Document:

EX-4.1

 

EXHIBIT 4.1

AMENDMENT TO RIGHTS AGREEMENT

     This Amendment, dated as of October 24, 2006 (this “Amendment”) to Rights Agreement, dated as
of February 14, 2005 (the “Rights Agreement”), between Wheeling-Pittsburgh Corporation, a Delaware
corporation (the “Company”), and Computershare Investor Services, LLC (successor to Equiserve Trust
Company, N.A.), as rights agent (the “Rights Agent”).

     WHEREAS, the Company and the Rights Agent previously entered into the Rights Agreement;

     WHEREAS, as of the date of this Amendment, neither the Stock Acquisition Date nor the Final
Expiration Date has occurred;

     WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company may from time to time
supplement or amend any provision of the Rights Agreement at the direction of the Company without
the approval of any holders of the Rights for so long as the Rights are then redeemable; and

     WHEREAS, Section 23 of the Rights Agreement provides that the Rights are redeemable at any
time prior to the earlier of (i) the close of business on the tenth (10th) calendar day
following the Stock Acquisition Date or (ii) the Final Expiration Date;

     WHEREAS, the Board of Directors has determined that it is advisable and in the best interests
of the Company and its stockholders to amend the Rights Agreement as set forth herein; and

     WHEREAS, all acts necessary to make this Amendment a valid agreement, enforceable according to
its terms, have been done and performed, and the execution and delivery of this Amendment by the
Company and the Rights Agent have been in all respects duly authorized by the Board of Directors
and the Rights Agent.

     NOW, THEREFORE, the Rights Agreement is amended as follows:

     1. Amendment of Section 1(i). Section 1(i) of the Rights Agreement is hereby amended
to read in its entirety as follows:

“Final Expiration Date” shall mean the earlier of (a) the close of business on
October 24, 2006, or (b) the close of business on the date, if any, on which the
Company first discloses in any filing with the Securities and Exchange Commission
that the Company’s net operating loss carryforwards (or estimates thereof) for
federal income tax purposes do not exceed $50 million.”

     2. Entire Agreement. This Amendment and the Rights Agreement shall constitute the
entire understanding and agreement between the Company and the Rights Agent with regard to the
subjects hereof and thereof.

 

 

     3. Counterparts. This Amendment may be executed in multiple counterparts or
originals, and by the different parties hereto in separate counterparts or multiple originals, each
of which when executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

     4. Effectiveness. This Amendment shall be deemed effective as of the date first
written above, as if executed on such date.

     5. Governing Law and Interpretation. This Amendment shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State. If any provision, covenant or restriction of this Amendment
is held by a court of competent jurisdiction or other authority to be invalid, illegal or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Amendment
shall remain in full force and effect and shall in no way be affected, impaired or invalidated. It
is the intent of the parties hereto to enforce the remainder of the terms, provisions, covenants
and restrictions of this Amendment to the maximum extent permitted by law.

[SIGNATURE PAGE FOLLOWS]

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

	 	 	 	 	 	 	 
	 	 	WHEELING-PITTSBURGH CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Paul J. Mooney 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Paul J. Mooney 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Executive Vice President and
Chief Financial Officer 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	COMPUTERSHARE INVESTOR SERVICES, LLC	 	 
	 
	 

	 	By:	 	/s/ Carol Mulvey-Eori 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Carol Mulvey-Eori 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Managing DirectorExhibit 10.1

    Exhibit
      10.1

     

    
 

    FIFTH
      AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

     

    Dated
      as
      of October 30, 2006

     

    AMONG:

     

    BARCLAYS
      BANK PLC,
      as
      buyer on behalf of, and agent for, the Principals pursuant to and as provided
      for in Annex I (in such capacity, “Agent”),

     

    Each
      of
      the Bank Principals and Conduit Principals listed on the signature pages hereto
      and from time to time party hereto, and 

     

    PHH
      MORTGAGE CORPORATION,
      a New
      Jersey corporation, as Seller (in such capacity, the “Seller”).

     

    1.  APPLICABILITY

     

    Sheffield
      Receivables Corporation, as purchaser (the “Purchaser”),
      Seller and Agent have entered into that certain Fourth Amended and Restated
      Mortgage Loan Repurchase and Servicing Agreement, dated as of June 30, 2005
      (as
      amended, supplemented or otherwise modified prior to the date hereof, the
“Original
      Repurchase Agreement”),
      which
      prescribes the manner of sale of eligible loans and the management, control
      and
      servicing thereof, including the method and manner by which Seller will
      repurchase such loans. 

     

    Purchaser,
      Seller and Agent desire to amend and restate the Original Repurchase Agreement
      in its entirety and contemporaneously therewith enter into the Transaction
      Documents (as such term is defined in this Agreement). Upon the effectiveness
      of
      this Agreement, each reference to the Original Repurchase Agreement in any
      other
      document, instrument or agreement shall mean and be a reference to this
      Agreement. Nothing contained herein, unless expressly herein stated to the
      contrary, is intended to amend, modify or otherwise affect any other instrument,
      document or agreement executed and/or delivered in connection with the Original
      Repurchase Agreement.

     

    Agent
      shall, from time to time, at the request of Seller, upon the terms and subject
      to the conditions set forth herein, enter into transactions in which Seller
      transfers to Agent Eligible Mortgage Loans against the transfer of funds by
      Agent, with a simultaneous agreement by Seller to repurchase such mortgage
      loans
      at a date certain or on demand. Each such transaction shall be referred to
      herein as a “Transaction”,
      and,
      unless otherwise agreed in writing, shall be governed by this Agreement.

     

    2.  DEFINITIONS
      AND INTERPRETATION

     

    (a)  Defined
      Terms.

     

    “Accepted
      Servicing Practices”
means
      the Servicer's customary servicing procedures and the servicing practices
      required by the Guidelines.

     

     

    
      ______________

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

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

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

     

    “Additional
      Collateral Mortgage Loan”
has
      the
      meaning ascribed to “Additional Collateral Mortgage Loan,” as such term is
      defined in the Surety Bond. The underwriting guidelines for such programs will
      not be materially altered without prior consent of Agent. 

     

    “Additional
      Collateral Transfer Agreement”
means
      each additional collateral transfer and servicing agreement or other similar
      agreement or agreements between an Approved Provider and Seller, which, in
      each
      case shall be in form, scope and substance reasonably satisfactory to
      Agent.

     

    “Additional
      Purchased Assets”
shall
      have the meaning assigned thereto in Section 5 hereof.

     

    “Adjusted
      LIBOR Rate”
means
      with respect to any period during which the return to any APA Purchaser is
      to be
      calculated by reference to the London interbank offered rate, a rate which
      is
      0.75% in excess of a rate per annum equal to the sum (rounded upwards, if
      necessary, to the nearest 1/16th of 1%) of (A) the rate obtained by
      dividing (i) the applicable LIBOR Rate by (ii) a percentage equal to
      100% minus the sum of (A) the maximum reserve requirement as specified in
      Regulation D (including, without limitation, any marginal, emergency,
      supplemental, special or other reserves) that is applicable to Agent during
      such
      period in respect of eurocurrency or eurodollar funding, lending or liabilities
      (or, if more than one percentage shall be so applicable, the daily average
      of
      such percentage for those days in such period during which any such percentage
      shall be applicable) and (B) the then daily net annual assessment rate
      (rounded upwards, if necessary, to the nearest 1/16th of 1%) as estimated by
      Agent for determining the current annual assessment payable by Agent to the
      Federal Deposit Insurance Corporation in respect of eurocurrency or eurodollar
      funding, lending or liabilities.

     

    “Affected
      Person”
shall
      have the meaning assigned thereto in Section 18 hereof.

     

    “Affiliate”
shall
      mean as to any Person any Person which, directly or indirectly, is in control
      of, is controlled by, or is under common control with, such Person. For purposes
      of this definition, a Person shall be deemed to be “controlled by” another if
      such latter Person possesses, directly or indirectly, power either to (i) vote
      10% or more of the securities having ordinary voting power for the election
      of
      directors of such controlled Person or (ii) direct or cause the direction of
      the
      management and policies of such controlled Person whether by contract or
      otherwise.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Agency
      or
Agencies”
means
      any of GNMA, FNMA or FHLMC, as applicable.

     

    “Agency
      Securities”
means
      securities backed by a pool or pools of mortgage loans owned by Seller, which
      are issued and guaranteed by the applicable Agency.

     

    “Agent”
has
      the
      meaning set forth in the preamble.

     

    “Aggregate
      Margin Value”
means,
      at any time of determination, the sum of the Margin Values for each Eligible
      Mortgage Loan. 

     

    “Aggregate
      Purchase Price”
means,
      at any time of determination, the sum of the outstanding Purchase
      Prices.

     

    “Aggregate
      Unpaids”
means,
      at any time, an amount equal to the sum of all amounts owed by Seller, Agent
      and
      each Principal under the Transaction Documents, including, without limitation,
      the Fees, unpaid Purchase Prices (and any accrued and to accrue Price
      Differential with respect thereto), and Breakage Costs, any and all amounts
      in
      respect of indemnification.

     

    “Agreement”
means
      this Fifth Amended and Restated Master Repurchase Agreement, as it may be
      amended, supplemented or otherwise modified from time to time.

     

    “APA
      Purchaser”
means
      each party (or assignee thereof) who has executed a signature page of an Asset
      Purchase Agreement, which execution obligates such party to become a purchaser
      or an assignee of all or any part of the applicable Conduit Principal’s interest
      in the Eligible Mortgage Loans at any time, pursuant to the related Asset
      Purchase Agreement or an assignee of such purchaser’s obligations to purchase
      Eligible Mortgage Loans from Seller.

     

    “Appraised
      Value”
means
      the value set forth in an appraisal made by an acceptable appraiser in
      connection with the origination of the related Eligible Mortgage Loan as the
      value of the Mortgaged Property. For the avoidance of doubt, Seller and Agent
      agree that an automated valuation model report meeting guidelines that would
      be
      generally acceptable to prudent mortgage lenders that regularly originate or
      purchase mortgage loans comparable to the Eligible Mortgage Loans for sale
      to
      prudent investors in the secondary market that invest in mortgage loans such
      as
      the Eligible Mortgage Loans is an acceptable appraisal.

     

    “Approved
      Provider”
means
      each of the mortgage loan originating institutions listed on Exhibit A attached
      hereto, as such Exhibit A is amended, amended and restated, supplemented or
      otherwise modified with the prior written consent of the Agent.

     

    “Approved
      Seller/Servicer”
means
      an approved seller and servicer under the Guidelines.

     

    “Asset
      Purchase Agreement”
means
      with respect to each Conduit Principal, a revolving asset purchase agreement,
      liquidity asset purchase agreement or other agreement pursuant to which certain
      liquidity providers agree to provide liquidity support to such Conduit Principal
      in connection with the Short-Term Notes issued to fund or maintain its purchases
      hereunder, together with each of the other commercial paper program documents
      related thereto, as each of the foregoing may be at any time amended, modified
      or supplemented.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    “Assignee
      Rate”
with
      respect to any Principal for any Transaction, means an interest rate
per
      annum
      equal to
      the Adjusted LIBOR Rate with respect to such Principal for such Transaction;
      provided,
      however,
      that in
      case of:

     

    (i) any
      Transaction on or prior to the first day of which a Conduit Principal or Bank
      Principal shall have notified Agent that the introduction of or any change
      in,
      or in the interpretation of, any law or regulation makes it unlawful, or any
      central bank or other governmental authority asserts that it is unlawful, for
      such Conduit Principal or Bank Principal to fund such Transaction at the
      Assignee Rate set forth above (and such Conduit Principal or Bank Principal
      shall not have subsequently notified Agent that such circumstances no longer
      exist), or

     

    (ii) any
      Transaction as to which Agent does not receive a Transaction Notice, together
      with the Daily Servicer Report as required in accordance with Section 3 hereof,
      

     

    the
      Assignee Rate for such Transaction for the affected Conduit Principal or Bank
      Principal shall be an interest rate per
      annum
      equal to
      the Base Rate in effect from time to time during such Transaction; and
provided,
      further
      that at
      all times following the occurrence and during the continuation of an Event
      of
      Default, the Assignee Rate shall be an interest rate per
      annum
      equal to
      the Default Rate.

     

    “Assignment
      of Mortgage”
means
      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 sale of the Mortgage
      to
      Agent (on behalf of the Principals).

     

    “Assignment
      and Acceptance”
shall
      have the meaning assigned thereto in Section 22 hereof.

     

    “Bank
      Principal”
shall
      mean each Person designated on the signature pages hereto as such or designated
      as such on any agreement or instrument pursuant to which it becomes a party
      hereto.

     

    “Bankruptcy
      Code”
shall
      have the meaning assigned thereto in Section 28 hereof.

     

    “Barclays”
means
      Barclays Bank PLC and its successors and permitted assigns. 

     

    “Base
      Rate”
means,
      for any day, the higher of (i) the prime rate in the United States announced
      from time to time by Barclays in effect on such day, and (ii) the sum of (x)
      the
      rate equal to the weighted average of the rates on overnight Federal funds
      transactions with members of the Federal Reserve System arranged by Federal
      funds brokers, as published for such day (or, if such day is not a Business
      Day,
      for the next preceding Business Day) by the Federal Reserve Bank of New York,
      or, if such rate is not so published for such day, the average of the quotations
      for such day for such transactions received by Barclays from three Federal
      funds
      brokers of recognized standing selected by it, and (y) one-half of one
      percent (1⁄2%).

     

    “Best’s”
has
      the
      meaning specified in the Servicing Agreement.

     

    “BIF”
means
      The Bank Insurance Fund or any successor thereto.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    “Blocked
      Account Control Agreement”
shall
      mean each Blocked Account Control Agreement, dated as of October 30, 2006,
      by
      and between, inter
      alia,
      Agent
      and The Bank of New York, as depositary, as any such agreement may be amended,
      supplemented or otherwise modified in accordance with the respective terms
      thereof.

     

    “Board”
shall
      mean the Board of Governors of the Federal Reserve System.

     

    “Borrower”
means
      the obligor or obligors on a Mortgage Note, including any Person that has
      acquired the related collateral and assumed the obligations of the original
      obligor or obligors under the Mortgage Note.

     

    “Breakage
      Costs”
shall
      mean any amounts any Affected Person sustains or incurs in connection with
      the
      final paragraph of Section 18 hereof.

     

    “Business
      Day”
shall
      mean any day other than (i) Saturday and Sunday, or (ii) a day on which banking
      institutions or foreign exchange markets in New York City are authorized or
      required by law, regulation or executive order to be closed for
      business.

     

    “Closed
      End Second Mortgage Loan”
shall
      mean any Mortgage Loan secured by a second lien on the related Mortgage Property
      which (i) does not permit subsequent advances, and (ii) has a maximum initial
      principal balance of not greater than the then current Agency maximum (which,
      on
      the Effective Date, is $208,500).

     

    “Change
      in Control”
shall
      mean if at any time PHH Corporation shall cease to own, directly or through
      wholly-owned Subsidiaries, all of the outstanding voting stock of Seller, free
      and clear of any direct or indirect Liens.

     

    “Code”
means
      the Internal Revenue Code of 1986, as amended. 

     

    “Collateral”
has
      the
      meaning assigned thereto in Section 7 hereof.

     

    “Collateral
      Value”
means
      with respect to each mortgage loan, the lesser of (i) the Outstanding Principal
      Balance of such mortgage loan and (ii) the Market Value of such mortgage loan
      as
      determined by Seller or Agent, as applicable.

     

    “Collection
      Account” shall mean that certain account number [***], maintained at The
      Bank of New York (ABA [***]), which is subject to the terms and conditions
      of a
      Blocked Account Agreement.

     

     

    

      ______________

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

       

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

    “Collections”
means,
      with respect to any Purchased Asset, all Income and collections and proceeds
      of
      such Purchased Asset, including, without limitation, all cash proceeds of
      Related Security with respect to such Purchased Asset, and (a) all payments
      on
      account of scheduled principal on the Eligible Mortgage Loans; (b) all payments
      on account of interest on the Eligible Mortgage Loans (including interest
      accrued and unpaid on the Eligible Mortgage Loans prior to the applicable
      Purchase Date); (c) any Principal Prepayments; (d) all Liquidation Proceeds;
      (e)
      all Insurance Proceeds including amounts required to be deposited pursuant
      to
      the Servicing Agreement (other than proceeds to be held in the Escrow Account
      and applied to the restoration or repair of the Mortgaged Property or released
      to the Mortgagor in accordance with Accepted Servicing Practices as further
      specified in the Servicing Agreement); (f) all Condemnation Proceeds which
      are
      not applied to the restoration or repair of the Mortgaged Property or released
      to the Mortgagor in accordance with the Servicing Agreement; (g) any amount
      required to be deposited in any account (including, without limitation, the
      Collection Account, the Funding Account, the Escrow Account and the Margin
      Call
      Account) pursuant to this Agreement or any other Transaction Document; (h)
      any
      amounts required to be deposited by Servicer pursuant to the Servicing Agreement
      in connection with the deductible clause in any blanket hazard insurance policy;
      (i) any amounts received with respect to or related to any REO Property and
      all
      REO Disposition Proceeds pursuant to the Servicing Agreement; (j) any other
      amounts received with respect to or related to the mortgage loan including
      but
      not limited to late payment charges and interest paid on funds deposited in
      the
      Collection Account, the Funding Account, the Margin Call Account or the Escrow
      Account, to the extent permitted by applicable law and (k) all proceeds of
      each
      of the forgoing.

     

    “Combined
      Loan-to-Value Ratio”
means,
      with respect to any HELOC or any Closed End Second Mortgage Loan, the ratio
      expressed as a percentage equal to (i) if the loan transaction is a purchase
      money transaction (a) that includes an appraisal, the Credit Limit of the HELOC
      or Closed End Second Mortgage Loan, as applicable, plus the then outstanding
      principal amount of any related senior mortgage loans, divided by the lesser
      of
      the Appraised Value or the purchase price of the Mortgaged Property, or (b)
      if
      such transaction does not include an appraisal, the Credit Limit of the HELOC
      or
      Closed End Second Mortgage Loan, as applicable, plus the then outstanding
      principal amount of any related senior mortgage loans, divided by the purchase
      price of the Mortgaged Property; and (ii) if the loan transaction is a refinance
      (a) that includes an appraisal, the Credit Limit of the HELOC or Closed End
      Second Mortgage Loan, as applicable, plus the then outstanding principal amount
      of any related senior mortgage loans, divided by the appraised value of the
      Mortgaged Property, or (b) if such transaction does not include an appraisal,
      the Credit Limit of the HELOC or Closed End Second Mortgage Loan, as applicable,
      plus the then outstanding principal amount of any related senior mortgage loans,
      divided by the estimated value of the Mortgaged Property.

     

    “Commitment”
of
      any
      Principal means, (a) with respect to a Principal party hereto on the date
      hereof, the amount set forth beneath its signature on the signature pages to
      this Agreement, as reduced or increased in accordance with the terms hereof
      and
      (b) with respect to any other Principal that becomes a party hereto in
      accordance with the terms hereof, the amount set forth in the agreement or
      instrument to which such Principal becomes a party hereto as such Principal’s
      Commitment, as such amount may be reduced or increased in accordance with the
      terms hereof. Any reduction (or termination) of the Maximum Aggregate Purchase
      Price shall reduce ratably (or terminate) each Principal’s Commitment.

     

    “Condemnation
      Proceeds”
means,
      as to any Eligible Mortgage Loan, 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 Loan Documents.

     

    “Conduit
      Principal”
shall
      mean each Person designated on the signature pages hereto as such or designated
      as such on any agreement or instrument pursuant to which it becomes a party
      hereto.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    “Conforming
      Loan”
shall
      mean any mortgage loan which conforms to the Guidelines of GNMA, FNMA or FHLMC,
      as amended.

     

    “Consolidated
      Net Income”
means,
      for any period for which such amount is being determined, the net income (loss)
      of PHH Corporation and its Consolidated Subsidiaries during such period
      determined on a consolidated basis for such period taken as a single accounting
      period in accordance with GAAP, provided
      that
      there shall be excluded (i) income (or loss) of any Person (other than a
      Consolidated Subsidiary) in which PHH Corporation or any of its Consolidated
      Subsidiaries has an equity investment or comparable interest, except to the
      extent of the amount of dividends or other distributions actually paid to PHH
      Corporation or its Consolidated Subsidiaries by such Person during such period,
      (ii) the income (or loss) of any Person accrued prior to the date it becomes
      a
      Consolidated Subsidiary or is merged into or consolidated with PHH Corporation
      or any of its Consolidated Subsidiaries, (iii) the income of any
      Consolidated Subsidiary to the extent that the declaration or payment of
      dividends or similar distributions by that Consolidated Subsidiary of the income
      is not at the time permitted by operation of the terms of its charter or any
      agreement, instrument, judgment, decree, order, statute, rule or governmental
      regulation applicable to that Consolidated Subsidiary, (iv) any
      extraordinary after-tax gains and (v) any extraordinary pretax losses but
      only to the extent attributable to a write-down of financing costs relating
      to
      any existing and future indebtedness.

     

    “Consolidated
      Net Worth”
shall
      mean, with respect to any Person, at any date of determination, all amounts
      which would be included on a balance sheet of such Person and its Consolidated
      Subsidiaries under stockholders’ equity as of such date in accordance with
      GAAP.

     

    “Consolidated
      Subsidiaries”
shall
      mean, with respect to any Person, all Subsidiaries of such Person that are
      required to be consolidated with such Person for financial reporting purposes
      in
      accordance with GAAP.

     

    “Credit
      Limit”
means
      the maximum amount a Borrower is permitted to draw down the credit line under
      a
      Home Equity Line Agreement.

     

    “Credit
      Policy”
means
      those underwriting and credit policies of Seller with respect to mortgage loans
      as attached in Exhibit B hereto as amended, supplemented or otherwise modified
      from time to time in accordance with Section 11(u)(B).

     

    “Custodial
      Agreement”
means
      the Amended and Restated Custodial Agreement, dated as of the date hereof,
      among
      Barclays, as agent, PHH Mortgage Corporation, as Seller and Servicer, and the
      Custodian, as such agreement may at any time be amended, modified or
      supplemented from time to time.

     

    “Custodian”
means
      The Bank of New York Trust Company N.A. or its successors and permitted
      assigns.

     

    “Daily
      Loan Inventory”
means
      the schedule attached and made a part of the Daily Servicer Report.

     

    “Daily
      Servicer Report”
means
      the report attached as Exhibit D to the Servicing Agreement.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

     

    “Default
      Rate”
means
      an annual rate of interest equal to the Base Rate plus 2%.

     

    “Defaulted
      Loan”
means
      any Eligible Mortgage Loan where (i) the Borrower thereon has failed to make
      a
      required payment for 90 days or more after the Due Date of such required payment
      or (ii) any other event has occurred which gives the holder the right to
      accelerate payment and/or take steps to foreclose on the mortgage securing
      the
      Eligible Mortgage Loan under the Eligible Mortgage Loan
      documentation.

     

    “Delinquency
      Ratio”
means,
      with respect to any date of determination, the ratio (expressed as a percentage)
      computed as of the last day of each calendar month by dividing (i) the aggregate
      Outstanding Principal Balance of all Delinquent Loans as of the last day of
      such
      calendar month by (ii) the Outstanding Principal Balance of the Eligible
      Mortgage Loans as of the last day of such calendar month. 

     

    “Delinquent
      Loan”
means
      any Eligible Mortgage Loan which has a payment which is 30 days or more past
      its
      Due Date.

     

    “Determination
      Date”
means
      with respect to a Due Period, the 5th
      day (or
      if such day is not a Business Day, the Business Day immediately succeeding
      such
      day) of the calendar month following such Due Period.

     

    “Due
      Date”
means
      the first day of the month in which the related Monthly Payment is due on an
      Eligible Mortgage Loan, exclusive of any days of grace. 

     

    “Due
      Period”
means
      (i) for the initial Monthly Interest Payment Date, the period commencing on
      the
      Effective Date and ending on the last day of the month immediately preceding
      the
      month in which such initial Monthly Interest Payment Date occurs and (ii) for
      each other Monthly Interest Payment Date, the period commencing on the first
      day
      of the month immediately preceding the month in which such Monthly Interest
      Payment Date occurs and ending on the last day of such month.

     

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

     

    “Dollars”
and
      “$”
and
      “US$”
shall
      mean lawful currency of the United States.

     

    “Effective
      Date”
means
      November 1, 2006.

     

    “Eligible
      Investments”
means
      investments which mature no later than the next following Monthly Interest
      Payment Date in the following: (i) obligations issued by, or the full and timely
      payment of principal of and interest on which is fully guaranteed by, the United
      States of America or any agency or instrumentality thereof (which agency or
      instrumentality is backed by the full faith and credit of the United States
      of
      America); (ii) commercial paper (other than the Short-Term Notes) rated (at
      the
      time of purchase) at least “A-1+” by S&P and “P-1” by Moody’s; (iii)
      certificates of deposit, other deposits or bankers’ acceptances issued by or
      established with commercial banks having short-term deposit ratings (at the
      time
      of purchase) of at least “A-1+” by S&P and “P-1” by Moody’s; (iv) repurchase
      agreements involving any of the Eligible Investments described in the foregoing
      clauses (i) through (iii) so long as the other party to the repurchase agreement
      has short-term unsecured debt obligations or short-term deposits rated (at
      the
      time of purchase) at least “A-1+” by S&P and “P-1” by Moody’s; and
      (v) if approved in writing by Moody’s, direct obligations of any money
      market fund or other similar investment company all of whose investments consist
      of obligations described in the foregoing clauses of this definition and that
      is
      rated “AAm” by S&P and “Aam” by Moody’s or higher. In addition, the
      instrument should not have an ‘r’ highlighter affixed to its rating, and its
      terms should have a predetermined fixed dollar amount of principal due at
      maturity that cannot vary or change. Interest on any Eligible Investment should
      be tied to a single interest rate index plus a single fixed spread, if any,
      and
      move proportionately with that index.

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

    “Eligible
      Mortgage Loan”
means
      a
      Conforming Loan (provided that Seller is an Approved Seller/Servicer by the
      related Agency), a Jumbo Loan, an Additional Collateral Mortgage Loan, a
      Landscape Loan, an Uninsured Loan, a HELOC, a Non-Primary Residence Mortgage
      Loan, a Closed End Second Mortgage Loan, a Manufactured Home Mortgage Loan
      or an
      Interest-Only Loan, identified on a Daily Servicer Report that satisfies the
      Eligibility Criteria and the Portfolio Criteria and that is not a Terminated
      Loan. An Eligible Mortgage Loan includes, without limitation, the Mortgage
      Loan
      File, the Related Security, the Monthly Payments, Principal Prepayments,
      Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
      VA Guaranty Proceeds, REO Disposition Proceeds and all other rights,
      benefits, proceeds and obligations arising from or in connection with such
      Eligible Mortgage Loan (other than the right to service such Eligible Mortgage
      Loans, which shall be retained by Servicer pursuant to the terms of this
      Agreement and the other Transaction Documents). For the avoidance of doubt
      only
      mortgage loans which are of the types specifically enumerated in this definition
      shall be eligible for purchase by Agent (on behalf of the Principals) under
      this
      Agreement. 

     

    “Eligibility
      Criteria”
means,
      with respect to each mortgage loan, that such mortgage loan satisfies each
      of
      the following criteria: (i) such mortgage loan must be an Eligible Mortgage
      Loan, (ii) such mortgage loan must have been originated or purchased by Seller
      in accordance with its then-current origination or acquisition underwriting
      practices within 120 days prior to the acquisition thereof by Agent, (iii)
      each
      mortgage loan may not be made to a Borrower that is a Sub-Prime Borrower and
      (iv) Seller and Servicer are in compliance with the laws of, and have valid,
      existing licenses in, the state in which the related Mortgage Property is
      located to the extent necessary to ensure the enforceability of such mortgage
      loan and the servicing of any such mortgage loan in accordance with the terms
      of
      this Agreement, each Transaction Document and any Daily Servicer Report. In
      addition, the representations and warranties made by Seller in this Agreement
      must be true and correct in all material respects on such day.

     

    “Eligibility
      Representations”
means
      each of the representations and warranties made by Seller with respect to each
      mortgage loan, set forth in Annex II attached hereto.

     

    “Environmental
      Laws”
shall
      mean any and all federal, provincial, state, local or municipal laws, rules,
      orders, regulations, statutes, ordinances, codes, decrees or requirements of
      any
      Official Body regulating, relating to or imposing liability or standards of
      conduct concerning, any Hazardous Material or environmental protection or health
      and safety, as now or at any time hereafter in effect, including without
      limitation, the Clean Water Act also known as the Federal Water Pollution
      Control Act, 33 U.S.C. §§ 1251 et seq.,
      the
      Clean Air Act, 42 U.S.C. §§ 7401 et seq.,
      the
      Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136
et seq.,
      the
      Surface Mining Control and Reclamation Act, 30 U.S.C. §§ 1201
et seq.,
      the
      Comprehensive Environmental Response, Compensation and Liability Act,
      42 U.S.C. §§ 9601 et seq.,
      the
      Superfund Amendment and Reauthorization Act of 1986, Public Law 99-499, 100
      Stat. 1613, the Emergency Planning and Community Right to Know Act,
      42 U.S.C. §§ 11001 et seq.,
      the
      Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.,
      the
      Occupational Safety and Health Act as amended, 29 U.S.C. § 655 and
§ 657, together, in each case, with any amendment thereto, and the
      regulations adopted and publications promulgated thereunder and all
      substitutions thereof.

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

    “Environmental
      Liabilities”
shall
      mean any liability, contingent or otherwise (including any liability for
      damages, costs of environmental remediation, fines, penalties or indemnities),
      of Seller or any Subsidiary directly or indirectly resulting from or based
      upon
      (a) violation of any Environmental Law, (b) the generation, use, handling,
      transportation, storage, treatment or disposal of any Hazardous Materials,
      (c)
      exposure to any Hazardous Materials, (d) the release or threatened release
      of
      any Hazardous Materials into the environment or (e) any contract, agreement
      or
      other consensual arrangement pursuant to which liability is assumed or imposed
      with respect to any of the foregoing.

     

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

     

    “ERISA
      Affiliate”
means
      any corporation or trade or business that is a member of any group of
      organizations (i) described in Section 414(b) or (c) of the Code of which Seller
      is a member and (ii) solely for purposes of potential liability under Section
      302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created
      under Section 302(f) of ERISA and Section 412(n) of the Code, described in
      Section 414(m) or (o) of the Code of which Seller is a member.

     

    “Errors
      and Omissions Insurance Policy”
shall
      have the meaning set forth in the Servicing Agreement.

     

    “Escrow
      Account”
means
      as to the Eligible Mortgage Loans (other than HELOCs and Closed End Second
      Mortgage Loans), any account created and maintained pursuant to the Servicing
      Agreement.

     

    “Event
      of Default”
shall
      have the meaning assigned thereto in Section 13 hereof.

     

    “Excluded
      Taxes”
shall
      have the meaning assigned thereto in Section 18 hereof.

     

    “FASB”
shall
      have the meaning assigned thereto in Section 18 hereof.

     

    “Federal
      Funds Rate”
means,
      for any period, a fluctuating interest rate per annum equal for each day during
      such period to the weighted average of the rates on overnight Federal funds
      transactions with members of the Federal Reserve System arranged by Federal
      funds brokers, as published for such day (or, if such day is not a Business
      Day,
      for the next preceding Business Day) by the Federal Reserve Bank of New York,
      or, if such rate is not so published for any day which is a Business Day, the
      average of the quotations for such day on such transactions received by Agent
      from three Federal funds brokers of recognized standing selected by
      it.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

    “Fee
      Letter”
means,
      that certain Fee Letter, dated as of October 30, 2006, by Seller and each
      Principal, as such letter may be amended, supplemented or otherwise modified
      from time to time in accordance with the terms thereof and each other fee letter
      entered into after the date hereof by Seller and the Principals becoming parties
      hereof, dated as of the date each such Principal becomes a party hereto, as
      such
      other letter may be amended, supplemented or otherwise modified from time to
      time in accordance with the terms thereof.

     

    “Fees”
means,
      the Program Fee and the Transfer Availability Fee.

     

    “FHA”
means
      The Federal Housing Administration, an agency within the United States
      Department of Housing and Urban Development, or any successor thereto and
      including the Federal Housing Commissioner and the Secretary of Housing and
      Urban Development where appropriate under the FHA Regulations.

     

    “FHA
      Approved Mortgagee”
means
      a
      corporation or institution approved as a mortgagee by the FHA under the Act
      and
      applicable FHA Regulations, and eligible to own and service mortgage loans
      such
      as the FHA Loans.

     

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

     

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

     

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

     

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

     

    “FHLMC”
shall
      mean Freddie Mac, formerly known as the Federal Home Loan Mortgage Corporation,
      or any successor thereto.

     

    “FHLMC
      Guides”
shall
      mean the Freddie Mac’s Seller’s Guide and the Federal Home Loan Mortgage
      Corporation Servicers’ Guide and all amendments or additions
      thereto.

     

    “FICO
      Score”
means
      a
      statistical credit score obtained by many mortgage lenders in connection with
      a
      loan application to help assess a borrower’s creditworthiness. A FICO Score is
      generated by models developed by a third party and made available to lenders
      through three national credit bureaus. The FICO Score is based on a borrower’s
      historical credit data, including, among other things, payment history,
      delinquencies on accounts, levels of outstanding indebtedness, length of credit
      history, types of credit and bankruptcy experience.

     

    “Fidelity
      Bond”
shall
      have the meaning set forth in the Servicing Agreement. 

     

    “Finance
      Charges”
means,
      with respect to an Eligible Mortgage Loan, any finance, interest, late or
      similar charges owing by a Borrower pursuant to such Eligible Mortgage
      Loan.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    “FNMA”
shall
      mean The Federal National Mortgage Association, or any successor
      thereto.

     

    “FNMA
      Guides”
shall
      mean the Fannie Mae Selling and Servicing Guides and all amendments or additions
      thereto.

     

    “Funding
      Account” shall mean that certain account number [***], maintained at The
      Bank of New York (ABA [***]), which is subject to the terms and conditions
      of a
      Blocked Account Control Agreement.

     

    “GAAP”
shall
      mean generally accepted accounting principles set forth in the opinions and
      pronouncements of the Accounting Principles Board of the American Institute
      of
      Certified Public Accountants and statements and pronouncements of the Financial
      Accounting Standards Board or in such other statements by such accounting
      profession, as in effect from time to time.

     

    “GNMA”
shall
      mean The Government National Mortgage Association, or any successor
      thereto.

     

    “GNMA
      Guides”
shall
      mean the GNMA Handbooks 5500.3 and all amendments or additions thereto.

     

    “Guidelines”
shall
      mean the GNMA Guides, the FNMA Guides and the FHLMC Guides, as such Guides
      have
      been amended from time to time with respect to Seller.

     

    “Hazardous
      Materials”
shall
      mean any flammable materials, explosives, radioactive materials, hazardous
      materials, hazardous wastes, hazardous or toxic substances, or similar materials
      defined as such in any Environmental Law.

     

    “Home
      Equity Line Agreement”
means,
      with respect to HELOCs, the agreement between a Borrower and a lender pursuant
      to which a Borrower receives a line of credit secured by a Mortgage on the
      Mortgaged Property.

     

    “HELOC”
shall
      mean an open-end, revolving, home equity line of credit underwritten in
      accordance with the Credit Policy.

     

    “HUD”
means
      the Department of Housing and Urban Development, or any federal agency or
      official thereof which may from time to time succeed to the functions thereof
      with regard to FHA Mortgage Insurance. The term “HUD,” for purposes of this
      Agreement, is also deemed to include subdivisions thereof such as the FHA and
      GNMA.

     

    “Income”
means,
      with respect to any Purchased Asset at any time, any accrued and unpaid interest
      on any principal in respect of such Purchased Asset and other collections (other
      than escrowed amounts for insurance, taxes and other periodic payments
      customarily escrowed for mortgage loan borrowers) with respect
      thereto.

     

    “Indebtedness”
shall
      mean (i) all indebtedness, obligations and other liabilities of Seller and
      its
      Subsidiaries which are, at the date as of which Indebtedness is to be
      determined, includable as liabilities in a consolidated balance sheet of such
      Person, other than (x) accounts payable and accrued expenses and, in each case,
      not overdue by its respective terms by more than 90 days, and (y) current and
      deferred income taxes and other similar liabilities, plus (ii) without
      duplicating any items included in Indebtedness pursuant to the foregoing clause
      (i), the maximum aggregate amount of all liabilities of Seller or any of its
      Subsidiaries under any Guarantee, indemnity or similar undertaking given or
      assumed of, or in respect of, the indebtedness, obligations or other
      liabilities, assets, revenues, income or dividends of any Person other than
      Seller or one of its Subsidiaries and (iii) all other obligations or liabilities
      of Seller or any of its Subsidiaries in relation to the discharge of the
      obligations of any Person other than such Person.

    

      ______________

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

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    “Indemnified
      Party”
shall
      have the meaning assigned thereto in Section 16(b) hereof.

     

    “Insurance
      Proceeds”
means,
      with respect to any Eligible Mortgage Loan, proceeds of insurance policies
      insuring the Eligible Mortgage Loan or the related Mortgaged
      Property.

     

    “Interest-Only
      Loan”
shall
      mean any Conforming Loan or any Jumbo Loan which permits the related Borrower
      to
      pay only the accrued interest on such mortgage loan for a specified period
      of
      time.

     

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

     

    “Jumbo
      Loan”
shall
      mean any mortgage loan which substantially conforms to the Guidelines, except
      that the principal balance thereof exceeds the principal balance of a mortgage
      loan which conforms to the Guidelines, and the terms of which include other
      specified exceptions to the Guidelines, if any, which are consistent with
      Seller’s Jumbo Loan underwriting standards. Jumbo Loans will not include
      mortgage loans made to Sub-Prime Borrowers.

     

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

     

    “Law”
means
      any law (including common law), constitution, statute, treaty, regulation,
      rule,
      ordinance, order, injunction, writ, decree or award of any Official
      Body.

     

    “LIBOR”
means,
      with respect to any funding period, the rate per annum (rounded upwards, if
      necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or
      any
      successor page) as the London interbank offered rate for deposits in U.S.
      dollars at approximately 11:00 a.m. (London time) two London Business Days
      prior
      to the first day of such funding period for a term of one month. If for any
      reason such rate is not available, the term “LIBOR Rate” shall mean, for any
      funding period, the rate per annum (rounded upwards, if necessary, to the
      nearest 1/100 of 1%) appearing on Reuters Screen LIBOR Page as the London
      interbank offered rate for deposits in dollars at approximately 11:00 a.m.
      (London time) two London Business Days prior to the first day of such funding
      period for a term of one month; provided,
      however,
      if more
      than one rate is specified on the Reuters Screen LIBOR Page, the applicable
      rate
      shall be the arithmetic mean of all such rates. In the event no such rate
      appears as described in the preceding sentences, the LIBOR Rate shall be, with
      respect to any funding period, the per annum rate of interest at which Dollar
      deposits in immediately available funds are offered to Agent by prime banks
      in
      the interbank eurodollar market at or about 10:00 a.m., London time, on the
      second Business Day before (and for value on) the first day of such funding
      period (or portion thereof) and in an amount of not less than $1,000,000 for
      such funding period (or portion thereof).

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

     

    “Lien”
shall
      mean with respect to the property of any Person, any ownership interest of
      any
      other Person, any mortgage, deed of trust, hypothecation, pledge, lien, security
      interest, filing of any financing statement, charge or other encumbrance or
      security arrangement of any nature whatsoever, including, without limitation,
      any conditional sale or title retention arrangement, and any assignment, deposit
      arrangement, consignment or lease intended as, or having the effect of,
      security.

     

    “Liquidation
      Proceeds”
means
      all amounts received and retained in connection with the liquidation of
      Defaulted Loans.

     

    “Loan-to-Value
      Ratio or LTV”
means
      (x) with respect to any Eligible Mortgage Loan (except for HELOCs and Closed
      End
      Second Mortgage Loans), the ratio expressed as a percentage of (i) if the loan
      transaction is a purchase money transaction (a) that includes an appraisal,
      the
      initial principal amount (less for any Additional Collateral Mortgage Loan,
      the
      value of the Additional Collateral as of the date of determination), divided
      by
      the lesser of the Appraised Value or the purchase price of the Mortgaged
      Property, or (b) if such transaction does not include an appraisal, the initial
      principal amount (less for any Additional Collateral Mortgage Loan, the value
      of
      the Additional Collateral as of the date of determination), divided by the
      purchase price of the Mortgaged Property; and (ii) if the loan transaction
      is a
      refinance (a) that includes an appraisal, the initial principal amount (less
      for
      any Additional Collateral Mortgage Loan, the value of the Additional Collateral
      as of the date of determination), or (b) if such transaction does not include
      an
      appraisal, the initial principal amount (less for any Additional Collateral
      Mortgage Loan, the value of the Additional Collateral as of the date of
      determination), divided by the estimated value of the Mortgaged
      Property.

     

    “Loan
      Documents”
has
      the
      meaning set forth in the definition of “Mortgage Loan File.”

     

    “Manufactured
      Home Mortgage Loan”
shall
      mean any Conforming Loan for which the Mortgaged Property is a manufactured
      home
      unit that is permanently attached to its foundation and ready for occupancy,
      but
      is not a mobile home. 

     

    “Margin
      Call”
shall
      have the meaning assigned thereto in Section 5 hereof.

     

    “Margin
      Call Account” shall mean that certain account number [***], maintained at
      The Bank of New York (ABA [***]), which is subject to the terms and conditions
      of a Blocked Account Control Agreement.

     

    “Margin
      Deficit”
      shall
      have the meaning assigned thereto in Section 5 hereof.

     

    “Margin
      Value”
means,
      at any time of determination with respect to each mortgage loan, an amount
      equal
      to the product of (i) the applicable Purchase Price Percentage for such mortgage
      loan multiplied by (ii) the Collateral Value of such mortgage loan at such
      time;
provided,
      that
      the Collateral Value of any mortgage loan that is a Defaulted Loan or that
      is
      not an Eligible Mortgage Loan shall be zero.

     

    

      ______________

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

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

     

    “Market
      Value”
means,
      at any time of determination with respect to any mortgage loan, the value
      ascribed to such asset by Seller or Agent in its sole discretion (based on
      a
      methodology used in accordance with normal market practice).

     

    “Maximum
      Aggregate Purchase Price”
means
      Seven Hundred Fifty-Million Dollars ($750,000,000).

     

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

     

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

     

    “Minimum
      Transfer Amount”
means
      an amount equal to or greater than $250,000.

     

    “Minimum
      Transfer Condition”
shall
      have the meaning assigned thereto in Section 5 hereof. 

     

    “Monthly
      Interest Payment Date”
means,
      the 10th
      day (or
      if such day is not a Business Day, the immediately succeeding Business Day)
      of
      any month, commencing December 11, 2006.

     

    “Monthly
      Payment”
means
      the scheduled monthly payment of principal and/or interest on an Eligible
      Mortgage Loan.

     

    “Moody’s”
shall
      mean Moody’s Investors Service Inc.

     

    “Mortgage”
means,
      the mortgage, deed of trust or other instrument securing a Mortgage Note, which
      creates a lien on an estate in fee simple in real property securing the Mortgage
      Note.

     

    “Mortgage
      Banker’s Blanket Bond”
shall
      have the meaning set forth in the Servicing Agreement.

     

    “Mortgage
      Impairment Insurance”
shall
      have the meaning set forth in the Servicing Agreement. 

     

    “Mortgage
      Interest Rate”
means
      the annualized regular rate of interest borne on a Mortgage Note.

     

    “Mortgage
      Loan File”
means
      each of the following documents (constituting, collectively, the “Loan
      Documents”),
      and
      such other documents as Agent may require from time to time:

     

    (1)  the
      original or an electronic or imaged copy of any guarantee executed in connection
      with the Mortgage Note (if any);

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

    (2)  the
      original or a copy or imaged copy of the Mortgage with evidence of recording
      thereon;

     

    (3)  the
      originals or copies or images of copies of all assumption, modification,
      consolidation or extension agreements, with evidence of recording
      thereon;

     

    (4)  except
      with respect to any MERS Designated Mortgage Loan, any original duly executed
      Assignment of Mortgage for each Eligible Mortgage Loan or image copy thereof,
      in
      form and substance acceptable for recording, and all interim assignments with
      evidence of recording thereon, if any; if the Eligible Mortgage Loan was
      acquired by Seller in a merger, any Assignment of Mortgage must be made by
      “[Seller], successor by merger to [name of predecessor].” If the Eligible
      Mortgage Loan was acquired or originated by Seller while doing business under
      another name, any Assignment of Mortgage must be by “[Seller], formerly known as
      [previous name].” If the Eligible Mortgage Loan was acquired by Seller as
      receiver for another entity, any Assignment of Mortgage must be by “[Seller],
      receiver for [name of entity in receivership].” Any Assignment of Mortgage must
      be duly recorded only if recordation is either necessary under applicable law
      to
      perfect or on direction of Agent as provided in this Agreement. If any
      Assignment of Mortgage is not to be recorded, such Assignment of Mortgage shall
      be delivered in blank;

     

    (5)  if
      Seller
      did not originate the mortgage loan, the originals or image copies (for mortgage
      loans other than MERS Designated Mortgage Loans) of all intervening assignments
      of mortgage with evidence of recording thereon evidencing the chain of mortgage
      assignments from the originator of the mortgage loan to Seller, or in the case
      of a MERS Designated Mortgage Loan, to MERS, or if any such intervening
      assignment has not been returned from the applicable recording office or has
      been lost or if such public recording office retains the original recorded
      assignments of mortgage, Seller shall deliver or cause to be delivered to
      Servicer, a photocopy of such intervening assignment, together with (i) in
      the
      case of a delay caused by the public recording office, an Officer’s Certificate
      of Seller 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 Servicer upon receipt
      thereof by Seller; or (ii) in the case of an intervening assignment where a
      public recording office retains the original recorded intervening assignment
      or
      in a case where an intervening assignment is lost after recordation in a public
      recording office, a copy of such intervening assignment;

     

    (6)  if
      available, the original or a copy or an image copy of the original mortgagee
      title insurance policy or attorney’s opinion of title and abstract of title, or
      if the policy has not yet been issued, (a) the irrevocable written commitment,
      interim binder or marked up binder for a title insurance policy issued by the
      title insurance company dated and certified as of the date the Eligible Mortgage
      Loan was funded, or (b) a copy of the applicable escrow instructions indicating
      the name of the title company with, in either case, a statement by the title
      insurance company or closing attorney on such binder or commitment or escrow
      instructions that the priority of the lien on the related Mortgage during the
      period between the date of the funding of the related Eligible Mortgage Loan
      and
      the date of the related title policy is insured;

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

     

    (7)  the
      original or an image copy of any security agreement, chattel mortgage,
      securities account control agreement, guarantee, filings or equivalent document
      executed in connection with the Mortgage; 

     

    (8)  the
      certification number for any primary mortgage insurance policy (if any);

     

    (9)  if
      the
      Eligible Mortgage Loans are sold to the Agencies, the originals or image copies
      of other documents, forms, releases, certifications and papers required by
      the
      applicable Agency Custodial Agreement; and

     

    (10)  and
      any
      additional documents or image copies thereof, required to be added to the
      Mortgage Loan File pursuant to this Agreement or any other Transaction
      Document.

     

    “Mortgage
      Note”
means
      the note, Home Equity Line Agreement or other evidence of the indebtedness
      of a
      Borrower secured by a Mortgage.

     

    “Mortgaged
      Property”
means,
      with respect to a Mortgage Loan, the real property securing repayment of the
      debt evidenced by a Mortgage Note.

     

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

     

    “Non-Primary
      Residence Mortgage Loan”
means
      any mortgage loan for which the Mortgaged Property is not owner occupied on
      a
      full-time basis, and was purchased by the Borrower as an investment property
      or
      for second home purposes. 

     

    “Officer’s
      Certificate”
means
      a
      certificate signed by the Chairman of the Board and Chief Executive Officer,
      the
      President, or any Vice President of Seller or Servicer, as applicable, and
      delivered to Agent as required by this Agreement.

     

    “Official
      Body”
means
      any government or political subdivision or any agency, authority, bureau,
      central bank, commission, department or instrumentality of any such government
      or political subdivision, or any court, tribunal, grand jury or arbitrator,
      in
      each case whether foreign or domestic.

     

    “Obligations”
means
      all of Seller’s obligations to pay the Repurchase Price on each Repurchase Date
      and other obligations and liabilities of Seller to the Principals and Agent
      arising under this Agreement and the other Transaction Documents, whether now
      existing or hereafter arising.

     

    “Option
      Arm Loan”
shall
      mean a mortgage loan that requires a loan repayment in accordance with the
      terms
      and conditions of the adjustable rate mortgage note which includes a repayment
      rate that may not occur on the same calendar date as the interest rate change
      date and which repayment terms may also include an interest-only
      period.

     

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    “Original
      Additional Collateral Requirement”
means
      with respect to any Additional Collateral Mortgage Loan, an amount equal to
      the
      Additional Collateral required at the time of origination of such mortgage
      loan
      in order to achieve an Loan-to-Value Ratio equal to a maximum of
      70%.

     

    “Outstanding
      Principal Balance”
means,
      with respect to any Eligible Mortgage Loan at any date, the then outstanding
      principal amount thereof as of such date excluding any accrued and outstanding
      Finance Charges related thereto.

     

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

     

    “Performance
      Guaranty”
means
      the guaranty of certain obligations by Performance Guarantor in favor of Agent
      (for itself and each of the Principals), as more particularly set forth in
      the
      Servicing Agreement.

     

    “Performance
      Guarantor”
shall
      mean PHH Corporation.

     

    “Person”
shall
      mean any legal person, including any individual, corporation, partnership,
      association, joint-stock company, trust, limited liability company,
      unincorporated organization, governmental entity or other entity of similar
      nature.

     

    “PHH
      Corporation”
means
      PHH Corporation, a Maryland corporation, together with its successors and
      permitted assigns.

     

    “PHH
      Home Loans”
means
      PHH Home Loans, LLC, a Delaware limited liability company and its Subsidiaries,
      whether now existing or hereafter acquired. 

     

    “Plan”
shall
      mean an employee pension benefit plan described in Section 3(2) of ERISA, other
      than a Multiemployer Plan which is sponsored by Seller or one of its
      Subsidiaries.

     

    “Portfolio
      Aging Limitations”
means
      with respect to the age of the Eligible Mortgage Loans owned by Agent on any
      day, the following limitations shall apply: (i) the aggregate Repurchase Price
      of Eligible Mortgage Loans transferred to Agent more than three (3) months
      prior
      to such day may not exceed 50% of the Maximum Aggregate Purchase Price on such
      day; (ii) the aggregate Repurchase Price of Eligible Mortgage Loans
      acquired by Agent more than six (6) months prior to such day may not exceed
      25%
      of the Maximum Aggregate Purchase Price on such day; and (iii) Seller must
      repurchase each Purchased Asset included in any Transaction (or series of
      Transactions) on or prior to the date that is 364 days from the date such
      Purchased Asset first became subject to a Transaction under this
      Agreement.

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

    “Portfolio
      Criteria”
means,
      on any day, after giving effect to Agent’s purchase and sale of mortgage loans
      on such day, the Eligible Mortgage Loans owned by Agent in the aggregate must
      satisfy the following criteria: (i) the aggregate Repurchase Price of
      mortgage loans secured by property in California may not on such date exceed
      35%
      of the Maximum Aggregate Purchase Price; (ii) the aggregate Repurchase Price
      of
      all mortgage loans secured by properties located in New York may not on such
      date exceed 25% of the Maximum Aggregate Purchase Price, (iii) the aggregate
      Repurchase Price of all mortgage loans secured by properties located in New
      Jersey may not on such date exceed 20% of the Maximum Aggregate Purchase Price,
      (iv) the aggregate Repurchase Price of all mortgage loans secured by properties
      located in Florida may not on such date exceed 20% of the Maximum Aggregate
      Purchase Price, (v) the aggregate Repurchase Price of mortgage loans
      secured by property in any other single state may not on such date exceed 15%
      of
      the Maximum Aggregate Purchase Price; (vi) the aggregate Repurchase Price of
      Uninsured Loans acquired on such date may not exceed 15% of the Maximum
      Aggregate Purchase Price; (vii) the mortgage loans (excluding FHA Loans and
      VA Loans) owned by Agent must have a weighted average FICO Score of at least
      675; (viii) the weighted average Loan-to-Value Ratio of the mortgage loans
      (excluding FHA Loans, VA Loans, HELOCs and Closed End Second Mortgage Loans)
      owned by Agent must not on such date exceed 85%; (ix) the aggregate Repurchase
      Price of HELOCs plus the aggregate Repurchase Price of Closed End Second
      Mortgage Loans may not on such date exceed 40% of the Maximum Aggregate Purchase
      Price; (x) the weighted average Combined Loan-to-Value Ratio of HELOCs and
      Closed End Second Mortgage Loans owned by Agent must not on such date exceed
      85%; (xi)
      the
      aggregate Purchase Price of all Manufactured Home Mortgage Loans and acquired
      on
      such day may not exceed 1% of the Aggregate Purchase Price; and (xii) the
      aggregate Purchase Price of all Interest-Only Loans shall not on such day exceed
      40% of the Maximum Aggregate Purchase Price.

     

    “Previously
      Disclosed Matters”
means
      any civil litigation as existing on the date hereof brought or filed by a
      private party, involving PHH Corporation or its Subsidiaries, as a defendant
      related to or arising from matters disclosed to Agent and each Bank Principal
      and described in PHH
      Corporation’s Form 8-K, dated September 7, 2005, Form 8-K, dated March 1, 2006,
      Form 8-K, dated March 17, 2006, Form 8-K, dated May 11, 2006, Form 8-K, dated
      June 12, 2006, Form 8-K, dated July 17, 2006, Form 8-K, dated August 16, 2006,
      Form 8-K, dated
      September 21, 2006, Form
      8-K,
      dated September 26, 2006 and Form 8-K, dated September 28, 2006, solely to
      the
      extent that
      all
      settlements and final judgments for the payment of money arising from such
      litigation rendered against PHH Corporation or any of its Subsidiaries, which
      within thirty (30) days from the entry of such judgment shall not have been
      discharged or stayed pending appeal or which shall not have been discharged
      within thirty (30) days from the entry of a final order of affirmance on
      appeal.

     

    “Price
      Differential”
means,
      with respect to each Transaction as of any date, the aggregate amount for all
      Conduit Principals and Bank Principals of the following: 

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

     

    (i) for
      each
      Transaction to the extent a Conduit Principal will be funding its portion of
      the
      Purchase Price for such Transaction through the issuance of Short-Term
      Notes,

     

    
      	
              (STNR
                x P x TP)
                +
                F

            
	
              360

            
	 

    

    

     

    (ii) for
      each
      Transaction to the extent (x) a Conduit Principal will not be funding its
      portion of the Purchase Price for such Transaction through the issuance of
      Short-Term Notes, or (y) a Bank Principal will be funding such
      Transaction,

     

    
      	
              (AR
                x P x TP)
                +
                F

            
	
              360

            

    

    

    
      	 	 	
              where:

            
	 	 	 
	
              AR

            	
              =

            	
              the
                applicable Assignee Rate for such Transaction

            
	 	 	 
	
              P

            	
              =

            	
              the
                related Principal’s Pro Rata Share of the related Purchase
                Price

            
	 	 	 
	
              STNR

            	
              =

            	
              the
                applicable Short-Term Note Rate for such Transaction

            
	 	 	 
	
              TP

            	
              =

            	
              the
                actual number of days during the period commencing on (and including)
                the
                Purchase Date and ending on (but excluding) the Repurchase Date
                

            
	 	 	 
	
              F

            	
              =

            	
              the
                Fees, if any, for such Transaction

            

    

    

     

    “Principal”
shall
      mean each Bank Principal and each Conduit Principal.

     

    “Principal
      Prepayment”
means
      any payment or other recovery of principal made on an Eligible Mortgage Loan
      that is received in advance of its scheduled Due Date, including any prepayment
      penalty or premium thereon, 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.

     

    “Program
      Fee”
shall
      have the meaning assigned thereto in the Fee Letter.

     

    “Pro
      Rata Share”
means
      with respect to each Principal, a percentage obtained by dividing the related
      Principal’s Commitment by the Maximum Aggregate Purchase Price.

     

    “Purchase
      Date”
means
      the date on which Purchased Assets are to be transferred by Seller to Agent,
      which shall be a Business Day.

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

     

    “Purchase
      Price”
shall
      mean the price at which Purchased Assets are transferred by Seller to Agent
      in a
      Transaction, which shall be equal to the aggregate of the applicable Margin
      Values as of the related Purchase Date calculated for each mortgage loan subject
      to such Transaction.

     

    “Purchase
      Price Percentage”
means,
      with respect to each Eligible Mortgage Loan, the following percentage, as
      applicable:

     

    (i)  99%
      with
      respect to Conforming Loans and Landscape Loans;

     

    (ii)  98%
      with
      respect to Jumbo Loans;

     

    (iii)  90%
      with
      respect to Non-Primary Residence Mortgage Loans, Interest-Only Loans and
      Uninsured Loans;

     

    (iv)  85%
      with
      respect to HELOCs and Closed End Second Mortgage Loans; and 

     

    (v)  80%
      with
      respect to Manufactured Home Mortgage Loans; 

     

    provided
      that if
      more than one Purchase Price Percentage is applicable to an Eligible Mortgage
      Loan, the lowest of such percentages shall apply.

     

    “Purchased
      Assets”
means,
      with respect to a Transaction, the related Eligible Mortgage Loans, together
      with the Related Security, related Records, Servicing Rights, and other
      collateral, and all instruments, chattel paper, and general intangibles
      comprising or relating to all of the foregoing. The term “Purchased Assets” with
      respect to any Transaction at any time also shall include Additional Purchased
      Assets delivered pursuant to Section 5 hereof. 

     

    “Qualified
      Depository”
means
      any depository the accounts of which are insured by the FDIC through the BIF
      or
      the SAIF and the debt obligations of which are rated “A2” and “Aa” or better by
      Moody’s and S&P, respectively or such depository as shall be acceptable to
      Moody’s and S&P, as applicable.

     

    “Qualified
      Insurer”
means
      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 FHLMC, FNMA or GNMA.

     

    “Records”
means
      all documents, books, records and other information (including, without
      limitation, computer programs, tapes, discs, punch cards, data processing
      software and related property and rights) maintained with respect to Eligible
      Mortgage Loans and the related Borrowers.

     

    “Related
      Security”
means
      with respect to any Eligible Mortgage Loan, all of Seller’s right, title and
      interest in, to and under:

     

    (i)
      all
      security agreements, mortgages, deeds of trust, Home Equity Line Agreements
      or
      other agreements that relate to such Eligible Mortgage Loan;

     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

     

    (ii)
      all
      other security interests or liens and property subject thereto from time to
      time, if any, purporting to secure payment of such Eligible Mortgage Loan,
      whether pursuant to the Eligible Mortgage Loan related to such Eligible Mortgage
      Loan or otherwise, together with all financing statements signed by a Borrower
      describing any collateral securing such Eligible Mortgage Loan;

     

    (iii)
      the
      assignment to Agent of all UCC financing statements covering any collateral
      securing payment of such Eligible Mortgage Loan;

     

    (iv)
      all
      guarantees, indemnities, warranties, insurance (and proceeds and premium refunds
      thereof) or other agreements or arrangements of any kind from time to time
      supporting or securing payment of such Loan whether pursuant to the Eligible
      Mortgage Loan or otherwise;

     

    (v)
      all
      Records related to such Eligible Mortgage Loan;

     

    (vi)
      all
      rights and remedies of Seller under the Custodial Agreement, together with
      all
      financing statements filed by Seller against Seller in connection therewith;
      and

     

    (vii)
      all
      proceeds of any of the foregoing.

     

    “REO
      Disposition”
means
      the final sale by Servicer of any REO Property.

     

    “REO
      Disposition Proceeds”
means
      all amounts received with respect to an REO Disposition (net of costs related
      thereto) pursuant to the Servicing Agreement.

     

    “REO
      Property”
means
      a
      Mortgaged Property acquired by Servicer on behalf of Agent through foreclosure
      or by deed in lieu of foreclosure, as described in the Servicing
      Agreement.

     

    “Reportable
      Event”
shall
      mean any reportable event as defined in Section 4043(c) of ERISA, other than
      a
      reportable event as to which provision for 30-day notice to the PBGC would
      be
      waived under applicable regulations had the regulations in effect on the date
      hereof been in effect on the date of occurrence of such reportable
      event.

     

    “Repurchase
      Date”
shall
      have the meaning assigned thereto in Section 3(a) and shall also include the
      date determined by application of Section 13.

     

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

     

    “Required
      Principals”
means
      (i) when Purchaser is the only Conduit Principal, Purchaser and (ii) otherwise,
      two or more Bank Principals which in the aggregate represent more than 50%
      of
      the Maximum Aggregate Purchase Price (or, if the Commitments have been
      terminated, have related Conduit Principals representing more than 50% of the
      aggregate outstanding Purchase Price of all Transactions).

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

     

    “SAIF”
means
      the Savings Association Insurance Fund, or any successor thereto.

     

    “S&P”
shall
      mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill
      Companies.

     

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

     

    “Securities
      or Securitization Securities”
means
      any note, bond or pass-through certificate that is, directly or indirectly
      secured by, or represents an interest in, any Eligible Mortgage Loan or pool
      of
      Eligible Mortgage Loans.

     

    “Securitization
      or Securitized”
means
      a
      transaction in which any Eligible Mortgage Loan or pool of Eligible Mortgage
      Loans designated by Servicer or Seller is financed through or sold to a
      Securitization Vehicle, which vehicle issues Securities in the capital
      markets.

     

    “Securitization
      Vehicle”
means
      FHLMC, FNMA, GNMA or any trust, partnership, corporation, limited liability
      corporation, limited liability partnership or other state law entity that is
      created for the principal purpose of owning or holding an Eligible Mortgage
      Loan
      or Eligible Mortgage Loans which are the subject of a
      Securitization.

     

    “Securities
      Account”
has
      the
      meaning ascribed to such term in the Additional Collateral Transfer
      Agreement.

     

    “Servicer”
means
      (i) PHH Mortgage Corporation, in such capacity, or (ii) any other servicer
      approved by Agent and the Required Principals in their sole
      discretion.

     

    “Servicer
      Default”
shall
      have the meaning assigned thereto in the Servicing Agreement.

     

    “Servicing
      Agreement”
means
      that certain Servicing Agreement, dated as of the date hereof, between Servicer,
      Seller, Performance Guarantor and Agent, as it may be amended, supplemented
      or
      otherwise modified from time to time.

     

    “Servicing
      Fee”
means
      with respect to the services provided by Servicer pursuant to the Servicing
      Agreement, a monthly servicing fee of (i) 3/8 of 1% on the average monthly
      balance of Eligible Mortgage Loans (excluding HELOCs and Closed End Second
      Mortgage Loans), and (ii) 0.65% on the sum of (a) the average monthly balance
      of
      HELOCs plus (b) the average monthly balance of Closed End Second Mortgage Loans
      and, in each case, held by Agent during such month. 

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

     

    “Short-Term
      Note Rate”
with
      respect to any Conduit Principal for any interest period for any Transaction
      means (a) to the extent such Conduit Principal funds such Transaction by issuing
      Short-Term Notes, the per
      annum
      rate
      equivalent to the weighted average of the per
      annum
      rates
      paid or payable by such Conduit Principal from time to time as interest on
      or
      otherwise in respect of such Short-Term Notes issued by such Conduit Principal
      that are allocated, in whole or in part, by the applicable agent for such
      Conduit Principal (on behalf of such Conduit Principal) to fund the Transaction
      or maintenance of such Transaction during such interest period as determined
      by
      such agent (on behalf of such Conduit Principal) and reported to Agent, Sellers
      and Servicer, which rates shall include and give effect to the commissions
      of
      placement agents and dealers in respect of such Short-Term Notes, incremental
      carrying costs incurred with respect to such Short-Term Notes maturing on dates
      other than those on which corresponding funds are received by such Conduit
      Principal, and any other costs associated with the issuance of Short-Term Notes,
      in each case to the extent such commissions and other costs are allocated,
      in
      whole or in part, to such Short-Term Notes by such agent (on behalf of such
      Conduit Principal); provided,
      however,
      that if
      any component of such rate is a discount rate, in calculating the “Short-Term
      Note Rate” for such interest period such agent shall for such component use the
      rate resulting from converting such discount rate to an interest bearing
      equivalent rate per
      annum;
      provided,
      further,
      that
      notwithstanding anything in this Agreement or the other Transaction Documents
      to
      the contrary, Seller agrees that any amounts payable to the Principals in
      respect of interest for any interest period with respect to any Transaction
      funded by such Conduit Principal at the Short-Term Note Rate shall include
      an
      amount equal to the portion of the face amount of the outstanding Short-Term
      Notes issued to fund or maintain such Transaction that corresponds to the
      portion of the proceeds of such Short-Term Notes that was used to pay the
      interest component of maturing Short-Term Notes issued to fund or maintain
      such
      Transaction, to the extent that such Conduit Principal had not received payments
      of interest in respect of such interest component prior to the maturity date
      of
      such maturing Short-Term Notes (for purposes of the foregoing, the “interest
      component” of Short-Term Notes equals the excess of the face amount thereof over
      the net proceeds received by such Conduit Principal from the issuance of
      Short-Term Notes, except that if such Short-Term Notes are issued on an
      interest-bearing basis its “interest component” will equal the amount of
      interest accruing on such Short-Term Notes through maturity), or (b) any other
      rate designated as the “Short-Term Note Rate” for such Conduit Principal in an
      agreement or instrument pursuant to which such Person became or becomes a party
      hereto as a Conduit Principal, or any other writing or agreement provided by
      such Conduit Principal to Servicer and Agent from time to time. The “Short-Term
      Note Rate” for any day while an Event of Default exists
      shall be the Default Rate.

     

    “Short-Term
      Notes”
means
      the short-term commercial paper, secured liquidity, or extended maturity notes
      issued or to be issued by a Conduit Principal to fund or maintain the
      Transactions.

     

    “Subject
      Adjustments”
means
      (a) accounting adjustments that could arise from matters which have been
      disclosed in PHH Corporation’s Form 8-K, dated September 7, 2005, Form 8-K,
      dated March 1, 2006, Form 8-K, dated March 17, 2006, Form 8-K, dated May 11,
      2006, Form 8-K, dated June 12, 2006, Form 8-K, dated July 17, 2006, Form 8-K,
      dated August 16, 2006 Form 8-K, dated September 21, 2006, Form
      8-K,
      dated September 26, 2006 and Form 8-K, dated September 28, 2006 and
      (b)
      accounting adjustments the substance of which has been communicated to Agent
      and
      each Bank Principal (in form and scope satisfactory to Agent) prior to October
      30, 2006, solely to the extent that all such accounting adjustments are finally
      resolved and disclosed accurately in the 2005 Form 10-K of PHH Corporation
      dated
      on or before November 30, 2006.

    

    “Sub-Prime
      Borrower”
means
      a
      Borrower of nonprime credit quality or lower credit quality.

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

     

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

     

    “Supplemental
      Transaction Notice”
shall
      have the meaning assigned thereto in Section 3(c) hereof.

     

    “Surety
      Bond”
means
      any limited purpose surety bond identified by a policy number guaranteeing
      payment by the related insurer to the applicable Permitted Beneficiary of any
      shortfalls that occur with respect to any Additional Collateral Mortgage Loan
      that becomes a Defaulted Loan.

     

    “Tangible
      Net Worth”
means
      with respect to any Person, at any date of determination, Consolidated Net
      Worth
      of such Person minus the aggregate book value of all intangible assets of such
      Person and its Consolidated Subsidiaries as of such date in accordance with
      GAAP.

     

    “Termination
      Date”
means
      the earliest of (i) October 29, 2007 or such later day as mutually agreed to
      in
      writing by Seller, Agent and the Bank Principals in accordance with Section
      21
      hereof, (ii) the day the purchase commitment termination date under any Asset
      Purchase Agreement occurs (unless other APA Purchaser(s) or a replacement APA
      Purchaser accepts such terminating APA Purchaser’s commitment thereunder), (iii)
      the date determined pursuant to Section
      13
      and
      (iv) the date that the Commitments are permanently reduced to zero or terminated
      by Seller in accordance with Section 21 hereof. 

     

    “Terminated
      Loan”
means
      each Eligible Mortgage Loan which is either (i) sold or Securitized or
      (ii) prepaid in full.

     

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

     

    “Transaction
      Documents”
means
      this Agreement, the Custodial Agreement, the Servicing Agreement, the Fee
      Letter, each Transaction Notice, each Daily Servicer Report, each Supplemental
      Transaction Notice, the Performance Guaranty and any other agreement entered
      into by Seller and/or Servicer or Performance Guarantor, on the one hand, and
      Agent or any Principal or any of their respective Affiliates (or Custodian
      on
      their behalf) on the other, in connection herewith or therewith.

     

    “Transaction
      Notice”
means
      a
      written request of Seller to enter into a Transaction, in form and substance
      satisfactory to Agent and each Bank Principal and substantially in the form
      attached and made a part of the Daily Servicer Report which is delivered to
      Agent and Custodian. 

     

    “Transfer
      Availability Fee”
shall
      have the meaning assigned thereto in the Fee Letter.

     

     

    
      
        
        

      

      
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    “Transferee”
has
      the
      meaning assigned thereto in Section 30 hereof.

     

    “Uniform
      Commercial Code”
or
      “UCC”
means
      the Uniform Commercial Code as in effect on the date hereof in the State of
      New
      York or the Uniform Commercial Code as in effect in the applicable
      jurisdiction.

     

    “Uninsured
      Loan”
means
      a
      mortgage loan that substantially conforms to the Guidelines, except (i) the
      principal balance of such Eligible Mortgage Loan may exceed the principal
      balance of a mortgage loan that conforms to the Guidelines, (ii) maintenance
      of
      a PMI Policy will not be required and (iii) the mortgage loan is not an FHA
      Loan, VA Loan, Landscape Loan, HELOC or Closed End Second Mortgage Loan.

     

    “Unmatured
      Event of Default”
means
      any event, that, with the giving of notice or the passage of time or both,
      would
      constitute an Event of Default.

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Wet
      Funded Loan”
means
      a
      mortgage loan that is originated by Seller and purchased by Agent, prior to
      the
      delivery of the Mortgage Note to the Custodian.

     

    “Wet
      Funded Loan Limitation”
means
      at any time of determination, the aggregate Purchase Price of all Wet Funded
      Loans, other than Landscape Loans, as a percentage of Aggregate Purchase Price
      may not exceed 45%.

     

    (b)  Capitalized
      terms.
      Capitalized terms used but not defined in this Agreement shall have the meanings
      assigned thereto in the Servicing Agreement or the Custodial Agreement, as
      applicable.

     

     

    
      
        
        

      

      
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    (c)  Interpretation.

     

    Headings
      are for convenience only and do not affect interpretation. The following rules
      of this subsection (c) apply unless the context requires otherwise. The singular
      includes the plural and conversely. A gender includes all genders. Where a
      word
      or phrase is defined, its other grammatical forms have a corresponding meaning.
      A reference to a subsection, Section, Annex, Exhibit or Schedule is, unless
      otherwise specified, a reference to a Section of, or Annex, Exhibit or Schedule
      to, this Agreement. A reference to a party to this Agreement or another
      agreement or document includes the party’s successors and permitted substitutes
      or assigns. A reference to an agreement or document is to the agreement or
      document as amended, modified, novated, supplemented or replaced, except to
      the
      extent prohibited by any Transaction Document. A reference to legislation or
      to
      a provision of legislation includes a modification or re-enactment of it, a
      legislative provision substituted for it and a regulation or statutory
      instrument issued under it. A reference to writing includes a facsimile
      transmission and any means of reproducing words in a tangible and permanently
      visible form. A reference to conduct includes, without limitation, an omission,
      statement or undertaking, whether or not in writing. An Event of Default or
      a
      Servicer Default exists until it has been waived in writing by the appropriate
      Person or Persons or has been timely cured. The words “hereof”, “herein”,
“hereunder” and similar words refer to this Agreement as a whole and not to any
      particular provision of this Agreement. The term “including” is not limiting and
      means “including without limitation.” In the computation of periods of time from
      a specified date to a later specified date, the word “from” means “from and
      including”, the words “to” and “until” each mean “to but excluding”, and the
      word “through” means “to and including.” This Agreement may use several
      different limitations, tests or measurements to regulate the same or similar
      matters. All such limitations, tests and measurements are cumulative and shall
      each be performed in accordance with their terms. Unless the context otherwise
      clearly requires, all accounting terms not expressly defined herein shall be
      construed, and all financial computations required under this Agreement shall
      be
      made, in accordance with GAAP, consistently applied. References herein to
“fiscal year” and “fiscal quarter” refer to such fiscal periods of Seller.
      Except where otherwise provided in this Agreement, any determination, statement
      or certificate by Agent or Principal or an authorized officer of Agent or
      Principal or any of their Affiliates provided for in this Agreement that is
      made
      in good faith and in the manner provided for in this Agreement shall be
      conclusive and binds the parties in the absence of manifest error. A reference
      to an agreement includes a security interest, guarantee, agreement or legally
      enforceable arrangement whether or not in writing. A reference to a document
      includes an agreement (as so defined) in writing or a certificate, notice,
      instrument or document, or any information recorded in computer disk form.
      Where
      Seller or Servicer is required to provide any document to any other Person
      under
      the terms of this Agreement, the relevant document shall be provided in writing
      or printed form unless such other Person requests otherwise. At the request
      of
      Agent or any Bank Principal, the document shall be provided in computer disk
      form or both printed and computer disk form. This Agreement is the result of
      negotiations among Agent, Principals, Servicer and Seller, and is the product
      of
      all parties. In the interpretation of this Agreement, no rule of construction
      shall apply to disadvantage one party on the ground that such party proposed
      or
      was involved in the preparation of any particular provision of this Agreement
      or
      this Agreement itself. Except where otherwise expressly stated, Agent and any
      Principal may give or withhold, or give conditionally, approvals and consents,
      may be satisfied or unsatisfied, and may form opinions and make determinations
      at its sole and absolute discretion. Any requirement of good faith, discretion
      or judgment by Agent or any Principal shall not be construed to require Agent
      or
      any Principal to request or await receipt of information or documentation not
      immediately available from or with respect to Seller, Servicer, or any other
      Person or the Purchased Assets themselves.

     

     

    
      
        
        

      

      
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    3.  ENTERING
      INTO TRANSACTIONS, TRANSACTION NOTICES; CONFIRMATIONS

     

    (a)  When
      Seller wishes to enter into a proposed Transaction it shall deliver a
      Transaction Notice of such proposed Transaction together with the Daily Servicer
      Report to Agent prior to 4:00 p.m. New York City time one Business Day prior
      to
      the proposed Purchase Date. Such Daily Servicer Report shall include a Daily
      Loan Inventory for the Purchased Assets and such other information required
      to
      be set forth therein or attached thereto. On the terms and subject to the
      conditions set forth herein, on such Purchase Date, Seller shall sell and
      transfer to Agent, against the payment of the Purchase Price therefor, and
      Agent
      shall purchase from Seller, all of Seller’s right, title and interest in the
      Purchased Assets with respect to such Transaction. On any Business Day (the
      “Demand
      Date”),
      Seller may, on demand, repurchase any and all of the Purchased Assets subject
      to
      such Transaction; provided,
      however,
      that,
      subject to Section 3(c) below, Seller shall repurchase all such Purchased Assets
      from Agent on the 10th
      day (or
      if such day is not a Business Day, the next Business Day) of each month
      following the related Purchase Date (such day so determined for each month,
      the
“Scheduled
      Repurchase Date”,
      and/or, if applicable, the Demand Date or such other date set forth in a
“Supplemental
      Transaction Notice”
      pursuant to Section 3(c) below are referred to herein as the “Repurchase
      Date”
for
      such Transaction). In the case of a Transaction (or portion thereof) that Seller
      terminates upon demand, such demand shall be made by Seller, no later than
      4:00
      p.m. New York City time one Business Day prior to the Business Day on which
      such
      termination will be effective. On each applicable Repurchase Date, the
      termination of such Transaction (or portion thereof) will be effected by
      transfer to Seller (or its agent) of the Purchased Assets against the payment
      of
      the Repurchase Price therefor to Agent; provided,
      however,
      that if
      such Repurchase Date is not a Scheduled Repurchase Date, the portion of such
      Repurchase Price equal to the Price Differential may be paid by Seller on the
      Scheduled Repurchase Date.

     

    (b)  Subject
      to the conditions in Section 8(b), each Transaction (or portion thereof) that
      has not been terminated by a repurchase by Seller on a Demand Date, shall become
      subject to a new Transaction unless Agent is notified by Seller no later than
      4:00 p.m. New York City time one Business Day prior to the then Scheduled
      Repurchase Date. Notwithstanding any other provision of this Agreement to the
      contrary, under no circumstances may any Purchased Asset be included in any
      Transaction (or series of Transactions) if the current Repurchase Date for
      such
      Transaction occurs on a date that is greater than 364 days from the date such
      Purchased Asset first became subject to a Transaction under this
      Agreement.

     

    (c)  In
      the
      event that Seller and Agent desire to enter into a Transaction on terms other
      than as set forth in this Agreement, Seller and Agent shall execute a
“Supplemental
      Transaction Notice”
      specifying such terms prior to entering into such Transaction. Any such
      Supplemental Transaction Notice and the related Transaction Notice in the
      applicable Daily Servicer Report, together with this Agreement, shall constitute
      conclusive evidence of the terms agreed to between Agent and Seller with respect
      to the Transaction to which the Supplemental Transaction Notice relates. In
      the
      event of any conflict between this Agreement and a Supplemental Transaction
      Notice, the terms of the Supplemental Transaction Notice shall control with
      respect to the related Transaction.

     

     

    
      
        
        

      

      
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    (d)  Unless
      otherwise consented to in writing by Agent and the Required Principals, the
      number of Transactions with Seller in any calendar day shall not exceed
      one.

     

    4.  PAYMENT
      AND TRANSFER

     

    Unless
      otherwise agreed, all transfers of funds by any Principal to Seller hereunder
      shall be in immediately available funds and shall be remitted to the Funding
      Account (which shall be specified in each related Daily Servicer Report) and
      all
      Purchased Assets transferred shall be transferred to the Custodian pursuant to
      the Custodial Agreement. All amounts remitted to the Funding Account by or
      on
      behalf of any Principal shall be distributed from the Funding Account in
      accordance with the provisions of Section 6 hereof. Any Repurchase Price or
      Price Differential received by Agent after 2:00 p.m. (New York City time) shall
      be applied on the next succeeding Business Day and Seller and Servicer, as
      applicable, shall be obligated to pay to Agent (in addition to, and together
      with, the amount of such Price Differential and any Breakage Costs) interest
      on
      the unpaid Repurchase Price at a rate per annum equal to the Default Rate until
      the Price Differential is received in full by Agent. All per annum fees payable
      under this Agreement and the other Transaction Documents shall be calculated
      for
      the actual days elapsed on the basis of a 360-day year. All amounts to be paid
      or deposited by Seller or Servicer under any Transaction Document shall be
      paid
      or deposited in accordance with the terms thereof in immediately available
      funds
      no later than 2:00 p.m. (New York City time) on the day when due; if such
      amounts are payable to Agent or any Principal or Principals they shall be paid
      to Agent or deposited into the Funding Account and the Agent shall remit such
      amounts as applicable. Seller shall, to the extent permitted by Law, pay to
      Agent for the account of each Principal upon demand of Agent, interest on all
      amounts not paid or deposited when due to Agent for the account of each
      Principal hereunder at a rate equal to the Default Rate. All computations of
      interest hereunder shall be made on the basis of a year of 360 days for the
      actual number of days (including the first but excluding the last day) elapsed
      other than computations of interest calculated by reference to the Base Rate
      which shall be calculated on the basis of a 365- or 366- day year, as
      applicable.

     

    5.  MARGIN
      MAINTENANCE

     

    If
      at any
      time the Aggregate
      Purchase Price of all Purchased Assets of Seller subject to all Transactions
      shall exceed the Aggregate Margin Value therefor (any such deficiency, a
“Margin
      Deficit”)
      then
      Seller shall either transfer cash to the Funding Account, or at Agent’s option
      (and provided Seller has additional Eligible Mortgage Loans), transfer
      additional Eligible Mortgage Loans to the Custodian, together with the Related
      Security, Records, Servicing Rights and other collateral and all instruments,
      chattel paper, and general intangibles comprising or related to all of the
      foregoing (“Additional
      Purchased Assets”),
      so
      that after giving effect to the transfer of cash or the inclusion of any such
      Additional Purchased Assets, no Margin Deficit shall exist (such requirement,
      a
“Margin
      Call”);
      provided
      that if,
      as a result of Agent’s determination of the aggregate Collateral Value, the
      Aggregate Purchase Price of all Purchased Assets of Seller subject to all
      Transactions exceeds the Aggregate Margin Value by the Minimum Transfer Amount
      (such event, a “Minimum
      Transfer Condition”)
      (i)
      Seller shall be required to transfer cash to the Margin Call Account to cure
      such Margin Deficit and (ii) Seller’s obligation to make the Margin Call shall
      be subject to its receipt of notice from Agent (it
      being understood
      that if
      such notice is delivered to Seller by Agent on or prior to 11:00 a.m. on any
      Business Day on which a Minimum Transfer Condition exists, Seller shall pay
      to
      the Margin Call Account the Minimum Transfer Amount prior to 5:00 p.m. on such
      Business Day and if such notice is delivered after 11:00 a.m., such notice
      shall be deemed received on the next succeeding Business Day and Seller shall
      pay to the Margin Call Account the Minimum Transfer Amount prior to 5:00 p.m.
      on
      such Business Day).

     

     

    
      
        
        

      

      
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    All
      amounts paid by Seller to the Margin Call Account in respect of any Margin
      Deficit shall be held for the benefit of Agent and the Principals.

     

    On
      any
      day on which an Event
      of
      Default shall not have occurred and be continuing, and if no Margin Deficit
      exists, if the amount on deposit in the Margin Call Account exceeds the
      Aggregate Purchase Price of all Purchased Assets of Seller subject to all
      Transactions less the Aggregate Margin Value then, at the request of Seller,
      such excess shall be withdrawn from the Margin Call Account by the authorization
      of Agent and remitted to Seller.

     

    If
      an
      Event of Default shall have occurred and be continuing, all amounts on deposit
      in the Margin Call Account, if any, shall be withdrawn by Agent and applied
      by
      it in reduction of the Aggregate Purchase Price and Aggregate
      Unpaids.

     

    6.  INCOME
      PAYMENTS AND COLLECTIONS

     

    The
      Seller shall cause all Collections and other proceeds of the Collateral received
      by the Seller to be remitted to the Collection Account within two (2) Business
      Days after the Seller’s receipt thereof. 

     

    The
      Seller shall, on a daily basis, remit all Collections (other than Income) then
      on deposit in the Collection Account to the Funding Account.

     

    The
      Seller shall, on each Monthly Interest Payment Date, remit all Income with
      respect to the related Due Period then on deposit in the Collection Account
      to
      the Funding Account.

     

    All
      amounts on deposit in the Funding Account, remitted by or on behalf of the
      Seller shall be applied in accordance with the provisions of Annex IV hereto,
      prior to giving effect to any amounts in respect of the aggregate Purchase
      Price
      for Transactions occurring on such day.

     

    7.  BACK-UP
      SECURITY INTEREST

     

    Seller,
      Agent and each Principal intend that the Transactions hereunder be sales to
      Agent of the Purchased Assets and not loans from Agent to Seller secured by
      such
      Purchased Assets. However, in order to preserve Agent’s and each Principal’s
      rights under this Agreement in the event that a court or other forum
      recharacterizes the Transactions hereunder as other than sales, and as security
      for Seller’s performance of all of its respective Obligations, Seller hereby
      grants to Agent a fully perfected first priority security interest in the
      following property, whether now existing or hereafter acquired: the Purchased
      Assets, the Related Security, the related Records, all mortgage guaranties
      and
      insurance relating to such Purchased Assets (issued by governmental agencies
      or
      otherwise) and any mortgage insurance certificate or other document evidencing
      such mortgage guaranties or insurance relating to such Purchased Assets and
      all
      claims and payments thereunder, any purchase agreements or other agreements
      or
      contracts relating to or constituting any or all of the foregoing, all
“accounts” as defined in the Uniform Commercial Code relating to or constituting
      any or all of the foregoing, all other insurance policies and insurance proceeds
      relating to any Purchased Asset or the related Mortgaged Property, any security
      account and all rights to Income and the rights to enforce such payments arising
      from any of the Purchased Assets, the Servicing Rights, all guarantees or other
      support for the Purchased Assets, all returned or repossessed manufactured
      housing units relating to the Mortgage Loans, any assignment of a security
      interest in the related manufactured housing unit, and any and all replacements,
      substitutions, distributions on, or proceeds with respect to, any of the
      foregoing (collectively the “Collateral”).
      Seller agrees to execute, deliver and/or file such documents and perform such
      acts as may be reasonably necessary to fully perfect Agent’s security interest
      created hereby. Furthermore, Seller hereby authorizes Agent to file financing
      statements relating to the Purchased Assets without any further authorization
      of
      Seller at its option, as it deems appropriate. Servicer shall pay all costs
      for
      any financing statement or statements prepared pursuant to this Section
      7.

     

     

    
      
        
        

      

      
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    8.  CONDITIONS
      PRECEDENT

     

    (a)  As
      conditions precedent to the initial Transaction, (i) Agent shall have received
      on or before the day of such initial Transaction each of the following, in
      form
      and substance satisfactory to Agent in its sole and absolute discretion and
      (ii)
      the following shall be true the day of such initial Transaction:

     

    (1)  Transaction
      Documents.
      Agent
      shall have received this Agreement and each of the other Transaction Documents,
      each executed and delivered by a duly authorized officer of each of the parties
      thereto.

     

    (2)  Organizational
      Documents.
      Agent
      shall have received, with copies for each of the Principals, a certificate
      of
      the Secretary or Assistant Secretary of Seller, Servicer and Performance
      Guarantor, each dated the Effective Date, and certifying (A) that attached
      thereto is a true and complete copy of the organizational documents and
      applicable operating agreement of such Person as in effect on the date of such
      certification; (B) that attached thereto is a true and complete copy of
      resolutions adopted by the board of directors of such Person authorizing the
      transactions contemplated hereunder and under the other Transaction Documents
      and the execution, delivery and performance in accordance with their respective
      terms of this Agreement, any other Transaction Document to which such Person
      is
      a party and any other documents required or contemplated under any Transaction
      Document to which such Person is a party; and (C) as to the incumbency and
      specimen signature of each officer of such Person executing this Agreement,
      any
      other Transaction Document to which such Person is a party or any other document
      delivered by it in connection herewith or therewith (such certificate to contain
      a certification by another officer of such Person as to the incumbency and
      signature of the officer signing the certificate referred to in this paragraph
      (2)).

     

     

    
      
        
        

      

      
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    (3)  Financial
      Statements.
      Agent
      and the Principals shall have received and be satisfied with the preliminary,
      unaudited consolidated financial statements of Seller and the pro forma balance
      sheet of Seller and its Consolidated Subsidiaries for September 30,
      2006.

     

    (4)  Opinions
      of Counsel.
      Agent
      shall have received the favorable written opinions, dated as of the Effective
      Date and addressed to Agent, the Principals and each Rating Agency, of internal
      counsel of Seller and of Thacher, Proffitt & Wood, LLP, in each case in
      form, scope, and substance satisfactory to Agent and each of the
      Principals.

     

    (5)  No
      Material Adverse Change.
      Agent
      shall be satisfied that no material adverse change (other than Previously
      Disclosed Matters and Subject Adjustments) shall have occurred with respect
      to
      the business, assets, operations or condition, financial or otherwise, of
      Seller, Servicer, Performance Guarantor and their respective Consolidated
      Subsidiaries, taken as a whole, since September 30, 2005.

     

    (6)  Payment
      of Fees.
      Agent
      shall be satisfied that all amounts payable to Agent and the Principals pursuant
      hereto or with regard to the transactions contemplated hereby have been or
      are
      simultaneously being paid.

     

    (7)  Litigation.
      No
      litigation shall be pending or, to the knowledge of Seller, threatened which
      could reasonably be expected to have a material adverse effect (other than
      Previously Disclosed Matters) on Seller or any of its properties, or which
      could
      reasonably be expected to materially adversely affect the ability of Seller
      to
      fulfill its obligations hereunder or under any other Transaction Document or
      to
      otherwise materially impair the interests of Agent or any of the
      Principals.

     

    (8)  Officer’s
      Certificate.
      Agent
      shall have received a certificate of the chief executive officer or chief
      financial officer or chief accounting officer of Seller certifying, as of the
      Effective Date, compliance with the conditions set forth in Sections 8(b)(2),
      8(b)(3) 8(b)(4) below. 

     

    (9)  Historical
      Data.
      Agent
      and the Principals shall have received such historical financial information
      of
      Seller, and pro-forma financial statements and other financial information,
      as
      Agent or any Principal may reasonably request.

     

    (10)  UCC
      Search Reports.
      Agent
      shall have received written search reports provided to Agent by a search service
      acceptable to Agent, listing all effective financing statements that name Seller
      as debtor or assignor and that are filed in any applicable UCC jurisdiction
      and
      in such other jurisdictions that Agent shall reasonably request, together with
      copies of such financing statements (none of which shall cover any Purchased
      Assets or interests therein or proceeds of any thereof other than those in
      favor
      of Agent), and tax and judgment lien search reports from a Person satisfactory
      to Agent showing no evidence of such lien filed against Seller.

     

    (11)  UCC
      Financing Statements.
      Agent
      shall have received (i) acknowledgment copies of proper financing statements
      (Form UCC-1 or Form UCC-3), filed on or prior to the Effective Date or shortly
      thereafter, naming Seller, as debtor and Agent as the secured party as may
      be
      necessary or, in the opinion of Agent, desirable under the UCC to perfect
      Agent’s security interest in the Purchased Assets and (ii) evidence of properly
      filed Uniform Commercial Code Form UCC-3 financing statements necessary to
      release all liens and other adverse claims of any Person (other than Agent)
      in
      the Purchased Assets granted by any Person.

     

     

    
      
        
        

      

      
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    (12)  Establishment
      of Accounts.
      Agent
      shall have received evidence satisfactory to it that Seller has caused the
      Collection Account, the Funding Account, the Escrow Account and the Margin
      Call
      Account to be established. 

     

    (b)  The
      obligation of Agent to enter into each Transaction pursuant to this Agreement
      is
      subject to the following conditions precedent:

     

    (1)  Agent
      or
      its designee shall have received on or before the day of a Transaction with
      respect to such Purchased Assets (x) evidence satisfactory to Agent that each
      Principal’s Pro Rata Share of the related Purchase Price for such Transaction
      has been remitted to the Funding Account and (y) a Daily Servicer Report, which
      includes a Transaction Notice and Daily Loan Inventory.

     

    (2)  The
      representations and warranties set forth in this Agreement and in the other
      Transaction Documents shall be true and correct on and as of such date with
      the
      same effect as if made on and as of such date.

     

    (3)  (i)
      Seller, Servicer and Performance Guarantor shall be in compliance with each
      of
      the terms and provisions set forth in the Transaction Documents to be observed
      or performed and no Unmatured Event of Default, Event of Default or Servicer
      Default shall have occurred and be continuing on such date or after giving
      effect to the Transaction to be made on such date and (ii) no unmatured event
      of
      default shall have occurred under the Five Year Competitive Advance and
      Revolving Credit Agreement, dated as of January 6, 2006, among PHH Corporation,
      as Borrower, the Lenders referred to therein, Citicorp USA, Inc., as Syndication
      Agent, and Bank of America, N.A., The Bank of Nova Scotia and Calyon New York
      Branch, as Documentation Agents, and JPMorgan Chase Bank, N.A., as
      administrative agent, as such agreement exists on the date hereof and as the
      same may be further amended, modified, waived or supplemented, solely to the
      extent that the Agent and the Required Principals have given their prior written
      consent to such amendment, modification, wavier or supplement; provided
      that the
      condition in clause (ii) above alone shall not prevent Transactions which,
      after
      giving effect thereto, do not, during the continuation of an unmatured event
      of
      default, increase the Aggregate Purchase Price beyond the Aggregate Purchase
      Price as of the close of Seller’s business, on the Business Day immediately
      prior to the date such unmatured event of default occurred. 

     

    (4)  As
      evidenced by a certificate of Seller in form and substance satisfactory to
      Agent, the then aggregate outstanding Purchase Price for all Purchased Assets,
      when added to the Purchase Price for the requested Transaction, shall not exceed
      the Maximum Aggregate Purchase Price.

     

     

    
      
        
        

      

      
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    (5)  The
      aggregate Purchase Price for the requested Transaction shall not be less than
      $1,000,000 and only in multiples of $100,000 in excess thereof, unless otherwise
      agreed between Seller and Agent.

     

    (6)  The
      Termination Date shall not have occurred.

     

    (7)  Agent
      shall have completed to its satisfaction any due diligence with respect to
      Seller and the Eligible Mortgage Loans which are the subject of such Transaction
      and the Principals and Agent shall have received such approvals, opinions or
      other documents as any such Person shall have reasonably requested prior to
      any
      such Transaction.

     

    (8)  The
      following representation and warranty of Seller, Servicer and Performance
      Guarantor shall be true and correct: (A) no event, circumstance or condition
      (other than Subject Adjustments) that has resulted, or could reasonably be
      expected to result in, a material adverse change with respect to the business,
      assets, operations or condition, financial or otherwise, of such Person and
      (B)
      no material adverse effect shall have occurred with respect to such Person
      (for
      the
      avoidance of doubt, Previously Disclosed Matters shall be deemed not to
      constitute a material adverse effect).

     

    (9)  Solely
      for the period commencing on December 15, 2006, the Agent shall have received
      an
      opinion of counsel satisfactory to it covering certain Investment Company Act
      matters, in form and substance satisfactory to it.

     

    9.  RELEASE
      OF PURCHASED ASSETS

     

    Upon
      timely payment in full of the Repurchase Price and all other Obligations owing
      with respect to a Purchased Asset, if no Unmatured Event of Default which is
      capable of cure or Event of Default has occurred and is continuing, Agent (or
      Custodian on its behalf) shall release such Purchased Asset to Seller (or its
      designee) unless such release would give rise to or perpetuate a Margin Deficit.
      

     

    10.  REPRESENTATIONS
      AND WARRANTIES

     

    Seller
      hereby represents and warrants for the benefit of Agent and each Principal,
      and
      shall on and as of the Purchase Date for any Transaction and on and as of each
      date thereafter through and including the related Repurchase Date be deemed
      to
      represent and warrant, that:

     

    (a)  Due
      Organization and Authority.
      It is
      duly organized, validly existing and in good standing under the laws of New
      Jersey 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 required to conduct business of the type
      conducted by it and where the failure to be licensed, qualified or in good
      standing could reasonably be expected to have a material adverse effect, and
      in
      any event it is in compliance with the laws of any such state to the extent
      necessary to ensure the enforceability of any Eligible Mortgage Loan sold
      hereunder and the servicing of any such Eligible Mortgage Loan in accordance
      with the terms of this Agreement, each Transaction Document and any Transaction
      Notice. 

     

     

    
      
        
        

      

      
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    (b)  Power
      and Authority.
      It has
      the full power and authority to execute and deliver this Agreement, each other
      Transaction Document and any Transaction Notice and to perform its obligations
      thereunder in accordance with the terms thereof and to consummate the
      Transactions and to conduct its business as currently conducted.

     

    (c)  Due
      Authorization.
      The
      execution, delivery and performance of this Agreement, each other Transaction
      Document and any Transaction Notice by it and the consummation of the
      transactions contemplated hereby and thereby have been duly and validly
      authorized by it and all requisite corporate action has been taken by it to
      make
      this Agreement, each other Transaction Document and any Transaction Notice
      valid
      and binding upon Seller in accordance with its terms.

     

    (d)  Noncontravention.
      Neither
      the execution and delivery of this Agreement, any other Transaction Document
      or
      any Transaction Notice, the acquisition of Eligible Mortgage Loans by it, the
      sale of Eligible Mortgage Loans to Agent or the transactions contemplated hereby
      or thereby, nor the fulfillment of or compliance with the terms and conditions
      of this Agreement, any other Transaction Document or any Transaction Notice,
      will conflict with or result in a breach of any of the terms, conditions or
      provisions of Seller’s charter or by-laws or any material agreement or
      instrument to which Seller 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 in any material respect of any applicable law, rule, regulation,
      order, judgment or decree to which Seller or its property is subject, or impair
      the ability of Agent to realize on the Eligible Mortgage Loans in any material
      respect, or impair the value of the Eligible Mortgage Loans in any material
      respect, or impair in any material respect the ability of Agent to realize
      the
      full mortgage insurance benefits (i) of the FHA Mortgage Insurance Contract
      with
      respect to FHA Loans; (ii) of the VA Loan Guaranty Certificate with respect
      to
      VA Loans; or (iii) other insurance benefits accruing pursuant to this Agreement
      and the other Transaction Documents, including but not limited to any PMI
      Policy.

     

    (e)  Legal
      Proceeding.
      Other
      than Previously Disclosed Matters, there is no action, suit, proceeding or
      investigation pending or to its knowledge threatened against it which, either
      in
      any one instance or in the aggregate, may result in any material adverse change
      in the business, operations, financial condition, properties or assets of
      Seller, or result in any material impairment of the right or ability of Seller
      to carry on its business substantially as now conducted, or in any material
      liability on the part of Seller, or which would draw into question the validity
      of this Agreement, any other Transaction Document or any Transaction Notice
      or
      the Eligible Mortgage Loans or the validity of any action taken or to be taken
      in connection with the obligations of Seller contemplated herein, or which
      would
      be likely to impair materially the ability of Seller to perform under the terms
      of this Agreement, any other Transaction Document or any Transaction
      Notice.

     

    (f)  Valid
      and Binding Obligations.
      This
      Agreement, each other Transaction Document and any Transaction Notice evidences
      the valid, binding and enforceable obligation of Seller, except that (i) the
      enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
      receivership and other similar laws relating to creditors’ rights generally and
      (ii) the remedy of specific performance and injunctive and other forms of
      equitable relief may be subject to equitable defenses and to the discretion
      of
      the court before which any proceeding therefore may be brought.

     

     

    
      
        
        

      

      
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    (g)  Financial
      Statements.
      Seller
      has delivered to Agent consolidated financial statements of PHH Corporation
      as
      to its last three complete fiscal years and any later quarter ended more than
      60
      days prior to the execution of this Agreement; provided
      that
      with respect to such items for the fiscal year ending December 31, 2005, the
      fiscal quarter ending March 31, 2006, the fiscal quarter ending June 30, 2006
      and the fiscal quarter ending September 30, 2006, Seller shall have delivered
      to
      the Agent and each Principal such items on or before (x) November 30, 2006,
      in
      the case of the financial statements for the fiscal year ending December 31,
      2005 and (y) December 29, 2006, in the case of the financial statements for
      the
      fiscal quarters ending March 31, 2006, June 30, 2006 and September 30, 2006;
      provided,
      further,
      that
      the failure to furnish such financial statements in accordance with this
clause
      (g)
      shall
      constitute an immediate Event of Default. Other than Subject Adjustments, all
      such financial statements fairly present the pertinent results of operations
      and
      changes in financial position at the end of each such period of PHH Corporation
      and its subsidiaries and have been prepared in accordance with GAAP consistently
      applied throughout the periods involved, except as set forth in the notes
      thereto. Other than Subject Adjustments, there has been no change in the
      business, operations, financial condition, properties or assets of Seller since
      the date of PHH Corporation’s most recently provided financial statements that
      would have a material adverse effect on its ability to perform its obligations
      under this Agreement. 

     

    (h)  Accuracy
      of Information.
      Other
      than the Subject Adjustments, neither this Agreement, any other Transaction
      Document, any Transaction Notice nor any statement, report or other document
      prepared by Seller or to be prepared by Seller pursuant hereto or thereto or
      in
      connection with the transactions contemplated hereby or thereby contains any
      untrue statement of a material fact relating to Seller or the Eligible Mortgage
      Loans or omits to state a fact necessary to make the statements herein or
      therein not materially misleading.

     

    (i)  No
      Consents.
      No
      consent, approval, authorization or order of any court or governmental agency
      or
      body including, without limitation, HUD, FHA or VA, is required for the
      execution, delivery and performance by it of or compliance by it with this
      Agreement, any other Transaction Document or any Transaction Notice or the
      sale
      of the Eligible Mortgage Loans, or if required, such consent, approval or
      authorization has been obtained. 

     

    (j)  Compliance
      With Law, Etc.
      Seller
      and each of its Subsidiaries are in compliance with the requirements of all
      applicable laws, rules, regulations, and orders of all governmental authorities
      (including, without limitation, the Real Estate Settlement Procedures Act,
      as
      amended, the Federal Consumer Credit Protection Act, as amended, Regulation
      Z of
      the Board of Governors of the Federal Reserve System, as amended, laws, rules
      and regulations relating to usury, truth in lending, fair credit billing, fair
      credit reporting, equal credit opportunity, fair debt collection practices
      and
      privacy and all other consumer laws, rules and regulations applicable to the
      mortgage loans), except where failure to so comply could not reasonably be
      expected to have a material adverse effect (for the avoidance of doubt,
      Previously Disclosed Matters and Subject Adjustments shall be deemed not to
      constitute a material adverse effect) and (ii) neither Seller nor any of its
      Subsidiaries has failed to obtain any licenses, permits, franchises or other
      governmental authorizations necessary to the ownership of its properties or
      to
      the conduct of its business (including, without limitation, as may be necessary
      in any applicable jurisdiction in connection with the ownership of the mortgage
      loans), which violation or failure to obtain could reasonably be expected to
      have a material adverse effect (for the avoidance of doubt, Previously Disclosed
      Matters and Subject Adjustments shall be deemed not to constitute a material
      adverse effect).

     

     

    
      
        
        

      

      
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    (k)  Solvency;
      Fraudulent Conveyance.
      Seller
      is solvent and will not be rendered insolvent by the Transaction and, after
      giving effect to such Transaction, Seller will not be left with an unreasonably
      small amount of capital with which to engage in its business. Seller does not
      intend to incur, nor believes that it has incurred, debts beyond its ability
      to
      pay such debts as they mature. Seller is not contemplating the commencement
      of
      insolvency, bankruptcy, liquidation or consolidation proceedings or the
      appointment of a receiver, liquidator, conservator, trustee or similar official
      in respect of Seller or any of its assets. The amount of consideration being
      received by Seller upon the sale of the Purchased Assets to Agent constitutes
      reasonably equivalent value and fair consideration for such Purchased Assets.
      Seller is not transferring any Purchased Assets with any intent to hinder,
      delay
      or defraud any of its creditors.

     

    (l)  Investment
      Company Compliance.
      Seller
      and none of its Subsidiaries is not, and no such Person will during the term
      of
      this Agreement be an “investment company”, within the meaning of the Investment
      Company Act.

     

    (m)  Taxes.
      Seller
      and each of its Subsidiaries have filed or caused to be filed all federal,
      provincial, state and local tax returns which are required to be filed, and
      have
      paid or have caused to be paid all taxes as shown on said returns or on any
      assessment received by them in writing, to the extent that such taxes have
      become due, except to the extent that the failure to do so could not reasonably
      be expected to result in a material adverse effect. Any taxes, fees and other
      governmental charges payable by Seller in connection with a Transaction and
      the
      execution and delivery of the Transaction Documents have been paid.

     

    (n)  Additional
      Representations.
      With
      respect to each mortgage loan, Seller hereby makes all of the applicable
      representations and warranties set forth in this Agreement as of the Purchase
      Date and the date the Mortgage Note is delivered to the Custodian. Further,
      as
      of each Purchase Date, Seller shall be deemed to have represented and warranted
      in like manner that Seller has no knowledge that any such representation or
      warranty may have ceased to be true in a material respect as of such date,
      except as otherwise stated in a Transaction Notice, any such exception to
      identify the applicable representation or warranty and specify in reasonable
      detail the related knowledge of Seller.

     

    (o)  No
      Broker.
      Seller
      has not dealt with any broker, investment banker, agent or other Person that
      may
      be entitled to any commission or compensation in connection with the sale of
      any
      Eligible Mortgage Loans to Agent.

     

    (p)  No
      Event of Default; No Servicer Default.
      There
      exists no Event of Default under this Agreement or any other Transaction
      Document, which default gives rise to a right to accelerate indebtedness as
      referenced in this Agreement, under any mortgage, borrowing agreement or other
      instrument or agreement pertaining to indebtedness for borrowed money or to
      the
      repurchase of mortgage loans or securities and there exists no Servicer
      Default.

     

     

    
      
        
        

      

      
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    (q)  Guidelines.
      The
      Guidelines provided to Agent and Principals are the true and correct
      Guidelines.

     

    (r)  Chief
      Executive Office; Jurisdiction of Organization.
      Seller’s organizational information as set forth on Schedule I hereto is true
      and correct. 

     

    (s)  Location
      of Books and Records.
      The
      location where Seller keep its books and records, including all computer tapes
      and records relating to the Purchased Assets is as set forth on Schedule
      I.

     

    (t)  ERISA.
      Seller
      and each of its Subsidiaries is in compliance with the provisions of ERISA
      and
      the Code applicable to Plans, and the regulations and published interpretations
      thereunder, if any, which are applicable to it and the applicable laws, rules
      and regulations of any jurisdiction applicable to Plans. Neither Seller nor
      any
      of its Subsidiaries has, with respect to any Plan, engaged in a prohibited
      transaction which would subject it to a tax or penalty on prohibited
      transactions imposed by ERISA or Section 4975 of the Code. No liability to
      the
      PBGC exists, or to the best knowledge of Seller is reasonably expected to be,
      incurred with respect to the Plans and there has been no Reportable Event and
      no
      other event or condition that presents a risk of termination of a Plan by the
      PBGC. Neither Seller nor any of its Subsidiaries has engaged in a transaction
      which could reasonably be expected to result in the incurrence of liability
      under Section 4069 of ERISA. As of the Effective Date, neither Seller nor any
      of
      its Subsidiaries contributes to a Multiemployer Plan, and no such Person has
      incurred any liability that could reasonably be expected to result in a partial
      or complete withdrawal (as defined in Sections 4203 and 4205 of ERISA,
      respectively) with respect to any Multiemployer Plan.

     

    (u)  No
      Material Adverse Change.
      Other
      than Previously Disclosed Matters and Subject Adjustments, since September
      30,
      2005 there has been no material adverse change in the business, assets,
      operations or condition, financial or otherwise, of Seller together with any
      of
      its Consolidated Subsidiaries taken as a whole; provided
      that the
      foregoing representation is made solely as of the Effective Date.

     

    (v)  Copyrights,
      Patents and Other Rights.
      Seller
      and each of its Subsidiaries owns, or is licensed to use, all trademarks,
      tradenames, service marks, copyrights, patents and other intellectual property
      material to its business, and the use thereof by such Person does not infringe
      upon the rights of any other Person, except for any such infringements that,
      individually or in the aggregate, could not reasonably be expected to result
      in
      a material adverse effect.

     

    (w)  Federal
      Reserve Regulations.
      Neither
      Seller nor any of its Subsidiaries is engaged principally, or as one of its
      important activities, in the business of extending credit for the purpose of
      purchasing or carrying any margin stock. No part of the proceeds of any Purchase
      Price hereunder will be used by Seller, whether immediately, incidentally or
      ultimately, for any purpose violative of or inconsistent with any of the
      provisions of Regulation T, U or X of the Board.

     

    (x)  Disclosure.
      As of
      the Effective Date, other than Previously Disclosed Matters and Subject
      Adjustments, there is no fact known to Seller which, individually or in the
      aggregate, could reasonably be expected to have a material adverse effect on
      it
      or any of its Subsidiaries.

     

     

    
      
        
        

      

      
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    (y)  Environmental
      Liabilities.
      Except
      with respect to any matters, that, individually or in the aggregate, could
      not
      reasonably be expected to result in a material adverse effect, neither Seller
      nor any of its Subsidiaries (i) has failed to comply with any Environmental
      Law
      or to obtain, maintain or comply with any permit, license or other approval
      required under any Environmental Law, (ii) has become subject to any
      Environmental Liability, (iii) has received notice of any claim with respect
      to
      any Environmental Liability or (iv) knows of any basis for any Environmental
      Liability.

     

    (z)  Adverse
      Selection.
      Each
      mortgage loan sold pursuant to a Transaction Notice was selected from mortgage
      loans originated by Seller or purchased by Seller from third parties and are
      Eligible Mortgage Loans which satisfy the Eligibility Representations and any
      selection process employed by it was not made in a manner so as to materially
      adversely affect the interests of Agent or any Principal.

     

    (aa)  Agreements.
      Neither
      Seller nor any of its Subsidiaries is a party to any agreement, instrument,
      or
      indenture or subject to any restriction materially and adversely affecting
      its
      business, operations, assets or financial condition, except, to the extent
      disclosure is required by GAAP, as disclosed in the financial statements
      described in this Agreement. Neither Seller nor any of its Subsidiaries is
      in
      default in the performance, observance or fulfillment of any of the obligations,
      covenants or conditions contained in any agreement, instrument, or indenture
      which default could have a material adverse effect on the business, operations,
      properties, or financial condition of such Person as a whole. No holder of
      any
      indebtedness of Seller or of any of its Subsidiaries has given notice of any
      asserted monetary or material default thereunder.

     

    (bb)  Fair
      Consideration.
      The
      consideration received by Seller in connection with each Transaction under
      this
      Agreement constitutes fair consideration and reasonably equivalent value for
      the
      Eligible Mortgage Loans.

     

    (cc)  Ability
      to Perform.
      Seller
      does not believe, nor does it have any reason or cause to believe, that it
      cannot perform each and every covenant contained in this Agreement in all
      material respects. Seller is solvent and the sale of the Eligible Mortgage
      Loans
      is not undertaken to hinder, delay or defraud any of Seller’s
      creditors.

     

    (dd)  Financing
      Treatment.
      Seller
      has determined that the transfer of the Eligible Mortgage Loans pursuant to
      this
      Agreement will be afforded financing treatment for accounting and tax
      purposes.

     

    (ee)  The
      Surety Bond.
      The
      Surety Bond is in full force and effect and is a legal, valid and binding
      obligation of the Surety, enforceable in accordance with its terms, except
      that
      enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
      receivership and other similar laws relating to creditors’ rights generally and
      the remedy of specific performance and injunctive and other forms of equitable
      relief may be subject to equitable defenses and to the discretion of the court
      before which any proceeding therefor may be brought.

     

     

     

    
      
        
        

      

      
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    (ff)  Premium
      Payments.
      Seller
      agrees to make each premium required under the Surety Bond on or prior to the
      date on which such premium payment is due. No premium payments are past due
      on
      the Surety Bond.

     

    (gg)  Permitted
      Beneficiaries.
      Each
      Additional Collateral Mortgage Loan is an “Additional Collateral Mortgage Loan,”
as such term is defined in the related Surety Bond, and each of Seller, Agent
      and each Principal is a “Permitted Beneficiary” of the rights of the related
      Approved Provider.

     

    (hh)  The
      Additional Collateral Transfer Agreement.
      The
      Additional Collateral Transfer Agreement is a legal, valid and binding
      obligation of the related Approved Provider, enforceable in accordance with
      its
      terms, except that enforceability thereof may be limited by bankruptcy,
      insolvency, moratorium, receivership and other similar laws relating to
      creditors’ rights generally and the remedy of specific performance and
      injunctive and other forms of equitable relief may be subject to equitable
      defenses and to the discretion of the court before which any proceeding therefor
      may be brought.

     

    (ii)  Security
      Interest of Seller.
      Pursuant to the Additional Collateral Transfer Agreement, with respect to each
      Additional Collateral Mortgage Loan, Seller has a first-priority perfected
      security interest in each Securities Account, or, if necessary to perfect a
      first-priority security interest in each asset contained in such Securities
      Account, a perfected first-priority security interest in each such asset
      contained in each Securities Account.

     

    (jj)  Security
      Interest of Agent.
      Upon
      the purchase of each Additional Collateral Mortgage Loan, Agent will acquire
      a
      first-priority perfect security interest in the related Securities
      Account.

     

    (kk)  Representations
      and Warranties Regarding Individual Mortgage Loans; Eligibility
      Representations.
      As to
      each Eligible Mortgage Loan, Seller shall on and as of the Purchase Date for
      any
      Transaction and on and as of each date thereafter through and including the
      related Repurchase Date be deemed to make each of the representations and
      warranties set forth on Annex II hereto.

     

    The
      representations and warranties set forth in this Agreement shall survive
      transfer of the Purchased Assets to Agent and shall continue for so long as
      the
      Purchased Assets are subject to this Agreement. It is understood and agreed
      that
      the representations and warranties set forth in this Agreement (including Annex
      II) shall survive the sale of the Eligible Mortgage Loans to Agent and the
      delivery of the Loan Documents to Servicer and delivery of the Mortgage Notes
      to
      the Custodian and shall inure to the benefit of Agent and each Principal
      notwithstanding any restrictive or qualified endorsement on any Mortgage Note
      or
      Assignment of Mortgage or the examination or failure to examine any Mortgage
      Note.

     

    11.  COVENANTS
      OF SELLER

     

    Seller
      hereby covenants with Agent and each Principal as follows:

     

    (a)  Defense
      of Title.
      Seller
      warrants and will defend the right, title and interest of Agent and each
      Principal in and to all Purchased Assets against all adverse claims and
      demands.

     

     

    
      
        
        

      

      
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    (b)  No
      Amendment or Compromise.
      Without
      Agent’s prior written consent and the prior written consent of the Required
      Principals, neither Seller nor any Person acting on Seller’s behalf shall amend,
      supplement or modify, or waive any term or condition of, or settle or compromise
      any claim in respect of, any item of the Purchased Assets, any related rights
      or
      any of the Transaction Documents; provided
      that any
      such party may amend, supplement or modify a mortgage loan if such amendment,
      supplement or modification does not affect the amount or timing of any payment
      of principal or interest, extend its scheduled maturity date, modify its
      interest rate, or constitute a cancellation or discharge of its outstanding
      principal balance and does not materially and adversely affect the security
      afforded by the real property, finishings, fixtures, or equipment securing
      the
      mortgage loan and any such party may amend, supplement or modify a mortgage
      loan
      in the ordinary course of business to correct errors; provided,
      further,
      that,
      any
      such amendments shall be done in accordance with all applicable law and shall
      not result in a material adverse effect.

     

    (c)  No
      Assignment.
      Except
      as permitted herein and in the other Transaction Documents, neither Seller
      nor
      any Person acting on its behalf shall sell, assign, transfer or otherwise
      dispose of, or grant any option with respect to, or pledge, hypothecate or
      grant
      a security interest in or lien on or otherwise encumber (except pursuant to
      the
      Transaction Documents), any of the Purchased Assets or any interest
      therein.

     

    (d)  Preservation
      of Purchased Assets: Value.
      Seller
      shall (and shall cause Servicer to) do all things necessary to preserve the
      Purchased Assets so that each Purchased Asset remains subject to a first
      priority perfected security interest hereunder. Without limiting the foregoing,
      Seller will comply with all rules, regulations and other laws of any Official
      Body applicable to Seller relating to the Purchased Assets and cause the
      Purchased Assets to comply with all applicable rules, regulations and other
      laws
      of any such Official Body. Seller will not allow any default for which Seller
      is
      responsible to occur under any Purchased Assets or any Transaction
      Documents.

     

    (e)  Financial
      Statements; Accountants’ Reports; Other Information.
      Seller
      shall keep or cause to be kept in reasonable detail books and records of account
      of its assets and business and shall clearly reflect Agent’s interest in the
      Purchased Assets.

     

    (f)  Notice
      of Material Events.
      Seller
      shall promptly, upon the earlier of its knowledge or notice thereof, inform
      Agent and each Principal in writing of any of the following:

     

    i.  any
      Unmatured Event of Default or Event of Default under any Transaction Document
      or
      any Servicer Default;

     

    ii.  any
      material change in the insurance coverage required of Seller or any other Person
      pursuant to any Transaction Document, with copy of evidence of same
      attached;

     

    iii.  any
      material dispute, litigation, investigation (which shall not include request
      for
      information), proceeding or suspension between Seller, on the one hand, and
      any
      Official Body or any other Person as to which there is a reasonable likelihood
      of an adverse determination that would result in a material adverse
      effect;

     

     

    
      
        
        

      

      
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    iv.  any
      material change in accounting policies or financial reporting practices of
      Seller, other than Subject Adjustments; and

     

    v.  the
      occurrence of any material employment dispute that is reasonably likely to
      result in a material adverse effect and a description of the strategy for
      resolving it.

     

    (g)  Licenses.
      Seller
      shall maintain its qualifications to do business and all licenses necessary
      to
      perform its obligations hereunder.

     

    (h)  No
      Withholdings for Taxes.
      Any
      payments made by Seller to Agent or any Principal shall be free and clear of,
      and without deduction or withholding for, any taxes; provided,
      however,
      that if
      Seller shall be required by law to deduct or withhold any taxes from any sums
      payable to Agent or any Principal then Seller shall (A) make such deductions
      or
      withholdings and pay such amounts to the relevant authority in accordance with
      Law, (B) pay to Agent or any Principal the sum that would have been payable
      had
      such deduction or withholding not been made, and (C) at the time the Price
      Differential is paid, pay to Agent or any Principal all additional amounts
      as
      specified by Agent or any Principal to preserve the after-tax yield Agent or
      any
      Principal would have received if such tax had not been imposed. This provision
      does not apply to income taxes payable by Agent or any Principal on its taxable
      income.

     

    (i)  Nature
      of Business.
      Seller
      shall not make any material change in the nature of its business as conducted
      on
      the date hereof. Seller shall manage its business substantially in accordance
      with current industry practices.

     

    (j)  Fees.
      Seller
      agrees to pay to Agent for its own account and for the account of the Principals
      on or prior to the Effective Date and on any other date as provided therein,
      all
      of the Fees set forth in the Fee Letter, in accordance with the terms
      thereof.

     

    (k)  Other
      Fees and Expenses.
      Seller
      shall pay all reasonable out-of-pocket expenses incurred by Agent and any
      Principal to consummate the transactions contemplated by this Agreement and
      the
      other Transaction Documents, including any necessary due diligence expenses
      and
      reasonable attorney’s fees. Seller shall pay any reasonable legal fees for any
      subsequent amendments or waivers to this Agreement, the Transaction Documents
      or
      related documents. Seller shall pay ongoing custodial and bank fees and expenses
      and any other ongoing fees and expenses under any Transaction
      Document.

     

    (l)  No
      Adverse Claims.
      There
      are no adverse claims with respect to the Purchased Assets. 

     

     

    
      
        
        

      

      
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    (m)  Further
      Assurances; Change in Name or Jurisdiction of Origination, etc.
      Seller
      hereby authorizes and hereby agrees from time to time, at its own expense,
      promptly to execute (if necessary) and deliver all further instruments and
      documents, and to take all further actions, that may be necessary or desirable,
      or that Agent or any Principal may reasonably request, to perfect, protect
      or
      more fully evidence the purchases made under this Agreement and/or security
      interest granted pursuant to this Agreement, or to enable Agent or the
      Principals to exercise and enforce their respective rights and remedies under
      this Agreement. Without limiting the foregoing, Seller hereby authorizes, and
      will, upon the request of Agent, at its own expense, execute (if necessary)
      and
      file such financing or continuation statements (including fixture filings),
      or
      amendments thereto, and such other instruments and documents, that may be
      necessary or desirable, or that Agent or any Principal may reasonably request,
      to perfect, protect or evidence such purchases. Seller authorizes Agent to
      file
      financing or continuation statements, and amendments thereto and assignments
      thereof, relating to any of the Purchased Assets without the signature of such
      Person. A photocopy or other reproduction of this Agreement shall be sufficient
      as a financing statement where permitted by law. Seller shall at all times
      be
      organized under the laws of the State of its organization at the date hereof
      and
      shall not take any action to change its jurisdiction of organization. Seller
      will not change its name, location, identity or corporate structure unless
      (x)
      Agent shall have received at least thirty (30) days’ advance written notice of
      such change, (y) Seller, at its own expense, shall have taken all action
      necessary or appropriate to perfect or maintain the perfection of the purchases
      (including, without limitation, the filing of all financing statements and
      the
      taking of such other action as Agent or any Principal may request in connection
      with such change or relocation), and (z) if requested by Agent or any Principal,
      Seller shall cause to be delivered to Agent and each Principal, an opinion,
      in
      form and substance satisfactory to Agent and each Principal as to such UCC
      matters a such Person may request at such time.

     

    (n)  Taxes.
      Seller
      shall duly pay and discharge, or cause to be paid and discharged, before the
      same shall become delinquent, all federal, state or local taxes, assessments,
      levies and other governmental charges, imposed upon it or any of its
      Subsidiaries or their respective properties, sales and activities, or any part
      thereof, or upon the income or profits therefrom, as well as all claims for
      labor, materials, or supplies which if unpaid could reasonably be expected
      to
      result in a material adverse effect; provided
      that any
      such tax, assessment, charge, levy or claim need not be paid if the validity
      or
      amount thereof shall currently be contested in good faith by appropriate
      proceedings and if such Person shall have set aside on its books reserves (the
      presentation of which is segregated to the extent required by GAAP) adequate
      with respect thereto if reserves shall be deemed necessary by such Person in
      accordance with GAAP; and provided,
      further,
      that
      such Person will pay all such taxes, assessments, levies or other governmental
      charges forthwith upon the commencement of proceedings to foreclose any Lien
      which may have attached as security therefor (unless the same is fully bonded
      or
      otherwise effectively stayed).

     

    (o)  Corporate
      Existence; Compliance with Statutes.
      Seller
      shall do or cause to be done all things necessary to remain duly organized and
      validly existing in good standing under the laws of its jurisdictions of
      incorporation and in good standing to operate as a foreign corporation with
      power and authority to own its properties and to conduct its business, in all
      jurisdictions where the nature of its business so requires it and where a
      failure to be in good standing as a foreign corporation could reasonably be
      expected to have a material adverse effect and to preserve, renew and keep
      in
      full force and effect its corporate existence, rights, licenses, permits and
      franchises and comply, except where failure to comply, either individually
      or in
      the aggregate, could not reasonably be expected to result in a material adverse
      effect, with all provisions of Law, and all applicable restrictions imposed
      by
      any Official Body, and all state and provincial laws and regulations of similar
      import.

     

    (p)  Insurance.
      Seller
      shall maintain with good and reputable insurers insurance in such amounts and
      against such risks as are customarily insured against by companies in similar
      businesses; provided however,
      that
      (a) workmen’s compensation insurance or similar coverage may be effected with
      respect to its operations in any particular state or other jurisdiction through
      an insurance fund operated by such state or jurisdiction and (b) such insurance
      may contain self-insurance retention and deductible levels consistent as such
      insurance is usually carried by companies of established reputation and
      comparable size.

     

     

    
      
        
        

      

      
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    (q)  ERISA
      Compliance and Reports.
      Seller
      shall furnish to Agent and each Principal (a) as soon as possible, and in any
      event within 30 days after any of its executive officers (as defined in
      Regulation C under the Securities Act of 1933, as amended) knows that (i) any
      Reportable Event with respect to any Plan has occurred, a statement of the
      chief
      financial officer of such Person, setting forth details as to such Reportable
      Event and the action which it proposes to take with respect thereto, together
      with a copy of the notice, if any, required to be filed by such Person or any
      of
      its Subsidiaries of such Reportable Event with the PBGC or (ii) an accumulated
      funding deficiency has been incurred or an application has been made to the
      Secretary of the Treasury for a waiver or modification of the minimum funding
      standard or an extension of any amortization period under Section 412 of the
      Code with respect to a Plan, a Plan has been or is proposed to be terminated
      in
      a “distress termination” (as defined in Section 4041(c) of ERISA), proceedings
      have been instituted to terminate a Plan or a Multiemployer Plan, a proceeding
      has been instituted to collect a delinquent contribution to a Plan or a
      Multiemployer Plan, or either such Person or any of its Subsidiaries will incur
      any liability (including any contingent or secondary liability) to or on account
      of the termination of or withdrawal from a Plan under Section 4062, 4063 or
      4064
      of ERISA or the withdrawal or partial withdrawal from a Multiemployer Plan
      under
      Section 4201 or 4204 of ERISA, a statement of the chief financial officer of
      such Person, setting forth details as to such event and the action it proposes
      to take with respect thereto, (b) promptly upon the reasonable request of Agent,
      copies of each annual and other report with respect to each Plan and (c)
      promptly after receipt thereof, a copy of any notice such Person or any of
      its
      Subsidiaries may receive from the PBGC relating to the PBGC’s intention to
      terminate any Plan or to appoint a trustee to administer any Plan. 

     

    (r)  Maintenance
      of Properties; Title to Properties.
      Seller
      shall (i) keep its properties which are material to its business in good repair,
      working order and condition consistent with companies of established reputation
      and comparable size and (ii) maintain good title or valid leasehold interests
      to
      each of the properties and assets reflected on its balance sheets, except for
      minor defects in title that do not interfere with its ability to conduct its
      business as currently conducted or to utilize such properties for their intended
      purposes, and all such properties and assets will be free and clear of
      Liens.

     

    (s)  Compliance
      with Laws, and Credit Policy, Etc.
      Seller
      shall comply in all material respects with all applicable laws, rules,
      regulations and orders of all governmental authorities (including those which
      relate to the mortgage loans) and all Guidelines, applicable rules, regulations
      and orders of each Agency and shall comply in all material respects with the
      Credit Policy in regard to each mortgage loan.

     

    (t)  Compliance
      with Regulations.
      All
      required financial statements, information and reports delivered by Seller
      pursuant to this Agreement shall be prepared in accordance with GAAP, or, if
      applicable, to SEC filings, the appropriate SEC accounting regulations, subject
      to the Subject Adjustments.

     

     

    
      
        
        

      

      
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    (u)  Negative
      Covenants.
      Seller,
      for so long as this Agreement shall be in effect or any amount shall remain
      outstanding or unpaid under this Agreement or any other Transaction Document,
      unless Agent and the Required Principals shall otherwise consent in writing,
      agrees that it will not directly or indirectly, 

     

    (A)  Limitations
      on Liens.
      Create,
      incur, assume, or suffer to exist, or permit any Subsidiary to create, incur,
      assume or suffer to exist, any Lien on any Purchased Asset. 

     

    (B)  No
      Amendments to Credit Policy; Transaction Documents, Etc.
      Make or
      permit any Subsidiary to make any change to the Credit Policy which change
      could
      reasonably be expected to have a material adverse effect, or otherwise
      materially and adversely affect the collectibility of and/or amount collected
      on
      the mortgage loans; amend, modify, supplement or waive or permit any Subsidiary
      to amend modify, supplement or waive any provision of any Transaction Document
      or any other Contractual Obligation or enter into any new Contractual Obligation
      or make any prepayment in respect of any subordinated Indebtedness.

     

    (C)  No
      Change in Account Banks; Deposits.
      (a) Add
      or terminate (or permit any other Person to add or terminate) any bank
      maintaining the Collection Account, the Funding Account or the Margin Call
      Account as of the Effective Date or make any change in its instructions
      regarding payments to be made any such bank, unless (A) Agent shall have
      received duly executed counterparts of a Blocked Account Control Agreement,
      with
      each new account bank, and copies of such instructions (which shall be in form
      and substance acceptable to Agent) and (B) Agent previously shall have
      consented in writing to such addition or termination, which consent shall not
      be
      unreasonably withheld, delayed or conditioned. (b) Deposit or otherwise credit,
      or cause or permit to be so deposited or credited by any other Person, to the
      Collection Account, the Funding Account or the Margin Call Account, cash or
      cash
      proceeds other than Income with respect to the related Purchased Assets,
      Collections with respect to the mortgage loans or other proceeds of the
      Collateral.

     

    (v)  Delivery
      of Mortgage Note.
      Seller
      shall deliver each Mortgage Note, including Mortgage Notes on Wet Funded Loans,
      to the Custodian as soon as practicable, but in any event within 30 days of
      the
      purchase and, if any Mortgage Note is not delivered within 30 days of the
      purchase, it shall be repurchased on such 30th
      day by
      Seller at the Repurchase Price.

     

    (w)  Assignment.
      Seller
      shall assign to Agent all right, title and interest of Seller under the
      Additional Collateral Transfer Agreement with respect to Additional Collateral
      Mortgage Loans transferred.

     

    (x)  Changes
      in Origination and Underwriting Criteria.
      Seller
      shall inform Agent, each Bank Principal and each rating agency rating any
      outstanding Short-Term Notes of any material changes (as determined by Seller)
      in its origination and underwriting practices and guidelines with respect to
      the
      mortgage loans.

     

    (y)  Funding
      Future Advances.
      Seller
      will be obligated to, and will fulfill its obligation to, make any future
      advance for any HELOC pursuant to the related Home Equity Line
      Agreement.

     

     

    
      
        
        

      

      
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    (z)  Eligibility
      Criteria, the Portfolio Criteria and Limitations.
      As of
      any date of determination, the Eligible Mortgage Loans in the aggregate shall
      satisfy the Eligibility Criteria, the Portfolio Criteria, the Portfolio Aging
      Limitations and the Wet Funded Loan Limitation.

     

    12.  REPURCHASE
      TRANSACTIONS

     

    A
      Principal may, in its sole and absolute discretion, engage in repurchase
      transactions with the Purchased Assets or otherwise pledge, hypothecate, assign,
      transfer or otherwise convey the Purchased Assets with a counterparty of such
      Principal’s choice, in all cases subject to the obligation to reconvey the
      Purchased Assets (and not substitutes therefor) on the Repurchase Date. In
      the
      event a Principal engages in a repurchase transaction with any of the Purchased
      Assets or otherwise pledges, hypothecates, assigns, transfers or otherwise
      conveys any of the Purchased Assets, such Principal shall have the right to
      assign to the applicable counterparty any of the applicable representations
      or
      warranties set forth herein and the remedies for breach thereof, as they relate
      to the Purchased Assets that are subject to such repurchase
      transaction.

     

    13.  EVENTS
      OF DEFAULT

     

    Upon
      the
      occurrence and continuance of any of the following conditions, Agent (on behalf
      of the Principals) shall have the right subject to the consent of the Required
      Principals to notify Seller that Agent has determined to sell the Purchased
      Assets (on behalf of the Principals) (each, an “Event
      of Default”):

     

    (a)  (i)
      Seller fails to transfer the Purchased Assets to Agent on the applicable
      Purchase Date (provided Agent has tendered the related Purchase Price), (ii)
      Seller fails to make any payment (whether in respect of principal, interest,
      fees or other amounts) payable by it hereunder or under any other Transaction
      Document, when and as the same shall become due and payable, whether at the
      due
      date thereof or at a date fixed for prepayment thereof or by acceleration
      thereof or otherwise, and such default shall continue unremedied for 2 Business
      Days after the earlier of such Person’s knowledge or receipt of notice thereof,
      (iii) Seller fails to repurchase the Purchased Assets on the applicable
      Repurchase Date or fails to perform any of its obligations under Section 5
      and
      such failure continues unremedied for 2 Business Days after the earlier of
      its
      knowledge or receipt of notice thereof, (iv) any of the Portfolio Criteria
      shall
      not be satisfied, and Seller fails to repurchase Purchased Assets such that
      such
      failure continues unremedied for 2 Business Days after the earlier of Seller’s
      knowledge or receipt of notice thereof, (v) any Eligible Mortgage Loan that
      ceases to satisfy the Eligibility Criteria shall fail to be repurchased by
      Seller within two (2) Business Days after the earlier of Seller’s knowledge or
      notice of such failure, (vi) any noncompliance with the Portfolio Aging
      Limitations, and Seller fails to repurchase Purchased Assets such that such
      non-compliance continues unremedied for two (2) Business Days after the earlier
      of Seller’s knowledge or notice thereof, or (vii) a Margin Deficit shall
      continue unremedied for 2 Business Days after the earlier of the Seller’s
      knowledge or receipt of notice thereof (it being understood that solely for
      the
      purposes of this clause (vii), notice or knowledge of a report actually received
      by the Seller pursuant to Section 2 of the Custodial Agreement shall be deemed
      to have occurred at 9.a.m. Eastern time on the Business Day immediately
      following the actual day such report way received);

     

     

    
      
        
        

      

      
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    (b)  Seller
      shall fail to (i) observe or perform any covenant, condition or agreement
      contained in Section 11(f)(i), 11(o), 11(s) of this Agreement and such failure
      shall continue unremedied for 2 Business Days after the earlier of such Person’s
      knowledge or notice thereof, (ii) observe or perform any covenant contained
      in
      Section 11(u) or (iii) observe or perform any other covenant, condition or
      agreement to be observed or performed pursuant to the terms of this Agreement
      or
      any other Transaction Document and such default shall continue unremedied for
      thirty (30) days after the earlier of such Person’s knowledge or receipt of
      notice thereof;

     

    (c)  any
      representation or warranty made or deemed made by Seller or Performance
      Guarantor in this Agreement or any other Transaction Document or in connection
      herewith or therewith or with the purchases hereunder, or any statement or
      representation made in any report, financial statement, certificate or other
      document furnished by or on behalf of Seller, Performance Guarantor or any
      of
      their respective Subsidiaries to Agent, any Principal or the Custodian under
      or
      in connection with this Agreement or any other Transaction Document, shall
      prove
      to have been false or misleading in any material respect when made or delivered
      and, solely to the extent capable of cure, such inaccuracy continues unremedied
      for 2 Business Days after the earlier of such Person’s knowledge or receipt of
      notice thereof;

     

    (d)  (i)
      Seller, Performance Guarantor or any of their respective Subsidiaries shall
      fail
      to (x) pay any Indebtedness or Interest Rate Protection Agreements where the
      amount or amounts of such Indebtedness or Interest Rate Protection Agreement
      exceeds $50,000,000 (or its equivalent thereof in any other currency) in the
      aggregate; or (y) perform any other term, provision or condition with respect
      to
      any Indebtedness or Interest Rate Protection Agreements of greater than
      $50,000,000 (or its equivalent thereof in any other currency), which failure
      results in such Indebtedness becoming due prior to the scheduled date of
      maturity thereof or enables or permits the holder or holders of such
      Indebtedness or any trustee or agent on its or their behalf to cause such
      Indebtedness to become due, or to require the prepayment (other than by a
      regularly scheduled payment), repurchase, redemption or defeasance thereof,
      prior to the scheduled date of maturity thereof; or (ii) any other circumstance
      shall arise (other than the mere passage of time) by reason of which Seller,
      Performance Guarantor or any of their respective Subsidiaries is required to
      redeem or repurchase, or offer to holders the opportunity to have redeemed
      or
      repurchased, any such Indebtedness or Interest Rate Protection Agreement where
      the amount or amounts of such Indebtedness or Interest Rate Protection Agreement
      exceeds $50,000,000 (or its equivalent thereof in any other currency) in the
      aggregate;

     

    (e)  any
      involuntary case, proceeding or other action against Seller, Performance
      Guarantor or any of their respective Subsidiaries shall be commenced seeking
      to
      have an order for relief entered against it as debtor or to adjudicate it a
      bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
      liquidation, dissolution or composition of it or its debts under any law
      relating to bankruptcy, insolvency, reorganization or relief of debtors, or
      seeking appointment of a receiver, trustee, custodian or other similar official
      for it or for all or any substantial part of its property and such case,
      proceeding or other action shall continue undismissed, or unstayed and in
      effect, for a period of 60 days; or an order for relief in respect of such
      Person shall be entered in an involuntary case or proceeding under any law
      relating to bankruptcy, insolvency, reorganization or relief of creditors or
      other similar laws now or hereafter in effect;

     

     

    
      
        
        

      

      
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    (f)  Seller,
      Performance Guarantor or any of their respective Subsidiaries shall generally
      not pay its debts as they become due or shall admit in writing its inability
      to
      pay its debts, or shall make a general assignment for the benefit of creditors;
      or Seller, Performance Guarantor or any of their respective Subsidiaries shall
      commence any case, proceeding or other action seeking to have an order for
      relief entered on its behalf as debtor or to adjudicate it a bankrupt or
      insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
      dissolution or composition of it or its debts under any law relating to
      bankruptcy, insolvency, reorganization or relief of debtors or seeking
      appointment of a receiver, trustee, custodian or other similar official for
      it
      or for all or any substantial part of its property or shall file an answer
      or
      other pleading in any such case, proceeding or other action admitting the
      material allegations of any petition, complaint or similar pleading filed
      against it or consenting to the relief sought therein; or Seller, Performance
      Guarantor or any of their respective Subsidiaries shall take any action to
      authorize any of the foregoing; or a senior officer of Seller or Performance
      Guarantor shall admit in writing its inability to, or intention not to, perform
      any of its respective Obligations;

     

    (g)  Seller,
      Performance Guarantor or any of their respective Subsidiaries shall fail to
      satisfy the terms of any final, non-appealable judgment(s) for the payment
      of
      money in excess of $25,000,000 (or its equivalent thereof in any other currency)
      rendered against Seller, Performance Guarantor or any of their respective
      Subsidiaries;

     

    (h)  any
      Official Body or any person, agency or entity acting or reasonably purporting
      to
      act under governmental authority shall have taken any action reasonably likely
      to result in a condemnation, seizure or appropriation, or assumption of custody
      or control of, all or any substantial part of the property of Seller,
      Performance Guarantor or any of their respective Subsidiaries, or shall have
      taken any action reasonably likely to displace the management of Seller,
      Performance Guarantor or any their respective Subsidiaries or reasonably likely
      to curtail its authority in the conduct of a material portion of the business
      of
      Seller, Performance Guarantor or any of their respective Subsidiaries, or takes
      any action in the nature of enforcement reasonably likely to remove, limit
      or
      restrict the approval of Seller, Performance Guarantor or any of their
      respective Subsidiaries as an issuer, buyer or a seller of mortgage loans or
      securities backed thereby;

     

    (i)  an
      event
      of default (as defined in the credit agreement referred to in this clause)
      shall
      have occurred under the Five Year Competitive Advance and Revolving Credit
      Agreement, dated as of January 6, 2006, among PHH Corporation, as Borrower,
      the
      Lenders referred to therein, Citicorp USA, Inc., as Syndication Agent, and
      Bank
      of America, N.A., The Bank of Nova Scotia and Calyon New York Branch, as
      Documentation Agents, and JPMorgan Chase Bank, N.A., as administrative agent,
      as
      such agreement exists on the date hereof and as the same may be further amended,
      modified, waived or supplemented, solely to the extent that the Agent and the
      Required Principals have given their prior written consent to such amendment,
      modification, waiver or supplement;

     

    (j)  failure
      of Seller or Servicer to remit to the Funding Account for the benefit of the
      Principals not later than 2 Business Days after the sale or Securitization
      of
      any Eligible Mortgage Loans the proceeds of any such sale or
      Securitization;

     

     

    
      
        
        

      

      
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    (k)  failure
      of Servicer to remit (within the applicable grace period, if any) to the
      Collection Account, the Funding Account or the Margin Call Account any amounts
      when such amounts are required to be so remitted;

     

    (l)  the
      occurrence of a Change in Control; 

     

    (m)  failure
      of Seller to make any required Margin Call or pay any Minimum Transfer Amount
      as
      required by Section 5 hereof or failure of Seller or Servicer to apply
      Collections in accordance with Section 5 or Section 6 hereof;

     

    (n)  the
      audited annual financial statements or the notes thereto or other opinions
      or
      conclusions stated therein shall be qualified or limited by reference to the
      status of Seller or Performance Guarantor as a “going concern” or a reference of
      similar import;

     

    (o)  Seller
      shall become subject to regulation under the Investment Company
      Act;

     

    (p)  a
      Servicer Default shall have occurred and be continuing;

     

    (q)  a
      Daily
      Servicer Report shall fail to be delivered as and when required, and such
      failure shall continue unremedied for 1 Business Day;

     

    (r)  [Reserved];

     

    (s)  (x)
      any
      Transaction Document, any Purchased Asset, or any lien or security interest
      granted hereunder or thereunder, shall (except in accordance with its terms),
      in
      whole or in part, terminate, cease to be effective or cease to be the legally
      valid, binding and enforceable obligation of Seller or Seller shall, directly
      or
      indirectly, contest in any manner such effectiveness, validity, binding nature
      or enforceability or (y) any security interest securing the Purchased Assets
      shall, in whole or in part, cease to be a perfected first priority security
      interest in favor of Agent and, in the case of this clause (y) such failure
      shall continue unremedied for 2 Business Days after the earlier of Seller’s
      knowledge or receipt of notice thereof;
      

     

    (t)  [Reserved];

     

    (u)  [Reserved];
      or

     

    (v)  if
      Seller
      assigns or attempts to assign this Agreement or any other Transaction Document
      or any rights or obligations hereunder or thereunder without first obtaining
      the
      specific written consent of Agent or the granting by Seller of any security
      interest, lien or other encumbrances on any Purchased Assets or on the
      Collection Account, the Funding Account, the Margin Call Account or any of
      the
      other collateral referred to in Section 7 to any person other than
      Agent.

     

    Upon
      the
      occurrence of an Event of Default, Seller will no longer be permitted to sell
      and Agent (on behalf of the Principals) will no longer be permitted to purchase
      additional Eligible Mortgage Loans and principal and interest payments on
      Eligible Mortgage Loans and principal proceeds of sales and Securitizations
      of
      Eligible Mortgage Loans will be remitted to the Funding Account for application
      in accordance with Section 6 hereof.

     

     

    
      
        
        

      

      
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    Additionally,
      Agent, at its option (which option shall be deemed to have been exercised
      immediately upon the occurrence of an Event of Default pursuant to Section
      13(e)
      or (f) hereof), shall have any or all of the following rights and remedies,
      which may (or at the direction of the Required Principals, shall) be exercised
      by Agent: 

     

    (a)  The
      Termination Date and the Repurchase Date for each Transaction hereunder shall
      be
      deemed immediately to occur.

     

    (b)  Seller’s
      obligations hereunder to repurchase all Purchased Assets subject to a
      Transaction with Seller at the Repurchase Price therefor on the Repurchase
      Date
      in such Transactions shall thereupon become immediately due and payable; Seller
      shall immediately deliver to Agent or its designee any and all original papers,
      records and files relating to the Purchased Assets subject to such Transaction
      then in Seller’s possession and/or control; and all right, title and interest in
      and entitlement to such Purchased Assets and Servicing Rights thereon shall
      be
      deemed transferred to Agent or its designee.

     

    In
      addition to its repurchase obligation, Seller shall indemnify Agent and each
      Principal and hold them harmless against any losses, damages, penalties, fines,
      forfeitures, reasonable and necessary legal fees and related costs, judgments,
      and other costs and expenses resulting from any claim, demand, defense or
      assertion based on or grounded upon, or resulting from, a breach of the
      representations and warranties contained in this Agreement. It is understood
      and
      agreed that the obligations of Seller to cure or repurchase an Eligible Mortgage
      Loan and to indemnify Agent and each Principal constitute the sole remedies
      of
      Agent and each Principal respecting a breach of the foregoing representations
      and warranties.

     

    Agent
      may
      sell, on or following the Business Day following the date on which the
      Repurchase Price became due and payable pursuant to Section 13(b) without notice
      or demand of any kind, at a public or private sale and at such price or prices
      as Agent may reasonably deem satisfactory any or all Purchased Assets. The
      proceeds of any disposition of Purchased Assets shall be applied first
      to the
      reasonable costs and expenses incurred by Agent in connection with or as a
      result of an Event of Default; second
      to the
      aggregate Repurchase Prices; and third
      to all
      other Obligations.

     

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

     

     

    
      
        
        

      

      
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    In
      addition to its rights hereunder, upon the occurrence and during the
      continuation of an Event of Default, Agent shall have the right to proceed
      against Seller’s assets which may be in the possession of Agent, any Principal,
      any Principal’s Affiliate or designee (including, without limitation, the
      Custodian), including the right to liquidate such assets and to set-off the
      proceeds against monies owed by Seller to Agent pursuant to this Agreement.
      Agent may set off cash, the proceeds of the liquidation of the Purchased Assets,
      any other collateral or its proceeds and all other sums or obligations owed
      by
      Agent to Seller against all of Seller’s Obligations to Agent, whether under this
      Agreement, under a Transaction, or under any other agreement between the
      parties, or otherwise, whether or not such Obligations are then due, without
      prejudice to Agent’s right to recover any deficiency.

     

    Upon
      the
      occurrence and during the continuation of an Event of Default, Agent shall
      have
      the right to obtain physical possession of the Records and all other files
      of
      Seller relating to the Purchased Assets and all documents relating to the
      Purchased Assets which are then or may thereafter come into the possession
      of
      Seller or any third party acting for Seller and Seller shall deliver (or cause
      to be delivered) to Agent such assignments as Agent shall request.

     

    Upon
      the
      occurrence and during the continuation of an Event of Default, Agent may direct
      Servicer to take such action consistent with the Transaction Documents with
      respect to the Purchased Assets as Agent determines appropriate.

     

    Seller
      shall be liable to Agent for the amount of all expenses (plus interest thereon
      at a rate equal to the Default Rate), and Breakage Costs and all costs and
      expenses incurred in connection with hedging or covering transactions related
      to
      the Purchased Assets.

     

    Seller
      shall, within 2 Business Days of receipt thereof, cause all sums received by
      it
      with respect to the Purchased Assets to be remitted to the Collection
      Account.

     

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

     

    Agent
      may
      enforce its rights and remedies hereunder without prior judicial process or
      hearing, and Seller hereby expressly waives, to the extent permitted by law,
      any
      right such Person might otherwise have to require Agent to enforce its rights
      by
      judicial process. Seller also waives, to the extent permitted by law, any
      defense such Person might otherwise have to the Obligations, arising from use
      of
      nonjudicial process, enforcement and sale of all or any portion of the Purchased
      Assets and any other collateral or from any other election of remedies. Seller
      recognizes that nonjudicial remedies are consistent with the usages of the
      trade, are responsive to commercial necessity and are the result of a bargain
      at
      arm’s length.

     

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

     

     

    
      
        
        

      

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

     

    14.  DELAY
      NOT WAIVER; REMEDIES ARE CUMULATIVE

     

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

     

    15.  USE
      OF EMPLOYEE PLAN ASSETS

     

    No
      assets
      of an employee benefit plan subject to any provision of ERISA shall be used
      by
      any party hereto in a Transaction.

     

    16.  EXPENSES;
      INDEMNITY

     

    (a)  Seller
      agrees, upon receipt of a written invoice, to pay or cause to be paid, and
      to
      save each Principal and Agent harmless against liability for the payment of,
      all
      reasonable out-of-pocket expenses (including, without limitation, attorneys’,
      accountant’s and other third parties’ fees and expenses, any rating agency fees,
      any filing fees and expenses incurred by officers or employees of each Principal
      and Agent, but excluding salaries and similar overhead costs of each Principal
      and Agent which are incurred notwithstanding the execution and performance
      of
      this Agreement) incurred by or on behalf of any Principal and Agent (i) in
      connection with the negotiation, execution, delivery and preparation of the
      Transaction Documents and the transactions contemplated by or undertaken
      pursuant to or in connection herewith or therewith (including, without
      limitation, the perfection or protection of the Eligible Mortgage Loans) and
      (ii) from time to time (a) relating to any requested amendments, waivers or
      consents under the Transaction Documents requested by Seller, (b) arising in
      connection with the Principals’ or Agent’s or their enforcement or preservation
      of their respective rights (including, without limitation, the perfection and
      protection of the Eligible Mortgage Loans) under the Transaction Documents,
      or
      (c) arising in connection with any audit, dispute, disagreement, litigation
      or
      preparation for litigation involving the Transaction Documents, which audit,
      dispute, disagreement, litigation or preparation for litigation directly results
      from Seller’s failure to comply with Seller’s obligations (as Seller or
      Servicer) under the Transaction Documents (collectively, the “Transaction
      Costs”).

     

     

    
      
        
        

      

      
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    (b)  Without
      limiting any other rights which Agent or the Principals may have hereunder
      or
      under applicable law, Seller hereby agrees to indemnify each Principal, Agent
      and the APA Purchasers and any successors and permitted assigns and their
      respective officers, directors and employees (collectively, “Indemnified
      Parties”),
      from
      and against any and all damages, losses, claims, liabilities, costs and
      expenses, including, without limitation, reasonable attorneys’ fees (which such
      attorneys may be employees of the APA Purchasers or Agent, as applicable) and
      disbursements (all of the foregoing being collectively referred to as
“Indemnified
      Amounts”),
      arising out of or in connection with:

     

    (i)  any
      dispute, action, suit, litigation or proceeding arising out of or as a result
      of
      (x) this Agreement, the other Transaction Documents, the ownership or
      maintenance by Agent, any Principal or any APA Purchaser of the Eligible
      Mortgage Loans, (y) the use of proceeds of Transactions by Seller, or (z) any
      Eligible Mortgage Loan; provided
      that no
      Indemnified Party shall have the right to be indemnified under this paragraph
      (i) in respect of any litigation instituted by (x) any person (a “Participant”)
      participating in the interest of any APA Purchaser under the Asset Purchase
      Agreement against any APA Purchaser or Agent, (y) any APA Purchaser against
      any
      Participant, any APA Purchaser or Agent, or (z) any holder of any security
      of
      any APA Purchaser (in its capacity as such) against any APA Purchaser, to the
      extent any such litigation does not arise out of any misconduct (alleged in
      good
      faith by such APA Purchaser) by or on behalf of Seller.

     

    (ii)  any
      representation or warranty (other than a representation or warranty in Annex
      II
      hereof) made by Seller (including, in its capacity as Servicer) or any officers
      of Seller (including, in its capacity as Servicer) under or in connection with
      this Agreement, any of the other Transaction Documents, any Servicer Report
      or
      any other information or report delivered by Seller or Servicer pursuant hereto,
      which shall have been false or incorrect in any material respect when made
      or
      deemed made;

     

    (iii)  the
      failure by Seller (including, in its capacity as Servicer) to comply with any
      applicable law, rule or regulation with respect to any Eligible Mortgage Loan
      or
      the nonconformity of any Eligible Mortgage Loan with any such applicable law,
      rule or regulation;

     

    (iv)  any
      claim
      resulting from the sale of merchandise or services by Seller, any Affiliate
      of
      Seller or any designee of Seller to the related Borrower with respect to any
      Eligible Mortgage Loan or the furnishing or failure to furnish such merchandise
      or services by Seller, any Affiliate of Seller or any designee of
      Seller;

     

    (v)  the
      transfer of an ownership interest in any mortgage loan other than an Eligible
      Mortgage Loan;

     

     

    
      
        
        

      

      
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    (vi)  the
      failure by Seller (individually or as Servicer) to comply with any term,
      provision or covenant contained in this Agreement or any of the other
      Transaction Documents to which it is a party or to perform any of its respective
      duties under any Eligible Mortgage Loan;

     

    (vii)  the
      Aggregate Purchase Price exceeds the Maximum Aggregate Purchase Price at any
      time;

     

    (viii)  the
      failure of Seller to pay when due any taxes, including without limitation,
      sales, excise or personal property taxes payable by Seller in connection with
      any of the Eligible Mortgage Loans;

     

    (ix)  any
      repayment by any Indemnified Party of any amount previously distributed in
      reduction of Aggregate Purchase Price which such Indemnified Party believes
      in
      good faith is required to be made;

     

    (x)  any
      inability to obtain any judgment in or utilize the court or other adjudication
      system of, any state in which a Borrower may be located as a result of the
      failure of Seller to qualify to do business or file any notice of business
      activity report or any similar report; or

     

    (xi)  any
      action taken by Seller, or Servicer (if Seller or any Affiliate or designee
      of
      Seller) in the enforcement or collection of any Eligible Mortgage
      Loan;

     

    provided
      that no
      Indemnified Party shall have the right to be indemnified hereunder (x) for
      its
      own gross negligence or willful misconduct as determined by a court of competent
      jurisdiction, (y) for any lost profits of such Indemnified Party, or (z) any
      claim for punitive damages claimed by such Indemnified Party against
      Seller.

     

    (c)  Without
      limitation on the provisions of Section 3, if any payment of the Repurchase
      Price of any Transaction is made by Seller other than on the then Scheduled
      Repurchase Date thereto as a result of an acceleration of the Repurchase Date
      pursuant to Section 13 or for any other reason, Seller shall, upon demand by
      Agent, pay to Agent for the benefit of the applicable Principals any Breakage
      Costs incurred by such Principals as of a result of such payment.

     

    (d)  Without
      prejudice to the survival of any other agreement of Seller hereunder, the
      covenants and obligations of Seller contained in this Section shall survive
      the
      payment in full of the Repurchase Price and all other amounts payable hereunder
      or any other Transaction Document and delivery of the Purchased Assets by Agent
      against full payment therefor.

     

     

    
      
        
        

      

      
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    17.  WAIVER
      OF REDEMPTION AND DEFICIENCY RIGHTS

     

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

     

    18.  INCREASED
      COSTS; TAXES; ETC. 

     

    (A) (i) If
      after
      the date hereof, the adoption of any law or bank regulatory guideline or any
      amendment or change in the interpretation of any existing or future Law or
      bank
      regulatory guideline by any Official Body charged with the administration,
      interpretation or application thereof, or the compliance with any directive
      of
      any Official Body (in the case of any bank regulatory guideline, whether or
      not
      having the force of Law):

     

    (1)  shall
      subject Agent, any Principal or any other Person (including any bank or other
      financial institution providing liquidity and/or credit support to any Conduit
      Principal in connection with its securitization program (each, an “Affected
      Person”)
      to any
      tax, duty or other charge (other than Excluded Taxes) with respect to this
      Agreement, the other Transaction Documents, the ownership, maintenance or
      financing of the Eligible Mortgage Loans or payments of amounts due hereunder,
      or shall change the basis of taxation of payments to any Affected Person of
      amounts payable in respect of this Agreement, the other Transaction Documents,
      the ownership, maintenance or financing of the Eligible Mortgage Loans or
      payments of amounts due hereunder or its obligation to advance funds hereunder,
      under the Asset Purchase Agreement or the credit support furnished by the
      Affected Person or otherwise in respect of this Agreement, the other Transaction
      Documents, the ownership, maintenance or financing of the Eligible Mortgage
      Loans (except for changes in the rate of general corporate, franchise, net
      income or other income tax imposed on such Affected Person by the jurisdiction
      in which such Affected Person’s principal executive office is located);

     

    (2)  shall
      impose, modify or deem applicable any reserve, special deposit or similar
      requirement (including, without limitation, any such requirement imposed by
      the
      Board of Governors of the Federal Reserve System) against assets of, deposits
      with or for the account of, or credit extended by, any Affected Person or shall
      impose on any Affected Person or on the United States market for certificates
      of
      deposit or the London interbank market any other condition affecting this
      Agreement, the other Transaction Documents, the ownership, maintenance or
      financing of the Eligible Mortgage Loans or payments of amounts due hereunder
      or
      its obligation to advance funds hereunder under the Asset Purchase Agreement
      or
      the credit support provided by such Affected Person or otherwise in respect
      of
      this Agreement, the other Transaction Documents, or the ownership, maintenance
      or financing of the Eligible Mortgage Loans; or

     

    (3)  imposes
      upon any Affected Person any other expense (including, without limitation,
      reasonable attorneys’ fees and expenses, and expenses of litigation or
      preparation therefor in contesting any of the foregoing) with respect to this
      Agreement, the other Transaction Documents, the ownership, maintenance or
      financing of the Eligible Mortgage Loans or payments of amounts due hereunder
      or
      its obligation to advance funds hereunder, under the Asset Purchase Agreement
      or
      the credit support furnished by the Program Bank or otherwise in respect of
      this
      Agreement, the other Transaction Documents, or the ownership, maintenance or
      financing of the Eligible Mortgage Loans,

     

     

     

    
      
        
        

      

      
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    and
      the
      result of any of the foregoing is to increase the cost to such Affected Person
      with respect to this Agreement, the other Transaction Documents, the ownership,
      maintenance or financing of the Eligible Mortgage Loans, the obligations
      hereunder, the funding of any purchases hereunder or the Asset Purchase
      Agreement, by an amount deemed by such Affected Person to be material, then,
      within ten (10) days after demand by such Affected Person through Agent, Seller
      shall pay to Agent, for the benefit of such Affected Person, such additional
      amount or amounts as will compensate such Affected Person for such increased
      cost or reduction.

     

    (ii)  If
      any
      Affected Person shall have determined that after the date hereof, the adoption
      of any applicable law or bank regulatory guideline regarding capital adequacy,
      or any change therein, or any change in the interpretation thereof by any
      Official Body, or any directive regarding capital adequacy (in the case of
      any
      bank regulatory guideline, whether or not having the force of law) of any such
      Official Body, has or would have the effect of reducing the rate of return
      on
      capital of such Affected Person (or its parent) as a consequence of such
      Affected Person’s obligations hereunder or with respect hereto to a level below
      that which such Affected Person (or its parent) could have achieved but for
      such
      adoption, change, request or directive (taking into consideration its policies
      with respect to capital adequacy) by an amount deemed by such Affected Person
      to
      be material, then from time to time, within ten (10) days after demand by such
      Affected Person through Agent, Seller shall pay to Agent, for the benefit of
      such Affected Person, such additional amount or amounts as will compensate
      such
      Affected Person (or its parent) for such reduction. For the avoidance of doubt,
      any interpretation of Accounting Research Bulletin No. 51 by the Financial
      Accounting Standards Board (“FASB”)
      (including, without limitation, FASB Interpretation No. 46), shall constitute
      an
      adoption, change, request or directive subject to this Section.

     

    Agent
      will promptly notify Seller of any event of which it has knowledge, occurring
      after the date hereof, which will entitle an Affected Person to compensation
      pursuant to this Section. A notice by Agent or the applicable Affected Person
      claiming compensation under this Section and setting forth the additional amount
      or amounts to be paid to it hereunder shall be conclusive in the absence of
      manifest error. In determining such amount, Agent or any applicable Affected
      Person may use any reasonable averaging and attributing methods.

     

    (B) All
      payments made hereunder by Seller or Servicer (each, a “payor”)
      to any
      Affected Person (each, a “recipient”)
      shall
      be made free and clear of and without deduction for any present or future
      income, excise, stamp or franchise taxes and any other taxes, fees, duties,
      withholdings or other charges of any nature whatsoever imposed by any taxing
      authority on any recipient (or any assignee of such parties) (such nonexcluded
      items being called “Taxes”),
      but
      excluding franchise taxes and taxes imposed on or measured by the recipient’s
      net income or gross receipts (“Excluded
      Taxes”).
      In
      the event that any withholding or deduction from any payment made by the payor
      hereunder is required in respect of any Taxes (other than Excluded Taxes),
      then
      such payor shall:

     

    (i)  pay
      directly to the relevant authority the full amount required to be so withheld
      or
      deducted;

     

     

    
      
        
        

      

      
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    (ii)  promptly
      forward to Agent an official receipt or other documentation satisfactory to
      Agent evidencing such payment to such authority; and

     

    (iii)  pay
      to
      the recipient such additional amount or amounts as is necessary to ensure that
      the net amount actually received by the recipient will equal the full amount
      such recipient would have received had no such withholding or deduction been
      required.

     

    Moreover,
      if any Taxes (other than Excluded Taxes) are directly asserted against any
      recipient with respect to any payment received by such recipient hereunder,
      the
      recipient may pay such Taxes and the payor will promptly pay such additional
      amounts (including any penalties, interest or expenses) as shall be necessary
      in
      order that the net amount received by the recipient after the payment of such
      Taxes (including any Taxes on such additional amount) shall equal the amount
      such recipient would have received had such Taxes not been
      asserted.

     

    If
      the
      payor fails to pay any Taxes when due to the appropriate taxing authority or
      fails to remit to the recipient the required receipts or other required
      documentary evidence, the payor shall indemnify the recipient for any
      incremental Taxes, interest, or penalties that may become payable by any
      recipient as a result of any such failure.

     

    Seller
      shall pay to each Affected Person, as applicable, upon the request of such
      Affected Person or Agent on its behalf, such amount or amounts as shall
      compensate such Affected Person for any actual loss (including loss of profit),
      cost or expense incurred by such Affected Person (as reasonably determined
      by
      such Affected Person) as a result of (x) any payment or repayment of any
      Purchase Price related to a Transaction (or portion thereof) other than on
      the
      maturity date of the source of funds obtained or utilized by such Affected
      Person to fund or maintain such Purchase Price or (y) any failure by Seller
      to
      commence a Transaction (including the continued maintenance of, or any increase
      with respect to any Purchase Prince related thereto, or portion thereof),
      requested by Seller hereunder, in either case, such compensation to include,
      without limitation, an amount equal to any loss or expense suffered by such
      Affected Person during the period from the date of receipt of such repayment
      or
      failure to commence a Transaction, as the case may be, to (but excluding) the
      maturity date of such source of funds, if the rate of interest obtained by
      such
      Affected Person upon the redeployment of an amount of funds equal to the amount
      of such repayment or failure to commence a Transaction, as the case may be,
      is
      less than the interest rate that would have been applicable thereon, hereunder
      through the applicable maturity thereof. The determination by any Affected
      Person of the amount of any such loss or expense shall be set forth in a written
      notice to Seller in reasonable detail and shall be conclusive and binding for
      all purposes, absent manifest error.

     

    19.  FURTHER
      ASSURANCES

     

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

     

     

    
      
        
        

      

      
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    20.  ENTIRE
      AGREEMENT; PRODUCT OF NEGOTIATION

     

    This
      Agreement supersedes and integrates all previous negotiations, contracts,
      agreements and understandings between the parties relating to a sale and
      repurchase of Purchased Assets, and it, together with the other Transaction
      Documents, and the other documents delivered pursuant hereto or thereto,
      contains the entire final agreement of the parties. No prior negotiation,
      agreement, understanding or prior contract shall have any validity.

     

    21.  TERMINATION;
      COMMITMENT REDUCTION

     

    (a) This
      Agreement shall remain in effect until the Termination Date. However, no such
      termination shall affect Seller’s outstanding obligations to Agent, any
      Principal, any Affected Person or any Indemnified Party at the time of such
      termination. Seller’s obligations to indemnify Agent, each Principal, each
      Affected Person and each Indemnified Party pursuant to this Agreement and the
      other Transaction Documents shall survive the termination hereof and
      thereof.

     

    (b) Upon
      at
      least 10 Business Days’ prior irrevocable written notice or telecopy notice to
      Agent and each Bank Principal, Seller may at any time in whole permanently
      terminate, or from time to time in part permanently reduce, the Commitments;
      provided
      that (i)
      each partial reduction shall be made in an integral multiple of $1,000,000
      and
      in a minimum principal amount of $10,000,000 and (ii) Seller shall not be
      entitled to make any such permanent termination or reduction that would reduce
      (x) the aggregate amount of the Commitments to any amount less than the
      Aggregate Purchase Price at such time or (y) the Commitment of any Principal
      to
      an amount less than such Principal’s Pro Rata Share of the Aggregate Purchase
      Price at such time, unless, with respect to this subclause (y), a replacement
      for such Principal acceptable to Agent and Seller assumes such Principal’s
      rights and obligations under this Agreement.

     

    (c) Each
      reduction in the Maximum Aggregate Purchase Price shall be made ratably among
      the Principals in accordance with their respective Commitments. Seller shall
      pay
      on the effective date of a termination or a reduction in the Commitments, to
      Agent for the account of the Principals, the Fees accrued to such effective
      date, based on the amount of the Commitments prior to giving effect to such
      termination or reduction, together with any Breakage Costs incurred in
      connection therewith.

     

    (d) Seller
      may advise Agent and each Bank Principal in writing of its desire to extend
      the
      Termination Date with respect to each Principal for an additional period of
      up
      to 364 days; provided
      such
      request is made not more than sixty (60) days prior to, and not less than thirty
      (30) days prior to, the then current Termination Date. Each Bank Principal
      shall
      promptly notify Agent of its decision to extend the then Termination Date.
      In
      the event that all of the Principals are agreeable to such extension, Agent
      shall so notify Seller in writing (it
      being understood
      that
      each of the Principals may accept or decline such a request in its sole
      discretion and on such terms as it may elect) not less than fifteen (15) days
      prior to the then current Termination Date and Seller, Agent and the Principals
      shall enter into such documents as the Principals may deem necessary or
      appropriate to reflect such extension, and all reasonable costs and expenses
      for
      services delivered by outside professionals incurred by the Principals and
      Agent
      in connection therewith (including reasonable attorneys’ costs) shall be paid by
      Seller. In the event any Principal declines the request for such extension,
      such
      Principal (or the applicable Bank Principal on its behalf) shall so notify
      Seller and Agent of such determination.

     

     

    
      
        
        

      

      
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    22.  ASSIGNMENT
      BY PRINCIPALS

     

    A
      Principal may assign any of its rights and obligations hereunder and under
      the
      other Transaction Documents, to any other Person with the prior written consent
      of Seller (such consent not to be unreasonably withheld, conditioned or
      delayed); provided,
      that
      Agent shall maintain, for review by Seller upon written request, a register
      of
      assignees and a copy of an executed assignment and acceptance (in form and
      substance satisfactory to Agent) by Agent, each such assigning Principal and
      each assignee (“Assignment
      and Acceptance”),
      specifying a constant, and not a varying, percentage or portion of such rights
      and obligations assigned and the amount being assigned pursuant to each such
      assignment (determined as of the date of the Assignment and Acceptance Agreement
      with respect to such assignment), which shall in no event be less than the
      lesser of (x) $5,000,000 and (y) all of the assigning Principal’s Commitment.
      Upon such assignment, (a) such assignee shall be a party hereto and to each
      Transaction Document to the extent of the percentage or portion set forth in
      the
      Assignment and Acceptance, and shall succeed to the applicable rights and
      obligations of a Principal hereunder, and (b) such Principal shall, to the
      extent that such rights and obligations have been so assigned by it to another
      Person which assumes the obligations of such Principal, be released from its
      obligations hereunder and under the other Transaction Documents accruing
      thereafter. Unless otherwise stated in the Assignment and Acceptance, Seller
      shall continue to take directions solely from Agent unless otherwise notified
      by
      Agent in writing. Agent may distribute to any prospective assignee any document
      or other information delivered to Agent by Seller; provided,
      further
      that on
      and after the occurrence and continuation of any Event of Default, a Principal
      may, without the consent of Seller or any other Person, as assign any of its
      rights hereunder and under any other Transaction Document, to any Person. The
      entries in the register referred to above shall be conclusive and binding for
      all purposes, absent manifest error, and Seller, Servicer, Agent and the
      Principals may treat each Person whose name is recorded in such register as
      a
      Principal under this Agreement for all purposes of this Agreement and the other
      Transaction Documents. 

     

    A
      Conduit
      Principal may, without notice to, or the consent of, Seller or any of its
      Affiliates, assign and grant a security interest in all of its right, title
      and
      interest in, to and under this Agreement and the other Transaction Documents
      to
      any liquidity bank, program support provider or any the collateral trustee
      acting for the benefit of such parties and the holders of such Conduit
      Principal’s Short-Term Notes, and any successor in such capacity, to secure such
      Conduit Principal’s obligations under or in connection with the Short-Term
      Notes, any related Asset Purchase Agreement, any credit agreement provided
      to
      such Conduit Principal by any applicable program support provider, and certain
      other obligations of such Conduit Principal incurred in connection with the
      funding and maintenance of the Transactions hereunder.

     

     

    
      
        
        

      

      
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    23.  AMENDMENTS,
      ETC.

     

    No
      amendment, modification or waiver of any provision of this Agreement or any
      other Transaction Document nor any consent to any failure to comply herewith
      or
      therewith shall in any event be effective unless the same shall be in writing
      and signed by Seller, Agent and the Required Principals, and then such
      amendment, modification, waiver or consent shall be effective only in the
      specific instance and for the specific purpose for which given; provided,
      however,
      that no
      material amendment to this Agreement shall be effective unless (solely to the
      extent required by the documents governing the securitization program of any
      applicable Conduit Principal), the Bank Principal (or its agent) for such
      Conduit Principal shall have received written confirmation from each Rating
      Agency then rating such Conduit Principal’s Short-Term Notes, that such action,
      event or condition will not cause the then current rating of such notes to
      be
      suspended, downgraded or withdrawn; and provided,
      further,
      that no
      amendment, waiver or consent shall, unless in writing and signed by each
      Principal: (a) change (directly or indirectly) the definitions of “Eligible
      Mortgage Loan”, “Portfolio Criteria”, “Purchase Price Percentage” or “Required
      Principals”, (b) reduce fees payable by Seller to any Principal, or delay the
      dates on which such fees are payable, (c) change any Event of Default or
      Servicer Default or (d) change any of the provisions of this Section
      and
      provided,
      further,
      that
      (i) no amendment, waiver or consent shall increase the Commitment of any
      Principal unless in writing and signed by such Principal and (ii) no amendment
      of any definition or any provision contained in this Agreement that specifically
      relates to the rights or obligations of the Custodian under this Agreement,
      if
      the effect of such amendment would materially and adversely affect the
      Custodian, without the Custodian’s prior written consent.

     

    Seller
      shall provide each rating agency then rating any Short-Term Notes with written
      notice of each amendment. The costs and expenses associated with any such
      amendment shall be borne by the party requesting the amendment. 

     

    24.  SEVERABILITY

     

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

     

    25.  BINDING
      EFFECT: GOVERNING LAW

     

    This
      Agreement shall be binding and inure to the benefit of the parties hereto and
      their respective successors and assigns, except that Seller may not assign
      or
      transfer any of its respective rights or obligations under this Agreement or
      any
      other Transaction Document without the prior written consent of Agent. THIS
      AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS
      OF
      THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
      THEREOF (EXCEPT FOR SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
      OBLIGATIONS LAW).

     

     

    
      
        
        

      

      
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    26.  CONSENT
      TO JURISDICTION

     

    SELLER
      HEREBY WAIVES TRIAL BY JURY. SELLER HEREBY IRREVOCABLY CONSENTS TO THE
      NON-EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE
      UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING
      OUT
      OF OR RELATING TO THE TRANSACTION DOCUMENTS IN ANY ACTION OR PROCEEDING. SELLER
      HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION IT MAY HAVE TO, NON-EXCLUSIVE
      PERSONAL JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND
      THE
      UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT
      TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE TRANSACTION
      DOCUMENTS.

     

    27.  SINGLE
      AGREEMENT

     

    Seller,
      Agent and each Principal acknowledge that, and have entered hereinto and will
      enter into each Transaction hereunder and under the other Transaction Documents
      in consideration of and in reliance upon the fact that, all Transactions
      hereunder constitute a single business and contractual relationship and have
      been made in consideration of each other. Accordingly, Seller, Agent and each
      Principal each agree (i) to perform all of its respective obligations in respect
      of each Transaction hereunder, and that a default in the performance of any
      such
      obligations shall constitute a default by it in respect of all Transactions
      hereunder, and (ii) that payments, deliveries and other transfers made by any
      of
      them in respect of any Transaction shall be deemed to have been made in
      consideration of payments, deliveries and other transfers in respect of any
      other Transaction hereunder, and the obligations to make any such payments,
      deliveries and other transfers may be applied against each other and
      netted.

     

    28.  INTENT

     

    Seller,
      each Principal and Agent recognize that each Transaction is a “repurchase
      agreement” as that term is defined in Section 101 of Title 11 of the United
      States Code, as amended (“Bankruptcy
      Code”).
      It is
      understood that Agent’s right to liquidate the Purchased Assets delivered to it
      in connection with the Transactions hereunder or to exercise any other remedies
      pursuant to Section 13 hereof is a contractual right to liquidate such
      Transaction as described in Section 559 of Title 11 of the Bankruptcy
      Code.

     

    29.  NOTICES
      AND OTHER COMMUNICATIONS

     

    Notices
      and other communications provided for in this Agreement or in any other
      Transaction Document shall be in writing and shall be delivered or mailed (or
      in
      the case of telegraphic communication, if by telegram, delivered to the
      telegraph company and, if by telex, telecopy, graphic scanning or other
      telegraphic communications equipment of the sending party hereto, delivered
      by
      such equipment) addressed, if to Agent, to it at Barclays
      Bank PLC, 200 Park Avenue, 5th
      Floor,
      New York, New York 10166, Attention: Pierre Duleyrie, Telephone: (212) 412-2932,
      Telecopy: (212) 412-6846,
      if to
      Seller, to it at 3000 Leadenhall Road, Mail Stop PCLG, Mt. Laurel, NJ 08054,
      Attention:
      Mark Johnson, Telephone: (856) 917-0813,
      Telecopy:
      (856) 917-0107,
      with a copy to William F. Brown, General Counsel, or
      if to
      a Principal, to it at its address set forth beneath its signature to this
      Agreement (or in the agreement pursuant to which it became a party hereunder),
      or such other address as such party may from time to time designate by giving
      written notice to the other parties hereunder. All notices and other
      communications given to any party hereto in accordance with the provisions
      of
      this Agreement shall be deemed to have been given on the fifth Business Day
      after the date when sent by registered or certified mail, postage prepaid,
      return receipt requested, if by mail, or when delivered to the telegraph
      company, charges prepaid, if by telegram, or when receipt is acknowledged,
      if by
      any telecopier or telegraphic communications equipment of the sender, in each
      case addressed to such party as provided in this Section or in accordance with
      the latest unrevoked written direction from such party. Information required
      to
      be delivered hereunder may also be delivered by electronic communication
      pursuant to procedures approved by Agent.

     

     

    
      
        
        

      

      
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    30.  CONFIDENTIALITY

     

    Each
      of
      Agent and the Principals agrees to keep confidential all non-public information
      provided to it by Seller pursuant to this Agreement or any other Transaction
      Document that is designated by such Person as confidential; provided
      that
      nothing herein shall prevent Agent or any Principal from disclosing any such
      information (a) to Agent, any other Principal or any affiliate of any Principal,
      (b) to any participant or assignee (each, a “Transferee”)
      of a
      Principal or prospective Transferee which agrees to comply with the provisions
      of this Section 30, (c) to any of its employees, directors, agents, attorneys,
      accountants and other professional advisors, (d) upon the request or demand
      of
      any governmental or regulatory authority having jurisdiction over it, (e) in
      response to any order of any court or other governmental authority or as may
      otherwise be required pursuant to any requirement of law, (f) if requested
      or
      required to do so in connection with any litigation or similar proceeding,
      (g)
      which has been publicly disclosed other than in breach of this Section 30,
      (h)
      to the National Association of Insurance Commissioners or any similar
      organization or any nationally recognized rating agency that requires access
      to
      information about a Principal’s investment portfolio in connection with ratings
      issued with respect to such Principal’s commercial paper or (i) in connection
      with the exercise of any remedy hereunder or under any other Transaction
      Document.

     

    31.  NO
      PROCEEDINGS; LIMITATION ON PAYMENTS

     

    Seller
      agrees not to cause the filing of a petition in bankruptcy or other similar
      proceeding against any Conduit Principal so long as any Short-Term Notes or
      other senior indebtedness issued by such Conduit Principal shall be outstanding
      or there shall not have elapsed one year plus one day since the last day on
      which any such commercial paper, promissory notes or other senior indebtedness
      shall have been outstanding.

     

    Notwithstanding
      any provisions contained in this Agreement to the contrary, a Conduit Principal
      shall not, and shall be under no obligation to, pay any amount, if any, payable
      by it pursuant to this Agreement or any other Transaction Document unless (i)
      such Conduit Principal has received funds which may be used to make such payment
      and which funds are not required to repay such Conduit Principal’s Short-Term
      Notes when due and (ii) after giving effect to such payment, either (x) such
      Conduit Principal could issue Short-Term Notes to refinance all of its
      outstanding Short-Term Notes (assuming such outstanding Short-Term Notes matured
      at such time) in accordance with the program documents governing such Conduit
      Principal’s securitization program or (y) all of such Conduit Principal’s
      Short-Term Notes are paid in full. Any amount which any Conduit Principal does
      not pay pursuant to the operation of the preceding sentence shall not constitute
      a claim (as defined in Section 101 of the Bankruptcy Code) against or company
      obligation of such Conduit Principal for any such insufficiency unless and
      until
      such Conduit Principal satisfies the provisions of clauses
      (i)
      and
(ii)
      above.
      The provisions of this Section
      31 shall
      survive any termination of this Agreement.

     

     

    
      
        
        

      

      
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    32.  POWER
      OF ATTORNEY

     

    Seller
      hereby authorizes Agent to file such financing statement or statements relating
      to the Purchased Assets without their respective signatures thereon as Agent,
      at
      its option, may deem appropriate. Seller hereby appoints Agent as its agent
      and
      attorney-in-fact to execute any such financing statement or statements in its
      name and to perform all other acts which Agent deems appropriate to perfect
      and
      continue its ownership interest in and/or the security interest granted hereby,
      if applicable, and to protect, preserve and realize upon the Purchased Assets,
      including, but not limited to, the right to endorse notes, complete blanks
      in
      documents, transfer servicing, and sign assignments on behalf of Seller as
      its
      agent and attorney-in-fact. This agency and power of attorney is coupled with
      an
      interest and is irrevocable without Agent’s consent. Seller shall pay the filing
      costs for any financing statement or statements prepared pursuant to this
      Section.

     

    33.  RECORDING
      OF COMMUNICATIONS

     

    Agent,
      each Principal and Seller shall have the right (but not the obligation) from
      time to time to make or cause to be made tape recordings of communications
      between its employees and those of the other party with respect to Transactions.
      Agent, each Principal and Seller consent to the admissibility of such tape
      recordings in any court, arbitration, or other proceedings. The parties agree
      that a duly authenticated transcript of such a tape recording shall be deemed
      to
      be a writing conclusively evidencing the parties’ agreement.

     

    [Signature
      Page Follows]

     

    

    
      
        
        

        
        

      

      
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    IN
      WITNESS WHEREOF, Seller, Agent and each Principal have caused their names to
      be
      signed to this Agreement by their respective officers thereunto duly authorized
      as of the date first above written.

     

    PHH
      MORTGAGE CORPORATION, 

    as
      Seller

    

    By:
      /s/
      Mark E. Johnson

    Name:
      Mark E. Johnson

    Title:
      Vice President & Treasurer

    

    Taxpayer
      ID:

    

    

    
      
        S
          -
5th
          A&R
          Master Repurchase Agreement

        
        

      

      
        S-1

        
          

        

      

      
        
        

      

    

    BARCLAYS
      BANK PLC, 

    as
      Agent

    

    By:
      /s/
      Pierre Duleyrie 

    Name:
      Pierre Duleyrie

    Title:
      Director

    

    

    BARCLAYS
      BANK PLC, 

    as
      a Bank
      Principal 

    

    

    By:
      /s/
      Pierre Duleyrie 

    Name:
      Pierre Duleyrie

    Title:
      Director

    

    200
      Park
      Avenue, 5th Floor

    New
      York,
      New York 10166

    Attention:
      Ms. Mary Logan

    Telephone:
      212-412-3266

    Fax:
      212-412-6846 

    

    

    SHEFFIELD
      RECEIVABLES CORPORATION, 

    as
      a
      Conduit Principal 

    

    By
      BARCLAYS BANK PLC, 

    as
      attorney-in-fact

    

    By:
      /s/
      Janette Lieu 

    Name:
      Janette Lieu

    Title:
      Director

    

    Sheffield
      Receivables Corporation

    c/o
      Barclays Bank PLC

    200
      Park
      Avenue, 5th
      Floor

    New
      York,
      New York 10166

    Attention:
      Ms. Mary Logan

    Telephone:
      212-412-3266

    Fax:
      212-412-6846

    

    Commitment:
      $750,000,000

    

    

    
      
        
          S
            -
5th
            A&R
            Master Repurchase Agreement

        

        
        

      

      
        S-2

        
          

        

      

      
        
        

        
          

        

      

    

     

    ANNEX
      I

     

    BUYER
      ACTING AS AGENT; FUNDINGS BY PRINCIPALS; ETC.

     

    This
      Annex I forms a part of the Fifth Amended and Restated Master Repurchase
      Agreement, dated as of October 30, 2006 (as amended, supplemented or otherwise
      modified, the “Agreement”)
      among
      Barclays Bank PLC, acting as buyer on behalf of, and as agent for, the
      Principals from time to time party thereto, the Principals from time to time
      party thereto and Seller. This Annex I sets forth certain terms and conditions
      governing all Transactions in which Agent is acting as buyer on behalf of,
      and
      as agent for, the Principals. Capitalized terms used but not defined in this
      Annex I shall have the meanings ascribed to them in the Agreement.

     

    (i)  Authorization
      and Action.
      Each
      Principal hereby appoints and authorizes Agent to take such action as agent
      on
      its behalf and to exercise such powers under this Agreement as are delegated
      to
      Agent by the terms hereof, together with such powers as are reasonably
      incidental thereto. Agent shall not have any duties other than those expressly
      set forth in the Transaction Documents, and no implied obligations or
      liabilities shall be read into any Transaction Document, or otherwise exist,
      against Agent. Agent does not assume, nor shall it be deemed to have assumed,
      any obligation to, or relationship of trust or agency with, Seller, Servicer,
      any Conduit Principal or any Bank Principals. Notwithstanding any provision
      of
      this Agreement or any other Transaction Document to the contrary, in no event
      shall Agent ever be required to take any action which exposes Agent to personal
      liability or which is contrary to any provision of any Transaction Document
      or
      Law.

     

    (ii)  Agent’s
      Reliance, Etc.
      Neither
      Agent nor any of its directors, officers, agents or employees shall be liable
      for any action taken or omitted to be taken by it or them as Agent under or
      in
      connection with this Agreement (including, without limitation, Agent’s
      servicing, administering or collecting Mortgage Loans in the event it replaces
      Servicer in such capacity pursuant to the Transaction Documents), in the absence
      of its or their own gross negligence or willful misconduct. Without limiting
      the
      generality of the foregoing, Agent: (a) may consult with legal counsel
      (including counsel for Seller or Servicer), independent certified public
      accountants and other experts selected by it and shall not be liable for any
      action taken or omitted to be taken in good faith by it in accordance with
      the
      advice of such counsel, accountants or experts; (b) makes no warranty or
      representation to any Conduit Principal or Bank Principal (whether written
      or
      oral) and shall not be responsible to any Conduit Principal or Bank Principal
      for any statements, warranties or representations (whether written or oral)
      made
      in or in connection with this Agreement or any other Transaction Document;
      (c)
      shall not have any duty to ascertain or to inquire as to the performance or
      observance of any of the terms, covenants or conditions of this Agreement on
      the
      part of Seller or Servicer to inspect the property (including the books and
      records) of any such Person; (d) shall not be responsible to any Conduit
      Principal or Bank Principal for the due execution, legality, validity,
      enforceability, genuineness, sufficiency or value of this Agreement or any
      other
      instrument or document furnished pursuant hereto; and (e) shall incur no
      liability under or in respect of this Agreement by acting upon any notice
      (including notice by telephone), consent, certificate or other instrument or
      writing (which may be by telecopier or telex) believed by it to be genuine
      and
      signed or sent by the proper party or parties.

     

     

     

    
      
        
        

      

      
        Annex
          I-1

        
          

        

      

      
        
        

      

    

     

     

    (iii)  Barclays
      and Affiliates.
      The
      obligation of Barclays as a Bank Principal to make purchases under this
      Agreement may be satisfied by Barclays or any of its Affiliates. With respect
      to
      any mortgage loan or interest therein owned by it, Barclays shall have the
      same
      rights and powers under this Agreement as any Bank Principal. Barclays and
      any
      of its Affiliates may generally engage in any kind of business with Seller,
      or
      any Borrower, any of their respective Affiliates and any Person who may do
      business with or own securities of any of the foregoing or any of their
      respective Affiliates, all as if Barclays were not Agent and Barclays were
      not a
      Bank Principal and without any duty to account therefor to any of the Conduit
      Principals or the Bank Principals.

     

    (iv)  Indemnification
      of Agent.
      Each
      Bank Principal agrees to indemnify Agent (to the extent not reimbursed by Seller
      or Servicer), ratably according to the respective Commitment of such Bank
      Principal, from and against any and all liabilities, obligations, losses,
      damages, penalties, actions, judgments, suits, costs, expenses or disbursements
      of any kind or nature whatsoever which may be imposed on, incurred by, or
      asserted against Agent in any way relating to or arising out of this Agreement
      or any other Transaction Document or any action taken or omitted by Agent under
      this Agreement or any other Transaction Document; provided
      that no
      Bank Principal shall be liable for any portion of such liabilities, obligations,
      losses, damages, penalties, actions, judgments, suits, costs, expenses or
      disbursements resulting from Agent’s gross negligence or willful
      misconduct.

     

    (v)  Delegation
      of Duties.
      Agent
      may execute any of its duties through agents or attorneys-in-fact and shall
      be
      entitled to advice of counsel concerning all matters pertaining to such duties.
      Agent shall not be responsible for the negligence or misconduct of any agents
      or
      attorneys-in-fact selected by it with reasonable care.

     

    (vi)  Action
      or Inaction by Agent.
      Agent
      shall in all cases be fully justified in failing or refusing to take action
      under any Transaction Document unless it shall first receive such advice or
      concurrence of the Principals or the Required Principals, as the case may be,
      and assurance of its indemnification by the Bank Principals, as it deems
      appropriate. Agent shall in all cases be fully protected in acting, or in
      refraining from acting, under this Agreement or any other Transaction Document
      in accordance with a request or at the direction of the Principals or the
      Required Principals, as the case may be, and such request or direction and
      any
      action taken or failure to act pursuant thereto shall be binding upon all
      Conduit Principals and all Bank Principals. The Principals and Agent agree
      that
      unless any action to be taken by Agent under a Transaction Document (i)
      specifically requires the advice or concurrence of all of the Principals or
      (ii)
      may be taken by Agent alone or without any advice or concurrence of any
      Principal, then Agent may take action based upon the advice or concurrence
      of
      the Required Principals.

     

     

    
      
        
        

      

      
        Annex
          I-2

        
          

        

      

      
        
        

      

    

     

     

    (vii)  Notice
      of Events; Action by Agent.
      Agent
      shall not be deemed to have knowledge or notice of the occurrence of any
      Unmatured Event of Default or Event of Default or of any Servicer Default unless
      Agent has received notice from any Principal, Seller or Servicer stating that
      an
      Unmatured Event of Default, an Event of Default or a Servicer Default has
      occurred under the Transaction Documents and describing such Unmatured Event
      of
      Default, an Event of Default or a Servicer Default. If Agent receives such
      a
      notice, it shall promptly give notice thereof to each Principal. Agent shall
      take such action concerning an Unmatured Event of Default, an Event of Default
      or a Servicer Default or any other matter hereunder as may be directed by the
      Principals or the Required Principals, as the case may be (subject to the other
      provisions of this Annex), but until Agent receives such directions, Agent
      may
      (but shall not be obligated to) take such action, or refrain from taking such
      action, as Agent deems advisable and in the best interests of the
      Principals.

     

    (viii)  Non-Reliance
      on Agent and Other Parties.
      Each
      Principal expressly acknowledges that neither Agent nor any of its directors,
      officers, agents or employees has made any representations or warranties to
      it
      and that no act by Agent hereafter taken, including any review of the affairs
      Seller or Servicer, shall be deemed to constitute any representation or warranty
      by Agent. Each Principal represents and warrants to Agent that, independently
      and without reliance upon Agent or any other Principal and based on such
      documents and information as it has deemed appropriate, it has made and will
      continue to make its own appraisal of and investigation into the business,
      operations, property, prospects, financial and other conditions and
      creditworthiness of Seller and Servicer and the Mortgage Loans and its own
      decision to enter into this Agreement and to take, or omit, action under any
      Transaction Document. Except for items expressly required to be delivered under
      any Transaction Document by Agent to any Principal, Agent shall not have any
      duty or responsibility to provide any Principal with any information concerning
      Seller or Servicer or any of their Affiliates that comes into the possession
      of
      Agent or any of its directors, officers, agents, employees, attorneys-in-fact
      or
      Affiliates.

     

    (ix)  Successor
      Agent.
      Agent
      may, upon at least thirty (30) days’ notice to Seller, Servicer and each
      Principal, resign as Agent. Except as provided below, such resignation shall
      not
      become effective until a successor Agent is appointed by the Required Principals
      and has accepted such appointment. If no successor Agent shall have been so
      appointed by the Required Principals, within thirty (30) days after the
      departing Agent’s giving of notice of resignation, the departing Agent may, on
      behalf of the Required Principals, appoint a successor Agent, which successor
      Agent shall have short-term debt ratings of at least A-1 from S&P and P-1
      from Moody’s and shall be either a commercial bank having a combined capital and
      surplus of at least $250,000,000 or an Affiliate of such an institution and
      (so
      long as no Event of Default has occurred and is continuing hereunder) shall
      be
      acceptable to Seller. If no successor Agent shall have been so appointed by
      the
      Required Principals within sixty (60) days after the departing Agent’s giving of
      notice of resignation, the departing Agent may, on behalf of the Required
      Principals, petition a court of competent jurisdiction to appoint a successor
      Agent, which successor Agent shall have short-term debt ratings of at least
      A-1
      from S&P and P-1 from Moody’s, and shall be either a commercial bank having
      a combined capital and surplus of at least $250,000,000 or an Affiliate of
      such
      an institution. Upon such acceptance of its appointment as Agent hereunder
      by a
      successor Agent, such successor Agent shall succeed to and become vested with
      all the rights and duties of the resigning Agent, and the resigning Agent shall
      be discharged from its duties and obligations under the Transaction Documents.
      After any resigning Agent’s resignation hereunder, the indemnification
      provisions of this Agreement and this Annex shall inure to its benefit as to
      any
      actions taken or omitted to be taken by it while it was Agent.

     

     

    
      
        
        

      

      
        Annex
          I-3

        
          

        

      

      
        
        

      

    

     

     

    (x)  Interpretation
      of Terms.
      All
      references to a “Agent” in the Agreement shall, subject to the provisions of
      this Annex (including, among other provisions, the limitations on Agent’s
      liability), be construed to reflect that (i) each Principal shall have, in
      connection with any Transaction or Transactions entered into by Agent on its
      behalf, the rights, responsibilities, privileges and obligations of a “Agent”
directly entering into such Transaction or Transactions with Seller under the
      Agreement, and (ii) Principals have designated Agent as their sole agent for
      performance of Agent’s obligations to Seller and for receipt of performance by
      Agent of its obligations to Seller in connection with any Transaction or
      Transactions under the Agreement (including, among other things, as Agent for
      each Principal in connection with transfers of securities, cash or other
      property and as agent for giving and receiving all notices under the
      Agreement).

     

    (xi)  Transactions.
      (A)
      Agent shall promptly forward to each Principal each Transaction Notice received
      by Agent pursuant to Section 3(a). Each Conduit Principal shall promptly notify
      Agent and its Bank Principal whether it has determined in its sole discretion
      to
      fund its Pro Rata Share of the related Purchase Price. If any Conduit Principal
      has determined not to make its Pro Rata Share of the related Purchase Price,
      its
      related Bank Principal shall make such amount available. On the date of each
      Transaction, the applicable Conduit Principals and/or Bank Principals shall,
      upon satisfaction of the applicable conditions set forth Section 8, make
      available an aggregate amount equal to its Pro Rata Share of the Purchase Price
      for the related Transaction to the Funding Account, which is specified in the
      related Transaction Notice. Notwithstanding the foregoing, no Principal shall
      be
      obligated to fund any Transaction under this Agreement at any time if the result
      would be to exceed such the related Bank Principal’s Commitment. Each Bank
      Principal’s obligation shall be several, such that the failure of any Bank
      Principal to make available to Agent any funds in connection with any requested
      Transaction shall not relieve any other Bank Principal of its obligation, if
      any, hereunder to make funds available on the requested Purchase Date,
      (it being understood,
      that no
      Bank Principal shall be responsible for the failure of any other Bank Principal
      to make funds available in connection with any Transaction
      hereunder).

     

    (xii)  Addition
      of Principals.
      Seller
      may, with the written consent of Agent and the Required Principals, add
      additional Persons as Principals or request an existing Principal to increase
      its Commitment; provided,
      however,
      that
      the Commitment of any existing Principal may only be increased with the prior
      written consent of such Principal. Each new Principal shall become a party
      hereto, by executing and delivering to Agent, an assumption agreement in form
      and substance satisfactory to Agent and such new Principals and consented to
      by
      Seller.

     

     

    

     

    
      
        
           

        

        
        

      

      
        Annex
          I-4

        
          

        

      

      
        
        

        
          

        

      

    

    ANNEX
      II

    ELIGIBILITY
      REPRESENTATIONS

     

    This
      Annex II forms a part of the Fifth Amended and Restated Master Repurchase
      Agreement, dated as of October 30, 2006 (as amended, supplemented or otherwise
      modified, the “Agreement”)
      among
      Barclays Bank PLC, acting as buyer on behalf of, and as agent for, the
      Principals from time to time party thereto, the Principals from time to time
      party thereto and Seller. This Annex II sets forth certain terms and conditions
      governing all Transactions in which Agent is acting as buyer on behalf of,
      and
      as agent for, the Principals. Capitalized terms used but not defined in this
      Annex II shall have the meanings ascribed to them in the Agreement.

     

    As
      to
      each Eligible Mortgage Loan, Seller hereby represents and warrants to Agent
      and
      the Principals that as of each applicable Purchase Date and (excluding clause
      (d) below) as of the date of the sale of each Eligible Mortgage
      Loan:

     

    (a)  Eligibility
      of Mortgage Loans.
      The
      mortgage loan is an Eligible Mortgage Loan. 

     

    (b)  Eligible
      Mortgage Loans as Described.
      The
      information set forth in each Daily Servicer Report is complete, true and
      correct in all material respects.

     

    (c)  Valid
      Lien.
      The
      Mortgage is either a (i) valid first lien on the Mortgaged Property or (ii)
      valid second lien on the Mortgaged Property. Except for Mortgaged Property
      that
      is the subject of a HELOC or a Closed End Second Mortgage Loan, the Mortgaged
      Property is free and clear of all prior liens and encumbrances and no rights
      or
      condition may exist that could give rise to such liens, except for liens for
      real estate taxes and special assessments not yet due and payable. The Mortgage
      is a legal, valid and binding obligation of the related borrower, enforceable
      according to its terms and conditions, except that (i) the enforceability
      thereof may be limited by bankruptcy, insolvency, moratorium, receivership
      and
      other similar laws relating to creditors’ rights generally and (ii) the remedy
      of specific performance and injunctive and other forms of equitable relief
      may
      be subject to equitable defenses and to the discretion of the court before
      which
      any proceeding therefor may be brought, and free from any right of set-off,
      counterclaim or other claim or defense. No part of the Mortgaged Property has
      been released from the Mortgage. The terms of the Mortgage have not in any
      material manner been modified, amended or in any way waived or changed, except
      as stated in a written modification agreement that is acceptable to and
      delivered to Seller and Servicer. 

     

    Any
      security agreement, chattel mortgage, Home Equity Line Agreement or equivalent
      document related to and delivered in connection with the Eligible Mortgage
      Loan
      establishes and creates a valid, subsisting and enforceable first lien or second
      lien, as applicable, and first priority security interest on the property
      described therein and Seller has full right to sell and assign the same to
      Agent. The Mortgaged Property was not, as of the date of origination of the
      Eligible Mortgage Loan (except for HELOCs and Closed End Second Mortgage Loans),
      subject to a mortgage, deed of trust, deed to secure debt, or other security
      instrument creating a lien senior to the lien of the Mortgage.

     

    (d)  HELOCs
      and Closed End Second Mortgage Loans.
      Each
      HELOC and Closed End Second Mortgage Loan has been conveyed to Agent free and
      clear of any charge lien, mortgage, pledge, claim, security interest or other
      encumbrance.

     

     

    
      
        
        

      

      
        Annex
          II-1

        
          

        

      

      
        
        

      

    

     

     

    (e)  Principalship.
      Seller
      is the sole owner of record and holder of the Eligible Mortgage Loan. The
      Eligible Mortgage Loan is not assigned or pledged, and Seller has good and
      marketable title thereto, and has full right to transfer and sell the Eligible
      Mortgage Loan to Agent free and clear of any encumbrance, equity, participation
      interest, lien, pledge, charge, claim or security interest, and has full right
      and authority subject to no interest or participation of, or agreement with,
      any
      other party, to sell and assign each Eligible Mortgage Loan pursuant to the
      related Transaction Notice.

     

    (f)  No
      Additional Collateral.
      For
      Purchased Assets other than Additional Collateral Mortgage Loans, the Mortgage
      Note is not and has not been secured by any collateral except the lien of the
      corresponding Mortgage and the security interest of any applicable security
      agreement or chattel mortgage referred to in clause (c) above.

     

    (g)  Conformance
      with Underwriting Standards.
      The
      Eligible Mortgage Loan was underwritten in accordance with (i) Seller’s
      underwriting standards in effect on the date of origination of such Eligible
      Mortgage Loan, and (ii) the Guidelines, if applicable.

     

    (h)  Payments
      Current.
      As of
      the Purchase Date, no payments due with respect to the Eligible Mortgage Loan
      are 30 days or more past their contractual due date.

     

    (i)  No
      Borrower Bankruptcy; Delinquencies.
      To the
      best of Seller’s knowledge and belief, no Borrower is the subject of a
      bankruptcy or similar proceeding. All payments required to be made up to the
      Purchase Date for each Eligible Mortgage Loan under the terms of the related
      Mortgage Note have been made. As of the Purchase Date, no payment required
      under
      any such purchased Eligible Mortgage Loan has ever been delinquent more than
      30
      days.

     

    (j)  No
      Outstanding Charges.
      There
      are no defaults in complying with the terms of the Mortgages, and all taxes,
      governmental assessments, insurance premiums, water, sewer and municipal
      charges, leasehold payments or ground rents which previously became due and
      owing have been paid, or an escrow of funds has been established in an amount
      sufficient to pay for every such item which remains unpaid and which has been
      assessed but is not yet due and payable. Seller has not advanced funds, or
      induced, solicited or knowingly received any advance of funds by a party other
      than the Borrower, directly or indirectly, for the payment of any amount
      required under the Eligible Mortgage Loan, except for interest accruing from
      the
      date of the Mortgage Note or date of disbursement of the Eligible Mortgage
      Loan
      proceeds, whichever is greater, to the day which precedes by one month the
      Due
      Date of the first installment of principal and interest.

     

    (k)  Original
      Terms Unmodified.
      The
      terms of the Mortgage Note and Mortgage have not been impaired, waived, altered
      or modified in any material respect (i) from the date of final endorsement
      of
      the Mortgage Note by HUD with respect to FHA Loans, and (ii) from the date
      of
      origination for all other mortgage loans, except by a written instrument which
      has been recorded, if necessary to protect the interest of Agent and which
      has
      been delivered to the Custodian. The substance of any such waiver, alteration
      or
      modification has been approved by the issuer of any related PMI Policy and
      the
      title insurer, to the extent required by the policy, and by the FHA for the
      related FHA Loans, and the VA for the related VA Loans, and its terms are
      reflected on the related Daily Servicer Report. No Borrower has been released,
      in whole or in part, except in connection with an assumption agreement approved
      by the issuer of any related PMI Policy and the title insurer, to the extent
      required by the policy, and by the FHA for the related FHA Loans, and the VA
      for
      the related VA Loans, and which assumption agreement is part of the Mortgage
      Loan File and the terms of which are reflected in the related Daily Servicer
      Report.

     

     

    
      
        
        

      

      
        Annex
          II-2

        
          

        

      

      
        
        

      

    

     

     

    (l)  No
      Defenses.
      The
      Eligible Mortgage Loan is not subject to any right of rescission, set-off,
      counterclaim or defense, including without limitation the defense of usury,
      nor
      will the operation of any of the terms of the Mortgage Note or the Mortgage,
      or
      the exercise of any right thereunder, render either the Mortgage Note or the
      Mortgage unenforceable, in whole or in part, or, with respect to FHA Loans,
      impair Agent’s or any Principal’s ability to collect full insurance benefits
      under the FHA Mortgage Insurance Contract, without indemnity to HUD, or, with
      respect to VA Loans, impair Agents or any Principal’s ability to collect full
      value under the VA Loan Guaranty Certificate upon the Borrower’s default, or
      subject to any right of rescission, set-off, counterclaim or defense, including
      without limitation the defense of usury, and no such right of rescission,
      set-off, counterclaim or defense has been asserted with respect thereto, and
      no
      Borrower was a debtor in any state or federal bankruptcy or insolvency
      proceeding at the time the Eligible Mortgage Loan was originated.

     

    (m)  Hazard
      Insurance.
      Pursuant to the terms of the Mortgage, all buildings or other improvements
      upon
      the Mortgaged Property are insured by (i) an FHA approved insurer with respect
      to each FHA Loan, (ii) a VA approved insurer with respect to each VA Loan or
      (iii) a generally acceptable insurer against loss by fire and extended coverage
      and coverage for such other hazards as are customary in the area where the
      Mortgaged Property is located pursuant to insurance policies conforming to
      the
      requirements of the Servicing Agreement and of FHA and VA, if applicable. If
      upon origination of the Eligible Mortgage Loan, the Mortgaged Property was
      in an
      area identified in the Federal Register by the Federal Emergency Management
      Agency as having special flood hazards (and such flood insurance has been made
      available) a flood insurance policy meeting the requirements of the current
      guidelines of the Flood Insurance Administration is in effect which policy
      conforms to the requirements of the Servicing Agreement and of FHA and VA,
      if
      applicable. All individual insurance policies contain a standard mortgagee
      clause naming Seller and its successors and assigns as mortgagee, and all
      premiums thereon have been paid. The Mortgage obligates the Borrower thereunder
      to maintain the hazard insurance policy at the Borrower’s cost and expense, and
      on the Borrower’s failure to do so, authorizes the holder of the Mortgage to
      obtain and maintain such insurance at such Borrower’s cost and expense, and to
      seek reimbursement therefor from the Borrower. Where required by state law
      or
      regulation, the Borrower has been given an opportunity to choose the carrier
      of
      the required hazard insurance, provided the policy is not a “master” or
“blanket” hazard insurance policy covering the common facilities of a planned
      unit development. The hazard insurance policy is the valid and binding
      obligation of the insurer and is in full force and effect. Seller has not
      engaged in, and has no knowledge of the Borrower’s having engaged in, any act or
      omission which would impair the coverage of any such policy, the benefits of
      the
      endorsement provided for herein, or the validity and binding effect of either.
      

     

    (n)  Compliance
      with Laws.
      Any
      applicable requirements of federal, state or local law including, without
      limitation, usury, truth-in-lending, real estate settlement procedures, consumer
      credit protection, equal credit opportunity or disclosure laws and FHA
      Regulations and VA Regulations applicable to the Eligible Mortgage Loan have
      been complied with in all material respects.

     

     

     

    
      
        
        

      

      
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          II-3

        
          

        

      

      
        
        

      

    

     

    (o)  No
      Satisfaction of Mortgage; No Waiver.
      The
      Mortgage has not been satisfied, cancelled, subordinated or rescinded, in whole
      or in part, and the Mortgaged Property has not been released from the lien
      of
      the Mortgage, in whole or in part, nor has any instrument been executed that
      would effect any such release, cancellation, subordination or rescission. Seller
      has not waived the performance by the Borrower of any action, if the Borrower’s
      failure to perform such action would cause the Eligible Mortgage Loan to be
      in
      default, nor has Seller waived any default resulting from any action or inaction
      by the Borrower.

     

    (p)  Location
      and Type of Mortgaged Property.
      The
      Mortgaged Property is located in the state identified in the applicable Daily
      Servicer Report and consists of a parcel of real property with a detached single
      family residence erected thereon, or a two- to four-family dwelling, or an
      individual condominium unit, or an individual unit in a planned unit
      development; provided, however, that any condominium unit or planned unit
      development shall conform with the applicable FHA and VA requirements regarding
      such dwellings, if applicable, and no residence or dwelling is a mobile home.
      To
      the best of Seller’s knowledge and belief, no more than 30% of the Mortgaged
      Property is used for commercial purposes.

     

    (q)  Validity
      of Mortgage Documents.
      The
      Mortgage Note and the Mortgage are genuine, and each is the legal, valid and
      binding obligation of the maker thereof enforceable in accordance with its
      terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
      moratorium and similar laws of general applicability relating to or affecting
      creditors’ rights and to general equity principles. All parties to the Mortgage
      Note and the Mortgage and any other related agreement had legal capacity to
      enter into the Eligible Mortgage Loan and to execute and deliver the Mortgage
      Note and the Mortgage and any other related agreement, and the Mortgage Note
      and
      the Mortgage have been duly and properly executed by such parties. To the best
      of Seller’s knowledge and belief, the documents, instruments and agreements
      submitted for loan underwriting were not falsified and contain no untrue
      statement of material fact or omit to state a material fact required to be
      stated therein or necessary to make the information and statements therein
      not
      materially misleading. No fraud was committed in connection with the origination
      of the Eligible Mortgage Loan.

     

    (r)  Full
      Disbursement of Proceeds.
      Each
      Eligible Mortgage Loan has been closed and its proceeds have been fully
      disbursed, excluding HELOCs, 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 Eligible 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
      Mortgage Note or Mortgage.

     

    (s)  Doing
      Business.
      All
      parties which have had any interest in the Eligible Mortgage Loan, whether
      as
      mortgagee, assignee, pledge or otherwise, are (or, during the period in which
      they held and disposed of such interest, were) (1) in compliance with any
      applicable licensing requirements of the laws of the state wherein the Mortgaged
      Property is located, and (2) organized under the laws of such state, or (3)
      qualified to do business in such state, or (4) not required to qualify to do
      business in such state.

     

     

    
      
        
        

      

      
        Annex
          II-4

        
          

        

      

      
        
        

      

    

     

     

    (t)  Loan-to-Value
      Ratio; PMI Policy.
      Except
      where the Guidelines exempt certain Eligible Mortgage Loans from this
      requirement, the original Loan-to-Value Ratio of the Eligible Mortgage Loan
      other than an FHA Loan, a VA Loan, an Uninsured Loan or a HELOC or a Closed
      End
      Second Mortgage Loan either was not more than 80% or the excess over 80% is
      and
      will be insured as to payment defaults (other than for Landscape Loans) by
      a PMI
      Policy until the Loan-to-Value Ratio of such Eligible Mortgage Loan is reduced
      to 80%. All material provisions of such PMI Policy have been and are being
      complied with, such policy is in full force and effect, and all premiums due
      thereunder have been paid. No action, inaction, or event has occurred and no
      state of facts exists that has, or will result in the exclusion from, denial
      of,
      or defense to coverage. Any Eligible Mortgage Loan subject to a PMI Policy
      obligates the Borrower thereunder to maintain the PMI Policy and to pay all
      premiums and charges in connection therewith. The Mortgage Interest Rate for
      the
      Eligible Mortgage Loan as set forth on the Daily Servicer Report is net of
      any
      such insurance premium.

     

    (u)  Combined
      Loan-to-Value Ratio:
      No
      HELOC or Closed End Second Mortgage Loan has a Combined Loan-to-Value Ratio
      in
      excess of 100% at the time of origination or purchase by Seller. 

     

    (v)  Title
      Insurance.
      Except
      where the Guidelines or Seller’s underwriting guidelines exempt certain Eligible
      Mortgage Loans from this requirement, each Eligible Mortgage Loan is covered
      by
      (i) an attorney’s opinion of title and abstract of title, the form and substance
      of which is acceptable to mortgage lending institutions making mortgage loans
      in
      the area where the Mortgaged Property is located; (ii) an ALTA lender’s title
      insurance policy or other generally acceptable form of policy of insurance
      acceptable to FNMA or FHLMC, issued by a title insurer acceptable to FNMA or
      FHLMC and qualified to do business in the jurisdiction where the Mortgaged
      Property is located or if applicable; (iii) an attorney’s opinion of title and
      abstract of title, the form and substance of which is acceptable to the FHA
      with
      respect to FHA Loans and the VA with respect to VA Loans; or (iv) an ALTA
      lender’s title insurance policy or other generally acceptable form of policy of
      insurance acceptable to (a) the FHA with respect to the FHA Loans and (b) the
      VA
      with respect to the VA Loans, and each such title insurance policy is issued
      by
      a title insurer acceptable to FHA or VA, as the case may be, and qualified
      to do
      business in the jurisdiction where the Mortgaged Property is located, insuring
      Seller, its successors and assigns, as to the first priority lien of the
      Mortgage in the original principal amount of the Eligible Mortgage Loan, and
      against any loss by reason of the invalidity or unenforceability of the lien.
      Additionally, such lender’s title insurance policy affirmatively insures ingress
      and egress, and against encroachments by or upon the Mortgaged Property or
      any
      interest therein. Seller is the sole insured of such lender’s title insurance
      policy, and such lender’s title insurance policy is in full force and effect and
      will be in force and effect upon the consummation of the transactions
      contemplated by this Agreement. No claims have been made under such lender’s
      title insurance policy, and no prior holder of the Mortgage, including Seller,
      has done, by act or omission, anything which would impair the coverage of such
      lender’s title insurance policy. 

     

    (w)  No
      Defaults.
      To the
      best of Seller’s knowledge and belief, there is no default, breach, violation or
      event of acceleration existing under the Mortgage or the Mortgage Note and
      no
      event which, with the passage of time or with notice and the expiration of
      any
      grace or cure period, would constitute a default, breach, violation or event
      of
      acceleration, and neither Seller nor its predecessors have waived any default,
      breach, violation or event of acceleration.

     

     

    
      
        
        

      

      
        Annex
          II-5

        
          

        

      

      
        
        

      

    

     

    (x)  No
      Mechanics’ Liens.
      There
      are no mechanics’ or similar liens or claims which have been filed for work,
      labor or material (and no rights are outstanding that under the law could give
      rise to such liens) affecting the related Mortgaged Property which are or may
      be
      liens prior to, or equal or coordinate with, the lien of the related
      Mortgage.

     

    (y)  Location
      of Improvements; No Encroachments.
      All
      improvements which were considered in determining the Appraised Value of the
      Mortgaged Property lay wholly within the boundaries and building restriction
      lines of the Mortgaged Property and, to the best of Seller’s knowledge and
      belief, no improvements on adjoining properties encroach upon the Mortgaged
      Property. No improvement located on or being part of the Mortgaged Property
      is
      in violation of any applicable zoning law or regulation.

     

    (z)  Customary
      Provisions.
      The
      Mortgage contains customary and enforceable provisions such as to render the
      rights and remedies of the holder thereof adequate for the realization against
      the Mortgaged Property of the benefits of the security provided thereby,
      including, (i) in the case of a Mortgage designated as a deed of trust, by
      trustee’s sale, and (ii) otherwise by judicial foreclosure. Upon default by a
      Borrower on an Eligible Mortgage Loan and foreclosure on, or trustee’s sale of,
      the Mortgaged Property pursuant to the proper procedures, the holder of the
      Eligible Mortgage Loan will be able to deliver good and marketable title to
      the
      Mortgaged Property. There is no homestead or other exemption available to a
      Borrower which would interfere with the right to sell the Mortgaged Property
      at
      a trustee’s sale or the right to foreclose the Mortgage.

     

    (aa)  Occupancy
      of the Mortgaged Property.
      As of
      the Purchase Date, the Mortgaged Property is lawfully occupied under applicable
      law. All inspections, licenses and certificates required to be made or issued
      with respect to all occupied portions of the Mortgaged Property and, with
      respect to the use and occupancy of the Eligible Mortgage Loan, including but
      not limited to certificates of occupancy and fire underwriting certificates,
      have been made or obtained from the appropriate authorities. All of the
      Borrowers represented at the time of origination of the related Eligible
      Mortgage Loan that any such Borrower would occupy the Mortgaged Property as
      the
      Borrower’s primary residence, other than with respect to Non-Primary Residence
      Mortgage Loans.

     

    (bb)  Deeds
      of Trust.
      If the
      Mortgage constitutes a deed of trust, a trustee, duly qualified under applicable
      law to serve as such, has been properly designated and currently so serves
      and
      is named in the Mortgage, and no fees or expenses are or will become payable
      by
      the Principals to the trustee under the deed of trust, except in connection
      with
      a trustee’s sale after default by the Borrower.

     

    (cc)  Acceptable
      Investment.
      Seller
      has no knowledge of any circumstances or conditions with respect to the
      Mortgage, the Mortgaged Property, the Borrower or the Borrower’s credit-standing
      not reflected in the representations set forth herein, or in the documents
      in
      the Mortgage Loan File, that could reasonably be expected to cause private
      institutional investors to regard the Eligible Mortgage Loan as an unacceptable
      investment or cause the Eligible Mortgage Loan to become delinquent or
      materially adversely affect the value or the marketability of the Eligible
      Mortgage Loan.

     

    (dd)  Delivery
      of Mortgage Notes.
      With
      the exception of Wet Funded Loans, the Mortgage Note endorsed in blank or to
      Agent (on behalf of the Principals) required to be delivered for the Eligible
      Mortgage Loan by Seller under the Custodial Agreement has been delivered to
      the
      Custodian on or prior to Purchase Date. With respect to Wet Funded Loans, the
      Mortgage Note will be delivered as soon as practicable, but in no event later
      than 30 days from the Purchase Date.

     

     

    
      
        
        

      

      
        Annex
          II-6

        
          

        

      

      
        
        

      

    

     

     

    (ee)  Transfer
      of Eligible Mortgage Loans.
      The
      Assignment of Mortgage is in recordable form and is acceptable for recording
      under the laws of the jurisdiction in which the Mortgaged Property is
      located.

     

    (ff)  Due
      on
      Sale.
      The
      Mortgage contains an enforceable provision for the acceleration of the payment
      of the unpaid principal balance of the Eligible Mortgage Loan if the Mortgaged
      Property is sold or transferred without the prior written consent of the
      Mortgagee thereunder. 

     

    (gg)  No
      Option Arm Loans.
      No
      Eligible Mortgage Loan is an Option Arm Loan.

     

    (hh)  Mortgaged
      Property Undamaged.
      There
      is no proceeding pending or, to the best of Seller’s knowledge and belief,
      threatened for the total or partial condemnation of the Mortgaged Property.
      The
      Mortgaged Property is undamaged by waste, fire, earthquake or earth movement,
      windstorm, flood, tornado or other casualty so as to affect materially adversely
      the value of the Mortgaged Property as security for the Eligible Mortgage Loan
      or the use for which the premises were intended.

     

    (ii)  Collection
      Practices; Escrow Deposits; Interest Rate Adjustments.
      The
      origination and collection practices used with respect to the Eligible Mortgage
      Loan have been in accordance with Accepted Servicing Practices, and have been
      in
      compliance in all material respects with applicable laws and regulations. With
      respect to escrow deposits and Escrow Payments, all such payments are in the
      possession of Seller and there exist no deficiencies in connection therewith
      for
      which customary arrangements for repayment thereof have not been made or for
      which repayment is not provided for in the Mortgage. All Escrow Payments have
      been collected in compliance with applicable state and federal law. An escrow
      of
      funds is not prohibited by applicable law and has been established in an amount
      sufficient to pay for each applicable item which remains unpaid and which has
      been assessed but is not yet due and payable. No escrow deposits or Escrow
      Payments or other charges or payments due Seller have been capitalized under
      the
      Mortgage or the Mortgage Note. All interest rate adjustments in respect of
      Eligible Mortgage Loans have been made in strict compliance with state and
      federal law and the terms of the related Mortgage and Mortgage
      Note.

     

    (jj)  Appraisal.
      Except
      where the Guidelines or Seller’s underwriting standards exempt certain Eligible
      Mortgage Loans from this requirement, the Mortgage Loan File contains an
      appraisal of the related Mortgaged Property signed prior to the approval of
      the
      Eligible Mortgage Loan application by a qualified appraiser, duly appointed
      by
      or acceptable to Seller, who had no interest, direct or indirect in the
      Mortgaged Property or in any loan made on the security thereof; and whose
      compensation is not affected by the approval or disapproval of the Eligible
      Mortgage Loan, and the appraisal and appraiser both satisfy the requirements
      of
      Title XI of the Federal Institutions Reform, Recovery, and Enforcement Act
      of 1989 and the regulations promulgated thereunder, all as in effect on the
      date
      that the Eligible Mortgage Loan was originated and the appraiser and appraisal
      both satisfy requirements of the FHA or VA, if applicable. 

     

     

    
      
        
        

      

      
        Annex
          II-7

        
          

        

      

      
        
        

      

    

     

     

    (kk)  Soldiers’
      and Sailors’ Relief Act.
      The
      Borrower has not notified Seller and Seller has no knowledge of any relief
      requested by the Borrower under the Soldiers’ and Sailors’ Civil Relief Act of
      1940.

     

    (ll)  Environmental
      Matters.
      To the
      best of Seller’s knowledge and belief, the Mortgaged Property is free from any
      and all toxic or hazardous substances and there exists no violation of any
      local, state or federal environmental law, rule or regulation. There is no
      pending action or proceeding directly involving any Mortgaged Property of which
      Seller is aware in which compliance with any environmental law, rule or
      regulation is an issue; and, to the best of Seller’s knowledge and belief,
      nothing further remains to be done to satisfy in full all requirements of each
      such law, rule or regulation consisting of a prerequisite to use and enjoyment
      of said property.

     

    (mm)  No
      Construction Loans.
      No
      Eligible Mortgage Loan (i) was made in connection with the construction or
      rehabilitation of a Mortgaged Property which has not been completed, (ii) except
      for HELOCs and Closed End Second Mortgage Loans, provides for future advances
      of
      funds by Seller that have not yet been advanced or (iii) facilitates the
      trade-in or exchange of a Mortgaged Property.

     

    (nn)  No
      Denial of Insurance.
      No
      action, inaction, or event has occurred and no state of facts exists or has
      existed that has resulted or would result in the exclusion from, denial of,
      or
      defense to coverage under any applicable PMI Policy or bankruptcy bond,
      irrespective of the cause of such failure of coverage. In connection with the
      placement of any such insurance, no commission, fee, or other compensation
      has
      been or will be received by Seller or any designee of Seller or any corporation
      in which Seller or any officer, director, or employee had a financial interest
      at the time of placement of such insurance.

     

    (oo)  Regarding
      the Borrower.
      The
      Borrower is one or more natural persons or the Mortgage Note signed on behalf
      of
      the Borrower has been co-signed by a natural person.

     

    (pp)  Condominiums/Planned
      Unit Developments.
      If the
      Mortgaged Property is a condominium unit or a planned unit development (other
      than a de minimums planned unit development) such condominium or planned unit
      development project meets FHA, VA and GNMA eligibility requirements for sale
      to
      GNMA or is located in a condominium or planned unit development project which
      has received FHA, VA and GNMA project approval and the representations and
      warranties required by FHA, VA and GNMA with respect to such condominium or
      planned unit development have been made and remain true and correct in all
      material respects.

     

    (qq)  FHA
      Mortgage Insurance; VA Loan Guaranty.
      With
      respect to the FHA Loans, the application for coverage under the FHA Mortgage
      Insurance Contract has been submitted to HUD or the FHA and neither Seller
      nor
      Servicer has been notified of a denial of the application or a refusal to issue
      the FHA Mortgage Insurance. With respect to the VA Loans, the application for
      the VA Loan Guaranty Certificate has been submitted to the VA and neither Seller
      nor Servicer has been notified of a denial of the application or the refusal
      to
      issue the Certificate. All necessary steps have been taken with respect to
      each
      such application in order to obtain such coverage or the issuance of such
      Certificate and each such application is complete and correct in all material
      respects. Upon issuance, each such guarantee or insurance will be the binding,
      valid and enforceable obligation of the FHA and the VA, respectively, to the
      full extent thereof, without surcharge, set-off or defense upon the issuance
      of
      the insurance or guaranty.

     

     

    
      
        
        

      

      
        Annex
          II-8

        
          

        

      

      
        
        

      

    

     

    (rr)  HUD
      Form 92080.
      With
      respect to each FHA Loan, a HUD Form 92080 has been duly executed and delivered
      to HUD.

     

    (ss)  Filings:
      Any UCC
      filings necessary in any jurisdiction to give Agent (on behalf of the
      Principals) a perfected security interest in the Eligible Mortgage Loans have
      been made.

     

    (tt)  Servicing.
      Subject
      to the terms of this Agreement, Seller holds all right, title and interest
      in
      and to the servicing rights related to such Eligible Mortgage Loan and no other
      person has the right to service such Eligible Mortgage Loan.

     

    (uu)  Future
      Advances for HELOCs.
      Pursuant
      to the related Home Equity Line Agreement, Seller retains the obligation to
      make
      future advances on any HELOC transferred to Agent up to the Credit Limit
      specified in such Home Equity Line Agreement.

     

    
      
        
           

        

        
        

      

      
        Annex
          II-9

        
          

        

      

      
        
        

        
          

        

      

    

    ANNEX
      III

     

    [RESERVED]

     

    

     

    
      
        
          Annex
            III-1

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ANNEX
      IV

     

    This
      Annex IV forms a part of the Fifth Amended and Restated Master Repurchase
      Agreement, dated as of October 30, 2006 (as amended, supplemented or otherwise
      modified, the “Agreement”)
      among
      Barclays Bank PLC, acting as buyer on behalf of, and as agent for, the
      Principals from time to time party thereto, the Principals from time to time
      party thereto and Seller. This Annex IV sets forth certain terms and conditions
      governing the application of all Collections and the payment of the Purchase
      Price related to Purchased Assets subject to all Transactions in which Agent
      is
      acting as buyer on behalf of, and as agent for, the Principals. Capitalized
      terms used but not defined in this Annex I shall have the meanings ascribed
      to
      them in the Agreement.

     

    (a) Prior
      to
      the occurrence of an Event of Default, Collections on deposit in the Funding
      Account shall be distributed by the Seller on each Business Day, prior to giving
      effect to amounts in respect of the aggregate Purchase Price for Transactions
      occurring on such day, in the amounts required, and in the following order
      of
      priority:

     

    first,
      to the
      reimbursement of the Agent’s costs of collection and enforcement with respect to
      the Seller under the Repurchase Agreement and the other Transaction Documents
      (including, without limitation, reimbursement of such amounts which were due
      and
      payable on any prior day, but remain unpaid);

     

    second,
      solely
      to the extent that PHH Mortgage (or any of its Affiliates) is not the Servicer,
      to the payment of accrued and unpaid Servicing Fees to the Person acting as
      the
“Servicer” (including, without limitation, amounts in respect of Servicing Fees
      which were due and payable on any prior day, but remain unpaid); 

     

    third,
      to the
      payment of custodian fees in respect of the Custodial Agreement (including,
      without limitation, such amounts which were due and payable on any prior day,
      but remain unpaid);

     

    fourth,
      solely
      to the extent that such Business Day is a Monthly Interest Payment Date, to
      payment of the Price Differential for the applicable Transactions (including,
      without limitation, such amounts which were due and payable on any prior Monthly
      Interest Payment Date, but remain unpaid);

     

    fifth,
      if a
      Margin Deficit with respect to Purchased Assets exists, solely to the extent
      that the Seller has not transferred cash or Additional Purchased Assets in
      accordance with the terms of Section 5 of the Repurchase Agreement, an amount,
      such that after giving effect to such payment, no such Margin Deficit shall
      exist; 

     

    sixth,
      to the
      payment of all other amounts then owing to Agent, any Principal or any Affected
      Person or Indemnified Party (including, without limitation, any indemnities,
      costs, fees, expenses or taxes) then payable by the Seller under the Repurchase
      Agreement or any other Transaction Document (including, without limitation,
      such
      amounts which were due and payable on any prior day, but remain
      unpaid);

     

    seventh,
      the
      balance, if any, to be paid to the Seller. 

     

     

    
      
        
        

      

      
        Annex
          IV-1

        
          

        

      

      
        
        

      

    

     

     

    (b) Prior
      to
      the occurrence of an Event of Default, after giving effect to the priority
      of
      payments set forth in clause (a) above, the amount of any aggregate Purchase
      Price deposited by or on behalf of the Principals into the Funding Account
      shall
      immediately be distributed to the Seller.

     

    (c) On
      and
      after the Termination Date and after the occurrence, and during the continuation
      of, an Event of Default, Collections on deposit in the Funding Account shall
      be
      distributed by the Seller on each Business Day, in the amounts required, and
      in
      the following order of priority:

     

    first,
      to the
      reimbursement of the Agent’s costs of collection and enforcement under the
      Repurchase Agreement and the other Transaction Documents (including, without
      limitation, reimbursement of such amounts which were due and payable on any
      prior day, but remain unpaid);

     

    second,
      solely
      to the extent that PHH Mortgage (or any of its Affiliates) is not the Servicer,
      to the payment of accrued and unpaid Servicing Fees to the Person acting as
      the
“Servicer” (including, without limitation, amounts in respect of Servicing Fees
      which were due and payable on any prior day, but remain unpaid);

     

    third,
      to the
      payment of custodian fees in respect of the Custodial Agreement (including,
      without limitation, such amounts which were due and payable on any prior day,
      but remain unpaid);

     

    fourth,
      to
      payment of the Price Differential for the applicable Transactions (including,
      without limitation, such amounts which were due and payable on any prior day,
      but remain unpaid);

     

    fifth,
      if a
      Margin Deficit exists, solely to the extent that the Seller has not transferred
      cash or Additional Purchased Assets in accordance with the terms of Section
      5 of
      the Agreement, such amount, such that after giving effect to all such payments,
      no such Margin Deficit shall exist; 

     

    sixth,
      to the
      Agent (for the benefit of the Principals on a pro rata basis) for application
      to
      the aggregate outstanding principal balance of the Repurchase Prices (other
      than
      the applicable Price Differential) in respect of the Seller;

     

    seventh,
      to the
      payment of all other amounts then owing to the Agent, any Principal, any
      Affected Person or Indemnified Party (including, without limitation, any
      indemnities, costs, fees, expenses or taxes) then payable by the Seller under
      the Repurchase Agreement or any other Transaction Document (including, without
      limitation, such amounts which were due and payable on any prior day, but remain
      unpaid);

     

    eighth,
      the
      balance, if any, to be paid to the Seller.

     

    

     

    
      
        
           

        

        
        

      

      
        Annex
          IV-2

        
          

        

      

      
        
        

        
          

        

      

    

    SCHEDULE
      I

     

    CHIEF
      EXECUTIVE OFFICE; JURISDICTION OF ORGANIZATION; LOCATION OF BOOKS AND
      RECORDS

     

    3000
      Leadenhall Road, Mail Stop PCLG, Mt. Laurel, NJ 08054

     

    

    

     

    

     

     

    
      Schedule
        I

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    

      EXHIBIT
        A

       

      1) [***]

       

       

      
        
          ______________

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

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