Document:

Exhibit
10.1

 

COMERICA
INCORPORATED

RESTRICTED
STOCK AWARD AGREEMENT

 

THIS AGREEMENT (the “Agreement”)
between Comerica Incorporated (the “Company”) and NAME
(the “Award Recipient”) is effective as of GRANT DATE (the
“Effective Date”).  Any undefined terms
appearing herein as defined terms shall have the same meaning as they do in the
Comerica Incorporated 2006 Long-Term Incentive Plan, as amended and/or restated
from time to time (the “Plan”).  The
Company will provide a copy of the Plan to the Award Recipient upon request.

 

WITNESSETH:

 

1.     Award of Stock. 
Pursuant to the provisions of the Plan, the Company hereby awards the
Award Recipient, subject to the terms and conditions of the Plan (incorporated
herein by reference), and subject further to the terms and conditions in this
Agreement, XXX Shares of $5.00 par value
common stock of the Company (the “Stock Award”).  The Stock Award is intended to constitute “long-term
restricted stock”, as such term is defined by the Emergency Economic
Stabilization Act of 2008, as amended from time to time, including by the
American Recovery and Reinvestment Act of 2009 (collectively, “EESA”), and the
regulations and guidance promulgated thereunder, as amended from time to time (the
“EESA Guidance”), and the Stock Award shall be subject to all limitations and
restrictions necessary to qualify it as long-term restricted stock thereunder
for the periods required thereunder.

 

2.     Vesting
of Stock Award.  Until it is vested,
the Stock Award is subject to forfeiture. 
Subject to the terms of the Plan and this Agreement, including without
limitation, paragraph 5, and fulfillment of the employment requirements in
paragraph 4 below, the Stock Award will vest and become free of restrictions on
the fifth anniversary of the Effective Date of this Stock Award.  Notwithstanding the foregoing, unless
otherwise permitted under the EESA Guidance, even after vesting, the Stock
Award may not be transferred until the Company has repaid any obligation
arising from the financial assistance provided to it under the Capital Purchase
Program (the “CPP”) under the Troubled Asset Relief Program (“TARP”) (other
than warrants to purchase common stock), except that (1) if the Stock
Award vests prior to the Company’s repayment of its obligation arising from the
financial assistance provided to it under the CPP and (2) in such a case, provided
that the Award Recipient  has not made an
election under section 83(b) of the Code  with respect to this Stock Award, then from
the date on which the Stock Award vests through December 31 of the
calendar year that includes such vesting date, a portion of the Stock Award shall
become transferable as is reasonably required to pay any federal, state, local
or foreign taxes that are anticipated to apply to the income recognized due to
this vesting, with such portion to be determined by the Company in its sole
discretion.  As soon as administratively
feasible after the vesting of the Stock Award and the satisfaction of any
applicable taxes pursuant to paragraph 12 of this Agreement, the Company will
deliver to the Award Recipient (or to the designated Beneficiary of the Award
Recipient if the Award Recipient is not then living) evidence of his or her
ownership (by book entry or certificate), of the Shares subject to the vested
Stock Award for which any applicable taxes have been paid.

 

3.     Cancellation of Stock Award.  The Committee has the right to cancel for no
consideration all or any portion of the Stock Award in accordance with Section 4
of the Plan if the Committee determines in good faith that the Award Recipient
has done any of the following:  (i) committed
a felony; (ii) committed fraud; (iii) embezzled; (iv) disclosed
confidential information or trade secrets; (v) was terminated for Cause; (vi) engaged
in any activity in competition with the business of the Company or any
Subsidiary or Affiliate of the Company; or (vii) engaged in conduct that
adversely affected the Company.  The
Delegate shall have the power and authority to suspend the vesting of or the
right to receive the Shares in respect of all or any portion of the Stock Award
if the Delegate makes in good faith the determination described in the
preceding sentence.  Any such suspension
of a Stock Award shall remain in effect until the suspension shall be presented
to and acted on by the Committee at its next meeting.  This paragraph 3 shall have no application
for the two-year period following a Change of Control of the Company.

 

4.     Employment Requirements. 
Except as provided in this Agreement, in order to vest in and not
forfeit the Stock Award, the Award Recipient must remain employed by and
continue performing substantial services for the Company or one of its
Affiliates until the Stock Award has vested. 
If there is a Termination of Employment for any reason (other than due
to death or Disability) before the Stock Award has vested, the Award Recipient
will forfeit the Stock Award as of the date of the Termination of Employment,
unless the Committee determines otherwise and such determination is permissible
under applicable laws, rules and regulations, including, without
limitation, EESA and
the EESA Guidance, to the extent applicable. 
If there is a Termination of Employment due to the death or Disability
of the Award Recipient prior to this Stock Award vesting, the Stock Award will
vest as of the date of the Award Recipient’s Termination of Employment due to
death or Disability.

 

5.     Effect of a Change of Control.  This Stock Award will vest and become free of
restrictions on the date a Change of Control of the Company occurs, provided
such vesting is permissible under EESA and the EESA Guidance, to the extent
applicable.

 

 

6.     Nontransferability.  Neither this Stock Award, nor any of the
rights pertaining thereto or under this Agreement, shall be transferable other
than by will or the laws of intestacy until the Stock Award has vested; provided,
however, that the Award Recipient may, in the manner established by
the Committee, designate a Beneficiary to receive any property distributable
with respect to the Stock Award upon the death of the Award Recipient.  Prior to vesting, this Stock Award and any
rights pertaining thereto or under this Agreement may not be pledged,
alienated, attached or otherwise encumbered. 
Any purported pledge, alienation, attachment or encumbrance of the Stock
Award or rights pertaining thereto that is contrary to the provisions of this
Agreement or the Plan shall be void and unenforceable against the Company or
any Affiliate.

 

7.     Voting and Dividends.  Beginning upon the Effective Date, the Award
Recipient shall have the right to vote the Shares underlying the unvested Stock
Award and to receive any cash dividends or cash distributions that may be paid
with respect thereto.  Subject to Section 11(D) of
the Plan, in the event of a stock dividend, stock distribution, stock split,
division of shares or other corporate structure change which results in the
issuance of additional Shares with respect to any Share of the Stock Award
prior to such Stock Award having vested, such additional Shares will be subject
to the same restrictions and vesting requirements as are applicable to such
unvested Share of the Stock Award.

 

8.     No Right to Continued Employment.  Nothing in the Plan or this Agreement shall
confer on the Award Recipient any right to continue in the employment of the
Company or its Affiliates for any given period or on any specified terms nor in
any way affect the Company’s or its Affiliates’ right to terminate the Award
Recipient’s employment without prior notice at any time for any reason or for
no reason.

 

9.     Compliance
with Laws and Regulations.  The Stock
Award and the obligation of the Company to deliver the Shares subject to the
Stock Award are subject to compliance with all applicable laws, rules and
regulations, including, without limitation, for the period required by EESA and the EESA
Guidance, EESA and the EESA Guidance, and to receipt of any approvals
by any government or regulatory agency as may be required, and to any
determinations the Company may make regarding the application of all such laws,
rules and regulations.  In addition, the Award Recipient agrees
that the Award Recipient’s rights to compensation under this Agreement and participation
in the Company’s other compensation and benefits arrangements (this Agreement
and any and all such arrangements, collectively, the “Benefit Plans”) will be
limited to ensure that such Benefit Plans comply with and are administered in
accordance with the provisions of EESA and the EESA Guidance for the period
required by EESA and the EESA Guidance. 
Accordingly, the Award Recipient hereby (A) acknowledges and
understands that any compensation payable to the Award Recipient under any
Benefit Plan, including without limitation under this Agreement, shall be
subject to EESA and the EESA Guidance to the extent necessary to comply with
EESA and the EESA Guidance, including, without limitation, (x) the
potential for clawback of any bonus, retention or incentive compensation paid
or granted to the Award Recipient under any Benefit Plan based on statements of
earnings, revenues, gains or other criteria that are later found to be
materially inaccurate or as otherwise provided under the EESA Guidance and (y) the
potential for the reduction or elimination of the amounts payable to the Award
Recipient under this Agreement or otherwise as a result of the limitations on
golden parachute payments under EESA and the EESA Guidance and (B) consents
to any modifications and limitations prior to a Change of Control with respect
to, and under, the Benefit Plans to the extent necessary to ensure compliance
with EESA and the EESA Guidance.

 

10.   Binding Nature of Plan.  The Award Recipient agrees to be bound by all
terms and provisions of the Plan and related administrative rules and
procedures, including terms and provisions and administrative rules and
procedures adopted and/or modified after the granting of the Stock Award.  In the event any provisions of this Agreement
are inconsistent with those of the Plan, the provisions of the Plan shall
control, unless the application of the Plan provision would result in a
violation of EESA or the EESA Guidance.

 

11.   Notices.  Any notice to the Company under this
Agreement shall be in writing to the following address or facsimile
number:  Human Resources - Executive
Compensation, Comerica Incorporated, 1717 Main Street, MC 6515, Dallas, TX
75201; Facsimile Number: 214-462-4430. 
The Company will address any notice to the Award Recipient to his or her
current address according to the Company’s personnel files.  All
written notices provided in accordance with this paragraph shall be deemed to
be given when (a) delivered to the appropriate address(es) by hand or by a
nationally recognized overnight courier service (costs prepaid); (b) sent
by facsimile to the appropriate facsimile number, with confirmation by
telephone of transmission receipt; or (c) received by the addressee, if
sent by U.S. mail to the appropriate address or by Company inter-office mail to
the appropriate mail code.  Either party
may designate in writing some other address or facsimile number for notice
under this Agreement.

 

12.   Withholding.  No later than the date as of which an amount
first becomes includible in the gross income of the Award Recipient for Federal
income tax purposes with respect to any Shares subject to this Stock Award, the
Award Recipient shall pay to the Company, or make arrangements satisfactory to
the Company regarding the payment of, the minimum statutory amount of Federal, state and local
withholding taxes with respect thereto.  The Award Recipient authorizes the Company to
withhold from 

 

2

 

his
or her compensation to satisfy any such income and employment tax withholding
obligations in connection with the Stock Award. 
The Award Recipient agrees that the Company may delay removal of the
restrictive legend until proper payment of such taxes has been made by the
Award Recipient.  Unless determined
otherwise by the Committee, the Award Recipient may satisfy such obligations
under this paragraph 12 by any method authorized under Section 9 of the
Plan.

 

13.   Voluntary
Participation.  Participation in the Plan is voluntary.  The value of the Stock Award is an
extraordinary item of compensation outside the scope of the Award Recipient’s
employment contract, if any.  As such,
the Stock Award is not part of normal or expected compensation for purposes of
calculating any severance, resignation, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments.

 

14.   Force and Effect.  The various provisions of this Agreement are
severable in their entirety.  Any
judicial or legal determination of invalidity or unenforceability of any one
provision shall have no effect on the continuing force and effect of the
remaining provisions.

 

15.   Successors.  This Agreement shall be binding upon and
inure to the benefit of the successors of the respective parties.

 

IN
WITNESS WHEREOF, this Agreement has been executed by an appropriate officer of
Comerica Incorporated and by the Award Recipient, both as of the day and year
first above written.

 

 

COMERICA
INCORPORATED

 

 

	
  By:

  	
  /s/ Jacquelyn H. Wolf

  	
   

  
	
  Name:

  	
  Jacquelyn H. Wolf

  	
   

  
	
  Title:

  	
  Executive Vice
  President

  Corporate Human Resources

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AWARD RECIPIENT

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name: [Insert Award
  Recipient’s Name]

  	
   

  

 

3Exhibit
10.1

 

Execution Copy

 

MASTER
REPURCHASE AGREEMENT

 

Dated as of October 30,
2009

 

Between:

 

HOME LOAN CENTER, INC., as
Seller

 

and

 

JPMORGAN CHASE BANK, N.A.,
as Buyer

 

1.                                      Applicability

 

Subject to the terms of the Side Letter and
satisfaction of the conditions precedent set forth in Paragraph 3 and in
Paragraph 7, prior to the Termination Date, the parties hereto may enter into
transactions in which Home Loan Center, Inc. (“Seller”)
may transfer to JPMorgan Chase Bank, N.A. (together with its successors and
assigns, “Buyer”) certain Mortgage Loans
(including the Servicing Rights, as defined below, thereto) and Buyer shall be
obligated to accept such Mortgage Loans (on a servicing released basis against
the transfer of funds by Buyer), with a simultaneous agreement by Buyer to
transfer to Seller those Mortgage Loans (including the Servicing Rights
thereto) on a servicing released basis at a date certain or on demand, against
the transfer of funds by Seller.  Each
such transaction shall be referred to in this Agreement as a “Transaction” and shall be governed by this Agreement.  Buyer shall have no obligation to enter into
any Transaction on or after the Termination Date.

 

2.                                      Definitions

 

“Accounts”
means, collectively, the Cash Pledge Account, the Funding Account and the
Operating Account, any interest, additions and proceeds due or to become due on
such Accounts, which Accounts are held at Financial Institution and include all
of the above described deposits, deposit accounts, payment intangibles, financial
assets and other obligations of Financial Institution, whether they are deposit
accounts, negotiable or non-negotiable or book entry certificates of deposit,
book entry investment time deposits, savings accounts, money market accounts,
transaction accounts, time deposits, negotiable order of withdrawal accounts,
share draft accounts, demand deposit accounts, instruments, general
intangibles, chattel paper or otherwise, and all funds held in or represented
by any of the foregoing, and any successor Accounts howsoever numbered and all
Accounts issued in renewal, extension or increase or decrease of or replacement
or substitution for any of the foregoing; and all promissory notes, checks,
cash, certificates of deposit, passbooks, deposit receipts, instruments,
certificates and other records from time to time representing or evidencing the
Accounts described above and any supporting obligations relating to any of the
foregoing property.

 

“Act of Insolvency”
means with respect to any Person (a) the commencement by that Person as
debtor of any case or proceeding under any bankruptcy, insolvency,
reorganization, 

 

 

liquidation, dissolution or
similar law, or a request by that Person for the appointment of a receiver,
trustee, custodian or similar official for that Person or any substantial part
of its property; (b) the commencement of any such case or proceeding
against that Person, or another’s seeking such appointment, or the filing
against that Person of an application for a protective decree which (i) is
consented to or not timely contested by that Person, or (ii) results in
the entry of an order for relief, such an appointment, the issuance of such a
protective decree or the entry of an order having similar effect, or (iii) is
not dismissed within fifteen (15) days; (c) the making by that Person
of a general assignment for the benefit of creditors; (d) the admission in
writing by that Person (or, if a non-natural Person, by any of the President,
the Chief Financial Officer or the board of directors or managers of that
Person) that it is unable to pay its debts as they become due, or the
nonpayment of its debts generally as they become due; or (e) the board of
directors, managers, members or partners, as the case may be, of that Person
taking any action in furtherance of any of the foregoing.

 

“Additional Purchased
Mortgage Loans” means Mortgage Loans provided by Seller to Buyer
pursuant to Paragraph 4(a).

 

“Adjusted LIBOR Rate”
has the meaning set forth in the Side Letter.

 

“Adjusted
Tangible Net Worth” means, with respect to Seller and its Subsidiaries
on a consolidated basis at any date, an amount equal to (i) the Tangible
Net Worth of Seller and its Subsidiaries on a consolidated basis at such date, plus
(ii) the lesser of (A) one percent (1%) of the unpaid principal
balances of all Mortgage Loans at such date for which Seller and its
Subsidiaries owns the Servicing Rights and (B) the capitalized value of
Seller’s and its Subsidiaries’ Servicing Rights, plus (iii) the
unpaid principal amount of all Qualified Subordinated Debt of Seller and its
Subsidiaries at such date, minus (iv) an amount equal to 50% of the
net book value of Mortgage Loans held by Seller for investment purposes at such
date, minus (v)  an amount equal to 50% of the net book value of
net REO Property held by Seller at such date, minus (vi) an amount
equal to 50% of the net book value of other illiquid investments held by Seller
at such date.

 

“Affiliate”
means, as to a specified Person, any other Person (a) that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with the specified Person; (b) that is a director,
manager, trustee, general partner or executive officer of the specified Person
or serves in a similar capacity in respect of the specified Person; (c) that,
directly or indirectly through one or more intermediaries, is the beneficial
owner of ten percent (10%) or more of any class of equity securities of the
specified Person; or (d) of which the specified Person is directly or
indirectly the owner of ten percent (10%) or more of any class of equity
securities (or equivalent equity interests).

 

“Agency” (and,
with respect to two or more of the following, “Agencies”)
means FHA, Fannie Mae, Ginnie Mae, Freddie Mac or VA.

 

“Agency Guidelines”
means those requirements, standards and procedures which may be adopted by the
Agencies from time to time with respect to their purchase or guaranty of residential
mortgage loans, which requirements govern the Agencies’ willingness to purchase
or guaranty such loans.

 

2

 

“Aggregate Purchase Price”
means, at any time, the sum of the Purchase Prices paid by Buyer for all
Purchased Mortgage Loans that are subject to Transactions outstanding at that
time.

 

“Agreement”
means this Master Repurchase Agreement dated as of the date hereof, between
Seller and Buyer (including any supplemental terms or conditions contained in
the Exhibits hereto and the Side Letter), as the same shall be amended,
restated, supplemented or otherwise modified from time to time.

 

“Approved Takeout Investor”
means any of (i) Fannie Mae, Freddie Mac and any of the other entities
listed on Schedule I, as such schedule is updated from time to time by
Buyer, in its sole discretion, with written notice to Seller; (ii) CL, or (iii) an
entity which is acceptable to Buyer, as notified to Seller in writing by Buyer;
provided, however, that, notwithstanding the foregoing, any entity
described in the foregoing clauses (i) through (iii) that fails
to perform any of its material obligations under its Takeout Agreement shall
cease to be an Approved Takeout Investor upon such failure.

 

“Available Warehouse
Facilities” means, at any time, the aggregate amount of used and
unused available warehouse lines of credit, purchase facilities, repurchase
facilities and off-balance sheet funding facilities (whether committed or
uncommitted) available to Seller at such time.

 

“Bailee Letter”
means a bailee letter in the form attached hereto as Exhibit J or such
other form as is satisfactory to Buyer in its sole discretion.

 

“Bankruptcy Code”
means Title 11 of the United States Code (11 U.S.C.
Paragraph 101 et seq.),
as amended by the Bankruptcy Reform Act and as further amended from time to
time, or any successor statute.

 

“Bankruptcy Reform Act”
means the Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005, effective as of October 17, 2005.

 

“Business
Day” means a day other than a Saturday or Sunday when (i) banks
in Dallas, Texas, Houston, Texas and New York, New York are generally open for
commercial banking business and (ii) federal funds wire transfers can be
made.

 

“Cash Equivalents” means any of
the following: (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within three (3) months or less after the date of the
applicable financial statement reporting such amounts; and (b) certificates
of deposit, time deposits or Eurodollar time deposits having maturities of
three (3) months or less after the date of the applicable financial
statement reporting such amounts, or overnight bank deposits, issued by any
commercial bank organized under the laws of the United States or any state
thereof having combined capital and surplus of not less than $500,000,000 and
rated at least A- by S&P or A3 by Moody’s.

 

“Cash Pledge Account”  means the internal demand deposit account
held at JPM Chase for the benefit of Buyer, and styled as follows:

 

3

 

JPMorgan Chase Bank, N.A. Secured Party

Cash Pledge Account for Home Loan Center, Inc.

 

“Change in
Control” means either of the
following events (a) the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3
of the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended) of outstanding shares of voting stock (or equivalent equity
interests) of Seller or any Guarantor at any time if after giving effect to
such acquisition such Person or Persons owns fifty percent (50%) or more of
such outstanding voting stock (or equivalent equity interests) or (b) the
Parent shall for any reason cease to own and control, directly or indirectly,
all of the outstanding equity interests of Seller.

 

“Change in Requirement of
Law” means (a) the adoption of a Requirement of Law after the
date of this Agreement, (b) any change in a Requirement of Law or (c) compliance
by Buyer (or by any applicable lending office of Buyer) with any Requirement of
Law made or issued after the date of this Agreement.

 

“CL” means JPM
Chase, operating through its unincorporated division commonly known as its
Correspondent Lending group.

 

“CL Loan” means
an Eligible Mortgage Loan for which CL is the Approved Takeout Investor.

 

“CMWF Web” means
the website maintained by Buyer and used by Seller and Buyer to administer the
Transactions, the notices and reporting requirements contemplated by the
Transaction Documents and other related arrangements.

 

“Completed Repurchase
Advice” means with respect to any Purchased Mortgage Loan, receipt
by Buyer of:

 

(i) funds into the Funding Account in an
amount equal to or greater than (x) the Repurchase Price of such Purchased
Mortgage Loan minus (y) any unpaid Price Differential to be paid by
Seller on the next Remittance Date;

 

(ii) in the event that the funds
described in clause (i) above are less than an amount equal to (x) the
Repurchase Price of such Purchased Mortgage Loan minus (y) any
unpaid Price Differential to be paid by Seller on the next Remittance Date,
confirmation that funds in an amount equal to such deficiency are on deposit in
the Operating Account and available for payment to Buyer after taking into
account all other payments required to be made by Seller out of funds on
deposit in the Operating Account;

 

(iii) confirmation from the related
Approved Takeout Investor that the funds received in the Funding Account are
for the purchase of that Purchased Mortgage Loan; and

 

(iv) an updated Loan Purchase Detail
from Seller showing the removal of that Purchased Mortgage Loan from the list
of Purchased Mortgage Loans subject to the outstanding Transactions under this
Agreement.

 

4

 

“Compliance Certificate” means a compliance certificate substantially in the form of Exhibit C,
completed, executed and submitted by the chief financial officer of Seller.

 

“Confirmation”
means a confirmation substantially in the form attached hereto as Exhibit A
and delivered pursuant to Paragraph 3.

 

“Conventional Conforming
Loan” means a Mortgage Loan which conforms to Agency
Guidelines.  The term Conventional
Conforming Loan shall not include a Mortgage Loan which is a Government Loan.

 

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

 

“Cooperative Loan” means a
mortgage loan that is secured by a Lien on and perfected security interest in
Cooperative Shares and the related Proprietary Lease granting exclusive rights
to occupy the related Cooperative Unit in the building owned by the related
Cooperative Corporation.

 

“Cooperative Project” means, with
respect to any Cooperative Loan, all real property and improvements thereto and
rights therein and thereto owned by a Cooperative Corporation including without
limitation the land, separate dwelling units and all common elements, all of
which shall be located in any state of the United States or the District of
Columbia.

 

“Cooperative Shares” means, with
respect to any Cooperative Loan, the shares of stock issued by a Cooperative
Corporation and allocated to a Cooperative Unit and represented by a stock
certificate.

 

“Cooperative Unit” means, with
respect to a Cooperative Loan, a specific unit in a Cooperative Project.

 

“Credit File” means, with respect to a
Mortgage Loan, all of the paper and documents required to be maintained pursuant to the related Takeout Commitment or the
related Hedging Arrangement, as applicable, and all other papers and records of
whatever kind or description, whether developed or created by Seller or others,
required to Originate, document or service the Mortgage Loan.

 

“Current Assets”
means, with respect to any Person at any date, those assets set forth in the
consolidated balance sheet of the Person, prepared in accordance with GAAP, as
current assets, defined as those assets that are now cash or will be by their
terms or disposition converted to cash within one year from the date of
calculation.

 

“Current Liabilities”
means, with respect to any Person at any date, those liabilities set forth in
the consolidated balance sheet of the Person, prepared in accordance with GAAP,
as current liabilities, defined as those liabilities due upon demand or within
one year from the date of calculation.

 

5

 

“Current Ratio”
means, with respect to any Person at any date, the sum of the amounts set forth
in the consolidated balance sheet of the Person, prepared in accordance with
GAAP, as Current Assets divided by the sum of the amounts set forth in such
consolidated balance sheet as Current Liabilities.

 

“Debt” means,
with respect to any Person, at any date (a) all indebtedness or other
obligations of such Person (and, if applicable, that Person’s Subsidiaries, on
a consolidated basis) which, in accordance with GAAP, would be included in
determining total liabilities as shown on the liabilities side of a balance
sheet of such Person at such date; and (b) all indebtedness or other
obligations of such Person (and, if applicable, that Person’s Subsidiaries, on
a consolidated basis) for borrowed money or for the deferred purchase price of
property or services; provided, however, that, for purposes of
this Agreement, there shall be excluded from Debt at any date loan loss
reserves, deferred taxes arising from capitalized excess service fees,
operating leases and Qualified Subordinated Debt.

 

“Default” means
any condition or event that, with the giving of notice or lapse of time or
both, would constitute an Event of Default.

 

“Defaulted Loan”
means a Mortgage Loan (i) as to which any payment, escrow payment, or part
thereof, remains unpaid for 30 days or more from the original due date for
such payment (whether or not Seller has allowed any grace period or extended
the due date thereof by any means), (ii) as to which another material
default has occurred and is continuing, including the commencement of
foreclosure proceedings; (iii) as to which an Act of Insolvency has
occurred with respect to the Mortgagor thereof or any cosigner, guarantor,
endorser, surety, assumptor or grantor with respect thereto, or (iv) which,
consistent with Seller’s collection policies, has been or should be written off
as uncollectible in whole or in part.

 

“Defective Mortgage Loan” means a Mortgage
Loan that is not an Eligible Mortgage Loan.

 

“Early Repurchase Date”
has the meaning set forth in Paragraph 3(h)(ii).

 

“Electronic
Tracking Agreement” means the Electronic Tracking Agreement
substantially dated the date hereof by and among, Buyer, Seller, MERS and
MERSCORP, Inc. (the “Electronic Agent”);
as the same shall be amended, supplemented or otherwise modified from time to
time.

 

“Eligible
Mortgage Loan” means, on any date of determination, a Mortgage Loan:

 

(i)            for which each of the representations
and warranties set forth on Exhibit B are true and correct as of
such date of determination;

 

(ii)           which is either a Conventional
Conforming Loan or a Government Loan;

 

(iii)          which has an Origination Date no more
than thirty (30) days prior to the Purchase Date for the initial Transaction to
which that Mortgage Loan was subject;

 

6

 

(iv)          which is eligible for sale to an
Approved Takeout Investor under its Takeout Guidelines;

 

(v)           which has a scheduled Repurchase Date
not later than thirty (30) days after the Purchase Date for the initial
Transaction to which that Mortgage Loan was subject;

 

(vi)          which does not have a Loan-to-Value
Ratio in excess of 103%, in the case of a Government Loan, or 95%, in the case
of a Conventional Conforming Loan (or, in each case, such other percentage
determined by Buyer in its sole discretion and specified in a written notice
from Buyer to Seller from time to time) and, if its Loan-to-Value Ratio is in
excess of 80% (or such other percentage as may be determined by Buyer in its
sole discretion and specified in a written notice from Buyer to Seller from
time to time), it has private mortgage insurance in an amount required by the
applicable Agency Guidelines, unless pursuant to Agency Guidelines in existence
at the time such Mortgage Loan was originated, private mortgage insurance is
not required for such Mortgage Loan;

 

(vii)         which, if a Government Loan, the
related Mortgagor has a FICO Score of at least 620 (or such other minimum FICO
Score as may be determined by Buyer in its sole discretion and specified in a
written notice from Buyer to Seller from time to time);

 

(viii)        which, if a Conventional Conforming
Loan, the related Mortgagor has a FICO Score of at least 620 (or such other
minimum FICO Score as may be determined by Buyer in its sole discretion and
specified in a written notice from Buyer to Seller from time to time);

 

(ix)           for which a complete Loan File has
been delivered to Buyer, or, in the case of a Wet Loan, for which the items
listed in items (i) through (iv) of the definition of Loan File have
been delivered to Buyer;

 

(x)            for which, if a Wet Loan on the
applicable Purchase Date, all applicable items listed in items (v) through
(xii) of the definition of Loan File have been delivered to Buyer at or prior
to its Wet Funding Deadline;

 

(xi)           which, if a Wet Loan, its Purchase
Price, when added to the sum of the Purchase Prices of all other Wet Loans that
are then subject to Transactions, is less than or equal to (i) 50% (or
such other percentage as may be determined by Buyer in its sole discretion and
specified in a written notice from Buyer to Seller from time to time) of the
Facility Amount on any day that is one of the first five (5) or the last
five (5) Business Days of any calendar month or (ii) 30% (or such
other percentage as may be determined by Buyer in its sole discretion and
specified in a written notice from Buyer to Seller from time to time) of the
Facility Amount on any other day;

 

(xii)          which, if a Government Loan, its
Purchase Price, when added to the sum of the Purchase Prices of all other
Government Loans that are then subject to Transactions, is less than or equal
to 50% (or such other percentage as may be determined by Buyer in its sole
discretion and specified in a written notice from Buyer to Seller from time to
time) of the Facility Amount;

 

7

 

(xiii)         for which, if not a CL Loan, Buyer has
approved the underwriting, the Takeout Commitment or Hedging Arrangement, as
applicable, the appraisal and other related information;

 

(xiv)        which, if subject to a Takeout
Commitment, is not (a) subject to a Takeout Agreement with respect to
which Seller is in default, or (b) rejected or excluded for any reason
(other than default by Buyer) from the related Takeout Commitment by the
Approved Takeout Investor;

 

(xv)         which, if subject to a Hedging
Arrangement, is not (a) subject to a Hedging Arrangement with respect to
which Seller is in default, or (b) rejected or excluded for any reason
(other than default by Buyer) from the related Hedging Arrangement by the
Person with whom such Hedging Arrangement is maintained;

 

(xvi)        which is not a Mortgage Loan that Seller
has failed to repurchase when required by the terms of this Agreement;

 

(xvii)       for which, if subject to a Takeout
Commitment, the related Takeout Commitment has not expired or been terminated
or cancelled by the Approved Takeout Investor;

 

(xviii)      for which, if subject to a Hedging
Arrangement, the related Hedging Arrangement has not expired or been terminated
or cancelled by the Person with whom such Hedging Arrangement is maintained;

 

(xix)         for which the related Mortgage Note has
not been out of the possession of Buyer pursuant to a Trust Release Letter for
more than five (5) Business Days after the date of that Trust Release
Letter;

 

(xx)          for which neither the related Mortgage
Note nor the Mortgage has been out of the possession of Buyer pursuant to a
Bailee Letter for more than the number of days specified in such Bailee Letter;
and

 

(xxi)         which is not a Defaulted Loan.

 

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

 

“Event of Default”
has the meaning set forth in Paragraph 12.

 

“Facility Amount”
has the meaning set forth in the Side Letter.

 

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

 

“FDIC” means the Federal
Deposit Insurance Corporation or
any successor.

 

8

 

“FHA” means the
Federal Housing Administration, which is a sub-division of HUD, or any
successor.  The term “FHA” is used
interchangeably in this Agreement with the term “HUD”.

 

“FICO Score”
means, with respect to any Mortgagor, the statistical credit score prepared by
Fair Isaac Corporation, Experian Information Solutions, Inc., TransUnion
LLC or such other Person as may be approved in writing by Buyer in its sole
discretion.

 

“Financial Institution”
means JPM Chase in its capacity of the bank at which the Accounts are held.

 

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

 

“Funding Account” means the
internal demand deposit account held at JPM Chase for the benefit of Buyer, and
styled as follows:

 

JPMorgan Chase Bank, N.A. Secured Party

Funding Account for Home Loan Center, Inc.

 

“GAAP” means
generally accepted accounting principles consistently applied in the United
States.

 

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

 

“GLB Act” means
the Gramm-Leach Bliley Act of 1999 (Public Law 106-102, 113 Stat 1338), as it
may be amended from time to time.

 

“Government Loan”
means a Mortgage Loan which is insured by the FHA or guaranteed by the
Department of Veterans Affairs.  The term
Government Loan shall not include any Mortgage Loan which is a Conventional
Conforming Loan.

 

“Governmental Authority”
means and includes the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, any
governmental or quasi-governmental department, commission, board, bureau or
instrumentality, any court, tribunal or arbitration panel, and, with respect to
any Person, any private body having regulatory jurisdiction over any Person or
its business or assets (including any insurance company or underwriter through
whom that Person has obtained insurance coverage).

 

“Guarantors”
means each of Tree.com, Inc., Lending Tree Holdings Corp. and Lending
Tree, LLC, and any Person who hereafter executes a guaranty to support the
obligations of Seller under this Agreement and the other Transaction Documents.

 

“Guaranty” means
each guaranty dated the date hereof, executed by each Guarantor in favor of
Buyer or any other guaranty executed and delivered to Buyer by a Guarantor, in
each 

 

9

 

case, as the same may be
amended, restated, supplemented or otherwise modified from time to time.

 

“Hedging Arrangement”
means any forward sales contract, forward trade contract, interest rate swap
agreement, interest rate cap agreement, or other contract pursuant to which
Seller has protected itself from the consequences of a loss in the value of a
Mortgage Loan or its portfolio of Mortgage Loans because of changes in interest
rates or in the market value of mortgage loan assets.

 

“HLC Escrow”
means HLC Escrow and Settlement Services, Inc., a California corporation.

 

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

 

“Income” means,
with respect to any Purchased Mortgage Loan, (i) all payments of
principal, payments of interest, proceeds of Takeout Commitments, proceeds of
Hedging Arrangements, cash collections, dividends, sale or insurance proceeds
and other cash proceeds received relating to the Purchased Mortgage Loan and
other Mortgage Assets, (ii) any other payments or proceeds received in
relation to the Purchased Mortgage Loan and other Mortgage Assets (including,
without limitation, any liquidation or foreclosure proceeds with respect to the
Purchased Mortgage Loan and payments under any guarantees relating to the
Purchased Mortgage Loan), (iii) all escrow withholds and escrow payments
for Property Charges and (iv) all other “proceeds” as defined in Section 9-102(64)
of the UCC.

 

“Indemnified Party”
has the meaning set forth in Paragraph 16(b).

 

“Insured Closing Letter”
means a letter of indemnification from a title insurer addressed to Seller
and/or Buyer, with coverage that is customarily acceptable to Persons engaged
in the Origination of mortgage loans, identifying the Settlement Agent covered
thereby and indemnifying Seller and/or Buyer against losses incurred due to
malfeasance or fraud by the Settlement Agent or the failure of the Settlement
Agent to follow the specific closing instructions specified by Buyer in the
escrow letter with respect to the closing of the Mortgage Loan.  The Insured Closing Letter shall be either
with respect to the individual Mortgage Loan being purchased pursuant hereto or
a blanket Insured Closing Letter which covers closings conducted by the
Settlement Agent in the jurisdiction in which the closing of such Mortgage Loan
takes place.

 

“Interim Servicing Term”
has the meaning set forth in Paragraph 13(a).

 

“IRC” means the
Internal Revenue Code of 1986, as amended from time to time and any successor
statute.

 

“JPM Chase”
means JPMorgan Chase Bank, N.A., a national banking association, in its
individual capacity, and its successors and assigns.

 

“Last Endorsee”
means with respect to each Mortgage Loan, the last Person to whom such Mortgage
Loan was assigned or the related Mortgage Note was endorsed, as applicable.

 

10

 

“Leverage
Ratio” means that ratio of a Person’s Debt (including off balance sheet
financings) to its Adjusted Tangible Net Worth.

 

“Lien” means any
security interest, mortgage, deed of trust, charge, pledge, hypothecation,
assignment, deposit arrangement, equity, encumbrance, lien (statutory or
other), preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation,
any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the UCC (other than any such financing
statement filed for informational purposes only) or comparable law of any
jurisdiction to evidence any of the foregoing.

 

“Liquidity”
means, at any time, Seller’s unencumbered and unrestricted cash and Cash
Equivalents (including the balance on deposit in the Cash Pledge Account, but
excluding any restricted cash or cash pledged to third parties) at such time
plus, with respect to any Purchased Mortgage Loans subject to this Agreement or
other Mortgage Loans subject to similar agreements with other third parties,
the excess, if any, of the maximum Purchase Price (or equivalent term under a similar
agreement) available to Seller pursuant to the terms hereof (or thereof) for
such Purchased Mortgage Loans (or such other Mortgage Loans) over the aggregate
outstanding Purchase Price (or equivalent term) for such Purchased Mortgage
Loans (or such other Mortgage Loans) at such time.

 

“Litigation”
means, as to any Person, any action, lawsuit, investigation, claim, proceeding,
judgment, order, decree or resolution pending against such Person or the
business, operations, properties or assets of such Person before, or by, any
Governmental Authority.

 

“Loan File”
means, with respect to each Mortgage Loan, the following documents:

 

(i)            if a Wet Loan, a fully
executed Insured Closing Letter from the related Settlement Agent involved in
the Wet Funding of that Mortgage Loan;

 

(ii)           if a Government Loan, a
valid eligibility certification from VA or FHA, as applicable, or such other
documentation as may be required by Buyer in its sole discretion and specified
in a written notice from Buyer to Seller from time to time, with respect to
such Purchased Mortgage Loan;

 

(iii)          if a Conventional Conforming
Loan, a valid eligibility certification from Fannie Mae or Freddie Mac, as
applicable, or such other documentation as may be required by Buyer in its sole
discretion and specified in a written notice from Buyer to Seller from time to
time, with respect to such Mortgage Loan;

 

(iv)          such other documents
required by Buyer in its sole discretion;

 

(v)           the original Mortgage Note,
endorsed in blank without recourse by the Last Endorsee thereof, together with
all intervening endorsements showing an unbroken chain of endorsement from the
originator of such Mortgage Loan to the Last Endorsee, or, if the original has
been lost, a lost note affidavit in form and substance acceptable to Buyer and
executed by the Last Endorsee;

 

11

 

(vi)          the original recorded
Mortgage, or, if the original has been lost or if such Mortgage is in the
process of being recorded, a copy of the original Mortgage together with an
Officer’s Certificate (which may be included on the face of such copy)
certifying (x) that such copy is a true, correct and complete copy and (y) that
such Mortgage has been transmitted to the appropriate recording office for
recordation;

 

(vii)         the originals of all
assumption, modification, consolidation, substitution and extension agreements,
if any, with evidence of recordation thereon, or copies of such original
agreements together with an Officer’s Certificate certifying (x) that such
copy is a true, correct and complete copy and (y) that such agreements
have been transmitted to the appropriate recording office for recordation;

 

(viii)        all guarantees, supporting
obligations and collateral, if any, received with respect to, or supporting
repayment of, such Purchased Mortgage Loan;

 

(ix)           evidence satisfactory to
Buyer that each Mortgage Loan subject to such Transaction is a MERS Designated
Mortgage Loan and Buyer is designated as “Interim Funder” on the MERS System
with respect to each such Mortgage Loan;

 

(x)            if, at any point in the
future, Buyer so designates, by giving at least ten (10) Business Days’
written notice to a Seller, that Sellers will, on a going forward basis, be
responsible for giving the same (it being understood and agreed that
unless and until Buyer gives such notice to a Seller, Buyer will be responsible
for giving such notices to Mortgagors and this item will not be included in the
Loan Files), a notice letter in form and substance acceptable to Buyer in its
sole discretion, delivered by Seller on behalf of Buyer to Mortgagor setting
forth the information regarding Buyer as the “new creditor” and such other
information required by Section 404 of The Helping Families Save Their
Homes Act of 2009 (amending the Truth in Lending Act of 1968 (as amended)), and
acknowledged in writing by Mortgagor unless Buyer has notified Seller in
writing that such notice is no longer required;

 

(xi)           if a Cooperative Loan:

 

(A) 
the original Cooperative Shares with original Stock Power with a signature
guarantee in form and substance satisfactory to Buyer;

 

(B) 
the original Proprietary Lease;

 

(C) 
the original Recognition Agreement; and

 

(D) an
acknowledgement copy of the UCC-1 financing statement filed in connection with
the Mortgage related thereto; and

 

(xii)          such additional documents
required by Buyer in its sole discretion from time to time by written notice to
Seller.

 

“Loan Purchase Detail”
means a data tape or schedule of information prepared and transmitted
electronically by Seller to Buyer in the format and with such fields of
information set

 

12

 

forth in Exhibit I
regarding the Purchased Mortgage Loans, as such required format or information
fields may be changed from time to time by Buyer with prior written notice to
Seller.

 

“Loan-to-Value Ratio”
means, for each Mortgage Loan as of the related Purchase Date, a fraction
(expressed as a percentage) having as its numerator the original principal
amount of the Mortgage Note and as its denominator the appraised value of the
related Mortgaged Property of such Mortgage Loan indicated in the appraisal
obtained in connection with the Origination of such Mortgage Loan.

 

“Manufactured Home”
means a single-family home constructed at a factory and shipped in one or more
sections to a housing site.

 

“Margin Amount”
means at any time with respect to any Purchased Mortgage Loan, the amount equal
to (a) the applicable Margin Percentage for that Purchased Mortgage Loan
at that time multiplied  by (b) the Market Value for that
Purchased Mortgage Loan at that time.

 

“Margin Deficit”
has the meaning specified in Paragraph 4(a).

 

“Margin Percentage”
has the meaning set forth in the Side Letter.

 

“Margin
Stock” has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to
time.

 

“Market Value”
means, at any time with respect to any Purchased Mortgage Loan, the fair market
value of such Purchased Mortgage Loan at such time as determined by Buyer in
its sole good faith discretion.

 

“Material Adverse Effect”
means any (i) material adverse effect upon the validity, performance or
enforceability of any Transaction Document, (ii) material adverse effect
upon the assets, business or condition, financial or otherwise, of Seller (and
its Subsidiaries, on a consolidated basis) or any Guarantor, (iii) material
adverse effect upon the ability of Seller to fulfill its obligations under this
Agreement or the ability of any Guarantor to fulfill its obligations under its
Guaranty, or (iv) material adverse effect on the value or salability of
the Purchased Mortgage Loans subject to this Agreement, taken as a whole.

 

“Maximum Warehouse Capacity Ratio”
means, at any time with respect to any Person, the ratio of (a) Available
Warehouse Facilities at such time, to (b) that Person’s Adjusted Tangible
Net Worth at such time.

 

“MERS” means
Mortgage Electronic Registration Systems, Inc. and its successors and
assigns.

 

“MERS Designated Mortgage
Loan” means a Mortgage Loan that satisfies the definition of the
term “MERS Designated Mortgage Loan” contained in the Electronic Tracking
Agreement.

 

13

 

“MERS® System” has the meaning given that
term in the Electronic Tracking Agreement.

 

“MIN” means the
eighteen digit MERS Identification Number permanently assigned to each MERS
Designated Mortgage Loan.

 

“MOM Loan” means
a MERS Designated Mortgage Loan that was registered on the MERS® System at the time of its Origination and for
which MERS appears as the record mortgagee or beneficiary on the related
Mortgage.

 

“Moody’s” means
Moody’s Investors Service and any successor.

 

“Mortgage” means
a mortgage, deed of trust or other security instrument creating a Lien on the
Mortgaged Property.

 

“Mortgage Assets”
has the meaning specified in Paragraph 6.

 

“Mortgage Loan”
means a whole mortgage loan or Cooperative Loan which is secured by a Mortgage
on residential real estate, and shall include all Servicing Rights with respect
thereto.

 

“Mortgage Loan Documents”
means the Mortgage Note, the Mortgage and all other documents evidencing,
securing, guaranteeing or otherwise related to a Mortgage Loan.

 

“Mortgage Note”
means the original, executed promissory note or other primary evidence of
indebtedness of a Mortgagor on a Mortgage Loan.

 

“Mortgaged Property”
means the residential real estate securing the Mortgage Note, which shall be
either (i) in the case of a Mortgage Loan that is not a Cooperative Loan,
a fee simple estate in the real property located in any state of the United
States (including, without limitation, all buildings, improvements and fixtures
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) purchased with the proceeds of the Mortgage Loan or (ii) in
the case of a Cooperative Loan, the Proprietary Lease and related Cooperative
Shares.

 

“Mortgagor”
means the obligor on a Mortgage Note or the grantor or mortgagor on a Mortgage,
as the context requires.

 

“Officer’s Certificate”
means a certificate signed by a Responsible Officer of Seller and delivered to
Buyer.

 

“Operating
Account” means the internal demand deposit account held at
JPM Chase for the benefit of Buyer, and styled as follows:

 

JPMorgan Chase Bank, N.A. Secured Party

Operating Account for Home Loan Center, Inc.

 

14

 

“Originate” or “Origination” means a Person’s actions in taking applications
for, underwriting and closing Mortgage Loans.

 

“Origination Date”
means the date of the Mortgage Note and the related Mortgage.

 

“Outstanding Principal
Balance” of a Mortgage Loan means, at any time, the then unpaid
outstanding principal balance of such Mortgage Loan.

 

“Parent” means
Tree.com, Inc.

 

“Party” means
each of Buyer and Seller.

 

“Permitted Dividend”
means (a) as to any taxable period of Seller during which Seller
makes an S corporation election with the Internal Revenue Service, an annual or
quarterly distribution necessary to enable each shareholder of Seller to
pay federal or state income taxes attributable to such shareholder resulting
solely from the allocated share of income of Seller for such period (“Permitted
Tax Distributions”) and (b) a regular cash dividend declared by Seller and
paid to its shareholders, provided that such regular cash dividends do not
exceed, in the aggregate, during any fiscal year one hundred percent (100%) of
Seller’s net income for such fiscal year after payment of the Permitted Tax
Distributions (as calculated on its annual statement of income).

 

“Person” means
an individual, partnership, corporation (including a business trust),
joint-stock company, limited liability company, trust, unincorporated
association, joint venture, any Governmental Authority or other entity.

 

“Post-Origination Period”  means the period of time
between a Mortgage Loan’s Origination Date and its subsequent sale to an
Approved Takeout Investor.

 

“Price Differential”
means with respect to any Transaction hereunder, for each month (or portion
thereof) during which that Transaction is outstanding, the sum of the following
amount for each day during that month (or portion thereof):  the weighted average of the applicable
Pricing Rates for such day multiplied  by the aggregate
outstanding Purchase Price on such day divided  by 360.  The Price Differential for each Transaction
shall accrue during the period commencing on (and including) the day on which
the Purchase Price is transferred into the Funding Account (or otherwise paid
to Seller) for such Transaction and ending on (but excluding) the date on which
the Repurchase Price is paid.

 

“Pricing Rate”
means the per annum percentage rate (or rates) to be applied to determine the
Price Differential, which rate (or rates) shall be determined in accordance
with the Side Letter.

 

“Prime Rate”
means the rate of interest per annum announced from time to time by Buyer as
its prime rate.  The Prime Rate is a
variable rate and each change in the Prime Rate is effective from and including
the date the change is announced as being effective.  THE PRIME RATE IS A REFERENCE RATE AND MAY NOT
BE BUYER’S LOWEST RATE.

 

15

 

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

 

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

 

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

 

“Purchase Date”
means the date with respect to each Transaction on which the Mortgage Loans
subject to such Transaction are transferred by Seller to Buyer hereunder; provided,
however, that in any case, the Purchase Date shall occur no later than 30 days
after the Origination Date of each related Mortgage Loan.

 

“Purchase Price”  has the meaning set forth in the Side Letter.

 

“Purchased Mortgage Loans”
means, with respect to any Transaction, the Mortgage Loans sold by Seller to
Buyer in such Transaction hereunder (each of which sales shall be on a
servicing released basis), including any Additional Purchased Mortgage Loans
delivered pursuant to Paragraph 4(a) and excluding any
Purchased Mortgage Loans repurchased by Seller or transferred to Seller.  Unless the context shall otherwise require,
the term “Purchased Mortgage Loans” shall refer
to all Purchased Mortgage Loans under all Transactions.

 

“Qualified Subordinated Debt” means, with respect to any Person, all unsecured Debt of such Person,
for borrowed money, which is, by its terms or by the terms of a subordination
agreement (which terms shall have been approved by Buyer), in
form and substance satisfactory to Buyer, effectively subordinated in right of payment to all other present and
future obligations and all indebtedness of such Person, of every kind and
character, owed to Buyer and which terms or subordination agreement, as
applicable, include, among other things, standstill and blockage provisions
approved by Buyer, restrictions on amendments without the consent of Buyer,
non-petition provisions and maturity date or dates for any principal thereof at
least 395 days after the date hereof.

 

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

 

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

 

“REO Property”
means a Mortgaged Property acquired by Seller through foreclosure or deed in
lieu of foreclosure.

 

16

 

“Repurchase Date”
means, with respect to each Transaction, the date on which Seller is required
to repurchase from Buyer the Purchased Mortgage Loans which are subject to that
Transaction.  The Repurchase Date shall
occur (i) for Transactions terminable on a date certain, on the date that
is 30 days after the related Purchase Date, or such later date as permitted by
Buyer in its sole discretion, (ii) for Transactions to be terminable on
demand (as permissible under this Agreement), the earlier to occur of (a) the
date specified in Buyer’s demand or (b) the date that is 30 days after the
related Purchase Date, if no demand is sooner made, or such later date as
permitted by Buyer in its sole discretion and (iii) for repurchases of
Defective Mortgage Loans under Paragraph 3(h), the Early Repurchase
Date; provided, however, that in any case, the Repurchase Date with
respect to each Transaction shall occur no later than the earlier of (1) the
date declared by Buyer pursuant to Paragraph 12(b)(i) and (2) the
Termination Date.

 

“Repurchase Price”
means, with respect to each Transaction, the price at which Purchased Mortgage
Loans subject to such Transaction are to be resold by Buyer to Seller upon
termination of such Transaction, which will be determined in each case
(including Transactions terminable upon demand) as the sum of the Purchase
Price and the accrued and unpaid Price Differential as of the date of such
termination; provided that such Price Differential may be paid on a day
other than the Repurchase Date in accordance with the terms of this Agreement.

 

“Required Amount”
has the meaning set forth in Paragraph 5(b).

 

“Requirement(s) of Law” means any law,
treaty, ordinance, decree, requirement, order, judgment, rule, regulation (or
interpretation of any of the foregoing) of any Governmental Authority having
jurisdiction over Buyer, Seller, any Guarantor, any Approved Takeout Investor
or any person with whom any Hedging Arrangement is maintained, any of their
respective Subsidiaries or their respective properties or any agreement by
which any of them is bound.

 

“Rescission”
means the Mortgagor’s exercise of any right to rescind the related Mortgage
Note and related documents pursuant to applicable law.

 

“Responsible Officer”
means, as to any Person, the chief executive officer or, with respect to
financial matters, the chief financial officer of such Person; provided,
however, that in the event any such officer is unavailable at any time he
or she is required to take any action hereunder, Responsible Officer means any
officer authorized to act on such officer’s behalf as demonstrated by a
certificate of corporate resolution or similar document and an incumbency
certificate.

 

“S&P” means
Standard and Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.,
and any successor.

 

“Seller’s Accounts”
means each of the Funding Account and the Operating Account.

 

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

 

“Seller’s Customer Information” means any information or
records in any form (written, electronic or otherwise) containing a Seller’s
Customer’s personal information or

 

17

 

identity,
including such Seller’s
Customer’s name, address, telephone number, loan number, loan payment history, delinquency
status, insurance carrier or payment information, tax amount or payment information
and the fact that such Seller’s Customer has a relationship with Seller.

 

“Servicing
File” means with respect to each
Mortgage Loan, all documents relating to the servicing thereof, which may
consist of (i) copies of the documents contained in the related Credit
File and Loan File, as applicable, (ii) the credit documentation relating
to the underwriting and closing of such Mortgage Loan(s), (iii) copies of
all related documents, correspondence, notes and all other materials of any
kind, (iv) copies of computer tapes, proof of insurance coverage,
insurance policies, appraisals, other closing documentation, payment history
records, (v) all other information or materials necessary or required to
board such Mortgage Loan onto the applicable servicing system and (vi) all
other related documents required to be delivered pursuant to any of the
Transaction Documents.

 

“Servicing Records”
means all servicing records created and/or maintained by Seller in its capacity
as interim servicer for Buyer with respect to a Purchased Mortgage Loan,
including but not limited to any and all servicing agreements, files,
documents, records, databases, computer tapes, copies of computer tapes, proof
of insurance coverage, insurance policies, appraisals, other closing documentation,
payment history records and any other records relating to or evidencing the
servicing thereof.

 

“Servicing Rights”
means all rights and interests of Seller or any other Person, whether
contractual, possessory or otherwise to service, administer and collect Income
with respect to Mortgage Loans, and all rights incidental thereto.

 

“Settlement Agent”
means a title company, escrow company or attorney that is acceptable to Buyer
in its sole discretion and that is (i) a division, subsidiary or licensed
agent of a title insurance company reasonably acceptable to Buyer and (ii) insured
against errors and omissions in such amounts and covering such risks as are at
all times customary for its business and with industry standards, to which the
proceeds of any purchase of a Mortgage Loan are to be wired in accordance with
local law and practice in the jurisdiction where such Mortgage Loan is being
Originated.

 

“Shipping Instructions”
means the advice in the form of Exhibit D, sent by Seller to Buyer
electronically through the CMWF Web, which instructs Buyer to send one or more
Mortgage Notes and the related Mortgages to an Approved Takeout Investor.

 

“Side Letter”
means the letter agreement, dated as of the date hereof, between Buyer and
Seller, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

 

“Stock Power”
means, with respect to a Cooperative Loan, an assignment of the stock
certificate or an assignment of the Cooperative Shares issued by the
Cooperative Corporation.

 

“Subservicer” has the meaning
set forth in Paragraph 13(a)(ii).

 

“Subservicer Instruction Letter” means a letter
agreement between Seller and each Subservicer substantially in the form of Exhibit H.

 

18

 

“Subservicing Agreement” has the
meaning set forth in Paragraph 13(a)(ii).

 

“Subsidiary”
means any corporation, association or other business entity in which more than
fifty percent (50%) of the total voting power or shares of stock (or equivalent
equity interest) entitled to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more of the other Subsidiaries of that Person or a
combination thereof.

 

“Successor Servicer” has the
meaning set forth in Paragraph 13(e).

 

“Takeout Agreement”
means an agreement, in form and substance acceptable to Buyer, between an
Approved Takeout Investor and Seller, pursuant to which such Approved Takeout
Investor has committed to purchase from Seller certain of the Purchased
Mortgage Loans, as such agreement may be amended, restated, supplemented or
otherwise modified from time to time with the prior written consent of Buyer.

 

“Takeout Commitment”
means, with respect to each Approved Takeout Investor, the commitment to
purchase a Purchased Mortgage Loan from Seller pursuant to a Takeout Agreement,
and that specifies (a) the type of Purchased Mortgage Loan to be
purchased, (b) a purchase date or purchase deadline date and (c) a
purchase price or the criteria by which the purchase price will be determined.

 

“Takeout Guidelines”
means (i) the eligibility requirements established by the Approved Takeout
Investor that must be satisfied by a Mortgage Loan originator to sell Mortgage
Loans to the Approved Takeout Investor and (ii) the specifications that a
Mortgage Loan must meet, and the requirements that it must satisfy, to qualify
for the Approved Takeout Investor’s program of Mortgage Loan purchases, as such
requirements and specifications may be revised, supplemented or replaced from
time to time.

 

“Takeout Value”
means, with respect to any Purchased Mortgage Loan subject to a Takeout
Commitment, the price that an Approved Takeout Investor has agreed to pay
Seller for such Purchased Mortgage Loan and, with respect to any Purchased
Mortgage Loan subject to a Hedging Arrangement, the weighted average price of
portfolio hedges or forward trades for such Purchased Mortgage Loan.

 

“Tangible Net Worth” means, without respect to any Person at any date, the sum of total
shareholders’ equity in such Person (including capital stock, additional
paid-in capital and retained earnings, but excluding treasury stock, if any),
on a consolidated basis; provided, however, that, for purposes of
this definition, there shall be excluded from assets the following: the
aggregate book value of all intangible assets of such Person (as determined in
accordance with GAAP), including, without limitation, goodwill, trademarks,
trade names, service marks, copyrights, patents, licenses, franchises, capitalized
servicing rights, excess capitalized servicing rights, each to be determined in accordance with GAAP consistent with those
applied in the preparation of such Person’s financial statements; advances
of loans to shareholders or Affiliates, advances of loans to employees (unless
such advances are against future commissions), investments in Affiliates,
deferred tax assets, assets pledged to secure any liabilities not included

 

19

 

in the Debt of such Person
and any other assets which would be deemed by Buyer, CL or the Agencies to be
unacceptable in calculating tangible net worth.

 

“Tax and Insurance Amount”
means, at any time, the amount determined by Buyer from time to time in its
sole discretion with written notice to Seller, as the amount approximately
equal to the escrowed tax and insurance payments made by the Mortgagors with
respect to the Purchased Mortgage Loans, at that time.

 

“Termination Date”
means the earliest of (i) that Business Day which Seller designates as the
Termination Date by written notice to Buyer at least thirty (30) days
prior to such date, (ii) the date of declaration of the Termination Date
pursuant to Paragraph 12(c), (iii) the Business Day which
Buyer designates as the Termination Date pursuant to Paragraph 11(aa),
and (iv) 364 days after the date hereof.

 

“Third Party Originator”
means any Person, other than a permanent employee of Seller, who engages in the
solicitation, procurement, packaging, processing or performing of any other
Origination function with regard to a Mortgage Loan.

 

“TPO Loan” means
a Mortgage Loan which has been solicited, procured, packaged, processed or
otherwise Originated by a Third Party Originator.

 

“Transaction”
has the meaning set forth in Paragraph 1 of this Agreement.

 

“Transaction Documents”
means this Agreement, each Confirmation, each Bailee Letter, each Trust Release
Letter, the Side Letter, the Electronic Tracking Agreement, each Takeout
Agreement, each Takeout Commitment, each Insured Closing Letter, each Guaranty
and each other agreement, document or instrument executed or delivered in
connection therewith, in each case as amended, restated, supplemented or
otherwise modified from time to time.

 

“Trust Release Letter”
means a letter in substantially the form of Exhibit L,
appropriately completed and authenticated by Seller, or such other form as may
be approved by Buyer in writing in its sole discretion.

 

“UCC” means the
Uniform Commercial Code, as amended from time to time, as in effect in the
relevant jurisdiction.

 

“VA” means the
U.S. Department of Veterans Affairs or any successor department or agency.

 

“Wet Funding”
means the purchase of a Mortgage Loan that is Originated by Seller on the
Purchase Date under escrow arrangements satisfactory to Buyer pursuant to which
Seller is permitted to use the Purchase Price proceeds to close the Mortgage
Loan prior to Buyer’s receipt of the complete Loan File.

 

“Wet Funding Deadline”
means, with respect to any Wet Loan, the fifth (5th) Business Day after the
Origination Date for such Wet Loan, or such later Business Day as Buyer, in its
sole discretion, may specify from time to time.

 

20

 

“Wet Loan” means a Mortgage Loan for
which the completed Loan File was not delivered to Buyer prior to funding.

 

3.                                      Initiation;
Confirmations; Termination

 

(a)                                 Initiation.  Any agreement to enter into a Transaction
shall be made in writing at the initiation of Seller through the CMWF Web prior
to the Termination Date.  In the event
that Seller desires to enter into a Transaction hereunder, Seller shall deliver
to Buyer no earlier than three (3) Business Days prior to, and no later
than (x) if no fraud detection report is submitted with a request, 2:30 p.m.,
Houston, Texas time, or (y) if a fraud detection report from a third-party
mortgage fraud detection service acceptable to Buyer is submitted with a
request, 3:00 p.m., Houston, Texas time, on, the date of the proposed
Purchase Date, a request for Buyer to purchase an amount of Eligible Mortgage
Loans on such Purchase Date; provided that Buyer may obtain additional
fraud detection reports with respect to Mortgage Loans in respect of which
Seller submits fraud detection reports. 
All such purchases shall be on a servicing released basis and shall
include the Servicing Rights with respect to such Eligible Mortgage Loan.  Such request shall state the Purchase Price
and shall include the Confirmation related to the proposed Transaction.

 

(b)                                 Purchase by
Buyer.  Subject to the terms of the
Side Letter and satisfaction of the conditions precedent set forth in this Paragraph 3
and in Paragraph 7, on the requested Purchase Date for each
Transaction, Buyer shall transfer to Seller an amount equal to the Purchase
Price for purchase of the Eligible Mortgage Loans that is the subject of such
Transaction on that Purchase Date, less any amounts to be netted against such
Purchase Price.  The transfer of funds to
the Settlement Agent to be used to fund the Mortgage Loan, and if applicable,
the netting of amounts for value, on the Purchase Date for any Transaction will
constitute full payment by Buyer of the Purchase Price for such Transaction.
Within five (5) days following the Purchase Date, Seller shall (i) take
such steps as are necessary and appropriate to effect the transfer of the
Purchased Mortgage Loan to Buyer on the MERS® System and (ii) in
the case of a Wet Funding, deliver all remaining items of the related Loan File
to Buyer.  Notwithstanding anything to
the contrary in this Agreement or any other Transaction Document, Buyer shall
have no obligation to enter into any Transaction on or after the Termination
Date.

 

(c)                                  Confirmations.  The Confirmation for each Transaction shall (i) include
the Loan Purchase Detail with respect to the Mortgage Loans subject to such
Transaction, (ii) identify Buyer and Seller and (iii) set forth (A) the
Purchase Date, (B) the Purchase Price, (C) the Repurchase Date, (D) the
Pricing Rate applicable to the Transaction and (E) any additional terms or
conditions of the Transaction mutually agreeable to Buyer and Seller.  In the event of any conflict between the
terms of a Confirmation and this Agreement, such Confirmation shall prevail.

 

(d)                                 Failed Fundings.  Seller agrees to report to Buyer by facsimile
transmission or electronic mail as soon as practicable, but in no event later
than one (1) Business Day after each Purchase Date any Mortgage Loans
which failed to be funded to the related Mortgagor, otherwise failed to close
for any reason or failed to be purchased hereunder.  Seller further agrees to (i) return, or
cause the Settlement Agent to return, to Buyer the portion of the Purchase
Price allocable to such Mortgage Loans as soon as practicable, but in no event
later than one (1) Business Day after the related Purchase Date, and (ii) indemnify
Buyer for any loss, cost or

 

21

 

expense
incurred by Buyer as a result of the failure of such Mortgage Loans to close; provided
that Seller shall not be required to indemnify Buyer for any loss, cost or expense
arising as a result of Buyer’s failure to fund the Purchase Price for an
Eligible Mortgage Loan by the end of the day on the related Purchase Date in
accordance with Paragraph 3(b) if Buyer is obligated to so fund pursuant
to Paragraph 3(b).

 

(e)                                  Repurchase
Required.  Seller
shall repurchase Purchased Mortgage Loans from Buyer on or prior to each
related scheduled Repurchase Date.  Each
obligation to repurchase exists without regard to any prior or intervening
liquidation or foreclosure with respect to any Purchased Mortgage Loan.  Seller is obligated to obtain the Purchased
Mortgage Loans from Buyer or its designee at Seller’s expense on the related
Repurchase Date. On the Repurchase Date, termination of the Transaction will be
effected by resale by Buyer to Seller or its designee of the Purchased Mortgage
Loans on a servicing released basis against Seller’s submission to Buyer of a
Completed Repurchase Advice, all in form and substance satisfactory to
Buyer.  After receipt of the payment of
the Repurchase Price from Seller, Buyer shall deliver, or cause to be
delivered, to Seller all Mortgage Loan Documents previously delivered to Buyer
and take such steps as are necessary and appropriate to effect the transfer of
the Purchased Mortgage Loan to Seller on the MERS® System.

 

(f)                                   Repurchase
Advice.  If Buyer receives the
Completed Repurchase Advice with respect to a Purchased Mortgage Loan at or prior
to 3:00 p.m. Houston, Texas time, on any Business Day, then the Repurchase
Date will occur with respect to such Purchased Mortgage Loan on such day.  If Buyer receives the Completed Repurchase
Advice with respect to any Purchased Mortgage Loan after 3:00 p.m.
Houston, Texas time, on any Business Day, then the Repurchase Date will occur
with respect to such Purchased Mortgage Loan on the next Business Day.  In connection with any repurchase pursuant to
a Completed Repurchase Advice, Buyer will debit the Funding Account and the
Operating Account, if applicable, for the amount of the Repurchase Price (less
any amount of Price Differential to be paid on the next Remittance Date).  Without limiting Seller’s obligations
hereunder, at any time after the occurrence and during the continuance of a
Default or an Event of Default, Seller shall not be permitted to repurchase
less than all of the Purchased Mortgage Loans without the prior written consent
of Buyer.

 

(g)                                  Reliance.  With respect to any Transaction, Buyer may
conclusively rely upon, and shall incur no liability to Seller in acting upon,
any request or other communication that Buyer reasonably believes to have been
given or made by a Person authorized to enter into a Transaction on Seller’s
behalf.

 

(h)                                 Defective
Mortgage Loans.  (i) 
If, after Buyer purchases a Mortgage Loan, Buyer determines or receives notice
(whether from Seller or otherwise) that a Purchased Mortgage Loan is (or has
become) a Defective Mortgage Loan, Buyer shall promptly notify Seller, and
Seller shall repurchase such Purchased Mortgage Loan at the Repurchase Price on
the Early Repurchase Date (as such term is defined below).

 

(ii)  If Seller becomes obligated to repurchase a Mortgage Loan
pursuant to subparagraph (h)(i) above, Buyer shall promptly give
Seller notice of such repurchase obligation and a calculation of the Repurchase
Price therefor.  On the same day Seller
receives such notice (the “Early Repurchase Date”),
Seller shall repurchase the Defective Mortgage Loan by making

 

22

 

a
payment to Buyer of an amount equal to the Repurchase Price, and shall submit a
Completed Repurchase Advice.  Buyer is
authorized to charge any of Seller’s Accounts for such amount unless the
parties have agreed in writing to a different method of payment and Seller has
paid such amount by such agreed method. 
If Seller’s Accounts do not contain sufficient funds to pay in full the
amount due Buyer under this subparagraph, or if the amount due is not paid by
any applicable alternative method of payment previously agreed to by the
Parties, Seller shall promptly deposit funds in the Operating Account
sufficient to pay such amount due Buyer and notify Buyer of such deposit.  After receipt of the payment of the Repurchase
Price from Seller, Buyer shall deliver, or cause to be delivered, to Seller all
documents for the Mortgage Loan previously delivered to Buyer and take such
steps as are necessary and appropriate to effect the transfer of the Mortgage
Loan to Seller on the MERS® System.

 

4.                                      Margin
Maintenance

 

(a)                                 Margin Deficit.  If at any time the sum of the Margin Amounts
of all Purchased Mortgage Loans is less than the Aggregate Purchase Price (a “Margin Deficit”), then Buyer, by notice to Seller (a “Margin Call”), may require Seller to transfer to Buyer, at
Buyer’s option, either (x) cash to be applied by Buyer to the payment of
the Repurchase Prices of the Purchased Mortgage Loans that are subject to the
related Transactions, (y) additional Eligible Mortgage Loans reasonably
acceptable to Buyer (“Additional Purchased
Mortgage Loans”) or (z) a combination, as determined by Buyer,
of cash and Additional Purchased Mortgage Loans, so that, immediately after
such transfer(s), the sum of (i) such cash, if any, so transferred to
Buyer plus (ii) the aggregate of the Margin Amounts of all Purchased
Mortgage Loans for all Transactions outstanding at that time, including any
such Additional Purchased Mortgage Loans, will be at least equal to the
Aggregate Purchase Price at that time.

 

(b)           Margin Maintenance. 
If the notice to be given by Buyer to Seller under Paragraph (a)
above is given at or prior to 10:00 a.m. Houston, Texas time on a Business Day,
Seller shall transfer cash or Additional Purchased Mortgage Loans to Buyer
prior to 5:00 p.m. Houston, Texas time on the date of such notice, and if such
notice is given after 10:00 a.m. Houston, Texas time, Seller shall transfer
cash or Additional Purchased Mortgage Loans prior to 9:30 a.m. Houston, Texas
time on the Business Day following the date of such notice.  All cash required to be delivered to Buyer
pursuant to this Paragraph shall be deposited by Seller into the Funding
Account. Buyer’s election, in its sole and absolute discretion, not to make a
Margin Call at any time there is a Margin Deficit shall not in any way limit or
impair its right to make a Margin Call at any other time a Margin Deficit
exists.

 

(c)                                  Margin Excess.  If on any day after Seller has transferred
cash or Additional Purchased Mortgage Loans to Buyer pursuant to Paragraph (b) above,
the sum of (i) the cash paid to Buyer and (ii) the aggregate of the
Margin Amounts of all Purchased Mortgage Loans for all Transactions at that
time, including any such Additional Purchased Mortgage Loans, exceeds the sum of
the outstanding Purchase Prices for all outstanding Transactions at that time,
then at the request of Seller, Buyer shall return a portion of the cash or
Additional Purchased Mortgage Loans to Seller so that the remaining sum of (i) and
(ii) does not exceed the sum of the outstanding Purchase Prices for all
outstanding Transactions at that time; provided that the sum of the cash
plus the value of Additional Purchased Mortgage Loans returned shall be
strictly limited to an amount, after the return of which, no Margin Deficit
will exist.

 

23

 

(d)                                 Market Value
Determinations.  Buyer may
determine the Market Value of any Purchased Mortgage Loans from time to time
and with such frequency and taking into consideration such factors, as it may
elect, in its sole good faith discretion, including, but not limited to,
current market conditions and the fact that the Purchased Mortgage Loans may be
sold or otherwise disposed of under circumstances where Seller is in default
under this Agreement; provided, however, that a Market Value of
zero shall be assigned to any Purchased Mortgage Loan that, at the time of
determination, is not an Eligible Mortgage Loan.  Buyer’s determination of Market Value shall
be conclusive upon the Parties.

 

5.                                      Accounts;
Income Payments

 

(a)                                 Accounts.  Prior to the date hereof, Seller shall
establish or cause to be established each of the Accounts at Financial
Institution.  Seller’s taxpayer
identification number will be designated as the taxpayer identification number
for each Account and Seller shall be responsible for reporting and paying taxes on any income
earned with respect to the Accounts.  Each Account shall be under the sole dominion
and control of Buyer, and Seller agrees that (i) Seller shall have no
right or authority to withdraw or otherwise give any directions with respect to
the Accounts or the disposition of any funds held in the Accounts; provided
that Seller may cause amounts to be deposited into any Account at any time, and
(ii) Financial Institution may comply with instructions originated by
Buyer directing disposition of the funds in the Accounts without further
consent of Seller.  Only employees of
Buyer shall be signers with respect to the Accounts.   Pursuant to Paragraph 6, Seller has
pledged, assigned, transferred and granted a security interest to Buyer in all
Accounts in which Seller has rights or power to transfer rights and all
Accounts in which Seller later acquires ownership, other rights or the power to
transfer rights.  Seller and Buyer hereby
agree that Buyer has “control” of the Accounts within the meaning of Section 9-104
of the UCC.

 

(b)                                 Cash Pledge
Account.  On or prior to the date
hereof, Seller shall deposit an amount equal to 1.00% of the Facility Amount
(the “Required Amount”) into the Cash Pledge
Account.  Seller shall cause an amount
not less than the Required Amount to be on deposit in the Cash Pledge Account
at all times.  If on any Remittance Date,
the amount on deposit in the Cash Pledge Account is greater than the Required
Amount, provided that no Default or Event of Default has occurred, upon
Seller’s request such excess will be disbursed to Seller on such Remittance
Date after application by Buyer to the payment of any amounts owing by Seller
to Buyer on such date.  At any time upon
or after the occurrence of an Event of Default, Buyer, in its sole discretion,
may apply the amounts on deposit in the Cash Pledge Account in accordance with
the provisions of Paragraph 5(f).

 

(c)                                  Funding Account.  The Funding Account shall be used for
fundings of the Purchase Price and the Repurchase Price with respect to each
Purchased Mortgage Loan in accordance with Paragraph 3.  Seller shall cause all amounts to be paid in
respect of the Takeout Commitments to be remitted by the Approved Takeout
Investors directly to the Funding Account without any notice to or consent of
Seller.  On each Repurchase Date which
occurs pursuant to Paragraph 3(e) with respect to any Purchased
Mortgage Loan, Buyer will apply the applicable amounts on deposit in the
Funding Account to the unpaid Repurchase Price due to Buyer for such Purchased
Mortgage Loan.  At any time upon or after
the occurrence of an Event of Default,

 

24

 

Buyer,
in its sole discretion, may apply the amounts on deposit in the Funding Account
in accordance with the provisions of Paragraph 5(f).

 

(d)                                 [Reserved]

 

(e)                                  Operating
Account.  The Operating Account shall be
used for the purposes of (i) Seller’s payment of Price Differential and
any other amounts owing to Buyer under this Agreement, the Side Letter or any
other Transaction Document, (ii) Seller’s funding of the shortfall between
the original outstanding balance of a Mortgage Loan and the Purchase Price paid
by Buyer for that Mortgage Loan and (iii) Seller’s payment of any
difference between the Repurchase Price and the amount received by Buyer from
the applicable Approved Takeout Investor in connection with the repurchase of a
Purchased Mortgage Loan pursuant to Paragraph 3(f).   On or prior to the fourth (4th) Business Day
prior to each Remittance Date, Buyer will notify Seller in writing of the Price
Differential and other amounts due to Buyer on that Remittance Date.  On or prior to the Business Day preceding
each Remittance Date, Seller shall deposit into the Operating Account an amount
sufficient to pay such amounts due to Buyer on that Remittance Date.  On each Remittance Date, Buyer shall withdraw
funds from amounts on deposit in the Operating Account to effect such payment
to the extent of funds available.  In the
event that the funds on deposit in the Operating Account are insufficient to
pay the amounts due to Buyer in full, Seller shall pay the amount of the
shortfall on the date such payment is due by wire transfer of such amount to
the Operating Account.  At any time upon
or after the occurrence of an Event of Default, Buyer, in its sole discretion,
may apply the amounts on deposit in the Operating Account in accordance with
the provisions of Paragraph 5(f).

 

(f)                                   Application of
Funds.  After the occurrence and
during the continuance of an Event of Default, at such times as Buyer may
direct in its sole discretion, Buyer shall apply all Income and such other
amounts on deposit in all or any of the Accounts other than escrow amounts held
in any account and required to be used for the payment of taxes and insurance
on any Purchased Mortgage Loan (i) first, to pay
all actual and reasonable costs and expenses incurred by Buyer in connection
with or as a result of a Default or an Event of Default (including, without
limitation, legal fees, consulting fees, accounting fees, file transfer and
inventory fees, costs and expenses incurred in respect of a transfer of the
servicing of the Purchased Mortgage Loans and costs and expenses incurred in
connection with a disposition of the Purchased Mortgage Loans), (ii) second, to Buyer for the payment of all accrued and unpaid
Price Differential for all Transactions, (iii) third,
to Buyer for the payment of the aggregate remaining unpaid Repurchase Price
then due and payable, (iv) fourth, to
Buyer to be applied by Buyer to the payment of all other accrued and unpaid
obligations of Seller hereunder and under the other Transaction Documents and (v) fifth, any remaining proceeds to Seller or other Person
legally entitled thereto.

 

(g)                                  Income.  Where a particular Transaction’s term extends
over the date on which Income is paid by the Mortgagor on any Purchased
Mortgage Loan subject to that Transaction, that Income will be the property of
Buyer until Seller has paid Buyer the full Repurchase Price in respect of such
Transaction.  Notwithstanding the
foregoing, and provided no Default or Event of Default has occurred and is
continuing and no Margin Deficit then exists, Buyer agrees that Seller or its
designee shall be entitled to receive and retain that Income to the full extent
it would be so entitled if the Purchased Mortgage Loans had not been sold to
Buyer; provided that any

 

25

 

Income
received by Seller while the related Transaction is outstanding shall be deemed
to be held by Seller solely in trust for Buyer pending the payment of the
Repurchase Price in respect of such Transaction and the repurchase of the
related Purchased Mortgage Loans.  If a
Default or an Event of Default has occurred and is continuing, or a Margin
Deficit exists, as of the date Income is paid on a Purchased Mortgage Loan
subject to a Transaction hereunder, if directed by Buyer, Seller shall cause
such Income to be deposited directly into an account designated by Buyer.

 

(h)                                 Seller’s
Obligations.  The
provisions of this Paragraph 5 shall not relieve Seller from its
obligations to pay the Repurchase Price on the applicable Repurchase Date and
to satisfy any other payment obligation of Seller hereunder or under any other
Transaction Document.

 

6.                                      Security
Interest; Assignment of Takeout Commitments

 

(a)                                 Security
Interest.  Although the
parties intend that all Transactions hereunder be absolute sales and purchases
and not loans, to secure the payment and performance by Seller of its
obligations, liabilities and indebtedness under each such Transaction and
Seller’s obligations, liabilities and indebtedness hereunder and under the
other Transaction Documents, Seller hereby pledges, assigns, transfers and
grants to Buyer a security interest in the Mortgage Assets in which Seller has
rights or power to transfer rights and all of the Mortgage Assets in which
Seller later acquires ownership, other rights or the power to transfer rights.  “Mortgage Assets”
means (i) the Purchased Mortgage Loans with respect to all Transactions
hereunder (including, without limitation, all Servicing Rights with respect
thereto), (ii) all Servicing Records, Loan Files, Mortgage Loan Documents,
including, without limitation, the Mortgage Note and Mortgage, and all of
Seller’s claims, liens, rights, title and interests in and to the Mortgaged
Property related to such Purchased Mortgage Loans, (iii) all Liens
securing repayment of such Purchased Mortgage Loans, (iv) all Income with
respect to such Purchased Mortgage Loans, (v) the Accounts, (vi) the
Takeout Commitments and Takeout Agreements to the extent Seller’s rights
thereunder relate to the Purchased Mortgage Loans, (vii) all Hedging
Arrangements relating to the Purchased Mortgage Loans and (viii) all
proceeds of the foregoing.  Seller hereby
authorizes Buyer to file such financing statements relating to the Mortgage
Assets as Buyer may deem appropriate, and irrevocably appoints Buyer as
Seller’s attorney-in-fact to take such other actions as Buyer deems necessary
or appropriate to perfect and continue the Lien granted hereby and to protect,
preserve and realize upon the Mortgage Assets. 
Seller shall pay all fees and expenses associated with perfecting such
Liens including, without limitation, the cost of filing financing statements
and amendments under the UCC, registering each Purchased Mortgage Loan with
MERS and recording assignments of the Mortgages as and when required by Buyer
in its sole discretion.

 

(b)                                 Assignment of Takeout Commitment.The sale of each Mortgage Loan to Buyer
shall include Seller’s rights (but none of the obligations) under the
applicable Takeout Commitment and Takeout Agreement to deliver the Mortgage
Loan to the Approved Takeout Investor and to receive the net sum therefor
specified in the Takeout Commitment from the Approved Takeout Investor.  Effective on and  after the Purchase Date for each Mortgage
Loan purchased by Buyer hereunder, Seller assigns to Buyer, free and clear of
any Lien, all of Seller’s right, title and interest in any applicable Takeout
Commitment and Takeout Agreement for such Mortgage Loan; provided that
Buyer shall not assume or be deemed to have assumed any of the obligations of
Seller under any Takeout Agreement or Takeout Commitment.

 

26

 

7.                                      Conditions
Precedent

 

(a)                                 Conditions
Precedent to the Effectiveness of this Agreement.  The effectiveness of this Agreement shall be
subject to the satisfaction of each of the following conditions precedent:

 

(i)                                     on or before
the date hereof, Seller shall deliver or cause to be delivered each of the
documents listed on Exhibit E (other than those listed under the
heading “Post-Closing Items”) in form and substance satisfactory to Buyer and
its counsel;

 

(ii)                                  as of the date
hereof, there has been no material adverse change in the financial condition of
Seller or any Guarantor since the most recent financial statements of such
Person delivered to Buyer;

 

(iii)                               as of the date
hereof, no material action, proceeding or investigation shall have been
instituted, nor shall any material order, judgment or decree have been issued
or proposed to be issued by any Governmental Authority with respect to Seller
or any Guarantor;

 

(iv)                              Seller shall
have delivered to Buyer such other documents, opinions of counsel and
certificates as Buyer may reasonably request;

 

(v)                                 Seller shall
have established the Accounts at Financial Institution and shall have deposited
the Required Amount to the Cash Pledge Account; and

 

(vi)                              on or before
the date hereof, Seller shall have paid to the extent due all fees and
out-of-pocket costs and expenses (including, without limitation, due diligence
fees and expenses and reasonable legal fees and expenses) required to be paid
hereunder and under the other Transaction Documents.

 

(b)                                 Conditions
Precedent to Each Transaction.  Buyer’s obligation to pay the Purchase Price
for each Transaction shall be subject to the satisfaction of each of the
following conditions precedent:

 

(i)                                     with respect to
each Purchase Date, Seller shall have delivered to Buyer a Confirmation and the
Loan Purchase Detail with respect to the Purchased Mortgage Loans subject to
such Transaction;

 

(ii)                                  in the case of
a Mortgage Loan subject to a Wet Funding, Buyer shall have received the
documents described in items (i) through (iv) of the definition of
Loan File, and, in the case of any other Mortgage Loan subject to such
Transaction, Buyer shall have received the complete Loan File for such Mortgage
Loan, in each case in form and substance satisfactory to Buyer;

 

(iii)                               no Default or
Event of Default shall have occurred and be continuing;

 

(iv)                              no Margin
Deficit shall exist either before or after giving effect to such Transaction;

 

27

 

(v)                                 this Agreement
and each of the other Transaction Documents shall remain in full force and
effect, and the Termination Date shall not have occurred;

 

(vi)                              each Mortgage
Loan subject to such Transaction is an Eligible Mortgage Loan;

 

(vii)                           Seller shall
have delivered evidence satisfactory to Buyer, in its sole discretion, that
each Mortgage Loan subject to such Transaction is subject to a valid and
binding Takeout Commitment or Hedging Arrangement, which may include a copy of the
related Takeout Agreement or Hedging Arrangement;

 

(viii)                        each of
Seller’s and each Guarantor’s representations and warranties in this Agreement
and each of the other Transaction Documents to which it is a party and in any
Officer’s Certificate delivered to Buyer in connection therewith shall be true
and correct on and as of the date hereof and such Purchase Date, with the same
effect as though such representations and warranties had been made on and as of
such date (except for those representations and warranties and Officer’s
Certificates which are specifically made only as of a different date, which
representations and warranties and Officer’s Certificates shall be correct on
and as of the date made), and Seller and each Guarantor shall have complied with
all the agreements and satisfied all the conditions under this Agreement, each
of the other Transaction Documents and the Mortgage Loan Documents to which it
is a party on its part to be performed or satisfied at or prior to the related
Purchase Date;

 

(ix)                              no Requirement
of Law would prohibit the consummation of any transaction contemplated hereby,
or would impose limits on the amounts that Buyer may legally receive or would
impose a material tax or levy on such Transaction or the Purchase Price, Repurchase
Price or any payments received in respect thereof;

 

(x)                                 no action,
proceeding or investigation shall have been instituted, nor shall any order,
judgment or decree have been issued or proposed to be issued by any
Governmental Authority to set aside, restrain, enjoin or prevent the
consummation of any Transaction contemplated hereby or seeking material damages
against Buyer in connection with the transactions contemplated by the
Transaction Documents;

 

(xi)                              after giving
effect to such Transaction, as of the related Purchase Date for such
Transaction, no Purchased Mortgage Loan subject to a Transaction has an
Origination Date more than thirty (30) days prior to such Purchase Date;

 

(xii)                           Buyer shall
have determined that the amounts on deposit in the Operating Account are
sufficient to fund the difference between the Outstanding Principal Balance of
the related Mortgage Loan and the Purchase Price to be paid by Buyer for the
related Mortgage Loan, after taking into account the other obligations of
Seller to be satisfied with the amounts on deposit in the Operating Account on
such Purchase Date;

 

(xiii)                        after giving
effect to such Transaction, the aggregate Purchase Price for all outstanding
Transactions shall not exceed the Facility Amount;

 

28

 

(xiv)                       Buyer shall
have received such other documents, information, reports and certificates as it
shall have reasonably requested;

 

(xv)                          Seller shall
have deposited the amounts required by Paragraph 5 into the Cash Pledge
Account; and

 

(xvi)                       Lending Tree
Holdings Corp. shall have delivered its signature page to the Guaranty and
a certificate of its Secretary as described on Exhibit E.

 

The acceptance by Seller of
any Purchase Price proceeds shall be deemed to constitute a representation and
warranty by Seller that the foregoing conditions have been satisfied.

 

8.                                      Change in
Requirement of Law

 

(a)                                 If any Change
in Requirement of Law shall:

 

(i)                                     impose, modify
or deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, Buyer
(except any such reserve requirement reflected in the Adjusted LIBOR Rate); or

 

(ii)                                  impose on Buyer
or the London interbank market any other condition affecting this Agreement or
Transactions entered into by Buyer;

 

and the result of any of the foregoing shall be to increase the cost to
Buyer of making or maintaining any purchase hereunder (or of maintaining its
obligation to enter into any Transaction) or to increase the cost or to reduce
the amount of any sum received or receivable by Buyer (whether of Repurchase
Price, Price Differential or otherwise), then Seller will pay to Buyer such
additional amount or amounts as will compensate Buyer for such additional costs
incurred or reduction suffered.

 

(b)                                 If Buyer
determines that any Change in Requirement of Law regarding capital requirements
has or would have the effect of reducing the rate of return on Buyer’s capital
or on the capital of Buyer’s holding company as a consequence of this Agreement
or the purchases made by Buyer to a level below that which Buyer or Buyer’s
holding company could have achieved but for such Change in Requirement of Law
(taking into consideration Buyer’s policies with respect to capital adequacy),
then from time to time Seller will pay to Buyer such additional amount or
amounts as will compensate Buyer or Buyer’s holding company for any such
reduction suffered.

 

(c)                                  A certificate
of Buyer setting forth the amount or amounts necessary to compensate Buyer or
its holding company, as the case may be, as specified in subparagraph (a) or
(b) of this Paragraph shall be delivered to Seller and shall be
conclusive absent manifest error.  Seller
shall pay Buyer, the amount shown as due on any such certificate within 10 days
after receipt thereof.

 

(d)                                 Failure or
delay on the part of Buyer to demand compensation pursuant to this Paragraph
shall not constitute a waiver of Buyer’s right to demand such compensation; provided
that Seller shall not be required to compensate Buyer pursuant to this
Paragraph for any increased

 

29

 

costs
or reductions incurred more than 270 days prior to the date that Buyer notifies
Seller of the Change in Requirement of Law giving rise to such increased costs
or reductions and of Buyer’s intention to claim compensation therefor; provided
further that, if the Change in Requirement of Law giving rise to such
increased costs or reductions is retroactive, then the 270-day period referred
to above shall be extended to include the period of retroactive effect thereof.

 

(e)                                  If, within 10
days after receipt of notice from Buyer demanding compensation pursuant to this
Paragraph (it being understood that a certificate described in clause (c) above
shall constitute such notice for purposes hereof), Seller notifies Buyer that
it declares the Termination Date in accordance with clause (i) of the
definition of “Termination Date” (which Termination Date shall occur not less
than 30 days following such notice from Seller to Buyer), Seller shall be
entitled to receive a pro-rated refund of the “Commitment Fee” (as defined in
the Side Letter) in the amount equal to the portion of the total Commitment Fee
allocated to the period of time following the Termination Date declared
pursuant to this clause (e) until October 29, 2010, calculated on a
364 day per year basis.  Such refund
shall be paid to Seller on the Termination Date net of any amounts owed by
Seller to Buyer or any other Indemnified Party as of the Termination Date.

 

9.                                      Segregation of
Documents Relating to Purchased Mortgage Loans

 

All documents relating to Purchased Mortgage Loans in the possession of
Seller shall be segregated from other documents and securities in its
possession and shall be identified as being subject to this Agreement.  Segregation may be accomplished by
appropriate identification on the books and records of the holder, including a
financial or securities intermediary or a clearing corporation.  All of Seller’s interest in the Purchased
Mortgage Loans (including, without limitation, the Servicing Rights) shall pass
to Buyer on the Purchase Date and nothing in this Agreement shall preclude
Buyer from engaging in repurchase transactions with the Purchased Mortgage
Loans or otherwise selling, transferring, pledging or hypothecating the
Purchased Mortgage Loans, but no such transaction shall relieve Buyer of its
obligations to transfer the Purchased Mortgage Loans or other Mortgage Loans
with substantially identical terms to Seller pursuant to Paragraph 3
or 4.

 

10.                               Representations
and Warranties.

 

(a)                                 To induce Buyer
to enter into this Agreement and the Transactions hereunder, Seller represents
and warrants as of the date of this Agreement and as of each Purchase Date that
each of the following statements is and shall remain true and correct
throughout the term of this Agreement and until all obligations, liabilities
and indebtedness of Seller under this Agreement and the other Transaction
Documents are paid in full.

 

(i)                                     Representations
and Warranties Concerning Purchased Mortgage Loans.  By each delivery of a Confirmation, Seller
shall be deemed, as of the Purchase Date of the described sale of each
Purchased Mortgage Loan (or, if another date is expressly provided in such
representation or warranty, as of such other date), and as of each date
thereafter that such Purchased Mortgage Loan remains subject to this Agreement,
to represent and warrant that each Purchased Mortgage Loan then sold to Buyer
is an Eligible Mortgage Loan.

 

30

 

(ii)                                  Organization
and Good Standing.  Each of
Seller and its Subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction under which it was organized, has full legal power and authority
to own its property and to carry on its business as currently conducted, and is
duly qualified as a foreign corporation or entity to do business and is in good
standing in each jurisdiction in which the transaction of its business makes
such qualification necessary, except in jurisdictions, if any, where a failure
to be in good standing has no material adverse effect on the business,
operations, assets or financial condition of Seller or any such
Subsidiary.  For the purposes hereof,
good standing shall include qualification for any and all licenses and payment
of any and all taxes required in the jurisdiction of its organization and in
each jurisdiction in which Seller or a Subsidiary transacts business.  Seller has no Subsidiaries except those identified
by Seller to Buyer in Exhibit G. 
With respect to Seller and each such Subsidiary, Exhibit G
correctly states its name as it appears in its articles of formation filed in
the jurisdiction of its organization, address, place of organization, each
state in which it is qualified as a foreign corporation or entity, and in the
case of the Subsidiaries, the percentage ownership (direct or indirect) of
Seller in such Subsidiary.

 

(iii)                               Authority and
Capacity.  Seller has
all requisite power, authority and capacity to enter into this Agreement and
each other Transaction Document and to perform the obligations required of it
hereunder and thereunder.  This Agreement
constitutes a valid and legally binding agreement of Seller enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization, conservatorship and similar
laws, and by equitable principles.  No
consent, approval, authorization, license or order of or registration or filing
with, or notice to, any Governmental Authority is required under any
Requirement of Law prior to the execution, delivery and performance of or
compliance by Seller with this Agreement or any other Transaction Document or
the consummation by Seller of any transaction contemplated thereby, except for
those which have already been obtained by Seller, and the filings and
recordings in respect of the Liens created pursuant to this Agreement and the
other Transaction Documents.  If Seller
is a depository institution, this Agreement shall be maintained in Seller’s
official records.

 

(iv)                              No Conflict.  Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated by this
Agreement, nor compliance with its terms and conditions, shall conflict with or
result in the breach of, or constitute a default under, or result in the
creation or imposition of any Lien of any nature upon the properties or assets
of Seller, any of the terms, conditions or provisions of Seller’s organizational
documents, or any mortgage, indenture, deed of trust, loan or credit agreement
or other agreement or instrument to which Seller is now a party or by which it
is bound (other than this Agreement).

 

(v)                                 Performance.  Seller does not believe, nor does it have any
reason or cause to believe, that it cannot perform, and Seller intends to
perform, each and every covenant which it is required to perform under this
Agreement and the other Transaction Documents.

 

31

 

(vi)                              Ordinary Course
Transaction.  The
consummation of the transactions contemplated by this Agreement are in the
ordinary course of business of Seller, and neither the sale, transfer,
assignment and conveyance of Mortgage Loans to Buyer nor the pledge,
assignment, transfer and granting of a security interest to Buyer in the
Mortgage Assets, by Seller pursuant to this Agreement are subject to the bulk
transfer or any similar Requirement of Law in effect in any applicable
jurisdiction.

 

(vii)                           Litigation;
Compliance with Laws.  There is no
Litigation pending that could reasonably be expected to cause a Material
Adverse Effect or that might materially and adversely affect the Mortgage Loans
sold or to be sold pursuant to this Agreement. 
Seller has not violated any Requirement of Law applicable to Seller
which, if violated, would materially and adversely affect the Mortgage Loans to
be sold pursuant to this Agreement or could reasonably be expected to cause a
Material Adverse Effect.

 

(viii)                        Statements Made.  The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of
Seller to Buyer in connection with the negotiation, preparation or delivery of
this Agreement and the other Transaction Documents or included herein or
therein or delivered pursuant hereto or thereto, when taken as a whole, do not
contain any untrue statement of material fact or omit to state any material
fact necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by or on behalf of Seller to Buyer
in connection with this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby will be true, complete and
accurate in every material respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is stated or
certified. There is no fact known to a Responsible Officer that, after due inquiry,
could reasonably be expected to have a Material Adverse Effect that has not
been disclosed herein, in the other Transaction Documents or in a report,
financial statement, exhibit, schedule, disclosure letter or other writing
furnished to Buyer for use in connection with the transactions contemplated
hereby or thereby.

 

(ix)                                Approved
Company.  Seller currently holds all
approvals, authorizations and other licenses from the Approved Takeout
Investors and the Agencies required under the Takeout Guidelines (or otherwise)
to Originate, purchase, hold, service and sell Mortgage Loans of the types to
be offered for sale to Buyer hereunder.

 

(x)                                   Fidelity Bonds.  Seller has purchased fidelity bonds and
policies of insurance, all of which are in full force and effect, insuring
Seller, Buyer and the successors and assigns of Buyer in the greater of (a) $500,000,
(b) the amount required by the Approved Takeout Investor and (c) the
amount required by any other Takeout Guidelines, against loss or damage from
any breach of fidelity by Seller or any officer, director, employee or agent of
Seller, and against any loss or damage from loss or destruction of documents,
fraud, theft, misappropriation, or errors or omissions.

 

(xi)                                Solvency.  As of the date hereof and immediately after
giving effect to each Transaction hereunder, the fair value of the assets of
Seller is greater than the fair value of the liabilities (including, without
limitation, contingent liabilities if and to the 

 

32

 

extent required to be
recorded as a liability on the financial statements of Seller in accordance
with GAAP) of Seller, and Seller is and, to the best of its knowledge, will be
solvent, is, will be able and intends, to pay its debts as they mature and does
not and will not have an unreasonably small capital to engage in the business
in which it is engaged and proposes to engage. Seller does not intend to incur,
or believe that it has incurred, debts beyond its ability to pay such debts as
they mature. Seller is not transferring any Loans with any intent to hinder,
delay or defraud any Person.

 

(xii)                             Reporting.  In its financial statements, Seller intends
to report each sale of a Mortgage Loan hereunder as a financing in accordance
with GAAP.  Seller has been advised by or
confirmed with its independent public accountants that such sales can be so
reported under GAAP on its financial statements.

 

(xiii)                          Financial
Condition.  The balance
sheets of Seller provided to Buyer pursuant to Paragraph 11(g) (and,
if applicable, its Subsidiaries, on a consolidated and consolidating basis) as
at the dates of such balance sheets, and the related statements of income,
changes in stockholders’ equity and cash flows for the periods ended on the
dates of such balance sheets heretofore furnished to Buyer, fairly present the
financial condition of Seller and its Subsidiaries as of such dates and the
results of its and their operations for the periods ended on such dates.  On the dates of such balance sheets, Seller had
no known material liabilities, direct or indirect, fixed or contingent, matured
or unmatured, or liabilities for taxes, long-term leases or unusual forward or
long-term commitments not disclosed by, or reserved against on, said balance
sheets and related statements, and at the present time there are no material
unrealized or anticipated losses from any loans, advances or other commitments
of Seller except as heretofore disclosed to Buyer in writing.  Said financial statements were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved.  Since the date of such balance
sheet, there has been no Material Adverse Effect, nor is Seller aware of any
state of facts particular to Seller which (with or without notice or lapse of
time or both) could reasonably be expected to result in any such Material
Adverse Effect.

 

(xiv)                         Regulation U.  Seller is not engaged principally, or as one
of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock, and no part of the proceeds of
any sales made hereunder will be used to purchase or carry any margin stock or
to extend credit to others for the purpose of purchasing or carrying any margin
stock.

 

(xv)                            Investment
Company Act.  Neither
Seller nor any of its Subsidiaries is an “investment company” or controlled by
an “investment company” within the meaning of the Investment Company Act of
1940, as amended.

 

(xvi)                         Agreements.  Neither Seller nor any of its Subsidiaries is
a party to any agreement, instrument or indenture, or subject to any
restriction, materially or adversely affecting its business, operations, assets
or financial condition, except as disclosed in the financial statements
described in Paragraph 11(g). 
None of Seller’s Subsidiaries is subject to any dividend restriction
imposed by a Governmental Authority other than those under applicable statutory
law.  Neither Seller nor any of its
Subsidiaries is in default in 

 

33

 

the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained in
any agreement, instrument or indenture which default could reasonably be
expected to result in a Material Adverse Effect.  No holder of any Debt of Seller or of any of
its Subsidiaries has given notice of any alleged default thereunder, or, if
given, the same has been cured or will be cured by Seller or the relevant
Subsidiary within the cure period provided therein.  No Act of Insolvency with respect to Seller
or any of its Subsidiaries or any of their respective properties is pending,
contemplated or, to the knowledge of Seller, threatened.

 

(xvii)                      Title to
Properties.  Seller and
each Subsidiary of Seller has good, valid, insurable (in the case of real
property) and marketable title to all of its properties and assets (whether
real or personal, tangible or intangible) reflected on the financial statements
described in Paragraph 11(g), and all such properties and assets are
free and clear of all Liens except (i) the lien of current (nondelinquent)
real and personal property taxes and assessments, (ii) covenants,
conditions and restrictions, rights of way, easements and other similar matters
to which like properties and assets are commonly subject that do not materially
interfere with the use of the property or asset as it is currently being used
and (iii) such other Liens as are disclosed in such financial statements
and not prohibited under this Agreement.

 

(xviii)                   ERISA.  If applicable, all plans (“Plans”) of a type described in Paragraph 3(3) of ERISA
in respect of which Seller or any Subsidiary of Seller is an “employer,” as
defined in Paragraph 3(5) of ERISA, are in substantial compliance with
ERISA, and none of such Plans is insolvent or in reorganization, has an
accumulated or waived funding deficiency within the meaning of Paragraph 412 of
the IRC, and neither Seller nor any Subsidiary of Seller has incurred any
material liability (including any material contingent liability) to or on
account of any such Plan pursuant to Paragraphs 4062, 4063, 4064, 4201 or 4204
of ERISA.  No proceedings have been
instituted to terminate any such Plan, and no condition exists which presents a
material risk to Seller or a Subsidiary of Seller of incurring a liability to
or on account of any such Plan pursuant to any of the foregoing Paragraphs of
ERISA.  No Plan or trust forming a part
thereof has been terminated since December 1, 1974.

 

(xix)                           Proper Names.  Seller does not operate in any jurisdiction
under a trade name, division, division name or name other than those names
previously disclosed in writing by Seller to Buyer, and all such names are
utilized by Seller only in the jurisdiction(s) identified in such
writing.  The only names used by Seller
in its tax returns for the last ten years are set forth in Exhibit K.

 

(xx)                              No Undisclosed
Liabilities.  Other than
as disclosed in the financial statements delivered pursuant to Paragraph
11(g), Seller does not have any liabilities or Debt, direct or contingent.

 

(xxi)                           Tax Returns and
Payments.  All
federal, state and local income, excise, property and other tax returns
required to be filed with respect to Seller’s operations and those of its
Subsidiaries in any jurisdiction have been filed on or before the due date
thereof (plus any applicable extensions); all such returns are true and
correct; all taxes, 

 

34

 

assessments, fees and other
governmental charges upon Seller, and Seller’s Subsidiaries and upon their
respective properties, income or franchises, which are, or should be, shown to
be due and payable on such tax returns have been paid, including, without
limitation, all Federal Insurance Contributions Act (FICA) payments and
withholding taxes, if appropriate, other than those which are being contested
in good faith by appropriate proceedings, diligently pursued and as to which
Seller has established adequate reserves determined in accordance with GAAP,
consistently applied.  The amounts
reserved, as a liability for income and other taxes payable, in the financial
statements described in Paragraph 11(g) are sufficient for payment
of all unpaid federal, state and local income, excise, property and other
taxes, whether or not disputed, of Seller and its Subsidiaries, accrued for or
applicable to the period and on the dates of such financial statements and all
years and periods prior thereto and for which Seller and Seller’s Subsidiaries
may be liable in their own right or as transferee of the assets of, or as
successor to, any other Person.

 

(xxii)                        No Warrants;
Shares Valid, Paid and Non-assessable.  Seller has not issued, and does not have
outstanding, any warrants, options, rights or other obligations to issue or
purchase any shares of its capital stock or other securities (or other equity
equivalent).  The outstanding shares of
capital stock (or other equity equivalent) of Seller have been duly authorized
and validly issued and are fully paid and non-assessable.

 

(xxiii)                     Credit
Information.  Seller has
full right and authority and is not precluded by law or contract from
furnishing to Buyer the applicable consumer report (as defined in the Fair
Credit Reporting Act, Public Law 91-508) and all other credit information
relating to each Purchased Mortgage Loan sold hereunder, and Buyer will not be
precluded from furnishing such materials to the related Approved Takeout
Investor by such laws.  Neither the
foregoing nor any other provision of this Agreement or any other Transaction
Document shall be construed to impose any obligation on Buyer to keep the above
described materials confidential or to otherwise comply with the Fair Credit
Reporting Act or any similar laws.

 

(xxiv)                    No
Discrimination.  Seller
makes credit accessible to all qualified applicants in accordance with all Requirements
of Law.  Seller has not discriminated,
and will not discriminate, against credit applicants on the basis of any
prohibited characteristic, including race, color, religion, national origin,
sex, marital or familial status, age (provided that the applicant has the
ability to enter into a binding contract), handicap, sexual orientation or
because all or part of the applicant’s income is derived from a public
assistance program or because of the applicant’s good faith exercise of rights
under the Federal Consumer Protection Act. 
Furthermore, Seller has not discouraged, and will not discourage, the
completion of any credit application based on any of the foregoing prohibited
bases.  In addition, Seller has complied
with all anti-redlining provisions and equal credit opportunity laws applicable
under all Requirements of Law.

 

(xxv)                       Home Ownership
and Equity Protection Act. 
There is no Litigation, proceeding or governmental investigation
existing or pending, or any order, injunction or decree outstanding against or
relating to Seller, relating to any violation of the Home 

 

35

 

Ownership and Equity
Protection Act or any state, city or district high cost home mortgage or
predatory lending law.

 

(xxvi)                    Place of
Business and Formation.  The
principal place of business of Seller is located at the address set forth for
Seller in Paragraph 15.  As of the
date hereof, and during the four (4) months immediately preceding that
date, the chief executive office of Seller and the office where it keeps its
financial books and records relating to its property and all contracts relating
thereto and all accounts arising therefrom is and has been located at the
address set forth for Seller in Paragraph 15.  As of the date hereof, Seller’s jurisdiction
of organization is the state specified in Paragraph 15.

 

(xxvii)                 No Adverse Selection.  Seller used no selection procedures that
identified the Purchased Mortgage Loans offered to Buyer for purchase hereunder
as being less desirable or valuable than other comparable Mortgage Loans owned
by Seller.

 

(xxviii)              MERS.  Seller and each Approved Takeout Investor is
a member of MERS in good standing.

 

(xxix)                      Principal.  Seller is engaging in the Transactions as a
principal.

 

(xxx)                         No Default.  No Default or Event of Default has occurred.

 

(xxxi)                      National City
Bank.  No Mortgage Assets or proceeds
thereof are maintained at or deposited into any account maintained at National
City Bank.

 

(b)                                 Mortgage Loan
Representations.  Seller
represents and warrants to Buyer that (i) each Purchased Mortgage Loan is
an Eligible Mortgage Loan on and as of the Purchase Date therefor, (ii) each
Mortgage Loan to be transferred from Seller to Buyer as an Additional Purchased
Mortgage Loan is an Eligible Mortgage Loan on and as of the date of transfer
thereof and (iii) each Purchased Mortgage Loan identified as an Eligible
Mortgage Loan by Seller in any report or other information delivered to Buyer
is an Eligible Mortgage Loan.  Seller
further makes the representations and warranties regarding each Purchased
Mortgage Loan (including each Additional Purchased Mortgage Loan) as are set
forth in Exhibit B.

 

(c)                                  Survival of
Representations.  All the
representations and warranties made by Seller to Buyer in this Agreement are
binding on Seller regardless of whether the subject matter thereof was under
the control of Seller or a third party. 
Seller acknowledges that Buyer will rely upon all such representations
and warranties with respect to each Purchased Mortgage Loan purchased by Buyer
hereunder, and Seller makes such representations and warranties in order to
induce Buyer to purchase the Mortgage Loans. 
The representations and warranties by Seller in this Agreement with
respect to a Purchased Mortgage Loan shall be unaffected by, and shall
supersede and control over, any provision in any existing or future endorsement
of any Purchased Mortgage Loan or in any assignment with respect to such
Purchased Mortgage Loan to the effect that such endorsement or assignment is without
recourse or without representation or warranty. 
All Seller representations and warranties shall survive delivery of the
Loan Files and the Confirmations, purchase by Buyer of Purchased Mortgage
Loans, transfer of the servicing for the Purchased Mortgage Loans to a
successor servicer, delivery of Purchased Mortgage Loans to an Approved Takeout
Investor, repurchases of the Purchased Mortgage Loans by Seller and 

 

36

 

termination
of this Agreement. The representations and warranties of Seller in this
Agreement shall inure to the benefit of Buyer and its successors and assigns,
notwithstanding any examination by Buyer of any Mortgage Loan Documents,
related files or other documents delivered to Buyer.

 

11.                               Seller’s
Covenants.

 

Seller shall perform, and shall cause each of
its Subsidiaries to perform, the following duties at all times during the term
of this Agreement:

 

(a)                                  Maintenance of
Existence; Conduct of Business.  Seller and each of its Subsidiaries shall
preserve and maintain its existence in good standing and all of its rights,
privileges, licenses and franchises necessary in the normal conduct of its
business, including without limitation its eligibility as lender,
seller/servicer and issuer described under Paragraph 10(a)(ix); and each
of Seller and its Subsidiaries shall conduct its business in an orderly and
efficient manner and shall keep adequate books and records of its business
activities, and make no material change in the nature or character of its
business or engage in any business in which it was not engaged on the date of
this Agreement, except that Seller and HLC Escrow shall be permitted to enter
into the mortgage loan closing, escrow, title insurance and settlement
business.  Seller will not make any
material change in its accounting treatment and reporting practices except as
required by GAAP.  Seller shall remain a
member of MERS in good standing.

 

(b)                                 Compliance with
Applicable Laws.  Seller and
each of its Subsidiaries shall comply with all Requirements of Law, a breach of
which could affect the Mortgage Loans to be sold pursuant to this Agreement or
that could reasonably expect to result in a Material Adverse Effect, except
where contested in good faith and by appropriate proceedings, and with
sufficient reserves established therefor. 
Seller and each of its Subsidiaries shall comply with all Requirements
of Law applicable to it and the Purchased Mortgage Loans or any part thereof
(including, without limitation, any Agency Guidelines, all anti-money laundering laws and regulations, including,
without limitation, the USA Patriot Act of 2001, as amended, the GLB Act and
all consumer protection laws and regulations).

 

(c)                                  Inspection of
Properties and Books.  Seller
shall permit authorized representatives of Buyer to (i) discuss the
business, operations, assets and financial condition of Seller and Seller’s
Subsidiaries with their officers and employees and to examine their books of
account, records, reports and other papers and make copies or extracts thereof,
(ii) inspect all of Seller’s property and all related information and
reports, and (iii) audit Seller’s operations to ensure compliance with the
terms of the Transaction Documents, the GLB Act and other privacy laws and
regulations, all at Seller’s expense and at such reasonable times as Buyer may
request.  Seller will provide its
accountants with a photocopy of this Agreement promptly after the execution
hereof and will instruct its accountants to answer candidly any and all
questions that the officers of Buyer or any authorized representatives of Buyer
may address to them in reference to the financial condition or affairs of
Seller and Seller’s Subsidiaries.  Seller
may have its representatives in attendance at any meetings between the officers
or other representatives of Buyer and Seller’s accountants held in accordance
with this authorization.

 

37

 

(d)                                 Notices.  Seller will promptly notify Buyer of the
occurrence of any of the following and shall provide such additional
documentation and cooperation as Buyer may request with respect to any of the
following:

 

(i)                                     any change in
Seller’s, any of its Subsidiary’s or any Guarantor’s business address and/or
telephone number;

 

(ii)                                  any merger, consolidation
or reorganization of Seller, any of its Subsidiaries or any Guarantor, or any
changes in the ownership of Seller, any of its Subsidiaries or any Guarantor by
direct or indirect means.  “Indirect” means any change in ownership of a controlling interest
of the relevant Person’s direct or indirect parent;

 

(iii)                               any change of
the name or jurisdiction of organization of Seller, any of its Subsidiaries or
any Guarantor;

 

(iv)                              any significant
adverse change in the financial position of Seller, any of its Subsidiaries or
any Guarantor;

 

(v)                                 entry of any
court judgment or regulatory order in which Seller, any Subsidiary of Seller or
any Guarantor is or may be required to pay a claim or claims which could have a
material adverse effect on the financial condition of Seller, any of Seller’s
Subsidiaries or any Guarantor, on Seller’s or any Guarantor’s ability to
perform its obligations under any Transaction Document, or on the ability of
Seller, any Subsidiary of Seller or any Guarantor to continue its operations in
a manner similar to its current operations;

 

(vi)                              the filing of
any petition, claim or lawsuit against Seller, any of Seller’s Subsidiaries or
any Guarantor which could have a material adverse effect on the financial
condition of Seller, any Subsidiary of Seller or any Guarantor, on Seller’s or
any Guarantor’s ability to perform its obligations under any Transaction
Document, or on the ability of Seller, any Subsidiary of Seller or any
Guarantor to continue its operations in a manner similar to its current
operations;

 

(vii)                           Seller, any
Subsidiary of Seller or any Guarantor admits to committing, or is found by a
court or similar body with the appropriate jurisdiction to have committed, a
material violation of any Requirement of Law relating to its business
operations, including but not limited to, its loan generation, sale or
servicing operations;

 

(viii)                        the initiation
of any investigations, audits, examinations or reviews of Seller, any
Subsidiary of Seller or any Guarantor by any Agency, Governmental Authority,
trade association or consumer advocacy group relating to the Origination, sale
or servicing of mortgage loans by Seller, any Subsidiary of Seller or any
Guarantor or the business operations of Seller, any Subsidiary of Seller or any
Guarantor, with the exception of normally scheduled audits or examinations by
the regulators of Seller, any Subsidiary of Seller or any Guarantor;

 

(ix)                                any
disqualification or suspension of Seller, any Subsidiary of Seller or any
Guarantor by an Agency, including any notification or knowledge, from any
source, 

 

38

 

of any disqualification or
suspension, or any warning of any such disqualification or suspension or
impending disqualification or suspension;

 

(x)                                   the occurrence
of any actions, inactions or events upon which an Agency may, in accordance
with Agency Guidelines, disqualify or suspend Seller, any Subsidiary of Seller
or any Guarantor as a seller or servicer, including, but not limited to, those
events or reasons for disqualification or suspension enumerated in Chapter 5 of
the Freddie Mac Single Family Seller/Servicer Guide;

 

(xi)                                the filing,
recording or assessment of any valid federal, state or local tax Lien against
it, any Subsidiary of Seller or any Guarantor, or any of its, any such
Subsidiary’s or any Guarantor’s assets;

 

(xii)                             the occurrence
of any Event of Default hereunder or the occurrence of any Default,

 

(xiii)                          the suspension,
revocation or termination of any licenses or eligibility as described under Paragraph
10(a)(ix) of Seller, any Subsidiary of Seller or any Guarantor,

 

(xiv)                         any other
action, event or condition of any nature which could reasonably be expected to
result in a Material Adverse Effect or which, with or without notice or lapse
of time or both, will constitute a default under any other agreement,
instrument or indenture to which Seller, any Subsidiary of Seller or any
Guarantor is a party or to which its properties or assets may be subject; or

 

(xv)                            any alleged
breach by Buyer of any provision of this Agreement or of any of the other
Transaction Documents.

 

(e)                                  Payment of
Debt, Taxes, etc.

 

(i)                                     Seller shall
pay and perform all obligations and Debt of Seller, and cause to be paid and
performed all obligations and Debt of its Subsidiaries in accordance with the
terms thereof, and pay and discharge or cause to be paid and discharged all
taxes, assessments and governmental charges or levies imposed upon Seller, its
Subsidiaries, or upon their respective income, receipts or properties, before
the same shall become past due, as well as all lawful claims for labor,
materials or supplies or otherwise which, if unpaid, might become a Lien upon
such properties or any part thereof; provided, however, that Seller and
its Subsidiaries shall not be required to pay obligations, Debt, taxes,
assessments or governmental charges or levies or claims for labor, materials or
supplies for which Seller or its Subsidiaries shall have obtained an adequate
bond or adequate insurance or which are being contested in good faith and by
proper proceedings that are being reasonably and diligently pursued, if such
proceedings do not involve any likelihood of the sale, forfeiture or loss of
any such property or any interest therein while such proceedings are pending; and
provided further that book reserves adequate under GAAP shall have been
established with respect thereto.

 

(ii)                                  (A)                              All payments
made by Seller under this Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any present 

 

39

 

or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities (including
penalties, interest and additions to tax) with respect thereto imposed by any
Governmental Authority, excluding taxes imposed on (or measured by) its net
income (however denominated) or capital, branch profits taxes, franchise taxes
or any other tax imposed on the net income by the United States, a state or a
foreign jurisdiction under the laws of which Buyer is organized or of its
applicable lending office, or any political subdivision thereof (collectively,
“Taxes”), all of which shall be paid by
Seller for its own account not later than the date when due.  If Seller is required by Requirement of Law
to deduct or withhold any Taxes from or in respect of any amount payable
hereunder, it shall: (a) make such deduction or withholding; (b) pay
the amount so deducted or withheld to the appropriate Governmental Authority
not later than the date when due; (c) deliver to Buyer, promptly, original
tax receipts and other evidence satisfactory to Buyer of the payment when due
of the full amount of such Taxes; and (d) pay to Buyer such additional
amounts as may be necessary so that such Buyer receives, free and clear of all
Taxes, a net amount equal to the amount it would have received under this
Agreement, as if no such deduction or withholding had been made.

 

(B)                                In addition,
Seller agrees to pay to the relevant Governmental Authority in accordance with
all applicable Requirements of Law any current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
(including, without limitation, mortgage recording taxes, transfer taxes and
similar fees) imposed by the United States or any taxing authority thereof or
therein that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement (“Other Taxes”).

 

(C)                                Seller agrees
to indemnify Buyer for the full amount of Taxes (including additional amounts
with respect thereto) and Other Taxes, and the full amount of Taxes of any kind
imposed by any jurisdiction on amounts payable under this subparagraph, and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, provided that Buyer shall have provided Seller with
evidence, reasonably satisfactory to Seller, of payment of Taxes or Other
Taxes, as the case may be.

 

(D)                               Any assignee of
Buyer that is not incorporated or otherwise created under the laws of the
United States, any State thereof, or the District of Columbia (a “Foreign Buyer”) shall provide Seller with properly completed
United States Internal Revenue Service (“IRS”) Form W-8BEN
or W-8ECI or any successor form prescribed by the IRS, certifying that such
Foreign Buyer is entitled to benefits under an income tax treaty to which the
United States is a party which reduces the rate of withholding tax on payments
of interest or certifying that the income receivable pursuant to this Agreement
is effectively connected with the conduct of a trade or business in the United
States on or prior to the date upon which each such Foreign Buyer becomes a
purchaser of Mortgage Loans hereunder. 
Each Foreign Buyer will resubmit the appropriate form on the earliest of
(x) the third anniversary of the prior submission or (y) on or before
the expiration of thirty (30) days after there is a “change in circumstances”
with respect to such Foreign Buyer as defined in Treas. Reg. Section 1.1441(e)(4)(ii)(D).  For any period with respect to which a
Foreign Buyer has failed to provide Seller with the appropriate form or other 

 

40

 

 

relevant
document pursuant to this subparagraph (unless such failure is due to a change
in any Requirement of Law occurring subsequent to the date on which a form
originally was required to be provided), such Foreign Buyer shall not be
entitled to any “gross-up” of Taxes or indemnification under this Paragraph
11(e) with respect to Taxes imposed by the United States; provided,
however, that should a Foreign Buyer, which is otherwise exempt from a
withholding tax, become subject to Taxes because of its failure to deliver a
form required hereunder, Seller shall take such steps as such Foreign Buyer
shall reasonably request to assist such Foreign Buyer to recover such Taxes.

 

(E)                                 Without
prejudice to the survival or any other agreement of Seller hereunder, the
agreements and obligations of Seller contained in this Paragraph 11(e) shall
survive the termination of this Agreement. 
Nothing contained in this Paragraph 11(e) shall require
Buyer to make available any of its tax returns or other information that it deems
to be confidential or proprietary.

 

(F)                                 Each Party
acknowledges that it is its intent, for purposes of U.S. federal, state and
local income and franchise taxes only, to treat each purchase transaction
hereunder as indebtedness of Seller that is secured by the Mortgage Loans and
that the Mortgage Loans are owned by Seller in the absence of an Event of
Default by Seller.  All parties to this
Agreement agree to such treatment and agree to take no action inconsistent with
this treatment, unless required by law.

 

(f)                                    Insurance.  Seller shall, and shall cause its
Subsidiaries to, maintain (a) errors and omissions insurance or mortgage
impairment insurance and blanket bond coverage, with such companies and in such
amounts as to satisfy prevailing Agency Guidelines requirements applicable to a
qualified mortgage originating institution; (b) liability insurance and
fire and other hazard insurance on its properties, with responsible insurance
companies approved by Buyer, in such amounts and against such risks as is
customarily carried by similar businesses operating in the same vicinity; and (c) within
thirty (30) days after notice from Buyer, obtain such additional insurance as
Buyer shall reasonably require, all at the sole expense of Seller.  Photocopies of such policies shall be
furnished to Buyer without charge upon obtaining such coverage or any renewal
of or modification to such coverage.

 

(g)                                 Financial
Statements and Other Reports.  Seller shall deliver or cause to be delivered
to Buyer:

 

(i)                                     As soon as
available and in any event not later than 30 days after the end of each
calendar month, statements of income and changes in stockholders’ equity and
cash flow of Seller, and, if applicable, Seller’s Subsidiaries, on a
consolidated and consolidating basis for the immediately preceding month, and
related balance sheet as at the end of the immediately preceding month, all in
reasonable detail, prepared in accordance with GAAP applied on a consistent
basis, and certified as to the fairness of presentation by the chief financial
officer of Seller, subject, however, to normal year-end audit adjustments;

 

(ii)                                  As soon as
available and in any event not later than 90 days after Seller’s and Parent’s
fiscal year end, statements of income, changes in stockholders’ equity and 

 

41

 

cash flows of Seller, Parent
and, if applicable, their respective Subsidiaries, on a consolidated basis for
the preceding fiscal year, the related balance sheet as at the end of such year
(setting forth in comparative form the corresponding figures for the preceding
fiscal year), all in reasonable detail, prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved, and accompanied
by an opinion in form and substance satisfactory to Buyer and prepared by an
accounting firm reasonably satisfactory to Buyer, or other independent
certified public accountants of recognized standing selected by Seller or
Parent, as applicable, and, in each case, acceptable to Buyer, as to said
financial statements and a certificate signed by the chief financial officer of
Seller or Parent, as applicable, stating that said financial statements fairly
present the financial condition, results and cash flows of operations of Seller
or Parent, as applicable (and, if applicable, Seller’s or Parent’s Subsidiaries
on a consolidated basis) as at the end of, and for, such year;

 

(iii)                               Together with
each delivery of financial statements required in this Paragraph, Compliance
Certificates executed by each chief financial officer of Seller and Parent;

 

(iv)                              Photocopies of
all regular or periodic financial and other reports, if any, which Seller, any
Guarantor or any Subsidiary of Seller or any Guarantor shall file with the SEC
or any other Governmental Authority, not later than five (5) days after
filing,

 

(v)                                 Photocopies of
any audits completed by any Agency of Seller, any Guarantor or any of their
Subsidiaries, not later than five (5) days after receiving such audit;

 

(vi)                              Not less
frequently than once every week (and more often if requested by Buyer), a
report in form and substance satisfactory to Buyer summarizing the Hedging
Arrangements then in effect with respect to all Mortgage Loans then owned by
Buyer and interim serviced by Seller (or a Successor Servicer);

 

(vii)                           On each
Business Day, a data tape for Purchased Mortgage Loans including the
information described on Exhibit I and such other information
requested by Buyer from time to time; and

 

(viii)                        From time to
time, with reasonable promptness, such further information regarding the
Mortgage Assets, or the business, operations, properties or financial condition
of Seller and any Guarantor as Buyer may reasonably request.

 

(h)                                 Limits on
Distributions.  Seller
shall not, and shall not permit any of its Subsidiaries to, pay, make or
declare or incur any liability to pay, make or declare any dividend (excluding
stock dividends) or other distribution, direct or indirect, on or on account of
any shares of its stock (or equivalent equity interest) or any redemption or
other acquisition, direct or indirect, of any shares of its stock (or
equivalent equity interest) or of any warrants, rights or other options to
purchase any shares of its stock (or equivalent equity interest), nor purchase,
acquire, redeem or retire any stock (or equivalent equity interest) in itself
whether now or hereafter

 

42

 

outstanding,
except that, so long as no Default or Event of Default exists at such time or
will occur as a result of such payment, Seller and its Subsidiaries may pay
Permitted Dividends.

 

(i)                                     Use of Chase’s
Name.  Seller shall and shall cause
its Subsidiaries to, confine its use of Buyer’s logo and the “JPMorgan” and
“Chase” names to those uses specifically authorized by Buyer in writing.   Except where required by the federal Real
Estate Settlement Procedures Act or HUD’s Regulation X thereunder, or the
Helping Families Save Their Homes Act of 2009, as amended from time to time, in
no instance may Seller or any of its Subsidiaries disclose to any prospective
Mortgagor, or the agents of the Mortgagor, that such Mortgagor’s Mortgage Loan
will be offered for sale to Buyer.  None
of Seller or its Subsidiaries may use Buyer’s name or logo to obtain any
mortgage-related services without the prior written consent of Buyer.

 

(j)                                     Reporting.  In its financial statements, Seller will
report each sale of a Mortgage Loan hereunder as a financing in accordance with
GAAP.

 

(k)                                  Transactions
with Affiliates.  Seller will
not and will not permit any of its Subsidiaries to (i) enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in
the ordinary course of Seller’s or such Subsidiary’s business and (c) upon
fair and reasonable terms no less favorable to Seller or such Subsidiary than
it would obtain in a comparable arm’s-length transaction with a Person which is
not an Affiliate, or (ii) make a payment that is not otherwise permitted
by this Paragraph 11 to any Affiliate.

 

(l)                                     Defense of
Title; Preservation of Mortgage Assets.  Seller warrants and will defend the right,
title and interest of Buyer in and to all Mortgage Assets against all adverse
claims and demands of all Persons whomsoever. 
Seller shall do all things necessary to preserve the Mortgage Assets so
that such Mortgage Assets remain subject to a first priority perfected Lien
hereunder. Without limiting the foregoing, Seller will comply with all
Requirements of Law applicable to Seller or relating to the Mortgage Assets and
cause the Mortgage Assets to comply with all applicable Requirements of
Law.  Seller will not allow any default
to occur for which Seller is responsible under any Mortgage Assets or any
Transaction Documents and Seller shall fully perform or cause to be performed
when due all of its obligations under any Mortgage Assets and the Transaction
Documents.

 

(m)                               Limitation on
Sale of Assets. Seller shall not convey, sell, lease, assign,
transfer or otherwise dispose of (collectively, “Transfer”),
all or substantially all of its property, business or assets (including,
without limitation, receivables and leasehold interests) whether now owned or
hereafter acquired or allow any of its Subsidiaries to Transfer all or
substantially all of its assets to any Person; provided, that Seller
may, after at least ten (10) days’ prior written notice to Buyer, allow
such action with respect to any Subsidiary which is not a material part of
Seller’s overall business operations.

 

(n)                                 No Amendment or
Compromise.  Without
Buyer’s prior written consent, none of Seller or those acting on Seller’s
behalf shall amend or modify, or waive any term or condition of, or settle or
compromise any claim in respect of, any item of the Purchased Mortgage Loans,
any related rights or any of the Transaction Documents.

 

43

 

(o)                                 Loan Determined
to be Defaulted or Defective.  Upon discovery by Seller that any Purchased
Mortgage Loan is a Defaulted Loan or a Defective Mortgage Loan, Seller shall
promptly give notice of such discovery to Buyer.

 

(p)                                 Further
Assurances.  Seller
agrees to do such further acts and things and to execute and deliver to Buyer
such additional assignments, acknowledgments, agreements, powers and
instruments as are reasonably required by Buyer to carry into effect the intent
and purposes of this Agreement and the other Transaction Documents, to perfect
the interests of Buyer in the Mortgage Assets or to better assure and confirm
unto Buyer its rights, powers and remedies hereunder and thereunder.

 

(q)                                 Hedging
Arrangements.  Seller
shall maintain Hedging Arrangements with respect to all Mortgage Loans not the
subject of Takeout Commitments reasonably satisfactory to Buyer, with Persons
reasonably satisfactory to Buyer, in order to mitigate the risk that the Market
Value of any such Mortgage Loan will change as a result of a change in interest
rates or the market for mortgage loan assets before the Mortgage Loan is
purchased by an Approved Takeout Investor or repurchased by Seller.

 

(r)                                    No Loans or
Investments Except Approved Investments.  Sellers shall not and shall not permit any of
its Subsidiaries to, make or permit to remain outstanding any loans or advances
to, or investments in, any Person, except that the foregoing restriction shall
not apply to:

 

(i)                                     investments in
Cash Equivalents; and

 

(ii)                                  investments not
to exceed $1,000,000 in the aggregate without Buyer’s prior written consent.

 

(s)                                  No Guaranties.  Without the prior written consent of Buyer,
Seller shall not, and shall not permit any of its Subsidiaries to, guaranty any
Debt other than Debt incurred by a Subsidiary for a warehouse or repurchase
facility for Mortgage Loans.

 

(t)                                    Mortgage Loans.  Seller will underwrite Eligible Mortgage
Loans in compliance with its underwriting guidelines in effect on the date
hereof.  Seller will not change its
underwriting guidelines in any material respect without the prior written
consent of Buyer.

 

(u)                                 No Mergers,
Acquisitions, Subsidiaries.  Seller will not, and will not permit any of
its Subsidiaries to, consolidate or merge with or into any entity (unless
Seller is the surviving entity and any of Seller’s Subsidiaries may merge with
or into Seller), consolidate, acquire any interest in any Person or create,
form or acquire any Subsidiary not listed in Exhibit G.

 

(v)                                 UCC.  Seller will not change its name, identity,
corporate structure or location (within the meaning of Paragraph 9-307 of the
UCC) unless it shall have (i) given Buyer at least forty-five (45) days’
prior written notice thereof and (ii) delivered to Buyer all financing
statements, amendments, instruments, legal opinions and other documents
requested by Buyer in connection with such change.  Seller will keep its principal place of
business and chief executive office at 163 Technology Drive, Irvine, CA 92618,
and the office where it maintains any physical records of the Purchased
Mortgage Loans at a corporate facility of Seller, or, in any such case, upon
thirty (30) days’ prior written notice to Buyer, at another location within the
United States.

 

44

 

(w)                               Takeout
Commitments.  Except to
the extent superseded by this Agreement, Seller covenants that it shall
continue to perform all of its duties and obligations to the Approved Takeout
Investor, under any applicable Takeout Commitment and Takeout Agreement and
otherwise, with respect to a Purchased Mortgage Loan as if such Mortgage Loan
were still owned by Seller and to be sold directly by Seller to the Approved
Takeout Investor pursuant to such Takeout Commitment on the date provided
therein without the intervening ownership of Buyer pursuant to this Agreement.  Without limiting the generality of the
foregoing, Seller shall timely assemble all records and documents concerning
the Mortgage Loan required under any applicable Takeout Commitment (except that
photocopies instead of originals shall be used for those documents already
provided to Buyer in the Loan File) and all other documents and information
that may have been required or requested by the Approved Takeout Investor, and
Seller shall make all representations and warranties required to be made to the
Approved Takeout Investor under the applicable Takeout Commitment and Takeout
Agreement.

 

(x)                                   Financial
Covenants.

 

(i)                                     Leverage Ratio.  Seller shall not permit the Leverage Ratio of
Seller (and, if applicable, its Subsidiaries, on a consolidated basis) to
exceed 10 to 1 computed as of the end of each calendar month.

 

(ii)                                  Minimum
Adjusted Tangible Net Worth.  Seller shall not permit the Adjusted Tangible
Net Worth of Seller (and, if applicable, its Subsidiaries, on a consolidated
basis), computed as of the end of each calendar month, to be less than
$44,000,000.

 

(iii)                               Minimum Current
Ratio.  Seller shall not permit the
Current Ratio of Seller (and, if applicable, its Subsidiaries, on a
consolidated basis), computed as of the end of each calendar month, to be less
than 1.05 to 1.

 

(iv)                              Maintenance of
Liquidity.  Seller
shall:

 

(A)                              maintain at all
times unencumbered Liquidity in an amount greater than or equal to 3% of actual
total assets; and

 

(B)                                maintain at all
times Available Warehouse Facilities from buyers and lenders other than Buyer
such that the Available Warehouse Facility under this Agreement constitutes no
more than 50% of Seller’s aggregate Available Warehouse Facilities.

 

(v)                                 Net Income.  As of the end of each calendar month, Seller
shall not permit its net income before taxes, for the period including such
calendar month and the eight calendar months ending immediately prior to such
calendar month, to be less than $1.00.

 

(vi)                              Maximum
Warehouse Capacity Ratio. 
Seller shall not permit the Maximum Warehouse Capacity Ratio of Seller
(and, if applicable, its Subsidiaries, on a consolidated basis) to exceed 30 to
1 computed as of the end of each calendar month.

 

45

 

(vii)                           Wholesale
Originations.  Seller
shall Originate no more than 20% of its total Mortgage Loan originations in any
calendar month through wholesale or broker originations.

 

(viii)                        Net Losses.  Seller shall not permit:

 

(A)                              its net loss
before taxes, for any calendar quarter, to be greater than $2,500,000; or

 

(B)                                any net loss
before taxes to occur for any two consecutive calendar quarters.

 

(y)                                 Government
Regulation.  Seller
shall not (1) be or become subject at any time to any Requirement of Law
(including, without limitation, the U.S. Office of Foreign Asset Control list)
that prohibits or limits Buyer from making any advance or extension of credit
to Seller or from otherwise conducting business with Seller, or (2) fail
to provide documentary and other evidence of Seller’s identity as may be requested
by Buyer at any time to enable Buyer to verify Seller’s identity or to comply
with any applicable Requirement of Law, including, without limitation, Section 326
of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

 

(z)                                   National City
Bank.  At no time shall Seller permit
any Mortgage Assets or proceeds thereof to be maintained at or deposited into
any account maintained at National City Bank.

 

(aa)                            Management
Change.  Seller will notify Buyer in
writing within thirty (30) days after any of Douglas Lebda, Matthew Packey or
David Norris shall cease for any reason whatsoever, including death or
disability, to be, and to continuously perform the duties of, chairman and
chief executive officer of the Parent, chief financial officer of the Parent or
president of the Seller, respectively (such an occurrence being referred to
herein as a “Change in Management”). 
If Buyer reasonably disapproves of any Change in Management, Buyer shall
give written notice of its disapproval within thirty (30) days after its receipt
of Seller’s notice together with Buyer’s recommendations for resolving such
Management Change to Buyer’s satisfaction. 
If Seller does not resolve such Change in Management to Buyer’s
satisfaction within thirty (30) days after Buyer’s notice of disapproval, Buyer
may accelerate the Termination Date by giving written notice of the accelerated
Termination Date to Seller.  If any
successor satisfactory to Buyer shall have been elected or appointed in
connection with a Change in Management, then the name of such successor or
successors shall be deemed to have been inserted in place of Douglas Lebda,
Matthew Packey, or David Norris, as applicable, in this paragraph.

 

12.                               Events of
Default; Remedies.

 

(a)                                  Each of the
following events shall, upon the occurrence and continuance thereof, be an “Event of Default”:

 

(i)                                     Seller fails to
remit any Price Differential, Income, fees, Repurchase Price, escrow payment or
any other amount due to Buyer pursuant to the terms hereof or any other
Transaction Document or fails to cure any Margin Deficit as provided in Paragraph
4; or

 

46

 

(ii)                                  Seller fails to
repurchase any Purchased Mortgage Loan at the time and for the amount required
hereunder; or

 

(iii)                               (A) any
representation or warranty made by Seller or any Guarantor in connection with
this Agreement or any other Transaction Document or contained herein or therein
is inaccurate or incomplete on or as of the date made or hereafter becomes
untrue or (B) any information contained in any written statement, report,
financial statement or certificate made or delivered by Seller or any Guarantor
(either before or after the date hereof) to Buyer pursuant to the terms of any
Transaction Document is untrue or incorrect as of the date when made or deemed
made; or

 

(iv)                              Seller shall
fail in the observance or performance of any duty, responsibility or obligation
imposed by or set forth in Paragraph:

 

(A)                              11(c) (Inspection
of Properties and Books);

 

(B)                                11(h) (Limits
on Distributions);

 

(C)                                11(o) (Loan
Determined to be Defaulted or Defective);

 

(D)                               11(x) (Financial
Covenants); or

 

(v)                                 Any Guarantor
shall fail in the observance or performance of any duty, responsibility or
obligation imposed by or set forth in Paragraph 4(c) (Inspection of
Properties and Books) of the Guaranty; or

 

(vi)                              Seller or any
Guarantor, as applicable, shall fail in the observance or performance of any
other duty, responsibility or obligation contained in the Transaction Documents
(other than the other “Events of Default” identified in this Paragraph 12),
and such failure continues unremedied for a period of five (5) days; or

 

(vii)                           any Act of
Insolvency occurs with respect to Seller, any Guarantor, or any Subsidiary of
Seller or any Guarantor (other than HLC Escrow); or

 

(viii)                        one or more
judgments or decrees are entered against Seller, any Guarantor or any
Subsidiary of Seller or any Guarantor (other than HLC Escrow) involving claims
not paid or not fully covered by insurance and all such judgments or decrees
are not vacated, discharged, or stayed or bonded pending appeal within thirty
(30) days from entry thereof; or

 

(ix)                                any Agency, or
private investor, or any other Person seizes or takes control of the servicing
portfolio of Seller, any of its Subsidiaries, any Subservicer, any Guarantor or
any Subsidiary of any Guarantor, for breach of any servicing agreement
applicable to such servicing portfolio or for any other reason whatsoever; or

 

(x)                                   any Agency or
Governmental Authority revokes or materially restricts the authority of Seller,
any of Seller’s Subsidiaries, any Subservicer, any Guarantor  or any Subsidiary of any Guarantor to Originate, purchase, sell or
service Mortgage Loans, or 

 

47

 

Seller, any of Seller’s
Subsidiaries, any Subservicer, any Guarantor or any Subsidiary of any Guarantor
shall fail to meet all requisite servicer eligibility qualifications
promulgated by any Agency; or

 

(xi)                                there is a
default (which has not been cured within the applicable cure period, if any)
under any agreement, if any, that Seller or any Guarantor, or any of their
respective Affiliates or Subsidiaries, has entered into with Buyer, or any of
its Affiliates or Subsidiaries; or

 

(xii)                             Seller, any
Guarantor or any of their respective Subsidiaries (other than HLC Escrow) fails
to pay when due any other Debt in excess of $1,000,000 individually or in the
aggregate beyond any period of grace provided, or there occurs any breach or
default (which has not been cured within the applicable cure period, if any),
with respect to any material term of any such Debt, if the effect of such
failure, breach or default is to cause, or to permit the holder or holders
thereof (or a trustee on behalf of such holder or holders) to cause, such Debt
of such Person to become or be declared due prior to its stated maturity (upon
the giving or receiving of notice, lapse of time, both, or otherwise); or

 

(xiii)                          there is a
Material Adverse Effect; or

 

(xiv)                         Seller, any
Guarantor or any of their respective Subsidiaries defaults under any mortgage
loan repurchase arrangement similar to this Agreement, including off balance
sheet repurchase arrangements, or under any warehouse lending arrangement,
including off balance sheet warehouse lending arrangements, which it may have
with any other Person, beyond any applicable notice and grace periods; or

 

(xv)                            (A) 
Seller or any Guarantor shall assert that any Transaction Document is not in
full force and effect or shall otherwise seek to terminate or disaffirm its
obligations under any such Transaction Document at any time following the
execution thereof or (B) any Transaction Document ceases to be in full
force and effect, or any of Seller’s or any Guarantor’s material obligations
under any Transaction Document shall cease to be in full force and effect, or
the enforceability thereof shall be contested by Seller or any Guarantor; or

 

(xvi)                         any
Governmental Authority or any Person acting or purporting to act under
Governmental Authority shall have taken any action to condemn, seize or
appropriate, or to assume custody or control of, all or any substantial part of
the assets of Seller, any of its Subsidiaries, any Subservicer, any Guarantor
or any Subsidiary of any Guarantor, or shall have taken any action to displace
the management of Seller, any of its Subsidiaries, any Guarantor or any
Subsidiary of any Guarantor or to curtail its authority in the conduct of the
business of Seller, any of its Subsidiaries (other than HLC Escrow), any
Guarantor or any Subsidiary of any Guarantor (other than
HLC Escrow), or to restrict the payment of dividends to Seller by any
Subsidiary of Seller (other than HLC Escrow), and such action shall not have
been discontinued or stayed within thirty (30) days; or

 

48

 

(xvii)                      any Guarantor
defaults under its Guaranty, or a default or an event of default shall have
occurred under any other Transaction Document; or

 

(xviii)                   any Change in Control of
Seller, any of its Subsidiaries or any Guarantor shall have occurred without
Buyer’s prior written consent or a material change in the management of Seller,
any of its Subsidiaries or any Guarantor shall have occurred which has not been
approved by Buyer in writing; or

 

(xix)                           without the
Buyer’s prior written consent, any of Douglas Lebda, Matthew Packey or David
Norris shall cease for any reason whatsoever, including death or disability, to
be, and to continuously perform the duties of, chairman and chief executive
officer of the Parent, chief financial officer of the Parent or president of
the Seller, respectively, or, if such cessation shall occur as a result of
death or disability, no successor satisfactory to Buyer, in its reasonable
judgment, shall have become, and shall have commenced to perform the duties of
chairman and chief executive officer of the Parent, chief financial officer of
the Parent or president of the Seller, respectively, within ninety (90) days
after such cessation; provided that if any such satisfactory successor
shall have been so elected and shall have commenced performance of such duties
within such period, then the name of such successor or successors shall be
deemed to have been inserted in place of Douglas Lebda, Matthew Packey, or
David Norris, as applicable, in this paragraph; or

 

(xx)                              any failure by
Seller to deliver assignments executed in blank to Buyer or its designee for
any Purchased Mortgage Loan within five (5) Business Days following any
termination of Seller’s MERS membership; or

 

(xxi)                           the initiation
of any investigation or proceeding of Seller or any Guarantor by any
Governmental Authority related to allegations of misconduct or wrongdoing,
which is reasonably likely to have a material effect on Seller’s or any
Guarantor’s ability to perform its obligations under this Agreement or the
other Transaction Documents;  provided,
that Seller is not otherwise prohibited from disclosing the fact of the
investigation; or

 

(xxii)                        the Pension
Benefit Guaranty Corp. shall, or shall indicate its intention to, file notice
of a Lien pursuant to Section 4068 of ERISA with regard to any of the
assets of Seller, any Guarantor or any of their respective Subsidiaries; or

 

(xxiii)                     Seller shall become subject
to registration as an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended;

 

(xxiv)                    Buyer shall fail to have a
valid and perfected first priority security interest in any of the Purchased
Mortgage Loans, including the Servicing Rights thereto, and other Mortgage
Assets, in each case free and clear of any other Lien;

 

(xxv)                       Seller shall
have failed to deliver to Buyer opinions of counsel substantially in the form
of Exhibit F and in form and substance reasonably satisfactory to Buyer
and its counsel by November 29, 2009; or

 

49

 

(b)                                 If an Event of
Default occurs and is continuing, then, Buyer may, at its option by written
notice to Seller (i) declare the Repurchase Date for each outstanding
Transaction hereunder, if it has not already occurred, to be deemed immediately
to occur (except that, in the event that the Purchase Date for any Transaction
has not yet occurred as of the date of such exercise, such Transaction shall be
deemed immediately canceled), (ii) terminate and replace Seller as interim
servicer with respect to any Mortgage Assets at the cost and expense of Seller,
(iii) direct Seller to cause all Income to be transferred into an account
specified by the Buyer within one (1) Business Day after receipt by Seller
or any Subservicer, (iv) direct or cause Seller to direct, all Mortgagors
to remit all Income directly to an account specified by Buyer and (v) terminate
any commitment of Buyer to purchase Mortgage Loans under this Agreement.

 

(c)                                  If Buyer has
exercised the option referred to in Paragraph 12(b)(i), then (i) Seller’s
obligations hereunder to repurchase all Purchased Mortgage Loans in such
Transactions on the Repurchase Date determined in accordance with Paragraph 12(b)(i) shall
thereupon become immediately due and payable, (ii) to the extent permitted
by applicable law, the Repurchase Price with respect to each such Transaction
shall be increased by the aggregate amount obtained by daily application of (x) the
greater of (i) the Pricing Rate for such Transaction and (ii) 2.0%
plus the Prime Rate to (y) the Repurchase Price for such Transaction as of
the Repurchase Date as determined pursuant to Paragraph 12(b)(i) (decreased
as of any day by (A) any amounts retained by Buyer with respect to such
Repurchase Price pursuant to clause (iii) or clause (iv) of
this Paragraph and (B) any proceeds from the sale of Purchased Mortgage
Loans pursuant to Paragraph 12(d), on a 360 day per year basis
for the actual number of days during the period from and including the date of
the Event of Default giving rise to such option to but excluding the date of
payment of the Repurchase Price as so increased, (iii) all Income paid
after such exercise or deemed exercise shall be payable to and retained by
Buyer and shall be applied to the aggregate unpaid Repurchase Prices and all
other amounts owed by Seller to Buyer or any other Indemnified Party under the
Transaction Documents, (iv) in accordance with Paragraphs 4
and 5, all amounts on deposit in the Accounts, shall be applied by Buyer
to the aggregate unpaid Repurchase Prices and all other amounts owed by Seller
to Buyer or any other Indemnified Party under the Transaction Documents, (v) Seller
shall, if directed by Buyer in writing, immediately deliver to Buyer any
documents then in Seller’s possession relating to any Purchased Mortgage Loans
subject to such Transactions, (iv) Buyer may, by notice to Seller, declare
the Termination Date to have occurred.

 

(d)                                 Upon the
occurrence of any Event of Default, without prior notice to Seller, Buyer may (A) immediately
sell, on a servicing released or servicing retained basis as Buyer deems
desirable, in a recognized market at such price or prices as Buyer may in its
sole discretion deem satisfactory, any or all Purchased Mortgage Loans subject
to such Transactions and apply the proceeds thereof to the aggregate unpaid
Repurchase Prices and any other amounts owing by Seller to Buyer or any other
Indemnified Party under the Transaction Documents or (B) in its sole
discretion elect, in lieu of selling all or a portion of such Purchased
Mortgage Loans, to give Seller credit for such Purchased Mortgage Loans in an
amount equal to the Market Value therefor on such date against the aggregate
unpaid Repurchase Prices and any other amounts owing by Seller to Buyer or any
other Indemnified Party under the Transaction Documents.

 

The proceeds of any disposition described above shall be applied first, to the reasonable costs and
expenses incurred by Buyer in connection with or as a result of an Event of 

 

50

 

Default (including, without limitation, legal
fees, consulting fees, accounting fees, file transfer and inventory fees, costs
and expenses incurred in respect of a transfer of the servicing of the
Purchased Mortgage Loans and costs and expenses incurred in connection with a
disposition of the Purchased Mortgage Loans); second,
to costs of cover and/or related hedging transactions; third,
to the aggregate and accrued Price Differential owed hereunder, fourth, to the remaining aggregate
Repurchase Prices owed hereunder; fifth, to
any other accrued and unpaid obligations of Seller hereunder and under the
other Transaction Documents, and sixth, any
remaining proceeds shall be paid to Seller or other Person legally entitled
thereto.

 

The parties acknowledge and agree that (1) the Purchased Mortgage
Loans subject to any Transaction hereunder are instruments traded in a
recognized market, (2) in the absence of a generally recognized source for
prices or bid or offer quotations for any Purchased Mortgage Loans, Buyer may
establish the source therefor in its sole discretion, (3) all prices, bids
and offers shall be determined together with accrued Income (except to the
extent contrary to market practice with respect to the relevant Purchased
Mortgage Loans) and (4) in soliciting price, bid and offer quotations for
any Purchased Mortgage Loan, it is reasonable for Buyer to use only the
information provided by Seller on the daily data tape pursuant to Paragraph
11(g)(vii).  The parties further
recognize that it may not be possible to purchase or sell all of the Purchased
Mortgage Loans on a particular Business Day, or in a transaction with the same
purchaser, or in the same manner because the market for such Purchased Mortgage
Loans may not be liquid at such time.  In
view of the nature of the Purchased Mortgage Loans, the parties agree that
liquidation of a Transaction or the underlying Purchased Mortgage Loans does
not require a public purchase or sale and that a good faith private purchase or
sale shall be deemed to have been made in a commercially reasonable
manner.  Accordingly, Buyer may elect the
time and manner of liquidating any Purchased Mortgage Loan and nothing
contained herein shall obligate Buyer to liquidate any Purchased Mortgage Loan
on the occurrence of an Event of Default or to liquidate all Purchased Mortgage
Loans in the same manner or on the same Business Day and no such exercise of
any right or remedy shall constitute a waiver of any other right or remedy of
Buyer.

 

(e)           Seller shall be
liable to Buyer for (i) the amount of all reasonable legal or other
expenses incurred by Buyer in connection with or as a result of an Event of
Default, (ii) damages in an amount equal to the cost (including all fees,
expenses and commissions determined in good faith) of entering into replacement
transactions and entering into or terminating hedge transactions in connection
with or as a result of an Event of Default and (iii) any other loss,
damage, cost or expense directly arising or resulting from the occurrence of an
Event of Default.

 

(f)            To the extent
permitted by applicable law, Seller shall be liable to Buyer for interest on
any amounts owing by Seller hereunder, from the date Seller becomes liable for
such amounts hereunder until such amounts are (i) paid in full by or on
behalf of Seller or (ii) satisfied in full by the exercise of Buyer’s
rights hereunder.  Interest on any sum
payable by Seller to Buyer under this Paragraph 12(f) shall be
at a rate equal to the greater of the Pricing Rate for the relevant Transaction
and the Prime Rate.

 

(g)           If an Event of
Default occurs, Buyer shall have, in addition to its rights hereunder, any
rights otherwise available to it under any other agreement entered into in
connection with the Transactions contemplated by this Agreement, under
applicable law or in equity.

 

51

 

(h)           Seller hereby
acknowledges, admits and agrees that Seller’s obligations under this Agreement
are recourse obligations of Seller.

 

13.                               Interim
Servicing of the Purchased Mortgage Loans

 

(a)                                 As a condition
of purchasing an Eligible Mortgage Loan, Buyer hereby engages Seller to interim
service such Purchased Mortgage Loan as agent for Buyer for a term of thirty
(30) days during the Post Origination Period (the “Interim
Servicing Term”), which is renewable as provided in clause (vi) below,
on the following terms and conditions:

 

(i)            Seller shall interim service and temporarily administer
the Purchased Mortgage Loan on behalf of Buyer in accordance with prudent mortgage
loan servicing standards and procedures generally accepted in the mortgage
banking industry and in accordance with all applicable requirements of the
Agencies, Requirements of Law, the provisions of any applicable servicing
agreement, and the requirements of any applicable Takeout Agreement and the
Approved Takeout Investor, so that the eligibility of the Purchased Mortgage
Loan for purchase under such Takeout Agreement is not voided or reduced by such
interim servicing and temporary administration;

 

(ii)           If any Eligible Mortgage
Loan that is proposed to be sold on a Purchase Date is serviced by a servicer other than Seller or any of its
Affiliates (a “Subservicer”),
or if the interim servicing of any Purchased Mortgage Loan is to be transferred to a Subservicer, Seller shall provide a
copy of the related subservicing agreement and a Subservicer Instruction Letter
executed by such Subservicer (collectively, the “Subservicing
Agreement”) to Buyer prior to such Purchase Date or interim servicing
transfer date, as applicable.  Each such
Subservicing Agreement shall be in form and substance acceptable to Buyer.  In addition,
Seller shall have obtained the prior written consent of Buyer for such Subservicer to subservice the Purchased
Mortgage Loans, which consent may be withheld
in Buyer’s sole discretion.  In no event shall Seller’s use of a
Subservicer relieve Seller of its obligations hereunder, and Seller shall
remain liable under this Agreement as if Seller were interim servicing such Purchased
Mortgage Loans directly.  Any termination of Seller as interim servicer
shall automatically terminate each Subservicer. 
In the event that any Agency or Governmental Authority revokes or
materially restricts any Subservicer’s authority to originate, sell or service
Mortgage Loans, or any Subservicer shall fail to meet all requisite originator,
seller and servicer eligibility qualifications promulgated by any Agency, Buyer
may direct Seller to immediately terminate such Subservicer as a subservicer of
any or all of the Purchased Mortgage Loans and Seller shall promptly cause the
termination of such Subservicer as directed by Buyer.

 

(iii)          Seller acknowledges that it
has no right, title or interest in the Servicing Rights for any Purchased
Mortgage Loan, and agrees that Seller may not transfer or assign any rights to
master service, service, interim service, subservice or administer any
Purchased Mortgage Loan prior to Seller’s repurchase thereof from Buyer (by
payment to Buyer of the Repurchase Price on the applicable Repurchase Date)
other than an interim servicing transfer to a Subservicer approved by Buyer
pursuant to a Subservicing Agreement approved by Buyer as described above in
this Paragraph.

 

52

 

(iv)          Seller shall deliver all physical and contractual servicing
materials, files and records for the servicing of each Purchased Mortgage Loan,
together with all of the related Servicing Records that are not already in
Buyer’s possession, to Buyer’s designee upon the earliest of (w) the occurrence of a Default or Event of
Default hereunder, (x) the termination of Seller as interim servicer by Buyer pursuant to Paragraph 13(a)(v), (y) the
expiration (and non-renewal) of the Interim Servicing Term, or (z) the
transfer of servicing to any entity approved by Buyer and the assumption thereof by such entity.  Seller’s
transfer of the Servicing Records and the physical and such contractual
servicing materials, files and records under this Paragraph shall be in
accordance with customary standards in the industry and such transfer shall
include the transfer of the gross amount of all escrows held for the related
mortgagors (without reduction for unreimbursed advances or “negative escrows”).

 

(v)           Buyer shall have the right
to terminate Seller as interim servicer of any of the Purchased Mortgage Loans, which right shall be exercisable at
any time in Buyer’s sole discretion,
upon written notice.

 

(vi)          The Interim Servicing Term will be deemed renewed on each
Remittance Date succeeding the related Purchase Date unless (i) Seller has
previously been terminated as interim servicer of all of the Purchased
Mortgaged Loans or (ii) an Event of Default has occurred on or before such
Remittance Date, in which latter event the Interim Servicing Term will expire
on such Remittance Date unless Buyer gives written notice to Seller that the
Interim Servicing Term is renewed and specifying the renewal term.

 

(vii)         The Interim Servicing Term will automatically terminate and
Seller shall have no further obligation to interim service such Purchased
Mortgage Loan as agent for Buyer or to make the delivery of documents required
under this Paragraph, upon receipt by Buyer of the Repurchase Price therefor.

 

(viii)        Buyer has no obligation to pay Seller a
fee for the interim servicing obligations Seller agrees to assume hereunder, no
fee or other compensation will ever accrue or be or become owing, due or
payable for or on account of such interim servicing, and such interim servicing
rights have no monetary value.

 

(b)                                During the
period Seller is interim servicing the Purchased Mortgage Loans as agent for
Buyer, Seller agrees that Buyer is the owner of the related Servicing Rights,
Credit Files and Servicing Records and Seller shall at all times maintain and
safeguard, and cause any Subservicer to maintain and safeguard, the Credit File
for the Purchased Mortgage Loan (including photocopies or images of the
documents delivered to Buyer), and accurate and complete records of its interim
servicing of the Purchased Mortgage Loan; Seller’s possession of the Credit
Files and Servicing Records being for the sole purpose of interim servicing
such Purchased Mortgage Loans and such retention and possession by Seller being
in a temporary custodial capacity only.

 

(c)                                 Seller further covenants as follows:

 

53

 

(i)            Buyer may, at any time during Seller’s business hours on
reasonable notice (provided that upon or during the occurrence of a Default or
Event of Default, no such notice shall be required), examine and make copies of
all such documents and records relating to interim servicing and administration
of the Purchased Mortgage Loans;

 

(ii)           At Buyer’s request, Seller shall promptly deliver to Buyer
reports regarding the status of any Purchased Mortgage Loan being interim
serviced by Seller, which reports shall include, but shall not be limited to, a
description of any event that would cause the Purchased Mortgage Loan to become
a Defaulted Loan or a Defective Mortgage Loan or any other circumstances that
could cause a material adverse effect on such Purchased Mortgage Loan, Buyer’s
title to such Purchased Mortgage Loan or the collateral securing such Purchased
Mortgage Loan; Seller may be required to deliver such reports until the repurchase
of the Purchased Mortgage Loan by Seller;

 

(iii)          Seller shall immediately notify Buyer if it becomes aware
of any payment default that occurs under the Purchased Mortgage Loan or any
default under any Subservicing Agreement that would materially and adversely
affect any Purchased Mortgage Loan subject thereto; and

 

(iv)          If, during the Post-Origination Period, any Mortgagor
contacts Seller requesting a payoff quote on the related Purchased Mortgage
Loan, Seller shall ensure that any payoff quote provided requires Mortgagor to
wire payoff funds directly to the Funding Account and includes wiring
instructions therefor.

 

(d)                                Seller shall
release its custody of the contents of any Credit File and any Loan File only (i) in
accordance with the written instructions of Buyer, (ii) upon the consent
of Buyer when such release is required as incidental to Seller’s servicing of
the Purchased Mortgage Loan, or is required to complete the Takeout Funding or
comply with the Takeout Guidelines, or (iii) as required by any
Requirements of Law.

 

(e)                                 Buyer reserves
the right to appoint a successor interim servicer, or a regular servicer, at
any time to service any Purchased Mortgage Loan (each a “Successor
Servicer”) in its sole discretion. 
If Buyer elects to make such an appointment after the occurrence of a
Default or an Event of Default, Seller shall be assessed all costs and expenses
incurred by Buyer associated with transferring the physical and contractual
servicing materials, files and records for the servicing of each Purchased
Mortgage Loan, together with all related Servicing Records, to the Successor
Servicer.  In the event of such an
appointment, Seller shall perform all acts and take all action so that any part
of the Credit File and related Servicing Records held by Seller, together with
all funds and other receipts relating to such Purchased Mortgage Loan, are
promptly delivered to the Successor Servicer, and shall otherwise fully
cooperate with Buyer in effectuating such transfer.  Seller shall have no claim for lost interim
servicing income, any termination fee, lost profits or other damages if Buyer
appoints a Successor Servicer hereunder. 
Buyer may, in its sole discretion if an Event of Default shall have
occurred and be continuing, without payment of any termination fee or any other
amount to Seller, sell any or all of the Purchased Mortgage Loans on a
servicing released basis, at the sole cost and expense of Seller.

 

54

 

(f)            In the event Seller
is terminated as interim servicer of any Purchased Mortgage Loan, whether by
expiry of the Interim Servicing Term or by any other means, Seller shall
cooperate with Buyer in effecting such termination and transferring all
authority to interim service such Purchased Mortgage Loan to the Successor
Servicer.  Without limiting the
generality of the foregoing, Seller shall, in the manner and at such times as
the Successor Servicer or Buyer shall reasonably request (i) promptly
transfer all data in its possession relating to the applicable Purchased
Mortgage Loans and other Mortgage Assets to the Successor Servicer in such
electronic format as the Successor Servicer may reasonably request, (ii) promptly
transfer to the Successor Servicer, Buyer or Buyer’s designee all other files,
records, correspondence and documents relating to the applicable Purchased
Mortgage Loans and other Mortgage Assets and (iii) fully cooperate and
coordinate with the Successor Servicer and/or Buyer to comply with any
applicable so-called “goodbye” letter requirements, notices or other applicable
requirements of the Real Estate Settlement Procedures Act or other applicable
Requirements of Law applicable to the transfer of the servicing of the
applicable Purchased Mortgage Loans. 
Seller agrees that if Seller fails to cooperate with Buyer or any
Successor Servicer in effecting the termination of Seller as servicer of any
Purchased Mortgage Loan or the transfer of all authority to service such
Purchased Mortgage Loan to such Successor Servicer in accordance with the terms
hereof, Buyer will be irreparably harmed and entitled to injunctive relief and
shall not be required to post bond.

 

(g)           Notwithstanding
anything to the contrary in any Transaction Document, Seller and Buyer agree
that all Servicing Rights with respect to the Purchased Mortgage Loans are
being transferred hereunder to Buyer on the applicable Purchase Date, the
Purchase Price for the Purchased Mortgage Loans includes full and fair
consideration for such Servicing Rights and such Servicing Rights shall be
transferred by Buyer to Seller upon Seller’s payment of the Repurchase Price
for such Purchased Mortgage Loans.

 

14.                               Single
Agreement

 

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

 

55

 

15.                               Notices and
Other Communications

 

Except as otherwise expressly provided herein, all such notices,
statements, demands or other communications shall be in writing and shall be
deemed to have been duly given and received (i) if sent by facsimile, upon
the sender’s receipt of confirmation of transmission of such facsimile from the
sending facsimile machine, (ii) by email, upon confirmation of receipt by
the recipient, (ii) if hand delivered, when delivery to the address below
is made, as evidenced by a confirmation from the applicable courier service of
delivery to such address, but without any need of evidence of receipt by the
named individual required and (iii) if mailed by overnight courier, on the
following Business Day, in each case addressed as follows:

 

if to Seller:

 

Home Loan Center, Inc.

163 Technology Drive

Irvine, California  92618

Attn: Rian Furey

Telecopier: (949) 579-8462

Telephone: (949) 579-8362

Email: Rian.Furey@lendingtree.com

 

if to Buyer:

 

JPMorgan Chase Bank, N.A.

712 Main Street, 7th Floor

Houston, Texas 77002

Attention:  Jack Camiolo

Telephone:  (713) 216-3019

Facsimile:  (713) 216-3024

Email:  jack.j.camiolo@chase.com

 

with copies to:

 

Veronica J. Chapple

Senior Operations Manager

Chase Mortgage Warehouse Finance

14800 Frye Road, Mailstop TX1 - 0022

Fort Worth, TX 76155

Telephone: 
817-399-5122

Facsimile: 
817-399-5117

Email: 
vickie.j.chapple@jpmchase.com

 

and

 

Marjorie A. Hirsch

Vice President and Assistant General Counsel

Legal and Compliance Department

JPMorgan Chase Bank, N.A.

1111 Fannin, 10th Floor (Mail Code TX2-F069)

 

56

 

Houston, TX 77002

Telephone: 713-750-2305

Facsimile: 713-750-2346

Email: Midge.Hirsch@jpmorgan.com

 

Either Party may revise any information relating to it by notice in
writing to the other Party, in accordance with the provisions in this
paragraph.

 

16.                               Fees and
Expenses; Indemnity

 

(a)           Seller will promptly
pay all out-of-pocket costs and expenses incurred by Buyer, including, without limitation,
reasonable attorneys’ fees, in connection with (i) preparation,
negotiation, and documentation of this Agreement and the other Transaction
Documents, (ii) administration of this Agreement and the other Transaction
Documents and any amendment or waiver thereto and purchase and resale of
Mortgage Loans by Buyer hereunder, (iii) protection of the Purchased
Mortgage Loans (including, without limitation, all costs of filing or recording
any assignments, financing statements, amendments and other documents), (iv) performance
of due diligence, collateral audits and servicing appraisals by Buyer or any
agent of Buyer conducted prior to and after the date hereof, and (v) enforcement
of Buyer’s rights hereunder and under any other Transaction Document (including,
without limitation, costs and expenses suffered or incurred by Buyer in
connection with any Act of Insolvency related to Seller or any Guarantor,
appeals and any anticipated post-judgment collection services).

 

(b)           In addition to its
other rights hereunder, Seller shall indemnify Buyer and Buyer’s Affiliates and
Subsidiaries and their respective directors, officers, agents, advisors and
employees (collectively the “Indemnified Parties”)
against, and hold Buyer and each of them harmless from, any losses,
liabilities, damages, claims, costs and expenses (including reasonable
attorneys’ fees and disbursements) suffered or incurred by any Indemnified
Party (“Losses”) relating to or arising out of
this Agreement, any other Transaction Document or any other related document,
or any transaction contemplated hereby or thereby or any use or proposed use of
proceeds thereof and amendment or waiver thereof, or any breach of any
covenant, representation or warranty contained in any of such documents, or
arising out of, resulting from, or in any manner connected with, the purchase
by Buyer of any Mortgage Loan or the servicing of any Purchased Mortgage Loans
by Seller or any Subservicer; provided that Seller shall not be required
to indemnify any Indemnified Party to the extent such Losses result from the
gross negligence or willful misconduct of such Indemnified Party.  The provisions of Paragraph 16 shall
survive the termination of this Agreement.

 

17.                               Shipment to
Approved Takeout Investor; Trust Release Letters

 

(a)           Shipping
Instructions.  If Seller desires that
Buyer send a Mortgage Note and the related Mortgage to an Approved Takeout
Investor, rather than to Seller directly, in connection with Seller’s
repurchase of the related Purchased Mortgage Loan, then Seller shall prepare
and send to Buyer Shipping Instructions to instruct Buyer when and how to send
such Mortgage Note and related Mortgage to such Approved Takeout Investor.  Buyer shall use its best efforts to send each
Mortgage Note and related Mortgage on or before the date specified for shipment
in the Shipping Instructions in accordance with the cutoff times specified in
the “Chase Mortgage 

 

57

 

Warehouse Finance Customer Reference Guide” provided by Buyer to
Seller, or otherwise specified by Buyer to Seller in writing from time to
time.  If Seller instructs Buyer to send
a Mortgage Note and related Mortgage before the Repurchase Date, Buyer will
send the Mortgage Note and related Mortgage under a Bailee Letter.  If Seller does not provide Buyer with
Shipping Instructions with respect to a Mortgage Loan, Buyer shall send the
Mortgage Note and related Mortgage to Seller at such time as Buyer receives the
Repurchase Price.

 

(b)           Trust Release
Letters.  If Seller believes that a
Mortgage Note contains one or more aspects that are correctable and necessary
to facilitate the purchase or enforceability of that Mortgage Note, then Seller
may deliver a Trust Release Letter to Buyer to request the release of the Mortgage
Note to Seller for the purpose of making that correction.  If Buyer, in its sole discretion, deems the
reason stated by Seller in the Trust Release Letter to be sufficient to cause
the Mortgage Note to be returned to Seller for correction, then Buyer will
deliver the Mortgage Note to Seller at its earliest convenience.  Seller shall return the corrected Mortgage
Note to Buyer no later than the fifth (5th) Business Day after the date of the related Trust
Release Letter.  At all times any
Mortgage Note is in the possession Seller pursuant to a Trust Release Letter,
Seller shall hold such Mortgage Note in trust for the benefit of Buyer.  At no time shall the aggregate original
Outstanding Principal Balance of all Mortgage Notes released to Seller pursuant
to this paragraph exceed $10,000,000.

 

18.                               Further
Assurances.

 

Seller shall (i) promptly provide such further assurances or
agreements as Buyer may request in good faith in order to effect the purposes
of this Agreement and (ii) on or prior to the date hereof, mark its
systems and/or other data processing records evidencing the Purchased Mortgage
Loans with a legend or other identifier, acceptable to Buyer, evidencing that
Buyer has acquired an interest therein as provided in this Agreement.

 

19.                               Buyer as Attorney-in-Fact

 

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

 

58

 

20.                               Wire
Instructions

 

(a)                                 Unless
otherwise specified in this Agreement, any amounts to be transferred by Buyer
to Seller hereunder shall be sent by wire transfer in immediately available
funds to the account of Seller at:

 

Bank:  JPMorgan Chase Bank, N.A.

Account Name:  Home Loan Center, Inc.
Clearing Account

Acct. 
No.:  

ABA No.  

Reference:

 

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

 

	
  Bank:

  	
   

  	
  JPMorgan Chase Bank, N.A.

  
	
  ABA:

  	
   

  	
   

  
	
  Acct Name:

  	
   

  	
  Chase Mortgage Warehouse Finance - Clearing Account

  
	
  Account #:

  	
   

  	
   

  
	
  Attn:

  	
   

  	
  Veronica J. Chapple,
  817-399-5122

  

 

Amounts received after 4:00 p.m., Houston, Texas time, on any
Business Day shall be deemed to have been paid and received on the next
succeeding Business Day.

 

21.                               Entire
Agreement; Severability

 

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

 

22.                               Assignments;
Termination

 

(a)                                  The rights and
obligations of Seller under this Agreement and under any Transaction shall not
be assigned by Seller without the prior written consent of Buyer and any such
assignment without the prior written consent of Buyer shall be null and void.

 

(b)                                 Buyer may
assign all or any portion of its rights, obligations and interest under this
Agreement and in the Mortgage Assets at any time without the consent of any
Person, provided that any such assignment, other than an assignment to
an Affiliate of Buyer, is subject to the prior written consent of Seller so
long as an Event of Default or Default has not occurred and is not
continuing.  Any such assignment shall be
in a minimum amount of at least $5,000,000 unless otherwise consented to by
Seller; provided that Seller’s consent shall not be required if an Event
of Default or Default has occurred and is continuing.  Resales of Purchased Mortgage Loans by Buyer
(subject to Seller’s prior right to repurchase the Purchased Mortgage Loans or
Mortgage Loans substantially similar to the Purchased Mortgage Loans prior to
the termination of 

 

59

 

this
Agreement or Buyer’s liquidation of the Purchased Mortgage Loans pursuant to
Paragraph 12) in accordance with applicable law, shall be permitted without
restriction.  Buyer may sell
participation interests in all or any portion of its rights, obligations and
interest under this Agreement and in the Mortgage Assets to any Person at any
time without the consent of any Person. 
In addition to, and notwithstanding any provision to the contrary in,
the foregoing, Buyer may assign its rights to enforce this Agreement as to any
Mortgage Loan to any Person that subsequently purchases such Mortgage Loan from
Buyer or provides financing to Buyer with respect to such Mortgage Loan.

 

(c)           In addition to the
foregoing, Buyer may, at any time, pledge or grant a Lien in all or any portion
of its rights under this Agreement (including, without limitation, any rights
to Mortgage Assets and any rights to payment of the Repurchase Price) to secure
obligations to a Federal Reserve Bank, without notice to or consent of Seller;
provided that no such pledge or grant of a security interest would release
Buyer from any of its obligations under this Agreement, or substitute any such
pledgee or grantee for Buyer as a party to this Agreement.

 

(d)           Subject to the
foregoing, this Agreement and any Transactions shall be binding upon and shall
inure to the benefit of the Parties and their respective successors and
assigns.

 

(e)           Notwithstanding any
of the foregoing provisions of this Paragraph, Buyer shall not be precluded
from assigning, charging or otherwise dealing with all or any part of its
interest in any sum payable to it under Paragraph 12.

 

(f)            This Agreement and
all Transactions outstanding hereunder shall terminate automatically without
any requirement for notice on the date occurring on or after the Termination
Date on which all Repurchase Prices and all other obligations of Seller under
the Transaction Documents have been paid in full.

 

23.                               Counterparts

 

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

 

24.                               GOVERNING LAW;
CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

 

(a)           THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK ,
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR
SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

(b)           SELLER 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 

 

60

 

CONTEMPLATED HEREBY.  SELLER
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 PARAGRAPH 24
SHALL AFFECT THE RIGHT OF BUYER TO BRING ANY ACTION OR PROCEEDING AGAINST
SELLER OR ITS PROPERTY IN THE COURTS OF OTHER JURISDICTIONS.  EACH PARTY CONSENTS TO THE SERVICE OF ANY AND
ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH
PROCESS TO IT AT ITS ADDRESS FOR NOTICES HEREUNDER SPECIFIED IN PARAGRAPH 15.

 

(c)           EACH OF SELLER AND BUYER (BY ITS
ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN SELLER AND
BUYER ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO BUYER TO
PROVIDE THE FACILITY EVIDENCED BY THIS AGREEMENT.

 

25.                               No Waivers,
Etc.

 

No express or implied waiver of any Event of Default by Buyer shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by Buyer shall constitute a waiver of its right to exercise any other
remedy hereunder.  No modification or
waiver of any provision of this Agreement and no consent by any Party to a
departure herefrom shall be effective unless and until such shall be in writing
and duly executed by both of the parties hereto.  Without limitation on any of the foregoing,
the failure to give a notice pursuant to Paragraph 4(a) hereof
will not constitute a waiver of any right to do so at a later date.

 

26.                               Use of Employee
Plan Assets

 

(a)           If assets of an
employee benefit plan subject to any provision of the Employee Retirement
Income Security Act of 1974 (“ERISA”) are intended to be used by Seller in a
Transaction, Seller shall so notify Buyer prior to the Transaction.  Seller shall represent in writing to Buyer
that the Transaction does not constitute a prohibited transaction under ERISA
or is otherwise exempt therefrom, and Buyer may proceed in reliance thereon but
shall not be required so to proceed.

 

(b)           Subject to the last
sentence of Paragraph (a) of this Paragraph, any such
Transaction shall proceed only if Seller furnishes or has furnished to Buyer
its most recent available audited statement of its financial condition and its
most recent subsequent unaudited statement of its financial condition.

 

(c)           By entering into a
Transaction pursuant to this Paragraph, Seller shall be deemed (i) to
represent to Buyer that since the date of Seller’s latest such financial statements,
there has

 

61

 

been
no material adverse change in Seller’s financial condition which Seller has not
disclosed to Buyer, and (ii) to agree to provide Buyer with future audited
and unaudited statements of its financial condition as they are issued, so long
any such Transaction is outstanding.

 

27.                               Intent

 

(a)           The parties intend
and acknowledge that each Transaction is a “repurchase agreement” as that term
is defined in Paragraph 101 of the Bankruptcy Code, and a “securities
contract” as that term is defined in Paragraph 741 of the Bankruptcy
Code.  Seller hereby agrees that it shall
not challenge the characterization of this Agreement as a “repurchase agreement”
as that term is defined in Paragraph 101 of the Bankruptcy Code, or as a
“securities contract” as that term is defined in Paragraph 741 of the
Bankruptcy Code in any dispute or proceeding.

 

(b)           It is understood
that either Party’s right to accelerate or terminate this Agreement or to
liquidate Mortgage Loans delivered to it in connection with Transactions
hereunder or to exercise any other remedies pursuant to Paragraph 12
hereof, is a contractual right to accelerate, terminate or liquidate this
Agreement or such Transaction as described in Paragraphs 555 and 559 of
the Bankruptcy Code.

 

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

 

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

 

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

 

28.                               Disclosure
Relating to Certain Federal Protections

 

The parties acknowledge that they have been advised that:

 

(a)           in the case of
Transactions in which one of the Parties is a broker or dealer registered with
the Securities and Exchange Commission (“SEC”) under
Paragraph 15 of the Securities Exchange Act of 1934 (“1934 Act”),
the Securities Investor Protection Corporation has 

 

62

 

taken
the position that the provisions of the Securities Investor Protection Act of
1970 (“SIPA”) do not protect the other Party
with respect to any Transaction hereunder;

 

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

 

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

 

29.                               Confidentiality

 

(a)           Confidential
Terms.  The Parties hereby acknowledge
and agree that all written or computer-readable information provided by one
Party to any other regarding the terms set forth in any of the Transaction
Documents or the Transactions contemplated thereby (the “Confidential Terms”)
shall be kept confidential and shall not be divulged to any Person without the
prior written consent of such other Party except to the extent that (i) such
Person is an Affiliate, division, or parent holding company of a Party or a
director, officer, employee or agent (including an accountant, legal counsel
and other advisor) of a Party or such Affiliate, division or parent holding
company , (ii) in such Party’s opinion it is necessary to do so in
working with legal counsel, auditors, taxing authorities or other governmental
agencies or regulatory bodies or in order to comply with any applicable federal
or state laws or regulations, (iii) any of the Confidential Terms are in
the public domain other than due to a breach of this covenant, (iv) in the
event of a Default or and Event of Default Buyer reasonably determines such
information to be necessary or desirable to disclose in connection with the
marketing and sales of the Purchased Mortgage Loans or otherwise to enforce or
exercise Buyer’s rights hereunder, or (v) to the extent Buyer deems
necessary or appropriate, in connection with an assignment or participation
under Paragraph 22 of this Agreement or in connection with any hedging
transaction related to Purchased Mortgage Loans.  Notwithstanding the foregoing or anything to
the contrary contained herein or in any other Transaction Document, the Parties
may disclose to any and all Persons, without limitation of any kind, the U.S.
federal, state and local tax treatment of the Transactions, any fact that may
be relevant to understanding the U.S. federal, state and local tax treatment of
the Transactions, and all materials of any kind (including opinions or other
tax analyses) relating to such U.S. federal, state and local tax treatment and
that may be relevant to understanding such tax treatment; provided that
Seller may not disclose (except as provided in clauses (i) through (iv) of
this Section) the name of or identifying information with respect to Buyer or
any pricing terms (including the Pricing Rate, Facility Fee, Purchase Price
Percentage and Purchase Price) or other nonpublic business or financial
information (including any sublimits and financial covenants) that is unrelated
to the U.S. federal, state and local tax treatment of the Transactions and is
not relevant to understanding the U.S. federal, state and local tax treatment
of the Transactions, without the prior written consent of Buyer. The provisions
set forth in this Paragraph 29 shall survive the termination of this
Agreement for a period of one (1) year following such termination.

 

63

 

(b)           Privacy of
Customer Information.  The Seller’s Customer Information in the
possession of Buyer, other than information independently obtained by Buyer and
not derived in any manner from or using information obtained under or in
connection with this Agreement, is and shall remain confidential and
proprietary information of Seller. 
Except in accordance with this Paragraph 29(b), Buyer shall not
use any Seller’s Customer Information for any purpose, including the marketing
of products or services to, or the solicitation of business from, Customers, or
disclose any Seller’s Customer Information to any Person, including any of
Buyer’s employees, agents or contractors or any third party not affiliated with
Buyer.  Buyer may use or disclose
Seller’s Customer Information only to the extent necessary (i) for
examination and audit of Buyer’s activities, books and records by Buyer’s
regulatory authorities, (ii) to protect or exercise Buyer’s rights and
privileges or (iii) to carry out Buyer’s express obligations under this
Agreement and the other Transaction Documents (including providing Seller’s
Customer Information to Approved Takeout Investors), and for no other purpose; provided that Buyer may also use
and disclose the Seller’s Customer Information as expressly permitted by Seller
in writing, to the extent that such express permission is in accordance with
the Privacy Requirements.  Buyer shall
take commercially reasonable steps to ensure that each Person to which Buyer
intends to disclose Seller’s Customer Information, before any such disclosure
of information, agrees to keep confidential any such Seller’s Customer
Information and to use or disclose such Seller’s Customer Information only to
the extent necessary to protect or exercise Buyer’s rights and privileges, or
to carry out Buyer’s express obligations, under this Agreement and the other
Transaction Documents (including providing Seller’s Customer Information to
Approved Investors).  Buyer agrees to
maintain an information security program and to assess, manage and control
risks relating to the security and confidentiality of Seller’s Customer
Information pursuant to such program in the same manner as Buyer does in
respect of its own customers’ information, and shall implement the standards
relating to such risks in the manner set forth in the Interagency Guidelines
Establishing Standards for Safeguarding Company Customer Information set forth
in 12 CFR Parts 30, 208, 211, 225, 263, 308, 364, 568 and 570.  Without limiting the scope of the foregoing
sentence, Buyer shall use at least the same physical and other security
measures to protect all of the Seller’s Customer Information in its possession
or control as Buyer uses for its own customers’ confidential and proprietary
information.

 

30.                               Setoff

 

Except to the extent specifically permitted herein,
Seller hereby irrevocably and unconditionally waives all right to setoff that
it may have under contract (including this Agreement), applicable law, in
equity or otherwise with respect to any funds or monies of Buyer (or any
disclosed principal for which Buyer is acting as agent) at any time held by or
in the possession of Seller.

 

Seller agrees that Buyer may setoff any funds or
monies of Seller at any time held by or in the possession of Buyer, whether in
connection with this Agreement or otherwise, against any amounts Seller owes to
Buyer pursuant to the terms of this Agreement or any other Transaction
Document.

 

64

 

31.                               WAIVER OF
SPECIAL DAMAGES.

 

SELLER WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT SELLER MAY HAVE TO CLAIM
OR RECOVER FROM BUYER IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES.

 

32.                               USA PATRIOT ACT
NOTIFICATION.

 

The following notification
is provided to Borrower pursuant to Section 326 of the USA Patriot Act of
2001, 31 U.S.C. Section 5318:

 

IMPORTANT INFORMATION ABOUT
PROCEDURES FOR OPENING A NEW ACCOUNT.  To
help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each person or entity that opens an
account, including any deposit account, treasury management account, loan,
other extension of credit, or other financial services product. What this means
for Seller:  When Seller opens an
account, if Seller is an individual, Buyer will ask for Seller’s name, taxpayer
identification number, residential address, date of birth, and other
information that will allow Buyer to identify Seller, and if Seller is not an
individual, Buyer will ask for Seller’s name, taxpayer identification number,
business address, and other information that will allow Buyer to identify
Seller.  Buyer may also ask, if Seller is
an individual, to see Seller’s driver’s license or other identifying documents,
and if Seller is not an individual to see Seller’s legal organizational documents
or other identifying documents.

 

[Remainder
of page intentionally blank.]

 

65

 

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

 

 

	
  JPMORGAN CHASE BANK, N.A.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Ken Brock

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name: 

  	
  Ken Brock

  	
   

  
	
   

  	
   

  	
   

  
	
  Title: 

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  HOME LOAN CENTER, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Rian Furey

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Rian Furey

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior Vice President

  	
   

  

 

 

Signature
Page to

Master
Repurchase Agreement

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