Document:

Exhibit 10.24(A)

 

	
  

  	
   

  
	
  Master Repurchase

  Agreement

  	
   

  
	
  September 1996 Version

  	
   

  

 

	
  Dated as of

  	
   

  	
  OCTOBER 11, 2005

  
	
   

  	
   

  	
   

  
	
  Between:

  	
   

  	
  LIQUID FUNDING, LTD.

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
  FIELDSTONE MORTGAGE OWNERSHIP
  CORP.

  

 

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;.

 

(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;

 

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(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 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 

 

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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.

 

(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 

 

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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.

 

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.

 

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 

 

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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.

 

(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 

 

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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 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.

 

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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.

 

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.

 

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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.

 

(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).

 

9

 

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 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.

 

 

	
  Liquid Funding, Ltd.

  	
  Fieldstone Mortgage Ownership Corp.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Marco Montarsolo

  	
   

  	
  By:

  	
  /s/ Mark C. Krebs

  	
   

  
	
  Name: Marco Montarsolo

  	
  Name: Mark C. Krebs

  
	
  Title: Alt Director

  	
  Title: Sr. Vice President & Treasurer

  
	
  Date: October 12, 2005

  	
  Date: October 11, 2005

  

 

10

 

Annex
I

 

Supplemental
Terms and Conditions

 

This Annex I forms a part
of the TBMA Master Repurchase Agreement (September 1996 Version) (the “Repurchase
Agreement”) dated as of October 11, 2005 between LIQUID FUNDING, LTD. (“Buyer”) and FIELDSTONE MORTGAGE OWNERSHIP CORP. (“Seller”) (the
Repurchase Agreement, this Annex I, Annex I-A, Annex II and the applicable
Confirmation are collectively referred to herein as the “Agreement”).
Capitalized terms used but not defined in this Annex I shall have the meanings
ascribed to such terms in the Repurchase Agreement. If there is any
inconsistency between this Annex I and the Repurchase Agreement, this Annex I
shall control.

 

1.                           Other Applicable Annexes. Please select any/all of the
optional Annexes below to form a part of the Agreement. The Annexes which are
initialed shall form a part of this Agreement and shall be applicable
hereunder.

 

	
   

  	
   

  	
  Initials

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Annex III
  (International Transactions)

  	
   

  
	
  (b)

  	
  Annex IV (Party Acting
  as Agent)

  	
   

  
	
  (c)

  	
  Annex V (Margin for Forward
  Transactions)

  	
   

  
	
  (d)

  	
  Annex VI (Buy/Sell Back
  Transactions)

  	
   

  
	
  (e)

  	
  Annex VII (Transactions
  Involving Registered Investment Companies)

  	
   

  

 

 

2.                           “Margin
Notice Deadline” means 10:00 a.m. (New York time).

 

3.                           Margin
calls may be made orally by telephone directly to one of the individuals set
forth on Annex II (but in no event by voice mail).

 

4.                           Definitions

 

“Amount of
Transactions” shall mean the aggregate of all Purchase Prices paid for all
Purchased Securities hereunder and not repaid to the Buyer.

 

“Applicable Table”
shall have such meaning with respect to a particular Transaction hereunder as
is set forth in the relevant Confirmation for such Transaction.

 

“Business Day”
shall mean each day on which both (i) commercial banks in New York City and
(ii) the New York Stock Exchange are open for business.

 

 

“Buyer’s Margin Ratio”
shall mean, with respect to each Purchased Security, the Buyer’s Margin Ratio
determined in accordance with Section 7 herein and the applicable Confirmation.

 

“Confirmation”
shall mean a Confirmation issued pursuant to the Agreement setting forth terms
applicable to a Transaction hereunder.

 

“Diversity Requirement”, for a Transaction,
shall have the meaning set forth in the applicable Confirmation.

 

“Exit Fee”, for a Transaction, shall mean a
termination fee as agreed to by the parties in the relevant Confirmation; provided, however, that if the Confirmation for the relevant
Transaction does not specify an Exit Fee, the Exit Fee shall be deemed to be
zero.

 

“LIBOR” shall mean the rate for deposits in
U.S. dollars for a period of one (1) month as such rate appears on Telerate
Page 3750 as of 11:00 a.m., London time, on the day that is two (2) “London
Business Days” (meaning a day on which commercial banks are open for
business in London, England) preceding a given Reset Date. If such rate does
not appear on Telerate Page 3750, the applicable rate for that Reset Date shall
be determined by reference to “USD-LIBOR-Reference Banks.”  “USD-LIBOR-Reference Banks” means, for
purposes of this definition, the rates at which deposits in U.S. dollars are
offered by four (4) reference banks selected by Buyer at approximately 11:00
a.m., London time, on the day that is two (2) London Business Days preceding a
given Reset Date to prime banks in the London interbank market for a period
equal to one (1) month commencing on that Reset Date and in a representative
amount. Buyer shall request the principal London office of each of the
reference banks to provide a quotation of its LIBOR rate. If at least two such
quotations are received, the rate for the Reset Date will be the arithmetic
mean of such quotations. If fewer than two quotations are received, the rate
for that Reset Date will be the arithmetic mean of the rates quoted by major
banks in New York City (selected by Buyer), at approximately 11:00 a.m. New
York time on that Reset Date, for loans in U.S. dollars to leading European
banks for a period of one (1) month commencing on that Reset Date and in a
representative amount.

 

“Margin Deficit Amount”
shall mean, when referring to a particular Transaction under the Agreement, the
amount, if any, by which (a) the aggregate of (i) the Repurchase Prices for all
Purchased Securities governed by the relevant Confirmation and (ii) the
Replacement Cost Amounts (defined below) for all such Purchased Securities, exceeds (b) the aggregate of the products of (i) the
applicable Buyer’s Margin Ratio and (ii) the Market Value of each such
Purchased Security. For purposes of this Annex I, “Replacement Cost Amount”
for a Purchased Security shall be an amount equal to the amount (if any) Seller
would owe under Paragraphs 11(g)(ii) and (iii) of the Repurchase Agreement, as
determined by Buyer in its sole discretion acting in good faith, if an Event of
Default with Seller as the defaulting party were to occur pursuant to Paragraph
11 of the Repurchase Agreement on such date on which the Replacement Cost
Amount for such Purchased Security is being calculated.

 

“Margin Excess Amount”
shall mean, when referring to a particular Transaction under the Agreement, the
amount, if any, by which the aggregate of the Repurchase Prices for all
Purchased Securities governed by the relevant Confirmation is less than the
aggregate of

 

2

 

the products of (a) the
applicable Buyer’s Margin Ratio and (b) the Market Value of each such Purchased
Security.

 

“Market Value”
shall mean, with respect to all Purchased Securities, the market value
determined by Buyer daily in its sole discretion acting in good faith.

 

“Maximum Amount” shall have the meaning
specified in the applicable Confirmation.

 

“Purchased Security”
shall mean any Security transferred by Seller to Buyer in a Transaction or any
Securities substituted therefore in accordance with Paragraph 9 of the
Repurchase Agreement (as amended), in each case under the Agreement, that have
not been repurchased or liquidated pursuant to the Agreement. The term
“Purchased Security” with respect to any Transaction shall also include
Securities delivered pursuant to Paragraph 4(a) of the Repurchase Agreement (as
amended).

 

“Ratings Category” means the following
groupings of ratings, each of which shall be a separate Ratings Category:

 

	
  (i)

  	
   

  	
  Aaa/AAA/AAA

  
	
  (ii)

  	
   

  	
  Aa1/AA+/AA+

  
	
  (iii)

  	
   

  	
  Aa2/AA/AA

  
	
  (iv)

  	
   

  	
  Aa3/AA-/AA-

  
	
  (v)

  	
   

  	
  A1/A+/A+

  
	
  (vi)

  	
   

  	
  A2/A/A

  
	
  (vii)

  	
   

  	
  A3/A-/A-

  
	
  (viii)

  	
   

  	
  Baa1/BBB+/BBB+

  
	
  (ix)

  	
   

  	
  Baa2/BBB/BBB

  
	
  (x)

  	
   

  	
  Baa3/BBB-/BBB-

  
	
  (xi)

  	
   

  	
  Ba1/BB+/BB+

  
	
  (xii)

  	
   

  	
  Ba2/BB/BB

  
	
  (xiii)

  	
   

  	
  Ba3/BB-/BB-

  
	
  (xiv)

  	
   

  	
  B1/B+/B+

  
	
  (xv)

  	
   

  	
  B2/B/B

  
	
  (xvi)

  	
   

  	
  B3/B-/B-

  
	
  (xvii)

  	
   

  	
  Below B3/B-/B- or Not
  Rated

  

 

The foregoing ratings are as published by Moody’s
Investors Service, Inc., Standard & Poor’s Ratings Services, a division of
The McGraw-Hill Companies, Inc. or Fitch Ratings, Inc. (in that order) on
Purchased Securities. If more than one rating agency rates the Purchased
Securities, the lowest of the ratings shall set the Ratings Category. If either
(i) no rating agency rates the Purchased Securities or (ii) any rating agency
withdraws its rating of the Purchased Securities, the Ratings Category “Not
Rated” shall apply.

 

“Relevant Spread”, for a Transaction, shall
have the meaning set forth in the applicable Confirmation.

 

“Repurchase Price” shall mean, with respect to
each Purchased Security, the price at which such Purchased Security is to be
transferred from Buyer to Seller upon termination of the applicable
Transaction, which will be determined in each case (including Transactions
terminable upon demand) as the sum of (a) the Purchase Price, (b) the Price
Differential,

 

3

 

and (c) if the Repurchase Date occurs pursuant to
Paragraph 11 of the Repurchase Agreement, any amounts Seller owes under
Paragraphs 11(g)(ii) and (iii) of the Repurchase Agreement, as determined by
Buyer in its sole discretion acting in good faith, each as of the date of
determination.

 

“Reset Date” shall mean, if applicable,  the date on which LIBOR is reset with respect
to a Transaction, which date shall be the 15th day of each month or
such other date as Buyer may specify in the Confirmation for such Transaction
(or, if such date is not a Business Day, the next following Business Day,
unless that day falls in the next calendar month, in which case that date will
be the first preceding day that is a Business Day).

 

“Termination Date”,
for a Transaction, shall have the meaning set forth in the applicable
Confirmation.

 

“Transaction”,
with respect to the Repurchase Agreement, means any transaction under this
Agreement and does not include transactions under any other master repurchase
agreement or any other agreement.

 

5.                           Notwithstanding
the definition of Purchase Price in Paragraph 2 of the Repurchase Agreement and
the provisions of Paragraph 4 of the Repurchase Agreement (as amended), the
parties agree (i) that the Purchase Price will not be increased or decreased by
the amount of any cash or Securities transferred by one party to the other
pursuant to Paragraph 4 of the Repurchase Agreement and (ii) that transfer of
such 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) of the Repurchase Agreement (as amended), as the case may
be (including for purposes of the definition of “Additional Purchased
Securities”).

 

6.                           Determination of Pricing Rate and Payment of Price Differential

 

(a)                      The Pricing
Rate for each Transaction will be as specified in the applicable Confirmation.
If the Pricing Rate is specified in the applicable Confirmation to be LIBOR
plus a Relevant Spread, the Pricing Rate will be reset on each Reset Date.

 

(b)                     All accrued
Price Differential incurred in connection with each Transaction in each
calendar month will be due and payable to Buyer on such payment dates as are
specified in the applicable Confirmation.

 

7.                           Determination of Purchase Price, Buyer’s Margin Ratio, Margin Excess
Amount and Margin Deficit Amount

 

(a)                      The Purchase
Price shall be determined separately for all Purchased Securities within a
Ratings Category based on the Purchase Price set forth in the Applicable Table
which corresponds to the Ratings Category for such Purchased Securities.

 

(b)                     The Buyer’s
Margin Ratio shall be determined separately for each Ratings Category based on
the “Buyer’s Margin Ratio” set forth in the Applicable Table corresponding to
such Ratings Category.

 

4

 

(c)                      If there is
no Applicable Table, the Purchase Price and Buyer’s Margin Ratio will be
determined by Buyer in its sole discretion.

 

(d)                     Margin Excess
Amounts and Margin Deficit Amounts shall each be determined separately for each
Ratings Category and then aggregated.

 

8.         Purchase Fee

 

If provided for in the
applicable Confirmation, Seller will pay to Buyer, in lieu of a portion of the
Pricing Rate, an upfront amount on the applicable Purchase Date in the amount
set forth in the relevant Confirmation; provided, however,
that the foregoing fee shall not be payable in connection with any repricing
pursuant to Section 13 below or any substitution of Securities permitted under
the Agreement.

 

9.         Early Termination of Transactions

 

(a)  Seller may
elect to terminate any Transaction prior to the Termination Date specified in
the applicable Confirmation and repurchase the relevant Purchased Securities
from Buyer on five (5) Business Days’ notice by paying an Exit Fee.

 

(b)  If the Amount of Transactions with respect to
the Agreement exceeds the Maximum Amount at any time, Seller shall repurchase
sufficient Purchased Securities to reduce the Amount of Transactions to not
greater than the Maximum Amount not later than the first (1st)
Business Day after notice from Buyer (which date shall constitute a Repurchase
Date with respect to the Purchased Securities to be repurchased hereunder and
for the purpose of Paragraph 11(ii) of the Repurchase Agreement).

 

(c)  Seller shall pay the Exit Fee with respect to
any and all Purchased Securities transferred to Seller on any such Repurchase
Date that precedes the Termination Date with respect to such Purchased
Securities. The acceleration of such Repurchase Date for any reason shall not
excuse Seller from paying the Exit Fee, except if such acceleration results
from (i) an Event of Default where Buyer is the defaulting party or (ii) the
occurrence of an Enforcement Event. No Exit Fee shall be payable upon (i) a
repricing pursuant to Section 13 hereof, or (ii) a substitution of securities
as permitted under the Agreement, provided that
the Exit Fee shall be payable to Buyer upon any termination resulting from
Buyer’s election not to accept a substitution of Securities pursuant to Section
15 below.

 

10.       Mandatory Early Repurchase Date

 

(a)           Notwithstanding
any provision of the Repurchase Agreement, and subject to no condition
precedent, the tenth (10th) Business Day following the date on which
an “Enforcement Event” (as defined below) occurs shall automatically and
irrevocably become the Repurchase Date in respect of all Transactions hereunder
(the “Mandatory Early Repurchase Date”), whether or not the Enforcement
Event is then continuing. In the event of the occurrence of an Enforcement
Event, in lieu of the delivery of the

 

5

 

Repurchase Price by
Seller on the Mandatory Early Repurchase Date, Seller shall be obliged to pay
to Buyer, with respect to each Transaction hereunder, an amount (the “Mandatory
Early Repurchase Amount”) equal to (i) the Repurchase Price as of the
Mandatory Early Repurchase Date minus (ii) the
value (positive or negative) of any agreement entered into by Buyer for the
purpose of hedging any exposure resulting from its entry into the Transaction.
Buyer shall promptly notify Seller of the occurrence of an Enforcement Event
and of the resulting Mandatory Early Repurchase Date, which notice shall state
that on the Mandatory Early Repurchase Date all Transactions will be terminated
in their entirety and shall specify the aggregate amount of the Mandatory Early
Repurchase Amounts for all Transactions as of the Mandatory Early Repurchase
Date.

 

(b)           “Enforcement Event” will have
the meaning specified in the Offering Circular dated April 9, 2004 for Buyer’s
Global Medium-Term Note Program. A copy of the relevant excerpt is attached
hereto as Exhibit A.

 

(c)           “Security Trustee” means JP
Morgan Chase Bank, N.A. (formerly The Chase Manhattan Bank), or such other
person as may then be acting as security trustee for certain of Buyer’s
creditors.

 

11.       Change in Ratings Category of Purchased Securities

 

(a)                      Seller shall
give Buyer notice of any change in the rating of a Purchased Security within
one (1) Business Day after Seller becomes aware of such change.

 

(b)                     If the rating
on a particular Purchased Security is upgraded and such upgrade results in a
change in the Ratings Category of such Purchased Security, then, at Seller’s
written request, the resulting change in the Purchase Price and the Buyer’s
Margin Ratio of such Purchased Security shall be effected on the first (1st)
Business Day following Buyer’s receipt of such request.

 

(c)                      If the
rating on a particular Purchased Security is downgraded and such downgrade
results in a change in the Ratings Category of such Purchased Security, then
the resulting change in the Purchase Price and the Buyer’s Margin Ratio of such
Purchased Security shall be effected automatically on the Business Day on which
Buyer becomes aware of such downgrade.

 

(d)                     If the rating
on a particular Purchased Security is upgraded or downgraded and such upgrade
or downgrade results in a change in the Ratings Category of such Purchased
Security, then the resulting change in the Pricing Rate of such Purchased
Security shall be effected automatically on the applicable date specified in
the relevant Confirmation, provided that
if no such date is specified, any resulting change in the Pricing Rate of such
Purchased Security shall be effected automatically on the next payment date for
Seller’s payment of Price Differential to Buyer after the date of such upgrade
or downgrade.

 

6

 

12.       Change of Applicable Tables

 

If a change in the
composition of Purchased Securities results in failure to satisfy the Diversity
Requirement set forth in the applicable Confirmation where such Diversity
Requirement was previously satisfied, or a change in the composition of
Purchased Securities results in satisfaction of the Diversity Requirement set
forth in the applicable Confirmation where such Diversity Requirement was not
previously satisfied, and consequently causes a different Applicable Table to
apply, then the resulting change in the Purchase Price and the Buyer’s Margin
Ratio of the applicable Purchased Securities shall be effected automatically on
the Business Day on which Buyer becomes aware of such change.

 

13.       Repricing

 

If the Purchase Price of
a Purchased Security is to be changed pursuant to the terms hereof, then as of
the date on which such Purchase Price is to be changed (each a “Repricing
Date”), (i) the Repurchase Date with respect to the applicable Purchased
Security will be accelerated automatically to the Repricing Date, (ii) the
Repurchase Price and any other amounts owed by Seller to Buyer with respect to
such Transaction (excluding accrued Price Differential not yet due) shall be
due and payable, (iii) Buyer shall be obligated to purchase such Purchased
Security as a new Transaction at the new Purchase Price, and (iv) the amounts
owing pursuant to subparagraphs (ii) and (iii) of this Section 13 shall be
offset and any net amount shall be due and payable by Buyer or Seller, as
applicable.

 

14.       Procedures Regarding Margin Deficit Amounts and Margin Excess Amounts

 

Paragraphs 4(a), 4(b) and
4(c) of the Repurchase Agreement are deleted and the following paragraphs are
substituted therefor:

 

“(a)                Notwithstanding
anything in this Agreement to the contrary, if on any day there is a Margin
Deficit Amount, Buyer may by notice to Seller require Seller to
(i) transfer to Buyer sufficient cash or additional Securities acceptable
to Buyer in its sole discretion, which cash or additional Securities shall
constitute Additional Purchased Securities within the meaning of Paragraph 2(b)
of this Agreement, and/or (at Seller’s election), in the alternative,
(ii) pay such amount of the Purchase Price so that, after such transfer(s)
and/or payment of Purchase Price, there is no Margin Deficit Amount, provided that any such payment of the Purchase Price
pursuant to (ii) above shall be considered an early termination of a
Transaction and shall be subject to the payment of an Exit Fee with respect to
such amount so transferred or paid by Seller to Buyer.

 

(b)                     Notwithstanding
anything in this Agreement to the contrary, if on any day there is a Margin
Excess Amount, Seller may by notice to Buyer require Buyer to transfer cash or
Purchased Securities to Seller, so that, after such transfer(s), there is no
Margin Excess Amount.

 

7

 

(c)                      If any
notice is given by Buyer or Seller under subparagraph (a) or (b) of
this Paragraph 4 at or before the Margin Notice Deadline on any Business
Day, the party receiving such notice shall transfer cash or Purchased
Securities as provided in such subparagraph no later than the close of business
in the relevant market on such Business Day. If any such notice is given after
the Margin Notice Deadline, the party receiving such notice shall transfer such
cash or Purchased Securities no later than the close of business in the
relevant market on the next Business Day following such notice. Buyer or Seller
may dispute the existence or amount of a Margin Deficit Amount or Margin Excess
Amount by providing a notice of dispute to the other party within one (1)
Business Day of receipt of the notice provided pursuant to subparagraph (a) or
(b) of this Paragraph 4. If no notice of dispute is delivered within one (1)
Business Day, the notice delivered under subparagraph (a) or (b) of this
Paragraph 4 shall be binding upon the parties hereto. If a notice of dispute is
delivered within one (1) Business Day, the parties hereto agree to use good
faith efforts to resolve any disputes within two (2) Business Days of such
notice; provided, however, that the parties
shall remain obligated to make margin transfers and/or payments in the time
periods set forth in the first and second sentences of this Paragraph 4(c). If
the parties cannot resolve any such disputes within two (2) Business Days,
Buyer’s reasonable good faith determination shall be final. Any transfers that
are determined to be appropriate as a result of the resolution of such disputes
shall be made within one (1) Business Day of such determination.”

 

15.       The
following 2 paragraphs shall be added to Paragraph 9 of the Repurchase
Agreement:

 

“(c)  In the case of any Transaction for which the
Repurchase Date is other than the Business Day immediately following the
Purchase Date and with respect to which Seller does not have any existing right
to substitute substantially the same Securities for the Purchased Securities,
Seller shall have the right, subject to the proviso to this sentence, upon
notice to Buyer, which notice shall be given at or prior to 10:00 a.m. (New
York time) on such Business Day, to substitute substantially the same
Securities for any Purchased Securities; provided, however,
that Buyer may elect, by the close of business on the Business Day notice is
received, or by the close of the next Business Day if notice is given after
10:00 a.m. (New York time) on such day, not to accept such substitution. In the
event such substitution is accepted by Buyer, such substitution shall be made
by Seller’s transfer to Buyer of such other Securities and Buyer’s transfer to
Seller of such Purchased Securities, and after such substitution, the
substituted Securities shall be deemed to be Purchased Securities. In the event
Buyer elects not to accept such substitution, Buyer shall offer Seller the
right to terminate the Transaction with the payment of an Exit Fee as
calculated pursuant to the relevant Confirmation, plus payment of the amount
calculated pursuant to subparagraph (d) below.

 

(d) In the event Seller
exercises its right to substitute or terminate under subparagraph (c), Seller
shall be obligated to pay to Buyer, by the close of the Business Day of such
substitution or termination, as the case may be, an amount equal to (A) Buyer’s
actual cost (including all fees, expenses and commissions) of (i) entering into
replacement transactions, (ii) entering into or terminating hedge transactions,
and/or (iii) terminating transactions or substituting securities in like
transactions with third parties in connection with or as a result of such
substitution or termination; and (B) to the extent Buyer determines not to
enter into replacement transactions, the loss incurred by Buyer directly

 

8

 

arising or resulting from
such substitution or termination. The foregoing amounts shall be solely
determined and calculated by Buyer in good faith.”

 

16.       Tax Treatment

 

(a)                                  The parties acknowledge that, to the extent
relevant, it is their intent, solely for purposes of U.S. federal, state and
local income and franchise taxes, to treat the Transactions as indebtedness of
the Seller that is secured by the Purchased Securities and the Purchased
Securities as owned by the Seller for federal income tax purposes in the
absence of an Event of Default by the Seller. The parties agree to such
treatment and agree to take no action inconsistent with this treatment, unless
required by law.

 

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

 

“Although
the parties intend that all Transactions hereunder be sales and purchases and
not loans (other than for federal income tax purposes), 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.”

 

(c)                                  The third 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 Purchased 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 obligation to credit or
pay Income to, or apply Income to the obligations of, Seller pursuant to
Paragraph 5 hereof.”

 

17.       Additional Events of Default

 

Paragraph
11 of the Repurchase Agreement is amended to delete the word “or” before (vii)
and to add the following after “obligations hereunder” and prior to
“(each an “Event of Default”)”:

 

“(viii) Seller fails to
make any payment of Price Differential within one (1) Business Day after such
payment becomes due, (ix) Seller fails to comply with any other material
obligation to Buyer and such failure continues for a period of fifteen (15)
days after notice thereof is given to Seller by Buyer, (x) with respect to any
Transaction to which Annex I-A

 

9

 

to the Repurchase
Agreement (“Annex I-A”) applies, Seller fails to comply with Section 6
of Annex I-A and such failure continues for a period of fifteen (15) Business
Days after notice thereof is given to Seller by Buyer, or (xi) Seller (1)
defaults under a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs a liquidation of,
an acceleration of obligations under, or an early termination of, that
Specified Transaction, (2) defaults, after giving effect to any applicable
notice requirement or grace period, in making any payment or delivery due on
the last payment, delivery or exchange date of, or any payment on early
termination of, a Specified Transaction (or such default continues for at least
two Business Days if there is no applicable notice requirement or grace period)
or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a
Specified Transaction (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf); where “Specified
Transaction” means (a) any transaction (including an agreement with respect
thereto) now existing or hereafter entered into between Seller and any
financial institution which is a rate swap transaction, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of these transactions), (b) all other financial transactions and financial
agreements entered into between Seller and any financial institution,
including, without limitation, futures, stock lending agreements, repurchase
agreements and reverse repurchase agreements, loans of any kind, purchases and
sales of equity and debt securities of any kind, including mortgages, whether
or not on margin, and (c) any combination of these transactions”

 

Upon the occurrence of
any Event of Default or any event which with the passage of time or delivery of
notice would become an Event of Default under the Agreement, the defaulting
party shall give immediate notice thereof to the nondefaulting party.

 

18.       Early Retirement of Purchased Securities

 

Unless otherwise
specified in the applicable Confirmation, in the event that a Purchased
Security is retired by the issuer thereof prior to the scheduled maturity of
such Purchased Security pursuant to a call feature, call provision, “sinking
fund” provision, optional acceleration feature or otherwise, such early
retirement of the Purchased Security shall be treated as a voluntary early
termination by Seller of the applicable Transaction under Section 9 hereof and
Seller shall pay an Exit Fee in accordance with Section 9 hereof to Buyer with
respect to such deemed voluntary early termination. The Repurchase Date with
respect to any such Transaction shall be considered to be the date on which
such early retirement of the applicable Purchased Security by the issuer
thereof occurs.

 

19.       Single Obligation

 

Seller’s obligations
under the Agreement consist of a single obligation, notwithstanding that the
Transactions are margined on a Transaction-by-Transaction basis. Upon an Event
of Default, all Purchased Securities, all cash and other property held pursuant
to the Agreement (including, but not limited to, all principal and interest
payments received by Buyer as the owner of the Purchased Securities under all
Transactions under the

 

10

 

Agreement), and all
payments and performance due under the Agreement, may be utilized by Buyer to
satisfy Seller’s obligations under the Agreement. Notwithstanding anything to
the contrary herein, Seller and Buyer agree in accordance with Paragraph 4(f)
of the Repurchase Agreement that the calculation of the Buyer’s Margin Ratio,
the Margin Deficit Amount and the Margin Excess Amount and the obligation of
Seller to eliminate the Margin Deficit Amount shall be determined separately
with respect to each Transaction pursuant to this Agreement and the applicable
Confirmation.

 

20.       Miscellaneous

 

(a)           No Proceedings against Buyer. Seller hereby agrees (which
agreement shall, pursuant to the terms of this Agreement, be binding upon its
successors and assigns) that it shall not institute against, or join any other
person in instituting against, Buyer any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under
any Bermuda or United States federal or state bankruptcy or similar law, for
two years and a day after the latest maturing commercial paper note,
medium-term note or other rated indebtedness issued by Buyer is paid. The
provisions of this Section 20(a) shall survive the termination of this
Agreement.

 

(b)           Acknowledgement of Security. Pursuant to that certain
Collateral Trust and Security Agreement dated as of November 9, 2001 and
amended as of June 27, 2003 among Buyer, the Security Trustee (as defined in
Section 10(c) above) and Bear, Stearns Securities Corp., as securities
intermediary, Buyer has granted to the Security Trustee a first priority
security interest in all of Buyer’s right, title and interest in and to this
Agreement and each Transaction hereunder. Seller acknowledges such security
interest and understands that (i) the Security Trustee has the right to enforce
the rights of Buyer hereunder,
including the right of Buyer to give notices to Seller, to declare a
Termination Date on behalf of Buyer hereunder, to determine Market Value and to
calculate the Mandatory Early Repurchase Amount with respect to a Transaction
as of the Mandatory Early Repurchase Date; (ii) the Security Trustee is an
express third party beneficiary of this Agreement; and (iii) in no event will
the Security Trustee incur any obligations or liabilities hereunder. Buyer
acknowledges that the arrangement described in this subparagraph imposes no
additional duties or obligations upon Seller.

 

(c)           No Recourse. No recourse shall be had against any
incorporator, shareholder, officer, director or employee of Buyer or Seller
with respect to any of the covenants, agreements, representations or warranties
of the other party hereto contained in the Agreement.

 

(d)           Pricing Information. Seller agrees to make available to Buyer any
password in the possession of Seller which Buyer may reasonably require to
enable Buyer to determine the Market Value of any Purchased Security (including
the cashflows due thereon). Seller acknowledges and agrees that Buyer may from
time to time furnish, or require that Seller furnish, such passwords to an
independent pricing source with the consent of Seller, which consent shall not
be unreasonably withheld.

 

11

 

21.       Intent

 

Notwithstanding anything
to the contrary in the Agreement, Buyer shall not be deemed to have waived any
right which it may have or be deemed to have under Section 506(a), 506(b),
1111(b) or any other provisions of the U.S. Bankruptcy Code to file a claim for
the full amount due and owing under the provisions of the Agreement.

 

22.       Governing Law; Consent to Jurisdiction; Waiver of Immunity

 

The 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.

 

Each party irrevocably
and unconditionally (x) submits to the 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 (y)
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.

 

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.

 

23.       Costs and Expenses

 

Each party to the
Agreement shall bear its own costs and expenses in connection with the
negotiation and documentation of the Agreement.

 

24.       Buyer to Provide Written Confirmation

 

Buyer shall provide
Seller with a written Confirmation for each Transaction within five (5)
Business Days of the Purchase Date.

 

25.       Recording

 

Each party (i) consents
to the monitoring or recording, at any time and from time to time, by the other
party of any and all communications in connection with the Agreement or any
potential Transaction between the parties and their respective officers,
directors, partners,

 

12

 

members, employees and
agents and (ii) waives any further notice of such monitoring or recording.

 

26.       Final and Complete Expression of the Agreement

 

The Agreement constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions between the parties hereto, whether verbal or written, with
respect to such subject matter.

 

 

	
  LIQUID FUNDING, LTD.

  	
  FIELDSTONE MORTGAGE OWNERSHIP
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Marco Montarsolo

  	
   

  	
  By:

  	
  /s/ Mark C. Krebs

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Marco Montarsolo

  	
   

  	
   

  	
  Name:

  	
  Mark C. Krebs

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Alt Director

  	
   

  	
   

  	
  Title:

  	
  Sr. Vice President
  & Treasurer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  12 October 2005

  	
   

  	
   

  	
  Date:

  	
  October 11, 2005

  	
   

  

 

13

 

EXHIBIT A

 

EXCERPT
FROM OFFERING CIRCULAR

 

OF LIQUID
FUNDING, LTD.

 

(A
COMPLETE COPY OF THE OFFERING CIRCULAR WILL BE PROVIDED UPON REQUEST)

 

The occurrence of any of the following events shall
constitute an “Enforcement Event”:

 

(i)            the
occurrence of an “Event of Default” with respect to the Notes of any Series
(subject to any applicable cure period);

 

(ii)           a failure
of the Issuer to make a payment with respect to Commercial Paper which shall
not have been cured within one (1) Business Day;

 

(iii)          the
occurrence of an “LFL Event of Default” under any GIC Transaction (subject to
any applicable cure period);

 

(iv)          the
declaration of an “Early Termination Date” as a result of the occurrence of an
“Event of Default” under any Hedging Transaction where the Issuer is the defaulting
party;

 

(v)           the
occurrence of an “Event of Default” under any Liquidity Facility (subject to
any applicable cure period);

 

(vi)          any Note
shall be rated below “A” or “A2” (as the case may be) by any Rating Agency
which has been engaged by the Issuer to provide a rating on such Note;

 

(vii)         the
occurrence of a Capital Adequacy Failure;

 

(viii)        the
failure of the Interest Rate Neutrality Test to be satisfied for five (5)
consecutive Business Days; or

 

(ix)           the
failure of the Liquidity Sufficiency Test to be satisfied for five (5) consecutive
Business Days.

 

14

 

Annex I-A

 

This Annex I-A forms a
part of the TBMA Master Repurchase Agreement (September 1996 Version) (the “Repurchase
Agreement”) dated as of October 11, 2005 between LIQUID
FUNDING, LTD. (“Buyer”) and FIELDSTONE
MORTGAGE OWNERSHIP CORP. (“Seller”). This Annex I-A shall
apply to all Transactions in which Buyer is the buyer of (i) certain
subordinated commercial mortgage-backed securities (“CMBS”) issued by
securitization trusts (each a “Trust”) with respect to pools of
commercial loans, and/or (ii) certain subordinated residential mortgage-backed
securities (“RMBS”) issued by Trusts with respect to pools of
residential loans, and/or (iii) certain home equity mortgage-backed securities
(“HELS” and “HELX”) 
(“CMBS”, “RMBS”, “HELS” and “HELX” are collectively referred to herein
as “MBS”), from Seller in accordance with the terms described below
(each such Transaction, a “MBS Transaction”). For the avoidance of
doubt, each MBS Transaction between Seller and Buyer will be subject to the
Repurchase Agreement, Annex I, Annex II, this Annex I-A, and the
applicable Confirmation under the Repurchase Agreement (collectively, the “Agreement”),
and each purchased MBS shall constitute a Purchased Security under this
Agreement. If there is any inconsistency between this Annex I-A and either
the Repurchase Agreement or Annex I, this Annex I-A (including the
applicable Confirmation issued hereunder) shall control. Each MBS Transaction
shall constitute a sale by Seller to Buyer of the related MBS. Capitalized
terms used but not defined in this Annex I-A shall have the meanings ascribed
to them in the Repurchase Agreement or Annex I, as applicable.

 

1.                                      Definitions

 

“Affirmative Control”
shall mean, with respect to any purchased CMBS, the ability to exercise the
rights of the Controlling Class (by whatever name denominated in the documents
governing the applicable Trust) with respect to the Trust which issued such CMBS
or otherwise to direct, approve or consent to or vote on specified actions to
be taken with respect to the underlying commercial mortgage loans or the
applicable Trust, or, if such Trust does not provide for a Controlling Class,
to appoint, retain or remove the Trust’s special servicer, such ability to be
exercisable without interruption, regardless of any change in the Controlling
Class or future reductions in the principal balance of the securities issued by
the Trust.

 

“Controlling Class” shall mean, with respect to
each Trust, the class of certificates issued by it that vests the holders in
the aggregate of such certificates with the right to appoint, retain or remove
the Trust’s special servicer (and to otherwise exercise the rights of the
controlling class, however denominated in the issuing Trust’s governing
documentation).

 

2.                                      Sale
and Purchase of the MBS

 

(a) Buyer and Seller may
enter into certain MBS Transactions, subject to the terms of the Agreement,
including the applicable Confirmation. Each MBS Transaction shall be subject to
the approval of Buyer in its sole discretion. Each MBS Transaction shall
constitute a Transaction under the Repurchase Agreement. The aggregate amount
of MBS Transactions with respect to the Agreement outstanding at any time,
together with all Transactions which are not MBS Transactions, shall not exceed
the Maximum Amount as set forth in Annex I to the Repurchase Agreement (“Annex
I”). The Purchase Price and Buyer’s Margin Ratio for each MBS Transaction
shall be determined in accordance with Section 7 of Annex I, and the Pricing
Rate for each MBS Transaction shall be determined in accordance with Section 6
of Annex I.

 

 

(b)  Each offer
by Seller to sell MBS to Buyer in a MBS Transaction (i) shall disclose any
confidentiality agreement or other agreement that might prevent Seller from
disclosing or limit Seller’s ability to disclose information with respect to
the Security subject to such offer to Buyer and (ii) shall include a copy of
any and all such agreements. Seller shall use commercially reasonable efforts
to add Buyer, any entity designated by Buyer and any transferee of an interest
in such Security from any of the foregoing as permitted recipients of any
information which Seller receives or has the right to receive in respect of any
Purchased Security. No later than two (2) Business Days prior to the Purchase
Date, Seller shall provide Buyer with any form of confidentiality agreement
that is required to be used in connection with providing Buyer with such confidential
information.

 

(c) Seller shall deliver
to Buyer all of the Securities proposed to be purchased hereunder, and, if
necessary, a complete set of all transfer documents in form sufficient to allow
transfer and registration of such Purchased Security, to Buyer no later than
the proposed Purchase Date for the relevant MBS Transaction. Seller shall
deliver to Buyer the related prospectus or private placement memorandum and
such other documentation as Buyer shall request no later than two (2) Business
Days prior to the proposed Purchase Date for the relevant MBS Transaction.

 

(d) If an issuer (in the
case of physical Purchased Securities) and/or The Depository Trust Company (in
the case of book-entry Purchased Securities) fails or refuses to transfer to,
or register the Purchased Securities in the name of, Buyer, (i) Buyer shall
have the right to cancel any MBS Transaction with respect to such Purchased
Securities and (ii) Seller agrees to pay to Buyer within five (5) Business Days
of notice (which date shall constitute a Repurchase Date) any Purchase Price
paid by Buyer plus any accrued Price
Differential plus any costs, losses, damages
or fees incurred in connection with any hedge entered into or unwound by Buyer
as a result of such cancellation.

 

3.                                      Repurchase
by Seller

 

(a) All Purchased
Securities with respect to a MBS Transaction under a Confirmation shall be
repurchased by Seller no later than the Termination Date for such MBS
Transaction; provided, however, that if Buyer,
in its sole discretion, enters into a new MBS Transaction with respect to such
Confirmation (including, without limitation, “rolling” any outstanding MBS
Transaction) after such date, the Agreement shall continue to control such MBS
Transactions.

 

(b) On the Termination Date, all Repurchase Prices and
other amounts owed by Seller with respect to a MBS Transaction under the
applicable Confirmation will be due and payable and Seller shall pay all such
amounts to Buyer.

 

4.                                      Control

 

(a)  Seller
acknowledges that Buyer will not enter into a Transaction with respect to a
CMBS in a Ratings Category lower than Ba3/BB-/BB- unless Seller has Affirmative
Control with respect to the Trust which issued such CMBS. Seller shall deliver
to Buyer no later than the Purchase Date for the relevant CMBS such documentation
as Buyer may reasonably request to effect or confirm Buyer’s right to exercise
Affirmative Control with respect to such Trust. Notwithstanding anything to the
contrary herein, for so long as no Event of Default has occurred with respect
to Seller under the Agreement and any other agreement between Seller and Buyer,
Buyer grants Seller a license to exercise Affirmative Control with respect to
each purchased CMBS and pursuant to such license Seller shall have the sole and
exclusive right to exercise Affirmative Control. Immediately upon notice by
Buyer to Seller of the occurrence of an Event of Default with respect to
Seller, the foregoing license shall terminate automatically and all rights of
Affirmative

 

2

 

Control shall automatically re-vest in Buyer until
such time, if any, as such Event of Default is waived by Buyer in its sole
discretion by written notice to Seller. Buyer and Seller shall enter into such
agreements, give such notices and obtain such acknowledgements as may be
necessary or desirable for Seller to have the right to exercise Affirmative
Control prior to the occurrence of any Event of Default and for Buyer to have
the right to exercise Affirmative Control upon the occurrence of such Event of
Default on a Trust-by-Trust basis. This Section 4(a) shall survive any transfer
by Buyer of an interest in (including by way of pledge, sale, hypothecation,
repurchase agreement or other means) a purchased CMBS and shall be binding on
any transferee of the purchased CMBS, and Buyer shall notify any purchaser of
the purchased CMBS of this provision to the extent such transferee would
otherwise have such rights. Seller shall indemnify and hold Buyer harmless from
and against any and all losses, damages, liabilities, obligations, penalties,
judgments and awards arising from or related to claims, and to pay, on demand,
all direct and indirect costs, liabilities and damages incurred by Buyer
(including, without limitation, costs of collection, reasonable third-party
attorneys’ fees, court costs and other expenses arising from or related to the
foregoing, but excluding any actual or alleged diminution in the Market Value
of any purchased CMBS) in connection with any action or failure to take action
by Seller with respect to the foregoing license of Affirmative Control (“Control
Costs”). In each case, whether or not demand has been made therefor, Buyer
may, in its sole discretion, treat the Control Costs as a Margin Deficit
Amount. This indemnity shall survive the termination of this Agreement.

 

(b) If at any time during this Agreement, subject only
to the license described in Section 4(a) above, Buyer does not have Affirmative
Control with respect to any MBS Transaction relating to a CMBS in a Ratings
Category lower than Ba3/BB-/BB-, then (i) Buyer shall have the right to cancel
such Transaction and (ii) Seller agrees to pay to Buyer within five (5)
Business Days of notice (which date shall constitute a Repurchase Date) any
Purchase Price paid by Buyer plus any accrued Price Differential plus any costs, losses, damages or fees incurred in
connection with any hedge entered into or unwound by Buyer as a result of such
cancellation.

 

(c) Seller may not exercise its right to terminate any
Transaction and repurchase Purchased Securities pursuant to Section 9(a) of
Annex I with respect to CMBS which are required by Seller for it to exercise
Affirmative Control with respect to a Trust unless Seller also so accelerates
with respect to all purchased CMBS issued by such Trust.

 

5.                                      Prepayment
of the Underlying MBS

 

Unless otherwise specified in the applicable
Confirmation, in the event of the prepayment of all or a portion of the
outstanding principal amount of any MBS subject to a MBS Transaction by the
applicable Trust, such prepayment shall be treated as a voluntary early
termination (whether in part or in full, as applicable) by Seller of such MBS
Transaction under Section 9 of Annex I and Seller shall pay an Exit Fee in
accordance with Section 9 of Annex I to Buyer with respect to such termination
(a “Prepayment Termination”). The Repurchase Date with respect to any
such MBS Transaction (or portion of a Transaction in the event of a partial
prepayment) shall be considered to be the date on which such MBS securities are
prepaid by the applicable Trust.

 

3

 

6.                                      Seller’s
Obligation to Provide Information

 

Seller shall provide to
Buyer (a) any reports or other written information that Seller provides to its
limited partners, partners, members or equity or residual holders relating to
the Purchased Securities within five (5) Business Days of delivery thereof by
Seller and (b) any material written information received by Seller from the
trustee or the master servicer for any issuer of Purchased Securities,
including, without limitation, watch lists and borrower or periodic summary
property financial reports but excluding (i) any periodic bond remittance
reports that are otherwise available to Buyer directly from the applicable trustee
and (ii) any loan files corresponding to loans that have been transferred from
the applicable master servicer to the applicable special servicers, within two
(2) Business Days of receipt thereof by Seller (Seller shall make items (b)(i)
and (b)(ii) available to Buyer upon Buyer’s request). Seller shall notify Buyer
of any material information relating to any mortgage loans underlying any
Purchased Securities and any material correspondence that Seller receives with
respect to any such underlying mortgage loans, including, without limitation,
information that could materially affect the performance or Market Value of any
Purchased Security. Seller shall make such notification within three (3)
Business Days of Seller’s receipt of such information (except in the case of
information respecting the timing and amount of receipt of loan payments,
Seller shall make such notification no earlier than is permitted under the
issuing trust’s governing documentation). Seller’s asset management and credit
surveillance staff shall be made reasonably available to Buyer to respond to
periodic inquiries from Buyer regarding the status of the Purchased Securities
and the status of assets underlying the Purchased Securities.

 

7.                                      REMIC
Status Required

 

At all times (i) each pool
of mortgage loans relating to a Purchased Security subject to a MBS Transaction
shall be qualified under sections 860A through 860G of the Internal Revenue
Code as a real estate mortgage investment conduit (“REMIC”), or (ii) the
Purchased Security shall include an opinion that it should be treated as debt
for tax purposes. If at any time such Purchased Security does not qualify for
either (i) or (ii) in the preceding sentence of this Section 7, then the Market
Value of such Purchased Security shall be deemed to be zero.

 

 

	
  LIQUID FUNDING, LTD.

  	
   

  	
  FIELDSTONE MORTGAGE OWNERSHIP
  CORP.

  	 

	
   

  	
   

  	
   

  	 

	
  By:

  	
  /s/ Marco Montarsolo

  	
   

  	
   

  	
  By:

  	
  /s/ Mark C. Krebs

  	
   

  	 

	
   

  	
  Name:

  	
  Marco Montarsolo

  	
   

  	
   

  	
   

  	
  Name:

  	
  Mark C. Krebs

  	
   

  	 

	
   

  	
  Title:

  	
  Alt Director

  	
   

  	
   

  	
   

  	
  Title:

  	
  Sr. Vice President
  & Treasurer

  	
   

  
	
   

  	
  Date:

  	
  12 October 2005

  	
   

  	
   

  	
   

  	
  Date:

  	
  October 11, 2005

  	
   

  
														

 

4Exhibit 10.24(B)

 

GUARANTY

 

GUARANTY,
dated as of October 11, 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 LIQUID FUNDING, LTD. (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 11, 2005 (collectively, the “Agreement”); and

 

WHEREAS, it was a condition to the Beneficiary
agreeing to enter into the 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 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 Agreement.

 

Section 2.               Guarantee.
The Guarantor hereby unconditionally, irrevocably and absolutely guarantees to
the Beneficiary and its successors and assigns: (i) the due and punctual
performance of all duties, liabilities and obligations of FMOC under the
Agreement; and (ii) the full and prompt payment of all amounts due and owing by
FMOC under the Agreement, as and when they shall become due thereunder
(collectively, (i) and (ii) being 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 Agreement and
FMOC shall not have delivered full and timely payment to the Beneficiary as
required by the 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 three (3) Business Days after such
notice is received. The Guarantor shall perform any non-monetary Guaranteed
Obligations as soon as reasonably practicable after receipt of written demand
therefor by the Beneficiary.

 

 

Section 3.               Obligations
Unconditional. The obligations of the Guarantor under Section 2 hereof are
absolute, irrevocable and unconditional irrespective of the value, genuineness,
validity, regularity or enforceability of the 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 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 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 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).

 

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.               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 6.               Remedies.
The Guarantor agrees that, as between the Guarantor and the Beneficiary, the
obligations of FMOC under the 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.

 

Section 7.               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 8.               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 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
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 9.               General
Limitation on Guaranteed Obligations. In any action or proceeding with
respect to the Guarantor involving any state, corporate law, or any state or
Federal bankruptcy, insolvency, reorganization or other law affecting the
rights of creditors generally, if the Guaranteed Obligations would otherwise be
held or determined to be void, invalid or unenforceable, or subordinated to the
claims of any other creditors, on account of the amount of the Guarantor’s
liability hereunder, then, notwithstanding any other provision hereof to the
contrary, the amount of such liability shall, without any further action by the
Guarantor or

 

 

any other Person, be automatically limited
and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.

 

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

 

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;

 

 

(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
three (3) Business Days after notice from the Beneficiary.

 

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

 

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 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 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
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

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 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; provided that neither of the Beneficiary nor the Guarantor
may assign all or any part of the Guaranteed Obligations or this Guaranty
without the prior written consent of the other party, which consent shall not
be unreasonably withheld. This Guaranty is not intended for the benefit of any
Person other than the Beneficiary and its successors and permitted assigns, and
shall not confer or be deemed to confer upon any other Person any benefits,
rights or remedies hereunder.

 

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;

 

(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 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 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. THE GUARANTOR (AND, EXCEPT AS OTHERWISE PROVIDED FOR IN THE
AGREEMENT, ANY OF ITS AFFILIATES, OFFICERS, DIRECTORS, MEMBERS, EMPLOYEES,
ATTORNEYS, CONSULTANTS OR AGENTS) SHALL NOT BE LIABLE FOR SPECIAL, INDIRECT,
INCIDENTAL, PUNITIVE 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.             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]

 

 

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 11, 2005

  
					

 

 

Accepted
and Acknowledged:

 

	
  LIQUID FUNDING, LTD.,
  as Beneficiary

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Marco Montarsolo

  	
   

  
	
   

  	
  Name: Marco Montarsolo

  
	
   

  	
  Title: Alt Director

  
	
   

  	
  Date: 12 October 2005

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