Document:

ex10-1.htm

    
       

      Exhibit
10.1

     

    SECOND
AMENDMENT, dated as of February 28, 2008 (this “Second Amendment”),
among Chesapeake Funding LLC (the “Issuer”), PHH Vehicle
Management Services, LLC, as administrator (the “Administrator”), and
The Bank of New York, as successor to JPMorgan Chase Bank, N.A., as Indenture
Trustee (the “Indenture Trustee”),
to the Series 2006-1 Indenture Supplement, dated as of March 7, 2006, as amended
as of March 6, 2007 (the “Series 2006-1 Indenture
Supplement”), among the Issuer, the Administrator, the several commercial
paper conduits listed on Schedule I thereto (the “CP Conduit
Purchasers”), the banks party thereto with respect to each CP Conduit
Purchaser (the “APA
Banks”), the agent banks party thereto with respect to each CP Conduit
Purchaser (the “Funding Agents”),
JPMorgan Chase Bank, N.A., in its capacity as administrative agent (the “Administrative
Agent”) for the CP Conduit Purchasers, the APA Banks and the Funding
Agents, and the Indenture Trustee, to the Base Indenture, dated as of March 7,
2006 (the “Base
Indenture”), between the Issuer and the Indenture Trustee pursuant to
which the Series 2006-1 Investor Notes were issued to the CP Conduit
Purchasers.

     

    W I T N E
S S E T H:

     

    WHEREAS,
the Issuer has requested, and, upon this Second Amendment becoming effective,
the Issuer, the Administrator and the Indenture Trustee have agreed and the
Series 2006-1 Investor Noteholders and the Administrative Agent have consented,
that certain provisions of the Series 2006-1 Indenture Supplement be amended in
the manner provided for in this Second Amendment.

     

    NOW,
THEREFORE, the parties hereto hereby agree as follows:

     

    1. Defined
Terms.  All capitalized terms defined in Schedule 1 to the Base
Indenture or the Series 2006-1 Indenture Supplement and used herein shall have
the meanings given to them therein.

     

    2. Amendments to Article
1(b).  Article 1(b) of the Series 2006-1 Indenture Supplement
is hereby amended by (a) deleting the definitions of the following defined terms
in their respective entireties and substituting in lieu thereof the following
new definitions:

     

    “‘Enhancement Matrix’
means either the Single A Enhancement Matrix or the Triple A Enhancement
Matrix.

    

    ‘Level 1 Required Enhancement
Percentage’ means on any date the sum of (a) the product of (i) the
percentage equivalent of a fraction, the numerator of which is equal to the
amount, if any, by which the Series 2006-1 Maximum Invested Amount on such date
exceeds $1,400,000,000 and the denominator of which is equal to the Series
2006-1 Maximum Invested Amount on such date and (ii) the percentage set forth in
the Triple A Enhancement Matrix on the line titled “Level 1 Required Enhancement
Percentage” for the Applicable Option and (b) the product of (i) the percentage
equivalent of a fraction, the numerator of which is equal to the lesser of (x)
$1,400,000,000 and (y) the Series 2006-1 Maximum Invested Amount on such date
and the denominator of which is equal to the Series 2006-1 Maximum Invested
Amount on such date and (ii) the percentage set forth in the Single A
Enhancement Matrix on the line titled “Level 1 Required Enhancement Percentage”
for the Applicable Option.

     

    

      [***]
INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
 

    ‘Level 2 Required Enhancement
Percentage’ means on any date the sum of (a) the product of (i) the
percentage equivalent of a fraction, the numerator of which is equal to the
amount, if any, by which the Series 2006-1 Maximum Invested Amount on such date
exceeds $1,400,000,000 and the denominator of which is equal to the Series
2006-1 Maximum Invested Amount on such date and (ii) the percentage set forth in
the Triple A Enhancement Matrix on the line titled “Level 2 Required Enhancement
Percentage” for the Applicable Option and (b) the product of (i) the percentage
equivalent of a fraction, the numerator of which is equal to the lesser of (x)
$1,400,000,000 and (y) the Series 2006-1 Maximum Invested Amount on such date
and the denominator of which is equal to the Series 2006-1 Maximum Invested
Amount on such date and (ii) the percentage set forth in the Single A
Enhancement Matrix on the line titled “Level 2 Required Enhancement Percentage”
for the Applicable Option.

    

    ‘Level 3 Required Enhancement
Percentage’ means on any date the sum of (a) the product of (i) the
percentage equivalent of a fraction, the numerator of which is equal to the
amount, if any, by which the Series 2006-1 Maximum Invested Amount on such date
exceeds $1,400,000,000 and the denominator of which is equal to the Series
2006-1 Maximum Invested Amount on such date and (ii) the percentage set forth in
the Triple A Enhancement Matrix on the line titled “Level 3 Required Enhancement
Percentage” for the Applicable Option and (b) the product of (i) the percentage
equivalent of a fraction, the numerator of which is equal to the lesser of (x)
$1,400,000,000 and (y) the Series 2006-1 Maximum Invested Amount on such date
and the denominator of which is equal to the Series 2006-1 Maximum Invested
Amount on such date and (ii) the percentage set forth in the Single A
Enhancement Matrix on the line titled “Level 3 Required Enhancement Percentage”
for the Applicable Option.

    

    ‘LIBO Rate’ means,
with respect to each day during each Eurodollar Period pertaining to a
Eurodollar Tranche, the rate per annum shown on the display designated as
“LIBOR01” on the Reuters Money 3000 Service for a period equal to such
Eurodollar Period at 11:00 a.m. (London time) on the second Business Day prior
to the commencement of such Eurodollar Period; provided that in the
event no such rate is shown, the LIBO Rate shall be determined by reference to
such other comparable available service for displaying eurodollar rates as may
be reasonably selected by the Administrative Agent; provided further that in the
event no such service is available, the LIBO Rate shall be a rate per annum at
which dollar deposits are offered by the principal office of JPMorgan Chase in
London, England to prime banks in the London interbank market at 11:00 a.m.
(London time) on the second Business Day prior to the commencement of such
Eurodollar Period for delivery on the first day of such Eurodollar Period and
for a period equal to such Eurodollar Period.

    

    ‘Required Reserve Account
Amount Percentage’ means on any date the sum of (a) the product of (i)
the percentage equivalent of a fraction, the numerator of which is equal to the
amount, if any, by which the Series 2006-1 Maximum Invested Amount on such date
exceeds $1,400,000,000 and the denominator of which is equal to the Series
2006-1 Maximum Invested Amount on such date and (ii) the percentage set forth in
the Triple A Enhancement Matrix on the line titled “Required Reserve Account
Amount Percentage” for the Applicable Option and (b) the product of (i) the
percentage equivalent of a fraction, the numerator of which is equal to the
lesser of (x) $1,400,000,000 and (y) the Series 2006-1 Maximum Invested Amount
on such date and the denominator of which is equal to the Series 2006-1 Maximum
Invested Amount on such date and (ii) the percentage set forth in the Single A
Enhancement Matrix on the line titled “Required Reserve Account Amount
Percentage” for the Applicable Option.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
 

    ‘Scheduled Expiry
Date’ means, with respect to any Purchaser Group, the later of (a)
February 26, 2009 and (b) the last day of any extension of the Commitment
of the APA Banks included in such Purchaser Group made in accordance with Section
2.6(b).

     

    ‘Series 2006-1 Minimum Yield
Rate’ means, for any Settlement Date, a rate per annum equal to the sum
of (i) the Series 2006-1 Note Rate for the Series 2006-1 Interest Period ending
on the day before such Settlement Date, (ii) [***]% and (iii)
[***]%.”;

     

    (b)
inserting the following new defined terms in alphabetical order:

    

    “‘Change in Control’
means (i) the acquisition by any Person or group (within the meaning of the
Exchange Act and the rules of the Securities and Exchange Commission thereunder
as in effect on January 1, 2006), directly or indirectly, beneficially or of
record, of ownership or control of in excess of 50% of the voting common stock
of PHH on a fully diluted basis at any time or (ii) if at any time, individuals
who on January 1, 2006 constituted the Board of Directors of PHH (together with
any new directors whose election by such Board of Directors or whose nomination
for election by the shareholders of PHH, as the case may be, was approved by a
vote of the majority of the directors then still in office who were either
directors on January 1, 2006 or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of PHH then in office.

    

    ‘Net Cash Proceeds’
means, with respect to any issuance and sale of a Series of Investor Notes, the
cash proceeds of such issuance and sale net of attorneys’ fees, accountants’
fees, underwriters’ or placement agents’ fees, discounts or commissions and
brokerage, consultant and other fees actually incurred in connection with such
issuance and sale.

    

    ‘PHH Credit Agreement’
means the Amended and Restated Competitive Advance and Revolving Credit
Agreement, dated as of January 6, 2006, among PHH, PHH Vehicle Management
Services Inc., the lenders referred to therein, Citicorp USA, Inc. as
syndication agent, The Bank of Nova Scotia and Wachovia Bank, National
Association, as co-documentation agents, and JPMorgan Chase, as administrative
agent for the lenders, as amended, modified, supplemented or waived from time to
time in accordance with its terms; provided, however, that, for the purposes of
clause (y) of Article 4, PHH Credit Agreement shall mean such credit agreement
without giving effect to any amendments, modifications or supplements thereto or
waivers thereof after February 28, 2008 not approved by the Series 2006-1
Required Investor Noteholders.

     

    

      [***]
INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

    ‘Single A Enhancement
Matrix’ means the following matrix:

    

    
      	 
      	
              Option 1

            	
              Option 2

            	
              Option 3

            
	
              Level
      1 Required Enhancement Percentage

            	
              [***]%

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            
	
              Level
      2 Required Enhancement Percentage

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            
	
              Level
      3 Required Enhancement Percentage

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            
	
              Required
      Reserve Account Amount Percentage

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            	
                    
                [***]%

              

               

            

    

    ; provided,
however, that, if the
Indenture Supplement with respect to any Series of Investor Notes issued after
February 28, 2008 and rated A-, A or A+ by S&P or A1, A2 or A3 by Moody’s at
the time of issuance requires that the Credit Enhancement with respect to such
Series be a higher percentage of the Initial Invested Amount with respect to
such Series during any period when a particular Overconcentration Option is in
effect in accordance with Section 13.18 of the
Base Indenture than the percentage for such Overconcentration Option in the
matrix set forth above, the Single A Enhancement Matrix shall mean the matrix
set forth above revised to include each such higher percentage.

    

    ‘Triple A Enhancement
Matrix’ means the following matrix:

    

    
      	 
      	
              Option 1

            	
              Option 2

            	
              Option 3

            
	
              Level
      1 Required Enhancement Percentage

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            
	
              Level
      2 Required Enhancement Percentage

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            
	
              Level
      3 Required Enhancement Percentage

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            
	
              Required
      Reserve Account Amount Percentage

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            	
                    
                [***]%

              

            

    

     

    ; provided,
however, that, if the
Indenture Supplement with respect to any Series of Investor Notes issued after
February 28, 2008 and rated AAA by S&P or Aaa by Moody’s at the time of
issuance requires that the Credit Enhancement with respect to such Series be a
higher percentage of the Initial Invested Amount with respect to such Series
during any period when a particular Overconcentration Option is in effect in
accordance with Section 13.18 of the
Base Indenture than the percentage for such Overconcentration Option in the
matrix set forth above, the Triple A Enhancement Matrix shall mean the matrix
set forth above revised to include each such higher percentage.” ;

    

    and (c)
deleting therefrom the definition of “Telerate Page 3750” in its
entirety.

     

    
      [***]
INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

    3. Amendment to Article
2.  Article 2 of the Series 2006-1 Indenture Supplement is
hereby amended by inserting the following new paragraph (d) to the end of
Section 2.6 thereof:

     

    “(d)  If,
subsequent to February 28, 2008, the Issuer issues a new Series of Investor
Notes on a date on which the Series 2006-1 Invested Amount is greater than
$1,400,000,000, the Administrator shall direct the Indenture Trustee to allocate
the Net Cash Proceeds thereof (or such lesser amount thereof sufficient to
reduce the Series 2006-1 Invested Amount to $1,400,000,000) to the Series 2006-1
General Collection Subaccount pursuant to Section 5A.2(b)(ii)
and then to the Series 2006-1 Principal Collection Subaccount pursuant to Section 5A.2(e) in
order to effect a Decrease with such funds in accordance with Section 5A.2(g) and
Section 2.5(a)
on the earliest possible date.  In connection with any such Decrease,
the Issuer shall reduce the Series 2006-1 Maximum Invested Amount in an amount
at least equal to the amount of such Decrease pursuant to Section
2.6(c).”

    

    4. Amendments to Article
3.  Article 3 of the Series 2006-1 Indenture Supplement is
hereby amended by (a) inserting the word “General” after the words “Series
2006-1” and before the words “Collection Subaccount” in Section 5A.2(e) thereof,
(b) deleting paragraph (x) of Section 5A.4(c) thereof in its entirety and
inserting the following new clause (x) in lieu thereof:

     

    “(x)  (A)
on any Payment Date during the Series 2006-1 Revolving Period, to the Series
2006-1 Principal Collection Subaccount, an amount equal to the greater of (I)
the Series 2006-1 Allocated Asset Amount Deficiency, if any, on such Payment
Date and (II) if such Payment Date is during a Paydown Period, the lesser of the
Series 2006-1 Principal Payment Amount for such Payment Date and the aggregate
Purchaser Group Invested Amounts with respect to the Non-Extending Purchaser
Groups on such Payment Date and (B) on any Payment Date during the period from
and including the first day of the Series 2006-1 Amortization Period to and
including the Series 2006-1 Note Termination Date, to the Series 2006-1
Principal Collection Subaccount, an amount equal to the lesser of the Series
2006-1 Principal Payment Amount for such Payment Date and the Series 2006-1
Invested Amount on such Payment Date;” ;

    

    (c)
inserting the words “Class X” before  the words “1999-1B Invested
Amount” in clause (xii) of Section 5A.4(c) thereof; (d) deleting [***]% from
Section 5A.12(b) thereof and inserting the words “the sum of [***]% and the then
current Program Fee Rate” in lieu thereof; and (e) deleting [***]% from Section
5A.12(c) thereof and inserting the words “the sum of [***]%
and the then current Program Fee Rate” in lieu thereof.

    

    5. Amendments to Article
4.  Article 4 of the Series 2006-1 Indenture Supplement is
hereby amended by (a) deleting “or” at the end of clause (u) thereof; (b)
deleting clause (v) thereof in its entirety and inserting the following new
clause (v) in lieu thereof:

     

    “(v) the failure on the part of the
Administrator to (i) deliver to the Indenture Trustee, the Administrative Agent
and each Funding Agent a letter of independent certified public accountants of
recognized national standing concerning the results of agreed upon procedures
pursuant to Section 8.3(e) that is in form and substance reasonably satisfactory
to the Series 2006-1 Required Investor Noteholders or (ii) duly to observe or
perform in any material respect any other covenants or agreements of the
Administrator set forth in the Base Indenture or this Indenture Supplement,
which failure continues unremedied for a period of 30 days after there shall
have been given to the Administrator by the Indenture Trustee or the
Administrator and the Indenture Trustee by any Series 2006-1 Investor
Noteholder, written notice specifying such default and requiring it to be
remedied;” ;

     

    
      [***]
INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
 

    (c)
inserting after clause (v) thereof, the following new clauses (w), (x) and
(y):

    

    “(w) a
Change in Control shall occur;

    

    (x)  default
shall occur in the due observance or performance of any covenant, condition or
agreement contained in Section 6.6 or Section 6.7 of the PHH Credit Agreement;
or

    

    (y) an
event described in paragraph (e) or (f) of Section 7 of the PHH Credit Agreement
shall occur”;

    

    and (d)
replacing “then, in the case of any event described in clause (p) through (v)
above” with “then, in the case of any event described in clause (p) through (y)
above” therein.

    

    6. Amendments to Article
8.  Article 8 of the Series 2006-1 Indenture Supplement is
hereby amended by (a) deleting the proviso to Section 8.3(c) thereof; and (b)
deleting the proviso to Section 8.3(d) thereof.

     

    7. Amendment to Article
12.  Article 12 of the Series 2006-1 Indenture Supplement is
hereby amended by deleting Section 12.20 thereof in its entirety and inserting
the following new Section 12.20 in lieu thereof:

     

    “SECTION
12.20.                                           JPMorgan Chase Conflict
Waiver.  JPMorgan Chase acts as the Funding Agent with respect
to one or more of the CP Conduit Purchasers  (collectively, “Conduit”)
and as administrative agent for Conduit, as issuing and paying agent for
Conduit’s Commercial Paper, as provider of other backup facilities for Conduit,
and may provide other services or facilities from time to time (the “JPMorgan Chase
Roles”).  Each of the parties hereto hereby acknowledges and
consents to any and all JPMorgan Chase Roles, waives any objections it may have
to any actual or potential conflict of interest caused by JPMorgan Chase’s
acting as the Funding Agent with respect to Conduit or as the APA Bank with
respect to Conduit and acting as or maintaining any of the JPMorgan Chase Roles,
and agrees that in connection with any JPMorgan Chase Role, JPMorgan Chase may
take, or refrain from taking, any action which it in its discretion deems
appropriate.”

     

    8. Amendment to Schedule
I.  Schedule I to the Series 2006-1 Indenture Supplement is
hereby amended and restated to read in its entirety as set forth on Schedule A to this
Second Amendment.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    9. Conditions to
Effectiveness.  This Second Amendment shall become effective on
February 28, 2008 (the “Second Amendment Effective
Date”), if each of the following conditions precedent shall have been
satisfied on or prior to such day:

     

    (a) The
Administrative Agent shall have received, with a copy for each Funding Agent,
this Second Amendment duly executed and delivered by the Issuer, the
Administrator and the Indenture Trustee;

     

    (b) The
representations and warranties of the Issuer and VMS contained in the
Transaction Documents to which each is a party shall be true and correct in all
material respects as of the Second Amendment Effective Date as if made as of the
Second Amendment Effective Date;

     

    (c) The
Indenture Trustee and the Administrative Agent shall have received the Consent
of Purchaser Groups in the form of Exhibit A to this Second Amendment, duly
executed by the CP Conduit Purchasers, the APA Banks and the Administrative
Agent;

     

    (d) The
Indenture Trustee and the Administrative Agent shall have received the second
amended and restated Fee Letter relating to the Series 2006-1 Indenture
Supplement in the form of Exhibit B to this Second Amendment, duly executed by
the Issuer, the Administrator, the Administrative Agent and each Funding Agent;
and

     

    (e) The
Issuer shall have paid to the Administrative Agent on behalf of each Purchaser
Group the non-refundable renewal fee contemplated by the amended and restated
Fee Letter referred to in Section 9(d) hereof and all other fees due and payable
to the Administrative Agent in connection with this Second
Amendment.

     

    10. Miscellaneous.

     

    (a) Payment of
Expenses.  The Issuer agrees to pay or reimburse the Indenture
Trustee, the Administrative Agent, the CP Conduit Purchasers, the APA Banks and
the Funding Agents for all of their respective out-of-pocket costs and
reasonable expenses incurred in connection with this Second Amendment,
including, without limitation, the reasonable fees and disbursements of their
respective counsel.

     

    (b) No Other Amendments;
Confirmation.  Except as expressly amended, modified and
supplemented hereby, the provisions of the Series 2006-1 Indenture Supplement
are and shall remain in full force and effect.

     

    (c) Governing
Law.   THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

     

    (d)  Counterparts.  This
Second Amendment may be executed in two or more counterparts (and by different
parties on separate counterparts), each of which shall be an original, but all
of which together shall constitute one and the same instrument.  A set
of the copies of this Second Amendment signed by all the parties shall be lodged
with the Indenture Trustee.  This Second Amendment may be delivered by
facsimile transmission of the relevant signature pages hereof.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the Issuer, the Administrator and the Indenture Trustee have
caused this Second Amendment to be duly executed by their respective officers as
of the day and year first above written.

     

    CHESAPEAKE
FUNDING LLC

     

    By: /s/ Mark E.
Johnson                                                                           

       Name:
Mark E. Johnson

       Title:   Vice
President and Treasurer

     

    PHH
VEHICLE MANAGEMENT SERVICES, LLC

     

    By: /s/ Mark E.
Johnson                                                                           

       Name:
Mark E. Johnson

       Title:   Vice
President and Treasurer

     

    THE BANK
OF NEW YORK, as successor Indenture Trustee

     

    By: /s/ Jared
Fischer                                                                           

       Name:
Jared Fischer

       Title:   Assistant
Treasurer

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

    TO SECOND
AMENDMENT

    TO SERIES
2006-1

     

    INDENTURE
SUPPLEMENT

     

    Consent of Purchaser
Groups

     

    Reference
is made to (i) that certain Series 2006-1 Indenture Supplement, dated as of
March 7, 2006, as amended by the First Amendment thereto, dated as of March 6,
2007 (as further amended or supplemented, the “Series 2006-1 Indenture
Supplement”), among Chesapeake Funding LLC (the “Issuer”), PHH Vehicle
Management Services, LLC, as administrator (the “Administrator”), the
several commercial paper conduits listed on Schedule I thereto (the “CP Conduit
Purchasers”), the banks party thereto with respect to each CP Conduit
Purchaser (the “APA
Banks”), the agent banks party thereto with respect to each CP Conduit
Purchaser (the “Funding Agents”),
JPMorgan Chase Bank, N.A., in its capacity as administrative agent (the “Administrative
Agent”) for the CP Conduit Purchasers, the APA Banks and the Funding
Agents, and The Bank of New York, as successor to JPMorgan Chase Bank, N.A., as
Indenture Trustee (the “Indenture Trustee”),
to the Base Indenture, dated as of March 7, 2006 between the Issuer and the
Indenture Trustee pursuant to which the Series 2006-1 Investor Notes were issued
to the CP Conduit Purchasers and (ii) that certain Second Amendment to the
Series 2006-1 Indenture Supplement, dated as of February 28, 2008 (the “Second Amendment”),
among the Issuer, the Administrator and the Indenture Trustee.  All
capitalized terms defined in the Series 2006-1 Indenture Supplement and used
herein shall have the meanings given to them therein.

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    The
undersigned hereby consent to the execution, delivery and performance of the
Second Amendment by the parties thereto.

     

    Dated:  February
28, 2008

     

    
      
        
          	 
      	
                  JPMORGAN
      CHASE BANK, N.A., as Administrative Agent

                   

                
	 
      	
                  By:  /s/ Jill T.
  Lane

                
	 
      	
                  Name:
      Jill T. Lane

                
	 
      	
                  Title:
      Executive Director

                

        

      

      
 

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      PARK
AVENUE RECEIVABLES COMPANY, LLC, as a CP Conduit Purchaser

       

      
        
          	 
      	
                  By:  JPMorgan
      Chase Bank, N.A., its attorney-in-fact

                
	 
      	 
      
	 
      	
                  By:  /s/ Jill T. Lane

                
	 
      	
                  Name:  Jill
      T. Lane

                
	 
      	
                  Title:   Executive
      Director

                
	 	 
	 
      	
                  FALCON
      ASSET SECURITIZATION COMPANY LLC, as a CP Conduit
  Purchaser

                
	 	 
	 
      	
                  By:  JPMorgan
      Chase Bank, N.A., its attorney-in-fact

                
	 
      	 
      
	 
      	
                  By:  /s/ Jill T. Lane

                
	 
      	
                  Name:  Jill
      T. Lane

                
	 
      	
                  Title:   Executive
      Director

                
	 	 
	 
      	
                  JPMORGAN
      CHASE BANK, N.A., as an APA Bank

                
	 	 
	 
      	
                  By:  /s/ Jill T. Lane

                
	 
      	
                  Name:  Jill
      T. Lane

                
	 
      	
                  Title:   Executive
      Director

                

        

      

       

       

      
 

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      
        
          	 
      	
                  CRC
      FUNDING, LLC, as a CP Conduit Purchaser

                   

                
	 
      	
                  By:  CITICORP
      NORTH AMERICA, INC.,

                
	 
      	
                  As
      Attorney-in-Fact

                   

                
	 
      	
                  By:  /s/ James H.
      Matland

                
	 
      	
                  Name:  James
      H. Matland

                
	 
      	
                  Title:   Director

                
	 
      	
                   

                  CITIBANK,
      N.A., as an APA Bank

                   

                
	 
      	
                  By:    /s/ James H.
      Matland

                
	 
      	
                  Name:  James
      H. Matland

                
	 
      	
                  Title:   Director

                

        

      

       

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      
        
          
            	 
      	
                    VARIABLE
      FUNDING CAPITAL COMPANY LLC, as a CP Conduit Purchaser

                     

                  
	 
      	
                    By:  WACHOVIA
      CAPITAL MARKETS, LLC,

                  
	 
      	
                    As
      Attorney-in-Fact

                  
	 
      	 
      
	 
      	 
      
	 
      	
                    By:  /s/ Douglas R. Wilson,
      Sr.

                  
	 
      	
                    Name:  Douglas
      R. Wilson, Sr.

                  
	 
      	
                    Title:   Director

                  
	 
      	
                     

                    WACHOVIA
      BANK, NATIONAL ASSOCIATION, as an APA Bank

                     

                  
	 
      	
                    By:    /s/ Kevin
    McConnoll

                  
	 
      	
                    Name:  Kevin
      McConnoll

                  
	 
      	
                    Title:   Managing
      Director

                  

          

        

      

    

     

    
      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      
        
          
            	 
      	
                    YC
      SUSI TRUST, as a CP Conduit Purchaser

                     

                     

                    By:  Bank
      of America, National Association, as Administrative
  Trustee

                  
	 
      	 
      
	 
      	
                    By:    /s/ Leif E.
    Rauer

                  
	 
      	
                    Name:  Leif
      E. Rauer

                  
	 
      	
                    Title:   Vice
      President

                  
	 
      	
                     

                    BANK
      OF AMERICA, NATIONAL ASSOCIATION, as an APA Bank

                     

                  
	 
      	
                    By:    /s/ Leif E.
    Rauer

                  
	 
      	
                    Name:  Leif
      E. Rauer

                  
	 
      	
                    Title:   Vice
      President

                  

          

        

      

      
 

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      
        
          
            	 
      	
                    LIBERTY
      STREET FUNDING LLC, as a CP Conduit Purchaser

                     

                  
	 
      	
                    By:  /s/ Jill A.
    Gordon

                  
	 
      	
                    Name:  Jill
      A. Gordon

                  
	 
      	
                    Title:   Vice
      President

                  
	 
      	
                     

                    THE
      BANK OF NOVA SCOTIA, as an APA Bank

                     

                  
	 
      	
                    By:    /s/ Michael
  Eden

                  
	 
      	
                    Name:  Michael
      Eden

                  
	 
      	
                    Title:   Director

                  

          

        

      

      

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      
        
          
            	 
      	
                    PARADIGM
      FUNDING, LLC, as a CP Conduit Purchaser

                  
	 
      	
                     

                    By:    /s/ Doris J.
    Hearn

                  
	 
      	
                    Name:  Doris
      J. Hearn

                  
	 
      	
                    Title:   Vice
      President

                  
	 
      	
                     

                    WESTLB
      AG, NEW YORK BRANCH, as an APA Bank

                  
	 
      	
                     

                    By:    /s/ Michael
      Gilhuley

                  
	 
      	
                    Name:  Michael
      Gilhuley

                  
	 
      	
                    Title:   Associate
      Director

                  
	 
      	
                     

                    By:    /s/ Liyin
  Liang

                  
	 
      	
                    Name:  Liyin
      Liang

                  
	 
      	
                    Title:   Director

                  

          

           

           

          
            
              
              

            

            
              16

              
                

              

            

            
              
              

            

          

           

           

          
            	 
      	
                    ATLANTIC
      ASSET SECURITIZATION LLC, as a CP Conduit Purchaser

                     

                  
	 
      	
                     

                    By:    /s/ Richard
    McBride

                  
	 
      	
                    Name:  Richard
      McBride

                  
	 
      	
                    Title:   Director

                  
	 
      	
                     

                    By:    /s/ Kostantina
      Kourmpetis

                  
	 
      	
                    Name:  Kostantina
      Kourmpetis

                  
	 
      	
                    Title:   Managing
      Director

                  
	 
      	
                     

                    CALYON
      NEW YORK BRANCH, as an APA Bank

                     

                  
	 
      	
                    By:    /s/ Richard
    McBride

                  
	 
      	
                    Name:  Richard
      McBride

                  
	 
      	
                    Title:   Director

                     

                  
	 
      	
                    By:    /s/ Kostantina
      Kourmpetis

                  
	 
      	
                    Name:   Kostantina
      Kourmpetis

                  
	 
      	
                    Title:   Managing
      Director

                  

          

        

      

      

       

      

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      
        
          
            	 
      	
                    THAMES
      ASSET GLOBAL SECURITIZATION 

                        NO.1
      INC., as a CP Conduit Purchaser

                     

                  
	 
      	
                    By:  /s/ R. Douglas
      Donaldson

                  
	 
      	
                    Name:
      R. Douglas Donaldson

                  
	 
      	
                    Title:  Treasurer

                  
	 
      	
                     

                    THE
      ROYAL BANK OF SCOTLAND, NEW YORK 

                        BRANCH,
      as an APA Bank

                     

                  
	 
      	
                    By:    /s/ James P.
    Wilson

                  
	 
      	
                    Name:
      James P. Wilson

                  
	 
      	
                    Title:  Senior
      Vice President

                  

          

        

      

      

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
B

      TO SECOND
AMENDMENT

      TO SERIES
2006-1

       

      INDENTURE
SUPPLEMENT

       

      Chesapeake Funding LLC

      940
Ridgebrook Road

      Sparks,
Maryland 21152

      

      February
28, 2008

       

      Second Amended and Restated
Series 2006-1 Indenture Supplement Fee Letter

       

      JPMorgan
Chase Bank, N.A.

       

      10 South
Dearborn, IL1-0597

       

      Chicago,
Illinois 60670

       

      Ladies
and Gentlemen:

       

      Reference
is hereby made to the Series 2006-1 Indenture Supplement, dated as of March 7,
2006, as amended by the First Amendment thereto, dated as of March 6, 2007, and
the Second Amendment thereto, dated as of the date hereof (as further amended or
supplemented from time to time, the “Series 2006-1 Indenture
Supplement”), among Chesapeake Funding LLC, as the issuer (the “Issuer”), PHH Vehicle
Management Services, LLC, as administrator, JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as
administrative agent (the “Administrative
Agent”), the CP Conduit Purchasers, APA Banks and Funding Agents named
therein and The Bank of New York, as successor to JPMorgan Chase Bank, N. A., as
indenture trustee (the “Indenture Trustee”),
to the Base Indenture, dated as of March 7, 2006, between the Issuer and the
Indenture Trustee.  Capitalized terms used but not defined herein are
used with the meanings assigned to them in the Series 2006-1 Indenture
Supplement.

       

      This Fee
Letter sets forth (i) the definitions of Applicable Margin, Commitment Fee Rate
and Program Fee Rate used in the Series 2006-1 Indenture Supplement and (ii) the
fees to be paid by the Issuer to the Administrative Agent on behalf of each
Purchaser Group on the date hereof.

       

      The
following terms shall have the following meanings:

       

      “Applicable Margin”
means on any date of determination, [***]% per annum; provided, however that
after the occurrence of an Amortization Event or a Potential Amortization Event,
the Applicable Margin shall equal [***]% per annum.

       

      
        [***]
INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.

      

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      “Commitment Fee Rate”
means [***]% per annum; provided, however,
that the Commitment Fee Rate on any day during the Fourth Period on which the
Series 2006-1 Maximum Invested Amount is greater than $2,400,000,000 shall be
[***]% per annum.

       

      “First Period” means
the period from and including February 28, 2008 to and including May 31,
2008.

       

      “Fourth Period” means
the period from and including February 1, 2009 to and including February 26,
2009.

       

      “Program Fee Rate”
means [***]% per annum; provided, however,
that (a) the Program Fee Rate on any day during (i) the Second Period on which
the Series 2006-1 Maximum Invested Amount is greater than $2,400,000,000, (ii)
the Third Period on which the Series 2006-1 Maximum Invested Amount is greater
than $1,900,000,000 but not greater than $2,400,000,000 or (iii) the Fourth
Period on which the Series 2006-1 Maximum Invested Amount is greater than
$1,400,000,000 but not greater than $1,900,000,000 shall be [***]% per annum,
(b) the Program Fee Rate on any day during (i) the Third Period on which the
Series 2006-1 Maximum Invested Amount is greater than $2,400,000,000 or (ii) the
Fourth Period on which the Series 2006-1 Maximum Invested Amount is greater than
$1,900,000,000 but not greater than $2,400,000,000 shall be [***]% per annum and
(c) the Program Fee Rate on any day during the Fourth Period on which the Series
2006-1 Maximum Invested Amount is greater than $2,400,000,000 shall be [***]%
per annum.

       

      “Second Period” means
the period from and including June 1, 2008 to and including September 30,
2008.

      

      “Third Period” means
the period from and including October 1, 2008 to and including January 31,
2009.

      

       

      On the
date hereof, the Issuer shall pay to the Administrative Agent on behalf of each
Purchaser Group an amount equal to [***]% of the Maximum Purchaser Group
Invested Amount with respect to such Purchaser Group.

       

      Once
paid, the fees or any part thereof payable hereunder shall not be refundable
under any circumstances.  All fees payable hereunder shall be paid in
immediately available funds and shall be in addition to reimbursement of the
reasonable out-of-pocket expenses of each Purchaser Group.

      

      It is
understood and agreed that this Fee Letter shall not constitute or give rise to
any obligation to provide any financing; such an obligation will arise only to
the extent provided in the Series 2006-1 Indenture Supplement.  This
Fee Letter may not be amended or waived except by an instrument in writing
signed by the Issuer and each of the undersigned parties.  This Fee
Letter shall be governed by, and construed and interpreted in accordance with,
the laws of the State of New York.  This Fee Letter may be executed in
any number of counterparts, each of which shall be an original, and all of
which, when taken together, shall constitute one agreement.  Delivery
of an executed signature page of this Fee Letter by facsimile transmission shall
be effective as delivery of a manually executed counterpart hereof.

       

      
        [***]
INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.

      

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      Please
confirm that the foregoing is our mutual understanding by signing and returning
to us an executed counterpart of this Fee Letter.

       

      Very
truly yours,

       

      
        
          	 
      	
                  CHESAPEAKE
      FUNDING LLC

                   

                
	 
      	
                  By:
      /s/ Mark E.
Johnson

                
	 
      	
                     Name:
      Mark E. Johnson

                
	 
      	
                     Title:   Vice
      President and Treasurer

                

        

      

       

      Accepted
and agreed to as of

      the date
first written above by:

       

      

       

      PHH
VEHICLE MANAGEMENT SERVICES, LLC,

        as
Administrator

       

      

      By: /s/ Mark E.
Johnson                                                      

      Name:
Mark E. Johnson

      Title:   Vice
President and Treasurer

      

      

      JPMORGAN
CHASE BANK, N.A., as 

        
Administrative Agent

       

      By:   /s/ Jill T.
Lane                                           

      Name:  Jill
T. Lane

      Title:    Executive
Director

       

      

      JPMORGAN
CHASE BANK, N.A., as 

        
Funding Agent

       

      By:   /s/ Jill T.
Lane                                           

      Name:  Jill
T. Lane

      Title:    Executive
Director

      

      

      CITICORP
NORTH AMERICA, INC., as 

        
Funding Agent

       

      By:   /s/ James H.
Matland                                                                

      Name:
James H. Matland

      Title:   Director

       

      
 

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      

      WACHOVIA
BANK, NATIONAL

        ASSOCIATION,
as Funding Agent

       

      By: /s/ Kevin
McConnoll                                                      

      Name:
Kevin McConnoll

      Title:   Managing
Director

      

      

      BANK OF
AMERICA, NATIONAL 

        
ASSOCIATION, as Funding Agent

       

      By: / s/ Leif E.
Rauer                                                      

      Name:
Leif E. Rauer

      Title:   Vice
President

      

      THE BANK
OF NOVA SCOTIA, as 

        
Funding Agent

       

      By: / s/ Michael
Eden                                                      

      Name:
Michael Eden

      Title:   Director

      

      

      WESTLB
AG, NEW YORK BRANCH, as 

        
Funding Agent

       

      By: / s/ Michael
Gilhuley                                                      

      Name:
Michael Gilhuley

      Title:   Associate
Director

      

      By: / s/ Liyin
Liang                                           

      Name:
Liyin Liang

      Title:   Director

      

      

      THE ROYAL
BANK OF SCOTLAND PLC, as 

        
Funding Agent

       

      By: / s/ David
Viney                                                      

      Name:
David Viney

      Title:   Senior
Director

       

       

      
 

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      

      CALYON
NEW YORK BRANCH, as 

        
Funding Agent

       

      By: / s/ Richard
McBride                                                      

      Name:
Richard McBride

      Title:   Director

      

      By: / s/ Kostantina
Kourrmpetis                                                                           

      Name:
Kostantina Kourmpetis

      Title:   Managing
Director

      

      

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    

    Schedule
A

    
      	
              SCHEDULE I TO SERIES
      2006-1 INDENTURE SUPPLEMENT

            

    

    
      	
              CP Conduit Purchaser

            	
              APA Bank

            	
               

               

              APA Bank Percentage

            	
              Funding Agent

            	
              Maximum

              Purchaser Group Invested
    Amount

            	
              Match Funding

            
	
              [***]

               

            	
              [***]

            	 
      	
              [***]

            	
              [***]

            	 
      
	
              [***]

               

            	
              [***]

            	 
      	
              [***]

            	
              [***]

            	 
      
	
              [***]

               

            	
              [***]

            	 
      	
              [***]

            	
              [***]

            	 
      
	
              [***]

               

            	
              [***]

            	 
      	
              [***]

            	
              [***]

            	 
      
	
              [***]

               

            	
              [***]

            	 
      	
              [***]

            	
              [***]

            	 
      
	
              [***]

               

            	
              [***]

            	 
      	
              [***]

            	
              [***]

            	 
      
	
              [***]

               

            	
              [***]

            	 
      	
              [***]

            	
              [***]

            	 
      
	
              [***]

               

            	
              [***]

            	 
      	
              [***]

            	
              [***]

            	 
      
	
              [***]

            	
              [***]

            	 
      	
              [***]

            	
              [***]

            	 
      

    

     

    

      
        [***]
INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.ex10-2.htm

     

    Exhibit 10.2

    
      

      

      

      

      

      

      

      MASTER
REPURCHASE AGREEMENT

      

      Dated
as of February 28, 2008

      

      

      Between:

      

      

      CITIGROUP
GLOBAL MARKETS REALTY CORP., as Buyer,

      

      and

      

      PHH
MORTGAGE CORPORATION, as Seller

      

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    TABLE OF
CONTENTS

     

    
      
        	
                1.

              	
                APPLICABILITY

              	
                1

              
	
                2.

              	
                DEFINITIONS
      AND ACCOUNTING MATTERS

              	
                1

              
	
                3.

              	
                THE
      TRANSACTIONS

              	
                18

              
	
                4.

              	
                PAYMENTS;
      COMPUTATION

              	
                21

              
	
                5.

              	
                TAXES;
      TAX TREATMENT

              	
                21

              
	
                6.

              	
                MARGIN
      MAINTENANCE

              	
                22

              
	
                7.

              	
                INCOME
      PAYMENTS

              	
                22

              
	
                8.

              	
                SECURITY
      INTEREST; BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT

              	
                23

              
	
                9.

              	
                CONDITIONS
      PRECEDENT

              	
                25

              
	
                10.

              	
                RELEASE
      OF PURCHASED LOANS

              	
                29

              
	
                11.

              	
                RELIANCE

              	
                30

              
	
                12.

              	
                REPRESENTATIONS
      AND WARRANTIES

              	
                30

              
	
                13.

              	
                COVENANTS
      OF SELLER AND GUARANTOR

              	
                33

              
	
                14.

              	
                REPURCHASE
      DATE PAYMENTS

              	
                42

              
	
                15.

              	
                REPURCHASE
      OF PURCHASED LOANS

              	
                42

              
	
                16.

              	
                SUBSTITUTION

              	
                42

              
	
                17.

              	
                [RESERVED]

              	
                44

              
	
                18.

              	
                EVENTS
      OF DEFAULT

              	
                43

              
	
                19.

              	
                REMEDIES

              	
                46

              
	
                20.

              	
                DELAY
      NOT WAIVER; REMEDIES ARE CUMULATIVE

              	
                48

              
	
                21.

              	
                NOTICES
      AND OTHER COMMUNICATIONS

              	
                48

              
	
                22.

              	
                USE
      OF EMPLOYEE PLAN ASSETS

              	
                48

              
	
                23.

              	
                INDEMNIFICATION

              	
                48

              
	
                24.

              	
                WAIVER
      OF REDEMPTION AND DEFICIENCY RIGHTS

              	
                49

              
	
                25.

              	
                EXPENSES;
      REIMBURSEMENT

              	
                49

              
	
                26.

              	
                FURTHER
      ASSURANCES

              	
                50

              
	
                27.

              	
                TERMINATION

              	
                50

              
	
                28.

              	
                SEVERABILITY

              	
                50

              
	
                29.

              	
                BINDING
      EFFECT; GOVERNING LAW

              	
                50

              
	
                30.

              	
                AMENDMENTS

              	
                51

              
	
                31.

              	
                SUCCESSORS
      AND ASSIGNS

              	
                51

              
	
                32.

              	
                SURVIVAL

              	
                51

              
	
                33.

              	
                CAPTIONS

              	
                51

              
	
                34.

              	
                COUNTERPARTS

              	
                51

              
	
                35.

              	
                SUBMISSION
      TO JURISDICTION; WAIVERS

              	
                51

              
	
                36.

              	
                WAIVER
      OF JURY TRIAL

              	
                52

              
	
                37.

              	
                ACKNOWLEDGEMENTS

              	
                52

              
	
                38.

              	
                HYPOTHECATION
      OR PLEDGE OF PURCHASED ITEMS

              	
                52

              
	
                39.

              	
                ASSIGNMENTS;
      PARTICIPATIONS

              	
                52

              
	
                40.

              	
                SINGLE
      AGREEMENT

              	
                53

              
	
                41.

              	
                INTENT

              	
                54

              
	
                42.

              	
                CONFIDENTIALITY

              	
                54

              
	
                43.

              	
                SERVICING

              	
                54

              
	
                44.

              	
                PERIODIC
      DUE DILIGENCE REVIEW

              	
                56

              
	
                45.

              	
                SET-OFF

              	
                57

              
	
                46.

              	
                ENTIRE
      AGREEMENT

              	
                57

              

      

      

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

    

    

    SCHEDULES

     

    SCHEDULE
1                                Representations
and Warranties re: Loans

     

    SCHEDULE
2                                Filing
Jurisdictions and Offices

     

    SCHEDULE
3                                Relevant
States

     

    SCHEDULE
4                                Subsidiaries

     

    SCHEDULE
5                                Approved
Originator List

     

    SCHEDULE
6                                Litigation

     

    EXHIBITS

     

    EXHIBIT
A                                Form
of Certification

     

    EXHIBIT
B                                Form
of Custodial Agreement

     

    EXHIBIT
C                                Form
of Opinion of Counsel to Seller

     

    EXHIBIT
D                                Form
of Notice of Transaction Notice

     

    EXHIBIT
E                                Underwriting
Guidelines

     

    EXHIBIT
F                                Required
Fields for Servicing Transmission

     

    EXHIBIT
G                                Required
Fields for Loan Schedule

     

    EXHIBIT
H                                Form
of Confidentiality Agreement

     

    EXHIBIT
I                                Form
of Instruction Letter

     

    EXHIBIT
J                                Form
of Master Netting Agreement

     

    EXHIBIT
K                                Form
of Security Release Certification

     

     

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    MASTER
REPURCHASE AGREEMENT, dated as of February 28, 2008, between PHH Mortgage
Corporation, a New Jersey Corporation as seller (“Seller”) and
Citigroup Global Markets Realty Corp., a New York corporation (“Buyer”, which term
shall include any “Principal” as defined
and provided for in Annex I), or as agent pursuant hereto (“Agent”),

     

    
      	
              1.  

            	
              APPLICABILITY

            

    

     

    Buyer
shall, from time to time, upon the terms and conditions set forth herein, agree
to enter into transactions in which Seller transfers to Buyer Eligible Loans
against the transfer of funds by Buyer, with a simultaneous agreement by Buyer
to transfer to Seller Purchased Loans at a date certain, against the transfer of
funds by Seller.  Each such transaction shall be referred to herein as
a “Transaction”, and,
unless otherwise agreed in writing, shall be governed by this
Agreement.

     

    
      	
              2.  

            	
              DEFINITIONS AND
      ACCOUNTING MATTERS 

            

    

     

    (a) Defined
Terms. As used herein, the following terms have the following meanings (all
terms defined in this Section 2 or in other provisions of this 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 Loan, those accepted and
prudent mortgage servicing practices (including collection procedures) of
prudent mortgage lending institutions which service mortgage loans of the same
type as the Loans in the jurisdiction where the related Mortgaged Property is
located, and which are in accordance with Fannie Mae servicing practices and
procedures for MBS pool mortgages, as defined in the Fannie Mae servicing guides
including future updates, and in a manner at least equal in quality to the
servicing Seller or Seller’s designee provides to mortgage loans which they own
in their own portfolio.

     

    “Account Agreement”
shall mean with respect to any Additional Collateral Loan, the agreement between
the related mortgagor and the related Additional Collateral Servicer pursuant to
which such mortgagor granted a security interest in the related Securities
Account.

     

    “Account Control
Agreement” shall mean the collection account control agreement to be
entered into in connection with this Agreement among Buyer, Seller and The Bank
of New York, in form and substance acceptable to Buyer to be entered into with
respect to the Collection Account, the FNMA Loan Purchase Account and the
Citigroup Sub-Account.

     

    “Additional
Collateral” shall mean with respect to any Additional Collateral Loan,
collateral that consists of either (i) marketable securities owned by the
borrower and deposited in a Securities Account held by an Additional Collateral
Servicer, subject to a security interest in favor of Seller pursuant to an
Additional Collateral Transfer Agreement or (ii) with respect to a loan to a
borrower that is subject to a guaranty, (a) marketable securities owned by the
guarantor and deposited in an account held by an Additional Collateral Servicer,
subject to a first priority security interest in favor of Seller pursuant to an
Additional Collateral Transfer Agreement or (b) a home equity line of credit to
fund such guaranty that is secured by a lien on residential real estate owned by
such guarantor subject to a security interest in favor of Seller pursuant to an
Additional Collateral Transfer Agreement; provided, however, that the
amount available to be drawn under the home equity line of credit supporting
such guaranty must be at least equal to the Original Additional Collateral
Requirement for such Additional Collateral Loan.

     

    “Additional Collateral
Loan” shall mean a Loan (i) that is secured by additional collateral in
the form of a security interest in a Securities Account and identified as such
in the Mortgage File required to be provided at the closing thereof, (ii) as to
which the related Additional Collateral has a value, as of the date of
origination of such Loan, at least equal to the related Original Additional
Collateral Requirement, and (iii) that is subject to the terms of this Agreement
from time to time

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
 

    “Additional Collateral
Servicer” shall mean with respect to any Additional Collateral Loan, the
Broker or entity responsible for administering and servicing the Additional
Collateral with respect to such Additional Collateral Loan, approved by Buyer
and listed on Schedule 5 hereto.

     

    “Additional Collateral
Servicing Agreement” shall mean with respect to any Additional Collateral
Loan, the agreement between the related Additional Collateral Servicer and the
Seller, including any exhibits thereto, pursuant to which such Additional
Collateral Servicer shall service and administer the related Additional
Collateral.

     

    “Additional Collateral
Transfer Agreement” shall mean with respect to each Additional Collateral
Loan, the agreement between the Additional Collateral Servicer and the Seller
constitutes an assignment of the Additional Collateral Servicer’s rights to
Seller, pursuant to which a first priority security interest in the Additional
Collateral and control over the related Securities Account is granted to Seller
with respect to such Additional Collateral Loan, in form and substance
acceptable to Buyer in its sole discretion and, which may incorporate any
related Account Agreement.

     

     “Additional Purchased
Loans” shall have the meaning specified in Section 6(a)
hereof.

     

    “Adjustable Rate Loan”
shall mean a Loan which provides for the adjustment of the Mortgage Interest
Rate payable in respect thereto.

     

    “Adjustment Date”
shall mean with respect to each Adjustable Rate Loan, the date set forth in the
related Note on which the Mortgage Interest Rate on the Loan is adjusted in
accordance with the terms of the Note.

     

    “Affiliate” shall
mean, with respect to any Person, any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person.  For purposes of this definition, “control” (together with the
correlative meanings of “controlled by” and “under common control with”) means
possession, directly or indirectly, of the power (a) to vote 10% or more of the
securities (on a fully diluted basis) having ordinary voting power for the
directors or managing general partners (or their equivalent) of such Person, or
(b) to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by contract, or
otherwise.

     

    “Agencies” shall mean
collectively Fannie Mae, Freddie Mac and Ginnie Mae.

     

    “Agency Eligible Loan”
shall mean a Loan that is originated in compliance with the Agency Guidelines
and is eligible for sale to securitization by Fannie Mae, Freddie Mac or Ginnie
Mae.

     

    “Agency Guidelines”
shall mean the Ginnie Mae Guidelines, the Fannie Mae Guidelines and the Freddie
Mac Guidelines, in each case as such guidelines have been or may be amended,
supplemented or otherwise modified from time to time (i) by Ginnie Mae, Fannie
Mae or Freddie Mac, as applicable, in the ordinary course of business and, with
respect to material amendments, supplements or other modifications, as to which
Buyer shall not have reasonably objected within ten (10) days of receiving
notice of such or (ii) by Ginnie Mae, Fannie Mae or Freddie Mac, as applicable,
at the request of Seller and as to which (x) Seller has given notice to Buyer of
any such material amendment, supplement or other modification and (y) Buyer
shall not have reasonably objected.

     

    “Agent” shall have the
meaning set forth in the preamble to this Agreement.

     

     

    
      
        
        

      

      
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    “Agreement” shall mean
this Master Repurchase Agreement (including all exhibits, schedules and other
addenda hereto or thereto), as supplemented by the
Pricing Side Letter, as it may be amended, further supplemented or otherwise
modified from time to time.

     

    “ALTA” shall mean the
American Land Title Association.

     

    “Alt-A Credit Loan”
means a Loan originated in accordance with the Underwriting Guidelines for Alt-A
product.

     

    “Applicable Margin”
shall have the meaning set forth in the Pricing Side Letter.

     

    “Appraised Value”
shall mean the value set forth in an appraisal made in connection with the
origination of the related Loan as the value of the Mortgaged Property (or the
related Cooperative Unit in the case of a Cooperative Loan).

     

    “Approved Originator”
means each of the mortgage loan originating institutions approved by listed on
Schedule 5 hereto.

     

     “Approved Title Insurance
Company” shall mean a title insurance company that has not been
disapproved in writing by Buyer.

     

    “Assignment of
Mortgage” shall mean, with respect to any Mortgage, an assignment of the
Mortgage, notice of transfer or equivalent instrument in recordable form,
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect the assignment of the Mortgage to
Buyer.

     

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

     

    “Best’s” shall mean
Best’s Key Rating Guide, as the same shall be amended from time to
time.

     

     “Broker” shall mean
with respect to each Additional Collateral Loan, an entity acting as broker
under the related Account Agreement, which is acceptable to the Buyer in its
sole discretion.

     

    “Business Day” shall
mean any day other than (i) a Saturday or Sunday, (ii) a day on which the New
York Stock Exchange, the Federal Reserve Bank of New York, are closed, banking
and savings and loan institutions in the State of New York, the City of New York
or the city or, with respect to any obligations owing to or from the Custodian,
the state in which the Custodian’s offices are located are closed, or (iii) a
day on which trading in securities on the New York Stock Exchange or any other
major securities exchange in the United States is not conducted.

     

    “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 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 any commercial bank having capital and surplus in
excess of $500,000,000, (c) repurchase obligations 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 Standard and Poor’s
Ratings Group (“S&P”) or P-1 or the equivalent thereof by Moody’s Investors
Service, Inc. (“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 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 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.

     

     

    
      
        
        

      

      
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    “Change of Control”
shall mean (i) the acquisition by any Person or group (within the meaning of the
Securities Exchange Act of 1934, as amended, and the rules of the Securities and
Exchange Commission thereunder as in effect on the Effective Date), directly or
indirectly, beneficially or of record, of ownership or control of in excess of
50% of the voting common stock of the Seller on a fully diluted basis at any
time or (ii) if at any time, individuals who, at the Effective Date, constituted
the Board of Directors of the Seller (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Seller, as the case may be, was approved by a vote of the
majority of the directors then still in office who were either directors at the
Effective Date or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Seller then in office.

     

    “Chesapeake
Facilities” shall mean the liquidity facility described in that certain
Base Indenture, dated as of March 7, 2006, between Chesapeake Funding LLC (now
known as Chesapeake Finance Holdings LLC), as Issuer, and JPMorgan Chase Bank,
N.A., as Indenture Trustee, as supplemented by that certain Series 2006-1
Indenture Supplement dated as of March 7, 2006 and that certain Series 2006-2
Indenture Supplement dated as of March 7, 2006, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.

     

    “Citigroup
Sub-Account” shall have the meaning set forth in Section 13 (jj)
hereto.

     

    “Closing Date” shall
mean the date of this Agreement hereinabove referenced.

     

    “Collection Account”
shall mean the following account established by Seller in accordance with
Section 13(ii) for the benefit of Buyer, “Citigroup Global Markets Realty Corp.,
Inc. - P&I account - Account # ________”.

     

    “Combined Loan-to-Value
Ratio” or “CLTV” shall mean: 

     

    (i)
           with respect
to any Loan that was originated as a purchase-money loan, the ratio expressed as
a percentage of the following:

     

    (a)           if
the related Mortgage File includes an appraisal, (x) the outstanding principal
balance of such Loan as of origination plus the outstanding
principal balance of any other loan that is secured by a lien on the related
Mortgaged Property determined as of that date such ratio is being calculated,
divided by (y) the lesser of (1) the Appraised Value of the related Mortgaged
Property, (2) the purchase price of the related Mortgaged Property paid by
Seller, and (3) any updated valuation of such Mortgaged Property performed by or
on the behalf of Buyer; or

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b)           if
the related Mortgage File does not include an appraisal, (x) the outstanding
principal balance of such Loan as of origination plus the outstanding
principal balance of any other loan that is secured by a lien on the related
Mortgaged Property determined as of that date such ratio is being calculated,
divided by (y) the lesser of (1) the purchase price of the related Mortgaged
Property paid by Seller, and (2) any updated valuation of such Mortgaged
Property performed by or on the behalf of Buyer.

     

    (ii)           with
respect to any Loan that was originated as a refinance loan, or is a Landscape
Loan, the ratio expressed as a percentage of the following:

     

    (a)           if
the related Mortgage File includes an appraisal, (x) the outstanding principal
balance of such Loan as of origination plus the outstanding
principal balance of any other loan that is secured by a lien on the related
Mortgaged Property determined as of that date such ratio is being calculated,
divided by the Appraised Value of the related Mortgaged Property,
or

     

    (b)           if
the related Mortgage File does not include an appraisal, (x) the outstanding
principal balance of such Loan as of origination plus the outstanding
principal balance of any other loan that is secured by a lien on the related
Mortgaged Property determined as of that date such ratio is being calculated,
divided by the estimated value (as determined by Seller in accordance with
Seller’s Underwriting Guidelines or applicable Agency Guidelines) of the
Mortgaged Property.

     

    “Commitment Fee” shall
have the meaning assigned to it in the Pricing Side Letter.

     

    “Commonly Controlled
Entity” shall mean an entity, whether or not incorporated, which is under
common control with Seller within the meaning of Section 4001 of ERISA or is
part of a group which includes Seller and which is treated as a single employer
under Section 414 of the Code.

     

    “Confirmation” shall
have the meaning assigned thereto in Section 3(a) hereof.

     

    “Conforming Mortgage
Loan” shall mean a Loan which is eligible for sale to Fannie Mae or
Freddie Mac and conforms to Agency Guidelines.

     

    “Consolidated
Subsidiaries” shall mean all Subsidiaries of the Seller that are required
to be consolidated with the Borrower for financial reporting purposes in
accordance with GAAP.

     

    “Contractual
Obligation” shall mean as to any Person, any material provision of any
agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound or any material provision of any
security issued by such Person.

     

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

     

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

     

     

    
      
        
        

      

      
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    “Cooperative Project”
shall mean, with respect to any Cooperative Loan, all real property and
improvements thereto and rights therein and thereto owned by a Cooperative
Corporation including without  limitation the land, separate dwelling
units and all common elements.

     

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

     

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

     

    “Credit Score” shall
mean the credit score of the Mortgagor provided by Fair, Isaac & Company,
Inc. or such other organization providing credit scores at the time of the
origination of a Loan.  If two credit scores are obtained, the Credit
Score shall be the lower of the two credit scores.  If three credit
scores are obtained, the Credit Score shall be the middle of the three credit
scores.

     

    “Custodial Agreement”
shall mean the Tri-Party Custody Agreement, to be entered into in connection
with this Agreement, among Seller, Buyer and Custodian as the same shall be
modified and supplemented and in effect from time to time.

     

    “Custodian” shall mean
The Bank of New York Trust Company, N.A., or its successors and permitted
assigns, or any successor custodian appointed by the Buyer and Seller to act as
custodian under this Agreement.

     

    “Custodian Loan
Transmission” shall have the meaning assigned thereto in the Custodial
Agreement.

     

    “Default” shall mean
an Event of Default or any event, that, with the giving of notice or the passage
of time or both, would become an Event of Default.

     

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

     

    “Dry Loan” shall mean
a first or second lien Loan which is underwritten in accordance with the
Underwriting Guidelines and as to which the related Mortgage File has been
delivered to the Custodian in accordance with the Custodial
Agreement.

     

    “Due Date” shall mean
the day of the month on which the Monthly Payment is due on a 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 44 hereof with respect to any or all of the Loans or Seller or related
parties, as desired by Buyer from time to time.

     

    “Effective Date” shall
mean the date upon which the conditions precedent set forth in Section 9(a) have
been satisfied.

     

    “Effective Loan-to-Value
Ratio” or “Effective LTV” means,
with respect to any Additional Collateral Loan, a fraction, expressed as a
percentage, the numerator of which is the original outstanding principal amount
of the related Additional Collateral Loan, less the Original Additional
Collateral Requirement, if any, and the denominator of which is the Appraised
Value of the related Mortgaged Property at such time, or if the Loan was
originated as a purchase-money loan, the purchase price of the Mortgaged
Property paid by Seller if such purchase price is less than such Appraised
Value.

     

     

    
      
        
        

      

      
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    “Electronic Tracking
Agreement” shall mean the electronic tracking agreement among Buyer,
Seller, MERSCORP, Inc. and MERS, in form and substance acceptable to Buyer to be
entered into in the event that any of the Loans become MERS Loans; provided that if no
Loans are or will be MERS Loans, all references herein to the Electronic
Tracking Agreement shall be disregarded.

     

    “Electronic
Transmission” shall mean the delivery of information in an electronic
format acceptable to the applicable recipient thereof.  An Electronic
Transmission shall be considered written notice for all purposes hereof (except
when a request or notice by its terms requires execution).

     

    “Eligible Loan” shall
have the meaning assigned thereto in the Pricing Side Letter.

     

    “ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended from time to
time.

     

    “ERISA Affiliate”
shall mean any corporation or trade or business that is a member of any group of
organizations (i) described in Section 414(b) or (c) of the Code of which Seller
is a member and (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 Seller is a member.

     

    “Escrow Payments”
shall mean, with respect to any Loan, the amounts constituting ground rents,
taxes, assessments, water charges, 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 terms of any Note or Mortgage or any other
document.

     

    “Event of Default”
shall have the meaning provided in Section 18 hereof.

     

    “Event of Termination”
shall have the meaning set forth in Section 17 herein.

     

    “Event of Termination
Rate” shall have the meaning assigned thereto in the Pricing Side
Letter.

     

    “Exception” shall have
the meaning assigned thereto in the Custodial Agreement.

     

    “Exception Report”
shall mean the exception report prepared by the Custodian pursuant to the
Custodial Agreement.

     

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

     

    “FHA Loan” shall mean
an Eligible Loan that is the subject of an FHA Mortgage Insurance
Contract.

    

    “FHA Mortgage
Insurance” shall mean mortgage insurance authorized under Sections
203(b), 213, 221(d)(2), 222, and 235 of the Act and provided by the
FHA.

    

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

     

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
 

    “FHA Regulations”
shall mean regulations promulgated by HUD under the Federal Housing
Administration Act, codified in 24 Code of Federal Regulations, and other HUD
issuances relating to FHA Loans, including the related handbooks, circulars,
notices and mortgagee letters.

    

    “First Lien” shall
mean with respect to each Mortgaged Property, the lien of the mortgage, deed of
trust or other instrument securing a mortgage note which creates a first lien on
the Mortgaged Property.

    

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

     

    “GAAP” shall mean
generally accepted accounting principles in effect from time to time in the
United States of America.

     

    “Governmental
Authority” shall mean with respect to any Person, any nation or
government, any state or other political subdivision, agency or instrumentality
thereof, any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any court or
arbitrator having jurisdiction over such Person, any of its Subsidiaries or any
of its properties.

     

    “Gross Margin” shall
mean with respect to each Adjustable Rate Loan, the fixed percentage amount set
forth in the related Note and the Loan Schedule that is added to the Index on
each Adjustment Date in accordance with the terms of the related Note to
determine the new Mortgage Interest Rate for such Loan.

     

    “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 (i) endorsements for collection or deposit in the ordinary
course of business, or (ii) obligations to make servicing advances for
delinquent taxes and insurance, or other obligations in respect of a Mortgaged
Property, to the extent required by Buyer. 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.

     

    “Guarantor” shall mean
PHH Corporation and any successor thereto.

     

    “Guaranty” shall mean
the Guaranty Agreement of the Guarantor in favor of Buyer to be entered into in
connection with this Agreement, as the same may be amended, modified or
supplemented from time to time.

     

    “Income” shall mean,
with respect to any Purchased Loan at any time, any principal and/or interest
thereon and all dividends, sale proceeds (including, without limitation, any
proceeds from the securitization of such Purchased Loan or other disposition
thereof) and other collections and distributions thereon (including, without
limitation, any proceeds received in respect of mortgage insurance), but not
including any commitment fees, origination fees and/or servicing fees accrued in
respect of periods on or after the initial Purchase Date with respect to such
Purchased Loan.  For the avoidance of doubt, the term “Income” shall
not include Escrow Payments.

     

    “Indebtedness” shall
mean (i) all indebtedness, obligations and other liabilities of the Seller and
its Subsidiaries which are, at the date as of which Indebtedness is to be
determined, includable as liabilities in a consolidated balance sheet of the
Seller and its Subsidiaries, other than (w) accounts payable, accrued expenses
and derivatives transactions entered into in the ordinary course of business
pursuant to hedging programs, (x) advances from clients obtained in the ordinary
course of the relocation management services business of the Seller and its
Subsidiaries, (y) current and deferred income taxes and other similar
liabilities and (z) minority interest, plus (ii) without duplicating any items
included in Indebtedness pursuant to the foregoing clause (i) the maximum
aggregate amount of all liabilities of the Seller or any of its Subsidiaries
under any guaranty, indemnity or similar undertaking given or assumed of, or in
respect of, the indebtedness, obligations or other liabilities, assets,
revenues, income or dividends of any Person other than the Seller or one of its
Subsidiaries and (iii) all other obligations or liabilities of the Seller or any
of its Subsidiaries in relation to the discharge of the obligations of any
Person other than the Seller or one of its Subsidiaries.

     

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    “Index” shall mean
with respect to each Adjustable Rate Loan, the index identified on the related
Loan Schedule and set forth in the related Note for the purpose of calculating
the interest rate thereon.

     

    “Instruction Letter”
shall mean a letter agreement between Seller and each Subservicer substantially
in the form of Exhibit I attached hereto.

     

    “Insurance Proceeds”
shall mean with respect to each Loan, proceeds of insurance policies insuring
the Loan or the related Mortgaged Property.

     

    “Interest Only Loan”
means a Loan which, by its terms, requires the related Mortgagor to make monthly
payments of only accrued interest for a certain period of time following
origination.  After such interest-only period, the loan terms provide
that the Mortgagor’s monthly payment will be recalculated to cover both interest
and principal so that such Loan will amortize fully on or prior to its final
payment date.

     

     “Investment Company
Act” shall mean the Investment Company Act of 1940, as amended, including
all rules and regulations promulgated thereunder.

     

    “Jumbo A Credit Loan”
means a Loan originated in accordance with the Underwriting Guidelines for Jumbo
A product.

     

    “Landscape Loan” shall
mean a Conforming Loan that substantially conforms to the Underwriting
Guidelines, except (i) maintenance of a PMI Policy may not be required, (ii) the
mortgage loan may not be an FHA Loan or VA Loan and (iii) there may not be an
appraisal of the related Mortgage Property.

     

    “LIBOR” means the rate
determined daily by Buyer on the basis of the offered rate for one-month U.S.
dollar deposits, as such rate appears on Reuters Screen LIBOR01 Page as of 11:00
a.m. (London time) on such date (rounded up to the nearest whole multiple of
1/16%); provided that if such rate does not appear on Reuters Screen LIBOR01
Page, the rate for such date will be the rate determined by reference to such
other comparable publicly available service publishing such rates as may be
selected by Buyer in its sole discretion and communicated to
Seller.  Notwithstanding anything to the contrary herein, Buyer shall
have the sole discretion to re-set LIBOR on a daily basis.

     

    “Lien” shall mean any
mortgage, lien, pledge, charge, security interest or similar
encumbrance.

     

     “Loan” shall mean a
first or second lien, fixed rate or adjustable rate, wet or dry funded
residential mortgage loan which shall include, Cooperative Loans, Interest Only
Loans, Jumbo A Credit Loans, Landscape Loans or Additional Collateral Loans
(including all related Servicing Rights with respect thereto) which the
Custodian has been instructed to hold for Buyer pursuant to the Custodial
Agreement, and which Loan includes, without limitation, (i) a Note, the related
Mortgage and all other Loan Documents (including but not limited to Additional
Collateral Agreements and Surety Bonds in connection with the Additional
Collateral Loans) and (ii) all right, title and interest of Seller in and to the
Mortgaged Property covered by such Mortgage.

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

    “Loan Documents” shall
mean, with respect to a Loan, the documents comprising the Mortgage File for
such Loan.

     

    “Loan Schedule” shall
mean a hard copy or electronic format incorporating the fields identified on
Exhibit G, any
other information required by Buyer and any other additional information to be
provided pursuant to the Custodial Agreement.

     

    “Loan-to-Value Ratio”
or “LTV” shall
mean

     

    (i)           with
respect to any Loan that was originated as a purchase-money loan, the ratio
expressed as a percentage of the following:

     

    (a)           if
the related Mortgage File includes an appraisal, (x) the outstanding principal
balance of such Loan as of origination, divided by (y) the lesser of (1) the
Appraised Value of the related Mortgaged Property, (2) the purchase price of the
related Mortgaged Property paid by Seller, and (3) any updated valuation of such
Mortgaged Property performed by or on the behalf of Buyer; or

     

    (b)           if
the related Mortgage File does not include an appraisal, (x) the outstanding
principal balance of such Loan as of origination, divided by (y) the lesser of
(1) the purchase price of the related Mortgaged Property paid by Seller, and (2)
any updated valuation of such Mortgaged Property performed by or on the behalf
of Buyer.

     

    (ii)           with
respect to any Loan that was originated as a refinance loan, or is a Landscape
Loan, the ratio expressed as a percentage of the following:

     

    (a)           if
the related Mortgage File includes an appraisal, (x) the outstanding principal
balance of such Loan as of origination, divided by the Appraised Value of the
related Mortgaged Property, or

     

    (b)           if
the related Mortgage File does not include an appraisal, (x) the outstanding
principal balance of such Loan as of origination, divided by the estimated value
(as determined by Seller in accordance with Seller’s Underwriting Guidelines or
applicable Agency Guidelines) of the Mortgaged Property.

     

    “Margin Amount” means,
with respect to any Transaction, as of any date of determination, the amount
obtained by application of the Margin Percentage to the Repurchase Price
(reduced by the amount of any accrued and unpaid Price Differential) for such
Transaction as of such date.

     

    “Margin Call” shall
have the meaning assigned thereto in Section 6(a) hereof.

     

    “Margin Deficit” shall
have the meaning assigned thereto in Section 6(a) hereof.

     

    “Margin Percentage”
shall have the meaning assigned thereto in the Pricing Side Letter.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    “Market Value” shall
mean the value, determined in good faith by Buyer in its sole reasonable
discretion, of the Loans (including the related Servicing Rights) if sold in
their entirety to a single third-party purchaser under circumstances where
Seller is in default under this Agreement.  Buyer’s determination of
Market Value shall be conclusive upon the parties, absent manifest error on the
part of Buyer.  Buyer shall have the right to mark to market the Loans
on a daily basis, which Market Value with respect to one or more of the Loans
may be determined to be zero. Seller acknowledges that Buyer’s determination of
Market Value is for the limited purpose of determining the value of Purchased
Loans which are subject to Transactions hereunder without the ability to perform
customary purchaser’s due diligence and is not necessarily equivalent to a
determination of the fair market value of the Loans achieved by obtaining
competing bids in an orderly market in which the originator/servicer is not in
default under a revolving debt facility and the bidders have adequate
opportunity to perform customary loan and servicing due
diligence.  The Market Value shall be deemed to be zero with respect
to each Loan that is not an Eligible Loan.

     

    “Master Netting
Agreement” shall mean the letter agreement among Buyer, Seller, Guarantor
and certain Affiliates and Subsidiaries of Buyer and/or Seller and/or Guarantor,
in the form attached hereto as Exhibit J.

     

     “Material Adverse
Effect” shall mean a material adverse effect or change in (a) the
property, business, operations, condition (financial or otherwise) or
performance of Seller or Guarantor, or changes therein that would materially and
adversely impact the prospects of Seller or Guarantor, (b) the ability of the
Seller or Guarantor to perform its obligations under any of the Program
Documents to which it is a party, (c) the validity or enforceability of any of
the Program Documents, (d) the rights and remedies of Buyer under any of the
Program Documents, (e) the timely repurchase of the Purchased Loans or payment
of other amounts payable in connection therewith, (f) the Purchased Items in the
aggregate or (g) any Loans in the aggregate which, as of any date of
determination, are under consideration for purchase by Buyer
hereunder.

     

    “Maximum Aggregate Purchase
Price” shall mean $500,000,000.

     

    “Maximum Mortgage Interest
Rate” shall mean with respect to each Adjustable Rate Loan, a rate that
is set forth on the related Loan Schedule and in the related Note and is the
maximum interest rate to which the Mortgage Interest Rate on such Loan may be
increased on any Adjustment Date.

     

    “MERS” shall mean
Mortgage Electronic Registration Systems, Inc., a Delaware corporation, or any
successor in interest thereto.

     

    “MERS Identification
Number” shall mean the eighteen digit number permanently assigned to each
MERS Loan.

     

    “MERS Loan” shall mean
any Loan as to which the related Mortgage or Assignment of Mortgage has been
recorded in the name of MERS, as agent for the holder from time to time of the
Note, and which is identified as a MERS Loan on the related
Schedule.

     

    “Monthly Payment”
shall mean the scheduled monthly payment of principal and interest on a Loan as
adjusted in accordance with changes in the Mortgage Interest Rate pursuant to
the provisions of the Note for an Adjustable Rate Loan.

     

    “Mortgage” shall mean
with respect to a Loan, the mortgage, deed of trust or other instrument, which
creates a First Lien or Second Lien (as indicated on the Loan Schedule) on
either (i) with respect to a Loan other than a Cooperative Loan, the fee simple
or leasehold estate in such real property or (ii) with respect to a Cooperative
Loan, the Proprietary Lease and related Cooperative Shares, which in either case
secures the Note.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    “Mortgage File” shall
have the meaning assigned thereto in the Custodial Agreement.

     

    “Mortgage Interest
Rate” means the annual rate of interest borne on a Note, which shall be
adjusted from time to time with respect to Adjustable Rate Loans.

     

    “Mortgaged Property”
shall mean the real property (including all improvements, buildings, fixtures,
building equipment and personal property thereon and all additions, alterations
and replacements made at any time with respect to the foregoing) and all other
collateral securing repayment of the debt evidenced by a Note.

     

    “Mortgagee” shall mean
the record holder of a Note secured by a Mortgage.

     

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

     

    “Multiemployer Plan”
shall mean a multiemployer plan defined as such in Section 3(37) of ERISA to
which contributions have been or are required to be made by Seller or any ERISA
Affiliate and that is covered by Title IV of ERISA.

     

    “Negative
Amortization” shall mean with respect to a Negative Amortization Loan,
that portion of interest accrued at the Mortgage Interest Rate in any month
which exceeds the Monthly Payment on the related loan for such month and which,
pursuant to the terms of the Note, is added to the principal balance of the
loan.

     

    “Negative Amortization
Loan” shall mean each Loan that may be subject to Negative
Amortization.

     

     “Note” shall mean,
with respect to any Loan, the related promissory note together with all riders
thereto and amendments thereof or other evidence of indebtedness of the related
Mortgagor.

     

    “Obligations” shall
mean (a) all of Seller’s obligation to pay the Repurchase Price on the
Repurchase Date and other obligations and liabilities of Seller or Guarantor to
Buyer, its Affiliates, the Custodian or any other Person arising under, or in
connection with, the Program Documents or directly related to the Purchased
Loans, whether now existing or hereafter arising; (b) any and all sums paid by
Buyer or on behalf of Buyer pursuant to the Program Documents in order to
preserve any Purchased Loan or its interest therein; (c) in the event of any
proceeding for the collection or enforcement of any of Seller’s indebtedness,
obligations or liabilities referred to in clause (a), the reasonable expenses of
retaking, holding, collecting, preparing for sale, selling or otherwise
disposing of or realizing on any Purchased Loan, or of any exercise by Buyer or
any Affiliate of Buyer of its rights under the Program Documents, including
without limitation, reasonable attorneys’ fees and disbursements and court
costs; and (d) all of Seller’s indemnity obligations to Buyer pursuant to the
Program Documents.

     

    “Original Additional
Collateral Requirement” means, with respect to any Additional Collateral
Loan, an amount equal to the value of the Additional Collateral required at the
time of the origination of such Additional Collateral Loan in order to achieve
an Effective LTV equal to a maximum of 70%.

     

    “Participants” shall
have the meaning assigned thereto in Section 39 hereof.

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    “Payment Adjustment
Date”  With respect to each Negative Amortization Loan, the
date on which Monthly Payments shall be adjusted.

     

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

     

    “Permitted Exceptions”
shall mean the following exceptions to lien priority: (i) the lien of current
real property taxes and assessments not yet due and payable; (ii) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording acceptable to mortgage lending
institutions generally and specifically referred to in the lender’s title
insurance policy delivered to the originator of the Loan and (A) referred to or
otherwise considered in the appraisal (if any) made for the originator of the
Loan or (B) which do not adversely affect the appraised value of the Mortgaged
Property set forth in such appraisal; and (iii) other matters to which like
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property; and (iv) in
the case of a Second Lien Loan, a First Lien on the Mortgaged
Property.

     

    “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 an
employee benefit or other plan established or maintained by either Seller or any
ERISA Affiliate and that is covered by Title IV of ERISA, other than a
Multiemployer Plan.

     

    “PMI Policy” or “Primary Insurance
Policy” shall mean a policy of primary mortgage guaranty insurance issued
by a Qualified Insurer.

     

    “Post-Default Rate”
shall mean, in respect of the Repurchase Price for any Transaction or any other
amount under this Agreement, or any other Program Document that is not paid when
due to Buyer (whether at stated maturity, by acceleration or mandatory
prepayment or otherwise), a rate per annum during the period from and including
the due date to but excluding the date on which such amount is paid in full
equal to 4% per annum, plus (a)(i) the applicable Pricing Rate, or (ii) if no
Pricing Rate is otherwise applicable, LIBOR plus (b) the Applicable
Margin.

     

    “Price Differential”
shall mean, with respect to each Transaction as of any date of determination,
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 number of days elapsed
during the period commencing on (and including) the Purchase Date and ending on
(but excluding) the date of determination (reduced by any amount of such Price
Differential in respect of such period previously paid by Seller to Buyer with
respect to such Transaction).

     

    “Pricing Rate” shall
mean the per annum percentage rate for determination of the Price Differential
as set forth in the Pricing Side Letter.

     

    “Pricing Side Letter”
shall mean the pricing side letter to be entered into in connection with this
Agreement between Seller and Buyer, as the same may be amended, supplemented or
modified from time to time.

     

    "Prime Loan" shall
mean a Loan originated in accordance with the Underwriting Guidelines for prime
product.

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    “Principal” shall have
the meaning assigned thereto in Annex I.

     

    “Program Documents”
shall mean this Agreement, the Custodial Agreement, any Servicing Agreement, the
Master Netting Agreement, the Pricing Side Letter, any Instruction Letter, the
Account Control Agreement, the Electronic Tracking Agreement and any other
agreement entered into by Seller, on the one hand, and Buyer and/or any of its
Affiliates or Subsidiaries (or Custodian on its behalf) on the other, in
connection herewith or therewith.

     

    “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.

     

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

     

    “Purchase Date” shall
mean, with respect to each Transaction, the date on which Purchased Loans are
sold by Seller to Buyer hereunder.

     

    “Purchase Price” shall
have the meaning assigned thereto in the Pricing Side Letter.

     

    “Purchased Items”
shall have the meaning assigned thereto in Section 8 hereof.

     

    “Purchased Loans”
shall mean the following assets sold by Seller to Buyer in a Transaction: the
Loans, together with the related Records and Servicing Rights, such other
property, rights, titles or interest as are specified on a related Transaction
Notice, and all instruments, chattel paper, and general intangibles comprising
or relating to all of the foregoing.  The term “Purchased Loans” with
respect to any Transaction at any time shall also include Additional Purchased
Loans delivered pursuant to Section 6(a) hereof and Substitute Loans delivered
pursuant to Section 16 hereof.

     

    “Qualified Insurer”
shall mean an insurance company approved as an insurer by Fannie Mae and Freddie
Mac.

     

    “Qualified Originator”
shall mean (a) Seller, (b) any Approved Originator and (c) any other originator
of Loans; provided, that Buyer
shall have the right to reject any such originator (in its sole discretion) by
delivering written notice to Seller fifteen (15) days prior to ceasing to accept
Loans originated by such person.

     

    “Reacquired Loans”
shall have the meaning assigned thereto in Section 16.

     

     “Records” means 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 Loan.  Records shall
include, without limitation, the Notes, any Mortgages, the Mortgage Files, the
Servicing File, and any other instruments necessary to document or service a
Loan that is a Purchased Loan, including, without limitation, the complete
payment and modification history of each Loan that is a Purchased
Loan.

     

    “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 Date”
shall mean the date occurring on (i) the 15th day of
each month following the related Purchase Date (or if such date is not a
Business Day, the following Business Day), (ii) any other Business Day set forth
in the related Transaction Notice and/or the related Confirmation, (iii) the
Takeout Repurchase Date or (iv) the date determined by application of Section
17(a) or 19, as applicable.

     

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

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

     

    “Request and Receipt”
shall have the meaning assigned to such term in the Custodial
Agreement.

     

    “Required Documents”
shall have the meaning set forth in the Custodial Agreement.

     

    “Required Surety
Payment” means, with respect to any defaulted Additional Collateral Loan
for which a claim is payable under the related Surety Bond under the procedures
referred to herein, the lesser of (i) the principal portion of the realized loss
with respect to such Loan as determined by the Servicer and (ii) the excess, if
any, of (a) the amount of Additional Collateral required at origination with
respect to such Loan (but for this purpose, not more than 30% of the original
principal balance of the related Additional Collateral Loan) over (b) the net
proceeds realized by the Additional Collateral Servicer from the related
Additional Collateral.

     

    “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.

     

    “Renewal Fee” shall
have the meaning assigned thereto in the Pricing Side Letter.

     

    “Rescission”  shall
mean the right of a Mortgagor to rescind the related Note and related documents
pursuant to applicable law.

     

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

     

    “Second Lien” shall
mean with respect to each Mortgaged Property, the lien of the mortgage, deed of
trust or other instrument securing a mortgage note which creates a second lien
on the Mortgaged Property.

     

    “Second Lien Loan”
shall mean an Eligible Loan secured by the lien on the Mortgaged Property,
subject only to one prior lien on such Mortgaged Property securing financing
obtained by the related Mortgagor and to Permitted Exceptions.

     

    “Securities Account”
means, with respect to any Additional Collateral Loan, the account, together
with the financial assets held therein, that are the subject of the related
Account Agreement.

     

     “Security Release
Certification” shall mean a security release certification in
substantially the form set forth in Exhibit K
hereto.

     

    “Servicer” shall mean
Seller in its capacity as servicer or master servicer of the Loans.

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    “Servicing Agreement”
shall have the meaning provided in Section 43(c) hereof.

     

    “Servicing File” shall
mean with respect to each Loan, the file retained by Seller (in its capacity as
Servicer) consisting of all documents that a prudent originator and servicer
would have, including copies of the Loan Documents, all documents necessary to
document and service the Loans and any and all documents required to be
delivered pursuant to any of the Program Documents.

     

    “Servicing Records”
shall have the meaning assigned thereto in Section 43(b) hereof.

     

    “Servicing Rights”
shall mean contractual, possessory or other rights of Seller or any other
Person, whether arising under the Servicing Agreement, the Custodial Agreement
or otherwise, including the rights: (i) to administer or service Purchased
Loans, (ii) to possess related Servicing Records or Records (iii) to receive
servicing fees and reimbursement of any servicing advances and (iv) to direct
Escrow Payments.

     

    “Servicing
Transmission” shall mean a computer-readable magnetic or other electronic
format acceptable to the parties containing the information identified on
Exhibit F.

     

     “Single Employer Plan”
shall mean any Plan which is covered by Title IV of ERISA, but which is not a
Multiemployer Plan.

     

    “Subservicer” shall
have the meaning provided in Section 43(c) hereof.

     

    “Subsidiary” shall
mean, with respect to any Person, any corporation, association, joint venture,
partnership or other business entity (whether now existing or hereafter
organized) of which at least a majority of the voting stock or other ownership
interests having ordinary voting power for the election of directors (or the
equivalent) is, at the time of which any determination is being made, 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.  Unless otherwise
qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a Subsidiary or Subsidiaries of the
Seller.

     

     “Substitute Loans” has
the meaning assigned thereto in Section 16.

     

    “Surety Bond” means,
with respect to each Additional Collateral Loan, the surety bond issued by the
related Surety Bond Issuer covering such Additional Collateral
Loan.

     

    “Surety Bond Issuer”
means, with respect to each Additional Collateral Loan, the surety bond issuer
for the related Surety Bond covering such Additional Collateral Loan, as
identified in the Mortgage File.

     

    “Takeout Repurchase
Date” shall mean the date on which a Loan is purchased from Seller by
Fannie Mae, Freddie Mac or Ginnie Mae pursuant to a takeout arrangement with
Seller.

     

    “Termination Date”
shall mean February 26, 2009, or such earlier date on which this Agreement shall
terminate in accordance with the provisions hereof or by operation of
law.

     

     “Transaction” has the
meaning assigned thereto in Section 1.

     

    “Transaction Notice”
shall mean a written request by Seller in the form of Exhibit D hereto, to
enter into a Transaction, in a form to be mutually agreed upon among Seller and
Buyer, which is delivered to Buyer.

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

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

     

    “Trust Receipt” shall
have the meaning provided in the Custodial Agreement.

     

    “Underwriting
Guidelines” shall mean the underwriting guidelines of Seller attached as
Exhibit E
hereto in effect as of the date of this Agreement, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with terms of
this Agreement, and which have been approved in writing by Buyer.

     

    “Uniform Commercial
Code” shall mean the Uniform Commercial Code as in effect on the date
hereof 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 Purchased Items 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
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.

     

    “USC” shall mean the
United State Code, as amended.

     

    “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 those lenders which are approved by the VA to act as a lender in
connection with the origination of VA Loans.

     

    “VA Guaranty Proceeds”
shall mean the proceeds of any payment of a VA Loan Guaranty
Certificate.

     

    “VA Loan” shall mean
an Eligible Mortgage Loan which is the subject of a VA Loan Guaranty Certificate
as evidenced by a VA Loan Guaranty Certificate, or an Eligible Mortgage Loan
which is a vendee loan sold by the VA.

     

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

     

    “VA Regulations” shall
mean regulations promulgated by the U.S. Department of Veterans Affairs pursuant
to the Servicemen’s Readjustment Act, as amended, codified in 38 Code of
Federal Regulations, and other VA issuances relating to VA Loans, including
related handbooks, circulars and notices.

     

    “Wet Loan” means a
wet-funded First Lien or Second Lien Mortgage Loan which is underwritten in
accordance with the Underwriting Guidelines and does not contain all the
required Loan Documents in the related Mortgage File, which in order to be
deemed to an Eligible Loan, the related Rescission period has
elapsed.

     

    (b) Accounting Terms and
Determinations.  Except as otherwise expressly provided herein,
all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to Buyer hereunder shall be prepared, in accordance with
GAAP.

     

    (c) Interpretation.  The
following rules of this subsection (c) apply unless the context requires
otherwise.  A gender includes all genders.  Where a word or
phrase is defined, its other grammatical forms have a corresponding
meaning.  A reference to a subsection, Section, Annex or Exhibit is,
unless otherwise specified, a reference to a Section of, or annex or exhibit to,
this Agreement.  A reference to a party to this Agreement or another
agreement or document includes the party’s successors and permitted substitutes
or assigns. A reference to an agreement or document (including any Program
Document) is to the agreement or document as amended, modified, novated,
supplemented or replaced, except to the extent prohibited thereby or by any
Program Document and in effect from time to time in accordance with the terms
thereof.  A reference to legislation or to a provision of legislation
includes a modification or re-enactment of it, a legislative provision
substituted for it and a regulation or statutory instrument issued under
it.  A reference to writing includes a facsimile transmission and any
means of reproducing words in a tangible and permanently visible
form.  A reference to conduct includes, without limitation, an
omission, statement or undertaking, whether or not in writing.  The
words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement
as a whole and not to any particular provision of this Agreement.  The
term “including” is not limiting and means “including without
limitation”.  In the computation of periods of time from a specified
date to a later specified date, the word “from” means “from and including”, the
words “to” and “until” each mean “to but excluding”, and the word “through”
means “to and including”.

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    Except
where otherwise provided in this Agreement, any determination, consent,
approval, statement or certificate made or confirmed in writing with notice to
Seller by Buyer or an authorized officer of Buyer provided for in this Agreement
is conclusive and binds the parties in the absence of manifest error. A
reference to an agreement includes a security interest, guarantee, agreement or
legally enforceable arrangement whether or not in writing related to such
agreement.

     

    A
reference to a document includes an agreement (as so defined) in writing or a
certificate, notice, instrument or document, or any information recorded in
computer disk form.  Where Seller is required to provide any document
to Buyer under the terms of this Agreement, the relevant document shall be
provided in writing or printed form unless Buyer requests
otherwise.  At the request of Buyer, the document shall be provided in
computer disk form or both printed and computer disk form.

     

    This
Agreement is the result of negotiations among, and has been reviewed by counsel
to, Buyer and Seller, and is the product of all parties.  In the
interpretation of this Agreement, no rule of construction shall apply to
disadvantage one party on the ground that such party proposed or was involved in
the preparation of any particular provision of this Agreement or this Agreement
itself.  Except where otherwise expressly stated, Buyer may give or
withhold, or give conditionally, approvals and consents and may form opinions
and make determinations at its absolute discretion.  Any requirement
of good faith, discretion or judgment by Buyer shall not be construed to require
Buyer to request or await receipt of information or documentation not
immediately available from or with respect to Seller, a servicer of the
Purchased Loans, any other Person or the Purchased Loans
themselves.

     

    
      	
              3.  

            	
              THE
      TRANSACTIONS

            

    

     

    (a) Subject
to the terms and conditions of the Program Documents, Buyer shall, from time to
time enter into Transactions with an aggregate Purchase Price for all Purchased
Loans acquired by Buyer not to exceed the Maximum Aggregate Purchase
Price.  Unless otherwise agreed, Seller shall request that Buyer enter
into a Transaction by delivering (i) a Transaction Notice (which shall clearly
indicate those Loans that are intended to be Wet or Dry Loans) substantially in
the form of Exhibit D hereto (a “Transaction Notice”), appropriately completed,
and a Loan Schedule to Buyer and the Custodian, and (ii) the Mortgage File to
the Custodian for each Loan (other than Wet Loans) proposed to be included
in such Transaction, which Transaction Notice and Loan Schedule must be received
no later than 5:00 p.m. (New York City time) one (1) Business Day prior to the
requested Purchase Date. Such Transaction Notice shall include a Loan Schedule
in respect of the Eligible Loans that Seller proposes to include in the related
Transaction. Each Transaction Notice shall specify the proposed Purchase Date,
Purchase Price, Pricing Rate and Repurchase Date.  In the event that
the parties hereto desire to enter into a Transaction on terms other than as set
forth in this Agreement and the Transaction Notice, Buyer shall deliver to
Seller, in electronic or other format, a “Confirmation” specifying such terms
prior to entering into such Transaction, including, without limitation, the
Purchase Date, the Purchase Price, the Pricing Rate therefor and the Repurchase
Date.  By entering in to a Transaction with Buyer, Seller consents to
the terms set forth in any related Confirmation.  Any such Transaction
Notice and the related Confirmation, if any, together with this Agreement, shall
constitute conclusive evidence of the terms agreed to between Buyer and Seller
with respect to the Transaction to which the Transaction Notice and
Confirmation, if any, relates.  In the event of any conflict between
this Agreement and a Confirmation, the terms of the Confirmation shall control
with respect to the related Transaction.

     

     

    
      
        
        

      

      
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    (b) Reserved.

     

    (c) Upon
Seller’s request to enter into a Transaction pursuant to Section 3(a), Buyer
shall, assuming all conditions precedent set forth in this Section 3 and in
Section 9(a) have been met, and provided no Default shall have occurred and be
continuing, not later than 2:00 p.m. (New York City time) on the requested
Purchase Date purchase the Eligible Loans included in the related Transaction
Notice by  transferring, via wire transfer (pursuant to wire transfer
instructions provided by Seller on or prior to such Purchase Date), the Purchase
Price.

     

    (d) Anything
herein to the contrary notwithstanding, if, on or prior to the determination of
LIBOR:

     

    (i) Buyer
determines, which determination shall be conclusive, that quotations of interest
rates for the relevant deposits referred to in the definition of “LIBOR” in
Section 2 are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for Transactions as
provided herein; or

     

    (ii) Buyer
determines, which determination shall be conclusive, that the Applicable Margin
plus the relevant rate of interest referred to in the definition of “LIBOR” in
Section 2 upon the basis of which the rate of interest for Transactions is to be
determined is not likely adequately to cover the cost to Buyer of purchasing and
holding Loans hereunder; or

     

    (iii) it
becomes unlawful for Buyer to enter into Transactions with a Pricing Rate based
on LIBOR;

     

    then
Buyer shall give Seller prompt notice thereof and, so long as such condition
remains in effect, Buyer shall be under no obligation to purchase Loans
hereunder, and Seller shall, at its option, either repurchase such Loans or pay
a Pricing Rate at a rate per annum as determined by Buyer taking into account
the increased cost to Buyer of purchasing and holding the Loans.

     

    (e) Seller
shall repurchase Purchased Loans from Buyer on each related Repurchase
Date.  Each obligation to repurchase exists without regard to any
prior or intervening liquidation or foreclosure with respect to any Purchased
Loan.  Seller is obligated to obtain the Purchased Loans from Buyer or
its designee (including the Custodian) at Seller’s expense on (or after) the
related Repurchase Date.

     

    (f) Provided
that the applicable conditions in Sections 9(a) and (b) have been satisfied, a
Purchased Loan that is repurchased by Seller on the Repurchase Date shall become
subject to a new Transaction  (a “Rolled
Transaction”).  Buyer shall purchase the related Eligible Loans
pursuant to the procedures set forth in Section 3(c).  For each Rolled
Transaction, unless otherwise agreed, (y) the accrued and unpaid Price
Differential shall be settled in cash on each related Repurchase Date, and (z)
the Pricing Rate shall be as set forth in the Pricing Side Letter.

     

     

    
      
        
        

      

      
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    (g) If Seller
intends to repurchase any Loans on any day which is not a Repurchase Date,
Seller shall give one (1) Business Day prior written notice thereof to
Buyer.  If such notice is given, the Repurchase Price specified in
such notice shall be due and payable on the date specified therein, together
with the Price Differential to such date on the amount prepaid.  Such
early repurchases shall be in an aggregate principal amount of at least
$100,000.

     

    (h) [Reserved].

     

    (i) If any
Requirement of Law (other than with respect to any amendment made to 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 Buyer with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:

     

    (i) shall
subject Buyer to any tax of any kind whatsoever with respect to this Agreement
or any Loans purchased pursuant to it (excluding net income taxes) or change the
basis of taxation of payments to Buyer in respect thereof;

     

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

     

    (iii) shall
impose on Buyer any other condition;

     

    and the
result of any of the foregoing is to increase the cost to Buyer, by an amount
which Buyer deems to be material, of effecting or maintaining purchases
hereunder, or to reduce any amount receivable hereunder in respect thereof,
then, in any such case, Seller shall promptly pay Buyer such additional amount
or amounts as will compensate Buyer for such increased cost or reduced amount
receivable thereafter incurred.

     

    If 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 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 Buyer or any corporation controlling 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 Buyer’s or such
corporation’s capital as a consequence of its obligations hereunder to a level
below that which Buyer or such corporation but for such adoption, change or
compliance (taking into consideration Buyer’s or such corporation’s policies
with respect to capital adequacy) by an amount deemed by Buyer to be material,
then from time to time, Seller shall promptly pay to Buyer such additional
amount or amounts as will thereafter compensate Buyer for such
reduction.

     

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

     

     

    
      
        
        

      

      
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              4.  

            	
              PAYMENTS;
      COMPUTATION

            

    

     

    (a) Payments.  Except
to the extent otherwise provided herein, all payments to be made by Seller under
this Agreement shall be made in Dollars, in immediately available funds, without
deduction, set-off or counterclaim, to Buyer at the following account maintained
by Buyer at JP Morgan Chase Bank Account Number 066612187, For the A/C of
Citigroup Global Markets Realty Corp., ABA# 021000021, Reference: PHH Mortgage
Corporation, not later than 2:00 p.m., New York City time, on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day).
Seller acknowledges that it has no rights of withdrawal from the foregoing
account.

     

    (b) Computations.  The
Pricing Differential shall be computed on the basis of a 360-day year for the
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable.

     

    
      	
              5.  

            	
              TAXES; TAX
      TREATMENT

            

    

     

    (a) All
payments made by Seller under this Agreement shall be made free and clear of,
and without deduction or withholding for or on account of, any present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
(including penalties, interest and additions to tax) with respect thereto
imposed by any Governmental Authority, excluding income taxes, branch profits
taxes, franchise taxes or any other tax imposed on the net income by the United
States, a state or a foreign jurisdiction under the laws of which Buyer is
organized or of its applicable lending office, or any political subdivision
thereof (collectively, “Taxes”), all of which
shall be paid by Seller for its own account not later than the date when
due.  If Seller is required by law or regulation to deduct or withhold
any Taxes from or in respect of any amount payable hereunder, it shall: (a) make
such deduction or withholding; (b) pay the amount so deducted or withheld to the
appropriate Governmental Authority not later than the date when due; (c) deliver
to Buyer, promptly, original tax receipts and other evidence satisfactory to
Buyer of the payment when due of the full amount of such Taxes; and (d) pay to
Buyer such additional amounts as may be necessary so that such Buyer receives,
free and clear of all Taxes, a net amount equal to the amount it would have
received under this Agreement, as if no such deduction or withholding had been
made.

     

    (b) In
addition, Seller agrees to pay to the relevant Governmental Authority in
accordance with 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, transfer taxes and similar fees)
imposed by the United States or any taxing authority thereof or therein that
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement (“Other
Taxes”).

     

    (c) Seller
agrees to indemnify Buyer for the full amount of Taxes (including additional
amounts with respect thereto) and Other Taxes, and the full amount of Taxes of
any kind imposed by any jurisdiction on amounts payable under this Section 5,
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, provided that Buyer shall have provided Seller with
evidence, reasonably satisfactory to Seller, of payment of Taxes or Other Taxes,
as the case may be.

     

    (d) Any Buyer
that is not incorporated under the laws of the United States, any State thereof,
or the District of Columbia (a “Foreign Buyer”) shall
provide Seller with properly completed United States Internal Revenue Service
(“IRS”) Form
W-8BEN or W-8ECI or any successor form prescribed by the IRS, certifying that
such Foreign Buyer is entitled to benefits under an income tax treaty to which
the United States is a party which reduces the rate of withholding tax on
payments of interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States on or prior to the date upon which each such Foreign Buyer
becomes a Buyer.  Each Foreign Buyer will resubmit the appropriate
form on the earliest of (A) the third anniversary of the prior submission or (B)
on or before the expiration of thirty (30) days after there is a “change in
circumstances” with respect to such Foreign Buyer as defined in Treas. Reg.
Section 1.1441(e)(4)(ii)(D).  For any period with respect to which a
Foreign Buyer has failed to provide Seller with the appropriate form or other
relevant document pursuant to this Section 5(d) (unless such failure is due to a
change in treaty, law, or regulation occurring subsequent to the date on which a
form originally was required to be provided), such Foreign Buyer shall not be
entitled to any “gross-up” of Taxes or indemnification under Section 5(c) with
respect to Taxes imposed by the United States; provided, however, that should
a Foreign Buyer, which is otherwise exempt from a withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
Seller shall take such steps as such Foreign Buyer shall reasonably request to
assist such Foreign Buyer to recover such Taxes.

     

     

    
      
        
        

      

      
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    (e) Without
prejudice to the survival or any other agreement of Seller hereunder, the
agreements and obligations of Seller contained in this Section 5 shall survive
the termination of this Agreement.  Nothing contained in this Section
5 shall require Buyer to make available any of its tax returns or other
information that it deems to be confidential or proprietary.

     

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

     

    
      	
              6.  

            	
              MARGIN
      MAINTENANCE

            

    

     

    (a) If at any
time either the aggregate Market Value or the aggregate unpaid principal
balance of all Purchased Loans subject to Transactions is less than the
aggregate Margin Amount for all such Transactions (either such event, a “Margin Deficit”),
then Buyer may, by notice to Seller, require Seller in such Transactions to
transfer to Buyer cash or, at Buyer’s option (and provided Seller has additional
Eligible Loans), additional Eligible Loans (“Additional Purchased
Loans”) within one (1) Business Day after such notice by Buyer, so
that the cash, together with the aggregate Market Value or unpaid principal
balance, as applicable, of the Purchased Loans, including any such Additional
Purchased Loans, will thereupon equal or exceed such aggregate Margin Amount
(such requirement, a “Margin Call”);
provided that if Seller transfers cash, Buyer shall deposit such cash into a
non-interest bearing account until the next succeeding Repurchase
Date.

     

    (b) Notice
required pursuant to Section 6(a) may be given by any means provided in
Section 21 hereof.  Any notice given on a Business Day shall be
met, and the related Margin Call satisfied, no later than 5:00 p.m. (New York
City time) on the following Business Day.  The failure of Buyer, on
any one or more occasions, to exercise its rights under this Section 6, shall
not change or alter the terms and conditions to which this Agreement is subject
or limit the right of Buyer to do so at a later date.  Seller and
Buyer each agree that a failure or delay by Buyer to exercise its rights
hereunder shall not limit or waive Buyer’s rights under this Agreement or
otherwise existing by law or in any way create additional rights for
Seller.

     

    
      	
              7.  

            	
              INCOME
      PAYMENTS

            

    

     

    Where a
particular term of a Transaction extends over the date on which Income is paid
in respect of any Purchased Loan subject to that Transaction, such Income shall
be the property of Buyer. Notwithstanding the foregoing, and provided no Default
or Event of Default has occurred and is continuing, Buyer agrees that Seller
shall be entitled to receive an amount equal to all Income collected in respect
of the Purchased Loans, whether by Buyer, any Custodian or any servicer or any
other Person, which is not otherwise received by Seller, to the full extent it
would be so entitled if the Purchased Loans had not been sold to Buyer; provided that any
Income received by Seller while the related Transaction is outstanding shall be
held by Seller solely in trust for Buyer pending the repurchase or payment of
the Price Differential pursuant to Section 3(f) hereof, as applicable, on the
related Repurchase Date; provided further that
following the occurrence of a Default or an Event of Default, Seller shall remit
all such Income in the Collection Account in accordance with Section 13(hh)
hereof.  Provided no Default has occurred, Buyer shall, as the parties
may agree with respect to any Transaction (or, in the absence of any such
agreement, as Buyer shall reasonably determine in its sole discretion), on the
Repurchase Date following the date any Income is received by Buyer (or a
servicer on its behalf) either (i) transfer (or permit the servicer to transfer)
to Seller such Income with respect to any Purchased Loans subject to such
Transaction, or (ii) if a Margin Deficit then exists, apply the Income payment
to reduce the amount, if any, to be transferred to Buyer by Seller upon
termination of such Transaction.  Buyer shall not be obligated to take
any action pursuant to the preceding sentences (A) to the extent that such
action would result in the creation of a Margin Deficit, unless prior thereto or
simultaneously therewith Seller transfers to Buyer cash or Additional Purchased
Loans sufficient to eliminate such Margin Deficit, or (B) if an Event of Default
with respect to Seller has occurred and is then continuing at the time such
Income is paid.

     

     

     

    
      
        
        

      

      
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              8.  

            	
              SECURITY INTEREST;
      BUYER’S APPOINTMENT AS
ATTORNEY-IN-FACT

            

    

     

    (a) Seller
and Buyer intend that the Transactions hereunder be sales to Buyer of the
Purchased Loans and not loans from Buyer to Seller secured by the Purchased
Loans.  However, in order to preserve Buyer’s rights under this
Agreement in the event that a court or other forum recharacterizes the
Transactions hereunder as other than sales, and as security for Seller’s
performance of all of its Obligations, Seller hereby grants Buyer a fully
perfected first priority security interest in all of Seller’s rights, title and
interest in and to the following property, whether now existing or hereafter
acquired: (i) all Purchased Loans (including the related Servicing Rights
thereto) identified on a Transaction Notice  delivered by Seller to
Buyer and the Custodian from time to time, (ii) any other collateral pledged or
otherwise relating to such Purchased Loans (including but not limited to Account
Agreements, Additional Collateral Transfer Agreements and Surety Bonds in
connection with the Additional Collateral Loans), together with all files,
material documents, instruments, surveys (if available), certificates,
correspondence, appraisals, computer records, computer storage media, Loan
accounting records and other books and records relating thereto, (iii) all
rights of Seller to receive from any third party or to take delivery of any
Records or other documents which constitute a part of the Mortgage File or
Servicing File, (iv) the Collection Account and all Income relating to such
Purchased Loans, (v) all mortgage guaranties and insurance (issued by
governmental agencies or otherwise) and any mortgage insurance certificate or
other document evidencing such mortgage guaranties or insurance relating to any
Purchased Loans and all claims and payments thereunder and all rights of Seller
to receive from any third party or to take delivery of any of the foregoing,
(vi) all interests in real property collateralizing any Purchased Loans, (vii)
all other insurance policies and insurance proceeds relating to any Purchased
Loans or the related Mortgaged Property and all rights of Seller to receive from
any third party or to take delivery of any of the foregoing, (viii) any purchase
agreements or other agreements, contracts or take-out commitments relating to or
constituting any or all of the foregoing and all rights to receive documentation
relating thereto, (ix) all “accounts”, “chattel paper”, “commercial tort
claims”, “deposit accounts”, “documents,” “equipment”, “general intangibles”,
“goods”, “instruments”, “inventory”, “investment property”, “letter of credit
rights”, and “securities’ accounts” as each of those terms is defined in the
Uniform Commercial Code and all cash and Cash Equivalents and all products and
proceeds relating to or constituting any or all of the foregoing, and (x) any
and all replacements, substitutions, distributions on or proceeds of any or all
of the foregoing (collectively the “Purchased
Items”).  Seller acknowledges and agrees that its rights with
respect to the Purchased Items (including without limitation, any security
interest Seller may have in the Purchased Loans and any other collateral granted
by Seller to Buyer pursuant to any other agreement) are and shall continue to be
at all times junior and subordinate to the rights of Buyer
hereunder.

     

     

    
      
        
        

      

      
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    (b) At any
time and from time to time, upon the written request of Buyer, and at the sole
expense of Seller, Seller will promptly and duly execute and deliver, or will
promptly cause to be executed and delivered, such further instruments and
documents and take such further action as Buyer may reasonably request for the
purpose of obtaining or preserving the full benefits of this Agreement and of
the rights and powers herein granted, including, without limitation, the filing
of any financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Purchased Items and the liens
created hereby.  Seller also hereby authorizes Buyer to file any such
financing or continuation statement to the extent permitted by applicable law. A
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement for filing in any jurisdiction.  This
Agreement shall constitute a security agreement under applicable
law.

     

    (c) Seller
shall not (i) change the location of its chief executive office/chief place of
business from that specified in Section 12(l) hereof, (ii) change its name,
identity or corporate structure (or the equivalent) or change the location where
it maintains its records with respect to the Purchased Items, or (iii)
reincorporate or reorganize under the laws of another jurisdiction unless it
shall have given Buyer at least 30 days prior written notice thereof and shall
have delivered to Buyer all Uniform Commercial Code financing statements and
amendments thereto as Buyer shall request and taken all other actions deemed
reasonably necessary by Buyer to continue its perfected status in the Purchased
Items with the same or better priority.

     

    (d) Seller
hereby irrevocably constitutes and appoints 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 Seller and in the name of Seller or in its own name, from time to time
in Buyer’s discretion, for the purpose of carrying out the terms of this
Agreement, including without limitation, protecting, preserving and realizing
upon the Purchased Items, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, including without limitation, to
protect, preserve and realize upon the Purchased Items, to file such financing
statement or statements relating to the Purchased Items as Buyer at its option
may deem appropriate, and, without limiting the generality of the foregoing,
Seller hereby gives Buyer the power and right, on behalf of Seller, without
assent by, but with notice to, Seller, if an Event of Default shall have
occurred and be continuing, to do the following:

     

    (i) in the
name of 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 Purchased Items 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 Buyer for the purpose of collecting
any and all such moneys due with respect to any Purchased Items whenever
payable;

     

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

     

    (iii)  (A)
to direct any party liable for any payment under any Purchased Items to make
payment of any and all moneys due or to become due thereunder directly to Buyer
or as 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 Purchased Items; (C) to sign
and endorse any invoices, assignments, verifications, notices and other
documents in connection with any Purchased Items; (D) to commence and prosecute
any suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Purchased Items or any proceeds thereof and to
enforce any other right in respect of any Purchased Items; (E) to defend any
suit, action or proceeding brought against Seller with respect to any Purchased
Items; (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 Buyer may deem appropriate; and (G) generally, to
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any Purchased Items as fully and completely as though Buyer were the
absolute owner thereof for all purposes, and to do, at Buyer’s option and
Seller’s expense, at any time, and from time to time, all acts and things which
Buyer deems necessary to protect, preserve or realize upon the Purchased Items
and Buyer’s Liens thereon and to effect the intent of this Agreement, all as
fully and effectively as Seller might do.

     

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    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.

     

    Seller
also authorizes Buyer, if an Event of Default shall have occurred, from time to
time, to execute, in connection with any sale provided for in Section 19 hereof,
any endorsements, assignments or other instruments of conveyance or transfer
with respect to the Purchased Items.

     

    (e) The
powers conferred on Buyer hereunder are solely to protect Buyer’s interests in
the Purchased Items and shall not impose any duty upon it to exercise any such
powers.  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 Seller for
any act or failure to act hereunder, except for its or their own gross
negligence or willful misconduct.

     

    (f) If Seller
fails to perform or comply with any of its agreements contained in the Program
Documents and Buyer may itself perform or comply, or otherwise cause performance
or compliance, with such agreement, the reasonable out-of-pocket expenses of
Buyer incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the Post-Default Rate, shall be
payable by Seller to Buyer on demand and shall constitute
Obligations.

     

    (g) Buyer’s
duty with respect to the custody, safekeeping and physical preservation of the
Purchased Items in its possession, under Section 9-207 of the Uniform Commercial
Code or otherwise, shall be to deal with it in the same manner as Buyer deals
with similar property for its own account. Neither Buyer nor any of its
directors, officers or employees shall be liable for failure to demand, collect
or realize upon all or any part of the Purchased Items or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any
Purchased Items upon the request of Seller or otherwise.

     

    (h) All
authorizations and agencies herein contained with respect to the Purchased Items
are irrevocable and powers coupled with an interest.

     

    
      	
              9.  

            	
              CONDITIONS
      PRECEDENT

            

    

     

    (a) As
conditions precedent to the initial Purchase Date, Buyer shall have received on
or before such date the following, in form and substance satisfactory to Buyer
and duly executed by each party thereto (as applicable):

     

     

    
      
        
        

      

      
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    (i) Program Documents.
The Program Documents duly executed and delivered by Seller and Guarantor
thereto and being in full force and effect, free of any modification, breach or
waiver.

     

    (ii) Organizational
Documents.  A good standing certificate and certified copies of
the charter and by-laws (or equivalent documents) for each of Seller and
Guarantor, in each case dated as of a recent date, but in no event more than ten
(10) days prior to the date of such initial Transaction and of all corporate or
other authority for Seller with respect to the execution, delivery and
performance of the Program Documents and each other document to be delivered by
Seller from time to time in connection herewith (and Buyer may conclusively rely
on such certificate until it receives notice in writing from Seller to the
contrary).

     

    (iii) Incumbency
Certificate.  An incumbency certificate of the secretary of
each of Seller and Guarantor certifying the names, true signatures and titles of
its respective representatives duly authorized to request Transactions hereunder
and to execute the Program Documents and the other documents to be delivered
thereunder;

     

    (iv) Legal
Opinion.  A legal opinion of counsel to Seller and Guarantor,
substantially in the form attached hereto as Exhibit C.

     

    (v) Filings, Registrations,
Recordings. (i) Any documents (including, without limitation, financing
statements) required to be filed, registered or recorded in order to create, in
favor of Buyer, a perfected, first-priority security interest in the Purchased
Items, subject to no Liens other than those created hereunder, shall have been
properly prepared and executed for filing (including the applicable county(ies)
if Buyer determines such filings are necessary in its reasonable discretion),
registration or recording in each office in each jurisdiction in which such
filings, registrations and recordations are required to perfect such
first-priority security interest; and (ii) UCC lien searches, dated as of a
recent date, in no event more than 14 days prior to the date of such initial
Transaction, in such jurisdictions as shall be applicable to Seller and the
Purchased Items, the results of which shall be satisfactory to
Buyer.

     

    (vi) Fees and Expenses.
Buyer shall have received payment or reimbursement of all fees and expenses
required to be paid by Seller on or prior to the initial Purchase Date
(including, but not limited to, the Commitment Fee, payable pursuant to Section
2 of the Pricing Side Letter, and all attorneys’ fees and due diligence expenses
and costs), which fees and expenses may be netted out of any purchase proceeds
paid by Buyer hereunder.

     

    (vii) Financial Statements.
Buyer shall have received the financial statements referenced in Section
12(b).

     

    (viii) Underwriting
Guidelines. Buyer and Seller shall have agreed upon Seller’s current
Underwriting Guidelines for Loans and Buyer shall have received a copy thereof
certified by a Responsible officer of Seller.

     

    (ix) Consents, Licenses,
Approvals, etc. Buyer shall have received copies certified by Seller of
all consents, licenses and approvals, if any, required in connection with the
execution, delivery and performance by Seller of, and the validity and
enforceability of, the Loan Documents, which consents, licenses and approvals
shall be in full force and effect.

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

     

    (x) Insurance. Buyer
shall have received evidence in form and substance satisfactory to Buyer showing
compliance by Seller as of such initial Purchase Date with Section 13(v)
hereof.

     

    (xi) Account.  Evidence
of the establishment of the Collection Account, the FNMA Loan Purchase Account
and the Citigroup Sub-Account.

     

    (xii) Due
Diligence.  Buyer shall have completed its corporate due
diligence of Seller and Guarantor, and such due diligence review shall be
satisfactory to Buyer in its sole discretion.

     

    (xiii) Other Documents.
Buyer shall have received such other documents as Buyer or its counsel may
reasonably request.

     

    (b) The
obligation of Buyer to enter into each Transaction pursuant to this Agreement
(including the initial Transaction and each rolled Transaction) is subject to
the following further conditions precedent, both immediately prior to any
Transaction and also after giving effect thereto and to the intended use
thereof:

     

    (i) No
Default, Event of Default or Event of Termination shall have occurred and be
continuing.

     

    (ii) No
Material Adverse Effect shall have occurred and be continuing.

     

    (iii) Both
immediately prior to entering into such Transaction and also after giving effect
thereto and to the intended use of the proceeds thereof, the representations and
warranties made by Seller in Section 12 and Schedule 1 hereof, and in each of
the other Program Documents, shall be true and complete on and as of the
Purchase Date in all material respects (in the case of the representations and
warranties in Section 12(w), 12(x) and Schedule 1, solely with respect to Loans
which have not been repurchased by Seller) 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). At the request of Buyer, Buyer shall have received an officer’s
certificate signed by a Responsible Officer of Seller certifying as to the truth
and accuracy of the above, which certificate shall specifically include a
statement that Seller is in compliance with all governmental licenses and
authorizations and is qualified to do business and in good standing in all
required jurisdictions.

     

    (iv) The then
aggregate outstanding Purchase Price for all Purchased Loans, when added to the
Purchase Price for the requested Transaction, shall not exceed the Maximum
Aggregate Purchase Price.

     

    (v) [Reserved].

     

    (vi) [Reserved].

     

    (vii) Buyer
shall have made a determination in its sole reasonable discretion that each Loan
or any pool of Loans is (a) eligible for sale in the secondary market taking
into consideration the characteristics of such Loan or the aggregate
characteristics of such pool of Loans, (b) eligible to be included in a standard
securitization and (c) is eligible for purchase under the terms of this
Agreement.

     

     

    
      
        
        

      

      
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    (viii) Buyer or
its designee shall have received on or before the day of a Transaction with
respect to any Purchased Loans (unless otherwise specified in this Agreement)
the following, in form and substance satisfactory to Buyer and (if applicable)
duly executed:

     

    
      	
              (1)  

            	
              The
      Transaction Notice and Loan Schedule with respect to such Purchased Loans
      delivered pursuant to Section 3(a);

            

    

     

    
      	
              (2)  

            	
              The
      Trust Receipt with respect to such Purchased Loans (except with respect to
      Wet Loans), with the Loan Schedule attached;
and

            

    

     

    
      	
              (3)  

            	
              Such
      certificates, customary opinions of counsel or other documents as Buyer
      may reasonably request, provided that such opinions of counsel shall not
      be required routinely in connection with each Transaction but shall only
      be required from time to time as deemed necessary by Buyer in its
      commercially reasonable judgment.

            

    

     

    (ix) Reserved.

     

    (x) With
respect to any Loan that was funded in the name of or acquired by a Qualified
Originator which is an Affiliate of Seller, Buyer may, in its sole discretion,
require Seller to provide evidence sufficient to satisfy Buyer that such Loan
was acquired in a legal sale, including without limitation, an opinion, in form
and substance and from an attorney, in both cases, acceptable to Buyer in its
sole discretion, that such Loan was acquired in a legal sale.

     

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

     

    (a)           an
event or events resulting in the inability of Buyer to finance its purchases of
assets with traditional counterparties at rates which would have been reasonable
prior to the occurrence of such event or events; or

     

    (b)           any
other event beyond the control of Buyer which Buyer reasonably determines may
result in Buyer’s inability to perform its obligations under this Agreement
including, without limitation, acts of God, strikes, lockouts, riots, acts of
war or terrorism, epidemics, nationalization, expropriation, currency
restrictions, fire, communication line failures, computer viruses, power
failures, earthquakes, or other disasters of a similar nature to the
foregoing.

     

    (xii) Such
Loans shall conform to Seller’s Underwriting Guidelines and Seller shall have
delivered to Buyer a copy of all material updates or amendments thereto that
have not theretofore been delivered to Buyer.

     

    (xiii) Reserved.

     

    (xiv) If there
is a Subservicer with respect to any Loans that will be subject to such
Transaction, Buyer shall have received, no later than 10:00 a.m. three (3) days
prior to the requested Purchase Date, an Instruction Letter, executed by Seller,
with the related Servicing Agreement attached thereto, which such Servicing
Agreement shall be in form and substance acceptable to Buyer.

     

     

     

    
      
        
        

      

      
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    (xv) With
respect to any Additional Collateral Loan that will be subject to such
Transaction, Seller shall have assigned to Buyer all of its rights, title and
interest in, to and under the related Additional Collateral Transfer Agreement
and if applicable, the Account Agreement.

     

    (xvi) In no
event shall Buyer be required to enter into (A) more than one Transaction in any
one Business Day, nor (B) any Transaction whose Purchase Price would be less
than $1,000,000.

     

    (xvii) Buyer
shall have determined that all actions reasonably necessary or, in the opinion
of Buyer, desirable to maintain Buyer’s perfected interest in the Purchased
Loans and other Purchased Items have been taken, including, without limitation,
duly filed Uniform Commercial Code financing statements on Form
UCC-1.

     

    (xviii) Seller
shall have paid to Buyer the Renewal Fee, if applicable, in accordance with
Section 2 of the Pricing Side Letter, and all other fees and expenses then owed
to Buyer, including, but not limited to, attorneys fees’, any due diligence
expenses and costs, in accordance with this Agreement and any other Program
Document.

     

    (xix) Buyer or
its designee shall have received any other documents reasonably requested by
Buyer.

     

    (xx) There is
no Margin Deficit at the time immediately prior to entering into a new
Transaction.

     

    (xxi) With
respect to each Purchased Loan that is subject to a security interest (including
any precautionary security interest) immediately prior to the Purchase Date,
Buyer shall have received a Security Release Certification for such Purchased
Loan that is duly executed by the related secured party and
Seller.  Such secured party shall have filed Uniform Commercial Code
termination statements in respect of any Uniform Commercial Code filings made in
respect of such Loan, and each such release and Uniform Commercial Code
termination statement has been delivered to Buyer prior to each Transaction and
to the Custodian as part of the Mortgage File.

     

    
      	
              10.  

            	
              RELEASE OF PURCHASED
      LOANS

            

    

     

    Upon
timely payment in full of the Repurchase Price and all other Obligations (if
any) then owing with respect to a Purchased Loan, unless a Default or Event of
Default shall have occurred and be continuing, then (a) Buyer shall be deemed to
have terminated any security interest that Buyer may have in such Purchased Loan
and any Purchased Items solely related to such Purchased Loan and (b) with
respect to such Purchased Loan, Buyer shall direct Custodian to release such
Purchased Loan and any Purchased Items solely related to such Purchased Loan to
Seller unless such release and termination would give rise to or perpetuate a
Margin Deficit.  Except as set forth in Section 16, Seller shall give
at least one (1) Business Days prior written notice to Buyer if such repurchase
shall occur on any date other than the Repurchase Date in Section
2(a).

     

    If such
release and termination gives rise to or perpetuates a Margin Deficit, Buyer
shall notify Seller of the amount thereof and Seller shall thereupon satisfy the
Margin Call in the manner specified in Section 6.

     

     

     

    
      
        
        

      

      
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              11.  

            	
              RELIANCE

            

    

     

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

     

    
      	
              12.  

            	
              REPRESENTATIONS AND
      WARRANTIES

            

    

     

    The
Seller hereby represents and warrants to Buyer that throughout the term of this
Agreement:

     

    (a) Existence.  The
Seller (a) is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, (b) has all requisite
corporate or other power, and has all governmental licenses, authorizations,
consents and approvals, necessary to own its assets and carry on its business as
now being or as proposed to be conducted, except where the lack of such
licenses, authorizations, consents and approvals would not be reasonably likely
to have a Material Adverse Effect, (c) 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 (d) is in compliance in all material
respects with all Requirements of Law.

     

    (b) Financial Condition of
Seller.  Seller has heretofore furnished to Buyer a copy of (1)
consolidated balance sheet for the fiscal year ended as of December 31, 2006 and
the related consolidated statements of income and retained earnings and of cash
flows for the fiscal year then ended, setting forth in each case in comparative
form the figures for the previous year, with the opinion thereon of a nationally
recognized public accounting firm and (2) unaudited consolidated balance sheet
for the quarterly fiscal period(s) ended March 31, 2007, June 30, 2007 and
September 30, 2007 and the related unaudited consolidated statements of income
and retained earnings and Seller’s cash flows for such quarterly fiscal
period(s), setting forth in each case in comparative form the figures for the
previous year.  All such financial statements are complete and correct
in all material respects and fairly present the consolidated financial condition
of Seller and its Consolidated Subsidiaries and the consolidated results of its
operations for the relevant time period, all in accordance with GAAP applied on
a consistent basis.  Since December 31, 2006 there has been no
development or event nor any prospective development or event which has had or
should reasonably be expected to have a Material Adverse Effect.

     

    (c) Litigation.  There
are no actions, suits, arbitrations, investigations or proceedings pending or,
to its knowledge, threatened against the Seller or any of its respective
Subsidiaries or Affiliates or affecting any of the property thereof before any
Governmental Authority other than as disclosed on Schedule 6 hereto, (i) as to
which individually or in the aggregate there is a reasonable likelihood of an
adverse decision which would be reasonably likely to have a Material Adverse
Effect or (ii) which questions the validity or enforceability of any of the
Program Documents or any action to be taken in connection with the transactions
contemplated thereby and there is a reasonable likelihood of a Material Adverse
Effect or adverse decision.

     

    (d) No
Breach.  Neither (a) the execution and delivery of the Program
Documents, or (b) the consummation of the transactions therein contemplated in
compliance with the terms and provisions thereof will conflict with or result in
a breach of the charter or by-laws of the Seller, or any applicable law, rule or
regulation, or any order, writ, injunction or decree of any Governmental
Authority, or other material agreement or instrument to which the Seller, or any
of its Subsidiaries, is a party or by which any of them or any of their property
is bound or to which any of them or their property is subject, or constitute a
default under any such material agreement or instrument, or (except for the
Liens created pursuant to this Agreement) result in the creation or imposition
of any Lien upon any property of the Seller or any of its Subsidiaries, pursuant
to the terms of any such agreement or instrument.

     

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    (e) Action.  The
Seller has all necessary corporate or other power, authority and legal right to
execute, deliver and perform its obligations under each of the Program Documents
to which it is a party; the execution, delivery and performance by the Seller of
each of the Program Documents to which it is a party has been duly authorized by
all necessary corporate or other action on its part; and each Program Document
to which the Seller is a party, has been duly and validly executed and delivered
by it and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms.

     

    (f) Approvals.  No
authorizations, approvals or consents of, and no filings or registrations with,
any Governmental Authority, or any other Person, are necessary for the
execution, delivery or performance by the Seller of the Program Documents to
which it is a party or for the legality, validity or enforceability thereof,
except for filings and recordings in respect of the Liens created pursuant to
this Agreement.

     

    (g) 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
any of them, except for (i) any such taxes, if any, that are being appropriately
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves have been provided or (ii) any such taxes for
which an extension has been obtained in compliance with applicable law. The
charges, accruals and reserves on the books of each of the Seller and its
Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of Seller, adequate. Any taxes, fees and other governmental charges
payable by the Seller in connection with a Transaction and the execution and
delivery of the Program Documents have been paid.

     

    (h) Investment Company
Act.  None of the Seller or any of its Subsidiaries is an
“investment company”, or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended. Seller is
not subject to any Federal or state statute or regulation which limits its
ability to incur indebtedness.

     

    (i) No Legal
Bar.  The execution, delivery and performance of this
Agreement, the other Program Documents, the sales hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of Seller or of any of its Subsidiaries and will not result in, or
require, the creation or imposition of any Lien (other than the Liens created
hereunder) on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.

     

    (j) Compliance with
Law.  No practice, procedure or policy employed or proposed to
be employed by the Seller in the conduct of its business violates any law,
regulation, judgment, agreement, regulatory consent, order or decree applicable
to it which, if enforced, would result in either a Material Adverse Effect with
respect to Seller.

     

    (k) No
Default.  None of the Seller, or any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which should reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.

     

    (l) Chief Executive Office;
Chief Operating Office.  Seller’s chief executive office and
chief operating office on the Effective Date are located at 3000 Leadenhall
Road, Mount Laurel, New Jersey 08054.

     

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    (m) Location of Books and
Records.  The location where the Seller keeps its books and
records including all computer tapes and records relating to the Purchased Items
is at its respective chief executive office or chief operating office or the
offices of the Custodian.

     

    (n) True and Complete
Disclosure.  The information, reports, financial statements,
exhibits and schedules furnished in writing by or on behalf of the Seller or any
of its Subsidiaries to Buyer in connection with the negotiation, preparation or
delivery or performance of this Agreement and the other Program Documents or
included herein or therein or delivered pursuant hereto or thereto or in
connection herewith or therewith, 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. There is no fact known to a Responsible
Officer that, after due inquiry, could reasonably be expected to have a Material
Adverse Effect that has not been disclosed herein, in the other Program
Documents or in a report, financial statement, exhibit, schedule, disclosure
letter or other writing furnished to Buyer for use in connection with the
transactions contemplated hereby or thereby.

     

    (o) Additional Repurchase or
Warehouse Facility.  Seller currently has, with a nationally
recognized and established counterparty or counterparties (other than Buyer), at
least one loan repurchase or warehouse facility that (i) provides funding on a
committed basis, (ii) is secured by mortgage loans originated or acquired by the
Seller which are substantially similar with respect to Credit Score,
underwriting and product type to the Eligible Loans and (iii) is in an aggregate
amount totaling at least $750,000,000.

     

    (p) ERISA. Each Plan to
which the Seller or its Subsidiaries make direct contributions, and, to the
knowledge of Seller, each other Plan and each Multiemployer Plan, is in
compliance in all material respects with, and has been administered in all
material respects in compliance with, the applicable provisions of ERISA, the
Code and any other Federal or State law. No event or condition has occurred and
is continuing as to which each the Seller would be under an obligation to
furnish a report to Buyer under Section 13(a)(v) hereof.

     

    (q) Licenses.  Buyer
will not be required as a result of purchasing the Loans to be licensed,
registered or approved or to obtain permits or otherwise qualify (i) to do
business in any state in which it currently so required or (ii) under any state
or other jurisdiction’s consumer lending, fair debt collection or other
applicable state or other jurisdiction’s statute or regulation.

     

    (r) Filing Jurisdictions;
Relevant States.  Schedule 2 sets forth all of the
jurisdictions and filing offices in which a financing statement should be filed
in order for Buyer to perfect its security interest in the Purchased Items.
Schedule 3 sets forth all of the states or other jurisdictions in which Seller
originates Loans in its own name or through brokers on the date of this
Agreement.

     

    (s) True
Sales.  Any and all interest of a Qualified Originator in, to
and under any Mortgage funded in the name of or acquired by such Qualified
Originator or seller which is an Affiliate of Seller has been sold, transferred,
conveyed and assigned to Seller pursuant to a legal sale and such Qualified
Originator retains no interest in such Loan, and if so requested by Buyer, such
sale is covered by an opinion of counsel to that effect in form and substance
acceptable to Buyer.

     

    (t) No Burdensome
Restrictions.  No Requirement of Law or Contractual Obligation
of the Seller or any of its Subsidiaries has a Material Adverse
Effect.

     

    (u) Subsidiaries.  The
current organizational structure of Seller and its Subsidiaries is set forth on
Schedule 4 to this Agreement.

     

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    (v) Origination and Acquisition
of Loans.  The Loans were originated or acquired by Seller, and
the origination and collection practices used by Seller or Qualified Originator,
as applicable, with respect to the Loans have been, in all material respects
legal, proper, prudent and customary in the residential mortgage loan
origination and servicing business, and in accordance with the Underwriting
Guidelines. With respect to Loans acquired by Seller, all such Loans are in
conformity with the Underwriting Guidelines.  Each of the Loans
complies with the representations and warranties listed in Schedule 1
hereto.

     

    (w) No Adverse
Selection.  Seller used no selection procedures that identified
the Loans as being less desirable or valuable than other comparable Loans owned
by Seller.

     

    (x) Solvent; Fraudulent
Conveyance.  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 and will be solvent, is and will be able to pay its
debts as they mature and does not and will not have an unreasonably small
capital to engage in the business in which it is engaged and proposes to engage.
The  Seller does not intend to incur, or believe that it has incurred,
debts beyond its ability to pay such debts as they mature. The Seller is not
contemplating the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of Seller or any of its
assets.  Seller is not transferring any Loans with any intent to
hinder, delay or defraud any of its creditors.

     

    (y) No
Broker.  Other than with respect to Additional Collateral
Loans, Seller has not dealt with any broker, investment banker, agent, or other
person, except for Buyer, who may be entitled to any commission or compensation
in connection with the sale of Purchased Loans pursuant to this Agreement; provided, that if
Seller has dealt with any broker, investment banker, agent, or other person,
except for Buyer, who may be entitled to any commission or compensation in
connection with the sale of Purchased Loans pursuant to this Agreement, such
commission or compensation shall have been paid in full by Seller.

     

    (z) MERS.  Seller
is a member of MERS
in good standing.

     

    
      	
              13.  

            	
              COVENANTS OF SELLER
      

            

    

     

    The
Seller hereby covenants and agrees with Buyer that during the term of this
Agreement:

     

    (a) Financial
Statements and Other Information; Financial Covenants.

     

    The
Seller shall deliver to Buyer:

     

    (i) As soon
as available and in any event within 45 days after the end of each of the first
three quarterly fiscal periods of each fiscal year of Seller, a certification in
the form of Exhibit A together with the consolidated balance sheets of Seller
and its Consolidated Subsidiaries as at the end of such period and the related
unaudited consolidated statements of income and retained earnings and of cash
flows for Seller and its Consolidated Subsidiaries for such period and the
portion of the fiscal year through the end of such period, setting forth in each
case in comparative form the figures for the previous year, accompanied by a
certificate of a Responsible Officer of Seller, which certificate shall state
that said consolidated financial statements fairly present the consolidated
financial condition and results of operations of Seller and its Consolidated
Subsidiaries in accordance with GAAP, consistently applied, as at the end of,
and for, such period (subject to normal year-end audit
adjustments);

     

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

     

    (ii) As soon
as available and in any event within 100 days after the end of each fiscal year
of Seller, the consolidated balance sheets of Seller and its Consolidated
Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and of cash flows for Seller and its
Consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall not be qualified as to scope of audit or going
concern and shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of Seller
and its Consolidated Subsidiaries at the end of, and for, such fiscal year in
accordance with GAAP;

     

    (iii) From time
to time such other information regarding the financial condition, operations, or
business of the Seller, as Buyer may reasonably request; and

     

    (iv) As soon
as reasonably possible, and in any event within thirty (30) days after a
Responsible Officer knows, or with respect to any Plan or Multiemployer Plan to
which each of the Seller, or any of its Subsidiaries makes direct contributions,
has reason to believe, that any of the events or conditions specified below with
respect to any Plan or Multiemployer Plan has occurred or exists, a statement
signed by a senior financial officer of the Seller, setting forth details
respecting such event or condition and the action, if any, that Seller or its
ERISA Affiliate proposes to take with respect thereto (and a copy of any report
or notice required to be filed with or given to PBGC by Seller, or an ERISA
Affiliate with respect to such event or condition):

     

    (a) any
reportable event, as defined in Section 4043(b) of ERISA and the regulations
issued thereunder, with respect to a Plan, as to which PBGC has not by
regulation or otherwise waived the requirement of Section 4043(a) of ERISA that
it be notified within thirty (30) days of the occurrence of such event (provided
that a failure to meet the minimum funding standard of Section 412 of the Code
or Section 302 of ERISA, 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, shall be a reportable event regardless of the
issuance of any waivers in accordance with Section 412(d) of the Code); and any
request for a waiver under Section 412(d) of the Code for any Plan;

     

    (b) the
distribution under Section 4041(c) of ERISA of a notice of intent to terminate
any Plan or any action taken by it or its ERISA Affiliate to terminate any
Plan;

     

    (c) the
institution by PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by it or any of its ERISA Affiliates of a notice from a Multiemployer
Plan that such action has been taken by PBGC with respect to such Multiemployer
Plan;

     

    (d) the
complete or partial withdrawal from a Multiemployer Plan by it or any of its
ERISA Affiliates that results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt by it or any of its ERISA Affiliates of notice
from a Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;

     

     

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    (e) the
institution of a proceeding by a fiduciary of any Multiemployer Plan against it
or any of its ERISA Affiliates to enforce Section 515 of ERISA, which proceeding
is not dismissed within 30 days; and

     

    (f) 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 it or its ERISA Affiliate fails to
timely provide security to such Plan in accordance with the provisions of said
Sections.

     

    The
Seller shall include in its certification (in the form of Exhibit A pursuant to
paragraph (i) above), that Seller, during such fiscal period or year has
observed or performed all of its covenants and other agreements, and satisfied
every material condition, contained in this Agreement and the other Program
Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate (and, if any Default or Event of Default
has occurred and is continuing, describing the same in reasonable detail and
describing the action Seller, has taken or proposes to take with respect
thereto).

     

    (b) Litigation.  The
Seller will promptly, and in any event within five (5) Business Days after
service of process on any of the following, give to Buyer notice of all legal or
arbitrable proceedings affecting it or any of its Subsidiaries (to the extent
that such proceedings were not disclosed on Schedule 6 hereto) that reasonably
questions or challenges the validity or enforceability of any of the Program
Documents or as to which an adverse determination would result in a Material
Adverse Effect.

     

    (c) Existence,
Etc.  The Seller and its Subsidiaries will:

     

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

     

    (ii) comply
with the requirements of all applicable laws, rules, regulations and orders of
Governmental Authorities (including, without limitation, truth in lending, real
estate settlement procedures and all environmental laws) if failure to comply
with such requirements would be reasonably likely (either individually or in the
aggregate) to have a Material Adverse Effect;

     

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

     

    (iv) not move
its chief executive office or chief operating office from the respective
addresses referred to in Section 12(l) unless it shall have provided Buyer 30
days prior written notice of such change;

     

    (v) pay and
discharge all taxes, assessments and governmental charges or levies imposed on
it or on its income or profits or on any of its Property prior to the date on
which penalties attach thereto, except for any such tax, assessment, charge or
levy (1) the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained or (2) the
non-payment (other than taxes in connection with Purchased Loans) of
which  would not reasonably be likely to have a Material Adverse
Effect; and

     

     

    
      
        
        

      

      
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    (vi) permit
representatives of Buyer, during normal business hours upon three (3) Business
Days’ prior written notice at a mutually desirable time or at any time during
the continuance of an Event of Default, 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 Buyer.

     

    (d) Prohibition of Fundamental
Changes.   Seller shall not at any time, directly or
indirectly, (i) enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation, winding up or dissolution) or sell all or substantially all of its
assets without Buyer’s prior consent, unless such sale of assets is in
connection with a whole loan sale or securitization or similar transactions made
in the ordinary course of business; or (ii) form or enter into any partnership,
joint venture, syndicate or other combination which would have a Material
Adverse Effect with respect to it.

     

    (e) Margin Deficit. If at
any time there exists a Margin Deficit, Seller shall cure the same in accordance
with Section 6 hereof.

     

    (f) Notices. The Seller
shall give notice to Buyer promptly in writing of any of the
following:

     

    (i) Upon it
becoming aware of, and in any event within one (1) Business Day after the
occurrence of any Default, Event of Default, Event of Termination or any event
of default or default under any Program Document or other material agreement of
Seller;

     

    (ii) upon, and
in any event within five (5) Business Days after, service of process on it
Seller or any of its Subsidiaries, or any agent thereof for service of process,
in respect of any legal or arbitrable proceedings affecting it Seller or any of
its Subsidiaries that (a) questions or challenges the validity or
enforceability of any of the Program Documents, (b) could prevent it from
complying with any material provisions of any of the Program Documents to which
it is a party or (c) is required to be disclosed by Seller in its public
filings pursuant to the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange Commission as in effect
from time to time thereunder;

     

    (iii) upon
Seller becoming aware of any Material Adverse Effect and any event or change in
circumstances which should reasonably be expected to have a Material Adverse
Effect;

     

    (iv) upon
Seller becoming aware during the normal course of its business that the
Mortgaged Property in respect of any Loan or Loans with an aggregate unpaid
principal balance of at least $1,000,000 has been damaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty, or
otherwise damaged so as to materially and adversely affect the value of such
Loan;

     

    (v) upon the
entry of a judgment or decree against Seller or any of its Subsidiaries in an
amount in excess of $3,000,000;

     

    (vi) any
material change in the insurance coverage required of Seller or any other Person
pursuant to any Program Document, with copy of evidence of same
attached;

     

     

    
      
        
        

      

      
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    (vii) any
material dispute, licensing issue, litigation, investigation, proceeding or
suspension between it or any of its Subsidiaries, on the one hand, and any
Governmental Authority or any other Person; and

     

    (viii) any
material change in its accounting policies or financial reporting practices or
those of any of its Consolidated Subsidiaries except changes required in
conformity with new or revised GAAP.

     

    Each
notice pursuant to this Section 13(f) (other than (vi) above) shall be
accompanied by a statement of a Responsible Officer of Seller, setting forth
details of the occurrence referred to therein and stating what action it has
taken or proposes to take with respect thereto.

     

    (g) Servicing.  Except
as provided in Section 43, Seller shall not permit any Person other than Seller
to service Purchased Loans without the prior written consent of Buyer, which
consent shall not be unreasonably withheld.

     

    (h) Underwriting
Guidelines.  Seller shall not permit any material modifications
to be made to the Underwriting Guidelines that may result in a Material Adverse
Effect on the Purchased Items taken as a whole.  Seller agrees to
promptly deliver to Buyer copies of the Underwriting Guidelines and provide
periodic updates, as otherwise reasonably requested by Buyer.

     

    (i) Lines of
Business.  Seller shall not make any material change in the
nature of its business as conducted on the date hereof.

     

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

     

    (k) Defense of
Title.  Seller warrants and will defend the right, title and
interest of Buyer in and to all Purchased Items against all adverse claims and
demands of all Persons whomsoever.

     

    (l) Preservation
of Purchased Items.  Seller shall do all things necessary to
preserve the Purchased Items so that such Purchased Items remain subject to a
first priority perfected security interest hereunder. Without limiting the
foregoing, Seller will comply with all applicable laws, rules and regulations of
any Governmental Authority applicable to Seller or relating to the Purchased
Items and cause the Purchased Items to comply with all applicable laws, rules
and regulations of any such Governmental Authority.  Seller will not
allow any default to occur for which Seller is responsible under any Purchased
Items or any Program Documents and Seller shall fully perform or cause to be
performed when due all of its obligations under any Purchased Items or the
Program Documents.

     

    (m) No
Assignment.  Seller shall not sell, assign, transfer or
otherwise dispose of, or grant any option with respect to, or pledge,
hypothecate or grant a security interest in or lien on or otherwise encumber
(except pursuant to the Program Documents), any of the Purchased Loans or any
interest therein, provided that this
Section 13(m) shall not prevent any contribution, assignment, transfer or
conveyance of Purchased Loans in accordance with the Program
Documents.

     

    (n) Limitation on Sale of
Assets.  Seller shall not convey, sell, lease, assign, transfer
or otherwise dispose of (collectively, “Transfer”), all or
substantially all of its Property, business or assets (including, without
limitation, receivables and leasehold interests) whether now owned or hereafter
acquired or allow any Subsidiary to Transfer substantially all of its assets to
any Person, unless such Transfer is in the ordinary course of business of the
Seller or any of its Subsidiaries.

     

     

    
      
        
        

      

      
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    (o) [Reserved].

     

    (p) [Reserved].

     

    (q) [Reserved].

     

    (r) [Reserved].

     

    (s) Servicing
Transmission.  Seller shall provide to Buyer on a monthly basis
no later than 11:00 a.m. New York City time two (2) Business Days prior to each
Repurchase Date (or such other day requested by Buyer) (i) the Servicing
Transmission, on a loan-by-loan basis and in the aggregate, with respect to the
Loans serviced hereunder by Seller which were funded prior to the first day of
the current month, summarizing Seller’s delinquency and loss experience with
respect to Loans serviced by Seller and loan prepayment history, and (ii) any
other information reasonably requested by Buyer with respect to the
Loans.

     

    (t) No Amendment or
Compromise.  Without Buyer’s prior written consent, none of
Seller or those acting on Seller’s behalf shall amend or modify, or waive any
term or condition of, or settle or compromise any claim in respect of, any item
of the Purchased Loans, any related rights or any of the Program Documents,
provided that Seller may amend or modify a Loan if such amendment or
modification does not affect the amount or timing of any payment of principal or
interest, extend its scheduled maturity date, modify its interest rate, or
constitute a cancellation or discharge of its outstanding principal balance and
does not materially and adversely affect the security afforded by the real
property, furnishings, fixtures, or equipment securing the Loan.

     

    (u) Maintenance of Property;
Insurance.  The Seller shall keep all property useful and
necessary in its business in good working order and condition. The Seller shall
maintain errors and omissions insurance, mortgage impairment insurance and
blanket fidelity bond coverage as required by Fannie Mae and shall not reduce
such coverage without the written consent of Buyer, and shall also maintain such
other insurance with financially sound and reputable insurance companies, and
with respect to property and risks of a character usually maintained by entities
engaged in the same or similar business similarly situated, against loss, damage
and liability of the kinds and in the amounts customarily maintained by such
entities; provided further that the Seller may amend or modify a Loan in the
ordinary course of business to correct errors in accordance with Accepted
Servicing Practices and will provide Buyer with prompt written notification of
such amendments or modifications.

     

    (v) Further Identification of
Purchased Items.  Seller will furnish to Buyer from time to
time statements and schedules further identifying and describing the Purchased
Items and such other reports in connection with the Purchased Items as Buyer may
reasonably request, all in reasonable detail.

     

    (w) Loan Determined to be
Defective.  Upon discovery by Seller or Buyer of any breach of
any representation or warranty listed on Schedule 1 hereto
applicable to any Loan, the party discovering such breach shall promptly give
notice of such discovery to the other.

     

    (x) Reserved.

     

     

    
      
        
        

      

      
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    (y) Certificate of a Responsible
Officer of Seller.  At the end of each calendar month Seller
shall deliver to Buyer a certificate of its Responsible Officer certifying that
it is in compliance with the covenants set forth in Exhibit A
hereto.

     

    (z) Additional Repurchase or
Warehouse Facility.  Seller shall maintain throughout the term
of this Agreement, with a nationally recognized and established counterparty or
counterparties (other than Buyer), at least one loan repurchase or warehouse
facility that (i) provides funding on a committed basis, (ii) is secured by
mortgage loans originated or acquired by the Seller which are substantially
similar with respect to Credit Score, underwriting and product type to the
Eligible Loans and (iii) is in an aggregate amount totaling at least
$750,000,000.

     

    (aa) Reserved.

     

    (bb) Maintenance of Papers,
Records and Files.  Seller shall acquire, and Seller shall
build, maintain and have available, a complete file in accordance with lending
industry custom and practice for each Purchased Loan.  Seller will
maintain all such Records not in the possession of a Custodian in good and
complete condition in accordance with industry practices and preserve them
against loss or destruction.

     

    (i) Seller
shall collect and maintain or cause to be collected and maintained all Records
relating to the Purchased Loans in accordance with industry custom and practice,
including those maintained pursuant to the preceding subsection, and all such
Records shall be in the Custodian’s possession unless Buyer otherwise
approves.  Seller will not cause or authorize any such papers, records
or files that are an original or an only copy to leave the Custodian’s
possession, except for individual items removed in connection with servicing a
specific Loan, in which event Seller will obtain or cause to be obtained a
receipt from the Custodian for any such paper, record or file.

     

    (ii) For so
long as Buyer has an interest in or lien on any Purchased Loan, Seller will hold
or cause to be held all related Records in trust for Buyer.  Seller
shall notify, or cause to be notified, every other party holding any such
Records of the interests and liens granted hereby.

     

    (iii) Upon
reasonable advance notice from any Custodian or Buyer, Seller shall (x) make any
and all such Records available to the Custodian or Buyer to examine any such
Records, either by its own officers or employees, or by agents or contractors,
or both, and make copies of all or any portion thereof, (y) permit Buyer or its
authorized agents to discuss the affairs, finances and accounts of Seller with
its respective chief operating officer and chief financial officer and to
discuss the affairs, finances and accounts of Seller with its independent
certified public accountants.

     

    (cc) Maintenance of
Licenses.  Seller shall (i) maintain all licenses, permits or
other approvals necessary for Seller to conduct its business and to perform its
obligations under the Program Documents, (ii) remain in good standing under the
laws of each state in which it conducts business or any Mortgaged Property is
located, and (iii) shall conduct its business strictly in accordance with
applicable law.

     

    (dd) Taxes,
Etc.  The Seller shall pay and discharge or cause to be paid
and discharged, when due, 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 Purchased
Loans) 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, except for
any such taxes, assessments and governmental charges, levies or claims as are
appropriately contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are
provided.  The Seller shall file on a timely basis all federal, and
material 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.

     

     

     

    
      
        
        

      

      
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    (ee) Reserved.

     

    (ff) Change of Fiscal
Year.  The Seller will not at any time, directly or indirectly,
except upon ninety (90) days’ prior written notice to Buyer, change the date on
which its fiscal year begins from its current fiscal year beginning
date.

     

    (gg) Delivery of Servicing Rights
and Servicing Records.  Seller hereby agrees that Buyer is
purchasing the Servicing Rights related to each Purchased Loan simultaneously
with the purchase of such Loans and that the value of such Servicing Rights is
factored into the Purchase Price for such Loan.  Seller shall deliver
such Servicing Rights to Buyer on the related Purchase Date.  With
respect to the Servicing Records and the physical servicing of the Purchased
Loans, Seller shall deliver such Servicing Records to the designee of Buyer,
within (45) days of each related Purchase Date, unless otherwise stated in
writing by Buyer; provided that on each Repurchase Date on which the Purchased
Loans becomes subject to a new Transaction, such delivery requirement is deemed
restated for such new Transaction (and the immediately preceding delivery
requirement is deemed to be rescinded) in the absence of directions to the
contrary from Buyer, and a new 45-day period is deemed to commence as of such
Repurchase Date.  Seller’s transfer of the Servicing Rights and
Servicing Records under this Section shall be in accordance with customary
standards in the industry and such transfer shall include the transfer of the
gross amount of escrows held for the related mortgagors (without reduction for
outstanding advances or “negative escrows”).

     

    (hh) Establishment of Collection
Account.  Prior to the initial Purchase Date, Seller shall
establish the Collection Account for the sole and exclusive benefit of
Buyer.  Following the occurrence of a Default or an Event of Default,
Seller shall and shall cause the Subservicer to segregate all Income collected
on account of the Purchased Loans, and shall deposit such to the Collection
Account (or otherwise in accordance with Buyers instructions) within three (3)
Business Days of receipt thereof.  No amounts deposited into such
account shall be removed without Buyer’s prior written
consent.  Seller shall follow the instructions of Buyer with respect
to the Purchased Loans and deliver to Buyer any information with respect to the
Purchased Loans reasonably requested by Buyer.  Seller shall deposit
or credit to the Collection Account all items to be deposited or credited
thereto irrespective of any right of setoff or counterclaim arising in favor of
it (or any third party claiming through it) under any other agreement or
arrangement.

     

    (ii) Establishment of FNMA Loan
Purchase Account.  Prior to the initial Purchase Date, Seller
shall establish the FNMA Loan Purchase Account for the sole and exclusive
benefit of Buyer and the other lenders having an interest therein.  On
or prior to a Repurchase Date for a Landscape Loan that is subject to a
Transaction hereunder, Seller shall direct Fannie Mae to deposit directly to the
FNMA Loan Purchase Account the Purchase Price, and all other amounts to be paid
by Fannie Mae in connection with such purchase.  Seller shall
segregate all amounts on deposit in the FNMA Loan Purchase Account and shall
hold such amounts in trust for the benefit of Buyer and the other lenders having
an interest therein.  Seller shall not amend, supplement or otherwise
modify in any respect the payment and deposit direction relating to Buyer’s
interest in the FNMA Loan Purchase Account, Landscape Loans subject to
Transactions under this Agreement from time to time or the Citigroup Sub-Account
without Buyer’s prior written consent.  Seller shall deposit or credit
to the FNMA Loan Purchase Account all items to be deposited or credited thereto
irrespective of any right of setoff or counterclaim arising in favor of it (or
any third party claiming through it) under any other agreement or
arrangement.

     

     

    
      
        
        

      

      
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    (jj) Establishment of Citigroup
Sub-Account.  Prior to the initial Purchase Date, Seller shall
establish the Citigroup Sub-Account for the sole and exclusive benefit of
Buyer.  On or prior to a Repurchase Date for a Landscape Loan that is
subject to a Transaction hereunder, Seller shall direct FNMA Account Bank to
deposit directly to the Citigroup Sub-Account the purchase price, and all other
amounts on deposit in the FNMA Loan Purchase Account that relate to Fannie Mae’s
purchase from Seller of such Landscape Loan.  In the event that such
amounts are less than the Repurchase Price for such Landscape Loan, Seller
shall, on or prior to the related Repurchase Date, deposit the difference in
such Citigroup Sub-Account and all such amounts shall be disbursed to the Buyer
on the related Purchase Date in accordance with Buyer’s written instructions.
Prior to the occurrence and continuance of a Default, Event of Termination or an
Event of Default, Seller shall direct FNMA Account Bank with respect to the
disposition of funds on deposit in the Citigroup Sub-Account irrespective of
whether such funds relate to Landscape Loans then subject to Transactions under
this Agreement.  Upon the occurrence and continuance of a Default,
Event of Termination or an Event of Default, all amounts on deposit in the
Citigroup Sub-Account shall be subject to Buyer’s exclusive control and Seller’s
authority to direct the disposition of such funds shall immediately
cease.  Seller shall deposit or credit to the Citigroup Sub-Account
all items to be deposited or credited thereto irrespective of any right of
setoff or counterclaim arising in favor of it (or any third party claiming
through it) under any other agreement or arrangement.  Seller shall
segregate all amounts on deposit in the Citigroup Sub-Account and shall hold
such amounts in trust for the benefit of Buyer, in accordance with Buyer’s
written instructions.  Seller shall not amend, supplement or otherwise
modify in any respect the foregoing procedures without Buyer’s prior written
consent.

     

    (kk) MERS.  Seller
will comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the MERS Loans for as long as such Purchased
Loans are registered with MERS.

     

    (ll) Servicer
Rating.  Seller shall maintain a minimum rating as Servicer of
loans of Below Average with respect to Standard & Poor’s and RPS2- with
respect to Fitch (each a “Minimum Servicer
Rating”).

     

    (mm) Rescission.  If
any Wet Loan that is a Purchased Loan shall be subject to a Rescission, Seller
shall provide prompt notice of such Rescission to Buyer and shall promptly
return the related Purchase Price to Buyer, but in no event later than one (1)
Business Day, in immediately available funds.

     

    (nn) Additional Collateral
Loans.  The Seller covenants that within two (2) Business Days
after the Purchase Date for any purchase of Additional Collateral Loans, the
Seller will deliver to each Surety Bond Issuer any instrument required to be
delivered under the related Surety Bond, executed by the necessary parties, and
that all other requirements for transferring coverage under the related Surety
Bonds in respect of such Additional Collateral Loans to the Buyer shall be
complied with. The Seller shall indemnify the Buyer and hold it harmless against
any and all claims, losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments, and any other costs, fees
and expenses that are related to or arise from the non-payment of Required
Surety Payments with respect to the Additional Collateral Loans purchased by
Buyer from the Seller under this Agreement.  The indemnification
obligation referred to in this paragraph (nn) shall expire upon Buyer receiving
all Required Surety Payments.

     

    (oo) True and Complete
Disclosure.   All written information furnished after the
date hereof by or on behalf of each of the Seller or any of its Subsidiaries to
Buyer in connection with this Agreement and the other Program 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.

     

     

    
      
        
        

      

      
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              14.  

            	
              REPURCHASE DATE
      PAYMENTS

            

    

     

    On each
Repurchase Date, with respect to Purchased Loans that are transferred from Buyer
to Seller upon termination of a Transaction, Seller shall remit or shall cause
to be remitted to Buyer the Repurchase Price together with any other Obligations
then due and payable.

     

    
      	
              15.  

            	
              REPURCHASE OF
      PURCHASED LOANS

            

    

     

    Upon
discovery by Seller of a breach of any of the representations and warranties set
forth on Schedule
1 to this Agreement, Seller shall give prompt written notice thereof to
Buyer.  Upon any such discovery by Buyer, Buyer will notify
Seller.  It is understood and agreed that the representations and
warranties set forth in Schedule 1 with
respect to the Purchased Loans shall survive delivery of the respective Mortgage
Files to the Custodian and shall inure to the benefit of Buyer.  The
fact that Buyer has conducted or has failed to conduct any partial or complete
due diligence investigation in connection with its purchase of any Purchased
Loan shall not affect Buyer’s right to demand repurchase as provided under this
Agreement.  Seller shall, within two (2) Business Days of the earlier
of Seller’s discovery or Seller receiving notice with respect to any Purchased
Loan of (i) any breach of a representation or warranty contained in Schedule 1, or (ii)
any failure to deliver any of the items required to be delivered as part of the
Mortgage File within the time period required for delivery pursuant to the
Custodial Agreement, promptly cure such breach or delivery failure in all
material respects.  If within two (2) Business Days after the earlier
of Seller’s discovery of such breach or delivery failure or Seller receiving
notice thereof that such breach or delivery failure has not been remedied by
Seller, Seller shall promptly upon receipt of written instructions from Buyer,
at Buyer’s option, either (i) repurchase such Purchased Loan at a purchase price
equal to the Repurchase Price with respect to such Purchased Loan by wire
transfer to the account designated by Buyer, or (ii) transfer comparable
Substitute Loans to Buyer, as provided in Section 16 hereof.

     

    
      	
              16.  

            	
              SUBSTITUTION

            

    

     

    Seller
may, subject to agreement with and acceptance by Buyer upon one (1) Business
Day’s notice, substitute other assets which are substantially the same as the
Purchased Loans (the “Substitute Loans”)
for any Purchased Loans.  Such substitution shall be made by transfer
to Buyer of such Substitute Loans and transfer to Seller of such Purchased Loans
(the “Reacquired
Loans”) along with the other information to be provided with respect to
the applicable Substitute Loan as described in the form of Transaction
Notice.  Upon substitution, the Substitute Loans shall be deemed to be
Purchased Loans, the Reacquired Loans shall no longer be deemed Purchased Loans,
Buyer shall be deemed to have terminated any security interest that Buyer may
have had in the Reacquired Loans and any Purchased Items solely related to such
Reacquired Loans to Seller unless such termination and release would give rise
to or perpetuate a Margin Deficit.  Concurrently with any termination
and release described in this Section 16, Buyer shall execute and deliver to
Seller upon request and Buyer hereby authorizes Seller to file and record such
documents as Seller may reasonably deem necessary or advisable in order to
evidence such termination and release.

     

    
      	
              17.  

            	
              EVENT OF
      TERMINATION

            

    

     

    (a)           Each
of the following events shall constitute an Event of Termination (an “Event of
Termination”):

     

    (i) Seller’s
membership in MERS is terminated for any reason and such membership shall not be
reinstated or duly executed Assignments in blank shall not be delivered by
Seller to Custodian for each MERS Loan subject to a Transaction in each case
within five (5) Business Days of such termination;

     

     

    
      
        
        

      

      
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    (ii) Buyer
shall reasonably request, specifying the reasons for such request, reasonable
information, and/or written responses to such requests, regarding the financial
well being of Seller or Guarantor and such reasonable information and/or
responses shall not have been provided within three (3) Business Days of such
request;

     

     (b)           Upon
the occurrence of an Event of Termination, Buyer shall have the right to
terminate this Agreement and all Transactions hereunder by delivering written
notice of termination to Seller (a “Notice of
Termination”), in which event (i) Buyer’s obligation to enter into new
Transactions hereunder shall immediately terminate, (ii) the aggregate
outstanding Repurchase Price for all Transactions hereunder and all other
Obligations shall be due and payable on the date that is sixty (60) days
following delivery of such Notice of Termination to Seller (such date, the
“Early Termination
Date”); provided that the Pricing Rate shall be equal to the Event of
Termination Rate from and after the date on which the Event of Termination shall
have occurred, and (iii) the Repurchase Date for all Transactions then
outstanding hereunder shall be deemed to be the Early Termination
Date.

    
 

    
      	
              18.  

            	
              EVENTS OF
      DEFAULT

            

    

     

    Each of
the following events shall constitute an Event of Default (an “Event of
Default”) hereunder:

     

    (a) Seller
fails to transfer the Purchased Loans to Buyer on the applicable Purchase Date
(provided Buyer has tendered the related Purchase Price);

     

    (b) Seller
either fails to repurchase the Purchased Loans on the applicable Repurchase Date
or fails to perform its obligations under Section 6 or the Guarantor fails to
comply with any of its obligations under the Guaranty;

     

    (c) Seller
shall default in the payment of any other amount payable by it hereunder, other
than as provided in Section 18(b) or under any other Program Document after
notification by Buyer of such default, and such default shall have continued
unremedied for two (2) Business Days; or

     

    (d) any
representation, warranty, covenant or certification made or deemed made herein
or in any other Program Document by Seller or any certificate furnished to Buyer
pursuant to the provisions thereof, shall prove to have been false 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 Loans; unless (i)
Seller shall have made any such representations and warranties with knowledge
that they were materially false or misleading at the time made or (ii) any such
representations and warranties have been determined by Buyer in its sole
reasonable discretion to be materially false or misleading on a regular basis);
or

     

    (e) Seller
shall fail to comply with the requirements of Section 13(c)(i), Section 13(d),
Section 13(f)(i) or (iii), Sections 13(k) through 13(r) or Section 13(v) hereof;
or Seller shall otherwise fail to observe or perform any other agreement
contained in this Agreement or any other Program Document and such failure to
observe or perform shall continue unremedied for a period of five (5) Business
Days; or

     

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    (f) any
final, judgment or judgments or order or orders for the payment of money in
excess of $3,000,000 in the aggregate (to the extent that it is, in the
reasonable determination of Buyer, uninsured and provided that any insurance or
other credit posted in connection with an appeal shall not be deemed insurance
for these purposes) shall be rendered against Seller or any of its Affiliates by
one or more courts, administrative tribunals or other bodies having jurisdiction
over them and the same shall not be discharged (or provisions shall not be made
for such discharge), satisfied, or bonded, or a stay of execution thereof shall
not be procured, within sixty (60) days from the date of entry thereof and
Seller or any of its Affiliates as applicable, shall not, within said period of
sixty (60) days, appeal therefrom and cause the execution thereof to be stayed
during such appeal;

     

    (g) Seller
shall admit in writing its inability to, or intention not to, perform any of its
Obligations;

     

    (h) Seller or
any of its Affiliates or Subsidiaries files a voluntary petition in bankruptcy,
seeks relief under any provision of any bankruptcy, reorganization, moratorium,
delinquency, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction whether now or subsequently in effect; or
consents to the filing of any petition against it under any such law; or
consents to the appointment of or taking possession by a custodian, receiver,
conservator, trustee, liquidator, sequestrator or similar official for Seller or
any of its Affiliates or Subsidiaries, or of all or any part of Seller’s or it
Affiliates’ or Subsidiaries’ Property; or makes an assignment for the benefit
of  Seller  or its Affiliates’ or Subsidiaries’
creditors;

     

    (i) A
custodian, receiver, conservator, liquidator, trustee, sequestrator or similar
official for Seller or any of its Affiliates or Subsidiaries, or of any of
Seller’s or its Affiliate’s or Subsidiaries’ Property (as a debtor or creditor
protection procedure), is appointed or takes possession of such Property; or
Seller or any of its Affiliates or Subsidiaries generally fails to pay Seller’s
or its Affiliates’ or Subsidiaries’ debts as they become due; or Seller or any
of its Affiliates or Subsidiaries is adjudicated bankrupt or insolvent; or an
order for relief is entered under the Bankruptcy Code, or any successor or
similar applicable statute, or any administrative insolvency scheme, against
Seller or any of its Affiliates or Subsidiaries; or any of Seller’s or any of
its Affiliates’ or Subsidiaries Property is sequestered by court or
administrative order; or a petition is filed against Seller or any of its
Affiliates or Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, moratorium, delinquency or
liquidation law of any jurisdiction, whether now or subsequently in
effect;

     

    (j) Any
Governmental Authority or any person, agency or entity acting or purporting to
act under governmental authority shall have taken any action to condemn, seize
or appropriate, or to assume custody or control of, all or any substantial part
of the Property of Seller or any of its Affiliates or Subsidiaries, or shall
have taken any action to displace the management of Seller or any of its
Affiliates or Subsidiaries to curtail its authority in the conduct of the
business of any Seller or any of its Affiliates or Subsidiaries, or takes any
action in the nature of enforcement to remove, limit or restrict the approval of
Seller or any of its Affiliates or Subsidiaries as an issuer, buyer or a
seller/servicer of Loans or securities backed thereby

     

    (k) Any
Program Document shall for whatever reason (including an event of default
thereunder) be terminated, this Agreement shall for any reason cease to create a
valid, first priority security interest or ownership interest upon transfer in
any of the Purchased Loans or Purchased Items purported to be covered hereby or
any of Seller’s material obligations (including Seller’s Obligations hereunder)
shall cease to be in full force and effect, or the enforceability thereof shall
be contested by Seller;

     

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    (l) Any
Material Adverse Effect shall have occurred with respect to Seller, as
determined by Buyer in its sole discretion;

     

    (m) (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, (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 Buyer 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 Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the reasonable
opinion of Buyer, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA, (v) Seller or any Commonly Controlled Entity shall, or in
the reasonable opinion of 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; 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;

     

    (n) A Change
of Control of  Seller shall have occurred without the prior consent of
Buyer;

     

    (o) Seller
shall grant, or suffer to exist, any Lien on any Purchased Items except the
Liens contemplated hereby; or the Liens contemplated hereby shall cease to be
first priority perfected Liens on the Purchased Items in favor of Buyer or shall
be Liens in favor of any Person other than Buyer;

     

    (p) Reserved.

     

    (q) Seller or
any Subsidiary or Affiliate of Seller shall experience an “Event of Default” as
defined under any instrument, agreement or contract between Seller or such other
entity, on the one hand, and Buyer or any of Buyer’s Affiliates on the other; or
Seller or any Subsidiary or Affiliate of Seller shall experience an “Event of
Default” as defined under the terms of any repurchase agreement, loan and
security agreement or similar credit facility or agreement for Indebtedness
entered into by Seller, Guarantor or such other entity and any third party in an
amount individually or in the aggregate greater than $25,000,000, which default
or failure entitles any party to require acceleration or prepayment of such
Indebtedness thereunder;

     

    (r) Reserved.

     

    (s) Seller
shall materially fail to service any of the Purchased Loans in accordance with
the terms of this Agreement; or

     

    (t)  The
Chesapeake 2006-01 Variable Funding Note and Chesapeake 2006-02 Variable Funding
Note issued in connection with the Chesapeake Facility shall not have been
renewed by March 4, 2008 in an aggregate amount of at least equal to
$3,900,000,000, less the aggregate amount of gross proceeds paid in connection
with the placement of any of Seller’s term notes on or before such
date;

     

    (u) Seller
shall at anytime fail to maintain either of the Minimum Servicer Ratings as set
forth in Section 13(ll) herein.

     

    

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    
      	
              19.  

            	
              REMEDIES

            

    

     

    Upon the
occurrence of an Event of Default, Buyer, at its option (which option shall be
deemed to have been exercised immediately upon the occurrence of an Event of
Default pursuant to Section 18(g), (h), (i) or (j) hereof), shall have the right
to exercise any or all of the following rights and remedies:

     

    (a)           (i)           The
Repurchase Date for each Transaction hereunder shall, if it has not already
occurred, be deemed immediately to occur (provided that, in the event that the
Purchase Date for any Transaction has not yet occurred as of the date of such
exercise or deemed exercise, such Transaction shall be deemed immediately
canceled).  Seller’s obligations hereunder to repurchase all Purchased
Loans at the Repurchase Price therefor on the Repurchase Date (determined in
accordance with the preceding sentence) in such Transactions shall thereupon
become immediately due and payable; all Income then on deposit in the Collection
Account and all Income paid after such exercise or deemed exercise shall be
remitted to and retained by Buyer and applied to the aggregate Repurchase Price
and any other amounts owing by Seller hereunder; Seller shall immediately
deliver to Buyer or its designee any and all original papers, Servicing Records
and files relating to the Purchased Loans subject to such Transaction then in
Seller’s possession and/or control; and all right, title and interest in and
entitlement to such Purchased Loans and Servicing Rights thereon shall be deemed
transferred to Buyer or its designee.

     

    (ii)           Buyer
shall have the right to (A) sell, on or following the Business Day following the
date on which the Repurchase Price became due and payable pursuant to Section
19(a)(i) without notice or demand of any kind, at a public or private sale and
at such price or prices as Buyer may deem to be commercially reasonable for cash
or for future delivery without assumption of any credit risk. Buyer may purchase
any or all of the Purchased Assets at any public or private
sale.  Seller shall remain liable to Buyer for any amounts that remain
owing to Buyer following a sale and/or credit under the preceding
sentence.  The proceeds of any disposition of Purchased Loans shall be
applied first
to the reasonable costs and expenses incurred by Buyer in connection with or as
a result of an Event of Default; second to costs of
cover and/or related hedging transactions; third to the
aggregate Repurchase Prices; and fourth to all other
Obligations.

     

    (iii)           Buyer
shall have the right to terminate this Agreement and declare all obligations of
Seller to be immediately due and payable, by a notice in accordance with Section
21 hereof provided no such notice shall be required for an Event of Default
pursuant to Section 18(g), (h), (i) or (j) hereof.

     

    (iv)           The
parties recognize that it may not be possible to purchase or sell all of the
Purchased Loans on a particular Business Day, or in a transaction with the same
purchaser, or in the same manner because the market for such Purchased Loans may
not be liquid.  In view of the nature of the Purchased Loans, the
parties agree that liquidation of a Transaction or the underlying Purchased
Loans does not require a public purchase or sale and that a good faith private
purchase or sale shall be deemed to have been made in a commercially reasonable
manner.  Accordingly, Buyer may elect the time and manner of
liquidating any Purchased Loan and nothing contained herein shall obligate Buyer
to liquidate any Purchased Loan on the occurrence of an Event of Default or to
liquidate all Purchased Loans in the same manner or on the same Business Day or
constitute a waiver of any right or remedy of Buyer.  Notwithstanding
the foregoing, the parties to this Agreement agree that the Transactions have
been entered into in consideration of and in reliance upon the fact that all
Transactions hereunder constitute a single business and contractual obligation
and that each Transaction has been entered into in consideration of the other
Transactions.

     

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    (vi)           To
the extent permitted by applicable law, the Seller waives all claims, damages
and demands it may acquire against Buyer arising out of the exercise by Buyer of
any of its rights hereunder, other than those claims, damages and demands
arising from the gross negligence or willful misconduct of Buyer.  If
any notice of a proposed sale or other disposition of Purchased Items shall be
required by law, such notice shall be deemed reasonable and proper if given at
least one (1) day before such sale or other disposition.

     

    (b) Seller
hereby acknowledges, admits and agrees that Seller’s obligations under this
Agreement are recourse obligations of Seller to which Seller pledges its full
faith and credit. In addition to its rights hereunder, Buyer shall have the
right to proceed against any of Seller’s assets which may be in the possession
of Buyer, any of Buyer’s Affiliates or their respective designees (including the
Custodian), including the right to liquidate such assets and to set-off the
proceeds against monies owed by Seller to Buyer pursuant to this
Agreement.  Buyer may set off cash, the proceeds of the liquidation of
the Purchased Loans and Additional Purchased Loans, any other Purchased Items
and their proceeds and all other sums or obligations owed by Buyer to Seller
against all of Seller’s obligations to Buyer, whether under this Agreement,
under a Transaction, or under any other agreement between the parties, or
otherwise, whether or not such obligations are then due, without prejudice to
Buyer’s right to recover any deficiency.

     

    (c) Buyer
shall have the right to obtain physical possession of the Servicing Records and
all other files of Seller relating to the Purchased Loans and all documents
relating to the Purchased Loans which are then or may thereafter come into the
possession of Seller or any third party acting for Seller and Seller shall
deliver to Buyer such assignments as Buyer shall request.

     

    (d) Buyer
shall have the right to direct all Persons servicing the Purchased Loans to take
such action with respect to the Purchased Loans as Buyer determines
appropriate.

     

    (e) Buyer
shall, without regard to the adequacy of the security for the Obligations, be
entitled to the appointment of a receiver by any court having jurisdiction,
without notice, to take possession of and protect, collect, manage, liquidate,
and sell the Purchased Loans and any other Purchased Items or any portion
thereof, collect the payments due with respect to the Purchased Loans and any
other Purchased Items or any portion thereof, and do anything that Buyer is
authorized hereunder or by law to do.  Seller shall pay all costs and
expenses incurred by Buyer in connection with the appointment and activities of
such receiver.

     

    (f) Reserved.

     

    (g) In
addition to all the rights and remedies specifically provided herein, Buyer
shall have all other rights and remedies provided by applicable federal, state,
foreign, and local laws, whether existing at law, in equity or by statute,
including, without limitation, all rights and remedies available to a purchaser
or a secured party, as applicable, under the Uniform Commercial
Code.

     

    Except as
otherwise expressly provided in this Agreement, Buyer shall have the right to
exercise any of its rights and/or remedies without presentment, demand, protest
or further notice of any kind other than as expressly set forth herein, all of
which are hereby expressly waived by Seller.

     

    Buyer may
enforce its rights and remedies hereunder without prior judicial process or
hearing, and Seller hereby expressly waives, to the extent permitted by law, any
right Seller might otherwise have to require Buyer to enforce its rights by
judicial process.  Seller also waives, to the extent permitted by law,
any defense Seller might otherwise have to the Obligations, arising from use of
nonjudicial process, enforcement and sale of all or any portion of the Purchased
Loans and any other Purchased Items or from any other election of
remedies.  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.

     

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    Seller
shall cause all sums received by it with respect to the Purchased Loans to be
deposited with such Person as Buyer may direct after receipt
thereof.  Seller shall be liable to Buyer for the amount of all
expenses (plus interest thereon at a rate equal to the Post-Default Rate)
including, without limitation, all costs and expenses incurred within thirty
(30) days of the Event of Default in connection with hedging or covering
transactions related to the Purchased Loans, conduit advances and payments for
mortgage insurance.

     

    
      	
              20.  

            	
              DELAY NOT WAIVER;
      REMEDIES ARE CUMULATIVE

            

    

     

    No
failure on the part of Buyer to exercise, and no delay in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise by Buyer of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All rights and remedies of Buyer provided for herein are
cumulative and in addition to any and all other rights and remedies provided by
law, the Program Documents and the other instruments and agreements contemplated
hereby and thereby, and are not conditional or contingent on any attempt by
Buyer to exercise any of its rights under any other related
document.  Buyer may exercise at any time after the occurrence of an
Event of Default one or more remedies, as they so desire, and may thereafter at
any time and from time to time exercise any other remedy or
remedies.

     

    
      	
              21.  

            	
              NOTICES AND OTHER
      COMMUNICATIONS

            

    

     

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

     

    
      	
              22.  

            	
              USE OF EMPLOYEE PLAN
      ASSETS

            

    

     

    No assets
of an employee benefit plan subject to any provision of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”) shall be used
by either party hereto in a Transaction.

     

    
      	
              23.  

            	
              INDEMNIFICATION.

            

    

     

    (a) Seller
agrees to hold 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, the “Costs”) relating
to or arising out of this Agreement, any other Program 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
Agreement, any other Program Document or any transaction contemplated hereby or
thereby, that, in each case, results from anything other than any Indemnified
Party’s gross negligence or willful misconduct.  Without limiting the
generality of the foregoing, Seller agrees to hold any Indemnified Party
harmless from and indemnify such Indemnified Party against all Costs with
respect to all Loans relating to or arising out of any violation or alleged
violation of any environmental law, rule or regulation or any consumer credit
laws, including without limitation laws with respect to unfair or deceptive
lending practices and predatory lending practices, the Truth in Lending Act
and/or the Real Estate Settlement Procedures Act, that, in each case, results
from anything other than such Indemnified Party’s gross negligence or willful
misconduct.  In any suit, proceeding or action brought by an
Indemnified Party in connection with any Loan for any sum owing thereunder, or
to enforce any provisions of any Loan, 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 of
liability whatsoever of the account debtor or obligor thereunder, arising out of
a breach by 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 Seller.  Seller also
agrees to reimburse an Indemnified Party as and when billed by such Indemnified
Party for all such Indemnified Party’s costs and expenses incurred in connection
with the enforcement or the preservation of such Indemnified Party’s rights
under this Agreement, any other Program Document or any transaction contemplated
hereby or thereby, including without limitation the reasonable fees and
disbursements of its counsel.  Seller hereby acknowledges that, the
obligations of Seller under this Agreement are recourse obligations of
Seller.

     

     

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    (b) Seller
also agrees not to assert any claim against Buyer or any of its Affiliates, or
any of their respective officers, directors, employees, attorneys and agents, on
any theory of liability, for special, indirect, consequential or punitive
damages arising out of or otherwise relating to the Program Documents, the
actual or proposed use of the proceeds of the Transactions, this Agreement or
any of the transactions contemplated hereby or thereby.  THE FOREGOING
INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT
LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT)
OF THE INDEMNIFIED PARTIES.

     

    (c) Without
prejudice to the survival of any other agreement of Seller hereunder, the
covenants and obligations of Seller contained in this Section 23 shall survive
the payment in full of the Repurchase Price and all other amounts payable
hereunder and delivery of the Purchased Loans by Buyer against full payment
therefor.

     

    
      	
              24.  

            	
              WAIVER OF REDEMPTION
      AND DEFICIENCY RIGHTS

            

    

     

    Seller
hereby expressly waives, to the fullest extent permitted by law, every statute
of limitation on a deficiency judgment, any reduction in the proceeds of any
Purchased Items as a result of restrictions upon Buyer or the Custodian
contained in the Program Documents or any other instrument delivered in
connection therewith, and any right that it may have to direct the order in
which any of the Purchased Items shall be disposed of in the event of any
disposition pursuant hereto.

     

    
      	
              25.  

            	
              EXPENSES;
      REIMBURSEMENT

            

    

     

    (a)           Seller
agrees to pay as and when billed by Buyer all of the out-of pocket costs and
expenses incurred by Buyer in connection with the development, consummation,
administration, preparation and execution of, and any amendment, supplement or
modification to, this Agreement, any other Program Document or any other
documents prepared in connection herewith or therewith including, without
limitation, (i) all the reasonable fees, disbursements and expenses of counsel
to Buyer and (ii) all the due diligence, inspection, testing and review costs
and expenses incurred by Buyer with respect to Purchased Items under this
Agreement, including, but not limited to, those costs and expenses incurred by
Buyer pursuant to Sections 23, 39 and 44 hereof.  If Seller fails to
pay when due any costs, expenses or other amounts payable by it under this
Agreement, including, without limitation, reasonable fees and expenses of
counsel and indemnities, such amount may be paid on behalf of Seller by Buyer,
in its sole discretion and Seller shall remain liable for any such payments by
Buyer.  No such payment by Buyer shall be deemed a waiver of any of
Buyer’s rights under the Program Documents.

     

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

     

    (b)           All
sums reasonably expended by Buyer in connection with the exercise of any right
or remedy provided for herein shall be and remain Seller’s obligation (unless
and to the extent that Seller is the prevailing party in any dispute, claim or
action relating thereto).  Seller agrees to pay, with interest at the
Post-Default Rate to the extent that an Event of Default has occurred, the
reasonable out-of-pocket expenses and reasonable attorneys’ fees incurred by
Buyer and/or the Custodian in connection with the preparation, negotiation,
enforcement (including any waivers), administration and amendment of the Program
Documents (regardless of whether a Transaction is entered into hereunder), the
taking of any action, including legal action, required or permitted to be taken
by Buyer (without duplication to Buyer) and/or the Custodian pursuant thereto,
any “due diligence” or loan agent reviews conducted by Buyer or on its behalf or
by refinancing or restructuring in the nature of a “workout.”

     

    (c)           Without
prejudice to the survival of any other agreement of Seller hereunder, the
covenants and obligations of Seller contained in this Section 25 shall survive
the payment in full of the Repurchase Price and all other amounts payable
hereunder and delivery of the Purchased Loans by Buyer against full payment
therefor.

     

    
      	
              26.  

            	
              FURTHER
      ASSURANCES

            

    

     

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

     

    
      	
              27.  

            	
              TERMINATION

            

    

     

    This
Agreement shall remain in effect until the Termination Date.  However,
no such termination shall affect Seller’s outstanding obligations to Buyer at
the time of such termination.

     

    
      	
              28.  

            	
              SEVERABILITY

            

    

     

    If any
provision of any Program Document is declared invalid by any court of competent
jurisdiction, such invalidity shall not affect any other provision of the
Program Documents, and each Program Document shall be enforced to the fullest
extent permitted by law.

     

    
      	
              29.  

            	
              BINDING EFFECT;
      GOVERNING LAW

            

    

     

    This
Agreement shall be binding and inure to the benefit of the parties hereto and
their respective successors and assigns, except that Seller may not assign or
transfer any of its respective rights or obligations under this Agreement or any
other Program Document without the prior written consent of
Buyer.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND
GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).

     

     

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    
      	
              30.  

            	
              AMENDMENTS

            

    

     

    Except as
otherwise expressly provided in this Agreement, any provision of this Agreement
may be modified or supplemented only by an instrument in writing signed by
Seller and Buyer and any provision of this Agreement may be waived by
Buyer.

     

    
      	
              31.  

            	
              SUCCESSORS AND
      ASSIGNS

            

    

     

    This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.

     

    
      	
              32.  

            	
              SURVIVAL

            

    

     

    The
obligations of Seller under Section 3(h), Section 3(i), Section 5, Section 23
and Section 25 hereof and any other reimbursement or indemnity obligation of
Seller to Buyer pursuant to this Agreement or any other Program Document shall
survive the repurchase of the Loans hereunder and the termination of this
Agreement. In addition, each representation and warranty made, or deemed to be
made by a request for a purchase, herein or pursuant hereto shall survive the
making of such representation and warranty, and Buyer shall not be deemed to
have waived, by reason of purchasing any Loan, any Default that may arise by
reason of such representation or warranty proving to have been false or
misleading, notwithstanding that Buyer may have had notice or knowledge or
reason to believe that such representation or warranty was false or misleading
at the time such purchase was made.

     

    
      	
              33.  

            	
              CAPTIONS

            

    

     

    The table
of contents and captions and section headings appearing herein are included
solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.

     

    
      	
              34.  

            	
              COUNTERPARTS

            

    

     

    This
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 Agreement by signing any such counterpart.

     

    
      	
              35.  

            	
              SUBMISSION TO
      JURISDICTION; WAIVERS

            

    

     

    EACH
PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:

     

    (A)           SUBMITS
FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT AND/OR ANY OTHER PROGRAM DOCUMENT, OR FOR RECOGNITION AND ENFORCEMENT
OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-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;

     

    (B)           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;

     

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

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

     

    (D)           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.

     

    
      	
              36.  

            	
              WAIVER OF JURY
      TRIAL

            

    

     

    EACH
OF SELLER AND BUYER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

     

    
      	
              37.  

            	
              ACKNOWLEDGEMENTS

            

    

     

    Seller
hereby acknowledges that:

     

    (a) it has
been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Program Documents to which it is a party;

     

    (b) Buyer has
no fiduciary relationship to Seller; and

     

    (c) no joint
venture exists among or between Buyer and Seller.

     

    
      	
              38.  

            	
              HYPOTHECATION OR
      PLEDGE OF PURCHASED ITEMS. 

            

    

     

    Buyer
shall have free and unrestricted use of all Loans and Purchased Items and
nothing in this Agreement shall preclude Buyer from engaging in repurchase
transactions with the Loans and Purchased Items or otherwise pledging,
repledging, transferring, hypothecating, or rehypothecating the Loans and
Purchased Items, in all cases subject to Buyer’s obligation to reconvey the
Purchased Items (and not substitute therefore) on the Repurchase Date. Nothing
contained in this Agreement shall obligate Buyer to segregate any Loans or
Purchased Items delivered to Buyer by Seller.

     

    
      	
              39.  

            	
              ASSIGNMENTS;
      PARTICIPATIONS.

            

    

     

    (a) Seller
may assign any of its rights or obligations hereunder only with the prior
written consent of Buyer.  Buyer may assign at any time in its sole
discretion all or a portion of its rights and obligations under this Agreement
and the Program Documents; provided, however, that Buyer
shall maintain, for review by 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 Program 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 to
either (i) an Affiliate of Buyer which assumes the obligations of Buyer
hereunder or (ii) to another Person which assumes the obligations of Buyer
hereunder, be released from its obligations hereunder accruing thereafter and
under the Program Documents.  The Seller agrees that, for any such
assignment, Seller will cooperate with the prompt execution and delivery of
documents reasonably necessary for such assignment process.  Unless
otherwise stated in the Assignment and Acceptance, 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.

     

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

     

    (b) Buyer
may, in accordance with applicable law, at any time sell to one or more entities
(“Participants”)
participating interests in this Agreement, its agreement to purchase Loans, or
any other interest of Buyer hereunder and under the other Program
Documents.  In the event of any such sale by Buyer of participating
interests to a Participant, Buyer’s obligations under this Agreement to Seller
shall remain unchanged, Buyer shall remain solely responsible for the
performance thereof and Seller shall continue to deal solely and directly with
Buyer in connection with Buyer’s rights and obligations under this Agreement and
the other Program Documents. Seller agrees that if amounts outstanding under
this Agreement are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Buyer under this Agreement; provided, that such Participant shall only be
entitled to such right of set-off if it shall have agreed in the agreement
pursuant to which it shall have acquired its participating interest to share
with Buyer the proceeds thereof.  Buyer also agrees that each
Participant shall be entitled to the benefits of Sections 3(h), 3(i), 23 and 25
with respect to its participation in the Loans and Purchased Items outstanding
from time to time; provided, that Buyer and all Participants shall be entitled
to receive no greater amount in the aggregate pursuant to such Sections than
Buyer would have been entitled to receive had no such transfer
occurred.

     

    (c) Buyer may
furnish any information concerning Seller or any of its Subsidiaries in the
possession of Buyer from time to time to assignees and Participants (including
prospective assignees and Participants) only after notifying Seller in writing
and securing signed confidentiality statements (a form of which is attached
hereto as Exhibit H) and only for the sole purpose of evaluating assignments or
participations and for no other purpose.

     

    (d) Seller
agrees to cooperate with Buyer in connection with any such assignment and/or
participation, to execute and deliver replacement notes, and to enter into such
restatements of, and amendments, supplements and other modifications to, this
Agreement and the other Program Documents in order to give effect to such
assignment and/or participation. Seller further agrees to furnish to any
Participant identified by Buyer to Seller copies of all reports and certificates
to be delivered by Seller to Buyer hereunder, as and when delivered to
Buyer.

     

    
      	
              40.  

            	
              SINGLE
      AGREEMENT

            

    

     

    Seller
and Buyer acknowledge that, and have entered hereinto and will enter into each
Transaction hereunder in consideration of and in reliance upon the fact that,
all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each
other.  Accordingly, Seller and Buyer each agree (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, and (ii) that payments, deliveries and
other transfers made by any 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 Transaction hereunder, and the obligations to
make any such payments, deliveries and other transfers may be applied against
each other and netted.

     

     

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

    
      	
              41.  

            	
              INTENT

            

    

     

    Seller
and Buyer recognize that each Transaction is a “repurchase agreement” as that
term is defined in Section 101 of Title 11 of the USC, a “securities contract”
as that term is defined in Section 741 of Title 11 of the USC, and a “master
netting agreement” as that term is defined in Section 101 of Title 11 of the
USC.

     

    It is
understood that Buyer’s right to liquidate the Purchased Loans delivered to it
in connection with the Transactions hereunder or to accelerate or terminate this
Agreement or otherwise exercise any other remedies pursuant to Section 19 hereof
is a contractual right to liquidate, accelerate or terminate such Transaction as
described in Sections 555, 559 and 561 of Title 11 of the USC.

     

    
      	
              42.  

            	
              CONFIDENTIALITY

            

    

     

    The
Program Documents and their respective terms, provisions, supplements and
amendments, and transactions and notices thereunder, are proprietary to Buyer
and shall be held by Seller in strict confidence and shall not be disclosed to
any third party without the consent of Buyer (such consent not to be
unreasonably withheld) except for (i) disclosure to Seller’s direct and indirect
parent companies, directors, attorneys, agents or accountants, provided that
such attorneys or accountants likewise agree to be bound by this covenant of
confidentiality, or are otherwise subject to confidentiality restrictions or
(ii) upon prior written notice to Buyer, disclosure required by law, rule,
regulation or order of a court or other regulatory body or (iii) any disclosures
or filing required under Securities and Exchange Commission (“SEC”) or state
securities’ laws or (iv) such other circumstances as are reasonably within the
discretion of a public company in order to meet its corporate obligations; provided that in the
case of (ii), (iii) and (iv), Seller shall take reasonable actions to provide
Buyer with prior written notice.  Notwithstanding anything herein to
the contrary, each party (and each employee, representative, or other agent of
each party) may disclose to any and all persons, without limitation of any kind,
the tax treatment and tax structure of the transaction and all materials of any
kind (including opinions or other tax analyses) that are provided to it relating
to such tax treatment and tax structure.  For this purpose, tax
treatment and tax structure shall not include (i) the identity of any existing
or future party (or any Affiliate of such party) to this Agreement or (ii) any
specific pricing information or other commercial terms, including the amount of
any fees, expenses, rates or payments arising in connection with the
transactions contemplated by this Agreement.  Buyer acknowledges that
this Agreement may be filed with the Securities and Exchange Commission;
provided that, Seller shall redact any pricing and other confidential
provisions, including, without limitation, the amount of the Commitment Fee, Non
Usage Fee, Price Differential and Purchase Price from such filed
Agreement.

     

    
      	
              43.  

            	
              SERVICING

            

    

     

    (a) Seller
covenants to maintain or cause the servicing of the Purchased Loans to be
maintained in conformity with Accepted Servicing Practices. In the event that
the preceding language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate automatically upon the
earliest of (i) the occurrence of an Event of Termination, or (ii) an Event of
Default, or (iii) the date on which all the Obligations have been paid in full,
or (iv) the transfer of servicing to any entity approved by Buyer and the
assumption thereof by such entity.

     

    (b) During
the period Seller is servicing the Purchased Loans, (i) Seller agrees that Buyer
is the owner of all servicing records, including but not limited to any and all
servicing agreements, files, documents, records, data bases, computer tapes,
copies of computer tapes, proof of insurance coverage, insurance policies,
appraisals, other closing documentation, payment history records, and any other
records relating to or evidencing the servicing of such Loans (the “Servicing
Records”), and (ii) Seller grants Buyer a security interest in all servicing
fees and rights relating to the Purchased Loans and all Servicing Records to
secure the obligation of Seller or its designee to service in conformity with
this Section 43 and any other obligation of Seller to Buyer.  Seller
covenants to safeguard such Servicing Records and to deliver them promptly to
Buyer or its designee (including the Custodian) at Buyer’s
request.  It is understood and agreed by the parties that prior to an
Event of Default, Seller shall retain the servicing fees with respect to the
Purchased Loans.

     

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

     

    (c) If the
Loans are serviced by any other third party servicer (such third party servicer,
the “Subservicer”) Seller
shall provide a copy of the related servicing agreement with a properly executed
Instruction Letter to Buyer at least three (3) Business Days prior to the
applicable Purchase Date or the date on which the Subservicer shall begin
subservicing the Loans, which shall be in the form and substance acceptable to
Buyer (the “Servicing Agreement”) and shall have obtained the written consent of
Buyer for such Subservicer to subservice the Loans. Initially, there shall not
be any Subservicer.

     

    (d) Seller
agrees that upon the occurrence of an Event of Default, Buyer may terminate
Seller in its capacity as servicer and terminate any Servicing Agreement and
Seller shall transfer such servicing to Buyer or its designee, at no cost or
expense to Buyer.  In addition, Seller shall provide to Buyer an
Instruction Letter from Seller to the effect that upon the occurrence of an
Event of Default, Buyer may terminate  any Subervicer or Servicing
Agreement and direct that collections with respect to the Loans be remitted in
accordance with Buyer’s instructions.  Seller agrees to cooperate with
Buyer in connection with the transfer of servicing.

     

    (e) After the
Purchase Date, until the Repurchase Date, Seller will have no right to modify or
alter the terms of the Loan or consent to the modification or alteration of the
terms of any Loan, and Seller will have no obligation or right to repossess any
Loan or substitute another Loan, except as provided in any Custodial
Agreement.

     

    (f) Seller
shall permit Buyer to inspect upon reasonable prior written notice at a mutually
convenient time, Seller’s or its Affiliate’s servicing facilities, as the case
may be, for the purpose of satisfying Buyer that Seller or its Affiliate, as the
case may be, has the ability to service the Loans as provided in this
Agreement.  In addition, with respect to any Subservicer which is not
an Affiliate of Seller, Seller shall use its best efforts to enable Buyer to
inspect the servicing facilities of such Subservicer.

     

    (g) With
respect to the Additional Collateral Loans that are Purchased Loans
hereunder:

     

    (i) Pursuant
to the related Additional Collateral Servicing Agreement, the related Additional
Collateral shall be maintained and serviced by the Additional Collateral
Servicer in accordance with Accepted Servicing Practices.

     

    (ii) Pursuant
to the related Additional Collateral Servicing Agreement, the Additional
Collateral Servicer, at its own cost and expense, shall administer the
Additional Collateral and the Account Agreement for the benefit of Buyer (i) in
a prudent and non-negligent manner and in accordance with the procedures it
employs to administer Securities Accounts for its own benefit (as the same may
be amended from time to time); (ii) in accordance with the terms of the related
Account Agreements, the applicable Loan Documents and this Agreement; and (iii)
in accordance with applicable law;

     

    (iii) Buyer
will cooperate with the Seller to transfer to the Buyer the coverage of the
Surety Bond in respect of the Additional Collateral Loans;

     

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

     

     

    (iv) Pursuant
to the related Additional Collateral Servicing Agreement, the Additional
Collateral Servicer shall use its best efforts to realize upon any related
Additional Collateral for such of the Additional Collateral Loans as come into
and continue in default and as to which no satisfactory arrangements can be made
for collection of delinquent payments; provided that the Seller shall not obtain
title to any such Additional Collateral as a result of or in lieu of the
disposition thereof or otherwise; and provided further that (i) the Additional
Collateral Servicer shall not proceed with respect to such Additional Collateral
in any manner that would impair the ability to recover against the related
Mortgaged Property, and (ii) the Seller shall proceed with any acquisition of
real-estate owned property in a manner that preserves the ability to apply the
proceeds of such Additional Collateral against amounts owed under the defaulted
Loan. Any proceeds realized from such Additional Collateral (other than amounts
to be released to the Mortgagor or the related guarantor in accordance with
procedures that the Seller would follow in servicing loans held for its own
account, subject to the terms and conditions of the related Mortgage and Note
and to the terms and conditions of any security agreement, guarantee agreement,
mortgage or other agreement governing the disposition of the proceeds of such
Additional Collateral) shall be remitted to the Buyer; provided, that such
proceeds shall not be so deposited if the Required Surety Payment in respect of
such Additional Collateral Loan has been otherwise paid to the Buyer (except to
the extent of any such proceeds taken into account in calculating the amount of
the Required Surety Payment).

     

    (v) With
respect to each Additional Collateral Loan sold to Buyer under this Agreement,
the Seller, as Servicer, will assign, on the related Purchase Date, to the Buyer
its security interest in and to any related Additional Collateral, all of its
rights in each related Account Agreement, its right to receive amounts due or to
become due in respect of any related Additional Collateral and its rights as
beneficiary under the related Surety Bond in respect of any Additional
Collateral Loans;

     

    (vi) The
Seller’s obligations to administer the Securities Accounts shall terminate upon
termination of the related Account Agreement. Buyer acknowledges coverage under
the terms and provisions of the related Surety Bond as to any particular
Additional Collateral Loan shall terminate upon termination of the related
Account Agreement; provided, however, that such termination shall not affect
claims arising under this Agreement or the related Surety Bond prior to the date
of termination of the related Account Agreement; and

     

    (vii) If a
Required Surety Payment is payable pursuant to the related Surety Bond with
respect to any Additional Collateral Loan as determined by the Seller, as
servicer, the Additional Collateral Servicer shall so notify the related Surety
Bond Issuer promptly.  Seller shall cause the prompt completion of any
necessary documentation relating to the related Surety Bond and shall cause the
prompt submission of such documentation to the related Surety Bond Issuer as a
claim for a required surety.  Buyer shall execute such documentation
if requested by Seller.

     

    
      	
              44.  

            	
              PERIODIC DUE DILIGENCE
      REVIEW

            

    

     

    Seller
acknowledges that Buyer has the right to perform continuing due diligence
reviews with respect to the Loans, for purposes of verifying compliance with
Buyer’s valuation, underwriting, credit and compliance standards and the
representations, warranties, covenants and specifications made hereunder or
under any other Program Document, or otherwise, and Seller agrees that upon
reasonable (but no less than one (1) Business Day’s) prior notice to Seller
(provided that upon the occurrence of a Default or an Event of Default, no such
prior notice shall be required), Buyer or its authorized representatives will be
permitted during normal business hours to examine, inspect, make copies of, and
make extracts of, the Mortgage Files, the Servicing Records and any and all
documents, records, agreements, instruments or information relating to such
Loans in the possession, or under the control, of Seller and/or the Custodian.
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 Loans. Without limiting the generality of the foregoing,
Seller acknowledges that Buyer shall purchase Loans from Seller based solely
upon the information provided by Seller to Buyer in the 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 Purchased Loans, including, without
limitation, ordering new credit reports, new appraisals on the related Mortgaged
Properties and otherwise re-generating the information used to originate such
Loan.  Buyer may underwrite such Loans itself or engage a third party
underwriter to perform such underwriting.  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 Loans in the possession, or under the control, of
Seller. In addition, Buyer has the right to perform continuing Due Diligence
Reviews of Seller and its Affiliates, directors, and their respective
Subsidiaries and the officers, employees and significant shareholders
thereof.  Seller and Buyer further agree that all reasonable
out-of-pocket costs and expenses incurred by Buyer in connection with Buyer’s
activities pursuant to this Section 44 shall be paid by Seller.

     

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

     

     

    
      	
              45.  

            	
              SET-OFF

            

    

     

    In
addition to any rights and remedies of Buyer provided by this Agreement and by
law, Buyer shall have the right, without prior notice to Seller, any such notice
being expressly waived by Seller to the extent permitted by applicable law, upon
any amount becoming due and payable by Seller hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all Property and 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 Buyer or any Affiliate thereof to or for the credit or the account of
Seller or any Affiliate of Seller.  Buyer may set-off cash, the
proceeds of the liquidation of any Purchased Items and all other sums or
obligations owed by Buyer or its Affiliates to Seller or any of its Affiliates
against all of Seller’s or any of its Affiliates obligations to Buyer or its
Affiliates, whether under this Agreement or under any other agreement between
Seller  or any Affiliate of Seller and Buyer or any Affiliate of
Buyer, or otherwise, whether or not such obligations are then due, without
prejudice to Buyer’s or its Affiliate’s right to recover any
deficiency.  Buyer agrees promptly to notify Seller after any such
set-off and application made by Buyer; provided that the failure to give such
notice shall not affect the validity of such set-off and application.
Notwithstanding anything contained within this Section 45, the terms of this
Section 45 shall not apply to any of the Chesapeake Facilities.

     

    
      	
              46.  

            	
              ENTIRE
      AGREEMENT

            

    

     

    This
Agreement and the other Program Documents embody the entire agreement and
understanding of the parties hereto and thereto and supersede any and all prior
agreements, arrangements and understandings relating to the matters provided for
herein and therein.  No alteration, waiver, amendments, or change or
supplement hereto shall be binding or effective unless the same is set forth in
writing by a duly authorized representative of each party hereto.

     

    [SIGNATURE
PAGE FOLLOWS]

     

     

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

     

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

     

    

    
      	
              PHH
      MORTGAGE CORPORATION, a New Jersey corporation, as Seller

              By:  /s/ Mark E.
      Johnson

              Name:                      Mark E. Johnson

              Title:                      Vice President and
Treasurer

            	 
      
	
               

              Address
      for Notices:

               

              3000
      Leadenhall Road

              Mount
      Laurel, New Jersey 08054

              Attention:
      Mark Johnson, Vice President and Treasurer

              Telephone:
      (856) 917-0183

              Fax:  (856)
      917-0107

            	 
      
	 
      	 
      
	
              CITIGROUP GLOBAL MARKETS REALTY
      CORP., as Buyer and Agent, as applicable

              By:  /s/ Perry J. DeFelice,
      Jr.

              Name:                      Perry J. DeFelice, Jr.

              Title:                      Authorized Signatory

            	 
      
	
               

              Address
      for Notices:

               

              Citigroup
      Global Markets Realty Corp.

              390
      Greenwich Street

              New
      York, New York  10013

              Attention:
      Bobbie Theivakumaran

              Telephone:
      (212) 723-6753

              Fax:  (212)
      723-8604

            	 
      

    

     

     

     58

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