Document:

Series 2006-A Supplement to Base Indenture

 Exhibit 4.2 
 CARMEL MOUNTAIN FUNDING TRUST, 
 as Issuer 
 and 
 DEUTSCHE BANK TRUST COMPANY AMERICAS, 
 as Indenture Trustee and Paying Agent 
  

 SERIES 2006-A SUPPLEMENT 
 dated as of August 23, 2006 
 to 
 BASE INDENTURE 
 dated as of May 10, 2005 
  

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page
	 ARTICLE 1 Definitions
	  	1
		
	 ARTICLE 2 SERIES 2006-A SUBORDINATED NOTES
	  	4
			
	 Section 2.1
	  	Payment of Principal.	  	4
			
	 Section 2.2
	  	Payment of Interest.	  	4
			
	 Section 2.3
	  	Calculation of Interest.	  	5
			
	 Section 2.4
	  	Optional Repurchase.	  	6
			
	 Section 2.5
	  	Final Scheduled Payment; Early Amortization.	  	7
			
	 Section 2.6
	  	Series 2006-A Payment Account.	  	8
		
	 ARTICLE 3 FORM AND TRANSFER RESTRICTIONS OF SERIES 2006-A NOTES
	  	9
			
	 Section 3.1
	  	Restricted Global Series 2006-A Subordinated Notes; Definitive Notes	  	9
			
	 Section 3.2
	  	2006-A Subordinated Note Sold Pursuant to Regulation S.	  	9
			
	 Section 3.3
	  	Transfer and Exchange of Subordinated Notes.	  	10
		
	 ARTICLE 4 GENERAL
	  	10
			
	 Section 4.1
	  	Information.	  	10
			
	 Section 4.2
	  	Exhibits.	  	10
			
	 Section 4.3
	  	Ratification of Base Indenture.	  	10
			
	 Section 4.4
	  	Counterparts.	  	10
			
	 Section 4.5
	  	Governing Law.	  	11
			
	 Section 4.6
	  	Amendments.	  	11
			
	 Section 4.7
	  	Discharge of Indenture.	  	11
			
	 Section 4.8
	  	Notice to Rating Agencies.	  	11
			
	 Section 4.9
	  	Action by Direction of Required Subordinated Noteholders.	  	11
			
	 Section 4.10
	  	Protections Under Base Indenture.	  	11
			
	 Section 4.11
	  	Statement of Intent.	  	12
			
	 Section 4.12
	  	No Recourse.	  	12
			
	 Exhibit A:
	  	Form of Restricted Global Series 2006-A Subordinated Note	  	
	 Exhibit B:
	  	Form of Definitive Note Series 2006-A Subordinated Note	  	

  

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 SERIES 2006-A SUPPLEMENT, dated as of August 23, 2006 (this “Supplement”) between
CARMEL MOUNTAIN FUNDING TRUST a statutory trust established under the laws of Delaware (the “Issuer”), DEUTSCHE BANK TRUST COMPANY AMERICAS, a, New York banking corporation as indenture trustee (together with its successors in trust
thereunder as provided in the Base Indenture referred to below, the “Indenture Trustee”), and DEUTSCHE BANK TRUST COMPANY AMERICAS, as paying agent for the benefit of the Series 2006-A Subordinated Noteholders (the “Paying
Agent”), to the Base Indenture, dated as of May 10, 2005, as amended by Amendment No. 1 thereto, dated as of August 23, 2006 between the Issuer and the Indenture Trustee (as further amended, modified or supplemented from time
to time, exclusive of Supplements creating a new Series of Subordinated Notes, the “Base Indenture”). 
 PRELIMINARY
STATEMENT 
 WHEREAS, Sections 2.2, 2.3 and 12.1 of the Base Indenture provide, among other things, that the Issuer and
the Indenture Trustee may at any time and from time to time enter into a supplement to the Base Indenture for the purpose of authorizing the issuance of one or more Series of Subordinated Notes. 
 NOW, THEREFORE, the parties hereto agree as follows: 
 DESIGNATION 
 There is hereby created a Series of Subordinated Notes to be issued pursuant to the Base Indenture and this
Supplement and such Series of Subordinated Notes shall be designated as Variable Rate Subordinated Notes, Series 2006-A (the “Series 2006-A Subordinated Notes”). The Series 2006-A Subordinated Notes shall be issued in an Initial
Principal Amount of $40,000,000. 
 The proceeds from the sale of the Series 2006-A Subordinated Notes shall be deposited in the Collateral
Account and shall be used by the Issuer to acquire Mortgage Loans from the Seller, to invest in Eligible Investments or to pay any amounts due and owing on the Issuer’s outstanding obligations in accordance with the Program Documents.

 ARTICLE 1 
 Definitions 
 All capitalized terms not otherwise defined herein are defined in the Definitions List attached to the Amended
and Restated Security Agreement, dated as of August 23, 2006 (the “Security Agreement”) between the Issuer and Deutsche Bank Trust Company Americas, as Collateral Agent, as Schedule I thereto. All Article, Section
or Subsection references herein shall refer to Articles, Sections or Subsections of the Base Indenture, except as otherwise provided herein. Unless otherwise stated herein or the context otherwise requires or if such term is otherwise defined in the
Security Agreement, each capitalized term used or defined herein shall relate only to the Series 2006-A Subordinated Notes and not to any other Series of Subordinated Notes issued by the Issuer. 
  

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 The following words and phrases shall have the following meanings with respect to the Series 2006-A
Subordinated Notes and the definitions of such terms are applicable to the singular as well as the plural form of such terms and to the masculine as well as the feminine and neuter genders of such terms: 
 “LIBOR” shall be determined in accordance with Section 2.3(b)(i) hereof. 
 “LIBOR Determination Date” has the meaning specified in Section 2.3(b)(i) hereof. 
 “Optional Repurchase” has the meaning specified in Section 2.4 of this Supplement. 
 “Paying Agent” has the meaning specified in the initial paragraph hereto. 
 “Qualified Institutional Buyer” has the meaning specified in Section 3.1 hereof. 
 “Reference Banks” shall have the meaning specified in Section 2.3(b)(ii) hereof. 
 “Restricted Global Series 2006-A Subordinated Note” has the meaning specified in Section 3.1 hereof. 
 “Series 2006-A Carry-Over Interest Deficiency” means for each Payment Date an amount equal to the excess, if any, of (i) the Series
2006-A Carry-Over Interest Shortfall Amount for such Payment Date, over (ii) all amounts paid to the Series 2006-A Subordinated Noteholders in respect of the Series 2006-A Carry-Over Interest Shortfall Amount on such Payment Date.

 “Series 2006-A Carry-Over Interest Shortfall Amount “ means for each Payment Date an amount equal to the product of
(i) the aggregate Principal Amount Charge-Offs allocated to the Series 2006-A Subordinated Notes on such Payment Date, plus the Series 2006-A Carry-Over Interest Deficiency on the preceding Payment Date (after giving effect to all
Principal Amount Charge-Offs and Principal Amount Reinstatements made on such preceding Payment Date in respect of the Series 2006-A Subordinated Notes), (ii) the applicable Series 2006-A Subordinated Note Rate for the preceding Series 2006-A
Interest Period and (iii) the actual number of days in such Series 2006-A Interest Period divided by 360. 
 “Series 2006-A
Closing Date” means August 23, 2006. 
 “Series 2006-A Collateral” means the Collateral and the Series 2006-A
Payment Account Collateral. 
 “Series 2006-A Final Scheduled Payment Date” means August 25, 2011. 
 “Series 2006-A Initial Purchaser” means Lehman Brothers Inc. 
 “Series 2006-A Interest Amount” means for each Payment Date an amount equal to the product of (i) the Series 2006-A Principal
Amount plus the Series 2006-A Interest 

  

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Shortfall, each as of the preceding Payment Date (after giving effect to all payments and allocations made on such prior Payment Date or, with respect to the
first Payment Date for the Series 2006-A Subordinated Notes, on the Series 2006-A Closing Date), (ii) the applicable Series 2006-A Subordinated Note Rate for the preceding Series 2006-A Interest Period and (iii) the actual number of days
in such Series 2006-A Interest Period divided by 360. 
 “Series 2006-A Interest Period” means, with respect to any Payment
Date, the period from and including the immediately preceding Payment Date (or the Series 2006-A Closing Date in the case of the first Payment Date) to and including the day immediately preceding such Payment Date. 
 “Series 2006-A Interest Shortfall” means the excess, if any of (a) the Series 2006-A Interest Amount over (b) the amount paid
to the Series 2006-A Subordinated Noteholders in respect of the Series 2006-A Interest Amount for the related Series 2006-A Interest Period. 
 “Series 2006-A Payment Account” has the meaning specified in Section 2.6(a) hereof. 
 “Series
2006-A Payment Account Collateral” has the meaning specified in Section 2.6(d) hereof. 
 “Series 2006-A
Principal Amount” shall be an amount equal to (i) the Initial Principal Amount of the Series 2006-A Subordinated Notes issued on the Series 2006-A Closing Date, less (ii) the aggregate amount of any Principal Amount
Charge-Offs allocated to the Series 2006-A Subordinated Notes, plus (iii) the aggregate amount of any Principal Amount Reinstatements allocated to the Series 2006-A Subordinated Notes, less (iv) any amounts distributed to
Series 2006-A Subordinated Noteholders in respect of the Series 2006-A Principal Amount thereof. 
 “Series 2006-A Required
Subordinated Noteholders” means Series 2006-A Subordinated Noteholders holding in excess of 50% of the Series 2006-A Principal Amount (excluding Series 2006-A Subordinated Notes held by any Seller, the Servicer or Affiliate of any Seller or
the Servicer). 
 “Series 2006-A Subordinated Note Calculation Agent” means, with respect to the Series 2006-A Subordinated
Notes, Deutsche Bank Trust Company Americas, as agent for purposes of calculating the Series 2006-A Subordinated Note Rate, or its designee. 
 “Series 2006-A Subordinated Note Rate” means a per annum rate equal to LIBOR plus 1.30%. 
 “Series
2006-A Subordinated Noteholders” shall mean the holders of the Series 2006-A Subordinated Notes. 
 “Series 2006-A
Subordinated Notes” means any one of the Variable Rate Subordinated Notes, Series 2006-A, executed by the Issuer and authenticated by or on behalf of the Indenture Trustee, substantially in the form of Exhibit A or Exhibit
B. 
  

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 “Subordinated Note Registrar” means Deutsche Bank Trust Company Americas, or any
successor subordinated note registrar. 
 “Subordinated Note Representative” has the meaning specified in
Section 2.5(c) hereof. 
 “Supplement” has the meaning set forth in the preamble. 
 “Transfer” has the meaning specified in Section 3.3 hereof. 
 “Void Transfer” has the meaning specified in Section 3.3 hereof. 
 ARTICLE 2 
 SERIES 2006-A SUBORDINATED NOTES 
 With respect to the Series 2006-A Subordinated Notes, the following shall apply: 
 Section 2.1 Payment of Principal. 
 The Issuer will issue the Series 2006-A Subordinated Notes in the forms set forth as Exhibits A and B to this Supplement. The Series 2006-A Subordinated Notes will be issued in an aggregate Series 2006-A Principal Amount of $40,000,000.
Unless a Security Agreement Event of Default or an Indenture Event of Default that results in the cessation of the issuance of the Secured Liquidity Notes or Term Notes occurs or an Optional Repurchase occurs, no Series 2006-A Principal Amount will
be payable on the Series 2006-A Subordinated Notes until the Series 2006-A Final Scheduled Payment Date; provided, however, that, for purposes of an Indenture Event of Default, until the Senior Notes are paid in full, no Series 2006-A
Principal Amount will be due or become due. 
 Section 2.2 Payment of Interest. 
 (a) Interest will accrue during each Series 2006-A Interest Period on the Series 2006-A Principal Amount plus the Series 2006-A Interest Shortfall, each
as of the preceding Payment Date, at a per annum rate equal to the Series 2006-A Subordinated Note Rate, commencing on the Series 2006-A Closing Date; provided, however, that, for purposes of an Indenture Event of Default, until
the Senior Notes are paid in full, no interest will be due or become due. 
 (b) The Paying Agent will distribute from funds available
therefor in the Series 2006-A Payment Account pro rata to Series 2006-A Subordinated Noteholders the Series 2006-A Interest Amount. The Series 2006-A Interest Amount will be payable on each Payment Date to the holders of the Series
2006-A Subordinated Notes as of the close of business on the immediately preceding Note Record Date, commencing September 25, 2006 and ending on the Series 2006-A Final Scheduled Payment Date. In the event that the Paying Agent or its
designated agent receives funds in an amount less than the Series 2006-A Interest Amount, additional interest on the Series 2006-A Interest Shortfall shall accrue at the applicable Series 2006-A Subordinated Note Rate. The Series 2006-A Interest
Shortfall and additional interest on 

  

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the Series 2006-A Interest Shortfall shall be paid to Series 2006-A Subordinated Noteholders in accordance with the Priority of Payments. 
 (c) In the event that the Series 2006-A Principal Amount is reduced by any Principal Amount Charge Off, additional interest on the aggregate Principal
Amount Charge-Offs allocated to the Series 2006-A Subordinated Notes and the Series 2006-A Carry-Over Interest Deficiency, each as of the preceding Payment Date, shall accrue at the applicable Series 2006-A Subordinated Note Rate. The related Series
2006-A Carry Over Interest Shortfall Amount and the Series 2006-A Carry Over Interest Deficiency shall be paid to the Series 2006-A Subordinated Noteholders in accordance with the Priority of Payments. 
 Section 2.3 Calculation of Interest. 
 (a) For purposes of calculating the Series 2006-A Subordinated Note Rate, Deutsche Bank Trust Company Americas is hereby appointed as, and hereby accepts such appointment and agrees to perform the duties of, the Series 2006-A Subordinated
Note Calculation Agent. The Series 2006-A Subordinated Note Calculation Agent may be removed by the Series 2006-A Required Subordinated Noteholders at any time. If the Series 2006-A Subordinated Note Calculation Agent is unable or unwilling to act
as such or is removed by the Series 2006-A Required Subordinated Noteholders, or if the Series 2006-A Subordinated Note Calculation Agent fails to determine the Series 2006-A Subordinated Note Rate, the Series 2006-A Interest Amount, the Series
2006-A Interest Shortfall, the Series 2006-A Carry Over Interest Shortfall Amount and the Series 2006-A Interest Deficiency Amount for any Series 2006-A Interest Period, the Series 2006-A Required Subordinated Noteholders will promptly appoint as a
replacement Series 2006-A Subordinated Note Calculation Agent a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market. The Series 2006-A Subordinated Note Calculation Agent may not resign its
duties without a successor having been duly appointed. 
 (b) LIBOR shall be determined by the Series 2006-A Subordinated Note Calculation
Agent in accordance with the following provisions: 
 (i) On the second Business Day prior to the commencement of a Series
2006-A Interest Period (each such day, a “LIBOR Determination Date”), “LIBOR” shall equal the rate, as obtained by the Series 2006-A Subordinated Note Calculation Agent, for one-month Eurodollar deposits which appears on
Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 2000 Interest Rate and Currency Exchange Definitions) or such other page as may replace Telerate Page 3750, as it relates to U.S. dollars, as of 11:00 a.m.
(London time) on such LIBOR Determination Date. 
 (ii) If, on any LIBOR Determination Date, such rate does not appear on
Telerate Page 3750, the Series 2006-A Subordinated Note Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks to leading banks in the London interbank market for one-month Eurodollar deposits in an
amount determined by the Series 2006-A Subordinated Note Calculation Agent by reference to requests for quotations as of approximately 

  

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11:00 a.m. (London time) on the LIBOR Determination Date made by the Series 2006-A Subordinated Note Calculation Agent to the Reference Banks. If, on any
LIBOR Determination Date, at least two (2) of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one (1) or none of the Reference Banks provide
such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in The City of New York selected by the Series 2006-A Subordinated Note Calculation Agent are quoting on the relevant LIBOR Determination
Date for one-month Eurodollar deposits in an amount determined by the Series 2006-A Subordinated Note Calculation Agent by reference to the principal London offices of leading banks in the London interbank market; provided, however,
that if the Series 2006-A Subordinated Note Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, “LIBOR” shall be LIBOR as determined on the previous LIBOR
Determination Date. As used herein, “Reference Banks” means four major banks in the London interbank market selected by the Series 2006-A Subordinated Note Calculation Agent. 
 As soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date, but in no event later than 11:00 a.m. (London time) on the Business
Day immediately following each LIBOR Determination Date, the Series 2006-A Subordinated Note Calculation Agent will cause the Series 2006-A Subordinated Note Rate, the Series 2006-A Interest Amount, the Series 2006-A Interest Shortfall, the Series
2006-A Carry Over Interest Shortfall Amount and the Series 2006-A Carry Over Interest Deficiency for the next Series 2006-A Interest Period payable in respect of the Series 2006-A Subordinated Notes on the related Payment Date to be given to the
Issuer and the Paying Agent. The Series 2006-A Subordinated Note Calculation Agent will also specify to the Issuer the quotations upon which the Series 2006-A Subordinated Note Rate is based, and in any event the Series 2006-A Subordinated Note
Calculation Agent shall notify the Issuer before 5:00 p.m. (London time) on each LIBOR Determination Date that either: (i) it has determined or is in the process of determining the Series 2006-A Subordinated Note Rate and the Series 2006-A
Interest Amount or (ii) it has not determined and is not in the process of determining the Series 2006-A Subordinated Note Rate and the Series 2006-A Interest Amount, together with its reasons therefor. For the sole purpose of calculating the
Series 2006-A Subordinated Note Rate, “Business Day” shall be any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. 
 Section 2.4 Optional Repurchase. 
 In connection with the termination of the Issuer’s Secured Liquidity Notes program (other than a termination through the replacement of such program with a facility having substantially similar terms; any such replacement facility may
be deemed to have substantially similar terms even though interest rate spreads may differ), and repayment of all of the Senior Notes and upon satisfaction of the requirements included in the Program Documents (including the payment of any amounts
due and owing to the Senior Secured Parties), the Series 2006-A Subordinated Notes, together with all other outstanding Series of Subordinated Notes, may be repurchased (an “Optional Repurchase”), in whole but not in part, by the
Issuer on any 

  

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Payment Date upon not more than sixty (60) nor less than thirty (30) days’ prior notice to the Subordinated Noteholders at a price equal to
the aggregate outstanding Principal Amount thereof together with any accrued and unpaid interest thereon, any Interest Shortfall and interest thereon to the date of repurchase and the aggregate amount of all Principal Amount Charge-Offs that have
not been reinstated (unless each holder of the Series 2006-A Subordinated Notes waives the payment of such Principal Amount Charge-Offs); provided, that the Issuer shall effect an Optional Repurchase at the written request of any Swap Counterparty
given no earlier than the sixtieth (60th) day following the date that the last Mortgage Loan has been sold and all the Senior Notes have been satisfied following a Termination Event at a purchase price equal to the aggregate outstanding
Principal Amount of the Subordinated Notes of all Series on such Payment Date, plus accrued and unpaid interest on the unpaid aggregate Principal Amount of the Subordinated Notes of all Series and any Interest Shortfalls and interest thereon to the
date of repurchase. 
 Section 2.5 Final Scheduled Payment; Early Amortization. 
 (a) The Series 2006-A Principal Amount, plus the aggregate amount of any Principal Amount Charge-Offs allocated to the Series 2006-A Subordinated
Notes which have not been reinstated, will be payable in full on the Series 2006-A Final Scheduled Payment Date, as the case may be. 
 (b)
Upon the occurrence of a Security Agreement Event of Default or an Indenture Event of Default that results in the cessation of the issuance of the Secured Liquidity Notes or an Optional Repurchase, the Issuer will be prohibited from purchasing
additional Mortgage Loans and, in such case, the principal collections on Mortgage Loans, the proceeds of sales of Mortgage Loans and the amounts received from the Swap Counterparty will be available to be applied to the repayment of all Series of
Subordinated Notes, subject to the Priority of Payments set forth in Section 7.02(b) of the Security Agreement. 
 (c) In
connection with any such Security Agreement Event of Default or Indenture Event of Default , upon a sale or disposition of a Defaulted Loan, a Delinquent Loan or a portfolio of Defaulted Loans and/or Delinquent Loans (each, a
“Portfolio”), the Collateral Agent shall use commercially reasonable efforts to obtain three (3) or more bids for each such Defaulted Loan, Delinquent Loan or Portfolio; provided, however, that such bids shall be
received within ten (10) Business Days of one another. The Collateral Agent shall promptly notify the holder of the largest Principal Amount of all Series of Subordinated Notes or, if no single holder holds the largest Principal Amount of all
Series of Subordinated Notes, such person as the Required Subordinated Noteholders shall designate (the “Subordinated Note Representative”), of the highest bid price obtained. The Subordinated Note Representative shall have the
option to purchase such Defaulted Loans, Delinquent Loans or Portfolio within certain time periods at a price at least equal to 102% of such highest bid price but in no event more than the amount of the Outstanding Purchase Price of such Mortgage
Loan or Mortgage Loans (plus accrued interest thereon) after giving effect to amounts payable by the Swap Counterparty with respect to the sale of such Mortgage Loan or Mortgage Loans. The Subordinated Note Representative will have certain time
periods specified in the Security Agreement within which to elect to purchase, and to pay for, such Defaulted Loans, Delinquent Loans or Portfolio. In the event that the Subordinated Note Representative fails to elect to purchase or pay for such

  

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Defaulted Loans, Delinquent Loans or Portfolio within the applicable time period, the Collateral Agent shall have the right to sell such Defaulted Loans,
Delinquent Loans or Portfolio to the highest bidder. 
 Section 2.6 Series 2006-A Payment Account. 
 (a) Establishment of Series 2006-A Payment Account. The Issuer shall establish and maintain in the name of the Indenture Trustee for the benefit of
the Series 2006-A Subordinated Noteholders, or cause to be established and maintained, a segregated non-interest bearing trust account (the “Series 2006-A Payment Account”), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Series 2006-A Subordinated Noteholders. The Series 2006-A Payment Account will not be subjected to the lien of the Security Agreement. The Series 2006-A Payment Account shall be maintained
(i) with a Qualified Institution, or (ii) as a segregated trust account with the corporate trust department of a depository institution or trust company having corporate trust powers and acting as Indenture Trustee for funds deposited in
the Series 2006-A Payment Account; provided that, if at any time such Qualified Institution is no longer a Qualified Institution or the credit rating of any securities issued by such depositary institution or trust company shall be reduced to
below “BBB-“ by S&P or “Baa3” by Moody’s, then the Issuer shall, within 30 days of such reduction, establish a new Series 2006-A Payment Account with a new Qualified Institution. If the Series 2006-A Payment Account
is not maintained in accordance with the previous sentence, the Issuer shall establish a new Payment Account, within ten (10) Business Days after obtaining knowledge of such fact, which complies with such sentence, and shall instruct the
Indenture Trustee in writing to transfer all cash and Eligible Investments from the non-qualifying Series 2006-A Payment Account into the new Series 2006-A Payment Account. Initially, the Series 2006-A Payment Account will be established with the
Indenture Trustee. 
 (b) Administration of the Series 2006-A Payment Account. The Indenture Trustee, at the written instruction of
the Servicer, may instruct the institution maintaining the Series 2006-A Payment Account to invest funds on deposit in the Series 2006-A Payment Account from time to time in Eligible Investments; provided, however, that any such
Eligible Investment shall mature not later than the Business Day prior to the Payment Date following the date on which such funds were received, unless any Eligible Investment held in the Series 2006-A Payment Account is held with the Indenture
Trustee, then such investment may mature on such Payment Date and such funds shall be available for withdrawal on or prior to such Payment Date. All such Eligible Investments will be credited to the Series 2006-A Payment Account. 
 (c) Earnings from Series 2006-A Payment Account. All interest and earnings (net of losses and investment expenses) paid on funds on deposit in the
Series 2006-A Payment Account shall be deemed to be on deposit and available for distribution. 
 (d) Series 2006-A Payment Account
Constitutes Additional Collateral for Series 2006-A Subordinated Notes. In order to secure and provide for the repayment and payment of the Issuer’s obligations with respect to the Series 2006-A Subordinated Notes, the Issuer hereby grants
a security interest in and assigns, pledges, grants, transfers and sets over to the Paying Agent, for the benefit of the Series 2006-A Subordinated Noteholders, all of the Issuer’s right, title and interest in and to the following (whether now
or hereafter existing or 

  

 8 

 
acquired): (i) the Series 2006-A Payment Account, including any security entitlement thereto; (ii) all funds on deposit therein from time to time;
(iii) all certificates and instruments, if any, representing or evidencing any or all of the Series 2006-A Payment Account or the funds on deposit therein from time to time; (iv) all Eligible Investments made at any time and from time to
time with monies in the Series 2006-A Payment Account, whether constituting securities, instruments, general intangibles, investment property, financial assets or other property; (v) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or in exchange for the Series 2006-A Payment Account, the funds on deposit therein from time to time or the Eligible Investments made with such funds; and (vi) all
proceeds of any and all of the foregoing, including, without limitation, cash (the items in the foregoing clauses (i) through (vi) are referred to, collectively, as the “Series 2006-A Payment Account
Collateral”). The Paying Agent shall possess all right, title and interest in all funds on deposit from time to time in the Series 2006-A Payment Account and in all proceeds thereof, and shall be the only person authorized to originate
entitlement orders in respect of the Series 2006-A Payment Account. The Series 2006-A Payment Account Collateral shall be under the sole dominion and control of the Paying Agent for the benefit of the Series 2006-A Subordinated Noteholders.

 ARTICLE 3 
 FORM AND
TRANSFER RESTRICTIONS OF SERIES 2006-A NOTES 
 Section 3.1 Restricted Global Series 2006-A Subordinated Notes; Definitive
Notes 
 The Series 2006-A Subordinated Notes sold in the United States to persons who are qualified institutional buyers within the
meaning of, and in reliance on, Rule 144A under the Securities Act (“Qualified Institutional Buyers”) who are also “qualified purchasers” within the meaning of the Investment Company Act (“Qualified
Purchasers”) will be issued in book-entry form and represented by one or more permanent global notes without interest coupons (each, a “Restricted Global Series 2006-A Subordinated Note”), substantially in the form set
forth in Exhibit A hereto, with such legends as may be applicable thereto as set forth in the Base Indenture, deposited with a custodian for, and registered in the name of Cede & Co. as nominee of DTC, duly executed by the Issuer and
authenticated by the Indenture Trustee in the manner set forth in Section 2.7 of the Base Indenture. Beneficial interests in a Restricted Global Series 2006-A Subordinated Note will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its direct and indirect participants. 
 Section 3.2 2006-A Subordinated Note Sold Pursuant to
Regulation S. 
 The Series 2006-A Subordinated Notes sold outside the United States in reliance on Regulation S under the Securities
Act shall be issued in definitive, full registered, certificated form without interest coupons, substantially in the form set forth in Exhibit B hereto, duly executed by the Issuer and authenticated by the Indenture Trustee in the manner set
forth Section 2.7 of the Base Indenture. 
  

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 Section 3.3 Transfer and Exchange of Subordinated Notes. 
 No Series 2006-A Subordinated Note may be issued, sold, transferred, assigned, participated, pledged, or otherwise disposed of (any such act, a
“Transfer”) to any Person except in accordance with the provisions of the Base Indenture and this Indenture Supplement and any attempted Transfer in violation of this Section shall be null and void (each, a “Void
Transfer”). If a Transfer of a Series 2006-A Subordinated Note is permitted pursuant to the Base Indenture and this Supplement, a transferee of a Series 2006-A Subordinated Note shall become a Subordinated Noteholder, and shall be entitled
to the rights and subject to the obligations of a Subordinated Noteholder under the Base Indenture and this Supplement upon such transferee’s acceptance of a Series 2006-A Subordinated Note duly registered in such transferee’s name
pursuant to this Section. 
 ARTICLE 4 
 GENERAL 
 Section 4.1 Information. 
 The Indenture Trustee, upon the written request of any Series 2006-A Subordinated Noteholder, shall provide to such Series 2006-A Subordinated Noteholder,
or its designated agent, copies of all requested information previously furnished to the Indenture Trustee or the Issuer pursuant to the Program Documents, as such information relates to the Series 2006-A Subordinated Notes or the Series 2006-A
Collateral. 
 Section 4.2 Exhibits. 
 The following exhibits attached hereto supplement the exhibits included in the Base Indenture. 
 Exhibit A
Form of Restricted Global Series 2006-A Subordinated Note 
 Exhibit B Form of Definitive Note 
 Section 4.3 Ratification of Base Indenture. 
 As supplemented by this Supplement, the Base Indenture is in all respects ratified and confirmed and the Base Indenture as so supplemented by this Supplement shall be read, taken, and construed as one and the same
instrument. 
 Section 4.4 Counterparts. 
 This Supplement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.

  

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 Section 4.5 Governing Law. 
 This Supplement shall be construed in accordance with the law of the State of New York (without giving effect to the provisions thereof regarding
conflicts of laws other than Section 5-1401 of the New York General Obligations Law), and the obligations, rights and remedies of the parties hereto shall be determined in accordance with such law. 
 Section 4.6 Amendments. 
 This
Supplement may be modified or amended from time to time in accordance with the terms of the Base Indenture; provided, however, that if, pursuant to the terms of the Base Indenture or this Supplement, the consent of the Series 2006-A
Required Subordinated Noteholders is required for an amendment or modification of this Supplement, such requirement shall be satisfied if such amendment or modification is consented to by the Series 2006-A Required Subordinated Noteholders.

 Section 4.7 Discharge of Indenture. 
 Notwithstanding anything to the contrary contained in the Base Indenture, no discharge of the Indenture pursuant to Section 11.1(b) of the Base Indenture will be effective as to the Series 2006-A
Subordinated Notes without the consent of the Series 2006-A Required Subordinated Noteholders. 
 Section 4.8 Notice to Rating
Agencies. 
 The Indenture Trustee shall provide to each Rating Agency a copy of each notice, opinion of counsel, certificate,
amendment or other item delivered to, or required to be provided by, the Indenture Trustee pursuant to this Supplement or any other Program Document. The Indenture Trustee makes this covenant as a matter of courtesy and accommodation only and shall
not be liable to any Person for any failure to comply therewith. 
 Section 4.9 Action by Direction of Required Subordinated
Noteholders. 
 Subject to Section 10.1 of the Base Indenture, the Indenture Trustee agrees that, so long as no Event of
Default shall have occurred and be continuing with respect to any Series of Subordinated Notes other than the Series 2006-A Subordinated Notes, it shall not exercise any rights or remedies available to it as a result of the occurrence of an Event of
Default with respect to the Series 2006-A Subordinated Notes until the Indenture Trustee has obtained the written direction of the Series 2006-A Required Subordinated Noteholders in accordance with the terms of the Indenture. 
 Section 4.10 Protections Under Base Indenture. 
 Deutsche Bank Trust Company Americas, as Paying Agent, Subordinated Note Registrar and Series 2006-A Subordinated Note Calculation Agent hereunder, shall have all of the protections, etc., of the Indenture Trustee
under Section 10 of the Base Indenture. 
  

 11 

 Section 4.11 Statement of Intent. 
 The Issuer, the Indenture Trustee and each Holder of a Series 2006-A Subordinated Note intends, by its acceptance of a Series 2006-A Subordinated Note, to
treat such Series 2006-A Subordinated Note as indebtedness for all United States federal, state and local income tax purposes. 
 Section
4.12 No Recourse. 
 It is expressly understood and agreed by the parties hereto that (a) this Agreement is executed and
delivered by U.S. Bank Trust National Association, not individually or personally but solely as Owner Trustee of the Carmel Mountain Funding Trust, in the exercise of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the Carmel Mountain Funding Trust is made and intended not as personal representations, undertakings and agreements by U.S. Bank Trust National Association but is made and
intended for the purpose of binding only the Carmel Mountain Funding Trust, (c) nothing herein contained shall be construed as creating any liability on U.S. Bank Trust National Association, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto and (d) under no circumstances shall U.S. Bank Trust
National Association be personally liable for the payment of any indebtedness or expenses of the Carmel Mountain Funding Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the
Carmel Mountain Funding Trust under this Agreement or any other related documents. 
  

 12 

 IN WITNESS WHEREOF, the Issuer, the Indenture Trustee and the Paying Agent have caused this Supplement to
be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. 
  

			
	CARMEL MOUNTAIN FUNDING TRUST, as Issuer
	
	By: U.S. Bank Trust National Association not in its individual capacity, but solely as Owner Trustee
		
	By:	 	/s/ Patricia M. Child
	Name:	 	Patricia M. Child
	Title:	 	Vice President

  

			
	 DEUTSCHE BANK TRUST COMPANY AMERICAS,
 as
Indenture Trustee and as Paying Agent

		
	By:	 	/s/ Lisa Karlsen
	Name:	 	Lisa Karlsen
	Title:	 	Vice President

 [Signature Page to 2006-A Subordinated Notes Indenture Supplement] 
  

 1 

 EXHIBIT A 
 Form of Restricted Global Series 2006-A Subordinated Note 
 Exhibit A 
 Form of Restricted Global Series 2006-A Subordinated Note 
 CARMEL MOUNTAIN FUNDING TRUST 
 FORM OF RESTRICTED GLOBAL SUBORDINATED NOTE, SERIES 2006-A

 THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE
SECURITIES OR “BLUE SKY” LAWS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF CARMEL MOUNTAIN FUNDING TRUST THAT THIS NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE ISSUER (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
WHO IS ALSO A QUALIFIED PURCHASER (AS DEFINED IN THE INVESTMENT COMPANY ACT, A “QUALIFIED PURCHASER”) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON (AS SUCH TERM IS DEFINED
IN REGULATION S OF THE SECURITIES ACT) WHO IS ALSO A QUALIFIED PURCHASER IN A TRANSACTION IN COMPLIANCE WITH REGULATION S OF THE SECURITIES ACT OR (4) IN A TRANSACTION COMPLYING WITH OR EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (SUBJECT IN THE CASE OF THIS CLAUSE (4) TO RECEIPT OF SUCH CERTIFICATES AND OTHER DOCUMENTS AS THE INDENTURE TRUSTEE MAY REQUIRE UNDER THE INDENTURE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE. 
 EACH PURCHASER REPRESENTS, WARRANTS AND COVENANTS FOR THE BENEFIT OF THE INDENTURE TRUSTEE AND THE ISSUER THAT EITHER (A) SUCH PURCHASER IS NOT AND IS NOT ACTING ON BEHALF OF (I) AN “EMPLOYEE BENEFIT
PLAN” (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO TITLE I OF ERISA, (II) A “PLAN” (AS DEFINED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE “CODE”)) THAT IS SUBJECT TO SECTION 4975 OF THE CODE, (III) ANY ENTITY DEEMED TO BE INVESTING “PLAN ASSETS” (WITHIN THE MEANING OF UNITED STATES DEPARTMENT OF LABOR REGULATION 29 C.F.R. SECTION

  

 A-1 

 
2510.3-101 OR OTHERWISE UNDER ERISA) OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN, OR (IV) A “GOVERNMENTAL PLAN” (AS DEFINED IN SECTION 3(32) OF
ERISA) SUBJECT TO APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”), (EACH OF THE FOREGOING A “BENEFIT PLAN”) OR (B) THE ACQUISITION
AND HOLDING OF THIS NOTE WILL BE ELIGIBLE FOR, AND SATISFY ALL REQUIREMENTS OF, A UNITED STATES DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION (OR, IN THE CASE OF A PURCHASER THAT IS A GOVERNMENTAL PLAN, WILL NOT VIOLATE ANY SIMILAR
LAW). EACH PURCHASER THAT ACQUIRES A BENEFICIAL INTEREST IN THIS NOTE WILL BE DEEMED TO MAKE THE FOREGOING REPRESENTATION AND WARRANTY. 
 UNLESS THIS
NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN. 
  

 A-2 

 CARMEL MOUNTAIN FUNDING TRUST 
 RESTRICTED GLOBAL SUBORDINATED NOTE, SERIES 2006-A 
  

			
	CUSIP No.: 143348 AB 6	  	up to $40,000,000
	ISIN No.: US143348AB63	  	

 No.: R- 1 
 Carmel Mountain Funding Trust, a Delaware statutory trust (the “Issuer”), for value received, hereby promises to pay to CEDE & CO.,
(a) upon presentation and surrender of this Note (except as otherwise permitted by the Indenture referred to below), up to the principal amount of FORTY MILLION AND NO/100 DOLLARS (U.S. $40,000,000) on August 25, 2011 (the “Series
2006-A Final Scheduled Payment Date”), unless the unpaid principal of this Note becomes due and payable at an earlier date by declaration of acceleration, call for redemption or otherwise, and (b) interest thereon on the 25th day of each
month (or if such day is not a Business Day, the next following Business Day), commencing September 25, 2006 (each, a “Payment Date”), at a rate of one-month LIBOR (determined as set forth in the Indenture) plus 1.3% (the “Series
2006-A Subordinated Note Rate”) until the principal hereof is paid in full or duly provided for. 
 This Variable Rate Subordinated Note
is one of a duly authorized issue of Notes of the Issuer, designated as the Carmel Mountain Funding Trust, Series 2006-A (the “Series 2006-A Subordinated Notes”), issued under a Base Indenture dated as of May 10, 2005, as amended by
Amendment No. 1 thereto, dated as of August 23, 2006 (the “Base Indenture”), between the Issuer and Deutsche Bank Trust Company Americas, as indenture trustee (the “Indenture Trustee”), as supplemented by the Series
2006-A Supplement dated as of August 23, 2006 (the “Series Supplement”). The term “Indenture,” unless the context otherwise requires, refers to the Base Indenture, as supplemented by the Series Supplement. The term
“Security Agreement” refers to the Amended and Restated Security Agreement dated as of August 23, 2006, between the Issuer and Deutsche Bank Trust Company Americas, as collateral agent (the “Collateral Agent”). The Notes are
subject to the terms of the Indenture and Security Agreement. All capitalized terms used in this Note and not otherwise defined shall have the meanings assigned to them in the Series Supplement and Schedule I to the Security Agreement. In the event
of any conflict or inconsistency between the Indenture or Security Agreement and this Note, the Indenture or Security Agreement, as applicable, shall control. 
 Notwithstanding anything in the Indenture or this Note to the contrary, the holder of this Note acknowledges and agrees for the benefit of the holders of the Senior Notes that the rights of such holder in and to
the Collateral and to receive payments shall 

  

 A-3 

 
be subordinate and junior to the holders of the Senior Notes and to certain other fees, indemnities, expenses and obligations of the Issuer to the extent
and in the manner set forth in the Indenture and the Security Agreement. 
 Except under certain circumstances set forth in the
Indenture, the Series 2006-A Subordinated Notes are issuable only in registered, certificated form without coupons in minimum denominations of $200,000 and any integral multiple of $1,000 in excess thereof. 
 This Note does not purport to summarize the Indenture or the Security Agreement and reference is made to the Indenture and Security Agreement for the
interests, rights and limitations of rights, benefits, obligations and duties evidenced thereby, and the rights, duties and immunities of the Indenture Trustee and Collateral Agent, respectively. 
 This Note is issued with the intention that for United States federal, state and local income, single business, franchise and any other income tax
purposes, the Notes will be characterized as indebtedness. Each holder of this Note, by acceptance of this Note (and each beneficial owner by acceptance of a beneficial interest in this Note), agrees to treat the Notes for United States federal,
state and local income, single business, franchise and any other income tax purposes as indebtedness. 
 Unless the certificate of
authentication hereon has been duly executed by the Indenture Trustee by manual or facsimile signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. 
 THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
THEREIN WITHOUT REGARD TO THE CONFLICT OF LAWS OR CHOICE OF LAW PRINCIPLES THEREOF, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW. 
  

 A-4 

 IN WITNESS WHEREOF, U.S. Bank Trust National Association, as Owner Trustee, on behalf of the Issuer and
not in its individual capacity, has caused this Note to be duly executed. 
  

			
	CARMEL MOUNTAIN FUNDING TRUST
		
	BY:	 	U.S. Bank Trust National Association, not in
its individual capacity, but solely as Owner
Trustee

  

			
		
	By:	 	  
		 	Name:
		 	Title:

 Dated: August 23, 2006 
  

 S-1 

 CERTIFICATE OF AUTHENTICATION 
 This is one of the Notes referred to in the within-mentioned Indenture. 
  

			
	 DEUTSCHE BANK TRUST COMPANY AMERICAS,
 as
Indenture Trustee

		
	By:	 	  
		 	Name:
		 	Title:

 Dated: August 23, 2006 
  

 S-2 

 ASSIGNMENT 
 FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto 
 PLEASE INSERT
SOCIAL SECURITY 
 OR OTHER IDENTIFYING NUMBER 
 OF ASSIGNEE 
  
  

 (Please print or type name and address, including
postal zip code, of assignee) 
  
  

 the within Note , and all rights thereunder, hereby irrevocably constituting and appointing 
 ____________________________________________ Attorney to transfer said Note on the books of the Term Note Registrar, with full power of substitution in the premises. 
 Dated: 
 */ 
 Signature Guaranteed: 
 */ 
                      */ NOTICE: The signature to this
assignment must correspond with the name as it appears upon the face of the within Note in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by a member firm of the New York Stock Exchange or
a commercial bank or trust company. 

 SCHEDULE OF EXCHANGES IN RESTRICTED GLOBAL SUBORDINATED NOTE 
 The initial principal balance of this Restricted Global Note is $40,000,000. The following exchanges of a part of this Restricted Global Note have been made: 

 

									
	 Date of
 Exchange
	  	 Amount of
 decrease in
 Principal
 Balance of this
 Restricted Global
 Note
	  	 Amount of
 increase in
 Principal
 Balance of this
 Restricted Global
 Note
	  	 Principal
 Balance of this
 Restricted Global
 Note
 following such
 decrease
 (or
increase)
	  	 Signature of
 authorized
 officer
 of Indenture
 Trustee
or
 securities
 custodian

 Exhibit B 
 Form of Definitive Series 2006-A Subordinated Note 
 CARMEL MOUNTAIN FUNDING TRUST 

FORM OF DEFINITIVE SUBORDINATED NOTE, SERIES 2006-A 
 THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES OR “BLUE SKY” LAWS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR
THE BENEFIT OF CARMEL MOUNTAIN FUNDING TRUST THAT THIS NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE ISSUER (UPON REDEMPTION THEREOF OR
OTHERWISE), (2) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) WHO IS ALSO A QUALIFIED PURCHASER (AS DEFINED IN THE INVESTMENT COMPANY ACT, A
“QUALIFIED PURCHASER”) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON (AS SUCH TERM IS DEFINED IN REGULATION S OF THE SECURITIES ACT) WHO IS ALSO A QUALIFIED PURCHASER IN A
TRANSACTION IN COMPLIANCE WITH REGULATION S OF THE SECURITIES ACT OR (4) IN A TRANSACTION COMPLYING WITH OR EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT IN THE CASE OF THIS CLAUSE (4) TO RECEIPT OF SUCH
CERTIFICATES AND OTHER DOCUMENTS AS THE INDENTURE TRUSTEE MAY REQUIRE UNDER THE INDENTURE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE. 
 EACH PURCHASER REPRESENTS, WARRANTS AND
COVENANTS FOR THE BENEFIT OF THE INDENTURE TRUSTEE AND THE ISSUER THAT EITHER (A) SUCH PURCHASER IS NOT AND IS NOT ACTING ON BEHALF OF (I) AN “EMPLOYEE BENEFIT PLAN” (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO TITLE I OF ERISA, (II) A “PLAN” (AS DEFINED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)) THAT IS SUBJECT TO SECTION
4975 OF THE CODE, (III) ANY ENTITY DEEMED TO BE INVESTING “PLAN ASSETS” (WITHIN THE MEANING OF UNITED STATES DEPARTMENT OF LABOR REGULATION 29 C.F.R. SECTION 2510.3-101 OR OTHERWISE UNDER ERISA) OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN,
OR (IV) A “GOVERNMENTAL PLAN” (AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO APPLICABLE LAW THAT IS SUBSTANTIALLY 

  

 B-1 

 
SIMILAR TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”), (EACH OF THE FOREGOING A “BENEFIT
PLAN”) OR (B) THE ACQUISITION AND HOLDING OF THIS NOTE WILL BE ELIGIBLE FOR, AND SATISFY ALL REQUIREMENTS OF, A UNITED STATES DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION (OR, IN THE CASE OF A PURCHASER THAT IS A GOVERNMENTAL
PLAN, WILL NOT VIOLATE ANY SIMILAR LAW). EACH PURCHASER THAT ACQUIRES A BENEFICIAL INTEREST IN THIS NOTE WILL BE DEEMED TO MAKE THE FOREGOING REPRESENTATION AND WARRANTY. 
  

 B-2 

 CARMEL MOUNTAIN FUNDING TRUST 
 VARIABLE RATE DEFINITIVE SUBORDINATED NOTE, SERIES 2006-A 
  

					
	 CUSIP No.: 143348 AB 6
	  	$	[______________	]
		
	 ISIN No.: US143348AB63
	  			

 No.: R-
[            ] 
 Carmel Mountain Funding Trust, a Delaware statutory trust (the
“Issuer”), for value received, hereby promises to pay to
[                                        
                        ], (a) upon presentation and surrender of this Note (except as otherwise permitted by the
Indenture referred to below), the principal amount of [                            ]AND [__]/100
DOLLARS (U.S. $[                            ]) on
[                            ] (the “Series 2006-A Final Scheduled Payment Date”), unless
the unpaid principal of this Note becomes due and payable at an earlier date by declaration of acceleration, call for redemption or otherwise, and (b) interest thereon on the 25th day of each month (or if such day is not a Business Day, the
next following Business Day), commencing [            ] (each, a “Payment Date”), at a rate of one-month LIBOR (determined as set forth in the Indenture) plus 1.3% (the
“Series 2006-A Subordinated Note Rate”) until the principal hereof is paid in full or duly provided for. 
 This Variable Rate
Subordinated Note is one of a duly authorized issue of Notes of the Issuer, designated as the Carmel Mountain Funding Trust, Series 2006-A (the “Series 2006-A Subordinated Notes”), issued under a Base Indenture dated as of May 10,
2005, as amended by Amendment No. 1 thereto, dated as of August 23, 2006 (the “Base Indenture”), between the Issuer and Deutsche Bank Trust Company Americas, as indenture trustee (the “Indenture Trustee”), as
supplemented by the Series 2006-A Supplement dated as of August 23, 2006 (the “Series Supplement”). The term “Indenture,” unless the context otherwise requires, refers to the Base Indenture, as supplemented by the Series
Supplement. The term “Security Agreement” refers to the Amended and Restated Security Agreement dated as of August 23, 2006, between the Issuer and Deutsche Bank Trust Company Americas, as collateral agent (the “Collateral
Agent”). The Notes are subject to the terms of the Indenture and Security Agreement. All capitalized terms used in this Note and not otherwise defined shall have the meanings assigned to them in the Series Supplement and Schedule I to the
Security Agreement. In the event of any conflict or inconsistency between the Indenture or Security Agreement and this Note, the Indenture or Security Agreement, as applicable, shall control. 
 Notwithstanding anything in the Indenture or this Note to the contrary, the holder of this Note acknowledges and agrees for the benefit of the holders
of the Senior Notes that the rights of such holder in and to the Collateral and to receive payments shall 

  

 B-3 

 
be subordinate and junior to the holders of the Senior Notes and to certain other fees, indemnities, expenses and obligations of the Issuer to the extent
and in the manner set forth in the Indenture and the Security Agreement. 
 Except under certain circumstances set forth in the
Indenture, the Series 2006-A Subordinated Notes are issuable only in registered, certificated form without coupons in minimum denominations of $200,000 and any integral multiple of $1,000 in excess thereof. 
 This Note does not purport to summarize the Indenture or the Security Agreement and reference is made to the Indenture and Security Agreement for the
interests, rights and limitations of rights, benefits, obligations and duties evidenced thereby, and the rights, duties and immunities of the Indenture Trustee and Collateral Agent, respectively. 
 This Note is issued with the intention that for United States federal, state and local income, single business, franchise and any other income tax
purposes, the Notes will be characterized as indebtedness. Each holder of this Note, by acceptance of this Note (and each beneficial owner by acceptance of a beneficial interest in this Note), agrees to treat the Notes for United States federal,
state and local income, single business, franchise and any other income tax purposes as indebtedness. 
 Unless the certificate of
authentication hereon has been duly executed by the Indenture Trustee by manual or facsimile signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. 
 THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
THEREIN WITHOUT REGARD TO THE CONFLICT OF LAWS OR CHOICE OF LAW PRINCIPLES THEREOF, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW. 
  

 B-4 

 IN WITNESS WHEREOF, U.S. Bank Trust National Association, as Owner Trustee, on behalf of the Issuer and
not in its individual capacity, has caused this Note to be duly executed. 
  

			
	CARMEL MOUNTAIN FUNDING TRUST
		
	BY:	 	U.S. Bank Trust National Association, not in
its individual capacity, but solely as Owner
Trustee

  

			
		
	By:	 	  
		 	Name:
		 	Title:

 Dated: August     , 2006 
  

 S-1 

 CERTIFICATE OF AUTHENTICATION 
 This is one of the Notes referred to in the within-mentioned Indenture. 
  

			
	DEUTSCHE BANK TRUST COMPANY
AMERICAS,
as Indenture Trustee
		
	By:	 	  
		 	Name:
		 	Title:

 Dated: August     , 2006 
  

 S-2 

 ASSIGNMENT 
 FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto 
 PLEASE INSERT
SOCIAL SECURITY 
 OR OTHER IDENTIFYING NUMBER 
 OF ASSIGNEE 
  
  

 (Please print or type name and address, including
postal zip code, of assignee) 
  
  

 the within Note , and all rights thereunder, hereby irrevocably constituting and appointing 
 ____________________________________________ Attorney to transfer said Note on the books of the Term Note Registrar, with full power of substitution in the premises.

 Dated: 
         */ 
 Signature Guaranteed: 
         */ 
                             */ NOTICE: The signature to this assignment must correspond with
the name as it appears upon the face of the within Note in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust
company.Amendment No. 1 to the Mortgage Loan Purchase and Servicing Agreement

 Exhibit 4.3 
 AMENDMENT NO. 1 
 TO THE 
 MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT 
 Amendment No. 1,
dated as of August 23, 2006 (the “Amendment”), to the Mortgage Loan Purchase and Servicing Agreement (the “Agreement”) dated as of May 10, 2005, by and among Carmel Mountain Funding Trust (the
“Issuer”), Accredited Home Lenders, Inc. (the “Seller” or “Servicer”) and Accredited Home Lenders Holding Co. (the “Performance Guarantor”). Capitalized terms used and not defined
herein shall have the meaning set forth in the Amended and Restated Security Agreement, dated as of August 23, 2006, by and between the Issuer and Deutsche Bank Trust Company Americas, as the collateral agent and Schedule I thereto. 

WHEREAS the parties hereto have entered into the Agreement; 
 WHEREAS the parties hereto now wish to amend certain provisions in the Agreement pursuant to Section 12.2 of the Agreement; and 
 WHEREAS the Issuer shall not consent to this Amendment to the Agreement unless (a) it shall have first received Rating Agency Confirmation with respect to this Amendment and (b) any applicable requirements
and conditions set forth in the Agreement with respect to the adoption of amendments thereto have been complied with. 
 NOW, THEREFORE, in
consideration of the promises and mutual agreements contained herein, the parties hereto agree to amend the Agreement pursuant to Section 12.2 of the Agreement and restate certain provisions thereof as follows: 
 1. Amendments. Upon the execution of this Amendment by each party hereto and effective as of the date of this Amendment: 
 A. Sections 3.1(f), 3.1(j) and 3.2(f) are revised as follows: references to “the Swap Counterparty” will be changed to “each Swap
Counterparty”. 
 B. Section 3.1(h) will be replaced in its entirety with the following: 
 (h) Selection Process. Any Portfolio sold pursuant to a Transfer Supplement was selected from mortgage loans originated by the Seller or an
affiliate of the Seller or acquired by the Seller from third parties and are Mortgage Loans which satisfy the Eligibility Criteria (other than the Eligibility Representations, which are the subject of the representations set forth in
Section 3.2 hereof), Portfolio Criteria and Wet Funded Loan Limitation, and any selection process employed by it was not made in a manner so as to materially adversely affect the interests of the Issuer. 
 C. Section 4.2(e) of the Agreement will be replaced in its entirety with the following paragraph and paragraphs (e) through (i) will be
added to Section 4.2 as follows: 

	 	(e)	 If the Servicer arranges for the sale of Mortgage Loans by the Issuer pursuant to this Agreement and the Sale Price of any Mortgage Loan or Mortgage Loans is
anticipated to be less than the Outstanding Purchase Price of such Mortgage Loan or Mortgage Loans, the Servicer shall give each Swap Counterparty written notice of the anticipated Sale Price of such Mortgage Loan or Mortgage Loans in advance of
such sale. Such written notice shall also include a summary description of the procedure used in the determination of the Sale Price. Each Swap Counterparty shall have two (2) Business Days from the receipt of such written notice to dispute the
Sale Price; provided, that no Swap Counterparty shall dispute the Sale Price of any single Mortgage Loan if the sale of such Mortgage Loan was pursuant to a sale agreement for a pool of Mortgage Loans and the aggregate Sale Price for such
pool is equal to or greater than 102% of the aggregate Outstanding Principal Balance for the Mortgage Loans in such pool; provided, further, that the Servicer may request in writing that each Swap Counterparty waive its right to
dispute a sale of a Mortgage Loan or Mortgage Loans; such request shall be deemed to have been granted with respect to a Swap Counterparty if (i) such Swap Counterparty shall not have responded by the close of business San Diego time on the
date such request was received by such Swap Counterparty so long as such request was received by 3:00 p.m. Eastern time on such date (otherwise such request shall be deemed to have been received on the next following Business Day) and
(ii) (A) the Seller, as swap counterparty under each of the Back-to-Back Swaps, shall have made or shall make all payments, if any, to be made under the Back-to-Back Swaps related to the sale of such Mortgage Loan or Mortgage Loans prior
to or concurrent with such sale and (B) such payments under the Back-to-Back Swaps shall not be subject to the limitations set forth in the provisos of the first sentence of the Party B First Floating Rate Amount (as defined in the Back-to-Back
Swaps) or any similar limitation in any replacement Back-to-Back Swap. If any Swap Counterparty disputes the Sale Price, the Servicer and such Swap Counterparty shall use their best efforts to resolve such dispute within two (2) Business Days
of receipt by the Servicer of notice of such dispute. If such Swap Counterparty disputes the Sale Price of any Mortgage Loan or Mortgage Loans and such dispute is not resolved, then such Swap Counterparty, or its designee, shall be permitted to
submit a bid to purchase such Mortgage Loan or Mortgage Loans (the “Purchase Option”) at a price at least equal to 102% of the Sale Price (the “Bid Price”) within three (3) Business Days of receipt by such Swap
Counterparty of the written notice of the Sale Price. If each Swap Counterparty waives its right to dispute a sale of a Mortgage Loan or Mortgage Loans, fails to dispute the Sale 

  

 2 

	 	 
Price within two (2) Business Days after receipt of notice of the Sale Price, or fails (or such designee fails) to pay the Bid Price for such Mortgage
Loan or Mortgage Loans within three (3) Business Days after receipt of notice of the Sale Price, the Servicer shall be permitted to sell such Mortgage Loan or Mortgage Loans in accordance with this Agreement. The Servicer shall be permitted to
sell such Mortgage Loans to the highest bidding Swap Counterparty. To the extent that more than one Swap Counterparty has submitted the highest bid, the Servicer shall be permitted to sell to such Swap Counterparties as indicated by the Designated
Swap Counterparty pursuant to the letter agreement among the Swap Counterparties. 

  

	 	(f)	If the Servicer arranges for the sale of Mortgage Loans by the Issuer pursuant to this Agreement and (x) the aggregate Sale Price of any portfolio of Mortgage Loans sold on any
Business Day to a particular buyer (including any Securitization Vehicle), as set forth in the related Sale Notice, is less than ninety-one percent (91%) of the aggregate Outstanding Purchase Price of such Mortgage Loans or (y) a
Termination Event has occurred and is continuing and the sale of such Mortgage Loans would be for a purchase price less than the aggregate Outstanding Purchase Price of such Mortgage Loans, then each Swap Counterparty shall have an option to submit
a bid to purchase (a “Purchase Option”) such Mortgage Loans on the related Sale Date from the Issuer at a price equal to the Sale Price. Each Swap Counterparty that elects to exercise its Purchase Option shall submit a written
notice (the “Purchase Option Notice”) to the Servicer no later than 9:30 am Eastern time on the related Sale Date. The Servicer shall be permitted to sell such Mortgage Loans to the highest bidding Swap Counterparty. To the extent
that more than one Swap Counterparty has submitted the highest bid, the Servicer shall be permitted to sell to such Swap Counterparties as indicated by the Designated Swap Counterparty pursuant to the letter agreement among the Swap Counterparties.

  

	 	(g)	If any Swap Counterparty notifies the Servicer in writing that the current Fair Market Value, as determined by it in its sole reasonable discretion, of the non-Delinquent and
non-Defaulted Mortgage Loans then owned by the Issuer, is less than ninety-six percent (96%) of the aggregate Outstanding Purchase Price of such Mortgage Loans, then the Servicer shall arrange for the sale of individual Mortgage Loans or
portfolios of Mortgage Loans sufficient to cause the Fair Market Value of the non-Delinquent and non-Defaulted Mortgage Loans owned by the Issuer to be greater than or equal to ninety-six percent (96%) of the aggregate Outstanding Purchase
Price as determined by such Swap Counterparty in its sole reasonable discretion. 

  

 3 

 If the Servicer fails to arrange for the sale of Mortgage Loans in order to cause the Fair Market Value
of the non-Delinquent and non-Defaulted Mortgage Loans owned by the Issuer to be greater than or equal to ninety-six percent (96%) of the aggregate Outstanding Purchase Price, as determined by such Swap Counterparty in its sole reasonable
discretion, on or before the 90th day following its receipt of notice from such Swap Counterparty, then the Designated Swap Counterparty shall have the sole and exclusive right, on behalf of and for the benefit of the Issuer, to arrange for the sale
of individual Mortgage Loans or portfolios of Mortgage Loans sufficient to cause the Fair Market Value of the non-Delinquent and non-Defaulted Mortgage Loans owned by the Issuer to be greater than or equal to ninety-six percent (96%) of the
aggregate Outstanding Purchase Price of the Mortgage Loans, as determined by the notifying Swap Counterparty in its sole reasonable discretion. 
 If, at any time following such receipt of notice, if the then current Fair Market Value, as determined by the Swap Counterparty delivering the additional notice referred to in this sentence, of the non-Delinquent and non-Defaulted Mortgage
Loans then owned by the Issuer is less than ninety-five percent (95%) of the aggregate Outstanding Purchase Price of the non-Delinquent and non-Defaulted Mortgage Loans owned by the Issuer, then any Swap Counterparty may deliver an additional
notice to such effect and on the 15th Business Day after the delivery of such additional notice, the Designated Swap Counterparty shall have the sole and exclusive right, on behalf of and for the benefit of the Issuer, to arrange for the sale of
individual Mortgage Loans or portfolios of Mortgage Loans sufficient to cause the Fair Market Value of the non-Delinquent and non-Defaulted Mortgage Loans owned by the Issuer to be greater than or equal to ninety-five percent (95%) of the
aggregate Outstanding Purchase Price of the Mortgage Loans, as determined by the notifying Swap Counterparty in its sole reasonable discretion. 
 In connection with the sales contemplated by this paragraph (g), the Designated Swap Counterparty shall use commercially reasonable efforts to maximize the Sale Price of any Mortgage Loans that it arranges to sell on behalf of the Issuer.

  

	 	(h)	 If the Servicer arranges for a sale of a group of Mortgage Loans pursuant to this Agreement and the Sale Price, as set forth in the related Sale Notice to be
received by the Issuer for the sale of such group of Mortgage Loans is less than ninety-one percent (91%) of the aggregate Outstanding Purchase Price of such group of 

  

 4 

	 	 
Mortgage Loans then such sale may only be made by the Servicer with the written consent of each Swap Counterparty. 

  

	 	(i)	“Fair Market Value” as used in this Section 4.2, shall mean the fair market value of the Mortgage Loans, as determined by the related Swap Counterparty in its sole
reasonable discretion in good faith. 

 D. The first sentence of the last paragraph of Section 10.1 shall be replaced with
the following language: 
 At any time during the continuance of an event described in clauses (a) through (i) above, the Issuer
may, and shall (x) at the written request of the Required Subordinated Noteholders, with the consent of the Required Senior Noteholders or (y) at the written request of the Majority Swap Counterparties, terminate all of the rights and
obligations of the Servicer under this Mortgage Loan Purchase and Servicing Agreement and in and to the Mortgage Loans and the proceeds thereof other than the right to receive unpaid Servicing Fees and reimbursement of Servicing Advances and Monthly
Servicer Advances. 
 E. Clauses (t) and (u) are added to Section 11.2 as follows: 
  

	 	(t)	At any time the Credit Amount shall be less than the Required Enhancement Amount and such noncompliance shall continue for a period of thirty (30) days; or

  

	 	(u)	Failure of the Issuer to satisfy the Partial Termination Condition within 90 days of the occurrence of a Partial Termination Event. 

 F. Section 11.2(p) is deleted in its entirety and replaced with the following language: 
 (p) On any day following the third Payment Date under the Program Documents, the average of the Excess Spread Rate for the Remittance Periods relating to
each of the three most recent Payment Dates is less than three percent (3.00%); provided, however that if (i) the Excess Spread Rate is not less than two percent (2.00%) and (ii) the increase contemplated by the final proviso in the
definition of “Initial Required Reserve Fund Amount” relating to the Excess Spread Rate has been satisfied, then no Termination Event shall have occurred. 
 G. The last paragraph of Section 11.2 is deleted in its entirety and replaced with the following language: 
 provided, however, that at any time during the continuance of an event described in clauses (a) through (c), the Issuer may, and shall (i) at the written request of the Required Subordinated
Noteholders, with the consent of the Required Senior Noteholders (or, if the Senior Notes have been paid in full, such consent will not be required), (ii) at the written request of the Collateral Agent acting pursuant to
Section 4.11 of the Security Agreement, or (iii) in the case of a Servicer Event of Default as set forth in Section 

  

 5 

 
10.1(g) or (h) hereof, at the written request of (x) the Majority Swap Counterparties or (y) in the case of a Servicer Event of
Default as set forth in Section 10.1(h) occasioned by (i) the failure of the Servicer to pay or to post under a Back-to-Back Swap Agreement, (ii) an Event of Default under Section 5(a)(vii) of the related Back-to-Back Swap
Agreement or (iii) any other default under a Back-to-Back Swap Agreement (after giving effect to any related grace period (any of the events described in this clause (y), a “Related Party Default”), then at the request of the
related Back-to-Back Swap Counterparty, notify the Seller that the commitment of the Issuer to purchase Mortgage Loans from the Seller shall terminate. 
 Provided, further, that upon the occurrence of a Termination Event described in clauses (d) through (s) (each, an “Automatic Termination Event”), the Issuer’s commitment to
purchase Mortgage Loans from the Seller shall terminate automatically and an Automatic Termination Event will be deemed to have occurred. Upon the declaration of a Termination Event by the Issuer or the occurrence of an Automatic Termination Event,
the Issuer will no longer be permitted to purchase additional Mortgage Loans and principal collections on Mortgage Loans, proceeds of sales of Mortgage Loans and amounts received from any Swap Counterparty will be retained under the Security
Agreement and used to pay the outstanding obligations of the Issuer pursuant to the terms thereof. If a Termination Event described in clauses (h) or (k) through (u) above occurs, a Servicer Event of Default as set forth
in Section 10.1(h) hereof occurs, at the written request of the Majority Swap Counterparties, or in the event of a Related Party Default, at the written request of the related Back-to-Back Swap Counterparty, a Security Agreement Event of
Default described in clause (e) or (m) through (t) of Section 7.01 of the Security Agreement occurs or an Indenture Event of Default described in clause (e) or (m) through
(r) of Schedule I of the Indenture occurs, the Servicer shall use its best efforts to sell all non-Delinquent Loans and non-Defaulted Loans within 90 days of the date on which such Termination Event, Security Agreement Event of
Default or Indenture Event of Default occurred (or, in the case of the failure of the Servicer, in its capacity as a party to a Back-to-Back Swap Agreement, to perform its obligations to pay or post under such Back-to-Back Swap Agreement (after
giving effect to any grace periods therein) such shorter period not less than 60 days as requested in writing by the related Swap Counterparty (such period measured from the date such request is received by the Servicer) or such shorter period not
less than 30 days as requested in writing by all the Swap Counterparties (such period measured from the date such request is received by the Servicer)) (such 30 day, 60 day or 90 day period, as applicable, the “Sale Period”); it
being understood that, in the case of the 30 day or 60 day period, the Servicer’s obligation will be to enter into a purchase and sale agreement for the sale of such Mortgage Loans; provided, that if the Servicer, in its capacity as a party to
the Back-to-Back Swap Agreement, shall cure the failure to pay or post under such Back-to-Back Swap Agreement within such 30 day or 60 day period, the obligation of the Servicer and the Collateral Agent to sell the Mortgage Loan within such 30 day
or 60 day period will cease and be of no further effect. In the event that all non-Delinquent Loans and non-Defaulted Loans have not been so sold within the Sale Period, the Collateral Agent shall hold a Termination Event Auction of the remaining
non-Delinquent Loans and non-Defaulted Loans for settlement not later than the 28th day following the end of the
Sale Period (the “Sale Deadline Date”). The Servicer shall notify potential bidders of the 

  

 6 

 
Termination Event Auction, including the Rated Bidder. During the Termination Event Auction, the Servicer shall promptly notify each Swap Counterparty of the
highest bid price obtained in the Termination Event Auction for each such non-Delinquent Loan and non-Defaulted Loan and each Swap Counterparty shall have up to two (2) Business Days from the time of notification (but in no event beyond the
Sale Deadline Date) to elect to purchase such non-Delinquent Loans or non-Defaulted Loans at a price equal to 102% of such highest bid price but in no event more than the amount of the Outstanding Purchase Price of such non-Delinquent Loans or
non-Defaulted Loans (plus accrued interest thereon) (the “Purchase Price”). If any Swap Counterparty elects to purchase such non-Delinquent Loans or non-Defaulted Loans within such two (2) Business Day time period, such Swap
Counterparty shall pay the Purchase Price for such non-Delinquent Loans or non-Defaulted Loans within two (2) Business Days of the date of such election (but in no event beyond the Sale Deadline Date). If each Swap Counterparty fails to pay
such Purchase Price or fails to affirmatively elect to purchase such non-Delinquent Loans or non-Defaulted Loans, in either case, within the applicable time period referred to above, the Servicer shall have the right to sell such non-Delinquent
Loans or non-Defaulted Loans to the highest bidder. 
 provided, further, that, notwithstanding the foregoing, if the Issuer shall have
received written request of less than the Majority Swap Counterparties with respect to an event described in Section 10.1(h) above (unless such event is a Related Party Default occasioned by (i) the failure of the Servicer to pay or to
post under a Back-to-Back Swap Agreement or (ii) an Event of Default under Section 5(a)(vii) of the related Back-to-Back Swap Agreement and the related Back-to-Back Swap Counterparty has requested that the Issuer declare a Termination
Event) (a “Partial Termination Event”) then the Issuer shall notify the Seller that the Issuer’s commitment to purchase Mortgage Loans from the Seller shall terminate until the Partial Termination Condition has been satisfied.
If a Partial Termination Event occurs, so long as the Partial Termination Condition has not been satisfied, the Issuer will not be permitted to purchase additional Mortgage Loans, and principal collections on Mortgage Loans, proceeds of sales of
Mortgage Loans and amounts received from the Swap Counterparties will be retained under the Security Agreement and used to pay outstanding obligations of the Issuer pursuant to the terms thereof, and the related Swap Agreement will remain
outstanding in accordance with its terms until the Partial Termination Condition has been satisfied. If a Partial Termination Event occurs, then the Issuer shall either (i) cause the Servicer to use its best efforts to sell non-Delinquent and
non-Defaulted Loans, and/or (ii) enter into replacement Interest Rate Swaps for Interest Rate Swaps to which any Departing Swap Counterparty is a party, in each case within 60 days of the occurrence of the Partial Termination Event to the
extent required to cause the Partial Termination Condition to be satisfied. If the Partial Termination Condition is not satisfied by such 60th day, then the Collateral Agent shall hold an auction (a “Partial Termination Event
Auction”) of non-Delinquent Loans and non-Defaulted Loans for settlement not later than the 90th day following the date on which such Partial Termination Event occurred and in an amount sufficient to cause the Partial Termination Condition
to be satisfied. The Servicer shall notify potential bidders of the Partial Termination Event Auction, including the Rated Bidder. During the Partial Termination Event Auction, the Servicer shall promptly notify each Swap Counterparty of the highest
bid price obtained in the Partial Termination Event Auction for each such 

  

 7 

 
non-Delinquent Loan and non-Defaulted Loan being offered for sale at such Partial Termination Event Auction and each Swap Counterparty shall have the right
pursuant to Section 4.2(e) or (f) to exercise its Purchase Option to purchase such non-Delinquent Loans or non-Defaulted Loans. The Servicer shall be permitted pursuant to Section 4.2(e) or (f) to sell such Mortgage Loans to the
highest bidding Swap Counterparty. 
 Provided, finally, that should at any time during the continuance of a Partial Termination Event,
additional Termination Event shall occur, the Departing Swap Counterparties shall have the option to waive the Partial Termination Event, by giving written notice of the same to the Servicer and the Collateral Agent. If the Departing Swap
Counterparties do not elect to waive the Partial Termination Event, then the Servicer and the Collateral Agent will proceed with the actions described above to affect the termination of the related Swap Agreements, in addition to taking the actions,
if any, required in connection with the subsequent Termination Event. 
 H. Exhibits B, C, and D are replaced in their entirety with Exhibits
B, C, and D attached hereto. 
 3. Conditions to Effectiveness. As conditions to the effectiveness of this Amendment, an
Officer’s Certificate satisfying the requirements of Section 12.2 of the Agreement and Rating Agency Confirmation have been received by the parties hereto. 
 4. Effect of Amendment. This Amendment to the Agreement shall be effective and the Agreement shall be deemed to be modified and amended in accordance herewith on the Payment Date on the date on which the
Indenture Trustee and the Collateral Agent receives an executed copy of this Amendment. This Amendment, once effective, shall be effective as of the date first set forth above. The respective rights, limitations, obligations, duties, liabilities and
immunities of the Issuer, the Seller, the Servicer and the Performance Guarantor shall hereafter be determined, exercised and enforced subject in all respects to such modifications and amendments, and all the terms and conditions of this Amendment
shall be and be deemed to be part of the terms and conditions of the Agreement for any and all purposes. The Agreement, as amended hereby, is hereby ratified and confirmed in all respects. 
 5. The Agreement in Full Force and Effect as Amended. Except as specifically amended hereby, all the terms and conditions of the Agreement shall
remain in full force and effect and, except as expressly provided herein, the effectiveness of this Amendment shall not operate as, or constitute a waiver or modification of, any right, power or remedy of any party to the Agreement. All references
to the Agreement in any other document or instrument shall be deemed to mean the Agreement as amended by this Amendment. 
 6.
Counterparts. This Amendment may be executed by the Parties in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. This Amendment shall become

  

 8 

 
effective when counterparts hereof executed on behalf of such party shall have been received. 
 7. Governing Law. This Amendment shall be construed in accordance with and governed by the laws of the State of New York applicable to agreements
made and to be performed therein. 
 8. No Recourse. It is expressly understood and agreed by the parties hereto that (a) this
Amendment is executed and delivered by U.S. Bank Trust National Association, not individually or personally but solely as Owner Trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by U.S. Bank Trust National Association but is made and intended for the purpose of
binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on U.S. Bank Trust National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all
such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto and (d) under no circumstances shall U.S. Bank Trust National Association be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related documents. Nothing in
this paragraph 5 shall release U.S. Bank Trust National Association from its obligations under the Trust Agreement. 
  

 9 

 IN WITNESS WHEREOF, the Issuer, the Seller, the Servicer and the Performance Guarantor have caused this
Amendment to be duly executed by their officers thereunto duly authorized, all as of the day and year first above written. 
  

			
	 CARMEL MOUNTAIN FUNDING TRUST,
 as Issuer

	
	 By: U.S. Bank Trust National Association, not in its
 individual capacity, but solely as Owner Trustee

		
	 By:
	 	 /s/ Patricia M. Child

		 	 Name: Patricia M. Child
 Title:   Vice President

	
	 ACCREDITED HOME LENDERS, INC., as Seller
 and Servicer

		
	 By:
	 	 /s/ Charles O. Ryan

		 	 Name: Charles O. Ryan
 Title:   Securitization Coordinator

	
	 ACCREDITED HOME LENDERS HOLDING CO.,
 as the Performance Guarantor

		
	 By:
	 	 /s/ Melissa Dant

		 	 Name: Melissa Dant
 Title: Senior Secondary Markets Counsel,
          Ass’t Vice President, and Ass’t Secretary

 [Signature Page for Amendment No. 1 to the MLPSA]

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