MASTER REPURCHASE AGREEMENT 

 

CREDIT SUISSE FIRST BOSTON
MORTGAGE CAPITAL LLC, as buyer
(“Buyer”),

 

ZFC FUNDING, INC., as seller
(“Seller”),

 

U.S. BANK NATIONAL
ASSOCIATION, not in its individual capacity but solely as
trustee
(“Pass-Through Trust Trustee”) for ZFC Funding Pass-Through Trust I
(“Pass-Through
Trust”),
and 

 

ZAIS FINANCIAL CORP.
(“Guarantor”) 

 

Dated August 14, 2014








TABLE OF CONTENTS


		      		Page
	1	.	Applicability	1
			 	
	2	.	Definitions	1
			 	
	3	.	Program;
      Initiation of Transactions	18
			 	
	4	.	Repurchase	19
			 	
	5	.	Price
      Differential	20
			 	
	6	.	Margin
      Maintenance	21
			 	
	7	.	Income
      Payments	21
			 	
	8	.	Security
      Interest	23
			 	
	9	.	Payment and
      Transfer	25
			 	
	10	.	Conditions
      Precedent	26
			 	
	11	.	Program;
      Costs	28
			 	
	12	.	Servicing	31
			 	
	13	.	Representations
      and Warranties	32
			 	
	14	.	Covenants	38
			 	
	15	.	Events of
      Default	43
			 	
	16	.	Remedies Upon
      Default	46
			 	
	17	.	Reports	48
			 	
	18	.	Repurchase
      Transactions	50
			 	
	19	.	Single
      Agreement	51
			 	
	20	.	Notices and Other
      Communications	51
			 	
	21	.	Entire Agreement;
      Severability	53
			 	
	22	.	Non
      assignability	54
			 	
	23	.	Set-off	54



- i - 







	24	.      
      	Binding Effect;
      Governing Law; Jurisdiction	54
			 	
	25	.	No Waivers,
      Etc.	55
			 	
	26	.	Intent	55
			 	
	27	.	Disclosure
      Relating to Certain Federal Protections	56
			 	
	28	.	Power of
      Attorney	57
			 	
	29	.	Buyer May Act
      Through Affiliates	57
			 	
	30	.	Indemnification;
      Obligations	57
			 	
	31	.	Counterparts	58
			 	
	32	.	Confidentiality	58
			 	
	33	.	Buyer Covenant
      Regarding Notice of Exclusive Control	59
			 	
	34	.	Periodic Due
      Diligence Review	59
			 	
	35	.	Authorizations	60
			 	
	36	.	Reserved	60
			 	
	37	.	Documents
      Mutually Drafted	60
			 	
	38	.	General
      Interpretive Principles	61
			 	
	39	.	Conflicts	61
			 	
	40	.	Limited Role of
      U.S. Bank National Association as Pass-Through Trust Trustee	61



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SCHEDULES 

Schedule 1-A –
Representations and Warranties with Respect to Contributed Mortgage
Loans

Schedule 1-B –
Representations and Warranties with Respect to Pass-Through Trust
Interests

Schedule 2 – Authorized
Representatives

EXHIBITS 

Exhibit A – Asset
Schedule

Exhibit B – Product
Matrix

Exhibit C – Reserved


Exhibit D – Form of Power
of Attorney 

Exhibit E – Reserved


Exhibit F – Officer’s
Certificate of the Seller and Guarantor

Exhibit G – Seller’s and
Guarantor’s Tax Identification Numbers

Exhibit H –
Reserved

Exhibit I –
Reserved

Exhibit J – Form of
Servicer Notice 

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          This Master Repurchase Agreement, dated as of
August 14, 2014, among ZFC FUNDING, INC. (“Seller”), U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee (“Pass-Through
Trust Trustee”) for ZFC Funding
Pass-Through Trust I (“Pass-Through Trust”), Zais
Financial Corp. (“Guarantor”) and Credit
Suisse First Boston Mortgage Capital LLC (“Buyer”). 

     1. Applicability 

          On the
initial Purchase Date, the Buyer will purchase the Pass-Through Trust
Certificate (the “Purchased
Certificate”) from the Seller in
connection with the Transaction on such date, with a simultaneous agreement by
Buyer to transfer to Seller the Purchased Certificate at a date certain, against
the transfer of funds by Seller, in an amount equal to the Repurchase Price.
From time to time the parties hereto may enter into transactions in which Seller
agrees to initiate the transfer of the Mortgage Loans to the Pass-Through Trust
Trustee for the Pass-Through Trust against the transfer by Buyer of funds in an
amount equal to the Purchase Price Increase on account of the Purchased
Certificate as the result of the increase in value with respect to the Mortgage
Loans transferred to the Pass-Through Trust Trustee for the Pass-Through Trust,
with a simultaneous agreement by Buyer to permit the release of Mortgage Loans
with respect thereto from the Pass-Through Trust Trustee for the Pass-Through
Trust, to or for the benefit of Seller upon payment by Seller of a portion of
the Repurchase Price for the Pass-Through Trust Certificate representing the
Repurchase Price in respect of such Mortgage Loans, in all cases, subject to the
terms of this Agreement. From time to time, Seller may request a release of
Mortgage Loans from the Pass-Through Trust Trustee for the Pass-Through Trust in
conjunction with an Optional Repurchase or under certain other circumstances
described herein. Each such transaction involving any acquisition or transfer of
Mortgage Loans, with a resulting increase in the Purchase Price, shall be
referred to herein as a “Transaction” and, unless
otherwise agreed in writing, shall be governed by this Agreement, including any
supplemental terms or conditions contained in any annexes identified herein, as
applicable hereunder. 

          After the
initial Purchase Date, Seller may request and Buyer will fund, subject to the
terms and conditions of this Agreement, an increase in the Purchase Price for
the Purchased Certificate based upon the acquisition of additional Mortgage
Loans by the Pass-Through Trust. 

          In order to
further secure the Obligations hereunder, the Pass-Through Trust Trustee’s
interest in the Contributed Mortgage Loans shall be pledged by the Pass-Through
Trust Trustee for the Pass-Through Trust to the Buyer. As additional credit
enhancement in connection with the Transactions hereunder, as a condition
precedent to the Buyer entering into the Transactions hereunder, Guarantor shall
deliver a guaranty. 

     2. Definitions 

          Whenever
used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings: 

         
“1934 Act” means the Securities Exchange Act of 1934, as
amended from time to time. 

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

         
“Acquisition
Guidelines” means the Product
Matrix, or such revisions thereto as are identified to and approved in writing
by Buyer.

         
“Acquisition
Price” has the meaning assigned
to such term in the Pricing Side Letter. 

         
“Act of
Insolvency” means, with respect
to any Person or its Affiliates, (a) the filing of a petition, commencing, or
authorizing the commencement of any case or proceeding, or the voluntary joining
of any case or proceeding under any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar law relating to the protection of creditors,
or suffering any such petition or proceeding to be commenced by another which is
consented to, not timely contested or results in entry of an order for relief;
(b) the seeking of the appointment of a receiver, trustee, custodian or similar
official for such party or an Affiliate or any substantial part of the property
of either; (c) the appointment of a receiver, conservator, or manager for such
party or an Affiliate by any governmental agency or authority having the
jurisdiction to do so; (d) the making or offering by such party or an Affiliate
of a composition with its creditors or a general assignment for the benefit of
creditors; (e) the admission by such party or an Affiliate of such party, in
each case, in writing, of its inability to pay its debts or discharge its
obligations as they become due or mature; or (f) that any governmental authority
or agency or any person, agency or entity acting or purporting to act under
governmental authority shall have taken any action to condemn, seize or
appropriate, or to assume custody or control of, all or any substantial part of
the property of such party or of any of its Affiliates, or shall have taken any
action to displace the management of such party or of any of its Affiliates or
to curtail its authority in the conduct of the business of such party or of any
of its Affiliates. 

         
“Additional Repurchase
Assets” has the meaning assigned
to such term in Section 8.b hereof. 

         
“Affiliate” means, with respect to any Person, any
“affiliate” of such Person, as such term is defined in the Bankruptcy Code. For
the avoidance of doubt, with respect to the Seller, no entity shall be
considered an “Affiliate” that is not a direct subsidiary of the
Guarantor. 

         
“Aged Loan” has the meaning assigned to such term in the
Pricing Side Letter. 

         
“Agency
Security” has the meaning
assigned to such term in the Pricing Side Letter. 

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


         
“Allocated Purchase
Price” means, for each
Contributed Mortgage Loan,

- 2 - 







          (a)
as of the related Purchase Date, the
product of the Purchase Price Percentage multiplied by the least of (x) the
Market Value of such Contributed Mortgage Loan, (y) the outstanding principal
amount thereof as set forth on the related Asset Schedule and (z) the
Acquisition Price thereof. 

          (b)
thereafter, the amount calculated pursuant to clause (a) above, decreased by the
amount, without duplication, of any cash, Income or payments (including payments
made to cure a Margin Deficit) made related to a Contributed Mortgage Loan
received by Buyer and applied to reduce the Allocated Purchase Price
attributable to such Contributed Mortgage Loan and if not solely attributable to
any specific Contributed Mortgage Loan, to be applied by Buyer to all
Contributed Mortgage Loans on a pro rata basis.

         
“Allocated Repurchase
Price” means, for each
Contributed Mortgage Loan, the Allocated Purchase Price of such Contributed
Mortgage Loan, together with the related accrued and unpaid Price Differential.


         
“Appraised
Value” means, with respect to any
Mortgaged Property, the lesser of (i) the value (or the lowest value if more
than one appraisal is received) thereof as determined by a Qualified Appraiser
at the time of origination of the Mortgage Loan, and (ii) the purchase price
paid for the related Mortgaged Property by the Mortgagor with the proceeds of
the Mortgage Loan; provided, however, that in the case of a refinanced Mortgage
Loan, such value (or the lowest value if more than one appraisal is received) of
the Mortgaged Property is based solely upon the value determined by a Qualified
Appraiser at the time of origination of such refinanced Mortgage Loan.


         
“Asset
Documents” means the documents in
the related Asset File to be delivered to the Custodian. 

         
“Asset File” has the meaning set forth in the Custodial
Agreement. 

         
“Asset
Schedule” means, with respect to
any Transaction as of any date, an Asset Schedule in the form of a computer tape
or other electronic medium generated by Seller, and delivered to Buyer, which
provides information, set forth on Exhibit A hereto, required
by Buyer to enter into Transactions relating to the Purchased Assets and
Contributed Mortgage Loans in a format acceptable to Buyer. 

         
“Asset
Value” has the meaning assigned
to such term in the Pricing Side Letter. 

         
“Assignment of
Mortgage” means an assignment of
the Mortgage, notice of transfer or equivalent instrument in recordable form,
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect the assignment of the Mortgage in blank, in the
name of the Pass-Through Trust Trustee for the Pass-Through Trust or, with
respect to a MERS Loan, in the name of MERS. 

         
“Assignment of Proprietary
Lease” means the specific
agreement creating a first lien on and pledge of the Co-op Shares and the
appurtenant Proprietary Lease securing a Co-op Loan. 

- 3 - 







          “Bank” means U.S. Bank
National Association and any successor or assign. 

         
“Bankruptcy
Code” means the United States
Bankruptcy Code of 1978, as amended from time to time. 

         
“Business
Day” means any day other than (i)
a Saturday or Sunday; (ii) a day on which the New York Stock Exchange, the
Federal Reserve Bank of New York or the Custodian is authorized or obligated by
law or executive order to be closed or (iii) a public or bank holiday in New
York City. 

         
“Buyer” means Credit Suisse First Boston Mortgage
Capital LLC, and any successor or assign hereunder. 

         
“Capital Lease
Obligations” means, for any
Person, all obligations of such Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) property to the extent
such obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP. 

         
“Capital
Stock” means, as to any Person,
any and all shares, interests, participations or other equivalents (however
designated) of capital stock of a corporation, any and all equivalent equity
ownership interests in a Person which is not a corporation, including, without
limitation, any and all member or other equivalent interests in any limited
liability company, limited partnership, trust, and any and all warrants or
options to purchase any of the foregoing, in each case, designated as
“securities” (as defined in Section 8-102 of the Uniform Commercial Code) in
such Person, including, without limitation, all rights to participate in the
operation or management of such Person and all rights to such Person’s
properties, assets, interests and distributions under the related organizational
documents in respect of such Person. “Capital Stock” also includes (i) all
accounts receivable arising out of the related organizational documents of such
Person; (ii) all general intangibles arising out of the related organizational
documents of such Person; and (iii) to the extent not otherwise included, all
proceeds of any and all of the foregoing (including within proceeds, whether or
not otherwise included therein, any and all contractual rights under any revenue
sharing or similar agreement to receive all or any portion of the revenues or
profits of such Person).

         
“Cash
Equivalents” means (a) securities
with maturities of 90 days or less from the date of acquisition issued or fully
guaranteed or insured by the United States Government or any agency thereof, (b)
certificates of deposit and eurodollar time deposits with maturities of 90 days
or less from the date of acquisition and overnight bank deposits of Buyer or of
any commercial bank having capital and surplus in excess of $500,000,000, (c)
repurchase obligations of Buyer or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than
seven days with respect to securities issued or fully guaranteed or insured by
the United States Government, (d) commercial paper of a domestic issuer rated at
least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof
by Moody’s and in either case maturing within 90 days after the day of
acquisition, (e) securities with maturities of 90 days or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or
by any foreign government, the securities of which state, commonwealth,
territory, political subdivision, taxing authority or foreign government (as the
case may be) are rated at least A by S&P or A by Moody’s, (f) securities
with maturities of 90 days or less from the date of acquisition backed by
standby letters of credit issued by Buyer or any commercial bank satisfying the
requirements of clause (b) of this definition or (g) shares of money market
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition. 

- 4 - 







          “Change in Control” means:


         
(a) any transaction or event as a result of which
Seller ceases to own, beneficially or of record (other than to the extent record
title is held by Buyer), 100% of the Capital Stock of Pass-Through Trust;


         
(b) any transaction or event as a result of which
Guarantor ceases to own, directly or indirectly, beneficially or of record, 100%
of the Capital Stock of Seller;

         
(c) the sale, transfer, or other disposition of all or
substantially all of any Seller Party’s or Guarantor’s assets (excluding any
such action taken in connection with any securitization transaction or whole
loan transfer or in accordance with the terms of the Program Agreements);
or

         
(d) the consummation of a merger or consolidation of
any Seller Party or Guarantor with or into another entity or any other corporate
reorganization, if more than 50% of the combined voting power of the continuing
or surviving entity’s stock outstanding immediately after such merger,
consolidation or such other reorganization is owned by Persons who were not
stockholders of a Seller Party or Guarantor immediately prior to such merger,
consolidation or other reorganization. 

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

         
“Collection
Account” means the account
identified in the Collection Account Control Agreement. 

         
“Collection Account Control
Agreement” means that certain
“shifting control” collection account control agreement, dated as of the date
hereof, among Buyer, Seller and Bank, as it may be amended, supplemented or
otherwise modified from time to time. 

         
“Commitment
Fee” has the meaning assigned to
such term in the Pricing Side Letter. 

         
“Contributed Mortgage
Loans” means the collective
reference to Jumbo Prime Mortgage Loans and Jumbo Standard Mortgage Loans,
listed on all Asset Schedules attached to the Transaction Requests, the related
Asset File for which the Custodian has been instructed to hold pursuant to the
Custodial Agreement. 

- 5 - 









          “Co-op Corporation” means,
with respect to any Co-op Loan, the cooperative apartment corporation that holds
legal title to the related Co-op Project and grants occupancy rights to units
therein to stockholders through Proprietary Leases or similar arrangements.


         
“Co-op Lien
Search” means a search for (a)
federal tax liens, mechanics’ liens, lis pendens, judgments of record or
otherwise against (i) the Co-op Corporation and (ii) seller of the Co-op Unit,
(b) Uniform Commercial Code financing statements and (c) the deed of the Co-op
Project into the Co-op Corporation. 

         
“Co-op Loan” means a Contributed Mortgage Loan secured by the
pledge of stock allocated to a dwelling unit in a residential Co-op Corporation
and collateral assignment of the related Proprietary Lease. 

         
“Co-op
Project” means, with respect to
any Co-op Loan, all real property and improvements thereto and rights therein
and thereto owned by a Co-op Corporation including without limitation the land,
separate dwelling units and all common elements. 

         
“Co-op
Shares” means, with respect to
any Co-op Loan, the shares of stock issued by a Co-op Corporation and allocated
to a Co-op Unit and represented by a Stock Certificate. 

         
“Co-op Unit” means, with respect to any Co-op Loan, a
specific unit in a Co-op Project. 

         
“CSCOF” means, for each day, the rate of interest
(calculated on a per annum basis) determined by Buyer’s treasury department
(which such determination shall be dispositive absent manifest error), which
shall be confirmed by notice to the Seller (which notice may be electronic),
equal to the overnight interest expense incurred by Buyer for borrowing funds in
connection with its warehouse lending arrangements, as set internally by the
Buyer’s treasury department. 

         
“Custodial
Agreement” means the custodial
agreement, dated as of the date hereof, among Seller Parties, Buyer and
Custodian, as it may be amended, supplemented or otherwise modified from time to
time. 

         
“Custodial Asset
Schedule” has the meaning
assigned to such term in the Custodial Agreement. 

         
“Custodian” means Deutsche Bank National Trust Company or
such other party specified by Seller and agreed to by Buyer, which approval
shall not be unreasonably withheld. 

         
“Default” means an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default. 

         
“Dollars” and “$” means dollars in lawful
currency of the United States of America. 

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

- 6 - 







         
“Effective
Date” means the date upon which
the conditions precedent set forth in Section 10.a shall have been satisfied or
waived by Buyer. 

         
“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended from time to time. 

         
“ERISA
Affiliate” means any corporation
or trade or business that, together with a Seller Party or Guarantor is treated
as a single employer under Section 414(b) or (c) of the Code or solely for
purposes of Section 302 of ERISA and Section 412 of the Code is treated as
single employer described in Section 414 of the Code. 

         
“Escrow
Payments” means, with respect to
any Mortgage Loan, the amounts constituting ground rents, taxes, assessments,
water rates, sewer rents, municipal charges, mortgage insurance premiums, fire
and hazard insurance premiums, condominium charges, and any other payments
required to be escrowed by the Mortgagor with the mortgagee pursuant to the
Mortgage or any other document. 

         
“Event of
Default” has the meaning
specified in Section 15 hereof. 

         
“Event of
Termination” means with respect
to a Seller Party or Guarantor (a) with respect to any Plan, a reportable event,
as defined in Section 4043 of ERISA, as to which the PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified within 30
days of the occurrence of such event, or (b) the withdrawal of a Seller Party,
Guarantor or any ERISA Affiliate thereof from a Plan during a plan year in which
it is a substantial employer, as defined in Section 4001(a)(2) of ERISA, or (c)
the failure by a Seller Party, Guarantor or any ERISA Affiliate thereof to meet
the minimum funding standard of Section 412 of the Code or Section 302 of ERISA
with respect to any Plan, including, without limitation, the failure to make on
or before its due date a required installment under Section 412(m) of the Code
(or Section 430(j) of the Code as amended by the Pension Protection Act) or
Section 302(e) of ERISA (or Section 303(j) of ERISA, as amended by the Pension
Protection Act), or (d) the distribution under Section 4041 of ERISA of a notice
of intent to terminate any Plan or any action taken by a Seller Party, Guarantor
or any ERISA Affiliate thereof to terminate any plan, or (e) the failure to meet
requirements of Section 436 of the Code resulting in the loss of qualified
status under Section 401(a)(29) of the Code, or (f) the institution by the PBGC
of proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or (g) the receipt by a Seller
Party, Guarantor or any ERISA Affiliate thereof of a notice from a Multiemployer
Plan that action of the type described in the previous clause (f) has been taken
by the PBGC with respect to such Multiemployer Plan, or (h) any event or
circumstance exists which may reasonably be expected to constitute grounds for a
Seller Party, Guarantor or any ERISA Affiliate thereof to incur liability under
Title IV of ERISA or under Sections 412(b) or 430(k) of the Code with respect to
any Plan. 

         
“Excluded
Taxes” means any of the following
Taxes imposed on or with respect to Buyer or other recipient of any payment
hereunder or required to be withheld or deducted from a payment to Buyer or such
other recipient: (a) Taxes based on (or measured by) net income or net profits,
franchise Taxes and branch profits Taxes that are imposed on Buyer or other
recipient of any payment hereunder as a result of (i) being organized under the
laws of, or having its principal office or its applicable lending office located
in the jurisdiction imposing such Tax (or any political subdivision thereof), or
(ii) a present or former connection between such Buyer or other recipient and
the jurisdiction of the Governmental Authority imposing such Tax or any
political subdivision or Taxing authority thereof (other than connections
arising from such Buyer or other recipient having executed, delivered, become a
party to, performed its obligations under, received payments under, received or
perfected a security interest under, engaged in any other transaction pursuant
to or enforced under this Agreement or any Program Agreement, or sold or
assigned an interest in any Purchased Asset or any related Contributed Mortgage
Loan); (b) any Tax imposed on Buyer or other recipient of a payment hereunder
that is attributable to such Buyer’s or other recipient’s failure to comply with
relevant requirements set forth in Section 11(e); (c) any withholding Tax that
is imposed on amounts payable to or for the account of Buyer or other recipient
of a payment hereunder pursuant to a law in effect on the date such person
becomes a party to or under this Agreement, or such person changes its lending
office, except in each case to the extent that amounts with respect to Taxes
were payable either to such person’s assignor immediately before such person
became a party hereto or to such person immediately before it changed its
lending office; and (d) any U.S. federal withholding Taxes imposed under
FATCA. 

- 7 - 







         
“Exit Fee” has the meaning assigned to such term in the
Pricing Side Letter. 

         
“Fannie Mae” means the Federal National Mortgage Association
or any successor thereto. 

         
“FATCA” means Sections 1471 through 1474 of the Code, as
of the date of this Agreement (or any amended or successor version that is
substantively comparable and not materially more onerous to comply with), any
current or future regulations or official interpretations thereof and any
agreements entered into pursuant to Section 1471(b)(1) of the Code. 

         
“FICO” means Fair Isaac & Co., or any successor
thereto. 

         
“Freddie
Mac” means the Federal Home Loan
Mortgage Corporation or any successor thereto. 

         
“GAAP” means generally accepted accounting principles
in effect from time to time in the United States of America and applied on a
consistent basis. 

         
“Governmental
Authority” means any nation or
government, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions over Seller Parties, Guarantor or Buyer, as applicable. 

         
“Gross
Margin” means, with respect to
each adjustable rate Mortgage Loan, the fixed percentage amount set forth in the
related Mortgage Note. 

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

- 8 - 







          “Guarantor” means ZAIS
Financial Corp., in its capacity as guarantor under the Guaranty. 

          “Guaranty” means the
guaranty of Guarantor dated as of the date hereof as the same may be amended
from time to time, pursuant to which the Guarantor fully and unconditionally
guarantees the obligations of the Seller hereunder. 

          “Hedge Agreement” means,
with respect to any or all of the Contributed Mortgage Loans, any short sale of
a US Treasury Security, or futures contract, or mortgage related security, or
Eurodollar futures contract, or options related contract, or 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, which conform to Seller’s
existing hedging policies, entered into by Seller. 

          “High Cost Mortgage Loan”
means a Mortgage Loan (a) classified as a “high cost” loan under the Home
Ownership and Equity Protection Act of 1994; (b) classified as a “high cost,”
“threshold,” “covered,” or “predatory” loan under any other applicable state,
federal or local law (or a similarly classified loan using different terminology
under a law, regulation or ordinance imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high interest
rates, points and/or fees) or (c) as such term is defined in the then-current
S&P’s LEVELS® Glossary of Terms on Appendix E). 

          “Income” means, without
duplication, with respect to any Purchased Asset or Contributed Mortgage Loan,
at any time until repurchased or removed from a Transaction by the Seller
pursuant to this Agreement, any principal received thereon or in respect thereof
and all interest, dividends or other distributions thereon. 

          “Indebtedness” means, for
any Person, at any time, and only to the extent outstanding at such time: (a)
obligations created, issued or incurred by such Person for borrowed money
(whether by loan, the issuance and sale of debt securities or the sale of
Property to another Person subject to an understanding or agreement, contingent
or otherwise, to repurchase such Property from such Person); (b) obligations of
such Person to pay the deferred purchase or acquisition price of Property or
services, other than trade accounts payable (other than for borrowed money)
arising, and accrued expenses incurred, in the ordinary course of business, so
long as such trade accounts payable are payable within 90 days after the date
the respective goods are delivered or the respective services are rendered; (c)
Indebtedness of others secured by a Lien on the Property of such Person, whether
or not the respective Indebtedness so secured has been assumed by such Person;
(d) obligations (contingent or otherwise) of such Person in respect of letters
of credit or similar instruments issued or accepted by banks and other financial
institutions for the account of such Person; (e) Capital Lease Obligations of
such Person; (f) obligations of such Person under repurchase agreements,
sale/buy-back agreements or like arrangements, including, without limitation,
any Indebtedness arising hereunder; (g) Indebtedness of others Guaranteed by
such Person; (h) all obligations of such Person incurred in connection with the
acquisition or carrying of fixed assets by such Person; (i) Indebtedness of
general partnerships of which such Person is a general partner and (j) with
respect to clauses (a)-(i) above both on and off balance sheet; provided,
however, that notwithstanding anything to the contrary herein, Indebtedness
shall exclude all Non-Recourse Debt. 

- 9 - 







          “Indemnified Taxes” means
Taxes other than Excluded Taxes and Other Taxes, imposed on or with respect to
any payment made by or on account of any obligation of the Seller hereunder or
under any Program Agreement. 

         
“Index” means, with respect to any adjustable rate
Mortgage Loan, the index identified on the Asset Schedule and set forth in the
related Mortgage Note for the purpose of calculating the applicable Mortgage
Interest Rate. 

         
“Interest Rate Adjustment
Date” means the date on which an
adjustment to the Mortgage Interest Rate with respect to each Mortgage Loan
becomes effective. 

         
“Jumbo Mortgage
Loan” means a Mortgage Loan
originated in accordance with the Product Matrix. 

         
“Jumbo Prime Mortgage
Loan” means a Jumbo Mortgage Loan
for which the FICO score is greater than or equal to 700. 

         
“Jumbo Standard Mortgage
Loan” means a Jumbo Mortgage Loan
for which the FICO score is less than 700. 

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

         
“Margin
Call” has the meaning specified
in Section 6.a hereof.

         
“Margin
Deadline” has the meaning
specified in Section 6.b hereof. 

         
“Margin
Deficit” has the meaning
specified in Section 6.a hereof. 

         
“Market
Value” has the meaning assigned
to such term in the Pricing Side Letter. 

         
“Material Adverse
Effect” means (a) a material
adverse change in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) of any Seller Party, Guarantor or
any Affiliate that is a party to any Program Agreement taken as a whole; (b) a
material impairment of the ability of any Seller Party, Guarantor or any
Affiliate that is a party to any Program Agreement, taken as a whole, to perform
its material obligations under any Program Agreement and to avoid any Event of
Default; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability of any Program Agreement against any Seller Party,
Guarantor or any Affiliate that is a party to any Program Agreement, in each
case as determined by the Buyer in its reasonable discretion. 

- 10 - 







          “Maximum Aggregate Purchase Price” has the meaning assigned to such term in the Pricing Side Letter.


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

         
“MERS Loan” has the meaning set forth in the Custodial
Agreement. 

         
“MERS®
System” means the MERSCORP
Holdings, Inc.’s mortgage electronic registry system.

         
“Monthly
Payment” means the scheduled
monthly payment of principal and interest on a Mortgage Loan. 

         
“Moody’s” means Moody’s Investors Service, Inc. or any
successors thereto. 

         
“Mortgage” means each mortgage, assignment of rents,
security agreement and fixture filing, or deed of trust, assignment of rents,
security agreement and fixture filing, deed to secure debt, assignment of rents,
security agreement and fixture filing, or similar instrument creating and
evidencing a lien on real property and other property and rights incidental
thereto, unless such Mortgage is granted in connection with a Co-op Loan, in
which case the first lien position is in the stock of the subject cooperative
association and in the tenant’s rights in the Proprietary Lease relating to such
stock. 

         
“Mortgage Interest
Rate” means the rate of interest
borne on a Mortgage Loan from time to time in accordance with the terms of the
related Mortgage Note. 

         
“Mortgage Interest Rate
Cap” means, with respect to an
adjustable rate Mortgage Loan, the limit on each Mortgage Interest Rate
adjustment as set forth in the related Mortgage Note. 

         
“Mortgage
Loan” means any first lien,
one-to-four-family residential loan evidenced by and including a Mortgage Note
and a Mortgage. 

         
“Mortgage Loan
Schedule” has the meaning set
forth in the Custodial Agreement. 

         
“Mortgage
Note” means the promissory note
or other evidence of the indebtedness of a Mortgagor secured by a Mortgage.


         
“Mortgaged
Property” means the real property
or other Co-op Loan collateral securing repayment of the debt evidenced by a
Mortgage Note. 

- 11 - 







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

         
“Multiemployer
Plan” means a multiemployer plan
defined as such in Section 3(37) of ERISA to which contributions have been or
are required to be made by Seller, Guarantor or any ERISA Affiliate and that is
covered by Title IV of ERISA. 

         
“Net Income” means, for any period and any Person, the net
income of such Person for such period as determined in accordance with GAAP.


         
“Net Worth” means, with respect to any Person, an amount
equal to, on a consolidated basis, such Person’s stockholder equity (determined
in accordance with GAAP).

         
“Non-Recourse
Debt” shall mean Indebtedness in
the form of asset-backed securities to the extent payable solely from the assets
sold or pledged to secure such Indebtedness under which no purchaser or creditor
has recourse to Seller or Guarantor or any of their Affiliates (other than any
Affiliate that is a special purpose borrower of such Indebtedness) if such
assets are inadequate or unavailable to pay off such Indebtedness, and neither
Guarantor nor Seller nor any of their Affiliates effectively has any obligation
to directly or indirectly pay any such deficiency.

         
“Obligations” means (a) all
of Seller’s obligations to pay the Repurchase Price on the Termination Date, the
Price Differential on each Payment Date, and other obligations and liabilities,
to Buyer, its Affiliates or Custodian arising under, or in connection with, the
Program Agreements, whether now existing or hereafter arising; (b) any and all
sums paid by Buyer or on behalf of Buyer in order to preserve any Purchased
Asset or Contributed Mortgage Loan or its interest therein; (c) without
duplication, in the event of any proceeding for the collection or enforcement of
any of Seller’s obligations or liabilities referred to in clause (a), the
reasonable expenses of retaking, holding, collecting, preparing for sale,
selling or otherwise disposing of or realizing on any Purchased Asset or
Contributed Mortgage Loan, or of any exercise by Buyer of its rights under the
Program Agreements, including, without limitation, reasonable attorneys’ fees
and disbursements and court costs; and (d) all of Seller’s indemnity obligations
to Buyer or Custodian or both pursuant to the Program Agreements. 

         
“OFAC” has the meaning set forth in Section 13.a(27)
hereof. 

         
“Officer’s Compliance
Certificate” has the meaning
assigned to such term in the Pricing Side Letter. 

         
“Optional
Repurchase” has the meaning
specified in Section 4.b hereof. 

         
“Optional Repurchase
Date” has the meaning specified
in Section 4.b hereof. 

         
“Other
Taxes” means any and all present
or future stamp, court or documentary, intangible, recording, filing or similar
Taxes or any excise, sales, goods and services or transfer taxes, charges or
similar levies arising from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, from the receipt or
perfection of a security interest under, or otherwise with respect to, any
Program Agreement. 

- 12 - 







         
“Pass-Through
Trust” means ZFC Funding
Pass-Through Trust I, a New York common law trust. 

         
“Pass-Through Trust
Account” means the segregated
account established at an institution reasonably acceptable to the Buyer by and
in the name of Pass-Through Trust Trustee for the benefit of the Pass-Through
Trust, into which all collections, proceeds and Income received on account of or
in respect of the Contributed Mortgage Loans shall be deposited.

         
“Pass-Through Trust Account
Control Agreement” means that
certain “shifting control” account control agreement, dated as of the date
hereof, among Buyer, Pass-Through Trust Trustee for the benefit of the
Pass-Through Trust and Bank, as it may be amended, supplemented or otherwise
modified from time to time. 

         
“Pass-Through Trust
Agreement” means that certain
Trust Agreement, dated as of August 14, 2014, between Seller, in its capacity as
depositor, and Pass-Through Trust Trustee, as the same may be amended,
supplemented, or otherwise modified from time to time. 

         
“Pass-Through Trust
Certificates” means the
certificates evidencing 100% of the Pass-Through Trust Interests of the
Pass-Through Trust.

         
“Pass-Through Trust
Interests” means any and all of
the Capital Stock of Pass-Through Trust. 

         
“Pass-Through Trust
Trustee” means U.S. Bank National
Association as trustee on behalf of the Pass-Through Trust. 

         
“Payment
Date” means the 25th
day of the month; provided, that, if any
such day is not a Business Day, the Payment Date shall be the next succeeding
Business Day.

         
“PBGC” means the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions under ERISA. 

         
“Pension Protection
Act” means the Pension Protection
Act of 2006. 

         
“Person” means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof. 

         
“Plan” means an employee benefit or other plan
established or maintained by Seller Parties, Guarantor or any ERISA Affiliate
and covered by Title IV of ERISA, other than a Multiemployer Plan. 

         
“Post Default
Rate” has the meaning assigned to
such term in the Pricing Side Letter. 

         
“Power of
Attorney” means a Power of
Attorney substantially in the form of Exhibit D hereto. 

- 13 - 







         
“Price
Differential” means as of any
date of determination, the aggregate amount obtained by daily application of,
for each Contributed Mortgage Loan, the applicable Pricing Rate for such
Contributed Mortgage Loan (or during the continuation of an Event of Default,
the Post-Default Rate) to the related Allocated Purchase Price for such
Contributed Mortgage Loan, calculated on the basis of a 360-day-per-year for the
actual number of days elapsed during the period commencing on (and including)
the related Purchase Date and ending on (but excluding) the earlier of (x) the
date of determination and (y) the date on which such Contributed Mortgage Loan
has been repurchased or removed by the Seller from a Transaction pursuant to
this Agreement (reduced by any amount of such Price Differential in respect of
such period previously paid by Seller to Buyer with respect to such Contributed
Mortgage Loan).

         
“Pricing
Rate” has the meaning assigned to
such term in the Pricing Side Letter. 

         
“Pricing Side
Letter” means, the letter
agreement dated as of the date hereof, among Buyer, Seller Parties and
Guarantor, as the same may be amended from time to time. 

         
“Primary Repurchase
Assets” has the meaning assigned
thereto in Section 8.a hereof. 

         
“Product
Matrix” means the product matrix
of the Seller, set forth as Exhibit B hereto, which may be amended from time to
time as reasonably acceptable to the Buyer.

         
“Program
Agreements” means, collectively,
this Agreement, the Guaranty, the Custodial Agreement, the Pricing Side Letter,
the Servicer Account Control Agreement, the Pass-Through Trust Account Control
Agreement, the Collection Account Control Agreement, the Power of Attorney, the
Servicing Agreement, if any, the Pass-Through Trust Agreement, and the Servicer
Notice, if entered into. 

         
“Prohibited
Person” has the meaning set forth
in Section 13.a(27) hereof. 

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

         
“Proprietary
Lease” means the lease on a Co-op
Unit evidencing the possessory interest of the owner in the Co-op Shares in such
Co-op Unit. 

         
“Purchase
Date” means the date on which the
Purchased Certificate is to be transferred by a Seller to Buyer or a Purchase
Price Increase Date, as applicable. 

         
“Purchase
Price” means: 

         
(a) with respect to the Purchased Certificate, (i) as
of the date of the initial Transaction, the price at which the Purchased
Certificate is transferred by Seller to Buyer in a Transaction, which shall be
equal to, (x) if Contributed Mortgage Loans are to be subject to the initial
Transaction, the product of the Purchase Price Percentage multiplied by the
least of: (A) the Market Value of such Contributed Mortgage Loans, (B) the
outstanding principal amount thereof as set forth on the related Asset Schedule
and (C) the Acquisition Price thereof, (y) if no Contributed Mortgage Loans are
to be subject to the initial Transaction, zero, and (ii) the amount calculated
in clause (a)(i) above plus the amount of any Purchase Price Increase since the
initial Transaction minus the amount of any Purchase Price Decreases since the
initial Transaction and minus the amount of any cash, Income or payments
(including payments made to cure a Margin Deficit) received by Buyer and applied
to reduce the Allocated Purchase Price of any Contributed Mortgage Loan;
and 

- 14 - 







         
(b) with respect to each Contributed Mortgage Loan,
the Allocated Purchase Price. 

         
“Purchase Price
Decrease” means a decrease in the
Purchase Price for the Purchased Certificate, based upon the amount of any cash
transferred by the Seller to Buyer applied to reduce the Seller’s obligations in
accordance with Section 4 hereof or pursuant to Section 6 hereof. 

         
“Purchase Price Decrease
Date” means, with respect to the
Purchased Certificate, the date on which a Purchase Price Decrease occurs with
respect thereto.

         
“Purchase Price
Increase” means an increase in
the Purchase Price for the Purchased Certificate, based upon the Pass-Through
Trust Trustee for the Pass-Through Trust acquiring additional Contributed
Mortgage Loans to which such portion of the Purchase Price is allocated, as
requested by a Seller pursuant to Section 3.b hereof, which amount shall equal
the product of the Purchase Price Percentage multiplied by the least of: (x) the
Market Value of such Contributed Mortgage Loans, (y) the outstanding principal
amount thereof as set forth on the related Asset Schedule and (z) the
Acquisition Price thereof.

         
“Purchase Price Increase
Date” means, with respect to the
Purchased Certificate, the date on which a Purchase Price Increase occurs with
respect thereto. 

         
“Purchase Price
Percentage” has the meaning
assigned to such term in the Pricing Side Letter. 

         
“Purchased
Assets” means the collective
reference to the Purchased Certificate, together with the beneficial interests
in the related Contributed Mortgage Loans represented thereby. 

         
“Purchased
Certificate” has the meaning
specified in Section 1 hereof.

         
“Qualified
Appraiser” means, with respect to
each Mortgage Loan, an appraiser, duly appointed by or acceptable to the
originator of the Mortgage Loan, licensed or certified by the applicable
governmental body in which the related Mortgaged Property is located, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and such appraiser and the appraisal made by
such appraiser both satisfy the requirements of Fannie Mae or Freddie Mac and
Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of
1989, as amended and in effect from time to time, and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated. 

- 15 - 







         
“Qualified
Insurer” means an insurance
company duly authorized and licensed where required by law to transact insurance
business and approved as an insurer by Fannie Mae or Freddie Mac. 

         
“Qualified
Originator” means an originator
of Mortgage Loans who is approved by Seller in accordance with the Seller
approval policies and procedures.

         
“Recognition
Agreement” means, an agreement
among a Co-op Corporation, a lender and a Mortgagor with respect to a Co-op Loan
whereby such parties (i) acknowledge that such lender may make, or intends to
make, such Co-op Loan, and (ii) make certain agreements with respect to such
Co-op Loan. 

         
“Records” means, with respect to any Contributed Mortgage
Loan, the documents in the Asset File and the Servicing Records. 

         
“REIT” means a real estate investment trust under
Section 856 through 860 of the Code.

         
“REIT Distribution
Requirement” means for any
taxable year, an amount of dividends sufficient to meet the requirements of
Section 857(a) of the Code, as determined by the Guarantor, in its sole
discretion, in each case at the time any such distribution is made.

         
“Reporting
Date” means the 15th
day of each month or, if such day is not a Business Day, the next succeeding
Business Day. 

         
“Repurchase
Assets” has the meaning assigned
thereto in Section 8 hereof. 

         
“Repurchase
Date” means the earliest of (a)
the Termination Date, (b) a Purchase Price Decrease Date, or (c) the date
determined by application of Section 16 hereof. 

         
“Repurchase
Price” means, with respect to (a)
the Purchased Certificate, the Purchase Price for the Purchased Certificate and
(b) Contributed Mortgage Loans that are requested to be released from the
Pass-Through Trust Trustee for the Pass-Through Trust upon an Optional
Repurchase, the Allocated Purchase Price for such Contributed Mortgage Loans, in
in each case with any accrued but unpaid Price Differential as of the date of
such determination. 

         
“Requirement of
Law” means, with respect to any
Person, any law, treaty, rule or regulation or determination of an arbitrator, a
court or other governmental authority, applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject. 

         
“Responsible
Officer” means as to any Person
(other than the Pass-Through Trust Trustee), the chief executive officer or,
with respect to financial matters, the chief financial officer of such Person.
With respect to the Pass-Through Trust Trustee, as defined in the Pass-Through
Trust Agreement. 

         
“S&P” means Standard & Poor’s Ratings Services, or
any successor thereto. 

- 16 - 







         
“SEC” means the Securities and Exchange Commission, or
any successor thereto. 

         
“Seller” means ZFC Funding, Inc. or its permitted
successors and assigns. 

         
“Seller
Parties” means, collectively,
Seller and the Pass-Through Trust Trustee for the Pass-Through Trust.


         
“Seller
Repurchase” has the meaning set
forth in Section 4.b hereof. 

         
“Servicer” means Select Portfolio Servicing, Inc. or any
other servicer approved by Buyer in its good faith discretion. 

         
“Servicer
Account” means the segregated
account established at an institution reasonably acceptable to the Buyer by and
in the name of Servicer pursuant to the Servicing Agreement, into which all
collections, proceeds and Income received on account of or in respect of the
Contributed Mortgage Loans serviced by Servicer shall be deposited.

         
“Servicer Account Control
Agreement” means that certain
“shifting control” account control agreement, among
Buyer, Pass-Through Trust Trustee for the benefit of the Pass-Through Trust,
Servicer and JPMorgan Chase Bank, N.A., as it may be amended, supplemented or
otherwise modified from time to time. 

         
“Servicer
Notice” means the notice
acknowledged by the related Servicer substantially in the form of
Exhibit J hereto, as the same may be amended from time to
time. 

         
“Servicer Remittance
Date” means the tenth
(10th) day of each month or, if such day is not a Business Day, the
immediately succeeding Business Day. 

         
“Servicing
Agreement” means (i) the
servicing agreement, dated as of the date hereof, among the Pass-Through Trust Trustee for
the Pass-Through Trust, Seller, in its capacity as depositor under the
Pass-Through Trust Agreement, and Servicer, and (ii) any other servicing
agreement with a Servicer relating to the Contributed Mortgage Loans, each as
approved by Buyer in its sole discretion. 

         
“Servicing
Records” means the servicing
records with respect to the Contributed Mortgage Loans, including but not
limited to any and all servicing agreements, files, documents, records, data
bases, computer tapes, copies of computer tapes, proof of insurance coverage,
insurance policies, appraisals, other closing documentation, payment history
records, and any other records relating to or evidencing the servicing of such
Contributed Mortgage Loans. 

         
“Servicing
Rights” means rights of any
Person to administer, service or subservice, the Contributed Mortgage Loans or
to possess related Records. 

         
“SIPA” means the Securities Investor Protection Act of
1970, as amended from time to time. 

         
“Stock
Certificate” means, with respect
to a Co-op Loan, the certificates evidencing ownership of the Co-op Shares
issued by the Co-op Corporation. 

- 17 - 







         
“Stock
Power” means, with respect to a
Co-op Loan, an assignment of the Stock Certificate or an assignment of the Co-op
Shares issued by the Co-op Corporation. 

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

         
“Tangible Net
Worth” has the meaning set forth
in the Pricing Side Letter. 

         
“Taxes” means any and all present or future taxes
(including social security contributions and value added taxes), levies,
imposts, duties (including stamp duties), deductions, charges (including ad
valorem charges), withholdings (including backup withholding), assessments, fees
or other charges of any nature whatsoever imposed by any Governmental Authority,
including any interest, additions to tax or penalties applicable thereto.


         
“Termination
Date” has the meaning assigned to
such term in the Pricing Side Letter. 

         
“Transaction” has the
meaning set forth in Section 1 hereof. 

         
“Transaction
Request” means a request via
email or other mutually agreed electronic method from Seller to Buyer notifying
Buyer that Seller wishes to enter into a Transaction, including a Purchase Price
Increase, hereunder that indicates that it is a Transaction Request under this
Agreement. 

         
“Trust
Receipt” means, with respect to
any Transaction as of any date, a receipt in the form attached as an exhibit to
the Custodial Agreement. 

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

         
“U.S. Tax Compliance
Certificate” has the meaning set
forth in Section 11(e)(ii)(B) hereof. 

     3.
Program; Initiation of
Transactions 

     a. On the
initial Purchase Date, Buyer will purchase from Seller the Purchased
Certificate. From time to time, Seller may request and Buyer will fund Purchase
Price Increases in connection with the acquisition or transfer of Mortgage Loans
by or to the Pass-Through Trust Trustee for the Pass-Through Trust and the
corresponding increase in value of the Purchased Certificate equal to the
Purchase Price for such Contributed Mortgage Loan as of the related Purchase
Date. All related Contributed Mortgage Loans shall be serviced by Servicer. The
aggregate Purchase Price of the Purchased Certificate (adjusted for any Purchase
Price Increases and Purchase Price Decreases, as applicable) subject to
outstanding Transactions shall not exceed the Maximum Aggregate Purchase
Price. 

- 18 - 







     b.
Seller shall request that Buyer enter
into a Transaction by delivering (i) to Buyer, a Transaction Request one (1)
Business Day prior to the proposed Purchase Date, (ii) to Buyer, an Asset
Schedule and (ii) to Custodian, a Mortgage Loan Schedule. The Custodian shall
deliver to Buyer by the proposed Purchase Date, the final Trust Receipt with
respect to the related Mortgage Loans subject to the proposed Transaction. In
the event Buyer elects not to enter into a Transaction with respect to a
proposed Mortgage Loan because of its failure to meet the eligibility
requirements set forth herein, Buyer shall provide written notice of such intent
to Seller no later than 12:00 noon (Eastern time) on the related Purchase
Date.

     c.
Reserved

     d.
Reserved. 

     e.
Upon the satisfaction of the
applicable conditions precedent set forth in Section 10 hereof, all of Seller’s
interest in the Purchased Certificate shall pass to Buyer on the initial
Purchase Date, against the transfer of the Purchase Price for the Purchased
Certificate to Seller. Upon transfer of the Purchased Certificate to the Buyer
or Contributed Mortgage Loans to the Pass-Through Trust Trustee for the
Pass-Through Trust and until termination of any related Transactions or the
release of Contributed Mortgage Loans as set forth in Sections 4 or 16 of this Agreement, ownership of the Purchased
Certificate, and control of the Purchased Assets, is vested in Buyer.


4. Repurchase 

     a.
Seller shall repurchase the Purchased
Certificate from Buyer on the Termination Date. Such obligation to repurchase
exists without regard to any prior or intervening liquidation or foreclosure
with respect to any Contributed Mortgage Loan (but liquidation or foreclosure
proceeds received by Buyer shall be applied to reduce the Repurchase Price for
the Purchased Certificate on each Payment Date except as otherwise provided
herein). Seller is obligated to repurchase and take physical possession of the
Purchased Certificate from Buyer or its designee (including the Custodian) at
Seller’s expense on the Termination Date. In addition, Seller may repurchase the
Purchased Certificate or effect an Optional Repurchase without penalty or
premium, but subject, with respect to the situations set forth in Section 3.2 of
the Pricing Side Letter, to the Exit Fee, on any date pursuant to
Section 4.b below. 


- 19 - 










     b.
When any Contributed Mortgage Loans
are desired by Seller to be sold or otherwise liquidated, Seller shall give
Buyer at least one (1) Business Day’s prior written notice thereof designating
the applicable Contributed Mortgage Loans and specifying the net sale proceeds
expected from such sale and shall make payment to Buyer of the Allocated Repurchase Price
attributable to such Contributed Mortgage Loans plus any Exit Fee due (an
“Optional
Repurchase”) on each date such
Contributed Mortgage Loans are desired to be sold or otherwise liquidated (each,
an “Optional Repurchase
Date”). Such payment shall serve
as a partial prepayment of the Repurchase Price in respect of the Purchased
Certificate. Provided that no Default shall have occurred and is continuing, and
(i) the applicable Allocated Repurchase Price due Buyer has been deposited in
the Pass-Through Trust Account and (ii) the applicable Exit Fee due Buyer has
been deposited in the account set forth in Section 9 hereof, Buyer agrees to
permit the release from the Pass-Through Trust Trustee for the Pass-Through
Trust of the related Contributed Mortgage Loans (and release its lien on the
related Contributed Mortgage Loans and the Repurchase Assets related thereto) at
the request of Seller. In addition, if the Buyer either terminates this
Agreement without cause or has indicated that it will no longer enter into new
Transactions, the Seller shall have the immediate right to repurchase the
Purchased Certificate by providing written notice to the Buyer and depositing
the Repurchase Price and all other Obligations that are owing in the account set
forth in Section 9 hereof (such a repurchase, a “Seller Repurchase”). Upon the Repurchase Price for the Purchased
Certificate and all other Obligations that are owing being deposited in the
account set forth in Section 9 hereof, the Contributed Mortgage Loans shall be
released from the Pass-Through Trust Trustee for the Pass-Through Trust and the
Buyer’s lien on the Repurchased Assets shall immediately be released. The Seller
will not owe any Exit Fee in connection with a Seller Repurchase.

     c. Provided that no Event of Default shall have occurred and be continuing,
and Buyer has received the related Repurchase Price and satisfaction of all
Obligations related to the Contributed Mortgage Loans being repurchased, Buyer
agrees to release its ownership interest hereunder in the related Purchased
Assets (including its lien on the Contributed Mortgage Loans and Repurchase
Assets related thereto) at the request of Seller. The applicable Purchased
Assets (and the Contributed Mortgage Loans and Repurchase Assets related
thereto, as applicable) shall be retransferred by delivery to the Seller or the
designee of Seller. Following payment of the Repurchase Price and the
satisfaction of all Obligations hereunder, Buyer shall return the original
Purchased Certificate and all applicable transfer documents to the Seller, and
shall release its lien on the Repurchase Assets. 

5. Price
Differential. 

     a.
On each Business Day that a
Transaction is outstanding, each Pricing Rate shall be reset and, unless
otherwise agreed, the accrued and unpaid Price Differential shall be settled in
cash on each related Payment Date. Two Business Days prior to the Payment Date,
Buyer shall give Seller written or electronic notice of the amount of the Price
Differential due on such Payment Date. If on a Payment Date, Price Differential
owing for such Payment Date is not paid pursuant to Section 7 of this Agreement,
Seller shall pay to Buyer the Price Differential for such Payment Date, by wire
transfer in immediately available funds. 

     b.
If Buyer fails to receive all or part
of the Price Differential due for a Payment Date by the close of business on
that Payment Date, Seller shall be obligated to pay to Buyer (in addition to,
and together with, the amount of such Price Differential) interest on the unpaid
Repurchase Price at a rate per annum equal to the Post Default Rate until the
Price Differential is received in full by Buyer. 

- 20 - 







6. Margin
Maintenance 

     a. If at any time the outstanding Purchase Price of the Purchased
Certificate is greater than the sum of (i) the aggregate Asset Value of the
Contributed Mortgage Loans subject to Transactions and (ii) amounts on deposit
in the Servicer Account, Pass-Through Trust Account or Collection Account (a
“Margin Deficit”), then Buyer may by notice to Seller require
Seller to transfer to Buyer cash in an amount at least equal to the Margin
Deficit (such requirement, a “Margin Call”).

     b.
Notice delivered pursuant to Section
6.a above may be given by any written or electronic means. Any notice given on a
Business Day shall be met, and the related Margin Call satisfied, no later than
the close of business on the following Business Day, so long as the amount at
least equal to the Margin Deficit is actually received by Buyer (the foregoing
time requirement for satisfaction of a Margin Call is referred to as the
“Margin Deadline”). The failure of Buyer, on any one or more
occasions, to exercise its rights hereunder, shall not change or alter the terms
and conditions to which this Agreement is subject or limit the right of Buyer to
do so at a later date. Seller and Buyer each agree that a failure or delay by
Buyer to exercise its rights hereunder shall not limit or waive Buyer’s rights
under this Agreement or otherwise existing by law or in any way create
additional rights for Seller. 

     c.
In the event that a Margin Deficit
exists, Buyer may retain any funds received by it to which the Seller would
otherwise be entitled hereunder, which funds (i) shall be held by Buyer against
the related Margin Deficit for a Contributed Mortgage Loan and (ii) will be
applied by Buyer against the Allocated Purchase Price of the Contributed
Mortgage Loan for which the related Margin Deficit remains otherwise
unsatisfied. Notwithstanding the foregoing, the Buyer retains the right, in its
sole discretion, to make a Margin Call in accordance with the provisions of this
Section 6. 

7. Income
Payments 

     a.
All Income received on account of the
Contributed Mortgage Loans during the term of a Transaction shall be the
property of Buyer through its ownership of the Purchased Certificate. Seller
shall cause (i) the Pass-Through Trust Trustee to cause the Servicer to deposit
all such Income received on account of the Contributed Mortgage Loans, net of
applicable servicing fees and servicing advances due Servicer pursuant to the
Servicing Agreement, in the Servicer Account no later than two (2) Business Days
following receipt thereof, (ii) on the Servicer Remittance Date, the
Pass-Through Trust Trustee to cause the Servicer to immediately remit such
Income to the Pass-Through Trust Account and (iii) on the Payment Date, the
Pass-Through Trust Trustee to cause the Bank to remit such Income to the
Collection Account.

- 21 - 







     b. Provided no Event of Default has occurred and is
continuing, on each Payment Date Buyer shall direct the Bank to remit amounts on
deposit in the Collection Account as follows: 

         
(1) first, to Buyer in payment of any accrued and
unpaid Price Differential, to the extent not paid by Seller to Buyer pursuant to
Section 5; 

         
(2) second, to Buyer to reduce the Allocated Purchase
Price for any Contributed Mortgage Loan by an amount sufficient to eliminate any
outstanding Margin Deficit for such Contributed Mortgage Loan that exists or
would exist after the payment of amounts to Seller pursuant to clause (5) below
(without limiting Seller’s obligation to satisfy such Margin Deficit in a timely
manner as required by Section 6 to the extent not otherwise satisfied);


         
(3) third, to Buyer on account of unpaid fees,
expenses, and indemnity amounts and any other amounts due from Seller under the
Program Agreements;

         
(4) fourth, to Buyer on account of the aggregate
Allocated Repurchase Price for Contributed Mortgage Loans subject to Optional
Repurchases; and 

         
(5) fifth, all remaining amounts (if any), to
Seller.

     c. Notwithstanding any provision
to the contrary in this Section 7, upon the occurrence and continuance of an
Event of Default or on the Termination Date, Buyer shall, or shall direct Bank
to, remit amounts on deposit in the Collection Account as follows: 

         
(1) first, to Buyer in payment of any accrued and
unpaid Price Differential, to the extent not paid by Seller to Buyer pursuant to
Section 5; 

         
(2) second, to Buyer to reduce the Allocated Purchase
Price for any Contributed Mortgage Loan by an amount sufficient to eliminate any
outstanding Margin Deficit for such Contributed Mortgage Loan (without limiting
Seller’s obligation to satisfy such Margin Deficit in a timely manner as
required by Section 6 to the extent not otherwise satisfied); 

         
(3) third, to Buyer on account of unpaid fees,
expenses, and indemnity amounts and any other amounts due from Seller under the
Program Agreements;

         
(4) fourth, to Buyer to reduce the aggregate Purchase
Price for the Purchased Certificate to $0;

         
(5) fifth, to Buyer all other Obligations that are due
and payable; and 

         
(6) sixth, all remaining amounts (if any), to Seller.


- 22 - 







8. Security Interest 

     a. Security
Interest. On the initial Purchase
Date, Seller hereby sells, assigns and conveys all rights and interests in the
Purchased Assets and the beneficial interest in the Repurchase Assets. Although
the parties intend that all Transactions hereunder be sales and purchases and
not loans, in the event any such Transactions are deemed to be loans, and in any
event, Seller hereby pledges to Buyer as security for the performance by Seller
of its Obligations and hereby grants, assigns and pledges to Buyer a fully
perfected first priority security interest in the Purchased Assets, the Records,
and all related Servicing Rights, the Program Agreements (to the extent such
Program Agreements and Seller’s right thereunder relate to the Purchased
Assets), any Property relating to the Purchased Assets, all insurance policies
and insurance proceeds relating to any Purchased Assets or the related Mortgaged
Property, including, but not limited to, any payments or proceeds under any
related primary insurance, hazard insurance, Income, the Collection Account, the
Servicer Account, accounts (including any interest of Seller in escrow accounts)
and any other contract rights, instruments, accounts, payments, rights to
payment (including payments of interest or finance charges), general intangibles
and other assets relating to the Purchased Assets (including, without
limitation, any other accounts) or any interest in the Purchased Assets, and any
proceeds (including the related securitization proceeds) and distributions with
respect to any of the foregoing and any other property, rights, title or
interests as are specified on a Transaction Request and/or Trust Receipt, in all
instances, whether now owned or hereafter acquired, now existing or hereafter
created (the “Primary Repurchase
Assets”). 

     b. Additional Repurchase
Assets. In order to further
secure the Obligations hereunder, the Pass-Through Trust Trustee for the
Pass-Through Trust hereby grants, assigns and pledges on the date hereof to
Buyer a fully perfected first priority security interest in the Contributed
Mortgage Loans, the Records, and all related Servicing Rights, the Program
Agreements (to the extent such Program Agreements and Pass-Through Trust Trustee
for the Pass-Through Trust’s rights thereunder relate to the Contributed
Mortgage Loans), any Property relating to the Contributed Mortgage Loans, all
insurance policies and insurance proceeds relating to any Contributed Mortgage
Loan or the related Mortgaged Property, including, but not limited to, any
payments or proceeds under any related primary insurance and hazard insurance,
Income, the Pass-Through Trust Account, the Servicer Account, accounts
(including any interest of Pass-Through Trust Trustee for the Pass-Through Trust
in escrow accounts) and any other contract rights, instruments, accounts,
payments, rights to payment (including payments of interest or finance charges),
general intangibles and other assets relating to the Contributed Mortgage Loans
(including, without limitation, any other accounts) or any interest in the
Contributed Mortgage Loans, and any proceeds (including the related
securitization proceeds) and distributions with respect to any of the foregoing
and any other property, rights, title or interests as are specified on a
Transaction Request and/or Trust Receipt, in all instances, whether now owned or
hereafter acquired, now existing or hereafter created (collectively, the
“Additional Repurchase
Assets” and together with the
Primary Repurchase Assets, the “Repurchase Assets”). All
Additional Repurchase Assets shall be deemed to be part of the Pass-Through
Trust. This paragraph is intended to constitute a security agreement or other
arrangement or other credit enhancement related to the Agreement and
transactions hereunder as defined under
Section 101(47)(v) and 741(7)(xi) of the Bankruptcy Code, and is further
intended to be a guaranty of the Obligations to the Buyer by the Pass-Through
Trust Trustee for the Pass-Through Trust to the extent of its Contributed
Mortgage Loans; the assets set forth in Section 8.a above and this Section 8.b
are the “Repurchase
Assets”. 

- 23 - 







     c. Release of Servicing Rights. Seller and Guarantor each acknowledge that it
does not have rights to service the Contributed Mortgage Loans but only has
rights to the extent a party to the current Servicing Agreement. Without
limiting the generality of the foregoing and in the event that Seller or
Guarantor is deemed to retain any residual Servicing Rights, and for the
avoidance of doubt, Seller and Guarantor each grant, assign and pledge to Buyer
a security interest in the Servicing Rights and proceeds related thereto and in
all instances, whether now owned or hereafter acquired, now existing or
hereafter created. The foregoing provision is intended to constitute a security
agreement or other arrangement or other credit enhancement related to this
Agreement and Transactions hereunder as defined under Sections 101(47)(A)(v) and
741(7)(A)(xi) of the Bankruptcy Code. 

     d. Financing
Statements. Subject to Section 40
herein, Seller Parties agree to execute, deliver and/or file such documents and
perform such acts as may be reasonably necessary to fully perfect Buyer’s
security interest created hereby. Furthermore, Seller Parties hereby authorize
the Buyer to file financing statements relating to the Repurchase Assets, as the
Buyer, at its option, may deem appropriate. The Seller Parties shall pay the
filing costs for any financing statement or statements prepared pursuant to this
Section 8. 

     e. Pass-Through Trust
Interests as Securities. The
parties acknowledge and agree that the Pass-Through Trust Interests shall
constitute and remain “securities” as defined in Section 8-102 of the Uniform
Commercial Code; Seller Parties covenant and agree that (i) the Pass-Through
Trust Interests are not and will not be dealt in or traded on securities
exchanges or securities markets, and (ii) the Pass-Through Trust Interests are
not and will not be investment company securities within the meaning of Section
8-103 of the Uniform Commercial Code. Seller shall, at its sole cost and
expense, take all steps as may be necessary in connection with the
re-registration, indorsement, transfer and delivery of the Purchased Certificate
to Buyer. 

     f. Additional
Interests. If Seller shall, as a
result of ownership of the Purchased Certificate, become entitled to receive or
shall receive any certificate evidencing any Purchased Certificate, whether in
addition to, in substitution for, as a conversion of, or in exchange for the
Purchased Certificate, or otherwise in respect thereof, Seller shall accept the
same as the Buyer’s agent, hold the same in trust for the Buyer and deliver the
same forthwith to the Buyer in the exact form received, duly indorsed by Seller
to the Buyer, if required, together with an undated transfer power, if required,
covering such certificate duly executed in blank, or, if requested, deliver the
Purchased Certificate re-registered in the name of Buyer, to be held by the
Buyer subject to the terms hereof as additional security for the Obligations.
Any sums paid upon or in respect of the Pass-Through Trust Interests upon the
liquidation or dissolution of the Pass-Through Trust or otherwise shall be paid
over to the Buyer as additional security for the Obligations. If following the occurrence and during the continuation of
an Event of Default, any sums of money or property so paid or distributed in
respect of the Pass-Through Trust Interests shall be received by Seller, Seller
shall, until such money or property is paid or delivered to the Buyer, hold such
money or property in trust for the Buyer segregated from other funds of Seller
as additional security for the Obligations. 

- 24 - 







     g.
Cash Dividends; Voting
Rights. Subject to this Section,
after the occurrence of an Event of Default that has not been waived or cured,
Buyer as the holder, shall exercise all voting rights with respect to the
Repurchase Assets and Pass-Through Trust Interests. Prior to the occurrence of
an Event of Default that has not been waived or cured, the applicable Seller
Parties shall exercise all voting rights with respect to the Repurchase Assets
and Pass-Through Trust Interests, but subject in all events to the consent
rights of Buyer as set forth in the related governing agreements. In no event
shall any vote be cast or other action taken which would impair the Repurchase
Assets or Pass-Through Trust Interests, as applicable, or which would be
inconsistent with or result in a violation of any provision of this Agreement.
Without limiting the generality of the foregoing, after an Event of Default,
Buyer shall have no obligation to (i) vote to enable, or take any other action
to permit Pass-Through Trust, to issue any trust interests of any nature or to
issue any other trust interests convertible into or granting the right to
purchase or exchange for any trust interests of Pass-Through Trust or (ii) sell,
assign, transfer, exchange or otherwise dispose of, or grant any option with
respect to, the Pass-Through Trust Interests or (iii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, the Pass-Through Trust Interests, the Repurchase Assets, or any interest
therein, except for the Lien provided for by this Agreement, or (iv) enter into
any agreement or undertaking restricting the right or ability of Seller Parties
to sell, assign or transfer any of the Pass-Through Trust Interests. 

9. Payment and Transfer 

          Unless otherwise mutually agreed in writing, all
transfers of funds to be made by Seller hereunder to Buyer shall be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to Buyer at the following account maintained by Buyer: Account No.
30956492, for the account of CS Buyer/Zais Inbound, Citibank, NA, ABA No. 021
000 089 or such other account as Buyer shall specify to Seller in writing. Each
Seller Party and Guarantor acknowledges that it has no rights of withdrawal from
the foregoing account. The Purchased Certificate transferred by one party hereto
to the other party shall be in the case of a purchase by Buyer in suitable form
for transfer or shall be accompanied by duly executed instruments of transfer or
assignment in blank and such other documentation as Buyer may reasonably
request. The Purchased Certificate and Contributed Mortgage Loans shall be
evidenced by a Trust Receipt. Any Repurchase Price received by Buyer after the
close of business on a Business Day shall be deemed received on the next
succeeding Business Day. 

- 25 - 







10. Conditions Precedent 

     a. Initial Transaction. As
conditions precedent to the initial Transaction, Buyer shall have received on or
before the day of such initial Transaction the following: 

         
(1) Program Agreements. The Program Agreements in form and substance
satisfactory to Buyer and duly executed and delivered by the parties thereto and
being in full force and effect, free of any modification, breach or
waiver.

         
(2) Security Interest. Evidence that all other actions necessary or, in
the opinion of Buyer, desirable to perfect and protect Buyer’s interest in the
Repurchase Assets have been taken, including, without limitation, ensuring that
all Pass-Through Trust Interests are evidenced by certificates in registered
form and that such Pass-Through Trust Interests constitute and remain
“securities” (as defined in Section 8-102 of the Uniform Commercial Code).
Seller shall take all steps as may be necessary in connection with the
indorsement, transfer of power, delivery and pledge of all Purchased Assets and
Contributed Mortgage Loans to Buyer, and performing UCC searches and duly
authorized and filing Uniform Commercial Code financing statements, in form and
substance satisfactory to Buyer, on Form UCC-1. 

         
(3) Organizational Documents. A certificate of the authorized person of the
Seller and Guarantor substantially in the form of Exhibit F hereto, attaching certified copies of Seller’s and Guarantor’s
organizational documents and resolutions approving the Program Agreements and
transactions thereunder (either specifically or by general resolution) and all
documents evidencing other necessary action or governmental approvals as may be
required in connection with the Program Agreements. 

         
(4) Good Standing Certificate. A certified copy of a good standing certificate
from the jurisdiction of organization of the Seller and Guarantor, dated as of
no earlier than the date ten (10) Business Days prior to the Purchase Date with
respect to the initial Transaction hereunder. 

         
(5) Incumbency Certificate. An incumbency certificate of the company
secretary of the Seller and Guarantor, certifying the names, true signatures and
titles of the representatives duly authorized to request transactions hereunder
and to execute the Program Agreements. 

         
(6) Opinion of Counsel. (A) A security interest, general corporate and
enforceability opinion or opinions of counsel to Seller Parties and Guarantor,
including an Investment Company Act of 1940, as amended (the “Investment Company Act”) opinion indicating that (x) it is not necessary
to register Pass-Through Trust under the Investment Company Act, for reasons
other than the exemption provided by Section 3(c)(1) or Section 3(c)(7) of the
Investment Company Act and (y) it is not necessary to register Seller or
Guarantor under the Investment Company Act; and (B) a Bankruptcy Code opinion of
counsel to Seller Parties and Guarantor, with respect to the matters outlined in
Section 26, each in form and substance acceptable to
Buyer;

         
(7) Reserved. 

         
(8) Fees. Payment of any fees due to Buyer hereunder. 

         
(9) Reserved. 

- 26 - 







          (10)
Delivery of
Certificates. Seller shall
deliver to the Custodian the Purchased Certificate issued in the name of the
Buyer.

     b. All
Transactions. The obligation of
Buyer to enter into each Transaction pursuant to this Agreement is subject to
the following conditions precedent: 

         
(1) Due Diligence Review. Without limiting the generality of Section 34
hereof, Buyer shall have completed, to its satisfaction, its due diligence
review of the related Purchased Assets, Contributed Mortgage Loans and Seller
Parties, Guarantor and the Servicer. 

         
(2) Required Documents. With respect to each Contributed Mortgage Loan,
the Asset File has been delivered to the Custodian in accordance with the
Custodial Agreement. 

         
(3) Transaction Documents. Buyer or its designee shall have received on or
before the day of such Transaction (unless otherwise specified in this
Agreement) the following, in form and substance satisfactory to Buyer and (if
applicable) duly executed: 

         
(a) A Transaction Request and Asset Schedule delivered
by Seller pursuant to Section 3.b hereof. 

         
(b) The Trust Receipt and Custodial Asset Schedule
delivered by Custodian.

         
(c) Such certificates, opinions of counsel or other
documents as Buyer may reasonably request. 

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


         
(5) Requirements of Law. Buyer shall not have determined that the
introduction of or a change in any Requirement of Law or in the interpretation
or administration of any Requirement of Law applicable to Buyer has made it
unlawful, and no Governmental Authority shall have asserted that it is unlawful,
for Buyer to enter into Transactions with a Pricing Rate based on CSCOF.


         
(6) Representations and Warranties. Both immediately prior to the related
Transaction and also after giving effect thereto and to the intended use
thereof, the representations and warranties made by Seller and Guarantor in each
Program Agreement shall be true, correct and complete on and as of such Purchase
Date in all material respects with the same force and effect as if made on and
as of such date (or, if any such representation or warranty is expressly stated
to have been made as of a specific date, as of such specific date). 

         
(7) Reserved. 

- 27 - 







          (8)
Material Adverse
Change. None of the following
shall have occurred and/or be continuing: 

         
(a) Credit Suisse AG, New York Branch’s corporate bond
rating as calculated by S&P or Moody’s has been lowered or downgraded to a
rating below investment grade by S&P or Moody’s; 

         
(b) an event or events shall have occurred in the good
faith determination of Buyer resulting in the effective absence of a “repo
market” or comparable “lending market” for financing debt obligations secured by
mortgage loans or securities or an event or events shall have occurred resulting
in Buyer not being able to finance Contributed Mortgage Loans through the “repo
market” or “lending market” with traditional counterparties at rates which would
have been reasonable prior to the occurrence of such event or events; or


         
(c) an event or events shall have occurred resulting
in the effective absence of a “securities market” for securities backed by
mortgage loans or an event or events shall have occurred resulting in Buyer not
being able to sell securities backed by mortgage loans at prices which would
have been reasonable prior to such event or events; or 

         
(d) there shall have occurred (i) a material change in
financial markets, an outbreak or escalation of hostilities or a material change
in national or international political, financial or economic conditions; (ii) a
general suspension of trading on major stock exchanges; or (iii) a disruption in
or moratorium on commercial banking activities or securities settlement
services; or 

         
(e) there shall have occurred a material adverse
change in the financial condition of Buyer which affects (or can reasonably be
expected to affect) materially and adversely the ability of Buyer to fund its
obligations under this Agreement; provided, that any such determination under
this Section 10.b(9)(e) shall be consistent with the determinations made by
Buyer in respect of collateral substantially similar to the Contributed Mortgage
Loans and the Purchased Certificate. Seller shall be entitled to a refund of a
pro-rated portion of any Commitment Fee actually paid by Seller with respect to
any period after the date on which such payment and any event occurring pursuant
to this clause (8). 

11. Program; Costs 

     a. Seller
and Guarantor shall reimburse Buyer for any of Buyer’s reasonable out-of-pocket
costs, including reasonable attorney’s fees, incurred by Buyer in determining
the acceptability to Buyer of any Repurchase Assets, subject to Section 34 of
this Agreement. Seller and Guarantor shall also pay, or reimburse Buyer if Buyer
shall pay, any termination fee, which may be due any Servicer in connection with
a termination of the Servicer by Buyer in accordance with Section 12.e or Section 16.d of this
Agreement. Seller and Guarantor shall pay the fees and expenses of Buyer’s
counsel in connection with the Program Agreements. Legal fees for any subsequent
amendments to this Agreement or related
documents shall be borne by Seller and Guarantor. Seller and Guarantor shall pay
ongoing custodial fees and expenses as set forth in the Custodial Agreement, and
any other ongoing fees and expenses under any other Program Agreement.


- 28 - 







     b.
If Buyer determines that, due to the
introduction of, any change in, or the compliance by Buyer with (i) any
eurocurrency reserve requirement or (ii) the interpretation of any law,
regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
an increase in the cost to Buyer in engaging in the present or any future
Transactions, then each of Seller and Guarantor agrees to pay to Buyer, from
time to time, upon demand by Buyer (with a copy to Custodian) the actual cost of
additional amounts as specified by Buyer to compensate Buyer for such increased
costs; provided, that any such determination made under this Section 11.b shall be consistent with determinations made by
Buyer in respect of substantially similar warehouse and loan facilities with
substantially similar assets. 

     c. With
respect to any Transaction, Buyer may conclusively rely upon, and shall incur no
liability to Seller or Guarantor in acting upon, any request or other
communication that Buyer reasonably believes to have been given or made by a
person authorized to enter into a Transaction on Seller’s behalf, whether or not
such person is listed on the certificate delivered pursuant to Section 10.a(5)
hereof. In each such case, Seller and Guarantor hereby waives the right to
dispute Buyer’s record of the terms of the request or other
communication.

     d. Reserved. 

     e. (i)
Any payments made by Seller or Guarantor to Buyer or a Buyer assignee hereunder
or any Program Agreement shall be made free and clear of and without deduction
or withholding for any Taxes, except as required by applicable law. If Seller or
Guarantor shall be required by applicable law (as determined in the good faith
discretion of the applicable withholding agent) to deduct or withhold any Tax
from any sums payable to Buyer or a Buyer assignee, then (i) the Seller or
Guarantor shall make such deductions or withholdings and pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law; (ii) to the extent the withheld or deducted Tax is an Indemnified Tax or
Other Tax, the sum payable shall be increased as necessary so that after making
all required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section 11(e)) the Buyer or
Buyer assignee receives an amount equal to the sum it would have received had no
such deductions or withholdings been made; and (iii) the Seller and Guarantor
shall notify the Buyer or Buyer assignee of the amount paid and shall provide
the original or a certified copy of a receipt issued by the relevant
Governmental Authority evidencing such payment within ten (10) days thereafter.
Seller and Guarantor shall otherwise indemnify Buyer, within ten (10) days after
demand therefor, for any Indemnified Taxes or Other Taxes imposed on Buyer
(including Indemnified Taxes and Other Taxes imposed or asserted on or
attributable to amounts payable under this Section 11(e)) and any reasonable
expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally asserted by the relevant Governmental
Authority.

- 29 - 







     (ii) Buyer and any Buyer assignee shall deliver to
each of the Seller and Guarantor, at the time or times reasonably requested by
the Seller or Guarantor, such properly completed and executed documentation
reasonably requested by the Seller or Guarantor as will permit payments made
hereunder to be made without withholding or at a reduced rate of withholding. In
addition, Buyer and any Buyer assignee, if reasonably requested by Seller or
Guarantor, shall deliver such other documentation prescribed by applicable law
or reasonably requested by the Seller or Guarantor as will enable the Seller or
Guarantor to determine whether or not such Buyer or Buyer assignee is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in this Section 11, the completion, execution and
submission of such documentation (other than such documentation in Section
11(e)((ii)(A), (B) and (C) below) shall not be required if in the Buyer’s or
Buyer’s assignee’s judgment such completion, execution or submission would
subject such Buyer or Buyer assignee to any material unreimbursed cost or
expense or would materially prejudice the legal or commercial position of such
Buyer or Buyer assignee. Without limiting the generality of the foregoing, Buyer
or Buyer assignee shall deliver to each of the Seller and Guarantor, to the
extent legally entitled to do so: 

(A) in the case of a Buyer or Buyer assignee which is a “U.S. Person” as
defined in section 7701(a)(30) of the Code, a properly completed and executed
Internal Revenue Service (“IRS”) Form W-9 certifying that it is not subject to
U.S. federal backup withholding tax;

(B) in the case of a Buyer or Buyer assignee which is not a “U.S. Person”
as defined in Code section 7701(a)(30): (I) a properly completed and executed
IRS Form W-8BEN, W-8BEN-E or W-8ECI, as appropriate, evidencing entitlement to a
zero percent or reduced rate of U.S. federal income tax withholding on any
payments made hereunder, (II) in the case of such non-U.S. Person claiming
exemption from the withholding of U.S. federal income tax under Code sections
871(h) or 881(c) with respect to payments of “portfolio interest,” a duly
executed certificate (a “U.S. Tax Compliance Certificate”) to the effect that
such non-U.S. Person is not (x) a “bank” within the meaning of Code section
881(c)(3)(A), (y) a “10 percent shareholder” of Seller, Guarantor or affiliate
thereof, within the meaning of Code section 881(c)(3)(B), or (z) a “controlled
foreign corporation” described in Code section 881(c)(3)(C), (III) to the extent
such non-U.S. person is not the beneficial owner, executed originals of IRS Form
W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E a
U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification
documents from each beneficial owner, as applicable; provided that if such
non-U.S. person is a partnership and one or more direct or indirect partners of
such non-U.S. person are claiming the portfolio interest exemption, such
non-U.S. person may provide a U.S. Tax Compliance Certificate on behalf of each
such direct and indirect partner, and (IV) executed originals of any other form
or supplementary documentation prescribed by law as a basis for claiming
exemption from or a reduction in United
States federal withholding tax together with such supplementary documentation as
may be prescribed by law to permit the Seller or Guarantor to determine the
withholding or deduction required to be made. 

- 30 - 







(C) if a payment made to a Buyer or Buyer assignee under this Agreement
would be subject to U.S. federal withholding tax imposed by FATCA if such Buyer
or assignee were to fail to comply with the applicable reporting requirements of
FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), such Buyer or assignee shall deliver to the Seller or Guarantor at
the time or times prescribed by law and at such time or times reasonably
requested by the Seller such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Seller as may be necessary
for the Seller to comply with their obligations under FATCA or to determine the
amount to deduct and withhold from such payment. Solely for purposes of this
Section 11(e), “FATCA” shall include any amendments made to FATCA after the date
of this Agreement. 

The applicable IRS forms referred to above shall be delivered by each
applicable Buyer or Buyer assignee on or prior to the date on which such person
becomes a Buyer or Buyer assignee under this Agreement, as the case may be, and
upon the obsolescence or invalidity of any IRS form previously delivered by it
hereunder. 

     f.
Any indemnification payable by Seller
or Guarantor to Buyer or any Buyer assignee for Indemnified Taxes or Other Taxes
that are imposed on Buyer or a Buyer assignee, as described in Section 11(e)(i)
hereof, shall be paid by Seller or Guarantor within ten (10) days after demand
therefor. A certificate as to the amount of such payment or liability delivered
to the Seller or Guarantor by Buyer or a Buyer assignee shall be conclusive
absent manifest error. 

     g. Each
party’s obligations under this Section 11 shall survive any assignment of rights
by, or the replacement of, Buyer or a Buyer assignee, and the repayment,
satisfaction or discharge of all obligations under any Program Agreement.


     h. Each party to this
Agreement acknowledges that it is its intent for purposes of U.S. federal, state
and local income and franchise taxes to treat each Transaction as indebtedness
of Seller that is secured by the Purchased Assets, and the Purchased Assets as
owned by Seller in the absence of an Event of Default by Seller. Buyer and
Seller agree that they will treat and report for all tax purposes the
Transactions entered into hereunder as one or more loans from Buyer to Seller
secured by the Purchased Assets, unless otherwise prohibited by law or upon a
final determination by any taxing authority that the Transactions are not loans
for tax purposes. 

12. Servicing 

     a. The
Pass-Through Trust Trustee for the Pass-Through Trust and the Seller, in its
capacity as depositor under the Pass-Through Trust Agreement, shall contract
with Servicer to service the Contributed
Mortgage Loans consistent with Accepted Servicing Practices.

- 31 - 







     b.
Seller shall cause Pass-Through Trust
Trustee for the Pass-Through Trust to cause the Servicer to hold or cause to be
held all escrow funds collected by Servicer with respect to any Contributed
Mortgage Loans in trust accounts and shall apply the same for the purposes for
which such funds were collected. 

     c. Seller
shall cause Pass-Through Trust Trustee for the Pass-Through Trust to cause the
Servicer to deposit all collections received by Servicer on the Contributed
Mortgage Loans in accordance with Section 7.a.

     d. In the
event there is a third party Servicer and upon Buyer’s request, Seller shall
provide promptly to Buyer a Servicer Notice addressed to and agreed to by the
Servicer of the related Contributed Mortgage Loans, advising such Servicer of
such matters as Buyer may reasonably request, including, without limitation,
recognition by the Servicer of Buyer’s interest in such Contributed Mortgage
Loans and the Servicer’s agreement that upon receipt of notice of an Event of
Default from Buyer, it will follow the instructions of Buyer with respect to the
Contributed Mortgage Loans and any related Income with respect thereto.


     e. Upon
the occurrence of an Event of Default hereunder or a default that permits
termination of the Servicer under the Servicing Agreement, Buyer shall have the
right to immediately terminate the Servicer’s right to service the Contributed
Mortgage Loans without payment of any penalty or termination fee. Seller and the
Servicer shall cooperate in transferring the servicing of the Contributed
Mortgage Loans to a successor servicer appointed by Buyer in its sole
discretion. For the avoidance of doubt any termination of the Servicer’s rights
to service by the Buyer as a result of an Event of Default shall be deemed part
of an exercise of the Buyer’s rights to cause the liquidation, termination or
acceleration of this Agreement. 

     f. If
Seller should discover the occurrence of an event of default under the Servicing
Agreement, Seller shall promptly notify Buyer and shall cause the enforcement of
the Servicing Agreement in accordance with its terms. 

13. Representations and Warranties 

     a. Each
of Seller, on behalf of the Seller Parties, and Guarantor represents and
warrants to Buyer as of the date hereof and as of each Purchase Date for any
Transaction that: 

         
(1) Existence. Seller has been duly organized and is validly existing as a corporation
in good standing under the laws of the State of Delaware. Pass-Through Trust has
been organized as a common law trust under the laws of the State of New York.
Guarantor has been duly organized and is validly existing as a real estate
investment trust in good standing under the laws of the State of
Maryland.

- 32 - 







          (2)
Licenses. Each of the Seller and Guarantor is duly
licensed or is otherwise qualified in each jurisdiction in which it transacts
business for the business which it conducts and is not in default of any
applicable federal, state or local laws, rules and regulations unless, in each
instance, the failure to take such action is not reasonably likely (either
individually or in the aggregate) to cause a Material Adverse Effect. Each
Seller Party and Guarantor has the requisite power and authority to execute and
deliver, engage in the transactions contemplated by, and perform and observe the
terms and conditions of, each Program Agreement and any Transaction
Request.

         
(3) Power. Each Seller Party and Guarantor has all requisite corporate or other
power, and has all governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
Material Adverse Effect. 

         
(4) Due Authorization. Each Seller Party and Guarantor has all
necessary corporate or other power, authority and legal right to execute,
deliver and perform its obligations under each of the Program Agreements, as
applicable. Each Program Agreement has been (or, in the case of Program
Agreements not yet executed, will be) duly authorized, executed and delivered by
Seller Parties and Guarantor, as applicable, all requisite or other corporate
action having been taken, and each is valid, binding and enforceable against
Seller Parties and Guarantor, as applicable, in accordance with its terms except
as such enforcement may be affected by bankruptcy, by other insolvency laws, or
by general principles of equity. 

         
(5) Financial Statements. The Guarantor has heretofore furnished to Buyer
a copy of (a) its consolidated balance sheet and the consolidated balance sheets
of its consolidated Subsidiaries for the fiscal year of the Guarantor ended
December 31, 2013 and the related consolidated statements of income and retained
earnings and of cash flows for the Guarantor and its consolidated Subsidiaries
for such fiscal year, setting forth in each case in comparative form the figures
for the previous year, with the opinion thereon of PriceWaterhouseCoopers and
(b) its consolidated balance sheet and the consolidated balance sheets of its
consolidated Subsidiaries for the quarterly fiscal periods of the Guarantor
ended September 30, 2013 and March 31, 2014 and the related consolidated
statements of income and retained earnings and of cash flows for the Guarantor
and its consolidated Subsidiaries for such quarterly fiscal periods, setting
forth in each case in comparative form the figures for the previous year. All
such financial statements are complete and correct and fairly present, in all
material respects, the consolidated financial condition of the Guarantor and its
Subsidiaries and the consolidated results of their operations as at such dates
and for such fiscal periods, all in accordance with GAAP applied on a consistent
basis. Since ________________, 201_, there has been no material adverse change
in the consolidated business, operations or financial condition of the Guarantor
and its consolidated Subsidiaries taken as a whole from that set forth in said
financial statements nor is Guarantor aware of any state of facts which (with
notice or the lapse of time) would or could result in any such material adverse
change. The Guarantor has, on the date of the statements delivered pursuant to
this Section (the “Statement
Date”) no liabilities, direct or
indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes,
long-term leases or unusual forward or long-term commitments not disclosed by,
or reserved against in, said balance sheet and related statements, and at the
present time there are no material unrealized or anticipated losses from any
loans, advances or other commitments of Seller except as heretofore disclosed to
Buyer in writing.



-
33 - 










          (6)
Event of Default. There exists no Event of Default under Section
15.b hereof, which default gives rise to a right to accelerate indebtedness as
referenced in Section 15.b hereof, under any mortgage, borrowing agreement or
other instrument or agreement pertaining to indebtedness for borrowed money or
to the repurchase of mortgage loans or securities. 

         
(7) Solvency. Each of Seller and Guarantor is solvent and will not be rendered
insolvent by any Transaction and, after giving effect to such Transaction, will
not be left with an unreasonably small amount of capital with which to engage in
its business. No Seller Party nor Guarantor intends to incur, nor does it
believe that it has incurred, debts beyond its ability to pay such debts as they
mature and is not contemplating the commencement of insolvency, bankruptcy,
liquidation or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of such entity
or any of its assets. The amount of consideration being received by Seller upon
the sale of the Purchased Certificate to Buyer constitutes reasonably equivalent
value and fair consideration for such Purchased Certificate. Seller is not
transferring any Purchased Certificate with any intent to hinder, delay or
defraud any of its creditors. Each transfer of Mortgage Loans to Pass-Through
Trust Trustee for the Pass-Through Trust constitutes reasonably equivalent value
and fair consideration for such Mortgage Loans. 

         
(8) No Conflicts. The execution, delivery and performance by each
Seller Party and Guarantor of each Program Agreement do not conflict with any
term or provision of the formation documents or by-laws of any Seller Party or
Guarantor or any law, rule, regulation, order, judgment, writ, injunction or
decree applicable to any Seller Party or Guarantor of any court, regulatory
body, administrative agency or governmental body having jurisdiction over any
Seller Party or Guarantor, which conflict would have a Material Adverse Effect
and will not result in any violation of any such mortgage, instrument, agreement
or obligation to which any Seller Party or Guarantor is a party. 

         
(9) True and Complete Disclosure. All information, reports, exhibits, schedules,
financial statements or certificates of Seller, Guarantor or any Affiliate
thereof or any of their officers furnished or to be furnished to Buyer in
connection with the initial or any ongoing due diligence of Seller, Guarantor,
or any Affiliate or officer thereof (taken as a whole), and the negotiation,
preparation, or delivery of the Program Agreements are true and complete and, to
the best of the knowledge of Seller, Guarantor or any Affiliate, do not omit to
disclose any material facts necessary to make the statements herein or therein,
in light of the circumstances in which they are made, not misleading. All
financial statements have been prepared in accordance with GAAP (other than
monthly financial statements solely with respect to footnotes, year-end
adjustments and cash flow statements). 

- 34 - 







         
(10) Approvals. No consent, approval, authorization or order of, registration or filing
with (other than any Form 8-Ks that may be required to be filed with the SEC),
or notice to any Governmental Authority or court is required under applicable
law in connection with the execution, delivery and performance by any Seller
Party or Guarantor of each Program Agreement. 

         
(11) Litigation. There is no action, proceeding or investigation pending with respect to
which any Seller Party or Guarantor has received service of process or, to the
best of Seller’s or Guarantor’s knowledge threatened against it before any
court, administrative agency or other tribunal (A) asserting the invalidity of
any Program Agreement, (B) seeking to prevent the consummation of any of the
transactions contemplated any Program Agreement, (C) making a claim individually
in an amount greater than $5,00,000 or in an aggregate amount greater than
$10,000,000, or (D) which might materially and adversely affect the validity of
the Purchased Assets or Contributed Mortgage Loans or the performance by it of
its obligations under, or the validity or enforceability of any Program
Agreement. 

         
(12) Material Adverse Effect. There has been no Material Adverse Effect since
the date set forth in the most recent financial statements supplied to Buyer.


         
(13) Ownership. No Seller Party has assigned, pledged, or otherwise conveyed or
encumbered any Purchased Asset or Contributed Mortgage Loan to any other Person,
other than as contemplated in the Program Agreements, and immediately prior to
the sale of such Purchased Certificate to Buyer, Seller was the sole owner of
such Purchased Certificate and had good and marketable title thereto, free and
clear of all Liens, in each case except for Liens to be released simultaneously
with the sale to Buyer hereunder. 

         
(14) Acquisition Guidelines. The Acquisition Guidelines provided to Buyer are
the true and correct Acquisition Guidelines of the Seller. 

         
(15) Taxes.

         
(a) Seller and Guarantor have timely filed all tax
returns that are required to be filed by them and have paid all taxes, except
for any such taxes as are being appropriately contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate
reserves have been provided. The charges, accruals and reserves on the books of
Seller and Guarantor in respect of taxes and other governmental charges are, in
the opinion of Seller or Guarantor, as applicable, adequate. 

         
(b) Guarantor is and has always been treated as a real
estate investment trust for U.S. federal income tax purposes. 

         
(16) Investment Company. Neither Seller nor Guarantor nor any of its
Subsidiaries is an “investment company”, or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act and (x)
it is not necessary to register Pass-Through Trust under the Investment Company
Act, for reasons other than the exemption provided by Section 3(c)(1) or Section
3(c)(7) of the Investment Company Act and (y) it is not necessary to register
Seller or Guarantor under the Investment Company Act. 

- 35 - 







          (17)
Chief Executive Office;
Jurisdiction of Organization. On
the Effective Date, Seller’s chief executive office is, and has been, located at
c/o Zais REIT Management, LLC, 2 Bridge Avenue, Suite 322, Red Bank, New Jersey
07701 and the trust office of Pass-Through Trust is, and has been, located at
U.S. Bank National Association, 60 Livingston Avenue, Mailcode: EP-MN-WS3D, St.
Paul, Minnesota 55107. On the Effective Date, Seller’s jurisdiction of
organization is Delaware. On the Effective Date, Pass-Through Trust’s
jurisdiction of organization is New York. Seller shall provide Buyer with thirty
days advance notice of any change in Seller’s principal office or place of
business, legal name or jurisdiction. Seller has no trade name. During the
preceding five years, Seller has not been known by or done business under any
other name, corporate or fictitious, and has not filed or had filed against it
any bankruptcy receivership or similar petitions nor has it made any assignments
for the benefit of creditors.

         
(18) Location of Books and Records. The location where Seller keeps its books and
records, including all computer tapes and records relating to the Purchased
Assets and Contributed Mortgage Loans and the related Repurchase Assets is its
chief executive office, the offices of the Custodian or the related trustee.


         
(19) Tangible Net Worth. On the Effective Date, Guarantor’s Tangible Net
Worth is not less than the amount set forth in Section 2.1 of the Pricing Side
Letter. 

         
(20) ERISA. Each Plan to which Seller, Guarantor or its respective Subsidiaries
make direct contributions, and, to the knowledge of Seller, each other Plan and
each Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law. 

         
(21) Adverse Selection. Seller has not used selection procedures that
identified the Contributed Mortgage Loans as being less desirable or valuable
than other Mortgage Loans owned directly or indirectly by the Seller.


         
(22) Agreements. No Seller Party, Guarantor or any Subsidiary of any Seller Party or
Guarantor is a party to any agreement, instrument, or indenture or subject to
any restriction materially and adversely affecting its business, operations,
assets or financial condition, except as disclosed in the financial statements
described in Section 13.a(5) hereof. No Seller Party or Guarantor is in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement, instrument, or indenture
which default could have a material adverse effect on the business, operations,
properties, or financial condition of Seller Parties or Guarantor as a whole. No
holder of any indebtedness of Seller Parties, Guarantor or of any of their
Subsidiaries has given notice of any asserted default thereunder. 

- 36 - 







         
(23) Reserved. 

         
(24) Real Estate Investment Trust. Except as disclosed in writing to Buyer,
Guarantor has not involuntarily engaged in any material “prohibited
transactions” as defined in Section 857(b)(6)(B)(iii) and (C) of the Code.
Guarantor for its current “tax year” (as defined in the Code) is entitled to a
dividends paid deduction under the requirements of Section 857 of the Code with
respect to any dividends paid by it with respect to such year for which it
claims a deduction in its Form 1120-REIT filed with the United States Internal
Revenue Service for such year. 

         
(25) No Reliance. Each Seller Party and Guarantor has made its own independent decisions
to enter into the Program Agreements and each Transaction and as to whether such
Transaction is appropriate and proper for it based upon its own judgment and
upon advice from such advisors (including without limitation, legal counsel and
accountants) as it has deemed necessary. No Seller Party or Guarantor is relying
upon any advice from Buyer as to any aspect of the Transactions including
without limitation, the legal, accounting or tax treatment of such Transactions.


         
(26) Plan Assets. No Seller Party nor Guarantor is an employee benefit plan as defined in
Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the
Code, and none of the Purchased Assets or Contributed Mortgage Loans are “plan
assets” within the meaning of 29 CFR §2510.3 101 as amended by Section 3(42) of
ERISA, in the Seller Parties’ hands, and transactions by or with Seller Parties
or Guarantor are not subject to any state or local statute regulating
investments or fiduciary obligations with respect to governmental plans within
the meaning of Section 3(32) of ERISA. 

         
(27) No Prohibited Persons. Neither the Seller nor Guarantor nor any of
their Affiliates, officers, directors, partners or members, is an entity or
person (or to the Seller’s or Guarantor’s knowledge, owned or controlled by an
entity or person): (i) that is listed in the Annex to, or is otherwise subject
to the provisions of Executive Order 13224 issued on September 24, 2001
(“EO13224”); (ii) whose name appears on the United States
Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current list of “Specifically Designated National and Blocked
Persons” (which list may be published from time to time in various mediums
including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or
supports “terrorism”, as that term is defined in EO13224; or (iv) who is
otherwise affiliated with any entity or person listed above (any and all parties
or persons described in clauses (i) through (iv) above are herein referred to as
a “Prohibited Person”). 

         
(28) Servicing. Seller shall ensure that Servicer and each subservicer servicing any
Contributed Mortgage Loans hereunder have all consents, licenses and approvals
necessary to service the Contributed Mortgage Loans.

     b.
Seller represents and warrants to
Buyer as of the applicable Purchase Date for any Transaction and each date
thereafter that each Purchased Asset and Contributed Mortgage Loan complies with
the representations and warranties set forth on Schedule 1-A and 1-B and each
such representation and warranty is true and correct, as
applicable. 

- 37 - 







     c. The
representations and warranties set forth in this Agreement shall survive
transfer of the Purchased Assets to Buyer and shall continue for so long as the
Purchased Assets and Contributed Mortgage Loans are subject to this Agreement.
Upon discovery by Seller, Guarantor or Buyer of any breach of any of the
representations or warranties set forth in this Agreement, the party discovering
such breach shall promptly give notice of such discovery to the others. Buyer
has the right to require, in its unreviewable discretion, Seller to repurchase
within one (1) Business Day after receipt of notice from Buyer any Purchased
Asset, or cause the release of any Contributed Mortgage Loan for which a breach
of one or more of the representations and warranties referenced in Section 13.b
exists and which breach has a material adverse effect on the value of such
Purchased Asset, Contributed Mortgage Loan or the interests of Buyer.


14. Covenants

          Each of
Seller, on behalf of the Seller Parties, and Guarantor covenants with Buyer
that, during the term of this facility: 

     a.
Litigation. Seller and Guarantor, as applicable, will
promptly, and in any event within ten (10) days after receipt of service of
process on any of the following, give to Buyer notice of all litigation,
actions, suits, arbitrations, investigations or other legal or arbitrable
proceedings affecting any Seller Party, Guarantor or any of their Subsidiaries
or affecting any of the Property of any of them before any Governmental
Authority that (i) questions or challenges the validity or enforceability of any
of the Program Agreements or any action to be taken in connection with the
transactions contemplated hereby, (ii) makes a claim individually in an amount
greater than $5,00,000 or in an aggregate amount greater than $10,000,000, or
(iii) which, individually or in the aggregate, if adversely determined, could be
reasonably likely to have a Material Adverse Effect. 

     b. Prohibition of Fundamental Changes. Seller shall not enter into any transaction of merger or consolidation
or amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation, winding up or dissolution) or, without Buyer’s prior consent, sell
all or substantially all of its assets, other than in connection with a
securitization transaction, whole loan sale or similar execution, the proceeds
of which will be applied toward the payment of the Repurchase Price and other
related Obligations then due and owing hereunder. 

     c. Servicing. Seller shall
not cause the Contributed Mortgage Loans to be serviced by any Servicer other
than a Servicer expressly approved in writing by Buyer, which approval shall be
deemed granted by Buyer with respect to Seller with the execution of this
Agreement. 

     d. Insurance. Seller and each
subservicer shall maintain errors and omissions insurance and/or mortgage
impairment insurance and blanket bond coverage in such amounts as are in effect
on the Effective Date and as disclosed to Buyer and shall not reduce such
coverage without the written consent of Buyer, and shall also maintain such
other insurance with financially sound and reputable insurance companies, and
with respect to property and risks of a character usually maintained by entities
engaged in the same or similar business similarly situated, against loss, damage
and liability of the kinds and in the amounts customarily maintained by such
entities.

- 38 - 







     e. No
Adverse Claims. Seller warrants
and will defend, and shall cause any Servicer to defend, as applicable, the
right, title and interest of Buyer in and to all Purchased Assets, Contributed
Mortgage Loans and the related Repurchase Assets against all adverse claims and
demands. 

     f. Assignment. Except as
permitted herein, no Seller Party nor any Servicer shall sell, assign, transfer
or otherwise dispose of, or grant any option with respect to, or pledge,
hypothecate or grant a security interest in or lien on or otherwise encumber
(except pursuant to the Program Agreements), any of the Purchased Assets,
Contributed Mortgage Loans or any interest therein, provided that this Section
shall not prevent any transfer of Purchased Assets or Contributed Mortgage Loans
otherwise in accordance with the Program Agreements. 

     g. Security Interest. Seller
shall do all things necessary to preserve the Purchased Assets, Contributed
Mortgage Loans and the related Repurchase Assets so that they remain subject to
a first priority perfected security interest hereunder. Without limiting the
foregoing, Seller will comply with all rules, regulations and other laws of any
Governmental Authority and cause the Purchased Assets, Contributed Mortgage
Loans or the related Repurchase Assets to comply with all applicable rules,
regulations and other laws. Seller will not allow any default for which Seller
is responsible to occur under any Purchased Assets, Contributed Mortgage Loans
or the related Repurchase Assets or any Program Agreement and Seller shall fully
perform or cause to be performed when due all of its obligations under any
Purchased Assets, Contributed Mortgage Loans or the related Repurchase Assets
and any Program Agreement. 

     h. Records. 

         
(1) Seller shall maintain or cause to be maintained
all records relating to the Purchased Assets, Contributed Mortgage Loans and
Repurchase Assets in accordance with industry custom and practice for assets
similar to the Purchased Assets, Contributed Mortgage Loans and Repurchase
Assets. All such Records related to the Contributed Mortgage Loans shall be in
Custodian’s possession unless Buyer otherwise approves or as provided in the
Custodial Agreement. Except in accordance with the Custodial Agreement, Seller
will not allow any such papers, records or files that are an original or an only
copy to leave Custodian’s possession, except for individual items removed in
connection with servicing a specific Contributed Mortgage Loan, in which event
Seller will obtain or cause to be obtained a receipt from a financially
responsible person for any such paper, record or file. Seller will, or will
cause the Servicer to, maintain all such Records not in the possession of
Custodian in good and complete condition in accordance with industry practices
for assets similar to the Contributed Mortgage Loans and preserve them against
loss. 

- 39 - 







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

         
(3) In accordance with the Custodial Agreement and the
Pass-Through Trust Agreement, upon reasonable advance notice from Custodian or
Buyer, Seller shall cause the Custodian or Pass-Through Trust Trustee, as
applicable, to (x) make any and all such Records available to Buyer to examine
any such Records, either by its own officers or employees, or by agents or
contractors, or both, and make copies of all or any portion thereof, and (y)
permit Buyer or its authorized agents to discuss the affairs, finances and
accounts of Seller with its chief operating officer and chief financial officer
and to discuss the affairs, finances and accounts of Seller with its independent
certified public accountants. 

     i.
Books. Each Seller Party shall keep or cause to be kept
in reasonable detail books and records of account of its assets and business and
shall clearly reflect therein the transfer of Purchased Certificate and pledge
of Repurchase Assets to Buyer. 

     j. Approvals. Seller shall
maintain all licenses, permits or other approvals necessary for Seller to
conduct its business and to perform its obligations under the Program
Agreements, and Seller shall conduct its business strictly in accordance with
applicable law. 

     k. Material Change in Business. No Seller Party nor Guarantor shall make any material change in the
nature of its business as carried on at the date hereof. 

     l. Product Matrix. Without
the prior written consent of Buyer (such consent not to be unreasonably
withheld), Seller shall not amend or otherwise modify the Product Matrix.
Without limiting the foregoing, in the event that Seller makes any amendment or
modification to the Product Matrix, Seller shall promptly deliver to Buyer a
complete copy of the amended or modified Product Matrix. 

     m. Distributions. If a
Default or an Event of Default has occurred and is continuing, neither Seller
nor Guarantor shall pay any dividends with respect to any capital stock or other
equity interests in such entity, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Seller or Guarantor;
provided that Guarantor shall be permitted to pay
dividends solely in order to meet its REIT Distribution Requirement. 

     n. Applicable Law. Each
Seller Party and Guarantor shall comply with the requirements of all applicable
laws, rules, regulations and orders of any Governmental Authority. 

     o. Existence. Each Seller
Party and the Guarantor shall preserve and maintain their legal existence and
all of their material rights, privileges, licenses and franchises. 

- 40 - 







     p. Chief Executive Office; Jurisdiction of Organization. No Seller Party shall move its chief executive
office from the address referred to in Section 13.a(17) or change its
jurisdiction of organization from the jurisdiction referred to in Section
13.a(17) unless it shall have provided Buyer 30 days’ prior written notice of
such change. 

     q. Taxes.

         
(1) Each Seller Party and Guarantor shall timely file
all tax returns that are required to be filed by them and shall timely pay and
discharge all taxes, assessments and governmental charges or levies imposed on
it or on its income or profits or on any of its property prior to the date on
which penalties attach thereto, except for any such tax, assessment, charge or
levy the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained.


         
(2) Guarantor will be treated as a real estate
investment trust for U.S. federal income tax purposes, and Seller Parties will
be treated as disregarded entities for tax purposes. 

     r.
Transactions with
Affiliates. Except for those
transactions contemplated by the Program Agreements or a securitization
transaction, no Seller Party will enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property, with any
Affiliate, unless such transaction is (a) in the ordinary course of such Seller
Party’s business and (b) upon fair and reasonable terms no less favorable to
such Seller Party than it would obtain in a comparable arm’s length transaction
with a Person which is not an Affiliate, or make a payment that is not otherwise
permitted by this Section to any Affiliate; provided that this clause (r) will
not limit the movement of cash, Cash Equivalents or Agency Securities among
Seller Parties and their affiliates. 

     s. Reserved. 

     t. Reserved.

     u. Reserved. 

     v. True and Correct Information. All information, reports, exhibits, schedules, financial statements or
certificates of the Seller, Guarantor, any Affiliate thereof or any of their
officers furnished to Buyer hereunder and during Buyer’s diligence of the Seller
and Guarantor are and will be true and complete in all material respects and do
not omit to disclose any material facts necessary to make the statements herein
or therein, in light of the circumstances in which they are made, not
misleading. All required financial statements, information and reports delivered
by each Seller Party to Buyer pursuant to this Agreement shall be prepared in
accordance with U.S. GAAP, or, if applicable, to SEC filings, the appropriate
SEC accounting regulations. 

     w. Reserved.

     x. Reserved. 

- 41 - 







     y. Reserved. 

     z. Plan Assets. No Seller
Party nor Guarantor shall be an employee benefit plan as defined in Section 3 of
Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code and no
Seller Party or Guarantor shall use “plan assets” within the meaning of 29 CFR
§2510.3 101, as amended by Section 3(42) of ERISA to engage in this Agreement or
any Transaction hereunder. Transactions by or with any Seller Party or Guarantor
shall not be subject to any state or local statute regulating investments of or
fiduciary obligations with respect to governmental plans within the meaning of
Section 3(32) of ERISA. 

     aa. Reserved. 

     bb. MERS Loans. With respect
to MERS Loans, Seller will cause Pass-Through Trust Trustee for the benefit of
Pass-Through Trust (i) to be named as the owner of record on the MERS® System,
(ii) to identify Buyer in the field “interim funder” on the MERS® System, and
(iii) on the occurrence and continuance of an Event of Default hereunder, to
take direction solely from Buyer. 

     cc. REIT Status. Guarantor
shall maintain its status as a real estate investment trust under Section 856 of
the Code. 

     dd. Quality Control. Seller
shall maintain an internal quality control program that verifies, on a regular
basis, the existence and accuracy of all legal documents, credit documents,
property appraisals, and underwriting decisions related to Mortgage Loans. Such
program shall be capable of evaluating and monitoring the overall quality of
Seller’s loan production activities. Such program shall (i) ensure that the
Mortgage Loans are originated in accordance with prudent mortgage banking
practices and accounting principles; (ii) guard against dishonest, fraudulent,
or negligent acts; and (iii) guard against errors and omissions by officers,
employees, or other authorized persons. 

     ee. Financial Covenants.
Guarantor shall at all times comply with all financial covenants and/or
financial ratios set forth in Section 2 of the Pricing Side Letter. 

     ff. Government Reports. Seller
shall provide to Buyer written summaries of relevant portions of all final
written Governmental Authority and investor audits, examinations, evaluations,
monitoring reviews and reports of its operations (including those prepared on a
contract basis) which provide for or relate to (i) material corrective action
required, or (ii) material sanctions proposed, imposed or required, including
without limitation notices of defaults, notices of termination of approved
status, notices of imposition of supervisory agreements or interim servicing
agreements, and notices of probation, or suspension, in each case which requires
filing with the SEC in accordance with the 1934 Act or any rules thereunder;
provided, however, that any obligation under this clause (ff) is deemed to be
satisfied by Seller arranging for Buyer to receive automatic email notification
from Guarantor with respect to such items. 

     gg. SPE
Covenant Separateness. Except as
permitted by the Program Agreements, the Pass-Through Trust shall (a) own no
assets, and will not engage in any business, other than the assets and
transactions specifically contemplated by this Agreement; (b) not incur any
Indebtedness or obligation, secured or unsecured, direct or indirect, absolute
or contingent (including guaranteeing any obligation), other than pursuant
hereto or in connection with the Pass-Through Trust Interests; (c) not make any
loans or advances to any third party, and shall not acquire obligations or
securities of its affiliates; (d) comply with the provisions of its
organizational documents in a manner that will not have a material adverse
effect on the Pass-Through Trust Interests; (e) do all things necessary to
observe organizational formalities and to preserve its existence in a manner
that will not have a material adverse effect on the Pass-Through Trust
Interests, and will not amend, modify or otherwise change its organizational
documents, or suffer same to be amended, modified or otherwise changed, without
the prior written consent of Buyer; (f) not commingle its funds or other assets
with those of any Affiliate or any other Person; (g) maintain its assets in such
a manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any affiliate or any other person;
and (h) not and will not hold itself out to be responsible for the debts or
obligations of any other Person. 

- 42 - 







15. Events of Default 

     Each of the following shall constitute an
“Event of Default” hereunder: 

     a. Payment Failure. Failure
of Seller to (i) make any payment of Price Differential or any other sum
(excluding those amounts specified in clauses (ii) and (iii) below) which has
become due, on a Payment Date, Optional Repurchase Date (with respect to
Purchased Assets actually repurchased) or otherwise, in each case after
notification by Buyer to Seller of such default and such default shall have
continued unremedied for three (3) Business Days, (ii) make any payment of
Repurchase Price on a Repurchase Date or otherwise, whether by acceleration or
otherwise, under the terms of this Agreement, or (iii) cure any Margin Deficit
when due pursuant to Section 6 hereof. 

     b. Cross Default. Seller,
Guarantor or any of Guarantor’s Affiliates shall be in default under (i) any
Indebtedness, in the aggregate, in excess of $5,000,000 of Seller, Guarantor or
of such Affiliate which default (1) involves the failure to pay a matured
obligation, or (2) permits the acceleration of the maturity of obligations by
any other party to or beneficiary with respect to such Indebtedness, or (ii) any
other contract or contracts, in the aggregate in excess of $5,000,000 to which
Seller, Guarantor or such Affiliate is a party which default (1) involves the
failure to pay a matured obligation, or (2) permits the acceleration of the
maturity of obligations by any other party to or beneficiary of such contract.


     c. Assignment. Assignment or
attempted assignment by any Seller Party or Guarantor of this Agreement or any
rights hereunder without first obtaining the specific written consent of Buyer,
or the granting by any Seller Party of any security interest, lien or other
encumbrances on any Purchased Asset or Repurchase Asset to any person other than
Buyer. 

- 43 - 







     d. Insolvency. An Act of
Insolvency shall have occurred with respect to any Seller Party, Guarantor or
any Affiliate and that, with respect to an action provided for in clause (f) of
the definition thereof, such action shall not have been discontinued or unstayed
within forty-five (45) days. 

     e. Material Adverse Change.
The occurrence of a Material Adverse Effect. 

     f. Breach of Financial Representation or Covenant or
Obligation. (i) A breach by any
Seller Party or Guarantor of any of the representations, warranties or covenants
or obligations set forth in Sections 13.a(1) (Existence), 13.a(7) (Solvency), 13.a(12)
(Material Adverse
Effect), 13.a(19)
(Tangible Net
Worth), 14.b (Prohibition of Fundamental Changes), 14.m
(Distributions), 14.o (Existence), 14.z
(Plan Assets), 14.ee (Financial Covenants), or
14.gg (SPE Covenant
Separateness) of this Agreement,
and, (ii) solely with respect to a breach by any Seller Party or Guarantor of
Section 14.cc (REIT Status) or Section 2.3 (Maintenance of Liquidity)
of the Pricing Side Letter, such breach shall continue unremedied for a period
of one (1) Business Day. 

     g. Breach of Non-Financial Representation or Covenant. A breach by any Seller Party or Guarantor of any
other material representation, warranty or covenant set forth in this Agreement
(and not otherwise specified in Section 15.f above), if such breach is not cured
within five (5) Business Days of such Seller Party’s or Guarantor’s knowledge
thereof (other than the representations and warranties set forth in Schedule 1,
which shall be considered solely for the purpose of determining the Asset Value,
the existence of a Margin Deficit and the obligation to repurchase such
Purchased Asset or related Contributed Mortgage Loan, as applicable, unless (i)
such party shall have made any such representations and warranties with
knowledge that they were materially false or misleading at the time made, (ii)
any such representations and warranties have been determined by Buyer in its
sole discretion to be materially false or misleading on a regular basis, or
(iii) Buyer, in its sole discretion, determines that such breach of a material
representation, warranty or covenant materially and adversely affects (A) the
condition (financial or otherwise) of such party, its Subsidiaries or
Affiliates; or (B) Buyer’s determination to enter into this Agreement or
Transactions with such party, then such breach shall constitute an immediate
Event of Default and Seller Parties shall have no cure right hereunder).


     h. Change of Control. The
occurrence of a Change in Control. 

     i. Failure to Transfer. The
Pass-Through Trust Trustee for the Pass-Through Trust fails to acquire the
Contributed Mortgage Loans on a Purchase Date (provided that Buyer has tendered
the related Purchase Price). 

     j. Judgment. A final judgment
or judgments for the payment of money in excess of $5,000,000 in the aggregate
shall be rendered against any Seller Party, Guarantor or any of its Affiliates
by one or more courts, administrative tribunals or other bodies having
jurisdiction and the same shall not be satisfied, discharged (or provision shall
not be made for such discharge) or bonded, or a stay of execution thereof shall
not be procured, within forty-five (45) days from the date of entry thereof.


- 44 - 







     k. Government Action. Any
Governmental Authority or any person, agency or entity acting or purporting to
act under governmental authority shall have taken any action to condemn, seize
or appropriate, or to assume custody or control of, all or any substantial part
of the Property of Seller Parties, Guarantor or any Affiliate thereof, or shall
have taken any action to displace the management of Seller Parties, Guarantor or
any Affiliate thereof or to curtail its authority in the conduct of the business
of Seller Parties, Guarantor or any Affiliate thereof, or takes any action in
the nature of enforcement to remove, limit or restrict the approval of Seller
Parties, Guarantor or Affiliate as an issuer, buyer or a seller/servicer of
Contributed Mortgage Loans or securities backed thereby, and such action
provided for in this Section 15.k shall not have been discontinued or stayed
within five (5) Business Days. 

     l. Inability to Perform. An
officer of any Seller Party or Guarantor shall admit its inability to, or its
intention not to, perform any of such Seller Party’s Obligations hereunder or
Guarantor’s obligations hereunder or under the Guaranty. 

     m. Security Interest. This
Agreement shall for any reason cease to create a valid, first priority security
interest in any material portion of the Purchased Assets or other Repurchase
Assets purported to be covered hereby. 

     n. Financial Statements.
Guarantor’s consolidated audited annual financial statements and the notes
thereto or other opinions or conclusions stated therein shall be qualified or
limited by reference to the status of Guarantor as a “going concern” or a
reference of similar import. 

     o. Guarantor Breach. A breach
by Guarantor of any material representation, warranty or covenant set forth in
the Guaranty or any other Program Agreement, any “event of default” by Guarantor
under the Guaranty, any repudiation of the Guaranty by the Guarantor, or if the
Guaranty is not enforceable against the Guarantor. 

     p. Servicer Default. There is
a breach by Servicer of the Servicing Agreement and Seller has not appointed a
successor servicer acceptable to Buyer within ninety (90) days. 

     q. Pass-Through Trust Trustee Breach. (i) A breach by Pass-Through Trust Trustee of any material
representation, warranty or covenant set forth in the Pass-Through Trust
Agreement, or any other Program Agreement, in any case, in its capacity as
Pass-Through Trust Trustee, which has a material and adverse effect on Buyer or
Buyer’s interests in the Repurchase Assets, or Buyer’s ability to realize on the
Repurchase Assets or exercise its rights or remedies under any of the Program
Agreements or Pass-Through Trust Agreement, (ii) any repudiation of the
Pass-Through Trust Agreement by Pass-Through Trust Trustee, or (iii) if the
Pass-Through Trust Agreement is not enforceable. 

     r. REIT Qualification.
Guarantor shall fail to maintain its status as a real estate investment trust
under Section 856 of the Internal Revenue Code of 1986, as amended or fails to
be entitled to claim dividend paid deductions pursuant to Section 857 of the
Internal Revenue Code of 1986, as amended. 

- 45 - 







          An Event of
Default shall be deemed to be continuing unless expressly waived by Buyer in
writing. 

16. Remedies Upon Default 

     In the event that an Event of Default shall have
occurred: 

     a. Buyer
may, at its option (which option shall be deemed to have been exercised
immediately upon the occurrence of an Act of Insolvency of any Seller Party,
Guarantor or any Affiliate), declare an Event of Default to have occurred
hereunder and, upon the exercise or deemed exercise of such option, the
Repurchase Date for each Transaction hereunder shall, if it has not already
occurred, be deemed immediately to occur (except that, in the event that the
Purchase Date for any Transaction has not yet occurred as of the date of such
exercise or deemed exercise, such Transaction shall be deemed immediately
canceled). Buyer shall (except upon the occurrence of an Act of Insolvency of
any Seller Party, Guarantor or any Affiliate) give notice to Seller and
Guarantor of the exercise of such option as promptly as practicable. 

     b. If
Buyer exercises or is deemed to have exercised the option referred to in
subparagraph (a) of this Section, (i) Seller’s obligations in such Transactions
to repurchase all Purchased Assets and Repurchase Assets, at the Repurchase
Price therefor on the Repurchase Date determined in accordance with subparagraph
(a) of this Section, shall thereupon become immediately due and payable, (ii)
all Income paid after such exercise or deemed exercise shall be retained by
Buyer and applied, in Buyer’s sole discretion, to the aggregate unpaid
Repurchase Prices for the Purchased Certificate (including the related Purchased
Assets) and any other amounts owing by Seller hereunder, and (iii) Seller shall
immediately (A) deliver to Buyer the Asset Files relating to any Purchased
Assets or Repurchase Assets subject to such Transactions then in Seller’s
possession or control and (B) prepare and deliver any Assignments of Mortgage
from the Pass-Through Trust Trustee for the Pass-Through Trust as requested by
Buyer in its sole discretion. 

     c. Buyer
also shall have the right to obtain physical possession, and to commence an
action to obtain physical possession, of all Records and files of each Seller
Party relating to the Purchased Assets and Repurchase Assets and all documents
relating to the Purchased Assets and Repurchase Assets (including, without
limitation, any legal, credit or servicing files with respect to the Purchased
Assets or Repurchase Assets) which are then or may thereafter come in to the
possession of such Seller Party or any third party acting for such Seller Party.
Without limiting the rights of Buyer hereto to pursue all other legal and
equitable rights available to Buyer for any Seller Party’s failure to perform
its obligations under this Agreement, Seller acknowledges and agrees that the
remedy at law for any failure to perform obligations hereunder would be
inadequate and Buyer shall be entitled to specific performance, injunctive
relief, or other equitable remedies in the event of any such failure. The
availability of these remedies shall not prohibit Buyer from pursuing any other
remedies for such breach, including the recovery of monetary damages.


- 46 - 







     d. Buyer
shall have the right to direct all servicers then servicing any Contributed
Mortgage Loans to remit all collections thereon to Buyer, and if any such
payments are received by a Seller Party, such Seller Party shall not commingle
the amounts received with other funds of any Seller Party and shall promptly pay
them over to Buyer. Buyer shall also have the right to terminate any one or all
of the servicers then servicing any Contributed Mortgage Loans with or without
cause. In addition, Buyer shall have the right to immediately sell the Purchased
Assets and liquidate all Repurchase Assets as it, acting in good faith, deems
appropriate. Such disposition of Purchased Assets and Repurchase Assets may be,
at Buyer’s option, on either a servicing-released or a servicing-retained basis.
Buyer shall not be required to give any warranties as to the Purchased Assets or
Repurchase Assets with respect to any such disposition thereof. Buyer may
specifically disclaim or modify any warranties of title or the like relating to
the Purchased Assets or Repurchase Assets. Buyer shall be entitled to place the
Contributed Mortgage Loans in a pool for issuance of mortgage-backed securities
at the then-prevailing price for such securities and to sell such securities for
such prevailing price in the open market. Buyer shall also be entitled to sell
any or all of such Purchased Assets and Repurchase Assets individually for the
prevailing price as it, acting in good faith, deems appropriate. Buyer shall
also be entitled, in its sole discretion, to elect, in lieu of selling all or a
portion of such Purchased Assets and Repurchase Assets, to give the Seller
credit for such Purchased Assets and the Repurchase Assets in an amount equal to
the Market Value of the Purchased Assets against the aggregate unpaid Repurchase
Price and any other amounts owing by the Seller hereunder. 

     e. Upon
the happening of one or more Events of Default, Buyer may apply any proceeds
from the liquidation of the Purchased Assets and Repurchase Assets to the
Repurchase Prices hereunder and all other Obligations in the manner Buyer deems
appropriate in its sole discretion. 

     f. Seller
shall be liable to Buyer for (i) the amount of all reasonable legal or other
expenses (including, without limitation, all costs and expenses of Buyer in
connection with the enforcement of this Agreement or any other agreement
evidencing a Transaction, whether in action, suit or litigation or bankruptcy,
insolvency or other similar proceeding affecting creditors’ rights generally,
further including, without limitation, the reasonable fees and expenses of
counsel (including the costs of internal counsel of Buyer) incurred in
connection with or as a result of an Event of Default, and (ii) any other loss,
damage, cost or expense directly arising or resulting from the occurrence of an
Event of Default in respect of a Transaction. 

     g. To the
extent permitted by applicable law, Seller shall be liable to Buyer for interest
on any amounts owing by Seller hereunder, from the date Seller becomes liable
for such amounts hereunder until such amounts are (i) paid in full by Seller or
(ii) satisfied in full by the exercise of Buyer’s rights hereunder. Interest on
any sum payable by Seller under this Section 16.g shall accrue at a rate equal
to the Post-Default Rate. 

     h. Buyer
shall have, in addition to its rights hereunder, any rights otherwise available
to it under any other agreement or applicable law. 

- 47 - 







     i. Buyer
may exercise one or more of the remedies available to Buyer immediately upon the
occurrence of an Event of Default and, except to the extent provided in
subsections (a) and (d) of this Section, at any time thereafter without notice
to Seller. All rights and remedies arising under this Agreement as amended from
time to time hereunder are cumulative and not exclusive of any other rights or
remedies which Buyer may have. 

     j. Buyer
may enforce its rights and remedies hereunder without prior judicial process or
hearing, and Seller hereby expressly waives any defenses Seller might otherwise
have to require Buyer to enforce its rights by judicial process. Seller also
waives any defense (other than a defense of payment or performance) Seller might
otherwise have arising from the use of nonjudicial process, enforcement and sale
of all or any portion of the Repurchase Assets, or from any other election of
remedies. Seller recognizes that nonjudicial remedies are consistent with the
usages of the trade, are responsive to commercial necessity and are the result
of a bargain at arm’s length. 

     k. Buyer
shall have the right to perform reasonable due diligence with respect to each
Seller Party, Guarantor, the Purchased Assets and the Repurchase Assets, which
review shall be at the expense of Seller. 

17. Reports 

     a. Default Notices. Seller
and Guarantor shall each furnish notice to Buyer (with a copy to the
Pass-Through Trust Trustee) within one (1) Business Day after becoming aware of
the occurrence of any (A) Event of Default hereunder, (B) default by any Seller
Party or Guarantor of any obligation under any Program Agreement or any material
contract or agreement of such Seller Party or Guarantor or (C) event or
circumstance that such party reasonably expects has resulted in, or will, with
the passage of time, result in, a Material Adverse Effect or an Event of
Default. 

     b. Financial Notices.
Guarantor shall furnish to Buyer: 

         
(1) as soon as available and in any event within
forty-five (45) calendar days after the end of each calendar month, the
unaudited consolidated balance sheets of Guarantor and its consolidated
Subsidiaries as of the end of such month and the related unaudited consolidated
statements of stockholders’ equity for Guarantor and its consolidated
Subsidiaries for such period and the portion of the fiscal year through the end
of such period, setting forth, in each case, in comparative form the figures for
the previous year accompanied by a certificate of a Responsible Officer of
Guarantor, which certificate shall state that said consolidated financial
statements fairly present in all material respects the consolidated financial
condition and results of operations of Guarantor and its consolidated
Subsidiaries in accordance with GAAP consistently applied, as at the end of, and
for, such month, subject to normal year-end audit adjustments; 


- 48 - 










         
(2) as soon as available and in any event within one
hundred (100) days after the end of each fiscal year of Guarantor, the
consolidated balance sheets of Guarantor and its consolidated Subsidiaries as at the end of such fiscal
year and the related consolidated statements of operations, stockholders’ equity
and cash flows for Guarantor and its consolidated Subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
year, accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall be acceptable
to Buyer in its sole discretion, shall have no “going concern” qualification and
shall state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of Guarantor and its
respective consolidated Subsidiaries as at the end of, and for, such fiscal year
in accordance with GAAP; 

          (3)
at the time Guarantor furnishes each
set of financial statements pursuant to Section 17.b(1) above, an Officer’s
Compliance Certificate of a Responsible Officer of Guarantor in the form
attached as Exhibit
A to the Pricing Side Letter;


         
(4) as soon as available and in any event within
thirty (30) days of receipt thereof; 

         
(a) if applicable, copies of any 10-Ks, 10-Qs,
registration statements and other “corporate finance” SEC
filings by Seller and Guarantor, within 5 Business Days of their filing with the
SEC; provided, that, Seller and Guarantor or any Affiliate will provide Buyer
with a copy of the annual 10-K filed with the SEC by Seller and Guarantor or
their Affiliates, no later than 100 days after the end of the year; provided
however that this clause (a) is deemed to be satisfied by Seller arranging for
Buyer to receive automatic email notifications from Guarantor with respect to
such items; 

         
(b) such other information regarding the financial
condition, operations, or business of the Seller and Guarantor as Buyer may
reasonably request; and 

         
(c) the particulars of any Event of Termination in
reasonable detail; 

     provided, however, that any obligation to provide notice under this clause 17.b
is deemed to be satisfied by Seller or Guarantor arranging for Buyer to receive
automatic email notifications from Guarantor with respect to such items.


     c. Notices of Certain Events.
As soon as possible and in any event within five (5) Business Days of knowledge
thereof, Seller shall furnish to Buyer notice of the following events:


         
(1) a material change in the insurance coverage
required of Seller; 

         
(2) any material dispute, litigation, investigation,
proceeding, licensing issue or suspension between a Seller Party, Guarantor or
Servicer, on the one hand, and any Governmental Authority or any Person;


- 49 - 







         
(3) any material change in accounting policies or
financial reporting practices of Seller, Guarantor or Servicer; 

         
(4) with respect to any Contributed Mortgage Loan,
that the underlying Mortgaged Property has been damaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty, or
otherwise damaged so as to affect adversely the value of such Mortgaged Loan;


         
(5) any material issues raised upon examination of
Seller or Guarantor by any Governmental Authority; 

         
(6) any material change in the Indebtedness of Seller
or Guarantor, including, without limitation, any default, renewal, termination,
increase in available amount or decrease in available amount related
thereto;

         
(7) any action, proceeding or investigation pending
with respect to which any Seller Party or Guarantor has received service of
process or, to the best of Seller’s or Guarantor’s knowledge threatened against
it before any court, administrative agency or other tribunal which requires
filing with the Securities and Exchange Commission in accordance with the 1934
Act or any rules thereunder; and 

         
(8) any other event, circumstance or condition that
has resulted, or is reasonably likely to result in, in a Material Adverse Effect
with respect to any Seller Party, Guarantor or Servicer; 

         
provided, however, that
any obligation to provide notice under this clause 17.c is deemed to be
satisfied by Seller or Guarantor arranging for Buyer to receive automatic email
notifications from Guarantor with respect to such items. 

     d.
Portfolio Performance
Data. On each Reporting Date,
Seller will furnish to Buyer (i) a report in a mutually agreed upon format and
(ii) electronically, in a format mutually acceptable to Buyer and Seller,
servicing information, including, without limitation, those fields reasonably
requested by Buyer from time to time, on a loan-by-loan basis and in the
aggregate, with respect to the Contributed Mortgage Loans serviced by Seller or
any Servicer for the month (or any portion thereof) prior to the Reporting Date.
In addition to the foregoing information on each Reporting Date, Seller will
furnish to Buyer such information upon the occurrence and continuation of an
Event of Default. 

     e. Other Reports. Seller
shall deliver to Buyer any other reports or information reasonably requested by
Buyer or as otherwise required pursuant to this Agreement or as set forth in the
Officer’s Compliance Certificate delivered pursuant to Section 17.b(3)
above.

18. Repurchase Transactions 

          Buyer may, in its sole election, engage in
repurchase transactions with the Purchased Assets or Repurchase Assets or
otherwise pledge, hypothecate, assign, transfer or otherwise convey the
Purchased Assets or Repurchase Assets with a counterparty of Buyer’s choice,
provided, however, that no such repurchase transaction shall relieve Buyer of
its obligations set forth herein with respect to the Purchased Assets and any
Income thereon, including, but not limited to, the redelivery of the Purchased
Assets to the Seller on the Repurchase Date unless an Event of Default has
occurred and is continuing (subject to the terms and provisions of this
Agreement). Unless an Event of Default shall have occurred, no such transaction
shall relieve Buyer of its obligations to transfer Purchased Assets or
Repurchase Assets to Seller pursuant to Section 4 hereof, or of Buyer’s
obligation to credit or pay Income to, or apply Income to the obligations of,
Seller pursuant to Section 7 hereof. In the event Buyer engages in a repurchase
transaction with any of the Purchased Assets or Repurchase Assets or otherwise
pledges or hypothecates any of the Purchased Assets or Repurchase Assets, Buyer
shall have the right to assign to Buyer’s counterparty any of the applicable
representations or warranties herein and the remedies for breach thereof, as
they relate to the Purchased Assets or Repurchase Assets that are subject to
such repurchase transaction. 

- 50 - 







     19.
Single Agreement


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

     20. Notices and Other Communications 

          Any and all
notices (with the exception of Transaction Requests, which shall be delivered
via electronic mail or other electronic medium agreed to by the Buyer and the
Seller), statements, demands or other communications hereunder may be given by a
party to the other by mail, email, facsimile, messenger or otherwise to the
address specified below, or so sent to such party at any other place specified
in a notice of change of address hereafter received by the other. All notices,
demands and requests hereunder may be made orally, to be confirmed promptly in
writing, or by other communication as specified in the preceding sentence. In
all cases, to the extent that the related individual set forth in the respective
“Attention” line is no longer employed by the respective Person, such notice may
be given to the attention of a Responsible Officer of the respective Person or
to the attention of such individual or individuals as subsequently notified in
writing by a Responsible Officer of the respective Person. 

- 51 - 







              
If to Seller Parties:

                   
ZFC Funding, Inc. 
                   
c/o ZAIS REIT Management, LLC
                   
2 Bridge Avenue, Suite 322
                   
Red Bank, NJ 07701
                   
Attention: Michael Szymanski
                   
Fax Number: (732) 747-7619
                   
Email: notices@zfcconduit.com 

              
With a copy to, with respect to notices related to legal matters,
security interests or notices of claims: 

                   
ZFC Funding, Inc.
                   
c/o ZAIS REIT Management, LLC
                   
2 Bridge Avenue, Suite 322
                   
Red Bank, NJ 07701
                   
Attention: General Counsel
                   
Fax Number: (732) 978-7507
                   
Email: zaislegal@zaisgroup.com 

              
If to the Pass-Through Trust Trustee: 

                   
U.S. Bank National Association
                   
60 Livingston Avenue
                   
Mailcode: EP-MN-WS3D
                   
St. Paul, MN
55107 
                   
Attention: Global Structured
Finance – ZFC Funding Pass-Through Trust I
                   
Phone Number: 651-466-5048
                   
Fax Number: 651-466-7363 

              
If to the Guarantor:

                   
ZAIS Financial Corp.
                   
c/o ZAIS REIT Management, LLC
                   
2 Bridge Avenue, Suite 322
                   
Red Bank, NJ 07701
                   
Attention:
                   
Phone Number:
                   
Fax Number: 

- 52 - 







              
If to Buyer: 

              
For Transaction Requests: 

                   
CSFBMC LLC
                   
c/o Credit Suisse Securities (USA) LLC
                   
One Madison Avenue, 2nd floor
                   
New York, New York 10010 
                   
Attention: Christopher Bergs,
Resi Mortgage Warehouse Ops
                   
Phone: 212-538-5087
                   
E-mail: christopher.bergs@credit-suisse.com 

              
with a copy to:

                   
Credit Suisse First Boston Mortgage Capital LLC
                   
c/o Credit Suisse Securities (USA) LLC 
                   
Eleven Madison Avenue, 4th
Floor
                   
New York, NY 10010 
                   
Attention: Margaret
Dellafera
                   
Phone Number: 212-325-6471
                   
Fax Number: 212-743-4810
                   
E-mail:
margaret.dellafera@credit-suisse.com 

              
For all other Notices:


                   
Credit Suisse First Boston Mortgage Capital LLC
                   
c/o Credit Suisse Securities (USA) LLC 
                   
Eleven Madison Avenue, 4th
Floor
                   
New York, New York 10010
                   
Attention: Margaret Dellafera
                   
Phone Number: 212-325-6471
                   
Fax Number: 212-743-4810 
                   
E-mail:
margaret.dellafera@credit-suisse.com 

              
with a copy to: 

                   
Credit Suisse First Boston Mortgage Capital LLC
                   
c/o Credit Suisse Securities (USA) LLC 
                   
One Madison Avenue, 9th
Floor
                   
New York, NY 10010 
                   
Attention: Legal
Department—RMBS Warehouse Lending
                   
Fax Number: (212) 322-2376 

     21. Entire Agreement; Severability 

          This
Agreement shall supersede any existing agreements between the parties containing
general terms and conditions for repurchase transactions. Each provision and
agreement herein shall be treated as separate and independent from any other
provision or agreement herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement. 

- 53 - 







     22. Non
assignability 

          The Program
Agreements are not assignable by any Seller Party or Guarantor. Buyer may from
time to time assign all or a portion of its rights and obligations under this
Agreement and the Program Agreements with Seller’s prior written consent;
provided, that such consent shall not be required after the occurrence and
during the continuance of an Event of Default; provided, further that Buyer
shall maintain as agent of Seller, for review by Seller upon written request, a
register of assignees and a copy of an executed assignment and acceptance by
Buyer and assignee (“Assignment
and Acceptance”), specifying the
percentage or portion of such rights and obligations assigned. Upon such
assignment, (a) such assignee shall be a party hereto and to each Program
Agreement to the extent of the percentage or portion set forth in the Assignment
and Acceptance, and shall succeed to the applicable rights and obligations of
Buyer hereunder, and (b) Buyer shall, to the extent that such rights and
obligations have been so assigned by it to either (i) an Affiliate of Buyer
which assumes the obligations of Buyer or (ii) another Person approved by Seller
(such approval not to be unreasonably withheld) which assumes the obligations of
Buyer, be released from its obligations hereunder and under the Program
Agreements. Unless otherwise stated in the Assignment and Acceptance, Seller
Parties shall continue to take directions solely from Buyer unless otherwise
notified by Buyer in writing. Buyer may distribute to any prospective assignee
any document or other information delivered to Buyer by Seller Parties.


     23. Set-off 

          In addition
to any rights and remedies of the Buyer hereunder and by law, after the
occurrence and during the continuance of an Event of Default, the Buyer shall
have the right, without prior notice to the Seller or Guarantor, any such notice
being expressly waived by the Seller and Guarantor to the extent permitted by
applicable law to set-off and appropriate and apply against any Obligation from
Seller, Guarantor or any Affiliate thereof to Buyer or any of DLJ Mortgage
Capital, Inc., Credit Suisse Securities (USA) LLC or Credit Suisse International
any and all deposits (general or special, time or demand, provisional or final),
in any currency, and any other obligation (including to return excess margin),
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by or due from the Buyer or any Affiliate thereof to or for the credit or
the account of the Seller, Guarantor or any Affiliate thereof. The Buyer agrees
promptly to notify the Seller or Guarantor after any such set off and
application made by the Buyer; provided that the failure to give such notice
shall not affect the validity of such set off and application. 

     24. Binding Effect; Governing Law; Jurisdiction 

     a. This
Agreement shall be binding and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Each Seller Party
acknowledges that the obligations of Buyer hereunder or otherwise are not the
subject of any guaranty by, or recourse to, any direct or indirect parent or
other Affiliate of Buyer. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH,
AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF. 

- 54 - 







     b. EACH
SELLER PARTY AND GUARANTOR HEREBY WAIVES TRIAL BY JURY. EACH SELLER PARTY AND
GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY COURT
OF THE STATE OF NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING TO THE PROGRAM
AGREEMENTS IN ANY ACTION OR PROCEEDING. EACH SELLER PARTY AND GUARANTOR HEREBY
SUBMITS TO, AND WAIVES ANY OBJECTION THEY MAY HAVE TO, EXCLUSIVE PERSONAL
JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY
DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM AGREEMENTS. 

     25. No
Waivers, Etc. 

          No express
or implied waiver of any Event of Default by either party shall constitute a
waiver of any other Event of Default and no exercise of any remedy hereunder by
any party shall constitute a waiver of its right to exercise any other remedy
hereunder. No modification or waiver of any provision of this Agreement and no
consent by any party to a departure herefrom shall be effective unless and until
such shall be in writing and duly executed by both of the parties hereto.
Without limitation on any of the foregoing, the failure to give a notice
pursuant to Section 6.a, 16.a or otherwise, will not constitute a waiver of any
right to do so at a later date. 

     26. Intent


     a. The
parties recognize that each Transaction is a “repurchase agreement” as that term is defined in Section 101 of Title
11 of the United States Code, as amended, a “securities contract” as that term is defined in Section 741 of Title
11 of the United States Code, as amended, and a “master netting agreement” as
that term is defined in Section 101(38A)(A) of the Bankruptcy Code, that all
payments hereunder are deemed “margin payments” or “settlement
payments” as defined in Title 11
of the United States Code, and that the pledge of the Repurchase Assets
constitutes “a security agreement or other arrangement or other credit
enhancement” that is “related to” the Agreement and Transactions hereunder
within the meaning of Sections 101(38A)(A), 101(47)(A)(v) and 741(7)(A)(xi) of
the Bankruptcy Code. Seller and Buyer further recognize and intend that this
Agreement is an agreement to provide financial accommodations and is not subject
to assumption pursuant to Bankruptcy Code Section 365(a). 

     b. Buyer’s right to liquidate the Purchased Assets and Repurchase Assets
delivered to it in connection with the Transactions hereunder or to accelerate
or terminate this Agreement or otherwise exercise any other remedies pursuant to
Section 16 hereof is a contractual right to liquidate, accelerate or terminate
such Transaction as described in Bankruptcy Code Sections 555, 559 and 561; any
payments or transfers of property made with respect to this Agreement or any
Transaction to satisfy a Margin Deficit shall be considered a “margin payment”
as such term is defined in Bankruptcy Code Section 741(5). 

- 55 - 







     c. The
parties agree and acknowledge that 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). 

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

     e. This
Agreement is intended to be a “repurchase agreement” and a “securities
contract,” within the meaning of Section 101(47), Section 555, Section 559 and
Section 741 under the Bankruptcy Code. 

     f. Each
party agrees that this Agreement is intended to create mutuality of obligations
among the parties, and as such, the Agreement constitutes a contract which (i)
is between all of the parties and (ii) places each party in the same right and
capacity. 

     27. Disclosure Relating to Certain Federal Protections 

          The parties
acknowledge that they have been advised that: 

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

     b. in the
case of Transactions in which one of the parties is a government securities
broker or a government securities dealer registered with the SEC under Section
15C of the 1934 Act, SIPA will not provide protection to the other party with
respect to any Transaction hereunder; and 

     c.
in the case of Transactions in which
one of the parties is a financial institution, funds held by the financial
institution pursuant to a Transaction hereunder are not a deposit and therefore
are not insured by the Federal Deposit Insurance Corporation or the National
Credit Union Share Insurance Fund, as applicable. 

- 56 - 







     28. Power
of Attorney 

          Each Seller
Party hereby authorizes Buyer to file such financing statement or statements
relating to the Repurchase Assets without such Seller Party’s signature thereon
as Buyer, at its option, may deem appropriate. Each Seller Party hereby appoints
Buyer as such Seller Party’s agent and attorney-in-fact to execute any such
financing statement or statements in such Seller Party’s name and to perform all
other acts which Buyer deems appropriate to perfect and continue its ownership
interest in and/or the security interest granted hereby, if applicable, and to
protect, preserve and realize upon the Repurchase Assets, including, but not
limited to, the right to endorse notes, complete blanks in documents, transfer
servicing, and sign assignments on behalf of such Seller Party as its agent and
attorney-in-fact. This agency and power of attorney is coupled with an interest
and is irrevocable without Buyer’s consent. Seller Parties shall pay the filing
costs for any financing statement or statements prepared pursuant to this
Section 28. In addition the foregoing, each Seller Party agrees to execute a
Power of Attorney, in the form of Exhibit D hereto, to be
delivered on the date hereof. Notwithstanding the foregoing, the power of
attorney granted in this Section 28 or in the form of Exhibit D hereto may be
exercised only during the occurrence and continuance of any Event of Default
hereunder. 

     29. Buyer
May Act Through Affiliates 

          Buyer may,
from time to time, designate one or more Affiliates for the purpose of
performing any action hereunder; provided, however, that Buyer shall be
responsible for any action performed by any of its Affiliates. 

     30. Indemnification; Obligations 

     a. Seller
and Guarantor each agree to hold Buyer and each of its respective Affiliates and
their officers, directors, employees, agents and advisors (each, an
“Indemnified Party”) harmless from and indemnify each Indemnified
Party (and will reimburse each Indemnified Party as the same is incurred)
against all liabilities, losses, damages, judgments, costs and expenses
(including, without limitation, reasonable fees and expenses of counsel) of any
kind which may be imposed on, incurred by, or asserted against any Indemnified
Party relating to or arising out of this Agreement, any Transaction Request, any
Program Agreement or any transaction contemplated hereby or thereby resulting
from anything other than the Indemnified Party’s gross negligence or willful
misconduct. Each of Seller and Guarantor also agrees to reimburse each
Indemnified Party for all reasonable expenses in connection with the enforcement
of this Agreement and the exercise of any right or remedy provided for herein,
any Transaction Request and any Program Agreement, including, without
limitation, the reasonable fees and disbursements of counsel. Seller’s and
Guarantor’s agreements in this Section 30 shall survive the payment in full of
the Repurchase Price and the expiration or termination of this Agreement. Each
of Seller and Guarantor hereby acknowledges that its obligations hereunder are
recourse obligations of Seller and Guarantor and are not limited to recoveries
each Indemnified Party may have with respect to the Purchased Assets. Each of
Seller and Guarantor also agrees not to assert any claim against Buyer or any of
its Affiliates, or any of their respective officers, directors, employees,
attorneys and agents, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to the
facility established hereunder, the actual or proposed use of the proceeds of
the Transactions, this Agreement or any of the transactions contemplated
thereby. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY
APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES. 

- 57 - 







     b.
Reserved. 

     c. Without limiting the provisions of Section 30.a hereof, if Seller fails
to pay when due any costs, expenses or other amounts payable by it under this
Agreement, including, without limitation, fees and expenses of counsel and
indemnities, such amount may be paid on behalf of Seller by Buyer, in its sole
discretion. 

     31. Counterparts 

          This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument. 

     32. Confidentiality 

     a. This
Agreement and its terms, provisions, supplements and amendments, and notices
hereunder, are proprietary to Buyer or each Seller Party and Guarantor, as
applicable, and shall be held by Buyer or each Seller Party and Guarantor, as
applicable, in strict confidence and shall not be disclosed to any third party
without the written consent of Buyer or each Seller Party and Guarantor, as
applicable, except for (i) disclosure to Buyer’s, Seller’s or Guarantor’s direct
and indirect Affiliates and Subsidiaries, directors, attorneys or accountants,
provided that such parties agree to hold all information in strict confidence,
(ii) disclosure required by law, rule, regulation or order of a court or other
regulatory body or (iii) any disclosures or filing required under federal or
state securities’ laws; provided, that, in the case of clause (iii), neither
party shall file any of the Program Agreements other than this Agreement with
the SEC or state securities office unless such party shall have provided at
least five days (or such lesser time as may be demanded by the SEC or state
securities office) prior written notice of such filing to the other party.
Notwithstanding the foregoing or anything to the contrary contained herein or in
any other Program Agreement, the parties hereto may disclose to any and all
Persons, without limitation of any kind, the federal, state and local tax
treatment of the Transactions, any fact relevant to understanding the federal,
state and local tax treatment of the Transactions, and all materials of any kind
(including opinions or other tax analyses) relating to such federal, state and
local tax treatment and that may be relevant to understanding such tax
treatment; provided that Seller may not disclose the name of or identifying
information with respect to Buyer or any pricing terms (including, without
limitation, the Pricing Rate, Commitment Fee, Purchase Price Percentage and
Purchase Price) or other nonpublic business or financial information (including
any sublimits and financial covenants) that is unrelated to the federal, state
and local tax treatment of the Transactions and is not relevant to understanding
the federal, state and local tax treatment of the Transactions, without the
prior written consent of the Buyer. 

- 58 - 







     b. Notwithstanding anything in this Agreement to the contrary, each of the
parties hereto shall comply with all applicable local, state and federal laws,
including, without limitation, all privacy and data protection law, rules and
regulations that are applicable to the Purchased Assets and the Repurchase
Assets and/or any applicable terms of this Agreement (the “Confidential Information”). Each Seller Party and Buyer understand that
the Confidential Information may contain “nonpublic personal information”, as
that term is defined in Section 509(4) of the Gramm-Leach-Bliley Act (the
“Act”), and each Seller Party and Buyer agree to
maintain such nonpublic personal information that it receives hereunder in
accordance with the Act and other applicable federal and state privacy laws.
Each Seller Party shall implement such physical and other security measures as
shall be necessary to (a) ensure the security and confidentiality of the
“nonpublic personal information” of the “customers” and “consumers” (as those
terms are defined in the Act) of Buyer or any Affiliate of Buyer which Seller
Parties hold, (b) protect against any threats or hazards to the security and
integrity of such nonpublic personal information, and (c) protect against any
unauthorized access to or use of such nonpublic personal information. Each
Seller Party represents and warrants that it has implemented appropriate
measures to meet the objectives of Section 501(b) of the Act and of the
applicable standards adopted pursuant thereto, as now or hereafter in effect.
Without limitation, this may include Buyer’s review of audits, summaries of test
results, and other equivalent evaluations of any Seller Party. The Seller
Parties shall notify Buyer immediately following discovery of any breach or
compromise of the security, confidentiality, or integrity of nonpublic personal
information of the customers and consumers of Buyer or any Affiliate of Buyer
provided directly to the Seller Parties by Buyer or such Affiliate. The Seller
Parties shall provide such notice to Buyer by personal delivery, by facsimile
with confirmation of receipt, or by overnight courier with confirmation of
receipt to the applicable requesting individual. 

     33. Buyer
Covenant Regarding Notice of Exclusive Control 

          The Buyer
hereby covenants and agrees that it shall not deliver a Notice of Exclusive
Control (as such term is defined in the Collection Account Control Agreement,
the Pass-Through Trust Account Control Agreement or the Servicer Account Control
Agreement) under the Collection Account Control Agreement, the Pass-Through
Trust Account Control Agreement or the Servicer Account Control Agreement unless
an Event of Default has occurred and is continuing and has not been waived in
writing by Buyer. 

     34. Periodic Due Diligence Review 

          Each Seller
Party and Guarantor acknowledges that Buyer has the right to perform continuing
due diligence reviews with respect to such Seller Party, Guarantor, the
Purchased Assets and the Repurchase Assets, for purposes of verifying compliance
with the representations, warranties and specifications made hereunder, for the
purpose of performing quality control review of the Purchased Assets and the
Repurchase Assets or otherwise, and each Seller Party and Guarantor agrees that
upon reasonable (but no less than five (5) Business Days’) prior notice unless
an Event of Default shall have occurred, in which case no notice is required, to
such Seller Party or Guarantor, Buyer or its authorized representatives will be
permitted during normal business hours to examine, inspect, and make copies and
extracts of, the Asset Files and any and all documents, data, records,
agreements, instruments or information relating to such Purchased Assets and the
Repurchase Assets (including, without limitation, quality control review) in the
possession or under the control of Seller Parties and/or Guarantor and/or the
Custodian. Each Seller Party and Guarantor also shall make available to Buyer a
knowledgeable financial or accounting officer for the purpose of answering
questions respecting the Asset Files and the Purchased Assets and the Repurchase
Assets. Without limiting the generality of the foregoing, each Seller Party and
Guarantor acknowledges that Buyer may purchase Purchased Assets from Seller
Parties based solely upon the information provided by Seller Parties and
Guarantor to Buyer in the Asset Schedule and the representations, warranties and
covenants contained herein, and that Buyer, at its option, has the right at any
time to conduct a partial or complete due diligence review on some or all of the
Purchased Assets and the Repurchase Assets subject to a Transaction, including,
without limitation, ordering new credit reports and new appraisals on the
related Mortgaged Properties and otherwise re-generating the information used to
originate such Contributed Mortgage Loans. Buyer may underwrite such Contributed
Mortgage Loans itself or engage a mutually agreed upon third party underwriter
to perform such underwriting. Each Seller Party and Guarantor agrees to
cooperate with Buyer and any third party underwriter in connection with such
underwriting, including, but not limited to, providing Buyer and any third party
underwriter with access to any and all documents, records, agreements,
instruments or information relating to such Contributed Mortgage Loans in the
possession, or under the control, of Seller Parties or Guarantor. Seller Parties
and Guarantor further agree that Seller shall pay all out-of-pocket costs and
expenses incurred by Buyer in connection with Buyer’s activities pursuant to
this Section 34 and Section 13(a) of the Custodial Agreement; provided that such
costs shall not exceed $25,000 per calendar year unless a Default or Event of
Default shall have occurred, in which event the dollar limitation described in
this proviso shall not apply. 

- 59 - 







     35.
Authorizations 

          Any of the
persons whose signatures and titles appear on Schedule 2 are authorized, acting
singly, to act for the applicable Seller Party or Buyer to the extent set forth
therein, as the case may be, under this Agreement. 

     36. Reserved 

     37. Documents Mutually Drafted 

          Each Seller
Party, Guarantor and the Buyer agree that this Agreement and each other Program
Agreement prepared in connection with the Transactions set forth herein have
been mutually drafted and negotiated by each party, and consequently such
documents shall not be construed against either party as the drafter thereof.


- 60 - 








     38. General Interpretive Principles 

          For
purposes of this Agreement, except as otherwise expressly provided or unless the
context otherwise requires: 



     a. the
terms defined in this Agreement have the meanings assigned to them in this
Agreement and include the plural as well as the singular, and the use of any
gender herein shall be deemed to include the other gender; 

     b.
accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with GAAP;


     c.
references herein to “Articles”,
“Sections”, “Subsections”, “Paragraphs”, and other subdivisions without
reference to a document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement; 

     d.
a reference to a Subsection without
further reference to a Section is a reference to such Subsection as contained in
the same Section in which the reference appears, and this rule shall also apply
to Paragraphs and other subdivisions; 

     e.
the words “herein”, “hereof”,
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular provision;

     f.
the term “include” or “including”
shall mean without limitation by reason of enumeration;

     g.
all times specified herein or in any
other Program Agreement (unless expressly specified otherwise) are local times
in New York, New York unless otherwise stated; and 

     h.
all references herein or in any
Program Agreement to “good faith” means good faith as defined in Section
1-201(19) of the UCC as in effect in the State of New York. 

     39. Conflicts 

          In the
event of any conflict between the terms of this Agreement and any other Program
Agreement, the documents shall control in the following order of priority:
first, the terms of the Pricing Side Letter shall
prevail, then the terms of this Agreement shall prevail, and
then the terms of the other Program Agreements shall
prevail. 

     40. Limited Role of U.S. Bank National Association as Pass-Through Trust
Trustee 

          The
Pass-Through Trust Trustee shall not have any obligations or duties under this
Agreement except as expressly set forth herein. No implied duties on the part of
the Pass-Through Trust Trustee shall be read into this Agreement. Nothing herein
shall be construed to be an assumption by the Pass-Through Trust Trustee of any
duties or obligations of any party to this Agreement, the duties of the
Pass-Through Trust Trustee being solely those set forth in the Pass-Through
Trust Agreement, and the parties hereto acknowledge and agree that the
Pass-Through Trust Trustee shall have no duty to act under this Agreement unless
pursuant to appropriate direction under the Pass-Through Trust Agreement. The
Pass-Through Trust Trustee is entering into this Agreement solely in its
capacity as trustee under the Pass-Through Trust Agreement and not individually,
and there shall be no recourse against the Pass-Through Trust Trustee in its
individual capacity hereunder. 

- 61 - 







          It is expressly understood and agreed by the
parties hereto that (a) this Agreement is executed and delivered by U.S. Bank
National Association, not individually or personally but solely as Pass-Through
Trust Trustee of the Pass-Through Trust in the exercise of the powers and
authority conferred and vested in it, (b) the representations, undertakings and
agreements herein or in any other agreement related hereto, as applicable, made
on the part of the Pass-Through Trust are made and intended not as personal
representations, undertakings and agreements by U.S. Bank National Association
but are made and intended for the purpose of binding only the Pass-Through
Trust, (c) nothing herein contained or in any other agreement related hereto
shall be construed as creating any liability on U.S. Bank National Association,
individually or personally, to perform any covenant either expressed or implied
contained herein or therein, as applicable, all such liability, if any, being
expressly waived by the parties who are signatories to this Agreement and any
other related agreement and by any person claiming by, through or under such
parties; provided that, nothing herein shall release U.S. Bank National
Association from its obligations or liabilities as Pass-Through Trust Trustee
under the Pass-Through Trust Agreement, subject to the standard of care set
forth therein, and (d) under no circumstances shall U.S. Bank National
Association be personally liable for the payment of any indebtedness or expenses
of the Pass-Through Trust or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by the
Pass-Through Trust under this Agreement and any other agreement related hereto.


          The parties
hereto acknowledge and agree that the Pass-Through Trust Trustee shall have no
obligation to take any action or perform any obligations hereunder unless and
until the Pass-Through Trust Trustee has received written direction by the
applicable party under the Pass-Through Trust Agreement. Notwithstanding any
provision in this Agreement, with respect to any obligation of the Pass-Through
Trust Trustee, the parties understand and agree that in the absence of such
direction, the Pass-Through Trust Trustee will not take action or direct another
party to take action, despite any time restriction set forth in this
Agreement.

[Signature Page Follows]


- 62 - 







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

Credit Suisse First Boston
Mortgage Capital LLC, as Buyer 

	By:      	/s/ Adam Loskove
		Name:  	Adam Loskove
		Title:	Vice President



ZFC Funding, Inc., as
Seller 

	By:      	/s/ Michael F. Szymanski
		Name:  	Michael F. Szymanski
		Title:	President



U.S. Bank National
Association, not in its individual
capacity but solely as trustee for ZFC
Funding Pass-
Through Trust I, as Pass-Through Trust 

	By:      	/s/ Nick Sandell
		Name:  	Nick Sandell
		Title:	Vice President



ZAIS Financial Corp., as
Guarantor 

	By:      	/s/ Michael F. Szymanski
		Name:  	Michael F. Szymanski
		Title:	President



Solely with respect to
Sections 4.a and 4.b hereof:


Credit Suisse (USA)
Securities LLC 

	By:      	/s/ A. Adam Loskove
		Name:  	A. Adam Loskove
		Title:	Director



Signature Page to the Master
Repurchase Agreement