Document:

Amended and Restated Repurchase Agreement Governing Purchases and Sales

 EXHIBIT 10.3 
  
 EXECUTION COPY 
  
 AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT 
 GOVERNING 
 PURCHASES AND SALES OF MORTGAGE LOANS 
  
 DATED AS OF MARCH 18, 2003 
  
 BETWEEN 
  
 LEHMAN BROTHERS BANK, FSB, 
 AS BUYER 
  
 AND 
  
 WMC MORTGAGE CORP., 
 AS SELLER 

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page

	 1.
	  	 APPLICABILITY
	  	1
	 2.
	  	 DEFINITIONS
	  	1
	 3.
	  	CONDITIONS PRECEDENT; INITIATION; CONFIRMATION; TERMINATION; MAXIMUM TRANSACTION AMOUNTS	  	17
	 4.
	  	 COLLATERAL AMOUNT MAINTENANCE
	  	20
	 5.
	  	 INCOME PAYMENTS
	  	21
	 6.
	  	 SECURITY INTEREST
	  	22
	 7.
	  	 PAYMENT, TRANSFER AND CUSTODY
	  	22
	 8.
	  	 REHYPOTHECATION OR PLEDGE OF PURCHASED MORTGAGE LOANS
	  	25
	 9.
	  	 SUBSTITUTION
	  	25
	 10.
	  	 REPRESENTATIONS AND WARRANTIES
	  	26
	 11.
	  	 NEGATIVE COVENANTS OF THE SELLER
	  	29
	 12.
	  	 AFFIRMATIVE COVENANTS OF THE SELLER
	  	33
	 13.
	  	 EVENTS OF DEFAULT
	  	36
	 14.
	  	 REMEDIES
	  	39
	 15.
	  	 SINGLE AGREEMENT
	  	42
	 16.
	  	 NOTICES AND OTHER COMMUNICATIONS
	  	43
	 17.
	  	 ENTIRE AGREEMENT; SEVERABILITY
	  	43
	 18.
	  	 NON-ASSIGNABILITY
	  	43
	 19.
	  	 TERMINABILITY
	  	43
	 20.
	  	 INDEMNIFICATION
	  	43
	 21.
	  	 GOVERNING LAW
	  	44
	 22.
	  	 CONSENT TO JURISDICTION
	  	44
	 23.
	  	 NO WAIVERS, ETC.
	  	44
	 24.
	  	 INTENT
	  	44
	 25.
	  	 SERVICING
	  	44
	 26.
	  	 DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
	  	45
	 27.
	  	 NETTING
	  	45
	 28.
	  	 MISCELLANEOUS
	  	46

  

 i 

					
	 	  	 	  	SCHEDULES
			
	 Schedule 1
	  	–	  	Representations and Warranties Regarding Mortgage Loans
	 Schedule 2
	  	–	  	Underwriting Guidelines
	 Schedule 3
	  	–	  	Authorized Officers of Seller
			
	 	  	 	  	EXHIBITS
			
	 Exhibit I
	  	–	  	Confirmation (Form)
	 Exhibit II
	  	–	  	Custodial Agreement (Form)
	 Exhibit III
	  	–	  	Custodial Delivery (Form)
	 Exhibit IV
	  	–	  	Request for Purchase (Form)
	 Exhibit V
	  	–	  	Guaranty (Form)
	 Exhibit VI
	  	–	  	Blocked Account Agreement (Form)
	 Exhibit VII
	  	–	  	Power of Attorney (Form)
	 Exhibit VIII
	  	–	  	Reserved
	 Exhibit IX
	  	–	  	Electronic Tracking Agreement (Form)
	 Exhibit X
	  	–	  	Monthly Report (Form)

  

 ii 

 AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT GOVERNING 
 PURCHASES AND SALES OF MORTGAGE LOANS 
  
 DATED AS OF MARCH 18, 2003 
  
 BETWEEN 
  
 LEHMAN BROTHERS BANK, FSB, 
 AS BUYER 
  
 AND 
  
 WMC MORTGAGE CORP., 
 AS SELLER 
  
 1. APPLICABILITY

  
 From time to time until the Final Repurchase Date, Lehman
Brothers Bank, FSB (“Buyer”) shall, subject to the terms hereof, enter into transactions upon the request of WMC Mortgage Corp. (“Seller”) in which Seller agrees to transfer to Buyer Mortgage Loans against the
transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Mortgage Loans at a date certain or on demand, as specified in the Confirmation, against the transfer of funds by Seller. Each such transaction shall be
referred to herein as a “Transaction” and shall be governed by this Agreement and the related Confirmation, unless otherwise agreed in writing. Buyer shall have the option, upon the completion of a Transaction and receipt of a
Request for Purchase, to enter into additional Transactions with respect to the related Mortgage Loans provided that the maximum aggregate term any Mortgage Loan may be subject to Transactions shall not exceed the earlier of (x) ninety (90) days
(or, subject to the limitations set forth in this Agreement, one hundred eighty (180) days) or (y) the Final Repurchase Date. Notwithstanding anything in this Agreement to the contrary, Buyer shall have no obligation to enter into any Transaction
hereunder if there shall have occurred any material adverse change, as determined by Buyer in its reasonable judgment, in the financial condition of Seller, the financial markets generally or the secondary market for Mortgage Loans. Buyer shall
promptly notify Seller of any determination by Buyer that any of the foregoing has occurred. All obligations under the Transactions shall be recourse to Seller. 
  

2. DEFINITIONS 
  
 “Act of Insolvency” means, with respect to any party and its Affiliates, (i) the filing of a petition, commencing, or authorizing the
commencement of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law relating to the protection of creditors, or suffering any such petition or proceeding to be commenced by another which
is consented to, not timely contested or results in entry of an order for relief, (ii) the seeking of the appointment of a receiver, trustee, custodian or similar official for such party or an Affiliate or any substantial part of the property of
either, (iii) the appointment of a receiver, conservator, or manager for such party or an Affiliate by any governmental agency or authority having the jurisdiction to do so, (iv) the making or offering by such party or an Affiliate of a composition
with its creditors or a general assignment for the benefit of creditors, (v) the admission by such party or an Affiliate of such party of its inability to pay its debts or discharge its obligations as they become due or mature, or (vi) any
governmental authority or agency or any person, agency or entity acting or purporting to act under governmental authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part
of the property of such party or of any of its Affiliates, or shall have taken any action to displace the management of such party or of any of its Affiliates or to curtail its authority in the conduct of the business of such party or of any of its
Affiliates. 

 “Additional Costs” has the meaning specified in Section 3(e). 
  
 “Additional Loans” means Mortgage Loans provided by Seller
to Buyer or its designee pursuant to Section 4(a). 
  
 “Affiliate” means, with respect to any Person, another Person that directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, “control”
(including, with is correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership
of securities or partnership or other ownership interests, by contract or otherwise). 
  
 “Affirmation of Guaranty” means that Affirmation of Guaranty, dated as of March 24, 2003, as amended, modified or supplemented from time to time, affirming the Guaranty, dated as of March 19, 2001,

  
 “Aged Mortgage Loan” means a Mortgage Loan
that has been subject to Transactions for more than ninety (90) days and up to one hundred eighty (180) days and that is not more than 29 days Delinquent. 
  
 “Agreement” means this Amended and Restated Master Repurchase Agreement Governing Purchases and Sales of Mortgage Loans between Buyer and
Seller, as amended from time to time. 
  
 “Balloon
Mortgage Loan” means any Mortgage Loan that provided on the date of origination for scheduled payments by the Mortgagor based upon an amortization schedule extending beyond its maturity date. 
  
 “Blocked Account Agreement” has the meaning specified in
Section 5(b) hereof. 
  
 “Breakage Costs” has the
meaning specified in Section 3(f). 
  
 “Business
Day” means a day other than (i) a Saturday or Sunday, or (ii) a day on which the New York Stock Exchange is authorized or obligated by law or executive order to be closed. 
  
 “Buyer” has the meaning specified in Section 1. 
  
 “Capital Lease”, as applied to any Person or entity, shall
mean any lease of any property (whether real, personal or mixed) by that Person or entity as lessee that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person or entity. 
  
 “Capital Stock” means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing
Person. 
  

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 “Cash Equivalents” shall mean (a) securities with maturities of 90 days or less from the
date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight
bank deposits of any commercial bank having capital and surplus in excess of $50,000,000, (c) repurchase obligations of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven days with
respect to securities issued or fully guaranteed or insured by the United States Government, (d) commercial paper of a domestic issuer rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in
either case maturing within 90 days after the day of acquisition, (e) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case
may be) are rated at least A by S&P or A by Moody’s, (f) securities with maturities of 90 days or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (b)
of this definition, or (g) shares of money market, mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. 
  
 “Collateral” has the meaning specified in Section 6. 
  
 “Collateral Deficit” means either a Market Value Collateral
Deficit or a Securitization Value Collateral Deficit. 
  
 “Collateral Information” means the following information with respect to each Mortgage Loan: (i) Seller’s loan number, (ii) the Mortgagor’s name, (iii) the address of the Mortgaged Property, (iv) the current
interest rate, (v) the original balance, (vi) the current balance as of the last day of the immediately preceding month, (vii) the paid to date and the next payment date, (viii) the appraised value of the Mortgaged Property at the time the Mortgage
Loan was originated, (ix) whether the interest rate is fixed or adjustable (and if adjustable, the “ARM” code, which includes the index, adjustment frequency, spread and caps), (x) the lien position of the Mortgage Loan on the Mortgaged
Property (and if a second lien, the outstanding principal balance of the first lien at the time the Mortgage Loan was originated and the monthly payment and maturity date of the first lien loan), (xi) the occupancy status of the Mortgaged Property
(including whether owner occupied), (xii) whether the Mortgage Loan is a Balloon Mortgage Loan, (xiii) the first payment date, (xiv) the maturity date, (xv) the principal and interest payment, (xvi) the property type of the Mortgaged Property,
(xvii) the Mortgagor’s FICO Score (where available in the Mortgage File), (xviii) the applicable Mortgage Loan grade, (xix) the social security number of the Mortgagor, (xx) the Mortgage Note date, (xxi) the prepayment penalty and prepayment
penalty type, (xxii) the delinquency status, and (xxiii) Mortgage Loan purpose (i.e. refinance, cash out refinance, home improvement, debt consolidation). 
  
 “Collateral Maintenance Amount” means, with respect to any Transaction, the amount obtained by application of the applicable Collateral
Maintenance Percentage to the Repurchase Price for such Transaction. 
  
 “Collateral Maintenance Percentage” means the amount set forth in the Confirmation with respect to each Mortgage Loan which, (1) in determining whether a Market Value Collateral Deficit exists pursuant to the second
sentence of Section 4(a) hereof shall, for each type of Mortgage Loan set forth in the far left hand column below, equal the applicable percentage set forth in the middle column below and (2) in determining whether a Securitization Value Collateral
Deficit exists pursuant to the third sentence of Section 4(a) hereof shall, for each type of Mortgage Loan set forth in the far left hand column below, equal the applicable percentage set forth in the far right hand column below: 
  

 3 

							
	Mortgage Loan Type

	 	 Percentage for Market
Value Collateral Deficit
 Determination

	 	 Percentage for Securitization
 Value Collateral Deficit
 Determination

	(a)	 	Mortgage Loan (other than the Mortgage Loans referred to in (b), (c),(d) and (e) below)	 	103%	 	105%
				
	(b)	 	Aged Mortgage Loans (more than ninety (90) and up to one hundred twenty (120) days)	 	103%	 	105%
				
	(c)	 	 Aged Mortgage Loans (more than one hundred twenty (120) and up to one hundred eighty (180)
 days)
	 	110%	 	117%
				
	(d)	 	Delinquent Mortgage Loans	 	110%	 	117%
				
	(e)	 	Repurchased Mortgage Loans	 	133%	 	n/a

  
 “Collection
Account” and “Collection Account Bank” have the meanings specified in Section 5(b) and 5(a) hereof, respectively. 
  
 “Confirmation” has the meaning specified in Section 3(c). 
  
 “Contractual Obligation” shall mean as to any Person, any provision of any security issued by such Person
or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. 
  
 “Costs” has the meaning specified in Section 20. 
  

“Custodial Agreement” means that custodial agreement, dated as of March 19, 2001, as amended, modified or supplemented from time to
time, by and among Buyer, Seller and the Custodian, the form of which is attached hereto as Exhibit II. 
  
 “Custodial Delivery” means the form executed by the Seller in order to deliver a Mortgage Loan Schedule and/or Mortgage Files to Buyer or
its designee (including the Custodian) pursuant to Section 7, a form of which is attached hereto as Exhibit III. 
  
 “Custodian” means the custodian under the Custodial Agreement. The initial custodian is Wells Fargo Bank Minnesota, National Association.

  

 4 

 “Delinquent” means, with respect to any Mortgage Loan, the period of time from the date
on which a Mortgagor fails to pay an obligation under the terms of such Mortgage Loan to the date on which such payment is made. 
  
 “Delinquent Mortgage Loans” means (x) the portion of the Mortgage Loans that are Delinquent for thirty (30) or more days and up to (and
including) fifty-nine (59) days in excess of 3% of the aggregate Repurchase Price for all Mortgage Loans which are subject to then outstanding Transactions and (y) any Mortgage Loan that is Delinquent for sixty (60) or more days and up to (but
excluding) one hundred twenty (120) days and, in either of clauses (x) or (y) above that are secured by a Mortgaged Property the title to which has not been acquired by foreclosure, deed-in-lieu of foreclosure or similar means. 
  
 “EBITDA” means, for any period, Net Income for such period
plus, without duplication and to the extent reflected as a charge in the statement of such Net Income for such period, the sum of (a) total income tax expense, (b) interest expense, (c) depreciation and amortization expense, (d) amortization
of intangibles (including, but not limited to, goodwill) and organization costs, (e) any extraordinary expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, losses
on sales of assets outside of the ordinary course of business), and (f) any other noncash charges, and minus, to the extent included in the statement of such Net Income for such period, the sum of (a) any extraordinary income or gains
(including, whether or not otherwise includable as a separate item in the statement of such Net Income for such period, gains on the sales of assets outside of the ordinary course of business) and (b) any other noncash income (other than any income
represented by a receivable that in the ordinary course would be expected to be paid in cash), all as determined on a consolidated basis. 
  
 “Electronic Tracking Agreement” means an Electronic Tracking Agreement by and among Buyer, Seller, MERS and MERS Corp. Inc., entered into
pursuant to Section 7(i), the form of which is attached hereto as Exhibit IX (with such changes as Buyer shall agree to). 
  
 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time. 
  
 “ERISA Affiliate” shall mean any trade or business (whether
or not incorporated) which, together with the Seller, is treated as single employer under Section 414(b) or (c) of the Internal Revenue Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Internal Revenue Code, is treated as
a single employer under Section 414 of the Internal Revenue Code. 
  
 “ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan; (b) the adoption of any amendment to a Plan that would require
the provision of security pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307 of ERISA; (c) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Internal
Revenue Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section 412(d) of the Internal Revenue Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan;
(e) the incurrence of any liability under Title IV of ERISA upon the termination of any Plan or the withdrawal or partial withdrawal of the Seller or any ERISA Affiliates from any Plan or Multiemployer Plan; (f) the receipt by the Seller or any
ERISA Affiliate from the Pension Benefit Guaranty Corporation of any notice relating to the intention to terminate any Plan or to appoint a trustee to administer any Plan; (g) the receipt by the Seller or any ERISA Affiliate of any notice concerning
the imposition of withdrawal liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; and (h) the occurrence of a “prohibited transaction”
with respect to which 

  

 5 

 
the Seller or any Subsidiaries is a “disqualified person” (within the meaning of Section 4975 of the Internal Revenue Code) or with respect to
which the Seller or any such Subsidiary could otherwise be liable. 
  
 “Escrow Account” has the meaning specified in Section 5(b). 
  
 “Event of Default” has the meaning specified in Section 13. 
  
 “Facility Amount” has the meaning specified in Section 3(g). 
  
 “Facility Documents” has the meaning specified in Section 3(a). 
  
 “FHLMC” means Federal Home Loan Mortgage Corporation or
Freddie Mac. 
  
 “Final Repurchase Date” means
September 17, 2004 or such earlier date on which all Purchased Mortgage Loans are required to be immediately repurchased pursuant to Section 14(a) (unless such date is extended upon mutual agreement of Buyer and Seller). 
  
 “First Mortgage” means the Mortgage that is the first lien
on the Mortgaged Property. 
  
 “FNMA” means
Federal National Mortgage Association or Fannie Mae. 
  
 “Foreign NIM Transactions” means a transaction with respect to which each of the following statements is accurate and complete: 
  
 (a) Said transaction is a net interest margin transaction in which Seller, through its special purpose Subsidiaries, sells certificates
(the “NIM Transaction Certificates”) representing credit enhancement and/or prepayment penalties and/or other similar interests that it derives from a securitization of its Mortgage Loans through investment instruments to be purchased by
U.S. and/or non-U.S. investors; 
  
 (b) To
facilitate said transaction, Seller creates or has created (i) a domestic Subsidiary which acts as a qualifying special purpose entity (the “QSPE”), and (ii) a special purpose Subsidiary organized under a non-U.S. jurisdiction and
primarily owned by the QSPE (the “Foreign Subsidiary”) which issues certain rated instruments (the “Foreign Instruments”); 
  
 (c) In said transaction, the QSPE transfers the NIM Transaction Certificates to the Foreign Subsidiary in exchange for cash resulting from
the sale of the Foreign Instruments by the Foreign Subsidiary and certain common stock ownership interests in the Foreign Subsidiary which will be received by the QSPE immediately upon consummation of such transaction; and 
  
 (d) If requested by Buyer, Seller has provided to Buyer a
written description of said transaction in detail satisfactory to Buyer. 
  
 “Foreign Instruments” and “Foreign Subsidiary” have the meanings given in the definition of “Foreign NIM Transactions.” 
  
 “GAAP” means with respect to the financial statements or
other financial information of any Person, generally accepted accounting principles in the United States set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession) which are applicable and in effect from time to time.

  

 6 

 “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over the Borrower, any of its Affiliates or any of its
properties. 
  
 “Guarantee Obligation” means a
guarantee, an endorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working
capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) property, products, materials,
supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor’s obligations or an agreement to assure a creditor against loss, and including, without limitation, causing a bank or other financial institution
to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business. 
  
 “Guarantor” means WMC Finance Co., a Delaware corporation. 
  
 “Guaranty” means the Guaranty of the aggregate Repurchase
Price from Guarantor, the form of which is attached hereto as Exhibit V and which is affirmed by the Affirmation of Guaranty. 
  
 “Hedge” means, with respect to any or all of the Mortgage Loans, any interest rate swap, cap or collar agreement or similar arrangements
providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, entered into by Seller, and reasonably acceptable to the Buyer. 
  
 “HUD” means the United States Department of Housing and
Urban Development. 
  
 “Income” means, with
respect to any Mortgage Loan at any time, any principal thereof then payable, any principal prepayments and curtailments and all interest, dividends or other distributions payable thereon. 
  
 “Indebtedness” means, for any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such
property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable within ninety (90) days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a Lien on the
property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial
institutions for account of such Person (other than a Permitted Letter of Credit); (e) Capital Leases of such Person; and (f) Indebtedness of others guaranteed by such Person. 
  
 “Interest Coverage Ratio” means for any period with respect to the Seller and it Subsidiaries, the
ratio of (a) EBITDA for such period to (b) Interest Expense for such period. 
  

 7 

 “Interest Expense” means for any period, total interest expense, both expensed and
capitalized, of the Seller and its Subsidiaries for such period with respect to all outstanding Indebtedness of the Seller and its Subsidiaries (including, without limitation, all commissions, discounts and other fees and charges owed with respect
to letters of credit and bankers’ acceptance financing and net costs under interest rate protection agreements), determined on a consolidated basis in accordance with GAAP, net of interest income of the Seller and its Subsidiaries for such
period (determined on a consolidated basis in accordance with GAAP). 
  
 “Interest Period” means, with respect to any Transaction, (i) initially, the period commencing on the related Purchase Date and ending on the day immediately preceding the next Payment Date (the “Interest Reset
Date”), and (ii) thereafter, each period from and including the day following the immediately preceding Interest Reset Date up to and including the succeeding Interest Reset Date or such shorter period as agreed among Buyer and Seller when
the current Interest Period expires. Notwithstanding the foregoing, each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate calendar month
when the Interest Period expires) shall end on the last Business Day of the appropriate calendar month. Notwithstanding the foregoing: (i) no Interest Period may begin before and end after the Final Repurchase Date; and (ii) each Interest Period
that would otherwise end on a day that is not a Business Day shall end on the next succeeding Business Day (or, if such next succeeding Business Day falls in the next succeeding calendar month, on the next preceding Business Day). 
  
 “Interest Reset Date” has the meaning specified in the
definition of Interest Period. 
  
 “Leverage
Ratio” means, at any time with respect to the Seller and its Subsidiaries, the ratio of (i) the aggregate principal amount of all Indebtedness (inclusive of residual financing) at such time which on a consolidated basis in accordance with
GAAP would be required to be reflected on a consolidated balance sheet as a liability to (ii) the Tangible Net Worth at such time. 
  
 “LIBOR” means the rate per annum calculated with respect to each Transaction as set forth below: 
  
 (i) Two (2) Business Days prior to each Interest Reset Date,
LIBOR shall be determined by Buyer on the basis of the offered rate for one month deposits of not less than U.S.$1,000,000, which appears on the date of determination on Dow Jones Market Service Page 3750 as of 11:00 a.m., London time (or such other
page as may replace the Dow Jones Market Service Page on that service for the purposes of displaying London interbank offered rates of major banks). If no such offered rate appears, LIBOR with respect to the relevant Interest Period shall be
determined as described in (ii) below. 
  
 (ii)
With respect to an Interest Reset Date on which no such offered rate appears two (2) Business Days prior thereto on Dow Jones Market Service Page 3750 as described in (i) above, LIBOR shall be the arithmetic mean, expressed as a percentage, of the
offered rates for one month deposits in U.S. Dollars that appears on the Reuters Screen LIBOR Page as of 11:00 a.m., London time, on the date of determination. If, in turn, such rate is not displayed on the Reuters Screen LIBOR Page at such time,
then LIBOR for such date shall be reasonably determined by Buyer to be the arithmetic mean of the offered quotations to first-class banks in the Interbank LIBOR Market. 
  
 All percentages resulting from any calculations of LIBOR referred to in this Agreement shall be rounded up to the nearest
multiple of 1/100 of 1% and all U.S. Dollar amounts used in or resulting from such calculations shall be rounded to the next higher cent. 
  

 8 

 “Loan-to-Value Ratio” means with respect to any Mortgage Loan, the fraction, expressed
as a percentage, the numerator of which is the principal balance of such Mortgage Loan at the date of origination and the denominator of which is the lowest of (a) the value of the related Mortgaged Property as set forth in the appraisal of such
Mortgaged Property obtained in connection with the origination of such Mortgage Loan, (b) the purchase price of the Mortgaged Property or (c) the review appraisal, if any, provided that the appraised value shown in the review appraisal is less than
the appraised value at origination by a variance of 10% or greater. For purposes of calculating the Loan-to-Value Ratio of a Mortgage Loan secured by a second Mortgage, the principal balance of the related First Mortgage (at the time of origination
of the second Mortgage) as well as the second Mortgage shall be included in the numerator. 
  
 “Market Value” means as of any date with respect to any Mortgage Loan, the price at which such Mortgage Loan could readily be sold as determined by Buyer in its sole discretion; provided, that
the Market Value shall be deemed zero for any Mortgage Loan: 
  
 (i) except as set forth in clause (ii) below, which has been subject to Transactions for more than 90 days, 
  
 (ii) which is an Aged Mortgaged Loan and together with the other Aged Mortgage Loans subject to then outstanding Transactions would cause
the aggregate Repurchase Price for all Aged Mortgage Loans which are subject to then outstanding Transactions to exceed the lesser of (x) 20% of the aggregate Repurchase Price for all Mortgage Loans which are subject to then outstanding Transactions
and (y) $80,000,000, 
  
 (iii) which is
Delinquent for thirty (30) or more days and up to fifty-nine (59) days (and is not a Delinquent Mortgage Loan) and together with the other Mortgage Loans that are Delinquent (and are not Delinquent Mortgage Loans) for such period subject to then
outstanding Transactions would cause the aggregate outstanding principal balance of such Mortgage Loans that are Delinquent (and are not Delinquent Mortgage Loans) for such period subject to then outstanding Transactions to exceed 3.0% of the
aggregate Repurchase Price for of all Mortgage Loans which are subject to then outstanding Transactions, 
  
 (iv) which is a Delinquent Mortgage Loan and together with the other Delinquent Mortgage Loans subject to then outstanding Transactions
would cause the aggregate Repurchase Price for all Delinquent Mortgage Loans which are subject to then outstanding Transactions to exceed the lesser of (x) 3% of the aggregate Repurchase Price for all Mortgage Loans which are subject to then
outstanding Transactions and (y) $10,000,000, 
  
 (v) which is a Mortgage Loan secured by a second mortgage lien on the Mortgaged Property and together with the other Mortgage Loans secured by second mortgage liens on the Mortgaged Property subject to then outstanding Transactions would
cause the aggregate Repurchase Price for all Mortgage Loans secured by second mortgage liens on the Mortgaged Property which are subject to then outstanding Transactions to exceed the lesser of (x) 10% of the aggregate Repurchase Price for all
Mortgage Loans which are subject to then outstanding Transactions and (y) $40,000,000, 
  
 (vi) which is Delinquent for one hundred twenty (120) days or more, 
  
 (vii) which is Delinquent for sixty (60) days or more (except as permitted under clause (iv) above),

  

 9 

 (viii) which is a Wet Ink Mortgage Loan for more than seven (7) Business Days,

  
 (ix) which is a Wet Ink Mortgage Loan and
together with the other Wet Ink Mortgage Loans subject to then outstanding Transactions, would cause the aggregate Repurchase Price of Wet Ink Mortgage Loans subject to the then outstanding Transactions to exceed $85,000,000, 
  
 (x) which is a Repurchased Mortgage Loan and together with
the other Repurchased Mortgage Loans subject to then outstanding Transactions would cause the aggregate Repurchase Price for all Repurchased Mortgage Loans which are subject to then outstanding Transactions to exceed $10,000,000, 
  
 (xi) with respect to which there is a breach of a
representation, warranty or covenant made by Seller in this Agreement that materially adversely affects Buyer’s interest in such Mortgage Loan and which breach has not been cured, or 
  
 (xii) which is in foreclosure or subject to a bankruptcy
proceeding of the related Mortgager or with respect to which the first monthly payment was not made by the second due date or within the grace period in accordance with the terms of the Mortgage Note. 
  
 “Market Value Collateral Deficit” has the meaning specified
in Section 4(a). 
  
 “Material Adverse Effect”
shall mean a material adverse effect on (a) the business, assets, property, condition (financial or otherwise) or prospects of the Seller and its Subsidiaries taken as a whole, or (b) the validity or enforceability of (i) this Agreement or the other
Facility Documents or (ii) the rights or remedies of the Buyer hereunder or thereunder. 
  
 “MERS” and “MERS System” have the meanings specified in Section 7(i). 
  
 “Moody’s” means Moody’s Investors Service, Inc. 
  
 “Mortgage” means a mortgage, deed of trust, deed to secure debt or other instrument, creating a valid and
enforceable first or second lien on or a first or second priority ownership interest in an estate in fee simple in real property and the improvements thereon, securing a mortgage note or similar evidence of indebtedness. 
  
 “Mortgage File” means the documents specified as the
“Mortgage File” in Section 7(d), together with any additional documents and information required to be delivered to the Buyer or its designee (including the Custodian) pursuant to this Agreement. 
  
 “Mortgage Loan” means a non-securitized whole loan, namely a
conventional mortgage loan secured by a first or second lien on a one to four family residential property (including, without limitation, a Wet Ink Mortgage Loan) which conforms to the Seller’s Underwriting Guidelines. 
  
 “Mortgage Loan Schedule” means a schedule of Mortgage Loans
attached to each Trust Receipt, Confirmation and Custodial Delivery. 
  
 “Mortgage Note” means a note or other evidence of indebtedness of a Mortgagor secured by a Mortgage. 
  
 “Mortgaged Property” means the real property securing repayment of the debt evidenced by a Mortgage Note. 
  

 10 

 “Mortgagee” means the record holder of a Mortgage. 
  
 “Mortgagor” means the obligor on a Mortgage Note and the
grantor of the related Mortgage. 
  
 “Multiemployer
Plan” shall mean a Plan which is a multiemployer plan as defined in Section 4001(a) of ERISA. 
  
 “Net Income” means, for any period, the consolidated net income (or loss) for such period, determined on a consolidated basis in
accordance with GAAP. 
  
 “Net Worth” mean the
amount which would be included under stockholders’ equity on a consolidated balance sheet of Seller and its Subsidiaries determined on a consolidated basis in accordance with GAAP. 
  
 “NIM Transaction Certificates” has the meaning given in the definition of “Foreign NIM
Transaction.” 
  
 “Payment Date” means the
first calendar day of the month (or if such day is not a Business Day, the succeeding Business Day). 
  
 “Periodic Payment” has the meaning specified in Section 5(c). 
  
 “Permitted Securitization” means any transaction or series of related transactions for the sale or
financing of Purchased Mortgage Loans (the “Sold Loans”) pursuant to which the Sold Loans are held by or transferred to a special purpose entity structured in a manner which enhances the credit or diminishes the bankruptcy risks
attendant upon creditors of such entity (any such entity so structured, a “Special Purpose Entity”), and such transaction or transactions would not violate or be inconsistent with any statute, law, rule, regulation, judgment, order
or decree applicable to the Seller, any of its Subsidiaries or any of their respective properties (including, without limitation, any thereof respecting fraudulent transfers or conveyances set forth in any applicable laws of any jurisdiction
respecting the bankruptcy or insolvency of debtors). 
  
 “Person” means an individual, partnership, limited liability company, corporation, joint stock company, trust or unincorporated organization or a governmental agency or political subdivision thereof. 
  
 “Plan” shall mean any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 112 of the Internal Revenue Code or Section 307 of ERISA and in respect of which the Borrower or any ERISA Affiliate is (or if such plan were terminated would under
Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA. 
  
 “Predatory Lending Practices” means any and all underwriting and lending policies, procedures and practices defined or enumerated in any
local or municipal ordinance or regulation or any state or federal regulation or statute prohibiting, limiting or otherwise relating to the protection of consumers from such policies, procedures and practices. Such policies, practices and procedures
may include, without limitation, charging excessive loan, broker, and closing fees, charging excessive rates of loan interest, making loans without regard to a consumer’s ability to re-pay the loan, refinancing loans with no material benefit to
the consumer, charging fees for services not actually performed, discriminating against consumers on the basis of race, gender, or age, failing to make proper disclosures to the consumer of the consumer’s rights under federal and state law, and
any other predatory lending policy, practice or procedure as defined by ordinance, regulation or statute. 
  

 11 

 “Price Differential” means, with respect to any Transaction hereunder as of any date,
the aggregate amount obtained by daily application of the Pricing Rate for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days during the period commencing on (and including) the
Purchase Date for such Transaction and ending on (but excluding) the Repurchase Date (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Transaction). 
  
 “Pricing Rate” means, with respect to a Transaction, the per
annum percentage rate specified in the related Confirmation for determination of the Price Differential which shall not exceed LIBOR plus the applicable Pricing Spread. 
  
 “Pricing Spread” means the rate specified in the Confirmation with respect to each Mortgage Loan, which
shall be equal to (i) on each day the related Purchased Mortgage Loan is a Wet Ink Mortgage Loan, 1.55% and (ii) on each date on and after the delivery to the Custodian of a complete Mortgage File for such Purchased Mortgaged Loan, for each type of
Mortgage Loan set forth in the left hand column below, the applicable rate set forth in the right hand column below: 
  

					
	Mortgage Loan Type

	 	 Rate

	(a)	 	Mortgage Loan (other than the Mortgage Loans referred to in (b) and (c) below)	 	1.10%
			
	(b)	 	Aged Mortgage Loans	 	1.65%
			
	(c)	 	Delinquent Mortgage Loans or Repurchased Mortgage Loans	 	2.25%

  
 “Prime
Rate” means the rate of interest published by The Wall Street Journal, northeast edition, as the “prime rate.” 
  
 “Purchase Date” means the date on which Purchased Mortgage Loans are transferred by Seller to Buyer or its designee (including the
Custodian) as specified in the Confirmation. 
  
 “Purchase
Price” means on each Purchase Date, the price at which each Purchased Mortgage Loan is transferred by Seller to Buyer or its designee (including the Custodian) which shall be equal to for each type of Mortgage Loan set forth in the left
hand column below, the lowest of (i) the product of the Market Value of such Mortgage Loan and the applicable percentage set forth below under the column labeled “A”, (ii) the product of the Securitization Value of such Mortgage Loan and
the applicable percentage set forth under the column labeled “B” and (iii) the product of the outstanding principal balance of such Mortgage Loan and the applicable percentage set forth below under the column labeled “C”:

  

 12 

												
	Mortgage Loan Type

	 	 A
 (% of
 Market
 Value)

	 	 	 B
 (% of
 Securitization
 Value)

	 	 	 C
 % of Unpaid
 Principal
 Amount

	 
	(a)	 	Mortgage Loans (other than the Mortgage Loans referred to in (b), (c), (d), (e) and (f) below)	 	97.5	%	 	95.5	%	 	100	%
					
	(b)	 	Aged Mortgage Loans that are subject to Transactions for more than ninety (90) days up to one hundred twenty (120) days	 	97.5	%	 	95.5	%	 	95	%
					
	(c)	 	Aged Mortgage Loans that are subject to Transactions for more than one hundred twenty (120) days up to one hundred eighty (180) days	 	90.5	%	 	85.5	%	 	85	%
					
	(d)	 	Delinquent Mortgage Loans that are Delinquent for thirty (30) days up to fifty nine (59) days	 	90.5	%	 	85.5	%	 	75	%
					
	(e)	 	Delinquent Mortgage Loans that are Delinquent for more than fifty nine (59) days up to one hundred nineteen (119) days	 	90.5	%	 	85.5	%	 	50	%
					
	(f)	 	Repurchased Mortgage Loans	 	75	%	 	N/A	 	 	65	%

  
 “Purchased
Mortgage Loans” means the Mortgage Loans sold by Seller to Buyer in a Transaction, any Additional Loans and any Substituted Mortgage Loans. 
  
 “QSPE” has the meaning given in the definition of “Foreign NIM Transactions.” 
  
 “Replacement Loans” has the meaning specified in Section
14(b)(ii). 
  

 13 

 “Repurchase Date” means the date on which Seller is to repurchase the Purchased Mortgage
Loans from Buyer, including any date determined by application of the provisions of Sections 3 or 14, as specified in the Confirmation or otherwise; provided that (a) in no event shall such date be more than one hundred eighty (180) days after the
Purchase Date and (b) in no event shall such date be more than ninety (90) days after the Purchase Date with respect to Aged Mortgage Loans which have an aggregate Repurchase Price for Purchased Mortgage Loans subject to such Transactions exceeding
the lesser of (x) 20% of the aggregate Repurchase Price for all Purchased Mortgage Loans subject to Transactions at such time and (y) $80,000,000. 
  
 “Repurchase Price” means the price at which Purchased Mortgage Loans are to be transferred from Buyer or its designee (including the
Custodian) to Seller upon termination of a Transaction, which will be determined in each case as the sum of the Purchase Price and the Price Differential as of the date of such determination decreased by all cash, Income and Periodic Payments
actually received by Buyer pursuant to Sections 4(a), 5(a) and 5(f), respectively, with respect to such Transaction. 
  
 “Repurchased Mortgage Loan” means any Mortgage Loan which (x) the Seller or an Affiliate of the Seller has previously sold to an investor
in any type of sale transaction (including, without limitation, a whole loan sale, a mortgage loan purchase and sale agreement, or otherwise) and the Seller or such Affiliate has been required to repurchase or otherwise take back for any reason
(including, without limitation, due to breach of a representation and warranty or a document deficiency with respect to such Mortgage Loan or otherwise) and (y) the Buyer has specifically approved the inclusion of such Mortgage Loan in a Transaction
in its reasonable discretion. No Repurchased Mortgage Loan may be a Wet Ink Mortgage Loan. 
  
 “Request for Purchase” means written notice of Seller’s request to enter into a Transaction in the form of Exhibit IV. Such Request for Purchase shall specify the requested Purchase Date and
Repurchase Date and include the Mortgage Loan Schedule containing information with respect to the Collateral that the Seller proposes to pledge to Buyer in connection with such Transaction. 
  
 “Requirement of Law” means as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its property is subject. 
  
 “Responsible Officer” means, as to any Person, the chief executive officer, chief operating officer, the chief financial officer or
treasurer or any other officer having substantially the same authority and responsibility including any vice president with responsibility for or knowledge of financial matters. 
  
 “S&P” means Standards & Poor’s Ratings Group, a division of McGraw Hill Companies, Inc.

  
 “Securitization Value” means, as of any date
with respect to any Mortgage Loans, the price at which such Mortgage Loans could be securitized and sold in a securitization as determined by Buyer in its sole discretion; provided, that the Securitization Value shall be deemed zero for any
Mortgage Loan: 
  
 (i) except as set forth in
clause (ii) below, which has been subject to Transactions for more than 90 days, 
  
 (ii) which is an Aged Mortgaged Loan and together with the other Aged Mortgage Loans subject to then outstanding Transactions would cause
the aggregate Repurchase Price for all Aged Mortgage Loans which are subject to then outstanding Transactions to exceed the lesser of (x) 20% of the aggregate Repurchase Price for all Mortgage Loans which are subject to then outstanding Transactions
and (y) $80,000,000, 
  

 14 

 (iii) which is Delinquent for thirty (30) or more days and up to fifty-nine (59) days
(and is not a Delinquent Mortgage Loan) and together with the other Mortgage Loans that are Delinquent (and are not Delinquent Mortgage Loans) for such period subject to then outstanding Transactions would cause the aggregate outstanding principal
balance of such Mortgage Loans that are Delinquent (and are not Delinquent Mortgage Loans) for such period subject to then outstanding Transactions to exceed 3.0% of the aggregate Repurchase Price for of all Mortgage Loans which are subject to then
outstanding Transactions, 
  
 (iv) which is a
Delinquent Mortgage Loan and together with the other Delinquent Mortgage Loans subject to then outstanding Transactions would cause the aggregate Repurchase Price for all Delinquent Mortgage Loans which are subject to then outstanding Transactions
to exceed the lesser of (x) 3% of the aggregate Repurchase Price for all Mortgage Loans which are subject to then outstanding Transactions and (y) $10,000,000, 
  

(v) which is a Mortgage Loan secured by a second mortgage lien on the Mortgaged Property and together with the other Mortgage Loans
secured by second mortgage liens on the Mortgaged Property subject to then outstanding Transactions would cause the aggregate Repurchase Price for all Mortgage Loans secured by second mortgage liens on the Mortgaged Property which are subject to
then outstanding Transactions to exceed the lesser of (x) 10% of the aggregate Repurchase Price for all Mortgage Loans which are subject to then outstanding Transactions and (y) $40,000,000, 
  
 (vi) which is Delinquent for one hundred twenty (120) days
or more, 
  
 (vii) which is Delinquent for sixty
(60) days or more (except as permitted under clause (iv) above), 
  
 (viii) which is a Wet Ink Mortgage Loan for more than seven (7) Business Days, 
  
 (ix) which is a Wet Ink Mortgage Loan and together with the other Wet Ink Mortgage Loans subject to then outstanding Transactions, would
cause the aggregate Repurchase Price of Wet Ink Mortgage Loans subject to the then outstanding Transactions to exceed $85,000,000, 
  
 (x) which is a Repurchased Mortgage Loan and together with the other Repurchased Mortgage Loans subject to then outstanding Transactions
would cause the aggregate Repurchase Price for all Repurchased Mortgage Loans which are subject to then outstanding Transactions to exceed $10,000,000, 
  
 (xi) with respect to which there is a breach of a representation, warranty or covenant made by Seller in this Agreement that materially
adversely affects Buyer’s interest in such Mortgage Loan and which breach has not been cured, or 
  
 (xii) which is in foreclosure or subject to a bankruptcy proceeding of the related Mortgager or with respect to which the first monthly
payment was not made by the second due date or within the grace period in accordance with the terms of the Mortgage Note. 
  
 “Securitization Value Collateral Deficit” has the meaning specified in Section 4(a). 
  

 15 

 “Seller” has the meaning specified in Section 1. 
  
 “Servicer” means Fairbanks Capital Corp., a Utah
corporation, and its successors in interest and permitted assigns. 
  
 “Servicing Agreement” means the servicing agreement, between the Buyer, the Seller and the Servicer, as amended, modified or supplemented from time to time, the form of which is attached hereto as Exhibit VIII. 

 
 “Servicing Records” has the meaning specified in Section
25. 
  
 “Sold Loans” and “Special Purpose
Entity” have the meaning specified in the definition of “Permitted Securitization”. 
  
 “Subsidiary” means, as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to
“Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Seller. 
  
 “Substituted Mortgage Loans” means any Mortgage Loans substituted for Purchased Mortgage Loans in accordance with Section 9 hereof.

  
 “Tangible Net Worth” means, at any time, Net
Worth at such time, minus intangible assets included in determining Net Worth. 
  
 “Transaction” has the meaning specified in Section 1. 
  
 “Trust Receipt” means a trust receipt issued by the Custodian to the Buyer confirming the Custodian’s possession of certain mortgage
loan files which are the property of and held by the Custodian for the benefit of the Buyer or the registered holder of such trust receipt. 
  
 “Underwriting Guidelines” means the underwriting guidelines attached as Schedule 2 hereto, as amended, modified or supplemented from time
to time. 
  
 “Uniform Commercial Code” means the
Uniform Commercial Code as in effect on the date hereof in the State of New York; provided, that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non-perfection of the security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or non-perfection. 
  
 “Wet Ink Mortgage Loan” means a Mortgage Loan for which a Mortgage File has not been delivered to the Custodian. No Repurchased Mortgage Loan may qualify as a Wet Ink Mortgage Loan. 
  
 “Whole Loan Sale” means a sale of the Purchased Mortgage
Loans by the Seller (other than in connection with a Permitted Securitization). 
  

 16 

 3. CONDITIONS PRECEDENT; INITIATION; CONFIRMATION; TERMINATION; MAXIMUM TRANSACTION
AMOUNTS 
  
 (a) Conditions Precedent to Initial
Transaction. Buyer’s obligation to enter into the initial Transaction hereunder is subject to the satisfaction, immediately prior to or concurrently with the making of such Transaction, of the condition precedent that Buyer shall have
received all of the following documents, each of which shall be reasonably satisfactory to Buyer and its counsel in form and substance (collectively, the “Facility Documents”): 
  
 (i) Agreement. This Agreement, duly completed, and
executed and delivered by Seller; 
  
 (ii)
Custodial Agreement. The Custodial Agreement, duly executed and delivered by Seller and Custodian; 
  
 (iii) Uniform Commercial Code Filings. Any filings requested or required under the Uniform Commercial Code duly completed and
executed and such other actions as Buyer shall have requested in order to perfect the security interests created pursuant to this Agreement; 
  
 (iv) Blocked Account Agreement. The Blocked Account Agreement, duly executed and delivered by Seller and the Collection Account
Bank; 
  
 (v) Opinion of Counsel. An
opinion or opinions of counsel favorable to the Buyer with respect to the Seller and the transactions contemplated by this Agreement; 
  
 (vi) Letter Agreements. The letter agreements with respect to the payment of fees and certain investment banking services, duly
executed and delivered by Seller; and 
  
 (vii)
Other Documents. Such other documents as Buyer may reasonably request. 
  
 (b) Conditions Precedent to all Transactions. Except as provided below, Buyer’s obligation to enter into each Transaction (including the initial Transaction) is subject to the satisfaction of the following
further conditions precedent, both immediately prior to entering into such Transaction and also after giving effect thereto to the intended use thereof: 
  
 (i) Seller shall have delivered to Buyer and Custodian a Request for Purchase at least one Business Day prior to the proposed Purchase
Date specified in such Request for Purchase (including in the Mortgage Loan Schedule attached thereto the Collateral Information, which may be transmitted by direct electronic transmission or via a computer diskette, in either case in Excel format);

  
 (ii) other than with respect to Wet Ink
Mortgage Loans, Buyer shall have received from the Custodian a Trust Receipt with exceptions as are acceptable to Buyer in its sole discretion in respect of Mortgage Loans to be sold hereunder on the applicable Business Day and a Mortgage Loan
Schedule, in each case dated such Business Day and duly completed; 
  
 (iii) Buyer shall have completed its due diligence to its reasonable satisfaction with respect to each Mortgage Loan to be purchased on such Purchase Date; 
  
 (iv) no Event of Default shall have occurred and be
continuing; 
  

 17 

 (v) Seller shall have provided Buyer with a copy of any material changes to Seller’s
Underwriting Guidelines prior to the effectiveness of any such change and obtained Buyer’s approval of such change; and 
  
 (vi) no Collateral Deficit exists. 
  
 (c) Initiation and Confirmation. 
  
 (i) Each agreement to enter into a Transaction must be entered into in writing at the initiation of Seller by Seller’s delivery of a
Request for Purchase to Buyer. Buyer shall confirm the terms of each Transaction by issuing a written confirmation to Seller promptly after the parties enter into such Transaction in the form of Exhibit I attached hereto (a
“Confirmation”). Such Confirmation shall describe the Purchased Mortgage Loans, identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date, (iv) the Pricing Rate applicable to
the Transaction, (v) the applicable Collateral Maintenance Percentages and (vi) additional terms or conditions not inconsistent with this Agreement. After receipt of the Confirmation, Seller shall, subject to the provisions of subsection (c)(iii)
below, sign the Confirmation and promptly return it to Buyer. The Purchase Price for any Transaction shall not be less than $750,000. Buyer shall not have any obligation to enter into more than two Transactions on any Business Day. 
  
 (ii) Any Confirmation by Buyer shall be deemed to have been
received by Seller on the date actually received by Seller. 
  
 (iii) Each Confirmation, together with this Agreement, shall be conclusive evidence of the terms of the Transaction(s) covered thereby unless objected to in writing by Seller no more than two (2) Business Days after
the date the Confirmation was received by Seller or unless a corrected Confirmation is sent by Buyer. An objection sent by Seller must state specifically that such writing is an objection to a Confirmation and must specify the provision(s) being
objected to by Seller, must set forth such provision(s) in the manner that the Seller believes they should be stated, and must be received by Buyer no more than two (2) Business Days after the Confirmation was received by Seller. 
  
 (iv) With respect to all Transactions hereunder related to a
Repurchased Mortgage Loan that is Delinquent for sixty (60) or more days, the Purchase Date shall be not later than ten (10) Business Days following the day on which the Seller provides the Collateral Information relating thereto as requested by
Buyer in a computer readable format together with a liquidation proceeds spreadsheet and a BPO, with pictures, and a Trust Receipt. With respect to all Transactions hereunder related to a Repurchased Mortgage Loan, the Seller shall deliver to the
Buyer a written explanation of the reason the Seller or its Affiliate was required to repurchase or otherwise take back the related Mortgage Loan. 
  
 (d) Limitation on Pricing Rate Used; Illegality. Anything herein to the contrary notwithstanding, if, on or prior to the determination of the
Pricing Rate: 
  
 (i) the Buyer reasonably
determines, which determination shall be conclusive, that quotations of interest rates for the relevant deposits referred to in the definition of “LIBOR” in Section 2 hereof are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining the Pricing Rates as provided herein; or 
  

 18 

 (ii) the Buyer reasonably determines, which determination shall be conclusive, that the
relevant rate of interest referred to in the definition of “Pricing Rate” in Section 2 hereof upon the basis of which the Pricing Rate is to be determined is not likely to equal the cost to the Buyer of purchasing the Purchased Mortgage
Loans using such Pricing Rate; or 
  
 (iii) it
becomes unlawful for the Buyer to honor its obligation to purchase Mortgage Loans hereunder using a Pricing Rate based upon LIBOR; 
  
 then the Buyer shall give the Seller prompt notice thereof and, so long as such condition remains in effect, the Buyer shall be under no obligation to enter into
additional Transactions, and the Seller shall, at the option of Seller, either repurchase all Purchased Mortgage Loans then subject to a Transaction or the Pricing Rate shall be determined based upon the rate selected by the Buyer in a manner that
is reasonably satisfactory to Buyer so as to adequately reflect the cost to Buyer of purchasing the Purchased Mortgage Loans using such substituted Pricing Rate (in which case Buyer shall continue to be obligated to enter into additional
Transactions using that substituted Pricing Rate). 
  
 (e)
Additional Costs. The Seller shall pay directly to Buyer from time to time such amounts as Buyer may determine to be necessary to compensate Buyer for any costs that Buyer determines are attributable to its using a LIBOR-based Pricing Rate or
its obligation to use a LIBOR-based Pricing Rate hereunder, or any reduction in any amount receivable by Buyer hereunder in respect of the Pricing Rate (such increases in costs and reductions in amounts receivable being herein called
“Additional Costs”), resulting from any change that: 
  
 (i) shall subject Buyer to any tax, duty or other charge in respect of such LIBOR-based Pricing Rate or changes the basis of taxation of any amounts payable to such Buyer under this Agreement in respect of any of such
LIBOR-based Pricing Rate (excluding changes in the rate of tax on the overall net income of such Buyer by the jurisdiction in which Buyer has its principal office); or 
  
 (ii) imposes or modifies any reserve, special deposit or similar requirements relating to any LIBOR-based
Pricing Rate; or 
  
 (iii) imposes any other
condition affecting this Agreement or the transactions contemplated hereby or thereby. 
  
 Buyer shall deliver to Seller a statement setting forth the amount and basis of determination of any Additional Costs in such detail as reasonably determined in good faith by Buyer to be adequate, it being agreed that such statement and the
method of its calculation shall be adequate and shall be conclusive and binding upon Seller, absent manifest error. 
  
 (f) Termination and Repurchase. 
  
 (i) Seller may at any time and from time to time repurchase the Purchased Mortgage Loans subject to a Transaction, in whole or in part, in
connection with a Permitted Securitization or a Whole Loan Sale, upon at least two (2) Business Days’ irrevocable notice to Buyer, specifying the Business Day of such repurchase and amount required to be paid in connection with such repurchase
pursuant to Section 5(d). If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with any amounts payable pursuant to the succeeding paragraph. 
  

 19 

 (ii) On the Repurchase Date, termination of the Transaction will be effected by transfer
to Seller or its designee of the Purchased Mortgage Loans (and any Income in respect thereof received by Buyer not previously credited or transferred to, or applied to the obligations of, Seller pursuant to Section 5) against the simultaneous
transfer of the amount required to be paid in connection with such repurchase plus any Breakage Costs payable by Seller to Buyer pursuant to the succeeding paragraph to an account of Buyer. Seller is obligated to obtain the Mortgage Files from Buyer
or its designee at Seller’s expense on the Repurchase Date. 
  
 (iii) If Seller repurchases the Purchased Mortgage Loans subject to a Transaction on any day or otherwise transfers funds to Buyer pursuant to its obligations hereunder on any day which is not a Repurchase Date,
Seller shall indemnify Buyer and hold Buyer harmless from any loss or expense which Buyer actually sustains or incurs arising from the reemployment of funds obtained by Buyer hereunder or from fees actually paid by Buyer to terminate the deposits
from which such funds were obtained, but not including loss of profit (“Breakage Costs”). Buyer shall deliver to Seller a statement setting forth the amount and basis of determination of any Breakage Costs in such detail as
reasonably determined in good faith by Buyer, it being agreed that such statement and the method of its calculation shall be conclusive and binding upon Seller, absent manifest error. This Section shall survive termination of this Agreement and
repurchase of all Purchased Mortgage Loans subject to Transactions hereunder. 
  
 (g) Maximum Facility Amount. With respect to all Transactions hereunder, the aggregate Purchase Price for all Purchased Mortgage Loans at any one time subject to then outstanding Transactions shall not exceed
$400,000,000 (the “Facility Amount”). 
  
 4. COLLATERAL AMOUNT
MAINTENANCE 
  
 (a) Buyer shall mark to market the Mortgage
Loans in its sole discretion, but at least monthly. If at any time the aggregate Market Value of all Purchased Mortgage Loans subject to all Transactions is less than the aggregate Collateral Maintenance Amount for all such Transactions (a
“Market Value Collateral Deficit”), then Buyer may by notice to Seller require Seller to transfer to Buyer or its designee (including the Custodian) Additional Loans or cash or other collateral acceptable to Buyer, so that the cash
and aggregate Market Value of the Purchased Mortgage Loans and other collateral, including any such Additional Loans, will thereupon equal or exceed the aggregate Collateral Maintenance Amount. If at any time the aggregate Securitization Value of
all Mortgage Loans subject to Transactions is less than the aggregate Collateral Maintenance Amount for all such Transactions (a “Securitization Value Collateral Deficit”), then Buyer may by notice to Seller require Seller to
transfer to Buyer or its designee (including the Custodian) Additional Loans or cash or other collateral acceptable to Buyer, so that the cash and aggregate Securitization Value of the Purchased Mortgage Loans and other collateral, including any
such Additional Loans, will thereupon equal or exceed the aggregate Collateral Maintenance Amount. 
  
 (b) Notice required pursuant to subsection (a) above may be given by any means of facsimile transmission. Seller shall transfer Additional Loans or cash
pursuant to subsection (a) above not later than 5:00 p.m. on the Business Day following the receipt of such notice. The failure of Buyer, on any one or more occasions, to exercise its rights under subsection (a) of this Section shall not change or
alter the terms and conditions to which this Agreement is subject or limit the right of the Buyer to do so at a later date. Buyer and Seller agree that a failure or delay to exercise its rights under subsection (a) of this Section shall not limit
Buyer’s rights under this Agreement or otherwise existing by law or in any way create additional rights for Seller. 
  

 20 

 (c) In the event that Seller fails to comply with the provisions of this Section 4, Buyer shall not enter
into any additional Transactions hereunder after the date of such failure and an Event of Default shall exist. 
  
 5. INCOME PAYMENTS 
  
 (a)
Where a particular Transaction’s term extends over an Income payment date on the Purchased Mortgage Loans subject to that Transaction, such Income shall be the property of Buyer, subject to the application of such Income in accordance with this
Agreement. Seller shall instruct each Mortgagor to remit all Income and all tax and insurance escrow payments to a financial institution reasonably acceptable to Buyer (the “Collection Account Bank”). The initial Collection Account
Bank shall be Bank One, Utah. The Collection Account Bank shall upon receipt thereof promptly remit all Income (including all cash, checks and other near cash items) to the Collection Account (as defined below) and all tax and insurance escrow
payments to the Escrow Accounts (as defined below). 
  
 (b) Seller
shall, or shall cause the Servicer to, establish on or prior to the date of the first Transaction, and maintain for the Buyer’s benefit, with the Collection Account Bank one or more collection accounts (together, the “Collection
Account”) and escrow accounts (together, the “Escrow Account”) pledged to the Buyer, which may be interest-bearing and shall be entitled “[Servicer], in trust for WMC Mortgage Corp. and Lehman Brothers Bank, FSB”
The Collection Account and the Escrow Account shall be under the sole dominion and control of the Collection Account Bank. Prior to the date of the first Transaction, Seller shall cause the Collection Account Bank to deliver to the Buyer an
agreement between the Seller, the Buyer and the Collection Account Bank, substantially in the form of Exhibit VI hereto (the “Blocked Account Agreement”) in which the Collection Account Bank acknowledges the Buyer’s security
interest in the Collection Account and the Escrow Account and agrees that upon receipt of notice that an Event of Default has occurred or is continuing, the Collection Account Bank shall only withdraw funds from the Collection Account or the Escrow
Account, respectively, on instructions of Buyer (other than for payment of servicing fees and ancillary income due and owing to the Servicer and reimbursement of servicing advances under any servicing agreement). Prior to the delivery by Buyer to
the Collection Account Bank of the notice referred to in the immediately preceding sentence, all Income and all tax and insurance escrow payments held in the Collection Account or the Escrow Account, respectively, may be withdrawn by Seller or the
Servicer for servicing of the Mortgage Loans and administration of escrow-related matters pertaining to the Purchased Mortgage Loans and any other purposes. 
  
 (c) Notwithstanding that Buyer and Seller intend that the Transactions hereunder be sales to Buyer of the Purchased Mortgage Loans, Seller shall pay by
wire transfer to Buyer the accreted value of the Price Differential (each such payment, a “Periodic Payment”) on each Payment Date and may withdraw from the Collection Account any excess on such Payment Date in the ordinary course
of business. The Price Differential shall accrue and be calculated on a daily basis for each Purchased Mortgage Loan. 
  
 (d) In the event the Seller repurchases the Purchased Mortgage Loans in connection with a Whole Loan Sale or Permitted Securitization, Seller shall
simultaneous with the closing thereof apply the net proceeds (after payment of all reasonable costs and expenses incurred in connection therewith) from such Whole Loan Sale or Permitted Securitization to pay: (i) first, the accreted value of the
Price Differential, and (ii) second, the Repurchase Price (exclusive of such Price Differential) of all Purchased Mortgage Loans which are the subject of such Whole Loan Sale or Permitted Securitization, and shall be permitted to retain the
remainder, if any. 
  

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 (e) If an Event of Default shall have occurred and be continuing, all Income held in the Collection
Account, on each Business Day shall be distributed by Seller or the Servicer, on each Business Day in the following order of priority: 
  
 FIRST:    To the Servicer in payment of any reasonable servicing fees and ancillary income under any servicing
agreement due and owing and for reimbursement of servicing advances under any servicing agreement and the Custodian’s fees under the Custodial Agreement; 
  

SECOND: To the Buyer in an amount sufficient to pay: 
  
 (i) any Periodic Payment due and owing; 
  
 (ii) the amount of any Collateral Deficit; and 
  
 (iii) the amount of any fees or expenses or other amounts
due and owing to the Buyer hereunder or in the Facility Documents; and 
  
 THIRD: To payment of any then outstanding and due Repurchase Price for all Transactions and any additional amounts owing to the Buyer hereunder; and 
  
 FOURTH: To the Seller in an amount equal to any surplus then remaining. 
  
 (f) Buyer shall offset against the Repurchase Price of each Transaction all
Income and Periodic Payments actually received by Buyer pursuant to Sections 5(a) – (e). 
  
 6. SECURITY INTEREST 
  
 (a) Buyer and the Seller intend that the Transactions hereunder be sales to Buyer of the Purchased Mortgage Loans and not loans from Buyer to Seller secured by the Purchased Mortgage Loans. However, in order to preserve Buyer’s rights
under this Agreement in the event that a court or other forum recharacterizes the Transactions hereunder as loans and as security for the performance by Seller of all of Seller’s obligations to Buyer under this Agreement and the Transactions
entered into pursuant to this Agreement, Seller grants Buyer a first priority security interest in (i) the Purchased Mortgage Loans and (ii) all of the following with respect to the Purchased Mortgage Loans: Servicing Records, servicing agreements,
purchase commitments, insurance, Income, any and all Hedges, any and all collection accounts and escrow accounts and all cash or other property or amounts on deposit therein and any other contract rights, general intangibles and other assets and any
and all replacements, substitutions, distributions on or proceeds of any and all of the foregoing (collectively, the “Collateral”). 
  
 (b) Seller shall pay all fees and expenses associated with perfecting Buyer’s security interest in the Collateral (including, without limitation, the
cost of filing financing statements under the Uniform Commercial Code and, upon the occurrence of an Event of Default, recording assignments of Mortgage, as and when required by Buyer in its sole discretion). Seller shall take such further actions
as are necessary in order to perfect Buyer’s first priority security interest in the Hedges with respect to the Purchased Mortgage Loans. 
  
 7. PAYMENT, TRANSFER AND CUSTODY 
  
 (a) Unless otherwise mutually agreed in writing, all transfers of funds hereunder shall be in immediately available funds. 
  

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 (b) On or before each Purchase Date, Seller shall deliver or cause to be delivered to Buyer or its
designee the Custodial Delivery in the form attached hereto as Exhibit III. 
  
 (c) On the Purchase Date for each Transaction, ownership of the Purchased Mortgage Loans shall be transferred to the Buyer or its designee (including the Custodian) against the simultaneous transfer of the Purchase
Price to an account of Seller specified in the Confirmation. Seller, simultaneously with the delivery to Buyer or its designee (including the Custodian) of the Purchased Mortgage Loans relating to each Transaction hereby sells, transfers, conveys
and assigns to Buyer or its designee (including the Custodian) without recourse, but subject to the terms of this Agreement, all the right, title and interest of Seller in and to the Purchased Mortgage Loans together with all right, title and
interest in and to the proceeds of any related insurance policies. 
  
 (d) In connection with each sale, transfer, conveyance and assignment, on or prior to each Purchase Date with respect to each Mortgage Loan which is not a Wet Ink Mortgage Loan (or with respect to item (viii) below within five Business Days
after the Purchase Date), the Seller shall deliver or cause to be delivered and released to the Custodian the following original documents (collectively the “Mortgage File”), pertaining to each of the Purchased Mortgage Loans
identified in the Custodial Delivery delivered therewith: 
  
 (i) the original Mortgage Note bearing all intervening endorsements (or allonges), endorsed “Pay to the order of             , without
recourse” and signed in the name of the last endorsee (the “Last Endorsee”) by an authorized officer (in the event that the Mortgage Loan was acquired by the Last Endorsee in a merger, the signature must be in the following
form: “[the Last Endorsee], successor by merger to [name of predecessor]”; in the event that the Mortgage Loan was acquired or originated while doing business under another name, the signature must be in the following form: “[the Last
Endorsee], formerly known as [previous name]”); 
  
 (ii) the original of any guarantee executed in connection with the Mortgage Note (if any); 
  
 (iii) the original Mortgage with evidence of recording thereon or a copy certified by Seller, its agent or the title company on behalf of
Seller to have been sent for recording; 
  
 (iv)
the originals of all assumption, modification, consolidation or extension agreements, with evidence of recording thereon or copies certified by Seller, its agent or the title company on behalf of Seller to have been sent for recording, if any;

  
 (v) the original assignment of Mortgage in
blank (or, if such Mortgage Loan is and will be registered on the MERS System, showing MERS as the assignee of such Mortgage) for each Mortgage Loan, in form and substance acceptable for recording and signed in the name of the Last Endorsee (in the
event that the Mortgage Loan was acquired by the Last Endorsee in a merger, the signature must be in the following form: “[the Last Endorsee], successor by merger to [name of predecessor]”; in the event that the Mortgage Loan was acquired
or originated while doing business under another name, the signature must be in the following form: “[the Last Endorsee], formerly known as [previous name]”); 
  
 (vi) the originals of all intervening assignments of mortgage with evidence of recording thereon or copies
certified by Seller to have been sent for recording, if any; 
  
 (vii) the original of any security agreement, chattel mortgage or equivalent document executed in connection with the Mortgage (if any); 
  

 23 

 (viii) the original policy of title insurance or a true copy thereof or, if such policy
has not yet been delivered by the insurer, the commitment or binder to issue the same (which may be marked by the title insurance company) and a certified copy of mortgage insurance, if applicable; and 
  
 (ix) the original power of attorney, if any, or a copy
thereof certified by an authorized officer of the Seller, for any document described above; and 
  
 (x) if such Mortgage Loan is and will be registered on the MERS System, evidence, in accordance with the MERS procedures manual, that
Borrower has designated the Servicer as the servicer or subservicer in the MERS System for such Purchase Mortgage Loan. 
  
 (e) In connection with each sale, transfer, conveyance and assignment, with respect to each Mortgage Loan which is a Wet Ink Mortgage Loan, (x) on each
Purchase Date, Seller shall cause the related Mortgage Note for each funded Mortgage Loan to be faxed to the Custodian and (y) on or prior to 1:30 p.m. (New York City time) on the fifth Business Day following each Purchase Date, Seller shall deliver
or cause to be delivered to the Custodian a complete Mortgage File. On the date on which the Buyer receives a Trust Receipt from the Custodian certifying that a complete Mortgage File with respect to a Wet Ink Mortgage Loan is in the possession of
the Custodian, such Wet Ink Mortgage Loan be deemed a standard Mortgage Loan (and no longer a Wet Ink Mortgage Loan) for all purposes hereunder, including, without limitation, determination of the Pricing Spread and compliance with subsection (zz)
of Schedule 1. 
  
 (f) With respect to each Mortgage Loan
delivered by Seller to Buyer or its designee (including the Custodian), Seller shall have executed an omnibus power of attorney substantially in the form of Exhibit VII attached hereto irrevocably appointing Buyer its attorney-in-fact with full
power to complete and record the assignment of Mortgage, complete the endorsement of the Mortgage Note and take such other steps as may be necessary or desirable to enforce Buyer’s rights against such Mortgage Loans, the related Mortgage Files
and the Servicing Records. 
  
 (g) Buyer shall deposit the
Mortgage Files representing the Purchased Mortgage Loans, or direct that the Mortgage Files be deposited directly, with the Custodian. The Mortgage Files shall be maintained in accordance with the Custodial Agreement. 
  
 (h) Any Mortgage Files not delivered to Buyer or its designee (including the
Custodian) are and shall be held in trust by Seller or its designee for the benefit of Buyer as the owner thereof. Seller or its designee shall maintain a copy of the Mortgage File and the originals of the Mortgage File not delivered to Buyer or its
designee. The possession of the Mortgage File by Seller or its designee is at the will of the Buyer for the sole purpose of servicing the related Purchased Mortgage Loan, and such retention and possession by the Seller or its designee is in a
custodial capacity only. The books and records (including, without limitation, any computer records or tapes) of Seller or its designee shall be marked appropriately to reflect clearly the sale of the related Purchased Mortgage Loan to Buyer. Seller
or its designee (including the Custodian) shall release its custody of the Mortgage File only in accordance with written instructions from Buyer, unless such release is required as incidental to the servicing of the Purchased Mortgage Loans or is in
connection with a repurchase of any Purchased Mortgage Loan by Seller. 
  
 (i) From time to time, the Seller may request in writing that the Buyer agree to have the Purchased Mortgage Loans registered on the MERS CORP., Inc. mortgage electronic registry system (the “MERS System”) such that the
mortgagee of record under such Purchased Mortgage Loans shall be identified as Mortgage Electronic Registration Systems, Inc. (“MERS”). If Buyer agrees to such registration, then prior to effecting such registration for any
Purchased Mortgage Loan, Seller shall deliver to Buyer an Electronic Tracking Agreement in form and substance acceptable to Buyer. 
  

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 8. REHYPOTHECATION OR PLEDGE OF PURCHASED MORTGAGE LOANS 
  
 Title to all Purchased Mortgage Loans shall pass to Buyer and Buyer shall
have free and unrestricted use of all Purchased Mortgage Loans. Nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Mortgage Loans or otherwise assigning, syndicating, participating,
sub-participating, pledging, repledging, hypothecating, or rehypothecating the Purchased Mortgage Loans, but no such transaction shall relieve Buyer of its obligations to transfer Purchased Mortgage Loans to Seller pursuant to Section 3. Seller
shall cooperate with Buyer’s reasonable requests to complete such assignments, syndication, participation or pledge. Nothing contained in this Agreement shall obligate Buyer to segregate any Purchased Mortgage Loans delivered to Buyer by
Seller. In the event that there is a material adverse change or other development in the repurchase markets which results in Buyer being unable to finance its position through the repurchase market with its traditional repurchase counterparties,
Buyer may accelerate the Repurchase Date for any outstanding Transactions following reasonable written notice to Seller of the occurrence of such event. 
  
 9. SUBSTITUTION 
  
 (a) Subject to Section 9(b) and the prior consent of Buyer, Seller may, upon one (1) Business Days written notice to Buyer, with a copy to Custodian,
substitute Mortgage Loans or other assets for any Purchased Mortgage Loans. Such substitution shall be made by transfer to Buyer or its designee (including the Custodian) of the Mortgage File of such other Mortgage Loans together with a Custodial
Delivery and transfer to Seller or its designee of the Purchased Mortgage Loans requested for release. After substitution, the substituted Mortgage Loans shall be deemed to be Purchased Mortgage Loans subject to the same Transaction as the released
Mortgage Loans. 
  
 (b) Notwithstanding anything to the contrary
in this Agreement, Seller may not substitute other Mortgage Loans or other assets for any Purchased Mortgage Loans if (i) after taking into account such substitution, a Collateral Deficit would occur, (ii) such substitution would cause a breach of
any provision of this Agreement or (iii) the Market Value of the Mortgage Loans or assets substituted is less than the Market Value of such Purchased Mortgage Loans. 
  
 (c) In the case of any Transaction for which the Repurchase Date is other than the Business Day immediately following the
Purchase Date and with respect to which Seller does not have any existing right to substitute substantially the same Mortgage Loans for the Purchased Mortgage Loans, Seller shall have the right, subject to the proviso to this sentence, upon notice
to Buyer, which notice shall be given at or prior to 10:00 a.m. (New York time) on such Business Day, to substitute substantially the same Mortgage Loans for any Purchased Mortgage Loans; provided, however, that Buyer may elect, by the
close of business on the Business Day notice is received, or by the close of the next Business Day if notice is given after 10:00 a.m. (New York time) on such day, not to accept such substitution. In the event such substitution is accepted by Buyer,
such substitution shall be made by Seller’s transfer to Buyer of such other Mortgage Loans and Buyer’s transfer to Seller of such Purchased Mortgage Loans, and after substitution, the substituted Mortgage Loans shall be deemed to be
Purchased Mortgage Loans. In the event Buyer elects not to accept such substitution, Buyer shall offer Seller the right to terminate the Transaction. 
  
 (d) In the event Seller exercises its right to substitute or terminate under sub-paragraph (c), Seller shall be obligated to pay to Buyer, by the close of
the Business Day of such substitution or termination, as the case may be, an amount equal to (A) Buyer’s actual cost (including all fees, expenses 

  

 25 

 
and commissions) of (i) entering into replacement transactions; (ii) entering into or terminating hedge transactions; and/or (iii) terminating transactions
or substituting mortgage loans in like transactions with third parties in connection with or as a result of such substitution or termination, and (B) to the extent Buyer determines not to enter into replacement transactions, the loss incurred by
Buyer directly arising or resulting from such substitution or termination. The foregoing amounts shall be solely determined and calculated by Buyer in good faith. 
  
 10. REPRESENTATIONS AND WARRANTIES 
  
 (a) Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to execute and deliver this Agreement, to enter into the
Transactions contemplated hereunder and to perform its obligations hereunder and has taken all necessary action to authorize such execution, delivery and performance; (ii) it will engage in such Transactions as principal; (iii) the person signing
this Agreement on its behalf is duly authorized to do so on its behalf; (iv) no approval, consent or authorization of the Transactions contemplated by this Agreement from any federal, state, or local regulatory authority having jurisdiction over it
is required or, if required, such approval, consent or authorization has been or will, prior to the first Purchase Date, be obtained; (v) the execution, delivery, and performance of this Agreement and the Transactions hereunder will not violate any
law, regulation, order, judgment, decree, ordinance, charter, by-law, or rule applicable to it or its property or constitute a default (or an event which, with notice or lapse of time, or both would constitute a default) under or result in a breach
of any agreement or other instrument by which it is bound or by which any of its assets are affected; (vi) it has received approval and authorization to enter into this Agreement and each and every Transaction actually entered into hereunder
pursuant to its internal policies and procedures; and (vii) neither this Agreement nor any Transaction pursuant hereto are entered into in contemplation of insolvency or with intent to hinder, delay or defraud any creditor. 
  
 (b) Seller represents and warrants to Buyer that as of the Purchase Date for
the purchase of any Purchased Mortgage Loans by Buyer from Seller and as of the date of this Agreement and any Transaction hereunder and at all times while this Agreement and any Transaction hereunder is in full force and effect: 
  
 (i) Organization. Seller is duly organized, validly
existing and in good standing under the laws and regulations of the state of California and is duly licensed, qualified, and in good standing in every state where Seller transacts business and in any state where any Mortgaged Property is located if
the laws of such state require licensing or qualification in order to conduct business of the type conducted by Seller therein. 
  
 (ii) No Litigation. There is no action, suit, proceeding, arbitration or investigation pending or, to Seller’s knowledge,
threatened against Seller which, either in any one instance or in the aggregate, is reasonably likely to result in a Material Adverse Effect. 
  
 (iii) No Broker. Seller has not dealt with any broker, investment banker, agent, or other person, except for Buyer, who may be
entitled to any commission or compensation in connection with the sale of Purchased Mortgage Loans pursuant to this Agreement. 
  
 (iv) Good Title to Collateral. The Purchased Mortgage Loans shall be free and clear of any lien, encumbrance or impediment to
transfer, and Seller has good, valid and marketable title and the right to sell and transfer such Purchased Mortgage Loans to Buyer free and clear of all liens. 
  

 26 

 (v) Delivery of Mortgage File. With respect to each Purchased Mortgage Loan (other
than a Wet Ink Mortgage Loan), the Mortgage Note, the Mortgage, the assignment of Mortgage and any other documents required to be delivered under this Agreement and the Custodial Agreement for the Mortgage Loans have been delivered to the Custodian.
Seller or its designee is in possession of a complete, true and accurate Mortgage File with respect to the Mortgage Loans (other than Wet Ink Mortgage Loans), except for such documents the originals of which have been delivered to the Custodian.

  
 (vi) Selection Process. The Purchased
Mortgage Loans were selected from among the outstanding mortgage loans in Seller’s portfolio as to which the representations and warranties set forth in this Agreement could be made and such selection was not made in a manner so as to affect
adversely the interests of Buyer. 
  
 (vii) No
Untrue Statements. To the best of Seller’s knowledge, neither this Agreement nor any written statement made, or any report or other document issued or delivered or to be issued or delivered by Seller pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading. 
  
 (viii) Origination Practices. The origination
practices used by Seller with respect to each Mortgage Loan (i) have been and are in all respects legal and proper in the mortgage origination business and (ii) are in accordance with the Underwriting Guidelines previously supplied by Seller to
Buyer. 
  
 (ix) Performance of Agreement.
Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement on its part to be performed. 
  
 (x) Seller Not Insolvent. Seller is not, and with the passage of time does not expect to become,
insolvent. 
  
 (xi) No Event of Default.
No Event of Default has occurred and is continuing hereunder. 
  
 (xii) Financial Condition. 
  
 (A) The consolidated pro forma balance sheets of the Seller and its consolidated Subsidiaries as of December 31, 2002 and the related consolidated pro forma statements of income and of cash flows for the fiscal
quarter ended on each such date, copies of which have heretofore been furnished to the Buyer, are complete and correct and present fairly the pro forma consolidated financial condition of the Seller and its consolidated Subsidiaries as at such
dates, and the pro forma consolidated results of their pro forma operations and their consolidated cash flows for the fiscal year then ended. 
  
 (B) All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such accountants or a Responsible Officer, as the case may be, and as disclosed therein). 
  

 27 

 (C) Neither the Seller nor any of its consolidated Subsidiaries had, at the date of the
most recent balance sheet referred to above, any material Guarantee Obligation, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment (including, without limitation, any interest rate or
foreign currency swap or exchange transaction, or other financial derivative), which is not reflected in the foregoing statements or in the notes thereto. 
  
 (xiii) No Change. Since December 31, 2002, there has been no development or event which has had or is reasonably expected to have a
Material Adverse Effect. 
  
 (xiv) Corporate
Power; Compliance with Law. The Seller (a) has the corporate power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee, to carry on its business as now being or as proposed to be
conducted, to originate, acquire and own Mortgage Loans, to sell and repurchase such Mortgage Loans pursuant to this Agreement, and to make, deliver and perform this Agreement and each other Facility Document, and (b) is in compliance in all
material respects with all Requirements of Law (including environmental law and the Real Estate Settlement Procedures Act, the Home Ownership and Equity Protection Act and related state law). 
  
 (xv) Enforceability. This Agreement has been duly and
validly executed and delivered by the Seller and constitutes, and each other Facility Document when executed and delivered on behalf of the Seller will constitute, a legal, valid and binding obligation of the Seller, enforceable against the Seller
in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law). 
  
 (xvi) Collateral; Collateral Security. 
  
 (A) If the Transactions are recharacterized as secured financings, the provisions of this Agreement are effective to create in favor of the Buyer a valid security interest in all right, title and interest of the
Seller in, to and under the Collateral. 
  
 (B)
Upon receipt by the Custodian of each Mortgage Note, endorsed in blank by a duly authorized officer of the Seller, the Buyer shall have a fully perfected first priority security interest therein, in the Purchased Mortgage Loan evidenced thereby, and
the Seller’s interest in the related Mortgaged Property. 
  
 (C) Upon filing of financing Statements on Form UCC-1 naming the Buyer as “Secured Party” and the Seller as “Debtor”, and describing the Collateral, the security interests granted hereunder in the
Collateral (other than Mortgage Notes) will constitute fully perfected first priority security interests under the Uniform Commercial Code in all right, title and interest of the Seller in, to and under such Collateral, which can be perfected by
filing under the Uniform Commercial Code. 
  
 (xvii) No Burdensome Restrictions. No Requirement of Law or Contractual Obligation of the Seller or any of its Subsidiaries has a Material Adverse Effect. 
  
 (xviii) Taxes. The Seller has filed all Federal income tax returns and all other material tax returns
that are required to be filed by it and has paid all taxes due pursuant to such returns or pursuant to any assessment received by it, except for any such taxes or assessments, if any, that 

  

 28 

 
are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves in conformity
with GAAP have been provided. No tax Lien has been filed, and, to the knowledge of the Seller, no claim is being asserted, with respect to any such tax or assessment. 
  
 (xix) Investment Company Act; Other Regulations. The Seller is not an “investment company”,
or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. 
  
 (xx) Subsidiaries. The Seller has no Subsidiaries other than in connection with a investment permitted under Section 11(g)(ii)
which the Buyer has not approved. 
  
 (xxi)
ERISA. Each of Seller and its ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA and the Internal Revenue Code and regulations and published interpretations thereunder, and (b) no ERISA Event
has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, is reasonably expected to result in liability of the Seller or any of its ERISA affiliates which would be material to the Seller or any of
its ERISA Affiliates on a consolidated basis. 
  
 (xxii) Closing Letters for Wet Ink Mortgage Loans. Other than in states where prohibited or where other insurance applies, for each Wet Ink Mortgage Loan: (a) Seller has entered into an escrow agreement or closing instruction letter
with a closing agent pursuant to which such closing agent is required to obtain a complete Mortgage File for such Wet Ink Mortgage Loan as a condition to disbursing Seller’s funds on account of the principal amount of such Mortgage Loan; and
(b) such closing agent is either a title insurance company licensed to do business in the state where such Mortgaged Property is located (a “Licensed Title Company”) or an abstract company or other agent for a Licensed Title
Company, in connection with which a Licensed Title Company has issued to Seller an insured closing letter in customary form by which such Licensed Title Company assumes responsibility for (among other things) such closing agent’s compliance
with clause “a.” 
  
 (c) Seller represents and warrants
to the Buyer that each Purchased Mortgage Loan sold hereunder and each pool of Purchased Mortgage Loans sold in a Transaction hereunder, as of the related Purchase Date, conforms in all material respects to the representations and warranties set
forth in Schedule 1 attached hereto and that each Mortgage Loan delivered hereunder as Additional Loans or Substituted Mortgage Loans, as of the date of such delivery, conforms in all material respects to the representations and warranties set forth
in Schedule 1 hereto. Seller further represents and warrants to the Buyer that, as of the fifth (5th) Business Day
of each month, the Collateral Information delivered on such day with respect to each Purchased Mortgage Loan is complete, true and correct. It is understood and agreed that the representations and warranties set forth in Schedule 1 hereto, if any,
shall survive delivery of the respective Mortgage File to Buyer or its designee (including the Custodian). 
  
 (d) On the Purchase Date for any Transaction, Buyer and Seller shall each be deemed to have made all the foregoing representations with respect to itself
as of such Purchase Date. 
  
 11. NEGATIVE COVENANTS OF THE SELLER

  
 On and as of the date of this Agreement and each Purchase
Date and until this Agreement is no longer in force with respect to any Transaction, Seller covenants that it will not (unless otherwise permitted herein): 
  

 29 

 (a) take any action which would directly or indirectly impair or adversely affect Buyer’s title to
or the value of the Purchased Mortgage Loans; 
  
 (b) pledge,
assign, convey, grant, bargain, sell, set over, deliver or otherwise transfer any interest in the Purchased Mortgage Loans to any person not a party to this Agreement (other than in connection with a Whole Loan Sale or Permitted Securitization
consummated as provided herein) nor will the Seller create, incur or permit to exist any lien, encumbrance or security interest in or on the Purchased Mortgage Loans except as described in Section 6 of this Agreement; 
  
 (c) (i) liquidate, wind up or dissolve itself (or suffer any liquidation,
winding up or dissolution), (ii) sell all or substantially all of its assets, (iii) change its name, identity or corporate structure, (iv) upon less than thirty (30) days’ prior written notice to Buyer change its chief executive office or its
principal place of business, or (v) enter into any transaction of merger or consolidation or amalgamation other than consolidations and mergers in connection with which (i) Seller is the surviving corporation or (ii) the entity into which the Seller
consolidates or merges has equity and a market value of at least that of the Seller immediately prior to such merger or consolidation and such entity expressly assumes the obligations of the Seller at the time of such merger or consolidation, and in
any case, no Event of Default exists immediately prior to, or will occur as a result of, such consolidation or merger; 
  
 (d) create, incur, assume or suffer to exist any Guarantee Obligation (other than Guarantee Obligations disclosed or reserved for in the financial
statements referred to in Section 10(b)(xii) and Guarantee Obligations relating to Indebtedness permitted under Section 11(m)); 
  
 (e) engage in any line or lines of business activity other than the businesses now generally carried on by it or businesses otherwise in the ordinary
course of mortgage banking; 
  
 (f) enter into any transaction
(including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service), with any Affiliate unless such transaction is (a) otherwise not prohibited under this Agreement, (b) in the ordinary course of
Seller’s business and (c) upon fair and reasonable terms no less favorable to Seller than it would obtain in a comparable arm’s length transaction with a Person which is not an Affiliate; provided, however, that nothing
contained herein shall restrict the right of Seller, so long as an Event of Default does not exist, to: 
  
 (i) pay management fees in an amount not to exceed $500,000 in the aggregate during any fiscal year to Guarantor, or to Affiliates of
Guarantor, 
  
 (ii) pay customary fees and
compensation to, and provide customary indemnification in favor of directors, officers and other employees of Seller, 
  
 (iii) provide customary indemnification in favor of directors, officers and other employees of Guarantor to the extent such
indemnifications are permitted under applicable law, 
  
 (iv) provide reasonable employee relocation packages to its executives, 
  
 (v) enter into transactions with Lending Concourse, Inc. or similar entities; or 
  
 (vi) enter into other transactions with Affiliates permitted
under Section 11(g) and (i) below; 
  
 provided further, that
notwithstanding that there shall exist an Event of Default, nothing herein contained shall restrict the right of Seller to advance to Guarantor that portion of taxes due and payable by Guarantor and its consolidated Subsidiaries reasonably allocable
to the business activities of Seller and its consolidated Subsidiaries. 
  

 30 

 (g) make any advance, loan (other than residential mortgage loans in the ordinary course of business),
extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person; provided, however, that
nothing contained herein shall restrict the right of Seller 
  
 (i) to make reimbursable servicing advances in the ordinary course of Seller’s business, 
  
 (ii) to make advances to and investments in or otherwise create Subsidiaries of Seller organized under the laws of the United States of
America in the ordinary course of business, 
  
 (iii) to make investments in Cash Equivalents, 
  
 (iv) to retain subordinated certificates in connection with the issuance of mortgage-backed securities supported or secured by Mortgage Loans, 
  
 (v) to enter into hedges, 
  
 (vi) to make advances to and investments in its direct or indirect special purpose Subsidiaries in
connection with Foreign NIM Transactions (including, without limitation, in the form of transfers of certificates representing credit enhancements and/or prepayment penalties and/or other similar interests derived from a securitization of
Seller’s Mortgage Loans), 
  
 (vii) to make
other investments (other than investments in Subsidiaries) not otherwise permitted hereunder in an amount not to exceed $1,000,000 in the aggregate; 
  
 (viii) further, to make advances to or investments in Guarantor for taxes due and payable by Guarantor and its consolidated Subsidiaries
reasonably allocable to the business activities of Seller and its consolidated Subsidiaries for; and 
  
 (ix) maintain any of the foregoing in existence on the date hereof, and any renewals, extensions and refinancings of any of the foregoing;

  
 (h) make any changes to its fiscal year; 
  
 (i) after the occurrence and during the continuation of an Event of Default,
(x) declare or pay any dividend or make any other distribution on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of any shares
of any class of Capital Stock of the Seller or any warrants or options to purchase any such Capital Stock, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or
property or in obligations of the Seller (except as permitted under the second proviso to Section 11(f)) or (y) make any bonus or other extraordinary compensation payment to a senior executive officer (other than required tax payments) or (z) make a
capital expenditure not referenced in the capital expenditure budget approved by Buyer in its reasonable discretion in excess of $1,000,000 in any fiscal year of Seller; 
  
 (j) amend, modify or change in any material respect, or consent or agree to any amendment, modification or change to any of
the terms of any Indebtedness (other than any such amendment, modification or change which would extend the maturity or reduce the amount of any payment of principal thereof or which would reduce the rate or extend the date for payment of interest
thereon); 
  

 31 

 (k) enter into any arrangement with any Person providing for the leasing by the Seller of real or
personal property which has been or is to be sold or transferred by the Seller to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Seller;

  
 (l) enter into any agreement, other than this Agreement or an
agreement entered into pursuant to Section 11(m) below, which prohibits or limits the ability of the Seller to create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired;

  
 (m) be liable for or create, assume, incur, guarantee, or in
any manner become liable, contingently or otherwise, in respect of any Indebtedness, except: 
  
 (i) the Transactions; 
  
 (ii) other Indebtedness to the Buyer arising under this Agreement and the other Facility Documents; 
  
 (iii) obligations in connection with operating expenses
arising in the ordinary course of the Seller’s business; 
  
 (iv) secured Indebtedness relating solely to the acquisition or leasing of equipment (including computers) used in the ordinary course of business and secured by such equipment, to the extent that such leases are
ordinary and customary in the Seller’s industry, and the proceeds of which are not distributed to Seller except as reimbursement for monies expended to fund the financing, acquisition or leasing of such equipment; and 
  
 (v) indebtedness or other liabilities on account of
incidentals or services supplied or furnished to the Seller (including accountants’ and attorneys’ fees), provided, that such other indebtedness is incurred in connection with the transactions contemplated hereby and the aggregate amount
of the indebtedness or liabilities described in this clause (v) shall not exceed $100,000 at any one time outstanding; 
  
 (vi) Indebtedness reflected in the financial statements referred to in Section 10(b)(xii) above and any extensions or refinancings
thereof; 
  
 (vii) obligations under Capital
Leases in an aggregate amount not to exceed at any one time outstanding $2,500,000; 
  
 (viii) so long as an Event of Default has not occurred and is not continuing, Indebtedness and repurchase arrangements entered into by
Seller or any of its Subsidiaries in the ordinary course of business, which arrangements may be secured by any assets of Seller or such Subsidiary other than Purchased Mortgage Loans which have not been repurchased by Seller, 
  
 (ix) financings of residual interests issued to Seller or
any of its Subsidiaries in connection with securitization transactions entered into in the ordinary course of business, which financings may be secured by the residual interests and financings in support of “interest only” strips included
in such securitizations; 
  

 32 

 (x) arbitrage investment lines of credit entered into by Seller with non-Affiliates in
the ordinary course of business, which lines of credit may be secured by the investment securities purchased with the proceeds thereof; and 
  
 (xi) Indebtedness secured by acquired assets, so long as: (i) such Indebtedness does not exceed $5,000,000 in the aggregate for Seller and
all Subsidiaries at any time outstanding, (ii) such Indebtedness was not incurred in contemplation of the acquisition and (iii) the lien securing such Indebtedness does not extend to any assets other than those being acquired; 
  
 (n) amend the Underwriting Guidelines in any material respect without
delivering the notice required under Section 12(g) and obtaining Buyer’s prior written consent, such consent not to be unreasonably withheld, delayed or conditioned; 
  
 (o) commence a voluntary case under bankruptcy or other similar insolvency laws without the unanimous vote of Seller’s
board of directors. 
  
 12. AFFIRMATIVE COVENANTS OF THE SELLER 

 
 For so long as this Agreement is in effect: 
  
 (a) Seller shall promptly notify Buyer of any material adverse change in its
business operations and/or financial condition. 
  
 (b) Seller
shall provide Buyer with copies of such documentation as Buyer may reasonably request evidencing the truthfulness of the representations set forth in Section 10, including but not limited to resolutions evidencing the approval of this Agreement by
Seller’s board of directors or loan committee and copies of the minutes of the meetings of Seller’s board of directors or loan committee at which this Agreement and the Transactions contemplated by this Agreement were approved. 

 
 (c) Seller shall, at Buyer’s request, take all action necessary to
ensure that Buyer will have a first priority security interest in the Purchased Mortgage Loans (including, among other things, filing such Uniform Commercial Code financing statements as Buyer may reasonably request). 
  
 (d) The Seller acknowledges that the Buyer has the right to perform
continuing due diligence reviews with respect to the Purchased Mortgage Loans, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise. The Seller agrees that upon reasonable prior
notice to the Seller, the Buyer or its authorized representatives will be permitted during normal business hours to examine, inspect, make copies of, and make extracts of, the Mortgage Files and any and all documents, records, agreements,
instruments or information relating to the Mortgage Loans in the possession, or under the control, of the Seller. The Seller shall reimburse the Buyer for any and all out-of-pocket costs and expenses reasonably incurred by the Buyer in connection
with the Buyer’s on-going due diligence and auditing activities pursuant to this Section 12(d). 
  
 (e) Seller shall notify Buyer no later than one (1) Business Day after obtaining actual knowledge thereof, if any event has occurred that constitutes an
Event of Default with respect to Seller or any event that with the giving of notice or lapse of time, or both, would become an Event of Default with respect to Seller. 
  
 (f) Seller shall cause each Purchased Mortgage Loan subject to this Agreement to be serviced in accordance with Section 25
hereof. 
  

 33 

 (g) Seller shall provide Buyer with a copy of any proposed material changes to Seller’s Underwriting
Guidelines not less than ten (10) Business Days prior to the effectiveness of any such change. 
  
 (h) Seller shall, upon request of Buyer enter into hedging transactions with respect to fixed rate Purchased Mortgage Loans in order to protect adequately, in the reasonable judgment of Buyer, against interest rate
risks and assign such hedging transactions to Buyer. 
  
 (i)
Seller shall provide Buyer on each Purchase Date and by no later than the fifth Business Day of each month, either by direct modem electronic transmission or via a computer diskette, the Collateral Information in computer readable Excel format with
respect to all Purchased Mortgage Loans then subject to Transactions and shall provide Buyer with other information with respect to the Mortgage Loans and any additional reports as Buyer may reasonably request with respect to the Mortgage Loans.

  
 (j) Seller shall provide Buyer with the following financial
and reporting information: 
  
 (i) Within 90 days
after the last day of its fiscal year, (i) the audited consolidated balance sheets of each of Guarantor and Seller and its respective Subsidiaries and the unaudited consolidating balance sheet of each of Guarantor and Seller and its respective
Subsidiaries as of the end of such year and the related consolidated statements of earnings, shareholders’ equity and cash flow for such year, setting forth in the case of the audited consolidated statement in comparative form the figures for
the previous fiscal year, and accompanied by an opinion of a nationally recognized independent accounting firm which report shall state that such audited consolidated financial statements present fairly the financial positions and results of
operations of each of Guarantor and Seller and its respective Subsidiaries for the periods indicated in conformity with GAAP applied on a basis consistent with prior years, except as stated therein (such opinion shall not be qualified or limited
because of a restricted or limited examination by such auditors of any material portion of Guarantor’s, Seller’s or any Subsidiary’s records); 
  

(ii) Within 60 days after the last day of the first three fiscal quarters in any fiscal year, (i) the unaudited consolidated and
consolidating balance sheets as of the close of such quarter and related statements of income and changes in cash flow for such quarter and that portion of the fiscal year ending as of the end of such quarter setting forth in comparative form the
figures for the corresponding period in the prior year in each case certified by a Responsible Officer as fairly presenting the consolidated financial position of Seller and its Subsidiaries as at the dates indicated and the results of their
operations and cash flow for the periods indicated in accordance with GAAP; and (ii) forecasts prepared by management of Seller for each of the succeeding months for a twelve month period setting forth in reasonable detail the projected origination
level, operating cost and estimate of the net interest margin assumptions and resulting cash flow, balance sheet and income statement as at the end of each such month and such twelve-month period, together with a statement of all material
assumptions on which such forecasts are based (it being understood that such forecasts are subject to inherent uncertainties and contingencies, many of which are beyond Seller’s control, and that no assurance can be given that such forecasts
will be realized); 
  
 (iii) Within 30 days after
the last day of each month in any fiscal year, (a) the consolidated unaudited general ledger trial balance, statements of income and balance sheets and statements of changes in cash flow of Seller and its Subsidiaries for such month and as of the
end of such month in each case certified by a Responsible Officer as fairly presenting the consolidated financial position of Seller and its Subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods
indicated in accordance with GAAP; (b) a 

  

 34 

 
budget forecast for cash use by Seller for the two month period then commencing setting forth sources and uses of such cash by Seller for such period,
certified by a Responsible Officer and (c) Seller’s monthly report in substantially the form attached hereto as Exhibit X; 
  
 (iv) Within 30 days after the last day of each month in any fiscal year of the Seller, a compliance certificate from a Responsible Officer
certifying that to the best knowledge of such officer, no default or Event of Default under the Agreement has occurred and is continuing (or if a default or Event of Default has occurred and is continuing, stating the nature thereof and the action
which Seller proposes to take with respect thereto); 
  
 (v) Within 60 days after the last day of the first three fiscal quarters in any fiscal year and within 90 days after the last day of its fiscal year of the Seller, an officer’s certificate from a Responsible Officer addressed to Buyer
certifying that, as of such date, Seller is in compliance with all of the terms, conditions and requirements of the Agreement and other Facility Documents (such certification to include in reasonable detail the calculations used in demonstrating
compliance with the financial covenants set forth in Section 13(xiii)-(xviii) for all applicable periods during such fiscal year); 
  
 (vi) Upon request by the Buyer, copies of any financial statements, appraisal, projections or other relevant documents in the
Seller’s possession useful in evaluating the credit of Seller and its Subsidiaries; 
  
 (vii) As soon as available, copies of all proxy statements, financial statements, and reports which Guarantor sends to its stockholders,
and copies of all regular, periodic and special reports, and all registration statements under the Securities Act of 1933, as amended, which it files with the Securities and Exchange Commission or any government authority which may be substituted
therefor, or with any national securities exchange; 
  
 (viii) Within 45 days after the last day of each fiscal quarter in any fiscal year, an officer’s certificate from a Responsible Officer addressed to Buyer certifying the calculation of Tangible Net Worth, including the valuation (and
the assumptions used to derive such valuation) of residual certificates, interest-only certificates and other comparable instruments with respect to securitizations of mortgage loans included in the calculation of such Tangible Net Worth;

  
 (ix) Promptly after entering into any hedging
transactions described in subsection (h) above, notify Buyer of such hedging transactions; and 
  
 (x) Promptly after the renewal of any fidelity insurance and errors omissions insurance policy that identifies Buyer as a co-insured,
notify Buyer of such renewal. 
  
 (k) Seller covenants to
repurchase or substitute pursuant to Section 9 hereof any Mortgage Loan, within one Business Day following written notice from Buyer, as to which a representation or warranty made by Seller set forth in Schedule 1 hereto proves to be incorrect or
untrue in any material respect. 
  
 (l) The Seller shall (i)
preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises; (ii) comply in all material respects with all Requirements of Laws (including, without limitation, all environmental laws and local,
municipal, state or Federal ordinances, regulations or statutes regarding Predatory Lending Practices) and Contractual Obligations; and (iii) keep adequate records and books of account, in which complete entries will be made in accordance with GAAP
consistently applied. Seller shall maintain, and shall make available to Buyer upon request, written 

  

 35 

 
policies and procedures to determine whether any Mortgage Loan contains any terms, or carries or carried any fees, charges or other costs, such that the
requirements of the Home Ownership Equity Protection Act, 15 U.S.C. Section 1639 and 12 C.F.R. Section 226.32 – Requirements for Certain Closed-End Home Mortgages, are applicable. 
  
 (m) The Seller shall maintain insurance with financially sound and reputable insurance companies, and with respect to
property and risks of a character usually maintained by entities engaged in the same or similar business similarly situated, against loss, damage and liability of the kinds and in the amounts customarily maintained by such entities. In addition, the
Seller shall obtain and maintain at its own expense and keep in full force and effect throughout the term of this Agreement a blanket fidelity bond in an amount at least equal to $10,000,000 and an errors and omissions insurance policy covering its
officers and employees and other Persons acting on behalf of it in an amount at least equal to such amounts as are required by criteria set forth by FNMA under its approved mortgage program, which insurance policies shall be obtained from insurance
companies which are acceptable to the Buyer in its reasonable discretion and shall name Buyer as a loss payee. 
  
 (n) The Seller shall give notice to the Buyer, immediately upon (and in any event not more than one Business Day after) the Seller obtaining notice
thereof, of: 
  
 (i) any material default or
litigation related to any Collateral, any Material Adverse Effect and any event or change in circumstances which is reasonably expected to have a Material Adverse Effect; and 
  
 (ii) with respect to any Purchased Mortgage Loan, if the Seller acquires knowledge that the Mortgaged
Property violates environmental law or has been materially damaged so as to affect adversely the value as collateral of such Mortgage Loan. 
  
 Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of the Seller setting forth details of the occurrence referred to
therein and stating what action the Seller has taken or proposes to take with respect thereto. 
  
 (o) The Seller shall permit the Buyer to maintain at Buyer’s expense a full time employee at the Sellers’ principal place of business to monitor the Seller’s Mortgage Loan origination and servicing
process. 
  
 (p) The Seller shall use commercially reasonable
efforts to maintain at all times committed facilities (other than this Agreement) with a maximum aggregate principal amount of commitments equal to at least $150,000,000. 
  
 13. EVENTS OF DEFAULT 
  
 If any of the following events (each an “Event of Default”) occur, Seller and Buyer shall have the rights set forth in Section 14, as
applicable: 
  
 (i) Seller or Buyer fails to
satisfy or perform either: 
  
 (A) Any payment or
purchase obligation under this Agreement (including without limitation, the payment of the Repurchase Price) when due; or 
  

 36 

 (B) Any other material obligation or covenant under this Agreement, other than an Event
of Default specifically included in any of the other subsections of this Section 13 within five (5) Business Days after notice of such breach; 
  
 (ii) an Act of Insolvency occurs with respect to Seller, Guarantor or Buyer; 
  
 (iii) any representation made by Seller shall have been
incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated; provided, that any such incorrect or untrue representation with respect to a Purchased Mortgage Loan set forth in Schedule 1 hereto
shall not be an Event of Default if Borrower repurchases (or substitutes for) such Mortgage Loan in accordance with Section 14(a)(xiii); 
  
 (iv) Seller or Buyer shall admit its inability to, or its intention not to, perform any of its obligations hereunder; 
  
 (v) any governmental, regulatory, or self-regulatory
authority takes any action to remove, limit, restrict, suspend or terminate the rights, privileges, or operations of the Seller or any of its Affiliates, including suspension as an issuer, lender or seller/servicer of mortgage loans, which
suspension has a Material Adverse Effect, and which continues for more than 24 hours; 
  
 (vi) Buyer, in its reasonable good faith judgment, believes that there has been a material adverse change in the business, operations,
corporate structure or financial condition of Seller or that Seller will not meet any of its obligations under any Transaction pursuant to this Agreement or any other agreement between the parties; 
  
 (vii) Seller, Guarantor or any of its respective
Subsidiaries shall fail to perform or shall violate any other material agreement or instrument between any of them and Buyer or any of its Affiliates and such failure or violation continues unremedied after any applicable grace period therefor, or
Seller, Guarantor or any of its respective Subsidiaries shall fail to pay when due or within any applicable grace period therefor any portion of any single obligation constituting Indebtedness of Seller, Guarantor or any of its respective
Subsidiaries in excess of $250,000; or any default or other event shall occur under or with respect to any agreement under which any single obligation constituting Indebtedness of Seller, Guarantor or any of its respective Subsidiaries in excess of
$250,000 was created or is governed, the effect of which is to cause, or to permit the holder or holder of such indebtedness to cause, such indebtedness to become due prior to its stated maturity; or any single obligation constituting indebtedness
of Seller, Guarantor or any of its respective Subsidiaries in excess of $250,000 shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled payment), prior to the stated maturity thereof; 
  
 (viii) A final judgment by any competent court in the United
States of America for the payment of money in an amount of at least $250,000 is rendered against the Seller, and the same remains undischarged or unpaid for a period of sixty (60) days during which execution of such judgment is not effectively
stayed; 
  
 (ix) This Agreement shall for any
reason cease to create a valid, first priority security interest in any of the Purchased Mortgage Loans purported to be covered hereby; 
  
 (x) A Market Value Collateral Deficit or Securitization Value Collateral Deficit occurs and is not eliminated within the time period
specified in Section 4(b); 
  

 37 

 (xi) any Person or entity or any group (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) of Persons and/or entities, shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended),
directly or indirectly, in one or more transactions, of securities of the Guarantor or the Seller(or other securities convertible into such securities) representing more than 25% (or, following an initial public offering of common stock of the
Seller, 50%) of the combined voting power of all securities of the Seller entitled to vote in the election of directors (other than the Person or entities owning such securities on the date of this Agreement). 
  
 (xii) at any time, the Leverage Ratio shall exceed either
(a) 2.0 to 1.0 with respect to non-warehouse Indebtedness only or (b) 12.0 to 1.0; 
  
 (xiii) at any time, the unencumbered cash and Cash Equivalents shall be less than $1,000,000; 
  
 (xiv) at any time, the sum of (x) unencumbered cash and Cash
Equivalents and (y) the Seller’s available borrowing capacity shall be less than $10,000,000; 
  
 (xv) Tangible Net Worth shall be less than the amount set forth in the right hand column below at any time during the period set forth in
the left hand column below: 
  

			
	 Time Period

	  	 Tangible Net Worth

	March 18, 2003 – June 30, 2003	  	$75,000,000
		
	July 1, 2003 – September 30, 2003	  	$75,000,000 plus 25% of the Net Income for the fiscal quarter ending June 30, 2003
		
	October 1, 2003 – December 31, 2003	  	$75,000,000 plus 25% of the Net Income for the fiscal quarters ending June 30, 2003 and September 30, 2003
		
	January 1, 2004 – March 31, 2004	  	$75,000,000 plus 25% of the Net Income for the fiscal quarters ending June 30, 2003, September 30, 2003 and December 31, 2003
		
	April 1, 2004 – June 30, 2004	  	$75,000,000 plus 25% of the Net Income for the fiscal quarters ending June 30, 2003, September 30, 2003, December 31, 2003 and March 31, 2004
		
	July 1, 2004 – Final Repurchase Date	  	$75,000,000 plus 25% of the Net Income for the fiscal quarters ending June 30, 2003, September 30, 2003, December 31, 2003, March 31, 2004 and June 30, 2004

  

 38 

 (xvi) for any fiscal quarter of Seller, beginning with the fiscal quarter ending March
31, 2003, the sum of (x) Net Income of the Seller and its Subsidiaries on a consolidated basis in accordance with GAAP plus (y) other non-cash charges with respect to write downs of residual interests of the Seller and its Subsidiaries not exceeding
$4,000,000, for any fiscal quarter of Seller, beginning with the fiscal quarter ending March 31, 2003, and not exceeding $10,000,000 on a four quarter rolling basis commencing with the four quarters ending March 31, 2003 shall be less than $1.00; or

  
 (xvii) for any fiscal quarter of Seller, the
Interest Coverage Ratio shall be less than 1.25:1.00. 
  
 14. REMEDIES

  
 (a) If an Event of Default occurs with respect to Seller,
the following rights and remedies are available to Buyer: 
  
 (i) At the option of Buyer, exercised by notice to Seller (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency), the Repurchase Date
for each Transaction hereunder shall be deemed immediately to occur. 
  
 (ii) If Buyer exercises or is deemed to have exercised the option referred to in subsection (a)(i) of this Section, 
  
 (A) Seller’s obligations hereunder to repurchase all Purchased Mortgage Loans in such Transactions shall thereupon become immediately
due and payable, 
  
 (B) to the extent permitted
by applicable law, the Repurchase Price with respect to each such Transaction shall be increased by the aggregate amount obtained by daily application of, on a 360 day per year basis for the actual number of days during the period from and including
the date of the exercise or deemed exercise of such option to but excluding the date of payment of the Repurchase Price as so increased, (x) for each such Transaction, the greater of the related Pricing Rate plus 4.0% or the Prime Rate plus 5.0% to
(y) the Repurchase Price for such Transaction as of the Repurchase Date as determined pursuant to subsection (a)(i) of this Section (decreased as of any day by (I) any amounts actually in the possession of Buyer pursuant to clause (C) of this
subsection, (II) any proceeds from the sale of Purchased Mortgage Loans applied to the Repurchase Price pursuant to subsection (a)(xii) of this Section, and (III) any amounts applied to the Repurchase Price pursuant to subsection (a)(iii) of this
Section), and 
  
 (C) all Income actually
received by the Buyer or its designee (including the Custodian) pursuant to Section 5 shall be applied to the aggregate unpaid Repurchase Price owed by Seller. 
  

(iii) After one Business Day’s notice to Seller (which notice need not be given if an Act of Insolvency shall have occurred, and
which may be the notice given under subsection (a)(i) of this Section), Buyer may (A) immediately sell, without notice or demand of any kind, at a public or private sale and at such price or prices Buyer may reasonably deem satisfactory any or all
Purchased Mortgage Loans subject to a Transaction hereunder or (B) in its sole discretion 

  

 39 

 
elect, in lieu of selling all or a portion of such Purchased Mortgage Loans, to give Seller credit for such Purchased Mortgage Loans in an amount equal to
the Market Value of the Purchased Mortgage Loans against the aggregate unpaid Repurchase Price and any other amounts owing by Seller hereunder. The proceeds of any disposition of Purchased Mortgage Loans shall be applied first to the costs and
expenses incurred by Buyer in connection with Seller’s default; second to costs of cover and/or related hedging transactions relating to Transactions and to losses, damages, costs or expenses directly arising or resulting from the occurrence of
the Event of Default; third to the Repurchase Price; and fourth to any other outstanding obligation of Seller to Buyer or its Affiliates. 
  
 (iv) The parties recognize that it may not be possible to purchase or sell all of the Purchased Mortgage Loans on a particular Business
Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Mortgage Loans may not be liquid. In view of the nature of the Purchased Mortgage Loans, the parties agree that liquidation of a
Transaction or the underlying Purchased Mortgage Loans does not require a public purchase or sale and that a good faith private purchase or sale shall be deemed to have been made in a commercially reasonable manner. Accordingly, Buyer may elect, in
its sole discretion, the time and manner of liquidating any Purchased Mortgage Loan and nothing contained herein shall (A) obligate Buyer to liquidate any Purchased Mortgage Loan on the occurrence of an Event of Default or to liquidate all Purchased
Mortgage Loans in the same manner or on the same Business Day or (B) constitute a waiver of any right or remedy of Buyer. However, in recognition of the parties’ agreement that the Transactions hereunder have been entered into in consideration
of and in reliance upon the fact that all Transactions hereunder constitute a single business and contractual relationship and that each Transaction has been entered into in consideration of the other Transactions, the parties further agree that
Buyer shall use its best efforts to liquidate all Transactions hereunder upon the occurrence of an Event of Default as quickly as is prudently possible in the reasonable judgment of Buyer. 
  
 (v) Buyer shall, without regard to the adequacy of the
security for the Seller’s obligations under this Agreement, be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession of and protect, collect, manage, liquidate, and sell the Collateral or
any portion thereof, and collect the payments due with respect to the Collateral or any portion thereof. Seller shall pay all costs and expenses incurred by Buyer in connection with the appointment and activities of such receiver. 
  
 (vi) Seller agrees that Buyer may obtain an injunction or an
order of specific performance to compel Seller to fulfill its obligations as set forth in Section 25, if Seller fails or refuses to perform its obligations as set forth therein. 
  
 (vii) Seller shall be liable to Buyer for the amount of all expenses, reasonably incurred by Buyer in
connection with or as a consequence of an Event of Default, including, without limitation, reasonable legal fees and expenses and reasonable costs incurred in connection with hedging or covering transactions relating to Transactions. 
  
 (viii) Buyer shall have all the rights and remedies provided
herein, provided by applicable federal, state, foreign, and local laws (including, without limitation, the rights and remedies of a secured party under the Uniform Commercial Code of the State of New York, to the extent that the Uniform Commercial
Code is applicable, and the right to offset any mutual debt and claim), in equity, and under any other agreement between Buyer and Seller. 
  

 40 

 (ix) Buyer may exercise one or more of the remedies available to Buyer immediately upon
the occurrence of an Event of Default and, except to the extent provided in subsections (a)(i) and (iii) of this Section, at any time thereafter without notice to Seller. All rights and remedies arising under this Agreement as amended from
time-to-time hereunder are cumulative and not exclusive of any other rights or remedies which Buyer may have. 
  
 (x) In addition to its rights hereunder, Buyer shall have the right to proceed against any assets of Seller which may be in the possession
of Buyer or its agent on Buyer’s behalf including the right to liquidate such assets and to set off the proceeds against monies owed by Seller to Buyer pursuant to this Agreement. Buyer may set off cash, the proceeds of the liquidation of the
Purchased Mortgage Loans, any Collateral or its proceeds, and all other sums or obligations owed by Seller to Buyer against all of Seller’s obligations to Buyer, whether under this Agreement, under a Transaction, or under any other agreement
between the parties, or otherwise, whether or not such obligations are then due, without prejudice to Buyer’s right to recover any deficiency. Any cash, proceeds, or property in excess of any amounts due, or which Buyer reasonably believes may
become due, to it from Seller shall be returned to Seller after satisfaction of all obligations of Seller to Buyer. 
  
 (xi) Buyer may enforce its rights and remedies hereunder without prior judicial process or hearing, and Seller hereby expressly waives any
defenses Seller might otherwise have to require Buyer to enforce its rights by judicial process. Seller also waives any defense Seller might otherwise have arising from the use of nonjudicial process, enforcement and sale of all or any portion of
the Collateral, or from any other election of remedies. Seller recognizes that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm’s length. 

 
 (xii) Buyer and Seller hereby agree that sales of the
Purchased Mortgage Loans shall be deemed to include and permit the sales of Purchased Mortgaged Loans pursuant to a securities offering. The net proceeds of any such sale shall be applied to reduce the Repurchase Price of outstanding Transactions.

  
 (xiii) Notwithstanding anything herein to the
contrary, a breach of any representation or warranty set forth in Schedule 1 attached hereto with respect to a Purchased Mortgage Loan shall not be an Event of Default if Seller either repurchases such Mortgage Loan (or substitutes for such Mortgage
Loan in accordance with Section 9 of this Agreement) within one (1) Business Day of the discovery or receipt of notice of such breach; provided, however, that Seller shall not have the foregoing right if such breach relates to Mortgage
Loans that in the aggregate represent ten percent (10%) or more of the aggregate Purchase Price of all Purchased Mortgage Loans subject to then outstanding Transactions. The repurchase price for any such repurchase shall be the outstanding
Repurchase Price of such Mortgage Loan. 
  
 (b) If an Event of
Default occurs with respect to Buyer, the following rights and remedies are available to Seller: 
  
 (i) Upon tender by Seller of payment of the aggregate Repurchase Price for all such Transactions, Buyer’s right, title and interest
in all Purchased Mortgage Loans subject to such Transactions shall be deemed transferred to Seller, and Buyer shall deliver or cause to be transferred all such Purchased Mortgage Loans to Seller or its designee at Buyer’s expense. 

 
 (ii) If Seller exercises the option referred to in
subsection (b)(i) of this Section and Buyer fails to deliver or cause to be delivered the Purchased Mortgage Loans to Seller or its 

  

 41 

 
designee, after one Business Day’s notice to Buyer, Seller may (A) purchase Mortgage Loans (“Replacement Loans”) that are as similar as
is reasonably practicable in characteristics, outstanding principal amounts (as a pool) and interest rate to any Purchased Mortgage Loans that are not delivered by Buyer to Seller or its designee as required hereunder or (B) in its sole discretion
elect, in lieu of purchasing Replacement Loans, to be deemed to have purchased Replacement Loans at a price therefor on such date, equal to the Market Value of the Purchased Mortgage Loans. 
  
 (iii) Buyer shall be liable to the Seller (A) with respect
to Purchased Mortgage Loans (other than Additional Loans), for any excess of the price paid (or deemed paid) by Seller for Replacement Loans therefor over the Repurchase Price for such Purchased Mortgage Loans and (B) with respect to Additional
Loans, for the price paid (or deemed paid) by Seller for the Replacement Loans therefor. In addition, Buyer shall be liable to Seller for interest on such remaining liability with respect to each such purchase (or deemed purchase) of Replacement
Loans calculated on a 360-day year basis for the actual number of days during the period from and including the date of such purchase (or deemed purchase) until paid in full by Buyer. Such interest shall accrue at the greater of the Pricing Rate or
the Prime Rate. 
  
 (iv) Buyer shall be liable to
Seller for the amount of all expenses reasonably incurred by Seller in connection with or as a consequence of an Event of Default, including, without limitation, reasonable legal fees and expenses and reasonable costs incurred in connection with
covering existing hedging transactions with respect to the Purchased Mortgage Loans. 
  
 (v) Seller shall have all the rights and remedies provided herein, provided by applicable federal, state, foreign, and local laws, in
equity, and under any other agreement between Buyer and Seller, including, without limitation, the right to offset any debt or claim. 
  
 (vi) Seller may exercise one or more of the remedies available to Seller immediately upon the occurrence of an Event of Default and at any
time thereafter without notice to Buyer. All rights and remedies arising under this Agreement as amended from time-to-time hereunder are cumulative and not exclusive of any other rights or remedies which Seller may have. 
  
 15. SINGLE AGREEMENT 
  
 Buyer and Seller acknowledge that, and have entered hereunto and will enter into each Transaction hereunder in consideration
of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and that each has been entered into in consideration of the other Transactions. Accordingly, each of Buyer and Seller agrees
(i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (ii) that each of them shall be
entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that payments, deliveries, and other transfers made by either of them
in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries, and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries, and other
transfers may be applied against each other and netted; provided, however, that the parties hereto acknowledge and agree that each Purchased Mortgage Loan is identified and unique and nothing in this Agreement should limit or reduce
Buyer’s obligation to deliver the Purchased Mortgage Loans to Seller as and when provided herein. 
  

 42 

 16. NOTICES AND OTHER COMMUNICATIONS 
  
 Unless another address is specified in writing by the respective party to whom any written notice or other communication is
to be given hereunder, all such notices or communications shall be in writing or confirmed in writing and delivered at the respective addresses set forth in the form of Confirmation set forth in Exhibit I. 
  
 17. ENTIRE AGREEMENT; SEVERABILITY 
  
 This Agreement together with the applicable Confirmation constitutes the
entire understanding between Buyer and Seller with respect to the subject matter it covers and shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions involving Purchased
Mortgage Loans. By acceptance of this Agreement, Buyer and Seller acknowledge that they have not made, and are not relying upon, any statements, representations, promises or undertakings not contained in this Agreement. Each provision and agreement
herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. 
  
 18. NON-ASSIGNABILITY 
  
 The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by Seller
without the prior written consent of Buyer. Subject to the foregoing, this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. Nothing in this Agreement
express or implied, shall give to any person, other than the parties to this Agreement and their successors hereunder, any benefit or any legal or equitable right, power, remedy or claim under this Agreement. 
  
 19. TERMINABILITY 
  
 (a) This Agreement shall terminate upon the earlier of (i) the Final Repurchase Date or (ii) written notice from Seller to
Buyer to such effect, except that this Agreement shall, notwithstanding the above clauses, remain applicable to any Transaction then outstanding. 
  
 (b) Notwithstanding any termination of this Agreement or the occurrence of an Event of Default, all of the representations and warranties hereunder
(including those made in Schedule 1) shall continue and survive. 
  
 20.
INDEMNIFICATION 
  
 Seller agrees to hold Buyer harmless from
and indemnify Buyer (and its directors, officers, employees and agents) against all liabilities, losses, damages, judgments, reasonably incurred out-of-pocket costs and expenses of any kind which may be imposed on, incurred by or asserted against
Buyer (collectively, the “Costs”) relating to or arising out of the Transactions or this Agreement, including reasonable legal costs and settlement costs, except if such losses, liabilities, claims, damages or expenses result from the
gross negligence or willful misconduct or conduct in violation of applicable law of the indemnified party. Without limiting the generality of the foregoing, Seller agrees to hold Buyer harmless from and indemnify Buyer against all Costs with respect
to all Mortgage Loans relating to or arising out of any violation or alleged violation of any environmental law, rule or regulation or any consumer credit laws, including without limitation ERISA, the Truth in Lending Act, the Home Ownership and
Equity Protection Act and/or the Real Estate Settlement Procedures Act, that, in each case, results from anything other than Buyer’s gross negligence or willful misconduct or conduct in violation of applicable law. In 

  

 43 

 
any suit, proceeding or action brought by Buyer in connection with any Mortgage Loan for any sum owing thereunder, or to enforce any provisions of any
Mortgage Loan, Seller will save, indemnify and hold Buyer harmless from and against all expense, loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or
obligor thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from Seller. Seller also agrees to reimburse Buyer as and when billed by Buyer
for all of Buyer’s reasonable on-going due diligence and auditing expenses and costs and expenses incurred in connection with the enforcement or the preservation of Buyer’s rights under this Agreement or any Transaction contemplated
hereby, including without limitation the reasonable fees and disbursements of its counsel and other third party agents. Seller hereby acknowledges that the obligation of Seller hereunder is a recourse obligation of Seller. 
  
 21. GOVERNING LAW 
  
 THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 

 
 22. CONSENT TO JURISDICTION 
  
 The parties irrevocably agree to submit to the personal jurisdiction of the
United States District Court for the Southern District of New York, the parties irrevocably waiving any objection thereto. If, for any reason, federal jurisdiction is not available, and only if federal jurisdiction is not available, the parties
irrevocably agree to submit to the personal jurisdiction of the Supreme Court of the State of New York, the parties irrevocably waiving any objection thereto. 
  

23. NO WAIVERS, ETC. 
  
 No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any party to a departure herefrom shall be effective unless and
until such shall be in writing and duly executed by both of the parties hereto. Any such waiver or modification shall be effective only in the specific instance and for the specific purpose for which it was given. 
  
 24. INTENT 
  
 The parties understand and intend that this Agreement and each Transaction hereunder constitute a “repurchase
agreement” and a “securities contract” as those terms are defined under the relevant provisions of Title 11 of the United States Code, as amended. 
  
 25. SERVICING 
  
 (a) Notwithstanding the purchase and sale of the Purchased Mortgage Loans hereby, Seller shall cause the Purchased Mortgage Loans to be serviced by the
Servicer for the benefit of Buyer and, if Buyer shall exercise its rights to pledge or hypothecate the Purchased Mortgage Loans prior to the related Repurchase Date pursuant to Section 8, Buyer’s assigns. Seller shall cause the Purchased
Mortgage Loans to be serviced by the Servicer in accordance with the servicing standards as are customary with other prudent mortgage lenders with respect to mortgage loans similar to the Purchased Mortgage Loans and are acceptable to Buyer.

  

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 (b) Seller agrees that Buyer is the owner of all servicing records, including but not limited to any and
all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of Purchased Mortgage Loans (the “Servicing Records”). Seller grants Buyer a security interest in all servicing fees and rights relating to the Purchased Mortgage Loans and all Servicing
Records to secure the obligation of the Seller or its designee to service in conformity with this Section and any other obligation of Seller to Buyer. Seller will, and will cause each servicer and subservicer to, segregate such Servicing Records
from any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other
records relating to or evidencing the servicing of mortgage loans which are not Purchased Mortgage Loans and to safeguard such Servicing Records and to deliver them promptly to Buyer or its designee (including the Custodian) at Buyer’s request.

  
 (c) Upon the occurrence and continuance of an Event of
Default, Buyer may, in its sole discretion, (i) sell its right to the Purchased Mortgage Loans on a servicing released basis or (ii) terminate the Seller or Servicer as servicer of the Purchased Mortgage Loans with or without cause, in each case
without payment of any termination fee. 
  
 (d) Seller shall not
employ other third-party servicers (other than the Servicer) or sub-servicers to service the Purchased Mortgage Loans without the prior written consent of Buyer. 
  
 (e) Seller shall cause the Servicer to execute a letter agreement with Buyer acknowledging Buyer’s security interest
and agreeing that, upon notice from Buyer (or the Custodian on its behalf) that an Event of Default has occurred and in continuing hereunder, it shall deposit all Income with respect to the Purchased Mortgage Loans in the account specified in
Section 5(a), apply such Income in accordance with Section 5(e), recognize Buyer as the party in interest with respect to the Purchased Mortgage Loans and take instructions from Buyer until such Event of Default is no longer continuing. 

 
 (f) After the occurrence of an Event of Default or a Market Value
Collateral Deficit or Securitization Value Collateral Deficit which is not cured in accordance with Section 4, at the request of Buyer, Seller shall enter into a master servicing agreement with Buyer and a backup servicer reasonably acceptable to
Buyer, which agreement shall be satisfactory in form and substance to Buyer. 
  
 26. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS 
  
 The parties acknowledge that they have been advised that in the case of Transactions in which one of the parties is an “insured depository institution” as that term is defined in Section 1831(a) of Title 12 of the United States
Code, as amended, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance Fund or the Bank Insurance
Fund, as applicable. 
  
 27. NETTING 
  
 If Buyer and Seller are “financial institutions” as now or
hereinafter defined in Section 4402 of Title 12 of the United States Code (“Section 4402”) and any rules or regulations promulgated thereunder: 
  
 (a) All amounts to be paid or advanced by one party to or on behalf of the other under this Agreement or any Transaction
hereunder shall be deemed to be “payment obligations” and all amounts to be received by or on behalf of one party from the other under this Agreement or any Transaction hereunder shall be deemed to be “payment entitlements”
within the meaning of Section 4402, and this Agreement shall be deemed to be a “netting contract” as defined in Section 4402. 
  

 45 

 (b) The payment obligations and the payment entitlements of the parties hereto pursuant to this Agreement
and any Transaction hereunder shall be netted as follows. In the event that either party (the “Defaulting Party”) shall fail to honor any payment obligation under this Agreement or any Transaction hereunder, the other party (the
“Nondefaulting Party”) shall be entitled to reduce the amount of any payment to be made by the Nondefaulting Party to the Defaulting Party by the amount of the payment obligation that the Defaulting Party failed to honor.

  
 28. MISCELLANEOUS 
  
 (a) Time is of the essence under this agreement and all Transactions and all
references to a time shall mean New York time in effect on the date of the action unless otherwise expressly stated in this Agreement. 
  
 (b) Buyer shall be authorized to accept orders and take any other action affecting any accounts of the Seller in response to instructions given in writing
by any authorized officer of Seller listed on Schedule 3 hereto, as such list may be amended in writing from time to time. Seller shall indemnify Buyer, defend, and hold Buyer harmless from and against any and all liabilities, losses, damages,
costs, and expenses of any nature arising out of or in connection with any action taken by Buyer in response to such instructions received or reasonably believed to have been received from such authorized officers of Seller. 
  
 (c) If there is any conflict between the terms of this Agreement or any
Transaction entered into hereunder and the Custodial Agreement, this Agreement shall prevail. 
  
 (d) If there is any conflict between the terms of a Confirmation or a corrected Confirmation issued by the Buyer and this Agreement, the Confirmation shall prevail. 
  
 (e) This Agreement may be executed in counterparts, each of which so executed
shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. 
  
 (f) The Seller shall be responsible for the reasonable out-of-pocket costs and expenses incurred by Buyer in connection with the preparation, execution,
delivery and administration of the Facility Documents. Seller agrees to reimburse Buyer for all reasonable out-of-pocket costs and expenses of Buyer incurred in connection with any amendment or waiver with respect thereto of this Agreement requested
by Seller (including, without limitation, the fees, expenses and disbursement of outside counsel to Buyer). 
  
 (g) Buyer and Seller agree this Agreement will be held by the parties hereto in confidence and will not be disclosed to anyone other than to (i)
principals of the parties hereto, (ii) proposed transferees of all or any portion of the Mortgage Loans and (iii) legal counsel for any of the parties described in (i) and (ii) above, and other agents and representatives of the parties described in
(i) and (ii) above who need to know such information in connection with the transactions contemplated hereby and except that the Buyer, or any successor thereto, may disclose any facilities in place and/or may describe the provisions of this
Agreement in the ordinary course of business. In addition, the parties hereto shall be permitted to disclose information regarding this Agreement to the extent required by legal process. 
  

 46 

 (h) The headings in this Agreement are for convenience of reference only and shall not affect the
interpretation or construction of this Agreement. 
  
 [Signature
page follows] 
  

 47 

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

  

			
	 LEHMAN BROTHERS BANK, FSB, as Buyer

		
	 By:
	 	 /s/    GARY T.
TAYLOR        

	 	 	 Name:  Gary T. Taylor

	 	 	 Title:    Vice President

	
	 WMC MORTGAGE CORP., as Seller

		
	 By:
	 	 /s/    DAVID B.
TRZCINSKI        

	 	 	 Name:  David B. Trzcinski

	 	 	 Title:    Chief Financial Officer

 SCHEDULE 1 
  
 REPRESENTATIONS AND WARRANTIES REGARDING MORTGAGE LOANS 
  
 The Seller represents and warrants to the Buyer that, with respect to each Mortgage Loan sold in a Transaction hereunder, as of the related Purchase Date:

  
 (a) Mortgage Loans as Described. The information set
forth in the Mortgage Loan Schedule is complete, true and correct in all material respects. 
  
 (b) Payments Current Within 120 Days; Aged Mortgage Loans. The Mortgage Loan (i) together with the other Purchased Mortgage Loans subject to Transactions, would not cause the aggregate Repurchase Price for Aged
Mortgage Loans which are subject to then outstanding Transactions to exceed the lesser of (x) 20% of the aggregate Repurchase Price for all Mortgage Loans which are subject to then outstanding Transactions and (y) $80,000,000 and (ii) is not more
than 120 days Delinquent. 
  
 (c) No Outstanding Charges.
There are no defaults to the Seller’s actual knowledge in complying with the terms of the Mortgage, and all taxes, governmental assessments, insurance premiums, water, sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, or an escrow of funds has been established in an amount sufficient to pay for every such item which remains unpaid and which has been assessed but is not yet due and payable. Seller has not advanced
funds, or induced, solicited or knowingly received any advance of funds by a party other than the Mortgagor, directly or indirectly, for the payment of any amount required under the Mortgage Loan, except for interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage Loan proceeds, whichever is greater, to the day which precedes by one month the due date of the first installment of principal and interest. 
  
 (d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect, except by a written instrument which has been recorded, if necessary to protect the interests of Buyer and which has been delivered to Buyer or its designee (including the
Custodian). The substance of any such waiver, alteration or modification has been approved by the title insurer, to the extent required by the policy, and its terms are reflected on the Mortgage Loan Schedule. No Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement approved by the title insurer, and which assumption agreement is included in the Mortgage File delivered to Buyer or its designee (including the Custodian) and the terms of which
are reflected in the Mortgage Loan Schedule. 
  
 (e) No
Defenses. The Mortgage Loan is not subject to any right of rescission, set-off, counterclaim or defense, including without limitation the defense of usury, nor will the operation of any of the terms of the Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including without limitation the defense of usury, and no
such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto. 
  
 (f) Insurance Policies in Effect. The fire and casualty insurance policy covering the Mortgaged Property (1) affords sufficient insurance against
fire and such other risks as are usually insured against in the broad form of extended coverage insurance from time to time available, as well as insurance against flood hazards if the Mortgaged Property is an area identified by the Federal
Emergency Management Agency as having special flood hazards; (2) is a standard policy of insurance for the locale where the Mortgaged Property is located, conforming to the requirements of Fannie Mae or Freddie Mac, 

 
is in full force and effect, and the amount of the insurance is in the amount of the full insurable value of the Mortgaged Property on a replacement cost
basis or the unpaid balance of the Mortgage Loans, whichever is less; (3) names the present owner of the Mortgaged Property as the insured; and (4) contains a standard mortgagee loss payable clause in favor of Seller. All individual insurance
policies with respect to the Mortgage Loan are the valid and binding obligation of the insurer and contain a standard mortgage clause naming Seller, its successors and assigns, as Mortgagee. All premiums thereon have been paid. The Mortgage
obligates the Mortgagor thereunder to maintain all such insurance policies at the Mortgagor’s cost and expense, and upon the Mortgagor’s failure to do so, authorizes the holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor’s cost and expense and to seek reimbursement therefor from the Mortgagor. 
  
 (g) Compliance with Applicable Laws. Any and all requirements of any federal, state or local law including, without limitation, usury, truth-in-lending (including the Home Ownership and Equity Protection Act),
real estate settlement procedures, consumer credit protection, equal credit opportunity or disclosure laws applicable to the origination and servicing of the Mortgage Loan have been complied with, and Seller shall maintain in its possession,
available for Buyer’s inspection, and shall deliver to Buyer upon demand, evidence of compliance with all such requirements. 
  
 (h) No Satisfaction of Mortgage. The Mortgage has not been satisfied, canceled, subordinated or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole or in part, nor has any instrument been executed that would effect any such release, cancellation, subordination or rescission. 
  
 (i) Location and Type of Mortgaged Property. The Mortgaged Property is
located in the state identified in the Mortgage Loan Schedule and consists of a parcel of real property with a detached single family residence erected thereon, or a two- to four-family dwelling, or an individual condominium unit in a condominium
project, or an individual unit in a planned unit development and no residence or dwelling is a mobile home or a manufactured dwelling (other than a mobile home or a manufactured dwelling permanently affixed to real property). No portion of the
Mortgaged Property is used for commercial purposes (except for home offices). 
  
 (j) Valid First or Second Lien. The Mortgage is a valid, subsisting and enforceable first or second lien on the Mortgaged Property, including all buildings on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems located in or annexed to such buildings, and all additions, alterations and replacements made at any time with respect to the foregoing. The lien of the Mortgage is subject only
to: 
  
 (i) the lien of current real property
taxes and special assessments not yet due and payable; 
  
 (ii) covenants, conditions and restrictions, rights of way, easements and other matters of the public record as of the date of recording acceptable to mortgage lending institutions generally and specifically referred to in the lender’s
title insurance policy delivered to the originator of the Mortgage Loan and (i) referred to or otherwise considered in the appraisal made for the originator of the Mortgage Loan or (ii) which do not adversely affect the appraised value of the
Mortgaged Property set forth in such appraisal; 
  
 (iii) in the case of a Mortgaged Property that is a condominium or an individual unit in a planned unit development, liens for common charges permitted by statute; 

 (iv) in the case where the Mortgage Loan is secured by a second mortgage lien on the
Mortgaged Property (and represented on the Mortgage Loan Schedule as such), the lien of the First Mortgage; and 
  
 (v) other matters to which like properties are commonly subject which do not materially interfere with the benefits of the security
intended to be provided by the mortgage or the use, enjoyment, value or marketability of the related Mortgaged Property. 
  
 Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Mortgage Loan establishes and creates a valid, subsisting
and enforceable first or second lien and first or second priority security interest on the property described therein and Seller has full right to pledge and assign the same to Buyer or its designee (including the Custodian). 
  
 (k) Validity of Mortgage Documents. The Mortgage Note and the Mortgage
are genuine, and each is the legal, valid and binding obligation of the maker thereof enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other
similar laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law.) All parties to the Mortgage Note and the Mortgage
had legal capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have been duly and properly executed by such parties. The Mortgagor is a natural person or
living trust who is a party to the Mortgage Note and the Mortgage in an individual or trustee capacity, respectively. 
  
 (l) Full Disbursement of Proceeds. The proceeds of the Mortgage Loan have been fully disbursed and there is no requirement for future advances
thereunder, and any and all requirements as to completion of any on-site or off-site improvement and as to disbursements of any escrow funds therefor have been complied with. All costs, fees and expenses incurred in making or closing the Mortgage
Loan and the recording of the Mortgage were paid, and the Mortgagor is not entitled to any refund of any amounts paid or due under the Mortgage Note or Mortgage. 
  
 (m) Ownership. Seller is the sole owner of record and holder of the Mortgage Loan. The Mortgage Loan is not assigned
or pledged except as provided in this Agreement, and Seller has good and marketable title thereto, and has full right to pledge and assign the Mortgage Loan to Buyer or its designee (including the Custodian) free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security interest, and has full right and authority subject to no interest or participation of, or agreement with, any other party, to sell and assign each Mortgage Loan pursuant to this
Agreement. 
  
 (n) Doing Business. All parties which have
had any interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (1) in compliance with any and all applicable licensing requirements of
the laws of the state wherein the Mortgaged Property is located, and (2) organized under the laws of such state, or (3) qualified to do business in such state, or (4) federal savings and loan associations or national banks having principal offices
in such state, or (5) not doing business in such state. 
  
 (o)
Loan-to-Value Ratio. No Mortgage Loan has a Loan-to-Value Ratio of more than 100%. 
  
 (p) Title Insurance. The Mortgage Loan is covered by an ALTA mortgage title insurance policy or such other form of policy acceptable to FNMA or FHLMC, issued by and constituting the valid and binding obligation
of a title insurer generally acceptable to prudent mortgage lenders that regularly 

 
originate or purchase mortgage loans comparable to the Mortgage Loans for sale to prudent investors in the secondary market that invest in mortgage loans
such as the Mortgage Loans and qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring Seller, its successors and assigns, as to the first priority lien of the Mortgage in the case of a First Mortgage Loan
secured by a First Mortgage and the second priority lien of the Mortgage in the case of a Mortgage Loan secured by a second lien on the related Mortgaged Property, in the original principal amount of the Mortgage Loan. Seller is the sole named
insured of such mortgage title insurance policy, the assignment to Buyer or the Custodian as assignee of Buyer of Seller’s interest in such mortgage title insurance policy does not require the consent of or notification to the insurer or the
same has been obtained, and such mortgage title insurance policy is in full force and effect and will be in full force and effect and inure to the benefit of Buyer upon the consummation of the transactions contemplated by this Agreement. At
origination, no claims have been made under such mortgage title insurance policy and no prior holder of the related Mortgage, including Seller, has done, by act or omission, anything that would impair the coverage of such mortgage title insurance
policy. 
  
 (q) No Defaults. Other than a payment default,
there is no default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration, and neither Seller nor its predecessors have waived any default, breach, violation or event of acceleration. 
  
 (r) No Mechanics’ Liens. There are no mechanics’ or similar liens or claims which have been filed for work, labor or material (and no
rights are outstanding that under the law could give rise to such liens) affecting the Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the lien of the Mortgage. 
  
 (s) Location of Improvements; No Encroachments. All improvements which
were considered in determining the appraised value of the mortgaged property lay wholly within the boundaries and building restriction lines of the mortgaged property and no improvements on adjoining properties encroach upon the mortgaged property.
As of the date of origination, no improvement located on or being part of the mortgaged property is in violation of any applicable zoning law or regulation in any material respect. 
  
 (t) Origination. The Mortgage Loan was originated by Seller, an affiliate of Seller or by an originator not
affiliated with the Seller licensed to originate such Mortgage Loan. To the best of Seller’s knowledge, the documents, instruments and agreements submitted for loan underwriting were not falsified and contain no untrue statement of material
fact or omit to state a material fact required to be stated therein or necessary to make the information and statements therein not misleading. 
  
 (u) Customary Provisions. The Mortgage contains customary and enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the benefits of the security provided thereby, including, (i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale, and (ii) otherwise by judicial
foreclosure. There is no homestead or other exemption available to a Mortgagor which would interfere with the right to sell the Mortgaged Property at a trustee’s sale or the right to foreclose the Mortgage. 
  
 (v) Occupancy of the Mortgaged Property. As of the related origination
date for the Mortgage Loan, the Mortgaged Property was capable of being lawfully occupied under applicable law. All inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property
and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy and fire underwriting certificates, had been made or obtained from 

 
the appropriate authorities. Either the Mortgagor represented at the time of origination of the Mortgage Loan that the Mortgagor would occupy the Mortgaged
Property as the Mortgagor’s primary residence or second home or the Mortgaged Property is capable of being occupied pursuant to terms that approximate current standard market rental terms and rates. 
  
 (w) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and the security interest of any applicable security agreement or chattel mortgage referred to in (j) above. 
  
 (x) Deeds of Trust. In the event the Mortgage constitutes a deed of trust, a trustee, duly qualified under applicable
law to serve as such, has been properly designated and currently so serves and is named in the Mortgage, and no fees or expenses are or will become payable by Buyer to the trustee under the deed of trust, except in connection with a trustee’s
sale after default by the Mortgagor. 
  
 (y) Acceptable
Investment. Seller has no knowledge of any circumstances or conditions with respect to the Mortgage, the Mortgaged Property, or the Mortgagor (other than the Mortgagor’s credit standing) that can reasonably be expected to cause private
institutional investors that regularly invest in subprime or high loan-to-value mortgage loans similar to the Mortgage Loans to regard the Mortgage Loan as an unacceptable investment or adversely affect the value or marketability of the Mortgage
Loan to other similar institutional investors. 
  
 (z) Purchase
of Mortgage Documents. The Mortgage File and any other documents required by Buyer to be delivered for the Mortgage Loan by Seller under this Agreement have been delivered (or with respect to Wet Ink Mortgage Loans, will be delivered within five
Business Days) to the Custodian. Seller is in possession of a complete, true and accurate Mortgage File except for such documents the originals of which have been delivered to the Buyer or its designee (including the Custodian). Each of the
documents and instruments included in the Mortgage File is duly executed and in due and proper form and each such document or instrument is in a form generally acceptable to prudent institutional mortgage lenders that regularly originate and
purchase subprime or high loan-to-value mortgage loans. 
  
 (aa)
Condominiums/Planned Unit Developments. If the Mortgaged Property is a condominium unit or a planned unit development (other than a de minimus planned unit development) such condominium or planned unit development project meets Seller’s
Underwriting Guidelines in all material respects. 
  
 (bb)
Transfer of Mortgage Loans. The assignment of Mortgage is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the Mortgaged Property is located. 
  
 (cc) Due on Sale. The Mortgage contains an enforceable provision for
the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the Mortgagee thereunder. 
  
 (dd) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which monthly payments are paid or partially paid with funds deposited in any separate account established by Seller, the Mortgagor or anyone on behalf of the Mortgagor, or
paid by any source other than the Mortgagor nor does it contain any other similar provisions currently in effect which may constitute a “buydown” provision. The Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature. 

 (ee) Consolidation of Future Advances. Any future advances made prior to the Purchase Date have
been consolidated with the outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term. The lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first or second lien priority, as the case may be, by a title insurance policy or an endorsement to the policy insuring the mortgagee’s consolidated interest. The consolidated principal amount does not
exceed the original principal amount of the Mortgage Loan. 
  
 (ff) Mortgaged Property Undamaged. There is no proceeding pending or, to Seller’s knowledge, threatened for the total or partial condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty so as to affect adversely the value of the Mortgaged Property as security for the Mortgage Loan or the use for which the premises were intended. 
  
 (gg) Collection Practices; Escrow Deposits; Interest Rate Adjustments.
The origination and collection practices used with respect to the Mortgage Loan have been in all respects in accordance with industry custom and practice, and have been in all respects legal and proper. With respect to escrow deposits and escrow
payments, all such payments are in the possession of Seller or Servicer and there exist no deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made. All escrow payments have been collected in
full compliance with state and federal law. If an escrow of funds has been established, it is not prohibited by applicable law and has been established in an amount sufficient to pay for every item that remains unpaid and has been assessed but is
not yet due and payable. No escrow deposits or escrow payments or other charges or payments due Seller have been capitalized under the Mortgage or the Mortgage Note. All mortgage interest rate adjustments have been made in strict compliance with
state and federal law and the terms of the related Mortgage Note. Any interest required to be paid pursuant to state and local law has been properly paid and credited. 
  
 (hh) Conversion to Fixed Interest Rate. With respect to the aggregate outstanding principal balance of the Mortgage
Loans on the related Purchase Date, no more than 50% of the Mortgage Notes contain a provision allowing the Mortgagor to convert the Mortgage Note from an adjustable interest rate Mortgage Note to a fixed interest rate Mortgage Note for the
remaining term thereof all in accordance with the terms of a rider to the related Mortgage Note. 
  
 (ii) Appraisal. The Mortgage File for each Mortgage Loan contains an appraisal of the related Mortgaged Property signed prior to the approval of
the Mortgage Loan application by a qualified appraiser, duly appointed by the originator of the Mortgage Loan, who had no interest, direct or indirect in the mortgaged property or in any loan made on the security thereof, other than as an employee
of the lender, and whose compensation is not affected by the approval or disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy the requirements of Title XI of the Federal Institutions Reform, Recovery, and Enforcement Act of
1989 and the regulations promulgated thereunder, all as in effect on the date the Mortgage Loan was originated. 
  
 (jj) Soldiers’ and Sailors’ Relief Act. The Mortgagor has not notified Seller, and Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Soldiers’ and Sailors’ Civil Relief Act of 1940. 
  
 (kk) Environmental Matters. To Seller’s actual knowledge, the Mortgaged Property is free from any and all toxic or hazardous substances and there exists no violation of any local, state or federal
environmental law, rule or regulation. 

 (ll) Seller Origination The Mortgage Loan was originated by Seller or an Affiliate of Seller or
was purchased and reunderwritten by Seller. 
  
 (mm) Balloon
Mortgage Loans. Each Balloon Mortgage Loan has an original term of not less than 7 years and provides for level monthly payments based on a thirty (30) year amortization schedule and a final monthly payment substantially greater than the
preceding monthly payments. 
  
 (nn) No Construction Loans.
No Mortgage Loan is a construction loan.. 
  
 (oo) Selection by
Seller. No Mortgage Loan was selected for inclusion under this Agreement on any basis which was intended to have a material adverse effect on Buyer. 
  
 (pp) Second Mortgages. With respect to each Mortgage Loan secured by a second lien on the related Mortgaged Property: 
  
 (i) if the Loan-to-Value Ratio is higher than 70%, either
the related first lien does not provide for a balloon payment or the maturity date of each Mortgage Loan with respect to which a first lien on the related Mortgaged Property provides for a balloon payment is prior to the maturity date of the
mortgage loan relating to such first lien; 
  
 (ii) the related first lien on any Mortgaged Property with respect to which the related Mortgage Loan is secured by a second lien does not provide for negative amortization; 
  
 (iii) either no consent for the Mortgage Loan secured by a second lien on the related Mortgaged Property is
required by the holder of the related first lien or such consent has been obtained and is contained in the Mortgage File; 
  
 (iv) the related first lien is not held by an individual; and 
  
 (v) the Purchase Price of such Mortgage Loan together with the Purchase Price of Purchased Mortgage Loans
subject to then outstanding Transactions secured by a second lien on the related Mortgaged Properties does not exceed the lesser of (x) 10% of the aggregate Repurchase Price for all Mortgage Loans subject to then outstanding Transactions and (y)
$40,000,000. 
  
 (qq) CERCLA. To the best of the
Seller’s knowledge, no Mortgaged Property was, as of the Purchase Date or, with respect to Additional Loans or Substitute Mortgage Loans, as of the related date of addition or substitution, located within a one-mile radius of any site listed in
the National Priorities List as defined under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or on any similar state list of hazardous waste sites which are known to contain any hazardous substance or
hazardous waste. 
  
 (rr) No Bankruptcy of Mortgagor. None
of the Mortgage Loans are subject to a bankruptcy plan. 
  
 (ss)
Conformance to Underwriting Standards. Each Mortgage Loan was generally underwritten in accordance with the Underwriting Guidelines supplied to Buyer by Seller in all material respects. 
  
 (tt) Qualified Mortgage. Each Mortgage Loan constitutes a
“qualified mortgage” within the meaning of Section 860G(a)(3) of the Internal Revenue Code. 

 (uu) Balloon Loan Concentration. If the Mortgage Loan is a Balloon Mortgage Loan, it, together
with the other Purchased Mortgage Loans which are Balloon Mortgage Loans subject to Transactions, constitutes less than 10% of the Facility Amount. 
  
 (vv) No Short Maturity Balloon Loans. No Balloon Mortgage Loan has a maturity date occurring within five years from its origination date.

  
 (ww) Owner Occupied. In the event the Purchased
Mortgage Loan relates to a Mortgaged Property which is non-owner occupied, it, together with the other Purchased Mortgage Loans subject to Transactions relating to Mortgaged Properties which are non-owner occupied, does not exceed 15% of the
Facility Amount. 
  
 (xx) Payment Terms. With respect to
adjustable rate Mortgage Loans, following any applicable initial fixed rate period of 2, 3 or 5 years, the mortgage interest rate is adjusted annually or semi-annually on each interest rate adjustment date to equal the index plus the gross margin,
rounded up or down to the nearest 0.125%, subject to the mortgage interest rate cap. With respect to fixed rate Mortgage Loans, the Mortgage Note is payable each month in equal monthly installments of principal and interest. With respect to
adjustable rate Mortgage Loans, installments of interest are subject to change due to the adjustments to the mortgage interest rate on each interest rate adjustment date, with interest calculated and payable in arrears, sufficient to amortize the
Mortgage Loan fully by the stated maturity date, over an original term of not more than thirty years from commencement of amortization. 
  
 (yy) Securitization Standards. To Seller’s actual knowledge, each of the Mortgage Loans conforms to the then current standards of
securitization (or whole loan sale at market rates for similar performing assets) applicable to similar assets as determined in the reasonable judgment of Buyer. 
  
 (zz) Wet Ink Mortgage Loans. The Repurchase Price of a Wet Ink Mortgage Loan together with the Repurchase Price of
other Purchased Mortgage Loans which are Wet Ink Mortgage Loans does not exceed $85,000,000. 
  
 (aaa) Non-Eligible Mortgage Loans. No Mortgage Loan (w) is classified as a “high cost” first lien loan under the Home Ownership and Equity Protection Act of 1994 or any equivalent State legislation,
(x) is a “stated income” Mortgage Loan to a Mortgagor with a credit rating of “C” or lower, (y) is a cash-out refinancing secured by a Mortgaged Property located in Texas or (z) is secured by a non-owner occupied Mortgaged
Property where the related Mortgagor is a builder. 
  
 It is
understood and agreed that the representations and warranties set forth in this Schedule 1 shall survive delivery of the respective Mortgage Files to the Custodian on behalf of Buyer. 

 SCHEDULE 2 
  
 UNDERWRITING GUIDELINES 
  
 [Delivered Separately] 

 SCHEDULE 3 
  
 AUTHORIZED OFFICERS OF SELLER 
  
 See Attached 

 EXHIBIT I 
  
 FORM OF CONFIRMATION LETTER 
  
 (date) 
  
 WMC Mortgage Corp. 
 6320 Canoga Avenue 
 Woodland Hills, CA 91367 
 Attention: David Trzcinski 
 Confirmation No.:                      
  
 Ladies/Gentlemen: 
  
 This letter confirms our agreement to purchase from you the Mortgage Loans listed in Appendix I hereto, pursuant to the Amended and Restated Master
Repurchase Agreement Governing Purchases and Sales of Mortgage Loans between us, dated as of March 18, 2003 (the “Agreement”), as follows: 
  
 Purchase Date: 
  
 Mortgage Loans to be Purchased:              See Appendix I hereto.1 
  
 Aggregate Principal Amount of Purchased
Mortgage Loans: 
  
 Purchase Price: 
  
 Pricing Rate: 
  
 Repurchase Date: 
  
 Repurchase Price: 
  
 Collateral Amount Percentage with respect to Market Value: 
  
 Collateral Amount Percentage with respect to Securitization Value: 
  
 Names and addresses for communications: 
  
 Buyer: 
  
 Lehman Brothers Bank, FSB 
 745 Seventh Avenue

 7th Floor 
 New York, New York
10019 
 Attention: Central Funding Department 

	1	Appendix I to Confirmation Letter will list Mortgage Loans. 

 Seller: 
  
 WMC Mortgage Corp. 
 6320 Canoga Avenue

 Woodland Hills, CA 91367 
 Attention:                              
  

			
	 LEHMAN BROTHERS BANK, FSB, as Buyer

		
	 By::
	 	  

	 	 	 Name:

	 	 	 Title:

  
 Agreed and Acknowledged:

  
 WMC MORTGAGE CORP., as Seller 
  

			
	 By::
	 	  

	 	 	 Name:

	 	 	 Title:

 EXHIBIT II 
  
 FORM OF CUSTODIAL AGREEMENT 

 EXHIBIT III 
  
 FORM OF CUSTODIAL DELIVERY 
  
 On this      day of
                    , 200  , WMC Mortgage Corp. (“Seller”), as the Seller under that certain Amended and Restated
Master Repurchase Agreement Governing Purchases and Sales of Mortgage Loans, dated as of March 18, 2003 (the “Repurchase Agreement”) between the Seller and Lehman Brothers Bank, FSB (“Buyer”), does hereby deliver to Wells Fargo
Bank Minnesota, National Association (“Custodian”), as custodian under that certain Custodial Agreement, dated as of March 19, 2001, among Buyer, Seller and Custodian the Mortgage Files with respect to the Mortgage Loans to be purchased by
Buyer pursuant to the Repurchase Agreement, which Mortgage Loans are listed on the Mortgage Loan Schedule attached hereto and which Mortgage Loans shall be subject to the terms of the Custodial Agreement on the date hereof. 
  
 With respect to the Mortgage Files delivered hereby, for the purposes of
issuing the Trust Receipt, the Custodian shall review the Mortgage Files to ascertain delivery of the documents listed in Schedule 1 to the Custodial Agreement. 
  

[The Mortgage Loans delivered hereby constitute Additional Loans delivered pursuant to Section 4(a) of the Repurchase Agreement].][The Mortgage Loans
delivered hereby constitute substituted Collateral pursuant to Section 9(a) of the Repurchase Agreement and are intended to be substituted for the Purchased Mortgage Loans listed on the [schedule attached hereto][Request for Release of Documents and
receipt delivered herewith]. The Purchased Mortgage Loans to be released shall be delivered to                     .] 
  
 Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Repurchase Agreement or the Custodial Agreement. 

 IN WITNESS WHEREOF, the Seller has caused its name to be signed hereto by its officer thereunto duly
authorized as of the day and year first above written. 
  

			
	 WMC MORTGAGE CORP.

	
	 Seller

		
	 By:
	 	  

	 Title:
	 	  

	 Name:
	 	  

 EXHIBIT IV 
  
 FORM OF REQUEST FOR PURCHASE 
  
 (date) 
  
 Lehman Brothers Bank, FSB, 
 745 Seventh Avenue 
 7th Floor 
 New York, New York 10019 
  
 Ladies/Gentlemen:

  
 Pursuant to this letter, WMC Mortgage Corp.
(“Seller”) requests that you purchase from Seller the Mortgage Loans listed in Appendix I hereto, pursuant to the Amended and Restated Master Repurchase Agreement Governing Purchases and Sales of Mortgage Loans between us, dated as of
March 18, 2003 (the “Agreement”), as follows: 
  
 Purchase Date: 
  
 Mortgage Loans to be Purchased:
             See Appendix I hereto.1 
  
 Aggregate Principal Amount of Mortgage Loans to be Purchased: 
  
 Pricing Rate: 
  
 Repurchase Date: 
  

			
	 WMC MORTGAGE CORP., as Seller

		
	 By:
	 	  

	 	 	 Name:

	 	 	 Title:

	1	Appendix I to Request for Purchase will list Mortgage Loans. 

 EXHIBIT V 
  
 FORM OF GUARANTY 

 EXHIBIT VI 
  
 Bank One, Utah 
  
 BLOCKED ACCOUNT AGREEMENT 
  
                     , 2003 
  
 Lehman Brothers Bank, FSB 
 745 Seventh Avenue

 7th Floor 

New York, New York 10019 
  
 Attention: Chris Czako 
  
 Ladies and Gentlemen:

  
 At the request and instruction of WMC Mortgage Corp., a
California corporation (“Seller”), we (also sometimes the “Bank”) confirm to you that Seller’s agent, the Servicer, maintains the following account(s) with us, at our offices at 80 West Broadway, Suite 300,
Salt Lake City, Utah 84101, into which Seller may from time to time make or cause to be made deposits (the principal sum from time to time on deposit in such account(s) is referred to herein collectively as the “Deposits”):

  
 1. Account Number 98-6535, “Servicer in
trust for WMC Mortgage Corp. and Lehman Brothers Bank, FSB” (the “Collection Account”) 
  
 2. Account Number 98-6543, “Servicer in trust for WMC Mortgage Corp. and Lehman Brothers Bank, FSB and various mortgagors” (the
“Escrow Account”) 
  
 The foregoing accounts are referred to
herein as the “Account.” 
  
 In addition, we (a)
acknowledge that Seller has pledged and assigned its rights in the Account and the Deposits in your favor as security for certain obligations, (b) hereby agree that you shall have a lien on, and security interest in, the Deposits in the Account(s),
and (c) upon receipt of written notice from you that an Event of Default has occurred and is continuing: (i) the Deposits and all additional deposits, if any, thereafter made into the Account(s) may not be (x) withdrawn or applied or offset by
Seller or (y) withdrawn or applied or offset by the undersigned without your prior written approval, except to the extent of (1) the undersigned’s servicing fees and ancillary income with respect to the Mortgage Loans and reimbursement of
servicing advances, or (2) any outstanding overdrafts attributable to the Account(s), (ii) the undersigned shall hold the Deposits for you and upon your order, and (iii) the undersigned shall withdraw funds from the Account on your instructions and
promptly remit directly to an account designated by you in writing the amount of the Deposits. 
  
 Except as set forth above, we hereby confirm to you that we have not received any notice of any lien, pledge, charge, assignment, attachment, claim or other encumbrance with respect to Seller’s rights in the
Account or the Deposits. 
  
 In furtherance of the pledge and
assignment of Seller’s rights in the Account and the Deposits in your favor, we agree that we will take such further actions and execute such further documents as you may reasonably request at your sole cost and expense. You agree that in no
event shall we have any liability to you for any action taken or omitted to be taken by us pursuant to this letter agreement. 

 The Account, except as set forth in this Agreement, shall be subject to our terms and conditions for
commercial accounts and any agreements for banking services which may be arranged from time to time. The Seller shall provide us with documentation of proper authority to operate the Account, including, without limitation, corporate resolutions and
signature cards which shall designate employees, officers and agents who are authorized to withdraw funds from the Account and to give instructions with respect to the Account. 
  
 All funds deposited in the Account shall be made available by us in accordance with our availability schedule for customers
similar to the Seller. Funds may be withdrawn from the Account in accordance with the terms specified herein. 
  
 The Seller shall not give any instructions to us to change the authorized signatures or withdrawal arrangements with respect to the Account, unless such
instructions are approved in writing by you. Any two (2) of your officers may, from time to time, issue letters of instructions on your letterhead superseding the instructions contained in this Agreement. The Bank shall by fully protected in acting
on any instructions given by you regarding the Account without making any inquiry as to your right to give the instructions or as to the application of any payment made pursuant thereto, and any payment of all or part of the Account made to you or
pursuant to your instructions will satisfy any liability the Bank has to you and relieve us of all liability to the Seller for such amounts. Should the Seller attempt to give the Bank any instructions, including, without limitation, corporate
resolutions, which are not accompanied by your written approval, the Bank, without liability to either the Seller or you, may: (i) place a hold on the Account to prevent withdrawals of funds until such time as any concerns regarding authorized
signatures or withdrawal arrangements are resolved; (ii) commence a legal proceeding to allow determination of the rights of the parties to the funds; or (iii) continue the operation of the Account in accordance with the documentation already in its
records. 
  
 We consent to your security in the Account, and
hereby subordinate our right of set-off against the Account to your security interest for the term of this Agreement. Notwithstanding the foregoing, we retain the right to debit the Account at any time for (a) the amount of any overdraft in the
Account, (b) the amount of any item deposited to the Account and subsequently returned to us unpaid for any reason, (c) the undersigned’s servicing fees and ancillary income with respect to the Mortgage Loans and reimbursement of servicing
advances (collectively, the “Permitted Debits”). The foregoing subordination shall not in any way limit our right of set-off or any other similar right or security interest we have against the Seller, such subordination being an
agreement between you and us for our exclusive and mutual benefit and arrangement of respective rights. 
  
 The Seller or Servicer shall compensate us for providing the services described herein at our fees from time to time in effect. Payment of such fees shall
be effected by a mutually agreed upon method. 
  
 All notices,
including, without limitation, statements of account, debit and credit advices, return items, general correspondence and termination notices, shall be sent to the following addresses, or to such other address as any party receiving notices shall
designate to the other parties, in writing, from time to time: 
  

					
	 (a)
	  	 You:
	  	 Lehman Brothers Bank, FSB

	 	  	 	  	 745 Seventh Avenue

	 	  	 	  	 7th Floor

	 	  	 	  	 New York, New York 10019

							
	 	 	 	  	 Attention:
	  	 Fred Madonna

	 	 	 	  	 Telephone:
	  	 (212) 526-9249

	 	 	 	  	 Facsimile:
	  	 (212) 526-0038

			
	 	 	 	  	 with a copy to:

			
	 	 	 	  	 Latham & Watkins

	 	 	 	  	 885 Third Avenue, Suite 1000

	 	 	 	  	 New York, New York 10022

	 	 	 	  	 Attention:
	  	 Brian Krisberg, Esq.

	 	 	 	  	 Telephone:
	  	 (212) 906-1200

	 	 	 	  	 Facsimile:
	  	 (212) 751-4864

			
	 (b)
	 	 Seller:
	  	 WMC Mortgage Corp.

	 	 	 	  	 6320 Canoga Avenue

	 	 	 	  	 Woodland Hills, CA 91367

	 	 	 	  	 Attention:
	  	 Anthony Miguel

	 	 	 	  	 Telephone:
	  	 (818) 592-2431

	 	 	 	  	 Facsimile:
	  	 (818) 712-2822

			
	 (c)
	 	 The Bank:
	  	 Bank One, Utah

	 	 	 	  	 80 West Broadway, Suite 300

	 	 	 	  	 Salt Lake City, Utah 84101

	 	 	 	  	 Attention:
	  	 Inga Brewster

	 	 	 	  	 Telephone:
	  	 (801) 481-5179

	 	 	 	  	 Facsimile:
	  	 (801) 481-5369

  
 To the maximum extent
permitted by law, the Bank shall not be liable for: (i) events or circumstances beyond its reasonable control; or (ii) indirect, special or consequential damages, even if advised of the possibility of such damages. The Seller shall indemnify and
hold the Bank harmless from and against any and all claims, losses, damages, costs, and expenses (including reasonable attorneys’ fees) suffered or incurred by the Bank as a result of or in connection with any acts or omissions of the Seller,
you or any other person with respect to the Account other than claims, losses, damages, costs and expenses (including reasonable attorneys’ fees) resulting from the Bank’s willful misconduct or gross negligence or conduct in violation of
applicable law. 
  
 This Agreement and the authorizations
contained herein may not be changed, modified or waived orally, and supersedes any other understandings with respect to the Account. 
  
 Nothing contained herein will require us to take any action in contravention of applicable laws, any court order, or the instructions of any bankruptcy
trustee. 
  
 This Letter Agreement shall be effective as of the
date first written above and may be terminated by the Bank or you upon the sending of thirty (30) days advance written notice to the other two parties. This Agreement may be terminated by the Seller upon the sending of thirty (30) days advance
written notice to the Bank, which notice is accompanied by your written consent. 
  
 This represents the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties pertaining to the Account. The Bank is not bound
by any provisions contained in any other document executed between the Seller and you and to which the Bank is not a party, even if provided with a copy of that document. 

 Terms used herein and not defined herein shall have the meanings ascribed to such terms in the Master
Repurchase Agreement Governing Purchases and Sales of Mortgage Loans, dated as of March 19, 2001, between WMC Mortgage Corp., as Seller and Lehman Brothers Bank, FSB, as Buyer (the “Master Repurchase Agreement”). 
  
 This agreement shall be governed by, and construed in accordance with, the
laws of the State of New York. 
  
 [SIGNATURE
PAGE FOLLOWS] 

			
	 Very truly yours,

	
	 Bank One, Utah

		
	 By:
	 	  

	 	 	 Name:

	 	 	 Title:

  
 ACKNOWLEDGED AND AGREED:

  
 WMC MORTGAGE CORP., 
 a California corporation 
  

							
	 By:
	 	  

	 	 	 Name:
	 	  

	 	 
	 	 	 Title:
	 	  

	 	 

 EXHIBIT VII 
  
 FORM OF POWER OF ATTORNEY 
  
 “Know All Men by These Presents, that WMC Mortgage Corp. (“Seller”), does hereby appoint Lehman Brothers Bank, FSB (“Buyer”), its
attorney-in-fact to act, upon the occurrence and during the continuance of an Event of Default with respect to Seller, in Seller’s name, place and stead in any way which Seller could do with respect to (i) the completion of the endorsements of
the Mortgage Notes and the assignments of Mortgages, (ii) the recordation of the assignments of Mortgages and (iii) the enforcement of the Seller’s rights under the Mortgage Loans purchased by Buyer pursuant to an Amended and Restated Master
Repurchase Agreement Governing Purchases and Sales of Mortgage Loans, dated as of March 18, 2003 (the “Master Repurchase Agreement”; capitalized terms used herein without definition shall have the meaning given in the Master Repurchase
Agreement) between Seller and Buyer and to take such other steps as may be necessary or desirable to enforce Buyer’s rights against such Mortgage Loans, the related Mortgage Files and the Servicing Records to the extent that Seller is permitted
by law to act through an agent. 
  
 TO INDUCE ANY THIRD PARTY TO
ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL
NOTICE OR KNOWLEDGE OF SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND SELLER ON ITS OWN BEHALF AND ON BEHALF OF SELLER’S ASSIGNS, HEREBY AGREES TO INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND
AGAINST ANY AND ALL CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT. 
  
 IN WITNESS WHEREOF Seller has caused this Power of Attorney to be executed and the Seller’s seal to be affixed this     
day of             , 2003. 
  

			
	 WMC MORTGAGE CORP., as Seller

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  
 (Seal)

 EXHIBIT VIII 
  
 FORM OF SERVICING AGREEMENT 
  
 [Reserved] 

 EXHIBIT IX 
  
 FORM OF ELECTRONIC TRACKING AGREEMENT 
  
 [Delivered Separately] 

 EXHIBIT X 
  
 FORM OF MONTHLY REPORT 
  
 [Delivered Separately]Master Repurchase Agreement, dated 9/22/03

 Exhibit 10.4 
  
 EXECUTION VERSION 

  
 MASTER REPURCHASE AGREEMENT 
  
 Between: 
  
 Merrill Lynch Mortgage Capital Inc., as Buyer 
  
 and 
  
 WMC Mortgage Corp., as Seller 
  
 Dated as of September 22, 2003 
  

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page

			
	 SECTION 1.
	  	APPLICABILITY	  	1
			
	 SECTION 2.
	  	DEFINITIONS	  	1
			
	 SECTION 3.
	  	INITIATION; TERMINATION	  	18
			
	 SECTION 4.
	  	MARGIN AMOUNT MAINTENANCE	  	23
			
	 SECTION 5.
	  	INCOME PAYMENTS	  	24
			
	 SECTION 6.
	  	REQUIREMENTS OF LAW	  	25
			
	 SECTION 7.
	  	TAXES	  	26
			
	 SECTION 8.
	  	SECURITY INTEREST	  	28
			
	 SECTION 9.
	  	PAYMENT, TRANSFER AND CUSTODY	  	28
			
	 SECTION 10.
	  	HYPOTHECATION OR PLEDGE OF PURCHASED MORTGAGE LOAN	  	29
			
	 SECTION 11.
	  	REPRESENTATIONS	  	29
			
	 SECTION 12.
	  	COVENANTS	  	34
			
	 SECTION 13.
	  	EVENTS OF DEFAULT	  	41
			
	 SECTION 14.
	  	REMEDIES	  	44
			
	 SECTION 15.
	  	INDEMNIFICATION AND EXPENSES; RECOURSE	  	46
			
	 SECTION 16.
	  	SERVICING	  	47
			
	 SECTION 17.
	  	SINGLE AGREEMENT	  	48
			
	 SECTION 18.
	  	SET-OFF	  	48

  

 -i- 

					
			
	 SECTION 19.
	  	NOTICES AND OTHER COMMUNICATIONS	  	48
			
	 SECTION 20.
	  	ENTIRE AGREEMENT; SEVERABILITY	  	49
			
	 SECTION 21.
	  	NON-ASSIGNABILITY	  	49
			
	 SECTION 22.
	  	TERMINABILITY	  	51
			
	 SECTION 23.
	  	GOVERNING LAW	  	51
			
	 SECTION 24.
	  	SUBMISSION TO JURISDICTION; WAIVERS	  	51
			
	 SECTION 25.
	  	NO WAIVERS, ETC.	  	52
			
	 SECTION 26.
	  	DUE DILIGENCE	  	52
			
	 SECTION 27.
	  	NON-UTILIZATION FEE	  	53
			
	 SECTION 28.
	  	COMMITMENT FEE	  	53
			
	 SECTION 29.
	  	BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT	  	53
			
	 SECTION 30.
	  	MISCELLANEOUS	  	55
			
	 SECTION 31.
	  	CONFIDENTIALITY	  	55
			
	 SECTION 32.
	  	INTENT	  	56
			
	 SECTION 33.
	  	DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS	  	56
			
	 SECTION 34.
	  	CONFLICTS	  	57
			
	 SECTION 35.
	  	AUTHORIZATIONS	  	57

  

 -ii- 

 EXHIBITS 
  

			
		
	 SCHEDULE 1
	  	 Representations and Warranties Re: Mortgage Loans

		
	 SCHEDULE 2
	  	 Existing Indebtedness

		
	 EXHIBIT I
	  	 Form of Confirmation Letter

		
	 EXHIBIT II
	  	 Form of Opinion Letter

		
	 EXHIBIT III
	  	 UCC Filing Jurisdictions

		
	 EXHIBIT IV
	  	 Form of Account Agreement

		
	 EXHIBIT V
	  	 Mortgage Loan Schedule Fields

		
	 EXHIBIT VI
	  	 Mortgage File Documents

		
	 EXHIBIT VII
	  	 Underwriting Guidelines

		
	 EXHIBIT VIII
	  	 Seller’s Officer’s Certificate

		
	 EXHIBIT IX
	  	 Form of Servicer Notice

		
	 EXHIBIT X
	  	 Authorized Representatives

		
	 EXHIBIT XI
	  	 Responsible Officers

		
	 EXHIBIT XII
	  	 Form of Escrow Instruction Letter

  

 -iii- 

  
 MASTER REPURCHASE AGREEMENT

  
 This is a MASTER REPURCHASE AGREEMENT, dated as of September
22, 2003, between WMC MORTGAGE CORP., a California corporation (the “Seller”) and MERRILL LYNCH MORTGAGE CAPITAL INC., a New York corporation (the “Buyer”). 
  
 SECTION 1. APPLICABILITY 
  
 From time to time the parties hereto shall enter into transactions in which
the respective Seller agrees to transfer to Buyer Mortgage Loans against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to the Seller such Mortgage Loans at a date certain after the related Purchase Date, against
the transfer of funds by the Seller. Each such transaction shall be referred to herein as a “Transaction” and shall be governed by this Repurchase Agreement, unless otherwise agreed in writing. 
  
 SECTION 2. DEFINITIONS 
  
 As used herein, the following terms shall have the following meanings (all terms defined in this Section 2 or in other provisions of this
Repurchase Agreement in the singular to have the same meanings when used in the plural and vice versa) 
  
 “Accepted Servicing Practices” shall mean, with respect to any Mortgage Loan, those mortgage servicing practices of prudent mortgage
lending institutions which service mortgage loans of the same type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located. 
  
 “Account Agreement” shall mean a letter agreement between the Seller, the Buyer, and a depository institution acceptable to Buyer in its
sole discretion substantially in the form of Exhibit IV attached hereto. 
  
 “Actual Purchase Price” shall have the meaning set forth in Section 3(b) hereof. 
  
 “Additional Purchased Mortgage Loans” shall mean Mortgage Loans or cash provided by the Seller to Buyer or its designee pursuant to
Section 4 of this Repurchase Agreement. 
  
 “Affiliate” shall mean with respect to any Person, any “affiliate” of such Person, as such term is defined in the Bankruptcy Code. 
  
 “Aged Loan” shall mean a Mortgage Loan which has been subject to a Transaction hereunder for a period of
greater than 120 days but not greater than 270 days. 
  
 “Agency” shall mean Freddie Mac, Fannie Mae or Ginnie Mae, as applicable. 
  

 “Appraised Value” shall mean the value set forth in an appraisal made in connection with
the origination of the related Mortgage Loan as the value of the Mortgaged Property. 
  
 “Asset Value” “Asset Value” shall mean with respect to each Eligible Mortgage Loan, the lesser of the (x) applicable Purchase Price Percentage for the related Purchased Mortgage Loan
multiplied by the Market Value of such Mortgage Loan or (y) the Par Percentage, if any, multiplied by the outstanding principal balance of such Mortgage Loan. 
  

“Authorized Representative” shall mean, for the purposes of this Repurchase Agreement only, an agent or Responsible Officer of the
Seller listed on Exhibit X hereto, as such Exhibit X may be amended from time to time. 
  
 “Bailee Letter” shall have the meaning assigned to such term in the Custodial Agreement. 
  
 “Bankruptcy Code” shall mean the United States Bankruptcy
Code of 1978, as amended from time to time. 
  
 “Business
Day” shall mean a day other than (i) a Saturday or Sunday, (ii) any day on which banking institutions are authorized or required by law, executive order or governmental decree to be closed in the State of New York or (iii) any day on which
the New York Stock Exchange is closed. 
  
 “Buyer” shall mean Merrill Lynch Mortgage Capital Inc., its successors in interest and assigns. 
  
 “Capital Lease Obligations” shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Repurchase Agreement, the
amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP. 
  
 “Cash Equivalents” shall mean (a) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed
or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight bank deposits of Buyer or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations of Buyer or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven days with respect to securities
issued or fully guaranteed or insured by the United States Government, (d) commercial paper of a domestic issuer rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in either case maturing
within 90 days after the day of acquisition, (e) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or 

  

 -2- 

 
foreign government (as the case may be) are rated at least A by S&P or A by Moody’s, (f) securities with maturities of 90 days or less from the date
of acquisition backed by standby letters of credit issued by Buyer or any commercial bank satisfying the requirements of clause (b) of this definition or (g) shares of money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition. 
  
 “Change in Control” shall mean: 
  
 (A) any transaction or event as a result of which Apollo Advisors, L.P. (or any investment fund or entity managed by it) ceases to own,
directly or indirectly, at least 50.01% of the stock of the Seller; 
  
 (B) the sale, transfer, or other disposition of all or substantially all of a Seller’s assets (excluding any such action taken in connection with any securitization transaction); or 
  
 (C) the consummation of a merger or consolidation of Seller
with or into another entity or any other corporate reorganization, if more than 50.01% of the combined voting power of the continuing or surviving entity’s stock outstanding immediately after such merger, consolidation or such other
reorganization is owned by persons who were not stockholders of the Seller immediately prior to such merger, consolidation or other reorganization. 
  
 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. 
  
 “Collection Account” shall mean the account established by a
financial institution acceptable to Buyer subject to an Account Agreement, into which all Income shall be deposited after the occurrence of a Default or an Event of Default. 
  
 “Combined Loan to Value Ratio” or “CLTV” shall mean, with respect to any Second Lien
Mortgage Loan, the sum of the original principal balance of such Mortgage Loan and the outstanding principal balance of any related first lien as of the date of origination of the Mortgage Loan, divided by the Appraised Value of the Mortgaged
Property as of the origination date. 
  
 “Commitment
Fee” shall mean an amount equal to (i) 0.125% multiplied by (ii) the Maximum Purchase Price, which shall be due and payable to Buyer by Seller pursuant to Section 28 hereof at the account set forth in Section 9 hereof. 
  
 “Committed Mortgage Loan” shall mean a Mortgage Loan which
is the subject of a Takeout Commitment with a Takeout Investor. 
  
 “Confirmation” shall mean a Confirmation Letter in the form of Exhibit I hereto. 
  
 “Custodial Agreement” shall mean that certain Custodial Agreement dated as of the date hereof, among Seller, Buyer and Custodian as the
same may be amended from time to time. 
  

 -3- 

 “Custodian” shall mean Deutsche Bank National Trust Company, or any successor thereto
under the Custodial Agreement. 
  
 “Default”
shall mean an Event of Default or an event that with notice or lapse of time or both would become an Event of Default. 
  
 “Delinquent Mortgage Loan” shall mean a Delinquent One Month Mortgage Loan, a Delinquent Two Month Mortgage Loan or a Delinquent Three
Month Mortgage Loan. 
  
 “Delinquent One Month Mortgage
Loan” shall mean any Mortgage Loan, other than a Repurchased Loan, as to which any Monthly Payment, or part thereof, remains unpaid for more than thirty (30), but not more than fifty-nine (59), days past its Due Date. 
  
 “Delinquent Two Month Mortgage Loan” shall mean any Mortgage
Loan, other than a Repurchased Loan, as to which any Monthly Payment, or part thereof, remains unpaid for more than fifty-nine (59), but not more than eighty-nine (89), days past its Due Date. 
  
 “Delinquent Three Month Mortgage Loan” shall mean any
Mortgage Loan, other than a Repurchased Loan, as to which any Monthly Payment, or part thereof, remains unpaid for more than eighty-nine (89), but not more than one hundred seventy-nine (179), days past its Due Date. 
  
 “Disbursement Agent” shall mean Deutsche Bank National Trust
Company, its successor or assigns. 
  
 “Disbursement
Agreement” shall mean the Disbursement Agreement by and among the Buyer, the Disbursement Agent and the Seller, dated as of the date hereof, as the same may be amended from time to time, setting forth the terms pursuant to which the
Disbursement Agent shall disburse funds related to Wet-Ink Mortgage Loans. 
  
 “Dollars” and “$” shall mean lawful money of the United States of America. 
  
 “Due Date” shall mean the day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.

  
 “Due Diligence Review” shall mean the
performance by Buyer of any or all of the reviews permitted under Section 26 hereof with respect to any or all of the Mortgage Loans, as desired by the Buyer from time to time. 
  
 “Effective Date” shall mean the date upon which the conditions precedent set forth in Section 3(a) shall
have been satisfied. 
  
 “Electronic Tracking
Agreement” shall mean an Electronic Tracking Agreement among Buyer, Seller, MERS and MERSCORP, Inc., to the extent applicable. 
  
 “Eligible Mortgage Loan” shall mean a Purchased Mortgage Loan which complies with the representations and warranties set forth on
Schedule 1 to this Repurchase Agreement. 
  

 -4- 

 “ERISA” shall, with respect to any Person, mean the Employee Retirement Income Security
Act of 1974, as amended from time to time and any successor thereto, and the regulations promulgated and rulings issued thereunder. 
  
 “ERISA Affiliate” shall, with respect to any Person, mean any Person which is a member of any group of organizations (i) described in
Section 414(b) or (c) of the Code of which such Person is a member, or (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which such Person is a member. 
  
 “Escrow Instruction Letter” shall mean the Escrow Instruction Letter from Seller to Settlement Agent, in the form of Exhibit XII hereto,
as the same may be modified, supplemented and in effect from time to time. 
  
 “Escrow Payments” shall mean, with respect to any Mortgage Loan, the amounts constituting ground rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage insurance premiums,
fire and hazard insurance premiums, condominium charges, and any other payments required to be escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any other document. 
  
 “Estimated Purchase Price” shall have the meaning set forth in Section 3(b) hereof. 
  
 “Event of Default” shall have the meaning specified in
Section 13.01 hereof. 
  
 “Event of Insolvency”
shall mean: 
  
 (a) that FinCo or any of its Subsidiaries shall
discontinue or abandon operation of its mortgage origination business; or 
  
 (b) that FinCo or any of its Subsidiaries shall fail generally to, or admit in writing its inability to, pay its debts as they become due; or 
  
 (c) a proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for
relief in respect of FinCo or any of its Subsidiaries in an involuntary case under any applicable bankruptcy, insolvency, liquidation, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator, conservator or other similar official of FinCo or any of its Subsidiaries, or for any substantial part of its property, or for the winding-up or liquidation of its affairs; or 
  
 (d) the commencement by FinCo or any of its Subsidiaries of a voluntary case
under any applicable bankruptcy, insolvency or other similar Law now or hereafter in effect, or FinCo’s or any of its Subsidiaries’ consent to the entry of an order for relief in an involuntary case under any such Law, or consent to the
appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or other similar official of 

  

 -5- 

 
FinCo or any of its Subsidiaries, or for any substantial part of its property, or any general assignment for the benefit of creditors; or 
  
 (e) that FinCo or any of its Subsidiaries shall become insolvent; or

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

  
 “Fannie Mae” shall mean Fannie Mae, or any
successor thereto. 
  
 “Financial Statements”
shall mean the consolidated financial statements of the Seller prepared in accordance with GAAP for the year or other period then ended. Such financial statements will be audited, in the case of annual statements, by KPMG LLP or such other
independent certified public accountants approved by the Buyer (which approval shall not be unreasonably withheld). 
  
 “FinCo” shall mean WMC Finance Co., a Delaware corporation, or any successor in interest thereto. 
  
 “First Lien Mortgage Loan” shall mean a Mortgage Loan
secured by a first lien on the related Mortgaged Property. 
  

 -6- 

 “First Payment Default” shall mean, with respect to a Mortgage Loan, the failure of the
Mortgagor to make the first Monthly Payment on or before thirty (30) days after the first Due Date following the date of origination of the Mortgage Loan. 
  
 “Fitch” shall mean Fitch Ratings, Inc., or any successor thereto. 
  
 “Freddie Mac” shall mean Freddie Mac, or any successor thereto. 
  
 “GAAP” shall mean generally accepted accounting principles
in the United States of America, applied on a consistent basis and applied to both classification of items and amounts, and shall include, without limitation, the official interpretations thereof by the Financial Accounting Standards Board, its
predecessors and successors. 
  
 “Ginnie Mae”
shall mean the Government National Mortgage Association and any successor thereto. 
  
 “Governmental Authority” shall mean the government of the United States of America or of any state, county, municipality or other political subdivision thereof or any governmental body, agency,
authority, department or commission (including, without limitation, any taxing authority) or any instrumentality or officer of any of the foregoing (including, without limitation, any court or tribunal) exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any corporation, partnership or other entity directly or indirectly owned by or controlled by the foregoing. 
  
 “Guarantee” shall mean, as to any Person, any obligation of such Person directly or indirectly guaranteeing
any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The
amount of any Guarantee of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith. The terms “Guarantee” and “Guaranteed” used as verbs shall have correlative meanings. 
  
 “HUD” shall mean the Department of Housing and Urban
Development. 
  
 “Income” shall mean, with
respect to any Mortgage Loan at any time, any principal thereof then payable and all interest, dividends or other distributions payable thereon. 
  
 “Indebtedness” shall mean, with respect to any Person, (a) obligations created, issued or incurred by such Person for borrowed money
(whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business, so long as such trade accounts
payable are 

  

 -7- 

 
payable within 90 days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a Lien
on the Property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (d) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for the account of such Person; (e) Capital Lease Obligations of such Person; (f) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements (other than sale
agreements entered into in the ordinary course of business and which do not contain recourse other than with respect to usual and customary representations and warranties and early payment defaults made in the ordinary course of business); (g)
Indebtedness of others Guaranteed by such Person; (h) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; and (i) Indebtedness of general partnerships of which such Person is a
general partner. 
  
 “Interest Rate Protection
Agreement” shall mean, with respect to any or all of the Purchased Mortgage Loans, any short sale of a US Treasury Security, or futures contract, or mortgage related security, or Eurodollar futures contract, or options related contract, or
interest rate swap, cap or collar agreement or Take-out Commitment, or similar arrangement providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific
contingencies, entered into by Seller. 
  
 “Late Payment
Fee” shall mean the excess of the Price Differential paid as a result of its calculation at the Post-Default Rate over the Price Differential as would have been calculated at the Pricing Rate. 
  
 “Law” shall mean, any law, treaty, rule or regulation or
determination of an arbitrator or court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. 
  
 “LIBOR Period” shall mean, with respect to each Payment
Date, the period from and including the immediately preceding Payment Date (or, with respect to the first LIBOR Period for each Transaction, from and including the related Purchase Date) to but excluding such Payment Date, unless otherwise agreed to
by the Buyer and the Seller and set forth in the related Confirmation. 
  
 “LIBOR Period Commencement Date” shall mean (a) with respect to the initial LIBOR Period with respect to a Transaction, the Purchase Date, and (b) with respect to each succeeding LIBOR Period with respect to a Transaction,
the Payment Date, or if the LIBOR Period is other than one month, the last day of the immediately preceding LIBOR Period. 
  
 “LIBOR Rate” shall mean, with respect to each day during the applicable LIBOR Period, the rate per annum equal to the one month British
Bankers Association Rate as reported on the display designated as “BBAM” “Page DG8 4a” on Bloomberg (or such other display as may replace “BBAM” “Page DG8 4a on Bloomberg), as of 8:00 a.m., New York City time, on
the date two (2) Business Days prior to the commencement of such LIBOR Period, and if such rate shall not be so quoted, or if the related LIBOR Period shall be less than one month, the rate per annum at which the Buyer or its Affiliate is offered
dollar deposits at or about 8:00 a.m., 

  

 -8- 

 
New York City time, on the date two (2) Business Days prior to the commencement of the such LIBOR Period, by prime banks in the interbank eurodollar market
where the eurodollar and foreign currency exchange operations in respect of its Transactions are then being conducted for delivery on such day for a period of one month or such other period as agreed upon in writing by the Buyer and the Seller and
in an amount comparable to the amount of the Transactions outstanding on such day. 
  
 “Lien” shall mean any lien, claim, charge, restriction, pledge, security interest, mortgage, deed of trust or other encumbrance. 
  
 “Loan to Value Ratio” or “LTV” shall mean with respect to any Mortgage Loan, the ratio of
the original outstanding principal amount of such Mortgage Loan to the lesser of (a) the Appraised Value of the Mortgaged Property at origination or (b) if the Mortgaged Property was purchased within 6 months of the origination of such Mortgage
Loan, the purchase price of the Mortgaged Property. 
  
 “Manufactured Home” shall mean a manufactured home, including all accessions thereto, that is legally classified as real property under applicable state law. 
  
 “Manufactured Home Loan” shall mean a Mortgage Loan secured by property upon which the primary dwelling is
a Manufactured Home. 
  
 “Margin Call” shall have
the meaning specified in Section 4. 
  
 “Margin
Deficit” shall have the meaning specified in Section 4. 
  
 “Market Value” shall mean, as of any date with respect to any Purchased Mortgage Loan, the price at which such Mortgage Loan could readily be sold as determined by the Buyer in its sole reasonable discretion. Without
limiting the generality of the foregoing, the Seller acknowledges that the Market Value of a Purchased Mortgage Loan may be reduced to zero by Buyer if: 
  
 (a) such Purchased Mortgage Loan ceases to be an Eligible Mortgage Loan; 
  
 (b) the Purchased Mortgage Loan has been released from the possession of the Custodian under the Custodial Agreement (other
than to a Take-out Investor pursuant to a Bailee Letter) for a period in excess of 10 calendar days; 
  
 (c) the Purchased Mortgage Loan is a Wet-Ink Mortgage Loan for which the related Mortgage File has not been received and certified by the Custodian by the
seventh (7th) Business Day following the related Purchase Date; 
  
 (d) such Purchased Mortgage Loan is a Non-Performing Mortgage Loan;

  
 (e) such Purchased Mortgage Loan has been subject to a
Transaction for a period of greater than 270 days; 
  

 -9- 

 (f) a First Payment Default and Second Payment Default have occurred and are continuing with respect to
such Purchased Mortgage Loan; 
  
 (g) the Buyer has determined in
its sole good faith discretion that the Purchased Mortgage Loan is not eligible for whole loan sale or securitization in a transaction consistent with the prevailing sale and securitization industry with respect to substantially similar Mortgage
Loans; 
  
 (h) such Purchased Mortgage Loan contains a material
breach of a representation or warranty made by the Seller in this Repurchase Agreement or the Custodial Agreement; 
  
 (i) when the Purchase Price for such Purchased Mortgage Loan is added to other Purchased Mortgage Loans, the aggregate Purchase Price of all Second Lien
Mortgage Loans exceeds 30% of the aggregate outstanding Purchase Price related to all Mortgage Loans; 
  
 (j) when the Purchase Price for such Purchased Mortgage Loan is added to other Purchased Mortgage Loans, the aggregate Purchase Price of all Wet-Ink
Mortgage Loans exceeds $130,000,000; 
  
 (k) when the Purchase
Price for such Purchased Mortgage Loan is added to other Purchased Mortgage Loans, the aggregate Purchase Price of all First Lien Mortgage Loans with an LTV greater than 95% but not greater than 100% exceeds $25,000,000; 
  
 (l) when the Purchase Price for such Purchased Mortgage Loan is added to
other Purchased Mortgage Loans, the aggregate Purchase Price of all Delinquent Two Month Mortgage Loans and Delinquent Three Month Mortgage Loans exceeds $20,000,000; 
  
 (m) when the Purchase Price for such Purchased Mortgage Loan is added to other Purchased Mortgage Loans, the aggregate
Purchase Price of all Delinquent One Month Mortgage Loans exceeds $20,000,000; 
  
 (n) when the Purchase Price for such Purchased Mortgage Loan is added to other Purchased Mortgage Loans, the aggregate Purchase Price of all Repurchased Mortgage Loans exceeds $15,000,000; or 
  
 (o) when the Purchase Price for such Purchased Mortgage Loan is added to
other Purchased Mortgage Loans, the aggregate Purchase Price of all Manufactured Home Loans exceeds 1.25% of the Maximum Purchase Price. 
  
 “Material Adverse Effect” shall mean a material adverse effect on (a) the Property, business, operations or financial condition of FinCo
or any of its Subsidiaries, taken as a whole, (b) the ability of the Seller or any Affiliate to perform its obligations under any of the Repurchase Documents to which it is a party, (c) the validity or enforceability of any of the Repurchase
Documents, (d) the rights and remedies of the Buyer or any Affiliate under any of the Repurchase Documents, or (e) the timely payment of any amounts payable under the Repurchase Documents. 
  

 -10- 

 “Maximum Purchase Price” shall mean $400,000,000. 
  
 “MERS” shall mean Mortgage Electronic Registration Systems,
Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor thereto. 
  
 “MERS System” shall mean the system of recording transfers of mortgages electronically maintained by MERS. 
  
 “Monthly Payment” shall mean the scheduled monthly payment
of principal and interest on a Mortgage Loan. 
  
 “Moody’s” shall mean Moody’s Investor’s Service, Inc. or any successors thereto. 
  
 “Mortgage” shall mean each mortgage, assignment of rents, security agreement and fixture filing, or deed of trust, assignment of rents,
security agreement and fixture filing, deed to secure debt, assignment of rents, security agreement and fixture filing, or similar instrument creating and evidencing a first lien or second lien on real property and other property and rights
incidental thereto. 
  
 “Mortgage File” shall
mean, with respect to a Mortgage Loan, the documents and instruments relating to such Mortgage Loan and set forth in Exhibit VI hereto. 
  
 “Mortgage Interest Rate” shall mean the rate of interest borne on a Mortgage Loan from time to time in accordance with the terms of the
related Mortgage Note. 
  
 “Mortgage Loan” shall
mean any first or second lien, one-to-four-family residential mortgage loan evidenced by a Mortgage Note and secured by a Mortgage, which Mortgage Loan is subject to a Transaction hereunder, which in no event shall include any mortgage loan which
(a) is subject to Section 226.32 of Regulation Z or any similar state law (relating to high interest rate credit/lending transactions), (b) includes any single premium credit life or accident and health insurance or disability insurance, or (c)
contains any term or condition, or involves any loan origination practice, that has been defined as “predatory”, “covered” or “threshold” under applicable federal, state or local law, or which has been expressly
categorized as an “unfair” or “deceptive” term, condition, or practice in any applicable federal, state or local law dealing with “predatory” or “high cost” mortgage lending (or a similarly classified loan
using different terminology under a law, regulation or ordinance imposing heightened regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees). 
  
 “Mortgage Loan Schedule” shall mean with respect to any
Transaction as of any date, a mortgage loan schedule in the form of a computer tape or other electronic medium generated by the Seller and delivered to Buyer and the Custodian, which provides information (including, without limitation, the
information set forth on Exhibit V attached hereto) relating to the Purchased Mortgage Loans in a format acceptable to the Buyer. 
  
 “Mortgage Loan Schedule and Exception Report” shall have the meaning set forth in the applicable Custodial Agreement. 
  

 -11- 

 “Mortgage Note” shall mean the promissory note or other evidence of the indebtedness of
a Mortgagor secured by a Mortgage. 
  
 “Mortgaged
Property” shall mean the real property securing repayment of the debt evidenced by a Mortgage Note. 
  
 “Mortgagor” shall mean the obligor or obligors on a Mortgage Note, including any Person who has assumed or guaranteed the obligations of
the obligor thereunder. 
  
 “Multiemployer Plan”
shall mean, with respect to any Person, a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding five years contributed to by such Person or any ERISA
Affiliate thereof on behalf of its employees and which is covered by Title IV of ERISA. 
  
 “Net Income” shall mean, for any Person for any period, the net income of such Person for such period as determined in accordance with GAAP. 
  
 “Non-Excluded Taxes” shall have the meaning set forth in
Section 7(a) hereof. 
  
 “Non-Performing Mortgage
Loan” means (i) any Mortgage Loan for which any Monthly Payment, or part thereof, remains unpaid for one hundred eighty (180) days or more past its scheduled Due Date, (ii) any Mortgage Loan with respect to which the related mortgagor is in
bankruptcy or (iii) any Mortgage Loan with respect to which the related Mortgaged Property is in foreclosure. 
  
 “Non-Utilization Fee” shall mean, for each calendar quarter in which the average quarterly aggregate outstanding Purchase Price of the
Purchased Mortgage Loans was less than $200,000,000, an amount equal to the product of (x) 0.125% per annum and (y) the excess of (I) the Maximum Purchase Price over (II) the average quarterly Purchase Price of the Purchased Mortgage Loans during
such calendar quarter. 
  
 “Obligations” shall
mean (a) any amounts due and payable by the Seller to Buyer in connection with a Transaction hereunder, together with interest thereon (including interest which would be payable as post-petition interest in connection with any bankruptcy or similar
proceeding) and all other fees or expenses which are payable hereunder or under any of the Repurchase Documents and (b) all other obligations or amounts due and payable by the Seller to the Buyer or an Affiliate of Buyer under any other contract or
agreement. 
  
 “Other Taxes” shall have the
meaning set forth in Section 7(b) hereof. 
  
 “Overestimate Amount” shall have the meaning set forth in Section 3(c) hereof. 
  
 “Par Percentage” shall mean: 
  
 (a) with respect to each Mortgage Loan which is an Aged Loan (other than a Delinquent Mortgage Loan or a Repurchased Loan), 95%; 
  

 -12- 

 (b) with respect to each Mortgage Loan which is a Delinquent One Month Mortgage Loan (other than a
Repurchased Loan), 93%; 
  
 (c) with respect to each Mortgage Loan
which is a Delinquent Two Month Mortgage Loan (other than a Repurchased Loan), 90%; 
  
 (d) with respect to each Mortgage Loan which is a Delinquent Three Month Mortgage Loan (other than a Repurchased Loan), 50%; 
  
 (e) with respect to each Mortgage Loan which is a Repurchased Loan, 50%; or 
  
 (f) with respect to each Mortgage Loan (other than an Aged Loan, Delinquent Mortgage Loan or Repurchased Loan), 100%.

  
 “Payment Date” shall mean the 5th day of each
month, or if such date is not a Business Day, the Business Day immediately preceding the last day of the month. 
  
 “PBGC” shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

  
 “Periodic Advance Repurchase Payment” shall
have the meaning specified in Section 5(a). 
  
 “Person” shall mean any individual, corporation, company, voluntary association, partnership, joint venture, limited liability company, trust, unincorporated association or government (or any agency, instrumentality or
political subdivision thereof). 
  
 “Plan” shall
mean, with respect to any Person, any employee benefit or similar plan that is or was at any time during the current year or immediately preceding five years established or maintained by such Person or any ERISA Affiliate thereof and that is covered
by Title IV of ERISA, other than a Multiemployer Plan. 
  
 “Post-Default Rate” shall mean a rate equal to the sum of (a) the Pricing Rate plus (b) two percent (2.00%). 
  
 “Price Differential” shall mean, with respect to any Transaction hereunder as of any date, the aggregate amount obtained by daily
application of the Pricing Rate (or, during the continuation of an Event of Default, by daily application of the Post-Default Rate) for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of
days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the Repurchase Date (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such
Transaction). 
  
 “Pricing Rate” shall mean a
rate per annum equal to the sum of (a) the LIBOR Rate plus (b) the Pricing Spread. 
  

 -13- 

 “Pricing Spread” shall mean: 
  
 (a) with respect to Transactions the subject of which are Mortgage Loans
other than Wet-Ink Mortgage Loans, Delinquent Two Month Mortgage Loans, Delinquent Three Month Mortgage Loans, Repurchased Loans or Aged Mortgage Loans, 0.875%; 
  

(b) with respect to Transactions the subject of which are Mortgage Loans which are Wet-Ink Mortgage Loans, 1.25%; 
  
 (c) with respect to Transactions the subject of which are Mortgage Loans
which are Delinquent Two Month Mortgage Loans or Delinquent Three Month Mortgage Loans, 1.625%; or 
  
 (d) with respect to Transactions the subject of which are Mortgage Loans which are Repurchased Loans, 1.625%. 
  
 “Property” shall mean any right or interest in or to
property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. 
  
 “Purchase Date” shall mean the date on which Purchased Mortgage Loans are transferred by Seller to the Buyer or its designee. 

 
 “Purchase Price” shall mean, 
  
 (a) on the Purchase Date, the price at which each Purchased Mortgage Loan is
transferred by Seller to Buyer which shall equal the Asset Value on the Purchase Date; and 
  
 (b) thereafter, except where Buyer and Seller agree otherwise, the amount described in clause (a) decreased by the amount of any cash, Income and Periodic Advance Repurchase Payments actually received by Buyer
pursuant to Sections 5 or applied to reduce Seller’s obligations under Section 4(b) hereof. 
  
 “Purchase Price Percentage” shall mean: 
  
 (a) with respect to each Mortgage Loan which is an Eligible Mortgage Loan (other than Repurchased Loans, Aged Loans or Delinquent Mortgage Loans), 98%;

  
 (b) with respect to each Mortgage Loan which is a Wet-Ink
Mortgage Loan, 98%; 
  
 (c) with respect to each Aged Loan (other
than Delinquent Mortgage Loans or Repurchased Loans), 95%; 
  
 (d)
with respect to each Delinquent One Month Mortgage Loan (other than Repurchased Loans), 93%; 
  
 (e) with respect to each Mortgage Loan which is a Delinquent Two Month Mortgage Loan (other than Repurchased Loans), 90%; 
  
 (f) with respect to each Mortgage Loan which is a Delinquent Three Month Mortgage Loan (other than Repurchased Loans), 85%; 
  

 -14- 

 (g) with respect to each Mortgage Loan which is a Repurchased Loan, 85%. 
  
 “Purchased Mortgage Loan Report” shall mean a report,
delivered with each Transaction Request, on or prior to the 10th of each month (or if such date is not a Business Day, the next preceding Business Day), or upon the request of the Buyer, including a Mortgage Loan Schedule in the form of Exhibit
V hereto, setting forth information with respect to the Purchased Mortgage Loans (and Mortgage Loans proposed to be the subject of a Transaction on the related Purchase Date, if applicable). 
  
 “Purchased Mortgage Loans” shall mean the Mortgage Loans
sold by the Seller to Buyer in a Transaction, and any Additional Purchased Mortgage Loans as evidenced by a Confirmation and a Trust Receipt. 
  
 “Qualified Insurer” shall mean a mortgage guaranty insurance company duly authorized and licensed where required by law to transact
mortgage guaranty insurance business and acceptable under the Underwriting Guidelines. 
  
 “Rating Agency” shall mean any of S&P, Moody’s or Fitch. 
  
 “Records” shall mean all instruments, agreements and other books, records, and reports and data generated by other media for the storage
of information maintained by Seller or any other person or entity with respect to a Purchased Mortgage Loan. Records shall include the Mortgage Notes, any Mortgages, the Mortgage Files, the credit files related to the Purchased Mortgage Loan and any
other instruments necessary to document or service a Mortgage Loan. 
  
 “Regulations T, U and X” shall mean Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.

  
 “REO Property” means real property acquired
by Seller, including a Mortgaged Property acquired through foreclosure of a Mortgage Loan or by deed in lieu of such foreclosure. 
  
 “Reportable Event” shall mean any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. § 2615. 
  
 “Repurchase Agreement” shall mean this Master Repurchase Agreement between Buyer and the Seller, dated as of the date hereof as the same
may be further amended, supplemented or otherwise modified in accordance with the terms hereof. 
  
 “Repurchase Assets” shall have the meaning provided in Section 8 hereof. 
  
 “Repurchase Date” shall mean the date on which the Seller is to repurchase the Purchased Mortgage Loans
subject to a Transaction from Buyer as specified in the related Confirmation, or if not so specified on a date requested pursuant to Section 3(d) or on the Termination Date, including any date determined by application of the provisions of Sections
3 or 14, or the date identified to Buyer by the Seller as the date that the related Mortgage Loan is to be sold pursuant to a Take-out Commitment. 
  

 -15- 

 “Repurchase Documents” shall mean this Repurchase Agreement, the Custodial Agreement,
the Electronic Tracking Agreement, if applicable, a Servicer Notice, if any, the Disbursement Agreement and the Account Agreement. 
  
 “Repurchase Price” shall mean the price at which Purchased Mortgage Loans are to be transferred from Buyer or its designee to the Seller
upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as of the date of such determination. 
  
 “Repurchased Loan” shall mean a Mortgage Loan (a) which is
repurchased by Seller as a result of a breach of representations and warranties made by Seller under the agreed upon terms in which the claimed breach is not a result of fraud or material misrepresentation of fact by any party to the Mortgage Loan
(unless otherwise approved by Buyer in writing) or consumer credit law violation, (b) where the claimed breach is expressly identified to Buyer in writing and (c) which is subject to a Transaction hereunder for no more than 270 days. In no event
will a Repurchased Loan be subject to a Transaction hereunder as a “Repurchased Loan” if (i) there is a breach of representation and warranty in respect of such Repurchased Loan other than the breach identified in writing to the Buyer
pursuant to subclause (b) of this definition or (ii) the related Mortgaged Property has been foreclosed upon or has been converted to REO Property. 
  
 “Requirement of Law” shall mean as to any Person, the certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or
any of its Property is subject. 
  
 “Responsible
Officer” shall mean an officer of the Seller listed on Exhibit XI hereto, as such Exhibit XI may be amended from time to time. 
  
 “Reset Date” shall mean the last day of the related LIBOR Period. 
  
 “S&P” shall mean Standard & Poor’s Ratings Services, or any successor thereto. 
  
 “Second Lien Mortgage Loan” shall mean a Mortgage Loan
secured by a second lien on the related Mortgaged Property. 
  
 “Second Payment Default” shall mean, with respect to a Mortgage Loan, the failure of the Mortgagor to make the second Monthly Payment on or before thirty (30) days after the second Due Date following the date of origination
of the Mortgage Loan. 
  
 “Seller” shall mean WMC
Mortgage Corp., or any successor in interest thereto. 
  
 “Servicer” shall mean Fairbanks Capital Corporation or Option One Mortgage Corporation or any of their respective successors or permitted assigns. 
  
 “Servicer Notice” shall mean the notice acknowledged by the Servicer substantially in the form of
Exhibit IX hereto. 
  

 -16- 

 “Servicing Agreement” shall mean any servicing agreement entered into among the Seller
and a Servicer, as the same may be amended from time to time. 
  
 “Settlement Account” shall have the meaning set forth in of the Custodial Agreement. 
  
 “Settlement Account Control Agreement” shall mean the Settlement Account Control Agreement entered into among the Buyer, the Seller and
the Custodian, dated as of the date hereof as the same may be further amended, supplemented or otherwise modified in accordance with its terms. 
  
 “Settlement Agent” with respect to any Transaction the subject of which is a Wet-Ink Mortgage Loan, the entity approved by Buyer, in its
sole discretion, which may be a title company, escrow company or attorney in accordance with local law and practice in the jurisdiction where the related Wet-Ink Mortgage Loan is being originated. A Settlement Agent is deemed approved unless Buyer
notifies Seller otherwise at any time electronically or in writing. 
  
 “Single-Employer Plan” shall mean a single-employer plan as defined in Section 4001(a)(15) of ERISA which is subject to the provisions of Title IV of ERISA. 
  
 “Subsidiary” shall mean, with respect to any Person, any corporation, partnership or other entity of which
at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or
other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person. 
  
 “Takeout Commitment” means a commitment of Seller to sell
one or more Mortgage Loans to a Takeout Investor, and the corresponding Takeout Investor’s commitment back to Seller to effectuate the foregoing. 
  
 “Takeout Investor” shall mean any institution which has made a Takeout Commitment and has been approved by Buyer. A Takeout Investor is
deemed approved unless Buyer notifies Seller otherwise at any time electronically or in writing. 
  
 “Tangible Net Worth” shall mean, for any Person as of a particular date, 
  
 (a) all amounts which would be included under capital on a balance sheet of such Person at such date, determined in
accordance with GAAP, less 
  
 (b) (i) amounts owing to
such Person from Affiliates, or from officers, employees, shareholders or other Persons similarly affiliated with such Person, (ii) intangible assets and (iii) any deferred tax charge in excess of $45,000,000. 
  

 -17- 

 “Taxes” shall have the meaning set forth in Section 7(a) hereof. 
  
 “Termination Date” shall mean the date which is 546 days
from the date hereof which shall be March 21, 2005. 
  
 “Termination Event” shall have the meaning set forth in Section 13.02 hereof. 
  
 “Transaction” shall have the meaning specified in Section 1. 
  
 “Transaction Request” shall mean a request from the Seller to Buyer to enter into a Transaction.

  
 “Trust Receipt” shall have the meaning set
forth in the Custodial Agreement. 
  
 “Underwriting
Guidelines” shall mean the underwriting guidelines of the Seller, attached hereto as Exhibit VII, as may be updated from time to time under this Repurchase Agreement. 
  
 “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect from time to time in the
State of New York. 
  
 “Wet-Ink Funding Account”
shall mean an account established in the name of the Seller, subject to the dominion and control of the Buyer, at the Disbursement Agent pursuant to the terms of the Disbursement Agreement. 
  
 “Wet-Ink Mortgage Loan” shall mean a Mortgage Loan which any
Seller is selling to Buyer simultaneously with the origination thereof and/or for which the Mortgage File has not been delivered to the Custodian. 
  
 “Wiring Schedule” shall mean, for each Wet-Ink Mortgage Loan, a schedule setting forth the loan identification number, the loan amount to
be funded by wire transfer and wiring directions for such Wet-Ink Mortgage Loan. 
  
 SECTION 3. INITIATION; TERMINATION 
  
 (a)
Conditions Precedent to Initial Transaction. Buyer’s obligation to enter into the initial Transaction hereunder is subject to the satisfaction, immediately prior to or concurrently with the making of such Transaction, of the condition
precedent that Buyer shall have received from the Seller any fees and expenses payable hereunder, and all of the following documents, each of which shall be satisfactory to Buyer and its counsel in form and substance: 
  
 (i) The following Repurchase Documents delivered to the
Buyer: 
  
 (A) Repurchase Agreement. This
Repurchase Agreement, duly executed by the parties thereto; 
  
 (B) Custodial Agreement. The Custodial Agreement, duly executed by the parties thereto; 
  

 -18- 

 (C) Account Agreement. An Account Agreement, duly executed by the parties thereto
in form and substance acceptable to the Buyer; 
  
 (D) Electronic Tracking Agreement. To the extent Seller is selling Mortgage Loans which are registered on the MERS® System, an Electronic Tracking Agreement entered into, duly executed and delivered by the parties thereto, in full force and effect, free of any
modification, breach or waiver; 
  
 (E)
Servicing Agreement. A Servicing Agreement, duly executed by the parties thereto; 
  
 (F) Disbursement Agreement. The Disbursement Agreement, executed and delivered by a duly authorized officer of each of the Buyer,
Seller and Disbursement Agent, in form and substance acceptable to the Buyer; and the establishment thereunder of all accounts, computer systems and agreements with the Disbursement Agent necessary for disbursing the Purchase Price related to
Wet-Ink Mortgage Loans; and 
  
 (G) Settlement
Account Control Agreement. The Settlement Account Control Agreement, executed and delivered by a duly authorized officer of each of the Buyer, Seller and Custodian. 
  
 (ii) Opinions of Counsel. 
  
 (A) An opinion or opinions of counsel to the Seller, substantially in the form of Exhibit II.

  
 (iii) Seller Organizational Documents.
A certificate of corporate existence of the Seller delivered to Buyer prior to the Effective Date (or if unavailable, as soon as available thereafter) and certified copies of the charter and by-laws (or equivalent documents) of the Seller and of all
corporate or other authority for the Seller with respect to the execution, delivery and performance of the Repurchase Documents and each other document to be delivered by the Seller from time to time in connection herewith. 
  
 (iv) Security Interest. Evidence that all other
actions necessary or, in the opinion of Buyer, desirable to perfect and protect Buyer’s interest in the Purchased Mortgage Loans and other Repurchase Assets have been taken, including, without limitation, UCC searches and duly authorized and
filed Uniform Commercial Code financing statements on Form UCC-1. 
  
 (v) Underwriting Guidelines. A true and correct copy of the Underwriting Guidelines certified by an officer of the Seller. 
  
 (vi) Insurance. Evidence that Seller has added Buyer as an additional loss payee under the
Seller’s banker’s bond. 
  
 (vii)
Other Documents. Such other documents as Buyer may reasonably request, in form and substance reasonably acceptable to Buyer. 
  

 -19- 

 (b) Conditions Precedent to all Transactions. Upon satisfaction of the conditions set forth in
this Section 3(b), the Buyer shall enter into a Transaction with Seller. Buyer’s obligation to enter into each Transaction (including the initial Transaction) is subject to the satisfaction of the following further conditions precedent, both
immediately prior to entering into such Transaction and also after giving effect thereto to the intended use thereof: 
  
 (i) Buyer shall have executed and delivered a Confirmation in accordance with the procedures set forth in Section 3(c); 
  
 (ii) No Termination Event, Default or Event of Default shall
have occurred and be continuing under the Repurchase Documents; 
  
 (iii) Both immediately prior to the Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by the Seller in Section 11 hereof, shall be true and
correct on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such
specific date); 
  
 (iv) After giving effect to
the requested Transaction, the aggregate outstanding Purchase Price for all Purchased Mortgage Loans subject to then outstanding Transactions under this Repurchase Agreement shall not exceed the Maximum Purchase Price; 
  
 (v) After giving effect to the requested Transaction, the
Asset Value of all Purchased Mortgage Loans exceeds the aggregate Repurchase Price for such Transactions; 
  
 (vi) With respect to Transactions the subject of which are Mortgage Loans other than Wet-Ink Mortgage Loans, on or prior to 4:00 p.m. (New
York City time) one (1) Business Day prior to the related Purchase Date, the Seller shall have delivered (A) to the Buyer (1) a Transaction Request and (2) a Purchased Mortgage Loan Report, and (B) to the Custodian, a Purchased Mortgage Loan Report;

  
 (vii) With respect to Transactions the
subject of which are Wet-Ink Mortgage Loans: 
  
 (A) By 4:00 p.m. (New York City time) one (1) Business Day prior to the related Purchase Date, the Buyer shall have received the proposed Mortgage Loan Schedule (if available) and a report detailing the approximate outstanding principal
balance of Wet-Ink Mortgage Loans to be purchased by the Buyer on such Purchase Date and the approximate amount of the related Purchase Price (the “Estimated Purchase Price”); 
  
 (B) By 3:30 p.m. (New York City time) on the related
Purchase Date, the Buyer and the Disbursement Agent shall have received (a) the final Mortgage Loan Schedule, including, without limitation, a schedule setting forth the mortgage loan identification number, the Mortgagor name and the approximate

  

 -20- 

 
outstanding principal balance of Wet-Ink Mortgage Loans to be purchased by Buyer on such Purchase Date, (b) an updated report setting forth the approximate
outstanding principal balance of Wet-Ink Mortgage Loans to be purchased by the Buyer on such Purchase Date and the amount of the related Purchase Price (the “Actual Purchase Price”) and (c) a Wiring Schedule; and 
  
 (C) By 4:00 p.m. (New York City time) on the related
Purchase Date, the Buyer shall have received a Wet-Ink Trust Receipt for each Wet-Ink Mortgage Loan with the related Mortgage Loan Schedule attached thereto. 
  

(viii) The Seller shall have delivered to the Custodian the Mortgage File with respect to each Purchased Mortgage Loan which is not a
Wet-Ink Mortgage Loan and the Custodian shall have issued a Trust Receipt with respect to each such Purchased Mortgage Loan to the Buyer and with respect to each Wet-Ink Mortgage Loan, by no later than the seventh (7th) Business Day following the applicable Purchase Date, Seller shall deliver the Mortgage File to the Custodian; 
  
 (ix) The Buyer shall have received all fees and expenses of
counsel to the Buyer as contemplated by Sections 15(b) and 26 which amounts, at the Buyer’s option, may be withheld from the proceeds remitted by Buyer to the Seller pursuant to any Transaction hereunder; 
  
 (x) None of the following shall have occurred and/or be
continuing: 
  
 (A) an event or events shall have
occurred in the good faith determination of the Buyer resulting in the effective absence of a “repo market” or comparable “lending market” for financing debt obligations secured by securities or an event or events shall have
occurred resulting in the Buyer not being able to finance Purchased Mortgage Loans through the “repo market” or “lending market” with traditional counterparties at rates which would have been reasonable prior to the occurrence of
such event or events; or 
  
 (B) there shall have
occurred a material adverse change in the financial condition of the Buyer which affects (or can reasonably be expected to affect) materially and adversely the ability of the Buyer to fund its obligations under this Repurchase Agreement; and

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

  
 (i) With respect to Transactions the subject
of which are Wet-Ink Mortgage Loans, the Seller shall deliver a Transaction Request to the Buyer on or prior to 4:00 p.m. (New York City time) on the date of any Transaction and with respect to Transactions the subject of which are Mortgage Loans
other than Wet-Ink Mortgage Loans, the Seller 

  

 -21- 

 
shall deliver a Transaction Request to the Buyer on or prior to 4:00 p.m. (New York City time) on the date one (1) Business Day prior to entering into any
Transaction. Such Transaction Request shall include a Mortgage Loan Schedule with respect to the Mortgage Loans to be sold in such requested Transaction. Buyer shall confirm the terms of each Transaction by issuing a written confirmation to the
Seller promptly after the parties enter into such Transaction in the form of Exhibit I attached hereto (a “Confirmation”). Such Confirmation shall set forth (A) the Purchase Date, (B) the Purchase Price, (C) the Repurchase
Date, (D) the Pricing Rate applicable to the Transaction, (E) the applicable Purchase Price Percentages, (F) LIBOR Period and (G) additional terms or conditions not inconsistent with this Repurchase Agreement. 
  
 (ii) The Repurchase Date for each Transaction shall not be
later than the date which is 364 days after the related Purchase Date. The LIBOR Period for each Transaction shall be one month, unless agreed to in writing by the Buyer. 
  
 (iii) Each Confirmation, together with this Repurchase Agreement, shall be conclusive evidence of the terms
of the Transaction(s) covered thereby unless objected to in writing by the Seller no more than two (2) Business Days after the date the Confirmation was received by the Seller or unless a corrected Confirmation is sent by Buyer. An objection sent by
Seller must state specifically that writing which is an objection, must specify the provision(s) being objected to by the Seller, must set forth such provision(s) in the manner that the Seller believes they should be stated, and must be received by
Buyer no more than two (2) Business Days after the Confirmation was received by the Seller. 
  
 (iv) Subject to the terms and conditions of this Repurchase Agreement, during such period the Seller may sell, repurchase and resell
Eligible Mortgage Loans hereunder. 
  
 (v) In no
event shall a Transaction be entered into when the Repurchase Date for such Transaction would be later than the Termination Date. 
  
 (vi) No later than 4:00 p.m., New York City time, one (1) Business Day prior to the requested Purchase Date, the Seller shall deliver to
the Custodian the Mortgage File pertaining to each Eligible Mortgage Loan (other than a Wet-Ink Mortgage Loan) to be purchased by the Buyer. 
  
 (vii) Subject to the provisions of this Section 3, the Purchase Price will then be made available to the Seller by the Buyer transferring,
via wire transfer, in the aggregate amount of such Purchase Price in funds immediately available. 
  
 (viii) With respect to Transactions the subject of which are Wet-Ink Mortgage Loans: 
  
 (A) The conditions set forth in subsection (b)(vii) of this
Section shall have been satisfied. 
  

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 (B) Notwithstanding the foregoing, the full amount of the Estimated Purchase Price shall
be deemed to have been made on the Purchase Date for all purposes hereunder. 
  
 (C) Upon receipt of the final Wiring Schedule with respect to any Purchase Date, the Buyer shall determine the amount, if any, by which the Estimated Purchase Price deposited in the Wet-Ink Funding Account exceeds the
Actual Purchase Price (such amount, the “Overestimate Amount”). The Buyer shall cause the Disbursement Agent to promptly wire such Overestimate Amount directly to the Buyer as a prepayment of the Transaction made on such Purchase
Date. 
  
 (d) Repurchase 
  
 (i) The Seller may repurchase Purchased Mortgage Loans
without penalty or premium on any date. The Repurchase Price payable for the repurchase of any such Purchased Mortgage Loan shall be reduced as provided in Section 5(d). If the Seller intends to make such a repurchase, the Seller shall give one (1)
Business Day’s prior written notice thereof to the Buyer, designating the Purchased Mortgage Loans to be repurchased. If such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, and, on
receipt, such amount shall be applied to the Repurchase Price for the designated Purchased Mortgage Loans. 
  
 (ii) On the Repurchase Date, termination of the Transaction will be effected by reassignment to the Seller or its designee of the
Purchased Mortgage Loans (and any Income in respect thereof received by Buyer not previously credited or transferred to, or applied to the obligations of, the Seller pursuant to Section 5) against the simultaneous transfer of the Repurchase Price to
an account of Buyer. The Seller is obligated to obtain the Mortgage Files from Buyer or its designee at the Seller’s expense on the Repurchase Date. 
  
 SECTION 4. MARGIN AMOUNT MAINTENANCE 
  
 (a) The Buyer shall determine the Asset Value of the Purchased Mortgage Loans on a weekly basis, or at such intervals as determined by the Buyer in its
sole discretion. 
  
 (b) If at any time the aggregate Asset Value
of all related Purchased Mortgage Loans subject to all Transactions is less than the aggregate Purchase Price for all such Transactions (a “Margin Deficit”), then Buyer may by notice to Seller (as such notice is more particularly
set forth below, a “Margin Call”), require Seller to transfer to Buyer or its designee cash or Eligible Mortgage Loans approved by the Buyer in its sole discretion (“Additional Purchased Mortgage Loans”) so that the
aggregate Asset Value of the Purchased Mortgage Loans, including any such cash or Additional Purchased Mortgage Loans or cash, will thereupon equal or exceed the aggregate Purchase Price for all Transactions. If Buyer delivers a Margin Call to the
Seller on or prior to 9:30 a.m. (New York City time) on any Business Day, then the Seller shall transfer cash or Additional Purchased Mortgage Loans to Buyer no later than 5 p.m. (New York City time) that day. In the event the Buyer delivers a
Margin Call to a Seller after 

  

 -23- 

 
9:30 a.m. (New York City time) on any Business Day, the Seller shall be required to transfer cash or Additional Purchased Mortgage Loans no later than 5 p.m.
(New York City time) on the subsequent Business Day. 
  
 (c)
Buyer’s election, in its sole and absolute discretion, not to make a Margin Call at any time there is a Margin Deficit shall not in any way limit or impair its right to make a Margin Call at any time a Margin Deficit exists. 
  
 (d) Any cash transferred to the Buyer pursuant to Section 4(b) above shall be
credited to the Repurchase Price of the related Transactions. 
  
 SECTION 5.
INCOME PAYMENTS 
  
 (a) Notwithstanding that Buyer and the
Seller intend that the Transactions hereunder be sales to Buyer of the Purchased Mortgage Loans, Seller shall pay to Buyer the accreted value of the Price Differential (less any amount of such Price Differential previously paid by the Seller to
Buyer) plus the amount of any unpaid Margin Deficit (each such payment, a “Periodic Advance Repurchase Payment”) on each Payment Date. Notwithstanding the preceding sentence, if Seller fails to make all or part of the Periodic
Advance Repurchase Payment by 5:00 p.m. (New York City time) on any Payment Date, the Pricing Rate shall be equal to the Post-Default Rate until the Periodic Advance Repurchase Payment is received in full by Buyer. 
  
 (b) The Seller shall hold for the benefit of, and in trust for, Buyer all
Income, including without limitation all Income received by or on behalf of the Seller with respect to such Purchased Mortgage Loans. All Income shall be held in trust for Buyer, shall constitute the property of Buyer and shall not be commingled
with other property of the Seller, any Affiliate of the Seller except as expressly permitted above. With respect to each Payment Date, the Seller shall remit all Income as follows: 
  
 (i) first, to the payment of all costs and fees payable by the Seller pursuant to this Repurchase Agreement;

  
 (ii) second, to the Buyer in payment of any
accrued and unpaid Price Differential; and 
  
 (iii) third, without limiting the rights of Buyer under Section 4 of this Repurchase Agreement, to the Buyer, in the amount of any unpaid Margin Deficit. 
  
 (c) After the occurrence of a Default or an Event of Default, the Seller shall deposit such Income in a deposit account (the
title of which shall indicate that the funds therein are being held in trust for Buyer) (the “Collection Account”) with a financial institution acceptable to Buyer and subject to the Account Agreement. All such Income shall be held
in trust for Buyer, shall constitute the property of Buyer and shall not be commingled with other property of the Seller or any Affiliate of the Seller except as expressly permitted above. Funds deposited in the Collection Account during any month
shall be held therein, in trust for the Buyer, until the next Payment Date. 
  

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 (d) To the extent that the Buyer receives any funds from a Takeout Investor with respect to the purchase
by such Takeout Investor of a Mortgage Loan, the Buyer shall promptly apply such funds in accordance with the same order of priority set forth in Section 5(b) hereof. 
  
 (e) Notwithstanding the preceding provisions, if an Event of Default has occurred, all funds in the Collection Account shall
be withdrawn and applied as determined by the Buyer. 
  
 (f) Buyer
shall offset against the Repurchase Price of each such Transaction all Income and Periodic Advance Repurchase Payments actually received by Buyer pursuant to Section 5(a), excluding any Late Payment Fees paid pursuant to any Periodic Advance
Repurchase Payments made at the Post-Default Rate pursuant to Section 5(a). 
  
 (g) So long as no Default or Event of Default exists and is continuing and Seller otherwise complies with the requirements of this Section 5 with respect to the application of Income on each Payment Date, Buyer grants
Seller a right and license to use, retain and enjoy the Income or so much thereof as may be remaining after application pursuant to Section 5(b) above. 
  
 SECTION 6. REQUIREMENTS OF LAW 
  
 (a) If any Requirement of Law (other than with respect to any amendment made to the Buyer’s certificate of incorporation and by-laws or other
organizational or governing documents) or any change in the interpretation or application thereof or compliance by the Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority
made subsequent to the date hereof: 
  
 (i) shall
subject the Buyer to any tax of any kind whatsoever with respect to this Repurchase Agreement or any Transaction (excluding net income taxes branch profits taxes, franchise taxes or similar taxes imposed on the Buyer as a result of any present or
former connection between the Buyer and the United States, other than any such connection arising solely from the Buyer having executed, delivered or performed its obligations or received a payment under, or enforced, this Repurchase Agreement) or
change the basis of taxation of payments to the Buyer in respect thereof; 
  
 (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, or other
extensions of credit by, or any other acquisition of funds by, any office of the Buyer which is not otherwise included in the determination of the LIBOR Rate hereunder; 
  
 (iii) shall impose on the Buyer any other condition; 
  
 and the result of any of the foregoing is to increase the cost to the Buyer, by an amount
which the Buyer deems to be material, of entering, continuing or maintaining any Transaction or to reduce any amount due or owing hereunder in respect thereof, then, in any such case, the Seller shall 

  

 -25- 

 
promptly pay the Buyer such additional amount or amounts as calculated by the Buyer in good faith as will compensate the Buyer for such increased cost or
reduced amount receivable. 
  
 (b) If the Buyer shall have
determined that the adoption of or any change in any Requirement of Law (other than with respect to any amendment made to the Buyer’s certificate of incorporation and by-laws or other organizational or governing documents) regarding capital
adequacy or in the interpretation or application thereof or compliance by the Buyer or any corporation controlling the Buyer with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on the Buyer’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which the Buyer or such
corporation could have achieved but for such adoption, change or compliance (taking into consideration the Buyer’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by the Buyer to be material, then from
time to time, the Seller shall promptly pay to the Buyer such additional amount or amounts as will compensate the Buyer for such reduction. 
  
 (c) If the Buyer becomes entitled to claim any additional amounts pursuant to this Section, it shall promptly notify the Seller of the event by reason of
which it has become so entitled. A certificate as to any additional amounts payable pursuant to this Section submitted by the Buyer to the Seller shall be conclusive in the absence of manifest error. 
  
 SECTION 7. TAXES. 
  
 (a) Any and all payments by the Seller under or in respect of this Repurchase Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest and additions to tax) with respect thereto, whether
now or hereafter imposed, levied, collected, withheld or assessed by any taxation authority or other Governmental Authority (collectively, “Taxes”), unless required by law. If the Seller shall be required under any applicable Requirement
of Law to deduct or withhold any Taxes from or in respect of any sum payable under or in respect of this Repurchase Agreement to the Buyer, (i) the Seller shall make all such deductions and withholdings in respect of Taxes, (ii) the Seller shall pay
the full amount deducted or withheld in respect of Taxes to the relevant taxation authority or other governmental authority in accordance with the applicable Requirement of Law, and (iii) the sum payable by the Seller shall be increased as may be
necessary so that after the Seller has made all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section 7) such Buyer receives an amount equal to the sum it would have
received had no such deductions or withholdings been made in respect of Non-Excluded Taxes. For purposes of this Repurchase Agreement, the term “Non-Excluded Taxes” are Taxes other than, in the case of the Buyer, Taxes that are imposed on
its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction under the laws of which such Buyer is organized or of its principal office, or any political subdivision thereof, unless such Taxes are imposed
as a result of such Buyer having executed, delivered or performed its obligations or received payments under, or enforced, this Repurchase Agreement (in which case such Taxes will be treated as Non-Excluded Taxes). 
  

 -26- 

 (b) If on the date of the assignment pursuant to which a Buyer assignee becomes a party to this
Repurchase Agreement, the Buyer assignor was entitled to payments under this Section 7, then, to such extent (and only to such extent), the term “Non-Excluded Taxes” shall include (in addition to Taxes that may be imposed in the future or
other amounts otherwise includable in Taxes) such Taxes, if any, applicable with respect to such Buyer assignee on such date. Any additional Taxes in respect of a Buyer that result solely and directly from a change in the principal office of such
Buyer shall be treated as any Taxes other than Non-Excluded Taxes (“Excluded Taxes”) unless (A) any such additional Taxes are imposed as a result of a change in the applicable Requirement of Law, or in the interpretation or application
thereof, occurring after the date of such change or (B) such change is made pursuant to the terms of Section 7(d) or otherwise as a result of a request therefor by the Seller. 
  
 (c) In addition, the Seller hereby agrees to pay any present or future stamp, recording, documentary, excise, property or
similar taxes, charges or levies that arise from any payment made under or in respect of this Repurchase Agreement or from the execution, delivery or registration of, any performance under, or otherwise with respect to, this Repurchase Agreement
(collectively, “Other Taxes”). 
  
 (d) The Seller hereby
agrees to indemnify the Buyer, and to hold it harmless against, the full amount of Non-Excluded Taxes and Other Taxes, and the full amount of Taxes of any kind imposed by any jurisdiction on amounts payable under this Section 7, imposed on or paid
by the Buyer, and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. The indemnity by the Seller provided for in this Section 7(d) shall apply and be made whether or not the
Non-Excluded Taxes or Other Taxes for which indemnification hereunder is sought have been correctly or legally asserted. Amounts payable by the Seller under the indemnity set forth in this Section 7(d) shall be paid within 10 days from the date on
which the Buyer makes written demand therefor. 
  
 (e) As soon as
practicable after the date of any payment of Taxes or Other Taxes by the Seller to the relevant Governmental Authority, the Seller will deliver to the Buyer the original or a certified copy of the receipt issued by such Governmental Authority
evidencing payment thereof. 
  
 (f) Without prejudice to the
survival of any other agreement of the Seller hereunder, the agreements and obligations of the Seller contained in this Section 7 shall survive the termination of this Repurchase Agreement. Nothing contained in this Section 7 shall require the Buyer
to make available any of its tax returns or any other information that it deems to be confidential or proprietary. 
  
 (g) Each party to this Repurchase Agreement acknowledges that it is its intent for purposes of U.S. federal, state and local income and franchise taxes,
to treat the Transaction as indebtedness of the Seller that is secured by the Purchased Assets and the Purchased Assets as owned by the Seller for federal income tax purposes in the absence of a Default by the Seller. All parties to this Repurchase
Agreement agree to such treatment and agree to take no action inconsistent with this treatment, unless required by law. 
  

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 SECTION 8. SECURITY INTEREST 
  
 Although the parties intend that all Transactions hereunder be sales and purchases (other than for accounting and tax
purposes) and not loans, in the event any such Transactions are deemed to be loans, the Seller hereby pledges to Buyer as security for the performance by the Seller of its Obligations and hereby grants, assigns and pledges to Buyer a fully perfected
first priority security interest in the Purchased Mortgage Loans, the Records, and all servicing rights related to the Purchased Mortgage Loans, the Repurchase Documents (to the extent such Repurchase Documents and the Seller’s right thereunder
relate to the Purchased Mortgage Loans), any Property relating to any Purchased Mortgage Loan or the related Mortgaged Property, any Takeout Commitments relating to any Purchased Mortgage Loan, all Settlement Accounts and all amounts held therein,
the Disbursement Account and all amounts held therein, all insurance policies and insurance proceeds relating to any Purchased Mortgage Loan or the related Mortgaged Property, including but not limited to any payments or proceeds under any related
hazard insurance, any Income relating to any Purchased Mortgage Loan, the Collection Account, any Interest Rate Protection Agreements relating to any Purchased Mortgage Loan, and any other contract rights, accounts (including any interest of the
Seller in escrow accounts) and any other contract rights, accounts, payments, rights to payment (including payments of interest or finance charges) and general intangibles to the extent that the forgoing relates to any Purchased Mortgage Loan and
any other assets relating to the Purchased Mortgage Loans (including, without limitation, any other accounts) or any interest in the Purchased Mortgage Loans, all collateral under any other secured debt facility between Affiliates of Seller on the
one hand and the Buyer and the Buyer’s Affiliates on the other, all collateral under any other secured debt facility between Seller on the one hand and the Buyer’s Affiliates on the other, all collateral under any other secured debt
facility between the Seller and the Buyer in which the Buyer has or obtains a perfected security interest through action other than the filing of the financing statement filed in connection with this Repurchase Agreement, and any proceeds (including
the related securitization proceeds) and distributions and any other property, rights, title or interests as are specified on a Trust Receipt and Mortgage Loan Schedule and Exception Report with respect to any of the foregoing, in all instances,
whether now owned or hereafter acquired, now existing or hereafter created (collectively, the “Repurchase Assets”). Notwithstanding the foregoing or any other provisions of this Repurchase Agreement, Repurchase Assets shall not
include any portion of Seller’s web site (currently located at the URL http://www.wmcdirect.com), Seller’s non-prime or sub-prime automated underwriting system, or any of the computer programs, software or documentation related to the
foregoing, whether now existing or hereafter created, and Buyer acknowledges and agrees that it shall have no security or other interest therein. 
  
 The Seller hereby authorizes the Buyer to file such financing statement or statements relating to the Repurchase Assets as the Buyer, at its option, may
deem appropriate. The Seller shall pay the filing costs for any financing statement or statements prepared pursuant to this Section 8. 
  
 SECTION 9. PAYMENT, TRANSFER AND CUSTODY 
  
 (a) Except with respect to transfers of funds related to Mortgage Loans subject to a Takeout Commitment, or unless otherwise mutually agreed in writing,
all transfers of funds to 

  

 -28- 

 
be made by the Seller hereunder shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the Buyer at the
following account maintained by the Buyer: Account No. 00812914, for the account of MLCMI Matchbook, Bankers Trust, N.Y. ABA No. 021-001-033, not later than 5:00 p.m. New York City time, on the date on which such payment shall become due (and each
such payment made after such time shall be deemed to have been made on the next succeeding Business Day). The Seller acknowledges that it has no rights of withdrawal from the foregoing account. 
  
 (b) On the Purchase Date for each Transaction, ownership of the Purchased
Mortgage Loans shall be transferred to the Buyer or its designee against the simultaneous transfer of the Purchase Price to the following account of the Seller (or as otherwise directed by the Seller pursuant to the Disbursement Agreement or
otherwise): Account No. 38462, for the account of Deutsche Bank, ABA No. 021001033, Attn: Aimee Kemmeter. With respect to the Purchased Mortgage Loans being sold by a Seller on a Purchase Date, the Seller hereby sells, transfers, conveys and assigns
to Buyer or its designee without recourse, but subject to the terms of this Repurchase Agreement, all the right, title and interest of the Seller in and to the Purchased Mortgage Loans together with all right, title and interest in and to the
proceeds of any related Repurchase Assets. 
  
 (c) In connection
with such sale, transfer, conveyance and assignment, on or prior to each Purchase Date, the Seller shall deliver or cause to be delivered and released to Buyer or its designee the Mortgage File for the related Purchased Mortgage Loans. 

 
 SECTION 10. HYPOTHECATION OR PLEDGE OF PURCHASED MORTGAGE LOAN 
  
 Title to all Purchased Mortgage Loans and Repurchase Assets shall pass to
Buyer and Buyer shall have free and unrestricted use of all Purchased Mortgage Loans. Nothing in this Repurchase Agreement shall preclude the Buyer from engaging in repurchase transactions with the Purchased Mortgage Loans or otherwise pledging,
repledging, transferring, hypothecating, or rehypothecating the Purchased Mortgage Loans. Nothing contained in this Repurchase Agreement shall obligate the Buyer to segregate any Purchased Mortgage Loans delivered to the Buyer by the Seller.

  
 SECTION 11. REPRESENTATIONS 
  
 (1) The Seller represents and warrants to the Buyer that as of the Purchase
Date for any Purchased Mortgage Loans by the Buyer from the Seller and as of the date of this Repurchase Agreement and any Transaction hereunder and at all times while the Repurchase Documents and any Transaction hereunder is in full force and
effect: 
  
 (a) Acting as Principal. The Seller will engage
in such Transactions as principal (or, if agreed in writing in advance of any Transaction by the other party hereto, as agent for a disclosed principal). 
  
 (b) No Broker. The Seller has not dealt with any broker, investment banker, agent, or other person, except for the Buyer, who may be entitled to
any commission or compensation in connection with the sale of Purchased Mortgage Loans pursuant to this Repurchase Agreement. 
  

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 (c) Financial Statements. The Seller has heretofore furnished to the Buyer a copy of its (a)
consolidated balance sheet and the consolidated balance sheets of its consolidated Subsidiaries for the fiscal year ended December 31, 2002 and the related consolidated statements of income and retained earnings and of cash flows for the Seller and
its consolidated Subsidiaries for such fiscal year, setting forth in each case in comparative form the figures for the previous year, with the opinion thereon of KPMG LLP and (b) consolidated balance sheet and the consolidated balance sheets of its
consolidated Subsidiaries for the quarterly fiscal period(s) of the Seller ended March 31, 2003 and June 30, 2003 and the related consolidated statements of income and retained earnings and of cash flows for the Seller and its consolidated
Subsidiaries for such quarterly fiscal period(s), setting forth in each case in comparative form the figures for the previous year. All such financial statements are complete and correct and fairly present, in all material respects, the consolidated
financial condition of the Seller and its Subsidiaries and the consolidated results of their operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis. Since December 31, 2002, there has been
no material adverse change in the consolidated business, operations or financial condition of the Seller and its consolidated Subsidiaries taken as a whole from that set forth in said financial statements nor is the Seller aware of any state of
facts which (without notice or the lapse of time) would or could result in any such material adverse change. The Seller does not have, on the date of the statements delivered pursuant to this section (the “Statement Date”), any
known liabilities, direct or indirect, fixed or contingent, matured or unmatured, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related
statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of the Seller except as heretofore disclosed to the Buyer electronically or in writing. 
  
 (d) Organization, Etc. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of California. The Seller (a) has all requisite corporate or other power, and has all governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its
business as now being or as proposed to be conducted, except where the lack of such licenses, authorizations, consents and approvals would not be reasonably likely to have a Material Adverse Effect; (b) is qualified to do business and is in good
standing in all other jurisdictions in which the nature of the business conducted by it makes such qualification necessary, except where failure so to qualify would not be reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect; and (c) has full power and authority to execute, deliver and perform its obligations under the Repurchase Documents. 
  
 (e) Authorization, Compliance, Etc. The execution and delivery of, and the performance by the Seller of its obligations under, the Repurchase
Documents to which it is a party (a) are within the Seller’s powers, (b) have been duly authorized by all requisite action, (c) do not violate any provision of applicable law, rule or regulation, or any order, writ, injunction or decree of any
court or other Governmental Authority, or its organizational documents, (d) do not violate any indenture, agreement, document or instrument to which the Seller or any of its Subsidiaries is a party, or by which any of them or any of their
properties, any of the Repurchase Assets is bound or to which any of them is subject and (e) are not in conflict with, do not result 

  

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in a breach of, or constitute (with due notice or lapse of time or both) a default under, or except as may be provided by any Repurchase Document, result in
the creation or imposition of any Lien upon any of the property or assets of the Seller or any of its Subsidiaries pursuant to, any such indenture, agreement, document or instrument. The Seller is not required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any Governmental Authority in connection with or as a condition to the consummation of the Transactions contemplated herein and the execution, delivery or performance of the
Repurchase Documents to which it is a party. 
  
 (f)
Litigation. There are no actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which are pending or threatened) or other legal or arbitrable proceedings affecting the Seller or any of its
Subsidiaries or affecting any of the Repurchase Assets or any of the other properties of the Seller before any Governmental Authority which (i) questions or challenges the validity or enforceability of the Repurchase Documents or any action to be
taken in connection with the transactions contemplated hereby, (ii) makes a claim or claims in an aggregate amount greater than $5,000,000, (iii) individually or in the aggregate, if adversely determined, would have a Material Adverse Effect, or
(iv) requires filing with the SEC in accordance with its regulations. 
  
 (g) Purchased Mortgage Loans. 
  
 (i) The Seller has not assigned, pledged, or otherwise conveyed or encumbered any Purchased Mortgage Loan to any other Person, and immediately prior to the sale of such Mortgage Loan to the Buyer, the Seller was the sole owner of such
Purchased Mortgage Loan and had good and marketable title thereto, free and clear of all Liens, in each case except for Liens to be released simultaneously with the sale to the Buyer hereunder. 
  
 (ii) The provisions of this Repurchase Agreement are
effective to either constitute a sale of Repurchase Assets to the Buyer or to create in favor of the Buyer a valid security interest in all right, title and interest of the Seller in, to and under the Repurchase Assets. 
  
 (h) Chief Executive Office/Jurisdiction of Organization. On the
Effective Date, The Seller’s chief executive office is, and has been, located at 6320 Canoga Ave., Woodland Hills, CA 91367. The Seller’s jurisdiction of organization is California. 
  
 (i) Location of Books and Records. The location where the Seller keeps
its books and records, including all computer tapes and records related to the Repurchase Assets is its chief executive office. 
  
 (j) Filing and Payment of Taxes. FinCo has and its Subsidiaries have filed on a timely basis all federal, state and local tax and information
returns, reports and any other information statements or schedules that are required to be filed by or in respect of them and have paid all taxes due pursuant to such returns, reports or other information statements or schedules or pursuant to any
assessment received by them, except for any such taxes as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with 

  

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respect to which adequate reserves have been provided. The charges, accruals and reserves on the books of the Seller and its Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of the Seller, adequate. 
  
 (k) Enforceability. This Repurchase Agreement and all of the other Repurchase Documents executed and delivered by the Seller in connection herewith are legal, valid and binding obligations of the Seller and are
enforceable against the Seller in accordance with their terms except as such enforceability may be limited by (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors rights generally
and (ii) general principles of equity. 
  
 (l) Ability to
Perform. The Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in the Repurchase Documents to which it is a party on its part to be performed 
  
 (m) Material Adverse Effect. Since December 31, 2002, there has been
no development or event nor, to the Seller’s knowledge, any prospective development or event, which has had or could have a Material Adverse Effect. 
  
 (n) No Default. No Default or Event of Default has occurred and is continuing. 
  
 (o) Underwriting Guidelines. The Underwriting Guidelines provided to Buyer are the true and correct Underwriting
Guidelines of the Seller. 
  
 (p) Adverse Selection. The
Seller has not selected the Purchased Mortgage Loans in a manner so as to adversely affect Buyer’s interests. 
  
 (q) Tangible Net Worth. On the initial Purchase Date, the Tangible Net Worth of the Seller is not less than $100,000,000. 
  
 (r) Indebtedness. On the initial Purchase Date, the Seller does not
have any Indebtedness, except as disclosed on Schedule 2 to this Repurchase Agreement. 
  
 (s) Accurate and Complete Disclosure. The information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of the Seller to the Buyer in connection with the negotiation,
preparation or delivery of this Repurchase Agreement and the other Repurchase Documents or included herein or therein or delivered pursuant hereto or thereto, when taken as a whole, do not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. All written information furnished after the date hereof by or on behalf of the Seller to the Buyer
in connection with this Repurchase Agreement and the other Repurchase Documents and the transactions contemplated hereby and thereby will be true and accurate in every material respect, or (in the case of projections) based on reasonable estimates,
on the date as of which such information is stated or certified. There is no fact known to the Seller, after due inquiry, that could reasonably be expected to have a Material Adverse Effect that has not been disclosed herein, in the other Repurchase
Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Buyer for use in connection with the transactions contemplated hereby or thereby. 
  

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 (t) Margin Regulations. The use of all funds acquired by the Seller under this Repurchase
Agreement will not conflict with or contravene any of Regulations T, U or X promulgated by the Board of Governors of the Federal Reserve System as the same may from time to time be amended, supplemented or otherwise modified. 
  
 (u) Investment Company. The Seller nor any of its Subsidiaries is not
an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended. 
  
 (v) Solvency. As of the date hereof and immediately after giving effect to each Transaction, the fair value of the
assets of the Seller is greater than the fair value of the liabilities (including, without limitation, contingent liabilities if and to the extent required to be recorded as a liability on the financial statements of the Seller in accordance with
GAAP) of the Seller and the Seller is solvent and, after giving effect to the transactions contemplated by this Repurchase Agreement and the other Repurchase Documents, will not be rendered insolvent or left with an unreasonably small amount of
capital with which to conduct its business and perform its obligations. The Seller does not intend to incur, nor does it believe that it has incurred, debts beyond its ability to pay such debts as they mature. The Seller is not contemplating the
commencement of an insolvency, bankruptcy, liquidation, or consolidation proceeding or the appointment of a receiver, liquidator, conservator, trustee, or similar official in respect of itself or any of its property. 
  
 (w) ERISA. 
  
 (i) No liability under Section 4062, 4063, 4064 or 4069 of
ERISA has been or is expected by the Seller to be incurred by the Seller or any ERISA Affiliate thereof with respect to any Plan which is a Single-Employer Plan in an amount that could reasonably be expected to have a Material Adverse Effect.

  
 (ii) No Plan of the Seller which is a
Single-Employer Plan had an accumulated funding deficiency, whether or not waived, as of the last day of the most recent fiscal year of such Plan ended prior to the date hereof. Neither the Seller nor any ERISA Affiliate thereof is (i) required to
give security to any Plan which is a Single-Employer Plan pursuant to Section 401(a) (29) of the Code or Section 307 of ERISA, or (ii) subject to a Lien in favor of such a Plan under Section 302(f) of ERISA. 
  
 (iii) Each Plan of the Seller, each of its Subsidiaries and
each of its ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA and the Code, except where the failure to comply would not result in any Material Adverse Effect. 
  
 (iv) Neither the Seller nor any of its Subsidiaries has
incurred a tax liability under Section 4975 of the Code or a penalty under Section 502(i) of ERISA in respect of any Plan which has not been paid in full, except where the incurrence of such tax or penalty would not result in a Material Adverse
Effect. 
  
 (v) Neither the Seller nor any of its
Subsidiaries or any ERISA Affiliate thereof has incurred or reasonably expects to incur any withdrawal liability under Section 4201 

  

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of ERISA as a result of a complete or partial withdrawal from a Multiemployer Plan which will result in withdrawal liability to the Seller, any of its
Subsidiaries or any ERISA Affiliate thereof in an amount that could reasonably be expected to have a Material Adverse Effect. 
  
 (x) Agency Approvals. The Seller is approved by Fannie Mae as an approved lender and Freddie Mac as an approved seller/servicer, and, to the extent
necessary, approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the National Housing Act. In each such case, the Seller is in good standing. 
  
 (y) Mortgage Loan Schedule. The information set forth in the related Mortgage Loan Schedule and all other information
or data furnished by, or on behalf of, Seller to Buyer is complete, true and correct in all material respects, and Seller acknowledges that Buyer has not verified the accuracy of such information or data. 
  
 (z) No Reliance. The Seller has made its own independent decisions to
enter into the Repurchase Documents and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including without limitation, legal counsel and accountants)
as it has deemed necessary. Seller is not relying upon any advice from Buyer as to any aspect of the Transactions, including without limitation, the legal, accounting or tax treatment of such Transactions. 
  
 (aa)Plan Assets. The Seller is not an employee benefit plan as defined
in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code, and the Purchased Mortgage Loans are not “plan assets” within the meaning of 29 CFR §2510.3-101 in the Seller’s hands. 
  
 SECTION 12. COVENANTS 
  
 On and as of the date of this Repurchase Agreement and each Purchase Date and until this Repurchase Agreement is no longer
in force with respect to any Transaction, the Seller covenants as follows: 
  
 (a) Preservation of Existence; Compliance with Law. The Seller shall: 
  
 (i) Preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises necessary for the
operation of its business; 
  
 (ii) Comply with
the requirements of all applicable laws, rules, regulations and orders, whether now in effect or hereafter enacted or promulgated by any applicable Governmental Authority (including, without limitation, all environmental laws); 
  
 (iii) Maintain all licenses, permits or other approvals
necessary for the Seller to conduct its business and to perform its obligations under the Repurchase Documents, and shall conduct its business strictly in accordance with applicable law; and 
  

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 (iv) Keep adequate records and books of account, in which complete entries will be made
in accordance with GAAP consistently applied. 
  
 (b) Taxes,
Etc. 
  
 (i) The Seller shall pay and
discharge or cause to be paid and discharged, when due, or adequately reserve for the payment of, all taxes, assessments and governmental charges or levies imposed upon it or upon its income and profits or upon any of its property, real, personal or
mixed (including without limitation, the Repurchase Assets) or upon any part thereof, as well as any other lawful claims which, if unpaid, might become a Lien upon such properties or any part thereof, except for any such taxes as are appropriately
contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves are provided. 
  
 (ii) The Seller shall file on a timely basis all federal, state and local tax and information returns, reports and any other information
statements or schedules required to be filed by or in respect of it and pay all taxes due pursuant to such returns, reports and other information statements or schedules or pursuant to any assessment received by it. 
  
 (c) Notice of Proceedings or Adverse Change. The Seller shall give
notice to the Buyer immediately after a Responsible Officer of the Seller has any knowledge of: 
  
 (i) the occurrence of any Default or Event of Default or Termination Event; 
  
 (ii) any (a) permanent reduction, termination, default or event of default under any Indebtedness of the
Seller or (b) litigation, investigation, regulatory action or proceeding that is pending or threatened by or against the Seller in any federal or state court or before any Governmental Authority which, if not cured or if adversely determined, would
reasonably be expected to have a Material Adverse Effect or constitute a Default or Event of Default, and (c) any Material Adverse Effect with respect to the Seller; 
  
 (iii) any litigation or proceeding that is pending or threatened against (a) the Seller in which the amount
involved exceeds $5,000,000 and is not covered by insurance, in which injunctive or similar relief is sought, or which, would reasonably be expected to have a Material Adverse Effect and (b) any litigation or proceeding that is pending or threatened
in connection with any of the Repurchase Assets, which, if adversely determined, would reasonably be expected to have a Material Adverse Effect; 
  
 (iv) and, as soon as reasonably possible, notice of any of the following events: 
  
 (A) a change in the insurance coverage of the Seller, with a
copy of evidence of same attached; 
  
 (B) any
material change in accounting policies or financial reporting practices of the Seller; 
  

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 (C) promptly upon receipt of notice or knowledge of any Lien or security interest (other
than security interests created hereby or under any other Repurchase Document) on, or claim asserted against, any of the Repurchase Assets; and 
  
 (D) any other event, circumstance or condition that has resulted, or has a possibility of resulting, in a Material Adverse Effect; and

  
 (v) Promptly, but no later than three (3)
Business Days after the Seller receives any of the same, deliver to the Buyer a true, complete, and correct copy of any schedule, report, notice, or any other document delivered to the Seller by any Person pursuant to, or in connection with, any of
the Repurchase Assets. 
  
 (d) Financial Reporting. The
Seller shall maintain a system of accounting established and administered in accordance with GAAP, and furnish to the Buyer: 
  
 (i) Within one hundred twenty (120) days after the close of each fiscal year, Financial Statements, including a statement of income and
changes in shareholders’ equity of the Seller for such year, and the related balance sheet as at the end of such year, all in reasonable detail and accompanied by an opinion of an accounting firm as to said financial statements; 
  
 (ii) Within sixty (60) days after the close of each of the
Seller’s first three fiscal quarters in each fiscal year unaudited balance sheets and income statements, for the period from the beginning of such fiscal year to the end of such fiscal year, subject, however, to year end adjustments;

  
 (iii) Within thirty (30) days after the end
of each calendar month, the unaudited balance sheets of the Seller as at the end of such period and the related unaudited consolidated statements of income and retained earnings and of cash flows for the Seller for such period and the portion of the
fiscal year through the end of such period, subject, however, to year end adjustments; 
  
 (iv) Simultaneously with the furnishing of each of the Financial Statements to be delivered pursuant to subsection (ii) above, or monthly
upon Buyer’s request, a certificate in the form of Exhibit VIII hereto and certified by an executive officer of the Seller; 
  
 (v) If applicable, copies of any 10-Ks, 10-Qs, registration statements and other “corporate finance” SEC filings (other than
8-Ks) by the Seller, within 5 Business Days of their filing with the SEC; provided, that, the Seller or any Affiliate will provide the Buyer with a copy of the annual 10-K filed with the SEC by the Seller or its Affiliates, no later than 90 days
after the end of the year; and 
  
 (vi) Promptly,
from time to time, such other information regarding the business affairs, operations and financial condition of the Seller as the Buyer may reasonably request. 
  

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 (e) Visitation and Inspection Rights. Subject to the provisions of Section 26, the Seller shall
permit the Buyer to inspect, and to discuss with the Seller’s officers, agents and auditors, the affairs, finances, and accounts of the Seller, the Repurchase Assets, and the Seller’s books and records, and to make abstracts or
reproductions thereof and to duplicate, reduce to hard copy or otherwise use any and all computer or electronically stored information or data, in each case, (i) during normal business hours, (ii) upon reasonable notice (provided, that upon the
occurrence of an Event of Default, no notice shall be required), and (iii) at the expense of the Seller to discuss with its officers, its affairs, finances, and accounts. 
  
 (f) Further Assurances. The Seller shall execute and deliver to the Buyer all further documents, financing
statements, agreements and instruments, and take all further action that may be required under applicable law, or that the Buyer may reasonably request, in order to effectuate the transactions contemplated by this Repurchase Agreement and the
Repurchase Documents or, without limiting any of the foregoing, to grant, preserve, protect and perfect the validity and first-priority of the security interests created or intended to be created hereby. The Seller shall do all things necessary to
preserve the Repurchase Assets so that they remain subject to a first priority perfected security interest hereunder. Without limiting the foregoing, the Seller will comply with all rules, regulations, and other laws of any Governmental Authority
and cause the Repurchase Assets to comply with all applicable rules, regulations and other laws. The Seller will not allow any default for which the Seller is responsible to occur under any Repurchase Assets or any Repurchase Document and the Seller
shall fully perform or cause to be performed when due all of its obligations under any Repurchase Assets or the Repurchase Documents. 
  
 (g) True and Correct Information. All information, reports, exhibits, schedules, financial statements or certificates of Seller or any of its
Affiliates thereof or any of their officers furnished to Buyer hereunder and during Buyer’s diligence of the Seller are and will be true and do not omit to disclose any material facts necessary to make the statements therein or therein, in
light of the circumstances in which they are made, not misleading. All required financial statements, information and reports delivered by the Seller to the Buyer pursuant to this Repurchase Agreement shall be prepared in accordance with GAAP, or in
applicable, to SEC filings, the appropriate SEC accounting requirements. 
  
 (h) ERISA Events. 
  
 (i) Promptly upon becoming aware of the occurrence of any Event of Termination which together with all other Events of Termination occurring within the prior 12 months involve a payment of money by or a potential
aggregate liability of the Seller or any ERISA Affiliate thereof or any combination of such entities in excess of $5,000,000 the Seller shall give the Buyer a written notice specifying the nature thereof, what action the Seller or any ERISA
Affiliate thereof has taken and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; 
  
 (ii) Promptly upon receipt thereof, the Seller shall furnish to the Buyer copies of (i) all notices received
by the Seller or any ERISA Affiliate thereof of the PBGC’s intent to terminate any Plan or to have a trustee appointed to administer any Plan; (ii) all 

  

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notices received by the Seller or any ERISA Affiliate thereof from the sponsor of a Multiemployer Plan pursuant to Section 4202 of ERISA involving a
withdrawal liability in excess of $5,000,000; and (iii) all funding waiver requests filed by the Seller or any ERISA Affiliate thereof with the Internal Revenue Service with respect to any Plan, the accrued benefits of which exceed the present value
of the plan assets as of the date the waiver request is filed by more than $5,000,000, and all communications received by the Seller or any ERISA Affiliate thereof from the Internal Revenue Service with respect to any such funding waiver request.

  
 (i) Financial Condition Covenants. 
  
 (i) Maintenance of Tangible Net Worth. The Seller
shall maintain a Tangible Net Worth of not less than $75,000,000 plus 25% of the Net Income for each quarter from and including the quarter ending June 30, 2003. 
  
 (ii) Maintenance of Ratio of Indebtedness to Tangible Net Worth. The Seller shall maintain the ratio
of Indebtedness to Tangible Net Worth no greater than 15:1. 
  
 (iii) Maintenance of Liquidity. The Seller shall ensure that, at any time, it shall maintain the sum of (x) unencumbered cash and Cash Equivalents and (y) Seller’s same-day ability to borrow or draw money
on any Business Day under a warehouse line of credit or other similar Indebtedness (which, by the terms of the applicable agreement, is not subject to any condition, event or circumstance which (A) the Seller is unable to satisfy or which (B) would
otherwise render access to such warehouse line of credit or other similar Indebtedness unavailable to Seller on a same-day basis) on any Business Day, equal to at least $30,000,000. 
  
 (j) Hedging. The Seller shall enter into and maintain Interest Rate Protection Agreements in accordance with
Seller’s written policies regarding hedging, with such policies or a letter detailing such policies to be delivered to the Buyer on or before January 1, 2004. The Seller shall not amend or modify its hedging policies in any material respect
without the prior written consent of the Buyer. 
  
 (k) No
Adverse Selection. The Seller shall not select Eligible Mortgage Loans to be sold to Buyer as Purchased Mortgage Loans using any type of adverse selection or other selection criteria which would adversely affect the Buyer. 
  
 (l) Mortgage Loan Schedule. On or before the 10th of each month (or if such date is not a Business Day, the next Business Day), or with such greater frequency as requested by
Buyer, the Seller shall provide to Buyer, electronically, in a format mutually acceptable to Buyer, a Mortgage Loan Schedule. The Seller shall not cause the Purchased Mortgage Loans to be serviced by any servicer other than a servicer expressly
approved in writing by Buyer, which approval shall be deemed granted by Buyer with respect to the Seller and the Servicer (but subject to Section 16(g) hereof) with the execution of this Repurchase Agreement. 
  
 (m) Insurance. The Seller shall continue to maintain insurance
coverage with respect to employee dishonesty, forgery or alteration, theft, disappearance and destruction, robbery and safe burglary, property (other than money and securities) and computer fraud in an 

  

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aggregate amount at least equal to $10,000,000. The Seller shall maintain a fidelity bond in respect of its officers, employees and agents, with respect to
any claims made in connection with all or any portion of the Repurchase Assets. The Seller shall notify the Buyer of any material change in the terms of any such fidelity bond or insurance policy. 
  
 (n) Books and Records. The Seller shall, to the extent practicable,
maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing the Repurchase Assets in the event of the destruction of the originals thereof), and keep and maintain or
obtain, as and when required, all documents, books, records and other information reasonably necessary or advisable for the collection of all Repurchase Assets. 
  

(o) Security Interest. The Seller shall do all things necessary to preserve the Repurchase Assets so that they remains subject to a first
priority perfected security interest hereunder. Without limiting the foregoing, the Seller will comply with all rules, regulations and other laws of any Governmental Authority and cause the Repurchase Assets to comply with all applicable rules,
regulations and other laws. The Seller will not allow any default for which the Seller is responsible to occur under any Repurchase Assets or any Repurchase Documents and the Seller shall fully perform or cause to be performed when due all of its
obligations under any Repurchase Assets or the Repurchase Documents. 
  
 (p) Illegal Activities. The Seller shall not engage in any conduct or activity that could subject its assets to forfeiture or seizure. 
  
 (q) Material Change in Business. The Seller shall not make any material change in the nature of its business as carried on at the date hereof.

  
 (r) Limitation on Dividends and Distributions. At any
time following the occurrence and during the continuation of an Event of Default, the Seller shall not make any dividends or other distributions to any shareholder or equity owner of the Seller, either directly or indirectly, whether in cash or
property or in obligations of the Seller. 
  
 (s) Disposition
of Assets; Liens. The Seller shall not create, incur, assume or suffer to exist any mortgage, pledge, Lien, charge or other encumbrance of any nature whatsoever on any of the Repurchase Assets, whether real, personal or mixed, now or hereafter
owned, other than the Liens created in connection with the transactions contemplated by this Repurchase Agreement; nor shall the Seller cause any of the Purchased Mortgage Loans to be sold, pledged, assigned or transferred. 
  
 (t) Transactions with Affiliates. The Seller shall not enter into any
transaction or transactions in an aggregate amount greater than $5,000,000, including, without limitation, the purchase, sale, lease or exchange of property or assets or the rendering or accepting of any service with any Affiliate, unless such
transaction is (a) not otherwise prohibited in this Repurchase Agreement, (b) in the ordinary course of the Seller’s business and (c) upon fair and reasonable terms no less favorable to the Seller, as the case may be, than it would obtain in a
comparable arm’s length transaction with a Person which is not an Affiliate. 
  

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 (u) ERISA Matters. 
  
 (i) The Seller shall not permit any event or condition which is described in any of clauses (i) through
(vii) of the definition of “Event of Termination” to occur or exist with respect to any Plan or Multiemployer Plan if such event or condition, together with all other events or conditions described in the definition of Event of Termination
occurring within the prior 12 months, involves the payment of money by or an incurrence of liability of the Seller or any ERISA Affiliate thereof, or any combination of such entities in an amount in excess of $5,000,000. 
  
 (ii) The Seller shall not be an employee benefit plan as
defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code and (b) the Seller shall not use “plan assets” within the meaning of 29 CFR §2510.3-101 to engage in this Repurchase Agreement or the
Transactions hereunder. 
  
 (v) Consolidations, Mergers and
Sales of Assets. The Seller shall not consolidate or merge with or into any other Person in a manner that would result in a Change in Control. 
  
 (w) Mortgage Loan Reports. The Seller will furnish to Buyer monthly electronic Mortgage Loan performance data, including, without limitation,
delinquency reports, pool analytic reports and static pool reports (i.e., delinquency, foreclosure and net charge-off reports) and monthly stratification reports summarizing the characteristics of the Mortgage Loans substantially in the form
agreed upon by Seller and Buyer. 
  
 (x) Agency Approvals;
Servicing. The Seller shall maintain its status with Fannie Mae as an approved lender and Freddie Mac as an approved seller/servicer, in each case in good standing (each such approval, an “Agency Approval”). The Seller shall
cause all Purchased Mortgage Loans which are subject to an Agency Takeout Commitment to be serviced in accordance with the applicable Agency guide. Should the Seller, for any reason, cease to possess all such applicable Agency Approvals to the
extent necessary, or should notification to the relevant Agency or to HUD be required, the Seller shall so notify Buyer immediately in writing. Notwithstanding the preceding sentence and unless Buyer has given its prior written consent otherwise
(such consent not to be unreasonably withheld), the Seller shall not surrender or relinquish its Agency Approvals during the term of this Repurchase Agreement and each outstanding Transaction. 
  
 (y) Guarantees. The Seller shall not create, incur, assume or suffer
to exist any Guarantees, except (i) to the extent reflected in the Seller’s financial statements or notes thereto and (ii) to the extent the aggregate Guarantees of the Seller do not exceed $5,000,000. 
  
 (z) Takeout Payments. With respect to each Mortgage Loan subject to a
Takeout Commitment, the Seller shall arrange that all payments under the related Takeout Commitment shall be paid to the Settlement Account as set forth in the Custodial Agreement, or to an account approved by the Buyer in writing prior to such
payment. With respect to any Agency Takeout Commitment, if applicable, (1) with respect to the wire transfer instructions as set forth in Freddie Mac Form 987 (Wire Transfer Authorization for a Cash Warehouse Delivery) such wire transfer
instructions are identical to Buyer’s wire instructions or the Buyer has approved such wire transfer instructions in writing in its sole discretion, or (2) the Payee Number set forth on Fannie Mae Form 1068 (Fixed-Rate, Graduated-Payment, or
Growing-Equity Mortgage Loan 

  

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Schedule) or Fannie Mae Form 1069 (Adjustable-Rate Mortgage Loan Schedule), as applicable, is identical to the Payee Number that has been identified by Buyer
in writing as Buyer’s Payee Number or the Buyer has approved the related Payee Number in writing in its sole discretion; With respect to any Takeout Commitment with an Agency for which the Agency is swapping the related Mortgage Loans for a
mortgage backed security, the applicable Agency documents list Buyer as sole subscriber. 
  
 (aa)Underwriting Guidelines. Without the prior written consent of Buyer, the Seller shall not materially amend or otherwise modify the Underwriting Guidelines. Without limiting the foregoing, in the event that
the Seller makes any material amendment or modification to the Underwriting Guidelines, the Seller shall promptly deliver to Buyer a complete copy of the amended or modified Underwriting Guidelines. 
  
 SECTION 13. EVENTS OF DEFAULT 
  
 Section 13.01 Events of Default. If any of the following events (each
an “Event of Default”) occur, the Seller and Buyer shall have the rights set forth in Section 14, as applicable: 
  
 (a) the Seller shall default in the payment of (i) any amount payable by it hereunder or under any other Repurchase Document, (ii) expenses required to be
paid under any Repurchase Document or (iii) any other Obligations, when the same shall become due and payable, whether at the due date thereof, or by acceleration or otherwise; or 
  
 (b) the failure of the Seller to perform, comply with or observe any term, covenant or agreement applicable to the Seller
contained in Sections 12(a)(i), (i), (m), (p), (q), (r), (s), (u), (v), (x), (y), (z) or (aa) (provided that, with respect to any failure to perform or comply with the obligations under Section 12(aa), if such failure has not occurred previously,
such failure shall continue unremedied for a period of 5 Business Days); or 
  
 (c) any representation, warranty or certification made or deemed made herein or in any other Repurchase Document by the Seller or any certificate furnished to the Buyer pursuant to the provisions hereof or thereof or
any information with respect to the Purchased Mortgage Loans furnished in writing by on behalf of the Seller shall prove to have been untrue or misleading in any material respect as of the time made or furnished (other than the representations and
warranties set forth in Schedule 1, which shall be considered solely for the purpose of determining the Market Value of the Purchased Mortgage Loans; unless (i) the Seller shall have made any such representations and warranties with actual knowledge
that they were materially false or misleading at the time made; or (ii) any such representations and warranties have been determined in good faith by the Buyer in its sole discretion to be materially false or misleading on a regular basis); or

  
 (d) the Seller shall fail to observe or perform any other
covenant or agreement contained in this Repurchase Agreement (and not identified in clause (b) of Section 13.01) or any other Repurchase Document, and if such default shall be capable of being remedied, and such failure to observe or perform shall
continue unremedied for a period of 10 Business Days; or 
  

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 (e) a judgment or judgments for the payment of money in excess of $5,000,000 in the aggregate shall be
rendered against the Seller or any of its Affiliates by one or more courts, administrative tribunals or other bodies having jurisdiction and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or bonded,
or a stay of execution thereof shall not be procured, within 30 days from the date of entry thereof, and the Seller or any such Affiliate shall not, within said period of 30 days, or such longer period during which execution of the same shall have
been stayed or bonded, appeal therefrom and cause the execution thereof to be stayed during such appeal; or 
  
 (f) any “event of default” or any other default which permits a demand for, or requires, the early repayment of obligations due by the Seller or
FinCo or any of its Subsidiaries under (i) any agreement (after the expiration of any applicable grace period under any such agreement) relating to any Indebtedness of the Seller or FinCo or any of its Subsidiaries, as applicable, to which the Buyer
or any Affiliate of the Buyer is a party or (ii) any agreement (after the expiration of any applicable grace period under any such agreement) relating to any Indebtedness of the Seller or FinCo or any of its Subsidiaries, as applicable, in an amount
equal to or in excess of $5,000,000 in the aggregate; or 
  
 (g)
an Event of Insolvency shall have occurred; or 
  
 (h) for any
reason, this Repurchase Agreement at any time shall not be in full force and effect in all material respects or shall not be enforceable in all material respects in accordance with its terms, or any Lien granted pursuant thereto shall fail to be
perfected and of first priority, or any Person (other than Buyer) shall contest the validity, enforceability, perfection or priority of any Lien granted pursuant thereto, or any party thereto (other than Buyer) shall seek to disaffirm, terminate,
limit or reduce its obligations hereunder; or 
  
 (i) the Seller
shall grant, or suffer to exist, any Lien on any material portion of the Repurchase Assets (except any Lien in favor of the Buyer); or (A) the Repurchase Assets shall not have been sold to the Buyer, or (B) the Liens contemplated hereby shall cease
or fail to be first priority perfected Liens on any Repurchase Assets in favor of the Buyer or shall be Liens in favor of any Person other than the Buyer; or 
  
 (j) any material adverse change in the Property, business, financial condition or operations of the Seller or FinCo or any of its Subsidiaries shall
occur, in each case as determined by Buyer in its sole good faith discretion, or any other condition shall exist which, in Buyer’s sole good faith discretion, constitutes a material impairment of the Seller’s ability to perform its
obligations under this Repurchase Agreement or any other Repurchase Document. 
  
 (k) any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan of Seller, (ii) any material “accumulated funding
deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Seller or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Plan of Seller, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion 

  

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of the Buyer, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Plan of Seller shall terminate for purposes of
Title IV of ERISA, (v) the Seller or any Commonly Controlled Entity shall, or in the reasonable opinion of the Buyer is likely to, incur any liability in connection with a withdrawal from, or the insolvency or reorganization of, a Multiemployer Plan
or (vi) any other event or condition shall occur or exist with respect to a Plan of Seller; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be
expected to have a Material Adverse Effect; 
  
 (l) Seller’s
audited annual financial statements or the notes thereto or other opinions or conclusions stated therein shall be qualified or limited by reference to the status of Seller as a “going concern” or a reference of similar import; or

  
 (m) A Change in Control of the Seller shall have occurred.

  
 Section 13.02 Termination Event. (a) If either of the
following events (a “Termination Event”) occurs, the Buyer and Seller, as applicable, shall have the rights set forth in Section 13.02(b): 
  
 (i) the senior debt obligations or short-term debt obligations of Merrill Lynch & Co., Inc. shall be rated below the four highest
generic grades (without regard to any pluses and minuses reflecting gradations within such generic grades) by any nationally recognized statistical rating organization; or 
  
 (ii) any change or development involving a prospective change in taxation or other applicable law or
regulation (including, without limitation, pursuant Sections 6 or 7) or interpretation thereof in the United States directly affecting the Purchased Mortgage Loans or the consequences of Buyer owning, or holding a security interest in, the Purchased
Mortgage Loans; the imposition of exchange controls by the United States, that directly affects the Purchased Mortgage Loans or the consequences of Buyer owning, or holding a security interest in, the Purchased Mortgage Loans; or the imposition of
exchange controls by the United States, that directly affects the financial markets of the United States, and makes it, in the sole reasonable judgment of Seller, inadvisable or impracticable to enter into Transactions with the Mortgage Loans.

  
 (b) Upon the occurrence of a Termination Event under Section
13.02(a)(i), the Buyer shall have the right, in its sole discretion (and in the case of a Termination Event pursuant to Section 13.02(a)(ii), the Seller shall also have the right, in its reasonable discretion), to immediately terminate the
Buyer’s obligation to enter into any additional Transactions. The Seller shall repurchase any Purchased Mortgage Loans subject to a Transaction hereunder within 60 days following receipt of a request therefor from Buyer following the occurrence
of a Termination Event. 
  

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 SECTION 14. REMEDIES 
  
 (a) If an Event of Default occurs with respect to the Seller, the following rights and remedies are available to the Buyer; provided, that an Event of
Default shall be deemed to be continuing unless expressly waived by the Buyer in writing. 
  
 (i) At the option of the Buyer, exercised by written notice to the Seller (which option shall be deemed to have been exercised, even if no
notice is given, immediately upon the occurrence of an Event of Insolvency of the Seller), the Repurchase Date for each Transaction hereunder, if it has not already occurred, shall be deemed immediately to occur. The Buyer shall (except upon the
occurrence of an Act of Insolvency of the Seller) give notice to the Seller of the exercise of such option as promptly as practicable. 
  
 (ii) If the Buyer exercises or is deemed to have exercised the option referred to in subsection (a)(i) of this Section, 
  
 (A) the Seller’s obligations in such Transactions to
repurchase all Purchased Mortgage Loans, at the Repurchase Price therefor on the Repurchase Date determined in accordance with subsection (a)(i) of this Section, (1) shall thereupon become immediately due and payable and (2) all Income paid after
such exercise or deemed exercise shall be retained by the Buyer and applied to the aggregate unpaid Repurchase Price and any other amounts owed by the Seller hereunder; 
  
 (B) to the extent permitted by applicable law, the Repurchase Price with respect to each such Transaction
shall be increased by the aggregate amount obtained by daily application of, on a 360 day per year basis for the actual number of days during the period from and including the date of the exercise or deemed exercise of such option to but excluding
the date of payment of the Repurchase Price as so increased, (x) the Post-Default Rate in effect following an Event of Default to (y) the Purchase Price for such Transaction as of the Repurchase Date as determined pursuant to subsection (a)(i) of
this Section (decreased as of any day by (i) any amounts actually in the possession of Buyer pursuant to clause (C) of this subsection, and (ii) any proceeds from the sale of Purchased Mortgage Loans applied to the Purchase Price pursuant to
subsection (a)(iv) of this Section; and 
  
 (C)
all Income actually received by the Buyer pursuant to Section 5 (excluding any Late Payment Fees paid pursuant to Section 5(a)) shall be applied to the aggregate unpaid Repurchase Price owed by the Seller. 
  
 (iii) Upon the occurrence of one or more Events of Default,
the Buyer shall have the right to obtain physical possession of all files of the Seller relating to the Purchased Mortgage Loans and the Repurchase Assets and all documents relating to the Purchased Mortgage Loans which are then or may thereafter
come in to the possession of the Seller or any third party acting for the Seller and the Seller shall deliver to the Buyer 

  

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such assignments as the Buyer shall request. The Buyer shall be entitled to specific performance of all agreements of the Seller contained in the Repurchase
Documents. 
  
 (iv) At any time on the Business
Day following notice to the Seller (which notice may be the notice given under subsection (a)(i) of this Section), in the event the Seller has not repurchased all Purchased Mortgage Loans, the Buyer may (A) immediately sell, without demand or
further notice of any kind, at a public or private sale and at such price or prices as the Buyer may deem satisfactory any or all Purchased Mortgage Loans and the Repurchase Assets subject to a such Transactions hereunder and apply the proceeds
thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by the Seller hereunder or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Mortgage Loans, to give the Seller credit for such
Purchased Mortgage Loans and the Repurchase Assets in an amount equal to the Market Value of the Purchased Mortgage Loans against the aggregate unpaid Repurchase Price and any other amounts owing by the Seller hereunder. The proceeds of any
disposition of Purchased Mortgage Loans and the Repurchase Assets shall be applied first to the costs and expenses incurred by the Buyer in connection with the Seller’s default; second to costs of cover and/or related hedging transactions;
third to the Repurchase Price; and fourth to any other outstanding obligation of the Seller to the Buyer or its Affiliates. 
  
 (v) The Seller shall be liable to Buyer for (i) the amount of all reasonable legal or other expenses (including, without limitation, all
costs and expenses of Buyer in connection with the enforcement of this Repurchase Agreement or any other agreement evidencing a Transaction, whether in action, suit or litigation or bankruptcy, insolvency or other similar proceeding affecting
creditors’ rights generally, further including, without limitation, the reasonable fees and expenses of counsel (including the costs of internal counsel of Buyer) incurred in connection with or as a result of an Event of Default, (ii) damages
in an amount equal to the cost (including all fees, expenses and commissions) of entering into or terminating hedge transactions in connection with or as a result of an Event of Default, and (iii) any other loss, damage, cost or expense directly
arising or resulting from the occurrence of an Event of Default in respect of a Transaction. 
  
 (vi) The Buyer shall have, in addition to its rights hereunder, any rights otherwise available to it under any other agreement or
applicable law. 
  
 (b) Buyer may exercise one or more of the
remedies available to Buyer immediately upon the occurrence of an Event of Default and at any time thereafter without notice to the Seller. All rights and remedies arising under this Repurchase Agreement as amended from time to time hereunder are
cumulative and not exclusive of any other rights or remedies which Buyer may have. 
  
 (c) Buyer may enforce its rights and remedies hereunder without prior judicial process or hearing, and the Seller hereby expressly waives any defenses the Seller might otherwise have to require Buyer to enforce its
rights by judicial process. The Seller also waives any defense (other than a defense of payment or performance) the Seller might otherwise have arising from the use of nonjudicial process, enforcement and sale of all or any portion of the 

  

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Repurchase Assets, or from any other election of remedies. The Seller recognizes that nonjudicial remedies are consistent with the usages of the trade, are
responsive to commercial necessity and are the result of a bargain at arm’s length. 
  
 (d) To the extent permitted by applicable law, the Seller shall be liable to the Buyer for interest on any amounts owing by the Seller hereunder, from the date the Seller becomes liable for such amounts hereunder
until such amounts are (i) paid in full by the Seller or (ii) satisfied in full by the exercise of the Buyer’s rights hereunder. Interest on any sum payable by the Seller to the Buyer under this paragraph 14(d) shall be at a rate equal to the
Post-Default Rate. 
  
 SECTION 15. INDEMNIFICATION AND EXPENSES; RECOURSE

  
 (a) The Seller agrees to hold the Buyer, and its
Affiliates and their officers, directors, employees, agents and advisors (each an “Indemnified Party”) harmless from and indemnify any Indemnified Party against all liabilities, losses, damages, judgments, costs and expenses of any
kind which may be imposed on, incurred by or asserted against such Indemnified Party (collectively, “Costs”), relating to or arising out of this Repurchase Agreement, any other Repurchase Document or any transaction contemplated
hereby or thereby, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Repurchase Agreement, any other Repurchase Document or any transaction contemplated hereby or thereby, that, in each case,
results from anything other than the Indemnified Party’s gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Seller agrees to hold any Indemnified Party harmless from and indemnify such Indemnified
Party against all Costs with respect to all Purchased Mortgage Loans relating to or arising out of any taxes incurred or assessed in connection with the ownership of the Purchased Mortgage Loans, that, in each case, results from anything other than
the Indemnified Party’s gross negligence or willful misconduct. In any suit, proceeding or action brought by an Indemnified Party in connection with any Purchased Mortgage Loan for any sum owing thereunder, or to enforce any provisions of any
Purchased Mortgage Loan, the Seller will save, indemnify and hold such Indemnified Party harmless from and against all expense, loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or reduction or liability whatsoever
of the account debtor or obligor thereunder, arising out of a breach by the Seller of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or
its successors from the Seller. The Seller also agrees to reimburse an Indemnified Party as and when billed by such Indemnified Party for all the Indemnified Party’s costs and expenses incurred in connection with the enforcement or the
preservation of the Buyer’s rights under this Repurchase Agreement after the occurrence of a Default or an Event of Default, any other Repurchase Document or any transaction contemplated hereby or thereby, including without limitation the
reasonable fees and disbursements of its counsel. 
  
 (b) The
Seller agrees to pay as and when billed by the Buyer all of the reasonable out-of-pocket costs and expenses incurred by the Buyer in connection with the development, preparation and execution of, and any amendment, supplement or modification to,
this Repurchase Agreement, any other Repurchase Document or any other documents prepared in connection herewith or therewith. The Seller agrees to pay as and when billed by the Buyer all 

  

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of the reasonable out-of-pocket costs and expenses incurred in connection with the consummation and administration of the transactions contemplated hereby
and thereby including without limitation filing fees and all the reasonable fees, disbursements and expenses of counsel to the Buyer. Subject to the limitations set forth in Section 26 hereof, the Seller agrees to pay the Buyer all the reasonable
out of pocket due diligence, inspection, testing and review costs and expenses incurred by the Buyer with respect to Purchased Mortgage Loans submitted by the Seller for purchase under this Repurchase Agreement, including, but not limited to, those
out of pocket costs and expenses incurred by the Buyer pursuant to Sections 15(b) and 26 hereof. 
  
 (c) The obligations of the Seller from time to time to pay the Repurchase Price, the Periodic Advance Repurchase Payments, and all other amounts due under
this Repurchase Agreement shall be full recourse obligations of the Seller. 
  
 SECTION 16. SERVICING 
  
 (a) The Seller, on
Buyer’s behalf, shall contract with Servicer to, or if a Seller is the Servicer, such Seller shall, service the Mortgage Loans consistent with the degree of skill and care that such Seller customarily requires with respect to similar Mortgage
Loans owned or managed by it and in accordance with Accepted Servicing Practices. The Servicer shall (i) comply with all applicable Federal, State and local laws and regulations, (ii) maintain all state and federal licenses necessary for it to
perform its servicing responsibilities hereunder and (iii) not impair the rights of Buyer in any Purchased Mortgage Loans or any payment thereunder. Buyer may terminate the servicing of any Purchased Mortgage Loan with the then existing servicer in
accordance with Section 16(e) hereof. 
  
 (b) The Seller shall
cause the Servicer to hold or cause to be held all escrow funds collected by the Seller with respect to any Purchased Mortgage Loans in trust accounts and shall apply the same for the purposes for which such funds were collected. 
  
 (c) The Seller shall cause the Servicer to deposit all collections received
by the Seller on account of the Purchased Mortgage Loans in the Collection Account no later than two Business Days following receipt. 
  
 (d) The Seller shall provide promptly to Buyer (i) a Servicer Notice addressed to and agreed to by the Servicer of the related Purchased Mortgage Loans,
advising such Servicer of such matters as Buyer may reasonably request, including, without limitation, recognition by the Servicer of Buyer’s interest in such Purchased Mortgage Loans and the Servicer’s agreement that upon receipt of
notice of an Event of Default from Buyer, it will follow the instructions of Buyer with respect to the Purchased Mortgage Loans and any related Income with respect thereto. 
  
 (e) Upon the occurrence of a Default or an Event of Default hereunder or a material default under the Servicing Agreement,
Buyer shall have the right to immediately terminate the Servicer’s right to service the Purchased Mortgage Loans without payment of any penalty, transfer or termination fee, any of which fees shall be borne by Seller. The Seller shall cooperate
in transferring the servicing of the Purchased Mortgage Loans to a successor servicer appointed by Buyer in its sole discretion. 
  

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 (f) If the Seller should discover that, for any reason whatsoever, any entity responsible to the Seller
by contract for managing or servicing any such Purchased Mortgage Loan has failed to perform fully the Seller’s obligations under the Repurchase Documents or any of the obligations of such entities with respect to the Purchased Mortgage Loans,
the Seller shall promptly notify Buyer. 
  
 (g) Notwithstanding
and in addition to the foregoing, the Seller shall not permit Fairbanks Capital Corporation to service Mortgage Loans with an aggregate outstanding principal balance in excess of $3,000,000 after January 1, 2004, without Buyer’s written
consent. 
  
 SECTION 17. SINGLE AGREEMENT 
  
 Buyer and the Seller acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and that each has been entered into in consideration of the other
Transactions. Accordingly, each of Buyer and the Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transaction hereunder; (iii) that
payments, deliveries, and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries, and other transfers in respect of any other Transactions hereunder, and the
obligations to make any such payments, deliveries, and other transfers may be applied against each other and netted and (iv) to promptly provide notice to the other after any such set off or application. 
  
 SECTION 18. SET-OFF 
  
 In addition to any rights and remedies of the Buyer hereunder and by law, the Buyer shall have the right, without prior
notice to the Seller, any such notice being expressly waived by the Seller to the extent permitted by applicable law, upon any amount becoming due and payable by the Seller hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Buyer or any Affiliate thereof to or for the credit or the account of the Seller or any Affiliate thereof. The Buyer agrees promptly to notify the Seller after
any such set-off and application made by the Buyer; provided that the failure to give such notice shall not affect the validity of such set-off and application. 
  

SECTION 19. NOTICES AND OTHER COMMUNICATIONS 
  
 Except as otherwise expressly permitted by this Repurchase Agreement, all notices, requests and other communications provided for herein (including
without limitation any modifications of, or waivers, requests or consents under, this Repurchase Agreement) shall be 

  

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given or made in writing (including without limitation by telecopy) delivered to the intended recipient at the “Address for Notices” specified
below its name on the signature pages hereof or thereof); or, as to any party, at such other address as shall be designated by such party in a written notice to each other party. Except as otherwise provided in this Repurchase Agreement and except
for notices given under Section 3 (which shall be effective only on receipt), all such communications shall be deemed to have been duly given when transmitted by telecopy or personally delivered or, in the case of a mailed notice, upon receipt, in
each case given or addressed as aforesaid. 
  
 SECTION 20. ENTIRE AGREEMENT;
SEVERABILITY 
  
 This Repurchase Agreement, together with the
Repurchase Documents, constitute the entire understanding between Buyer and the Seller with respect to the subject matter they cover and shall supersede any existing agreements between the parties containing general terms and conditions for
repurchase transactions involving Purchased Mortgage Loans. By acceptance of this Repurchase Agreement, Buyer and Seller acknowledge that they have not made, and are not relying upon, any statements, representations, promises or undertakings not
contained in this Repurchase Agreement. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other
provision or agreement. 
  
 SECTION 21. NON-ASSIGNABILITY 
  
 The rights and obligations of the parties under this Repurchase Agreement
and under any Transaction shall not be assigned by the Seller without the prior written consent of Buyer. Subject to the foregoing, this Repurchase Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. Nothing in this Repurchase Agreement express or implied, shall give to any Person, other than the parties to this Repurchase Agreement and their successors hereunder, any benefit of any legal or equitable
right, power, remedy or claim under this Repurchase Agreement. Prior to the occurrence of an Event of Default, Buyer may from time to time assign all or a portion of its rights and obligations under this Repurchase Agreement and the Repurchase
Documents to an Affiliate of the Buyer without the prior consent of the Seller or another Person with the prior consent of Seller, which consent shall not be unreasonably withheld or delayed; provided, however that Buyer shall maintain, for
review by the Seller upon written request, a register of assignees and a copy of an executed assignment and acceptance by Buyer and assignee (“Assignment and Acceptance”), specifying the percentage or portion of such rights and
obligations assigned. Upon such assignment, (a) such assignee shall be a party hereto and to each Repurchase Document to the extent of the percentage or portion set forth in the Assignment and Acceptance, and shall succeed to the applicable rights
and obligations of Buyer hereunder, and (b) Buyer shall, to the extent that such rights and obligations have been so assigned by it be released from its obligations hereunder and under the Repurchase Documents. After the occurrence of an Event of
Default, Buyer may assign all or a portion of its rights and obligations under this Repurchase Agreement and the Repurchase Documents to any Person without the prior consent of Seller. Unless otherwise stated in the Assignment and Acceptance, the
Seller shall continue to take directions solely from Buyer unless otherwise notified by Buyer in writing. Buyer may distribute to any prospective assignee any document or other information delivered to Buyer by Seller. 
  

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 Subject to acceptance and recording thereof pursuant to the following paragraph of this Section, from and
after the effective date specified in each assignment and acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such assignment and acceptance, have the rights and obligations of Buyer under this
Agreement. Any assignment or transfer by Buyer of rights or obligations under this Agreement that does not comply with this Section 21 shall be treated for purposes of this Agreement as a sale by such Buyer of a participation in such rights and
obligations in accordance with the following paragraph of this Section. 
  
 The Seller shall maintain a register (the “Register”) on which it will record the Buyer’s rights hereunder, and each assignment and acceptance and participation. The Register shall include the names and addresses of
Buyers (including all assignees, successors and participants). Failure to make any such recordation, or any error in such recordation shall not affect the Seller’s obligations in respect of such rights. If Buyer sells a participation in its
rights hereunder, it shall provide Seller, or maintain as agent of Seller, the information described in this paragraph and permit Seller to review such information as reasonably needed for Seller to comply with its obligations under this Agreement
or under any applicable law or governmental regulation or procedure. 
  
 The Buyer may sell participations to one or more Persons in or to all or a portion of its rights and obligations under this Repurchase Agreement; provided, however, that (i) the Buyer’s obligations under this Repurchase Agreement shall
remain unchanged, (ii) the Buyer shall remain solely responsible to the other parties hereto for the performance of such obligations; and (iii) the Seller shall continue to deal solely and directly with the Buyer in connection with the Buyer’s
rights and obligations under this Repurchase Agreement and the other Repurchase Documents. Notwithstanding the terms of Section 8, each participant of the Buyer shall be entitled to the additional compensation and other rights and protections
afforded the Buyer under Section 8 to the same extent as the Buyer would have been entitled to receive them with respect to the participation sold to such participant. 
  
 The Buyer may, in connection with any assignment or participation or proposed assignment or participation pursuant to this
Section 21, disclose to the assignee or participant or proposed assignee or participant, as the case may be, any information relating to the Seller or any of its Subsidiaries or to any aspect of the Transactions that has been furnished to the Buyer
by or on behalf of the Seller or any of its Subsidiaries; provided that such assignee or participant agrees to hold such information subject to the confidentiality provisions of this Repurchase Agreement. 
  
 The Buyer may at any time create a security interest in all or any portion of
its rights under this Repurchase Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank. No such
assignment shall release the assigning Buyer from its obligations hereunder. 
  

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 In the event the Buyer assigns all or a portion of its rights and obligations under this Repurchase
Agreement, the parties hereto agree to negotiate in good faith an amendment to this Repurchase Agreement to add Agency provisions similar to those included in repurchase agreements for similar syndicated repurchase facilities. 
  
 SECTION 22. TERMINABILITY 
  
 Each representation and warranty made or deemed to be made by entering into
a Transaction, herein or pursuant hereto shall survive the making of such representation and warranty, and the Buyer shall not be deemed to have waived any Default that may arise because any such representation or warranty shall have proved to be
false or misleading, notwithstanding that the Buyer may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time the Transaction was made. Notwithstanding any such termination or the
occurrence of an Event of Default, all of the representations and warranties and covenants hereunder shall continue and survive. The obligations of the Seller under Section 15 hereof shall survive the termination of this Repurchase Agreement.

  
 SECTION 23. GOVERNING LAW 
  
 THIS REPURCHASE AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF. 
  
 SECTION 24. SUBMISSION TO JURISDICTION; WAIVERS 
  
 BUYER AND THE SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY: 
  
 (i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS REPURCHASE AGREEMENT AND THE OTHER REPURCHASE DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF; 
  
 (ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT
AND AGREES NOT TO PLEAD OR CLAIM THE SAME; 
  

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

  
 (iv) AGREES THAT NOTHING HEREIN SHALL
AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION. 
  
 (v) THE BUYER AND THE SELLER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS REPURCHASE AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 
  
 SECTION 25. NO WAIVERS, ETC. 
  
 No failure on the part of the Buyer to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under
any Repurchase Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any Repurchase Document preclude any other or further exercise thereof or the exercise of any other right,
power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. An Event of Default shall be deemed to be continuing unless expressly waived by the Buyer in writing. 
  
 SECTION 26. DUE DILIGENCE 
  
 The Seller acknowledges that Buyer has the right to perform continuing due
diligence reviews with respect to the Mortgage Loans and the Seller, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise, and the Seller agrees that upon reasonable prior notice
unless an Event of Default shall have occurred, in which case no notice is required, to the Seller, Buyer or its authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of, the
Mortgage Files and any and all documents, records, agreements, instruments or information relating to such Mortgage Loans in the possession or under the control of the Seller and/or the Custodian. The Seller also shall make available to Buyer a
knowledgeable financial or accounting officer for the purpose of answering questions respecting the Mortgage Files and the Mortgage Loans. Without limiting the generality of the foregoing, the Seller acknowledges that Buyer may purchase Mortgage
Loans from the Seller based solely upon the information provided by the Seller to Buyer in the Purchased Mortgage Loan Schedule and the representations, warranties and covenants contained herein, and that Buyer, at its option, has the right at any
time to conduct a partial or complete due diligence review on some or all of 

  

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the Mortgage Loans purchased in a Transaction, including, without limitation, ordering broker’s price opinions, new credit reports and new appraisals on
the related Mortgaged Properties and otherwise re-generating the information used to originate such Mortgage Loan. Buyer may underwrite such Mortgage Loans itself or engage a mutually agreed upon third party underwriter to perform such underwriting.
The Seller agrees to cooperate with Buyer and any third party underwriter in connection with such underwriting, including, but not limited to, providing Buyer and any third party underwriter with access to any and all documents, records, agreements,
instruments or information relating to such Mortgage Loans in the possession, or under the control, of the Seller. The Seller further agrees that the Seller shall pay all out-of-pocket costs and expenses incurred by Buyer in connection with
Buyer’s activities pursuant to this Section 26 (“Due Diligence Costs”); provided, that such Due Diligence Costs shall not exceed $25,000 for each year, measured from the date of this Repurchase Agreement and each anniversary of
the date of this Repurchase Agreement thereafter unless a Default or Event of Default shall have occurred, in which event Buyer shall have the right to perform due diligence, at the sole expense of Seller without regard to the dollar limitation set
forth herein. 
  
 SECTION 27. NON-UTILIZATION FEE 
  
 No later than the Payment Date following the end of each calendar quarter
and the Termination Date, the Seller shall pay in immediately available funds to Buyer the Non-Utilization Fee, if any, and with respect to the initial calculation, the Payment Date following the quarter end occurring after sixty (60) days following
the date of this Repurchase Agreement. Such Non-Utilization Fee shall commence accruing from and after the sixtieth (60th) calendar day after the date of this Repurchase Agreement, prorated for any portion of a calendar month in which the
Non-Utilization Fee does not apply to this Repurchase Agreement. Such payment shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to Buyer at an account designated by Buyer. 
  
 SECTION 28. COMMITMENT FEE 
  
 The Seller shall pay to Buyer in immediately available funds, due and owing
on the date hereof (and upon each anniversary of the closing, if this agreement has not been terminated), the Commitment Fee, prorated to reflect the actual term of the Repurchase Agreement. Such payment shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to Buyer at such account designated by Buyer. 
  
 In the event that an event set forth in Section 3(b)(x), Section 6(a) or Section 13.02(a) occurs, the result of which is the termination of Transactions
hereunder, the Buyer shall refund to the Seller an amount equal to the Commitment Fee prorated for the number of days remaining prior to the Termination Date. 
  

SECTION 29. BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT 
  
 (a) The Seller hereby irrevocably constitutes and appoints the Buyer and any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Seller and in the name of 

  

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the Seller or in its own name, from time to time in the Buyer’s discretion, for the purpose of carrying out the terms of this Repurchase Agreement, to
take any and all appropriate action and to execute any and all documents and instruments which may be reasonably necessary or desirable to accomplish the purposes of this Repurchase Agreement, and, without limiting the generality of the foregoing,
the Seller hereby gives the Buyer the power and right, on behalf of the Seller, without assent by, but with notice to, the Seller, if an Event of Default shall have occurred and be continuing, to do the following: 
  
 (i) in the name of the Seller, or in its own name, or
otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due with respect to any other Repurchase Assets and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by the Buyer for the purpose of collecting any and all such moneys due with respect to any other Repurchase Assets whenever payable; 
  
 (ii) to pay or discharge taxes and Liens levied or placed on
or threatened against the Repurchase Assets; 
  
 (iii) (A) to direct any party liable for any payment under any Repurchase Assets to make payment of any and all moneys due or to become due thereunder directly to the Buyer or as the Buyer shall direct; (B) to ask or demand for, collect,
receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Repurchase Assets; (C) to sign and endorse any invoices, assignments, verifications, notices and
other documents in connection with any Repurchase Assets; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Repurchase Assets or any proceeds thereof and to
enforce any other right in respect of any Repurchase Assets; (E) to defend any suit, action or proceeding brought against the Seller with respect to any Repurchase Assets; (F) to settle, compromise or adjust any suit, action or proceeding described
in clause (E) above and, in connection therewith, to give such discharges or releases as the Buyer may deem appropriate; and (G) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any Repurchase Assets
as fully and completely as though the Buyer were the absolute owner thereof for all purposes, and to do, at the Buyer’s option and the Seller’s expense, at any time, and from time to time, all acts and things which the Buyer deems
necessary to protect, preserve or realize upon the Repurchase Assets and the Buyer’s Liens thereon and to effect the intent of this Repurchase Agreement, all as fully and effectively as the Seller might do. 
  
 (b) The Seller hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable. 
  
 (c) The Seller also authorizes the Buyer, if an Event of Default shall have occurred, from time to time, to execute, in connection with any sale provided
for in Section 14 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Repurchase Assets. 
  

 -54- 

 (d) The powers conferred on the Buyer hereunder are solely to protect the Buyer’s interests in the
Repurchase Assets and shall not impose any duty upon it to exercise any such powers. The Buyer shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to the Seller for any act or failure to act hereunder, except for its or their own gross negligence or willful misconduct. 
  
 SECTION 30. MISCELLANEOUS 
  
 (a) Counterparts. This Repurchase Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Repurchase Agreement by signing any such counterpart. 
  
 (b) Captions. The captions and headings appearing herein are for included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Repurchase Agreement. 
  
 (c) Acknowledgment. The Seller hereby acknowledges that: 
  
 (i) it has been advised by counsel in the negotiation, execution and delivery of this Repurchase Agreement and the other Repurchase Documents; 
  
 (ii) the Buyer has no fiduciary relationship to the Seller; and 
  
 (iii) no joint venture exists between the Buyer and the
Seller. 
  
 SECTION 31. CONFIDENTIALITY 
  
 The Buyer and the Seller hereby acknowledge and agree that all written or
computer-readable information provided by one party to any other regarding the terms set forth in any of the Repurchase Documents or the Transactions contemplated thereby (the “Confidential Terms”) shall be kept confidential and
shall not be divulged to any party without the prior written consent of such other party except to the extent that (i) it is necessary to do so in working with legal counsel, auditors, taxing authorities or other governmental agencies or regulatory
bodies or in order to comply with any applicable federal or state laws, (ii) any of the Confidential Terms are in the public domain other than due to a breach of this covenant, (iii) in the event of an Event of Default the Buyer determines such
information to be necessary or desirable to disclose in connection with the marketing and sales of the Purchased Mortgage Loans or otherwise to enforce or exercise the Buyer’s rights hereunder or (iv) such disclosure is to either party’s
direct and indirect Affiliates and Subsidiaries, investors, attorneys or accountants, but only to the extent such disclosure is necessary and such parties agree to hold all information in strict confidence. The provisions set forth in this Section
31 shall survive the termination of this Repurchase Agreement. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Repurchase Document, the parties hereto may disclose to any and all Persons, without limitation
of any kind, (i) the federal income tax treatment of the Transactions, any fact relevant to understanding the federal tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such
federal 

  

 -55- 

 
income tax treatment; provided that Seller may not disclose the name of or identifying information with respect to Buyer or Agent or any pricing terms
(including, without limitation, the Pricing Rate, Purchase Price Percentage and Purchase Price) or other nonpublic business or financial information (including any sublimits and financial covenants) that is unrelated to the purported or claimed
federal income tax treatment of the Transactions and is not relevant to understanding the purported or claimed federal income tax treatment of the Transactions, without the prior written consent of the Buyer, and (ii) the existence of this Agreement
and the Maximum Purchase Price. 
  
 SECTION 32. INTENT 
  
 (a) The parties recognize that each Transaction is a “repurchase
agreement” as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Mortgage Loans subject to such Transaction or the term of such Transaction would render such definition
inapplicable), and a “securities contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of assets subject to such Transaction would render such definition
inapplicable). 
  
 (b) It is understood that either party’s
right to liquidate Mortgage Loans delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Paragraph 11 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and 559
of Title 11 of the United States Code, as amended. 
  
 (c) The
parties agree and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a
“qualified financial contract,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable). 

 
 (d) It is understood that this Repurchase Agreement constitutes a
“netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction hereunder
shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial
institution” as that term is defined in FDICIA). 
  
 SECTION 33.
DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS 
  
 The
parties acknowledge that they have been advised that: 
  
 (a) in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission (“SEC”) under Section 15 of the Securities Exchange Act of 1934 (“1934
Act”), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any Transaction
hereunder; 
  

 -56- 

 (b) in the case of Transactions in which one of the parties is a government securities broker or a
government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and 
  
 (c) in the case of Transactions in which one of the parties is a financial institution, funds held by the financial
institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable. 
  
 SECTION 34. CONFLICTS 
  
 In the event of any conflict between the terms of this Repurchase Agreement, any other Repurchase Document and any
Confirmation, the documents shall control in the following order of priority: first, the terms of the Confirmation shall prevail, then the terms of this Repurchase Agreement shall prevail, and then the terms of the Repurchase Documents shall
prevail. 
  
 SECTION 35. AUTHORIZATIONS 
  
 Any of the persons whose signatures and titles appear on Exhibit X
are authorized, acting singly, to act for Seller or Buyer, as the case may be, under this Repurchase Agreement. 
  
 [THIS SPACE INTENTIONALLY LEFT BLANK] 
  

 -57- 

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

			
	 BUYER:

	  
 MERRILL LYNCH MORTGAGE CAPITAL
INC.

		
	 By:
	 	 /s/    JAMES B.
CASON        

	 Name:
 Title:
	 	 James B. Cason
 Vice President

  

			
	
	 Address for Notices:

	 	 	  
 4 World Financial
Center
 10th Floor
 New York, New York 10080
  
 Attention: James B. Cason
 Telecopier No.: (212) 449-3673
 Telephone No.: (212) 449-1219

  

			
	 SELLER:

	  
 WMC MORTGAGE CORP.

		
	 By:
	 	 /s/    DAVID
TRZCINSKI        

	 Name:
 Title:
	 	 David Trzcinski
 Chief Financial Officer

			
	
	 Address for Notices:

	 	 	  
 WMC MORTGAGE
CORP.
 6320 Canoga Avenue
 Woodland Hills, CA 91367
 Attention: David Trzcinski
 Telecopier No.: (818) 712-2822
 Telephone No.: (818) 592-2530

  

			
	
	 with a copy to:

	 	 	  
 WMC Mortgage
Corp.
 6320 Canoga Avenue
 Woodland Hills, CA 91367
 Attention: George M. Eshaghian, Esq.
 Telecopier No.: (818) 592-2605
 Telephone No.: (818) 592-2626

  

 SCHEDULE 1 
  

REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS 
  
 The Seller represents and warrants to the Buyer, with respect to each Mortgage Loan, that as of the Purchase Date for the purchase of any Purchased
Mortgage Loans by the Buyer from the Seller and as of the date of this Repurchase Agreement and any Transaction hereunder and at all times while the Repurchase Documents and any Transaction hereunder is in full force and effect, the following
representations and warranties are true and correct. For purposes of this Schedule 1 and the representations and warranties set forth herein, a breach of a representation or warranty shall be deemed to have been cured with respect to a
Mortgage Loan if and when the Seller has taken or caused to be taken action such that the event, circumstance or condition that gave rise to such breach no longer adversely affects such Mortgage Loan. With respect to those representations and
warranties which are made to the best of the Seller’s knowledge, if it is discovered by the Seller or the Buyer that the substance of such representation and warranty is inaccurate, notwithstanding the Seller’s lack of knowledge with
respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty. 
  
 (a) Mortgage Loans as Described. The information set forth in the related Mortgage Loan Schedule is true and correct in all material respects;

  
 (b) Payments Current. Except with respect to a
Delinquent Mortgage Loan or a Repurchased Loan, (i) all Monthly Payments required to be made up to the close of business on the day prior to the Purchase Date for such Mortgage Loan under the terms of the Mortgage Note have been made and credited,
(ii) no Monthly Payment required under the Mortgage Loan is more than twenty-nine (29) days delinquent and (iii) the first Monthly Payment shall be made, or shall have been made, with respect to the Mortgage Loan on or before twenty-nine (29) days
after its Due Date or within the grace period, all in accordance with the terms of the related Mortgage Note; 
  
 (c) No Outstanding Charges. There are no delinquent taxes, ground rents, water charges, sewer rents, governmental assessments, municipal charges,
insurance premiums, leasehold payments or other outstanding charges affecting the related Mortgaged Property. The Seller has not advanced funds, or induced, solicited or knowingly received any advance of funds by a party other than the Mortgagor,
directly or indirectly, for the payment of any amount required under the Mortgage Loan, except for interest accruing from the date of the Mortgage Note or date of disbursement of the Mortgage Loan proceeds, whichever is later, to the day which
precedes by one month the Due Date of the first installment of principal and interest; 
  
 (d) Original Terms Unmodified. The terms of the Mortgage Note and the Mortgage have not been impaired, waived, altered or modified in any respect, except by written instruments, recorded in the applicable
public recording office if necessary to maintain the lien priority of the Mortgage, and which have been delivered to the Custodian; the substance of any such waiver, alteration or modification has been approved by the title insurer, to the extent
required by the related policy, and is reflected on the related Mortgage Loan Schedule. No 

  

 Sch. 1-1 

 
instrument of waiver, alteration or modification has been executed, and no Mortgagor has been released, in whole or in part, except in connection with an
assumption agreement approved by the title insurer, to the extent required by the policy, and which assumption agreement has been delivered to the Custodian and the terms of which are reflected in the related Mortgage Loan Schedule; 
  
 (e) No Defenses. The Mortgage Note and the Mortgage are not subject to
any right of rescission, set-off, counterclaim or defense, including the defense of usury, nor will the operation of any of the terms of the Mortgage Note and the Mortgage, or the exercise of any right thereunder, render the Mortgage unenforceable,
in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto, and no Mortgagor
was a debtor of any state or federal bankruptcy or insolvency proceeding at the time the Mortgage Loan was originated; 
  
 (f) Hazard Insurance. The Mortgaged Property is insured by a fire and extended perils insurance policy, issued by a Qualified Insurer, and such
other hazards as are customary in the area where the Mortgaged Property is located, and to the extent required by Seller as of the date of origination consistent with the Underwriting Guidelines, against earthquake and other risks insured against by
Persons operating like properties in the locality of the Mortgaged Property, in an amount not less than the lesser of (A) the maximum amount allowed by law, and (B) the greatest of (i) 100% of the replacement cost of all improvements to the
Mortgaged Property, (ii) the outstanding principal balance of the Mortgage Loan, or (iii) the amount necessary to avoid the operation of any co-insurance provisions with respect to the Mortgaged Property, and consistent with the amount that would
have been required as of the date of origination in accordance with the Underwriting Guidelines. If any portion of the Mortgaged Property is in an area identified by any federal Governmental Authority as having special flood hazards, and flood
insurance is available, a flood insurance policy meeting the current guidelines of the Federal Emergency Management Agency is in effect with a generally acceptable insurance carrier, in an amount representing coverage not less than the least of (1)
the outstanding principal balance of the Mortgage Loan (2) the full insurable value of the Mortgaged Property, and (3) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended by the Flood Disaster
Protection Act of 1974. All such insurance policies (collectively, the “hazard insurance policy”) contain a standard mortgagee clause naming Seller, its successors and assigns (including, without limitation, subsequent owners of the
Mortgage Loan), as mortgagee, and may not be reduced, terminated or canceled without 30 days’ prior written notice to the mortgagee. No such notice has been received by Seller. All premiums heretofore due and payable on such insurance policy
have been paid. The related Mortgage obligates the Mortgagor to maintain all such insurance and, at such Mortgagor’s failure to do so, authorizes the mortgagee to maintain such insurance at the Mortgagor’s cost and expense and to seek
reimbursement therefor from such Mortgagor. Where required by state law or regulation, the Mortgagor has been given an opportunity to choose the carrier of the required hazard insurance, provided the policy is not a “master” or
“blanket” hazard insurance policy covering a condominium, or any hazard insurance policy covering the common facilities of a planned unit development. The hazard insurance policy is the valid and binding obligation of the insurer and is in
full force and effect. Seller has not engaged in, and has no knowledge of the Mortgagor’s having engaged in, any act or omission which would impair the coverage of any such policy, the 

  

 Sch. 1-2 

 
benefits of the endorsement provided for herein, or the validity and binding effect of either including, without limitation, no unlawful fee, commission,
kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by Seller; 
  
 (g) Compliance with Applicable Law. Any and all requirements of any
federal, state or local law including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer credit protection, equal credit opportunity or disclosure laws applicable to the Mortgage Loan have been complied with,
the consummation of the transactions contemplated hereby will not involve the violation of any such laws or regulations, and Seller shall maintain or shall cause its agent to maintain in its possession, available for the inspection of Buyer, and
shall deliver to Buyer, upon demand, evidence of compliance with all such requirements; 
  
 (h) No Satisfaction of Mortgage. The Mortgage has not been satisfied, cancelled, subordinated or rescinded, in whole or in part, and the Mortgaged Property has not been released from the lien of the Mortgage,
in whole or in part, nor has any instrument been executed that would effect any such satisfaction, cancellation, subordination, rescission or release. The Seller has not waived the performance by the Mortgagor of any action, if the Mortgagor’s
failure to perform such action would cause the Mortgage Loan to be in default, nor has the Seller waived any default resulting from any action or inaction by the Mortgagor unless such waiver is in accordance with Accepted Servicing Practices;

  
 (i) Valid First or Second Lien. The Mortgage is a
valid, subsisting, enforceable and perfected (a) with respect to each first lien Mortgage Loan, first priority lien and first priority security interest, or (b) with respect to each Second Lien Mortgage Loan, second priority lien and second priority
security interest, in each case, on the real property included in the Mortgaged Property, including all buildings on the Mortgaged Property and all installations and mechanical, electrical, plumbing, heating and air conditioning systems located in
or annexed to such buildings, and all additions, alterations and replacements made at any time with respect to the foregoing. The lien of the Mortgage is subject only to: 
  
 (i) the lien of current real property taxes and assessments not yet due and payable; 
  
 (ii) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of recording acceptable to prudent mortgage lending institutions generally and specifically referred to in Buyer’s title insurance policy delivered to the originator of the
Mortgage Loan and (a) referred to or otherwise considered in the appraisal made for the originator of the Mortgage Loan or (b) which do not materially adversely affect the Appraised Value of the Mortgaged Property set forth in such appraisal;

  
 (iii) other matters to which like properties
are commonly subject which do not materially interfere with (x) the benefits of the security intended to be provided by the Mortgage or (y) the use, enjoyment, value or marketability of the related Mortgaged Property; and 
  
 (iv) with respect to each Mortgage Loan which is a Second
Lien Mortgage Loan, a first lien on the Mortgaged Property. 
  

 Sch. 1-3 

 Any security agreement, chattel mortgage or equivalent document related to and delivered in connection
with the Mortgage Loan establishes and creates a valid, subsisting and enforceable (a) with respect to each first lien Mortgage Loan, first priority lien and first priority security interest, or (b) with respect to each Second Lien Mortgage Loan,
second priority lien and second priority security interest, in each case, on the property described therein and Seller has full right to pledge and assign the same to Buyer. The Mortgaged Property was not, as of the date of origination of the
Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt or other security instrument creating a lien subordinate to the lien of the Mortgage; 
  

(j) Validity of Mortgage Documents. The Mortgage Note and the Mortgage and any other agreement executed and delivered by a Mortgagor or
guarantor, if applicable, in connection with a Mortgage Loan are genuine, and each is the legal, valid and binding obligation of the maker thereof enforceable in accordance with its terms, except as may be limited by applicable bankruptcy or
creditors’ rights laws. All parties to the Mortgage Note, the Mortgage and any other such related agreement had legal capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage Note, the Mortgage and any such agreement,
and the Mortgage Note, the Mortgage and any other such related agreement have been duly and properly executed by such related parties. No misrepresentation or similar occurrence with respect to a Mortgage Loan has taken place on the part of any
Person, including, without limitation, the Mortgagor, any appraiser, any builder or developer, or any other party involved in the origination of the Mortgage Loan. Seller has reviewed all of the documents constituting the Mortgage File and has made
such inquiries as it deems necessary to make and confirm the accuracy of the representations set forth herein. To the best of Seller’s knowledge, except as disclosed to Buyer in writing, all tax identifications and property descriptions are
legally sufficient; and tax segregation, where required, has been completed; 
  
 (k) Full Disbursement of Proceeds. The proceeds of the Mortgage Loan have been fully disbursed to or for the account of the Mortgagor and there is no obligation for the Mortgagee to advance additional funds
thereunder and any and all requirements as to completion of any on-site or off-site improvement and as to disbursements of any escrow funds therefor have been complied with. All costs, fees and expenses incurred in making or closing the Mortgage
Loan and the recording of the Mortgage have been paid, and the Mortgagor is not entitled to any refund of any amounts paid or due to the Mortgagee pursuant to the Mortgage Note or Mortgage; 
  
 (l) Ownership. Seller has full right to sell the Mortgage Loan to
Buyer free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest, and has full right and authority subject to no interest or participation of, or agreement with, any other party, to sell each
Mortgage Loan pursuant to this Repurchase Agreement and following the sale of each Mortgage Loan, Buyer will own such Mortgage Loan free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest

  

 Sch. 1-4 

 
except any such encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest created pursuant to the terms of this
Repurchase Agreement; 
  
 (m) Doing Business. All parties
which have had any interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (i) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is located, and (ii) either (A) organized under the laws of such state, (B) qualified to do business in such state, (C) a federal savings and loan association, a savings bank or a
national bank having a principal office in such state, or (D) not doing business in such state; 
  
 (n) Title Insurance. The Mortgage Loan is covered by either (i) an attorney’s opinion of title and abstract of title, the form and substance
of which is acceptable to prudent mortgage lending institutions making mortgage loans in the area wherein the Mortgaged Property is located or (ii) an ALTA lender’s title insurance policy or other generally acceptable form of policy or
insurance acceptable to Fannie Mae or Freddie Mac and each such title insurance policy is issued by a title insurer acceptable to Fannie Mae or Freddie Mac and qualified to do business in the jurisdiction where the Mortgaged Property is located,
insuring Seller, its successors and assigns, as to the first priority lien or second priority lien, as applicable of the Mortgage, as applicable in the original principal amount of the Mortgage Loan (or to the extent a Mortgage Note provides for
negative amortization, the maximum amount of negative amortization in accordance with the Mortgage), subject only to the exceptions contained in clauses (i), (ii), (iii), and (iv) of paragraph (i) of this Schedule 1, and in the case of adjustable
rate Mortgage Loans, against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment to the Mortgage Interest Rate and Monthly Payment. Where required by state law
or regulation, the Mortgagor has been given the opportunity to choose the carrier of the required mortgage title insurance. Additionally, such lender’s title insurance policy affirmatively insures ingress and egress and against encroachments by
or upon the Mortgaged Property or any interest therein. The title policy does not contain any special exceptions (other than the standard exclusions) for zoning and uses. Seller, its successors and assigns, are the sole insureds of such
lender’s title insurance policy, and such lender’s title insurance policy is valid and remains in full force and effect and will be in force and effect upon the consummation of the transactions contemplated by this Repurchase Agreement. No
claims have been made under such lender’s title insurance policy, and no prior holder or servicer of the related Mortgage, including Seller, has done, by act or omission, anything which would impair the coverage of such lender’s title
insurance policy, including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful
items have been received, retained or realized by Seller; 
  
 (o)
No Defaults. Except with respect to Delinquent Mortgage Loans or Repurchased Loans, there is no default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no event which, with the passage of time
or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration, and the Seller has not waived any default, breach, violation or event of acceleration; 
  

 Sch. 1-5 

 (p) No Mechanics’ Liens. There are no mechanics’ or similar liens or claims which have
been filed for work, labor or material (and no rights are outstanding that under law could give rise to such lien) affecting the related Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the lien of the related
Mortgage; 
  
 (q) Location of Improvements; No
Encroachments. All improvements which were considered in determining the Appraised Value of the related Mortgaged Property lay wholly within the boundaries and building restriction lines of the Mortgaged Property, and no improvements on
adjoining properties encroach upon the Mortgaged Property. No improvement located on or being part of the Mortgage Property is in violation of any applicable zoning law or regulation; 
  
 (r) Origination. The Mortgage Loan was originated by or in conjunction with a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to s 203 and 211 of the National Housing Act, a savings and loan association, a savings bank, a commercial bank, credit union, insurance company or similar banking institution which is supervised and examined
by a federal or state authority. Principal payments on the Mortgage Loan commenced no more than 60 days after funds were disbursed in connection with the Mortgage Loan. The Mortgage Interest Rate is adjusted, with respect to adjustable rate Mortgage
Loans, on each Interest Rate Adjustment Date to equal the Index plus the Gross Margin (rounded up or down to the nearest .125%), subject to the Mortgage Interest Rate Cap. The Mortgage Note is payable on the first day of each month in equal monthly
installments of principal and interest, which installments of interest, with respect to adjustable rate Mortgage Loans, are subject to change due to the adjustments to the Mortgage Interest Rate on each Interest Rate Adjustment Date, with interest
calculated and payable in arrears, sufficient to amortize the Mortgage Loan fully by the stated maturity date (except in the case of certain Second Lien Mortgage Loans which have 15-year balloon payments), over an original term of not more than 30
years from commencement of amortization. The Due Date of the first payment under the Mortgage Note is no more than 60 days from the date of the Mortgage Note; 
  

(s) Customary Provisions. The Mortgage Note has a stated maturity. The Mortgage contains customary and enforceable provisions such as to render
the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security provided thereby, including, (i) in the case of a Mortgage designated as a deed of trust, by trustee’s
sale, and (ii) otherwise by judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan and foreclosure on, or trustee’s sale of, the Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage Loan will be able to
deliver good and merchantable title to the Mortgaged Property. There is no homestead or other exemption available to a Mortgagor which would interfere with the right to sell the Mortgaged Property at a trustee’s sale or the right to foreclose
the Mortgage. The Mortgagor has not notified the Seller and the Seller has no knowledge of any relief requested or allowed to the Mortgagor under the Soldiers and Sailors Civil Relief Act of 1940. The Mortgage Note and Mortgage are on forms
acceptable to Freddie Mac or Fannie Mae; 
  
 (t) Collection
Practices; Escrow Deposits; Interest Rate Adjustments. The origination and collection practices used by the Seller with respect to each Mortgage Note and Mortgage have been in all respects legal. The Mortgage Loan has been serviced by the Seller

  

 Sch. 1-6 

 
and any predecessor servicer in accordance with the terms of the Mortgage Note. With respect to escrow deposits and Escrow Payments, if any, all such
payments are in the possession of, or under the control of, the Seller and there exist no deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made. No escrow deposits or Escrow Payments or other
charges or payments due the Seller have been capitalized under any Mortgage or the related Mortgage Note and no such escrow deposits or Escrow Payments are being held by the Seller for any work on a Mortgaged Property which has not been completed.
All Mortgage Interest Rate adjustments have been made in strict compliance with state and federal law and the terms of the related Mortgage Note. Any interest required to be paid pursuant to state and local law has been properly paid and credited;

  
 (u) Mortgaged Property Undamaged. The Mortgaged
Property is free of damage by fire, earthquake or earth movement, windstorm, flood, tornado or other casualty and waste, and there is no proceeding pending for the total or partial condemnation thereof; 
  
 (v) Conformance with Underwriting Guidelines. The Mortgage Loan was
underwritten in accordance with the Underwriting Guidelines (including exception practices) in effect at the time the Mortgage Loan was originated; 
  
 (w) No Additional Collateral. The Mortgage Note is not and has not been secured by any collateral except the lien of the corresponding Mortgage on
the Mortgaged Property and the security interest of any applicable security agreement or chattel mortgage referred to in (j) above; 
  
 (x) Appraisal. The Mortgage File contains an appraisal of the related Mortgaged Property which satisfied the standards of prudent mortgage lenders
for loans similar to the Mortgage Loans and was made and signed by a qualified appraiser, duly appointed by the Seller or the broker or originator, who had no interest, direct or indirect in the Mortgaged Property or in any loan made on the security
thereof, whose compensation is not affected by the approval or disapproval of the Mortgage Loan and who met the minimum qualifications of prudent mortgage lenders for loans similar to the Mortgage Loans. Each appraisal of the Mortgage Loan was made
in accordance with the requirements of Title XI of the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date the Mortgage Loan was originated; 
  
 (y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in the Mortgage, and no fees or expenses are or will become payable by the Buyer to the trustee under the deed
of trust, except in connection with a trustee’s sale after default by the Mortgagor; 
  
 (z) No Buydown Provisions; No Graduated Payments or Contingent Interests. Other than those Mortgage Loans acceptable for purchase by an Agency, no Mortgage Loan contains provisions pursuant to which Monthly
Payments are (a) paid or partially paid with funds deposited in any separate account established by the Seller, the Mortgagor, or anyone on behalf of the Mortgagor, (b) paid by any source other than the Mortgagor or (c) contains any other similar
provisions which may constitute a “buydown” provision. The Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan does not have a shared appreciation or other contingent interest feature; 
  

 Sch. 1-7 

 (aa) Mortgagor Acknowledgment. The Mortgagor has executed a statement to the effect that the
Mortgagor has received all disclosure materials required by applicable law with respect to the making of fixed rate mortgage loans in the case of Fixed Rate Mortgage Loans, and adjustable rate mortgage loans in the case of Adjustable Rate Mortgage
Loans and rescission materials with respect to Refinanced Mortgage Loans, and such statement is and will remain in the Mortgage File; 
  
 (bb) No Construction Loans. No Mortgage Loan was made in connection with (a) the construction or rehabilitation of a Mortgaged Property or (b)
facilitating the trade-in or exchange of a Mortgaged Property; 
  
 (cc) Acceptable Investment. The Seller has no knowledge of any circumstances or condition with respect to the Mortgage, the Mortgaged Property, the Mortgagor other than the Mortgagor’s credit standing or the loan-to-value ratio
that can reasonably be expected to cause the Mortgage Loan to be an unacceptable investment for subprime Mortgage Loans, cause the Mortgage Loan to become delinquent, or adversely affect the value of the Mortgage Loan; 
  
 (dd) LTV. No Mortgage Loan has an LTV (“loan-to-value”
ratio) or CLTV (“combined loan-to-value” ratio) in excess of 100%. 
  
 (ee) Capitalization of Interest. The Mortgage Note does not by its terms provide for the capitalization or forbearance of interest. 
  
 (ff) No Equity Participation. No document relating to the Mortgage Loan provides for any contingent or additional
interest in the form of participation in the cash flow of the Mortgaged Property or a sharing in the appreciation of the value of the Mortgaged Property. The indebtedness evidenced by the Mortgage Note is not convertible to an ownership interest in
the Mortgaged Property or the Mortgagor and Seller has not financed nor does it own directly or indirectly, any equity of any form in the Mortgaged Property or the Mortgagor. 
  
 (gg) Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan have not been and shall not be used to satisfy, in
whole or in part, any debt owed or owing by the Mortgagor to Seller or any Affiliate or correspondent of Seller, except in connection with a refinanced Mortgage Loan. 
  
 (hh) Origination Date. Unless otherwise approved in writing by Buyer, the origination date is no earlier than sixty
(60) days prior to the related Purchase Date. 
  
 (ii) No
Exception. The Custodian has not noted any material exceptions on a Mortgage Loan Schedule and Exception Report with respect to the Mortgage Loan which would materially adversely affect the Mortgage Loan or Buyer’s interest in the Mortgage
Loan. 
  
 (jj) Occupancy of Mortgaged Property. The
Mortgaged Property is lawfully occupied under applicable law; all inspections, licenses and certificates required to be made or 

  

 Sch. 1-8 

 
issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to
certificates of occupancy, have been made or obtained from the appropriate authorities; 
  
 (kk) No Misrepresentation or Fraud. No misrepresentation, fraud or similar occurrence with respect to a Mortgage Loan has taken place on the part of any person, including without limitation the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the origination of the Mortgage Loan or in the application of any insurance in relation to such Mortgage Loan; 
  
 (ll) Transfer of Mortgage Loans. Except with respect to Mortgage Loans registered with MERS, the Assignment of
Mortgage is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the Mortgaged Property is located; 
  
 (mm) Consolidated Future Advances. Any principal advances made to the Mortgagor prior to the Cut-off Date have been consolidated with the
outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term. The lien of the Mortgage securing the consolidated principal amount is expressly insured
as having first lien priority by a title insurance policy, an endorsement to the policy insuring the mortgagee’s consolidated interest or by other title evidence acceptable to Fannie Mae and Freddie Mac. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan; 
  
 (nn) No Balloon Payment. Except with respect to certain Second Lien Mortgage Loans with a 15-year balloon payment feature, no Mortgage Loan has a balloon payment feature; 
  
 (oo) Condominiums/ Planned Unit Developments. If the Residential Dwelling on the Mortgaged Property is a condominium
unit or a unit in a planned unit development (other than a de minimis planned unit development) such condominium or planned unit development project meets the eligibility requirements of Fannie Mae and Freddie Mac including Fannie Mae eligibility
requirements for sale to Fannie Mae or is located in a condominium or planned unit development project which has received Fannie Mae project approval and the representations and warranties required by Fannie Mae with respect to such condominium or
planned unit development have been made and remain true and correct in all respects; 
  
 (pp) Calculation of Interest. Interest on each Mortgage Loan is calculated on the basis of a 360-day year consisting of twelve 30-day months; 
  
 (qq) Environmental Matters. To the best of Seller’s knowledge, the Mortgaged Property is in material compliance
with all applicable local, state and federal environmental laws, rules or regulations pertaining to environmental hazards including, without limitation, asbestos, and neither the Seller nor, to the Seller’s knowledge, the related Mortgagor, has
received any notice of any violation or potential violation of such law nor is there any pending action or proceeding directly involving any Mortgaged Property of which the Seller is aware in which compliance with any environmental law, rule or
regulation is an issue; 
  

 Sch. 1-9 

 (rr) Predatory Lending Regulations; High Cost Loans. No Mortgage Loan (a) is subject to Section
226.32 of Regulation Z or any similar state law (relating to high interest rate credit/lending transactions), or (b) contains any term or condition, or involve any loan origination practice, that has been defined as “predatory”,
“covered” or “threshold” under applicable federal, state or local law, or which has been expressly categorized as an “unfair” or “deceptive” term, condition, or practice in any applicable federal, state or
local law (or the regulations promulgated thereunder) dealing with “predatory” or “high cost” mortgage lending (or a similarly classified loan using different terminology under a law, regulation or ordinance imposing heightened
regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees). 
  
 (ss) Location and Type of Mortgaged Property. The Mortgaged Property is a fee simple property located in the state identified in the Mortgage Loan
Schedule and consists of a parcel of real property with a detached single family residence erected thereon, or a two- to four-family dwelling, or an individual condominium unit in a condominium project, or an individual unit in a planned unit
development, provided, however, that any condominium project or planned unit development shall conform with the applicable Fannie Mae and Freddie Mac requirements regarding such dwellings. No portion of the Mortgaged Property is used for commercial
purposes; 
  
 (tt) Due on Sale. Subject to applicable law,
the Mortgage contains an enforceable provision for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the Mortgage
thereunder; 
  
 (uu) No Denial of Insurance. No action,
inaction, or event has occurred and no state of facts exists or has existed that has resulted or will result in the exclusion from, denial of, or defense to coverage under any applicable pool insurance policy, special hazard insurance policy or
bankruptcy bond, irrespective of the cause of such failure of coverage. In connection with the placement of any such insurance, no commission, fee, or other compensation has been or will be received by the Seller or any designee of the Seller or any
corporation in which the Seller or any officer, director, or employee had a financial interest at the time of placement of such insurance. The Seller has caused or will cause to be performed any and all acts required to preserve the rights and
remedies of the Buyer in any insurance policies applicable to the Mortgage Loans including, without limitation, any necessary notifications of insurers, assignments of policies or interests therein, and establishments of coinsured, joint loss payee
and mortgagee rights in favor of the Buyer; 
  
 (vv) Flood
Certification Contract. The Seller has obtained a life of loan, transferable flood certification contract for each Mortgage Loan and such contract is assignable without penalty, premium or cost to the Buyer; 
  
 (ww) Tax Service Contract The Seller has obtained a life of loan,
transferable real estate tax service contract with an tax service contract provider acceptable in the secondary market on each Mortgage Loan and such contract is assignable without penalty, premium or cost to the Buyer; 
  

 Sch. 1-10 

 (xx) Recordation. Each original Mortgage was or will be recorded and, except for those Mortgage
Loans subject to the MERS identification system, all subsequent assignments of the original Mortgage (other than the assignment to the Buyer) have been or will be recorded in the appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof as against creditors of the Seller, or is in the process of being recorded; 
  
 (yy) Simple Interest Mortgage Loans. None of the Mortgage Loans are simple interest Mortgage Loans; 
  
 (zz) Documents Genuine. Such Purchased Mortgage Loan and all
accompanying collateral documents are complete and authentic and all signatures thereon are genuine. Such Purchased Mortgage Loan is a “closed” loan fully funded by the Seller and held in Seller’s name. 
  
 (aaa) Bona Fide Loan. Such Purchased Mortgage Loan arose from a bona
fide loan, complying with all applicable State and Federal laws and regulations, to persons having legal capacity to contract and is not subject to any defense, set-off or counterclaim. 
  
 (bbb) Description. Each Purchased Mortgage Loan conforms to the description thereof as set forth on the related
Mortgage Loan Schedule and Exception Report delivered to the Custodian and Buyer. 
  
 (ccc) Located in U.S. No collateral (including, without limitation, the related real property and the dwellings thereon and otherwise) relating to a Purchased Mortgage Loan is located in any jurisdiction other
than in one of the fifty (50) states of the United States of America or the District of Columbia. 
  
 (ddd) Prepayment Penalty. With respect to each Mortgage Loan that has a Prepayment Penalty feature, each such Prepayment Penalty is enforceable and
will be enforced by the Seller, and each Prepayment Penalty is permitted pursuant to federal, state and local law. No Mortgage Loan will impose a Prepayment Penalty for a term in excess of five years from the date such Mortgage Loan was originated.
Except as otherwise set forth on the Mortgage Loan Schedule, with respect to each Mortgage Loan that contains a Prepayment Penalty, such Prepayment Penalty is at least equal to the lesser of (A) the maximum amount permitted under applicable law and
(B) six months interest at the related Mortgage Interest Rate on the amount prepaid in excess of 20% of the original principal balance of such Mortgage Loan; 
  
 (eee) Servicing Practices. Each Mortgage Loan has been serviced in all material respects in compliance with those mortgage servicing practices
(including collection procedures) of prudent mortgage banking institutions which service mortgage loans of the same type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located; and 
  
 (fff) Single-Premium Credit Life Insurance. None of the proceeds of
the Mortgage Loan were used to finance single-premium credit insurance policies. 
  
 (ggg) Takeout Commitment. Each Takeout Commitment is a legal, valid and binding obligation of Seller enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 
  

 Sch. 1-11 

 SCHEDULE 2 
  

INDEBTEDNESS 
  
 Warehouse Financing Facilities 
  

										
	 	  	Facility Size

	 	  	Permanent

	  	Temporary

	  	Total

	 RFC Warehousing Credit Line
	  	$	400 Mil	  	 	 	  	$	400 Mil
	 Lehman Master Repurchase Agreement
	  	$	400 Mil	  	$	100 Mil	  	$	500 Mil
	 CSFB Master Repurchase Agreement
	  	$	300 Mil	  	$	 50 Mil	  	$	350 Mil
	 CDC Mortgage Capital Master Repurchase Agreement
	  	$	250 Mil	  	$	 50 Mil	  	$	300 Mil

  
 Residual Financing Facility

  

							
	 	  	Original

	  	Current

	 Chase Senior Secured Credit Agreement
	  	$	75 Mil	  	$	8.5 Mil

  

 Sch. 2-1 

 EXHIBIT I 
  

FORM OF CONFIRMATION LETTER 
  
 [            ],
200             
  

			
		
	 	  	 
	
	 	 
	 	  	 
	
	 	 
	 	  	 
	
	 	 
	 	  	 
	
	 	 

  
 Attention: 
  
 Confirmation
No.:                                     
  
 Ladies/Gentlemen: 
  
 This letter confirms our oral agreement to purchase from you the Mortgage Loans listed in Appendix I hereto, pursuant to the
Master Repurchase Agreement governing purchases and sales of Mortgage Loans between us, dated as of September 22, 2003 (the “Agreement”), as follows: 
  
 Purchase Date: 
  
 Mortgage Loans to be Purchased: See Appendix I hereto. 
 [Appendix I to Confirmation Letter will list Mortgage Loans] 
  
 Aggregate Principal Amount of Purchased Mortgage Loans: 
  
 Purchase Price: 
  
 Pricing
Spread: 
  
 Repurchase Date: 
  
 [Purchase Price Percentage:] 
  
 LIBOR Period: 
  
 Names and addresses for communications: 
  
 Buyer: 
  
 Merrill Lynch Mortgage Capital Inc. 
 4 World
Financial Center 
 10th Floor 
 New York, New York 10080 
 Attention: James B. Cason 
  

 Exh.I-1 

 Seller: 
 WMC Mortgage Corp. 
 [ADDRESS] 
  
 Attention: 
  

			
	MERRILL LYNCH MORTGAGE CAPITAL INC.
		
	 By:
	 	  

	 	 	 Name:

	 	 	 Title:

  
 [Agreed and Acknowledged:

  
 WMC MORTGAGE CORP. 
 Seller 
  

			
		
	 By:
	 	  

	 	 	 Name:

	 	 	 Title:]

  

 Exh. I-2 

 EXHIBIT II 
  

FORM OF OPINIONS 
  
 September 22, 2003 
  
 Merrill
Lynch Mortgage Capital Inc. 
 4 World Financial Center 
 10th Floor 
 New York, New York 10080 
  
 Dear Sirs and Mesdames: 
  
 You have requested [our] [my] opinion as counsel to WMC Mortgage Corp., a corporation
organized and existing under the laws of California (the “Seller”), with respect to certain matters in connection with that certain Master Repurchase Agreement governing purchases and sales of certain Mortgage Loans, dated September
22, 2003 (the “Repurchase Agreement”), by and between the Seller and Merrill Lynch Mortgage Capital Inc. (the “Buyer”), that certain Custodial Agreement, dated September 22, 2003 (the “Custodial
Agreement”) by and among the Buyer, the Seller and Deutsche Bank National Trust Company, as custodian (the “Custodian”) and that certain Collection Account Agreement, dated as of September 22, 2003 (the “Collection
Account Agreement”) among the Seller, the Buyer and Deutsche Bank National Trust Company, as bank (the “Bank”). The Repurchase Agreement, the Custodial Agreement and the Collection Account Agreement are hereinafter collectively
referred to as the “Governing Agreements.” Capitalized terms not otherwise defined herein have the meanings set forth in the Repurchase Agreement. 
  
 [We] [I] have examined the following documents: 
  

	 	1.	the Repurchase Agreement; 

  

	 	2.	the Custodial Agreement; 

  

	 	3.	an unfiled copy of each financing statement listed on Schedule 1 (the “Financing Statements”) naming the Seller as Debtor and the Buyer as Secured Party and
describing the Repurchase Assets (as defined in the Repurchase Agreement) as to which security interests may be perfected by filing under the Uniform Commercial Code as in effect in the State of California (the “Filing Collateral”),
which [I] [we] understand will be filed in the offices of the Secretary of State of the State of California (the “Filing Offices”); 

  

	 	4.	the reports listed on Schedule 2 as to UCC financing statements (collectively, the “UCC Search Report”); 

  

	 	5.	such other documents, records and papers as [we] [I] have deemed necessary and relevant as a basis for this opinion. 

  

 Exh. II-1 

 To the extent [we] [I] have deemed necessary and proper, [we] [I] have relied upon the representations
and warranties of the Seller contained in the Repurchase Agreement. [We] [I] have assumed the authenticity of all documents submitted to [us] [me] as originals, the genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents. 
  
 Based upon the
foregoing, it is [our] [my] opinion that: 
  
 1. The Seller is a
corporation duly organized, validly existing and in good standing under the laws of the State of California and is qualified to transact business in, and is in good standing under, the laws of the State of California. 
  
 2. The Seller has all necessary corporate power to authorize, execute and
deliver, and to perform its obligations under, the Governing Agreements. 
  
 3. The execution, delivery and performance by the Seller of the Governing Agreements to which it is a party, and the sales by the Seller and the pledge of the Repurchase Assets under the Repurchase Agreement have been
duly authorized by all necessary corporate action on the part of the Seller. Each of the Governing Agreements has been duly executed and delivered by the Seller, and are legal, valid and binding agreements of the Seller enforceable against the
Seller in accordance with their respective terms, subject to bankruptcy laws and other similar laws of general application affecting rights of creditors and subject to the application of the rules of equity, including those respecting the
availability of specific performance, none of which will materially interfere with the realization of the benefits provided thereunder or with the Buyer’s purchase of the Purchased Mortgage Loans and/or security interest in the Repurchase
Assets. 
  
 3. No consent, approval, authorization or order of,
and no filing or registration with, any court or governmental agency or regulatory body is required on the part of the Seller for the execution, delivery or performance by the Seller of the Governing Agreements to which it is a party or for the
sales by the Seller under the Repurchase Agreement or the sale of the Repurchase Assets to the Buyer and/or granting of a security interest to the Buyer in the Repurchase Assets, pursuant to the Repurchase Agreement. 
  
 4. The execution, delivery and performance by the Seller of, and the
consummation by the Seller of the transactions contemplated by, the Governing Agreements do not and will not (a) violate any provision of the Seller’s charter or by-laws, (b) violate any applicable law, rule or regulation, (c) violate any
order, writ, injunction or decree of any court or governmental authority or agency or any arbitral award applicable to the Seller of which [I] [we] have knowledge (after due inquiry) or (d) result in a breach of, constitute a default under, require
any consent under, or result in the acceleration or required prepayment of any indebtedness pursuant to the terms of, any agreement or instrument listed on Schedule 3 hereto, which the Seller has represented lists all of the material agreements to
which it is a party or by which, it is bound or to which its or its properties is bound, or (except for the Liens created pursuant to the Repurchase Agreement) result in the creation or imposition of any Lien upon any Property of such party pursuant
to the terms of any such agreement or instrument. 
  

 Exh. II-2 

 5. There is no action, suit, proceeding or investigation pending or, to the best of [our] [my] knowledge,
threatened against the Seller which, in [our] [my] judgment, either in any one instance or in the aggregate, would be reasonably likely to result in any material adverse change in the properties, business or financial condition, or prospects of such
party or in any material impairment of the right or ability of such party to carry on its business substantially as now conducted or in any material liability on the part of such party or which would draw into question the validity of the Governing
Agreements to which it is a party or the Mortgage Loans or of any action taken or to be taken in connection with the transactions contemplated thereby, or which would be reasonably likely to impair materially the ability of such party to perform
under the terms of the Governing Agreements to which it is a party or the Mortgage Loans. 
  
 6. The Repurchase Agreement is effective to create, in favor of the Buyer, either a valid sale of the Repurchase Assets to the Buyer or a valid security interest under the Uniform Commercial Code in all of the right,
title and interest of the Seller in, to and under the Repurchase Assets as collateral security for the payment of the Seller’s obligations under the Repurchase Agreement, except that (a) such security interests will continue in Repurchase
Assets after its sale, exchange or other disposition only to the extent provided in Section 9-315 of the Uniform Commercial Code, (b) the security interests in Repurchase Assets in which the Seller acquires rights after the commencement of a case
under the Bankruptcy Code in respect of the Seller may be limited by Section 552 of the Bankruptcy Code 
  
 7. When the Purchased Mortgage Loans are delivered to the [Buyer] [Custodian], the security interest referred to in Section 7 above in the Mortgage Loans
will constitute a fully perfected first priority security interest in all right, title and interest of the Seller therein. 
  
 8. (a) Upon the filing of the Financing Statement in the Filing Office, the security interest referred to in Section 7 above will constitute a fully
perfected security interest under the Uniform Commercial Code in all right, title and interest of the Seller in, to and under that portion of the Repurchase Assets that can be perfected by filing under the Uniform Commercial Code. 
  
 (b) The UCC Search Report sets forth the proper filing
offices and the proper debtor necessary to identify those Persons who have on file in the jurisdictions listed on Schedule 1 financing statements covering the Repurchase Assets as of the dates and times specified on Schedule 2. The UCC
Search Report identifies no Person who has filed in any Filing Office a financing statement describing the Repurchase Assets prior to the effective dates of the UCC Search Report. 
  
 9. The provisions of the Collection Account Agreement are effective to cause the security interest of the Buyer in the
Collection Account to be a fully perfected first-priority security interest therein. 
  
 10. The Seller is not an “investment company”, or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended. 
  
 Very truly yours, 
  

 Exh. II-3 

 EXHIBIT III 
  

UCC FILING JURISDICTIONS 
  
 California 
  

 Exh. III-1 

 EXHIBIT IV 
  

[FORM OF COLLECTION ACCOUNT CONTROL AGREEMENT] 
  
 COLLECTION ACCOUNT CONTROL AGREEMENT, dated as of September 22, 2003, among Merrill Lynch Mortgage Capital Inc. (the “Buyer”), WMC
Mortgage Corp. (the “Seller”) and Deutsche Bank National Trust Company (the “Bank”). 
  
 WHEREAS, the Seller and the Buyer have entered into that certain Repurchase Agreement, dated as of September 22, 2003, (the “Repurchase
Agreement”) pursuant to which the Buyer may enter into a Transaction (as defined therein) secured by, among other things, the payments made on account of Purchased Mortgage Loans sold to the Buyer under the Repurchase Agreement
(“Distributions”); 
  
 WHEREAS, the Seller
(the “Seller”) has established that certain Collection Account, Acct. No. [            ], subject to the security interest of the Buyer, ABA
#[                ], which account is maintained in the name of the Seller with the Bank pursuant to the Repurchase Agreement (the “Collection
Account”); 
  
 WHEREAS, pursuant to the
Transaction, all Distributions are required to be deposited into the Collection Account identified below upon receipt by the Seller; and 
  
 WHEREAS, the Seller has granted to the Buyer a security interest in the Collection Account and all amounts held therein; 
  
 NOW, THEREFORE, the parties hereby agree as follows: 
  
 Section 1. Capitalized Terms. Capitalized terms used but not defined
herein shall have the meanings assigned in the Repurchase Agreement. 
  
 Section 2. Transfers To and From Collection Account; Control. The parties agree that: (a) Distributions received by the Bank for credit to the Collection Account are, except as provided below, for application as instructed by the
Seller; (b) the Bank shall transfer funds from the Collection Account in accordance with such instructions until the Bank receives notice from the Buyer that an event of default has occurred and is continuing under the Repurchase Agreement (a
“Notice of Event of Default”); and (c) upon the Bank’s receipt of a Notice of Event of Default, the Bank shall (i) in no event (A) transfer funds from the Collection Account to the Seller, (B) act on the instruction of the
Seller, or (C) cause or permit withdrawals from the Collection Account in any manner not approved by the Buyer in writing and (ii) comply with instructions originated by the Buyer concerning the disposition of funds in the Collection Account without
further consent of the Seller. 
  
 Section 3. Collection
Account. The Bank hereby confirms and agrees that: 
  
 (a) The
Bank shall not change the name or account number of the Collection Account without the prior written consent of the Buyer; 
  

 Exh. IV-1 

 (b) The Collection Account is a “deposit account” (within the meaning of Section 9-102(a)(29)
of the Uniform Commercial Code (the “UCC”)); 
  
 (c) Without limitation on the Buyer’s rights under Section 2 above, the Bank shall comply with any stop payment orders given by the Buyer with respect to items presented for payment by the Seller; 
  
 (d) There are no other agreements entered into between the Bank and the
Seller with respect to the Collection Account; 
  
 (e) It has not
entered into, and until the termination of this Agreement will not enter into, any agreement with any other person relating to the Collection Account and/or any funds held therein pursuant to which it has agreed, or will agree, to comply with orders
or instructions of such other person; and 
  
 (f) It has not
entered into, and until the termination of this Agreement will not enter into, any agreement with the Seller purporting to limit or condition the obligation of the Bank to comply with orders and other instructions of the Buyer as set forth in
Sections 2(c)(ii) and 3(c) above. 
  
 Section 4. Subordination
of Lien; Waiver of Set-Off. (a) In the event that the Bank has or subsequently obtains by agreement, by operation of law or otherwise a security interest in the Collection Account or any funds held therein, the Bank hereby agrees that such
security interest shall be subordinate to the security interest of the Buyer. The funds and other items deposited to the Collection Account will not be subject to deduction, set-off, banker’s lien, or any other right in favor of any person
other than the Buyer (except that the Bank may set off (i) all amounts due to the Bank in respect of customary fees and expenses for the routine maintenance and operation of the Collection Account and (ii) the face amount of any checks which have
been credited to the Collection Account but are subsequently returned unpaid because of uncollected or insufficient funds, or (iii) other returned items or mistakes made in crediting the Collection Account). 
  
 (b) The Seller hereby authorizes the Bank, without prior notice, from time to
time to debit any other account the Seller may have with the Bank for the amount due the Bank hereunder. 
  
 Section 5. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. REGARDLESS OF ANY PROVISION IN ANY OTHER
AGREEMENT, FOR PURPOSES OF THE UCC, NEW YORK SHALL BE DEEMED TO BE THE “BANK’S JURISDICTION.” 
  
 Section 6. Conflict with Other Agreements. (a) In the event of any conflict between this Agreement (or any portion thereof) and any other agreement
between the Seller and the Bank now existing or hereafter entered into, the terms of this Agreement shall prevail. 
  
 (b) No amendment or modification of this Agreement or waiver of any right hereunder shall be binding on any party hereto unless it is in writing and is
signed by all of the parties hereto. 
  

 Exh. IV-2 

 Section 7. Adverse Claims. Except for the claims and interest of the Buyer and of the Seller in
the Collection Account, the Bank does not know of any claim to, or interest in, the Collection Account or in funds held therein. If any person asserts any lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of
attachment, execution or similar process) against the Collection Account or against any funds held therein, the Bank will promptly notify the Buyer and the Seller thereof. 
  
 Section 8. Successors. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective corporate successors or heirs and personal representatives who obtain such rights solely by operation of law. 
  
 Section 9. Notices. Any notice, request or other communication required or permitted to be given under this Agreement shall be in writing and
deemed, to have been properly given when delivered in person, or when sent by telecopy or other electronic means and electronic confirmation of error free receipt is received, or three days after being sent by certified or registered United States
mail, return receipt requested, postage prepaid, addressed to the party at the address set forth below: 
  
 Seller: 
  
 WMC Mortgage Corp. 
 6320 Canoga Avenue

 Woodland Hills, CA 91367 
 Attention: David Trzcinski 
 Telecopier No.: (818) 712-2822 
 Telephone No.: (818) 592-2530 
  
 with a copy to: 
  
 WMC Mortgage Corp. 
 6320 Canoga Avenue

 Woodland Hills, CA 91367 
 Attention: George M. Eshaghian, Esq. 
 Telecopier No.: (818) 592-2605 
 Telephone No.: (818) 592-2626 
  
 with copies to the Buyer at the address below 
  
 Buyer: 
  
 Merrill Lynch Mortgage Capital Inc. 
 4 World
Financial Center 
 10th Floor 
 New York, New York 10080 
 Attention: James Cason 
  

 Exh. IV-3 

 Bank: 
  
 Deutsche Bank National Trust Company 
 1761
East St. Andrew Place 
 Santa Ana, California 92705 
 Attention: Mortgage Custody WY030C 
 Telephone: (714) 247-6000 
 Facsimile: (714) 247-6082 
  
 Any party may change its address for notices in the manner set forth above. 
  
 Section 10. Termination. The obligations of the Bank to the Buyer pursuant to this Agreement shall continue in effect
until the Buyer has notified the Bank of such termination in writing. The Buyer agrees with the Seller to provide Notice of Termination in substantially the form of Exhibit A hereto to the Bank on or after the termination of the Buyer’s
security interest in the Collection Account pursuant to, or as otherwise provided by, the terms of the Repurchase Agreement. 
  
 Section 11. Limitation of Liability; Indemnification of the Bank. The Seller and the Buyer hereby agree that (a) the Bank is released from any and
all liabilities to the Seller and the Buyer arising from the terms of this Agreement and the compliance of the Bank with the terms hereof, except to the extent that such liabilities arise from the Bank’s bad faith, willful misconduct or
negligence and (b) the Seller, its successors and assigns shall at all times indemnify and save harmless the Bank from and against any loss, liability or expense incurred without bad faith, willful misconduct or negligence on the part of the Bank,
its officers, directors and agents, arising out of or in connection with the execution and performance of this Agreement or the maintenance of the Collection Account, including the costs and expenses of defending themselves against any claim or
liability in connection with the performance of any of their powers or duties hereunder, until the termination of this Agreement. 
  
 Section 12. Counterparts. This Agreement may be executed may be executed in any number of counterparts, all of which shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing and delivering one or more counterparts. 
  
 [SIGNATURE PAGES FOLLOW] 
  

 Exh. IV-4 

 IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Collection Account
Control Agreement, all as of the day and year first above written. 
  

			
	 WMC MORTGAGE CORP., as seller

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

			
	 MERRILL LYNCH MORTGAGE CAPITAL INC., as Buyer

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

			
	 DEUTSCHE BANK NATIONAL TRUST COMPANY, as Bank

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

 Exh. IV-5 

 Exhibit A to 
 Collection Account Control Agreement 
  
 [LETTERHEAD OF MERRILL LYNCH MORTGAGE CAPITAL INC.] 
  
 [Date] 
  
 [Bank] 
 Attention:
                                     
  

	 	Re:	Notice of Termination of Collection Account Control Agreement 

  
 You are hereby notified that the Collection Account Control Agreement, dated as of September 22, 2003, a copy of which is attached (the
“Agreement”), among you, the undersigned and WMC Mortgage Corp. (the “Seller”) is terminated and you have no further obligations to the undersigned pursuant to the Agreement. Notwithstanding any previous
instructions to you, you are hereby instructed to accept all future directions with respect to the Collection Account from the Seller. This notice terminates any obligations you may have to the undersigned with respect to the Collection Account;
provided, however, that nothing contained in this notice shall alter any obligations which you may otherwise owe to the undersigned pursuant to any other agreement. 
  

			
	 Very truly yours,

	
	 MERRILL LYNCH MORTGAGE CAPITAL INC.

		
	 By:
	 	 
	 	 	

	 Name:
	 	 
	 Title:
	 	 

  

 Exh. IV-6 

 EXHIBIT V 
  

Mortgage Loan Schedule Fields 
  

	 	1.	Loan ID# 

  

	 	2.	Account Number 

  

	 	3.	Property Type 

  

	 	4.	Loan Purpose 

  

	 	5.	Loan Rate 

  

	 	6.	Original Balance 

  

	 	7.	Actual P & I 

  

	 	8.	Service Fee 

  

	 	9.	Original Term 

  

	 	10.	State 

  

	 	11.	Appraisal 

  

	 	12.	Number of Units 

  

	 	13.	Margin 

  

	 	14.	Life Cap 

  

	 	15.	Property Street Address 

  

	 	16.	Property City 

  

	 	17.	Property Zip Code 

  

	 	18.	Doc Level 

  

	 	19.	First Payment Date 

  

	 	20.	Remaining Term 

  

	 	21.	CLTV 

  

	 	22.	Current Balance 

  

	 	23.	Borrower Last Name 

  

 Exh. V-1 

	 	24.	Borrower First Name 

  

	 	25.	Next Interest Adjustment 

  

	 	26.	Index Name 

  

	 	27.	Last Payment Date 

  

	 	28.	Grade/Rating 

  

	 	29.	Debt Service Ratio 

  

	 	30.	LTV 

  

	 	31.	Owner Occupancy 

  

	 	32.	Lien Position 

  

	 	33.	Product Description 

  

	 	34.	Loan Type (Fixed Rate, Buy Down, GPM, GEM, ARM, Balloon) 

  

	 	35.	Negative Amortization Indicator 

  

	 	36.	Interest Rate Adjustment Frequency 

  

	 	37.	Annual Payment Cap 

  

	 	38.	Periodic Rate Cap on First Adjustment Date 

  

	 	39.	Lifetime Maximum Rate 

  

	 	40.	Negative Amortization Limit % 

  

	 	41.	Periodic Rate Cap Subsequent to First Adjustment Date 

  

	 	42.	Mortgage Insurance Coverage 

  

	 	43.	Borrower Credit Quality 

  

	 	44.	Risk Grades 

  

	 	45.	Current FICO Scores 

  

	 	46.	Mortgage Score 

  

	 	47.	Silent Second 

  

	 	48.	Current Delinquency Status (30, 60, 90 Days Past Due, Foreclosure, Bankruptcy) 

  

	 	49.	First Mortgage Balance 

  

	 	50.	Payment Change Frequency 

  

 Exh V-2 

 EXHIBIT VI 
  

Mortgage File Documents 
  
 (a) The original Mortgage Note bearing all intervening endorsements, endorsed “Pay to the order of
             without recourse” and signed in the name of the last endorsee (the “Last Endorsee”) by an authorized Person (in the event that the Mortgage Loan was
acquired by the Last Endorsee in a merger, the signature must be in the following form: “[Last Endorsee], successor by merger to [name of predecessor]”; in the event that the Mortgage Loan was acquired or originated by the Last Endorsee
while doing business under another name, the signature must be in the following form: “[Last Endorsee], formerly known as [previous name]”). 
  
 (b) The original of the guarantee executed in connection with the Mortgage Note (if any). 
  
 (c) The original Mortgage with evidence of recording thereon, or a copy thereof together with an Officer’s Certificate
of the Seller certifying that such represents a true and correct copy of the original and that such original has been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is
located. 
  
 (d) The originals of all assumption, modification,
consolidation or extension agreements with evidence of recording thereon, or copies thereof together with an Officer’s Certificate of the Seller certifying that such represent true and correct copies of the originals and that such originals
have each been submitted for recordation in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located. 
  
 (e) The original Assignment of Mortgage in blank for each Mortgage Loan, in form and substance acceptable for recording and signed in the name of the Last
Endorsee (in the event that the Mortgage Loan was acquired by the Last Endorsee in a merger, the signature must be in the following form: “[Last Endorsee], successor by merger to [name of predecessor]”; in the event that the Mortgage Loan
was acquired or originated while doing business under another name, the signature must be in the following form: “[Last Endorsee], formerly known as [previous name]”). 
  
 (f) The originals of all intervening assignments of mortgage with evidence of recording thereon, showing an unbroken chain
of title from the originator thereof to the Last Endorsee or copies thereof together with an Officer’s Certificate of the Seller certifying that such represent true and correct copies of the originals and that such originals have each been
submitted for recordation in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located. 
  
 (g) The original attorney’s opinion of title and abstract of title or the original mortgagee title insurance policy, or if the original mortgagee
title insurance policy has not been issued, the irrevocable commitment to issue the same. 
  

 Exh. VI-1 

 (h) The original of any security agreement, chattel mortgage or equivalent document executed in
connection with the Mortgage Loan. 
  

 Exh. VI-2 

 EXHIBIT VII 
  

Underwriting Guidelines 
  
 SEE TAB 8, EXHIBIT D. 
  

 Exh. VII-1 

 EXHIBIT VIII 
  
 Seller’s Officer’s Certificate 
  
 I,
                                , do hereby certify that I am duly elected,
qualified and authorized officer of WMC Mortgage Corp. (“Seller”). This Certificate is delivered to you in connection with Section 12(d)(iv) of the Master Repurchase Agreement dated as of September 22, 2003, among Seller and Merrill
Lynch Mortgage Capital Inc. (the “Agreement”). On behalf of Seller, I hereby certify that, as of the date of the financial statements attached hereto and as of the date hereof, Seller is and has been in compliance in all material
respects with all the terms of the Agreement and, without limiting the generality of the foregoing, I certify that: 
  
 (i) Maintenance of Tangible Net Worth. The Seller shall maintain a Tangible Net Worth of not less than $75,000,000 plus 25% of the
Net Income for each quarter from and including the quarter ending June 30, 2003. 
  
 (ii) Maintenance of Ratio of Indebtedness to Tangible Net Worth. The Seller has maintained the ratio of Indebtedness to Tangible
Net Worth no greater than 15:1. 
  
 (iii)
Maintenance of Liquidity. The Seller shall ensure that, at any time, it shall maintain the sum of (x) unencumbered cash and Cash Equivalents and (y) Seller’s same-day ability to borrow or draw money on any Business Day under a warehouse
line of credit or other similar Indebtedness (which, by the terms of the applicable agreement, is not subject to any condition, event or circumstance which (A) the Seller is unable to satisfy or which (B) would otherwise render access to such
warehouse line of credit or other similar Indebtedness unavailable to Seller on a same-day basis) on any Business Day, equal to at least $30,000,000; 
  
 (iv) No Default or Event of Default has occurred or is continuing. [If any Default or Event of Default has occurred and is continuing,
Seller shall describe the same in reasonable detail and describe the action the Seller has taken or proposes to take with respect thereto.] 
  
 (v) Attached hereto as Schedule 1 is a true and correct list of all Mortgage Loans purchased by Buyer and held by the Custodian pending
repurchase. 
  
 IN WITNESS WHEREOF, I have set my hand this
         day of                     ,
                . 
  

			
	 
		
	 By:
	 	 
	 	 	

	 Name:
	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

 Exh. VIII-1 

 EXHIBIT IX 
  
 [to Officer’s Certificate] 
  
 EXHIBIT IX 
 FORM OF SERVICER NOTICE 

 
 [Date] 
  
 [            ], as Servicer 
 [ADDRESS] 
 Attention:
             
  

	 	Re:	Master Repurchase Agreement, dated as of September 22, 2003 (the “Repurchase Agreement”), by and among WMC Mortgage Corp. (the “Seller”) and
Merrill Lynch Mortgage Capital Inc. (the “Buyer”). 

  
 Ladies and Gentlemen: 
  
 [                    ] (the “Servicer”) is servicing certain mortgage loans for Seller pursuant to that certain
Servicing Agreement between the Servicer and Seller. Pursuant to the Repurchase Agreement between Buyer and Seller, the Servicer is hereby notified that Seller has pledged to Buyer certain mortgage loans which are serviced by Servicer which are
subject to a security interest in favor of Buyer. 
  
 Upon receipt of a Notice of
Event of Default from Buyer in which Buyer shall identify the mortgage loans which are then pledged to Buyer under the Repurchase Agreement (the “Mortgage Loans”), the Servicer shall segregate all amounts collected on account of
such Mortgage Loans, hold them in trust for the sole and exclusive benefit of Buyer, and remit such collections in accordance with Buyer’s written instructions. Following such Notice of Event of Default, Servicer shall follow the instructions
of Buyer with respect to the Mortgage Loans, and shall deliver to Buyer any information with respect to the Mortgage Loans reasonably requested by Buyer. 
  
 Notwithstanding any contrary information which may be delivered to the Servicer by Seller, the Servicer may conclusively rely on any information or Notice of Event of
Default delivered by Buyer, and Seller shall indemnify and hold the Servicer harmless for any and all claims asserted against it for any actions taken in good faith by the Servicer in connection with the delivery of such information or Notice of
Event of Default. 
  

 Exh. IX-1 

 Please acknowledge receipt of this instruction letter by signing in the signature block below and forwarding an executed
copy to Buyer promptly upon receipt. Any notices to Buyer should be delivered to the following addresses: 4 World Financial Center, New York, New York 10080; Attention: Mr. James B. Cason; Telephone: 212-449-1219; Facsimile:212-449-3673. 

 

			
	Very truly yours,
	
	[                                      
          ]
		
	 By:
	 	 
	 	 	

	 Name:
	 	 
	 Title:
	 	 

  

			
	ACKNOWLEDGED:
	
	[                                      
      ]
	        as Servicer

  

			
		
	 By:
	 	 
	 	 	

	 Title:
	 	 
	 Telephone
	 	 
	 Facsimile:
	 	 

  

 Exh. IX-2 

 EXHIBIT X 
  

AUTHORIZED REPRESENTATIVES 
  
 SELLER NOTICES 
  

			
	 	  	Address: WMC Mortgage Corp.
	 Name:
	  	 
	 Telephone:
	  	 
	 Facsimile:
	  	 

  
 SELLER AUTHORIZATIONS

  
 Any of the persons whose signatures and titles appear below are
authorized, acting singly, to act for Seller under this Agreement: 
  

					
	 Name

	 	 Title

	 	 Signature

  
 SEE INCUMBENCY
CERTIFICATE ATTACHED HERETO. 
  

 Exh. X-1 

 BUYER NOTICES 
  

					
	 Name: James Cason
	  	Address:	  	Merrill Lynch Mortgage Capital Inc.
	 Telephone: (212) 449-1219
	  	 	  	4 World Financial Center
	 Facsimile: (212) 449-3673
	  	 	  	10th Floor
	 	  	 	  	New York, New York 10080

  
 BUYER AUTHORIZATIONS

  
 Any of the persons whose signatures and titles appear below, including
any other authorized officers, are authorized, acting singly, to act for Buyer under this Agreement: 
  

					
	 Name

	 	 Title

	 	 Authorized Signature

			
	 James Cason
	 	Director	 	 
	 	 	 	 	

			
	 Joseph Magnus
	 	Director	 	 
	 	 	 	 	

			
	 Gene Nagotko
	 	Director	 	 
	 	 	 	 	

			
	 Christopher Czako
	 	Vice President	 	 
	 	 	 	 	

			
	 Lisa Liao
	 	Senior Specialist	 	 
	 	 	 	 	

			
	 Michael Saccento
	 	Senior Specialist	 	 
	 	 	 	 	

			
	 Christopher Gregory
	 	Senior Specialist	 	 
	 	 	 	 	

			
	 John Winchester
	 	Director	 	 
	 	 	 	 	

  

 Exh. X-2 

 EXHIBIT XI 
  

RESPONSIBLE OFFICERS OF SELLER 
  
 Responsible Officers 
  
 SEE EXHIBIT X. 
  

 Exh. X-1 

 EXHIBIT XII 
  

FORM OF ESCROW INSTRUCTION LETTER 
  

 Exh. XI-1 

 AMENDMENT NO. 1 TO MASTER REPURCHASE AGREEMENT 
  
 Amendment No. 1, dated as of October 24, 2003 (this
“Amendment”), between WMC MORTGAGE CORP. (the “Seller”) and MERRILL LYNCH MORTGAGE CAPITAL INC. (the “Buyer”). 
  
 RECITALS 
  
 The Buyer and Seller are parties to that certain Master Repurchase Agreement, dated as of September 22, 2003 (the “Existing Repurchase
Agreement”; as amended by this Amendment, the “Repurchase Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Repurchase Agreement. 
  
 The Buyer and Seller have agreed, subject to the terms and conditions of this
Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon revisions to the terms of the Existing Repurchase Agreement. 
  
 Accordingly, the Buyer and Seller hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing
Repurchase Agreement is hereby amended as follows: 
  
 SECTION 1.
Amendment. Section 2 of the Existing Master Repurchase Agreement is hereby amended by: 
  
 (a) deleting clause (k) of the definition of “Market Value” in its entirety and replacing it with the following language:

  
 “(k) when the Purchase Price for such Purchased Mortgage
Loan is added to other Purchased Mortgage Loans, the aggregate Purchase Price of all First Lien Mortgage Loans with an LTV greater than 95% but not greater than 100% exceeds $30,000,000;” 
  
 (b) deleting the definition of “Maximum Purchase
Price” in its entirety and replacing it with the following language: 
  
 “Maximum Purchase Price” shall mean $500,000,000. 
  
 (c) deleting the definition of “Non-Utilization Fee” in its entirety and replacing it with the following language: 

 
 “Non-Utilization Fee” shall mean, for each calendar
quarter in which the average quarterly aggregate outstanding Purchase Price of the Purchased Mortgage Loans was less than $250,000,000, an amount equal to the product of (x) 0.125% per annum and (y) the excess of (I) the Maximum Purchase Price over
(II) the average quarterly Purchase Price of the Purchased Mortgage Loans during such calendar quarter. 
  

 SECTION 2. Conditions Precedent. This Amendment shall become effective on October 24, 2003 (the
“Amendment Effective Date”), subject to the satisfaction of the following conditions precedent: 
  
 2.1 Delivered Documents. On the Amendment Effective Date, the Buyer shall have received the following documents, each of which shall be
satisfactory to the Buyer in form and substance: 
  
 (a) this Amendment, executed and delivered by duly authorized officers of the Buyer and the Seller; and 
  
 (b) such other documents as the Buyer or counsel to the Buyer may reasonably request. 
  
 SECTION 3. Representations and Warranties. The Seller hereby
represents and warrants to the Buyer that it is in compliance with all the terms and provisions set forth in the Existing Repurchase Agreement on its part to be observed or performed, and that no Event of Default has occurred or is continuing, and
hereby confirms and reaffirms the representations and warranties contained in Section 11 of the Existing Repurchase Agreement. 
  
 SECTION 4. Limited Effect. Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and
shall remain, in full force and effect in accordance with its terms. 
  
 SECTION 5. Counterparts. This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same
instrument. 
  
 SECTION 6. GOVERNING LAW. THIS
AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF. 
  
 [SIGNATURE PAGE FOLLOWS] 
  

 2 

 IN WITNESS WHEREOF, the parties 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:
	 	 	 	 MERRILL LYNCH MORTGAGE
 CAPITAL INC.

				
	 	 	 	 	 By:
	 	/s/    JAMES B. CASON        
	 	 	 	 	 	 	 	

	 	 	 	 	 Name:
	 	James B. Cason
	 	 	 	 	 Title:
	 	Vice President

  

									
	 Seller:
	 	 	 	 WMC MORTGAGE CORP.

				
	 	 	 	 	 By:
	 	/s/     DAVID TRZCINSKI        
	 	 	 	 	 	 	 	

	 	 	 	 	 Name:
	 	David Trzcinski
	 	 	 	 	 Title:
	 	Chief Financial Officer

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