Document:

exv4w1

Exhibit 4.1

2011 EXECUTIVE PERFORMANCE RSU AWARD AGREEMENT

     This Executive Performance RSU Award Agreement (the “Agreement”) is hereby entered effective
as of _________________, 2011 (the “Effective Date”), by and between Fuel Tech, Inc. (the
“Company” or “Fuel Tech” or “FTI”), and _____________ (the “Participant”). Any term
capitalized but not defined in this Agreement will have the meaning set forth in the Fuel Tech,
Inc. Incentive Plan, as amended (the “Plan”).

     1. Purpose. The purpose of this Agreement is, among other things, to align the
Participant’s interests with the interests of the Company and its stockholders in the long-term
growth of the Company and to reward the Participant for his continued employment and service to the
Company in the future and his compliance with the Company’s policies (including, without
limitation, the Company’s Code of Business Ethics and Conduct), to protect the Company’s interests
in non-public, confidential and/or proprietary information, products, trade secrets, customer
relationships, and other legitimate business interests. In view of these purposes, this Agreement,
issued pursuant to Section 6.6 of the Plan, provides the Participant the opportunity to receive an
executive performance RSU award in the manner and on the terms, conditions and amounts set forth in
this Agreement (“Executive Performance RSU”).

2. Executive Performance RSU Award. For purposes of the Executive Performance RSU Award
calculations set forth below in this Agreement, the Company’s Compensation and Nominating Committee
(the “Committee”), in the exercise of its business judgment under the Plan, approved a total target
number of executive performance RSUs made up of three target RSU amount components. The three
components of the Executive Performance RSU Award (each of them an Award under the Plan) are:
Look-Back RSUs, Revenue Growth RSUs, and TSR Performance RSUs (as each of those terms are defined
below).

     3. Look-Back RSUs. For purposes of this Agreement, the Committee approved a Target
Look-Back RSU Amount of _____________ RSUs. No later than ninety (90) days after the end of the
Performance Period, the Committee, in its sole discretion, shall award the Participant a number of
RSUs of between zero and the Target Look-Back RSU Amount (“Look-Back RSUs”), on the Determination
Date (as defined below).

     (a) Performance Assessment. The Committee, in its business judgment, may
approve the Company awarding none, some or all of the Target Look-Back RSU Amount to the
Participant based on the Committee’s subjective, qualitative assessment of the Participant’s
overall performance during the Performance Period. The determination and approval by the
Committee of what portion, if any, of the Target Look-Back RSU Amount shall be awarded to
the Participant may include a variety of factors considered by the Committee in its sole
discretion, including one or more of the equity award determination factors listed in
Exhibit A to this Agreement.

     (b) Determination Date. All Look-Back RSU Awards will be made on the
Determination Date, subject to the terms and conditions of the Plan and this Agreement,
including the vesting schedule set forth in Section 3(d) below, provided that the
Participant’s status as a Participant under this Agreement has not terminated before the
Determination Date.

 

 

     (c) Employment Termination. If the Participant’s status as a Participant under
this Agreement (e.g., termination of employment with the Company) terminates for any reason
before the Determination Date, other than death or becoming Totally Disabled, no Look-Back
RSUs will be awarded to the Participant, except as provided in Section 3(e) below. If the
Participant’s status as a Participant under this Agreement terminates before the
Determination Date due to death or becoming Totally Disabled, the Committee shall determine,
in its sole discretion, whether to award none, some or all of the Target Look-Back RSUs to
the Participant. If the Participant’s status as a Participant under this Agreement
terminates on or after the Determination Date, but before the Look-Back RSUs have fully
vested under Section 3(d) or (e) below:

     (i) If the Participant’s employment is terminated by the Company for Cause (as
defined below), the Participant will forfeit all Look-Back RSUs, including any
Look-Back RSUs that have vested under Section 3(d);

     (ii) If the Participant terminates employment due to death or becoming Totally
Disabled, the Participant will vest in any Look-Back RSUs that have not vested under
Section 3(d) or (e), and on a date within thirty (30) days of the employment
termination, determined by the Committee or Board, as applicable, the Company will
distribute Shares to the Participant equal to the full number of Look-Back RSUs that
were awarded to the Participant, regardless of whether or not the Participant had
elected to defer under Section 3(f) below;

     (iii) If the Participant’s employment is terminated other than (A) due to death
or becoming Totally Disabled, or (B) by the Company for Cause, the Participant will
forfeit any Look-Back RSUs that have not vested under Section 3(d) or (e), and on a
date within thirty (30) days of the employment termination, determined by the
Committee or Board, as applicable, the Company will distribute Shares to the
Participant equal to the number of Look-Back RSUs that already have vested,
regardless of whether or not the Participant had elected to defer under Section 3(f)
below.

     (d) Installment Vesting. Any Look-Back RSUs awarded on the Determination Date
shall vest in three installments, as follows: (i) one-third of the total Look-Back RSUs
awarded shall vest thirteen (13) months after the Determination Date, (ii) one-third shall
vest on the second anniversary of the Determination Date, and (iii) the remaining one-third
shall vest on the third anniversary of the Determination Date, in each case, provided that
the Participant’s status as a Participant under this Agreement has not terminated before the
applicable vesting date.

     (e) Change in Control. In the event of a Change of Control before the
Determination Date for Look-Back RSUs, the Committee shall determine, in its sole
discretion, whether to award none, some or all the Target Look-Back RSUs to the Participant
under this Agreement and whether to accelerate the vesting of those Look-Back RSUs it so
awards. In the event of a Change of Control on or after the Determination Date for
Look-Back RSUs, but before the Look-Back RSUs awarded to the Participant, if any, have fully
vested under Sections 3(c) or (d), if the Participant’s status as a Participant under this
Agreement has not terminated before the effective date

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of the Change in Control, the Look-Back RSUs awarded to the Participant will fully vest
on a date before the effective date of the Change in Control, determined by the Committee or
Board, as applicable, unless (i) the Company is the surviving entity and any adjustments
necessary to preserve the value of the Participant’s outstanding Look-Back RSUs have been
made, or (ii) the Company’s successor at the time of the Change in Control irrevocably
assumes the Company’s obligations under the Plan and this Agreement or replaces the
Participant’s outstanding Look-Back RSUs with an award of equal or greater value and having
terms and conditions no less favorable to the Participant than those applicable to the
Participant’s Look-Back RSUs immediately prior to the Change in Control; provided,
that, if the Participant’s status as a Participant under this Agreement has not
terminated before the effective date of the Change in Control and the Participant’s
Look-Back RSUs do not become fully vested upon the Change of Control because of the
foregoing provisions of this paragraph (e), the Participant’s Look-Back RSUs nonetheless
will become fully vested if, within two years after the effective date of the Change of
Control, the Company or its successor terminates the Participant’s employment other than for
Cause or the Participant terminates his employment for Good Reason (as defined below). If
the Participant terminates employment following a Change in Control due to death or becoming
Totally Disabled, the Participant will vest in any Look-Back RSUs that have not previously
vested. On a date determined by the Committee or Board, as applicable, within thirty (30)
days of the Change of Control, the Company will distribute Shares to the Participant equal
to the number of any Look-Back RSUs that are or have become vested, regardless of whether or
not the Participant had elected to defer under Section 3(f) below.

     (f) Deferral of Share Distribution. The Participant may elect to defer the
receipt of Shares beyond the vesting date of the underlying Look-Back RSUs in Section 3(d)
above, by written election on the Company’s then-current Deferral Election Form, filed no
earlier than the Determination Date and no later than thirty (30) days after the
Determination Date for the Look-Back RSUs. Any deferral period must be expressed as a
number of whole years, not less than five (5) or more than ten (10), beginning on the
Determination Date. Any such deferral election shall apply to the receipt of all Shares
underlying the Look-Back RSUs under this Agreement; for example, a deferral period of seven
(7) years would result in the Participant receiving all Shares underlying the vested
Look-Back RSUs seven (7) years from the Determination Date regardless of the fact that the
Look-Back RSUs under this Agreement may have vested at differing times. If a Participant
elects a deferral period but thereafter the Participant’s status as a Participant terminates
after the Look-Back RSUs vest but before the elected deferral period expires, then, subject
to the forfeiture provisions of Sections 7 and 10, distribution of the Participant’s Shares
underlying the Look-Back RSUs will occur within thirty (30) days after the date the
Participant’s status as such terminates. If a Participant elects a deferral period but
thereafter a Change in Control occurs after the Look-Back RSUs vest but before the elected
deferral period expires, then, subject to the forfeiture provisions of Sections 7 and 10,
distribution of the Participant’s Shares underlying the Look-Back RSUs will occur on a date
to be determined by the Committee or the Board, as applicable, immediately prior to the
effective time of the Change in Control.

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     4. Revenue Growth RSUs. For purposes of this Agreement, the Committee approved a
Target Revenue Growth RSU Amount of _____________ RSUs. After the completion of the Performance
Period the Committee shall award the Participant a number of RSUs of between zero and up to 150% of
the Target Revenue Growth RSU Amount (“Revenue Growth RSUs”), on the Determination Date.

     (a) Revenue Growth Measurement. During the Performance Period, the Company’s
Revenue Growth will be measured against the Revenue Growth of the Peer Group Companies. As
soon as practicable after the Peer Group Companies have reported their Revenue Growth for
the Performance Period, the Committee shall compare the Company’s Revenue Growth for the
Performance Period with that of the Peer Group Companies. The Peer Group Companies will be
ranked by Revenue Growth and then divided into four quartiles. The Committee will evaluate
the Company’s Revenue Growth performance in light of those rankings and shall approve the
issuance to the Participant a number of Revenue Growth RSUs determined as follows:

     (i) if the Company’s Revenue Growth performance places it in the fourth
(lowest) quartile of the Peer Group Companies, no RSUs will be awarded;

     (ii) if the Company’s Revenue Growth performance places it in the third
quartile of the Peer Group Companies, then a number of RSUs equal to 50% of the
Target Revenue Growth RSU Amount will be awarded;

     (iii) if the Company’s Revenue Growth performance places it in the second
quartile of the Peer Group Companies, then a number of RSUs equal to 100% of the
Target Revenue Growth RSU Amount will be awarded; and

     (iv) if the Company’s Revenue Growth performance places it in the first
(highest) quartile of the Peer Group Companies, then a number of RSUs equal to 150%
of the Target Revenue Growth RSU Amount will be awarded.

     (b) Determination Date. Any Revenue Growth RSU awards made as a result of the
Company’s Revenue Growth performance will be made on the Determination Date, subject to the
terms and conditions of the Plan and this Agreement, including the vesting schedule set
forth in Section 4(d) below, provided that the Participant’s status as a Participant under
this Agreement has not terminated before the Determination Date.

     (c) Employment Termination. If the Participant’s status as a Participant under
this Agreement terminates for any reason before the Determination Date, other than the
Participant’s (i) termination by the Company without Cause, (ii) death, or (iii) becoming
Totally Disabled, no Revenue Growth RSUs will be awarded to the Participant, except as
provided in Section 4(e) below. If, before the Determination Date, the Participant’s status
as a Participant under this Agreement is terminated by the Company without Cause, or due to
death or becoming Totally Disabled, the Participant will be awarded a number of vested
Revenue Growth RSUs, determined as follows: (A) the Company shall determine the number of
Revenue Growth RSUs that would have been awarded to the Participant as a percentage of the
Target Revenue Growth RSU Amount, based on the Company’s Revenue Growth as of his employment
termination measured against the Revenue

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Growth of the Peer Group Companies on that date, according to the metrics of Section
4(a) above, then (B) the Company shall multiply that number by a fraction, the numerator of
which is the number of months of employment during the Performance Period the Participant
had completed as of the date of his employment termination and the denominator of which is
thirty-six (36). If the Participant’s status as a Participant under this Agreement
terminates on or after the Determination Date, but before the Revenue Growth RSUs have fully
vested under Section 4(d) or (e) below:

     (i) If the Participant’s employment is terminated by the Company for Cause, the
Participant will forfeit all Revenue Growth RSUs, including any Revenue Growth RSUs
that have vested under Section 4(d);

     (ii) If the Participant terminates employment due to death or becoming Totally
Disabled, the Participant will vest in any Revenue Growth RSUs that have not vested
under Section 4(d) or (e), and on a date within thirty (30) days of the employment
termination, determined by the Committee or Board, as applicable, the Company will
distribute Shares to the Participant equal to the full number of Revenue Growth RSUs
that were awarded to the Participant, regardless of whether or not the Participant
had elected to defer under Section 4(f) below;

     (iii) If the Participant’s employment is terminated other than (A) due to death
or becoming Totally Disabled, or (B) by the Company for Cause, the Participant will
forfeit any Revenue Growth RSUs that have not vested under Section 4(d) or (e), and
on a date within thirty (30) days of the employment termination, determined by the
Committee or Board, as applicable, the Company will distribute Shares to the
Participant equal to the number of Revenue Growth RSUs that already have vested,
regardless of whether or not the Participant had elected to defer under Section 4(f)
below.

     (d) Installment Vesting. Any Revenue Growth RSUs awarded on the Determination
Date shall vest in two installments, as follows: (i) two-thirds of the total Revenue Growth
RSUs awarded shall immediately vest on the Determination Date, and (ii) the remaining
one-third shall vest on the first anniversary of the Determination Date, in each case
provided that the Participant’s status as a Participant under this Agreement has not
terminated before the applicable vesting date.

     (e) Change in Control. In the event of a Change of Control before the
Determination Date for Revenue Growth RSUs, the Committee shall determine, in its sole
discretion, whether to award none, some or all of the Target Revenue Growth RSU Amount to
the Participant under this Agreement and whether to accelerate the vesting of those Revenue
Growth RSUs it so awards; provided that, in no event shall the Participant be awarded a
number of vested Revenue Growth RSUs that is less than the number determined as follows:
(A) the Company shall determine the number of Revenue Growth RSUs that would have been
awarded to the Participant as a percentage of the Target Revenue Growth RSU Amount, based on
the Company’s Revenue Growth as of the date of the Change in Control measured against the
Revenue Growth of the Peer Group Companies on that date, according to the metrics of Section
4(a) above, then (B) the Company shall multiply that number by a fraction, the numerator of
which is the number

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of months of employment during the Performance Period the Participant had completed as
of the date of the Change in Control and the denominator of which is thirty-six (36). In
the event of a Change of Control on or after the Determination Date, but before the Revenue
Growth RSUs awarded to the Participant, if any, have fully vested under Sections 4(c) or
(d), if the Participant’s status as a Participant under this Agreement has not terminated
before the effective date of the Change in Control, the Revenue Growth RSUs awarded to the
Participant will fully vest on a date before the effective date of the Change in Control,
determined by the Committee or Board, as applicable, unless (i) the Company is the surviving
entity and any adjustments necessary to preserve the value of the Participant’s outstanding
Revenue Growth RSUs have been made, or (ii) the Company’s successor at the time of the
Change in Control irrevocably assumes the Company’s obligations under the Plan and this
Agreement or replaces the Participant’s outstanding Revenue Growth RSUs with an award of
equal or greater value and having terms and conditions no less favorable to the Participant
than those applicable to the Participant’s Revenue Growth RSUs immediately prior to the
Change in Control; provided, that, if the Participant’s status as a
Participant under this Agreement has not terminated before the effective date of the Change
in Control and the Participant’s Revenue Growth RSUs do not become fully vested upon the
Change of Control because of the foregoing provisions of this paragraph (e), the
Participant’s Revenue Growth RSUs nonetheless will become fully vested if, within two years
after the effective date of the Change of Control, the Company or its successor terminates
the Participant’s employment other than for Cause or the Participant terminates his
employment for Good Reason (as defined below). If the Participant terminates employment
following a Change in Control due to death or becoming Totally Disabled, the Participant
will vest in any Revenue Growth RSUs that have not previously vested.

     (f) Deferral of Share Distribution. The Participant may elect to defer the
receipt of Shares beyond the vesting date of the underlying Revenue Growth RSUs in Section
4(d) above, by written election on the Company’s then-current Deferral Election Form, filed
no earlier than the Determination Date and no later than thirty (30) days after the
Determination Date for the Revenue Growth RSUs. Any deferral period must be expressed as a
number of whole years, not less than five (5) or more than ten (10), beginning on the
Determination Date. Any such deferral election shall apply to the receipt of all Shares
underlying the Revenue Growth RSUs under this Agreement; for example, a deferral period of
seven (7) years would result in the Participant receiving all Shares underlying the vested
Revenue Growth RSUs seven (7) years from the Determination Date regardless of the fact that
the Revenue Growth RSUs under this Agreement may have vested at differing times. If a
Participant elects a deferral period but thereafter the Participant’s status as a
Participant terminates after the Revenue Growth RSUs vest but before the elected deferral
period expires, then, subject to the forfeiture provisions of Sections 7 and 10,
distribution of the Participant’s Shares underlying the Revenue Growth RSUs will occur
within thirty (30) days after the date the Participant’s status as such terminates. If a
Participant elects a deferral period but thereafter a Change in Control occurs after the
Revenue Growth RSUs vest but before the elected deferral period expires, then, subject to
the forfeiture provisions of Sections 7 and 10, distribution of the Participant’s Shares
underlying the Revenue Growth RSUs will occur on a date to

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be determined by the Committee or the Board, as applicable, immediately prior to the
effective time of the Change in Control.

     5. TSR Performance RSUs. For purposes of this Agreement, the Committee approved a
Target TSR Performance RSU Amount of _____________ RSUs. After the completion of the Performance
Period the Committee shall award the Participant a number of RSUs of between zero and up to 150% of
the Target TSR Performance RSU Amount (“TSR Performance RSUs”), on the Determination Date (as
defined below).

     (a) TSR Performance Measurement. During the Performance Period, the Company’s
TSR performance will be measured against the TSR performance of the Peer Group Companies.
As soon as practicable after the Peer Group Companies have reported their TSR performance
for the Performance Period, the Committee shall compare the Company’s TSR performance for
the Performance Period with that of the Peer Group Companies. The Peer Group Companies will
be ranked by TSR performance, and then divided into four quartiles. The Committee will
evaluate the Company’s TSR performance in light of those rankings and shall approve the
issuance to the Participant a number of TSR performance RSUs determined as follows:

     (i) if the Company’s TSR performance places it in the fourth (lowest) quartile
of the Peer Group Companies, no RSUs will be awarded;

     (ii) if the Company’s TSR performance places it in the third quartile of the
Peer Group Companies, then a number of RSUs equal to 50% of the Target TSR
Performance RSU Amount will be awarded;

     (iii) if the Company’s TSR performance places it in the second quartile of the
Peer Group Companies, then a number of RSUs equal to 100% of the Target TSR
Performance RSU Amount will be awarded; and

     (iv) if the Company’s TSR performance places it in the first (highest) quartile
of the Peer Group Companies, then a number of RSUs equal to 150% of the Target TSR
Performance RSU Amount will be awarded.

     (b) Determination Date. Any TSR Performance RSU awards made as a result of the
Company’s TSR performance will be made on the Determination Date, subject to the terms and
conditions of the Plan and this Agreement, including the vesting schedule set forth in
Section 5(d) below, provided that the Participant’s status as a Participant under this
Agreement has not terminated before the Determination Date.

     (c) Employment Termination. If the Participant’s status as a Participant under
this Agreement terminates for any reason before the Determination Date, other than the
Participant’s (i) termination by the Company without Cause, (ii) death, or (iii) becoming
Totally Disabled, no TSR Performance RSUs will be awarded to the Participant, except as
provided in Section 5(e) below. If, before the Determination Date, the Participant’s status
as a Participant under this Agreement is terminated by the Company without Cause, or due to
death or becoming Totally Disabled, the Participant will be awarded a number of vested TSR
Performance RSUs, determined as follows: (A) the Company shall determine the number of RSUs
that would have been awarded to the Participant as a

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percentage of the Target TSR Performance RSU Amount, based on the Company’s TSR
Performance as of his employment termination measured against the TSR Performance of the
Peer Group Companies on that date, according to the metrics of Section 5(a) above, then (B)
the Company shall multiply that number by a fraction, the numerator of which is the number
of months of employment during the Performance Period the Participant had completed as of
the date of his employment termination and the denominator of which is thirty-six (36). If
the Participant’s status as a Participant under this Agreement terminates on or after the
Determination Date, but before the TSR Performance RSUs have fully vested under Section 5(d)
or (e) below:

     (i) If the Participant’s employment is terminated by the Company for Cause, the
Participant will forfeit all TSR Performance RSUs, including any TSR Performance
RSUs that have vested under Section 5(d);

     (ii) If the Participant terminates employment due to death or becoming Totally
Disabled, the Participant will vest in any TSR Performance RSUs that have not vested
under Section 5(d) or (e), and on a date within thirty (30) days of the employment
termination, determined by the Committee or Board, as applicable, the Company will
distribute Shares to the Participant equal to the full number of TSR Performance
RSUs that were awarded to the Participant, regardless of whether or not the
Participant had elected to defer under Section 5(f) below;

     (iii) If the Participant’s employment is terminated other than (A) due to death
or becoming Totally Disabled, or (B) by the Company for Cause, the Participant will
forfeit any TSR Performance RSUs that have not vested under Section 5(d) or (e), and
on a date within thirty (30) days of the employment termination, determined by the
Committee or Board, as applicable, the Company will distribute Shares to the
Participant equal to the number of TSR Performance RSUs that already have vested,
regardless of whether or not the Participant had elected to defer under Section 5(f)
below.

     (d) Installment Vesting. Any TSR Performance RSUs awarded on the Determination
Date shall vest in two installments, as follows: (i) two-thirds of the total TSR
Performance RSUs awarded shall immediately vest on the Determination Date, and (ii) the
remaining one-third shall vest on the first anniversary of the Determination Date, in each
case, provided that the Participant’s status as a Participant under this Agreement has not
terminated before the applicable vesting date.

     (e) Change in Control. In the event of a Change of Control before the
Determination Date for TSR Performance RSUs, the Committee shall determine, in its sole
discretion, whether to award none, some or all of the Target TSR Performance RSU Amount to
the Participant under this Agreement, and whether to accelerate the vesting of those TSR
Performance RSUs it so awards; provide that, in no event shall the Participant be awarded a
number of vested TSR Performance RSUs that is less than the number determined as follows:
(A) the Company shall determine the number of TSR Performance RSUs that would have been
awarded to the Participant as a percentage of the Target TSR Performance RSU Amount, based
on the Company’s TSR Performance as

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of the date of the Change in Control measured against the TSR Performance of the Peer
Group Companies on that date, according to the metrics of Section 5(a) above, then (B) the
Company shall multiply that number by a fraction, the numerator of which is the number of
months of employment during the Performance Period the Participant had completed as of the
date of the Change in Control and the denominator of which is thirty-six (36). In the event
of a Change of Control on or after the Determination Date, but before the TSR Performance
RSUs awarded to the Participant, if any, have fully vested under Sections 5(c) or (d), if
the Participant’s status as a Participant under this Agreement has not terminated before the
effective date of the Change in Control, the TSR Performance RSUs awarded to the Participant
will fully vest on a date before the effective date of the Change in Control, determined by
the Committee or Board, as applicable, unless (i) the Company is the surviving entity and
any adjustments necessary to preserve the value of the Participant’s outstanding TSR
Performance RSUs have been made, or (ii) the Company’s successor at the time of the Change
in Control irrevocably assumes the Company’s obligations under the Plan and this Agreement
or replaces the Participant’s outstanding TSR Performance RSUs with an award of equal or
greater value and having terms and conditions no less favorable to the Participant than
those applicable to the Participant’s TSR Performance RSUs immediately prior to the Change
in Control; provided, that, if the Participant’s status as a Participant
under this Agreement has not terminated before the effective date of the Change in Control
and the Participant’s TSR Performance RSUs do not become fully vested upon the Change of
Control because of the foregoing provisions of this paragraph (e), the Participant’s TSR
Performance RSUs nonetheless will become fully vested if, within two years after the
effective date of the Change of Control, the Company or its successor terminates the
Participant’s employment other than for Cause or the Participant terminates his employment
for Good Reason. If the Participant terminates employment following a Change in Control due
to death or becoming Totally Disabled, the Participant will vest in any TSR Performance RSUs
that have not previously vested.

     (f) Deferral of Share Distribution. The Participant may elect to defer the
receipt of Shares beyond the vesting date of the underlying TSR Performance RSUs in Section
5(d) above, by written election on the Company’s then-current Deferral Election Form, filed
no earlier than the Determination Date and no later than thirty (30) days after the
Determination Date for the TSR Performance RSUs. Any deferral period must be expressed as a
number of whole years, not less than five (5) or more than ten (10), beginning on the
Determination Date. Any such deferral election shall apply to the receipt of all Shares
underlying the TSR Performance RSUs under this Agreement; for example, a deferral period of
seven (7) years would result in the Participant receiving all Shares underlying the vested
TSR Performance RSUs seven (7) years from the Determination Date regardless of the fact that
the TSR Performance RSUs under this Agreement may have vested at differing times. If a
Participant elects a deferral period but thereafter the Participant’s status as a
Participant terminates after the TSR Performance RSUs vest but before the elected deferral
period expires, then, subject to the forfeiture provisions of Sections 7 and 10,
distribution of the Participant’s Shares underlying the TSR Performance RSUs will occur
within thirty (30) days after the date the Participant’s status as such terminates. If a
Participant elects a deferral period but thereafter a Change in Control occurs after the TSR
Performance RSUs vest but before

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the elected deferral period expires, then, subject to the forfeiture provisions of
Sections 7 and 10, distribution of the Participant’s Shares underlying the TSR Performance
RSUs will occur on a date to be determined by the Committee or the Board, as applicable,
immediately prior to the effective time of the Change in Control.

     6. Distribution of Shares. As soon as practicable after the Participant’s
Distribution Date, the Company may either (i) issue to the Participant or the Participant’s
personal representative a Share certificate, (ii) deposit Shares with an online broker or other
service provider contracted by the Company for such purpose, or (iii) handle such Shares according
to the terms of a Change in Control, subject to Sections 7 and 10 below, but each such issuance
subject to compliance to the satisfaction of the Committee with all requirements under applicable
laws or regulations in connection with such issuance, and with the requirements hereof and of the
Plan. Until Shares have been issued to the Participant under this Section, the Participant shall
not have any rights as a holder of the Shares underlying any component of this Executive
Performance RSU Award including but not limited to voting rights or dividends, if and when the
Company declares same.

     7. Adjustment of Executive Performance RSU Award. In the event that the Company or
one or more of the Peer Group Companies is required to prepare an accounting restatement due to the
material noncompliance with any financial reporting requirement under the federal securities laws
the Committee, in good faith and subject to its sole discretion, may reduce or increase the number
of RSUs awarded to the Participant under this Agreement to reflect the number of RSUs that would
have been awarded to the Participant under the accounting restatement. At all times and regardless
of the date of adoption any RSU target amounts established, RSUs awarded and Shares distributed
under this Agreement shall be subject to any compensation recovery policy adopted by the Company to
comply with applicable law or to comport with good corporate governances practices as determined by
the Committee in its sole discretion, as such policy may be amended from time to time. The
Company’s remedies and rights under this Section 7 shall be in addition to any other remedies or
rights that the Company shall have, and any penalties or restrictions that may apply, under state
or federal law, or any employment or other agreement.

     8. Changes in Capital or Corporate Structure. In the event of any change in the
outstanding shares of common stock of the Company by reason of a recapitalization,
reclassification, reorganization, stock split, reverse stock split, combination of shares, stock
dividend or similar transaction the Committee or Board, as applicable, shall proportionately
adjust, in a manner deemed equitable by the Committee or Board, as applicable, in its sole
discretion, the number of RSUs held by the Participant under this Agreement, in accordance with the
Plan.

     9. Nontransferability. A Participant’s rights under this Agreement, RSUs awarded
under this Agreement and any rights and privileges pertaining to either of them, may not be
transferred, assigned, pledged or hypothecated in any manner, by operation of law or otherwise,
other than by will or by the laws of descent and distribution, and shall not be subject to
execution, attachment or similar process.

     10. Non-Competition and Non-Solicitation Restrictive Covenants. In order to protect
the Confidential Information (as defined below), customer relationships, and other legitimate

10

 

business interests of the Company, during the Participant’s status as such under this
Agreement and for twelve (12) months following the termination of his or her status as a
Participant under this Agreement (e.g., termination of employment with the Company) the Participant
will not, directly or indirectly, as an employee, agent, member, director, partner, consultant or
contractor or in any other individual or representative capacity: (a) solicit any Protected
Individual (as defined below) for other employment or engagement, induce or attempt to induce any
Protected Individual to terminate his or her employment, hire or engage any Protected Individual,
or otherwise interfere or attempt to interfere in any way in the relationship between the Company
and such Protected Individual; or (b) solicit or provide competitive products or services to any
Customer (as defined below) or Prospective Customer (as defined below) or otherwise interfere or
attempt to interfere in any way in the relationship between the Company and any Customer or
Prospective Customer. Because the Company’s business is global in scope, the Participant
understands and agrees that these restrictions apply worldwide.

     The Participant agrees that in the event of a breach or threatened breach of any of the
covenants contained in this Section 10, in addition to any other penalties or restrictions that may
apply under any employment agreement, state law, or otherwise the Participant shall forfeit, upon
written notice to such effect from the Company: (i) any rights to receive an Executive Performance
RSU Award under this Agreement, (ii) any and all RSUs awarded to him or her under the Plan and this
Agreement, including vested RSUs or Shares; (iii) any Shares acquired under this Award, and (iv)
any profit the Participant has realized on the vesting or sale of any Shares acquired under this
Award, which the Participant may be required to repay to the Company). The forfeiture provisions
of this Section 10 shall continue to apply, in accordance with their terms, after the provisions of
any employment or other agreement between the Company and the Participant have lapsed. The
Participant consents and agrees that if the Participant violates or threatens to violate any
provisions of this Section 10, the Company or its successors in interest shall be entitled, in
addition to any other remedies that they may have, including money damages, to an injunction to be
issued by a court of competent jurisdiction restraining the Participant from committing or
continuing any violation of this Section 10. In the event that the Participant is found to have
breached any provision set forth in this Section 10 or elsewhere in this Agreement, the time period
provided for in that provision shall be deemed tolled (i.e., it will not begin to run) for so long
as the Participant was in violation of that provision.

     11. Binding Effect. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators, successors and permitted
assigns.

     12. Tax Consequences and Withholding. Nothing contained herein shall be construed as
a promise, guarantee, or other representation by the Company of any particular tax effect nor shall
the Company be liable for any taxes, penalties, or other amounts incurred by the Participant. The
Company may withhold from any Shares that it is required to deliver under this Agreement the number
of Shares sufficient to satisfy applicable withholding requirements under any applicable federal,
state, local or foreign law, rule or regulation if any. The Participant acknowledges that he/she
has had sufficient opportunity to review with his/her own tax advisors the federal, state, local,
and foreign tax consequences of the transactions contemplated by this Agreement. The Participant
acknowledges he/she must rely solely on such advisors and not on

11

 

any statement or representations of the Company or any of its agents. The Participant
understands that he/she (and not the Company) shall be responsible for any tax liability that may
arise as a result of the transactions contemplated by the Agreement.

     13. No Limitation on the Company’s Rights. The awarding of RSUs shall not in any way
affect the Company’s right or power to make adjustments, reclassifications or changes in its
capital or business structure or to merge, consolidate, reincorporate, dissolve, liquidate or sell
or transfer all or any part of its business or assets. The terms and provisions of this Agreement
that provide for the Participant to forfeit Executive Performance RSUs in the event of a
termination for Cause, shall be in addition to any other remedies or rights that the Company shall
have, and any penalties or restrictions that may apply, under state or federal law, or any
employment or other agreement.

     14. Plan and Agreement Not a Contract of Employment or Service. Neither the Plan nor
this Agreement is a contract of employment or service, and no terms of the Participant’s employment
or service will be affected in any way by the Plan, this Agreement or related instruments, except
to the extent specifically expressed therein. Neither the Plan nor this Agreement will be
construed as conferring any legal rights to the Participant to continue in the employment or
service with the Company or any subsidiary or affiliate thereof.

     15. Entire Agreement and Amendment. This Agreement is the entire Agreement between
the parties to it, and all prior oral and written representations are merged in this Agreement.
This Agreement may be amended, modified or terminated only by written agreement between the
Participant and the Company, provided, that the Company may amend this Agreement without further
action by the Participant if such amendment is deemed by the Company to be advisable or necessary
to comply with Code Section 409A. The headings in this Agreement are inserted for convenience and
identification only and are not intended to describe, interpret, define or limit the scope, extent,
or intent of this Agreement or any provision hereof. Each party has cooperated in the preparation
of this Agreement. As a result, this Agreement shall not be construed against any party on the
basis that the party was the draftsperson.

     16. Notices. Notices given pursuant to this Agreement shall be in writing and shall
be deemed received when personally delivered, or on the date of written confirmation of receipt by
(i) overnight carrier, (ii) facsimile, (iii) registered or certified mail, return receipt
requested, addressee only, postage prepaid, or (iv) such other method of delivery that provides a
written confirmation of delivery. Notice to the Company shall be directed to:

Fuel Tech, Inc.

27601 Bella Vista Parkway

Warrenville, Illinois 60555

Attention: Equity Administration Department, Attn: Assistant Controller

The Company may change the person and/or address to which the Participant must give notice under
this Section 16 by giving the Participant written notice of such change, in accordance with the
procedures described above. Notices to or with respect to the Participant will be directed to the
Participant, or to the Participant’s executors, personal representatives or distributees, if the
Participant is deceased, or the assignees of the Participant, at the Participant’s most recent home
address on the records of the Company.

12

 

     17. Compliance with Laws. No certificate for Shares distributable pursuant to the
Plan or this Agreement shall be issued and delivered unless the issuance of such certificate
complies with all applicable legal requirements including, without limitation, compliance with the
provisions of applicable state securities laws, the Securities Act of 1933, as amended from time to
time or any successor statute, the Exchange Act and the requirements of the exchanges on which
Shares may, at the time, be listed, and the provisions of any foreign securities laws or the rules
of foreign securities exchanges, where applicable.

     18. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of the Agreement shall in no way be construed to be a waiver of such provision
or of any other provision hereof.

     19. Incorporation of the Plan. The Plan, as it exists on the date of the Agreement
and as amended from time to time, is hereby incorporated by reference and made a part hereof, and
the Executive Performance RSU Award and the Agreement shall be subject to all terms and conditions
of the Plan. In the event of any conflict between the provisions of the Agreement and the
provisions of the Plan, the terms of the Plan shall control, except as expressly stated otherwise.

     20. Governing Law. The laws of the State of New York shall govern the validity,
interpretation, construction, and performance of this Agreement, without regard to the conflict of
laws principles thereof. Any dispute concerning the interpretation or effect of this Agreement or
of the Plan or the rights of the Participant under the Agreement (other than the Company’s right to
seek an injunction under Section 10 above) shall be resolved according to the arbitration rules
under Section 14.5 of the Plan.

     21. Code Section 409A. It is intended that this Agreement and the Plan be designed
and operated within the requirements of Code Section 409A (including any applicable exemptions)
and, in the event of any inconsistency between any provision of the Plan or this Agreement and
Section 409A, the provisions of Section 409A shall control. Any provision in the Plan or Agreement
that is determined to violate the requirements of Section 409A shall be void and without effect.
Any provision that is required by Section 409A to appear in the Plan or Agreement that is not
expressly set forth therein shall be deemed to be set forth therein, and the Plan shall be
administered in all respects as if such provision was expressly set forth herein. Any reference in
the Plan or Agreement to Section 409A or a Treasury Regulation Section shall be deemed to include
any similar or successor provisions thereto.

     (a) The Executive Performance RSU Award including each component RSU Award part thereof
is intended to be exempt from Code Section 409A under the short-term deferral exception set
forth in Code Section or, in the alternative, to comply with the requirements of Section
409A.

     (b) Notwithstanding anything in the Plan or Agreement to the contrary, if the
Participant should become subject to the 6-month delay rule of Treasury Regulation Section
1.409A-1(c)(3)(v), then to the extent that the Executive Performance RSU award, in whole or
in part, is subject to Section 409A and the Participant is a Specified Employee (as defined
below) as of the date of Separation from Service (as defined below), distributions with
respect to any RSUs that have been deferred may not be made

13

 

before the date that is six (6) months after the date of Separation from Service or, if
earlier, the date of the Participant’s death.

     22. Counterparts. This Agreement may be executed in one or more counterparts, all of
which together shall constitute but one Agreement.

     23. Definitions. Where used in this Agreement, the following capitalized terms shall
have the following meanings:

     (a) “Cause” shall have the meaning set forth in any employment, consulting, or other
written agreement between the Participant and the Company. In addition, if there is no
employment, consulting, or other written agreement between the Company and the Participant
or if such agreement does not define “Cause” to the extent provided for below then for
purposes of this Agreement, “Cause” both thereunder and under this Agreement shall mean, as
determined by the Committee in its sole judgment, conviction of the Participant under, or a
plea of guilty by the Participant to any state or federal felony charge (or the equivalent
thereof outside of the United States); any instance of fraud, embezzlement, self-dealing,
insider trading or similar malfeasance with respect to the Company or its affiliates
regardless of amount; substance or alcohol abuse; or other conduct for which dismissal has
been identified in the Company’s Code of Business Ethics and Conduct or the applicable
Employee Handbook of the Company or its affiliates, or any successor manual, as a potential
disciplinary measure.

     In addition, the Participant’s employment or service shall be deemed to have terminated
for Cause if, after the Participant’s employment or service has terminated, facts and
circumstances are discovered that would have justified a termination for Cause. For
purposes of this Plan, no act or failure to act on the Participant’s part shall be
considered “willful” unless it is done, or omitted to be done, by him or her in bad faith or
without reasonable belief that his or her action or omission was in the best interests of
the Company.

     (b) “Confidential Information” means any information (whether or not specifically
labeled or identified as “confidential”), in any form or medium, that is disclosed to,
developed, or learned by the Participant during his/her status as a Participant, that
relates to the business, services, techniques, know-how, processes, methods, formulations,
investments, finances, operations, plans, research or development of the Company, and that
is not generally known outside of the Company. Confidential Information includes, but is
not limited to: the identity and information concerning the needs and preferences of
current, former, and prospective customers; performance, compensation, and other personnel
data concerning employees of the Company; business plans and strategies; plans for
recruiting and hiring new personnel; trade secrets; and pricing strategies and policies.
Confidential Information does not include the general skills, knowledge, and experience
gained during the Participant’s status as a Participant and common to others in the industry
or information that is or becomes publicly available without any breach by the Participant
of this Agreement. the Participant agrees that at all times both during this Agreement and
after his/her status as a Participant under this Agreement terminates, the Participant will
not, without the Company’s express written permission, use Confidential Information for the
Participant’s own benefit or the benefit

14

 

of any other person or entity or disclose Confidential Information to any person other
than (i) in the case of disclosures made while the Participant maintained his/her status as
such hereunder, to persons to whom disclosure is required in connection with the performance
of the Participant’s duties for the Company or (ii) any disclosure requested by a court or
regulatory authority with jurisdiction over the subject matter, in which event the
Participant agrees promptly to notify the Company in advance of and cooperate with the
Company in any efforts to suppress or limit such disclosure.

     (c) “Customer” means any Person (as defined below) who or which is or was a customer of
the Company and with whom the Participant had business contact during his or her tenure as a
Participant hereunder or about whom the Participant received Confidential Information;
provided that a former customer will only be considered a “Customer” for twelve (12) months
after the last date on which the Company provided products or services (including, without
limitation, marketing services, as determined by the Company in its sole discretion) to such
Person.

     (d) “Determination Date” means the actual date on which the Company awards RSUs to the
Participant under this Agreement after completion of the applicable Performance Period.

     (e) “Distribution Date” means the date on which the Shares represented by vested RSUs
shall be deemed to be distributed to the Participant, which is the date on which a RSU
vests; provided that, the Distribution Date for a Participant who elects to defer the
distribution of his or her Shares beyond the date on which the applicable RSU vests will be
the earliest of (i) the date the Participant’s status as a Participant under this Agreement
terminates, or (ii) the end of the deferral period specified by the Participant.
Additionally, if the Participant elects to defer the distribution of his Shares beyond the
date on which the applicable RSUs vests, but a Change in Control occurs after the applicable
RSUs vest, but before the elected deferral period expires, then, subject to the forfeiture
provisions of Sections 7 and 10, the Participant’s Distribution Date will occur on a date to
be determined by the Committee or Board, as applicable, immediately prior to the effective
time of the Change in Control.

     (f) “Good Reason” shall have the meaning set forth in any employment, consulting, or
other written agreement between the Participant and the Company and, if there is no
employment, consulting, or other written agreement between the Company and the Participant
or if such agreement does not define “Good Reason” then for purposes of this Agreement,
“Good Reason” shall mean the occurrence of any of the following, without the Participant’s
prior written consent:

     (i) Any material diminution in the Participant’s assigned duties,
responsibilities and/or authority;

     (ii) Any material reduction in the Participant’s base compensation;

     (iii) The Company requires the Participant to be based at a location that is
more than thirty-five (35) miles further from the Participant’s residence than the
location of the Participant’s principal job location or office immediately prior to

15

 

the Change in Control (except for required travel on Company’s business to an
extent substantially consistent with the Participant’s then present business travel
obligations); or

     (iv) Any other action or inaction that constitutes a material breach by the
Company of any agreement under which the Participant provides services to the
Company.

     Notwithstanding the foregoing, Good Reason shall not exist unless the Participant gives
the Company written notice thereof within sixty (60) days after its occurrence and the
Company shall not have remedied the action or omission within thirty (30) days after such
written notice.

     (g) “Peer Group Companies” means, as of the first day of the Performance Period, the
following companies:

	 	 	 

	A123 Systems

	 	FuelCell Energy
	Active Power

	 	Met-Pro
	American Superconductor

	 	Peerless Manufacturing
	Amerigon

	 	Plug Power
	Ballard Power Systems

	 	Power Integrations
	Capstone Turbine

	 	Quantum Fuel Systems
	Clean Energy Fuels

	 	RenTech
	Energy Conversion Devices

	 	Syntroleum
	Evergreen Solar

	 	Fuel Systems Solutions

     During the Performance Period, the Committee shall review the companies in the Peer
Group Companies and the Committee may remove any company from the category of Peer Group
Companies if the Committee determines, in good faith and subject to its sole discretion,
that such company should no longer be part of the Peer Group Companies due to merger,
acquisition, disposition, change in ownership, growth, contraction, or any other event or
circumstance affecting the Company or one of the Peer Group Companies, which the Committee
determines, in good faith and subject to its sole discretion, is appropriate.

     (h) “Performance Period” means, for the Look-Back RSUs, the 2011 calendar year, and for
the Revenue Growth RSUs and the TSR Performance RSUs, the two-year period commencing January
1, 2011 and ending December 31, 2012.

     (i) “Person” means an individual or any type of business entity.

     (j) “Prospective Customer” means any Person, other than a Customer, toward whom or
which the Company directed specific and material business development efforts, such as, but
not limited to, a detailed proposal or bid, and with whom the Participant had business
contact during his or her tenure as a Participant hereunder or about whom the Participant
received Confidential Information; provided that such Person will only be considered a
“Prospective Customer” for twelve (12) months after the last date on which such efforts were
undertaken by the Company.

16

 

     (k) “Protected Individual” means an individual who is or was an employee, consultant or
advisor of the Company and with whom the Participant had business contact at any time during
the Participant’s employment or other retention by the Company or about whom the Participant
received Confidential Information ; provided that such a former employee, consultant or
advisor will only be considered a “Protected Individual” for six (6) months after the last
date he or she was employed by or provided services to the Company.

     (l) “Restricted Stock Unit” or “RSU” means a notional account established pursuant to
an Award granted to a Participant under this Agreement, which is (i) valued solely by
reference to Shares, (ii) subject to restrictions specified in the Agreement, and (iii)
payable only in Shares.

     (m) “Revenue Growth” means, with respect to the Company and each of the Peer Group
Companies, the Revenue Growth reported on Form 10-K for the Company and each of the Peer
Group Companies, respectively, coinciding with the Performance Period.

     (n) “Separation from Service” shall have the meaning given in Code Section 409A, and
references to termination of employment shall be deemed to refer to a Separation from
Service. In accordance with Treasury Regulation §1.409A-1(h)(1)(ii) (or any similar or
successor provisions), a Separation from Service shall be deemed to occur, without
limitation, if the Company and the Participant reasonably anticipate that the level of bona
fide services the Participant will perform after a certain date (whether as an employee or
as an independent contractor) will permanently decrease to less than fifty percent (50%) of
the average level of bona fide services provided in the immediately preceding thirty-six
(36) months. All references in this Agreement to “termination of employment” or “employment
termination” or “termination of status as a Participant under this Agreement” shall be
deemed to refer to a Separation from Service.

     (o) “Specified Employee” has the meaning given to that term in Code Section 409A and
Treasury Regulation §1.409A-1(i) (or any similar or successor provisions).

     (p) “Total Shareholder Return” or “TSR” means, with respect to the Company and each of
the Peer Group Companies, the reporting company’s total return to stockholders per share of
stock as reported on Form 10-K for the Company and each of the Peer Group Companies,
respectively, coinciding with the Performance Period.

     In Witness Whereof, the parties have executed this Agreement effective as of the
Effective Date.

	 	 	 	 	 	 	 	 	 

	 	 	 	 	Fuel Tech, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	
 

            
                  Participant

	 	 	 	
Its:
	 	
 

	 	 
	 

	 	 	 	
	 	
 

	 	 

17

 

Exhibit A

to

2011 Executive Performance RSU Award Agreement

Equity Award Factors

     The determination and approval of proposed equity awards by the Company’s Compensation and
Nominating Committee are based on a variety of factors that may include:

	 	•	 	historical equity awards, by employee, by year;
	 
	 	•	 	intrinsic values for each equity award, or, when applicable, the fair value of each
equity award using the Black-Scholes option pricing model;
	 
	 	•	 	the number of equity award units available for issuance under the Plan;
	 
	 	•	 	supervisor recommendations for employee equity awards;
	 
	 	•	 	the estimate of expected intrinsic value (e.g., equity award compensation expense) of
the aggregate equity award;
	 
	 	•	 	Fuel Tech’s financial performance in light of market conditions and operational
considerations, which may be quantitative, qualitative or both;
	 
	 	•	 	achievement of individual or company operational objectives;
	 
	 	•	 	exceptional and innovative individual performance;
	 
	 	•	 	individual contribution to a strategic goal;
	 
	 	•	 	teamwork;
	 
	 	•	 	leadership accomplishments; and
	 
	 	•	 	employee job level

18

 

EXECUTIVE PERFORMANCE RSU DEFERRAL ELECTION FORM

This Executive Performance RSU Deferral Election Form (“Deferral Election Form”) is entered into by
and between Fuel Tech, Inc. (the “Company”) and _________________ ( “the Participant” or “you”),
who became eligible to receive an award of Look-Back RSUs, Revenue Growth RSUs and/or TSR
Performance RSUs under the Fuel Tech, Inc. Incentive Plan, as amended (the “Plan”) and a 2011
Executive Performance RSU Award Agreement (the “Agreement”), which Agreement was legally effective
_____________, 2011. The provisions of the Plan and the Agreement are incorporated herein by
reference in their entirety and supersede any conflicting provisions contained in this Deferral
Election Form. Neither this Deferral Election Form nor the Plan or the Agreement shall be
construed as giving the Participant any right to continue to be employed by or perform services for
the Company or any subsidiary or affiliate thereof.

1. Deferral of RSUs

You may file a separate deferral election with respect to each form of RSUs you may be awarded
under the Agreement; that is, a deferral election for any Look-Back RSUs, a deferral election for
any Revenue Growth RSUs, and/or a deferral election for any TSR Performance RSUs.

Any deferral period must be expressed as a number of whole years, not less than five (5) or more
than ten (10), beginning on the Determination Date.

Deferral election must be made no earlier than the Determination Date for the form of RSUs involved
and no later than thirty (30) days after the Determination Date applicable to the form a RSUs you
are electing to defer.

Any such deferral must apply to receipt of all Shares underlying that form of RSU award; for
example, if you were to elect a deferral period of seven (7) years for any Revenue Growth RSUs,
this would result in you receiving Shares underlying the entire Revenue Growth RSUs award seven (7)
years from the Determination Date regardless of the fact that the Revenue Growth RSUs may have
vested at differing times.

If no deferral period is specified on the Deferral Election Form or if the Company does not receive
from you, a signed and dated Deferral Election Form within the required election period applicable
to any form of RSUs, Shares underlying those RSUs will be issued as described in the Agreement as
soon as practicable upon vesting of the RSUs.

	 	o	 	 No deferral. I wish to receive Shares upon vesting of each installment of RSUs.
	 
	 	o	 	 I wish to defer receipt of all Shares underlying any Look-Back RSUs until ____
years (minimum of 5) after the Determination Date.
	 
	 	o	 	I wish to defer receipt of all Shares underlying any Revenue Growth RSUs until
____ years (minimum of 5) after the Determination Date.
	 
	 	o	 	 I wish to defer receipt of all Shares underlying any TSR Performance RSUs until
____ years (minimum of 5) after the Determination Date.

2. Deferral Election Effective Date, Revision of Election During Election Period

This Deferral Election Form must be received by the Company no later than thirty (30) days after
the Determination Date applicable to the form a RSUs you are electing to defer and will become
irrevocable on such date. You may revise this Deferral Election with respect to the deferral
period no later than this due date, by contacting the Company’s Equity Administration Department,
Attn: Assistant Controller in writing in accordance with the Notice provision set forth in Section
16 of the Agreement.

	 	 	 	 	 

	 

                          
             Participant

	 	 
	 	Date:                                        , 201           

19exv10w2

EXHIBIT 10.2

FORM OF STRATEGIC ALLIANCE AGREEMENT

     This Strategic Alliance Agreement (“Agreement”) is made on ___________ ___, 2011 by
and between Provident Mortgage Capital Associates, Inc., a Maryland corporation (“PMCA” and
together with its subsidiaries, the “Company”), and Provident Funding Associates, L.P., a
California limited partnership (“Provident”):

     WHEREAS, PMCA has filed a registration statement on Form S-11 with the Securities and Exchange
Commission pursuant to which PMCA intends to conduct a public offering of shares of the Company’s
common stock (the “IPO”);

     WHEREAS, upon completion of the IPO, the Company will be externally managed and advised by PMF
Advisors, LLC, a Delaware limited liability company (the “Manager”) and wholly-owned
subsidiary of Provident;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

     1. Defined Terms. Capitalized words and phrases used in this Agreement shall have the
meanings set forth below unless defined elsewhere herein:

          (a) “Acceptance Notice” has the meaning set forth in Section 2(a)(ii)

          (b) “Acceptance Period” has the meaning set forth in Section 2(a)(ii).

          (c) “Affiliate” of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common control with such
specified Person. For the purposes of this definition, “control”, when used with respect to any
Person, means the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise; and the
terms “controlling” and “controlled” have meanings correlative to the foregoing; provided that
beneficial ownership of 10% or more of the capital stock of a Person entitled to vote in the
election of the board of directors or other governing body of such Person shall be deemed to be
control.

          (d) “Agreement” has the meaning set forth in the recitals.

          (e) “Business Day” means any day that is not a Saturday or a Sunday and excludes any
day on which banking institutions are authorized or required by law or executive order to be closed
in the States of New York or California.

          (f) “Company” has the meaning set forth in the recitals.

          (g) “Independent Directors” means the members of the board of directors of the Company
who are not officers or employees of the Manager or any Person directly or indirectly controlling
or controlled by the Manager and who are otherwise “independent” in accordance with the Company’s
articles of incorporation, bylaws and corporate governance guidelines and, if applicable, the rules
of any national securities exchange on which the Company’s common stock is listed.

 - 1 - 

 

          (h) “IPO” has the meaning set forth in the recitals.

          (i) “Manager” has the meaning set forth in the recitals.

          (j) “Master Agreements” has the meaning set forth in Section 2(a)(ii).

          (k) “Master Loan Purchase and Sale Agreement” means the master loan purchase and sale
agreement substantially in the form attached hereto as Exhibit A.

          (l) “Master Security Sales Agreement” means the master security sales agreement
substantially in the form attached hereto as Exhibit B.

          (m) “Offer Notice” has the meaning set forth in Section 2(a)(i).

          (n) “Offered Asset” has the meaning set forth in Section 2(a).

          (o) “Person” means any individual, corporation, partnership, joint venture, limited
liability company, estate, trust, unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.

          (p) “PMCA” has the meaning set forth in the recitals.

          (q) “Pricing Information” has the meaning set forth in Section 2(a).

          (r) “Provident” has the meaning set forth in the recitals.

          (s) “Qualifying Asset” means any loan or residential mortgage-backed security
originated or owned by Provident for itself or for any Related Entity.

          (t) “Rejection Notice” has the meaning set forth in Section 2(a)(ii).

          (u) “Related Entity” means any Affiliate of Provident, including Provident Mortgage
Trust Inc. and Colorado Federal Savings Bank, and any other fund, investment vehicle or other
entity that is sponsored, managed or advised by Provident, in each case, other than the Company and
for so long as such entity remains an Affiliate of Provident.

          (v) “Right of First Offer” has the meaning set forth in Section 2.

          (w) “ROFO Period” has the meaning set forth in Section 2(a).

          (x) “ROFO Price” has the meaning set forth in Section 2(a)(i).

          (y) “Servicing Purchase Price” has the meaning set forth in Section 5(b).

          (z) “Servicing Rights Purchase Agreement” has the meaning set forth in Section
5(b).

          (aa) “Sub-servicing Agreement” has the meaning set forth in Section 4(b).

 - 2 - 

 

     2. Right of First Offer on Qualifying Assets. Except as set forth in Section
3, prior to (x) the sale by Provident of any Qualifying Asset during the term of this
Agreement, the Company shall have a first right to purchase the Qualifying Asset before any such
Qualifying Asset is offered for sale to a Related Entity or (y) the purchase by Provident of any
Qualifying Asset from a Related Entity during the term of this Agreement, the Company shall have
been afforded a first right to purchase such Qualifying Asset prior to Provident purchasing such
Qualifying Asset, in each case in accordance with the terms and conditions set forth below (the
“Right of First Offer”).

          (a) If the Right of First Offer provided under this Section 2 shall apply with respect
to a particular asset, Provident shall provide the Company with written notice (the “Initial
Notice”) stating: (x) Provident’s bona fide intention to sell or purchase any Qualifying Asset
(the “Offered Asset”); (y) to the extent available, information relating to any bids
received or bids available on Bloomberg Professional, Tradeweb Markets LLC’s Tradeweb platform, or
a similar service relating to such Offered Asset and any other bid information from two or more
unaffiliated third parties (the “Pricing Information”), as well as any other bid
information from a third party, and (z) the terms, if any, upon which it proposes to offer or has
been offered such Offered Asset. The Company shall then have the right, for a period of one full
Business Day after the Company’s receipt of the Initial Notice (the “ROFO Period”), to
offer to purchase the Offered Asset in accordance with the following provisions:

               (i) The Company may offer to purchase the Offered Asset described in the Initial Notice by
giving Provident written notice (the “Offer Notice”) of that election prior to the end of
the ROFO Period, which shall contain the Company’s proposed purchase price and/or other
consideration for the Offered Asset (the “ROFO Price”), which ROFO Price may be subject to
adjustment in accordance with Section 2(b) hereof. The Company’s failure to respond in
writing to the Initial Notice prior to the end of the ROFO Period shall constitute the Company’s
election not to exercise its right to offer to purchase the Offered Asset.

               (ii) In the event that the Company timely delivers the Offer Notice to Provident, Provident
may elect to accept or reject the Company’s ROFO Price by giving the Company written notice (an
“Acceptance Notice” or a “Rejection Notice,” as the case may be) of that election
within one full Business Day of the date of the Offer Notice (the “Acceptance Period”).
Provident’s failure to respond in writing to the Offer Notice within the Acceptance Period shall be
deemed to constitute delivery by Provident to the Company of a Rejection Notice. If Provident
accepts the ROFO Price in a timely Acceptance Notice, Provident and the Company shall enter into,
(A) for any Offered Asset that is a loan, a loan trade confirmation substantially in the form
attached to the Master Loan Purchase and Sale Agreement, or (B) for any Offered Asset that is a
residential mortgage-backed security, a security trade confirmation substantially in the form
attached to the Master Security Sales Agreement (the Master Security Sales Agreement, together with
the Master Loan Purchase and Sale Agreement, the “Master Agreements”), which Master
Agreements and related trade confirmations may be modified from time to time by the parties in
accordance with current industry practice.

               (iii) If (A) the Company fails to respond to the Initial Notice within the ROFO Period or
otherwise elects not to offer to purchase the Offered Asset or (B) Provident rejects the Company’s
ROFO Price in a Rejection Notice or otherwise fails to respond to the Offer Notice within the
Acceptance Period, Provident may, during the one full Business Day period following the end of the
ROFO Period or the Acceptance Period, as applicable, offer and sell or acquire, as the case may be,
the Offered Asset to or from, as the case may be, (x) any Related Entity, for an amount greater
than the ROFO Price, and upon terms no more favorable in any material respect to such Related
Entity than, those specified in the Offer Notice, or (y) any Person that is not a Related Entity,
for an amount and on such terms as it may determine in its sole discretion. If Provident does not
enter into an agreement for the sale of the Offered Asset within such one full Business Day period,
the Right of First Offer provided under

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this Section 2 shall apply and such Offered Asset shall not be offered to or acquired
from any Related Person, as the case may be, unless first re-offered to the Company in accordance
with this Agreement and the Right of First Offer contained herein.

          (b) To the extent that Pricing Information for an Offered Asset is not available, the ROFO
Price shall be adjusted to equal the fair market value of the Offered Asset, which shall be
determined by a single independent third party. The independent third party shall be selected from
a pool of at least three independent third parties selected from time to time by a majority of the
Independent Directors, subject to Provident’s reasonable consent, and no single independent third
party shall determine the fair market value of an Offered Asset more than three times in a row.
The determination of fair market value by the selected independent third party shall be performed
either prior to or following completion of the subject transaction. To the extent that fair market
value is determined by an independent third party prior to the completion of the subject
transaction, the ROFO Price shall be adjusted to reflect the fair market value as determined by the
third party. To the extent that fair market value is determined by the independent third party
following completion of any subject transaction, such third party shall complete the determination
of fair market value within 30 calendar days following the completion of the fiscal quarter in
which the transaction was consummated. To the extent that the independent third party determines
that the ROFO Price paid by the Company to Provident during the prior fiscal quarter was greater
than the fair market value of the Offered Asset purchased during such fiscal quarter, Provident
shall pay the difference in cash to the Company within five Business Days following such
determination by the independent third party. To the extent that the independent third party
determines that the ROFO Price paid by the Company to Provident was less than the fair market value
of the Offered Asset purchased during such quarter, the Company shall pay the difference in cash to
Provident within five Business Days following such determination by the independent third party.

     3. Right of First Offer Limitations/No Obligation to Purchase. Notwithstanding any
provision to the contrary contained herein, the Right of First Offer shall not apply (a) to any
sale by Provident of any Qualifying Asset to any Person that is not a Related Entity, (b) to a
Qualifying Asset held by a Related Entity, which Related Entity is a financing or securitization
vehicle, to the extent that exercise of the Right of First Offer would violate such financing or
securitization vehicle’s related documentation and (c) if it is in violation of any applicable law.
In addition, notwithstanding any provision to the contrary contained herein, the Company shall be
under no obligation to purchase any Qualifying Asset from Provident, and nothing herein shall be
deemed to restrict the Company’s ability to purchase Qualifying Assets and other assets from
sources other than Provident.

     4. Mortgage Loan Sub-servicing.

          (a) During the term of this Agreement, Provident shall have the right to act as mortgage loan
sub-servicer with respect to any loan that the Company purchases from Provident or any other Person
on a servicing-released basis; provided, that the Company shall have the right to engage an
alternative mortgage loan sub-servicer for a specific portfolio of loans based on a determination
by a majority of the Independent Directors that the initial appointment of Provident as mortgage
loan sub-servicer for such portfolio will be materially adverse to the Company or its business,
such as when such appointment is prohibited by contractual, regulatory or other legal limitations
applicable to the specific loan portfolio or may be otherwise prohibited by law, rule or
regulation.

          (b) In the event that Provident exercises its right to act as sub-servicer with respect to a
loan as provided in Section 4(a), the Company and Provident shall enter into a
sub-servicing agreement substantially in the form attached hereto as Exhibit C (each, a
“Sub-servicing Agreement”), which Sub-servicing Agreements may be modified from time to
time by the parties in accordance with current industry practice. The compensation payable by the
Company to Provident for acting as sub-servicer and

 - 4 - 

 

other terms and conditions of the sub-servicing for the loan shall be set forth in the
Sub-servicing Agreement. Such compensation and the other terms and conditions will be reviewed and
approved by a majority of the Independent Directors on an annual basis.

     5. Mortgage Loan Servicing

          (a) To the extent that the Company seeks to sell the servicing on a loan, Provident shall have
a right of first offer to purchase the servicing on such loan before the loan and its servicing is
offered for sale to a third party.

          (b) In the event that Provident exercises its right to purchase the servicing on a loan as
provided in Section 5(a), the Company and Provident shall enter into a servicing rights
purchase agreement substantially in the form attached hereto as Exhibit D (the
“Servicing Rights Purchase Agreement”), which Servicing Rights Purchase Agreement may be
modified from time to time by the parties in accordance with current industry practice. The
purchase price (the “Servicing Purchase Price”) and other terms and conditions of the
purchase and sale of such servicing rights shall be set forth in the Servicing Rights Purchase
Agreement for each such purchase and sale.

          (c) The Servicing Purchase Price shall be adjusted to equal the fair market value of the
servicing rights, which shall be determined by a single independent third party. The independent
third party shall be selected from a pool of at least three independent third parties selected from
time to time by a majority of the Independent Directors, subject to Provident’s reasonable consent,
and no single independent third party shall determine the fair market value of the servicing rights
more than three times in a row. The determination of fair market value by the selected independent
third party shall be performed either prior to or following completion of the subject transaction.
To the extent that fair market value is determined by an independent third party prior to the
completion of the subject transaction, the Servicing Purchase Price shall be adjusted to reflect
the fair market value as determined by the third party. To the extent that fair market value is
determined by the independent third party following completion of the subject transaction, such
third party shall complete the determination of fair market value within 30 calendar days following
the completion of the fiscal quarter in which the transaction was consummated. To the extent that
the independent third party determines that the Servicing Purchase Price paid by the Company to
Provident during the prior fiscal quarter was greater than the fair market value of the servicing
rights purchased during such fiscal quarter, Provident shall pay the difference in cash to the
Company within five Business Days following such determination by the independent third party. To
the extent that the independent third party determines that the Servicing Purchase Price paid by
the Company to Provident during the prior fiscal quarter was less than the fair market value of the
servicing rights purchased during such quarter, the Company shall pay the difference in cash to
Provident within five Business Days following such determination by the independent third party.

     6. Term; Termination.

          (a) Unless terminated earlier in accordance with the terms hereof, the term of this Agreement
shall be for the longer of (x) three years, or (y) the date that is 12 months following the date on
which the Manager or an affiliate of the Manager is no longer serving as the Company’s manager.

          (b) The Company or Provident shall have the right to terminate this Agreement if the
non-terminating party materially breaches any provision of this Agreement and such breach shall
continue for a period of 30 calendar days after written notice thereof specifying such breach and
requesting that the same be remedied within such 30-calendar day period (or 45 calendar days after
written notice of such breach if the non-terminating party takes steps to cure such breach within
30 calendar days of the written

 - 5 - 

 

notice). Following termination of this Agreement, the parties shall have no further
obligations or liabilities hereunder except for obligations and liabilities accrued prior to such
termination.

     7. Assignment. This Agreement may not be assigned by either party hereto, in whole or
in part, whether directly or indirectly by merger, consolidation or other transfer of a party’s
assets substantially or as an entirety, without the prior written consent of the other party.

     8. Notices. Unless expressly provided otherwise in this Agreement, all notices,
requests, demands and other communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made and received when delivered against
receipt or upon actual receipt of (i) personal delivery, (ii) delivery by reputable overnight
courier, (iii) delivery by facsimile transmission with telephonic confirmation or (iv) delivery by
registered or certified mail, postage prepaid, return receipt requested, addressed as set forth
below:

	 	(a)	 	If to the Company:
	 
	 	 	 	Provident Mortgage Capital Associates, Inc.

1633 Bayshore Highway, Suite 331

Burlingame, CA 94010

Attention: Chief Investment Officer

Facsimile: (855) 653-4301
	 
	 	(b)	 	If to Provident:
	 
	 	 	 	Provident Funding Associates, Inc.

1633 Bayshore Highway, Suite 155

Burlingame, CA 94010

Attention: Chief Financial Officer

Facsimile: (650) 652-1350

     Either party may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this Section 8 for
the giving of notice.

     9. Independent Third Parties. To the extent that an independent third party is used
to determine the fair market value of an Offered Asset or servicing rights pursuant to Section
2(b) or Section 5(c), any fee associated with the independent third party’s
determination of fair market value shall be borne equally by the Company and Provident.

     10. Binding Nature of Agreement; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns as provided in this Agreement.

     11. Entire Agreement. This Agreement contains the entire agreement and understanding
among the parties hereto with respect to the subject matter of this Agreement, and supersedes all
prior and contemporaneous agreements, understandings, inducements and conditions, express or
implied, oral or written, of any nature whatsoever with respect to the subject matter of this
Agreement. The express terms of this Agreement control and supersede any course of performance
and/or usage of the trade inconsistent with any of the terms of this Agreement. This Agreement may
not be modified or amended other than by an agreement in writing signed by the parties hereto.

 - 6 - 

 

     12. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES TO THE CONTRARY.

     13. No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of any party hereto, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. No
waiver of any provision hereunder shall be effective unless it is in writing and is signed by the
party asserted to have granted such waiver.

     14. Specific Performance. In the event of a breach by any party to this Agreement of
its obligations under this Agreement, any party injured by such breach, in addition to being
entitled to exercise all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The parties agree that the provisions of
this Agreement shall be specifically enforceable, it being agreed by the parties that the remedy at
law, including monetary damages, for breach of such provision will be inadequate compensation for
any loss and that any defense in any action for specific performance that a remedy at law would be
adequate is waived. In the event of any breach of this Agreement by any party hereto, each such
breaching party agrees to indemnify the persons to whom a representation and warranty is given or
an obligation is owed under this Agreement for all damages, costs and expenses (including
reasonable attorneys’ fees) actually incurred as a result of any such breach.

     15. Headings. The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed part of this Agreement.

     16. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original as against any party whose signature appears thereon,
and all of which shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts of this Agreement, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the signatories.

     17. Severability. Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.

     18. Gender. Words used herein regardless of the number and gender specifically used,
shall be deemed and construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context requires.

[Signatures begin on the following page]

 - 7 - 

 

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

	 	 	 	 	 	 	 

	 	 	PROVIDENT MORTGAGE CAPITAL ASSOCIATES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	PROVIDENT FUNDING ASSOCIATES, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

 - 8 - 

 

Exhibit A

FORM OF MASTER LOAN PURCHASE AND SALE AGREEMENT

- Exh. A-1 -

  

 

FORM OF MORTGAGE LOAN

PURCHASE AND SALE AGREEMENT

          THIS MORTGAGE LOAN PURCHASE AND SALE AGREEMENT (this “Agreement”) is made this _____ day of
_________________, 20__, by and between Provident Mortgage Capital Associates, Inc., a Maryland
corporation (“Purchaser”), and __________, a _________ (“Seller”).

     WHEREAS, Seller wishes to sell and Purchaser wishes to purchase, from time to time
certain Mortgage Loans (as defined below) identified in a Purchase Confirmation (as defined
below) executed by Seller and Purchaser.

     WHEREAS, in connection with the purchase and sale of the Mortgage Loans, Seller is willing
to assign all of its rights, duties and obligations with respect to the Mortgage Loans.
Purchaser is willing to assume all of Seller’s rights, duties and obligations with respect to
the Mortgage Loans.

     WHEREAS, Seller and Purchaser wish to provide for the terms and conditions relating to the
sale by Seller, and purchase by Purchaser, of Mortgage Loans.

          NOW THEREFORE, IN CONSIDERATION OF THE MUTUAL BENEFITS ACCRUING TO THE PARTIES HERETO AND
OTHER VALUABLE CONSIDERATION THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE
PARTIES HERETO DECLARE, UNDERSTAND AND AGREE TO THE FOLLOWING TERMS.

	 	I.	 	DEFINITIONS

	 	1.01	 	For purposes of this Agreement the following capitalized terms shall have the
respective meanings set forth below. Capitalized terms used in this Section
1.01, but not immediately defined, are defined elsewhere in this Section
1.01.
	 
	 	 	 	Agency: Fannie Mae and/or Freddie Mac.
	 
	 	 	 	Agreement: This Mortgage Loan Purchase and Sale Agreement, including all exhibits,
schedules amendments and supplements hereto.
	 
	 	 	 	Appraised Value: With respect to any Mortgaged Property, the lesser of (i) the value
thereof as determined by an appraisal made for the originator of the related
Mortgage Loan at the time of origination of such Mortgage Loan by an appraiser who
meets the minimum Agency appraisal requirements, or (ii) the purchase price (plus
added value of documented improvements) of such Mortgaged Property by the Mortgagor
at the time of origination of such Mortgage Loan.
	 
	 	 	 	Assignment of Mortgage: An individual assignment of a Mortgage, notice of transfer
or equivalent instrument in recordable form sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to give record notice
of the sale of the related Mortgage Loan to Purchaser.
	 
	 	 	 	Business Day: Any day other than a Saturday, a Sunday, or a day on which banks in
the United States are authorized or obligated by federal law or executive order to
be closed.

1

 

	 	 	 	Condemnation Proceeds: All awards, compensation and settlements relating to a taking
of all or part of a Mortgaged Property by exercise of the power of condemnation or
the right of eminent domain.
	 
	 	 	 	Cut-off Date: With respect to each sale and purchase of a Mortgage Loan Package as
contemplated hereunder, the date upon which the receipt of payments, accrual of
interest and other charges shall cease for the benefit of Seller and shall begin for
the benefit of Purchaser.
	 
	 	 	 	Dodd-Frank: The Dodd-Frank Wall Street Reform and Consumer Protection Act, as
amended.
	 
	 	 	 	Due Date: The day of the month on which a Monthly Payment is due on a Mortgage Loan,
exclusive of any grace days.
	 
	 	 	 	Fannie Mae: Federal National Mortgage Association or any successor thereto.
	 
	 	 	 	Freddie Mac: Federal Home Loan Mortgage Corporation or any successor thereto.
	 
	 	 	 	HUD: The United States Department of Housing and Urban Development or any successor
thereto.
	 
	 	 	 	Impound/Escrow Payments: The amounts constituting ground rents, taxes, assessments,
water charges, sewer rents, fire, wind, hazard and flood insurance premiums, and
other payments required to be impounded or escrowed by the Mortgagor with the
Mortgagee pursuant to the terms of any Mortgage Note or Mortgage.
	 
	 	 	 	Insurance Proceeds: With respect to each Mortgage Loan, proceeds of insurance
policies insuring the related Mortgaged Property.
	 
	 	 	 	Investor: An entity to whom Purchaser sells a Mortgage Loan or any other entity who
subsequently purchases such Mortgage Loan.
	 
	 	 	 	Liquidation Proceeds: Amounts, other than Insurance Proceeds and Condemnation
Proceeds, received in connection with the liquidation of a defaulted Mortgage Loan
through trustee’s sale, foreclosure sale or otherwise, other than amounts received
following the acquisition of REO Property.
	 
	 	 	 	Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan as of any date of
determination, the lesser of the ratio on such date of: (i) the outstanding
principal amount of such Mortgage Loan to the Appraised Value of the related
Mortgaged Property, or (ii) the outstanding principal amount of such Mortgage Loan
to the sales price of such Mortgaged Property, if such a sale occurred at
origination of such Mortgage Loan.
	 
	 	 	 	Makewhole Amount: An amount calculated pursuant to Section 6.07 herein, to
satisfy a Makewhole Demand under Section 6.01 or any other provision of this
Agreement.
	 
	 	 	 	Makewhole Demand: A demand by an Investor or Purchaser to be made whole in
connection with a loss sustained in connection with a Mortgage Loan following REO
Disposition.
	 
	 	 	 	MERS: The Mortgage Electronic Registration System, Inc., a corporation organized and
existing under the laws of the State of Delaware, or any successor thereto.

2

 

	 	 	 	MERS Mortgage Loan: Any Mortgage Loan registered with MERS on the MERS System.
	 
	 	 	 	MERS System: The system of recording transfers of mortgages electronically
maintained by MERS.
	 
	 	 	 	Monthly Payment: With respect to each Mortgage Loan, the scheduled combined payment
of principal, interest, and Impound/Escrow Payments payable by the Mortgagor under
the related Mortgage Note on the applicable Due Date.
	 
	 	 	 	Mortgage: The mortgage, deed of trust or other instrument creating a first lien on
Mortgaged Property securing the related Mortgage Note.
	 
	 	 	 	Mortgage File: With respect to each Mortgage Loan, the file, which may be physical,
electronic or both, containing the documents pertaining to the origination and/or
servicing of such Mortgage Loan, including, without limitation, the following:

(1) A fully completed loan application signed by the applicable Borrower(s);

(2) The original Mortgage Note evidencing the Mortgage Loan and signed by the
applicable Borrower(s);

(3) An original of the Mortgage signed the applicable Borrower(s) and containing a
recorders stamp or other evidence that the Mortgage has been recorded, together with
the original of any modification(s) of such Mortgage;

(4) An appraisal report signed by an appraiser who is licensed or certified by the
state in which the Mortgaged Property is located, or an other signed report of
certification of valuation;

(5) A copy of written credit report covering each Borrower dated no earlier than
sixty days prior to the date of the closing of the applicable Mortgage Loan (unless
accompanied by an updated credit report dated no earlier than sixty days prior to
the date of the closing of the Mortgage Loan);

(6) A policy of title insurance insuring the validity and first lien priority of the
applicable Mortgage with a liability limit of at least the amount of the related
Mortgage Note;

(7) A written record of the payment of applicable taxes, assessments and hazard
insurance premiums payment;

(8) Evidence that the Mortgaged Property is covered by a hazard insurance policy in
an amount representing coverage at least equal to the outstanding principal balance
or the full insurable value of the improvements, whichever is less, which covers
such perils as are commonly covered in policies described as “Standard Fire and
Extended Coverage,” as well as other perils as to which institutional lenders
operating in the same area commonly require hazard insurance and which provides that
Seller’s hazard insurance is not invalidated by acts of the Borrower;

(9) With respect to Mortgaged Property determined to be located in a flood zone,
evidence that such Mortgaged Property is covered by flood insurance policy in
accordance with the requirements of the Flood Disaster Protection Act of 1973, as
amended, and all implementing regulations thereof;

3

 

(10) Written acknowledgment from each Borrower that such Borrower has received all
disclosures required by law and regulations, including, without limitation, all
disclosures required under the Truth in Lending Act, Federal Reserve Bank Regulation
Z (“Regulation Z”) and the Real Estate Settlement Procedure Act (“RESPA”);

(11) With respect to Mortgage Loans subject to the recission provisions under
Regulation Z, written acknowledgment from each Borrower that such Borrower has been
given the requisite right of recission notice; and

(12) All other documents executed or prepared in connection with the applicable
Mortgage Loan and all records required to be maintained for such Mortgage Loan under
applicable law and regulations.

Mortgage Loan: A mortgage loan which is the subject of a Trade Confirmation and
which is sold, assigned and transferred to Purchaser pursuant to this Agreement,
including, without limitation, the related Mortgage File, the Monthly Payments, all
prepayments of principal and/or interest, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition proceeds, and all other rights,
benefits, proceeds and obligations arising from or in connection with such Mortgage
Loan.

Mortgage Loan Documents: The “Mortgage Loan Note” (as defined below), the Mortgage
and any other documents executed by or on behalf of a Borrower in connection with a
Mortgage Loan.

Mortgage Loan Package: A group of Mortgage Loans sold by Seller to Purchaser
pursuant to this Agreement, a Trade Confirmation and Purchase Confirmation.

Mortgage Loan Schedule: The list of Mortgage Loans and information relating thereto
attached to each Purchase Continuation that may be entered into by Seller and
Purchaser, which schedule shall include, as of the Cut-off Date, the Purchase Price
and such other information for each Mortgage Loan as is mutually agreed upon from
time to time between Purchaser and Seller.

Mortgage Note: The original executed promissory note or other evidence of the
Mortgage Loan indebtedness of a Mortgagor.

Mortgaged Property: The Mortgagor’s real property securing repayment of a related
Mortgage Note, consisting of a fee simple interest in real property improved by a
Residential Dwelling.

Mortgagee: The mortgagee or beneficiary named in the Mortgage and the successors and
assigns of such mortgagee or beneficiary.

Mortgagor: The obligor on a Mortgage Note, the owner of the related Mortgaged
Property and the grantor or mortgagor named in the related Mortgage, and such
grantor’s or mortgagor’s successors in title to the Mortgaged Property.

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

Premium: The portion of the Purchase Price attributable to the principal balance of
a Mortgage Loan, which portion exceeds par. Par is expressed as 100%. Accordingly,
if the amount paid for the principal balance of such Mortgage Loan is 101.125%, the
Premium would equal 1.125% of such principal balance.

4

 

Private Mortgage Insurance Policy: The policy of private mortgage guaranty insurance
(including all endorsements thereto) issued with respect to a Mortgage Loan, or any
replacement policy that meets the current published Agency guidelines.

Private Mortgage Insurer: The named insurer under any Private Mortgage Insurance
Policy.

Purchase Confirmation: Those certain purchase confirmations executed by Seller and
Purchaser in connection with the purchase and sale of a Mortgage Loan Package, which
set forth the terms relating thereto including a description of the related Mortgage
Loans (including the Mortgage Loan Schedule), the Purchase Prices for such Mortgage
Loans, the Closing Date and the Cut-off Date.

Purchase Date: The date on which Purchaser purchases a Mortgage Loan Package and
pays the aggregate Purchase Price for such Mortgage Loans, as set forth in the
related Trade Confirmation.

Purchase Price: The net amount paid for a Mortgage Loan Package on the applicable
Purchase Date by Purchaser to Seller, as calculated in accordance with or as set
forth in the related Trade Confirmation.

Purchase Proceeds: The purchase proceeds to be paid by Purchaser for a Mortgage
Loan, as set forth in a Purchase Confirmation.

Purchased Principal Balance: As to each Mortgage Loan, the original principal amount
of such Mortgage Loan minus all payments of principal received with respect to such
Mortgage Loan on or before the Cut-Off Date for such Mortgage Loan.

REO Disposition: The final sale by Purchaser of any REO Property.

REO Property: A Mortgaged Property acquired as a result of the liquidation of a
Mortgage Loan.

Repurchase Demand: A demand by an Investor or Purchaser to repurchase a Mortgage
Loan.

Residential Dwelling: Any one of the following: (i) a detached one-family dwelling,
(ii) a detached two-to-four-family dwelling, (iii) an attached single family
dwelling, or (iv) certain approved attached two-to-four-family dwellings.

RESPA: The Real Estate Settlement Procedures Act, 12 U.S.C. § 2601—2617.

SRP: Service Release Premium. The SRP, if any, specified on the applicable Lock
Confirmation.

Securities Act: The Securities Act of 1933, as amended.

Securities and Exchange Act: The Securities and Exchange Act of 1934, as amended.

Servicing Transfer Date: With respect to each Mortgage Loan, the date or dates set
forth in the related Trade Confirmation (or as otherwise agreed in writing by
Purchaser and Seller) upon which the actual transfer of servicing responsibilities
for any Mortgage Loan subject to such Trade Confirmation is transferred from Seller
to Purchaser or its designee.

5

 

Stated Principal Balance: The unpaid principal balance of a Mortgage Loan as of the
Cut-off Date.

Trade Confirmation: A letter agreement executed by Seller and Purchaser prior to the
applicable Closing Date confirming the terms of a prospective purchase and sale of
Mortgage Loans.

VA: The Veterans Administration, or any successor thereto.

	 	II.	 	PURCHASE AND SALE OF MORTGAGE LOANS

	 	2.01	 	Agreement to Sell and Transfer the Mortgage Loans. On each Closing Date related
to a Mortgage Loan Package, Seller does hereby agree to sell, convey, transfer and
assign to Purchaser all right, title and interest in and to the Mortgage Loans, the
Mortgage Loan Documents, and the Mortgage Files relating to the Mortgage Loans in the
Mortgage Loan Package specified in the related Trade Confirmation, all in accordance
with the terms and conditions set forth herein.
	 
	 	2.02	 	Payment of the Purchase Proceeds. On each Closing Date with respect to a
Mortgage Loan Package, Purchaser shall pay to Seller the Purchase Proceeds, less any
applicable deductions, by wire transfer in immediately available Federal funds to the
account designated by Seller. Purchaser shall pay to Seller a purchase price as agreed
in the related Purchase Confirmation. The amount of the Purchase Proceeds is subject
to Section 5(c) of the Strategic Alliance Agreement, dated as of _________, 2011,
between the Purchaser and Provident Funding Associates, L.P., on behalf of itself and
any affiliates.
	 
	 	2.03	 	Closing Conditions. Purchaser’s obligation to pay the Purchase Price and
Seller’s transfer and sale of a Mortgage Loan Package pursuant to a Trade Confirmation
shall be subject to the full satisfaction of each and all of the following conditions:

(1) Seller and Purchaser shall have executed and delivered to the other an original
counterpart of this Agreement.

(2) Seller and Purchaser each shall have performed in all material respects all of
their respective covenants and agreements contained herein which are required to be
performed on or prior to each Closing Date;

(3) All of Sellers and Purchaser’s representations and warranties contained in this
Agreement shall be true and correct in all material respects as of each applicable
Closing Date and no event shall have occurred which, with notice or the passage of
time, would constitute a default under this Agreement;

(4) Seller shall have provided all the information required on the Mortgage Loan
Schedule as to each Mortgage Loan in such Mortgage Loan Package which shall include,
without limitation, the Stated Principal Balance of each such Mortgage Loan;

(5) Seller shall have provided an executed Purchase Confirmation relating to the
Closing;

(6) Seller shall have promptly reported the sale of the Mortgage Loans through
Mortgage Electronic Registrations Systems, Inc. (“MERS”);

6

 

(7) Seller shall prepare and deliver as directed by Purchaser an original Assignment
of Mortgage in blank.

	 	2.04	 	Pre-Purchase Review and Deadlines:

	 	A.	 	Purchaser may, in its sole discretion, review a Mortgage Loan in a
Mortgage Loan Package prior to purchase from Seller. Any review by Purchaser is
limited in scope and is done for Purchaser’s sole benefit, and in agreeing to
purchase a Mortgage Loan Purchaser is relying on the representations and warranties
of Seller regarding the Mortgage Loan. Seller acknowledges and agrees that
Purchaser would not have entered into this Agreement absent Seller’s
representations and warranties set forth herein, including those relating to
Mortgage Loans.
	 
	 	B.	 	If a Mortgage File is not submitted to Purchaser by the related
[Closing Date] for any reason whatsoever, Purchaser shall have no obligation to
purchase the related Mortgage Loan. In the event that Purchaser reviews a Mortgage
Loan and identifies any deficiencies (which, if discovered after the applicable
[Closing Date], would constitute a breach of a representation, warranty or covenant
by Seller under this Agreement), Purchaser may in its sole discretion elect to
provide written notice to Seller explaining any such deficiencies and a description
of any and all conditions (the “Conditions”) that must be satisfied to cure any
such deficiencies. Seller will have until the Business Day immediately preceding
the [Closing Date] to remedy all such Conditions. If all such Conditions are
satisfactorily remedied, Purchaser, in its sole discretion, may elect to purchase
such Mortgage Loan in accordance with the terms of this Agreement.
	 
	 	C.	 	Seller acknowledges that in order for a Mortgage Loan to be eligible
for purchase by Purchaser hereunder, Seller must have satisfied all of the terms of
this Agreement (including, without limitation, any Conditions) by no later than the
Business Day immediately preceding the applicable Purchase Date (as identified in
the applicable Lock Confirmation).

	 	2.05	 	Documents, Schedules and Exhibits Required On or Prior to the Closing Date:
Seller shall deliver to Purchaser, or as otherwise instructed by Purchaser, on or
before the Closing Date the following with respect to each Mortgage Loan in the related
Mortgage Loan Package, in such forms as are agreed upon and reasonably acceptable to
Purchaser:

(1) The original of each Mortgage Note, endorsed by Seller payable to the order of
Purchaser or in other form acceptable to Purchaser;

(2) The original Security Instrument or a certified copy thereof;

(3) An Assignment of Mortgage in favor of Purchaser with respect to each Mortgage,
each in recordable form, and any other documents required to effectively transfer to
Purchaser all of Seller’s rights under the assigned Mortgage; and

(4) A completed Mortgage Loan Schedule containing all of the information with
respect to each Mortgage Loan.

	 	2.06	 	Books and Records: The sale of each Mortgage Loan hereunder shall be reflected
on Seller’s balance sheet and other financial statements as a sale of assets by Seller.
Seller shall be responsible for maintaining, and shall maintain, a complete set of
books and records for each Mortgage Loan which shall be clearly marked to reflect the
ownership (after the applicable Purchase Date) of such Mortgage Loan by Provident
Mortgage Capital Associates, Inc., for so long as is required by applicable law.

7

 

	 	2.07	 	Property Tax Payments: For each Mortgage Loan which is sold pursuant to this
Agreement, it shall be Seller’s responsibility to see that all property taxes on the
related Mortgaged Property which are due and payable prior to, or within thirty (30)
days after, the applicable Purchase Date are paid in full. Within ten (10) Business
Days after the Purchase Date, Seller shall prepare and forward to Purchaser a statement
showing the next property tax payment due date for each Mortgage Loan purchased by
Purchaser hereunder. All applicable property tax receipts relating to such Mortgaged
Property are to be promptly forwarded to Purchaser by Seller upon receipt. All new
property tax bills relating to such Mortgaged Property received by Seller and which
Seller is not obligated to pay pursuant to the foregoing provisions shall be promptly
forwarded to Purchaser to permit the payment thereof prior to the applicable penalty
date.
	 
	 	2.08	 	Hazard and Flood Insurance Payments: For each Mortgage Loan which is sold
pursuant to this Agreement, it shall be Seller’s responsibility to see that all hazard
and flood insurance premiums for insurance required with respect to such Mortgage Loan
which are due and payable prior to, or within thirty (30) days after, the applicable
Purchase Date are paid in full. Within ten (10) Business Days after the Purchase Date,
Seller shall prepare and forward to Purchaser a statement showing the next hazard and
flood insurance payment due date for each Mortgage Loan purchased by Purchaser
hereunder. All applicable hazard and flood insurance receipts relating to such
Mortgaged Property are to be promptly forwarded to Purchaser by Seller upon receipt.
All new insurance premium bills relating to such Mortgage Loan received by Seller and
which Seller is not obligated to pay pursuant to the foregoing provisions shall be
promptly forwarded to Purchaser to permit the payment thereof prior to the applicable
penalty date.
	 
	 	2.09	 	Ownership of Mortgage Loan:

	 	A.	 	Upon the purchase of a Mortgage Loan hereunder by Purchaser, and the
receipt by Seller of the Purchase Price for the related Mortgage Loan Package, the
ownership of such Mortgage Loan shall be vested in Purchaser and the ownership of
all records and documents with respect to such Mortgage Loan prepared by or which
come into the possession of Seller shall immediately vest in Purchaser and shall be
delivered promptly by Seller to Purchaser.
	 
	 	B.	 	Seller agrees that the servicing rights for each Mortgage Loan
purchased hereunder will be transferred to Purchaser on the Servicing Transfer
Date. Seller shall be responsible to collect any payments from the applicable
borrower which are due prior to the Servicing Transfer Date.
	 
	 	C.	 	Purchaser shall own and be entitled to receive: (i) with respect to
each Mortgage Loan purchased by Purchaser pursuant to this Agreement, all principal
payments due, and all other recoveries of principal received, after the related
Purchase Date, and (ii) with respect to each Mortgage Loan purchased by Purchaser
hereunder, all payments or other recoveries of interest on the principal amount of
such Mortgage Loan. For the purposes of this Agreement, payments of principal and
interest on any Mortgage Loan purchased pursuant to this Agreement which constitute
prepayments of amounts received after the applicable Purchase Date shall be the
property of Purchaser, and shall be taken into account in the calculation of the
applicable Purchase Price. Seller shall remit all such prepaid amounts to Purchaser
on the related Servicing Transfer Date.

	 	2.10	 	Notices:

8

 

	 	A.	 	Seller shall notify each insurance carrier providing insurance with
respect to each Mortgage Loan or the related Mortgaged Property, including without
limitation the hazard insurance, flood insurance and mortgage insurance carriers,
of the sale of such Mortgage Loan to Purchaser, and cause each such insurance
carrier to update the loss payee, mortgagee or such other similar clauses of the
applicable insurance policies as may be specified by Purchaser, in favor of
Purchaser in a manner satisfactory to Purchaser in its sole discretion.
	 
	 	B.	 	Seller also is obligated to notify MERS, in accordance with all
applicable rules and regulations, of such sale and to comply with all servicing
transfer requirements of applicable law, including RESPA.
	 
	 	C.	 	Seller also shall give such other notices and take such other actions
as Purchaser may require from time to time in its reasonable discretion for the
purpose of effecting the transfer to Purchaser of each Mortgage Loan, together with
all rights, interests, contracts and privileges relating thereto. All such notices
and other actions will be given and performed on the Purchase Date for such
Mortgage Loan or no later than the close of business on the first Business Day
after such Purchase Date. Seller shall not give any such notice or take any such
action before such Purchase Date.

	 	III.	 	POST SETTLEMENT OBLIGATIONS

	 	3.01	 	Early Prepayment Policy: In the event that (A) Purchaser paid a Service Release
Premium in connection with the purchase of a Mortgage Loan and (B) such Mortgage Loan
is prepaid in full within ninety (90) days after the related Purchase Date, Seller
shall within ten (10) Business Days following receipt of written notice pay to
Purchaser the full amount of such Service Release Premium, as applicable; provided,
however, that Seller’s obligation to make any such payment shall not exist if the
applicable Mortgage Loan was refinanced by Purchaser.
	 
	 	3.02	 	Trailing Documents: Seller is to provide to Purchaser the following with
respect to each Mortgage Loan in a Mortgage Loan Package documents within one
hundred-eighty (180) days of the re-dated Purchase Date:

	 	•	 	Original Final Title Policy
	 
	 	•	 	Original Recorded Mortgage/Deed of Trust
	 
	 	•	 	Original Recorded Assignment (for each Mortgage Loan that is not a MERS
Mortgage Loan)
	 
	 	•	 	Final HUD-1
	 
	 	•	 	The remainder of the Mortgage File

To the following address with a cover page listing borrower name, loan number, and
document(s) included in each shipment;

Provident Mortgage Capital Associates, Inc.

1633 Bayshore Highway, Suite 331

Burlingame, CA 94010

ATTN: Trailing Documents Department

Failure to deliver the Original Final Title Policy, the Original Recorded
Mortgage/Deed of Trust, and/or the Original Recorded Assignment (for each Mortgage
Loan that is not a MERS Mortgage Loan) within the time period required will result in
an assessment of a fee

9

 

in the amount of $50.00 per document to defray Purchaser’s costs to obtain such
document(s).

	 	3.03	 	Survival of This Part: The covenants set forth in this Article III and
the rights of Purchaser under this Article III shall survive termination of
this Agreement and the sale of each Mortgage Loan to Purchaser or the subsequent sale
of the Mortgage Loan by Purchaser.

	 	IV.	 	REPRESENTATIONS AND WARRANTIES OF SELLER

To induce Purchaser to enter into this Agreement and to purchase Mortgage Loans
hereunder, Seller warrants and represents the truth and accuracy of each of the
following warranties and representations on each Purchase Date pursuant to this
Agreement.

	 	4.01	 	General Representations and Warranties of Seller

	 	A.	 	Seller is duly organized, validly existing and in good
standing under the laws of the state of its organization and each state in
which it does business; and it possesses the requisite legal power, authority
and capacity to enter into this Agreement and to consummate all of the
transactions contemplated hereby.
	 
	 	B.	 	There has been no negligence, gross negligence, misfeasance,
malfeasance or fraudulent acts by Seller or its employees, agents and
representatives as they pertain to the performance by Seller under this
Agreement, including without limitation origination, processing, funding,
closing and acquiring of Mortgage Loans purchased by Purchaser from Seller.
	 
	 	C.	 	The execution, delivery and performance of this Agreement by
Seller, and the performance of all transactions contemplated hereunder, has
been duly authorized and approved and all proceedings necessary to consummate
all of the transactions contemplated by this Agreement have been taken by
Seller and no other proceeding on the part of Seller is necessary to authorize
this Agreement or to consummate the transactions contemplated hereunder.
	 
	 	D.	 	Seller has received all necessary federal, state and local
licenses, permits, authorizations and approvals required to conduct its
business as it is presently being conducted and to perform its obligations
under this Agreement.
	 
	 	E.	 	The execution and delivery of this Agreement and the sale of
each and every Mortgage Loan hereunder, and all other transactions
contemplated hereunder (i) are taken in the ordinary course of Seller’s
business and (ii) are not and will not (A) breach, violate or cause an event
of default (or an event which would become an event of default with the lapse
of time or notice or both) under, any judgment, decree, agreement, indenture
or other instrument to which Seller is party or otherwise subject or (B)
conflict with or violate any provision of Seller’s organizational documents.
	 
	 	F.	 	The execution and delivery of this Agreement, the making,
origination or acquisition of any Mortgage Loan and/or the consummation of the
transactions contemplated by this Agreement, will not result in a violation or
infraction by Seller of any applicable federal, state or local law, rule or
regulation.
	 
	 	G.	 	This Agreement is the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.

10

 

	 	H.	 	There is, as of the date of this Agreement, no pending or, to
Seller’s knowledge, threatened litigation, adverse claim or action of any kind
or nature which, if decided against Seller, would materially and adversely
affect Seller’s ability to perform its obligations pursuant to this Agreement.
	 
	 	I.	 	Seller is not the subject of any proceeding or action under
any bankruptcy, insolvency or similar law, nor is Seller the subject of any
assignment for the benefit of creditors, conservatorship or receivership, or
insolvent.
	 
	 	J.	 	Seller has complied, and is in compliance, in all material
respects, with all laws applicable to Seller in connection with the Mortgage
Loans.
	 
	 	K.	 	Seller acknowledges that, in executing this Agreement, its
duly authorized officers had the opportunity to seek the advice of independent
legal counsel, and its board of directors or members and duly authorized
officer executing this Agreement have read and understood all of the terms and
provisions of this Agreement. This Agreement shall not be construed against
any party herein by reason of the drafting or preparation hereof.
	 
	 	L.	 	No representation or warranty of Seller contained in this
Agreement and no statement furnished by or on behalf of Seller pursuant to
this Agreement or in connection with the transactions contemplated herein
contains any untrue statement of a material fact.
	 
	 	M.	 	The sale and transfer of the Mortgage Loans by Seller to
Purchaser are not subject to the bulk transfer or similar statutory provisions
of applicable state or federal law.

	 	4.02	 	Representations and Warranties of Seller with Respect to Mortgage Loans, Notes
and Mortgage Loan Documents.

	 	A.	 	Seller has sole, full and complete title to each Mortgage
Loan in the related Mortgage Loan Package and each Mortgage Loan Document
relating thereto to be sold or transferred to Purchaser hereunder, free and
clear of all liens, claims or other interests of any other Person; and Seller
has full power and authority to sell, assign, transfer and convey the same to
Purchaser as provided herein.
	 
	 	B.	 	Each Mortgage Loan in the related Mortgage Loan Package sold
hereunder, including the related Mortgage Note, Mortgage and other Mortgage
Loan Documents, is genuine, valid, binding and enforceable and is not in
default in any respect; and is and will continue to be free from claims,
defenses, set-off and counterclaims arising because of any act or omission of
Seller.
	 
	 	C.	 	The information set forth in the Mortgage Loan Schedule, the
Trade Confirmation, the Purchase Confirmation, and each Mortgage File is
complete, true and correct with respect to the related Mortgage Loan Package.
All signatures, names, addresses, amounts and other statements of facts,
including descriptions of property, appearing on the credit application and
other Mortgage Loan Documents relating to each Mortgage Loan are true and
correct and the borrowers named thereon were of majority age, and had the
legal capacity to enter into the applicable Mortgage Loan.

11

 

	 	D.	 	The Mortgaged Property securing each Mortgage Loan in the
related Mortgage Loan Package is insured against all forms of casualty,
including without limitation fire, flood, and wind, and coverage under each
applicable insurance policy contains a lender’s loss payable endorsement
naming Seller and its successors and assigns as a loss payee and providing
Seller and its successors and assigns with coverage in the amounts required by
Agency standards.
	 
	 	E.	 	Seller acknowledges that Purchaser has relied and will rely
upon the information, records and documents contained in the Mortgage File for
each Mortgage Loan in the related Mortgage Loan Package purchased by Purchaser
hereunder, and Seller specifically warrants that each such Mortgage File
includes, without limitation, all material backup documentation, investigation
materials, and payment records in Seller’s possession and that each such
Mortgage File, and the documents, records and information contained therein is
true and correct in all material respects.
	 
	 	F.	 	With respect to each Mortgage Loan in the related Mortgage
Loan Package, at the time of its purchase by Purchaser hereunder, (i) such
Mortgage Loan is not in default nor is such Mortgage Loan delinquent more than
thirty (30) days, (ii) Seller has no knowledge of any existing, threatened or
impending disputes or litigation involving such Mortgage Loan, the borrower
thereunder or the related Mortgaged Property, and (iii) no settlement,
payment, or compromise has been made with respect thereto.
	 
	 	G.	 	All proceeds of the closing of each Mortgage Loan in the
related Mortgage Loan Package have been properly and 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 Borrower is not entitled to
any refund of any amounts paid or due under the related Mortgage Note or
Mortgage in the related Mortgage Loan Package.
	 
	 	H.	 	There are no verbal or written agreements, instruments, or
understandings with the borrower or any third party in connection with any
Mortgage Loan in the related Mortgage Loan Package purchased by Purchaser
hereunder, other than those contained in the Mortgage Loan Documents submitted
to Purchaser in accordance with the terms of this Agreement.
	 
	 	I.	 	The appraisal of each Mortgaged Property has been signed by a
qualified appraiser, duly appointed by Seller. All appraisers used by Seller
are licensed or certified in accordance with applicable state and federal law.
	 
	 	J.	 	Each Mortgage Loan in the related Mortgage Loan Package
purchased by Purchaser hereunder is in full compliance with all applicable
laws, rules and regulations, existing as of the Purchase Date, including
without limitation, the Real Estate Settlement Procedures Act, the Equal
Credit Opportunity Act, the Flood Disaster Protection Act, the
Truth-In-Lending Act, the Gramm-Leach-Bliley Privacy Act, the Patriot Act, all
regulations issued pursuant to each of the foregoing, and all laws, rules and
regulations relating to usury. Each such Mortgage Loan is in compliance with
all applicable laws, rules and regulations concerning predatory lending and
shall not be classified as “high cost,” “threshold,” “covered” or “predatory”
under any such law, rule or regulation. No such Mortgage Loan violates or is
classified as a high cost loan under, the Home Ownership and Equity Protection
Act of 1994, as amended.

12

 

	 	K.	 	There is a paid-up title insurance policy with respect to the
Mortgaged Property relating to each Mortgage Loan in effect at the time such
Mortgage Loan is purchased by Purchaser hereunder, in an amount at least equal
to the original principal balance of such Mortgage Loan. Each such policy and
the company issuing such policy must be satisfactory to Purchaser in its sole
discretion.
	 
	 	L.	 	Each Assignment of Mortgage (for each Mortgage Loan that is
not a MERS Mortgage Loan) delivered by Seller pursuant to this Agreement is
the valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms.

	 	4.03	 	Survival of This Part: The covenants set forth in this Article IV and
the rights of Purchaser under this Article IV shall survive termination of this
Agreement and the sale of each Mortgage Loan to Purchaser or the subsequent sale of the
Mortgage Loan by Purchaser. Seller further agrees that Seller’s representations and
warranties shall inure, together with the right to enforce any remedies against Seller
in connection with the breach of any such representations and warranties, to the
benefit of Purchaser and its successors, assigns and any subsequent holder of the
Mortgage Loans.

	 	V.	 	COVENANTS OF SELLER

	 	5.01	 	Furnishing Information. From the date hereof, and until the satisfaction of all
Seller’s obligations hereunder, Seller shall at its expense furnish to Purchaser such
documents and information as Purchaser may reasonably request in writing in connection
with this Agreement and the transactions described herein or contemplated hereby, and
shall promptly notify Purchaser in writing of any matter arising or discovered at any
time that would materially alter or amend the information set forth in any document or
other information previously delivered to Purchaser, or that would render any
representation or warranty made hereunder untrue as of the date such representation or
warranty was made or deemed made. Upon receipt of Purchaser’s written request, Seller
will provide Purchaser with copies of all licenses, permits, approvals, and renewals
thereof, and additions thereto, which demonstrate Seller’s authority to conduct the
business contemplated by this Agreement, and a certificate signed by an authorized
executive officer of Seller (satisfactory in form and content to Purchaser) listing the
names of all Seller’s offices and employees authorized to execute documents or
otherwise to perform any act required to be performed by Seller under the terms of this
Agreement.
	 
	 	5.02	 	Books and Records. Seller shall keep records satisfactory to Purchaser
pertaining to each Mortgage Loan and shall permit inspection by Purchaser thereof, and
of all of its other books and records as they pertain to Mortgage Loans sold to
Purchaser hereunder.
	 
	 	5.03	 	Collections. Seller will not accept collections, institute foreclosure
proceedings or modify the terms of any Mortgage Loan on or after the date such Mortgage
Loan has been purchased by Purchaser hereunder, unless requested in writing to do so by
Purchaser. After the purchase of a Mortgage Loan by Purchaser hereunder, Seller shall
hold in trust for the sole benefit of Purchaser and promptly deliver to Purchaser in
the form received all cash, notes, acceptances, checks, drafts, money orders, Insurance
Proceeds, Condemnation Proceeds and instruments of payment relating to such Mortgage
Loan that may come into the possession of Seller from time to time.
	 
	 	5.04	 	Endorsements and Other Documents. Seller agrees, upon the request of Purchaser
from time to time, to endorse to Purchaser any notes, acceptances, checks, drafts,
money orders, Insurance Proceeds, Condemnation Proceeds and instruments of payment
relating to each Mortgage Loan that has been purchased by Purchaser hereunder, and to
execute

13

 

	 	 	 	such releases, discharges, satisfactions and any and all other documents requested by
Purchaser in connection with such Mortgage Loan.

	                                                       
	 	5.05	 	Post-Purchase Audits. Purchaser may, in its sole discretion, conduct a
post-purchase audit of such Mortgage Loans as Purchaser may choose from time to time.
In the event that such post-purchase audits indicate that errors and exceptions have
occurred with any Mortgage Loan purchased from Seller, Purchaser shall notify the
Seller of such errors and exceptions. The Seller shall have 10 Business Days following
the date it receives such notice to refute or correct any such exceptions. If any such
errors or exceptions are not corrected, the Seller shall have the option to cause the
repurchase of such Mortgage Loan pursuant to Section 6.01, subject to
Section 6.02.
	                                                        
	 
	 	5.06	 	Further Assurances. At any time and from time to time each party hereto shall
take such further action as the other party hereto may reasonably believe to be
necessary or desirable to carry out the intent of this Agreement, including, without
limitation, the execution and delivery of such agreements, documents, certificates,
instruments and notifications as may be necessary to evidence the vesting in such other
party of its rights as contemplated by this Agreement.
	 
	 	5.07	 	No Modification of Representations and Warranties or Covenants. The right to
indemnification, reimbursement or other remedy based upon the representations,
warranties or covenants contained herein shall not be affected by any investigation
conducted, or any knowledge acquired at any time, with respect to the accuracy or
compliance with any such representations, warranties or covenant.
	 
	 	5.08	 	No Solicitation. Seller cannot seek to refinance any Mortgage Loan purchased by
Purchaser hereunder for a period of 12 months after the Purchase Date of such Mortgage
Loan; provided, however, that the Seller can seek to refinance any such Mortgage Loan
to the extent it receives a prior request from the related Mortgagee for a pay-off
amount. Notwithstanding the foregoing, it is understood and agreed that promotions
undertaken by Seller or any affiliate of Seller, which promotions are directed to the
general public at large, or segments thereof (provided that no segment shall consist
primarily of the Mortgagors under the Mortgage Loans), including, without limitation,
mass mailing based on commercially acquired mailing lists, newspaper, radio, television
and/or Internet advertisements, shall not constitute solicitation under this
Section 5.08.
	 
	 	5.09	 	Cooperation with Regulatory Compliance.

	 	A.	 	Pursuant to new Section 15G of the Securities and Exchange
Act, as amended, Seller shall [agree to maximum (or shared) risk retention].
	 
	 	B.	 	To the extent a Mortgage Loan meets the underwriting
standards to qualify as a “qualified residential mortgages” under new Section
15G of the Securities Exchange Act, Seller shall incorporate in the related
mortgage transaction documents all requirements regarding servicing policies
and procedures for the mortgage necessary to qualify such mortgage loan.
	 
	 	C.	 	Seller shall provide Purchaser with all necessary information
available to it, and cooperate/assist with Purchaser, so that Purchaser can
comply with any disclosure requirements under Dodd-Frank and the Securities
Act (including Regulation AB promulgated thereunder and any amendments
thereto).
	 
	 	D.	 	Seller and all persons acting on its behalf shall supply
Purchaser with any information regarding Mortgage Loan repurchases or
otherwise necessary to comply with the requirements of Rule 15Ga-1 of the
Securities Exchange Act of 1934.

14

 

	 	E.	 	Seller shall not communicate with (including verbal
communication) or provide information to any nationally recognized statistical
ratings organization regarding a potential securitization by, or involving,
Purchaser without prior consultation with Purchaser to ensure compliance with
Rule 17g-5 of the Securities Exchange Act.
	 
	 	F.	 	In order to comply with Rule 193 of the Securities Exchange
Act, Seller shall cooperate with Purchaser to the extent necessary to conduct
a review of the assets underlying a securitization by, or involving,
Purchaser.
	 
	 	G.	 	The Seller will use its reasonable commercial efforts to
assist Purchaser in its compliance with any other laws or regulations, or
amendments or changes thereto, that arise after the date of this Agreement.

	 	5.10	 	Survival of This Part: The covenants set forth in this Article V and
the rights of Purchaser under this Article V shall survive termination of this
Agreement and the sale of each Mortgage Loan to Purchaser or the subsequent sale of the
Mortgage Loan by Purchaser.

	 	VI.	 	SELLER’S REPURCHASE AND MAKEWHOLE OBLIGATIONS

	 	6.01	 	Repurchase Demands and Makewhole Demands: Except as provided in Section
6.02, Seller agrees to comply with any Repurchase Demand or Makewhole Demand
relating to any Mortgage Loan sold to Purchaser pursuant to this Agreement, or any REO
Property following foreclosure of such Mortgage Loan, within ten (10) Business Days of
receipt of such demand from Purchaser based on any of the following events or
circumstances:

	 	A.	 	A violation of, or failure to comply with, any federal,
state or local law or regulation prior to purchase of such Mortgage Loan by
Purchaser which would give rise to a right of the Mortgagor to refuse further
payment on such Mortgage Loan and/or seek a refund of amounts previously paid
and/or claim a penalty of any kind or nature;
	 
	 	B.	 	Any breach by Seller of any representation, warranty or
covenant under this Agreement the affect of which would have a material
adverse affect on the collectability of such Mortgage Loan;
	 
	 	C.	 	Any default by Seller under this Agreement with respect to
a Mortgage Loan sold to Purchaser the affect of which would have a material
adverse affect on the collectability of such Mortgage Loan;
	 
	 	D.	 	The Mortgagor’s first, second, third, and/or fourth Monthly
Payment with a due date subsequent to the Purchase Date is not received by
Purchaser, whether from the Mortgager directly or forwarded by Seller if the
Mortgager has submitted the payment to Seller, by the last day of the month
in which such payment is due, and any such payment becomes 90 days past due;
	 
	 	E.	 	Seller is obligated to repurchase such Mortgage Loan
pursuant to the provisions of Section 5.05 or any other provision of
this Agreement.

There is no deadline by which Purchaser must invoke its rights pursuant to this
Section 6.01 with respect to any Mortgage Loan or REO Property. If Seller
is otherwise obligated to comply with a Repurchase Demand or Makewhole Demand, it
shall not be a defense that Seller did not knowingly breach a representation and
warranty or did not know of the Mortgage Loan defect, inaccurate statement of fact,
or other ground for the Repurchase Demand or Makewhole Demand. The representations
and warranties made by Seller in Article IV of this Agreement are absolute
and unqualified, and they are not limited to the

15

 

best of Seller’s knowledge or belief or otherwise restricted in scope. In its sole
discretion, Purchaser may accept an indemnification agreement from Seller in lieu of
requiring that a Mortgage Loan or REO Property be repurchased.

	 	6.02	 	Notice to Seller: Upon receipt of a Repurchase Demand or Makewhole Demand from
Purchaser under Section 6.01 of this Agreement, Seller may contest its
obligation by preparing a written response to the Repurchase Demand or Makewhole Demand
(“Demand Response”). Said Demand Response must be delivered to Purchaser by no later
than thirty (30) Business Days following Seller’s receipt of the Repurchase Demand or
Makewhole Demand. If a Demand Response is not timely received by Purchaser, it shall
be of no force or effect and need not be considered by Purchaser. Purchaser shall
promptly consider any timely Demand Response and indicate in writing to Seller whether
the Repurchase Demand or Makewhole Demand is withdrawn or modified as a result of the
Demand Response. The decision of Purchaser shall be made in its sole discretion, shall
be final, and shall not be subject to further review or challenge by Seller. If the
basis for the Repurchase Demand or Makewhole Demand was a finding or demand made by an
Investor, then Purchaser shall promptly forward to the Investor any timely Demand
Response to the Repurchase Demand or Makewhole Demand received from Seller, for
Investor’s consideration as to whether the Repurchase Demand or Makewhole Demand will
be withdrawn or modified as a result of the Demand Response. The decision of the
Investor shall be made in Investor’s sole discretion, shall be final, and shall not be
subject to further review or challenge by Seller. Upon receipt of written notice from
Purchaser indicating that a Repurchase Demand or Makewhole Demand has not been
withdrawn or modified as a result of a Demand Response from Seller, Seller shall comply
with the Repurchase Demand or Makewhole Demand within fifteen (15) Business Days of
receipt of said notice from Purchaser.
	 
	 	6.03	 	Repurchase Price for Mortgage Loan: The price Seller shall pay to Purchaser for
each Mortgage Loan that Seller is obligated to repurchase pursuant to Section
6.01 shall equal the sum of:

	 	A.	 	The original Purchase Price of such Mortgage Loan, including
without limitation the Premium, if any (but in any event not less than par)
less the sum of all principal reductions of such Mortgage Loan after the
original purchase thereof by Purchaser;
	 
	 	B.	 	Plus all accrued and unpaid interest on such Mortgage Loan
from the Purchase Date of such Mortgage Loan through and including the first
day of the month following the month during which the repurchase of such
Mortgage Loan is made by Seller pursuant to this Article VI;
	 
	 	C.	 	Plus the entire “Final SRP,” if any, as shown in the Trade
Confirmation relating to such Mortgage Loan, if applicable; and
	 
	 	D.	 	Plus all expenses, including but not limited to, escrow
advances, late fees, NSF fees, attorney’s fees, inspection fees, miscellaneous
fees, repair costs, and any other expenses incurred and not reimbursed by the
Investor, together with actual attorney’s fees and expenses incurred by
Purchaser’s in enforcing Seller’s obligation to repurchase such Mortgage Loan.

	 	6.04	 	Return of Notes and Mortgage Files: Upon each such repurchase of a Mortgage
Loan by Seller pursuant to this Article VI, Purchaser shall promptly endorse
the Mortgage Note (without recourse), shall assign the related Mortgage (without
recourse and in recordable form) to Seller (or its designee) and shall promptly take
any and all other actions

16

 

	 	 	 	necessary or appropriate to vest title in the applicable Mortgage Loan in Seller (or
its designee) and return the related Mortgage File to Seller.
	 
	 	6.05	 	Repurchase Price for REO Property: The price Seller shall pay to Purchaser for
each REO Property that Seller is obligated to repurchase pursuant to Section
6.01 shall equal the sum of:

	 	A.	 	The original Purchase Price of such Mortgage Loan, including
without limitation the Premium, if any (but in any event not less than par)
less the sum of all principal reductions of such Mortgage Loan after the
original purchase thereof by Purchaser;
	 
	 	B.	 	Plus all accrued and unpaid interest on such Mortgage Loan
from the Purchase Date of such Mortgage Loan through and including the first
day of the month following the month during which the repurchase of such
Mortgage Loan is made by Seller pursuant to this Article VI;
	 
	 	C.	 	Plus the entire “Final SRP,” if any, as shown in the Trade
Confirmation relating to such Mortgage Loan, if applicable; and
	 
	 	D.	 	Plus all expenses, including but not limited to, escrow
advances, foreclosure expenses, late fees, NSF fees, attorney’s fees,
inspection fees, miscellaneous fees, repair costs, and any other expenses
incurred and not reimbursed by the Investor, together with actual attorney’s
fees and expenses incurred by Purchaser in enforcing Seller’s obligation to
repurchase such Mortgage Loan.

	 	6.06	 	Transfer of Title: Upon each repurchase of an REO Property by Seller pursuant
to this Article VI, Purchaser shall promptly transfer title to the REO Property
(without recourse and in recordable form for each Mortgage Loan that is not a MERS
Mortgage Loan) to Seller (or its designee) and shall promptly take any and all other
actions necessary or appropriate to vest title to the REO Property in Seller (or its
designee).
	 
	 	6.07	 	Makewhole Amount: The amount Seller shall pay to Purchaser for the loss on each
Mortgage Loan that Seller is obligated to reimburse pursuant to Section 6.01
shall equal the sum of:

	 	A.	 	The original Purchase Price of such Mortgage Loan, including
without limitation the Premium, if any (but in any event not less than par)
less the sum of all principal reductions of such Mortgage Loan after the
original purchase thereof by Purchaser;
	 
	 	B.	 	Plus all accrued and unpaid interest on such Mortgage Loan
from the Purchase Date of such Mortgage Loan through and including the first
day of the month following the month during which the repurchase of such
Mortgage Loan is made by Seller pursuant to this Article VI;
	 
	 	C.	 	Plus the entire “Final SRP,” if any, as shown in the Trade
Confirmation relating to such Mortgage Loan, if applicable;
	 
	 	D.	 	Plus all expenses, including but not limited to, escrow
advances, foreclosure expenses, late fees, NSF fees, attorney’s fees,
inspection fees, miscellaneous fees, repair costs, and any other expenses
incurred and not reimbursed by the Investor, together with actual attorney’s
fees and expenses incurred by Purchaser in enforcing Seller’s obligation to
repurchase such Mortgage Loan;
	 
	 	E.	 	Less the net proceeds received from the sale of the REO
Property.

17

 

	 	6.08	 	No Waiver: The prior knowledge on the part of Purchaser or an Investor of any
fact concerning a Mortgage Loan, or any delay by Purchaser or an Investor in making a
Repurchase Demand or a Makewhole Demand, shall neither impair Purchaser’s rights nor
constitute a waiver of Seller’s obligations hereunder.
	 
	 	6.09	 	Survival of This Part: The covenants set forth in this Article VI and
the rights of Purchaser hereunder shall survive termination of this Agreement, the sale
of each Mortgage Loan to Purchaser, and the subsequent sale of the Mortgage Loan by
Purchaser to an Investor. Seller acknowledges and agrees that the basis for a
Repurchase Demand or Makewhole Demand under this Agreement may not be obvious or known
to Purchaser or to an Investor prior to a Mortgage Loan going into default, and that
the Mortgage Loan defect, inaccurate statement of fact, or other ground for a
Repurchase Demand or Makewhole Demand may or may not be related to the reason for any
default by a Borrower, and Seller shall nonetheless be obligated to comply with such
demand. Seller also acknowledges and agrees that the amount bid by an Investor or
Purchaser for a Mortgaged Property at a foreclosure sale shall not be used to determine
the amount of loss incurred in connection with a Mortgage Loan and shall not reduce the
amount of a Repurchase Demand or Makewhole Demand under this Agreement. Seller further
acknowledges and agrees that its repurchase and Makewhole obligations shall not be
affected by either Purchaser or the Investor taking any of the following actions with
or without notice to Seller: (1) liquidation, sale, or resale of any Mortgage Loan; (2)
foreclosure of any Mortgage Loan; (3) sale or resale of any Mortgaged Property or REO
Property; or (4) any other action or inaction by Purchaser or an Investor regarding a
Mortgage Loan.

	 	VII.	 	INDEMNIFICATION

	 	7.01	 	Indemnification by Seller. In addition to Seller’s obligations,
representations, warranties and covenants herein, Seller agrees to indemnify and hold
Purchaser and its partners, shareholders, directors, officers, agents, successors and
assignees harmless from, and on demand by Purchaser, to pay Purchaser for any and all
damages, losses, costs, expenses, claims, liabilities, obligations, actions, suits, or
proceedings of any nature whatsoever (including reasonable attorney’s fees and costs of
suit) to the extent that the same are incurred by or asserted against Purchaser, its
partners, shareholders, directors, officers, agents, successors or assignees and
relating in any way to any acts or omissions by Seller, its partners, shareholders,
officers, directors, employees, agents, and representatives or any breach by Seller of
any representation, warranty, covenant or obligation of Seller hereunder. The
indemnification contained herein shall survive the termination of this Agreement and
shall not be affected by Purchaser or an Investor taking of any of the following
actions with or without notice to Seller: (i) liquidation, repayment, sale or resale of
any Mortgage Loan; (ii) foreclosure of any Mortgage Loan; (iii) sale or resale of any
Mortgaged Property; or (iv) any other action or inaction by Purchaser or an Investor.

	 	VIII.	 	TERMINATION

	 	8.01	 	Termination. Either party may terminate this Agreement at any time in its sole
discretion. Termination shall not relieve Purchaser of the obligation to purchase
Mortgage Loans with respect to which the parties have entered into a Trade
Confirmation, and shall not relieve Seller of its obligations to sell to Purchaser
Mortgage Loans with respect to which the parties have entered into a Trade
Confirmation. Further, termination of this Agreement by either party shall not affect
the rights, liabilities and obligations of the parties as to

18

 

	 	 	 	Mortgage Loans previously purchased under this Agreement. The respective obligations
and responsibilities of Seller shall terminate with respect to any Mortgage Loan upon
the first to occur of (i) the later of the final payment or other liquidation of the
Mortgage Loan or the disposition of the REO Property; or (ii) by mutual consent of
Seller and Purchaser in writing.

	 	IX.	 	DISPUTE RESOLUTION

	 	9.01	 	Dispute Resolution. The parties agree that any and all disputes, claims or
controversies arising out of or relating to this Agreement shall be submitted to and
resolved by arbitration conducted by a single arbitrator under the rules of the
American Arbitration Association or its successor. Any such arbitration shall be held
in San Francisco, California. The award of the arbitrator shall be final and binding.
Judgment on any arbitration award may be entered in any court having jurisdiction. The
provisions of this Section 9.01 may be enforced by any court of competent
jurisdiction, and the party seeking enforcement shall be entitled to an award of all
costs, fees and expenses, including attorney’s fees, to be paid by the party against
whom enforcement is ordered.

	 	X.	 	Miscellaneous

	 	10.01	 	Notices. All notices to be given in connection with this Agreement shall be in
writing and delivered to a party at its respective address appearing below, or at such
other address which may be designated in writing by such party pursuant to the
provisions hereof, by personal delivery, e-mail, facsimile transmission, overnight
delivery, telefax (with telephonic confirmation of receipt) or mail. Each such notice
should be effective upon receipt.

If to Purchaser:

Provident Mortgage Capital Associates, Inc.

1633 Bayshore Highway, Suite 331

Burlingame, CA 94010

ATTN: Chief Financial Officer

Telephone: (855) 653-4300

Fax: (855) 653-4301

Email: ____________________________

If to Seller:

c/o Provident Mortgage Capital Associates, Inc.

1633 Bayshore Highway, Suite 155

Burlingame, CA 94010

ATTN: Compliance Officer

Telephone: (650) 652-1300

Fax: (650) 652-1350

Email: ____________________________

	 	10.02	 	Interpretation. The parties hereto intend that each representation, warranty,
and covenant contained herein shall have independent significance. If Seller has
breached any representation, warranty, or covenant contained herein in any respect, the
fact that there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) that Seller has
not breached shall not detract from or mitigate the fact that Seller is in breach of
the first representation, warranty, or covenant.

19

 

	 	10.03	 	Independent Contractors. This Agreement shall not be deemed to constitute the
parties hereto as partners or joint venturers, nor shall any party be deemed to be the
agent of the other party. The parties hereto agree that Seller is neither an agent nor
an employee of Purchaser, nor of any parent or other affiliate of Purchaser, and may
not be construed as such by reason of this Agreement. It is agreed that Seller is an
independent contractor, and is expressly prohibited from holding itself out as an
agent, representative or employee of Purchaser, or of any parent or other affiliate of
Purchaser. Without limiting the foregoing, Seller shall not represent to any borrower
or other person that it has any authority to commit Purchaser to make, fund or purchase
any Mortgage Loan.
	 
	 	10.04	 	Entire Agreement. This Agreement and the Trade Confirmation contains the
entire agreement among the parties hereto with respect to the subject matter hereof and
thereof and supersedes any and all prior agreements, arrangements, proposals or
understandings, written or oral, by or between the parties hereto with respect to the
subject matter hereof and thereof.
	 
	 	10.05	 	Choice of Law. This Agreement shall be construed in accordance with the laws
of the State of California (but not including the choice of law rules thereof). The
invalidity or unenforceability of any provision or provisions of this Agreement shall
not affect the validity or enforceability of any other provision hereof. Any suit or
proceeding relating to this Agreement shall be brought in the federal or state courts
located in, California, which courts shall have sole and exclusive subject matter and
other jurisdiction in connection with such suit or proceeding, and venue shall be
appropriate for all purposes in such courts.
	 
	 	10.06	 	Attorney’s Fees. In the event of a dispute between the parties hereto or their
successors, arising out of this Agreement, the prevailing party shall be entitled to
recover costs, including reasonable attorney’s fees actually incurred in connection
therewith.
	 
	 	10.07	 	Successors and Assigns. This Agreement shall bind and benefit Seller and
Purchaser and their respective successors and assigns; provided, however, that neither
party shall have the power or right to assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other party; further
provided, however, that Purchaser shall have the right to assign its rights and
obligations hereunder to any of its affiliates without the consent of Seller.
	 
	 	10.08	 	Miscellaneous. A party’s omission or delay in exercising any of its optional
or absolute rights or remedies under this Agreement shall not constitute a waiver by
such party, nor operate to bar such party from the exercise of any such rights or
remedies. Any waiver by any party of any default shall not operate as a waiver of any
other or subsequent default. All rights and remedies provided to any party herein are
not exclusive of any other rights or remedies at law or equity, are cumulative and not
alternative, and may be exercised by such party simultaneously or in such order as such
party deems to be in its best interests. Captions and paragraph headings are for
convenience only.
	 
	 	10.09	 	Not Exclusive. Seller acknowledges that Purchaser may enter into other
agreements or understandings with other parties for the purchase, funding or
origination of loans in the areas in which Seller presently conducts or may conduct
business, that Purchaser may seek to originate, fund and purchase loans in a manner
that may compete with Seller, and that this Agreement shall not be deemed to restrict
or impede such actions by Purchaser in any way.

20

 

	 	10.10	 	Counterparts: This Agreement may be signed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall collectively
constitute one and the same agreement. The delivery of an executed signature page to
this Agreement by facsimile transmission or electronic image scan transmission (e.g.,
“PDF or “tif” via email) shall be as effective as delivery of a manually signed
counterpart of this Agreement.

          IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed by
its duly authorized representative as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 

	“Purchaser”	 	 	 	“Seller”	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

21

 

Exhibit B

FORM OF MASTER SECURITIES SALE AGREEMENT

- Exh. B-1 -

  

 

FORM OF MASTER SECURITIES SALE AGREEMENT

     THIS AGREEMENT is made as of ____________, 20__, between __________________, a __________
organized under the laws of the State of __________ (the “Seller”), and Provident Mortgage Capital
Associates, Inc., a corporation organized under the laws of the State of Maryland (the
“Purchaser”).

WITNESSETH

     WHEREAS, subject to the terms and conditions hereof, the Seller wishes to sell, and the
Purchaser wishes to purchase, from time to time the residential mortgage-backed securities owned by
the Seller (“Securities”) indentified on Schedule I to a bill of sale in the form attached hereto
as Exhibit A (a “Bill of Sale”);

     WHEREAS, with respect to any Securities so purchased, the Purchaser will purchase such
Securities and all payments and collections thereon due on or after the date of such purchase
(each, a “Closing Date”) from the Seller, in exchange for the Purchase Price (as defined herein)
for such Securities;

     NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto
agree as follows:

     1. Purchase and Sale of the Securities.

     (a) Subject to and upon the terms and conditions set forth in this Agreement, on each Closing
Date related to Securities identified on a Bill of Sale, the Seller hereby sells and assigns to the
Purchaser, without recourse, except as provided herein, and the Purchaser hereby purchases and
accepts, in each case, all of the Seller’s right, title and interest in and to each of such
Securities and all amounts due on or after such Closing Date with respect thereto, and all the
proceeds of the foregoing. The transfer to the Purchaser of Securities shall be absolute and is
intended by the Seller to constitute and to be treated as a sale of such Securities by the Seller
to the Purchaser.

     (b) In connection with each such sale, the Purchaser shall pay to the Seller on the related
Closing Date the aggregate purchase price in U.S. dollars set forth on the Bill of Sale (a
“Purchase Price”); provided, however, that a Purchase Price for Securities is subject to adjustment
pursuant to Section 2(b) of the Strategic Alliance Agreement, dated as of _______, 2011, between
the Seller and Provident Funding Associates, L.P.

     (c) The sale and assignment of Securities shall be made on or prior to the related Closing
Date at the time and in the manner agreed upon by the parties. Upon receipt of evidence of
delivery or transfer of such Securities to the Purchaser, the Purchaser shall pay the related
Purchase Price to the Seller on the related Closing Date in the manner agreed upon by the Seller
and the Purchaser.

 

 

     2. Conditions. The obligations of the parties with respect to the Securities under this
Agreement are subject to the representations and warranties contained herein being true and correct
as of the date hereof and as of each Closing Date.

     3. Representations and Warranties of the Seller. The Seller hereby represents, warrants and
covenants to the Purchaser, its successors and assigns as of each Closing Date that:

     (a) The Seller (i) is duly organized and validly existing as an entity in good standing under
the laws of the jurisdiction in which it is chartered or organized and (ii) has the full power and
authority to execute, deliver, and perform its obligations under this Agreement. The Seller has
the full power and authority to sell and assign the related Securities to the Purchaser.

     (b) This Agreement has been duly authorized by all necessary corporate action, has been duly
executed and delivered by one or more duly authorized officers and is the valid and binding
agreement of the Seller enforceable against the Seller in accordance with its terms subject, as to
enforcement, (a) to the effect of bankruptcy, insolvency or similar laws affecting generally the
enforcement of creditors’ rights as such laws would apply in the event of any bankruptcy,
receivership, insolvency or similar event applicable to the Seller and (b) to general equitable
principles (whether enforceability of such principles is considered in a proceeding at law or in
equity).

     (c) (i) The Seller has either (x) not pledged, encumbered, assigned, transferred, conveyed,
disposed of or terminated, in whole or in part, any of its right, title and interest in and to the
Securities or (y) caused the release of any pledge or encumbrance of its right, title and interest
in any of the Securities and, on such Closing Date, the Seller is the sole owner of the Securities,
and has good and marketable title thereto, free and clear of any pledges, liens, security
interests, claims, charges, or other encumbrances, and has the full right and authority to sell the
Securities to the Purchaser, and upon the delivery or transfer of such Securities to the Purchaser
as contemplated herein, the Purchaser will receive good and marketable title to such Securities,
free and clear of any pledges, liens, security interests, claims, charges, or other encumbrances,
(ii) none of the execution, delivery or performance by the Seller of this Agreement shall (a)
conflict with, result in any breach of or constitute a default (or an event which, with the giving
of notice or passage of time, or both, would constitute a default) under, any term or provision of
the organizational documents of the Seller or any material indenture, agreement or other material
instrument to which the Seller is a party or by which the Seller is bound or (b) violate any
provision of any law, rule, regulation, order, decree or determination applicable to the Seller of
any regulatory body, administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its respective properties, (iii) no registration with, consent or
approval of, or other action by, any federal, state or other governmental agency, authority,
administrative or regulatory body, arbitrator, court or other tribunal, foreign or domestic or any
other Person, other than those registrations, consents, approvals or actions obtained or completed
prior to such Closing Date is required in connection with the execution, delivery and performance
of this Agreement by the Seller and the consummation by the Seller of the sale of the Securities
and (iv) no proceedings are pending or, to the Seller’s knowledge, threatened against the Seller,
before any federal, state or other governmental agency, authority, administrative or regulatory
body, arbitrator, court or other tribunal, foreign or domestic, which,

 - 2 - 

 

singly or in the aggregate, could materially and adversely affect any action taken or to be
taken by the Seller under this Agreement.

     (d) The Seller has accounted for each sale of each Security hereunder, in its books and
financial statements, as sales, consistent with United States generally accepted accounting
principles.

     (e) The Seller is currently solvent and able to pay its debts as they become due.

     (f) The information set forth in Schedule I attached to the related Bill of Sale is true and
accurate in all material respects.

     4. Representations and Warranties of the Purchaser. As of each Closing Date the Purchaser
hereby represents, warrants and covenants to the Seller, its successors and assigns, that:

     (a) (i) It is duly organized and validly existing as an entity in good standing under the laws
of the jurisdiction in which it is chartered or organized and (ii) it has the requisite corporate
power and authority to enter into and perform this Agreement.

     (b) This Agreement has been duly authorized by all necessary corporate action, has been duly
executed and delivered by one or more duly authorized officers and is the valid and binding
agreement of the Purchaser enforceable against the Purchaser in accordance with its terms subject,
as to enforcement, (a) to the effect of bankruptcy, insolvency or similar laws affecting generally
the enforcement of creditors’ rights as such laws would apply in the event of any bankruptcy,
receivership, insolvency or similar event applicable to the Purchaser and (b) to general equitable
principles (whether enforceability of such principles is considered in a proceeding at law or in
equity).

     (c) No consent, approval, authorization or order of any court or governmental agency or body
is required for the execution, delivery and performance by the Purchaser of, or compliance by the
Purchaser with, this Agreement or the consummation of the transactions contemplated hereby, or if
any such consent, approval, authorization or order is required, the Purchaser has obtained the
same.

     (d) The execution and delivery of this Agreement by the Purchaser and the Purchaser’s
performance and compliance with the terms of this Agreement will not (i) violate the Purchaser’s
organizational documents, (ii) violate any law or regulation or any administrative decree or order
to which it is subject or (iii) constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the breach of, any contract,
agreement or other instrument to which the Purchaser is a party or by which the Purchaser is bound.

     5. Obligation Upon Breach of Representation and Warranty. Upon the discovery by the Seller or
the Purchaser of a breach of any of the representations and warranties in Section 3 hereof that
materially and adversely affects the interests of the Purchaser in the Securities or the value of
the Securities, the Purchaser shall give prompt written notice to the Seller. Within 90 days of
its discovery or its receipt of such notice of any such breach of the

 - 3 - 

 

representations and warranties in Section 3 above, the Seller shall cause such breach to be
cured in all material respects or, if the Seller is unable to cure such breach, the Seller shall
repurchase the Security as to which the misrepresentation exists (the “Defective Security”) at a
purchase price equal to [the principal amount thereof plus, without duplication, accrued interest
thereon]. The Seller shall reimburse the Purchaser for all necessary and reasonable costs and
expenses, including the costs and expenses of enforcement with respect to such Defective Security,
and any applicable transfer taxes incurred in connection with such repurchase.

     6. Non-Recourse.

     (a) Notwithstanding anything to the contrary contained herein, no recourse shall be had,
whether by levy or execution or otherwise, for the payment of the principal of or interest or
premium (if any) on the Securities, or for any claim based on payments due thereon, against the
Seller or any of its respective stockholders, directors, officers, agents or employees or
successors and assigns of any of the foregoing, under any rule of law, statute or constitution, or
by the enforcement of any assessment or penalty, or otherwise, nor shall any of such persons be
personally liable for any such amounts or claims, or liable for any defenses or any judgment based
thereon or with respect thereto; provided, that the foregoing shall not (i) constitute a waiver of
any rights of the Purchaser or its assignees against the Seller for breach of any representations,
warranties or covenants contained herein, or (ii) be taken to prevent recourse by the Purchaser to,
and the enforcement of its rights against, the Securities or any obligor thereunder.

     (b) No recourse under any obligation, covenant or agreement of the Purchaser contained in this
Agreement shall be had against any incorporator, stockholder, officer, director or employee of the
Purchaser or successors and assigns of any of the foregoing, by the enforcement of any assessment
or by any legal or equitable proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that this Agreement is solely a corporate obligation of the Purchaser, and
that no personal liability whatever shall attach to or be incurred by the incorporators,
stockholders, officers, directors or employees of the Purchaser, or any of them under or by reason
of any of the obligations, covenants or agreements of the Purchaser contained in this Agreement, or
implied therefrom, and that any and all personal liability for breaches by the Purchaser of any
such obligations, covenants or agreements either at common law or at equity, or by statute or
constitution, of every such incorporator, stockholder, officer, director or employee is hereby
expressly waived as a condition of and in consideration for the execution of this Agreement,
provided however, that nothing in this Section 6(b) shall relieve any of the foregoing persons or
entities from any liability arising from his, her or its willful misconduct or intentional
misrepresentation.

     7. Change of Name, Etc. The Seller shall not change its name, identity or structure
(including a merger) or the location of its state of organization or any other change which could
render any UCC financing statement filed in connection with this Agreement or any other transaction
document to become “seriously misleading” under the UCC, unless at least twenty (20) days prior to
the effective date of any such change the Seller delivers to the Purchaser such documents,
instruments or agreements, executed by the Seller as are necessary to reflect such change and to
continue the perfection of the Purchaser’s ownership interests or security interests in the
Securities.

 - 4 - 

 

     8. Amendments. None of this Agreement, any Bill of Sale or any term hereof may be changed,
waived, discharged or terminated except upon the execution and delivery of a written agreement by
the parties hereto.

     9. Communications. Except as may be otherwise agreed between the parties, all communications
hereunder shall be made in writing to the relevant party, by personal delivery or by courier or
first-class registered mail, or the closest local equivalent thereto, or by facsimile transmission
confirmed by personal delivery or by courier or first-class registered mail as follows:

To the Seller:

c/o Provident Funding Associates, L.P.

1633 Bayshore Highway, Suite 155

Burlingame, CA 94010

ATTN: Compliance Officer

Telephone: (650) 652-1300

Fax: (650) 652-1350

Email:                                                             

To the Purchaser:

Provident Mortgage Capital Associates, Inc.

1633 Bayshore Highway, Suite 331

Burlingame, CA 94010

ATTN: Chief Financial Officer

Telephone: (855) 653-4300

Fax: (855) 653-4301

Email:                                                             

or to such other address, telephone number or facsimile number as either party may notify to the
other in accordance with the terms hereof from time to time. Any communications hereunder shall be
effective upon receipt.

     10. [Governing Law and Consent to Jurisdiction.

     (a) This Agreement shall be construed in accordance with the laws of the State of California
(but not including the choice of law rules thereof). The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or enforceability of any
other provision hereof. Any suit or proceeding relating to this Agreement shall be brought in the
federal or state courts located in, California, which courts shall have sole and exclusive subject
matter and other jurisdiction in connection with such suit or proceeding, and venue shall be
appropriate for all purposes in such courts.

 - 5 - 

 

     (b) To the extent permitted by applicable law, the parties hereto shall not seek and hereby
waive the right to any review of the judgment of any such court by any court of any other nation or
jurisdiction which may be called upon to grant an enforcement of such judgment.]

     11. Costs. The Seller shall pay all expenses that are incidental to the performance of the
obligations of the Seller under this Agreement.

     12. Survival. Each of the Seller and the Purchaser agrees that the representations,
warranties and agreements made by it herein and in any certificate or other instrument delivered
pursuant hereto shall be deemed to have been relied upon by the Seller and the Purchaser,
respectively, notwithstanding any investigation heretofore or hereafter made by the other party or
on the other party’s behalf, and that the representations, warranties and agreements made by the
Seller herein or in any such certificate or other instrument shall survive the delivery of and
payment for the Securities.

     13. Counterparts. This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one and the same agreement.

 - 6 - 

 

     IN WITNESS WHEREOF, this Agreement has been entered into as of the date first written above.

	 	 	 	 	 	 	 

	 	 	[SELLER]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	PROVIDENT MORTGAGE CAPITAL ASSOCIATES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

 

 

EXHIBIT A

FORM OF BILL OF SALE

     Reference is made to the Master Securities Sale Agreement, dated _______, 2011 (the “MSSA”)
between _____________________ (the “Seller”) and Provident Mortgage Capital Associates, Inc. (the
“Purchaser”) . Capitalized terms used by not otherwise defined herein are as defined in the MSAA.

     This is a Bill of Sale as defined in the MSAA with respect to the Securities identified on
Schedule I hereto (the “Sold Securities”).

     The “Purchase Price” for the Sold Securities is $____________________; provided, however, that
this Purchase Price is subject to adjustment pursuant to Section 2(b) of the Strategic Alliance
Agreement, dated as of _______, 2011, between the Seller and Provident Funding Associates, L.P.

     Now, therefore, for good and valuable consideration the sufficiency of which is hereby
acknowledged, the Seller does hereby sell, assign, set over and otherwise convey the Sold
Securities to the Purchaser.

     This Bill of Sale is governed by the laws of the State of [California].

CLOSING DATE: _________________________

SELLER:

	 	 	 	 	 	 	 

	 

	 	By:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	PURCHASER:	 	PROVIDENT MORTGAGE CAPITAL ASSOCIATES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 

Ex.A-1

 

 

Schedule I to Bill of Sale

Security Schedule

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Sold Original	 
	 	CUSIP	 	 	Issuer	 	 	Balance	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 

Ex.A-2

 

Exhibit C

FORM OF SUB-SERVICING AGREEMENT

- Exh. C-1 -

 

 

PROVIDENT FUNDING ASSOCIATES, L.P.,

as Subservicer

and

PROVIDENT MORTGAGE CAPITAL ASSOCIATES, INC.,

as Servicer

FORM OF SUBSERVICING AGREEMENT

Dated as of                , 2011

Non-Conforming First Lien Mortgage Loans

 

- 1 -

 

TABLE OF CONTENTS

	 	 	 	 	 

	ARTICLE I. DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II. THE SERVICER’S ENGAGEMENT OF THE SUBSERVICER TO PERFORM SERVICING RESPONSIBILITIES
	 	 	9	 
	 
	 	 	 	 
	Section 2.01. Contract for Servicing; Possession of Servicing Files
	 	 	9	 
	Section 2.02. Books and Records
	 	 	10	 
	Section 2.03. Custodial Agreement; Delivery of Documents
	 	 	10	 
	Section 2.04. Transfer of Servicing
	 	 	10	 
	 
	 	 	 	 
	ARTICLE III. SERVICING OF THE ASSETS
	 	 	11	 
	 
	 	 	 	 
	Section 3.01. The Subservicer to Service
	 	 	11	 
	Section 3.02. Collection and Liquidation of Mortgage Loans
	 	 	12	 
	Section 3.03. Establishment of and Deposits to Custodial Account
	 	 	12	 
	Section 3.04. Permitted Withdrawals From Custodial Account
	 	 	13	 
	Section 3.05. Establishment of and Deposits to Escrow Account
	 	 	14	 
	Section 3.06. Permitted Withdrawals From Escrow Account
	 	 	15	 
	Section 3.07. Notification of Adjustments
	 	 	16	 
	Section 3.08. Payment of Taxes, Insurance and Other Charges
	 	 	16	 
	Section 3.09. Protection of Accounts
	 	 	16	 
	Section 3.10. Maintenance of Hazard Insurance
	 	 	16	 
	Section 3.11. Maintenance of Mortgage Impairment Insurance
	 	 	18	 
	Section 3.12. Maintenance of Fidelity Bond and Errors and Omissions Insurance
	 	 	18	 
	Section 3.13. Restoration of Mortgaged Property
	 	 	18	 
	Section 3.14. Maintenance of PMI and/or LPMI Policy; Claims
	 	 	19	 
	Section 3.15. Title, Management and Disposition of REO Property
	 	 	20	 
	Section 3.16. Real Estate Owned Reports
	 	 	21	 
	Section 3.17. Liquidation Reports
	 	 	21	 
	Section 3.18. Reports of Foreclosures and Abandonments of Mortgaged Property or REO
Property
	 	 	21	 
	Section 3.19. Prepayment Charges
	 	 	21	 
	Section 3.20. Credit Reporting
	 	 	21	 
	Section 3.21. Confidentiality/Protecting Customer Information
	 	 	21	 
	Section 3.22. Advances
	 	 	23	 
	 
	 	 	 	 
	ARTICLE IV. PAYMENTS TO THE OWNER
	 	 	23	 
	 
	 	 	 	 
	Section 4.01. Remittances
	 	 	23	 
	Section 4.02. Statements to the Servicer
	 	 	23	 
	Section 4.03. Repurchase
	 	 	24	 
	 
	 	 	 	 
	ARTICLE V. GENERAL SERVICING PROCEDURES
	 	 	24	 
	 
	 	 	 	 
	Section 5.01. Transfers of Mortgaged Property
	 	 	24	 

- i -

 

	 	 	 	 	 

	Section 5.02. Satisfaction of Mortgages and Release of Mortgage Files
	 	 	25	 
	Section 5.03. Servicing Compensation
	 	 	25	 
	Section 5.04. Right to Examine the Subservicer Records
	 	 	26	 
	Section 5.05. Reports and Returns to be Filed by the Subservicer
	 	 	26	 
	 
	 	 	 	 
	ARTICLE VI. REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	27	 
	 
	 	 	 	 
	Section 6.01. Representations, Warranties and Covenants of the Subservicer
	 	 	27	 
	Section 6.02. Representations, Warranties and Covenants of the Servicer
	 	 	28	 
	Section 6.03. Indemnification by the Servicer
	 	 	29	 
	Section 6.04. Indemnification by the Subservicer
	 	 	30	 
	Section 6.05. Limitation of Liability
	 	 	30	 
	 
	 	 	 	 
	ARTICLE VII. THE SUBSERVICER
	 	 	30	 
	 
	 	 	 	 
	Section 7.01. Merger or Consolidation of the Subservicer
	 	 	30	 
	Section 7.02. Limitation on Liability of the Subservicer and Others
	 	 	31	 
	Section 7.03. Limitation on Resignation and Assignment by the Subservicer
	 	 	31	 
	 
	 	 	 	 
	ARTICLE VIII. TERMINATION
	 	 	32	 
	 
	 	 	 	 
	Section 8.01. Termination for Cause
	 	 	32	 
	 
	 	 	 	 
	ARTICLE IX. MISCELLANEOUS PROVISIONS
	 	 	33	 
	 
	 	 	 	 
	Section 9.01. Successor to the Subservicer
	 	 	33	 
	Section 9.02. Costs
	 	 	34	 
	Section 9.03. Waiver of Jury Trial, Venue; Governing Law
	 	 	34	 
	Section 9.04. Notices
	 	 	35	 
	Section 9.05. Severability Clause
	 	 	36	 
	Section 9.06. Counterparts
	 	 	36	 
	Section 9.07. Further Agreements
	 	 	37	 
	Section 9.08. Successors and Assigns; Assignment of Agreement
	 	 	37	 
	Section 9.09. Waivers
	 	 	37	 
	Section 9.10. Exhibits
	 	 	37	 
	Section 9.11. General Interpretive Principles
	 	 	37	 
	Section 9.12. Reproduction of Documents
	 	 	38	 
	Section 9.13. Force Majeure
	 	 	38	 
	Section 9.14. Term
	 	 	38	 
	Section 9.15. Survival
	 	 	39	 

EXHIBITS

	 	 	 

	EXHIBIT A

	 	SERVICING FEES
	EXHIBIT B

	 	MORTGAGE LOAN DOCUMENTS
	EXHIBIT C

	 	FORM OF LIMITED POWER OF ATTORNEY
	EXHIBIT D

	 	FORM OF ACKNOWLEDGMENT AGREEMENT
	EXHIBIT E

	 	FORM OF MONTHLY WHOLE LOAN REPORTING PACKAGE
	EXHIBIT F

	 	SERVICING TRANSFER INSTRUCTIONS

- ii -

 

SUBSERVICING AGREEMENT

          This is a Subservicing Agreement (the “Agreement”), dated as of                _, 2011 by and
between Provident Funding Associates, L.P. (the “Subservicer”) and Provident Mortgage
Capital Associates, Inc., Inc. (the “Servicer”).

W I T N E S S E T H:

          WHEREAS, the Servicer will originate and/or acquire certain mortgage loans that that may or
may not conform with the U.S. government agency and/or Fannie Mae or Freddie Mac underwriting
guidelines and funding criteria;

          WHEREAS, the Mortgage Loan Holders (as defined herein) of such Mortgage Loans have retained
the Servicer to service such mortgage loans, and Servicer may from time to time service additional
mortgage loans held by a Mortgage Loan Holder;

          WHEREAS, the Servicer desires to retain the Subservicer to subservice and provide certain
management and disposition services for the Assets (as defined below) for the benefit of the
applicable Mortgage Loan Holders;

          WHEREAS, the Servicer and the Subservicer desire to set forth the terms and conditions on
which the Subservicer will subservice and provide management and disposition services for the
Assets; and

          NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, and for other
good and reasonable consideration, the receipt and adequacy of which is hereby acknowledged, the
Servicer and the Subservicer hereby agree as follows:

ARTICLE I.

DEFINITIONS

          The following terms are defined as follows:

          Accepted Servicing Practices: With respect to any Asset, those mortgage servicing
practices which are in accordance with the Subservicer’s normal servicing practices, which will
conform to the mortgage servicing practices of prudent mortgage lending institutions that service
for their own account mortgage loans of the same type as the Mortgage Loans in the jurisdictions in
which the related Mortgaged Properties are located., (ii) the terms of the Mortgage Loan Documents
related to each Asset, (iii) Legal Requirements, and (iv) the responsibilities and obligations with
regard to the Assets that are set forth in this Agreement.

          Acknowledgment Agreement: A servicing acknowledgment agreement agreed to by the
Parties in the form of Exhibit D that makes specific reference to this Agreement to be executed on
or prior to each Transfer Date with respect to the subservicing of a pool of Assets.

          Affiliate: With respect to any specified Person, any other Person controlling or
controlled by or under common control with such specified Person. For the purposes of this

- 1 -

 

definition, “control” when used with respect to any specified Persons means the power to
direct the management and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.

          Agreement: This Subservicing Agreement, including all exhibits, schedules, amendments
and supplements hereto.

          Ancillary Income: All income, excluding Servicing Fees and Prepayment Charges
attributable to the Mortgage Loans, derived from the Mortgage Loans after the related Transfer
Date, including, but not limited to, interest received on funds deposited in the Custodial Account
or any Escrow Account (to the extent not required to be paid to the Mortgagor) late charges,
insufficient fund fees, assumption fees, name change fees, optional insurance administrative fees
and other similar fees with respect to the Assets to the extent not otherwise prohibited by the
related Mortgage Loan Documents or Legal Requirements.

          Appraised Value: The value of the Mortgaged Property assigned by using various
valuations methodologies, including but not limited to broker price opinions.

          Asset: Each Mortgage Loan and REO Property subject to this Agreement being identified
on the related Asset Schedule.

          Asset Schedule: The schedule of Assets attached to each Acknowledgment Agreement
setting forth information with respect to the related Mortgage Loans and REO Properties.

          Assignment of Mortgage: An assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the transfer of the Mortgage to the party
indicated therein or if the related Mortgage has been recorded in the name of MERS or its designee,
such actions as are necessary to cause the applicable Mortgage Loan Holder to be shown as the owner
of the related Mortgage on the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.

          Balloon Mortgage Loan: Any Mortgage Loan that by its original terms or by virtue of
any modification provides for a monthly amortization schedule extending beyond its scheduled
maturity date.

          Balloon Payment: With respect to a Balloon Mortgage Loan, as of any date of
determination, the amount outstanding on the maturity date of such Balloon Mortgage Loan in excess
of the related Monthly Payment.

          Business Day: Any day other than (a) a Saturday or Sunday, or (b) a day on which
banking and savings and loan institutions in the states of New York or California are authorized or
obligated by law or executive order to be closed.

          Code: The Internal Revenue Code of 1986, as amended.

- 2 -

 

          Condemnation Proceeds: All awards or settlements in respect of a Mortgaged Property,
whether permanent or temporary, partial or entire, by exercise of the power of eminent domain or
condemnation, to the extent not required to be released to a Mortgagor in accordance with the terms
of the related Mortgage Loan Documents.

          Confidential Information: As defined in Section 3.21.

          Custodial Account: The separate account or accounts created and maintained pursuant
to Section 3.03.

          Custodial Agreement: Any custodial agreement between a Mortgage Loan Holder and a
Custodian.

          Custodian: The custodian(s) appointed by the applicable Mortgage Loan Holder from
time to time to hold certain Mortgage Loan Documents.

          Customer Information: As defined in Section 3.21.

          Determination Date: The last Business Day of the month prior to the related
Remittance Date.

          Due Date: The day of the calendar month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.

          eNote: Means a Transferable Record as defined by E-SIGN or UETA, whichever is
applicable, stored electronically rather than using traditional paper documentation that has a pen
and ink signature and registered on the MERS eRegistry.

          Environmental Liability: Any and all claims, losses, damages, liabilities, judgments,
penalties, fines, forfeitures, reasonable legal fees and expenses, and any and all related costs
and/or expenses of litigation, administrative and/or regulatory agency proceedings, and any other
costs, fees and expenses, suffered or incurred by the Subservicer or the Mortgage Loan Holders
arising out of or resulting from the introduction of environmentally hazardous materials on any
Mortgaged Property or REO Property before and/or after the date of the Subservicer’s knowledge
thereof, including, without limitation, (a) any liability under or on account of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., as the same
may be amended from time to time, and/or any other federal or state environmental laws, and
specifically including, without limitation, any liability relating to asbestos and asbestos
containing materials, polychlorinated biphenyls, radon gas, petroleum and petroleum products, urea
formaldehyde and any substances classified as being “in inventory”, “usable work in process” or
similar classification which would, if classified as unusable, be included in the foregoing
definition, including the assertion of any lien thereunder, (b) claims brought by third parties for
loss or damage incurred or sustained subsequent to the date hereof, and (c) liability with respect
to any other matter affecting the Mortgaged Property or REO Property within the jurisdiction of the
federal Environmental Protection Agency or state environmental regulatory agencies pursuant to any
state laws, and in the regulations adopted pursuant to any of said laws.

- 3 -

 

          Errors and Omissions Insurance: Errors and Omissions Insurance to be maintained by
the Subservicer in accordance with Section 3.12.

          Escrow Account: The separate account or accounts operated and maintained pursuant to
Section 3.05.

          Escrow Payments: 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.

          Event of Default: Any event set forth in Section 8.01.

          Fannie Mae: Fannie Mae, or any successor thereto.

          FDIC: The Federal Deposit Insurance Corporation or any successor thereto.

          Fidelity Bond: A fidelity bond to be maintained by the Subservicer in accordance with
Section 3.12.

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

          GSEs: Fannie Mae and Freddie Mac.

          Insurance Proceeds: With respect to each Asset, proceeds of insurance policies
insuring the Mortgage Loan, the related Mortgaged Property or the REO Property, as applicable,
including the proceeds of any hazard or flood insurance policy, title insurance policy, LPMI Policy
or PMI Policy.

          Legal Requirements: The federal, state or local laws, statutes, rules, regulations,
ordinances, standards, requirements, administrative rulings, orders or processes pertaining to the
processing and servicing of the Assets.

          Liquidation Proceeds: Cash received in connection with the liquidation of an Asset,
whether through the sale or assignment of such Mortgage Loan, trustee’s sale, foreclosure sale or
otherwise, or the sale of the related REO Property if the Mortgaged Property is acquired in
satisfaction of a Mortgage Loan.

          Loan to Value Ratio or LTV: As to any Mortgage Loan, the ratio (expressed as a
percentage) of the outstanding principal balance of such Mortgage Loan at the date of determination
to the Appraised Value.

          LPMI Loan: A Mortgage Loan with a LPMI Policy.

          LPMI Policy: A policy of primary mortgage guaranty insurance issued by a Qualified
Insurer pursuant to which the related premium is to be paid by the Subservicer from

- 4 -

 

payments of interest made by the Mortgagor in an amount as is set forth in the related Asset
Schedule or reimbursed by Servicer.

          Maximum Rate: With respect to any adjustable rate Mortgage Loan, the maximum
allowable Mortgage Interest Rate that may be charged the borrower under the related Mortgage Note.

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

          MERS eRegistry: Means the electronic mortgage registration system established and
maintained by MERS for tracking the control of eNotes.

          MERS System: The system of recording transfers of mortgages electronically maintained
by MERS.

          Monthly Payment: The scheduled monthly payment of principal and/or interest on a
Mortgage Loan, excluding any Balloon Payment.

          Moody’s: Moody’s Investors Service, Inc. or any successor in interest.

          Mortgage: The mortgage, deed of trust or other instrument creating a first lien on a
Mortgaged Property securing a Mortgage Note.

          Mortgage File: The Mortgage Loan Documents and any additional documents required to
be added to the Mortgage File pursuant to this Agreement.

          Mortgage Impairment Insurance Policy: A mortgage impairment or blanket hazard
insurance policy to be maintained by the Subservicer in accordance with Section 3.12.

          Mortgage Interest Rate: The annualized monthly rate of interest borne on a Mortgage
Note.

          Mortgage Loan: An individual mortgage loan that is the subject of this Agreement and
identified on the related Asset Schedule, which may be a first lien mortgage loan and which
mortgage loan includes, without limitation, the Mortgage Loan Documents, the Monthly Payments,
Escrow Payments, Principal Prepayments, Prepayment Charges, Liquidation Proceeds, Condemnation
Proceeds, Ancillary Income, Insurance Proceeds, REO Disposition Proceeds, and all other rights,
benefits, proceeds and obligations arising from or in connection with such Mortgage Loan.

          Mortgage Loan Documents: The items pertaining to a particular Mortgage Loan as set
forth on Exhibit B to the extent available from the Servicer or originator.

          Mortgage Loan Holder: With respect to any Mortgage Loan, the owner or beneficial owner
of such Mortgage Loan, which is either Provident Mortgage Capital Associates, Inc. (“PMCA”), as
holder of such Mortgage Loan for its own account, the Person to which

- 5 -

 

PMCA has transferred such Mortgage Loan, or a trustee of a securitization vehicle to which
such Mortgage Loan has been transferred.

          Mortgage Note: The note, an eNote, or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.

          Mortgaged Property: The real property (stock or leasehold estate, if applicable)
securing repayment of the debt evidenced by a Mortgage Note.

          Mortgagor: The obligor on a Mortgage Note.

          Nonrecoverable Servicing Advance: Any Servicing Advance previously made or proposed
to be made in respect of a Mortgage Loan or REO Property that, in the good faith business judgment
of the Subservicer, will not, or, in the case of a proposed Servicing Advance, would not be,
ultimately recoverable from related late payments, Insurance Proceeds or Liquidation Proceeds on
such Mortgage Loan or REO Property as provided herein.

          Officer’s Certificate: A certificate signed by the President or a Vice President or
an assistant Vice President of the Subservicer and delivered to the Servicer as required by this
Agreement.

          Opinion of Counsel: A written opinion of counsel, who may be an employee of the
Subservicer, reasonably acceptable to the Servicer.

          Servicer: Provident Mortgage Capital Associates, Inc., as servicer of the Mortgage
Loans.

          Parties: The Servicer and the Subservicer.

          Party: The Servicer or the Subservicer, as applicable.

          Pass-Through Expense: All customary and reasonable costs and expenses incurred by the
Subservicer (to the extent the Subservicer performs any such functions or incurs any such expense,
and where such expense is approved in advance by the Servicer ), which pursuant to Accepted
Servicing Practices are due and payable to a Person other than the Subservicer, which are
not reimbursable to the Subservicer from the Mortgagor or through the netting of proceeds
from the related Mortgage Loan, and which are in the nature of an expenditure that relates to
establishing, maintaining or curing the right, title or interests of the mortgagee or lender of the
Mortgage Loan. Such Pass-Through Expenses shall include, but are not limited to, each of the
following items:

	 	1.	 	The cost of research, recovery and locating any documents
missing from the Mortgage Loan Documents.
	 
	 	2.	 	Payments for costs, fees and expenses incurred in perfecting,
filing or recording documents evidencing the assignment, foreclosure, sale or
mortgaging of any Mortgaged Property.

- 6 -

 

	 	3.	 	Expenses incurred to resolve or cure a dispute or issue
involving any failure of the Mortgage Loan to comply with any Legal
Requirements or customary industry standards that is attributable to the
Mortgage Loan Holder, Servicer, originator or any Person (other than the
Subservicer).
	 
	 	4.	 	Expenses or costs incurred in connection with any proceeding,
investigation, audit, request or other inquiry by any governmental regulatory
agency or other instrumentality involving the compliance of any Mortgage Loans
with Legal Requirements relating to the origination or servicing prior to or
after the related Transfer Date.
	 
	 	5.	 	Servicer Expenses for the Servicer’s failure to fund or offset
the funding of the following: non-funded positive escrow, unapplied balances
and non-documented corporate advances.
	 
	 	6.	 	Regulatory fines and or penalties associated with the
Servicer’s or the Servicer designee’s or Custodian’s failure to provide
required documents in order to complete the timely satisfaction or release of
the Mortgage.
	 
	 	7.	 	Set-up, transfer, and release fees for Mortgage Loans
registered on the MERS System.

          Person: Any individual, corporation, partnership, joint venture, association, limited
liability company, joint-stock company, trust, unincorporated organization, government or any
agency or political subdivision thereof, or any other entity.

          PMI Policy: A policy of primary mortgage guaranty insurance issued by a Qualified
Insurer, as required by this Agreement with respect to certain Mortgage Loans.

          Prepayment Charge: With respect to any Mortgage Loan and Remittance Date, the charges
or premiums, if any, due in connection with a full or partial prepayment of such Mortgage Loan in
accordance with the terms thereof.

          Prime Rate: The prime rate announced to be in effect from time to time, as published
as the average rate in The Wall Street Journal (national edition) or if not published in The Wall
Street Journal (national edition), such other publication selected by the Subservicer.

          Principal Prepayment: Any payment or other recovery of principal on a Mortgage Loan
which is received in advance of its scheduled Due Date, including any Prepayment Charge or premium
thereon and which is not accompanied by an amount of interest representing scheduled interest due
on any date or dates in any month or months subsequent to the month of prepayment.

          Property Charges: As defined in Section 3.09(a).

          Protected Information: As defined in Section 3.21.

- 7 -

 

          Qualified Depository: A federal or state chartered depository institution the
deposits in which are insured by the FDIC to the applicable limits and acceptable to the Servicer
consistent with Accepted Servicing Practices.

          Qualified Insurer: A mortgage guaranty insurance company duly authorized and licensed
where required by law to transact mortgage guaranty insurance business and approved as an insurer
by the Servicer consistent with Accepted Servicing Practices.

          Remittance Date: With respect to any Mortgage Loan, the date(s) the applicable
Mortgage Loan Holder requires the Servicer to remit the applicable funds to it.

          Reporting Date: Four (4) Business Days prior to each Remittance Date.

          REO Disposition: The final settlement of sale of any REO Property.

          REO Disposition Proceeds: All amounts received with respect to an REO Disposition.

          REO Property: A Mortgaged Property acquired by the Subservicer on behalf of the
applicable Mortgage Loan Holder through foreclosure or by deed in lieu of foreclosure, as described
in Section 3.17.

          S&P: Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc.
or any successor in interest.

          Security Breach: As defined in Section 3.21.

          Servicing Advances: Any and all (i) Pass-Through Expenses and (ii) customary,
reasonable and/or necessary “out of pocket” costs and expenses (including reasonable attorneys’
fees and disbursements) incurred in the performance by the Subservicer of its servicing obligations
that would be reasonably believed to be recoverable under Accepted Servicing Practices, including,
but not limited to, the cost of (a) the preservation, restoration and protection of the Mortgaged
Property or REO Property, (b) any enforcement or administrative or judicial proceedings, including
foreclosures and any expenses incurred in connection with any such proceeding that result from the
Mortgage Loan being registered on the MERS System, (c) the management and liquidation of the
Mortgaged Property or REO Property (including default management and similar services, appraisal
services and real estate broker services), (d) taxes, assessments, water rates, sewer rents and
other charges which are or may become a lien upon the Mortgaged Property or REO Property, PMI
Policy premiums and fire and hazard insurance coverage, (e) payments to obligors or tenants in
connection with obtaining title to or possession of any Mortgaged Property pursuant to a
deed-in-lieu of foreclosure, unlawful detainer or eviction action and (f) such other amounts as set
forth in this Agreement that are considered Servicing Advances.

          Servicing Fees: With respect to each Asset, the fees the Servicer shall pay to the
Subservicer as provided in Exhibit A and elsewhere in this Agreement.

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          Servicing File: The items pertaining to a particular Asset including, but not limited
to, the computer files, data disks, books, records, data tapes, notes, copies of the Mortgage Loan
Documents, electronic images, and all additional documents generated as a result of or utilized in
originating and/or servicing each Asset, which are delivered to the Subservicer and held for the
Servicer by the Subservicer.

          Servicing Transfer Costs: All reasonable out-of-pocket costs and expenses incurred in
connection with the transfer of servicing, including, without limitation, costs related to the
transfer or procurement of acceptable tax or flood certification contracts, assignment preparation
and recordation costs, MERS transfer costs, and any reasonable out-of-pocket costs or expenses
associated with the complete transfer of all servicing data, but not including overhead or similar
costs.

          Shortfall: As defined in Section 4.01.

          Subservicer: Provident Funding Associates, L.P., acting as subservicer, or its
successor in interest or assigns or any successor to the Subservicer under this Agreement as herein
provided.

          Transfer Date: The date or dates on which the servicing of a pool of Mortgage Loans
is transferred from the Servicer to the Subservicer, as evidenced by an Acknowledgment Agreement,
executed in accordance with Section 2.01.

ARTICLE II.

THE SERVICER’S ENGAGEMENT OF THE SUBSERVICER

TO PERFORM SERVICING RESPONSIBILITIES

Section 2.01. Contract for Servicing; Possession of Servicing Files.

          With respect to each Mortgage Loan to be serviced hereunder, the Servicer shall deliver to the
Subservicer the Servicing File for each related Mortgage Loan and, by computer readable electronic
transmission in the format specified either by the servicing transfer instructions attached hereto
as Exhibit F or by the Subservicer, the related final Asset Schedule not later than one (1)
Business Day following the Transfer Date. Subservicer shall confirm receipt of the aforementioned
electronic submission and the related asset schedule by e mail not later than 1 business day after
receipt. Such submission and confirmation shall constitute the acknowledgement of the parties that
Servicer shall service and the Subservicer shall subservice the transferred loans in accordance
with this agreement.

          The Subservicer shall maintain the Servicing File with respect to each Asset in order to
service such Asset pursuant to this Agreement and such Servicing File is and shall be held by the
Subservicer for the benefit of the applicable Mortgage Loan Holder as the owner thereof. The
possession of each Servicing File by the Subservicer is at the will of the Servicer for the sole
purpose of subservicing the related Asset, and such retention and possession by the Subservicer is
in a custodial capacity only. The ownership of each Mortgage Note, Mortgage, deed, and the contents
of the Servicing File shall be vested in the applicable Mortgage Loan Holder and the ownership of
all records and documents with respect to the related Asset prepared

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by or which come into the possession of the Subservicer shall immediately vest in the
applicable Mortgage Loan Holder and shall be retained and maintained by the Subservicer at the
will of the Servicer in such custodial capacity only. The portion of each Servicing File retained
by the Subservicer pursuant to this Agreement shall be marked electronically to clearly reflect the
ownership of the related Asset by the applicable Mortgage Loan Holder. The Subservicer shall
release from its custody the contents of any Servicing File retained by it only in accordance with
this Agreement.

Section 2.02. Books and Records.

          Record title to each Mortgage and the related Mortgage Note shall remain in the name of the
applicable Mortgage Loan Holder and record title to each REO Property shall be in the name of a
Person as the Servicer shall designate. With respect to each Assignment of Mortgage, if so
requested by the Servicer, the Subservicer, at the Servicer’s expense, shall cause MERS to
designate on the MERS System the applicable Mortgage Loan Holder as the beneficial holder with
respect to such Mortgage Loan (and the Servicer as servicer) or shall prepare and record each
Assignment of Mortgage, and track such assignments of mortgage to ensure they have been recorded.
The Servicer shall pay all reasonable and necessary fees associated with the preparation, recording
and tracking of the Assignment of the Mortgage Loans. To the extent that original documents are
not required for purposes of realization of loan proceeds, documents maintained by the Subservicer
may be in the form of microfilm or microfiche or such other reliable means of recreating original
documents, including but not limited to, optical imagery techniques so long as the Subservicer
complies with the requirements of the Accepted Servicing Practices.

Section 2.03. Custodial Agreement; Delivery of Documents.

          Pursuant to the Custodial Agreement, the applicable Mortgage Loan Holder has or shall deliver
and release to the Custodian the Mortgage Loan Documents and REO Property documents as required
pursuant to the Custodial Agreement. The Custodian has certified its receipt of all such Mortgage
Loan and REO Property documents required to be delivered pursuant to the Custodial Agreement, as
evidenced by the certification of the Custodian. The applicable Mortgage Loan Holder or Servicer
shall be responsible for maintaining the Custodial Agreement and shall pay all fees and expenses of
the Custodian, including reasonable fees and expenses due to the Subservicer’s requests of the
Custodian in the normal course of the Subservicer’s collection and foreclosure activities
(including, but not limited to, follow up document deliveries to and from the Subservicer and
photocopies of documents made at the request of the Subservicer).

Section 2.04. Transfer of Servicing.

          On or prior to each Transfer Date with respect to a each Asset, the Servicer agrees to act
reasonably, in good faith and in accordance with all Legal Requirements and regulations and to do
all things reasonably necessary or appropriate to effectuate and evidence the transfer of the
servicing of the Assets to the Subservicer, including to comply with the Subservicer’s servicing
transfer instructions attached hereto as Exhibit F. If the Servicer intends to provide the
Subservicer with any part of the Mortgage File or Servicing File by electronic images, the

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images must be provided in a format ingestible into the Subservicer’s imaging system without
additional cost or time to the Subservicer. The Subservicer shall have no liability hereunder and
shall be excused from performance to the extent that such liability or failure to perform arises
from the lack of having the original documents due to Servicer error and/or technological issues,
including without limitation, any illegibility of the images. If Subservicer becomes aware of
missing and/or illegible original documents it will notify Servicer as soon as reasonably possible.

          If an Asset is covered by a transferable life-of-loan real estate tax service contract, the
Servicer shall promptly transfer such contract to the Subservicer. Within fifteen (15) days of the
related Transfer Date, the Subservicer shall, if an Asset is not covered by a transferable
life-of-loan real estate tax service contract, purchase such a tax service contract from a tax
service provider and reimburse itself for such as a Servicing Advance as provided in Section 3.04.

          If an Asset is covered by a transferable life-of-loan real estate flood certification
contract, the Servicer shall promptly transfer such contract to the Subservicer. Within fifteen
(15) days of the related Transfer Date, the Subservicer shall, if an Asset is not covered by a
flood certification contract and is required by Accepted Servicing Practices to be covered by a
flood certification contract, purchase such a flood certification contract from a flood
certification contract provider and reimburse itself for such as a Servicing Advance as provided in
Section 3.04.

ARTICLE III.

SERVICING OF THE ASSETS

Section 3.01. The Subservicer to Service.

          The Subservicer, as an independent contractor, shall service and administer the Assets from
and after the related Transfer Date and shall have full power and authority, acting alone or
through the utilization of a third party service provider, to do any and all things in connection
with such servicing and administration which the Subservicer may deem necessary or desirable,
consistent with the terms of this Agreement and Accepted Servicing Practices.

          Consistent with the terms of this Agreement and Accepted Servicing Practices the Subservicer
may, waive, modify or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor if in the
Subservicer’s reasonable and prudent determination such waiver, modification, postponement or
indulgence is not materially adverse to the applicable Mortgage Loan Holder. Without limiting the
generality of the foregoing, the Subservicer shall continue, and is hereby authorized and
empowered, to execute and deliver on behalf of itself and the Servicer, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the Mortgaged Properties. If
requested by the Subservicer, the Servicer shall furnish the Subservicer with any powers of
attorney (in the form of Exhibit C) and other documents necessary or appropriate to enable the
Subservicer to carry out its servicing and administrative duties under this Agreement.

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Section 3.02. Collection and Liquidation of Mortgage Loans.

          Continuously from the related Transfer Date until the date each Asset ceases to be subject to
this Agreement, the Subservicer shall proceed diligently to collect all payments due under each
Asset when the same shall become due and payable and shall, solely with respect to each first lien
Mortgage Loan which provides for Escrow Payments, ascertain Escrow Payments and all other charges
that will become due and payable with respect to the Mortgage Loans and each related Mortgaged
Property, to the end that the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable.

          Consistent with Accepted Servicing Practices, the Subservicer shall foreclose upon or
otherwise comparably convert the ownership of such Mortgaged Properties as come into and continue
in default and as to which no satisfactory arrangements can be made for collection of delinquent
payments of the related Mortgage Loans pursuant to Section 3.01. The Subservicer shall realize
upon defaulted Mortgage Loans in such a manner as will maximize the receipt of principal and
interest, taking into account, among other things, the timing of foreclosure proceedings. The
foregoing is subject to the provisions that, in any case in which Mortgaged Property shall have
suffered damage, the Subservicer shall not be required to expend its own funds toward the
restoration of such property unless (a) it shall determine in its discretion that such restoration
will increase the proceeds of liquidation of the related Mortgage Loan to the applicable Mortgage
Loan Holder after reimbursement to itself for such expenses or (b) it is required by Legal
Requirements. In addition, the Subservicer shall not advance any funds on an Asset unless the
Subservicer reasonably believes, based on Accepted Servicing Practices, that an advance pursuant to
this or any other section (including but not limited to Section 3.08(b)) will be ultimately
recoverable from Insurance Proceeds, Liquidation Proceeds or other recovery or such advance is
required by Legal Requirements or Accepted Servicing Practices. In the event that any payment due
under any Mortgage Loan and not postponed pursuant to Section 3.01 is not paid when the same
becomes due and payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any applicable grace period,
the Subservicer shall take such action as (i) shall be consistent with Accepted Servicing Practices
and (ii) the Subservicer shall determine to be in the best interest of the applicable Mortgage Loan
Holder. In the event that any payment due under any Mortgage Loan is not postponed pursuant to
Section 3.01 and remains delinquent for a period of ninety (90) days (or such other timeframe
consistent with Accepted Servicing Practices) or any other default continues for a period of ninety
(90) days beyond the expiration of any grace or cure period, the Subservicer shall unless
prohibited by Legal Requirements, commence foreclosure proceedings.

Section 3.03. Establishment of and Deposits to Custodial Account.

          The Subservicer shall segregate and hold all funds collected and received on the Assets
separate and apart from any of its own funds and general assets and shall establish and maintain
one or more Custodial Accounts, in the form of demand accounts, titled “Provident Funding
Associates, L.P., for the benefit of Provident Mortgage Capital Associates, Inc.” (or the
applicable Mortgage Loan Holder). The Custodial Account shall be established with a Qualified
Depository. Funds deposited in the Custodial Account may be drawn on by the Subservicer in
accordance with Section 3.04. The Subservicer shall deposit in the Custodial Account within

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two (2) Business Days of the Subservicer’s receipt, and retain therein, the following
collections received by the Subservicer and payments made by the Subservicer after each Transfer
Date:

               (i) all payments on account of principal on the Mortgage Loans, including all Principal
Prepayments and all Prepayment Charges;

               (ii) all payments on account of interest on the Mortgage Loans;

               (iii) all Liquidation Proceeds;

               (iv) all Insurance Proceeds including amounts required to be deposited pursuant to Section
3.10 (other than proceeds to be held in the Escrow Account and applied to the restoration and
repair of the Mortgaged Property or released to the Mortgagor in accordance with the related
Mortgage Loan Documents and Accepted Servicing Practices);

               (v) all Condemnation Proceeds that are not applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with the related Mortgage Loan
Documents and Accepted Servicing Practices;

               (vi) any amounts required to be deposited by the Subservicer pursuant to Section 3.10 in
connection with the deductible clause in any blanket hazard insurance policy;

               (vii) any amounts received with respect to or related to any REO Property or REO Disposition
Proceeds as provided in this Agreement;

               (viii) any amounts required to be deposited by the Subservicer pursuant to Section 3.16;

               (ix) any amounts received by the Subservicer under a PMI Policy or LPMI Policy; and

               (x) any other amount required to be deposited in the Custodial Account pursuant to this
Agreement.

          The foregoing requirements for deposit into the Custodial Account shall be exclusive, it being
understood and agreed that, without limiting the generality of the foregoing, payments in the
nature of Servicing Fees or Ancillary Income need not be deposited by the Subservicer into the
Custodial Account. Any interest paid on funds deposited in the Custodial Account by the depository
institution shall accrue to the benefit of the Subservicer and the Subservicer shall be entitled to
retain and withdraw such interest from the Custodial Account pursuant to Section 3.04.

Section 3.04. Permitted Withdrawals From Custodial Account.

          Subservicer shall, from time to time, withdraw funds from the Custodial Account for the
following purposes:

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               (i) to make payments to the applicable Mortgage Loan Holder in the amounts and in the manner
provided for in Section 4.01;

               (ii) to pay to itself the related Servicing Fees;

               (iii) to pay itself all other fees set forth in this Agreement and any Ancillary Income
deposited into the Custodial Account;

               (iv) to reimburse itself for Servicing Advances;

               (v) to reimburse itself for Nonrecoverable Servicing Advances;

               (vi) to pay itself interest on funds deposited in the Custodial Account;

               (vii) to deposit the Shortfall, if any;

               (viii) to transfer funds to another Qualified Depository in accordance with Section 3.10
hereof;

               (ix) to withdraw funds deposited in error; and

               (x) to clear and terminate the Custodial Account upon the termination of this Agreement.

          The Subservicer shall keep and maintain separate accounting, on a Mortgage Loan by Mortgage
Loan basis, and on an REO Property by REO Property basis, for the purpose of justifying any
withdrawal from the Custodial Account.

Section 3.05. Establishment of and Deposits to Escrow Account.

          The Subservicer shall segregate and hold all funds collected and received pursuant to a
Mortgage Loan constituting Escrow Payments separate and apart from any of its own funds and general
assets and shall establish and maintain one or more Escrow Accounts, in the form of demand
accounts, titled, “Provident Funding Associates, L.P., for the benefit of Provident Mortgage
Capital Associates, Inc. (or applicable Mortgage Loan Holder) and/or various mortgagors,
respectively”. The Escrow Accounts shall be established with a Qualified Depository. Funds
deposited in the Escrow Account may be drawn on by the Subservicer in accordance with Section 3.06.
The Subservicer shall deposit in the Escrow Account or Accounts within two (2) Business Days of
Subservicer’s receipt, and retain therein:

               (i) all Escrow Payments collected on account of the Mortgage Loans; and

               (ii) all amounts representing Insurance Proceeds or Condemnation Proceeds which are to be
applied to the restoration or repair of any Mortgaged Property.

          The Subservicer shall make withdrawals from the Escrow Account only to effect such payments as
are required under this Agreement, as set forth in Section 3.06. The

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Subservicer shall be entitled to retain any interest paid on funds deposited in the Escrow
Account by the depository institution, other than interest on escrowed funds required by law to be
paid to the Mortgagor. To the extent required by law, the Subservicer shall pay, without
reimbursement, interest on escrowed funds to the Mortgagor notwithstanding that the Escrow Account
may be non-interest bearing or that interest paid thereon is insufficient for such purposes.

Section 3.06. Permitted Withdrawals From Escrow Account.

          Withdrawals from the Escrow Account or Accounts may be made by the Subservicer only:

               (i) to effect timely payments of ground rents, taxes, assessments, water rates, mortgage
insurance premiums, condominium charges, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage;

               (ii) to reimburse the Subservicer for any Servicing Advance made by the Subservicer with
respect to a Mortgage Loan, but only from amounts received on such Mortgage Loan which represent
late collections of Escrow Payments thereunder to the extent not otherwise reimbursed pursuant to
Section 3.04(iv);

               (iii) to refund to any Mortgagor any funds found to be in excess of the escrow amounts
required under the terms of the related Mortgage Loan;

               (iv) to the extent permitted by Accepted Servicing Practices, for transfer to the Custodial
Account and application to reduce the principal balance of the Mortgage Loan in accordance with the
terms of the related Mortgage and Mortgage Note;

               (v) for application to restoration or repair of the Mortgaged Property in accordance with
Section 3.13;

               (vi) to pay to the Subservicer, or any Mortgagor to the extent permitted by Accepted Servicing
Practices, any interest paid on the funds deposited in the Escrow Account;

               (vii) to withdraw funds deposited in error; and

               (viii) to clear and terminate the Escrow Account on the termination of this Agreement.

          The Subservicer will be responsible for the administration of the Escrow Accounts and will be
obligated to make Servicing Advances to the Escrow Account in respect of its obligations under this
Section 3.06, reimbursable from the Escrow Accounts or Custodial Account to the extent not
collected from the related Mortgagor. The Subservicer shall keep and maintain separate accounting,
on a Mortgage Loan by Mortgage Loan basis, and on an REO Property by REO Property basis, for the
purpose of justifying any withdrawal from the Escrow Account.

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Section 3.07. Notification of Adjustments.

          With respect to each adjustable rate Mortgage Loan, the Subservicer shall adjust the Mortgage
Interest Rate on the related interest rate adjustment date and shall adjust the Monthly Payment on
the related mortgage payment adjustment date, if applicable, in compliance with Accepted Servicing
Practices. The Subservicer shall execute and deliver any and all necessary notices required under
Accepted Servicing Practices regarding the Mortgage Interest Rate and Monthly Payment adjustments.
The Subservicer shall promptly, upon written request therefor, deliver to the Servicer such
notifications and any additional applicable data regarding such adjustments and the methods used to
calculate and implement such adjustments.

Section 3.08. Payment of Taxes, Insurance and Other Charges.

          (a) With respect to each first lien Mortgage Loan which provides for Escrow Payments and with
respect to each REO Property, the Subservicer shall maintain accurate records reflecting the status
of ground rents, taxes, assessments, water rates, sewer rents and other charges which are or may
become a lien upon the Mortgaged Property or REO Property, and shall obtain, from time to time, all
bills for the payment of such charges (including renewal premiums) (“Property Charges”) and
shall effect payment thereof prior to the applicable penalty or termination date, employing for
such purpose (i) with respect to the related Mortgage Loans, deposits of the Mortgagor in the
Escrow Account which shall have been estimated by the Subservicer in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage or (ii) with respect to the related REO
Properties, Servicing Advances. The Subservicer assumes full responsibility for the timely payment
of all such bills and shall effect timely payment of all such charges irrespective of each
Mortgagor’s faithful performance in the payment of same or the making of the Escrow Payments.

          (b) To the extent that a first lien Mortgage Loan does not provide for Escrow Payments, the
Subservicer shall make a Servicing Advance from its own funds to effect payment of all Property
Charges with respect to such first lien Mortgage Loan upon receipt of notice of any failure to pay
on the part of the Mortgagor, provided that, the Subservicer shall use commercially reasonable
efforts to pay such charges on or before the date by which payment is necessary to preserve the
lien status of the Mortgage. The Subservicer shall pay any late fee or penalty which is payable
due to any delay in payment of any Property Charge, and any such late fee or penalty shall be
reimbursement to the Subservicer as a Servicing Advance. Penalties and late fees that are a result
of the Servicer’s action or inaction are “Servicer Penalties.” The Subservicer is required to
advance Servicer Penalties. Such Servicer Penalties shall be deemed a Servicing Advance.

Section 3.09. Protection of Accounts.

          The Subservicer may transfer the Custodial Account or the Escrow Account to a different
Qualified Depository from time to time following notice to the Servicer.

Section 3.10. Maintenance of Hazard Insurance.

          The Subservicer shall cause to be maintained for each first lien Mortgage Loan hazard
insurance such that all buildings upon each Mortgaged Property are insured by a insurer

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acceptable to the applicable Mortgage Loan Holder and licensed to do business in the
jurisdiction in which the Mortgaged Property is located, insuring against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area where the Mortgaged Property
is located, in an amount consistent with Accepted Servicing Practices. If the Mortgagor fails to
maintain hazard insurance, the Subservicer shall, if the Mortgaged Property is occupied, advance an
amount sufficient to maintain the existing Mortgagor’s policy. If such policy cannot be
maintained, the Subservicer shall obtain such coverage, and the costs and expenses the Subservicer
incurs for coverage shall be deemed a Servicing Advance.

          If the related Mortgaged Property is located in an area identified in the Federal Register by
the Flood Emergency Management Agency as having special flood hazards (and such flood insurance has
been made available), the Subservicer shall maintain a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration in effect, with a
insurance carrier acceptable to the Servicer in an amount consistent with Accepted Servicing
Practices. If at any time during the term of the Mortgage Loan the Subservicer determines in
accordance with Legal Requirements that a Mortgaged Property is located in a special flood hazard
area and is not covered by flood insurance or is covered in an amount less than the amount required
consistent with Accepted Servicing Practices, the Subservicer shall, advance an amount sufficient
to maintain the existing Mortgagor’s policy and notify the related Mortgagor that the Mortgagor
must obtain such flood insurance coverage, and if said Mortgagor fails to obtain the such flood
insurance coverage within forty-five (45) days after such notification, the Subservicer shall
immediately force place the required flood insurance on the Mortgagor’s behalf. The costs and
expenses the Subservicer incurs for such flood insurance coverage shall be a Servicing Advance.

          All policies required hereunder shall name the Subservicer as loss payee and shall be endorsed
with standard mortgagee clauses, without contribution, which shall provide for at least thirty (30)
days prior written notice of any cancellation, reduction in amount or material change in coverage.

          The Subservicer shall not interfere with the Mortgagor’s freedom of choice in selecting either
his insurance carrier or agent, provided, however, that the Subservicer shall not accept any such
insurance policies from insurance companies unless such companies are acceptable to the Servicer
and are licensed to do business in the jurisdiction in which the Mortgaged Property is located.
The Subservicer shall determine that such policies insure the property owner and that they properly
describe the property address. The Subservicer shall furnish to the Mortgagor a formal notice of
expiration of any such insurance in sufficient time for the Mortgagor to arrange for renewal
coverage by the expiration date.

          Pursuant to Section 3.03, any amounts collected by the Subservicer under any such policies
(other than amounts to be deposited in the Escrow Account and applied to the restoration or repair
of the related Mortgaged Property, or property acquired in liquidation of the Asset, or to be
released to the Mortgagor, in accordance with Accepted Servicing Practices as specified in Section
3.13) shall be deposited in the Custodial Account subject to withdrawal pursuant to Section 3.04.

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Section 3.11. Maintenance of Mortgage Impairment Insurance.

          In the event that the Subservicer shall obtain and maintain a blanket policy insuring against
losses arising from fire and hazards covered under extended coverage on all of the Assets, then, to
the extent such policy provides coverage in an amount equal to the amount required pursuant to
Section 3.10 and otherwise complies with all other requirements of Section 3.10, it shall
conclusively be deemed to have satisfied its obligations as set forth in Section 3.10. Any amounts
collected by the Subservicer under any such policy relating to an Asset shall be deposited in the
Custodial Account subject to withdrawal pursuant to Section 3.04. Such policy may contain a
deductible clause, in which case, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property, a policy complying with Section 3.10, and there shall
have been a loss which would have been covered by such policy, the Subservicer shall deposit in the
Custodial Account at the time of such loss the amount not otherwise payable under the blanket
policy because of such deductible clause, such amount to be deposited from the Subservicer’s funds,
without reimbursement therefor. Upon request of the Servicer, the Subservicer shall cause to be
delivered to the Servicer a certificate of insurance for such policy.

Section 3.12. Maintenance of Fidelity Bond and Errors and Omissions Insurance.

          The Subservicer shall maintain with responsible companies, at its own expense, a blanket
Fidelity Bond and an Errors and Omissions Insurance Policy, with coverage on all officers,
employees or other persons acting in any capacity requiring such persons to handle funds, money,
documents or papers relating to the Mortgage Loans (“Subservicer Employees”). Any such
Fidelity Bond and Errors and Omissions Insurance Policy shall be in the form of the Mortgage
Banker’s Blanket Bond and shall protect and insure the Subservicer against losses, including
forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of such Subservicer
Employees. No provision of this Section 3.12 requiring such Fidelity Bond and Errors and Omissions
Insurance Policy shall diminish or relieve the Subservicer from its duties and obligations as set
forth in this Agreement. The minimum coverage under any such bond and insurance policy shall be
acceptable to the Servicer. Upon the request of the Servicer, the Subservicer shall cause to be
delivered to the Servicer a certificate of insurance for such Fidelity Bond and Errors and
Omissions Insurance Policy.

Section 3.13. Restoration of Mortgaged Property.

          Solely with respect to any Mortgage Loan which is less than 30 days delinquent, the
Subservicer need not obtain the approval of the Servicer prior to releasing any Insurance Proceeds
or Condemnation Proceeds to the Mortgagor to be applied to the restoration or repair of the
Mortgaged Property if such release is in accordance with Accepted Servicing Practices. For claims
greater than $15,000, at a minimum, the Subservicer shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation Proceeds:

               (i) the Subservicer shall receive satisfactory independent verification of completion of
repairs and issuance of any required approvals with respect thereto;

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               (ii) the Subservicer shall take all steps necessary to preserve the priority of the lien of
the Mortgage, including, but not limited to requiring waivers with respect to mechanics’ and
materialmen’s liens; and

               (iii) pending repairs or restoration, the Subservicer shall place the Insurance Proceeds or
Condemnation Proceeds in the Escrow Account.

          If the Servicer is named as an additional loss payee, the Subservicer is hereby empowered to
endorse any loss draft issued in respect of such a claim in the name of the applicable Mortgage
Loan Holder.

Section 3.14. Maintenance of PMI and/or LPMI Policy; Claims.

          The Subservicer shall comply with all provisions of Legal Requirements and Accepted Servicing
Practices relating to the cancellation of, or collection of premiums with respect to PMI Policies
and LPMI Policies, including, but not limited to, the provisions of the Homeowners Protection Act
of 1998 (if applicable), and all regulations promulgated thereunder, as amended from time to time.
If the Mortgagor is required but fails to pay any PMI Policy or LPMI Policy premium, it shall be
paid from the Subservicer’s own funds, and any premium payments made by the Subservicer from its
own funds pursuant to this Section 3.16 shall be recoverable by the Subservicer as a Servicing
Advance as provided in Section 3.04.

          With respect to each Mortgage Loan subject to a PMI Policy or LPMI Policy as of the related
Transfer Date, the Subservicer shall maintain or cause the Mortgagor to maintain (to the extent
that the Mortgage Loan requires the Mortgagor to maintain such insurance) in full force and effect
a PMI Policy or LPMI Policy with a Qualified Insurer, and shall pay or shall cause the Mortgagor to
pay the premium thereon on a timely basis. Such premium shall be paid until the LTV of such
Mortgage Loan is reduced to a level at which the PMI Policy or LPMI Policy may be terminated in
accordance with Accepted Servicing Practices. In the event that such PMI Policy or LPMI Policy
shall be terminated (but not in accordance with Accepted Servicing Practices), the Subservicer
shall to the extent commercially reasonable obtain from another Qualified Insurer a comparable
replacement policy, with a total coverage equal to the remaining coverage of such terminated PMI
Policy or LPMI Policy at substantially the same fee level. The Subservicer shall not take any
action which would result in noncoverage under any applicable PMI Policy or LPMI Policy of any loss
which, but for the actions of the Subservicer would have been covered thereunder. In connection
with any assumption or substitution agreements entered into or to be entered into with respect to a
Mortgage Loan, the Subservicer shall promptly notify the insurer under the related PMI Policy or
LPMI Policy, if any, of such assumption or substitution of liability in accordance with the terms
of such PMI Policy or LPMI Policy and shall take all actions which may be required by such insurer
as a condition to the continuation of coverage under such PMI Policy or LPMI Policy. If such PMI
Policy or LPMI Policy is terminated as a result of such assumption or substitution of liability,
the Subservicer shall to the extent commercially reasonable obtain a replacement PMI Policy or LPMI
Policy as provided above.

          (a) With respect to each Mortgage Loan covered by a PMI Policy or LPMI Policy, the Subservicer
shall take all such actions on behalf of the Servicer as are necessary to

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service, maintain and administer the related Mortgage Loan in accordance with such policy and
to enforce the applicable Mortgage Loan Holder’s rights under such policy. Except as expressly set
forth herein, the Subservicer shall have full authority on behalf of the Servicer to act in
accordance with the Accepted Servicing Practices in connection with the servicing, maintenance and
administration of such policy; provided that the Subservicer shall not take any action to permit
any modification or assumption of a Mortgage Loan covered by a LPMI or PMI Policy, or take any
other action with respect to such Mortgage Loan, which would result in non-coverage under such
policy of any loss which, but for actions of any the Subservicer, would have been covered
thereunder. The Subservicer shall cooperate with the Qualified Insurers and shall furnish all
reasonable evidence and information in the possession of the Subservicer to which the Subservicer
has access with respect to the related Mortgage Loan.

          (b) In connection with its activities as servicer and to the extent consistent with Accepted
Servicing Practices, the Subservicer agrees to prepare and present, on behalf of itself and the
Servicer, claims to the Qualified Insurer under any PMI Policy or LPMI Policy in accordance
Accepted Servicing Practices. Any amounts collected by the Subservicer under any PMI Policy or
LPMI Policy shall be deposited in the Custodial Account pursuant to Section 3.03, subject to
withdrawal pursuant to Section 3.04.

          (c) The Servicer shall furnish the Subservicer with any powers of attorney and other documents
(within three (3) Business Days upon request from the Subservicer) in form reasonably acceptable to
the Servicer and provided to it by the Subservicer necessary or appropriate to enable the
Subservicer to service and administer any PMI or LPMI Policy.

Section 3.15. Title, Management and Disposition of REO Property.

          In the event that title to any Mortgaged Property is acquired in foreclosure or by deed in
lieu of foreclosure, the deed or certificate of sale shall be taken in the name of a Person
identified by the Servicer.

          The Subservicer shall manage, conserve, protect and operate each REO Property for the Servicer
in accordance with Accepted Servicing Practices for the purpose of maximizing the net present value
of proceeds recoverable by the Servicer. The Subservicer, either itself or through an agent
selected by the Subservicer or the Servicer, shall manage, conserve, protect and operate the REO
Property in accordance with Accepted Servicing Practices and in the same manner that it manages,
conserves, protects and operates other foreclosed property for its own account, and in the same
manner that similar property in the same locality as the REO Property is managed. The Subservicer
shall attempt to sell the same (and may temporarily rent the same) and use commercially reasonable
efforts to dispose of the REO Property and shall sell such REO Property as promptly as possible for
the orderly liquidation of such REO Property.

          The proceeds of sale of the REO Property shall be promptly deposited in the Custodial Account.
The Subservicer shall make advances of all funds necessary for the proper operation, management
and maintenance of the REO Property, including the cost of maintaining any hazard or flood
insurance pursuant to Section 3.10. Such advances shall be considered a Servicing Advance.

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Section 3.16. Real Estate Owned Reports.

          Together with the statement furnished pursuant to Section 4.02, the Subservicer shall furnish
to the Servicer on the Reporting Date, a statement with respect to any REO Property covering the
operation of such REO Property for the previous month and the Subservicer’s efforts in connection
with the sale of such REO Property and any rental of such REO Property incidental to the sale
thereof for the previous month.

Section 3.17. Liquidation Reports.

          Upon the foreclosure sale of any Mortgaged Property or the acquisition thereof by the
Subservicer on behalf of the Servicer pursuant to a deed in lieu of foreclosure, the Subservicer
shall submit to the Servicer a liquidation report with respect to such Mortgaged Property.

Section 3.18. Reports of Foreclosures and Abandonments of Mortgaged Property or REO
Property.

          Following the foreclosure sale or abandonment of any Mortgaged Property or REO Property, the
Subservicer shall report such foreclosure or abandonment as required pursuant to Section 6050J of
the Code.

Section 3.19. Prepayment Charges.

          Notwithstanding anything in this Agreement to the contrary, in the event of a Principal
Prepayment in full or in part of a Mortgage Loan, the Subservicer may not waive any Prepayment
Charge or portion thereof required by the terms of the related Mortgage Note unless otherwise
consistent with Accepted Servicing Practices.

Section 3.20. Credit Reporting.

          For each Mortgage Loan, the Subservicer shall accurately and fully furnish, in accordance with
the Fair Credit Reporting Act and its implementing regulations, accurate and complete information
(e.g., favorable and unfavorable) on its borrower credit files to each of the following credit
repositories: Equifax Credit Information Services, Inc., Trans Union, LLC and Experian Information
Solution, Inc., on a monthly basis.

Section 3.21. Confidentiality/Protecting Customer Information.

          Each Party agrees that it shall comply with all Legal Requirements and regulations regarding
the privacy or security of Customer Information and shall maintain appropriate administrative,
technical and physical safeguards to protect the security, confidentiality and integrity of
Customer Information, including, if applicable, maintaining security measures designed to meet the
Interagency Guidelines Establishing Standards for Safeguarding Customer Information, 66 Fed. Reg.
8616 and complying with the privacy regulations under Title V of the Gramm-Leach-Bliley Act, 15
U.S.C. § 6801 et seq., and the rules promulgated thereunder. For purposes of this section,
“Customer Information” means any personal information concerning a Mortgagor that is disclosed by
one Party to the other.

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          Notwithstanding any provision of this Agreement, the trademarks, trade secrets, know-how,
business methods and practices, internal procedures and other intellectual property and
confidential information of the Subservicer or the Servicer, respectively (“Confidential
Information”) shall remain vested in the Subservicer and the Servicer, respectively, and are
not hereby transferred to the other party, and the Subservicer and the Servicer shall have the
right to take all actions necessary to protect their Confidential Information.

          Each Party shall maintain the Confidential Information of the other in confidence using the
same care and discretion to avoid disclosure of Confidential Information as it uses to protect its
own confidential information that it does not want disclosed, but in no event less than a
reasonable standard of care. Each Party further agrees to (a) restrict disclosure of Confidential
Information of the disclosing party solely to persons who need to know the Confidential
Information to perform under this Agreement, (b) not to disclose any Confidential Information to
any third party or copy Confidential Information without written approval of the disclosing party,
and (c) inform those third parties and other persons who receive Confidential Information of its
confidential nature and obtain their agreement to abide by the obligations set forth herein.

          The obligations imposed under this Agreement shall not apply to Confidential Information that
is (a) made public by the party whose Confidential Information is disclosed, (b) generally
available to the public other than by a breach of this Agreement by the Servicer or the Subservicer
or its representatives in violation of this Agreement, or is required to be disclosed by law, but
shall be deemed to include the Servicing Fees contained herein and any passwords or identification
codes, access codes and similar items, (c) rightfully received after the date hereof from a source
(other than the Servicer or the Subservicer or its representatives, as applicable) having the legal
right to disclose the Confidential Information free of any obligation of confidence, or (d) is
developed or derived by a Party hereto without the aid, application or use of Confidential
Information, nor shall this Section 3.21 be deemed to prohibit any disclosure by a party that is
necessary or appropriate in such Party’s work with legal counsel, accountants, auditor or as
required by Legal Requirements or regulation. In the event that the receiving party, or any of
such Party’s agents or employees, becomes legally compelled (by deposition, interrogatory, request
for documents, subpoena, civil or criminal investigative demand or similar process) to disclose any
Confidential Information of the disclosing party, such receiving party shall provide prompt prior
notice to the disclosing party so that it may seek a protective order or other appropriate remedy.
In the event that such protective order or other remedy is not obtained, or that the disclosing
party waives compliance with the provisions of this Section 3.21, the receiving party will furnish
only that portion of the Confidential Information which in the judgment of its counsel is legally
required and will exercise reasonable efforts to obtain assurances that confidential treatment will
be accorded the Confidential Information.

          Each Party acknowledges and agrees that any breach or threatened breach of any of the
provisions of this Section 3.21 by it will result in immediate and irreparable harm to the other
Party and that any remedies at law in such event will be inadequate. Each Party agrees that such
breaches, whether threatened or actual, will give the other Party the right to obtain injunctive
relief to restrain such disclosure or use. This right shall, however, be in addition to and not in
lieu of any other remedies at law or in equity.

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Section 3.22. Advances.

          (a) In no event shall the Subservicer advance any delinquent principal or interest payments or
any tax or insurance payments to the Servicer or a Mortgage Loan Holder.

          (b) Notwithstanding anything herein to the contrary, no Servicing Advance shall be required to
be made hereunder if such Servicing Advance would, if made, constitute a Nonrecoverable Servicing
Advance.

ARTICLE IV.

PAYMENTS TO THE OWNER

Section 4.01. Remittances.

          No later than 5:00 p.m. (Pacific Standard time) on the Business Day prior to each Remittance
Date, the Subservicer shall notify the Servicer of (i) the aggregate amount of Monthly Payments
which are delinquent as of the Determination Date and (ii) any other shortfall that may exist with
respect to payments that the applicable Mortgage Loan Holder is entitled to receive in accordance
with Accepted Servicing Practices (collectively, the “Shortfall”) including compensating interest,
if applicable. . No later than 9:00 a.m. (Pacific Standard Time) on each Remittance Date, the
Servicer shall remit or cause to be remitted the Shortfall to the Custodial Account; provided,
however, that the Subservicer shall take all commercially reasonable to offset, minimize, or
otherwise reduce the amount of any Shortfall with other funds that maybe available in the Custodial
Account to the fullest extent consistent with Accepted Servicing Practices.

          On each Remittance Date the Subservicer shall remit by wire transfer of immediately available
funds to the applicable Mortgage Loan Holder, as applicable all amounts deposited in the Custodial
Account as of the Determination Date that are required to be remitted to such Mortgage Loan Holder
(net of charges against or withdrawals from the Custodial Account pursuant to Section 3.04).

          The Subservicer will remit monthly to the Servicer by wire transfer to an account to be
designated by the Servicer all fees, interest, and service fees due no later than the close of
business on the date indicated in Exhibit A under the heading “Cutoff/Remittance to Asset Owner”.

Section 4.02. Statements to the Servicer.

          On or before the Reporting Date, the Subservicer shall furnish to the Servicer an electronic
monthly remittance advice in the form of Exhibit E relating to the period ending on the last day of
the preceding calendar month.

          The Subservicer shall timely prepare and file any and all necessary IRS Form 1098 and IRS Form
1099 tax reports with Mortgagors, covering the period of the Subservicer’s servicing of the related
Mortgage Loans inclusive of any closing interest and fees on newly originated loans without any
additional charge if requested by the Servicer .

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Section 4.03. Repurchase.

          In connection with any repurchase by the Servicer of a Mortgage Loan from the applicable
Mortgage Loan Holder, the Subservicer may facilitate the remittance of repurchase funds between the
Servicer and such Mortgage Loan Holder, but, notwithstanding anything to the contrary in this
Agreement, in no event shall the Subservicer be required to advance any funds for such repurchase
and the Subservicer shall be reimbursed for any expenses incurred due to such repurchase.

ARTICLE V.

GENERAL SERVICING PROCEDURES

Section 5.01. Transfers of Mortgaged Property.

          If the Subservicer reasonably believes it to be in the best interest of the applicable
Mortgage Loan Holder and otherwise is consistent with Accepted Servicing Practices], the
Subservicer shall use commercially reasonable efforts to enforce any “due-on-sale” provision
contained in any Mortgage or Mortgage Note and to deny assumption by the Person to whom the
Mortgaged Property has been or is about to be sold whether by absolute conveyance or by contract of
sale, and whether or not the Mortgagor remains liable on the Mortgage and the Mortgage Note. When
the Mortgaged Property has been conveyed by the Mortgagor, the Subservicer shall, to the extent it
has knowledge of such conveyance, exercise its rights to accelerate the maturity of such Mortgage
Loan under the “due-on-sale” clause applicable thereto, provided, however, that the Subservicer
shall not exercise such rights if prohibited by Legal Requirements from doing so or if the exercise
of such rights would impair or threaten to impair any recovery under the related PMI Policy or LPMI
Policy, if any.

          If the Subservicer reasonably believes (a) enforcement is not in the best interest of the
applicable Mortgage Loan Holder or (b) it is unable under Legal Requirements to enforce such
“due-on-sale” clause, the Subservicer shall enter into (i) an assumption and modification agreement
with the Person to whom such property has been conveyed, pursuant to which such Person becomes
liable under the Mortgage Note and the original Mortgagor remains liable thereon or (ii) in the
event the Subservicer is unable under Legal Requirements to require that the original Mortgagor
remain liable under the Mortgage Note and the Subservicer has the prior consent of the primary
mortgage guaranty insurer, a substitution of liability agreement may be entered into with the owner
of the Mortgaged Property pursuant to which the original Mortgagor is released from liability and
the owner of the Mortgaged Property is substituted as Mortgagor and becomes liable under the
Mortgage Note. Any fee collected by the Subservicer for entering into an assumption agreement
shall be retained by the Subservicer as additional servicing compensation. In connection with any
such assumption, neither the Mortgage Interest Rate borne by the related Mortgage Note, the term of
the Mortgage Loan nor the outstanding principal amount of the Mortgage Loan shall be changed
without the Servicer providing the applicable Mortgage Loan Holder’s written consent to the
Subservicer.

          To the extent that any Mortgage Loan is assumable, the Subservicer shall inquire diligently
into the creditworthiness of the proposed transferee, and shall use the underwriting

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criteria for approving the credit of the proposed transferee which are used by the applicable
Mortgage Loan Holder with respect to underwriting mortgage loans of the same type as the Mortgage
Loan; provided that the Servicer shall provide the applicable Mortgage Loan Holder’s consent to the
Subservicer. If the credit of the proposed transferee does not meet such underwriting criteria,
the Subservicer diligently shall, to the extent permitted by the Mortgage or the Mortgage Note and
by Legal Requirements and consistent with Accepted Servicing Practices, accelerate the maturity of
the Mortgage Loan. The Subservicer shall notify the Servicer of any assumption requests.

Section 5.02. Satisfaction of Mortgages and Release of Mortgage Files.

          Upon the payment in full of any Mortgage Loan, or the receipt by the Subservicer of a
notification that payment in full will be escrowed in a manner customary for such purposes, the
Subservicer shall notify the Servicer in the monthly remittance advice as provided in Section 4.02,
and may request the release of any Mortgage Loan Documents from Custodian in accordance with this
Section 5.02 hereof. The Subservicer shall cause a satisfaction of mortgage to be prepared and
recorded, if required by federal, state or local laws and any other requirements of any government
or agency or instrumentality thereof applicable to the servicing of the Mortgage Loans by the
Subservicer, within the time frame so prescribed. In the event the Subservicer fails to do so, the
Subservicer shall be responsible for any and all penalties, fines, and damages arising out of or
based upon such failure; provided, however, that the Subservicer shall not be responsible for any
such penalties, fines and damages if the delay resulted from the failure of the applicable Mortgage
Loan Holder, Custodian or the Servicer to provide any documents required to record a satisfaction
of that Mortgage in a timely fashion. Subservicer will cooperate with the Servicer to the fullest
extent reasonable to recover any loss, cost or expense related to delays caused by any party.

          If the Subservicer satisfies or releases a Mortgage without first having obtained payment in
full of the indebtedness secured by the Mortgage (other than in connection with a short sale or
similar loss mitigation strategy) or should the Subservicer otherwise prejudice any rights the
Servicer may have under the mortgage instruments, the Subservicer shall (i) within sixty (60) days
of discovery thereof, reinstate such Mortgage and (ii) to the extent the Subservicer is unable to
reinstate the related Mortgage within such sixty (60) day period, deposit into the Custodial
Account the entire outstanding principal balance of the related Mortgage Loan within two (2)
Business Days following such sixty (60) day period. The Subservicer shall maintain the Fidelity
Bond and Errors and Omissions Insurance Policy as provided for in Section 3.12 insuring the
Subservicer against any loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.

Section 5.03. Servicing Compensation.

          As consideration for servicing the Assets subject to this Agreement, the Subservicer shall
retain and/or be paid by the Servicer on a monthly basis, the Servicing Fees for each Asset subject
to this Agreement during any month or part thereof. Such Servicing Fee shall be payable monthly,
in arrears. Additional servicing compensation in the form of certain Ancillary Income as further
described in Exhibit A shall be retained by the Subservicer and is not required to be deposited in
the Custodial Account.

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          Notwithstanding anything to the contrary contained herein, at the end of each Business Day,
the Subservicer shall so notify the Servicer of the amount of unreimbursed Servicing Advances as of
such Business Day that are required to be deposited into the Custodial Account after application of
all permissible offsets, and the Servicer shall remit the total amount of such unreimbursed
Servicing Advances to the Subservicer no later than the Business Day following the date of such
notice. The failure of the Servicer to remit any payment required in this paragraph within the
required timeframe shall permit the Subservicer to suspend its obligation to fund further Servicing
Advances hereunder until such unreimbursed Servicing Advances have been paid to the Subservicer.
Furthermore, in the event that such amount is not paid within the required timeframe, such amount
shall accrue interest commencing on the Business Day following the date of such notice at the Prime
Rate.

          Notwithstanding anything to the contrary contained herein, if at the end of any calendar
month, the amount of accrued and unpaid Servicing Fees exceed the aggregate amount collected by the
Subservicer during such calendar month, the Subservicer shall so notify the Servicer and the
Servicer shall remit the total amount of such shortfall to the Subservicer no later than ten (10)
Business Days following the date of such notice. The failure of the Servicer to remit any payment
required in this paragraph within the required timeframe shall permit the Subservicer to suspend
its obligation to fund further Servicing Advances hereunder until such unpaid Servicing Fees have
been paid to the Subservicer. Furthermore, in the event that such amount is not paid within the
required timeframe, such amount shall accrue interest commencing on the tenth (10th)
Business Day following the date of such notice at the Prime Rate.

          The payment and reimbursement provisions contained in this Agreement shall survive the
termination of this Agreement.

Section 5.04. Right to Examine the Subservicer Records.

          The Servicer shall have the right to, in a reasonable manner, examine and audit the books,
records, or other information of the Subservicer with respect to or concerning this Agreement or
the Assets during regular business hours. The Servicer shall pay its own expenses in connection
with any such examination.

Section 5.05. Reports and Returns to be Filed by the Subservicer.

          The Subservicer shall timely file information reports with respect to the receipt of mortgage
interest received in a trade or business, reports of foreclosure and abandonment of any Mortgaged
Property or REO Property and information returns relating to cancellation of indebtedness income
with respect to any Mortgaged Property as required by Sections 6050H, 6050J and 6050P of the Code.
Such reports shall be in form and substance sufficient to meet the reporting requirements imposed
by such Sections 6050H, 6050J and 6050P of the Code.

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ARTICLE VI.

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 6.01. Representations, Warranties and Covenants of the Subservicer.

          The Subservicer, as a condition to the consummation of the transactions contemplated hereby,
hereby makes the following representations, warranties and covenants to the Servicer as of the date
hereof and as of each Transfer Date:

          (a) Due Organization and Authority. The Subservicer is a limited partnership duly
organized, validly existing and in good standing under the laws of its jurisdiction of formation
and has all licenses necessary to carry on its business as now being conducted and is licensed,
qualified and in good standing in each state where a Mortgaged Property is located if the laws of
such state require licensing or qualification in order to conduct business of the type conducted by
the Subservicer, and in any event the Subservicer is in compliance with the laws of any such state
to the extent necessary to ensure the enforceability of the terms of this Agreement; the
Subservicer has the full power and authority to execute and deliver this Agreement and to perform
in accordance herewith; the execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by the Subservicer and the
consummation of the transactions contemplated hereby have been duly and validly authorized; this
Agreement evidences the valid, binding and enforceable obligation of the Subservicer and all
requisite action has been taken by the Subservicer to make this Agreement valid and binding upon
the Subservicer in accordance with its terms;

          (b) No Conflicts. Neither the execution and delivery of this Agreement, the
performance of the servicing responsibilities by the Subservicer or the transactions contemplated
hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement, will
conflict with or result in a breach of any of the terms, conditions or provisions of the
Subservicer’s certificate of formation or limited partnership agreement or any legal restriction or
any agreement or instrument to which the Subservicer is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing, or result in the
violation of any law, rule, regulation, order, judgment or decree to which the Subservicer or its
property is subject, or impair the ability of the Subservicer to service the Assets, or impair the
value of the Assets;

          (c) No Litigation Pending. There is no action, suit, proceeding or investigation,
pending or, to the best of the Subservicer’s knowledge, threatened against the Subservicer which,
either in any one instance or in the aggregate, which would draw into question the validity of this
Agreement or of any action taken or to be taken in connection with the obligations of the
Subservicer contemplated herein, or which would be likely to impair materially the ability of the
Subservicer to perform under the terms of this Agreement;

          (d) No Consent Required. No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and performance by the
Subservicer of or compliance by the Subservicer with this Agreement, or if required, such approval
has been obtained prior to the related Transfer Date;

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          (e) No Default. The Subservicer is not in default, and no event or condition exists
that after the giving of notice or lapse of time or both, would constitute an event of default
under any material mortgage, indenture, contract, agreement, judgment, or other undertaking, to
which the Subservicer is a party or which purports to be binding upon it or upon any of its assets,
which default would impair materially the ability of the Subservicer to perform under the terms of
this Agreement;

          (f) No Material Adverse Change. There have occurred no events or change in
circumstances which could reasonably impair the Subservicer’s ability to service the mortgage loans
subject to this Agreement. The Subservicer will immediately notify the Servicer of any such
circumstances or events.

Section 6.02. Representations, Warranties and Covenants of the Servicer.

          The Servicer as a condition to the consummation of the transactions contemplated hereby,
hereby makes the following representations and warranties to the Subservicer as of the date hereof
and as of each Transfer Date:

          (a) Due Organization and Authority. The Servicer is a duly organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation, and in any
event the Servicer is in compliance with the laws of any such state to the extent necessary to
ensure the enforceability of the terms of this Agreement; the Servicer has the full corporate power
and authority to execute and deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Servicer and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement evidences the valid,
binding and enforceable obligation of the Servicer and all requisite corporate action has been
taken by the Servicer to make this Agreement valid and binding upon the Servicer in accordance with
its terms;

          (b) No Conflicts. Neither the execution and delivery of this Agreement, or the
transactions contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Servicer’s corporate documents or any legal restriction or any
agreement or instrument to which the Servicer is now a party or by which it is bound, or constitute
a default or result in an acceleration under any of the foregoing, or result in the violation of
any law, rule, regulation, order, judgment or decree to which the Servicer or its property is
subject;

          (c) No Litigation Pending. There is no action, suit, proceeding or investigation,
pending or, to the best of the Servicer’s knowledge, threatened against the Servicer which, either
in any one instance or in the aggregate, which would draw into question the validity of this
Agreement or of any action taken or to be taken in connection with the obligations of the Servicer
contemplated herein, or which would be likely to impair materially the ability of the Servicer to
perform under the terms of this Agreement;

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          (d) No Consent Required. No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and performance by the Servicer
of or compliance by the Servicer with this Agreement, or if required, such approval has been
obtained prior to the execution of this Agreement;

          (e) No Default. The Servicer is not in default, and no event or condition exists that
after the giving of notice or lapse of time or both, would constitute an event of default under any
material mortgage, indenture, contract, agreement, judgment, or other undertaking, to which the
Servicer is a party, which default could impair materially the ability of the Servicer to perform
under the terms of this Agreement;

          (f) Ownership. With respect to each Mortgage Loan, Fannie Mae is the owner of all the
right, title and interest in and to the Mortgage Loan free and clear of any claims or encumbrances;

          (g) Compliance. In connection with the servicing and transfer of servicing to the
Subservicer, the Servicer has complied with Accepted Servicing Practices.

          (h) Asset Schedule. The Asset Schedule and the servicing transfer tape are true,
complete and correct in all material respects. However, all Parties understand that errors can
inadvertently be made. Accordingly, Servicer shall have thirty-days from the date of information
transfer within which to cure any errors in information that were inadvertently included on the
Asset schedule and the servicing transfer tape.

          (i) No High Cost Loans. No Mortgage Loan is subject to the provisions of the
Homeownership and Equity Protection Act of 1994 as amended or is considered a “high cost,”
“predatory” or “abusive” loan under any other state, county or municipal laws or ordinances, or any
other statute or regulation providing “assignee” or “originator” liability to holders of such
mortgage loans; and

          (j) No Second Liens. No Mortgage Loan is a second lien Mortgage Loan.

          (k) MERS. Each Mortgage Loan is registered on the MERS System.

Section 6.03. Indemnification by the Servicer.

          (a) The Servicer shall indemnify, defend and hold the Subservicer, its Affiliates and each of
their respective officers, directors, members, managers, employees, agents and representatives (the
“Indemnified Parties”) harmless from any and all claims, losses, damages, liabilities,
penalties, fines, forfeitures, reasonable legal fees and related reasonable costs, judgments, and
any other reasonable costs, fees and expenses incurred by or asserted against any of such
Indemnified Parties arising out of or based upon (i) any breach or alleged breach of any
representation, warranty or covenant made by the Servicer in this Agreement, (ii) any act or
omission by the Servicer prior to the related Transfer Date with respect to the Assets, (iii) the
Subservicer’s compliance with a directive or instructions of the Servicer, (iv) any Environmental
Liability, and (v) any failure of the Servicer or applicable Mortgage Loan Holder to provide the
Subservicer with any documents or information required to be delivered to the Subservicer to
service the Mortgage Loans. Subservicer has an affirmative obligation to notify

- 29 -

 

Servicer of any alleged failures by a Mortgage Loan Holder within a reasonable time from
discovery; failure to do so will waive this warranty.

          The Subservicer shall immediately notify the Servicer if a claim is made by a third party with
respect to this Agreement or the Assets, assume (with the prior written consent of the Servicer)
the defense of any such claim and pay all expenses in connection therewith, including counsel fees
and expenses, promptly pay, discharge and satisfy any judgment or decree which may be entered
against it or any Indemnified Party in respect of such claim with the prior written consent of the
Servicer and follow any written instructions received from the Servicer in connection with such
claim. The Servicer shall have final approval of the counsel to be hired by Subservicer to defend
any such claim and shall have the option to actively participate in the management of the defense
of such claim. The Servicer promptly shall reimburse the Subservicer for all reasonable amounts
advanced by it pursuant to the preceding sentence. In the alternative, at the option of Servicer,
Servicer may hire its own separate counsel to defend the claim directly. In such circumstance, the
Subservicer may hire its own counsel to represent it separate and apart from Servicer at
Subservicer’s own cost.

          The Servicer’s obligations under this Section 6.03 shall survive the Transfer Date and the
termination of this Agreement.

Section 6.04. Indemnification by the Subservicer.

          The Subservicer shall indemnify the Servicer and its Affiliates and each of their respective
officers, directors, members, managers, employees, agents and representatives harmless against any
and all claims, losses, damages, liabilities, penalties, fines, forfeitures, reasonable legal fees
and reasonable related costs, judgments, and any other reasonable costs, fees and expenses incurred
by or asserted against such individuals or entities arising out of or based upon the material
breach of the Subservicer’s representations, warranties and covenants set forth in this Agreement
or the failure of the Subservicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement.

Section 6.05. Limitation of Liability.

          All claims of liability between the Parties shall, regardless of the form or cause of action,
be limited to direct damages and in no event shall either Party be liable to the other Party or to
any third party for any indirect, incidental, special, consequential (including, without
limitation, damages attributed to lost profits, loss of goodwill, or business interruption)
punitive and exemplary damages, even if the other Party has been advised of the possibility of such
damages.

ARTICLE VII.

THE SUBSERVICER

Section 7.01. Merger or Consolidation of the Subservicer.

          Any Person into which the Subservicer may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Subservicer

- 30 -

 

shall be a Party, or any Person succeeding to the business of the Subservicer, shall be the
successor of the Subservicer hereunder, without the execution or filing of any paper or any further
act on the part of any of the Parties, anything herein to the contrary notwithstanding.

Section 7.02. Limitation on Liability of the Subservicer and Others.

          The Subservicer, its Affiliates and their respective officers, directors, members, managers,
employees, agents and representatives shall not be under any liability to the Servicer, any
Mortgage Loan Holder or any other Person for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment, provided, however,
that this provision shall not protect the Subservicer or any such Person against any breach of
warranties, representations or covenants made herein, gross negligence, willful misconduct, or
failure to perform its obligations in compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of any breach of the terms
and conditions of this Agreement by the Subservicer. Notwithstanding anything set forth in this
Agreement to the contrary, in no event shall the Subservicer, its Affiliates and their respective
officers, directors, members, managers, employees, agents and representatives be liable for any
reason whatsoever relating to the inability to foreclose on a Mortgage Property resulting from
litigation, administrative or regulatory action arising out of or based upon the Mortgage Note
being an eNote; provided, however, that the Subservicer will take all commercially reasonable steps
to enforce foreclosure rights on any note that is an eNote . The Subservicer and any director,
officer, employee, agent or representative of the Subservicer may rely in good faith on (a) the
Servicer’s or Mortgage Loan Holder’s written instructions that conflict with any terms of this
Agreement and (b) any document prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Subservicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to service the Assets in
accordance with this Agreement and which in its opinion may involve it in any expense or liability;
provided, however, that the Subservicer may, with the consent of the Servicer undertake any such
action which it may deem necessary or desirable in respect of this Agreement and the rights and
duties of the Parties hereto. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities for which the Servicer shall
be liable, and the Subservicer shall be entitled to reimbursement from the Servicer upon written
demand except when such expenses, costs and liabilities are subject to the Subservicer’s
indemnification.

Section 7.03. Limitation on Resignation and Assignment by the Subservicer.

          The Subservicer shall not assign this Agreement or the servicing responsibilities hereunder or
delegate its rights or duties hereunder or any portion hereof (to other than a third party service
provider) without the prior written consent of the Servicer which consent shall not be unreasonably
withheld or delayed.

          The Subservicer shall not resign from the obligations and duties hereby imposed on it except
by mutual consent of the Subservicer and the Servicer or upon the determination that its duties
hereunder are no longer permissible under Legal Requirements and such incapacity cannot be cured by
the Subservicer. Any such determination permitting the resignation of the Subservicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Servicer

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which Opinion of Counsel shall be in form and substance acceptable to the Servicer. No such
resignation shall become effective until a successor shall have assumed the Subservicer’s
responsibilities and obligations hereunder in the manner provided in Section 9.01.

ARTICLE VIII.

TERMINATION

Section 8.01. Termination for Cause.

          (a) This Agreement shall be terminable at the sole option of the Servicer, if any of the
following events of default (each, an “Event of Default”) exist on the part of the
Subservicer:

               (i) any failure by the Subservicer to remit to any Mortgage Loan Holder any payment required
to be made under the terms of this Agreement (unless such failure is the result of the Servicer’s
failure to remit any amounts to the Subservicer required to be made under the terms of this
Agreement) which continues unremedied for a period of two (2) Business Days after the date upon
which written notice of such failure, requiring the same to be remedied, shall have been given to
the Subservicer by the Servicer; or

               (ii) failure by the Subservicer to observe or perform in any other material respect any other
of the covenants, representations and warranty, standards of service or care or agreements on the
part of the Subservicer set forth in this Agreement, not otherwise addressed in this Section 8.01,
which continues unremedied for a period of thirty (30) days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to the Subservicer by the
Servicer; or

               (iii) a decree or order of a court or agency or supervisory authority having jurisdiction for
the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt,
including bankruptcy, marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the Subservicer and such
decree or order shall have remained in force undischarged or unstayed for a period of five (5)
days; or

               (iv) the Subservicer shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Subservicer or relating to all or substantially all of
its property; or

               (v) the Subservicer shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable insolvency, bankruptcy or
reorganization statute or make an assignment for the benefit of its creditors; or

               (vi) except in accordance with this Agreement, the Subservicer either shall assign this
Agreement or the servicing responsibilities hereunder or delegate its rights or duties hereunder or
any portion hereof (to a party other than a third party service provider).

- 32 -

 

          In each and every such case, so long as an Event of Default shall not have been remedied
within the required cure period, if any, in addition to whatsoever rights the Servicer may have at
law or equity to damages, including injunctive relief and specific performance, the Servicer, by
notice in writing to the Subservicer, may terminate the obligations of the Subservicer under this
Agreement.

          Upon receipt by the Subservicer of such written notice, all authority and power of the
Subservicer under this Agreement, whether with respect to the Assets or otherwise, shall pass to
and be vested in a successor servicer appointed by the Servicer. The Subservicer shall prepare,
execute and deliver to the successor entity designated by the Servicer, any and all documents and
other instruments reasonably necessary, place in such successor’s possession all Servicing Files,
and, in a timely manner, do or cause to be done all other acts or things necessary and appropriate
to effect the purposes of such notice of termination, including, but not limited to, the transfer
of the Assets and related documents, at the Subservicer’s sole expense. The Subservicer shall, in
a timely manner, reasonably cooperate with the Servicer and such successor in effecting the
termination of the servicing responsibilities hereunder, including without limitation, the transfer
to such successor for administration by it of all cash amounts which shall at the time be credited
by the Subservicer to the Custodial Account or Escrow Account or thereafter received with respect
to the Assets net of all unreimbursed Servicing Advances, accrued and unpaid Servicing Fees, and
any other cost, fee or expense due to the Subservicer under this Agreement.

          By a written notice, the Servicer hereto may waive any default by the Subservicer in the
performance of its obligations hereunder and its consequences. Upon any waiver of a past default,
such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the extent expressly
so waived.

ARTICLE IX.

MISCELLANEOUS PROVISIONS

Section 9.01. Successor to the Subservicer.

          Simultaneously with the termination of the Subservicer’s responsibilities, duties and
liabilities under this Agreement pursuant to Sections 7.03 or 8.01, the Servicer shall appoint a
successor who shall assume all of the responsibilities, duties and liabilities of the Subservicer
under this Agreement simultaneously with the termination of the Subservicer’s responsibilities,
duties and liabilities under this Agreement. In the event that the Subservicer’s duties,
responsibilities and liabilities under this Agreement should be terminated pursuant to the
aforementioned Sections, the Subservicer shall discharge such duties and responsibilities during
the period from the date it acquires knowledge of such termination until the effective date thereof
with the same degree of diligence and prudence which it is obligated to exercise under this
Agreement. The resignation or removal of the Subservicer pursuant to the aforementioned Sections
shall not become effective until a successor shall be appointed pursuant to this Section 9.01 and
shall in no event relieve the Subservicer of the representations, warranties and

- 33 -

 

covenants made pursuant to Section 6.01, it being understood and agreed that the provisions of
Section 6.01 shall be applicable to the Subservicer notwithstanding any such resignation or
termination of the Subservicer, or the termination of this Agreement.

          Within thirty (30) days of (i) the appointment of a successor entity by the Servicer and (ii)
receipt of the account numbers to transfer funds and the location to deliver the documents in the
Subservicer’s possession, the Subservicer shall prepare, execute and deliver to the successor
entity any and all documents and other instruments reasonably necessary, place in such successor’s
possession all Servicing Files, and, in a timely manner, do or cause to be done all other acts or
things necessary and appropriate to effect the purposes of such notice of termination, including,
but not limited to, the transfer of the funds in the Custodial Account and Escrow Account and the
transfer of the Servicing Files and related documents, at the Servicer’s expense. The Subservicer
shall, in a timely manner, reasonably cooperate with the Servicer and such successor in effecting
the termination of the Subservicer’s responsibilities hereunder and the transfer of servicing
responsibilities to the successor servicer, including, without limitation, the transfer to such
successor for administration by it of all cash amounts which shall at the time be credited by the
Subservicer to the Custodial Account or Escrow Account or thereafter received with respect to the
Mortgage Loans. Notwithstanding any other term of this Agreement to the contrary and in all
circumstances under which this Agreement is terminated, the Subservicer shall be entitled to offset
against deposits in the Custodial Account all unreimbursed Servicing Fees, Servicing Advances and
any other cost, fee or expense due to the Subservicer under this Agreement.

          Upon a successor’s acceptance of appointment as such, the Servicer shall notify by mail the
Subservicer of such appointment in accordance with the procedures set forth in Section 9.04.

Section 9.02. Costs.

          The Servicer shall pay any commissions due to any broker retained by the Servicer, the
Servicer’s salesmen and the legal fees and expenses of the Servicer’s attorneys. Neither
Subservicer or the Broker are aware of fees or commissions due any Broker. The Subservicer shall
pay the legal fees and expenses of its attorneys. Servicing Transfer Costs incurred in connection
with the transfer of the servicing responsibilities to the Subservicer, including fees for
delivering Servicing Files, shall be paid by the Servicer. The Servicer shall pay for the costs
associated with the preparation, delivery, tracking and recording of Assignments of Mortgages or
any MERS transfer related costs related to a transfer of servicing to the Subservicer.

Section 9.03. Waiver of Jury Trial, Venue; Governing Law.

          EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, WAIVES (TO THE EXTENT PERMITTED BY
LEGAL REQUIREMENTS) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR
RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING
WITHOUT A JURY.

- 34 -

 

          THE PARTIES AGREE THAT ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT SHALL BE
BROUGHT IN AND WILL BE RESOLVED EXCLUSIVELY IN EITHER UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK OR IN THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK. EACH
PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY DEFENSE OF IMPROPER VENUE OR FORUM
NON CONVENIENS IN ANY ACTION ARISING UNDER OR RELATING TO THIS AGREEMENT AND AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY ARISING UNDER OR OUT OF IN RESPECT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY RELATED DOCUMENT OR OBLIGATION.

          EACH PARTY FURTHER IRREVOCABLY DESIGNATES AND APPOINTS THE INDIVIDUAL(S) WHO ARE IDENTIFIED
HEREIN TO RECEIVE NOTICES ON ITS BEHALF, AS ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL
PROCESS IN ANY SUCH ACTION, SUCH SERVICE BEING HEREBY ACKNOWLEDGED TO BE EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT. SERVICE SHALL BE EFFECTUATED UPON MAILING A COPY OF ANY SUCH PROCESS BY
REGISTERED MAIL TO EACH PARTY AT ITS ADDRESS PROVIDED HEREIN. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

          THE PARTIES HEREBY AGREE THAT THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCLUDING ITS RULES OF CONFLICTS OF LAWS BUT
INCLUDING THE NEW YORK GENERAL OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402.

Section 9.04. Notices.

          All demands, notices and communications hereunder shall be in writing and shall be deemed to
have been duly given if (i) personally delivered to the appropriate Party hereto, (ii) mailed, by
registered or certified mail, return receipt requested, to the appropriate Party hereto at the
address below, or (iii) transmitted by facsimile transmission or by electronic mail with
acknowledgment, to the appropriate Party hereto at the facsimile number or the electronic mail
address provided below:

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	 	(i)	 	If to the Servicer:
	 
	 	 	 	Provident Mortgage Capital Associates, Inc.

1633 Bayshore Highway, Suite 331

Burlingame, California 94010

Attention:

Facsimile Number: (855) 653-4301

Phone Number: (855) 653-4300

Email:

	 
	 	(ii)	 	If to the Subservicer:
	 
	 	 	 	Provident Funding Associates, L.P.

1633 Bayshore Highway, Suite 155

Burlingame, California 94010

Attention: Adam Carmel

Facsimile Number: (650) 652-1350

Phone Number: (602) 614-5347

Email: ACarmel@provident.com

          Any such demand, notice or communication hereunder shall be deemed to have been received on
the date delivered to or received at the premises of the addressee.

Section 9.05. Severability Clause.

          Any part, provision, representation or warranty of this Agreement which is prohibited or which
is held to be void or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or unenforceable or is held to be
void or unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction, to the
extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction as to any Asset shall not
invalidate or render unenforceable such provision in any other jurisdiction. To the extent
permitted by Legal Requirements, the Parties waive any provision of law which prohibits or renders
void or unenforceable any provision hereof. If the invalidity of any part, provision,
representation or warranty of this Agreement shall deprive any Party of the economic benefit
intended to be conferred by this Agreement, the Parties shall negotiate, in good-faith, to develop
a structure the economic effect of which is as close as possible to the economic effect of this
Agreement without regard to such invalidity.

Section 9.06. Counterparts.

          This Agreement may be executed simultaneously in any number of counterparts. Each counterpart
shall be deemed to be an original, and all such counterparts shall constitute one and the same
instrument. The Parties agree that this Agreement, any documents to be delivered pursuant to this
Agreement and any notices hereunder may be transmitted between them by email and/or by facsimile.
The Parties intend that faxed signatures and electronically imaged

- 36 -

 

signatures such as .pdf files shall constitute original signatures and are binding on all
Parties. The original documents shall be promptly delivered, if requested.

Section 9.07. Further Agreements.

          The Servicer and the Subservicer agree to execute and deliver to the other such reasonable and
appropriate additional documents, instruments or agreements as may be necessary or appropriate to
effectuate the purposes of this Agreement.

Section 9.08. Successors and Assigns; Assignment of Agreement.

          This Agreement shall bind and inure to the benefit of and be enforceable by the Subservicer
and the Servicer and the respective permitted successors and permitted assigns of the Subservicer
and the Servicer. This Agreement shall not be assigned, pledged or hypothecated by a Party to a
third party without the prior written consent of the other Party which consent shall not be
unreasonably withheld or delayed.

Section 9.09. Waivers.

          No term or provision of this Agreement may be waived or modified unless such waiver or
modification is in writing and signed by the Party against whom such waiver or modification is
sought to be enforced.

Section 9.10. Exhibits.

          The exhibits to this Agreement are hereby incorporated and made a part hereof and are an
integral part of this Agreement.

Section 9.11. General Interpretive Principles.

          For purposes of this Agreement, except as otherwise expressly provided or unless the context
otherwise requires:

          (a) The terms defined in this Agreement have the meanings assigned to them in this Agreement
and include the plural as well as the singular, and the use of any gender herein shall be deemed to
include the other gender.

          (b) Accounting terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles.

          (c) References herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and other
subdivisions without reference to a document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement.

          (d) A reference to a Subsection without further reference to a Section is a reference to such
Subsection as contained in the same Section in which the reference appears, and this rule shall
also apply to Paragraphs and other subdivisions.

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          (e) The words “herein,” “hereof,” “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular provision.

          (f) The term “include” or “including” shall mean by reason of enumeration.

          (g) Section headings are for convenience only and shall not be part of the terms and
conditions of this Agreement.

Section 9.12. Reproduction of Documents.

          This Agreement and all documents relating thereto, including, without limitation, (a)
consents, waivers and modifications which may hereafter be executed, (b) documents received by each
Party at the closing, and (c) financial statements, certificates and other information previously
or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process. The Parties agree that any such reproduction
shall be admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such reproduction was
made by a Party in the regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

Section 9.13. Force Majeure.

          A Party will not be liable to the other Party for delays or failures in performance of its
obligations under this Agreement arising out of or based upon acts of God, strikes, riots, acts of
war, terrorism, earthquakes, and other events beyond its reasonable control (each, a “Force
Majeure Event”). A Party excused from performance pursuant to this Section shall exercise
reasonable efforts to continue to perform its obligations hereunder and shall thereafter continue
with reasonable due diligence and good faith to remedy its inability to so perform, except that
nothing herein shall obligate either Party to settle a strike or labor dispute when it does not
wish to do so. The consequences arising from the existence and continuation of a Force Majeure
Event shall be deemed not to constitute a breach by either Party of any representation, warranty,
covenant, agreement or obligation in this Agreement.

Section 9.14. Term.

          This Agreement shall continue in full force and effect for an original term (the “Original
Term”) of three (3) years, commencing on the initial Transfer Date hereof and ending at the close
of business on the eve of the third anniversary of such initial Transfer Date, unless sooner
terminated either by mutual agreement or otherwise in accordance with this Agreement. The term of
this Agreement automatically shall be extended for successive one (1) year terms (each an
“Extension Term”) unless either party delivers written notice of intent not to extend to the other
party not less than sixty (60) days before the end of (a) the Original Term or (b) any Extension
Term.

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Section 9.15. Survival.

          The following Articles and Sections shall survive the termination of this Agreement: Article
I, Section 3.21, Section 5.03, Article VI, Section 9.02, Section 9.03, Section 9.04, Section 9.05
and Section 9.07.

[NO FURTHER TEXT ON THIS PAGE]

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

	 	 	 	 	 	 	 

	 	 	PROVIDENT FUNDING ASSOCIATES, L.P.	 	 
	 	 	(Subservicer)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	PROVIDENT MORTGAGE CAPITAL ASSOCIATES, INC.	 	 
	 

	 	(Servicer)	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

- 1 -

 

EXHIBIT A

Fee & Term Schedule

	 	 	 

	Current Loan
	 	 
	Fixed Rate
	 	$7.00 per loan, per month
	Arms
	 	$7.50 per loan, per month
	 
	 	 
	30 - 59 day DQ Loan
	 	 
	Fixed Rate
	 	$15.00 per loan, per month
	Arms
	 	$15.00 per loan, per month
	 
	 	 
	60 - 89 day DQ Loan
	 	 
	Fixed Rate
	 	$35.00 per loan, per month
	Arms
	 	$35.00 per loan, per month
	 
	 	 
	90+ day DQ Loan
	 	 
	Fixed Rate
	 	$45.00 per loan, per month
	Arms
	 	$45.00 per loan, per month
	 
	 	 
	Bankruptcy
	 	 
	Referral Fee
	 	Waived
	Fixed Rate
	 	$50.00 per loan, per month
	Arms
	 	$50.00 per loan, per month
	 
	 	 
	Foreclosure
	 	 
	Referral Fee
	 	No Charge
	Fixed Rate
	 	$50.00 per loan, per month
	Arms
	 	$50.00 per loan, per month
	 
	 	 
	Foreclosure & REO
	 	 
	REO Manangement Monthly Fee
	 	$250.00 per loan, per month
	Foreclosure Sale
	 	1% of Sales Price
	 
	 	 
	Ancillary Income
	 	 
	Ancillary Income (phone pay, Western Union, etc.)
	 	Sub-Servicer to Retain
	Late Charges
	 	50/50 Split
	Custodial Accounts
	 	Held at Sub-Servicer bank of choice
	 
	 	 
	Manual Work / Special Project Hourly Rate(s)
	 	 
	MIS Technical Support
	 	$200.00 per hour
	Staff / Manager
	 	No Charge

- 1 -

 

	 	 	 

	Miscellaneous
	 	 
	Cutoff/Remittance to Servicer (Asset Owner)
	 	Month End Cutoff / Remit within 2 business days
	Interest On Escrow
	 	Paid by Servicer (Asset Owner)
	 
	 	Reimbursed by Servicer (Asset Owner) within
	Advances
	 	10 business days
	Monthly Delinquency / Loan Level Reporting
	 	5 business days after month-end
	 
	 	 
	Per Loan Setup Fees
	 	 
	Manual
	 	$25.00 per loan
	Electronic
	 	$5.00 per loan
	Pre Boarding Deficiency Correction
	 	$50.00 per loan
	File Review: Bankruptcy or Foreclosure
	 	$20.00 per loan
	 
	 	 
	Resolution fees on default Completion
	 	 
	Borrower Reinstatement
	 	No Charge
	Repayment Plan
	 	$250.00 per loan
	Loan Modification
	 	Sub-Servicer to Retain GSE Incentive
	HAMP Modification
	 	Sub-Servicer to Retain Treasury Incentive
	FDIC Loan Modification
	 	$1.000.00 per loan
	Payoffs
	 	No Charge
	Redemption
	 	No Charge
	Third Party Sales
	 	$500.00 per loan
	Short Sales
	 	$1500.00 per loan
	Loan Sales
	 	$1000.00 per loan
	Deed in Lieu
	 	$500.00 per loan
	FHA Conveyance
	 	$500.00 per loan
	Title Remediation
	 	$500.00 per loan
	 
	 	 
	Other Service Fees
	 	 
	Document Procurement from Third Parties
	 	$50.00 per document
	Reconveyence Fee (pay-off)
	 	$50.00 per loan
	Release fee (pay-off)
	 	Actual Cost
	Service release put backs
	 	$50.00 per loan
	Master File Corrections
	 	No Charge
	Servicing File Pull Fee
	 	$10.00 per loan
	 
	 	 
	Optional Services
	 	 
	MERS Registration & Transfer
	 	Actual Cost
	Annual 1098 Reporting
	 	Actual Cost
	Pre Boarding 1098 Reporting
	 	$20.00 per loan
	Flood Service Contract
	 	$10.00 per loan + actual cost
	Tax Service Contract
	 	$10.00 per loan + actual cost

- 2 -

 

	 	 	 

	Deconversion Fees
	 	 
	0 - 36 months
	 	$100.00 per loan
	after 37 months
	 	$50.00 per loan

- 3 -

 

EXHIBIT B

MORTGAGE LOAN DOCUMENTS

The following documents (to the extent in the applicable Mortgage Loan Holder or its designee’s
possession and which may be imaged documents) shall constitute the Mortgage Loan Documents with
respect to each Mortgage Loan:

	 	(a)	 	With respect to traditional paper Mortgage Notes, the Mortgage Note bearing all
intervening endorsements, endorsed “Pay to the order of                _, without recourse”
or a lost note affidavit.
	 
	 	(b)	 	If such mortgage loan is evidenced by an eNote, where the Servicer is
identified as controller on the MERS eRegistry.
	 
	 	(c)	 	the original of any guarantee executed in connection with the Mortgage Note;
	 
	 	(d)	 	the original or certified copies of the Mortgage with evidence of recording
thereon; provided that in the case of a delay caused by the public recording office, a
photocopy of such Mortgage, together with an Officer’s Certificate of the loan seller
(or certified by the title company, escrow agent, or closing attorney) stating that
such Mortgage has been dispatched to the appropriate public recording office for
recordation and that the original recorded Mortgage or a copy of such Mortgage
certified by such public recording office to be a true and complete copy of the
original recorded Mortgage will be promptly delivered to the Custodian upon receipt
thereof by the loan seller;
	 
	 	(e)	 	the originals or certified copies of all assumption, modification,
consolidation or extension agreements, if any, with evidence of recording thereon;
	 
	 	(f)	 	the original Assignment of Mortgage for each Mortgage Loan assigned in blank in
form and substance acceptable for recording;
	 
	 	(g)	 	the originals or certified copies of all intervening Assignments of Mortgage
(if any) evidencing a complete chain of assignment from the originator to the last
endorsee with evidence of recording thereon; provided that in the case of a delay
caused by the public recording office, a photocopy of such intervening assignment,
together with an Officer’s Certificate of the loan seller (or certified by the title
company, escrow agent, or closing attorney) stating that such intervening Assignment of
Mortgage has been dispatched to the appropriate public recording office for recordation
and that such original recorded intervening Assignment of Mortgage or a copy of such
intervening Assignment of Mortgage certified by the appropriate public recording office
to be a true and complete copy of the original recorded intervening Assignment of
Mortgage will be promptly delivered to the Custodian upon receipt thereof by the loan
seller;
	 
	 	(h)	 	the original mortgagee policy of title insurance or, in the event such original
title policy is unavailable, a certified true copy of the related policy binder or

- 1 -

 

	 	 	 	commitment for title certified to be true and complete by the title insurance
company;
	 
	 	(i)	 	original or certified copies of powers of attorney, if applicable; and
	 
	 	(j)	 	security agreement, chattel mortgage or equivalent document executed in
connection with the Mortgage, if any.

- 2 -

 

EXHIBIT C

FORM OF LIMITED POWER OF ATTORNEY

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL TO:

Provident Funding Associates, L.P.

1633 Bayshore Highway, Suite 155

Burlingame, California 94010

Attn:                               

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that Provident Mortgage Capital Associates, , Inc., a corporation
organized and existing under the laws of the State of Maryland and having its principal place of
business at 1633 Bayshore Highway, Suite 155, Burlingame, California 94010 as Servicer (the
“Servicer”) pursuant to that Subservicing Agreement, between Provident Funding Associates, L.P.
(the “Subservicer”) and the Servicer, dated as of March 1, 2011 (the “Agreement”), hereby
constitutes and appoints the Subservicer, by and through the Subservicer’s officers, the Servicer’s
true and lawful Attorney-in-Fact, in the Servicer’s name, place and stead and for the Servicer’s
benefit, in connection with all mortgage loans and REO properties subject to the terms of the
Agreement for the purpose of performing all acts and executing all documents in the name of the
Servicer as may be customarily and reasonably necessary and appropriate to effectuate the following
enumerated transactions in respect of any of the mortgages or deeds of trust (the “Mortgages” and
the “Deeds of Trust” respectively) and promissory notes secured thereby (the “Mortgage Notes”) for
which the undersigned is the Servicer and for which the Subservicer is performing sub-servicing
activities all subject to the terms of the Agreement.

This appointment shall apply to the following enumerated transactions only:

	 	1.	 	The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recording is for the purpose of correcting the Mortgage or Deed of
Trust to conform same to the original intent of the parties thereto or to correct title
errors discovered after such title insurance was issued and said modification or
rerecording, in either instance, does not adversely affect the lien of the Mortgage or
Deed of Trust as insured.
	 
	 	2.	 	The subordination of the lien of a Mortgage or Deed of Trust to an easement in
favor of a public utility company of a United States governmental agency or unit with
powers of eminent domain; this section shall include, without limitation, the execution
of partial satisfactions/releases, partial reconveyances or the execution or requests
to trustees to accomplish same.
	 
	 	3.	 	The conveyance of the properties to the mortgage insurer, or the closing of the
title to the property to be acquired as real estate owned, or conveyance of title to
real estate owned.

- 1 -

 

	 	4.	 	The completion of loan assumption agreements.
	 
	 	5.	 	The full satisfaction/release of a Mortgage or Deed of Trust or full conveyance
upon payment and discharge of all sums secured thereby, including, without limitation,
cancellation of the related Mortgage Note.
	 
	 	6.	 	The assignment of any Mortgage or Deed of Trust and the related Mortgage Note,
in connection with the repurchase of the mortgage loan secured and evidenced thereby.
	 
	 	7.	 	The full assignment of a Mortgage or Deed of Trust upon payment and discharge
of all sums secured thereby in conjunction with the refinancing thereof, including,
without limitation, the assignment of the related Mortgage Note.
	 
	 	8.	 	With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of a
deed in lieu of foreclosure, or the completion of judicial or non-judicial foreclosure
or termination, cancellation or rescission of any such foreclosure, including, without
limitation, any and all of the following acts:

	 	a.	 	the substitution of trustee(s) serving under a Deed of Trust,
in accordance with state law and the Deed of Trust;
	 
	 	b.	 	the preparation and issuance of statements of breach or
non-performance;
	 
	 	c.	 	the preparation and filing of notices of default and/or notices
of sale;
	 
	 	d.	 	the cancellation/rescission of notices of default and/or
notices of sale;
	 
	 	e.	 	the taking of a deed in lieu of foreclosure; and
	 
	 	f.	 	the preparation and execution of such other documents and
performance such other actions as may be necessary under the terms of the
Mortgage, Deed of Trust or state law to expeditiously complete said
transactions in paragraphs 8(a) through 8(e), above.

The undersigned gives said Attorney-in-Fact full power and authority to execute such instruments
and to do and perform all and every act and thing necessary and proper to carry into effect the
power or powers granted by or under this Limited Power of Attorney, each subject to the terms and
conditions set forth in the Agreement and in accordance with the standard of care set forth in the
Agreement as fully as the undersigned might or could do, and hereby does ratify and confirm to all
that said Attorney-in-Fact shall lawfully do or cause to be done by authority hereof. This Limited
Power of Attorney shall be effective as of                           ,           .

- 2 -

 

Third parties without actual notice may rely upon the exercise of the power granted under this
Limited Power of Attorney; and may be satisfied that this Limited Power of Attorney shall continue
in full force and effect and has not been revoked unless an instrument of revocation has been made
in writing by the undersigned.

     IN WITNESS WHEREOF, Provident Mortgage Capital Associates, Inc., as the Servicer pursuant to
that Subservicing Agreement between the Servicer and the Subservicer, dated as of                     , 2011,
has caused its corporate seal to be hereto affixed and these presents to be signed and acknowledged
in its name and behalf by                , its duly elected and authorized                 this       day
of                ,                .

	 	 	 	 	 	 	 

	 	 	PROVIDENT MORTGAGE CAPITAL ASSOCIATES, INC.

	 	 
	 

	 	By:	 	 

	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 
	 	 

- 3 -

 

STATE OF                               

COUNTY OF                               

     On                     ,            , before me, the undersigned, a Notary Public in and for said state,
personally appeared                 of                                              , personally known to me to be the
person whose name is subscribed to the within instrument and acknowledged to me that [she/he]
executed that same in [her/his] authorized capacity, and that by [her/his] signature on the
instrument the entity upon behalf of which the person acted and executed the instrument.

     WITNESS my hand and official seal.

               (SEAL)

	 	 	 	 	 

	 

	 	 

Notary Public
	 	 

- 4 -

 

EXHIBIT D

FORM OF ACKNOWLEDGMENT AGREEMENT

On this                 day of                 20     , pursuant to Section 2.01 of the Subservicing Agreement (the
“Agreement”) dated as of March 1, 2011 between PROVIDENT FUNDING ASSOCIATES, L.P. (the
“Subservicer”) and PROVIDENT MORTGAGE CAPITAL ASSOCIATES, INC. (the “Servicer”), the Servicer
hereby requests that the Subservicer service the Mortgage Loans identified on Schedule A attached
hereto for the Servicer pursuant to the Agreement and the Subservicer hereby agrees to service the
Mortgage Loans pursuant to the Agreement. Capitalized terms used but not defined herein shall have
the meanings set forth in the Agreement.

	 	 	 	 	 	 	 

	 	 	PROVIDENT MORTGAGE CAPITAL ASSOCIATES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

Accepted and Agreed:

PROVIDENT FUNDING ASSOCIATES, L.P.

	 	 	 	 	 

	By:
	 	 	 	 
	 

	 	 

	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 

- -

 

EXHIBIT E

FORM OF MONTHLY WHOLE LOAN REPORTING PACKAGE

[SUBSERVICER TO PROVIDE]

- 1 -

 

EXHIBIT F

SERVICING TRANSFER INSTRUCTIONS

[SUBSERVICER TO PROVIDE]

- 1 -

 

Exhibit D

FORM OF SERVICING RIGHTS PURCHASE AGREEMENT

- Exh. D-1 -

 

 

FORM OF SERVICING RIGHTS PURCHASE AGREEMENT

     THIS SERVICING RIGHTS PURCHASE AGREEMENT (this “Agreement”) is made and entered into effective
as of           . 20      (the “Effective Date”) by and between PROVIDENT MORTGAGE CAPITAL ASSOCIATES,
INC., a Maryland corporation (“Seller”) and PROVIDENT FUNDING ASSOCIATES, L.P., a California
limited partnership (“Provident”).

RECITALS

     The following recitals are a material part of this Agreement:

     A. Seller is the owner [and holder of][of the servicing rights with respect to] certain
mortgage loans identified on Schedule I to this Agreement (the “Mortgage Loans”). [Describe any
related transactions].

     B. [Seller is currently the servicer of the Mortgage Loans for its own account, and Provident
is currently the subservicer of the Mortgage Loans pursuant to that certain Subservicing Agreement,
dated as of           , 2011, between the Seller and Provident (the “Subservicing Agreement”).][or
describe alternative current servicing arrangement]

     C. Seller and Provident are party to a Strategic Alliance Agreement, dated as of           , 2011
(the “Strategic Alliance Agreement”), pursuant to which the Seller is required to offer to
Provident the right of first offer to purchase the service on mortgage loans the Seller otherwise
intends to sell on a servicing released basis.

     D. As contemplated by the Strategic Alliance Agreement, Seller desires to transfer the rights
to service the Mortgage Loans to Provident effective as of           , 20      (the “Effective Date”).
This Agreement sets forth the terms and conditions relating to the transfer to Provident by Seller
of any and all rights Seller may have to service and administer the Mortgage Loans (the “Servicing
Rights”) as of the Effective Date.

     E. Provident will agree to service the Mortgage Loans for the benefit of the Loan Purchaser in
accordance with the terms of the Servicing Agreement to be entered into between the Loan Purchaser
and Provident (the “Servicing Agreement,” and together with the Subservicing Agreement, the
"Servicing Agreements.”) [The terms and conditions of the Servicing Agreement will be
substantially identical to those of the Subservicing Agreement (or shall have such other terms and
conditions mutually agreeable to the Provident and Loan Purchaser.)[if applicable]

AGREEMENT

     In consideration of the mutual promises and agreements contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller and Provident hereby agree as follows:

     1. Definitions. Capitalized terms used but not defined in this Agreement have the respective
meanings assigned to them in the MLPA or Servicing Agreements, as applicable.

 

 

     2. Servicing Appointment; Servicing Rights Transfers.

     (a) [On the Closing Date, Loan Purchaser will purchase the Mortgage Loans pursuant to the
MLPA.][if applicable] As of the Effective Date, Seller hereby transfers and conveys to Provident
the Servicing Rights with respect to the Mortgage Loans (subject to the Servicing Agreements). The
parties agree that, effective upon the Effective Date, Provident shall assume all of the rights,
duties and obligations of Servicer pursuant to, in accordance with and subject to the terms and
conditions of the Servicing Agreement, including the right to receive all of the Servicing Fees and
any other servicing compensation that Servicer is entitled to receive under the terms and
provisions of the Servicing Agreement with respect to the Mortgage Loans. Provident agrees to
negotiate in good faith with the Loan Purchaser a Servicing Agreement governing the terms and
conditions with respect to Provident’s servicing of the Mortgage Loans (i) whose economic and
others terms are identical to those of the Subservicing Agreement (except that Provident would be
the servicer, and not the subservicer for the Seller, of the Mortgage Loans) or (ii) whose terms
and conditions are otherwise mutually acceptable to Provident and Loan Purchaser.

     (b) On or before the Effective Date, Seller shall cause the delivery to Provident or its
designee of all data tapes, loan documents, servicing files, and payment records in the possession
or under the control of Seller relating to the Mortgage Loans that Provident does not already
possess.

     3. Representations and Warranties; Indemnity.

     (a) Seller and Provident each hereby represents and warrants to the other party, as of the
Effective Date and as of the Closing Date, that with respect to itself:

          (i) The party (A) is validly existing and in good standing under the laws governing its
creation and existence, (B) is duly authorized and qualified to transact any and all business
contemplated by this Agreement, and (C) possesses all requisite authority, power, licenses, permits
and franchises to execute, deliver and comply with its obligations under the terms of this
Agreement;

          (ii) This Agreement has been duly and validly authorized, executed and delivered by the party
and (assuming due authorization, execution and delivery of this Agreement by the other party)
constitutes a legal, valid and binding obligation of the party, enforceable against the party in
accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general
and by general equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);

          (iii) The execution and delivery of this Agreement by the party and the party’s performance
and compliance with the terms of this Agreement will not (A) violate the party’s certificate of
incorporation or organization or bylaws, (B) violate any law or regulation or any administrative
decree or order to which it is subject or (C) 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 material
contract, agreement or other instrument to which it is a party or which may be

- 2 -

 

applicable to it or any of its assets; which violation, default or breach would materially and
adversely affect the ability of the party to perform its duties and obligations under this
Agreement;

          (iv) The party is not in default with respect to any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or other governmental agency or body,
which default might have consequences that would, in the party’s reasonable and good faith
judgment, materially and adversely affect the condition (financial or other) or operations of the
party or its properties (taken as a whole) or have consequences that would materially and adversely
affect its performance under this Agreement;

          (v) The party is not a party to or bound by any agreement or instrument or subject to any
certificate of incorporation, bylaws or any other corporate restriction or any judgment, order,
writ, injunction, decree, law or regulation that would, in the party’s reasonable and good faith
judgment, materially and adversely affect the ability of the party to perform its obligations under
this Agreement or that requires the consent of any third person to the execution of this Agreement
or the performance by the party of its obligations under this Agreement;

          (vi) No consent, approval, authorization or order of any court or governmental agency or body
is required for the execution, delivery and performance by the party of or compliance by the party
with this Agreement or the consummation of the transactions contemplated by this Agreement; and

          (vii) No litigation is pending or, to the best of the party’s knowledge, threatened against
the party that would, in the party’s good faith and reasonable judgment, prohibit its entering into
this Agreement or materially and adversely affect the performance by the party of its obligations
under this Agreement.

     (b) Seller further represents and warrants as of the Effective Date and as of the Closing
Date:

          (i) Seller is the lawful owner of, and has the sole right and authority to transfer, the
Servicing Rights as contemplated by this Agreement, subject only to the Servicing Agreements.

          (ii) Except for the Servicing Agreements:

               (A) No third parties have any rights with respect to the servicing of the Mortgage Loans by
reason of any action of Seller;

               (B) The transfer, assignment, and delivery of the Servicing Rights shall vest in Provident all
rights incidental to the economic benefits to the Servicing Rights, free and clear of any and all
claims, charges, defenses, offsets and encumbrances of any kind or nature whatsoever, including
those of Seller, but subject to the terms and conditions of the Servicing Agreements; and

               (C) The Servicing Rights have not been hypothecated, assigned or pledged as collateral by
Seller, for any loan or for any other purpose.

- 3 -

 

          (iii) The Loan Data Tape (hereinafter defined) is true and correct in all material respects.

     (c) Seller shall indemnify and hold Provident and its successors and permitted assigns
harmless from, and will reimburse Provident and its successors and permitted assigns for, any
actual loss, liability, damage, penalty, fine, forfeiture, deficiency, judgment, claim or other
cost or expense (including reasonable attorneys’ fees and related costs and expenses), unrelated to
the calculation of the Purchase Price (defined below), incurred in connection with (i) any breach
of the representations of warranties made by Seller in Sections 3(a) and 3(b) and (ii) a failure by
Seller to perform any of its obligations under this Agreement (to the extent that, in either case,
such loss, liability, damage, penalty, fine, forfeiture, deficiency, judgment, claim or other cost
or expense does not result from Provident’s bad faith, willful misconduct or negligence in the
performance of its obligations under this Agreement).

     (d) Provident shall indemnify and hold Seller and its successors and permitted assigns
harmless from, and will reimburse Seller and its respective successors and permitted assigns for,
any actual loss, liability, damage, penalty, fine, forfeiture, deficiency, judgment, claim or other
cost or expense (including reasonable attorneys’ fees and related costs and expenses) incurred in
connection with (i) any breach of the representations of warranties made by Provident in Section
3(a) and (ii) a failure by Provident to perform any of its obligations under this Agreement (to the
extent that, in either case, such loss, liability, damage, penalty, fine, forfeiture, deficiency,
judgment, claim or other cost or expense does not result from Seller’s bad faith, willful
misconduct or negligence in the performance of its obligations under this Agreement).

     4. Purchase Price.

     (a) The purchase price (the “Purchase Price”) being paid by Provident to Seller in connection
with the consents, acknowledgements, transfers, conveyances and representations and warranties
described in this Agreement is equal to $           with respect to the Mortgage Loans. The Purchase
Price shall be paid by Provident to Seller on the Closing Date, concurrently with the execution and
delivery of this Agreement and the Servicing Agreement, by wire transfer of immediately available
funds in accordance with the wire transfer instructions provided to Provident by Seller. The
Purchase Price is subject to adjustment as set forth in Section 5(c) of the Strategic Alliance
Agreement.

     (b) In determining the Purchase Price, Provident has relied on the information regarding the
Mortgage Loans described in the data tape delivered by Seller to Provident on or about           , 20__
(collectively with any updated data tape(s) delivered thereafter, the “Loan Data Tape”) and the
other information with respect to the Mortgage Loans described in Sections 3(b)(iii) (the “Assumed
Characteristics”).

     5. Repurchase.

     (a) Upon any repurchase of any Mortgage Loan by Seller (or any of its Affiliates) pursuant to
MLPA, Seller shall pay to Provident, at the same time as the repurchase of the Mortgage Loan, an
amount (the “Servicing Rights Repurchase Amount”) equal to the product of (i) the portion of the
Purchase Price allocable to the purchase of the Servicing Rights with

- 4 -

 

respect to such Mortgage Loan (as set forth as “Purchase Price Allocation” in Schedule I to
this Agreement) and (ii) a fraction, the numerator of which is the number of calendar months from
the date of repurchase of such Mortgage Loan to and including the related Maturity Date, and the
denominator of which is the number of calendar months from the Cut-off Date to and including the
related Maturity Date.

     For example, if (w) the Purchase Price is $          , (x) $           of the Purchase Price is
allocable to one of the Mortgage Loans (as set forth as “Purchase Price Allocation” in Schedule I
to this Agreement), (y) the Mortgage Loan is repurchased by Seller on a date when       calendar
months remain until the related Maturity Date, and (z) the term of such Mortgage Loan contains      
calendar months from the Cut-off Date until the related Maturity Date, then the repurchase price
would equal $      [(          ) x ((     )/(     )) = $          ].

     (b) Any repurchase contemplated by this Section 5 shall be accomplished by wire transfer of
immediately available funds to Provident and Provident’s rights to service the applicable Mortgage
Loan shall terminate.

     6. Closing Conditions. The respective obligations of Provident and Seller to consummate the
transactions contemplated by this Agreement shall be subject in either case to the execution and
delivery of MLPA and Servicing Agreement by the parties thereto.

     7. Miscellaneous. This Agreement shall be construed in accordance with the substantive laws
of the State of New York (without regard to conflicts of law principles), and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance with such laws. In
order to facilitate the execution and delivery of this Agreement, this Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one and the same instrument. A signature of a party by facsimile
or other electronic transmission shall be deemed to constitute an original and fully effective
signature of such party.

     8. Construction. The article and section headings herein are for convenience of reference
only, and shall not limit or otherwise affect the meaning thereof. This Agreement shall be
construed without regard to any presumption or rule requiring construction against the party
causing such instrument or any portion thereof to be drafted. Any pronoun used herein shall be
deemed to cover all genders. The terms “include”, “including” and similar terms shall be construed
as if followed by the phrase “without being limited to.” The term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,”
“hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and
not to any particular provision or section of this Agreement. Words importing the singular number
shall mean and include the plural number, and vice versa.

     9. Severability of Provisions. If any one or more of the covenants, agreements, provisions,
or terms of this Agreement shall be held invalid for any reason whatsoever, then such covenants,
agreements, provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions, or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions, or terms of this Agreement. If the
invalidity of any part, provision, representation or warranty of this Agreement

- 5 -

 

shall deprive any party of the economic benefit intended to be conferred by this Agreement,
the parties shall negotiate in good faith to develop a structure the economic effect of which is
nearly as possible the same as the economic effect of this Agreement without regard to such
invalidity.

     10. Further Assurances. After the Closing Date, each party shall promptly execute, endorse,
acknowledge, deliver or file all such notices, certificates and additional agreements,
undertakings, conveyances, transfers or assignments, and take any and all such other action, as may
be reasonably necessary to effect the appointment of Provident as servicer under the Servicing
Agreement and the transfer of the Servicing Rights as contemplated in this Agreement and to more
fully carry out the provisions of this Agreement.

     (a) Notices. All demands, notices and communications hereunder shall be in writing and shall
be deemed to have been duly given if personally delivered at, mailed by registered mail (postage
prepaid) to, or sent by overnight courier to: (i) in the case of Seller, Provident Mortgage
Capital Associates, Inc., 1633 Bayshore Highway, Suite 331, Burlingame, CA 94010, Attention: Chief
Financial Officer; (ii) in the case of Provident, Provident Funding Associates, L.P., 1633 Bayshore
Highway, Suite 155, Burlingame, CA 94010, Attention: Compliance Officer; and (iii) for any party,
to such other address as may be furnished by the applicable party to the other parties by written
notice pursuant to this Agreement.

[Remainder of Page Intentionally Blank; Signature Page Follows]

- 6 -

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the
Effective Date.

	 	 	 	 	 	 	 
	SELLER:	 	PROVIDENT MORTGAGE CAPITAL ASSOCIATES, INC.,	 	 
	 	 	a Maryland corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	PROVIDENT:	 	PROVIDENT FUNDING ASSOCIATES, L.P.,	 	 
	 	 	a California limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

 

 

SCHEDULE I

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Purchase Price	 
	 	Mortgage Loan	 	 	Cut-Off Balance	 	 	Allocation	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 

Sch. I-1

 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Purchase Price	 
	 	Mortgage Loan	 	 	Cut-Off Balance	 	 	Allocation	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 

Sch. I-2

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