Document:

Exhibit 10.25(A)

 

	
  

  	
   

  
	
  Master Repurchase

  Agreement

  	
   

  

 

September 1996
Version

 

	
  Dated as of

  	
  October 21,
  2005

  
	
   

  	
   

  
	
   

  	
  Lehman Brothers Inc.

  
	
  Between:

  	
  Lehman Commercial Paper Inc.

  
	
   

  	
   

  
	
  and

  	
  Fieldstone
  Mortgage Ownership Corp.

  
	
   

  	
  [complete
  legal name of counterparty]

  

 

1.              Applicability

 

From
time to time the parties hereto may enter into transactions in which one
party (“Seller”) agrees to transfer to the other (“Buyer”) securities or other
assets (“Securities”) against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller such Securities at a date
certain or on demand, against the transfer of funds by Seller. Each such
transaction shall be referred to herein as a “Transaction” and, unless
otherwise agreed in writing, shall be governed by this Agreement, including any
supplemental terms or conditions contained in Annex I hereto and in any other
annexes identified herein or therein as applicable hereunder.

 

2.              Definitions

 

(a)           “Act
of Insolvency”, with respect to any party, (i) the commencement by such
party as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization,
liquidation, moratorium, dissolution, delinquency or similar law, or such party
seeking the appointment or election of a receiver, conservator, trustee, custodian
or similar official for such party or any substantial part of its
property, or the convening of any meeting of creditors for purposes of
commencing any such case or proceeding or seeking such an appointment or
election, (ii) the commencement of any such case or proceeding against
such party, or another seeking such an appointment or election, or the filing
against a party of an application for a protective decree under the provisions
of the Securities Investor Protection Act of 1970, which (A) is consented
to or not timely contested by such party, (B) results in the entry of an
order for relief, such an appointment or election, the issuance of such a
protective decree or the entry of an order having a similar effect, or (C) is
not dismissed within 15 days, (iii) the making by such party of a general
assignment for the benefit of creditors, or (iv) the admission in writing
by such party of such party’s inability to pay such party’s debts as they
become due;

 

(b)          “Additional
Purchased Securities”, Securities provided by Seller to Buyer pursuant to
Paragraph 4(a) hereof;

 

 

(c)           “Buyer’s
Margin Amount”, with respect to any Transaction as of any date, the amount
obtained by application of the Buyer’s Margin Percentage to the Repurchase
Price for such Transaction as of such date;

 

(d)          “Buyer’s
Margin Percentage”, with respect to any Transaction as of any date, a
percentage (which may be equal to the Seller’s Margin Percentage) agreed
to by Buyer and Seller or, in the absence of any such agreement, the percentage
obtained by dividing the Market Value of the Purchased Securities on the
Purchase Date by the Purchase Price on the Purchase Date for such Transaction;

 

(e)           “Confirmation”,
the meaning specified in Paragraph 3(b) hereof;

 

(f)             “Income”,
with respect to any Security at any time, any principal thereof and all
interest, dividends or other distributions thereon;

 

(g)          “Margin
Deficit”, the meaning specified in Paragraph 4(a) hereof;

 

(h)          “Margin
Excess”, the meaning specified in Paragraph 4(b) hereof;

 

(i)              “Margin
Notice Deadline”, the time agreed to by the parties in the relevant
Confirmation, Annex I hereto or otherwise as the deadline for giving notice
requiring same-day satisfaction of margin maintenance obligations as provided
in Paragraph 4 hereof (or, in the absence of any such agreement, the deadline
for such purposes established in accordance with market practice);

 

(j)              “Market
Value”, with respect to any Securities as of any date, the price for such
Securities on such date obtained from a generally recognized source agreed to
by the parties or the most recent closing bid quotation from such a source,
plus accrued Income to the extent not included therein (other than any Income
credited or transferred to, or applied to the obligations of, Seller pursuant
to Paragraph 5 hereof) as of such date (unless contrary to market practice for
such Securities);

 

(k)           “Price
Differential”, with respect to any Transaction as of any date, the aggregate
amount obtained by daily application of the Pricing Rate for such Transaction
to the Purchase Price for such Transaction on a 360 day per year basis for the
actual number of days during the period commencing on (and including) the
Purchase Date for such Transaction and ending on (but excluding) the date of
determination (reduced by any amount of such Price Differential previously paid
by Seller to Buyer with respect to such Transaction);

 

(l)              “Pricing
Rate”, the per annum percentage rate for determination of the Price
Differential;

 

(m)        “Prime
Rate”, the prime rate of U.S. commercial banks as published in The Wall Street
Journal (or, if more than one such rate is published, the average of such
rates);

 

(n)          “Purchase
Date”, the date on which Purchased Securities are to be transferred by Seller
to Buyer;

 

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(o)          “Purchase
Price”, (i) on the Purchase Date, the price at which Purchased Securities
are transferred by Seller to Buyer, and (ii) thereafter, except where
Buyer and Seller agree otherwise, such price increased by the amount of any
cash transferred by Buyer to Seller pursuant to Paragraph 4(b) hereof and
decreased by the amount of any cash transferred by Seller to Buyer pursuant to
Paragraph 4(a) hereof or applied to reduce Seller’s obligations under
clause (ii) of Paragraph 5 hereof;

 

(p)          “Purchased
Securities”, the Securities transferred by Seller to Buyer in a Transaction
hereunder, and any Securities substituted therefor in accordance with Paragraph
9 hereof. The term “Purchased Securities” with respect to any Transaction at
any time also shall include Additional Purchased Securities delivered pursuant
to Paragraph 4(a) hereof and shall exclude Securities returned pursuant to
Paragraph 4(b) hereof;

 

(q)          “Repurchase
Date”, the date on which Seller is to repurchase the Purchased Securities from
Buyer, including any date determined by application of the provisions of
Paragraph 3(c) or 11 hereof;

 

(r)             “Repurchase
Price”, the price at which Purchased Securities are to be transferred from
Buyer to Seller upon termination of a Transaction, which will be determined in
each case (including Transactions terminable upon demand) as the sum of the
Purchase Price and the Price Differential as of the date of such determination;

 

(s)           “Seller’s
Margin Amount”, with respect to any Transaction as of any date, the amount
obtained by application of the Seller’s Margin Percentage to the Repurchase
Price for such Transaction as of such date;

 

(t)             “Seller’s
Margin Percentage”, with respect to any Transaction as of any date, a
percentage (which may be equal to the Buyer’s Margin Percentage) agreed to
by Buyer and Seller or, in the absence of any such agreement, the percentage
obtained by dividing the Market Value of the Purchased Securities on the
Purchase Date by the Purchase Price on the Purchase Date for such Transaction.

 

3.              Initiation; Confirmation; Termination

 

(a)           An
agreement to enter into a Transaction may be made orally or in writing at
the initiation of either Buyer or Seller. On the Purchase Date for the
Transaction, the Purchased Securities shall be transferred to Buyer or its
agent against the transfer of the Purchase Price to an account of Seller.

 

(b)          Upon
agreeing to enter into a Transaction hereunder, Buyer or Seller (or both), as
shall be agreed, shall promptly deliver to the other party a written
confirmation of each Transaction (a “Confirmation”). The Confirmation shall
describe the Purchased Securities (including CUSIP number, if any), identify
Buyer and Seller and set forth (i) the Purchase Date, (ii) the
Purchase Price, (iii) the Repurchase Date, unless the Transaction is to be
terminable on demand, (iv) the Pricing Rate or Repurchase Price applicable
to the Transaction, and (v) any additional terms or conditions of the
Transaction not inconsistent with this Agreement. The Confirmation, together
with this Agreement, shall constitute conclusive evidence of the terms agreed
between Buyer and Seller with respect to the Transaction to which the
Confirmation relates, unless with

 

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respect to the Confirmation specific objection is made promptly after
receipt thereof. In the event of any conflict between the terms of such
Confirmation and this Agreement, this Agreement shall prevail.

 

(c)           In
the case of Transactions terminable upon demand, such demand shall be made by
Buyer or Seller, no later than such time as is customary in accordance with
market practice, by telephone or otherwise on or prior to the business day on
which such termination will be effective. On the date specified in such demand,
or on the date fixed for termination in the case of Transactions having a fixed
term, termination of the Transaction will be effected by transfer to Seller or
its agent of the Purchased Securities and any Income in respect thereof received
by Buyer (and not previously credited or transferred to, or applied to the
obligations of, Seller pursuant to Paragraph 5 hereof) against the transfer of
the Repurchase Price to an account of Buyer.

 

4.              Margin Maintenance

 

(a)           If
at any time the aggregate Market Value of all Purchased Securities subject to
all Transactions in which a particular party hereto is acting as Buyer is less
than the aggregate Buyer’s Margin Amount for all such Transactions (a “Margin
Deficit”), then Buyer may by notice to Seller require Seller in such
Transactions, at Seller’s option, to transfer to Buyer cash or additional
Securities reasonably acceptable to Buyer (“Additional Purchased Securities”),
so that the cash and aggregate Market Value of the Purchased Securities, including
any such Additional Purchased Securities, will thereupon equal or exceed such
aggregate Buyer’s Margin Amount (decreased by the amount of any Margin Deficit
as of such date arising from any Transactions in which such Buyer is acting as
Seller).

 

(b)          If at
any time the aggregate Market Value of all Purchased Securities subject to all
Transactions in which a particular party hereto is acting as Seller exceeds the
aggregate Seller’s Margin Amount for all such Transactions at such time (a “Margin
Excess”), then Seller may by notice to Buyer require Buyer in such
Transactions, at Buyer’s option, to transfer cash or Purchased Securities to
Seller, so that the aggregate Market Value of the Purchased Securities, after
deduction of any such cash or any Purchased Securities so transferred, will
thereupon not exceed such aggregate Seller’s Margin Amount (increased by the
amount of any Margin Excess as of such date arising from any Transactions in
which such Seller is acting as Buyer).

 

(c)           If
any notice is given by Buyer or Seller under subparagraph (a) or (b) of
this Paragraph at or before the Margin Notice Deadline on any business day, the
party receiving such notice shall transfer cash or Additional Purchased
Securities as provided in such subparagraph no later than the close of business
in the relevant market on such day. If any such notice is given after the
Margin Notice Deadline, the party receiving such notice shall transfer such
cash or Securities no later than the close of business in the relevant market on
the next business day following such notice.

 

(d)          Any
cash transferred pursuant to this Paragraph shall be attributed to such
Transactions as shall be agreed upon by Buyer and Seller.

 

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(e)           Seller
and Buyer may agree, with respect to any or all Transactions hereunder,
that the respective rights of Buyer or Seller (or both) under subparagraphs (a) and
(b) of this Paragraph may be exercised only where a Margin Deficit or
Margin Excess, as the case may be, exceeds a specified dollar amount or a
specified percentage of the Repurchase Prices for such Transactions (which
amount or percentage shall be agreed to by Buyer and Seller prior to entering
into any such Transactions).

 

(f)             Seller
and Buyer may agree, with respect to any or all Transactions hereunder,
that the respective rights of Buyer and Seller under subparagraphs (a) and
(b) of this Paragraph to require the elimination of a Margin Deficit or a
Margin Excess, as the case may be, may be exercised whenever such a
Margin Deficit or Margin Excess exists with respect to any single Transaction
hereunder (calculated without regard to any other Transaction outstanding under
this Agreement).

 

5.              Income Payments

 

Seller shall be entitled to receive an amount equal to all Income paid
or distributed on or in respect of the Securities that is not otherwise
received by Seller, to the full extent it would be so entitled if the
Securities had not been sold to Buyer. Buyer shall, as the parties may agree
with respect to any Transaction (or, in the absence of any such agreement, as
Buyer shall reasonably determine in its discretion), on the date such Income is
paid or distributed either (i) transfer to or credit to the account of
Seller such Income with respect to any Purchased Securities subject to such
Transaction or (ii) with respect to Income paid in cash, apply the Income
payment or payments to reduce the amount, if any, to be transferred to Buyer by
Seller upon termination of such Transaction. Buyer shall not be obligated to
take any action pursuant to the preceding sentence (A) to the extent that
such action would result in the creation of a Margin Deficit, unless prior
thereto or simultaneously therewith Seller transfers to Buyer cash or
Additional Purchased Securities sufficient to eliminate such Margin Deficit, or
(B) if an Event of Default with respect to Seller has occurred and is then
continuing at the time such Income is paid or distributed.

 

6.              Security Interest

 

Although the parties intend that all Transactions hereunder be sales
and purchases and not loans, in the event any such Transactions are deemed to
be loans, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under each such Transaction, and shall
be deemed to have granted to Buyer a security interest in, all of the Purchased
Securities with respect to all Transactions hereunder and all Income thereon
and other proceeds thereof.

 

7.              Payment and Transfer

 

Unless otherwise mutually agreed, all transfers of funds hereunder
shall be in immediately available funds. All Securities transferred by one
party hereto to the other party (i) shall be in suitable form for
transfer or shall be accompanied by duly executed instruments of transfer or
assignment in blank and such other documentation as the party receiving
possession may reasonably request, (ii) shall be transferred on the
book-entry system of a Federal Reserve Bank, or (iii) shall be transferred
by any other method mutually acceptable to Seller and Buyer.

 

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8.              Segregation of Purchased Securities

 

To the extent required by applicable law, all Purchased Securities in
the possession of Seller shall be segregated from other securities in its
possession and shall be identified as 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 Securities shall pass to
Buyer on the Purchase Date and, unless otherwise agreed by Buyer and Seller,
nothing in this Agreement shall preclude Buyer from engaging in repurchase
transactions with the Purchased Securities or otherwise selling, transferring,
pledging or hypothecating the Purchased Securities, but no such transaction
shall relieve Buyer of its obligations to transfer Purchased Securities to
Seller pursuant to Paragraph 3, 4 or 11 hereof, or of Buyer’s obligation to
credit or pay Income to, or apply Income to the obligations of, Seller pursuant
to Paragraph 5 hereof.

 

Required Disclosure for Transactions in Which the Seller
Retains Custody of the Purchased Securities

 

Seller is not permitted to substitute other securities for those subject
to this Agreement and therefore must keep Buyer’s securities segregated at all
times, unless in this Agreement Buyer grants Seller the right to substitute
other securities. If Buyer grants the right to substitute, this means that
Buyer’s securities will likely be commingled with Seller’s own securities
during the trading day. Buyer is advised that, during any trading day that
Buyer’s securities are commingled with Seller’s securities, they [will]*
[may]** be subject to liens granted by Seller to [its clearing bank]* [third
parties]** and may be used by Seller for deliveries on other securities
transactions. Whenever the securities are commingled, Seller’s ability to
resegregate substitute securities for Buyer will be subject to Seller’s ability
to satisfy [the clearing]* [any]** lien or to obtain substitute securities.

 

* Language to be used under 17 C.F.R. ß403.4(e) if Seller is a
government securities broker or dealer other than a financial institution.

** Language to be used under 17 C.F.R. ß403.5(d) if Seller is a
financial institution.

 

9.              Substitution

 

(a)           Seller
may, subject to agreement with and acceptance by Buyer, substitute other
Securities for any Purchased Securities. Such substitution shall be made by
transfer to Buyer of such other Securities and transfer to Seller of such
Purchased Securities. After substitution, the substituted Securities shall be
deemed to be Purchased Securities.

 

(b)          In
Transactions in which Seller retains custody of Purchased Securities, the
parties expressly agree that Buyer shall be deemed, for purposes of
subparagraph (a) of this Paragraph, to have agreed to and accepted in this
Agreement substitution by Seller of other Securities for Purchased Securities;
provided, however, that such other Securities shall have a Market Value at
least equal to the Market Value of the Purchased Securities for which they are
substituted.

 

6

 

10.Representations

 

Each of Buyer and Seller represents and warrants to the other that (i) it
is duly authorized to execute and deliver this Agreement, to enter into
Transactions contemplated hereunder and to perform its obligations
hereunder and has taken all necessary action to authorize such execution,
delivery and performance, (ii) it will engage in such Transactions as
principal (or, if agreed in writing, in the form of an annex hereto or
otherwise, in advance of any Transaction by the other party hereto, as agent
for a disclosed principal), (iii) the person signing this Agreement on its
behalf is duly authorized to do so on its behalf (or on behalf of any such
disclosed principal), (iv) it has obtained all authorizations of any
governmental body required in connection with this Agreement and the
Transactions hereunder and such authorizations are in full force and effect and
(v) the execution, delivery and performance of this Agreement and the
Transactions hereunder will not violate any law, ordinance, charter, by-law or rule applicable
to it or any agreement by which it is bound or by which any of its assets are
affected. On the Purchase Date for any Transaction Buyer and Seller shall each
be deemed to repeat all the foregoing representations made by it.

 

11.Events
of Default

 

In the event that (i) Seller fails to transfer or Buyer fails to
purchase Purchased Securities upon the applicable Purchase Date, (ii) Seller
fails to repurchase or Buyer fails to transfer Purchased Securities upon the
applicable Repurchase Date, (iii) Seller or Buyer fails to comply with
Paragraph 4 hereof, (iv) Buyer fails, after one business day’s notice, to
comply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with
respect to Seller or Buyer, (vi) any representation made by Seller or
Buyer shall have been incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated, or (vii) Seller or Buyer
shall admit to the other its inability to, or its intention not to, perform any
of its obligations hereunder (each an “Event of Default”):

 

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

 

(b)          In
all Transactions in which the defaulting party is acting as Seller, if the
nondefaulting party exercises or is deemed to have exercised the option
referred to in subparagraph (a) of this Paragraph, (i) the defaulting
party’s obligations in such Transactions to repurchase all Purchased Securities,
at the Repurchase Price therefor on the Repurchase Date determined in
accordance with subparagraph (a) of this Paragraph, shall thereupon become
immediately due and payable, (ii) all Income paid after such exercise or
deemed exercise shall be retained by the nondefaulting party and applied to the
aggregate unpaid Repurchase Prices and any other amounts owing by the
defaulting party hereunder, and (iii) the defaulting party shall
immediately deliver to the nondefaulting party any Purchased Securities subject
to such Transactions then in the defaulting party’s possession or control.

 

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(c)           In
all Transactions in which the defaulting party is acting as Buyer, upon tender
by the nondefaulting party of payment of the aggregate Repurchase Prices for
all such Transactions, all right, title and interest in and entitlement to all
Purchased Securities subject to such Transactions shall be deemed transferred
to the nondefaulting party, and the defaulting party shall deliver all such
Purchased Securities to the nondefaulting party.

 

(d)          If
the nondefaulting party exercises or is deemed to have exercised the option
referred to in subparagraph (a) of this Paragraph, the nondefaulting
party, without prior notice to the defaulting party, may:

 

(i)        as to Transactions in which the defaulting party is acting as Seller, (A) immediately
sell, in a recognized market (or otherwise in a commercially reasonable manner)
at such price or prices as the nondefaulting party may reasonably deem
satisfactory, any or all Purchased Securities subject to such Transactions and
apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any
other amounts owing by the defaulting party hereunder or (B) in its sole
discretion elect, in lieu of selling all or a portion of such Purchased
Securities, to give the defaulting party credit for such Purchased Securities
in an amount equal to the price therefor on such date, obtained from a
generally recognized source or the most recent closing bid quotation from such
a source, against the aggregate unpaid Repurchase Prices and any other amounts
owing by the defaulting party hereunder; and

 

(ii)     as to Transactions in which the defaulting party is acting as Buyer, (A) immediately
purchase, in a recognized market (or otherwise in a commercially reasonable
manner) at such price or prices as the nondefaulting party may reasonably
deem satisfactory, securities (“Replacement Securities”) of the same class and
amount as any Purchased Securities that are not delivered by the defaulting
party to the nondefaulting party as required hereunder or (B) in its sole
discretion elect, in lieu of purchasing Replacement Securities, to be deemed to
have purchased Replacement Securities at the price therefor on such date,
obtained from a generally recognized source or the most recent closing offer
quotation from such a source.

 

Unless
otherwise provided in Annex I, the parties acknowledge and agree that (1) the
Securities 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 Security, the nondefaulting party may establish
the source therefor in its sole discretion and (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 Securities).

 

(e)           As
to Transactions in which the defaulting party is acting as Buyer, the
defaulting party shall be liable to the nondefaulting party for any excess of
the price paid (or deemed paid) by the nondefaulting party for Replacement
Securities over the Repurchase Price for the Purchased Securities replaced
thereby and for any amounts payable by the defaulting party under Paragraph 5
hereof or otherwise hereunder.

 

(f)             For
purposes of this Paragraph 11, the Repurchase Price for each Transaction
hereunder in respect of which the defaulting party is acting as Buyer shall not
increase above the

 

8

 

amount of such Repurchase Price for such Transaction determined as of
the date of the exercise or deemed exercise by the nondefaulting party of the
option referred to in subparagraph (a) of this Paragraph.

 

(g)   The defaulting party shall be liable to the
nondefaulting party for (i) the amount of all reasonable legal or other
expenses incurred by the nondefaulting party 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) 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 in respect of a Transaction.

 

(h)   To the extent permitted by applicable law,
the defaulting party shall be liable to the nondefaulting party for interest on
any amounts owing by the defaulting party hereunder, from the date the
defaulting party becomes liable for such amounts hereunder until such amounts
are (i) paid in full by the defaulting party or (ii) satisfied in
full by the exercise of the nondefaulting party’s rights hereunder. Interest on
any sum payable by the defaulting party to the nondefaulting party under this
Paragraph 11(h) shall be at a rate equal to the greater of the Pricing
Rate for the relevant Transaction or the Prime Rate.

 

(i)     The nondefaulting party shall have, in
addition to its rights hereunder, any rights otherwise available to it under
any other agreement or applicable law.

 

12.  Single Agreement

 

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

 

13.  Notices and Other
Communications

 

Any and all notices, statements, demands or other communications
hereunder may be given by a party to the other by mail, facsimile,
telegraph, messenger or otherwise to the address specified in Annex II hereto,
or so sent to such party at any other place specified in a notice of change of
address hereafter received by the other. All notices, demands and requests
hereunder may be made orally, to be confirmed promptly in writing, or by
other communication as specified in the preceding sentence.

 

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14.  Entire Agreement;
Severability

 

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

 

15.  Non-assignability;
Termination

 

(a)    The rights and obligations of the parties
under this Agreement and under any Transaction shall not be assigned by either
party without the prior written consent of the other party, and any such
assignment without the prior written consent of the other party shall be null
and void. 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. This Agreement may be terminated by
either party upon giving written notice to the other, except that this
Agreement shall, notwithstanding such notice, remain applicable to any
Transactions then outstanding.

 

(b)   Subparagraph (a) of this Paragraph 15
shall not preclude a party from assigning, charging or otherwise dealing with
all or any part of its interest in any sum payable to it under Paragraph
11 hereof.

 

16.  Governing Law

 

This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof.

 

17.  No Waivers, Etc.

 

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

 

18.  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
either party hereto (the “Plan Party”) in a Transaction, the Plan Party shall
so notify the other party prior to the Transaction. The Plan Party shall
represent in writing to the other party that the Transaction does not
constitute a prohibited transaction under ERISA or is otherwise exempt
therefrom, and the other party may proceed in reliance thereon but shall
not be required so to proceed.

 

10

 

(b)          Subject
to the last sentence of subparagraph (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 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 as it is a Seller in any outstanding
Transaction involving a Plan Party.

 

19.  Intent

 

(a)    The parties recognize that each Transaction
is a “repurchase agreement” as that term is defined in Section 101 of
Title 11 of the United States Code, as amended (except insofar as the type of
Securities subject to such Transaction or the term of such Transaction would
render such definition inapplicable), and a “securities contract” as that term
is defined in Section 741 of Title 11 of the United States Code, as
amended (except insofar as the type of assets subject to such Transaction would
render such definition inapplicable).

 

(b)   It is understood that either party’s right to
liquidate Securities delivered to it in connection with Transactions hereunder
or to exercise any other remedies pursuant to Paragraph 11 hereof is a
contractual right to liquidate such Transaction as described in Sections 555
and 559 of Title 11 of the United States Code, as amended.

 

(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).

 

20.  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 Section 15 of the Securities Exchange Act of 1934
(“1934 Act”), the Securities Investor Protection Corporation has 

 

11

 

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 Section 15C of the 1934 Act, SIPA will not
provide protection to the other party with respect to any Transaction
hereunder; and

 

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

 

 

	
  Lehman Brothers Inc.

  	
   

  
	
  Lehman Commercial Paper Inc.

  	
  Fieldstone
  Mortgage Ownership Corp.

  
	
   

  	
   

  
	
   

  	
  [complete
  legal name of counterparty]

  
	
   

  	
   

  
	
  By:

  	
  /s/ Robert E. Guglielmo

  	
   

  	
  By:

  	
  /s/ Mark C. Krebs

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Robert E. Guglielmo

  	
   

  	
  Name:

  	
  Mark C. Krebs

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior Vice President

  	
   

  	
  Title:

  	
  Sr. Vice President &
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
  October 21, 2005

  
											

 

12

 

EXECUTION

 

ANNEX I

Supplemental Terms and Conditions

 

This
Annex forms a part of the Master Repurchase Agreement dated as of October 21, 2005 (the “Agreement”)
between Lehman Brothers Inc., Lehman
Commercial Paper Inc., and Fieldstone
Mortgage Ownership Corp.

 

Capitalized
terms used but not defined in this Annex I shall have the meanings ascribed to
them in the Agreement.

 

1.               In addition to this Annex I, Annex II shall
be deemed executed by the parties hereto and shall also form a part of
the Agreement.

 

2.               With respect to individual repurchase
transactions, this Agreement shall only apply to the Lehman Brothers entity
(i.e. Lehman Brothers Inc., Lehman Commercial Paper Inc.) printed in the
confirmation (as described in Section 3(b) herein) provided to the
counterparty of the Lehman Brothers entity.

 

3.               Definitions. For purposes of the Agreement, the following terms shall have the
following meanings: 

 

(a)           “Margin Notice Deadline”, 10:00 am New York City time.

 

(b)          “Business
Day” or “business day”, with respect to any Transaction hereunder, a day on
which regular trading may occur in the principal market for the
Purchased Securities subject to such Transaction. In no event shall a Saturday
or Sunday be considered a business day.

 

4.               Purchase Price Maintenance.

 

(a)           Unless
otherwise expressly agreed by the parties hereto, the parties agree that in any
Transaction hereunder whose term extends over an Income payment date for
the Securities subject to such Transaction, Buyer shall on the date such Income
is paid transfer to or credit to the account of Seller an amount equal to such
Income payment or payments pursuant to Paragraph 5(i) and shall not apply
the Income payment or payments to reduce the amount to be transferred to Buyer
or Seller upon termination of the Transaction pursuant to Paragraph 5(ii) of
the Agreement.

 

(b)          Unless
otherwise expressly agreed by the parties hereto, notwithstanding the
definition of Purchase Price in Paragraph 2 of the Agreement and the provisions of Paragraph 4 of the Agreement, the parties agree (i) that
the Purchase Price will not be increased or decreased by the amount of any cash
transferred by one party to the other pursuant to Paragraph 4 of the Agreement
and (ii) that transfer of cash shall be treated as if it constituted a
transfer of Securities (with a Market Value equal to the U.S. dollar amount of
such cash) pursuant to Paragraph 4(a) or (b), as the case may be
(including for purposes of the definition of “Additional Purchased Securities”).

 

5.               Submission to Jurisdiction; Waiver of
Immunity; Waiver of Jury Trial.

 

(a)           Each
party irrevocably and unconditionally (i) submits to the non-exclusive
jurisdiction of any United States Federal or New York State court sitting in
Manhattan, and any appellate court from any such court, solely for the purpose
of any suit, action or proceeding brought to enforce its
obligations under the Agreement or relating in any way to the Agreement or any
Transaction under the Agreement and (ii) waives, to the fullest extent it may effectively
do so, any defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court and any right of jurisdiction on account of its
place of residence or domicile.

 

(b)          To
the extent that either party has or hereafter may acquire any immunity
(sovereign or otherwise) from any legal action, suit, or proceeding, from
jurisdiction of any court or from set off or any legal process (whether service
or notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise) with respect to itself or any of
its property, such party hereby irrevocably waives and agrees not to
plead or claim such immunity in respect of any action brought to enforce its
obligations under the Agreement or relating in any way to the Agreement or any
Transaction under the Agreement.

 

1

 

(c)           Insofar
as permitted by law, each party hereto hereby irrevocably waives any right that
it may have to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement or the Transactions
contemplated hereby.

 

6.               Additional Provisions.

 

(a)           Lehman
Brothers Inc. and Lehman Commercial Paper Inc., each as a Buyer, acknowledge
that it is their intent for purposes of U.S. federal income taxes to treat  

 

(1)           the
Transactions as indebtedness of the Seller that is secured by the Purchased
Securities, and  

(2)           the
Purchased Securities as owned by the Seller for federal income tax purposes. 

and in the absence of an Event of Default by the Seller shall take no
action inconsistent with this treatment, unless required by law. 

 

(b)          Fieldstone
Mortgage Ownership Company, Inc. as Buyer, acknowledges that it is its
intent for purposes of U.S. federal income taxes to treat

 

(1)    the Transactions as indebtedness of the
Seller (or, when the Seller is Lehman Brothers Inc. or Lehman Commercial Paper
Inc., as indebtedness of Lehman Brothers Inc. or Lehman Commercial Paper Inc.,
as appropriate, that is secured by the Purchased Securities, and  

(2)    the Purchased Securities as owned by the
Seller for federal income tax purposes. 

and in the absence of an Event of Default by the Seller shall take no
action inconsistent with this treatment, unless required by law. 

 

(c)           In
the event that either party believes in good faith that the tax treatment of
one or more Transactions is likely to change to the material detriment of such
party, then such party (the “Terminating Party”) may terminate such
Transactions (and only such Transactions) by giving written notice to the other
party (the “Non-Terminating Party”) in accordance with Paragraph 11(a) of
the Agreement. On such termination the obligations of the parties with respect
to delivery of Purchased Securities shall terminate in accordance with
Paragraph 11(b) through (i) of the Agreement, as applicable, and all
references in such subparagraphs to the defaulting party shall mean the
Terminating Party and all references to the nondefaulting party shall mean the
Non-Terminating Party. 

For avoidance of doubt, it is agreed that this subsection (c) and
subsections (a) and (b) shall (1) set forth the parties intent
solely with respect to tax treatment of the Purchased Securities, and (2) shall
not be deemed in any way to alter the parties intent to treat each Transaction
as a “repurchase agreement” at set forth in Section 19(a) of the
Agreement.

 

(d)          Paragraph
6 of the Agreement is deleted and the following paragraph is substituted
thereof: 

 

“Subject
to Section 6(a) and 6(b) of Annex I, although the parties intend
that all Transactions hereunder be sales and purchases and not loans, in the
event any such Transactions are deemed to be loans, Seller shall be deemed to
have pledged to Buyer as security for the performance by Seller of its
obligations under each such Transaction, and shall be deemed to have granted to
Buyer a security interest in, all of the Purchased Securities with respect to
all Transactions hereunder and all Income thereon and other proceeds thereof.” 

 

(e)           The
second sentence of Paragraph 8 of the Repurchase Agreement is deleted and the
following sentence is substituted thereof: 

 

“All
of Seller’s interest in the purchased securities shall pass to buyer on the
Purchase Date and, unless otherwise agreed by Buyer and Seller, nothing in this
Agreement shall preclude Buyer from engaging in repurchase transactions with
the Purchased Securities or otherwise selling, transferring, pledging or
hypothecating the Purchase Securities, but no such transaction shall relieve
Buyer of its obligations to transfer the Purchased Securities (which shall mean
securities with the same CUSIP number as the Purchased Securities) to Seller
pursuant to Paragraph 3, 4, or 11 hereof, or of Buyer’s obligations to credit
or pay Income to, or apply Income to the obligations of, Seller pursuant to
Paragraph 5 hereof.”

 

(f)             In
no event shall any of the parties to the Agreement be liable to any other party
to the Agreement (or to any third party) for any claims based on or related to
a change in tax liabilities.

 

2Exhibit 10.25(B)

 

EXECUTION

 

GUARANTY

 

GUARANTY,
dated as of October 21, 2005 (as
amended, restated, supplemented or otherwise modified and in effect from time
to time, this “Guaranty”), is made and entered into upon the terms
hereinafter set forth by FIELDSTONE
INVESTMENT CORPORATION, a corporation duly incorporated and in good
standing in the State of Maryland (the “Guarantor”), in favor of Lehman Brothers Inc. and Lehman Commercial Paper Inc. (each,
separately and not jointly, the “Beneficiary”).

 

RECITALS

 

WHEREAS,
Fieldstone Mortgage Ownership Corp., a wholly-owned direct subsidiary of the
Guarantor (“FMOC”), and the Beneficiary have entered into that certain
Master Repurchase Agreement (including all annexes thereto), dated as of
October 21, 2005 (collectively, the “Repurchase Agreement”); and

 

WHEREAS, it
was a condition to the Beneficiary agreeing to enter into the Repo Repurchase
Agreement with FMOC that the Guarantor agree to execute and deliver this
Guaranty, and the Guarantor is executing and delivering this Guaranty in
accordance with the terms of the Repurchase Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which hereby are acknowledged by the Guarantor, the
Guarantor hereby agrees as follows:

 

Section 1.               Definitions.
 Capitalized terms used but not defined
herein shall have the meanings specified in the Repurchase Agreement.

 

Section 2.               Guarantee.
 The Guarantor hereby unconditionally,
irrevocably and absolutely guarantees to the Beneficiary and its successors and
assigns the full and prompt payment of all unpaid Repurchase Price, including
accrued Price Differential (and including, without limitation, interest
accruing after the applicable Repurchase Date and interest accruing after the
filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, relating to FMOC, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), on all outstanding
Transactions under the Repurchase Agreement, and all other obligations and
liabilities of FMOC to Beneficiary, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, or out of or in connection with the Repurchase Agreement, and
any other document made, delivered or given in connection therewith or herewith,
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, and reasonable costs and expenses (including, without limitation,
all fees and disbursements of counsel) the “Guaranteed Obligations”).
This is a guaranty of payment and not of collection. The liability of the
Guarantor hereunder shall be direct and immediate and not conditional or contingent
upon the occurrence of any event.

 

 

If at any time
any amounts shall have become due and payable under the Repurchase Agreement
and FMOC shall not have delivered full and timely payment to the Beneficiary as
required by the Repurchase Agreement, the Beneficiary shall notify the
Guarantor in writing (which may be by telecopy confirmed by a telephone call as
described below) of the amounts that remain due and unpaid (the “Shortfall
Amount”). The Guarantor shall deliver the Shortfall Amount to the
Beneficiary, in immediately available funds no later than one (1) Business Day after
such notice is received.

 

Section 3.               Obligations
Unconditional.  The Guaranteed
Obligations of the Guarantor under Section 2 hereof are absolute, irrevocable
and unconditional irrespective of the value, genuineness, validity, regularity
or enforceability of the Repurchase Agreement or any other agreement or
instrument referred to herein or therein, or any substitution, release or
exchange of any other guarantee of the Guaranteed Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor (other than any payments made by
FMOC, but subject to the provisions of Section 4). Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or
more of the following shall not alter or impair the liability of the Guarantor
hereunder which shall remain absolute, irrevocable and unconditional as
described above:

 

(i)            at any time or from
time to time, without notice to the Guarantor, the time for any performance of
or the compliance with any of the Guaranteed Obligations shall be extended or
accelerated, or such performance or compliance shall be waived;

 

(ii)           any of the acts
mentioned in any of the provisions of the Repurchase Agreement or any other
agreement or instrument referred to herein or therein shall be done or omitted
(other than any payments made by FMOC, but subject to the provisions of Section
4);

 

(iii)          the maturity of any of
the Guaranteed Obligations shall be accelerated, or any Guaranteed Obligations
due and unpaid shall be modified, supplemented or amended in any respect, or any
right under the Repurchase Agreement or any other agreement or instrument
referred to herein or therein shall be waived or any other guarantee of any of
the obligations hereunder or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with;

 

(iv)          any amendment,
restatement, supplement or other modification of the Repurchase Agreement; or

 

(v)           any lien or security
interest granted to, or in favor of, the Beneficiary as security for any of the
Guaranteed Obligations shall fail to be perfected.

 

The Guarantor
hereby expressly and irrevocably waives (i) all defenses, set-offs, counterclaims,
estoppels, rights of rescission, diligence, demand of payment, protest and
privileges which might but for this provision exonerate or discharge it from
its obligations hereunder, (ii) notice of acceptance of this Guaranty, and
(iii) any requirement that the Beneficiary exhaust any right, power or remedy
or proceed against FMOC or any other person or entity (including without
limitation any other guaranty of the Guaranteed Obligations in part or in
whole).

 

2

 

Section 4.               Reinstatement.
 The obligations of the Guarantor shall
be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of FMOC in respect of the Guaranteed Obligations is
rescinded or otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceeding under the United States
Bankruptcy Code or similar law (“Debtor Relief Law”) and the Guarantor
agrees that it will indemnify the Beneficiary on demand for all reasonable
costs and expenses (including, without limitation, fees of counsel) incurred by
the Beneficiary in connection with such rescission or restoration, including
any such costs and expenses incurred in defending against any claim alleging
that such payment constituted a preference, fraudulent transfer or similar
payment under a Debtor Relief Law.

 

Section 5.               Right
of Set-off.  Upon the occurrence and
during the continuance of any Event of Default specified in the Repurchase
Agreement, Beneficiary is hereby irrevocably authorized at any time and from
time to time without notice to the Guarantor, any such notice being hereby
waived by the Guarantor, to set off and appropriate and apply any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by Beneficiary to or for the credit or the
account of the Guarantor, or any part thereof in such amounts as Beneficiary
may elect, on account of the liabilities of the Guarantor hereunder and claims
of every nature and description of Beneficiary against the Guarantor, in any
currency, whether arising hereunder, under the Repurchase Agreement or
otherwise, as Beneficiary may elect, whether or not Beneficiary has made any
demand for payment and although such liabilities and claims may be contingent
or unmatured. Beneficiary shall notify the Guarantor promptly of any such
set-off and the application made by Beneficiary, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of Beneficiary under this paragraph are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which
Beneficiary may have.

 

Section 6.               Subrogation.
 Until such time as all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
irrevocably paid in full, the Guarantor hereby unconditionally and irrevocably
waives its right to assert all rights of subrogation or contribution against
FMOC, whether arising by contract or operation of law (including, without
limitation, any such right arising under a Debtor Relief Law) by reason of any
payment by it pursuant to the provisions of this Guaranty.

 

Section 7.               Remedies.
 The Guarantor agrees that, as between
the Guarantor and the Beneficiary, the obligations of FMOC under the Repurchase
Agreement may be declared to be forthwith due and payable as provided therein
(and shall be deemed to have become automatically due and payable pursuant
thereto) for purposes of Section 2 hereof, notwithstanding any stay, injunction
or other prohibition preventing such declaration (or such obligations from becoming
automatically due and payable) as against FMOC and that, in the event of such
declaration (or such obligations being deemed to have become automatically due
and payable), such obligations (whether or not due and payable by FMOC) shall
forthwith become due and payable by the Guarantor.

 

3

 

Section 8.               Instrument
for the Payment of Money.  To the
extent permitted by applicable law, the Guarantor hereby acknowledges that the
guaranty provided herein constitutes an instrument for the payment of money,
and consents and agrees that Beneficiary, at Beneficiary’s sole option, in the
event of a dispute by the Guarantor in the payment of any moneys due hereunder,
shall have the right to bring motion-action under New York Civil Practice Law
and Rules Section 3213.

 

Section 9.               Continuing
Guarantee.  The guarantee provided herein
is a continuing guarantee, and shall apply to all Guaranteed Obligations
whenever or however arising and shall survive the termination of the Repurchase
Agreement. Notwithstanding the foregoing sentence, the Guarantor’s obligations
to make payments or otherwise perform pursuant to Section 2 hereof shall
terminate on the date on which both (i) the Repurchase Agreement has terminated
and (ii) all obligations and liabilities of FMOC described in clauses (i) and
(ii) of Section 2 hereof shall have been indefeasibly paid and performed in
full. The Beneficiary agrees, by its acceptance hereof, that upon receipt of a
written request of the Guarantor following termination of all of the
obligations of the Guarantor under Section 2 of this Guaranty in accordance with
the provisions of this Section 8, the Beneficiary will promptly deliver to the
Guarantor a written confirmation of the termination of this Guaranty and the
obligations of the Guarantor hereunder.

 

Section 10.             Representations
and Warranties.

 

(i)            Existence.  The Guarantor (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and (b) has all requisite corporate or other
power, and has all governmental licenses, authorizations, consents and
approvals necessary to own its assets and carry on its business as now being or
as proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
material adverse effect.

 

(ii)           No Breach.  Neither (a) the execution and delivery of this
Guaranty nor (b) the consummation of the transactions herein contemplated in
compliance with the terms and provisions hereof will conflict with or result in
a breach of the charter or by-laws of the Guarantor, or any applicable law,
rule or regulation, or any order, writ, injunction or decree of any
governmental authority, or other material agreement or instrument to which the
Guarantor or any of its affiliates is a party or by which any of them or any of
their property is bound or to which any of them is subject, or constitute a
default under any such material agreement or instrument or result in the
creation or imposition of any lien upon any property of the Guarantor or any of
its subsidiaries pursuant to the terms of any such agreement or instrument.

 

(iii)          Action.  The Guarantor has all necessary corporate or
other power, authority and legal right to execute, deliver and perform its
obligations hereunder; the execution, delivery and performance by the Guarantor
of this Guaranty has been duly authorized by all necessary corporate or other
action on its part and this Guaranty has been duly and validly executed and delivered
by the Guarantor and constitutes a legal, valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its terms.

 

(iv)          Approvals.  No authorizations, approvals or consents of,
and no filings or registrations with, any governmental authority or any
securities exchange are necessary for the

 

4

 

execution, delivery or performance by the
Guarantor hereunder or for the legality, validity or enforceability hereof.

 

(v)           Knowledge of FMOC’s
Financial Condition.  Guarantor is
presently informed of the financial condition of the FMOC and of all other
circumstances which diligent inquiry would reveal and which bear upon the risk
of nonpayment of the Guaranteed Obligations. The Guarantor hereby covenants
that it will make its own investigation and will continue to keep itself
informed of FMOC’s financial condition, the status of other guarantors, if any,
of all other circumstances which bear upon the risk of nonpayment and that it
will continue to rely upon sources other than Beneficiary for such information
and will not rely upon Beneficiary for any such information. Absent a written
request for such information by the Guarantor to Beneficiary, the Guarantor
hereby waives its right, if any, to require Beneficiary to disclose to the
Guarantor any information which Beneficiary may now or hereafter acquire
concerning such condition or circumstances including, but not limited to, the
release of or revocation by any other guarantor.

 

(vi)          No Proceeding.  No litigation, investigation or proceeding of or
before any arbitrator or governmental authority is pending or, to the knowledge
of the Guarantor, threatened by or against the Guarantor or against any of the
Guarantor’s properties or revenues with respect to this Guarantee or any of the
transactions contemplated hereby; and

 

(vii)         Tax Return Filings.
 Except as disclosed in writing to
Beneficiary prior to the date hereof, the Guarantor has filed or caused to be
filed all tax returns which, to the knowledge of the Guarantor, are required to
be filed and has paid all taxes shown to be due and payable on said returns or
on any assessments made against him or any of the Guarantor’s property and all
other taxes, fees or other charges imposed on him or any of the Guarantor’s
property by any governmental authority (other than any the amount or validity
of which are currently being contested in good faith by appropriate
proceedings); no tax lien has been filed, and, to the knowledge of the
Guarantor, no claim is being asserted, with respect to any such tax, fee or
other charge.

 

The Guarantor agrees that the foregoing
representations and warranties shall be deemed to have been made by the
Guarantor on the date of each borrowing by FMOC under the Repurchase Agreement
on and as of such date of borrowing as though made hereunder on and as of such date.

 

Section 11.             Covenants.

 

(i)    Existence,
etc.  The Guarantor will:

 

(a)           preserve and maintain
its legal existence and all of its material rights, privileges, licenses and
franchises;

 

(b)           comply with the
requirements of all applicable laws, rules, regulations and orders of
governmental authorities (including, without limitation, all environmental
laws) if failure to comply with such requirements would be reasonably likely
(either individually or in the aggregate) to have a material adverse effect;

 

5

 

(c)           keep adequate records
and books of account, in which complete entries will be made in accordance with
GAAP consistently applied;

 

(d)           pay and discharge all
taxes, assessments and governmental charges or levies imposed on it or on its
income or profits or on any of its property prior to the date on which
penalties attach thereto, except for any such tax, assessment, charge or levy
the payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained; and

 

(e)           permit representatives
of the Beneficiary, during normal business hours, to examine, copy and make
extracts from its books and records, to inspect any of its properties, and to
discuss its business and affairs with its officers, all to the extent
reasonably requested by the Beneficiary.

 

(ii)           Payment of Shortfall
Amounts.  The Guarantor shall pay all
Shortfall Amounts to or at the direction of the Beneficiary in immediately
available funds no later than one (1) Business Day after notice from the
Beneficiary.

 

(iii)          Notices.  The Guarantor shall give notice to the
Beneficiary (unless FMOC have already given such notice under the Repurchase
Agreement):

 

(a)           promptly upon receipt
of notice or knowledge other than from the Beneficiary of the occurrence of any
Default or Event of Default under the Repurchase Agreement;

 

(b)           promptly upon receipt
of notice other than from the Beneficiary or knowledge of the occurrence of any
material breach of a representation or warranty or the failure to observe or
perform in all material respects any covenant or agreement contained herein;
and

 

(c)           promptly upon receipt
of notice other than from the Beneficiary or knowledge of (A) any default
related to any collateral, (B) any lien or security interest (other than
security interests created by the Repurchase Agreement) on, or claim assert
against, any of the collateral or (C) any event or change in circumstances
which could reasonably be expected to have a material adverse effect upon the
collateral.

 

(iv)          The Guarantor covenants
and agrees that, upon request of Beneficiary the Guarantor will furnish to
Beneficiary an unaudited statement of the Guarantor’s net worth no later than 10
days following such request, certified as accurate and signed by the Guarantor.
Beneficiary agrees to keep such financial statements strictly confidential; provided,
that Beneficiary may disclose such financial statements, if required, to its
regulators, or as otherwise required by law. Beneficiary may, but is not
obligated to request such information.

 

(v)           The Guarantor covenants
and agrees that the Guarantor will not change the Guarantor’s legal name or
primary place of business without having provided to Beneficiary 30 day’s prior
written notice of any such change.

 

6

 

Section 12.             No
Limitation of Liability.  The
liability of the Guarantor hereunder shall in no way be affected by (i) the
release or discharge of FMOC in any creditors’, receivership, bankruptcy or
other proceedings, (ii) the impairment, limitation or modification of the
liability of FMOC in bankruptcy, or of any remedy for enforcement of any
obligations of the Beneficiary under the Repurchase Agreement resulting from
the operation of any present or future provision of the federal bankruptcy law
or any other statute or the decision of any court, (iii) the rejection or
disaffirmance of any instrument, document or agreement evidencing any of the Beneficiary’s
rights or obligations under the Repurchase Agreement in any such proceedings,
or (iv) the cessation from any cause whatsoever of the liability of the
Beneficiary with respect to any such party’s obligations under the Repurchase
Agreement.

 

Section 13.             No
Waiver.  No failure on the part of
the Beneficiary to exercise and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Beneficiary of
any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The remedies
herein are cumulative and not exclusive of any remedies provided by law.

 

Section 14.             Notices
and Communications.  All notices and
other communications hereunder shall be in writing and shall be (i) delivered
(charges prepaid) by Federal Express, Express Mail or other recognized
overnight courier for next Business Day delivery, (ii) delivered by hand, or
(iii) sent by facsimile and confirmed by “hard” copy delivered by one of the
methods described in (i) or (ii) above, to any party at its address set forth
below their signatures hereafter or such other address as it may designate by
notice sent in the manner provided herein, provided that a copy of all notices
delivered to Guarantor shall be delivered to: Fieldstone Investment Corporation

 

 

Fieldstone
Investment Corporation

11000 Broken
Land Parkway

Suite 600

Columbia,
Maryland 21044

Attention:
Treasurer

Facsimile:
443-367-2172

 

With a copy
to:

 

Fieldstone
Investment Corporation

11000 Broken
Land Parkway

Suite 600

Columbia,
Maryland 21044

Attn: General
Counsel

Facsimile:
443-367-2036

 

All notices
delivered in the manner provided hereinabove shall be deemed received (a) if
sent by Federal Express, Express Mail or other recognized overnight courier for
next

 

7

 

Business Day delivery, one (1) Business Day
after same are delivered (postage prepaid) to such courier, (b) if sent by
personal delivery with receipt acknowledged, the date that same are delivered or
(c) if sent by facsimile with confirmation as required above, upon the date
sent if received prior to 6:00 p.m. EDT, or on the next Business Day if
received thereafter.

 

Section 15.             Expenses.
 The Guarantor agrees to indemnify the
Beneficiary for all of its reasonable costs and expenses (including, without
limitation, the reasonable fees and expenses of legal counsel) in connection
with (i) any non-payment of Shortfall Amounts as they shall become due and any
enforcement or collection proceeding resulting therefrom, including, without
limitation, all manner of participation in or other involvement with (x)
bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation
proceeding, (y) judicial or regulatory proceedings and (z) workout,
restructuring or other negotiations or proceedings (whether or not the workout,
restructuring or transaction contemplated thereby is consummated); (ii) the
enforcement of this Section 15; and (iii) any other actions reasonably taken by
the Beneficiary in respect of the enforcement of this Guaranty.

 

Section 16.             Assignment.
 This Guaranty shall be binding upon the
Guarantor and the Guarantor’s successors and permitted assigns and shall inure
to the benefit of and be enforceable by the Beneficiary and its successors and
permitted assigns. Neither of Beneficiary nor Guarantor may assign all or any
part of this Guaranty without the prior written consent of the other party, provide, however, that the Beneficiary may
assign all or any part of the Guaranteed Obligations or this Guaranty to an
affiliate upon the delivery of at least three (3) business days’ written notice
of such assignment to Guarantor. This Guaranty is not intended for the benefit
of any Person other than the Beneficiary and its successors and permitted
assigns.

 

Section 17.             Governing
Law.  THIS GUARANTY SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.

 

Section 18.             Submission
To Jurisdiction; Waivers. The Guarantor hereby irrevocably and
unconditionally:

 

(i)            SUBMITS
FOR ITSELF AND ITS PROPERTY IN ANY LEGAL  ACTION
OR PROCEEDING RELATING TO THIS GUARANTY, THE NOTE AND  THE OTHER LOAN DOCUMENTS, OR FOR RECOGNITION AND
ENFORCEMENT  OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE EXCLUSIVE GENERAL JURISDICTION  OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL
COURTS OF THE UNITED STATES OF AMERICA FOR
THE SOUTHERN DISTRICT  OF NEW YORK,
AND APPELLATE COURTS FROM ANY THEREOF;

 

(ii)           CONSENTS
THAT ANY SUCH ACTION OR PROCEEDING MAY  BE
BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW,  WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE  VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR  THAT
SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT  COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

 

8

 

(iii)         AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION  OR PROCEEDING MAY BE EFFECTED BY
MAILING A COPY THEREOF BY REGISTERED  OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF  MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN
SECTION 14  HEREOF OR AT SUCH OTHER
ADDRESS OF WHICH THE BENEFICIARY SHALL  HAVE BEEN NOTIFIED; AND

 

(iv)          AGREES
THAT NOTHING HEREIN SHALL AFFECT THE  RIGHT
TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED  BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER
JURISDICTION.

 

Section 19.             WAIVER
OF JURY TRIAL.  THE GUARANTOR AND THE
BENEFICIARY EACH HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

Section 20.             Non-Recourse.
 Notwithstanding any other provision of
this Guaranty, no Person other than Guarantor (or FMOC) shall be personally
liable (whether by operation of law or otherwise) for payments due hereunder or
for the performance of any Guaranteed Obligations except as expressly provided
herein. Beneficiary agrees that the payment and performance of the Guaranteed
Obligations shall be obligations of the Guarantor only (except for FMOC) and
Beneficiary shall have no claim against or recourse to (whether by operation of
law or otherwise) any shareholder or member, as applicable, of the Guarantor or
against any of its managers, directors, officers, agents or employees in
respect of such Guaranteed Obligations. The sole recourse of Beneficiary for
satisfaction of the Guarantor’s obligations hereunder shall be against the
Guarantor and its assets and not against any other Person; provided, however,
that (i) nothing in this Section 20 shall limit or otherwise prejudice in any
way the right of Beneficiary to proceed against any Person with respect to the
enforcement of such Person’s obligations (or the enforcement of Beneficiary’s
rights) under any agreement to which it is a party, (ii) recourse against any
Person for such Person’s gross negligence, fraud or intentional
misrepresentation shall not be limited by this Section 20, and (iii) recourse
against a Person for acts or failures to act by any Person where such action or
inactivity is unrelated to the Guaranteed Obligations or the Repurchase
Agreement shall, in each case, not be limited to this Section 20.

 

Section 21.             WAIVER
OF CERTAIN DAMAGES.  BENEFICIARY, BY
ITS ACCEPTANCE OF THIS GUARANTY, AGREES THAT IT SHALL NOT BE ENTITLED TO RECOVER
ANY DAMAGES OR AMOUNTS OWED HEREUNDER FROM THE GUARANTOR TO THE EXTENT THAT
SUCH DAMAGES OR AMOUNTS OWED ARE SOLELY CAUSED BY OR SOLELY RESULT FROM THE
GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR VIOLATION OF APPLICABLE LAW, IN EACH
CASE, BY BENEFICIARY, AS DETERMINED BY A FINAL JUDGMENT OF A COURT OF COMPETENT
JURISDICTION THAT IS NO LONGER SUBJECT TO APPEAL, REHEARING OR OTHER LEGAL CHALLENGE.
EXCEPT AS OTHERWISE EXPRESSLY STATED IN THIS GUARNTY OR THE AGREEMENT, THE
GUARANTOR (AND, EXCEPT AS OTHERWISE PROVIDED

 

9

 

FOR IN THE AGREEMENT, ANY OF ITS AFFILIATES,
OFFICERS, DIRECTORS, MEMBERS, EMPLOYEES, ATTORNEYS, CONSULTANTS OR AGENTS)
SHALL NOT BE LIABLE FOR PUNITIVE OR UNREASONABLE SPECIAL, INDIRECT, INCIDENTAL
OR CONSEQUENTIAL DAMAGES UNDER, ARISING OUT OF OR IN CONNECTION WITH ITS PERFORMANCE
OR NON-PERFORMANCE UNDER THIS GUARANTY OR ANY OF ITS OBLIGATIONS HEREIN,
WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, WARRANTY, INDEMNITY OR
OTHERWISE.

 

Section 22.             Amendments.
 No amendment or modification hereof
shall be effective unless evidenced by a writing signed by the Guarantor and
the Beneficiary.

 

Section 23.             Severability.
 If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect in
such jurisdiction and (ii) the invalidity or unenforceability of any provisions
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.

 

Section 24.             Integration.
 This Guaranty embodies the final, entire
agreement among the Guarantor and the Beneficiary with respect to the subject
matter hereof and supersedes any and all prior commitments, agreements,
representations and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous or subsequent oral agreements or discussions of the
Guarantor and the Beneficiary. All prior or contemporaneous agreements and
understandings with respect to the subject matter hereof, oral or written, are
merged into this Guaranty.

 

Section 25.             Acknowledgments.
 The Guarantor hereby acknowledges that:

 

(i)            The Guarantor has been
advised by counsel in the negotiation, execution and delivery of this
Guarantee, the Repurchase Agreement and the other documents;

 

(ii)           Beneficiary does not
have any fiduciary relationship to the Guarantor, and the relationship between
Beneficiary and the Guarantor is solely that of surety and creditor; and

 

(iii)          No joint venture exists
between Beneficiary and the Guarantor or among Beneficiary, the FMOC and the
Guarantor.

 

Section 26.             Counterparts.
 This Guaranty may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Guaranty by
signing any such counterpart.

 

[SIGNATURES FOLLOW]

 

10

 

IN WITNESS
WHEREOF, the undersigned has executed this Guaranty, or has caused this
Guaranty to be executed by its duly authorized representative, as of the date
first above written.

 

 

	
   

  	
  FIELDSTONE INVESTMENT CORPORATION,

  as Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark C. Krebs

  	
   

  
	
   

  	
   

  	
  Name: Mark C. Krebs

  
	
   

  	
   

  	
  Title: Sr. Vice President & Treasurer

  
	
   

  	
   

  	
  Date: October 21, 2005

  

 

 

	
  Accepted and Acknowledged:

  
	
   

  
	
  Separately and not jointly,

  Lehman Brothers Inc., as
  Beneficiary

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Robert E. Guglielmo

  	
   

  
	
   

  	
  Name: Robert E. Guglielmo

  
	
   

  	
  Title: Senior Vice President

  
	
   

  
	
   

  
	
  Separately and not jointly,

  Lehman Commercial Paper Inc., as
  Beneficiary

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Robert E. Guglielmo

  	
   

  
	
   

  	
  Name: Robert E. Guglielmo

  
	
   

  	
  Title: Senior Vice President

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