Document:

NUMBER

  	
   

  	
   

  
	
  COMMON STOCK

  	
  COMMON STOCK

  
	
  PAR VALUE $.01

  	
  SEE REVERSE FOR
  CERTAIN DEFINITIONS

  
	
   

  	
   

  	
  CUSIP                                          

  

 

MORTGAGEIT
HOLDINGS, INC.

 

INCORPORATED
UNDER THE LAWS OF THE STATE OF MARYLAND

 

THIS CERTIFIES
THAT

 

S P E C I M E N

is the owner of:

 

 

FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK $.01 PAR
VALUE PER SHARE OF

MORTGAGEIT
HOLDINGS, INC.

 

The shares
represented by this certificate are transferable only on the stock transfer
books of the Corporation by the holder of record thereof, or by his or her duly
authorized attorney or legal representative, upon the surrender of this
certificate properly endorsed.  This
certificate and the shares represented hereby are issued and shall be held
subject to all the provisions of the Articles of Incorporation of the
Corporation and any amendments thereto (copies of which are on file with the
Transfer Agent), to all of which provisions the holder by acceptance hereof,
assents.

 

This certificate is not valid unless countersigned and
registered by the Transfer Agent and Registrar.

 

IN
WITNESS THEREOF,
MORTGAGEIT HOLDINGS, INC. has caused this certificate to be executed by the
facsimile signatures of its duly authorized officers and has caused a facsimile
of its corporate seal to be hereunto affixed.

 

	
  Dated:

  	
   

  	
  [SEAL]

  	
   

  
	
   

  	
  President

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  	
   

  

 

COUNTERSIGNED AND
REGISTERED:

AMERICAN STOCK
TRANSFER & TRUST COMPANY

 

 

	
  By

  	
   

  
	
   

  	
  AUTHORIZED SIGNATURE

  

 

 

 

MORTGAGEIT
HOLDINGS, INC.

 

 

The Board of
Directors of the Corporation is authorized by resolution(s), from time to time
adopted, to provide for the issuance of serial preferred stock in series and to
fix and state the voting powers, designations, preferences and relative,
participating, optional, or other special rights of the shares of each such
series and the qualifications, limitations and restrictions thereof.  The Corporation will furnish to any
shareholder upon request and without charge a full description of each class of
stock and any series thereof.

 

                The securities represented by this certificate are
subject to significant restrictions on ownership and transfer. Except as
otherwise provided pursuant to the Articles of Incorporation of the
Corporation, no person may beneficially own (i) shares of common stock of the
Corporation in excess of [_____%] of
the more restrictive of the total number or value of the outstanding shares of
common stock of the Corporation, (ii) shares of equity stock of the Corporation
in excess of [_____%] of the more
restrictive of the total number or value of the outstanding shares of equity
stock of the Corporation, (iii) shares of the Corporation's equity stock if
such acquisition would result in the trust being "closely held" under
section 856(h) of the internal revenue code of 1986, as amended (the
"Code"), (iv) shares of the Corporation's equity stock if such
acquisition would result in the equity stock being beneficially owned by fewer
than 100 persons (determined without reference to any rules of attribution
under the Code), (v) shares of the Corporation's common stock or equity stock
if such acquisition would cause the Corporation to fail to qualify as a real
estate investment trust under the Code, or (vi) shares of the Corporation's
common stock or equity stock in violation of any of the further restrictions
set forth in the Corporation's Articles of Incorporation.  Any person who attempts or proposes to
beneficially own shares of the Corporation's common stock or equity stock in
excess of the above limitations must immediately notify the Corporation in writing.  If an attempt is made to violate or there is
a violation of these restrictions, (a) any purported transfer will be void ab initio and will not be recognized by
the Corporation and (b) the shares of the Corporation's common stock or equity
stock in violation of these restrictions, whether as a result of a transfer or
non-transfer event, will be transferred automatically and by operation of
law to a share trust and shall be designated shares-in-trust. All
terms used in this legend and defined in the Corporation's Articles of
Incorporation have the meanings provided in the Corporation's Articles of
Incorporation, as the same may be amended from time to time, a copy of which,
including the restrictions on ownership and transfer, will be sent without charge
to each stockholder who so requests.

 

The following
abbreviations, when used in the inscription on the face of this certificate,
shall be construed as though they were written out in full according to
applicable laws or regulations:

 

	
  TEN COM - as tenants in common

  	
   

  	
  UNIF GIFTS MIN ACT -  

  	
  custodian

  
	
   

  	
   

  	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TEN ENT - as tenants by the entireties

  	
  under Uniform Gifts to
  Minors Act

  	
   

  	
   

  
	
   

  	
   

  	 

	
   

  	
  (State)

  	 

								

 

	
  JT TEN - 

  	
  as joint tenants with
  right

  
	
   

  	
  of survivorship
  and not as

  
	
   

  	
  tenants in common

  

 

Additional
abbreviations may also be used though not in the above list.

 

For value
received, __________ hereby sell, assign and transfer unto

 

	
  PLEASE INSERT SOCIAL SECURITY OR OTHER

  
	
  IDENTIFICATION NUMBER OF TRANSFEREE

  
	
   

  
	
                                                                                                                                                  

  
	
  Please print or
  typewrite name and address including postal zip code of assignee

  
	
   

  
	
                                               shares of the common stock represented
  by the within Certificate, and do hereby irrevocably constitute and appoint                                                                                    
  Attorney to transfer the said stock on the books of the within-named
  Corporation with full power of substitution in the premises.

  

 

	
  DATED

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE:  THE
  SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
  THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR
  ENLARGEMENT OR ANY CHANGE WHATEVER.

  

 

 

 

	
  SIGNATURE GUARANTEED:

  	
   

  
	
   

  	
  THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
  GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND
  CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION
  PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15Exhibit 10.2

 

EXECUTION VERSION

 

 

MASTER REPURCHASE AGREEMENT

 

Between:

 

Merrill Lynch Commercial Finance Corp., as
Buyer

 

and

 

MortgageIT, Inc., as Seller

 

 

Dated as of June 20, 2003

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
  SECTION 1.

  	
  APPLICABILITY

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  INITIATION; TERMINATION

  	
  19

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  MARGIN AMOUNT MAINTENANCE

  	
  24

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
  INCOME PAYMENTS

  	
  25

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  REQUIREMENTS OF LAW

  	
  26

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  TAXES.

  	
  27

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  SECURITY INTEREST

  	
  28

  
	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
  PAYMENT, TRANSFER AND CUSTODY

  	
  29

  
	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
  HYPOTHECATION OR PLEDGE OF PURCHASED
  MORTGAGE LOAN

  	
  29

  
	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
  REPRESENTATIONS

  	
  30

  
	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
  COVENANTS

  	
  35

  
	
   

  	
   

  	
   

  
	
  SECTION 13.

  	
  EVENTS OF DEFAULT

  	
  42

  
	
   

  	
   

  	
   

  
	
  SECTION 14.

  	
  REMEDIES

  	
  45

  
	
   

  	
   

  	
   

  
	
  SECTION 15.

  	
  INDEMNIFICATION AND EXPENSES; RECOURSE

  	
  47

  
	
   

  	
   

  	
   

  
	
  SECTION 16.

  	
  SERVICING

  	
  48

  
	
   

  	
   

  	
   

  
	
  SECTION 17.

  	
  SINGLE AGREEMENT

  	
  49

  
	
   

  	
   

  	
   

  
	
  SECTION 18.

  	
  SET-OFF

  	
  49

  

 

i

 

	
  SECTION 19.

  	
  NOTICES AND OTHER COMMUNICATIONS

  	
  50

  
	
   

  	
   

  	
   

  
	
  SECTION 20.

  	
  ENTIRE AGREEMENT; SEVERABILITY

  	
  50

  
	
   

  	
   

  	
   

  
	
  SECTION 21.

  	
  NON-ASSIGNABILITY

  	
  50

  
	
   

  	
   

  	
   

  
	
  SECTION 22.

  	
  TERMINABILITY

  	
  51

  
	
   

  	
   

  	
   

  
	
  SECTION 23.

  	
  GOVERNING LAW

  	
  52

  
	
   

  	
   

  	
   

  
	
  SECTION 24.

  	
  SUBMISSION TO JURISDICTION; WAIVERS

  	
  52

  
	
   

  	
   

  	
   

  
	
  SECTION 25.

  	
  NO WAIVERS, ETC

  	
  53

  
	
   

  	
   

  	
   

  
	
  SECTION 26.

  	
  NETTING

  	
  53

  
	
   

  	
   

  	
   

  
	
  SECTION 27.

  	
  DUE DILIGENCE

  	
  53

  
	
   

  	
   

  	
   

  
	
  SECTION 28.

  	
  [RESERVED]

  	
  54

  
	
   

  	
   

  	
   

  
	
  SECTION 29.

  	
  [RESERVED]

  	
  54

  
	
   

  	
   

  	
   

  
	
  SECTION 30.

  	
  BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT

  	
  54

  
	
   

  	
   

  	
   

  
	
  SECTION 31.

  	
  MISCELLANEOUS

  	
  55

  
	
   

  	
   

  	
   

  
	
  SECTION 32.

  	
  CONFIDENTIALITY

  	
  55

  
	
   

  	
   

  	
   

  
	
  SECTION 33.

  	
  INTENT

  	
  56

  
	
   

  	
   

  	
   

  
	
  SECTION 34.

  	
  DISCLOSURE RELATING TO CERTAIN FEDERAL
  PROTECTIONS

  	
  57

  
	
   

  	
   

  	
   

  
	
  SECTION 35.

  	
  CONFLICTS

  	
  57

  
	
   

  	
   

  	
   

  
	
  SECTION 36.

  	
  AUTHORIZATIONS

  	
  57

  

 

ii

 

EXHIBITS

 

	
  SCHEDULE 1

  	
  Representations and Warranties Re: Mortgage
  Loans

  
	
   

  	
   

  
	
  SCHEDULE 2

  	
  Existing Indebtedness

  
	
   

  	
   

  
	
  EXHIBIT I

  	
  Form of Confirmation Letter

  
	
   

  	
   

  
	
  EXHIBIT II

  	
  Form of Opinion Letter

  
	
   

  	
   

  
	
  EXHIBIT III

  	
  UCC Filing Jurisdiction

  
	
   

  	
   

  
	
  EXHIBIT IV

  	
  Form of Account Agreement

  
	
   

  	
   

  
	
  EXHIBIT V

  	
  Mortgage Loan Schedule Fields

  
	
   

  	
   

  
	
  EXHIBIT VI

  	
  Mortgage File Documents

  
	
   

  	
   

  
	
  EXHIBIT VII

  	
  RESERVED

  
	
   

  	
   

  
	
  EXHIBIT VIII

  	
  Seller’s Officer’s Certificate

  
	
   

  	
   

  
	
  EXHIBIT IX

  	
  Form of Servicer Notice

  
	
   

  	
   

  
	
  EXHIBIT X

  	
  Authorized Representatives

  
	
   

  	
   

  
	
  EXHIBIT XI

  	
  Responsible Officers

  

 

 

iii

 

MASTER REPURCHASE AGREEMENT

 

This is a
MASTER REPURCHASE AGREEMENT, dated as of June 20, 2003, between MortgageIT,
Inc., a New York corporation (the “Seller”) and MERRILL LYNCH COMMERCIAL
FINANCE CORP., a New York corporation (the “Buyer”).

 

SECTION 1.                            APPLICABILITY

 

From time to
time the parties hereto shall enter into transactions in which the Seller
agrees to transfer to Buyer Mortgage Loans against the transfer of funds by
Buyer, with a simultaneous agreement by Buyer to transfer to the Seller such
Mortgage Loans at a date certain not later than the date 364 days after the
related Purchase Date, against the transfer of funds by the Seller. Each such
transaction shall be referred to herein as a “Transaction” and shall be
governed by this Repurchase Agreement, unless otherwise agreed in writing. This
Repurchase Agreement is not a commitment by Buyer to enter into Transactions
with Seller but rather sets forth the procedures to be used in connection with
periodic requests for Buyer to enter into Transactions with Seller.  Seller hereby acknowledges that Buyer is
under no obligation to agree to enter into, or to enter into, any Transaction
pursuant to this Repurchase Agreement.

 

SECTION 2.                            DEFINITIONS

 

As used herein, the following terms shall
have the following meanings (all terms defined in this Section 2 or in other
provisions of this Repurchase Agreement in the singular to have the same
meanings when used in the plural and vice  versa)

 

“Accepted
Servicing Practices” shall mean, with respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the jurisdiction
where the related Mortgaged Property is located.

 

“Account
Agreement” shall mean a letter agreement between the Seller, the Buyer, and
a depository institution acceptable to Buyer in its sole discretion
substantially in the form of Exhibit IV attached hereto.

 

“Additional
Purchased Mortgage Loans” shall mean Mortgage Loans or cash provided by the
Seller to Buyer or its designee pursuant to Section 4 of this Repurchase
Agreement.

 

“Affiliate”
shall mean with respect to any Person, any “affiliate” of such Person, as such
term is defined in the Bankruptcy Code.

 

“Aged
Mortgage Loan” shall mean a Mortgage Loan that has been subject to a
Transaction hereunder for period of greater than 120 days but no longer than
180 days.

 

“Agency”
shall mean Freddie Mac, Fannie Mae or Ginnie Mae, as applicable.

 

 

“Agency
Takeout Commitment” shall mean a commitment by an Agency to purchase the
Mortgage Loan under any of its cash purchase programs.

 

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

 

“Asset
Value” shall mean with respect to each Eligible Mortgage Loan, the
applicable Purchase Price Percentage for the related Purchased Mortgage Loan
multiplied by the lesser of (a) the Market Value of such Mortgage Loan and (b)
the outstanding principal balance of such Mortgage Loan.

 

“Authorized
Representative” shall mean, for the purposes of this Repurchase Agreement
only, an agent or Responsible Officer of the Seller listed on Exhibit X
hereto, as such Exhibit X may be amended from time to time by Seller
providing written notice to the Buyer.

 

“Bailee
Letter” shall have the meaning assigned to such term in the Custodial
Agreement.

 

“Bankruptcy
Code” shall mean the United States Bankruptcy Code of 1978, as amended from
time to time.

 

“Business
Day” shall mean a day other than (i) a Saturday or Sunday, (ii) any day on
which banking institutions are authorized or required by law, executive order
or governmental decree to be closed in the State of New York or (iii) any day
on which the New York Stock Exchange is closed.

 

“Buyer”
shall mean Merrill Lynch Commercial Finance Corp, and its successors in
interest and assigns.

 

“Capital
Lease Obligations” shall mean, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP, and, for purposes of this Repurchase
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.

 

“Cash
Equivalents” shall mean (a) securities with maturities of 90 days or less
from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of Buyer or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase
obligations of Buyer or of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than seven days with
respect to securities issued or fully guaranteed or insured by the United
States Government, (d) commercial paper of a domestic issuer rated at least A-1
or the equivalent thereof by S&P or P-1 or the equivalent thereof by
Moody’s and in either case maturing within 90 days after the day of
acquisition, (e) securities with maturities of 90 days or less from the date of
acquisition issued or fully guaranteed by any

 

2

 

state, commonwealth or territory of the
United States, by any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign government, the securities
of which state, commonwealth, territory, political subdivision, taxing
authority or foreign government (as the case may be) are rated at least A by
S&P or A by Moody’s, (f) securities with maturities of 90 days or less from
the date of acquisition backed by standby letters of credit issued by Buyer or
any commercial bank satisfying the requirements of clause (b) of this
definition or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.

 

“Change in
Control” shall mean:

 

(A) the sale,
transfer, or other disposition of all or substantially all of Seller’s assets
(excluding any such action taken in connection with any securitization
transaction); or

 

(B) the
consummation of a merger or consolidation of Seller with or into another entity
or any other corporate reorganization, if more than 50.1% of the combined
voting power of the continuing or surviving entity’s stock outstanding
immediately after such merger, consolidation or such other reorganization is
owned by persons who were not stockholders of the Seller immediately prior to
such merger, consolidation or other reorganization.

 

“Closed End
Second Lien Mortgage Loan” shall mean a closed end, Second Lien Mortgage
Loan that (i) qualifies under the “CAL-Rural” or “PERS” loan programs or which
is otherwise underwritten in accordance with the Underwriting Guidelines and
(ii) is eligible for sale by the Seller in a securitization transaction or to a
Takeout Investor.

 

“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

“Collection
Account” shall mean the account established by a financial institution
acceptable to Buyer subject to an Account Agreement, into which all Income
shall be deposited after the occurrence of an Event of Default.

 

“Combined
Loan to Value Ratio or CLTV” shall mean, with respect to any Second Lien
Mortgage Loan, the sum of (a) the original principal balance of such Mortgage
Loan or, with respect to the HELOCs, the original Credit Limit and (b) the
outstanding principal balance of any related first lien as of the date of
origination of the Mortgage Loan, divided by the Appraisal Value of the
Mortgaged Property as of the origination date.

 

“Committed
Mortgage Loan” shall mean a Mortgage Loan which is the subject of a Takeout
Commitment with a Takeout Investor.

 

“Confirmation”
shall mean a Confirmation Letter in the form of Exhibit I hereto.

 

“Conforming
Mortgage Loan” shall mean a first lien Mortgage Loan that (i) conforms to
the requirements of an Agency for securitization or cash purchase and (ii) is
subject

 

3

 

to an Agency Commitment or a Takeout
Commitment, including, without limitation, conventional Mortgage Loans, FHA
Loans and VA Loans.

 

“Credit
Limit” shall mean, with respect to each HELOC, the maximum amount permitted
under the terms of the related Credit Line Agreement.

 

“Credit
Line Agreement” shall mean, with respect to each HELOC, the related home
equity line of credit agreement, account agreement and promissory note (if any)
executed by the related mortgagor and any amendment or modification thereof.

 

“Custodial
Agreement” shall mean that certain Custodial Agreement dated as of the date
hereof, among Seller, Buyer and Custodian as the same may be amended from time
to time.

 

“Custodian”
shall mean Deutsche Bank National Trust Company, or any successor thereto under
the Custodial Agreement.

 

“Default”
shall mean an Event of Default or an event that with notice or lapse of time or
both would become an Event of Default.

 

“Delinquent
Mortgage Loan” shall mean any Mortgage Loan as to which any Monthly
Payment, or part thereof, remains unpaid for 30 days or more from the original
Due Date for such Monthly Payment.

 

“Disbursement
Agent” shall mean Deutsche Bank National Trust Company, its successor or
assigns.

 

“Disbursement
Agreement” shall mean that certain Disbursement Agreement by and between
the Disbursement Agent and the Buyer, dated as of June 20, 2003, setting forth
the terms pursuant to which the Disbursement Agent shall disburse funds related
to Wet-Ink Mortgage Loans.

 

“Dollars”
and “$” shall mean lawful money of the United States of America.

 

“Draw”
shall mean, with respect to each HELOC, an additional borrowing by the
Mortgagor in accordance with the related Credit Line Agreement.

 

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

 

“Due
Diligence Review” shall mean the performance by Buyer of any or all of the
reviews permitted under Section 27 hereof with respect to any or all of the
Mortgage Loans, as desired by the Buyer from time to time.

 

“EC
Mortgage Loan” shall mean a first lien Mortgage Loan that (i) is a prime
quality Mortgage Loan underwritten in conformity to the Underwriting Guidelines
for EC Mortgage Loans and (ii) is eligible for sale to a Takeout Investor or
for securitization.

 

4

 

“Effective
Date” shall mean the date upon which the conditions precedent set forth in Section
3(a) shall have been satisfied.

 

“Electronic
Tracking Agreement” shall mean an Electronic Tracking Agreement among
Buyer, Seller, MERS and MERSCORP, Inc., to the extent applicable.

 

“Eligible
Mortgage Loan” shall mean a Purchased Mortgage Loan which (i) complies with
the representations and warranties set forth on Schedule 1 to this
Repurchase Agreement and (ii) is a Conforming Mortgage Loan, a Jumbo Mortgage
Loan, a Super Jumbo Mortgage Loan, a HELOC, an EC Mortgage Loan or a Closed End
Second Lien Mortgage Loan.

 

“ERISA”
shall, with respect to any Person, mean the Employee Retirement Income Security
Act of 1974, as amended from time to time and any successor thereto, and the
regulations promulgated and rulings issued thereunder.

 

“ERISA
Affiliate” shall, with respect to any Person, mean any Person which is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which such Person is a member, or (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which such
Person is a member.

 

“Escrow
Payments” shall mean, with respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed
by the Mortgagor with the mortgagee pursuant to the Mortgage or any other
document.

 

“Event of
Default” shall have the meaning specified in Section 13.01 hereof.

 

“Event of
Insolvency” shall mean, for any Person:

 

(a) that such Person or any Material Subsidiary
shall discontinue or abandon operation of its business; or

 

(b)  that such Person or any Material Subsidiary shall fail generally
to, or admit in writing its inability to, pay its debts as they become due; or

 

(c) a proceeding shall have been instituted
in a court having jurisdiction in the premises seeking a decree or order for
relief in respect of such Person or any Material Subsidiary in an involuntary
case under any applicable bankruptcy, insolvency, liquidation, reorganization
or other similar law now or hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator
or other similar official of such Person or any Material Subsidiary, or for any
substantial part of its property, or for the winding-up or liquidation of its
affairs; or

 

(d)  the commencement by such Person or any Material Subsidiary of a
voluntary case under any applicable bankruptcy, insolvency or other similar Law
now or hereafter in effect,

 

5

 

or such Person’s or any Material Subsidiary’s
consent to the entry of an order for relief in an involuntary case under any
such Law, or consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator, conservator or other
similar official of such Person or such Material Subsidiary, or for any
substantial part of its property, or any general assignment for the benefit of
creditors; or

 

(e) that such Person or any Material Subsidiary
shall become insolvent; or

 

(f) if such Person or any Material
Subsidiary is a corporation, such Person or any Material Subsidiary shall take
any corporate action in furtherance of, or the action of which would result in
any of the actions set forth in the preceding clause (a), (b), (c), (d) or (e).

 

“Event of
Termination” shall, with respect to the Seller, mean (i) with respect to
any Plan, a reportable event, as defined in Section 4043 of ERISA, as to which
the PBGC has not by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event, or
(ii) the withdrawal of the Seller or any ERISA Affiliate thereof from a Plan
during a plan year in which it is a substantial employer, as defined in Section
4001(a)(2) of ERISA, or (iii) the failure by the Seller or any ERISA Affiliate
thereof to meet the minimum funding standard of Section 412 of the Code or
Section 302 of ERISA with respect to any Plan, including, without limitation,
the failure to make on or before its due date a required installment under
Section 412(m) of the Code or Section 302(e) of ERISA, or (iv) the distribution
under Section 4041 of ERISA of a notice of intent to terminate any Plan or any
action taken by the Seller or any ERISA Affiliate thereof to terminate any
Plan, or (v) the adoption of an amendment to any Plan that, pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of
tax-exempt status of the trust of which such Plan is a part if the Seller or
any ERISA Affiliate thereof fails to timely provide security to the Plan in
accordance with the provisions of said Sections, or (vi) the institution by the
PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or (vii) the receipt by the Seller or any
ERISA Affiliate thereof of a notice from a Multiemployer Plan that action of
the type described in the previous clause (vi) has been taken by the PBGC with
respect to such Multiemployer Plan, or (viii) any event or circumstance exists
which may reasonably be expected to constitute grounds for the Seller or any
ERISA Affiliate thereof to incur liability under Title IV of ERISA or under
Sections 412(c)(11) or 412(n) of the Code with respect to any Plan.

 

“Expenses”
shall mean all present and future reasonable expenses incurred by or on behalf
of the Buyer in connection with this Repurchase Agreement or any of the other
Repurchase Documents and any amendment, supplement or other modification or
waiver related hereto or thereto, whether incurred heretofore or hereafter,
which reasonable expenses shall include the cost of title, lien, judgment and
other record searches; reasonable attorneys’ fees; and costs of preparing and
recording any UCC financing statements or other filings necessary to perfect
the security interest created hereby.

 

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

 

“Financial
Statements” shall mean the consolidated financial statements of the Seller
prepared in accordance with GAAP for the year or other period then ended. Such
financial

 

6

 

statements will be audited, in the case of
annual statements, by BDO Seidman LLP or such other independent certified
public accountants approved by the Buyer (which approval shall not be
unreasonably withheld).

 

“First
Payment Default” shall mean, with respect to a Mortgage Loan, the failure
of the Mortgagor to make the first Monthly Payment due under the Mortgage Loan
on or before its scheduled Due Date.

 

“FHA”
shall mean the Federal Housing Administration, an agency within the United
States Department of Housing and Urban Development, or any successor thereto,
and including the Federal Housing Commissioner and the Secretary of Housing and
Urban Development where appropriate under the FHA Regulations.

 

“FHA
Approved Mortgagee” shall mean a corporation or institution approved as a
mortgagee by the FHA under the National Housing Act, as amended from time to time,
and applicable FHA Regulations, and eligible to own and service mortgage loans
such as the FHA Loans.

 

“FHA Loan”
shall mean a Mortgage Loan which is the subject of an FHA Mortgage Insurance
Contract.

 

“FHA
Mortgage Insurance” shall mean, mortgage insurance authorized under the
National Housing Act, as amended from time to time, and provided by the FHA.

 

“FHA
Mortgage Insurance Contract” shall mean the contractual obligation of the
FHA respecting the insurance of a Mortgage Loan.

 

“FHA
Regulations” shall mean the regulations promulgated by the Department of
Housing and Urban Development under the National Housing Act, as amended from
time to time and codified in 24 Code of Federal Regulations, and other
Department of Housing and Urban Development issuances relating to FHA Loans,
including the related handbooks, circulars, notices and mortgagee letters.

 

“Fitch”
shall mean Fitch Ratings, Inc., or any successor thereto.

 

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

 

“GAAP”
shall mean generally accepted accounting principles in the United States of
America, applied on a consistent basis and applied to both classification of
items and amounts, and shall include, without limitation, the official
interpretations thereof by the Financial Accounting Standards Board, its
predecessors and successors.

 

“Ginnie Mae”
shall mean the Government National Mortgage Association and any successor
thereto.

 

“Governmental
Authority” shall mean the government of the United States of America or of
any state, county, municipality or other political subdivision thereof or any
governmental body, agency, authority, department or commission (including,
without limitation,

 

7

 

any taxing authority) or any instrumentality
or officer of any of the foregoing (including, without limitation, any court or
tribunal) exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any corporation,
partnership or other entity directly or indirectly owned by or controlled by
the foregoing.

 

“Guarantee”
shall mean, as to any Person, any obligation of such Person directly or
indirectly guaranteeing any Indebtedness of any other Person or in any manner
providing for the payment of any Indebtedness of any other Person or otherwise
protecting the holder of such Indebtedness against loss (whether by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, or to take-or-pay or otherwise); provided that the term
“Guarantee” shall not include endorsements for collection or deposit in
the ordinary course of business.  The
amount of any Guarantee of a Person shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by such
Person in good faith.  The terms “Guarantee”
and “Guaranteed” used as verbs shall have correlative meanings.

 

“HELOC”
shall mean a home equity revolving line of credit secured by a mortgage, deed
of trust or other instrument creating a first or second lien on the related
Mortgaged Property, which lien secures the related Credit Line Agreement, and
which is underwritten in conformity with the Underwriting Guidelines.

 

“HUD”
shall mean the Department of Housing and Urban Development.

 

“Income”
shall mean, with respect to any Mortgage Loan at any time, any principal
thereof then payable and all interest, dividends or other distributions payable
thereon.

 

“Indebtedness”
shall mean, with respect to any Person, (a) obligations created, issued or
incurred by such Person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such
Property from such Person); (b) obligations of such Person to pay the deferred
purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business, so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial
institutions for the account of such Person; (e) Capital Lease Obligations of
such Person; (f) obligations of such Person under repurchase agreements,
sale/buy-back agreements or like arrangements; (g) Indebtedness of others
Guaranteed by such Person; (h) all obligations of such Person incurred in
connection with the acquisition or carrying of fixed assets by such Person; and
(i) Indebtedness of general partnerships of which such Person is a general
partner.

 

“Interest
Rate Protection Agreement” shall mean, with respect to any or all of the
Purchased Mortgage Loans, any short sale of a US Treasury Security, or futures
contract, or

 

8

 

mortgage related security, or Eurodollar
futures contract, or options related contract, or interest rate swap, cap or
collar agreement or Take-out Commitment, or similar arrangement providing for
protection against fluctuations in interest rates or the exchange of nominal
interest obligations, either generally or under specific contingencies, entered
into by a Seller and an Affiliate of the Buyer, and acceptable to the Buyer.

 

“Jumbo
Mortgage Loan” shall mean a first lien Mortgage Loan with a principal
balance of not more than $1,000,000 that (i) except with respect to the
original principal balance thereof, conforms to the requirements for
securitization or cash purchase by an Agency or is eligible for pool insurance
by an insurer acceptable to the Buyer, and (ii) that either (a) is eligible to
be sold or securitized by the Seller or (b) is eligible for sale to a Takeout
Investor pursuant to a Takeout Commitment.

 

“Late
Payment Fee” shall mean the excess of the Price Differential paid as a
result of its calculation at the Post-Default Rate over the Price Differential
as would have been calculated at the Pricing Rate.

 

“Law”
shall mean, any law, treaty, rule or regulation or determination of an
arbitrator or court or other Governmental Authority, in each case applicable to
or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

 

“LIBOR
Period” shall mean, with respect to each Payment Date, the period from and
including the immediately preceding Payment Date (or, with respect to the first
LIBOR Period for each Transaction, from and including the related Purchase
Date) to but excluding such Payment Date, unless otherwise agreed to by the
Buyer and the Seller and set forth in the related Confirmation.

 

“LIBOR
Period Commencement Date” shall mean (a) with respect to the initial LIBOR
Period with respect to a Transaction, the Purchase Date, and (b) with respect
to each succeeding LIBOR Period with respect to a Transaction, the Payment
Date, or if the LIBOR Period is other than one month, the last day of the
immediately preceding LIBOR Period.

 

“LIBOR Rate”
shall mean, with respect to each day during the applicable LIBOR Period, the
rate per annum equal to the one month British Bankers Association Rate as
reported on the display designated as “BBAM” “Page DG8 4a” on Bloomberg (or
such other display as may replace “BBAM” “Page DG8 4a on Bloomberg), as of 8:00
a.m., New York City time, on the date two Business Days prior to the
commencement of such LIBOR Period, and if such rate shall not be so quoted, or
if the related LIBOR Period shall be less than one month, the rate per annum at
which the Buyer or its Affiliate is offered dollar deposits at or about 8:00
a.m., New York City time, on the date two Business Days prior to the
commencement of the such LIBOR Period, by prime banks in the interbank
eurodollar market where the eurodollar and foreign currency exchange operations
in respect of its Transactions are then being conducted for delivery on such
day for a period of one month or such other period as agreed upon in writing by
the Buyer and the Seller and in an amount comparable to the amount of the
Transactions outstanding on such day.

 

9

 

“Lien”
shall mean any lien, claim, charge, restriction, pledge, security interest,
mortgage, deed of trust or other encumbrance.

 

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

 

“Margin
Call” shall have the meaning specified in Section 4.

 

“Margin
Deficit” shall have the meaning specified in Section 4.

 

“Market
Value” shall mean, as of any date with respect to any Purchased Mortgage
Loan, the price at which such Mortgage Loan could readily be sold as determined
by the Buyer in its sole good-faith discretion.  Without limiting the generality of the foregoing, the Seller
acknowledges that the Market Value of a Purchased Mortgage Loan may be reduced
to zero by Buyer if:

 

(a)                                  such
Purchased Mortgage Loan ceases to be an Eligible Mortgage Loan;

 

(b)                                 the
Purchased Mortgage Loan has been released from the possession of the Custodian
under the Custodial Agreement (other than to a Take-out Investor pursuant to a
Bailee Letter) for a period in excess of 10 Business Days;

 

(c)                                  the
Purchased Mortgage Loan is a Wet-Ink Mortgage Loan for which the related
Mortgage File has not been received and certified by the Custodian by the
seventh Business Day following the related Purchase Date;

 

(d)                                 such
Purchased Mortgage Loan is a Delinquent Mortgage Loan;

 

(e)                                  such
Purchased Mortgage Loan is rejected by the related Takeout Investor;

 

(f)                                    such
Purchased Mortgage Loan has been subject to a Transaction hereunder for period
of greater than 120 days, unless such Purchased Mortgage Loan is an Aged
Mortgage Loan;

 

(g)                                 a
First Payment Default occurs with respect to such Purchased Mortgage Loan;

 

(h)                                 the
Buyer has determined in its sole good-faith discretion that the Purchased
Mortgage Loan is not eligible for whole loan sale or securitization in a
transaction consistent with the prevailing sale and securitization industry
with respect to substantially similar Mortgage Loans;

 

(i)                                     such
Purchased Mortgage Loan contains a material breach of a representation or
warranty made by the Seller in this Repurchase Agreement or the Custodial
Agreement;

 

10

 

(j)                                     when
the Purchase Price for such Purchased Mortgage Loan is added to the aggregate
Purchase Price of other Purchased Mortgage Loans, the aggregate Purchase Price
of all Aged Mortgage Loans exceeds $10,000,000;

 

(k)                                  when
the Purchase Price for such Purchased Mortgage Loan is added to the aggregate
Purchase Price of other Purchased Mortgage Loans, the aggregate Purchase Price
of all HELOCs exceeds $15,000,000;

 

(l)                                     when
the Purchase Price for such Purchased Mortgage Loan is added to the aggregate
Purchase Price of other Purchased Mortgage Loans, the aggregate Purchase Price
of all Closed End Second Lien Mortgage Loans exceeds $2,000,000;

 

(m)                               when
the Purchase Price for such Purchased Mortgage Loan is added to the aggregate
Purchase Price of other Purchased Mortgage Loans, the aggregate Purchase Price
of all Super Jumbo Mortgage Loans exceeds $15,000,000;

 

(n)                                 when
the Purchase Price for such Purchased Mortgage Loan is added to the aggregate
Purchase Price of other Purchased Mortgage Loans, the aggregate Purchase Price
of all EC Mortgage Loans exceeds 5% of the aggregate Purchase Price of all
Purchased Mortgage Loans;

 

(o)                                 when
the Purchase Price for such Purchased Mortgage Loan is added to the aggregate
Purchase Price of other Purchased Mortgage Loans, the aggregate Purchase Price
of all Wet-Ink Mortgage Loans exceeds (i) with respect to the first five (5)
Business Days of a month and the last five (5) Business Days of a month,
$50,000,000 or (ii) with respect to all other times, $30,000,000.

 

“Material
Adverse Effect” shall mean a material adverse effect on (a) the Property,
business, operations, financial condition or prospects of the Seller or any
Material Subsidiary, (b) the ability of the Seller or any Material Subsidiary
to perform its obligations under any of the Repurchase Documents to which it is
a party, (c) the validity or enforceability of any of the Repurchase Documents,
(d) the rights and remedies of the Buyer or any Affiliate under any of the
Repurchase Documents or (e) the Market Value of the Purchased Mortgage Loans.

 

“Material
Subsidiary” shall mean any Subsidiary of the Seller which accounts for more
than 15% of the Seller’s net income.

 

“Maximum
Purchase Price” shall mean $200,000,000.

 

“MERS”
shall mean Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any
successor thereto.

 

“MERS
System” shall mean the system of recording transfers of mortgages
electronically maintained by MERS.

 

11

 

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

 

“Moody’s”
shall mean Moody’s Investor’s Service, Inc. or any successors thereto.

 

“Mortgage”
shall mean each mortgage, assignment of rents, security agreement and fixture
filing, or deed of trust, assignment of rents, security agreement and fixture
filing, deed to secure debt, assignment of rents, security agreement and
fixture filing, or similar instrument creating and evidencing a first lien or
second lien on real property and other property and rights incidental thereto.

 

“Mortgage
File” shall mean, with respect to a Mortgage Loan, the documents and
instruments relating to such Mortgage Loan and set forth in Exhibit VI
hereto.

 

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

 

“Mortgage
Loan” shall mean any first or second lien, one-to-four-family residential
mortgage loan or HELOC evidenced by a Mortgage Note or Credit Line Agreement,
as applicable, and secured by a Mortgage, which Mortgage Loan is subject to a
Transaction hereunder, which in no event shall include any mortgage loan which
(a) is subject to Section 226.32 of Regulation Z or any similar state law
(relating to high interest rate credit/lending transactions), (b) includes any
single premium credit life or accident and health insurance or disability
insurance, or (c) contains any term or condition, or involves any loan
origination practice, that has been defined as “predatory”, “covered” or
“threshold” under applicable federal, state or local law, or which has been
expressly categorized as an “unfair” or “deceptive” term, condition, or
practice in any applicable federal, state or local law dealing with “predatory”
or “high cost” mortgage lending (or a similarly classified loan using different
terminology under a law, regulation or ordinance imposing heightened regulatory
scrutiny or additional legal liability for residential mortgage loans having
high interest rates, points and/or fees).

 

“Mortgage
Loan Schedule” shall mean with respect to any Transaction as of any date, a
mortgage loan schedule in the form of a computer tape or other electronic
medium generated by the Seller and delivered to Buyer and the Custodian, which
provides information (including, without limitation, the information set forth
on Exhibit V attached hereto) relating to the Purchased Mortgage Loans
in a format acceptable to the Buyer.

 

“Mortgage
Loan Schedule and Exception Report” shall have the meaning set forth in the
applicable Custodial Agreement.

 

“Mortgage
Note” shall mean the promissory note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.

 

“Mortgaged
Property” shall mean the real property securing repayment of the debt
evidenced by a Mortgage Note.

 

“Mortgagor”
shall mean the obligor or obligors on a Mortgage Note, including any Person who
has assumed or guaranteed the obligations of the obligor thereunder.

 

12

 

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

 

“Net Worth”
means, with respect to any Person, an amount equal to, on a consolidated basis,
such Person’s stockholder equity (determined in accordance with GAAP).

 

“Non-Excluded
Taxes” shall have the meaning set forth in Section 7(a) hereof.

 

“Obligations”
shall mean (a) any amounts due and payable by the Seller to Buyer in connection
with a Transaction hereunder, together with interest thereon (including
interest which would be payable as post-petition interest in connection with
any bankruptcy or similar proceeding) and all other fees or expenses which are
payable hereunder or under any of the Repurchase Documents and (b) all other
obligations or amounts due and payable by the Seller to the Buyer or an
Affiliate of Buyer under any other contract or agreement.

 

“Other
Taxes” shall have the meaning set forth in Section 7(b) hereof.

 

“Payment
Date” shall mean the first day of each month, or if such date is not a
Business Day, the Business Day immediately preceding the first day of the
month.

 

“PBGC”
shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to
any or all of its functions under ERISA.

 

“Periodic
Advance Repurchase Payment” shall have the meaning specified in Section
5(a).

 

“Person”
shall mean any individual, corporation, company, voluntary association,
partnership, joint venture, limited liability company, trust, unincorporated
association or government (or any agency, instrumentality or political
subdivision thereof).

 

“Plan”
shall mean, with respect to any Person, any employee benefit or similar plan
that is or was at any time during the current year or immediately preceding
five years established or maintained by such Person or any ERISA Affiliate
thereof and that is covered by Title IV of ERISA, other than a Multiemployer
Plan.

 

“PMI Policy”
shall mean a policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, as required by this Repurchase Agreement with respect to
certain Mortgage Loans.

 

“Post-Default
Rate” shall mean a rate equal to the sum of (a) the Pricing Rate plus (b) [*] percent ([*]%).

 

“Price
Differential” shall mean, with respect to any Transaction hereunder as of
any date, the aggregate amount obtained by daily application of the Pricing
Rate (or, during the continuation of an Event of Default, by daily application
of the Post-Default Rate) for such Transaction to the Purchase Price for such
Transaction on a 360 day per year basis for the actual

 

* Confidential portions omitted and filed
separately with the Commission

 

13

 

number of days during the period commencing
on (and including) the Purchase Date for such Transaction and ending on (but
excluding) the Repurchase Date (reduced by any amount of such Price Differential
previously paid by Seller to Buyer with respect to such Transaction).

 

“Pricing
Rate” shall mean a rate per annum equal to the sum of (a) the LIBOR Rate
plus (b) the Pricing Spread.

 

“Pricing
Spread” shall mean:

 

(a) with respect to Transactions the
subject of which are Conforming Mortgage Loans that are not Wet-Ink Mortgage
Loans, [*]%;

 

(b) with respect to Transactions the
subject of which are Jumbo Mortgage Loans that are not Wet-Ink Mortgage Loans, [*]%;

 

(c) with respect to Transactions the
subject of which are EC Mortgage Loans that are not Wet-Ink Mortgage Loans, [*]%;

 

(d) with respect to Transactions the
subject of which are Mortgage Loans that are HELOCs that are not Wet-Ink
Mortgage Loans, [*]%;

 

(e) with respect to Transactions the subject
of which are Mortgage Loans that are Super Jumbo Mortgage Loans that are not
Wet-Ink Mortgage Loans, [*]%;

 

(f) with respect to Transactions the
subject of which are Mortgage Loans that are Closed End Second Lien Mortgage
Loans that are not Wet-Ink Mortgage Loans, [*]%;

 

(g) with respect to Transactions the
subject of which are Mortgage Loans that are EC Mortgage Loans that are Wet-Ink
Mortgage Loans, [*]%;

 

(h) with respect to Transactions the
subject of which are Mortgage Loans that are Conforming Mortgage Loans that are
Wet-Ink Mortgage Loans, [*]%;

 

(i) with respect to Transactions the
subject of which are Mortgage Loans that are Jumbo Mortgage Loans that are
Wet-Ink Mortgage Loans, [*]%;

 

(j) with respect to Transactions the
subject of which are Mortgage Loans which are HELOCs that are Wet-Ink Mortgage
Loans, [*]%;

 

(k) with respect to Transactions the
subject of which are Mortgage Loans which are Super Jumbo Mortgage Loans that
are Wet-Ink Mortgage Loans, [*]%;

 

(l) with respect to Transactions the
subject of which are Mortgage Loans which are Closed End Second Lien Mortgage
Loans that are Wet-Ink Mortgage Loans, [*]%; or

 

(m) with
respect to Transactions the subject of which are Mortgage Loans which are Aged
Mortgage Loans, [*]%.

 

 

* Confidential portions omitted and filed
separately with the Commission

 

14

 

“Property”
shall mean any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible.

 

“Purchase
Date” shall mean the date on which Purchased Mortgage Loans are transferred
by Seller to the Buyer or its designee.

 

“Purchase
Price” shall mean,

 

(a) on the Purchase Date, the price at
which each Purchased Mortgage Loan is transferred by Seller to Buyer which
shall equal the applicable Purchase Price Percentage multiplied by the lesser
of (i) the Market Value of such Mortgage Loan on the Purchase Date and (ii) the
outstanding principal balance of the Mortgage Loan; and

 

(b) thereafter, except where Buyer and
Seller mutually agree in writing to the contrary, such Purchase Price decreased
by the amount of any cash, Income and Periodic Advance Repurchase Payments
actually received by Buyer pursuant to Section 5 or applied to reduce Seller’s
obligations under Section 4(b) hereof.

 

“Purchase
Price Percentage” shall mean:

 

(a)  with respect to each Mortgage Loan which is a Conforming Mortgage
Loan that is not a Wet-Ink Mortgage Loan, [*]%;

 

(b) with respect to each Mortgage Loan
which is a Jumbo Mortgage Loan that is not a Wet-Ink Mortgage Loan, [*]%;

 

(c) with respect to each Mortgage Loan
which is an EC Mortgage Loan that is not a Wet-Ink Mortgage Loan, [*]%;

 

(d) with respect to each Mortgage Loan
which is a Conforming Mortgage Loan that is a Wet-Ink Mortgage Loan, [*]%;

 

(e) with respect to each Mortgage Loan
which is a Jumbo Mortgage Loan that is a Wet-Ink Mortgage Loan, [*]%;

 

(f) with respect to each Mortgage Loan
which is an EC Mortgage Loan that is a Wet-Ink Mortgage Loan, [*]%;

 

(g) with respect to each Mortgage Loan
which is a Super Jumbo Mortgage Loan that is not a Wet-Ink Mortgage Loan, [*]%;

 

(h) with respect to each Mortgage Loan
which is a HELOC, [*]%;

 

(i) with respect to each Mortgage Loan
which is a Closed End Second Lien Mortgage Loan, [*]%;

 

(j) with respect to each Mortgage Loan
which is an Aged Mortgage Loan, [*]%; and

 

* Confidential portions omitted and filed
separately with the Commission

 

 

15

 

(k) with respect to each Mortgage Loan
which is a Super Jumbo Mortgage Loan that is a Wet-Ink Mortgage Loan, [*]%.

 

“Purchased
Mortgage Loan Report” shall mean a report, delivered with each Transaction
Request, on Friday of each week (or if such date is not a Business Day, the next
preceding Business Day), or upon the request of the Buyer, including a Mortgage
Loan Schedule in the form of Exhibit V hereto, setting forth information
with respect to the Purchased Mortgage Loans (and Mortgage Loans proposed to be
the subject of a Transaction on the related Purchase Date, if applicable).

 

“Purchased
Mortgage Loans” shall mean the Mortgage Loans sold by the Seller to Buyer
in a Transaction, and any Additional Purchased Mortgage Loans as evidenced by a
Confirmation and a Trust Receipt.

 

“Qualified
Insurer” shall mean a mortgage guaranty insurance company duly authorized
and licensed where required by law to transact mortgage guaranty insurance
business and acceptable under the Underwriting Guidelines.

 

“Rating
Agency” shall mean any of S&P, Moody’s or Fitch.

 

“Records”
shall mean all instruments, agreements and other books, records, and reports
and data generated by other media for the storage of information maintained by
Seller or any other person or entity with respect to a Purchased Mortgage Loan.
Records shall include the Mortgage Notes, any Mortgages, the Mortgage Files,
the credit files related to the Purchased Mortgage Loan and any other
instruments necessary to document or service a Mortgage Loan.

 

“Regulations
T, U and X” shall mean Regulations T, U and X of the Board of Governors of
the Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.

 

“Reportable
Event” shall mean any of the events set forth in Section 4043(b) of ERISA,
other than those events as to which the thirty day notice period is waived
under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.  § 2615.

 

“Repurchase
Agreement” shall mean this Master Repurchase Agreement between Buyer and
the Seller, dated as of the date hereof as the same may be further amended,
supplemented or otherwise modified in accordance with the terms hereof.

 

“Repurchase
Assets” shall have the meaning provided in Section 8 hereof.

 

“Repurchase
Date” shall mean the date on which the Seller is to repurchase the
Purchased Mortgage Loans subject to a Transaction from Buyer as specified in
the related Confirmation, or if not so specified in the related Confirmation on
a date requested pursuant to Section 3(d) or on the Termination Date, including
any date determined by application of the provisions of Sections 3 or 14, or
the date identified to Buyer by the Seller as the date that the related
Mortgage Loan is to be sold pursuant to a Take-out Commitment.

 

* Confidential portions omitted and filed
separately with the Commission

 

16

 

“Repurchase
Documents” shall mean this Repurchase Agreement, the Custodial Agreement,
the Electronic Tracking Agreement, if applicable, a Servicer Notice, if any,
the Disbursement Agreement and the Account Agreement.

 

“Repurchase
Price” shall mean the price at which Purchased Mortgage Loans are to be
transferred from Buyer or its designee to the 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.

 

“Requirement
of Law” shall mean as to any Person, the certificate of incorporation and
by- laws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its Property is
subject.

 

“Responsible
Officer” shall mean an officer of the Seller listed on Exhibit XI
hereto, as such Exhibit XI may be amended from time to time by Seller
providing written notice to Buyer.

 

“Reset Date”
shall mean the last day of the related LIBOR Period.

 

“S&P”
shall mean Standard & Poor’s Ratings Services, or any successor thereto.

 

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

 

“Seller”
shall mean MortgageIT, Inc. or any successor in interest thereto.

 

“Servicer”
shall mean the Seller, or any successor or permitted assigns.

 

“Servicer
Notice” shall mean the notice acknowledged by the Servicer substantially in
the form of Exhibit IX hereto.

 

“Servicing
Agreement” shall mean any servicing agreement entered into among a Seller
and a Servicer, as the same may be amended from time to time.

 

“Single-Employer
Plan” shall mean a single-employer plan as defined in Section 4001(a)(15)
of ERISA which is subject to the provisions of Title IV of ERISA.

 

“Subsidiary”
shall mean, with respect to any Person, any corporation, partnership or other
entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.

 

17

 

“Super
Jumbo Mortgage Loan” shall mean a Jumbo Mortgage Loan with an unpaid
principal balance in excess of $1,000,000 but not greater than $2,000,000, and
which is subject to a Takeout Commitment from Merrill Lynch Credit Corp.

 

“Takeout
Commitment” means a commitment of Seller to sell one or more Mortgage Loans
to a Takeout Investor, and the corresponding Takeout Investor’s commitment back
to Seller to effectuate the foregoing.

 

“Takeout
Investor”  shall mean any
institution which has made a Takeout Commitment and has been approved by Buyer,
which approval shall not be unreasonably withheld or delayed.

 

“Tangible
Net Worth” shall mean, for any Person, the Net Worth of such Person
determined in accordance with GAAP minus all intangible assets, including
goodwill, patents, tradenames, trademarks, copyrights, franchises, any
organizational expenses, deferred expenses, receivables from shareholders,
Affiliates or employees, and any other asset as shown as an intangible asset on
the balance sheet of such Person on a consolidated basis as determined at a
particular date in accordance with GAAP.

 

“Taxes”
shall have the meaning set forth in Section 7(a) hereof.

 

“Termination
Date” shall mean the date which is 364 days from the date hereof which
shall be June 18, 2004

 

“Termination
Event” shall have the meaning set forth in Section 13.02 hereof.

 

“Test
Period” shall mean any period of three (3) consecutive months.

 

“Transaction”
shall have the meaning specified in Section 1.

 

“Transaction
Request” shall mean a request from the Seller to Buyer to enter into a
Transaction.

 

“Trust
Receipt” shall have the meaning set forth in the Custodial Agreement, and
shall include any Wet-Ink Trust Receipt (as such term is defined in the
Custodial Agreement).

 

“Underwriting
Guidelines” shall mean the underwriting guidelines of the Seller which have
been delivered to the Buyer on or prior to the Effective Date of this
Repurchase Agreement, as such underwriting guidelines may be amended from time
to time in conformity with the terms and conditions of this Repurchase
Agreement.

 

“Uniform
Commercial Code” shall mean the Uniform Commercial Code as in effect from
time to time in the State of New York; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interest in any Repurchase Assets or the continuation, renewal
or enforcement thereof is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than New York, “Uniform Commercial Code” shall mean the
Uniform Commercial Code as in effect in such

 

18

 

other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection.

 

“VA”
shall mean the U.S. Department of Veterans Affairs, an agency of the United
States of America, or any successor thereto including the Secretary of Veterans
Affairs.

 

“VA
Approved Lender” shall mean a lender which is approved by the VA to act as
a lender in connection with the origination of VA Loans.

 

“VA Loan”
shall mean a Mortgage Loan which is subject of a VA Loan Guaranty Agreement as
evidenced by a VA Loan Guaranty Agreement, or a Mortgage Loan which is a vender
loan sold by the VA.

 

“VA Loan
Guaranty Agreement” shall mean the obligation of the United States to pay a
specific percentage of a Mortgage Loan (subject to a maximum amount) upon
default of the Mortgagor pursuant to the Servicemen’s Readjustment Act, as
amended.

 

“Wet-Ink
Funding Account” shall mean an account established in the name of the
Seller, subject to the dominion and control of the Buyer, at the Disbursement Agent
pursuant to the terms of the Disbursement Agreement.

 

“Wet-Ink
Mortgage Loan” shall mean a Mortgage Loan which any Seller is selling to
Buyer simultaneously with the origination thereof and for which the Mortgage
Loan Documents have not been delivered to the Custodian.

 

“Wiring
Schedule” shall mean, for each Wet-Ink Mortgage Loan, a schedule setting
forth the loan identification number, the loan amount to be funded by wire
transfer and wiring directions for such Wet-Ink Mortgage Loan.

 

SECTION 3.                            INITIATION;
TERMINATION

 

(a) Conditions Precedent to Initial
Transaction.  Buyer’s agreement to
enter into the initial Transaction hereunder is subject to the satisfaction,
immediately prior to or concurrently with the making of such Transaction, of
the condition precedent that Buyer shall have received from the Seller any fees
and expenses payable hereunder, and all of the following documents, each of
which shall be satisfactory to Buyer and its counsel in form and substance:

 

(i)                                   The
following Repurchase Documents delivered to the Buyer:

 

(A) Repurchase Agreement.  This Repurchase Agreement, duly executed by
the parties thereto;

 

(B) Custodial Agreement.  The Custodial Agreement, duly executed by
the parties thereto;

 

(C) Account Agreement.  An Account Agreement, duly executed by the
parties thereto in form and substance acceptable to the Buyer; and

 

19

 

(D) Electronic Tracking Agreement.  To the extent Seller is selling Mortgage
Loans which are registered on the MERS® System, an Electronic Tracking
Agreement entered into, duly executed and delivered by the parties thereto, in
full force and effect, free of any modification, breach or waiver.

 

(E) Disbursement Agreement.  A Disbursement Agreement, duly executed by the
parties thereto in form and substance acceptable to the Buyer; and the
establishment thereunder of all accounts, computer systems and agreements with
the Disbursement Agent necessary for disbursing the Purchase Price related to
Wet-Ink Mortgage Loans.

 

(ii)                                    Opinions
of Counsel. An opinion or opinions of outside counsel to the Seller,
substantially in the form of Exhibit II.

 

(iii)                                      Seller
Organizational Documents.  A
certificate of corporate existence of the Seller delivered to Buyer prior to
the Effective Date (or if unavailable, as soon as available thereafter) and
certified copies of the charter and by-laws (or equivalent documents) of the
Seller and of all corporate or other authority for the Seller with respect to
the execution, delivery and performance of the Repurchase Documents and each
other document to be delivered by the Seller from time to time in connection
herewith.

 

(iv)                                    Security
Interest.  Evidence that all other
actions necessary or, in the opinion of Buyer, desirable to perfect and protect
Buyer’s interest in the Purchased Mortgage Loans and other Repurchase Assets
have been taken, including, without limitation, UCC searches and duly
authorized and filed Uniform Commercial Code financing statements on Form
UCC-1.

 

(v)                                  Underwriting
Guidelines.  A true and correct copy
of the Underwriting Guidelines certified by an officer of the Seller.

 

(vi)                                    Insurance.  Evidence that Seller has added Buyer as an
additional insured under the Seller’s E&O Insurance.

 

(vii)                                     Other
Documents.  Such other documents as
Buyer may reasonably request, in form and substance reasonably acceptable to
Buyer.

 

(b) Conditions Precedent to all
Transactions.  Upon satisfaction of
the conditions set forth in the Section 3(b), the Buyer may enter into a
Transaction with Seller.  This Agreement
is not a commitment by Buyer to enter into Transactions with Seller but rather
sets forth the procedures to be used in connection with periodic requests for
Buyer to enter into Transactions with Seller. 
Seller hereby acknowledges that Buyer is under no obligation to agree to
enter into, or to enter into, any Transaction pursuant to this Agreement.  Buyer’s agreement to enter into each
Transaction (including the initial Transaction) is subject to the satisfaction
of the following further conditions precedent, both immediately prior to
entering into such Transaction and also after giving effect thereto to the
intended use thereof:

 

(i)                                   Buyer
shall have executed and delivered a Confirmation in accordance with the
procedures set forth in Section 3(c);

 

20

 

(ii)                                    No
Termination Event, Default or Event of Default shall have occurred and be
continuing under the Repurchase Documents;

 

(iii)                                      Both
immediately prior to the Transaction and also after giving effect thereto and
to the intended use thereof, the representations and warranties made by the
Seller in Section 11 hereof, shall be true, correct and complete on and as of
such Purchase Date in all material respects with the same force and effect as if
made on and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date);

 

(iv)                                    After
giving effect to the requested Transaction, the aggregate outstanding Purchase
Price for all Purchased Mortgage Loans subject to then outstanding Transactions
under this Repurchase Agreement shall not exceed the Maximum Purchase Price;

 

(v)                                  After
giving effect to the requested Transaction, the Asset Value of all Purchased
Mortgage Loans exceeds the aggregate Repurchase Price for such Transactions;

 

(vi)                                    On
or prior to 5:30 p.m. (New York Time) one (1) day prior to the related Purchase
Date, the Seller shall have delivered to the Buyer (a) a Transaction Request,
and (b) a Purchased Mortgage Loan Report;

 

(vii)                                     With
respect to Transactions the subject of which are Wet-Ink Mortgage Loans:

 

(A) At least one Business Day prior to
the related Purchase Date, the Buyer shall have received a Transaction Request;

 

(B) By 12:00 noon (New York time) on the
related Purchase Date, the Custodian shall have received from the Buyer a
schedule setting forth the mortgage loan identification number, the Mortgagor
name and the outstanding principal balance of Wet-Ink Mortgage Loans to be
purchased by Buyer on such Purchase Date; and

 

(C) The Custodian and the Buyer shall
have received a Wiring Schedule setting forth the disbursement amount and
wiring instructions for each Wet-Ink Mortgage Loan.

 

(viii)                                       The
Seller shall have delivered to the Custodian the Mortgage File with respect to
each Purchased Mortgage Loan which is not a Wet-Ink Mortgage Loan and the
Custodian shall have issued a Trust Receipt with respect to each such Purchased
Mortgage Loan to the Buyer and (B) with respect to each Wet-Ink Mortgage Loan,
by no later than 5:00 p.m. (New York Time) on the seventh Business Day
following the applicable Purchase Date, Seller shall deliver the Mortgage File
to the Custodian;

 

(ix)                                      The
Buyer shall have received all fees and expenses of counsel to the Buyer as contemplated
by Sections 15(b) and 27 which amounts, at the Buyer’s option, may be

 

21

 

withheld from the proceeds remitted by Buyer
to the Seller pursuant to any Transaction hereunder;

 

(x)                                    None
of the following shall have occurred and/or be continuing:

 

(A) an event or events shall have
occurred in the good faith determination of the Buyer resulting in the
effective absence of a “repo market” or comparable “lending market” for
financing debt obligations secured by securities or an event or events shall
have occurred resulting in the Buyer not being able to finance Purchased
Mortgage Loans through the “repo market” or “lending market” with traditional
counterparties at rates which would have been reasonable prior to the
occurrence of such event or events; or

 

(B) there shall have occurred a material
adverse change in the financial condition of the Buyer which affects (or can
reasonably be expected to affect) materially and adversely the ability of the
Buyer to fund its obligations under this Repurchase Agreement; or

 

(xi)                                      Each
Transaction Request delivered by the Seller hereunder shall constitute a
certification by the Seller that all the conditions set forth in this Section
3(b) (other than clause (x) hereof) have been satisfied (both as of the date of
such notice or request and as of the date of such purchase).

 

(c) Initiation; Confirmation.

 

(i)                                   The
Seller shall deliver a Transaction Request to the Buyer on or prior to 5:30
p.m. on the date one (1) Business Day prior to entering into any
Transaction.  Such Transaction Request
shall include a Mortgage Loan Schedule with respect to the Mortgage Loans to be
sold in such requested Transaction. 
Following receipt of such request, Buyer may agree to enter into such
requested Transaction or shall notify Seller of its intention not to enter into
such Transaction within one (1) Business Day of the receipt of any Transaction
Request.  Buyer shall confirm the terms
of each Transaction by issuing a written confirmation to the Seller promptly
after the parties enter into such Transaction in the form of Exhibit I
attached hereto (a “Confirmation”). 
Such Confirmation shall set forth (A) the Purchase Date, (B) the
Purchase Price, (C) the Repurchase Date, (D) the Pricing Rate applicable to the
Transaction, (E) the applicable Purchase Price Percentages, (F) LIBOR Period
and (G) additional terms or conditions not inconsistent with this Repurchase
Agreement.

 

(ii)                                    The
Repurchase Date for each Transaction shall not be later than the date which is
364 days after the related Purchase Date. 
The LIBOR Period for each Transaction shall be one month, unless agreed
to in writing by the Buyer.

 

(iii)                                      Each
Confirmation, together with this Repurchase Agreement, shall be conclusive
evidence of the terms of the Transaction(s) covered thereby unless objected to
in writing by the Seller no more than two (2) Business Days after the date the
Confirmation was received by the Seller or unless a corrected Confirmation is
sent by Buyer.  An objection sent by
Seller must state specifically that writing which is an

 

22

 

objection, must specify the provision(s)
being objected to by the Seller, must set forth such provision(s) in the manner
that the Seller believes they should be stated, and must be received by Buyer
no more than two (2) Business Days after the Confirmation was received by the
Seller.

 

(iv)                                    Subject
to the terms and conditions of this Repurchase Agreement, during such period
the Seller may sell, repurchase and resell Eligible Mortgage Loans hereunder.

 

(v)                                  In
no event shall a Transaction be entered into when the Repurchase Date for such
Transaction would be later than the Termination Date.

 

(vi)                                    No
later than 3 p.m., New York City time, on the Business Day prior to the
requested Purchase Date, the Seller shall deliver to the Custodian the Mortgage
Loan File pertaining to each Eligible Mortgage Loan (other than a Wet-Ink
Mortgage Loan) to be purchased by the Buyer.

 

(vii)                                     With
respect to Transactions the subject of which are Wet-Ink Mortgage Loans:

 

(A) No later than 5:30 p.m. (New York
time) on the Business Day prior to the related Purchase Date, the Buyer shall
have received a report detailing the approximate outstanding principal balance
of Wet-Ink Mortgage Loans to be purchased by the Buyer on such Purchase Date
and the Estimated Purchase Price;

 

(B) On or before the Purchase Date, the
Buyer shall have received (a) a schedule setting forth the mortgage loan
identification number, the Mortgagor name and the approximate outstanding
principal balance of Wet-Ink Mortgage Loans to be purchased by Buyer on such
Purchase Date, and (b) an updated report setting forth the approximate
outstanding principal balance of Wet-Ink Mortgage Loans to be purchased by the
Buyer on such Purchase Date and the amount of the Actual Purchase Price.  On the Purchase Date, the Buyer shall remit
the amount of the Estimated Purchase Price directly to the Wet-Ink Funding
Account to be disbursed by the Disbursement Agent in accordance with the
Disbursement Agreement;

 

(C) With respect to Wet-Ink Mortgage
Loans which are being purchased in whole or in part by means of wire transfer,
on or prior to the related Purchase Date, the Custodian shall have received the
Wiring Schedule related to such Wet-Ink Mortgage Loans.  Upon receipt by the Buyer of the Wiring
Schedule, the Buyer shall forward the Wiring Schedule and direct the
Disbursement Agent to wire the related funding amount to each Mortgagor from
the Wet-Ink Funding Account.

 

(D) Notwithstanding the foregoing, the
full amount of the Estimated Purchase Price shall be deemed to have been made
on the Purchase Date for all purposes hereunder.

 

23

 

(E) Upon receipt of the final Wiring
Schedule with respect to any Purchase Date, the Buyer shall determine the
amount, if any, by which the Estimated Purchase Price deposited in the Wet-Ink
Funding Account exceeds the Actual Purchase Price (such amount, the “Overestimate
Amount”).  The Buyer shall cause the
Disbursement Agent to promptly wire such Overestimate Amount directly to the
Buyer as a prepayment of the Transaction made on such Purchase Date.

 

(viii)                                       Subject
to the provisions of this Section 3, the Purchase Price will then be made
available to the Seller by the Buyer transferring, via wire transfer, in the
aggregate amount of such Purchase Price in funds immediately available.

 

(d) Repurchase

 

(i)                                   The
Seller may repurchase Purchased Mortgage Loans without penalty or premium on
any date.  The Repurchase Price payable
for the repurchase of any such Purchased Mortgage Loan shall be reduced as
provided in Section 5(d).  If the Seller
intends to make such a repurchase, the Seller shall give prior written notice
thereof by 10:00 a.m. on the same Business Day to the Buyer, designating the
Purchased Mortgage Loans to be repurchased. 
If such notice is given, the amount specified in such notice shall be
due and payable on the date specified therein, and, on receipt, such amount
shall be applied to the Repurchase Price for the designated Purchased Mortgage
Loans.

 

(ii)                                    On
the Repurchase Date, termination of the Transaction will be effected by
reassignment to the Seller or its designee of the Purchased Mortgage Loans (and
any Income in respect thereof received by Buyer not previously credited or
transferred to, or applied to the obligations of, the Seller pursuant to
Section 5) against the simultaneous transfer of the Repurchase Price to an
account of Buyer.  The Seller is
obligated to obtain the Mortgage Files from Buyer or its designee at the
Seller’s expense on the Repurchase Date.

 

SECTION 4.                            MARGIN
AMOUNT MAINTENANCE

 

(a) The Buyer shall determine the Asset
Value of the Purchased Mortgage Loans on a weekly basis, or at such intervals
as determined by the Buyer in its sole good faith discretion.

 

(b) If at any time the aggregate Asset
Value of all related Purchased Mortgage Loans subject to all Transactions is
less than the aggregate Repurchase Price for all such Transactions (a “Margin
Deficit”), then Buyer may by notice to Seller (as such notice is more
particularly set forth below, a “Margin Call”), require Seller to
transfer to Buyer or its designee cash or Eligible Mortgage Loans approved by
the Buyer in its sole good faith discretion (“Additional Purchased Mortgage
Loans”) so that the aggregate Asset Value of the Purchased Mortgage Loans,
including any such cash or Additional Purchased Mortgage Loans or cash, will
thereupon equal or exceed the aggregate Repurchase Price for all Transactions.
If Buyer delivers a Margin Call to the Seller on or prior to 5 p.m. (New York
City time) on any Business Day, then

 

24

 

the Seller shall transfer cash or Additional
Purchased Mortgage Loans to Buyer no later than 5 p.m. (New York City time) on
the subsequent Business Day.

 

(c) Buyer’s election, in its sole and
absolute discretion, not to make a Margin Call at any time there is a Margin
Deficit shall not in any way limit or impair its right to make a Margin Call at
any time a Margin Deficit exists.

 

(d) Any cash transferred to the Buyer
pursuant to Section 4(b) above shall be credited to the Repurchase Price of the
related Transactions.

 

SECTION 5.                            INCOME
PAYMENTS

 

(a) Notwithstanding that Buyer and the
Seller intend that the Transactions hereunder be sales to Buyer of the
Purchased Mortgage Loans shall pay to Buyer the accreted value of the Price
Differential (less any amount of such Price Differential previously paid by the
Seller to Buyer) plus the amount of any unpaid Margin Deficit (each such
payment, a “Periodic Advance Repurchase Payment”) on each Payment Date,
as invoiced by the Buyer on the related Payment Date.  The Seller shall initiate wire payment of the Periodic Advance
Repurchase Payment within two (2) hours of receipt of such invoice on the
related Payment Date.  If the Seller
fails to make all or part of the Periodic Advance Repurchase Payment in
accordance with the previous sentence, the Pricing Rate shall be equal to the
Post-Default Rate until the Periodic Advance Repurchase Payment is received in
full by Buyer.

 

(b) The Seller shall hold for the
benefit of, and in trust for, Buyer all income, including without limitation
all Income received by or on behalf of the Seller with respect to such
Purchased Mortgage Loans.  All Income
shall be held in trust for Buyer, shall constitute the property of Buyer.  With respect to each Payment Date, the
Seller shall remit all Income as follows:

 

(i)                                   first,
to the payment of all costs and fees payable by the Seller pursuant to this
Repurchase Agreement;

 

(ii)                                    second,
to the Buyer in payment of any accrued and unpaid Price Differential; and

 

(iii)                                      third,
without limiting the rights of Buyer under Section 4 of this Repurchase
Agreement, to the Buyer, in the amount of any unpaid Margin Deficit.

 

(c) After the occurrence of an Event of
Default, the Seller shall deposit such Income in a deposit account (the title
of which shall indicate that the funds therein are being held in trust for
Buyer) (the “Collection Account”) with a financial institution
acceptable to Buyer and subject to the Account Agreement.  All such Income shall be held in trust for
Buyer, shall constitute the property of Buyer and shall not be commingled with
other property of the Seller or any Affiliate of the Seller except as expressly
permitted above.  Funds deposited in the
Collection Account during any month shall be held therein, in trust for the
Buyer, until the next Payment Date. 
Subject to the terms of the Account Agreement, Seller shall withdraw any
funds on deposit in the Collection Account and apply such funds as follows:

 

25

 

(i)                                   first,
to the payment of all costs and fees payable by the Seller pursuant to this
Repurchase Agreement;

 

(ii)                                    second,
to the Buyer in payment of any accrued and unpaid Price Differential;

 

(iii)                                      third,
without limiting the rights of Buyer under Section 4 of this Repurchase
Agreement, to the Buyer, in the amount of any unpaid Margin Deficit; and

 

(iv)                                    fourth,
to the Seller.

 

(d) To the extent that the Buyer
receives any funds from a Takeout Investor with respect to the purchase by such
Takeout Investor of a Mortgage Loan, the Buyer shall promptly apply such funds
in accordance with the same order of priority set forth in Section 5(b) hereof.

 

(e) Buyer shall offset against the
Repurchase Price of each such Transaction all Income and Periodic Advance
Repurchase Payments actually received by Buyer pursuant to Section 5(a),
excluding any Late Payment Fees paid pursuant to any Periodic Advance
Repurchase Payments made at the Post-Default Rate pursuant to Section 5(a).

 

SECTION 6.                            REQUIREMENTS
OF LAW

 

(a) If any Requirement of Law (other
than with respect to any amendment made to the Buyer’s certificate of
incorporation and by-laws or other organizational or governing documents) or
any change in the interpretation or application thereof or compliance by the
Buyer with any request or directive (whether or not having the force of law)
from any central bank or other Go vernmental Authority made subsequent to the
date hereof:

 

(i)                                   shall
subject the Buyer to any tax of any kind whatsoever with respect to this
Repurchase Agreement or any Transaction (excluding net income taxes branch
profits taxes, franchise taxes or similar taxes imposed on the Buyer as a
result of any present or former connection between the Buyer and the United
States, other than any such connection arising solely from the Buyer having
executed, delivered or performed its obligations or received a payment under,
or enforced, this Repurchase Agreement) or change the basis of taxation of
payments to the Buyer in respect thereof;

 

(ii)                                    shall
impose, modify or hold applicable any reserve, special deposit, compulsory loan
or similar requirement against assets held by, deposits or other liabilities in
or for the account of, advances, or other extensions of credit by, or any other
acquisition of funds by, any office of the Buyer which is not otherwise
included in the determination of the LIBOR Rate hereunder;

 

(iii)                                      shall
impose on the Buyer any other condition;

 

and the result of any of the foregoing is to
increase the cost to the Buyer, by an amount which the Buyer determines in good
faith to be material, of entering, continuing or maintaining any Transaction or
to reduce any amount due or owing hereunder in respect thereof, then, in any
such

 

26

 

case, the Seller shall promptly pay the Buyer
such additional amount or amounts as calculated by the Buyer in good faith as
will compensate the Buyer for such increased cost or reduced amount receivable.

 

(b) If the Buyer shall have determined
that the adoption of or any change in any Requirement of Law (other than with
respect to any amendment made to the Buyer’s certificate of incorporation and
by- laws or other organizational or governing documents) regarding capital
adequacy or in the interpretation or application thereof or compliance by the
Buyer or any corporation controlling the Buyer with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof shall have the effect
of reducing the rate of return on the Buyer’s or such corporation’s capital as
a consequence of its obligations hereunder to a level below that which the
Buyer or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration the Buyer’s or such corporation’s
policies with respect to capital adequacy) by an amount determined in good
faith by the Buyer to be material, then from time to time, the Seller shall
promptly pay to the Buyer such additional amount or amounts as will compensate
the Buyer for such reduction.

 

(c) If the Buyer becomes entitled to
claim any additional amounts pursuant to this Section, it shall promptly notify
the Seller of the event by reason of which it has become so entitled.  A certificate as to any additional amounts
payable pursuant to this Section submitted by the Buyer to the Seller shall be
conclusive in the absence of manifest error.

 

(d) No amount shall be payable by either
Seller under this Section 6 with respect to any period in excess of ninety (90)
days prior to the date of demand by the Buyer unless the effect of a change in
the interpretation or application of the Requirement of Law is retroactive by
its terms to a period prior to the date of the change in interpretation or
application of the Requirement of Law, in which case any additional amount or
amounts shall be payable for the retroactive period but only if the Buyer
provides its written demand not later than ninety (90) days after the change in
the interpretation or application of the Requirement of Law.

 

SECTION 7.                            TAXES.

 

(a) All payments made by the Seller
under this Repurchase Agreement shall be made free and clear of, and without
deduction or withholding for, or on account of, any present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
(including penalties, interest and additions to tax) with respect thereto
imposed by any Governmental Authority thereof or therein (“Taxes”), excluding
income taxes, branch profits taxes, franchise taxes or similar taxes imposed on
the Buyer as a result of any present or former connection between the Buyer and
the United States, other than any such connection arising solely from the Buyer
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Repurchase Agreement (all such nonexcluded Taxes, “Non-Excluded
Taxes”).  If the Seller shall be
required to deduct or withhold any Taxes from or in respect of any amount
payable hereunder, (i) the Seller shall make such deductions or withholdings,
(ii) the Seller shall pay the full amount deducted or withheld to the relevant
Governmental Authority in accordance with applicable law, and (iii) with
respect to any Non-Excluded Taxes, the amount payable shall be increased by an
amount (the “additional amount”) necessary so that the Buyer, shall
receive a

 

27

 

net amount equal to the amount it would have
received had no such deductions or withholdings in respect of Non-Excluded
Taxes been made.

 

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

 

(c) The Seller will indemnify the Buyer
for the full amount of Non- Excluded Taxes (including additional amounts with
respect thereto) and Other Taxes paid by the Buyer, provided that the
Buyer shall have provided the Seller with evidence, reasonably satisfactory to
the Seller, of payment of Non-Excluded Taxes or Other Taxes, as the case may
be.

 

(d) As soon as practicable after the
date of any payment of Taxes or Other Taxes by the Seller to the relevant
Governmental Authority, the Seller will deliver to the Buyer the original or a
certified copy of the receipt issued by such Governmental Authority evidencing
payment thereof.

 

(e) Without prejudice to the survival of
any other agreement of the Seller hereunder, the agreements and obligations of
the Seller contained in this Section 7 shall survive the termination of this
Repurchase Agreement.  Nothing contained
in this Section 7 shall require the Buyer to make available any of its tax
returns or any other information that it deems to be confidential or
proprietary.

 

SECTION 8.                            SECURITY
INTEREST

 

Although the
parties intend that all Transactions hereunder be sales and purchases (other
than for accounting and tax purposes) and not loans, in the event any such
Transactions are deemed to be loans, the Seller hereby pledges to Buyer as
security for the performance by the Seller of its Obligations and hereby
grants, assigns and pledges to Buyer a fully perfected first priority security
interest in the Purchased Mortgage Loans, the Records, and all servicing rights
related to the Purchased Mortgage Loans, the Repurchase Documents (to the
extent such Repurchase Documents and the Seller’s right thereunder relate to
the Purchased Mortgage Loans), any Property relating to any Purchased Mortgage
Loan or the related Mortgaged Property, any Takeout Commitments relating to any
Purchased Mortgage Loan, all insurance policies and insurance proceeds relating
to any Purchased Mortgage Loan or the related Mortgaged Property, including but
not limited to any payments or proceeds under any related primary insurance,
hazard insurance, FHA Mortgage Insurance Contracts and VA Loan Guaranty
Agreements (if any), any Income relating to any Purchased Mortgage Loan, the
Collection Account, any Interest Rate Protection Agreements relating to any
Purchased Mortgage Loan, and any other contract rights, accounts (including any
interest of the Seller in escrow accounts) and any other contract rights,
accounts, payments, rights to payment (including payments of interest or
finance charges) and general intangibles to the extent that the forgoing
relates to any Purchased Mortgage Loan and any other assets relating to the
Purchased Mortgage Loans (including, without limitation, any other accounts) or
any interest in the Purchased

 

28

 

Mortgage Loans, all collateral under any
other secured debt facility between the Seller or its Affiliates on the one
hand and the Buyer and the Buyer’s Affiliates on the other, and any proceeds
(including the related securitization proceeds) and distributions and any other
property, rights, title or interests as are specified on a Trust Receipt and
Mortgage Loan Schedule and Exception Report with respect to any of the
foregoing, in all instances, whether now owned or hereafter acquired, now
existing or hereafter created (collectively, the “Repurchase Assets”).

 

The Seller
hereby authorizes the Buyer to file such financing statement or statements
relating to the Repurchase Assets as the Buyer, at its option, may deem
appropriate.  The Seller shall pay the
filing costs for any financing statement or statements prepared pursuant to
this Section 8.

 

SECTION 9.                            PAYMENT,
TRANSFER AND CUSTODY

 

(a) Unless otherwise mutually agreed in
writing, all transfers of funds to be made by the Seller hereunder shall be
made in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Buyer at the following account maintained by the Buyer:
Merrill Lynch Bank USA, Account No. 62030, for the account of Credit Globus
Account 0200001133 CFCGABF, ABA# 124 084 669, not later than 5:00 p.m. New York
City time, on the date on which such payment shall become due (and each such
payment made after such time shall be deemed to have been made on the next
succeeding Business Day).  The Seller
acknowledges that it has no rights of withdrawal from the foregoing account.

 

(b) On the Purchase Date for each
Transaction, ownership of the Purchased Mortgage Loans shall be transferred to
the Buyer or its designee against the simultaneous transfer of the Purchase
Price to the following account of the Seller (or as otherwise directed by the
Seller):  Deutsche Bank National Trust
Company, Account No. 37622, for the account of Buyer, ABA# 01419663.  With respect to the Purchased Mortgage Loans
being sold by a Seller on a Purchase Date, the Seller hereby sells, transfers,
conveys and assigns to Buyer or its designee without recourse, but subject to
the terms of this Repurchase Agreement, all the right, title and interest of
the Seller in and to the Purchased Mortgage Loans together with all right,
title and interest in and to the proceeds of any related Repurchase Assets.

 

(c) In connection with such sale,
transfer, conveyance and assignment, on or prior to each Purchase Date, the
Seller shall deliver or cause to be delivered and released to Buyer or its designee
the Mortgage File for the related Purchased Mortgage Loans.

 

SECTION 10.                     HYPOTHECATION
OR PLEDGE OF PURCHASED MORTGAGE LOAN

 

Title to all
Purchased Mortgage Loans and Repurchase Assets shall pass to Buyer and Buyer
shall have free and unrestricted use of all Purchased Mortgage Loans.  Nothing in this Repurchase Agreement shall
preclude the Buyer from engaging in repurchase transactions with the Purchased
Mortgage Loans or otherwise pledging, repledging, transferring, hypothecating,
or rehypothecating the Purchased Mortgage Loans.  Nothing contained in this Repurchase Agreement shall obligate the
Buyer to segregate any Purchased Mortgage Loans delivered to the Buyer by the
Seller.

 

29

 

SECTION 11.                     REPRESENTATIONS

 

(1) The Seller
represents and warrants to the Buyer that as of the Purchase Date for any
Purchased Mortgage Loans by the Buyer from the Seller and as of the date of
this Repurchase Agreement and any Transaction hereunder and at all times while
the Repurchase Documents and any Transaction hereunder is in full force and
effect:

 

(a) Acting as Principal.  The Seller will engage in such Transactions
as principal (or, if agreed in writing in advance of any Transaction by the
other party hereto, as agent for a disclosed principal).

 

(b) No Broker.  The Seller has not dealt with any broker,
investment banker, agent, or other person, except for the Buyer, who may be
entitled to any commission or compensation in connection with the sale of
Purchased Mortgage Loans pursuant to this Repurchase Agreement.

 

(c) Financial Statements.  The Seller has heretofore furnished to the
Buyer a copy of its (a) consolidated balance sheet and the consolidated balance
sheets of its consolidated Subsidiaries for the fiscal year ended December 31,
2002 and the related consolidated statements of income and retained earnings
and of cash flows for the Seller and its consolidated Subsidiaries for such
fiscal year, setting forth in each case in comparative form the figures for the
previous year, with the opinion thereon of BDO Seidman LLP and (b) consolidated
balance sheet and the consolidated balance sheets of its consolidated
Subsidiaries for the quarterly fiscal period of the Seller ended April 30, 2003
and the related consolidated statements of income and retained earnings and of
cash flows for the Seller and its consolidated Subsidiaries for such quarterly
fiscal period, setting forth in each case in comparative form the figures for
the previous year.  All such financial
statements are complete and correct and fairly present, in all material
respects, the consolidated financial condition of the Seller and its
Subsidiaries and the consolidated results of their operations as at such dates
and for such fiscal periods, all in accordance with GAAP applied on a
consistent basis.  Since December 31,
2002, there has been no material adverse change in the consolidated business,
operations or financial condition of the Seller and its consolidated Subsidiaries
taken as a whole from that set forth in said financial statements nor is the
Seller aware of any state of facts which (without notice or the lapse of time)
would or could result in any such material adverse change.  The Seller does not have, on the date of the
statements delivered pursuant to this section (the “Statement Date”),
any liabilities, direct or indirect, fixed or contingent, matured or unmatured,
known or unknown, or liabilities for taxes, long-term leases or unusual forward
or long-term commitments not disclosed by, or reserved against in, said balance
sheet and related statements, and at the present time there are no material
unrealized or anticipated losses from any loans, advances or other commitments
of the Seller which are required to be disclosed in or reserved against in said
balance sheet and related statement under GAAP.

 

(d) Organization, Etc. The Seller
is a corporation duly organized, validly existing and in good standing under
the laws of New York.  The Seller (a)
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

 

30

 

likely to have a Material Adverse Effect; (b)
is qualified to do business and is in good standing in all other jurisdictions
in which the nature of the business conducted by it makes such qualification
necessary, except where failure so to qualify would not be reasonably likely
(either individually or in the aggregate) to have a Material Adverse Effect;
and (c) has full power and authority to execute, deliver and perform its
obligations under the Repurchase Documents.

 

(e) Authorization, Compliance, Etc.  The execution and delivery of, and the
performance by the Seller of its obligations under, the Repurchase Documents to
which it is a party (a) are within the Seller’s powers, (b) have been duly
authorized by all requisite action, (c) do not violate any provision of
applicable law, rule or regulation, or any order, writ, injunction or decree of
any court or other Governmental Authority, or its organizational documents, (d)
do not violate any indenture, agreement, document or instrument to which the
Seller is a party, or by which it or any of its properties, any of the
Repurchase Assets is bound or to which it is subject and (e) are not in
conflict with, do not result in a breach of, or constitute (with due notice or
lapse of time or both) a default under, or except as may be provided by any
Repurchase Document, result in the creation or imposition of any Lien upon any
of the property or assets of the Seller pursuant to, any such indenture, agreement,
document or instrument.  The Seller is
not required to obtain any consent, approval or authorization from, or to file
any declaration or statement with, any Governmental Authority in connection
with or as a condition to the consummation of the Transactions contemplated
herein and the execution, delivery or performance of the Repurchase Documents
to which it is a party.

 

(f) Litigation. On the date
hereof, there are no actions, suits, arbitrations, investigations (including,
without limitation, any of the foregoing which are pending or threatened) or
other legal or arbitrable proceedings affecting the Seller or any of its
Subsidiaries or affecting any of the Repurchase Assets or any of the other
properties of the Seller before any Governmental Authority which (i) questions
or challenges the validity or enforceability of the Repurchase Documents or any
action to be taken in connection with the transactions contemplated hereby,
(ii) individually or in the aggregate, if adversely determined, would have a Material
Adverse Effect, or (iii) requires filing with the SEC in accordance with its
regulations.

 

(g) Purchased Mortgage Loans.

 

(i)                                   The
Seller has not assigned, pledged, or otherwise conveyed or encumbered any
Purchased Mortgage Loan to any other Person, and immediately prior to the sale
of such Mortgage Loan to the Buyer, the Seller was the sole owner of such
Purchased Mortgage Loan and had good and marketable title thereto, free and
clear of all Liens, in each case except for Liens to be released simultaneously
with the sale to the Buyer hereunder.

 

(ii)                                    The
provisions of this Repurchase Agreement are effective to either constitute a
sale of Repurchase Assets to the Buyer or to create in favor of the Buyer a
valid security interest in all right, title and interest of the Seller in, to
and under the Repurchase Assets.

 

31

 

(h) Chief Executive
Office/Jurisdiction of Organization. 
On the Effective Date, The Seller’s chief executive office is, and has
been, located at 33 Maiden Lane, 6th Floor, New York, New York
10038.  The Seller’s jurisdiction of
organization is New York.

 

(i) Location of Books and Records.  The location where the Seller keeps its
books and records, including all computer tapes and records related to the
Repurchase Assets is its chief executive office.

 

(j) Filing and Payment of Taxes.
The Seller has filed on a timely basis all federal, state and local tax and
information returns, reports and any other information statements or schedules
that are required to be filed by or in respect of it and has paid all taxes due
pursuant to such returns, reports or other information statements or schedules
or pursuant to any assessment received by it, except for any such taxes as are
being appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been
provided.  The charges, accruals and
reserves on the books of the Seller in respect of taxes and other governmental
charges are adequate.

 

(k) Enforceability.  This Repurchase Agreement and all of the
other Repurchase Documents executed and delivered by the Seller in connection
herewith are legal, valid and binding obligations of the Seller and are
enforceable against the Seller in accordance with their terms except as such
enforceability may be limited by (i) the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors
rights generally and (ii) general principles of equity.

 

(l) Ability to Perform.  The Seller does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in the Repurchase Documents to which it is a party on its
part to be performed

 

(m) Material
Adverse Effect.  Since December 31,
2002, there has been no development or event nor, to the Seller’s knowledge,
any prospective development or event, which has had or could have a Material
Adverse Effect.

 

(n) No Default.  No Default or Event of Default has occurred and
is continuing.

 

(o) Underwriting Guidelines.  The Underwriting Guidelines provided to
Buyer are the true and correct Underwriting Guidelines of the Seller.

 

(p) Adverse Selection.  The Seller has not selected the Purchased
Mortgage Loans in a manner so as to adversely affect Buyer’s interests.

 

(q) Tangible Net Worth.  On the initial Purchase Date, the Tangible
Net Worth of the Seller is not less than $22,000,000.

 

(r) Indebtedness.  The Seller does not have any Indebtedness,
except as disclosed on Schedule 2 to this Repurchase Agreement.

 

(s) Accurate and Complete Disclosure.
The information, reports, financial statements, exhibits and schedules
furnished in writing by or on behalf of the Seller to the Buyer

 

32

 

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

 

(t) Margin Regulations.  The use of all funds acquired by the Seller
under this Repurchase Agreement will not conflict with or contravene any of
Regulations T, U or X promulgated by the Board of Governors of the Federal
Reserve System as the same may from time to time be amended, supplemented or
otherwise modified.

 

(u) Investment Company.  The Seller is not an “investment company” or
a company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

 

(v) Solvency.  As of the date hereof and immediately after
giving effect to each Transaction, the fair value of the assets of the Seller
is greater than the fair value of the liabilities (including, without
limitation, contingent liabilities if and to the extent required to be recorded
as a liability on the financial statements of the Seller in accordance with
GAAP) of the Seller and the Seller is solvent and, after giving effect to the
transactions contemplated by this Repurchase Agreement and the other Repurchase
Documents, will not be rendered insolvent or left with an unreasonably small
amount of capital with which to conduct its business and perform its
obligations.  The Seller does not intend
to incur, nor does it believe that it has incurred, debts beyond its ability to
pay such debts as they mature.  The
Seller is not contemplating the commencement of an insolvency, bankruptcy,
liquidation, or consolidation proceeding or the appointment of a receiver,
liquidator, conservator, trustee, or similar official in respect of itself or
any of its property.

 

(w) ERISA.

 

(i)                                   No
liability under Section 4062, 4063, 4064 or 4069 of ERISA has been or is
expected by the Seller to be incurred by the Seller or any ERISA Affiliate
thereof with respect to any Plan which is a Single-Employer Plan in an amount
that could reasonably be expected to have a Material Adverse Effect.

 

(ii)                                    No
Plan of the Seller which is a Single-Employer Plan had an accumulated funding
deficiency, whether or not waived, as of the last day of the most recent fiscal
year of such Plan ended prior to the date hereof.  Neither the Seller nor any ERISA Affiliate thereof is (i)
required to give security to any Plan which is a Single-Employer

 

33

 

Plan pursuant
to Section 401(a) (29) of the Code or Section 307 of ERISA, or (ii) subject to
a Lien in favor of such a Plan under Section 302(f) of ERISA.

 

(iii)                                      Each
Plan of the Seller, each of its Subsidiaries and each of its ERISA Affiliates
is in compliance in all material respects with the applicable provisions of
ERISA and the Code, except where the failure to comply would not result in any
Material Adverse Effect.

 

(iv)                                    Neither
the Seller nor any of its Subsidiaries has incurred a tax liability under
Section 4975 of the Code or a penalty under Section 502(i) of ERISA in respect
of any Plan which has not been paid in full, except where the incurrence of
such tax or penalty would not result in a Material Adverse Effect.

 

(v)                                  Neither
the Seller nor any of its Subsidiaries or any ERISA Affiliate thereof has
incurred or reasonably expects to incur any withdrawal liability under Section
4201 of ERISA as a result of a complete or partial withdrawal from a
Multiemployer Plan which will result in withdrawal liability to the Seller, any
of its Subsidiaries or any ERISA Affiliate thereof in an amount that could
reasonably be expected to have a Material Adverse Effect.

 

(x) Agency Approvals. The Seller
is an FHA Approved Mortgagee and a VA Approved Lender. The Seller is also
approved by Fannie Mae as an approved lender and Freddie Mac as an approved
seller, and, to the extent necessary, approved by the Secretary of Housing and
Urban Development pursuant to Sections 203 and 211 of the National Housing
Act.  In each such case, the Seller is
in good standing, with no event having occurred prior to the issuance of the
consummation of the related Takeout Commitment, including, without limitation,
a change in insurance coverage which would either make the Seller unable to
comply with the eligibility requirements for maintaining all such applicable
approvals or require notification to the relevant Agency or to the Department
of Housing and Urban Development, FHA or VA. 
The Seller has adequate financial standing, servicing facilities,
procedures and experienced personnel necessary for the sound servicing of
mortgage loans of the same types as may from time to time constitute Mortgage
Loans and in accordance with Accepted Servicing Practices.

 

(y) Mortgage Loan Schedule.  The information set forth in the related
Mortgage Loan Schedule and all other information or data furnished by, or on
behalf of, Seller to Buyer is complete, true and correct in all material
respects, and Seller acknowledges that Buyer has not verified the accuracy of
such information or data.

 

(z) Taxes.  The Seller and its Subsidiaries have filed
all Federal income tax returns and all other material tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by it or any of its Subsidiaries,
except for any such taxes as are being appropriately contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate
reserves have been provided.  The
charges, accruals and reserves on the books of the Seller and its Subsidiaries
in respect of taxes and other governmental charges are, in the opinion of the
Seller, adequate.

 

34

 

(aa)                            No
Reliance.  The Seller has made its
own independent decisions to enter into the Repurchase Documents and each
Transaction and as to whether such Transaction is appropriate and proper for it
based upon its own judgment and upon advice from such advisors (including
without limitation, legal counsel and accountants) as it has deemed necessary.  Seller is not relying upon any advice from
Buyer as to any aspect of the Transactions, including without limitation, the
legal, accounting or tax treatment of such Transactions.

 

(bb)                          Plan
Assets.  The Seller is not an
employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan
described in Section 4975(e)(1) of the Code, and the Purchased Mortgage Loans
are not “plan assets” within the meaning of 29 CFR §2510.3-101 in the Seller’s
hands.

 

SECTION 12.                     COVENANTS

 

On and as of
the date of this Repurchase Agreement and each Purchase Date and until this
Repurchase Agreement is no longer in force with respect to any Transaction, the
Seller covenants as follows:

 

(a) Preservation of Existence;
Compliance with Law. The Seller shall:

 

(i)                                   Preserve
and maintain its legal existence and all of its material rights, privileges,
licenses and franchises necessary for the operation of its business;

 

(ii)                                    Comply
with the requirements of all applicable laws, rules, regulations and orders,
whether now in effect or hereafter enacted or promulgated by any applicable
Governmental Authority (including, without limitation, all environmental laws);

 

(iii)                                      Maintain
all licenses, permits or other approvals necessary for the Seller to conduct
its business and to perform its obligations under the Repurchase Documents, and
shall conduct its business in accordance with applicable law;

 

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

 

(v)                                  Permit
representatives of the Buyer, upon reasonable notice (unless an Event of
Default shall have occurred and is continuing, in which case, no prior notice
shall be required), 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 Buyer.

 

(b) Taxes, Etc.

 

(i)                                   The
Seller shall pay and discharge or cause to be paid and discharged, when due, or
adequately reserve for the payment of, all taxes, assessments and governmental
charges or levies imposed upon it or upon its income and profits or upon any of
its property, real, personal or mixed (including without limitation, the Repurchase

 

35

 

Assets) or
upon any part thereof, as well as any other lawful claims which, if unpaid,
might become a Lien upon such properties or any part thereof.

 

(ii)                                    The
Seller shall file on a timely basis all federal, state and local tax and
information returns, reports and any other information statements or schedules
required to be filed by or in respect of it and pay all taxes due pursuant to
such returns, reports and other information statements or schedules or pursuant
to any assessment received by it, except for any such taxes as are
appropriately contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are provided.

 

(c) Notice of Proceedings or Adverse
Change.  The Seller shall give
notice to the Buyer immediately after a Responsible Officer of the Seller has
any knowledge of:

 

(i)                                   the
occurrence of any Default or Event of Default or Termination Event;

 

(ii)                                    any
(a) default or event of default under any Indebtedness of the Seller in an
aggregate amount in excess of $1,000,000 or (b) litigation, investigation,
regulatory action or proceeding that is pending or threatened by or against the
Seller in any federal or state court or before any Governmental Authority
which, if not cured or if adversely determined, would reasonably be expected to
have a Material Adverse Effect or constitute a Default or Event of Default, and
(c) any Material Adverse Effect with respect to the Seller;

 

(iii)                                      any
litigation or proceeding that is pending or threatened against (a) the Seller
in which the amount involved exceeds $1,000,000 and is not covered by
insurance, in which injunctive or similar relief is sought, or which, would
reasonably be expected to have a Material Adverse Effect and (b) any litigation
or proceeding that is pending or threatened in connection with any of the
Repurchase Assets, which, if adversely determined, would reasonably be expected
to have a Material Adverse Effect;

 

(iv)                                    and,
as soon as reasonably possible, notice of any of the following events:

 

(A) a change in the insurance coverage
of the Seller, with a copy of evidence of same attached;

 

(B) any material adverse change in
accounting policies or financial reporting practices of the Seller;

 

(C) promptly upon receipt of notice or
knowledge of any Lien or security interest (other than security interests
created hereby or under any other Repurchase Document) on, or claim asserted
against, any of the Repurchase Assets; and

 

(D) any other event, circumstance or
condition that has resulted, or has a possibility of resulting, in a Material
Adverse Effect; and

 

36

 

(v)                                  Promptly,
but no later than five (5) Business Days after the Seller receives any of the
same, deliver to the Buyer a true, complete, and correct copy of any schedule,
report, notice, or any other document delivered to the Seller by any Person
pursuant to, or in connection with, any of the Repurchase Assets.

 

(d) Financial Reporting.  The Seller shall maintain a system of
accounting established and administered in accordance with GAAP, and furnish to
the Buyer:

 

(i)                                   Within
one hundred twenty (120) days after the close of each fiscal year, Financial
Statements, including a statement of income and changes in shareholders’ equity
of the Seller for such year, and the related balance sheet as at the end of
such year, all in reasonable detail and accompanied by an opinion of an
accounting firm as to said financial statements;

 

(ii)                                    Within
sixty (60) days after the close of each of the Seller’s first three fiscal
quarters in each fiscal year unaudited balance sheets and income statements,
for the period from the beginning of such fiscal year to the end of such fiscal
year, subject, however, to year end adjustments;

 

(iii)                                      Within
thirty (30) days after the end of each calendar month, the unaudited balance
sheets of the Seller as at the end of such period and the related unaudited
consolidated statements of income and retained earnings and of cash flows for
the Seller for such period and the portion of the fiscal year through the end
of such period, subject, however, to year end adjustments;

 

(iv)                                    Simultaneously
with the furnishing of each of the Financial Statements to be delivered
pursuant to subsection (ii) above, or monthly upon Buyer’s request, a
certificate in the form of Exhibit VIII hereto and certified by a
Responsible Officer of the Seller;

 

(v)                                  If
applicable, copies of any 10-Ks, 10-Qs, registration statements and other
“corporate finance” SEC filings (other than 8-Ks) by the Seller, within 5
Business Days of their filing with the SEC; provided, that, the Seller or any
Affiliate will provide the Buyer with a copy of the annual 10-K filed with the
SEC by the Seller or its Affiliates, no later than 90 days after the end of the
year; and

 

(vi)                                    Promptly,
from time to time, such other information regarding the business affairs,
operations and financial condition of the Seller as the Buyer may reasonably
request.

 

(e) Visitation and Inspection Rights.  Subject to the provisions of Section 27, the
Seller shall permit the Buyer to inspect, and to discuss with the Seller’s
officers, agents and auditors, the affairs, finances, and accounts of the
Seller, the Repurchase Assets, and the Seller’s books and records, and to make
abstracts or reproductions thereof and to duplicate, reduce to hard copy or
otherwise use any and all computer or electronically stored information or
data, in each case, (i) during normal business hours, (ii) upon reasonable
notice (provided, that upon the occurrence of an Event of Default, no notice
shall be required), and (iii) at the expense of the Seller to discuss with its
officers, its affairs, finances, and accounts.

 

37

 

(f) Reimbursement of Expenses.  On the date of execution of this Repurchase
Agreement, the Seller shall reimburse the Buyer for all expenses incurred by
the Buyer on or prior to such date. 
From and after such date, the Seller shall promptly reimburse the Buyer for
all expenses as the same are incurred by the Buyer and within thirty (30) days
of the receipt of invoices therefor.

 

(g) Further Assurances.  The Seller shall execute and deliver to the
Buyer all further documents, financing statements, agreements and instruments,
and take all further action that may be required under applicable law, or that
the Buyer may reasonably request, in order to effectuate the transactions
contemplated by this Repurchase Agreement and the Repurchase Documents or,
without limiting any of the foregoing, to grant, preserve, protect and perfect
the validity and first-priority of the security interests created or intended
to be created hereby.  The Seller shall
do all things necessary to preserve the Repurchase Assets so that they remain
subject to a first priority perfected security interest hereunder.  Without limiting the foregoing, the Seller
will comply with all rules, regulations, and other laws of any Governmental
Authority and cause the Repurchase Assets to comply with all applicable rules,
regulations and other laws.  The Seller
will not allow any default for which the Seller is responsible to occur under
any Repurchase Assets or any Repurchase Document and the Seller shall fully
perform or cause to be performed when due all of its obligations under any
Repurchase Assets or the Repurchase Documents.

 

(h) True and Correct Information.  All information, reports, exhibits,
schedules, financial statements or certificates of Seller or any of its
Affiliates thereof or any of their officers furnished to Buyer hereunder and
during Buyer’s diligence of the Seller are and will be true and complete in all
material respects and do not omit to disclose any material facts necessary to
make the statements therein or therein, in light of the circumstances in which
they are made, not misleading.  All
required financial statements, information and reports delivered by the Seller
to the Buyer pursuant to this Repurchase Agreement shall be prepared in
accordance with GAAP, or if applicable, to SEC filings, the appropriate SEC
accounting requirements.

 

(i)  ERISA
Events.

 

(i)                                   Promptly
upon becoming aware of the occurrence of any Event of Termination which
together with all other Events of Termination occurring within the prior 12
months involve a payment of money by or a potential aggregate liability of the
Seller or any ERISA Affiliate thereof or any combination of such entities in
excess of $250,000 the Seller shall give the Buyer a written notice specifying
the nature thereof, what action the Seller or any ERISA Affiliate thereof has
taken and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto;

 

(ii)                                    Promptly
upon receipt thereof, the Seller shall furnish to the Buyer copies of (i) all
notices received by the Seller or any ERISA Affiliate thereof of the PBGC’s
intent to terminate any Plan or to have a trustee appointed to administer any
Plan; (ii) all notices received by the Seller or any ERISA Affiliate thereof
from the sponsor of a Multiemployer Plan pursuant to Section 4202 of ERISA
involving a withdrawal liability in excess of $250,000; and (iii) all funding
waiver requests filed by the Seller or any

 

38

 

ERISA Affiliate
thereof with the Internal Revenue Service with respect to any Plan, the accrued
benefits of which exceed the present value of the plan assets as of the date
the waiver request is filed by more than $250,000, and all communications
received by the Seller or any ERISA Affiliate thereof from the Internal Revenue
Service with respect to any such funding waiver request.

 

(j)  Financial
Condition Covenants.

 

(i)                                   Maintenance
of Tangible Net Worth.  The Seller
shall maintain a Tangible Net Worth of not less than $22,000,000. The Seller
shall maintain a Tangible Net Worth at the end of any two consecutive calendar
quarters of not less than 80% of its Tangible Net Worth at the beginning of the
related calendar quarters.

 

(ii)                                    Maintenance
of Ratio of Indebtedness to Tangible Net Worth. The Seller shall maintain
the ratio of Indebtedness to Tangible Net Worth no greater than 20:1.

 

(iii)                                      Maintenance
of Liquidity.  The Seller shall
ensure that, as of the end of each calendar month, it has Cash Equivalents in
an amount not less than $2,000,000.

 

(k) RESERVED.

 

(l)  No
Adverse Selection.  The Seller shall
not select Eligible Mortgage Loans to be sold to Buyer as Purchased Mortgage
Loans using any type of adverse selection or other selection criteria which
would adversely affect the Buyer in any material respect.

 

(m) Mortgage
Loan Schedule.  On the Friday of
each calendar week (or if such date is not a Business Day, the next preceding
Business Day), or with such greater frequency as requested by Buyer, the Seller
shall provide to Buyer, electronically, in a format mutually acceptable to
Buyer, a Mortgage Loan Schedule.  The
Seller shall not cause the Purchased Mortgage Loans to be serviced by any
servicer other than a servicer expressly approved in writing by Buyer, which approval
shall be deemed granted by Buyer with respect to the Seller with the execution
of this Repurchase Agreement.

 

(n) Insurance.  The Seller shall continue to maintain
insurance coverage with respect to employee dishonesty, forgery or alteration,
theft, disappearance and destruction, robbery and safe burglary, property
(other than money and securities) and computer fraud in an aggregate amount at
least equal to $2,000,000 with respect to errors and omissions insurance and
$5,000,000 with respect to blanket insurance policy.  The Seller shall maintain a fidelity bond as required by
applicable state regulations in respect of its officers, employees and agents,
with respect to any claims made in connection with all or any portion of the
Repurchase Assets.  The Seller shall
notify the Buyer of any material change in the terms of any such fidelity bond
or insurance policy.

 

(o) Books and Records.  The Seller shall, to the extent practicable,
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing the Repurchase
Assets in the event of the destruction of the originals thereof), and keep and
maintain or obtain, as and when required, all documents, books, records

 

39

 

and other information reasonably necessary or
advisable for the collection of all Repurchase Assets.

 

(p) Security Interest.  The Seller shall do all things necessary to
preserve the Repurchase Assets so that they remains subject to a first priority
perfected security interest hereunder. 
Without limiting the foregoing, the Seller will comply with all rules,
regulations and other laws of any Governmental Authority and cause the Repurchase
Assets to comply with all applicable rules, regulations and other laws.  The Seller will not allow any default for
which the Seller is responsible to occur under any Repurchase Assets or any
Repurchase Documents and the Seller shall fully perform or cause to be
performed when due all of its obligations under any Repurchase Assets or the
Repurchase Documents.

 

(q) Illegal Activities.  The Seller shall not engage in any conduct
or activity that could subject its assets to forfeiture or seizure.

 

(r) Material Change in Business.  The Seller shall not make any material
change in the nature of its business as carried on at the date hereof.

 

(s) Limitation on Dividends and
Distributions.  The Seller shall not
make any payment on account of, or set apart assets for, a sinking or other
analogous fund for the purchase, redemption, defeasance, retirement or other
acquisition of any equity interest of the Seller, whether now or hereafter
outstanding, or make any other distribution in respect of any of the foregoing
or to any shareholder or equity owner of the Seller, either directly or
indirectly, whether in cash or property or in obligations of the Seller or any
of the Seller’s consolidated Subsidiaries in any calendar year; in excess of
50% of the net income of the Seller for such calendar year (determined in
accordance with GAAP ); provided that no such dividends or other distributions
may be made at any time following the occurrence and during the continuation of
an Event of Default.

 

(t) Disposition of Assets; Liens.  The Seller shall not create, incur, assume
or suffer to exist any mortgage, pledge, Lien, charge or other encumbrance of
any nature whatsoever on any of the Repurchase Assets, whether real, personal
or mixed, now or hereafter owned, other than the Liens created in connection
with the transactions contemplated by this Repurchase Agreement; nor shall the
Seller cause any of the Purchased Mortgage Loans to be sold, pledged, assigned
or transferred, except for sales of Purchased Mortgage Loans to Takeout
Investors or pursuant to securitizations, provided that the proceeds therefrom
are remitted to Buyer in accordance with this Repurchase Agreement.

 

(u) Transactions with Affiliates.  The Seller shall not enter into any
transaction, including, without limitation, the purchase, sale, lease or exchange
of property or assets or the rendering or accepting of any service with any
Affiliate, unless such transaction is (a) not otherwise prohibited in this
Repurchase Agreement and (b) upon fair and reasonable terms no less favorable
to the Seller, as the case may be, than it would obtain in a comparable arm’s
length transaction with a Person which is not an Affiliate.

 

(v) ERISA Matters.

 

40

 

(i)                                   The
Seller shall not permit any event or condition which is described in any of
clauses (i) through (vii) of the definition of “Event of Termination” to occur
or exist with respect to any Plan or Multiemployer Plan if such event or
condition, together with all other events or conditions described in the
definition of Event of Termination occurring within the prior 12 months,
involves the payment of money by or an incurrence of liability of the Seller or
any ERISA Affiliate thereof, or any combination of such entities in an amount
in excess of $250,000.

 

(ii)                                    The
Seller shall not be an employee benefit plan as defined in Section 3 of Title I
of ERISA, or a plan described in Section 4975(e)(1) of the Code and (b) the
Seller shall not use “plan assets” within the meaning of 29 CFR §2510.3-101 to
engage in this Repurchase Agreement or the Transactions hereunder.

 

(w) Consolidations, Mergers and Sales
of Assets.  The Seller shall not (i)
consolidate or merge with or into any other Person or (ii) sell, lease or
otherwise transfer all or substantially all of its assets to any other Person; provided
that the Seller may merge or consolidate with another Person if the Seller is
the Person surviving such merger and Seller may sell Purchased Mortgage Loans
to Takeout Investors or pursuant to securitizations provided that the proceeds therefrom
are remitted to Buyer in accordance with this Repurchase Agreement.

 

(x) Mortgage Loan Reports.  The Seller will furnish to Buyer monthly
electronic Mortgage Loan performance data, including, without limitation,
delinquency reports, pool analytic reports and static pool reports (i.e., delinquency, foreclosure and net
charge-off reports) and monthly stratification reports summarizing the
characteristics of the Mortgage Loans.

 

(y) Agency Approvals; Servicing.  The Seller shall maintain its status with
Fannie Mae and Ginnie Mae as an approved lender and Freddie Mac as an approved
seller, in each case in good standing (each such approval, an “Agency
Approval”).  The Seller shall
service all Purchased Mortgage Loans which are subject to an Agency Takeout
Commitment in accordance with the applicable Agency guide.  Should the Seller, for any reason, cease to
possess all such applicable Agency Approvals to the extent necessary, or should
notification to the relevant Agency or to HUD, FHA or VA be required, the
Seller shall so notify Buyer immediately in writing.  Notwithstanding the preceding sentence, the Seller shall take all
necessary action to maintain all of its applicable Agency Approvals at all
times during the term of this Repurchase Agreement and each outstanding
Transaction.

 

(z) Guarantees.  The Seller shall not create, incur, assume
or suffer to exist any Guarantees, except (i) to the extent reflected in the
Seller’s financial statements or notes thereto and (ii) to the extent the
aggregate Guarantees of the Seller do not exceed $2,000,000.

 

(aa)                            Takeout
Payments.  With respect to each
Mortgage Loan subject to a Takeout Commitment, the Seller shall arrange that
all payments under the related Takeout Commitment shall be paid directly to the
Buyer at the account set forth in Section 9 hereof, or to an account approved
by the Buyer in writing prior to such payment. 
With respect to any Agency Takeout Commitment, if applicable, (1) with
respect to the wire transfer instructions as set forth in Freddie Mac Form 987
(Wire Transfer Authorization for a Cash Warehouse Delivery) such wire transfer
instructions are identical to Buyer’s wire instructions or the Buyer has
approved

 

41

 

such wire transfer instructions in writing in
its sole discretion, or (2) the Payee Number set forth on Fannie Mae Form 1068
(Fixed-Rate, Graduated-Payment, or Growing- Equity Mortgage Loan Schedule) or
Fannie Mae Form 1069 (Adjustable-Rate Mortgage Loan Schedule), as applicable, is
identical to the Payee Number that has been identified by Buyer in writing as
Buyer’s Payee Number or the Buyer has approved the related Payee Number in
writing in its sole discretion; With respect to any Takeout Commitment with an
Agency for which the Agency is swapping the related Mortgage Loans for a
mortgage backed security, the applicable Agency documents list Buyer as sole
subscriber.

 

(bb)                          Underwriting
Guidelines.  Without the prior
written consent of Buyer, the Seller shall not amend in any material respect or
otherwise modify the Underwriting Guidelines in any material respect.  Without limiting the foregoing, in the event
that the Seller makes any amendment or modification to the Underwriting
Guidelines, the Seller shall promptly deliver to Buyer a complete copy of the
amended or modified Underwriting Guidelines.

 

(cc)                            HELOC
Provisions.  With respect to each
HELOC, if a Mortgagor requests an increase in the related Credit Limit, the
Seller, shall, in its sole discretion, either accept or reject the Mortgagor’s
request in accordance with Seller’s Underwriting Guidelines and notify the
Buyer’s decision in writing.  If the
request for a Credit Limit increase is accepted by the Seller, the increase
will be effected by the Seller through modification of the Mortgage Loan with
the Mortgagor.  Seller shall deliver to
the Buyer an updated Mortgage Loan Schedule reflecting the modification to the
Mortgage Loan and shall deliver any modified Mortgage Loan Documents to the
Custodian.

 

SECTION 13.                     EVENTS OF
DEFAULT

 

Section 13.01 Events of Default.  If any of the following events (each an “Event
of Default”) occur, the Seller and Buyer shall have the rights set forth in
Section 14, as applicable:

 

(a) Seller shall default in the payment
of the Repurchase Price or Price Differential on its related Repurchase Date or
Payment Date, respectively, or any amount necessary to satisfy a Margin Deficit
when due pursuant to Section 4;

 

(b) Seller shall default in the payment
of any other amount payable by it hereunder or under any other Repurchase
Document, or the payment of Expenses or any other Obligations, when the same
shall become due and payable, whether at the due date thereof, or by
acceleration or otherwise and such failure to make such payment, in all
instances set forth herein shall continue unremedied for a period of three
Business Days; or

 

(c) the failure of the Seller to
perform, comply with or observe any term, covenant or agreement applicable to
the Seller contained in Sections 12(a)(i), (h), (j), (n), (r), (s), (t), (u),
(v), (w), (x), (y), (z), (aa), (bb) or (cc); or

 

(d) any representation, warranty or
certification made or deemed made herein or in any other Repurchase Document by
the Seller or any certificate furnished to the Buyer pursuant to the provisions
hereof or thereof or any information with respect to the Purchased

 

42

 

Mortgage Loans furnished in writing by on
behalf of the Seller shall prove to have been untrue or misleading in any
material respect as of the time made or furnished (other than the
representations and warranties set forth in Schedule 1, which shall be
considered solely for the purpose of determining the Market Value of the
Purchased Mortgage Loans; unless (i) the Seller shall have made any such
representations and warranties with actual knowledge that they were materially
false or misleading at the time made; or (ii) any such representations and
warranties have been determined in good faith by the Buyer in its sole
discretion to be materially false or misleading on a regular basis); or

 

(e) the Seller shall fail to observe or
perform any other covenant or agreement contained in this Repurchase Agreement
(and not identified in clause (b) of Section 13.01) or any other Repurchase
Document, and if such default shall be capable of being remedied, and such
failure to observe or perform shall continue unremedied for a period of 1
Business Day; or

 

(f) a judgment or judgments for the
payment of money in excess of $1,000,000 in the aggregate shall be rendered
against the Seller or any of its Material Subsidiaries by one or more courts,
administrative tribunals or other bodies having jurisdiction and the same shall
not be satisfied, discharged (or provision shall not be made for such
discharge) or bonded, or a stay of execution thereof shall not be procured,
within 30 days from the date of entry thereof, and the Seller or any such
Material Subsidiary shall not, within said period of 30 days, or such longer
period during which execution of the same shall have been stayed or bonded,
appeal therefrom and cause the execution thereof to be stayed during such
appeal; or

 

(g) any “event of default” or any other
default which permits a demand for, or requires, the early repayment of
obligations due by the Seller or its Material Subsidiaries under (i) any
agreement (after the expiration of any applicable grace period under any such
agreement) relating to any Indebtedness of the Seller or any Material
Subsidiary, as applicable, to which the Buyer or any Affiliate is a party or
(iii) any agreement (after the expiration of any applicable grace period under
any such agreement) relating to any Indebtedness of the Seller or any Material
Subsidiary, as applicable in an aggregate amount in excess of $1,000,000; or

 

(h) an Event of Insolvency shall have
occurred with respect to the Seller; or

 

(i)  for
any reason, this Repurchase Agreement at any time shall not be in full force
and effect in all material respects or shall not be enforceable in all material
respects in accordance with its terms, or any Lien granted pursuant thereto
shall fail to be perfected and of first priority, or any Person (other than
Buyer) shall contest the validity, enforceability, perfection or priority of
any Lien granted pursuant thereto, or any party thereto (other than Buyer)
shall seek to disaffirm, terminate, limit or reduce its obligations hereunder;
or

 

(j)  the
Seller shall grant, or suffer to exist, any Lien on any Repurchase Asset
(except any Lien in favor of the Buyer); or (A) the Repurchase Assets shall not
have been sold to the Buyer, or (B) the Liens contemplated hereby shall cease
or fail to be first priority perfected Liens on any Repurchase Assets in favor
of the Buyer or shall be Liens in favor of any Person other than the Buyer; or

 

43

 

(k) any material adverse change in the
Property, business, prospects, financial condition or operations of the Seller
or any of its Material Subsidiaries shall occur, in each case as determined by
Buyer in its sole good faith discretion, or any other condition shall exist
which, in Buyer’s sole good faith discretion, constitutes a material impairment
of the Seller’s ability to perform its obligations under this Repurchase
Agreement or any other Repurchase Document.

 

(l)  (i)
any Person shall engage in any “prohibited transaction” (as defined in Section
406 of ERISA or Section 4975 of the Code) involving any Plan of Seller, (ii)
any material “accumulated funding deficiency” (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the PBGC or a Plan shall arise on the assets of the Seller or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Plan of Seller, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Buyer, likely to result in the termination of
such Plan for purposes of Title IV of ERISA, (iv) any Plan of Seller shall
terminate for purposes of Title IV of ERISA, (v) the Seller or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Buyer is likely
to, incur any liability in connection with a withdrawal from, or the insolvency
or reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan of Seller; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or

 

(m) any change
or development involving a prospective change in taxation or other applicable
law or regulation or interpretation thereof in the United States directly
affecting the Purchased Mortgage Loans or the consequences of Buyer owning, or
holding a security interest in, the Purchased Mortgage Loans; the imposition of
exchange controls by the United States, that directly affects the Purchased
Mortgage Loans or the consequences of Buyer owning, or holding a security
interest in, the Purchased Mortgage Loans; or the imposition of exchange
controls by the United States, that directly affects the financial markets of
the United States, and makes it, in the sole judgment of Buyer, inadvisable or
impracticable to enter into Transactions with the Mortgage Loans.

 

(n) Seller’s audited annual financial
annual financial statements or the notes thereto or other opinions or
conclusions stated therein shall be qualified or limited by reference to the
status of Seller as a “going concern” or a reference of similar import.

 

Section 13.02 Termination Event.  (a) If the following event (a “Termination
Event”) occurs, the Buyer shall have the rights set forth in Section
13.02(b):

 

(i)                                   the
senior debt obligations or short-term debt obligations of Merrill Lynch &
Co., Inc. shall be rated below the four highest generic grades (without regard
to any pluses and minuses reflecting gradations within such generic grades) by
any nationally recognized statistical rating organization; or

 

(ii)                                    A
Change of Control of the Seller shall have occurred; or

 

44

 

(iii)                                      Doug
Naidus shall cease to be in a senior management position of the Seller, and a
replacement acceptable to the Buyer in its sole discretion has not been secured
within 180 days.

 

(b) Upon the occurrence of a Termination
Event, the Buyer shall have the right, in its sole discretion, to immediately
terminate the Buyer’s agreement to enter into any additional Transactions on
the terms of this Agreement.  With
respect to the Termination Events set forth in Section 13.02(i) and (ii), the
Seller shall repurchase any Purchased Mortgage Loans subject to a Transaction
hereunder within 60 days following receipt of a request therefor from Buyer
following the occurrence of such Termination Event.

 

SECTION 14.                     REMEDIES

 

(a) If an Event of Default occurs with
respect to the Seller, the following rights and remedies are available to the
Buyer; provided, that an Event of Default shall be deemed to be continuing
unless expressly waived by the Buyer in writing.

 

(i)                                   At
the option of the Buyer, exercised by written notice to the Seller (which
option shall be deemed to have been exercised, even if no notice is given,
immediately upon the occurrence of an Event of Insolvency of the Seller), the
Repurchase Date for each Transaction hereunder, if it has not already occurred,
shall be deemed immediately to occur. 
The Buyer shall (except upon the occurrence of an Act of Insolvency of
the Seller) give notice to the Seller of the exercise of such option as
promptly as practicable.

 

(ii)                                    If
the Buyer exercises or is deemed to have exercised the option referred to in
subsection (a)(i) of this Section,

 

(A) the Seller’s obligations in such
Transactions to repurchase all Purchased Mortgage Loans, at the Repurchase
Price therefor on the Repurchase Date determined in accordance with subsection
(a)(i) of this Section, (1) shall thereupon become immediately due and payable
and (2) all Income paid after such exercise or deemed exercise shall be
retained by the Buyer and applied to the aggregate unpaid Repurchase Price and
any other amounts owed by the Seller hereunder;

 

(B) to the extent permitted by
applicable law, the Repurchase Price with respect to each such Transaction
shall be increased by the aggregate amount obtained by daily application of, on
a 360 day per year basis for the actual number of days during the period from
and including the date of the exercise or deemed exercise of such option to but
excluding the date of payment of the Repurchase Price as so increased, (x) the
Post-Default Rate in effect following an Event of Default to (y) the Repurchase
Price for such Transaction as of the Repurchase Date as determined pursuant to
subsection (a)(i) of this Section (decreased as of any day by (i) any amounts
actually in the possession of Buyer pursuant to clause (C) of this subsection,
and (ii) any proceeds from the sale of Purchased Mortgage Loans applied to the
Repurchase Price pursuant to subsection (a)(iv) of this Section; and

 

45

 

(C) all Income actually received by the
Buyer pursuant to Section 5 (excluding any Late Payment Fees paid pursuant to
Section 5(a)) shall be applied to the aggregate unpaid Repurchase Price owed by
the Seller.

 

(iii)                                      Upon
the occurrence of one or more Events of Default, the Buyer shall have the right
to obtain physical possession of all files of the Seller relating to the
Purchased Mortgage Loans and the Repurchase Assets and all documents relating
to the Purchased Mortgage Loans which are then or may thereafter come in to the
possession of the Seller or any third party acting for the Seller and the
Seller shall deliver to the Buyer such assignments as the Buyer shall
request.  The Buyer shall be entitled to
specific performance of all agreements of the Seller contained in the Repurchase
Documents.

 

(iv)                                    At
any time on the Business Day following notice to the Seller (which notice may
be the notice given under subsection (a)(i) of this Section), in the event the
Seller has not repurchased all Purchased Mortgage Loans, the Buyer may (A)
immediately sell, without demand or further notice of any kind, at a public or
private sale and at such price or prices as the Buyer may deem satisfactory any
or all Purchased Mortgage Loans and the Repurchase Assets subject to a such
Transactions hereunder and apply the proceeds thereof to the aggregate unpaid
Repurchase Prices and any other amounts owing by the Seller hereunder or (B) in
its sole discretion elect, in lieu of selling all or a portion of such
Purchased Mortgage Loans, to give the Seller credit for such Purchased Mortgage
Loans and the Repurchase Assets in an amount equal to the Market Value of the
Purchased Mortgage Loans against the aggregate unpaid Repurchase Price and any
other amounts owing by the Seller hereunder. 
The proceeds of any disposition of Purchased Mortgage Loans and the
Repurchase Assets shall be applied first to the costs and expenses incurred by
the Buyer in connection with the Seller’s default; second to costs of cover
and/or related hedging transactions; third to the Repurchase Price; and fourth
to any other outstanding obligation of the Seller to the Buyer or its
Affiliates.

 

(v)                                  The
Seller shall be liable to Buyer for (i) the amount of all reasonable legal or
other expenses (including, without limitation, all costs and expenses of Buyer
in connection with the enforcement of this Repurchase Agreement or any other
agreement evidencing a Transaction, whether in action, suit or litigation or
bankruptcy, insolvency or other similar proceeding affecting creditors’ rights
generally, further including, without limitation, the reasonable fees and
expenses of counsel (including the costs of internal counsel of Buyer) incurred
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.

 

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

 

(b) Buyer may exercise one or more of
the remedies available to Buyer immediately upon the occurrence of an Event of
Default and at any time thereafter without

 

46

 

notice to the Seller.  All rights and remedies arising under this
Repurchase Agreement as amended from time to time hereunder are cumulative and
not exclusive of any other rights or remedies which Buyer may have.

 

(c) Buyer may enforce its rights and
remedies hereunder without prior judicial process or hearing, and the Seller
hereby expressly waives any defenses the Seller might otherwise have to require
Buyer to enforce its rights by judicial process.  The Seller also waives any defense (other than a defense of
payment or performance) the Seller might otherwise have arising from the use of
nonjudicial process, enforcement and sale of all or any portion of the
Repurchase Assets, or from any other election of remedies.  The Seller recognizes that nonjudicial
remedies are consistent with the usages of the trade, are responsive to
commercial necessity and are the result of a bargain at arm’s length.

 

(d) To the extent permitted by
applicable law, the Seller shall be liable to the Buyer for interest on any
amounts owing by the Seller hereunder, from the date the Seller becomes liable
for such amounts hereunder until such amounts are (i) paid in full by the
Seller or (ii) satisfied in full by the exercise of the Buyer’s rights
hereunder.  Interest on any sum payable
by the Seller to the Buyer under this paragraph 14(d) shall be at a rate equal
to the Post-Default Rate.

 

(e) Upon the occurrence of an Event of
Default, the Buyer may obtain a life of loan, transferable real estate Tax
Service Contract with an Approved Tax Service Contract Provider on each
Mortgage Loan at the sole cost and expense of the Seller.

 

(f) Upon the occurrence of a Default or
Event of Default, the Seller shall provide to Buyer, within 24 hours of request
for same, any information requested by Buyer related to any PMI Policy or pool
insurance, as applicable, with respect to each Mortgage Loan covered by a PMI
Policy or pool insurance.  Upon the
Buyer’s request, after the occurrence of a Default or Event of Default, the
Seller shall deliver to Buyer (i) with respect to each Mortgage Loan that is
covered by a PMI Policy, a certified copy of such PMI Policy or evidence of
delegated underwriter approval and (ii) with respect to each Mortgage Loan
which is covered by pool insurance, a pool insurer pool certification.

 

SECTION 15.                     INDEMNIFICATION
AND EXPENSES; RECOURSE

 

(a) The Seller agrees to hold the Buyer,
and its Affiliates and their officers, directors, employees, agents and
advisors (each an “Indemnified Party”) harmless from and indemnify any
Indemnified Party against all liabilities, losses, damages, judgments, costs
and expenses of any kind which may be imposed on, incurred by or asserted
against such Indemnified Party (collectively, “Costs”), relating to or
arising out of this Repurchase Agreement, any other Repurchase Document or any
transaction contemplated hereby or thereby, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Repurchase Agreement, any other Repurchase Document or any transaction
contemplated hereby or thereby, that, in each case, results from anything other
than the Indemnified Party’s gross negligence or willful misconduct.  Without limiting the generality of the
foregoing, the Seller agrees to hold any Indemnified Party harmless from and
indemnify such Indemnified Party against all Costs with respect to all
Purchased Mortgage Loans relating to or

 

47

 

arising out of any taxes incurred or assessed
in connection with the ownership of the Purchased Mortgage Loans, that, in each
case, results from anything other than the Indemnified Party’s gross negligence
or willful misconduct.  In any suit,
proceeding or action brought by an Indemnified Party in connection with any
Purchased Mortgage Loan for any sum owing thereunder, or to enforce any
provisions of any Purchased Mortgage Loan, the Seller will save, indemnify and
hold such Indemnified Party harmless from and against all expense, loss or
damage suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by the Seller of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing to or
in favor of such account debtor or obligor or its successors from the Seller.  The Seller also agrees to reimburse an
Indemnified Party as and when billed by such Indemnified Party for all the
Indemnified Party’s costs and expenses incurred in connection with the
enforcement or the preservation of the Buyer’s rights under this Repurchase
Agreement, any other Repurchase Document or any transaction contemplated hereby
or thereby, including without limitation the reasonable fees and disbursements
of its counsel.

 

(b) The Seller agrees to pay as and when
billed by the Buyer all of the out-of-pocket costs and expenses incurred by the
Buyer in connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Repurchase Agreement, any other
Repurchase Document or any other documents prepared in connection herewith or
therewith.  The Seller agrees to pay as
and when billed by the Buyer all of the reasonable out-of-pocket costs and
expenses incurred in connection with the consummation and administration of the
transactions contemplated hereby and thereby including without limitation
filing fees and all the reasonable fees, disbursements and expenses of counsel
to the Buyer which amount shall be deducted from the Purchase Price paid for
the first Transaction hereunder. 
Subject to the limitations set forth in Section 27 hereof, the Seller
agrees to pay the Buyer all the reasonable out of pocket due diligence,
inspection, testing and review costs and expenses incurred by the Buyer with
respect to Purchased Mortgage Loans submitted by the Seller for purchase under
this Repurchase Agreement, including, but not limited to, those out of pocket
costs and expenses incurred by the Buyer pursuant to Sections 15(b) and 27
hereof.

 

(c) The obligations of the Seller from
time to time to pay the Repurchase Price, the Periodic Advance Repurchase
Payments, and all other amounts due under this Repurchase Agreement shall be
full recourse obligations of the Seller.

 

SECTION 16.                     SERVICING

 

(a) The Seller, on Buyer’s behalf, shall
contract with Servicer to, or if the Seller is the Servicer, the Seller shall,
service the Mortgage Loans consistent with the degree of skill and care that
the Seller customarily requires with respect to similar Mortgage Loans owned or
managed by it and in accordance with Accepted Servicing Practices.  The Servicer shall (i) comply with all
applicable Federal, State and local laws and regulations, (ii) maintain all
state and federal licenses necessary for it to perform its servicing
responsibilities hereunder and (iii) not impair the rights of Buyer in any
Purchased Mortgage Loans or any payment thereunder.  Buyer may terminate the servicing of any Purchased Mortgage Loan
with the then existing servicer in accordance with Section 16(e) hereof.

 

48

 

(b) The Seller shall cause the Servicer
to hold or cause to be held all escrow funds collected by the Seller with
respect to any Purchased Mortgage Loans in trust accounts and shall apply the
same for the purposes for which such funds were collected.

 

(c) The Seller shall cause the Servicer
to deposit all collections received by the Seller on account of the Purchased
Mortgage Loans in the Collection Account no later than two Business Days
following receipt.

 

(d) The Seller shall provide promptly to
Buyer (i) a Servicer Notice addressed to and agreed to by the Servicer of the
related Purchased Mortgage Loans, advising such Servicer of such matters as
Buyer may reasonably request, including, without limitation, recognition by the
Servicer of Buyer’s interest in such Purchased Mortgage Loans and the
Servicer’s agreement that upon receipt of notice of an Event of Default from
Buyer, it will follow the instructions of Buyer with respect to the Purchased
Mortgage Loans and any related Income with respect thereto.

 

(e) Upon the occurrence of a Default or
Event of Default hereunder or a material default under the Servicing Agreement,
Buyer shall have the right to immediately terminate the Servicer’s right to
service the Purchased Mortgage Loans without payment of any penalty or
termination fee.  The Seller shall
cooperate in transferring the servicing of the Purchased Mortgage Loans to a
successor servicer appointed by Buyer in its sole discretion.

 

(f) If the Seller should discover that,
for any reason whatsoever, any entity responsible to the Seller by contract for
managing or servicing any such Purchased Mortgage Loan has failed to perform
fully the Seller’s obligations under the Repurchase Documents or any of the
obligations of such entities with respect to the Purchased Mortgage Loans, the
Seller shall promptly notify Buyer.

 

SECTION 17.                     SINGLE
AGREEMENT

 

Buyer and the
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 that each has been entered into in consideration of the other
Transactions.  Accordingly, each of
Buyer and the 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 Transaction hereunder; (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 and (iv) to promptly provide
notice to the other after any such set off or application.

 

49

 

SECTION 18.                     SET-OFF

 

In addition to
any rights and remedies of the Buyer hereunder and by law, the Buyer shall have
the right, without prior notice to the Seller, any such notice being expressly
waived by the Seller to the extent permitted by applicable law, upon any amount
becoming due and payable by the Seller hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Buyer or any
Affiliate thereof to or for the credit or the account of the Seller or any
Affiliate thereof.  The Buyer agrees promptly
to notify the Seller after any such set-off and application made by the Buyer;
provided that the failure to give such notice shall not affect the validity of
such set-off and application.

 

SECTION 19.                     NOTICES AND
OTHER COMMUNICATIONS

 

Except as
otherwise expressly permitted by this Repurchase Agreement, all notices,
requests and other communications provided for herein (including without
limitation any modifications of, or waivers, requests or consents under, this
Repurchase Agreement) shall be given or made in writing (including without limitation
by telecopy) delivered to the intended recipient at the “Address for Notices”
specified below its name on the signature pages hereof or thereof); or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party. 
Except as otherwise provided in this Repurchase Agreement and except for
notices given under Section 3 (which shall be effective only on receipt), all
such communications shall be deemed to have been duly given when transmitted by
telecopy or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.

 

SECTION 20.                     ENTIRE
AGREEMENT; SEVERABILITY

 

This
Repurchase Agreement, together with the Repurchase Documents, constitute the
entire understanding between Buyer and the Seller with respect to the subject
matter they cover and shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase transactions
involving Purchased Mortgage Loans.  By
acceptance of this Repurchase Agreement, Buyer and Seller acknowledge that they
have not made, and are not relying upon, any statements, representations,
promises or undertakings not contained in this Repurchase Agreement.  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.

 

SECTION 21.                     NON-ASSIGNABILITY

 

The rights and
obligations of the parties under this Repurchase Agreement and under any
Transaction shall not be assigned by the Seller without the prior written
consent of Buyer.  Subject to the
foregoing, this Repurchase Agreement and any Transactions shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and

 

50

 

assigns. 
Nothing in this Repurchase Agreement express or implied, shall give to
any Person, other than the parties to this Repurchase Agreement and their
successors hereunder, any benefit of any legal or equitable right, power,
remedy or claim under this Repurchase Agreement. Buyer may from time to time
with the prior written consent of the Seller (which consent will not be
unreasonably withheld (provided that such consent shall not be required with
respect to an assignment to any Affiliate of the Buyer or if an Event of
Default shall have occurred and is continuing)) assign all or a portion of its
rights and obligations under this Repurchase Agreement and the Repurchase
Documents; provided, however that
Buyer shall maintain, for review by the Seller upon written request, a register
of assignees and a copy of an executed assignment and acceptance by Buyer and
assignee (“Assignment and Acceptance”), specifying the percentage or
portion of such rights and obligations assigned.  Upon such assignment, (a) such assignee shall be a party hereto
and to each Repurchase Document to the extent of the percentage or portion set
forth in the Assignment and Acceptance, and shall succeed to the applicable
rights and obligations of Buyer hereunder, and (b) Buyer shall, to the extent
that such rights and obligations have been so assigned by it be released from
its obligations hereunder and under the Repurchase Documents.  Unless otherwise stated in the Assignment
and Acceptance, the Seller shall continue to take directions solely from Buyer
unless otherwise notified by Buyer in writing. 
Buyer may distribute to any prospective assignee any document or other
information delivered to Buyer by Seller.

 

The Buyer may
sell participations to one or more Persons in or to all or a portion of its
rights and obligations under this Repurchase Agreement; provided, however, that
(i) the Buyer’s obligations under this Repurchase Agreement shall remain
unchanged, (ii) the Buyer shall remain solely responsible to the other parties
hereto for the performance of such obligations; and (iii) the Seller shall
continue to deal solely and directly with the Buyer in connection with the
Buyer’s rights and obligations under this Repurchase Agreement and the other
Repurchase Documents. Notwithstanding the terms of Section 8, each participant
of the Buyer shall be entitled to the additional compensation and other rights and
protections afforded the Buyer under Section 8 to the same extent as the Buyer
would have been entitled to receive them with respect to the participation sold
to such participant.

 

The Buyer may,
in connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 21, disclose to the assignee or
participant or proposed assignee or participant, as the case may be, any
information relating to the Seller or any of its Subsidiaries or to any aspect
of the Transactions that has been furnished to the Buyer by or on behalf of the
Seller or any of its Subsidiaries; provided that such assignee or participant
agrees to hold such information subject to the confidentiality provisions of
this Repurchase Agreement.

 

The Buyer may
at any time create a security interest in all or any portion of its rights
under this Repurchase Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System and any Operating Circular issued by such Federal Reserve Bank. No such
assignment shall release the assigning Buyer from its obligations hereunder.

 

In the event
the Buyer assigns all or a portion of its rights and obligations under this
Repurchase Agreement, the parties hereto agree to negotiate in good faith an
amendment to

 

51

 

this
Repurchase Agreement to add agency provisions similar to those included in
repurchase agreements for similar syndicated repurchase facilities.

 

SECTION
22.                     TERMINABILITY

 

Each
representation and warranty made or deemed to be made by entering into a
Transaction, herein or pursuant hereto shall survive the making of such
representation and warranty, and the Buyer shall not be deemed to have waived
any Default that may arise because any such representation or warranty shall
have proved to be false or misleading, notwithstanding that the Buyer may have
had notice or knowledge or reason to believe that such representation or
warranty was false or misleading at the time the Transaction was made.  Notwithstanding any such termination or the
occurrence of an Event of Default, all of the representations and warranties
and covenants hereunder shall continue and survive.  The obligations of the Seller under Section 15 hereof shall
survive the termination of this Repurchase Agreement.

 

SECTION 23.                     GOVERNING
LAW

 

THIS REPURCHASE AGREEMENT SHALL BE GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.

 

SECTION
24.                     SUBMISSION
TO JURISDICTION; WAIVERS

 

BUYER AND THE SELLER HEREBY IRREVOCABLY AND
UNCONDITIONALLY:

 

(i)                                  SUBMITS
FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
REPURCHASE AGREEMENT AND THE OTHER REPURCHASE 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

 

52

 

FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH
THE BUYER 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.

 

(v)                                    THE
BUYER AND THE SELLER HEREBY IRREVOCABLY WAIVE, 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 REPURCHASE AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

SECTION 25.                     NO WAIVERS,
ETC.

 

No failure on
the part of the Buyer to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under any Repurchase
Document shall operate as a waiver thereof, nor shall any single or partial exercise
of any right, power or privilege under any Repurchase Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.  The remedies provided herein
are cumulative and not exclusive of any remedies provided by law.  An Event of Default shall be deemed to be
continuing unless expressly waived by the Buyer in writing.

 

SECTION 26.                     RESERVED

 

SECTION 27.                     DUE
DILIGENCE

 

The Seller
acknowledges that Buyer has the right to perform continuing due diligence reviews
with respect to the Mortgage Loans and the Seller, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or otherwise, and the Seller agrees that upon reasonable prior
notice unless an Event of Default shall have occurred, in which case no notice
is required, to the Seller, Buyer or its authorized representatives will be
permitted during normal business hours to examine, inspect, and make copies and
extracts of, the Mortgage Files and any and all documents, records, agreements,
instruments or information relating to such Mortgage Loans in the possession or
under the control of the Seller and/or the Custodian.  The Seller also shall make available to Buyer a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Mortgage Files and the Mortgage Loans.  Without limiting the generality of the foregoing, the Seller
acknowledges that Buyer may purchase Mortgage Loans from the Seller based
solely upon the information provided by the Seller to Buyer in the Purchased
Mortgage Loan Schedule and the representations, warranties and covenants
contained herein, and that Buyer, at its option, has the right at any time to
conduct a partial or complete due diligence review on some or all of the
Mortgage Loans purchased in a Transaction, including, without limitation,
ordering broker’s

 

53

 

price
opinions, new credit reports and new appraisals on the related Mortgaged
Properties and otherwise re-generating the information used to originate such
Mortgage Loan.  Buyer may underwrite
such Mortgage Loans itself or engage a mutually agreed upon third party
underwriter to perform such underwriting. 
The Seller agrees to cooperate with Buyer and any third party
underwriter in connection with such underwriting, including, but not limited
to, providing Buyer and any third party underwriter with access to any and all
documents, records, agreements, instruments or information relating to such
Mortgage Loans in the possession, or under the control, of the Seller.  The Seller further agrees that the Seller
shall pay all out-of-pocket costs and expenses incurred by Buyer in connection
with Buyer’s activities pursuant to this Section 27 (“Due Diligence Costs”);
provided, that such Due Diligence Costs shall not exceed $20,000 per calendar
year unless a Default or Event of Default shall have occurred, in which event
Buyer shall have the right to perform due diligence, at the sole expense of
Seller without regard to the dollar limitation set forth herein.

 

SECTION 28.                     [RESERVED]

 

SECTION 29.                     [RESERVED]

 

SECTION
30.                     BUYER’S
APPOINTMENT AS ATTORNEY-IN-FACT

 

(a) The Seller hereby irrevocably
constitutes and appoints the Buyer and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney- in- fact with full
irrevocable power and authority in the place and stead of the Seller and in the
name of the Seller or in its own name, from time to time in the Buyer’s
discretion, for the purpose of carrying out the terms of this Repurchase
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be reasonably necessary or desirable to
accomplish the purposes of this Repurchase Agreement, and, without limiting the
generality of the foregoing, the Seller hereby gives the Buyer the power and
right, on behalf of the Seller, without assent by, but with notice to, the
Seller, if an Event of Default shall have occurred and be continuing, to do the
following:

 

(i)                                           in
the name of the Seller, or in its own name, or otherwise, to take possession of
and endorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due with respect to any other Repurchase
Assets and to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Buyer for the
purpose of collecting any and all such moneys due with respect to any other
Repurchase Assets whenever payable;

 

(ii)                                        to
pay or discharge taxes and Liens levied or placed on or threatened against the
Repurchase Assets;

 

(iii)                                     (A)
to direct any party liable for any payment under any Repurchase Assets to make
payment of any and all moneys due or to become due thereunder directly to the
Buyer or as the Buyer shall direct; (B) to ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any Repurchase
Assets; (C) to sign and endorse

 

54

 

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

 

(b) The Seller hereby ratifies all that
said attorneys shall lawfully do or cause to be done by virtue hereof.  This power of attorney is a power coupled
with an interest and shall be irrevocable.

 

(c) The Seller also authorizes the
Buyer, if an Event of Default shall have occurred, from time to time, to
execute, in connection with any sale provided for in Section 14 hereof, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Repurchase Assets.

 

(d) The powers conferred on the Buyer
hereunder are solely to protect the Buyer’s interests in the Repurchase Assets
and shall not impose any duty upon it to exercise any such powers.  The Buyer shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents shall be
responsible to the Seller for any act or failure to act hereunder, except for
its or their own gross negligence or willful misconduct.

 

SECTION
31.                     MISCELLANEOUS

 

(a) Counterparts.  This Repurchase Agreement 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
Repurchase Agreement by signing any such counterpart.

 

(b) Captions.  The captions and headings appearing herein
are for included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Repurchase Agreement.

 

(c) Acknowledgment.  The Seller hereby acknowledges that:

 

(i) it
has been advised by counsel in the negotiation, execution and delivery of this
Repurchase Agreement and the other Repurchase Documents;

 

55

 

(ii)                          the
Buyer has no fiduciary relationship to the Seller; and

 

(iii)                       no
joint venture exists between the Buyer and the Seller.

 

SECTION
32.                     CONFIDENTIALITY

 

The Buyer and
the Seller hereby acknowledge and agree that all written or computer-readable
information provided by one party to any other regarding the terms set forth in
any of the Repurchase Documents or the Transactions contemplated thereby (the “Confidential
Terms”) shall be kept confidential and shall not be divulged to any party
without the prior written consent of such other party except to the extent that
(i) it is necessary to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies or regulatory bodies or in order to
comply with any applicable federal or state laws, (ii) any of the Confidential
Terms are in the public domain other than due to a breach of this covenant, or
(iii) in the event of an Event of Default the Buyer determines such information
to be necessary or desirable to disclose in connection with the marketing and
sales of the Purchased Mortgage Loans or otherwise to enforce or exercise the
Buyer’s rights hereunder. 
Notwithstanding the foregoing or anything to the contrary contained
herein or in any other Repurchase Document, the parties hereto may disclose to
any and all Persons, without limitation of any kind, the federal income tax
treatment of the Transactions, any fact relevant to understanding the federal
tax treatment of the Transactions, and all materials of any kind (including
opinions or other tax analyses) relating to such federal income tax treatment;
provided that Seller may not disclose the name of or identifying information
with respect to Buyer or any pricing terms (including, without limitation, the
Pricing Spread, Purchase Price Percentage, and Purchase Price) or other
nonpublic business or financial information (including any sublimits and
financial covenants) that is unrelated to the purported or claimed federal
income tax treatment of the Transactions and is not relevant to understanding
the purported or claimed federal income tax treatment of the Transactions,
without the prior written consent of the Buyer.  The provisions set forth in this Section 32 shall survive the
termination of this Repurchase Agreement.

 

SECTION 33.                     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 Mortgage Loans 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 Mortgage Loans 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

 

56

 

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
Repurchase 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).

 

SECTION
34.                     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.

 

SECTION 35.                     CONFLICTS

 

In the event
of any conflict between the terms of this Repurchase Agreement, any other
Repurchase Document and any Confirmation, the documents shall control in the
following order of priority:  first,
the terms of the Confirmation shall prevail, then the terms of this Repurchase
Agreement shall prevail, and then the terms of the Repurchase Documents shall
prevail.

 

SECTION
36.                     AUTHORIZATIONS

 

Any of the
persons whose signatures and titles appear on Exhibit X are authorized,
acting singly, to act for Seller or Buyer, as the case may be, under this
Repurchase Agreement.

 

[THIS SPACE
INTENTIONALLY LEFT BLANK]

 

57

 

IN WITNESS
WHEREOF, the parties have entered into this Repurchase Agreement as of the date
set forth above.

 

	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MERRILL LYNCH
  COMMERCIAL

  FINANCE CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  
	
   

  	
   

  	
  4 World Financial
  Center

  10th Floor

  New York, New York 10080

  
	
   

  	
   

  
	
   

  	
   

  	
  Attention:  James B. Cason

  Telecopier No.:  (212) 449-3673

  Telephone No.:  (212) 449-1219

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MORTGAGEIT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  Title:

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  	
  33 Maiden Lane,
  6th Floor

  New York, NY 10038

  
	
   

  	
   

  	
  Attention:  Chief Operating Officer

  Telecopier No.:  212-651-4689

  Telephone No:  212-651-4691

  
					

 

58

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