Document:

exv4w3

Exhibit 4.3

 

 

APPROACH RESOURCES INC.,

AS ISSUER

AND

ANY SUBSIDIARY GUARANTORS PARTIES HERETO,

AS SUBSIDIARY GUARANTORS

TO

[TRUSTEE’S NAME],

AS TRUSTEE

SUBORDINATED INDENTURE

DATED AS OF                                         , 20                    

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
	 	 	1	 
	 
	 	 	 	 
	SECTION 101. Definitions
	 	 	1	 
	SECTION 102. Compliance Certificates and Opinions
	 	 	5	 
	SECTION 103. Form of Documents Delivered to Trustee
	 	 	5	 
	SECTION 104. Acts of Holders; Record Dates
	 	 	5	 
	SECTION 105. Notices, Etc., to Trustee and Company
	 	 	7	 
	SECTION 106. Notice to Holders; Waiver
	 	 	7	 
	SECTION 107. Conflict with Trust Indenture Act
	 	 	7	 
	SECTION 108. Effect of Headings and Table of Contents
	 	 	8	 
	SECTION 109. Successors and Assigns
	 	 	8	 
	SECTION 110. Separability Clause
	 	 	8	 
	SECTION 111. Benefits of Indenture
	 	 	8	 
	SECTION 112. Governing Law
	 	 	8	 
	SECTION 113. Legal Holidays
	 	 	8	 
	SECTION 114. No Recourse Against Others
	 	 	8	 
	 
	 	 	 	 
	ARTICLE TWO SECURITY FORMS
	 	 	8	 
	 
	 	 	 	 
	SECTION 201. Forms Generally
	 	 	8	 
	SECTION 202. Form of Face of Security
	 	 	9	 
	SECTION 203. Form of Reverse of Security
	 	 	10	 
	SECTION 204. Form of Notation of Subsidiary Guarantee
	 	 	12	 
	SECTION 205. Form of Legend for Global Securities
	 	 	13	 
	SECTION 206. Form of Trustee’s Certificate of Authentication
	 	 	13	 
	SECTION 207. Form of Conversion Notice
	 	 	13	 
	 
	 	 	 	 
	ARTICLE THREE THE SECURITIES
	 	 	14	 
	 
	 	 	 	 
	SECTION 301. Amount Unlimited; Issuable in Series
	 	 	14	 
	SECTION 302. Denominations
	 	 	16	 
	SECTION 303. Execution, Authentication, Delivery and Dating
	 	 	16	 
	SECTION 304. Temporary Securities
	 	 	17	 
	SECTION 305. Registration, Registration of Transfer and Exchange
	 	 	17	 
	SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities
	 	 	18	 
	SECTION 307. Payment of Interest; Interest Rights Preserved
	 	 	19	 
	SECTION 308. Persons Deemed Owners
	 	 	19	 
	SECTION 309. Cancellation
	 	 	20	 
	SECTION 310. Computation of Interest
	 	 	20	 
	 
	 	 	 	 
	ARTICLE FOUR SATISFACTION AND DISCHARGE
	 	 	20	 
	 
	 	 	 	 
	SECTION 401. Satisfaction and Discharge of Indenture
	 	 	20	 
	SECTION 402. Application of Trust Money
	 	 	21	 

i

 

	 	 	 	 	 
	 	 	Page	 
	ARTICLE FIVE REMEDIES
	 	 	21	 
	 
	 	 	 	 
	SECTION 501. Events of Default
	 	 	21	 
	SECTION 502. Acceleration of Maturity; Rescission and Annulment
	 	 	22	 
	SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee
	 	 	23	 
	SECTION 504. Trustee May File Proofs of Claim
	 	 	23	 
	SECTION 505. Trustee May Enforce Claims Without Possession of Securities
	 	 	23	 
	SECTION 506. Application of Money Collected
	 	 	23	 
	SECTION 507. Limitation on Suits
	 	 	24	 
	SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest
	 	 	24	 
	SECTION 509. Restoration of Rights and Remedies
	 	 	24	 
	SECTION 510. Rights and Remedies Cumulative
	 	 	24	 
	SECTION 511. Delay or Omission Not Waiver
	 	 	24	 
	SECTION 512. Control by Holders
	 	 	25	 
	SECTION 513. Waiver of Past Defaults
	 	 	25	 
	SECTION 514. Undertaking for Costs
	 	 	25	 
	SECTION 515. Waiver of Usury, Stay or Extension Laws
	 	 	25	 
	 
	 	 	 	 
	ARTICLE SIX THE TRUSTEE
	 	 	25	 
	 
	 	 	 	 
	SECTION 601. Certain Duties and Responsibilities
	 	 	25	 
	SECTION 602. Notice of Defaults
	 	 	26	 
	SECTION 603. Certain Rights of Trustee
	 	 	26	 
	SECTION 604. Not Responsible for Recitals or Issuance of Securities
	 	 	26	 
	SECTION 605. May Hold Securities
	 	 	26	 
	SECTION 606. Money Held in Trust
	 	 	26	 
	SECTION 607. Compensation and Reimbursement
	 	 	26	 
	SECTION 608. Conflicting Interests
	 	 	27	 
	SECTION 609. Corporate Trustee Required; Eligibility
	 	 	27	 
	SECTION 610. Resignation and Removal; Appointment of Successor
	 	 	27	 
	SECTION 611. Acceptance of Appointment by Successor
	 	 	28	 
	SECTION 612. Merger, Conversion, Consolidation or Succession to Business
	 	 	29	 
	SECTION 613. Preferential Collection of Claims Against Company and Subsidiary Guarantors
	 	 	29	 
	SECTION 614. Appointment of Authenticating Agent
	 	 	29	 
	 
	 	 	 	 
	ARTICLE SEVEN HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY
	 	 	30	 
	 
	 	 	 	 
	SECTION 701. Company to Furnish Trustee Names and Addresses of Holders
	 	 	30	 
	SECTION 702. Preservation of Information; Communications to Holders
	 	 	30	 
	SECTION 703. Reports by Trustee
	 	 	30	 
	SECTION 704. Reports by Company and Subsidiary Guarantors
	 	 	31	 
	 
	 	 	 	 
	ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
	 	 	31	 
	 
	 	 	 	 
	SECTION 801. Company May Consolidate, Etc., Only on Certain Terms
	 	 	31	 
	SECTION 802. Subsidiary Guarantors May Consolidate, Etc., Only on Certain Terms
	 	 	31	 
	SECTION 803. Successor Substituted
	 	 	32	 

ii

 

	 	 	 	 	 
	 	 	Page	 
	ARTICLE NINE SUPPLEMENTAL INDENTURES
	 	 	32	 
	 
	 	 	 	 
	SECTION 901. Supplemental Indentures Without Consent of Holders
	 	 	32	 
	SECTION 902. Supplemental Indentures With Consent of Holders
	 	 	33	 
	SECTION 903. Execution of Supplemental Indentures
	 	 	34	 
	SECTION 904. Effect of Supplemental Indentures
	 	 	34	 
	SECTION 905. Conformity with Trust Indenture Act
	 	 	34	 
	SECTION 906. Reference in Securities to Supplemental Indentures
	 	 	34	 
	 
	 	 	 	 
	ARTICLE TEN COVENANTS
	 	 	34	 
	 
	 	 	 	 
	SECTION 1001. Payment of Principal, Premium and Interest
	 	 	34	 
	SECTION 1002. Maintenance of Office or Agency
	 	 	34	 
	SECTION 1003. Money for Securities Payments to Be Held in Trust
	 	 	35	 
	SECTION 1004. Statement by Officers as to Default
	 	 	35	 
	SECTION 1005. Existence
	 	 	36	 
	SECTION 1006. Maintenance of Properties
	 	 	36	 
	SECTION 1007. Payment of Taxes and Other Claims
	 	 	36	 
	SECTION 1008. Maintenance of Insurance
	 	 	36	 
	SECTION 1009. Waiver of Certain Covenants
	 	 	36	 
	 
	 	 	 	 
	ARTICLE ELEVEN REDEMPTION OF SECURITIES
	 	 	36	 
	 
	 	 	 	 
	SECTION 1101. Applicability of Article
	 	 	36	 
	SECTION 1102. Election to Redeem; Notice to Trustee
	 	 	36	 
	SECTION 1103. Selection by Trustee of Securities to Be Redeemed
	 	 	37	 
	SECTION 1104. Notice of Redemption
	 	 	37	 
	SECTION 1105. Deposit of Redemption Price
	 	 	38	 
	SECTION 1106. Securities Payable on Redemption Date
	 	 	38	 
	SECTION 1107. Securities Redeemed in Part
	 	 	38	 
	 
	 	 	 	 
	ARTICLE TWELVE SUBORDINATION OF SECURITIES
	 	 	38	 
	 
	 	 	 	 
	SECTION 1201. Applicability of Article
	 	 	38	 
	SECTION 1202. Securities Subordinate to Senior Debt
	 	 	38	 
	SECTION 1203. Payment Over of Proceeds Upon Dissolution, Etc
	 	 	38	 
	SECTION 1204. No Payment When Senior Debt of the Company in Default
	 	 	39	 
	SECTION 1205. Payment Permitted If No Default
	 	 	40	 
	SECTION 1206. Subrogation to Rights of Holders of Senior Debt of the Company
	 	 	40	 
	SECTION 1207. Provisions Solely to Define Relative Rights
	 	 	40	 
	SECTION 1208. Trustee to Effectuate Subordination
	 	 	41	 
	SECTION 1209. No Waiver of Subordination Provisions
	 	 	41	 
	SECTION 1210. Notice to Trustee
	 	 	41	 
	SECTION 1211. Reliance on Judicial Order or Certificate of Liquidating Agent
	 	 	42	 
	SECTION 1212. Trustee Not Fiduciary for Holders of Senior Debt of the Company
	 	 	42	 
	SECTION 1213. Rights of Trustee as Holder of Senior Debt of the Company; Preservation of Trustee’s Rights
	 	 	42	 
	SECTION 1214. Article Applicable to Paying Agents
	 	 	42	 

iii

 

	 	 	 	 	 
	 	 	Page	 
	SECTION 1215. Defeasance of this Article Twelve
	 	 	42 	 
	 
	 	 	 	 
	ARTICLE THIRTEEN SUBSIDIARY GUARANTEES
	 	 	42	 
	 
	 	 	 	 
	SECTION 1301. Applicability of Article
	 	 	42	 
	SECTION 1302. Subsidiary Guarantees
	 	 	42	 
	SECTION 1303. Execution and Delivery of Notations of Subsidiary Guarantees
	 	 	44	 
	SECTION 1304. Release of Subsidiary Guarantors
	 	 	44	 
	SECTION 1305. Additional Subsidiary Guarantors
	 	 	44	 
	SECTION 1306. Limitation on Liability
	 	 	44	 
	 
	 	 	 	 
	ARTICLE FOURTEEN SUBORDINATION OF SUBSIDIARY GUARANTEES
	 	 	45	 
	 
	 	 	 	 
	SECTION 1401. Applicability of Article
	 	 	45	 
	SECTION 1402. Subsidiary Guarantees Subordinate to Senior Debt of Subsidiary Guarantors
	 	 	45	 
	SECTION 1403. Payment Over of Proceeds Upon Dissolution, Etc
	 	 	45	 
	SECTION 1404. No Payment When Senior Debt of such Subsidiary Guarantor in Default
	 	 	46	 
	SECTION 1405. Payment Permitted If No Default
	 	 	46	 
	SECTION 1406. Subrogation to Rights of Holders of Senior Debt of such Subsidiary Guarantor
	 	 	46	 
	SECTION 1407. Provisions Solely to Define Relative Rights
	 	 	47	 
	SECTION 1408. Trustee to Effectuate Subordination
	 	 	47	 
	SECTION 1409. No Waiver of Subordination Provisions
	 	 	47	 
	SECTION 1410. Notice to Trustee
	 	 	47	 
	SECTION 1411. Reliance on Judicial Order or Certificate of Liquidating Agent
	 	 	48	 
	SECTION 1412. Trustee Not Fiduciary for Holders of Senior Debt of such Subsidiary Guarantor
	 	 	48	 
	SECTION 1413. Rights of Trustee as Holder of Senior Debt of such Subsidiary Guarantor; Preservation of Trustee’s Rights
	 	 	48	 
	SECTION 1414. Article Applicable to Paying Agents
	 	 	48	 
	SECTION 1415. Defeasance of this Article Fourteen
	 	 	48	 
	 
	 	 	 	 
	ARTICLE FIFTEEN DEFEASANCE AND COVENANT DEFEASANCE
	 	 	49	 
	 
	 	 	 	 
	SECTION 1501. Company’s Option to Effect Defeasance or Covenant Defeasance
	 	 	49	 
	SECTION 1502. Defeasance and Discharge
	 	 	49	 
	SECTION 1503. Covenant Defeasance
	 	 	49	 
	SECTION 1504. Conditions to Defeasance or Covenant Defeasance
	 	 	49	 
	SECTION 1505. Deposited Money and U.S. Government Obligations to Be Held in Trust; Miscellaneous Provisions
	 	 	51	 
	SECTION 1506. Reinstatement
	 	 	51	 
	 
	 	 	 	 
	ARTICLE SIXTEEN SINKING FUNDS
	 	 	51	 
	 
	 	 	 	 
	SECTION 1601. Applicability of Article
	 	 	51	 
	SECTION 1602. Satisfaction of Sinking Fund Payments with Securities
	 	 	52	 
	SECTION 1603. Redemption of Securities for Sinking Fund
	 	 	52	 

[SCHEDULE I          SUBSIDIARY GUARANTORS]

iv

 

APPROACH RESOURCES INC.

RECONCILIATION AND TIE OF CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318,
INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:

	 	 	 
	 	 	INDENTURE
	TRUST INDENTURE ACT SECTION	 	SECTION
	Section 310(a)(1)
	 	609
	(a)(2)
	 	609
	(a)(3)
	 	Not Applicable
	(a)(4)
	 	Not Applicable
	(b)
	 	608
	 
	 	610
	 
	 	 
	Section 311(a)
	 	613
	(b)
	 	613
	 
	 	 
	Section 312(a)
	 	701
	 
	 	702
	(b)
	 	702
	(c)
	 	702
	 
	 	 
	Section 313(a)
	 	703
	(b)
	 	703
	(c)
	 	703
	(d)
	 	703
	 
	 	 
	Section 314(a)
	 	704
	(a)(4)
	 	101
	 
	 	1004
	(b)
	 	Not Applicable
	(c)(1)
	 	102
	(c)(2)
	 	102
	(c)(3)
	 	Not Applicable
	(d)
	 	Not Applicable
	(e)
	 	102
	 
	 	 
	Section 315(a)
	 	601
	(b)
	 	602
	(c)
	 	601
	(d)
	 	601
	(e)
	 	514
	 
	 	 
	Section 316(a)
	 	101
	(a)(1)(A)
	 	502
	 
	 	512

v

 

	 	 	 
	 	 	INDENTURE
	TRUST INDENTURE ACT SECTION	 	SECTION
	(a)(1)(B)
	 	513
	(a)(2)
	 	Not Applicable
	(b)
	 	508
	(c)
	 	104
	 
	 	 
	Section 317(a)(1)
	 	503
	(a)(2)
	 	504
	(b)
	 	1003
	 
	 	 
	Section 318(a)
	 	107

NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the
Indenture.

vi

 

     INDENTURE, dated as of __________, 20___, among Approach Resources
Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein
called the “Company”), having its principal office at One Ridgmar Centre, 6500 West Freeway, Suite
800, Fort Worth, Texas 76116, each of the Subsidiary Guarantors (as hereinafter defined) parties
hereto and [TRUSTEE’S NAME], a [__________] duly organized and existing under the
laws of [__________], as Trustee (herein called the “Trustee”).

RECITALS OF THE COMPANY AND THE SUBSIDIARY GUARANTORS

     The Company has duly authorized the execution and delivery of this Indenture to provide for
the issuance from time to time of its unsecured debentures, notes or other evidences of
indebtedness (herein called the “Securities”), to be issued in one or more series as in this
Indenture provided.

     The Company and the Subsidiary Guarantors are members of the same consolidated group of
companies. The Subsidiary Guarantors will derive direct and indirect economic benefit from the
issuance of the Securities. Accordingly, each Subsidiary Guarantor has duly authorized the
execution and delivery of this Indenture to provide for its full, unconditional and joint and
several guarantee of the Securities to the extent provided in or pursuant this Indenture.

     All things necessary to make this Indenture a valid agreement of the Company, in accordance
with its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

     For and in consideration of the premises and the purchase of the Securities by the Holders
thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the
Securities or of series thereof, as follows:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS

OF GENERAL APPLICATION

     SECTION 101. Definitions.

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

     (1) the terms defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular;

     (2) all other terms used herein which are defined in the Trust Indenture Act, either directly
or by reference therein, have the meanings assigned to them therein;

     (3) all accounting terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles, and, except as otherwise herein expressly
provided, the term “generally accepted accounting principles” with respect to any computation
required or permitted hereunder shall mean such accounting principles as are generally accepted at
the date of this instrument;

     (4) unless the context otherwise requires, any reference to an “Article” or a “Section” refers
to an Article or a Section, as the case may be, of this Indenture;

     (5) the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other subdivision; and

     (6) unsecured Debt shall not be deemed to be subordinate or junior to secured Debt merely by
virtue of its nature as unsecured Debt.

     “Act”, when used with respect to any Holder, has the meaning specified in Section 104.

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

1

 

     “Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 614 to
act on behalf of the Trustee to authenticate Securities of one or more series.

     “Board of Directors” means, with respect to the Company, either the board of directors of the
Company or any committee of that board duly authorized to act for it in respect hereof, and with
respect to any Subsidiary Guarantor, either the board of directors of such Subsidiary Guarantor or
any committee of that board duly authorized to act for it in respect hereof.

     “Board Resolution” means, with respect to the Company or a Subsidiary Guarantor, a copy of a
resolution certified by the Secretary or an Assistant Secretary of the Company or such Subsidiary
Guarantor, as the case may be, to have been duly adopted by its Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the Trustee.

     “Business Day”, when used with respect to any Place of Payment, means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of
Payment are authorized or obligated by law or executive order to close.

     “Capital Stock” of any Person means any and all shares, interests, participations or other
equivalents (however designated) of corporate stock or other equity participations, including
partnership interests, whether general or limited, of such Person.

     “Commission” means the Securities and Exchange Commission, from time to time constituted,
created under the Exchange Act, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.

     “Common Stock” means the common stock, $0.01 par value per share, of the Company as the same exists at the
date of execution and delivery of this Indenture or other Capital Stock of the Company into which
such common stock is converted, reclassified or changed from time to time.

     “Company” means the Person named as the “Company” in the first paragraph of this instrument
until a successor Person shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter “Company” shall mean such successor Person.

     “Company Request” or “Company Order” means a written request or order signed in the name of
the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors,
its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Trustee.

     “Conversion Agent” means any Person authorized by the Company to convert any Securities on
behalf of the Company.

     “Corporate Trust Office” means the principal office of the Trustee in [__________, __________] at which at any particular time its corporate trust business
shall be administered, such office being located on the date hereof at [TRUSTEE’S ADDRESS].

     “Corporation” means a corporation, association, limited liability company, joint-stock company
or business trust.

     “Covenant Defeasance” has the meaning specified in Section 1503.

     “Debt” of any Person at any date means any obligation created, assumed or guaranteed by such
Person for the repayment of borrowed money.

     “Defaulted Interest” has the meaning specified in Section 307.

     “Defeasance” has the meaning specified in Section 1502.

     “Depositary” means, with respect to Securities of any series issuable in whole or in part in
the form of one or more Global Securities, a clearing agency registered under the Exchange Act that
is designated to act as Depositary for such Securities as contemplated by Section 301.

     “Event of Default” has the meaning specified in Section 501.

     “Exchange Act” means the Securities Exchange Act of 1934 and any statute successor thereto, in
each case as amended from time to time.

     “Expiration Date” has the meaning specified in Section 104.

     “Global Security” means a Security that evidences all or part of the Securities of any series
and bears the legend set forth in Section 205 (or such legend as may be specified as contemplated
by Section 301 for such Securities).

     “Holder” means a Person in whose name a Security is registered in the Security Register.

     “Indenture” means this instrument as originally executed and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof, including, for all purposes of this instrument and any such
supplemental

2

 

indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and
govern this instrument and any such supplemental indenture, respectively. The term “Indenture”
shall also include the terms of particular series of Securities established as contemplated by
Section 301.

     “interest”, when used with respect to an Original Issue Discount Security which by its terms
bears interest only after Maturity, means interest payable after Maturity.

     “Interest Payment Date”, when used with respect to any Security, means the Stated Maturity of
an installment of interest on such Security.

     “Investment Company Act” means the Investment Company Act of 1940 and any statute successor
thereto, in each case as amended from time to time.

     “Maturity”, when used with respect to any Security, means the date on which the principal of
such Security or an installment of principal becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

     “Notice of Default” means a written notice of the kind specified in Section 501(5).

     “Officers’ Certificate” means a certificate signed by the Chairman of the Board of Directors,
a Vice Chairman of the Board of Directors, the President or a Vice President, and by the Treasurer,
an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company or a Subsidiary
Guarantor, as the case may be, and delivered to the Trustee. One of the officers signing an
Officers’ Certificate given pursuant to Section 1004 shall be the principal executive, financial or
accounting officer of the Company.

     “Opinion of Counsel” means, as to the Company or a Subsidiary Guarantor, a written opinion of
counsel, who may be counsel for the Company or such Subsidiary Guarantor, as the case may be, and
who shall be acceptable to the Trustee.

     “Original Issue Discount Security” means any Security which provides for an amount less than
the principal amount thereof to be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 502.

     “Outstanding”, when used with respect to Securities, means, as of the date of determination,
all Securities theretofore authenticated and delivered under this Indenture, except:

     (1) Securities theretofore cancelled by the Trustee or delivered to the Trustee for
cancellation;

     (2) Securities for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set
aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for
the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory
to the Trustee has been made;

     (3) Securities as to which Defeasance has been effected pursuant to Section 1502; and

     (4) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of
which other Securities have been authenticated and delivered pursuant to this Indenture, other than
any such Securities in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite principal amount of the
Outstanding Securities have given, made or taken any request, demand, authorization, direction,
notice, consent, waiver or other action hereunder as of any date, (A) the principal amount of an
Original Issue Discount Security which shall be deemed to be Outstanding shall be the amount of the
principal thereof which would be due and payable as of such date upon acceleration of the Maturity
thereof to such date pursuant to Section 502, (B) if, as of such date, the principal amount payable
at the Stated Maturity of a Security is not determinable, the principal amount of such Security
which shall be deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 301, (C) the principal amount of a Security denominated in one or more
foreign currencies or currency units which shall be deemed to be Outstanding shall be the U.S.
dollar equivalent, determined as of such date in the manner provided as contemplated by Section
301, of the principal amount of such Security (or, in the case of a Security described in clause
(A) or (B) above, of the amount determined as provided in such clause), and (D) Securities owned by
the Company, any Subsidiary Guarantor or any other obligor upon the Securities or any Affiliate of
the Company, any Subsidiary Guarantor or of such other obligor shall be disregarded and deemed not
to be Outstanding, except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent, waiver or other action,
only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to
the

3

 

satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that
the pledgee is not the Company, a Subsidiary Guarantor or any other obligor upon the Securities or
any Affiliate of the Company, a Subsidiary Guarantor or of such other obligor.

     “Paying Agent” means any Person authorized by the Company to pay the principal of or any
premium or interest on any Securities on behalf of the Company.

     “Person” means any individual, corporation, partnership, joint venture, trust, unincorporated
organization or government or any agency or political subdivision thereof.

     “Place of Payment”, when used with respect to the Securities of any series, means the place or
places where the principal of and any premium and interest on the Securities of that series are
payable as specified as contemplated by Section 301.

     “Predecessor Security” of any particular Security means every previous Security evidencing all
or a portion of the same debt as that evidenced by such particular Security; and, for the purposes
of this definition, any Security authenticated and delivered under Section 306 in exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Security.

     “Redemption Date”, when used with respect to any Security to be redeemed, means the date fixed
for such redemption by or pursuant to this Indenture.

     “Redemption Price”, when used with respect to any Security to be redeemed, means the price at
which it is to be redeemed pursuant to this Indenture.

     “Regular Record Date” for the interest payable on any Interest Payment Date on the Securities
of any series means the date specified for that purpose as contemplated by Section 301.

     “Securities” has the meaning stated in the first recital of this Indenture and more
particularly means any Securities authenticated and delivered under this Indenture.

     “Securities Act” means the Securities Act of 1933 and any statute successor thereto, in each
case as amended from time to time.

     “Security Register” and “Security Registrar” have the respective meanings specified in Section
305.

     “Senior Debt” with respect to any series of Securities shall have the meaning specified as
contemplated by Section 301.

     “Significant Subsidiary” means, at any date of determination, any Subsidiary that represents
10% or more of the Company’s consolidated total assets at the end of the most recent fiscal quarter
for which financial information is available or 10% or more of the Company’s consolidated net
revenues or consolidated operating income for the most recent four quarters for which financial
information is available.

     “Special Record Date” for the payment of any Defaulted Interest means a date fixed by the
Trustee pursuant to Section 307.

     “Stated Maturity”, when used with respect to any Security or any installment of principal
thereof or interest thereon, means the date specified in such Security as the fixed date on which
the principal of such Security or such installment of principal or interest is due and payable.

     “Subsidiary” of any Person means (1) a corporation more than 50% of the combined voting power
of the outstanding Voting Stock of which is owned, directly or indirectly, by such Person or by one
or more other Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof or
(2) any other Person (other than a corporation) in which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies, management and
affairs thereof.

     “Subsidiary Guarantees” means the guarantees of each Subsidiary Guarantor as provided in
Article Thirteen.

     “Subsidiary Guarantors” means (i) the subsidiaries listed in Schedule I hereto; (ii) each
other Subsidiary of the Company that becomes a Subsidiary Guarantor in accordance with Section 1305
hereof; and (iii) any successor of the foregoing, in each case (i), (ii) and (iii) until such
Subsidiary Guarantor ceases to be such in accordance with Section 1304 hereof.

     “Trust Indenture Act” means the Trust Indenture Act of 1939 as in force at the date as of
which this instrument was executed; provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, “Trust Indenture Act” means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.

4

 

     “Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument
until a successor Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter “Trustee” shall mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, “Trustee” as used with respect to
the Securities of any series shall mean the Trustee with respect to Securities of that series.

     “U.S. Government Obligation” has the meaning specified in Section 1504.

     “Vice President”, when used with respect to the Company or the Trustee, means any vice
president, whether or not designated by a number or a word or words added before or after the title
“vice president”.

     “Voting Stock” of any Person means Capital Stock of such Person which ordinarily has voting
power for the election of directors (or persons performing similar functions) of such Person,
whether at all times or only so long as no senior class of securities has such voting power by
reason of any contingency.

     “Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person all of the
outstanding Capital Stock of which (other than directors’ qualifying shares) shall at the time be
owned by such Person or by one or more Wholly Owned Subsidiaries of such Person or by such Person
and one or more Wholly Owned Subsidiaries of such Person.

     SECTION 102. Compliance Certificates and Opinions.

     Upon any application or request by the Company or any Subsidiary Guarantor to the Trustee to
take any action under any provision of this Indenture, the Company and/or such Subsidiary
Guarantor, as appropriate, shall furnish to the Trustee such certificates and opinions as may be
required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form
of an Officers’ Certificate, if to be given by an officer of the Company or a Subsidiary Guarantor,
or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the
Trust Indenture Act and any other requirements set forth in this Indenture.

     Every certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture shall include:

     (1) a statement that each individual signing such certificate or opinion has read such
covenant or condition and the definitions herein relating thereto;

     (2) a brief statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are based;

     (3) a statement that, in the opinion of each such individual, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and

     (4) a statement as to whether, in the opinion of each such individual, such condition or
covenant has been complied with.

     SECTION 103. Form of Documents Delivered to Trustee.

     In any case where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.

     Any certificate or opinion of an officer of the Company or a Subsidiary Guarantor may be
based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or representations by, an officer
or officers of the Company or such Subsidiary Guarantor stating that the information with respect
to such factual matters is in the possession of the Company or such Subsidiary Guarantor, unless
such counsel knows, or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.

     Where any Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this Indenture, they may,
but need not, be consolidated and form one instrument.

     SECTION 104. Acts of Holders; Record Dates.

     Whenever in this Indenture it is provided that the Holders of a specified percentage in
aggregate principal amount of the Securities of any or all series may take action (including the
making of any demand

5

 

or request, the giving of any direction, notice, consent or waiver or the taking of any other
action) the fact that at the time of taking any such action the Holders of such specified
percentage have joined therein may be evidenced (a) by any instrument or any number of instruments
of similar tenor executed by Holders in person or by agent or proxy appointed in writing, (b) by
the record of the Holders voting in favor thereof at any meeting of Holders duly called and held in
accordance with procedures approved by the Trustee, (c) by a combination of such instrument or
instruments and any such record of such a meeting of Holders or (d) in the case of Securities
evidenced by a Global Security, by any electronic transmission or other message, whether or not in
written format, that complies with the Depositary’s applicable procedures. Such evidence (and the
action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the
relevant Holders. Proof of execution of any such instrument or of a writing appointing any such
agent or proxy shall be sufficient for any purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.

     The fact and date of the execution by any Person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof. Where such execution
is by a signer acting in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner that the Trustee deems sufficient.

     The ownership of Securities shall be proved by the Security Register.

     Any request, demand, authorization, direction, notice, consent, waiver or other Act of the
Holder of any Security shall bind every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company
in reliance thereon, whether or not notation of such action is made upon such Security.

     The Company may set any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give, make or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided or permitted by this
Indenture to be given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or direction referred to in
the next paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of the relevant series on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders after such record
date; provided that no such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities
of such series on such record date. Nothing in this paragraph shall be construed to prevent the
Company from setting a new record date for any action for which a record date has previously been
set pursuant to this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be
construed to render ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities of the relevant series on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice
of such record date, the proposed action by Holders and the applicable Expiration Date to be given
to the Trustee in writing and to each Holder of Securities of the relevant series in the manner set
forth in Section 106.

     The Trustee may set any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of
Default, (ii) any declaration of acceleration referred to in Section 502, (iii) any request to
institute proceedings referred to in Section 507(2) or (iv) any direction referred to in Section
512, in each case with respect to Securities of such series. If any record date is set pursuant to
this paragraph, the Holders of Outstanding Securities of such series on such record date, and no
other Holders, shall be entitled to join in such notice, declaration, request or direction, whether
or not such Holders remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the
requisite principal amount of Outstanding Securities of such series on such record date. Nothing in
this paragraph shall be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person be

6

 

cancelled and of
no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant series on the date such
action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at
the Company’s expense, shall cause notice of such record date, the proposed action by Holders and
the applicable Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.

     With respect to any record date set pursuant to this Section, the party hereto which sets such
record dates may designate any day as the “Expiration Date” and from time to time may change the
Expiration Date to any earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in writing, and to
each Holder of Securities of the relevant series in the manner set forth in Section 106, on or
prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any
record date set pursuant to this Section, the party hereto which set such record date shall be
deemed to have initially designated the 180th day after such record date as the Expiration Date
with respect thereto, subject to its right to change the Expiration Date as provided in this
paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day
after the applicable record date.

     Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with
regard to any particular Security may do so with regard to all or any part of the principal amount
of such Security or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.

     SECTION 105. Notices, Etc., to Trustee and Company.

     Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or furnished to, or
filed with:

     (1) the Trustee by any Holder or by the Company or any Subsidiary Guarantor shall be
sufficient for every purpose hereunder if made, given, furnished or filed in writing in the English
language to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Department; or

     (2) the Company or any Subsidiary Guarantor by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing
in the English language and mailed, first-class postage prepaid, in the case of the Company
addressed to it at the address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to the Trustee by the Company
and, in the case of any Subsidiary Guarantor, to it at the address of the Company’s principal
office specified in the first paragraph of this instrument, Attention: Chief Financial Officer, or
at any other address previously furnished in writing to the Trustee by such Subsidiary Guarantor.

     SECTION 106. Notice to Holders; Waiver.

     Where this Indenture provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing in the English
language and mailed, first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date (if any), and not
earlier than the earliest date (if any), prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect
in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either before or after the
event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall
be filed with the Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.

     In case by reason of the suspension of regular mail service or by reason of any other cause it
shall be impracticable to give such notice by mail, then such notification as shall be made with
the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

     SECTION 107. Conflict with Trust Indenture Act.

     If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture
Act which is required under such Act to be a part of and govern this Indenture, the latter
provision shall control. If any provision of this Indenture modifies or excludes any provision of
the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed
to apply to this Indenture as so modified or to be excluded, as the case may be.

7

 

     SECTION 108. Effect of Headings and Table of Contents.

     The Article and Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.

     SECTION 109. Successors and Assigns.

     All covenants and agreements in this Indenture by the Company and any Subsidiary Guarantor
shall bind their respective successors and assigns, whether so expressed or not.

     SECTION 110. Separability Clause.

     In case any provision in this Indenture, the Securities or the Subsidiary Guarantees shall be
invalid, illegal or unenforceable, the validity, legality and enforce ability of the remaining
provisions shall not in any way be affected or impaired thereby.

     SECTION 111. Benefits of Indenture.

     Nothing in this Indenture, the Securities or the Subsidiary Guarantees, express or implied,
shall give to any Person, other than the parties hereto and their successors hereunder, the holders
of Senior Debt and the Holders, any benefit or any legal or equitable right, remedy or claim under
this Indenture.

     SECTION 112. Governing Law.

     This Indenture, the Securities and the Subsidiary Guarantees shall be governed by and
construed in accordance with the law of the State of New York.

     SECTION 113. Legal Holidays.

     In any case where any Interest Payment Date, Redemption Date, purchase date or Stated Maturity
of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any
other provision of this Indenture or of the Securities (other than a provision of any Security
which specifically states that such provision shall apply in lieu of this Section)) payment of
interest or principal (and premium, if any) need not be made at such Place of Payment on such date,
but may be made on the next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date, Redemption Date or purchase date, or at the
Stated Maturity.

     SECTION 114. No Recourse Against Others.

     No director, officer, employee, incorporator, stockholder, member, partner or trustee of the
Company or any Subsidiary Guarantor, as such, shall have any liability for any obligations of the
Company or any Subsidiary Guarantor under the Securities, this Indenture or any Subsidiary
Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their
creation. By accepting a Security, each Holder shall be deemed to have waived and released all such
liability. The waiver and release shall be a party of the consideration for the issue of the
Securities.

ARTICLE TWO

SECURITY FORMS

     SECTION 201. Forms Generally.

     The Securities of each series and, if applicable, the notations of Subsidiary Guarantees to be
endorsed thereon shall be in substantially the form set forth in this Article, or in such other
form as shall be established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon as may be required
to comply with the rules of any securities exchange or Depositary therefor or as may, consistently
herewith, be determined by the officers executing such Securities or notations of Subsidiary
Guarantees, as the case may be, as evidenced by their execution thereof. If the form of Securities
of any series is established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 303 for the authentication and delivery of such Securities.

     The definitive Securities shall be printed, lithographed or engraved on steel engraved borders
or may be produced in any other manner, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.

8

 

     SECTION 202. Form of Face of Security.

[Insert any legend required by the Internal Revenue Code and the regulations thereunder.]

	 	 	 	 	 	 	 
	 

	 	Approach Resources Inc.	 	 	 	 
	 
	 	 	 	 	 	 
	No._________________________

	 	 	 	 	$_______________________

     Approach Resources Inc., a corporation duly organized and existing under the laws of Delaware
(herein called the “Company,” which term includes any successor Person under the Indenture
hereinafter
referred to), for value received, hereby promises to pay to _______________, or registered assigns, the principal sum of ______________ Dollars on ___________________________ [if the Security is to bear interest prior to Maturity, insert — , and to pay interest
thereon from _______________ or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually on _______________ and _______________ in each year,
commencing _______________, at the rate of __________% per annum, until the principal hereof is paid or made available for payment, provided that
any principal and premium, and any such installment of interest, which is overdue shall bear
interest at the rate of ___% per annum (to the extent that the payment of such interest shall be
legally enforceable), from the dates such amounts are due until they are paid or made available for
payment, and such interest shall be payable on demand. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be the __________ or __________(whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid
to the Person in whose name this Security (or one or more Predecessor Securities) is registered at
the close of business on a Special Record Date for the payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not
less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on which the Securities of
this series may be listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture].

     [If the Security is not to bear interest prior to Maturity, insert — The principal of this
Security shall not bear interest except in the case of a default in payment of principal upon
acceleration, upon redemption or at Stated Maturity and in such case the overdue principal and any
overdue premium shall bear interest at the rate of ___% per annum (to the extent that the payment
of such interest shall be legally enforceable), from the dates such amounts are due until they are
paid or made available for payment. Interest on any overdue principal or premium shall be payable
on demand. Any such interest on overdue principal or premium which is not paid on demand shall bear
interest at the rate of __________% per annum (to the extent that the payment of
such interest on interest shall be legally enforceable), from the date of such demand until the
amount so demanded is paid or made available for payment. Interest on any overdue interest shall be
payable on demand.]

     Payment of the principal of (and premium, if any) and [if applicable, insert — any such]
interest on this Security will be made at the office or agency of the Company maintained for that
purpose in __________, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the Security Register.

     Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.

     Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.

9

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed [under its
corporate seal].

Dated:

	 	 	 	 	 
	 	APPROACH RESOURCES INC.

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 

[Attest:

_______________________________]

     SECTION 203. Form of Reverse of Security.

     This Security is one of a duly authorized issue of securities of the Company (herein called
the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of
_______________, 20___(herein called the “Indenture”, which term
shall have the meaning assigned to it in such instrument), among the Company, the Subsidiary
Guarantors named therein and [TRUSTEE’S NAME], as Trustee (herein called the “Trustee”, which term
includes any successor trustee under the Indenture), and
reference is hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the Subsidiary Guarantors,
the Trustee, the holders of Senior Debt and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This Security is one of the
series designated on the face hereof [if applicable, insert — , limited in aggregate principal
amount to $ __________].

     [If applicable, insert — The Securities of this series are subject to redemption upon not
less than 30 nor more than 60 days’ notice by mail, [if applicable, insert — (1) on _______________ in any year commencing with the year __________
and ending with the year __________ through operation of the sinking fund for
this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any time [if
applicable, insert — on or after _______________, 20___], as a
whole or in part, at the election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount): If redeemed [if applicable, insert — on or before  ________________%, and if redeemed] during the 12-month period beginning _______________ of the years indicated,

	 	 	 	 	 	 	 
	Redemption	 	Redemption
	Year	 	Price	 	Year	 	Price
	 

	 	 
	 	 
	 	 

and thereafter at a Redemption Price equal to __________% of the principal
amount, together in the case of any such redemption [if applicable, insert — (whether through
operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable
to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]

     [If applicable, insert — The Securities of this series are subject to redemption upon not
less than 30 nor more than 60 days’ notice by mail, (1) on _______________ in any year commencing with the year ___ and ending with the year ___ through operation of
the sinking fund for this series at the Redemption Prices for redemption through operation of the
sinking fund (expressed as percentages of the principal amount) set forth in the table below, and
(2) at any time [if applicable, insert — on or after _______________], as a whole or in part, at the election of the Company, at the Redemption Prices for
redemption otherwise than through operation of the sinking fund (expressed as percentages of the
principal amount) set forth in the table below: If redeemed during the 12-month period beginning
___ of the years indicated,

	 	 	 	 	 
	 	 	Redemption Price For Redemption	 	Redemption Price For Redemption
	 	 	Through Operation of the Sinking	 	Otherwise Than Through Operation
	Year	 	Fund	 	of the Sinking Fund
	 

	 	 
	 	 

10

 

and thereafter at a Redemption Price equal to __________% of the principal
amount, together in the case of any such redemption (whether through operation of the sinking fund
or otherwise) with accrued interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the relevant Record
Dates referred to on the face hereof, all as provided in the Indenture.]

     [If applicable, insert — Notwithstanding the foregoing, the Company may not, prior to _______________, redeem any Securities of this series as contemplated by
[if applicable, insert — clause (2) of] the preceding paragraph as a part of, or in anticipation
of, any refunding operation by the application, directly or indirectly, of moneys borrowed having
an interest cost to the Company (calculated in accordance with generally accepted financial
practice) of less than __________% per annum.]

     [If applicable, insert — The sinking fund for this series provides for the redemption on _______________ in each year beginning with the year __________ and ending with the year __________ of [if applicable, insert — not
less than $__________ (“mandatory sinking fund”) and not more than] $__________ aggregate principal amount of Securities
of this series. Securities of this series acquired or redeemed by the Company otherwise than
through [if applicable, insert — mandatory] sinking fund payments may be credited against
subsequent [if applicable, insert — mandatory] sinking fund payments otherwise required to be made
[if applicable, insert — , in the inverse order in which they become due].]

     [If the Security is subject to redemption of any kind, insert — In the event of redemption of
this Security in part only, a new Security or Securities of this series and of like tenor for the
unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.]

     [If the Security is subject to conversion, insert — Subject to the provisions of the
Indenture, the Holder has the right to convert the principal amount of this Security into fully
paid and nonassessable
shares of Common Stock of the Company at the initial conversion price per share of Common
Stock of $__________ (or $__________ in principal amount of Securities for each such share of Common Stock), or at the
adjusted conversion price then in effect, if adjustment has been made as provided in the Indenture,
upon surrender of the Security to the Conversion Agent, together with a fully executed notice in
substantially the form attached hereto and, if required by the Indenture, an amount equal to
accrued interest payable on this Security.]

     The indebtedness evidenced by this Security is, to the extent provided in the Indenture,
subordinate and subject in right of payment to the prior payment in full of all Senior Debt of the
Company, and this Security is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee
his attorney-in-fact for any and all such purposes.

     [If applicable, insert — As provided in the Indenture and subject to certain limitations
therein set forth, the obligations of the Company under this Security are guaranteed on a senior
subordinated basis pursuant to the Indenture as indicated in the notation of Subsidiary Guarantee
endorsed hereon. The Indenture provides that a Subsidiary Guarantor shall be released from its
Subsidiary Guarantee upon compliance with certain conditions.]

     [If applicable, insert — The Indenture contains provisions for Defeasance at any time of [the
entire indebtedness of this Security] [or] [certain restrictive covenants and Events of Default
with respect to this Security] [, in each case] upon compliance with certain conditions set forth
in the Indenture.]

     [If the Security is not an Original Issue Discount Security, insert — If an Event of Default
with respect to Securities of this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the manner and with the effect
provided in the Indenture.]

     [If the Security is an Original Issue Discount Security, insert — If an Event of Default with
respect to Securities of this series shall occur and be continuing, an amount of principal of the
Securities of this series may be declared due and payable in the manner and with the effect
provided in the Indenture. Such amount shall be equal to — insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and payable and (ii) of
interest on any overdue principal, premium and interest (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the

11

 

Company’s obligations in respect
of the payment of the principal of and premium and interest, if any, on the Securities of this
series shall terminate.]

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the Securities of each series at the
time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

     As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall
have previously given the Trustee written notice of a continuing Event of Default with respect to
the Securities of this series, the Holders of not less than 25% in principal amount of the
Securities of this series at the time Outstanding shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default as Trustee and offered the Trustee
reasonable security or indemnity, and the Trustee shall not have received from the Holders of a
majority in principal amount of Securities of this series at the time Outstanding a direction
inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days
after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any payment of principal
hereof or any premium or interest hereon on or after the respective due dates expressed herein [if
applicable, insert — or the right to convert this Security in accordance with its terms].

     No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of and any premium and interest on this Security at the times, place and rate, and in
the coin or currency, herein prescribed [if applicable, insert — and to convert this Security in
accordance with its terms].

     As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in any place where the
principal of and any premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.

     The Securities of this series are issuable only in registered form without coupons in
denominations of $ __________ and any integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.

     No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

     Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

     All terms used in this Security which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.

     SECTION 204. Form of Notation of Subsidiary Guarantee.

NOTATION OF SUBSIDIARY GUARANTEE

     Each of the Subsidiary Guarantors (which term includes any successor Person under the
Indenture) has fully, unconditionally and absolutely guaranteed, to the extent set forth in the
Indenture and

12

 

subject to the provisions in the Indenture, the due and punctual payment of the
principal of, and premium, if any, and interest on the Securities and all other amounts due and
payable under the Indenture and the Securities by the Company.

     The obligations of the Subsidiary Guarantors to the Holders of Securities and to the Trustee
pursuant to the Subsidiary Guarantee and the Indenture are expressly set forth in Article Thirteen
of the Indenture and reference is hereby made to the Indenture for the precise terms of the
Subsidiary Guarantee.

	 	 	 	 	 
	 	[Insert Names of Subsidiary Guarantors]

 	 
	 	By:  	 	 
	 	 	Title: 	 	 
	 

     SECTION 205. Form of Legend for Global Securities.

Unless otherwise specified as contemplated by Section 301 for the Securities evidenced
thereby, every Global Security authenticated and delivered hereunder shall bear a legend in
substantially the following form:

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED
IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART
MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

     SECTION 206. Form of Trustee’s Certificate of Authentication.

     The Trustee’s certificates of authentication shall be in substantially the following form:

This is one of the Securities of the series designated therein referred to in the within-mentioned
Indenture.

	 	 	 	 	 
	 	[TRUSTEE’S NAME],

As Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 

     SECTION 207. Form of Conversion Notice.

     Each convertible Security shall have attached thereto, or set forth on the reverse of the
Security, a notice of conversion in substantially the following form:

Conversion Notice

To: Approach Resources Inc.

     The undersigned owner of this Security hereby: (i) irrevocably exercises the option to convert
this Security, or the portion hereof below designated, for shares of Common Stock of Approach
Resources Inc. in accordance with the terms of the Indenture referred to in this Security and (ii)
directs that such shares of Common Stock deliverable upon the conversion, together with any check
in payment for fractional shares and any Security(ies) representing any unconverted principal
amount hereof, be issued and delivered to the registered holder hereof unless a different name has
been indicated below. If shares are to be delivered registered in the name of a Person other than
the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any
amount required to be paid by the undersigned on account of interest accompanies this Security.

13

 

	 	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 
	 	Signature 

	 	 

     Fill in for registration of shares if to be delivered, and of Securities if to be issued,
otherwise than to and in the name of the registered holder.

	 	 	 	 	 
	 	 	 
	 	 	 
	 	Social Security or other
Taxpayer Identification Number 	 
	 	 	 	 
	 

 

(Name)

 

(Please print name and address)

Principal amount to be converted: (if less than all)

$ __________________________________

Signature Guarantee*

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature acceptable
to the Trustee).

ARTICLE THREE

THE SECURITIES

     SECTION 301. Amount Unlimited; Issuable in Series.

     The aggregate principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.

     The Securities may be issued in one or more series. There shall be established in or pursuant
to a Board Resolution and, subject to Section 303, set forth, or determined in the manner provided,
in an Officers’ Certificate, or established in one or more indentures supplemental hereto, prior to
the issuance of Securities of any series,

     (1) the title of the Securities of the series (which shall distinguish the Securities of the
series from Securities of any other series);

     (2) if the Securities of the series will not have the benefit of the Subsidiary Guarantees of
the Subsidiary Guarantors;

     (3) any change to the subordination provisions which applies to the Securities of the series
from those contained in Article Twelve with respect to the Securities and/or, if applicable, those
contained in Article Fourteen with respect to the Subsidiary Guarantees, and the definitions of
Senior Debt and Designated Senior Debt which shall apply to the Securities of the series, and, if
applicable, the Subsidiary Guarantees;

     (4) any limit upon the aggregate principal amount of the Securities of the series which may be
authenticated and delivered under this Indenture (except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series
pursuant to Section 304, 305, 306, 906 or 1107 and except for any Securities which, pursuant to
Section 303, are deemed never to have been authenticated and delivered hereunder);

     (5) the Person to whom any interest on a Security of the series shall be payable, if other
than the Person in whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest;

     (6) the date or dates on which the principal of any Securities of the series is payable;

     (7) the rate or rates at which any Securities of the series shall bear interest, if any, the
date or dates from which any such interest shall accrue, the Interest Payment Dates on which any
such interest shall be payable and the Regular Record Date for any such interest payable on any
Interest Payment Date;

     (8) the place or places where the principal of and any premium and interest on any
Securities of the series shall be payable;

14

 

     (9) the period or periods within which, the price or prices at which and the terms and
conditions upon which any Securities of the series may be redeemed, in whole or in part, at the
option of the Company and, if other than by a Board Resolution, the manner in which any election by
the Company to redeem the Securities shall be evidenced;

     (10) the obligation, if any, of the Company to redeem or purchase any Securities of the series
pursuant to any sinking fund or analogous provisions or at the option of the Holder thereof and the
period or periods within which, the price or prices at which and the terms and conditions upon
which any Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to
such obligation;

     (11) if other than denominations of $1,000 and any integral multiple thereof, the
denominations in which any Securities of the series shall be issuable;

     (12) if the amount of principal of or any premium or interest on any Securities of the series
may be determined with reference to an index or pursuant to a formula, the manner in which such
amounts shall be determined;

     (13) if other than the currency of the United States of America, the currency, currencies or
currency units in which the principal of or any premium or interest on any Securities of the series
shall be payable and the manner of determining the equivalent thereof in the currency of the United
States of America for any purpose, including for purposes of the definition of “Outstanding” in
Section 101;

     (14) if the principal of or any premium or interest on any Securities of the series is to be
payable, at the election of the Company or the Holder thereof, in one or more currencies or
currency units other than that or those in which such Securities are stated to be payable, the
currency, currencies or currency units in which the principal of or any premium or interest on such
Securities as to which such election is made shall be payable, the periods within which and the
terms and conditions upon which such election is to be made and the amount so payable (or the
manner in which such amount shall be determined);

     (15) if other than the entire principal amount thereof, the portion of the principal amount of
any Securities of the series which shall be payable upon declaration of acceleration of the
Maturity thereof pursuant to Section 502;

     (16) if the principal amount payable at the Stated Maturity of any Securities of the series
will not be determinable as of any one or more dates prior to the Stated Maturity, the amount which
shall be deemed to be the principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which shall be due and payable upon
any Maturity other than the Stated Maturity or which shall be deemed to be Outstanding as of any
date prior to the Stated Maturity (or, in any such case, the manner in which such amount deemed to
be the principal amount shall be determined);

     (17) if applicable, that the Securities of the series, in whole or any specified part, shall
be defeasible pursuant to Section 1502 or Section 1503 or both such Sections and, if other than by
a Board Resolution, the manner in which any election by the Company to defease such Securities
shall be evidenced;

     (18) if applicable, that any Securities of the series shall be issuable in whole or in part in
the form of one or more Global Securities and, in such case, the respective Depositories for such
Global Securities, the form of any legend or legends which shall be borne by any such Global
Security in addition to or in lieu of that set forth in Section 205 and any circumstances in
addition to or in lieu of those set forth in clause (2) of the last paragraph of Section 305 in
which any such Global Security may be exchanged in whole or in part for Securities registered, and
any transfer of such Global Security in whole or in part may be registered, in the name or names of
Persons other than the Depositary for such Global Security or a nominee thereof;

     (19) any addition to or change in the Events of Default which applies to any Securities of the
series and any change in the right of the Trustee or the requisite Holders of such Securities to
declare the principal amount thereof due and payable pursuant to Section 502;

     (20) any addition to or change in the covenants set forth in Article Ten which applies to
Securities of the series;

     (21) whether the Securities of the series will be convertible into Common Stock (or cash in
lieu thereof) and, if so, the terms and conditions upon which such conversion will be effected; and

     (22) any other terms of the series (which terms shall not be inconsistent with the provisions
of this Indenture, except as permitted by Section 901(5)).

     All Securities of any one series shall be substantially identical except as to denomination
and except as may otherwise be provided in or pursuant to the Board Resolution referred to above
and (subject

15

 

to Section 303) set forth, or determined in the manner provided, in the Officers’ Certificate
referred to above or in any such indenture supplemental hereto.

     If any of the terms of the series are established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or
an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of
the Officers’ Certificate setting forth the terms of the series.

     The Securities of each series shall have the benefit of the Subsidiary Guarantees unless the
Company elects otherwise upon the establishment of a series pursuant to this Section 301.

     SECTION 302. Denominations.

     The Securities of each series shall be issuable only in registered form without coupons and
only in such denominations as shall be specified as contemplated by Section 301. In the absence of
any such specified denomination with respect to the Securities of any series, the Securities of
such series shall be issuable in denominations of $1,000 and any integral multiple thereof.

     SECTION 303. Execution, Authentication, Delivery and Dating.

     The Securities shall be executed on behalf of the Company by its Chairman of the Board of
Directors, its Vice Chairman of the Board of Directors, its President or one of its Vice
Presidents. If its corporate seal is reproduced thereon, then it shall be attested by its Secretary
or one of its Assistant Secretaries. The signature of any of these officers on the Securities may
be manual or facsimile.

     Securities bearing the manual or facsimile signatures of individuals who were at any time the
proper officers of the Company shall bind the Company, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.

     At any time and from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities of any series executed by the Company and, if applicable, having
endorsed thereon the notations of Subsidiary Guarantees executed as provided in Section 1303 by the
Subsidiary Guarantors to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. If the form or terms of the Securities of the
series have been established by or pursuant to one or more Board Resolutions as permitted by
Sections 201 and 301, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled
to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of
Counsel stating,

     (1) if the form of such Securities has been established by or pursuant to Board Resolution as
permitted by Section 201, that such form has been established in conformity with the provisions of
this Indenture;

     (2) if the terms of such Securities have been established by or pursuant to Board Resolution
as permitted by Section 301, that such terms have been established in conformity with the
provisions of this Indenture; and

     (3) that such Securities, when authenticated and delivered by the Trustee and issued by the
Company in the manner and subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company, and, if applicable, the notations
of Subsidiary Guarantees endorsed thereon will constitute valid and legally binding obligations of
the Subsidiary Guarantors, enforceable in accordance with their 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.

     If such form or terms have been so established, the Trustee shall not be required to
authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect
the Trustee’s own rights, duties or immunities under the Securities and this Indenture or otherwise
in a manner which is not reasonably acceptable to the Trustee.

     Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all
Securities of a series are not to be originally issued at one time, it shall not be necessary to
deliver the Officers’ Certificate otherwise required pursuant to Section 301 or the Company Order
and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security

16

 

of such series if such documents are delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued.

     Each Security shall be dated the date of its authentication.

     No Security or Subsidiary Guarantee shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a certificate of
authentication substantially in the form provided for herein executed by the Trustee by manual
signature, and such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding
the foregoing, if any Security shall have been authenticated and delivered hereunder but never
issued and sold by the Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 309, for all purposes of this Indenture such Security shall be
deemed never to have been authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.

     SECTION 304. Temporary Securities.

     Pending the preparation of definitive Securities of any series, the Company may execute, and
upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities and, if applicable, having
endorsed thereon the notations of Subsidiary Guarantees in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as the officers
executing such Securities and, if applicable, notations of Subsidiary Guarantees may determine, as
evidenced by their execution of such Securities and notations of Subsidiary Guarantees.

     If temporary Securities of any series are issued, the Company will cause definitive Securities
of that series to be prepared without unreasonable delay. After the preparation of definitive
Securities of such series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary Securities of such series at
the office or agency of the Company in a Place of Payment for that series, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Securities of any series, the
Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or
more definitive Securities of the same series, of any authorized denominations and of like tenor
and aggregate principal amount and, if applicable, having endorsed thereon the notations of
Subsidiary Guarantees executed by the Subsidiary Guarantors. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series and tenor.

     SECTION 305. Registration, Registration of Transfer and Exchange.

     The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register
(the register maintained in such office and in any other office or agency of the Company in a Place
of Payment being herein sometimes collectively referred to as the “Security Register”) in which,
subject to such reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby appointed
“Security Registrar” for the purpose of registering Securities and transfers of Securities as
herein provided.

     Upon surrender for registration of transfer of any Security of a series at the office or
agency of the Company in a Place of Payment for that series, the Company shall execute, if
applicable the Subsidiary Guarantors shall execute the notation of Subsidiary Guarantee endorsed
thereon and the Trustee shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of the same series, of any authorized denominations and of
like tenor and aggregate principal amount.

     At the option of the Holder, Securities of any series may be exchanged for other Securities of
the same series, of any authorized denominations and of like tenor and aggregate principal amount,
upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities
are so surrendered for exchange, the Company shall execute, if applicable the Subsidiary Guarantors
shall execute the notation of Subsidiary Guarantees endorsed thereon and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is entitled to
receive.

     All Securities issued upon any registration of transfer or exchange of Securities shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Securities surrendered upon such registration of transfer or exchange.

     Every Security presented or surrendered for registration of transfer or for exchange shall (if
so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written
instrument of

17

 

transfer in form satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.

     No service charge shall be made for any registration of transfer or exchange of Securities,
but the Company may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 906, 1107 or otherwise not involving any
transfer.

     If the Securities of any series (or of any series and specified tenor) are to be redeemed in
part, the Company shall not be required (A) to issue, register the transfer of or exchange any
Securities of that series (or of that series and specified tenor, as the case may be) during a
period beginning at the opening of business 15 days before the day of the mailing of a notice of
redemption of any such Securities selected for redemption under Section 1103 and ending at the
close of business on the day of such mailing, or (B) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part.

     The provisions of clauses (1), (2), (3) and (4) below shall apply only to Global Securities:

     (1) Each Global Security authenticated under this Indenture shall be registered in the name of
the Depositary designated for such Global Security or a nominee thereof and delivered to such
Depositary or a nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.

     (2) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged
in whole or in part for Securities registered, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the Depositary for such Global
Security or a nominee thereof unless (A) such Depositary (i) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or (ii) has ceased to be a
clearing agency registered under the Exchange Act, and in either case the Company fails to appoint
a successor Depositary within 90 days, (B) there shall have occurred and be continuing an Event of
Default with respect to such Global Security and the Depositary shall have notified the Trustee of
its decision to exchange such Global Security for Securities in certificated form, (C) subject to
the rules of the Depositary, the Company shall have elected to terminate the book-entry system
through the Depositary or (D) there shall exist such circumstances, if any, in addition to or in
lieu of the foregoing as have been specified for this purpose as contemplated by Section 301.

     (3) Subject to clause (2) above, any exchange of a Global Security for other Securities may be
made in whole or in part, and all Securities issued in exchange for a Global Security or any
portion thereof shall be registered in such names as the Depositary for such Global Security shall
direct.

     (4) Every Security authenticated and delivered upon registration of transfer of, or in
exchange for or in lieu of, a Global Security or any portion thereof, whether pursuant to this
Section, Section 304, 306, 906 or 1107 or otherwise, shall be authenticated and delivered in the
form of, and shall be, a Global Security, unless such Security is registered in the name of a
Person other than the Depositary for such Global Security or a nominee thereof.

     SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.

     If any mutilated Security is surrendered to the Trustee, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and
of like tenor and principal amount and bearing a number not contemporaneously outstanding and, if
applicable, the Subsidiary Guarantors shall execute the notation of Subsidiary Guarantee endorsed
thereon.

     If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction
of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be
required by them to save each of them and any agent of either of them harmless from any loss that
any of them may suffer if a Security is replaced, then, in the absence of notice to the Company or
the Trustee that such Security has been acquired by a protected purchaser, the Company shall
execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security, a new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding and, if applicable, the Subsidiary Guarantors
shall execute the notation of Subsidiary Guarantee endorsed thereon.

     In case any such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable or is to be converted, the Company in its discretion may, instead of issuing
a new Security, pay or authorize the conversion of such Security (without surrender thereof save in
the case of a mutilated Security).

18

 

     Upon the issuance of any new Security under this Section, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee) connected
therewith.

     Every new Security of any series issued pursuant to this Section in lieu of any destroyed,
lost or stolen Security shall constitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Securities of that series duly issued hereunder.

     The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement, payment or conversion of mutilated,
destroyed, lost or stolen Securities.

     SECTION 307. Payment of Interest; Interest Rights Preserved.

     Except as otherwise provided as contemplated by Section 301 with respect to any series of
Securities, interest on any Security which is payable, and is punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the Regular Record Date for
such interest.

     Any interest on any Security of any series which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall
forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:

     (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose
names the Securities of such series (or their respective Predecessor Securities) are registered at
the close of business on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security of such series and the date of
the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be given to each Holder of Securities of such series in the manner set forth in Section
106, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following clause (2).

     (2) The Company may make payment of any Defaulted Interest on the Securities of any series in
any other lawful manner not inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.

     Subject to the foregoing provisions of this Section, each Security delivered under this
Indenture upon registration of transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such
other Security.

     SECTION 308. Persons Deemed Owners.

     Prior to due presentment of a Security for registration of transfer, the Company, the
Subsidiary Guarantors, the Trustee and any agent of the Company, the Subsidiary Guarantors, or the
Trustee may treat the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and any premium and (subject to
Section 307) any interest on such Security and for all other purposes whatsoever, whether or not
such Security be overdue, and neither the

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Company, any Subsidiary Guarantor, the Trustee nor any agent of the Company, any Subsidiary
Guarantor, or the Trustee shall be affected by notice to the contrary.

     SECTION 309. Cancellation.

     All Securities surrendered for payment, redemption, purchase, registration of transfer or
exchange or for credit against any sinking fund payment shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver
to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of in
accordance with its standard procedures, unless as directed by a Company Order.

     SECTION 310. Computation of Interest.

     Except as otherwise specified as contemplated by Section 301 for Securities of any series,
interest on the Securities of each series shall be computed on the basis of a 360-day year of
twelve 30-day months.

ARTICLE FOUR

SATISFACTION AND DISCHARGE

     SECTION 401. Satisfaction and Discharge of Indenture.

     This Indenture shall upon Company Request cease to be of further effect with respect to the
Securities of any series, and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when

     (1) either

     (A) all Securities of such series theretofore authenticated and delivered (other than
(i) Securities of such series which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii) Securities of such series for whose
payment money has theretofore been deposited in trust or segregated and held in trust by
the Company and thereafter repaid to the Company or discharged from such trust, as provided
in Section 1003) have been delivered to the Trustee for cancellation; or

     (B) all such Securities of such series not theretofore delivered to the Trustee for
cancellation

     (i) have become due and payable, or

     (ii) will become due and payable at their Stated Maturity within one year, or

     (iii) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the Trustee
in the name, and at the expense, of the Company,

and the Company or, if applicable, a Subsidiary Guarantor, in the case of (i), (ii) or
(iii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose money in an amount sufficient, without consideration of any
reinvestment of interest, to pay and discharge the entire indebtedness on such Securities
not theretofore delivered to the Trustee for cancellation, for principal and any premium
and interest to the date of such deposit (in the case of Securities which have become due
and payable) or to the Stated Maturity or Redemption Date, as the case may be;

     (2) the Company or a Subsidiary Guarantor has paid or caused to be paid all other sums payable
hereunder by the Company and the Subsidiary Guarantors with respect to the Securities of such
series; and

     (3) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture with respect to the Securities of such series have
been complied with.

     Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the
Company to the Trustee under Section 607, the obligations of the Company with respect to the
Securities of such series under Sections 304, 305, 306, 1002 and 1003, any surviving rights of
conversion, the obligations of the Trustee to any Authenticating Agent under Section 614 and, if
money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this
Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003
shall survive.

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     SECTION 402. Application of Trust Money.

     Subject to the provisions of the last paragraph of Section 1003, all money deposited with the
Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine,
to the Persons entitled thereto, of the principal and any premium and interest for whose payment
such money has been deposited with the Trustee.

ARTICLE FIVE

REMEDIES

     SECTION 501. Events of Default.

     “Event of Default”, wherever used herein with respect to Securities of any series, means any
one of the following events (whatever the reason for such Event of Default and whether it shall be
occasioned by the provisions of Article Twelve or be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

     (1) default in the payment of any interest upon any Security of that series when it becomes
due and payable, and continuance of such default for a period of 30 days; or

     (2) default in the payment of the principal of or any premium on any Security of that series
at its Maturity; or

     (3) default in the deposit of any sinking fund payment, when and as due by the terms of a
Security of that series; or

     (4) default in the performance, or breach, of any covenant of the Company or, if the
Subsidiary Guarantors have issued Subsidiary Guarantees with respect to the Securities of such
series, any Subsidiary Guarantor in Article Eight of this Indenture; or

     (5) default in the performance, or breach, of any covenant or warranty of the Company or, if
the Subsidiary Guarantors have issued Subsidiary Guarantees with respect to the Securities of such
series, any Subsidiary Guarantor in this Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section specifically dealt with or which has
expressly been included in this Indenture solely for the benefit of series of Securities other than
that series), and continuance of such default or breach for a period of 60 days after there has
been given, by registered or certified mail, to the Company by the Trustee or to the Company and
the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of
that series a written notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a “Notice of Default” hereunder; or

     (6) any Debt of the Company, any Significant Subsidiary or, if the Subsidiary Guarantors have
issued Subsidiary Guarantees with respect to the Securities of such series, any Subsidiary
Guarantor is not paid within any applicable grace period after final maturity or is accelerated by
the holders thereof because of a default and the total amount of such Debt unpaid or accelerated
exceeds $20.0 million, or its foreign currency equivalent at the time; or

     (7) any judgment or decree for the payment of money in excess of $20.0 million or its foreign
currency equivalent at the time it is entered against the Company, any Significant Subsidiary or,
if the Subsidiary Guarantors have issued Subsidiary Guarantees with respect to the Securities of
such series, any Subsidiary Guarantor, remains outstanding for a period of 60 consecutive days
following the entry of such judgment or decree and is not discharged, waived or the execution
thereof stayed; or

     (8) the entry by a court having jurisdiction in the premises of (A) a decree or order for
relief in respect of the Company, any Significant Subsidiary or, if the Subsidiary Guarantors have
issued Subsidiary Guarantees with respect to the Securities of such series, any Subsidiary
Guarantor in an involuntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company, any
Significant Subsidiary or any such Subsidiary Guarantor a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company, any Significant Subsidiary or any such Subsidiary Guarantor under any
applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company, any Significant Subsidiary or any
such Subsidiary Guarantor or of any substantial part of its or their property, or ordering the
winding up or liquidation of its or their affairs, and the continuance of any such decree or order
for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive
days; or

     (9) the commencement by the Company, any Significant Subsidiary or, if the Subsidiary
Guarantors have issued Subsidiary Guarantees with respect to the Securities of such series, any
Subsidiary

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Guarantor of a voluntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it or them to the entry of a decree or order
for relief in respect of the Company, any Significant Subsidiary or any such Subsidiary Guarantor
in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it or them, or the filing by it or them of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law, or the consent by it or
them to the filing of such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company, any
Significant Subsidiary or any such Subsidiary Guarantor or of any substantial part of its or their
property, or the making by it or them of an assignment for the benefit of creditors, or the
admission by it or them in writing of its or their inability to pay its or their debts generally as
they become due, or the taking of corporate action by the Company, any Significant Subsidiary or
any such Subsidiary Guarantor in furtherance of any such action; or

     (10) in the event the Subsidiary Guarantors have issued Subsidiary Guarantees with respect to
the Securities of such series, the Subsidiary Guarantee of any Subsidiary Guarantor is held by a
final non-appealable order or judgment of a court of competent jurisdiction to be unenforceable or
invalid or ceases for any reason to be in full force and effect (other than in accordance with the
terms of this Indenture) or any Subsidiary Guarantor or any Person acting on behalf of any
Subsidiary Guarantor denies or disaffirms such Subsidiary Guarantor’s obligations under its
Subsidiary Guarantee (other than by reason of a release of such Subsidiary Guarantor from its
Subsidiary Guarantee in accordance with the terms of this Indenture); or

     (11) any other Event of Default provided with respect to Securities of that series.

     SECTION 502. Acceleration of Maturity; Rescission and Annulment.

     If an Event of Default (other than an Event of Default with respect to the Company specified
in Section 501(8) or 501(9)) with respect to Securities of any series at the time Outstanding
occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25%
in principal amount of the Outstanding Securities of that series may declare the principal amount
of all the Securities of that series (or, if any Securities of that series are Original Issue
Discount Securities, such portion of the principal amount of such Securities as may be specified by
the terms thereof) to be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), and upon any such declaration such principal amount (or specified
amount), together with any accrued and unpaid interest thereon, shall become immediately due and
payable. If an Event of Default with respect to the Company specified in Section 501(8) or 501 (9)
with respect to Securities of any series at the time Outstanding occurs, the principal amount of
all the Securities of that series (or, if any Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may be specified by the
terms thereof), together with any accrued and unpaid interest thereon, shall automatically, and
without any declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable.

     At any time after such a declaration of acceleration with respect to Securities of any series
has been made and before a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of
the Outstanding Securities of that series, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if

     (1) the Company or, if applicable, any Subsidiary Guarantor has paid or deposited with the
Trustee a sum sufficient to pay

     (A) all overdue interest on all Securities of that series,

     (B) the principal of (and premium, if any, on) any Securities of that series which
have become due otherwise than by such declaration of acceleration and any interest thereon
at the rate or rates prescribed therefor in such Securities,

     (C) to the extent that payment of such interest is lawful, interest upon overdue
interest at the rate or rates prescribed therefor in such Securities, and

     (D) all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel;
and

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     (2) all Events of Default with respect to Securities of that series, other than the
non-payment of the principal of Securities of that series which has become due solely by such
declaration of acceleration, have been cured or waived as provided in Section 513.

     No such rescission shall affect any subsequent default or impair any right consequent thereon.

     SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.

     The Company covenants that if

     (1) default is made in the payment of any interest on any Security when such interest becomes
due and payable and such default continues for a period of 30 days, or

     (2) default is made in the payment of the principal of (or premium, if any, on) any Security
at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such
Securities, the whole amount then due and payable on such Securities for principal and any premium
and interest and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.

     If an Event of Default with respect to Securities of any series occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein,
or to enforce any other proper remedy.

     SECTION 504. Trustee May File Proofs of Claim.

     In case of any judicial proceeding relative to the Company, any Subsidiary Guarantor or any
other obligor upon the Securities, or the property or creditors of the Company, any Subsidiary
Guarantor or any other obligor upon the Securities, the Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise, to take any and all actions authorized under the
Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 607.

     No provision of this Indenture shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or any Subsidiary Guarantee or the rights of any
Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the
election of a trustee in bankruptcy or similar official and be a member of a creditors’ or other
similar committee.

     SECTION 505. Trustee May Enforce Claims Without Possession of Securities.

     All rights of action and claims under this Indenture or the Securities or any Subsidiary
Guarantee may be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable
benefit of the Holders of the Securities in respect of which such judgment has been recovered.

     SECTION 506. Application of Money Collected.

     Any money collected by the Trustee pursuant to this Article shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on
account of principal or any premium or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

     FIRST: To the payment of all amounts due the Trustee under Section 607;

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     SECOND: Subject to Article Twelve and Article Fourteen, to the payment of the amounts then due
and unpaid for principal of and any premium and interest on the Securities in respect of which or
for the benefit of which such money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Securities for principal and any premium
and interest, respectively; and

     THIRD: The balance, if any, to the Company or to such other Person as a court of competent
jurisdiction shall direct.

     SECTION 507. Limitation on Suits.

     No Holder of any Security of any series shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless

     (1) such Holder has previously given written notice to the Trustee of a continuing Event of
Default with respect to the Securities of that series;

     (2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that
series shall have made written request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;

     (3) such Holder or Holders have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities to be incurred in compliance with such request;

     (4) the Trustee for 60 days after its receipt of such notice, request and offer of security or
indemnity has failed to institute any such proceeding; and

     (5) no direction inconsistent with such written request has been given to the Trustee during
such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities
of that series;
it being understood and intended that no one or more of such Holders shall have any right in any
manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such Holders.

     SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.

     Notwithstanding any other provision in this Indenture, the Holder of any Security shall have
the right, which is absolute and unconditional, to receive payment of the principal of and any
premium and (subject to Section 307) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption or offer by the Company to purchase the
Securities pursuant to the terms of this Indenture, on the Redemption Date or purchase date, as
applicable) and, if applicable, to convert such Security in accordance with its terms, and to
institute suit for the enforcement of any such right, and such rights shall not be impaired without
the consent of such Holder.

     SECTION 509. Restoration of Rights and Remedies.

     If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every such case, subject to
any determination in such proceeding, the Company, the Subsidiary Guarantors, the Trustee and the
Holders shall be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.

     SECTION 510. Rights and Remedies Cumulative.

     Except as otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.

     SECTION 511. Delay or Omission Not Waiver.

     No delay or omission of the Trustee or of any Holder of any Securities to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a
waiver of

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any such Event of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

     SECTION 512. Control by Holders.

     The Holders of a majority in principal amount of the Outstanding Securities of any series
shall have the right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such series, provided that

     (1) such direction shall not be in conflict with any rule of law or with this Indenture, and

     (2) the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.

     SECTION 513. Waiver of Past Defaults.

     The Holders of not less than a majority in principal amount of the Outstanding Securities of
any series may on behalf of the Holders of all the Securities of such series waive any past default
hereunder with respect to such series and its consequences, except a default

     (1) in the payment of the principal of or any premium or interest on any Security of such
series (including any Security which is required to have been purchased by the Company pursuant to
an offer to purchase by the Company made pursuant to the terms of this Indenture), or

     (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified
or amended without the consent of the Holder of each Outstanding Security of such series.

     Upon any such waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right consequent thereon.

     SECTION 514. Undertaking for Costs.

     In any suit for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require
any party litigant in such suit to file an undertaking to pay the costs of such suit, and may
assess costs against any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, however, that neither this Section nor the Trust Indenture Act shall be
deemed to authorize any court to require such an undertaking or to make such an assessment in any
suit instituted by the Company or any Subsidiary Guarantor.

     SECTION 515. Waiver of Usury, Stay or Extension Laws.

     Each of the Company and the Subsidiary Guarantors covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the performance of this
Indenture; and each of the Company and the Subsidiary Guarantors (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that
it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE SIX

THE TRUSTEE

     SECTION 601. Certain Duties and Responsibilities.

     The duties and responsibilities of the Trustee shall be as expressly set forth in this
Indenture and as provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision
of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether
or not therein expressly so provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.

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     SECTION 602. Notice of Defaults.

     If a default occurs hereunder with respect to Securities of any series, the Trustee shall give
the Holders of Securities of such series notice of such default as and to the extent provided by
the Trust Indenture Act; provided, however, that in the case of any default of the character
specified in Section 501(5) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the purpose of this
Section, the term “default” means any event which is, or after notice or lapse of time or both
would become, an Event of Default with respect to Securities of such series.

     SECTION 603. Certain Rights of Trustee.

     Subject to the provisions of Section 601:

     (1) the Trustee may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper party or parties;

     (2) any request or direction of the Company mentioned herein shall be sufficiently evidenced
by a Company Request or Company Order, and any resolution of the Board of Directors shall be
sufficiently evidenced by a Board Resolution;

     (3) whenever in the administration of this Indenture the Trustee shall deem it desirable that
a matter be proved or established prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers’ Certificate;

     (4) the Trustee may consult with counsel and the written advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;

     (5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with such request or
direction;

     (6) the Trustee shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and

     (7) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.

     SECTION 604. Not Responsible for Recitals or Issuance of Securities.

     The recitals contained herein and in the Securities and the notations of Subsidiary
Guarantees, except the Trustee’s certificates of authentication, shall be taken as the statements
of the Company or the Subsidiary Guarantors, as the case may be, and neither the Trustee nor any
Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the Securities or the
Subsidiary Guarantees. Neither the Trustee nor any Authenticating Agent shall be accountable for
the use or application by the Company of Securities or the proceeds thereof.

     SECTION 605. May Hold Securities.

     The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other
agent of the Company or any Subsidiary Guarantor, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal
with the Company and any Subsidiary Guarantor with the same rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.

     SECTION 606. Money Held in Trust.

     Money held by the Trustee in trust hereunder need not be segregated from other funds except to
the extent required by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Company or any Subsidiary Guarantor,
as the case may be.

     SECTION 607. Compensation and Reimbursement.

     The Company and each Subsidiary Guarantor jointly and severally agree:

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     (1) to pay to the Trustee from time to time reasonable compensation for all services rendered
by it hereunder (which compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);

     (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request
for all reasonable expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or bad faith; and

     (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder, including the costs and expenses
of defending itself against any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder.

     SECTION 608. Conflicting Interests.

     If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust
Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the
manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.

     To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to Securities of more than
one series.

     SECTION 609. Corporate Trustee Required; Eligibility.

     There shall at all times be one (and only one) Trustee hereunder with respect to the
Securities of each series, which may be Trustee hereunder for Securities of one or more other
series. Each Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act to act
as such, and has a combined capital and surplus of at least $50,000,000. If any such Person
publishes reports of condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus of such Person shall be
deemed to be its combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee with respect to the Securities of any series shall cease
to be eligible in accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.

     SECTION 610. Resignation and Removal; Appointment of Successor.

     No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to
this Article shall become effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 611.

     The Trustee may resign at any time with respect to the Securities of one or more series by
giving written notice thereof to the Company. If the instrument of acceptance by a successor
Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the Securities of such
series.

     The Trustee may be removed at any time with respect to the Securities of any series by Act of
the Holders of a majority in principal amount of the Outstanding Securities of such series,
delivered to the Trustee and to the Company.

     If at any time:

     (1) the Trustee shall fail to comply with Section 608 after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or

     (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after
written request therefor by the Company or by any such Holder, or

     (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent
or a receiver of the Trustee or of its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the Trustee with respect
to all Securities, or (B) subject to Section 514, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.

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     If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall
occur in the office of Trustee for any cause, with respect to the Securities of one or more series,
the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of such series and
that at any time there shall be only one Trustee with respect to the Securities of any particular
series) and shall comply with the applicable requirements of Section 611. If, within one year after
such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the Holders of a majority
in principal amount of the Outstanding Securities of such series delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 611, become the successor
Trustee with respect to the Securities of such series and to that extent supersede the successor
Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.

     The Company shall give notice of each resignation and each removal of the Trustee with respect
to the Securities of any series and each appointment of a successor Trustee with respect to the
Securities of any series to all Holders of Securities of such series in the manner provided in
Section 106. Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.

     SECTION 611. Acceptance of Appointment by Successor.

     In case of the appointment hereunder of a successor Trustee with respect to all Securities,
every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company,
the Subsidiary Guarantors and to the retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of
the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.

     In case of the appointment hereunder of a successor Trustee with respect to the Securities of
one or more (but not all) series, the Company, the Subsidiary Guarantors, the retiring Trustee and
each successor Trustee with respect to the Securities of one or more series shall execute and
deliver an indenture supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be necessary or desirable to
transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable
to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series as to which the retiring Trustee is not retiring shall
continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each
such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or
trusts hereunder administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to which the appointment of
such successor Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.

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     Upon request of any such successor Trustee, the Company and the Subsidiary Guarantors shall
execute any and all instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts referred to in the first or second preceding
paragraph, as the case may be.

     No successor Trustee shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be qualified and eligible under this Article.

     SECTION 612. Merger, Conversion, Consolidation or Succession to Business.

     Any Person into which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder, provided such Person
shall be otherwise qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. As soon as practicable, the
successor Trustee shall mail a notice of its succession to the Company and the Holders of the
Securities then Outstanding. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor Trustee had itself authenticated such
Securities.

     SECTION 613. Preferential Collection of Claims Against Company and Subsidiary
Guarantors.

     If and when the Trustee shall be or become a creditor of the Company, any Subsidiary Guarantor
or any other obligor upon the Securities, the Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against the Company, such Subsidiary
Guarantor or any such other obligor.

     SECTION 614. Appointment of Authenticating Agent.

     The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities
of such series issued upon original issue and upon exchange, registration of transfer, conversion
or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee’s certificate of
authentication, such reference shall be deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a Person organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia, authorized under such laws
to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000
and subject to supervision or examination by Federal or State authority. If such Authenticating
Agent publishes reports of condition at least annually, pursuant to law or to the requirements of
said supervising or examining authority, then for the purposes of this Section, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the effect specified in
this Section.

     Any Person into which an Authenticating Agent may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any Person succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent,
provided such Person shall be otherwise eligible under this Section, without the execution or
filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

     An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee
and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may
appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment in the manner provided in Section 106 to all Holders of Securities of
the series with respect to which such

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Authenticating Agent will serve. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of this Section.

     The Trustee agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this Section, and the Trustee shall be entitled to be
reimbursed for such payments, subject to the provisions of Section 607.

     If an appointment with respect to one or more series is made pursuant to this Section, the
Securities of such series may have endorsed thereon, in addition to the Trustee’s certificate of
authentication, an alternative certificate of authentication in the following form:

This is one of the Securities of the series designated therein referred to in the within-mentioned
Indenture.

	 	 	 	 	 
	 	[TRUSTEE’S NAME],

As Trustee

 	 
	 	By:  	 	 
	 	 	As Authenticating Agent 	 
	 	 	 
	 	By:  	
 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 

ARTICLE SEVEN

HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY

     SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.

     The Company will furnish or cause to be furnished to the Trustee with respect to the
Securities of each series:

     (1) not more than 10 days after each record date with respect to the payment of interest, if
any, a list, in such form as the Trustee may reasonably require, of the names and addresses of the
Holders of Securities of such series as of such record date, and

     (2) at such other times as the Trustee may request in writing, within 30 days after the
receipt by the Company of any such request, a list of similar form and content as of a date not
more than 15 days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its capacity as
Security Registrar.

     SECTION 702. Preservation of Information; Communications to Holders.

     The Trustee shall preserve, in as current a form as is reasonably practicable, the names and
addresses of Holders contained in the most recent list furnished to the Trustee as provided in
Section 701 and the names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701
upon receipt of a new list so furnished.

     The rights of Holders to communicate with other Holders with respect to their rights under
this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee,
shall be as provided by the Trust Indenture Act.

     Every Holder of Securities, by receiving and holding the same, agrees with the Company and the
Trustee that neither the Company, the Subsidiary Guarantors nor the Trustee nor any agent of any of
them shall be held accountable by reason of any disclosure of information as to names and addresses
of Holders made pursuant to the Trust Indenture Act.

     SECTION 703. Reports by Trustee.

     The Trustee shall transmit to Holders such reports concerning the Trustee and its actions
under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto.

     A copy of each such report shall, at the time of such transmission to Holders, be filed by the
Trustee with each stock exchange upon which any Securities are listed, with the Commission and with
the Company. The Company will notify the Trustee when any Securities are listed on any stock
exchange.

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     SECTION 704. Reports by Company and Subsidiary Guarantors.

     The Company and each of the Subsidiary Guarantors shall file with the Trustee and the
Commission, and transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant to such Act; provided that any such information, documents or reports
required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall
be filed with the Trustee within 15 days after the same is filed with the Commission.

     ARTICLE
EIGHT

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

     SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.

     The Company shall not, in a single transaction or a series of related transactions,
consolidate with or merge into any other Person or permit any other Person to consolidate with or
merge into the Company or, directly or indirectly, transfer, convey, sell, lease or otherwise
dispose of all or substantially all of its assets, unless:

     (1) in a transaction in which the Company does not survive or in which the Company transfers,
conveys, sells, leases or otherwise disposes of all or substantially all of its assets, the
successor entity (for purposes of this Article Eight, a “Successor Company”) shall be a
corporation, partnership, trust or other entity organized and validly existing under the laws of
the United States of America, any State thereof or the District of Columbia, and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and
interest on all the Securities and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed;

     (2) immediately before and after giving pro forma effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or any Subsidiary as a result of such
transaction as having been incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing;

     (3) if, as a result of any such consolidation or merger or such transfer, conveyance, sale,
lease or other disposition, properties or assets of the Company would become subject to a mortgage,
pledge, lien, security interest or other encumbrance which would not be permitted by this
Indenture, the Company or the Successor Company, as the case may be, shall take such steps as shall
be necessary effectively to secure the Securities equally and ratably with (or prior to) all
indebtedness secured thereby;

     (4) any other conditions provided pursuant to Section 301 with respect to the Securities of a
series are satisfied; and

     (5) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, transfer, conveyance, sale, lease or other
disposition and, if a supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with.

     SECTION 802. Subsidiary Guarantors May Consolidate, Etc., Only on Certain Terms.

     Except in a transaction resulting in the release of a Subsidiary Guarantor in accordance with
the terms of this Indenture, each Subsidiary Guarantor shall not, and the Company shall not permit
any Subsidiary Guarantor to, in a single or a series of related transactions, consolidate or merge
with or into any Person (other than the Company or another Subsidiary Guarantor) or permit any
Person (other than another Subsidiary Guarantor) to consolidate or merge with or into such
Subsidiary Guarantor or, directly or indirectly, transfer, convey, sell, lease or otherwise dispose
of all or substantially all of its assets unless, in each case:

     (1) in a transaction in which such Subsidiary Guarantor does not survive or in which all or
substantially all of the assets of such Subsidiary Guarantor are transferred, conveyed, sold,
leased or otherwise disposed of, the successor entity (the “Successor Subsidiary Guarantor”) shall
be a corporation, partnership, trust or other entity organized and validly existing under the laws
of the United States of America, any State thereof or the District of Columbia, and shall expressly
assume by an indenture supplemental hereto executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of all obligations of such Subsidiary
Guarantor under its Subsidiary Guarantee and this Indenture and the performance of every covenant
of this Indenture on the part of such Subsidiary Guarantor to be performed or observed; and

31

 

     (2) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, transfer, conveyance, sale, lease or other
disposition and, if a supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with.

     SECTION 803. Successor Substituted.

     (a) Upon any consolidation of the Company with, or merger of the Company into, any other
Person or any transfer, conveyance, sale, lease or other disposition of all or substantially all of
the assets of the Company in accordance with Section 801, the Successor Company shall succeed to,
and be substituted for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company herein, and
thereafter, except in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities.

     (b) Upon any consolidation of a Subsidiary Guarantor with, or merger of such Subsidiary
Guarantor into, any other Person or any transfer, conveyance, sale, lease or other disposition of
all or substantially all of the assets of such Subsidiary Guarantor in accordance with Section 802,
the Successor Subsidiary Guarantor shall succeed to, and be substituted for, and may exercise every
right and power of, such Subsidiary Guarantor under this Indenture with the same effect as if such
successor Person had been named as a Subsidiary Guarantor herein, and thereafter, except in the
case of a lease, the predecessor Person shall be relieved of all obligations and covenants under
this Indenture and its Subsidiary Guarantee.

ARTICLE NINE

SUPPLEMENTAL INDENTURES

     SECTION 901. Supplemental Indentures Without Consent of Holders.

     Without the consent of any Holders, the Company, when authorized by a Board Resolution, the
Subsidiary Guarantors, when authorized by their respective Board Resolutions, and the Trustee, at
any time and from time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:

     (1) to evidence the succession of another Person to the Company or any Subsidiary Guarantor
and the assumption by any such successor of the covenants of the Company or any Subsidiary
Guarantor herein and in the Securities or Subsidiary Guarantees, as the case may be; or

     (2) to add to the covenants of the Company or the Subsidiary Guarantors for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be for the benefit of less
than all series of Securities, stating that such covenants are expressly being included solely for
the benefit of such series) or to surrender any right or power herein conferred upon the Company or
the Subsidiary Guarantors; or

     (3) to add any additional Events of Default for the benefit of the Holders of all or any
series of Securities (and if such additional Events of Default are to be for the benefit of less
than all series of Securities, stating that such additional Events of Default are expressly being
included solely for the benefit of such series); or

     (4) to add to or change any of the provisions of this Indenture to such extent as shall be
necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form; or

     (5) to add to, change or eliminate any of the provisions of this Indenture in respect of one
or more series of Securities, provided that any such addition, change or elimination (A) shall
neither (i) apply to any Security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (ii) modify the rights of the Holder of
any such Security with respect to such provision or (B) shall become effective only when there is
no such Security Outstanding; or

     (6) to secure the Securities; or

     (7) to establish the form or terms of Securities of any series as permitted by Sections 201
and 301; or

     (8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee
with respect to the Securities of one or more series and to add to or change any of the provisions
of this
Indenture as shall be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section 611; or

32

 

     (9) to cure any ambiguity, to correct or supplement any provision herein which may be
defective or inconsistent with any other provision herein; or

     (10) to make any other provisions with respect to matters or questions arising under this
Indenture, provided that such action pursuant to this clause (10) shall not adversely affect the
interests of the Holders of Securities of any series in any material respect; or

     (11) to add new Subsidiary Guarantors; or

     (12) to make any change to the provisions of Article Twelve or Fourteen that limits or
terminates the benefits applicable to any holder of Senior Debt.

     SECTION 902. Supplemental Indentures With Consent of Holders.

     With the consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of each series affected by such supplemental indenture, by Act of said
Holders delivered to the Company, the Subsidiary Guarantors and the Trustee, the Company, when
authorized by a Board Resolution, the Subsidiary Guarantors, when authorized by their respective
Board Resolutions and the Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities
of such series under this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected thereby:

     (1) change the Stated Maturity of the principal of, or any installment of principal of or
interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon
or any premium payable upon the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security or any other Security which would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of
Payment where, or the coin or currency in which, any Security or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of (a) any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date
or in the case of an offer to purchase Securities which has been made pursuant to a covenant
contained in this Indenture, on or after the applicable purchase date), or (b) any conversion right
with respect to any Security, or modify the provisions of this Indenture with respect to the
conversion or subordination of the Securities or the Subsidiary Guarantees, in a manner adverse to
the Holders, or release any Subsidiary Guarantee other than as provided in this Indenture; or

     (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the
consent of whose Holders is required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this Indenture; or

     (3) modify any of the provisions of this Section, Section 513 or Section 1009, except to
increase any such percentage or to provide that certain other provisions of this Indenture cannot
be modified or waived without the consent of the Holder of each Outstanding Security affected
thereby; provided, however, that this clause shall not be deemed to require the consent of any
Holder with respect to changes in the references to “the Trustee” and concomitant changes in this
Section and Section 1009, or the deletion of this proviso, in accordance with the requirements of
Sections 611 and 901(8); or

     (4) following the making of an offer to purchase Securities from any Holder which has been
made pursuant to a covenant contained in this Indenture, modify the provisions of this Indenture
with respect to such offer to purchase in a manner adverse to such Holder.

     A supplemental indenture which changes or eliminates any covenant or other provision of this
Indenture which has expressly been included solely for the benefit of one or more particular series
of Securities, or which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

     It shall not be necessary for any Act of Holders under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve
the substance thereof.

     After a supplemental indenture under this Section 902 requiring the consent of the Holders of
any series of Debt Securities is approved, the Company shall mail to Holders of that series of Debt
Securities a notice briefly describing any amendment or supplement hereto effected by such
supplemental indenture.
The failure to give such notice to any such Holders, or any defect therein, shall not impair
or affect the

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validity of any amendment or supplement hereto effected by such supplemental
indenture with respect to other Holders.

     SECTION 903. Execution of Supplemental Indentures.

     In executing, or accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter
into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities
under this Indenture or otherwise.

     SECTION 904. Effect of Supplemental Indentures.

     Upon the execution of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby.

     SECTION 905. Conformity with Trust Indenture Act.

     Every supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act.

     SECTION 906. Reference in Securities to Supplemental Indentures.

     Securities of any series authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in
form approved by the Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities of any series so modified as to conform, in the opinion
of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by
the Company, if applicable the notations of Subsidiary Guarantees may be endorsed thereon and such
new Securities may be authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.

ARTICLE TEN

COVENANTS

     SECTION 1001. Payment of Principal, Premium and Interest.

     The Company covenants and agrees for the benefit of each series of Securities that it will
duly and punctually pay the principal of and any premium and interest on the Securities of that
series in accordance with the terms of the Securities and this Indenture. Principal, premium, if
any, and interest shall be considered paid on the date due if the Paying Agent, if other than the
Company or a Subsidiary thereof, holds as of 11:00 A.M., New York City time, on the due date money
deposited with it in immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due, and such Paying Agent is not prohibited from
paying such money to the Holders entitled thereto on such date pursuant to the terms of Article
Twelve or Fourteen of this Indenture.

     SECTION 1002. Maintenance of Office or Agency.

     The Company will maintain in each Place of Payment for any series of Securities an office or
agency where Securities of that series may be presented or surrendered for payment or, if
applicable, for conversion, where Securities of that series may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company or any Subsidiary
Guarantor in respect of the Securities of that series or any Subsidiary Guarantee and this
Indenture may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee, and each of the Company and the Subsidiary Guarantors
hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and
demands.

     The Company may also from time to time designate one or more other offices or agencies where
the Securities of one or more series may be presented or surrendered for any or all such purposes
and may from time to time rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain an office or
agency in each Place of Payment for Securities of any series for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.

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     SECTION 1003. Money for Securities Payments to Be Held in Trust.

     If the Company or any Subsidiary Guarantor shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the principal of or any
premium or interest on any of the Securities of that series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and
interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its action or failure so to act.

     Whenever the Company shall have one or more Paying Agents for any series of Securities, it
will, prior to 11:00 A.M., New York City time, on each due date of the principal of or any premium
or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay
such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to
act.

     The Company will cause each Paying Agent for any series of Securities other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this Section, that such Paying Agent will (1) comply with the
provisions of the Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company, the Subsidiary Guarantors, if applicable, or any other
obligor upon the Securities of that series in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith pay to the Trustee
all sums held in trust by such Paying Agent for payment in respect of the Securities of that
series.

     The Company may at any time, for the purpose of obtaining the satisfaction and discharge of
this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay,
to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.

     Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of or any premium or interest on any Security of any series
and remaining unclaimed for two years after such principal, premium or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may at the expense of the Company cause to be published
once, in a newspaper published in the English language, customarily published on each Business Day
and of general circulation in The City of New York, New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining will be repaid to the
Company.

     SECTION 1004. Statement by Officers as to Default.

     (a) The Company and the Subsidiary Guarantors will deliver to the Trustee, within 90 days
after the end of each fiscal year of the Company ending after the date hereof, an Officers’
Certificate, stating whether or not to the best knowledge of the signers thereof (i) the Company or
any Subsidiary Guarantor, as the case may be, is in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company or any Subsidiary Guarantor
shall be in default, specifying all such defaults and the nature and status thereof of which they
may have knowledge and (ii) any event has occurred and remains in existence prohibiting any
payments on any series of Securities then Outstanding and, if any such event exists, a description
of such event and what action the Company is taking or proposes to take with respect thereto.

     (b) The Company shall, so long as any series of Securities is Outstanding, deliver to the
Trustee, as soon as possible and in any event within five days after the Company becomes aware of
the occurrence of an Event of Default or an event which, with notice or the lapse of time or both,
would constitute an Event of Default, an Officers’ Certificate setting forth the details of such
Event of Default or default, and the action which the Company proposes to take with respect
thereto.

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     SECTION 1005. Existence.

     Subject to Article Eight, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect the existence, rights (charter and statutory) and
franchises of the Company; provided, however, that the Company shall not be required to preserve
any such right or franchise if it shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Holders.

     SECTION 1006. Maintenance of Properties.

     The Company will cause all properties used or useful in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair and working order
(reasonable wear and tear excepted) and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the operation or maintenance
of any of such properties if such discontinuance is, in the judgment of the Company, desirable in
the conduct of its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.

     SECTION 1007. Payment of Taxes and Other Claims.

     The Company will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the
Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary,
and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a
lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in good faith by
appropriate proceedings.

     SECTION 1008. Maintenance of Insurance.

     The Company shall, and shall cause its Subsidiaries to, keep at all times all of their
properties which are of an insurable nature insured against loss or damage with insurers believed
by the Company to be responsible to the extent that property of similar character is usually so
insured by corporations similarly situated and owning like properties in accordance with good
business practice.

     SECTION 1009. Waiver of Certain Covenants.

     Except as otherwise specified as contemplated by Section 301 for Securities of such series,
the Company and the Subsidiary Guarantors may, with respect to the Securities of any series, omit
in any particular instance to comply with any term, provision or condition set forth in any of
Sections 1005 through 1008 or in any covenant provided pursuant to Section 301(22), 901(2) or
901(7) for the benefit of the Holders of such series if before the time for such compliance the
Holders of at least a majority in principal amount of the Outstanding Securities of such series
shall, by Act of such Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company and the duties of the Trustee in respect of
any such term, provision or condition shall remain in full force and effect.

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

     SECTION 1101. Applicability of Article.

     Securities of any series which are redeemable before their Stated Maturity shall be redeemable
in accordance with their terms and (except as otherwise specified as contemplated by Section 301
for such Securities) in accordance with this Article.

     SECTION 1102. Election to Redeem; Notice to Trustee.

     The election of the Company to redeem any Securities shall be evidenced by a Board Resolution
or in another manner specified as contemplated by Section 301 for such Securities. In case of any
redemption at the election of the Company of less than all the Securities of any series (including
any such redemption affecting only a single Security), the Company shall, at least five Business
Days prior to giving notice of such redemption (unless a shorter notice shall be satisfactory to
the Trustee), notify the Trustee of such Redemption Date, of the principal amount of Securities of
such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In
the case of any redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere

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in this Indenture, the Company shall furnish the Trustee with an Officers’ Certificate
evidencing compliance with such restriction.

     SECTION 1103. Selection by Trustee of Securities to Be Redeemed.

     If less than all the Securities of any series are to be redeemed (unless all the Securities of
such series and of a specified tenor are to be redeemed or unless such redemption affects only a
single Security), the particular Securities to be redeemed shall be selected by the Trustee, from
the Outstanding Securities of such series not previously called for redemption, (i) in compliance
with the requirements of the principal national securities exchange on which such Securities are
listed, if such Securities are listed on any national securities exchange, and (ii) if such
Securities are not so listed, on a pro rata basis, by lot or by such other method as the Trustee
shall deem fair and appropriate and which may provide for the selection for redemption of a portion
of the principal amount of any Security of such series, provided that the unredeemed portion of the
principal amount of any Security shall be in an authorized denomination (which shall not be less
than the minimum authorized denomination) for such Security. If less than all the Securities of
such series and of a specified tenor are to be redeemed (unless such redemption affects only a
single Security), the particular Securities to be redeemed shall be selected by the Trustee, from
the Outstanding Securities of such series and specified tenor not previously called for redemption
in accordance with the preceding sentence.

     The Trustee shall promptly notify the Company in writing of the Securities selected for
redemption as aforesaid and, in case of any Securities selected for partial redemption as
aforesaid, the principal amount thereof to be redeemed.

     The provisions of the two preceding paragraphs shall not apply with respect to any redemption
affecting only a single Security, whether such Security is to be redeemed in whole or in part. In
the case of any such redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than the minimum
authorized denomination) for such Security.

     For all purposes of this Indenture, unless the context otherwise requires, all provisions
relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to
be redeemed only in part, to the portion of the principal amount of such Securities which has been
or is to be redeemed. If any Security selected for partial redemption is surrendered for conversion
after such selection, the converted portion of such Security shall be deemed (so far as may be) to
be the portion selected for redemption. Upon any redemption of less than all the Securities of a
series, for purposes of selection for redemption the Company and the Trustee may treat as
Outstanding Securities surrendered for conversion during the period of 15 days next preceding the
mailing of a notice of redemption, and need not treat as Outstanding any Security authenticated and
delivered during such period in exchange for the unconverted portion of any Security converted in
part during such period.

     SECTION 1104. Notice of Redemption.

     Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than
30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed,
at his address appearing in the Security Register; provided, however, notice of redemption may be
given more than 60 days prior to the Redemption Date if the notice is issued in connection with a
satisfaction and discharge pursuant to Article Four. All notices of redemption shall state:

     (1) the Redemption Date,

     (2) the Redemption Price, if then determinable and otherwise the method of its determination,

     (3) if less than all the Outstanding Securities of any series consisting of more than a single
Security are to be redeemed, the identification (and, in the case of partial redemption of any such
Securities, the principal amounts) of the particular Securities to be redeemed and, if less than
all the Outstanding Securities of any series consisting of a single Security are to be redeemed,
the principal amount of the particular Security to be redeemed,

     (4) that on the Redemption Date the Redemption Price will become due and payable upon each
such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and
after said date,

     (5) the place or places where each such Security is to be surrendered for payment of the
Redemption Price,

     (6) that the redemption is for a sinking fund, if such is the case, and

     (7) if applicable, the conversion price then in effect and the date on which the right to
convert such Securities will expire.

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     Notice of redemption of Securities to be redeemed at the election of the Company shall be
given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of
the Company and shall be irrevocable. If any Security called for redemption is converted pursuant
hereto, any money deposited with the Trustee or any Paying Agent or so segregated and held in trust
for the redemption of such Security shall be paid to the Company upon delivery of a Company Request
to the Trustee or such Paying Agent, or, if then held by the Company, shall be discharged from such
trust.

     SECTION 1105. Deposit of Redemption Price.

     Prior to 11:00 A.M., New York City time, on any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities which are to be redeemed on that date.

     SECTION 1106. Securities Payable on Redemption Date.

     Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall,
on the Redemption Date, become due and payable at the Redemption Price therein specified, and from
and after such date (unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security
for redemption in accordance with said notice, such Security shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption Date; provided, however, that,
unless otherwise specified as contemplated by Section 301, installments of interest whose Stated
Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of business on the relevant
Record Dates according to their terms and the provisions of Section 307.

     If any Security called for redemption shall not be so paid upon surrender thereof for
redemption, the principal and any premium shall, until paid, bear interest from the Redemption Date
at the rate prescribed therefor in the Security.

     SECTION 1107. Securities Redeemed in Part.

     Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment
therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the Company shall execute, if
applicable, the Subsidiary Guarantors shall execute the notations of Subsidiary Guarantees endorsed
thereon, and the Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series and of like tenor, of any
authorized denomination as requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so surrendered.

ARTICLE TWELVE

SUBORDINATION OF SECURITIES

     SECTION 1201. Applicability of Article.

     Unless otherwise provided with respect to the Securities of any series in or pursuant to the
Board Resolution or supplemental indenture establishing such series of Securities pursuant to
Section 301, the provisions of this Article shall be applicable to each series of Securities.

     SECTION 1202. Securities Subordinate to Senior Debt.

     The Company covenants and agrees, and each Holder of a Security, by his acceptance thereof,
likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this
Article (subject to the provisions of Article Four and Article Fifteen), the payment of the
principal of (and premium, if any) and interest on each and all of the Securities of such series is
hereby expressly made subordinate and subject in right of payment to the prior payment in full of
all Senior Debt of the Company.

     No provisions of this Article Twelve shall prevent the occurrence of any Event of Default.

     SECTION 1203. Payment Over of Proceeds Upon Dissolution, Etc.

     In the event of (a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection therewith, relative
to the Company or to its creditors, as such, or to its assets, or (b) any liquidation, dissolution
or other winding up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy,

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or (c) any assignment for the benefit of creditors or any other marshalling of assets and
liabilities of the Company, then and in any such event specified in (a), (b) or (c) above (each
such event, if any, herein sometimes referred to as a “Proceeding”) the holders of Senior Debt of
the Company shall be entitled to receive payment in full of all amounts due or to become due on or
in respect of all Senior Debt of the Company, or provision shall be made for such payment in cash
or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt of the
Company, before the Holders of the Securities are entitled to receive any payment or distribution
of any kind or character, whether in cash, property or securities (including any payment or
distribution which may be payable or deliverable by reason of the payment of any other indebtedness
of the Company subordinated to the payment of the Securities, such payment or distribution being
hereinafter referred to as a “Junior Subordinated Payment”), on account of principal of (or
premium, if any) or interest on the Securities or on account of any purchase or other acquisition
of Securities by the Company or any Subsidiary of the Company (all such payments, distributions,
purchases and acquisitions, other than the payment or distribution of stock or securities of the
Company referred to in the second succeeding paragraph, herein referred to, individually and
collectively, as a “Securities Payment”), and to that end the holders of Senior Debt of the Company
shall be entitled to receive, for application to the payment thereof, any Securities Payment which
may be payable or deliverable in respect of the Securities in any such Proceeding.

     In the event that, notwithstanding the foregoing provisions of this Section, the Trustee or
the Holder of any Security shall have received any Securities Payment before all Senior Debt of the
Company is paid in full or payment thereof provided for in cash or cash equivalents or otherwise in
a manner satisfactory to the holders of Senior Debt of the Company, and if such fact shall, at or
prior to the time of such Securities Payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such Securities Payment shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent
or other Person making payment or distribution of assets of the Company for application to the
payment of all Senior Debt of the Company remaining unpaid, to the extent necessary to pay all
Senior Debt of the Company in full, after giving effect to any concurrent payment or distribution
to or for the holders of Senior Debt of the Company.

     For purposes of this Article only, the words “any payment or distribution of any kind or
character, whether in cash, property or securities” shall not be deemed to include a payment or
distribution of stock or securities of the Company provided for by a plan of reorganization or
readjustment authorized by an order or decree of a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law or of any other corporation provided
for by such plan of reorganization or readjustment which stock or securities are subordinated in
right of payment to all then outstanding Senior Debt of the Company to substantially the same
extent as the Securities are so subordinated as provided in this Article. The consolidation of the
Company with, or the merger of the Company into, another Person or the liquidation or dissolution
of the Company following the conveyance or other disposition of all or substantially all of its
assets to another Person upon the terms and conditions set forth in Article Eight shall not be
deemed a Proceeding for the purposes of this Section if the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance or other disposition
such assets, as the case may be, shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions set forth in Article Eight.

     SECTION 1204. No Payment When Senior Debt of the Company in Default.

     In the event that any Senior Payment Default (as defined below) shall have occurred and be
continuing, then no Securities Payment shall be made unless and until such Senior Payment Default
shall have been cured or waived or shall have ceased to exist or all amounts then due and payable
in respect of Senior Debt of the Company shall have been paid in full, or provision shall have been
made for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt of the Company; provided, however, that nothing in this Section shall
prevent the satisfaction of any sinking fund payment in accordance with Article Sixteen by
delivering and crediting pursuant to Section 1602 Securities which have been acquired (upon
redemption or otherwise) prior to such Senior Payment Default.

     “Senior Payment Default” means any default in the payment of principal of (or premium, if any)
or interest on any Senior Debt of the Company when due, whether at the Stated Maturity of any such
payment or by declaration of acceleration, call for redemption or otherwise.

     In the event that any Senior Nonmonetary Default (as defined below) shall have occurred and be
continuing, then, upon the receipt by the Company, the Subsidiary Guarantors and the Trustee of
written notice of such Senior Nonmonetary Default from the agent for the Designated Senior Debt
which is the

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subject of such Senior Nonmonetary Default, no Securities Payment shall be made during the
period (the “Payment Blockage Period”) commencing on the date of such receipt of such written
notice and ending on the earlier of (i) the date on which such Senior Nonmonetary Default shall
have been cured or waived or shall have ceased to exist or all Designated Senior Debt the subject
of such Senior Nonmonetary Default shall have been discharged; (ii) the 179th day after the date of
such receipt of such written notice; or (iii) the date on which the Payment Blockage Period shall
have been terminated by written notice to the Company, any Subsidiary Guarantor or the Trustee from
the agent for the Designated Senior Debt initiating the Payment Blockage Period; provided, however,
that nothing in this Section shall prevent the satisfaction of any sinking fund payment in
accordance with Article Sixteen by delivering and crediting pursuant to Section 1602 Securities
which have been acquired (upon redemption or otherwise) prior to the date of such receipt of such
written notice. No more than one Payment Blockage Period may be commenced with respect to the
Securities of a particular series during any 360-day period and there shall be a period of at least
181 consecutive days in each 360-day period when no Payment Blockage Period is in effect. For all
purposes of this paragraph, no Senior Nonmonetary Default that existed or was continuing on the
date of commencement of any Payment Blockage Period shall be, or be made, the basis for the
commencement of a subsequent Payment Blockage Period, whether or not within a period of 360
consecutive days, unless such Senior Nonmonetary Default shall have been cured for a period of not
less than 90 consecutive days.

     “Senior Nonmonetary Default” means the occurrence or existence and continuance of any event of
default with respect to any Designated Senior Debt, other than a Senior Payment Default, permitting
the holders of such Designated Senior Debt (or a trustee or agent on behalf of the holders thereof)
to declare such Designated Senior Debt due and payable prior to the date on which it would
otherwise become due and payable.

     In the event that, notwithstanding the foregoing, the Company shall make any Securities
Payment to the Trustee or any Holder prohibited by the foregoing provisions of this Section, and if
such fact shall, at or prior to the time of such Securities Payment, have been made known to the
Trustee or, as the case may be, such Holder, then and in such event such Securities Payment shall
be paid over and delivered forthwith to the Company.

     The provisions of this Section shall not apply to any Securities Payment with respect to which
Section 1203 would be applicable.

     SECTION 1205. Payment Permitted If No Default.

     Nothing contained in this Article or elsewhere in this Indenture or in any of the Securities
shall prevent (a) the Company, at any time except during the pendency of any Proceeding referred to
in Section 1203 or under the conditions described in Section 1204, from making Securities Payments,
or (b) the application by the Trustee of any money deposited with it hereunder to Securities
Payments or the retention of such Securities Payment by the Holders, if, at the time of such
application by the Trustee, it did not have knowledge that such Securities Payment would have been
prohibited by the provisions of this Article.

     SECTION 1206. Subrogation to Rights of Holders of Senior Debt of the Company.

     Subject to the payment in full of all amounts due or to become due on or in respect of Senior
Debt of the Company, or the provision for such payment in cash or cash equivalents or otherwise in
a manner satisfactory to the holders of Senior Debt of the Company, the Holders of the Securities
shall be subrogated to the rights of the holders of such Senior Debt of the Company to receive
payments and distributions of cash, property and securities applicable to the Senior Debt of the
Company until the principal of (and premium, if any) and interest on the Securities shall be paid
in full. For purposes of such subrogation, no payments or distributions to the holders of the
Senior Debt of the Company of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of Senior Debt of the
Company by Holders of the Securities or the Trustee, shall, as among the Company, its creditors
other than holders of Senior Debt of the Company and the Holders of the Securities, be deemed to be
a payment or distribution by the Company to or on account of the Senior Debt of the Company.

     SECTION 1207. Provisions Solely to Define Relative Rights.

     The provisions of this Article are and are intended solely for the purpose of defining the
relative rights of the Holders on the one hand and the holders of Senior Debt of the Company on the
other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Securities
is intended to or shall (a) impair, as among the Company, its creditors other than holders of
Senior Debt of the Company and the Holders of the Securities, the obligation of the Company, which
is absolute and unconditional (and which,

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subject to the rights under this Article of the holders
of Senior Debt of the Company, is intended to rank
equally with all other general obligations of the Company), to pay to the Holders of the
Securities the principal of (and premium, if any) and interest on the Securities as and when the
same shall become due and payable in accordance with their terms; or (b) affect the relative rights
against the Company of the Holders of the Securities and creditors of the Company other than the
holders of Senior Debt of the Company; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article of the holders of Senior Debt of the
Company to receive cash, property and securities otherwise payable or deliverable to the Trustee or
such Holder.

     SECTION 1208. Trustee to Effectuate Subordination.

     Each Holder of a Security by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for any and all such
purposes.

     SECTION 1209. No Waiver of Subordination Provisions.

     No right of any present or future holder of any Senior Debt of the Company to enforce
subordination as herein provided shall at any time in any way be prejudiced or impaired by any act
or failure to act on the part of the Company or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise
charged with.

     Without in any way limiting the generality of the foregoing paragraph, the holders of Senior
Debt of the Company may, at any time and from time to time, without the consent of or notice to the
Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the
Securities and without impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders of the Securities to the holders of Senior Debt of the
Company, do any one or more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Debt of the Company, or otherwise amend or
supplement in any manner Senior Debt of the Company or any instrument evidencing the same or any
agreement under which Senior Debt of the Company is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt of the
Company; (iii) release any Person liable in any manner for the collection of Senior Debt of the
Company; and (iv) exercise or refrain from exercising any rights against the Company and any other
Person.

     SECTION 1210. Notice to Trustee.

     The Company shall give prompt written notice to the Trustee of any fact known to the Company
which would prohibit the making of any payment to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless and until the
Trustee shall have received written notice thereof from the Company or a holder of Senior Debt of
the Company or from any trustee therefor; and, prior to the receipt of any such written notice, the
Trustee, subject to the provisions of Section 601, shall be entitled in all respects to assume that
no such facts exist; provided, however, that if the Trustee shall not have received the notice
provided for in this Section at least three Business Days prior to the date upon which by the terms
hereof any money may become payable for any purpose (including, without limitation, the payment of
the principal of (and premium, if any) or interest on any Security), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purpose for which such money was received and shall
not be affected by any notice to the contrary which may be received by it within three Business
Days prior to such date.

     Subject to the provisions of Section 601, the Trustee shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself to be a holder of Senior Debt
of the Company (or a trustee therefor) to establish that such notice has been given by a holder of
Senior Debt of the Company (or a trustee therefor). In the event that the Trustee determines in
good faith that further evidence is required with respect to the right of any Person as a holder of
Senior Debt of the Company to participate in any payment or distribution pursuant to this Article,
the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Debt of the Company held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence is not furnished,
the Trustee

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may defer any payment to such Person pending judicial determination as to the right of such
Person to receive such payment.

     SECTION 1211. Reliance on Judicial Order or Certificate of Liquidating Agent.

     Upon any payment or distribution of assets of the Company referred to in this Article, the
Trustee, subject to the provisions of Section 601, and the Holders of the Securities shall be
entitled to rely upon any order or decree entered by any court of competent jurisdiction in which
such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose
of ascertaining the Persons entitled to participate in such payment or distribution, the holders of
the Senior Debt of the Company and other indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article.

     SECTION 1212. Trustee Not Fiduciary for Holders of Senior Debt of the Company.

     The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt of the
Company and shall not be liable to any such holders if it shall in good faith mistakenly pay over
or distribute to Holders of Securities or to the Company, a Subsidiary Guarantor or to any other
Person cash, property or securities to which any holders of Senior Debt of the Company shall be
entitled by virtue of this Article or otherwise.

     SECTION 12.13. Rights of Trustee as Holder of Senior Debt of the Company; Preservation of
Trustee’s Rights.

     The Trustee in its individual capacity shall be entitled to all the rights set forth in this
Article with respect to any Senior Debt of the Company which may at any time be held by it, to the
same extent as any other holder of Senior Debt of the Company, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.

     Nothing in this Article shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 607.

     SECTION 1214. Article Applicable to Paying Agents.

     In case at any time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term “Trustee” as used in this Article shall in such case
(unless the context otherwise requires) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named
in this Article in addition to or in place of the Trustee; provided, however, that Section 1213
shall not apply to the Company, any Subsidiary Guarantor or any Affiliate of the Company if it or
such Subsidiary Guarantor or Affiliate acts as Paying Agent.

     SECTION 1215. Defeasance of this Article Twelve.

     The subordination of the Securities of a series provided by this Article Twelve is expressly
made subject to the provisions for Defeasance or Covenant Defeasance in Article Fifteen hereof and,
anything herein to the contrary notwithstanding, upon the effectiveness of any such Defeasance or
Covenant Defeasance, the Securities of such series then outstanding shall thereupon cease to be
subordinated pursuant to this Article Twelve.

ARTICLE THIRTEEN

SUBSIDIARY GUARANTEES

     SECTION 1301. Applicability of Article.

     Unless the Company elects to issue any series of Securities without the benefit of the
Subsidiary Guarantees, which election shall be evidenced in or pursuant to the Board Resolution or
supplemental indenture establishing such series of Securities pursuant to Section 301, the
provisions of this Article shall be applicable to each series of Securities except as otherwise
specified in or pursuant to the Board Resolution or supplemental indenture establishing such series
pursuant to Section 301.

     SECTION 1302. Subsidiary Guarantees.

     Subject to Section 1301, each Subsidiary Guarantor hereby, jointly and severally, fully and
unconditionally guarantees to each Holder of a Security authenticated and delivered by the Trustee,
the due and punctual payment of the principal of (and premium, if any) and interest on such
Security when and as the same shall become due and payable, whether at the Stated Maturity, by
acceleration, call for

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redemption, offer to purchase or otherwise, in accordance with the terms of such Security and
of this Indenture, and each Subsidiary Guarantor similarly guarantees to the Trustee the payment of
all amounts owing to the Trustee in accordance with the terms of this Indenture. In case of the
failure of the Company punctually to make any such payment, each Subsidiary Guarantor hereby,
jointly and severally, agrees to cause such payment to be made punctually when and as the same
shall become due and payable, whether at the Stated Maturity or by acceleration, call for
redemption, offer to purchase or otherwise, and as if such payment were made by the Company.

     Each of the Subsidiary Guarantors hereby jointly and severally agrees that its obligations
hereunder shall be absolute, unconditional, irrespective of, and shall be unaffected by, the
validity, regularity or enforceability of such Security or this Indenture, the absence of any
action to enforce the same or any release, amendment, waiver or indulgence granted to the Company
or any other guarantor or any consent to departure from any requirement of any other guarantee of
all or any of the Securities of such series or any other circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor; provided, however,
that, notwithstanding the foregoing, no such release, amendment, waiver or indulgence shall,
without the consent of such Subsidiary Guarantor, increase the principal amount of such Security,
or increase the interest rate thereon, or alter the Stated Maturity thereof. Each of the Subsidiary
Guarantors hereby waives the benefits of diligence, presentment, demand for payment, any
requirement that the Trustee or any of the Holders protect, secure, perfect or insure any security
interest in or other lien on any property subject thereto or exhaust any right or take any action
against the Company or any other Person or any collateral, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a proceeding first against
the Company, protest or notice with respect to such Security or the indebtedness evidenced thereby
and all demands whatsoever, and covenants that this Subsidiary Guarantee will not be discharged in
respect of such Security except by complete performance of the obligations contained in such
Security and in such Subsidiary Guarantee. Each Subsidiary Guarantor agrees that if, after the
occurrence and during the continuance of an Event of Default, the Trustee or any of the Holders are
prevented by applicable law from exercising their respective rights to accelerate the maturity of
the Securities of a series, to collect interest on the Securities of a series, or to enforce or
exercise any other right or remedy with respect to the Securities of a series, such Subsidiary
Guarantor agrees to pay to the Trustee for the account of the Holders, upon demand therefor, the
amount that would otherwise have been due and payable had such rights and remedies been permitted
to be exercised by the Trustee or any of the Holders.

     The indebtedness of each Subsidiary Guarantor evidenced by the Subsidiary Guarantees is, to
the extent provided in this Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Debt of each Subsidiary Guarantor, and the Subsidiary Guarantees are
issued subject to the provisions of this Indenture with respect thereto. Each Holder of such
Security, by accepting the same, will be deemed to have (a) agreed to and be bound by such
provisions, (b) authorized and directed the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and (c) appointed the Trustee
his attorney-in-fact for any and all such purposes.

     Each Subsidiary Guarantor shall be subrogated to all rights of the Holders of the Securities
upon which its Subsidiary Guarantee is endorsed against the Company in respect of any amounts paid
by such Subsidiary Guarantor on account of such Security pursuant to the provisions of its
Subsidiary Guarantee or this Indenture; provided, however, that no Subsidiary Guarantor shall be
entitled to enforce or to receive any payments arising out of, or based upon, such right of
subrogation until the principal of (and premium, if any) and interest on all Securities of the
relevant series issued hereunder shall have been paid in full.

     Each Subsidiary Guarantor that makes or is required to make any payment in respect of its
Subsidiary Guarantee shall be entitled to seek contribution from the other Subsidiary Guarantors to
the extent permitted by applicable law; provided, however, that no Subsidiary Guarantor shall be
entitled to enforce or receive any payments arising out of, or based upon, such right of
contribution until the principal of (and premium, if any) and interest on all Securities of the
relevant series issued hereunder shall have been paid in full.

     Each Subsidiary Guarantee shall remain in full force and effect and continue to be effective
should any petition be filed by or against the Company for liquidation or reorganization, should
the Company become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any part of the Company’s assets, and shall, to the
fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if
at any time payment and performance of the Securities of a series, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be

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restored or returned by any Holder of the Securities, whether as a “voidable preference,”
“fraudulent transfer,” or otherwise, all as though such payment or performance had not been made.
In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned,
the Securities shall, to the fullest extent permitted by law, be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or returned.

     SECTION 1303. Execution and Delivery of Notations of Subsidiary Guarantees.

     To further evidence the Subsidiary Guarantee set forth in Section 1302, each of the Subsidiary
Guarantors hereby agrees that a notation relating to such Subsidiary Guarantee, substantially in
the form set forth in Section 204, shall be endorsed on each Security entitled to the benefits of
the Subsidiary Guarantee authenticated and delivered by the Trustee and executed by either manual
or facsimile signature of an officer of such Subsidiary Guarantor, or in the case of a Subsidiary
Guarantor that is a limited partnership, an officer of the general partner of each Subsidiary
Guarantor. Each of the Subsidiary Guarantors hereby agrees that the Subsidiary Guarantee set forth
in Section 1302 shall remain in full force and effect notwithstanding any failure to endorse on
each Security a notation relating to the Subsidiary Guarantee. If any officer of the Subsidiary
Guarantor, or in the case of a Subsidiary Guarantor that is a limited partnership, any officer of
the general partner of the Subsidiary Guarantor, whose signature is on this Indenture or a Security
no longer holds that office at the time the Trustee authenticates such Security or at any time
thereafter, the Subsidiary Guarantee of such Security shall be valid nevertheless. The delivery of
any Security by the Trustee, after the authentication thereof hereunder, shall constitute due
delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary
Guarantors.

     SECTION 1304. Release of Subsidiary Guarantors.

     Unless otherwise specified pursuant to Section 301 with respect to a series of Securities,
each Subsidiary Guarantee will remain in effect with respect to the respective Subsidiary Guarantor
until the entire principal of, premium, if any, and interest on the Securities to which such
Subsidiary Guarantee relates shall have been paid in full or otherwise satisfied and discharged in
accordance with the provisions of such Securities and this Indenture and all amounts owing to the
Trustee hereunder have been paid; provided, however, that if (i) such Subsidiary Guarantor ceases
to be a Subsidiary in compliance with the applicable provisions of this Indenture, (ii) either
Defeasance or Covenant Defeasance occurs with respect to such Securities pursuant to Article
Fifteen or (iii) all or substantially all of the assets of such Subsidiary Guarantor or all of the
Capital Stock of such Subsidiary Guarantor is sold (including by sale, merger, consolidation or
otherwise) by the Company or any Subsidiary in a transaction complying with the requirements of
this Indenture, then, in each case of (i), (ii) or (iii), upon delivery by the Company of an
Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent herein
provided for relating to the release of such Subsidiary Guarantor from its obligations under its
Subsidiary Guarantee and this Article Thirteen have been complied with, such Subsidiary Guarantor
shall be released and discharged of its obligations under its Subsidiary Guarantee and under this
Article Thirteen without any action on the part of the Trustee or any Holder, and the Trustee shall
execute any documents reasonably required in order to acknowledge the release of such Subsidiary
Guarantor from its obligations under its Subsidiary Guarantee endorsed on the Securities of such
series and under this Article Thirteen.

     SECTION 1305. Additional Subsidiary Guarantors.

     Unless otherwise specified pursuant to Section 301 with respect to a series of Securities, the
Company will cause any domestic Wholly Owned Subsidiary of the Company that becomes a Subsidiary
after the date the Securities of a series are first issued hereunder to become a Subsidiary
Guarantor as soon as practicable after such Subsidiary becomes a Subsidiary. The Company shall
cause any such Wholly Owned Subsidiary to become a Subsidiary Guarantor with respect to the
Securities by executing and delivering to the Trustee (a) a supplemental indenture, in form and
substance satisfactory to the Trustee, which subjects such Person to the provisions (including the
representations and warranties) of this Indenture as a Subsidiary Guarantor and (b) an Opinion of
Counsel to the effect that such supplemental indenture has been duly authorized and executed by
such Person and such supplemental indenture and such Person’s obligations under its Subsidiary
Guarantee and this Indenture constitute the legal, valid, binding and enforceable obligations of
such Person (subject to such customary exceptions concerning creditors’ rights and equitable
principles as may be acceptable to the Trustee in its discretion).

     SECTION 1306. Limitation on Liability.

     Any term or provision of this Indenture to the contrary notwithstanding, the maximum amount of
the Subsidiary Guarantee of any Subsidiary Guarantor shall not exceed the maximum amount that can
be hereby guaranteed by such Subsidiary Guarantor without rendering such Subsidiary Guarantee
voidable

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under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.

ARTICLE FOURTEEN

SUBORDINATION OF SUBSIDIARY GUARANTEES

     SECTION 1401. Applicability of Article.

     Unless otherwise provided with respect to the Securities of any series in or pursuant to the
Board Resolution or supplemental indenture establishing such series of Securities pursuant to
Section 301, the provisions of this Article shall be applicable to each series of Securities.

     SECTION 1402. Subsidiary Guarantees Subordinate to Senior Debt of Subsidiary
Guarantors.

     Each Subsidiary Guarantor covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Article (subject to the provisions of Article Four and Article
Fifteen), the Subsidiary Guarantee of such Subsidiary Guarantor is hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all Senior Debt of such
Subsidiary Guarantor.

     No provisions of this Article Fourteen shall prevent the occurrence of any Event of Default.

     SECTION 1403. Payment Over of Proceeds Upon Dissolution, Etc.

     In the event of (a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection therewith, relative
to any Subsidiary Guarantor or to its creditors, as such, or to its assets, or (b) any liquidation,
dissolution or other winding up of any Subsidiary Guarantor, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of any Subsidiary Guarantor, then and
in any such event specified in (a), (b) or (c) above (each such event, if any, herein sometimes
referred to as a “Guarantor Proceeding”) the holders of Senior Debt of such Subsidiary Guarantor
shall be entitled to receive payment in full of all amounts due or to become due on or in respect
of all Senior Debt of such Subsidiary Guarantor, or provision shall be made for such payment in
cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt of
such Subsidiary Guarantor, before the Holders of the Securities are entitled to receive any payment
or distribution of any kind or character, whether in cash, property or securities (including any
payment or distribution which may be payable or deliverable by reason of the payment of any other
indebtedness of such Subsidiary Guarantor subordinated to the payment of the Securities, such
payment or distribution being hereinafter referred to as a “Guarantor Junior Subordinated
Payment”), on account of the Subsidiary Guarantee of such Subsidiary Guarantor (all such payments,
other than the payment or distribution of stock or securities of a Subsidiary Guarantor referred to
in the second succeeding paragraph, herein referred to, individually and collectively, as a
“Guarantee Payment”), and to that end the holders of Senior Debt of such Subsidiary Guarantor shall
be entitled to receive, for application to the payment thereof, any Guarantee Payment which may be
payable or deliverable in respect of such Subsidiary Guarantor’s Subsidiary Guarantee in any such
Guarantor Proceeding.

     In the event that, notwithstanding the foregoing provisions of this Section, the Trustee or
the Holder of any Security shall have received any Guarantee Payment before all Senior Debt of such
Subsidiary Guarantor is paid in full or payment thereof provided for in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Debt of such Subsidiary Guarantor, and
if such fact shall, at or prior to the time of such Guarantee Payment, have been made known to the
Trustee or, as the case may be, such Holder, then and in such event such Guarantee Payment shall be
paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of assets of such
Subsidiary Guarantor for application to the payment of all Senior Debt of such Subsidiary Guarantor
remaining unpaid, to the extent necessary to pay all Senior Debt of such Subsidiary Guarantor in
full, after giving effect to any concurrent payment or distribution to or for the holders of Senior
Debt of such Subsidiary Guarantor.

     For purposes of this Article only, the words “any payment or distribution of any kind or
character, whether in cash, property or securities” shall not be deemed to include a payment or
distribution of stock or securities of a Subsidiary Guarantor provided for by a plan of
reorganization or readjustment authorized by an order or decree of a court of competent
jurisdiction in a reorganization proceeding under any applicable bankruptcy law or of any other
corporation provided for by such plan of reorganization or readjustment which stock or securities
are subordinated in right of payment to all then outstanding Senior Debt of such Subsidiary
Guarantor to substantially the same extent as the Subsidiary Guarantees are so subordinated as

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provided in this Article. The consolidation of a Subsidiary Guarantor with, or the merger of a
Subsidiary Guarantor into, another Person or the liquidation or dissolution of such Subsidiary
Guarantor following the conveyance or other disposition of all or substantially all of its assets
to another Person upon the terms and conditions set forth in Article Eight shall not be deemed a
Guarantor Proceeding for the purposes of this Section if the Person formed by such consolidation or
into which such Subsidiary Guarantor is merged or the Person which acquires by conveyance or
transfer such assets, as the case may be, shall, as a part of such consolidation, merger,
conveyance or other disposition, comply with the conditions set forth in Article Eight.

     SECTION 1404. No Payment When Senior Debt of such Subsidiary Guarantor in Default.

     In the event that any Senior Payment Default shall have occurred and be continuing, then no
Guarantee Payment shall be made unless and until such Senior Payment Default shall have been cured
or waived or shall have ceased to exist or all amounts then due and payable in respect of the
relevant Senior Debt of the Company shall have been paid in full, or provision shall have been made
for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders
of such Senior Debt; provided, that nothing in this Section shall prevent the satisfaction of any
sinking fund payment in accordance with Article Sixteen by delivering and crediting pursuant to
Section 1602 Securities which have been acquired (upon redemption or otherwise) prior to such
Senior Payment Default.

     In the event that any Senior Nonmonetary Default shall have occurred and be continuing, then,
upon the receipt by the Company, the Subsidiary Guarantors and the Trustee of written notice of
such Senior Nonmonetary Default from any holder, or agent for the holders, of any Designated Senior
Debt of the Company, no Guarantee Payment shall be made during the applicable Payment Blockage
Period; provided, however, that nothing in this Section shall prevent the satisfaction of any
sinking fund payment in accordance with Article Sixteen by delivering and crediting pursuant to
Section 1602 Securities which have been acquired (upon redemption or otherwise) prior to the date
of such receipt of such written notice. No more than one Payment Blockage Period may be commenced
with respect to the Subsidiary Guarantees during any 360-day period and there shall be a period of
at least 181 consecutive days in each 360-day period when no Payment Blockage Period is in effect.
For all purposes of this paragraph, no Senior Nonmonetary Default that existed or was continuing on
the date of commencement of any Payment Blockage Period shall be, or be made, the basis for the
commencement of a subsequent Payment Blockage Period, whether or not within a period of 360
consecutive days, unless such Senior Nonmonetary Default shall have been cured for a period of not
less than 90 consecutive days.

     In the event that, notwithstanding the foregoing, a Subsidiary Guarantor shall make any
Guarantee Payment to the Trustee or any Holder prohibited by the foregoing provisions of this
Section, and if such fact shall, at or prior to the time of such Guarantee Payment, have been made
known to the Trustee or, as the case may be, such Holder, then and in such event such Guarantee
Payment shall be paid over and delivered forthwith to the Company.

     The provisions of this Section shall not apply to any Guarantee Payment with respect to which
Section 1403 would be applicable.

     SECTION 1405. Payment Permitted If No Default.

     Nothing contained in this Article or elsewhere in this Indenture or in any of the Subsidiary
Guarantees shall prevent (a) a Subsidiary Guarantor, at any time except during the pendency of any
Guarantor Proceeding referred to in Section 1403 or under the conditions described in Section 1404,
from making Guarantee Payments, or (b) the application by the Trustee of any money deposited with
it hereunder to Guarantee Payments or the retention of such Guarantee Payment by the Holders, if,
at the time of such application by the Trustee, it did not have knowledge that such Guarantee
Payment would have been prohibited by the provisions of this Article.

     SECTION 1406. Subrogation to Rights of Holders of Senior Debt of such Subsidiary
Guarantor.

     Subject to the payment in full of all amounts due or to become due on or in respect of Senior
Debt of a Subsidiary Guarantor, or the provision for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Debt of such Subsidiary Guarantor, the
Holders of the Securities shall be subrogated to the rights of the holders of such Senior Debt of
such Subsidiary Guarantor to receive payments and distributions of cash, property and securities
applicable to the Senior Debt of such Subsidiary Guarantor until the principal of (and premium, if
any) and interest on the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Debt of

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a Subsidiary Guarantor of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of Senior Debt of a
Subsidiary Guarantor by Holders of the Securities or the Trustee, shall, as among a Subsidiary
Guarantor, its creditors other than holders of Senior Debt of such Subsidiary Guarantor and the
Holders of the Securities, be deemed to be a payment or distribution by such Subsidiary Guarantor
to or on account of the Senior Debt of such Subsidiary Guarantor.

     SECTION 1407. Provisions Solely to Define Relative Rights.

     The provisions of this Article are and are intended solely for the purpose of defining the
relative rights of the Holders on the one hand and the holders of Senior Debt of a Subsidiary
Guarantor on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in
the Subsidiary Guarantees is intended to or shall (a) impair, as among a Subsidiary Guarantor, its
creditors other than holders of Senior Debt of such Subsidiary Guarantor and the Holders of the
Securities, the obligation of such Subsidiary Guarantor, which is absolute and unconditional (and
which, subject to the rights under this Article of the holders of Senior Debt of such Subsidiary
Guarantor, is intended to rank equally with all other general obligations of such Subsidiary
Guarantor), to guarantee payment to the Holders of the Securities of the principal of (and premium,
if any) and interest on the Securities as and when the same shall become due and payable in
accordance with their terms; or (b) affect the relative rights against a Subsidiary Guarantor of
the Holders of the Securities and creditors of such Subsidiary Guarantor other than the holders of
Senior Debt of such Subsidiary Guarantor; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article of the holders of Senior Debt of a
Subsidiary Guarantor to receive cash, property and securities otherwise payable or deliverable to
the Trustee or such Holder.

     SECTION 1408. Trustee to Effectuate Subordination.

     Each Holder of a Security by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for any and all such
purposes.

     SECTION 1409. No Waiver of Subordination Provisions.

     No right of any present or future holder of any Senior Debt of a Subsidiary Guarantor to
enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of such Subsidiary Guarantor or by any act or failure to act,
in good faith, by any such holder, or by any noncompliance by such Subsidiary Guarantor with the
terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.

     Without in any way limiting the generality of the foregoing paragraph, the holders of Senior
Debt of a Subsidiary Guarantor may, at any time and from time to time, without the consent of or
notice to the Trustee or the Holders of the Securities, without incurring responsibility to the
Holders of the Securities and without impairing or releasing the subordination provided in this
Article or the obligations hereunder of the Holders of the Securities to the holders of Senior Debt
of such Subsidiary Guarantor, do any one or more of the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, Senior Debt of such
Subsidiary Guarantor, or otherwise amend or supplement in any manner Senior Debt of such Subsidiary
Guarantor or any instrument evidencing the same or any agreement under which Senior Debt of such
Subsidiary Guarantor is outstanding; (ii) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Debt of such Subsidiary Guarantor; (iii)
release any Person liable in any manner for the collection of Senior Debt of such Subsidiary
Guarantor; and (iv) exercise or refrain from exercising any rights against such Subsidiary
Guarantor and any other Person.

     SECTION 1410. Notice to Trustee.

     Each Subsidiary Guarantor shall give prompt written notice to the Trustee of any fact known to
such Subsidiary Guarantor which would prohibit the making of any payment to or by the Trustee in
respect of its Subsidiary Guarantee. Notwithstanding the provisions of this Article or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in respect of the
Subsidiary Guarantees, unless and until the Trustee shall have received written notice thereof from
a Subsidiary Guarantor or a holder of Senior Debt of such Subsidiary Guarantor or from any trustee
therefor; and, prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Section 601, shall be entitled in all respects to

47

 

assume that no such facts exist; provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least three Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of (and premium, if any) or interest on any Security),
then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power
and authority to receive such money and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary which may be received by it within
three Business Days prior to such date.

     Subject to the provisions of Section 601, the Trustee shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself to be a holder of Senior Debt
of a Subsidiary Guarantor (or a trustee therefor) to establish that such notice has been given by a
holder of Senior Debt of such Subsidiary Guarantor (or a trustee therefor). In the event that the
Trustee determines in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Debt of a Subsidiary Guarantor to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior Debt of such Subsidiary
Guarantor held by such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such Person under this
Article, and if such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such payment.

     SECTION 1411. Reliance on Judicial Order or Certificate of Liquidating Agent.

     Upon any payment or distribution of assets of a Subsidiary Guarantor referred to in this
Article, the Trustee, subject to the provisions of Section 601, and the Holders of the Securities
shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction
in which such Guarantor Proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other
Person making such payment or distribution, delivered to the Trustee or to the Holders of
Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt of such Subsidiary Guarantor and other indebtedness of
such Subsidiary Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.

     SECTION 1412. Trustee Not Fiduciary for Holders of Senior Debt of such Subsidiary
Guarantor.

     The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt of a
Subsidiary Guarantor and shall not be liable to any such holders if it shall in good faith
mistakenly pay over or distribute to Holders of Securities or to the Company, a Subsidiary
Guarantor, or to any other Person cash, property or securities to which any holders of Senior Debt
of such Subsidiary Guarantor shall be entitled by virtue of this Article or otherwise.

     SECTION 1413. Rights of Trustee as Holder of Senior Debt of such Subsidiary Guarantor;
Preservation of Trustee’s Rights.

     The Trustee in its individual capacity shall be entitled to all the rights set forth in this
Article with respect to any Senior Debt of a Subsidiary Guarantor which may at any time be held by
it, to the same extent as any other holder of Senior Debt of such Subsidiary Guarantor, and nothing
in this Indenture shall deprive the Trustee of any of its rights as such holder.

     Nothing in this Article shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 607.

     SECTION 1414. Article Applicable to Paying Agents.

     In case at any time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term “Trustee” as used in this Article shall in such case
(unless the context otherwise requires) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named
in this Article in addition to or in place of the Trustee; provided, however, that Section 1413
shall not apply to the Company, any Subsidiary Guarantor or any Affiliate of the Company if it or
such Subsidiary Guarantor or Affiliate acts as Paying Agent.

     SECTION 1415. Defeasance of this Article Fourteen.

     The subordination of the Subsidiary Guarantees provided by this Article Fourteen is expressly
made subject to the provisions for Defeasance or Covenant Defeasance of a series of Securities in
Article Fifteen hereof and, anything herein to the contrary notwithstanding, upon the effectiveness
of any

48

 

such Defeasance or Covenant Defeasance with respect to a series of Securities, the Subsidiary
Guarantees of the Securities of such series shall thereupon cease to be subordinated pursuant to
this Article Fourteen.

ARTICLE FIFTEEN

DEFEASANCE AND COVENANT DEFEASANCE

     SECTION 1501. Company’s Option to Effect Defeasance or Covenant Defeasance.

     The Company may elect, at its option at any time, to have Section 1502 or Section 1503 applied
to any Securities or any series of Securities, as the case may be, designated pursuant to Section
301 as being defeasible pursuant to such Section 1502 or 1503, in accordance with any applicable
requirements provided pursuant to Section 301 and upon compliance with the conditions set forth
below in this Article. Any such election shall be evidenced in or pursuant to a Board Resolution or
in another manner specified as contemplated by Section 301 for such Securities.

     SECTION 1502. Defeasance and Discharge.

     Upon the Company’s exercise of its option (if any) to have this Section applied to any
Securities or any series of Securities, as the case may be, the Company shall be deemed to have
been discharged from its obligations, and each Subsidiary Guarantor shall be deemed to have been
discharged from its obligations with respect to its Subsidiary Guarantee of such Securities, and
the provisions of Articles Twelve and Fourteen shall cease to be effective, with respect to such
Securities and Subsidiary Guarantees as provided in this Section on and after the date the
conditions set forth in Section 1504 are satisfied (herein called “Defeasance”). For this purpose,
such Defeasance means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by such Securities and to have satisfied all its other obligations under
such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging the same), subject to
the following which shall survive until otherwise terminated or discharged hereunder: (1) the
rights of Holders of such Securities to receive, solely from the trust fund described in Section
1504 and as more fully set forth in such Section, payments in respect of the principal of and any
premium and interest on such Securities when payments are due, or, if applicable, to convert such
Securities in accordance with their terms, (2) the Company’s and each Subsidiary Guarantor’s
obligations with respect to such Securities under Sections 304, 305, 306, 1002 and 1003, and, if
applicable, their obligations with respect to the conversion of such Securities, (3) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and (4) this Article. Subject to
compliance with this Article, the Company may exercise its option (if any) to have this Section
applied to any Securities notwithstanding the prior exercise of its option (if any) to have Section
1503 applied to such Securities.

     SECTION 1503. Covenant Defeasance.

     Upon the Company’s exercise of its option (if any) to have this Section applied to any
Securities or any series of Securities, as the case may be, (1) the Company shall be released from
its obligations under Section 801(3), Sections 1005 through 1008, inclusive, and any covenants
provided pursuant to Section 301(22), 901(2) or 901(7) for the benefit of the Holders of such
Securities, and (2) the occurrence of any event specified in Sections 501(5) (with respect to any
of Section 801(3), Sections 1005 through 1008, inclusive, and any such covenants provided pursuant
to Section 301(22), 901(2) or 901(7)), 501(6), 501(7)), 501(10) and 501(11) shall be deemed not to
be or result in an Event of Default and (3) the provisions of Articles Twelve, Thirteen and
Fourteen shall cease to be effective, in each case with respect to such Securities and Subsidiary
Guarantees as provided in this Section on and after the date the conditions set forth in Section
1504 are satisfied (herein called “Covenant Defeasance”). For this purpose, such Covenant
Defeasance means that, with respect to such Securities, the Company and the Subsidiary Guarantors,
as applicable, may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such specified Section (to the extent so specified in the
case of Section 501(5)) or Article Twelve, Thirteen or Article Fourteen, whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or Article or by reason
of any reference in any such Section or Article to any other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be unaffected thereby.

     SECTION 1504. Conditions to Defeasance or Covenant Defeasance.

     The following shall be the conditions to the application of Section 1502 or Section 1503 to
any Securities or any series of Securities, as the case may be:

     (1) The Company shall irrevocably have deposited or caused to be deposited with the Trustee
(or another trustee which satisfies the requirements contemplated by Section 609 and agrees to
comply with the provisions of this Article applicable to it) as trust funds in trust for the
purpose of making the following

49

 

payments, specifically pledged as security for, and dedicated solely to, the benefits of the
Holders of such Securities, (A) money in an amount, or (B) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any payment, money in an amount,
or (C) a combination thereof, in each case sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, and which shall be applied by the Trustee (or any such other
qualifying trustee) to pay and discharge, the principal of and any premium and interest on such
Securities on the respective Stated Maturities, in accordance with the terms of this Indenture and
such Securities. As used herein, “U.S. Government Obligation” means (x) any security which is (i) a
direct obligation of the United States of America for the payment of which the full faith and
credit of the United States of America is pledged or (ii) an obligation of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of America the
payment of which is unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case (i) or (ii), is not callable or redeemable at the option
of the issuer thereof, and (y) any depositary receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any U.S. Government Obligation which is
specified in clause (x) above and held by such bank for the account of the holder of such
depositary receipt, or with respect to any specific payment of principal of or interest on any U.S.
Government Obligation which is so specified and held, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable to the holder of
such depositary receipt from any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal or interest evidenced by such depositary receipt.

     (2) In the event of an election to have Section 1502 apply to any Securities or any series of
Securities, as the case may be, the Company shall have delivered to the Trustee an Opinion of
Counsel stating that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of this instrument, there has been a change
in the applicable Federal income tax law, in either case (A) or (B) to the effect that, and based
thereon such opinion shall confirm that, the Holders of such Securities will not recognize gain or
loss for Federal income tax purposes as a result of the deposit, Defeasance and discharge to be
effected with respect to such Securities and will be subject to Federal income tax on the same
amount, in the same manner and at the same times as would be the case if such deposit and
Defeasance were not to occur.

     (3) In the event of an election to have Section 1503 apply to any Securities or any series of
Securities, as the case may be, the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of such Securities will not recognize gain or loss for
Federal income tax purposes as a result of the deposit and Covenant Defeasance to be effected with
respect to such Securities and will be subject to Federal income tax on the same amount, in the
same manner and at the same times as would be the case if such deposit and Covenant Defeasance were
not to occur.

     (4) The Company shall have delivered to the Trustee an Officers’ Certificate to the effect
that neither such Securities nor any other Securities of the same series, if then listed on any
securities exchange, will be delisted as a result of such deposit.

     (5) No event which is, or after notice or lapse of time or both would become, an Event of
Default with respect to such Securities shall have occurred and be continuing at the time of such
deposit or, with regard to any such event specified in Sections 501(7) and (8), at any time on or
prior to the 121st day after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until after such 121st day).

     (6) Such Defeasance or Covenant Defeasance shall not cause the Trustee to have a conflicting
interest within the meaning of the Trust Indenture Act (assuming all Securities are in default
within the meaning of such Act).

     (7) Such Defeasance or Covenant Defeasance shall not result in a breach or violation of, or
constitute a default under, any other agreement or instrument to which the Company or any
Subsidiary is a party or by which it is bound.

     (8) At the time of such deposit, (A) no default in the payment of any principal of or premium
or interest on any Senior Debt of the Company or any Subsidiary Guarantor shall have occurred and
be continuing, (B) no event of default with respect to any Senior Debt of the Company or any
Subsidiary Guarantor shall have resulted in such Senior Debt becoming, and continuing to be, due
and payable prior to the date on which it would otherwise have become due and payable (unless
payment of such Senior Debt

50

 

has been made or duly provided for), and (C) no other event of default with respect to any
Senior Debt of the Company or any Subsidiary Guarantor shall have occurred and be continuing
permitting (after notice or lapse of time or both) the holders of such Senior Debt (or a trustee on
behalf of such holders) to declare such Senior Debt due and payable prior to the date on which it
would otherwise have become due and payable.

     (9) The Company shall have delivered to the Trustee an Opinion of Counsel to the effect that
such deposit shall not cause either the Trustee or the trust so created to be subject to the
Investment Company Act of 1940.

     (10) The Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion
of Counsel, each stating that all conditions precedent with respect to such Defeasance or Covenant
Defeasance have been complied with.

	 	 	SECTION 1505. Deposited Money and U.S. Government Obligations to Be Held in Trust;
Miscellaneous Provisions.

     Subject to the provisions of the last paragraph of Section 1003, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee or other qualifying trustee
(solely for purposes of this Section and Section 1506, the Trustee and any such other trustee are
referred to collectively as the “Trustee”) pursuant to Section 1504 in respect of any Securities
shall be held in trust and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any such Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders
of such Securities, of all sums due and to become due thereon in respect of principal and any
premium and interest, but money so held in trust need not be segregated from other funds except to
the extent required by law. Money and U.S. Government Obligations so held in trust shall not be
subject to the provisions of Article Twelve or Article Fourteen.

     The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against the U.S. Government Obligations deposited pursuant to Section 1504 or the
principal and interest received in respect thereof other than any such tax, fee or other charge
which by law is for the account of the Holders of Outstanding Securities.

     Anything in this Article to the contrary notwithstanding, the Trustee shall deliver or pay to
the Company from time to time upon Company Request any money or U.S. Government Obligations held by
it as provided in Section 1504 with respect to any Securities which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect the Defeasance or Covenant Defeasance, as the case may be, with respect to such
Securities.

     SECTION 1506. Reinstatement.

     If the Trustee or the Paying Agent is unable to apply any money in accordance with this
Article with respect to any Securities by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such application, then the
obligations under this Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 1502 or 1503 shall be revived and reinstated as though no deposit had
occurred pursuant to this Article with respect to such Securities, until such time as the Trustee
or Paying Agent is permitted to apply all money held in trust pursuant to Section 1505 with respect
to such Securities in accordance with this Article; provided, however, that if the Company makes
any payment of principal of or any premium or interest on any such Security following such
reinstatement of its obligations, the Company shall be subrogated to the rights (if any) of the
Holders of such Securities to receive such payment from the money so held in trust.

ARTICLE SIXTEEN

SINKING FUNDS

     SECTION 1601. Applicability of Article.

     The provisions of this Article shall be applicable to any sinking fund for the retirement of
Securities of any series except as otherwise specified as contemplated by Section 301 for such
Securities.

     The minimum amount of any sinking fund payment provided for by the terms of any Securities is
herein referred to as a “mandatory sinking fund payment”, and any payment in excess of such minimum
amount provided for by the terms of such Securities is herein referred to as an “optional sinking
fund payment.” If provided for by the terms of any Securities, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section 1602. Each sinking fund payment shall be
applied to the redemption of Securities as provided for by the terms of such Securities.

51

 

     SECTION 1602. Satisfaction of Sinking Fund Payments with Securities.

     The Company (1) may deliver Outstanding Securities of a series (other than any previously
called for redemption) and (2) may apply as a credit Securities of a series which have been (x)
converted or (y) redeemed either at the election of the Company pursuant to the terms of such
Securities or through the application of permitted optional sinking fund payments pursuant to the
terms of such Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to any Securities of such series required to be made pursuant to the terms of
such Securities as and to the extent provided for by the terms of such Securities; provided,
however, that the Securities to be so credited have not been previously so credited. The Securities
to be so credited shall be received and credited for such purpose by the Trustee at the Redemption
Price, as specified in the Securities so to be redeemed, for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced accordingly.

     SECTION 1603. Redemption of Securities for Sinking Fund.

     Not less than 35 days prior to each sinking fund payment date for any Securities, the Company
will deliver to the Trustee an Officers’ Certificate specifying the amount of the next ensuing
sinking fund payment for such Securities pursuant to the terms of such Securities, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which
is to be satisfied by delivering and crediting Securities pursuant to Section 1602 and will also
deliver to the Trustee any Securities to be so delivered. Not less than 32 days prior to each such
sinking fund payment date, the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1103 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the manner provided in
Section 1104. Such notice having been duly given, the redemption of such Securities shall be made
upon the terms and in the manner stated in Sections 1106 and 1107.

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

52

 

     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as
of the day and year first above written.

	 	 	 	 	 
	 	ISSUER:

APPROACH RESOURCES INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SUBSIDIARY GUARANTORS:

[INSERT SUBSIDIARY GUARANTORS]

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	TRUSTEE:

[TRUSTEE’S NAME],

as Trustee

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

SCHEDULE I

SUBSIDIARY GUARANTORS

	 	 	 	 	 
	SUBSIDIARY	 	STATE OF ORGANIZATION
	 

[Insert Subsidiary Guarantors]

Schedule Iexv10w1

EXHIBIT 10.1

EXECUTION VERSION

 

MASTER REPURCHASE AGREEMENT

Among

BARCLAYS BANK PLC, as Purchaser and Agent,

TH TRS CORP., as Seller,

and

TWO HARBORS INVESTMENT CORP., as Guarantor

Dated as of May 17, 2011

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 

	1. APPLICABILITY
	 	 	1	 
	2. DEFINITIONS AND INTERPRETATION
	 	 	1	 
	3. THE TRANSACTIONS
	 	 	17	 
	4. CONFIRMATION
	 	 	19	 
	5. INCOME
	 	 	19	 
	6. PAYMENT AND TRANSFER
	 	 	20	 
	7. MARGIN MAINTENANCE
	 	 	20	 
	8. TAXES; TAX TREATMENT
	 	 	21	 
	9. SECURITY INTEREST; PURCHASER’S APPOINTMENT AS
ATTORNEY-IN-FACT
	 	 	23	 
	10. CONDITIONS PRECEDENT
	 	 	24	 
	11. RELEASE OF PURCHASED ASSETS
	 	 	27	 
	12. RELIANCE
	 	 	27	 
	13. REPRESENTATIONS AND WARRANTIES
	 	 	27	 
	14. COVENANTS OF SELLER
	 	 	30	 
	15. REPURCHASE OF PURCHASED ASSETS
	 	 	35	 
	16. SERVICING OF THE MORTGAGE LOANS
	 	 	35	 
	17. EVENTS OF DEFAULT
	 	 	36	 
	18. REMEDIES
	 	 	37	 
	19. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE
	 	 	39	 
	20. USE OF EMPLOYEE PLAN ASSETS
	 	 	40	 
	21. INDEMNITY
	 	 	40	 
	22. WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS
	 	 	41	 
	23. REIMBURSEMENT; SET-OFF
	 	 	41	 
	24. FURTHER ASSURANCES
	 	 	42	 
	25. ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION
	 	 	42	 
	26. TERMINATION
	 	 	42	 
	27. REHYPOTHECATION; ASSIGNMENT
	 	 	42	 
	28. AMENDMENTS, ETC.
	 	 	43	 
	29. SEVERABILITY
	 	 	43	 
	30. BINDING EFFECT; GOVERNING LAW
	 	 	44	 
	31. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION AND VENUE; SERVICE OF PROCESS 
	 	 	44	 
	32. SINGLE AGREEMENT
	 	 	44	 
	33. INTENT
	 	 	45	 
	34. NOTICES AND OTHER COMMUNICATIONS
	 	 	45	 
	35. CONFIDENTIALITY
	 	 	46	 
	36. DUE DILIGENCE
	 	 	46	 
	37. GUARANTY
	 	 	47	 

-i-

 

 

SCHEDULES AND EXHIBITS

	 	 	 

	EXHIBIT A

	 	QUARTERLY CERTIFICATION
	EXHIBIT B

	 	REPRESENTATIONS AND WARRANTIES WITH RESPECT TO MORTGAGE LOANS
	EXHIBIT C

	 	FORM OF TRANSACTION NOTICE
	EXHIBIT D

	 	FORM OF GOODBYE LETTER
	EXHIBIT E

	 	FORM OF WAREHOUSE LENDER’S RELEASE
	EXHIBIT F

	 	[RESERVED]
	EXHIBIT G

	 	[RESERVED]
	EXHIBIT H

	 	[RESERVED]

-ii-

 

 

MASTER REPURCHASE AGREEMENT

Dated as of May 17, 2011

AMONG:

BARCLAYS BANK PLC, in its capacity as purchaser (“Purchaser”) and agent pursuant hereto
(“Agent”),

TH TRS CORP. (“Seller”)

and

TWO HARBORS INVESTMENT CORP. (“Guarantor”).

1. APPLICABILITY

     Purchaser may from time to time, upon the terms and conditions set forth herein, agree to
enter into transactions on an uncommitted basis in which Seller sells to Purchaser Eligible
Mortgage Loans, on a servicing-released or servicing-retained basis, against the transfer of funds
by Purchaser, with a simultaneous agreement by Purchaser to transfer to Seller such Purchased
Assets on a date certain not later than one year following such transfer, against the transfer of
funds by Seller; provided, that the Aggregate MRA Purchase Price shall not exceed,
as of any date of determination, the lesser of (a) the Maximum Aggregate Purchase Price and (b) the
Asset Base. Each such transaction shall be referred to herein as a “Transaction,” and
shall be governed by this Agreement. This Agreement is not a commitment by Purchaser to enter into
Transactions with Seller but rather sets forth the procedures to be used in connection with
periodic requests for Purchaser to enter into Transactions with Seller. Seller hereby acknowledges
that Purchaser is under no obligation to enter into, any Transaction pursuant to this Agreement.

2. DEFINITIONS AND INTERPRETATION

     (a) Defined Terms.

     “30+ Day Delinquent Mortgage Loan” means any Mortgage Loan at any time the Monthly
Payment for which was not received within 29 days after its Due Date.

     “Accepted Servicing Practices” means with respect to any Mortgage Loan, those
accepted, customary and prudent mortgage servicing practices (including collection procedures) of
prudent mortgage banking institutions that service mortgage loans of the same type as the Mortgage
Loans in the jurisdiction where the related Mortgaged Property is located, and which are in
accordance with the requirements of applicable law, FHA regulations and VA regulations, if
applicable, and the requirements of any private mortgage insurer so that the FHA insurance, VA
guarantee or any other applicable insurance or guarantee in respect of any Mortgage Loan is not
voided or reduced.

     “Accrual Period” means, with respect to each Monthly Payment Date for any Transaction,
the period from and including the immediately prior Monthly Payment Date to but excluding such
Monthly Payment Date; provided that with respect to the first Monthly Payment Date of a Transaction
following the related Purchase Date, the Accrual Period shall commence on the related Purchase
Date.

 

 

     “Additional Purchased Mortgage Loans” shall have the meaning assigned thereto in
Section 7(b) hereof.

     “Adjustable Rate Mortgage Loan” means a Mortgage Loan which provides for the
adjustment of the Mortgage Interest Rate payable in respect thereto.

     “Advisers” means PRCM Advisers, LLC.

     “Affiliate” means, with respect to (1) any specified Person other than the Seller, any
other Person controlling or controlled by or under common control with such specified Person and
(2) the Seller, the Guarantor and its Subsidiaries. For the purposes of this definition, “control”
means the power to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise and the terms
“controlling,” “controlled by” and “under common control with” have meanings correlative to the
meaning of “control.” For the avoidance of doubt, with respect to Seller and Guarantor,
“Affiliate” shall not include (i) PRCMLP, PRCMLLC, PRDM, Advisers, any subsidiary of PRCMLP,
PRCMLLC, PRDM or Advisers, or any fund that PRCMLP, PRCMLLC, PRDM or Advisers from time to time may
manage, other than Guarantor or (ii) any officer or director of Guarantor or Guarantor’s
subsidiaries.

     “Agency” means Freddie Mac or Fannie Mae, as applicable.

     “Agent” means Barclays Bank PLC and its successors in interest, as administrative
agent for Purchaser and any additional purchasers that may become a party hereto.

     “Aggregate MRA Purchase Price” means as of any date of determination, an amount equal
to the aggregate Purchase Price for all Mortgage Loans then subject to Transactions under this
Agreement.

     “Agreement” means this Master Repurchase Agreement (including all exhibits, schedules
and other addenda thereto), as it may be amended, further supplemented or otherwise modified from
time to time.

     “ALTA” means the American Land Title Association.

     “Applicable Law” means all applicable provisions of constitutions, laws, statutes,
ordinances, rules, treaties, regulations, permits, licenses, approvals, interpretations and orders
of governmental authorities and all applicable orders and decrees of all courts and arbitrators.

     “Applicable Margin” shall have the meaning assigned thereto in the Pricing Side
Letter.

     “Approvals” means the approvals obtained by the applicable Agency in designation of
the Servicer as a Fannie Mae- or a Freddie Mac-approved servicer, as applicable, in good standing.

     “Asset Base” means, on any date of determination and with respect to all Purchased
Assets then subject to Transactions and, to the extent applicable, all Eligible Mortgage Loans
proposed to be sold to the Purchaser as of such date of determination, the product of the
applicable Purchase Price Percentage multiplied by the Market Value of such Purchased Assets and
such Eligible Mortgage Loans, plus any cash received and held by Purchaser in respect of a Margin
Call if not used to reduce the aggregate Purchase Price.

     “Assignment and Acceptance” shall have the meaning assigned thereto in Section 27(b).

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     “Assignment of Mortgage” means, with respect to any Mortgage, an assignment of the
Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect the assignment of
the Mortgage to Purchaser.

     “Bank” means (i) Wells Fargo Bank, N.A., and its successors and permitted assigns or
(ii) such other bank as may be mutually acceptable to the Seller and the Purchaser.

     “Bankruptcy Code” means 11 U.S.C. Section 101 et seq., as amended from time to time.

     “Breakage Costs” shall have the meaning assigned thereto in Section 3(h).

     “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day upon
which the New York Stock Exchange or the Federal Reserve Bank of New York is closed or (iii) with
respect to any day on which the parties hereto have obligations to the Custodian or on which the
Custodian has obligations to any party hereto, a day upon which the Custodian’s offices are closed.

     “Cash Equivalents” means any of the following: (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or issued by any agency
thereof and backed by the full faith and credit of the United States, in each case maturing within
one (1) year from the date of acquisition; (b) mortgage-backed securities issued or guaranteed by
any agency of the United States Government with an implied rating of AAA or with an express rating
of AAA by either Standard & Poor’s Ratings Services (“S&P”) or by Moody’s Investors Service, Inc.
(“Moody’s”); (c) certificates of deposit, time deposits, eurodollar time deposits or overnight bank
deposits having maturities of six (6) months] or less from the date of acquisition issued by any
commercial bank organized under the laws of the United States or of any state thereof having
combined capital and surplus of not less than $500,000,000; (d) commercial paper of a domestic
issuer rated at least A-1 by S&P or P-1 by Moody’s, or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies cease publishing
ratings of commercial paper issuers generally, and maturing within six months from the date of
acquisition; (e) repurchase obligations of any commercial bank satisfying the requirements of
clause (c) of this definition, having a term of not more than thirty (30) days, with respect to
securities issued or fully guaranteed or insured by the United States government; (f) securities
with maturities of one (1) year or less from the date of acquisition issued or fully guaranteed by
any state, commonwealth or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign government, the securities
of which state, commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody’s; (g) securities with
maturities of six (6) months or less from the date of acquisition backed by standby letters of
credit issued by any commercial bank satisfying the requirements of clause (c) of this definition;
or (h) shares of money market mutual or similar funds which invest exclusively in assets satisfying
the requirements of clauses (a) through (g) of this definition.

     “Cash Out Refinance Loan” means a Mortgage Loan with respect to which the borrower
used only a portion of the proceeds of the new Mortgage Loan to repay the existing mortgage loan,
retaining the remaining proceeds in cash for other purposes.

     “Certification” shall have the meaning assigned thereto in the Custodial Agreement.

     “Change in Control” shall mean: (a) any transaction or event as a result of which the
Guarantor ceases to own, beneficially or of record, 100% of the stock of Seller, (b) the sale,
transfer, or other disposition of all or substantially all of Seller’s assets (excluding any such
action taken in connection with any securitization transaction or routine sales of Mortgage Loans),
or (c) the consummation of a merger or consolidation of Seller with or into another entity or any
other corporate reorganization, if more than

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50% of the combined voting power of the continuing or surviving entity’s equity outstanding
immediately after such merger, consolidation or such other reorganization is owned by persons who
were not equityholders of the Seller immediately prior to such merger, consolidation or other
reorganization.

     “Change in Law” means (a) the taking effect of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by Purchaser (or any Affiliate thereof) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or issued after the
date of this Agreement.

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

     “Collection Account” means the account established and maintained by the Seller in
accordance with Section 5 for the benefit of the Purchaser.

     “Collection Account Control Agreement” means that certain Collection Account Control
Agreement, dated as of May 17, 2011, by and among the Purchaser, the Seller and Bank, in form and
substance acceptable to the Purchaser to be entered into with respect to the Collection Account, as
the same may be amended, modified or supplemented from time to time.

     “Combined Loan to Value Ratio” or “CLTV” means with respect to any Mortgage Loan, the
ratio of the original outstanding principal amount of such Mortgage Loan and any other mortgage
loan secured by the same properly to the lesser of (a) the Appraised Value of the Mortgaged
Property at origination or (b) if the Mortgaged Property was purchased within 12 months of the
origination of such Mortgage Loan, the purchase price of the Mortgaged Property.

     “Condominium Loan” means a Mortgage Loan secured by a unit in a condominium.

     “Confirmation” shall have the meaning assigned thereto in Section 4 hereof.

     “Current Liabilities” means those liabilities of Seller, or any portion thereof, the
maturity of which will not extend beyond one year from the date said determination is to be made
all in accordance with GAAP.

     “Custodial Agreement” means that certain Custodial Agreement, dated as of May 17 2011,
among Seller, Purchaser, and Custodian, entered into in connection with this Agreement.

     “Custodian” means Wells Fargo Bank, N.A., and its successors and permitted assigns.

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

     “Default Rate” shall have the meaning assigned thereto in the Pricing Side Letter.

     “Dollars” or “$” means, unless otherwise expressly stated, lawful money of the
United States of America.

     “Due Date” means the day of the month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.

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     “Electronic Tracking Agreement” means the electronic tracking agreement in form and
substance acceptable to Purchaser and Seller, among Purchaser, Servicer, MERSCORP, Inc., entered
into in connection with this Agreement, as the same may be amended, modified or supplemented from
time to time.

     “Electronic Transmission” means the delivery of information in an electronic format
acceptable to the applicable recipient thereof. An Electronic Transmission shall be considered
written notice for all purposes hereof (except when a request or notice by its terms requires
execution).

     “Eligible Mortgage Loan” means a Mortgage Loan that (i) satisfies each of the
representations and warranties in Exhibit B to the Agreement in all material respects, and
(ii) contains all required documents in the Mortgage File without exceptions unless otherwise
waived by Purchaser or permitted below. No Mortgage Loan shall be an Eligible Mortgage Loan:

     (1) if the Purchase Price of such Mortgage Loan, when added to the Aggregate MRA
Purchase Price, exceeds, as of any date of determination, the lesser of (a) the Maximum
Aggregate Purchase Price and (b) the Asset Base;

     (2) if such Mortgage Loan has been subject to a Transaction hereunder for a period of
time which is greater than the Maximum Time on Facility;

     (3) if such Mortgage Loan is not a Forward Eligible Asset subject to the Forward AAA
Securities Agreement or to a similar agreement approved by Agent in its sole discretion; and

     (4) if such Mortgage Loan was not purchased by Seller pursuant to an MLPA.

     “Eligible Mortgage Loan Commitment Fee” shall have the meaning assigned thereto in the
Pricing Side Letter.

     “ERISA” means, with respect to any Person, the Employee Retirement Income Security Act
of 1974, as amended from time to time and any successor thereto, and the regulations promulgated
and rulings issued thereunder.

     “Escrow Payments” means, with respect to a Mortgage Loan, the amounts constituting
ground rents, taxes, assessments, water charges, sewer rents, municipal charges, mortgage insurance
premiums, fire and hazard insurance premiums, condominium charges and other payments as may be
required to be escrowed by the Mortgagor with the Mortgagee pursuant to the terms of the Mortgage
or any other document.

     “Event of Default” shall have the meaning assigned thereto in Section 17 hereof.

     “Event of Insolvency” means, with respect to any Person,

     (i) the filing of a voluntary petition (or the consent by such Person to the filing of
any such petition against it), commencing, or authorizing the commencement of any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or
similar law relating to the protection of creditors, or suffering any such petition or
proceeding to be commenced by another; or such Person shall consent or seek to the
appointment of or taking possession by a custodian, receiver, conservator, trustee,
liquidator, sequestrator or similar official of such Person, or for any substantial part of its Property, or any general
assignment for the benefit of creditors;

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     (ii) a proceeding shall have been instituted against such Person under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution, moratorium,
delinquency or liquidation law of any jurisdiction, whether now or subsequently in effect,
or a custodian, receiver, conservator, liquidator, trustee, sequestrator or similar official
for such Person or such Person’s Property (as a debtor or creditor protection procedure) is
appointed by any Governmental Authority having the jurisdiction to do so or takes possession
of such Property and any such proceeding is not dismissed within thirty (30) days of filing;

     (iii) that such Person shall become insolvent;

     (iv) that such Person shall (a) admit in writing its inability to pay or discharge its
debts or obligations generally as they become due or mature, (b) admit in writing its
inability to, or intention not to, perform any of its material obligations, or (c) generally
fail to pay its debts or obligations as they become due or mature;

     (v) any Governmental Authority shall have seized or appropriated, or assumed custody or
control of, all or any substantial part of the Property of such Person, or shall have taken
any action to displace the management of such Person; or

     (vi) the audited annual financial statements of such Person or the notes thereto or
other opinions or conclusions stated therein shall be qualified or limited by reference to
the status of such Person as a “going concern” or a reference of similar import or shall
indicate that such Person has a negative net worth or is insolvent; or

     (vii) if such Person is a corporation, such Person shall take any corporate action in
furtherance of, or the action of which would result in any of the foregoing actions.

     “Extra Large Jumbo Loan” means a Mortgage Loan with an original principal balance of
$1,500,000 or more.

     “Fannie Mae” means Fannie Mae or any successor thereto.

     “FDIC” means the Federal Deposit Insurance Corporation or any successor thereto.

     “FHA” means the Federal Housing Administration, an agency within HUD, or any successor
thereto, and including the Federal Housing Commissioner and the Secretary of Housing and Urban
Development where appropriate under the FHA regulations.

     “FICO” means Fair Isaac & Co., or any successor thereto.

     “FICO Score” means the credit score of the Mortgagor provided by Fair, Isaac &
Company, Inc. or such other organization providing credit scores at the time of the origination of
a Mortgage Loan.

     “Foreign Purchaser” shall have the meaning assigned thereto in Section 8(d).

     “Forward AAA Securities Agreement” means that agreement, dated as of May 17, 2011,
between the Seller and the Purchaser, relating to securities expected to be issued and backed by
the Purchased Assets.

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     “Forward Eligible Asset” shall have the meaning assigned thereto in the Forward AAA
Securities Agreement.

     “Forward Ineligible Asset” shall have the meaning assigned thereto in the Forward AAA
Securities Agreement.

     “Freddie Mac” means Freddie Mac, and its successors in interest.

     “Funded Liabilities” means, without duplication:

     (i) any liability or obligation payable more than one year from the date of creation
thereof, which under GAAP is required to be shown on a balance sheet as a liability,

     (ii) indebtedness payable more than one year from the date of creation thereof which is
secured by any security interest on property owned by Seller whether or not the indebtedness
secured thereby shall have been assumed by Seller,

     (iii) guarantees, endorsements (other than endorsements of negotiable instruments for
collection in the ordinary course of business), and other contingent liabilities (whether
direct or indirect) in connection with the obligations, stock, or dividends of any Person,

     (iv) obligations under any contract providing for the making of loans, advances, or
capital contributions to any Person in order to enable such Person primarily to maintain
working capital, net worth, or any other balance sheet condition or to pay debts, dividends,
or expenses, and

     (v) obligations under any contract which, in economic effect, is substantially
equivalent to a guarantee,

     all as determined in accordance with GAAP; provided, however, that any such obligation shall
be treated as a Funded Liability, regardless of its term, if such obligation is renewable pursuant
to the terms thereof or arises under a revolving credit or similar agreement effective for more
than one year after the date of creation of such obligation, or may be payable out of the proceeds
of a similar obligation pursuant to the terms of such obligation or of any such agreement.

     “GAAP” means generally accepted accounting principles as in effect from time to time
in the United States of America.

     “Governmental Authority” means any nation or government, any state or other political
subdivision, agency or instrumentality thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government and any court or
arbitrator having jurisdiction over Seller any of its Subsidiaries or any of their Property.

     “Guaranteed Obligations” means, without duplication, all of the Obligations of Seller
to Purchaser, whenever arising, under this Agreement or any other Program Document (including, but
not limited to, obligations with respect to principal, interest and fees).

     “Guarantor” means Two Harbors Investment Corp.

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     “Hedge Instrument” means any interest rate cap agreement, interest rate floor
agreement, interest rate swap agreement or other interest rate hedging agreement entered into by
Seller with a counterparty reasonably acceptable to Agent, in each case with respect to the
Mortgage Loans.

     “High Cost Mortgage Loan” means a Mortgage Loan that is (a) subject to, covered by or
in violation of the provisions of the Homeownership and Equity Protection Act of 1994, as amended,
(b) a “high cost,” “covered,” “abusive,” “predatory” or “high risk” mortgage loan under any
federal, state or local law, or any similarly classified loan using different terminology under any
law imposing heightened regulation, scrutiny or additional legal liability for residential mortgage
loans having high interest rates, points and/or fees, or any other state or other regulation
providing assignee liability to holders of such mortgage loans, (c) subject to or in violation of
any such or comparable federal, state or local statutes or regulations, or (d) a “High Cost Loan”
or “Covered Loan,” as applicable, as such terms are defined in the current version of the Standard
& Poor’s LEVELS® Glossary Revised, Appendix E.

     “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 Government National Mortgage Association.

     “Income” means, with respect to any Purchased Asset at any time, any principal and/or
interest thereon and all dividends, sale proceeds and all other proceeds as defined in Section
9-102(a)(64) of the Uniform Commercial Code and all other collections and distributions thereon
(including, without limitation, any proceeds received in respect of mortgage insurance).

     “Indebtedness” means, with respect to any Person: (a) all obligations created, issued
or incurred by such Person for borrowed money; (b) obligations to pay the deferred purchase or
acquisition price of Property or services, other than trade accounts payable (other than for
borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long
as such trade accounts payable are payable and paid within ninety (90) days of the date the
respective goods are delivered or the respective services are rendered; (c) indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective indebtedness so
secured has been assumed by such Person; (d) obligations (contingent or otherwise) in respect of
letters of credit or similar instruments issued for account of such Person; (e) capital lease
obligations; (f) payment obligations under repurchase agreements, single seller financing
facilities, warehouse facilities and other lines of credit; (g) indebtedness of others guaranteed
on a recourse or partial recourse basis by such Person; (h) all obligations incurred in connection
with the acquisition or carrying of fixed assets; (i) indebtedness of general partnerships of which
such Person is a general partner; and (j) any other known or contingent liabilities of such Person.
For purposes of Section 14(g)(ii)(A)(2), the term “Indebtedness” shall be calculated net of any
dividends declared but not yet paid by the Guarantor, any debt associated with repurchase
agreements collateralized by U.S. Treasury securities, short “TBAs” and any negative fair market
value of other derivative instruments, including but not limited to interest rate swaps and
swaptions.

     “Indemnified Party” shall have the meaning assigned thereto in Section 21(a).

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

     “Large Jumbo Loan” means a Mortgage Loan with an original principal balance of
$1,000,000 or more, but less than $1,500,000.

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     “LIBOR” means for each day, the rate (adjusted for statutory reserve requirements for
eurocurrency liabilities) for eurodollar deposits for a period equal to one month appearing on
Reuters Screen LIBOR01 Page or if such rate ceases to appear on Reuters Screen LIBOR01 Page, or any
other service providing comparable rate quotations at approximately 11:00 a.m., London time, on the
applicable date of determination, or such interpolated rate as determined by the Agent.

     “Lien” means any mortgage, deed of trust, lien, claim, pledge, charge, security
interest or similar encumbrance.

     “Loan-to-Value Ratio” or “LTV” means with respect to any Mortgage Loan, the
ratio of the original outstanding principal amount of such Mortgage Loan to the lesser of (a) the
Appraised Value of the Mortgaged Property at origination or (b) if the Mortgaged Property was
purchased within 12 months of the origination of such Mortgage Loan, the purchase price of the
Mortgaged Property.

     “Margin Call” shall have the meaning assigned thereto in Section 7(b) hereof.

     “Margin Deficit” shall have the meaning assigned thereto in Section 7(b) hereof.

     “Market Value” means, with respect to any Transaction and as of any date of
determination, (i) the price at which a Purchased Asset could readily be sold, as determined by
Agent in its good faith discretion, using methodology and parameters customarily used by Agent to
value similar assets, as may be as marked to market daily, (ii) zero, with respect to any Purchased
Asset that is not an Eligible Mortgage Loan on account of clause (1), (2) or (4) of the definition
of Eligible Mortgage Loan or that is and was, as of the related Purchase Date, a Forward Ineligible
Asset and (iii) 50% of the related outstanding principal balance with respect to any Purchased
Asset that is not described in the preceding clause (ii) and was thought to be a Forward Eligible
Asset on the Purchase Date but has been discovered after the related Purchase Date to be a Forward
Ineligible Asset. Additionally, Market Value means zero with respect to any Purchased Asset for
which the related Servicer triggers a Servicing Related Market Value Event, until such time that a
replacement servicer (approved by Agent in its good faith discretion not to be unreasonably
withheld) is engaged to service such Purchased Asset or the Servicer Related Market Value Event is
otherwise cured.

     “Material Adverse Change” means, with respect to a Person, any material adverse change
in the business, condition (financial or otherwise), operations, performance, Property or prospects
of such Person including the insolvency of such Person or its Parent Company, if applicable.

     “Material Adverse Effect” means (a) a Material Adverse Change with respect to Seller
or Guarantor, as applicable, (b) a material impairment of the ability of Seller, Guarantor or any
of their respective Affiliates that is a party to any Program Document to perform under any Program
Document to which it is a party; (c) a material adverse effect upon the legality, validity, binding
effect or enforceability of any Program Document against Seller or Guarantor, as applicable, or any
of their respective Affiliates that is a party to any Program Document; (d) a material adverse
effect on the Market Value of the Purchased Assets; or (e) a material adverse effect on the
Approvals of Servicer.

     “Maturity Date” means the date that is 364 days following the date of this Agreement,
subject to Section 26.

     “Maximum Aggregate Purchase Price” shall have the meaning assigned thereto in the
Pricing Side Letter.

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     “Maximum Time on Facility” means for each Purchased Asset, the maximum number of days
such Purchased Asset may be subject to a Transaction, which is three hundred sixty-four (364) days,
unless such period is extended pursuant to Section 26.

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

     “MERS Designated Mortgage Loan” means 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.

     “MERS Identification Number” shall have the meaning assigned thereto in the Custodial
Agreement.

     “MLPA” means, with respect to any Mortgage Loan, the agreement, approved by the Agent
in its sole discretion, pursuant to which the Seller acquired such Mortgage Loan.

     “Monthly Payment” shall mean the scheduled monthly payment of principal and interest
on a Mortgage Loan as adjusted in accordance with changes in the mortgage interest rate pursuant to
the provisions of the Mortgage Note for an Adjustable Rate Mortgage Loan.

     “Monthly Payment Date” means the twentieth (20th) day of each calendar month beginning
with June 2011; provided that if such day is not a Business Day, the next succeeding Business Day.

     “Mortgage” means a mortgage, deed of trust, or other security instrument, securing a
Mortgage Note.

     “Mortgage File” shall have the meaning assigned thereto in the Custodial Agreement.

     “Mortgage Interest Rate” means, with respect to each Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan from time to time in accordance with the provisions of
the related Mortgage Note.

     “Mortgage Loan” means a prime, jumbo residential mortgage loan.

     “Mortgage Note” means a promissory note or other evidence of indebtedness of the
obligor thereunder, evidencing a Mortgage Loan, and secured by the related Mortgage.

     “Mortgaged Property” means the real property (or leasehold estate, if applicable)
securing repayment of the debt evidenced by a Mortgage Note.

     “Mortgagee” means the record holder of a Mortgage Note secured by a Mortgage.

     “Mortgagor” means the obligor or obligors on a Mortgage Note, including any person who
has assumed or guaranteed the obligations of the obligor thereunder.

     “Multi-Unit Residential Loan” means a Mortgage Loan secured by a two-to four-unit
residential building.

     “Negative Amortization” means the portion of interest accrued at the Mortgage Interest
Rate in any month which exceeds the Monthly Payment on the related Mortgage Loan for such month and
which, pursuant to the terms of the Mortgage Note, is added to the principal balance of the
Mortgage Loan.

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     “Net Asset Value” means, with respect to any Person, the difference of (i) the gross
assets of such Person minus (ii) all liabilities (including Indebtedness) of such Person, each
determined in accordance with GAAP.

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

     “Obligations” means (a) all amounts due an payable by Seller to Purchaser in
connection with a Transaction hereunder, together with interest thereon (including interest which
would be payable as post-petition interest in connection with any bankruptcy or similar proceeding)
and other obligations and liabilities of Seller to Purchaser arising under, or in connection with,
the Program Documents or directly related to the Purchased Assets, whether now existing or
hereafter arising; (b) any and all sums paid by Purchaser or on behalf of Purchaser pursuant to the
Program Documents in order to preserve any Purchased Asset or its interest therein; (c) in the
event of any proceeding for the collection or enforcement of any of Seller’s indebtedness,
obligations or liabilities referred to in clause (a), the reasonable expenses of retaking, holding,
collecting, preparing for sale, selling or otherwise disposing of or realizing on any Purchased
Asset, or of any exercise by Purchaser of its rights under the Program Documents, including without
limitation, reasonable attorneys’ fees and disbursements and court costs; and (d) all of Seller’s
indemnity obligations to Purchaser pursuant to the Program Documents.

     “Originator” means, with respect to any Mortgage Loan, the entity that originated such
Mortgage Loan.

     “Origination Date” means the date on which a Mortgage Loan was originated by the
related originator.

     “Other Taxes” shall have the meaning assigned thereto in Section 8(b).

     “OTS” means Office of Thrift Supervision or any successor thereto.

     “Parent Company” means a corporation or other entity owning at least 50% of the
outstanding shares of voting stock of Seller.

     “Person” means 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.

     “PRCMLLC” means Pine River Capital Management LLC.

     “PRCMLP” means Pine River Capital Management L.P.

     “PRDM” means Pine River Domestic Management LP.

     “Price Differential” means, with respect to any Purchased Asset or Transaction as of
any date of determination, an amount equal to the product of (A) the Pricing Rate (or during the
continuation of an Event of Default, by daily application of the Default Rate) and (B) the Purchase
Price for such Purchased Asset or Transaction. Price Differential will be calculated in accordance
with Section 3(e) herein for the actual number of days elapsed during such Accrual Period on a
360-day basis.

     “Price Differential Determination Date” means, with respect to any Monthly Payment
Date, the second (2nd) Business Day preceding such Monthly Payment Date.

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     “Pricing Rate” means, as of any date of determination and with respect to an Accrual
Period for any Purchased Asset or Transaction, an amount equal to the sum of (i) LIBOR plus (ii)
the Applicable Margin.

     “Pricing Side Letter” means that certain Pricing Side Letter, dated as of May 17,
2011, between Seller and Purchaser, as the same may be amended, modified or supplemented from time
to time.

     “Private-Label MBS” means mortgage-backed securities that are not issued or guaranteed
by any Agency.

     “Program Documents” means this Agreement, the Pricing Side Letter, the Custodial
Agreement, the Collection Account Control Agreement, the Forward AAA Securities Agreement, any
assignment of Hedge Instrument, the Electronic Tracking Agreement and all other agreements,
documents and instruments entered into by Seller on the one hand, and Purchaser or one of its
Affiliates (or Custodian on its behalf) and/or Agent or one of its Affiliates on the other, in
connection herewith or therewith with respect to the transactions contemplated hereunder or
thereunder and all amendments, restatements, modifications or supplements thereto.

     “Property” means any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible.

     “Purchase Date” means, with respect to each Transaction, the date on which Purchased
Assets are sold by Seller to the Purchaser or its designee hereunder.

     “Purchase Price” means the price at which Purchased Assets subject to a Transaction
are sold by Seller to Purchaser or its designee on a Purchase Date, which shall (unless otherwise
agreed to by the Seller and Purchaser) be equal to the lesser of (i) the unpaid principal balance
of such Purchased Assets as of such date of determination and (ii) the product of the applicable
Purchase Price Percentage multiplied by the Market Value of such Purchased Assets as of such date
of determination.

     “Purchase Price Percentage” shall have the meaning assigned thereto in the Pricing
Side Letter.

     “Purchased Assets” means all of the Mortgage Loans sold by Seller to Purchaser in a
Transaction, together with the following: (i) such other property, rights, titles or interest as
are specified on the related Transaction Notice, (ii) all mortgage guarantees and insurance
relating to such Mortgage Loans (issued by governmental agencies or otherwise) or the related
Mortgaged Property and any mortgage insurance certificate or other document evidencing such
mortgage guarantees or insurance and all claims and payments related to such Mortgage Loans, (iii)
all guarantees or other support for such Mortgage Loans, (iv) all rights to Income and the rights
to enforce such payments arising from such Mortgage Loans and any other contract rights, payments,
rights to payment (including payments of interest or finance charges) with respect thereto, (v) the
Collection Account and all amounts on deposit therein, (vi) all Additional Purchased Mortgage
Loans, (vii) all “accounts,” “deposit accounts,” “securities accounts,” “chattel paper,”
“commercial tort claims,” “deposit accounts,” “documents,” “general intangibles,” “instruments,”
“investment property,” and “securities accounts,” relating to the foregoing as each of those terms
is defined in the Uniform Commercial Code and all cash and cash equivalents and all products and
proceeds relating to or constituting any or all of the foregoing, (viii) any purchase agreements or
other agreements or contracts relating to or constituting any or all of the foregoing, (ix) any
other collateral pledged or otherwise relating to any or all of the foregoing, together with all
files, material documents, instruments, surveys (if available), certificates, correspondence,
appraisals, computer records, computer storage media, accounting records and other books and
records relating to the foregoing, and (x) any and all replacements, substitutions, distributions
on, or proceeds with respect to, any of the foregoing.

- 12 -

 

     “Purchaser” shall have the meaning set forth in the preamble hereof.

     “Purchaser’s Wire Instructions” shall have the meaning set forth in the Pricing Side
Letter.

     “Records” means all instruments, agreements and other books, records, and reports and
data generated by other media for the storage of information maintained by Seller or any other
person or entity with respect to a Purchased Asset. Records shall include, without limitation, the
Mortgage Notes, any Mortgages, the Mortgage Files, the Servicing Files, and any other instruments
necessary to document or service an Asset that is a Purchased Asset, including, without limitation,
the complete payment and modification history of each Asset that is a Purchased Asset.

     “Repurchase Date” means, with respect to any Transaction, the earliest of (i) the
Termination Date, (ii) the date set forth in the related Transaction Notice as the scheduled
Repurchase Date, (iii) the second Business Day following Seller’s written notice to Purchaser
requesting a repurchase of such Transaction or (iv) the conclusion of the Maximum Time on Facility
for each such Transaction, or if such day is not a Business Day, the immediately following Business
Day.

     “Repurchase Price” means the price at which Purchased Assets are to be transferred
from Purchaser or its designee to Seller upon termination of a Transaction, which will be
determined in each case as the sum of: (i) any portion of the Purchase Price not yet repaid to
Purchaser, (ii) the Price Differential accrued and unpaid thereon, (iii) Breakage Costs, if any,
and (iv) any accrued and unpaid fees or expenses or indemnity amounts and any other outstanding
amounts owing under the Program Documents from Seller to Purchaser.

     “Requirement of Law” means as to any Person, the certificate of incorporation and
by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

     “SEC” shall have the meaning ascribed thereto in Section 35.

     “Second Home Loan” means a Mortgage Loan secured by a real property that is occupied
by the borrower, but not as the borrower’s principal residence.

     “Section 404 Notice” means the notice required pursuant to Section 404 of the Helping
Families Save Their Homes Act of 2009 (P.L. 111-22), which amends 15 U.S.C. Section 1641 et seq.,
to be delivered by a creditor that is an owner or an assignee of a Mortgage Loan to the related
Mortgagor within thirty (30) days after the date on which such Mortgage Loan is sold or assigned to
such creditor.

     “Seller” shall have the meaning set forth in the preamble hereof.

     “Seller Mortgage Loan Schedule” means the list of Purchased Assets proposed to be
purchased by Purchaser that will be delivered in a mutually agreeable excel spreadsheet format by
Seller to Purchaser and Custodian together with each Transaction Notice and attached by the
Custodian to the related Certification.

     “Servicer” means a servicer of a Mortgage Loan acquired pursuant to a Transaction,
approved by Agent in its good faith discretion not to be unreasonably withheld.

     “Servicing Agreement” means, with respect to Servicing Released Mortgage Loans, the
servicing agreement, in form and substance acceptable to Purchaser and Seller, among Purchaser,
Seller and
Servicer and, with respect to Servicing Retained Mortgage Loans, any servicing agreement
relating to one or more Servicing Retained Mortgage Loans and approved by Purchaser.

- 13 -

 

     “Servicing File” means with respect to each Mortgage Loan, the file retained by Seller
or its designee consisting of all documents that a prudent originator and servicer would include
(including copies of the Mortgage File), all documents necessary to document and service the
Mortgage Loans and any and all documents required to be delivered in connection with any transfer
of servicing pursuant to the Program Documents.

     “Servicing Records” means with respect to a Mortgage Loan, the related servicing
records, including but not limited to any and all servicing agreements, files, documents, records,
data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance
policies, appraisals, other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of such Mortgage Loan.

     “Servicing Related Market Value Event” means any of the following:

     (a) With respect to Servicing Retained Mortgage Loans, Servicer ceases to be a member of MERS
in good standing and has not been reinstated within fifteen (15) calendar days following receipt of
notice or knowledge thereof;

     (b) With respect to Servicing Retained Mortgage Loans, change of Servicer without consent of
the Agent;

     (c) With respect to Servicing Retained Mortgage Loans, failure of Servicer to service the
Mortgage Loans in accordance with Accepted Servicing Practices;

     (d) With respect to Servicing Retained Mortgage Loans, failure of Servicer to meet the
qualifications to maintain all requisite Approvals, such Approvals are revoked or such Approvals
are materially modified;

     (e) With respect to Servicing Retained Mortgage Loans, if, at any time, Servicer’s HUD ranking
falls below “Tier 2” lender;

     (f) With respect to Servicing Retained Mortgage Loans, any failure by Servicer to remit when
due Income payments required to be made under the terms of this Agreement or such Mortgage Loan and
such failure is not cured within two (2) Business Days of the earlier of (x) Servicer’s receipt of
written notice from Purchaser or Custodian of such breach or (y) the date on which Servicer obtains
actual knowledge of the facts giving rise to such breach;

     (g) With respect to Servicing Retained Mortgage Loans, Servicer fails to operate or conduct
its business operations or any material portion thereof in the ordinary course, or Servicer
experiences any other material adverse change in its business operations or financial condition,
which, in Agent’s sole discretion, constitutes a material impairment of Servicer’s ability to
perform its obligations under this Agreement or any other related document; or

     (h) With respect to Servicing Retained Mortgage Loans, the Servicer defaults under the
Servicing Agreement and remains in default after any applicable notice and cure periods, and
servicing cannot be transferred due to action or inaction of Seller.

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     “Servicing Released Mortgage Loan” means a Mortgage Loan acquired by Seller along with
the related Servicing Rights.

     “Servicing Retained Mortgage Loan” means a Mortgage Loan acquired by Seller from an
entity that retained the Servicing Rights.

     “Servicing Rights” means contractual, possessory or other rights of Servicer or any
other Person to administer or service a Mortgage Loan or to possess the Servicing File.

     “Subordinated Debt” means, with respect to any Person Indebtedness of such Person to
any other Person that is subordinated to the Obligations pursuant to a currently effective and
irrevocable Subordination Agreement approved by Agent in its sole discretion and the principal of
which is not due and payable until ninety (90) days or more after the Termination Date.

     “Subsidiary” means, with respect to any Person, any corporation, partnership or other
entity of which at least a majority of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.

     “Taxes” shall have the meaning assigned thereto in Section 8(a).

     “Termination Date” means the earliest to occur of (i) the Maturity Date, and (ii) at
the option of Purchaser, the occurrence of an Event of Default under this Agreement after the
expiration of any applicable grace period.

     “Threshold Ratio” means (a) the sum of the following: (i) for securities issued by
Fannie Mae or Freddie Mac or guaranteed by Ginnie Mae and for mortgage loans eligible to be sold to
Fannie Mae or Freddie Mac or that qualify for the Ginnie Mae guaranty, an amount equal to 8.5
multiplied by the aggregate market value of such securities or the aggregate outstanding principal
balance of such mortgage loans, as the case may be, and (ii) for Private-Label MBS and non-agency
or non-governmental mortgages, an amount equal to 2 multiplied by the aggregate market value of
such Private-Label MBS or aggregate outstanding principal balance of such non-agency or
non-governmental mortgages, as applicable, (b) divided by Total Assets.

     “Total Assets” means as of any date, for any Person, an amount equal to the aggregate
book value of all assets owned by such Person on a consolidated basis and the proportionate share
of assets owned by all non-consolidated Subsidiaries of such Person, less (a) amounts owing to such
Person from any Affiliate thereof, or from officers, employees, partners, members, directors,
shareholders or other Persons similarly affiliated with such Person or any Affiliate thereof, (b)
intangible assets, and (c) prepaid taxes and expenses, all on or as of such date.

     “Total Debt” means as of any date, for any Person, the sum of such Person’s (i) Total
Liabilities as of such date and (ii) all Indebtedness as of such date, all determined in accordance
with GAAP.

     “Total Liabilities” means all liabilities and obligations of Seller on a consolidated
basis, determined in accordance with GAAP, and shall include, without limitation, Funded
Liabilities and/or Current Liabilities, as the case may be.

- 15 -

 

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

     “Transaction Notice” means a written request of Seller to enter into a Transaction in
a form attached as Exhibit C hereto or such other form as shall be mutually agreed upon
between Seller and Purchaser, which is delivered to the Purchaser in accordance with Section 3(c)
herein.

     “Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to
time in the State of New York; provided that if by reason of mandatory provisions of law, the
perfection or the effect of perfection or non-perfection of the security interest in any Purchased
Assets or the continuation, renewal or enforcement thereof is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New York, “Uniform Commercial Code” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or non-perfection.

     “Unrestricted Cash” means cash and Cash Equivalents that are not subject to a Lien in
favor of any Person or that are not required to be reserved by Seller in a restricted escrow
arrangement or other similarly restricted arrangement pursuant to a contractual agreement or
requirement of law.

     “Warehouse Lender” means any lender providing financing to Seller for the purpose of
warehousing, originating or purchasing a Mortgage Loan, which lender has a security interest in
such Mortgage Loan to be purchased by Purchaser.

     “Warehouse Lender’s Release” means a letter, in the form of Exhibit E, from a
Warehouse Lender to Purchaser, unconditionally releasing all of Warehouse Lender’s right, title and
interest in certain Mortgage Loans identified therein upon payment to the Warehouse Lender.

     (b) Interpretation.

          Headings are for convenience only and do not affect interpretation. The following rules of
this subsection (b) 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 or
Exhibit is, unless otherwise specified, a reference to a section of, or annex or exhibit 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 Program Document. A reference to legislation or to a provision of
legislation includes any 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 or electronic 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 exists until it has been
waived in writing by Purchaser 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.

- 16 -

 

          Except where otherwise provided in this Agreement, any determination, consent, approval,
statement or certificate made or confirmed in writing with notice to Seller by Purchaser or an
authorized officer of Purchaser as required by this Agreement is conclusive 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 related to such agreement.

          A reference to a document includes an agreement in writing or a certificate, notice,
instrument or document, or any information recorded in electronic form. Where Seller is required
to provide any document to Purchaser under the terms of this Agreement, the relevant document shall
be provided in writing or printed form unless Purchaser requests otherwise.

          This Agreement is the result of negotiations among, and has been reviewed by counsel to,
Purchaser 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, Purchaser may give or withhold, or give
conditionally, approvals and consents and may form opinions and make determinations in its absolute
sole discretion, subject in all cases to the implied covenant of good faith and fair dealing.
Except as specifically required herein, any requirement of good faith, discretion or judgment by
Purchaser shall not be construed to require Purchaser to request or await receipt of information or
documentation not immediately available from or with respect to Seller, any other Person or the
Purchased Assets themselves.

	3.	 	THE TRANSACTIONS

     (a) It is acknowledged and agreed that, notwithstanding any other provision of this Agreement
to the contrary, the facility provided under this Agreement is an uncommitted facility and
Purchaser shall have no obligation to enter into any Transactions hereunder.

     (b) Subject to the terms and conditions of the Program Documents, Purchaser may enter into
Transactions provided, that the Aggregate MRA Purchase Price shall not exceed, as
of any date of determination, the lesser of (a) the Maximum Aggregate Purchase Price and (b) the
Asset Base.

     (c) With respect to the purchase of any Eligible Mortgage Loans, Seller shall deliver, no
later than 11:00 a.m. (New York City time) two (2) Business Days prior to the proposed Purchase
Date (the date on which such notice is so given, the “Notice Date”; provided that if such
notice is given after 11:00 a.m. (New York City time) two (2) Business Days prior to the proposed
Purchase Date, the Notice Date shall be deemed to be the next succeeding Business Day and the
proposed Purchase Date shall be no earlier than two (2) Business Days after the date on which such
notice is given), the following:

     (i) a Seller Mortgage Loan Schedule,

     (ii) a Transaction Notice to Purchaser; and

     (iii) the complete Mortgage Files to Custodian for each Mortgage Loan subject to such
Transaction.

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     (d) Upon Seller’s request to enter into a Transaction pursuant to Section 3(c), Purchaser
shall, assuming there has been a Confirmation issued and assuming all conditions precedent set
forth in
this Section 3 and in Sections 10(a) and (b) have been met, and provided no Default or Event
of Default shall have occurred and be continuing, on the requested Purchase Date purchase the
Eligible Mortgage Loans included in the related Transaction Notice by transferring the Purchase
Price (net of any fees and expense then due and payable by Seller to Purchaser pursuant to the
Agreement) in accordance with the following wire instructions or as otherwise provided:

	 	 	 	 	 

	 

	 	Receiving Bank:
	 	Bank of New York Mellon
	 

	 	ABA#:
	 	021-000-018
	 

	 	DDA#:
	 	GLA 111569 WVI
	 

	 	Account Name:
	 	BBPLC NY Branch Whole Loans Warehouse
	 

	 	Reference:
	 	Two Harbor Warehouse
	 

	 	Attention:
	 	Whole Loan Operations/Roberto Wang 201-499-2139

     (e) On the related Price Differential Determination Date, Agent shall calculate the Price
Differential for each outstanding Transaction payable on the Monthly Payment Date utilizing the
Pricing Rate. Not less than two (2) Business Days prior to each Monthly Payment Date, Agent shall
provide Seller with an invoice for the amount of the Price Differential due and payable with
respect to all outstanding Transactions, setting forth the calculations thereof in reasonable
detail and all accrued fees and expenses then due and owing to Purchaser. On the earliest of (1)
the Monthly Payment Date or (2) the Termination Date, Seller shall pay to Purchaser the Price
Differential then due and payable for (x) all outstanding Transactions and (y) Purchased Assets for
which Purchaser has received the related Repurchase Price (other than Price Differential) pursuant
to Section 3(f).

     (f) With respect to a Transaction, upon the Repurchase Date, Seller shall pay to Purchaser the
related Repurchase Price together with any other Obligations then due and payable, and shall
repurchase all Purchased Assets then subject to such Transaction. The Repurchase Price shall be
transferred directly to Purchaser.

     (g) If Agent determines in its sole discretion that any Change in Law or any change in
accounting rules regarding capital requirements has the effect of reducing the rate of return on
Purchaser’s capital or on the capital of any Affiliate of Purchaser under this Agreement as a
consequence of such Change in Law or change in accounting rules, then from time to time Seller will
compensate Purchaser for such reduced rate of return suffered as a consequence of such Change in
Law or change in accounting rules on terms similar to those imposed by Purchaser. Further, if due
to the introduction of, any change in, or the compliance by Purchaser with (i) any eurocurrency
reserve requirement, or (ii) the interpretation of any law, regulation or any guideline or request
from any central bank or other Governmental Authority whether or not having the force of law, there
shall be an increase in the cost to Purchaser in engaging in the present or any future
Transactions, then Seller shall, from time to time and upon demand by Purchaser, compensate
Purchaser for such increased costs, and such amounts shall be deemed a part of the Obligations
hereunder. Purchaser shall provide Seller with notice as to any such Change in Law, change in
accounting rules or change in compliance 30 days prior to the implementation of any charge or costs
due under this Section 3(g).

     (h) Seller shall indemnify the Purchaser and hold the Purchaser harmless from any losses,
costs and/or expenses which the Purchaser may sustain or incur as a result of Seller terminating
any Transaction on or before a Repurchase Date arising from the reemployment of funds obtained by
the Purchaser hereunder or from actual out of pocket fees and expenses payable to terminate the
deposits from which such funds were obtained (“Breakage Costs”). The Agent shall deliver
to Seller a statement setting forth the amount and basis of determination of any Breakage Costs in
such detail as determined in good faith by the Purchaser to be adequate, it being agreed that such
statement and the method of its calculation shall be adequate and shall be conclusive and binding upon Seller, absent manifest
error. The provisions of this Section 3(h) shall survive termination of this Agreement.

- 18 -

 

4. CONFIRMATION

     In the event that parties hereto desire to enter into a Transaction the parties shall execute
a confirmation prior to entering into such Transaction, which confirmation shall be in a form that
is mutually agreeable to Purchaser and Seller and shall specify such terms, including, without
limitation, the Purchase Date, the Purchase Price, the Pricing Rate therefor and the Repurchase
Date (a “Confirmation”). Any such Confirmation and the related Transaction Notice,
together with this Agreement, shall constitute conclusive evidence of the terms agreed to between
Purchaser and Seller with respect to the Transaction to which the Confirmation relates. In the
event of any conflict between this Agreement and a Confirmation, the terms of the Confirmation
shall control with respect to the related Transaction.

     Immediately following receipt by the Seller of Confirmation from the Purchaser, an Eligible
Mortgage Loan Commitment Fee will accrue with respect to the committed amount until the earlier of
the purchase of such loan or loans by the Purchaser hereunder or written notification from the
Seller to Purchaser that Seller shall not acquire such loan or loans or shall otherwise no longer
need such Confirmation.

5. INCOME

     Income Payments.

     (a) Where a particular term of a Transaction extends over the date on which Income is paid in
respect of any Purchased Asset subject to that Transaction, (i) Seller and Purchaser shall direct
the Servicer to deposit such Income into the Collection Account no later than one (1) Business Day
after receipt thereof, and (ii) such Income shall be the property of Purchaser subject to
subsections 5(b) and (c) below.

     (b) On the Monthly Payment Date, if no Event of Default is then continuing, the Seller and the
Purchaser shall cause the Bank to withdraw from the Collection Account all Income on deposit
therein with respect to all Purchased Assets subject to all Transactions, and to apply such amount
in the following order of priority:

     (i) to pay to Purchaser an amount equal to the Price Differential accrued with respect
to the Purchased Assets as of such Monthly Payment Date;

     (ii) to pay to Purchaser all other Obligations then due and payable from Seller to
Purchaser;

     (iii) to pay to Purchaser an amount sufficient to eliminate any outstanding Margin
Deficit (or Margin Deficit which would result from the withdrawal of funds from the
Collection Account on such date); and

     (iv) to pay to Seller any remainder for its own account.

     (c) On the Monthly Payment Date, if an Event of Default is then continuing, the Seller and the
Purchaser shall cause the Bank to withdraw from the Collection Account all Income on deposit
therein with respect to all Purchased Assets subject to all Transactions, and to apply such amount
in the following order of priority:

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     (i) to pay to Purchaser an amount equal to the Price Differential accrued with
respect to the Purchased Assets as of such Monthly Payment Date;

     (ii) to pay to Purchaser an amount equal to the aggregate Repurchase Price for all
outstanding Transactions;

     (iii) to pay to Purchaser all other Obligations then due and payable from Seller to
Purchaser; and

     (iv) to pay to Seller any remainder for its own account.

6. PAYMENT AND TRANSFER

     Unless otherwise agreed by Seller and Purchaser, all transfers of funds hereunder shall
be in Dollars in immediately available funds. Seller shall remit (or, if applicable, shall cause
to be remitted) directly to Purchaser all payments required to be made by it to Purchaser hereunder
or under any other Program Document in accordance with wire instructions provided by Purchaser.
Any payments received by Purchaser after 5:00 p.m. (New York City time) shall be applied on the
next succeeding Business Day.

7. MARGIN MAINTENANCE

     (a) Agent shall determine the Market Value of the Purchased Assets on a daily basis as
determined by Agent in its good faith discretion.

     (i) If, as of any date of determination, the lesser of (a) the unpaid principal
balance of the Purchased Assets and (b) the aggregate Market Value of all related Purchased
Assets subject to all Transactions, taking into account the cash then on deposit in the
Collection Account, multiplied by the applicable Purchase Price Percentage is less than the
Repurchase Price for all such Transactions (a “Margin Deficit”), then Agent may, by
notice to the Seller (as such notice is more particularly set forth below, a “Margin
Call”), require Seller to transfer to Purchaser or its designee cash or, at Purchaser’s
option (and provided Seller has additional Eligible Mortgage Loans), additional Eligible
Mortgage Loans to Purchaser (“Additional Purchased Mortgage Loans”) to cure the
Margin Deficit. If the Agent delivers a Margin Call to the Seller on or prior to 11:00 a.m.
(New York City time) on any Business Day, then the Seller shall transfer cash or Additional
Purchased Mortgage Loans to Purchaser or its designee no later than (i) 5:00 p.m. (New York
City time) on the same Business Day. In the event the Agent delivers a Margin Call to
Seller after 11:00 a.m. (New York City time) on any Business Day, Seller shall be required
to transfer cash or Additional Purchased Mortgage Loans no later than (i) 12:00 p.m. (New
York City time) on the next succeeding Business Day.

     (ii) If, on any day prior to the Termination Date, if no Event of Default has
occurred and is continuing, (x) the aggregate Market Value of all Purchased Assets subject
to all Transactions, taking into account all cash then on deposit in the Collection Account,
multiplied by the applicable Purchase Price Percentage is greater than (y) the Repurchase
Price as of such date (such excess amount, a “Margin Excess”), Seller may upon at
least two (2) Business Days prior notice to Purchaser request Purchaser to apply and
Purchaser shall apply or cause the Bank to apply an amount necessary to reduce the Margin
Excess to zero on the next Monthly Payment Date. Any Margin Excess paid by Purchaser under
this provision shall be applied by Purchaser to increase the respective Purchase Price of
the Purchased Assets.

- 20 -

 

     (b) [RESERVED]

     (c) Any cash transferred to Purchaser or its designee pursuant to Section 5 herein shall
reduce the Repurchase Price of the related Transactions.

     (d) The failure of Purchaser, on any one or more occasions, to exercise its rights
hereunder, shall not change or alter the terms and conditions of this Agreement or limit the right
of the Purchaser to do so at a later date. Seller and Purchaser each agree that a failure or delay
by a Purchaser to exercise its rights hereunder shall not limit or waive Purchaser’s rights under
this Agreement or otherwise existing by law or in any way create additional rights for Seller.

     (e) For the avoidance of doubt, it is hereby understood and agreed that Seller shall be
responsible for satisfying any Margin Deficit existing as a result of any reduction of the unpaid
principal balance of any Purchased Asset pursuant to any action by any bankruptcy court.

     (f) Notwithstanding section 7(b) above, (i) amounts due on account of a Margin Deficit or
Margin Excess hereunder shall be netted against any Variation Margin as defined under the Forward
AAA Securities Purchase Agreement before Margin Call payments or payments of Margin Excess are made
and (ii) to the extent that any payment amount with respect to a Margin Call or Margin Excess at
the time due and owing is less than $100,000 (the “Minimum Transfer Amount”), the party owing such
amount is not required to transfer funds until such amount reaches the Minimum Transfer Amount; for
avoidance of doubt all such amounts shall remain due and owing.

8. TAXES; TAX TREATMENT

     (a) All payments made by Seller under this Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest
and additions to tax) with respect thereto imposed by any Governmental Authority therewith or
thereon, excluding income taxes, branch profits taxes, franchise taxes or any other tax imposed on
net income by the United States, a state or a foreign jurisdiction under the laws of which the
Purchaser is organized or of its applicable lending office, or a state or foreign jurisdiction with
respect to which Purchaser has a present or former connection, or any political subdivision thereof
(collectively, “Taxes”), all of which shall be paid by Seller for its own account not later than
the date when due. If Seller is required by law or regulation to deduct or withhold any Taxes from
or in respect of any amount payable hereunder, it shall: (a) make such deduction or withholding,
(b) pay the amount so deducted or withheld to the appropriate Governmental Authority not later than
the date when due, (c) deliver to the Purchaser, promptly, original tax receipts and other evidence
satisfactory to Purchaser of the payment when due of the full amount of such Taxes; and (d) pay to
the Purchaser such additional amounts as may be necessary so that the Purchaser receives, free and
clear of all Taxes, a net amount equal to the amount it would have received under this Agreement,
as if no such deduction or withholding had been made.

     (b) In addition, Seller agrees to pay to the relevant Governmental Authority in accordance
with applicable law any current or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies (including, without limitation, mortgage recording taxes,
transfer taxes and similar fees) imposed by the United States or any taxing authority thereof or
therein that arise from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement (“Other Taxes”).

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     (c) Seller agrees to indemnify Purchaser for the full amount of Taxes (including
additional amounts with respect thereto) and Other Taxes, and the full amount of Taxes of any kind
imposed by any
jurisdiction on amounts payable under this Section 8, and any liability (including penalties,
interest and expenses arising thereon or with respect thereto) arising therefrom or with respect
thereto, provided that Purchaser shall have provided Seller with evidence, reasonably satisfactory
to Seller, of payment of Taxes or Other Taxes, as the case may be. Notwithstanding Seller’s
indemnification obligations under this paragraph, in the event any Taxes are imposed that result in
an indemnification or other payment obligation of Seller under this Section 8, Seller shall
indemnify Purchaser for such taxes as provided herein, but shall also be entitled to challenge or
dispute the imposition of such Taxes with the applicable Governmental Authority, regardless of
whether such Taxes are imposed on Seller or a Purchaser, and Seller shall be entitled to control
any proceeding relating to such Taxes, including as to settlement so long as it does not result in
material harm to the Purchaser, as determined in the Purchaser’s reasonable discretion. At
Seller’s request, a Purchaser shall reasonably cooperate in any such challenge, dispute or
proceeding; provided, however, no Purchaser shall be required to provide any tax return or other
proprietary or confidential information.

     (d) Agent and any Purchaser that either (i) is not incorporated under the laws of the
United States, any State thereof, or the District of Columbia or (ii) whose name does not include
“Incorporated,” “inc.,” “Corporation,” “Corp.,” “P.C.,” “insurance company,” or “assurance company”
(a “Foreign Purchaser”) shall provide Seller and Agent with original properly completed and
duly executed United States Internal Revenue Service (“IRS”) Forms W-8BEN or W-8ECI or any
successor form prescribed by the IRS, certifying that such Person is entitled to benefits under an
income tax treaty to which the United States is a party which eliminates withholding tax on
payments to it or certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States on or prior to the date upon
which each such Foreign Purchaser becomes a Purchaser. In addition, the Agent shall be a
“qualified intermediary” (as defined in Treasury regulation section 1.1441-1(e)(5)) and provide the
Seller with an original properly completed and duly executed IRS Form W-8IMY with “qualified
intermediary” checked in Part I and Part II properly completed to provide that the Agent is a
“qualified intermediary” for Purchaser with respect to payments under this Agreement and the other
Program Documents (with all appropriate attachments) for any amount received on behalf of a
Purchaser which eliminates withholding tax on payments to it on or after the date it becomes an
Agent. Agent and each Foreign Purchaser will resubmit the appropriate form eliminating withholding
tax on payments to it on the earliest of (A) the third anniversary of the prior submission, or (B)
on or before the expiration of thirty (30) days after there is a “change in circumstances” with
respect to such Person as defined in Treas. Reg. Section 1.1441-1(e)(4)(ii)(D). For any period
with respect to which the Agent or a Foreign Purchaser has failed to provide Seller with the
appropriate form or other relevant document pursuant to this Section 8(d) (unless such failure is
due to a change in treaty, law, or regulation occurring subsequent to the date on which a form
originally was required to be provided) such Person shall not be entitled to “gross-up” of Taxes or
indemnification under Section 8(c) with respect to Taxes imposed by the United States; provided,
however that should a Foreign Purchaser, which is otherwise exempt from a withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder, Seller shall take
such steps as such Foreign Purchaser shall reasonably request to assist such Foreign Purchaser to
recover such Taxes. If a payment made to a Purchaser under this Agreement would be subject to U.S.
Federal withholding Taxes imposed by FATCA if such Purchaser fails to comply with the applicable
reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the
Code, as applicable), such Purchaser shall deliver to the Seller (A) a certification signed by the
chief financial officer, principal accounting officer, treasurer or controller, and (B) other
documentation reasonably requested by Seller sufficient for the Seller to comply with its
obligations under FATCA and to determine that such Purchaser has complied with such applicable
reporting requirements.

     (e) Without prejudice to the survival or any other agreement of Seller hereunder, the
agreements and obligations of Seller contained in this Section 8 shall survive the termination of
this Agreement. Nothing contained in this Section 8 shall require Purchaser to make available any
of their tax

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returns or other information that it deems to be confidential or proprietary; provided,
however, that Seller shall have no liability for Taxes and Other Taxes under this Section to the
extent Purchaser shall thereby fail or refuse to provide Seller with evidence, reasonably
satisfactory to Seller, necessary for the assessment, liability or defense of any such amounts.

     (f) Each party to this Agreement acknowledges that it is its intent solely for purposes of
U.S. federal, state and local income and franchise taxes to treat each Transaction as indebtedness
of Seller that is secured by the Purchased Assets and that the Purchased Assets are owned by Seller
in the absence of an Event of Default by Seller. All parties to this Agreement agree to such
treatment and agree to take no action inconsistent with this treatment, unless required by law.

9. SECURITY INTEREST; PURCHASER’S APPOINTMENT AS ATTORNEY-IN-FACT

     (a) Seller and Purchaser intend that (other than for accounting purposes) the Transactions
hereunder be sales to Purchaser of the Purchased Assets and not loans from Purchaser to Seller
secured by the Purchased Assets. However, in order to preserve Purchaser’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 Obligations, Seller hereby
grants to Purchaser a first priority security interest in the Purchased Assets. Seller
acknowledges and agrees that its rights with respect to the Purchased Assets are and shall continue
to be at all times junior and subordinate to the rights of Purchaser hereunder.

     (b) Seller hereby irrevocably constitutes and appoints Purchaser and any officer or agent
thereof, with full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Seller and in the name of Seller or in
its own name, from time to time in Purchaser’s discretion, to file such financing statement or
statements relating to the Purchased Assets as Purchaser at its option may deem appropriate, and if
an Event of Default shall have occurred and be continuing, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be reasonably necessary or desirable to accomplish the purposes
of this Agreement, and, without limiting the generality of the foregoing, Seller hereby gives
Purchaser the power and right, on behalf of Seller, without assent by, but with notice to, Seller,
to do the following if an Event of Default shall have occurred and be continuing and Purchaser has
elected to exercise its remedies pursuant to Section 18 hereof:

     (i) in the name of Seller, or in its own name, or otherwise, to take possession of
and endorse and collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due with respect to any Purchased Assets and to file any claim or to take
any other action or initiate and maintain any appropriate proceeding in any appropriate
court of law or equity or otherwise deemed appropriate by Purchaser for the purpose of
collecting any and all such moneys due with respect to any Purchased Assets whenever
payable;

     (ii) to pay or discharge taxes and Liens levied or placed on or threatened against
the Purchased Assets;

     (iii) (A) to direct any party liable for any payment under any Purchased Assets to
make payment of any and all moneys due or to become due thereunder directly to Purchaser or
as Purchaser shall direct, (B) in the name of Seller, or in its own name, or otherwise as
appropriate, to directly send or cause the applicable servicer to send “hello” letters,
“goodbye” letters in the form of Exhibit D, and Section 404 Notices; (C) to ask or
demand for, collect, receive payment of and receipt for any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out of any Purchased
Assets; (D) to sign and endorse any invoices,

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	 	 	assignments, verifications, notices and other documents in connection with any
Purchased Assets; (E) to commence and prosecute any suits, actions or proceedings at law or
in equity in any court of competent jurisdiction to collect the Purchased Assets or any
proceeds thereof and to enforce any other right in respect of any Purchased Assets; (F) to
defend any suit, action or proceeding brought against Seller with respect to any Purchased
Assets; (G) to settle, compromise or adjust any suit, action or proceeding described in
clause (F) above and, in connection therewith, to give such discharges or releases as
Purchaser may deem appropriate; and (H) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any Purchased Assets as fully and
completely as though Purchaser was the absolute owner thereof for all purposes, and to do,
at Purchaser’s option and Seller’s expense, at any time, and from time to time, all acts and
things which Purchaser deems necessary to protect, preserve or realize upon the Purchased
Assets and Purchaser’s Liens thereon and to effect the intent of this Agreement, all as
fully and effectively as Seller might do.

     Seller hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue
hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.

     Seller also authorizes Purchaser, from time to time if an Event of Default shall have occurred
and be continuing, to execute any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Purchased Assets in connection with any sale provided for in Section
18 hereof.

     The powers conferred on Purchaser hereunder are solely to protect Purchaser’s interests in the
Purchased Assets and shall not impose any duty upon it to exercise any such powers. Purchaser
shall be accountable only for amounts that they actually receive as a result of the exercise of
such powers, and neither Purchaser nor any of its officers, directors, employees or agents shall be
responsible to Seller for any act or failure to act hereunder.

10. CONDITIONS PRECEDENT

     (a) As conditions precedent to the initial Transaction, Purchaser shall have received on
or before the day of such initial Transaction the following, in form and substance satisfactory to
Purchaser and duly executed by each party thereto (as applicable):

     (i) Each of the Program Documents duly executed and delivered by the parties
thereto and being in full force and effect, free of any modification, breach or waiver;

     (ii) Certificates of an officer of each of Seller and Guarantor attaching certified
copies of Seller’s and Guarantor’s respective consents or charter, bylaws and corporate
resolutions, as applicable, approving the Program Documents and Transactions thereunder
(either specifically or by general resolution), and all documents evidencing other necessary
corporate action or governmental approvals as may be required in connection with the Program
Documents;

     (iii) Certified copies of good standing certificates from the jurisdictions of
organization of each of Seller and Guarantor, dated as of no earlier than the date which is
ten (10) Business Days prior to the Purchase Date with respect to the initial Transaction
hereunder;

     (iv) An incumbency certificate of the secretary of each of Seller and Guarantor
certifying the names, true signatures and titles of Seller’s and Guarantor’s respective
representatives who are duly authorized to request Transactions hereunder and to execute the
Program Documents and the other documents to be delivered thereunder;

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     (v) An opinion of Seller’s counsel as to such matters as Purchaser may reasonably
request (including, without limitation, with respect to Purchaser’s first priority lien on
and perfected security interest in the Purchased Assets, a no material litigation,
non-contravention, enforceability and corporate opinion with respect to Seller, an opinion
with respect to the inapplicability of the Investment Company Act of 1940 to Seller and the
Guarantor, an opinion that this Agreement constitutes a “repurchase agreement” and a
“securities contract” within the meaning of the Bankruptcy Code and an opinion that no
Transaction constitutes an avoidable transfer under Section 546(f) of the Bankruptcy Code,
each in form and substance acceptable to Purchaser);

     (vi) Seller shall have provided evidence of all material licenses necessary to
conduct business as now being conducted and as proposed to be conducted under this
Agreement;

     (vii) A copy of the insurance policies required by Section 14(q) of this Agreement;

     (viii) Purchaser and/or Agent shall have completed the due diligence review of the
loan files and Servicing File for the Eligible Mortgage Loans that are to be subject to such
Transaction pursuant to Section 36, and such review shall be satisfactory to Purchaser and
Agent in their sole discretion;

     (ix) Evidence that all other actions necessary to perfect and protect Purchaser’s
interest in the Purchased Assets have been taken, including, without limitation, the
establishment of the Collection Account, and duly prepared for filing Uniform Commercial
Code financing statements acceptable to Purchaser and covering the Purchased Assets on Form
UCC1;

     (x) Seller shall have provided evidence, satisfactory to Purchaser and Agent, that
Servicer’s Approvals are in good standing;

     (xi) Seller shall have provided evidence (including the Account Number) that it has
established the Collection Account; and

     (xii) Any other documents reasonably requested by Purchaser or Agent.

     (b) The Purchaser may, in its sole discretion, enter into a Transaction pursuant to this
Agreement if following conditions precedent have been satisfied:

     (i) Purchaser or its designee shall have received on or before the Purchase Date
with respect to Eligible Mortgage Loans that are to be the subject of such Transaction
(unless otherwise specified in this Agreement) the following, in form and substance
satisfactory to Purchaser and (if applicable) duly executed:

	 	(A)	 	Seller shall have paid to Purchaser and
Purchaser shall have received all accrued and unpaid fees and expenses
owed to Purchaser pursuant to Section 23 in immediately available
funds, and without deduction, set-off or counterclaim;

	 	(B)	 	The Transaction Notice and Seller Mortgage
Loan Schedule with respect to such Purchased Assets, delivered pursuant
to Section 3(c);

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	 	(C)	 	Such certificates, customary opinions of
counsel or other documents as Purchaser may reasonably request,
provided that such opinions of
counsel shall not be required routinely in connection with each
Transaction but shall only be required from time to time as deemed
necessary by Purchaser in its commercially reasonable judgment;

	 	(D)	 	Purchaser has received and approved the
MLPA and the Servicing Agreement;

	 	(E)	 	An original trust receipt executed by the
Custodian without exceptions;

	 	(F)	 	Such other certifications of Custodian as
are required under the Custodial Agreement; and

	 	(G)	 	a duly executed Warehouse Lender’s Release
from any Warehouse Lender (including any party that has a precautionary
security interest in a Mortgage Loan) having a security interest in any
Mortgage Loans, substantially in the form of Exhibit E,
addressed to Purchaser, releasing any and all of its right, title and
interest in, to and under such Mortgage Loan (including, without
limitation, any security interest that such secured party or secured
party’s agent may have by virtue of its possession, custody or control
thereof) and, to the extent applicable, Uniform Commercial Code
termination statements in respect of any Uniform Commercial Code
filings made in respect of such Mortgage Loan.

     (ii) No Default or Event of Default shall have occurred and be continuing;

     (iii) Purchaser shall not have reasonably determined that the introduction of or a
change in any Requirement of Law or in the interpretation or administration of any
requirement of law applicable to Purchaser has made it unlawful, and no Governmental
Authority shall have asserted that it is unlawful, for Purchaser to enter into Transactions
with the applicable Pricing Rate;

     (iv) All representations and warranties in the Program Documents shall be true and
correct on the date of such Transaction and Seller is in compliance with the terms and
conditions of the Program Documents, other than as may be expressly waived by the Purchaser;

     (v) The then Aggregate MRA Purchase Price when added to the Purchase Price for the
requested Transaction, shall not exceed the lesser of (a) the Maximum Aggregate Purchase
Price and (b) the Asset Base;

     (vi) [RESERVED];

     (vii) Satisfaction of any conditions precedent to the initial Transaction as set
forth in clause (a) of this Section 10 that were not satisfied prior to such initial
Purchase Date;

     (viii) Purchaser shall have determined that all actions necessary to maintain
Purchaser’s perfected security interest in the Purchased Assets have been taken;

     (ix) Purchaser or their designee shall have received any other documents reasonably
requested by Purchaser; and

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     (x) There is no Margin Deficit at the time immediately prior to entering into a new
Transaction (other than a Margin Deficit that will be cured contemporaneous with such
Transaction in accordance with the provisions of Section 7 hereof).

11. RELEASE OF PURCHASED ASSETS

     Upon timely payment in full of the Repurchase Price and all other Obligations (if any) then
owing with respect to a Purchased Asset pursuant to Section 3(f) hereof, unless a Margin Deficit or
an Event of Default shall have occurred and be continuing: (a) Purchaser shall be deemed to have
terminated any security interest that Purchaser may have in such Purchased Asset, (b) all of
Purchaser’s right, title and interest in such Purchased Assets shall automatically transfer to
Seller, and (c) with respect to such Purchased Asset, Purchaser shall or shall direct Custodian to
release such Purchased Asset to Seller. Except as set forth in Sections 5, 18(a)(i) and 15, Seller
shall give at least two (2) Business Days prior written notice to Purchaser if such repurchase
shall occur on any date other than the Repurchase Date.

     If the repurchase gives rise to a Margin Deficit, Purchaser shall notify Seller of the amount
thereof and Seller may thereupon satisfy the Margin Call in the manner specified in Section 7.

12. RELIANCE

     With respect to any Transaction, Purchaser may conclusively rely upon, and shall incur no
liability to Seller in acting upon, any request or other communication that Purchaser reasonably
believes to have been given or made by a person authorized to enter into a Transaction on Seller’s
behalf.

13. REPRESENTATIONS AND WARRANTIES

     Each of the Guarantor and Seller hereby represents and warrants to Purchaser and Agent, 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 to Purchaser
and Agent that:

     (a) Due Organization, Qualification, Power, Authority and Due Authorization. Each
of the Guarantor and Seller is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and it has qualified to do business in each jurisdiction in
which it is legally required to do so. Each of the Guarantor and Seller has the power and
authority under its certificate of incorporation, bylaws and applicable law to enter into this
Agreement and the Program Documents and to perform all acts contemplated hereby and thereby or in
connection herewith and therewith; this Agreement and the Program Documents and the transactions
contemplated hereby and thereby have been duly authorized by all necessary action and do not
require any additional approvals or consents or other action by, or any notice to or filing with,
any Person other than any that have heretofore been obtained, given or made.

     (b) Noncontravention. The consummation of the transactions contemplated by this
Agreement and Program Documents are in the ordinary course of business of each of the Guarantor and
Seller and will not conflict with, result in the breach of or violate any provision of the charter
or by-laws of Seller or Guarantor or result in the breach of any provision of, or conflict with or
constitute a default under or result in the acceleration of any obligation under, any agreement,
indenture, loan or credit agreement or other instrument to which Seller or Guarantor, the Mortgage
Loans or any of Seller’s Property or Guarantor’s Property is or may be subject to, or result in the
violation of any law, rule, regulation, order, judgment or decree to which Seller, Guarantor, the
Mortgage Loans or Seller’s Property or Guarantor’s Property is subject.

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     (c) Legal Proceeding. There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before or by any court, public board or body pending or, to
Seller’s knowledge or Guarantor’s knowledge, threatened against or affecting Seller or Guarantor
(or, to Seller’s knowledge, or Guarantor’s knowledge any basis therefor) wherein an unfavorable
decision, ruling or finding would adversely affect the validity or enforceability of this
Agreement, the Program Documents or any agreement or instrument to which Seller is a party and
which is used or contemplated for use in the consummation of the transactions contemplated hereby,
would materially and adversely affect the proceedings of Seller in connection herewith or would or
could materially and adversely affect Seller’s ability or Guarantor’s ability to carry out its
obligations hereunder.

     (d) Valid and Binding Obligations. This Agreement, the Program Documents and
every other document to be executed by Seller or Guarantor in connection with this Agreement is and
will be legal, valid, and binding obligations of Seller or Guarantor, as applicable, enforceable in
accordance with their respective terms, except that (A) the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’
rights generally and (B) 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.

     (e) Financial Statements. The financial statements of each of Guarantor and
Seller, copies of which have been furnished to Purchaser, (i) are, as of the dates and for the
periods referred to therein, complete and correct in all material respects, (ii) present fairly the
financial condition and results of operations of Seller as of the dates and for the periods
indicated and (iii) have been prepared in accordance with GAAP consistently applied, except as
noted therein (subject as to interim statements to normal year-end adjustments). Since the date of
the most recent financial statements, there has been no Material Adverse Change with respect to
Seller or Guarantor. Except as disclosed in such financial statements or pursuant to Section 14(i)
hereof, neither Guarantor nor Seller is subject to any contingent liabilities or commitments that,
individually or in the aggregate, have a material possibility of causing a Material Adverse Change
with respect to Seller.

     (f) Accuracy of Information. Neither this Agreement nor any representations and
warranties or information relating to Seller or Guarantor that Seller or Guarantor has delivered or
caused to be delivered to Purchaser, including, but not limited to, all documents related to this
Agreement, the Program Documents or Seller’s or Guarantor’s financial statements, contains any
untrue statement of a material fact or omits to state a material fact necessary to make the
statements made therein or herein in light of the circumstances under which they were made, not
misleading. Since the furnishing of such documents or information, there has been no change, nor
any development or event involving a prospective change that would render any of such documents or
information untrue or misleading in any material respect.

     (g) No Consents. No consent, license, approval or authorization from, or
registration, filing or declaration with, any regulatory body, administrative agency or other
governmental instrumentality, nor any consent, approval, waiver or notification of any creditor,
lessor or other non-governmental Person, is required in connection with the execution, delivery and
performance by Seller or Guarantor of this Agreement or any other Program Document, other than any
that have heretofore been obtained, given or made.

     (h) Compliance With Law, Etc. No practice, procedure or policy employed or
proposed to be employed by Seller or Guarantor in the conduct of its businesses violates any law,
regulation, judgment, agreement, regulatory consent, order or decree applicable to it which, if
enforced, would result in a Material Adverse Effect.

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     (i) Solvency. Each of Guarantor and Seller is solvent and will not be rendered
insolvent by any Transaction and, after giving effect to each such Transaction, neither Guarantor
nor Seller will be left with an unreasonably small amount of capital with which to engage in its
business. Neither Guarantor nor Seller intends to incur, nor believes that it has incurred, debts
beyond its ability to pay such debts as they mature. Neither Guarantor nor Seller is 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 Guarantor or any of their respective assets.

     (j) Fraudulent Conveyance. The amount of consideration being received by Seller
in respect of each Transaction, taken as a whole, constitutes reasonably equivalent value and fair
consideration for the related Purchased Assets. Seller is not transferring any Purchased Assets
with any intent to hinder, delay or defraud any of its creditors. The Agreement and the Program
Documents, any other document contemplated hereby or thereby and each transaction have not been
entered into fraudulently by Seller hereunder, or with the intent to hinder, delay or defraud any
creditor or Purchaser.

     (k) Investment Company Act Compliance. Neither Guarantor nor Seller is required
to be registered as an “investment company” as defined under the Investment Company Act nor as an
entity under the control of an entity required to be registered as an “investment company” as
defined under the Investment Company Act.

     (l) Taxes. Seller has filed all federal and state tax returns which are required
to be filed and paid all taxes, including any assessments received by it, to the extent that such
taxes are shown to be due on such returns (other than for taxes that are being contested in good
faith or for which it has established adequate reserves). Any taxes, fees and other governmental
charges payable by Seller or Guarantor in connection with a Transaction and the execution and
delivery of the Program Documents have been or shall be timely paid.

     (m) Additional Representations. With respect to each Asset to be sold hereunder
by Seller to Purchaser, Seller hereby makes all of the applicable representations and warranties
set forth in the related MLPA as of the date the related Mortgage File is delivered to Purchaser or
the Custodian with respect to the Assets and continuously while such Asset is subject to a
Transaction. 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.

     (n) No Broker. Neither Guarantor nor Seller has dealt with any broker, investment
banker, agent, or other person, except for Purchaser, who may be entitled to any commission or
compensation in connection with the sale of Purchased Assets pursuant to this Agreement;
provided, that if Seller or Guarantor has dealt with any broker, investment banker, agent,
or other person, except for Purchaser, who may be entitled to any commission or compensation in
connection with the sale of Purchased Assets pursuant to this Agreement, such commission or
compensation shall have been paid in full by Seller or Guarantor.

     (o) Good Title. Seller has not sold, assigned, transferred, pledged or
hypothecated any interest in any individual Mortgage Loan to any person other than any sale,
assignment, transfer, pledge or hypothecation that is released in conjunction with the sale to
Purchaser hereunder, and upon delivery of a Purchased Asset to Purchaser, Purchaser will be the
sole owner thereof (other than for tax and accounting purposes), free and clear of any lien, claim
or encumbrance other than those arising under this Agreement.

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     (p) Approvals. Servicer has all requisite Approvals. Each of Guarantor and
Seller have all material licenses and permits necessary to conduct its business as now being
conducted and to enter into and perform under this Agreement and the Program Documents.

     (q) Custodian. The Custodian is not an Affiliate of Seller.

     (r) [RESERVED]

     (s) Mortgage Recordation. The original Mortgage in respect to each Mortgage Loan
has been submitted for recordation in the appropriate public recording office in the applicable
jurisdictions wherein such recordation is necessary to perfect the lien thereof as against
creditors of the Seller.

     (t) Affiliated parties. Seller is not an Affiliate of the Custodian or the Bank.

     The representations and warranties set forth in this Agreement shall survive transfer of the
Purchased Assets to Purchaser and shall continue for so long as the Purchased Assets are subject to
this Agreement.

14. COVENANTS OF SELLER

     Seller hereby covenants and agrees with Purchaser and Agent as follows:

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

     (b) No Amendment or Compromise. None of Seller or those acting on Seller’s behalf
shall amend, 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 Program Documents
without the prior written consent of Purchaser, except if such amendment or modification does not
(i) affect the amount or timing of any payment of principal or interest payable with respect to a
Purchased Asset, extend its scheduled maturity date, modify its interest rate, or constitute a
cancellation or discharge of its outstanding principal balance or (ii) materially and adversely
affect the security afforded by the real property, furnishings, fixtures, or equipment securing the
Purchased Asset. Notwithstanding the foregoing, the Seller or Servicer may amend, modify or waive
any term or condition of the individual Mortgage Loans in accordance with Accepted Servicing
Practices; provided, that Seller shall promptly notify Purchaser of any amendment, modification or
waiver that causes any Mortgage Loan to cease to be an Eligible Mortgage Loan.

     (c) No Assignment. Except as permitted herein, Seller shall not 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 Program
Documents) any of the Purchased Assets or any interest therein, provided that this Section
14(c) shall not prevent any of the following: any contribution, sale, assignment, transfer or
conveyance of Purchased Assets in accordance with the Program Documents and any forward purchase
commitment or other type of take out commitment for the Purchased Assets (without vesting rights in
the related purchasers as against Purchaser).

     (d) [RESERVED]

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     (e) Preservation of Purchased Assets. Seller shall take all actions necessary or,
in the opinion of Purchaser, desirable, to preserve the Purchased Assets so that they remain
subject to a first priority
perfected security interest hereunder and deliver evidence that such actions have been taken,
including, without limitation, duly executed and filed Uniform Commercial Code financing statements
on Form UCC1. Without limiting the foregoing, Seller will materially comply with all applicable
laws, rules, regulations and other laws of any Governmental Authority applicable to Seller relating
to the Purchased Assets and cause the Purchased Assets to materially comply with all applicable
laws, rules, regulations and other laws of any such Governmental Authority.

     (f) Maintenance of Papers, Records and Files.

     (i) Seller shall maintain all Records relating to the Purchased Assets not in the
possession of Custodian in good and complete condition in accordance with mortgage lending
industry practices and preserve them against loss. Seller shall collect and maintain or
cause to be collected and maintained all such Records in accordance with industry custom and
practice, and all such Records shall be in Purchaser’s or Custodian’s possession unless
Purchaser otherwise approves in writing. Seller will not cause or authorize any such
papers, records or files that are an original or an only copy to leave Custodian’s
possession, except for individual items removed in connection with servicing a specific
Mortgage Loan, in which event Seller will obtain or cause to be obtained a receipt from the
Custodian for any such paper, record or file, or as otherwise permitted under the Custodial
Agreement.

     (ii) For so long as Purchaser has an interest in or Lien on any Purchased Asset,
Seller will hold or cause to be held all related Records for the sole benefit of Purchaser.

     (iii) Upon reasonable advance notice from Custodian or Purchaser, Seller shall (x)
make any and all such Records available to Custodian or Agent for examination, either by its
own officers or employees, or by agents or contractors, or both, and make copies of all or
any portion thereof, (y) permit Agent or its authorized agents to discuss the affairs,
finances and accounts of Seller with its chief operating officer and chief financial officer
and to discuss the affairs, finances and accounts of Seller with its independent certified
public accountants.

     (g) Financial Statements and Other Information; Financial Covenants.

     (i) Seller shall keep or cause to be kept in reasonable detail books and records
setting forth an account of its assets and business and, as applicable, shall clearly
reflect therein the transfer of Purchased Assets to Purchaser. Seller or Guarantor, as
applicable, shall furnish or cause to be furnished to Purchaser the following:

(A) Financial Statements.

          (1) Within ninety (90) days after the end of each fiscal year of each of
Seller and Guarantor, the consolidated audited balance sheets of Guarantor and its
respective consolidated Subsidiaries, and the unaudited balance sheet of Seller,
which in each case will be in conformity with GAAP, and the related consolidated
and, in the case of Guarantor, audited statements of income and changes in equity
showing the financial condition of Seller and Guarantor, respectively, and their
respective consolidated Subsidiaries as of the close of such fiscal year and the
results of operations during such year, and consolidated and, in the case of
Guarantor, audited statements of cash flows, as of the close of such fiscal year,
setting forth, in each case, in comparative form the corresponding figures for the
preceding year. The foregoing consolidated audited financial statements of
Guarantor are to be reported on by, and to carry the unqualified report of, an
independent public accountant of national standing and are to be
accompanied by a letter of management in form and substance reasonably
acceptable to Purchaser and Agent;

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          (2) Within forty-five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of each of Seller and Guarantor, consolidated
unaudited balance sheets and consolidated statements of income and changes in equity
and unaudited statement of cash flows showing the financial condition and results of
operations of Seller and Guarantor, respectively, and their respective consolidated
Subsidiaries, each on a consolidated basis as of the end of each such quarter and
for the then elapsed portion of the fiscal year, setting forth, in each case, in
comparative form the corresponding figures for the corresponding periods of the
preceding fiscal year, certified by a financial officer of Seller or Guarantor, as
applicable, as presenting fairly the financial position and results of operations of
Seller and Guarantor, respectively, and their respective consolidated Subsidiaries
and as having been prepared in accordance with GAAP consistently applied, in each
case, subject to normal year-end audit adjustments;

          (3) Within fifteen (15) days after the end of each month, a report
containing Seller’s and Guarantor’s estimated Net Asset Value and estimated Net
Asset Value per share, including the calculation thereof, and its most recent
monthly report of performance, in each case for the immediately preceding calendar
month;

          (4) Promptly upon receipt thereof, a copy of each other report submitted to
Seller and Guarantor by their independent public accountants in connection with any
annual, interim or special audit of Seller or Guarantor, as applicable;

          (5) Such supplements to the aforementioned documents and such other
information regarding the operations, business, affairs and financial condition of
the Seller, Guarantor or any of Seller’s or Guarantor’s respective consolidated
Subsidiaries as Purchaser may reasonably request.

     (ii) Guarantor shall comply with the following financial covenants:

	 	(A)	 	Guarantor shall at all times maintain:

          (1) As of the last Business Day of each calendar quarter, Net Asset Value
greater than $250 million;

          (2) As of last Business Day of each calendar quarter, Total Debt to Net
Asset Value less than the Threshold Ratio; and

          (3) As of last Business Day of each calendar quarter, Cash and Cash
Equivalents greater than $25 million.

     (iii) Certifications. Seller shall execute and deliver a quarterly
certification substantially in the form of Exhibit A attached hereto within fifteen
(15) days after the end of each calendar quarter.

     (h) [RESERVED]

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     (i) Notice of Material Events. Seller shall promptly inform Purchaser and Agent in
writing of any of the following:

     (i) any Default, Event of Default by Seller or Guarantor or (to the extent Seller
shall become aware) by any other Person (other than Purchaser or Purchaser’s Affiliates) of
any material obligation under any Program Document, or the occurrence or existence of any
event or circumstance that Seller reasonably expects will with the passage of time become a
Default, Event of Default by Seller or any other Person;

     (ii) any material change in the insurance coverage of Seller as required to be
maintained pursuant to Section 14(q) hereof, or any other Person pursuant to any Program
Document, with copy of evidence of same attached;

     (iii) the commencement of, or any determination in, any material dispute,
litigation, investigation, proceeding, sanctions or suspension between Seller or Guarantor,
on the one hand, and any Governmental Authority or any other Person, on the other;

     (iv) any material change in accounting policies or financial reporting practices of
Seller which could reasonably be expected to have a Material Adverse Effect;

     (v) any event, circumstance or condition that has resulted, or has a reasonable
likelihood of resulting in either a Material Adverse Change or a Material Adverse Effect
with respect to Seller;

     (vi) any material modifications to the Seller’s underwriting or acquisition
guidelines;

     (vii) any financial covenants or margin maintenance requirements Seller becomes
subject to or any change or modification to, or waiver of compliance with, any financial
covenants or margin maintenance requirements Seller is obligated to comply with, in either
case, under any agreement for Indebtedness;

     (j) Maintenance of Approvals. Seller shall take all reasonable actions to cause
Servicer maintain its Approvals at all times during the term of this Agreement. If, for any
reason, Servicer ceases to maintain any such Approval, Seller shall so notify Purchaser and Agent
immediately upon knowledge thereof.

     (k) Maintenance of Licenses. Each of Guarantor and Seller shall (i) maintain all
material licenses, permits or other approvals necessary for Guarantor and Seller to conduct its
business and to perform its obligations under the Program Documents, (ii) remain in good standing
under, and comply in all material respects with, all laws of each state in which it conducts
business or any Mortgaged Property is located, and (iii) conduct its business in accordance with
applicable law in all material respects.

     (l) Taxes, Etc. Each of Guarantor and Seller shall pay and discharge or cause to
be paid and discharged, when due all taxes, assessments and governmental charges or levies imposed
upon it or upon its income and profits or upon any of its property, real, personal or mixed
(including without limitation, the Purchased Assets) or upon any part thereof, as well as any other
lawful claims which, if unpaid, might become a Lien upon such properties or any part thereof,
except for any such taxes, assessments and governmental charges, levies or claims as are
appropriately contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves are provided. Seller shall file on a timely basis all federal,
and state and local tax and information returns, reports and any other information statements or
schedules required to be filed by or in respect of it.

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     (m) Nature of Business. Neither Guarantor nor Seller shall make any material
change in the nature of its business as carried on at the date hereof.

     (n) Limitation on Distributions. Each of Guarantor and Seller shall have the
right to pay dividends so long as Guarantor remains in compliance with the financial covenants set
forth in Section 14(g)(ii) immediately following such dividend distribution. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing, neither Guarantor nor Seller
shall make any payment of any dividends or make distributions on account of, or set apart assets
for a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other
acquisition of, any capital stock, senior or subordinate debt of Seller or Guarantor or other
equity interests, respectively, thereof, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash or property or in
obligations of Seller or Guarantor. Nothing in this Section 14(n) shall prevent or otherwise limit
Seller or Guarantor from declaring dividends or paying distributions on its equity interests necessary or
required for guarantor to pay its expenses and so that Guarantor can declare dividends to qualify
as a “real estate investment trust” under Section 856 of the Code; provided that Seller shall
notify Purchaser of any such payments prior to making such payments and, if such payment results in
a breach of financial covenant, Purchaser shall not be deemed to have waived such breach as a
result of this sentence.

     (o) Use of Custodian. Without the prior written consent of Purchaser, Seller
shall use no third party custodian as document custodian other than the Custodian for the Mortgage
File relating to the Mortgage Loans.

     (p) Merger of Seller. Seller shall not, at any time, directly or indirectly (i)
liquidate or dissolve or enter into any consolidation or merger or be subject to a Change in
Control or sell all or substantially all of its Property (other than in connection with an
asset-based financing or other secondary market transaction related to the Seller’s assets in the
ordinary course of the Seller’s business) without providing Purchaser with not less than forty-five
(45) days’ prior written notice of such event; (ii) form or enter into any partnership, joint
venture, syndicate or other combination which would have a Material Adverse Effect with respect to
Seller; or (iii) make any Material Adverse Change with respect to Seller.

     (q) Insurance. Seller shall obtain and maintain insurance with responsible
companies in such amounts and against such risks as are customarily carried by business entities
engaged in similar businesses similarly situated, and will furnish Purchaser on request full
information as to all such insurance, and provide within fifteen (15) days after receipt of such
request the certificates or other documents evidencing renewal of each such policy.

     (r) Affiliate Transaction. Seller shall not, at any time, directly or indirectly,
sell, lease or otherwise transfer any property or assets to, or otherwise acquire any property or
assets from, or otherwise engage in any transactions with, any of its Affiliates unless the terms
thereof are no less favorable to Seller than those that could be obtained at the time of such
transaction in an arm’s length transaction with a Person who is not such an Affiliate.

     (s) Change of Fiscal Year. Seller shall not, at any time, directly or indirectly,
except upon ninety (90) days’ prior written notice to Purchaser, change the date on which its
fiscal year begins from its current fiscal year beginning date.

     (t) Fees and Expenses. Seller shall timely pay to Purchaser all fees and actual
out of pocket expenses, if any, required to be paid by Seller pursuant to Section 23 hereunder and
under any other Program Document to Purchaser in immediately available funds, and without
deduction, set-off or counterclaim in accordance with Purchaser’s Wire Instructions.

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     (u) Further Documents. Seller shall, upon request of Purchaser or Agent, promptly
execute and deliver to Purchaser or Agent all such other and further documents and instruments of
transfer, conveyance and assignment, and shall take such other action as Purchaser or Agent may
reasonably require more effectively to transfer, convey, assign to and vest in Purchaser and to put
Purchaser in possession of the property to be transferred, conveyed, assigned and delivered
hereunder and otherwise to carry out more effectively the intent of the provisions under this
Agreement.

     (v) Due Diligence. Seller will permit Purchaser, Agent or their respective agents
or designees to perform due diligence reviews on the Mortgage Loans subject to each Transaction
hereunder within seven (7) days following the related Purchase Date. Seller shall cooperate in all
respects with such diligence and shall provide Purchaser, Agent or their respective agents or
designees with all loan files and other information (including, without limitation, Seller’s
quality control procedures and results) reasonably requested by Purchaser, Agent or their
respective agents or designees. Purchaser shall bear all of its own or its agents’ or designees’
costs and expenses associated with such due diligence.

15. REPURCHASE OF PURCHASED ASSETS

     Upon discovery by Seller of a breach of any of the representations and warranties set forth on
Exhibit B to this Agreement, Seller shall give prompt written notice thereof to Purchaser.
Upon any such discovery by Purchaser, Purchaser will likewise notify Seller. It is understood and
agreed that the representations and warranties set forth in Exhibit B to this Agreement
with respect to the Purchased Assets shall survive delivery of the respective Mortgage Files to the
Purchaser or Custodian with respect to the Purchased Assets and shall inure to the benefit of
Purchaser. The fact that Purchaser has conducted or has failed to conduct any partial or complete
due diligence investigation in connection with their purchase of any Purchased Asset shall not
affect Purchaser’s right to demand repurchase or any other remedy as provided under this Agreement.
Seller shall, within five (5) Business Days of the earlier of Seller’s discovery or receipt of
written notice with respect to any Purchased Asset of (i) any breach of a representation or
warranty contained in Exhibit B of this Agreement or (ii) any failure to deliver any of the
items required to be delivered as part of the Mortgage File within the time period required for
delivery pursuant to the Custodial Agreement, in each case having a Material Adverse Effect,
promptly cure such breach or delivery failure in all material respects. If within five (5)
Business Days after the earlier of Seller’s discovery of such breach or delivery failure or receipt
of written notice thereof that such breach or delivery failure has not been remedied by Seller in
all material respects, Seller shall promptly upon receipt of written instructions from Purchaser,
at Purchaser’s option, repurchase such Purchased Asset at a purchase price equal to the Repurchase
Price with respect to such Purchased Asset by wire transfer to the account designated by Purchaser.

16. SERVICING OF THE MORTGAGE LOANS

     (a) Transfer of Servicing Rights, Servicing Files and Servicing. With respect to
the Servicing Rights of each Servicing Released Mortgage Loan, Seller shall transfer such Servicing
Rights to Purchaser or its designee on the related Purchase Date. With respect to the Servicing
Files and the physical and contractual servicing of each Mortgage Loan to the extent in the
possession of Seller, Seller shall deliver such Servicing Files and the physical and contractual
servicing to Purchaser or its designee on the related Purchase Date. Seller’s transfer of the
Servicing Rights, Servicing Files and the physical and contractual servicing under this Section
shall be in accordance with customary standards in the industry including the transfer of the gross
amount of all escrows held for the related Mortgagors (without reduction for unreimbursed advances
or “negative escrows”).

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     (b) Servicing Agreement. The Mortgage Loans will be serviced pursuant to the
related Servicing Agreement.

17. EVENTS OF DEFAULT

     With respect to any Transactions covered by or related to this Agreement, the occurrence of
any of the following events shall constitute an “Event of Default”:

     (a) Seller fails to transfer the Purchased Assets to the applicable Purchaser on the
applicable Purchase Date (provided the Purchaser has tendered the related Purchase Price);

     (b) Seller either fails to repurchase the Purchased Assets on the applicable Repurchase
Date or fails to perform its obligations under Section 7 or the last sentence of Section 15 within
two (2) Business Days of the earlier of (x) Seller’s receipt of written notice from Purchaser or
Custodian of such breach or (y) the date on which Seller obtains actual knowledge of the facts
giving rise to such breach;

     (c) Seller shall fail to (i) remit to Purchaser when due any payment required to be made
under the terms of this Agreement, any of the other Program Documents or any other contracts or
agreements delivered in connection herewith or therewith, or (ii) perform, observe or comply with
any material term, condition, covenant or agreement contained in this Agreement or any of the other
Program Documents (other than the other “Events of Default” set forth in this Section 17) or any
other contracts or agreements delivered in connection herewith or therewith, and such failure is
not cured within the time period expressly provided for therein, or, if no such cure period is
provided, within two (2) Business Days of the earlier of (x) Seller’s receipt of written notice
from Purchaser or Custodian of such breach or (y) the date on which Seller obtains actual knowledge
of the facts giving rise to such breach;

     (d) Any representation or warranty made by Seller (or any of Seller’s officers) in the
Program Documents or in any other document delivered in connection therewith shall have been
incorrect or untrue in any material respect when made or repeated or deemed by the terms thereof to
have been made or repeated (other than the representations or warranties in Exhibit B which
shall be considered solely for the purpose of determining whether the related Purchased Asset is an
Eligible Mortgage Loan, unless Seller shall have made any such representation or warranty with the
knowledge that it was materially false or misleading at the time made or repeated or deemed to have
been made or repeated);

     (e) Seller or the Guarantor shall be in default under, or fail to perform as requested
under, or shall otherwise breach the material terms of any agreement relating to, in each case
beyond any applicable cure period, (i) any Indebtedness between Seller (or any of Seller’s
Affiliates if such event would have a Material Adverse Effect on Seller or Guarantor), or the
Guarantor on the one hand, and the Purchaser or any of Purchaser’s Affiliates, on the other hand
(such amount in excess of $1,000,000), or (ii) any Indebtedness of Seller or the Guarantor (or any
of Seller’s Affiliates if such event would have a Material Adverse Effect on Seller or Guarantor)
in excess of $10 million;

     (f) Any Event of Insolvency of the Seller or Guarantor (or any of Seller’s Affiliates if
such event would have a Material Adverse Affect on Seller or Guarantor);

     (g) Any final judgment or order for the payment of money in excess of $1,000,000 in the
aggregate (to the extent that it is, in the reasonable determination of Purchaser, uninsured and
provided that any insurance or other credit posted in connection with an appeal shall not be deemed
insurance for these purposes) shall be rendered against Seller or Guarantor (or any of Seller’s
Affiliates if such event would have a Material Adverse Affect on Seller or Guarantor) by one or
more courts, administrative tribunals or other bodies having jurisdiction over them and the same
shall not be discharged (or

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provisions shall not be made for such discharge) satisfied, or bonded, or a stay of execution
thereof shall not be procured, within sixty (60) days from the date of entry thereof and Seller or
Guarantor (or any of Seller’s Affiliates if such event would have a Material Adverse Affect on
Seller or Guarantor), as applicable, shall not, within said period of sixty (60) days, or such
longer period during which execution of the same shall have been stayed or bonded, appeal therefrom
and cause the execution thereof to be stayed during such appeal;

     (h) Any Governmental Authority or any person, agency or entity acting or purporting to act
under governmental authority (i) shall have taken any action to condemn, seize or appropriate, or
to assume custody or control of, all or any substantial part of the Property of Seller or Guarantor
(or any of Seller’s Affiliates if such event would have a Material Adverse Affect on Seller or
Guarantor), or shall have taken any action to displace the management of Seller or Guarantor (or
any of Seller’s Affiliates if such event would have a Material Adverse Affect on Seller or
Guarantor) or to curtail its authority in the conduct of the business of Seller or Guarantor (or
any of Seller’s Affiliates if such event would have a Material Adverse Affect on Seller or
Guarantor), or (ii) takes any action in the nature of enforcement to remove, limit or restrict the
approval of Seller or Guarantor (or any of Seller’s Affiliates if such event would have a Material
Adverse Affect on Seller or Guarantor) as an issuer, buyer or a seller/servicer of Mortgage Loans
or securities backed thereby;

     (i) Guarantor, shall fail to comply with any of the financial covenants set forth in
Section 14(g)(ii) two (2 )Business Days after notice or knowledge;

     (j) Any Material Adverse Effect shall have occurred and continues unremedied for two (2)
Business Days;

     (k) This Agreement shall for any reason cease to create a valid first priority security
interest or ownership interest upon transfer in any material portion of the Purchased Assets
purported to be covered hereby;

     (l) A Change in Control of Seller or Guarantor shall have occurred that has not been
approved by Agent;

     (m) A material event of default shall have occurred and be continuing beyond the
expiration of any applicable cure periods under any of the Program Documents;

     (n) Guarantor’s publicly traded stock is delisted or otherwise involuntarily removed from
the New York Stock Exchange; or

     (o) Guarantor’s failure to file Form 10-K or Form 10-Q within the time frame required by
the SEC, but in any case no later than 75 days after such period end in the case of Form 10-K, and
40 days after such period end in the case of Form 10-Q.

18. REMEDIES

     Upon the occurrence of an Event of Default, the Purchaser, at its option, shall have the right
to exercise any or all of the following rights and remedies:

     (a) (i) The Repurchase Date for each Transaction hereunder shall, if it has not
already occurred, be deemed immediately to occur (except that, in the event that the Purchase Date
for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such
Transaction shall be deemed immediately canceled). Seller’s Obligations hereunder, to repurchase
all Purchased

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Assets at the Repurchase Price therefor on the Repurchase Date in such Transactions shall
thereupon become immediately due and payable; all Income paid after such exercise or deemed
exercise shall be remitted to and retained by Purchaser and applied in accordance with Section 5
hereof; Seller shall immediately deliver to Purchaser or its designee any and all original papers,
records and files relating to the Purchased Assets subject to such Transaction then in its
possession and/or control; and all right, title and interest in and entitlement to such Purchased
Assets and Servicing Rights thereon shall become property of Purchaser.

     (ii) Purchaser may (A) sell, on or following the Business Day following the date on
which the Repurchase Price becomes due and payable pursuant to Section 18(a)(i) without
notice or demand of any kind, at a public or private sale and at such price or prices as
Purchaser may reasonably deem satisfactory, any or all or portions of the Purchased Assets
on a servicing-released or servicing-retained basis, as Purchaser may determine in its sole
discretion and/or (B) in its sole discretion elect, in lieu of selling all or a portion of
such Purchased Assets, to give Seller credit for such Purchased Assets (including the
Servicing Rights in respect of sales on a servicing-retained basis) in an amount equal to
the Market Value of the Purchased Assets against the aggregate unpaid Repurchase Price and
any other amounts owing by Seller hereunder. Seller shall remain liable to Purchaser for
any amounts that remain owing to Purchaser following a sale and/or credit under the
preceding sentence. The proceeds of any disposition of Purchased Assets shall be applied in
accordance with Section 5.

     (iii) 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 these characteristics 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 but that a good faith private purchase or sale shall be permitted provided
it shall be conducted in a commercially reasonable manner in order to maximize the value of
the Purchased Assets. Accordingly, Purchaser may elect the time and manner of liquidating
any Purchased Asset and nothing contained herein shall obligate Purchaser to liquidate any
Purchased Asset upon the occurrence of an Event of Default or to liquidate all Purchased
Assets in the same manner or on the same Business Day or shall constitute a waiver of any
right or remedy of Purchaser. 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.

     (iv) The Purchaser may terminate the Agreement.

     (b) Seller hereby acknowledges, admits and agrees that Seller’s obligations under this
Agreement are recourse obligations of Seller. In addition to their rights hereunder, Purchaser
shall have the right to proceed against any of Seller’s assets which may be in the possession of
Purchaser, any of Purchaser’s Affiliates or their designee (including the Custodian), including the
right to liquidate such assets and to set-off the proceeds against monies owed by Seller to
Purchaser pursuant to this Agreement. Purchaser may set off cash, the proceeds of the liquidation
of the Purchased Assets and Additional Purchased Mortgage Loans and all other sums or obligations
owed by Purchaser to Seller or against all of Seller’s Obligations to Purchaser, or Seller’s
obligations to Purchaser under any other agreement between the parties, or otherwise, whether or
not such obligations are then due, without prejudice to Purchaser’s right to recover any
deficiency.

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     (c) Purchaser 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 to Purchaser such assignments as Purchaser shall
request.

     (d) Purchaser shall have the right to direct all Persons servicing the Purchased Assets to
take such action with respect to the Purchased Assets as Purchaser determines appropriate,
including, without limitation, using its rights under a power of attorney granted pursuant to
Section 9(b) hereof.

     (e) Purchaser 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 or any
portion thereof, collect the payments due with respect to the Purchased Assets or any portion
thereof, and do anything that Purchaser is authorized hereunder to do. Seller shall pay all costs
and expenses incurred by Purchaser in connection with the appointment and activities of such
receiver, and such shall be deemed part of the Obligations hereunder.

     (f) Purchaser may, at its option upon an Event of Default, enter into one or more hedging
transactions covering all or a portion of the Purchased Assets, and Seller shall be responsible for
all costs and expenses (including reasonable legal expenses) of any kind incurred in connection
with the entering into of such hedging transactions, but not any costs, expenses, damages or
judgments of any kind which may be later imposed on, incurred by or asserted against Purchaser
relating to or arising out of such hedging transactions; including without limitation any losses
resulting from such hedging transactions. Seller’s obligation for the foregoing costs and expenses
shall be deemed part of the Obligations hereunder.

     (g) In addition to all the rights and remedies specifically provided herein, Purchaser
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.

     Except as otherwise expressly provided in this Agreement, Purchaser shall have the right to
exercise any of their 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.

     Purchaser 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 Seller might
otherwise have to require Purchaser to enforce its rights by judicial process. Seller also waives,
to the extent permitted by law, any defense Seller might otherwise have to the Obligations, or any
guaranty thereof, arising from use of nonjudicial process, enforcement and sale of all or any
portion of the Purchased Assets 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.

     Seller shall cause all sums received by it with respect to the Purchased Assets to be
deposited promptly in the Collection Account upon receipt thereof.

19. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE

     No failure on the part of Purchaser to exercise, and no delay by Purchaser in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise by Purchaser of any right, power or remedy hereunder preclude any other or further
exercise thereof or the

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exercise of any other right, power or remedy. All rights and remedies of Purchaser provided
for herein are cumulative and in addition to any and all other rights and remedies provided by law,
the Program Documents and the other instruments and agreements contemplated hereby and thereby, and
are not conditional or contingent on any attempt by Purchaser to exercise any of its rights under
any other related document. Purchaser may exercise at any time after the occurrence of an Event of
Default one or more remedies permitted hereunder, as it so desires, and may thereafter at any time
and from time to time exercise any other remedy or remedies permitted hereunder.

20. USE OF EMPLOYEE PLAN ASSETS

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

21. INDEMNITY

     (a) Seller agrees to indemnify and hold harmless Purchaser, Agent and their Affiliates and
their respective officers, directors, employees, agents and advisors (each, an “Indemnified
Party”) from and against any and all claims, damages, losses, liabilities, taxes, increased
costs and all other expenses including out-of-pocket expenses (including, without limitation,
reasonable fees and expenses of outside counsel and audit fees) that may be incurred by or asserted
or awarded against any Indemnified Party, in each case arising out of or in connection with or by
reason of (including without limitation, in connection with) (i) any investigation, litigation or
other proceeding (whether or not such Indemnified Party is a party thereto) relating to, resulting
from or arising out of any of the Program Documents, other than the Forward AAA Securities
Agreement, and all other documents related to such Program Documents, any breach by Seller of any
representation or warranty or covenant in this Agreement or any other Program Document, other than
the Forward AAA Securities Agreement, and all actions taken pursuant thereto, (ii) the
Transactions, the actual or proposed use of the proceeds of the Transactions, this Agreement or any
of the transactions contemplated thereby, (iii) the actual or alleged presence of hazardous
materials on any Property or any environmental action relating in any way to any Property, (iv) the
actual or alleged violation of any federal, state, municipal or local predatory lending laws
arising out of the Transactions or the Purchased Assets, or (v) the reduction of the unpaid
principal balance of a Purchased Asset due to an action authorized by any bankruptcy proceeding or
other case arising out of or relating to any petition under the Bankruptcy Code, in each case,
except to the extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted directly from such
Indemnified Party’s negligence or willful misconduct or is the result of a claim made by Seller
against the Indemnified Party, and Seller is ultimately the successful party in any resulting
litigation or arbitration. Seller and Purchaser each hereby agrees not to assert any claim against
the other party or any of its Affiliates, or any of their respective officers, directors,
employees, attorneys and agents, on any theory of liability, for special, indirect, consequential
or punitive damages arising out of or otherwise relating to the Program Documents, the actual or
proposed use of the proceeds of the Transactions, this Agreement or any of the transactions
contemplated thereby. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY
APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF
THE INDEMNIFIED PARTIES.

     (b) If Seller fails to pay when due any costs, expenses or other amounts payable by it
under this Agreement, including, without limitation, reasonable fees and expenses of counsel and
indemnities, such amount may be paid on behalf of Seller by Purchaser, in its sole discretion and
Seller shall remain liable for any such payments by Purchaser and such amounts shall be deemed part
of the Obligations hereunder. No such payment by Purchaser shall be deemed a waiver of any of
Purchaser’s rights under the Program Documents.

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     (c) Without prejudice to the survival of any other agreement of Seller hereunder, the
covenants and obligations of Seller contained in this Section 21 shall survive the payment in full
of the Repurchase Price and all other amounts payable hereunder and delivery of the Purchased
Assets by Purchaser against full payment therefor.

22. 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 Purchaser or Custodian contained in the Program Documents or any other
instrument delivered in connection therewith, and any right that they 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.

23. REIMBURSEMENT; SET-OFF

     (a) Except as provided in the following sentence, Seller shall not be responsible for
Purchaser’s legal costs and expenses or due diligence expenses associated with the initial
negotiation of the Program Documents or associated with any modification of the Program Documents
mutually agreed to by the Purchaser and Seller as necessary or desirable. Seller agrees to pay on
demand all reasonable out-of-pocket costs and expenses of Purchaser in connection with the
modification (except as provided in the preceding sentence), renewal and amendment of the Program
Documents requested or necessitated by Seller (including, without limitation, (A) all collateral
review and UCC search and filing fees and expenses and (B) the reasonable fees and expenses of
outside counsel for Purchaser with respect to advising Purchaser as to its rights and
responsibilities, or the perfection, protection or preservation of rights or interests, under this
Agreement and any other Program Document, with respect to negotiations with Seller or with other
creditors of Seller arising out of any Default or any events or circumstances that may give rise to
a Default and with respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors’ rights generally and any
proceeding ancillary thereto). Without prejudice to the survival of any other agreement of Seller
hereunder, the covenants and obligations of Seller contained in this Section 23(a) shall survive
the payment in full of the Repurchase Price and all other amounts payable hereunder and delivery of
the Purchased Assets by Purchaser against full payment therefor.

     (b) In addition to any rights and remedies of Purchaser hereunder and at law, Purchaser
and its Affiliates shall have the right, without prior notice to Seller, any such notice being
expressly waived by Seller to the extent permitted by applicable law, upon any amount becoming due
and payable (whether at the stated maturity, by acceleration or otherwise) by Seller hereunder or
under any other agreement (including, without limitation, the Forward AAA Securities Agreement)
entered into between Seller or any of its Affiliates on the one hand, and Purchaser or any of its
Affiliates on the other hand, to set-off and appropriate and apply against such amount any and all
Property and deposits (general or special, time or demand, provisional or final), in any currency,
or any other credits, indebtedness or claims, in any currency, or any other collateral (in the case
of collateral not in the form of cash or such other marketable or negotiable form, by selling such
collateral in a recognized market therefor or as otherwise permitted by law or as may be in
accordance with custom, usage or trade practice), in each case, whether direct or indirect,
absolute or contingent, matured or unmatured, at any time held or owing by Purchaser or any
Affiliate thereof to or for the credit or the account of Seller of any of its Affiliates.
Purchaser may also set-off cash and all other sums or obligations owed by Purchaser or its
Affiliates to Seller or its Affiliates (whether under this Agreement or under any other agreement
between the parties (including, without limitation, the Forward AAA Securities Agreement) or
between Seller or any of its Affiliates, on the one hand, and Purchaser or any of its Affiliates,
on the other) against all of Seller’s obligations to Purchaser or its Affiliates (whether under
this Agreement or under any other agreement (including, without limitation,

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the Forward AAA Securities Agreement) between the parties or between Seller or any of its
Affiliates, on the one hand, and Purchaser or any of its Affiliates, on the other), whether or not
such obligations are then due. The exercise of any such right of set-off shall be without prejudice
to Purchaser’s or its Affiliate’s right to recover any deficiency. Purchaser agrees to promptly
notify Seller after any such set-off and application made by Purchaser; provided
that the failure to give such notice shall not affect the validity of such set-off and
application.

24. FURTHER ASSURANCES

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

25. 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
Additional Purchased Mortgage Loans, and it, together with the other Program 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
hereafter.

26. TERMINATION

     This Agreement shall remain in effect until the Termination Date. However, no such
termination shall affect Seller’s outstanding obligations to Purchaser at the time of such
termination. Seller’s obligations to indemnify Purchaser pursuant to this Agreement and the other
Program Documents shall survive the termination hereof.

     At the request of Seller delivered to Purchaser no later than forty-five (45) days before the
Maturity Date or, with respect to any Purchased Asset, the expiration of the related Maximum Time
on Facility, respectively, Purchaser may in its discretion grant one or more extensions of the
Maturity Date or related Maximum Time on Facility, respectively, by giving notice approving such
extension and the extended Maturity Date or related Maximum Time on Facility, respectively, to
Seller no later than the earlier of 15 days following Seller’s request or thirty (30) days before
the Maturity Date or related Maximum Time on Facility, respectively. The failure of Purchaser to
so deliver such notice approving the extension shall be deemed to be Purchaser’s determination not
to extend the Maturity Date or related Maximum Time on Facility, respectively, unless Purchaser
thereafter gives notice to the contrary. Any extension of the Maturity Date or related Maximum
Time on Facility, respectively, shall be subject to the following: (i) no Default or Event of
Default exists on the date of the request to extend the Maturity Date or related Maximum Time on
Facility, respectively, and (ii) no Margin Deficit shall be outstanding. Seller may request one or
more further extensions of the Maturity Date or related Maximum Time on Facility, respectively
under the same terms and conditions as the request to extend the original Maturity Date or related
Maximum Time on Facility, respectively.

27. REHYPOTHECATION; ASSIGNMENT

     (a) Purchaser may, in its sole election, and without the consent of the Seller engage in
repurchase transactions with the Purchased Assets or otherwise pledge, hypothecate, assign,
transfer or otherwise convey the Purchased Assets with a counterparty of Purchaser’s choice, in all
cases subject to

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Purchaser’s obligation to reconvey the Purchased Assets (and not substitutes therefor) on the
Repurchase Date, all at no cost to the Seller. In the event Purchaser engages in a repurchase
transaction with any of the Purchased Assets or otherwise pledges or hypothecates any of the
Purchased Assets, Purchaser shall have the right to assign to Purchaser’s counterparty any of the
applicable representations or warranties in Exhibit B to this Agreement and the remedies
for breach thereof, as they relate to the Purchased Assets that are subject to such repurchase
transaction.

     (b) The Program Documents and the Seller’s rights and obligations thereunder are not
assignable by Seller without the prior written consent of Purchaser. Any Person into which Seller
may be merged or consolidated, or any corporation resulting from any merger, conversion or
consolidation to which Seller shall be a party, or any Person succeeding to the business of Seller,
shall be the successor of Seller hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. Without any requirement for further consent of the Seller and at no cost or
expense to the Seller, each of Purchaser and Agent may, in its sole election, assign or participate
all or a portion of its rights and obligations under this Agreement and the Program Documents with
a counterparty of Purchaser’s or Agent’s choice. Purchaser or Agent shall notify Seller of any
such assignment and participation and shall maintain, for review by Seller upon written request, a
register of assignees and participants and a copy of any executed assignment and acceptance by
Purchaser or Agent and assignee (“Assignment and Acceptance”), specifying the percentage or
portion of such rights and obligations assigned. The Seller agrees that, for any such permitted
assignment, Seller will cooperate with the prompt execution and delivery of documents reasonably
necessary for such assignment process to the extent that Seller incurs no cost or expense that is
not paid by the Purchaser or Agent, as applicable. Upon such assignment, (a) such assignee shall
be a party hereto and to each Program 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
Purchaser or Agent hereunder, and (b) Purchaser or Agent shall, to the extent that such rights and
obligations have been so assigned by it to either (i) an Affiliate of Purchaser or Agent which
assumes the obligations of Purchaser or Agent hereunder or (ii) to another Person which assumes the
obligations of Purchaser or Agent hereunder, be released from their obligations hereunder accruing
thereafter and under the Program Documents.

     (c) Purchaser and Agent may distribute to any prospective assignee, participant or pledgee
any document or other information delivered to Purchaser by Seller subject to the confidentiality
restrictions contained in Section 35 hereof; accordingly, such prospective assignee, participant or
pledgee shall be required to agree to confidentiality provisions similar to those set forth in
Section 35.

28. AMENDMENTS, ETC.

     No amendment or waiver of any provision of this Agreement 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, Purchaser and Agent, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.

29. SEVERABILITY

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

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30. BINDING EFFECT; GOVERNING LAW

     This Agreement shall be binding and inure to the benefit of the parties hereto and their
respective successors and assigns. 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 SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

31. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION AND VENUE; SERVICE OF PROCESS

     SELLER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE PROGRAM DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. SELLER HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS, ON BEHALF OF ITSELF AND ITS PROPERTY, 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, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THE PROGRAM DOCUMENTS IN ANY ACTION OR PROCEEDING. EACH OF PURCHASER AND 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 PROGRAM DOCUMENTS. EACH
OF PURCHASER AND SELLER HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A SUMMONS AND COMPLAINT AND
OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY ANOTHER PARTY IN CONNECTION WITH THIS
AGREEMENT OR THE OTHER PROGRAM DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF ITSELF OR ITS PROPERTY, IN THE MANNER
SPECIFIED IN THIS SECTION 31 AND TO SUCH PARTY’S ADDRESS SPECIFIED IN SECTION 34 OR SUCH OTHER
ADDRESS AS SUCH PARTY SHALL HAVE PROVIDED IN WRITING TO THE OTHER PARTIES HERETO. NOTHING IN THIS
SECTION 31 SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO (I) SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY APPLICABLE LAW, OR (II) BRING ANY ACTION OR PROCEEDING AGAINST ANY OTHER PARTY
OR ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.

32. SINGLE AGREEMENT

     Seller, Purchaser and Agent acknowledge that, and have entered hereinto and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions
hereunder constitute a single business and contractual relationship and have been made in
consideration of each other. Accordingly, Seller, Purchaser and Agent each agree (i) to perform
all of its obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect of all Transactions
hereunder, 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.

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33. INTENT

     Seller, Purchaser and Agent recognize that each of the Transactions and this Agreement is a
“repurchase agreement” as that term is defined in Section 101 of the Bankruptcy Code, and a
“securities contract” as that term is defined in Section 741 of the Bankruptcy Code, or a
“qualified financial contract” as that term is defined in the Federal Deposit Insurance Act, as
applicable.

     It is understood that Purchaser’s right to liquidate, the Purchased Assets and terminate and
accelerate the Transactions and this Agreement or to exercise any other remedies pursuant to
Section 18 hereof is a contractual right to liquidate, terminate and accelerate the Transactions
under a repurchase agreement, a securities contract and a qualified financial contract as described
in Sections 559, 555 and 561 of the Bankruptcy Code and Section 1821(e)(8)(A)(i) of the Federal
Deposit Insurance Act, as applicable and across contracts, as described in Section 561 of the
Bankruptcy Code. It is understood that Seller’s right to accelerate the Repurchase Date with
respect to the Purchased Assets and any Transaction hereunder pursuant to Section 22 hereof is a
contractual right to liquidate, terminate and accelerate the Transactions under a repurchase
agreement, a securities contract and a qualified financial contract as described in Sections 559,
555 and 561 of the Bankruptcy Code and Section 1821(e)(8)(A)(i) of the Federal Deposit Insurance
Act, as applicable.

     The parties hereby intend that any provisions hereof or in any other document, agreement or
instrument that is related in any way to the servicing of the individual Mortgage Loans shall be
deemed “related to” this Agreement within the meaning of Sections 101(38A)(A) and 101(47)(A)(v) of
the Bankruptcy Code and part of the “contract” as such term is used in Section 741 of the
Bankruptcy Code.

34. NOTICES AND OTHER COMMUNICATIONS

     Except as provided herein, all notices required or permitted by this Agreement shall be in
writing (including without limitation by Electronic Transmission, email or facsimile) and shall be
effective and deemed delivered only when received by the party to which it is sent; provided that
notices of Events of Default and exercise of remedies or under Sections 6 or 18 shall be sent via
overnight mail and by electronic transmission. Any such notice shall be sent to a party at the
address, electronic mail or facsimile transmission number set forth below:

	 	 	 

	if to Seller or Guarantor:

	 	Two Harbors Investment Corp.
	 

	 	601 Carlson Parkway, Suite 330
	 

	 	Minnetonka, MN 55305
	 

	 	Attention: General Counsel
	 

	 	Telephone: 612-615-6150
	 

	 	Facsimile: 612-615-3301
	 

	 	E-mail: legal@pinerivercapital.com
	 
	 	 
	if to Purchaser:

	 	Barclays Bank PLC
	 

	 	745 7th Avenue, 4th Floor
	 

	 	New York, New York 10019
	 

	 	Attention: Joseph O’Doherty
	 

	 	Telephone: 212-412-5517
	 

	 	Facsimile: 212-412-7333
	 

	 	E-mail: Joseph.odoherty@barcap.com

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	if to Agent:

	 	Barclays Bank PLC
	 

	 	745 7th Avenue, 4th Floor
	 

	 	New York, New York 10019
	 

	 	Attention: Ellen Kiernan
	 

	 	Telephone: 212-412-7990
	 

	 	Facsimile: 212-412-7333
	 

	 	E-mail: ellen.kiernan@barcap.com

or to such other address, e-mail address or facsimile number as either party may notify to the
others in writing from time to time.

35. CONFIDENTIALITY

     Seller, Purchaser and Agent each hereby acknowledge and agree that all written or
computer-readable information provided by one party to the other in connection with the Program
Documents or the Transactions contemplated thereby, including without limitation, Seller’s
Mortgagor information in the possession of Purchaser (the “Confidential Terms”) shall be
kept confidential and shall not be divulged to any party without the prior written consent of such
other party except for (i) disclosure to Seller’s direct and indirect parent companies, directors,
attorneys, agents or accountants, provided that such attorneys or accountants likewise agree to be
bound by this covenant of confidentiality, or are otherwise subject to confidentiality restrictions
or (ii) with prior (if feasible) written notice to the other parties, disclosure required by law,
rule, regulation or order of a court or other regulatory body or (iii) with prior (if feasible)
written notice to the other parties, disclosure to any approved hedge counterparty to the extent
necessary to obtain any Hedge Instrument hereunder or (iv) any disclosures or filing required under
Securities and Exchange Commission (“SEC”) or state securities’ laws; provided that in the
case of clause (iv), neither party shall file the Pricing Side Letter. Notwithstanding anything
herein to the contrary, except as reasonably necessary to comply with applicable securities laws,
each party (and each employee, representative, or other agent of each party) may disclose to any
and all persons, without limitation of any kind, the tax treatment and tax structure of the
transaction and all materials of any kind (including opinions or other tax analyses) that are
provided to it relating to such tax treatment and tax structure and, in particular, the tax
treatment and tax structure shall not be considered confidential within the meaning of Treasury
regulations section 1.6011-4. For this purpose, tax treatment and tax structure shall not include
(i) the identity of any existing or future party (or any Affiliate of such party) to this Agreement
or (ii) any specific pricing information or other commercial terms, including the amount of any
fees, expenses, rates or payments arising in connection with the transactions contemplated by this
Agreement.

36. DUE DILIGENCE

     Purchaser, Agent or any of their respective agents, representatives or permitted assigns shall
have the right, upon reasonable prior notice and during normal business hours, to conduct
inspection and perform continuing due diligence reviews of (x) the Purchased Assets and Seller’s
and Guarantor’s performance of its obligations under the Program Documents, and (y) the Servicing
File and the Purchased Assets. Seller agrees promptly to provide Purchaser, Agent and their
respective agents with access to, copies of and extracts from any and all documents, records,
agreements, instruments or information (including, without limitation, any of the foregoing in
computer data banks and computer software systems) relating to the Purchased Assets and Seller’s
and Guarantor’s respective business, operations, financial condition, performance of their
obligations under the Program Documents, the documents contained in the Servicing Files or the
Purchased Assets or assets proposed to be sold hereunder in the possession, or under the control,
of Seller. In addition, Seller shall also make available to Purchaser and/or Agent, upon
reasonable prior notice and during normal business hours, a knowledgeable financial or accounting
officer of Seller for the purpose of answering questions respecting

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the Purchased Assets. Without limiting the generality of the foregoing, Seller acknowledges
that Purchaser shall enter into transactions with Seller based solely upon the information provided
by Seller to Purchaser and/or Agent and the representations, warranties and covenants contained
herein, and that Purchaser and/or Agent, at its option, shall have the right at any time to conduct
itself or through its agents, or require Seller to conduct quality reviews and underwriting
compliance reviews of the individual Mortgage Loans at the expense of Seller. Any such diligence
conducted by Purchaser and/or Agent shall not reduce or limit the Seller’s representations,
warranties and covenants set forth herein. Purchaser and/or Agent shall bear the due diligence
costs and expenses incurred pursuant to this Section 36.

37. GUARANTY

     (a) Subject to Section 37(h) below, Guarantor hereby unconditionally and irrevocably
guarantees to Purchaser the prompt payment of the Guaranteed Obligations in full when due (whether
at the stated maturity, by acceleration or otherwise). Any such payment shall be made at such
place and in the same currency as such relevant Guaranteed Obligation is payable. This guaranty is
a guaranty of payment and not solely of collection and is a continuing guaranty and shall apply to
all Guaranteed Obligations whenever arising.

     (b) The obligations of the Guarantors hereunder are absolute and unconditional, irrespective
of the value, genuineness, validity, regularity or enforceability of this Agreement, or any other
agreement or instrument referred to herein, to the fullest extent permitted by Applicable Law,
irrespective of any other circumstance whatsoever which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor. Guarantor agrees that this guaranty may
be enforced by Purchaser without the necessity at any time of resorting to or exhausting any
security or collateral and without the necessity at any time of having recourse to this Agreement
or any other Program Document or any collateral, if any, hereafter securing the Guaranteed
Obligations or otherwise and Guarantor hereby waives the right to require Purchaser to proceed
against any other Person or to require the Purchaser to pursue any other remedy or enforce any
other right. Guarantor further agrees that nothing contained herein shall prevent Purchaser from
suing in any jurisdiction on this Agreement or any other Program Document or foreclosing its
security interest in or Lien on any collateral, if any, securing the Guaranteed Obligations or from
exercising any other rights available to it under this Agreement or any instrument of security, if
any, and the exercise of any of the aforesaid rights and the completion of any foreclosure
proceedings shall not constitute a discharge of Guarantor’s obligations hereunder; it being the
purpose and intent of Guarantor that its obligations hereunder shall be absolute, independent and
unconditional under any and all circumstances. Neither Guarantor’s obligations under this guaranty
nor any remedy for the enforcement thereof shall be impaired, modified, changed or released in any
manner whatsoever by reason of the application of the laws of any foreign jurisdiction. Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance of by Purchaser upon this guaranty or acceptance of
this guaranty. The Guaranteed Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon
this guaranty. All dealings between Seller and Guarantor, on the one hand, and Purchaser, on the
other hand, likewise shall be conclusively presumed to have been had or consummated in reliance
upon this guaranty.

     (c) Guarantor agrees that (a) all or any part of the security which hereafter may be held for
the Guaranteed Obligations, if any, may be exchanged, compromised or surrendered from time to time;
(b) the Purchaser shall not have any obligation to protect, perfect, secure or insure any such
security interests or Liens which hereafter may be held, if any, for the Guaranteed Obligations or
the properties subject thereto; (c) the time or place of payment of the Guaranteed Obligations may
be changed or extended, in whole or in part, to a time certain or otherwise, and may be renewed,
increased or

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accelerated, in whole or in part; (d) Seller and any other party liable for payment under this
Agreement may be granted indulgences generally; (e) any of the provisions of this Agreement or any
other Program Document may be modified, amended or waived; and (f) any deposit balance for the
credit of Seller or any other party liable for the payment of the Guaranteed Obligations or liable
upon any security therefor may be released, in whole or in part, at, before or after the stated,
extended or accelerated maturity of the Guaranteed Obligations, all without notice to or further
assent by Guarantor, which shall remain bound thereon, notwithstanding any such exchange,
compromise, surrender, extension, renewal, acceleration, modification, indulgence or release.

     (d) Guarantor expressly waives to the fullest extent permitted by Applicable Law: (a) notice
of acceptance of this guaranty by the Purchaser and of all transfers of funds to Seller by
Purchaser; (b) presentment and demand for payment or performance of any of the Guaranteed
Obligations; (c) protest and notice of dishonor or of default (except as specifically required in
this Agreement) with respect to the Guaranteed Obligations or with respect to any security
therefor; (d) notice of Purchaser obtaining, amending, substituting for, releasing, waiving or
modifying any Lien, if any, hereafter securing the Guaranteed Obligations, or Purchaser’s
subordinating, compromising, discharging or releasing such Liens, if any; (e) all other notices to
which Seller might otherwise be entitled in connection with the guaranty evidenced by this Section
37; and (f) demand for payment under this guaranty.

     (e) The obligations of Guarantor under this Section 37 shall be automatically reinstated if
and to the extent that for any reason any payment by or on behalf of any Person in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and Guarantor agrees that it will indemnify Purchaser on demand for all reasonable and
documented costs and out-of-pocket expenses (including, without limitation, reasonable and
documented fees and expenses of counsel) incurred by Purchaser in connection with such rescission
or restoration, including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law.

     (f) Guarantor agrees that, as between Guarantor, on the one hand, and Purchaser, on the other
hand, the Guaranteed Obligations may be declared to be forthwith due and payable as provided in
Section 18 (and shall be deemed to have become automatically due and payable in the circumstances
provided in Section 18) notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such Guaranteed Obligations from becoming automatically due and payable)
as against any other Person and that, in the event of such declaration (or such Guaranteed
Obligations being deemed to have become automatically due and payable), such Guaranteed Obligations
(whether or not due and payable by any other Person) shall forthwith become due and payable by
Guarantor.

     (g) Guarantor hereby agrees that until the payment and satisfaction in full of all Guaranteed
Obligations and the expiration and termination of the this Agreement it shall not exercise any
right or remedy arising by reason of any performance by it of its guarantee in Section 37(a),
whether by subrogation or otherwise, against Seller or any security for any of the Guaranteed
Obligations.

     (h) Notwithstanding any provision to the contrary contained herein, to the extent the
obligations of Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any Applicable Law relating to fraudulent conveyances or
transfers) then the obligations of Guarantor hereunder shall be limited to the maximum amount that
is permissible under Applicable Law (as now or hereinafter in effect).

- 48 -

 

[SIGNATURE PAGE FOLLOWS]

- 49 -

 

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

	 	 	 	 	 
	 	TWO HARBORS INVESTMENT CORP.,

as Guarantor

 	 
	 	By:  	/s/ Jeff Stolt
 	 
	 	 	Name:  	Jeff Stolt 	 
	 	 	Title:  	Chief Financial Officer 	 

	 	 	 	 	 
	 	TH TRS CORP.,

as Seller

 	 
	 	By:  	/s/ Jeff Stolt
 	 
	 	 	Name:  	Jeff Stolt 	 
	 	 	Title:  	Director 	 

	 	 	 	 	 
	 	BARCLAYS BANK PLC, as Purchaser and Agent

 	 
	 	By:  	/s/ Joseph O’Doherty	 
	 	 	Name:  	Joseph O’Doherty	 
	 	 	Title:  	Director	 

Signature Page to Master Repurchase Agreement

 

 

EXHIBIT A

QUARTERLY CERTIFICATION

     I, _______________________, _______________________ of TH TRS Corp. (the “Seller”), in
accordance with that certain Master Repurchase Agreement (“Agreement”), dated as of May 17,
2011, by and among Barclays Bank PLC and Seller and Two Harbors Investment Corp., as Guarantor, do
hereby certify that:

	 	(i)	 	To the best of my knowledge, no Default or Event of Default
has occurred and is continuing; and

	 	(ii)	 	Attached hereto as Schedule One is a schedule of
each financial covenant that the Guarantor is subject to under any agreement
(other than this Agreement), and a calculation which demonstrates compliance
with each such financial covenant.

[Signature Page Follows]

A - 1

 

Capitalized terms used but not defined herein shall have the meanings assigned thereto in the Agreement.

     IN WITNESS WHEREOF, I have signed this certificate.

Date:                      , 20[  ]

	 	 	 	 	 
	 	TH TRS Corp.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[SEAL]

     I, ________________________, ___________________ of Seller, do hereby certify that
_____________________ is the duly elected or appointed, qualified and acting __________________of
Seller, and the signature set forth above is the genuine signature of such officer on the date
hereof.

A - 2

 

SCHEDULE ONE TO EXHIBIT A

OTHER FINANCIAL COVENANTS

A - 3

 

SCHEDULE TWO TO EXHIBIT A

A - 4

 

EXHIBIT B

RESERVED

B - 1

 

EXHIBIT C

FORM OF TRANSACTION NOTICE

[insert date]

Barclays Bank PLC

745 7th Avenue, 4th Floor

New York, New York 10019

Attention: Mary Logan

	 	Re: 	 	 Master Repurchase Agreement, dated as of May 17, 2011 by and between Barclays
Bank PLC (“Purchaser” and “Agent”), Two Harbors Investment Corporation
(“Guarantor”) and TH TRS Corp. (“Seller”)

Ladies/Gentlemen:

          Reference is made to the above-referenced Master Repurchase Agreement (the “Repurchase
Agreement”; capitalized terms used but not otherwise defined herein shall have the meaning given
them in the Repurchase Agreement).

          In accordance with Section 3(c) of the Repurchase Agreement, the undersigned Seller hereby
requests, and the Purchaser, agrees to enter into a Transaction with us, in connection with our
delivery of Eligible Mortgage Loans and all related Servicing Rights, on ____________________
[insert requested Purchase Date, which must be at least one (1) Business Day following the date of
the request] (the “Purchase Date”), in connection with which we shall sell to you such
Eligible Mortgage Loans on the Seller Mortgage Loan Schedule attached hereto. The unpaid principal
balance of the Eligible Mortgage Loans is $________ and the Purchase Price shall be ______ [insert
applicable Purchase Price]. The Purchaser shall transfer to the Seller an amount equal to $
_______ [insert amount which represents the Purchase Price net of any fees then due and payable by
Seller to Purchaser pursuant to the Agreement]. Seller agrees to repurchase such Purchased Asset
on the Repurchase Date(s) at the Repurchase Price(s) listed below.

          The Eligible Mortgage Loans have the following characteristics:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Weighted	 	 
	 	 	 	 	 	 	 	 	Gross	 	Net	 	Average	 	Weighted
	 	 	 	 	 	 	 	 	Weighted	 	Weighted	 	Remaining	 	Average
	Repurchase	 	Repurchase	 	Total	 	Average	 	Average	 	Average	 	Term	 	Seasoning
	Date	 	Price	 	UPB	 	UPB	 	Coupon	 	Coupon	 	(months)	 	(months)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

C - 1

 

The Seller hereby certifies, as of such Purchase Date, that:

     (1) no Default or Event of Default has occurred and is continuing on the date
hereof (or to the extent existing, shall be cured after giving effect to such Transaction)
nor will occur after giving effect to such Transaction as a result of such Transaction;

     (2) each of the representations and warranties made by the Seller or Guarantor in or
pursuant to the Program Documents is true and correct in all material respects on and as of
such date as if made on and as of the date hereof (or, if any such representation or
warranty is expressly stated to have been made as of a specific date, as of such specific
date);

     (3) each of the Seller and Guarantor is in compliance with all governmental licenses
and authorizations and are qualified to do business and are in good standing in all required
jurisdictions, except as would not be reasonably likely to have a Material Adverse Effect;

     (4) Servicer has all requisite Approvals; and

     (5) the Seller has satisfied all applicable conditions precedent in Sections 10(a) and
(b) of the Repurchase Agreement and all other requirements of the Program Documents.

          The undersigned duly authorized officer of Seller further represents and warrants that (1) the
documents constituting the Mortgage Files (as defined in the Custodial Agreement), as more
specifically identified on the Seller Mortgage Loan Schedule delivered to the Purchaser and the
Custodian in connection herewith (the “Receipted Assets”), have been or are hereby
submitted to Custodian and such required documents are to be held by the Custodian for the
Purchaser, (2) all other documents related to such Receipted Assets (including, but not limited to,
mortgages, insurance policies, loan applications and appraisals) have been or will be created and
held by Seller for Purchaser, (3) all documents related to such Receipted Assets withdrawn from
Custodian shall be held by Seller for Purchaser, and (4) upon Purchaser’s wiring of the Purchase
Price pursuant to Section 3(b) of the Repurchase Agreement, Purchaser will have agreed to the terms
of the Transaction as set forth herein and purchased the Receipted Assets from the Seller.

          Seller hereby represents and warrants that (x) the Receipted Assets have an unpaid principal
balance as of the date hereof of $__________ and (y) the number of Receipted Assets is _____.

	 	 	 	 	 
	 	Very truly yours,

TH TRS Corp.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

C - 2

 

EXHIBIT D

FORM OF GOODBYE LETTER

«Primary_Borrower»                                           [_______] [__], 20[ ]

«Mailing_address_line_1»

«Mail_city», «Mail_state» «Mail_zip»

	 	 	 

	RE:

	 	Transfer of Mortgage Loan Servicing
	 

	 	Mortgage Loan «Account_number»

Dear Customer:

[SELLER] is the present servicer of your mortgage loan. Effective [Date] the servicing of your
mortgage will be transferred to ______. This transfer does not affect the terms and conditions of
your mortgage, other than those directly related to servicing. Because of the change in servicer,
we are required to provide you with this disclosure.

[SELLER] cannot accept any payments received after [Date]. Effective [Date], all payments are to
be made to _________. Any payments received by [SELLER] after [Date] will be forwarded to
________________. ___________________ will be contacting you shortly with payment instructions.
Please make future payments to:

	 	 	 	 	 
	 	________________________

Attn: ___________

[Address]

 	 

If you currently make payments by an automatic checking or savings account deduction, that service
will discontinue effective with the transfer date. After the servicing transfer, you may request
this service from ____________.

In [Date], you will receive a statement from [SELLER] reflecting the amount, if any, of the
interest and taxes paid on your behalf in 20[ ]. A similar statement will be sent
__________________ for the period beginning [Date] through year-end. Both statements must be added
together for income tax purposes.

If you have any questions concerning your account through [Date], you should continue to contact
[SELLER] , at <Seller’s Phone Number>, <HOURS OF OPERATION>. Questions after the
transfer date should be directed to ___________________Customer Service Department at
1-800-_____________, Monday — Friday, 7 a.m. — 7 p.m. EST.

Sincerely,

Loan Servicing Department

[SELLER]

D - 1

 

NOTICE OF ASSIGNMENT, SALE OR TRANSFER

OF SERVICING RIGHTS

You are hereby notified that the servicing of your mortgage loan, that is the right to collect
payments from you, is being assigned, sold or transferred.

The assignment, sale or transfer of the servicing of the mortgage loan does not affect any term or
condition of the mortgage instruments, other than the terms directly related to the servicing of
your loan.

Except in limited circumstances, the law requires that your present servicer send you a notice at
least 15 days before the effective date, or at closing. Your new servicer must also send you this
notice no later than 15 days after this effective date.

This notification is a requirement of Section 6 of the Real Estate Settlement Procedures Act
(RESPA) (12 U.S.C. 2605). You should also be aware of the following information, which is set out
in more detail in Section 6 of RESPA (12 U.S.C. 2605).

During the 60 day period following the effective date of the transfer of the loan servicing, a loan
payment received by your old servicer before its due date may not be treated by the new loan
servicer as late, and a late fee may not be imposed upon you.

Section 6 of RESPA (12 U.S.C. 2605) gives you certain consumer rights. If you send a “qualified
written request” to you loan servicer concerning the servicing of your loan, your servicer must
provide you with a written acknowledgement within 20 Business Days of receipt of your request. A
“qualified written request” is written correspondence, other than notice on a payment coupon or
other payment medium supplied by the servicer, which includes your name and account number and your
reasons for the request. If you want to send a “qualified written request” regarding the servicing
of your loan, it must be sent to this address:

___________________

[Address]

No later than 60 Business Days after receiving your request, your servicer must make any
appropriate corrections to your account, and must provide you with a written clarification
regarding any dispute. During this 60 Business Day period, your servicer may not provide
information to a consumer reporting agency concerning any overdue payment related to such period or
qualified written request. However, this does not prevent the servicer from initiating foreclosure
if proper grounds exist under the mortgage documents.

A Business Day is any day excluding legal public holidays (State or federal), Saturday and Sunday.

Section 6 of RESPA also provides for damages and costs for individuals or classes of individuals,
in circumstances where servicers are shown to have violated the requirements of that Section. You
should seek legal advice if you believe your rights have been violated.

MIRANDA DISCLOSURE — For your protection, please be advised that we are attempting to collect a
debt and any information obtained will be used for that purpose. Calls will be monitored and
recorded for quality assurance purposes. If you do not wish for your call to be recorded please
notify the customer service associate when calling.

D - 2

 

BANKRUPTCY INSTRUCTION — Attention to any customer in Bankruptcy or who has received a bankruptcy
discharge of this debt. Please be advised that this letter constitutes neither a demand for
payment of the captioned debt nor a notice of personal liability to any recipient hereof who might
have received a discharge of such debt in accordance with applicable bankruptcy laws or who might
be subject to the automatic stay of Section 362 of the United States Bankruptcy Code. However, it
may be a notice of possible enforcement of our lien against the collateral property, which has not
been discharged in your bankruptcy.

D - 3

 

EXHIBIT E

FORM OF WAREHOUSE LENDER’S RELEASE

(Date)

Barclays Capital — Operations

70 Hudson Street -7th Floor

Jersey City, New Jersey 07302

Attention Hansel Nieves

Telephone: 201-499-2269

Email: hansel.nieves@barcap.com

Two Harbors Investment Corporation

601 Carlson Parkway, Suite 330

Minnetonka, MN 55305

Attention: General Counsel

TH TRS Corp.

601 Carlson Parkway, Suite 330

Minnetonka, MN 55305

	 	 	 	 	 

	 

	 	Re:
	 	Certain Assets Identified on Schedule A hereto and owned by [SELLER]

     Capitalized terms used herein but not defined herein shall have the meanings ascribed to such
terms in the Master Repurchase Agreement, dated as of May 17, 2011 (the “Repurchase Agreement”),
between Barclays Bank, PLC, TH TRS Corp. and Two Harbors Investment Corporation.

     The undersigned hereby releases all right, interest, lien or claim of any kind with respect to
the Mortgage Loan described in the attached Schedule A, such release to be effective
automatically without any further action by any party upon receipt by Barclays Bank, PLC in
immediately available funds of $__________________, in accordance with the following wire
instructions:

          [                    ]

	 	 	 	 	 
	 	Very truly yours,

[WAREHOUSE LENDER]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

E - 1

 

[SCHEDULE A TO EXHIBIT E — LIST OF ASSETS TO BE RELEASED]

E - 1

 

EXHIBIT F

[RESERVED]

F - 1

 

EXHIBIT G

[RESERVED]

G - 2

 

EXHIBIT H

[RESERVED]

H - 1

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