Document:

Exhibit 10.2

 

 

MASTER REPURCHASE AGREEMENT

(the “Agreement”)

 

between

 

BANK OF AMERICA, N.A.

(“Buyer”)

 

and

 

HOME LOAN CENTER, INC.

(“Seller”)

 

dated as of

 

May 1, 2009

 

 

TABLE OF CONTENTS

 

ARTICLE
1

DEFINITIONS
AND PRINCIPLES OF CONSTRUCTION

 

	
  Section 1.1

  	
  Defined Terms 

  	
  1

  
	
  Section 1.2

  	
  Principles of Constructions 

  	
  1

  

 

ARTICLE
2

AMOUNTS
AND TERMS OF TRANSACTIONS

 

	
  Section 2.1

  	
  Agreement to Enter into Transactions

  	
  1

  
	
  Section 2.2

  	
  Transaction Limits

  	
  1

  
	
  Section 2.3

  	
  Description of Purchased Assets

  	
  2

  
	
  Section 2.4

  	
  Maximum Transaction Amounts

  	
  2

  
	
  Section 2.5

  	
  Use of Proceeds

  	
  2

  
	
  Section 2.6

  	
  Price Differential

  	
  2

  
	
  Section 2.7

  	
  Transactions are “Servicing Released”

  	
  3

  
	
  Section 2.8

  	
  Terms and Conditions of Transactions

  	
  3

  
	
  Section 2.9

  	
  Guarantee

  	
  3

  

 

ARTICLE
3

PROCEDURES
FOR REQUESTING AND ENTERING INTO TRANSACTIONS

 

	
  Section 3.1

  	
  Policies and Procedures

  	
  3

  
	
  Section 3.2

  	
  Request for Transaction; Asset Data
  Record

  	
  3

  
	
  Section 3.3

  	
  Delivery of Mortgage Loan Documents

  	
  4

  
	
  Section 3.4

  	
  Haircut

  	
  4

  
	
  Section 3.5

  	
  Over/Under Account

  	
  4

  
	
  Section 3.6

  	
  Payment of Purchase Price

  	
  6

  
	
  Section 3.7

  	
  Approved Payees

  	
  7

  
	
  Section 3.8

  	
  Funding Drafts

  	
  8

  

 

ARTICLE
4

REPURCHASE

 

	
  Section 4.1

  	
  Repurchase Price

  	
  10

  
	
  Section 4.2

  	
  Repurchase Acceleration Events

  	
  10

  
	
  Section 4.3

  	
  Reduction of Asset Value as Alternative
  Remedy

  	
  11

  
	
  Section 4.4

  	
  Designation as Noncompliant Mortgage
  Loan as Alternative Remedy

  	
  11

  
	
  Section 4.5

  	
  Illegality or Impracticability

  	
  11

  
	
  Section 4.6

  	
  Payments Pursuant to Sale to Approved
  Investors

  	
  11

  
	
  Section 4.7

  	
  Application of Payments from Seller or
  Approved Investors

  	
  12

  
	
  Section 4.8

  	
  Method of Payment

  	
  12

  
	
  Section 4.9

  	
  Notification of Payment

  	
  13

  
	
  Section 4.10

  	
  Authorization to Debit

  	
  13

  
	
  Section 4.11

  	
  Book Account

  	
  13

  
	
  Section 4.12

  	
  Full Recourse

  	
  13

  

 

ARTICLE 5

FEES

 

	
  Section 5.1

  	
  Payment of Fees

  	
  13

  

 

i

 

ARTICLE
6

SECURITY;
SERVICING; MARGIN ACCOUNT MAINTENANCE; CUSTODY OF MORTGAGE LOAN DOCUMENTS AND
REPURCHASE TRANSACTIONS

 

	
  Section 6.1

  	
  Precautionary Grant of Security
  Interest

  	
  13

  
	
  Section 6.2

  	
  Servicing

  	
  14

  
	
  Section 6.3

  	
  Margin Account Maintenance

  	
  17

  
	
  Section 6.4

  	
  Custody of Mortgage Loan Documents

  	
  18

  
	
  Section 6.5

  	
  Release of Mortgage Loan Documents

  	
  19

  
	
  Section 6.6

  	
  Repurchase Transactions

  	
  19

  

 

ARTICLE
7

CONDITIONS
PRECEDENT

 

	
  Section 7.1

  	
  Initial Transaction

  	
  20

  
	
  Section 7.2

  	
  All Transactions

  	
  21

  
	
  Section 7.3

  	
  Intercreditor Agreements

  	
  22

  
	
  Section 7.4

  	
  Satisfaction of Conditions

  	
  22

  

 

ARTICLE
8

REPRESENTATIONS
AND WARRANTIES

 

	
  Section 8.1

  	
  Representations and Warranties
  Concerning Seller 

  	
  23

  
	
  Section 8.2

  	
  Representations and Warranties Concerning
  Purchased Assets 

  	
  23

  
	
  Section 8.3

  	
  Continuing Representations and
  Warranties 

  	
  23

  
	
  Section 8.4

  	
  Amendment of Representations and
  Warranties

  	
  23

  

 

ARTICLE
9

AFFIRMATIVE
COVENANTS

 

	
  Section 9.1

  	
  Financial Statements and Other Reports

  	
  23

  
	
  Section 9.2

  	
  Inspection of Properties and Books 

  	
  24

  
	
  Section 9.3

  	
  Notice

  	
  24

  
	
  Section 9.4

  	
  Additional Financing

  	
  25

  
	
  Section 9.5

  	
  Servicing of Mortgage Loans

  	
  25

  
	
  Section 9.6

  	
  Evidence of Purchased Assets

  	
  26

  
	
  Section 9.7

  	
  Protection of Purchased Mortgage Loans

  	
  26

  
	
  Section 9.8

  	
  Further Assurances 

  	
  26

  
	
  Section 9.9

  	
  Fidelity Bonds and Insurance

  	
  26

  
	
  Section 9.10 

  	
  Wet Mortgage Loans

  	
  26

  

 

ARTICLE 10

NEGATIVE COVENANTS

 

	
  Section 10.1

  	
  Liabilities and Advances

  	
  27

  
	
  Section 10.2 

  	
  Debt and Subordinated Debt

  	
  27

  
	
  Section 10.3

  	
  Loss of Eligibility

  	
  27

  
	
  Section 10.4

  	
  Financial Covenants and Ratios

  	
  27

  
	
  Section 10.5

  	
  Loans to Officers, Employees and
  Shareholders

  	
  27

  
	
  Section 10.6

  	
  Liens on Purchased Mortgage Loans and
  Purchased Assets; Liens on Other Assets

  	
  27

  
	
  Section 10.7

  	
  Transactions with Affiliates

  	
  28

  
	
  Section 10.8

  	
  Consolidation, Merger, Sale of Assets
  and Change of Control

  	
  28

  
	
  Section 10.9

  	
  Payment of Dividends and Retirement of
  Stock

  	
  28

  
	
  Section 10.10

  	
  Purchased Assets

  	
  28

  
	
  Section 10.11

  	
  Secondary Marketing, Underwriting,
  Third Party Origination and Interest Rate Risk  Management Practices

  	
  28

  

 

ii

 

ARTICLE
11

DEFAULTS
AND REMEDIES

 

	
  Section 11.1

  	
  Events of Default

  	
  29

  
	
  Section 11.2

  	
  Remedies 

  	
  30

  
	
  Section 11.3

  	
  Treatment of Custodial Account

  	
  32

  
	
  Section 11.4

  	
  Sale of Purchased Assets

  	
  32

  
	
  Section 11.5

  	
  No Obligation to Pursue Remedy

  	
  32

  
	
  Section 11.6

  	
  Reimbursement of Costs and Expenses

  	
  32

  
	
  Section 11.7

  	
  Application of Proceeds

  	
  32

  
	
  Section 11.8

  	
  Rights of Set-Off

  	
  33

  
	
  Section 11.9

  	
  Reasonable Assurances

  	
  33

  

 

ARTICLE
12

INDEMNIFICATION

 

	
  Section 12.1

  	
  Indemnification

  	
  34

  
	
  Section 12.2

  	
  Payment of Taxes

  	
  34

  

 

ARTICLE
13

TERM
AND TERMINATION

 

	
  Section 13.1

  	
  Term

  	
  34

  
	
  Section 13.2

  	
  Termination

  	
  34

  
	
  Section 13.3

  	
  Extension of Term

  	
  35

  

 

ARTICLE
14

GENERAL

 

	
  Section 14.1

  	
  Integration;
  Servicing Provisions Integral and Non-Severable

  	
  35

  
	
  Section 14.2

  	
  Amendments

  	
  36

  
	
  Section 14.3

  	
  No Waiver

  	
  36

  
	
  Section 14.4

  	
  Remedies Cumulative

  	
  36

  
	
  Section 14.5

  	
  Assignment 

  	
  36

  
	
  Section 14.6

  	
  Successors and Assigns

  	
  36

  
	
  Section 14.7

  	
  Participations

  	
  36

  
	
  Section 14.8

  	
  Invalidity

  	
  36

  
	
  Section 14.9

  	
  Additional Instruments

  	
  36

  
	
  Section 14.10

  	
  Survival

  	
  37

  
	
  Section 14.11

  	
  Notices

  	
  37

  
	
  Section 14.12

  	
  Personal Identification Number

  	
  37

  
	
  Section 14.13

  	
  Governing Law

  	
  38

  
	
  Section 14.14

  	
  Counterparts 

  	
  38

  
	
  Section 14.15

  	
  Headings

  	
  38

  
	
  Section 14.16

  	
  Joint and Several Liability of Each
  Seller

  	
  38

  
	
  Section 14.17

  	
  Confidential Information

  	
  38

  
	
  Section 14.18

  	
  Intent

  	
  39

  
	
  Section 14.19

  	
  Right to Liquidate

  	
  39

  
	
  Section 14.20

  	
  Insured Depository Institution

  	
  39

  
	
  Section 14.21

  	
  Netting Contract

  	
  39

  
	
  Section 14.22

  	
  Reimbursement of Expenses

  	
  40

  

 

iii

 

EXHIBITS

	
  Exhibit A:

  	
  Glossary of Defined Terms

  
	
  Exhibit B:

  	
  Irrevocable Closing Instructions

  
	
  Exhibit C:

  	
  Secretary’s Certificate

  
	
  Exhibit D:

  	
  Corporate Resolutions

  
	
  Exhibit E:

  	
  Officer’s Certificate

  
	
  Exhibit F:

  	
  Assignment of Closing Protection Letter

  
	
  Exhibit G:

  	
  Assignment of Fidelity Bond and Errors
  and Omission Policy

  
	
  Exhibit H:

  	
  Form of Power of Attorney

  
	
  Exhibit I:

  	
  Acknowledgement of Password
  Confidentiality Agreement

  
	
  Exhibit J:

  	
  Wiring Instructions

  
	
  Exhibit K:

  	
  Form of Servicer Notice

  
	
  Exhibit L:

  	
  Representations and Warrranties

  
	
   

  	
   

  
	
  SCHEDULES

  
	
  Schedule 1:

  	
  Filing Jurisdictions and Offices

  

 

iv

 

 

MASTER REPURCHASE AGREEMENT

 

THIS MASTER REPURCHASE AGREEMENT (the “Agreement”) is made and entered into as of May 1, 2009
by and between Bank of America, N.A., a federal savings bank (“Buyer”), and Home Loan Center, Inc., a California
corporation (“Seller”).

 

RECITALS

 

A.                                   Seller
has requested Buyer to enter into transactions with Seller whereby Seller may,
from time to time, sell to Buyer certain residential mortgage loans (including
the servicing rights related thereto) and/or other mortgage related assets and
interests, against the transfer of funds by Buyer, with a simultaneous
agreement by Buyer to sell to Seller such purchased assets at a date certain or
on demand after the Purchase Date, against the transfer of funds by Seller
(each such transaction, a “Transaction”).

 

B.                                     Buyer
has agreed to consider entering into such Transactions, subject to the terms
and conditions set forth in this Agreement.

 

NOW,
THEREFORE, in consideration of the mutual rights and obligations provided
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Seller and Buyer agree as follows:

 

ARTICLE 1

DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

 

1.1                                 Defined Terms.  As used in this Agreement, capitalized terms
shall have the meanings set forth in Exhibit A hereto, unless the
context otherwise requires.  All such
defined terms shall, unless specifically provided to the contrary, have the
defined meanings set forth herein when used in any other agreement, certificate
or document made or delivered pursuant hereto.

 

1.2           Principles of Constructions.

 

(a)                                  Accounting Terms. Accounting
terms not otherwise defined herein shall have the meanings given under GAAP.

 

(b)                                 Number.  All terms defined in this Agreement may be
used in the singular or the plural, as the context requires.

 

(c)                                  Successors and Assigns. Reference to
any party shall mean that party and its successors and assigns permitted by the
terms of this Agreement.

 

ARTICLE 2

AMOUNT
AND TERMS OF TRANSACTIONS

 

2.1                                 Agreement to Enter into Transactions.  Subject to the terms and conditions of this
Agreement and provided that no Event of Default has occurred and is continuing,
Buyer agrees, from time to time during the term of this Agreement, to consider
entering into Transactions with Seller; provided, however, that the Buyer shall
be under no obligation to enter into Transactions with Seller and the total
aggregate Transactions outstanding at any one time shall not exceed the
Aggregate Transaction Limit and the aggregate type of Transactions outstanding
at any one time shall not exceed the applicable Type Sublimit.

 

2.2                                 Transaction Limits.  The Aggregate Transaction Limit and each Type
Sublimit shall be as set forth in the Transactions Terms Letter.  Upon an Event of Default, Buyer shall have
the right, in its sole and good faith discretion, to reduce, whether
permanently or temporarily, and without refund

 

 

1

 

of any fee or other amount previously
paid by Seller, the Aggregate Transaction Limit and/or each Type Sublimit.  In the event of any reduction pursuant to
this Section 2.2, Buyer shall give Seller prior written notice
thereof, which notice shall designate (a) the effective date of any such
reduction, (b) the amount of the reduction and (c) the Transaction
and/or Type Sublimit limit(s) to which such reduction amount shall
apply.  Buyer shall not be liable to
Seller for any costs, losses or damages arising from or relating to a reduction
by Buyer in the Aggregate Transaction Limit or any Type Sublimit.

 

2.3           Description of Purchased Assets.  With respect to each Transaction, Seller
shall cause to be maintained with Buyer Purchased Assets consisting of a Purchased
Mortgage Loan(s) with an Asset Value not less than, at any date, the
related Purchase Price for such Transaction. 
With respect to each Transaction, the type of Purchased Mortgage Loan
shall be the type of Mortgage Loan as specified in the Transactions Terms
Letter as the Type, and in each case shall consist of the type of mortgage
loans, mortgage related securities, or interests therein as described in
Bankruptcy Code section 101(47)(A).  If
there is uncertainty as to the Type of a Purchased Mortgage Loan, Buyer, in its
sole and good faith discretion, shall determine the correct Type for such
Purchased Mortgage Loan.

 

2.4           Maximum Transaction Amounts.  Each Transaction shall not exceed the lesser
of:

 

(a)           the
applicable Type Sublimit, as determined by the type of Purchased Mortgage Loan;

 

(b)           the
Aggregate Transaction Limit, minus the aggregate amount of all other
Transactions outstanding, if any; and

 

(c)           the
Asset Value of the related Purchased Mortgage Loan(s).

 

2.5           Use of Proceeds.
Seller shall use the Purchase Price of each Transaction solely for the purpose
of originating and/or acquiring the related Purchased Mortgage Loan(s).

 

2.6           Price
Differential.

 

(a)           Pricing Rate.  Notwithstanding that Buyer and Seller intend
that the Transactions hereunder be sales by Seller to Buyer of the Purchased
Mortgage Loans for all purposes except accounting and tax purposes, Seller
shall pay Buyer a price differential on the Purchase Price for each Purchased
Mortgage Loan from the Date of Disbursement until, but not including, the date
of repurchase, at an annual rate equal to the sum of the Applicable Pricing
Rate plus the applicable Margin; provided, however, that if a Purchased
Mortgage Loan is deemed to be a Noncompliant Mortgage Loan, thereafter, such
Purchase Price shall bear a price differential at an annual rate equal to the
sum of the Applicable Pricing Rate plus the Type Margin for a Noncompliant
Mortgage Loan.  Notwithstanding the
foregoing, if the Repurchase Price for a Transaction is not paid by Seller when
due (whether at the Repurchase Date, upon acceleration or otherwise), the
Purchase Price shall bear a price differential from the date due until paid in
full at an annual rate equal to the Default Rate.

 

(b)           Time for Payment.  Accrued interest for each Purchase Price
shall be due and payable on each Payment Date which occurs prior to the date on
which the Repurchase Price is paid.  On
the date that the Repurchase Price is paid, all accrued interest not otherwise
paid by Seller shall be due and payable.

 

(c)           Computations.  All computations of price differentials and
fees payable hereunder shall be based upon a year of three-hundred sixty (360)
days.

 

2

 

2.7           All
Transactions are “Servicing Released”.  The sale of Mortgage Loans by
Seller to Buyer pursuant to Transactions under the Repurchase Agreement
includes the servicing rights related to the Mortgage Loans and all
Transactions under the Repurchase Agreement are “servicing released” purchase
and sale transactions for all intents and purposes, it being understood that
the Purchase Price paid by Buyer to Seller for each Mortgage Loan includes a
premium that compensates Seller for the servicing rights related to the
Mortgage Loan and upon payment of the Purchase Price by Buyer to Seller, Buyer
becomes the owner of the Mortgage Loan, including the servicing rights related
to the Mortgage Loan.

 

2.8           Terms and Conditions of
Transactions.  The terms
and conditions of the Transactions as set forth in the Transactions Terms
Letter, this Agreement or otherwise may be changed upon an Event of Default, by
Buyer at its sole and good faith discretion by providing prior notice to
Seller.

 

2.9           Guarantee.  As may be determined necessary by Buyer from
time to time in its sole and good faith discretion
and as indicated in the Transactions Terms Letter, Seller agrees to cause to be
executed and delivered to Buyer such Guarantees and/or additional
security agreements as additional support for Seller’s obligations hereunder, which Guarantees and/or additional
security agreements shall be considered “margin payments” as such term is
defined in Bankruptcy Code Section 741(5).

 

ARTICLE 3

PROCEDURES FOR REQUESTING AND ENTERING INTO TRANSACTIONS

 

3.1           Policies
and Procedures.  In connection with the Transactions
contemplated hereunder, Seller shall comply with all applicable policies and
procedures of Buyer as may currently exist or as hereafter created to conform
to current legal and reasonable market requirements.  Such policies and procedures may be in
writing, published on Buyer’s website(s) or otherwise contained in the
Handbook.  Buyer shall have the right to
change, revise, amend or supplement its policies and procedures and the
Handbook from time to time to conform to current legal requirements or
Buyer practices by giving advance notice via Buyer’s website thereof to Seller.

 

3.2           Request for Transaction;
Asset Data Record.

 

(a)           Request
for Transaction.  Seller shall request a Transaction by
delivering to Buyer, electronically or in writing, an Asset Data Record for
each Mortgage Loan intended to be the subject of the Transaction no later than
the Transaction Request Deadline; provided, however, that if Seller intends to
request a Transaction or series of Transactions equal to or greater than ten
million ($10,000,000) dollars, Seller shall provide Buyer not fewer than one (1) Business
Day prior written notice thereof.  If
Buyer decides to enter into a Transaction, Buyer shall confirm to Seller the
terms of Transactions electronically or in writing.  Buyer reserves the right to reject any
Transaction request that Buyer determines, in its sole and good faith
discretion, fails to comply with the terms and conditions of this Agreement or
Buyer’s then current policies and procedures, which current policies and
procedures shall be available via Buyer’s website prior to any request for a
Transaction.

 

(b)           Failure
to Enter into Transaction; Cancellation of Transaction. 
Other than those Transactions that Buyer declines, or a return of
Repurchase Price of a Wet Mortgage Loan as defined in Section 3.6(d) if
Seller fails five (5) times or more to enter into a particular Transaction
after Seller has requested a particular Transaction and submitted an Asset Data
Record in connection with such request, for each Transaction  requested by Seller thereafter for which
Seller fails to enter into such Transaction, Seller shall pay Buyer the
Breakage Fee and reimburse Buyer for any reasonable out-of-pocket losses, costs
and expenses incurred by Buyer in connection with such failure to enter
into the Transaction, including, without limitation, costs relating to
re-employment of funds obtained by Buyer and fees payable to terminate the
arrangements through which such funds were obtained.  In addition, if following disbursement by
Buyer of the Purchase 

 

3

 

Price relating to any Transaction, Seller cancels such Transaction,
regardless of the number of Transactions Seller has previously cancelled,
Seller shall pay Buyer a price differential on such Purchase Price from the
Date of Disbursement until, but not including, the date the Purchase Price is
returned to Buyer.

 

(c)           Form of Asset Data Record.  Buyer shall have the right to revise or
supplement the form of the Asset Data Record from time to time by giving
reasonable prior notice thereof to Seller via Buyer’s website.

 

3.3           Delivery
of Mortgage Loan Documents.

 

(a)           Dry Mortgage Loans.  Prior to any Transaction related to a Dry
Mortgage Loan, Seller shall deliver to Buyer acting as custodian or its
Custodian, or authorize and direct the Closing Agent to deliver to Buyer acting
as custodian or its Custodian, the related Mortgage Loan Documents.

 

(b)           Wet Mortgage Loans.  With respect to a Transaction the subject of
which is a Wet Mortgage Loan, Seller shall deliver to Buyer or its Custodian,
or authorize and direct the Closing Agent to deliver to Buyer or its Custodian,
the related Mortgage Loan Documents within the Wet Mortgage Loans Maximum Dwell
Time.

 

(c)           Government Mortgage Loans. If a
Government Mortgage Loan is the subject of a Transaction, Seller shall, at the
request of Buyer, deliver to Buyer acting as custodian or its Custodian, within
sixty (60) calendar days following the date of such Transaction, a mortgage insurance
policy issued under an FHA insurance program or a guaranty for the full and
timely payment of principal and interest issued by the VA, as applicable, or
evidence of such insurance or guaranty, as applicable, including proof of
payment of the premium and the case number so Buyer can access the information
on the computer system maintained by FHA or the VA.

 

(d)           Mortgage Loan Documents in Seller’s
Possession.  At all times during
which the Mortgage Loan Documents related to any Purchased Mortgage Loan are in
the possession of Seller, and until such Purchased Mortgage Loan is repurchased
by Seller, Seller shall hold such Mortgage Loan Documents in trust for the exclusive benefit of Buyer and shall
act only in accordance with Buyer’s written instructions thereto.

 

(e)           Other
Mortgage Loan Documents in Seller’s Possession.  With
respect to each Purchased Mortgage Loan, until such Purchased Mortgage Loan is
repurchased by Seller, Seller shall hold in trust all mortgage loan documents
related to such Purchased Mortgage Loan and not delivered to Buyer, including,
without limitation, the Other Mortgage Loan Documents, as applicable.

 

3.4           Haircut.
With respect to each Transaction, Seller shall ensure that there are sufficient
funds on deposit in the Over/Under Account such that following the withdrawal
of the Haircut by Buyer, the balance of the Over/Under Account is equal to or
greater than the minimum required balance, as set forth in the Transactions
Terms Letter.

 

3.5           Over/Under Account.

 

(a)           Minimum
Balance.  Seller shall
at all times maintain a margin balance in the Over/Under Account of not than
less than that amount set forth in the Transactions Terms Letter, which account
shall be used to assist in settling the Transactions and any other obligations
under this Agreement.  Buyer shall not be
required to segregate and hold funds deposited by or on behalf of Seller in the
Over/Under Account separate and apart from Buyer’s own funds or funds deposited
by or held for others.  Upon the
occurrence of an Event of Default, Buyer shall have the right, in its sole and
good faith discretion, to 

 

4

 

increase
the minimum margin balance Seller is required to maintain in the Over/Under
Account by giving notice to Seller thereof.

 

(b)           Deposits.

 

(i)            Seller.  Seller shall deposit margin in the form
of funds in the Over/Under Account in accordance with the terms of this
Agreement, including, without limitation, Section 3.4 and Section 3.5(a).

 

(ii)           Buyer.  Buyer shall credit to the Over/Under Account
all amounts in excess of those amounts due to Buyer in accordance with the
Principal Agreements on the date Buyer receives or has received both (1) a
payment by Seller or an Approved Investor pursuant to a Purchase Commitment and
(2) a Purchase Advice relating to such payment without discrepancy;
provided, however, that funds and Purchase Advices received by Buyer after that
time set forth in the Transactions Terms Letter, shall be deemed to have been
received on the next Business Day.  Buyer
shall use reasonable efforts to notify Seller if there is a discrepancy between
a wire transfer and the related Purchase Advice, and thereafter, Seller shall
notify Buyer as to whether Buyer should accept such settlement payment despite
the discrepancy between the amount received and the related Purchase Advice;
provided, however, that if an Event of Default has occurred and is continuing,
Buyer is not obligated to receive approval from Seller prior to accepting any
amounts received and releasing the related Purchased Assets.

 

(iii)          Settlement
Statement. 
Buyer shall deliver to Seller via facsimile or make available to Seller
via the Internet within one (1) Business Day following settlement of an
Transaction, or as soon thereafter as is reasonably possible, a settlement
statement, which includes an explanation of all amounts credited by Buyer to
the Over/Under Account to settle the Transaction.

 

(c)           Withdrawals.

 

(i)            Seller.  If the amount credited to the Over/Under
Account creates a balance in excess of the minimum margin balance required
pursuant to Section 3.5(a) above, provided that no Event of
Default has occurred and is continuing, Seller may submit a written request to
Buyer for return or payment of such excess funds.  If any such request is received by Buyer
prior to 10:00 a.m. (Pacific time) on a Business Day, Buyer shall use
commercially reasonable efforts to wire such requested excess funds to Seller
by the end of such Business Day  and in
no event no later than two (2) Business Days after Buyer’s receipt of such
request.  Notwithstanding anything
contained in this Section 3.5(c)(i) to the contrary, Buyer
reserves the right to reject any request for excess funds from the Over/Under
Account if Buyer determines, in its sole and good faith discretion, that such
excess funds shall be used to satisfy Seller’s outstanding obligations under
this Agreement or are subject to other rights as provided in this Agreement.

 

(ii)           Buyer.  Buyer may, from time to time and without
separate authorization by Seller or notice to Seller, withdraw funds from the
Over/Under Account to settle amounts owed in
accordance with the terms of this Agreement or to otherwise satisfy Seller’s
obligations under this Agreement, including, without limitation:

 

(1)           with
respect to any Transaction, to deliver the Haircut to the Closing Agent;

 

(2)           to
reimburse itself for any reasonable costs and expenses incurred by Buyer as
contemplated by this Agreement, and as permitted herein;

 

5

 

(3)           to
pay itself any price differential on a Purchase Price that is due and owing;

 

(4)           to
Seller as provided in Section 3.5(c)(i);

 

(5)           as
security for the performance of Seller’s obligations hereunder;

 

(6)           without
limiting the generality of Section 3.5(c)(ii)(5), as security for a
Transaction as provided in Section 6.3(a) or as repayment of a
Repurchase Price as provided in Section 6.3(b); and

 

(7)           in
the exercise of Buyer’s or its Affiliates rights under Section 6.3(d) or
Section 11.8.

 

(d)           Failure
to Maintain Balance.  If, at any time, Seller fails to maintain
in the Over/Under Account the minimum margin balance as required hereunder, in
addition to any other rights and remedies that Buyer may have against Seller,
and upon one (1) Business Day’s notice, Buyer shall have the right, at its
sole and good faith discretion, to immediately stop entering into Transactions
with Seller and/or to charge Seller accrued interest on that portion of the
minimum margin balance that Seller has failed to maintain, at the Default Rate,
from the time that such balance failed to be maintained until the time that
funds are deposited into or held in the Over/Account to comply with such
minimum margin balance requirements hereunder. 
Without limiting the generality of the foregoing, it is understood and
agreed that should the balance in the Over/Under Account become negative,
Seller will continue to owe Buyer accrued interest as provided herein.

 

(e)           Security
Interest. 
Any funds of Seller at any time deposited or held in the Over/Under
Account, whether such funds are required to be deposited and held in the
Over/Under Account pursuant to this Section 3.5 or otherwise, are
hereby pledged by Seller as security for its obligations under this Agreement, and Seller
hereby grants a security interest in such funds to Buyer.

 

3.6           Payment of Purchase Price.

 

(a)           Payment of Purchase Price.  On
the Purchase Date for each Transaction, ownership of the Purchased Mortgage
Loans, including the servicing rights related thereto, shall be transferred to
Buyer against the simultaneous transfer of the Purchase Price to Seller
simultaneously with the delivery to Buyer of the Purchased Mortgage Loans
relating to each Transaction.  With
respect to the Purchased Mortgage Loans being sold by Seller on the Purchase
Date, Seller hereby sells,
transfers, conveys and assigns to Buyer or its designee without recourse, but
subject to the terms of this Agreement, all the right, title and interest of
Seller in and to the Purchased Mortgage Loans, including the servicing rights
related thereto, together with all right, title and interest in and to the
proceeds of any related Purchased Assets.

 

(b)           Methods of Payment.  On the Purchase Date for each Transaction:

 

(i)            Buyer may pay the Purchase Price (A) by
wire transfer in accordance with Seller’s wire instructions in Exhibit J,
(B) if Seller is approved to receive the Purchase Price via cashiers check
and has requested to receive the Purchase Price via cashiers check, by cashiers
check or (C) if Seller is approved to present funding drafts to Buyer and
Seller has requested to receive the Purchase Price via funding draft, by
funding draft, subject to the requirements of Section 3.8.  Unless Seller is approved to receive the
Purchase Price via cashiers check or funding draft and Seller has requested
that payment be made using one of these 

 

6

 

methods for a particular Transaction, Buyer shall pay the Purchase
Price for all Transactions by wire transfer. 
Buyer shall have no obligation to pay the Purchase Price by cashiers
check or funding draft unless and until Seller has requested to receive payment
in such manner and Seller has otherwise complied with all applicable policies
and procedures regarding such methods of payment.  Notwithstanding the foregoing, Buyer shall not
be obligated to pay the Purchase Price under any method of payment to any
Closing Agent or warehouse lender that is not an Approved Payee.  Further, the payment of the Purchase Price by
Buyer to any Closing Agent or warehouse lender that is not an Approved Payee
shall not make such Closing Agent or warehouse lender an Approved Payee.  Any funds disbursed by Buyer to Seller or its
Approved Payee shall be subject to all applicable federal, state and local
laws, including, without limitation, regulations and policies of the Board of
Governors of the Federal Reserve System on Reduction of Payments System
Risk.  Seller acknowledges that as a
result of such applicable laws, regulations and policies, equipment malfunction,
Buyer’s approval procedures or circumstances beyond the reasonable control of
Buyer, the payment of a Purchase Price using one or more of the methods
described above may be delayed.  
Further, Seller acknowledges that a funding draft may not constitute “good
funds” under certain state laws and funds will not be released to the payee
until Buyer, in its sole and good faith discretion, has reviewed and accepted
the funding draft following presentment of the draft to the payor bank.  Buyer shall not be liable to Seller for any
costs, losses or damages arising from or relating to any such delays, or

 

(ii)           Notwithstanding
the foregoing, where a Purchased Mortgage Loan is the subject of third party
financing, Buyer may pay all or any portion of the Purchase Price directly to
the warehouse or other lender that has a security interest in the Purchased
Mortgage Loan to satisfy the related indebtedness and obtain a release of such
security interest.

 

(c)           Transaction Limitations and Other
Restrictions Relating to Closing Agents. Notwithstanding that a particular
Transaction request will not exceed the Aggregate Transaction Limit or
applicable Type Sublimit, if the payment of the Purchase Price for such
Transaction to the related Closing Agent will violate Buyer’s applicable
policies and procedures (as contained in the Handbook or otherwise) regarding
payments to Closing Agents, Buyer may refuse to pay the Purchase Price to such
Closing Agent.

 

(d)           Return of Purchase Price.  If a Wet Mortgage Loan subject to a Transaction
is not closed within three (3) Business Days following the payment of the
Purchase Price, Seller shall immediately return, or cause to be immediately
returned, the Purchase Price to Buyer. 
If the Purchase Price was paid by cashiers check or funding draft,
Seller shall immediately void, or cause to be immediately voided (i.e. direct
the Closing Agent to immediately void) the cashiers check or funding draft, as
applicable.  Further, Seller shall pay
Buyer all fees and any price differential thereon immediately upon notification
from Buyer; provided, however, that price differential shall continue to accrue
until the Purchase Price is returned to Buyer or the voided cashiers check is
received and cancelled by Buyer, as applicable. 
If a cashier’s check has been issued with respect to any Transaction,
Buyer shall not be obligated to wire funds or issue another cashiers check to
fund such Transaction until the original voided cashiers check has been
received and cancelled by Buyer.

 

3.7           Approved
Payees.

 

(a)           Closing Agents.
In order for a Closing Agent to be designated an Approved Payee with respect to
any Purchase Price, Seller shall submit to Buyer the following documents:

 

7

 

(i)            if the title company issuing the title
policy that covers the applicable Purchased Mortgage Loan has not issued to
Buyer a blanket Closing Protection Letter, which covers closings conducted by
this Closing Agent in the jurisdiction where this closing will take place:

 

(1)           a valid blanket Closing Protection Letter,
in a form acceptable to Buyer, issued to Seller or Buyer by the title company,
which is issuing the title insurance policy that covers the related Purchased
Mortgage Loan, that covers closings conducted by the Closing Agent in the
jurisdiction where this closing will take place and if applicable, an
assignment to Buyer of such Closing Protection Letter, substantially in the
form of Exhibit F hereto; or

 

(2)           a valid Closing Protection Letter, in a form
acceptable to Buyer, issued to Seller or Buyer by the title company, which is
issuing the title insurance policy that covers the related Purchased Mortgage
Loans, that covers the closing of this specific Purchased Mortgage Loan and if
applicable, an assignment to Buyer of such Closing Protection Letter,
substantially in the form of Exhibit F hereto; or

 

(3)           if Closing Protection Letters are not
available or are limited in their applicability in the jurisdiction where the
closing takes place, any other documents Buyer may reasonably require,
including without limitation an assignment to Buyer of Seller’s rights under
its fidelity bond and errors and omissions policy, substantially in the form of
Exhibit F hereto; and

 

(ii)           evidence that the Irrevocable Closing
Instructions, in the applicable form and signed by Seller and Buyer, have been
delivered to such Closing Agent.

 

(b)           Warehouse Lenders. In order for a
warehouse lender to be designated an Approved Payee with respect to any
Purchase Price, Seller shall submit to Buyer a written request, including the
name and address of the warehouse lender, demonstrating a need for such
designation.  Notwithstanding the
foregoing, Buyer reserves the right to refuse to designate any warehouse lender
as an Approved Payee, or, alternatively, to require additional terms and
conditions in order for Buyer to pay a Purchase Price to the warehouse lender.

 

(c)           Approval Process. Buyer shall review
the applicable documents and notify Seller within two (2) Business Days as
to whether such Closing Agent or warehouse lender has been designated by Buyer,
in its sole and good faith discretion, to be an Approved Payee with respect to
such Purchase Price.  Buyer may withdraw
its approval of any Closing Agent or warehouse lender as an Approved Payee if
Buyer becomes aware of any facts or circumstances at any time related to such
Closing Agent or warehouse lender which Buyer determines, in its sole and good
faith discretion, materially and adversely affects the Closing Agent or
warehouse lender or otherwise makes the Closing Agent or warehouse lender
unacceptable as an Approved Payee upon notification to Seller.

 

3.8           Funding
Drafts.

 

(a)           Blank
Funding Drafts.  If Seller is approved by Buyer to receive
Purchase Prices by funding draft, Buyer, at its discretion, shall provide
Seller with a limited number of blank drafts. 
Seller shall store such blank drafts in a secure location and employ
sufficient security procedures to ensure that each funding draft issued by
Seller is authorized, authentic and complete. 
As requested by Buyer, Seller shall submit to Buyer an accounting of all
blank drafts provided to Seller, certified by Seller’s president or chief 

 

8

 

financial
officer.  Seller shall notify Buyer
immediately if it discovers that any blank drafts are missing or otherwise not
accounted for.

 

(b)           Completion
of Funding Drafts.  With respect to any Purchase Price to be paid
by funding draft, Seller shall not complete a funding draft until after it has
submitted a Asset Data Record for the related Transaction to Buyer that
includes the number of the draft that is to be used for the Purchase
Price.  Seller is responsible for
completing each funding draft clearly and accurately.  Buyer shall not be obligated to accept any
funding draft that contains incorrect information, is illegible or is not
signed by at least two (2) authorized officers of Seller.  If Seller makes an error in completing a
funding draft, Seller shall void the draft and return the voided draft to Buyer
with its accounting of blank drafts. 
Further, Seller shall notify Buyer immediately in order to confirm a new
draft number with respect to the Purchase Price.  Buyer shall not have an obligation to accept
any funding draft if the draft number does not match that approved by Buyer in
connection with a specific Transaction.

 

(c)           Acceptance
of Funding Drafts.  The payment of the Purchase Price by funding
draft is subject to Buyer’s acceptance of the funding draft following
presentment to the payor bank.  Buyer
will accept a funding draft upon confirmation of Seller’s compliance with the
terms of this Agreement, including, without limitation, receipt by Buyer of the
Asset Data Record prior to the date the funding draft was written, information
contained on the funding draft is consistent with that previously provided to
Buyer and the payee is an Approved Payee, as applicable.  If Buyer rejects a funding draft for any
reason, the Purchase Price for such Transaction may be paid by a new funding
draft, provided all applicable procedures are followed, or by an alternate
payment method.

 

(d)           Condition
Precedent.  As a condition precedent to Seller issuing a
funding draft, Seller shall have delivered to Buyer:

 

(i)            a
completed signature card, in form and substance satisfactory to the bank on
which the funding drafts are drawn; and

 

(ii)           a
certificate of Seller’s corporate secretary, dated as of the current date, as
to the incumbency and authenticity of the signatures of the officers of Seller
authorized to sign funding drafts and the resolutions of the board of directors
authorizing such officers to sign funding drafts on behalf of Seller.

 

9

 

ARTICLE 4

REPURCHASE

 

4.1           Repurchase
Price.

 

(a)           Payment
of Repurchase Price.  The Repurchase
Price for each Purchased Mortgage Loan shall be payable in full and by wire
transfer in accordance with Buyer’s wire instructions in Exhibit J
upon the earliest to occur of (i) the Repurchase Date of the Purchased
Mortgage Loan, (ii) the occurrence of any Repurchase Acceleration Event
with respect to such Transaction or (iii) the expiration or termination of
this Agreement.  Such obligation to
repurchase exists without regard to any prior or intervening liquidation or
foreclosure with respect to any Purchased Mortgage Loan.  While it is anticipated that Seller will
repurchase each Purchased Mortgage Loan on its related Repurchase Date, Seller
may repurchase any Purchased Mortgage Loan hereunder on demand without any
pre-payment penalty or premium.

 

(b)           Effect
of Payment of Repurchase Price.  On the Repurchase Date (or such other date on
which the Repurchase Price is paid by Seller), termination of the related
Transaction will be effected by the repurchase by Seller or its designee of the
Purchased Mortgage Loans and the simultaneous transfer of the Repurchase Price
to an account of Buyer, or transfer of additional Mortgage Loan(s) (in
each case as further described at Section 6.5), and all of Buyer’s
rights, title and interests therein shall then be conveyed to Seller or its
designee.  Seller is obligated to obtain
the Mortgage Loan Documents from Custodian at Seller’s expense on the
Repurchase Date.

 

4.2           Repurchase
Acceleration Events.  The occurrence of any of the following events
shall be a Repurchase Acceleration Event with respect to a Transaction:

 

(a)           Buyer
in its sole and good faith discretion has determined that the Purchased
Mortgage Loan is a Defective Mortgage Loan;

 

(b)           thirty
(30) calendar days elapse from the date the Mortgage Loan Documents relating to
the Purchased Mortgage Loan were delivered to an Approved Investor and such
Approved Investor has not returned the Mortgage Loan Documents or purchased the
Purchased Mortgage Loan, unless an extension is granted by Buyer, in its sole
and good faith discretion;

 

(c)           ten (10) Business
Days elapse from the date a Mortgage Loan Document relating to the Purchased
Mortgage Loan was delivered to Seller for correction or completion, without
being returned to Buyer or its designee;

 

(d)           Seller
fails to deliver to Buyer the related Mortgage Loan Documents within the Wet
Mortgage Loans Maximum Dwell Time or any Mortgage Loan Document delivered to
Buyer, upon examination by Buyer, is found not to be in compliance with the
requirements of this Agreement or the related Purchase Commitment and is not
corrected within the Wet Mortgage Loans Maximum Dwell Time;

 

(e)           Regardless
of whether a Purchased Mortgage Loan is a Defective Mortgage Loan, a
foreclosure or similar type of proceeding is initiated with respect to the
Purchased Mortgage Loan; or

 

(f)            the
further sale of the Purchased Mortgage Loan by Seller.

 

10

 

4.3           Reduction
of Asset Value as Alternative Remedy.  In Buyer’s sole and good faith
discretion, in lieu of requiring full repayment of the Repurchase Price upon
the occurrence of a Repurchase Acceleration Event, Buyer may elect to reduce
the Asset Value of the related Purchased Mortgage Loan (to as low as zero) and
accordingly require a full or partial repayment of such Repurchase Price or the
delivery of other funds or collateral, which additional assets shall be “margin
payments” or “settlement payments” as such terms are defined in Bankruptcy Code
Section 741(5) and (8), respectively.

 

4.4           Designation
as Noncompliant Mortgage Loan as Alternative Remedy.  In
Buyer’s sole and good faith discretion, in lieu of requiring full repayment of
the Repurchase Price upon the occurrence of a Repurchase Acceleration Event,
Buyer may elect to deem the related Purchased Mortgage Loan a Noncompliant
Mortgage Loan, provided that (a) after such Purchased Mortgage Loan is
deemed to be a Noncompliant Mortgage Loan, the aggregate original Asset Value
of all Noncompliant Mortgage Loans does not exceed the Type Sublimit for
Noncompliant Mortgage Loans; (b) the Asset Value of the Noncompliant
Mortgage Loan is greater than the Repurchase Price or Seller provides
additional Purchased Assets or repays part of the Repurchase Price as provided
in Section 6.3 in each case as a “margin payment” as such term is
defined in Bankruptcy Code Section 741(5); and (c) Seller delivers to
Buyer all documentation relating to the Purchased Mortgage Loan reasonably
requested by Buyer.

 

4.5           Illegality
or Impracticability.  Notwithstanding anything to the contrary in
this Agreement, if Buyer determines in its sole and good faith discretion that
any law, regulation, treaty or directive or any change therein or in the
interpretation or application thereof, or any circumstance materially and
adversely affecting the London interbank market, the repurchase market for
mortgage loans or mortgage-backed securities or the source or cost of Buyer’s
funds, shall make it unlawful, 
impractical, or commercially unreasonable for Buyer to enter into or
maintain Transactions as contemplated by this Agreement (a) the commitment
of Buyer hereunder to enter into or to continue to maintain Transactions shall
be cancelled and (b) the Repurchase Price for each Transaction then
outstanding shall be immediately due and payable upon the earlier to occur of (i) the
related scheduled Repurchase Date, (ii) within five (5) Business Days
after the date required by any financial institution providing funds to Buyer, (iii) sale
of the Purchased Mortgage Loan in accordance with the terms of this Agreement, (iv) the
date as of which Buyer determines that such Transactions are unlawful or (v) within
five (5) Business Days after the date Buyer determines that the payment of
the Repurchase Price on its scheduled Repurchase Date will be impractical or
commercially unreasonable because of the severe nature of the material and
adverse change affecting the London interbank market, the repurchase market for
mortgage loans or mortgage-backed securities or the source or cost of Buyer’s
funds.  For the avoidance of doubt, it is
understood and agreed that a material and adverse change affecting the London
interbank market, the repurchase market for mortgage loans or mortgage-backed
securities or the source or cost of Buyer’s funds shall not automatically require
Seller to pay the Repurchase Price for any Transaction then outstanding before
its related scheduled Repurchase Date unless Buyer has made an additional
determination that such change is severe, in which case, Seller shall have the
time specified in subsection (v) in which to pay the Repurchase Price for
each such Transaction.  Buyer shall not
be liable to Seller for any costs, losses or damages arising from or relating
from any actions taken by Buyer pursuant to this Section 4.5.

 

4.6           Payments
Pursuant to Sale to Approved Investors.  Seller shall direct each
Approved Investor purchasing a Purchased Mortgage Loan to pay directly to
Buyer, by wire transfer of immediately available funds, the full purchase
price, without set-off, as set forth in the applicable Purchase
Commitment.  In addition, Seller shall
provide Buyer with a Purchase Advice relating to such payment.  Seller shall not direct the Approved Investor
to pay to Buyer an amount less than the full purchase price set forth in the
applicable Purchase Commitment or modify or otherwise change the wire
instructions for payment of the purchase price provided to Approved Investor by
Buyer.  Buyer shall apply all amounts
received for the account of Seller in accordance with Section 4.7
below and credit all amounts due Seller to the Over/Under Account in accordance
with Section 3.5(b)(ii) above. 
Buyer may reject any amount received from an Approved Investor

 

11

 

and not release the related Purchased Mortgage Loan if (a) Buyer
does not receive a Purchase Advice in respect of any wire transfer, or (b) Buyer
does not receive the full purchase price, without set-off, as set forth in the
applicable Purchase Commitment or (c) the amount received is not
sufficient to pay the Repurchase Price. 
Alternatively, in lieu of rejecting an amount received by Buyer from an
Approved Investor, at Buyer’s sole option and discretion, if the amount
received from the Approved Investor does not equal or exceed the Repurchase
Price, Buyer may accept the amount received from the Approved Investor and
deduct the remaining amounts owed by Seller from the Over/Under Account or
demand payment of such remaining amount from Seller.  If Seller receives any funds intended for
Buyer, Seller shall segregate and hold such funds in trust for Buyer and
immediately pay to Buyer all such amounts by wire transfer of immediately
available funds together with providing Buyer with a settlement statement for the
transaction.

 

4.7           Application
of Payments from Seller or Approved Investors. 
Unless Buyer determines otherwise in its sole and good faith discretion,
payments made directly by Seller or an Approved Investor to Buyer shall be
applied in the following order of priority:

 

(a)           first, in
the exercise of Buyer’s rights under Section 6.3(d) or Buyer’
or its Affiliates’ rights under Section 11.8.

 

(b)           second, to all costs, expenses and fees incurred or
charged by Buyer under this Agreement that are not related to a specific
Transaction;

 

(c)           third, to any amounts due and owing to Buyer
pursuant to Section 6.3;

 

(d)           fourth, to all costs, expenses and fees incurred or
charged by Buyer under this Agreement that are related to the Transaction in
connection with which the payment is made;

 

(e)           fifth, to the price differential due and owing on
the Purchase Price in connection with which the payment is made;

 

(f)            sixth, to the price differentials on any Purchase
Prices related to any other Transactions that are outstanding, due and owing,
applied first to the Transaction with the earliest date;

 

(g)           seventh, to the amount of the Repurchase Price for
the Transaction in connection with which the payment is made; and

 

(h)           eighth, to the amount of any Repurchase Prices
related to any other Transactions that are outstanding, due and owing, applied
first to the Transaction with the earliest date.

 

Buyer
and Seller intend and agree that all such payments shall be “settlement
payments” as such term is defined in Bankruptcy Code Section 741(8).  After the settlement payments have been
applied as set forth above, Buyer shall deposit in the Over/Under Account any
amounts that remain.

 

4.8           Method
of Payment.  Except as otherwise specifically provided
herein, all payments hereunder must be received by Buyer on the date when due
and shall be made in United States dollars by wire transfer of immediately
available funds to such account designated by Buyer from time to time. Whenever
any payment to be made hereunder shall be stated to be due on a day that is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day, and with respect to payments of the Purchase Price, the price
differential thereon shall be payable at the Applicable Pricing Rate during such
extension.  All payments made by or on
behalf of Seller with respect to any Transaction shall be applied to Seller’s
account in accordance with Section 3.5(b)(ii) and Section 4.7
above and shall be made in such amounts as may be necessary in order that all
such payments after withholding for or on account of any present or future
taxes, levies, imports, duties or other similar charges of whatsoever nature
imposed by any 

 

12

 

government
or any political subdivision or taxing authority hereof, other than any taxes
on or measured by the net income of Buyer pursuant to the state, federal and
local tax laws of the jurisdiction where Buyer’s principal office or offices or
lending office or offices are located, compensate Buyer for any additional cost
or reduced amount receivable of making or maintaining Transactions as a result
of such taxes, imports, duties or other charges. All payments to be made by or
on behalf of Seller with respect to any Transaction shall be made without
set-off, counterclaim or other defense.

 

4.9           Notification
of Payment.  Seller shall provide Buyer not fewer than one
(1) Business Day prior written notice if Seller or an Approved Investor
intends to remit a payment to Buyer equal to or greater than ten million
($10,000,000) dollars.

 

4.10         Authorization
to Debit.  In addition to any other authorizations to
and rights of Buyer hereunder, Seller hereby expressly authorizes Buyer to
debit any account maintained by Seller with any depository institution into
which any funds related to the Purchased Mortgage Loans or related Purchased
Assets have been deposited, including without limitation, any operating,
settlement or custodial account, for the deposited amounts related to the
Purchased Mortgage Loans due Buyer hereunder. 
For the avoidance of doubt, the foregoing debit rights of Buyer shall
not apply to Purchased Mortgage Loans which have been repurchased by Seller
pursuant to Section 6.5.

 

4.11         Book Account. 
Buyer and Seller shall maintain an account on their respective books of
all Transactions entered into between Buyer and Seller and for which the
Repurchase Price has not yet been paid. 
As a courtesy to Seller, Buyer shall provide such information to Seller
via the Internet or by telephone or facsimile, if Seller is unable to access
the information via the Internet. 
Notwithstanding the foregoing, Seller shall be responsible for
maintaining its own book account and records of Transactions entered into with
Buyer, amounts due to Buyer in connection with such Transactions and for paying
such amounts when due.  Failure of Buyer
to provide Seller with information regarding any Transaction shall not excuse
Seller’s timely performance of all obligations under this Agreement, including,
without limitation, payment obligations under this Agreement.

 

4.12         Full
Recourse.  The obligations of Seller from time to time
to pay the Repurchase Price, Margin Deficit payments, settlement payments and
all other amounts due under this Agreement shall be full recourse obligations
of Seller.

 

ARTICLE 5

FEES

 

5.1           Payment of Fees.  Seller shall pay to Buyer those fees set
forth in this Agreement or the Transactions Terms Letter when they become due
and owing.  Without limiting the
generality of the foregoing, the initial Facility Fee shall be paid on or
before the Effective Date and if this Agreement is renewed, thereafter on or
before the anniversary of the Effective Date. 
Further, the Unused Facility Fee shall be paid quarterly in arrears, on
the first day of the months of January, April, July and October, for each
preceding calendar quarter.  Buyer shall
be entitled to withdraw from the Over/Under Account or retain from payments
made by Seller or an Approved Investor, subject to Section 4.6, any
fees permitted under this Agreement that are due and owing.  If such amounts on deposit in the Over/Under
Account or payments received in connection with a Transaction are not
sufficient to pay Buyer all fees owed, Buyer shall notify Seller and Seller
shall pay to Buyer, within one (1) Business Day, all unpaid fees.

 

ARTICLE 6

SECURITY; SERVICING; MARGIN ACCOUNT
MAINTENANCE; CUSTODY OF

MORTGAGE LOAN DOCUMENTS AND REPURCHASE
TRANSACTIONS

 

6.1           Precautionary
Grant of Security Interest.  Although the parties intend that all Transactions
hereunder be sales and purchases (other than for accounting and tax purposes)
and not loans, 

 

13

 

and
without prejudice to the provisions of Section 6.6 and the
expressed intent of the parties, if any Transactions are deemed to be loans, as
security for the performance of all of Seller’s obligations hereunder, or if
any determination is made that the servicing rights related to the Purchased
Mortgage Loans were not sold by Seller to Buyer or that the servicing rights
are not an interest in a Purchased Mortgage Loan and are severable from the
Purchased Mortgage Loan despite Buyer’s and Seller’s express intent herein to
treat them as included in the purchase and sale transaction, Seller hereby
pledges, assigns and grants to Buyer a continuing first priority security
interest in and lien upon the Purchased Assets, including, without limitation,
the servicing rights related to the Purchased Mortgage Loans, and Buyer shall
have all the rights and remedies of a “secured party” under the Uniform
Commercial Code.  Possession of any
promissory notes, instruments or documents by the Custodian shall constitute
possession on behalf of Buyer.  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 Assets and the
liens created hereby.  Seller also hereby
authorizes Buyer to file any such financing or continuation statement in a
manner consistent with this Agreement 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.

 

6.2           Servicing.

 

(a)           Servicing Rights Owned by Buyer;
Buyer’s Right to Appoint Servicer. 
In recognition that each Purchased Mortgage Loan is sold by Seller to
Buyer on a servicing released basis and Buyer is the owner of the servicing
rights related to each Purchased Mortgage Loan, Buyer shall have the sole right
to appoint the Servicer for each Purchased Mortgage Loan.

 

(b)           Appointment of Servicer. 
Subject to Buyer’s right to appoint a successor Servicer at its sole
discretion, Buyer hereby appoints Seller or the Servicer, as applicable, to
subservice the Purchased Mortgage Loans on behalf of Buyer as agent for Buyer
for the period between the Purchase Date and the Repurchase Date of the
Purchased Mortgage Loans.  The right of Seller or the Servicer, as
applicable, to service the Purchased Mortgage Loans is on an
interim basis only and does not provide or confer a contractual, ownership or
other right for Seller or the Servicer, as applicable, to service the Purchased
Mortgage Loans, it being understood that upon payment of the Purchase Price,
Buyer owns the servicing rights and may assume servicing or appoint a Successor
Servicer at any time.  Further, the fact
that Seller or the Servicer may be entitled to a servicing fee for interim
servicing of the Purchased Mortgage Loans or that Buyer may provide a separate
notice of default to Seller or the Servicer regarding the servicing of the
Purchased Mortgage Loans shall not affect or otherwise change Buyer’s ownership
of the servicing rights related to the Purchased Mortgage Loans.

 

(c)           Interim
Servicing Period; No Servicing Fee or Income.  Seller’s or the Servicer’s, as applicable,
right to interim service a Purchased Mortgage Loan shall commence on the
related Purchase Date and shall automatically terminate without notice on the
earlier of (i) sixty (60) days after the related Purchase Date or (ii) the
actual date Seller repurchases the Purchased Mortgage Loan.  If the interim servicing period expires with
respect to any Purchased Mortgage Loan for any reason other than Seller
repurchasing the Mortgage Loan, then upon mutual written agreement of Buyer and
Seller or the Servicer, as applicable, Seller or the Servicer, as applicable,
shall continue to interim service the Purchased Mortgage Loan for a thirty (30)
day extension period.  Such extension
period shall automatically expire without notice unless Buyer and Seller
mutually agree in writing 

 

14

 

to one or more additional thirty (30) day
extension period(s), provided, however, that absent mutual written agreement to
extend, or continue to extend, the interim servicing period, Seller or the
Servicer, as applicable, shall transfer servicing of the Mortgage Loan to Buyer
or its designee in accordance with the instructions of Buyer and any other
applicable requirements of this Repurchase Agreement.  For the avoidance of doubt, upon expiration
of the interim servicing period (including the expiration of any extension
period) with respect to any Purchased Mortgage Loan, Seller shall have no right
to service the related Purchased Mortgage Loan nor shall Buyer have any
obligation to extend the interim servicing period (or continue to extend the
interim servicing period), it being understood that upon such expiration,
Seller shall promptly transfer the servicing of the related Purchased Mortgage Loan
to Buyer or its designee in accordance with the instructions of Buyer and any
other applicable requirements of this Repurchase Agreement.  Buyer shall have no obligation to pay Seller
or the Servicer, as applicable, nor shall Seller or the Servicer, as applicable,
has any right to deduct or retain, any servicing fee or similar compensation in
connection with the interim servicing of a Purchased Mortgage Loan.

 

(d)           Servicing Agreement.  If there is a Servicer of the Purchased
Mortgage Loans, Seller shall enter into a Servicing Agreement with the Servicer
on behalf of Buyer, which such Servicing Agreement shall be on terms agreed to
by Buyer, and which shall include, at a minimum, (i) a recognition by the
Servicer of Buyer’s interests and rights to the Purchased Mortgage Loans as
provided under this Agreement, including, without limitation, Buyer’s ownership
of the servicing rights related to the Purchased Mortgage Loans; (ii) an obligation for the Servicer to subservice
the Purchased Mortgage Loans consistent with the degree of skill and care that
the Servicer customarily requires with respect to similar Mortgage Loans owned
or managed by it but in no event no less than in accordance with Accepted
Servicing Practices; (iii) an obligation to comply with all applicable
federal, state and local laws and regulations; (iv) an obligation to
maintain all state and federal licenses necessary for it to perform its
subservicing responsibilities; (v) an obligation not to impair the rights
of Buyer in any Purchased Mortgage Loans or any payment thereto and (vi) an
obligation to collect all sums payable in respect of the Purchased Mortgage
Loans on behalf of Buyer, in trust, in segregated custodial accounts.  Further, such Servicing Agreement shall
contain express reporting requirements and other rights to allow Buyer to
inspect the records of the Servicer with respect to the Purchased Mortgage
Loans.  Buyer may terminate the
subservicing of any Purchased Mortgage Loan with the then existing Servicer in
accordance with either Section 6.2(f) or Section 6.2(m).

 

(e)           Servicing
Obligations of Seller.  To the extent Seller shall subservice
any Purchased Mortgage Loan on behalf of Buyer, Seller shall:

 

(i)            Subservice and administer the Purchased
Mortgage Loans on behalf of Buyer in accordance with prudent mortgage loan
servicing standards and procedures generally accepted in the mortgage banking
industry and in accordance with the degree of care and servicing standards
generally prevailing in the industry, including all applicable requirements of
any Agency, and the requirements of any applicable Purchase Commitment and the
Approved Investor, so that the eligibility of the Purchased Mortgage Loan for
purchase under such Purchase Commitment is not voided or reduced by such
servicing and administration;

 

(ii)           Subject to Subsection 6.2(f),
and to the extent not otherwise held by the Custodian, Seller shall at all
times maintain and safeguard the Mortgage Loan File for the Purchased Mortgage
Loan, and in any event shall maintain and safeguard photocopies of the
documents delivered to Buyer pursuant to Section 3.3, and accurate
and complete records of its servicing of the Purchased Mortgage Loan; Seller’s
possession of such Mortgage Loan File is for the sole 

 

15

 

purpose of subservicing such Purchased Mortgage Loan and such retention
and possession by Seller is in a custodial capacity only;

 

(iii)          Buyer may, at any time during Seller’s
business hours on reasonable notice, examine and make copies of such documents
and records, or require delivery of the originals of such documents and records
to Buyer or its designee;

 

(iv)          At Buyer’s request, Seller shall promptly
deliver to Buyer reports regarding the status of any Purchased Mortgage Loan
being subserviced by it, which reports shall include, but shall not be limited
to, a description of any default thereunder for more than thirty (30) days or
such other circumstances that could cause a Material Adverse Change on such
Purchased Mortgage Loan, Buyer’s title to such Purchased Mortgage Loan or the
collateral securing such Purchased Mortgage Loan; Seller is required to deliver
such reports until the repurchase of the Purchased Mortgage Loan by Seller; and

 

(v)           Seller
shall immediately notify Buyer if Seller becomes aware of any payment default
that occurs under a Purchased Mortgage Loan.

 

(f)            Sale or Transfer of Servicing Rights by Buyer. 
Buyer may sell or transfer any rights to service a Purchased Mortgage
Loan without the prior written consent of Seller or any Servicer.

 

(g)           Release of Mortgage Loan Files. 
Seller shall release its
custody of the contents of any Mortgage Loan File only in accordance with the
written instructions of Buyer, except when such release is required as
incidental to Seller’s subservicing of the Purchased Mortgage Loan, is required
to complete the Purchase Commitment, or as required by law.

 

(h)           Right to Appoint Successor
Servicer.  Buyer reserves the right, in its sole discretion, to appoint a
successor servicer to subservice any Purchased Mortgage Loan (each a “Successor
Servicer”).  In the event of
such an appointment, Seller or the Servicer, as applicable, shall perform all
acts and take all action so that any part of the Mortgage Loan File and related
servicing records held by Seller or the Servicer, together with all funds in
the Custodial Account and other receipts relating to such Purchased Mortgage
Loan, are promptly delivered to the Successor Servicer.  Seller shall have no claim for servicing
Fees, lost profits or other damages if Buyer appoints a Successor Servicer
hereunder.

 

(i)            Reserved

 

(j)            Reserved

 

(k)           Reserved

 

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

 

(m)          Notification
of Servicer Defaults.  If Seller should discover that, for any
reason whatsoever, any entity responsible to Seller by contract for managing or
servicing any such Purchased Mortgage Loan has failed to perform fully Seller’s
obligations under this 

 

16

 

Agreement
or any of the obligations of such entities with respect to the Purchased
Mortgage Loans, Seller shall promptly notify Buyer.

 

(n)           Termination. 
Buyer shall have the right at any time and for any reason to immediately
terminate the Seller’s or the Servicer’s right, as applicable, to subservice
the Purchased Mortgage Loans without payment of any penalty or termination
fee.  Seller shall cooperate, or cause
the Servicer to cooperate, in transferring the servicing of the Purchased
Mortgage Loans to a successor subservicer appointed by Buyer in its sole and
good faith discretion.

 

(o)           Buyer’s
Right to Service.  Buyer or its designee, at the Buyer’s sole
discretion, shall be entitled to service some or all of the Purchased Mortgage
Loans, including, without limitation, receiving and collecting all sums payable
in respect of same.  Upon Buyer’s
exercising of a valid right to service under this Agreement, and written notice
to Seller or the Servicer, as applicable, that Buyer desires to service some or
all of the Purchased Mortgage Loans, Seller shall promptly cooperate, or shall
cause the Servicer to promptly cooperate, with all instructions of Buyer and do
or accomplish all acts or things necessary to effect the transfer of the
servicing to Buyer or its designee, at Seller’s sole expense.  Upon Buyer’s or its designee’s servicing of
the Purchased Mortgage Loans, (i) Buyer may, in its own name or in the
name of Seller or otherwise, demand, sue for, collect or receive any money or
property at any time payable or receivable on account of or in exchange for the
Purchased Mortgage Loan(s), but shall be under no obligation to do so; (ii) Seller
shall, if Buyer so requests, pay to Buyer all amounts received by Seller upon
or in respect of the Purchased Mortgage Loan(s) or other Purchased Assets,
advising Buyer as to the source of such funds; and (iii) all amounts so
received and collected by Buyer shall be held by it as part of the Purchased
Assets or applied against any outstanding Repurchase Price owed Buyer.

 

6.3           Margin
Account Maintenance.

 

(a)           Asset
Value.  Buyer shall have the right to determine the
Asset Value of each Purchased Mortgage Loan on a daily basis.

 

(b)           Margin
Deficit and Margin Call.  If Buyer shall determine at any time that (A) the
Asset Value of a Purchased Mortgage Loan subject to a Transaction is less than
the related Repurchase Price or (B) the aggregate Asset Value of all
Purchased Mortgage Loans for all such Transactions is less than the aggregate
Repurchase Price (in either case, a “Margin Deficit”),
then Buyer may, at its sole option and by notice to Seller (as such notice is
more particularly set forth below, a “Margin
Call”), require Seller to either:

 

(i)            transfer
to Buyer or its designee cash or eligible Mortgage Loans approved by Buyer in
its sole and good faith discretion (“Additional
Purchased Mortgage Loans”) so that the
individual Asset Value of the Purchased Mortgage Loan or the aggregate Asset
Value of the Purchased Mortgage Loans, including any such cash or Additional
Purchased Mortgage Loans, will not be less than the individual Repurchase Price
for the Transaction or the aggregate Repurchase Price for all Transactions by
more than fifty thousand ($50,000) dollars; or

 

(ii)           pay
one or more Repurchase Prices in an amount sufficient to reduce the outstanding
Repurchase Prices to an amount at least fifty thousand dollars ($50,000)
greater than the Asset Value of the Purchased Mortgage Loan(s).

 

If
Buyer delivers a Margin Call to Seller on or prior to 12:00 p.m. (Pacific
time) on any Business Day, then Seller shall transfer cash or Additional
Purchased Mortgage Loans to Buyer no later than 5:00 p.m. (Pacific time)
the next Business Day.  If Buyer delivers
a Margin Call to Seller after 12:00 p.m. (Pacific time) on any Business
Day, Seller shall be 

 

17

 

required
to transfer cash or Additional Purchased Mortgage Loans no later than 12:00 p.m.
(Pacific time) on the 2nd subsequent Business Day.  Notice of a Margin Call may be provided by
Buyer to Seller electronically or in writing, such as via electronic mail or
posting such notice on Buyer’s customer website(s).

 

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

 

(d)           Over/Under
Account.  Buyer may, in its sole and good faith
discretion, withdraw from the Over/Under Account amounts equal to any Margin
Deficit which is not otherwise satisfied by Seller within the time frames
provided in this Section 6.3.

 

(e)           Credit
to Repurchase Price.  Any cash transferred to Buyer pursuant to
this Section 6.3 shall be credited to the Repurchase Price of the
related Transaction(s).

 

6.4           Custody
of Mortgage Loan Documents.

 

(a)           Custodial
Arrangements.  Buyer may appoint any Person to act as the
Custodian to hold possession of the Mortgage Loan Documents (or a portion
thereof) and to take actions at the direction of Buyer.  Seller hereby consents to any and all such
appointments and agrees to deliver the Mortgage Loan Documents to the Custodian
upon the direction of Buyer.  Seller
further agrees that (i) the Custodian shall be exclusively the agent,
bailee and/or custodian of Buyer; (ii) receipt of the Mortgage Loan
Documents by the Custodian shall be constructive receipt by Buyer of the
Mortgage Loan Documents; (iii) Seller shall not have and shall not attempt
to exercise any degree of control over the Custodian or any Mortgage Loan
Document held by the Custodian.

 

(b)           Temporary
Withdrawal of Mortgage Loan Documents for Correction. 
Buyer may, in its sole and good faith discretion, permit Seller to
withdraw, for a period not to exceed ten (10) Business Days, specified
Mortgage Loan Documents for the purpose of correcting or completing such documents;
provided, however, that unless otherwise agreed to by Buyer in writing, in no
event shall the outstanding balance of the Transactions related to such
Mortgage Loan Documents exceed five percent (5%) of the Aggregate Transaction
Limit.  Notwithstanding the foregoing,
Buyer shall be deemed to be in possession of any Mortgage Loan Documents
released pursuant to this Section 6.4(b), and the interest of Buyer
in the related Purchased Mortgage Loan shall continued unimpaired until the
Mortgage Loan Documents are returned to, or the proceeds thereof are received
by, Buyer.

 

(c)           Delivery
of Mortgage Loan Documents to Approved Investors. 
Provided that no Event of Default has occurred and is continuing, upon
the written request of Seller, Buyer may, at its option and in its sole and
good faith discretion, deliver to an Approved Investor set forth in the related
Purchase Commitment, or its custodian, the Mortgage Loan Documents relating to
a specified Purchased Mortgage Loan.  All
such Purchased Mortgage Loans and the related Mortgage Loan Documents shall at
all times be covered by one or more Bailee Agreements, and Buyer or its
designee will not release Mortgage Loan Documents to an Approved Investor
unless Buyer or its Custodian has received a signed Bailee Agreement from the
Approved Investor.  Notwithstanding the
foregoing, Buyer shall be deemed to be in possession of any Mortgage Loan
Documents released pursuant to this Section 6.4(c), and the
interest of Buyer in the related Purchased Mortgage Loan shall continue
unimpaired until the Mortgage Loan Documents are returned to, or proceeds
thereof are received by, Buyer.  If the
Approved Investor does not purchase a Purchased Mortgage Loan as contemplated
by the related Purchase Commitment, Seller shall, upon the request of Buyer,
assist Buyer in the recovery of any Mortgage Loan Documents not returned by the
Approved Investor to Buyer.

 

18

 

(d)           Delivery
of Mortgage Loan Documents Relating to Mortgage-Backed Securities.  Upon
the written request of Seller, Buyer may, at its option and in its sole and
good faith discretion, deliver to the certifying custodian the Mortgage Loan
Documents relating to those Purchased Mortgage Loans that will be pooled to
support a Mortgage-Backed Security.  All
such Purchased Mortgage Loans and the related Mortgage Loan Documents shall at
all times be covered by a Bailee Agreement, and Buyer or its designee will not
release Mortgage Loan Documents to a certifying custodian unless Buyer or its
designee has received a signed tri-party custodial agreement from such
custodian, in a form acceptable to Buyer. 
Buyer shall have no obligation to release any Mortgage Loan Documents to
any certifying custodian that will not sign a custodial agreement acceptable to
Buyer.  Notwithstanding the foregoing,
Buyer shall be deemed to be in possession of any Mortgage Loan Documents
released pursuant to this Section 6.4(d), and the interest of Buyer
in the related Purchased Mortgage Loan shall continue unimpaired until the
Mortgage Loan Documents are returned to, or proceeds thereof are received by,
Buyer.  Seller shall pay for all costs of
the certifying custodian and use its best efforts to ensure that the issuer
delivers the Mortgage-Backed Securities to the certifying custodian.

 

6.5           Release
of Mortgage Loan Documents.  Provided that no Event of Default has
occurred and is continuing, Seller may repurchase a Purchased Mortgage Loan by
either:

 

(a)           paying,
or causing an Approved Investor to pay, to Buyer, subject to Sections 4.6
and 4.7 above, the Repurchase Price; or

 

(b)           transferring
to Buyer additional Mortgage Loan(s) satisfactory to Buyer and/or cash, in
aggregate amounts sufficient to cover the amount by which the aggregate amount
of Transactions then outstanding hereunder (plus accrued interest and accrued
fees with respect thereto) exceeds the Asset Value of the existing Purchased
Mortgage Loan(s), excluding the Purchased Mortgage Loan(s) to be released.

 

Upon
receipt of the applicable amount, as set forth above, Buyer shall deliver or
shall cause the Custodian to deliver the related Mortgage Loan Documents to
Seller or Seller’s designee, if such documents have not already been delivered
pursuant to a Bailee Agreement.  If such
release 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 6.3(b).  Buyer shall have no obligation to release a
repurchased Purchased Mortgage Loan or terminate its security interest in such
Purchased Mortgage Loan until such Margin Call is satisfied.

 

6.6           Sales
Transactions; Repurchase Transactions.  For the avoidance of doubt,
Buyer and Seller confirm that the Transactions contemplated by this Agreement
are intended to be sales transactions and absolute assignments of the Purchased
Mortgage Loans by Seller to Buyer, and not borrowings secured by the Purchased
Mortgage Loans.  Title to all Purchased
Mortgage Loans and related Purchased Assets shall pass to Buyer upon payment of
the Purchase Price.  Accordingly,
beginning on the Purchase Date and prior to the Repurchase Date, Buyer may in
its sole discretion and without notice to Seller engage in repurchase transactions
with respect to any or all of the Purchased Mortgage Loans or otherwise pledge,
hypothecate, assign, transfer or convey any or all of the Purchased Mortgage
Loans (such transactions, “Repurchase Transactions”),
provided, however, that to the extent Buyer engages in any Repurchase
Transactions, it shall have reacquired title to the Purchased Mortgage Loans
prior to the Repurchase Date.  Seller
shall not be responsible for any additional obligations, costs or fees in
connection with such Repurchase Transactions. 
Seller shall not take any action inconsistent with Buyer’s ownership of
a Purchased Mortgage Loan and shall not claim any legal, beneficial or other
interest in such a Purchased Mortgage Loan other than the limited right and
obligations to provide servicing of such Purchased Mortgage Loans where Buyer
designates Seller as servicer as provided in Section 6.2.

 

19

 

ARTICLE 7

CONDITIONS PRECEDENT

 

7.1           Initial
Transaction.  As conditions precedent to Buyer considering
whether to enter into the initial Transaction hereunder:

 

(a)           Seller
shall have delivered to Buyer, in form and substance satisfactory to Buyer:

 

(i)            this Agreement signed by Seller;

 

(ii)           the Transactions Terms Letter signed by Seller;

 

(iii)          an
Electronic Tracking Agreement signed by Seller;

 

(iv)          if
required in the Transactions Terms Letter, a Guarantee(s) signed by each
Guarantor(s);

 

(v)           a
Power of Attorney signed by Seller;

 

(vi)          a
certified copy of Seller’s articles or certificate of incorporation and bylaws
(or corresponding organizational documents if Seller is not a corporation) and,
if required by Buyer, a certificate of good standing issued by the appropriate
official in Seller’s jurisdiction of organization, dated no less recently than
one (1) month prior to the date hereof;

 

(vii)         a
certificate of Seller’s corporate secretary, substantially in the form of Exhibit C
hereto, dated as of the Effective Date, as to the incumbency and authenticity
of the signatures of the officers of Seller executing the Principal Agreements
and the resolutions of the board of directors of Seller (or its equivalent
governing body or Person), substantially in the form of Exhibit D
hereto;

 

(viii)        independently
audited financial statements of Seller (and its Subsidiaries, on a consolidated
basis) for each of the two (2) fiscal years most recently ended (if
available), containing a balance sheet and related statements of income,
stockholders’ equity and cash flows, all prepared in accordance with GAAP,
applied on a basis consistent with prior periods, and otherwise acceptable to
Buyer, together with an auditor’s opinion that is unqualified or otherwise is
consented to in writing by Buyer;

 

(ix)           if
more than one (1) year has passed since the close of the most recently
ended fiscal year, interim financial statements of Seller covering the period
from the first day of the current fiscal year to the last day of the most
recently ended month;

 

(x)            financial
statements of each of the Guarantors, if any, signed by them, dated no less
recently than three (3) months prior to the date of the initial
Transaction;

 

(xi)           Reserved;

 

(xii)          if
required by Buyer, a subordination agreement, in form and substance
satisfactory to Buyer, executed by any Person which is, as of the Effective
Date, a creditor of Seller, including each Guarantor (if required by the
Transactions Terms Letter) and each Affiliate of Seller that is a creditor of
Seller;

 

20

 

(xiii)         an
Acknowledgement of Confidentiality of Password Agreement;

 

(xiv)        the
initial Facility Fee, if applicable;

 

(xv)         a
Servicer Notice, if applicable;

 

(xvi)        if so
requested by Buyer, the Control Agreement in a form reasonably satisfactory to
Buyer;

 

(xvii)       if
required, a Servicing Agreement signed by the Servicer and Seller;

 

(xviii)      a copy of
Seller’s underwriting guidelines for Mortgage Loans; and

 

(xix)         such
other documents as Buyer or its counsel may reasonably request.

 

(b)           Buyer
shall have determined that it has received satisfactory evidence that the
appropriate Uniform Commercial Code Financial Statements (UCC-1) and/or such
other instruments as may be necessary  in
order to create in favor of Buyer, a perfected first-priority security
interest  in the Purchased Mortgage Loans
and related Purchased Assets should any of the Transactions be deemed to be
loans, and same shall have been duly executed and appropriately filed or
recorded in each office of each jurisdiction in which such filings and
recordations are required to perfect such first-priority security interest.

 

7.2           All
Transactions.  As conditions precedent to Buyer considering
whether to enter into any Transaction hereunder, including the initial
Transaction:

 

(a)           Seller
shall have delivered to Buyer, in form and substance satisfactory to Buyer and
not later than the Transaction Request Deadline:

 

(i)            an
Asset Data Record for the Purchased Mortgage Loan, which Asset Data Record may
be an individual record or part of a group report and shall be authenticated by
Seller with the PIN or the handwritten signature of an authorized officer of
Seller;

 

(ii)           the
Mortgage Loan Documents relating to the Purchased Mortgage Loan, unless such
Purchased Mortgage Loan is a Wet Mortgage Loan;

 

(iii)          a
copy of a Purchase Commitment for the related Purchased Mortgage Loan, unless
the Transactions Terms Letter states otherwise;

 

(iv)          written
evidence that all Transaction Requirements have been satisfied; and

 

(v)           such
other documents pertaining to the Transaction as Buyer may reasonably request,
from time to time.

 

(b)           an
amount equal to the Haircut plus the minimum required balance, as set forth in Section 3.5(a),
shall be on deposit in the Over/Under Account;

 

(c)           Seller
shall have paid all Facility Fees and Unused Facility Fees that are due;

 

(d)           Seller
shall have designated an Approved Payee, if applicable, to whom such funds
shall be delivered;

 

(e)           the
representations and warranties of Seller set forth in Article 8
hereof shall be true and correct in all material respects as if made on and as
of the date of each Transaction.  At

 

21

 

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
same;

 

(f)                                    if required by Buyer, Seller and each
Guarantor shall have performed all agreements to be performed by them hereunder
and under the Guarantee, respectively, and after giving effect to the requested
Transaction, there shall exist no Event of Default or Potential Default
hereunder;

 

(g)                                 no Potential Default, Event of Default or
a Material and Adverse Change shall have occurred and be continuing; and

 

(h)                                 Seller shall have deposited all amounts
required under Section 6.2(g) into the Custodial Account.

 

For the avoidance of
doubt, notwithstanding that foregoing conditions may be satisfied with respect
to any Transaction request, Buyer shall not no obligation to enter into any
Transaction and whether the Buyer enters into any Transaction shall be at the
sole and good faith discretion of Buyer.

 

7.3                               Intercreditor Agreements. 
If required by Buyer, within sixty (60) calendar days following the
Effective Date, Seller shall deliver to Buyer an Intercreditor Agreement signed
by each creditor that provides warehouse lines of credit, repurchase facilities
or similar mortgage finance arrangements to Seller.  By way of example but not limitation, if
Seller has a mortgage financing agreement with a syndication of creditors or if
an Affiliate of Seller is providing Seller a warehouse line of credit or
mortgage financing, Buyer may require that such creditors execute an
Intercreditor Agreement.  If Seller fails
to provide Buyer with any required Intercreditor Agreement within the time
frame stated herein, Buyer may, in its sole and good faith discretion,
determine that such failure adversely affects the creditworthiness of Seller
and may modify the terms and conditions under which it will continue to enter
into Transactions with Seller.  Buyer
shall not be liable to Seller for any costs, losses or damages arising from or
relating to any changes made by Buyer to the terms and conditions under which
it will continue to enter into Transactions with Seller. Further, Buyer agrees
that it shall deliver to Seller a signed Intercreditor Agreement substantially
in a form similar to Exhibit L, as requested by Seller if required by any
other creditor that provides Seller warehouse lines of credit, repurchase
facilities or similar mortgage finance arrangements.

 

7.4                               Satisfaction of Conditions. 
The entering into of any Transaction prior to or without the fulfillment
by Seller of all the conditions precedent thereto, whether or not known to
Buyer, shall not constitute a waiver by Buyer of the requirements that all
conditions, including the non-performed conditions, shall be required to be
satisfied with respect to all Transactions. 
All conditions precedent hereunder are imposed solely and exclusively
for the benefit of Buyer and may be freely waived or modified in whole or in
part by Buyer.  Any waiver or
modification asserted by Seller to have been agreed by Buyer must be in writing.  Buyer shall not be liable to Seller for any
costs, losses or damages arising from Buyer’s determination that Seller has not
satisfactorily complied with any applicable condition precedent.

 

22

 

ARTICLE 8

REPRESENTATIONS AND WARRANTIES

 

8.1                               Representations and
Warranties Concerning Seller.  Seller
represents and warrants to and covenants with Buyer that the representations
and warranties on Exhibit L hereto are true and correct as of the
Effective Date through and until the date on which all obligations of Seller
under this Agreement are fully satisfied.

 

8.2                               Representations and Warranties Concerning Purchased Assets. Seller
represents and warrants to and covenants with Buyer that the representations
and warranties contained on Exhibit L hereto are true and correct
with respect to each Purchased Mortgage Loan as of the related Purchase Date
through and until the date on which such Purchased Mortgage Loan is repurchased
by Seller.

 

8.3                               Continuing Representations and Warranties.  By submitting a Asset Data Record hereunder,
Seller shall be deemed to have represented and warranted the truthfulness and
completeness of the representations and warranties set forth in Exhibit L
hereto.

 

8.4                               Amendment of Representations and Warranties.  From time to time as determined necessary by
Buyer, Buyer may amend the representations and warranties set forth in Exhibit L
hereto.  Any such amendment shall not
apply to Transactions entered into prior to the effective date of the amendment
and in no event shall the amendment apply to any Transaction on a retroactive
basis.

 

ARTICLE 9

AFFIRMATIVE COVENANTS

 

Seller
hereby covenants and agrees with Buyer that during the term of this Agreement
and for so long as there remain any obligations of Seller to be paid or
performed under the Principal Agreements:

 

9.1                               Financial Statements and Other Reports.

 

(a)                                  Interim
Statements. Seller shall deliver to Buyer financial
statements of Seller, including statements of income and changes in shareholders’
equity for the period from the beginning of such fiscal year to the end of such
month or quarter, within the time frame required in the Transactions Terms
Letter, and the related balance sheet as of the end of such month or quarter,
within the time frame required in the Transactions Terms Letter, all in
reasonable detail and certified by an officer of Seller, subject, however, to
year-end audit adjustments;

 

(b)                                 Annual
Statements. Seller shall deliver to Buyer, within
the time frame required in the Transactions Terms Letter, audited financial
statements of Seller, including statements of income and changes in
shareholders’ equity for such fiscal year and the related balance sheet as at
the end of such fiscal year, all in reasonable detail and accompanied by an
opinion of a certified public accounting firm reasonably satisfactory to Buyer
including a management representation letter signed by the chief financial
officer of Seller stating that the financial statements fairly present the
financial condition and results of operations of Seller as of the end of, and
for, such year;

 

(c)                                  Officer’s
Certificate. 
Together with the financial statements required to be delivered pursuant
to Sections 9.1(a) and (b), Seller shall deliver to Buyer an
officer’s certificate substantially in a form to be provided by Buyer;

 

(d)                                 Annual
Statements of Guarantor. 
If required by Buyer, Seller shall deliver to Buyer updated financial
statements of each Guarantor, signed by each of them, within the time frame
required in the Transactions Terms Letter, and, if no time frame is specified,
within ninety (90) days following the end of each calendar year;

 

23

 

(e)                                  Hedging
Reports.  Upon request,
Seller shall deliver to Buyer, or cause to be delivered to Buyer, a
reconciliation report, in a form reasonably satisfactory to Buyer, including,
without limitation, a report of all outstanding Transactions and their related
Purchase Commitments, availability under unused Purchase Commitments and all
amounts outstanding and available under other warehouse lines of credit,
repurchase agreements and similar credit facilities; and

 

(f)                                    Reports and
Information Regarding Purchased Mortgage Loans.  Seller shall deliver to Buyer, with
reasonable promptness, copies of any reports related to the Purchased Mortgage
Loans and any other information in Seller’s possession related to the Purchased
Mortgage Loans as Buyer, in its sole and good faith discretion, may reasonably
request.

 

(g)                                 Other
Reports. As may be reasonably requested by Buyer from time to time,
Seller shall deliver to Buyer, within thirty (30) days of filing or receipt (i) copies
of all regular or periodic financial or other reports, if any, that Seller
files with any governmental, regulatory or other agency and (ii) copies of
all audits, examinations and reports concerning the operations of Seller from
any Approved Investor, Insurer or licensing authority. Seller shall also
deliver to Buyer, with reasonable promptness, such further information
reasonably related to the business, operations, properties or financial
condition of Seller, in such detail and at such times as Buyer, in its sole and
good faith discretion, may request. Seller understands and agrees that all
reports and information provided to Buyer by or relating to Seller may be
disclosed to Buyer’s Affiliates.

 

9.2                               Inspection of Properties and Books.  As required by applicable law and prudent
mortgage banking practices, Seller shall keep accurate and complete records of
the Purchased Mortgage Loans.  At no cost
to Buyer (except in the case where Buyer desires information from third
parties), Seller shall permit authorized representatives of Buyer to discuss
the business, operations, assets and financial condition of Seller with its
officers and employees and to examine its books of account and make copies
and/or extracts thereof, upon reasonable notice to Seller at Seller’s place of
business during normal business hours. Further, Seller will provide its
accountants with a copy of this Agreement promptly after the execution hereof
and will instruct its accountants to answer, at no cost to Buyer, any and all
questions that any authorized representative of Buyer may address to them in
reference to the financial condition or affairs of Seller.  Seller may have its representatives in
attendance at any meetings between the officers or other representatives of
Buyer and Seller’s accountants held in accordance with this authorization.

 

9.3                               Notice. 
Seller shall give Buyer prompt written notice, in reasonable detail, of:

 

(a)                                  any and all
material changes to the information set forth in the Application;

 

(b)                                 any action,
suit or proceeding instituted by or against Seller in any federal or state
court or before any commission or other regulatory body (federal, state or
local, foreign or domestic and if permitted by such body), or any such action,
suit or proceeding threatened in writing against Seller, in any case, if such
action, suit or proceeding, or any such action, suit or proceeding threatened
against Seller, involves a potential liability, on an individual or aggregate
basis, that, if adversely determined, may reasonably be expected to result in
any material and adverse change in the business, operations, assets, licenses,
qualifications or financial condition of Seller.

 

(c)                                  the filing,
recording or assessment of any valid federal, state or local tax lien against
it, or any of its assets;

 

(d)                                 the
occurrence of any Event of Default;

 

24

 

(e)                                  the actual
or threatened suspension, revocation or termination of Seller’s licensing or
eligibility, in any respect, as an approved, licensed lender, seller, mortgagee
or servicer that, if adversely determined, may reasonably be expected to result
in any material and adverse change in the business, operations, assets,
licenses, qualifications or financial condition of Seller;

 

(f)                                    the
suspension, revocation or termination of any existing and material credit or
investor relationship to facilitate the sale and/or origination of residential
mortgage loans if such suspension revocation or termination is made by any
party other than Seller;

 

(g)                                 any
demand(s), whether on an individual or aggregate basis, by an Approved Investor
or Insurer for (i) the repurchase of a mortgage loan(s) that, if
adversely determined, may reasonably be expected to result in any material and
adverse change in the business, operations, assets, licenses, qualifications or
financial condition of Seller;

 

(h)                                 any
potential or existing Purchased Mortgage Loan where a director, officer,
shareholder, member, partner or owner of Seller is the Mortgagor or guarantor
or where the related Mortgaged Property is being sold by a director, officer,
shareholder, member, partner or owner of Seller;

 

(i)                                     any
Purchased Mortgage Loan ceases to be an eligible Purchased Asset for the
security of the Transactions;

 

(j)                                     any Approved
Investor that threatens to set-off amounts owed by Seller to such Approved
Investor against the purchase proceeds owed by the Approved Investor to Seller
for the Purchased Mortgage Loans (excluding amounts owed by Seller to the
Approved Investor which are directly related to the Purchase Mortgage Loans and
which are allowed to be set-off by the Approved Investor pursuant to the Bailee
Agreement);

 

(k)                                  any change
in the Executive Management of Seller;

 

(l)                                     any other
action, event or condition of any nature that could be reasonably expected to
lead to or result in a material adverse effect on the business, operations,
assets or financial condition of Seller or that, without notice or lapse of
time or both, would constitute a default under any agreement, instrument or
indenture to which Seller is a party or to which Seller, its properties or
assets may be subject; and

 

(m)                               any (i) change
to the location of its principal place of business from that specified in Section 8.1(t),
(ii) change in the name, identity or corporate structure (or the
equivalent) or change in the location where Seller maintains its records with
respect to the Purchased Assets, or (iii) reincorporation or
reorganization of Seller under the laws of another jurisdiction.

 

9.4                               Additional Financing. 
If Seller intends to enter into any financing or lending arrangements
such as or similar to warehouse lines of credit or repurchase arrangements,
Seller shall notify Buyer not fewer than fifteen (15) Business Days prior to
the execution of such arrangement.

 

9.5                               Servicing of Mortgage Loans.  Subject to Section 6.2 above,
Seller shall subservice all Purchased Mortgage Loans at Seller’s expense and
without charge of any kind to Buyer. 
Seller may delegate its obligations hereunder to subservice the
Purchased Mortgage Loans (subject to Section 6.2) to an independent
servicer provided that such independent subservicer and the related Servicing
Agreement has been approved by Buyer and such independent subservicer has
executed a Servicing Agreement with Buyer. 
The failure of Seller to obtain the prior approval of Buyer regarding
the delegation of its subservicing obligations to an independent subservicer
and/or the failure of the independent subservicer to execute and return to
Buyer a Servicing Agreement shall be considered an Event of Default
hereunder.  In any event, Seller or its 

 

25

 

delegate
shall subservice such Purchased Mortgage Loans with the degree of care and in
accordance with the subservicing standards generally prevailing in the
industry, including those required by Fannie Mae, Freddie Mac and Ginnie Mae.

 

9.6                               Evidence of Purchased Assets.  Seller shall indicate on its computer records
that each Purchased Mortgage Loan has been included in the Purchased Assets
and, at the request of Buyer, place on each of its written records pertaining
to the Purchased Mortgage Loans a legend, in form and content satisfactory to
Buyer, indicating that such Purchased Mortgage Loan has been sold to Buyer.

 

9.7                               Protection of Purchased
Mortgage Loans.  Seller shall allow Buyer (a) to inspect
any Mortgaged Property relating to a Purchased Mortgage Loan; (b) to
appear in or intervene in any proceeding or matter affecting any Purchased
Mortgage Loan or other Purchased Assets or the value thereof; (c) to
initiate, commence, appear in and defend any foreclosure, action, bankruptcy or
proceeding which could adversely affect Buyer’s ownership or security of the
Purchased Assets or the value thereof, or the rights and powers of Buyer; (d) to
contest by litigation or otherwise any lien asserted against the Purchased
Mortgage Loans or other Purchased Assets or against the related Mortgaged
Property, the improvements, or the personal property identified therein; and/or
(e) to make payments on account of such encumbrances, charges, or liens
and to service any Purchased Mortgage Loan and take any action it may deem
appropriate to collect any Purchased Assets or any part thereof or to enforce
any rights with respect thereto.  All
reasonable costs and expenses, including reasonable attorneys’ fees (including,
but not limited to, those incurred on appeal), that Buyer may incur with
respect to any of the foregoing and any expenditures it may make, as necessary,
to protect or preserve the Purchased Assets or the rights of Buyer, shall be
for the account of Seller.  Seller shall
repay the same to Buyer upon demand with interest, at the Default Rate, from
the date any such expenditure shall have been made until it is repaid.

 

9.8                               Further Assurances. Seller shall, at its expense, promptly
procure, execute and deliver to Buyer, upon request, all such other and further
documents, agreements and instruments in compliance with or accomplishment of
the covenants and agreements of Seller in this Agreement.

 

9.9                               Fidelity Bonds and Insurance. Seller
shall maintain an insurance policy, in a form and substance satisfactory to
Buyer, covering against loss or damage relating to or resulting from any breach
of fidelity by Seller, or any officer, director, employee or agent of Seller,
any loss or destruction of documents (whether written or electronic), fraud,
theft, misappropriation and errors and omissions. This policy shall name Buyer
as insured and loss payee and provide coverage in an amount equal to the
greater of one million dollars ($1,000,000) or that required by Fannie Mae’s
Selling Guide, whichever is greater. The deductible on such insurance policy
shall not exceed one hundred fifty thousand dollars ($150,000).  Following approval by Buyer of a specific
insurance policy, Seller shall not amend, cancel, suspend or otherwise change
such policy without the prior written consent of Buyer.

 

9.10                         Wet Mortgage Loans. In connection with the funding of each
Wet Mortgage Loan, Seller shall provide to the applicable Closing Agent, in
addition to the Irrevocable Closing Instructions, final closing instructions,
which shall, without limitation, make reference to the Irrevocable Closing
Instructions and stipulate the title insurance company that will be issuing the
applicable title insurance policy and Closing Protection Letter; provided,
however, that Seller shall not use these final closing instructions to modify
or attempt to modify the terms of the Irrevocable Closing Instructions unless
such modifications are agreed to in advance and in writing by Buyer.  Seller shall not otherwise modify or attempt
to modify the terms of the Irrevocable Closing Instructions without Buyer’s
prior written approval.  If the Closing
Agent is not a title insurance company, Seller shall also (a) confirm that
the closing is covered by a blanket Closing Protection Letter issued to Buyer
by the title insurance company stipulated in the final closing instructions; or
(b) provide to Buyer (1) a Closing Protection Letter covering the
closing issued to Seller by the title insurance company stipulated in the final
closing instructions and (2) an Assignment of Closing 

 

26

 

Protection
Letter relating to the above referenced Closing Protection Letter naming Buyer
as the assignee.

 

ARTICLE
10

NEGATIVE
COVENANTS

 

Seller
hereby covenants and agrees with Buyer that during the term of this Agreement
and for so long as there remain any obligations of Seller to be paid or
performed under this Agreement, Seller shall comply with the following:

 

10.1                         Liabilities and Advances. 
Seller shall not, either directly or indirectly, without the prior
written consent of Buyer, lend money or credit or make any advances to any
Person or acquire any stock, obligations or securities of, or any interest in,
or make any capital contribution to any other Person in an amount greater than
ten percent (10%) of Seller’s Tangible Net Worth, except for Mortgage Loans or
other loans extended in the ordinary course of Seller’s mortgage banking
business.  Seller shall not, either
directly or indirectly, without the prior written consent of Buyer, assume,
guarantee, endorse, or otherwise become liable for the obligation of any Person
except by endorsement of negotiable instruments for deposit or collection in
the ordinary course of Seller’s mortgage banking business.

 

10.2                         Debt and Subordinated Debt. 
Seller shall not, either directly or indirectly, without the prior
written consent of Buyer, pay any Debt or Subordinated Debt if such payment
shall cause a Potential Default or Event of Default.  Further, if a Potential Default or an Event
of Default shall have occurred and for as long as such is occurring, Seller
shall not, either directly or indirectly, without the prior written consent of
Buyer, make any payment of any kind thereafter on such Debt or Subordinated
Debt until all obligations of Seller hereunder have been paid and performed in
full.

 

10.3                         Loss of Eligibility. 
Seller shall not, either directly or indirectly, without the prior
written consent of Buyer, take, or fail to take, any action that would cause
Seller to lose all or any part of its status as an eligible lender, seller,
mortgagee or servicer or willfully terminate its status as an eligible lender,
seller, mortgagee or servicer without forty-five (45) days prior written notice
to Buyer.

 

10.4                         Financial Covenants and
Ratios.  Seller shall at all times comply with any
financial covenants and/or financial ratios set forth in the Transactions Terms
Letter.

 

10.5                         Loans to Officers,
Employees and Shareholders.  Except those
made in the normal course of Seller’s mortgage banking business, Seller shall
not, either directly or indirectly, without the prior written consent of Buyer,
make any personal loans or advances to any officers, employees, shareholders,
members, partners or owners of Seller in an aggregate amount exceeding ten
percent (10%) of Seller’s Tangible Net Worth; provided, however, that Seller
shall be entitled to make a personal loan or advance to a majority shareholder,
member, partner or owner of Seller without the prior written consent of Buyer
provided that (i) a Potential Default or an Event of Default is not
existing and will not occur as a result thereof, (ii) such Person is also
a Guarantor and (iii) such loan or advance is clearly reflected on Seller’s
financial reports provided to Buyer.

 

10.6                         Liens on Purchased
Mortgage Loans and Purchased Assets; Liens on Other Assets. Seller acknowledges that with each
Transaction it shall have sold the Purchased Mortgage Loans and related
Purchased Assets and shall have granted to Buyer a first priority security
interest in such assets in the event such Transaction is deemed a loan.  Accordingly, Seller shall not create, incur,
assume or suffer to exist any lien upon the Purchased Mortgage Loans or the
Purchased Assets, other than as granted to Buyer herein.  Further, Seller shall not, or create, incur,
assume or suffer any lien upon any of its other property and assets without the
prior written consent of Buyer; provided, however, that Seller may, without the
prior written consent of Buyer, and provided that an Event of Default is not
existing or will not occur as a result thereof, incur, assume or suffer to
exist liens on its other property and assets for the following purposes (a) liens
for 

 

27

 

taxes not yet due or
taxes being contested in good faith discretion and by appropriate proceedings
for which adequate reserves have been established; (b) liens in favor of
Fannie Mae, Ginnie Mae or Freddie Mac on the right of Seller to service
Mortgage Loans sold to the Agencies; or (c) liens incurred by Seller in the
ordinary course of Seller’s mortgage banking business.

 

10.7                         Transactions with
Affiliates.  Seller shall not, directly or indirectly,
enter into any transaction with its Affiliates, if any, without the prior
written consent of Buyer, including, without limitation, (a) making any
loan, advance, extension of credit or capital contribution to an Affiliate, (b) transferring,
selling, pledging, assigning or otherwise disposing of any of its assets to or
on behalf of an Affiliate, (c) purchasing or acquiring assets from an
Affiliate, or (d) paying management fees to or on behalf of an Affiliate;
provided, however, that Seller may, without the prior written consent of Buyer,
and provided that a Potential Default or an Event of Default is not existing
and will not occur as a result thereof, engage in a transaction(s) with
any or all of its Affiliates if (i) such transaction is in the ordinary
course of Seller’s mortgage banking business, (ii) such transaction is
either (A) upon fair and reasonable terms no less favorable to Seller had
Seller entered into a comparable arm length’s transaction with a Person which
is not an Affiliate or (B) otherwise commercially reasonable given the
circumstances, and (iii) such transaction, whether individually or in
combination with other such transactions, does not decrease Seller’s Tangible
Net Worth by ten percent (10%) or more during any calendar year.  Notwithstanding the foregoing, Seller shall
be entitled to pay a commercially reasonable marketing fee (including without
limitation Parent’s standard transmit fee, computerized loan origination fee or
similar fees) to Seller’s parent company for mortgage loan leads, and Seller’s
parent company shall be entitled to receive such payments, without the prior
written approval of Buyer.

 

10.8                         Consolidation, Merger,
Sale of Assets and Change of Control.  Seller shall
not (a) wind up, liquidate or dissolve its affairs; (b) enter into
any transaction of merger or consolidation with any Person; (c) convey,
sell, lease or otherwise dispose of, or agree to do any of the foregoing at any
future time, all or any part of its property or assets, or (d) allow a
Change of Control to occur with respect to Seller, without prior written
consent of Buyer; provided, however, that Seller may, without the prior written
consent of Buyer, and provided that a Potential Default or an Event of Default
is not existing and will not occur as a result thereof: (i) merge or
consolidate with any Person if Seller is the surviving and controlling entity
and (ii) convey, sell or dispose of its property or assets in the ordinary
course of Seller’s mortgage banking business, including without limitation
equipment that is uneconomic or obsolete and acquire Mortgage Loans for resale
and sell Mortgage Loans; provided however, in no event shall the conveyance,
sale, lease or disposition of ten percent (10%) or more of the Seller’s
property or assets be considered in the ordinary course of business.

 

10.9                         Payment of Dividends and
Retirement of Stock.  The Payment of Dividends and Retirement
of Stock covenant shall be as set forth in the Transactions Terms Letter.”

 

10.10                   Purchased Assets.  Seller shall
not (a) except as expressly provided for in this Agreement, attempt to
resell, reassign, retransfer or otherwise dispose of, or grant any option with
respect to, or pledge or otherwise encumber any of the Purchased Mortgage Loans
or other Purchased Assets or any interest therein, or without prior written
consent of Buyer (b) amend or modify, or waive any of the terms and
conditions of (unless required by law), or settle or compromise any claim in
respect of, any Purchased Mortgage Loan.

 

10.11                   Secondary Marketing, Underwriting, Third Party Origination and Interest
Rate Risk Management Practices. 
Seller shall not, without the prior written approval of Buyer, change in
any material respect any secondary marketing, underwriting, third party
origination and interest rate risk management practices of Seller that exist as
of the Effective Date.  By way of example
but not limitation, any change to Seller’s hedging strategy, any change to add
a new line of Mortgage Loan products not contemplated by this Agreement, or any
change to add third party origination shall be considered material changes
subject to the prior written approval of Buyer. 
The fact that Seller may from time to time disclose to Buyer in writing
proposed changes in such 

 

28

 

practices
after the date hereof shall not be deemed Buyer’s consent to or written
approval thereof unless Buyer has indicated written approval of such
changes.  It shall be deemed an Event of
Default hereunder if Seller changes any of the foregoing practices without
having obtained such prior written approval from Buyer.

 

ARTICLE
11

DEFAULTS AND REMEDIES

 

11.1                         Events of Default. 
The occurrence of any of the following conditions or events shall be an
Event of Default:

 

(a)                                  failure of Seller to pay any amount due
under the Principal Agreements within two (2) Business Days following the
applicable due date;

 

(b)                                 a material breach or default by Seller
which remains uncured within any applicable cure period with respect to any
term of any indebtedness or of any loan agreement, note, mortgage, security
agreement, indenture, guaranty or similar agreement to which Seller is a party
or by which it is bound; for purposes of this subsection, Buyer and Seller
agree that a breach or default shall be deemed material if the effect of such
breach or default is to cause, or to permit any holder thereof to cause,
indebtedness of Seller in the aggregate amount of ten percent (10%) of Seller’s
Tangible Net Worth or more to become or be declared due prior to its stated
maturity, it being understood, however, that this does not create a minimum
threshold for materiality and the materiality of any breach or default shall
depend on the facts and circumstances related thereto;

 

(c)                                  the aggregate original Asset Value of
those Purchased Mortgage Loans that are deemed to be Noncompliant Mortgage
Loans is greater than or equal to the Type Sublimit for Noncompliant Mortgage
Loans for more than two (2) consecutive Business Days;

 

(d)                                 the aggregate original Asset Value of
those Purchased Mortgage Loans that are deemed to be Defective Mortgage Loans
is greater than or equal to ten percent (10%) of the outstanding Transactions
for more than two (2) consecutive Business Days;

 

(e)                                  any of Seller’s representations or
warranties made in Section 8.1 and/or Section 8.2 or in
any statement or certificate at any time given by Seller in writing pursuant
hereto or in connection herewith shall be false in any respect on the date as
of which made and such occurrence shall not have been remedied within three (3) Business
Days after receipt of notice from Buyer of such occurrence;

 

(f)                                    the failure of Seller to perform, comply
with or observe any term, covenant or agreement applicable to Seller as
contained in Articles 9 and 10 of this Agreement;

 

(g)                                 the failure of Seller to perform, comply
with or observe any other term, covenant or agreement applicable to Seller as
contained in this Agreement and such occurrence shall not have been remedied
within thirty (30) days after receipt of notice from Buyer of such occurrence;

 

(h)                                 an Insolvency Event shall have occurred
with respect to Seller or any Guarantor provided, however, that if there are
two or more Guarantors (if required by the Transaction Terms Letter) and an
Insolvency Event occurs with respect to one or more of them, Buyer shall
reasonably consider the aggregate net worth of those Guarantor(s) for
which an Insolvency Event has not occurred and reasonably determine whether
such aggregate net worth is sufficient for Buyer to continue to enter into
Transactions with Seller hereunder, and in the event Buyer makes such a
determination, the Insolvency Event with respect to the Guarantor(s) shall
not be considered an Event of Default under this subsection;

 

29

 

(i)                                     one or more judgments or decrees shall be
entered against Seller involving a liability of five hundred thousand
($500,000) dollars or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within sixty (60)
days after entry thereof;

 

(j)                                     any Plan maintained by Seller or any
subsidiary of Seller shall be terminated within the meaning of Title IV of
ERISA or a trustee shall be appointed by an appropriate United States District
Court to administer any Plan, or the Pension Benefit Guaranty Corporation (or
any successor thereto) shall institute proceedings to terminate any Plan or to
appoint a trustee to administer any Plan if as of the date thereof Seller’s
liability or any such subsidiary’s liability (after giving effect to the tax
consequences thereof) to the Pension Benefit Guaranty Corporation (or any successor
thereto) for unfunded guaranteed vested benefits under the Plan exceeds the
then current value of assets accumulated in such Plan by more than fifty
thousand ($50,000) dollars (or in the case of a termination involving Seller as
a “substantial employer” (as defined in Section 4001(a)(2) of ERISA)
the withdrawing employer’s proportionate share of such excess shall exceed such
amount);

 

(k)                                  Seller as employer under a Plan that is a
multiemployer plan shall have made a complete or partial withdrawal from such
Plan and the plan sponsor of such Plan shall have notified such withdrawing
employer that such employer has incurred a withdrawal liability in an annual
amount exceeding fifty thousand ($50,000) dollars;

 

(l)                                     Seller shall purport to disavow its
obligations hereunder or shall contest the validity or enforceability of the
Principal Agreements or Buyer’s interest in any Purchased Mortgage Loan or
other Purchased Assets;

 

(m)                               if applicable, the death of any Guarantor(s) who
is an individual shall occur;

 

(n)                                 a Material and Adverse Change shall
occur;

 

(o)                                 a change in any Key Personnel as set
forth in the Transactions Terms Letter shall occur, if applicable.

 

(p)                                 any Principal Agreement shall for
whatever reason (including an event of default thereunder) be terminated,
without the consent of Buyer (other than, with respect to the Custodial
Agreement, due to the resignation of the Custodian for reasons other than a
breach by Seller of the Custodial Agreement), or 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 Assets;

 

(q)                                 a breach of any of Seller’s or Servicer’s
subservicing obligations, including, but not limited to, its failure to deposit
any funds required to be deposited under Section 6.2(g) into
the Custodial Account; or

 

(r)                                    if Seller is a member of MERS, Seller’s
membership in MERS is terminated for any reason.

 

With respect to any Event
of Default which requires a determination to be made as to whether such Event
of Default has occurred, such determination shall be made in Buyer’s sole and
good faith discretion and Seller hereby agrees to be bound by and comply with
any such determination by Buyer.

 

11.2                         Remedies. 
Subject to Section 11.2 (f) below, upon the occurrence
of an Event of Default, Buyer may, by notice to Seller, declare all or any
portion of the Repurchase Prices related to the 

 

30

 

outstanding Transactions
to be immediately due and payable whereupon the same shall become immediately
due and payable, and the obligation of Buyer to enter into Transactions shall
thereupon terminate.  Further, it is
understood and agreed that upon the occurrence of an Event of Default, Seller
shall strictly comply with the negative covenants contained in Article 10
hereunder and in no event shall Seller declare and pay any dividends, incur
additional Debt or Subordinated Debt, make payments on existing Debt or
Subordinated Debt or otherwise distribute or transfer any of Seller’s property
and assets to any Person without the prior written consent of Buyer; provided,
however, that for as long as such Event of Default is occurring, Seller may
incur and pay trade Debt that is, or was, incurred in the ordinary course of
business of Seller’s mortgage banking business. 
Upon the occurrence of any Event of Default, Buyer may also:

 

(a)                                  enter the
office(s) of Seller and take possession of any of the Purchased Assets
including any records that pertain to the Purchased Assets;

 

(b)                                 communicate with and notify Mortgagors of
the Purchased Mortgage Loans and obligors under other Purchased Assets or on
any portion thereof, whether such communications and notifications are in
verbal, written or electronic form, including, without limitation,
communications and notifications that the Purchased Assets have been assigned
to Buyer and that all payments thereon are to be made directly to Buyer or its
designee; settle compromise, or release, in whole or in part, any amounts owing
on the Purchased Mortgage Loans or other Purchased Assets or any portion of the
Purchased Assets, on terms acceptable to Buyer; enforce payment and prosecute
any action or proceeding with respect to any and all Purchased Assets; and
where any Purchased Mortgage Loans or other Purchased Assets is in default,
foreclose upon and enforce security interests in, such Purchased Assets by any
available judicial procedure or without judicial process and sell property
acquired as a result of any such foreclosure;

 

(c)                                  collect payments from Mortgagors and/or
assume servicing of, or contract with a third party to subservice, any or all
Purchased Mortgage Loans requiring servicing and/or perform any obligations
required in connection with Purchase Commitments, such third party’s fees to be
paid by Seller.  In connection with
collecting payments from Mortgagors and/or assuming servicing of any or all
Purchased Mortgage Loans, Buyer may take possession of and open any mail
addressed to Seller, remove, collect and apply all payments for Seller, sign
Seller’s name to any receipts, checks, notes, agreements or other instruments
or letters or appoint an agent to exercise and perform any of these rights.  If Buyer so requests, Seller shall promptly forward to
Buyer or its designee, all further mail and all “trailing” documents, such as
title insurance policies, deeds of trust, and other documents, and all loan
payment histories, both in paper and electronic format, in each case, as same
relate to the Purchased Mortgage Loans;

 

(d)                                 proceed against Seller under this
Agreement or against any Guarantor(s) under their respective Guaranty, or
both;

 

(e)                                  pursue any
rights and/or remedies available at law or in equity against Seller or any
Guarantor(s), or both, and/or

 

(f)                                    if the Event
of Default is the occurrence of a Material and Adverse Change with respect to
general market circumstances or conditions, including, without limitation, if
any law, regulation, treaty or directive or any change therein or in the
interpretation or application thereof, or any circumstance affecting the London
interbank market or the repurchase market for mortgage loans or mortgage-backed
securities, the Repurchase Prices related to the then outstanding Transactions
shall be due and payable on their respective scheduled Repurchase Date unless
Buyer has made an additional determination that such change is severe, in which
case, Buyer may declare all or any portion of the

 

31

 

Repurchase Prices related to the then
outstanding Transactions to be immediately due and payable.

 

11.3                         Treatment of Custodial
Account.  During the existence of an Event of Default,
notwithstanding any other provision of this Agreement, Seller shall have no
right to withdraw or release any funds in the Custodial Account to itself or
for its benefit to which it is not entitled under this Agreement, nor shall it
have any right to set-off any amount owed to it by Buyer against funds held by
it for Buyer in the Custodial Account.  
During the existence of an Event of Default, Seller shall promptly remit
to or at the direction of Buyer all funds related to the Purchased Mortgage
Loans in the Custodial Account.

 

11.4                         Sale of Purchased Assets. Following an Event of Default, and
after giving Seller five (5) Business Days in which to purchase for itself
the Purchased Assets, Buyer may securitize or otherwise sell the Purchased
Assets with no obligation to reacquire title as provided in Section 6.6
and Buyer shall incur no liability as a result of such transaction.  For the avoidance of doubt, Buyer may sell
the Purchased Assets as part of a pool comprised of, all or part of, the
Purchased Assets and other mortgage loans owned by Buyer; in such instance, the
value of the Purchased Assets shall be determined on a pro rata basis.  Seller hereby waives any claims it may have
against Buyer arising by reason of the fact that the price at which the
Purchased Assets may have been sold at such private sale was less than the price
which might have been obtained at a public sale or was less than the aggregate
Repurchase Price amount of the outstanding Transactions, even if Buyer accepts
the first offer received and does not offer the Purchased Assets, or any part
thereof, to more than one offeree.

 

11.5                         No Obligation to Pursue
Remedy.
Seller waives any right to require Buyer to (a) proceed against any
Person, (b) proceed against or exhaust all or any of the Purchased Assets
or pursue its rights and remedies as against the Purchased Assets in any
particular order, or (c) pursue any other remedy in its power.  Buyer shall not be required to take any steps
necessary to preserve any rights of Seller against holders of mortgages prior
in lien to the lien of any Purchased Mortgage Loan included in the Purchased
Assets or to preserve rights against prior parties.  No failure on the part of Buyer to exercise,
and no delay in exercising, any right, power or remedy provided hereunder, at
law or in equity shall operate as a waiver thereof; nor shall any single or
partial exercise by Buyer of any right, power or remedy provided hereunder, at
law or in equity preclude any other or further exercise thereof or the exercise
of any other right, power or remedy.  The
remedies herein provided are cumulative and are not exclusive of any remedies
provided at law or in equity.

 

11.6                         Reimbursement of Costs and
Expenses.
Buyer may, but shall not be obligated to, advance any sums or do any act or
thing necessary to uphold and enforce the lien and priority of, or the security
intended to be afforded by, any Purchased Mortgage Loan, including, without
limitation, payment of delinquent taxes or assessments and insurance
premiums.  All advances, charges,
reasonable costs and expenses, including reasonable attorneys’ fees and
disbursements, incurred or paid by Buyer in exercising any right, power or
remedy conferred by this Agreement, or in the enforcement hereof, together with
interest thereon, at the Default Rate, from the time of payment until repaid,
shall become a part of the Repurchase Price.

 

11.7                         Application of Proceeds. 
The proceeds of any sale or other enforcement of Buyer’s interest in all
or any part of the Purchased Assets shall be applied by Buyer:

 

(a)                                  first, to the payment of the costs and expenses of such
sale or enforcement, including reasonable compensation to Buyer’s agents and
counsel, and all expenses, liabilities and advances made or incurred by or on
behalf of Buyer in connection therewith;

 

(b)                                 second, to the payment of any other amounts due under this
Agreement other than the aggregate Repurchase Price;

 

32

 

(c)                                  third, to the payment of the aggregate Repurchase Price;

 

(d)                                 fourth, to the payment to Seller, or to its successors or
assigns, or as a court of competent jurisdiction may direct, of any surplus
then remaining from such proceeds.  If
the proceeds of any such sale are insufficient to cover the costs and expenses
of such sale, as aforesaid, and the payment in full of the aggregate Repurchase
Price and all other amounts due hereunder, Seller shall remain liable for any
deficiency.

 

11.8                         Rights of Set-Off. 
Buyer shall have the following rights of set-off:

 

(a)                                  If Seller shall default in the payment or
performance of any of its obligations under this Agreement, Buyer shall have
the right, at any time, and from time to time, without notice, to set-off
claims and to appropriate or apply any and all deposits of money or property or
any other indebtedness at any time held or owing by Buyer to or for the credit
of the account of Seller against and on account of the obligations and
liabilities of Seller under this Agreement, irrespective of whether or not
Buyer shall have made any demand hereunder and whether or not said obligations
and liabilities shall have become due; provided, however, that the aforesaid
right to set-off shall not apply to any deposits of escrow monies being held on
behalf of the Mortgagors related to the Purchased Mortgage Loans or other third
parties.  Without limiting the generality
of the foregoing, Buyer shall be entitled to set-off claims and apply property
held by Buyer with respect to any Transaction against obligations and
liabilities owed by Seller to Buyer with respect to any other Transaction.

 

(b)                                 In addition to the rights in subsection
(a), Buyer and its Affiliates, including, without limitation, Balboa Insurance
Group, Inc., Countrywide Home Loans, Inc., Countrywide Securities
Corporation and LandSafe, Inc. (collectively, “Countrywide
Related Entities”), shall have the right to set-off and to
appropriate or apply any and all deposits of money or property or any other
indebtedness at any time held or owing by the Countrywide Related Entity to or
for the credit of the account of Seller and its Affiliates against and on
account of the obligations of Seller under any agreement(s) between Seller
and/or its Affiliates, on the one hand, and the Countrywide Related Entity, on
the other hand, irrespective of whether or not the Countrywide Related Entity
shall have made any demand hereunder and whether or not said obligations shall
have matured.  In exercising the
foregoing right to set-off, any Countrywide Related Entity shall be entitled to
withdraw funds in the Over/Under Account which are being held for or owing to
Seller to set-off against any amounts due and owing by Seller to the
Countrywide Related Entity.  If a
Countrywide Related Entity other than Buyer intends to exercise its right to
set-off in this subsection (b), such Countrywide Related Entity shall provide
Seller prior notice thereof, and upon Seller’s receipt of such notice, if the
basis for such right to set-off is Seller’s breach or default of its
obligations to the Countrywide Related Entity, Seller shall have three (3) Business
Days to cure any such breach or default in order to avoid such set-off.

 

11.9                         Reasonable Assurances. 
If, at any time during the term of the Agreement, Buyer has reason to
believe that Seller is not conducting its business in accordance with, or
otherwise is not satisfying: (i) all applicable statutes, regulations,
rules, and notices of federal, state, or local governmental agencies or
instrumentalities, all applicable requirements of Approved Investors and
Insurers and prudent industry standards or (ii) all applicable
requirements of Buyer, as set forth in this Agreement, then, Buyer shall have
the right to demand, pursuant to notice from Buyer to Seller specifying with
particularity the alleged act, error or omission in question, reasonable
assurances from Seller that such a belief is in fact unfounded, and any failure
of Seller to provide to Buyer such reasonable assurances in form and substance
reasonably satisfactory to Buyer, within the time frame specified in such
notice, shall itself constitute an Event of Default hereunder, without a
further cure period.  Seller hereby
authorizes Buyer to take such actions as may be necessary or 

 

33

 

appropriate to confirm
the continued eligibility of Seller for Transactions hereunder, including without
limitation (i) ordering credit reports and (ii) contacting
Mortgagors, licensing authorities and Approved Investors or Insurers.

 

ARTICLE 12

INDEMNIFICATION

 

12.1                         Indemnification. 
Seller shall indemnify and hold harmless Buyer, its Affiliates and any of
their respective officers, directors, employees and agents from and against any
and all liabilities, obligations, losses, damages, penalties, judgments, suits,
costs, expenses and disbursements of any kind whatsoever that may be imposed
upon, incurred by or asserted against Buyer, its Affiliates and their
respective officers, directors, employees and agents in any way relating to or
arising out of the Principal Agreements or any other document referred to
therein or any of the transactions contemplated thereby, except for
liabilities, losses and damages solely resulting from the gross negligence or
willful misconduct of Buyer and its Affiliates.

 

12.2                         Payment of Taxes. 
Seller shall pay and hold Buyer harmless from and against any and all
present and future stamp, documentary and other similar taxes with respect to
the Purchased Assets, the Principal Agreements and other documents related
thereto and hold Buyer harmless from and against any and all liabilities with
respect to or resulting from any delay or omission to pay such taxes.

 

ARTICLE 13

TERM AND
TERMINATION

 

13.1                         Term. Provided that no Event of Default has
occurred and is continuing, and except as otherwise provided for herein, this
Agreement shall commence on the Effective Date and continue until the
Expiration Date set forth in the Transactions Terms Letter.  Following expiration or termination of this
Agreement, all indebtedness due Buyer under the Principal Agreements shall be
immediately due and payable without notice to Seller and without presentment,
demand, protest, notice of protest or dishonor, or other notice of default, and
without formally placing Seller in default, all of which are hereby expressly
waived by Seller.

 

13.2                         Termination.

 

(a)                                  Buyer may, with or without cause,
terminate this Agreement at any time on not less than sixty (60) days prior
notice to Seller.  During such prior
notice time period and until the expiration thereof, Buyer shall continue to
make Transactions to Seller pursuant to the terms and conditions of this Agreement,
provided, however, within forty-five (45) days after the expiration of such
time period, Seller shall pay the Repurchase Price for all outstanding
Transactions.

 

(b)                                 In addition to the remedies
afforded Buyer upon the occurrence of an Event of Default, including, without
limitation, those remedies afforded Buyer under this Agreement, Buyer may
immediately terminate this Agreement by providing notice to Seller if such
Event of Default is not cured within any applicable cure period expressly
provided for in this Agreement.

 

(c)                                  Buyer may immediately terminate
this Agreement by providing notice to Seller if Buyer determines that there has
been fraud, misrepresentation or any similar intentional conduct on behalf of
Seller, its officers, directors, employees, agents and/or its representatives
with respect to any of Seller’s obligations, responsibilities or actions
undertaken in connection with this Agreement.

 

34

 

(d)                                 Buyer may
immediately terminate this Agreement if (i) this Agreement or any
Transaction is deemed by a court or by statute to not constitute a “repurchase
agreement,” a “securities contract,” or a “master netting agreement,” as each
such term is defined in the Bankruptcy Code, (ii) payments or security
offered hereunder are deemed by a court or by statute not to constitute “settlement
payments” or “margin payments” as each such term is defined in the Bankruptcy
Code or (iii) this Agreement or any Transaction is deemed by a court or by
statute not to constitute an agreement to provide financial accommodations as
described in Bankruptcy Code Section 365(c)(1); provided, however, that
unless Buyer’s cost of funds are materially and adversely affected by such
determination and/or Buyer’s source of funds requires Buyer to make immediate
repayment of any funds provided to Buyer as a result thereof, Seller shall have
forty-five (45) days after termination of the Agreement to pay the Repurchase
Prices related to the then outstanding Transactions..

 

(e)                                  Upon termination of this
Agreement for any reason, and except as expressly provided for in subsections (a) and
(d) above with respect to the Repurchase Prices for outstanding
Transactions, all outstanding amounts due Seller under the Principal Agreements
shall be immediately due and payable without notice to Seller and without
presentment, demand, protest, notice of protest or dishonor, or other notice of
default, and without formally placing Seller in default, all of which are
hereby expressly waived by Seller.  Further, any termination of this Agreement
shall not affect the outstanding obligations of Seller under this Agreement and
all such outstanding obligations and the rights and remedies afforded Buyer in
connection therewith, including, without limitation, those rights and remedies
afforded Buyer under this Agreement, shall survive any termination of this
Agreement.  Buyer shall not be liable to
Seller for any costs, loss or damages arising from or relating to a termination
by Buyer in accordance with any subsection of this Section 13.2.

 

13.3                         Extension of Term. 
Upon mutual agreement of Seller and Buyer, the term of this Agreement
may be extended.  Such extension may be
made subject to the terms and conditions hereunder and to any other terms and
conditions as Buyer, in its sole and good faith discretion, may deem necessary
or advisable.  Under no circumstances
shall such an extension by Buyer be interpreted or construed as a forfeiture by
Buyer of any of its rights, entitlements or interest created hereunder.  Seller acknowledges and understands that
Buyer is under no obligation whatsoever to extend the term of this Agreement
beyond the initial term.

 

ARTICLE 14

GENERAL

 

14.1                         Integration; Servicing Provisions Integral and Non-Severable. This
Agreement, together with the other Principal Agreements, and all other
documents executed pursuant to the terms hereof and thereof, constitute the
entire agreement between the parties with respect to the subject matter hereof
and supercedes any and all prior or contemporaneous oral or written
communications with respect to the subject matter hereof, all of which such
communications are merged herein.  All
Transactions hereunder constitute a single business and contractual
relationship and each Transaction has been entered into in consideration of the
other Transactions.  Without limiting the
generality of the foregoing, the provisions of this Repurchase Agreement
related to the servicing and servicing rights of the Mortgage Loans subject to
Transactions hereunder are integral, interrelated, and are non-severable from
the purchase and sale provisions of the Repurchase Agreement.   Buyer has relied upon such provisions as
being integral and non-severable in determining whether to enter into this
Repurchase Agreement and in determining the Purchase Price methodology for the
Mortgage Loans.  The integration of these
servicing provisions is necessary to enable Buyer to obtain the maximum value
from the sale of the Mortgage Loans by having the ability to sell the servicing
rights related to the Mortgage Loans free from any claims or encumbrances.  Further, the fact that Seller or the Servicer may be entitled to a servicing fee for
interim servicing of the Purchased Mortgage
Loans or that Buyer 

 

35

 

may provide a separate notice of default
to Seller or the Servicer regarding the
servicing of the Purchased Mortgage Loans shall not
affect or otherwise change the intent of Seller and Buyer regarding the
integral and non-severable nature of the provisions in the Repurchase Agreement
related to servicing and servicing rights nor will such facts affect or
otherwise change Buyer’s ownership of the servicing rights related to the
Mortgage Loans

 

14.2                         Amendments. 
No modification, waiver, amendment, discharge or change of this
Agreement shall be valid unless the same is in writing and signed by the party
against whom the enforcement of such modification, waiver, amendment, discharge
or change is sought.

 

14.3                         No Waiver. 
No failure or delay on the part of Seller or Buyer in exercising any
right, power or privilege hereunder and no course of dealing between Seller and
Buyer shall operate as a waiver thereof nor shall any single or partial
exercise of any right, power or privilege hereunder  preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.

 

14.4                         Remedies Cumulative. 
The rights and remedies herein expressly provided are cumulative and not
exclusive of any rights or remedies that Seller or Buyer would otherwise have.
No notice or demand on Seller in any case shall entitle Seller to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of Buyer to any other or further action in any circumstances
without notice or demand.

 

14.5                         Assignment. 
The Principal Agreements may not be assigned by Seller.  The Principal Agreements, along with Buyer’s
right, title and interest, including its security interest, in any or all of
the Purchased Assets, may, at any time, be transferred or assigned, in whole or
in part, by Buyer, and upon providing notice to Seller of such transfer or
assignment, any transferee or assignee thereof may enforce the Principal
Agreements and such security interest directly against Seller; provided,
however, that if Buyer transfers or assigns the Principal Agreements for the
purpose of a transferee or assignee assuming the obligations of Buyer hereunder
with respect to entering into Transactions with Seller, any such transferee or
assignee must be capable of complying with such obligations.

 

14.6                         Successors and Assigns. 
The terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

 

14.7                         Participations. 
Buyer may from time to time sell or otherwise grant participations in
this Agreement, and the holder of any such participation, if the participation
agreement so provides, (i) shall, with respect to its participation, be
entitled to all of the rights of Buyer and (ii) may exercise any and all
rights of set-off or banker’s lien with respect thereto, in each case as fully
as though Seller were directly obligated to the holder of such participation in
the amount of such participation; provided, however, that Seller shall not be
required to send or deliver to any of the participants other than Buyer any of
the materials or notices required to be sent or delivered by it under the terms
of this Agreement, nor shall it have to act except in compliance with the
instructions of Buyer.

 

14.8                         Invalidity. 
In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had not been included.

 

14.9                         Additional Instruments. 
Seller shall execute and deliver such further instruments and shall do
and perform all matters and things necessary or expedient to be done or
observed for the purpose of effectively creating, maintaining and preserving
the security and benefits intended to be afforded by this Agreement.

 

36

 

14.10                   Survival.  All representations, warranties, covenants
and agreements herein contained on the part of Seller shall survive any
Transaction and shall be effective so long as this Agreement is in effect or
there remains any obligation of Seller hereunder to be performed.

 

14.11                   Notices.

 

(a)                                  All notices, demands, consents, requests
and other communications required or permitted to be given or made hereunder in
writing shall be mailed (first class, return receipt requested and postage
prepaid) or delivered in person or by overnight delivery service or by
facsimile, addressed to the respective parties hereto at their respective
addresses set forth below or, as to any such party, at such other address as
may be designated by it in a notice to the other:

 

	
  If to Seller:

  	
  That address set forth
  in the Transactions Terms Letter

  
	
   

  	
   

  
	
  If to Buyer:

  	
  Bank of America Home
  Loans

  
	
   

  	
  Warehouse Lending

  
	
   

  	
  8511 Fallbrook Ave. 3rd Floor

  
	
   

  	
  Mail Code:
  CA9-911-03-23

  
	
   

  	
  West Hills, CA 91304

  
	
   

  	
  Facsimile
  No:     (818) 316-8841

  

 

All written notices shall
be conclusively deemed to have been properly given or made when duly delivered,
if delivered in person or by overnight delivery service, or on the third (3rd) Business Day after being deposited in the mail, if
mailed in accordance herewith, or upon transmission by the receiving party of a
facsimile confirming receipt, if delivered by facsimile.  Notwithstanding the foregoing, any notice of
termination shall be deemed effective upon mailing, transmission, or delivery,
as the case may be.

 

(b)                                 All notices, demands, consents, requests
and other communications required or permitted to be given or made hereunder
which are not required to be in writing may also be provided electronically
either (i) as an electronic mail sent and addressed to the respective
parties hereto at their respective electronic mail addresses set forth below,
or as to any such party, at such other electronic mail address as may be
designated by it in a notice to the other or (ii) with respect to Buyer,
via a posting of such notice on Buyer’s customer website(s).

 

	
  If to Seller:

  	
  That email address(es)
  specified in the Transactions Terms Letter, if any.

  
	
   

  	
   

  
	
  If to Buyer:

  	
  Blair.Kenny@bankofamerica.com

  

 

14.12                   Personal Identification Number.  Seller shall
adopt a Personal Identification Number or PIN to be entered into the computer
system in connection with all documents transmitted from Seller to Buyer
electronically.  Further, any document
required to be signed by Seller may be signed by handwritten signature or
transmitted electronically in conjunction with the PIN, except any written
notification designating or changing the PIN and those documents required to be
delivered pursuant to Section 7.1(a) above, which must be
signed by hand.  Seller shall provide
Buyer with written notification of its PIN and any changes thereto; provided,
however, that any change to the PIN may not become effective for twenty four
(24) hours following Buyer’s confirmation of receipt of such notice by
Seller.  Seller and Buyer agree that
transmitting a document in conjunction with the PIN shall have the same force
and effect as a handwritten signature and shall be sufficient to verify that
Seller originated such document. Seller shall employ security procedures to ensure
that all transmissions of documents accompanied by the PIN are authorized,
authentic, reliable and complete and shall promptly notify Buyer if Seller
discovers the PIN has been improperly disclosed to any Person.  Notwithstanding the foregoing or any other
breach of security, Buyer 

 

37

 

shall be entitled to rely
upon the PIN of Seller until such time as (a) Seller provides Buyer with
written instructions to the contrary and (b) Buyer has sufficient time to
notify the appropriate employees and modify its computerized systems.

 

14.13                   Governing Law. This Agreement and the rights and obligations of the parties under
the Principal Agreements shall be construed in accordance with and governed by
the laws of the State of California, without regard to principles of conflicts
of laws.  All legal actions between or
among the parties regarding this Agreement, including, without limitation,
legal actions to enforce this Agreement or because of a dispute, breach or default
of this Agreement, shall be brought in the federal or state courts located in
Los Angeles County, California, which courts shall have sole and exclusive in
personam, subject matter and other jurisdiction in connection with such legal
actions and the parties acknowledged and agree that venue in such courts shall
be convenient and appropriate for all purposes.

 

14.14                   Counterparts. This Agreement may be executed in any number of counterparts by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same Agreement.

 

14.15                   Headings.
The headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning or interpretation of any provisions
hereof.

 

14.16                   Joint and Several Liability of Each Seller. 
To the extent there is more than one Person which is named as a Seller
under this Agreement, each such Person shall be jointly and severally liable
for the rights, covenants, obligations and warranties and representations of “Seller”
as contained herein and the actions of any Person (including another Seller) or
third party shall in no way affect such joint and several liability.

 

14.17                   Confidential Information.  To effectuate
this Agreement, Buyer and Seller may disclose to each other certain
confidential information relating to the parties’ operations, computer systems,
technical data, business methods, and other information designated by the disclosing
party or its agent to be confidential, or that should be considered
confidential in nature by a reasonable person given the nature of the
information and the circumstances of its disclosure (collectively the “Confidential Information”). 
Confidential Information can consist of information that is either oral
or written or both, and may include, without limitation, any of the following: (i) any
reports, information or material concerning or pertaining to businesses,
methods, plans, finances, accounting statements, and/or projects of either
party or their affiliated or related entities; (ii) any of the foregoing
related to the parties or their related or affiliated entities and/or their
present or future activities and/or (iii) any term or condition of any
agreement (including this Agreement) between either party and any individual or
entity relating to any of their business operations.  With respect to Confidential Information, the
parties hereby agree:

 

(a)                                  not to use the Confidential Information
except in furtherance of this Agreement;

 

(b)                                 to use reasonable efforts to safeguard
the Confidential Information against disclosure to any unauthorized third party
with the same degree of care as they exercise with their own information of
similar nature; and

 

(c)                                  not to disclose Confidential Information
to anyone other than employees, agents or contractors with a need to have
access to the Confidential Information and who are bound to the parties by like
obligations of confidentiality, except that the parties shall not be prevented
from using or disclosing any of the Confidential Information which: (i) is
already known to the receiving party at the time it is obtained from the
disclosing party; (ii) is now, or becomes in the future, public knowledge
other than through wrongful acts or omissions of the party receiving the
Confidential Information; (iii) is lawfully obtained by the party from
sources independent of the party disclosing the Confidential Information and
without confidentiality and/or non-use restrictions; or (iv) is
independently developed 

 

38

 

by the receiving party
without any use of the Confidential Information of the disclosing party.  Notwithstanding anything contained herein to
the contrary, Buyer may share any Confidential Information of Seller with an
Affiliate of Buyer for any valid business purpose, such as, but not limited to,
to assist an Affiliate in evaluating a current or potential business
relationship with Seller.

 

If any party or
any of its successors, subsidiaries, officers, directors, employees, agents
and/or representatives, including, without limitation, its insurers, sureties
and/or attorneys, breaches its respective duty of confidentiality under this
Agreement, the nonbreaching party(ies) shall be entitled to all remedies
available at law and/or in equity, including, without limitation, injunctive
relief.

 

14.18      Intent.  Seller and Buyer
recognize and intend that:

 

(a)                                  this Agreement and each Transaction
hereunder constitutes a “repurchase agreement” as that term is defined in Section 101(47)
of the Bankruptcy Code,  a “securities
contract” as that term is defined in Section 741(7) of the Bankruptcy
Code and a “master netting agreement” as that term is defined in Section 101(38A)
of the Bankruptcy Code.  Seller and Buyer
further recognize and intend that this Agreement is an agreement to provide
financial accommodations and is not subject to assumption pursuant to
Bankruptcy Code Section 365(a);

 

(b)                                 Buyer’s right to liquidate the Purchased
Mortgage Loans delivered to it in connection with the Transactions hereunder or
to accelerate or terminate this Agreement or otherwise exercise any other
remedies herein is a contractual right to liquidate, accelerate or terminate
such Transaction as described in Bankruptcy Code Sections 555, 559 and 561;any
payments or transfers of property made with respect to this Agreement or any
Transaction to: (i) satisfy a Margin Deficit, (ii) comply with a
Margin Call, or (iii) satisfy the provision of Guarantees an/or additional
security agreements to provide enhancements to satisfy a deficiency in the
Over/Under Account, shall in each case be considered a “margin payment” as such
term is defined in Bankruptcy Code Section 741(5); and

 

(c)                                  any payments or transfers of property by
Seller (i) on account of a Haircut, (ii) in partial or full
satisfaction of a repurchase obligation, or (iii) fees and costs under
this Agreement or under any Transaction shall in each case constitute “settlement
payments” as such term is defined in Bankruptcy Code Section 741(8).

 

14.19                   Right to Liquidate.  It is
understood that either party’s right to liquidate Purchased Mortgage Loans
delivered to it in connection with Transactions hereunder or to terminate or
accelerate obligations under this Agreement or any individual Transaction, are
contractual rights for same as described in Sections 555 and 559 of the
Bankruptcy Code.

 

14.20                   Insured Depository Institution.  If a party
hereto is an “insured depository institution” as such term is defined in the
Federal Deposit Insurance Act (as amended, the “FDIA”), then each
Transaction hereunder is a “qualified financial contract” as that term is
defined in the FDIA and any rules, orders or policy statements thereunder
except insofar as the type of assets subject to such Transaction would render
such definition inapplicable.

 

14.21                   Netting Contract.  This
Agreement constitutes a “netting contract” as defined in and subject to Title
IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”)
and each payment entitlement and payment obligation under any Transaction
hereunder shall constitute a “covered contractual payment entitlement” or “covered
contractual payment obligation”, respectively, as defined in and subject to the
FDICIA except insofar as one or more of the parties hereto is not a “financial
institution” as that term is defined in the FDICIA.

 

39

 

14.22                   Reimbursement of Expenses.  If any claim,
legal action or any arbitration or other proceeding is brought for the
enforcement of this Agreement or because of a dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the prevailing party shall be entitled to recover reasonable attorneys’ fees
and other reasonable costs in that claim, action, arbitration or proceeding, in
addition to any other relief to which such party may be entitled.

 

14.23                   Examination and Oversight by Regulators. 
Seller agrees that the transactions with Buyer under this Agreement may
be subject to regulatory examination and oversight, including, without
limitation, examination and oversight by the Office of Thrift Supervision (“OTS”).  Seller shall comply with all regulatory
requirements of Buyer and Seller shall grant regulatory agencies, including,
but not limited to, the OTS, the right to audit the books and records of Seller
in order to monitor or verify Seller’s performance under and compliance with
the terms of this Agreement.

 

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

 

 

	
  BUYER:

  	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Blair Kenny

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blair Kenny

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SELLER:

  	
   

  	
  HOME LOAN CENTER, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rian Furey

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Rian Furey

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  

 

40

 

EXHIBIT A

 

GLOSSARY OF DEFINED
TERMS

 

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

 

Acknowledgement of Confidentiality
of Password Agreement:  That certain Acknowledgement
of Confidentiality of Password Agreement attached hereto as Exhibit I.

 

Additional Purchased Mortgage
Loans:  Those additional Mortgage Loans or cash
provided by Seller to Buyer pursuant to Section 6.3 of this
Agreement.

 

Affiliate: With respect to any specified entity,
any other entity controlling or controlled by or under common control with such
specified entity.  For the purposes of
this definition, “control” when used with respect to a specified entity means
the power to direct the management and policies of such entity, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms “controlling” and “controlled” having meanings
correlative to the foregoing.

 

Agency: 
Fannie Mae or Freddie Mac.

 

Aggregate Transaction Limit: The maximum aggregate principal amount
of Transactions that may be outstanding at any one time, as set forth in the
Transactions Terms Letter.

 

Applicable Pricing Rate: With respect to any date of
determination, the daily rate per annum (rounded up to three (3) decimal
places) for one-month U.S. dollar denominated deposits as offered to prime
banks in the London interbank market (“One-Month LIBOR”)
as published on Bloomberg or in the Wall Street Journal.  It is understood that the Applicable Pricing
Rate shall be initially set to the then current One-Month LIBOR in effect on
the date the Purchase Price is paid and shall thereafter be adjusted on a daily
basis to the then current One-Month LIBOR.

 

Application: 
The application or “Buyer Application Profile,” including all supporting
documentation, submitted by Seller to Buyer with respect to this Agreement.

 

Approved Investor: 
Fannie Mae, Freddie Mac, Ginnie Mae or a third party which is deemed
acceptable by Buyer in its sole and good faith discretion, purchasing Purchased
Mortgage Loans from Seller pursuant to a Purchase Commitment.

 

Approved Payee: 
A Closing Agent or warehouse lender approved by Buyer in accordance with
Section 3.7.

 

Asset Data Record: 
A document, in the form required by Buyer and as may from time to time
be amended by Buyer, as such form may be set forth in the Handbook, completed
by Seller and submitted to Buyer with respect to each Purchased Mortgage Loan.

 

Asset Value: 
With respect to each Purchased Mortgage Loan for any date of
determination, an amount equal to the following, as applicable, as same may be
reduced in accordance with Section 4.3:

 

(a)           if the Purchased Mortgage Loan has
Standard Status, the product of the Mortgage Loan Value and the Type Purchase
Price Percentage for the type of Purchased Mortgage Loan.

 

(b)           if the Purchased Mortgage Loan is a
Noncompliant Mortgage Loan, the product of the Mortgage Loan Value and the Type
Purchase Price Percentage for a Noncompliant Mortgage Loan; or

 

A-1

 

(c)           if the Purchased Mortgage Loan is a
Defective Mortgage Loan, zero.

 

For purposes of the
foregoing, “Mortgage Loan Value” shall mean
the lesser of (i) the outstanding principal balance of the Purchased
Mortgage Loan; (ii) the committed purchase price of the Purchased Mortgage
Loan, as evidenced by the related Purchase Commitment; and (iii) the fair
market value of the Purchased Mortgage Loan, as determined by Buyer in its sole
and good faith discretion.

 

Assignment: 
A duly executed assignment to Buyer in recordable form of a Purchased
Mortgage Loan, of the indebtedness secured thereby and of all documents and
rights related to such Purchased Mortgage Loan.

 

Assignment of Closing Protection
Letter:  An assignment assigning and subrogating Buyer
to all of Seller’s rights in a Closing Protection Letter, substantially in the
form of Exhibit F hereto.

 

Assignment of Fidelity Bond and
Errors and Omission Policy:  An assignment
assigning and subrogating Buyer to all of Seller’s rights in a Fidelity Bond
and Errors and Omissions Policy, substantially in the form of Exhibit G
hereto.

 

Bailee Agreement: 
A bailee agreement substantially in the form acceptable to Buyer.

 

Bankruptcy Code: 
Title 11 of the United States Code, now or hereafter in effect, as
amended, or any successor thereto.

 

Bond Loans – 1st Liens:  Unless
defined otherwise in the Transactions Terms Letter, a first lien mortgage loan,
other than a Nonperforming/Subperforming Mortgage Loan, that is eligible for
sponsorship, facilitated or insured by a qualifying local or state home
governmental homeownership program.

 

Bond Loans – 2nd Liens:  Unless
defined otherwise in the Transactions Terms Letter, a second lien mortgage loan
for a fixed amount drawn at closing, that is eligible for sponsorship, facilitated
or insured by a qualifying local or state governmental home homeownership
program.

 

Breakage Fee: 
That fee, if set forth in the Transactions Terms Letter or otherwise
indicated on Buyer’s then-current schedule of fees, payable by Seller to Buyer
if Seller fails to consummate a Transaction after Seller has submitted an Asset
Data Record in connection with such requested Transaction.

 

Business Day: 
Any day, excluding Saturday, Sunday and any day that is a legal holiday
under the laws of the State of California.

 

Cash Equivalents: 
Any (a) securities with maturities of ninety (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 ninety (90) days or less from the
date of acquisition and overnight bank deposits of any commercial bank having
capital, surplus and retained earnings in excess of $70,000,000, (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 S&P or p-1 or the equivalent thereof by Moody’s
and in either case maturing within ninety (90) days after the day of
acquisition, (e) securities with maturities of ninety (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 ninety (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 

 

A-2

 

invest exclusively in
assets satisfying the requirements of clauses (a) through (f) of this
definition, (h) available draws from warehouse or repurchase facilities.

 

Cashiers Check Fee: 
That fee, as set forth in the Transactions Terms Letter or otherwise
indicated on Buyer’s then-current schedule of fees, payable by Seller for each
disbursement made by a cashiers check issued to Seller or its Approved Payee.

 

Change
of Control:  Change of
Control shall mean any of the following:

 

(a)           if Seller is a corporation, any “person”
(as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), other than a trustee or
other fiduciary holding securities of Seller under an employee benefit plan of
Seller, becomes the “beneficial owner” (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
Seller representing 50% or more of (A) the outstanding shares of common
stock of Seller or (B) the combined voting power of Seller’s
then-outstanding securities;

 

(b)           if Seller is a legal entity other
than a corporation, the majority voting control of Seller, or its equivalent,
under Seller’s governing documents is transferred to any Person;

 

(c)           Seller is party to a merger or
consolidation, or series of related transactions, which results in the voting
securities or majority voting control interest of Seller outstanding
immediately prior thereto failing to continue to represent (either by remaining
outstanding or by being converted into voting securities or a majority voting
controlling interest of the surviving or another entity) at least fifty (50%)
percent of the combined voting power of the voting securities or majority
voting control interest of Seller or such surviving or other entity outstanding
immediately after such merger or consolidation;

 

(d)           the sale or disposition of all or
substantially all of Seller’s assets (or consummation of any transaction, or
series of related transactions, having similar effect);

 

(e)           there occurs a change in the composition
of the Board of Directors or governing body of Seller within a one (1) year
period, as a result of which fewer than a majority of the directors or
governing body members are incumbent;

 

(f)            the dissolution or liquidation of
Seller; or

 

(g)           any transaction or series of related
transactions that has the substantial effect of any one or more of the
foregoing.

 

Closed-End Second Lien Mortgage
Loan:  Unless defined otherwise in the Transactions
Terms Letter, a second lien mortgage loan for a fixed amount drawn at closing
and underwritten in accordance with Seller’s underwriting guidelines for second
lien mortgages, as same have been approved by Buyer.

 

Closing Agent: 
The Person designated by Seller and approved by Buyer in accordance with
Section 3.7 to receive Purchase Prices from Buyer, for the account
of Seller, for the purpose of funding a Purchased Mortgage Loan.

 

Closing Protection Letter: 
A document issued by a title insurance company to Seller and/or Buyer
and relied upon by Buyer to provide closing protection for one or more mortgage
loan closings and to insure Seller and/or Buyer, without limitation, against
embezzlement by the Closing Agent and loss or damage resulting from the failure
of the Closing Agent to comply with all applicable closing instructions.

 

Contingent Obligations: 
Any obligation of Seller arising from an existing condition or situation
that involves uncertainty as to outcome and that will be resolved by the
occurrence or nonoccurrence of some future event, including, without limitation,
any obligation guaranteeing or intended to guarantee any Debt, leases,
dividends or other obligations of any other Person in any manner, whether
directly or indirectly; provided; however, that endorsements of instruments for
deposit or collection in the ordinary course of 

 

A-3

 

business shall not be
included. With respect to guarantees, the amount of the Contingent Obligation
shall be equal to the stated or determinable amount of the primary obligation
in respect of the guarantee or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof, as determined by Buyer.

 

Control Agreement: the agreement to perfect Buyer’s
security interest in the Custodial Account as described at Section 6.2(g) of
this Agreement.

 

Conventional Conforming Mortgage
Loan:  Unless defined otherwise in the Transactions
Terms Letter, a first lien mortgage loan that fully conforms to all
underwriting standards, loan amount limitations and other requirements of that
standard Agency mortgage loan purchase program accepting only the highest
quality mortgage loans underwritten without dependence on expanded criteria
provisions, or that is approved by Desktop Underwriter or Loan Prospector.

 

Current Assets: 
Those assets set forth in the consolidated balance sheet of Seller,
prepared in accordance with GAAP, as current assets, defined as those assets
that are now cash or will by their terms or disposition be converted to cash
within one (1) year of the date of the determination.

 

Current Liabilities: 
Those liabilities set forth in the consolidated balance sheet of Seller,
prepared in accordance with GAAP, as current liabilities, defined as those
liabilities due upon demand or within one (1) year of the date of
determination.

 

Custodial Account: The account described at Section 6.2(g) of
this Agreement.

 

Custodian: 
Bank of America, N.A. or such other custodian selected by Buyer in its
sole and good faith discretion.

 

Date of Disbursement: 
The date of disbursement shall mean (i) with respect to a wire
transfer, the date such funds are wired, (ii) with respect to a cashiers
check, the date such check is issued by the bank and (iii) with respect to
a funding draft, the date that the draft is posted by the bank on which the
draft is drawn.

 

Debt: 
The debt of Seller consisting of, without duplication: (a) indebtedness
for borrowed money, including principal, interest, fees and other charges; (b) obligations
evidenced by bonds, debentures, notes or other similar instruments; (c) obligations
to pay the deferred purchase price of property or services; (d) obligations
as lessee under leases that shall have been or should be in accordance with
GAAP, recorded as capital leases; (e) obligations secured by any lien upon
property or assets owned by Seller, even though Seller has not assumed or
become liable for payment of such obligations; (f) obligations in
connection with any letter of credit issued for the account of Seller; (g) obligations
under direct or indirect guarantees in respect of and obligations, contingent
or otherwise, to purchase or otherwise acquire, or otherwise assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to above; and (h) all Contingent Obligations. Notwithstanding the
foregoing, the term “Debt” shall not include any obligations of Seller under
that certain Early Purchase Program Addendum to Loan Purchase Agreement by and
between Seller and Buyer.

 

Default Rate: 
The maximum nonusurious interest rate, if any, that at any time, or from
time to time, may be contracted for, taken, reserved, charged or received under
the laws of the United States and the State of California, not to exceed the
sum of five percent (5%) plus the Applicable Rate.

 

Defective Loan Fee: 
A fee equal to five hundred dollars ($500) payable by Seller for each
Purchased Mortgage Loan that is or becomes a Defective Mortgage Loan.

 

A-4

 

Defective Mortgage Loan: 
A Purchased Mortgage Loan:

 

(a)           that has not been repurchased within
the Maximum Dwell Time for a Noncompliant Mortgage Loan or is ineligible to be
a Noncompliant Mortgage Loan because the aggregate original Asset Value of
other Purchased Mortgage Loans that are deemed to be Noncompliant Mortgage
Loans is equal to or greater than the Type Sublimit for Noncompliant Mortgage
Loans;

 

(b)           that is the subject of fraud by any
Person involved in the origination of such Mortgage Loan and such fraud shall
not have been remedied within three (3) Business Days after receipt of
notice from Buyer to do so;

 

(c)           where the related Mortgaged Property
is the subject of material damage or waste and such damage or waste shall not
have been remedied within three (3) Business Days after receipt of notice
from Buyer to do so;

 

(d)           in connection with which any other
breach of a warranty or representation set forth in Section 8.2
occurs and remains uncured for a period of ten (10) calendar days;

 

(e)           in connection with which a default
occurs under the Purchased Mortgage Loan and remains uncured for a period of
ten (10) calendar days; or

 

(f)            where the related Mortgagor fails to
make the first payment due under the Mortgage Note on or before the applicable
due date, including any days of grace, and such default shall not have been
remedied within three (3) Business Days after receipt of notice from Buyer
to do so; provided, however, that with respect to any
Nonperforming/Subperforming Mortgage Loan where specific payment conditions
have been set forth in the Transactions Terms Letter, such
Nonperforming/Subperforming Mortgage Loan shall only be deemed a Defective
Mortgage Loan for failure of the Mortgagor to make payment if such failure
constitutes a breach of the such specific payment conditions.

 

Document Deposit Fee: 
That fee, as set forth in the Transactions Terms Letter or otherwise
indicated on Buyer’s then-current schedule of fees, payable by Seller for each
Mortgage Loan Document delivered to Buyer after the initial delivery date of
the related Mortgage Loan File.

 

Dry Mortgage Loan: 
A Mortgage Loan for which Buyer or its Custodian has possession of the
related Mortgage Loan Documents, in a form and condition acceptable to Buyer,
prior to the payment of the Purchase Price.

 

Effective Date: 
That effective date set forth in the Transactions Terms Letter.

 

Electronic Tracking Agreement: 
An Electronic Tracking Agreement in a form acceptable to Buyer.

 

Eligible Bank: A bank selected by Seller and approved by Buyer in
writing and authorized to conduct trust and other banking business in any state  in which Seller conducts operations.

 

ERISA: 
The Employee Retirement Income Security Act of 1974, as amended from
time to time and any successor statute.

 

ERISA Affiliate: 
Any person (as defined in section 3(9) of ERISA) that together with
Seller or any of its subsidiaries would be a member of the same “controlled
group” within the meaning of Section 414(b), (m), (c) and (o) of
the Internal Review Code of 1986, as amended.

 

Executive Management: 
Chairman of the board of directors, chief executive officer, president,
and chief financial officer.

 

A-5

 

Expanded Criteria Mortgage Loan: 
Unless defined otherwise in the Transactions Terms Letter, a first lien
mortgage loan underwritten to the same high credit standards as a Conventional
Conforming Mortgage Loan except with respect to loan programs and parameters
that may have broader specifications of eligibility.

 

Event of Default: 
Any of the conditions or events set forth in Section 11.1.

 

Expiration Date: 
The Expiration Date set forth in the Transactions Terms Letter for the
expiration of this Agreement.

 

Facility Fee: 
The non-refundable, annual commitment fee, as set forth in the
Transactions Terms Letter.

 

Fannie Mae: 
The Federal National Mortgage Association and any successor thereto.

 

FHA: 
The Federal Housing Administration of the United States Department of
Housing and Urban Development and any successor thereto.

 

File Fee: 
That fee, as set forth in the Transactions Terms Letter or otherwise
indicated on Buyer’s then current schedule of fees,  payable by Seller upon submission of the
related Asset Data Record whether or not the Transaction is actually made.

 

Freddie Mac: 
The Federal Home Loan Mortgage Corporation and any successor thereto.

 

Funding Draft Fee: 
That fee, as set forth in the Transactions Terms Letter or otherwise
indicated on Buyer’s then-current schedule of fees, payable by Seller for each
payment of the Purchase Price by funding draft.

 

GAAP: 
Generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession
and that are applicable to the circumstances as of the date of determination.

 

Ginnie Mae: 
Government National Mortgage Association or any successor thereto.

 

Government Mortgage Loan: 
Unless defined otherwise in the Transactions Terms Letter, a first lien
mortgage loan, other than a Nonperforming/Subperforming Mortgage Loan, that is (a) eligible
for insurance by FHA and is so insured or is subject to a current binding and
enforceable commitment for such insurance pursuant to the provisions of the
National Housing Act, as amended, and is otherwise eligible for inclusion in a
Ginnie Mae mortgage-backed security pool; or (b) eligible to be guaranteed
by the VA and is so guaranteed or is subject to a current binding and
enforceable commitment for such guarantee pursuant to the provisions of the
Servicemen’s Readjustment Act, as amended, and is otherwise eligible for
inclusion in a Ginnie Mae mortgage-backed security pool.

 

Guarantee: 
A guarantee signed by a Guarantor, in a form acceptable to Buyer.

 

Guarantors: 
Those guarantors as set forth in the Transactions Terms Letter.

 

Handbook: 
The guide prepared by Buyer containing additional policies and
procedures, as same may be amended from time to time.

 

Haircut: 
With respect to each Transaction, if the Purchase Price is less than
par, an amount equal to the difference between par and the Purchase Price,
which shall be considered a “settlement payment” as defined in Bankruptcy Code Section 741(8).

 

A-6

 

HELOC 1st Mortgages:  Unless
defined otherwise in the Transactions Terms Letter, a first lien mortgage loan
that is a home equity line of credit underwritten in accordance with Seller’s
underwriting guidelines for HELOCs, as same have been approved by Buyer.

 

HELOC Mortgage Loan: 
Unless defined otherwise in the Transactions Terms Letter, a home equity
line of credit underwritten in accordance with Seller’s underwriting guidelines
for HELOCs, as same have been approved by Buyer.

 

HUD: 
The United States Department of Housing and Urban Development or any
successor thereto.

 

Insolvency Event: 
The occurrence of any of the following events:

 

(a)           such Person shall become insolvent or
generally fail to pay, or admit in writing its inability to pay, its debts as
they become due, or shall voluntarily commence any proceeding or file any
petition under any bankruptcy, insolvency or similar law or seeking
dissolution, liquidation or reorganization or the appointment of a receiver,
trustee, custodian, conservator or liquidator for itself or a substantial
portion of its property, assets or business or to effect a plan or other
arrangement with its creditors, or shall file any answer admitting the
jurisdiction of the court and the material allegations of an involuntary
petition filed against it in any bankruptcy, insolvency or similar proceeding,
or shall be adjudicated bankrupt, or shall make a general assignment for the
benefit of creditors, or such Person, or a substantial part of its property,
assets or business, shall be subject to, consent to or acquiesce in the
appointment of a receiver, trustee, custodian, conservator or liquidator for
itself or a substantial property, assets or business;

 

(b)           corporate action shall be taken by
such Person for the purpose of effectuating any of the foregoing;

 

(c)           an order for relief shall be entered
in a case under the Bankruptcy Code in which such Person is a debtor; or

 

(d)           involuntary proceedings or an
involuntary petition shall be commenced or filed against such Person under any
bankruptcy, insolvency or similar law or seeking the dissolution, liquidation
or reorganization of such Person or the appointment of a receiver, trustee,
custodian, conservator or liquidator for such Person or of a substantial part
of the property, assets or business of such Person, or any writ, order,
judgment, warrant of attachment, execution or similar process shall be issued
or levied against a substantial part of the property, assets or business of
such Person, and such proceeding or petition shall not be dismissed, or such
execution or similar process shall not be released, vacated or fully bonded,
within sixty (60) days after commencement, filing or levy, as the case may be.

 

Insurer: 
A private mortgage insurer, which is acceptable to Buyer in its sole and
good faith discretion.

 

Intercreditor Agreement: 
An agreement substantially in the form acceptable to Buyer.

 

Irrevocable Closing Instructions: 
Closing instructions, including wire instructions, in the form of Exhibit B
issued in connection with funds disbursed for the funding of a Wet Mortgage
Loan.

 

Jumbo Mortgage Loan: 
Unless defined otherwise in the Transactions Terms Letter, a first lien
mortgage loan underwritten to the same standards as a Conventional Conforming
Mortgage Loan except with respect to the original principal balance, which is
greater than that permitted by the Agencies but less than one million
($1,000,000) dollars.

 

Key Personnel:  Any employee, officer, director,
agent or representative of Seller identified in the Transactions Terms Letter
as a Key Person.

 

Liquidity: 
If applicable, the cash and Cash Equivalents liquidity requirement of
Seller as set forth in the Transactions Terms Letter.

 

A-7

 

Margin: 
With respect to each Transaction, the pricing rate set forth in the
Transactions Terms Letter that shall be added to the Applicable Pricing Rate to
determine the pricing rate for the Purchase Price.

 

Margin
Call:  A
margin call, as defined and described in Section 6.3.

 

Margin
Deficit:  A
margin deficit, as defined and described in Section 6.3.

 

Material and Adverse Change: 
A material and adverse change with respect to (i) the business,
operations, properties or financial condition of Seller or (ii) general
market circumstances or conditions, including, without limitation, if any law,
regulation, treaty or directive or any change therein or in the interpretation or
application thereof, or any circumstance affecting the London interbank market
or the repurchase market for mortgage loans or mortgage-backed securities, in
either case of (i) or (ii), as such material and adverse change is
determined by Buyer in its sole and good faith discretion.

 

Maximum Dwell Time: The maximum number of days a Purchased
Mortgage Loan can be not repurchased by Seller before such Purchased Mortgage
Loan may be deemed to be a Noncompliant Mortgage Loan and with respect to a
Noncompliant Mortgage Loan, the maximum number of days that a Purchased
Mortgage Loan can be deemed to be a Noncompliant Mortgage Loan before such
Noncompliant Mortgage Loan may be deemed to be a Defective Mortgage Loan, all
as set forth in the Transactions Terms Letter.

 

MERS: Mortgage Electronic Registration Systems, Inc.,
a Delaware corporation, or any successor in interest thereto.

 

Mortgage: 
A first-lien or second-lien mortgage, deed of trust, security deed or
similar instrument on improved real property.

 

Mortgage-Backed Securities: Any security, including, without
limitation, a participation certificate, that is (a) guaranteed by Ginnie
Mae that represents an interest in a pool of mortgages, deeds of trusts or
other instruments creating a lien on real property; (b) issued by Fannie
Mae or Freddie Mac that represents interests in such a pool; or (c) privately
placed and represents undivided interests in or otherwise supported by such a
pool.

 

Mortgage Loan: A Conventional Conforming Mortgage
Loan, Government Mortgage Loan, Jumbo Mortgage Loan, Super Jumbo Mortgage Loan,
Expanded Criteria Mortgage Loan, Subprime Mortgage Loan, Closed-End Second Lien
Mortgage Loan, HELOC Mortgage Loan or Nonperforming/Subperforming Mortgage
Loan, which Mortgage Loan may be either a Dry Mortgage Loan or a Wet Mortgage
Loan.

 

Mortgage Loan Documents: 
With respect to each Purchased Mortgage Loan:

 

(a)           the original Mortgage Note evidencing
the Mortgage Loan, endorsed by Seller in blank, with a complete chain from the
originator to Seller;

 

(b)           an original assignment in blank,
executed by Seller, for the Mortgage securing the Mortgage Note, in recordable
form but unrecorded, with a complete chain of intervening assignments from the
originator to Seller;

 

(c)           a certified or true copy of the
Mortgage securing the Mortgage Note bearing evidence of the recordation of such
Mortgage with the appropriate governmental authority, or if such recording
information is unavailable because the document has not yet come back from the
recording office, then a copy of evidence that such original Mortgage was sent
out for recording by a Closing Agent; and

 

(d)           an original or copy of the title
insurance policy insuring the first lien or second lien position of the
Mortgage, as applicable, in at least the original principal amount of the
related Mortgage Note and containing only those exceptions permitted by the
Purchase Commitment or an unconditional commitment to issue such a title
insurance policy.

 

A-8

 

Mortgage Loan File: 
With respect to each Mortgage Loan, that file that contains the Mortgage
Loan Documents and is delivered to Buyer or its Custodian.

 

Mortgage Note: 
A promissory note secured by a Mortgage and evidencing a Mortgage Loan.

 

Mortgaged Property:  The real property securing repayment of the
debt evidenced by a Mortgage Note.

 

Mortgagor: The obligor of a Mortgage Loan.

 

Noncompliant Mortgage Loan: 
As of any date of determination, a Purchased Mortgage Loan that has
been:

 

(a)           not repurchased within the Maximum
Dwell Time permitted, given the type of Purchased Mortgage Loan, but less than
the Maximum Dwell Time for Noncompliant Mortgage Loans;

 

(b)           rejected by the Approved Investor set
forth in the related Purchase Commitment; or

 

(c)           determined to be ineligible for sale
as a Purchased Mortgage Loan of the type originally stipulated.

 

Noncompliant Mortgage Loan Fee: 
A one-time fee, as set forth in the Transactions Terms Letter or
otherwise indicated on Buyer’s then current schedule of fees, payable by Seller
for each Purchased Mortgage Loan that is deemed to be a Noncompliant Mortgage
Loan.

 

Nonperforming/Subperforming
Mortgage Loan:  Unless defined otherwise in the Transactions
Terms Letter, a first or second lien Mortgage Loan that when originated qualified
as a Conventional Conforming Mortgage Loan, Government Mortgage Loan, Expanded
Criteria Mortgage Loan, Subprime Mortgage Loan, Closed-End Second Lien Mortgage
Loan or HELOC Mortgage Loan, however, such Mortgage Loan has a history of late
payments during the past twelve months (the exact number permitted late payment
to be determined by Buyer in its sole and good faith discretion) or is
currently past due more than thirty (30) days.

 

One Time Close Loan: Unless defined otherwise in the
Transactions Terms Letter, a first lien mortgage loan underwritten to the same
credit standards as a Conventional Conforming Mortgage Loan, Expanded Criteria
Mortgage Loan, Jumbo Mortgage Loans or Super Jumbo Mortgage Loan and has the
additional feature of combining a construction loan advance with a conversion
provision to permanent financing in a single loan transaction.

 

Other Mortgage Loan Documents:  In addition to the Mortgage Loan Documents,
the following: (i) the original recorded Mortgage, if not included in the
Mortgage Loan Documents; (ii) the original policy of mortgagee’s title
insurance or unexpired commitment for a policy of mortgagee’s title insurance,
if not included in the Mortgage Loan Documents; (iii) the original Closing
Protection Letter; (iv) the original Purchase Commitment; (v) the
original FHA certificate of insurance or commitment to insure, the VA
certificate of guaranty or commitment to guaranty and the private mortgage
insurer’s certificate or commitment to insure, as applicable; (vi) the
survey, flood certificate, hazard insurance policy and flood insurance policy,
as applicable; (vii) the original of any assumption, modification, written
assurance or substitution of liability agreement, if any; (viii) copy of
each instrument necessary to complete identification of any exception set forth
in the exception schedule in the title policy; (ix) the loan application; (x) verification
of employment and income, if applicable; (xi) verification of source and amount
of downpayment; (xii) credit report on Mortgagor; (xiii) appraisal of Mortgaged
Property; (xiv) the original executed disclosure statement; (xv) Tax receipts,
insurance premium receipts, ledger sheets, payment records, insurance claim
files and correspondence, current and historical computerized data files,
underwriting standards used for origination and all other related papers and
records; and (xvi) all other documents relating to the Purchased Mortgage Loan.

 

Over/Under Account: That account maintained by Buyer, as
described in Section 3.5.

 

A-9

 

Payment
Date: 
The fifth (5th) day of each month, or if such date is
not a Business Day, the Business Day immediately preceding the fifth (5th) day of the month; provided, however, Buyer may
change the Payment Date from time to time upon thirty (30) days prior notice to
Seller.

 

Person: Includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, joint
stock companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions
thereof.

 

Personal Identification Number or
PIN: An
electronic identification number, unique to Seller, consisting of any
combination of symbols, codes, letters or numerals.

 

Plan: 
Any multiemployer plan or single-employer plan as defined in section
4001 of ERISA, that is maintained and contributed to by (or to which there is
an obligation to contribute of), or at any time during the five (5) calendar
years preceding the date of this Agreement was maintained or contributed to by
(or to which there is an obligation to contribute of), Seller or by a
subsidiary of Seller or an ERISA Affiliate.

 

Potential Default: 
The occurrence of any event or existence of any condition that, but for
the giving of notice, the lapse of time, or both, would constitute an Event of
Default.

 

Power of Attorney: 
That certain power of attorney attached hereto as Exhibit H.

 

Principal Agreements: 
This Agreement, the Transactions Terms Letter, the Electronic Transfer
Agreement, any Servicing Agreement, the Guarantee(s), if applicable, and all
other documents and instruments evidencing the Transactions, as same may from
time to time be supplemented, modified or amended, and any other agreement
entered into between Buyer and Seller in connection herewith or therewith.

 

Proceeds: Whatever is receivable or received when
Purchased Assets or proceeds is sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, and
includes, without limitation, all rights to payment, including return premiums,
with respect to any insurance relating thereto.

 

Property Charges: All taxes, fees, assessments, water,
sewer and municipal charges (general or special) and all insurance premiums,
leasehold payments or ground rents.

 

Purchase Advice: In connection with each wire transfer
to be made to Buyer by Seller or an Approved Investor, a written or electronic
notification setting forth (a) the loan number assigned by Buyer or last
name of the Mortgagor for each Mortgage Loan that is related to the Transaction
in connection with which a payment is being made; (b) the amount of the
wire transfer to be applied in the Transaction; and (c) the total amount
of the wire.

 

Purchase Commitment: 
A trade ticket or other written commitment, in form and substance
satisfactory to Buyer, issued in favor of Seller by an Approved Investor
pursuant to which that Approved Investor commits to purchase one or more
Purchased Mortgage Loans, along with the related correspondent or whole loan
purchase agreement by and between Seller and the Approved Investor, in form and
substance satisfactory to Buyer, governing the terms and conditions of any such
purchases.

 

Purchase Date: 
The date on which Buyer purchases a Purchased Mortgage Loan from
Seller.  If the Purchase Price is made by
wire transfer, the Purchase Date shall be the date such funds are wired.  If the Purchase Price is made by a cashiers
check, the Purchase Date shall be the date such check is issued by the
bank.  If the Purchase Price is paid by a
funding draft, the Purchase Date shall be the date that the draft is posted by
the bank on which the draft is drawn.

 

A-10

 

Purchase
Price: 
The price at which each Purchased Mortgage Loan is sold by Seller to
Buyer which shall be equal to the lesser of (A) the unpaid principal
balance of the Purchased Mortgage Loan multiplied by the lesser of (i) the
applicable Type Purchase Price Percentage (ii) par, (iii) the
purchase price percentage set forth in the related Purchase Commitment(s), if
applicable or (iv) the Market Value purchase price percentage of such
Mortgage Loan on the Purchase Date or (B) ninety eight percent (98%)
multiplied by the lesser of (i) the purchase price committed by the
related Approved Investor, if applicable or (ii) the Market Value of such
Mortgage Loan.

 

Purchased Assets: 
All now existing and hereafter arising right, title and interest of
Seller in, under and to the following:

 

(a)           all Mortgage Loans, now owned and
hereafter acquired, including all Mortgage Notes and Mortgages evidencing such
Mortgage Loans and the related Mortgage Loan Documents, for which a Transaction
has been entered into between Buyer and Seller hereunder and for with the
Repurchase Price has not been paid in full and all Mortgage Loans, including
all Mortgage Notes and Mortgages evidencing such Mortgage Loans and the related
Mortgage Loan Documents, which, from time to time, are delivered, or caused to
be delivered, to Buyer (including delivery to a custodian or other third party
on behalf of Buyer) as additional security for the performance of Seller’s
obligations hereunder;

 

(b)           all Mortgage-Backed Securities, now
owned or hereafter acquired by Seller, that are supported by any Mortgage Loan
constituting Purchased Assets hereunder, all right to the payment of monies in
non-cash distributions on account thereof and all new, substituted and
additional securities at any time issued with respect thereto;

 

(c)           all rights of Seller under all
Purchase Commitments, now existing and hereafter arising, covering any part of
the Purchased Assets, all rights to deliver such Mortgage Loans and
Mortgage-Backed Securities to permanent investors and other purchasers pursuant
thereto and all Proceeds resulting from the disposition of such Purchased
Assets thereto;

 

(d)           all now existing and hereafter
established accounts maintained with broker-dealers by Seller for the purpose
of carrying out transactions under Purchase Commitments relating to any part of
the Purchased Assets;

 

(e)           all now existing and hereafter
arising rights of Seller to service, administer and/or collect on the Mortgage
Loans included as Purchased Assets hereunder and any and all rights to the
payment of monies on account thereof;

 

(f)            all now existing and hereafter
arising accounts, contract rights and general intangibles constituting or
relating to any of the Purchased Assets;

 

(g)           all mortgage insurance and all
commitments issued by Insurers to insure or guaranty any Mortgage Loans
included as Purchased Assets, including, without limitation, the right to
receive all insurance proceeds and condemnation awards that may be payable in
respect of the premises encumbered by any Mortgage; and all other documents or
instruments delivered to Buyer in respect of the Mortgage Loans included as
Purchased Assets;

 

(h)           All documents, files, surveys,
certificates, correspondence, appraisals, computer programs, tapes, discs,
cards, accounting records and other information and data of Seller relating to
Mortgage Loans included as Purchased Assets;

 

(i)            All rights, but not any obligations
or liabilities, of Seller with respect to the Approved Investors;

 

(j)            All property of Seller, in any form
or capacity now or at any time hereafter in the possession or control of Buyer,
including, without limitation, all deposit accounts and any funds at any time
held therein, into which Proceeds of the foregoing Purchased Assets are at any
time deposited;

 

A-11

 

(k)           All products and Proceeds of the
foregoing Purchased Assets; and

 

(l)            Any funds of Seller at any time
deposited or held in the Over/Under Account.

 

Purchased
Mortgage Loan:  A Mortgage Loan that has been purchased by
Buyer from Seller in connection with a Transaction and which has not been
repurchased by Seller hereunder.

 

Reportable
Event:  An event described in Section 4043(b) of
ERISA with respect to a Plan as to which the thirty (30) days notice
requirement has not been waived by the Pension Benefit Guaranty Corporation.

 

Repurchase
Acceleration Event:  Any of the conditions or events set forth in Section 4.2.

 

Repurchase Date:  The date on which Seller is to repurchase a
Purchased Mortgage Loan subject to a Transaction from Buyer, as specified in the
related Transaction and/or Asset Data Record, or if not so specified, the date
identified to Buyer by Seller as the date that the related Purchased Mortgage
Loan is to be sold pursuant to a Purchase Commitment; provided, however, that
if the Repurchase Date is not a date within the Maximum Dwell Time, Buyer may,
at its discretion, deem such Purchased Mortgage Loan a Noncompliant Mortgage
Loan and Buyer may pursue any rights and remedies accorded Buyer hereunder as a
result thereof, including, without limitation, charging Seller any applicable
fees as a result thereof.  The Repurchase
Date for each Purchased Mortgage Loan shall in no event occur later than one
year after the Purchase Date of such Purchased Mortgage Loan.

 

Repurchase Price:  The
price at which a Purchased Mortgage Loan is to be transferred from Buyer or its
designee to Seller upon termination of a Transaction, which shall be determined
as the sum of (i) the Purchase Price, (ii) any applicable fees owed
by Seller in connection with the Purchased Mortgage Loan and (iii) the
price differential due on such Purchase Price pursuant to Section 2.6
as of the date of such determination.

 

Repurchase Transaction:  A repurchase transaction, as defined and
described in Section 6.6.

 

Servicer:  BAC
Home Loans Servicing LP, or such other entity responsible for servicing of the
Purchased Mortgage Loans, which is acceptable to Buyer and approved by Buyer in
writing, or any successor or permitted assigns.

 

Servicer Notice:  The
notice acknowledged by the Servicer substantially in the form of Exhibit L
hereto.

 

Servicing
Agreement: If the
Purchased Mortgage Loans are serviced by any third party servicer, the
agreement with that third party in form and substance acceptable to Buyer.

 

Shipping
Fee:  That fee, as set forth in the Transactions
Terms Letter or otherwise indicated on Buyer’s then current schedule of fees,
payable by Seller to Buyer for each Mortgage Loan File, or portion thereof,
Buyer delivers to Seller, an Approved Investor or other designee.

 

Standard
Status:  As of any date of determination, the
Purchased Mortgage Loan has been subject to a Transaction for less than the
Maximum Dwell Time and is not a Noncompliant Mortgage Loan or a Defective
Mortgage Loan.

 

Subordinated
Debt:  Debt of Seller that has been subordinated to
Buyer as provided in this Agreement or as otherwise approved by Buyer.

 

Successor
Servicer:  The subservicer of the Purchased Mortgage
Loans appointed by Buyer as described in Section 6.2(e) of
this Agreement.

 

Super
Jumbo Mortgage Loan:  Unless defined otherwise in the Transactions
Terms Letter, a first lien mortgage loan underwritten to the same standards as
a Conventional Conforming Mortgage Loan except 

 

A-12

 

with
respect to the original principal balance, which is greater than one million
($1,000,000) dollars but less than the one million five hundred thousand
($1,500,000) dollars.

 

Super
Jumbo Plus:  Unless defined otherwise in the Transactions
Terms Letter, a first lien mortgage loan underwritten to the same standards as
a Conventional Conforming Mortgage Loan except with respect to the original
principal balance, which is greater that one million five hundred thousand
($1,500,000) dollars.

 

Tangible
Net Worth:  With respect to any Person at any date, the
excess of the total assets over total liabilities of such Person on such date,
each to be determined in accordance with GAAP consistent with those applied in
the preparation of Seller’s financial statements less the sum of the following
(without duplication): (a) the book value of all investments in
non-consolidated subsidiaries, and (b) any other assets of Seller and
consolidated subsidiaries that would be treated as intangibles under GAAP
including, without limitation, good will, research and development costs,
trademarks, trade names, copyrights, patents, rights to refunds and
indemnification and unamortized debt discount and expenses; provided further
that, to the extent not already excluded, there shall be excluded from Tangible
Net Worth, those assets of any Person which, if such Person were a HUD
mortgagee, would be deemed by HUD to be non-acceptable in calculating adjusted
net worth in accordance with its requirements in effect as of such date, as
such requirements appear in the “Audit Guide for Use by Independent Public
Accountants in Audits of HUD-Approved Nonsupervised Mortgagees, Loan
Correspondents and Coinsuring Mortgagees” or any successor or replacement audit
guide published by HUD.  Notwithstanding
the foregoing, servicing rights shall be included in the calculation of total
assets.

 

Total
Liabilities:  The sum of (a) the total liabilities of
Seller on any given date of determination, to be determined in accordance with
GAAP consistent with those applied in the preparation of Seller’s financial
statements, plus (b) to the extent not already included under GAAP, the
total aggregate outstanding amount owed by Seller under any repurchase,
refinance or other similar credit arrangements, plus (c) to the extent not
already included under GAAP, any “off balance sheet” repurchase, refinance or
other similar credit arrangements, less (d) the amount of the “Credit Off
Feature,” if any, as set forth in the Transactions Terms Letter less (e) if
applicable, the aggregate unpaid principal balance of the outstanding Loans
sold by Seller to Buyer under the Early Purchase Program Addendum (the “EPP
Addendum”) to Loan Purchase Agreement by and between Seller and Buyer for which
the Review Period (as defined in the EPP Addendum) has not been completed.

 

Transaction:  A
transaction between Buyer and Seller as contemplated under this Agreement.

 

Transaction
Request Deadline:  That time, as set forth in the Transactions
Terms Letter, by which Seller must submit to Buyer certain documents in order
to initiate a Transaction.

 

Transaction
Requirements:  Those terms and conditions, as set forth in
the Transactions Terms Letter, applicable to a specific type of Purchased
Mortgage Loan.

 

Transactions
Terms Letter:  The document executed by Buyer and Seller,
referencing this Agreement and setting forth certain specific terms, and any
additional terms, with respect to this Agreement.

 

Type Purchase Price Percentage:  With
respect to each type of Purchased Mortgage Loan that corresponds to the Type,
the corresponding purchase price percentage, as set forth in the Transactions
Terms Letter.

 

Type
Margin:  With respect to each type of Purchased
Mortgage Loan that corresponds to the Type, the corresponding annual rate of
interest that shall be added to the Applicable Pricing Rate to determine the
annual rate of interest for the related Purchase Price, as set forth in the
Transactions Terms Letter.

 

Type
Sublimit:  Any of the applicable Type Sublimits, as set
forth in the Transactions Terms Letter.

 

A-13

 

Underwriter
Approval:  Written evidence, in form and substance
acceptable to Buyer, that a Purchased Mortgage Loan has been underwritten to
the satisfaction of the Approved Investor issuing the applicable Purchase
Commitment.

 

Unused
Facility Fee:  A fee, as set forth in the Transactions Terms
Letter or otherwise indicated on Buyer’s then current schedule of fees, payable
by Seller quarterly in arrears based upon the unused portion of the Aggregate
Transaction Limit; provided, however, that no fee shall be due if the average
difference between the Aggregate Transaction Limit and actual outstanding
principal amount of all Transactions, calculated on a daily basis, during such
quarter is less than that percent of the Aggregate Transaction Limit set forth
in the Transactions Terms Letter.

 

VA:  The
Department of Veterans Affairs and any successor thereto.

 

Warehouse
Credit:  The aggregate amount of credit, committed and
uncommitted, available to Seller through warehouse lines of credit, repurchase
facilities or similar mortgage finance arrangements.

 

Wet
Deficiency Fee:  That fee, as set forth in the Transactions
Terms Letter or otherwise indicated on Buyer’s then current schedule of fees,
payable by Seller for each calendar day that Seller fails to deliver to Buyer
or its Custodian the Mortgage Loan Documents relating to any Wet Mortgage Loan
purchased by Buyer following expiration of the Wet Mortgage Loans Maximum Dwell
Time.

 

Wet
Mortgage Loan:  A Mortgage Loan as to which Buyer purchases
from Seller by delivering funds to the applicable Closing Agent prior to
receipt by Buyer or its Custodian of the related Mortgage Loan Documents,
subject to Seller’s obligation to deliver the related Mortgage Loan Documents
within the Wet Mortgage Loans Maximum Dwell Time.

 

Wet
Mortgage Loans Maximum Dwell Time: That period of time, as set forth in the Transactions Terms Letter,
by which Seller must deliver to Buyer or its designee the Mortgage Loan
Documents for a Wet Mortgage Loan.

 

Wet
Mortgage Loans Sublimit: The maximum aggregate principal amount of Purchased Mortgage Loans
that may be Wet Mortgage Loans at any time, as set forth in the Transactions
Terms Letter.

 

Wire Transfer Fee:  That fee, as set forth in the Transactions Terms
Letter or otherwise indicated on Buyer’s then current schedule of fees, payable
by Seller for each payment of the Purchase Price by wire transfer or for any
payment (including the Repurchase Price) received by Buyer from Seller or its
Approved Investor.

 

A-14

 

EXHIBIT
B

 

IRREVOCABLE
CLOSING INSTRUCTIONS

 

May 1, 2009

 

                                            
(“Closing Agent”)

                                                                          

                                                                            

Dear  
                                                                  

 

Re:                             Irrevocable Closing Instructions

 

Closing
Protection Letter Issued By, if applicable: 
                                               

 

Ladies and Gentlemen:

 

This letter is being sent in accordance
with that Master Repurchase Agreement dated as of May 1, 2009 (the “Agreement”)
between Home Loan Center, Inc. (“Seller”) and Bank of America, N.A. (“Buyer”),
the terms of which do not affect Closing Agent except as set forth herein.

 

Pursuant to the Agreement, you have been
identified as either:

·                  the
title insurer to close and provide title insurance on certain mortgage loans
made by Seller; or

·                  the
closing agent to close and fund certain mortgage loans made by Seller and
covered by the above referenced  closing
protection letter (the “Mortgage Loans”).

 

From time to time, Buyer will wire to you,
for the account of Seller, funds requested by Seller under the terms of the
Agreement to be used by you for the purpose of funding such Mortgage Loan(s) and
for no other purpose.  Notwithstanding
anything to the contrary contained herein, you are not to distribute any of
such funds to Seller.  You must
immediately return the funds to Buyer at the following account if one of the
following conditions occurs:

·                  You
do not close any Mortgage Loan within forty-eight (48) hours of the time you
receive the applicable funds; or

·                  You
receive funds for a Mortgage Loan for which you have not been instructed by
Seller to (a) obtain title insurance from the title insurance company
specified in the above referenced closing protection letter or (b) underwrite
the title insurance.

 

	
   

  	
  Bank:

  	
   

  
	
   

  	
  ABA No.:

  	
   

  
	
   

  	
  Account No.:

  	
   

  
	
   

  	
  Credit:

  	
   

  
	
   

  	
  Reference:

  	
   

  

 

If
the Mortgage Loan Documents (as described below) have not been delivered to Seller
prior to the funding of the Transaction, within forty eight (48) hours of
closing any Mortgage Loan, unless otherwise instructed by Buyer, you must
deliver to Seller, the following Mortgage Loan Documents:

 

(a)                                  the original mortgage note evidencing the
Mortgage Loan, endorsed by Seller in blank, with a complete chain from the
originator to Seller;

 

B-1

 

(b)                                 if in your possession, an original assignment
in blank executed by Seller for the mortgage or deed of trust securing the
mortgage note, in recordable form but unrecorded, with a complete chain of
intervening assignments from the originator to Seller;

 

(c)                                  a certified copy of the executed mortgage or
deed of trust securing the mortgage note; and

 

(d)                                 an original or copy of the title insurance
policy insuring the first lien or second lien position of the mortgage or deed
of trust, as applicable, in at least the original principal amount of the
related mortgage note and containing only those exceptions permitted by the
purchase commitment, as set forth in the final closing instructions referred to
below, or an unconditional commitment to issue such a title insurance policy,
or a preliminary report and instructions received from Seller relating to the
issuance of such a title insurance policy.

 

With respect to each Mortgage Loan for
which you act as Closing Agent, Seller will deliver to you final closing
instructions specific to such Mortgage Loan. In the event that the terms of the
final closing instructions contradict the terms of these irrevocable closing
instructions, the terms of these irrevocable closing instructions shall
govern.  Permission to change the
scheduled closing date for any Mortgage Loan beyond the time permitted herein
or permission to otherwise deviate from these irrevocable closing instructions
must be furnished to you in a writing signed by Buyer and Seller.

 

By your participation in the closing and
funding of a Mortgage Loan as Closing Agent, you agree to act as Buyer’s bailee
with respect to such Mortgage Loan and the Mortgage Loan Documents referenced
above and you thereby acknowledge your responsibility to Buyer as holder of an
interest in such Mortgage Loan and to care for and protect Buyer’s interest in
such Mortgage Loan.   Facsimile
signatures on these instructions shall be deemed valid and binding to the same
extent as the original.

 

Sincerely,

 

	
  Bank of America, N.A.

  	
   

  	
  Home
  Loan Center, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  

 

B-2

 

EXHIBIT
C

 

SECRETARY’S
CERTIFICATE

 

I,
                                                              ,
am the duly elected Secretary of Home Loan Center, Inc. (“Company”), and I
hereby certify that:

 

1.                                       Each
of the persons listed below has been duly elected to and now holds the office
of the Company set forth opposite his or her name and is currently serving, in
such capacity, and the signature of each such person set forth opposite his or
her title is his or her true and genuine signature:

 

	
  Name

  	
   

  	
  Office

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

2.                                       Attached hereto as Exhibit A is a true
and complete copy of the Articles of Incorporation of the Company (or its
equivalent if the Company is not a corporation), as in full force and
effect.  No amendment or other document
relating to or affecting the Articles of Incorporation (or its equivalent) has
been filed in the office of the Secretary of State of incorporation or formation
and no action has been taken by the Company or its shareholders, directors or
officers in contemplation of the filing of any such amendment or other
documents and no proceedings therefore have occurred;

 

3.                                       Attached hereto as Exhibit B is a true
and complete copy of the By-laws of the Company (or its equivalent if the
Company is not a corporation), as in full force and effect, and such By-laws
(or its equivalent) have not been amended, except for amendments included in
the copy attached hereto; and

 

4.                                       Attached hereto as Exhibit C is true and
complete copy of the resolutions duly and validly adopted either at a special
or regular meeting or by unanimous consent that apply to the Master Repurchase
Agreement between the Company and Bank of America, N.A., and such resolutions
have not been amended, modified or rescinded in any respect and remain in full
force and effect without modification or amendment as of the date hereof.

 

	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

C-1

 

EXHIBIT
D

 

RESOLUTIONS

 

WHEREAS, Home Loan Center, Inc. (the “Company”)
desires to enter into mortgage loan purchase transactions (the “Transactions”)
in an aggregate amount not to exceed Fifty Million Dollars ($50,000,000) with
Bank of America, N.A. (“Buyer”) pursuant to a Master Repurchase Agreement
substantially in the form attached hereto (the “Agreement”).

 

NOW, THEREFORE, IT IS RESOLVED BY THE
BOARD OF DIRECTORS (OR ITS EQUIVALENT) OF THE COMPANY THAT:

 

1.                                       Company
is hereby authorized and directed to enter into and execute each of the following
documents:

 

(a)                                  the Agreement between Company and Buyer,
attached hereto; and

 

(b)                                 any and all other agreements and documents in
connection with the Transactions,

 

2.                                       Any
one of the following officers are separately and independently authorized and
directed to execute and deliver the Agreement and any and all other agreements
and documents related to the Transactions, and to do any and all things which
he or she may deem necessary or desirable in connection with the Transactions,
including approving, executing and delivering any amendments or modifications
to the Agreement.

 

	
  Name/Title

  	
   

  	
  Specimen Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

3.                                 Any
one of the following officers, directors and/or employees is separately and
independently authorized to take the following actions in connection with the
Agreement and Transactions: (a) request Transactions; (b) sign
receipts acknowledging delivery of funds and documents from Buyer; (c) request
and effect transfers of funds; and (d) ship and release documents to
Buyer:

 

	
  Name/Title

  	
   

  	
  Specimen Signature

  	
   

  	
  Restrictions, if any

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

D-1

 

4.                                       The employees of Buyer are hereby appointed
as assistant secretaries and vice presidents of Seller, and, as such, are
authorized to, in the name of Seller, do any of the following:

 

(a)                                  to
receive, endorse and collect all checks made payable to the order of Seller
representing any payment on account of the Purchased Assets (as defined in the
Agreement);

 

(b)                                 to
assign or endorse any mortgage, deed of trust, promissory note or other
instrument relating to the Purchased Assets;

 

(c)                                  to
correct any assignment, mortgage, deed of trust or promissory note or other
instrument relating to the Purchased Assets, including, without limitation,
unendorsing and re-endorsing a promissory note to another investor;

 

(d)                                 to
complete and execute lost note affidavits or other lost document affidavits
relating to the Purchased Assets;

 

(e)                                  to
issue title requests and instructions relating to the Purchased Assets;

 

(f)                                    to
give notice to any individual or entity of its interest in the Purchased Assets
under the Agreement; and

 

(g)                                 to
service and administer the Purchased Assets, including, without limitation, the
receipt and collection of all sums payable in respect of the Purchased Assets.

 

I,                                         ,
being the Secretary of Seller, hereby certify that the foregoing is a true copy
of the Resolutions duly adopted by the Board of Directors (or its equivalent)
of Seller, effective as of
                                ,
which is in full force and effect on this date and does not conflict with
Seller’s governing documents.

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Secretary

  	
   

  

 

D-2

 

EXHIBIT
E

 

OFFICER’S
CERTIFICATE

 

I,
                                    ,
the duly elected                               
of Home Loan Center, Inc. (“Seller”), do hereby certify as follows:

 

1.                                       The
representations and warranties made by Seller under the Principal Agreements
(as defined in the Master Repurchase Agreement dated as of May 1, 2009
(the “Agreement”) between Seller and Bank of America, N.A. (“Buyer”) are
accurate and true on and as of the date hereof with the same effect as though
such representations and warranties had been made on and as of the date hereof.

 

2.                                       Seller
is in compliance with all of the terms and provisions set forth in the
Principal Agreements on its part to be performed and observed, and no Event of
Default or Potential Default (as defined in the Agreement) has occurred and is
continuing.

 

3.                                       Since
                                          ,
no material change in the Executive Management (as defined in the Agreement),
business, assets or financial or other condition of Seller and its consolidated
Subsidiaries (as defined in the Agreement) taken as a whole has occurred.

 

4.                                       All
funds required under the Agreement to be deposited and segregated in the
Custodial Account have been so deposited and segregated.

 

IN WITNESS WHEREOF, the undersigned has
hereunto signed his/her name on  
                                .

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

E-1

 

EXHIBIT
F

 

ASSIGNMENT
OF CLOSING PROTECTION LETTER

 

Home Loan Center, Inc. (“Assignor”)
declares that for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, it does hereby convey, transfer, assign,
deliver and give to Assignee, and hereby expressly subrogates Bank of America,
N.A. (“Assignee”) unto, all of Assignor’s claims, demands, rights and causes of
action, past, present or future, that Assignor has for loss or damage covered
by the closing protection letter issued by
                                  
(Title Company) attached hereto (“Closing Protection Letter”).  Such rights being assigned by Assignor
hereunder include, without limitation, the right to demand, sue, collect,
receive, protect, preserve and enforce performance under the Closing Protection
Letter.  Assignee shall succeed to all
rights of recovery of Assignor under the Closing Protection Letter and Assignor
shall execute such instruments and documents necessary and proper to further
secure such rights to Assignee and shall not act in any manner hereafter to
prejudice or impair the rights of Assignee. Assignor hereby grants Assignee an
irrevocable mandate and power of attorney coupled with an interest with full
power of substitution to transact this act of assignment and subrogation.

 

IN WITNESS WHEREOF, the Assignor has
caused this assignment to be duly executed as of May 1, 2009.

 

Home Loan Center, Inc.

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

F-1

 

EXHIBIT
G

 

ASSIGNMENT
OF FIDELITY BOND AND ERRORS AND OMISSION POLICY

 

Home Loan Center, Inc. (“Assignor”)
declares that for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, it does hereby convey, transfer, assign,
deliver and give to Assignee, and hereby expressly subrogates Bank of America,
N.A. (“Assignee”) unto, all of Assignor’s claims, demands, rights and causes of
action, past, present or future, that Assignor has for loss or damage covered
by Assignor’s fidelity bond and errors and omission policy (collectively, the “Policy”).
Such rights being assigned by Assignor hereunder include, without limitation,
the right to demand, sue, collect, receive, protect, preserve and enforce
performance under the Policy.  Assignee
shall succeed to all rights of recovery of Assignor under the Policy and
Assignor shall execute such instruments and documents necessary and proper to
further secure such rights to Assignee and shall not act in any manner
hereafter to prejudice or impair the rights of Assignee.  Assignor hereby grants Assignee an
irrevocable mandate and power of attorney coupled with an interest with full
power of substitution to transact this act of assignment and subrogation.

 

IN WITNESS WHEREOF, the Assignor has
caused this assignment to be duly executed as of May 1, 2009.

 

Home Loan Center, Inc.

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

G-1

 

EXHIBIT
H

 

FORM OF
POWER OF ATTORNEY

 

KNOW ALL
MEN BY THESE PRESENTS:

 

WHEREAS, Bank of
America, N.A. (“Buyer”) and Home Loan Center, Inc. (“Seller”) have entered
into the Master Repurchase Agreement, dated as of May 1, 2009 (the “Agreement”),
pursuant to which Buyer has agreed to purchase from Seller certain mortgage
loans from time to time, subject to the terms and conditions set forth therein;

 

WHEREAS, Seller
has agreed to give to Buyer a power of attorney on the terms and conditions
contained herein in order for Buyer to take any action that Buyer may deem
necessary or advisable to accomplish the purposes of the Agreement;

 

NOW, THEREFORE, Seller hereby irrevocably
constitutes and appoints Buyer its true and lawful Attorney-in-Fact, with full
power and authority hereby conferred in its name, place and stead and for its
use and benefit, to do and perform the following in connection with mortgage
loan purchased by Buyer from Seller under the Agreement (the “Purchased Assets”)
or as otherwise provided below:

 

(1)                                  to
receive, endorse and collect all checks made payable to the order of Seller
representing any payment on account of the Purchased Assets;

 

(2)                                  to
assign or endorse any mortgage, deed of trust, promissory note or other
instrument relating to the Purchased Assets;

 

(3)                                  to
correct any assignment, mortgage, deed of trust or promissory note or other
instrument relating to the Purchased Assets, including, without limitation,
unendorsing and re-endorsing a promissory note to another investor;

 

(4)                                  to
complete and execute lost note affidavits or other lost document affidavits
relating to the Purchased Assets;

 

(5)                                  to
issue title requests and instructions relating to the Purchased Assets;

 

(6)                                  to
give notice to any individual or entity of its interest in the Purchased Assets
under the Agreement; and

 

(7)                                  to
service and administer the Purchased Assets, including, without limitation, the
receipt and collection of all sums payable in respect of the Purchased Assets.

 

Seller hereby ratifies and confirms all
that said Attorney-in-Fact shall lawfully do or cause to be done by authority
hereof.

 

Third
parties without actual notice may rely upon the power granted under this Power
of Attorney upon the exercise of such power by the Attorney-in-Fact.

 

Home Loan Center, Inc.

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

H-1

 

WITNESS
my hand this
                        
day of
                                ,
20      .

 

STATE
OF

 

County
of

 

This
instrument was acknowledged, subscribed and sworn to before me this
                  
day of                                   ,
by                       

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Notary
  Public

  
	
   

  	
   

  	
   

  	
   

  
	
  My
  Commission Expires:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Notary Seal:

  

 

H-2

 

EXHIBIT
I

 

ACKNOWLEDGEMENT OF PASSWORD
CONFIDENTIALITY AGREEMENT

 

Home
Loan Center, Inc. (“Seller”) has entered into a Master Repurchase
Agreement with Bank of America, N.A. (“Buyer”). 
In connection therewith, Seller is being provided access to the website
at www.warehouselending.com (the “Website”). 
As consideration for being provided access to and use of the Website,
Seller agrees that:

 

1.                                       Seller may only access the Website by using a
user name and password issued by Buyer.

 

2.                                       Buyer reserves the right to revoke or
deactivate any user name and/or password at any time.

 

3.                                       Seller shall designate in writing an
authorized representative (the “Authorized Representative”) to communicate with
Buyer regarding the authorized users of the Website.  The Authorized Representative shall be
responsible for notifying Buyer of any changes, additions or deletions to the
authorized users.  Under no circumstances
may user names and passwords be transferred between authorized users.  Seller shall be solely responsible for all
actions of its Authorized Representative and shall immediately notify Buyer of
any change in its Authorized Representative. 
Buyer shall be entitled to rely on the authority and directions of the
Authorized Representative without further inquiry.  Authorized Representative shall communicate
with Buyer in writing or via telephone by dialing (877) 425-3463, Option 5

 

4.                                       Seller shall be solely responsible for
safeguarding access to user names and passwords and for implementing controls
to prevent unauthorized usage of the Website.

 

5.                                       Seller is responsible for all requests,
approvals and other transactions on the Website accessed through user names
and/or passwords issued to Seller.

 

6.                                       Buyer shall be entitled to rely on all
requests, approvals and other communications made on the Website through a user
name and/or password issued to Seller until such time as:

 

(a)                                  Seller provides Buyer with written
instructions to the contrary; and

 

(b)                                 Buyer has sufficient time to notify the
appropriate employees and modify its computerized systems to deactivate the
affected user name and/or password.

 

7.                                       Any dispute regarding the use of user names
and/or passwords shall be resolved in accordance with the terms and conditions
of the Agreement.

 

By signing below you acknowledge your
agreement to the terms and conditions set forth herein. Facsimile signatures shall
be deemed valid and binding to the same extent as the original.

 

SELLER
AUTHORIZATIONS:

 

Any of the persons whose signatures and
titles appear below, or attached hereto, are authorized, acting singly, to act
for the Seller under this Agreement as an Authorized Representative.

 

	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  

 

J-1

 

	
   

  	
  Home
  Loan Center, Inc.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Number

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  	
  Assigned:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  	
  Date:

  	
   

  

 

J-2

 

EXHIBIT J

 

WIRING INSTRUCTIONS

 

Seller’s Wire Instructions:

 

Account #;

Account Holder’s name:

ABA #:

Bank name:

Bank Address:

Further Credit:

 

Buyer’s Wire Instructions:

 

	
  Bank:

  	
   

  	
   

  
	
  ABA No.:

  	
   

  	
   

  
	
  Account No.:

  	
   

  	
   

  
	
  Reference:

  	
   

  	
   

  

 

These
wiring instructions may not be changed except by an authorized representative
of Buyer or Seller, as applicable.  Buyer
shall be entitled to rely on these wiring instructions without further inquiry
or verification.

 

K-1

 

EXHIBIT K

 

[DRAFT]

FORM OF SERVICER NOTICE

 

May 1, 2009

 

[                                ],
as Servicer

[ADDRESS]

Attention:             

 

Re:                               Master
Repurchase Agreement, dated as of
[            
    ], 200[    ] (the “Repurchase Agreement”), by and among
[                      ]
(the “Seller”) and Bank of
America, N.A. (the “Buyer”).

 

Ladies and Gentlemen:

 

[                                      ]
(“Servicer”)
is servicing certain mortgage loans for Seller pursuant to that certain
Servicing Agreement between Servicer and Seller.  Pursuant to the Repurchase Agreement between
Buyer and Seller, Servicer is hereby notified that Seller may from time to time
sell to Buyer certain mortgage loans which are then currently being serviced by
Servicer.

 

Upon receipt of notice from Buyer in which
Buyer shall identify the mortgage loans which are then sold to Buyer under the
Repurchase Agreement (the “Mortgage Loans”), Servicer shall
segregate all amounts collected on account of such Mortgage Loans, hold them in
trust for the sole and exclusive benefit of Buyer, and remit such collections
in accordance with Buyer’s written instructions.  Further, Servicer shall follow the
instructions of Buyer with respect to the Mortgage Loans, and shall deliver to
Buyer any information with respect to the Mortgage Loans as reasonably
requested by Buyer.

 

Notwithstanding any contrary information which
may be delivered to the Servicer by Seller, Servicer may conclusively rely on
any information delivered by Buyer, and Seller shall indemnify and hold the
Servicer harmless for any and all claims asserted against it for any actions
taken in good faith by the Servicer in connection with the delivery of such
information.

 

Please acknowledge receipt of
this instruction letter by signing in the signature block below and forwarding
an executed copy to Buyer promptly upon receipt.  Any notices to Buyer should be delivered to
the following addresses: Bank of America, N.A., [ADDRESS]; Attention:; Telephone: 
[          ];
Facsimile: 
[        ].

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [                                        ]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

ACKNOWLEDGED:

 

[                                    ],

as Servicer

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
  Facsimile:

  	
   

  

 

 

EXHIBIT L

 

REPRESENTATIONS AND WARRANTIES

 

Representations and Warranties
Concerning Seller. 
Seller represents and warrants to and covenants with Buyer that the
following are true and correct as of the Effective Date through and until the
date on which all obligations of Seller under this Agreement are fully
satisfied:

 

(a)                                  Due
Formation and Good Standing. 
Seller is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has the full legal power and
authority to own its property and to carry on its business as currently
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the transaction of its business makes such qualification
necessary.

 

(b)                                 Authorization. The
execution, delivery and performance by Seller of the Principal Agreements and
all other documents and transactions contemplated thereby, are within Seller’s
corporate powers, have been duly authorized by all necessary corporate action
and do not constitute or will not result in (i) a breach of any of the
terms, conditions or provisions of Seller’s articles or certificate of
incorporation or bylaws (or corresponding organizational documents if Seller is
not a corporation); (ii) a material breach of any legal restriction or any
agreement or instrument to which Seller is now a party or by which it is bound;
(iii) a material default or an acceleration under any of the foregoing; or
(iv) the violation of any law, rule, regulation, order, judgment or decree
to which Seller or its property is subject.

 

(c)                                  Enforceable
Obligation. 
The Principal Agreements and all other documents contemplated thereby
constitute legal, binding and valid obligations of Seller, enforceable in
accordance with their respective terms, except as limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditor’s
rights.

 

(d)                                 Approvals.  The execution and delivery of the Principal
Agreements and all other documents contemplated thereby and the performance of
Seller’s obligations thereunder do not require any license, consent, approval,
authorization or other action of any Person, including any state, federal,
governmental or regulatory authority, or if required, such license, consent,
approval, authorization or other action has been obtained prior to the
Effective Date.

 

(e)                                  Compliance
with Laws.  Seller is not in
violation of any provision of any applicable law, or of any judgment, award,
rule, regulation, order, decree, writ or injunction of any court or public
regulatory body or authority that might have a material adverse effect on the
business, operations, assets or financial condition of Seller.

 

(f)                                    Financial
Condition.  All financial
statements of Seller and each Guarantor delivered to Buyer fairly and
accurately present the financial condition of the parties for whom such
statements are submitted. The financial statements of Seller have been prepared
in accordance with GAAP consistently applied throughout the periods involved,
and there are no contingent liabilities not disclosed thereby that would
adversely affect the financial condition of Seller. Since the close of the
period covered by the latest financial statement delivered to Buyer with
respect to Seller, there has been no material adverse change in the assets,
liabilities or financial condition of Seller nor is Seller aware of any facts
that, with or without notice or lapse of time or both, would or could result in
any such material adverse change. No event has occurred, including, without
limitation, any litigation or administrative proceedings, and no condition
exists or, to the knowledge of Seller, is threatened, that (i) is probable
and estimable that it may render Seller unable to perform its obligations under
the Principal Agreements and all other documents contemplated thereby; (ii) would
constitute a Potential Default or Event of Default; or (iii) might
adversely affect the financial condition of Seller or the validity, priority or
enforceability of the Principal Agreements or any other documents contemplated
thereby.

 

 

(g)                                 Credit
Facilities. 
The only credit facilities, including repurchase agreements for mortgage
loans and mortgage-backed securities, of Seller that are presently in effect
and are secured by mortgage loans or provide for the purchase, repurchase or
early funding of mortgage loan sales, are with Persons disclosed to Buyer at
the time of application, or thereafter disclosed to and approved by Buyer, and,
if required by Buyer, such Persons have executed and delivered an Intercreditor
Agreement (or will execute and deliver an Intercreditor Agreement within sixty
(60) days following the Effective Date in accordance with Section 7.3)
or warehouse lenders that are Approved Payees.

 

(h)                                 Title to
Assets.  Seller has good, valid,
insurable (in the case of real property) and marketable title to all of its
properties and other assets, whether real or personal, tangible or intangible,
reflected on the financial statements delivered to Buyer with respect to
Seller, except for such properties and other assets that have been disposed of
in the ordinary course of business of Seller’s mortgage banking business, and
all such properties and other assets are free and clear of all liens except as
disclosed in such financial statements.

 

(i)                                     Litigation. There are
no actions, claims, suits, investigations or proceedings pending, or to the
knowledge of Seller, threatened or reasonably anticipated against or affecting
Seller in any court or before or by any arbitrator, government commission, board,
bureau or other administrative agency that, if adversely determined, may
reasonably be expected to result in any material and adverse change in the
business, operations, assets, licenses, qualifications or financial condition
of Seller.

 

(j)                                     Payment of
Taxes.  Seller has filed
all tax returns and reports required to be filed and has paid all taxes,
assessments, fees and other governmental charges levied upon it or its property
or income that are due and payable, including interest and penalties, or has
provided adequate reserves for the payment thereof.

 

(k)                                  No Defaults.  Seller is not in default under any indenture,
mortgage, deed of trust, agreement or other instrument or contractual or legal
obligation to which it is a party or by which it is bound.

 

(l)                                     ERISA.  Seller is in compliance in all material
respects with the requirements of ERISA, and no Reportable Event has occurred
under any Plan maintained by Seller.

 

(m)                               Approved
Mortgagee.  If represented in
Buyer’s Credit Application or otherwise indicated by Seller to Buyer, Seller is
an approved FHA, VA, Ginnie Mae, Fannie Mae and/or Freddie Mac seller,
mortgagee and/or servicer and is in good standing with these agencies.

 

(n)                                 True and
Complete Disclosure. 
Seller has made full disclosure to Buyer of all information that could
adversely affect the execution, delivery and performance by Seller of its
obligations under the Principal Agreements. All information furnished to Buyer
by or on behalf of Seller in connection with the Principal Agreements or any
transaction contemplated thereby, including, without limitation, all
information set forth in the Application, was true, accurate and complete in
all material respects on the date furnished, and there has been no material
adverse change in the condition, financial or otherwise, of Seller from the
time such information was provided to Buyer.

 

(o)                                 Ownership;
Priority of Liens. Seller owns all Mortgage Loans
identified in the Transactions Terms Letter that are to become Purchased
Mortgage Loans, and any Transaction shall convey all of Seller’s right, title
and interest in and to such Purchased Mortgage Loans, including the servicing
rights related thereto, and other Purchased Assets to Buyer.  This Agreement shall also create in favor of
Buyer, a valid, enforceable, perfected first priority lien and security
interest in the Purchased Mortgage Loans and other Purchased Assets, prior to
the rights of all third Persons and subject to no other liens.

 

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

 

 

(q)                                 Filing Jurisdictions; Relevant States. 
Schedule 1 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 Assets. 
Schedule 1 sets forth all of the states or other jurisdictions in which
Seller originates Mortgage Loans in its own name or through brokers on the date
of this Agreement.

 

(r)                                    Seller Solvent; Fraudulent Conveyance.  As
of the date hereof and immediately after giving effect to each Transaction, the
fair value of the assets of 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 Seller in accordance with GAAP) of Seller and 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. Seller does not intend to incur, or believe
that it has incurred, debts beyond its ability to pay such debts as they mature.
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 Mortgage Loans with any
intent to hinder, delay or defraud any of its creditors.

 

(s)                                  Custodial Account.  All
funds required to be segregated and deposited into the Custodial Account have
been so segregated and deposited.

 

(t)            Chief Executive Office.  Seller’s chief executive office on is located
at 163 Technology Drive Irvine, CA 92618.

 

Representations
and Warranties Concerning Purchased Assets. Seller represents and warrants to and
covenants with Buyer that the following are true and correct with respect to
each Purchased Mortgage Loan as of the related Purchase Date through and until
the date on which such Purchased Mortgage Loan is repurchased by Seller:

 

(a)                                  Eligible Loan.  The
Mortgage Loan is a Conventional Conforming Mortgage Loan, Government Mortgage
Loan, Jumbo Mortgage Loan, Super Jumbo Mortgage Loan, Expanded Criteria
Mortgage Loan, Subprime Mortgage Loan, Closed-End Second Lien Mortgage Loan,
HELOC Mortgage Loan or Nonperforming/Subperforming Mortgage Loan, as
applicable. The Mortgage Loan is a legal, valid and binding obligation of the
Mortgagor thereunder, enforceable in accordance with its terms and subject to
no offset, defense or counterclaim, obligating Mortgagor to make the payments
specified therein.

 

(b)                                 Purchase Commitment. 
Unless otherwise stated in the Transactions Terms Letter, the Mortgage
Loan is covered by a Purchase Commitment that permits assignment thereof to
Buyer, does not exceed the availability under such Purchase Commitment,
conforms to the requirements and specifications set forth in such Purchase
Commitment and the related regulations, rules, requirements and/or handbooks of
the applicable Approved Investor and is eligible for sale to and insurance or
guaranty by, respectively, the applicable Approved Investor and any applicable
Insurer.

 

(c)                                  Asset Data Record.  The
information contained in the Asset Data Record is true, correct and complete.

 

(d)                                 Origination
and Servicing. 
The Mortgage Loan has been originated and serviced in material
compliance with all industry standards, applicable Approved Investor and
Insurer requirements and all applicable federal, state and local statutes,
regulations and rules, including, without limitation, the Federal
Truth-in-Lending Act of 1968, as amended, and Regulation Z thereunder, the
Federal Fair Credit Reporting Act, the Federal Equal Credit Opportunity Act,
the Federal Real 

 

 

Estate
Settlement Procedures Act of 1974, as amended, and Regulation X thereunder, and
all applicable usury, licensing, real property, consumer protection and other
laws.

 

(e)                                  Mortgage
Loan Documents. 
The Mortgage Loan is evidenced by instruments acceptable to FHA, VA,
Fannie Mae, Freddie Mac or the Approved Investor, as applicable, given the type
of Mortgage Loan. The Mortgage Loan Documents and other mortgage loan documents
have been duly executed and delivered by the Mortgagor and create valid and
legally binding obligations of the Mortgagor, enforceable in accordance with
their terms, except as may be limited by bankruptcy or other laws affecting the
enforcement of creditor’s rights generally, and there are no rights of
rescission, set-offs, counterclaims or other defenses with respect thereto.

 

(f)                                    Lien
Position.  The Mortgage Loan
is secured by a valid first priority lien on the Mortgaged Property under the
laws of the state where the related mortgaged property in located; provided,
however, that if the Mortgage Loan is a Closed-End Second Lien Mortgage Loan or
HELOC Mortgage Loan, it is secured by a valid second lien on the Mortgaged Property.

 

(g)                                 No Future
Advances.  The full original
principal amount of each Mortgage Loan, net of any discounts, has been fully
advanced or disbursed to the Mortgagor named therein, unless otherwise
expressly agreed by the parties in writing. There is no requirement for future
advances and any and all requirements as to completion of any on-site or
off-site improvements and as to disbursements of any escrow funds therefor have
been satisfied.

 

(h)                                 No Default.  There is no default, breach, violation or
event of acceleration existing under the Mortgage or the related Mortgage Note,
and no event has occurred that, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration. Seller has not waived any default, breach,
violation or event of acceleration.

 

(i)                                     No Waiver.  The terms of the Mortgage Loan have not been
waived, impaired, changed or modified, except to the extent such amendment or
modification has been disclosed to Buyer in writing and does not affect the
salability of the Mortgage Loan pursuant to the applicable Purchase Commitment.

 

(j)                                     Taxes and
Insurance.  All taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents that previously became due and
owing have been paid or a escrow of funds has been established in an amount
sufficient to pay for every such item that remains unpaid.

 

(k)                                  Private
Mortgage Insurance. 
Each Conventional Conforming Mortgage Loan is insured by a policy of
private mortgage insurance in the amount required by Fannie Mae or Freddie Mac,
as applicable, and by an Insurer and all provisions of such private mortgage
insurance policy have been and are being complied with, such policy is in full
force and effect and all premiums due thereunder have been paid. There are no
defenses, counterclaims or rights of setoff affecting the Conventional
Conforming Mortgage Loan or affecting the validity or enforceability of any
private mortgage insurance applicable to such Mortgage Loan.

 

(l)                                     Government
Mortgage Loans. 
If the Mortgage Loan is represented by Seller to have, or to be eligible
for, FHA insurance, such Mortgage Loan is insured, or eligible to be insured,
pursuant to the National Housing Act. If the Mortgage Loan is represented by
Seller to be guaranteed, or to be eligible for guarantee, by the VA, such
Mortgage Loan is guaranteed, or eligible to be guaranteed, under the provisions
of Chapter 37 of Title 38 of the United States Code. As to each FHA insurance
certificate or each VA guaranty certificate, Seller has complied with
applicable provisions of the insurance for guaranty contract and federal
statutes and regulations, all premiums or other charges due in connection with
such insurance or guarantee have been paid, there has been no act or omission
that would or may invalidate any such insurance or guaranty, and the insurance
or guaranty is, or when issued, will be in full force and effect with respect
to 

 

 

such
Government Mortgage Loan. There are no defenses, counterclaims or rights of
setoff affecting the Government Mortgage Loan or affecting the validity or
enforceability of the FHA insurance or VA guaranty applicable to such Mortgage
Loan.

 

(m)                               Hazard
Insurance.  The Mortgage Loan
is covered by a policy of hazard insurance, flood insurance and insurance
against other insurable risks and hazards as required by the applicable
Approved Investor and the agreements applicable to such Mortgage Loan, in
amounts not less than the outstanding principal balance of the Mortgage Loan or
such maximum lesser amount as permitted by the applicable Approved Investor and
applicable law, all in a form usual and customary in the industry and that is
in full force and effect, and all amounts required to have been paid under any
such policy have been paid.

 

(n)                                 Title
Insurance.  A valid and
enforceable title insurance policy has been issued or a commitment to issue
such title insurance policy has been obtained for the Mortgage Loan in an amount
not less than the original principal amount of such Mortgage Loan, which title
insurance policy insures that the Mortgage relating thereto is a valid first
lien or second lien, as applicable, on the property therein described and that
the mortgaged property is free and clear of all encumbrances and liens having
priority over the first lien of the Mortgage (unless the Mortgage Loan is a
Closed-End Second Lien Mortgage Loan or HELOC Mortgage Loan) and otherwise in
compliance with the requirements of the applicable Approved Investor. The title
insurance company that issued the applicable Closing Protection Letter has also
issued or has committed to issue the title insurance policy.

 

(o)                                 Assignment.  The Assignment (i) has been duly
authorized by all necessary corporate action by Seller, duly executed and
delivered by Seller and is the legal, valid and binding obligation of Seller
enforceable in accordance with its terms, and (ii) complies with all
applicable laws including all applicable recording, filing and registration
laws and regulations and is adequate and legally sufficient for the purpose
intended to be accomplished thereby, including, without limitation, the
assignment of all of the rights, powers and benefits of Seller as mortgagee.

 

(p)                                 No Fraud.  No error, omission, misrepresentation,
negligence, fraud or similar occurrence has taken place with respect to the
Mortgage Loan on the part of any Person, including, without limitation, the
Mortgagor, any appraiser, any builder or developer or any other party involved
in the origination of the Mortgage Loan or in the application of any insurance
in relation to such Mortgage Loan.

 

 

SCHEDULE 1

 

Filing Jurisdictions and OfficesExhibit 10.3

 

 

May 1,
2009

 

Home Loan Center, Inc.

163
Technology Drive

Irvine,
CA 92618

Attn:
Rian Furey, Senior Vice President

Email:
Rian.Furey@lendingtree.com

 

Re:           Transactions Terms Letter
for Master Repurchase Agreement

 

Ladies
and Gentlemen:

 

This
Transactions Terms Letter is made and entered into, as of the date set forth
above, by and between Bank of America, N.A. (“Buyer”) and Home Loan Center, Inc.
(“Seller”). This Transactions Terms Letter supplements the Master Repurchase
Agreement (the “Agreement”) by and between Buyer and Seller.  In the event there exists any inconsistency
between the Agreement and this Transactions Terms Letter, the latter shall be
controlling notwithstanding anything contained in the Agreement to the
contrary.  All capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Agreement. This Transactions Terms Letter supercedes all
previous Transactions Terms Letters and amendments as of the Effective Date.

 

Effective Date:                                                                                                                                                                  May 1, 2009

 

Expiration Date:                                                                                                                                                            Expiring on April 30, 2010

 

Aggregate Transaction Limit:                                                                                    Fifty Million Dollars ($50,000,000)

 

Financial Covenants:                                                                                                                                Seller shall maintain the following financial
covenants:

 

(a)                Minimum
Tangible Net Worth (calculated per HUD guidelines): $44,000,000; excluding any
net deferred tax assets.

 

(b)               Minimum
Liquidity: Seller to maintain unrestricted cash or unrestricted Cash
Equivalents in a minimum amount equal to 15% of Seller’s Tangible Net Worth,
inclusive of the Over/Under Account Balance. 
By way of example but not limitation, cash in escrow and/or impound
accounts shall not be included in this calculation.  Available draws from Seller’s warehouse or
repurchase facilities will be included in the Minimum Liquidity calculation.

 

(c)                Maximum
ratio of Total Liabilities and Warehouse Credit (Warehouse Credit is inclusive
of outstandings on warehouse lines, repurchase facilities or other off balance
sheet financing) to Tangible Net Worth: 4:1. (excluding the Early Purchase
Program with Buyer)

 

(d)               Net
Income:  Seller shall show positive
pre-tax net income, on a quarterly basis.

 

(e)                Seller
shall not add additional mortgage financing facilities (including warehouse,
repurchase, purchase or off-balance sheet facilities) without prior written
notification to Buyer.

 

(f)                  Payment
of Dividends: Seller may, without the prior written consent of Buyer, pay
dividends to its shareholders, members, partners or owners provided that (i) a
Potential 

 

	
   

  	
   

  	
  Acknowledged:

  
	
   

  	
   

  	
  Home Loan
  Center, Inc.:

  
	
   

  	
   

  	
  Bank of
  America, N.A.:

  
	
  Version:
  04-09

  	
   

  	
   

  

 

 

Default
or an Event of Default is not existing and will not occur as a result thereof, (ii) the
amount of dividends do not exceed 100% of Seller’s pre-tax net income for the
prior fiscal year if such dividends are declared and paid within 105 days after
the end of Seller’s prior fiscal year, and (iii) the amount of dividends
do not exceed 100% of Seller’s then current, pre-tax net income for the current
fiscal year if such dividends are declared and paid 106 days or more after
the end of Seller’s prior fiscal year.

 

Other Covenants:                                                                                                                                                  Seller shall maintain the following other
covenants:

 

(a)          To help ensure that Seller has adequate approved investors for mortgage
loans originated by Seller, Seller shall become and remain an approved client
of Bank of America Home Loans Correspondent Lending (“Correspondent Lending”)
and enter into an assignment of trade, direct trade, commitment or similar
agreement with Correspondent Lending to sell at least 50% of the mortgage loans
originated by Seller per quarter to Correspondent Lending for the term of the
Agreement.  Such agreement shall also
provide for a pair off fee of 37.5 basis points on the difference between the
required volume and actual volume of mortgage loans sold to Correspondent
Lending.

 

(b)         If the financial or other material covenants of Seller under any
current, future or modified third party warehouse, repurchase, financing,
guaranty or similar agreement are, or become, more favorable to Buyer than the
equivalent covenants under the Agreement, Seller shall promptly notify Buyer
and Buyer shall have the right, in its sole discretion, to modify the Agreement
to include such covenants.  Further, at
the request of Buyer, Seller shall promptly provide Buyer with its financial
covenants and any other covenants that Buyer deems material under any such
current, future or modified third party agreement.

 

(c)          Delinquency Covenant.  If,
in any two consecutive fiscal quarters of Seller, the delinquency rate for
first-lien residential mortgage loans originated by Seller and sold to
Correspondent Lending is greater than one hundred and fifty percent (150%) of
the average delinquency rate for first-lien residential mortgages sold by all
clients of Correspondent Lending, Buyer may immediately terminate the
Agreement.

 

(d)         Loss Mitigation Covenant. 
Seller agrees that, if (a) the sum total of all outstanding amounts
owed by Seller to Correspondent Lending at the end of a calendar quarter is
equal to or greater than eighty percent (80%) of Seller’s Tangible Net Worth or
(b) with respect to fifty percent (50%) or more of the outstanding
amounts, the  average number of days the
outstanding amounts have been outstanding exceeds 120 days, then, in either the
case of (a) or (b), Buyer may immediately suspend Transactions under the
Agreement and Correspondent Lending may immediately cease purchasing mortgage
loans from Seller.

 

(e)          Seller shall not have any undisputed receivables aged over sixty (60)
days.

 

	
   

  	
   

  	
  Acknowledged:

  
	
   

  	
   

  	
  Home Loan
  Center, Inc.:

  
	
   

  	
   

  	
  Bank of
  America, N.A.:

  
	
  Version:
  04-09

  	
   

  	
   

  

 

2

 

Facility Fee:                                                                                                                                                                                25 basis points, with 50% of the total fee
due prior to the Effective Date.  The
remaining fee shall be payable in two equal installments over the next two (2) quarters.
Upon early termination of the Agreement by Seller, the entire Facility Fee will
be due and owing.  The fee is payable
based on Aggregate Transactions Limit only and will be prorated in the event of
increases unless any of the following occur.

(i)             Termination
is Permissible due to Buyer’s breach of the Agreement;

(ii)          Buyer
alters any material terms of the Agreement whether permitted or not; or

(iii)       Buyer
elects to increase any fees or charges related to the Agreement.

 

Unused Facility Fees:                                                                                                                             For any given calendar quarter, Seller’s
average outstanding Transactions must be greater than or equal to 75% of the
Aggregate Transaction Limit, otherwise Seller shall pay Buyer 25 basis points
(0.25%) times the unused portion of the Aggregate Transaction Limit,
annualized. For the purposes of this calculation, outstanding Transactions
shall include EPP Loans under Seller’s EPP Addendum with Buyer.

 

Transaction Request Deadline:                                                                            2:00 p.m. (Pacific time).

 

Deadline
for Daily Receipt

Of Purchase Advices by Buyer:                                                                        2:00 p.m. (Pacific time).

 

Minimum Over/Under

Account Balance:                                                                                                                                                 $1,875,000 (minimum of 150 basis points of
the combined Aggregate Transaction Limit and the Outstanding Loan Limit set
forth within Seller’s EPP Addendum); Seller to be entitled to interest on a
monthly basis thereon at an annual rate of LIBOR plus the Type A Margin over 30
day LIBOR spread on the positive monthly average Over/Under Balance for
whatever portion is equal to or lesser than 1/5 of the average monthly outstanding
Transactions for such month and; Seller to be entitled to interest on a monthly
basis at an annual rate of LIBOR minus twenty five (25) basis points (0.25%) on
the positive monthly average Over/Under Balance for whatever portion is greater
than 1/5 of the average monthly outstanding Transactions for such month.  For the purpose of this calculation, average
outstanding Transactions shall include EPP Loans under Seller’s EPP Addendum
with Buyer.  “LIBOR” shall mean the
greater of (i) the daily rate per annum for one-month U.S. dollar
denominated deposits as offered to prime banks in the London interbank market
or (ii) 2%, as applicable.

 

Eligible Loans:                                                                                                                                                                  Each loan shall comply with Buyer’s and
Correspondent Lending’s eligibility guidelines on their respective websites,
and no loan shall be more than 30 days past its original funding date or
contractually delinquent 30 days or more. 
These guidelines are subject to change at Buyer’s sole discretion.

 

	
   

  	
   

  	
  Acknowledged:

  
	
   

  	
   

  	
  Home Loan
  Center, Inc.:

  
	
   

  	
   

  	
  Bank of America,
  N.A.:

  
	
  Version:
  04-09

  	
   

  	
   

  

 

3

 

Loans
to Officers, Directors,

Owners and Guarantors:                                                                                                               Transactions for a loan to be made to an
officer, director, senior manager or owner of Seller or any guarantor (if applicable)
shall be subject to the prior approval of Buyer and such Transaction
requirements as determined in Buyer’s sole discretion.

 

Reporting requirements:                                                                                                                Financial Reports & Officer’s
Certificate:  Seller shall deliver to Buyer, within thirty
(30) days after the end of each month, financial statements of Seller,
including statements of income and changes in shareholders’ equity (or its
equivalent) for such month and the related balance sheet as at the end of such
month, all in reasonable detail acceptable to Buyer and certified by the chief
financial officer of Seller, subject, however, to year-end audit adjustments.
Together with such financial statements, Seller shall deliver an officer’s
certificate substantially in a form to be provided by Buyer, which shall
include funding and production volume reports for the previous month.

 

Annual Reports:  Seller shall deliver to Buyer, within ninety
(90) days after the end of each fiscal year of Seller, audited financial
statements of Seller, including statements of income and changes in
shareholders’ equity for such fiscal year and the related balance sheet as at
the end of such fiscal year, all in reasonable detail acceptable to Buyer and
certified by the chief financial officer of Seller stating, at a minimum, that
the financial statements fairly present the financial condition and results of
operations of Seller as of the end of, and for, such year.

 

                                                                                                                                                                                                                                                Government Insuring Reports: 
Seller shall provide Buyer within thirty (30) days after the end of each
quarter, or as requested by Buyer, the following government insuring reports
(including 15 month history):

(a)          Loans
Originated - Current Defaults and Claims Reported — United States (from FHA
Connection):

·                  Output option: all loans

·                  Performance period: current period

·                  All insured single family loans with a
beginning amortization within the last two years

(b)         HUD
Pipeline/Uninsured Query:

·                  Date
range: use default

·                  Sort
by: originating ID in ascending order

(c)          Indemnification
Query:

·                  Date range: last five years

·                  Sort by: case # in descending order

 

(d)         Late
Endorsement Query:

·                  Loan status: Active, claimed

·                  Date range: last two year period

·                  Sort by: # days closing to Endr pkg Rcvd in
descending order

 

                                                                                                                                                                                                                                                Hedging Report:  Upon
Buyers request, Seller shall deliver to Buyer within 2 business days a loan and
rate lock position report and hedge report containing product level pricing and
interest rate sensitivity analysis (shocks) or as requested by Buyer (data
elements to be agreed upon).

 

	
   

  	
   

  	
  Acknowledged:

  
	
   

  	
   

  	
  Home Loan
  Center, Inc.:

  
	
   

  	
   

  	
  Bank of
  America, N.A.:

  
	
  Version:
  04-09

  	
   

  	
   

  

 

4

 

 

If
requested by Buyer, Seller shall provide to Buyer within five (5) days of
such request, in a form reasonably acceptable to Buyer, a detailed aging report
of all outstanding loans on warehouse/ purchase/ repurchase facilities, and
detail of all uninsured government loans.

 

Reimbursement of Expenses:                                                                                        Seller shall reimburse Buyer for certain
costs and expenses as follows:

 

(a)          Amendments:  Buyer reserves the right to
charge a fee for any future amendments to the Agreement, Transactions Terms
Letter, EPP Addendum, guaranty, covenant violation notices, or any other
required legal document.  The amendment
fee shall be waived for any future amendments or modifications requested by
Seller regarding increases to the Aggregate Transaction Limit.

 

	
  Fees:

  	
   

  	
  Wire
  Transfer Fee:

  	
   

  	
  $10.00
  per Transaction

  
	
   

  	
   

  	
  File
  Fee:

  	
   

  	
  $30.00
  per Transaction

  
	
   

  	
   

  	
  Shipping
  Fee:

  	
   

  	
  $15.00
  per Transaction for all investors other than Bank of America, N.A.; and

  
	
   

  	
   

  	
   

  	
   

  	
  $0.00
  for all Bank of America loans

  
	
   

  	
   

  	
  Non
  compliant Fee:

  	
   

  	
  $25.00

  
	
   

  	
   

  	
  Wet
  Deficiency Fee:

  	
   

  	
  $10.00
  per day

  
	
   

  	
   

  	
  Other
  Fees:

  	
   

  	
  As
  set forth within Schedule 1 hereto

  

 

Buyer’s Guidelines,

Policies and Procedures:                                                                                                              The terms and conditions of this Transactions
Terms Letter and the Agreement shall be subject to Buyer’s guidelines, policies
and procedures, as may be changed from time to time.  Buyer may communicate changes to its
guidelines, policies and procedures to Seller via Buyer’s website, email or in
writing.

 

Guarantors:                                                                                                                                                                                  Lending Tree, LLC, Tree.com, Inc., and
LendingTree Holdings, Inc.

 

Please
acknowledge your agreement to the terms and conditions of this Transactions
Terms Letter by signing in the appropriate space below and returning a copy of
the same to the undersigned. Facsimile signatures shall be deemed valid and
binding to the same extent as the original. 
Buyer shall have no obligation to honor the terms and conditions of this
Transactions Terms Letter if Seller fails to fully execute and return this
document to Buyer within thirty (30) days after the date of issuance.

 

 

	
  Sincerely,

  	
   

  	
  Agreed
  to and Accepted by:

  
	
   

  	
   

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  Home Loan Center, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Blair Kenny

  	
   

  	
  By:

  	
  /s/ Rian Furey

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Blair
  Kenny

  	
   

  	
  Name:

  	
  Rian Furey

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior
  Vice President

  	
   

  	
  Title:

  	
  Senior Vice President

  

 

	
   

  	
   

  	
  Acknowledged:

  
	
   

  	
   

  	
  Home Loan
  Center, Inc.:

  
	
   

  	
   

  	
  Bank of
  America, N.A.:

  
	
  Version:
  04-09

  	
   

  	
   

  

 

5

 

SCHEDULE 1

(Eligible Mortgage Loans)

 

	
   

  	
   

  	
  Type

  Sublimit

  	
   

  	
  Margin over 30

  day LIBOR (B)

  	
   

  	
  Type Purchase Price

  Percentage (A)

  	
   

  	
  Maximum

  Dwell Time

  	
   

  	
  Transaction

  Requirements

  
	
  Type
  A:

  Conventional Conforming Mortgage Loans (Agency eligible 1st mortgages with Full/Alt doc
  types only)

  	
   

  	
  100%

  	
   

  	
  2.25

  	
   

  	
  97

  	
   

  	
  30 days

  	
   

  	
  None

  
	
  Type
  B:

  Government Mortgage Loans and Bond Loans (1st mortgages only)

  	
   

  	
  100%

  	
   

  	
  2.25

  	
   

  	
  97

  	
   

  	
  30 days

  	
   

  	
  None

  
	
  Type
  C:

  Jumbo Mortgage Loans  (1st mortgages only, maximum loan
  amounts to $1,000,000)

  	
   

  	
  10%

  	
   

  	
  2.25

  	
   

  	
  95

  	
   

  	
  30 days

  	
   

  	
  Rate Lock and CLUES or Prior Approval

  
	
  Noncompliant
  Mortgage Loans

  	
   

  	
  7%

  	
   

  	
  2.00 over the initial margin

  	
   

  	
  See schedule 2

  	
   

  	
  Additional 45 days

  	
   

  	
   

  
	
  Wet
  Mortgage Loans

  	
   

  	
  40%,  increasing
  to 60% for the first and last five (5) calendar days of each month

  	
   

  	
  Non-compliant or default spreads, if applicable, over the initial
  margin

  	
   

  	
  Buyer reserves the right to reduce the value of Wet Mortgage Loans to
  zero if the loan is beyond the Maximum Dwell Time

  	
   

  	
  7 business days

  	
   

  	
   

  

 

(A) The Purchase Price shall be calculated and
equal to multiplying the unpaid principal balance times the lesser of (i) the
Type Purchase Price Percentage times the lesser of par, takeout price or
current market price or; (ii) 98% of the takeout price or current market
price or fair market value.

(B)        For the purpose of calculating the Margin over
30 day LIBOR, “LIBOR” shall mean the greater of (i) the daily rate per
annum for one-month U.S. dollar denominated deposits as offered to prime banks
in the London interbank market or (ii) 2%, as applicable.

 

·                  All
Transactions are to the closing table.

·                  Delegated
underwriting status does not satisfy the Transaction Requirements contained
herein.

·                  Transaction
Requirement Definitions and Doc Type Definitions are set forth on Buyer’s
website.

·                  All
loan amounts, FICO scores, LTV/CLTV, and document types shall meet
Correspondent Lending guidelines.

 

SCHEDULE
2

Noncompliant Mortgage
Loans (Applicable to dry Transactions only)

 

	
  Days over Maximum Dwell

  Time

  	
   

  	
  Reduction in Value of

  Purchased Asset

  	
   

  
	
  1 to 15 Days

  	
   

  	
  10

  	
   

  
	
  16 to 30
  Days

  	
   

  	
  20

  	
   

  
	
  31 to 45
  Days

  	
   

  	
  30

  	
   

  
	
  Investor
  Rejects

  	
   

  	
  30

  	
   

  

 

	
   

  	
   

  	
  Acknowledged:

  
	
   

  	
   

  	
  Home Loan
  Center, Inc.:

  
	
   

  	
   

  	
  Bank of
  America, N.A.:

  
	
  Version:
  04-09

  	
   

  	
   

  

 

6

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