Document:

Exhibit
10.26

 

 

 

WAREHOUSING

CREDIT AND SECURITY AGREEMENT

 

 

BETWEEN

 

 

WALKER & DUNLOP, LLC

a  Delaware limited liability company

AS BORROWER

 

 

and

 

 

PNC Bank, National Association

a national banking association

AS LENDER

 

 

DATED AS OF JUNE 30, 2010

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
  1.

  	
  THE CREDIT

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  The Warehousing Commitment

  	
  1

  
	
   

  	
  1.2

  	
  Expiration of Warehousing Commitment

  	
  1

  
	
   

  	
  1.3

  	
  Warehousing Note

  	
  2

  
	
   

  	
  1.4

  	
  Replacement of Warehousing Note

  	
  2

  
	
   

  	
  1.5

  	
  Nature of Obligations

  	
  2

  
	
   

  	
  1.6

  	
  Replacement Facility

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  PROCEDURES FOR OBTAINING ADVANCES

  	
  2

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Warehousing Advances

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  INTEREST, PRINCIPAL AND FEES

  	
  3

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Interest

  	
  3

  
	
   

  	
  3.2

  	
  Interest Limitation

  	
  3

  
	
   

  	
  3.3

  	
  Principal Payments

  	
  4

  
	
   

  	
  3.4

  	
  Facility Fee

  	
  6

  
	
   

  	
  3.5

  	
  Administrative Fee

  	
  6

  
	
   

  	
  3.6

  	
  Miscellaneous Fees and Charges

  	
  6

  
	
   

  	
  3.7

  	
  Overdraft Advances

  	
  7

  
	
   

  	
  3.8

  	
  Method of Making Payments

  	
  7

  
	
   

  	
  3.9

  	
  Billings

  	
  7

  
	
   

  	
  3.10

  	
  Late Charges

  	
  8

  
	
   

  	
  3.11

  	
  Additional Provisions Relating to Interest Rate

  	
  8

  
	
   

  	
  3.12

  	
  Continuing Authority of Authorized Representatives

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  COLLATERAL

  	
  10

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Grant of Security Interest

  	
  10

  
	
   

  	
  4.2

  	
  Maintenance of Collateral Records

  	
  12

  
	
   

  	
  4.3

  	
  Release of Security Interest in Pledged Loans and Pledged
  Securities

  	
  12

  
	
   

  	
  4.4

  	
  Collection and Servicing Rights

  	
  13

  
	
   

  	
  4.5

  	
  Return of Collateral at End of Warehousing Commitment

  	
  14

  
	
   

  	
  4.6

  	
  Delivery of Collateral Documents

  	
  14

  
	
   

  	
  4.7

  	
  Borrower Remains Liable

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  CONDITIONS PRECEDENT

  	
  15

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Initial Advance

  	
  15

  
	
   

  	
  5.2

  	
  Each Advance

  	
  16

  
	
   

  	
  5.3

  	
  Force Majeure

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  GENERAL REPRESENTATIONS AND WARRANTIES

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Place of Business

  	
  18

  

 

i

 

	
   

  	
  6.2

  	
  Organization; Good Standing

  	
  18

  
	
   

  	
  6.3

  	
  Authorization and Enforceability

  	
  18

  
	
   

  	
  6.4

  	
  Approvals

  	
  18

  
	
   

  	
  6.5

  	
  Financial Condition

  	
  19

  
	
   

  	
  6.6

  	
  Litigation

  	
  19

  
	
   

  	
  6.7

  	
  Compliance with Laws

  	
  19

  
	
   

  	
  6.8

  	
  Regulation U

  	
  19

  
	
   

  	
  6.9

  	
  Investment Company Act

  	
  19

  
	
   

  	
  6.10

  	
  Payment of Taxes

  	
  20

  
	
   

  	
  6.11

  	
  Agreements

  	
  20

  
	
   

  	
  6.12

  	
  Title to Properties

  	
  20

  
	
   

  	
  6.13

  	
  ERISA

  	
  20

  
	
   

  	
  6.14

  	
  No Retiree Benefits

  	
  21

  
	
   

  	
  6.15

  	
  Assumed Names

  	
  21

  
	
   

  	
  6.16

  	
  Servicing

  	
  21

  
	
   

  	
  6.17

  	
  Foreign Asset Control Regulations

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  AFFIRMATIVE COVENANTS

  	
  22

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Payment of Obligations

  	
  22

  
	
   

  	
  7.2

  	
  Financial Statements

  	
  22

  
	
   

  	
  7.3

  	
  Other Borrower Reports

  	
  22

  
	
   

  	
  7.4

  	
  Maintenance of Existence; Conduct of Business

  	
  23

  
	
   

  	
  7.5

  	
  Compliance with Applicable Laws

  	
  23

  
	
   

  	
  7.6

  	
  Inspection of Properties and Books; Operational Reviews

  	
  24

  
	
   

  	
  7.7

  	
  Notice

  	
  24

  
	
   

  	
  7.8

  	
  Payment of Taxes and Other Obligations

  	
  25

  
	
   

  	
  7.9

  	
  Insurance

  	
  25

  
	
   

  	
  7.10

  	
  Closing Instructions

  	
  25

  
	
   

  	
  7.11

  	
  Subordination of Certain Indebtedness

  	
  26

  
	
   

  	
  7.12

  	
  Other Loan Obligations

  	
  26

  
	
   

  	
  7.13

  	
  ERISA

  	
  26

  
	
   

  	
  7.14

  	
  Use of Proceeds of Warehousing Advances

  	
  26

  
	
   

  	
  7.15

  	
  Investor Instructions

  	
  26

  
	
   

  	
  7.16

  	
  Sale of Mortgage Loan to Investor

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  NEGATIVE COVENANTS

  	
  27

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  [Intentionally Deleted]

  	
  27

  
	
   

  	
  8.2

  	
  Contingent Liabilities

  	
  27

  
	
   

  	
  8.3

  	
  Restrictions on Fundamental Changes

  	
  27

  
	
   

  	
  8.4

  	
  Subsidiaries

  	
  28

  
	
   

  	
  8.5

  	
  Loss of Eligibility, Licenses or Approvals

  	
  28

  
	
   

  	
  8.6

  	
  Accounting Changes

  	
  28

  
	
   

  	
  8.7

  	
  Minimum Adjusted Tangible Net Worth

  	
  28

  
	
   

  	
  8.8

  	
  Maximum Indebtedness to Adjusted Tangible Net Worth

  	
  28

  
	
   

  	
  8.9

  	
  [Intentionally Deleted]

  	
  29

  
	
   

  	
  8.10

  	
  [Intentionally Deleted]

  	
  29

  

 

ii

 

	
   

  	
  8.11

  	
  Minimum Cash and Cash Equivalents

  	
  29

  
	
   

  	
  8.12

  	
  Servicing Delinquencies

  	
  29

  
	
   

  	
  8.13

  	
  Dividends and Distributions

  	
  29

  
	
   

  	
  8.14

  	
  Transactions with Affiliates

  	
  29

  
	
   

  	
  8.15

  	
  Recourse Servicing Contracts

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS
  CONCERNING COLLATERAL

  	
  30

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Special Representations and Warranties Concerning
  Warehousing Collateral

  	
  30

  
	
   

  	
  9.2

  	
  Special Affirmative Covenants Concerning Warehousing
  Collateral

  	
  32

  
	
   

  	
  9.3

  	
  Special Negative Covenants Concerning Warehousing
  Collateral

  	
  34

  
	
   

  	
  9.4

  	
  Special Representations and Warranties Concerning
  Eligibility as Fannie Mae Approved Seller/Servicer of Mortgage Loans

  	
  34

  
	
   

  	
  9.5

  	
  Special Representation and Warranty Concerning Fannie Mae
  DUS Program Reserve Requirements

  	
  34

  
	
   

  	
  9.6

  	
  Special Representations and Warranties Concerning FHA
  Mortgage Loans

  	
  34

  
	
   

  	
  9.7

  	
  Special Representations and Warranties Concerning
  Eligibility as Freddie Mac Program Plus Seller/Servicer of Mortgage Loans

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  DEFAULTS; REMEDIES

  	
  35

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Events of Default

  	
  35

  
	
   

  	
  10.2

  	
  Remedies

  	
  37

  
	
   

  	
  10.3

  	
  Insufficiency of Proceeds

  	
  40

  
	
   

  	
  10.4

  	
  Lender Appointed Attorney-in-Fact

  	
  40

  
	
   

  	
  10.5

  	
  Right of Set-Off

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  MISCELLANEOUS

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Notices

  	
  41

  
	
   

  	
  11.2

  	
  Reimbursement Of Expenses; Indemnity

  	
  42

  
	
   

  	
  11.3

  	
  Financial Information

  	
  43

  
	
   

  	
  11.4

  	
  Terms Binding Upon Successors; Survival of Representations

  	
  43

  
	
   

  	
  11.5

  	
  Pledge to Federal Reserve Banks

  	
  44

  
	
   

  	
  11.6

  	
  Governing Law

  	
  44

  
	
   

  	
  11.7

  	
  Amendments

  	
  44

  
	
   

  	
  11.8

  	
  Relationship of the Parties

  	
  44

  
	
   

  	
  11.9

  	
  Severability

  	
  44

  
	
   

  	
  11.10

  	
  Consent to Credit References

  	
  45

  
	
   

  	
  11.11

  	
  Counterparts

  	
  45

  
	
   

  	
  11.12

  	
  Headings/Captions

  	
  45

  
	
   

  	
  11.13

  	
  Entire Agreement

  	
  45

  
	
   

  	
  11.14

  	
  Consent to Jurisdiction

  	
  45

  
	
   

  	
  11.15

  	
  Waiver of Jury Trial

  	
  45

  
	
   

  	
  11.16

  	
  Waiver of Punitive, Consequential, Special or Indirect
  Damages

  	
  46

  
	
   

  	
  11.17

  	
  U.S. Patriot Act

  	
  46

  
	
   

  	
  11.18

  	
  Assignments and Participations

  	
  46

  

 

iii

 

	
   

  	
  11.19

  	
  Confidentiality

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  DEFINITIONS

  	
  47

  
	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Defined Terms

  	
  47

  
	
   

  	
  12.2

  	
  Other Definitional Provisions; Terms of Construction

  	
  58

  

 

iv

 

EXHIBITS

 

	
  Exhibit A

  	
  Form of
  Warehousing Note

  
	
  Exhibit B
  FNMA/DUS

  	
  Procedures
  and Documentation for Fannie Mae DUS Loans and Other Fannie Mae Mortgage
  Loans

  
	
  Exhibit B
  FHA/GNMA

  	
  Procedures
  and Documentation for FHA Mortgage Loans and Ginnie Mae Mortgage Backed
  Securities

  
	
  Exhibit B Freddie Mac Program Plus

  	
  Loans
  Procedures and Documentation for Program Plus Loans

  
	
  Exhibit C

  	
  Form of
  Warehousing Advance Request

  
	
  Exhibit D

  	
  Eligible
  Loans and Other Assets

  
	
  Exhibit E

  	
  Authorized
  Representatives

  
	
  Exhibit F

  	
  [Intentionally
  Omitted]

  
	
  Exhibit G

  	
  Assumed
  Names

  
	
  Exhibit H

  	
  Servicing
  Portfolio

  
	
  Exhibit I

  	
  Form of
  Compliance Certificate

  
	
  Exhibit J

  	
  Lines
  of Credit

  
	
  Exhibit K

  	
  Foreign
  Qualifications and Licenses

  
	
  Exhibit L

  	
  Miscellaneous
  Fees and Charges

  
	
  Exhibit M

  	
  Form of
  Assignment and Assumption Agreement

  
	
  Exhibit N-1

  	
  Form of
  Joint Escrow and Bailee Letter

  
	
  Exhibit N-2

  	
  Form of
  Escrow Letter

  
	
  Exhibit N-2

  	
  Form of
  Bailee Letter

  
	
  Exhibit O

  	
  Form of
  Assignment of Mortgage Note and Mortgage

  
	
  Exhibit P.

  	
  Confidentiality
  Agreement

  

 

v

 

WAREHOUSING

CREDIT AND SECURITY AGREEMENT

 

THIS
WAREHOUSING CREDIT AND SECURITY AGREEMENT, dated as of June 30, 2010, is
made between WALKER & DUNLOP, LLC, a Delaware limited liability
company (“Borrower”) and PNC Bank, National Association, a national
banking association (“Lender”).

 

Preliminary Statement

 

A.            Borrower has requested, and Lender
has agreed, to extend financial accommodations to Borrower pursuant to the
terms and conditions set forth herein.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement agree as follows:

 

1.                                                THE CREDIT

 

1.1                                         The Warehousing Commitment

 

1.1(a)                          On the terms and subject to the conditions and limitations of this
Agreement, the Lender agrees to make Warehousing Advances to Borrower from the
Closing Date to the fifth (5th)
Business Day immediately preceding the Warehousing Maturity Date, during which
applicable period Borrower may borrow, repay and reborrow in accordance with
the provisions of this Agreement.  The
Lender has no obligation to make or maintain Warehousing Advances if, after
giving effect to each requested Warehousing Advance, the aggregate outstanding
principal amount of all Warehousing Advances would exceed the Warehousing
Credit Limit.  While a Default or Event
of Default exists, the Lender may refuse to make any additional Warehousing Advances
to Borrower.  All Warehousing Advances
under this Agreement constitute a single indebtedness, and all of the
Collateral is security for the Warehousing Note and for the performance of all
of the Obligations.

 

1.2                                         Expiration of Warehousing Commitment

 

Subject
to the extension right set forth below in this Section 1.2, the
Warehousing Commitment expires on the earlier of (“Warehousing Maturity Date”):
(a) June 29, 2011 (the “Stated Maturity Date”), on which date
the Warehousing Commitment will expire of its own term and the Warehousing
Advances together with all accrued and unpaid interest and costs and expenses
will become due and payable without the necessity of Notice or action by the
Lender; and (b) the date the Warehousing Commitment is terminated and the
Warehousing Advances become due and payable under Section 10.2(a) or
10.2(b).  Notwithstanding the
foregoing, the Borrower shall have the option (the “Extension Option”)
to extend the Stated Maturity Date for an addition period of 364 days from the
Stated Maturity Date (the “Extension Period”), based upon substantially
identical terms and condition set forth in this Agreement.  The Borrower must give the Lender Notice of
its election to exercise the Extension Option no earlier than ninety (90) days
and no later than thirty (30) days of the Stated Maturity Date, and no Default
or Event of Default, shall exist as of either (i) the date the Borrower
gives the Lender Notice of its election to exercise 

 

 

the
Extension Option or (ii) the Stated Maturity Date.  In the event the Borrower satisfies the
conditions set forth in this Section 1.2 and the Stated Maturity Date is
to be extended, the Borrower and Lender shall enter into an amendment to this
Agreement in form and content acceptable to both parties, evidencing such
extension.

 

1.3                                         Warehousing Note

 

Warehousing
Advances are evidenced by Borrower’s promissory note, payable to the Lender in
the form attached hereto as Exhibit A (the “Warehousing Note”).  The term “Warehousing Note” as used in
this Agreement includes all amendments, restatements, renewals or replacements
of the original Warehousing Note and all substitutions for it.  All terms and provisions of the Warehousing
Note are incorporated into this Agreement.

 

1.4                                         Replacement of Warehousing Note

 

Upon
receipt of an affidavit of an officer of Lender as to the loss, theft,
destruction or mutilation of the Warehousing Note or any other security
document which is not of public record, and, in the case of any such loss,
theft, destruction or mutilation, upon cancellation of such Warehousing Note or
other security document and receipt by the Borrower of customary
indemnification from Lender, the Borrower will issue, in lieu thereof, a
replacement note or other security document in the same principal amount
thereof and otherwise of like tenor.

 

1.5                                         Nature of Obligations

 

The
aggregate amount of all Warehousing Advances outstanding from time to time
under this Agreement may hereinafter collectively be referred to as the “Loan.”

 

1.6                                         Replacement Facility

 

This
Agreement refinances and replaces in its entirety that certain Third Amended
and Restated Loan Agreement dated as of January 30, 2009 (the “2009
Agreement”) originally entered into by and among Green Park Financial Limited
Partnership, Walker & Dunlop, LLC and the Lender (as successor to
National City Bank), individually and as Agent. 
Upon the effectiveness of this Agreement, the 2009 Agreement shall be
deemed terminated.

 

2.                                                PROCEDURES FOR OBTAINING ADVANCES

 

2.1                                         Warehousing Advances

 

The
Borrower may obtain a Warehousing Advance under this Agreement by delivering to
the Lender a completed and signed request for a Warehousing Advance on the
Lender’s then current form (“Warehousing Advance Request”), not later
than 3:00 p.m. on the Business Day that is one (1) Business Day
before the Business Day on which Borrower desires the Warehousing Advance.  Warehousing Advance Requests received by the
Lender after 3:00 p.m. on a Business Day will be deemed received on the
following Business Day, provided, however, on a case-by-case basis at the
request of the Borrower, the Lender may, in its sole discretion (and without
thereby establishing any course of dealing), extend such 3:00 p.m. cut-off
time to a later time on the subject Business Day.  Subject to the delivery of a Warehousing
Advance Request and the 

 

2

 

satisfaction
of the conditions set forth in Sections 5.1 and 5.2, the Borrower
may obtain a Warehousing Advance under this Agreement upon compliance with the
procedures set forth in this Section and in the applicable Exhibit B,
including delivery to the Lender of all Collateral Documents required to be
delivered on the applicable dates specified in this Agreement for such
delivery.  The Lender’s current form of
Warehousing Advance Request is set forth in Exhibit C.  Upon not less than five (5) Business
Days’ prior Notice to the Borrower, the Lender may modify its form of
Warehousing Advance Request and any other Exhibit or document referred to
in this Section to conform to current legal requirements or Lender
practices and, as so modified, those Exhibits and documents will become part of
this Agreement.

 

3.                                                INTEREST, PRINCIPAL AND FEES

 

3.1                                         Interest

 

3.1(a)                          Except as otherwise provided in this Section, the Borrower must pay
interest on the unpaid amount of each Warehousing Advance from the date the
Warehousing Advance is made until it is paid in full at the Applicable Rate as
in effect from time to time.  The
Borrower must pay the Lender accrued interest on each Warehousing Advance on
the Warehousing Advance Due Date or upon prepayment of such Warehousing
Advance.

 

3.1(b)                          The Lender computes interest on the basis of the actual number of days in
each month and a year of 360 days.  The
Borrower must pay interest on outstanding Warehouse Advances in arrears on the
Warehousing Advance Due Date and on the Warehousing Maturity Date.

 

3.1(c)                           If, for any reason, (i) the Borrower repays a Warehousing Advance on
the same day that it was made, or (ii) a Borrower instructs the Lender not
to make a previously requested Warehousing Advance after the Lender has
reserved funds or made other arrangements necessary to enable the Lender to
fund that Warehousing Advance, the Borrower agrees to pay to the Lender,
without limiting the provisions of Section 3.11, for the account of
the Lender, interest thereon at the Applicable Rate for one day notwithstanding
repayment prior to the cut-off time specified in Section 3.8(a) (unless
the reason for such repayment is due to the failure of the underlying
transaction to close).  The Borrower must
pay all such interest within five (5) Business Days after the date of the
Lender’s notice thereof.

 

3.1(d)                          After an Event of Default occurs, the unpaid amount of each Warehousing
Advance will bear interest at the Default Rate until paid in full.

 

3.1(e)                           The Lender will adjust the rates of interest provided for in this
Agreement as of the effective date of each change in the applicable Reference
Rate.  The Lender’s determination of such
rates of interest as of any date of determination is conclusive and binding,
absent manifest error.

 

3.2                                         Interest Limitation

 

If,
at any time, the rate of interest, together with all amounts which constitute
or are deemed under any applicable law to constitute interest and which are
reserved, charged or taken by the 

 

3

 

Lender
as compensation for fees, services or expenses incidental to the making,
negotiating or collecting of Warehousing Advances, shall be deemed by any competent
court of law, governmental agency or tribunal to exceed the maximum rate of
interest permitted to be charged by the Lender to the Borrower under applicable
law, then, during such time as such rate of interest would be deemed excessive,
that portion of each sum paid attributable to that portion of such interest
rate that exceeds the maximum rate of interest so permitted shall be deemed a
voluntary prepayment of principal (or, if no Obligations are then outstanding,
shall be repaid to the Borrower).  As
used herein, the term “applicable law” shall mean the law in effect as of the
date hereof; provided, however, that in the
event there is a change in the law which results in a higher permissible rate
of interest, then this Agreement shall be governed by such new law as of its
effective date.

 

3.3                                         Principal Payments

 

3.3(a)                          The Borrower must pay the Lender the outstanding principal amount of each
Warehousing Advance, together with all accrued and unpaid interest thereon, on
the applicable Warehousing Advance Due Date. 
Notwithstanding the foregoing, the Borrower must pay the Lender the
outstanding principal amount of all Warehousing Advances together with all
accrued and unpaid interest thereon, and any unpaid costs and expenses, on the
Warehousing Maturity Date.

 

3.3(b)                          Except as otherwise provided in Section 3.1, the Borrower may
prepay any portion of the Warehousing Advances, together with all accrued and
unpaid interest on the portion so prepaid, without premium or penalty at any
time.

 

3.3(c)                           The Borrower must pay to the Lender, and the Borrower authorizes the
Lender to charge its Operating Accounts for, the amount of any outstanding
Warehousing Advance, together with all accrued and unpaid interest thereon,
against a specific Pledged Loan or Pledged Security upon the earliest
occurrence of any of the following events:

 

(i)                                     On the date a Warehousing Advance was made if the Pledged Loan to be
funded by that Warehousing Advance has not closed and funded.

 

(ii)                                  Three (3) Business Days elapse from the date a Warehousing Advance
was made against a Pledged Loan, without receipt of the Collateral Documents
relating to that Pledged Loan required to be delivered on that date, or if such
Collateral Documents, upon examination by the Lender, are found not to be in compliance
with the requirements of this Agreement or the related Purchase Commitment and
Borrower has not delivered Collateral Documents in compliance with the
requirements of this Agreement or the related Purchase Commitment within three (3) Business
Days of receipt by the Borrower of Notice from the Lender specifying the
non-compliant items.

 

(iii)                               Ten (10) Business Days elapse without the return of a Collateral
Document delivered by the Lender to the Borrower under a Trust Receipt for
correction or completion.

 

4

 

 

(iv)                              On the date on which a Pledged Loan is determined to have been originated
based on untrue, incomplete or inaccurate information or to be subject to
fraud, whether or not the Borrower had knowledge of the misrepresentation,
incomplete or inaccurate information or fraud.

 

(v)                                 On the date on which the Borrower knows, has reason to know, or receives
Notice from the Lender, that (A) one or more of the representations and
warranties set forth in Article 9 were inaccurate or incomplete in
any material respect on any date when made or deemed made or became inaccurate
or incomplete in any material respect after any such date, or (B) the
Borrower has failed to perform or comply with any covenant, term or condition
applicable to it set forth in Article 9.

 

(vi)                              On the date on which a Pledged Loan or an obligation secured by a Lien
senior to the Mortgage securing repayment of the Pledged Loan has been in
default for a period of 60 days or more (it being understood that, as provided
in Section 9.1(q), no Warehousing Advance will be made against any
Mortgage Loan which is in default).

 

(vii)                           On the mandatory delivery date of the related Purchase Commitment if the
specific Pledged Loan has not been delivered under the Purchase Commitment on
or prior to such mandatory delivery date, or on the date the related Purchase
Commitment expires or is terminated.

 

(viii)                        Three (3) Business Days after the date a Pledged Loan is rejected
for purchase by an Investor unless another Purchase Commitment is provided
within that three (3) Business Day period.

 

(ix)                              Upon the sale, other disposition or prepayment of any Pledged Loan or
Pledged Security or, with respect to a Pledged Loan included in an Eligible
Mortgage Pool, upon the sale or other disposition of the related Agency
Security.

 

(x)                                 With respect to any Pledged Loan, any of the Collateral Documents, upon
examination by the Lender, are found not to be in compliance with the
requirements of this Agreement or the related Purchase Commitment.

 

(xi)                              If, after giving effect to a new Warehousing Advance against a Pledged
Loan or to the payment of existing Warehousing Advances against Pledged Loans,
any of the limitations set forth in Exhibit D have been exceeded.

 

3.3(d)                          In addition to the payments required by Sections 3.3(a) and 3.3(c),
if the principal amount of any Pledged Loan is prepaid in whole or in part
while a Warehousing Advance is outstanding against the Pledged Loan, the
Borrower must pay to the Lender, without the necessity of prior demand or
Notice from the Lender, and the Borrower authorizes the Lender to charge its
Operating Accounts for, the amount of the prepayment, to be applied against the
Warehousing Advance.

 

5

 

3.3(e)                           The proceeds of the sale or other disposition of any Pledged Loan or
Pledged Security must be paid directly by the Investor to the Borrower’s Cash
Collateral Account.  The Borrower must
give Notice to the Lender in writing of the Pledged Loan or Pledged Security
for which proceeds have been received (including Notice to the Lender in
writing of any prepayment).  Upon receipt
of such Notice, the Lender will apply any proceeds deposited into the
applicable Cash Collateral Account to the payment of the Warehousing Advances
related to the Pledged Loan or Pledged Security identified by the Borrower in
its Notice, and such Pledged Loan or Pledged Security will be considered to
have been redeemed from pledge to the extent the related Warehousing Advance
has been paid in full.  The Lender is
entitled to rely upon a Borrower’s affirmation that deposits in the applicable
Cash Collateral Account represent payments from Investors for the purchase of
the Pledged Loan or Pledged Security specified by the Borrower in its
Notice.  If the payment from an Investor
for the purchase of a Pledged Loan or Pledged Security is less than the
outstanding Warehousing Advances against such Pledged Loan or Pledged Security
identified by the Borrower in its Notice, the Borrower must pay to the Lender,
and the Borrower authorizes the Lender to charge the Borrower’s Operating
Accounts for, an amount equal to that deficiency.  As long as no Default or Event of Default
exists, the Lender will return to the Borrower any excess payment from an
Investor for such Pledged Loan or Pledged Security.

 

3.3(f)                            The Lender reserves the right at any time to revalue any Pledged Loan or
Pledged Security.  The Borrower must pay
to the Lender, without the necessity of prior demand or Notice from the Lender,
and the Borrower authorizes the Lender to charge Borrower’s Operating Accounts
for, any amount required after any such revaluation to reduce the principal
amount of the Warehousing Advance outstanding against the revalued Pledged Loan
or Pledged Security to an amount equal to the Advance Rate for the applicable
type of Pledged Loan or Pledged Security multiplied by the Fair Market Value of
the Pledged Loan or Pledged Security.

 

3.4                                         Facility Fee

 

The
Borrower shall pay to the Lender a facility fee in the amount of three-tenths
of one percent (.3%) per annum of the Warehousing Credit Limit, to be paid
quarterly in arrears commencing on the Closing Date, and on or prior to the
first Business Day of each Calendar Quarter thereafter during the term of the
Loan.

 

3.5                                         Administrative Fee

 

In
connection with each Warehousing Advance, the Borrower shall pay to the Lender,
quarterly in arrears, an administrative fee equal to $10,000.

 

3.6                                         Miscellaneous Fees and Charges

 

The
Borrower must pay or reimburse the Lender, as applicable, for all Miscellaneous
Fees and Charges.  The Borrower must pay
all Miscellaneous Fees and Charges within five (5) Business Days after the
date of the Lender’s notice thereof.

 

6

 

3.7                                         Overdraft Advances

 

If,
under the authorization given by the Borrower pursuant to this Agreement, the
Lender debits the Borrower’s Operating Account to honor an item presented
against an Operating Account and that debit or direction results in an
overdraft, the Lender may make an additional advance to fund that overdraft (“Overdraft
Advance”).  The Borrower must pay (a) the
outstanding amount of any Overdraft Advance, within three (3) Business
Days after the date of the Overdraft Advance, and (b) interest on the
amount of the Overdraft Advance, at a rate per annum equal to the Applicable
Rate plus 2%, within three (3) Business Days after the date of the Lender’s
notice thereof.

 

3.8                                         Method of Making Payments

 

3.8(a)                          All payments of interest, principal and fees shall be made in lawful
money of the United States in immediately available funds, without counterclaim
or setoff and free and clear of, and without any deduction or withholding for,
any taxes or other payments by wire transfer to Lender, or as otherwise
provided in this Agreement.  Payments
shall be credited on the Business Day on which immediately available funds are
received prior to 2:00 p.m.; payments received after 2:00 p.m. shall
be credited on the next Business Day. 
All payments shall be applied first to the payment of all fees,
expenses, and other amounts due to Lender (excluding principal and interest),
then to accrued interest, and the balance on account of outstanding principal, provided, however, that, after the
occurrence and during the continuation of an Event of Default, payments will be
applied to the Obligations as Lender determines.  If the due date is not a Business Day,
payment is due on, and interest will accrue to, the next Business Day.

 

3.8(b)                          Subject to Section 3.8(c) below, the Borrower authorizes the
Lender to charge the Borrower’s Operating Accounts for any interest or fees due
and payable to Lender after giving at least two (2) Business Days’ Notice
to the Borrower.

 

3.8(c)                           While a Default or Event of Default exists, the Borrower authorizes the
Lender to charge Borrower’s Operating Accounts for any Obligations due and
payable to the Lender, without the necessity of prior demand or Notice from the
Lender.

 

3.8(d)                          All payments made on account of the Obligations shall be made by the
Borrower to the Lender.  No principal
payments resulting from the refinancing, sale or other disposition of Pledged
Loans or Pledged Securities shall be deemed to have been received by the Lender
until the Lender has also received the Notice required under Section 3.3(e).

 

3.9                                         Billings

 

Any
changes in the interest rate and in the outstanding amount of the Obligations
which occur between the date of any billing and the due date of any payment may
be reflected in adjustments in the billing for a subsequent month.  Neither the failure of the Lender to submit a
bill, nor any error in any such bill shall excuse the Borrower from the
obligation to make full payment of all Borrower’s payment obligations when due.

 

7

 

3.10                                  Late Charges

 

The
Borrower shall pay, upon billing therefor, a “Late Charge” equal to three
percent (3%) of the amount of any payment of principal (other than principal
due at the Warehousing Maturity Date or the date on which the Lender
accelerates the time for payment of the Loan after the occurrence of an Event
of Default), interest, or fees, which fees are not paid within ten (10) days
of the due date thereof.  Late Charges
are: (a) payable in addition to, and not in limitation of, the Default
Rate; (b) intended to compensate the Lender for administrative and processing
costs incident to late payments; (c) not interest; and (d) not
subject to refund or rebate or credit against any other amount due.

 

3.11                                  Additional Provisions Relating to Interest
Rate

 

3.11(a)                   If the Lender has determined, after the date hereof, that the adoption or
the becoming effective of, or any change in, or any change by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof in the interpretation or administration of, any applicable
law, rule or regulation regarding capital adequacy, or compliance by the
Lender with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
Lender’s capital or assets as a consequence of its commitments or obligations
hereunder to a level below that which Lender could have achieved but for such
adoption, effectiveness, change or compliance (taking into consideration Lender’s
policies with respect to capital adequacy), then, upon notice from the Lender
to the Borrower and delivery by the Lender of a statement setting forth the
reduction in the rate of return experienced by the Lender and the amount
necessary to compensate the Lender under this Section 3.11(a), the
Borrower shall be obligated to pay to the Lender such additional amount or
amounts as will compensate Lender for such reduction.  Each determination by Lender of amounts owing
under this Section shall, absent manifest error, be conclusive and binding
on the parties hereto.

 

3.11(b)                   If Lender determines (which determination shall be conclusive) that (i) by
reason of circumstances affecting the relevant market, adequate and reasonable means
do not exist for ascertaining the Applicable Daily Floating LIBO Rate for any
day; or (ii) the Daily LIBO Rate will not adequately and fairly reflect
the cost to Lenders of funding (including maintaining) Warehousing Advances,
then Lender shall give the Borrower prompt notice thereof, and, so long as such
condition remains in effect, the Loan (and all outstanding and future
Warehousing Advances under the Loan) shall bear interest at the Applicable Base
Rate.

 

3.11(c)                    Any and all payments by the Borrower to or for the account of Lender
hereunder shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding taxes
imposed on Lender’s income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which Lender is organized or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being hereinafter referred
to as 

 

8

 

“Taxes”).  If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable under this Agreement to
Lender, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 3.11(c)) the Lender receives an
amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law, and (iv) the
Borrower shall furnish to the Lender the original or a certified copy of a
receipt evidencing payment thereof.

 

3.11(d)                   The Borrower also agrees to pay any and all present or future stamp or
documentary taxes and any other excise or property taxes or charges or similar
levies which arise from any payment made under this Agreement or from the
execution or delivery of, or otherwise with respect to, this Agreement
(hereinafter referred to as “Other Taxes”).  Further, if the Borrower shall be required to
deduct or pay any Taxes or Other Taxes from or in respect of any sum payable
under this Agreement to Lender, the Borrower shall also pay to Lender, at the
time interest is paid, such additional amount that Lender specifies is
necessary to preserve the after-tax yield (after factoring in all taxes,
including taxes imposed on or measured by net income) that Lender would have
received if such Taxes or Other Taxes had not been imposed.

 

3.11(e)                    The Borrower agrees to indemnify the Lender for (i) the full amount
of Taxes and Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 3.11)
paid by any of them and any liability (including penalties, interest, and
expenses) arising therefrom or with respect thereto; (ii) any other
amounts payable under Section 3.11; and (iii) any liability
(including additions to tax, penalties, interest and expenses) arising
therefrom or with respect thereto, in each case whether or not such Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority.  Payment under
this Section 3.11(e) shall be made within 30 days after the
date that the Lender makes a demand therefor.

 

3.11(f)                     In the event that the Borrower is required to pay or withhold any amount
pursuant to Sections 3.11(c), 3.11(d), or 3.11(e), which
results in the Borrower paying more than would have been the case without
regard to such Sections (an “Excess Payment”), the Borrower shall have
the option to terminate the Warehousing Commitment in its entirety (but not in
part) and this Agreement (other than as to those provisions which by their
terms survive the termination of this Agreement), by giving Notice to the
Lender specifying the effective date of such termination, which Notice may be
given no earlier than three (3) Business Days after making an Excess
Payment and no later than thirty (30) days after making an Excess Payment.  Upon the effective date of the termination of
this Agreement by the Borrower pursuant to this Section, the Borrower shall pay
all of the Obligations in full.

 

3.11(g)                    Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if (x) any change in law shall make it unlawful for the Lender
to make Warehousing Advances as LIBOR Loans, or to maintain outstanding
Warehousing Advances as 

 

9

 

LIBOR Loans or to give
effect to its obligations as contemplated hereby with respect to the Loan or
any particular Warehousing Advance as a LIBOR Loan or (y) at any time
Lender reasonably determines that the making or continuance of LIBOR Loans has
become impracticable as a result of a contingency occurring after the date
hereof which adversely affects the London interbank market, the Lender may, by
written notice to the Borrower (i) declare that LIBOR Loans will not
thereafter be made by any Lender hereunder, whereupon all subsequent
Warehousing Advances will be made as Base Rate Loans unless such declaration
shall be subsequently withdrawn; and/or (ii) require that any then
outstanding Warehousing Advances be converted to Base Rate Loans (and thereby
bear interest at the Applicable Base Rate), as of the effective date of such
notice.

 

3.12                                  Continuing Authority of Authorized
Representatives

 

The
Lender is authorized to rely upon the continuing authority of the Persons
hereafter designated by the Borrower (“Authorized Representatives”) to
bind the Borrower with respect to all matters pertaining to the Loan and the
Loan Documents, including, but not limited to, the submission of requests for
Warehousing Advances, and certificates with regard thereto, instructions with
regard to the Operating Accounts and, to the extent permitted under this
Agreement, the Collateral, and matters pertaining to the procedures and documentation
for Warehousing Advances.  Such
authorization may be changed only upon written notice to Lender accompanied by
evidence, reasonably satisfactory to Lender, of the authority of the person
giving such notice and such notice shall be effective not sooner than five (5) Business
Days following receipt thereof by Lender. 
The Authorized Representatives as of the Closing Date are listed on Exhibit E.  Lender shall have a right of approval, not to
be unreasonably withheld or delayed, over the identity of the Authorized
Representatives so as to assure Lender that each Authorized Representative is a
responsible and senior official of the Borrower.

 

4.                                                COLLATERAL

 

4.1                                         Grant of Security Interest

 

As
security for the payment of its obligations under the Warehousing Note and for
the payment and performance of all of the Obligations, the Borrower grants a
security interest to Lender, in all of the Borrower’s right, title and interest
in and to the following described property, whether now owned or whether acquired
or arising after the date of this Agreement (“Collateral”):

 

4.1(a)                          All amounts advanced by Lender to or for the account of the Borrower
under this Agreement to fund a Mortgage Loan until that Mortgage Loan is closed
and those funds disbursed.

 

4.1(b)                          All Mortgage Loans, including all Mortgage Notes, Mortgages and Security
Agreements evidencing or securing those Mortgage Loans, that are delivered or
caused to be delivered to Lender (including delivery to a third party on behalf
of Lender), or that otherwise come into the possession, custody or control of
Lender (including the possession, custody or control of a third party on behalf
of Lender), in each case in 

 

10

 

respect of which Lender
has made a Warehousing Advance under this Agreement (collectively, “Pledged
Loans”).

 

4.1(c)                           All Mortgage-backed Securities that are created in whole or in part on
the basis of Pledged Loans or that are delivered or caused to be delivered to
Lender or that otherwise come into the possession, custody or control of
Lender, or its agent, bailee or custodian as assignee, or that are pledged to
Lender or, for such purpose are registered by book-entry in the name of Lender
(including registration in the name of a third party on behalf of Lender), in
each case in respect of which a Warehousing Advance has been made by Lender
under this Agreement (collectively, “Pledged Securities”).

 

4.1(d)                          All private mortgage insurance and all commitments issued by the FHA to
insure or guarantee any Pledged Loan; all Purchase Commitments held by the
Borrower covering Pledged Loans or Pledged Securities, and all proceeds from
the sale of Pledged Loans or Pledged Securities to Investors pursuant to those
Purchase Commitments; and all personal property, contract rights, servicing
rights or contracts and servicing fees and income or other proceeds, amounts
and payments payable to Borrower as compensation or reimbursement, accounts,
payments, intangibles and general intangibles of every kind relating to Pledged
Loans, Pledged Securities, Purchase Commitments, FHA commitments and private
mortgage insurance and commitments relating to Pledged Loans and Pledged
Securities, and all other documents or instruments relating to Pledged Loans
and Pledged Securities, including any interest of the Borrower in any fire,
casualty or hazard insurance policies and any awards made by any public body or
decreed by any court of competent jurisdiction for a taking or for degradation
of value in any eminent domain proceeding as the same relate to Pledged Loans.

 

4.1(e)                           All escrow accounts, documents, instruments, files, surveys,
certificates, correspondence, appraisals, computer programs, tapes, discs,
cards, accounting records (including all information, records, tapes, data,
programs, discs and cards) necessary or helpful in the administration or
servicing of the Collateral) and other information and data of the Borrower
relating to the Collateral.

 

4.1(f)                            The Operating Accounts, the Cash Collateral Accounts, and all cash, whether
now existing or acquired after the date of this Agreement, delivered to or
otherwise in the possession of Lender, or Lender’s agent, bailee or custodian
or designated on the books and records of the Borrower as assigned and pledged
to Lender, including all cash deposited in the Cash Collateral Account.

 

4.1(g)                           All Hedging Arrangements related to the Collateral (“Pledged Hedging
Arrangements”) and the Borrower’s accounts in which those Hedging
Arrangements are held (“Pledged Hedging Accounts”), including all rights
to payment arising under the Pledged Hedging Arrangements and the Pledged
Hedging Accounts, except that Lender’s security interest in the Pledged Hedging
Arrangements and Pledged Hedging Accounts applies only to benefits, including
rights to payment, related to the Collateral.

 

4.1(h)                          All cash and non-cash proceeds of the Collateral, including all
dividends, distributions and other rights in connection with, and all additions
to, modifications of and 

 

11

 

replacements for, the
Collateral, and all products and proceeds of the Collateral, together with
whatever is receivable or received when the Collateral or proceeds of
Collateral are sold, collected, exchanged or otherwise disposed of, whether such
disposition is voluntary or involuntary, including all rights to payment with
respect to any cause of action affecting or relating to the Collateral or
proceeds of Collateral.

 

4.2                                         Maintenance of Collateral Records

 

As
long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed under this Agreement or under any other
Loan Document, the Borrower must preserve and maintain, at its chief executive
office and principal place of business or in a regional office approved by
Lender, and, promptly upon request, make available to Lender the originals, or
copies in any case where the originals have been delivered to Lender or to an
Investor, of the Mortgage Notes, Mortgages and Security Agreements included in
Pledged Loans, Mortgage-backed Securities delivered to Lender as Pledged
Securities, Purchase Commitments, and all related Mortgage Loan documents and
instruments, and all files, surveys, certificates, correspondence, appraisals,
computer programs, tapes, discs, cards, accounting records and other
information and data relating to the Collateral.

 

4.3                                         Release of Security Interest in Pledged Loans
and Pledged Securities

 

4.3(a)                          Except as provided in Section 4.3(b), Lender will release its
security interest in a Pledged Loan and all of the Collateral related to such
Pledged Loan, as such Collateral is described in Section 4.1, only
against payment to Lender of the Release Amount in connection with such Pledged
Loan.  If a Pledged Loan is transferred
to a pool custodian or an Investor for inclusion in a Mortgage Pool and Lender’s
security interest in such Pledged Loan and all of the Collateral related to the
Pledged Loan, as such Collateral is described in Section 4.1 is not
released before the issuance of the related Mortgage-backed Security, then that
Mortgage-backed Security, when issued, is a Pledged Security, Lender’s security
interest continues in such Pledged Loan and all of the Collateral related to
such Pledged Loan, as such Collateral is described in Section 4.1, backing
that Pledged Security and Lender is entitled to possession of the Pledged
Security in the manner provided in this Agreement.

 

4.3(b)                          If a Pledged Loan is transferred to an Approved Custodian and included in
an Eligible Mortgage Pool, Lender’s security interest in such Pledged Loan and
all of the Collateral related to such Pledged Loan, as such Collateral is
described in Section 4.1, included in the Eligible Mortgage Pool
will be released upon the delivery of the Agency Security to Lender (including delivery
to or registration in the name of a third party on behalf of Lender) and that
Agency Security is a Pledged Security. 
Lender’s security interest in that Pledged Security will be released
only against payment to Lender of the Release Amount in connection with the
Mortgage Loans backing that Pledged Security.

 

4.3(c)                           Lender has the exclusive right to possession of all Pledged Securities
or, if Pledged Securities are issued in book-entry form or issued in
certificated form and delivered to a clearing corporation (as that term is
defined in the Uniform Commercial Code of Pennsylvania) or its nominee, Lender
has the right to have the Pledged Securities 

 

12

 

registered in the name of
a securities intermediary (as that term is defined in the Uniform Commercial
Code of Pennsylvania) in an account containing only customer securities and
credited to an account of Lender.  Lender
has no duty or obligation to deliver Pledged Securities to an Investor or to
credit Pledged Securities to the account of an Investor or an Investor’s
designee except against payment for those Pledged Securities.  The Borrower acknowledges that Lender may
enter into one or more standing arrangements with securities intermediaries
with respect to Pledged Securities issued in book entry form or issued in
certificated form and delivered to a clearing corporation or its designee,
under which the Pledged Securities are registered in the name of the securities
intermediary, and the Borrower agrees, upon request of Lender, to execute and
deliver to those securities intermediaries their respective written concurrence
in any such standing arrangements.

 

4.3(d)                          If no Default or Event of Default occurs (or, if a Default or Event of
Default has occurred, such Default or Event of Default has been cured or
waived), the Borrower may redeem a Pledged Loan and all of the Collateral
related to a Pledged Loan, as such Collateral is described in Section 4.1,
or Pledged Security from Lender’s security interest by notifying Lender of its
intention to redeem the Pledged Loan or Pledged Security from pledge and
paying, or causing an Investor to pay, to Lender, for application as a
prepayment on the principal balance of the Warehousing Note, the Release Amount
in connection with such Pledged Loan or the Pledged Loans backing that Pledged
Security.

 

4.3(e)                           After a Default or Event of Default occurs, Lender may, with no liability
to the Borrower or any other Person, continue to release its security interest
in any Pledged Loan and all of the Collateral related to such Pledged Loan, as
such Collateral is described in Section 4.1, or Pledged Security
against payment of the Release Amount for such Pledged Loan or for the Pledged
Loans backing that Pledged Security.

 

4.3(f)                            The amount to be paid by the Borrower to obtain the release of Lender’s
security interest in a Pledged Loan and all of the Collateral related to such
Pledged Loan, as such Collateral is described in Section 4.1 (“Release
Amount”) will be (1) in connection with the sale of a Pledged Loan by
Lender while an Event of Default exists, the amount paid to Lender in a
commercially reasonable disposition of that Pledged Loan and (2) otherwise,
the principal amount of the Warehousing Advance outstanding against the Pledged
Loan together with all accrued and unpaid interest thereon.

 

4.4                                         Collection and Servicing Rights

 

4.4(a)                          If no Event of Default exists, the Borrower may service and receive and
collect directly all sums payable to the Borrower in respect of the Collateral
other than proceeds of any Purchase Commitment or proceeds of the sale of any
Collateral.  All proceeds of any Purchase
Commitment or any other sale of Collateral must be paid directly to the Cash
Collateral Account for application as provided in this Agreement.

 

4.4(b)                          After an Event of Default occurs and remains continuing, Lender or its
designee is entitled to service and receive and collect all sums payable to
Borrower in respect of the 

 

13

 

Collateral, and in such
case, subject to any applicable requirements of the relevant Federal Agency, (1) Lender
or its designee in its discretion may, in its own name, in the name of Borrower
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 any of the
Collateral, but Lender has no obligation to do so, (2) Borrower must, if
Lender requests it to do so, hold in trust for the benefit of Lender and
immediately pay to Lender at its office designated by Notice, all amounts
received by Borrower upon or in respect of any of the Collateral, advising
Lender as to the source of those funds, and (3) all amounts so received
and collected by Lender will be held by it as part of the Collateral and
applied by Lender as provided in this Agreement.

 

4.5                                         Return of Collateral at End of Warehousing
Commitment

 

If
(a) the Warehousing Commitment has expired or has been terminated, and (b) no
Warehousing Advances, interest or other Obligations are outstanding and unpaid,
Lender will release its security interest and will deliver all Collateral in
its possession to the Borrower at Borrower’s expense.  Borrower’s acknowledgement or receipt for any
Collateral released or delivered to Borrower under any provision of this
Agreement is a complete and full acquittance for the Collateral so returned,
and the Lender is discharged from any liability or responsibility for that
Collateral.

 

4.6                                         Delivery of Collateral Documents

 

4.6(a)                          The Lender may deliver documents relating to the Collateral to Borrower
for correction or completion under a Trust Receipt.

 

4.6(b)                          If no Default or Event of Default exists, upon delivery by Borrower to
Lender of shipping instructions pursuant to the applicable Exhibit B,
Lender will deliver the Mortgage Notes evidencing Pledged Loans or Pledged
Securities together with all related loan documents and pool documents
previously received by Lender under the requirements of the applicable Exhibit B
to the designated Investor or Approved Custodian or to another party designated
by Borrower and acceptable to Lender in its sole discretion.

 

4.6(c)                           If a Default or Event of Default exists, Lender may, without liability to
Borrower or any other Person, continue to deliver Pledged Loans or Pledged Securities,
together with all related loan documents and pool documents in Lender’s
possession, to the applicable Investor or Approved Custodian or to another
party acceptable to Lender in its sole discretion.

 

4.7                                         Borrower Remains Liable

 

Anything
herein to the contrary notwithstanding, the Borrower shall remain liable under
each item of the Collateral granted by it to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all
in accordance with the terms thereof and any other agreement giving rise
thereto, and in accordance with and pursuant to the terms and provisions
thereof.  Whether or not the Lender has
exercised any rights in any of the Collateral, the Lender shall not have any
obligation or liability (other than for gross negligence or willful

 

14

 

misconduct)
under any of the Collateral (or any agreement giving rise thereto) by reason of
or arising out of this Agreement or the receipt by the Lender of any payment
relating thereto, nor shall the Lender be obligated in any manner to perform
any of the obligations of the Borrower under or pursuant to any of the
Collateral (or any agreement giving rise thereto) to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it
or as to the sufficiency of any performance by any party under any of the
Collateral (or any agreement giving rise thereto), to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.

 

5.                                                CONDITIONS PRECEDENT

 

5.1                                         Initial Advance

 

The
effectiveness of this Agreement is subject to the satisfaction, in the sole
discretion of Lender, of the following conditions precedent:

 

5.1(a)                          Lender must receive the following, all of which must be satisfactory in
form and content to Lender, in its sole discretion:

 

(i)                                     The Warehousing Note and this Agreement, duly executed by the Borrower.

 

(ii)                                  The Borrower’s organizational documents, certified as true and complete by
an appropriate officer or other Person.

 

(iii)                               Certificates of legal existence and good standing from the Secretary of
State of Delaware for Borrower, dated within thirty (30) days of the date of
this Agreement.

 

(iv)                              Such certificates of resolutions or other action, incumbency certificates
and/or other certificates of responsible officers of the Borrower as Lender may
require evidencing (A) the authority of the Borrower to enter into this
Agreement and the other Loan Documents and (B) the identity, authority and
capacity of each Authorized Representative thereof authorized to act as an
Authorized Representative in connection with this Agreement and the other Loan
Documents.

 

(v)                                 Uniform Commercial Code, tax lien and judgment searches of the
appropriate public records for Borrower that do not disclose the existence of
any Lien on the Collateral other than in favor of Lender.

 

(vi)                              Copies of Borrower’s errors and omissions insurance policy or mortgage
impairment insurance policy, and blanket bond coverage policy, or certificates
in lieu of policies, showing compliance by Borrower as of the date of this
Agreement with the related provisions of Section 7.9.

 

(vii)                           An opinion from counsel for the Borrower in form and substance
satisfactory to Lender concerning, among other matters (i) the legal
existence, good standing 

 

15

 

and
qualification to do business of the Borrower, (ii) the power and authority
of the Borrower to enter into and perform the Loan Documents, (iv) the
authorization of the individuals executing and delivering Loan Documents on
behalf of the Borrower to do so, (v) the enforceability of the Borrower’s
obligations under the Loan Documents, (vi) the absence of any pending or
threatened material litigation against the Borrower, (vii) the validity
and perfection of the Lender’s security interest in the Collateral, (viii) the
non-contravention of the Borrower’s obligations under the Loan Documents, under
the Borrower’s charter documents or under any material agreements or legal
proceedings to which it is a party or by which it is bound, and (ix) such
other matters as Lender reasonably shall request consistent with loan
facilities similar to the loan facility established by this Agreement.

 

(viii)                        Such financial statements and other information as Lender shall have
reasonably requested.

 

(ix)                              Such other documents as Lender reasonably may require, duly executed and
delivered, and evidence satisfactory to Lender of the occurrence of any further
conditions precedent to the closing of the credit facility established hereby.

 

5.1(b)                          Lender shall have filed Uniform Commercial Code financing statements in
such jurisdictions as Lender shall have determined to be appropriate in order
to perfect the security interest in the Collateral granted by Borrower pursuant
to this Agreement or any other Loan Document.

 

5.1(c)                           Borrower shall have (i) paid to the Lender, as applicable, all
amounts due as of the Closing Date, and (ii) paid or reimbursed the Lender
for all its attorneys’ fees and expenses incurred in connection with this
Agreement and the other Loan Documents.

 

5.2                                         Each Advance

 

The
effectiveness of this Agreement, including the Lender’s obligation to make
Warehousing Advances is subject to the satisfaction, in the sole discretion of
Lender, as of the date of each Warehousing Advance, of the following additional
conditions precedent:

 

5.2(a)                          The Borrower must have delivered to Lender the Warehousing Advance
Request and the Collateral Documents required by, and must have satisfied the
procedures and substantive requirements set forth in, Article 2 and
the Exhibits described in that Article. 
All items delivered to Lender must be satisfactory to Lender in form and
content, and Lender may reject any item that does not satisfy the requirements
of this Agreement or the applicable Purchase Commitment.  Confirmation of the date of the requested
Warehousing Advance will constitute a representation by the Borrower that all
necessary actions have been taken to qualify the Mortgage Loan for purchase by
the Investor and that the borrowing hereunder is permitted by Investor
regulations.

 

5.2(b)                          Lender must have received evidence satisfactory to it as to the making or
continuation of any book entry or the due filing and recording in all
appropriate offices of all 

 

16

 

financing statements and
other instruments necessary to perfect the security interest of Lender in the
Collateral under the Uniform Commercial Code or other applicable law.

 

5.2(c)                           The representations and warranties of the Borrower contained in Article 6
and Article 9 must be accurate and complete in all material
respects as if made on and as of the date of each Warehousing Advance.

 

5.2(d)                          The Borrower must have performed all agreements to be performed by them
under this Agreement, and after giving effect to the requested Warehousing
Advance, no Default or Event of Default will exist under this Agreement.

 

5.2(e)                           There shall not have been any material adverse change in the financial
condition, business, or affairs of Borrower since the date of this Agreement
which in Lender’s good faith judgment may jeopardize in a material manner the
ability of Borrower to perform fully its obligations under each applicable Loan
Document.

 

5.2(f)                            Lender shall have received and approved such other documents, and
certificates as Lender reasonably may request (including without limitation the
documents to be executed by the Mortgagor and the Borrower), in form and
substance reasonably satisfactory to Lender.

 

5.2(g)                           Prior to any Warehousing Advance being made against any otherwise
Eligible Loan, Borrower shall have provided to Lender copies of all documents,
agreements and other materials and information concerning Borrower’s status as
an originator and seller of such type of Mortgage Loan for the applicable
Federal Agency as Lender may require.

 

Delivery
of a Warehousing Advance Request by Borrower will be deemed a representation by
the Borrower that all conditions set forth in this Section have been
satisfied as of the date of the Warehousing Advance.

 

5.3                                         Force Majeure

 

Notwithstanding
Borrower’s satisfaction of the conditions set forth in this Agreement, the
Lender has no obligation to make a Warehousing Advance if Lender is prevented
from obtaining the funds necessary to make a Warehousing Advance, or is
otherwise prevented from making a Warehousing Advance as a result of any fire,
flood or other casualty, failure of power, strike, lockout or other labor
trouble, banking moratorium, embargo, sabotage, confiscation, condemnation,
riot, civil disturbance, insurrection, act of terrorism, war or other activity
of armed forces, act of God or other similar reason beyond the control of
Lender.  Lender will make the requested
Warehousing Advance as soon as reasonably possible following the occurrence of
such an event (provided that all applicable terms and conditions relating to
such Warehousing Advance continue to be satisfied).

 

6.                                                GENERAL REPRESENTATIONS AND WARRANTIES

 

The
Borrower represents and warrants to the Lender, as of the date of this
Agreement and as of the date of each Warehousing Advance Request and the making
of each Warehousing Advance, that:

 

17

 

6.1                                         Place of Business

 

The
Borrower’s chief executive office and principal place of business is 7501
Wisconsin Avenue, Suite 1200,Bethesda, Maryland 20814.

 

6.2                                         Organization; Good Standing

 

The
Borrower is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has the full legal
power and authority to own its property and to carry on its business as
currently conducted.  The Borrower is
duly qualified as a limited liability company to do business and is in good
standing in each jurisdiction in which the transaction of its business makes
qualification necessary, except in jurisdictions, if any, where a failure to be
in good standing has no material adverse effect on Borrower’s business,
operations, assets or financial condition as a whole.  For the purposes of this Agreement, good
standing includes qualification for all licenses and payment of all taxes
required in the jurisdiction of its formation and in each jurisdiction in which
the Borrower transacts business.  Exhibit K
hereto sets forth all foreign qualifications and mortgage lender and mortgage
servicer licenses held by the Borrower.

 

6.3                                         Authorization and Enforceability

 

The
Borrower has the power and authority to execute, deliver and perform this
Agreement, the Warehousing Note and the other Loan Documents and the Borrower
has the power and authority to obtain the Warehousing Advances under this
Agreement.  The execution, delivery and
performance by the Borrower of this Agreement, the Warehousing Note and the
other Loan Documents and the Warehousing Advances requested and made under this
Agreement and the Warehousing Note have been duly and validly authorized by all
necessary limited liability company action on the part of the Borrower (which
action has been modified or rescinded, and is in full force and effect) and
does not and will not conflict with or violate any applicable provision of law,
of any judgments binding upon the Borrower, or the certificate of formation and
limited liability company operating agreement of Borrower, conflict with or
result in a breach of, constitute a default or require any consent under, or
result in or require or allow the acceleration of any indebtedness of the
Borrower under any agreement, instrument or indenture to which it is a party or
by which it or its property may be bound or affected, or result in the creation
of any Lien upon any property or assets of the Borrower (other than the Lien on
the Collateral granted under this Agreement). 
This Agreement, the Warehousing Note and the other Loan Documents
constitutes the legal, valid and binding obligations of the Borrower,
enforceable in accordance with their respective terms, except that
enforceability may be limited by bankruptcy, insolvency or other such laws
affecting the enforcement of creditors’ rights and general principles of
equity.

 

6.4                                         Approvals

 

The
execution and delivery of this Agreement, the Warehousing Note and the other
Loan Documents and the performance of the Borrower’s obligations under this
Agreement, the Warehousing Note and the other Loan Documents and the validity
and enforceability of this Agreement, the Warehousing Note and the other Loan
Documents do not require any license, 

 

18

 

consent,
approval or other action of any agency, commission, instrumentality or other
regulatory body or authority (in each case, whether federal, state or local,
domestic or foreign) other than those that have been obtained and remain in
full force and effect or those with respect to which the failure to obtain may
reasonably be expected to result in a material adverse change in the Borrower’s
business, operations, assets or financial conditions as a whole.

 

6.5                                         Financial Condition

 

The
balance sheet of Borrower as of May 31, 2010 for the five (5) month
period then ended and the balance sheet of the Borrower as of December 31,
2009 for the eleven (11) month period then ended, and the related statements of
income and cash flows furnished to Lender, fairly present the financial
condition of Borrower as of such date and the results of its operations for the
five (5) month and eleven (11) month period, as applicable, then ended.

 

6.6                                         Litigation

 

Except
as listed on Schedule 6.6, as of the date hereof, there are no actions,
claims, suits or proceedings pending or, to the Borrower’s knowledge,
threatened or reasonably anticipated against or affecting the Borrower in any
court or before any arbitrator or before any agency, board, bureau, commission,
instrumentality or other administrative or regulatory body (in each case,
whether federal, state or local, domestic or foreign) that, if adversely
determined, may reasonably be expected to result in a material adverse change
in the Borrower’s business, operations, assets or financial condition as a
whole, or that would affect the validity or enforceability of this Agreement,
the Warehousing Note or any other Loan Document.

 

6.7                                         Compliance with Laws

 

The
Borrower is not in violation of any provision of any law, or of any judgment,
award, rule, regulation, order, decree, writ or injunction of any court or
public regulatory body or authority that could result in a material adverse
change in the Borrower’s business, operations, assets or financial condition as
a whole or that would affect the validity or enforceability of this Agreement,
the Warehousing Note or any other Loan Document.

 

6.8                                         Regulation U

 

The
Borrower is not engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying Margin
Stock, and no part of the proceeds of any Warehousing Advance made under this
Agreement will be used to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.

 

6.9                                         Investment Company Act

 

The
Borrower is not an “investment company” or controlled by an “investment company”
within the meaning of the Investment Company Act.

 

19

 

6.10                                  Payment of Taxes

 

The
Borrower has filed or caused to be filed all federal, state and local income,
excise, property and other tax returns that are required to be filed with
respect to the operations of the Borrower, all such returns are true and
correct and Borrower has paid or caused to be paid all taxes shown on those
returns or on any assessment, to the extent that those taxes have become due,
including all FICA payments and withholding taxes, if appropriate.  The amounts reserved as a liability for
income and other taxes payable in the financial statements described in Section 6.5
are sufficient for payment of all unpaid federal, state and local income,
excise, property and other taxes, whether or not disputed, of Borrower accrued
for or applicable to the period and on the dates of those financial statements
and all years and periods prior to those financial statements and for which
Borrower may be liable in its own right or as transferee of the assets of, or
as successor to, any other Person.  No
tax Liens have been filed and no material claims are being asserted against
Borrower or any property of Borrower with respect to any taxes, fees or
charges.

 

6.11                                  Agreements

 

The
Borrower is not a party to any agreement, instrument or indenture or subject to
any restriction materially and adversely affecting its business, operations,
assets or financial condition.  The
Borrower is not in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement,
instrument, or indenture which default could result in a material adverse
change in the Borrower’s business, operations, assets or financial condition as
a whole.  No holder of any indebtedness
of the Borrower has given notice of any asserted default under that
indebtedness, and no liquidation or dissolution of the Borrower and no
receivership, insolvency, bankruptcy, reorganization or other similar
proceedings relative to the Borrower or any of its properties is pending or to
the knowledge of the Borrower threatened.

 

6.12                                  Title to Properties

 

The
Borrower has good, valid, insurable and (in the case of real property)
marketable title to all of its properties and assets (whether real or personal,
tangible or intangible) reflected on the financial statements described in Section 6.5,
except for those properties and assets that the Borrower has disposed of since
the date of those financial statements either in the ordinary course of
business or because they were no longer used or useful in the conduct of the
Borrower’s business.  All of the Borrower’s
properties and assets are free and clear of all Liens except as disclosed in
Borrower’s financial statements.

 

6.13                                  ERISA

 

Each
Plan is in compliance with all applicable requirements of ERISA and the
Internal Revenue Code and with all material applicable rulings and regulations
issued under the provisions of ERISA and the Internal Revenue Code setting
forth those requirements, except where any failure to comply would not result
in a material loss to the Borrower or any ERISA Affiliate.  All of the minimum funding standards or other
contribution obligations applicable to each Plan have been satisfied.  No Plan is a Multiemployer Plan or a
defined-benefit pension plan subject to Title IV of ERISA.

 

20

 

6.14                                  No Retiree Benefits

 

Except
as required under Section 4980B of the Internal Revenue Code, Section 601
of ERISA or applicable state law, the Borrower is not obligated to provide
post-retirement medical or insurance benefits with respect to employees or
former employees.

 

6.15                                  Assumed Names

 

The
Borrower does not originate Mortgage Loans or otherwise conduct business under
any names other than its legal name and the assumed names set forth on Exhibit G.  The Borrower has made all filings and taken
all other action as may be required under the laws of any jurisdiction in which
it originates Mortgage Loans or otherwise conducts business under any assumed
name.  The Borrower’s use of the assumed
names set forth on Exhibit G does not conflict with any other
Person’s legal rights to any such name, nor otherwise give rise to any
liability by the Borrower to any other Person. 
The Borrower may amend Exhibit G to add or delete any
assumed names used by the Borrower to conduct business.  An amendment to Exhibit G to add
an assumed name is not effective until a Borrower has delivered to Lender an
assumed name certificate in the jurisdictions in which the assumed name is to
be used, which must be satisfactory in form and content to Lender in its sole
discretion.  In connection with any amendment
to delete a name from Exhibit G, the Borrower represents and
warrants that it has ceased using that assumed name in all jurisdictions.

 

6.16                                  Servicing

 

Exhibit H is a true and
complete list of the Borrower’s Servicing Portfolio as of March 31, 2010.  All of the Borrower’s Servicing Contracts are
in full force and effect, and are unencumbered by Liens.  No event of default or event that, with
notice or lapse of time or both, would become an event of default, exists under
any of Borrower’s Servicing Contracts.

 

6.17                                  Foreign Asset Control Regulations.

 

Neither
the making of the Warehousing Advances nor the use of the proceeds of any
thereof (or any other Loan) will violate the Trading With the Enemy Act (50
U.S.C. § 1 et seq., as amended) (the “Trading With the Enemy Act”) or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) (the “Foreign Assets
Control Regulations”) or any enabling legislation or executive order
relating thereto (which for the avoidance of doubt shall include, but shall not
be limited to (a) Executive Order 13224 of September 21, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive
Order”) and (b) the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Public Law 107-56).  Furthermore,
neither the Borrower nor any of its affiliates (a) is or will become a “blocked
person” as described in the Executive Order, the Trading With the Enemy Act or
the Foreign Assets Control Regulations or (b) engages or will engage in
any dealings or transactions, or be otherwise associated, with any such “blocked
person.”

 

21

 

7.                                                AFFIRMATIVE COVENANTS

 

As
long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed under this Agreement or under any other
Loan Document, the Borrower must, unless the Lender consents in writing:

 

7.1                                         Payment of Obligations

 

Punctually
pay or cause to be paid all Obligations, including the Obligations payable
under this Agreement and the Warehousing Note in accordance with their terms.

 

7.2                                         Financial Statements

 

Deliver
to Lender, in form and detail reasonably satisfactory to Lender:

 

7.2(a)                          As soon as available and in any event within one hundred twenty (120)
days after the end of each fiscal year of Borrower, audited fiscal year-end statements
of income and cash flows of Borrower and its Subsidiaries for that year, and
the related audited balance sheet as of the end of that year (setting forth in
comparative form the corresponding figures for the preceding Fiscal Year), all
in reasonable detail and accompanied by (1) an opinion as to those
financial statements in form and substance reasonably satisfactory to Lender
and prepared by an independent certified public accounting firm reasonably
acceptable to Lender (it being acknowledged by the Lender that KPMG LLP
currently is an acceptable independent certified public accounting firm) and (2) if
then available or otherwise within fifteen (15) days of receipt by Borrower,
any management letters, management reports or other supplementary comments or
reports delivered by those accountants to Borrower or its governing board,
body, manager, general partner, or the like;

 

7.2(b)                          As soon as available and in any event within sixty (60) days after the
end of each Calendar Quarter of Borrower, interim statements of income of
Borrower and its Subsidiaries for that Calendar Quarter and the period from the
beginning of the Fiscal Year to end of that Calendar Quarter, and the related
balance sheet (including contingent liabilities) as at the end of that Calendar
Quarter, all in reasonable detail, subject, however, to year-end audit
adjustments; and

 

7.2(c)                           Together with each delivery of financial statements required by this
Section, a Compliance Certificate substantially in the form of Exhibit I.

 

7.3                                         Other Borrower Reports

 

Deliver
to Lender:

 

7.3(a)                          As soon as available and in any event within sixty (60) days after the
end of each calendar quarter, a report (“Servicing Report”) as of the
end of the calendar quarter, as to all Mortgage Loans the servicing rights to
which are owned by the Borrower.  The
Servicing Report must be in similar summary form as previously presented to
Lender (or as Lender otherwise may agree), and must, at a minimum, indicate
which Mortgage 

 

22

 

Loans (1) are current
and in good standing, (2) are more than 30, 60 or 90 days past due, (3) are
the subject of pending bankruptcy or foreclosure proceedings, or (4) have
been converted (through foreclosure or other proceedings in lieu of foreclosure)
into real estate owned by the Borrower, and include, by Mortgage Loan type (x) weighted
average coupon, (y) weighted average maturity, and (z) weighted
average servicing fee.

 

7.3(b)                          As soon as available and in any event within sixty (60) days after the
end of each calendar quarter, a loan production report as of the end of that
quarter, presenting (i) the total dollar volume and the number of Mortgage
Loans originated and closed or purchased during that quarter and for the fiscal
year-to-date, specified by property type, loan type and (ii) as to any
Mortgage Loans sold in such quarter, the Investor to whom each Mortgage Loan
was sold.

 

7.3(c)                           As soon as available, but in any event at least sixty (60) days before
the end of each Fiscal Year, preliminary forecasts prepared by management of
the Borrower, in form satisfactory to the Lender, of the balance sheets and
statements of income or operations and cash flows of the Borrower on a calendar
quarterly basis for the immediately following Fiscal Year (including the fiscal
year in which the Maturity Date occurs).

 

7.3(d)                          Other reports in respect of Pledged Loans or Pledged Securities,
including, without limitation, copies of purchase confirmations issued by
Investors purchasing Pledged Loans from the Borrower, in such detail and at
such times as Lender in its discretion may reasonably request.

 

7.3(e)                           With reasonable promptness, all further information regarding the
business, operations, assets or financial condition of the Borrower as Lender
may reasonably request, including copies of any audits completed by Fannie Mae,
FHA or Ginnie Mae.

 

7.3(f)                            As soon as available and in any event within 30 days after the end of
each Calendar Quarter, a report as of the end of such Calendar Quarter
detailing all requests that the Borrower repurchase Mortgage Loans and the
status of each such request and any indemnification or similar agreement to
which the Borrower is a party in connection with any such request.

 

7.4                                         Maintenance of Existence; Conduct of Business

 

Preserve
and maintain its existence as a limited liability company in good standing and
all of its rights, privileges, licenses and franchises necessary or desirable
in the normal conduct of its business, including its eligibility as lender,
seller/servicer or issuer as described under Section 9.4; conduct
its business in an orderly and efficient manner; maintain a net worth of
acceptable assets as required for maintaining the Borrower’s eligibility as
lender, seller/servicer or issuer as described under Section 9.4;
and make no material change in the nature or character of its business or
engage in any business in which it was not engaged on the date of this
Agreement.

 

7.5                                         Compliance with Applicable Laws

 

Comply
with the requirements of all applicable laws, rules, regulations and orders of
any Governmental Authority, a breach of which could result in a material
adverse change in 

 

23

 

Borrower’s
business, operations, assets, or financial condition as a whole or on the
enforceability of this Agreement, the Warehousing Note, any other Loan Document
or any Collateral, except where contested in good faith and by appropriate
proceedings.

 

7.6                                         Inspection of Properties and Books;
Operational Reviews

 

Permit
Lender, and any Assignee or Participant (and their authorized representatives)
to discuss the business, operations, assets and financial condition of the
Borrower with the Borrower’s senior officers, and other management officials,
agents and employees, and to examine and make copies or extracts of the
Borrower’s books of account, all at such reasonable times as Lender or any
Participant may request.  Provide their
accountants with a copy of this Agreement promptly after its execution and
authorize and instruct them to answer candidly all questions that the officers
of Lender or any Participant or any authorized representatives of Lender or any
Participant may address to them in reference to the financial condition or
affairs of the Borrower.  The Borrower
may have representatives in attendance at any meetings held between the
officers or other representatives of Lender or any Participant and Borrower’s
accountants under this authorization. 
Permit any Lender or any Participant (and their authorized
representatives) access upon reasonable Notice and during normal business hours
to Borrower’s premises and records for the purpose of conducting a review of
the Borrower’s general mortgage business methods, policies and procedures,
auditing its loan files and reviewing the financial and operational aspects of
Borrower’s business.

 

7.7                                         Notice

 

Give
prompt Notice to Lender of (a) any action, suit or proceeding instituted
by or against the Borrower in any federal or state court or before any agency,
board, bureau, commission, instrumentality or other administrative or
regulatory body (in each case, whether federal, state or local, domestic or
foreign), which action, suit or proceeding has at issue in excess of $100,000,
or any such proceedings threatened against the Borrower in a writing containing
the details of that action, suit or proceeding; (b) the filing, recording
or assessment of any Lien for any federal, state or local taxes, assessments or
other governmental charges against the Borrower, any of its assets, other than
a Lien for taxes, assessments or other governmental charges on real property
securing or that previously secured an individual Mortgage Loan that is not a
Pledged Loan; (c) the occurrence of a Default or an Event of Default; (d) the
suspension, revocation or termination of the Borrower’s eligibility, in any
respect, as lender, seller/servicer or issuer as described under Section 9.4
or the suspension, revocation or termination of any other license or approval
required for the Borrower to engage in the business of originating, acquiring
and, if applicable, servicing Mortgage Loans; (e) the imposition of any
other adverse regulatory or administrative action or sanction on or against the
Borrower by any agency, board, bureau, commission, instrumentality or other
administrative or regulatory body (in each case, whether federal, state or
local, domestic or foreign) that could result in a material adverse change in
the Borrower’s business, operations, assets or financial condition as a whole
or that could affect the validity or enforceability of any Pledged Loan or
Pledged Security; (f) the transfer, loss, nonrenewal or termination of any
Servicing Contracts to which the Borrower is a party, or which is held for the
benefit of the Borrower, and the reason for that transfer, loss, nonrenewal or
termination; (g) any Prohibited Transaction with respect to any Plan,
specifying the nature of the Prohibited Transaction and what action the
Borrower or such Guarantor’s proposes to take with respect to it; and (h) any

 

24

 

other
action, event or condition of any nature that could lead to or result in a
material adverse change in the business, operations, assets or financial
condition of the Borrower.

 

7.8                                         Payment of Taxes and Other Obligations

 

Pay,
perform and discharge, or cause to be paid, performed and discharged, all
taxes, assessments and governmental charges or levies imposed upon the Borrower
or upon its income, receipts or properties before those taxes, assessments and
governmental charges or levies become past due, and all lawful claims for
labor, materials and supplies or otherwise that, if unpaid, could become a Lien
or charge upon any of their respective properties or assets.  The Borrower is not required to pay, however,
any taxes, assessments and governmental charges or levies or claims for labor,
materials or supplies for which the Borrower has obtained an adequate bond or
insurance or that are being contested in good faith and by proper proceedings
that are being reasonably and diligently pursued and for which proper reserves
have been created.

 

7.9                                         Insurance

 

(a)                                 Maintain blanket bond coverage and errors and omissions insurance with
such companies and in such amounts as satisfy prevailing requirements
applicable to a lender, seller/servicer or issuer as described under Section 9.4,
including all applicable Federal Agency insurance requirements, and liability,
fire and other hazard insurance on its properties, in each case with
responsible insurance companies acceptable to Lender, in such amounts and
against such risks as is customarily carried by similar businesses operating in
the same location.  Within 30 days after
Notice from Lender, obtain such additional insurance as Lender may reasonably
require, all at the sole expense of the Borrower.  Copies of such policies must be furnished to
Lender without charge upon request of Lender. 
Borrower agrees to use its best efforts to obtain and deliver to Lender
a certificate issued by said insurers to the effect that they will use their
best efforts to give Lender at least thirty (30) days prior written
notification prior to cancellation of coverage under any such policy.

 

(b)                                 Maintain a fidelity bond of an incorporated surety company in an amount
acceptable to the Lender and consistent with the Borrower’s past practice
securing protection and indemnity to Borrower against loss of any money or
other property entrusted to Borrower or Borrower’s officers, employees or
agents or coming into their control, caused by any dishonest, fraudulent or
criminal act, direct or indirect, of Borrower or of its officers, employees or
agents.  Borrower shall furnish a
certificate evidencing such fidelity bond to Lender, upon request, and shall
notify Lender if such fidelity bond coverage is decreased or exhausted.

 

7.10                                  Closing Instructions

 

Indemnify
and hold Lender harmless from and against any loss, including reasonable
attorneys’ fees and costs, attributable to the failure of any title insurance
company, agent or attorney to comply with the Borrower’s disbursement or
instruction letter relating to any Mortgage Loan.  

 

25

 

The
Lender has the right to pre-approve the Borrower’s choice of title insurance
company, agent or attorney, unless already approved by a relevant Federal
Agency, as applicable, and the Borrower’s disbursement or instruction letter to
them in any case in which the Borrower intends to obtain a Warehousing Advance
against the Mortgage Loan to be created at settlement or to pledge that
Mortgage Loan as Collateral under this Agreement.

 

7.11                                  Subordination of Certain Indebtedness

 

Cause
any indebtedness of the Borrower for borrowed money to any Affiliate or any
member, shareholder, director or officer of any Affiliate of the Borrower, to
be subordinated to the Obligations by the execution and delivery to Lender of a
Subordination of Debt Agreement, on the form prescribed by the Lender,
certified by the corporate secretary of the Borrower to be true and complete
and in full force and effect.

 

7.12                                  Other Loan Obligations

 

Perform
all material obligations under the terms of each loan agreement, note,
mortgage, security agreement or debt instrument by which the Borrower is bound
or to which any of its property is subject, and promptly notify the Lender in
writing of a declared default under or the termination, cancellation, reduction
or nonrenewal of any of its other lines of credit or agreements with any other
lender.  Exhibit J is a true
and complete list of all such revolving lines of credit or revolving credit
agreements as of the date of this Agreement.

 

7.13                                  ERISA

 

Maintain
and cause each ERISA Affiliate to maintain each Plan in compliance with all
material applicable requirements of ERISA and of the Internal Revenue Code and
with all applicable rulings and regulations issued under the provisions of
ERISA and of the Internal Revenue Code, and not, and not permit any ERISA
Affiliate to, (a) engage in any transaction in connection with which the
Borrower or any ERISA Affiliate would be subject to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975
of the Internal Revenue Code, in either case in an amount exceeding $25,000 or (b) fail
to make full payment when due of all amounts that, under the provisions of any
Plan, the Borrower or any ERISA Affiliate is required to pay as contributions
to that Plan, or permit to exist any accumulated funding deficiency (as such
term is defined in Section 302 of ERISA and Section 412 of the
Internal Revenue Code), whether or not waived, with respect to any Plan in an
aggregate amount exceeding $25,000.

 

7.14                                  Use of Proceeds of Warehousing Advances

 

Use
the proceeds of each Warehousing Advance solely for the purpose of funding
Eligible Loans and against the pledge of those Eligible Loans as Collateral.

 

7.15                                  Investor Instructions.

 

Upon
any Event of Default prior to purchase of a Mortgage Loan by the Investor, and
upon direction by the Lender, the Borrower shall immediately direct the
Investor to provide any documents in its possession related to such Mortgage
Loan to the Lender.

 

26

 

7.16                                  Sale of Mortgage Loan to Investor.

 

Provide
status reports of its efforts to sell each Mortgage Loan to the applicable
Investor on the earlier of: (a) within five (5) days after the
Borrower becomes aware of any fact or circumstance that causes the Borrower to
believe that the Investor may not purchase the Mortgage Loan within sixty (60)
days after the date of the related Warehousing Advance, in which case such
status report shall include Borrower’s plan for repaying the Lender the amount
of the Mortgage Loan, or (b) fifty five (55) days after the date of the
applicable Warehousing Advance.  In
addition, if the Investor has not purchased, and the Borrower has not repaid, the
Mortgage Loan within fifty-five (55) days after the date of the related
Warehousing Advance, the Borrower shall immediately cause the Lender to be
named as an additional insured under the property insurance policy covering the
property which is collateral for the Mortgage Loan.

 

8.                                                NEGATIVE COVENANTS

 

As
long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed, Borrower must not, either directly or
indirectly, without the prior written consent of Lender:

 

8.1                                         [Intentionally Deleted]

 

8.2                                         Contingent Liabilities

 

Assume,
guarantee, endorse or otherwise become contingently liable for the obligation
of any Person except (a) by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business and (b) for
obligations arising in connection with the sale of Mortgage Loans with recourse
in the ordinary course of a Borrower’s business.

 

8.3                                         Restrictions on Fundamental Changes

 

8.3(a)                          Reorganize, spin-off, consolidate with, merge with or into, or enter into
any analogous reorganization or transaction with any Person.

 

8.3(b)                          Amend or otherwise modify the Borrower’s certificate of formation or
operating agreement in any manner which is materially adverse to the Lender.

 

8.3(c)                           Liquidate, wind up or dissolve (or suffer any liquidation or
dissolution).

 

8.3(d)                          Make any material change in the nature or scope of the business in which
the Borrower engages as of the date of this Agreement and cease actively to
engage in the business of originating or acquiring Mortgage Loans, or if
applicable, servicing Mortgage Loans.

 

8.3(e)                           Sell, assign, lease, convey, transfer or otherwise dispose of (whether in
one transaction or a series of transactions) all or any substantial part of the
Borrower’s business or assets, whether now owned or acquired after the Closing
Date, other than, in the ordinary course of business and to the extent not
otherwise prohibited by this Agreement, sales by the Borrower of (1) Mortgage
Loans, (2) Mortgage-backed Securities and (3) Servicing Contracts.

 

27

 

8.3(f)                            Acquire by purchase or in any other transaction all or substantially all
of the business or property, or stock or other ownership interests of any
Person.

 

8.3(g)                           Permit any Subsidiary of the Borrower or a Guarantor to do or take any of
the foregoing actions.

 

8.4                                         Subsidiaries

 

Form or
acquire any Subsidiary of the Borrower.

 

8.5                                         Loss of Eligibility, Licenses or Approvals

 

Take
any action, or fail or omit to take any action, that would (a) cause the
Borrower to lose all or any part of its status as an eligible lender,
seller/servicer or issuer as described under Sections 9.4, 9.5, 9.6
or 9.7, or all or any part of any other license or approval required for
the Borrower to engage in the business of originating, acquiring and servicing
Mortgage Loans or (b) result in the imposition of any other adverse
regulatory or administrative action or sanction on or against the Borrower by
any agency board, bureau, commission, instrumentality or other administrative
or regulatory body (in each case, whether federal, state or local, domestic or
foreign) that could result in a material adverse change in the Borrower’s
business, operations, assets or financial condition as a whole or that could
affect the validity or enforceability of any Pledged Loan.

 

8.6                                         Accounting Changes

 

Make
any significant change in accounting treatment or reporting practices, except
as required by GAAP, or change its fiscal year. 
If any changes in GAAP would result in any material deviation in the
method of calculating and results of testing compliance with any financial
covenant hereunder, such financial covenant shall continue to be calculated and
tested as if such change in GAAP had not occurred, unless otherwise specifically
agreed in writing by Lender after full disclosure by Borrower.

 

8.7                                         Minimum Adjusted Tangible Net Worth

 

Permit
the minimum Adjusted Tangible Net Worth of the Borrower, at the Closing Date
and at the end of each Calendar Quarter thereafter to be less than Eighty-Five
Million Dollars ($85,000,000).

 

8.8                                         Maximum Indebtedness to Adjusted Tangible Net
Worth

 

Permit
the ratio of Borrower’s Indebtedness (excluding Indebtedness under this
Agreement) to Adjusted Tangible Net Worth of the Borrower at the Closing Date
and at the end of each Calendar Quarter thereafter to be more than 3:1.

 

28

 

8.9                                         [Intentionally Deleted]

 

8.10                                  [Intentionally Deleted]

 

8.11                                  Minimum Cash and Cash Equivalents

 

Permit
the sum of Borrower’s cash and Cash Equivalents at the end of any Calendar
Quarter to be less than Seven Million Dollars ($7,000,000).

 

8.12                                  Servicing Delinquencies

 

Permit
(i) the aggregate unpaid principal amount of Mortgage Loans comprising the
Borrower’s Servicing Portfolio which are sixty (60) or more days past due or
otherwise in default at any time to exceed two percent (2%) of the aggregate
unpaid principal balance of all Mortgage Loans comprising the Borrower’s
Servicing Portfolios at such time, or (ii) the aggregate unpaid principal
amount of At Risk Mortgage Loans comprising the Borrower’s Servicing Portfolio
which are sixty (60) or more days past due or otherwise in default to increase
by more than two percent (2%) from the last day of a Fiscal Quarter to the last
day of the following Fiscal Quarter.

 

8.13                                  Dividends and Distributions

 

So
long as any Default or Event of Default is then outstanding or would be
outstanding after taking into effect a dividend, redemption or setting aside of
funds, cause or permit, directly or indirectly: declare, pay, authorize or make
any form of dividend (except for stock dividends or stock splits) or return any
capital, in cash or property, to its shareholders, their successors or assigns
or repurchase, redeem or retire any of the capital stock of such Person.

 

8.14                                  Transactions with Affiliates

 

Directly
or indirectly (a) make any loan, advance, extension of credit or capital
contribution to any of the Borrower’s Affiliates, (b) sell, transfer,
pledge or assign any of its assets to or on behalf of those Affiliates, (c) merge
or consolidate with or purchase or acquire assets from those Affiliates, or (d) pay
management fees to or on behalf of those Affiliates, other than (i) payments
attributable to reasonable overhead and administrative charges allocated to the
Borrower by the Affiliates, and (ii) reasonable subservicing fees payable
to Affiliates for their servicing of the Servicing Portfolio.

 

8.15                                  Recourse Servicing Contracts

 

Except
for Servicing Contracts involving Fannie Mae DUS Mortgage Loans, and conduit
originations for which the Borrower notifies Lender pursuant hereto, acquire or
enter into Servicing Contracts under which the Borrower must repurchase or
indemnify the holder of the Mortgage Loans as a result of defaults on the
Mortgage Loans at any time during the term of those Mortgage Loans.

 

29

 

9.                                                SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL

 

9.1                                         Special Representations and Warranties
Concerning Warehousing Collateral

 

The
Borrower represents and warrants to the Lender, as of the date of this
Agreement and as of the date of each Warehousing Advance Request and the making
of each Warehousing Advance, that:

 

9.1(a)                          The Borrower has selected the Collateral in a manner so as to not affect
adversely Lender’s interests.

 

9.1(b)                          The Borrower is the legal and equitable owner and holder, free and clear
of all Liens (other than Liens granted under this Agreement), of the Pledged
Loans and the Pledged Securities.  All
Pledged Loans, Pledged Securities and related Purchase Commitments have been
duly authorized and validly issued to the Borrower, and all of the foregoing
items of Collateral comply with all of the requirements of this Agreement, and
have been and will continue to be validly pledged or assigned to Lender,
subject to no other Liens.

 

9.1(c)                           The Borrower has, and will continue to have, the full right, power and
authority to pledge the Collateral pledged and to be pledged by it under this
Agreement.

 

9.1(d)                          Each Mortgage Loan and each related document included in the Pledged
Loans (1) has been duly executed and delivered by the parties to that
Mortgage Loan and that related document, (2) has been made in compliance
with all applicable laws, rules and regulations (including all laws, rules and
regulations relating to usury), (3) is and will continue to be a legal,
valid and binding obligation, enforceable in accordance with its terms, without
setoff, counterclaim or defense in favor of the mortgagor under the Mortgage
Loan or any other obligor on the Mortgage Note, (4) has not been modified,
amended or any requirements of which waived, except in a writing that is part
of the Collateral Documents, and (5) complies and will continue to comply
with the terms of this Agreement, the related Purchase Commitment, and the
standard practices of the applicable Investor.

 

9.1(e)                           Each Pledged Loan is secured by a Mortgage on real property and
improvements located in one of the states of the United States or the District
of Columbia.

 

9.1(f)                            Each Pledged Loan has been closed or will be closed and funded with the
Warehousing Advance made against it.

 

9.1(g)                           Each Pledged Loan against which a Warehousing Advance has been or will be
made on the basis of a Purchase Commitment, meets all of the requirements of
that Purchase Commitment, and each Pledged Security against which a Warehousing
Advance is outstanding meets all of the requirements of the related Purchase
Commitment.

 

9.1(h)                          Pledged Loans that are intended to be exchanged for Agency Securities
comply or, prior to the issuance of the Agency Securities will comply, with the
requirements of any 

 

30

 

governmental
instrumentality, department or agency issuing or guaranteeing the Agency
Securities.

 

9.1(i)                              Except for FHA Construction Mortgage Loans, each Mortgage Loan has been
fully advanced in the face amount of its Mortgage Note.

 

9.1(j)                             Each Pledged Loan is a First Mortgage Loan, unless permitted to be a
Subordinate Mortgage Loan under Exhibit D (in which case such
Pledged Loan may only be a Second Mortgage Loan or a Third Mortgage Loan).

 

9.1(k)                          Each First Mortgage Loan is secured by a First Mortgage on the real
property and improvements described in or covered by that Mortgage.

 

9.1(l)                              Each First Mortgage Loan has or will have a title insurance policy, in
ALTA form or equivalent, from a recognized title insurance company, insuring
the priority of the Lien of the Mortgage and meeting the usual requirements of
Investors purchasing those Mortgage Loans.

 

9.1(m)                      The real property securing each Pledged Loan has been evaluated or
appraised in accordance with Title XI of FIRREA, USPAP, and the requirements of
the applicable Investor.

 

9.1(n)                          Each Subordinate Mortgage Loan (to the extent Subordinate Mortgage Loans
are permitted by Exhibit D) is a Second Mortgage Loan or a Third
Mortgage Loan on the premises described in that Mortgage.  With respect to each Second Mortgage Loan and
Third Mortgage Loan, the Borrower shall be the servicer, and the lender with
respect to such Second Mortgage Loan and Third Mortgage Loan shall also be the
lender with respect to the senior Mortgage Loan on such Property.

 

9.1(o)                          To the extent required by the related Purchase Commitment or by Investors
generally for similar Mortgage Loans, each Subordinate Mortgage Loan has or
will have a title insurance policy, in ALTA form or equivalent, from a
recognized title insurance company, insuring the appropriate priority of the
Lien of the Mortgage and meeting the usual requirements of Investors purchasing
those Mortgage Loans.

 

9.1(p)                          The Mortgage Note for each Pledged Loan is (1) payable or endorsed
to the order of the Borrower, (2) an “instrument” within the meaning of Article 9
of the Uniform Commercial Code of all applicable jurisdictions and (3) is
denominated and payable in United States dollars.

 

9.1(q)                          No default exists under any Mortgage Loan when such Mortgage Loan first
is included as a Pledged Loan, and no default has existed for 60 days or more
under any such Mortgage Loan at any time thereafter.

 

9.1(r)                             No party to a Mortgage Loan or any related document is in violation of
any applicable law, rule or regulation that would impair the
collectability of the Mortgage Loan or the performance by the mortgagor or any
other obligor of his or her obligations under the Mortgage Note or any related
document.

 

31

 

9.1(s)                            All fire and casualty policies covering the real property and
improvements encumbered by each Mortgage included in the Pledged Loans (1) name
and will continue to name Borrower and its successors and assigns as the
insured under a standard mortgagee clause, (2) are and will continue to be
in full force and effect and (3) afford and will continue to afford
insurance against fire and such other risks as are usually insured against in
the broad form of extended coverage insurance generally available.

 

9.1(t)                             Pledged Loans secured by real property and improvements located in a
special flood hazard area designated as such by the Director of the Federal
Emergency Management Agency are and will continue to be covered by special
flood insurance under the National Flood Insurance Program.

 

9.1(u)                          The real property and improvements securing each Pledged Loan are free of
damage or waste and are in good repair, and no improvement located on or being
a part of such real property violates any applicable zoning law or regulation
(unless constituting a legal non-conforming use or improvement).

 

9.1(v)                          No notice of any partial or total condemnation has been given with
respect to the real property and improvements securing any Pledged Loan.

 

9.1(w)                        None of the Pledged Loans is a graduated payment Mortgage Loan or has a
shared appreciation or other contingent interest feature, and each Pledged Loan
provides for periodic payments of all accrued interest on the Mortgage Loan on
at least a monthly basis.

 

9.1(x)                          Neither the Borrower nor any of the Borrower’s Affiliates has any
ownership interest, right to acquire any ownership interest or equivalent
economic interest in any property securing a Pledged Loan or the mortgagor
under the Pledged Loan or any other obligor on the Mortgage Note for such
Pledged Loan.

 

9.1(y)                          The original assignments of Mortgage delivered to Lender for each Pledged
Loan are in recordable form and comply with all applicable laws and regulations
governing the filing and recording of such documents.

 

9.1(z)                           None of the mortgagors, guarantors or other obligors of any Pledged Loan
is a Person named in any Restriction List and to whom the provision of
financial services is prohibited or otherwise restricted by applicable law.

 

9.2                                         Special Affirmative Covenants Concerning
Warehousing Collateral

 

As
long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed under this Agreement or under any other
Loan Document, the Borrower must, unless the Lender consents in writing:

 

9.2(a)                          Warrant and defend the right, title and interest of Lender in and to the
Collateral against the claims and demands of all Persons.

 

32

 

9.2(b)                          Service or cause to be serviced all Pledged Loans in accordance with the
standard requirements of the issuers of Purchase Commitments covering them and
all applicable Federal Agency requirements, including taking all actions
necessary to enforce the obligations of the obligors under such Mortgage Loans;
service or cause to be serviced all Mortgage Loans backing Pledged Securities
in accordance with applicable governmental requirements and requirements of
issuers of Purchase Commitments covering them; hold all escrow funds collected
in respect of Pledged Loans and Mortgage Loans backing Pledged Securities in
trust, without commingling the same with non-custodial funds, and apply them
for the purposes for which those funds were collected.

 

9.2(c)                           Execute and deliver to Lender, with respect to the Collateral, those
further instruments of sale, pledge, assignment or transfer, and those powers
of attorney, as reasonably required by Lender, and do and perform all matters
and things necessary or reasonably desirable to be done or observed, for the
purpose of effectively creating, maintaining and preserving the security and
benefits intended to be afforded Lender under this Agreement.

 

9.2(d)                          Notify Lender within three (3) Business Days of any default under,
or of the termination of, any Purchase Commitment relating to any Pledged Loan,
Eligible Mortgage Pool or Pledged Security.

 

9.2(e)                           Promptly comply in all respects with the terms and conditions of all
Purchase Commitments, and all extensions, renewals and modifications or
substitutions of or to all Purchase Commitments; deliver or cause to be
delivered to the Investor the Pledged Loans and Pledged Securities to be sold under
each Purchase Commitment not later than the mandatory delivery date of the
Pledged Loans or Pledged Securities under the Purchase Commitment.

 

9.2(f)                            Compare the names of every mortgagor, guarantor and other obligor of
every Mortgage Loan, together with appropriate identifying information
concerning those Persons obtained by Borrower, against every Restriction List,
and make certain that none of the mortgagors, guarantors or other obligors of
any Mortgage Loan is a Person named in any Restriction List and to whom the
provision of financial services is prohibited or otherwise restricted by
applicable law.

 

9.2(g)                           Other than with respect to Fannie Mae DUS Mortgage Loans, prior to the
origination by the Borrower of any Mortgage Loans for sale to a Federal Agency,
the Borrower shall have entered into an agreement among Lender, the Investor
under the applicable Purchase Commitment, and the Borrower, pursuant to which
such Investor agrees to send all cash proceeds of Mortgage Loans sold by the
Borrower to such Investor to the applicable Cash Collateral Account.

 

33

 

9.3                                         Special Negative Covenants Concerning
Warehousing Collateral

 

As
long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed, the Borrower must not, either directly or
indirectly, without the prior written consent of Lender:

 

9.3(a)                          Amend, modify, or waive any of the terms and conditions of, or settle or
compromise any claim in respect of, any Pledged Loans or Pledged Securities.

 

9.3(b)                          Sell, transfer or assign, or grant any option with respect to, or pledge
(except under this Agreement and, with respect to each Pledged Loan or Pledged
Security, the related Purchase Commitment) any of the Collateral or any
interest in any of the Collateral.

 

9.3(c)                           Make any compromise, adjustment or settlement in respect of any of the
Collateral or accept any consideration other than cash in payment or
liquidation of the Collateral.

 

9.4                                         Special Representations and Warranties
Concerning Eligibility as Fannie Mae Approved Seller/Servicer of Mortgage Loans

 

The Borrower represents and warrants to Lender, as
of the date of this Agreement and as of the date of each Warehousing Advance
Request and the making of each Warehousing Advance, that the Borrower is
approved, qualified and in good standing as a Fannie Mae-approved
seller/servicer of Mortgage Loans, eligible to originate, purchase, hold, sell
and service Mortgage Loans to be sold to Fannie Mae under the Fannie Mae DUS Program.

 

9.5                                         Special Representation and Warranty Concerning
Fannie Mae DUS Program Reserve Requirements

 

The
Borrower represents and warrants to Lender that the Borrower will have met the
Fannie Mae DUS Program requirements for lender reserves for each Fannie Mae DUS
Mortgage Loan to be funded by a Warehousing Advance, at such time as required
by Fannie Mae under the Fannie Mae DUS Program.

 

9.6                                         Special Representations and Warranties
Concerning FHA Mortgage Loans

 

The
Borrower represents and warrants to Lender, as of the date of each Advance
Request and the making of each Warehousing Advance, that:

 

9.6(a)                          Each FHA-insured Mortgage Loan included in the Pledged Loans meets all
applicable governmental requirements for such insurance.  The Borrower has complied and will continue
to comply with all laws, rules and regulations with respect to the FHA
insurance of each Pledged Loan designated by the Borrower as an FHA-insured
Mortgage Loan, and such insurance is and will continue to be in full force and
effect.

 

9.6(b)                          For FHA-insured Pledged Loans that will be used to back Ginnie Mae
Mortgage-backed Securities, the Borrower has received from Ginnie Mae the
Confirmation Notice for Request of Additional Commitment Authority and
Confirmation Notice for Request of Pool Numbers, and there remains available
under those agreements a commitment on

 

34

 

the part of Ginnie Mae sufficient to permit the
issuance of Ginnie Mae Mortgage-backed Securities in an amount at least equal
to the amount of the Pledged Loans designated by the Borrower as the Mortgage
Loans to be used to back those Ginnie Mae Mortgage-backed Securities; each of
those Confirmation Notices is in full force and effect; each of those Pledged
Loans has been assigned by the Borrower to one of those Pool Numbers and a
portion of the available Ginnie Mae Commitment has been allocated to this Agreement
by the Borrower, in an amount at least equal to those Pledged Loans; and each
of those assignments and allocations has been reflected in the books and
records of the Borrower.

 

9.7                                         Special Representations
and Warranties Concerning Eligibility as Freddie Mac Program Plus
Seller/Servicer of Mortgage Loans

 

9.7(a)                          The Borrower represents and warrants to
Lender, as of the date of this Agreement and as of the date of each Warehousing
Advance Request and the making of each Warehousing Advance, that the Borrower
is approved, qualified and in good standing as a Freddie Mac Program Plus
seller/servicer of Mortgage Loans

 

10.                                         DEFAULTS; REMEDIES

 

10.1                                  Events of Default

 

The occurrence of any of the following is an event of
default (“Event of Default”):

 

10.1(a)                   The Borrower fails to pay the principal
of any Warehousing Advance when due, whether at stated maturity, by
acceleration, or otherwise; or fails to pay interest on any Warehousing Advance
when due hereunder; or fails to pay, within any applicable grace period, any
other amount due under this Agreement or any other Obligation of the Borrower
to Lender.

 

10.1(b)                   The Borrower fails to perform or comply
with any term or condition applicable to it contained in any Section of Article 7
or Article 8.

 

10.1(c)                    The suspension, revocation or termination
of the Borrower’s eligibility, in any respect, as lender, seller/servicer or
issuer as described under Sections 9.4, 9.5, 9.6
or 9.7, or of any other license or approval required for Borrower to
engage in the business of originating, acquiring and, if applicable, servicing
Mortgage Loans; or the imposition of any other adverse regulatory or
administrative action or sanction on or against the Borrower by any agency,
board, bureau, commission, instrumentality or other administrative or
regulatory body (in each case, whether federal, state or local, domestic or
foreign), that in each such case could result in a material adverse change in
the Borrower’s business, operations, assets or financial condition as a whole
or that could affect the validity or enforceability of any Pledged Loan.

 

10.1(d)                   Any representation or warranty made or
deemed made by the Borrower under this Agreement, in any other Loan Document or
in any written statement or certificate at any time given by the Borrower is
inaccurate or incomplete in any material respect on the date as of which it is
made or deemed made.

 

35

 

10.1(e)                    The Borrower defaults in the performance
of or compliance with any term contained in this Agreement or any other Loan
Document other than those referred to in Sections 10.1(a), 10.1(b),
10.1(c) or 10.1(d) and such default has not been
remedied or waived in writing within 30 days after the earliest of
(1) receipt by the Borrower of Notice from Lender of that default,
(2) receipt by Lender of Notice from the Borrower of that default or
(3) the date the Borrower should have notified Lender of that default
under the applicable clause of Section 7.7.

 

10.1(f)                     The Borrower defaults under any other
Indebtedness in excess of $100,000 (individually or in the aggregate) and such
default continues beyond any applicable grace period provided in the relevant
agreement with respect thereto.

 

10.1(g)                    An “event of default” (however defined)
occurs under any agreement between the Borrower and Lender or its affiliates
other than this Agreement and the other Loan Documents.

 

10.1(h)                   A case (whether voluntary or involuntary)
is filed by or against the Borrower under any applicable bankruptcy, insolvency
or other similar federal or state law; or a court of competent jurisdiction
appoints a receiver (interim or permanent), liquidator, sequestrator, trustee,
custodian or other officer having similar powers over the Borrower, or over all
or a substantial part of its properties or assets, and, if filed against the
Borrower, such action is not dismissed within sixty (60) days; or the Borrower
(1) consents to the appointment of or possession by a receiver (interim or
permanent), liquidator, sequestrator, trustee, custodian or other officer
having similar powers over the Borrower or over all or a substantial part of
its properties or assets, (2) makes an assignment for the benefit of
creditors, or (3) fails, or admits in writing its inability, to pay its
debts as those debts become due.

 

10.1(i)                       The Borrower fails to perform any
contractual obligation to repurchase Mortgage Loans.

 

10.1(j)                      Any money judgment, writ or warrant of
attachment or similar process involving an amount in excess of $100,000 is
entered or filed against the Borrower or any of its properties or assets and
remains undischarged, unvacated, unbonded or unstayed for a period of 30 days
or 5 days before the date of any proposed sale under that money judgment, writ
or warrant of attachment or similar process.

 

10.1(k)                   Any order, judgment or decree decreeing
the dissolution of the Borrower is entered and remains undischarged or unstayed
for a period of 20 days.

 

10.1(l)                       The Borrower purports to disavow any of
its Obligations or contests the validity or enforceability of any Loan
Document.

 

10.1(m)               The Lender’s security interest on any
portion of the Collateral becomes unenforceable or otherwise impaired.

 

36

 

10.1(n)                   A material adverse change occurs in the Borrower’s
financial condition, business, properties or assets, operations or prospects,
or in Borrower’s ability to repay the Obligations.

 

10.1(o)                   Any Lien for any tax, assessment or other
governmental charge (i) is filed or is otherwise enforced against the
Borrower or any of its property, including any of the Collateral, other than a
Lien for taxes, assessments or other governmental charges on real property
securing or that previously secured an individual Mortgage Loan that is not a
Pledged Loan, or (ii) obtains priority that is equal to or greater than
the priority of Lender’s security interest in any of the Collateral.

 

10.2                                  Remedies

 

10.2(a)                   If an Event of Default described in Section 10.1(h) occurs
with respect to the Borrower, the Warehousing Commitment will automatically
terminate and the unpaid principal amount of and accrued interest on the
Warehousing Note and all other Obligations will automatically become due and
payable, without presentment, demand or other Notice or requirements of any kind,
all of which the Borrower expressly waives.

 

10.2(b)                   If an Event of Default described in Section 10.1(a) occurs
with respect to the Borrower, the Lender may terminate the Warehousing
Commitment and declare the Obligations to be immediately due and payable.

 

10.2(c)                    If any other Event of Default occurs, the
Lender may, by Notice to the Borrower, terminate the Warehousing Commitment and
declare the Obligations to be immediately due and payable.

 

10.2(d)                   If any Event of Default occurs, the
Lender may, also take any of the following actions:

 

(i)                                     Foreclose upon or otherwise enforce its
security interest in and Lien on the Collateral to secure all payments and
performance of the Obligations in any manner permitted by law or provided for
in the Loan Documents.

 

(ii)                                  Notify all obligors under any of the
Collateral that the Collateral has been assigned to the Lender (or to another
Person designated by the Lender) and that all payments on that Collateral are
to be made directly to the Lender (or such other Person); settle, compromise or
release, in whole or in part, any amounts any obligor or Investor owes on any
of the Collateral on terms acceptable to the Lender; enforce payment and
prosecute any action or proceeding involving any of the Collateral; and where
any Collateral is in default, foreclose on and enforce any Liens securing that
Collateral in any manner permitted by law and sell any property acquired as a
result of those enforcement actions.

 

(iii)                               Prepare and submit for filing Uniform
Commercial Code amendment statements evidencing the assignment to Lender or its
designee of any Uniform Commercial Code financing statement filed in connection
with any item of Collateral.

 

37

 

(iv)                              Act, or contract with a third party to
act at the Borrower’s expense, as servicer or subservicer of Collateral
requiring servicing and perform all obligations required under any Collateral,
including Servicing Contracts and Purchase Commitments.

 

(v)                                 Require the Borrower to assemble and make
available to the Lender the Collateral and all related books and records at a
place designated by the Lender.

 

(vi)                              Enter onto property where any Collateral
or related books and records are located and take possession of those items
with or without judicial process; and obtain access to the Borrower’s
respective data processing equipment, computer hardware and software relating
to the Collateral and use all of the foregoing and the information contained in
the foregoing in any manner the Lender deems necessary for the purpose of
effectuating its rights under this Agreement and any other Loan Document.

 

(vii)                           Before the disposition of the Collateral,
prepare it for disposition in any manner and to the extent the Lender deems
appropriate.

 

(viii)                        Exercise all rights and remedies of a
secured creditor under the Commercial Code of Pennsylvania or other applicable
law, including selling or otherwise disposing of all or any portion of the
Collateral at one or more public or private sales, whether or not the Collateral
is present at the place of sale, for cash or credit or future delivery, on
terms and conditions and in the manner as the Lender may determine, including
sale under any applicable Purchase Commitment. 
The Borrower waives any right it may have to prior notice of the sale of
all or any portion of the Collateral to the extent allowed by applicable
law.  If notice is required under
applicable law, the Lender will give the Borrower not less than 10 days’ notice
of any public sale or of the date after which any private sale may be
held.  The Borrower agrees that 10 days’
notice is reasonable notice.  The Lender
may, without notice or publication, adjourn any public or private sale one or
more times by announcement at the time and place fixed for the sale, and the
sale may be held at any time or place announced at the adjournment.  In the case of a sale of all or any portion
of the Collateral on credit or for future delivery, the Collateral sold on
those terms may be retained by the Lender until the purchaser pays the selling
price or takes possession of the Collateral. 
The Lender has no liability to the Borrower if a purchaser fails to pay
for or take possession of Collateral sold on those terms, and in the case of any
such failure, the Lender may sell the Collateral again upon notice complying
with this Section.

 

(ix)                              The Lender may proceed by suit at law or
in equity to collect all amounts due on the Collateral, or to foreclose the
Lender’s Lien on and sell all or any portion of the Collateral pursuant to a
judgment or decree of a court of competent jurisdiction.

 

(x)                                 Proceed against the Borrower on the
Warehousing Note.

 

38

 

10.2(e)                    The Lender will not incur any liability
as a result of the commercially reasonable sale or other disposition of all or
any portion of the Collateral at any public or private sale or other
disposition.  The Borrower waives (to the
extent permitted by law) any claims it may have against the Lender or any
Lender arising by reason of the fact that the price at which the Collateral may
have been sold at a private sale was less than the price that might have been
obtained at a public sale, or was less than the aggregate amount of the
outstanding Warehousing Advances, accrued and unpaid interest on those
Warehousing Advances, and unpaid fees, even if the Lender accepts the first
offer received and does not offer the Collateral to more than one offeree.  The Borrower agrees that any sale of
Collateral under the terms of a Purchase Commitment, or any other disposition
of Collateral arranged by Borrower, whether before or after the occurrence of
an Event of Default, will be deemed to have been made in a commercially
reasonable manner.

 

10.2(f)                     The Borrower acknowledges that Mortgage
Loans are collateral of a type that is the subject of widely distributed
standard price quotations and that Mortgage-backed Securities are collateral of
a type that is customarily sold on a recognized market.  The Borrower waives any right it may have to
prior notice of the sale of Pledged Securities, and agrees that the Lender or
any Lender may purchase Pledged Loans and Pledged Securities at a private sale
of such Collateral.

 

10.2(g)                    The Borrower specifically waives and
releases (to the extent permitted by law) any equity or right of redemption,
stay or appraisal that the Borrower has or may have under any rule of law
or statute now existing or adopted after the date of this Agreement, and any
right to require the Lender or any Lender to (1) proceed against any Person,
(2) proceed against or exhaust any of the Collateral or pursue its rights
and remedies against the Collateral in any particular order or (3) pursue
any other remedy within its power.  The
Lender is not required to take any action to preserve any rights of the
Borrower against holders of mortgages having priority to the Lien of any
Mortgage or Security Agreement included in the Collateral or to preserve the
Borrower’s rights against other prior parties.

 

10.2(h)                   The Lender may, but is not obligated to, advance
any sums or do any act or thing necessary to uphold or enforce the Lien and
priority of, or the security intended to be afforded by, any Mortgage or
Security Agreement included in the Collateral, including payment of delinquent
taxes or assessments and insurance premiums. 
All advances, charges, costs and expenses, including reasonable
attorneys’ fees and disbursements, incurred or paid by the Lender in exercising
any right, power or remedy conferred by this Agreement, or in the enforcement
of this Agreement, together with interest on those amounts at the Default Rate,
from the time paid by the Lender until repaid by the Borrower, are deemed to be
principal outstanding under this Agreement and the Warehousing Note.

 

10.2(i)                       No failure or delay on the part of the
Lender or any Lender to exercise any right, power or remedy provided in this
Agreement or under any other Loan Document, at law or in equity, will operate
as a waiver of that right, power or remedy. 
No single or partial exercise by the Lender or any Lender of any right,
power or remedy provided under this Agreement or any other Loan Document, at
law or in equity, precludes any other or 

 

39

 

further exercise of that right, power or remedy by the
Lender, or the Lender’s exercise of any other right, power or remedy.  Without limiting the foregoing, the Borrower
waives all defenses based on the statute of limitations to the extent permitted
by law.  The remedies provided in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any remedies provided at law or in equity.

 

10.2(j)                      The Borrower grants the Lender a license
or other right to use, without charge, Borrower’s computer programs, other
programs, labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any of the Collateral and the Borrower’s rights under all
licenses and all other agreements related to the foregoing inure to the
Lender’s benefit until the Obligations are paid in full.

 

10.3                                  Insufficiency of Proceeds

 

Nothing herein shall require the Lender to look to all
or any portion of the Collateral prior to, or in lieu of, pursuing any other
right or remedy, any or all of which may be pursued in any order and at any
time, including at the same time.

 

10.4                                  Lender Appointed Attorney-in-Fact

 

The Borrower appoints the Lender its attorney-in-fact,
with full power of substitution, for the purpose of carrying out the provisions
of this Agreement, the Warehousing Note and the other Loan Documents and taking
any action and executing any instruments that the Lender deems necessary or
advisable to accomplish that purpose. 
The Borrower’s appointment of the Lender as attorney-in-fact is
irrevocable and coupled with an interest. 
Without limiting the generality of the foregoing, the Lender may give
notice of its security interest in and Lien on the Collateral to any Person,
either in the Borrower’s name or in its own name, endorse all Pledged Loans or
Pledged Securities payable to the order of the Borrower, change or cause to be
changed the book-entry registration or name of subscriber or Investor on any
Pledged Security, prepare and submit for filing Uniform Commercial Code
amendment statements with respect to any Uniform Commercial Code financing
statements filed in connection with any item of Collateral or receive, endorse
and collect all checks made payable to the order of the Borrower representing
payment on account of the principal of or interest on, or the proceeds of sale
of, any of the Pledged Loans or Pledged Securities and give full discharge for
those transactions.  The foregoing
appointment shall be effective immediately with respect to ministerial matters,
and upon the occurrence of an Event of Default with respect to all other
matters.

 

10.5                                  Right of Set-Off

 

The Borrower hereby grants to the Lender a continuing
lien, security interest and right of setoff as security for all liabilities and
obligations to the Lender, whether now existing or hereafter arising, upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody safekeeping or control of the Lender or any entity under
the control of the Lender, and their respective successors and assigns or in
transit to any of them, other than third-party custodial accounts maintained by
Borrower at Lender.  Upon occurrence of
an  Event of 

 

40

 

Default with respect to the payment of any Obligation
or in the performance of any of its duties under the Loan Documents, the Lender
may, without Notice to or demand on the Borrower (which Notice or demand the Borrower
expressly waives), set-off, appropriate or apply any property of the Borrower
held at any time by the Lender, or any indebtedness at any time owed by the
Lender to or for the account of a Borrower, against the Obligations, whether or
not those Obligations have matured.  ANY
AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOANS, PRIOR TO EXERCISING
ITS RIGHT OF SETOFF WITH RESPECT TO SUCH NON-CUSTODIAL DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.

 

11.                                         MISCELLANEOUS

 

11.1                                  Notices

 

Except where telephonic or facsimile notice is
expressly authorized by this Agreement, all communications required or
permitted to be given or made under this Agreement (“Notices”) must be
in writing and must be sent by manual delivery, overnight courier or United
States mail (postage prepaid), addressed as follows (or at such other address
as may be designated by Borrower or Lender in a Notice to the other):

 

	
  If to Borrower:

  	
  Walker & Dunlop, LLC

  	 

	
   

  	
  7501 Wisconsin Avenue, Suite 1200

  	 

	 
	
   

  	
  Bethesda, Maryland 20814

  
	
   

  	
  Attention:

  	
  Deborah A. Wilson

  	 

	 
	
   

  	
  Telephone:

  	
  (301) 215-5575

  
	 
	
   

  	
  Facsimile:

  	
  (301) 634-2150

  
	
   

  	
   

  	 

	 
	
  In each case with a copy to:

  	
  Morgan Lewis & Bockius LLP

  
	
   

  	
  225 Franklin Street

  	 

	 
	
   

  	
  Boston, Massachusetts

  
	
   

  	
  Attention:

  	
  Sula R. Fiszman

  	 

	 
	
   

  	
  Telephone:

  	
  617-341-7730

  
	 
	
   

  	
  Facsimile:

  	
  617-341-7701

  
	
   

  	
   

  	 

	 
	
  If to the Lender:

  	
  PNC Real Estate Finance

  
	
   

  	
  One PNC Plaza, 19th Floor

  	 

	 
	
   

  	
  P1-POPP-19-2

  
	 
	
   

  	
  Pittsburgh, Pennsylvania 15222

  
	 
	
   

  	
  Attention: James A. Colella, Executive Vice
  President, Market Manager

  
	 
	
   

  	
  Telephone: (412) 762-2260

  
	 
	
   

  	
  Facsimile: (412) 762-6500

  
	 
	
   

  	
   

  
	 
	
   

  	
  and

  
	 
	
   

  	
   

  
	 
	
   

  	
  PNC Real Estate Finance

  
							

 

41

 

	 
	
   

  	
  One PNC Plaza, 19th Floor

  
	 
	
   

  	
  P1 — POPP — 19-2

  
	 
	
   

  	
  Pittsburgh, Pennsylvania 15222

  
	 
	
   

  	
  Attention: Terri Wyda, Vice President

  
	 
	
   

  	
  Telephone: (412) 768-8782

  
	 
	
   

  	
  Facsimile: (412) 762-6500

  
	
   

  	
   

  	 

	
  In each case with a copy to:

  	
  Ballard Spahr LLP

  	 

	 
	
   

  	
  300 East Lombard Street, 18th Floor

  
	 
	
   

  	
  Baltimore, Maryland 21202

  
	 
	
   

  	
  Attention: Thomas A. Hauser, Esquire

  
	 
	
   

  	
  Telephone: (410) 528-5691

  
	 
	
   

  	
  Facsimile: (410) 528-5650

  
					

 

All periods of Notice will be measured from the date
of delivery if delivered manually or by facsimile, from the first Business Day
after the date of sending if sent by overnight courier or from 4 days after the
date of mailing if sent by United States mail, except that Notices to the
Lender under Article 2 and Section 3.3(e) will be
deemed to have been given only when actually received by the Lender.  The Borrower authorizes the Lender to accept
the Borrower’s Warehousing Advance Requests, shipping requests, wire transfer
instructions, security delivery instructions and other routine communications
concerning the Warehousing Commitment and the Collateral transmitted to the
Lender by electronic transmission (including facsimile or e-mail) and those
documents, when transmitted to the Lender by electronic transmission have the
same force and effect as the originals.

 

11.2                                  Reimbursement Of Expenses; Indemnity

 

11.2(a)                   Whether or not the transactions
contemplated hereby shall be consummated, the Borrower agrees to pay promptly:
(i) all the actual and reasonable out-of-pocket costs and expenses of the
Lender for preparation of the Loan Documents and any consents, amendments,
waivers, or other modifications thereto; (ii) the reasonable fees,
expenses, and disbursements of counsel to the Lender in connection with the
negotiation, preparation, execution, and administration of the Loan Documents
and any consents, amendments, waivers, or other modifications thereto and any
other documents or matters requested by the Borrower; (iii) all other
actual and reasonable out-of-pocket costs and expenses incurred by the Lender
in connection with the establishment of the facility, and the negotiation,
preparation, and execution of the Loan Documents and any consents, amendments,
waivers, or other modifications thereto and the transactions contemplated
thereby; and (iv) all reasonable out-of-pocket expenses (including reasonable
attorneys fees and costs, which attorneys may be employees of the Lender and
the fees and costs of appraisers, brokers, investment bankers or other experts
retained by the Lender) incurred by the Lender in connection with (x) the
enforcement of or preservation of rights under any of the Loan Documents
against the Borrower or any other Person, or the administration thereof,
(y) any refinancing or restructuring of the credit arrangements provided
under this Agreement in the nature of a “work out” or pursuant to any
insolvency or bankruptcy proceedings, and (z) any litigation, proceeding
or dispute whether arising hereunder or otherwise, in any way related to the 

 

42

 

Lender’s relationship with the Borrower, except to the
extent arising out of such Person’s gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.  The covenants of this Section shall
survive payment or satisfaction of payment of amounts owing with respect to the
Warehousing Note.  The amount of all such
expenses shall, until paid, bear interest at the rate applicable to principal
hereunder (including the Default Rate) and be an Obligation secured by any
Collateral.

 

11.2(b)                   The Borrower shall indemnify and hold
harmless the Lender and its respective parents, affiliates, officers,
directors, employees, attorneys, and agents (“Indemnified Party”) from
and against any and all claims, actions and suits whether groundless or
otherwise, and from and against any and all liabilities, losses, damages and
expenses of every nature and character arising out of this Agreement or any of
the other Loan Documents or the transactions contemplated hereby (“Damages”)
including, without limitation (i) any actual or proposed use by the
Borrower of the proceeds of the Loan, (ii) the Borrower entering into or
performing this Agreement or any of the other Loan Documents, or
(iii) with respect to the Borrower and its properties and assets, the
violation of any applicable law, in each case including, without limitation,
the reasonable fees and disbursements of counsel and allocated costs of
internal counsel incurred in connection with any such investigation, litigation
or other proceeding; provided, however,
that no Indemnified Party shall be entitled to indemnification if a court of
competent jurisdiction finally determines (all appeals having been exhausted or
waived) that such Indemnified Party acted with willful misconduct or gross
negligence.  In litigation, or the
preparation therefor, the Lender shall be entitled to select their respective
own counsel and, in addition to the foregoing indemnity, the Borrower agrees to
pay promptly the reasonable fees and expenses of such counsel.  If, and to the extent that the obligations of
the Borrower under this Section 11.2(b) are unenforceable for
any reason, the Borrower agrees to make the maximum contribution to the payment
in satisfaction of such obligations which is permissible under applicable
law.  The provisions of this Section 11.2(b) shall
survive the repayment of the Loan and the termination of the obligations of the
Lender hereunder.

 

11.3                                  Financial Information

 

All financial statements and reports furnished to the
Lender under this Agreement must be prepared in accordance with GAAP, applied
on a basis consistent with that applied in preparing the most recent Audited
Financial Statement of the Borrower provided to Lender.

 

11.4                                  Terms Binding Upon Successors;
Survival of Representations

 

The terms and provisions of this Agreement are binding
upon and inure to the benefit of the Borrower, the Lender, and their respective
successors and permitted assigns.  All of
the Borrower’s representations, warranties, covenants and agreements survive
the making of any Warehousing Advance, and, except where a longer period is set
forth in this Agreement, remain effective for as long as the Warehousing
Commitment is outstanding or there remain any Obligations to be paid or
performed.

 

43

 

11.5                                  Pledge to Federal Reserve Banks

 

The Lender may at any time pledge or assign all or any
portion of its rights under the Loan Documents (including, without limitation,
any portion of its Warehousing Note) to any of the Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C.
Section 341.  No such pledge or
assignment or enforcement thereof shall release Lender from its obligations
under any of the Loan Documents.

 

11.6                                  Governing Law

 

This Agreement and the rights and obligations of the
parties hereunder shall be construed and interpreted in accordance with the
laws of the Commonwealth of Pennsylvania (excluding the laws applicable to
conflicts or choice of law).

 

11.7                                  Amendments

 

This Agreement may not be amended, modified, or
supplemented except by a written agreement signed by the Borrower and the
Lender.

 

11.8                                  Relationship of the Parties

 

This Agreement provides for the making of Warehousing
Advances by the Lender, the requirement of Warehousing Advances by the
Borrower, the payment of interest on those Warehousing Advances, and the
payment of certain fees by the Borrower to the Lender.  The relationship between the Lender and
Borrower is limited to that of creditor and secured party on the part of the Lender
and of debtor on the part of Borrower. 
The provisions of this Agreement and the other Loan Documents for
compliance with financial covenants and the delivery of financial statements
and other operating reports are intended solely for the benefit of the Lender
to protect their interests as creditors and secured party.  Nothing in this Agreement creates or may be
construed as permitting or obligating the Lender to act as a financial or
business advisor or consultant to the Borrower, as permitting or obligating the
Lender to control the Borrower or to conduct the Borrower’s operations, as
creating any fiduciary obligation on the part of the Lender or to the Borrower,
or as creating any joint venture, partnership, agency or other similar
relationship between the Lender and the Borrower.  The Borrower acknowledges that it has had the
opportunity to obtain the advice of experienced counsel of its own choice in
connection with the negotiation and execution of the Loan Documents and to
obtain the advice of that counsel with respect to all matters contained in the
Loan Documents, including the waivers of jury trial and of punitive,
consequential, special or indirect damages contained in Sections 11.15
and 11.16, respectively.  The
Borrower further acknowledges that it is experienced with respect to financial
and credit matters and has made its own independent decisions to apply to the
Lender for credit and to execute and deliver this Agreement.

 

11.9                                  Severability

 

If any provision of this Agreement or any other Loan
Document is declared to be illegal or unenforceable in any respect, that
provision is null and void and of no force and effect to the extent of the
illegality or unenforceability, and does not affect the validity or
enforceability of any other provision of the Agreement or such other Loan Document.

 

44

 

11.10                           Consent to Credit References

 

The
Borrower consents to the disclosure of information regarding the Borrower and
its relationship with the Lender to Persons making credit inquiries to the
Lender.  This consent is revocable by the
Borrower at any time upon Notice to the Lender as provided in Section 11.1.

 

11.11                           Counterparts

 

This
Agreement may be executed in any number of counterparts, each of which will be
deemed an original, but all of which together constitute but one and the same
instrument.

 

11.12                           Headings/Captions

 

The
captions or headings in this Agreement and the other Loan Documents are for
convenience only and in no way define, limit or describe the scope or intent of
any provision of this Agreement or any other Loan Document.

 

11.13                           Entire Agreement

 

This
Agreement, the Warehousing Note and the other Loan Documents are intended by
the parties as the final, complete and exclusive statement of the transactions
evidenced by thereby.  All prior or
contemporaneous promises, agreements and understandings, whether oral or
written, are deemed to be superseded by this Agreement, the Warehousing Note
and the other Loan Documents, and no party is relying on any promise, agreement
or understanding not set forth in this Agreement, the Warehousing Note or the
other Loan Documents.

 

11.14                           Consent to Jurisdiction

 

THE
BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH
OF PENNSYLVANIA OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SET FORTH HEREIN.  THE BORROWER HEREBY WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH
COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT FORUM.

 

11.15                           Waiver of Jury Trial

 

THE
BORROWER AND THE LENDER (BY ACCEPTANCE OF THIS AGREEMENT) MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT
LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, 

 

45

 

STATEMENTS
OR ACTIONS OF THE LENDER RELATING TO THE ADMINISTRATION OF THE LOANS OR
ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT NO PARTY WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED.

 

11.16                           Waiver of Punitive, Consequential, Special or
Indirect Damages

 

THE
BORROWER WAIVES ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL OR INDIRECT DAMAGES FROM LENDER OR ANY OF LENDER’S AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, OR AGENTS WITH RESPECT TO ANY AND
ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT
BY THE BORROWER AGAINST THE LENDER OR ANY OF THE LENDER’S AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES, ATTORNEYS, OR AGENTS WITH RESPECT TO ANY MATTER ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.  THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES IS KNOWINGLY AND VOLUNTARILY GIVEN
BY THE BORROWER, AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR
WHICH THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES
WOULD OTHERWISE APPLY.  THE LENDER IS
AUTHORIZED AND DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS AGREEMENT AS
CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES.

 

11.17                           U.S. Patriot Act

 

The
Lender hereby notifies the Borrower that pursuant to the requirements of the
USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow Lender to
identify the Borrower in accordance with the Act.

 

11.18                           Assignments and Participations

 

11.18(a)              The Lender may assign all or any part of, or any interest in, the Lender’s
rights and benefits hereunder and under the other Loan Documents, as well as
all obligations related to such assigned rights and interest, provided that
each such assignment:

 

(i)                                     shall, if not an assignment of the entire commitment of the Lender, be in
a minimum amount of $5,000,000,

 

(ii)                                  must be evidenced by an Assignment Agreement in the form of Exhibit M
attached hereto and made a part hereof,

 

(iii)                               shall be effective upon compliance with subparagraphs (1), (2) and (3) above.

 

46

 

11.18(b)            The Lender may at any time enter into participation agreements with one or
more participating lenders whereby the Lender may allocate certain percentages
of the Warehousing Credit Limit to such participant(s), provided that no
participant shall have, except as provided below, any voting or consent rights
on any issue with respect to this Agreement or the other Loan Documents.  No participant shall be entitled to require
the Lender to take or refrain from taking any action under this Agreement or
any other Loan Document.  Notwithstanding
the foregoing, any such participant shall be considered to be a “Lender” for
purposes of Sections 3.11, 10.5, and 11.2 with respect to
its participation; provided, however, that no participant shall be
entitled to receive any greater amount than the Lender would have been entitled
to receive in respect of the participation effected by such Lender had no
participation occurred.  The Borrower
acknowledges that, for the convenience of all parties, this Agreement is being
entered into with the Lender only and that its obligations under this Agreement
are, to the extent expressly provided for in this Section 11.18,
undertaken for the benefit of, and as an inducement to, any such participating
lenders as well as the Lender.  Any grant
of a participation by the Lender shall not discharge, reduce or otherwise
affect the Lender’s obligation under this Agreement to fund Warehousing
Advances, which obligation shall remain primary and absolute.  Such grants of participations shall not
affect or diminish the rights of the granting Lender to reimbursement or other
payments which may become due to the Lender under this Agreement and such
reimbursements and other payments will be calculated as if said Lender had not
granted any such participation.  Except
as provided for herein, no participant shall have, by virtue of any
participation, any rights or benefits under this Agreement or claims of any
kind against the Borrower.

 

11.18(c)             The Borrower authorizes the Lender to disclose to any participant or
assignee (each, a “Participant”) and any prospective Participant any and
all information in the Lender’s possession concerning the Borrower which has
been delivered to the Lender by the Borrower in connection with the Lender’s
credit evaluation of the Borrower.  The
Borrower shall assist the Lender in effectuating any assignment or
participation pursuant to this Section 11.18 (including during
syndication) in whatever manner the Lender reasonably deems necessary,
including the participation in meetings with prospective Participants.

 

11.19                           Confidentiality

 

The
terms and conditions of the Agreement shall be subject to the terms of that
certain Confidentiality Agreement, dated as of June 30, 2010, by and
between the Borrower and the Lender, a copy of which is attached hereto as Exhibit P.

 

12.                                         DEFINITIONS

 

12.1                                  Defined Terms

 

In
addition to terms defined elsewhere in this Agreement, when used in this
Agreement and, unless otherwise defined therein, in any other Loan Document
(and including, unless otherwise defined therein, in any Schedules or Exhibits
to this Agreement and to the other Loan 

 

47

 

Documents),
capitalized terms defined below or elsewhere in this Agreement have the
following meanings:

 

“Adjusted
Tangible Net Worth” shall mean Tangible Net Worth, minus Restricted Cash,
plus commercial mortgage servicing rights (to the extent otherwise included in
Intangible Assets).

 

“Advance
Rate” means, with respect to any Eligible Loan, the Advance Rate set forth
in Exhibit D for that type of Eligible Loan.

 

“Affiliate”
means, when used with reference to any Person, (a) each Person that,
directly or indirectly, controls, is controlled by or is under common control
with, the Person referred to, (b) each Person that beneficially owns or
holds, directly or indirectly, 5% or more of any class of voting Equity
Interests of the Person referred to, (c) each Person, 5% or more of the
voting Equity Interests of which is beneficially owned or held, directly or
indirectly, by the Person referred to, and (d) each of such Person’s
officers, directors and joint venturers. 
For these purposes, the term “control” (including the terms “controlled
by” and “under common control with”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of the Person in question.

 

“Agency
Security” means a Mortgage-backed Security issued or guaranteed by Fannie
Mae, Freddie Mac, or Ginnie Mae.

 

“Agreement”
means this Warehousing Credit and Security Agreement, either as originally
executed or as it may be amended, restated, renewed or replaced, and including
all Exhibits and Schedules hereto.

 

“Applicable
Base Rate” means for any day, a fluctuating per annum rate of interest
equal to the sum of (a) the higher of (i) the Prime Rate and (ii) the
Federal Funds Open Rate plus fifty basis points (0.50%), and (b) one
and one-half percent (1.5%).  The
calculation and determination of the Applicable Base Rate shall be made daily
by the Lender and such determination shall, absent manifest error, be final,
conclusive and binding upon the Borrower and the Lender.  Changes in the Applicable Base Rate shall
become effective on the same day as the Lender changes its Prime Rate or a
change occurs in the Federal Funds Open Rate, depending upon which rate is
applicable on that day to the determination of the Base Rate.

 

“Applicable
Daily Floating LIBO Rate” means, for any day, a rate per annum equal to the
Daily LIBO Rate for such day, plus two and one half percent (2.5%).

 

“Applicable
Rate” means, for any day (a) except as otherwise required from time to
time pursuant to Section 3.11(b) or 3.11(g), the
Applicable Daily Floating LIBO Rate for such day, or (b) if, and only for
as long as, required from time to time pursuant to Section 3.11(b) or
3.11(g), the Applicable Base Rate for each applicable day.

 

“Approved
Custodian” means Fannie Mae, Freddie Mac, FHA and any pool custodian or
other Person that the Lender deems acceptable, in its sole discretion, to hold
Mortgage Loans for inclusion in a Mortgage Pool or to hold Mortgage Loans as
agent for an Investor that has issued a Purchase Commitment for those Mortgage
Loans.

 

48

 

“At
Risk Mortgage Loans” means Mortgage Loans as to which the Borrower has any
loss sharing arrangement or otherwise are with recourse to the Borrower.

 

“Authorized
Representatives” has the meaning set forth in Section 3.12.

 

“Base
Rate Loan” means the Loan (or any particular Warehousing Advance) at any
time while it bears interest at the Applicable Base Rate.

 

“Borrower”
has the meaning set forth in the first paragraph of this Agreement.

 

“Business
Day” means any (a) day other than Saturday or Sunday, or (b) day
of the year on which offices of Lender are not required or authorized by law to
be closed for business in Pittsburgh, Pennsylvania.  If any day on which a payment is due is not a
Business Day, then the payment shall be due on the next day following which is
a Business Day.  Further, if there is no
corresponding day for a payment in the given calendar month (e.g., there is no “February 30th”),
the payment shall be due on the last Business Day of the calendar month.

 

“Calendar
Quarter” means the 3 month period beginning on each January 1, April 1,
July 1 or October 1.

 

“Cash
Collateral Account” means the Lender access only deposit accounts
maintained at Lender and designated for receipt of the proceeds of the sale or
other disposition of Collateral (account no. 4212830522  for Borrower).

 

“Cash
Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year
after its creation and having (i) the rating of P-1 or higher from Moody’s
Investors Service, Inc., (c) Lender’s certificates of deposit issued
maturing no more than one (1) year after issue; (d) short term
securities having the rating of AA or higher from Standard & Poor’s
Ratings Group or Aa2 from Moody’s Investors Service, Inc. and (e) money
market funds at least ninety-five percent (95%) of the assets of which
constitute Cash Equivalents of the kinds described in clauses (a) through (d) of
this definition.  Notwithstanding
anything hereinto the contrary, nothing in the foregoing definition shall be
construed to include “auction-rate” securities as Cash Equivalents herein.

 

“C&D
System” means Fannie Mae’s Commitments and Deliveries system.

 

“Closing
Date” means, subject to the Borrower’s satisfaction of the conditions set
forth in Article 5, the date as of which this Agreement is executed
as first above written.

 

“Collateral”
has the meaning set forth in Section 4.1.

 

“Collateral
Documents” means, with respect to each Mortgage Loan, (a) the documents
set forth in the applicable Exhibit B attached hereto and (b) all
other documents including, if applicable, any Security Agreement, executed in
connection with or relating to the Mortgage Loan.

 

49

 

“Compliance
Certificate” means a certificate executed on behalf of the Borrower by its
chief financial officer or other management official having principal financial
accounting responsibilities, substantially in the form of Exhibit I.

 

“Daily
LIBO Rate” for any day shall mean, the rate per annum determined by the
Lender by dividing (a) the Published Rate by (b) a number equal to
1.00 minus the LIBOR Reserve Percentage.

 

“Damages”
has the meaning set forth in Section 11.2(b).

 

“Default”
means 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.

 

“Default
Rate” means, on any day, a rate per annum equal to the Applicable Rate on
such day plus four percent (4%).

 

“Eligible
Loan” means a Mortgage Loan that satisfies the conditions and requirements
set forth in Exhibit D and meets the following criteria: (a) such
Mortgage Loan has not been previously sold or pledged to obtain financing
(whether or not such financing constitutes Indebtedness) under another
warehousing financing arrangement or gestation agreement, (b) Lender
believes that such Mortgage Loan is not based on untrue, incomplete, inaccurate
or fraudulent information and is not otherwise subject to fraud, and (c) the
Warehousing Advance on such Mortgage Loan will not exceed the Advance Rate
applicable to that type of Eligible Loan at the time it is pledged.

 

“Eligible
Mortgage Pool” means a Mortgage Pool for which (a) an Approved
Custodian has issued its initial certification, (b) there exists a
Purchase Commitment covering the Agency Security to be issued on the basis of
that certification and (c) the Agency Security will be delivered to the
Lender.

 

“Equity
Interests” means all shares, interests, participations or other
equivalents, however, designated, of or in a Person (other than a natural
person), whether or not voting, including common stock, membership interests,
warrants, preferred stock, convertible debentures and all agreements,
instruments and documents convertible, in whole or in part, into any one or
more of the foregoing.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974 and all rules and
regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.

 

“ERISA
Affiliate” means any trade or business (whether or not incorporated) that
is a member of a group of which a Borrower is a member and that is treated as a
single employer under Section 414 of the Internal Revenue Code.

 

“Escrow
Deposits” shall mean escrow deposits maintained by the Borrower at the
Lender, which shall be interest bearing or non-interest bearing as designated
by the Borrower.

 

“Event
of Default” means any of the conditions or events set forth in Section 10.1.

 

50

 

“Excess
Payment” has the meaning set forth in Section 3.11(f).

 

“Fair
Market Value” means, at any time for an Eligible Loan or a related Pledged
Security (if the Eligible Loan is to be used to back a Pledged Security) as of
any date of determination, the market price for such Eligible Loan or Pledged
Security, determined by Lender based on market data for similar Mortgage Loans
or Pledged Securities and such other criteria as Lender deems appropriate in
its sole discretion.

 

“Fannie
Mae” means Fannie Mae, a corporation created under the laws of the United
States, and any successor corporation or other entity.

 

“Fannie
Mae DUS Mortgage Loan” has the meaning specified in Exhibit D.

 

“Fannie
Mae DUS Program” means Fannie Mae’s program for the purchase of Mortgage
Loans originated under Fannie Mae’s Delegated Underwriting and Servicing Guide,
as amended from time to time.

 

“Fannie
Mae Loan Loss Reserves” means reserves established by the Borrower to
absorb estimated future losses related to Fannie Mae DUS Mortgage Loans.

 

“Federal
Agency” means FHA, Freddie Mac, Fannie Mae, Ginnie Mae or any other
instrumentality or agency of the United States of America or corporation
organized under the laws of the United States of America which insures,
guaranties or purchases Mortgage Loans.

 

“Federal
Funds Open Rate” for any day shall mean the rate per annum (based on a year
of 360 days and actual days elapsed) which is the daily federal funds open rate
as quoted by ICAP North America, Inc. 
(or any successor) as set forth on the Bloomberg Screen BTMM for that
day opposite the caption “OPEN” (or on such other substitute Bloomberg Screen
that displays such rate), or as set forth on such other recognized electronic
source used for the purpose of displaying such rate as selected by the Lender
(an “Alternate Federal Funds Source”) (or if such rate for such day does not
appear on the Bloomberg Screen BTMM (or any substitute screen) or on any
Alternate Federal Funds Source, or if there shall at any time, for any reason,
no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any
Alternate Federal Funds Source, a comparable replacement rate determined by the
Lender at such time (which determination shall be conclusive absent manifest
error); provided, that if such day is not a Business Day, the Federal Funds
Open Rate for such day shall be the Federal Funds Open Rate on the immediately
preceding Business Day.

 

“FHA”
means the Federal Housing Administration and any successor agency or other
entity.

 

“FHA
Construction Mortgage Loan” means an FHA fully-insured Mortgage Loan for
the construction or substantial rehabilitation of Multi-Family Properties.

 

“FHA
Mortgage Loan” means an FHA Construction Mortgage Loan or an FHA Permanent
Mortgage Loan.

 

“FHA
Permanent Mortgage Loan” means an FHA fully-insured Mortgage Loan secured
by a Mortgage on a Multi-Family Property.

 

51

 

“FICA”
means the Federal Insurance Contributions Act and all rules and
regulations promulgated under that statute, as amended, and any successor
statute, rules and regulations.

 

“FIRREA”
means the Financial Institutions Reform, Recovery and Enforcement Act of 1989
and all rules and regulations promulgated under that statute, as amended,
and any successor statute, rules, and regulations.

 

“First
Mortgage” means a Mortgage that constitutes a first Lien on the real
property and improvements described in or covered by that Mortgage.

 

“First
Mortgage Loan” means a Mortgage Loan secured by a First Mortgage.

 

“Fiscal
Year” means any period of twelve consecutive months ending on December 31
of any calendar year.

 

“Freddie
Mac” means Freddie Mac, or other Federal Agency to which the powers and
duties of Freddie Mac have been transferred.

 

“Freddie
Mac Program Plus” means Freddie Mac’s Program Plus Seller/Servicer program.

 

“GAAP”
means generally accepted accounting principles set forth in opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and in statements and pronouncements of the
Financial Accounting Standards Board, or in opinions, statements or
pronouncements of any other entity approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date
of determination.

 

“Ginnie
Mae” means the Government National Mortgage Association or other Federal
Agency as to which the powers and duties of the Governmental National Mortgage
Association have been transferred.

 

“Governmental
Authority” means the government of the United States or any other nation,
or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).

 

“Hedging
Arrangements” means, with respect to any Person, any agreements or other
arrangements (including interest rate swap agreements, collars, derivatives,
interest rate cap agreements and forward sale agreements) entered into to
protect that Person against changes in interest rates or the market value of
assets.

 

“HUD”
means the Department of Housing and Urban Development, and any successor agency
or other entity.

 

“Indebtedness”
means, as to any Person: (a) all obligations for borrowed money or other
extensions of credit whether secured or unsecured, absolute or contingent,
including, without 

 

52

 

limitation,
unmatured reimbursement obligations with respect to letters of credit or
guarantees issued for the account of or on behalf of such Person and its
Subsidiaries and all obligations representing the deferred purchase price of
property; (b) all obligations evidenced by bonds, notes, debentures or
other similar instruments; (c) all liabilities secured by any mortgage,
pledge, security interest, lien, charge, or other encumbrance existing on
property owned or acquired subject thereto, whether or not the liability
secured thereby shall have been assumed; (d) all guarantees, endorsements
and other contingent obligations whether direct or indirect, in respect of
indebtedness of others or otherwise, including any obligations under Hedging
Arrangements and otherwise with respect to puts, swaps, and other similar
undertakings, any obligation to supply funds to or in any manner to invest in,
directly or indirectly, the debtor, to purchase indebtedness, or to assure the
owner of indebtedness against loss, through an agreement to purchase goods,
supplies, or services for the purpose of enabling the debtor to make payment of
the indebtedness held by such owner or otherwise, and the obligations to
reimburse the issuer in respect of any letters of credit; and (e) that
portion of all obligations arising under capital leases that is required to be
capitalized on the consolidated balance sheet of such Person and its
Subsidiaries; but excluding, in all events obligations arising under operating
leases and accounts payable arising in the ordinary course of business.

 

“Indemnified
Party” has the meaning set forth in Section 11.2(b).

 

“Intangible
Assets” shall mean all assets which would be classified as intangible
assets under GAAP consistently applied, including, without limitation, goodwill
(whether representing the excess of cost over book value of assets acquired or
otherwise), patents, trademarks, trade names, copyrights, franchises and
deferred charges (including, without limitation, unamortized debt discount and
expense, organization costs, and research and development costs).

 

“Interest
Expense” for any period shall mean, the sum of (a) the amount of
interest accrued on, or with respect to, Indebtedness for such period,
including, without limitation, imputed interest on capital leases and imputed
or accreted interest in respect of deep discount or zero coupon obligations,
plus (b) the net amount payable under all Hedging Arrangements in respect
of such period (or minus the net amount receivable under all Hedging
Arrangements in respect of such period) plus (c) commitment fees payable
during such period.

 

“Internal
Revenue Code” means the Internal Revenue Code of 1986, Title 26 of the
United States Code, and all rules, regulations and interpretations issued under
those statutory provisions, as amended, and any subsequent or successor federal
income tax law or laws, rules, regulations and interpretations.

 

“Investment
Company Act” means the Investment Company Act of 1940 and all rules and
regulations promulgated under that statute, as amended, and any successor
statute, rules and regulations.

 

“Investor”
means (a) a Federal Agency, or (b) a financially responsible private
institution that the Lender deems acceptable from time to time, in its sole
discretion, to issue Purchase Commitments with respect to a particular category
of Eligible Loans.

 

“Late
Charge” has the meaning set forth in Section 3.10.

 

53

 

“Lender”
has the meaning set forth in the first paragraph of this Agreement.

 

“LIBOR
Loan” means the Loan (or any particular Warehousing Advance) at any time it
is being maintained at a rate of interest based upon the Daily LIBO Rate (the
Applicable Rate for which shall be the Applicable Daily Floating LIBO Rate).

 

“LIBOR
Reserve Percentage” shall mean the maximum effective percentage in effect
on such day as prescribed by the Board of Governors of the Federal Reserve System
(or any successor) for determining the reserve requirements (including, without
limitation, supplemental, marginal and emergency reserve requirements) with
respect to eurocurrency funding (currently referred to as “Eurocurrency
liabilities”).

 

“Lien”
means any lien, mortgage, deed of trust, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature of such an agreement and any
agreement to give any security interest).

 

“Loan”
shall have the meaning set forth in Section 1.5.

 

“Loan
Documents” means this Agreement, the Warehousing Note, and each other
document, instrument or agreement executed by the Borrower in connection with
any of those documents, instruments and agreements, or establishing or
evidencing an Obligation, including, without limitation, pursuant to a Hedging
Arrangement with the Lender or an Affiliate as the counterparty, to the extent
specifically hedging the Borrower’s interest bearing obligations under this
Agreement, each as originally executed or as any of the same may be amended,
restated, renewed or replaced.

 

“Margin
Stock” has the meaning assigned to that term in Regulation U of the Board
of Governors of the Federal Reserve System, as amended.

 

“Miscellaneous
Fees and Charges” means, without duplication, the miscellaneous fees set
forth on Exhibit L and/or in the custodial agreement and related
documents and fee schedule previously, or to be, entered into by the Lender (or
an affiliate) and the Borrower on or before the Closing Date, and all
miscellaneous disbursements, charges and expenses incurred by or on behalf of
Lender for the handling and administration of Warehousing Advances and
Collateral, including custodial fees, costs for Uniform Commercial Code, tax
lien and judgment searches conducted by Lender, filing fees, charges for wire
transfers (outgoing and incoming) and check processing charges, charges for
security delivery fees, charges for overnight delivery of Collateral to Investors,
recording fees, service fees and overdraft charges.  Upon not less than 3 Business Days’ prior
Notice to the Borrower, Lender may modify such Miscellaneous Fees and Charges
(and Exhibit L, as may be appropriate) to conform to current Lender
practices.

 

“Mortgage”
means a mortgage or deed of trust on real property that, except in the case of
an FHA Construction Mortgage Loan, is improved and substantially completed.

 

“Mortgage-backed
Securities” means securities that are secured or otherwise backed by Mortgage
Loans.

 

54

 

“Mortgage
Loan” means any loan evidenced by a Mortgage Note and secured by a Mortgage
and, if applicable, a Security Agreement.

 

“Mortgage
Loan Amount” means the outstanding principal amount of Mortgage Loan.

 

“Mortgage
Note” means a promissory note secured by one or more Mortgages and, if
applicable, one or more Security Agreements.

 

“Mortgage
Pool” means a pool of one or more Pledged Loans on the basis of which a
Mortgage-backed Security is to be issued.

 

“Multiemployer
Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA, to which the Borrower or any ERISA Affiliate of a Borrower has any
obligation with respect to its employees.

 

“Net
Worth” shall mean, as of the date of any determination thereof, the net
worth of the Borrower determined in accordance with GAAP.

 

“Notices”
has the meaning set forth in Section 11.1.

 

“Obligations”
means all indebtedness, obligations and liabilities of the Borrower to Lender
(whether now existing or arising after the date of this Agreement, voluntary or
involuntary, joint or several, direct or indirect, absolute or contingent,
liquidated or unliquidated, or decreased or extinguished and later increased
and however created or incurred), including, without limitation, Borrower’s
obligations and liabilities to Lender (a) under the Loan Documents, (b) for
disbursements made by the Lender for the Borrower’s account, (c) for
overdrafts (which, if permitted, shall be at Lender’s sole discretion), (d) for
automated clearinghouse exposure, (e) under Hedging Arrangements with
Lender or an Affiliate as the counterparty, to the extent specifically hedging
Borrower’s interest bearing obligations under this Agreement and of which
Hedging Arrangement Lender had been provided Notice (and all details thereof)
prior to its establishment, and (f) under any cash management or related
agreements.

 

“Operating
Accounts” means the demand deposit accounts maintained at Lender in the
Borrower’s name and designated for funding that portion of each Eligible Loan
not funded by a Warehousing Advance made against that Eligible Loan and for
returning any excess payment from an Investor for a Pledged Loan or Pledged
Security (as of the date hereof, account no. 4212867739 with respect to
Borrower).

 

“Other
Fannie Mae Mortgage Loan” has the meaning set forth in Exhibit D.

 

“Other
Taxes” has the meaning set forth in Section 3.11(d).

 

“Overdraft
Advance” has the meaning set forth in Section 3.7.

 

“Participant”
shall have the meaning set forth in Section 11.18.

 

“Person”
means and includes natural persons, corporations, limited liability companies,
limited liability partnerships, limited partnerships, general partnerships,
joint stock companies, joint 

 

55

 

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 of those governments.

 

“Plan”
means each employee benefit plan (whether in existence on the date of this
Agreement or established after that date), as that term is defined in Section 3
of ERISA, maintained for the benefit of directors, officers or employees of a
Borrower or any ERISA Affiliate.

 

“Pledged
Hedging Accounts” has the meaning set forth in Section 4.1(g).

 

“Pledged
Hedging Arrangements” has the meaning set forth in Section 4.1(g).

 

“Pledged
Loans” has the meaning set forth in Section 4.1(b).

 

“Pledged
Securities” has the meaning set forth in Section 4.1(c).

 

“Prime
Rate” means on any day, the rate of interest per annum then most recently
established by the Lender as its “prime rate,” it being understood and agreed
that such rate is set by the Lender as a general reference rate of interest,
taking into account such factors as the Lender may deem appropriate, that it is
not necessarily the lowest or best rate actually charged to any customer or a
favored rate, that it may not correspond with future increases or decreases in
interest rates charged by other lenders or market rates in general, and that
Lender may make various business or other loans at rates of interest having no
relationship to such rate.  If Lender
ceases to exist or to establish or publish a prime rate from which the Prime
Rate is then determined, the applicable variable rate from which the Prime Rate
is determined thereafter shall be instead the prime rate reported in The Wall
Street Journal (or the average prime rate if a high and a low prime rate are
therein reported), and the Prime Rate shall change without notice with each
change in such prime rate as of the date such change is reported.

 

“Prohibited
Transaction” has the meanings set forth for such term in Section 4975
of the Internal Revenue Code and Section 406 of ERISA.

 

“Property”
means a Multifamily Property securing a Mortgage Loan.

 

“Published
Rate” shall mean the rate of interest published each Business Day in The
Wall Street Journal “Money Rates” listing under the caption “London Interbank
Offered Rates” for a one-month period (or, if no such rate is published therein
for any reason, then the Published Rate shall be the eurodollar rate for a
one-month period as published in another publication determined by the Lender).

 

“Purchase
Commitment” means an unconditional, fixed price, irrevocable written
commitment, in form and substance satisfactory to the Lender, issued in favor
of the Borrower by an Investor under which that Investor commits to purchase
Mortgage Loans or Mortgage-backed Securities.

 

“Reference
Rate” means, as applicable for determining the Applicable Rate for any day,
the Daily LIBO Rate or the Applicable Base Rate for such day.

 

“Release
Amount” has the meaning set forth in Section 4.3(f).

 

56

 

“Restricted
Cash” shall mean segregated funds of the Borrower held for the benefit of
third parties and noted as “restricted cash and cash equivalents” in the
Borrower’s financial statements.

 

“Restriction
List” and “Restriction Lists” means each and every list of Persons
who are Specially Designated Nationals and Blocked Persons or otherwise are
Persons to whom the Government of the United States prohibits or otherwise
restricts the provision of financial services. 
For the purposes of this Agreement, Restriction Lists include the list
of Specially Designated Nationals and Blocked Persons established pursuant to
Executive Order 13224 (September 23, 2001) and maintained by the U.S.
Department of the Treasury’s Office of Foreign Assets Control or any successor
agency or other entity, U.S. Department of the Treasury, current as of the day
the Restriction List is used for purposes of comparison in accordance with the
requirements of this Agreement.

 

“Second
Mortgage” means a subordinate Mortgage that is in second lien position,
subordinate to a first lien position Mortgage.

 

“Second
Mortgage Loan” means a Mortgage Loan secured by a Second Mortgage.

 

“Security
Agreement” means a security agreement or other agreement that creates a
Lien on personal property, including furniture, fixtures and equipment, to
secure repayment of a Mortgage Loan.

 

“Servicing
Contract” means, with respect to any Person, the arrangement, whether or
not in writing, under which that Person has the right to service Mortgage
Loans.

 

“Servicing
Portfolio” means, as to any Person, the unpaid principal balance of
Mortgage Loans serviced by that Person under Servicing Contracts, minus the
principal balance of all Mortgage Loans that are serviced by that Person for
others under subservicing arrangements.

 

“Servicing
Report” has the meaning set forth in Section 7.3(a).

 

“Specially
Designated Nationals or Blocked Persons” means Persons which are owned or
controlled by, or acting on behalf of, the government of target countries or
are associated with international narcotics trafficking or terrorism.

 

“Subordinate
Mortgage” means a Second Mortgage or a Third Mortgage.

 

“Subordinate
Mortgage Loan” means a Mortgage Loan secured by a Subordinate Mortgage for
which all prior Mortgage Loans on that Property are under a Servicing Contract
with the Borrower, and for which all prior Mortgage Loans on that Property have
been sold to, or are subject to a Purchase Commitment issued by, Fannie Mae.

 

“Subsidiary”
means any corporation, partnership, association or other business entity in
which more than 50% of the shares of stock or other ownership interests having
voting power for the election of directors, managers, trustees or other Persons
performing similar functions is at the time owned or controlled by any Person
either directly or indirectly through one or more Subsidiaries of that Person.

 

57

 

“Tangible
Net Worth” means the excess of a Person’s (and, if applicable, that Person’s
Subsidiaries, on a consolidated basis) (a) total assets plus Fannie Mae
Loan Loss Reserves minus total liabilities as of the date of
determination, each determined in accordance with GAAP applied in a manner
consistent with the most recent audited financial statements delivered to
Lender under this Agreement.  For
purposes of calculating a Person’s Tangible Net Worth, advances or loans to
employees, Affiliates or shareholders, members, directors, or officers,
investments in Affiliates, assets pledged to secure any liabilities not
included in the Indebtedness of that Person, Intangible Assets, those
other assets that would be deemed by HUD to be non-acceptable in calculating
adjusted net worth in accordance with its requirements in effect as of that
date, as those requirements appear in the “Consolidated Audit Guide for Audits
of HUD Programs,” and other assets the Lender deems unacceptable, in its sole
discretion, must be excluded from that Person’s total assets.

 

“Taxes”
has the meaning set forth in Section 3.11(c).

 

“Third
Mortgage” means a subordinate Mortgage that is in third lien position, subordinate
to a first lien position Mortgage and a Second Mortgage.

 

“Third
Mortgage Loan” means a Mortgage Loan secured by a Third Mortgage.

 

“Trust
Receipt” means a trust receipt in a form approved by and under which the
Lender may deliver any document relating to the Collateral to the Borrower for
correction or completion.

 

“USPAP”
means the Appraisal Foundation’s Uniform Standards of Professional Appraisal
Practice, as in effect from time to time.

 

“Warehousing
Advance” means a disbursement by Lender under Section 1.1.

 

“Warehousing
Advance Due Date” means, with respect to a Warehousing Advance, the date
that is sixty (60) days after the date of such Warehousing Advance.

 

“Warehousing
Advance Request” has the meaning set forth in Section 2.1.

 

“Warehousing
Commitment” means the obligation of the Lender to make Warehousing Advances
to the Borrower under Section 1.1.

 

“Warehousing
Credit Limit” means One Hundred Fifty Million Dollars ($150,000,000); provided,
however upon Borrower’s written request, Lender may, in its sole
discretion, increase the Warehousing Commitment.

 

“Warehousing
Maturity Date” has the meaning set forth in Section 1.2.

 

“Warehousing
Note” has the meaning set forth in Section 1.3.

 

12.2                                  Other Definitional Provisions; Terms of
Construction

 

12.2(a)                   Accounting terms not otherwise defined in this Agreement have the
meanings given to those terms under GAAP.

 

58

 

12.2(b)                   Defined terms may be used in the singular or the plural, as the context
requires.

 

12.2(c)                    All references to time of day mean the then applicable time in
Pittsburgh, Pennsylvania, unless otherwise expressly provided.

 

12.2(d)                   References to Sections, Exhibits, Schedules and like references are to
Sections, Exhibits, Schedules and the like of this Agreement unless otherwise
expressly provided.

 

12.2(e)                    The words “include,” “includes” and “including” are deemed to be followed
by the phrase “without limitation.”

 

12.2(f)                     Unless the context in which it is used otherwise clearly requires, the
word “or” has the inclusive meaning represented by the phrase “and/or.”

 

12.2(g)                    All incorporations by reference of provisions from other agreements are
incorporated as if such provisions were fully set forth into this Agreement,
and include all necessary definitions and related provisions from those other
agreements.  All provisions from other
agreements incorporated into this Agreement by reference survive any
termination of those other agreements until the Obligations of the Borrower
under this Agreement and the Warehousing Notes are irrevocably paid in full and
the Warehousing Commitment is terminated.

 

12.2(h)                   All references to the Uniform Commercial Code are deemed to be references
to the Uniform Commercial Code in effect on the date of this Agreement in the
applicable jurisdiction.

 

12.2(i)                       Unless the context in which it is used otherwise clearly requires, all
references to days, weeks and months mean calendar days, weeks and months.

 

[Signature pages follow]

 

59

 

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

 

	
   

  	
  WALKER &
  DUNLOP, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William Walker

  
	
   

  	
  Name:

  	
  William
  Walker

  
	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PNC
  BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Terri Wyda

  
	
   

  	
  Name:

  	
  Terri
  Wyda

  
	
   

  	
  Title:

  	
  Vice
  PresidentExhibit 10.27

 

MASTER
LOAN PURCHASE AND SALE AGREEMENT

 

dated
as of March 30, 2010

 

by and
between

 

WALKER &
DUNLOP, LLC

as Seller and as Initial Servicer,

 

and

 

KEMPS
LANDING CAPITAL COMPANY, LLC,

as Buyer

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  PURCHASE AND SALE OF THE
  LOANS

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
  Procedures 

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2.02

  	
  Delivery of Original
  Mortgage Documents

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 2.03

  	
  Nature of Sale; Security
  Interests

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 2.04

  	
  Termination

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 2.05

  	
  No Obligation

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  TERMS OF EACH PURCHASE

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Terms and Conditions

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 3.02

  	
  Disbursement Amount

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 3.03

  	
  Buyer’s Fees

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 3.04

  	
  Deferred Purchase Price

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 3.05

  	
  Seller Payment Amounts

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 3.06

  	
  Seller Account

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  SERVICING

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Servicing of the Mortgage
  Loans

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 4.02

  	
  Additional Servicing and
  Administration Powers

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 4.03

  	
  Obligations in connection
  with Sales to the Approved Investor

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  LIQUIDATION AND RISK OF
  LOSS

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Mortgage Loans Declared in
  Default

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 5.02

  	
  Conversion to Liquidation
  Status Restricted

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 5.03

  	
  Sale of Mortgage Loans

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  INDEMNIFICATION

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Indemnification

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  MISCELLANEOUS PROVISIONS

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
  Amendments, Changes and
  Modifications

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 7.02

  	
  Governing Law

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 7.03

  	
  Communications

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 7.04

  	
  Assignment of Rights to
  Third Parties

  	
  14

  

 

i

 

TABLE
OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.05

  	
  Severability

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 7.06

  	
  Waivers

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 7.07

  	
  Counterparts

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 7.08

  	
  Survival of
  Representations and Warranties

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 7.09

  	
  Term of Agreement

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 7.10

  	
  Integrated Agreement

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 7.11

  	
  Further Assurances

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 7.12

  	
  Confidentiality

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 7.13

  	
  Non-Petition Agreement

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 7.14

  	
  Limitations on Payment
  Liabilities

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 7.15

  	
  No Tax Confidentiality

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 7.16

  	
  Third-Party Beneficiary

  	
  17

  

 

EXHIBITS AND SCHEDULES

 

	
  Appendix A

  	
   

  	
  Definitions

  
	
   

  	
   

  	
   

  
	
  Schedule I

  	
   

  	
  Seller Eligibility
  Representations and Warranties

  
	
  Schedule II

  	
   

  	
  Perfection
  Representations, Warranties and Covenants

  
	
  Schedule III

  	
   

  	
  Representations,
  Warranties and Covenants

  
	
  Schedule IV

  	
   

  	
  Covenants

  
	
  Schedule V

  	
   

  	
  Defaults and Remedies

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of Term Sheet

  
	
  Exhibit B

  	
   

  	
  Form of Purchase Request

  
	
  Exhibit C

  	
   

  	
  Form of Power of
  Attorney

  
	
  Exhibit D

  	
   

  	
  Form of Notice to
  Approved Investor

  
	
  Exhibit E

  	
   

  	
  Pre-Closing Package
  Documentation

  
	
  Exhibit F

  	
   

  	
  Form of Seller’s Title
  Insurance Certification

  
	
  Exhibit G

  	
   

  	
  Confirmation of Bailee
  Arrangement

  
	
  Exhibit H

  	
   

  	
  Delivery Process Outline

  
	
  Exhibit I

  	
   

  	
  Form of Certification
  Regarding Purchase Commitment

  
	
  Exhibit J

  	
   

  	
  Form of Enforceability
  Opinion

  
	
  Exhibit K

  	
   

  	
  Notice Addresses

  

 

ii

 

MASTER LOAN PURCHASE AND SALE AGREEMENT

 

THIS MASTER
LOAN PURCHASE AND SALE AGREEMENT (this “Agreement”), is
made and entered into as of March 30, 2010 by and between WALKER & DUNLOP, LLC as seller (in
such capacity, “Seller”) and as initial servicer (in such capacity, “Servicer”)
and KEMPS LANDING CAPITAL COMPANY, LLC as
buyer (“Buyer”).

 

WITNESSETH

 

WHEREAS, from time to time,
Seller may desire to sell, and Buyer may desire to purchase, multifamily
Mortgage Loans which were originated by Seller and which are or will be the
subject of this Agreement.

 

NOW THEREFORE, in
consideration of the above premises and of the mutual agreements contained
herein, and intending to be legally bound, Seller, Buyer and Servicer each
agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.01
Definitions. Certain capitalized terms used in the above recitals
and in this Agreement are defined in and shall have the respective meanings
assigned to them in (or by reference in) Appendix A to this Agreement.
All references herein to “the Agreement” or “this Agreement” are to this Master
Loan Purchase and Sale Agreement as it may be amended, supplemented or modified
from time to time, the exhibits and attachments hereto and the capitalized
terms used herein which are defined in such Appendix A, and all
references herein to Articles, Sections and subsections are to Articles,
Sections or subsections of this Agreement unless otherwise specified. The
rules of construction and usage set forth in such Appendix A shall
be applicable to this Agreement.

 

ARTICLE II

PURCHASE AND SALE OF THE LOANS

 

Section 2.01
Procedures.

 

(a)           General Procedures for Purchases of Eligible Loans.

 

(i)            Sale of
Mortgage Loans. From time to time, Seller may sell, transfer,
assign, set over and convey to Buyer, and, subject to the conditions herein,
Buyer may, in its sole discretion, purchase, without recourse, but subject to
the terms and conditions of this Agreement, all right, title and interest of
Seller in, and to, a Mortgage Loan and all related Transferred Assets (as
defined below). In connection with each Purchase of a Mortgage Loan pursuant to
the terms hereof, Seller shall be deemed to make, and hereby makes, as of the
applicable Purchase Date for the benefit of Buyer and its assigns, the
representations and warranties set forth in Section 2 of Schedule
I in respect of each such Mortgage Loan.

 

 

(ii)           Rights of
Ownership. From and after the related Purchase Date all
rights arising with respect to each Mortgage Loan sold hereby, including all
funds received on or in connection with each such Mortgage Loan, shall be
received and held by Servicer, in trust for the benefit of Buyer and its
assigns.

 

(iii)          Conditions to
Each Sale. With respect to any Mortgage Loan that Buyer
agrees to purchase, Buyer’s purchase of such Mortgage Loan shall be subject to
satisfaction of each of the following conditions as of the related Purchase
Date:

 

(A)          the related
Purchase Request is valid on its face, is complete (including the Purchase
Agreement Supplement attached thereto and whether in physical or, if
applicable, in electronic form);

 

(B)           such Mortgage
Loan is an Eligible Loan;

 

(C)           Seller has
provided a written certification, in the form attached hereto as Exhibit I
(as such exhibit may be updated from time to time by Buyer), that such Mortgage
Loan is subject to, and in compliance with, an effective Purchase Commitment
issued by the Approved Investor;

 

(D)          all of the
representations and warranties of Seller and Servicer contained in Schedule
I and in Schedule III of this Agreement with respect to each such
Mortgage Loan are true and correct;

 

(E)           Seller is not
in violation of any covenant or other obligation set forth in Schedule IV
of this Agreement;

 

(F)           no Default or
event which, but for the lapse of time or the giving of notice or both, would
constitute a Default exists;

 

(G)           no Material
Adverse Event has occurred;

 

(H)          a national
title company or Closing Agent was used with respect to such Mortgage Loan and
all of the required Closing Agent Approval Documents for such Mortgage Loan
have been executed and received by Buyer;

 

(I)            Seller has
assisted Buyer in obtaining insured Closing Protection Letters from each
Closing Agent;

 

(J)            Unless
previously delivered to Buyer, Seller has provided, or caused to be provided, a
full errors and omissions and fidelity bond policy in a minimum amount of
$3,000,000 (or such other amount as the Approved Investor may require) listing
Buyer as direct loss payee;

 

2

 

(K)          Buyer has
received an executed bailee letter with respect to the related Mortgage
Documents from Closing Agent in form and substance satisfactory to Buyer;

 

(L)           Buyer has
countersigned the related Purchase Request (including the Purchase Agreement
Supplement attached thereto) and delivered such countersigned Purchase Request
to Seller;

 

(M)         Unless
previously delivered to Buyer, Seller has provided opinions of Seller’s counsel
with respect to (i) corporate/enforceability matters substantially in the
form of Exhibit J and (ii) true sale matters from outside
counsel, each such opinion shall be in form satisfactory to Buyer in it its
sole discretion; and

 

(N)          Buyer has
sufficient funds to purchase such Mortgage Loan.

 

(iv)          Notice to Buyer
of Intended Sale. On any Business Day, Seller may deliver a Purchase
Request with respect to a Mortgage Loan that Seller intends to sell to Buyer.
Seller shall transmit such Purchase Request to Buyer as directed from time to
time by Buyer. Such Purchase Request shall serve as notice to Buyer of Seller’s
intention to sell the Mortgage Loan described therein to Buyer on the related
Purchase Date. Each Purchase Request prepared by Seller shall be complete and
in appropriate form (including the Purchase Agreement Supplement attached thereto),
shall be signed (electronically, if applicable) by an authorized Officer and
shall include all of the information set forth on Exhibit B. Any
Person that submits a Purchase Request electronically with a valid password
shall be deemed to be an authorized Officer with full authority to submit such
Purchase Request and such submission shall be binding on Seller.

 

(v)             Notice to
Approved Investor of Intended Sale. In connection with each
Purchase Request delivered to Buyer, Seller shall deliver to the Approved
Investor:

 

(A)          A “Notice of
Acquirer Funding” in the form attached hereto as Exhibit D (as such
exhibit may be updated from time to time by Buyer); and

 

(B)           A pre-closing
package including the related documents set forth on Exhibit E (as
such exhibit may be updated from time to time by Buyer).

 

(vi)            Approval of
Purchase Request. Within two (2) Business Days after Buyer’s
receipt of (i) a fully completed Purchase Request with all attachments
thereto and such other information and documents as Buyer shall request in its
sole discretion in connection with its review of such materials from Seller and
(ii) an Acceptance Notice from the Approved Investor, Buyer shall use
commercially reasonable efforts to either (A) countersign such Purchase
Request

 

3

 

(including the Purchase
Agreement Supplement attached thereto) evidencing Buyer’s approval of the
proposed Purchase (which may be given or denied in its sole discretion) and
return the countersigned Purchase Request to Seller or (B) deny such
Purchase Request. If Buyer fails to affirmatively notify Seller of its approval
or denial of the proposed Purchase by the end of such two (2) Business Day
period, then Buyer shall be deemed to have denied Seller’s request for such
Purchase.

 

(vii)       Consummation of
Sale. Subject to the terms and conditions hereof, if Buyer in its sole
discretion agrees to purchase a Mortgage Loan, Buyer will cause to be
transferred funds therefor to the appropriate Closing Agent on the applicable
Purchase Date. Upon execution of the related Purchase Request (including the
Purchase Agreement Supplement attached thereto) by Buyer, transfer of the
related Seller Purchase Price therefore and authorization from Buyer to Closing
Agent to release such funds, Seller shall have sold, assigned, transferred, set
over and conveyed to Buyer and Buyer shall have bought, purchased, received and
accepted (A) all of Seller’s right, title and interest in, and under such
Mortgage Loan identified on such Purchase Request, including the security
interest created thereby and the related Mortgage, (B) all Collections on
account thereof due on or with respect to such Mortgage Loan on and after the
applicable Purchase Date, (C) all fire and extended coverage insurance
policies and binders relating to the Mortgaged Property for the benefit of the creditor
of such Mortgage Loan, (D) the related Mortgage Documents, (E) the
rights and benefits of, but not the obligations of, Seller under the related
Purchase Commitment and (F) all proceeds in any way derived from any of
the foregoing on or after the Purchase Date, all upon the terms and conditions
set forth herein (collectively, the “Transferred Assets”).

 

(viii)        Instructions. Seller
understands that all instructions under this Agreement are to be delivered to
Buyer’s address listed on Exhibit K.

 

Section 2.02
Delivery of Original Mortgage Documents.

 

(a)           For each Mortgage Loan sold
to Buyer hereunder, Seller shall cause the related Closing Agent, on behalf of
Seller, to deliver to the Approved Investor (for receipt by the Approved
Investor no later than one (1) Business Day after such Purchase Date),
with copies to Buyer, or as otherwise directed by Buyer, the following
documents with respect to such Mortgage Loan, whether in physical or electronic
form, as applicable:

 

(i)            The original Mortgage Note
bearing all intervening endorsements, if any (which may only be on an allonge
to the extent permitted by the Approved Investor Guides), endorsed as follows
“Pay to the order of
             ,
without recourse”. The original Mortgage Note shall be accompanied by any
riders or exhibits required or approved by the Approved Investor in connection
with the origination of the related Mortgage Loan; and

 

4

 

(ii)           The original of each
guaranty (e.g., a completion guaranty, rental achievement guaranty, etc.)
and each credit enhancement (e.g., a letter of credit or pledge of collateral),
if any, required by the related Purchase Commitment or otherwise obtained.

 

(b)              On or prior to the Purchase
Date for each Mortgage Loan sold to Buyer hereunder, Seller shall execute an
Assignment of Mortgage naming the Approved Investor as assignee of the related
Mortgage, shall cause such Assignment of Mortgage to be recorded in the
applicable recording office and shall file such UCC financing statements as are
necessary to effect such Assignment of Mortgage. As soon as practicable after
such Assignment of Mortgage is returned by the applicable recording office but,
in any event, no later than the time required in order to comply with the Delivery
Process Outline attached hereto as Exhibit H (if delivery by a
certain time is required in order to comply therewith), Seller shall cause the
related Closing Agent to deliver the original of such Assignment of Mortgage
with evidence of recording thereon to the Approved Investor. As soon as
practicable after receiving evidence of filing with respect to such UCC
financing statements but, in any event, no later than the time required in
order to comply with the Delivery Process Outline attached hereto as Exhibit H
(if delivery by a certain time is required in order to comply therewith),
Seller shall cause the related Closing Agent to deliver copies of such UCC
financing statements with evidence of filing thereon to the Approved Investor.
In addition, on the Purchase Date for such Mortgage Loan, Seller shall cause
the related Closing Agent, on behalf of Seller, to deliver to Buyer an original
executed Assignment of Mortgage, in recordable form, naming Buyer as assignee
of the related Mortgage.

 

(c)               In addition to the
foregoing, Seller shall comply with all notification, delivery, timing and
other requirements set forth in, or otherwise reasonably necessary to achieve
the terms of, (i) the Delivery Process Outline attached hereto as Exhibit H
and (ii) any provisions referencing Buyer or the Master Purchase Agreement
which may be set forth in the related Purchase Commitment.

 

(d)              Notwithstanding the
foregoing, in the event that Buyer notifies Seller that the Approved Investor
has failed to purchase a Mortgage Loan to be sold to the Approved Investor,
Seller shall cause to be delivered to Buyer as soon as practicable thereafter
any Mortgage Documents which have yet to be delivered to the Approved Investor.

 

Section 2.03
Nature of Sale; Security Interests.  Seller and
Buyer intend that the conveyance of Seller’s right, title and interest in and
to the Mortgage Loans and related Transferred Assets pursuant to this Agreement
shall constitute a purchase and sale of the Transferred Assets and not a pledge
of security for a loan and shall so record such conveyance on its respective
books and records. If, notwithstanding the intent of the parties hereto, such
conveyance is deemed to be a pledge of security for a loan, or, ever
characterized by applicable law as a financing, then for value received, Seller
promises to pay to Buyer the Aggregate Repurchase Amount according to this
Agreement. Seller also intends and agrees that, in such event, (i) Seller
shall be deemed to have granted to Buyer, and Seller does hereby grant to
Buyer, a first priority security interest in Seller’s entire right, title and
interest in and to the Transferred
Assets and this Agreement shall constitute a security agreement under
applicable law and (ii) in

 

5

 

furtherance thereof, will
execute and deliver (A) the UCC financing statements, if requested by
Buyer, in order to perfect Buyer’s Liens in all of the Transferred Assets and
(B) a power of attorney, substantially in the form of Exhibit C,
appointing NattyMac LLC, with full power of substitution, for the purpose of
taking such action and executing agreements, instruments and other documents,
in the name of Seller, as set forth therein, which appointment is coupled with
an interest and is irrevocable. In addition, irrespective of whether such
conveyance is deemed to be a pledge of security for a loan, or, ever
characterized by applicable law as a financing, Seller hereby pledges all of
its right, title, and interest in, to and under and grants a separate first
priority lien on, and security interest in, the Seller Account to Buyer to
secure the payment and performance by Seller of all amounts or obligations
owing to Buyer pursuant to this Agreement. Buyer shall have all of the rights
and may exercise all of the remedies of a secured creditor under the UCC and
the other laws of the State of New York and Seller shall have all of the rights
and may exercise all of the remedies of a debtor under the UCC and the other
laws of the State of New York. In furtherance of the foregoing, (a) Buyer,
at Seller’s sole cost and expense, may cause to be filed in such locations as
may be necessary to perfect and maintain perfection and priority of the
security interest granted hereby, UCC financing statements and continuation
statements naming Seller as debtor and Buyer as secured party and
(b) Seller shall from time to time take such further actions as may be
requested by the Buyer to maintain and continue the perfection and priority of
the security interest granted hereby (including marking its records and files
to evidence the interests granted to Buyer hereunder).

 

Section 2.04
Termination.  No further
Purchases are intended to be made hereunder on and after the Stated Termination
Date. If for any reason, in Buyer’s sole discretion, Buyer Purchases a Mortgage
Loan from Seller after the Stated Termination Date, then such Purchased
Mortgage Loan shall be subject to the terms and conditions of this Agreement.
Buyer may, with one (1) Business Day’s prior written notice to Seller,
terminate this Agreement without cause; provided however, such termination
shall not affect the parties’ respective obligations with respect to any
Mortgage Loans already purchased by Buyer or for which a Purchase Request has
been approved by Buyer. Upon any such termination, at Buyer’s election, Seller
shall continue to provide servicing and otherwise facilitate sales of the
Mortgage Loans to the Approved Investor or any other Mortgage Loan Buyer.

 

Section 2.05
No Obligation.  Notwithstanding
anything to the contrary in this Agreement, Buyer assumes no obligations of
Seller or Servicer under any Purchase Commitment or other Transferred Asset, if
any, all of which shall remain with Seller or Servicer following the sale
hereunder.

 

ARTICLE III

TERMS OF EACH PURCHASE

 

Section 3.01
Terms and Conditions.  The terms and
conditions relating to each of the Mortgage Loans sold hereunder shall be set
forth in the related Purchase Request. Each Purchase Request shall be deemed to
be controlling as to the related terms and provisions of the Purchase of a
Mortgage Loan, absent manifest error, without regard to any other oral or
written communication between Buyer and Seller with respect to the Purchase of
such Mortgage Loan. With respect to the Purchase or Repurchase of a Mortgage
Loan, in the event of any conflict between the terms and the provisions of this
Agreement and the terms and provisions of the

 

6

 

related Purchase Request
(including the Purchase Agreement Supplement attached thereto), the terms and
provisions of this Agreement shall prevail over the terms and provisions of the
related Purchase Request (including the Purchase Agreement Supplement attached
thereto).

 

Section 3.02
Disbursement Amount.  On each Purchase
Date, Buyer shall cause payment in immediately available funds to be delivered
to the related Closing Agent and/or other applicable payoff designee on behalf
of and at the direction of Seller, in amounts, with respect to such Mortgage
Loan, equal to the Seller Purchase Price therefor. Buyer shall debit the Seller
Account pursuant to Section 3.06(d) for any amounts to be delivered
to the related Closing Agent in excess of the Seller Purchase Price.

 

Section 3.03
Buyer’s Fees.  Seller shall
pay to Buyer the file fees, the transaction fees, the wire fees, the acceptance
fee and any other fees, charges or expenses set forth in the Term Sheet and any
other custodial or other fees separately agreed to by Seller and Buyer in
writing.

 

Section 3.04
Deferred Purchase Price.  Buyer will pay
Seller a Deferred Purchase Price (or Seller will pay Buyer the absolute value
if the Deferred Purchase Price is negative) for each Eligible Loan sold to
Buyer hereunder upon the sale of such Eligible Loan by Buyer or its assignee
(other than to an affiliate of Buyer); provided,
that the Deferred Purchase Price shall not be paid (x) in
respect of any Mortgage Loan Repurchased hereunder by Seller or (y) in
respect of any sale of any Mortgage Loan by Buyer if (i) Seller is not then
in compliance with all of its repurchase obligations with respect to all
Mortgage Loans sold by Seller hereunder in accordance with Section 3.05,
or (ii) a Default or event which, but for the lapse of time or the giving
of notice or both, would constitute a Default shall then exist; provided,
however, that with respect to each event in clause (y), the Buyer shall hold
the Deferred Purchase Price and if the Seller is in compliance with all of its
repurchase obligations or the Default or event which would give rise to a
Default is cured, as applicable, at which time the Buyer shall then remit the
Deferred Purchase Price to the Seller, less any reasonable expenses incurred by
Buyer due to Seller’s non-compliance or Default.

 

Section 3.05
Seller Payment Amounts.

 

(a)           Upon the earlier of
discovery by Seller, Buyer or any of their respective assignees of a breach of
any of the representations and warranties set forth on Schedule I or Schedule
II, without regard to any limitation set forth in such representation or
warranty concerning the knowledge of Seller as to the facts stated therein,
which materially and adversely affects the value of the Mortgage Loans or the
interest therein of Buyer or its assignees (or which materially and adversely
affects the interest of Buyer or its assignees in the related Mortgage Loan in
the case of a representation and warranty relating to a particular Mortgage
Loan), Seller shall commence commercially reasonable efforts to promptly cure
such breach in all material respects and if such breach is not cured within 15
days, Seller shall immediately Repurchase all affected Mortgage Loans by
remitting to Buyer an amount equal to the related Repurchase Amount; provided, that Seller shall within two
(2) Business Days, Repurchase all affected Mortgage Loans in connection
with a breach of any of the Approved Investor Eligibility Representations. For
the avoidance of doubt, any non-compliance with any of the representations and
warranties contained in Section 2 of Schedule I that has the

 

7

 

 

effect of reducing the value
of the related Mortgage Loan or the underlying Mortgaged Property by $10,000 or
more shall be deemed to materially and adversely affect the value of the
Mortgage Loan or interest of Buyer or its assignees therein.

 

(b)           Upon the earlier of
discovery by Seller, Buyer or any of their respective assignees of a breach of
any of Seller’s obligations under Section 2.02, Seller shall
commence commercially reasonable efforts to promptly cure such breach in all
material respects and if such breach is not cured within 15 days, Seller shall
immediately Repurchase the related Mortgage Loan by remitting to Buyer an
amount equal to the related Repurchase Amount.

 

(c)           In addition to the
obligations set forth in Section 3.05(a) and (b), Seller
shall indemnify Buyer and its assigns, to the fullest extent permitted by
applicable law, from and against any and all demands, claims, actions or causes
of action, assessments, losses, diminution in value, liabilities, costs or
expenses, including interest, penalties, reasonable attorneys’ fees and other
related and reasonable professional fees and expenses of any nature whatsoever,
asserted against, or paid, suffered or incurred, by Buyer or its assigns and
resulting from or arising out of a breach of its representations and warranties
contained in this Agreement (including the Schedules hereto), but only to the
extent such out-of-pocket costs and expenses are not attributable to credit
losses on the Mortgage Loans and are not otherwise included in the Repurchase
Amount. It is understood and agreed that the obligations of Seller set forth in
this Section 3.05 to cure or to purchase a Mortgage Loan and to
indemnify Buyer and its assigns constitute the sole remedies of each such
Person respecting a breach of the representations and warranties contained in
this Agreement (including the Schedules hereto). The obligations of Seller
under this Section 3.05 shall survive the delivery and purchase of
each Mortgage Loan, liquidation of such Mortgage Loan giving rise to any
indemnification claim, and the termination of this Agreement.

 

(d)           In addition to and separate
and apart from the indemnification obligations set forth in Section 3.05(c),
Seller shall pay any and all expenses (including, without limitation, all reasonable
fees and disbursements of counsel) which may be paid or incurred by Buyer in
enforcing Buyer’s rights under this Agreement, or in collecting any or all of
the obligations of Seller under this Agreement.

 

Section 3.06
Seller Account.  (a) Seller shall (i) on or
prior to the first Purchase Date, create and maintain as security for Seller’s
obligations under this Agreement (and not as security for the performance of
the Eligible Loans) a deposit account with an Eligible Institution, as directed
by and in the name of Buyer, subject to the terms and conditions of this
Agreement (the “Seller Account”), (ii) on or prior to each Purchase
Date, deposit into the Seller Account as security for Seller’s obligations
under this Agreement (and not as security for the performance of the Eligible
Loans) fifty percent (50%) of the Minimum Interest Amount with respect to the
related Mortgage Loan; provided, that if Seller provides evidence satisfactory
to Buyer, in Buyer’s sole discretion, that the Approved Investor will purchase
such Mortgage Loan at an amount equal to or greater than Seller Purchase Price
(a “Purchase Price Premium”), Seller shall agree to a lesser deposit to reflect
such Purchase Price Premium (“Prepayment Amount”), (iii) until the date
when all Mortgage Loans purchased hereunder have been sold or repurchased, not

 

8

 

withdraw any amount from the
Seller Account if such withdrawal would cause the balance on deposit in the
Seller Account to be less than the aggregate Minimum Interest Amount with
respect to all Mortgage Loans purchased by Buyer pursuant to this Agreement and
owned by Buyer as of the date of such withdrawal, (iv) pay all fees and
expenses charged by the Eligible Institution to maintain the Seller Account and
(v) be entitled to the balance of the Seller Account (i.e. withdraw it to
a zero balance) when all Mortgage Loans purchased hereunder have been sold or
repurchased and all other payment obligations of the Seller hereunder have been
satisfied on the Stated Termination Date.

 

(b)           Buyer shall cause to be
deposited into the Seller Account any Deferred Purchase Prices due to Seller
and payable by Buyer under this Agreement and shall notify Seller of such
deposit, whereupon Buyer shall notify the Eligible Institution of such
permitted debits and Seller may debit the Seller Account for such amounts.

 

(c)           Seller hereby authorizes
Buyer to debit the Seller Account and deposit into the Settlement Account for
(i) any amounts due Buyer and payable by Seller or Servicer under this
Agreement, including any Collections covered by clause (e) of the
“Repurchase Amount” definition and (ii) any other fees or other amounts
payable by Seller.

 

(d)           Buyer shall cause to be
deposited into the Seller Account the amount, if any, by which the Seller
Purchase Price exceeds the amounts to be delivered (as directed by Seller) to
the related Closing Agent, whereupon Seller may debit the Seller Account for
such amount (unless there are any amounts then due and payable by Seller to
Buyer hereunder).

 

(e)           Buyer hereby authorizes
Seller to debit the Seller Account for amounts on deposit in the Seller Account
in excess of the aggregate Minimum Interest Amount with respect to all Mortgage
Loans purchased by Buyer pursuant to this Agreement and owned by Buyer as of
the date of such debit (including, without limitation, amounts deposited into
the Seller Account pursuant to Section 3.06(a) with respect to
Mortgage Loans no longer owned by Buyer as of the date of such debit, amounts described
in Section 3.06(b) and amounts described in Section 3.06(e))
and Buyer shall notify the Eligible Institution with which the Seller Account
has been established of such authorization.

 

ARTICLE IV

SERVICING

 

Section 4.01
Servicing of the Mortgage Loans.

 

(a)           Servicer shall act as an
independent contractor of Buyer in its activities as Servicer hereunder.
Servicer shall service and administer each Mortgage Loan on behalf of Buyer on
an interim basis in accordance with (i) Servicer’s standard and customary
servicing practices for the Approved Investor’s multifamily Mortgage Loans and,
in any event, in accordance with accepted and prudent mortgage loan servicing
standards and procedures generally accepted by prudent lenders in the mortgage
banking industry for mortgage loans of the same type as such Mortgage Loan and
in a manner at least equal in

 

9

 

quality to the servicing
Servicer provides for multifamily mortgage loans which it owns; and
(ii) the Approved Investor Guides and (iii) the related Purchase
Commitment, provided that,
Servicer shall at all times comply with applicable law and the requirements of
any applicable insurer or guarantor so that the insurance and any applicable
guarantee in respect of such Mortgage Loan is not voided or reduced. Servicer
shall at all times maintain accurate and complete records of its servicing of
the Mortgage Loans, and Buyer may, at any time during Servicer’s business hours
examine and make copies of such records or the Servicing Files. At any time
upon Buyer’s request, Servicer shall deliver to Buyer reports regarding the
status of the Mortgage Loans or the collateral securing the Mortgage Loans.

 

(b)           Servicer’s rights to interim
service any Mortgage Loan on behalf of Buyer as provided in this Agreement
shall terminate on the earlier of the date payment of the Deferred Purchase
Price is due under Section 3.04 or the related Repurchase Date for
such Mortgage Loan or on the date Buyer sells such Mortgage Loan to the Approved
Investor or any other Person. If any Default hereunder occurs (other than
pursuant to Section 1(d) of Schedule V) at any time,
Servicer’s rights and obligations to service any Mortgage Loan, as provided in
this Agreement, shall terminate upon one (1) Business day’s written notice
by Buyer; provided, that the termination of such rights and obligations
to service any Mortgage Loan shall be in accordance with customary industry
practices and all applicable laws and regulations. In the event Servicer is in
Default pursuant to clause (d) of the definition of such term, Servicer’s
rights and obligations to service any Mortgage Loan, as provided in this
Agreement, shall terminate automatically and immediately, without any notice or
action by Buyer. In the event that anything in this Agreement is interpreted as
constituting one or more interim servicing contracts, each such servicing
contract shall terminate in accordance with this Section 4.01(b).

 

(c)           Buyer hereby agrees that
Servicer may retain all Collections in respect of principal and interest
received from the related Mortgagor on each Mortgage Loan during the interim
servicing period and such amounts shall be offset against any Deferred Purchase
Price owed by Buyer to Servicer with respect to such Mortgage Loan to the
extent amounts have been so retained; provided,
however, that Servicer’s right to retain such amounts is revocable
by Buyer at any time and Servicer shall deposit such amounts in the Seller
Account prior to such offset upon demand of Buyer.

 

(d)           Servicer acknowledges and
agrees that with respect to each Mortgage Loan sold to the Approved Investor,
(i) Servicer shall be compensated for servicing such Mortgage Loan during
the interim servicing period through its receipt of the Deferred Purchase Price
with respect to such Mortgage Loan which may be paid by Servicer’s retention of
Collections in respect of principal and interest received from the related
Mortgagor on such Mortgage Loan during the interim servicing period pursuant to
Section 4.01(c), (ii) the aggregate amount of such
compensation shall be at least equal to the amount of interest income that the
related Purchase Commitment provides may be retained by Servicer as
compensation for servicing such Mortgage Loan and (iii) the Approved Investor
shall have no obligation to compensate Servicer for servicing such Mortgage
Loan during the interim servicing period.

 

10

 

(e)              Servicer shall
permit Buyer to inspect Servicer’s servicing records and facilities, as the
case may be, for the purpose of satisfying Buyer that Servicer has the ability
to service the Mortgage Loans as provided in this Agreement.

 

(f)              With respect to
any Mortgage Loan, Buyer has agreed to dispose of such Mortgage Loan to the
Approved Investor pursuant to the Master Purchase Agreement; provided that if
the Approved Investor defaults or otherwise is unable or unwilling to purchase
a Mortgage Loan, then Buyer may dispose of such Mortgage Loan in any manner,
irrespective of any Purchase Commitment, without notice to Seller or Servicer.

 

Section 4.02
Additional Servicing and Administration Powers.  Subject to the servicing
standards described in Section 4.01 and any consent of Buyer
required by Article V, Servicer shall have full power and
authority, acting alone, to do or cause to be done, and shall do or cause to be
done, any and all things in connection with such servicing and administration
that it may deem necessary and desirable in connection with arranging for the
sale and/or Securitization of Mortgage Loans to the Approved Investor or any
other Mortgage Loan Buyer, including pursuant to a Purchase Commitment by the
Approved Investor (in connection with which Servicer shall confirm to the
Approved Investor the representations and warranties set forth in Schedule I
or such other representations and warranties as are required by the Approved
Investor), and including accepting nominal title to the Mortgage Loans from
Buyer for the purpose of immediately thereafter transferring and delivering
such Mortgage Loans to the Approved Investor. For any Mortgage Loan to be
transferred and delivered to the Approved Investor by Buyer indirectly through
Servicer, and solely for such purpose, Buyer shall be deemed to transfer such
nominal title to Servicer immediately prior to Servicer’s transfer and
delivery.

 

Section 4.03
Obligations in connection with Sales to the Approved Investor.  In connection with each sale
of a Mortgage Loan by Buyer to the Approved Investor, Servicer shall deliver to
the Approved Investor such information regarding such Mortgage Loan as the
Approved Investor may require and shall otherwise cooperate with the Approved
Investor and Buyer to facilitate such sale.

 

ARTICLE V

LIQUIDATION AND RISK OF LOSS

 

Section 5.01
Mortgage Loans Declared in Default.  Servicer shall
give Buyer prompt written notice if by reason of the occurrence of events
specified in the Mortgage Documents with respect to a Mortgage Loan or
otherwise, such Mortgage Loan can be declared in default, thereby giving the
holder of the Mortgage Loan the right to accelerate the indebtedness and
foreclose the related lien and/or security interest. If Buyer provides its
written consent to such declaration, Servicer shall declare such Mortgage Loan
in default and such Mortgage Loan shall immediately be deemed “in liquidation.”
Subject to the direction of Buyer, Servicer shall use its best efforts to
promptly and efficiently liquidate the collateral securing the Mortgage Loan or
cause the Mortgagor under the Mortgage Loan to bring current any Mortgage Loan
that is in liquidation together with all related collateral, subject to the
provisions of this Agreement and the Mortgage Documents. Nothing in this Section 5.01
shall be construed, however, as limiting Buyer’s right to take any action it
deems necessary to protect its interests in a defaulted

 

11

 

Mortgage Loan, subject to
the provisions of this Agreement, the Mortgage Documents and the rights of the
Approved Investor.

 

Section 5.02
Conversion to Liquidation Status Restricted.  Servicer may not declare a
Mortgage Loan in default for purposes of converting such Mortgage Loan to “in
liquidation” status if (a) Seller shall have notified Buyer, or
(b) Buyer shall have notified Seller, that Seller has defaulted in its
representations or warranties with respect to such Mortgage Loan. If any
Mortgage Loan was declared in default by Servicer, and Buyer subsequently
discovers that Seller breached its representations and warranties with respect
to such Mortgage Loan (or Seller notifies Buyer of such breach), whether or not
such default was a proximate cause of the obligor’s default, the Mortgage Loan
shall cease to be treated as an Eligible Loan “in liquidation” and, instead,
such Seller shall promptly Repurchase such Mortgage Loan pursuant to Section 3.05
giving credit to payments to or from Buyer in respect of such Mortgage Loan.

 

Section 5.03
Sale of Mortgage Loans.  Should Servicer
fail to sell Mortgage Loans “in liquidation” as required by Section 5.01,
Buyer shall direct Servicer as to the time and method of sale, disposition, or
other liquidation of such unsold Mortgage Loans, and Servicer shall take all
steps required to effect such sale, disposition or liquidation. No Person shall
be required to purchase, repurchase, or substitute such Mortgage Loans except
as herein provided with respect to Seller in the event of a breach of warranty
or representation.

 

ARTICLE VI

INDEMNIFICATION

 

Section 6.01 Indemnification.  In addition to any other
indemnification provided to Buyer by Seller or Servicer pursuant to this
Agreement, each of Seller and Servicer hereby agrees to indemnify, defend and
hold harmless Buyer and its affiliates, successors, assigns and each of their
officers, directors, employees and agents (collectively, the “Indemnitees”),
and each of them, to the fullest extent permitted by applicable law, from and
against any and all demands, claims, actions or causes of action, assessments,
losses, diminution in value, liabilities, costs or expenses, including
interest, penalties, reasonable attorneys’ fees and other related and
reasonable professional fees and expenses of any nature whatsoever, asserted
against, or paid, suffered or incurred by, any Indemnitee and resulting from or
arising out of the breach of or failure to perform any representation,
warranty, covenant or other agreement made by Seller or Servicer, as
applicable, hereunder (including the Schedules hereto). No Indemnitee is
entitled to indemnification for its own gross negligence, willful misconduct,
or fraud. The obligations of Seller and Servicer under this Article VI
shall survive the delivery and purchase of each Mortgage Loan, liquidation of
such Mortgage Loan giving rise to the indemnification claim, and the termination
of this Agreement.

 

ARTICLE VII

MISCELLANEOUS PROVISIONS

 

Section 7.01
Amendments, Changes and Modifications.  This Agreement
may be amended, changed, modified or altered only with the written consent of
Buyer, Servicer and Seller by an instrument in writing that specifically refers
to this Agreement and that is executed by all parties.

 

12

 

Section 7.02 Governing Law.  THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS. EACH PARTY HERETO HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK
CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY
HERETO HEREBY CONSENTS TO PROCESS BEING SERVED IN ANY SUIT, ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT, OR ANY DOCUMENT DELIVERED PURSUANT
HERETO BY THE MAILING OF A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO ITS RESPECTIVE ADDRESS SPECIFIED
AT THE TIME FOR NOTICES UNDER THIS AGREEMENT OR TO ANY OTHER ADDRESS OF WHICH
IT SHALL HAVE GIVEN WRITTEN NOTICE TO THE OTHER PARTIES. THE FOREGOING SHALL
NOT LIMIT THE ABILITY OF ANY PARTY HERETO TO BRING SUIT IN THE COURTS OF ANY
JURISDICTION.

 

EACH OF THE PARTIES HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

Section 7.03 Communications.
 Unless otherwise stated, a
communication to a party to this Agreement must be written to be effective and
is deemed given:

 

(a)           For Purchase Requests only
when actually received by Buyer, either in physical or electronic form.

 

(b)           Otherwise, if by fax, when
transmitted to the appropriate fax number, promptly confirmed by telephone.

 

(c)           Otherwise, if by mail, on
the third Business Day after enclosed in a properly addressed, stamped, and
sealed envelope deposited in the appropriate official postal service.

 

For purposes of the
foregoing, until changed by written notice to each other party to this
Agreement, the address, fax number, telephone number and e-mail address of each
party to this agreement shall be as stated on Exhibit J.

 

13

 

Section 7.04
Assignment of Rights to Third Parties.  With respect to
any Mortgage Loan, Buyer and any subsequent holder shall have the right, at any
time after the Purchase Date, to assign its rights under this Agreement to any
subsequent transferee of such Mortgage Loan. Seller acknowledges irrevocably
that Buyer may transfer the Mortgage Loans at any time and consents to the
assignment, in whole or in part, of this Agreement and all rights hereunder.
Seller may not assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder without the prior express written
consent of Buyer. Any such purported assignment, transfer, hypothecation or
other conveyance by Seller without the prior express written consent of Buyer
shall be void. The terms and provisions of this Agreement are for the purpose
of defining the relative rights and obligations of Seller and Buyer with
respect to the transactions contemplated hereby and, except as set forth in
this Section 7.04,  no Person shall be a third-party
beneficiary of any of the terms and provisions of this Agreement.

 

Section 7.05
Severability.  In the event
that any provision of this Agreement shall be held invalid or unenforceable by
any court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provision hereof. Such invalid or unenforceable
provision shall be amended, if possible, in order to accomplish the purposes of
this Agreement.

 

Section 7.06
Waivers.  The rights of each of the
parties hereunder shall not be capable of being waived or varied otherwise than
by an express waiver or variation in writing. Any failure to exercise or any
delay in exercising any of such rights shall not operate as a waiver or
variation of that or any other such right. Any defective or partial exercise of
any of such rights shall not preclude any other or further exercise of that or
any other such right. No act or course of conduct or negotiation on the part of
any party shall in any way preclude such party from exercising any such right
or constitute a suspension or any variation of any such right.

 

Section 7.07
Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument, and
either party hereto may execute this Agreement by signing any such
counterparts.

 

Section 7.08
Survival of Representations and Warranties.  It is understood and agreed
that the representations and warranties set forth in Schedules II, III
and IV shall survive the sale of each Mortgage Loan to Buyer and
delivery of the Mortgage Documents to the Approved Investor, and shall inure to
the benefit of Buyer and its assigns, notwithstanding any restrictive or qualified
endorsement on any Mortgage Note or Assignment of Mortgage or the examination
or failure to examine any Mortgage Document. Each and every representation and
warranty made herein by Seller shall remain operative and in full force and
effect regardless of (i) any investigation made by or on behalf of Seller
or Buyer, (ii) the observance or performance of any covenant, agreement or
obligation hereunder or (iii) the termination of this Agreement.

 

Section 7.09
Term of Agreement.  This Agreement
shall continue in full force and effect so long as Buyer or any of its
affiliates shall own any Mortgage Loans purchased from Seller.

 

Section 7.10
Integrated Agreement.  This Agreement,
the Term Sheet and the documents, instruments and agreements executed and
delivered pursuant to this Agreement, constitute the entire agreement between
the parties with respect to the subject of the transactions

 

14

 

contemplated hereby and
supersede all prior letters or agreements with respect thereto. For the
avoidance of doubt, Appendix A, Schedules I through V and Exhibits
A through J shall be a part of this Agreement for all purposes. The
terms set forth in the Term Sheet are hereby expressly incorporated by
reference into this Agreement and any reference to this Agreement contained in
this Agreement shall be deemed to be a reference to this Agreement as
supplemented by the Term Sheet (including, for the avoidance of doubt, for
purposes of Schedule V); provided, however,  that in
the event of any conflict between this Agreement and the Term Sheet, this
Agreement shall prevail over the Term Sheet.

 

Section 7.11
Further Assurances. Seller and Buyer each agree to, at any time and from
time to time, execute and deliver to the other such reasonable and appropriate
additional documents, instruments or agreements and to take such further action
as may be necessary or appropriate to effectuate the purposes of this
Agreement. Seller further agrees to appoint NattyMac LLC as its lawful
attorney-in-fact and to execute and deliver to Buyer a power of attorney
substantially in the form of Exhibit C pursuant to Section 2.03.

 

Section 7.12
Confidentiality. Neither Buyer nor Seller shall disclose any
confidential or proprietary information of the other party with respect to such
other party that may be in the possession of that party, including
(i) such information in the possession of Buyer as to Seller’s financial
condition or underwriting guidelines, (ii) such information in the
possession of Seller as to any of the Mortgage Loan details with respect to the
Mortgage Loans sold to Buyer and any information regarding pricing of any
Mortgage Loan proposed to be purchased by Buyer and (iii) any information
designated “confidential” or “proprietary” by either party to the other party
to any Person who is not a partner, officer, employee, counsel, or agent of
such party, except with the consent of such other party, pursuant to a subpoena
or order issued by a court of competent jurisdiction, or by a judicial or administrative
or legislative body or committee. Confidential information shall not include
information which: (x) is in the receiving party’s possession without
actual or constructive knowledge of an obligation of confidentiality with
respect thereto, prior to disclosure by the disclosing party; (y) is or
subsequently becomes part of a public domain through no fault of receiving
party; or (z) is disclosed to the receiving party by a third party having
no obligation of confidentiality with respect thereto, and provided the
receiving party did not know, or reasonably should have know, that such
information was wrongfully disclosed by such third parties.

 

Buyer and Seller agree to
regard and preserve, as confidential, all information obtained by or disclosed
to either by or at the other’s direction about its customers, including name,
address, telephone number, account number, policy information and any list or
grouping of customers (“Customer Information”), and to use such Customer
Information solely in the manner contemplated and authorized by this Agreement.
Each agrees not to disclose and not to permit its employees to disclose,
Customer Information for any purpose other than for the performance of the
Agreement. Upon termination of the Agreement, or at any time requested by the
other party, the receiving party shall promptly return to the providing party,
or destroy, all such Customer Information in its possession except for its
business records. Each further agrees to implement and maintain an effective information
security program to protect such Customer Information. The program shall
include administrative, technical and physical safeguards to: (A) ensure
the security and confidentiality of Customer Information; (B) protect
against any anticipated threats or hazards to the security or integrity of such
Customer Information; and (C)

 

15

 

protect against unauthorized
access to or use of Customer Information which could result in substantial harm
or inconvenience to either party or its customers. If either party is not in
compliance with the requirements regarding Customer Information, such party
shall immediately advise the other party and take steps to correct the
non-compliance, including protecting customers and the providing party against
the consequences of any disclosure or use of Customer Information in violation
of this Agreement.

 

Notwithstanding the above
provisions in this Section 7.12, Buyer may disclose such
information to its affiliates, rating agencies, dealers and investors and to
the Approved Investor, after informing such parties of the confidential nature
of such information.

 

Section 7.13
Non-Petition Agreement.  Notwithstanding
anything to the contrary in this Agreement or any Purchase Request, each of
Seller and Servicer covenants and agrees that it shall not, prior to the date
which is one year and one day (or if longer, the applicable preference period
then in effect) after the payment in full of all indebtedness of Buyer and any
affiliate of Buyer which provides financing for the mortgage loans purchased by
Buyer, acquiesce, petition or otherwise, directly or indirectly, invoke or
cause Buyer to invoke the process of any governmental authority for the purpose
of commencing or sustaining a case against Buyer under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of Buyer
or any substantial part of its property or ordering the winding up or
liquidation of the affairs of Buyer. This Section 7.13 shall
survive the termination of this Agreement.

 

Section 7.14
Limitations on Payment Liabilities.  Notwithstanding
anything to the contrary in this Agreement or any Purchase Request, Buyer shall
have no obligation to pay any amounts owing under this Agreement unless and
until Buyer has received such amounts from the Mortgage Loans; provided that
the foregoing shall not be deemed to excuse Buyer’s obligation to deliver funds
to the Closing Agent pursuant to Section 3.02 above. In addition,
Seller and Servicer hereby agree that Buyer shall have no obligation to pay to
Seller or Servicer any amounts constituting fees, expenses or indemnities
(collectively, “Expense Claims”) and that such Expense Claims shall not
constitute a claim against Buyer (as defined in Section 101 of Title 11 of
the United States Bankruptcy Code), unless or until Buyer has received amounts
sufficient to pay such Expense Claims, and such amounts are not necessary to
pay outstanding indebtedness of Buyer; provided, that Expense Claims shall not
include Deferred Purchase Price or Buyer’s obligation to deliver funds to the
Closing Agent pursuant to Section 3.02 or to release funds to the
Seller pursuant to Section 3.06 above. This Section 7.14
shall survive the termination of this Agreement.

 

Section 7.15
No Tax Confidentiality.  Notwithstanding
anything to the contrary set forth herein, any obligations of confidentiality
contained herein shall not apply to the federal tax structure or federal tax
treatment of any transaction referenced herein, and each party (and any
employee, representative, or agent of any party) may disclose to any and all
persons, without limitation of any kind, the federal tax structure and federal
tax treatment of any transaction referenced herein; provided, however, that no
party (and no employee, representation or other agent thereof) shall disclose
any information that is not relevant to understanding the tax treatment or tax
structure of such transactions (including the identity of, or any information
that could lead another to determine the identity of any party, or employee,
representative or agent of

 

16

 

any party) except as
otherwise permitted by Section 7.12. The preceding sentence is
intended to cause this transaction to be treated as not having been offered
under conditions of confidentiality for purposes of section
1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
promulgated under section 6011 of the Internal Revenue Code of 1986, as
amended, and shall be construed in a manner consistent with such purpose. In
addition, each party acknowledges that it has no proprietary or exclusive
rights to the federal tax structure of this transaction or any federal tax
matter or federal tax idea related to any transaction referenced herein.

 

Section 7.16
Third-Party Beneficiary.  The Approved
Investor is an express third-party beneficiary of this Agreement entitled to
enforce the provisions hereof as if a party to this Agreement to the extent
necessary to enforce remedies against Seller for breach of any representation,
warranty or undertaking to Buyer by and from Seller that has been assigned to
the Approved Investor.

 

[Signatures
Commence on Following Page]

 

17

 

IN WITNESS WHEREOF, Buyer, Seller
and Servicer have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.

 

	
  BUYER

  	
   

  	
  SELLER

  
	
   

  	
   

  	
   

  
	
  KEMPS LANDING CAPITAL

  COMPANY, LLC

  	
   

  	
  WALKER & DUNLOP, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  J. E. Gorecki

  	
   

  	
  By:

  	
  /s/ William Walker

  
	
   

  	
  John E. Gorecki

  	
   

  	
  Title:

  	
  President & CEO

  
	
  Title:

  	
  Authorized Signer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  SERVICER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  WALKER & DUNLOP, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ William Walker

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President & CEO

  
						

 

Master Loan Purchase and Sale Agreement

 

S-1

 

 

APPENDIX A

 

DEFINITIONS AND USAGE

 

1.             Table of
Contents, Titles and Headings. The table of contents,
titles and headings of the articles and sections of this Agreement have been
inserted for convenience and reference only and are not to be considered a part
hereof and shall not in any way modify or restrict any of the terms or
provisions hereof and shall never be considered or given any effect in
construing this Agreement or any provision hereof or in ascertaining intent, if
any question of intent should arise.

 

2.             Interpretation.
Unless the context requires otherwise, words of the masculine gender
shall be construed to include correlative words of the feminine and neuter
genders and vice versa, words of the singular number shall be construed to
include correlative words of the plural number and vice versa, and “including”
(and with the correlative meaning “include”) means including without limiting
the generality of any description preceding such term. This Agreement, and all
terms and provisions hereof, shall be liberally construed to effect the
purposes set forth herein and to sustain the validity of this Agreement.

 

3.             Accounting
Principles. Unless otherwise specified, (a) GAAP determines
all accounting and financial terms and compliance with financial covenants,
and, (B) otherwise, all accounting principles applied in a current period
must be comparable in all material respects to those applied during the
preceding comparable period.

 

4.             Definitions.

 

“Acceptance Notice”
means, with respect to any Mortgage Loan, written notice from the Approved
Investor indicating that the Approved Investor has agreed to purchase such
Mortgage Loan from Buyer in the event that such Mortgage Loan is originated by
Seller and purchased by Buyer pursuant to this Agreement.

 

“Agency Approval”
means, with respect to any Mortgage Loan that is a Conforming Agency Loan,
Seller is approved as an approved seller/servicer (as the case may be) with
respect to the Approved Investor.

 

“Agreement” means
this Master Loan Purchase and Sale Agreement, and all exhibits, schedules,
amendments and supplements hereto.

 

“Aggregate Repurchase
Amount” means, at any time, the sum of all Repurchase Amounts for all
Mortgage Loans Purchased from Seller and then owned by Buyer.

 

“Applicable Rate”
means the Prime Rate of interest published from time to time by The Wall
Street Journal, as such rate. In the event The Wall Street Journal
publishes more than one Prime Rate of interest, the Prime Rate is defined to
mean the higher Prime Rate of interest set forth therein. If at any time the
Prime Rate increases or decreases, then the Applicable Rate hereunder shall be
correspondingly increased or decreased, effective on said date. In the event
that The Wall Street Journal abolishes or abandons the practice of publishing
a Prime Rate, or should the same become unascertainable, Buyer shall designate
a comparable reference rate

 

1

 

which shall be deemed to be
the Applicable Rate for purposes hereof. If for any reason the Applicable Rate
is voided by a court of competent jurisdiction or if for any reason such court
finds that the Applicable Rate is different from the Applicable Rate designated
by Buyer, then the Applicable Rate shall be deemed to be the highest rate permitted
by law.

 

“Approved Investor”
means Federal Home Loan Mortgage Corporation, or any successor thereto.

 

“Approved Investor
Eligibility Representations” means, with respect to any Mortgage Loan, the
loan level representations and warranties with respect to such Mortgage Loan
that Seller would make for the benefit of the Approved Investor if Seller were
selling and delivering such Mortgage Loan directly to the Approved Investor
pursuant to the related Purchase Commitment.

 

“Approved Investor Guides”
means the Freddie Mac Multifamily Seller/Servicer Guide and the Freddie Mac
Delegated Underwriting for Targeted Affordable Housing Guide and all amendments
and additions thereto.

 

“Assignment of Leases”
means, with respect to any Mortgage Loan, an assignment of leases, rents and
profits or similar instrument executed by the related Mortgagor, assigning to
the mortgagee all of the income, rents and profits derived from the ownership,
operation, leasing or disposition of all or a portion of the related Mortgaged Property,
as amended, modified, renewed or extended through the date hereof and from time
to time hereafter.

 

“Assignment of Mortgage”
means an assignment of mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the sale of the Mortgage to
Buyer or the Approved Investor, as applicable, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering the Mortgage Loans secured by Mortgaged Properties located
in the same jurisdiction, if permitted by law.

 

“Business Day” means
a day other than (i) a Saturday or Sunday and (ii) a day on which The
Federal Reserve Bank of New York is authorized or obligated by law or executive
order to remain closed.

 

“Buyer” is defined in
the preamble to this Agreement.

 

“Closing Agent” means
a Person closing a Mortgage Loan in escrow which is bonded by an Eligible
Insurer pursuant to an approved Closing Protection Letter.

 

“Closing Agent Approval
Documents” means the following documents and any other documents requested
by Buyer from time to time:

 

(i)            Closing Agent application
for each new Closing Agent;

(ii)           Errors and
Omissions insurance policy declaration for each new Closing Agent (except for
national title insurance company);

(iii)          Closing
Protection Letter for each Mortgage Loan (except for national title insurance
company);

 

2

 

(iv)          Funds Recipient
Agreement for each Mortgage Loan;

(v)           Title Insurance
Commitment for the issuance of a policy of title insurance for each Mortgage
Loan; and

(vi)          Escrow agent’s
closing instruction letter, if any.”

 

“Closing Agent Standing
Wire Instructions” means, with respect to any Mortgage Loan, the standing
wire instructions to the Closing Agent set forth in the relevant Purchase
Request for use when Buyer wires payment of the Seller Purchase Price for such
Mortgage Loan.

 

“Closing Protection
Letter” means a master letter from an Eligible Insurer pursuant to which
such Eligible Insurer agrees to reimburse, indemnify and hold harmless Buyer
and its assigns from any expense, cost, loss or liability incurred by Buyer or
its assigns from the failure of the relevant Closing Agent to comply with the
specific directions provided by Buyer, as well as any fraud, misallocation of
funds, gross negligence and any similar impropriety on the part of such Closing
Agent.

 

“Collections” means
all monies (including any prepayments) received by Seller, Servicer or Buyer,
in good, collected funds as principal, interest or other sums due on account of
the Mortgage Loans acquired by Buyer, and also includes proceeds from sales of
the such Mortgage Loans, whether to the Approved Investor or otherwise.

 

“Customary Servicing
Procedures” means procedures (including collection procedures) that
Servicer customarily employs and exercises in servicing and administering
mortgage loans similar to the Mortgage Loans or as otherwise specified in this Agreement.

 

“Debtor Law” means
any applicable liquidation, conservatorship, bankruptcy, insolvency,
rearrangement, moratorium, reorganization, or similar debtor relief laws
affecting the rights of creditors generally and general equitable principles
from time to time in effect under the laws of any State applicable to each loan
or under the laws of the United States.

 

“Default” is defined
in Schedule V.

 

“Default Rate” means,
for any day, an annual interest rate equal to the lesser of (a) the
Applicable Rate plus 4% or
(b) the maximum non-usurious rate of interest that, under applicable law,
Buyer is permitted to contract for, charge, take, reserve, or receive if the
Purchases were characterized by applicable law as financings.

 

“Deferred Purchase Price”
means, with respect to a Mortgage Loan, an amount equal to (x) the actual
cash proceeds received by Buyer from the sale of such Mortgage Loan minus
(y) the related Repurchase Amount.

 

“Eligible Institution”
means either (a) a federal or a state chartered depository institution or
a trust company where the short term unsecured debt obligations of which have
the highest short term ratings of a nationally recognized rating agency at the
time any amounts are held on deposit therein, (b) a depository institution
or a trust company where the short term unsecured debt obligations of which
have the highest short term ratings of a nationally recognized rating agency at
the time any amounts are held on deposit therein in which such accounts are
insured by the FDIC and the SAIF (to the limits established by the FDIC or the
SAIF) and the uninsured

 

3

 

deposits in which accounts
are otherwise secured such that Buyer has a claim with respect to the funds in
such account or a perfected first-priority security interest against any
collateral (which shall be limited to Eligible Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository institution or trust company in which such account is maintained, or
(c) a trust account or accounts maintained with the trust department of a
federal or state chartered depositary institution or trust company, acting in
its fiduciary capacity.

 

“Eligible Insurer” at
any time of determination, means a Qualified Insurer issuing a Closing
Protection Letter and with respect to which Buyer has not previously given
notice to Seller of its disapproval.

 

“Eligible Loan” means
a Mortgage Loan originated (or to be originated) by Seller that is
(i) subject to, and in compliance with, an effective Purchase Commitment
and (ii) identified in an Acceptance Notice received by Buyer.

 

“FHA” means the
Federal Housing Administration within the United States Department of Housing
and Urban Development.

 

“Financials” means
balance sheets, profit and loss statements, statements of cash flow, quarterly
call reports, and any other financial statements, reports, or information
reasonably specified by Buyer and to be provided by Seller pursuant to Schedule
IV.

 

“Fitch” means
Fitch, Inc. and any successor thereto.

 

“Flood Insurance Policy”
means a policy or binder of insurance issued pursuant to the Federal Flood
Insurance Act, as amended, or any other policy or binder providing similar
coverage against loss sustained by floods.

 

“GAAP” means
generally accepted accounting principles of the Accounting Principles Board of
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board that are applicable from time to time.

 

“Ground Lease” means,
with respect to any Mortgage Loan secured in whole or in part by the interest
of the related Mortgagor as a lessee under a ground lease of the related
Mortgaged Property, such ground lease, all written amendments and
modifications, and any related estoppels or agreements from the ground lessor
and, in the event the Mortgagor’s interest is a ground subleasehold, the
related ground lease.

 

“Lien” means any
lien, mortgage, security interest, pledge, assignment, charge, title retention
agreement, or encumbrance of any kind and any other arrangement for a
creditor’s claim to be satisfied from assets or proceeds prior to the claims of
other creditors or the owners.

 

“Mandatory Delivery Date”
means, with respect to any Mortgage Loan subject to a Purchase Commitment, the
date by which Seller must deliver the related loan package to the Approved
Investor, as specified in such Purchase Commitment.

 

“Master Purchase
Agreement” means that certain Master Purchase Agreement, dated as of
October 16, 2009, between Buyer and the Approved Investor.

 

4

 

“Material Adverse Event”
shall mean an event, act or condition which has a material adverse effect on
(a) the property, business, operations, financial condition or prospects
of Seller, (b) the ability of Seller to perform its obligations under this
Agreement, (c) the validity or enforceability of this Agreement, or
(d) the rights and remedies of Buyer under this Agreement.

 

“Minimum Interest Amount”
means, with respect to any Mortgage Loan, an amount equal to the product of
(i) the related Seller Purchase Price as of the related Purchase Date,
(ii) the Pricing Rate and (iii) a fraction, the numerator of which is
30 and the denominator of which is 360.

 

“Moody’s” means
Moody’s Investors Service, Inc. and any successor thereto.

 

“Mortgage” means a
mortgage, deed of trust, security deed or other instrument securing a Mortgage
Loan which creates a Lien on a Mortgaged Property.

 

“Mortgage Documents”
means, with respect to any Mortgage Loan, the documents described in Sections
2.02(a) and (b) and all other documents required to be
included in the related “Final Delivery Package” (as such term is defined in
the Approved Investor Guides).

 

“Mortgage Interest Rate”
means, with respect to any Mortgage Loan, the annual rate at which interest
accrues on such Mortgage Loan as provided under the related Mortgage Note.

 

“Mortgage Loan” means
a mortgage loan identified and described in a Purchase Request. A Mortgage Loan
includes the Mortgage Documents, scheduled monthly payments, principal
prepayments, liquidation proceeds (whether upon initial foreclosure, final sale
or otherwise), condemnation proceeds, insurance proceeds and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Mortgage Loan.

 

“Mortgage Loan Buyer”
means the Approved Investor, any other Securitization Vehicle or any other
Person that is purchasing a Mortgage Loan from Buyer (other than by Seller
under this Agreement).

 

“Mortgage Loan File”
means the documents and information listed on Exhibit D, as it may
be updated by Buyer from time to time.

 

“Mortgage Note” means
the note or other evidence of indebtedness (including a lost note affidavit) of
the Mortgagor under a Mortgage Loan and secured by the related Mortgage.

 

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

 

“Mortgagor” means the
obligor(s) on a Mortgage Note.

 

“NattyMac LLC” means
NattyMac LLC, a Delaware limited liability company, an affiliate of Buyer.

 

5

 

“Officer” means any
duly authorized officer of Seller involved in, or responsible for, the sale of
the Mortgage Loans whose name appears on a list furnished by Seller to Buyer,
as such list may be amended from time to time.

 

“Outstanding Principal
Balance” means, with respect to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan on such
date as reflected on Servicer’s mortgage loan servicing system in accordance
with its Customary Servicing Procedures.

 

“Payment Account”
means a non-interest bearing deposit account established by Seller with an
Eligible Institution, as directed by Buyer, for the deposit of Seller Purchase
Prices in immediately available funds by Buyer.

 

“Permitted Encumbrances”
means, with respect to any Mortgaged Property, (i) the lien of the
applicable local or other governmental authority for current-period real
property taxes and assessments, (ii) those deeded covenants, conditions
and restrictions, rights of way, easements, and other matters that are of
public record and permitted pursuant to the Approved Investor Guides or
approved by the Approved Investor in writing and (iii) the right of
tenants (whether under Ground Leases, space leases or operating leases) at such
Mortgaged Property to remain following a foreclosure or similar proceeding.

 

“Person” means any
individual, corporation, partnership, joint venture, limited liability company,
association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof.

 

“Pricing Rate” means
the rate stated in the Term Sheet as the “Pricing Rate”. The Pricing Rate shall
be computed daily on the basis of the actual number of days elapsed over a year
assumed to be 360 days.

 

“Purchase” means the
sale by Seller and purchase by Buyer of a Mortgage Loan, the related Purchase
Commitment and related Mortgage Documents under this Agreement.

 

“Purchase Agreement
Supplement” means, with respect to any Mortgage Loan, the document pursuant
to which such Mortgage Loan is sold by Seller to Buyer, which may be prepared
and sent electronically by Seller, shall be in the form of Annex 1 to Exhibit B
and shall be attached as Annex 1 to the Purchase Request with respect to such
Mortgage Loan.

 

“Purchase Commitment”
means, with respect to a Mortgage Loan, a mandatory purchase commitment issued
by the Approved Investor to Seller or an early rate lock application offer from
Seller accepted by the Approved Investor, in each case, evidencing the
commitment by the Approved Investor to purchase such Mortgage Loan from Seller.

 

“Purchase Commitment
Amount” means, with respect to any Mortgage Loan subject to a Purchase
Commitment, the purchase price set forth in the related Purchase Commitment at
which the Approved Investor agrees to purchase such Mortgage Loan in accordance
with its Purchase Commitment.

 

6

 

“Purchase Date” means
the date the Seller Purchase Price for a Mortgage Loan is paid by Buyer to the
Payment Account, which shall be the later of (A) the first date on which
each condition set forth in Section 2.01(a)(iii) is satisfied
with respect to such Mortgage Loan and (B) such date as Seller shall have
specified in the related Purchase Request.

 

“Purchase Request”
means, with respect to any Mortgage Loan being offered for Purchase by Seller,
a request, in appropriate data layout, in substantially in the form of Exhibit B,
executed by an Officer of Seller and containing all of the information set
therein, as such requested information may be amended from time to time in a
notice from Buyer to Seller, specifying the relevant characteristics of such
Mortgage Loan, including the Seller Purchase Price and a description of the
related Purchase Commitment, and attaching a Purchase Agreement Supplement with
respect to such Mortgage Loan as Annex 1 thereto.

 

“Qualified Insurer”
means an insurance company duly qualified as such under the laws of the states in
which the Mortgaged Properties are located, duly authorized and licensed in
such states to transact the applicable insurance business and to write the
insurance provided by the insurance policy or binder issued by it, and approved
as an insurer by the Approved Investor.

 

“Repurchase” means,
with respect to any Mortgage Loan, the transaction by which Seller remits the
Repurchase Amount thereof to the Buyer in accordance with Section 3.05.

 

“Repurchase Amount”
means, with respect to any Mortgage Loan at any date of determination, an
amount equal to the result of: (a) the Seller Purchase Price of such
Mortgage Loan, plus (b) the
Minimum Interest Amount with respect to such Mortgage Loan, plus
(c) if such date of
determination is more than 30 days after the related Purchase Date, accrued and
unpaid interest on such Mortgage Loan at the Pricing Rate from the date which
is 30 days after the related Purchase Date through (but not including) such
date of determination, plus (d) in
the case of a Mortgage Loan subject to a Repurchase, any reasonable fees and
expenses charged by other third parties and incurred by Buyer relating to the
Repurchase of such Mortgage Loan, minus (e) Collections
in respect of principal and interest received by Servicer from the related Mortgagor
on such Mortgage Loan and deposited into the Settlement Account or otherwise
remitted to Buyer on or prior to such date of determination.

 

“S&P” means
Standard & Poor’s Rating Services, a division of the McGraw &
Hill Companies, Inc. and any successor thereto.

 

“Securities” or “Securitization
Securities” means any note, bond or pass-through certificate that is,
directly or indirectly, secured by or representing an interest in a Portfolio
of Mortgage Loans designated by Servicer.

 

“Securitization” or “Securitized”
means a transaction in which a Portfolio of Mortgage Loans designated by
Servicer is financed through or sold to a Securitization Vehicle, which vehicle
issues Securities in the capital markets, or is exchanged for such Securities.

 

“Securitization Vehicle”
means the Approved Investor or any trust, partnership, corporation, limited
liability company, limited liability partnership or other state law entity that
is created for the principal purpose of owning or holding a Mortgage Loan or
pool of Mortgage Loans which are the subject of a Securitization.

 

7

 

“Seller” is defined
in the preamble to this Agreement.

 

“Seller Account” is
defined in Section 3.06.

 

“Seller Purchase Price”
means, at any time of determination, with respect to any Mortgage Loan subject
to a Purchase Commitment, an amount that is equal to the lesser of (i) the
Purchase Commitment Amount for such Mortgage Loan and (ii) the outstanding
principal amount of such Mortgage Loan at such time.

 

“Servicer” is defined
in the preamble to this Agreement.

 

“Servicing File”
means all papers and records of whatever kind or description, whether developed
or originated by Servicer or others, required to document or service the
Mortgage Loan.

 

“Settlement Account”
means a non-interest bearing deposit account established by Buyer with an
Eligible Institution for the deposit of (i) payments from the Approved
Investor and other Collections in respect of Mortgage Loans purchased and owned
by Buyer and (ii) payments by Seller to Buyer.

 

“Solvent” means for
any Person, that (a) the fair-market value of its assets exceeds its
liabilities, (b) it has sufficient cash flow to enable it to pay its debts
as they mature, and (c) it does not have unreasonably small capital to
conduct its businesses.

 

“Stated Termination Date”
means March 18, 2011, or such other date as agreed to by Seller and Buyer.

 

“Taxes” means, for
any Person, taxes, assessments, or other governmental charges or levies imposed
upon it, its income, or any of its properties, franchises, or assets.

 

“Term Sheet” means a
term sheet, substantially in the form of Exhibit A, executed by
Seller and Buyer.

 

“Title Policy” means
a paid-up American Land Title Association (ALTA) Mortgagee’s title insurance policy
or binder of the type of insurance acceptable to Buyer, naming Seller as the
insured, issued by an Eligible Insurer insuring Seller and its successors and
assigns as to the Lien of a Mortgage in an amount at least equal to the initial
principal balance of the related Mortgage Loan.

 

“Transferred Assets”
is defined in Section 2.01(a)(vii).

 

“UCC” means the
Uniform Commercial Code as enacted in the State of New York or in effect from
time to time in the specified jurisdiction.

 

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

 

8

 

SCHEDULE I

 

SELLER ELIGIBILITY REPRESENTATIONS, WARRANTIES AND COVENANTS

 

1.             Representations,
Warranties and Covenants Relating to Mortgage Loans. Seller
represents and warrants to, and covenants with Buyer, with respect to itself
and to each Mortgage Loan, as of the related Purchase Date:

 

(a)           Mortgage Loans
as Described.  The information
set forth in the Purchase Request is true and correct in all material respects
as of the date or dates that such information is specified therein.

 

(b)           Mortgage Loan
Representations and Warranties.  Each of the
representations and warranties as to such Mortgage Loan as set forth in Section 2
below is true and correct.

 

(c)           Perfection
Representations.  The Perfection
Representations in Schedule II shall be a part of this Agreement for all
purposes.

 

(d)           Anti-Money
Laundering Laws and OFAC.  Seller
(i) has complied with all applicable anti-money laundering laws and
regulations, including the USA Patriot Act of 2001 (collectively, the “Anti-Money
Laundering Laws”); (ii) has established an anti-money laundering
compliance program as required by the Anti-Money Laundering Laws;
(iii) has conducted the requisite due diligence in connection with the
origination of each Mortgage Loan for purposes of the Anti-Money Laundering
Laws, including with respect to the legitimacy of the applicable Mortgagor and
the origin of the assets used by the said Mortgagor to purchase the property in
question; and (iv) maintains, and will maintain, sufficient information to
identify the applicable Mortgagor for purposes of the Anti-Money Laundering
Laws. No Mortgage Loan is subject to nullification pursuant to Executive Order
13224 (the “Executive Order”) or the regulations promulgated by the
Office of Foreign Assets Control of the United States Department of the
Treasury (the “OFAC Regulations”) or in violation of the Executive Order
or the OFAC Regulations, and no Mortgagor is subject to the provisions of such
Executive Order or the OFAC Regulations nor listed as a “blocked person” for
purposes of the OFAC Regulations.

 

(e)           Fidelity Bond.  Seller has, and will maintain, at its own expense, a fidelity bond with
broad coverage and an errors and omissions policy in the amount and with the
coverage required by Buyer. Seller shall furnish proof of such coverage at or
before selling Mortgage Loans to Buyer, and thereafter at Buyer’s request, no
less frequently than once each year.

 

(f)            Insurer.  The applicable insurer is an insurance company duly qualified as such
under the laws of the states in which the Mortgaged Properties are located,
duly authorized and licensed in such states to transact the applicable
insurance business and to write the insurance provided by the insurance policy
or binder issued by it, and approved as an insurer by the Approved Investor.

 

1

 

(g)           Insurance. Seller maintains (i) with financially
sound, responsible, and reputable insurance companies or associations (or, as
to workers’ compensation or similar insurance, with an insurance fund or by
self-insurance authorized by the jurisdictions in which it operates) insurance
with respect to its business operations and with respect to its properties used
in its business and against casualties and contingencies and of types and in
amounts (and with co-insurance and deductibles) as is customary in the case of
similar businesses or as agreed to in the Term Sheet, and (ii) with
respect to the Mortgage Loans with financially sound, responsible and reputable
title insurance companies, which are duly qualified as such under the laws of
the states in which the Mortgaged Properties are located, duly authorized and
licensed in such states to transact the title insurance business and to write
the title insurance provided by the title insurance policy or binder issued by
it, and approved as an insurer by the Approved Investor.

 

(h)           Full Disclosure. All information furnished,
or to be furnished, by Seller to Buyer in connection with this Agreement is
true and accurate in all material respects or based on reasonable estimates on
the date the information is stated or certified. No Mortgage Document,
information, certificate of an Officer, statement furnished in writing, or
report required hereunder, delivered to Buyer or its agents in connection with
this Agreement or any Transferred Asset shall contain any untrue statement of a
material fact or omit to state a material fact necessary to make the Mortgage
Document, information, certificate, statement or report not misleading.

 

2.             Eligibility
Representations. Seller hereby represents and warrants to Buyer, as
to each Mortgage Loan (except as otherwise specified below), as of the related
Purchase Date and at all times thereafter until and including such time as such
Mortgage Loan is sold to a Mortgage Loan Buyer in accordance with the terms
hereof, as follows:

 

(a)           Each Mortgage Loan is an
Eligible Loan.

 

(b)           Each Mortgage creates a
valid lien on, or a perfected security interest with respect to the Mortgaged
Property securing the related Mortgage Note (subject only to Permitted
Encumbrances).

 

(c)           In the case of each Mortgage
Loan, any and all requirements of any Federal, state, local law, regulation or
order, including usury, applicable to such Mortgage Loan have been complied
with

 

(d)           In the case of each Mortgage
Loan, to the Seller’s knowledge after the exercise of reasonable diligence, all
information supplied by, on behalf of, or concerning the related Mortgagor is
true, accurate and complete in all material respects and does not contain any
statement that is or will be inaccurate or misleading in any material respect.

 

(e)           Each imaged Mortgage
Document represents a true, complete, and correct copy of the original Mortgage
Document in all respects, including all signatures conforming with signatures
contained in the original Mortgage Document, no information having been added
or deleted, and no imaged Mortgage Document having been manipulated or altered
in any manner. Each imaged Mortgage Document is clear

 

2

 

and legible, including
accurate reproductions of photographs. No original Mortgage Documents have been
or will be altered in any manner.

 

(f)            As of the related Purchase
Date, no payment of principal and/or interest on any Mortgage Loan is more than
zero days past the date late charges would be assessed as of the Purchase Date
and no Mortgage Loan has been so delinquent more than once in the 12-month
period prior to the related Purchase Date.

 

(g)           The information set forth in
the related Mortgage Loan schedule with respect to each Mortgage Loan is true
and correct in all material respects at the date or dates respecting which such
information is furnished.

 

(h)           The origination and
collection practices used by Seller with respect to each Mortgage Note and
Mortgage are in all respects legal and to the Seller’s knowledge after the
exercise of reasonable diligence, have been conducted in accordance with the
Approved Investor Guides. Each Mortgage Loan will be serviced by Seller in
accordance with the terms of the related Mortgage Note.

 

(i)            To Seller’s knowledge after
the exercise of reasonable diligence, no Purchase Commitment, as assigned to
Buyer hereunder as of its related closing date, is subject to any right of
rescission, set-off, counterclaim or defense that would prevent Buyer (or
Seller or Buyer’s assignees, acting on its behalf) from exercising the rights
of Seller with respect to such Purchase Commitment, as assigned to Buyer
hereunder.

 

(j)            In the case of each Mortgage
Loan, Seller has provided Buyer all information required to be delivered in Schedule
I and all such information is true, accurate and complete in all respects.

 

(k)           To Seller’s knowledge after
the exercise of reasonable diligence, each Mortgage Loan complies with a
Purchase Commitment.

 

(l)            In the case of each Mortgage
Loan, to the Seller’s knowledge, after the exercise of reasonable diligence,
all origination information and data provided by Seller with respect to such
Mortgage Loan is true and correct as of the origination date.

 

(m)          In the case of each Mortgage
Loan, Seller has not committed any negligent act or omission that has had an
adverse effect on the value of the related Mortgage or Mortgaged Property.

 

3.             Additional
Representations. In addition, notwithstanding any duplication of the
representations and warranties set forth above, the Seller hereby makes, as to
each Mortgage Loan, as of the related Purchase Date and at all times thereafter
until and including such time as such Mortgage Loan is sold to a Mortgage Loan
Buyer in accordance with the terms hereof, each of the representations and
warranties with respect to such Mortgage Loan that Seller would make for the
benefit of the Approved Investor if Seller were selling and delivering such
Mortgage Loan directly to the Approved Investor pursuant to the related
Purchase Commitment, including, without limitation, each of the representations
and warranties set forth in the Approved Investor Guides during such period
which are applicable to such Mortgage Loan; provided, however,
that

 

3

 

to the extent such representations
and warranties relate to the creditworthiness of the related Mortgagor, Seller
hereby makes such representations and warranties solely as of the related
Purchase Date.

 

4

 

 

SCHEDULE
II

 

PERFECTION
REPRESENTATIONS, WARRANTIES AND COVENANTS

 

In addition to the
representations, warranties and covenants contained in the Master Loan Purchase
and Sale Agreement (this “Agreement”), to induce Buyer to enter into this
Agreement, Seller hereby represents, warrants, and covenants to Buyer as
follows, on the date hereof and on each applicable Purchase Date hereafter:

 

General

 

1.             This Agreement creates a
valid and continuing security interest (as defined in the applicable UCC) in
Seller’s rights, title and interest in all Mortgage Loans accepted by Buyer for
purchase under this Agreement, including the related contractual rights and all
collateral related thereto now existing or hereafter arising in favor of Buyer,
which security interest is prior to all other Liens (other than Permitted
Encumbrances), and is enforceable as such as against creditors of and
purchasers from Seller.

 

2.                The Mortgage Loans
transferred by Seller to Buyer constitute “instruments” or “payment intangibles”
and the related contractual rights constitute “general intangibles” within the
meaning of the UCC as in effect in the State of New York.

 

3.             The Settlement Account, the
Seller Account and all subaccounts thereof constitute either deposit accounts
or securities accounts.

 

4.                The securities intermediary
for the Settlement Account and the Seller Account has agreed to treat all
assets credited to the Settlement Account and the Seller Account as “financial
assets” within the meaning of the applicable UCC.

 

Creation

 

5.             With regard to those
Mortgage Loans sold by Seller to Buyer hereunder, immediately prior to the
transfer of the Mortgage Loans by Seller to Buyer, Seller owned and had good
and marketable title to such Mortgage Loans and related contractual rights free
and clear of any Lien, claim or encumbrance of any Person (other than Permitted
Encumbrances).

 

6.             Seller has received or will
receive prior to the time of sale all consents and approvals to the sale of
Mortgage Loans and the related contractual rights to Buyer required by the
terms of such Mortgage Loans and related contractual rights.

 

7.             To the extent properly
credited to the Settlement Account, the Seller Account or subaccounts thereof
constitute security entitlements, certificated securities or uncertificated
securities, Seller has received all consents and approvals required to transfer
to Buyer its interest and rights in the Settlement Account and the Seller
Account.

 

1

 

Perfection

 

8.             Seller has caused or will
have caused, within ten days after the effective date of this Agreement, the
filing of all appropriate UCC financing statements in the proper filing office
in the appropriate jurisdictions under applicable law in order to perfect in
accordance with the UCC the security interest in the Mortgage Loans and related
contractual rights granted by Seller to Buyer under this Agreement. Such
financing statement shall describe such Mortgage Loans and related contractual
rights and contain a statement that: “A purchase of or acquisition of a
security interest in any collateral described in this financing statement will
violate the rights of the Secured Party.”

 

9.             With respect to the
Settlement Account, the Seller Account and all subaccounts that constitute
deposit accounts, either:

 

(a)           Seller has delivered to
Buyer and its assigns a fully-executed agreement pursuant to which the bank
maintaining the deposit accounts has agreed to comply with all instructions
originated by Buyer or its assigns directing disposition of the funds in the
Settlement Account and the Seller Account without further consent by Seller; or

 

(b)           Seller has taken all steps
necessary to cause Buyer or its assigns to become the sole “customer” (within
the meaning of Section 9-104 of the UCC) of the bank with respect to each
of the Settlement Account and the Seller Account.

 

10.           With respect to the
Settlement Account, the Seller Account or subaccounts thereof that constitute
securities accounts or security entitlements, either:

 

(a)           Seller has delivered to
Buyer a fully-executed agreement pursuant to which the securities intermediary
has agreed to comply with all instructions originated by Buyer or its assigns
relating to the Settlement Account and the Seller Account without further
consent by Seller; or

 

(b)           Seller has taken all steps
necessary to cause the securities intermediary to identify

in its records Buyer or its assigns as the person having a security entitlement
against the securities intermediary in the Settlement Account and the Seller Account.

 

Priority

 

11.           Other than the transfer of
the Mortgage Loans and the related contractual rights to Buyer under this
Agreement, Seller has not pledged, assigned, sold, granted a security interest
in, or otherwise encumbered or conveyed any of the Mortgage Loans. Seller has
not authorized the filing of, or is not aware of any UCC financing statements
against itself or Buyer that include a description of collateral covering the
Mortgage Loans, other than any UCC financing statements (i) relating to the
sale of Mortgage Loans by Seller to Buyer under this Agreement or
(ii) that have been terminated.

 

12.           Seller is not aware of any
judgment, ERISA or tax lien filings against itself.

 

2

 

13.                None of the instruments that
constitute or evidence the Mortgage Loans transferred by Seller has any marks
or notations indicating that they have been pledged, assigned or otherwise
conveyed to any Person other than Buyer or the Approved Investor under this
Agreement.

 

14.                Neither the Settlement
Account, the Seller Account nor any subaccount thereof is in the name of any
Person other than Buyer or in the name of its nominee. Seller has not consented
for the securities intermediary or bank of each of the Settlement Account and
the Seller Account to comply with entitlement orders or other instructions of
any person other than Buyer.

 

Survival
of Perfection Representations

 

Notwithstanding any other
provision of this Agreement, the Perfection Representations contained in this Schedule
II shall be continuing, and remain in full force and effect
(notwithstanding any termination of any of this Agreement) until such time as
all of Seller’s obligations have been finally and fully paid and performed.

 

No
Waiver

 

The parties to this Agreement
shall not waive any of the Perfection Representations, and shall not waive a
breach of any of the Perfection Representations.

 

3

 

SCHEDULE III

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

1.             Representations,
Warranties and Covenants of Buyer. Buyer represents and
warrants to, and covenants with, Seller that, as of the date hereof and each
Purchase Date:

 

(a)           Due
Organization.  Buyer is a
limited liability company duly formed, validly existing and in good standing
under the laws of the State of Delaware.

 

(b)           Due
Authorization; Enforceability.  This Agreement
to which Buyer is a party, assuming due authorization, execution and delivery
by the other parties thereto, constitutes a valid and legally binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other similar
laws of general applicability relating to or affecting creditors’ rights and to
general equity principles, regardless of whether such enforcement is considered
in a proceeding in equity or at law.

 

(c)           No Conflicts.  The execution and delivery by Buyer of this Agreement, and all
documents or instruments contemplated hereby which Buyer has executed and
delivered and its performance of and compliance with the terms of this
Agreement will not violate Buyer’s limited liability company agreement or
certificate of formation, and will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other material agreement
or instrument to which Buyer is a party or by which Buyer or to which any
property or assets of Buyer is subject.

 

2.             Representations,
Warranties and Covenants of Seller. Seller represents and
warrants to, and covenants with, Buyer that, as of the date hereof and each
applicable Purchase Date:

 

(a)           Due
Organization.  Seller is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and has all powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. Seller is licensed and qualified to transact
the mortgage origination business, in accordance with accepted practice and
prudent guidelines, in, and is in good standing under the laws of, each state
where a Mortgaged Property is located or is otherwise exempt under applicable
law from such licensing and qualification or is otherwise not required under
applicable law to effect such licensing and qualification and no demand for
such licensing or qualification has been made upon Seller by any state having
jurisdiction, and in such event Seller is or will be in compliance with the
laws of any state to the extent necessary to insure the enforceability of each
Mortgage Loan.

 

(b)           Due
Authorization; Enforceability.  The execution and delivery of this Agreement by Seller and the
performance by Seller of the obligations to be performed by it hereunder have
been duly authorized by any necessary corporate or other

 

1

 

similar action. Seller has
the full legal power, right and actual authority to hold each Mortgage Loan, to
sell each Mortgage Loan and to execute, deliver and perform, and to enter into
and consummate, all transactions contemplated by this Agreement; including the
ability to effect a valid and enforceable assignment of all of Seller’s rights,
title and interest under the Mortgage Notes, Mortgages, and the other Mortgage
Documents. This Agreement and each assignment in blank by Seller to Buyer of a
Mortgage or Assignment of Leases (assuming the insertion of Buyer’s name), when
duly executed and delivered by Seller, constitutes a legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
similar laws of general applicability relating to or affecting creditors’
rights and to general equity principles, regardless of whether such enforcement
is considered in a proceeding in equity or at law.

 

(c)           Compliance with Constituent Documents. Neither the
execution and delivery of this Agreement, the origination of the Mortgage Loans
by Seller, the sale of the Transferred Assets to Buyer, the consummation of the
transactions contemplated by this Agreement, nor the fulfillment of or
compliance with the terms and conditions of this Agreement, will violate Seller’s
charter, limited liability operating agreement, or other governing or
constituent documents.

 

(d)           No Conflicts. The execution and delivery
of this Agreement by Seller and the performance by Seller of the obligations to
be performed by it hereunder do not, and will not, (i) violate any
provision of law, rule, regulation, order, writ, judgment, decree,
determination or award presently in effect having applicability to Seller, or
(ii) result in a breach of or constitute a default or potential default
(or an event which with notice or lapse of time, or both, would constitute a
default or potential default) under any indenture or loan or credit agreement
or any other material agreement, lease or instrument to which Seller is a party
or by which it or its properties or assets may be bound or affected. All
parties that have had any interest in the Mortgage Loans, whether as mortgagee,
assignee or pledgee are (or during the period in which they held and disposed
of such interest, were) in compliance with all applicable licensing
requirements of the federal, state, and local government wherein the Mortgaged
Property is located.

 

(e)           Litigation. There are no actions, suits or proceedings
pending or, to Seller’s knowledge, threatened against or affecting Seller or
the properties of Seller before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which, if determined adversely to Seller, would materially and adversely affect
the sale of the Transferred Assets to Buyer, the execution, delivery or
enforceability of this Agreement, or have a material adverse effect on the
financial condition, properties or operations of Seller.

 

(f)            No Consent Required.  No consent, approval, authorization, exemption or
order of, or notice to or registration or filing with, any court or
governmental agency, authority or administrative or regulatory body is required
for the execution, delivery and performance by Seller of or compliance by
Seller with this Agreement, the delivery of the Mortgage Documents to Buyer,
the sale of the Transferred

 

2

 

Assets
to Buyer or the consummation of the transactions contemplated by this
Agreement.

 

(g)           No Bulk Transfer. The transfer, assignment and
conveyance of the Transferred Assets by Seller pursuant to this Agreement is
not subject to the bulk transfer or any similar statutory provision in effect
in any applicable jurisdiction. Seller is not transferring the Transferred
Assets with an actual intent to hinder, delay or defraud any of its creditors.

 

(h)           No Broker. Seller has not employed or otherwise engaged
any broker or finder in connection with the negotiation or execution of this
Agreement; nor has Seller conducted any negotiations with respect to this
Agreement nor with respect to the transactions contemplated by this Agreement
or otherwise taken any actions, in such a manner as to give rise to any
claims(s) against Buyer for any brokerage commission, finder’s fee or similar
payment.

 

(i)            Solvency. On the date of each Purchase, Seller is
Solvent, the sale of the Transferred Assets will not cause Seller to become
insolvent and Seller is not aware of any pending insolvency. The consideration
received by Seller upon the sale of the Transferred Assets under this Agreement
constitutes fair consideration and reasonably equivalent value for the Mortgage
Loans.

 

(j)            Transactions with Affiliates. Seller is not a party to a
material transaction with any of its affiliates except transactions in the
ordinary course of business and upon fair and reasonable terms not materially
less favorable than it could obtain or could become entitled to in an arm’s-length
transaction with a Person that was not its affiliate.

 

(k)           Taxes. All tax returns (including income, payroll and
other) of Seller required to be filed have been filed (or extensions have been
granted) before delinquency, except for returns for which the failure to file
is not a material adverse event, and all Taxes imposed upon Seller that are due
and payable have been paid before delinquency.

 

(l)            Property and Liens. Seller has good and
marketable title to all its property reflected on its most recent Financials
except for property that is obsolete or that has been disposed of in the
ordinary course of business or, after the date of this Agreement, as otherwise
permitted by this Agreement all Transferred Assets are free and clear of any
Liens and adverse claims of any nature.

 

(m)          Chief Executive Office. The principal place of
business and chief executive office of Seller is located and has been located
within the State of Maryland since its formation. The “location” of Seller as
defined in the UCC is in the State of Delaware.

 

(n)           No Prior Names. The exact legal name of
Seller is, and since its formation has been, the name set forth for it on the
signature page hereto, unless otherwise disclosed to Buyer.

 

3

 

3.             Representations,
Warranties and Covenants of Servicer. Servicer represents and
warrants to, and covenants with, Buyer that, as of the date hereof and each
applicable Purchase Date:

 

(a)           Servicer has complied with
all applicable laws relating to licensing, qualification to do business and
approval to service Mortgage Loans.

 

(b)           In the case of each Mortgage
Loan, the excess of the Mortgage Interest Rate over the Pricing Rate is at
least equal to the amount of interest income that the related Purchase
Commitment provides may be retained by Servicer as compensation for servicing
such Mortgage Loan.

 

(c)           The execution and delivery
by Servicer and its performance of and compliance with the terms of this
Agreement will not violate any term or condition of Servicer’s charter or
bylaws, any agreement or instrument to which Servicer is a party or any
judgment, order or regulation to which Servicer is subject.

 

(d)           In the case of each Mortgage
Loan, any action taken by it when enforcing the rights of the holder of the
related Mortgage or Servicer under the related Mortgage Documents will not
violate the terms of any covenant in the related Mortgage Documents.

 

4

 

SCHEDULE
IV

 

COVENANTS

 

1.             Covenants
of Seller. Seller covenants and agrees that, unless otherwise
consented to by Buyer, from and after the date hereof and until the date when
all Mortgage Loans purchased hereunder have been sold or repurchased:

 

(a)           Reporting Requirements.  Seller shall
furnish, or cause to be furnished, to Buyer the following, all in form and
detail reasonably satisfactory to Buyer:

 

(i)                Annual Financials
of Seller. Promptly when available, but within ninety (90) days
after the end of each fiscal year of Seller, Financials of Seller as of the
close of such fiscal year, accompanied by the related report prepared by
independent certified public accountants reasonably acceptable to Buyer and
stating that those statements were prepared according to GAAP applied on a
basis consistent with prior periods except for such changes in GAAP concurred
in by Seller’s independent public accountants;

 

(ii)               Quarterly Financial
Statements of Seller. Within forty-five (45) days after the end of
each calendar quarter, Seller’s unaudited quarterly Financials;

 

(iii)              Compliance
Certificate. Simultaneously with the delivery of the reports
described in clauses (i) and (ii) above, a compliance certificate,
certified by an Officer of Seller to be true and correct, certifying that such
financial statements fairly present the financial condition and the results of
operations of Seller on the dates and for the periods indicated, on the basis
of GAAP, subject, in the case of interim financial statements, to normally
recurring year-end adjustments; (iii) stating that Seller is in compliance
with all covenants in this Schedule IV,  and containing the
calculations evidencing such compliance; (iv) stating whether any Event of
Default exists on the date of such certificate and, if any Event of Default
then exists, setting forth the details thereof and the action which Seller is
taking or proposes to take with respect thereto.

 

(iv)             Notices. Promptly upon
becoming aware thereof, notice of (A) the commencement of, or any
determination in, any legal, judicial or regulatory proceedings, (B) any
dispute between Seller and any governmental or regulatory body, (C) any
event or condition, which, in any case of (A) or (B), if adversely
determined, would have a material adverse effect on (1) the validity or
enforceability of this Agreement, (2) the financial condition or business
operations of Seller or (3) the ability of Seller to fulfill its obligations
under this Agreement, (D) any material adverse change in the business,
operations, prospects or financial condition of Seller, including the
insolvency of Seller; (E) any fraud discovered with respect to any
Eligible Loan or (F) any material adverse change in Seller’s relationship
with the Approved Investor.

 

1

 

(v)              Other
Information. Promptly upon reasonable request by Buyer,
information (not otherwise required to be furnished under this Agreement) respecting
the business affairs, assets, and liabilities of Seller and opinions,
certifications, and documents in addition to those mentioned in this Agreement;

 

(b)           Books and Records. Seller shall maintain books,
records, and accounts necessary to prepare Financials according to GAAP;

 

(c)           Inspections. Upon reasonable request but subject to any
confidentiality requirements imposed by this Agreement or by law, Seller shall
allow Buyer, or its representatives to review reports, files, and other records
relating to the Transferred Assets and the servicing thereof and to make and
take away copies, to conduct tests or investigations, and to discuss any of its
affairs, conditions and finances with its directors, officers, or
representatives from time to time during reasonable business hours; provided, that if a Default exists, Buyer
may inspect Seller’s Mortgage Loan files at any time;

 

(d)           Taxes. Seller shall promptly pay when due any and all Taxes
other than Taxes of which the failure to pay would not have a material adverse
effect or which are being contested in good faith by lawful proceedings
diligently conducted, against which reserve or other provision required by GAAP
has been made, and in respect of which levy and execution of any Lien have been
and continue to be stayed;

 

(e)           Maintenance of Existence, Assets, and Business. Seller shall (A) maintain
its legal existence and good standing in its state of organization and its
authority to transact business in all other states where failure to maintain
its authority to transact business would have a material adverse effect, and
(B) maintain all licenses, permits, and franchises necessary for its
business where failure to do so would have a material adverse effect;

 

(f)            Insurance. Seller shall
(a) maintain with financially sound, responsible and reputable insurers,
insurance with respect to its assets and business against such liabilities,
casualties, risks, and contingencies and in such types and amounts, including a
fidelity bond and an errors and omissions policy in a minimum amount of
$3,000,000 in form and with the coverages, with a company, and with respect to
such individuals or groups of individuals, as shall satisfy prevailing Agency
requirements applicable to a qualified mortgage institution and otherwise as is
customary in the case of Persons engaged in the same or similar businesses and
similarly situated, (b) with respect to the Mortgage Loans maintain with
financially sound, responsible and reputable title insurance companies, which
are duly qualified as such under the laws of the states in which the Mortgaged
Properties are located, duly authorized and licensed in such states to transact
the title insurance business and to write the title insurance provided by the
title insurance policy or binder issued by it, and approved as an insurer by
the Approved Investor and (c) upon Buyer’s request, furnish to Buyer from
time to time (i) a summary of its insurance coverage, in form and
substance satisfactory to Buyer, and (ii) copies of the applicable
policies;

 

2

 

(g)           Purchase Commitments. Seller shall perform and
observe in all material respects each of the provisions of each Purchase
Commitment on its part to be performed or observed and cause all things to be
done that are necessary to have the Mortgage Loan and Mortgage Documents
covered by such Purchase Commitment comply with its respective requirements;

 

(h)           Limitation on Mergers, Issuance of Securities. Seller will not
(i) merge or consolidate with or into any other Person, or (ii) issue
any additional membership interests or other securities or any options,
warrants or other rights to acquire such additional interests or other
securities, without giving Buyer prior written notice;

 

(i)            Limitation on Dividends and Redemption. Seller will not
directly, or indirectly, make any capital contribution to or purchase, redeem,
acquire or retire any securities in any Person (whether such interests are now
or hereafter issued, outstanding or created), or cause or permit any reduction
or retirement of the membership interests of Seller without giving Buyer prior
written notice. Seller may declare or pay any dividends on or make any other
distribution in respect of any interest in it, so long as the net worth
requirement set forth in the Term Sheet is met;

 

(j)            Agency Approval. Seller shall take all
necessary action to maintain its Agency Approvals at all times during the term
of this Agreement. If, for any reason, Seller ceases to maintain such Agency
Approvals, Seller shall promptly and immediately notify Buyer;

 

(k)           Monetary Obligations. Seller shall satisfy any
monetary obligations owed by Seller to Buyer that do not have a specified
payment date in the Agreement within two (2) Business Days of demand
therefor;

 

(l)            Indemnification Payments. Seller shall
notify Buyer of payments made by Seller to the Approved Investor under any
repurchase or indemnification obligations relating to the Transferred Assets;

 

(m)          Approved Investor Seller/Servicer. Seller shall maintain its
status as an Approved Investor approved seller/servicer at all times;

 

(n)           Compliance with Law. Seller shall comply in all
material respects with all laws, rules, regulations, and all orders of any
governmental authority; and

 

(o)           Net Worth. Seller shall maintain a minimum adjusted net
worth of $2,000,000 and minimum liquid assets of $200,000, each as calculated
in accordance with Sections 3.3 (b) and (c) of the Freddie Mac
Multifamily Seller/Servicer Guide.

 

3

 

SCHEDULE
V

 

DEFAULTS
AND REMEDIES

 

1.             Default. The term “Default” means the
existence or occurrence of any one or more of the following:

 

(a)           Obligation. Seller fails to pay any obligation when
due under this Agreement.

 

(b)           Covenants. Seller or Servicer fails to punctually
and properly perform, observe, and comply with any covenant, agreement, or
condition contained herein, and that failure continues for a period of five
(5) calendar days after Seller or Servicer, as applicable, has, or, with
the exercise of reasonable investigation, should have, notice of it.

 

(c)           Misrepresentation. Any representation or warranty made by or
on behalf of Seller or Servicer in this Agreement or other writing by Seller or
Servicer, as applicable, and furnished in connection with this Agreement,
proves to have been incorrect or misleading in any material respect as of the
date made or deemed made.

 

(d)           Debtor Law. Seller (i) voluntarily seeks,
consents to, or acquiesces in the benefit of any Debtor Law, or
(ii) becomes a party to or is made the subject of any proceeding provided
for by any Debtor Law.

 

(e)           Judgments. Seller fails to pay any money judgment
against it at least ten days prior to the date on which any of the assets of
Seller may be lawfully sold by the judgment creditor to satisfy that judgment.

 

(f)            Attachments. Seller fails to have discharged within a
period of thirty (30) days after the commencement thereof, any attachment,
sequestration, or similar proceeding against any of the assets of Seller.

 

(g)           Unenforceability. Any material provision of this Agreement
for any reason ceases to be in full force and effect or is fully or partially
declared null and void or unenforceable or the validity or unenforceability of
this Agreement is challenged or denied by Seller.

 

(h)           Change of Control. Seller fails to provide advance notice of
any “change of control” of Seller or any change in the CEO, CFO or COO of
Seller. “Change of Control” shall mean if any person not currently a member of
the Seller shall possess, directly or indirectly, the power to direct or cause
the direction of the management and policies of Seller, whether through the
ownership of voting securities, by contract or otherwise.

 

(i)            Agency
Qualifications Seller
ceases to be an eligible lender, issuer, seller or servicer for the Approved
Investor, (ii) any Agency imposes any sanctions upon Seller resulting in a
material adverse effect, (iii) any Agency terminates or revokes

 

1

 

Seller’s right to service for such Agency, or
(iv) any Agency initiates any transfer of servicing from Seller.

 

2.             Remedies. Upon the occurrence of a Default, Buyer
may do any one or more of the following: reduce any claim to judgment;
foreclose upon or otherwise enforce any Liens; commence termination of all the
rights and obligations of Servicer under this Agreement, notify the applicable
Mortgagors of Servicer’s termination, and exercise any other rights in this
Agreement, at law, in equity, or otherwise that Buyer may direct.

 

3.             Right of Offset. Seller hereby grants to Buyer a right of
offset, to secure Seller’s obligations hereunder, upon any and all monies,
securities, or other property of Seller, and the proceeds therefrom now or
hereafter held or received by or in transit to Buyer from or for the account of
Seller, whether for safekeeping, custody, pledge, transmission, collection, or
otherwise, and also upon any and all deposits (general or special, time or
demand, provisional or final) and credits of Seller, and any and all claims of
Seller against Buyer at any time existing. Upon the occurrence of any Default,
Buyer is authorized at any time and from time to time, without notice to
Seller, to offset, appropriate, and apply any and all of those items against
Seller’s obligations. Notwithstanding anything in this Section 3 or
elsewhere in this Agreement to the contrary, Buyer shall not have any right to
offset, appropriate, or apply any accounts of Seller which consist of escrowed
funds (except and to the extent of any beneficial interest which Seller have in
such escrowed funds) which have been so identified by Seller in writing at the
time of deposit thereof.

 

4.             Performance by Buyer. Should any covenant, duty, or agreement
of Seller or Servicer fail to be performed according to the terms of this
Agreement or of any said document delivered under this Agreement, Buyer may, at
its option, after notice to Seller or Servicer, as the case may be, perform, or
attempt to perform, such covenant, duty, or agreement on behalf of Seller or
Servicer. In such event, Seller or Servicer, as the case may be, shall, at the
request of Buyer, promptly pay any amount reasonably expended by Buyer in such
performance or attempted performance to Buyer at its principal place of
business, together with interest
thereon at the Default Rate from the date of such expenditure by Buyer until
paid. Notwithstanding the foregoing, it is expressly understood that Buyer does
not assume and shall never have, except by express written consent of Buyer,
any liability or responsibility for the performance of any duties of Seller or
Servicer under this Agreement or under any other document delivered under this
Agreement.

 

5.             Cumulative Rights. All rights available to Buyer under this
Agreement or under any other document delivered under this Agreement shall be
cumulative of and in addition to all other rights granted to Buyer at law or in
equity whether or not Buyer shall have instituted any suit for collection,
foreclosure, or other action in connection with this Agreement or any other
document delivered under this Agreement.

 

2

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