Exhibit 10.1(1)


 


FUNDING
AGREEMENT


 


This FUNDING
AGREEMENT (as amended, supplemented or otherwise modified and in effect from
time to time, this “Agreement”), dated as of July 27, 2005, is by
and among FIELDSTONE INVESTMENT FUNDING, LLC, a Delaware limited liability
company, as borrower (in such capacity, the “Borrower”), FIELDSTONE
INVESTMENT CORPORATION, a Maryland corporation, as servicer (in such capacity,
the “Servicer”), CREDIT SUISSE, NEW YORK BRANCH (“CSFB”), as
Facility Agent for the benefit of the Group Agents and the Lenders (in such
capacity, the “Facility Agent”), and THE SEVERAL CONDUIT LENDERS,
COMMITTED LENDERS AND GROUP AGENTS PARTY HERETO FROM TIME TO TIME.


 


PRELIMINARY
STATEMENTS


 


WHEREAS, the
Borrower may desire to borrow funds from the Lenders from time to time to
finance the purchase of certain Mortgage Loans and Related Security
constituting Eligible Assets, and the Lenders have agreed to advance such funds
from time to time, subject to the terms and conditions of this Agreement.


 


NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:


 


ARTICLE I


 


DEFINITIONS


 


SECTION 1.1.  
Certain
Defined Terms. 
Capitalized terms used herein shall have the meanings assigned to such
terms in, or incorporated by reference into, Schedule A attached hereto,
which Schedule A is incorporated by reference herein and made a part
hereof.


 


SECTION 1.2.  
Other
Terms.  All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.


 


SECTION 1.3.  
Computation
of Time Periods. 
Unless otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date, the word “from”
means “from and including”, the words “to” and “until” each means “to but
excluding”, and the word “within” means “from and excluding a specified date
and to and including a later specified date”.


 





















 


ARTICLE II


 


LOANS AND
SETTLEMENTS


 


SECTION 2.1.  
Facility.  Upon the terms and subject to the conditions
set forth herein and in the other Transaction Documents from the Effective Date
to the Termination Date, and subject to the satisfaction in full of all Loan
Conditions, (x) the Borrower may, at its option, borrow funds from the Lenders
for the purpose of purchasing Eligible Assets and (y) each Conduit Lender
(acting through its Group Agent) may, at its option, and such Conduit Lender’s
related Committed Lenders (acting through its Group Agent) shall be obligated
to, advance funds to the Borrower from time to time (each such advance of
funds, a “Loan”).  No more than
one (1) Loan shall be made by the Lenders on any Business Day.  Subject to the Loan Conditions and the other
terms of this Agreement, the Borrower may borrow, repay and reborrow hereunder.


 


SECTION 2.2.  
Loans; Procedures.


 


(a)                                  Prior to the Termination Date, the
Borrower shall, by notice in substantially the form of Exhibit C hereto
(each such notice, a “Loan Notice”) to the Facility Agent and the Group
Agents given by telecopy or electronic mail (with a copy to the Custodian),
request, or cause to be requested, a Loan secured by certain Mortgage Loans and
Related Security.  Each Loan Notice shall
be delivered to the Facility Agent and the Group Agents no later than 11:00 A.M.
(New York time) on the second (2nd) Business Day prior to the
desired Loan Date.  Each Loan Notice
shall include all information required to be included therein and attached
thereto under this Agreement and the Custodial Agreement.  The Borrower shall also deliver, or cause to
be delivered, to the Custodian all other information required by the Custodial
Agreement and each Mortgage File (or, in the case of Wet-Ink Mortgage Loans,
the Wet-Ink Mortgage Information) and otherwise comply with the procedures set
forth in the Custodial Agreement.  Each
Loan Notice shall be irrevocable and binding on the Borrower, and the Borrower
shall indemnify the Lenders against any loss or expense incurred by the Lenders,
either directly or indirectly, as a result of any failure by the Borrower to
complete such Loan, including, without limitation, any actual loss or expense
incurred by the Lenders, either directly or indirectly, by reason of the
liquidation or reemployment of funds acquired by the Lenders (including,
without limitation, funds obtained by Conduit Lenders by issuing Commercial
Paper or promissory notes, obtaining deposits as loans from third parties and
reemployment of funds) for the Lenders to fund such Loan.


 


(b)                                 Each Group Agent will promptly
notify its related Conduit Lender and Committed Lenders of such Group Agent’s
receipt of any Loan


 


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Notice, such notice
to confirm its Pro Rata Share of the related Loan, the desired Loan Date and the
applicable Yield Rate.  The portion of
each Loan made by the Lenders of a Lending Group on a Loan Date shall equal
such Lending Group’s Pro Rata Share of such Loan.  No Lender shall be obligated to advance funds
to be secured by any Mortgage Loan and Related Security unless all of the Loan
Conditions relating to such Mortgage Loan and Related Security have been
satisfied.  The portion of each Loan made
by a Conduit Lender shall be in such Conduit Lender’s sole and absolute
discretion, and any portion of such Loan not made by the Conduit Lender of a
Lending Group will be made by the Committed Lenders of such Lending Group if
the Termination Date has not occurred and all of the Loan Conditions have been
satisfied.   At its option, any Conduit
Lender shall accept or reject any such Loan Notice by notice given to its
related Group Agent by telephone or telecopy.  
On each Loan Date, the Facility Agent shall record on its books and
records each Lending Group’s Pro Rata Share of each Loan made to the Borrower,
which records shall be conclusive evidence of Loans made to the Borrower,
absent manifest error.


 


(c)                                  The Borrower agrees to report
immediately to the Custodian, the Facility Agent and the Group Agents within
one (1) Business Day of discovery that any Wet-Ink Mortgage Loan that was
previously pledged to the Facility Agent, on behalf of the Group Agents and the
Lenders, did, in fact, not close or was rescinded for any reason (including
that the related Obligor has rescinded the related Mortgage Note and related
documents under applicable law) or that any other Mortgage Loan has been
rescinded and to cause such Mortgage Loan to be removed from the Collateral as
provided herein.


 


(d)                                 As a result of the making of any
Loan or the pledge of Collateral by the Borrower hereunder, no Lender, nor the
Facility Agent nor any Group Agent, shall be required to be licensed,
registered or approved or to obtain permits in any jurisdiction other than
those in which such Person is required to be so licensed or registered on the Effective
Date.


 


SECTION 2.3.  
Loan Repayment; Yield; Fees.


 


(a)                                  The Borrower shall repay in full on
the Termination Date the Facility Outstanding Principal, all accrued and unpaid
Yield, and all other Aggregate Unpaids. Yield on the Loans shall be payable in
arrears monthly on each Settlement Date in respect to the immediately preceding
Settlement Period and on the Termination Date.


 


(b)                                 If a LIBO Rate is available for a
Loan on the related Loan Date, such Loan shall initially bear interest at a
Yield Rate equal to the applicable Eurodollar Rate.    The Borrower shall pay to the Lenders Yield
on the


 


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unpaid principal
balance of each Loan for the period from and including the date of such Loan to
but excluding the date such Loan or portion thereof shall be paid in full, at a
rate per annum equal to the applicable Yield Rate.  Notwithstanding the foregoing, the Borrower
shall pay to the Lenders Yield at the Base Rate plus 2% on any portion of the
Facility Outstanding Principal and on any other amount payable by the Borrower
hereunder that shall not be paid in full when due (whether at stated maturity,
by acceleration or by mandatory prepayment or otherwise), for the period from
and including the due date thereto to but excluding the date the same is paid
in full.  Accrued Yield on each Loan
shall be payable monthly on each Settlement Date and on the Termination Date,
except that Yield payable at the Base Rate plus 2% shall accrue daily and shall
be payable promptly upon receipt of an invoice therefor by the Borrower.  Promptly after the determination of any
interest rate provided for herein or any change therein, the Facility Agent
shall give written notice thereof to the Borrower.


 


(c)                                  Notwithstanding any limitation or
purported limitation on recourse contained in this Agreement or the other
Transaction Documents, nothing shall limit in any way the obligations of the
Borrower to pay the Aggregate Unpaids as and when due in accordance with this
Agreement and the other Transaction Documents.


 


SECTION 2.4.  
Optional Prepayments.


 


(a)                                  The Loans are prepayable without
premium or penalty, in whole or in part, on each Settlement Date in accordance
with Section 2.5(a).    Amounts
repaid may be reborrowed in accordance with this Agreement.  Partial prepayments shall be in an aggregate
principal amount of at least $25,000,000 and integral multiples of $20,000 in
excess thereof.  Any specific Collateral
to be released on such Settlement Date from the Lien of the Facility Agent
hereunder shall be in accordance with Sections 2.4(b) and (c) below,
and such Settlement Date shall be treated as a “Prepayment Date” for purposes
of such Sections.


 


(b)                                 The Loans are prepayable by the
Borrower, in whole or in part, on any Business Day other than a Settlement Date
(each, a “Prepayment Date”) upon two (2) Business Days’ prior
written notice to the Facility Agent and the Group Agents, which notice shall
specify (i) the Business Day on which Loans are to be prepaid, (ii) the
aggregate principal amount of the Loans to be prepaid, (iii) the aggregate
amount of all accrued and unpaid Yield on such principal amount through the
date of such prepayment and (iv) the particular Mortgage Loan or Loans
that are to be released from the Lien of the Facility Agent on such Prepayment
Date in accordance with Section 2.4(c) below (each such notice, a “Prepayment
Notice”).  Proceeds of any such
prepayment shall be paid ratably to the Group Agents for the benefit of the
applicable Lenders.  No more than three (3) prepayments
under this


 


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Section 2.4(b) shall
occur during any Settlement Period.  No
prepayment by the Borrower shall be made under this Section 2.4(b) above
unless, after giving effect to such prepayment, all of the Prepayment
Conditions have been satisfied.


 


(c)                                  Immediately upon receipt of the
prepayment proceeds into the Collection Account on the related Prepayment Date,
and subject to the satisfaction in full of the Prepayment Conditions, the
Facility Agent shall, at the expense of the Borrower, release all of its right,
title and interest in, to and under the Mortgage Loans and related Collateral
specified in the related Prepayment Notice.


 


SECTION 2.5.  
Application of Payments.


 


(a)                                  The Servicer shall cause all
Collections in respect of the Collateral to be deposited to the Collection
Account within two (2) Business Days after receipt thereof by the
Borrower, the Servicer or their Affiliates or agents.  The Servicer shall be permitted, in its reasonable
discretion, to set aside and pay from Collections any accrued and unpaid
Servicing Fee due and owing to it, and such amounts shall not constitute
Available Collections.   On each
Settlement Date, the Servicer shall, from the Available Collections on deposit
in the Collection Account that relate to the immediately preceding Settlement
Period, pay the following Persons in the following order of priority:


 


(i)                                     first, to the Servicer, to repay any
outstanding Servicer Advances;


 


(ii)                                  second, on a pro  rata basis,
(A) to the Servicer, the Servicing Fee and any other reasonable amounts
due and owing to the Servicer (to the extent any portion of the accrued and
unpaid Servicing Fee has not been previously set aside from Collections by the
Servicer in accordance with the second sentence of this Section 2.5(a))
and (ii) to the Custodian, the Custodial Fee and the reasonable
out-of-pocket costs and expenses of the Custodian not covered by the Custodial
Fee;


 


(iii)                               third, to the Facility Agent, its
Administration Fee;


 


(iv)                              fourth, to the Lenders, pro  rata
in proportion to their portions of the Facility Outstanding Principal, all
accrued and unpaid Yield due and owing to the Lenders for the immediately
preceding Settlement Period;


 


(v)                                 fifth, to the Lenders, all accrued and
unpaid fees and other costs and expenses under the Fee Letters;


 


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(vi)                              sixth, to the Lenders, (A) prior to
the Termination Date, any amount selected by the Borrower in its discretion
toward a reduction of the Facility Outstanding Principal, or any amount
necessary to reduce the Facility Outstanding Principal to cure an Event of
Default or Potential Event of Default or to satisfy the Borrowing Base Test or
the Pool Criteria and (B) following the Termination Date, all remaining
Available Collections will be used to reduce the Facility Outstanding Principal
to zero;


 


(vii)                           seventh, to the Facility Agent, the Lenders
and the Group Agents, all costs, expenses and indemnification payments, if any,
due and owing to such Persons under this Agreement and the other Transaction
Documents; and


 


(viii)                        eighth, any remaining funds shall be paid
to the Borrower (prior to the Termination Date if, after giving effect to such
payment, no Event of Default shall occur and the Borrowing Base Test shall be
satisfied) or to the Group Agents, the Lenders and the Facility Agent to reduce
the Aggregate Unpaids to zero (following the Termination Date), to the extent
Aggregate Unpaids remain due and owing.


 


(b)                                 If on any Settlement Date Available
Collections are not sufficient to pay the sum of the amounts described in
clauses (ii) through (v) above that are due and payable, the Servicer
may, in its sole discretion and solely to the extent that the Servicer
reasonably expects to be reimbursed in full pursuant to Section 2.5(a)(i),
advance an amount equal to such amounts due and payable on such Settlement Date
(each, a “Servicer Advance”).


 


(c)                                  All Collections received by the
Borrower, the Servicer or their Affiliates shall promptly (but in any event no
later than two (2) Business Days after receipt thereof) be remitted to the
Collection Account.


 


SECTION 2.6.  
Extensions. 
From time to time, the Borrower may request the extension of any
Committed Lender’s Scheduled Commitment Expiry Date for an additional period of
time of up to three hundred and sixty-four (364) days by providing the related
Group Agent with a written request for such extension no fewer than forty-five
(45) days but no more than sixty (60) days prior to such Committed Lender’s
Scheduled Commitment Expiry Date then in effect.  Such Group Agent shall promptly forward such
written notice to the relevant Committed Lender following receipt thereof.  Such Committed Lender shall notify the
Facility Agent, the related Group Agent and the Borrower in writing of its
intent to extend (subject to satisfaction of the Renewal Conditions) or not
extend (which decision


 


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shall be made in such Committed
Lender’s sole and absolute discretion) no later than the thirtieth (30th) day
prior to the Scheduled Commitment Expiry Date then in effect; provided
that failure of such Committed Lender to provide such written notice by such
thirtieth (30th) day shall be deemed to be a decision not to extend.  Any such extension shall be effective on the
Scheduled Commitment Expiry Date then in effect and shall be conditioned upon
the satisfaction in full of the Renewal Conditions.


 


SECTION 2.7.  
Security Interest.


 


(a)                                  To secure the repayment by the Borrower
of all of the Aggregate Unpaids, the Borrower hereby grants to the Facility
Agent, on behalf of the Lenders and the Group Agents, a security interest in
all of the Borrower’s right, title and interest in, to and under the
Collateral, whether now owned or hereafter acquired and wherever located,
together with all of the Borrower’s rights in, to and under (i) the
Collection Account, (ii) the Custodial Agreement, (iii) the Purchase
Agreement and (iv) the Subservicing Agreement, and this Agreement shall
constitute a security agreement under applicable law.  The Borrower hereby assigns to the Facility
Agent, on behalf of the Lenders and the Group Agents, all of its rights and
remedies under the Purchase Agreement as collateral security.


 


(b)                                 The Borrower agrees that it will, to
the extent that it is permitted to do so under the Transaction Documents and
applicable law, enforce its rights against the Originator from time to time
and, at its expense, promptly execute and deliver all instruments and documents
and take all actions as may be necessary or as the Facility Agent or the Group
Agents may reasonably request in order to perfect or protect the Collateral or
to enable the Facility Agent, the Group Agents or the Lenders to exercise or
enforce any of their respective rights hereunder and thereunder.  The Borrower hereby authorizes the Lender to
file any financing or continuation statement or amendment regarding this
Agreement and the Lien of the Facility Agent hereunder without the signature of
the Borrower to the extent permitted by applicable law (including the filing of
a financing statement naming the Borrower as debtor and describing the property
secured as “all assets” or “all personal property” of the Borrower).  The Borrower shall at its expense, upon
request of the Facility Agent or the Group Agents, obtain such additional
search reports as the Facility Agent or the Group Agents shall reasonably
request.  To the fullest extent permitted
by applicable law, the Facility Agent shall be permitted to file continuation
statements and amendments thereto and assignments thereof.


 


(c)                                  Pursuant to the Custodial Agreement,
the Custodian shall hold the Mortgage Loan Documents as exclusive bailee and
agent for the Facility Agent, on behalf of the Lenders and the Group Agents,
pursuant to the terms of the Custodial Agreement and shall deliver to the
Facility Agent and the Group


 


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Agents Trust Receipts
and Wet-Ink Mortgage Loan Trust Receipts, together with any applicable Fatal
Exception Reports and Permitted Exception Reports, to the effect that it has
received such Mortgage Loan Documents in the manner required by the Custodial
Agreement and identifying any deficiencies in such Mortgage Loan Documents as
so reviewed.


 


(d)                                 The Borrower hereby irrevocably
constitutes and appoints the Facility Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of the Borrower and
in the name of the Borrower or in its own name, from time to time in the
Facility Agent’s discretion following the occurrence and during the
continuation of an Event of Default, for the purpose of carrying out the terms
of this Agreement, including, without limitation, protecting, preserving and
realizing upon the Collateral, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, including without
limitation, to protect, preserve and realize upon the Collateral and, without
limiting the generality of the foregoing, the Borrower hereby gives the
Facility Agent, on behalf of the Lenders and the Group Agents, the power and the
right, on behalf of the Borrower, without assent by, but with notice to, the
Borrower, if an Event of Default shall have occurred and be continuing, to do
the following:


 


(i)                                     In the name of the Borrower or in
its own name, or otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other instruments for the payment of
money due under any mortgage insurance or with respect to any other Collateral
and to file any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Facility Agent for the
purpose of collecting any and all such monies due under any such mortgage
insurance or with respect to any other Collateral whenever payable;


 


(ii)                                  To pay or discharge taxes and Liens
levied or placed on or threatened against the Collateral; and


 


(iii)                               (A) to direct any party liable
for any payment under any Collateral to make payment of any and all monies due
or to become due thereunder directly to the Facility Agent or as the Facility
Agent shall direct; (B) to ask or demand for, collect, receive payment and
receipt for, any and all monies, claims and other amounts due or to become due
at any time in respect of or arising out of any Collateral; (C) to sign
and endorse any invoices, assignments, verifications, notices and other
documents in connection with any of


 


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the
Collateral; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any party thereof and to enforce any other right in
respect of any Collateral; (E) to defend any suit, action or proceeding
brought against the Borrower with respect to any Collateral; (F) to
settle, compromise or adjust any suit, action or proceeding described in clause
(E) above and, in connection therewith, to give such discharges or
releases as the Facility Agent may deem appropriate; and (G) generally, to
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Facility
Agent, on behalf of the Lenders and the Group Agents, were the absolute owner
thereof for all purposes, and to do, at the Facility Agent’s option and at the
Borrower’s expense, at any time, or from time to time, all acts and things
which the Facility Agent deems necessary to protect, preserve or realize upon
the Collateral and to effect the intent of this Agreement, all as fully and
effectively as the Borrower might do.


 


The Borrower hereby
ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof.  This power of attorney is
a power coupled with an interest and shall be irrevocable.  The powers conferred on the Facility Agent
are solely to protect the Facility Agent’s interests in the Collateral and
shall not impose any duty upon the Facility Agent, the Group Agents or the
Lenders to exercise any such powers.  In
taking the actions described in this Section 2.7(d), the Facility Agent
will comply with all applicable laws, rules and regulations (including, if
necessary or advisable, designating a Person on its behalf that is permitted
under applicable law to take such action), and the Borrower and its Affiliates
will not be required to take any action in contravention of applicable laws, rules and
regulations.


 


(e)                                  Upon termination of this Agreement
and the repayment to the Facility Agent, the Group Agents and the Lenders of
all Aggregate Unpaids and the performance of all obligations under the
Transaction Documents, the Facility Agent, on behalf of the Lenders and the
Group Agents, shall release its security interest in any remaining Collateral; provided
that if any payment, or any part thereof, of any of the Aggregate Unpaids is
rescinded or must otherwise be restored or returned by any of the Facility
Agent, the Group Agents or the Lenders for any reason, this Agreement, all
rights hereunder and the Liens created hereby shall continue to be effective,
or shall be reinstated, until such payments have been made.


 


SECTION 2.8.  
Deemed
Collections.  (a) 
If on any day a Mortgage Loan included in the Collateral becomes the subject of
an event described in Section 2.2(c), the Borrower shall be deemed to have
received on such day a Collection of such Mortgage Loan equal to the related
Mortgage Loan Release Amount, and the


 


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Borrower shall pay such amount
to the Collection Account within one (1) Business Day, upon which such
Mortgage Loan shall be released from the Collateral.  Any such amount shall be reported as such on
the next succeeding Servicer Report and shall be applied by the Servicer as an
Available Collection in accordance with Section 2.5(a).


 


(b)                                 If on any day any of the
representations or warranties in Article III is determined to be incorrect
or untrue with regard to a specific Mortgage Loan included in the Collateral as
of the time to which such representation or warranty speaks, the Borrower shall
be deemed to have received on such day a Collection of such Mortgage Loan equal
to the related Mortgage Loan Release Amount, and the Borrower shall pay such
amount to the Collection Account within one (1) Business Day, upon which
such Mortgage Loan shall be released from the Collateral.  Any such amount shall be reported as such on
the next succeeding Servicer Report and shall be applied by the Servicer as an
Available Collection in accordance with Section 2.5(a).  Simultaneously with any such payment by the
Borrower, the Facility Agent, on behalf of the Lenders and the Group Agents,
shall release all of its right, title and interest in such Mortgage Loan and
related Collateral to the Borrower, and the Facility Agent, on behalf of the
Lenders and the Group Agents, shall take all action reasonably requested by the
Borrower, and at the expense of the Borrower, to effectuate such release.


 


(c)                                  In lieu of any payment required to
be made pursuant to Sections 2.8(a) and (b) above, the Borrower may
elect to include in the Collateral other mortgage loans and related property
that satisfy the following criteria (each, in the case of Section 2.8(a),
an “Additional Mortgage Loan” and, in the case of Section 2.8(b), a
“Substituted Mortgage Loan”) on the date of inclusion of such mortgage
loans and related property into the Collateral (each, an “Addition Date”):  (i) such mortgage loans and related
property are of reasonably equivalent or greater value to the Mortgage Loans
with respect to which Collections have been deemed to have been received under
Sections 2.8(a) and (b) and are otherwise reasonably acceptable to
the Facility Agent and the Group Agents, (ii) each such mortgage loan and
related property satisfies the definition of “Eligible Asset” and (iii) all
of the Loan Conditions are satisfied as if such mortgage loans and related
property were being included in the Collateral as the subject of a Loan on a
Loan Date.


 


SECTION 2.9.  
Payments
and Computations.   All
amounts to be paid or deposited by the Borrower or the Servicer hereunder shall
be paid or deposited in accordance with the terms hereof no later than 11:00 A.M.
(New York time) on the day when due in immediately available funds as notified
by the Facility Agent or the related Group Agent.  No later than 1:00 P.M. (New York time)
on each Loan Date, each Lending Group, acting through its Group Agent, will
initiate a wire transfer of immediately available funds to the Borrower for
such Lending Group’s


 


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Pro Rata Share of the amount of
such Loan on such day by remitting such amount to an account of the Borrower
specified in the related Loan Notice.  
All computations of Yield and all per annum fees hereunder shall be made
on the basis of a year of 360 days (or, in the case of Yield calculated at the
Base Rate, a year of 365 or 366 days, as applicable) for the actual number of
days (including the first but excluding the last day) elapsed.  Any computations by the Facility Agent or a
Group Agent of amounts payable by the Borrower hereunder shall be binding upon
the Borrower absent manifest error.


 


SECTION 2.10.  
Reports.    No later than 5:00 P.M. (New York
time) on the first Business Day following the last day of each Settlement
Period, the Facility Agent shall provide notice to the Borrower of all accrued
and unpaid Yield (and all other fees, indemnified amounts and other costs and
expenses due and owing to the Facility Agent, the Group Agents and the Lenders)
for the immediately preceding Settlement Period.  No later than 5:00 P.M. on the second (2nd)
Business Day prior to each Settlement Date, the Servicer shall deliver a duly
completed Servicer Report to the Facility Agent and the Group Agents with
respect to the immediately preceding Settlement Period and, on any other
Business Day, such other information as the Facility Agent or the Group Agents
may reasonably request.


 


SECTION 2.11.  
Collection Account.


 


(a)                                  There shall be established by the
Borrower on or before the Effective Date and maintained, for the benefit of the
Facility Agent on behalf of the Lenders and the Group Agents, one (1) segregated,
non-interest-bearing deposit account (the “Collection Account”), bearing
a designation for each such account clearly indicating that the funds deposited
therein are held for the benefit of the Facility Agent on behalf of the Lenders
and the Group Agents, which account shall be held with JPMorgan Chase Bank,
N.A., in its capacity as a “bank” (as defined in Section 9-102 of the
Relevant UCC).  The Servicer shall remit
or cause to be remitted to the Collection Account all Collections received by
the Borrower or its Affiliates with respect to any Collateral within two (2) Business
Days of receipt thereof.  Funds on
deposit in the Collection Account will not be invested except in Permitted Investments.    The Collection Account will at all times
constitute a “deposit account” (as defined in Section 9-102(a)(29) of the
Relevant UCC) and not a “securities account” (as defined in Section 8-501
of the Relevant UCC).


 


SECTION 2.12.  
Right
of Setoff.  Each of the
Facility Agent, the Group Agents and the Lenders is hereby authorized (in
addition to any other rights it may have), at any time after the occurrence of
the Termination Date or during the continuation of a Potential Event of Default
that has been declared by the Facility Agent, to set-off, appropriate and apply
(without presentment, demand, protest or other notice which are hereby
expressly waived) any deposits and any other


 


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indebtedness held or owing by
such Person to, or for the account of, the Borrower against the amount of the
Aggregate Unpaids owing by the Borrower to such Person (even if contingent or
unmatured).


 


SECTION 2.13.  
Sharing
of Payments, Etc.  If
any Lender (for purposes of this Section 2.13 only, being a “Recipient”)
shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of setoff, or otherwise) on account of any interest in the
Collateral pledged to it in excess of its ratable share of payments on account
of any interest in the Collateral obtained by the Lenders entitled thereto,
such Recipient shall forthwith purchase from the Lenders entitled to a share of
such amount participations in the percentage interests owned by such Persons as
shall be necessary to cause such Recipient to share the excess payment ratably
with each such other Person entitled thereto; provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such Recipient, such purchase from each such other Person shall be rescinded
and each such other Person shall repay to the Recipient the purchase price paid
by such Recipient for such participation to the extent of such recovery,
together with an amount equal to such other Person’s ratable share (according
to the proportion of (a) the amount of such other Person’s required
payment to (b) the total amount so recovered from the Recipient) of any
interest or other amount paid or payable by the Recipient in respect of the
total amount so recovered.


 


SECTION 2.14.  
Broken
Funding.  In the event
of (a) in the case of a Conduit Lender, a sale of the portion of the
Facility Outstanding Principal held by such Conduit Lender to its related
Committed Lenders, (b) the payment of any principal of any Loan other than
on the last day of the Funding Period applicable thereto (including as a result
of the occurrence of the Termination Date or an optional prepayment of a Loan),
(c) the conversion of any Loan other than on the last day of the related
Funding Period, or (d) any failure to borrow, convert, continue or prepay
any Loan on the date specified in any notice delivered pursuant hereto, then,
in any such event, the Borrower shall compensate the Lenders, without
duplication, for the loss, cost and expense attributable to such event.  Such loss, cost or expense to any Lender
shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of Yield which would have accrued on the
outstanding principal amount of such Loan had such event not occurred, at the
Yield Rate that would have been applicable to such Loan, for the period from
the date of such event to the last day of the related Funding Period (or, in
the case of a failure to borrow, convert or continue, for the period that would
have been the related Funding Period), over (ii) the amount of interest
which would accrue on such principal amount for such period at the interest
rate which such Lender would bid were it to bid, at the commencement of such
period, for dollar deposits of a comparable amount and period from other banks
in the interbank eurodollar market. 
Within ten (10) days after any Lender hereunder receives actual
knowledge of any of the events


 


12





















 


specified in this Section 2.14,
a certificate of such Lender setting forth any amount or amounts that such
Lender is entitled to receive pursuant to this Section 2.14 and the
reason(s) therefor shall be delivered to the Borrower (with a copy to the
Facility Agent and the related Group Agent) and shall be conclusive absent
manifest error.  The Borrower shall pay
each such Lender the amount shown as due on any such certificate on the next
succeeding Settlement Date following receipt thereof.  Each Lender hereby agrees to take all
commercially reasonable action necessary to mitigate the amount of any costs
incurred pursuant to this Section 2.14.


 


SECTION 2.15.  
Conversion
and Continuation of Outstanding Loans.  Prior to the occurrence of the Termination
Date, each Loan may, at the option of the Borrower at the end of the related
Funding Period, be continued at the same Yield Rate or converted to another
Yield Rate.  If the Termination Date has
occurred and is continuing, then (i) no outstanding Loan funded by the
Lenders may be converted to, or continued as, a Eurodollar Loan and (ii) unless
repaid, each Eurodollar Loan shall bear interest at a Base Rate on the last day
of the Funding Period related thereto. 
For any such conversion or continuation, the Borrower shall give the
Facility Agent and the related Group Agent irrevocable notice (each, a “Conversion/Continuation
Notice”) of such request not later than 12:30 P.M. (New York time) (i) in
the case of a conversion of a BR Loan into a Eurodollar Loan, or a continuation
of a Eurodollar Loan as a Eurodollar Loan, three (3) Business Days before
the date of such conversion or continuation, as applicable, and (ii) in
the case of a conversion of a Eurodollar Loan into a BR Loan or a continuation
of a BR Loan, on the Business Day of such conversion or continuation.  If a Conversion/Continuation Notice has not
been timely delivered with respect to any Loan, such Loan shall be
automatically continued as, or converted to, a BR Loan.  Each Conversion/Continuation Notice shall
specify (a) the requested date (which shall be a Business Day) of such
conversion or continuation, (b) the aggregate amount and rate option
applicable to the Loan which is to be converted or continued and (c) the
amount and rate option(s) of Loan(s) into which such Loan is to be converted or
continued.  For administrative
convenience, Conversion/Continuation Notices may be in the form of standing
instructions mutually agreeable to the Borrower, the Facility Agent and the
Group Agents.


 


SECTION 2.16.  
Illegality.  (a)  Notwithstanding any other provision
herein, if, after the Effective Date, the adoption of any Law or bank
regulatory guideline or any amendment or change in the interpretation of any
existing or future Law or bank regulatory guideline by any Official Body
charged with the administration, interpretation or application thereof, or the
compliance with any directive of any Official Body (in the case of any bank
regulatory guideline, whether or not having the force of Law), shall make it
unlawful for any Lender to acquire or maintain a Eurodollar Loan as
contemplated by this Agreement, (i) such Lender shall, within ten (10) days
after receiving actual knowledge thereof, deliver a


 


13





















 


certificate to the Borrower
(with a copy to the Facility Agent and the Group Agents) setting forth the
basis for such illegality, which certificate shall be conclusive absent
manifest error, (ii) the commitment of such Lender hereunder to make a
portion of a Eurodollar Loan, continue any portion of a Eurodollar Loan as such
and convert a BR to a Eurodollar Loan shall forthwith be suspended, and such
suspension shall remain in effect so long as the circumstance described above
exists, and (iii) such Lender’s portion of any Loan then outstanding shall
be converted automatically to a BR Loan on the last day of the related Funding
Period, or within such earlier period as required by law.


 


If any such
conversion of a portion of a Eurodollar Loan occurs on a day that is not the
last day of the related Funding Period, the Borrower shall pay to such Lender
such amounts, if any, as may be required to compensate such Lender.  If circumstances subsequently change so that
it is no longer unlawful for an affected Lender to acquire or to maintain a
portion of a Eurodollar Loan as contemplated hereunder, such Lender will, as
soon as reasonably practicable after such Lender knows of such change in
circumstances, notify the Borrower and the Facility Agent, and upon receipt of
such notice, the obligations of such Lender to acquire or maintain its
acquisition of portions of Eurodollar Loans or to convert its portion of a
Eurodollar Loan into portions of Eurodollar Loans shall be reinstated.


 


(b)                                 Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.16(a) with
respect to such Lender, it will, if requested by the Borrower and to the extent
permitted by law or by the relevant Official Body, endeavor in good faith to
change the office at which it books its portions of Eurodollar Loans hereunder
if such change would make it lawful for such Lender to continue to acquire or
to maintain its acquisition of portions of Eurodollar Loans hereunder; provided,
however, that such change may be made in such manner that such Lender,
in its sole determination, suffers no unreimbursed cost or expense or any other
disadvantage whatsoever.


 


SECTION 2.17.  
Inability
to Determine Yield Rate. 
(a)  If, prior to the first day of any Funding Period:


 


(1)                                  any Group Agent shall have
determined (which determination in the absence of manifest error shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Funding Period with respect to such
Group Agent’s related Lenders; or


 


(2)                                  any Group Agent shall have received
notice from its related Lenders that the Eurodollar Rate determined or to be


 


14





















 


determined
for such Funding Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of purchasing or
maintaining their affected portions of Eurodollar Loans during such Funding
Period;


 


then, in
either such event, such Group Agent shall give telecopy or telephonic notice
thereof (confirmed in writing) to the Borrower and such Group Agent’s related
Lenders as soon as practicable (but, in any event, within ten (10) days
after such determination or notice, as applicable) thereafter.  Until such notice has been withdrawn by such
Group Agent, no further Eurodollar Loans shall be made by the related
Lenders.  The related Group Agent agrees
to withdraw any such notice as soon as reasonably practicable after it is
notified of a change in circumstances which makes such notice inapplicable.


 


(b)  The Borrower shall have the right, upon no less than thirty
(30) days’ prior written notice to the Facility Agent and the Group Agents, to
replace the Lenders and related Group Agent of any Lending Group with respect
to which an event described in Section 2.16 or in this Section 2.17
has occurred.  Any such replacement
Lenders and related Group Agent shall be with the consent of the Facility
Agent, which consent shall not be unreasonably withheld, delayed or
conditioned; provided that if the Facility Agent is the same Person (or
an Affiliate thereof) as the affected Group Agent or Lenders, then no such
consent shall be required.  Any such
assignment of the rights of the affected Group Agent and Lenders to a
replacement Lending Group will be made by the affected Group Agent and Lenders
without recourse, representation and warranty and upon payment in full, in
immediately available funds, of all Aggregate Unpaids due and owing to the
affected Group Agent and Lenders through the date of such assignment.


 


15





















 


ARTICLE III


 


REPRESENTATIONS
AND WARRANTIES


 


SECTION 3.1.  
Representations
and Warranties of the Borrower.  The Borrower hereby represents and warrants
to the Facility Agent, the Group Agents and the Lenders as of the Effective
Date, each Loan Date, each Addition Date, each Prepayment Date and on any other
date specified in any Servicer Report or other certificate or report delivered
by or on behalf of the Borrower hereunder that:


 


(a)                                  Existence and Power. 
The Borrower is a limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of formation
and has all requisite power and all governmental licenses, authorizations,
consents and approvals required to carry on its business in each jurisdiction
in which its business is now conducted. 
The Borrower is duly qualified to do business in, and is in good
standing in, every other jurisdiction in which the nature of its business
requires it to be so qualified.


 


(b)                                 Limited Liability Company and
Governmental Authorization; Contravention.  The
execution, delivery and performance by the Borrower of this Agreement and the
other Transaction Documents to which it is a party are within the Borrower’s
limited liability company powers, have been duly authorized by all necessary
action, require no action by or in respect of, or filing with, any Official
Body or official thereof (except as contemplated by Section 2.7 hereof),
and do not contravene, or constitute a default under, any provision of
applicable law, rule or regulation or of the Certificate of Formation or
Limited Liability Company Agreement of the Borrower or of any agreement or of
any judgment, injunction, order, writ, decree or other instrument binding upon
the Borrower or result in the creation or imposition of any Lien on the assets
of the Borrower (other than the Lien of the Facility Agent hereunder).


 


(c)                                  Binding Effect.  Each of this Agreement and the other
Transaction Documents to which the Borrower is a party constitutes the legal,
valid and binding obligation of the Borrower, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally
and general equitable principles (whether considered in a proceeding at law or
in equity).


 


(d)                                 Perfection. 
Immediately preceding the making of each Loan hereunder, the Borrower
shall be the owner of all of the Collateral being


 


16





















 


pledged to the
Facility Agent in connection with such Loan, free and clear of all Liens.  On or prior to the making of each Loan, all
financing statements and other documents required to be recorded or filed in
order to perfect the Collateral in favor of the Facility Agent free and clear
of any Lien will have been duly filed in each filing office necessary for such
purpose, and all filing fees and taxes, if any, payable in connection with such
filings shall have been paid in full (and, as applicable, all documents
required to be delivered to the Custodian under the Custodial Agreement have
been delivered in accordance with the terms thereof).


 


(e)                                  Accuracy of Information. 
All information heretofore furnished by or on behalf of the Borrower
(including, without limitation, the Servicer Reports and any other document,
instrument, certificate or notice delivered to the Facility Agent, the Group
Agents or the Lenders) to the Facility Agent, the Group Agents or the Lenders
for purposes of, or in connection with, this Agreement and the other
Transaction Documents is true and accurate in every material respect as of the
date to which such information speaks.


 


(f)                                    Tax Status. 
The Borrower has filed all tax returns (Federal, state and local)
required to be filed and has paid or made adequate provision for the payment of
all taxes, assessments and other governmental charges.


 


(g)                                 Action, Suits. 
Except as set forth on Exhibit G, there are no actions, suits or
proceedings pending or, to the knowledge of the Borrower threatened, against or
affecting the Borrower, the Originator, the Servicer or their respective
properties, in or before any court, arbitrator or other body, which,
individually or in the aggregate, is reasonably likely to result in a Material
Adverse Effect.


 


(h)                                 Use of Proceeds. 
No proceeds of any Loan will be used by the Borrower in any way which
would violate Regulation T, U or X of the Board of Governors of the Federal
Reserve System.


 


(i)                                     Place of Business. 
The principal place of business of the Borrower is located at the
address of the Borrower indicated in Section 10.3 hereof, and the
locations of the offices where the Borrower keeps Servicing Records are located
at the address(es) described on Exhibit H or at such other locations as
are identified to the Facility Agent in writing.


 


(j)                                     Good Title. 
Upon the making of each Loan by the Lenders, the Facility Agent, on
behalf of the Lenders and the Group Agents, shall have a valid and perfected
security interest in all of the Collateral, free and clear of any Lien (other
than the Lien of the Facility Agent hereunder).


 


17





















 


(k)                                  Tradenames, Etc. 
As of the date hereof:  (i) the
Borrower has no subsidiaries and divisions; and (ii) the Borrower has no
tradenames and has not changed its name, merged with or into or consolidated
with any other corporation or been the subject of any proceeding under Title
11, United States Code (Bankruptcy).


 


(l)                                     Eligible Assets. 
Each Mortgage Loan and related Collateral (x) represented by the
Borrower or the Servicer to be an Eligible Asset (including in any Loan Notice,
Servicer Report or other report delivered to the Funding Agent, the Group Agent
or the Lenders) or (y) included in the calculation of the Net Eligible Assets
Balance, in each case meets the requirements of the definition of “Eligible
Asset” as of the date of such representation or inclusion, as applicable.


 


(m)                               Underwriting Policy &
Servicing Standards.  Since November 1, 2004, there have been
no changes in the Underwriting Policy and the Servicing Standards which are
reasonably likely to result in a Material Adverse Effect.


 


(n)                                 [Reserved]


 


(o)                                 No Event of Default. 
No event has occurred and is continuing and no condition exists that
constitutes an Event of Default or Potential Event of Default.


 


(p)                                 Not an Investment Company. 
The Borrower is not, and is not controlled by, an “investment company”
within the meaning of the Investment Company Act of 1940, as amended, or is
exempt from all provisions of such Act.


 


(q)                                 ERISA. 
Each of the Borrower and its ERISA Affiliates is in compliance in all
material respects with ERISA, and no Lien exists in favor of the Pension
Benefit Guaranty Corporation (or any Benefit Plan) on any of the Collateral.


 


(r)                                    Collections. 
Only Collections are deposited into the Collection Account.


 


(s)                                  Bulk Sales. 
No transaction contemplated hereby or by the other Transaction Documents
requires compliance with any “bulk sales” act or similar law.


 


(t)                                    Sales Under Purchase Agreement. 
Each Mortgage Loan which has been sold to the Borrower by the Originator
has been purchased or


 


18





















 


acquired by the Borrower
from the Originator pursuant to, and in accordance with, the terms of the
Purchase Agreement.


 


(u)                                 Preference; Voidability. 
The Borrower has given reasonably equivalent value to the Originator in
consideration for the conveyance by the Originator of Mortgage Loans and
related property under the Purchase Agreement, and each such conveyance shall
not have been made for or on account of an antecedent debt owed by the
Originator to the Borrower, and no such conveyance is intended to be voidable
under the Bankruptcy Code.


 


(v)                                 Mortgage Loans. 
On each Loan Date, Addition Date and Prepayment Date, the Borrower
represents and warrants that (i) each Mortgage Loan and related property
that is to be included in the Collateral on such day, as applicable, is an
Eligible Asset and (ii) each such Mortgage Loan and related property
satisfies all of the criteria contained in Exhibit D hereto.


 


19





















 


SECTION 3.2.  
Representations
and Warranties of the Servicer.  The Servicer hereby represents and warrants
to the Facility Agent, the Group Agents and the Lenders as of the Effective
Date, each Loan Date, each Addition Date, each Prepayment Date and on any other
date specified in any Servicer Report or other certificate or report delivered
by or on behalf of the Servicer hereunder that:


 


(a)                                  Corporate Existence and Power. 
The Servicer is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has all
requisite power and all governmental licenses, authorizations, consents and
approvals required to carry on its business in each jurisdiction in which its
business is now conducted.  The Servicer
is duly qualified to do business in, and is in good standing in, every other
jurisdiction in which the nature of its business requires it to be so
qualified.


 


(b)                                 Corporate and Governmental
Authorization; Contravention.  The
execution, delivery and performance by the Servicer of this Agreement and the
other Transaction Documents to which it is a party are within the Servicer’s
corporate powers, have been duly authorized by all necessary action, require no
action by or in respect of, or filing with, any Official Body or official
thereof, and do not contravene, or constitute a default under, any provision of
applicable law, rule or regulation or of the certificate of incorporation
or bylaws of the Servicer or of any agreement or of any judgment, injunction,
order, writ, decree or other instrument binding upon the Servicer or result in
the creation or imposition of any Lien on the assets of the Servicer.


 


(c)                                  Binding Effect. 
Each of this Agreement and the other Transaction Documents to which the
Servicer is a party constitutes the legal, valid and binding obligation of the
Servicer, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally and general equitable principles (whether
considered in a proceeding at law or in equity).


 


(d)                                 Accuracy of Information. 
All information heretofore furnished by or on behalf of the Servicer
(including, without limitation, the Servicer Reports and any other document,
instrument, certificate or notice delivered to the Facility Agent, the Group
Agents or the Lenders) to the Facility Agent, the Group Agents or the Lenders
for purposes of, or in connection with, this Agreement and the other
Transaction Documents is true and accurate in every material respect as of the
date to which such information speaks.


 


(e)                                  Tax Status. 
The Servicer has filed all tax returns (Federal, state and local)
required to be filed and has paid or made adequate provision for the payment of
all taxes, assessments and other governmental charges.


 


20





















 


(f)                                    Action, Suits. 
Except as set forth on Exhibit G, there are no actions, suits or
proceedings pending or, to the knowledge of the Servicer threatened, against or
affecting the Servicer, the Originator or the Borrower or their respective
properties, in or before any court, arbitrator or other body, which,
individually or in the aggregate, is reasonably likely to result in a Material
Adverse Effect.


 


(g)                                 Place of Business. 
The principal place of business of the Servicer is located at the
address of the Servicer indicated in Section 10.3 hereof, and the
locations of the offices where the Servicer keeps Servicing Records are located
at the address(es) described on Exhibit H or at such other locations that
are notified to the Facility Agent in writing.


 


(h)                                 Eligible Assets. 
Each Mortgage Loan and related Collateral (x) represented by the
Servicer to be an Eligible Asset (including in any Loan Notice, Servicer Report
or other report delivered to the Funding Agent, the Group Agent or the Lenders)
or (y) included in the calculation of the Net Eligible Assets Balance, in each
case meets the requirements of the definition of “Eligible Asset” as of the
date of such representation or inclusion, as applicable.


 


(i)                                     Underwriting Policy &
Servicing Standards.  Since November 1, 2004, there have been
no changes in the Underwriting Policy and the Servicing Standards which are
reasonably likely to result in a Material Adverse Effect.


 


(j)                                     Collections and Servicing. 
The Servicer or an Affiliate is an approved seller/servicer of
conventional Mortgage Loans for Fannie Mae and Freddie Mac.  The Servicer or an Affiliate is in good
standing to service Mortgage Loans for either Fannie Mae or Freddie Mac, and no
event has occurred, including a change in insurance coverage, which would make
the Servicer or an Affiliate unable to comply with either Fannie Mae or Freddie
Mac eligibility requirements or which would require notification to either
Fannie Mae or Freddie Mac.  Since November 1,
2004, there has been no change in the ability of the Servicer to perform its
obligations hereunder which is reasonably likely to result in a Material
Adverse Effect.


 


(k)                                  No Event of Default. 
No event has occurred and is continuing and no condition exists that constitutes
an Event of Default or Potential Event of Default.


 


(l)                                     Not an Investment Company. 
The Servicer is not, and is not controlled by, an “investment company”
within the meaning of the Investment Company Act of 1940, as amended, or is
exempt from all provisions of such Act.


 


21





















 


(m)                               ERISA. 
Each of the Servicer and its ERISA Affiliates is in compliance in all
material respects with ERISA, and no Lien exists in favor of the Pension
Benefit Guaranty Corporation (or any Benefit Plan) on any of the Collateral.


 


(n)                                 Collections. 
Only Collections are deposited into the Collection Account.


 


(o)                                 Mortgage Loans. 
On each Loan Date, Addition Date and Prepayment Date, the Servicer
represents and warrants that (i) each Mortgage Loan and related property
that is to be included in the Collateral on such date, as applicable, is an
Eligible Asset and (ii) each such Mortgage Loan and related property
satisfies all of the criteria contained in Exhibit D hereto.


 


22





















 


ARTICLE IV


 


CONDITIONS
PRECEDENT


 


SECTION 4.1.  
Conditions
to Effectiveness of this Agreement.  This Agreement shall become effective on the
first day on which the Facility Agent and the Group Agents shall have received
the following documents, instruments and fees, all of which shall be in a form
and substance acceptable to the them (such day, the “Effective Date”):


 


(a)                                  A certificate of the Secretary of
each of the Borrower, the Originator and the Servicer (i) certifying the
names and signatures of the officers and employees authorized on such Person’s
behalf to execute all of the Transaction Documents to which it is a party, (ii) attaching
a copy of such Person’s organizational documents, including, as applicable, its
certificate of incorporation or formation, limited liability company agreement
and Bylaws, (iii) attaching a copy of transaction resolutions of, as
applicable, the board of directors, board of managers or sole member of such
Person and (iv) attaching a certificate of good standing of the Secretary
of State of the jurisdiction of organization of such Person.


 


(b)                                 A copy of a proper financing
statement naming the Borrower as the debtor and the Facility Agent, as secured
party, and other similar instruments or documents as may be necessary or, in
the reasonable opinion of the Facility Agent and the Group Agents, desirable
under the Relevant UCC of all appropriate jurisdictions or any comparable law
to perfect the Facility Agent’s security interest in all Collateral.


 


(c)                                  A copy of a proper financing
statement naming FIC as debtor, the Borrower as secured party, and the Facility
Agent as assignee of the secured party, and other similar instruments or
documents as may be necessary or, in the reasonable opinion of the Facility
Agent and the Group Agents, desirable under the Relevant UCC of all appropriate
jurisdictions or any comparable law to perfect the Collateral that is the
subject of the Purchase Agreement.


 


(d)                                 Copies of proper financing
statements, if any, necessary to terminate all security interests and other
rights of any Person in Collateral previously granted by the Borrower and the
Originator, together with copies of executed lien releases, if any, necessary
to terminate all security interests and other rights of any person in
Collateral previously granted by the Borrower and the Originator.


 


23





















 


(e)                                  Certified copies of requests for
information or copies, dated a date reasonably near the Effective Date, listing
all effective financing statements which name any of the Originator and the
Borrower (under their respective present names and any previous names) as
debtor and which are filed both in jurisdictions in which the filings were made
pursuant to items (c), (d) and (e) and in those jurisdictions that
would have been applicable under the Relevant UCC prior to the enactment of
Revised Article 9 thereof, together with copies of such financing
statements (none of which shall cover any Collateral or any other property that
is the subject of the Transaction Documents).


 


(f)                                    Evidence of the establishment of the
Collateral Account.


 


(g)                                 Fully executed copies of all
Transaction Documents.


 


(h)                                 An opinion of in-house counsel to
the Originator, the Borrower and the Servicer, re:  corporate matters.


 


(i)                                     An opinion of Hogan &
Hartson L.L.P., special counsel to the Originator, the Servicer and the
Borrower, re:  enforceability of the
Transaction Documents to which each is a party and other corporate matters.


 


(j)                                     Opinions of special counsel to the
Originator and the Borrower, re: 
validity and perfection of the security interests granted by the
Originator and the Borrower under the Transaction Documents, and other matters.


 


(k)                                  An opinion of Hogan &
Hartson L.L.P., special counsel to the Originator and the Borrower, re:  nonconsolidation.


 


(l)                                     An opinion of Hogan &
Hartson L.L.P., special counsel to the Originator and the Borrower, re:  true sales.


 


(m)                               An opinion of counsel to the
Custodian, re:  corporate matters.


 


(n)                                 Evidence that the fees specified in
the Fee Letters for payment on or prior to the Effective Date have been paid to
the related Group Agents.


 


(o)                                 A pro  forma Servicer
Report for June 2005.


 


(p)                                 Such other documents, instruments,
certificates, information and opinions of counsel as the Facility Agent and the
Group Agents may reasonably request.


 


24





















 


SECTION 4.2.   Conditions to Each Loan.  Each Loan is subject to the following
conditions precedent on the related Loan Date, Addition Date or Prepayment Date
(collectively, the “Loan Conditions”):


 


(a)                                  Before and after giving effect to
such Loan, all of the representations and warranties made by the Borrower, the
Originator and the Servicer in this Agreement and the other Transaction
Documents shall be true and correct;


 


(b)                                 Before and after giving effect to
such Loan, no Event of Default or Potential Event of Default has occurred and
is continuing;


 


(c)                                  The Termination Date has not
occurred;


 


(d)                                 After giving effect to such Loan,
the Borrowing Base Test and the Pool Criteria are satisfied;


 


(e)                                  After giving effect to such Loan, (i) the
Facility Outstanding Principal does not exceed the Facility Limit and (ii) each
Group Facility Outstanding Principal shall not exceed the related Group
Facility Limit;


 


(f)                                    After giving effect to such Loan,
the aggregate Outstanding Principal Balance of Wet-Ink Mortgage Loans included
in the Collateral shall not exceed the greater of (i) 20% of the Facility
Outstanding Principal and (ii) $100,000,000;


 


(g)                                 After giving effect to such Loan,
the aggregate Outstanding Principal Balance of Fixed Rate Mortgage Loans
included in the Collateral shall not exceed an amount equal to 50% of the
Outstanding Principal Balance of all Mortgage Loans included in the Collateral;


 


(h)                                 On the related Loan Date or Addition
Date, as applicable, the Loan shall have an outstanding principal balance of no
less than $25,000,000;


 


(i)                                     No event has occurred and is
continuing that, in the sole discretion of the Facility Agent, is reasonably
likely to result in a Material Adverse Effect;


 


(j)                                     The credit, risk management and
collection policies of the Originator and the Servicer are satisfactory to the
Facility Agent, and the Originator and the Servicer have adequate ability to
underwrite Mortgage Loans and to administer the Underwriting Policy and the
Servicing Standards;


 


25





















 


(k)                                  In connection with a Loan Date or
Addition Date, the Borrower has delivered or caused to be delivered (i) to
the Facility Agent and each Group Agent a duly completed Loan Notice,
substantially free of error, together with all required attachments and such
other additional information as any of them may reasonably request and (ii) to
the Custodian, all documents and other information required to be delivered
pursuant to the Custodial Agreement;


 


(l)                                     In connection with a Loan Date or
Addition Date, the Facility Agent and the Group Agents shall have received from
the Custodian (i) in the case of Wet-Ink Mortgage Loans, a copy of the
related Mortgage Loan Schedule for such Wet-Ink Mortgage Loans, together
with a duly completed Wet-Ink Mortgage Loan Trust Receipt and (ii) in the
case of Mortgage Loans other than Wet-Ink Mortgage Loans, (A) a copy of a
cumulative Mortgage Loan Schedule that reflects the new Mortgage Loans to
be included in the Collateral (other than Wet-Ink Mortgage Loans), (B) copies
of a cumulative Permitted Exception Report and cumulative Fatal Exception
Report that reflects the new Mortgage Loans to be included in the Collateral
(other than Wet-Ink Mortgage Loans) and (C) a copy of a cumulative Trust
Receipt that reflects the new Mortgage Loans to be included in the Collateral
(other than Wet-Ink Mortgage Loans); and


 


(m)                               In connection with a Loan Date or
Addition Date, the Facility Agent and the Group Agents shall otherwise approve
of the Mortgage Loans and related property to be included in the Collateral and
the information with respect thereto.


 


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ARTICLE V


 


COVENANTS


 


SECTION 5.1.  
Affirmative
Covenants of Borrower. 
At all times from the Effective Date to the later to occur of (i) the
Termination Date or (ii) the date on which the Facility Outstanding
Principal has been reduced to zero and all other Aggregate Unpaids shall have
been paid in full, unless the Group Agents shall otherwise consent in writing:


 


(a)                                  Financial Reporting. 
The Borrower will furnish to the Facility Agent and the Group Agents:


 


(i)                                     Annual Reporting. 
Within ninety (90) days after the close of the Originator’s fiscal year,
audited financial statements for the Originator and the Borrower, in each case
prepared in accordance with GAAP on a consolidated and consolidating basis
including balance sheets as of the end of such period, related statements of
operations, shareholder’s/member’s equity and cash flows, accompanied by (A) an
unqualified audit report certified by nationally recognized independent
certified public accountants prepared in accordance with GAAP, (B) any
management letter prepared by said accountants and (C) a certificate of
said accountants that, in the course of the foregoing, nothing has come to
their attention to cause such accountants to believe that any Event of Default
or Potential Event of Default has occurred, or if, in the opinion of such
accountants, any Event of Default or Potential Event of Default shall exist,
stating the nature and status thereof. 
No later than sixty (60) days prior to each Scheduled Commitment Expiry
Date, an annual agreed upon procedures report prepared by a nationally
recognized independent certified public accounting firm using criteria agreed
upon between the Facility Agent and the Servicer, and which report shall
otherwise be acceptable to the Facility Agent.


 


(ii)                                  Quarterly Reporting. 
Within thirty (30) days after the close of each fiscal quarter of the
Originator and the Borrower (commencing with the fiscal quarter ending December 31,
2005), consolidated and consolidating unaudited balance sheets as at the close
of each such period and consolidated and consolidating related statements of
operations, shareholder’s/member’s equity and


 


27





















 


cash
flows for the period from the beginning of such fiscal year to the end of such
quarter, all certified by a senior financial officer of the Originator.


 


(iii)                               Monthly Reporting. 
On the dates specified in Section 2.10, a copy of a duly completed
Servicer Report.


 


(iv)                              Compliance Certificate. 
Together with the financial statements required hereunder and any
Servicer Report, a compliance certificate signed by the Originator’s chief
financial officer stating that (x) the attached financial statements have been
prepared in accordance with GAAP and accurately reflect the financial condition
of the Persons that are the subject of such financial statements as of the time
periods to which such financial statements relate and (y) no Event of Default
or Potential Event of Default exists, or if any Event of Default or Potential
Event of Default exists, stating the nature and status thereof.


 


(v)                                 Shareholders Statements and Reports. 
Promptly upon the furnishing thereof to the shareholders of the
Originator, copies of all financial statements, reports and proxy statements so
furnished, if any.


 


(vi)                              S.E.C. Filings. 
Promptly upon the filing thereof, copies of all registration statements
and annual, quarterly, monthly or other regular reports which the Originator or
any Affiliate of the Originator files with the Securities and Exchange
Commission, if any.


 


(vii)                           Notice of Certain Events. 
As soon as possible and in any event within two (2) Business Days
after the Borrower or any of its Affiliates know or should have known of the
occurrence of an Event of Default or Potential Event of Default or any other event
that is reasonably likely to result in a Material Adverse Effect, a statement
of the chief financial officer or chief accounting officer of the Borrower
setting forth reasonable details of such event and the action which the
Borrower proposes to take with respect thereto.


 


(viii)                        Change in Underwriting Policy and
Debt Ratings.  Promptly, and no later than three (3) Business
Days after the date of any material change in the Underwriting Policy, notice
of any such material change and an explanation therefor, together with, if the
Underwriting Policy is not otherwise available on the Originator’s


 


28





















 


Internet
website, a complete copy of the Underwriting Policy then in effect.  Promptly, and no later than three (3) Business
Days after the date of any change in the Originator’s public or private debt
ratings, if any, a written certification of such Originator’s public and
private debt ratings after giving effect to any such change.


 


(ix)                                ERISA. 
Promptly after the filing or receiving thereof, copies of all reports
and notices with respect to any Reportable Event (as defined in Title IV of
ERISA) which the Borrower, the Originator, the Servicer or any ERISA Affiliate
of any of them files under ERISA with the Pension Benefit Guaranty Corporation
or the U.S. Department of Labor or which the Borrower, the Originator, the
Servicer or any ERISA Affiliates of any of them receives from the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor.


 


(x)                                   Other Information. 
Such other reports and information (including non-financial information)
as the Facility Agent or the Group Agents may from time to time reasonably
request with respect to the Collateral and the Originator, the Borrower, the
Servicer or any Subsidiary of any of the foregoing.


 


(b)                                 Conduct of Business. 
The Borrower will carry on and conduct its business in substantially the
same manner and in substantially the same fields of enterprise as it is
presently conducted and will, and will cause the Originator to, do all things
necessary to remain duly organized, validly existing and in good standing as a
domestic limited liability company or corporation (as applicable) in its
jurisdiction of organization and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted, except,
in the case of the Originator, where the absence of such authority is not
reasonably likely to result in a Material Adverse Effect.


 


(c)                                  Compliance with Laws. 
The Borrower will comply with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it or its respective
properties may be subject.


 


(d)                                 Furnishing of Information and
Inspection of Records.  At its
expense, the Borrower will furnish to the Facility Agent and the Group Agents
from time to time such information with respect to the Collateral as the
Facility Agent or the Group Agents may reasonably request, including, without
limitation, listings identifying the Obligor and the Outstanding Principal
Balance for each Mortgage Loan, together with an aging history of the Mortgage
Loans.  At its expense, the Borrower will
at any time and from time to time during regular business


 


29





















 


hours and upon
reasonable notice permit the Facility Agent and the Group Agents, or their
respective agents or representatives, (i) to examine and make copies of
and abstracts from all Servicing Records and (ii) to visit the offices and
properties of the Borrower for the purpose of examining the Servicing Records
and other related systems and information, and to discuss matters relating to
the Collateral or the performance of any such Person hereunder and under the
other Transaction Documents to which such Person is a party with any of the
officers, directors, employees or independent public accountants of such
Person, as applicable, having knowledge of such matters.


 


(e)                                  Keeping of Records and Books of
Account.  The Borrower will maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Collateral in the event of the
destruction of the originals thereof), and keep and maintain, all documents,
books, records and other information reasonably necessary or advisable for the
collection of the Collateral (including, without limitation, records adequate
to permit the daily identification of each outstanding Mortgage Loan and all
Collections of and adjustments to each outstanding Mortgage Loan).  The Borrower will give the Facility Agent and
the Group Agents notice of any material change in the administrative and
operating procedures of such Persons, as applicable, referred to in the
previous sentence.


 


(f)                                    Performance and Compliance with
Mortgage Loan Documents.  The Borrower
will take no action to hinder or delay the timely and full compliance of the
Originator with all material provisions, covenants and other promises required
to be observed by the Originator under the Mortgage Loan Documents related to
the Collateral.


 


(g)                                 Underwriting Policy; Servicing. 
The Borrower will comply in all material respects with the Underwriting
Policy and Servicing Standards in regard to each Mortgage Loan and related
Collateral.  Any Mortgage Loan originated
by FIC shall at all times be subserviced by an Eligible Subservicer pursuant to
a binding and enforceable agreement between the Servicer and such Eligible
Subservicer (copies of which, together with all amendments and modifications
thereto, shall be provided to the Facility Agent and the Group Agents).


 


(h)                                 Collections. 
The Borrower shall hold in trust and cause all Collections to be
deposited directly into the Collection Account within two (2) Business
Days after receipt thereof.


 


(i)                                     Sale Treatment. 
The Borrower will not (i) account for (excluding for tax and
accounting purposes, which shall be in the discretion of the Borrower and the
Originator), or otherwise treat, the transactions contemplated by


 


30





















 


the Purchase
Agreement in any manner other than as sales of Mortgage Loans, or (ii) account
for or otherwise treat the transactions contemplated by this Agreement in any
manner other than as loans made by the Lenders (or the Facility Agent on their
behalf) secured by the Collateral.  In
addition, the Borrower shall disclose (in a footnote or otherwise) in all of
its respective financial statements (including any such financial statements
consolidated with any other Person’s financial statements) that the assets of
the Originator and the Borrower are not available to satisfy the creditors of
any other Person.


 


(j)                                     Authorized Business. 
The Borrower shall not engage in any business not permitted by its
Certificate of Formation and Limited Liability Company Agreement as in effect
on the Effective Date or as amended from time to time with the prior written
consent of the Facility Agent.


 


(k)                                  Organizational Documents. 
The Borrower shall only amend, alter, change or repeal its Certificate
of Formation or Limited Liability Company Agreement with the prior written
consent of the Facility Agent (acting at the direction of the Required
Committed Lenders).


 


(l)                                     Solvency. 
The Borrower will at all times have assets sufficient (i) to enable
it to pay its debts generally as they become due and (ii) such that it
will not be rendered insolvent by the transactions contemplated herein and in
the other Transaction Documents.


 


(m)                               Enforcement of Purchase Agreement. 
The Borrower shall use its best efforts to enforce all rights held by it
under the Purchase Agreement and shall not waive any breach of any covenant
contained thereunder without the prior written consent of the Facility Agent
(acting at the direction of the Required Committed Lenders).


 


(n)                                 Separate Existence. 
The Borrower shall at all times until all of the Aggregate Unpaids are
paid in full:


 


(i)                                     maintain accurate and separate
books, records and accounts, including, but not limited to, payroll and
intercompany transaction accounts, maintain the Borrower’s own deposit account
or accounts, separate from those of any other Person, with commercial banking
institutions and ensure that (1) the funds of the Borrower will not be
diverted to any other Person or for other than limited liability company uses
of the Borrower and (2) such funds not be commingled with the funds of any
other Person;


 


31





















 


(ii)                                  at all times hold itself out to the
public and all other Persons as a legal entity separate from its equity owners
and any other Person;


 


(iii)                               have a Board of Directors separate
from that of its equity owners and any other Person;


 


(iv)                              file its own tax returns, if any, as
may be required under applicable law, to the extent (1) not part of a
consolidated group filing a consolidated return or returns or (2) not
treated as a division for tax purposes of another taxpayer, and pay any taxes
so required to be paid under applicable law;


 


(v)                                 not commingle its assets with assets
of any other Person;


 


(vi)                              conduct its business in its own name
and strictly comply with all organizational formalities to maintain its
separate existence;


 


(vii)                           maintain and issue separate
financial statements (other than consolidated financial statements as required
by generally accepted accounting principles and as permitted in the Transaction
Documents) prepared not less frequently than quarterly and prepared in
accordance with the generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
accounting profession as in effect from time to time;


 


(viii)                        pay its own obligations only out of
its own funds;


 


(ix)                                maintain an arm’s length
relationship with its Affiliates and its equity owners including but not
limited entering into all material transactions between the Borrower and any of
its Affiliates, whether currently existing or hereafter entered into, only on
an arm’s-length basis, it being understood and agreed that the transactions
contemplated in the Transaction Documents meet the requirements of this clause
(ix);


 


(x)                                   pay the salaries of its own
employees, if any and, to the extent that the Borrower shares the same officers
or other


 


32





















 


employees
as any of its equity owners or Affiliates, the salaries of and the expenses
related to providing benefits to such officers and other employees shall be
fairly allocated among such entities, and each such entity shall bear its fair
share of the salary and benefit costs associated with all such common officers
and employees;


 


(xi)                                not hold out its credit or assets as
being available to satisfy the obligations of others;


 


(xii)                             to the extent that the Borrower
jointly contracts with any of its equity owners or Affiliates to do business
with vendors or service providers or to share overhead expenses, the costs
incurred in so doing shall be allocated fairly among such entities, and each
such entity shall bear its fair share of such costs;


 


(xiii)                          to the extent that the Borrower
contracts or does business with vendors or service providers where the goods
and services provided are partially for the benefit of any other Person, the
costs incurred in so doing shall be fairly allocated to or among such entities
for whose benefit the goods or services are provided, and each such entity
shall bear its fair share of such costs;


 


(xiv)                         either maintain office space separate
from the office space of the Originator or its Affiliates or, to the extent
that the Borrower and any of its equity owners or Affiliates have offices in
the same location, there shall be a fair and appropriate allocation of overhead
costs among them, and each such entity shall bear its fair share of such
expenses


 


(xv)                            use separate stationery, invoices
and checks;


 


(xvi)                         except as contemplated by the
Transaction Documents, not pledge its assets for the benefit of any other
Person;


 


(xvii)                      correct any known misunderstanding
regarding its separate identity;


 


(xviii)                   maintain adequate capital in light
of its contemplated business purpose, transactions and liabilities;


 


(xix)                           cause its Board of Directors to meet
at least annually or act pursuant to written consent and keep minutes of such
meetings and actions and observe all other Delaware limited liability company
formalities;


 


33





















 


(xx)                              conduct its affairs strictly in
accordance with its Certificate of Formation and this Agreement and observe all
necessary, appropriate and customary corporate formalities, including, but not
limited to, holding all regular and special meetings of its Board of Directors
and equity owners appropriate to authorize all limited liability company
action, keeping separate and accurate minutes of its meetings, passing all
resolutions or consents necessary to authorize actions taken or to be taken;


 


(xxi)                           not assume or guarantee any of the
liabilities of any other Person;


 


(xxii)                        not acquire any securities of its
equity owners;


 


(xxiii)                     cause the Directors, Officers,
agents and other representatives of the Borrower to act at all times with
respect to the Borrower consistently and in furtherance of the foregoing and in
the best interests of the Borrower; and


 


(xxiv)                    take, or refrain from taking, as the
case may be, all other actions that are reasonably necessary to be taken or not
to be taken in order to comply with this Section 5.1(n).


 


SECTION 5.2.  
Negative
Covenants of the Borrower. 
At all times from the Effective Date to the later to occur of (i) the
Termination Date or (ii) the date on which the Facility Outstanding
Principal has been reduced to zero and all other Aggregate Unpaids shall have
been paid in full, unless the Group Agents shall otherwise consent in writing:


 


(a)                                  No Sales, Liens, Etc. 
Except as otherwise provided herein and in the Purchase Agreement, the
Borrower will not sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Lien upon or the filing of any
financing statement with respect to (x) any of the Collateral, or (y)  the Collection Account or assign any right to
receive income in respect thereof (other than the Lien of the Facility Agent
hereunder).


 


(b)                                 No Extension or Amendment of
Mortgage Loans.  The Borrower will not extend, amend or
otherwise modify the terms of any Mortgage Loan, or amend, modify or waive any
term or condition of any Mortgage Loan Document related thereto, except in
accordance with the Underwriting Policy and the Servicing Standards, without
the prior written consent of the Facility Agent and the Group Agents.


 


34





















 


(c)                                  No Change in Business, Underwriting
Policy or Servicing Standards.  The Borrower
will not make any change in the character of its business or in the
Underwriting Policy or the Servicing Standards, which change would, in either
case, impair the collectibility of any material portion of the Collateral or
otherwise have a Material Adverse Effect.


 


(d)                                 No Mergers, Etc. 
The Borrower will not consolidate or merge with or into any other
Person, or sell, lease or loan all or substantially all of its assets to any
other Person.


 


(e)                                  Change in Payment Instructions to
Obligors; Deposits to Collection Account.  The Borrower
will not add or terminate any financial institution as the holder of the
Collection Account or make any change in procedures regarding payments of
Collections or any change in its instructions to the financial institution holding
the Collection Account regarding payment and deposits of Collections, without
the prior written consent of the Facility Agent and the Group Agents.  The Borrower will not, and will not permit
the Originator or the Servicer to, deposit or otherwise credit, or cause or
permit to be so deposited or credited, to the Collection Account cash or cash
proceeds other than Collections of Collateral.


 


(f)                                    Change of Name, Etc. 
The Borrower will not change its name, identity, corporate form or
jurisdiction of organization unless at least ten (10) days prior to the
effective date of any such change it delivers to the Facility Agent such
documents, instruments or agreements as are necessary or advisable to reflect
such change and to continue the perfection of the Facility Agent’s security
interest in the Collateral.


 


(g)                                 Amendments to Purchase Agreement. 
The Borrower will not consent to any amendment, modification or waiver
of, or supplement to, any provision of the Purchase Agreement, except with the
prior written consent of the Group Agents; nor shall the Borrower take any
other action under the Purchase Agreement that is inconsistent with the terms
of this Agreement or the Purchase Agreement.


 


(h)                                 Other Debt. 
Except as provided for herein, the Borrower will not create, incur,
assume or suffer to exist any indebtedness, whether current or funded, or any
other liability other than (i) indebtedness of the Borrower under or as
specifically permitted by the Transaction Documents and (ii) other
indebtedness with Persons who have not executed an agreement not to institute
an insolvency proceeding against the Borrower in substantially the form of Section 10.8
in an amount not to exceed $10,500 at any one time outstanding.


 


35





















 


(i)                                     ERISA Matters. 
The Borrower will not, and will not permit the Originator to, (i) engage
or permit any of its respective ERISA Affiliates to engage in any prohibited
transaction (as defined in Section 4975 of the Code and Section 406
of ERISA) for which an exemption is not available or has not previously been
obtained from the U.S. Department of Labor; (ii) permit to exist any
accumulated funding deficiency (as defined in Section 302(a) of ERISA
and Section 412(a) of the Code) or funding deficiency with respect to
any Benefit Plan other than a Multiemployer Plan; (iii) fail to make any
payments to any Multiemployer Plan that the Borrower, the Originator or any
ERISA Affiliate of any of them is required to make under the agreement relating
to such Multiemployer Plan or any law pertaining thereto, or permit an ERISA
Affiliate of any of them to fail to make any such material payments to any
Multiemployer Plan such ERISA Affiliate is so required to make; (iv) terminate
any Benefit Plan so as to result in any liability; or (v) permit to exist
any occurrence of any reportable event described in Title IV of ERISA which
represents a material risk of a liability to the Borrower, the Originator or
any ERISA Affiliate of any of them under ERISA or the Code, if such prohibited
transactions, accumulated funding deficiencies, payments, terminations and
reportable events occurring within any fiscal year of any of them, in the
aggregate, involve a payment of money or an incurrence of liability by any of
them or any ERISA Affiliate of any of them.


 


(j)                                     Payments to the Originator. 
With respect to any Mortgage Loan and related property sold or
contributed by the Originator to the Borrower, the Borrower shall effect such
sale or contribution under, and pursuant to the terms of, the Purchase
Agreement, including, without limitation, the payment by the Borrower of
consideration equal to the purchase price for such Mortgage Loan and related
property as required by the terms of the Purchase Agreement. 


 


(k)                                  Enforcement of Rights and Remedies. 
The Borrower agrees to take all action (or to refrain from taking
action) reasonably necessary or advisable to enforce its rights and remedies
under the Purchase Agreement and to cause the parties to the Purchase Agreement
to comply with their representations, warranties, covenants, duties and
obligations.  In determining whether or
not to take action (or to refrain from taking action) under the Purchase
Agreement, the Borrower shall (i) consult with (and, after an Event of
Default, take direction from) the Facility Agent and the Group Agents and (ii) take
into account with its own interests the significant interests of the Facility
Agent, the Group Agents and the Lenders under this Agreement and in the
Collateral.  Notwithstanding the foregoing,
the Borrower shall not be required to take any action (or to refrain from
taking action) in contravention of applicable laws, rules, regulations and the
terms of the Transaction Documents and the Mortgage Loan Documents.  


 


36





















 


SECTION 5.3.  
Covenants
of the Servicer.  At
all times from the Effective Date to the later to occur of (i) the
Termination Date or (ii) the date on which the Facility Outstanding
Principal has been reduced to zero and all other Aggregate Unpaids shall have
been paid in full, unless the Group Agents shall otherwise consent in writing:


 


(a)                                  Conduct of Business. 
The Servicer will, and will cause the Originator to, carry on and
conduct its business in substantially the same manner and in substantially the
same fields of enterprise as it is presently conducted and will, and will cause
the Originator to, do all things necessary to remain duly incorporated, validly
existing and in good standing as a domestic corporation in its jurisdiction of
incorporation and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted except, in the case of the
Originator, where the absence of such authority is not reasonably likely to
result in a Material Adverse Effect.


 


(b)                                 Compliance with Laws and Agreements. 
The Servicer will, and will cause the Originator to, (i) comply
with all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it or its respective properties may be subject and (ii) perform
all of its obligations under each Transaction Document, Mortgage Loan and
Mortgage Loan Document to which it is a party, except where the failure to
comply and/or perform is not reasonably likely to result in a Material Adverse
Effect.


 


(c)                                  Furnishing of Information and
Inspection of Records.  The Servicer
will, and will cause the Originator to, furnish to the Facility Agent and the
Group Agents from time to time such information and reports with respect to the
Servicer, the Originator and the Collateral as the Facility Agent or the Group
Agents may reasonably request (including, without limitation, listings
identifying the Obligor and the Outstanding Principal Balance for each Mortgage
Loan, together with an aging history of the Mortgage Loans).  The Servicer will, and will cause the
Originator to, at any time and from time to time during regular business hours
and upon reasonable notice permit the Facility Agent and the Group Agents, or
their respective agents or representatives, (i) to examine and make copies
of and abstracts from all Servicing Records and (ii) to visit the offices
and properties of the Servicer or the Originator, as applicable, for the
purpose of examining the Servicing Records and other related systems and
information, and to discuss matters relating to the Collateral or the
performance of any such Person hereunder and under the other Transaction
Documents to which such Person is a party with any of the officers, directors,
employees or independent public accountants of such Person, as applicable,
having knowledge of such matters.


 


37





















 


(d)                                 Keeping of Records and Books of
Account.  The Servicer will, and will cause the
Originator to, maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing the
Collateral in the event of the destruction of the originals thereof), and keep
and maintain, all documents, books, records and other information reasonably
necessary or advisable for the collection of the Collateral (including, without
limitation, records adequate to permit the daily identification of each
outstanding Mortgage Loan and all Collections of and adjustments to each
outstanding Mortgage Loan).  The Servicer
will, and will cause the Originator to, give the Facility Agent and the Group
Agents notice of any material change in the administrative and operating
procedures of such Persons, as applicable, referred to in the previous sentence.


 


(e)                                  Underwriting Policy; Servicing. 
The Servicer will, and will cause the Originator to, comply in all
material respects with the Underwriting Policy and Servicing Standards in
regard to each Mortgage Loan and related Collateral.  Any Mortgage Loan originated by FIC shall at
all times be subserviced by an Eligible Subservicer pursuant to a binding and
enforceable agreement between the Servicer and such Eligible Subservicer
(copies of which, together with all amendments and modifications thereto, shall
be provided to the Facility Agent and the Group Agents).


 


(f)                                    Collections. 
The Servicer shall, and shall cause the Originator and the Borrower to,
hold in trust and to cause all Collections to be deposited directly into the
Collection Account within two (2) Business Days after receipt thereof.


 


(g)                                 Solvency. 
The Servicer will at all times have assets sufficient (i) to enable
it to pay its debts generally as they become due and (ii) such that it
will not be rendered insolvent by the transactions contemplated herein and in
the other Transaction Documents.


 


(h)                                 No Extension or Amendment of
Mortgage Loans.  The Servicer will not, and will not permit
the Originator to, extend, amend or otherwise modify the terms of any Mortgage
Loan, or amend, modify or waive any term or condition of any Mortgage Loan
Document related thereto, except in accordance with the Underwriting Policy and
the Servicing Standards, without the prior written consent of the Facility
Agent and the Group Agents.


 


(i)                                     No Change in Business, Underwriting
Policy or Servicing Standards.  The Servicer
will not, and will not permit the Originator to, make any change in the
character of its business or in the Underwriting Policy or the


 


38





















 


Servicing Standards,
which change would, in either case, impair the collectibility of any material
portion of the Collateral or otherwise have a Material Adverse Effect.


 


(j)                                     Change in Payment Instructions to
Obligors; Deposits to Collection Account.  The Servicer
will not, and will not permit the Originator to, add or terminate any financial
institution as the holder of the Collection Account or make any change in
procedures regarding payments of Collections or any change in its instructions
to the financial institution holding the Collection Account regarding payment
and deposits of Collections, without the prior written consent of the Facility
Agent and the Group Agents.  The Servicer
will not, and will not permit the Originator to, deposit or otherwise credit,
or cause or permit to be so deposited or credited, to the Collection Account
cash or cash proceeds other than Collections or proceeds of Collateral.


 


(k)                                  Maintenance of Insurance. 
The Servicer shall, and shall cause the Originator to, at all times
maintain errors and omissions insurance and/or mortgage impairment insurance
and blanket fidelity bond coverage in such amounts as are in effect on the
Effective Date (as disclosed to the Facility Agent and the Group Agents in
writing), and shall not reduce such coverage without the prior written consent
of the Facility Agent and the Group Agents, 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 Persons
engaged in the same or similar business similarly situated, against loss,
claims, damage and liability of the kinds and in the amounts customarily
maintained by such Persons.


 


(l)                                     Committed Warehouse Facility. 
While FIC or an Affiliate of FIC is the Servicer, the Servicer shall
cause the Originator to maintain, at all times during the term of this
Agreement, one or more committed loan facilities with one or more nationally
recognized and established lenders (other than the Facility Agent and its
Affiliates) that, in the aggregate on a committed basis, have an aggregate
committed amount of funds available to the Originator equal to at least
$500,000,000.


 


(m)                               Minimum Consolidated Adjusted
Tangible Net Worth.  While FIC or an Affiliate of FIC is the
Servicer, the Servicer shall cause the Originator to maintain, at all times, a
minimum Consolidated Adjusted Tangible Net Worth of at least $250,000,000.


 


(n)                                 Indebtedness to Consolidated
Adjusted Tangible Net Worth Ratio.  While FIC or
an Affiliate of FIC is the Servicer, the Servicer shall cause the Originator’s (i) combined
ratio of consolidated Indebtedness to Consolidated Adjusted Tangible Net Worth
not to exceed 16:1 at any time and


 


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(ii) combined
ratio of consolidated Indebtedness (net of non-recourse Indebtedness) to
Consolidated Adjusted Tangible Net Worth not to exceed 10:1 at any time.


 


(o)                                 Maintenance of Liquidity. 
While FIC or an Affiliate of FIC is the Servicer, the Servicer shall
cause the Originator to maintain, on a combined basis, cash, cash equivalents
and unencumbered mortgage loans held for sale or securitization of at least
$15,000,000.


 


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ARTICLE VI


 


ADMINISTRATION
AND COLLECTIONS


 


SECTION 6.1.  
Appointment
of Servicer.  The
servicing, administering and collection of the Mortgage Loans and related
Collateral shall be conducted by such Person (the “Servicer”) as may be
designated from time to time in accordance with this Section 6.1.  Until the Facility Agent (acting at the
direction of the Required Committed Lenders) gives notice to the Borrower of
the designation of a new Servicer pursuant to the next sentence, FIC is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Servicer under this Agreement and the other Transaction Documents.  If an Event of Default has occurred and is
continuing, the Facility Agent may (with the consent of the Required Committed
Lenders), and upon the direction of the Required Committed Lenders the Facility
Agent shall, designate as Servicer any Person (including itself) to succeed FIC
or any successor Servicer, on the condition in each case that any such Person
so designated shall agree in writing to perform the duties and obligations of
the Servicer pursuant to the terms hereof, and such Person can perform its
obligations under this Agreement and the other Transaction Documents in
compliance with all applicable laws, rules or regulations.  If an Event of Default has occurred and is
continuing, the Facility Agent (acting at the direction of the Required
Committed Lenders) may notify any Obligor of the designation of a successor
Servicer.  FIC may not delegate any of
its rights, duties or obligations hereunder except to an Eligible Subservicer
upon notice to the Facility Agent; provided that such delegation shall
not relieve FIC of its duties and obligations as Servicer hereunder and under
the other Transaction Documents.


 


SECTION 6.2.  
Duties
of Servicer.  (a) 
The Servicer shall take or cause to be taken all such action as may be
necessary or advisable to collect amounts due under each Mortgage Loan from
time to time, with such servicing and collection activities to be in compliance
with all applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Transaction Documents and the Servicing
Standards.  In performing its duties
hereunder and under the other Transaction Documents, the Servicer shall (i) take,
or refrain from taking, action in accordance with the Servicing Standards, the
Transaction Documents and the instructions of the Facility Agent, (ii) comply
with all applicable Federal, state and local laws, rules, regulations and
orders, (iii) maintain all Federal, state and local licenses, permits and
consents necessary or advisable in each applicable jurisdiction for it to
perform its duties as Servicer as described above and (iv) not impair in
any manner the rights of the Facility Agent, the Group Agents and the Lenders
in any Collateral or proceeds of Collateral. 
If the Servicer shall discover that it, the


 


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Borrower or the Originator (or
any agent on behalf of either of them) has failed to perform such Person’s
obligations under any Transaction Document or any Mortgage Loan Document, the
Servicer shall provide immediate written notice to the Facility Agent and the
Group Agents.


 


Each of the Borrower, the Facility Agent, the Group Agents and the
Lenders hereby appoints as its agent the Servicer, from time to time designated
pursuant to Section 6.1 hereof, to enforce its respective rights and
interests in, to and under the Collateral, and FIC hereby accepts such
appointment on the Effective Date.  To
the extent permitted by applicable law, each of the Borrower and FIC (to the
extent not then acting as Servicer hereunder) hereby grants to any Servicer
appointed hereunder an irrevocable power of attorney to take in the Borrower’s
and/or FIC’s name and on behalf of the Borrower or FIC any and all steps
necessary or desirable, in the reasonable determination of the Servicer, to
collect all amounts due under any and all Collateral, including, without
limitation, endorsing the Borrower’s and/or the FIC’s name on checks and other
instruments constituting the Collateral. 
The Borrower shall deliver or cause to be delivered to the Servicer, and
the Servicer shall hold in trust for the Borrower, the Facility Agent, the
Group Agents and the Lenders, in accordance with their respective interests,
all Servicing Records relating to the Collateral.  Notwithstanding anything to the contrary
contained herein, if an Event of Default has occurred and is continuing, the
Facility Agent shall have the absolute and unlimited right to direct the
Servicer (whether the Servicer is FIC or any other Person) to commence or
settle any legal action to enforce collection of any Mortgage Loan or to
foreclose upon or repossess any Collateral. 
The Servicer shall not make the Facility Agent, the Group Agents or the
Lenders a party to any litigation relating to a portion of the Collateral
without the prior written consent of such Person.  The Servicer shall not be liable to the
Facility Agent, the Group Agents or the Lenders for any action or inaction that
was directed by the Facility Agent or the Group Agents; provided that
the foregoing shall not apply to any failure of the Servicer to follow the
directions of the Facility Agent or in the case of the gross negligence, bad
faith or willful misconduct of the Servicer.


 


(b)                                 The Servicer shall, as soon as
practicable following receipt thereof, return to the Person entitled thereto
any collections of any indebtedness of any Person which is not related to the
Collateral.  If the Servicer is not FIC
or an Affiliate of FIC, the Servicer, by giving thirty (30) days’ prior written
notice to the Facility Agent, may revise the Servicing Fee; provided
that such revised Servicing Fee shall be a reasonable fee agreed upon by the
Servicer and the Facility Agent (acting at the direction of the Required
Committed Lenders) on an arms-length basis reflecting rates and terms
prevailing at such time.  The Servicer,
if other than FIC or an Affiliate of FIC, shall as soon as practicable upon
demand, deliver to the Originator all Servicing Records in its possession which
evidence or relate to indebtedness of an Obligor which is not a part of the
Collateral.


 


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(c)                                  Notwithstanding anything to the
contrary contained in this Article VI, the Servicer, if not FIC or an
Affiliate of FIC, shall have no obligation to collect, enforce or take any
other action described in this Article VI with respect to any indebtedness
that is not included in the Collateral other than to deliver to the Persons
entitled thereto the collections and documents with respect to any such
indebtedness as described in Section 6.2(b) hereof.


 


SECTION 6.3.  
Rights
After Designation of New Servicer or an Event of Default.  At any time following the designation of a
replacement Servicer pursuant to Section 6.1 hereof or following an Event
of Default:


 


(i)                                     The Facility Agent may (with the
consent of the Required Committed Lenders) or shall, at the direction of the
Required Committed Lenders, direct the underlying mortgage loan borrowers to pay
all amounts payable under any Mortgage Loan directly to the Facility Agent or
its designee for the benefit of the Lenders and Group Agents.


 


(ii)                                  The Borrower and FIC shall, at the
request of the Facility Agent (with the consent of the Required Committed
Lenders) and at the Borrower’s expense, give notice of the Facility Agent’s
security interest in the Collateral to each Obligor and direct that payments be
made directly to the Facility Agent or its designee.


 


(iii)                               The Borrower and FIC shall, at the
request of the Facility Agent (with the consent of the Required Committed
Lenders), (A) assemble all of the Servicing Records, and shall make the
same available to the Facility Agent or its designee at a place selected by the
Facility Agent or its designee, and (B) segregate all cash, checks and
other instruments received by it from time to time constituting Collections and
other proceeds of Collateral in a manner acceptable to the Facility Agent and
shall, promptly upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the Facility Agent
or its designee.


 


(iv)                              The Borrower and FIC hereby
authorize the Facility Agent to take any and all steps in the Borrower’s or FIC’s
name and on behalf of the Borrower and FIC necessary or desirable, in the
reasonable determination of the Facility Agent (with the consent of the
Required Committed Lenders), to collect all amounts due under any and all
Collateral, including, without limitation, endorsing the Borrower’s or FIC’s
name on checks and other


 


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instruments
representing Collections and other proceeds of Collateral and enforcing the
Mortgage Loan Documents relating to the Collateral.


 


SECTION 6.4.   No Liability.  Anything herein to the contrary
notwithstanding, (i) neither the Facility Agent, the Group Agents nor any
of the Lenders shall have any obligation or liability with respect to any
Mortgage Loan or related Collateral, nor shall it be obligated to perform any
of the obligations of the Originator thereunder and (ii) neither the
Borrower or its Affiliates shall have any liability with respect to any private
placement memorandum or other disclosure delivered by or on behalf of a Conduit
Lender to holders of such Conduit Lender’s Commercial Paper.


 


SECTION 6.5.  
Servicer
Indemnification.  The
Servicer shall indemnify and hold harmless the Facility Agent, the Group Agents
and the Lenders and their permitted assigns (and their respective directors,
officers, employees and agents), from and against any loss, liability, claim,
expense, damage or injury suffered or sustained by reason of any breach by the
Servicer of any of its representations, warranties or covenants contained in
this Agreement and the other Transaction Documents, including any judgment,
award, settlement, reasonable attorneys’ fees and other costs or expenses
incurred in connection with the defense of any actual action, proceeding or
claim; provided that the Servicer shall not indemnify any such Person if
such acts or omissions were attributable to gross negligence or willful
misconduct by such Person or its officers, directors, agents or Affiliates; provided
further that this Section 6.5 shall not apply to any losses
attributable to the financial inability of an Obligor to pay.  The provisions of such indemnity shall run
directly to and be enforceable by any of the Facility Agent, the Group Agents
and the Lenders.  The provisions of this Section 6.5
shall survive the termination of this Agreement.


 


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ARTICLE VII


 


EVENTS OF
DEFAULT


 


SECTION 7.1.  
Events
of Default.  The
occurrence of any one or more of the following events shall constitute an Event
of Default:


 


(a)                                  the Borrower, the Originator or the
Servicer (if the Servicer is FIC or an Affiliate of FIC) shall fail to make any
payment or deposit to be made by it hereunder or under any of the Transaction
Documents when due hereunder or thereunder; or


 


(b)                                 any representation, warranty,
certification or statement made by the Borrower, the Originator or the Servicer
(if the Servicer is FIC or an Affiliate of FIC) in this Agreement, any other
Transaction Document to which it is a party or in any other document delivered
pursuant hereto or thereto shall prove to have been incorrect in any material
respect when made, and such inaccuracy has not been previously remedied in
accordance with Section 2.8 of this Agreement; or


 


(c)                                  the Borrower, the Originator or the
Servicer (if the Servicer is FIC or an Affiliate of FIC) shall default in the
performance of any material covenant, obligation or undertaking (other than
those covered by clause (a) above); or


 


(d)                                 failure of the Borrower, the
Originator or the Servicer (if the Servicer is FIC or an Affiliate of FIC) to
pay when due any amounts due under any agreement to which any such Person is a
party and under which any Indebtedness greater than $20,000,000 ($10,500 in the
case of the Borrower) is governed (after giving effect to any applicable cure
periods); or any Indebtedness owing by the Borrower, the Originator or the
Servicer (if the Servicer is FIC or an Affiliate of FIC) greater than
$20,000,000 ($10,500 in the case of the Borrower) shall be declared to be due
and payable or required to be prepaid (other than by a regularly scheduled
payment) prior to the date of maturity thereof; or


 


(e)                                  any Event of Bankruptcy shall occur
with respect to the Borrower, the Originator or the Servicer (if the Servicer
is FIC or an Affiliate of FIC); or


 


(f)                                    the Facility Agent, on behalf of the
Lenders and the Group Agents, shall, for any reason, fail or cease to have a
valid and perfected ownership or security interest in any material portion of
Collateral with respect


 


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thereto (as
determined by the Facility Agent in its sole good faith discretion) free and
clear of any Liens (other than the Lien of the Facility Agent hereunder); or


 


(g)                                 the Purchase Termination Date shall
have occurred under the Purchase Agreement; or


 


(h)                                 any change in the property,
business, financial condition or operations of the Borrower, the Originator,
the Servicer or any of their affiliates shall occur, and such change
constitutes a material impairment of any such Person’s ability to perform its
obligations under the Transaction Documents (in each case as determined by the
Facility Agent in its sole good faith discretion), or any other condition shall
exist which, in the Facility Agent’s sole good faith discretion, constitutes a
material impairment of the Borrower’s ability to perform its obligations under
the Transaction Documents; or


 


(i)                                     any of the Borrower, the Originator
or the Servicer shall be required to register as an “investment company” under
the Investment Company Act of 1940, as amended; or


 


(j)                                     any report of nationally recognized
independent auditors of the Originator or the Servicer includes a “going
concern” or similar qualification; or


 


(k)                                  a notice of Lien has been filed
against the Borrower, the Originator or the Servicer or any of their ERISA
Affiliates covering any portion of the Collateral under Section 412(n) of
the Code or Section 302(f) of ERISA for a failure to make a required
installment or other payment to a plan to which such provisions apply; or


 


(l)                                     the failure of FIC at any time to be
qualified as a “real estate investment trust” as defined in Section 856 of
the Code; or


 


(m)                               a Change of Control shall have
occurred; or


 


(n)                                 the failure at any time to have a
Person satisfying the definition of “Eligible Subservicer” obligated to perform
the duties of Eligible Subservicer with respect to Mortgage Loans and related
property originated by the Originator; or


 


(o)                                 the Yield Test is not satisfied on
any date of determination, and such condition continues unremedied for two (2) Business
Days; or


 


46





















 


(p)                                 the Borrowing Base Test is not
satisfied, and such condition continues unremedied for three (3) consecutive
Settlement Dates; or


 


(q)                                 the Facility Outstanding Principal
exceeds 94.5% of the aggregate Market Value of all Mortgage Loans included in
the Collateral, and such condition continues unremedied for two (2) Business
Days after the Facility Agent provides notice to the Borrower or the Servicer;
or


 


(r)                                    any of the Pool Criteria are not
satisfied, and such condition continues unremedied for ten (10) Business
Days.


 


SECTION 7.2.  
Remedies
Upon the Occurrence of an Event of Default.  (a)  If an Event of Default has occurred
and is continuing, the Facility Agent may (with the consent of the Required
Committed Lenders), or at the direction of the Required Committed Lenders
shall, by notice to the Borrower and the Servicer, declare the Termination Date
to have occurred; provided, however, that in the case of any
event described in Section 7.1(e) above, the Termination Date shall
be deemed to have occurred automatically upon the occurrence of such
event.  At all times after the
declaration or automatic occurrence of the Termination Date pursuant to this Section 7.2(a),
the Base Rate plus 2% shall be the Yield Rate applicable to the Facility
Outstanding Principal and, if an Event of Default has occurred, all Aggregate
Unpaids shall become immediately due and payable.  If an event or condition shall have occurred
which constitutes a Potential Event of Default, the Facility Agent may (at the
direction of the Required Committed Lenders), by notice to the Borrower,
declare such event or condition a Potential Event of Default.


 


(b)                                 In addition, if the Termination Date
has been declared pursuant to Section 7.2(a), (i) the Facility Agent,
on behalf of the Lenders and the Group Agents, shall have all of the rights and
remedies provided to a secured creditor under the Relevant UCC and other
applicable law in respect thereto, (ii) the Facility Limit shall be
reduced as of each calendar date thereafter to equal the Facility Outstanding
Principal as of such date, and (iii) the Facility Agent, at the direction
of the Required Committed Lenders, shall take any other action available to it
under this Agreement and the other Transaction Documents (including, but not
limited to, exercising its rights under Section 2.7 and Article VI
hereof, under the Custodial Agreement and its rights of control of the
Collection Account in accordance with the Account Control Agreement).


 


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ARTICLE VIII


 


INDEMNIFICATION;
EXPENSES; RELATED MATTERS


 


SECTION 8.1.  
Indemnities
by the Borrower. 
Without limiting any other rights which the Facility Agent, the Group
Agents or the Lenders may have hereunder or under applicable law, the Borrower
hereby agrees to indemnify the Facility Agent, the Group Agents and the Lenders
and any of their successors and permitted assigns and their respective
officers, directors, agents and employees (collectively, “Indemnified
Parties”) from and against any and all damages, losses, claims,
liabilities, costs and expenses, including, without limitation, reasonable
attorneys’ fees (which such attorneys may be employees of the Facility Agent or
the Group Agents) and disbursements (all of the foregoing being collectively
referred to as “Indemnified Amounts”) awarded against or incurred by any
of them in any action or proceeding between the Borrower and its agents, on the
one hand, and any of the Indemnified Parties or between any of the Indemnified
Parties and any third party or otherwise, on the other hand, arising out of or
as a result of this Agreement, the other Transaction Documents, the interests,
either directly or indirectly, of the Facility Agent, the Group Agents or the
Lenders in the Collateral or any of the other transactions contemplated hereby
or thereby, excluding, however, (i) Indemnified Amounts to the extent
resulting from gross negligence, bad faith or willful misconduct on the part of
an Indemnified Party and (ii) recourse (except as otherwise specifically
provided in this Agreement) for Mortgage Loans that are uncollectible for
reasons other than as a result of the actions or omissions of the Borrower and
its Affiliates.  Without limiting the generality
of the foregoing, but subject in all respects to the limitations set forth in
clauses (i) and (ii) above, the Borrower shall indemnify each
Indemnified Party for Indemnified Amounts relating to or resulting from:


 


(a)                                  any representation or warranty made
by the Borrower or any officers or agents of the Borrower under or in
connection with this Agreement, any of the other Transaction Documents, any
Servicer Report or any other information or report delivered by any of them
pursuant hereto or thereto, which shall have been false or incorrect in any
material respect when made;


 


(b)                                 the failure by the Borrower to
comply with any applicable law, rule, regulation or order with respect to any
item of Collateral, or the nonconformity of any Mortgage Loan or Mortgage Loan
Document with any such applicable law, rule, regulation or order;


 


48





















 


(c)                                  the failure to vest and maintain
vested in the Facility Agent, for the benefit of the Lenders and the Group
Agents, an undivided perfected security interest in the Collateral, free and
clear of any Lien (other than the Lien of the Facility Agent hereunder);


 


(d)                                 the failure to file, or any delay in
filing, financing statements, continuation statements, or other similar instruments
or documents under the Relevant UCC or other applicable laws with respect to
any item of Collateral;


 


(e)                                  any dispute, claim, offset or
defense (other than discharge in bankruptcy) of an Obligor to the payment of
any Mortgage Loan (including, without limitation, a defense based on such
Mortgage Loan or related Mortgage Loan Documents not being legal, valid and
binding obligation of such Obligor enforceable against it in accordance with
its terms), or any other claim, loss or liability arising in connection with or
resulting from such Mortgage Loan;


 


(f)                                    any failure of the Borrower or any
agent of the Borrower to perform its duties or obligations in accordance with
the provisions of this Agreement and the other Transaction Documents;


 


(g)                                 any products liability claim or
personal injury or property damage suit or other similar or related claim or
action of whatever sort arising out of or in connection with any Mortgage Loan,
any Mortgaged Property or the Mortgage Loan Documents, including any violation
or alleged violation of any environmental law, rule, regulation or order or any
consumer credit laws, including, without limitation, laws, rules, regulations
or orders with respect to unfair or deceptive lending practices and predatory
lending practices, any truth-in-lending act and real estate procedures act;


 


(h)                                 any Loan made with respect to any
item of Collateral that does not constitute an Eligible Asset;


 


(i)                                     the failure by the Borrower or any
agent of the Borrower to comply with any term, provision or covenant made by it
contained in this Agreement or any of the other Transaction Documents to which
it is a party;


 


(j)                                     the failure to pay when due any
taxes by the Borrower or its agents, including without limitation, sales,
excise or personal property taxes payable in connection with any of the
Collateral;


 


(k)                                  any repayment by any Indemnified
Party of any amount previously distributed in reduction of Facility Outstanding
Principal which such Indemnified Party believes in good faith is required to be
made;


 


49





















 


(l)                                     the commingling of Collections of
Collateral by the Borrower or its agents at any time with other funds that do
not constitute Collections or proceeds of Collateral;


 


(m)                               any investigation, litigation or
proceeding related to this Agreement, any of the other Transaction Documents,
the Mortgage Loan Documents, the use of proceeds of Loans, the Facility Agent’s
security interest in the Collateral, or any item of Collateral;


 


(n)                                 the failure of any bank or other
financial institution to remit any Collections or proceeds of Collateral
pursuant to the instructions of the Servicer, the Borrower or the Facility
Agent (to the extent such Person is entitled to give such instructions in
accordance with the terms hereof and under applicable law) whether by reason of
the exercise of set-off rights or otherwise (unless the set-off is made by a
Lender);


 


(o)                                 any inability to obtain any judgment
in or utilize the court or other adjudication system of, any state in which an
Obligor may be located as a result of the failure of the Borrower or its agents
to qualify to do business or file any notice of business activity report or any
similar report;


 


(p)                                 any failure of the Borrower to give
reasonably equivalent value to the Originator in consideration of the purchase
by the Borrower from the Originator of any Mortgage Loan and related property,
or any attempt by any Person to void, rescind or set-aside any such transfer
and sale (or purported transfer and sale) under statutory provisions or common
law or equitable action, including, without limitation, any provision of the
Bankruptcy Code; or


 


(q)                                 any action taken by the Borrower or
its agents in the enforcement or collection of any item of Collateral.


 


SECTION 8.2.  
Indemnity
for Reserves and Expenses. 
(a)  If after the date hereof, the adoption of any Law or bank
regulatory guideline or any amendment or change in the interpretation of any
existing or future Law or bank regulatory guideline by any Official Body charged
with the administration, interpretation or application thereof, or the
compliance with any directive of any Official Body (in the case of any bank
regulatory guideline, whether or not having the force of Law):


 


(i)                                     shall impose, modify or deem
applicable any reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System) against assets of, deposits with or for


 


50





















 


the
account of, or credit extended by, any Indemnified Party or shall impose on any
Indemnified Party or on the United States market for certificates of deposit or
the London interbank market any other condition affecting this Agreement, the
other Transaction Documents, the ownership, maintenance or financing of the
Collateral or payments of amounts due hereunder or its obligation to advance
funds hereunder or under the other Transaction Documents; or


 


(ii)                                  imposes upon any Indemnified Party
any other expense (including, without limitation, reasonable attorneys’ fees
and expenses, and expenses of litigation or preparation therefor in contesting
any of the foregoing) with respect to this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the Collateral or
payments of amounts due hereunder or its obligation to advance funds hereunder
or otherwise in respect of this Agreement or under the other Transaction
Documents,


 


and the result
of any of the foregoing is to increase the cost to such Indemnified Party of
this Agreement, the other Transaction Documents, the maintenance or financing
of the Collateral, the obligations hereunder, the funding of any Loans
hereunder or under the other Transaction Documents, by an amount deemed by such
Indemnified Party to be material, then, on the next succeeding Settlement Date
after demand therefor by such Indemnified Party through its related Group
Agent, the Borrower shall pay to such Group Agent, for the benefit of such
Indemnified Party, such additional amount or amounts as will compensate such
Indemnified Party for such increased cost or reduction.


 


(b)                                 If any Indemnified Party shall have
determined that after the date hereof, the adoption of any applicable Law or
bank regulatory guideline regarding capital adequacy, or any change therein, or
any change in the interpretation thereof by any Official Body, or any directive
regarding capital adequacy (in the case of any bank regulatory guideline,
whether or not having the force of law) of any such Official Body, has the
effect of reducing the rate of return on capital of such Indemnified Party (or
its parent) as a consequence of such Indemnified Party’s obligations hereunder
or with respect hereto to a level below that which such Indemnified Party (or
its parent) could have achieved but for such adoption, change, request or
directive (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by such Indemnified Party to be material, then
from time to time, on the next Settlement Date after demand therefor by such
Indemnified Party through its Group Agent, the Borrower shall pay to such Group
Agent, for the benefit of such Indemnified Party, such additional amount or
amounts as will compensate such Indemnified Party (or its parent) for such


 


51





















 


reduction.  The Borrower shall have the same rights under
this Section 8.2 as it has under Section 2.17(b).


 


SECTION 8.3.  
Indemnity
for Taxes.  (a) 
All payments made by the Borrower or the Servicer to the Facility Agent, the
Group Agents or the Lenders under this Agreement and any other Transaction
Document shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Official Body
after the Effective Date, excluding (i) taxes imposed on the net
income of the Facility Agent, the Group Agents or any other Indemnified Party,
however denominated, and (ii) franchise taxes imposed on the net income of
the Facility Agent, the Group Agents or any other Indemnified Party, in each
case imposed: (1) by the United States or any political subdivision or
taxing authority thereof or therein; (2) by any jurisdiction under the
laws of which the Facility Agent, the Group Agents or such Indemnified Party or
lending office is organized or in which its lending office is located, managed
or controlled or in which its principal office is located or any political
subdivision or taxing authority thereof or therein; or (3) by reason of
any, connection between the jurisdiction imposing such tax and the Facility
Agent, the Group Agents such Indemnified Party or such lending office other
than a connection arising solely from this Agreement or any other Transaction
Document or any transaction hereunder or thereunder (all such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
collectively or individually, “Taxes”). 
If any such Taxes are required to be withheld from any amounts payable
to the Facility Agent, the Group Agents, the Lenders or any Indemnified Party
hereunder, the amounts so payable to the Facility Agent, the Group Agents, the
Lenders or such Indemnified Party shall be increased to the extent necessary to
yield to the Facility Agent, the Group Agents or such Indemnified Party (after
payment of all Taxes) all amounts payable hereunder at the rates or in the
amounts specified in this Agreement and the other Transaction Documents.  The Borrower shall indemnify the Facility
Agent, the Group Agents, the Lenders or any such Indemnified Party for the full
amount of any such Taxes on the next Settlement Date after demand therefor by
the Facility Agent, the Lenders or the Group Agents.


 


(b)                                 Each Indemnified Party that is not
incorporated under the laws of the United States of America or a state thereof
or the District of Columbia shall:


 


(i)                                     deliver to the Borrower, the
Facility Agent and the Group Agents (A) two duly completed copies of IRS Form W-8BEN
or Form W-8ECI, or successor applicable form, as the case may be, or (B) in
the case of a Lender that is a “United States person”


 


52





















 


within
the meaning of Section 7701(a)(3) of the Code, two duly completed
copies of an IRS Form W-9, or successor applicable form;


 


(ii)                                  deliver to the Borrower, the
Facility Agent and the Group Agents two (2) further copies of any such
form or certification on or before the date that any such form or certification
expires or becomes obsolete and after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrower; and


 


(iii)                               obtain such extensions of time for
filing and complete such forms or certifications as may reasonably be requested
by the Borrower, the Facility Agent and the Group Agents;


 


unless, in any
such case, an event (including, without limitation, any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Indemnified Party from duly completing and delivering any such
form with respect to it, and such Indemnified Party so advises the Borrower,
the Facility Agent and the Group Agents. 
Each such Indemnified Party so organized shall certify (i) in the
case of an IRS Form W-8BEN or IRS Form W-8ECI, that it is entitled to
receive payments under this Agreement and the other Transaction Documents
without deduction or withholding of any United States federal income taxes and (ii) in
the case of an IRS Form W-9, that it is entitled to an exemption from
United States backup withholding tax. 
Each Person that becomes a Lender under this Agreement shall, prior to
the effectiveness thereof, be required to provide all of the forms and
statements required pursuant to this Section 8.3.


 


SECTION 8.4.  
Other
Costs, Expenses and Related Matters.  (a)  The Borrower agrees, upon receipt
of a written invoice, to pay or cause to be paid, and to hold the Facility
Agent, the Group Agents and the Lenders harmless against liability for the
payment of, all reasonable out-of-pocket expenses (including, without
limitation, reasonable attorneys’, accountants’ and other third parties’ fees
and expenses, any filing fees and expenses incurred by officers or employees of
the Facility Agent, the Group Agents and the Lenders) or intangible,
documentary or recording taxes incurred (A) by or on behalf of the
Facility Agent, the Group Agents and the Lenders (i) in connection with
the negotiation, execution, delivery and preparation of this Agreement, the
other Transaction Documents and any documents or instruments delivered pursuant
hereto and thereto and the transactions contemplated hereby or thereby
(including, without limitation, the perfection or protection of the Collateral)
and (ii) from time to time relating to any amendments, waivers or consents
under this Agreement and the other Transaction Documents, and (B) by or on
behalf of the Facility Agent, the Group Agents and the Lenders from


 


53





















 


time to time (i) arising
in connection with the enforcement or preservation of the rights of the
Facility Agent, the Group Agents and the Lenders (including, without
limitation, the perfection of a security interest in and protection of the
Collateral under this Agreement), and (ii) arising in connection with any
audit, dispute, disagreement, litigation or preparation for litigation
involving this Agreement or any of the other Transaction Documents (all of such
amounts, collectively, “Transaction Costs”).


 


(b)                                 Each Group Agent or Indemnified
Party shall, after receipt of notice of any event occurring after the date
hereof which will entitle an Indemnified Party to compensation pursuant to this
Article VIII, notify the Borrower in writing.  Any notice by a Group Agent or Indemnified
Party claiming compensation under this Article VIII and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error.  In
determining such amount, such Group Agent or any applicable Indemnified Party
may use any reasonable averaging and attributing methods.


 


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ARTICLE IX


 


THE FACILITY
AGENT


 


SECTION 9.1.   Appointment.  Each
Lender and Group Agent hereby irrevocably designates and appoints CSFB as
Facility Agent hereunder, and authorizes the Facility Agent to take such action
on its behalf under the provisions of this Agreement and to exercise such
powers and perform such duties as are expressly delegated to the Facility Agent
by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto, subject in each case to the approval and
direction of the Required Committed Lenders. 
Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Facility Agent shall not have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender or Group Agent, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities on the part of the Facility Agent shall be
read into this Agreement or the other Transaction Documents or shall otherwise
exist against the Facility Agent.  In
performing its functions and duties hereunder, the Facility Agent shall act
solely as the agent of the Lenders under the Transaction Documents, and the
Facility Agent does not assume, nor shall be deemed to have assumed, any
obligation or relationship of trust or agency with or for any such Person.


 


SECTION 9.2.   Delegation of Duties.  The Facility Agent may execute any of its
duties under this Agreement by or through its subsidiaries, affiliates, agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties.  The
Facility Agent shall not be responsible for the negligence or misconduct (other
than the gross negligence or willful misconduct) of any agents or attorneys-in-fact
selected by it with reasonable care.


 


SECTION 9.3.   Exculpatory Provisions.  Notwithstanding any provision of this
Agreement or any other Transaction Document: 
(i) the Facility Agent shall not have any obligations under this
Agreement or any other Transaction Document other than those specifically set
forth herein and therein, and no implied obligations of the Facility Agent
shall be read into this Agreement or any other Transaction Document; and (ii) in
no event shall the Facility Agent be liable under or in connection with this
Agreement or any other Transaction Document for indirect, special, or
consequential losses or damages of any kind, including lost profits, even if
advised of the possibility thereof and regardless of the form of action by
which such losses or damages may be claimed. 
Neither the Facility Agent nor any of its respective directors,
officers, agents or employees shall be liable for any action taken or omitted
to be taken in good faith by it or them under or in connection with this
Agreement or any other Transaction Document, except for its or their own gross
negligence or willful misconduct. 
Without limiting the foregoing, the Facility Agent (a) may consult
with legal counsel (including counsel for the Lenders), independent public
accountants and other experts selected by it and shall not be liable for any
action taken


 


55





















 


or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts, (b) shall not be responsible to any party hereto for any
statements, warranties or representations (other than its own statements) made
in or in connection with this Agreement or the other Transaction Documents, (c) shall
not be responsible to the parties hereto for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement
or the other Transaction Documents (other than the legality, validity,
enforceability or genuineness of its own execution, authorization and
performance hereof and thereof), (d) shall incur no liability under or in
respect of any of the Commercial Paper or other obligations of the Lenders
under this Agreement or the other Transaction Documents and (e) shall
incur no liability under or in respect of this Agreement or the other
Transaction Documents by acting in good faith upon any notice (including notice
by telephone), consent, certificate or other instrument or writing (which may
be by facsimile) believed by it to be genuine and signed or sent by the proper
party or parties.  Notwithstanding
anything else herein or in the other Transaction Documents, it is agreed that
where the Facility Agent may be required under this Agreement or the other Transaction
Documents to give notice of any event or condition or to take any action as a
result of the occurrence of any event or the existence of any condition, the
Facility Agent agrees to give such notice or take such action only to the
extent that it has actual knowledge of the occurrence of such event or the
existence of such condition, and shall incur no liability for any failure to
give such notice or take such action in the absence of such knowledge.


 


SECTION 9.4.   Reliance by Facility Agent.  The Facility Agent shall in all cases be entitled
to rely, and shall be fully protected in relying, in good faith, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to each
of the Lenders), independent accountants and other experts selected by the
Facility Agent.  The Facility Agent shall
in all cases be fully justified in failing or refusing to take any action in
good faith under this Agreement, any other Transaction Document or any other
document furnished in connection herewith or therewith unless it shall first
receive such advice or concurrence of the Required Committed Lenders, as it
deems appropriate, or it shall first be indemnified to its satisfaction by the
Required Committed Lenders against any and all liability, cost and expense
which may be incurred by it by reason of taking or continuing to take any such
action.  The Facility


 


56





















 


Agent shall in all cases be
fully protected in acting, or in refraining from acting, in good faith under
this Agreement, the other Transaction Documents or any other document furnished
in connection herewith or therewith in accordance with a request of the
Required Committed Lenders, and such request and any action taken or failure to
act pursuant thereto shall be binding upon the Group Agents and the Lenders.


 


SECTION 9.5.   Action Upon Certain Events.  To the extent the Facility Agent is entitled
to consent to or withhold its consent of any waiver or amendment of this
Agreement or other Transaction Documents in accordance with the terms hereof or
thereof or otherwise take action upon the occurrence of an Event of Default or
Potential Event of Default, the Facility Agent shall (i) give prompt
notice to the Group Agents of any such waiver, amendment, Event of Default or
Potential Event of Default of which it is aware and (ii) take such action
with respect to such waiver, amendment, Event of Default or Potential Event of
Default as shall be directed by the Required Committed Lenders.


 


SECTION 9.6.   Non-Reliance on Facility Agent.  Each of the parties hereto expressly
acknowledges that neither the Facility Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Facility Agent
hereafter taken, including, without limitation, any review of the affairs of
either the Borrower, the Originator or the Servicer, shall be deemed to
constitute any representation or warranty by the Facility Agent.  Except as expressly provided herein, the
Facility Agent shall not have any duty or responsibility to provide any Person
other than each Group Agent and each Lender with any credit or other
information concerning the business, operations, property, prospects, financial
and other condition or creditworthiness of the Borrower, the Originator or the
Servicer which may come into the possession of the Facility Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.


 


SECTION 9.7.   Indemnification.  The Committed Lenders agree to indemnify the
Facility Agent and its officers, directors, employees, representatives and
agents (to the extent not reimbursed by the Borrower, the Servicer or the
Originator under the Transaction Documents, and without limiting the obligation
of such Persons to do so in accordance with the terms of the Transaction
Documents), on a pro  rata basis, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of
counsel for the Facility Agent or the affected Person in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not the Facility Agent or such affected Person shall be designated a
party thereto) that may at any time be imposed on, incurred by or asserted
against the Facility Agent or such affected Person as a result of, or arising


 


57





















 


out of, or in any way related
to or by reason of, any of the transactions contemplated hereunder or under the
Transaction Documents or any other document furnished in connection herewith or
therewith (but excluding any such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the gross negligence or willful misconduct of the
Facility Agent or such affected Person).


 


SECTION 9.8.   Successor Facility Agent.  The Facility Agent may, upon five (5) days’
notice to each Group Agent (with a copy to the Borrower), and the Facility
Agent will, at the direction of the Required Committed Lenders, resign as Facility
Agent; provided, in either case, that a Group Agent or a Committed
Lender agrees to become the successor Facility Agent hereunder in accordance
with the next sentence with the approval of the Required Committed
Lenders.  If the Facility Agent shall resign
as Facility Agent under this Agreement, then the Required Committed Lenders
during such period shall appoint from among the Committed Lenders a successor
agent, whereupon such successor agent shall succeed to the rights, powers and
duties of the Facility Agent, and the term “Facility Agent” shall mean such
successor agent, effective upon its acceptance of such appointment and its
delivery of a duly executed counterpart of this Agreement and an acknowledgment
to each Group Agent, and the former Facility Agent’s rights, powers and duties
as Facility Agent shall be terminated, without any other or further act or deed
on the part of such former Facility Agent or any of the parties to this
Agreement.  After the retiring Facility
Agent’s resignation hereunder as Facility Agent, the provisions of this Article IX
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Facility Agent under this Agreement.


 


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ARTICLE X


 


MISCELLANEOUS


 


SECTION 10.1.   Term of Agreement.  This Agreement shall terminate on the date
following the Termination Date upon which the Facility Outstanding Principal
has been reduced to zero, and all other Aggregate Unpaids have been paid in
full, in each case, in cash; provided, however, that (i) the
rights and remedies of the Facility Agent, the Group Agents and the Lenders
with respect to any representation and warranty made or deemed to be made by
the Borrower or the Servicer pursuant to this Agreement, (ii) the
indemnification and payment provisions of Articles VI and VIII hereof, and (iii) the
agreements set forth in Sections 10.8 and 10.9 hereof, shall be continuing and
shall survive any termination of this Agreement.  On such date following the Termination Date
described in the preceding sentence, any funds remaining on deposit in the
Collection Account shall be paid to the Borrower.


 


SECTION 10.2.   Waivers; Amendments.  No failure or delay on the part of the
Facility Agent, the Group Agents or the Lenders in exercising any power, right
or remedy under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or remedy preclude any
other further exercise thereof or the exercise of any other power, right or
remedy.  The rights and remedies herein
provided shall be cumulative and nonexclusive of any rights or remedies
provided by law.  Any provision of this
Agreement and the other Transaction Documents may be amended if, but only if,
such amendment is in writing and is signed by the parties hereto and/or thereto
and the Required Committed Lenders; provided that the Borrower and the
Servicer agree not to unreasonably withhold consent with respect to any
amendment to this Agreement requested by Standard & Poor’s or Moody’s
in connection with any amendment to a Conduit Lender’s asset purchase facility
for the purpose of modifying the terms and conditions on which the Committed
Lenders make purchases thereunder.  The
Borrower agrees that it shall not give any consent or waiver required or
permitted to be given under the Purchase Agreement without the prior written
consent of the Facility Agent (acting at the direction of the Required
Committed Lenders).


 


SECTION 10.3.   Notices.  Except as provided below, all communications
and notices provided for hereunder shall be in writing (including telecopy,
electronic mail or similar writing) and shall be given to the other party at
its address or telecopy number set forth below or at such other address or
telecopy number as such party may hereafter specify for the purposes of notice
to such party.  Each such notice or other
communication shall be effective (i) if given by telecopy,


 


59





















 


when such telecopy is transmitted
to the telecopy number specified in this Section 10.3 and confirmation is
received (provided that, for purposes of this clause (i), any such
transmission or confirmation occurring after regular business hours or on a
non-Business Day shall be effective on the next succeeding Business Day), (ii) if
given by mail three (3) Business Days following such posting, postage
prepaid, U.S. certified or registered, (iii) if given by overnight
courier, one (1) Business Day after deposit thereof with a national overnight
courier service, (iv) if given by electronic mail, when transmitted, or (v) if
given by any other means, when received at the address specified in this Section 10.3.  However, anything in this Section 10.3
to the contrary notwithstanding, the Borrower hereby authorizes each Group
Agent to effect Loans, Funding Period and Yield Rate selections based on
telephonic notices made by any Person which such Group Agent in good faith
believes to be acting on behalf of the Borrower.  The Borrower agrees to deliver promptly to
the Facility Agent and each Group Agent a written confirmation of each
telephonic notice signed by an authorized officer of Borrower.  However, the absence of such confirmation
shall not affect the validity of such notice. 
If the written confirmation differs in any material respect from the
action taken by the Facility Agent or the related Group Agent, as applicable,
the records of such Person shall govern absent manifest error.


 


If to Alpine:


 


Alpine Securitization Corp.


c/o Credit Suisse, New York Branch


Eleven Madison Avenue


New York, New York  10010


Attention: 
Anthony Giordano


Telephone: 
(212) 325-9103


Telecopy:   
(212) 325-0873


 


(with a copy to Alpine’s Group Agent)


 


If to the
Borrower:


 


Fieldstone Investment Company, LLC


11000 Broken Land Parkway


Suite 600


Columbia, Maryland  21044


Attention: 
Treasurer


Telephone: 
(410) 772-7275


Telecopy:   
(410) 772-7299


 


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If to the Servicer:


 


Fieldstone Investment Corporation


11000 Broken Land Parkway


Suite 600


Columbia, Maryland  21044


Attention: 
Treasurer


Telephone: 
(410) 772-7275


Telecopy:    (410) 772-7299


 


with a copy
to:


 


Fieldstone Investment Corporation


11000 Broken Land Parkway


Suite 600


Columbia, Maryland  21044


Attention: 
General Counsel


Telephone: 
(410) 772-5108


Telecopy:    (410) 772-7299


 


If to the
Facility Agent, Alpine’s Group Agent or Alpine’s Committed Lenders:


 


Credit Suisse, New York Branch


Eleven Madison Avenue


New York, New York  10010


Attention: 
Anthony Giordano


Telephone: 
(212) 325-9103


Telecopy:   
(212) 325-0873


 


If to the
Committed Lenders, to the related Group Agents on their behalf.


 


SECTION 10.4.   Governing Law; Submission to
Jurisdiction; Integration. 
(a)  This Agreement shall be governed by, and construed in accordance
with the laws of the State of New York. 
Each of the parties hereto hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York state court sitting in The City of New York for
purposes of all legal proceedings arising out of or relating to this Agreement
or the transactions contemplated hereby. 
Each of the parties hereto hereby irrevocably waives, to the fullest
extent it may effectively do so, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.  Nothing in
this Section 10.4


 


61





















 


shall affect the right of the
Facility Agent, the Group Agents or the Lenders to bring any action or
proceeding against the Borrower, the Servicer, or their respective properties
in the courts of other jurisdictions.


 


(b)                                 Each of the parties hereto hereby
waives any right to have a jury participate in resolving any dispute, whether
sounding in contract, tort or otherwise among any of them arising out of,
connected with, relating to or incidental to the relationship between them in
connection with this Agreement or the other Transaction Documents.


 


(c)                                  This Agreement contains the final
and complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire Agreement
among the parties hereto with respect to the subject matter hereof superseding
all prior oral or written understandings.


 


(d)                                 The Borrower and the Servicer each
hereby appoint CT Corporation, New York, New York as the authorized agent upon
whom process may be served in any action arising out of or based upon this
Agreement, the other Transaction Documents to which such Person is a party or
the transactions contemplated hereby or thereby that may be instituted in the
United States District Court for the Southern District of New York and of any
New York State court sitting in The City of New York by the Facility Agent, the
Group Agents or the Lenders or any assignee of any of them.


 


SECTION 10.5.   Severability; Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same Agreement.  Any provisions of this Agreement which are
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.


 


SECTION 10.6.   Successors and Assigns.  This Agreement shall be binding on the
parties hereto and their respective successors and assigns; provided, however,
that neither the Borrower nor the Servicer may assign any of its rights or
delegate any of its duties hereunder or under any of the other Transaction
Documents to which it is a party without the prior written consent of the
Facility Agent (acting at the direction of the Required Committed
Lenders).  No provision of this Agreement
shall in any manner restrict the ability of any Lender to assign, participate,
grant security interests in, or otherwise transfer its interest in the Loans,
this Agreement


 


62





















 


and its security interest in
the Collateral.  Without limiting the
foregoing, any Conduit Lender may (with the consent of each of its related
Committed Lenders), on one or a series of transactions, transfer all or any
portion of its rights in the Collateral held by it, and its rights and
obligations under this Agreement and the other Transaction Documents to which
it is a party, to a Conduit Assignee.


 


SECTION 10.7.   Confidentiality.  (a)  Each of the Borrower and the
Servicer shall maintain, and shall cause each officer, employee and agent of
itself and its Affiliates to maintain, the Confidential Information, except for
(i) Confidential Information that has become publicly available (through
no fault of the Borrower and its Affiliates and only after such Confidential
Information has become publicly available) and Confidential Information that
has become generally available through no fault of the Borrower and its
Affiliates that make secured loans (but only after such Confidential
Information has become generally available to such financial institutions), (ii) Confidential
Information disclosed to legal counsel, accountants, consultants, employees,
nationally recognized rating agencies and other professional advisors to the
Borrower and its Affiliates who need to know such Confidential Information and
are informed of the confidential nature of such Confidential Information, (iii) Confidential
Information disclosed as required in order to comply with any law, regulation,
order or ruling applicable to the Borrower and its Affiliates (provided
that the Group Agents shall receive notice thereof prior to the disclosure of
such Confidential Information (if permitted under applicable law), and the
Person(s) disclosing such Confidential Information shall take all reasonable
precautions, including, if requested by the Group Agents, seeking a protective
order to insure confidential treatment of any Confidential Information so
disclosed), (iv) Confidential Information which was in the possession of
the Borrower and its Affiliates prior to receipt from the Facility Agent, the
Group Agents or the Lenders or (v) Confidential Information disclosed to a
third party consented to by the Facility Agent or the applicable Group Agent
pursuant to a written agreement of confidentiality in form and substance
satisfactory to the Facility Agent or such Group Agent.  Each of the Borrower and the Servicer hereby
consents to the disclosure of any Confidential Information with respect to it
received by the Facility Agent, a Group Agent or a Lender to (i) any of
the Facility Agent, the Group Agents or a Lender, (ii) any nationally
recognized rating agency providing a rating or proposing to provide a rating to
a Conduit Lender’s Commercial Paper, (iii) any placement agent which
proposes to offer and sell a Conduit Lender’s Commercial Paper (but only
information contained in such Conduit Lender’s standard monthly investor report
which does not contain the names of the Borrower and its Affiliates), or as
otherwise agreed, (iv) any provider of program-wide liquidity or credit
support facilities to a Conduit Lender, (v) any potential Committed Lender
or (vi) any participant or potential participant; provided, however,
in connection with any disclosure made pursuant to clause (iv), (v) or (vi) of
this sentence, each Person to receive such Confidential Information shall have
entered into a confidentiality


 


63





















 


undertaking in form and
substance satisfactory to the Borrower, the Facility Agent and the Group
Agents.


 


(b)                                 Each of the Facility Agent, the
Group Agents and the Lenders shall maintain, and shall cause each officer,
employee and agent of itself and its Affiliates to maintain, the
confidentiality of the Confidential Information, except (i) Confidential
Information that has become publicly available (through no fault of the
Facility Agent, the Group Agents or a Lender and only after such Confidential
Information has become publicly available), (ii) Confidential Information
disclosed to legal counsel, accountants, consultants, employees, nationally
recognized rating agencies and other professional advisors to the Facility
Agent, the Group Agents and the Lenders and their Affiliates who need to know
such Confidential Information to perform their obligations with respect to the
Transaction Documents and are informed of the confidential nature of such
Confidential Information, (iii) Confidential Information disclosed as
required by law or regulation, (iv) Confidential Information disclosed in
connection with any legal or regulatory process or proceeding to which the
Facility Agent, the Group Agents or a Lender or any of their Affiliates is
subject; provided that the Facility Agent, the Group Agents or a Lender
shall promptly notify the Borrower (if such notice is permitted under
applicable law) of any such proceeding or process requiring production of such
Confidential Information prior to compliance, or (v) Confidential Information
which was in the possession of the Facility Agent, the Group Agents or a Lender
prior to receipt from the Borrower or its Affiliates.


 


(c)                                  Each Person party hereto shall
protect such disclosed Confidential Information by using the same degree of
care, but no less than a reasonable degree of care, to prevent the unauthorized
use, dissemination or publication of such Confidential Information as such
Person uses to protect its own Confidential Information of a similar nature.  Each Person party hereto acknowledges that
certain Confidential Information provided hereunder or under the other
Transaction Documents may be the subject of confidentiality requirements with
Persons not party to any of the Transaction Documents (each such third-party
confidentiality requirement, a “Third-Party Confidentiality Requirement”).  Any party disclosing to another party hereto
Confidential Information that is the subject of a Third-Party Confidentiality
Requirement in connection herewith will notify the recipient of such Confidential
Information prior to the delivery of such Confidential Information of the
nature of any such Third-Party Confidentiality Requirement and provide such
recipient with a copy of the relevant Third-Party Confidentiality Requirement.  Prior to receipt of any such Confidential
Information, such recipient shall execute a confidentiality undertaking in form
and substance satisfactory to the Borrower, the relevant Lenders, the Servicer,
the Facility Agent and the Group Agents.


 


64





















 


SECTION 10.8.   No Bankruptcy Petition Against a
Conduit Lender.  Each
of the parties hereto hereby covenants and agrees that, prior to the date which
is one year and one day after the payment in full of all outstanding Commercial
Paper or other indebtedness of a Conduit Lender, it will not institute against,
or join any other Person in instituting against, or knowingly or intentionally
encourage or cooperate with any Person in instituting against, such Conduit
Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.


 


SECTION 10.9.   Limited Recourse.  Notwithstanding anything to the contrary
contained herein, the obligations of any Conduit Lender under this Agreement
are solely the corporate obligations of such Conduit Lender and, in the case of
obligations of a Conduit Lender other than Commercial Paper, shall be payable
at such time as funds are actually received by, or are available to, such
Conduit Lender in excess of funds necessary to pay in full all outstanding
Commercial Paper and, to the extent funds are not available to pay such
obligations, the claims relating thereto shall not constitute a claim against
such Conduit Lender but shall continue to accrue.  Each party hereto agrees that the payment of
any claim (as defined in Section 101 of Title 11 of the Bankruptcy Code)
of any such party shall be subordinated to the payment in full of all of such Conduit
Lender’s Commercial Paper.


 


No recourse
under any obligation, covenant or agreement of a Conduit Lender contained in
this Agreement shall be had against any incorporator, stockholder, officer,
director, member, manager, employee or agent of such Conduit Lender, the Group
Agent for such Conduit Lender or any of their Affiliates (solely by virtue of
such capacity) by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that this Agreement is solely a corporate obligation of
such Conduit Lender, and that no personal liability whatever shall attach to or
be incurred by any incorporator, stockholder, officer, director, member,
manager, employee or agent of such Conduit Lender, the Group Agent for such
Conduit Lender or any of their Affiliates (solely by virtue of such capacity)
or any of them under or by reason of any of the obligations, covenants or
agreements of such Conduit Lender contained in this Agreement, or implied
therefrom, and that any and all personal liability for breaches by such Conduit
Lender of any of such obligations, covenants or agreements, either at common
law or at equity, or by statute, rule or regulation, of every such
incorporator, stockholder, officer, director, member, manager, employee or
agent is hereby expressly waived as a condition of and in consideration for the
execution of this Agreement; provided that the foregoing shall not
relieve any such Person from any liability it might otherwise have as a result
of fraudulent actions


 


65





















 


taken or fraudulent omissions made by them or in any case of the gross
negligence, bad faith or willful misconduct of any such Person.


 


SECTION 10.10.   Characterization of the Transactions
Contemplated by the Agreement.  It is the intention of the parties that the
transactions contemplated hereby constitute a pledge of the Collateral by the
Borrower to the Facility Agent, on behalf of and for the benefit of the Lenders
and the Group Agents, to secure repayment of the Aggregate Unpaids.


 


SECTION 10.11.   Waiver of Setoff.  Each of the Facility Agent, the Borrower, the
Servicer, the Lenders and the Group Agents hereby waives any right of setoff it
may have or to which it may be entitled under this Agreement from time to time
against any Conduit Lender or its assets.


 


SECTION 10.12.   CSFB Conflict Waiver.  CSFB acts as Group Agent and as Facility
Agent for Alpine, as issuing and paying agent for Alpine’s Commercial Paper, as
provider of other backup facilities for Alpine, and may provide other services
or facilities from time to time (the “CSFB Roles”).  Each of the parties hereto hereby
acknowledges and consents to any and all CSFB Roles, waives any objections it
may have to any actual or potential conflict of interest caused by CSFB’s
acting as the Facility Agent or as a Group Agent or a Committed Lender and
acting as or maintaining any of the CSFB Roles, and agrees that in connection
with any CSFB Role, CSFB may take, or refrain from taking, any action which it
in its discretion deems appropriate.


 


SECTION 10.13.   Liability of Group Agents.  Notwithstanding any provision of this
Agreement:  (i) the Group Agents
shall not have any obligations under this Agreement other than those
specifically set forth herein, and no implied obligations of the Group Agents
shall be read into this Agreement; and (ii) in no event shall the Group
Agents be liable under or in connection with this Agreement for indirect,
special, or consequential losses or damages of any kind, including lost
profits, even if advised of the possibility thereof and regardless of the form
of action by which such losses or damages may be claimed.  Neither the Group Agents nor any of their
directors, officers, agents or employees shall be liable for any action taken
or omitted to be taken in good faith by them under or in connection with this
Agreement, except for their own gross negligence or willful misconduct.  Without limiting the foregoing, the Group
Agents (a) may consult with legal counsel (including counsel for the
Lenders), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants or experts, (b) shall
not be responsible to the Lenders, the Facility Agent, the Borrower, the other
Group Agents or the Servicer for any statements, warranties or representations
made in or in connection with this Agreement or the other


 


66





















 


Transaction Documents (other
than statements made by it), (c) shall not be responsible to the Lenders,
the Facility Agent, the Borrower, the other Group Agents or the Servicer for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or the other Transaction Documents (other than with
respect to itself), (d) shall incur no liability under or in respect of
any of the Commercial Paper or other obligations of the Lenders under this
Agreement or the other Transaction Documents and (e) shall incur no
liability under or in respect of this Agreement or the other Transaction
Documents by acting upon any notice (including notice by telephone), consent,
certificate or other instrument or writing (which may be by facsimile) believed
by it to be genuine and signed or sent by the proper party or parties.  Notwithstanding anything else herein or in
the other Transaction Documents, it is agreed that where the Group Agents may
be required under this Agreement or the other Transaction Documents to give
notice of any event or condition or to take any action as a result of the
occurrence of any event or the existence of any condition, the Group Agents agree
to give such notice or take such action only to the extent that they have
actual knowledge of the occurrence of such event or the existence of such
condition, and shall incur no liability for any failure to give such notice or
take such action in the absence of such knowledge.


 


67





















 


IN WITNESS
WHEREOF, the parties hereto have executed and delivered this Funding Agreement
as of the date first written above.


 


	
   

  	
  FIELDSTONE
  INVESTMENT FUNDING, LLC,

  
	
   

  	
  as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIELDSTONE
  INVESTMENT CORPORATION,

  
	
   

  	
  individually
  and as initial Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT
  SUISSE, NEW YORK BRANCH, as

  Facility Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


68





















 


	
  The Alpine Lending Group:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALPINE
  SECURITIZATION CORP.,

  
	
   

  	
  as a Conduit
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  CREDIT
  SUISSE, NEW YORK BRANCH, as a

  Group Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  CREDIT
  SUISSE, NEW YORK BRANCH,

  individually and as a Committed Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


69





















 


TABLE OF
CONTENTS


 


	
  ARTICLE I DEFINITIONS

  
	
   

  	
   

  
	
   

  	
   

  
	
  SECTION 1.1. Certain Defined Terms

  	
   

  
	
  SECTION 1.2. Other Terms

  	
   

  
	
  SECTION 1.3. Computation of Time
  Periods

  	
   

  
	
   

  	
   

  
	
  ARTICLE II LOANS AND SETTLEMENTS

  
	
   

  	
   

  
	
  SECTION 2.1. Facility

  	
   

  
	
  SECTION 2.2. Loans; Procedures

  	
   

  
	
  SECTION 2.3. Loan Repayment; Yield;
  Fees

  	
   

  
	
  SECTION 2.4. Optional Prepayments

  	
   

  
	
  SECTION 2.5. Application of Payments

  	
   

  
	
  SECTION 2.6. Extensions

  	
   

  
	
  SECTION 2.7. Security Interest

  	
   

  
	
  SECTION 2.8. Deemed Collections

  	
   

  
	
  SECTION 2.9. Payments and Computations

  	
   

  
	
  SECTION 2.10. Reports

  	
   

  
	
  SECTION 2.11. Collection Account

  	
   

  
	
  SECTION 2.12. Right of Setoff

  	
   

  
	
  SECTION 2.13. Sharing of Payments,
  Etc.

  	
   

  
	
  SECTION 2.14. Broken Funding

  	
   

  
	
  SECTION 2.15. Conversion and Continuation of Outstanding Loans

  	
   

  
	
  SECTION 2.16. Illegality

  	
   

  
	
  SECTION 2.17. Inability to Determine Yield Rate

  	
   

  
	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES

  
	
   

  	
   

  
	
  SECTION 3.1. Representations and Warranties of the Borrower

  	
   

  
	
  SECTION 3.2. Representations and Warranties of the Servicer

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV CONDITIONS PRECEDENT

  
	
   

  	
   

  
	
  SECTION 4.1. Conditions to Effectiveness of this Agreement

  	
   

  
	
  SECTION 4.2. Conditions to Each Loan

  	
   

  
	
   

  	
   

  
	
  ARTICLE V COVENANTS

  
	
   

  	
   

  
	
  SECTION 5.1. Affirmative Covenants of Borrower

  	
   

  
	
  SECTION 5.2. Negative Covenants of the Borrower

  	
   

  



 


i





















 


	
  SECTION 5.3. Covenants of the Servicer

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI ADMINISTRATION AND COLLECTIONS

  
	
   

  	
   

  
	
  SECTION 6.1. Appointment of Servicer

  	
   

  
	
  SECTION 6.2. Duties of Servicer

  	
   

  
	
  SECTION 6.3. Rights After Designation of New Servicer or an
  Event of Default

  	
   

  
	
  SECTION 6.4.
  No Liability

  	
   

  
	
  SECTION 6.5. Servicer Indemnification

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII EVENTS OF DEFAULT

  
	
   

  	
   

  
	
  SECTION 7.1. Events of Default

  	
   

  
	
  SECTION 7.2. Remedies Upon the Occurrence of an Event of Default

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII INDEMNIFICATION; EXPENSES; RELATED MATTERS

  
	
   

  	
   

  
	
  SECTION 8.1. Indemnities by the Borrower

  	
   

  
	
  SECTION 8.2. Indemnity for Reserves and Expenses

  	
   

  
	
  SECTION 8.3. Indemnity for Taxes

  	
   

  
	
  SECTION 8.4. Other Costs, Expenses and Related Matters

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX THE FACILITY AGENT

  
	
   

  	
   

  
	
  SECTION 9.1. Appointment

  	
   

  
	
  SECTION 9.2. Delegation of Duties

  	
   

  
	
  SECTION 9.3. Exculpatory Provisions

  	
   

  
	
  SECTION 9.4. Reliance by Facility Agent

  	
   

  
	
  SECTION 9.5. Action Upon Certain Events

  	
   

  
	
  SECTION 9.6. Non-Reliance on Facility Agent

  	
   

  
	
  SECTION 9.7. Indemnification

  	
   

  
	
  SECTION 9.8. Successor Facility Agent

  	
   

  
	
   

  	
   

  
	
  ARTICLE X MISCELLANEOUS

  
	
   

  	
   

  
	
  SECTION 10.1. Term of Agreement

  	
   

  
	
  SECTION 10.2. Waivers; Amendments

  	
   

  
	
  SECTION 10.3. Notices

  	
   

  
	
  SECTION 10.4. Governing Law; Submission to Jurisdiction;
  Integration

  	
   

  
	
  SECTION 10.5. Severability; Counterparts

  	
   

  
	
  SECTION 10.6. Successors and Assigns

  	
   

  
	
  SECTION 10.7. Confidentiality

  	
   

  
	
  SECTION 10.8. No Bankruptcy Petition Against a Conduit Lender

  	
   

  



 


ii





















 


	
  SECTION 10.9. Limited Recourse

  	
   

  
	
  SECTION 10.10. Characterization of the Transactions Contemplated
  by the Agreement

  	
   

  
	
  SECTION 10.11. Waiver of Setoff

  	
   

  
	
  SECTION 10.12. CSFB Conflict Waiver

  	
   

  
	
  SECTION 10.13. Liability of Group Agents

  	
   

  



 


iii





















 


EXHIBITS


 


	
  SCHEDULE A

  	
  Schedule of Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  Form of Loan Note

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
  Underwriting Policy

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
  Form of Loan Notice

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT D

  	
  Mortgage Loan Representations and Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E

  	
  Form of Servicer Report

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT F

  	
  Schedule of Commitments

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT G

  	
  List of Actions and Suits

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT H

  	
  Location of Records

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT I

  	
  List of Divisions, Subsidiaries and Tradenames

  	
   

  



 


iv





















 


FUNDING
AGREEMENT


 


by and among


 


FIELDSTONE
INVESTMENT FUNDING, LLC,


 


as Borrower,


 


FIELDSTONE
INVESTMENT CORPORATION,


 


as Servicer,


 


CREDIT SUISSE,
NEW YORK BRANCH,


 


as Facility Agent,


 


and


 


THE SEVERAL CONDUIT LENDERS,
COMMITTED LENDERS


 AND GROUP AGENTS PARTY HERETO FROM TIME TO
TIME


 


Dated as of July 27,
2005


 





















 


SCHEDULE A


 


SCHEDULE OF DEFINITIONS


 


“Account Control Agreement” shall mean
the Blocked Account Control Agreement, dated as of July 27, 2005, between
the Borrower, FIC, the Facility Agent, JPMorgan Chase Bank, National
Association, a subservicer and JPMorgan Chase Bank, N.A., as the financial
institution holding the account that comprises the Collection Account, as the
same may from time to time be amended, supplemented or otherwise modified and
in effect.


 


“Addition
Date” shall have the meaning specified in Section 2.8(c) of the
Funding Agreement.


 


“Additional
Mortgage Loan” shall have the meaning specified in Section 2.8(c) of
the Funding Agreement.


 


“Administration
Fee” shall have the meaning specified in the Facility Agent’s Fee Letter.


 


“Affiliate”
shall mean, with respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with,
such Person.  A Person shall be deemed to
control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of voting stock,
by contract or otherwise.


 


“Aggregate
Commitment” shall mean, at any time, the sum of the Commitments of the
Committed Lenders then in effect.


 


“Aggregate
Unpaids” shall mean, at any time, an amount equal to the sum of (i) the
aggregate accrued and unpaid Yield with respect to all Funding Periods at such
time, (ii) the Facility Outstanding Principal at such time, and (iii) all
other amounts owed (whether due or accrued) under the Transaction Documents by
the Borrower, the Originator and the Servicer to the Facility Agent, the Group
Agents and the Lenders at such time.


 


“Alpine”
shall mean Alpine Securitization Corp., a Delaware corporation, and its
permitted successors and assigns.


 





















 


“Applicable
Margin” shall have the meaning specified in the Fee Letters.


 


“Available
Collections” shall mean, on any date of determination, all Collections,
together with any investment income from funds on deposit in the Collection
Account; provided that, Available Collections shall not include any
Collections that have been set aside or removed by the Servicer solely in
payment of the Servicer’s accrued and unpaid Servicing Fee.


 


“Bankruptcy
Code” shall mean the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101
et seq.), and the rules, regulations and decisions promulgated thereunder, as
amended and in effect, and any successor thereto.


 


“Base Rate”
or “BR” for any Lending Group shall mean a rate per annum equal to the
higher of (i) the sum of the Applicable Margin and prime rate of interest
announced by the related Group Agent from time to time, changing when and as
said prime rate changes (such rate not necessarily being the lowest or best
rate charged by such Group Agent) and (ii) the sum of (a) 0.50% and (b) the
rate equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for such day for such transactions received by
such Group Agent from three (3) Federal funds brokers of recognized
standing selected by it.


 


“Benefit
Plan” shall mean any employee benefit plan as defined in Section 3(3) of
ERISA in respect of which the Borrower, the Originator or any ERISA Affiliate
of the Borrower, or the Originator is, or at any time during the immediately
preceding six (6) years was, an “employer” as defined in Section 3(5) of
ERISA.


 


“Borrower”
shall mean Fieldstone Investment Funding, LLC, a Delaware limited liability
company, and its successors and permitted assigns.


 


“Borrowing
Base Test” shall mean, on any date of determination, that Facility
Outstanding Principal on such date does not exceed the lesser of (i) 92.5%
of the aggregate Market Value of all Eligible Assets held by the Borrower on
such date and (ii) the Net Eligible Assets Balance on such date.


 


“BR Funding
Period” shall mean, with respect to a BR Loan for any Lending Group, either
(i) prior to the Termination Date, a period of up to thirty (30)


 





















 


days requested by the Borrower and agreed to by the related Lending
Group, commencing on a Business Day requested by the Borrower and agreed to by
the related Lending Group, or (ii) after the Termination Date, a period of
one (1) day.  If such BR Funding
Period would end on a day which is not a Business Day, such BR Funding Period
shall end on the next succeeding Business Day.


 


“BR Loan”
shall mean a Loan as to which Yield is calculated at the Base Rate.


 


“Business
Day” shall mean any day excluding Saturday, Sunday and any day on which
banks in The City of New York are authorized or required by law to close, and,
when used with respect to the determination of any Eurodollar Rate or any
notice with respect thereto, any such day which is also a day for trading by
and between banks in United States dollar deposits in the London interbank
market.


 


“Capitalized
Lease” of a Person shall mean any lease of property by such Person as lessee
which would be capitalized on a balance sheet of such Person prepared in
accordance with GAAP.


 


“Change of
Control” shall mean (i) any transaction or event as of a result of
which any Person or Persons own, beneficially or of record, at least 15% of the
outstanding stock of FIC, (ii) any transaction or event as a result of
which the Originator ceases to own, directly or indirectly, 100% of the
Borrower (or FIC shall cease to own, directly or indirectly, 100% of any of its
Subsidiaries) or (iii) the sale, transfer or other disposition of all or
substantially all of the Originator’s assets (excluding any such action taken
in connection with any securitization transaction in the ordinary course of business).


 


“Code”
shall mean the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.


 


“Collateral”
shall mean, on any date of determination, (i) each and every then
outstanding Mortgage Loan, (ii) all Related Security with respect thereto,
(iii) all Collections with respect thereto, (iv) all rights and
remedies of the Borrower in, to and under the Purchase Agreement, the Custodial
Agreement and the Collection Account and (v) all Proceeds of the
foregoing.


 


“Collection
Account” shall have the meaning specified in Section 2.11 of the
Funding Agreement.


 


“Collections”
shall mean, with respect to any Mortgage Loan, all cash collections and other
proceeds of such Mortgage Loan and Related Security with respect


 





















 


thereto, including, without limitation, all Deemed Collections and
proceeds of any prepayment of a Loan pursuant to Section 2.4.


 


“Commercial
Paper” shall mean the short-term promissory notes of a Conduit Lender
issued by such Conduit Lender in the commercial paper market.


 


“Commitment”
shall mean, at any time with respect to each Committed Lender, the amount set
forth opposite such Committed Lender’s name on Exhibit F to the Funding
Agreement (as such Exhibit F may be amended, supplemented or otherwise
modified and in effect).


 


“Commitment
Expiry Date” shall mean the earliest to occur of (i) the date on which
all amounts due and owing to the Facility Agent, the Group Agents and the
Lenders under the Funding Agreement and the other Transaction Documents have
been paid in full, (ii) the date on which the Aggregate Commitment has
been reduced to zero, and (iii) the Scheduled Commitment Expiry Date.


 


“Committed
Lender” shall mean any Person that becomes a party to the Funding Agreement
as a “Committed Lender” thereunder.


 


“Conduit
Assignee” shall mean any special purpose vehicle issuing indebtedness in
the commercial paper market that is administered by a Group Agent or one of its
Affiliates and is rated at least A-1 by S&P and P-1 by Moody’s.


 


“Conduit
Lender” shall mean any Person that becomes a party to the Funding Agreement
as a “Conduit Lender” thereunder.


 


“Confidential
Information” shall mean information concerning the confidentiality of the
Transaction Documents and all other non-public, confidential or proprietary
information with respect to the Borrower, the Originator, the Servicer, the
Facility Agent, the Group Agents, the Lenders and any of their Affiliates disclosed
or obtained in connection with the structuring, negotiation, execution and
performance of the transactions contemplated in the Transaction Documents.


 


“Consolidated
Adjusted Tangible Net Worth” shall mean, for the Originator, the amount
that would, in conformity with GAAP, equal the stockholder’s equity included on
the balance sheet of the Originator and its Subsidiaries, plus any preferred
stock not already included in the calculation of stockholder’s equity, plus any
Indebtedness of the Originator and its Subsidiaries that is fully subordinated,
plus other comprehensive loss arising from FASB 133, minus any intangibles or
goodwill (as defined under GAAP), minus any advances between the Originator and
its Affiliates (other than consolidated Subsidiaries), minus any loans or advances


 





















 


to officers or directors of the Originator (as reported under GAAP),
minus other comprehensive income arising from FASB 133; provided that
the non-cash effect (gain or loss) of any mark-to-market adjustments made
directly to stockholder’s equity for fluctuation of the value of financial
instruments as mandated under FASB 133 shall be excluded from the calculation
of Consolidated Adjusted Tangible Net Worth.


 


“Conversion/Continuation
Notice” shall have the meaning specified in Section 2.15 of the
Funding Agreement.


 


“Credit
Grade” shall mean, with respect to an Obligor, the risk category for such
Obligor as determined in accordance with the Underwriting Policy.


 


“CSFB”
shall have the meaning specified in the recitals to the Funding Agreement.


 


“CSFB Roles”
shall have the meaning specified in Section 10.12 of the Funding
Agreement.


 


“Custodial
Agreement” shall mean the Custodial Agreement, dated as of July 27,
2005, by and among the Custodian, the Borrower, the Originator and the Facility
Agent, as the same may from time to time be amended, supplemented or otherwise
modified and in effect.


 


“Custodial
Fee” shall mean the fee payable by the Borrower to the Custodian pursuant
to the Custodial Agreement.


 


“Custodial
Fee Percentage” shall mean the per annum percentage used to calculate the
Custodial Fee.


 


“Custodian”
shall mean Wells Fargo Bank, National Association, a national banking
association, and its permitted successors and assigns.


 


“Deemed
Collections” shall mean any Collections on any Mortgage Loan and related
Collateral deemed to have been received pursuant to Section 2.8(a) or
(b) of the Funding Agreement.


 


“Defaulted
Mortgage Loan” shall mean a Mortgage Loan (i) as to which any
scheduled payment, or part thereof, remains unpaid for sixty (60) days or more
from the original scheduled due date for such payment; (ii) as to which an
Event of Bankruptcy has occurred and is continuing with respect to the Obligor
thereof; (iii) as to which the related Obligor has failed to pay in full
the first scheduled


 





















 


payment thereunder; (iv) which has been identified by the
Borrower, the Originator or the Servicer as uncollectible; (v) which,
consistent with the Underwriting Policy and the Servicing Standards, has been
or should be written off as uncollectible; or (vi) as to which the related
Obligor is otherwise in default thereunder; provided that any Mortgage
Loan as to which any scheduled payment remains unpaid in full after the
scheduled due date therefor for more than thirty (30) days, but less than sixty
(60) days, shall not constitute a Defaulted Mortgage Loan unless such Mortgage
Loan is otherwise a Defaulted Mortgage Loan for a reason described in clauses
(i)-(v) above.


 


“Effective
Date” shall have the meaning specified in Section 4.1 of the Funding
Agreement.


 


“Eligible
Asset” shall mean, at any time, any Mortgage Loan and related property:


 


(i)                                     as to which all of the representations
and warranties contained in Exhibit D to the Funding Agreement are true
and correct;


 


(ii)                                  which is not a Defaulted Mortgage
Loan;


 


(iii)                               which (together with the Collections
and Related Security related thereto) has been the subject of a valid transfer
and assignment from the Originator to the Borrower of all of the Originator’s
right, title and interest therein;


 


(iv)                              which arises pursuant to Mortgage
Loan Documents with respect to which the applicable Originator and its
Affiliates have performed all obligations required to be performed by such
Person thereunder;


 


(v)                                 the Obligor of which is (A) a
resident of the United States, (B) not an Affiliate of any of the parties
to the Funding Agreement and (C)  not a government or a governmental
subdivision or agency;


 


(vi)                              which is an “eligible asset” as
defined in Rule 3a-7 under the Investment Company Act of 1940, as amended;


 


(vii)                           the Mortgage Note with respect to
which has been executed by the related Obligor and constitutes an “instrument”
within the meaning of Article 9 of the Relevant UCC;


 





















 


(viii)                        which is denominated and payable
only in United States dollars in the United States;


 


(ix)                                which arises under Mortgage Loan
Documents that, together with such Mortgage Loan, are in full force and effect
and constitutes the legal, valid and binding obligation of the related Obligor,
enforceable against such Obligor in accordance with its terms and is not
subject to any litigation or any dispute;


 


(x)                                   which (A) satisfies all
applicable requirements of the Underwriting Policy, (B) the Mortgage Loan
Documents with respect to which do not contain any requirement of consent by,
or notice to, the related Obligor that is effective under applicable law
(taking into account the Relevant UCC) and (C) complies with such other
reasonable criteria and requirements as the Facility Agent may from time to
time specify to the Borrower upon five (5) days’ prior written notice;


 


(xi)                                which was generated in the ordinary
course of the Originator’s business;


 


(xii)                             the assignment of which under the
Purchase Agreement by the Originator to the Borrower, and the grant of a
security interest therein by the Borrower to the Facility Agent, do not
violate, conflict with or contravene any applicable laws, rules, regulations,
orders or writs or any contractual provision;


 


(xiii)                          which (together with the related
Mortgage Loan Documents) has not been compromised or adjusted (including by the
extension of time for payment or the granting of any discounts, allowances or
credits), or amended, rewritten or otherwise modified, except in accordance
with the Underwriting Policy and the Servicing Standards; provided that
such modification is not reasonably likely to have a material adverse effect on
the collectibility of such Mortgage Loan; and


 


(xiv)                         as to which, in the case of a
Wet-Ink Mortgage Loan, (i) the Borrower, the related Originator and/or the
Servicer has not learned that such Mortgage Loan did not close and fully fund
to the order of the Obligor and (ii) upon recordation, such Mortgage Loan
will constitute a First Lien or Second Lien on the premises described therein.


 


“Eligible
Subservicer” shall mean JPMorgan Chase Bank, National Association, or such
other Person as may be approved in writing as a subservicer of


 





















 


Mortgage Loans by the Facility Agent (acting at the direction of the
Required Committed Lenders).


 


“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended,
supplemented or otherwise modified and in effect from time to time, and the rules and
regulations promulgated thereunder.


 


“ERISA
Affiliate” shall mean, with respect to any Person, (i) any corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as such Person; (ii) a
trade or business (whether or not incorporated) under common control (within
the meaning of Section 414(c) of the Code) with such Person; or (iii) a
member of the same affiliated service group (within the meaning of Section 414(n)
of the Code) as such Person, any corporation described in clause (i) above
or any trade or business described in clause (ii) above.


 


“Eurodollar
Loan” shall mean a Loan as to which Yield is calculated at the Eurodollar
Rate.


 


“Eurodollar
Funding Period” shall mean, with respect to a Eurodollar Loan for a Lending
Group, prior to the Termination Date, a period commencing on (and including)
the related Loan Date and ending on (but excluding) the last day of the Settlement
Period in which such Loan Date occurred and, subsequently, a period from the
last day of each Settlement Period to the last day of the next succeeding
Settlement Period; provided that if such Eurodollar Funding Period would
expire on a day that is not a Business Day, such Eurodollar Funding Period
shall expire on the next succeeding Business Day; provided  further,
that if such Eurodollar Funding Period would expire on (a) a day that is
not a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Eurodollar Funding Period shall expire on the
next preceding Business Day or (b) a Business Day for which there is no
numerically corresponding day in the applicable subsequent calendar month, such
Eurodollar Funding Period shall expire on the last Business Day of such month.


 


“Eurodollar
Rate” shall mean, with respect to any specified Eurodollar Funding Period
for a Lending Group, a rate which exceeds by a rate equal to the Applicable
Margin a rate per annum equal to the sum (rounded upwards, if necessary, to the
next higher 1/100 of 1%) of (A) the rate obtained by dividing (i) the
applicable LIBO Rate by (ii) a percentage equal to 100% minus the
reserve percentage used for determining the maximum reserve requirement as
specified in Regulation D of the Board of Governors of the Federal Reserve System
(including, without limitation, any margin, emergency, supplemental, special or
other reserves) that is applicable to


 





















 


the related Group Agent during such Eurodollar Funding Period in
respect of eurocurrency or eurodollar funding, lending or liabilities (or, if
more than one percentage shall be so applicable, the daily average of such
percentage for those days in such Eurodollar Funding Period during which any
such percentage shall be applicable) plus (B) the then daily net
annual assessment rate (rounded upwards, if necessary, to the nearest 1/100 of
1%) as estimated by the related Group Agent for determining the current annual
assessment payable by such Group Agent to the Federal Deposit Insurance
Corporation in respect of eurocurrency or eurodollar funding, lending or liabilities.


 


“Event of
Bankruptcy” shall mean, with respect to any Person, (i) that such
Person (a) shall generally not pay its debts as such debts become due or (b) shall
admit in writing its inability to pay its debts generally or (c) shall
make a general assignment for the benefit of creditors; (ii) any
proceeding shall be instituted by or against such Person seeking to adjudicate
it as bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official for
it or any substantial part of its property, and in the case of any proceeding
(in the case of any Person other than the Borrower), such involuntary
proceeding shall not have been stayed or dismissed for ninety (90) days or (iii) such
Person shall take any action to authorize any of the actions set forth in the
preceding clauses (i) or (ii).


 


“Event of
Default” shall mean an event described in Section 7.1 of the Funding
Agreement.


 


“Facility
Agent” shall mean CSFB, in its capacity as Facility Agent for the benefit
of the Lenders under the Transaction Documents, and its permitted successors
and assigns in such capacity.


 


“Facility
Limit” shall mean (i) prior to October 31, 2005, $500,000,000 and
(ii) on and after October 31, 2005, $800,000,000; provided
that such amount may not at any time exceed the Aggregate Commitment then in
effect; provided, further, that from and after the Termination
Date, the Facility Limit shall at all times equal the Facility Outstanding
Principal.


 


“Facility
Outstanding Principal” shall mean, at any time, the aggregate outstanding
principal balance of all Loans made by the Lenders to the Borrower.


 


“Fatal
Exception” shall have the meaning specified in the Custodial Agreement.


 





















 


“Fatal
Exception Report” shall mean, with respect to Mortgage Loans that are (or
are intended to be) included in the Collateral, a duly completed schedule delivered
by the Custodian to the Facility Agent and the Group Agents prior to a Loan
Date or Addition Date listing all Fatal Exceptions with respect to such Mortgage
Loans (as such term is defined in the Custodial Agreement).


 


“Fee
Letters” shall mean the letter agreements between the Borrower and the
Group Agents for each Lending Group, with respect to the fees to be paid by the
Borrower under the Transaction Documents, as amended, supplemented or otherwise
modified and in effect from time to time.


 


“FIC”
shall mean Fieldstone Investment Corporation, a Maryland corporation, and its
permitted successors and assigns.


 


“FICO”
shall mean Fair Isaac & Co., and its permitted successors and assigns.


 


“FICO Score”
shall mean, with respect to an Obligor, a rating level assigned by FICO to such
Obligor’s creditworthiness.


 


“Fixed Rate
Mortgage Loan” shall mean a Mortgage Loan that bears interest at a single
fixed rate for its entire term.


 


“Floating
Rate Mortgage Loan” shall mean a Mortgage Loan that is not a Fixed Rate
Mortgage Loan.


 


“Full
Documentation” shall mean, with respect to a Mortgage Loan, that the
related Obligor has provided the highest level of information to the Originator
about its assets, liablities, income, credit history and employment history, as
determined for “full documentation” in accordance with the Underwriting Policy.


 


“Funding
Agreement” shall mean the Funding Agreement, dated as of July 27,
2005, by and among the Borrower, the Servicer, the Facility Agent and the
Lenders, as such agreement may be amended, supplemented or otherwise modified
and in effect from time to time.


 


“Funding
Period” shall mean a BR Funding Period or a Eurodollar Funding Period.


 


“GAAP”
shall mean generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements


 


 





















 


of the Financial Accounting Standards Board or in such other statements
by such accounting profession as in effect from time to time.


 


“Group
Agent” shall mean each of CSFB and any other Person that becomes a party to
the Funding Agreement as a “Group Agent” thereunder.


 


“Group
Facility Limit” shall mean, in the case of the Lending Group related to
CSFB and Alpine, $800,000,000 and, in the case of any other Lending Group, such
amount as is specified in the related assumption agreement or other agreement
pursuant to which the Persons in such Lending Group become parties to the
Funding Agreement and assume all of the rights and obligations, as applicable,
of “Committed Lenders”, “Conduit Lenders” and “Group Agents” thereunder.


 


“Group
Facility Outstanding Principal” shall mean, for each Lending Group, the
portion of the Facility Outstanding Principal allocated to such Lending Group.


 


“Indebtedness”
shall mean, with respect to any Person, such Person’s (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price
of property other than accounts payable arising in the ordinary course of such
Person’s business on terms customary in the trade, (iii) obligations,
whether or not assumed, secured by liens or payable out of the proceeds or production
from property now or hereafter owned or acquired by such Person, (iv) obligations
that are evidenced by notes, acceptances, or other instruments, (v) obligations
under repurchase agreements, sale/buy-back agreements or like arrangements, (vi) obligations
(contingent or otherwise) of such Person in respect of letters of credit for
the account of such Person and (vii) Capitalized Lease obligations.


 


“Indemnified
Amounts” shall have the meaning specified in Section 8.1 of the
Funding Agreement.


 


“Indemnified
Parties” shall have the meaning specified in Section 8.1 of the
Funding Agreement.


 


“Law”
shall mean any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
Official Body.


 


“Lender”
shall mean, at any time, any of the Conduit Lenders and the Committed Lenders.


 





















 


“Lending
Group” shall mean, at any time, a group consisting of a Conduit Lender,
such Conduit Lender’s related Committed Lenders, and such Conduit Lender’s
Group Agent.


 


“LIBO Rate”
shall mean, on any date of determination for any Eurodollar Funding Period for
any Lending Group, the rate of interest (calculated on a per annum basis) equal
to the overnight British Bankers Association Rate as reported on the display
designated as “BBAM” “Page DG8 4A” on Bloomberg (or such other display as
may replace “BBAM” “Page DG8 4A” on Bloomberg) on such date of determination,
and if such rate shall not be so quoted, the rate per annum at which the
related Group Agent is offered Dollar deposits at or about 11:00 A.M.
(London time), on such day, by prime banks in the interbank eurodollar market
where the eurodollar and foreign currency exchange operations in respect of its
loans are then being conducted for delivery on such day for an overnight
period, in either case in an amount approximately equal to the principal
balance of the Loan to which the Eurodollar Rate is to apply and for a period
of time approximately equal to the applicable Eurodollar Funding Period.  The “date of determination” for any
Eurodollar Funding Period shall be the second (2nd) Business Day
prior to the commencement of such Eurodollar Funding Period.


 


“Lien”
shall mean a lien, security interest, mortgage, charge, pledge or encumbrance,
or other right or claim in, of or on any Person’s rights, assets or properties
in favor of any other Person (including any financing statement or any similar
instrument under the Relevant UCC filed against such Person’s rights, assets or
properties); provided that a Lien shall not include Permitted Liens.


 


“Loan”
shall have the meaning specified in Section 2.1 of the Funding Agreement.


 


“Loan
Conditions” shall mean the conditions precedent to each Loan specified in Section 4.2
of the Funding Agreement.


 


“Loan Date”
shall mean, with respect to each Loan, the Business Day on which such Loan is
made by the Lenders.


 


“Loan Note”
shall mean the Loan Note in substantially the form of Exhibit A to the
Funding Agreement, dated as of July 27, 2005, made by the Borrower, as the
same may from time to time be amended, supplemented or otherwise modified with
the consent of the Facility Agent and the Group Agents.


 


“Loan
Notice” shall have the meaning specified in Section 2.2(a) of the
Funding Agreement.


 





















 


“Market
Value” shall mean, with respect to any Mortgage Loan as of any date of
determination, the whole-loan fair market value of such Mortgage Loan on such
date as determined by the Facility Agent in its sole discretion; provided
that (i) the Market Value of any Mortgage Loan included in the Collateral
for more than one (1) year after its related Loan Date will be zero and (ii) the
Market Value of any Wet-Ink Mortgage Loan with respect to which a Trust Receipt
has not been issued by the Custodian to the Facility Agent and the Group Agents
on and after the fifth (5th) day following the related Loan Date or
Addition Date, as applicable, will be zero.


 


“Material
Adverse Effect” shall mean (i) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Originator, the Servicer or the
Borrower, taken as a whole, (ii) a material impairment of the ability of
any of the Borrower, the Servicer or the Originator to perform its obligations
under the Transaction Documents to which it is a party and to avoid an Event of
Default, (iii) a material adverse effect upon the collectibility of the Collateral,
the interests of the Facility Agent, the Group Agents or the Lenders or upon
the legality, validity, binding effect or enforceability of any Transaction
Document against the Originator, the Servicer or the Borrower.


 


“Moody’s”
shall mean Moody’s Investors Service, Inc., and its successors and
assigns.


 


“Mortgage”
shall mean each mortgage, assignment of rents, security agreement and fixture
filing, or deed of trust, assignment of rents, security agreement and fixture
filing, deed to secured 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.


 


“Mortgage
File” shall mean, with respect to a Mortgage Loan, the documents and
instruments relating to such Mortgage Loan as set forth on Annex A to the
Custodial Agreement.


 


“Mortgage
Loan” shall mean a closed-end, fixed or floating-rate, first lien or second
lien mortgage loan on a one-to-four family residential mortgage evidenced by a
promissory note and secured by a Mortgage, which mortgage loan has closed and
been funded by the related Originator, satisfies the requirements of the
Underwriting Policy and with respect to which the Custodian has been instructed
to hold such mortgage loan pursuant to and in accordance with the Custodial
Agreement.  A Mortgage Loan shall include
an Additional Mortgage Loan and a Substituted Mortgage Loan.


 





















 


“Mortgage
Loan Documents” shall mean, with respect to a Mortgage Loan, the documents
comprising the Mortgage File for such Mortgage Loan.


 


“Mortgage
Loan Release Amount” shall mean, with respect to any Mortgage Loan that is
the subject of Section 2.8 of the Funding Agreement, an amount selected by
the Borrower that is less than or equal to the Outstanding Principal Balance of
such Mortgage Loan and with respect to which, after giving effect to such
release from the Collateral, the Borrowing Base Test would be satisfied.


 


“Mortgage
Loan Schedule” shall mean, with respect to any Loan, a mortgage loan schedule either
in the form attached to the related Loan Notice in Exhibit C to the
Funding Agreement or a computer tape or other electronic medium generated by
the Servicer and delivered to the Facility Agent, the Group Agents and the
Custodian, which list provides information relating to the Mortgage Loans related
to such Loan in a format acceptable to the Facility Agent and the Group Agents.


 


“Mortgage
Note” shall mean the original executed promissory note or other evidence of
indebtedness of an Obligor with respect to a Mortgage Loan.


 


“Mortgaged
Property” shall mean the real property (including all improvements,
buildings, fixtures, building equipment and personal property thereon and all
additions, alterations and replacements made at any time with respect to the
foregoing) and all other property and collateral securing repayment of the
indebtedness evidenced by a Mortgage Loan and Mortgage Note.


 


“Multiemployer
Plan” shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA which is or was at any time during the current year or the immediately
preceding five years contributed to by the Borrower, the Originator or any
ERISA Affiliate of the Borrower or the Originator on behalf of its employees.


 


“Net
Eligible Assets Balance” shall mean, at any time, the aggregate Outstanding
Principal Balance of all Eligible Assets included in the Collateral at such
time.


 


“Obligor”
shall mean a Person obligated to make payments under a Mortgage Loan or
Mortgage Note (including, but not limited to, any Person who has assumed or
guaranteed the obligations of the obligor or mortgagor thereunder).


 


“Official
Body” shall mean any government or political subdivision or any agency,
authority, bureau, central bank, commission, department or instrumentality


 





















 


of any such government or political subdivision, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.


 


“Originator”
shall mean FIC.


 


“Outstanding
Principal Balance” shall mean, with respect to any Mortgage Loan at any
time, the then outstanding principal amount thereof.


 


“Permitted
Exception” shall have the meaning specified in the Custodial Agreement.


 


“Permitted
Exception Report” shall mean, with respect to Mortgage Loans that are (or
are intended to be) included in the Collateral, a duly completed schedule delivered
by the Custodian to the Facility Agent and the Group Agents prior to a Loan
Date or Addition Date listing all Permitted Exceptions with respect to such Mortgage
Loans (as such term is defined in the Custodial Agreement).


 


“Permitted
Investments” shall mean (i)  any investment described as an “Eligible
Investment” in the Subservicing Agreement and (ii) any other investments
agreed upon between the Borrower and the Facility Agent.


 


“Permitted
Liens” shall mean (i) liens of current real property taxes and
assessments not yet due and payable, (ii) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record
as of the date of recording being acceptable to mortgage lending institutions
generally and specifically referred to in the lender’s title insurance policy
delivered to the Originator and which do not adversely affect the Appraised
Value of the Mortgaged Property, (iii) in the case of a Mortgaged Property
that it a condominium or an individual unit in a planned unit development,
liens for common charges permitted by statute, (iv) other matters to which
like properties are commonly subject which do not, individually or in the
aggregate, materially interfere with the benefits of the security intended to
be provided by the related Mortgage or the use, enjoyment, value or marketability
of the related Mortgaged Property.


 


“Person”
shall mean any corporation, limited liability company, natural person, firm,
joint venture, partnership, trust, unincorporated organization, enterprise,
government or any department or agency of any government.


 


“Pool
Criteria” shall mean at any time with respect to the Mortgage Loans and
related property that are included in the Collateral at such time:


 





















 


(a)                                  the
Weighted Average Mortgage Interest Rate of all Fixed Rate Mortgage Loans is
greater than or equal to 7.5%;


 


(b)                                 the
Weighted Average Mortgage Interest Rate of all Floating Rate Mortgage Loans is
greater than or equal to 7%;


 


(c)                                  the
Weighted Average FICO Score of all Fixed Rate Mortgage Loans is greater than or
equal to 675;


 


(d)                                 the
Weighted Average FICO Score of all Floating Rate Mortgage Loans is greater than
or equal to 630;


 


(e)                                  the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans having FICO
Scores that are less than or equal to 500 is less than or equal to 1% of the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans;


 


(f)                                    the
Outstanding Principal Balance of all Floating Rate Mortgage Loans having FICO
Scores that are less than or equal to 500 is less than or equal to 0.50% of the
Outstanding Principal Balance of all Floating Rate Mortgage Loans;


 


(g)                                 the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans having FICO
Scores that are less than or equal to 550 is less than or equal to 3% of the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans;


 


(h)                                 the
Outstanding Principal Balance of all Floating Rate Mortgage Loans having FICO
Scores that are less than or equal to 550 is less than or equal to 15% of the
Outstanding Principal Balance of all Floating Rate Mortgage Loans;


 


(i)                                     the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans having FICO
Scores that are less than or equal to 600 is less than or equal to 10% of the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans;


 


(j)                                     the
Outstanding Principal Balance of all Floating Rate Mortgage Loans having FICO
Scores that are less than or equal to 600 is less than or equal to 30% of the
Outstanding Principal Balance of all Floating Rate Mortgage Loans;


 


(k)                                  the
Weighted Average LTV of all Fixed Rate Mortgage Loans is less than 87%;


 





















 


(l)                                     the
Weighted Average LTV of all Floating Rate Mortgage Loans is less than 85%;


 


(m)                               the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans having an LTV
that is greater than or equal to 95% but less than or equal to 100% is less than
40% of the Outstanding Principal Balance of all Fixed Rate Mortgage Loans;


 


(n)                                 the
Outstanding Principal Balance of all Floating Rate Mortgage Loans having an LTV
that is greater than or equal to 95% but less than or equal to 100% is less
than 15% of the Outstanding Principal Balance of all Floating Rate Mortgage
Loans;


 


(o)                                 the
Weighted Average CLTV of all Fixed Rate Mortgage Loans is less than 95%;


 


(p)                                 the
Weighted Average CLTV of all Floating Rate Mortgage Loans is less than 95%;


 


(q)                                 the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans having a CLTV
that is greater than or equal to 95% but less than or equal to 100% is less
than 40% of the Outstanding Principal Balance of all Fixed Rate Mortgage Loans;


 


(r)                                    the
Outstanding Principal Balance of all Floating Rate Mortgage Loans having a CLTV
that is greater than or equal to 95% but less than or equal to 100% is less
than 60% of the Outstanding Principal Balance of all Floating Rate Mortgage
Loans;


 


(s)                                  the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans having an
original Outstanding Principal Balance that is less than or equal to $50,000 is
less than 20% of the Outstanding Principal Balance of all Fixed Rate Mortgage
Loans;


 


(t)                                    the
Outstanding Principal Balance of all Floating Rate Mortgage Loans having an
original Outstanding Principal Balance that is less than or equal to $50,000 is
less than 5% of the Outstanding Principal Balance of all Floating Rate Mortgage
Loans;


 


(u)                                 the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans having an
original Outstanding Principal Balance that is less than or equal to


 





















 


$100,000 is less than 45% of the Outstanding Principal Balance of all
Fixed Rate Mortgage Loans;


 


(v)                                 the
Outstanding Principal Balance of all Floating Rate Mortgage Loans having an
original Outstanding Principal Balance that is less than or equal to $100,000
is less than 10% of the Outstanding Principal Balance of all Floating Rate Mortgage
Loans;


 


(w)                               the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans having a Credit
Grade of “A” is greater than or equal to 95% of the Outstanding Principal
Balance of all Fixed Rate Mortgage Loans;


 


(x)                                   the
Outstanding Principal Balance of all Floating Rate Mortgage Loans having a
Credit Grade of “A” is greater than or equal to 90% of the Outstanding
Principal Balance of all Floating Rate Mortgage Loans;


 


(y)                                 the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans having a Credit
Grade of “D” is less than or equal to 0.50% of the Outstanding Principal
Balance of all Fixed Rate Mortgage Loans;


 


(z)                                   the
Outstanding Principal Balance of all Floating Rate Mortgage Loans having a
Credit Grade of “D” is less than or equal to 1% of the Outstanding Principal
Balance of all Floating Rate Mortgage Loans;


 


(aa)                            the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans with respect to
which the related Obligors have provided Full Documentation is greater than 55%
of the Outstanding Principal Balance of all Fixed Rate Mortgage Loans;


 


(bb)                          the
Outstanding Principal Balance of all Floating Rate Mortgage Loans with respect
to which the related Obligors have provided Full Documentation is greater than
40% of the Outstanding Principal Balance of all Floating Rate Mortgage Loans;


 


(cc)                            the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans with respect to
which the related Obligors are required to pay interest only on scheduled
payment dates for a particular period of time (and which period of time has not
ended) is less than 10% of the Outstanding Principal Balance of all Fixed Rate
Mortgage Loans;


 


(dd)                          the
Outstanding Principal Balance of all Floating Rate Mortgage Loans with respect
to which the related Obligors are required to pay interest


 





















 


only on scheduled payment dates for a particular period of time (and
which period of time has not ended) is less than 75% of the Outstanding
Principal Balance of all Floating Rate Mortgage Loans;


 


(ee)                            the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans with respect to
which the related Obligor occupies the related Mortgaged Property is greater
than or equal to 93% of the Outstanding Principal Balance of all Fixed Rate
Mortgage Loans;


 


(ff)                                the
Outstanding Principal Balance of all Floating Rate Mortgage Loans with respect
to which the related Obligor occupies the related Mortgaged Property is greater
than or equal to 90% of the Outstanding Principal Balance of all Floating Rate
Mortgage Loans;


 


(gg)                          the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans with respect to
which the related Mortgaged Property is designated for single-family use is
greater than or equal to 65% of the Outstanding Principal Balance of all Fixed
Rate Mortgage Loans;


 


(hh)                          the
Outstanding Principal Balance of all Floating Rate Mortgage Loans with respect
to which the related Mortgaged Property is designated for single-family use is
greater than or equal to 65% of the Outstanding Principal Balance of all
Floating Rate Mortgage Loans;


 


(ii)                                  the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans with respect to
which the related Mortgaged Property is designated for other than single-family
use is less than or equal to 35% of the Outstanding Principal Balance of all
Fixed Rate Mortgage Loans;


 


(jj)                                  the
Outstanding Principal Balance of all Floating Rate Mortgage Loans with respect
to which the related Mortgaged Property is designated for other than
single-family use is less than or equal to 35% of the Outstanding Principal
Balance of all Fixed Rate Mortgage Loans;


 


(kk)                            the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans that are also
Second Lien Mortgage Loans is less than or equal to 40% of the Outstanding
Principal Balance of all Fixed Rate Mortgage Loans;


 


(ll)                                  there
are no Floating Rate Mortgage Loans that are also Second Lien Mortgage Loans;


 





















 


(mm)                      the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans with respect to
which the related Mortgaged Property is located in the State of California is
less than or equal to 42% of the Outstanding Principal Balance of all Fixed
Rate Mortgage Loans;


 


(nn)                          the
Outstanding Principal Balance of all Floating Rate Mortgage Loans with respect
to which the related Mortgaged Property is located in the State of California
is less than or equal to 55% of the Outstanding Principal Balance of all Floating
Rate Mortgage Loans;


 


(oo)                          the
Outstanding Principal Balance of all Fixed Rate Mortgage Loans with respect to
which the related Mortgaged Property is located in a particular state of the
United States or the District of Columbia (other than the State of California)
is less than or equal to 12% of the Outstanding Principal Balance of all Fixed
Rate Mortgage Loans; and


 


(pp)                          the
Outstanding Principal Balance of all Floating Rate Mortgage Loans with respect
to which the related Mortgaged Property is located in a particular state of the
United States or the District of Columbia (other than the State of California)
is less than or equal to 15% of the Outstanding Principal Balance of all
Floating Rate Mortgage Loans.


 


“Potential
Event of Default” shall mean an event which but for the lapse of time or
the giving of notice, or both, would constitute an Event of Default.


 


“Prepayment”
shall mean a prepayment by the Borrower of any portion of the Facility
Outstanding Principal in accordance with Section 2.4(b) of the
Funding Agreement.


 


“Prepayment
Conditions” shall mean, with respect to any Collateral that is to be
released from the Lien of the Facility Agent on any Prepayment Date, (i) all
of the conditions to Loans specified in Sections 4.2(a)-(g), (i) and (j)
shall be satisfied in full, as if references to “Loan” therein were
“Prepayment”, and references to “Loan Notice” were “Prepayment Notice”, (ii) the
Borrower shall have delivered a duly completed Prepayment Notice in accordance
with Section 2.4(b) and (iii) the Collateral subject to such release
is otherwise reasonably acceptable to the Facility Agent and the Group Agents.


 


“Prepayment
Date” shall have the meaning specified in Section 2.4(b) of the
Funding Agreement.


 





















 


“Prepayment
Notice” shall have the meaning specified in Section 2.4(b) of the
Funding Agreement.


 


“Proceeds”
shall mean “proceeds” as defined in the Relevant UCC.


 


“Pro Rata
Share” shall mean, for any Lending Group, the percentage equivalent of a
fraction, the numerator of which is the related Group Facility Limit, and the
denominator of which is the Facility Limit.


 


“Purchase
Agreement” shall mean the FIC Mortgage Loan Sale and Purchase Agreement,
dated as of July 27, 2005, between FIC, as seller, and the Borrower, as
purchaser, as the same may from time to time be amended, supplemented or
otherwise modified and in effect.


 


“Purchase
Termination Date” shall have the meaning specified in each Purchase
Agreement.


 


“Rating
Agencies” shall mean Standard & Poor’s and Moody’s.


 


“Recipient”
shall have the meaning specified in Section 2.13 of the Funding Agreement.


 


“Related
Security” shall mean, with respect to any Mortgage Loan, all rights of the
Borrower in, to and under the following:


 


(a)  all
Mortgage Loan Documents related to such Mortgage Loan, including without
limitation the Mortgage Note and all other promissory notes or instruments, all
Servicing Records, all Mortgaged Property and any other collateral pledged or
otherwise relating to such Mortgage Loan, together with all files, material
documents, instruments, surveys, certificates, correspondence, appraisals,
computer records, computer storage media, Mortgage Loan accounting records and
other books and records relating thereto, and all rights under the provisions
of, and rights to access, use and possess, the Mortgage Loan Documents;


 


(b)  all
mortgage guaranties and insurance (issued by governmental agencies or
otherwise) and any mortgage insurance certificate or other document evidencing
such mortgage guaranties or insurance relating to such Mortgage Loan and all
claims and payments thereunder;


 


(c)  all
other insurance policies and insurance proceeds relating to such Mortgage Loan
or related Mortgaged Property;


 





















 


(d)  all
interest rate protection agreements relating to any or all of the foregoing;


 


(e)  all
purchase or take-out commitments relating to or constituting any or all of the
foregoing;


 


(f)  all
purchase agreements or other agreements or contracts relating to or
constituting any or all of the foregoing;


 


(g)  all
“accounts”, “chattel paper”, “commercial tort claims”, “deposit accounts”,
“documents,” “equipment”, “general intangibles”, “goods”, “instruments”,
“inventory”, “investment property”, “letter of credit rights”, “securities’
accounts” and “security interest”, as each of those terms is defined in the
Relevant UCC and all cash and cash equivalents and all products and proceeds
relating to or constituting any or all of the foregoing;


 


(h)  all
interests in real property collateralizing such Mortgage Loan;


 


(i)  any
and all replacements, substitutions, distributions on or proceeds of any or all
of the foregoing; and


 


(k)  all Proceeds of any of the foregoing.


 


“Relevant
UCC” shall mean, with respect to any relevant state, the Uniform Commercial
Code as from time to time in effect in such state.


 


“Renewal
Conditions” shall mean, with respect to the extension of any Scheduled
Commitment Expiry Date by a Committed Lender pursuant to Section 2.6 of
the Funding Agreement, (i) the negotiation, execution and delivery of
legal documentation in form and substance acceptable to such Committed Lender, (ii) in
the judgment of such Committed Lender, the satisfactory completion of any
investigation or due diligence regarding the Collateral or the Borrower, the
Originator or the Servicer requested by such Committed Lender (including the
delivery of the agreed upon procedures report relating to such Scheduled Commitment
Expiry Date described in Section 5.1(a)(i) of the Funding Agreement),
(iii) an Event of Default or Potential Event of Default has not occurred, (iv) all
of the representations and warranties of the Borrower, the Originator and the
Servicer under the Transaction Documents are true and correct on the Scheduled
Commitment Expiry Date then in effect (unless a representation and warranty
speaks to an earlier date, in which case such representation and warranty shall
be true and correct as of such earlier date), (v) the Facility Agent, the
related Group Agent, the related Conduit Lender and such Committed Lender have
not become aware of any information or any other matter relating


 





















 


to the Borrower, the Originator or the Servicer, or relating to the
performance of all or a portion of the Collateral, which is inconsistent with
any information or other matters previously disclosed by the Borrower, the
Originator or the Servicer and (vi) the absence of any event or condition
prior to the Scheduled Commitment Expiry Date then in effect that, in the sole
discretion of such Committed Lender, could have a Material Adverse Effect or a
material adverse effect on any portion of the Collateral or on the business,
operations, property, condition (financial or otherwise) or prospects of such
Committed Lender, its related Conduit Lender, its related Group Agent, the
Borrower, the Originator, the Servicer and/or their respective Affiliates.


 


“Required
Committed Lenders” shall mean, at any time, Committed Lenders having
Commitments at least equal to 66 2/3% of the Aggregate Commitment, or, if the
Commitments have been terminated, having at least 66 2/3% of the Facility Outstanding
Principal.


 


“Scheduled
Commitment Expiry Date” shall mean July 26, 2006, as such date may be
extended pursuant to Section 2.6 of the Funding Agreement.


 


“Servicer”
shall mean, at any time, the Person then authorized pursuant to Section 6.1
of the Funding Agreement to service, administer and collect the Mortgage Loans
and related Collateral.


 


“Servicer
Advance” shall have the meaning specified in Section 2.5(b) of
the Funding Agreement.


 


“Servicer
Report” shall mean a report in substantially the form attached to the
Funding Agreement as Exhibit E or in such other form as is mutually agreed
to by the Borrower, the Servicer, the Facility Agent and the Group Agents,
delivered by the Servicer to the Facility Agent and the Group Agents in
accordance with Section 2.10 of the Funding Agreement.


 


“Servicing
Fee” shall mean the fees payable by the Lenders to the Servicer on each
Settlement Date in an amount equal to the product of the Servicing Fee
Percentage multiplied by the daily average Outstanding Principal Balance
of all Mortgage Loans included in the Collateral during the immediately
preceding Settlement Period.  Such fee
shall accrue from the Effective Date to the later of the Termination Date or
the date on which all Aggregate Unpaids are permanently reduced to zero.


 


“Servicing
Fee Percentage” shall mean 0.50% per annum.


 





















 


“Servicing
Records” shall mean, with respect to a Mortgage Loan, all servicing
records, including but not limited to any and all servicing agreements, files, documents,
records, data bases, licenses, software, computer tapes, copies of computer
tapes, proof of insurance coverage, insurance policies, appraisals, other
closing documentation, payment history records, and any other records or
electronic media relating to or evidencing the servicing and collection of such
Mortgage Loan.


 


“Servicing
Standards” shall mean, with respect to any Mortgage Loan, the servicing and
administration of such Mortgage Loan for which the Servicer or its agent is
responsible hereunder (a) in the same manner in which, and with the same
care, skill, prudence and diligence with which, the Servicer or such agent, as
applicable, generally services and administers similar mortgage loans with
similar obligors (i) for other third-parties, giving due consideration to
customary and usual standards of practice of prudent institutional residential
mortgage lenders servicing their own loans or (ii) held in the Servicer’s
or its agent’s own portfolio, as applicable, whichever standard is higher, (b) with
a view to the maximization of the recovery on such Mortgage Loans on a net
present value basis and the best interests of the Originator and any Person to
which such Mortgage Loan may be transferred by the Originator or any lender
providing financing to such Person, (c) without regard to: (i) any
relationship that the Servicer or its agent or any Affiliate thereof may have
with the related Obligor or any other party to the transaction; (ii) the
right of the Servicer or its agent to receive compensation or other fees for
its services rendered pursuant to this Agreement; (iii) the obligation of
the Servicer or its agent to make Servicer Advances; (iv) the ownership,
servicing or management by the Servicer or its agent or any Affiliate thereof
for others of any other mortgage loans or mortgaged properties; and (v) any
debt the Servicer or any Affiliate of the Servicer or its agent has extended to
the related Obligor or any Affiliate of such Obligor and (d) in accordance
with applicable state, local and federal laws, rules and regulations.


 


“Settlement
Date” shall mean the fifth (5th) Business Day of each calendar
month.


 


“Settlement
Period” shall mean a calendar month.


 


“Standard &
Poor’s” or “S&P” shall mean Standard & Poor’s Ratings
Services, a division of The McGraw-Hill Companies, Inc., and its
successors and assigns.


 


“Subservicing
Agreement” shall mean the Servicing Agreement, dated as of July 27,
2005, between the Borrower, as owner, FIC, as servicer and JPMorgan Chase Bank,
National Association, as subservicer, as the same may from time to time be
amended, supplemented or otherwise modified and in effect.


 





















 


“Subsidiary”
of a Person shall mean any Person more than 50% of the outstanding voting
interests of which shall at any time be owned or controlled, directly or
indirectly, by such Person or by one or more Subsidiaries of such Person or any
similar business organization which is so owned or controlled.


 


“Substituted
Mortgage Loan” shall have the meaning specified in Section 2.8(c) of
the Funding Agreement.


 


“Taxes”
shall have the meaning specified in Section 8.3 of the Funding Agreement.


 


“Termination
Date” shall mean the earliest of (i) the Business Day designated by
the Borrower to the Facility Agent and the Group Agents as the Termination Date
at any time following thirty (30) days’ written notice to the Facility Agent
and the Group Agents, (ii) the day upon which a Termination Date is
declared or automatically occurs relating to an Event of Default pursuant to Section 7.2(a) of
the Funding Agreement, (iii) the Commitment Expiry Date or (iv) the
Purchase Termination Date.


 


“Third-Party
Confidentiality Agreement” shall have the meaning specified in Section 10.7(c) of
the Funding Agreement.


 


“Transaction
Costs” shall have the meaning specified in Section 8.4(a) of the
Funding Agreement.


 


“Transaction
Documents” shall mean, collectively, the Funding Agreement, the Purchase
Agreement, the Custodial Agreement, the Account Control Agreement, the Fee
Letters, the Subservicing Agreement and all of the other instruments, reports,
agreements, certificates and other documents executed and delivered by the
Originator, the Servicer or the Borrower in connection with any of the
foregoing, in each case, as the same may be amended, restated, supplemented or
otherwise modified from time to time.


 


“Trust
Receipt” shall mean a duly completed trust receipt issued by the Custodian
to the Facility Agent and the Group Agents in accordance with the Custodial
Agreement in the form attached to the Custodial Agreement as Exhibit 1.


 


“Underwriting
Policy” shall mean the standards, procedures and guidelines of the
Originator for underwriting and acquiring Mortgage Loans, which are set forth
in the written policies and procedures of the Originator, a copy of which is
attached to the Funding Agreement as Exhibit B, and such other guidelines
as are


 





















 


identified to and approved in writing by the Facility Agent, as
modified and in effect from time to time in compliance with the Funding Agreement.


 


“U.S.”
or “United States” shall mean the United States of America and its
territories.


 


“Weighted
Average CLTV” shall mean, at any time with respect to a group of Mortgage
Loans that are included in the Collateral, the weighted average of all of the
CLTVs for such Mortgage Loans, weighted on the basis of the original
Outstanding Principal Balance of such Mortgage Loans.


 


“Weighted
Average FICO Score” shall mean, at any time with respect to a group of
Mortgage Loans that are included in the Collateral, the weighted average of all
FICO Scores for such Mortgage Loans, weighted on the basis of the original Outstanding
Principal Balance of such Mortgage Loans.


 


“Weighted
Average LTV” shall mean, at any time with respect to a group of Mortgage
Loans that are included in the Collateral, the weighted average of all of the
LTVs for such Mortgage Loans, weighted on the basis of the original Outstanding
Principal Balance of such Mortgage Loans.


 


“Weighted
Average Mortgage Interest Rate” shall mean, at any time with respect to a
group of Mortgage Loans that are included in the Collateral, the weighted
average of all Mortgage Interest Rates for such Mortgage Loans, weighted on the
basis of the current Outstanding Principal Balance of such Mortgage Loans.


 


“Wet-Ink
Mortgage Information” shall mean, with respect to any Wet-Ink Mortgage
Loan, all of the information required to be delivered by or on behalf of the
Borrower to the Custodian prior to a Loan Date or Addition Date pursuant to the
Custodial Agreement.


 


“Wet-Ink
Mortgage Loan” shall mean a “closed” Mortgage Loan that is fully funded and
for which all funds have been disbursed that does not contain an original
Mortgage Note and all of the other required Mortgage Loan Documents in the
related Mortgage File and with respect to which a Trust Receipt including such
Mortgage Loan has not been delivered by the Custodian to the Facility Agent and
the Group Agents in accordance with the Custodial Agreement.  A Wet-Ink Mortgage Loan shall be considered a
Wet-Ink Mortgage Loan until the later of five (5) days from the related
Loan Date and the date on which the Custodian has issued a Trust Receipt with
respect to such Mortgage Loan.


 





















 


“Wet-Ink
Mortgage Loan Trust Receipt” shall mean a duly completed trust receipt
delivered by the Custodian to the Facility Agent and the Group Agents prior to
the related Loan Date or Addition Date, a form of which is attached to the
Custodial Agreement as Exhibit 14.


 


“Yield”
shall mean, with respect to any Funding Period:


 


	
  (YR x FOP x AD)

  
	
  YD

  



 


where:


 


	
  YR

  	
   

  	
  =

  	
   

  	
  the Yield Rate applicable to such Funding
  Period;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FOP

  	
   

  	
  =

  	
   

  	
  the portion of the Facility Outstanding
  Principal allocated to such Funding Period;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AD

  	
   

  	
  =

  	
   

  	
  the actual number of days during such
  Funding Period; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  YD

  	
   

  	
  =

  	
   

  	
  either (i) if the Yield Rate is the
  Eurodollar Rate, 360 or (ii) if the Yield Rate is the Base Rate, 365 or
  366, as applicable;

  



 


provided, however,
that no provision of the Transaction Documents shall require the payment or
permit the collection of Yield in excess of the maximum amount permitted by applicable
law; and provided, further, that Yield shall not be considered
paid by any distribution if, at any time, such distribution is rescinded or
must be returned for any reason.


 


“Yield Rate”
shall mean, with respect to any Loan, either the Eurodollar Rate or the Base
Rate.


 


“Yield Test”
shall mean, for any Settlement Period, the weighted average coupon of all
Mortgage Loans included in the Collateral during such Settlement Period
(weighted based on the aggregate Outstanding Principal Balance of each Mortgage
Loan) minus (i) the Servicing Fee Percentage, (ii) the
Custodial Fee Percentage and (iii) the weighted average interest rate on
all Loans outstanding during such Settlement Period (weighted based on the
aggregate outstanding principal balance of each Loan), is greater than or equal
to 1.5%.


 





















 


EXHIBIT A


 


FORM OF
LOAN NOTE


 


	
  $800,000,000

  July 27, 2005

  	
  
New York, New York

  



 


FOR VALUE
RECEIVED, FIELDSTONE INVESTMENT FUNDING, LLC, a Delaware limited liability
company (the Borrower”), hereby promises to pay to the order of CREDIT SUISSE,
NEW YORK BRANCH, as facility agent (in such capacity, the “Facility Agent”) for
the benefit of the several lenders and group agents party to the Funding
Agreement (defined below), at the principal office of the Facility Agent in New
York, New York, in lawful money of the United States of America, and in
immediately available funds, the principal sum of Eight Hundred Million Dollars
($800,000,000) (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by the Lenders to the Borrower under the
Funding Agreement), on the dates and in the principal amounts provided in the
Funding Agreement, and to pay interest on the unpaid principal amount of each
such Loan and all other Aggregate Unpaids, at such office, in like money and
funds, for the period commencing on the date of such Loan until such Loan shall
be paid in full, at the rates per annum and on the dates provided in the
Funding Agreement.


 


The date,
amount and interest rate of each Loan made by the Lenders to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Facility Agent on its books and, prior to any transfer of this Loan Note,
endorsed by the Facility Agent on the schedule attached hereto or any
continuation thereof; provided that the failure of the Facility Agent to
make any such recordation or endorsement shall not affect the obligations of
the Borrower to make a payment when due of any amount owing under the Funding
Agreement or hereunder.


 


This Loan Note
is the Loan Note referred to in the Funding Agreement dated as of July 27,
2005 (as amended, supplemented or otherwise modified and in effect from time to
time, the “Funding Agreement”) between the Borrower, the Facility Agent,
Fieldstone Investment Corporation, as servicer and the several Lenders and
Group Agents party thereto from time to time. Capitalized terms used but not
defined in this Loan Note have the respective meanings assigned to them in, or
incorporated by reference into, the Funding Agreement.


 


The Borrower
agrees to pay all costs of collection and enforcement (including reasonable
attorneys’ fees and disbursements of counsel to the Facility Agent, the Lenders
and the Group Agents) in respect of this Loan Note when incurred, including,
without limitation, reasonable attorneys’ fees through appellate proceedings.


 


A-1





















 


Notwithstanding
the pledge of the Collateral, the Borrower hereby acknowledges, admits and
agrees that the Borrower’s obligations under this Loan Note are recourse
obligations of the Borrower to which the Borrower pledges its full faith and
credit.


 


The Borrower,
and any indorsers or guarantors hereof, (a) severally waive diligence,
presentment, protest and demand and also notice of protest, demand, dishonor
and nonpayments of this Loan Note, (b) expressly agree that this Loan
Note, or any payment hereunder, may be extended from time to time, and consent
to the acceptance of further Collateral, the release of any Collateral for this
Loan Note, the release of any party primarily or secondarily liable hereon, and
(c) expressly agree that it will not be necessary for the Facility Agent,
the Lenders and the Group Agents, in order to enforce payment of this Loan
Note, to first institute or exhaust its remedies against the Borrower or any
other party liable hereon or against any Collateral for this Loan Note.  No extension of time for the payment of this
Loan Note, or any installment hereof, made by agreement by the Facility Agent
with any Person now or hereafter liable for the payment of this Loan Note,
shall affect the liability under this Loan Note of the Borrower, even if the
Borrower is not a party to such agreement; provided that the Facility
Agent and the Borrower, by written agreement between them, may affect the
liability of the Borrower.


 


A-2





















 


Any reference
herein to the Facility Agent shall be deemed to include and apply to every
subsequent holder of this Loan Note. 
Reference is made to the Funding Agreement for provisions concerning
prepayments, Collateral, events of default, acceleration and other material
terms affecting this Loan Note.


 


The Borrower
hereby acknowledges and agrees that the Borrower will be liable to the Facility
Agent, the Lenders and the Group Agents for all representations, warranties,
covenants and liabilities of the Borrower hereunder and under the Funding
Agreement.


 


Any
enforcement action relating to this Loan Note may be brought by motion for
summary judgment in lieu of a complaint pursuant to Section 3213 of the
New York Civil Practice Law and Rules. 
The Borrower hereby submits to New York jurisdiction with respect to any
action brought with respect to this Loan Note and waives any right with respect
to the doctrine of forum  non  conveniens with respect to
such transactions.


 


This Loan Note
shall be governed by and construed in accordance with the laws of the State of
New York. The Borrower agrees that any action or proceeding brought to enforce
or arising out of this Loan Note may be commenced in the Supreme Court of the
State of New York, Borough of Manhattan, or in the District Court of the United
States for the Southern District of New York.


 


 


	
   

  	
  FIELDSTONE
  INVESTMENT FUNDING, LLC,

  
	
   

  	
  as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


A-3





















 


EXHIBIT D


 


MORTGAGE LOAN


REPRESENTATIONS AND WARRANTIES


 


Representations
and Warranties with respect to Mortgage Loans


 


As to each
Mortgage Loan that forms part of the Collateral under the Funding Agreement,
the Borrower shall be deemed to make the following representations and
warranties to the Facility Agent, the Group Agents and the Lenders as of the
dates specified in the Funding Agreement and as of each date the Net Eligible
Assets Balance is determined:


 


(a)                                  Payments
Current.  No payment required under
the Mortgage Loan is more than thirty (30) days past due from the related Due
Date therefor, and the first contractually due Monthly Payment shall have been
made on its Due Date, all in accordance with the terms of the Mortgage Loan
Documents.


 


(b)                                 No
Outstanding Charges.  All taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid.  Neither the
Borrower nor any of its Affiliates has advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the Obligor,
directly or indirectly, for the payment of any amount required under the
Mortgage Loan, except for interest accruing from the date of the Mortgage Note
or date of disbursement of the proceeds of the Mortgage Loan, whichever is
earlier, to the day which precedes by one month the Due Date of the first
installment of principal and interest thereunder.  There are no defaults in the Obligor’s compliance
with the terms of the Mortgage securing the Mortgage Loan.


 


(c)                                  Original
Terms Unmodified.  The terms of the
Mortgage Note and Mortgage have not been impaired, waived, altered or modified
in any respect, from the date of origination, except by a written instrument
which has been recorded, if necessary to protect the interests of the Facility
Agent, the Group Agents and the Lenders, and which has been delivered to the
Custodian and the terms of which are reflected in the Mortgage Loan Schedule.
The substance of any such waiver, alteration or modification has been approved
by the title insurer, to the extent required, and its terms are reflected on
the Mortgage Loan Schedule. No Obligor in respect of the Mortgage Loan has been
released, in whole or in part, except in connection with an assumption
agreement approved by the title insurer, to the extent required by such policy,
and which assumption agreement is part of the Mortgage File delivered to the
Custodian and the terms of which are reflected in the Mortgage Loan Schedule.


 


(d)                                 No
Defenses.  The Mortgage Loan is not
subject to any right of rescission, set-off, counterclaim or defense,
including, without limitation, the defense of usury, nor will the operation of
any of the terms of the Mortgage Note or the Mortgage, or the exercise of any
right thereunder, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto, and no Obligor
in respect of the Mortgage Loan was a debtor in any state or Federal bankruptcy
or insolvency proceeding at the


 


D-1





















 


time the Mortgage Loan was originated. 
The Borrower has no knowledge nor has it received any notice that any
Obligor in respect of the Mortgage Loan is a debtor in any state or federal
bankruptcy or insolvency proceeding.


 


(e)                                  Hazard
Insurance.  The Mortgaged Property is
insured by a fire and extended perils insurance policy, issued by a Qualified
Insurer, and such other hazards as are customary in the area where the
Mortgaged Property is located and to the extent consistent with the
Underwriting Policy, against earthquake and other risks insured against by
Persons operating like properties in the locality of the Mortgaged Property, in
an amount not less than the greatest of (i) 100% of the replacement cost
of all improvements to the Mortgaged Property, (ii) the outstanding
principal balance of the Mortgage Loan or (iii) the amount necessary to
avoid the operation of any co-insurance provisions with respect to the
Mortgaged Property, and consistent with the amount that would have been
required as of the date of origination in accordance with the Underwriting
Policy. If any portion of the Mortgaged Property is in an area identified by
any Official Body as having special flood hazards, and flood insurance is
available, a flood insurance policy meeting the current guidelines of the
Federal Emergency Management Agency is in effect with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least
of (1) the outstanding principal balance of the Mortgage Loan and, with
respect to any Second Lien Mortgage Loan, the outstanding principal balance of
the related First Lien Mortgage Loan, (2) the full insurable value of the
Mortgaged Property, and (3) the maximum amount of insurance available
under the National Flood Insurance Act of 1968, as amended by the Flood
Disaster Protection Act of 1974. All such insurance policies (collectively, the
“hazard insurance policy”) contain a standard mortgagee clause naming the
Originator, its successors and assigns (including, without limitation,
subsequent owners of the Mortgage Loan), as mortgagee, and may not be reduced,
terminated or canceled without thirty (30) days’ prior written notice to the
mortgagee. No such notice has been received by the Borrower or its Affiliates.
All premiums due on such insurance policy prior to the date of this
representation have been paid. The related Mortgage obligates the Obligor to
maintain all such insurance and, at such Obligor’s failure to do so, authorizes
the mortgagee to maintain such insurance at the Obligor’s cost and expense and
to seek reimbursement therefor from such Obligor. Where required by state law
or regulation, the Obligor has been given an opportunity to choose the carrier
of the required hazard insurance, provided the policy is not a “master” or
“blanket” hazard insurance policy covering a condominium, or any hazard insurance
policy covering the common facilities of a planned unit development. The hazard
insurance policy is the valid and binding obligation of the insurer and is in
full force and effect.  The Borrower has
not engaged in, and has no knowledge of the Obligor’s having engaged in, any
act or omission that would impair the coverage of any such policy, the benefits
of the endorsement provided for herein, or the validity and binding effect of
either including, without limitation, no unlawful fee, commission, kickback or
other unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other Person, and no such
unlawful items have been received, retained or realized by the Borrower.


 


(f)                                    Compliance
with Applicable Laws.  Any and all
requirements of any federal, state or local law including, without limitation,
usury, truth-in lending, real


 


D-2





















 


estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Mortgage Loan have been
complied with, the consummation of the transactions contemplated hereby will
not involve the violation of any such laws or regulations, and the Borrower
shall maintain or shall cause its agents to maintain in its possession,
available for the inspection of the Facility Agent and the Group Agents, and
shall deliver to the Facility Agent and the Group Agents, upon demand, evidence
of compliance with all such requirements.


 


(g)                                 No
Satisfaction of Mortgage.  The
Mortgage has not been satisfied, cancelled, subordinated or rescinded, in whole
or in part, and the Mortgaged Property has not been released from the lien of
the Mortgage, in whole or in part, nor has any instrument been executed that
would effect any such release, cancellation, subordination or rescission.  The Borrower has not waived the performance
by the Obligor of any action, if the Obligor’s failure to perform such action
would cause the Mortgage Loan to be in default, nor has Borrower waived any
default resulting from any action or inaction by the Obligor.


 


(h)                                 Location
and Type of Mortgaged Property.  The
Mortgaged Property is located in an Acceptable State as identified in the
Mortgage Loan Schedule and consists of a single parcel of real property
with a detached single family residence erected thereon, or a two-to four-
family dwelling, or an individual condominium unit in a low-rise condominium
project, or an individual unit in a planned unit development or a de minimis
planned unit development;  provided
that any condominium unit or planned unit development shall conform with the
applicable Fannie Mae and Freddie Mac requirements regarding such dwellings or
shall conform to underwriting guidelines acceptable to the Facility Agent in
its sole discretion and that no residence or dwelling is a mobile home. No
portion of the Mortgaged Property is used for commercial purposes; provided
that the Mortgaged Property may be a mixed use property if such Mortgaged
Property conforms to underwriting guidelines acceptable to the Facility Agent
in its sole discretion.


 


(i)                                     Valid
First or Second Lien.  The Mortgage
is a valid, subsisting, enforceable and perfected (a) with respect to each
First Lien Mortgage Loan, first priority lien and first priority security
interest, or (b) with respect to each Second Lien Mortgage Loan, second
priority lien and second priority security interest, in each case, on the real
property included in the Mortgaged Property, including all buildings on the
Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time with respect
to the foregoing. The lien of the Mortgage is subject only to:


 


a.                                       the lien of current real property
taxes and assessments not yet due and payable;


 


b.                                      covenants, conditions and
restrictions, rights of way, easements and other matters of the public record
as of the date of recording acceptable to prudent mortgage lending institutions
generally and specifically referred to in the lender’s title insurance policy
delivered to the originator of the Mortgage Loan and (x) referred to or
otherwise


 


D-3





















 


considered in the
appraisal made for the originator of the Mortgage Loan or (y) which do not
adversely affect the Appraised Value of the Mortgaged Property set forth in
such appraisal;


 


c.                                       other matters to which like
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property;


 


d.                                      with respect to each Mortgage Loan
which is a Second Lien Mortgage Loan a first lien on the Mortgaged Property;
and


 


e.                                       in the case of a Mortgaged Property
that is a condominium or an individual unit in a planned unit development,
liens for common charges permitted by statute.


 


Any security
agreement, chattel mortgage or equivalent document related to and delivered in
connection with the Mortgage Loan establishes and creates a valid, subsisting
and enforceable (A) first lien and first priority security interest with
respect to each Mortgage Loan which is indicated by the Borrower to be a First
Lien Mortgage Loan (as reflected on the related Mortgage Loan Schedule), or (B) second
lien and second priority security interest with respect to each Mortgage Loan
which is indicated by the Borrower to be a Second Lien Mortgage Loan (as
reflected on the related Mortgage Loan Schedule), in either case, on the
property described therein and the Borrower has full right to pledge and grant
a security interest in the same to the Facility Agent for the benefit of the
Group Agents and the Lenders.  The
Mortgaged Property was not, as of the date of origination of the Mortgage Loan,
subject to a mortgage, deed of trust, deed to secure debt or other security
instrument creating a lien subordinate to the lien of the Mortgage.


 


(j)                                     Validity
of Mortgage Documents.  The Mortgage
Note and the Mortgage and any other agreement executed and delivered by an
Obligor, if applicable, in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof enforceable
in accordance with its terms. All parties to the Mortgage Note, the Mortgage
and any other such related agreement had legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note, the Mortgage and
any such agreement, and the Mortgage Note, the Mortgage and any other such
related agreement have been duly and properly executed by such related parties.
All information supplied by, on behalf of, or concerning the Obligor is true,
accurate and complete and does not contain any statement that is or will be
inaccurate in any material respect.  The
Borrower (or an agent on its behalf) has reviewed all of the documents
constituting the Mortgage File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein. To the best of Borrower’s knowledge, except as disclosed to Facility
Agent and the Group Agents in writing, all tax identifications and property
descriptions are legally sufficient, and tax segregation, where required, has
been completed.


 


(k)                                  Full
Disbursement of Proceeds.  There is
no further requirement for future advances by the Originator and its Affiliates
under the Mortgage Loan, and any


 


D-4





















 


and all requirements as to completion of any on-site or off-site
improvement and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing the
Mortgage Loan and the recording of the Mortgage were paid, and the Obligor is
not entitled to any refund of any amounts paid or due under the Mortgage Note
or Mortgage.


 


(l)                                     Ownership.  The Borrower is the sole owner and holder of
the Mortgage Loan.  All Mortgage Loans
acquired by the Borrower from third parties (including affiliates) were
acquired in a sale or contribution pursuant to which such third party sold,
transferred, conveyed and assigned to the Borrower all of its right, title and
interest in, to and under such Mortgage Loan and related property and retained
no direct interest in such Mortgage Loan and related property.  In connection with such sale, such third
party received reasonably equivalent value and fair consideration.  The Mortgage Loan has not been assigned or
pledged by the Borrower (other than in connection with the transaction that is
the subject of the Funding Agreement), and the Borrower has good, indefeasible
and marketable title thereto, and has full right to pledge and grant a security
interest such Mortgage Loan to the Facility Agent for the benefit of the Group
Agents and the Lenders free and clear of any Lien.


 


(m)                               Doing
Business.  All parties that have had
any interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and disposed of such
interest, were) (i) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is
located, and (ii) either (A) organized under the laws of such state, (B) qualified
to do business in such state, (C) a federal savings and loan association,
a savings bank or a national bank having a principal office in such state, or (D) not
doing business in such state.


 


(n)                                 LTV.  As of the date of origination of the Mortgage
Loan, the LTV and CLTV (if applicable) are as identified on the related
Mortgage Loan Schedule.


 


(o)                                 Title
Insurance.  The Mortgage Loan is
covered by either (i) an attorney’s opinion of title and abstract of
title, the form and substance of which is acceptable to prudent mortgage
lending institutions making mortgage loans in the area wherein the Mortgaged
Property is located or (ii) an ALTA mortgagee’s title insurance policy or
other generally acceptable form of policy or insurance acceptable to Fannie Mae
or Freddie Mac and each such title insurance policy is issued by a title
insurer acceptable to Fannie Mae or Freddie Mac and qualified to do business in
the jurisdiction where the Mortgaged Property is located, insuring the
Originator and its successors and assigns (including the Borrower), as to the
first or second priority lien of the Mortgage, as applicable in the original
principal amount of the Mortgage Loan, subject only to the exceptions contained
in paragraph (i) of this Exhibit D, as applicable, and in the case of
adjustable rate Mortgage Loans, against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of the Mortgage
providing for adjustment to the Mortgage Interest Rate and Monthly Payment.
Where required by state law or regulation, the Obligor has been given the
opportunity to choose the carrier of the required mortgage title insurance.
Additionally, such lender’s title insurance policy


 


D-5





















 


affirmatively insures ingress and egress and against encroachments by
or upon the Mortgaged Property or any interest therein. The title policy does
not contain any special exceptions (other than the standard exclusions) for
zoning and uses and has been marked to delete the standard survey exception or
to replace the standard survey exception with a specific survey reading.  The Originator and its successors and assigns
(including the Borrower) are the sole insureds of such lender’s title insurance
policy, and such lender’s title insurance policy is valid and remains in full
force and effect and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. 
No claims have been made under such lender’s title insurance policy, and
no prior holder or servicer of the related Mortgage, including the Borrower,
has done, by act or omission, anything which would impair the coverage of such
lender’s title insurance policy, including, without limitation, no unlawful
fee, commission, kickback or other unlawful compensation or value of any kind
has been or will be received, retained or realized by any attorney, firm or
other Person, and no such unlawful items have been received, retained or
realized by the Borrower or its Affiliates.


 


(p)                                 No
Defaults.  There is no delinquency in
payments of more than thirty (30) days past the related Due Date or other
default, breach, violation or event of acceleration existing under the Mortgage
or the Mortgage Note and no event has occurred which, with the passage of time
or with notice and the expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration, and neither Borrower nor
its predecessors-in-interest have waived any default, breach, violation or
event of acceleration.  With respect to
each Mortgage Loan that is indicated by the Borrower to be a Second Lien
Mortgage Loan (as reflected in the related Mortgage Loan Schedule) (i) the
First Lien is in full force and effect, (ii) there is no default, breach,
violation or event of acceleration existing under such First Lien mortgage or
the related mortgage note, (iii) no event which, with the passage of time
or with notice and the expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration thereunder, and either (A) the
First Lien mortgage contains a provision which allows or (B) applicable
law requires, the mortgagee under the second lien Mortgage Loan to receive
notice of, and affords such mortgagee an opportunity to cure any default by
payment in full or otherwise under the First Lien mortgage.


 


(q)                                 No
Mechanics’ Liens.  There are no
mechanics’ or similar liens or claims which have been filed for work, labor or
material (and no rights are outstanding that under the law could give rise to
such liens) affecting the Mortgaged Property which are or may be liens prior
to, or equal or coordinate with, the lien of the Mortgage.


 


(r)                                    Location
of Improvements; No Encroachments. 
All improvements that were considered in determining the Appraised Value
of the Mortgaged Property lie wholly within the boundaries and building
restriction lines of the Mortgaged Property, and no improvements on adjoining
properties encroach upon the Mortgaged Property. No improvement located on or being
part of the Mortgaged Property is in violation of any applicable zoning and
building law, ordinance or regulation.


 


(s)                                  Origination;
Payment Terms.  The Mortgage Loan was
originated by or in conjunction with a mortgagee approved by the Secretary of Housing
and Urban


 


D-6





















 


Development pursuant to Sections 203 and 211 of the National Housing
Act. Principal payments on the Mortgage Loan commenced (or will commence) no
more than sixty (60) days after funds were disbursed in connection with the
Mortgage Loan.  Other than with respect
to interest only Mortgage Loans, provided that no Mortgage Note may result in
negative amortization, the Mortgage Note is payable on the first day of each
month in equal monthly installments of principal and interest, which
installments of interest, with respect to adjustable rate Mortgage Loans, are
subject to change due to the adjustments to the Mortgage Interest Rate on each
Interest Rate Adjustment Date, with interest calculated and payable in arrears,
sufficient to amortize the Mortgage Loan fully by the stated maturity date,
over an original term of not more than thirty (30) years from commencement of
amortization. The Due Date of the first payment under the Mortgage Note is no
more than sixty (60) days from the date of the Mortgage Note.


 


(t)                                    Customary
Provisions.  The Mortgage Note has a
stated maturity. The Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for
the realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (i) in the case of a Mortgage designated as a
deed of trust, by trustee’s sale, and (ii) otherwise by judicial
foreclosure. Upon default by an Obligor on a Mortgage Loan and foreclosure on,
or trustee’s sale of, the Mortgaged Property pursuant to the proper procedures,
the holder of the Mortgage Loan will be able to deliver good and merchantable
title to the Mortgaged Property. There is no homestead or other exemption
available to an Obligor which would interfere with the right to sell the
Mortgaged Property at a trustee’s sale or the right to foreclose the Mortgage.
The Mortgage Note and Mortgage are on forms acceptable to Freddie Mac or Fannie
Mae.  No Mortgage Loan provides for
negative amortization.


 


(u)                                 Occupancy
of the Mortgaged Property.  The
Mortgaged Property is lawfully occupied under applicable law.  All inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of the
Mortgaged Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate authorities.  The Borrower has not received notification
from any Official Body that the Mortgaged Property is in material
non-compliance with such laws or regulations, is being used, operated or
occupied unlawfully or has failed to have or obtain such inspection, licenses
or certificates, as the case may be.  The
Borrower has not received notice of any violation or failure to conform with
any such law, ordinance, regulation, standard, license or certificate. With
respect to any Mortgage Loan originated with an “owner-occupied” Mortgaged
property, the Obligor represented at the time of origination of the Mortgage
Loan that the Obligor would occupy the Mortgaged Property as the Obligor’s
primary residence.


 


(v)                                 No
Additional Collateral.  The Mortgage
Note is not and has not been secured by any collateral except the lien of the
corresponding Mortgage and the security interest of any applicable security
agreement or chattel mortgage referred to in clause (i) above.


 


D-7





















 


(w)                               Deeds
of Trust.  If the Mortgage is a deed
of trust, a trustee, authorized and duly qualified under applicable law to
serve as such, has been properly designated and currently so serves and is
named in the Mortgage, and no fees or expenses are or will become payable by
the Custodian, the Borrower or their Affiliates to the trustee under the deed
of trust, except in connection with a trustee’s sale after default by the
Obligor.


 


(x)                                   Delivery
of Mortgage Loan Documents; Transfer of Mortgage Loans.  All documents required to be delivered to the
Custodian under the Custodial Agreement as of the date of this representation
have been delivered.  The Facility Agent
or its agent is in possession of a true, complete and accurate Mortgage File in
compliance with the Custodial Agreement, except for such documents the
originals of which have been delivered to the Custodian.  Except with respect to Mortgage Loans
registered with MERS, the Assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located.


 


(y)                                 Due-On-Sale.  The Mortgage contains an enforceable
provision for the acceleration of the payment of the unpaid principal balance
of the Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the mortgagee thereunder.


 


(z)                                   No
Buydown Provisions; No Graduated Payments or Contingent Interests.  The Mortgage Loan does not contain provisions
pursuant to which Monthly Payments are paid or partially paid with funds
deposited in any separate account established by Borrower or its Affiliates,
the Obligor, or anyone on behalf of the Obligor, or paid by any source other
than the Obligor nor does it contain any other similar provisions which may
constitute a “buydown” provision.  The
Mortgage Loan is not a graduated payment mortgage loan, and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature.


 


(aa)                            Consolidation
of Future Advances.  Any future
advances made to the Obligor prior to origination of the Mortgage Loan have
been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term. 
The lien of the Mortgage securing the consolidated principal amount is
expressly insured as having (A) first lien priority with respect to each
Mortgage Loan which is indicated by the Borrower to be a First Lien Mortgage
Loan (as reflected on the related Mortgage Loan Schedule), or (B) second
lien priority with respect to each Mortgage Loan which is indicated by the
Borrower to be a Second Lien Mortgage Loan (as reflected on the related
Mortgage Loan Schedule), in either case, by a title insurance policy, an
endorsement to the policy insuring the mortgagee’s consolidated interest or by
other title evidence acceptable to Fannie Mae and Freddie Mac.  The consolidated principal amount does not
exceed the original principal amount of the Mortgage Loan.


 


(bb)                          Mortgaged
Property Undamaged.  The Mortgaged
Property is undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty so as to affect adversely the value of the
Mortgaged Property as security 


 


D-8





















 


for the Mortgage Loan or the use for which the premises were intended,
and each Mortgaged Property is in good repair. 
There have not been any condemnation proceedings with respect to the
Mortgaged Property and the Borrower has no knowledge of any such proceedings.


 


(cc)                            Collection
Practices; Escrow Deposits; Interest Rate Adjustments.  The origination and collection practices used
by the Originator, the Servicer and the Borrower with respect to the Mortgage
Loan have been in all respects in compliance with the Servicing Standards,
applicable laws and regulations, and have been in all respects legal and
proper. With respect to escrow deposits and Escrow Payments (other than with
respect to each Second Lien Mortgage Loan and for which the mortgagee under the
First Lien is collecting Escrow Payments) all such payments are in the
possession of, or under the control of, the Originator and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been collected
in full compliance with state and federal law. An escrow of funds is not
prohibited by applicable law and has been established in an amount sufficient
to pay for every item that remains unpaid and has been assessed but is not yet
due and payable. No escrow deposits or Escrow Payments or other charges or
payments due to the Originator have been capitalized under the Mortgage or the
Mortgage Note.  All Mortgage Interest
Rate adjustments have been made in strict compliance with state and federal law
and the terms of the related Mortgage Note. Any interest required to be paid
pursuant to state, federal and local law has been properly paid and credited.


 


(dd)                          Conversion
to Fixed Interest Rate.  No Mortgage
Loan listed on a Mortgage Loan Schedule as a Floating Rate Mortgage Loan
is convertible to a Fixed Rate Mortgage Loan.


 


(ee)                            Other
Insurance Policies.  No action,
inaction or event has occurred and no state of facts exists or has existed that
has resulted or will result in the exclusion from, denial of, or defense to
coverage under any applicable special hazard insurance policy, PMI Policy or
bankruptcy bond, irrespective of the cause of such failure of coverage. In
connection with the placement of any such insurance, no commission, fee, or
other compensation has been or will be received by the Borrower or its
Affiliates or by any officer, director, or employee of the Borrower or its
Affiliates or any designee of the Borrower or any corporation in which the
Borrower or its Affiliates or any officer, director, or employee had a
financial interest at the time of placement of such insurance.


 


(ff)                                Servicemembers
Civil Relief Act.  The Obligor has
not notified the Borrower or its Affiliates, and the Borrower and its
Affiliates have no knowledge, of any relief requested or allowed to the Obligor
under the Servicemembers Civil Relief Act of 2003.


 


(gg)                          Appraisal.  The Mortgage File contains an appraisal of
the related Mortgaged Property which appraisal is either (i) an automated
appraisal acceptable to Fannie Mae or Freddie Mac or (ii) signed prior to
the approval of the Mortgage Loan application by a qualified appraiser, duly
appointed by the Originator, who had no interest, direct or indirect in the
Mortgaged Property or in any loan made on the security


 


D-9





















 


thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of Fannie Mae or Freddie Mac and Title XI of the Federal
Institutions Reform, Recovery, and Enforcement Act of 1989 as amended and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated.


 


(hh)                          Disclosure
Materials.  The Obligor has executed
a statement to the effect that the Obligor has received all disclosure
materials required by applicable law with respect to the making of adjustable
rate mortgage loans, and such statement is maintained in the related Mortgage
File.


 


(ii)                                  Construction
or Rehabilitation of Mortgaged Property. 
No Mortgage Loan was made in connection with the construction or
rehabilitation of a Mortgaged Property or facilitating the trade-in or exchange
of a Mortgaged Property.


 


(jj)                                  No
Defense to Insurance Coverage.  No
action has been taken or failed to be taken, no event has occurred and no state
of facts exists or has existed on or prior to the date of origination (whether
or not known to the Originator on or prior to such date) which has resulted or
will result in an exclusion from, denial of, or defense to coverage under any
private mortgage insurance (including, without limitation, any exclusions,
denials or defenses which would limit or reduce the availability of the timely
payment of the full amount of the loss otherwise due thereunder to the insured)
whether arising out of actions, representations, errors, omissions, negligence,
or fraud of the Originator, the related Obligor or any party involved in the
application for such coverage, including the appraisal, plans and
specifications and other exhibits or documents submitted therewith to the
insurer under such insurance policy, or for any other reason under such
coverage, but not including the failure of such insurer to pay by reason of
such insurer’s breach of such insurance policy or such insurer’s financial
inability to pay.


 


(kk)                            Capitalization
of Interest.  The Mortgage Note does
not by its terms provide for the capitalization or forbearance of interest.


 


(ll)                                  No
Equity Participation.  No document
relating to the Mortgage Loan provides for any contingent or additional
interest in the form of participation in the cash flow of the Mortgaged
Property or a sharing in the appreciation of the value of the Mortgaged Property.
The indebtedness evidenced by the Mortgage Note is not convertible to an
ownership interest in the Mortgaged Property or the Obligor and the Originator
has not financed nor does it own directly or indirectly, any equity of any form
in the Mortgaged Property or the Obligor.


 


(mm)                      Proceeds
of Mortgage Loan.  The proceeds of
the Mortgage Loan have not been and shall not be used to satisfy, in whole or
in part, any debt owed or owing by the Obligor to the Originator or any
Affiliate or correspondent of the Originator, except in connection with a
refinanced Mortgage Loan; provided that no such refinanced Mortgage Loan
shall have been originated pursuant to a streamlined mortgage loan refinancing
program.


 


D-10





















 


(nn)                          No
Exception.  Other than as noted by
the Custodian on the Exception Report, no Exception (as defined in the
Custodial Agreement) exists with respect to the Mortgage Loan which is
reasonably likely to materially adversely affect the Mortgage Loan or the Lien
of the Facility Agent therein (as determined by the Facility Agent in its sole
discretion and which, in the case of a Wet-Ink Mortgage Loan, has not been
cured within seven (7) days of the related Loan Date or Addition Date, as
applicable).


 


(oo)                          Mortgage
Submitted for Recordation.  The
Mortgage either has been or will promptly be submitted for recordation in the
appropriate governmental recording office of the jurisdiction where the
Mortgaged Property is located.


 


(pp)                          Documents
Genuine.  Such Mortgage Loan and all
accompanying collateral documents are complete and authentic and all signatures
thereon are genuine. Such Mortgage Loan is a “closed” loan fully funded by the
Originator.


 


(qq)                          Bona
Fide Loan.  Such Mortgage Loan arose
from a bona  fide loan, complying with all applicable state and
Federal laws and regulations, to persons having legal capacity to contract and
is not subject to any defense, set-off or counterclaim.


 


(rr)                                Description.  Each Mortgage Loan conforms to the
description thereof as set forth on the related Mortgage Loan Schedule delivered
to the Custodian, the Facility Agent and the Group Agents.


 


(ss)                            Located
in U.S.  No collateral (including,
without limitation, the related real property and the dwellings thereon and
otherwise) relating to a Mortgage Loan is located in any jurisdiction other
than in one of the fifty (50) states of the United States of America or the
District of Columbia.


 


(tt)                                Underwriting
Policy.  Each Mortgage Loan has been
originated in accordance with the Underwriting Policy (including all
supplements or amendments thereto) previously provided to the Facility Agent
and the Group Agents.


 


(uu)                          Primary
Mortgage Guaranty Insurance.  Each
Mortgage Loan is insured as to payment defaults by a policy of primary mortgage
guaranty insurance in the amount required under the related Mortgage Loan
Documents where applicable, and all provisions of such primary mortgage
guaranty insurance have been and are being complied with, such policy is in
full force and effect, and all premiums due thereunder have been paid.  Each Mortgage Loan which is represented to
have, or to be eligible for, FHA insurance is insured, or eligible to be
insured, pursuant to the National Housing Act. Each Mortgage Loan which is
represented by the Borrower or its Affiliates to be guaranteed, or to be
eligible for guaranty, by the VA is guaranteed, or eligible to be guaranteed,
under the provisions of Chapter 37 of Title 38 of the United States Code. As to
each FHA insurance certificate or each VA guaranty certificate, the Originator
has complied with applicable provisions of the insurance for guaranty contract
and federal statutes and regulations, all premiums or other charges due in
connection with such insurance or guarantee have been paid, there has been no
act or omission which would or


 


D-11





















 


may invalidate any such insurance or guaranty, and the insurance or
guaranty is, or when issued, will be, in full force and effect with respect to
each Mortgage Loan. There are no defenses, counterclaims, or rights of setoff
affecting the Mortgage Loans or affecting the validity or enforceability of any
private mortgage insurance or FHA insurance applicable to the Mortgage Loans or
any VA guaranty with respect to the Mortgage Loans.


 


(vv)                          HOEPA;
Predatory Lending Regulations.  No
Mortgage Loan is (a) subject to the provisions of the Homeownership and
Equity Protection Act of 1994, as amended, (b) a “high cost” mortgage
loan, “covered” mortgage loan or “predatory” mortgage loan or any other
comparable term, no matter how defined, under any federal, state or local law,
or (c) subject to any comparable federal, state or local statutes or
regulations or any other statute or regulation providing for heightened
scrutiny or assignee liability to holders of such mortgage loans.   No predatory, abusive or deceptive lending
practices, including but not limited to, the extension of credit to a mortgagor
without regard for the mortgagor’s ability to repay the Mortgage Loan and the
extension of credit to a mortgagor which has no tangible net benefit to the
mortgagor, were employed in connection with the origination of the Mortgage
Loan.


 


(ww)                      Value
of Mortgaged Property.   The Borrower
has no knowledge of any circumstances existing that should reasonably be
expected to adversely affect the value or the marketability of the Mortgaged
Property or the Mortgage Loan.


 


(xx)                              MERS
Mortgage Loans.   With respect to
each MERS Mortgage Loan, a Mortgage Identification Number has been assigned by
MERS and such Mortgage Identification Number is accurately provided on the
Mortgage Loan Schedule.  The related
Assignment of Mortgage to MERS has been duly and properly recorded.  With respect to each MERS Mortgage Loan, the
Borrower has not received any notice of liens or legal actions with respect to
such Mortgage Loan and no such notices have been electronically posted by MERS.


 


(yy)                          First
Lien Consent.   With respect to each
Second Lien Mortgage Loan, either no consent for the Mortgage Loan is required
by the holder of the First Lien or such consent has been obtained and is
contained in the Mortgage File.


 


(zz)                              Suitability.   No specific circumstances or conditions
exist with respect to the Mortgage, the Mortgaged Property, the Obligor or the
Obligor’s credit standing that could reasonably be expected to (i) cause
the Mortgage Loan to be more likely to become past due in comparison to similar
Mortgage Loans or (iii) adversely affect the value or marketability of the
Mortgage Loan in comparison to similar Mortgage Loans.


 


(aaa)                      Environmental
Matters.   The Mortgaged Property is
free from any and all toxic or hazardous substances and there exists no
violation of any local, state or federal environmental law, rule or
regulation.


 


(bbb)                   Wet-Ink
Mortgage Loans.  With respect to each
Mortgage Loan that is a Wet-Ink Mortgage Loan, the Settlement Agent has been
instructed in writing to


 


D-12





















 


hold the related Mortgage Loan Documents as agent and bailee for Facility
Agent or the Facility Agent’s agent and to promptly forward such Mortgage Loan
Documents in accordance with the provisions of the Custodial Agreement.


 


(ccc)                      Ground
Leases.   With respect to each ground
lease to which the Mortgaged Property is subject (a “Ground Lease”): (i) the
Obligor is the owner of a valid and subsisting interest as tenant under the
Ground Lease; (ii) the Ground Lease is in full force and effect,
unmodified and not supplemented by any writing or otherwise; (iii) all
rent, additional rent and other charges reserved therein have been paid to the
extent that they are payable to the date hereof; (iv) the Obligor enjoys
the quiet and peaceful possession of the estate demised thereby, subject to any
sublease; (v) the Obligor is not in default under any of the terms thereof
and there are no circumstances that, with the passage of time or the giving of
notice or both, would constitute an event of default thereunder; (vi)  the
lessor under the Ground Lease is not in default under any of the terms or
provisions thereof on the part of the lessor to be observed or performed; (vii) the
lessor under the Ground Lease has satisfied all of its repair or construction
obligations, if any, to date pursuant to the terms of the Ground Lease; (viii) the
remaining term of the Ground Lease extends not less than ten (10) years
following the maturity date of such Mortgage Loan; and (ix) the execution,
delivery and performance of the Mortgage do not require the consent (other than
those consents which have been obtained and are in full force and effect)
under, and will not contravene any provision of or cause a default under, the
Ground Lease.


 


*********************Definitions*********************


 


“Acceptable
State” shall mean any state acceptable pursuant to the Sellers’
Underwriting Guidelines.


 


“Appraised
Value” shall mean the value set forth in an appraisal made in connection
with the origination of the related Mortgage Loan as the value of the Mortgaged
Property.


 


“Assignment
of Mortgage” shall mean 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
sale of the Mortgage.


 


“CLTV”
shall mean, with respect to any Mortgage Loan, the ratio of (a) the
original outstanding principal amount of such Mortgage Loan and any other
mortgage loan that is secured by a lien on the related Mortgaged Property to (b) the
lesser of (i) the Appraised Value of the Mortgaged Property at origination
or (ii) if the Mortgaged Property was purchased within twelve (12) months
of the origination of the Mortgage Loan, the purchase price of the Mortgaged
Property.


 


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


 


D-13





















 


“Escrow
Payments” shall mean, 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.


 


“Fannie Mae”
shall mean Fannie Mae, or any successor thereto.


 


“First Lien”
shall mean, with respect to a Mortgaged Property, the lien of the mortgage,
deed of trust or other instrument securing a mortgage note which creates a
first lien on the Mortgaged Property.


 


“First Lien
Mortgage Loan” shall mean a Mortgage Loan secured by a First Lien on the
related Mortgaged Property.


 


“Freddie
Mac” shall mean Freddie Mac, or any successor thereto.


 


“Interest
Rate Adjustment Date” shall mean, with respect to a Mortgage Loan, the date
on which an adjustment to the Mortgage Interest Rate of such Mortgage Loan
becomes effective.


 


“LTV”
shall mean, with respect to any Mortgage Loan, the ratio of the original
outstanding principal amount of the Mortgage Loan to the lesser of (a) the
Appraised Value of the Mortgaged Property at origination or (b) if the
Mortgaged Property was purchased within twelve (12) months of the origination
of the Mortgage Loan, the purchase price of the Mortgaged Property.


 


“MERS”
shall mean MERSCORP, Inc., a Delaware corporation, and its permitted
successors and assigns.


 


“MERS
Mortgage Loan” shall mean any Mortgage Loan as to which the related
Mortgage or Assignment of Mortgage has been recorded in the name of MERS, as
agent for the holder from time to time of the Mortgage Note, and which is
identified as a MERS Mortgage Loan on the related Mortgage Loan Schedule.


 


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


 


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


 


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


 


D-14





















 


“Second
Lien” shall mean, with respect to a Mortgaged Property, the lien of the
mortgage, deed of trust or other instrument securing a mortgage note which
creates a second lien on the Mortgaged Property.


 


“Second
Lien Mortgage Loan” shall mean a Mortgage Loan secured by a Second Lien on
the related Mortgaged Property.


 


“Settlement
Agent” shall mean, with respect to any transaction the subject of which is
a Wet-Ink Mortgage Loan, the entity approved by the Facility Agent, in its sole
good faith discretion, which may be a title company, escrow company or attorney
in accordance with local law and practice in the jurisdiction where the related
Wet-Ink Mortgage Loan is being originated. 
A Settlement Agent is deemed approved by the Facility Agent unless the
Facility Agent notifies the Borrower otherwise in writing.


 


D-15





















 


EXHIBIT F


 


SCHEDULE OF COMMITMENTS


 


	
  Credit
  Suisse, New York Branch

  	
   

  	
  $

  	
  500,000,000

  	
   

  



 


F-1