exv10w1






Exhibit 10.1




MASTER REPURCHASE AGREEMENT

(for HomeAmerican Mortgage Corporation)




dated as of November 12, 2008




among




U.S. BANK NATIONAL ASSOCIATION,

as Agent and a Buyer,




THE OTHER BUYERS PARTY HERETO




and




HOMEAMERICAN MORTGAGE CORPORATION, as Seller




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	MASTER REPURCHASE AGREEMENT
	 	 	1	 
	 
	 	 	 	 
	1  APPLICABILITY AND DEFINED TERMS
	 	 	1	 
	1.1. Applicability
	 	 	1	 
	1.2. Defined Terms
	 	 	2	 
	1.3. Other Definitional Provisions
	 	 	26	 
	 
	 	 	 	 
	2  THE BUYERS’ COMMITMENTS
	 	 	26	 
	2.1. The Buyers’ Commitments to Purchase
	 	 	26	 
	2.2. Expiration or Termination of the Commitments
	 	 	27	 
	2.3. Request for Increase in Maximum Aggregate Commitment
	 	 	27	 
	2.4. Swing Line Commitment
	 	 	28	 
	2.5. Swing Line Transactions
	 	 	28	 
	2.6. Optional Reduction or Termination of Buyers’ Commitments
	 	 	29	 
	 
	 	 	 	 
	3  INITIATION; TERMINATION
	 	 	29	 
	3.1. Seller Request; Agent Confirmation
	 	 	29	 
	3.2. Syndication of Purchases
	 	 	30	 
	3.3. Request/Confirmation
	 	 	31	 
	3.4. Transaction Termination; Purchase Price Decrease
	 	 	31	 
	3.5. Place for Payments of Repurchase Prices
	 	 	32	 
	3.6. Withdrawals from and Credits to Operating Account
	 	 	32	 
	3.7. Transfer of Existing Mortgage Loan Portfolio
	 	 	32	 
	3.8. Special Terms Applicable to the Existing Mortgage Loan Portfolio
	 	 	33	 
	3.9. Delivery of Additional Mortgage Loans
	 	 	34	 
	3.10. Application of Repurchase Price Payments
	 	 	34	 
	3.11. Pro Rata Ownership Interests
	 	 	34	 
	 
	 	 	 	 
	4  TRANSACTION LIMITS AND SUBLIMITS
	 	 	35	 
	4.1. Transaction Limits
	 	 	35	 
	4.2. Transaction Sublimits
	 	 	35	 
	 
	 	 	 	 
	5  PRICE DIFFERENTIAL
	 	 	36	 
	5.1. Pricing Rate
	 	 	36	 
	5.2. Seller’s Election of Pricing Rate
	 	 	36	 
	5.3. Seller’s Re-election of the Pricing Rate
	 	 	36	 
	5.4. Balances Deficiency Fees
	 	 	37	 
	5.5. Pricing Rate for Default Pricing Rate Purchased Loans
	 	 	37	 
	5.6. Price Differential Payment Due Dates
	 	 	37	 
	5.7. Separate Agreements
	 	 	37	 
	 
	 	 	 	 
	6  MARGIN MAINTENANCE
	 	 	38	 
	6.1. Margin Deficit
	 	 	38	 
	6.2. Margin Call Deadline
	 	 	38	 
	6.3. Application of Cash
	 	 	39	 






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	6.4. Increased Cost
	 	 	39	 
	6.5. Capital Adequacy
	 	 	39	 
	6.6. Agent’s Report
	 	 	40	 
	6.7. Provisions Relating to LIBOR Rate
	 	 	40	 
	 
	 	 	 	 
	7 TAXES
	 	 	40	 
	7.1. Payments to be Free of Taxes; Withholding
	 	 	40	 
	7.2. Other Taxes
	 	 	41	 
	7.3. Taxes Indemnity
	 	 	41	 
	7.4. Receipt
	 	 	41	 
	7.5. Survival
	 	 	41	 
	 
	 	 	 	 
	8 INCOME AND ESCROW PAYMENTS; CONTROL
	 	 	41	 
	8.1. Income and Escrow Payments
	 	 	41	 
	8.2. Income and Escrow Accounts
	 	 	42	 
	8.3. Income and Escrow Accounts after Default
	 	 	42	 
	 
	 	 	 	 
	9 FACILITY FEE; AGENT’S FEE
	 	 	43	 
	9.1. Facility Fee; Non-Use
	 	 	43	 
	9.2. Agent’s Fee
	 	 	43	 
	9.3. Loan Papers Handling Fee
	 	 	43	 
	 
	 	 	 	 
	10 SECURITY INTEREST
	 	 	44	 
	10.1. Intent of the Parties
	 	 	44	 
	 
	 	 	 	 
	11 SUBSTITUTION
	 	 	46	 
	11.1. Seller May Substitute Other Mortgage Loans with Notice to and
Approval of Agent
	 	 	46	 
	11.2. Payment to Accompany Substitution
	 	 	47	 
	 
	 	 	 	 
	12 PAYMENT AND TRANSFER
	 	 	47	 
	12.1. Immediately Available Funds; Notice to Custodian
	 	 	47	 
	12.2. Payments to the Agent
	 	 	47	 
	12.3. If Payment Not Made When Due
	 	 	47	 
	12.4. Payments Valid and Effective
	 	 	48	 
	12.5. Pro Rata Distribution of Payments
	 	 	48	 
	 
	 	 	 	 
	13 SEGREGATION OF DOCUMENTS RELATING TO PURCHASED LOANS
	 	 	48	 
	 
	 	 	 	 
	14 CONDITIONS PRECEDENT
	 	 	49	 
	14.1. Initial Purchase
	 	 	49	 
	14.2. Each Purchase
	 	 	51	 
	 
	 	 	 	 
	15 REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	52	 
	15.1. Buyers, Agent and Seller Representations
	 	 	52	 
	15.2. Additional Seller Representations
	 	 	53	 
	15.3. Special Representations Relating to the Purchased Loans
	 	 	57	 
	15.4. Representations and Warranties Relating to Specific Transactions
	 	 	57	 






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	15.5. Survival
	 	 	58	 
	 
	 	 	 	 
	16 AFFIRMATIVE COVENANTS
	 	 	59	 
	16.1. [RESERVED]
	 	 	59	 
	16.2. Office of Foreign Assets Control and USA Patriot Act
	 	 	59	 
	16.3. Financial Statements
	 	 	59	 
	16.4. Financial Statements Will Be Accurate
	 	 	61	 
	16.5. Other Reports
	 	 	61	 
	16.6. Maintain Existence and Statuses; Conduct of Business
	 	 	62	 
	16.7. Compliance with Applicable Laws
	 	 	62	 
	16.8. Inspection of Properties and Books; Protection of Seller’s
Proprietary Information; Buyers’ Due Diligence of Seller
	 	 	62	 
	16.9. Privacy of Customer Information
	 	 	64	 
	16.10. Notice of Suits, Etc. and Notice
	 	 	65	 
	16.11. Payment of Taxes, Etc.
	 	 	66	 
	16.12. Insurance; fidelity bond
	 	 	66	 
	16.13. Maintain Lien on Mortgaged Premises
	 	 	67	 
	16.14. [RESERVED]
	 	 	67	 
	16.15. Certain Debt to Remain Unsecured
	 	 	67	 
	16.16. Promptly Correct Escrow Imbalances
	 	 	67	 
	16.17. MERS Covenants
	 	 	67	 
	16.18. Special Affirmative Covenants Concerning Purchased Loans
	 	 	68	 
	16.19. Coordination with Other Lenders/Repo Purchasers and Their Custodians
	 	 	69	 
	 
	 	 	 	 
	17 NEGATIVE COVENANTS
	 	 	70	 
	17.1. No Merger
	 	 	70	 
	17.2. Limitation on Debt and Contingent Indebtedness
	 	 	70	 
	17.3. Business
	 	 	70	 
	17.4. Liquidations, Dispositions of Substantial Assets
	 	 	70	 
	17.5. Loans, Advances, and Investments
	 	 	71	 
	17.6. Use of Proceeds
	 	 	71	 
	17.7. Transactions with Affiliates
	 	 	72	 
	17.8. Liens
	 	 	72	 
	17.9. ERISA Plans
	 	 	72	 
	17.10. Change of Principal Office; Fiscal Year
	 	 	72	 
	17.11. Distributions
	 	 	72	 
	17.12. Adjusted Tangible Net Worth
	 	 	72	 
	17.13. Adjusted Tangible Net Worth Ratio
	 	 	72	 
	17.14. Adjusted Net Income
	 	 	73	 
	17.15. Liquidity
	 	 	73	 
	17.16. Special Negative Covenants Concerning Purchased Loans
	 	 	73	 
	17.17. No Changes in Accounting Practices
	 	 	73	 
	 
	 	 	 	 
	18 EVENTS OF DEFAULT; EVENT OF TERMINATION
	 	 	73	 
	18.1. Events of Default
	 	 	73	 
	18.2. Transaction Termination
	 	 	75	 
	18.3. Termination by the Agent
	 	 	75	 






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	18.4. Remedies
	 	 	76	 
	18.5. Liability for Expenses and Damages
	 	 	76	 
	18.6. Liability for Interest
	 	 	77	 
	18.7. Other Rights
	 	 	77	 
	18.8. Seller’s Repurchase Rights
	 	 	77	 
	18.9. Sale of Purchased Loans
	 	 	77	 
	 
	 	 	 	 
	19 SERVICING OF THE PURCHASED LOANS
	 	 	78	 
	19.1. Servicing Released Basis
	 	 	78	 
	19.2. Servicing and Subservicing
	 	 	78	 
	19.3. Escrow Payments
	 	 	78	 
	19.4. Escrow and Income after Event of Default
	 	 	78	 
	19.5. Servicing Records
	 	 	79	 
	19.6. Subservicer Instruction Letter
	 	 	79	 
	19.7. Termination of Servicing
	 	 	79	 
	19.8. Notice from Seller
	 	 	80	 
	19.9. Seller Remains Liable
	 	 	80	 
	19.10. Backup Servicer
	 	 	80	 
	19.11. Successor Servicer
	 	 	81	 
	 
	 	 	 	 
	20 PAYMENT OF EXPENSES; INDEMNITY
	 	 	82	 
	20.1. Expenses
	 	 	82	 
	20.2. Indemnity
	 	 	82	 
	 
	 	 	 	 
	21 SINGLE AGREEMENT
	 	 	83	 
	 
	 	 	 	 
	22 RELATIONSHIPS AMONG THE AGENT AND THE BUYERS
	 	 	83	 
	22.1. Agent’s Duties
	 	 	83	 
	22.2. Limitation on Duty to Disclose
	 	 	84	 
	22.3. Actions Requiring All Buyers’ Consent
	 	 	84	 
	22.4. Actions Requiring Required Buyers’ Consent
	 	 	85	 
	22.5. Agent’s Discretionary Actions
	 	 	85	 
	22.6. Buyers’ Cooperation
	 	 	86	 
	22.7. Buyers’ Sharing Arrangement
	 	 	86	 
	22.8. Buyers’ Acknowledgment
	 	 	87	 
	22.9. Agent Market Value Determinations
	 	 	87	 
	22.10. Agent’s Representations to Buyers
	 	 	88	 
	22.11. Agent’s Duty of Care, Express Negligence Waiver and Release
	 	 	88	 
	22.12. Calculations of Shares of Principal and Other Sums
	 	 	89	 
	22.13. Resignation or Removal of the Agent
	 	 	89	 
	22.14. Effective Date of Resignation of the Agent
	 	 	89	 
	22.15. Successor Agent
	 	 	89	 
	22.16. Merger of the Agent
	 	 	90	 
	22.17. Participation; Assignment
	 	 	90	 
	22.18. The Agent and the Buyers are the only Beneficiaries of this Section
	 	 	92	 
	 
	 	 	 	 
	23 NOTICES AND OTHER COMMUNICATIONS
	 	 	93	 






-iv-









 







	 	 	 	 	 
	24 MISCELLANEOUS
	 	 	95	 
	24.1. Further Assurances
	 	 	95	 
	24.2. Agent as Attorney in Fact
	 	 	95	 
	24.3. Wires to Seller
	 	 	95	 
	24.4. Wires to Agent
	 	 	95	 
	24.5. Receipt; Available Funds
	 	 	95	 
	 
	 	 	 	 
	25 ENTIRE AGREEMENT; SEVERABILITY
	 	 	96	 
	 
	 	 	 	 
	26 NON ASSIGNABILITY; TERMINATION
	 	 	96	 
	26.1. Limited Assignment
	 	 	96	 
	26.2. Remedies Exception
	 	 	96	 
	26.3. Agreement Termination
	 	 	96	 
	 
	 	 	 	 
	27 COUNTERPARTS
	 	 	97	 
	 
	 	 	 	 
	28 GOVERNING LAW, JURISDICTION AND VENUE
	 	 	97	 
	 
	 	 	 	 
	29 WAIVER OF JURY TRIAL
	 	 	97	 
	 
	 	 	 	 
	30 RELATIONSHIP OF THE PARTIES
	 	 	98	 
	 
	 	 	 	 
	31 NO WAIVERS, ETC
	 	 	98	 
	 
	 	 	 	 
	32 USE OF EMPLOYEE PLAN ASSETS
	 	 	99	 
	32.1. Prohibited Transactions
	 	 	99	 
	32.2. Audited Financial Statements Required
	 	 	99	 
	32.3. Representations
	 	 	99	 
	 
	 	 	 	 
	33 INTENT
	 	 	99	 
	33.1. Transactions are Repurchase Agreements and Securities Contracts
	 	 	99	 
	33.2. Contractual Rights, Etc.
	 	 	100	 
	33.3. FDIA
	 	 	100	 
	33.4. Master Netting Agreement
	 	 	100	 
	 
	 	 	 	 
	34 DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
	 	 	100	 
	34.1. Parties not Protected by SIPA or Insured by FDIC or NCUSIF
	 	 	100	 
	34.2. SIPA Does Not Protect Government Securities Broker or Dealer Counterparty
	 	 	101	 
	34.3. Transaction Funds Are Not Insured Deposits
	 	 	101	 
	 
	 	 	 	 
	35 USA PATRIOT ACT NOTIFICATION
	 	 	101	 






-v-









 






EXHIBITS AND SCHEDULES




	 	 	 
	Exhibit A 


Exhibit B

	 	Form of Request/Confirmation


Opinions Required for Opinion of Counsel to Seller
	Exhibit C

	 	Form of Compliance Certificate
	Exhibit D

	 	List of Restricted Subsidiaries of the Seller as of the Effective Date
	Exhibit E

	 	[RESERVED]
	Exhibit F

	 	Assignment and Assumption
	 
	 	 
	Schedule AI

	 	Approved Investors
	Schedule AR

	 	Authorized Seller Representatives List Effective as of November 12, 2008
	Schedule BC

	 	The Buyers’ Committed Sums
	Schedule BP

	 	List of Basic Papers
	Schedule DQ

	 	Disqualifiers
	Schedule EL

	 	Eligible Loans
	Schedule 1.2

	 	Account Numbers
	Schedule 15.2(f)

	 	Material Adverse Changes and Contingent Liabilities
	Schedule 15.2(g)

	 	Pending Litigation
	Schedule 15.2(n)

	 	Existing Liens
	Schedule 15.3

	 	Special Representations and Warranties with Respect to each
Purchased Loan
	Schedule 17.2

	 	Permitted Letters of Credit
	Schedule 23

	 	Buyers’ Addresses for Notice as of November 12, 2008






-vi-









 





MASTER REPURCHASE AGREEMENT




     THIS MASTER REPURCHASE AGREEMENT is made and entered into as of November 12, 2008, between and
among HomeAmerican Mortgage Corporation, a Colorado corporation (the “Seller”), U.S. Bank National
Association, as Agent and representative of itself as a Buyer and the other Buyers (the “Agent” and
sometimes “U.S. Bank”), and the other Buyers, as defined in Section 1.2.



RECITALS




1 Applicability and Defined Terms.




     1.1. Applicability. From time to time the parties hereto may enter into transactions in which
the Seller agrees to transfer to the Agent on behalf of the Buyers, Eligible Loans on a servicing
released basis against the transfer of funds by the Buyers, with a simultaneous agreement by the
Buyers to transfer to the Seller such Eligible Loans at a date certain or on demand in the event of
termination pursuant to Section 18.2 hereof, or if no demand is sooner made, on the
Termination Date, against the transfer of funds by the Seller. Each such transaction shall be
referred to herein as a “Transaction” and shall be governed by this Agreement, as hereinafter
defined.



     U.S. Bank has also agreed to provide a separate revolving swing line repurchase facility to
initially and temporarily purchase Eligible Loans pending their purchase by all of the Buyers
pursuant to this Agreement.



     The parties hereby specifically declare that it is their intention that this Master Repurchase
Agreement (as amended, restated, supplemented or otherwise modified from time to time, the
“Agreement,” which term includes the preamble above) and the purchases of Eligible Loans made
pursuant to it (under both its regular and swing line provisions) are to be treated as repurchase
transactions under the Title 11 of the United States Code, as amended (the “Bankruptcy Code”),
including all rights that accrue to the Buyers by virtue of sections 559, 561 and 562 of the
Bankruptcy Code. This Agreement also contains lien provisions with respect to the Purchased Loans
so that if, contrary to the intent of the parties, any court of competent jurisdiction
characterizes any Transaction as a financing, rather than a purchase, under applicable law,
including the applicable provisions of the Bankruptcy Code, the Agent is deemed to have a first
priority perfected security interest in and to the Purchased Loans to secure the payment and
performance of all of the Seller’s Obligations under this Agreement.



     The Buyers’ agreement to establish and continue the revolving repurchase facilities, and U.S.
Bank’s agreement to establish and continue such revolving swing line repurchase facility, are each
made upon and subject to the terms and conditions of this Agreement. If there is any conflict or
inconsistency between any of the terms or provisions of this Agreement and any of the other
Repurchase Documents, this Agreement shall govern and control. If there is any conflict between
any provision of this Agreement and any later supplement, amendment, restatement or replacement of
it, then the latter shall govern and control.



 









 





     1.2. Defined Terms. Except where otherwise specifically stated, capitalized terms used in
this Agreement and the other Repurchase Documents have the meanings assigned to them below or
elsewhere in this Agreement.



     “Accepted Servicing Practices” means, with respect to any Mortgage Loan, (a) those mortgage
loan servicing standards and procedures in accordance with all applicable state, local and federal
laws, rules and regulations and (b)(i) the mortgage loan servicing standards and procedures
prescribed by Fannie Mae and Freddie Mac, in each case as set forth in the Fannie Mae Servicing
Guide or Freddie Mac Servicing Guide, as applicable, and in the directives or applicable
publications of such agencies, as such may be amended or supplemented from time to time, or (ii)
with respect to any Mortgage Loans and any matters or circumstances as to which no such standard or
procedure applies, the servicing standards, procedures and practices the Seller uses with respect
to its own assets as of the date of this Agreement, subject to reasonable changes.



     “Additional Purchased Loans” means Eligible Loans transferred by the Seller to the Buyers
pursuant to, and as defined in, Section 6.1(a).



     “Adjusted Tangible Net Worth” means, as of any date, the sum of (a) all assets of the Seller
and the Subsidiaries on a Consolidated basis, minus (b) the sum of (i) all Debt and all Contingent
Indebtedness of the Seller and the Subsidiaries, and (ii) all assets of the Seller and the
Subsidiaries that would be classified as intangible assets under GAAP, including, but not limited
to, Capitalized Servicing Rights, goodwill (whether representing the excess of cost over book value
of assets acquired or otherwise), patents, trademarks, trade names, copyrights, franchises and
deferred charges, and (iii) receivables from Affiliates.



     Affiliate” means and includes, with respect to a specified Person, any other Person:



     (a) that directly or indirectly through one or more intermediaries Controls, is
Controlled by or is under common Control with the specified Person (in this definition only,
the term “Control” means having the power to set or direct management policies, directly or
indirectly);



     (b) that is a director, trustee, partner, member or executive officer of the specified
Person or serves in a similar capacity in respect of the specified Person;



     (c) of which the specified Person is a director, trustee, partner, member or executive
officer or with respect to which the specified Person serves in a similar capacity and over
whom the specified Person, either alone or together with one or more other Persons similarly
situated, has Control;



     (d) that, directly or indirectly through one or more intermediaries, is the beneficial
owner of twenty percent (20%) or more of any class of equity securities — which does not
include any MBS — of the specified Person; or



     (e) of which the specified Person is directly or indirectly the owner of twenty percent
(20%) or more of any class of equity securities of the specified Person.



2









 





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



     “Agency-eligible Forty Year Loans” means fully documented amortizing Conforming Mortgage Loans
that have original terms to stated maturity greater than thirty (30) years and up to forty (40)
years, which are eligible for purchase by an Agency.



     “Agency-eligible Forty Year Loans Sublimit” is defined in the table in Section 4.2(c).



     “Agency MBS” means MBS issued or guaranteed as to timely payment of principal and interest by
Ginnie Mae, Fannie Mae or Freddie Mac.



     “Agent” is defined above.



     “Agent’s Fee” is defined in Section 9.2.



     “Aggregate Outstanding Purchase Price” means as of any Determination Date, an amount equal to
the sum of the Purchase Prices for all Purchased Loans included in all Open Transactions.



     “Agreement” is defined in the Recitals.



     “Approved Investor” means Ginnie Mae, Fannie Mae, Freddie Mac and any of the Persons listed on
Schedule AI, as it may be supplemented or amended from time to time by agreement of the
Seller and the Agent; provided, that (a) persons listed on Schedule AI
shall be Approved Investors only with respect to the type(s) of Mortgage Loans for which they are
specified as an “Approved Investor” on Schedule AI, and (b) if the Agent shall give written
notice to the Seller of the Agent’s disapproval of any Approved Investor(s) named in the notice,
the Approved Investor(s) so named shall no longer be (an) Approved Investor(s) from and after the
time when the Agent sends that notice to the Seller or such later date as may be specified by the
Agent in its sole discretion.



     “Authorized Seller Representative” means a representative of the Seller duly designated by all
requisite corporate action to execute any certificate, schedule or other document contemplated or
required by this Agreement or the Custody Agreement on behalf of the Seller and as its act and
deed. A list of Authorized Seller Representatives current as of the Effective Date is attached as
Schedule AR. The Seller will provide an updated list of Authorized Seller Representatives
to the Agent and the Custodian promptly following each addition to or subtraction from such list,
and the Agent, the Buyers and the Custodian shall be entitled to rely on each such list until such
an updated list is received by the Agent and the Custodian.



     “Backup Servicer” means U.S. Bank Home Mortgage, Inc. or any other Person designated by the
Agent, in its sole discretion, to act as a backup servicer of the Purchased Loans in accordance
with Section 19.10.



     “Balance Funded Rate” means a per annum rate equal to the LIBOR Margin plus two tenths of one
percent (0.20%).



3









 





     “Balance Funded Segment” means a portion of the outstanding Purchase Price on Open
Transactions on which the Pricing Rate is determined by reference to the Balance Funded Rate for
the applicable type of Eligible Loan.



     “Bankruptcy Code” is defined in the Recitals.



     “Basic Papers” means all of the Loan Papers that must be delivered to the Custodian (in the
case of Dry Loans, prior to the related Purchase Date and, in the case of Wet Loans, on or before
the fifth (5th) Business Day after the related Purchase Date) in order for any particular Purchased
Loan to continue to have Market Value. Schedule BP lists the Basic Papers.



     “Business Day” means any day when both (1) the Agent’s main branch in Denver, Colorado, is
open for regular commercial banking business and (2) federal funds wire transfers can be made.



     “Buyer” means U.S. Bank and such other Person from time to time party to this Agreement as a
“Buyer.” Persons who are currently Buyers on any day shall be listed as Buyers in
Schedule BC in effect for that day.



     “Buyer Affiliate” means (a) with respect to any Buyer, (i) an Affiliate of such Buyer or
(ii) any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making,
purchasing, holding or otherwise investing in securities and mortgage reverse repurchase
agreements, bank loans and similar financial arrangements in the ordinary course of its business
and is administered or managed by such Buyer or an Affiliate of such Buyer and (b) with respect to
any Buyer that is a fund which invests in securities and mortgage reverse repurchase agreements,
bank loans and similar financial arrangements, any other fund that invests in securities and
mortgage reverse repurchase agreements, bank loans and similar financial arrangements and is
managed by the same investment advisor as such Buyer or by an Affiliate of such investment advisor.



     “Buyers’ Margin Percentage” means:




     (i) for all Conforming Mortgage Loans, ninety-eight percent (98%);




     (ii) for Jumbo Mortgage Loans and Agency-eligible Forty Year Loans, ninety-five percent
(95%);




     (iii) for Super Jumbo Mortgage Loans, ninety-three percent (93%); and




     (iv) for all Second Mortgage Loans, ninety percent (90%).



     “Capitalized Servicing Rights” means for any Person, all rights to service Mortgage Loans that
would be capitalized under GAAP (regardless of whether such rights result from asset
securitizations, whole loan sales or originations of Mortgage Loans).



4









 





     “Cash Equivalents” means and includes, on any day:




     (i) any evidence of debt issued by the United States government or any agency thereof,
or guaranteed as to the timely payment of principal and interest by the United States
government, and maturing ninety (90) days or less after that day;




     (ii) any certificate of deposit, time deposits, demand deposits or banker’s acceptance
issued by a commercial bank that is a member of the Federal Reserve System and has a
combined unimpaired capital and surplus and unimpaired undivided profits of not less than
Seven Hundred Fifty Million Dollars ($750,000,000), and maturing not more than ninety (90)
days after that day; and




     (iii) money market and cash accounts and money market funds which are invested in
investments of the types described above or in commercial paper maturing no more than 90
days from the date of creation thereof and which is rated at least “A-1” by Standard &
Poor’s Corporation or at least “P-1” by Moody’s Investors Service, Inc.



     “Central Elements” means and includes the value of a substantial part of the Purchased Loans;
the prospects for payment of each portion of the Repurchase Price, both Purchase Price and Price
Differential, when due; the validity or enforceability of this Agreement and the other Repurchase
Documents and, as to any Person referred to in any reference to the Central Elements, such Person’s
and its consolidated Subsidiaries’ property, business operations, financial condition and ability
to fulfill and perform its obligations under this Agreement and the other Repurchase Documents to
which it is a party, taken as a whole.



     “Certified Copy” means a copy of an original Basic Paper or Supplemental Paper accompanied by
(or on which there is stamped) a certification by an officer of either a title insurer or an agent
of a title insurer (whether a title agency or a closing attorney) or, except where otherwise
specified below, by an Authorized Seller Representative or an officer of the Servicer (if other
than the Seller) or subservicer of the relevant Mortgage Loan, that such copy is a true copy of the
original and (if applicable) that the original has been sent to the appropriate governmental filing
office for recording in the jurisdiction where the related Mortgaged Premises are located. Each
such certification shall be conclusively deemed to be a representation and warranty by the
certifying officer, agent, Authorized Seller Representative or officer of the relevant Servicer or
subservicer, as applicable, to the Agent, the Buyers and the Custodian upon which each may rely.



     “Change in Law” means (a) the adoption of any applicable Legal Requirement after the Effective
Date, (b) any change in any applicable Legal Requirement or in the interpretation or application
thereof by any Governmental Authority after the Effective Date or (c) reasonable compliance by any
Buyer (or by any applicable office of any Buyer) with any request, guideline or directive (whether
or not having the force of law) of any Governmental Authority made or issued after the Effective
Date.



     “Change of Control” in respect of the Seller means (a) the occurrence of Parent not owning
directly, or indirectly, all of the issued and outstanding ownership interests of the Seller, or
(b) any of the following circumstances: (i) any Person or two or more Persons (excluding the



5









 







named executive officers of the Seller) acting in concert acquiring beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934), directly or indirectly, of equity interests of the Seller representing 20%
or more of the combined voting power of all equity interests of Parent entitled to vote in the
election of directors; or (ii) during any period of up to twelve consecutive months, whether
commencing before or after the Effective Date, individuals who at the beginning of such
twelve-month period were directors of Parent ceasing for any reason to constitute a majority of the
Board of Directors of Parent (other than by reason of death, disability or scheduled retirement);
or (iii) any Person or two or more Persons (excluding the named executive officers of the Seller)
acting in concert acquiring by contract or otherwise, or entering into a contract or arrangement
which upon consummation will result in its or their acquisition of, control over equity interests
of Parent representing 20% or more of the combined voting power of all equity interests of Parent
entitled to vote in the election of directors.



     “Commitment” means, for each Buyer, its commitment under Section 2.1, subject to
reduction as described in Section 2.6, to fund its Funding Share of Transactions, limited
to such Buyer’s Committed Sum. Such term also includes U.S. Bank’s commitment under Section
2.4 to fund Swing Line Transactions, limited to the Swing Line Limit, upon and subject to the
terms of this Agreement.



     “Committed Sum” means, for any day, the maximum total amount a Buyer is committed to fund for
the purchase from the Seller of Eligible Loans on a revolving basis pursuant to this Agreement, on
its terms and subject to its conditions. From the Effective Date of this Agreement through the
Termination Date or such other date (if any) when all or any of them is changed by operation of the
provisions of any agreement or Legal Requirement, the Committed Sums for the Buyers are as set
forth on Schedule BC, as it may be amended and restated from time to time.



     “Conforming Mortgage Loan” means a first priority Single-family residential Mortgage Loan that
is (a) FHA insured, (b) VA guaranteed or, (c) a conventional mortgage loan that fully conforms to
all Agency underwriting and other requirements, excluding expanded criteria loans as defined under
any Agency program.



     “Consolidated” refers to the consolidation of any Person, in accordance with GAAP, with its
properly consolidated subsidiaries. References herein to a Person’s Consolidated financial
statements refer to the consolidated financial statements of such Person and its properly
consolidated subsidiaries.



     “Contingent Indebtedness” of any Person at a particular date means the sum (without
duplication) at such date of (a) all obligations of such Person in respect of letters of credit,
acceptances, or similar obligations issued or created for the account of such Person, (b) all
obligations of such Person under any contract, agreement or understanding of such Person pursuant
to which such Person guarantees, or in effect guarantees, any indebtedness or other obligations of
any other Person in any matter, whether directly or indirectly, contingently or absolutely, in
whole or in part, (c) all liabilities secured by any Lien on any property owned by such Person,
whether or not such Person has assumed or otherwise become liable for the payment thereof and
(d) any liability of such Person or any Affiliate thereof in respect of unfunded vested benefits
under in any ERISA Plan, in each case excluding any such liabilities or



6









 







obligations that constitute Debt; provided, that Contingent Indebtedness shall not
include Seller’s obligations on Permitted Letters of Credit.



     “Corporation Tax Treatment Certificate” is defined in Section 7.5(a).



     “Currency Agreement” means any foreign exchange contract, currency swap agreement, futures
contract, option contract, synthetic cap or other similar agreement or arrangement for the purpose
of hedging the currency risk associated with the Seller’s and its Subsidiaries’ operations and not
for speculative purposes.



     “Custodian” means U.S. Bank, as Custodian under the Custody Agreement, or any successor
custodian under the Custody Agreement acceptable to the Agent.



     “Custodian’s Fees” are the fees to be paid by the Seller to the Custodian for its services
under the Custody Agreement, as provided for in the Custody Agreement or by a separate agreement.
Such fees are separate from and in addition to other fees to be paid to the Buyers and the Agent
provided for in this Agreement.



     “Custody Agreement” means the Custody Agreement dated concurrently herewith among the Agent,
the Seller and U.S. Bank, as Custodian, as it may be supplemented, amended or restated from time to
time.



     “Customer” means and includes each maker of a Mortgage Note and each cosigner, guarantor,
endorser, surety and assumptor thereof, and each mortgagor or grantor under a Mortgage, whether or
not such Person has personal liability for its payment of the Mortgage Loan evidenced or secured
thereby, in whole or in part.



     “Debt” means, with respect to any Person, on any day, the sum of the following (without
duplication):



     (a) all of that Person’s debt or other obligations which, in accordance with GAAP,
should be included in determining total liabilities as shown on the liabilities side of that
Person’s balance sheet for that day;




     (b) all of that Person’s debt or other obligations for borrowed money or for the
deferred purchase price of property or services, except that non-recourse MBS Debt arising
out of transactions structured to qualify for GAAP sale treatment shall be excluded;




     (c) all of any other Person’s debt or other obligations for borrowed money or for the
deferred purchase price of property or services in respect of which such Person is liable,
contingently or otherwise, to pay or advance money or property as guarantor, surety,
endorser or otherwise (excluding such Person’s contingent liability as endorser of
negotiable instruments for collection in the ordinary course of business), or which such
Person has agreed to purchase or otherwise acquire but excluding Seller’s obligations on
Permitted Letters of Credit;



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     (d) obligations of that Person under repurchase agreements, reverse repurchase
agreements, mortgage warehouse lines of credit, sale/buy-back agreements or like
arrangements;




     (e) all debt for borrowed money or for the deferred purchase price of property or
services secured by a Lien on any property owned or being purchased by that Person (even
though that Person has not assumed or otherwise become liable for the payment of such debt)
to the extent that such debt would not be otherwise counted as a liability for purposes of
determining that Person’s net worth and to the extent that such debt is less than or equal
to the net book value of such property; and




     (f) net payment obligations of that Person in respect of any exchange traded or over
the counter derivative transaction, including any Hedge Agreement whether entered into for
hedging or speculative purposes;


provided that, for purposes of this Agreement, there shall be excluded from the calculation
of Debt for that day such Person’s obligations to pay to another Person any sums collected and held
by the subject Person (as loan servicer, escrow agent or collection agent or in a similar capacity)
for the account of such other Person.




     “Default” means 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.



     “Default Pricing Rate” means, on any day and with respect to any Transaction, a rate per annum
equal to the otherwise applicable Pricing Rate plus four percent (4.0%) per annum.



     “Determination Date” means the date as of, or for, which a specified characteristic of a
Mortgage Loan or other subject matter is being determined for purposes of a provision of this
Agreement or another Repurchase Document.



     “Disqualifier” means any of the circumstances or events affecting Purchased Loans that are
described on Schedule DQ.



     “Dry Loan” means an Eligible Loan originated by the Seller that has been closed, funded and
qualifies without exception as an Eligible Loan, including satisfying the requirement that all of
its Basic Papers have been delivered to the Custodian.



     “Effective Date” means November 12, 2008.



     “Electronic Agent” means MERSCORP, Inc. or its successor in interest or assigns.



     “Electronic Tracking Agreement” means a written Electronic Tracking Agreement among the
Seller, the Agent, MERS and the Electronic Agent, in form and substance acceptable to the Seller
and the Agent, as it may be supplemented, amended, restated or replaced from time to time.



     “Eligible Loans” is defined on Schedule EL.



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     “ERISA” means the Employee Retirement Income Security Act of 1974 and any successor statute,
as amended from time to time, and all rules and regulations promulgated under it.



     “ERISA Affiliates” means all members of the group of corporations and trades or businesses
(whether or not incorporated) that, together with the Seller, are treated as a single employer
under Section 414 of the Internal Revenue Code.



     “ERISA Plan” means any pension benefit plan subject to Title IV of ERISA or Section 412 of the
Internal Revenue Code maintained or contributed to by the Seller or any ERISA Affiliate with
respect to which the Seller has a fixed or contingent liability.



     “Escrow Account” means the Escrow Account established by the Seller with a bank satisfactory
to the Agent under Section 8, and subject to the control of the Agent into which amounts
paid for escrow accumulation under Purchased Loans are paid for purposes of paying taxes, insurance
and other appropriate escrow charges.



     “Event of Default” is defined in Section 18.1.



     “Event of Insolvency” means:




     (a) the Seller or a material Subsidiary has commenced as debtor any case or proceeding
under any bankruptcy, insolvency, reorganization, moratorium, delinquency, arrangement,
readjustment of debt, liquidation, dissolution, or similar Law of any jurisdiction whether
now or hereafter in effect, or consents to the filing of any petition against it under such
Law, or petitions for, causes or consents to the appointment or election of a receiver,
conservator, liquidator, trustee, sequestrator, custodian or similar official for the Seller
or a material Subsidiary or any substantial part of its property, or an order for relief is
entered under the Bankruptcy Code; or any of the Seller’s, or a material Subsidiary’s
property is sequestered by court or order; or the convening by the Seller or a material
Subsidiary of any meeting of creditors for purposes of commencing any such case or
proceeding or seeking such an appointment or election;




     (b) the commencement of any such case or proceeding against the Seller or any material
Subsidiary, or another Person’s seeking an appointment or election of a receiver,
conservator, liquidator, trustee, sequestrator, custodian or similar official for the Seller
or a material Subsidiary or any substantial part of its property, or the filing against the
Seller or a material Subsidiary of an application for a protective decree under the
provisions of SIPA which (i) is consented to or not timely contested by the Seller or such
Subsidiary, (ii) results in the entry of an order for relief, such an appointment or
election, the issuance of such a protective decree or the entry of an order having a similar
effect or (iii) is not dismissed within sixty (60) days;




     (c) the making by the Seller or a material Subsidiary of a general assignment for the
benefit of creditors; or



9









 






     (d) the admission by the Seller or a material Subsidiary of its inability, or intention
not, or the inability of the Seller or a material Subsidiary, to pay its debts as they
become due.



     “Excluded Taxes” is defined in Section 7.5.



     “Facility Fee” is defined in Section 9.1.



     “Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100th of one percent) equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of Minneapolis on the Business Day next
succeeding such day, provided that (i) if the day for which such rate is to be determined is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day, and (ii) if such
rate is not so published for any day, the Federal Funds Rate for such day shall be the average rate
quoted to the Agent on such day on such transactions as determined by the Agent.



     “Fee Letter” means that certain letter dated as of November 12, 2008, from the Agent to the
Seller.



     “FHA” means the Federal Housing Administration and any successor.



     “FICA” means the Federal Insurance Contributions Act.



     “FICO” means Fair Isaac Corporation and, where used in this Agreement, refers to the credit
scoring system developed by that company or to any other Customer credit scoring system whose use
by the Seller (for purposes of this Agreement and the Transactions) has been specifically approved
in writing by the Agent.



     “File” means a file in the possession of the Custodian or its designee (other than the Seller
or an Affiliate of the Seller) containing all of the Loan Papers for the relevant type of Mortgage
Loan.



     “Financial Statements” is defined in Section 15.2(f).



     “Funding Account” means the Seller’s non-interest bearing demand deposit account maintained
with U.S. Bank and described in Schedule 1.2 into which the Agent may transfer funds (funds
paid by the Buyers as Purchase Price) and from which the Agent is authorized to disburse funds to
the Seller or its designee (such as its agents) for the funding of Transactions. The Funding
Account shall be subject to setoff by the Agent for Pro Rata distribution to the Buyers and shall
be subject to the control of the Agent.



     “Funding Share” means, for each Buyer, that proportion of the sum of the original Purchase
Prices for the Eligible Loans to be purchased in a Transaction that bears the same ratio to the
total amount of such sum as that Buyer’s Committed Sum bears to the Maximum Aggregate Commitment.



10









 





     “GAAP” means, for any day, generally accepted accounting principles, applied on a consistent
basis, stated in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants, or in statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by another entity or entities as
may be approved by a significant segment of the accounting profession, that are applicable to the
circumstances for that day. The requirement that such principles be applied on a consistent basis
means that the accounting principles observed in a current period shall be comparable in all
material respects to those applied in an earlier period, with the exception of changes in
application to which the Seller’s independent certified public accountants have agreed and which
changes and their effects are summarized in the subject company’s financial statements following
such changes. If (a) during the term of this Agreement any change(s) in such principles occur(s)
that materially changes the meaning or effect of any provision of this Agreement and (b) the Seller
or the Required Buyers regard such change(s) as adverse to their respective interests, then upon
written notice by the Seller to the Agent, or by the Agent or the Required Buyers to the Seller,
the parties to this Agreement shall negotiate promptly and in good faith a supplement or amendment
to this Agreement to achieve as nearly as possible preservation and continuity of the business
substance of this Agreement in light of such change; provided that neither the Agent nor
any of the Buyers shall be obligated to commence, continue or conclude any such negotiation or to
execute any such supplement or amendment after any Default has occurred (other than a Default
caused by such change) and before it has been cured or after any Event of Default has occurred
(other than an Event of Default caused by such change) that the Agent has not declared in writing
to have been cured or waived.



     “Ginnie Mae” means the Government National Mortgage Association and any successor.



     “Governmental Authority” means any foreign governmental authority, the United States of
America, any state of the United States and any political subdivision of any of the foregoing, and
any agency, department, commission, board, bureau, court or other tribunal.



     “Hazard Insurance Policy” means, with respect to each Purchased Loan, the policy of fire and
extended coverage insurance required to be maintained for the related Mortgaged Premises’
improvements (and, if the related Mortgaged Premises are located in a federally-designated special
flood area, federal flood insurance issued in accordance with the Flood Disaster Protection Act of
1973, as amended from time to time, or, if repealed, any superseding legislation governing similar
insurance coverage, or similar coverage against loss sustained by floods or similar hazards that
conforms to the flood insurance requirements prescribed by Fannie Mae guidelines, which may be
provided under a separate insurance policy), which insurance may be a blanket mortgage impairment
policy.



     “Hedge Agreement” means an Interest Rate Protection Agreement, a Currency Agreement or a
forward sales agreement entered into in the ordinary course of the Seller’s or any of its
Subsidiaries’ businesses to protect the Seller against changes in interest rates or the market
value of assets.



     “HUD” means the U.S. Department of Housing and Urban Development and any successor.



11









 





     “In Default” means that, as to any Mortgage Loan, any Mortgage Note payment or escrow payment
is unpaid for thirty (30) days or more after its due date (whether or not the Seller has allowed
any grace period or extended the due date thereof by any means) or another material default has
occurred and is continuing, including the commencement of foreclosure proceedings or the
commencement of a case in bankruptcy for any Customer in respect of such Mortgage Loan.



     “Income” means, with respect to any Eligible Loan on any day, all payments of principal,
interest and other distributions thereon or proceeds thereof paid to the relevant party.



     “Income Account” means a demand deposit account established by the Seller with a bank
satisfactory to the Agent under the provisions of Section 8, which shall be subject to the
control of the Agent.



     “Indemnified Liabilities” is defined in Section 20.2.



     “Indemnified Parties” is defined in Section 20.2.



     “Interest Rate Protection Agreement” means, with respect to any or all of the Purchased Loans,
any short sale of any U.S. Treasury securities, futures contract, mortgage related security,
Eurodollar futures contract, options related contract, interest rate swap, cap or collar agreement
or similar arrangement providing for protection against fluctuations in interest rates or the
exchange of nominal interest obligations, either generally or under specific contingencies, that is
entered into by the Seller and a financial institution and is reasonably acceptable to the Agent.



     “Internal Revenue Code” means the Internal Revenue Code of 1986 or any subsequent federal
income tax law or laws, as amended from time to time.



     “Investor Commitment” means an unexpired written commitment held by the Seller from an
Approved Investor to buy Purchased Loans, and that specifies (a) the type or item(s) of Purchased
Loan, (b) a purchase date or purchase deadline date and (c) a purchase price or the criteria by
which the purchase price will be determined.



     “Jumbo Mortgage Loan” means a Mortgage Loan that would otherwise be a Conforming Mortgage Loan
secured by a first Lien Mortgage except that the original principal amount is more than the maximum
Agency loan amount but not more than One Million Dollars ($1,000,000).



     “Law” means any law, statute, code, ordinance, order, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or other determination,
direction or requirement (including any of the foregoing that relate to environmental standards or
controls, energy regulations and occupational safety and health standards or controls) of any
(domestic or foreign) court or other Governmental Authority.



     “Legal Requirement” means any law, statute, ordinance, decree, ruling, requirement, order,
judgment, rule or regulation (or interpretation of any of them) of any Governmental Authority, and
the terms of any license, permit, consent or approval issued by any Governmental Authority.



12









 





     “LIBOR Business Day” means a Business Day that is also a day for trading by and between banks
in United States dollar deposits in the interbank LIBOR market and a day on which banks are open
for business in New York City.



     “LIBOR Margin” means one and one-half percent (1.5%).



     “LIBOR Rate” means the one-month LIBOR rate (rounded upward, if necessary, to the nearest 1/16
of 1%) quoted by the Agent from Reuters Screen LIBOR01 Page, or any successor thereto, which shall
be that one-month LIBOR rate in effect and reset each LIBOR Business Day, adjusted for any reserve
requirement and any subsequent costs arising from a change in government regulations, or the rate
for such deposits determined by the Agent at such time based on such other published service of
general application as shall be selected by the Agent for such purpose; provided, that in
lieu of determining the rate in the foregoing manner, the Agent may determine the rate based on
rates at which United States dollar deposits having a maturity of one month are offered to the
Agent in the interbank LIBOR market at such time for delivery in immediately available funds on
such date of determination in an amount equal to $1,000,000 (rounded upward, if necessary, to the
nearest 1/16 of 1%).



     “LIBOR Segment” means a portion of the outstanding Purchase Price on Open Transactions on
which the Pricing Rate is determined by reference to the LIBOR Rate and the applicable LIBOR
Margin.



     “Lien” means any lien, mortgage, deed of trust, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof and any agreement to give any security interest.)



     “Liquidity” means the Seller’s unencumbered and unrestricted cash and Cash Equivalents
plus the amount by which the aggregate Purchase Value of all Purchased Mortgage Loans at such time
exceeds the aggregate Purchase Price outstanding for all Open Transactions at such time.



     “Loan Papers” means the Mortgage Note and all of the other papers related to the establishment
of a Purchased Loan and the creation, perfection and maintenance of its lien and lien priority for
such Purchased Loan, including its Basic Papers and its Supplemental Papers and including any
papers securing, guaranteeing or otherwise related to or delivered in connection with any Purchased
Loan, in a form acceptable to the Agent (including any guaranties, lien priority agreements,
security agreements, mortgages, deeds of trust, collateral assignments of the Seller’s interest in
underlying obligations or security, subordination agreements, negative pledge agreements, loan
agreements and title, mortgage, pool and casualty insurance policies), as any such Loan Paper may
be supplemented, amended, restated or replaced from time to time.



     “Loan Records” means books, records, ledger cards, files, papers, documents, instruments,
certificates, appraisal reports, journals, reports, correspondence, customer lists, information and
data that describes, catalogs or lists such information or data, computer printouts, media (tapes,
discs, cards, drives, flash memory or any other kind of physical, electronic or virtual data or
information storage media or systems) and related data processing



13









 







software (subject to any licensing restrictions) and similar items that at any time evidence
or contain information relating to any of the Purchased Loans, and other information and data that
is used or useful for managing and administering the Purchased Loans, together with the
nonexclusive right to use (in common with the Seller and any repurchase agreement counterparty or
secured party that has a valid and enforceable interest therein and that agrees that its interest
is similarly nonexclusive) the Seller’s operating systems to manage and administer any of the
Purchased Loans and any of the related data and information described above, or that otherwise
relates to the Purchased Loans, together with the media on which the same are stored to the extent
stored with material information or data that relates to property other than the Purchased Loans
(tapes, discs, cards, drives, flash memory or any other kind of physical or virtual data or
information storage media or systems), and the Seller’s rights to access the same, whether
exclusive or nonexclusive, to the extent that such access rights may lawfully be transferred or
used by the Seller’s permittees, and any computer programs that are owned by the Seller (or
licensed to the Seller under licenses that may lawfully be transferred or used by the Seller’s
permittees) and that are used or useful to access, organize, input, read, print or otherwise output
and otherwise handle or use such information and data.



     “Margin Call” is defined in Section 6.1(a).



     “Margin Deficit” is defined in Section 6.1(a).



     “Margin Excess” is defined in Section 6.1(b)



     “Margin Stock” has the meaning assigned to that term in Regulation U as in effect from time to
time.



     “Market Value” means what the Agent determines as the market value of any Purchased Loan,
using a commercially reasonable methodology that is, in their sole discretion, in accordance with
standards customarily applicable in the financial industry to third party service providers
providing values on comparable assets to be used in connection with the financing of such assets,
without reference to Hedge Agreements or Investor Commitments. The Agent’s determination of Market
Value hereunder shall be conclusive and binding upon the parties, absent manifest error.



     “Maximum Aggregate Commitment” means the maximum Aggregate Outstanding Purchase Price that is
allowed to be outstanding under this Agreement on any day, being the amount set forth in
Schedule BC in effect for that day. The Maximum Aggregate Commitment on the Effective Date
is One Hundred Million Dollars ($100,000,000). If and when some or all of the Buyers then party to
this Agreement agree in writing to increase their Committed Sums, or if a new Buyer or Buyers joins
the syndicate of Buyers, or if there is both such an increase and a new Buyer’s joinder, the Agent
shall execute an updated Schedule BC reflecting the new Maximum Aggregate Commitment and
deliver it to the Seller and the Buyers, and that updated Schedule BC shall thereupon be
substituted for and supersede the prior Schedule BC.



     “MBS” means a mortgage pass-through security, collateralized mortgage obligation, REMIC or
other security that (a) is based on and backed by an underlying pool of Mortgage Loans and
(b) provides for payment by its issuer to its holder of specified principal installments



14









 







and/or a fixed or floating rate of interest on the unpaid balance and for all prepayments to
be passed through to the holder, whether issued in certificated or book-entry form and whether or
not issued, guaranteed, insured or bonded by Ginnie Mae, Fannie Mae, Freddie Mac, an insurance
company, a private issuer or any other investor.



     “MERS” means Mortgage Electronic Registration Systems, Inc., a Delaware corporation, or its
successors or assigns.



     “MERS Designated Loan” means a Purchased Loan registered to the Seller on the MERS® System.



     “MERS Procedures Manual” means the MERS Procedures Manual, as it may be amended from time to
time.



     “MERS® System” means the Electronic Agent’s mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.



     “Mortgage” means a mortgage, deed of trust, deed to secure debt, security deed or other
mortgage instrument or similar evidence of lien legally effective in the U.S. jurisdiction where
the relevant real property is located to create and constitute a valid and enforceable Lien,
subject only to Permitted Encumbrances, on the fee simple or long term ground leasehold estate in
improved real property.



     “Mortgage Assignment” means an assignment of a Mortgage, in form sufficient under the Laws of
the U.S. jurisdiction where the real property covered by such Mortgage is located to give record
notice of the assignment of such Mortgage, perfect the assignment and establish its priority
relative to other transactions in respect of the Mortgage assigned (no Mortgage Assignment is
required for any Mortgage that has been originated in the name of MERS and registered under the
MERS® System).



     “Mortgage Loan” means any loan evidenced by a Mortgage Note and includes all right, title and
interest of the lender or mortgagee of such loan as a holder of both the beneficial and legal title
to such loan, including (a) all Loan Papers or other loan documents, files and records of the
lender or mortgagee for such loan, (b) the monthly payments, any prepayments, insurance and other
proceeds, (c) all Servicing Rights related to such loan and (iv) all other rights, interests,
benefits, security, proceeds, remedies and claims (including, without limitation, REO) in favor or
for the benefit of the lender or mortgagee arising out of or in connection with such loan.



     “Mortgage Loan Transmission File” means a file containing all information concerning each
Mortgage Loan required by the “Record Layout,” as defined and provided for in (and attached as an
exhibit to) the Custody Agreement, one of which shall be delivered by the Seller to each of the
Custodian and the Agent for each Purchased Loan on its Purchase Date, both by electronic, computer
readable transmission in accordance with such Record Layout and, in the event such electronic
transmission is not possible, by faxing a hard copy thereof to each of the Custodian and the Agent.



     “Mortgage Note” means a promissory note secured by a Mortgage.



15









 





     “Mortgaged Premises” means the Property securing a Mortgage Loan.



     “Multiemployer Plan” means any “multiemployer plan,” as defined in Section 4001(a)(3) of
ERISA, which is maintained for employees of the Seller or any of the Seller’s Subsidiaries.



     “Nonfunding Buyer” is defined in Section 3.11.



     “Non-excluded Taxes” is defined in Section 7.1.



     “Non-Usage Fee” is defined in Section 9.1.



     “Notices” is defined in Section 23.



     “Obligations” means all of the Seller’s present and future obligations and liabilities under
this Agreement or any of the other Repurchase Documents, whether for Repurchase Price, Price
Differential, Margin Call, premium, fees, costs, attorneys’ fees or other obligation or liability,
and whether absolute or contingent, and all renewals, extensions, modifications and increases of
any of them.



     “Officer’s Certificate” means a certificate executed on behalf of the Seller or another
relevant Person by its (or if it is a partnership, its general partner’s) Board of Directors’
Chairman (or if it is a limited liability company, one of its managers), president, vice
president-finance, treasurer, any of its executive vice presidents or senior vice presidents, its
company secretary, its controller or such other officer as shall be acceptable to the Agent.



     “Open Transaction” means a Transaction in which the Buyers have purchased and paid for the
related Purchased Loans but the Seller has not repurchased all of them, such that the remaining
Purchased Loans not repurchased by the Seller of the subject Transaction would be an Open
Transaction.



     “Operating Account” means the Seller’s non-interest bearing demand deposit account maintained
with U.S. Bank and described on Schedule 1.2, subject to a control agreement in favor of
the Agent and from which the Agent is authorized pursuant to Section 3.6 to withdraw funds
on any day in an amount equal to the aggregate Repurchase Prices of all Purchased Loans that are
Past Due on that day. The Operating Account shall be subject to setoff by the Agent for Pro Rata
distribution to the Buyers and, upon the occurrence and during the continuance of a Default or
Event of Default, the Agent may also terminate the Seller’s right to withdraw, or direct the
payment of  funds in the Operating Account until the Obligations have been paid in full.



     “Organizational Documents” means as to any Person other than a natural Person, its articles or
certificate of incorporation, organization, limited partnership or other document filed with a
Governmental Authority evidencing the organization of such entity and any bylaws, operating
agreement or other governance document governing the rights of the holders of the ownership
interests in such Person.



     “Other Taxes” is defined in Section 7.2.



16









 





     “Parent” means M.D.C. Holdings, Inc., a Delaware corporation.



     “Participant” is defined in Section 22.17(a).



     “Past Due” means that the Seller has not repurchased the subject Purchased Loan on or before
its Repurchase Date.



     “Permitted Encumbrances” means, in respect of the Mortgaged Premises securing a Purchased
Loan, (i) tax Liens for real property taxes and government-improvement assessments that are not
delinquent; (ii) easements and restrictions that do not materially and adversely affect the title
to or marketability of such Mortgaged Premises or prohibit or interfere with the use of such
Mortgaged Premises as a one-to-four family residential dwelling; (iii) reservations as to oil, gas
or mineral rights, provided such rights do not include the right to remove buildings or other
material improvements on or near the surface of such Mortgaged Premises or to mine or drill on the
surface thereof or otherwise enter the surface for purposes of mining, drilling or exploring for,
or producing, transporting or otherwise handling oil, gas or other minerals of any kind;
(iv) agreements for the installation, maintenance or repair of public utilities, provided such
agreements do not create or evidence Liens on such Mortgaged Premises or authorize or permit any
Person to file or acquire claims of Liens against such Mortgaged Premises; (v) with respect to
Purchased Loans which are Second Mortgage Loans, a first lien Mortgage Loans secured by the same
Mortgaged Premises; and (vi) such other exceptions (if any) as are acceptable under relevant Agency
guidelines; provided that any encumbrance that is not permitted pursuant to the standards
of any relevant Investor Commitment by which the subject Purchased Loan is covered shall not be a
Permitted Encumbrance.



     “Permitted Letters of Credit” means the letters of credit described on Schedule 17.2,
outstanding as of September 30, 2008, and similar letters of credit issued by Seller after such
date provided they are reported pursuant to Section 16.5(h) with the financial statements
for the month in which they are issued.



     “Person” means and includes natural persons, corporations, limited liability companies,
limited partnerships, registered limited liability partnerships, general partnerships, 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 of them.



     “Piggyback Loan” means a Second Mortgage Loan where the Mortgaged Premises are subject to a
first Mortgage Loan that is a Purchased Loan.



     “Plan” means an employee pension benefit plan of a type described in Section 3(2) of ERISA and
that is subject to Title IV of ERISA in respect of which the Seller is an “employer” as defined in
Section 3(5) of ERISA.



     “Plan Party” is defined in Section 32.1.



     “Price Differential” means, with respect to any Transaction hereunder for any day, the
aggregate amount obtained by multiplication of the Pricing Rate for each day by the Purchase Price
for such Transaction, based on a three hundred sixty (360) day per year basis for the actual



17









 







number of days during the period commencing on (and including) the Purchase Date for such
Transaction and ending on (but excluding) the Determination Date, reduced by any such amount
previously paid by the Seller to the Agent (for Pro Rata distribution to the Buyers) with respect
to such Transaction.



     “Pricing Rate” means the LIBOR Rate plus the LIBOR Margin, the Balance Funded Rate or the
Default Pricing Rate, as determined under this Agreement.



     “Prime Rate” means at any time of any determination thereof, the rate per annum that is most
recently publicly announced by U.S. Bank as its “Prime Rate,” which may be a rate at, above or
below the rate at which U.S. Bank lends to other Persons. The Prime Rate is a reference rate and
is not necessarily the lowest rate. Any Pricing Rate based on the Prime Rate shall be adjusted as
of the effective date of each change in the Prime Rate.



     “Principal Balance” means, for any day, the advanced and unpaid principal balance of a
Purchased Loan on that day.



     “Privacy Requirements” means (a) Title V of the Gramm-Leach-Bliley Act, 15 U.S.C. 6801 et
seq., (b) federal regulations implementing such act codified at 12 CFR Parts 40, 216, 332 and 573,
(c) the Interagency Guidelines Establishing Standards For Safeguarding Customer Information and
codified at 12 CFR Parts 30, 208, 211, 225, 263, 308, 364, 568 and 570 and (d) any other applicable
federal, state and local laws, rules, regulations and orders relating to the privacy and security
of Seller’s Customer Information, as such statutes, regulations, guidelines, laws, rules and orders
may be amended from time to time.



     “Pro Rata” means in accordance with the Buyers’ respective ownership interests in the
Purchased Loans. On any day, the Buyers will each own an undivided fractional ownership interest
in and to each Purchased Loan:



     (a) if the Commitments of the Buyers are outstanding on that day, (i) whose numerator
is that Buyer’s Committed Sum for that day and (ii) whose denominator is the Maximum
Aggregate Commitment for that day; or



     (b) if the Commitments have expired or have been terminated and have not been
reinstated, (i) whose numerator is the aggregate sum of the portions of the Purchase Prices
paid by that Buyer in all Transactions outstanding on that day and (ii) whose denominator is
the aggregate sum of the Purchase Prices paid by all Buyers in all such Transactions
outstanding on the day;



subject to adjustment pursuant to Section 3.11.



     “Property” means any interest of a Person in any kind of property, whether real, personal or
mixed, tangible or intangible, including the Mortgage Loans.



     “Purchase Date” means, for any Transaction, the date on which the Seller is to convey the
subject Purchased Loans to the Buyers.




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     “Purchase Price” means (a) on the relevant Purchase Date, the price at which the Purchased
Loans in a Transaction are sold by the Seller to the Buyers, such price being the Purchased Loans’
initial Purchase Value, and (b) thereafter, except where the Agent and the Seller agree otherwise,
such Purchased Loans’ Purchase Value decreased by the amount of any cash transferred in respect of
such Purchased Loans (as determined by the Agent) by the Seller to the Agent pursuant to
Sections 3.4 and 6.1 (absent manifest error, the Agent’s determination of for which
Transaction(s) cash was transferred by the Seller to the Agent shall be conclusive and binding).



     “Purchase Price Decrease” means a reduction in the outstanding Purchase Price for Purchased
Loans without a termination of a Transaction or portion thereof as described in Section
3.4(c).



     “Purchase Value” means the lesser of (a) (i) the Buyers’ Margin Percentage for a Purchased
Loan multiplied by (ii) the least of:




     (A) the face principal amount of the related Mortgage Note;




     (B) the unpaid Principal Balance of such Purchased Loan;




     (C) the price to be paid for such Purchased Loan under an Investor Commitment or the
weighted average price under unused Investor Commitments into which such Purchased Loan is
eligible for delivery; and




     (D) the Seller’s origination or acquisition price for such Purchased Loan.


and, (b) at the discretion of the Agent, ninety-five percent (95%) of the Market Value of such
Purchased Loan; provided, that (i) the Purchase Value for Purchased Loans in excess of the
sublimits set forth in Section 4.2 shall be zero and, (ii) the Purchase Value for any
Purchased Loan that is not an Eligible Loan shall be zero.




     “Purchased Loans” means the Eligible Loans sold by the Seller to the Buyers in Transactions,
and any Eligible Loans substituted therefor in accordance with Section 11. The term
“Purchased Loans” with respect to any Transaction at any time shall also include Additional
Purchased Loans delivered pursuant to Section 6.1.



     “Purchased Loans Curtailment Report” means a written report from the Seller to the Agent,
attached to the compliance certificate in the form of Exhibit C, listing Purchased Loans on
which an unscheduled principal payment, prepayment or reduction of more than an amount equal to one
regularly scheduled principal and interest installment payment was made in the preceding month, and
their resulting new Principal Balances.



19









 





     “Purchased Loans Support” means all property (real or personal) assigned, hypothecated or
otherwise securing any Purchased Loans and includes any security agreement or other agreement
granting a lien or security interest in such real or personal property, including:




     (1) all Loan Papers, whether now owned or hereafter acquired, related to, and all
private mortgage insurance on, any Purchased Loans, and all renewals, extensions,
modifications and replacements of any of them;




     (2) all rights, liens, security interests, guarantees, insurance agreements and
assignments accruing or to accrue to the benefit of the Seller in respect of any Purchased
Loan;




     (3) all of the Seller’s rights, powers, privileges, benefits and remedies under each
and every paper now or hereafter securing, insuring, guaranteeing or otherwise relating to
or delivered in connection with any Purchased Loan, including all guaranties, lien priority
agreements, security agreements, deeds of trust, Purchased Loans assignments, subordination
agreements, intercreditor agreements, negative pledge agreements, loan agreements,
management agreements, development agreements, design professional agreements, payment,
performance or completion bonds, title and casualty insurance policies and mortgage guaranty
or insurance contracts;




     (4) all of the Seller’s rights, to the extent assignable, in, to and under any and all
commitments issued by (i) Ginnie Mae, Fannie Mae, Freddie Mac, another mortgage company or
any other investor or any Buyer or securities issuer to guarantee, purchase or invest in any
of the Purchased Loans or any MBS based on or backed by any of them or (ii) any broker or
investor to purchase any MBS, whether evidenced by book entry or certificate, representing
or secured by any interest in any of the Purchased Loans, together with the proceeds arising
from or pursuant to any and all such commitments;




     (5) all rights under every Hazard Insurance Policy relating to real estate securing a
Purchased Loan for the benefit of the creditor of such Purchased Loan, the proceeds of all
errors and omissions insurance policies and all rights under any blanket hazard insurance
policies to the extent they relate to any Purchased Loan or its security and all hazard
insurance or condemnation proceeds paid or payable with respect to any of the Purchased
Loans and/or any of the property securing payment of any of the Purchased Loans or covered
by any related instrument;




     (6) all present and future claims and rights of the Seller to have, demand, receive,
recover, obtain and retain payments from, and all proceeds of any nature paid or payable by,
any governmental, quasi-governmental or private mortgage guarantor or insurer (including VA,
FHA or any other Person) with respect to any of the Purchased Loans;




     (7) all tax, insurance, maintenance fee and other escrow deposits or payments made by
the Customers under such Purchased Loans (the Buyers’ Agent and the Buyers acknowledge that
the Seller’s rights in such deposits are limited to the rights of an escrow



20









 







agent and such other rights, if any, in and to such deposits as are accorded by the
Purchased Loans and related papers); and




     (8) all monies, accounts, deposit accounts, payment intangibles and general
intangibles, however designated or maintained, constituting or representing so-called
“completion escrow” funds or “holdbacks,” and being Purchased Loans’ proceeds recorded as
disbursed but that have not been paid over to the seller of the subject Mortgaged Premises
(the purchase of which is financed by such Purchased Loan), but that are instead being held
by the Seller or by a third party escrow agent pending completion of specified improvements
or landscaping requirements for such Mortgaged Premises.



     “Qualifying Balances” means, with respect to any Buyer, for any day, the lesser of (a) the
amount of such Buyer’s outstanding Purchase Price on Open Transactions on such day, and (b) the sum
of the collected balances in all identified non-interest bearing accounts of the Seller maintained
with such Buyer less (i) amounts necessary to satisfy reserve and deposit requirements and (ii)
amounts required to compensate such Buyer for services rendered in accordance with such Buyer’s
system of charges for services to similar accounts.



     “Recourse Servicing” means Servicing Rights under a Servicing Agreement with respect to which
the Servicer is obligated to repurchase or indemnify the holder of the related Mortgage Loans in
respect of defaults on such Mortgage Loans at any time during the term of such Mortgage Loans.



     “Register” is defined in Section 22.17(c).



     “Regular Transaction” means a Transaction funded by all Buyers, rather than by U.S. Bank under
the Swing Line.



     “Regulation T” means Regulation T promulgated by the Board of Governors of the Federal Reserve
System, 12 C.F.R. Part 220, or any other regulation when promulgated to replace the prior
Regulation T and having substantially the same function.



     “Regulation U” means Regulation U promulgated by the Board of Governors of the Federal Reserve
System, 12 C.F.R. Part 221, or any other regulation when promulgated to replace the prior
Regulation U and having substantially the same function.



     “Regulation X” means Regulation X promulgated by the Board of Governors of the Federal Reserve
System, 12 C.F.R. Part 224, or any other regulation when promulgated to replace the prior
Regulation X and having substantially the same function.



     “REO” means real property improved by a one- through four-family residence owned following
judicial or nonjudicial foreclosure (or conveyance by deed in lieu of foreclosure) of a Mortgage
securing a Single-family Loan.



     “Repurchase Date” means the date on which the Seller is to repurchase Purchased Loans from the
Buyers, being the earlier of (a) the date when the Approved Investor is to purchase such



21









 







Purchased Loans, and (b) any date determined by application of the provisions of Section
3.4 or 18.



     “Repurchase Documents” means and includes this Agreement, the Custody Agreement, any financing
statements or other papers now or hereafter authorized, executed or issued pursuant to this
Agreement, and any renewal, extension, rearrangement, increase, supplement, modification or
restatement of any of them.



     “Repurchase Price” means the price at which Purchased Loans are to be resold by the Buyers to
the Seller upon termination of a Transaction (including Transactions terminable upon demand), which
will be determined in each case as the sum of (x) the Purchase Price and (y) the Price Differential
as of the date of such determination.



     “Repurchase Settlement Account” means the Seller’s non-interest bearing demand deposit account
to be maintained with U.S. Bank and described on Schedule 1.2, to be used for (a) the
Agent’s and the Buyers’ deposits of Purchase Price payments for Purchased Loans (including any
Swing Line Purchases) to the extent not deposited directly in the Funding Account, (b) any
principal payments received by the Agent or the Custodian (other than regular principal and
interest payments) on any Purchased Loans; (c) the Agent’s deposit of Repurchase Price payments
received from the Seller or from an Approved Investor for the Seller’s account for distribution to
the Buyers and (d) only if and when (i) no Default has occurred unless it has been either cured by
the Seller or waived in writing by the Agent (acting with the requisite consent of the Buyers as
provided in this Agreement) and (ii) no Event of Default has occurred unless the Agent has declared
in writing that it has been cured or waived, transfer to the Operating Account of proceeds of sales
or other dispositions of Purchased Loans to an Approved Investor in excess (if any) of the
Repurchase Price of such Purchased Loan. The Repurchase Settlement Account  shall be a
blocked account from which the Seller shall have no right to directly withdraw funds, but instead
such funds may be withdrawn or paid out only against the order of an authorized officer of the
Agent (acting with the requisite consent of the Buyers as provided herein).



     “Request/Confirmation” means letters substantially in the form of Exhibit A, delivered
pursuant to Section 3.1 and their related Mortgage Transmission Files.



     “Required Buyers” means, for any day, Buyers (a) whose Commitments comprise at least sixty-six
and two-thirds percent (66-2/3%) of the Maximum Aggregate Commitment under this Agreement, or (b)
who own at least sixty-six and two-thirds percent (66-2/3%) of the Purchased Loans owned by the
Buyers on that day if on or before that day the Commitments have expired or have been terminated
and have not been reinstated.



     “Second Mortgage Loan” means a Single-family Loan as to which the Lien against the related
Mortgaged Premises is second and inferior to the Lien of a single senior Mortgage Loan.



     “Segment” means that portion of an Open Transaction designated as either a LIBOR Segment or a
Balance Funded Segment.



     “Seller’s Customer” means any natural person who has applied to the Seller for a financial
product or service, has obtained any financial product or service from the Seller or has a Mortgage
Loan that is serviced or subserviced by the Seller.



22









 





     “Seller’s Customer Information” means any information or records in any form (written,
electronic or otherwise) containing a Seller’s Customer’s personal information or identity,
including such Seller’s Customer’s name, address, telephone number, loan number, loan payment
history, delinquency status, insurance carrier or payment information, tax amount or payment
information and the fact that such Seller’s Customer has a relationship with the Seller.



     “Serviced Loans” means all Mortgage Loans serviced or required to be serviced by the Seller
under any Servicing Agreement, irrespective of whether the actual servicing is done by another
Person (a subservicer) retained by the Seller for that purpose.



     “Servicer” means, initially the Seller, and upon termination of the Seller’s right to service
the Purchase Loans pursuant to the provisions of Section 19.7, the Backup Servicer or such
other Person (including the Agent) as the Agent may appoint as Servicer.



     “Servicing Agreement” means, with respect to any Person, the arrangement, whether or not in
writing, pursuant to which that Person acts as servicer of Mortgage Loans, whether owned by that
Person or by others.



     “Servicing Functions” means, with respect to the servicing of Mortgage Loans, the collection
of payments for the reduction of principal and application of interest, collection of amounts held
or to be held in escrow for payment of taxes, insurance and other escrow items and payment of such
taxes and insurance from amounts so collected, foreclosure services, and all other actions required
to conform with Accepted Servicing Practices.



     “Servicing Rights” means the rights and obligations to administer and service a Mortgage Loan,
including, without limitation, the rights and obligations to: ensure the taxes and insurance are
paid, provide foreclosure services, provide full escrow administration and perform any other
obligations required by any owner of a Mortgage Loan, collect the payments for the reduction of
principal and application of interest, and manage and remit collected payments.



     “Single-family Loan” means a Mortgage Loan that is secured by a Mortgage covering real
property improved by a one-, two-, three- or four-family residence.



     “SIPA” means the Securities Investors Protection Act of 1970, 15 U.S.C. §78a et. seq., as
amended.



     “Solvent” means, for any Person, that (a) the fair market value of its assets exceeds its
liabilities, (b) it has sufficient cash flow to enable it to pay its debts as they mature, and (c)
it does not have unreasonably small capital to conduct its business.



     “Statement Date” means December 31, 2007.



     “Statement Date Financial Statements” is defined in Section 15.2(f).



     “Sublimit” means one or more (as the context requires) of the sublimits described in
Section 4.2.



23









 





     “Subordination Agreement” means a written subordination agreement in form and substance
satisfactory to and approved by the Agent that subordinates (x) all present and future debts and
obligations owing by the Seller to the Person signing such subordination agreement to (y) the
Obligations, in both right of payment and lien priority, including standstill and blockage
provisions approved by the Agent.



     “Subservicer” means any entity permitted by the Agent to act as a subservicer of the Servicer
who shall perform Servicing Functions under a Subservicer Instruction Letter.



     “Subservicer Instruction Letter” means an instruction letter to a Subservicer in form and
substance agreed to by the Seller and the Agent.



     “Subsidiary” means any corporation, association or other business entity (including a trust)
in which any Person (directly or through one or more other Subsidiaries or other types of
intermediaries), owns or controls:




     (a) more than fifty percent (50%) of the total voting power or shares of stock entitled
to vote in the election of its directors, managers or trustees; or




     (b) more than ninety percent (90%) of the total assets and more than ninety percent
(90%) of the total equity through the ownership of capital stock (which may be non-voting)
or a similar device or indicia of equity ownership.



     “Super Jumbo Mortgage Loan” means a fully documented first lien Mortgage Loan that would be a
Jumbo Mortgage Loan except that the principal balance is greater than One Million Dollars
($1,000,000).



     “Supplemental Papers” means the Loan Papers for a particular Loan other than its Basic Papers.



     “Swing Line” means the short term revolving Eligible Loans purchase facility provided for in
Section 2.4 under which U.S. Bank will fund (as “Swing Line Purchases”) purchases of
Eligible Loans to bridge the Seller’s daily Transactions.



     “Swing Line Limit” means, for any day, the lesser of (x) $60,000,000, and (y) the Maximum
Aggregate Commitment minus the Aggregate Outstanding Purchase Price outstanding on that day, being
the maximum amount that may be funded and outstanding on that day under the Swing Line.



     “Swing Line Refunding Due Date” for each Transaction funded under the Swing Line means the
Business Day on which U.S. Bank shall elect to have such Swing Line Transaction funded by the
Buyers pursuant to Section 2.5 (provided that U.S. Bank shall elect to have such Swing Line
Transactions so funded no less than once per week) following the Business Day when U.S. Bank funds
such Transaction under the Swing Line; provided that U.S. Bank agrees not to exercise such
discretion to choose a due date in a manner that would materially affect the Seller’s ability to
complete a Transaction under this Agreement unless a Default has occurred that has not been cured
by the Seller or declared in writing by the Agent to have been waived or



24









 







any Event of Default has occurred that the Agent has not declared in writing to have been
cured or waived, in each case, as provided in Section 22.



     “Swing Line Transaction” means a Transaction funded by U.S. Bank under the Swing Line.



     “Taxes” is defined in Section 7.1.



     “Termination Date” means the earlier of (i) November 11, 2009, or (ii) the date when the
Buyers’ Commitments are terminated pursuant to this Agreement, by order of any Governmental
Authority or by operation of law.



     “Total Liabilities” means all liabilities of the Seller and its Subsidiaries, including
nonrecourse debt as, in accordance with GAAP, are reflected on the Seller’s consolidated balance
sheet, and also including all contingent liabilities and obligations (including Recourse Servicing,
recourse sale and other recourse obligations, and guaranty, indemnity and mortgage loan repurchase
obligations), but excluding Seller’s obligations under Permitted Letters of Credit.



     “Transaction” is defined in the Recitals.



     “UCC” means the Uniform Commercial Code or similar Laws of the applicable jurisdiction, as
amended from time to time.



     “VA” means the Department of Veterans Affairs and any successor.



     “Wet Loan” means a Purchased Loan originated and owned by the Seller immediately prior to
being purchased by the Buyers:




     (a) that has been closed on or prior to the Business Day on which the Purchase Price is
paid therefor, by a title agency or closing attorney, and that would qualify as an Eligible
Loan except that some or all of its Basic Papers are in transit to, but have not yet been
received by, the Custodian so as to satisfy all requirements to permit the Seller to sell it
pursuant to this Agreement without restriction;




     (b) that the Seller reasonably expects to fully qualify as an Eligible Loan when the
original Basic Papers have been received by the Custodian;




     (c) as to which the Seller actually and reasonably expects that such full qualification
can and will be achieved on or before five (5) Business Days after the relevant Purchase
Date; and




     (d) for which the Seller has delivered to the Custodian a Mortgage Loan Transmission
File on or before the Purchase Date, submission of which to the Custodian shall constitute
the Seller’s certification to the Custodian, the Buyers and the Agent that a complete File
as to such Purchased Loan, including the Basic Papers, exists and that such File is in the
possession of either the title agent or closing attorney that closed such Purchased Loan,
the Seller or that such File has been or will be shipped to the Custodian.



25









 




Each Wet Loan that satisfies the foregoing requirements shall be an Eligible Loan subject to the
condition subsequent of physical delivery of its Mortgage Note, Mortgage and all other Basic
Papers, to the Custodian on or before five (5) Business Days after the relevant Purchase Date.
Each Wet Loan sold by the Seller shall be irrevocably deemed purchased by the Buyers and shall
automatically become a Purchased Loan effective on the date of the related Transaction, and the
Seller shall take all steps necessary or appropriate to cause the sale to the Buyers and delivery
to the Custodian of such Wet Loan and its Basic Papers to be completed, perfected and continued in
all respects, including causing the original promissory note evidencing such Purchased Loan to be
physically delivered to the Custodian within five (5) Business Days after the relevant Purchase
Date, and, if requested by the Agent, to give written notice to any title agent, closing attorney
or other Person in possession of the Basic Papers for such Purchased Loan of the Buyers’ purchase
of such Purchased Loan. Upon the Custodian’s receipt of the Basic Papers relative to a Wet Loan
such Purchased Loan shall no longer be considered a Wet Loan.




     “Wet Loans Sublimit” is defined in Section 4.2.



     1.3. Other Definitional Provisions.Accounting terms not otherwise defined shall have the
meanings given them under GAAP.




     (a) Defined terms may be used in the singular or the plural, as the context requires.




     (b) Except where otherwise specified, all times of day used in the Repurchase Documents
are local (U.S. Mountain Time Zone) times in Denver, Colorado.




     (c) Unless the context plainly otherwise requires (e.g., if preceded by the word
“not”), wherever the word “including” or a similar word is used in the Repurchase Documents,
it shall be read as if it were written, “including by way of example but without in any way
limiting the generality of the foregoing concept or description.”




     (d) Unless the context plainly otherwise requires, wherever the term “Agent” is used in
this Agreement (excluding Section 22), it shall be read as if it were written “the
Agent (as agent and representative of the Buyers).”



2 The Buyers’ Commitments.




     2.1. The Buyers’ Commitments to Purchase. Subject to the terms and conditions of this
Agreement and provided no Default or Event of Default has occurred that the Agent has not declared
in writing to have been cured or waived (or, if one has occurred and not been so declared cured or
waived, if all of the Buyers, in their sole discretion and with or without waiving such Default or
Event of Default, have elected in writing that Transactions under this Agreement shall continue
nonetheless), the Buyers agree to make revolving purchases of Eligible Loans on a servicing
released basis through the
Termination Date, so long as the Aggregate Outstanding Purchase Price does not exceed the
Maximum Aggregate Commitment and so long as each Buyer’s Committed Sum is not exceeded. The
Buyers’ respective Committed Sums and the Maximum Aggregate Commitment are set forth on
Schedule BC in effect at the relevant time, as it may have been amended or restated
pursuant to this Agreement. Upon the joinder of additional Buyer(s), if any, the parties agree to
approve in writing revised and updated versions



26









 







of Schedule BC. The fractions to be
applied to determine the respective Funding Shares of the Buyers for any day are their respective
Committed Sums divided by the Maximum Aggregate Commitment for that day. Each Buyer shall be
obligated to fund only that Buyer’s own Funding Share of any Transaction requested, and no Buyer
shall be obligated to the Seller or any other Buyer to fund a greater share of any Transaction. No
Buyer shall be excused from funding its applicable Funding Share of any Transaction merely because
any other Buyer has failed or refused to fund its relevant Funding Share of that or any other
Transaction. If any Buyer fails to fund its Funding Share of any Transaction, the Agent (in its
sole and absolute discretion) may choose to fund the amount that such Nonfunding Buyer failed or
refused to fund, or the Agent as a Buyer and the other Buyers who are willing to do so shall have
the right (but no obligation) to do so in the proportion that the Committed Sum of each bears to
the total Committed Sums of all Buyers that have funded (or are funding) their own Funding Shares
of that Transaction and that are willing to fund part of the Funding Share of such Nonfunding
Buyer. Should the Agent and/or any other Buyer(s) fund any or all of the Nonfunding Buyer’s
Funding Share of any Transaction, then the Nonfunding Buyer shall have the obligation to deliver
such amount to the Agent (for distribution to the Buyer(s) who funded it) in immediately available
funds on the next Business Day. Regardless of whether the other Buyers fund the Funding Share of
the Nonfunding Buyer, the respective ownership interests of the Buyers in the Transaction shall be
adjusted as provided in Section 3.11. The obligations of the Buyers hereunder are several
and not joint.



     2.2. Expiration or Termination of the Commitments. Unless extended in writing or terminated
earlier in accordance with this Agreement, the Buyers’ Commitments (including U.S. Bank’s Swing
Line Commitment) shall automatically expire at the close of business on the Termination Date,
without any requirement for notice or any other action by the Agent, any of the Buyers or any other
Person.



     2.3. Request for Increase in Maximum Aggregate Commitment. If the Seller shall request to the
Agent an increase in the Maximum Aggregate Commitment to a specified amount up to One Hundred Fifty
Million Dollars ($150,000,000), the Agent shall use its best efforts to obtain increased Committed
Sums from existing Buyers, new Commitments from prospective new Buyers or such combination thereof
as the Agent shall elect, to achieve such requested increase; provided that no Default has
occurred that has not been cured before it has become an Event of Default, and no Event of Default
has occurred that the Agent has not declared in writing to have been waived or cured. No Buyer
will have any obligation to increase its Committed Sum. If an increase in the Maximum Aggregate
Commitment is achieved, then (i) the Pro Rata ownership interest in the Purchased Loans of each
Buyer shall, following funding by the Buyers increasing their Commitment Sums or the new Buyers,
automatically be adjusted proportionately and (ii) Schedule BC shall be updated and the
update executed and delivered by the Agent to the Seller and each of the Buyers and, effective as
of the
date specified on such update, shall each automatically supersede and replace the
then-existing corresponding schedule for all purposes.



     2.4. Swing Line Commitment. In addition to its Commitment under Section 2.1, U.S.
Bank agrees to fund revolving Swing Line Transactions for aggregate Purchase Prices which do not on
any day exceed the Swing Line Limit for the purpose of initially funding requested Transactions.



27









 





     2.5. Swing Line Transactions.




     (a) The Seller shall have the right to request and obtain a Swing Line Transaction:




     (i) only if such Swing Line Transaction fully qualifies in all respects for
funding as Regular Transaction under this Agreement except that it may have been
requested later in the day;




     (ii) provided that no Default has occurred that has not been cured before it
has become an Event of Default, and no Event of Default has occurred that the Agent
has not declared in writing to have been waived or cured and all conditions
precedent in Section 14.2 have been satisfied;




     (iii) so long as the Swing Line Limit is not exceeded;




     (iv) provided that the Mortgage Loan Transmission Files for the proposed
Transaction is received by U.S. Bank by no later than 1:00 p.m. on the Business Day
such Transaction is to be funded; and




     (v) provided that neither the Seller nor U.S. Bank is aware of any reason why
the requested Transaction cannot or will not be fully funded by the Buyers on the
first Swing Line Refunding Due Date following the Business Day on which the Swing
Line Transaction is to be funded.




     (b) All Swing Line Transactions shall have a Price Differential from the date funded
until the date repaid and the Repurchase Price therefor shall be due and payable to U.S.
Bank at the same rate(s) as would be applicable if such Swing Line Transactions had been
funded as Regular Transactions by all Buyers, instead of having been funded by U.S. Bank
alone as Swing Line Transactions.




     (c) Each Swing Line Transaction shall be re-funded on its Swing Line Refunding Due Date
by the Agent’s paying over to U.S. Bank out of the Repurchase Settlement Account, and U.S.
Bank’s applying against such Swing Line Transaction, an amount equal to the Purchase Price
of the Transaction funded by all of the Buyers in their Funding Shares of such Purchase
Price on that day against the same Transaction that was
initially funded as a Swing Line Transaction at which time such Transaction shall be
deemed to be a Regular Transaction.




     (d) All accrued Price Differential on Swing Line Transactions shall be due and payable
by the Seller to the Agent (for distribution to U.S. Bank) on the Price Differential payment
due date (determined under Section 5) next following the date of the Swing Line
Transaction.



     2.6. Optional Reduction or Termination of Buyers’ Commitments. The Seller may, at any time,
without premium or penalty, upon not less than ten (10) Business Days prior written notice to the
Agent, reduce or terminate the Maximum Aggregate Commitment, ratably, with any such reduction in a
minimum aggregate amount for all the Buyers of Ten Million Dollars



28









 






($10,000,000), or, if more, in
an integral multiple of Ten Million Dollars ($10,000,000); provided, however, that
(a) the Seller may reduce the Maximum Aggregate Commitment no more than once each calendar quarter,
(b) at no time may the Aggregate Outstanding Purchase Price exceed the Maximum Aggregate Commitment
after giving effect to any such reduction and, (c) unless terminated in full, the Maximum Aggregate
Commitment shall not be reduced to less than Fifty Million Dollars ($50,000,000). Upon termination
of the Buyers’ Commitments pursuant to this Section 2.6, the Seller shall pay to the Agent
for the ratable benefit of the Buyers the full amount of all outstanding Obligations under the
Repurchase Documents.



3 Initiation; Termination.




     3.1. Seller Request; Agent Confirmation.




     (a) Any request to enter into a Transaction shall be made by notice to the Agent at the
initiation of the Seller. To request a Transaction, the Seller shall deliver to the Agent
and the Custodian the Mortgage Loan Transmission File for each of the Eligible Loans subject
to the Transaction by electronic transmission.




     (b) If the Seller submits a Mortgage Loan Transmission File to the Agent and the
Custodian and:




     (i) it is received before 1:00 p.m. on the proposed Purchase Date, the
Transaction shall be funded as a Swing Line Transaction;




     (ii) it is received after 1:00 p.m. on the proposed Purchase Date, U.S. Bank
shall either, at its election, (i) fund the requested Transaction as a Swing Line
Transaction on that same day, or (ii) arrange for its funding on the next Business
Day as a Swing Line Transaction.




     (c) The Seller shall deliver a letter substantially in the form of Exhibit A to
the Agent no later than 5:00 p.m. on the day the Seller submits each Mortgage Loan
Transmission File.


U.S. Bank shall have no obligation to fund any such late-requested Transaction as is described in
Section 3.1(b)(ii) as a Swing Line Transaction if all of the requirements of Section
2.5 and this Section 3 are not satisfied, although U.S. Bank may elect to do so. If
U.S. Bank does not elect to do so, then U.S. Bank shall fund such requested Transaction as a Swing
Line Transaction on the next succeeding Business Day, provided that all conditions to its funding
(including the requirements of Section 2.5, this Section 3 and Section 14)
are then satisfied.




     3.2. Syndication of Purchases.



     U.S. Bank shall notify each Buyer no later than 1:00 p.m. on each Swing Line Refunding Date of
such Buyer’s Funding Share of the Swing Line Transactions that are to be converted to Regular
Transactions on such date. If U.S. Bank has funded the requested Transaction (or any part of it)
as a Swing Line Transaction, and if at the time such Swing Line Transaction was funded, U.S. Bank
reasonably believed that all of the conditions set forth in Section 2.5 were satisfied in
all material respects, then the other Buyers shall be unconditionally and irrevocably



29









 







obligated to
timely fund their respective Funding Shares of the Transaction that was so initially funded as a
Swing Line Transaction, upon notice from U.S. Bank received no later than 1:00 p.m. on the Swing
Line Refunding Due Date, irrespective of whether in the meantime any Default or Event of Default
has occurred or been discovered, and irrespective of whether in the meantime some or all of the
Buyers’ Commitments have lapsed, expired or been canceled, rescinded or terminated with or without
cause, or have been waived, released or excused for any reason whatsoever, so that (a) the Swing
Line is paid down by the required amount on each Swing Line Refunding Due Date, (b) all Price
Differential accrued on Swing Line Transactions to the applicable Swing Line Refunding Due Date
shall be due and payable by the Seller to the Agent (for distribution to U.S. Bank) within two (2)
Business Days after the Agent bills the Seller for such Price Differential, but in no event later
than the Termination Date, and (c) all Swing Line Transactions are converted to Regular
Transactions with each Buyer having funded its Funding Share thereof. The Agent shall disburse to
U.S. Bank from the Repurchase Settlement Account an amount equal to the sum of the Funding Shares
funded by all of the other Buyers on that day against the same Transaction that was initially
funded as a Swing Line Transaction (excluding U.S. Bank’s own Funding Share thereof);
provided that if a Buyer other than U.S. Bank advises the Agent by telephone and confirms
the advice by fax that such Buyer has placed all of its Funding Share on the federal funds wire to
the Repurchase Settlement Account, the Agent shall continue to keep the Swing Line Transaction
outstanding to the extent of that Buyer’s Funding Share so wired until such Buyer’s Funding Share
is received in the Repurchase Settlement Account, and the Agent shall then repay U.S. Bank that
still-outstanding portion of the Swing Line Transaction from the Repurchase Settlement Account, and
the Price Differential accrued at the Pricing Rate(s) applicable to the Transaction on that Funding
Share for the period from (and including) the relevant Swing Line Refunding Due Date to (but
excluding) the date such Buyer’s Funding Share is received by the Agent shall belong to U.S. Bank;
provided, further that in no event shall U.S. Bank have any obligation to continue such
portion of any Swing Line Transaction outstanding if and to the extent, if any, that doing so would
cause the total amount funded by U.S. Bank and outstanding to exceed the Swing Line Limit. If any
Buyer fails to wire to the Repurchase Settlement Account such Buyer’s Funding Share of any Regular
Transaction that was initially funded as a Swing Line Transaction (i.e., excluding any such failure
caused by a federal funds wire delay) so that such funds are received by 3:00 p.m. on the Swing
Line Refunding Due Date, then that Buyer shall also be obligated to pay to U.S. Bank Price
Differential on the Funding Share so due from such Buyer to U.S. Bank at the Federal Funds Rate
from (and including) such Swing Line Refunding Due Date to (but excluding) the date of payment of
such Funding Share.



     3.3. Request/Confirmation. Each Request/Confirmation shall identify the Agent and the Seller and
set forth:




     (a) the Purchase Date applicable to the relevant Transaction;




     (b) for each of the Eligible Loans to be sold, the Purchase Price ; and




     (c) any additional terms or conditions of the Transaction mutually agreed to by the
Agent and the Seller.



30









 




Each Request/Confirmation shall be binding on the parties, unless written notice of objection is
given by the objecting party to the other party within one (1) Business Day after the Agent has
received the completed Request/Confirmation from the Seller. In the event of any conflict between
the terms of a Request/Confirmation and this Agreement, this Agreement shall prevail.




     3.4. Transaction Termination; Purchase Price Decrease.




     (a) Automatic Termination. Each Transaction, or applicable portion thereof, will
automatically terminate on the earlier of (i) the date or dates when the subject Purchased
Loans are purchased by Approved Investor(s) and (ii) the Termination Date. Upon any such
automatic termination, the Seller shall immediately repurchase the Purchased Loans in
accordance with this Section 3.




     (b) Termination Upon Occurrence of Disqualifier. If any Disqualifier occurs in respect
of a Purchased Loan, the Seller shall immediately repurchase such Purchased Loan in
accordance with this Section 3.




     (c) How Terminations will be Effected. Termination of every Transaction will be
effected by (x) the Buyers’ reconveyance to the Seller or its designee of the Purchased
Loans, servicing released, and payment of any Income in respect thereof received by the
Agent and not previously either paid to the Seller or applied as a credit to the Seller’s
Obligations, against (y) payment of the Repurchase Price in immediately available funds to
the account referred to in Section 3.5 by 1:00 p.m. on the Repurchase Date, so that
the Agent receives the Repurchase Price (for Pro Rata distribution to the Buyers) in
immediately available funds on that same Business Day; provided that the portion of
the
Repurchase Price attributable to accrued and unpaid Price Differential for the
Repurchased Loan shall not be due until two (2) Business Days after the Agent bills the
Seller therefor; provided further that all accrued and unpaid Price Differential
shall be due and payable on the Termination Date.




     (d) Purchase Price Decrease. The Seller may effectuate a Purchase Price Decrease on
any Business Day by delivery to the Agent in immediately available funds of an amount
specified by the Seller as a Purchase Price Decrease on that Business Day. No Purchased
Loans shall be, or be deemed to be, repurchased in connection with a Purchase Price
Decrease.



     3.5. Place for Payments of Repurchase Prices. All Repurchase Price payments shall be paid to
the Repurchase Settlement Account.



     3.6. Withdrawals from and Credits to Operating Account. If the Seller fails for any reason to
repurchase any one or more Purchased Loans on the relevant Repurchase Date, to pay any Price
Differential or fees when due or to satisfy any Margin Call in the manner and by the time specified
in Sections 3.4 and 3.5, the Agent is hereby specifically and irrevocably
authorized to withdraw funds from the Operating Account or any other account of the Seller in an
amount equal to the sum of the Repurchase Prices of all Purchased Loans that are Past Due, plus
accrued, unpaid Price Differential or fees, plus Margin Deficit (if applicable), on that day and
cause application of such funds withdrawn to the payment of the Repurchase Prices of such



31









 







Purchased
Loans, Price Differential or fees, and Margin Deficit (if applicable) in such order and manner as
the Agent may elect and if funds in the Operating Account or any other account of the Seller are
insufficient to pay the Repurchase Prices of all such Purchased Loans, the Seller shall pay the
amount due hereunder on demand by wire to the Repurchase Settlement Account. As long as no Default
or Event of Default has occurred and is continuing, or thereafter with the consent of the Required
Buyers, the Agent shall, at the written request of the Seller, cause any amount deposited in the
Repurchase Settlement Account in excess of amounts required hereunder to be transferred to the
Operating Account.



     3.7. Transfer of Existing Mortgage Loan Portfolio.




     (a) The Agent, some of the Buyers and the Seller are also parties to a Fourth Amended
and Restated Credit Agreement dated as of September 5, 2006 (as amended, the “Warehousing
Credit Agreement”), pursuant to which such Buyers (the “Existing Lenders”) and the Agent
(acting as agent for the lenders party to the Warehousing Credit Agreement) have made
Advances (defined in the Warehousing Credit Agreement) in the nature of loans to the Seller.
Repayment of these Advances and all interest accrued thereon, and payment and performance
of the other obligations of the Seller under the Warehousing Credit Agreement, are secured
by a pledge and grant of a first priority security interest in certain Mortgage Loans and
related collateral delivered by the Seller to the Agent under the Warehousing Credit
Agreement (collectively, the “Existing Mortgage Loan Portfolio”), all on the terms and
conditions set forth therein and in the
Second Amended and Restated Pledge and Security Agreement referred to therein. The
Seller has requested that it be permitted to sell the Existing Mortgage Loan Portfolio, on
the terms and conditions set forth herein, to the Agent for the benefit of the Buyers, and
this Section 3.7 and Section 3.8 memorialize the parties’ further agreements
on that subject.




     (b) Concurrently with the initial Transaction hereunder, the Agent (acting as Agent for
the Existing Buyers) shall disburse the proceeds of such Transaction and additional funds
made available to it by the Seller, if required, to the Existing Lenders ratably in
accordance with their advances against the Existing Mortgage Loan Portfolio. The
Warehousing Credit Agreement shall thereupon be terminated (except for any provisions
thereof that by their terms survive termination of said agreement).




     (c) As part of the initial Transaction hereunder, subject to the terms and conditions
of this Agreement, the Buyers shall purchase all Eligible Loans in the Existing Mortgage
Loan Portfolio on the terms set forth in this Agreement.



     3.8. Special Terms Applicable to the Existing Mortgage Loan Portfolio. The following
changes in the terms and conditions of this Agreement are applicable to the Existing Mortgage Loan
Portfolio and the Mortgage Loans therein:




     (a) The Repurchase Date for each such Mortgage Loan under Section 3.4 (and as
set forth in the Disqualifiers on Schedule DQ) shall be measured from the date on
which the Mortgage Loan was first pledged by the Seller pursuant to the Warehousing Credit
Agreement. The requirement of Schedule EL (9) that each Eligible Loan be



32









 







originated
no more than 30 days prior to its Purchase Date shall be measured from the date on which the
Mortgage Loan was first pledged by the Seller pursuant to the Warehousing Credit Agreement
(i.e., that it was originated no more than 30 days prior to the date it was first pledged by
the Seller pursuant to the Warehousing Credit Agreement). The prior pledge of an Eligible
Loan that is a part of the Existing Mortgage Loan Portfolio pursuant to the Warehousing
Credit Agreement shall not violate any covenant, representation or warranty under this
Agreement regarding a prior pledge of any Eligible Loan.




     (b) Each such Mortgage Loan must be an Eligible Loan at the time of purchase under this
Agreement unless otherwise agreed by all Buyers and the Seller.




     (c) The Seller makes the following additional representations and warranties in
connection with the sale and purchase of the Existing Mortgage Loan Portfolio: the Seller
has not filed a petition in any case, action or proceeding under the Bankruptcy Code or any
similar state law; no petition in any case, action or proceeding under the Bankruptcy Code
or any similar state laws have been filed against the Seller that has not been dismissed or
vacated; and the Seller has not filed any answer or otherwise admitted in writing any
insolvency or inability to pay its debts or has made an assignment for the benefit of
creditors or consented to the appointment of a receiver or trustee of all or a material part
of its property. The Seller has no intention to make any such filing or
admission in the next ninety (90) days. The sale and purchase of the Existing Mortgage
Loan Portfolio will not be a preference, voidable transfer, fraudulent conveyance, or
otherwise in violation of the Bankruptcy Code or any similar state or federal law.



     3.9. Delivery of Additional Mortgage Loans. The Seller may from time to time deliver to the
Agent Mortgage Loans that are also Eligible Loans without entering into a new Transaction by
providing to the Agent the documents required under Section 3.1 with respect to such
Mortgage Loans. The Seller and the Buyers agree that such Mortgage Loans delivered pursuant to
this Section 3.9 shall be treated as Purchased Loans subject to the existing Transactions
hereunder from the date of such delivery.



     3.10. Application of Repurchase Price Payments. Upon receipt by the Agent of amounts paid or
prepaid as Purchase Price Decreases or Repurchase Price (except upon the exercise of remedies
provided in Section 18) the Agent shall apply amounts so received to the payment of all
Obligations that are then due, and if the amount so received is insufficient to pay all such
Obligations, (i) first to any reimbursement due under Section 20.1, (ii) second to payment
of all Swing Line Transactions that have not been syndicated, and (iii) third to partial payment of
Obligations then due or as otherwise agreed by the Buyers.



     3.11. Pro Rata Ownership Interests. If at any time or times when the Commitments are
outstanding, any Buyer fails to fund any of its Funding Share(s) of any Transaction as provided in
Section 2 (a “Nonfunding Buyer”) and one or more of the other Buyers funds it (electively
in accordance with the provisions of Section 2.1), then:




     (a) the respective ownership interests of both (i) the Nonfunding Buyer and (ii) the
Buyer (or Buyers) that funded such Funding Share(s), shall be proportionately



33









 







decreased and
increased, respectively, to the same extent as if their respective Committed Sums were
changed in direct proportion to the unreimbursed balance outstanding from time to time
thereafter of the amount so funded;




     (b) the Nonfunding Buyer’s share of all future distributions of Repurchase Prices or
other realizations on the Purchased Loans received, pro rata among them in accordance with
their respective unrecovered balances of such Nonfunding Buyer’s Funding Share(s), shall be
distributed to the Buyer(s) that so funded such Nonfunding Buyer’s Funding Share(s) until
all such funding Buyer(s) have been fully repaid the amount so funded; and




     (c) such adjustment shall remain in effect until such time as the Buyer(s) that funded
such Funding Share(s) have been so fully repaid.



     If no other Buyer funds any of the Nonfunding Buyer’s Funding Share, then the Pro Rata
ownership interests of the Buyers in the Purchased Loans shall be changed, in that case so that
each Buyer’s Pro Rata ownership interest in the Purchased Loans is equal to the ratio of (x) the
sum of the portions of the Purchase Prices paid by that Buyer in all Open Transactions on that
day to (y) the total of the Purchase Prices paid by all Buyers in all Open Transactions on that
day, but the Nonfunding Buyer’s share of all subsequent distributions of any Repurchase Price and
Margin Deficit payments shall be paid to the other Buyers, pro rata among them in the ratio that
the Pro Rata ownership interest in the Purchased Loans owned by each bears to the aggregate Pro
Rata ownership interests in the Purchased Loans of all such other Buyers, and the Buyers’
respective Pro Rata ownership interests in the Purchased Loans shall be readjusted after each such
payment, until their Pro Rata ownership interests are restored to what they were before any
Nonfunding Buyer failed to fund. Notwithstanding any such changes in the Buyers’ Pro Rata
ownership interests in any Purchased Loan due to any Buyer’s failure to fund its Funding Share(s)
of any Transaction, such failure to fund shall not diminish any Buyer’s Funding Share(s) for
subsequent Transactions.



4 Transaction Limits and Sublimits.




     4.1. Transaction Limits. Each Transaction shall be subject to the limitation that no purchase
will be made if at the time of or after such purchase, the Aggregate Outstanding Purchase Price
exceeds or would exceed the Maximum Aggregate Commitment.



     4.2. Transaction Sublimits. The following sublimits shall also be applicable to the
Transactions hereunder such that after giving effect to any proposed Transaction and after giving
effect to any repurchase, addition or substitution of any Mortgage Loan hereunder, the following
shall be true:




     (a) The Aggregate Outstanding Purchase Price of Conforming Mortgage Loans may be as
much as one hundred percent (100%) of the Maximum Aggregate Commitment.




     (b) The Aggregate Outstanding Purchase Price of all Purchased Loans that are Wet Loans
shall not exceed (x) fifty percent (50%) of the Maximum Aggregate Commitment on any of the
first five and last five Business Days of any month or



34









 







(y) thirty percent (30%) of the
Maximum Aggregate Commitment on any other day (the “Wet Loans Sublimit”).




     (c) The Aggregate Outstanding Purchase Price of all Purchased Loans that are of the
type listed in the first column of the following table shall not exceed the percentage of
the Maximum Aggregate Commitment listed in the second column of the table (the name of that
Sublimit is set forth in the third column).



	 	 	 	 	 	 	 
	 	 	Maximum	 	 
	 	 	percentage/amount of	 	 
	Type of Purchased	 	Maximum Aggregate	 	 
	Loan	 	Commitment	 	Name of Sublimit
	Second Lien Loans

	 	 	2.5	%	 	“Second Loans Sublimit”
	 
	 	 	 	 	 	 
	Agency-eligible Forty
Year Loans

	 	 	5	%	 	“Agency-eligible Forty
Year Loans Sublimit”
	 
	 	 	 	 	 	 
	Jumbo Mortgage Loans
and Super Jumbo
Mortgage Loans

	 	 	15	%	 	“Jumbo Loans Sublimit”
	 
	 	 	 	 	 	 
	Super Jumbo Mortgage
Loans

	 	 	5	%	 	“Super Jumbo Loans
Sublimit”







     (d) The Agent may agree to any change in the aggregate not involving more than Two
Million Dollars ($2,000,000) of the Purchased Loans in the handling of the Purchased Loans,
as set forth in Section 22.5.




     (e) The Purchase Value for any Purchased Loan hereunder shall not be more than One
Million Five Hundred Thousand Dollars ($1,500,000).



5 Price Differential.




     5.1. Pricing Rate. Except as otherwise provided herein with respect to Balance Funded
Segments and the Default Pricing Rate, the Pricing Rate to be applied to the Purchase Prices of
Purchased Loans to determine the Price Differential in all Open Transactions shall be the LIBOR
Rate plus the LIBOR Margin applicable from time to time.



     5.2. Seller’s Election of Pricing Rate. The Seller may elect that the Pricing Rate to be
applied to any Segment of Open Transactions owed to a particular Buyer be the Balance Funded Rate
from time to time by giving the Agent telephonic notice, confirmed by the applicable Buyer and the
Agent, not later than 10:00 a.m. on the effective date of such election, specifying the Business
Day when such election is to become effective and confirming the telephonic notice in writing by
not later than the close of business on the same day. A Balance Funded Rate may only be selected
where a Buyer is holding sufficient Qualifying Balances and shall only be applicable to such Buyer.
Such election shall not change the calculation of Price Differential for any period prior to the
specified effective date.



35









 





     5.3. Seller’s Re-election of the Pricing Rate. If the Seller has elected the Balance Funded
Rate for any Segment thereof, the Seller may thereafter elect that the Pricing Rate to be applied
to such Segment instead be calculated by reference to the LIBOR Rate plus the LIBOR Margin by
giving the Agent telephonic notice not later than 10:00 a.m. on the effective date of such
election, specifying the Business Day when
such election is to become effective and confirming the telephonic notice in writing by not
later than the close of business on the same day. Such election shall not change the calculation
of Price Differential for any period prior to the specified effective date.



     5.4. Balances Deficiency Fees. If for any calendar month the Qualifying Balances maintained
by the Seller with any Buyer is less than an amount equal to the average daily aggregate unpaid
principal balance of the Balance Funded Segments owed to such Buyer during such calendar month
(such deficiency being herein referred to as the “Balances Deficiency”), a fee (the “Balances
Deficiency Fee”) shall accrue for said calendar month on the Balances Deficiency at a per annum
rate equal to the average daily LIBOR Rate in effect during said calendar month; and provided
further, that if the Qualifying Balances maintained by the Seller with any Buyer for any calendar
month exceeds the weighted average daily aggregate unpaid principal balance of the Balance Funded
Segments held by such Buyer during such calendar month (such excess being defined herein as the
“Balances Surplus”), then such Balances Surplus may be carried forward and applied to reduce the
Balances Deficiency Fee in any succeeding calendar months (but not to any calendar month occurring
in any subsequent calendar year), and the net positive amount of the Balances Deficiency Fee, if
any, will be payable by the Seller at the end of each calendar year promptly after the Seller’s
receipt of an invoice for such amount.



     5.5. Pricing Rate for Default Pricing Rate Purchased Loans. Notwithstanding any contrary or
inconsistent provision of this Section 5, the Pricing Rate to be multiplied by the Purchase
Prices of all Purchased Loans shall be the Default Pricing Rate from (and including) (a) the day
immediately following the Repurchase Date for each such Past Due Purchased Loan and until (but
excluding) the date on which such Past Due Purchased Loan is repurchased by transfer to the Agent
(for Pro Rata distribution to the Buyers) of its full Repurchase Price in immediately available
funds; and (b) the date designated by the Agent to the Seller after the occurrence of an Event of
Default under Section 18.1.



     5.6. Price Differential Payment Due Dates. Price Differential on each Open Transaction
accrued and unpaid to the end of each month before the Termination Date (and any Balance Deficiency
Fee) shall be due and payable two (2) Business Days after the Agent bills the Seller for it,
whether or not such Transaction is still an Open Transaction on such payment due date;
provided that (a) all accrued and unpaid Price Differential (and Balance Deficiency Fees)
on all Transactions shall be due on the Termination Date, and (b) all Pricing Differential
calculated at the Default Pricing Rate shall be due on demand.



     5.7. Separate Agreements. The provisions of Sections 5.2 through 5.5 shall
not apply if a particular Buyer and the Seller agree otherwise by separate agreement with respect
to adjustments to such Buyer’s Price Differential based on Qualifying Balances. Any such Buyer
shall promptly inform the Agent of the separate agreement (although the terms may remain
confidential) and thereafter shall invoice
the Seller separately for the Price Differential due 


36









 






6 Margin Maintenance.



pursuant to such separate agreement (and
the Agent shall not invoice the Seller for Price Differential due such Buyer hereunder).


     6.1. Margin Deficit.




     (a) If at any time the aggregate Purchase Value of all Purchased Loans subject to all
Transactions hereunder is less than the aggregate Repurchase Price (excluding Price
Differential), minus cash transfers previously made from the Seller to the Agent in response
to previous Margin Calls, if any, for all such Transactions (a “Margin Deficit”), then by
notice to the Seller (a “Margin Call”), the Agent shall, require the Seller to transfer (for
the account of the Buyers) to the Agent or the Custodian, as appropriate, either (at the
Seller’s option) cash or additional Eligible Loans reasonably acceptable to the Agent
(“Additional Purchased Loans”), or a combination of cash and Additional Purchased Loans, so
that the cash and the aggregate Purchase Value of the Purchased Loans, including any such
Additional Purchased Loans, will thereupon at least equal the then aggregate Repurchase
Price (excluding Price Differential). The Agent will recalculate the Purchase Value of all
or a portion of the Purchased Loans at the times it deems appropriate in its sole discretion
and at any other time at the request of the Required Buyers.




     (b) On any Business Day on which the Purchase Value of the Purchased Loans subject to
Transactions exceeds the then outstanding aggregate Repurchase Price of all Transactions (a
“Margin Excess”), so long as no Default or Event of Default has occurred and is continuing
or will result therefrom, the Agent shall, upon receipt of written request from the Seller,
remit cash or release Purchased Loans as requested by the Seller, in either case, in an
amount equal to the lesser of (i) the amount requested by the Seller and (ii) such Margin
Excess, subject always to the other limitations of this Agreement. If cash is to be
remitted the Agent shall treat the receipt of the written request of the Seller under this
Section 6.1(b) as if it were a request for a Transaction. To the extent the Agent
remits cash to the Seller, such cash shall be (A) additional Purchase Price with respect to
the Transactions, and (B) subject in all respects to the provisions and limitations of this
Agreement. Each Buyer shall fund its Pro Rata share of such additional Purchase Price as if
the remission of such Margin Excess were the initiation of a Transaction hereunder.



     6.2. Margin Call Deadline. If the Agent delivers a Margin Call to the Seller at or before
11:00 a.m. on any Business Day, then the Seller shall transfer cash and/or Additional Purchased
Loans as provided in Section 6.1 on the same Business Day. If the Agent delivers a Margin
Call to the Seller after 11:00 a.m. on any Business Day, then the Seller shall transfer cash and/or
Additional Purchased Loans by no later than 11:00 a.m. on the next following Business Day.



     6.3. Application of Cash. Any cash transferred to the Agent (for Pro Rata distribution to the
Buyers) pursuant to this Section 6 shall be applied by the Buyers on receipt from the Agent



37









 







which shall occur on the date received from the Seller or the next Business Day if received after
2:00 p.m.



     6.4. Increased Cost. If any Legal Requirement (other than with respect to any amendment made
to the relevant Buyer’s articles of incorporation and by-laws or other organizational or governing
documents) or any change in the interpretation or application thereof or compliance by any Buyer
with any request or directive (whether or not having the force of law) from any central bank or
other Governmental Authority made subsequent to the Effective Date:




     (a) shall subject such Buyer to any Tax or increased Tax of any kind whatsoever with
respect to this Agreement or any Transaction or change the basis of taxation of payments to
the Buyer in respect thereof;




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




     (c) shall impose on the Buyer any other condition;


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




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



     6.6. Agent’s Report. In the discretion of the Agent or Required Buyers if it or they
reasonably determines that market conditions warrant (except that the Agent shall have no
obligation to make such determination more frequently than once per day), the Agent may: (1)
determine the aggregate Market Values for the Purchased Loans (which may include the



38









 







Purchase Value
of any Mortgage Loans purchased on that day) by summing the values of the individual Purchased
Loans as reported on (and recorded by the Agent from) the Mortgage Loan Transmission Files and
Purchased Loans Curtailment Reports, valuing at zero Purchased Loans for which the Agent has
current actual knowledge that a Disqualifier exists; (2) issue a statement of the value of the
Purchased Loans as so determined; and (3) provide a copy of such statement to the Seller and each
Buyer.



     6.7. Provisions Relating to LIBOR Rate. If, after the date of this Agreement, the adoption
of, or any change in, any applicable law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Buyer with any request or
directive (whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for such Buyer to make, maintain or fund
Transactions based on the LIBOR Rate, such Buyer shall notify the Seller and the Agent, whereupon
the Pricing Rate on all of the affected Transactions shall be automatically converted as of the
date of such Buyer’s notice to bear interest at a rate equal to the Prime Rate plus the
LIBOR Margin.



7 Taxes.




     7.1. Payments to be Free of Taxes; Withholding. Any and all payments by the Seller under or
in respect of this Agreement or any other Repurchase Documents to which the Seller is a party shall
be made free and clear of, and without deduction or withholding for or on account of, any and all
present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
(including penalties, interest and additions to tax) with respect thereto, whether now or hereafter
imposed, levied, collected, withheld or assessed by any taxation authority or other Governmental
Authority (collectively, “Taxes”), unless required by any Law. If the Seller shall be required
under any applicable Legal Requirement to deduct or withhold any Taxes from or in respect of any
sum payable under or in respect of this Agreement or any of the other Repurchase Documents to the
Agent (for the account of the Buyers), (a) the Seller shall make all such deductions and
withholdings in respect of Taxes, (b) the Seller shall pay the full amount deducted or withheld in
respect of Taxes to the relevant taxation authority or other Governmental Authority in accordance
with any applicable Legal Requirement and (c) the sum payable by the Seller shall be increased as
may be necessary so that after the Seller has made all required deductions and withholdings
(including deductions and withholdings applicable to additional amounts payable under this
Section 7) each Buyer receives an amount equal to the sum it would have received had no
such deductions or
withholdings been made in respect of Non-excluded Taxes. For purposes of this Agreement the
term “Non-excluded Taxes” means Taxes other than, in the case of any Person, Taxes that are imposed
on its overall net income (and franchise taxes imposed in lieu thereof) by the jurisdiction under
the laws of which such Person is organized or of its applicable lending office, or any political
subdivision thereof.



     7.2. Other Taxes. In addition, the Seller hereby agrees to pay any present or future stamp,
recording, documentary, excise, property or value-added taxes, or similar taxes, charges or levies
that arise from any payment made under or in respect of this Agreement or any other Repurchase
Document or from the execution, delivery or registration of, any performance under,



39









 





 or otherwise
with respect to, this Agreement or any other Repurchase Documents (collectively, “Other Taxes”).


     7.3. Taxes Indemnity. The Seller hereby agrees to indemnify the Buyers and the Agent for, and
to hold each of them harmless against, the full amount of Non-excluded Taxes and Other Taxes, and
the full amount of Taxes of any kind imposed by any jurisdiction on amounts payable under this
Section 7 imposed on or paid by the Buyers or the Agent and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. The
indemnity by the Seller provided for in this Section 7.3 shall apply and be made whether or
not the Non-excluded Taxes or Other Taxes for which indemnification hereunder is sought have been
correctly or legally asserted. Amounts payable by the Seller under the indemnity set forth in this
Section 7.3 shall be paid within ten (10) days from the date on which the Agent makes
written demand therefor.



     7.4. Receipt. Within thirty (30) days after the date of any payment of Taxes, the Seller (or
any Person making such payment on behalf of the Seller) shall furnish to the Agent for each Buyer’s
account a certified copy of the original official receipt evidencing payment thereof.



     7.5. Survival. Without prejudice to the survival of any other agreement of the Seller
hereunder, the agreements and obligations of the Seller contained in this Section 7 shall
survive the termination of this Agreement. Nothing contained in this Section 7 shall
require the Buyer to make available any of its tax returns or any other information that it deems
to be confidential or proprietary.



8 Income and Escrow Payments; Control.




     8.1. Income and Escrow Payments. Notwithstanding that the Buyers, the Agent and the Seller intend that the Transactions be
sales to the Buyers of the Purchased Loans, where a particular Transaction’s term extends over an
Income payment date on the Purchased Loans subject to that Transaction, all payments and
distributions, whether in cash or in kind, made on or with respect to the Purchased Loans shall be
paid directly to the Seller or its designee by the relevant Customer, and the Agent (and the
Buyers) shall have no obligation to collect or apply any Income to prevent or reduce any Margin
Deficit, unless the Seller (a) arranges for such Income to be paid to the Agent (for Pro Rata
distribution to the Buyers), (b) requests that the Agent apply such Income when received against
the Seller’s Margin Deficit(s) and (c) concurrently transfers to the Agent either (i) cash or (ii)
at the Agent’s option and with the Agent’s written approval, Additional Purchased Loans, sufficient
to eliminate such Margin Deficit. Amounts paid to the Seller by the relevant Customer shall be
deposited by the Seller into the Income Account within two (2) Business Days of receipt by the
Seller and, as to amounts so paid to the Seller for escrow payments, into the Escrow Account. The
Income Account and the Escrow Account shall be maintained by the Seller with a bank satisfactory to
the Agent and shall be subject to the control of the Agent. The Income Account and Escrow Account
may be interest bearing accounts if allowed or required by applicable law. At all times prior to a
Default or Event of Default, the Seller may have full use of all Income and amounts on deposit in
the Income Account, subject to the provisions of Section 8.2.



40









 





     8.2. Income and Escrow Accounts. Prior to the initial Transaction hereunder the Seller shall
establish the Income Account and the Escrow Account and shall cause the bank holding such accounts
to enter into a control agreement with the Agent providing that upon notice from the Agent (which
notice shall be given only upon the occurrence of a Default or Event of Default) no further
withdrawals or payment orders from the Seller shall be honored and only payment and withdrawal
orders from the Agent or its designee shall be honored. Prior to the occurrence of a Default or
Event of Default and so long as the Seller is also the Servicer, the Seller shall make payments
from the Escrow Account of all appropriate amounts payable with respect to each Purchased Loan for
taxes, insurance and other purposes for which the funds are paid into the Escrow Account. Subject
to Section 8.3, amounts on deposit in the Income Account shall be used by the Seller to pay
its fees as Servicer while it serves in such capacity, and may be used to pay to the Agent amounts
due under this Agreement for Margin Deficit or Price Differential and for any other lawful purpose.



     8.3. Income and Escrow Accounts after Default. Upon the occurrence and during the
continuation of a Default or Event of Default, the Seller shall have no right to direct withdrawal
or application of funds in the Income Account and the Escrow Account unless authorized to do so in
writing by the Agent. The Agent may cause all amounts on deposit in the Income Account to be paid
to it or its designee for application as provided in Section 18.4. The Agent or its
designee shall direct payments from the Escrow Account for the purposes for which such funds are
deposited into the Escrow Account and shall comply with all Legal Requirements applicable to the
operation of the Income Account and the Escrow Account, including any Agency guidelines with
respect thereto.



9 Facility Fee; Agent’s Fee.




     9.1. Facility Fee; Non-Use. The Seller agrees to pay to the Agent (for Pro Rata distribution
to the Buyers) a facility fee (the “Facility Fee”) in an amount equal to the sum of one fifth of
one percent (0.20%) per annum of the Maximum Aggregate Commitment for the period from the Effective
Date to the Termination Date, computed for each calendar month or portion thereof from the
Effective Date until the date this Agreement terminates in accordance with its terms. The Seller
further agrees to pay monthly to the Agent (for Pro Rata distribution to the Buyers) a non-usage
fee (the “Non-usage Fee”) in an amount determined by applying a rate of (a) if the daily Aggregate
Outstanding Purchase Price is less than 30% of the Maximum Aggregate Commitment, 0.10% per annum of
the amount by which the Maximum Aggregate Commitment exceeds the daily Aggregate Outstanding
Purchase Price, and (b) if the daily Aggregate Outstanding Purchase Price is greater than or equal
to 30% but less than 50% of the Maximum Aggregate Commitment, 0.05% of the daily amount by which
the Maximum Aggregate Commitment exceeds the Aggregate Outstanding Purchase Price, computed for
each calendar month or portion thereof from the Effective Date to the date this Agreement
terminates in accordance with its terms. The Facility Fee and the Non-Usage Fee shall be payable
monthly in arrears and shall be due no later than two (2) Business Days after the Agent bills the
Seller therefor. If the Maximum Aggregate Commitment shall be increased or decreased from time to
time either pursuant to a provision of this Agreement or by separate agreement between the Buyers
and the Seller (excluding, however, any change occurring as a result of or following the occurrence
of a Default or an Event of Default, in respect of which no adjustment of the Facility Fee and the
Non-Usage Fee shall be required), the amount of the Facility Fee and the calculation



41









 







of the
Non-Usage Fee shall be adjusted as of the date of such change. The Facility Fee and the Non-Usage
Fee are compensation to the Buyers for committing to make funds available for revolving purchases
of Eligible Loans on the terms and subject to the conditions of this Agreement, and are not
compensation for the use or forbearance or detention of money. Each calculation by the Agent of
the amount of the Facility Fee and the Non-Usage Fee shall be conclusive and binding absent
manifest error.



     9.2. Agent’s Fee. As set forth in the Fee Letter.



     9.3. Loan Papers Handling Fee. As set forth in the Fee Letter.



10 Security Interest.




     10.1. Intent of the Parties. The parties intend that all Transactions hereunder be sales and
purchases (other than for accounting and tax purposes) and not loans; nonetheless, as a security
agreement under the UCC and as a security agreement or other arrangement or other credit
enhancement related to this Agreement and transactions hereunder as provided for in Section 101(47)
(A)(v) of the Bankruptcy Code, the Seller hereby pledges to the Agent for the benefit of the Buyers
as security for the performance by the Seller of the Obligations and hereby grants, assigns and
pledges to the Agent for the benefit of the Buyers a fully perfected first priority security
interest in all of the Purchased Loans and all Income and proceeds from the Purchased Loans,
including all of the property, rights and other items described in the definition of “Mortgage
Loan” in Section 1.1 for each such Purchased Loan and all rights to have, receive and
retain the return or refund of funds transferred from any account with the Agent to any title
company, title agent, escrow agent or other Person for the purpose of originating or funding a
Mortgage Loan that did not close (for any reason) and that would have been a Purchased Loan if it
had closed (all funds so transferred continuously remain the property of the Agent and the Buyers
until disbursed by such agent to or for the account of the related Customer upon the closing of his
or her Mortgage Loan), and in all of the following property:




     (a) With respect to the Purchased Loans:




     (i) all Purchased Loans Support;




     (ii) all Mortgaged Premises related to the Purchased Loans




     (iii) all rights to deliver Purchased Loans to investors and other purchasers
and all proceeds resulting from the disposition of Purchased Loans pursuant thereto,
including the Seller’s right and entitlement to receive the entire purchase price
paid for Purchased Loans sold;




     (iv) all Hedge Agreements relating to or constituting any and all of the
foregoing or relating to the Obligations, including all rights to payment arising
under such Hedge Agreements;




     (v) all Servicing Rights in respect of any of the Purchased Loans; and



42









 






     (vi) all of the Seller’s rights now or hereafter existing in, to or under any
MBS secured by, created from or representing any interest in any of the Purchased
Loans, whether now owned or hereafter acquired by the Seller, and whether such MBS
are evidenced by book entry or certificate (the Buyers’ Agent’s ownership interest
and security interest in each MBS created from, based on or backed by Purchased
Loans shall automatically exist in, attach to, cover and affect all of the Seller’s
right, title and interest in that MBS when issued and its proceeds and the Buyers’
Agent’s ownership interest and security interest in the
Purchased Loans from which such MBS was so created shall automatically
terminate and be released when such MBS is issued, subject to automatic
reinstatement if such issuance is voided or set aside by any court of competent
jurisdiction), all right to the payment of monies and non-cash distributions on
account of any of such MBS and all new, substituted and additional securities at any
time issued with respect thereto;




     (b) Related Accounts, Payment Intangibles, General Intangibles:




     (i) all accounts, payment intangibles, general intangibles, instruments,
documents (including documents of title), chattel paper, contract rights and
proceeds, whether now or hereafter existing (including all of the Seller’s present
and future rights to have and receive interest and other compensation, whether or
not yet accrued, earned, due or payable), under or arising out of or relating to the
Purchased Loans;




     (ii) all instruments, documents or writings evidencing any such accounts,
payment intangibles, general intangibles or proceeds or evidencing any monetary
obligation under, or security interest in, any of the Purchased Loans, all other
papers delivered to the Agent or the Custodian, and all other rights transferred to
the Agent, in respect of any of the Purchased Loans, including, without limitation,
the right to collect, have and receive all insurance proceeds (including, but not
limited to, casualty insurance, mortgage insurance, pool insurance and title
insurance proceeds) and condemnation awards or payments in lieu of condemnation that
may be or become payable in respect of the Mortgaged Premises securing or intended
to secure any Purchased Loan, and other personal property of whatever kind relating
to any of the Purchased Loans, in each case whether now existing or hereafter
arising, accruing or acquired;




     (iii) all security for or claims against others in respect of the Purchased
Loans;




     (iv) all proceeds and rights to proceeds of any sale or other disposition of
any or all of the Purchased Loans; and




     (v) the nonexclusive right to use (in common with the Seller and any other
secured party that has a valid and enforceable security interest therein and that
agrees that its security interest is similarly nonexclusive) the Seller’s operating
systems to manage and administer the Purchased Loans and any of the



43









 







related data and
information described above, or that otherwise relates to the Purchased Loans,
together with the media on which the same are stored to the extent stored with
material information or data that relates to property other than the Purchased Loans
(tapes, discs, cards, drives, flash memory or any other kind of physical or virtual
data or information storage media or systems, and the Seller’s rights to access the
same, whether exclusive or nonexclusive, to the extent that such access rights may
lawfully be transferred or used by the Seller’s permittees), and any computer
programs that are owned by the Seller (or licensed
to the Seller under licenses that may lawfully be transferred or used by the
Seller’s permittees) and that are used or useful to access, organize, input, read,
print or otherwise output and otherwise handle or use such information and data;




     (c) Repurchase Settlement Account, Operating Account, Funding Account and other
accounts: the Repurchase Settlement Account, the Operating Account, the Income Account and
the Escrow Account and all cash and all securities and other property from time to time on
deposit in each such account;




     (d) Loan Records: all Loan Records;




     (e) Other Rights: all rights to have and receive any of the Purchased Loans described
above, all accessions or additions to and substitutions for any of such Purchased Loans,
together with all renewals and replacements of any of such Purchased Loans, all other rights
and interests now owned or hereafter acquired by the Seller in, under or relating to any of
such Purchased Loans or referred to above and all proceeds of any of such Purchased Loans;
and




     (f) Proceeds: all proceeds of all the foregoing.



     The Seller agrees to do such things as applicable Law requires to maintain the security
interest of the Agent in all of the Purchased Loans with respect to all such Transactions and all
Income and proceeds from the Purchased Loans that are the subject matter of such Transactions and
all of the other collateral described above in this Section 10.1 as a perfected first
priority Lien at all times. The Seller hereby authorizes the Agent to file any financing or
continuation statements under the applicable UCC to perfect or continue such security interest in
any and all applicable filing offices. The Seller shall pay all customary fees and expenses
associated with perfecting such security interest including the costs of filing financing and
continuation statements under the UCC and recording assignments of Mortgages as and when required
by the Agent in its reasonable discretion.



11 Substitution.




     11.1. Seller May Substitute Other Mortgage Loans with Notice to and Approval of Agent. So
long as no Event of Default has occurred and is continuing and no Margin Deficit exists or occurs
as a consequence thereof, subject to agreement with and acceptance by, and upon notice to, the
Agent, the Seller may substitute Mortgage Loans substantially similar to the Purchased Loans for
any Purchased Loans. If the Seller gives notice to the Agent at or before 12:00 noon on a Business
Day, the Agent may elect, by the close of business on the Business



44









 







Day notice is received or by the
close of the next Business Day if notice is given after 12:00 noon on such day, not to accept such
substitution. If such substitution is accepted by the Agent, such substitution shall be made by
the Seller’s transfer to the Agent of such other Mortgage Loans on a servicing released basis and
the Agent’s transfer to the Seller of such Purchased Loans, and after such substitution, the
substituted Mortgage Loans shall be deemed to be
Purchased Loans. If the Agent elects not to accept such substitution, the Seller shall offer
the Agent and the Buyers the right to terminate the related Transaction.



     11.2. Payment to Accompany Substitution. If the Seller exercises its right to substitute or
terminate under this Section 11, the Seller shall be obligated to pay to the Agent (for Pro
Rata distribution to the Buyers) by the close of the Business Day of such substitution or
termination, as the case may be, an amount equal to the sum of (a) actual cost (including all
customary fees, expenses and commissions) to the Agent and the Buyers of (i) entering into
replacement Transactions; (ii) entering into or terminating hedge transactions and/or (iii)
terminating Transactions or substituting securities in like transactions with third parties in
connection with or as a result of such substitution or termination, and (b) to the extent the Agent
determines not to enter into replacement Transactions, the loss incurred by the Agent and the
Buyers directly arising or resulting from such substitution or termination. The foregoing amounts
shall be solely determined and calculated by the Agent and the applicable Buyers in good faith.



12 Payment and Transfer.




     12.1. Immediately Available Funds; Notice to Custodian. All transfers of funds hereunder
shall be in immediately available funds. All Eligible Loans transferred by one party hereto to any
other party shall be transferred by notice to the Custodian to the effect that the Custodian is
then holding for the benefit of the transferee the related documents and assignment forms delivered
to it under the Custody Agreement.



     12.2. Payments to the Agent. Except as otherwise specifically provided in this Agreement, all
payments required by this Agreement or the other Repurchase Documents to be made to the Agent shall
be paid to the Agent by no later than 1:00 p.m. on the day when due (funds received after the
applicable deadline shall be conclusively deemed received on the next following Business Day unless
the Agent shall agree otherwise) and without set-off, counterclaim or deduction, in lawful money of
the United States of America in immediately available funds as provided in Section 24.4, or
at such other place as the Agent shall designate from time to time. Whenever any payment to be
made under this Agreement or any of the other Repurchase Documents shall be stated to be due on a
day that is not a Business Day, the due date for that payment shall be automatically extended to
the next day that is a Business Day, and (if applicable) Price Differential at the applicable rate
(determined in accordance with this Agreement) shall continue to accrue during the period of such
extension. Unless the Agent shall agree otherwise, funds received by the Agent after 1:00 p.m. on
a Business Day shall be deemed for all purposes to have been paid by the Seller on the next
succeeding Business Day.



     12.3. If Payment Not Made When Due. If and to the extent any payment is not made when due under this Agreement or any of the
other Repurchase Documents, the Seller authorizes the Agent and each Buyer (for the Pro Rata
account and benefit of all of the Buyers) then or at any time thereafter to charge any amounts so
due and unpaid against any or all of the Seller’s



45









 







accounts with the Agent or any of the Buyers;
provided that such right to charge the Seller’s accounts shall not apply to any escrow,
trust or other deposit accounts designated as being held by the Seller on behalf of third party
owners of the escrowed funds other than Affiliates of the Seller. The Agent agrees to use
reasonable efforts to promptly advise the Seller of any charge made pursuant to this Section
12.3, but its failure to do so will not affect the validity or collectibility of such charge.
Neither the Agent nor any Buyer shall have any obligation to charge any Seller account, merely the
right to do so.



     12.4. Payments Valid and Effective. Each payment received by the Agent in accordance with
this Agreement is valid and effective to satisfy and discharge the Seller’s liability under the
Repurchase Documents to the extent of the payment.



     12.5. Pro Rata Distribution of Payments. The Agent shall distribute all payments of
Repurchase Price (whether voluntary or involuntary and from whatever source) received to the Buyers
Pro Rata with their respective ownership interests in the Purchased Loans on the next Swing Line
Refunding Due Date (but no less frequently than once per week). The distribution from the Agent to
each Buyer shall be made by the Agent’s initiating a federal funds wire transfer by 3:00 p.m. on
such Swing Line Refunding Due Date, in immediately available funds directly to such Buyer or to
such account at another financial institution as is designated from time to time by such Buyer in
writing. If the Agent shall fail or refuse to so make any such distribution on the Swing Line
Refunding Due Date after it received payment, then, as agreed full and adequate compensation
therefor, the Agent shall pay the affected Buyer(s) interest on the undistributed funds at the
Federal Funds Rate.



13 Segregation of Documents Relating to Purchased Loans.




     All documents relating to Purchased Loans in the possession of the Seller or its designee
(including its agent, or any subservicer) shall be segregated from other documents and securities
in its or its designee’s possession and shall be identified as being owned by the Buyers and held
by the Agent on behalf of the Buyers (which shall be referenced in the relevant books and records
as “U.S. Bank National Association, Agent”) and subject to this Agreement. Segregation may be
accomplished by appropriate identification of ownership on the books and records of the holder of
such documents, including MERS, a documents custodian, a financial or securities intermediary or a
clearing corporation. All of the Seller’s interest in the Purchased Loans shall pass to the Buyers
on the Purchase Date and nothing in this Agreement shall preclude the Agent and the Buyers, in each
case with the Buyers’ consent, from engaging with others in repurchase transactions with the
Purchased Loans or otherwise selling, transferring, or pledging or
hypothecating, the Purchased Loans, but no such transaction shall relieve the Buyers of their
obligations to transfer Purchased Loans to the Seller pursuant to Section 3 or 18,
or of the Agent’s obligation to credit or pay Income to, or apply Income to the obligations of, the
Seller pursuant to Section 8.



46









 





14 Conditions Precedent.




     14.1. Initial Purchase. The obligations of the Buyers (and the Agent on the Buyers’ behalf)
to make the initial purchase under this Agreement are subject to the Seller’s fulfillment of the
following conditions precedent:




     (a) the Agent shall have received (or be satisfied that it will receive by such
deadline as the Agent shall specify) the following, all of which must be satisfactory in
form and content to the Agent:




     (i) this Agreement duly executed by the parties;




     (ii) UCC financing statements for the Purchased Loans covered by this
Agreement, each duly authorized by the Seller;




     (iii) a current UCC search report of a UCC filings search in the office of the
Secretary of State of the State of Colorado;




     (iv) the Custody Agreement duly executed by the Agent, the Seller and the
Custodian;




     (v) the Electronic Tracking Agreement duly executed by the Seller, MERS,
MERSCorp., Inc. and the Agent;




     (vi) a copy of the corporate resolution (or equivalent thereof) of the Seller
authorizing the execution, delivery and performance of the Repurchase Documents,
certified as of the date of this Agreement by the Secretary or an Assistant
Secretary of the Seller;




     (vii) an incumbency certificate showing the names and titles and bearing the
signatures of the officers of the Seller authorized to execute the Repurchase
Documents, certified as of the date of this Agreement by the Secretary or an
Assistant Secretary of the Seller;




     (viii) a copy of the bylaws of the Seller, certified as of the date of this
Agreement by the Secretary or an Assistant Secretary of the Seller;




     (ix) a copy of the Articles of Incorporation of the Seller with all amendments
thereto, certified by the appropriate governmental official of the
jurisdiction of its incorporation as of a date acceptable to the Agent in its
sole discretion;




     (x) a certificate of good standing (or the equivalent thereof) for the Seller
in the jurisdiction of its incorporation, certified by the appropriate governmental
officials as of a date acceptable to the Agent in its sole discretion;




     (xi) evidence reasonably satisfactory to the Agent (i) as to the due filing and
recording in all appropriate offices of all financing statements, (ii) if



47









 







there are
any Purchased Loans that require the Buyers’ interest to be noted by book entry,
that such book entry has been duly made and (iii) if there is any “investment
property” under the UCC of the State of New York or other applicable Law, that such
instruments as are necessary to give the Agent “control” of such investment property
have been duly executed by the Seller and the relevant securities intermediary;




     (xii) copies of an errors and omissions insurance policy or mortgage impairment
insurance policy and blanket bond coverage policy, or certificates in lieu of
policies, providing such insurance coverage as is customary for members of the
Seller’s industry;




     (xiii) a favorable written opinion of counsel to the Seller dated on or before
the initial Purchase Date, addressed to the Agent and the Buyers and in form and
substance reasonably satisfactory to the Agent and its legal counsel (a form
containing opinions required to be included therein are set forth in Exhibit
B), specifically stating that the Agent and the Buyers may rely on it; and




     (xiv) payment to the Agent or the Custodian, as applicable, of the Facility
Fee, the Agent’s Fee, and all other fees and expenses (including the disbursements
and reasonable fees of the Agent’s attorneys) of the Agent and the Buyers payable by
the Seller pursuant to Section 9 accrued and billed for to the date of the
Seller’s execution and delivery of this Agreement;




     (xv) control agreements in form and substance reasonably satisfactory to the
Agent establishing its control of the Income Account, Escrow Account, Operating
Account, Repurchase Settlement Account and the Funding Account.




     (xvi) Evidence satisfactory to the Agent that, after giving effect to the
Transaction contemplated by Section 3.7, the Seller’s obligations under the
Warehousing Credit Agreement for principal will have been paid in full.



     14.2. Each Purchase. The obligations of the Buyers (and the Agent on the Buyers’ behalf) to
make any purchase under this Agreement are also subject to the satisfaction, as of each Purchase
Date, of the following additional conditions precedent:




     (a) The Seller shall have delivered to the Agent and the Custodian, the related
Mortgage Loan Transmission Files for the new Mortgage Loans to be purchased.




     (b) Unless the requested Transaction is for the purchase of only Wet Loans, the
Custodian shall have issued its Custodian’s Exception Report (as defined in the Custody
Agreement) relating to the Purchased Loans then owned by the Buyers — the Agent agrees
that, for so long as it is the Custodian, it will not unreasonably withhold or delay issuing
any such Custodian’s Exception Report.




     (c) The representations and warranties of the Seller contained in this Agreement and
the other Repurchase Documents shall be true and correct in all
material 


48









 




respects as if made
on and as of each Purchase Date unless specifically stated to relate to an earlier date.



     (d) The Seller shall have performed all agreements to be performed by it under this
Agreement, the Custody Agreement and all other Repurchase Documents, as well as under all
Investor Commitments that the Seller has represented to the Agent and the Buyers cover any
of the Purchased Loans, and after the requested Transaction shall have been executed, no
Default or Event of Default will exist that the Agent has not declared in writing to have
been waived or cured, nor will any default exist under any such Investor Commitments.




     (e) The Seller shall not have incurred any material liabilities, direct or contingent,
other than in the ordinary course of its business, and no liabilities (whether or not in the
ordinary course of business) shall exist that adversely and materially affect any of the
Central Elements in respect of the Seller or any of its Subsidiaries since the dates of the
Seller’s Financial Statements most recently theretofore delivered to the Buyers.




     (f) The Seller shall have paid the Facility Fee, the Non-Usage Fee, the Agent’s Fee and
the Loan Papers Handling Fees then due and payable in accordance with Section 9.1,
Section 9.2 and Section 9.3.




     (g) Prior to the execution of the requested Transaction, no Default or Event of Default
shall have occurred or will occur after giving effect to such Transaction, that the Agent
has not declared in writing to have been waived or cured.




     (h) The requested Transaction will not result in the violation of any applicable Law.




     (i) The Agent shall have received such other documents, if any, as shall be specified
by the Agent.




     (j) No Margin Deficit exists or will exist after giving effect to such Transaction.




     (k) The Termination Date shall not have occurred.




     (l) After giving effect to such Transaction, none of the sublimits set forth in
Section 4.2 shall be exceeded.




     (m) For any Transaction involving a Wet Loan, (i) unless the closing title agency or
attorney has previously signed an agreement with the Agent acknowledging funds received from
the Agent for the purchase of such Wet Loan are held by such title agency or attorney in
trust for and as the property of the Agent until such Wet Loan is closed and purchased by
the Agent for the benefit of the Buyers and that any such funds so received shall be
returned to the Agent for the benefit of the Buyers if the Mortgage Loan that is proposed to
be so purchased as a Wet Loan does not close on the proposed Purchase Date, and (ii) the
Seller shall have delivered to such closing title agency or attorney an instruction letter
stating that funds received from the Agent for the purchase




49











 






of such Wet Loan are held by such title agency or attorney in trust for and as the property
of the Agent until such Wet Loan is closed and purchased by the Agent for the benefit of the
Buyers and that any such funds so received shall be returned to the Agent for the benefit of
the Buyers if the Mortgage Loan that is proposed to be so purchased as a Wet Loan does not
close on the proposed Purchase Date.



15 Representations, Warranties and Covenants.




     15.1. Buyers, Agent and Seller Representations. The Buyers, the Agent and the Seller each
represents and warrants, and shall on and as of the Purchase Date of any Transaction be deemed to
represent and warrant, to the others that:




     (a) it is duly authorized to execute and deliver this Agreement, to enter into the
Transactions and to perform its obligations hereunder and has taken all necessary action to
authorize such execution, delivery and performance;




     (b) it will engage in such Transactions as principal (or, in the case of the Agent, and
in respect of any other party if agreed in writing in advance of any Transaction by the
other parties hereto, as agent for a disclosed principal);




     (c) the person signing this Agreement on its behalf is duly authorized to do so on its
behalf (or on behalf of any such disclosed principal);




     (d) it has obtained all authorizations of any governmental body required in connection
with this Agreement and the Transactions and such authorizations are in full force and
effect; and




     (e) the execution, delivery and performance of this Agreement and the Transactions
hereunder will not violate any law, ordinance, charter, by-law or rule applicable to it or
any agreement by which it is bound or by which any of its assets are affected.



     15.2. Additional Seller Representations. With regard to:




     (i) Purchased Loans, on and as of the Purchase Date of any Transaction;




     (ii) Eligible Loans substituted pursuant to Section 11, on and as of the date
of their substitution; and




     (iii) Additional Purchased Loans submitted pursuant to Section 6.1, on and as
of the date of their transfer to the Custodian


the Seller hereby represents and warrants to the Buyers and the Agent, as follows:





     (a) Documents Genuine. The documents delivered or disclosed by the Seller to the Agent
or the Buyers pursuant to this Agreement or the Custody Agreement are either original
documents or genuine and true copies thereof.



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     (b) No Securities to be Acquired with Purchased Loan Sale Proceeds. None of the
Purchase Price for any Eligible Loan will be used either directly or indirectly to acquire
any security, as that term is defined in Regulation T, and the Seller has not taken any
action that might cause any Transaction to violate Regulation T, Regulation U or Regulation
X.




     (c) Organization; Good Standing; Subsidiaries. The Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State of Colorado,
and each of the Seller’s Subsidiaries is a corporation, partnership or limited liability
company duly formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, formation or organization. The Seller has furnished to
the Agent a true and complete copy of its Organizational Documents as in effect as of the
date of this Agreement, including all amendments thereto, and agrees to furnish to the Agent
a true and complete copy of any amendment adopted after the Effective Date promptly after it
is adopted. The Seller and its Subsidiaries each has the full legal power and authority to
own its properties and to carry on its business as currently conducted and each is duly
qualified to do business as a limited partnership or foreign corporation or (in the case of
any limited liability company Subsidiaries) limited liability company and in good standing
in each jurisdiction in which the ownership of its property or the transaction of its
business makes such qualification necessary, except in jurisdictions, if any, where a
failure to be qualified, licensed or in good standing could not reasonably be expected to
have a material adverse effect on any of the Central Elements in respect of the Seller or
any of its Subsidiaries. The Seller does not have any Subsidiaries except as set forth on
Exhibit D or as have been disclosed by the Seller to the Agent in writing after the
Effective Date. Exhibit D states the name of each such Subsidiary as of the
Effective Date, place of organization, each state in which it is qualified as a foreign
entity and the percentage ownership of the capital stock or other indicia of equity of each
such Subsidiary by the Seller.




     (d) Authorization and Enforceability. The Seller has the power and authority to
execute, deliver and perform this Agreement, the Custody Agreement and all other Repurchase
Documents to which it is a party or in which it joins or has joined. The execution,
delivery and performance by the Seller of this Agreement, the Custody Agreement and all
other Repurchase Documents to which it is a party have each been duly and validly authorized
by all necessary corporate action on the part of the Seller (none of which has been modified
or rescinded, and all of which are in full force and effect) and do not and will not
(i) conflict with or violate any Legal Requirement, (ii) conflict with or violate the
Organizational Documents of the Seller, (iii) conflict with or result in a breach of or
constitute a default under any agreement, instrument or indenture binding on the Seller or
(iv) require any consent under any such agreement, instrument or indenture, where the
conflict, violation, breach, default or nonconsent could reasonably be expected to have a
material adverse effect on any of the Central Elements in respect of the Seller or any of
its Subsidiaries, or result in the creation of any Lien
upon any property or assets of the Seller, or result in or permit the acceleration of
any debt of the Seller pursuant to any agreement, instrument or indenture to which the
Seller is a party or by which the Seller or its property may be bound or affected. This
Agreement, the Custody Agreement and all other Repurchase Documents constitute the



51









 







legal,
valid, and binding obligations of the Seller enforceable in accordance with their respective
terms, except as limited by bankruptcy, insolvency or other such laws affecting the
enforcement of creditors’ rights generally.




     (e) Approvals. Neither the execution and delivery of this Agreement, the Custody
Agreement and all other Repurchase Documents nor the performance of the Seller’s obligations
under such Repurchase Documents requires any license, consent, approval or other action of
any state or federal agency or governmental or regulatory authority other than (i) those
that have been obtained or will be obtained by the time required and that remain in full
force and effect, (ii) those for which the Seller’s failure to obtain them could not
reasonably be expected to have a material adverse effect on any of the Central Elements in
respect of the Seller or any of its Subsidiaries and (iii) the filing of any financing
statements.




     (f) Financial Condition. The consolidated balance sheet of the Seller (and, to the
extent applicable, the Seller’s consolidated Subsidiaries) and the related statements of
income, changes in stockholders’ equity cash flows and Mortgage Loan production (“Financial
Statements”) for the fiscal year ended on the Statement Date (the “Statement Date Financial
Statements”) heretofore furnished to the Agent and the Buyers, fairly present the financial
condition of the Seller (and the Seller’s consolidated Subsidiaries) as of the Statement
Date and the results of their operations for the fiscal period ended on the Statement Date.
On the Statement Date, the Seller did not have either any known material liabilities, direct
or indirect, fixed or contingent, matured or unmatured, other than the contingent
liabilities (if any) set forth on Schedule 15.2(f), obligations under Permitted
Letters of Credit and contingent liability on endorsements of negotiable instruments for
deposit or collection in the ordinary course of business, or any known material liabilities
for sales, long-term leases or unusual forward or long-term commitments, which are not
disclosed by the Statement Date Financial Statements or reserved against in them or that
have not been otherwise disclosed to the Buyers in writing. Each of the Seller and each of
its Subsidiaries is Solvent, and since the Statement Date, (i) there has been no material
adverse change in any of the Central Elements in respect of the Seller or any of its
Subsidiaries, taken as a whole, nor is the Seller aware of any state of facts which (with or
without notice, the lapse of time or both) would or could reasonably be expected to result
in any such material adverse change, and (ii) there have been no unrealized or anticipated
losses from any loans, advances or other commitments of the Seller that have resulted in a
material adverse change in the Central Elements in respect of the Seller or any of its
Subsidiaries, taken as a whole, except for the material adverse changes and losses (if any)
that are summarized in Schedule 15.2(f).




     (g) Litigation. Except as disclosed on Schedule 15.2(g) or except as disclosed
in the Statement Date Financial Statements or the most recent Financial Statements furnished
to the Agent and the Buyers (whichever is more current), there are no actions, claims, suits
or proceedings pending, or to the knowledge of the Seller, threatened against
or affecting the Seller or any of its Subsidiaries in any court, before any other
Governmental Authority or before any arbitrator or in any other dispute resolution forum
that, if adversely determined, could reasonably be expected to result in a material adverse



52









 





effect on any of the Central Elements in respect of the Seller or any of its Subsidiaries,
taken as a whole.



     (h) Licensing. The Seller, and any subservicer of its Mortgage Loans are duly
registered as mortgage lenders, bankers or servicers in each state in which Mortgage Loans
have been or are from time to time originated, to the extent such registration is required
by any applicable Legal Requirement, except where the failure to register could not
reasonably be expected to result in a material adverse effect on any of the Central Elements
in respect of the Seller and its Subsidiaries, taken as a whole, or such subservicer.




     (i) Compliance with Applicable Laws. Neither the Seller nor any of its Subsidiaries is
in violation of any provision of any law, or any judgment, award, rule, regulation, order,
decree, writ or injunction of any court, other Governmental Authority or public regulatory
body that could reasonably be expected to have a material adverse effect on any of the
Central Elements in respect of the Seller and its Subsidiaries, taken as a whole.




     (j) Regulation U. The Seller is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or carrying
Margin Stock, and no part of the proceeds of any Transactions directly or indirectly made
available to or received by the Seller or for its account will be used, directly or
indirectly, for the purpose of purchasing or carrying any Margin Stock or to extend credit
to others for the purpose of purchasing or carrying any Margin Stock or for the purpose of
reducing or retiring any debt that was originally incurred to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying any Margin
Stock or that would constitute this transaction a “purpose credit” within the meaning of
Regulation U, as now or hereafter in effect.




     (k) Investment Company Act. The Seller is not required to be registered as an
“investment company” within the meaning of the Investment Company Act of 1940, as amended.




     (l) Payment of Taxes. All tax returns required to be filed by the Seller and each
Subsidiary in any jurisdiction have been filed or extended and all taxes, assessments, fees
and other governmental charges upon the Seller and each Subsidiary or upon any of its
properties, income or franchises have been paid prior to the time that such taxes could give
rise to a Lien thereon, unless protested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been established on the books of the
Seller or such Subsidiary. Neither the Seller nor any Subsidiary has any knowledge of any
tax assessment against the Seller or any Subsidiary.




     (m) Agreements. Neither the Seller nor any of its Subsidiaries is a party to any
agreement, instrument or indenture or subject to any restriction, in each case materially
and adversely affecting any of the Central Elements in respect of the Seller and its
Subsidiaries, taken as a whole, except as disclosed in (i) the Statement Date Financial
Statements, or (ii) Schedule 15.2(f). Neither the Seller nor any Subsidiary is in
default in



53









 







the performance, observance or fulfillment of any of its obligations, covenants
or conditions contained in any agreement, instrument or indenture that could reasonably be
expected to have a material adverse effect on any of the Central Elements in respect of the
Seller and its Subsidiaries, taken as a whole. No holder of the Seller’s or any such
Subsidiary’s debt or other obligations has given notice of any asserted default that could
reasonably be expected to have a material adverse effect on any of the Central Elements in
respect of the Seller or any of its Subsidiaries, taken as a whole. No liquidation or
dissolution of the Seller is pending or, to the Seller’s knowledge, threatened and no
liquidation or dissolution of any Subsidiary is pending or, to Seller’s knowledge,
threatened that could reasonably be expected to have a material adverse effect on any of the
Central Elements in respect of the Seller or any of its Subsidiaries, taken as a whole. No
receivership, insolvency, bankruptcy, reorganization or other similar proceedings relative
to the Seller or any of its properties is pending, or to the Seller’s knowledge, threatened.
No receivership, insolvency, bankruptcy, reorganization or other similar proceedings
relative to any Subsidiary of the Seller or any of its properties is pending, or to the
Seller’s knowledge, threatened that could reasonably be expected to have a material adverse
effect on any of the Central Elements in respect of the Seller or any of its Subsidiaries,
taken as a whole.




     (n) Title to Properties. The Seller and each of its Subsidiaries has good, valid,
insurable (in the case of real property) and marketable title to all of its material
Properties and assets (whether real or personal, tangible or intangible) that are reflected
on or referred to in the Statement Date Financial Statements or in the more current
Financial Statements (if any) most recently furnished to the Buyer after the Effective Date,
except for such properties and assets as have been disposed of since the date of such
current Financial Statements either in the ordinary course of business or because they were
no longer used or useful in the conduct of its business, and all such Properties and assets
are free and clear of all Liens except for (i) the lien of current (nondelinquent) real and
personal property taxes and assessments, (ii) covenants, conditions and restrictions, rights
of way, easements and other matters to which like properties are commonly subject that do
not materially interfere with the use of the property as it is currently being used and
(iii) such other Liens, if any, as are disclosed in such Financial Statements or on
Schedule 15.2 (n) and Permitted Encumbrances.




     (o) The Seller’s Address. The Seller’s chief executive office and principal place of
business are at 6550 Greenwood Plaza Boulevard, Centennial, CO 80111, or at such other
address as shall have been set forth in a written notice to the Agent given subsequent to
the Effective Date and at least ten (10) Business Days before such notice’s effective date.




     (p) ERISA. The Seller does not maintain any ERISA Plans and shall not adopt or agree
to maintain or contribute to an ERISA Plan. The Seller shall promptly notify the Agent and
each Buyer in writing in the event an ERISA Affiliate adopts an ERISA Plan.
The Seller is not an employer under any Multiemployer Plan or any other Plan subject to
Title IV of ERISA.



54









 






     (q) Commissions. Neither the Seller nor any of its Affiliates have dealt with any
broker, investment banker, agent or other person, except for the Agent and the Buyers, who
may be entitled to any commissions or compensation in connection with the sale of Purchased
Loans pursuant to this Agreement.




     (r) Full Disclosure. Each material fact or condition relating to the Repurchase
Documents and the Central Elements has been disclosed in writing to the Agent. All
information previously furnished by the Seller and its Subsidiaries to the Agent in
connection with the Repurchase Documents was and all information furnished in the future by
the Seller and its Subsidiaries to the Agent or the Buyers will be true and accurate in all
material respects or based on reasonable estimates on the date the information is stated or
certified. To the best knowledge of the Seller, neither the financial statements referred
to in Section 15.2(f) , nor any Request/Confirmation, officer’s certificate or any
other report or statement delivered by the Seller and its Subsidiaries to the Agent in
connection with this Agreement, contains any untrue statement of material fact.



     15.3. Special Representations Relating to the Purchased Loans. The representations and
warranties concerning each Purchased Loan, as set forth on Schedule 15.3 hereto, are
incorporated herein.



     15.4. Representations and Warranties Relating to Specific Transactions. At the time each
Request/Confirmation is provided to the Agent, the Buyers and/or the Custodian, the following are
true with respect to each of the Mortgage Loans listed on the Mortgage Loan Transmission Files
attached to such Request/Confirmation or submitted in connection with such Request/Confirmation:




     (a) the Basic Papers have been or will be executed and delivered by all appropriate
Persons;




     (b) the Seller is electronically communicating to the Custodian a complete Mortgage
Loan Transmission File, and the information stated for such Mortgage Loan in such standard
Mortgage Loan Transmission File is correct and complete in accordance with the Record
Layout;




     (c) such Mortgage Loan has been (or will be) originated, closed, funded and (if
applicable) negotiated and assigned to the Seller;




     (d) for each such Mortgage Loan being offered as a Dry Loan, the Basic Papers are being
concurrently delivered to the Custodian;




     (e) for each Mortgage Loan being offered as a Wet Loan, the complete File for such
Mortgage Loan, including all Basic Papers and all Supplemental Papers, is or
will be in the possession of either that Mortgage Loan’s closer, or the Seller, its
Basic Papers are in the process of being delivered to the Custodian and such Basic Papers
will be delivered to the Custodian on or before five (5) Business Days after the Purchase
Date specified above;



55









 






     (f) no default or Event of Default has occurred and is continuing and there has been no
material adverse change in any of the Central Elements in respect of the Seller or any of
its Subsidiaries since the date of the Seller’s most recent annual audited Financial
Statements that have been delivered to the Agent and the Buyers;




     (g) all items that the Seller is required to furnish to the Buyers, the Agent or the
Custodian in connection with the requested Transaction and otherwise have been delivered, or
will be delivered before the Purchase Date specified in the applicable Request/Confirmation,
in all respects as required by this Agreement and the other Repurchase Documents. All
documentation described or referred to in the Mortgage Loan Transmission File submitted to
the Agent in connection with the applicable Request/Confirmation conforms in all respects
with all applicable requirements of this Agreement and the other Repurchase Documents; and




     (h) none of the Purchased Loans (including, but not limited to, the Purchased Loans
identified in the applicable Request/Confirmation) has been sold to any Person other than
the Buyers, is pledged to any Person other than the Agent, for the benefit of itself and the
Buyers, or supports any borrowing or repurchase agreement funding other than purchases under
this Agreement.



     15.5. Survival. All representations and warranties by the Seller shall survive delivery of
the Repurchase Documents and the sales of the Purchased Loans, and any investigation at any time
made by or on behalf of the Buyers or the Agent shall not diminish any Buyer’s or the Agent’s right
to rely on them.



16 Affirmative Covenants.




     The Seller agrees that, for so long as the Commitments are outstanding or either (i) there are
any Purchased Loans that have not been repurchased by the Seller or (ii) any of the Seller’s
Obligations remain to be paid or performed under this Agreement or any of the other Repurchase
Documents:



     16.1. [RESERVED].



     16.2. Office of Foreign Assets Control and USA Patriot Act.




     (a) The Seller will not knowingly directly or indirectly use any of the proceeds from
the sale of the Purchased Loans, or lend, contribute or otherwise make available any such
proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose
of financing the activities of any person or entity that is subject to sanctions under any
program administered by the Office of Foreign Assets Control of the United States Department
of the Treasury, including those implemented by regulations codified in Subtitle B, Chapter
V, of Title 31, Code of Federal Regulations.




     (b) The Seller will not (i) be or become subject at any time to any law, regulation or
list of any government agency (including the U.S. Office of Foreign Asset Control list) that
prohibits or limits the Buyers or the Agent from entering into any Transaction with the
Seller or from otherwise conducting business with the Seller, or



56









 







(ii) fail to provide
documentary and other evidence of the Seller’s identity as may be requested by the Agent or
any Buyer at any time to enable the Agent and the Buyers to verify the Seller’s identity or
to comply with any applicable law or regulation, including Section 326 of the USA Patriot
Act of 2001, 31 U.S.C. Section 5318.



     16.3. Financial Statements. The Seller will deliver to the Agent who will post the same for
viewing by all Buyers on a secure internet site within one Business Day of receipt:




     (a) As soon as available and in any event within thirty (30) days after the end of each
month (including each quarter end and year end month), Financial Statements for the Seller
and its Subsidiaries for the month just ended, all in reasonable detail, and certified by
its vice president-finance or other acceptable person that, such Financial Statements were
prepared in accordance with GAAP and present fairly in all material respects the Seller’s
and its consolidated Subsidiaries’ financial condition as of the date thereof and the
results of their operations for the period covered, subject, however, to adjustments
required by FAS-91 and normal year-end audit adjustments and the omission of notes to the
Financial Statements.




     (b) As soon as available and in any event within ninety (90) days after the close of
each of its fiscal years, audited consolidated and consolidating Financial Statements for
the Seller and its consolidated Subsidiaries for such year, and the related balance sheet as
at the end of such year (setting forth in comparative form the corresponding figures as of
the end of and for the preceding fiscal year), all in reasonable detail, prepared in
accordance with GAAP and with all notes, and accompanied by:




     (i) a report and clean and unqualified opinion of a firm of independent
certified public accountants of recognized standing selected by the Seller and
reasonably acceptable to the Agent (as of the Effective Date, Ernst & Young, LLP is
acceptable to the Agent), stating that such accountants have audited such Financial
Statements in accordance with generally accepted auditing standards
and that, in their opinion, such Financial Statements present fairly, in all
material respects, the consolidated financial condition of the Seller and its
consolidated Subsidiaries as of the date thereof and the consolidated results of its
operations and cash flows for the periods covered thereby in conformity with GAAP;




     (ii) any management letters, management reports or other supplementary comments
or reports delivered in conjunction with the report and opinion in Section
16.3(b)(1) by such accountants to management or the board of directors of the
Seller; and




     (iii) a certificate signed by the vice president-finance or other acceptable
person of the Seller stating that said Financial Statements fairly present the
consolidated financial condition and results of operations (for the Seller and its
consolidated Subsidiaries) as at the end of, and for, such year.



57









 




The Seller also agrees to provide to the Agent and the Buyers such other information related to
such annual reports or concerning the Seller’s finances or operations as the Agent or any Buyer may
from time to time reasonably request.





     (c) Financial Officer’s Certificate. Together with each of the monthly and annual
Financial Statements required by Sections 16.3(a), and 16.3(b) above, a
certificate of the Seller’s vice president-finance or other acceptable person in the form of
Exhibit C, among other things, (i) setting forth in reasonable detail all
calculations necessary to show whether the Seller is in compliance with the requirements of
Sections 17.12, 17.13, 17.14 and 17.15 of this Agreement or,
if the Seller is not in compliance, showing the extent of noncompliance and specifying the
period of noncompliance and what actions the Seller proposes to take with respect thereto
and (ii) stating that the terms of this Agreement have been reviewed by such officer or
under his or her supervision, and that he or she has made or caused to be made under his or
her supervision, a review in reasonable detail of the transactions and the condition of the
Seller during the accounting period covered by such Financial Statements and that such
review does not disclose the existence during or at the end of such accounting period and
that such officer does not have knowledge of the existence as of the date of the Officer’s
Certificate of any Event of Default or Default or, if any Event of Default or Default
existed or exists, specifying the nature and period of its existence and what action the
Seller has taken, is taking and proposes to take with respect to it.



     16.4. Financial Statements Will Be Accurate. The Seller agrees that all Financial Statements
and reports of auditors furnished to the Agent and the Buyers will be prepared in accordance with
GAAP, applied on a basis consistent with that applied in preparing the Statement Date Financial
Statements as at the date thereof and for the period then ended, subject, however for Financial
Statements other than year-end statements to year-end audit adjustments and the omission of
footnotes.



     16.5. Other Reports. The Seller will promptly furnish to the Agent from time to time
information regarding the business and affairs of the Seller (and, upon the written request of any
Buyer, such information reasonably requested by such Buyer), including the following and such other
information as the Agent may from time to time reasonably request (each report required must be
signed by a duly authorized officer of the Seller, and the Agent and the Buyers will have no
responsibility to verify or track any of the items referenced or conclusions stated in such reports
or to verify the authority of its signer):




     (a) A report of Purchased Loans prepaid in full, on or before one (1) Business Day
after prepayment of any one or more Purchased Loans is reported to the Seller internally or
by any Servicer or the Seller’s subservicer (and the Seller, as applicable, will require
each such Servicer and subservicer to promptly make such reports to the Seller, as
applicable).




     (b) Monthly with the certificate required by Section 16.3(c), a report attached
to Exhibit C summarizing (i) notices received by the Seller requesting or demanding
that the Seller repurchase (or pay indemnity or other compensation in respect of) Mortgage
Loans previously sold or otherwise disposed of by the Seller to any investor or other



58









 







Person
pursuant to any express or implied repurchase or indemnity obligation (whether absolute or
contingent and whether or not the Seller is contesting or intends to contest such request or
demand) and (ii) actual repurchase and indemnity payments made by the Seller to any Person.




     (c) Monthly with the certificate required under Section 16.3(c), a Purchased
Loans Curtailment Report.




     (d) Monthly, a summary of the Seller’s other repurchase, reverse repurchase or asset
warehousing facilities. Such report shall be in form and format reasonably acceptable to
the requesting party and include the total amount available, amount outstanding and maturity
date of each of such facilities, the counterparties and whether such facilities are
committed or uncommitted.




     (e) Such other reports by the Seller in respect of the Purchased Loans, in such detail
and at such times as the Agent or any Buyer in its reasonable discretion may request at any
time or from time to time.




     (f) As soon as practicable and in any event within one hundred twenty (120) days after
the beginning of each fiscal year of the Seller, projected financial information for fiscal
year consisting of income statements, statements of cash flow and loan production estimates
for each month in such fiscal year and a projected balance sheet of the Seller as at the end
of each month, together with supporting assumptions, all in reasonable detail and reasonably
satisfactory in scope to the Agent.




     (g) As soon as available and in any event no later than the first Business Day of the
following week, the Seller’s internally generated “marketing position report” and summary
showing the Seller’s pipeline and inventory and, with respect to each Investor
Commitment, the type, expiration date, price, interest rate and/or required yield, and
the original amount or aggregate thereof and the portions thereof that have been utilized
and the portions thereof that remain available, together with a calculation of the “weighted
average price” of all Investor Commitments as of the end of such week.




     (h) Monthly with the certificate required under Section 16.3(c), an updated
Schedule 17.2 reflecting the changes, if any, from the previously effective
Schedule 17.2.



     16.6. Maintain Existence and Statuses; Conduct of Business. The Seller agrees to preserve and
maintain its existence in good standing and all of its rights, privileges, licenses and franchises
necessary or desirable in the normal conduct of its business except where the failure to maintain
such rights, privileges, licenses or franchises could not reasonably be expected to have a material
adverse effect on any of the Central Elements in respect of the Seller or any of its Subsidiaries,
and the Seller will continue in the residential mortgage lending business as its principal and core
business.



     16.7. Compliance with Applicable Laws. The Seller and its Subsidiaries will comply with all
applicable Legal Requirements, the breach of which could reasonably be expected to materially
adversely affect any of the Central Elements with respect to the Seller and its Subsidiaries, taken
as a whole, except where contested in good faith.



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     16.8. Inspection of Properties and Books; Protection of Seller’s Proprietary Information;
Buyers’ Due Diligence of Seller.




     (a) The Seller agrees to permit the Agent and the Buyers, subject to the provisions of
Section 16.9, to perform continuing loan level due diligence reviews with respect to
the Purchased Loans, for purposes of verifying compliance with the representations,
warranties and specifications made in this Agreement or otherwise, and the Seller agrees
that upon reasonable prior notice to the Seller, the Agent or their authorized
representatives will be permitted timely and reasonable access to examine, inspect, and make
copies and extracts of, the related mortgage loan files and any and all documents, records,
agreements, instruments or information relating to such Purchased Loans in the possession or
under the control of the Seller, any Servicer or the Custodian. The Seller also shall make
available to the Agent a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the mortgage loan files and the Purchased Loans. Without
limiting the generality of the foregoing, the Seller acknowledges that the Buyers may
purchase Eligible Loans from the Seller based solely upon the information provided by the
Seller to the Agent in the Mortgage Loan Transmission File and the representations,
warranties and covenants contained in this Agreement, and that the Agent and the Buyers, at
their option, have the right at any time with reasonable prior notice to conduct a partial
or complete due diligence review on some or all of the Purchased Loans prior to or following
their purchase in a Transaction, including ordering new credit reports and new appraisals on
any property securing any
Purchased Loan and otherwise re-generating the information used to originate such
Purchased Loan. Notwithstanding any provision to the contrary herein regarding reasonable
prior notice, if an Event of Default in respect of the Seller shall have occurred and be
continuing, then the Agent, upon notice to the Seller, shall have the right to immediate
access and review of the Seller and the loan information contemplated in this Section
16.8(a), provided that to the extent that the Seller does not have possession of such
loan information, the Seller shall cause the applicable Servicer or subservicer to provide
the Agent and the Buyers with access and review of such loan information within a reasonable
period of time, but not to exceed any prior notification time provided under the related
Servicing Agreement with such Servicer or subservicer. The Agent may conduct the due
diligence review of such Purchased Loans itself or engage a third party underwriter selected
by the Agent to perform such review. The Seller agrees to, and to cause any relevant
Servicer and its subservicer to, reasonably cooperate with the Agent and any third party
underwriter in connection with such due diligence review, including providing the Agent and
any third party underwriter with access to any and all documents, records, agreements,
instruments or information relating to such Purchased Loans in the possession, or under the
control, of the Seller, such Servicer and such subservicer. The Seller agrees to pay all
costs and expenses of the Agent and, if a Default or Event of Default has occurred and is
continuing, any Buyer, incurred in the exercise of their rights pursuant to this Section
16.8(a). Such visits shall be coordinated by the Agent.




     (b) The Seller agrees to permit authorized representatives of the Agent and each Buyer,
at such Buyer’s expense except after the occurrence and during the continuance of a Default
or Event of Default, to discuss onsite the business, operations,



60









 







assets and financial
condition of the Seller and its Subsidiaries with their respective officers, employees and
independent accountants and to examine their books of account and make copies or extracts of
them, all at such reasonable times and upon such reasonable notice as the Agent or any Buyer
may request, for any or all of the purposes of ordinary diligence, performing the Buyers’
duties (and any of the Seller’s duties that the Seller has not performed) and enforcing the
Buyers’ and the Agent’s rights under this Agreement. To the extent that it is commercially
reasonable, any Buyer that desires to act under this Section 16.8(b) shall do so
either through the Agent, or with the coordination of the Agent, and to the extent that it
is not commercially reasonable for a Buyer to do so, such Buyer may only act under this
Section 16.8(b) one (1) time in any consecutive six (6) month period and, unless
such Buyer is the Person serving as the Agent, at such Buyer’s expense (or, after the
occurrence and during the continuance of a Default or Event of Default, at the Seller’s
expense). The Agent or the Buyer acting will notify the Seller before contacting the
Seller’s accountants and the Seller may have its representatives in attendance at any
meetings between the officers or other representatives of the Agent or any Buyer and such
accountants held in accordance with this authorization. The Agent and each Buyer agrees
that it will prevent disclosure by itself or its authorized representatives to third parties
of any proprietary information it has received pursuant to this Agreement and will maintain
the confidential nature of such material; provided that this restriction shall not apply to
information that (i) at the time in question has already entered the public domain, (ii) is
required to be disclosed by any Legal Requirement (including pursuant to any examination,
inspection or investigation
by any Governmental Authority having regulatory jurisdiction over any Buyer or the
Agent), (iii) is furnished by the Agent, or any Buyer to purchasers or prospective
purchasers of participations or interests in the Purchased Loans so long as such purchasers
and prospective purchasers have agreed to be subject to restrictions substantially identical
to those contained in this sentence, (iv) the disclosure of which the Agent and the Buyers
deem necessary to market or sell Purchased Mortgage Loans or to enforce or exercise their
rights under any Repurchase Document as long as any recipients have agreed to be subject to
restrictions substantially similar to those in this sentence, or (v) is disclosed by any
Buyer to its attorneys, employees, agents and auditors during the performance of their
respective duties, subject to the restrictions set forth in this sentence.



     16.9. Privacy of Customer Information. The Seller’s Customer Information in the possession of
the Agent or the Buyers, other than information independently obtained by the Agent or the Buyers
and not derived in any manner from or using information obtained under or in connection with this
Agreement, is and shall remain confidential and proprietary information of the Seller. Except in
accordance with this Section 16.9, the Agent and the Buyers shall not use any Seller’s
Customer Information for any purpose, including the marketing of products or services to, or the
solicitation of business from, Customers, or disclose any Seller’s Customer Information to any
Person, including any of the Agent’s or the Buyers’ employees, agents or contractors or any third
party not affiliated with the Agent or a Buyer. The Agent and the Buyers may use or disclose the
Seller’s Customer Information only to the extent necessary (i) for examination and audit of the
Agent’s or the Buyers’ respective activities, books and records by their regulatory authorities,
(ii) to market or sell Purchased Mortgage Loans or to enforce or exercise their rights under any
Repurchase Document, (iii) to carry out the Agent’s, the Buyers’ and the Custodian’s express rights
and obligations under this Agreement and the other



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Repurchase Documents (including providing the
Seller’s Customer Information to Approved Investors), or (iv) in connection with an assignment or
participation as authorized by Section 22 or in connection with any hedging transaction
related to the Purchased Loans and for no other purpose; provided that the Agent and the Buyers may
also use and disclose the Seller’s Customer Information as expressly permitted by the Seller in
writing, to the extent that such express permission is in accordance with the Privacy Requirements.
The Agent and the Buyers shall ensure that each Person to which the Agent or a Buyer intends to
disclose the Seller’s Customer Information, before any such disclosure of information, agrees to
keep confidential any such Seller’s Customer Information and to use or disclose such Seller’s
Customer Information only to the extent necessary to protect or exercise the Agent’s, the Buyers’
or the Custodian’s rights and privileges, or to carry out the Agent’s, the Buyers’ and the
Custodian’s express obligations, under this Agreement and the other Repurchase Documents (including
providing the Seller’s Customer Information to Approved Investors). The Agent agrees to maintain
an Information Security Program and to assess, manage and control risks relating to the security
and confidentiality of the Seller’s Customer Information pursuant to such program in the same
manner as the Agent does in respect of its own customers’ information, and shall implement the
standards relating to such risks in the manner set forth in the Interagency Guidelines Establishing
Standards for Safeguarding Company Customer Information set forth in 12 CFR Parts 30, 208, 211,
225, 263, 308, 364, 568 and 570. Without limiting the scope of the foregoing sentence, the Agent
and the Buyers shall use at least the same physical and other security measures to protect all of
the Seller’s Customer Information in their
possession or control as each of them uses for its own customers’ confidential and proprietary
information.



     16.10. Notice of Suits, Etc. and Notice. The Seller will, as soon as reasonably practical and
in any case no later than three (3) Business Days next following the day when the Seller first
learns of it, give written notice to the Agent and the Buyers of:




     (a) any material action, suit or proceeding instituted by or against the Seller or any
of its Subsidiaries in any federal or state court or before any commission, regulatory body
or Governmental Authority, or if any such proceedings are threatened against the Seller or
any of its Subsidiaries, in a writing containing the applicable details;




     (b) the filing, recording or assessment of any material federal, state or local tax
lien against the Seller or any of its Subsidiaries or any assets of any of them;




     (c) the occurrence of any Event of Default;




     (d) the occurrence of any Default;




     (e) the termination of, or the occurrence of any event which, with or without notice or
lapse of time or both, would constitute a default under the Custody Agreement;




     (f) the occurrence of:




     (i) any event that, with or without notice or lapse of time or both, would
constitute a default under, or permit the acceleration or termination of, any other
agreement, instrument or indenture to which the Seller or any of its Subsidiaries is
a party or to which any of them or any of their properties or assets



62









 







may be subject
if either (A) the effect of any such default is or if uncured and unwaived after
notice, the lapse of time or both, would be to cause, or to permit any other party
to such agreement, instrument or indenture (or a trustee on behalf of such a party)
to cause, Debt of the Seller or any of its Subsidiaries to become or be declared due
before its stated maturity or (B) such default, if uncured and unwaived after any
relevant notice, the lapse of time or both, could reasonably be expected to result
in a material adverse effect on any of the Central Elements in respect of the Seller
or any of its Subsidiaries;




     (ii) any margin call requiring the Seller to make a payment with respect to any
credit facility or repurchase facility for financing Mortgage Loans or MBS;




     (iii) the acceleration of any material Debt obligation of the Seller or the
termination of any credit facility of the Seller;




     (iv) any other action, event or condition of any nature (excluding general
economic conditions) that, if unremedied after any relevant notice, lapse
of time or both, could reasonably be expected to result in either (A) the
Seller’s being in breach of or out of compliance with any provision of Sections
17.12, 17.13, 17.14 and 17.15 (Financial Covenants) or
(B) a material adverse effect on any of the Central Elements in respect of the
Seller or any of its Subsidiaries; or




     (v) the curing by the Seller, or the waiver by the other party to the relevant
agreement, instrument or indenture, of any event described in Section
16.10(f)(1) and, in the case of curing, whether the event was cured before any
applicable grace or notice and opportunity to cure period had expired.




     (vi) any Prohibited Transaction with respect to any Plan, specifying the nature
of the Prohibited Transaction and what action the Seller proposes to take with
respect to it.



     16.11. Payment of Taxes, Etc. The Seller will, and will cause each of its Subsidiaries to,
pay and discharge or cause to be paid and discharged promptly all taxes, assessments and
governmental charges or levies imposed upon it or its Subsidiaries or upon their respective income,
receipts or properties before they become past due, as well as all lawful claims for labor,
materials and supplies or other things that, if unpaid, could reasonably be expected to become (or
result in the placement of) a Lien or charge upon any part of such properties; provided that it and
its affected Subsidiaries shall not be required to pay taxes, assessments or governmental charges
or levies or claims for labor, materials or supplies that are being contested in good faith and by
proper proceedings being reasonably and diligently pursued, execution or enforcement of which has
been effectively stayed (by the posting of a bond or other security sufficient to achieve that
result, or by any other fully effective means), and for which reserves determined to be adequate
(in accordance with GAAP in all material respects) have been set aside on its books.



     16.12. Insurance; fidelity bond. The Seller will, and will cause each of its Subsidiaries to:



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     (a) maintain liability insurance protecting the Seller and its Subsidiaries against
fire and other hazard insurance on its respective properties from which it conducts its
business, with responsible insurance companies, in such amounts and against such risks as is
customarily carried by similar businesses operating in the same vicinity. Copies of such
policies shall be furnished to the Agent without charge upon the Agent’s request made from
time to time; and




     (b) obtain and maintain at its own expense and keep in full force and effect a blanket
fidelity bond and an errors and omissions insurance policy covering the Seller’s officers
and employees and other persons acting on behalf of the Seller. The amount of coverage
shall be at least equal to the coverage that would be required by Fannie Mae or Freddie Mac,
whichever is greater, with respect to the Seller if the Seller were servicing and
administering the Mortgage Loans for Fannie Mae or Freddie Mac. In the event that any such
bond or policy ceases to be in effect, the Seller shall obtain a comparable replacement bond
or policy, as the case may be, meeting the requirements of this
Section 16.12(b). Coverage of the Seller under any policy or bond obtained by
an Affiliate of the Seller and providing the coverage required by this
Section 16.12(b) shall satisfy the requirements of this Section 16.12(b).
Upon the request of the Agent, the Seller shall cause to be delivered to the Buyer evidence
of such fidelity bond and insurance policies.



     16.13. Maintain Lien on Mortgaged Premises. The Seller will maintain the Lien on the
Mortgaged Premises securing each Purchased Loan as a first Lien (or, for Second Mortgage Loans, as
a second Lien), subject only to the Permitted Encumbrances.



     16.14. [RESERVED]



     16.15. Certain Debt to Remain Unsecured. The Seller will cause any and all obligations of the
Seller to any shareholder, officer or Affiliate of the Seller, whether such debt exists as of the
Effective Date or is incurred in the future, to remain at all times unsecured.



     16.16. Promptly Correct Escrow Imbalances. By no later than seven (7) Business Days after
learning (from any source) of any material imbalance in any escrow account(s) maintained by the
Seller (or any subservicer for it), the Seller will fully and completely correct and eliminate such
imbalance.



     16.17. MERS Covenants. The Seller will:




     (a) be a “Member” (as defined in the MERS Agreements) of MERSCORP;




     (b) maintain the Electronic Tracking Agreement in full force and effect and timely
perform all of its obligations thereunder;




     (c) provide the Agent with copies of any new MERS Agreement or any amendment,
supplement or other modification of any MERS Agreement (other than the Electronic Tracking
Agreement);



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     (d) not amend, terminate or revoke, or enter into any agreement that is inconsistent
with or contradicts any provision of the Electronic Tracking Agreement;




     (e) identify to the Agent each Purchased Loan that is registered in the MERS System, at
the earlier of the time it is so registered or the time it is purchased or deemed purchased
hereunder, as so registered;




     (f) at the request of the Agent, take such actions as may be requested by the Agent to:




     (i) transfer beneficial ownership of any Purchased Loan to the Agent on behalf
of the Buyers on the MERS System; or




     (ii) de-register or re-register any Purchased Loan on, or withdraw any
Purchased Loan from, the MERS System;




     (g) provide the Agent with copies of any or all of the following reports with respect
to the Purchased Loans registered on the MERS System at the request of the Agent:




     (i) Co-existing Security Interest (MERS form IA);




     (ii) Release of Security Interest by Interim Funder (MERS form IB);




     (iii) Interim Funder Rejects (MERS form IC);




     (iv) Paid in Full Verification (MERS form DK); and




     (v) such other reports as the Agent may reasonably request to verify the status
of any Purchased Loan on the MERS System;




     (h) notify the Agent of any withdrawal or deemed withdrawal of the Seller’s membership
in the MERS System or any deregistration of any Purchased Loan previously registered on the
MERS System; and




     (i) obtain the prior written consent of the Agent before entering into an electronic
tracking agreement (other than the Electronic Tracking Agreement) with any other Person.



     16.18. Special Affirmative Covenants Concerning Purchased Loans.




     (a) Until both (i) all of the Purchased Loans shall have been repurchased by the Seller
and (ii) the Buyers have no obligation to purchase any additional Loans hereunder or provide
any other financial accommodations to the Seller under or otherwise in respect of this
Agreement, the Seller warrants and will defend the right, title and interest of the Buyers
and the Agent in and to the Purchased Loans against the claims and demands of all persons
whomsoever.



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     (b) As soon as they become available and in any event within five (5) Business Days
after the Purchase Date for Wet Loans, the Seller will cause to be assembled and delivered
to the Custodian all Basic Papers relating to Wet Loans. Without limitation of the
foregoing, if original recordation receipts evidencing the recordation of the Mortgage and
Mortgage Assignment included in the Purchased Loans
have not previously been delivered to the Custodian, the Seller will promptly deliver
(or cause to be delivered) to the Custodian, either the original recordation receipts or the
original recorded Mortgage or Mortgage Assignment showing the recordation data thereon.




     (c) The Seller shall maintain, at its principal office or in a regional office not
disapproved by the Agent, or in the office of a computer service bureau engaged by the
Seller and not disapproved by the Agent, and upon request shall make available to the Agent
and the Custodian the originals of all Loan Papers and related instruments, and all files,
surveys, certificates, correspondence, appraisals, computer programs, tapes, discs, cards,
accounting records and other information and data relating to the Purchased Loans that are
held by or under the direction or control of the Seller or any of its Affiliates and that
have not already been provided to the Agent or the Custodian.




     (d) The Seller shall ensure that, if a Mortgage Loan that is to be funded and sold to
the Buyers as a Wet Loan does not close on the proposed Purchase Date, all amounts remitted
by the Agent for the payment of the Purchase Price shall be returned promptly within one (1)
Business Day to the Agent for the benefit of the Buyers and if such funds are not so
returned, the Seller shall pay promptly within one (1) Business Day a like amount to the
Agent for the benefit of the Buyers plus any accrued Price Differential. The Seller
acknowledges that until such time as the Mortgage Loan is deemed to have been sold to the
Buyers, the Seller has no interest in, nor any claim to such amounts and shall, if it
receives such amounts, hold such amounts in trust for the Buyers and shall promptly remit
such funds to the Agent for disbursement to the Buyers.



     16.19. Coordination with Other Lenders/Repo Purchasers and Their Custodians. The Seller will
provide to the Agent the current name, address and contact information concerning each of the
Seller’s other mortgage warehouse credit and repurchase facilities, will update such information
provided to the Agent as changes to the facilities or such name, address or contact information
occurs, and will cooperate and assist the Agent in exchanging information with such others (and
their document custodians or trustees) to prevent conflicting claims to and interests in Purchased
Loans between or among repurchase facilities counterparties or lenders, and promptly correct such
conflicting claims as may arise from time to time. The Seller will execute and deliver to the
Agent any intercreditor agreement Agent may require pursuant to Section 17.8.



17 Negative Covenants.




     The Seller agrees that, for so long as the Commitments are outstanding or until all of the
Purchased Loans have been repurchased by the Seller and none of the Seller’s Obligations remain to
be paid or performed under this Agreement or any of the other Repurchase Documents, the Seller
shall not, and shall not permit any Subsidiary to, either directly or indirectly, do any of the
following without the prior written consent of the Required Buyers:



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     17.1. No Merger. The Seller shall not merge or consolidate with or into any Person.



     17.2. Limitation on Debt and Contingent Indebtedness. At no time shall the Seller or any
Subsidiary incur, create, contract, assume, have outstanding, guarantee or otherwise be or become,
directly or indirectly, liable in respect of any Debt or Contingent Indebtedness except:




     (a) the Obligations;




     (b) trade debt (including, without limitation, trade debt for services provided by an
Affiliate), equipment leases, loans for the purchase of equipment used in the ordinary
course of the Seller’s business and indebtedness for taxes and assessments not yet due and
payable owed in the ordinary course of business;




     (c) with the prior written consent of the Required Buyers (which consent shall not be
unreasonably withheld, delayed or conditioned upon fees), Debt under a mortgage warehousing
facility, mortgage repurchase facility or off-balance sheet indebtedness under another
financing arrangement, provided that the Agent serves as collateral agent for such financing
arrangement;




     (d) liabilities to the Parent or other Affiliates incurred in the ordinary course of
business as currently conducted; and




     (e) liabilities (other than for borrowed money or the equivalent) incurred in the
ordinary course of business; including, without limitation, liabilities under Hedge
Agreements entered into in the ordinary course of business and not for speculative purposes.



     17.3. Business. The Seller shall not, directly or indirectly, engage in any businesses which
differ materially from those currently engaged in by the Seller or any other businesses customarily
engaged in by other Persons in the mortgage banking business.



     17.4. Liquidations, Dispositions of Substantial Assets. Except as expressly provided below in
this Section 17.4, neither the Seller nor any Subsidiary shall dissolve or liquidate or
sell, transfer, lease or otherwise dispose of any material portion of its property or assets or
business. Except as provided herein for the Purchased Loans, the Seller and the Subsidiaries may
sell other Mortgage Loans and the right to service such other Mortgage Loans in the ordinary course
of their business pursuant to other repurchase facilities or mortgage warehousing facilities
allowed hereunder, any Subsidiary may sell its property, assets or business to the Seller or
another Subsidiary, and any Subsidiary may liquidate or dissolve if at the time thereof and
immediately thereafter, the Seller and the Subsidiaries are in compliance with all covenants set
forth in the Repurchase Documents and no Default or Event of Default shall have occurred and be
continuing.



     17.5. Loans, Advances, and Investments. Neither the Seller nor any Subsidiary shall make any
loan (other than Mortgage Loans), advance, or capital contribution to, or investment in (including
any investment in any Subsidiary, joint venture or partnership), or purchase or otherwise acquire
any of the capital stock, securities, ownership interests, or evidences of



67









 







indebtedness of, any
Person (collectively, “Investment”), or otherwise acquire any interest in, or control of, another
Person, except for the following:




     (a) Cash Equivalents;




     (b) Any acquisition of securities or evidences of indebtedness of others when acquired
by the Seller in settlement of accounts receivable or other debts arising in the ordinary
course of its business, so long as the aggregate amount of any such securities or evidences
of indebtedness is not material to the business or condition (financial or otherwise) of the
Seller;




     (c) Mortgage Loans acquired in the ordinary course of the Seller’s business;




     (d) Investment in any existing Subsidiary; provided that at the time any such
investment is made and immediately thereafter, the Seller and the Subsidiaries are in
compliance with all covenants set forth in the Repurchase Documents and no Default or Event
of Default shall have occurred and be continuing;




     (e) promissory notes of the Parent issued in support of Permitted Letters of Credit;




     (f) Investments in the Parent or other Affiliates incurred in the ordinary course of
business as currently conducted; and




     (g) Investments arising in connection with the Hedge Agreements entered into in the
ordinary course of business and not for speculative purposes.



     17.6. Use of Proceeds. The Seller shall not, directly or indirectly, use any of the proceeds
of the Transactions for the purpose, whether immediate, incidental or ultimate, of buying any
“margin stock” or of maintaining, reducing or retiring any Debt or Contingent Indebtedness
originally incurred to purchase a stock that is currently any “margin stock,” or for any other
purpose that might constitute this transaction a “purpose credit,” in each case within the meaning
of Regulation U or otherwise take or permit to be taken any action that would involve a violation
of Regulation U, Regulation T or Regulation X.



     17.7. Transactions with Affiliates. The Seller shall not enter into any transactions
including, without limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Affiliate unless such transactions are otherwise permitted under this
Agreement (including, without
limitation, the transactions permitted under Section 17.2 or Section 17.5) and
are in the ordinary course of the Seller’s business.



     17.8. Liens. The Seller shall not grant, create, incur, assume, permit or suffer to exist any
Lien, upon any of its Mortgage Notes or any property related thereto, including but not limited to
the Mortgages securing such Mortgage Notes and the proceeds of the Mortgage Notes, unless such
Liens are the subject of an intercreditor agreement in form and substance satisfactory to the
Agent, other than: (a) Liens under approved warehouse or repurchase facilities under Section
17.2(c), and (b) Liens granted to the Buyers under Section 10.



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     17.9. ERISA Plans. Neither the Seller nor any Subsidiary shall adopt or agree to maintain or
contribute to an ERISA Plan. The Seller shall promptly notify Agent and each Buyer in writing in
the event an ERISA Affiliate adopts an ERISA Plan.



     17.10. Change of Principal Office; Fiscal Year. The Seller shall not move its principal
office, executive office or principal place of business from the address set forth in this
Agreement or change its Fiscal Year, without prior written notice to the Agent and each Buyer.



     17.11. Distributions. The Seller shall make no payment of dividends or distributions to
Parent if either before or after giving effect thereto a Default or an Event of Default exists or
shall be caused thereby.



     17.12. Adjusted Tangible Net Worth. At all times, the Seller’s Adjusted Tangible Net Worth
shall not be less than Fifteen Million Dollars ($15,000,000).



     17.13. Adjusted Tangible Net Worth Ratio. At all times, the ratio of (i) Total Liabilities to
(ii) the Adjusted Tangible Net Worth shall not be more than 12.5 to 1.0.



     17.14. Adjusted Net Income. As of the end of each month, the Seller’s net income, determined
in accordance with GAAP, for the twelve consecutive months then ended shall not be less than One
Dollar ($1.00).



     17.15. Liquidity. The Seller’s Liquidity shall at all times be no less than Five Million
Dollars ($5,000,000).



     17.16. Special Negative Covenants Concerning Purchased Loans. Except to correct errors or
omissions in Loan Papers, without the written consent of the Agent given on a case-by-case basis,
the Seller shall not amend or modify, or waive any of the terms and conditions of any Purchased
Loans, or settle or compromise any claim in respect of them, or accept other than cash or the
exchange of comparable Purchased Loans (which is concurrently sold by the Seller to the Buyers) in
liquidation of any Purchased Loans.



     17.17. No Changes in Accounting Practices. The Seller shall not make any significant change
in accounting treatment or reporting practices, except as required by GAAP, or change its fiscal
year.



18 Events of Default; Event of Termination.




     18.1. Events of Default. The following events shall constitute events of default (each an
“Event of Default”) hereunder:




     (a) The Seller shall default in the payment of (i) the Repurchase Price for any
Purchased Loans on the applicable Repurchase Date, (ii) any Price Differential, Facility
Fees or Agent’s Fees when due and fail to cure such default within one (1) Business Day,
(iii) any amount required to be paid or transferred or paid to eliminate any Margin Deficit
within the time period specified in Section 6.2 or (iv) any other Obligation, when
the same shall become due and payable, whether at the due date thereof, or by acceleration
or



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otherwise, and the Seller fails to pay the same within three (3) Business Days after the
date such Obligation becomes due.




     (b) An Event of Insolvency occurs with respect to the Seller or a Subsidiary.




     (c) Any representation or warranty made by the Seller under any Repurchase Document
shall have been incorrect or untrue in any material respect when made or repeated or deemed
to have been made or repeated; provided, that in the case of representations and warranties
made with respect to the Purchased Loans, such circumstance shall not constitute an Event of
Default if, after determining the Purchase Value of the Purchased Loans without taking into
account the Purchased Loans with respect to which such circumstance has occurred, no other
Event of Default shall have occurred and be continuing.




     (d) Any covenant contained in Sections 16.4 or 17 (except for the
covenants contained in Sections 17.10 and 17.16) shall have been breached.




     (e) Any covenant contained in Sections 16, 17.10 or 17.16 shall
have been breached in any material respect (except for the covenant in Section
16.4), or any other covenant or agreement contained in any Repurchase Document is
breached in any
material respect, and in each case, such breach is not cured within fifteen (15)
calendar days of the earlier of the Seller’s knowledge of such breach or the Seller’s
receipt of notice of such breach from any source; provided, that in the case of covenants
made with respect to the Purchased Loans, such circumstance shall not constitute an Event of
Default if, after determining the Purchase Value of the Purchased Loans without taking into
account the Purchased Loans with respect to which such circumstance has occurred, no other
Event of Default shall have occurred and be continuing.




     (f) Failure of the Seller or any of its Subsidiaries to pay any other Debt when due,
or any default in the payment when due of any principal or interest on any other Debt or in
the payment when due of any contingent obligation (other than nonrecourse MBS Debt of any
Affiliate formed for the purpose of issuing such Debt), or any breach or default with
respect to any other material term of any other debt or of any promissory note, bond, loan
agreement, reimbursement agreement, mortgage, indenture, repurchase agreement or financing
agreement or other agreement relating thereto, if the effect of any such failure, default,
breach or event referred to in this Section 18.1(f) is to cause, or to permit, with
or without the giving of notice or lapse of time or both, the holder or holders of such
obligation (or a trustee on behalf of such holder or holders) to cause, Debt of the Seller
or any of its Subsidiaries in the aggregate amount of One Million Dollars ($1,000,000) or
more to become or be declared due before its stated maturity.




     (g) A Change of Control shall occur.




     (h) A material adverse change shall occur in any of the Central Elements relative to
the Seller and its Subsidiaries, taken as a whole.




     (i) The Seller shall repudiate or purport to disavow its obligations under any of the
Repurchase Documents or shall contest their validity or enforceability.



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     (j) This Agreement shall cease to be in full force and effect or its enforceability is
disputed or challenged by the Seller.




     (k) The Seller shall take or omit to take any act (i) that would result in the
suspension or loss of any of its statuses, once achieved or any of such statuses of any of
its subservicers, if any, of any Ginnie Mae, Fannie Mae or Freddie Mac Mortgage Loans pools
for which the Seller is Servicer as an FHA- and VA-approved lender and mortgagee and a
Ginnie Mae-, Fannie Mae- and Freddie Mac-approved issuer and servicer, or (ii) after which
the Seller or any such relevant subservicer would no longer be in good standing as such, or
(iii) after which the Seller or any such relevant subservicer would no longer currently
satisfy all applicable Ginnie Mae, Fannie Mae and Freddie Mac net worth requirements, if
both (A) all of the material effects of such act or omission shall have not been cured by
the Seller or waived by the relevant Person (Ginnie Mae, Fannie Mae or Freddie Mac) before
termination of such status and (B) it could reasonably be expected to have a material
adverse effect on any of the Central Elements in respect of the Seller or any of its
Subsidiaries.




     (l) Any money judgment, writ or warrant of attachment, or similar process involving in
any case an amount in excess of One Million Dollars ($1,000,000) (in excess of relevant
insurance coverage reasonably satisfactory to the Agent in its discretion) shall be entered
or filed against the Seller or any of its Subsidiaries or any of their respective assets and
shall remain undischarged, unvacated, unbonded or unstayed for a period of thirty (30) days
or in any event later than five (5) days before the date of any proposed sale thereunder
(unless, in respect of any such case the judgment debtor or the subject of the writ or
warrant of attachment or similar process is one of the Seller’s Subsidiaries or such
Subsidiary’s property, and such order, case commencement, consent, assignment, inability or
failure or admission could not reasonably be expected to have a material adverse effect on
any of the Central Elements in respect of the Seller and its Subsidiaries, if any, taken as
a whole).




     (m) The Seller shall have failed to comply in any material respect with its obligations
under the Custody Agreement; provided, that in the case of any such failure affecting
particular Purchase Loans, such failure shall not constitute an Event of Default if, after
determining the Purchase Value of the Purchased Loads without taking into account the
Purchased Loans with respect to which the failure occurred, no other Event of Default shall
have occurred and be continuing.




     (n) The Seller, as Servicer, shall fail in any material respect to service the
Purchased Loans in conformance with Accepted Servicing Practices, and shall have failed to
cure the same within five (5) Business Days after Agent provides notice thereof.



     18.2. Transaction Termination. If an Event of Default shall have occurred and be continuing,
then, at the option of the Agent (which option shall be deemed to have been exercised, even if no
notice has been given, upon the occurrence of an Event of Insolvency), the Agent may, or at the
direction of the Required Buyers shall, declare the Repurchase Date for any or all Transactions
hereunder, upon written notice to the Seller, to be deemed immediately to occur.



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     18.3. Termination by the Agent. If the Agent has exercised or is deemed to have exercised the
option to terminate any Transactions referred to in Section 18.2, (a) the Seller’s
obligations hereunder to repurchase all Purchased Loans in such Transactions shall thereupon become
immediately due and payable, (b) to the extent permitted by applicable law, the Repurchase Price
with respect to each such Transaction shall be increased by the aggregate amount obtained by daily
multiplication of (i) the greater of the Pricing Rate for such Transaction and the Default Pricing
Rate by (ii) the Purchase Price for such Transaction as of the Repurchase Date as determined
pursuant to Section 18.2 (decreased as of any day by (A) any amounts retained by the Buyers
with respect to such Purchase Price pursuant to clause (c) of this Section 18.3, (B) any
proceeds from the sale of Purchased Loans pursuant to clause (a) of Section 18.4, and
(C) any amounts credited to the account of the Seller pursuant to clause (b) of Section
18.4) on a three hundred sixty (360) day per year basis for the actual number of days during
the period from and including the date of the Event of Default giving rise to such option to but
excluding the date of payment of the
Repurchase Price as so increased, (c) all Income paid after such exercise or deemed exercise
shall be payable to and retained by the Agent and applied to the aggregate unpaid Repurchase Prices
owed by the Seller and (d) the Seller shall immediately deliver or cause the Custodian to deliver
to the Agent any documents relating to Purchased Loans subject to such Transactions then in the
Custodian’s, the Seller’s, its Servicer’s or its subservicer’s possession.



     18.4. Remedies. Upon the occurrence of an Event of Default, the Agent, without prior notice
to the Seller, may (and, at the direction of the Required Buyers, shall) (a) immediately sell, in a
recognized market at such price or prices as the Agent may deem satisfactory, any or all Purchased
Loans subject to such Transactions on a servicing released or servicing retained basis and apply
the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by the
Seller hereunder, (b)  in lieu of selling all or a portion of such Purchased Loans, to give the
Seller credit for such Purchased Loans in an amount equal to the Market Value therefor on such date
against the aggregate unpaid Repurchase Prices and any other amounts owing by the Seller hereunder
(c) terminate and replace the Seller as Servicer (or any other Servicer or Subservicer) at the cost
and expense of the Seller, (d) exercise its rights under Section 8 regarding the Income
Account and Escrow Account, and (e) by notice to the Seller, declare the Termination Date to have
occurred, except that in the case of any event described in Section 18.1(b), the
Termination Date shall be deemed to have occurred automatically upon the occurrence of such event.
The proceeds of any disposition in clause (a) or (b) above shall be applied first to the
reasonable costs and expenses incurred by the Buyers in connection with or as a result of an Event
of Default (including legal fees, consulting fees, accounting fees, file transfer fees, inventory
fees and costs and expenses incurred in respect of a transfer of the servicing of the Purchased
Loans and costs and expenses of disposition of such Purchased Loans); second to the
aggregate Price Differential owed hereunder, third to the remaining aggregate Repurchase
Prices owed hereunder; fourth to any other accrued and unpaid obligations of the Seller
hereunder and under the other Repurchase Documents, fifth to any Servicer or Subservicer
(other than the Seller) for payment of any servicing fees due and payable as of such date,
sixth to the net obligations of the Seller under any Hedge Agreements related to the
Purchased Loans, and seventh any remaining proceeds to the Seller.



     18.5. Liability for Expenses and Damages. The Seller shall be liable to the Buyers for
(a) the amount of all reasonable legal or other expenses incurred by the Buyers in connection



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with
or as a result of an Event of Default, (b) damages in an amount equal to the reasonable cost
(including all fees, expenses and commissions) of entering into replacement transactions and
entering into or terminating hedge transactions in connection with or as a result of an Event of
Default and (c) any other reasonable loss, damage, cost or expense directly arising or resulting
from the occurrence of an Event of Default in respect of a defaulting party.



     18.6. Liability for Interest. To the extent permitted by applicable law, the Seller shall be
liable to the Buyers for interest on any amounts owing by the Seller hereunder, from the date the
Seller becomes liable
for such amounts hereunder until such amounts are (a) paid in full by the Seller or
(b) satisfied in full by the exercise of the Buyers’ rights hereunder. Interest on any sum payable
by the Seller under this Section 18.6 shall be at a rate equal to the greater of the
Pricing Rate for the relevant Transaction or the Prime Rate.



     18.7. Other Rights. In addition to its rights hereunder, the Buyers shall have any rights
otherwise available to them under any other agreement or applicable law.



     18.8. Seller’s Repurchase Rights. For avoidance of doubt, subject to the terms and conditions
of this Agreement, the Seller may repurchase Purchased Loans, on a servicing released basis, and
resell such Purchased Loans; provided that upon the occurrence and during the continuance of an
Event of Default, the Seller may repurchase Purchased Loans by payment of the Repurchase Price
therefor only upon approval of the Agent in its discretion exercised in accordance with the
provisions of Section 22.



     18.9. Sale of Purchased Loans. The parties acknowledge and agree that (a) the Purchased Loans
subject to any Transaction hereunder are instruments traded in a recognized market, (b) in the
absence of a generally recognized source for prices or bid or offer quotations for any Purchased
Loans, the Agent may establish the source therefor, (c) all prices, bids and offers shall be
determined together with accrued Income (except to the extent contrary to market practice with
respect to the relevant Purchased Loans) and (d) in soliciting price, bid and offer quotations for
any Purchased Loan, it is reasonable for the Agent to use only the information provided by the
Seller pursuant to Section 16.5(g). The parties further recognize that it may not be
possible to purchase or sell all of the Purchased Loans on a particular Business Day, or in a
transaction with the same purchaser, or in the same manner because the market for such Purchased
Loans may not be liquid at such time. In view of the nature of the Purchased Loans, the parties
agree that liquidation of a Transaction or the underlying Purchased Loans does not require a public
purchase or sale and that a good faith private purchase or sale shall be deemed to have been made
in a commercially reasonable manner. Accordingly, the Agent may elect the time and manner of
liquidating any Purchased Loan and nothing contained herein shall obligate the Agent to liquidate
any Purchased Loan on the occurrence of an Event of Default or to liquidate all Purchased Loans in
the same manner or on the same Business Day and no such exercise of any right or remedy shall
constitute a waiver of any other right or remedy of the Agent or the Buyers.



19 Servicing of the Purchased Loans.




     19.1. Servicing Released Basis. Consistent with the Buyers’ purchase of the Purchased Loans
on a servicing-released basis, the Seller shall have no ownership right whatsoever as to



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any of the
Purchased Loans or the servicing rights related thereto. Rather, the Seller shall have only
servicing responsibilities
with respect to the Purchased Loans that are subject to termination in accordance with
Section 19.7. The Seller and the Buyers hereby acknowledge and agree that the provisions
contained in this Section 19 are intended to be for the benefit of the Buyers and are an
essential part of this Agreement, and that the nature and purpose of the purchase and sale
obligations and the servicing obligations hereunder are interrelated. The Seller acknowledges that
if an Event of Default has occurred and is continuing, the Agent for the benefit of the Buyers may,
upon written notice to the Seller, without payment of any termination fee or other amount to the
Seller, sell any or all of the Purchased Loans on a servicing released basis at the cost and
expense of the Seller.



     19.2. Servicing and Subservicing. The Seller hereby agrees, for the benefit of the Buyers, to
service or contract with Subservicers to service the Purchased Loans in accordance with this
Agreement and Accepted Servicing Practices. The Seller’s fees for its duties as Servicer, until
terminated under Section 19.7, shall be twenty-five (25) basis points per annum on the
unpaid principal balance of each Purchased Loan, payable from Income in accordance with the
provisions of Section 8.2. Servicer shall, and shall cause each Subservicer to, (a) comply
with all applicable Federal, State and local laws and regulations in all material respects,
(b) maintain all state and federal licenses necessary for it to perform its servicing
responsibilities hereunder and (c) not impair the rights of the Buyers in any Purchased Loans or
any payment thereunder. The Agent may terminate the servicing of any Purchased Loan with the then
existing Servicer in accordance with Section 19.7. The Seller shall not be entitled to any
servicing fee or other compensation in connection with its performance of the servicing
responsibilities with respect to the Purchased Loans except to the extent that the Seller is
Servicer. Nothing in this Section 19.2 shall be deemed to impair the rights of any
Subservicer to fees and other compensation to which it is entitled under the applicable Servicing
Agreement.



     19.3. Escrow Payments. The Seller shall cause Servicer and any Subservicers to hold or cause
to be held all escrow payments collected by the Seller with respect to any Purchased Loans in trust
accounts and shall apply the same for the purposes for which such funds were collected.



     19.4. Escrow and Income after Event of Default. After the occurrence and during the
continuance of an Event of Default, (a) all funds received on or in connection with a Purchased
Loan shall be received and held by the Seller, Servicer and each Subservicer in trust for the
benefit of the Agent on behalf of the Buyers as owner of the Purchased Loans, and (b) neither the
Seller nor Servicer shall be deemed to have any rights or ownership interest in such funds prior to
their being remitted to the Agent on behalf of the Buyers.



     19.5. Servicing Records. The Seller agrees that the Agent, on behalf of the Buyers, is the
owner of all servicing records, including but not limited to any and all servicing agreements,
files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance
or guaranty coverage,
insurance or guaranty policies, appraisals, other closing documentation, payment history
records, and any other records relating to or evidencing the servicing of Purchased Loans (the
“Servicing Records”). The Servicing Records are and shall be held in trust by the Seller, Servicer
and each Subservicer for the benefit of the Agent as the owner thereof on behalf of the Buyers.
Upon notice from the Agent after the occurrence and



74









 







during the continuance of an Event of Default,
the Seller will cause Servicer and each Subservicer to (a) designate the Buyers as the owner of
each Purchased Loan in its collateral tracking system, (b) segregate such Servicing Records from
any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing
documentation, payment history records, and any other records relating to or evidencing the
servicing of assets that are not Purchased Loans, (c) safeguard such Servicing Records and (d)
deliver them promptly to the Agent or its designee (including Custodian) at the Agent’s request.



     19.6. Subservicer Instruction Letter. The Seller shall, prior to the initial Purchase Date of
Purchased Loans serviced by any Subservicer, provide to the Buyers a Subservicer Instruction Letter
addressed to and agreed to by such Subservicer of the related Purchased Loans.



     19.7. Termination of Servicing. At any time in the Agent’s sole discretion, the Agent shall
have the right to (A) terminate the Seller’s rights as Servicer, and any Subservicer’s rights, if
any, and obligations with respect to servicing of the Purchased Loans without payment of any
penalty or termination fee (1) immediately with respect to the Seller and (2) with respect to any
Servicer (other than the Seller) or Subservicer, as promptly as possible subject to the terms and
conditions of the applicable Servicing Agreement and Subservicer Instruction Letter; provided that
any such termination shall be deemed to have occurred automatically upon the occurrence of an Event
of Default set forth in Section 18.1(b), (B) require the Seller to enforce its rights and
remedies, as agent for and for the benefit of the Buyers in accordance with the Agent’s
commercially reasonable instructions, with respect to any Purchased Loans under any Servicing
Agreement, and (C) succeed to the rights and remedies of the Seller with respect to any Purchased
Loans under any Servicing Agreement to the extent permitted by, and subject to, the terms of such
Servicing Agreement (but not the obligations or liabilities of the Seller incurred prior to the
date of such succession) and related Subservicer Instruction Letter. Upon any such termination,
the Seller shall, and shall cause each Subservicer to, (i) perform the servicing responsibilities
with respect to the Purchased Loans in accordance with the terms of this Agreement until the
transfer of servicing responsibilities is effectuated and (ii) cooperate, at the Seller’s expense,
in transferring such servicing responsibilities with respect to the Purchased Loans to a successor
Servicer appointed by the Agent in its sole discretion. Upon termination of the Seller as Servicer
and without limiting the generality of the foregoing, the Seller shall, in the manner and at such
times as the successor servicer or the Agent shall request, (i) promptly transfer all data in the
Servicing Records relating to the Purchased Loans to the successor servicer in such electronic
format as the successor servicer may reasonably request, (ii) promptly transfer to the successor
servicer, the Agent or its designee, all other files, records correspondence and documents relating
to the Purchased Loans and (iii) use commercially reasonable efforts to cooperate and coordinate
with the successor servicer and the Agent to comply with any applicable so-called “goodbye”
letter requirements or other applicable requirements of the Real Estate Settlement Procedures
Act or other applicable legal or regulatory requirement associated with the transfer of the
servicing of the Purchased Loans. Servicer acknowledges and agrees that if it fails to cooperate
with the Agent or any successor servicer in effecting the termination of the Seller as Servicer of
any Purchase Loan or the transfer of all authority to service such Purchased Loan to such successor
servicer in accordance with the terms hereof, the Agent and the Buyers will be irreparably harmed
and entitled to injunctive relief.



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     19.8. Notice from Seller. If the Seller should discover that, for any reason whatsoever, any
entity responsible to the Seller by contract for managing or servicing any Purchased Loan has
failed to perform in any material respects the Seller’s obligations under the Repurchase Documents
or any of the material obligations of such entities with respect to the Purchased Loans, the Seller
shall promptly notify the Agent.



     19.9. Seller Remains Liable. Notwithstanding any Servicing Agreement or the provisions of
this Agreement relating to agreements or arrangements between the Seller and a Subservicer or
reference to actions taken through a Subservicer or otherwise, the Seller shall remain obligated
and primarily liable to the Buyers for servicing and administering of the Purchased Loans in
accordance with the provisions hereof without diminution of such obligation or liability by virtue
of such Servicing Agreements or arrangements or by virtue of indemnification from a Subservicer and
to the same extent and under the same terms and conditions as if the Seller alone were servicing
and administering the Purchased Loans. All actions of each Subservicer performed pursuant to the
related Servicing Agreement shall be performed as an agent of the Seller with the same force and
effect as if performed directly by the Seller and the Buyers shall have no obligations, duties or
liabilities with respect to any Subservicer including no obligation, duty or liability of the
Buyers to pay any Subservicer’s fees and expenses, provided, however, that each Subservicer may
retain any amounts collected by it that it is entitled to retain pursuant to the applicable
Servicing Agreement or Subservicer Instruction Letter. The Seller shall be entitled to enter into
any agreement with each Subservicer for indemnification of the Seller by the Subservicer and
nothing contained in this Repurchase Agreement shall be deemed to limit or modify such
indemnification.



     19.10. Backup Servicer. The Agent shall have the right, in its sole discretion, to appoint a
Backup Servicer that will (i) serve as a backup servicer of the Purchased Loans until such time as
the Agent shall elect to appoint the Backup Servicer as successor servicer of the Purchased Loans
and (ii) become the successor servicer of the Purchased Loans at the Agent’s option. In connection
with the appointment of a Backup Servicer as provided in the preceding sentence, the Agent may make
such arrangements for the compensation of Backup Servicer out of Income on the Mortgage Loans or
otherwise as the Agent and such Backup Servicer shall agree. The Seller shall provide Backup
Servicer with such data, files and information, in form, format and content as Backup Servicer may
reasonably request and that the Seller’s servicing system can provide, in order to permit Backup
Servicer to service the Mortgage Loans in accordance with Accepted Servicing
Practices; all such data, files and information shall be updated by the Seller on a monthly
basis as required by Backup Servicer.



     19.11. Successor Servicer. If Backup Servicer or any other Person is appointed by the Agent
to act as a successor servicer of the Purchased Loans pursuant to the preceding section, the Seller
(in its capacity as Servicer hereunder) shall, and shall cause each Subservicer, subject to such
Subservicer’s rights under any applicable Servicing Agreement, and Subservicer Instruction Letter,
to discharge its servicing duties and responsibilities during the period from the date it acquires
knowledge of such transfer of servicing until the effective date thereof with the same degree of
diligence and prudence that it is obligated to exercise under this Agreement, and shall take no
action whatsoever that might impair or prejudice the rights or financial condition of the successor
Servicer. Within five (5) Business Days of the appointment of a successor Servicer of the
Purchased Loans, the Seller shall, and shall cause each Subservicer to, prepare, execute and



76









 







deliver to such successor Servicer any and all documents and other instruments, place in such
successor’s possession all Servicing Records, and do or cause to be done all other acts or things
necessary or appropriate to effect the transfer of servicing to the successor Servicer, including
but not limited to the transfer and endorsement of the Mortgage Notes and related documents, and
the preparation and recordation of assignments of Mortgage. The Seller shall (and shall cause each
Subservicer to) cooperate with the Agent and the successor Servicer in effecting the transfer of
servicing responsibilities to Backup Servicer, including execution and delivery of servicing
transfer notices to Mortgagors, MERS (if applicable), taxing authorities and insurance companies,
the transfer to Backup Servicer for administration by it of all Income with respect to the
Purchased Loans which shall at the time be held or received by the Seller or any Subservicer. the
Seller shall deliver immediately to the successor Servicer all Purchased Loan documents and related
documents and statements held by it or any Subservicer hereunder and the Seller shall account for
all funds and shall execute and deliver such instruments and do such other things as may reasonably
be required to more fully and definitively vest in the successor Servicer all such rights, powers,
duties, responsibilities, obligations and liabilities of the Seller as servicer of the Purchased
Loans.



20 Payment of Expenses; Indemnity.




     20.1. Expenses.




     (a) The Seller shall pay on demand all of the Agent’s reasonable out-of-pocket fees and
expenses (including the fees and expenses for legal services) incurred by the Agent and the
Custodian in connection with this Agreement and the Custody Agreement and the Transactions
contemplated hereby and thereby, whether or not any Transactions are entered into hereunder,
including the reasonable out-of-pocket fees and expenses incurred in connection with (i) the
preparation, reproduction and distribution of this Agreement and the Custody Agreement and
any opinions of counsel, certificates of
officers or other documents contemplated by the aforementioned agreements, (ii) any
Transaction under this Agreement, (iii) the administration and syndication of this Agreement
and of any Transaction and (iv) any amendments and waivers regarding any of the foregoing.
The obligation of the Seller to pay such fees and expenses incurred prior to or in
connection with the termination of this Agreement shall survive the termination of this
Agreement.




     (b) The Seller shall pay all of the Agent’s and each Buyer’s, out-of-pocket costs and
expenses, including reasonable attorneys’ fees, after the occurrence of any Default or Event
of Default in connection with the enforcement of this Agreement, the Custody Agreement and
the other Repurchase Documents, including in connection with any (i) bankruptcy, (ii) other
insolvency proceeding, or (iii) any workout or consultation involving the Buyers’ rights and
remedies, the purchase and repurchase of the Purchased Loans and the payment of Price
Differential in connection therewith.




     (c) The Seller shall pay, and hold the Agent, the Buyers and any other owners or
holders of any of the Obligations harmless from and against, any and all present and future
stamp, documentary and other similar taxes with respect to the foregoing matters



77









 







and save
them each harmless from and against any and all liabilities with respect to or resulting
from any delay or omission to pay such taxes.




     (d) The Seller shall pay all of the Agent’s Fees and any other fees under this
Agreement and the other Repurchase Documents.



     20.2. Indemnity. The Seller shall pay, and indemnify, defend and hold harmless the Agent, the
Buyers and any of their respective officers, directors, employees, agents, advisors and Affiliates
(the “Indemnified Parties”) from and against, the “Indemnified Liabilities,” which means any and
all claims, liabilities, obligations, losses, damages, penalties, judgments, suits, disbursements
and reasonable, out-of-pocket costs and expenses (including reasonable attorneys’ fees and
disbursements) of any kind whatsoever which may be imposed upon, incurred by or asserted against
any of the Indemnified Parties in any way relating to or arising out of any of the Repurchase
Documents or any of the transactions contemplated thereby or the use of proceeds or proposed use of
proceeds thereof, provided that the Seller shall not have any obligation hereunder to any
Indemnified Party with respect to Indemnified Liabilities to the extent such Indemnified
Liabilities are found by a court of competent jurisdiction to have resulted from (i) the gross
negligence or willful misconduct of such Indemnified Party, (ii) a material breach of this
Agreement by such Indemnified Party, or (iii) disputes solely among Indemnified Parties (it being
understood that this clause (iii) shall not apply to the indemnification of the Agent in a suit
involving the Agent in its capacity as such).



21 Single Agreement.




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



22 Relationships among the Agent and the Buyers.




     22.1. Agent’s Duties. In its capacity as Agent until all Purchased Loans have all been
repurchased by the Seller, all other Obligations have been satisfied and the Buyers have no further
Commitments or other obligations under this Agreement and the other Repurchase Documents, the Agent
shall:




     (a) hold the Repurchase Documents and (by the Custodian’s holding the Purchased Loans
as bailee for the Agent) the Purchased Loans for the benefit of each




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Buyer, and each Buyer (including U.S. Bank) shall be
deemed to have an interest in the Repurchase Documents on any day in proportion to its Pro Rata
undivided ownership interest in the Purchased Loans on that day;

     (b)   send
timely bills to the Seller for the Facility Fee and other sums due and receive all sums on
account of the Purchased Loans or with respect to them;

     (c)   use
reasonable diligence to obtain from the Seller and promptly remit to each Buyer such Buyer’s
Pro Rata share of Repurchase Prices for Purchased Loans and other sums received by the Agent
on account of the Purchased Loans or with respect to them, in accordance with this Agreement;





     (d) use reasonable diligence to recover from the Seller all expenses incurred that are
reimbursable by the Seller, and promptly remit to each Buyer its Pro Rata share (if any)
thereof;




     (e) perform the obligations of the Agent that are specifically ascribed to the Agent by
this Agreement, including, with the approval or at the direction of the Required Buyers, the
remedies afforded the Buyers pursuant to Sections 18.2, 18.3, 18.4
and 18.7;




     (f) hold the Purchased Loans and all security interests established hereby ratably for
itself as the Agent and representative of the Buyers; and




     (g) request from the Seller, and promptly forward to the Buyers, such information as
any of the Buyers may reasonably request the Agent to obtain from the Seller, consistent
with the terms of this Agreement.


Notwithstanding anything in this Agreement to the contrary, the Agent shall be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon
the instructions of the Required Buyers, and such instructions shall be binding upon all Buyers,
their permitted successors, assigns and participants; provided, however, that the Agent shall not
be required to take any action that exposes the Agent to personal liability or which is contrary to
the Repurchase Documents or applicable law.




     22.2. Limitation on Duty to Disclose Except as expressly set forth herein, the Agent shall
not have any duty to disclose, and shall not be liable for the failure to disclose, any information
relating to the Seller or any of its Subsidiaries or Affiliates that is communicated to or obtained
by the bank serving as Agent or any of its Affiliates in any capacity.



     22.3. Actions Requiring All Buyers’ Consent. No amendment or waiver of, or any action with
respect to, any provision of this Agreement or any of the Repurchase Documents shall in any event
be effective unless the same shall be in writing signed by all Buyers with respect to any amendment
or waiver or any action that:




     (a) Increases the Maximum Aggregate Commitment (it being understood that, for purposes
of this Section 22.3(a), the Buyers’ execution of this Agreement evidences such
Buyers’ consent to any increase in the Maximum Aggregate Commitment in accordance with the
provisions of Section 2.3 hereof).



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     (b) Agrees to any reduction in any Pricing Rate, Repurchase Price or fee provisions of
this Agreement, excluding the provisions relating to the Agent’s Fee.




     (c) Acknowledges termination of the Buyers’ ownership interest in the Purchased Loans
or releases any Lien held under the Repurchase Documents other than in accordance with the
Repurchase Documents.




     (d) Changes any Buyer’s Pro Rata share of ownership of the Purchased Loans other than
in accordance with the express provisions of the Repurchase Documents.




     (e) Agrees to any change in the nature of the Buyers’ respective Commitments from
several to joint, in whole or in part.




     (f) Agrees to any change to the definition of “Required Buyers” or to any provisions of
this Agreement or any of the other Repurchase Documents that requires the consent, approval
or satisfaction of all of the Buyers or each of the Buyers.




     (g) Extends the Termination Date or the due date of any required payment other than in
accordance with the express provisions of the Repurchase Documents.




     (h) Agrees to any change in this Section.




     (i) Agrees to any change in the Buyer’s Margin Percentage rates.




     (j) Releases the Seller from any of its obligations other than in accordance with the
express conditions of the Repurchase Documents or changes any amount due under the terms of
the Repurchase Documents.




     (k) Modifies the sharing provisions of Section 22.7.


In the event of any conflict between the provisions of this Section 22.3 and any other
provisions of this Agreement or the other Repurchase Documents, this Section 22.3 shall
govern.




     22.4. Actions Requiring Required Buyers’ Consent . All amendments hereto, waivers or actions
taken hereunder that are not described in Section 22.3 and Section 22.5, require
the written consent or ratification of the Required Buyers except for actions that are specifically
reserved to the Agent under Sections 6.1 and 6.6; provided that no amendments,
waivers or actions taken hereunder that relate to the rights or obligations of the Agent shall be
effective without the prior written consent of the Agent. The Agent will, at the direction of the
Required Buyers, but may not, without the consent of the Required Buyers, take any enforcement
action or exercise any remedies under this Agreement and the Repurchase Documents which arise after
the occurrence of an Event of Default.



     22.5. Agent’s Discretionary Actions. Subject to the limitations of Sections 22.3 and
22.4, in its capacity as Agent and without seeking or obtaining the consent of any of the
other Buyers (although it may elect to obtain such consent before acting it if deems that
desirable), the Agent may:



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     (a) agree or consent to any change in the aggregate not involving more than Two Million
Dollars ($2,000,000) of the Purchased Loans at any time in the handling of the Purchased
Loans and which in the Agent’s reasonable judgment is unlikely to have a material adverse
effect on any of the Central Elements in respect of the Seller or any of its Subsidiaries
(for purposes of clarity, this allows the Agent to temporarily suspend the effects of one or
more of the sublimits set forth in Section 4.2(b) or (c) or one or more
Disqualifiers for Purchased Loans, if the Agent in its sole and absolute discretion
determines that such Disqualifier may be resolved or corrected and to allow funding of a Wet
Loan one Business Day after the advance of funds for the purchase of such Wet Loan, in each
case within the limitation set forth in this Section 22.5(a));




     (b) reconvey or exchange, in whole or in part, any Purchased Loans that are required to
be reconveyed or exchanged in accordance with the Repurchase Documents;




     (c) approve any new Approved Investor proposed by the Seller (and the Agent will
promptly provide to any Buyer that requests it a current list of Approved Investors); and




     (d) do or perform any act or thing that, in the Agent’s reasonable judgment, is
necessary or appropriate to enable the Agent to properly discharge and perform its duties
under this Agreement or the Custody Agreement, or that in its reasonable judgment is
necessary or appropriate to preserve or protect the validity, integrity or enforceability of
the Purchased Loans and/or the Repurchase Documents, the Buyers’ Pro Rata undivided
ownership interests in and to the Purchased Loans, the Lien created by this Agreement and
its priority, or any of the Central Elements in respect of the Seller or any of its
Subsidiaries, or to preserve and protect the interest of the Buyers in any of the foregoing.



     22.6. Buyers’ Cooperation. The Buyers agree to cooperate among themselves and with the Agent
and from time to time upon the Agent’s request, to execute and deliver such papers as may be
reasonably necessary to enable the Agent, in its capacity as Agent, to effectively administer this
Agreement and the other Repurchase Documents, the Purchased Loans and each Buyer’s Pro Rata
undivided ownership interest in the Purchased Loans in the manner contemplated by this Agreement.
The Agent and each of the Buyers agree to provide notice to the other parties if they have actual
knowledge of an Event of Default at any time.



     22.7. Buyers’ Sharing Arrangement.




     (a) Each of the Buyers agrees that if it should receive any
amount (whether by voluntary payment, realization upon security, the exercise of the right of
set-off, or otherwise) which is applicable to the payment of Repurchase Price, Margin Deficit,
Pricing Differential or any fees, that with respect to the related sum or sums received (or
receivable) by the other Buyers is in greater proportion than that Buyer’s Pro Rata ownership of
the Purchased Loans, then such Buyer receiving such excess amount shall purchase from the other
Buyers an participation interest in the Purchased Loans in such amount as shall result in Pro Rata
participation and ownership by all of the Buyers in such excess amount; provided that if all or any
portion of such excess amount is thereafter recovered from such Buyer, such purchase shall be
rescinded and the purchase



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price restored to the extent of such recovery; and provided further that the provisions of
this Section 22.7 shall not apply to the Agent’s Fee under this Agreement or to any fees
that the Custodian or any successor custodian might be paid pursuant to the Custody Agreement.




     (b) To the extent that the Seller fails to pay any amount required to be paid to the
Agent under Section 20, each Buyer severally agrees to pay to the Agent such Buyer’s
Funding Share (determined as of the time that the unreimbursed expense or indemnity payment
is sought) of such unpaid amount; provided, that the unreimbursed expense or
indemnified payment, claim, damage, liability or related expense, as the case may be, was
incurred by or asserted against the Agent in its capacity as such.



     22.8. Buyers’ Acknowledgment. Each Buyer other than U.S. Bank hereby acknowledges that U.S.
Bank has made no representations or warranties with respect to any Purchased Loan other than as
expressly set forth in this Agreement and that U.S. Bank shall have no responsibility (in its
capacity as a Buyer, the Agent, or any other capacity or role) for:




     (a) the marketability or collectibility of the Purchased Loans;




     (b) the genuineness, validity, likelihood of performance as and when due or
enforceability of any Investor Commitment or the solvency or performance record of any
Approved Investor;




     (c) the validity, enforceability or any legal effect of any of the Repurchase
Documents, any Loan Papers or any insurance, bond or similar device purportedly protecting
any obligation to the Buyers or any Purchased Loans; or




     (d) the financial condition of the Seller or any of its Subsidiaries or Affiliates, the
status, health or viability of any industry in which any of them is involved, the prospects
for repurchase of the Purchased Loans, the genuineness, validity or enforceability of any
warehousing facility or repurchase agreement between the Seller and any other lender or
repurchase agreement counterparty, the value of any Purchased Loans, the effectiveness of
any of the provisions of the Repurchase Documents (including the financial covenants, tests
and hedging requirements) or any aspect of their implementation or administration at any
time to reduce or control risks of any type, to produce returns, profits, yields or spreads
or to reduce or control losses or the accuracy of any information supplied by or to be
supplied in connection with any of the Seller or any of its Subsidiaries or Affiliates, or
otherwise with respect to this Agreement, any Purchased Loans or any source of equity or
other financing for any of the Seller, any of its Affiliates or any other warehouse lender
or repurchase agreement counterparty.



     22.9. Agent Market Value Determinations. The parties hereto agree and acknowledge that, in
determining the Market Value of the Purchased Loans, the Agent (i) shall determine Market Value as
a third party service provider, in accordance with standards customarily applicable in the
financial industry to third party service providers providing values on comparable assets to be
used in connection with the financing of
such assets, and (ii) shall not be obligated to do that same or similar amount of work or
analysis as if it were valuing its own



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assets, or as if it were valuing such assets for the
purchase or sale thereof by it or any other party. The parties hereto agree and acknowledge that
any asset valuation information produced by the Agent is intended to be and should be used solely
for the limited uses specified in this Agreement and the other Repurchase Documents, and is not
intended to be and should not be used by any Person for any other purpose. The parties hereto
further agree and acknowledge that the Agent may elect to determine the Market Value for any
Purchased Loan by determining the market bid price for a portfolio containing all Purchased Loans
and allocating such portfolio market bid price among each individual Purchased Loan.



     22.10. Agent’s Representations to Buyers. The Agent hereby represents and warrants to the
Buyers (other than U.S. Bank) that:




     (a) the Agent has delivered to each Buyer true copies of the originals of those
Repurchase Documents that have been specifically requested by that Buyer; and




     (b) the Agent has no current actual knowledge that any Default or Event of Default has
occurred and is continuing on the Effective Date.



     22.11. Agent’s Duty of Care, Express Negligence Waiver and Release. At all times until all
Purchased Loans have all been repurchased by the Seller and the Buyers have no further commitments
or other obligations under this Agreement and the other Repurchase Documents, the Agent shall
exercise the same degree of care in handling the Purchased Loans as U.S. Bank exercises with
respect to loans that are held solely by U.S. Bank for its own account, and the Agent, in its
capacity as Agent shall have no responsibility to the Buyers other than to exercise such standard
of care and, in any event, U.S. Bank shall have no liability with respect to any other Buyer’s Pro
Rata interest in the Purchased Loans except for U.S. Bank’s own fraud, gross negligence or willful
misconduct. Except in the case of its own fraud, gross negligence or willful misconduct, neither
the Agent, any Buyer, nor any of their officers, directors, employees, attorneys or agents shall be
liable for any action taken or omitted to be taken by it or them under this Agreement, the Custody
Agreement or any of the other Repurchase Documents reasonably believed by it or them to be within
the discretion or power conferred upon it or them by the Repurchase Documents or be responsible for
consequences of any error of judgment, the Buyers expressly intending to hereby waive and release
all present and future claims and rights against the Agent (i) owed, in whole or in part, under any
claim or theory of strict liability or (ii) for damages or injuries caused or contributed to by any
Indemnified Party’s sole or concurrent ordinary negligence that does not amount to gross negligence
or willful misconduct. Except as otherwise specifically and expressly set forth in this Agreement,
the Agent shall not be responsible in any manner to anyone for the effectiveness, enforceability,
genuineness, validity or due execution of this Agreement, any supplement, amendment or restatement
of it or of any other Repurchase Documents or for any representation, warranty, document,
certificate, report or statement made or furnished in, under or in connection with this Agreement
or any of the other Repurchase Documents or be under any obligation to anyone to ascertain or to
inquire as to the performance or observation of any of the terms, covenants or conditions of this
Agreement or of the other Repurchase Documents on the part of
the Seller or anyone else. Without limiting the generality of the foregoing provisions of
this Section 22.11, the Agent, in its capacity as Agent, may seek and rely upon the advice
of legal counsel in taking or refraining to take any action



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under any of the Repurchase Documents
or otherwise in respect of any Purchased Loans, this Agreement and its parties, and shall be fully
protected in relying upon such advice.


     22.12. Calculations of Shares of Principal and Other Sums. Except as provided to the
contrary in Section 6.4 (“Increased Cost”), Section 6.5 (“Capital Adequacy”),
Section 7.1 (“Payments to be free of Taxes; Withholding”), Section 7.3 (“Taxes
Indemnity”), Section 9.2 (“Agent’s Fee”) and Section 20 (“Payment of Expenses;
Indemnity”), U.S. Bank’s and each other Buyer’s respective shares of Repurchase Prices and other
sums received by the Agent on account of the Purchased Loans or with respect to them shall be
calculated on the basis of each Buyer’s (including U.S. Bank’s) respective Pro Rata ownership
interests in the Purchased Loans from time to time.



     22.13. Resignation or Removal of the Agent. The Agent, or any agent or agents
hereafter appointed, at any time may resign by giving written notice of resignation to the Seller
and the Buyers and complying with the applicable provisions of this Section 22. The
Required Buyers may remove the Agent for acts constituting gross negligence or willful misconduct
by giving notice to the Agent, the Buyers and the Seller.  Upon receiving such notice of
resignation or removal, with the Seller’s consent, which consent shall not unreasonably be delayed
or withheld (provided that the Seller’s consent shall not be required if a Default has occurred
that has not been cured by the Seller or declared in writing by the Agent to have been waived or
any Event of Default has occurred that the Agent has not declared in writing to have been cured or
waived), a successor Agent shall be promptly appointed by the Required Buyers by written
instrument, in duplicate, one copy of which instrument shall be delivered to the resigning or
removed Agent and one copy to the successor Agent.



     22.14. Effective Date of Resignation of the Agent. No resignation or removal of the
Agent shall be effective until both (i) sixty (60) days have elapsed after notice to the Seller and
the Buyers of the Agent’s election to resign or its removal, and (ii) a successor agent has been
appointed pursuant to the provisions of this Section 22 and has accepted the appointment;
provided that if such appointment has not been so made or if the Agent’s duties have not been
assumed by the appointed successor on or before ninety (90) days after the date of the Agent’s
notice of resignation, the Agent may cease acting as agent and representative of the Buyers
hereunder, and shall have no further responsibility therefor, at the close of business on the tenth
(10th) Business Day after such ninety-day period.



     22.15. Successor Agent. Any successor Agent appointed as provided in this
Section 22 shall execute and deliver to the Seller, the Buyers and to the predecessor Agent
an instrument accepting such appointment, and thereupon the resignation of the predecessor Agent
shall become effective and such successor Agent, without any further act, deed or conveyance, shall
become vested with all the
rights and obligations of its predecessor, with like effect as if originally named as the
Agent; provided that upon the written request of the Seller, all of the Buyers or the successor
Agent, the resigning Agent shall execute and deliver (a) an instrument transferring to such
successor Agent all of the rights of the resigning Agent and (b) to such successor Agent such
instruments as are necessary to transfer the Purchased Loans and the Repurchase Documents to such
successor Agent (including assignments of all Purchased Loans or Repurchase Documents).
Upon the request of any such successor Agent made from time to



84









 







time, the Seller shall execute
any and all papers which the successor Agent shall request or require to more fully and certainly
vest in and confirm to such successor Agent all such rights.



     22.16. Merger of the Agent. Any Person into which the Agent may be merged or
converted or with which it may be consolidated, or any Person surviving or resulting from any
merger, conversion or consolidation to which the Agent shall be a party or any Person succeeding to
the commercial banking business of the Agent, shall be the successor Agent without the execution or
filing of any paper or any further act on the part of any of the parties.



     22.17. Participation; Assignment.




     (a) Participations. Each Buyer reserves the right, without the consent of the
Seller, to sell to one or more banks or other entities (a “Participant”), participations in
all or any part of such Buyer’s Commitment and Pro Rata ownership share of the Purchased
Loans or to pledge, collaterally assign or grant a security interest in any or all of its
interests under this Agreement and in the Purchased Loans to any Federal Reserve Bank or any
other Person; provided that no such pledge, participation, collateral assignment or grant of
a security interest shall release a Buyer from any of its obligations hereunder or
substitute any such participant, pledgee or assignee for such Buyer as a party hereto.
Participants shall have no rights under the Repurchase Documents other than certain
voting rights as provided below. Each Buyer shall be entitled to obtain (on behalf
of its Participants) the benefits of this Agreement with respect to all Participants in its
Funding Share of Open Transactions outstanding from time to time; provided that the Seller
shall not be obligated to pay any amount in excess of the amount that would be due such
Buyer calculated as though no participation had been sold. No Buyer shall sell any
participating interest under which the Participant shall have any rights to approve any
amendment, modification or waiver of any Repurchase Documents, except to the extent such
amendment, modification or waiver requires the consent of all Buyers under Section
22.3. In those cases (if any) where a Buyer grants rights to any of its
Participants to approve amendments, modifications or waivers of any Repurchase Documents
pursuant to the immediately preceding sentence, such Buyer must include a voting mechanism
as to all such approval rights in the relevant participation agreement(s) whereby a
readily-determinable fraction of such Buyer’s portion of the Purchased Loans (whether held
by such Buyer or participated) shall control the vote for all of such Buyer’s portion of the
Purchased Loans; provided that if no such voting mechanism is provided for or is fully and
immediately effective, then the vote of such Buyer itself shall be the vote for all of
such Buyer’s portion of the Purchased Loans. Except in the case of the sale
of a participating interest to a Buyer, the relevant participation agreement shall not
permit the Participant to transfer, pledge, assign, sell any subparticipation in or
otherwise alienate or encumber its participation interest in the Purchased Loans.
In no event may a Participant be an Affiliate of the Seller.




     (b) Assignments. Without any requirements for further consent of the Seller,
any Buyer may assign any or all of its rights and obligations under the Repurchase Documents
to its own Buyer Affiliates or to an assignee that is a Buyer with a Commitment hereunder
immediately prior to giving effect to such assignment. With the prior written
consent of the Agent and (unless an Event of Default has occurred that the



85









 







Agent has not
declared in writing to have been cured or waived) the Seller, which consent of the Seller
will not be unreasonably withheld, and at no cost to the Seller or the Agent, any Buyer may
assign any or all of its rights and obligations under the Repurchase Documents to one or
more assignees; provided that (1) except in the case of an assignment to a Buyer or a Buyer
Affiliate or an assignment of the entire remaining amount of the assigning Buyer’s Committed
Sum, no such assignment shall be in an amount less than Ten Million Dollars ($10,000,000),
unless each of the Agent and (unless a Default or Event of Default has occurred and
continuing) the Seller consents thereto, (2) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Buyer’s rights and obligations under
this Agreement, (3) the assignee, if it is not a Buyer hereunder immediately prior to giving
effect to such assignment, shall deliver to the Agent an questionnaire in which the
assignee designates one or more credit contacts to whom all syndicate-level information
(which may contain material non-public information about the Seller and its Affiliates or
their respective securities) will be made available and who may receive such information in
accordance with the assignee’s compliance procedures and applicable laws, including Federal
and state securities laws, (4) the assignee may not be an Affiliate of the Seller, (5) each
such assignment shall be effected pursuant to an Assignment and Assumption substantially in
the form of Exhibit F, to be delivered to the Agent together with a processing and
recording fee of $2,500 (which shall not be applicable with respect to the initial
syndication of the Transactions), with the assignor having no further right or obligation
with respect to the rights and obligations assigned to and assumed by the assignee, and (6)
neither the Agent nor the Seller may withhold consent to an assignment involving the sale of
all or substantially all of the assets of a Buyer unless the Agent arranges a simultaneous
assignment of such Buyer’s rights and obligations to itself or another purchaser acceptable
to the Agent and the Seller. The Seller agrees that, as to any assignment to any
Buyer Affiliate or if the Seller consents to any other assignment, the Seller will cooperate
with the prompt execution and delivery of documents reasonably necessary to such assignment
process to the extent that the Seller incurs no cost or expense that is not paid by the
assigning Buyer and the assignee immediately upon delivery to the Seller of such assignment
form. Subject to acceptance and recording thereof pursuant to Section
22.17(d), from and after the effective date specified in each Assignment and Assumption,
the assignee shall be a Buyer for all purposes under this Agreement and the other Repurchase
Documents, if the assignment is an assignment of all of the assignor’s interest in the
Purchased Loans then held by the Agent (or by the Custodian on behalf of the Agent), the
assignor shall be automatically released from all of its obligations and
liabilities hereunder, and, whether it is such a complete assignment or only a partial
assignment, the Committed Sums shall be adjusted appropriately, and the parties agree to
approve in writing a revised and updated version of Schedule BC. Any
assignment or transfer by a Buyer of rights or obligations under this Agreement that does
not comply with this Section 22.17(b) shall be treated for purposes of this
Agreement as a sale by such Buyer of a participation in such rights and obligations in
accordance with Section 22.17(a).




     (c) The Agent, acting for this purpose as an Agent of the Seller, shall maintain at one
of its offices a copy of each Assignment and Assumption delivered to it and a register for
the recordation of the names and addresses of the Buyers, and the Committed



86









 







Sum of, and
amount owing to, each Buyer pursuant to the terms hereof from time to time the (the
“Register”). The entries in the Register shall be conclusive, and the Seller, the
Agent and the Buyers may treat each Person whose name is recorded in the Register pursuant
to the terms hereof as a Buyer hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by the
Seller and any Buyer, at any reasonable time and from time to time upon reasonable prior
notice.




     (d) Upon its receipt of a duly completed Assignment and Assumption executed by an
assigning Buyer and an assignee, the assignee’s completed questionnaire (unless the
assignee shall already be a Buyer hereunder), the processing and recordation fee referred to
in Section 22.17(b) and any written consent to such assignment required by
Section 22.17(b) hereof, the Agent shall accept such Assignment and Assumption and
record the information contained therein in the Register; provided that if either the
assigning Buyer or the assignee shall have failed to make any payment required to be made by
it hereunder, the Agent shall have no obligation to accept such Assignment and Assumption
and record the information therein in the Register unless and until such payment shall have
been made in full, together with all accrued interest thereon. No assignment shall
be effective for purposes of this Agreement unless it has been recorded in the Register as
provided in this Section 22.17.




     (e) The Seller shall not be required to incur any cost or expense incident to any sale
to a Person of any interest in the Repurchase Documents and the Purchased Loans pursuant to
this Section 22.17 and all such costs and expenses shall be for the account of the
Buyer selling its rights in the Purchased Loans to such Person.



     22.18. The Agent and the Buyers are the only Beneficiaries of this Section. Other than the
provisions of Section 22.17, this Section 22 is intended to bind and benefit only
U.S. Bank and the other Buyers, and does not benefit and shall not be enforceable by the Seller or
any other Person whatsoever.



23 Notices and Other Communications.




     All notices, demands, consents, requests and other communications required or permitted to be
given or made hereunder (collectively, “Notices”), except as otherwise specifically provided in
this Agreement, shall be in writing and shall be either (a) delivered in person, or (b) mailed, by
certified, registered or express mail, postage prepaid, addressed to the respective parties hereto
at their respective addresses specified below, or (c) sent in a prepaid overnight delivery envelope
via a nationally-recognized courier service (such as Federal Express, United Parcel Service or DHL
Worldwide Express) that provides weekday next-Business Day delivery service to the addressee’s
location, (d) faxed to their respective fax numbers (with a paper copy mailed the same day as
aforesaid) as hereinafter set forth or (e) emailed (with a confirming fax for any funding request)
and/or posted to an internet or intranet website and acknowledged as received as hereinafter set
forth; provided that any party may change its address for notice by designating such party’s new
address in a Notice to the other parties given at least five (5) Business Days before it shall
become effective. All Notices shall be conclusively deemed to have been properly given or served
when received in person, regardless of how sent. Regardless



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of when received, all Notices shall be
conclusively deemed to have been properly given or served if addressed in accordance with this
Section 23 and (1) if mailed, on the second (2nd) Business Day after being deposited in the
mails, or (2) if sent by nationally-recognized courier service, on the next Business Day or (3) if
faxed before the close of business at the recipient’s location on a Business Day, when faxed or if
faxed after the close of business at the recipient’s location or on a day that is not a Business
Day, on the next Business Day thereafter to the fax number set forth below (provided that a paper
copy is mailed on the same day as aforesaid) or (4) if e-mailed, upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided that if any such faxed or
emailed notice or other communication is not sent during the normal business hours of the
recipient, such notice or communication shall be deemed to have been sent at the opening of
business on the next business day for the recipient, and (5) notices or communications posted to an
internet or intranet website shall be deemed received upon the “receipt” by the intended recipient
at its e-mail address as described in clause (4) above of notification that such notice or
communication is available and identifying the website address therefor:


If to the Seller:



HomeAmerican Mortgage Corporation

6550 Greenwood Plaza Boulevard

Centennial, CO 80111

Attention: President

Telephone: (303) 773-1155

Fax: (720) 528-2202



with a copy to:



M.D.C. Holdings, Inc.

4350 South Monaco Street, Suite 500

Denver, CO 80237

Attention: General Counsel

Telephone: (303) 804-7716

Fax: (720) 977-4304



and



M.D.C. Holdings, Inc.

4350 South Monaco Street, Suite 500

Denver, CO 80237

Attention: Treasurer

Telephone: (303) 804-7709

Fax: (720) 977-4305



If to U.S. Bank as Agent or as a Buyer:




88









 







U.S. Bank National Association

3550 Rockmont Drive

Mortgage Banking Services

Denver, CO 80202

Attn: Mille Crocker

Telephone: (303) 561-7975

Fax: (303) 561-7246

email: mildred.crocker@usbank.com



with a copy to:



U.S. Bank National Association

800 Nicollet Mall

Mail Station: BC-MN-H03B

Minneapolis, MN 55402

Attention: Mortgage Banking Services

Telephone: (612) 303-3582

Fax: (612) 303-2253

email: edwin.jenkins@usbank.com



If to the other Buyers, at the addresses shown on Schedule 23.




24 Miscellaneous.




     24.1. Further Assurances. At any time and from time to time, at the sole expense of the
Seller, the Seller or the Servicer shall promptly provide such further reasonable assurances,
documents and agreements and undertake such actions as the Agent may reasonably request in order to
effect the purposes of this Agreement, including the assignment, conveyance and transfer of all
right, title and interest of each Purchased Loan from the Seller to the Agent, or to otherwise
obtain or preserve the benefits or rights granted under this Agreement. In the event the Seller,
Servicer or any subservicer, in the performance of the Servicing Functions shall foreclose any
Mortgage for which the Agent and the Buyers have not received the Repurchase Price, all such
actions shall be taken in the name of the Agent for the benefit of the Buyers and in accordance
with Accepted Servicing Practices.



     24.2. Agent as Attorney in Fact. The Agent is hereby appointed the attorney-in-fact of the
Seller for the purpose of carrying out the provisions of this Agreement and taking any action and
executing any instruments or documents that the Agent may deem reasonably necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled
with an interest, although the Agent agrees not to exercise its rights under this power of attorney
unless, in its opinion or the opinion of its legal counsel, an Event of Default has occurred that
the Agent has not declared in writing to have been cured or waived. Without limiting the
generality of the foregoing, but subject to Section 18.3, the Agent shall have the right
and power during the occurrence and continuation of any Event of Default to receive, endorse,
collect and control all checks or instruments made payable to the order of the Seller and all other
forms of payment to the Seller that represent any payment on account of the principal of



89









 







or
interest on or proceeds from any of the Purchased Loans and to give full discharge for the same.



     24.3. Wires to Seller. Any amounts to be transferred by the Agent to the Seller hereunder
shall be sent by journal entry (or wire transfer) in immediately available funds to the Operating
Account.



     24.4. Wires to Agent. Any amounts to be transferred by the Seller to the Agent hereunder
shall be sent by wire transfer in immediately available funds to the Repurchase Settlement Account.



     24.5. Receipt; Available Funds. Amounts received after 1:00 p.m. Denver time on any Business
Day shall be deemed to have been paid and received on the next succeeding Business Day. All
payments and transfers of cash pursuant to this Agreement shall be made (only if the paying and
receiving accounts are
with the same financial institution) by journal entries, or (otherwise) by wire transfer, of
immediately available funds in U.S. dollars.



25 Entire Agreement; Severability.




     This Agreement supersedes any existing agreements between the parties containing general terms
and conditions for repurchase transactions. This Agreement may not be amended, modified or
supplemented except in accordance with the provisions of Section 22 and such amendment,
modification or supplement must be set forth in a writing signed by the parties required to do so
in accordance with Section 22. Each provision and agreement herein shall be treated as
separate and independent from any other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or agreement.



26 Non-assignability; Termination.




     26.1. Limited Assignment. Except with respect to any repurchase transaction, sale, transfer,
pledge or hypothecation by the Agent or any Buyer pursuant to Section 22.17, the rights and
obligations of the parties under this Agreement and under any Transaction shall not be assigned by
any party without the prior written consent of the other parties and any such assignment without
the prior written consent of the other parties shall be null and void. Subject to the foregoing,
this Agreement and any Transactions shall bind and benefit the parties and their respective
successors and assigns.



     26.2. Remedies Exception. Section 26.1 shall not preclude a party from assigning, charging or
otherwise dealing with all or any part of its interest in any sum payable to it under Section
18.



     26.3. Agreement Termination. This Agreement shall terminate, automatically and without any
requirement for notice, on the date after the Termination Date on which all Obligations have been
indefeasibly paid in full, provided, that the provisions of Sections 6.4,
6.5, 7, 16.8(b), 16.9 and 20 shall survive the termination
of this Agreement, provided further, that this Agreement and any Open Transactions
may be extended by mutual agreement of the Buyers, the Agent and the Seller; and provided
further, that no such party shall be obligated to agree to such an extension.



90









 





27 Counterparts.




     This Agreement may be executed in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and the same
instrument.



28 Governing Law, Jurisdiction and Venue.




     THIS AGREEMENT (INCLUDING THIS CHOICE-OF-LAW PROVISION) AND THE OTHER REPURCHASE DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED AND ALL CONTROVERSIES AND DISPUTES ARISING UNDER, IN CONNECTION
WITH OR RELATING TO THIS AGREEMENT AND THE OTHER REPURCHASE DOCUMENTS SHALL BE RESOLVED, IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE UNITED STATES OF AMERICA APPLICABLE TO
CONTRACTS MADE AND TO BE WHOLLY PERFORMED WITHIN SUCH STATE. THE SELLER, THE AGENT AND THE BUYERS
EACH HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR, IF SUCH COURT DOES NOT HAVE JURISDICTION,
THE SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY, FOR THE PURPOSE OF ANY ACTION OR OTHER
PROCEEDING ARISING UNDER, IN CONNECTION WITH OR RELATING TO THE REPURCHASE DOCUMENTS OR ANY RELATED
TRANSACTION. To the fullest extent permitted by applicable law, the Seller, the Agent and the
Buyers each irrevocably waives any objection that it may now or hereafter have to the laying of
venue for any such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum and agrees that service of
process may be made upon it in any such proceeding by registered or certified mail. Nothing herein
shall affect any applicable right of any party at any time to initiate any suit in the United
States District Court for the Southern District of New York, or to remove any pending suit to that
court. Nothing herein shall affect the right of the Agent or any Buyer to accomplish service of
process in any manner permitted by applicable law or to commence legal proceedings or otherwise
proceed against Seller in any other jurisdiction or court.



29 Waiver of Jury Trial.




     EACH OF THE SELLER (IN ITS CAPACITY AS SELLER AND SERVICER), THE BUYERS AND THE AGENT HEREBY
(I) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND
(II) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND
VOLUNTARILY, BY
EACH OF THE SELLER, THE BUYERS AND THE AGENT, AND THIS WAIVER IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT OF A JURY TRIAL WOULD OTHERWISE
ACCRUE. THE AGENT IS HEREBY AUTHORIZED AND REQUESTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT



91









 







MATTER AND THE PARTIES HERETO, SO AS TO SERVE AS CONCLUSIVE EVIDENCE
OF THE FOREGOING WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, THE SELLER HEREBY CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF THE BUYERS OR THE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY
STOCKHOLDER, DIRECTOR, OFFICER, AGENT OR REPRESENTATIVE OF THE SELLER THAT THE BUYERS OR THE AGENT
WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.



30 Relationship of the Parties.




     This Agreement provides for the sale by the Seller and the purchase by the Buyers (acting
through their agent and representative, the Agent) of Eligible Loans and the obligation of the
Seller to repurchase them upon termination of each Transaction. The relationship between the
Seller and the Buyers (and the Agent) is limited to that of seller and repurchaser on the one hand
and buyers and resellers (and the Agent as the Buyers’ agent and representative) on the other. The
provisions in this Agreement and the other Repurchase Documents for compliance with financial
covenants and delivery of financial statements are intended solely for the benefit of the Buyers,
the Agent to protect the interests of the Buyers as buyers, including their and the Agent’s
interest in assuring repurchase of Purchased Loans at the termination of each Transaction, and
nothing contained in this Agreement or any of the other Repurchase Documents shall be construed as
permitting or obligating any Buyer, the Agent to act as a financial or business advisor or
consultant to the Seller, as permitting or obligating any Buyer, the Agent to control the Seller or
to conduct the Seller’s operations, as creating any fiduciary obligation on the part of the Buyers,
the Agent to the Seller, or as creating any joint venture, agency or other relationship between the
parties other than as explicitly and specifically stated in this Agreement. The Seller
acknowledges that it has had the opportunity to obtain the advice of experienced counsel of its own
choosing in connection with the negotiation and execution of this Agreement and the other
Repurchase Documents and to obtain the advice of such counsel with respect to all matters contained
in the Repurchase Documents including the provision for waiver of trial by jury. The Seller
further acknowledges that it is experienced with respect to financial and credit matters and has
made its own independent decisions to apply to the Buyers, the Agent to enter into this Agreement,
and to execute and deliver this Agreement and the other Repurchase Documents.



31 No Waivers, Etc.




     No express or implied waiver of any Event of Default by any party shall constitute a waiver of
any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a
waiver of its right to exercise any other remedy hereunder. No modification or
waiver of any provision of this Agreement and no consent by any party to a departure herefrom
shall be effective unless and until such shall be in writing and duly executed by the Seller and
the parties required to do so pursuant to Section 23. Without limitation on any of the
foregoing, the failure to give a notice pursuant to Section 23 will not constitute a waiver
of any right to do so at a later date. The rights and remedies of the Buyers hereunder shall be
cumulative and not exclusive of any rights and remedies which the Buyers would otherwise have. No
failure or delay on the part of the Buyers in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or



92









 






privilege hereunder preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.


32 Use of Employee Plan Assets.




     32.1. Prohibited Transactions. If assets of an employee benefit plan subject to any provision
of ERISA are intended to be used by any party hereto (the “Plan Party”) in a Transaction, the Plan
Party shall so notify the other parties prior to the Transaction. The Plan Party shall represent
in writing to the other parties that the Transaction does not constitute a prohibited transaction
under ERISA or is otherwise exempt therefrom, and the other parties may proceed in reliance thereon
but shall not be required so to proceed.



     32.2. Audited Financial Statements Required. Subject to the last sentence of Section
32.1, any such Transaction shall proceed only if the Seller furnishes or has furnished to the
Agent its most recent available audited statement of its financial condition and its most recent
subsequent unaudited statement of its financial condition.



     32.3. Representations. By entering into a Transaction pursuant to this Section 32,
the Seller shall be deemed (i) to represent to the Buyers and the Agent that since the date of the
Seller’s latest such financial statements, there has been no material adverse change in the
Seller’s financial condition which the Seller has not disclosed to the Agent, and (ii) to agree to
provide the Agent with future audited and unaudited statements of its financial condition as they
are issued, so long as it is a Seller in any Open Transaction involving a Plan Party.



33 Intent.




     33.1. Transactions are Repurchase Agreements and Securities Contracts. The parties intend
and acknowledge that each Transaction is a “repurchase agreement” and a “master netting agreement”
as such terms are defined in Section 101 of the Bankruptcy
Code (except insofar as the type of Eligible Loans subject to such Transaction or the term of
such Transaction would render such definition inapplicable), and a “securities contract” as that
term is defined in Section 741 of the Bankruptcy Code (except insofar as the type of assets subject
to such Transaction would render such definition inapplicable). This Agreement also constitutes a
“netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation
under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or
“covered contractual payment obligation,” respectively, as defined in and subject to FDICIA (except
insofar as any or all of the parties is not a “financial institution” as that term is defined in
FDICIA). The Seller hereby agrees that it shall not challenge the characterization of this
Agreement as a “repurchase agreement” as that term is defined in Section 101 of the Bankruptcy
Code, or as a “securities contract” as that term is defined in Section 741 of the Bankruptcy Code
in any dispute or proceeding.



     33.2. Contractual Rights, Etc. Any party’s right to liquidate Eligible Loans delivered to it
in connection with Transactions hereunder or to exercise any other remedies pursuant to Section
18, is a contractual right to liquidate, terminate or accelerate such Transaction as described
in Sections 555, 559 and 561 of the Bankruptcy Code.



93









 





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



     33.4. Master Netting Agreement. It is understood and agreed that this Agreement constitutes a
“master netting agreement” as that term is defined in Section 101 of the Bankruptcy Code, and that
a party’s right to cause the termination, liquidation, or acceleration of, or to offset net
termination values, payment amounts or other transfer obligations arising under or in connection
with, this Agreement or any Transaction is a contractual right to cause the termination,
liquidation, or acceleration of, or to offset net termination values, payment amounts or other
transfer obligations arising under or in connection with, this Agreement or any Transaction as
described in Section 561 of the Bankruptcy Code.



34 Disclosure Relating to Certain Federal Protections.



The parties acknowledge that they have been advised that:




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



     34.2. SIPA Does Not Protect Government Securities Broker or Dealer Counterparty. In the case
of Transactions in which one of the parties is a government securities broker or a government
securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide
protection to the other party with respect to any Transaction hereunder.



     34.3. Transaction Funds Are Not Insured Deposits. In the case of Transactions in which one of
the parties is a financial institution, funds held by such financial institution pursuant to a
Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit
Insurance Corporation (through either the Bank Insurance Fund or the Savings Association Insurance
Fund) or the National Credit Union Share Insurance Fund, as applicable.



35 USA Patriot Act Notification.




     The Agent and the Buyers hereby notify the Seller that, pursuant to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Agent or the
Buyers are required to obtain, verify and record information that identifies the Seller, including
the Seller’s name and address and other information that will allow them to identify the Seller in
accordance with said Act.



The remainder of this page is intentionally blank; signature pages follow.





94









 








EXECUTED as of the Effective Date.




	 	 	 	 	 
	 	 	HOMEAMERICAN MORTGAGE
	 	 	CORPORATION, as Seller and Servicer
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John J. Heaney
	 

	 	 	 	 
	 

	 	Name:
	 	John J. Heaney
	 

	 	Title:
	 	Senior Vice President and Treasurer
	 

	 	Date:	 	November 12, 2008
	 

	 	 	 	 






[Signature Page l to Master Repurchase Agreement]




 









 








	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION,
	 	 	as Agent
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Edwin D. Jenkins
	 

	 	 	 	 
	 

	 	Name:
	 	Edwin D. Jenkins
	 

	 	Title:
	 	Senior Vice President
	 

	 	Date:	 	November 12, 2008
	 

	 	 	 	 






[Signature Page 2 to Master Repurchase Agreement]





 











 





EXHIBIT A



TO MASTER REPURCHASE AGREEMENT




FORM OF REQUEST/CONFIRMATION




	 	 	 
	To:

	 	From:
	U.S. Bank National Association., Agent

	 	HomeAmerican Mortgage Corporation
	3550 Rockmont Drive

	 	6550 Greenwood Plaza Boulevard
	Mortgage Banking Services

	 	Centennial, CO 80111
	Denver, CO 80202
	 	 
	 
	 	 
	Attention: Millie Crocker

	 	Attention: Lisa McCarty
	Phone: (303) 561-7975

	 	Phone: 720-528-2254
	Fax: (303) 561-7246

	 	Fax: 303-488-4622
	email: mildred.crocker@usbank.com

	 	email: lisa.mccarty@mdch.com






     Please refer to the Master Repurchase Agreement dated November 12, 2008 among HomeAmerican
Corporation (the “Seller”), the buyers from time to time party thereto (the “Buyers”) and U.S. Bank
National Association, as agent to the Buyers (in such capacity, the “Agent”) (as it may have been
or may hereafter be supplemented, amended, restated or otherwise modified from time to time, the
“Current Repurchase Agreement”. Any term defined in the Current Repurchase Agreement and used in
this request shall have the meaning given to it in the Current Repurchase Agreement.



     The Seller currently qualifies under the Current Repurchase Agreement for, and hereby
requests, purchases as set forth below (the “Requested Purchases”) to be made on the following
Purchase Date:                                         , 20                     (which must be a Business Day).



Previous Day Aggregate

Outstanding Purchase Price




Purchase Price Advanced




Repurchase Price Paid




Aggregate Outstanding Purchase Price



After giving effect to the Requested Purchases, the Aggregate Outstanding Purchase Price will not
exceed the Maximum Aggregate Commitment.




     The Seller has delivered today multiple Mortgage Loan Transmission Files. All Mortgage Loans
listed in such Mortgage Loan Transmission Files and included in the foregoing calculations, which
are attached hereto (the “Purchased Loans”), are Eligible Loans. For each of the Purchased Loans
the representations set forth in Section 15.3 and 15.4 of the Current Repurchase
Agreement, are true and correct.



A-1









 





     Pursuant to the terms of the Custody Agreement and acknowledging and agreeing that new value,
as that term is used in the New York Uniform Commercial Code, has been given in reliance thereon,
the Seller hereby sells, negotiates and transfers to the Buyers the Mortgage Loans listed on the
attached Schedule of Mortgage Loans. The Seller acknowledges that the Agent and the Buyers will
rely on the truth of each statement in this Request/Confirmation and such Mortgage Loan
Transmission File in purchasing such Purchased Loans referred to herein.



     The Purchase Prices for the Purchased Loans should be deposited in the Funding Account for
payment as set forth on the instructions in the Mortgage Loan Transmission File or such other
account as indicated by the Seller.



     No Default has occurred under the Repurchase Documents that has not been cured by the Seller
or declared in writing by the Agent to have been waived, and no Event of Default has occurred under
the Repurchase Documents that the Agent has not declared in writing to have been cured or waived.
There has been no material adverse change in any of the Central Elements in respect of the Seller
and its Subsidiaries taken as a whole since the date of the Seller’s most recent annual audited
Financial Statements that have been delivered to the Agent and the Buyers.



     All items that the Seller is required to furnish to the Buyers, the Agent or the Custodian in
connection with the Requested Purchases have been delivered in all respects as required by the
Current Repurchase Agreement and the other Repurchase Documents. All documentation described or
referred to in the Mortgage Loan Transmission Files submitted to the Agent conform in all material
respects with all applicable requirements of the Current Repurchase Agreement and the other
Repurchase Documents.



     The Seller hereby warrants and represents to the Buyers and the Agent that none of the
Purchased Loans has been sold to any Person other than the Buyers, is pledged to any Person other
than Agent, for the benefit of itself and the Buyers, or supports any borrowing or repurchase
agreement funding other than purchases under the Current Repurchase Agreement.



     The undersigned officer hereby certifies that all of the Seller’s representations and
warranties (a) in the Current Repurchase Agreement and all of the other Repurchase Documents
(except only to the extent that (i) such a representation or warranty speaks to a specific date or
(ii) the facts on which a representation or warranty is based have been changed by transactions or
conditions contemplated or expressly permitted by the Repurchase Documents) and (b) in this
request, are true and correct on the date of this request; and that the Seller qualifies for the
Requested Purchases.



A-2









 





	 	 	 	 	 	 	 
	 	 	HOMEAMERICAN MORTGAGE CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	 
 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Attached:

Mortgage Loan Transmission File





A-3









 








SCHEDULE BC

TO MASTER REPURCHASE AGREEMENT




THE BUYERS’ COMMITTED SUMS

(IN DOLLARS)




	 	 	 	 	 
	Buyer	 	Committed Sum	 
	U.S. Bank National Association
	 	 	 	 
	Comerica Bank
	 	 	 	 
	Guaranty Bank
	 	 	 	 
	 
	Maximum Aggregate Commitment
	 	$	100,000,000	 






BC-1









 





SCHEDULE BP

TO MASTER REPURCHASE AGREEMENT




LIST OF BASIC PAPERS




     The following are the Basic Papers for Purchased Loans:



     (a) the original Mortgage Note, bearing all intervening endorsements to negotiate it from the
original payee named therein to the Seller and endorsed by the Seller as follows:



Pay To The Order Of

Without Recourse




 






HOMEAMERICAN MORTGAGE CORPORATION

[signature]

[name, title]




     (b) the recorded original or a Certified Copy of the power of attorney for each maker of the
Mortgage Note who (if any) did not personally execute the Mortgage Note and for whom the Mortgage
Note was executed by an attorney-in-fact;



     (c) the recorded original or a Certified Copy of the Mortgage securing such Mortgage Note;



     (d) originals or Certified Copies of all intervening assignments (if any) reflecting a
complete chain of assignment of such Mortgage from the original mortgagee to the Seller;
provided that intervening assignments are not required for any Mortgage that has been
originated in the name of MERS and registered under the MERS® System; and



     (e) the signed original of a Mortgage Assignment assigning the Mortgage in blank in a form
that is complete so as to be recordable in the jurisdiction where the Mortgaged Premises are
located without the need for completion of any blanks or supplying of any other information;
provided that no Mortgage Assignment is required for any Mortgage that has been originated
in the name of MERS and registered under the MERS® System with U.S. Bank at Interim Funder.




BP-1









 








SCHEDULE DQ

TO MASTER REPURCHASE AGREEMENT




DISQUALIFIERS




     “Disqualifier” means any of the following events. After the occurrence of any Disqualifier,
unless the Agent shall have waived it or declared it cured in writing, the Market Value of the
affected Purchased Loan shall be deemed to be zero:



     1. Any event occurs, or is discovered to have occurred, after which the affected Purchased
Loan fails to satisfy any element of the definition of “Eligible Loan”.



     2. In respect of any Purchased Loan, for any reason whatsoever any of the Seller’s special
representations concerning Purchased Loans set forth in Section 15.3 applicable to that
type of Purchased Loan shall become untrue, or shall be discovered to be untrue, in any respect
that is material to the value or collectibility of that Purchased Loan, considered either by itself
or together with other Purchased Loans.



     3. Any Purchased Loan shall become In Default.



     4. Five (5) Business Days shall have elapsed after the Purchase Date upon which a Wet Loan has
been sold to the Buyers without all of the Wet Loan’s Basic Papers having been received by the
Custodian.



     5. For any Purchased Loan, any Basic Paper shall have been sent to the Seller or its designee
for correction, collection or other action and shall not have been returned to the Custodian on or
before ten (10) Business Days after it was so sent to the Seller.



     6. Any Purchased Loan shall be assumed by (or otherwise become the liability) of, or the real
property securing it shall become owned by, any corporation, partnership or any other entity that
is not a natural person or a trust for natural persons unless payment in full of such Purchased
Loan is guaranteed by a natural person. The Agent, the Buyers and Custodian may rely on the
Seller’s representation and warranty that no Purchased Loans have been so assumed by (or otherwise
become the liability of) such a Person except as otherwise specified by written notice(s) to the
Custodian.



     7. Any Purchased Loan shall be assumed by (or otherwise become the liability of), or the real
property securing it shall become owned by, an Affiliate of the Seller or any of the Seller’s or
its Affiliates’ directors or officers, unless all of the following are true: (a) such Mortgage Loan
is a Single-family Loan secured by a first priority Lien on the related Mortgaged Premises, (b) the
owner-mortgagor occupies the Mortgaged Premises as a primary or secondary residence, and (c) such
Mortgage Loan will not cause the Aggregate Outstanding Purchase Price of all Purchased Loans to
such Affiliates, directors and officers to exceed $1,000,000 and (d) no more than 30 days have
elapsed since the Purchase Date of such Mortgage Loan. The Agent, the Buyers and Custodian may
rely on the Seller’s representation and warranty that no Purchased Loans have been so assumed by
(or otherwise become the liability of) such a Person except as otherwise specified by written
notice(s) to the Custodian.



DQ-1









 





     8. Any Purchased Loan shipped to an Approved Investor shall not be paid for or returned to the
Custodian or the Agent (whichever shipped it) on or before forty-five (45) days after it is
shipped.



     9. More than 30 days shall have elapsed since the Purchase Date of any Second Mortgage Loan;
more than 60 days shall have elapsed since the Purchase Date of any Jumbo Mortgage Loan or Super
Jumbo Mortgage Loan; more than 90 days shall have elapsed since the Purchase Date of any Conforming
Mortgage Loan or any Agency-eligible Forty Year Loan.



     10. Any Purchased Loan that is shipped to the Seller for correction of one or more Basic
Documents when the Market Value of all Purchased Loans so shipped to the Seller exceeds Two Million
Dollars ($2,000,000).



     11. Any Purchased Loan is listed on a Custodian’s Exception Report and the Agent has not exercised
its discretion to exclude such Purchased Loan from the list of Disqualifiers under Section
22.5(a) (for the avoidance of doubt, this means a Purchased Loan is subject to discrepancies,
inconsistencies or has documents that are incomplete).



DQ-2









 





SCHEDULE EL

TO MASTER REPURCHASE AGREEMENT




ELIGIBLE LOANS




     “Eligible Loans” means Single-family Loans that are amortizing Conforming Mortgage Loans with
original terms to stated maturities of thirty (30) years or less and that satisfy all applicable
requirements of this Agreement for Conforming Mortgage Loans, and shall also mean Single-family
Loans that are Jumbo Mortgage Loans, Super Jumbo Mortgage Loans, Agency-eligible Forty Year Loans,
Second Lien Loans, that otherwise meet all criteria for Eligible Loans set forth on this
Schedule EL and are not subject to a Disqualifier. Each Mortgage Loan must be secured by a
first priority or second priority Lien on its related Mortgaged Premises. It may bear interest at
a fixed interest rate, at a fluctuating interest rate or at a fixed or fluctuating interest rate
for part of its term followed, respectively, by a fluctuating or fixed interest rate for the
remainder of its term. No Mortgage Loan shall be an Eligible Loan at any time:




     (1) If the Mortgaged Premises securing it is a mobile home, manufactured housing, or
cooperative housing unit.




     (2) That contains or is otherwise subject to any contractual restriction or prohibition
on the free transferability of such Mortgage Loan, all Liens securing it and all related
rights (other than Legal Requirements requiring notification to its obligor(s) of any
transfer of it or of its servicing or administration), either absolutely or as security.




     (3) If any of its owners-mortgagors is a corporation, partnership or any other entity
that is not a natural person or a trust for natural persons unless its full payment when due
is guaranteed by a natural person.




     (4) If any of its owner-mortgagors is an Affiliate of a Seller or any of the Seller’s
or any such Affiliate’s directors, or appointed officers, unless all of the following are
true: (a) such Mortgage Loan is a Single-family Loan secured by a first priority Lien on the
related Mortgaged Premises, (b) the owner-mortgagor occupies the Mortgaged Premises as a
primary or secondary residence, and (c) such Mortgage Loan will not cause the Aggregate
Outstanding Purchase Price of all Purchased Loans to such Affiliates, directors and officers
to exceed $1,000,000 and (d) no more than 30 days have elapsed since the Purchase Date of
such Mortgage Loan.




     (5) Whose related Mortgaged Premises are not covered by a Hazard Insurance Policy.




     (6) That is a construction, rehabilitation or commercial loan. The Agent, Buyers and
Custodian may rely on a Seller’s representation and warranty that no Purchased Loan is such
a loan.



EL-1









 






     (7) In the case of a Jumbo Mortgage Loan or Super Jumbo Mortgage Loan, (i) has a
cumulative loan to value ratio greater than 90%, (ii) has a FICO score less than 700, (iii)
is not fully documented as to income or asset values, (iv) is not eligible for purchase by
two Approved Investors with short-term unsecured obligations rated not lower than A-1/P-1,
or (v) has not been prior approved by an Approved Investor for purchase except, in the case
of a Jumbo Mortgage Loan (but not a Super Jumbo Mortgage Loan), in cases where the Seller
has delegated underwriting guaranties for Mortgage Loans with an original principal balance
up to One Million dollars ($1,000,000).




     (8) In the case of a Second Mortgage Loan, (i) has an original principal amount greater
than $200,000, (ii) is not fully documented as to income or asset values, (iii) is not
eligible for purchase by two Approved Investors with short-term unsecured ratings not lower
than A-1/P-1, (iv) is not a Piggyback Loan, (v) has a FICO score less than 720, (vi) has a
Cumulative Loan-to-Value Ratio greater than ninety percent (90%)




     (9) That was originated more than ninety (90) days before its Purchase Date.




     (10) That is In Default or ever was In Default.




     (11) That contains any term or condition such that the repayment schedule results in
the outstanding principal balance increasing over time, rather than amortizing, whether or
not such Mortgage Loan is deemed to be an “option ARM”, “negative amortization” or
“graduated payment” loan. The Agent, the Buyers and the Custodian may rely on a Seller’s
representation and warranty that any Mortgage Loan duly sold to the Buyers amortizes over
time.




     (12) In connection with the origination of which a policy of single-premium life
insurance on the life of a mortgagor, borrower or guarantor was purchased.




     (13) That (i) is subject to the special Truth-in-Lending disclosure requirements
imposed by Section 32 of Regulation Z of the Federal Reserve Board (12 C.F.R. § 226.32) or
any similar state or local Law relating to high interest rate credit or lending transactions
or (ii) contains any term or condition, or involves any loan origination practice, that (1)
has been defined as “high cost”, “high risk”, “predatory”, “covered”, “threshold” or a
similar term under any such applicable federal, state or local law, (2) has been expressly
categorized as an “unfair” or “deceptive” term, condition or practice in any such applicable
federal, state or local law (or the regulations promulgated thereunder) or (3) by the terms
of such Law exposes assignees of Mortgage Loans to possible civil or criminal liability or
damages or exposes any Buyer or the Agent to regulatory action or enforcement proceedings,
penalties or other sanctions. The Agent, Buyers and Custodian may rely on a Seller’s
representation and warranty that no Purchased Loan is such a loan.




     (14) That a Seller or any Affiliate has previously warehoused with any other Person,
whether under a lending arrangement or an arrangement involving a sale in contemplation of a
subsequent further sale to (or securitization by) a secondary mortgage market purchaser,
whether with or without such Seller’s having any conditional repurchase or other recourse
obligation, and that was rejected or became ineligible or



EL-2









 







disqualified to be lent against or purchased and held by such other Person. The Agent,
Buyers and Custodian may rely on a Seller’s representation and warranty that no Purchased
Loan is such a loan.




     (15) That a Seller or any Affiliate sold and transferred, or attempted to sell and
transfer, to any other Person; provided, that a Purchased Loan shall not cease to be
an Eligible Loan as a result of the return of such Purchased Loan by an Investor to which it
was shipped by the Custodian.




     (16) In the case of a First Mortgage Loan, that has a loan to value ratio greater than
eighty percent (80%) unless such Mortgage Loan is guaranteed by VA or is insured by FHA or
private mortgage insurance provided by a provider acceptable to the Agent.




     (17) Except qualifying, FHA Loans and VA Loans, that has a Cumulative Loan-to-Value
Ratio greater than one hundred percent (100%).




     (18) Unless all of a Seller’s right, title and interest in and to the Purchased Loan is
subject to a first priority perfected security interest in favor of the Agent for the
benefit of the Buyers subject to no other liens, security interests, charges or encumbrances
other than such Seller’s right to repurchase the Purchased Loan hereunder.




     (19) Unless all the representations and warranties set forth in this Agreement,
including, without limitation, Section 15.3 and Schedule 15.4 are true and
correct with respect to such Purchased Loan at all times on and after the related Purchase
Date.




     (20) That is not covered by an Investor Commitment or Hedge Agreement.




EL-3









 








SCHEDULE 15.3

TO MASTER REPURCHASE AGREEMENT




SPECIAL REPRESENTATIONS AND WARRANTIES

WITH RESPECT TO EACH PURCHASED LOAN




     As of the related Purchase Date, for each Purchased Loan the Seller makes the following
representations and warranties:




     (a) The information with respect to each Purchased Loan set forth in the related
Mortgage Loan Transmission File is true and correct as of the date specified in all material
respects.




     (b) The Seller is the sole legal and equitable owner (except in the case of MERS
Designated Loans, as to which MERS, as nominee for the Seller and its successors and
assigns, is the record owner), free and clear of all Liens other than Permitted
Encumbrances, of all Mortgage Loans to be sold to the Buyers by the Seller pursuant to this
Agreement and has full right to sell such Mortgage Loans to the Buyers.




     (c) All Purchased Loans, including Wet Loans, have been duly authorized and validly
created.




     (d) Each of the Purchased Loans sold to the Buyers by the Seller complies with all of
the requirements of this Agreement and the Custody Agreement and is genuine and what it
purports to be.




     (e) All information concerning each item or grouping of Purchased Loans listed in any
Mortgage Loan Transmission File sent to the Agent or the Custodian was, is and/or shall be
(as applicable) true and complete in all material respects as of the date of such Mortgage
Loan Transmission File.




     (f) The Seller has complied and will continue to comply in all material respects with
all Legal Requirements relating to each Purchased Loan.




     (g) Each Mortgage Note and Mortgage related to a Purchased Loan, including Wet Loans,
has been duly (i) endorsed or assigned to the Seller and (ii) endorsed or assigned by the
Seller in blank (assignment of the Mortgage in blank is not required when MERS is designated
in the Mortgage as the original mortgagee or the nominee of the original mortgagee, its
successors and assigns) and delivered (or in the case of Wet Loans are in the process of
being delivered) to the Custodian.




     (h) All Basic Papers for each Purchased Loan (except Wet Loans) will be transmitted to
the Custodian with the Mortgage Loan Transmission File with which it is submitted for
purchase.




     (i) Each assignment to the Agent of the Lien securing any Purchased Loan will be in
proper and sufficient form for recording in the appropriate government office in



Sch 15.3 - 1









 






the U.S. jurisdiction where the related Mortgaged Premises are located (no such
assignment is required for any Mortgage that has been originated in the name of MERS and
registered under the MERS® System).




     (j) The Seller has and will continue to have the full right, power and authority to
sell the Purchased Loans to the Buyers, and the Purchased Loans sold and to be sold to the
Buyers by the Seller under this Agreement or pursuant to it may, subject to the terms of
this Agreement, be further sold, resold, assigned and reassigned to any Person or Persons
without any requirement for the further consent of the Seller or the consent of any other
party to any of the Loan Papers or obligated in respect of the Purchased Loans.




     (k) The Seller will maintain the Lien on the real estate described in, or referred to
as covered by, each Purchased Loan as a Lien having the priority represented by the Seller
to the Agent or the Custodian, subject only to the Permitted Encumbrances, until that
Purchased Loan shall have been repurchased by the Seller.




     (l) Each Purchased Loan is covered by an ALTA mortgage title insurance policy or such
other form of title insurance as is acceptable to Fannie Mae or Freddie Mac, issued by and
constituting the valid and binding obligation of a title insurer that is generally
acceptable to prudent mortgage lenders who regularly originate or purchase Mortgage Loans
comparable to the Purchased Loans that are for sale to prudent investors in the secondary
market in which investors invest in Mortgage Loans such as the Purchased Loan insuring the
Seller, its successors and assigns, as to the first priority (or, in the case of a second
lien Loan, second priority) of the Lien of the Mortgage on the related Mortgaged Premises,
in an amount equal to the original principal amount of such Purchased Loan. The Seller is
the sole named insured of such mortgage title insurance policy, the assignment to the Agent
of the Seller’s interest in such policy does not require the consent of or notice to the
insurer (or such consent has been obtained or notice given), and such policy is and will be
in full force and effect and inure to the benefit of the Agent as and when such Purchased
Loan is sold to the Buyers. No claims have been made under such policy and no prior holder
of the Purchased Loan, including the Seller, has done, by act or omission, anything that
would impair the coverage of such policy.




     (m) The Mortgaged Premises securing each Purchased Loan are capable of being lawfully
occupied under applicable Laws, all inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of such Mortgaged Premises and, with
respect to the use and occupancy of the same, including certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate Governmental
Authority.




     (n) The Seller has no knowledge of any circumstances or conditions with respect to the
Mortgage, the Mortgaged Premises or the Customer in respect of any Purchased Loan (other
than the Customer’s credit standing) that can reasonably be expected to cause private
institutional investors that regularly invest in Mortgage Loans similar to such Purchased
Loan to regard such Purchased Loan as an unacceptable investment or adversely affect the
value or marketability of such Purchased Loan to other similar institutional investors.



Sch 15.3 - 2









 






     (o) Each Purchased Loan’s Mortgage contains an enforceable provision for acceleration
of the maturity of the unpaid principal balance thereof in the event that the Mortgaged
Premises are sold or transferred without the prior written consent of the holder thereof.




     (p) No Purchased Loan is a graduated payment Mortgage Loan or has a shared appreciation
or other contingent interest feature.




     (q) All interest rate adjustments, if any, in respect of each Purchased Loan have been
made in strict compliance with applicable Law and the terms of the related Mortgage Note,
and any interest required to be paid pursuant to applicable Law has been properly paid and
credited.




     (r) No Customer in respect of any Purchased Loan has notified the Seller, and the
Seller has no knowledge, of any relief requested by or allowed to such Customer under the
Servicemembers’ Civil Relief Act of 2003.




     (s) The Seller used no selection procedures that identified the Eligible Loans relating
to a Transaction as being less desirable or valuable than other comparable assets in
Seller’s portfolio on the related Purchase Date, and no Purchased Loan was selected for
inclusion in a Transaction on any basis that was intended to have a material adverse effect
on the Buyers or the Agent.




     (t) No Purchased Loan is subject to a bankruptcy plan.




     (u) Each Purchased Loan is eligible to be a “qualified mortgage” within the meaning of
§860G(a)(3) of the Internal Revenue Code.




     (v) All Purchased Loans and all related papers included in the Purchased Loans:




     1 were originated by the Seller, a duly licensed mortgage lender in the
ordinary course of its business;




     2 have been made in compliance with all applicable requirements of the Real
Estate Settlement Procedures Act, the Equal Credit Opportunity Act, the federal
Truth-In-Lending Act, the Fair Credit Billing Act, the Fair Credit Reporting Act,
related statutes and regulations and all applicable Legal Requirements under usury,
truth-in-lending, equal credit opportunity and all other Laws, and the continued
compliance of the Purchased Loans is not affected by their sale to the Buyers;




     3 are the legal, valid and binding obligations of the respective Customers who
entered into them and are and will continue to be valid and enforceable in
accordance with their terms, without any claim, right of rescission, counterclaim,
defense or offset, including any claim or defense of usury, except as such
enforceability may be limited by bankruptcy and other laws affecting the rights of
creditors generally and by principles of equity, excepting rights that, by



Sch 15.3 - 3









 







applicable law, cannot be waived, and neither the operation of any of their
respective contract terms nor the exercise of any right thereunder will render any
of them partly or wholly unenforceable or subject to any such claim, right of
rescission, counterclaim, defense or offset, and no such claim, right of rescission,
counterclaim, defense or setoff has been asserted;




     4 have not been modified or amended and none of their requirements has been
waived, except as expressly and completely reflected in the applicable Loan Papers
furnished to the Custodian;




     5 have fair market values equal to or greater than the Purchase Price
respectively attributed or allocated to them under this Agreement on the Purchase
Date;




     6 comply and will continue to comply with the terms of this Agreement and the
Custody Agreement;




     7 were not originated in, and are not subject to the laws of, any jurisdiction
whose laws (i) make unlawful their sale to the Buyers pursuant to this Agreement, or
(ii) render the Purchased Loans unenforceable;




     8 are in full force and effect and have not been satisfied or subordinated in
whole or in part or rescinded, and the residential real property securing each
Purchased Loan has not been partially or completely released from the Lien of such
Purchased Loan;




     9 evidence and are each secured by a valid first or second Lien in favor of the
Seller on real property securing the amount owed by the Customer(s) under the
related Mortgage, subject only to Permitted Encumbrances;




     10 are each executed in full accordance with all requirements of the applicable
Laws of the jurisdiction in which the related Mortgaged Premises are located, with
the Mortgage for each being (i) duly acknowledged and sealed by such official and in
such manner and form as to be both recordable and effective under such Laws to give
such constructive notice to all Persons as shall be necessary to establish and
continue the Lien of such Mortgage with the priority that the Seller represents it
has to the Agent and (ii) so recorded, and with the Mortgage Note, Mortgage and all
related papers executed with the genuine original signature(s) of the Customer(s)
obligated on such Purchased Loan, and all parties to each such Purchased Loan had
full legal capacity to execute it;




     11 are secured by Single-family residential property;




     12 are the subject of a Current Appraisal or a Current Broker’s Price Opinion
of which the Seller has possession and will make available to the Custodian on
request, and the Seller has in its possession and will make available to the
Custodian on request evidence of such value and how it was determined;



Sch 15.3 - 4









 






     13 are not subject to the Home Ownership and Equity Protection Act of 1994;




     (w) As to each Purchased Loan and its Loan Papers:




     1 the Loan Papers contain customary and enforceable provisions so as to render
the rights and remedies of their holder adequate for the realization against the
Purchased Loan of the benefits of the security intended to be provided by it;




     2 there is only one original executed Mortgage Note, and, except in the case of
Wet Loans, that original has been delivered to the Custodian;




     3 none of its makers or mortgagors is an Affiliate of the Seller or any of its
or its Subsidiaries’ directors or officers, unless all of the following are true:
(a) such Mortgage Loan is a Single-family Loan secured by a first priority Lien on
the related Mortgaged Premises, (b) the owner-mortgagor occupies the Mortgaged
Premises as a primary or secondary residence, and (c) such Mortgage Loan will not
cause the Aggregate Outstanding Purchase Price of all Purchased Loans to such
Affiliates, directors and officers to exceed $1,000,000 and (d) no more than 30 days
have elapsed since the Purchase Date of such Mortgage Loan.




     4 does not contain any term or condition such that the repayment schedule
results in the outstanding principal balance increasing over time, rather than
amortizing, whether or not such Purchased Loan is deemed to be an “option ARM”,
“negative amortization” or “graduated payment” loan. The Agent and the Custodian
may rely on the Seller’s representation and warranty that any Purchased Loan
amortizes over time.




     (x) Each Mortgage is a Lien on the premises and property described in it having the
priority represented to the Agent, and the description of the Mortgaged Premises in each
Mortgage is legally adequate and each Purchased Loan has been fully advanced in its face
amount.




     (y) No default, and no event that with notice or lapse of time or both would become a
default, has occurred and is continuing in respect of any Purchased Loan except as to which
the Seller has given notice to the Agent (by reporting Purchased Loans that are delinquent
Mortgage Loans), and if any such default or event has occurred, it has not continued for
more than thirty (30) days, reckoned and counted from the most recent month end, and the
Seller will promptly notify the Agent of any such Purchased Loan that is in default for a
longer period of time.




     (z) The Mortgaged Premises in each Mortgage is insured by a fire and extended perils
insurance policy and such other hazards as are customary in the area where the Mortgaged
Property is located or customary under Seller’s servicing procedures and the amount of the
insurance is in the amount of the full insurable value of the Mortgaged Property on a
replacement cost basis or the unpaid balance of the



Sch 15.3 - 5









 







Mortgage Loans, whichever is less. If the Mortgaged Property is in an area identified
by any federal governmental authority as having special flood hazards, and flood insurance
is available, a flood insurance policy meeting the current guidelines of the Federal
Insurance Administration is in effect. All such insurance policies (collectively, the
“hazard insurance policy”) contain a standard mortgage clause naming the originator and its
successors and assigns (including subsequent owners of the Mortgage Loan), as mortgagee




     (aa) Each Purchased Loan is covered by an Investor Commitment or Hedge Agreement.



*      *      *      *      *      *      *      *




     As used in the this Schedule 15.3, the following terms have the following meanings:



     “Appraisal” means an appraisal by a licensed appraiser selected in accordance with Agency
guidelines and not identified to the Seller as an unacceptable appraiser by an Agency, and who is
recognized and experienced in estimating the value of property of that same type in the community
where it is located, and who, unless approved by the Agent on a case-by-case basis, is not a
member, manager, director, officer or employee of the Seller or any Affiliate of the Seller, or
related as a parent, sibling, child or first cousin to any of the Seller’s or any such Affiliate’s
respective directors or officers or any of their spouses, a signed copy of the written report of
which appraisal is in the possession of the Seller or the applicable Servicer.



     “Broker’s Price Opinion” means the written opinion of the value of a tract or parcel of
Single-family residential real property securing a Mortgage Loan, issued by a real estate broker
duly licensed as such by the jurisdiction in which the subject property is located that is
reasonably acceptable to the Agent and that is not an Affiliate of the Seller or a director,
member, manager, officer or employee of the Seller or any of its Affiliates, selected reasonably
and in good faith by the Seller.



     “Current Appraisal” means an Appraisal dated no earlier than ninety (90) days (or such longer
period, if any, as the Agent shall approve) before the relevant Determination Date.



     “Current Broker’s Price Opinion” means a Broker’s Price Opinion dated no earlier than ninety
(90) days (or such longer period, if any, as the Agent shall approve) before the relevant
Determination Date.




Sch 15.3 - 6