Document:

exv10w11

Exhibit 10.11

 

BEAR STEARNS ASSET-BACKED SECURITIES I LLC,

as Depositor

NATIONSTAR MORTGAGE LLC,

as Servicer

NEWCASTLE MORTGAGE SECURITIES TRUST 2007-1,

as Issuing Entity

WELLS FARGO BANK, N.A.

as Master Servicer, Securities Administrator and Custodian

and

THE BANKOF NEW YORK,

as Indenture Trustee

 

SALE AND SERVICING AGREEMENT

Dated as of July 12, 2007

 

Mortgage Loans

Newcastle Mortgage Securities Trust 2007-1

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I

	 
	 	 	 	 
	DEFINITIONS

	 
	 	 	 	 
	Section 1.01. Definitions
	 	 	2	 
	Section 1.02. Other Definitional Provisions
	 	 	2	 
	Section 1.03. Interest Calculations
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II

	 
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES

	 
	 	 	 	 
	Section 2.01. Conveyance of Mortgage Loans
	 	 	4	 
	Section 2.02. Acceptance by Indenture Trustee
	 	 	7	 
	Section 2.03. Repurchase or Substitution of Mortgage Loans by the Originator
	 	 	8	 
	Section 2.04. Representations and Warranties Regarding the Master Servicer
	 	 	11	 
	Section 2.05. Representations, Warranties and Covenants of the Servicer
	 	 	12	 
	Section 2.06. Existence
	 	 	14	 
	 
	 	 	 	 
	ARTICLE III

	 
	 	 	 	 
	ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

	 
	 	 	 	 
	Section 3.01. Servicer to Act as Servicer
	 	 	15	 
	Section 3.02. Sub-Servicing Agreements Between Servicer and Sub-Servicers
	 	 	17	 
	Section 3.03. Successor Sub-Servicers
	 	 	18	 
	Section 3.04. Liability of the Servicer
	 	 	18	 
	Section 3.05. No Contractual Relationship Between Sub-Servicers, the Indenture Trustee or
the Noteholders
	 	 	18	 
	Section 3.06. Assumption or Termination of Sub-Servicing Agreements by the Indenture Trustee
	 	 	19	 
	Section 3.07. Collection of Certain Mortgage Loan Payments
	 	 	19	 
	Section 3.08. Sub-Servicing Accounts
	 	 	20	 
	Section 3.09. Collection of Taxes, Assessments and Similar Items; Servicing Accounts
	 	 	20	 
	Section 3.10. Collection Account and Note Account
	 	 	21	 
	Section 3.11. Withdrawals from the Collection Account and Note Account
	 	 	23	 
	Section 3.12. Investment of Funds in the Collection Account and the Note Account
	 	 	25	 
	Section 3.13. [Reserved]
	 	 	26	 
	Section 3.14. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage
	 	 	26	 
	Section 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements
	 	 	28	 
	Section 3.16. Realization Upon Defaulted Mortgage Loans
	 	 	29	 
	Section 3.17. Custodian and Indenture Trustee to Cooperate; Release of Mortgage Files
	 	 	30	 
	Section 3.18. Servicing Compensation
	 	 	32	 
	Section 3.19. Reports to the Securities Administrator and Others; Collection Account Statements
	 	 	32	 
	Section 3.20. Statement as to Compliance
	 	 	32	 
	Section 3.21. Assessments of Compliance and Attestation Reports
	 	 	33	 
	Section 3.22. Access to Certain Documentation; Filing of Reports by Indenture Trustee
	 	 	36	 
	Section 3.23. Title, Management and Disposition of REO Property
	 	 	36	 
	Section 3.24. Obligations of the Servicer in Respect of Prepayment Interest Shortfalls
	 	 	38	 
	Section 3.25. [Reserved]
	 	 	39	 
	Section 3.26. Obligations of the Servicer in Respect of Mortgage Rates and Monthly Payments
	 	 	39	 
	Section 3.27. [Reserved]
	 	 	39	 
	Section 3.28. [Reserved]
	 	 	39	 
	Section 3.29. Advance Facility
	 	 	39	 
	Section 3.30. Master Servicer
	 	 	41	 
	Section 3.31. Monitoring of Servicer
	 	 	42	 
	Section 3.32. Fidelity Bond
	 	 	43	 
	Section 3.33. Power to Act; Procedures
	 	 	43	 
	Section 3.34. Due-on-Sale Clauses; Assumption Agreements
	 	 	44	 
	Section 3.35. Documents, Records and Funds in Possession of Master Servicer To Be Held for Trustee
	 	 	44	 
	Section 3.36. Possession of Certain Insurance Policies and Documents
	 	 	45	 
	Section 3.37. Compensation for the Master Servicer
	 	 	45	 
	Section 3.38. Obligation of the Master Servicer in Respect of Prepayment Interest Shortfalls
	 	 	45	 
	Section 3.39. Merger or Consolidation
	 	 	45	 
	Section 3.40. Resignation of Master Servicer
	 	 	46	 
	Section 3.41. Assignment or Delegation of Duties by the Master Servicer
	 	 	46	 
	 
	 	 	 	 
	ARTICLE IV

	 
	 	 	 	 
	REMITTANCE REPORTS; ADVANCES; EXCHANGE ACT REPORTING

	 
	 	 	 	 
	Section 4.01. Remittance Reports and Advances
	 	 	48	 
	Section 4.02. Exchange Act Reporting
	 	 	49	 
	Section 4.03. Swap Account
	 	 	60	 
	Section 4.04. Cap Account
	 	 	60	 
	 
	 	 	 	 
	ARTICLE V

	 
	 	 	 	 
	THE SERVICER AND THE DEPOSITOR

	 
	 	 	 	 
	Section 5.01. Liability of the Servicer, Master Servicer and the Depositor
	 	 	62	 
	Section 5.02. Merger or Consolidation of, or Assumption of the Obligations of, the Servicer or the Depositor
	 	 	62	 
	Section 5.03. Limitation on Liability of the Servicer, Master Servicer and Others
	 	 	62	 
	Section 5.04. Servicer Not to Resign
	 	 	63	 
	Section 5.05. Delegation of Duties
	 	 	63	 
	Section 5.06. Indemnification
	 	 	64	 
	Section 5.07. Inspection
	 	 	64	 
	 
	 	 	 	 
	ARTICLE VI

	 
	 	 	 	 
	DEFAULT

	 
	 	 	 	 
	Section 6.01. Servicer Events of Termination
	 	 	65	 
	Section 6.02. Master Servicer to Act; Appointment of Successor
	 	 	66	 
	Section 6.03. Waiver of Defaults
	 	 	68	 
	Section 6.04. Notification to Noteholders
	 	 	68	 
	Section 6.05. Survivability of Liabilities
	 	 	69	 
	Section 6.06. Master Servicer Events of Termination
	 	 	69	 
	Section 6.07. Appointment of Successor Master Servicer
	 	 	71	 
	 
	 	 	 	 
	ARTICLE VII

	 
	 	 	 	 
	MISCELLANEOUS PROVISIONS

	 
	 	 	 	 
	Section 7.01. Amendment
	 	 	74	 
	Section 7.02. GOVERNING LAW
	 	 	74	 
	Section 7.03. Notices
	 	 	74	 
	Section 7.04. Severability of Provisions
	 	 	76	 
	Section 7.05. Third-Party Beneficiaries
	 	 	76	 
	Section 7.06. Counterparts
	 	 	77	 
	Section 7.07. Effect of Headings and Table of Contents
	 	 	77	 
	Section 7.08. Termination
	 	 	77	 
	Section 7.09. No Petition
	 	 	77	 
	Section 7.10. No Recourse
	 	 	77	 
	Section 7.11. Indenture Trustee Rights
	 	 	77	 
	Section 7.12. Compliance
	 	 	77	 
	Section 7.13. Intention of the Parties and Interpretation
	 	 	77	 
	 
	 	 	 	 
	ARTICLE VIII

	 
	 	 	 	 
	DUTIES OF THE ADMINISTRATOR

	 
	 	 	 	 
	Section 8.01. Administrative Duties
	 	 	79	 
	Section 8.02. Records
	 	 	80	 
	Section 8.03. Additional Information to be Furnished
	 	 	80	 
	Section 8.04. No Recourse to Owner Trustee
	 	 	81	 

	 	 	 	 	 
	EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	Exhibit A
	 	Form of Assignment Agreement	 	 
	Exhibit B
	 	Mortgage Loan Schedule	 	 
	Exhibit C
	 	Form of Request for Release	 	 
	Exhibit D-1
	 	Form of Custodian’s Initial Certification	 	 
	Exhibit D-2
	 	Form of Custodian’s Final Certification	 	 
	Exhibit E
	 	Form of Lost Note Affidavit	 	 
	Exhibit F
	 	Form of Power of Attorney	 	 
	Exhibit G-1
	 	Form of Certification to Be Provided by the Servicer with Form 10-K	 	 
	Exhibit G-2 
	 	Form of Certification to Be Provided to the Servicer by the Securities Administrator	 	 
	Exhibit H
	 	Servicing Criteria	 	 
	Exhibit I
	 	Form 10-D, Form 8-K and Form 10-K Reporting Responsibility	 	 
	Exhibit J
	 	Standard File Layout-Scheduled/Scheduled	 	 
	Exhibit K 
	 	Standard File Layout- Delinquency Reporting	 	 
	Exhibit L
	 	Calculation of Realized Loss/Form 332	 	 
	Exhibit M
	 	Additional Disclosure Notification	 	 

 

 

          This Sale and Servicing Agreement, dated as of July 12, 2007 (the “Agreement”),
among Bear Stearns Asset Backed Securities I LLC., as depositor (the “Depositor” ),
Nationstar Mortgage LLC, as servicer (the “Servicer”), Newcastle Mortgage Securities
Trust 2007-1 (the “Issuing Entity”), Wells Fargo bank, N.A., as master servicer and
securities administrator (the “Master Servicer” and “Securities Administrator”) and The
Bank of New York, as indenture trustee (the “Indenture Trustee”).

W I T N E S S E T H    T H A T :

          WHEREAS, pursuant to the terms of the Assignment Agreement, the Depositor will
acquire the Mortgage Loans;

          WHEREAS, the Depositor will create Newcastle Mortgage Securities Trust 2007-1, a
Delaware statutory trust;

          WHEREAS, pursuant to the terms of this Sale and Servicing Agreement, the Depositor
will convey the Mortgage Loans and all of its rights under the Assignment Agreement to
the Issuing Entity in exchange for the Notes and the Certificates (as defined below);

          WHEREAS, pursuant to the terms of the Trust Agreement, the Issuing Entity will
issue and transfer to or at the direction of the Depositor, the Certificates;

          WHEREAS, pursuant to the terms of the Indenture the Issuing Entity will pledge the
Mortgage Loans and issue the Notes and the Certificates; and

          WHEREAS, pursuant to the terms of this Sale and Servicing Agreement, the Servicer
will service the Mortgage Loans set forth on the Mortgage Loan Schedule attached hereto
as Exhibit B directly or through one or more Sub-Servicers;

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties
hereto agree as follows:

ARTICLE I

DEFINITIONS

          Section 1.01. Definitions.

          For all purposes of this Sale and Servicing Agreement, except as otherwise
expressly provided herein or unless the context otherwise requires, capitalized terms
not otherwise defined herein shall have the meanings assigned to such terms in the
Definitions contained in Appendix A to the Indenture which is incorporated by reference
herein. All other capitalized terms used herein shall have the meanings specified
herein.

          Section 1.02. Other Definitional Provisions.

          (a) All terms defined in this Sale and Servicing Agreement shall have the defined
meanings when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.

          (b) As used in this Sale and Servicing Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not defined in
this Sale and Servicing Agreement or in any such certificate or other document, and
accounting terms partly defined in this Sale and Servicing Agreement or in any such
certificate or other document, to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles. To the extent
that the definitions of accounting terms in this Sale and Servicing Agreement or in any
such certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in this Sale
and Servicing Agreement or in any such certificate or other document shall control.

          (c) The words “hereof,” “herein,” “hereunder” and words of similar import when used
in this Sale and Servicing Agreement shall refer to this Sale and Servicing Agreement as
a whole and not to any particular provision of this Sale and Servicing Agreement;
Section and Exhibit references contained in this Sale and Servicing Agreement are
references to Sections and Exhibits in or to this Sale and Servicing Agreement unless
otherwise specified; and the term “including” shall mean “including without limitation”.

          (d) The definitions contained in this Sale and Servicing Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine as well
as the feminine and neuter genders of such terms.

          (e) Any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified or supplemented and
includes (in the case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.

          Section 1.03. Interest Calculations.

          All calculations of interest hereunder that are made in respect of the Stated
Principal Balance of a Mortgage Loan shall be made on the basis of a 360-day year
consisting of twelve 30-day months, notwithstanding the terms of the related Mortgage
Note and Mortgage.

 

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

          Section 2.01. Conveyance of Mortgage Loans.

          The Depositor, concurrently with the execution and delivery hereof, does hereby
sell, transfer, assign, set over and otherwise convey to the Issuing Entity as of the
Closing Date, without recourse, and for the benefit of the Noteholders, all the right,
title and interest of the Depositor, including any security interest therein for the
benefit of the Depositor, in and to (i) each Mortgage Loan identified on the Mortgage
Loan Schedule, including the related Cut-off Date Principal Balance, all interest
accruing thereon on and after the Cut-off Date and all collections in respect of
interest and principal due after the Cut-off Date; (ii) property which secured each such
Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure;
(iii) its interest in any insurance policies in respect of the Mortgage Loans; (iv) the
rights of the Depositor under the Purchase Agreement (as assigned to the Depositor
pursuant to the terms of the Assignment Agreement); and (v) all proceeds of any of the
foregoing. Such sale includes all interest and principal due and collected by the
Depositor or the Servicer after the Cut-off Date with respect to the Mortgage Loans. In
consideration of the sale to it of such property, the Issuing Entity shall deliver to or
at the order of the Depositor the Notes and the Certificates.

          In connection with such sale, transfer, and assignment, the Depositor shall
instruct the Seller to deliver to and deposit with the Custodian, on behalf of the
Indenture Trustee, the following documents or instruments with respect to each Original
Mortgage Loan so sold, transferred, and assigned, the following documents or instruments
(with respect to each Mortgage Loan, a “Mortgage File”):

          (i) the original Mortgage Note, endorsed either (A) in blank or (B) in the
following form: “Pay to the order of The Bank of New York, as Indenture Trustee,
without recourse” or with respect to any lost Mortgage Note, an original Lost
Note Affidavit stating that the original mortgage note was lost, misplaced or
destroyed, together with a copy of the related mortgage note; provided, however,
that such substitutions of Lost Note Affidavits for original Mortgage Notes may
occur only with respect to Mortgage Loans, the aggregate Cut-off Date Principal
Balance of which is less than or equal to 1.00% of the Pool Balance as of the
Cut-off Date;

          (ii) the original Mortgage (noting the presence of the MIN of the Mortgage
Loan and language indicating that the Mortgage Loan is a MOM Loan if the Mortgage
Loan is a MOM Loan), with evidence of recording thereon, and the original
recorded power of attorney, if the Mortgage was executed pursuant to a power of
attorney, with evidence of recording thereon or, if such Mortgage or power of
attorney has been submitted for recording but has not been returned from the
applicable public recording office, has been lost or is not otherwise available,
a copy of such Mortgage or power of attorney, as the case may be, certified to be
a true and complete copy of the original submitted for recording;

          (iii) unless the Mortgage Loan is registered on the MERS® System, an
original Assignment, in form and substance acceptable for recording. The Mortgage
shall be assigned either (A) in blank or (B) to “The Bank of New York, as
Indenture Trustee, without recourse”;

          (iv) an original of any intervening assignment of Mortgage showing a
complete chain of assignments (or to MERS if the Mortgage Loan is registered on
the MERS® System and noting the presence of MIN);

          (v) the original or a certified copy of lender’s title insurance policy; and

          (vi) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any.

          The Depositor herewith also delivers to the Custodian, on behalf of the Indenture
Trustee, an executed copy of the Assignment Agreement and the Purchase Agreement.

          If any of the documents referred to in Section 2.01(ii), (iii) or (iv) above has as
of the Closing Date been submitted for recording but either (x) has not been returned
from the applicable public recording office or (y) has been lost or such public
recording office has retained the original of such document, the obligations of the
Depositor to instruct the Seller to deliver such documents shall be deemed to be
satisfied upon (1) delivery to the Custodian, on behalf of the Indenture Trustee, no
later than the Closing Date, of a copy of each such document certified by the Originator
in the case of (x) above or the applicable public recording office in the case of (y)
above to be a true and complete copy of the original that was submitted for recording
and (2) if such copy is certified by the Originator, delivery to the Custodian, on
behalf of the Indenture Trustee, promptly upon receipt thereof of either the original or
a copy of such document certified by the applicable public recording office to be a true
and complete copy of the original. If the original lender’s title insurance policy, or a
certified copy thereof, was not delivered pursuant to Section 2.01(v) above, the
Depositor shall instruct the Seller to deliver or cause to be delivered to the
Custodian, on behalf of the Indenture Trustee, the original or a copy of a written
commitment or interim binder or preliminary report of title issued by the title
insurance or escrow company, with the original or a certified copy thereof to be
delivered to the Custodian, on behalf of the Indenture Trustee, promptly upon receipt
thereof. The Servicer or the Depositor shall deliver or cause to be delivered to the
Custodian, on behalf of the Indenture Trustee, promptly upon receipt thereof any other
documents constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an assumption or
modification of any Mortgage Loan.

          Upon discovery or receipt of notice of any materially defective document in, or
that a document is missing from, a Mortgage File, the Custodian, on behalf of the
Indenture Trustee, shall promptly notify the Seller and the Originator of such defect or
missing document and request that the Originator deliver such missing document or cure
such defect within 15 days from the date the Originator was notified of such missing
document or defect, and if the Originator does not deliver such missing document or cure
such defect in all material respects during such period, the Custodian, on behalf of the
Indenture Trustee, shall notify the Seller and the Originator of the Originator’s
obligation to repurchase such Mortgage Loan from the Trust on or prior to the
Determination Date following the expiration of such 15 day period (subject to Section
2.03(e)); provided that, in connection with any such breach that could not reasonably
have been cured within such 15 day period, if the Originator has commenced to cure such
breach within such 15 day period, the Originator shall be permitted to proceed
thereafter diligently and expeditiously to cure the same within any additional period
provided under the Assignment Agreement.

          Except with respect to any Mortgage Loan for which MERS is identified on the
Mortgage, the Servicer shall cause the Assignments with respect to any Mortgage Loan
located in Maryland which were delivered in blank to be completed and recorded. In the
event that any such Assignment is lost or returned unrecorded because of a defect
therein, the Servicer or the Custodian via the Exception Report shall notify the
Originator of its obligations under the Assignment Agreement to promptly have a
substitute Assignment prepared or have such defect cured, as the case may be, and
thereafter cause each such Assignment to be duly recorded.

 

 

          For administrative convenience and facilitation of servicing and to reduce closing
costs, the Assignments of Mortgage shall not be required to be submitted for recording
(except with respect to any Mortgage Loan located in Maryland) unless the Servicer
receives written notice that such failure to record would result in a withdrawal or a
downgrading by any Rating Agency of the rating on any Class of Notes; provided, however,
each Assignment, except with respect to any Mortgage Loan for which MERS is identified
on the Mortgage, shall be submitted for recording by the Originator in the manner
described above, at no expense to the Trust, the Depositor, the Custodian or the
Securities Administrator, upon the earliest to occur of: (i) reasonable direction by the
Holders of 25% of the aggregate Note Balance of the Notes, (ii) the occurrence of a
Servicer Event of Termination, (iii) the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Seller and (iv) the occurrence of a servicing transfer as
described in Section 6.02 hereof. In addition to the foregoing, the Servicer shall cause
each Assignment of Mortgage to be recorded in accordance with customary servicing
practices in order to convey, upon foreclosure, the title of any Mortgaged Property to
the Trust as set forth in Section 3.23 hereof. The cost of recording the Assignments
shall be paid by the Servicer and the Servicer shall be reimbursed for such expenses by
the Trust.

          In connection with the assignment of any Mortgage Loan registered on the MERS®
System, the Servicer further agrees that it will request that the Depositor cause,
within 30 Business Days after the Closing Date, the MERS® System to indicate that such
Mortgage Loans have been assigned by the Depositor to the Indenture Trustee in
accordance with this Sale and Servicing Agreement for the benefit of the Noteholders by
including (or deleting, in the case of Mortgage Loans which are repurchased in
accordance with this Agreement) in such computer files (a) the code in the field which
identifies the specific Indenture Trustee and (b) the code in the field “Pool Field”
which identifies the series of the Notes issued in connection with such Mortgage Loans.
The Depositor further agrees that it will not, and the Servicer agrees that it will not,
alter the codes referenced in this paragraph with respect to any Mortgage Loan during
the term of this Agreement unless and until such Mortgage Loan is repurchased in
accordance with the terms of this Agreement.

          The Servicer shall forward to the Custodian, on behalf of the Indenture Trustee,
original documents evidencing an assumption, modification, consolidation or extension of
any Mortgage Loan entered into in accordance with this Agreement within two weeks of
their execution; provided, however, that the Servicer shall provide the Custodian with a
certified true copy of any such document submitted for recordation within two weeks of
its execution, and shall provide the original of any document submitted for recordation
or a copy of such document certified by the appropriate public recording office to be a
true and complete copy of the original within 365 days of its submission for
recordation. In the event that the Servicer cannot provide a copy of such document
certified by the public recording office within such 365 day period, the Servicer shall
deliver to the Custodian, within such 365 day period, an Officers’ Certificate of the
Servicer which shall (A) identify the recorded document, (B) state that the recorded
document has not been delivered to the Custodian due solely to a delay caused by the
public recording office, (C) state the amount of time generally required by the
applicable recording office to record and return a document submitted for recordation,
if known and (D) specify the date the applicable recorded document is expected to be
delivered to the Custodian, and, upon receipt of a copy of such document certified by
the public recording office, the Servicer shall immediately deliver such document to the
Custodian. In the event the appropriate public recording office will not certify as to
the accuracy of such document, the Servicer shall deliver a copy of such document
certified by an officer of the Servicer to be a true and complete copy of the original
to the Custodian.

          Section 2.02. Acceptance by Custodian on behalf of Indenture Trustee.

          Subject to the provisions of Section 2.01 and subject to the review described below
and any exceptions noted on the Exception Report, the Custodian, on behalf of the
Indenture Trustee, acknowledges receipt of the documents referred to in Section 2.01
above and declares that it holds and will hold such documents and the other documents
delivered to it constituting a Mortgage File, and that it holds or will hold all such
assets and such other assets included in the definition of “Trust Estate” in trust for
the exclusive use and benefit of all present and future Noteholders.

          The Custodian, on behalf of the Indenture Trustee and for the benefit of the
Noteholders, agrees to review each Mortgage File no later than the Closing Date (or,
with respect to any document delivered after the Closing Date, within 45 days of receipt
and with respect to any Qualified Substitute Mortgage Loan, within 45 days after the
assignment thereof). The Custodian, on behalf of the Indenture Trustee and for the
benefit of the Noteholders, further agrees to certify to the Depositor, the Indenture
Trustee and the Servicer in substantially the form attached hereto as Exhibit D-1, on
the Closing Date (or, with respect to any document delivered after the Closing Date,
within 45 days of receipt and with respect to any Qualified Substitute Mortgage Loan,
within 45 days after the assignment thereof) that, as to each Mortgage Loan listed in
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage
Loan specifically identified in the Exception Report annexed thereto as not being
covered by such certification), (i) all documents required to be delivered to it
pursuant Section 2.01 (other than Section 2.01(vi)) of this Agreement and if actually
delivered to it, the documents required to be delivered to it pursuant to Section
2.01(vi) of this Agreement are in its possession, (ii) such documents have been reviewed
by it and appear regular on their face and relate to such Mortgage Loan and (iii) based
on its examination of the foregoing documents, the information set forth in the Mortgage
Loan Schedule that corresponds to items (i), (iii), (x), (xi), (xii), (xviii) and (xxv),
(but only as to Gross Margin and Maximum Mortgage Rate) of the Mortgage Loan Schedule
accurately reflects information set forth in the Mortgage File. It is herein
acknowledged that, in conducting such review, the Custodian is under no duty or
obligation to inspect, review or examine any such documents, instruments, certificates
or other papers to determine that they are recordable or genuine, legally enforceable,
valid or binding or appropriate for the represented purpose or that they have actually
been recorded or that they are other than what they purport to be on their face.

          No later than the first anniversary date of this Agreement, or the following
Business Day if such first anniversary date is not a Business Day, the Custodian shall
deliver to the Depositor, the Indenture Trustee and the Servicer a final certification
in the form annexed hereto as Exhibit D-2, with any applicable exceptions noted on the
Exception Report attached thereto.

          If in the process of reviewing the Mortgage Files and making or preparing, as the
case may be, the certifications referred to above, the Custodian finds any document or
documents constituting a part of a Mortgage File to be missing or defective in any
material respect, at the conclusion of its review the Custodian shall so notify the
Indenture Trustee, the Originator, the Depositor, the Sponsor and the Seller, such
notification to be in the form of the exception report attached to its certification
following a review of the Mortgage Files (an “Exception Report”). In addition, upon the
discovery by the Depositor, the Master Servicer or the Servicer (or upon receipt by a
Responsible Officer of the Indenture Trustee of written notification of such breach) of a
breach of any of the representations and warranties made by the Originator in the
Assignment Agreement in respect of any Mortgage Loan which materially adversely affects
such Mortgage Loan or the interests of the related Noteholders in such Mortgage Loan, the
party discovering such breach shall give prompt written notice to the other parties to
this Agreement.

 

 

          The Depositor and the Issuing Entity intend that the assignment and transfer herein
contemplated constitute a sale of the Mortgage Loans, the related Mortgage Notes and the
related documents, conveying good title thereto free and clear of any liens and
encumbrances, from the Depositor to the Issuing Entity for the benefit of the
Noteholders and that such property not be part of the Depositor’s estate or property of
the Depositor in the event of any insolvency by the Depositor. In the event that such
conveyance is deemed to be, or to be made as security for, a loan, the parties intend
that the Depositor shall be deemed to have granted and the Depositor does hereby grant
to the Issuing Entity a first priority perfected security interest in all of the
Depositor’s right, title and interest in and to the Mortgage Loans, the related Mortgage
Notes and the related documents, and that this Agreement shall constitute a security
agreement under applicable law.

          Section 2.03. Repurchase or Substitution of Mortgage Loans by the Originator.

          (a) Upon discovery or receipt of written notice of any materially defective
document in, or that a document is missing from, a Mortgage File or of the breach by the
Originator of any representation, warranty or covenant under the Purchase Agreement in
respect of any Mortgage Loan which materially adversely affects the value of such
Mortgage Loan or the interest therein of the Noteholders, the Custodian, on behalf of
the Indenture Trustee, shall promptly notify the Originator and the Seller of such
defect, missing document (via the Exception Report with respect to a defect, or missing
document) and the party discovering the breach shall give prompt written notice of the
breach to the other parties to this Agreement and the Originator and the Securities
Administrator shall request that the Originator deliver such missing document or cure
such defect or that the Originator cure such breach within 30 days from the date the
Originator was notified of such missing document, defect or breach, and if the
Originator does not deliver such missing document or cure such defect or if the
Originator does not cure such breach in all material respects during such period, the
Securities Administrator, on behalf of the Indenture Trustee shall notify the Sponsor
and the Originator of the Originator’s obligation to repurchase such Mortgage Loan from
the Trust on or prior to the Determination Date following the expiration of such 30 day
period (subject to Section 2.03(e)); provided that, in connection with any such breach
that could not reasonably have been cured within such 30 day period, if the Originator
has commenced to cure such breach within such 30 day period, the Originator shall be
permitted to proceed thereafter diligently and expeditiously to cure the same within any
additional period provided under the Assignment Agreement. Notwithstanding the
foregoing, to the extent the price required to be paid by the Originator for a
repurchased Mortgage Loan is less than the Purchase Price, the Seller, as required
pursuant to the terms of the Assignment Agreement, shall pay the difference between that
amount and the Purchase Price.

          The Purchase Price for the repurchased Mortgage Loan shall be remitted to the
Servicer for deposit in the Collection Account, and the Custodian, on behalf of the
Indenture Trustee and upon receipt of written certification (in the form of a Request
for Release hereto as Exhibit C) from the Servicer of such deposit, shall release to the
Originator the related Mortgage File and the Indenture Trustee shall execute and deliver
such instruments of transfer or assignment, in each case without recourse,
representation or warranty, as the Originator shall furnish to it and as shall be
necessary to vest in the Originator any Mortgage Loan released pursuant hereto and the
Indenture Trustee and the Custodian shall have no further responsibility with regard to
such Mortgage File (it being understood that neither the Indenture Trustee nor the
Custodian shall have any responsibility for determining the sufficiency of such
assignment for its intended purpose). In lieu of repurchasing any such Mortgage Loan as
provided above, the Originator may cause such Mortgage Loan to be removed from the Trust
(in which case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner and subject to the limitations set
forth in Section 2.03(d); provided, however, the Originator may not substitute for any
Mortgage Loan which breaches a representation or warranty regarding abusive or predatory
lending laws. It is understood and agreed that the obligation of the Originator to cure
or to repurchase (or to substitute for) any Mortgage Loan as to which a document is
missing, a material defect in a constituent document exists or as to which such a breach
has occurred and is continuing shall constitute the sole remedy (other than any
indemnification obligation of the Originator pursuant to the Purchase Agreement) against
the Originator respecting such omission, defect or breach available to the Indenture
Trustee on behalf of the Noteholders.

          In the event that the Originator fails to comply with any of the terms of the
Purchase Agreement, the Indenture Trustee, upon notice thereof from the Securities
Administrator or the Master Servicer and on behalf of the Noteholders, shall enforce the
obligations of the Originator to the extent such failure has a materially adverse effect
on the value of such Mortgage Loan or the interest therein of the Noteholders.

          (b) Within 90 days of the earlier of discovery by the Servicer or receipt of notice
by the Servicer of the breach of any representation, warranty or covenant of the
Servicer set forth in Section 2.05 which materially and adversely affects the interests
of the Noteholders in any Mortgage Loan, the Servicer shall cure such breach in all
material respects. Within 90 days of the earlier of discovery by the Master Servicer or
receipt of notice by the Master Servicer of the breach of any representation, warranty
or covenant of the Servicer set forth in Section 2.04 which materially and adversely
affects the interests of the Noteholders in any Mortgage Loan, the Master Servicer shall
cure such breach in all material respects.

          (c) As to any Deleted Mortgage Loan for which the Originator substitutes a
Qualified Substitute Mortgage Loan or Loans, such substitution shall be effected by the
Originator delivering to the Custodian on behalf of the Indenture Trustee, for such
Qualified Substitute Mortgage Loan or Loans, the Mortgage Note, the Mortgage and the
Assignment to the Indenture Trustee, and such other documents and agreements, with all
necessary endorsements thereon, as are required by Section 2.01, together with an
Officers’ Certificate providing that each such Qualified Substitute Mortgage Loan
satisfies the definition thereof and specifying the Substitution Adjustment (as
described below), if any, in connection with such substitution. The Custodian, on behalf
of the Indenture Trustee, shall acknowledge receipt for such Qualified Substitute
Mortgage Loan or Loans and, within 45 days thereafter, shall review such documents as
specified in Section 2.02 and deliver to the Depositor, the Indenture Trustee, the
Seller and the Servicer, with respect to such Qualified Substitute Mortgage Loan or
Loans, a certification substantially in the form attached hereto as Exhibit D-1, with
any applicable exceptions noted thereon. Within one year of the date of substitution,
the Custodian, on behalf of the Indenture Trustee, shall deliver to the Depositor, the
Indenture Trustee, the Seller and the Servicer a certification substantially in the form
of Exhibit D-2 hereto with respect to such Qualified Substitute Mortgage Loan or Loans,
with any applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part of the
Trust and will be retained by the Originator. For the month of substitution, payments to
Noteholders will reflect the collections and recoveries in respect of such Deleted
Mortgage Loan in the Due Period preceding the month of substitution and the Originator
shall thereafter be entitled to retain all amounts subsequently received in respect of
such Deleted Mortgage Loan. The Servicer shall give or cause to be given written notice
to the Securities Administrator, who shall forward such notice to the Noteholders, that
such substitution has taken place, shall amend the Mortgage Loan Schedule to reflect the
removal of such Deleted Mortgage Loan from the terms of this Agreement and the
substitution of the Qualified Substitute Mortgage Loan or Loans and shall deliver a copy
of such amended Mortgage Loan Schedule to the Indenture Trustee, the Securities
Administrator, and the Custodian. Upon such substitution by the Originator such
Qualified Substitute Mortgage Loan or Loans shall constitute part of the Mortgage Pool
and shall be subject in all respects to the terms of this Agreement and the Assignment
Agreement, including all applicable representations and warranties thereof included in
the Assignment Agreement as of the date of substitution.

 

 

          (d) For any month in which the Originator substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer will
determine the amount (the “Substitution Adjustment”), if any, by which the aggregate
Purchase Price of all such Deleted Mortgage Loans exceeds the aggregate, as to each such
Qualified Substitute Mortgage Loan, of the Stated Principal Balance thereof as of the
date of substitution, together with one month’s interest on such Stated Principal
Balance at the applicable Mortgage Rate. On the date of such substitution, the
Originator will deliver or cause to be delivered to the Servicer for deposit in the
Collection Account an amount equal to the Substitution Adjustment, if any, and
Custodian, on behalf of the Indenture Trustee, upon receipt of the related Qualified
Substitute Mortgage Loan or Loans and certification by the Servicer of such deposit,
shall release (or shall cause the Custodian to release) to the Originator the related
Mortgage File or Files and the Indenture Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, representation or
warranty, as the Originator shall deliver to it and as shall be necessary to vest
therein any Deleted Mortgage Loan released pursuant hereto.

          Section 2.04. Representations and Warranties Regarding the Master Servicer.

          The Master Servicer represents and warrants to the Issuing Entity, the Depositor,
the Seller, the Sponsor and the Indenture Trustee for the benefit of the Noteholders, as
follows:

          (i) The Master Servicer is a national banking association duly organized,
validly existing and in good standing under the laws of the United States of
America and has the corporate power to own its assets and to transact the
business in which it is currently engaged. The Master Servicer is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure to so qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the Master Servicer or
the validity or enforceability of this Agreement;

          (ii) The Master Servicer has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated under
this Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement. When executed and
delivered, this Agreement will constitute the legal, valid and binding obligation
of the Master Servicer enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors’ rights generally and by the
availability of equitable remedies;

          (iii) The Master Servicer is not required to obtain the consent of any other
Person or any consent, license, approval or authorization from, or registration
or declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except for such consent, license, approval or authorization, or
registration or declaration, as shall have been obtained or filed, as the case
may be;

          (iv) The execution and delivery of this Agreement and the performance of the
transactions contemplated hereby by the Master Servicer will not violate any
provision of any existing law or regulation or any order or decree of any court
applicable to the Master Servicer or any provision of the charter or bylaws of
the Master Servicer, or constitute a material breach of any mortgage, indenture,
contract or other agreement to which the Master Servicer is a party or by which
the Master Servicer may be bound; and

          (v) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending (other than litigation with
respect to which pleadings or documents have been filed with a court, but not
served on the Master Servicer), or to the knowledge of the Master Servicer
threatened, against the Master Servicer or any of its properties or with respect
to this Agreement or the Notes or the Certificates which, to the knowledge of the
Master Servicer, has a reasonable likelihood of resulting in a material adverse
effect on the transactions contemplated by this Agreement.

     The foregoing representations and warranties shall survive any termination of the
Master Servicer hereunder.

          Section 2.05. Representations, Warranties and Covenants of the Servicer.

          The Servicer hereby represents, warrants and covenants to the Issuing Entity and
for the benefit of the Indenture Trustee, as pledgee of the Mortgage Loans and the
Noteholders, the Master Servicer, the Securities Administrator and to the Depositor,
that as of the Closing Date or as of such date specifically provided herein:

          (i) The Servicer is duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its formation and has all licenses
necessary to carry on its business as now being conducted and is licensed,
qualified and in good standing in the states where the Mortgaged Property is
located (or is otherwise exempt under applicable law from such qualification) if
the laws of such state require licensing or qualification in order to conduct
business of the type conducted by the Servicer or to ensure the enforceability or
validity of each Mortgage Loan; the Servicer has the power and authority to
execute and deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all instruments
of transfer to be delivered pursuant to this Agreement) and all documents and
instruments contemplated hereby which are executed and delivered by the Servicer
and the consummation of the transactions contemplated hereby have been duly and
validly authorized; this Agreement and all documents and instruments contemplated
hereby which are executed and delivered by the Servicer, assuming due
authorization, execution and delivery by the other parties hereto, evidences the
valid, binding and enforceable obligation of the Servicer, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally; and all requisite
corporate action has been taken by the Servicer to make this Agreement and all
documents and instruments contemplated hereby which are executed and delivered by
the Servicer valid and binding upon the Servicer in accordance with its terms;

          (ii) The consummation of the transactions contemplated by this Agreement are
in the ordinary course of business of the Servicer and will not result in the
material breach of any term or provision of the certificate of formation or
limited liability company agreement of the Servicer or result in the breach of
any term or provision of, or conflict with or constitute a default under or
result in the acceleration of any obligation under, any agreement, indenture or
loan or credit agreement or other instrument to which the Servicer or its
property is subject, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Servicer or its property is subject;

 

 

          (iii) The execution and delivery of this Agreement by the Servicer and the
performance and compliance with its obligations and covenants hereunder do not
require the consent or approval of any governmental authority or, if such consent
or approval is required, it has been obtained;

          (iv) [Reserved];

          (v) The Servicer does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Agreement;

          (vi) There is no action, suit, proceeding or investigation pending or, to
its knowledge, threatened against the Servicer that, either individually or in
the aggregate, (A) may result in any change in the business, operations,
financial condition, properties or assets of the Servicer that might prohibit or
materially and adversely affect the performance by such Servicer of its
obligations under, or the validity or enforceability of, this Agreement, or (B)
may result in any material impairment of the right or ability of the Servicer to
carry on its business substantially as now conducted, or (C) would draw into
question the validity or enforceability of this Agreement or of any action taken
or to be taken in connection with the obligations of the Servicer contemplated
herein, or (D) would otherwise be likely to impair materially the ability of the
Servicer to perform under the terms of this Agreement;

          (vii) Neither this Agreement nor any information, certificate of an officer,
statement furnished in writing or any report delivered to the Securities
Administrator or Indenture Trustee in connection with the transactions
contemplated hereby contains any untrue statement of a material fact;

          (viii) The Servicer will not waive any Prepayment Charge unless it is waived
in accordance with the standard set forth in Section 3.01; and

          (ix) The Servicer has accurately and fully reported, and will continue to
accurately and fully report on a monthly basis, its borrower credit files for the
Mortgage Loans to each of the three national credit repositories in a timely
manner.

          The foregoing representations and warranties shall survive any termination of the
Servicer hereunder.

          It is understood and agreed that the representations, warranties and covenants set
forth in this Section 2.05 shall survive delivery of the Mortgage Files to the Indenture
Trustee and shall inure to the benefit of the Indenture Trustee, the Depositor, the
Master Servicer, the Securities Administrator, the Noteholders and the Holders of the
Certificates. Upon discovery by any of the Depositor, the Servicer, the Master Servicer
or the Indenture Trustee of a breach of any of the foregoing representations, warranties
and covenants which materially and adversely affects the value of any Mortgage Loan,
Prepayment Charge or the interests therein of the Noteholders, the party discovering
such breach shall give prompt written notice (but in no event later than two Business
Days following such discovery) to the Servicer and the Indenture Trustee.
Notwithstanding the foregoing, within 90 days of the earlier of discovery by the
Servicer or receipt of notice by the Servicer of the breach of the representation or
covenant of the Servicer set forth in Section 2.05(viii) above which materially and
adversely affects the interests of the Holders of the Owner Trust Certificates in any
Prepayment Charge, the Servicer must pay the amount of such waived Prepayment Charge,
for the benefit of the Holders of the Owner Trust Certificates, by depositing such
amount into the Collection Account. The foregoing shall not, however, limit any remedies
available to the Noteholders, the Holders of the Certificates, the Depositor or the
Indenture Trustee on behalf of the Noteholders and, pursuant to the Assignment Agreement
respecting a breach of the representations, warranties and covenants of the Originator.

          Section 2.06. Existence.

          The Issuing Entity will keep in full effect its existence, rights and franchises as
a statutory trust under the laws of the State of Delaware (unless it becomes, or any
successor Issuing Entity hereunder is or becomes, organized under the laws of any other
state or of the United States of America, in which case the Issuing Entity will keep in
full effect its existence, rights and franchises under the laws of such other
jurisdiction) and will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement.

ARTICLE III

ADMINISTRATION ANDSERVICING OF MORTGAGE LOANS

          Section 3.01. Servicer to Act as Servicer.

          The Servicer shall service and administer the Mortgage Loans on behalf of the Trust
and in the best interests of and for the benefit of the Noteholders (as determined by
the Servicer in its reasonable judgment) in accordance with the terms of this Agreement
and the Mortgage Loans and, to the extent consistent with such terms, in the same manner
in which it services and administers similar mortgage loans for its own portfolio,
giving due consideration to customary and usual standards of practice of mortgage
lenders and loan servicers administering similar mortgage loans but without regard to:

          (i) any relationship that the Servicer, any Sub-Servicer or any Affiliate of
the Servicer or any Sub-Servicer may have with the related Mortgagor;

          (ii) the ownership or non-ownership of any Note by the Servicer or any
Affiliate of the Servicer;

          (iii) the Servicer’s obligation to make Advances or Servicing Advances; or

          (iv) the Servicer’s or any Sub-Servicer’s right to receive compensation for
its services hereunder or with respect to any particular transaction.

          To the extent consistent with the foregoing, the Servicer (a) shall seek to
maximize the timely and complete recovery of principal and interest on the Mortgage
Notes and (b) shall waive (or permit a Sub-Servicer to waive) a Prepayment Charge only
under the following circumstances: (i) such waiver is standard and customary in
servicing similar Mortgage Loans, (ii) such waiver relates to a default or a reasonably
foreseeable default and would, in the reasonable judgment of the Servicer, maximize
recovery of total proceeds taking into account the value of such Prepayment Charge and
the related Mortgage Loan, (iii) the collection of such Prepayment Charge would be in
violation of applicable laws or (iv) such waiver is in accordance with the Servicer’s
internal policies. If a Prepayment Charge is waived as permitted by meeting the standard
described in clause (iii) above, then the Servicer shall make commercially reasonable
efforts to enforce the Indenture Trustee’s rights under the Purchase Agreement including
the obligation of the Originator to pay the amount of such waived Prepayment Charge to
the Servicer for deposit in the Collection Account for the benefit of the Holders of the
Owner Trust Certificates. If the Servicer makes a good faith determination, as evidenced
by an Officer’s Certificate delivered by the Servicer to the Indenture Trustee and the
Master Servicer, that the Servicer’s efforts are not reasonably expected to be
successful in enforcing such rights, it shall notify the Indenture Trustee and the
Master Servicer of such failure, and the Master Servicer shall notify the Originator of
its obligation under the Purchase Agreement to pay to the Servicer the amount of such
waived Prepayment Charge. If a Prepayment Charge is waived as permitted by meeting the
standard described in clause (iv) above, then the Servicer shall deposit the amount of
such waived Prepayment Charge in the Collection Account for the benefit of the Holders
of the Owner Trust Certificates.

 

 

          Subject only to the above-described servicing standards and the terms of this
Agreement and of the Mortgage Loans, the Servicer shall have full power and authority,
acting alone or through Sub-Servicers as provided in Section 3.02, to do or cause to be
done any and all things in connection with such servicing and administration which it
may deem necessary or desirable. Without limiting the generality of the foregoing, the
Servicer, in the name of the Trust, is hereby authorized and empowered by the Indenture
Trustee when the Servicer believes it appropriate in its best judgment in accordance
with the Servicing Standard, to execute and deliver, on behalf of the Trust, the Issuing
Entity, the Noteholders and the Indenture Trustee, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Mortgage Loans and the Mortgaged Properties
and to institute foreclosure proceedings or obtain a deed-in-lieu of foreclosure so as
to convert the ownership of such properties, and to hold or cause to be held title to
such properties, on behalf of the Indenture Trustee and the Noteholders. The Servicer
shall service and administer the Mortgage Loans in accordance with applicable state and
federal law and shall provide to the Mortgagors any reports required to be provided to
them thereby. The Servicer shall also comply in the performance of this Agreement with
all reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.17, within five (5) days of the Closing Date, the
Indenture Trustee shall execute and furnish to the Servicer and any Sub-Servicer any
limited powers of attorney in the form of Exhibit F hereto and other documents necessary
or appropriate to enable the Servicer or any Sub-Servicer to carry out their servicing
and administrative duties hereunder; provided, such limited powers of attorney or other
documents shall be prepared by the Servicer and submitted to the Indenture Trustee for
execution. The Indenture Trustee shall not be liable for the actions by the Servicer or
any Sub-Servicers under such powers of attorney and shall be indemnified by the Servicer
(from its own funds without any right of reimbursement from the Collection Account), for
any costs, liabilities or expenses incurred by the Indenture Trustee in connection with
the use or misuse of such powers of attorney.

          The Servicer further is hereby authorized and empowered, on behalf of the
Noteholders and the Indenture Trustee, in its own name or in the name of the
Sub-Servicer, when the Servicer or the Sub-Servicer, as the case may be, believes it is
appropriate in its best judgment to register any Mortgage Loan on the MERS® System, or
cause the removal from the registration of any Mortgage Loan on the MERS® System, to
execute and deliver, on behalf of the Indenture Trustee and the Noteholders or any of
them, any and all instruments of assignment and other comparable instruments with
respect to such assignment or re-recording of a Mortgage in the name of MERS, solely as
nominee for the Indenture Trustee and its successors and assigns. Any reasonable
expenses incurred in connection with the actions described in the preceding sentence or
as a result of MERS discontinuing or becoming unable to continue operations in
connection with the MERS® System, shall be reimbursable to the Servicer by withdrawal
from the Collection Account pursuant to Section 3.11.

          Subject to Section 3.09 hereof, in accordance with the standards of the preceding
paragraph, the Servicer, on escrowed accounts, shall advance or cause to be advanced
funds as necessary for the purpose of effecting the payment of taxes and assessments on
the Mortgaged Properties, which advances shall be Servicing Advances reimbursable in the
first instance from related collections from the Mortgagors pursuant to Section 3.09,
and further as provided in Section 3.11. Any cost incurred by the Servicer or by
Sub-Servicers in effecting the payment of taxes and assessments on a Mortgaged Property
shall not, for the purpose of calculating payments to Noteholders, be added to the
unpaid Stated Principal Balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit.

          Notwithstanding anything in this Agreement to the contrary, the Servicer may not
make any future advances with respect to a Mortgage Loan (except as provided in Section
4.01) and the Servicer shall not permit any modification with respect to any Mortgage
Loan that would change the Mortgage Rate, reduce or increase the Stated Principal
Balance (except for reductions resulting from actual payments of principal) or change
the final maturity date on such Mortgage Loan, (unless, in any such case, as provided in
Section 3.07, the Mortgagor is in default with respect to the Mortgage Loan or such
default is, in the judgment of the Servicer, reasonably foreseeable). In addition and
notwithstanding anything in this Agreement to the contrary, neither the Servicer nor the
Indenture Trustee shall, under any circumstance, be permitted to sell any Mortgage Loan
(other than with respect to the exercise of an optional redemption pursuant to Section
8.07 of the Indenture or the repurchase of a Mortgage Loan pursuant to Section 2.03).

          Section 3.02. Sub-Servicing Agreements Between Servicer and Sub-Servicers.

          (a) The Servicer may enter into Sub-Servicing Agreements with Sub-Servicers, which
may be Affiliates of the Servicer, for the servicing and administration of the Mortgage
Loans; provided, however, such sub-servicing arrangement and the terms of the related
Sub-Servicing Agreement must provide for the servicing of the Mortgage Loans in a manner
consistent with the servicing arrangement contemplated hereunder and in accordance with
the Servicing Standard. The Master Servicer is hereby authorized to acknowledge, at the
request of the Servicer, any Sub-Servicing Agreement. No such acknowledgment shall be
deemed to imply that the Master Servicer has consented to any such Sub-Servicing
Agreement, has passed upon whether such Sub-Servicing Agreement meets the requirements
applicable to Sub-Servicing Agreements set forth in this Agreement or has passed upon
whether such Sub-Servicing Agreement is otherwise permitted under this Agreement.

          Each Sub-Servicer shall be (i) authorized to transact business in the state or
states where the related Mortgaged Properties it is to service are situated, if and to
the extent required by applicable law to enable the Sub-Servicer to perform its
obligations hereunder and under the Sub-Servicing Agreement and (ii) a Freddie Mac or
Fannie Mae approved mortgage servicer. Each Sub-Servicing Agreement must impose on the
Sub-Servicer requirements conforming to the provisions set forth in Section 3.08 and
provide for servicing of the Mortgage Loans consistent with the terms of this Agreement.
The Servicer will examine each Sub-Servicing Agreement and will be familiar with the
terms thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. Any variation in any Sub-Servicing Agreements
from the provisions set forth in Section 3.08 relating to insurance or priority
requirements of Sub-Servicing Accounts, or credits and charges to the Sub-Servicing
Accounts or the timing and amount of remittances by the Sub-Servicers to the Servicer,
are conclusively deemed to be inconsistent with this Agreement and therefore prohibited.
The Servicer shall deliver to the Master Servicer copies of all Sub-Servicing
Agreements, and any amendments or modifications thereof, promptly upon the Servicer’s
execution and delivery of such instruments.

 

 

          (b) As part of its servicing activities hereunder, the Servicer, for the benefit of
the Indenture Trustee and the Noteholders, shall enforce the obligations of each
Sub-Servicer under the related Sub-Servicing Agreement, including, without limitation,
any obligation to make advances in respect of delinquent payments as required by a
Sub-Servicing Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing Agreements, and the pursuit of other
appropriate remedies, shall be in such form and carried out to such an extent and at
such time as the Servicer, in its good faith business judgment, would require were it
the owner of the related Mortgage Loans. The Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a general
recovery resulting from such enforcement, to the extent, if any, that such recovery
exceeds all amounts due in respect of the related Mortgage Loans, or (ii) from a
specific recovery of costs, expenses or attorneys’ fees against the party against whom
such enforcement is directed.

          Section 3.03. Successor Sub-Servicers.

          The Servicer shall be entitled to terminate any Sub-Servicing Agreement and the
rights and obligations of any Sub-Servicer pursuant to any Sub-Servicing Agreement in
accordance with the terms and conditions of such Sub-Servicing Agreement. In the event
of termination of any Sub-Servicer, all servicing obligations of such Sub-Servicer shall
be assumed simultaneously by the Servicer without any act or deed on the part of such
Sub-Servicer or the Servicer, and the Servicer either shall service directly the related
Mortgage Loans or shall enter into a Sub-Servicing Agreement with a successor
Sub-Servicer which qualifies under Section 3.02.

          Any Sub-Servicing Agreement shall include the provision that such agreement may be
immediately terminated by the Servicer or the Successor Servicer without fee, in
accordance with the terms of this Agreement.

          Section 3.04. Liability of the Servicer.

          Notwithstanding any Sub-Servicing Agreement or the provisions of this Agreement
relating to agreements or arrangements between the Servicer and a Sub-Servicer or
reference to actions taken through a Sub-Servicer or otherwise, the Servicer shall
remain obligated and primarily liable to the Indenture Trustee and the Noteholders for
the servicing and administering of the Mortgage Loans in accordance with the provisions
of Section 3.01 without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or arrangements or by virtue of indemnification from the
Sub-Servicer and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Mortgage Loans. The Servicer shall
be entitled to enter into any agreement with a Sub-Servicer for indemnification of the
Servicer by such Sub-Servicer and nothing contained in this Agreement shall be deemed to
limit or modify such indemnification.

          Section 3.05. No Contractual Relationship Between Sub-Servicers, the
Indenture Trustee or the Noteholders.

          Any Sub-Servicing Agreement that may be entered into and any transactions or
services relating to the Mortgage Loans involving a Sub-Servicer in its capacity as such
shall be deemed to be between the Sub-Servicer and the Servicer alone, and the Indenture
Trustee, the Master Servicer, the Securities Administrator or Noteholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Sub-Servicer except as set forth in Section 3.06. The
Servicer shall be solely liable for all fees owed by it to any Sub-Servicer,
irrespective of whether the Servicer’s compensation pursuant to this Agreement is
sufficient to pay such fees.

          Section 3.06. Assumption or Termination of Sub-Servicing Agreements by
the Successor Servicer.

          In the event the Servicer shall for any reason no longer be the servicer (including
by reason of the occurrence of a Servicer Event of Termination), the Successor Servicer
shall thereupon assume all of the rights and obligations of the Servicer under each
Sub-Servicing Agreement that the Servicer may have entered into, unless the Successor
Servicer elects to terminate any Sub-Servicing Agreement in accordance with its terms as
provided in Section 3.03. Upon such assumption, the Successor Servicer shall be deemed,
subject to Section 3.03, to have assumed all of the departing Servicer’s interest
therein and to have replaced the departing Servicer as a party to each Sub-Servicing
Agreement to the same extent as if each Sub-Servicing Agreement had been assigned to the
assuming party, except that (i) the departing Servicer shall not thereby be relieved of
any liability or obligations under any Sub-Servicing Agreement that arose before it
ceased to be the Servicer and (ii) the Successor Servicer shall not be deemed to have
assumed any liability or obligation of the Servicer that arose before it ceased to be
the Servicer.

          The Servicer at its expense shall, upon request of the Successor Servicer, deliver
to the assuming party all documents and records relating to each Sub-Servicing Agreement
and the Mortgage Loans then being serviced and an accounting of amounts collected and
held by or on behalf of it, and otherwise use its best efforts to effect the orderly and
efficient transfer of the Sub-Servicing Agreements to the assuming party. All Servicing
Transfer Costs shall be paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs, and if such predecessor Servicer defaults in its obligation
to pay such costs, such costs shall be paid by Successor Servicer (in which case the
Successor Servicer shall be entitled to reimbursement therefor from the assets of the
Trust).

          Section 3.07. Collection of Certain Mortgage Loan Payments.

          The Servicer shall make reasonable efforts, in accordance with the Servicing
Standard, to collect all payments called for under the terms and provisions of the
Mortgage Loans and the provisions of any applicable insurance policies provided to the
Servicer. Consistent with the foregoing, the Servicer may in its discretion (i) waive
any late payment charge or, if applicable, any penalty interest, or any provisions of
any Mortgage Loan requiring the related Mortgagor to submit to mandatory arbitration
with respect to disputes arising thereunder or (ii) extend the due dates for the Monthly
Payments due on a Mortgage Note for a period of not greater than 180 days; provided,
however, that any extension pursuant to clause (ii) above shall not affect the
amortization schedule of any Mortgage Loan for purposes of any computation hereunder,
except as provided below. In the event of any such arrangement pursuant to clause (ii)
above, the Servicer shall make timely Advances on such Mortgage Loan during such
extension pursuant to Section 4.01 and in accordance with the amortization schedule of
such Mortgage Loan without modification thereof by reason of such arrangement.
Notwithstanding the foregoing, in the event that any Mortgage Loan is in default or, in
the judgment of the Servicer, such default is reasonably foreseeable, the Servicer,
consistent with the standards set forth in Section 3.01, may also waive, modify or vary
any term of such Mortgage Loan (including modifications that would change the Mortgage
Rate, forgive the payment of principal or interest or extend the final maturity date of
such Mortgage Loan), accept payment from the related Mortgagor of an amount less than
the Stated Principal Balance in final satisfaction of such Mortgage Loan, or consent to
the postponement of strict compliance with any such term or otherwise grant indulgence
to any Mortgagor (any and all such waivers, modifications, variances, forgiveness of
principal or interest, postponements, or indulgences collectively referred to herein as
“forbearance”). The Servicer’s analysis supporting any forbearance and the conclusion
that any forbearance meets the standards of Section 3.01 shall be reflected in writing
in the Mortgage File.

 

 

          Section 3.08. Sub-Servicing Accounts.

          In those cases where a Sub-Servicer is servicing a Mortgage Loan pursuant to a Sub-
Servicing Agreement, the Sub-Servicer will be required to establish and maintain one or
more accounts (collectively, the “Sub-Servicing Account”). The Sub-Servicing Account
shall be an Eligible Account and shall comply with all requirements of this Agreement
relating to the Collection Account. The Sub-Servicer shall deposit in the clearing
account in which it customarily deposits payments and collections on mortgage loans in
connection with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Sub-Servicer’s receipt thereof, all proceeds of
Mortgage Loans received by the Sub-Servicer less its servicing compensation to the
extent permitted by the Sub-Servicing Agreement, and shall thereafter deposit such
amounts in the Sub-Servicing Account, in no event more than two Business Days after the
receipt of such amounts. The Sub-Servicer shall thereafter deposit such proceeds in the
Collection Account or remit such proceeds to the Servicer for deposit in the Collection
Account not later than two Business Days after the deposit of such amounts in the
Sub-Servicing Account. For purposes of this Agreement, the Servicer shall be deemed to
have received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.

          Section 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.

          To the extent required by the related Mortgage Note, the Servicer shall establish
and maintain, or cause to be established and maintained, one or more accounts (the
“Escrow Accounts”), into which all Escrow Payments shall be deposited and retained.
Escrow Accounts shall be Eligible Accounts. The Servicer shall deposit in the clearing
account in which it customarily deposits payments and collections on mortgage loans in
connection with its mortgage loan servicing activities, all Escrow Payments collected on
account of the Mortgage Loans and shall deposit in the Escrow Accounts, in no event more
than two Business Days after the receipt of such Escrow Payments, all Escrow Payments
collected on account of the Mortgage Loans for the purpose of effecting the payment of
any such items as required under the terms of this Agreement. Withdrawals of amounts
from an Escrow Account may be made only to (i) effect payment of taxes, assessments,
hazard insurance premiums, and comparable items in a manner and at a time that assures
that the lien priority of the Mortgage is not jeopardized (or, with respect to the
payment of taxes, in a manner and at a time that avoids the loss of the Mortgaged
Property due to a tax sale or the foreclosure as a result of a tax lien); (ii) reimburse
the Servicer (or a Sub-Servicer to the extent provided in the related Sub-Servicing
Agreement) out of related collections for any Servicing Advances made pursuant to
Section 3.01 (with respect to taxes and assessments) and Section 3.14 (with respect to
hazard insurance); (iii) refund to Mortgagors any sums as may be determined to be
overages; (iv) pay interest, if required and as described below, to Mortgagors on
balances in the Escrow Account; or (v) clear and terminate the Escrow Account at the
termination of the Servicer’s obligations and responsibilities in respect of the
Mortgage Loans under this Agreement in accordance with Section 8.07 of the Indenture. In
the event the Servicer shall deposit in a Escrow Account any amount not required to be
deposited therein, it may at any time withdraw such amount from such Escrow Account, any
provision herein to the contrary notwithstanding. The Servicer will be responsible for
the administration of the Escrow Accounts and will be obligated to make Servicing
Advances to such accounts when and as necessary to avoid the lapse of insurance coverage
on the Mortgaged Property, or which the Servicer knows, or in the exercise of the
required standard of care of the Servicer hereunder should know, is necessary to avoid
the loss of the Mortgaged Property due to a tax sale or the foreclosure as a result of a
tax lien. If any such payment has not been made and the Servicer receives notice of a
tax lien with respect to the Mortgage being imposed, the Servicer will, within 10
Business Days of receipt of such notice, advance or cause to be advanced funds necessary
to discharge such lien on the Mortgaged Property. As part of its servicing duties, the
Servicer or any Sub-Servicers shall pay to the Mortgagors interest on funds in the
Escrow Accounts, to the extent required by law and, to the extent that interest earned
on funds in the Escrow Accounts is insufficient, to pay such interest from its or their
own funds, without any reimbursement therefor. The Servicer may pay to itself any excess
interest on funds in the Escrow Accounts, to the extent such action is in conformity
with the Servicing Standard, is permitted by law and such amounts are not required to be
paid to Mortgagors or used for any of the other purposes set forth above.

          Section 3.10. Collection Account and Note Account.

          (a) On behalf of the Trust, the Servicer shall establish and maintain, or cause to
be established and maintained, one or more accounts (such account or accounts, the
“Collection Account”), held in trust for the benefit of the Trust, the Indenture Trustee
and the Noteholders. On behalf of the Trust, the Servicer shall deposit or cause to be
deposited in the Collection Account, in no event more than two Business Days after the
Servicer’s receipt thereof, as and when received or as otherwise required hereunder, the
following payments and collections received or made by it subsequent to the Cut-off Date
(other than in respect of principal or interest on the Mortgage Loans due on or before
the Cut-off Date) or payments (other than Principal Prepayments) received by it on or
prior to the Cut-off Date but allocable to a Due Period subsequent thereto:

          (i) all payments on account of principal, including Principal Prepayments
(but not Prepayment Charges), on the Mortgage Loans;

          (ii) all payments on account of interest (net of the Servicing Fee) on each
Mortgage Loan;

          (iii) all Insurance Proceeds, Liquidation Proceeds, Subsequent Recoveries
and condemnation proceeds (other than proceeds collected in respect of any
particular REO Property and amounts paid in connection with the redemption of the
Notes pursuant to Section 8.07 of the Indenture) and Subsequent Recoveries;

          (iv) any amounts required to be deposited pursuant to Section 3.12 in
connection with any losses realized on Permitted Investments with respect to
funds held in the Collection Account;

          (v) any amounts required to be deposited by the Servicer pursuant to the
second paragraph of Section 3.14(a) in respect of any blanket policy deductibles;

          (vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with Section 2.03 or Section 8.07 of the Indenture;

          (vii) all amounts required to be deposited in connection with Substitution
Adjustments pursuant to Section 2.03; and

          (viii) all Prepayment Charges collected by the Servicer in connection with
the Principal Prepayment of any of the Mortgage Loans.

 

 

          The foregoing requirements for deposit in the Collection Account shall be
exclusive, it being understood and agreed that, without limiting the generality of the
foregoing, payments in the nature of Servicing Fees, late payment charges, Prepayment
Interest Excess, assumption fees, insufficient funds charges and ancillary income (other
than Prepayment Charges) need not be deposited by the Servicer in the Collection Account
and may be retained by the Servicer as additional compensation. In the event the
Servicer shall deposit in the Collection Account any amount not required to be deposited
therein, it may at any time withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding.

          (b) On behalf of the Trust, the Servicer shall deliver to the Securities
Administrator in immediately available funds for deposit in the Note Account on or
before 2:00 p.m. New York time on the Servicer Remittance Date, that portion of the
Available Funds (calculated without regard to the references in the definition thereof
to amounts that may be withdrawn from the Note Account) for the related Payment Date
then on deposit in the Collection Account, the amount of all Prepayment Charges
collected during the applicable Prepayment Period by the Servicer in connection with the
Principal Prepayment of any of the Mortgage Loans then on deposit in the Collection
Account, the amount of any funds reimbursable to an Advancing Person pursuant to Section
3.29 (unless such amounts are to be remitted in another manner as specified in the
documentation establishing the related Advance Facility).

          (c) Funds in the Collection Account may be invested in Permitted Investments in
accordance with the provisions set forth in Section 3.12. The Servicer shall give notice
to the Securities Administrator of the location of the Collection Account maintained by
it when established and prior to any change thereof. The Securities Administrator shall
give notice to the Servicer, the Master Servicer and the Sponsor of the location of the
Note Account when established and prior to any change thereof.

          (d) Funds held in the Collection Account at any time may be delivered by the
Servicer to the Securities Administrator for deposit in an account (which may be the
Note Account and must satisfy the standards for the Note Account as set forth in the
definition thereof) and for all purposes of this Agreement shall be deemed to be a part
of the Collection Account; provided, however, that the Securities Administrator shall
have the sole authority to withdraw any funds held pursuant to this subsection (d).

          The Securities Administrator shall establish and maintain an Eligible Account (the
“Note Account”) in which the Securities Administrator shall deposit, on the same day as
it is received from the Servicer, each remittance received by the Securities
Administrator with respect to the Mortgage Loans. In the event the Servicer shall
deliver to the Securities Administrator for deposit in the Note Account any amount not
required to be deposited therein, it may at any time request that the Securities
Administrator withdraw such amount from the Note Account and remit to it any such
amount, any provision herein to the contrary notwithstanding. In addition, the Servicer,
with respect to items (i) through (iv) below, shall deliver to the Securities
Administrator from time to time for deposit, and the Securities Administrator, with
respect to items (i) through (iv) below, shall so deposit, in the Note Account:

          (i) any Advances, as required pursuant to Section 4.01;

          (ii) any amounts required to be deposited pursuant to Section 3.23(d) or (f)
in connection with any REO Property;

          (iii) any Compensating Interest to be deposited pursuant to Section 3.24 in
connection with any Prepayment Interest Shortfall; and

          (iv) any amounts required to be paid to the Securities Administrator
pursuant to the Agreement, including, but not limited to Section 3.06 and Section
6.02.

          Section 3.11. Withdrawals from the Collection Account and Note Account.

          (a) The Servicer shall, from time to time, make withdrawals from the Collection
Account for any of the following purposes or as described in Section 4.01:

          (i) to remit to the Securities Administrator for deposit in the Note Account
the amounts required to be so remitted pursuant to Section 3.10(b) or permitted
to be so remitted pursuant to the first sentence of Section 3.10(d);

          (ii) subject to Section 3.16(d), to reimburse the Servicer for (a) any
unreimbursed Advances to the extent of amounts received which represent Late
Collections (net of the related Servicing Fees), Liquidation Proceeds, Insurance
Proceeds and Subsequent Recoveries on Mortgage Loans or REO Properties with
respect to which such Advances were made in accordance with the provisions of
Section 4.01; or (b) without limiting any right of withdrawal set forth in clause
(vi) below, any unreimbursed Advances that, upon a Final Recovery Determination
with respect to such Mortgage Loan, are Nonrecoverable Advances, but only to the
extent that Late Collections (net of the related Servicing Fees), Liquidation
Proceeds and Insurance Proceeds received with respect to such Mortgage Loan are
insufficient to reimburse the Servicer for such unreimbursed Advances;

          (iii) subject to Section 3.16(d), to pay the Servicer or any Sub-Servicer
(a) any unpaid Servicing Fees, (b) any unreimbursed Servicing Advances with
respect to each Mortgage Loan, but only to the extent of any Late Collections,
Liquidation Proceeds and Insurance Proceeds received with respect to such
Mortgage Loan or REO Property, and (c) without limiting any right of withdrawal
set forth in clause (vi) below, any Servicing Advances made with respect to a
Mortgage Loan that, upon a Final Recovery Determination with respect to such
Mortgage Loan are Nonrecoverable Advances, but only to the extent that Late
Collections, Liquidation Proceeds and Insurance Proceeds received with respect to
such Mortgage Loan are insufficient to reimburse the Servicer or any Sub-Servicer
for Servicing Advances;

          (iv) to pay to the Servicer as additional servicing compensation (in
addition to the Servicing Fee) on the Servicer Remittance Date any interest or
investment income earned on funds deposited in the Collection Account;

          (v) to pay itself or the Originator with respect to each Mortgage Loan that
has previously been purchased or replaced pursuant to Section 2.03 all amounts
received thereon subsequent to the date of purchase or substitution, as the case
may be;

          (vi) to reimburse the Servicer for any Advance or Servicing Advance
previously made which the Servicer has determined to be a Nonrecoverable Advance
in accordance with the provisions of Section 4.01;

          (vii) to pay, or to reimburse the Servicer for Servicing Advances in respect
of, expenses incurred in connection with any Mortgage Loan pursuant to Section
3.16(b);

 

 

          (viii) to reimburse the Servicer for expenses incurred by or reimbursable to
the Servicer pursuant to Section 5.03;

          (ix) to pay itself any Prepayment Interest Excess; and

          (x) to clear and terminate the Collection Account.

          The foregoing requirements for withdrawal from the Collection Account shall be
exclusive. In the event the Servicer shall deposit in the Collection Account any amount
not required to be deposited therein, it may at any time withdraw such amount from the
Collection Account, any provision herein to the contrary notwithstanding.

          The Servicer shall keep and maintain separate accounting, on a Mortgage Loan by
Mortgage Loan basis, for the purpose of justifying any withdrawal from the Collection
Account, to the extent held by or on behalf of it, pursuant to subclauses (ii), (iii),
(iv), (v), (vi) and (vii) above. The Servicer shall provide written notification to the
Securities Administrator, on or prior to the next succeeding Servicer Remittance Date,
upon making any withdrawals from the Collection Account pursuant to subclause (vi)
above; provided that an Officers’ Certificate in the form described under Section
4.01(d) shall suffice for such written notification to the Securities Administrator in
respect hereof.

          (b) The Securities Administrator shall, from time to time, make withdrawals from
the Note Account, for any of the following purposes, without priority:

          (i) to make payments in accordance with Section 3.05 of the Indenture;

          (ii) to pay and reimburse itself and the Owner Trustee amounts to which it
or the Owner Trustee is entitled pursuant to Section 6.07 of the Indenture;

          (iii) to clear and terminate the Note Account pursuant to Section 8.07 of
the Indenture;

          (iv) to pay any amounts required to be paid to the Securities Administrator,
Master Servicer, Custodian or the Indenture Trustee pursuant to this Agreement,
including but not limited to funds required to be paid pursuant to Section 2.01,
Section 3.06 and Section 6.02 and Section 3.05 and Section 6.07 of the Indenture;

          (v) to pay to an Advancing Person reimbursements for Advances and/or
Servicing Advances pursuant to Section 3.29; and

          (vi) to pay to the Sponsor on each Payment Date any interest or investment
income earned on funds deposited in the Note Account.

          Section 3.12. Investment of Funds in the Collection Account and the Note Account.

          (a) The Servicer may direct any depository institution maintaining the Collection
Account and any REO Account to invest the funds on deposit in such accounts and the
Sponsor may direct any depository institution maintaining the Note Account to invest the
funds on deposit in such accounts (each such account, for the purposes of this Section
3.12, an “Investment Account”). All investments pursuant to this Section 3.12 shall be
in one or more Permitted Investments bearing interest or sold at a discount, and
maturing, unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such account
pursuant to this Agreement, if a Person other than the Securities Administrator is the
obligor thereon or if such investment is managed or advised by a Person other than the
Securities Administrator or an Affiliate of the Securities Administrator, and (ii) no
later than the date on which such funds are required to be withdrawn from such account
pursuant to this Agreement, if the Securities Administrator is the obligor thereon or if
such investment is managed or advised by the Securities Administrator or any Affiliate
or if the Securities Administrator or any Affiliate of the Securities Administrator is
the Custodian, sub-custodian or administrator. All such Permitted Investments shall be
held to maturity, unless payable on demand. Any investment of funds in an Investment
Account shall be made in the name of the Indenture Trustee (in its capacity as such), or
in the name of a nominee of the Indenture Trustee. The Securities Administrator shall be
entitled to sole possession (except with respect to investment direction of funds held
in the Collection Account, Note Account and any REO Account, and any income and gain
realized thereon) over each such investment, and any certificate or other instrument
evidencing any such investment shall be delivered directly to the Securities
Administrator or its agent, together with any document of transfer necessary to transfer
title to such investment to the Indenture Trustee or its nominee. In the event amounts
on deposit in an Investment Account are at any time invested in a Permitted Investment
payable on demand, the Securities Administrator shall:

     (x) consistent with any notice required to be given thereunder, demand that
payment thereon be made on the last day such Permitted Investment may otherwise
mature hereunder in an amount equal to the lesser of (1) all amounts then payable
thereunder and (2) the amount required to be withdrawn on such date; and

     (y) demand payment of all amounts due thereunder promptly upon determination
by a Responsible Officer of the Securities Administrator that such Permitted
Investment would not constitute a Permitted Investment in respect of funds
thereafter on deposit in the Investment Account.

          (b) All income and gain realized from the investment of funds deposited in the
Collection Account and any REO Account held by or on behalf of the Servicer shall be for
the benefit of the Servicer and shall be subject to its withdrawal in accordance with
Section 3.11 or Section 3.23, as applicable. The Servicer shall deposit in the
Collection Account or any REO Account, as applicable, the amount of any loss of
principal incurred in respect of any such Permitted Investment made with funds in such
Account immediately upon realization of such loss.

          (c) All income and gain realized from the investment of funds deposited in the Note
Account held by or on behalf of the Sponsor shall be for the benefit of the Sponsor and
shall be subject to its withdrawal in accordance with Section 3.11. The Sponsor shall
deposit in the Note Account the amount of any loss of principal incurred in respect of
any such Permitted Investment made with funds in such Account immediately upon
realization of such loss.

          (d) Except as otherwise expressly provided in this Agreement, if any default occurs
in the making of a payment due under any Permitted Investment, or if a default occurs in
any other performance required under any Permitted Investment, the Indenture Trustee may
and, upon the request of the Holders of the 50% of the aggregate Note Balance of the
Notes, shall take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate proceedings.

 

 

          Section 3.13. [Reserved].

          Section 3.14. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity
Coverage.

          (a) The Servicer shall cause to be maintained for each Mortgage Loan hazard
insurance with extended coverage on the Mortgaged Property in an amount which is at
least equal to the lesser of (i) the current Principal Balance of such Mortgage Loan and
(ii) the amount necessary to fully compensate for any damage or loss to the improvements
that are a part of such property on a replacement cost basis, in each case in an amount
not less than such amount as is necessary to avoid the application of any coinsurance
clause contained in the related hazard insurance policy. The Servicer shall also cause
to be maintained hazard insurance with extended coverage on each REO Property in an
amount which is at least equal to the lesser of (i) the maximum insurable value of the
improvements which are a part of such property and (ii) the outstanding Principal
Balance of the related Mortgage Loan at the time it became an REO Property. The Servicer
will comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under any such hazard policies. Any amounts to be collected
by the Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage or amounts to be
released to the Mortgagor in accordance with the procedures that the Servicer would
follow in servicing loans held for its own account, subject to the terms and conditions
of the related Mortgage and Mortgage Note) shall be deposited in the Collection Account,
subject to withdrawal pursuant to Section 3.11, if received in respect of a Mortgage
Loan, or in the REO Account, subject to withdrawal pursuant to Section 3.23, if received
in respect of an REO Property. Any cost incurred by the Servicer in maintaining any such
insurance shall not, for the purpose of calculating payments to Noteholders, be added to
the unpaid Principal Balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit. It is understood and agreed that no earthquake or
other additional insurance is to be required of any Mortgagor other than pursuant to
such applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Mortgaged Property or REO Property is at any
time in an area identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards and flood insurance has been made available, the
Servicer will cause to be maintained a flood insurance policy in respect thereof. Such
flood insurance shall be in an amount equal to the lesser of (i) the unpaid Principal
Balance of the related Mortgage Loan and (ii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance program
(assuming that the area in which such Mortgaged Property is located is participating in
such program).

          In the event that the Servicer shall obtain and maintain a blanket policy insuring
against hazard losses on all of the Mortgage Loans, it shall conclusively be deemed to
have satisfied its obligations as set forth in the first two sentences of this Section
3.14, it being understood and agreed that such policy may contain a deductible clause on
terms substantially equivalent to those commercially available and maintained by
competent servicers, in which case the Servicer shall, in the event that there shall not
have been maintained on the related Mortgaged Property or REO Property a policy
complying with the first two sentences of this Section 3.14, and there shall have been
one or more losses which would have been covered by such policy, deposit to the
Collection Account from its own funds the amount not otherwise payable under the blanket
policy because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the Servicer agrees to prepare and present, on behalf of itself,
the Indenture Trustee and Noteholders, claims under any such blanket policy in a timely
fashion in accordance with the terms of such policy.

          (b) The Servicer shall keep in force during the term of this Agreement a policy or
policies of insurance covering errors and omissions for failure in the performance of
the Servicer’s obligations under this Agreement, which policy or policies shall be in
such form and amount that would meet the requirements of Fannie Mae or Freddie Mac if it
were the purchaser of the Mortgage Loans, unless the Servicer has obtained a waiver of
such requirements from Fannie Mae or Freddie Mac. The Servicer shall also maintain a
fidelity bond in the form and amount that would meet the requirements of Fannie Mae or
Freddie Mac, unless the Servicer has obtained a waiver of such requirements from Fannie
Mae or Freddie Mac. The Servicer shall be deemed to have complied with this provision if
an Affiliate of the Servicer has such errors and omissions and fidelity bond coverage
and, by the terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Servicer. Any such errors and omissions policy and fidelity
bond shall by its terms not be cancelable without thirty days’ prior written notice to
the Master Servicer and the Indenture Trustee. The Servicer shall also cause each
Sub-Servicer to maintain a policy of insurance covering errors and omissions and a
fidelity bond which would meet such requirements.

          Section 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements.

          The Servicer will, to the extent it has knowledge of any conveyance or prospective
conveyance of any Mortgaged Property by any Mortgagor (whether by absolute conveyance or
by contract of sale, and whether or not the Mortgagor remains or is to remain liable
under the Mortgage Note and/or the Mortgage), exercise its rights to accelerate the
maturity of such Mortgage Loan under the “due-on-sale” clause, if any, applicable
thereto; provided, however, that the Servicer shall not be required to take such action
if in its sole business judgment the Servicer believes it is not in the best interests
of the Trust and shall not exercise any such rights if prohibited by law from doing so.
If the Servicer reasonably believes it is unable under applicable law to enforce such
“due-on-sale” clause, or if any of the other conditions set forth in the proviso to the
preceding sentence apply, the Servicer will enter into an assumption and modification
agreement from or with the person to whom such property has been conveyed or is proposed
to be conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, to the extent permitted by applicable state law, the Mortgagor remains liable
thereon. The Servicer is also authorized, to the extent permitted under the related
Mortgage Note, to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such person is
substituted as the Mortgagor and becomes liable under the Mortgage Note, provided that
no such substitution shall be effective unless such person satisfies the current
underwriting criteria of the Servicer for a mortgage loan similar to the related
Mortgage Loan. In connection with any assumption, modification or substitution, the
Servicer shall apply such underwriting standards and follow such practices and
procedures as shall be normal and usual in its general mortgage servicing activities and
as it applies to other mortgage loans owned solely by it. The Servicer shall not take or
enter into any assumption and modification agreement, however, unless (to the extent
practicable in the circumstances) it shall have received confirmation, in writing, of
the continued effectiveness of any applicable hazard insurance policy. Any fee collected
by the Servicer in respect of an assumption, modification or substitution of liability
agreement shall be retained by the Servicer as additional servicing compensation. In
connection with any such assumption, no material term of the Mortgage Note (including
but not limited to the related Mortgage Rate and the amount of the Monthly Payment) may
be amended or modified, except as otherwise required pursuant to the terms thereof. The
Servicer shall notify the Master Servicer and the Indenture Trustee that any such
substitution, modification or assumption agreement has been completed by forwarding to
the Custodian, on behalf of the Indenture Trustee, the executed original of such
substitution, modification or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such Mortgage
File to the same extent as all other documents and instruments constituting a part
thereof.

 

 

          Notwithstanding the foregoing paragraph or any other provision of this Agreement,
the Servicer shall not be deemed to be in default, breach or any other violation of its
obligations hereunder by reason of any assumption of a Mortgage Loan by operation of law
or by the terms of the Mortgage Note or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever. For purposes of this
Section 3.15, the term “assumption” is deemed to also include a sale (of the Mortgaged
Property) subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.

          Section 3.16. Realization Upon Defaulted Mortgage Loans.

          (a) The Servicer shall use its reasonable efforts, consistent with the Servicing
Standard, to foreclose upon or otherwise comparably convert the ownership of properties
securing such of the Mortgage Loans as come into and continue in default and as to which
no satisfactory arrangements can be made for collection of delinquent payments pursuant
to Section 3.07. Title to any such property shall be taken in the name of the Indenture
Trustee or its nominee on behalf of the Noteholders or in the name of the Servicer in
accordance with the Servicer’s customary servicing practices and held for the benefit of
the Trust, subject to applicable law. The Servicer shall be responsible for all costs
and expenses incurred by it in any such proceedings; provided, however, that such costs
and expenses will be recoverable as Servicing Advances by the Servicer as contemplated
in Section 3.11(a) and Section 3.23. The foregoing is subject to the provision that, in
any case in which a Mortgaged Property shall have suffered damage from an Uninsured
Cause, the Servicer shall not be required to expend its own funds toward the restoration
of such property unless it shall determine in its discretion that such restoration will
increase the proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself for such expenses.

          (b) Notwithstanding the foregoing provisions of this Section 3.16 or any other
provision of this Agreement, with respect to any Mortgage Loan as to which the Servicer
has received actual notice of, or has actual knowledge of, the presence of any toxic or
hazardous substance on the related Mortgaged Property, the Servicer shall not, on behalf
of the Indenture Trustee, either (i) obtain title to such Mortgaged Property as a result
of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire possession of, or
take any other action with respect to, such Mortgaged Property, if, as a result of any
such action, the Indenture Trustee, the Trust or the Noteholders would be considered to
hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator”
of such Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time, or any
comparable law, unless the Servicer has also previously determined, based on its
reasonable judgment and a report prepared by a Person who regularly conducts
environmental audits using customary industry standards, that:

          (i) such Mortgaged Property is in compliance with applicable environmental
laws or, if not, that it would be in the best economic interest of the Trust to
take such actions as are necessary to bring the Mortgaged Property into
compliance therewith; and

          (ii) there are no circumstances present at such Mortgaged Property relating
to the use, management or disposal of any hazardous substances, hazardous
materials, hazardous wastes, or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or remediation could be
required under any federal, state or local law or regulation, or that if any such
materials are present for which such action could be required, that it would be
in the best economic interest of the Trust to take such actions with respect to
the affected Mortgaged Property.

          The cost of the environmental audit report contemplated by this Section 3.16 shall
be advanced by the Servicer, subject to the Servicer’s right to be reimbursed therefor
from the Collection Account as provided in Section 3.11(a)(vii), such right of
reimbursement being prior to the rights of Noteholders to receive any amount in the
Collection Account received in respect of the affected Mortgage Loan or other Mortgage
Loans.

          If the Servicer determines, as described above, that it is in the best economic
interest of the Trust to take such actions as are necessary to bring any such Mortgaged
Property into compliance with applicable environmental laws, or to take such action with
respect to the containment, clean-up or remediation of hazardous substances, hazardous
materials, hazardous wastes or petroleum-based materials affecting any such Mortgaged
Property, then the Servicer shall take such action as it deems to be in the best
economic interest of the Trust; provided that any amounts disbursed by the Servicer
pursuant to this Section 3.16(b) shall constitute Servicing Advances, subject to Section
4.01(d). The cost of any such compliance, containment, clean-up or remediation shall be
advanced by the Servicer, subject to the Servicer’s right to be reimbursed therefor from
the Collection Account as provided in Section 3.11(a)(vii), such right of reimbursement
being prior to the rights of Noteholders to receive any amount in the Collection Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.

          (c) Reserved.

          (d) Proceeds received in connection with any Final Recovery Determination, as well
as any recovery resulting from a partial collection of Insurance Proceeds, Liquidation
Proceeds or condemnation proceeds, in respect of any Mortgage Loan, will be applied in
the following order of priority: first, to unpaid Servicing Fees; second, to reimburse
the Servicer or any Sub-Servicer for any related unreimbursed Servicing Advances
pursuant to Section 3.11(a)(iii) and Advances pursuant to Section 3.11(a)(ii); third, to
accrued and unpaid interest on the Mortgage Loan, to the date of the Final Recovery
Determination, or to the Due Date prior to the Payment Date on which such amounts are to
be paid if not in connection with a Final Recovery Determination; and fourth, as a
recovery of principal of the Mortgage Loan. The portion of the recovery so allocated to
unpaid Servicing Fees shall be reimbursed to the Servicer or any Sub-Servicer pursuant
to Section 3.11(a)(iii).

          Section 3.17. Custodian and Indenture Trustee to Cooperate; Release of
Mortgage Files.

          (a) Upon the payment in full of any Mortgage Loan, or the receipt by the Servicer
of a notification that payment in full shall be escrowed in a manner customary for such
purposes, the Servicer shall immediately notify or cause to be notified the Custodian,
on behalf of the Indenture Trustee, by a certification and shall deliver to the
Custodian, on behalf of the Indenture Trustee, in written or electronic format, which
format is acceptable to the Custodian, two executed copies of a Request for Release in
the form of Exhibit C hereto (which certification shall include a statement to the
effect that all amounts received or to be received in connection with such payment which
are required to be deposited in the Collection Account pursuant to Section 3.10 have
been or will be so deposited) signed by a Servicing Officer (or in a mutually agreeable
electronic format that will, in lieu of a signature on its face, originate from a
Servicing Officer) and shall request delivery to it of the Mortgage File. Upon receipt
of such certification and request, the Custodian, on behalf of the Indenture Trustee,
shall, within three Business Days, release and send by overnight mail, at the expense
of the Servicer or the related Mortgagor, the related Mortgage File to the Servicer. No
expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or the Note Account.

 

 

          (b) From time to time and as appropriate for the servicing or foreclosure of any
Mortgage Loan, including, for this purpose, collection under any insurance policy
relating to the Mortgage Loans, the Custodian, on behalf of the Indenture Trustee,
shall, upon any request made by or on behalf of the Servicer and delivery to the
Custodian, on behalf of the Indenture Trustee, of two executed copies of a written
Request for Release in the form of Exhibit C hereto signed by a Servicing Officer (or in
a mutually agreeable electronic format that will, in lieu of a signature on its face,
originate from a Servicing Officer), release the related Mortgage File to the Servicer
within three Business Days, and the Indenture Trustee shall, at the direction of the
Servicer, execute such documents provided to it by the Servicer as shall be necessary to
the prosecution of any such proceedings. Such Request for Release shall obligate the
Servicer to return each and every document previously requested from the Mortgage File
to the Custodian when the need therefor by the Servicer no longer exists, unless the
Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the Collection Account or the Mortgage File or such document
has been delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Servicer has delivered, or caused to be delivered, to the
Custodian, on behalf of the Indenture Trustee, an additional Request for Release
certifying as to such liquidation or action or proceedings. Upon the request of the
Indenture Trustee or the Custodian, the Servicer shall provide notice to the Indenture
Trustee or the Custodian, as applicable, of the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes of such
delivery. Upon receipt of a Request for Release, in written (with two executed copies)
or electronic format, from a Servicing Officer stating that such Mortgage Loan was
liquidated and that all amounts received or to be received in connection with such
liquidation that are required to be deposited into the Collection Account have been so
deposited, or that such Mortgage Loan has become an REO Property, such Mortgage Loan
shall be released by the Custodian, on behalf of the Indenture Trustee, to the Servicer
or its designee within three Business Days.

          (c) Upon written certification of a Servicing Officer, the Indenture Trustee shall
execute and deliver to the Servicer or the Sub-Servicer, as the case may be, copies of
any court pleadings, requests for Indenture Trustee’s sale or other documents necessary
to the foreclosure or Indenture Trustee’s sale in respect of a Mortgaged Property or to
any legal action brought to obtain judgment against any Mortgagor on the Mortgage Note
or Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity. Each such certification shall include a request that such pleadings or documents
be executed by the Indenture Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the Indenture
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or Indenture Trustee’s
sale.

          Section 3.18. Servicing Compensation.

          As compensation for its activities hereunder, the Servicer shall be entitled to the
Servicing Fee with respect to each Mortgage Loan payable solely from payments of
interest in respect of such Mortgage Loan, subject to Section 3.24. In addition, the
Servicer shall be entitled to recover unpaid Servicing Fees out of Insurance Proceeds,
Liquidation Proceeds, Subsequent Recoveries or condemnation proceeds to the extent
permitted by Section 3.11(a)(iii) and out of amounts derived from the operation and sale
of an REO Property to the extent permitted by Section 3.23. Except as provided in
Section 3.29, the right to receive the Servicing Fee may not be transferred in whole or
in part except in connection with the transfer of all of the Servicer’s responsibilities
and obligations under this Agreement; provided, however, that the Servicer may pay from
the Servicing Fee any amounts due to a Sub-Servicer pursuant to a Sub-Servicing
Agreement entered into under Section 3.02.

          Additional servicing compensation in the form of assumption fees, late payment
charges, insufficient funds charges or ancillary income (other than Prepayment Charges)
shall be retained by the Servicer only to the extent such fees or charges are received
by the Servicer. The Servicer shall also be entitled pursuant to Section 3.11(a)(iv) to
withdraw from the Collection Account and pursuant to Section 3.23(b) to withdraw from
any REO Account, as additional servicing compensation, interest or other income earned
on deposits therein, subject to Section 3.12 and Section 3.24. The Servicer shall also
be entitled to receive Prepayment Interest Excess pursuant to Section 3.10 and 3.11 as
additional servicing compensation. The Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder (including premiums
for the insurance required by Section 3.14, to the extent such premiums are not paid by
the related Mortgagors or by a Sub-Servicer, and servicing compensation of each
Sub-Servicer) and shall not be entitled to reimbursement therefor except as specifically
provided herein.

          The Servicer shall be entitled to any Prepayment Interest Excess, which it may
withdraw from the Collection Account pursuant to Section 3.11(a)(ix).

          Section 3.19. Reports to the Securities Administrator and Others;
Collection Account Statements.

          On each Servicer Remittance Date, the Servicer shall forward to the Securities
Administrator, the Master Servicer, the Sponsor and the Depositor an account statement
evidencing the status of the collection account reflecting activity in the previous
month and an Officer’s Certificates shall accompany such account statement certifying
that the information contained in such account statement is true and correct.

          Section 3.20. Statement as to Compliance.

          (a) The Servicer, Master Servicer and Securities Administrator shall deliver to the
Depositor and the Securities Administrator, not later than March 15th of each calendar
year beginning in 2008 an Officers’ Certificate (an “Annual Statement of Compliance”)
stating, as to each signatory thereof, that (i) a review of the activities of each such
party during the preceding calendar year and of performance under this Agreement has
been made under such officers’ supervision and (ii) to the best of such officers’
knowledge, based on such review, the Servicer has fulfilled all of its obligations under
this Agreement in all material respects throughout such year, or, if there has been a
failure to fulfill any such obligation in any material respect, specifying each such
failure known to such officer and the nature and status of cure provisions thereof. Such
Annual Statement of Compliance shall contain no restrictions or limitations on its use.
The Servicer, Master Servicer and Securities Administrator shall deliver a similar
Annual Statement of Compliance by any Sub-Servicer or subcontractor to which the
Servicer, Master Servicer or Securities Administrator has delegated any servicing
responsibilities with respect to the Mortgage Loans, to the Depositor and the Securities
Administrator as described above as and when required with respect to the Servicer.

          Failure of the Servicer or Master Servicer to timely comply with this Section 3.20
shall be deemed a Servicer Event of Termination or Master Servicer Event of Termination,
as applicable, and the Indenture Trustee shall, at the direction of the Depositor, in
addition to whatever rights the Indenture Trustee may have under this Agreement and at
law or equity or to damages, including injunctive relief and specific performance, upon
notice immediately terminate all the rights and obligations of the Servicer or Master
Servicer, as applicable, under this Agreement and in and to the Mortgage Loans and the
proceeds thereof without compensating the Servicer or Master Servicer, as applicable,
for the same (other than as provided herein with respect to unreimbursed Advances or
Servicing Advances or accrued and unpaid Servicing Fees). This paragraph shall supersede
any other provision in this Agreement or any other agreement to the contrary.

 

 

          The Servicer shall indemnify and hold harmless the Depositor, the Sponsor, the
Master Servicer, the Securities Administrator, the Owner Trustee and the Indenture
Trustee, as applicable and their respective officers, directors and Affiliates from and
against any actual losses, damages, claims, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments and other costs and expenses that
such Person may sustain based upon a breach of the Servicer’s obligations under this
Section 3.20.

          Section 3.21. Assessments of Compliance and Attestation Reports.

          Pursuant to Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation
AB, the Servicer, Master Servicer, Securities Administrator and Custodian (each an
“Attesting Party”) shall deliver to the Securities Administrator and the Depositor on or
before March 15th of each calendar year beginning in 2008, a report regarding such
Attesting Party’s assessment of compliance (an “Assessment of Compliance”) with the
applicable Servicing Criteria (as set forth in Exhibit H) during the preceding calendar
year. The Assessment of Compliance must contain the following:

          (i) A statement by an authorized officer of such Attesting Party of its
responsibility for assessing compliance with the Servicing Criteria applicable to
such Attesting Party;

          (ii) A statement by an authorized officer of such Attesting Party that such
officer used the Servicing Criteria, and which will also be attached to the
Assessment of Compliance, to assess compliance with the Servicing Criteria
applicable to such Attesting Party;

          (iii) An assessment by an authorized officer of such Attesting Party of such
Attesting Party’s compliance with the applicable Servicing Criteria for the
period consisting of the preceding calendar year, including disclosure of any
material instance of noncompliance with respect thereto during such period, which
assessment shall be based on the activities it performs with respect to
asset-backed securities transactions taken as a whole involving such Attesting
Party, that are backed by the same asset type as the Mortgage Loans;

          (iv) A statement that a registered public accounting firm has issued an
attestation report on such Attesting Party’s Assessment of Compliance for the
period consisting of the preceding calendar year; and

          (v) A statement as to which of the Servicing Criteria, if any, are not
applicable to such Attesting Party, which statement shall be based on the
activities it performs with respect to asset-backed securities transactions taken
as a whole involving such Attesting Party, that are backed by the same asset type
as the Mortgage Loans.

          Such report at a minimum shall address each of the Servicing Criteria specified on
Exhibit H hereto which are indicated as applicable to such Attesting Party.

          On or before March 15th of each calendar year beginning in 2008, each Attesting
Party shall furnish to the Depositor and the Securities Administrator a report (an
“Attestation Report”) by a registered public accounting firm that attests to, and
reports on, the Assessment of Compliance made by such Attesting Party, as required by
Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122(b) of Regulation AB, which
Attestation Report must be made in accordance with standards for attestation reports
issued or adopted by the Public Company Accounting Oversight Board.

          The Servicer, Master Servicer, Securities Administrator and Custodian shall cause
any Sub-Servicer engaged by it, and each subcontractor engaged by it and determined by
such party to be “participating in the servicing function” within the meaning of Item
1122 of Regulation AB, to deliver to the Securities Administrator and the Depositor an
Assessment of Compliance and Attestation Report as and when provided above.

          Such Assessment of Compliance, as to any Sub-Servicer, shall address each of the
Servicing Criteria applicable to the Sub-Servicer. Such Assessment of Compliance, as to
any subservicer or subcontractor, shall at a minimum address the applicable Servicing
Criteria specified on Exhibit H hereto which are indicated as applicable to any “primary
servicer” to the extent such subservicer or subcontractor is performing any servicing
function for the party who engages it and to the extent such party is not itself
addressing the Servicing Criteria related to such servicing function in its own
Assessment of Compliance. The Securities Administrator shall confirm that each of the
Assessments of Compliance delivered to it, taken as a whole, address all of the
Servicing Criteria and taken individually address the Servicing Criteria for each party
as set forth in Exhibit H and notify the Depositor of any exceptions. Notwithstanding
the foregoing, as to any subcontractor, an Assessment of Compliance is not required to
be delivered unless it is required as part of a Form 10-K with respect to the Trust
Fund.

          The Custodian shall deliver to the Securities Administrator and the Depositor an
Assessment of Compliance and Attestation Report, as and when provided above, which shall
at a minimum address each of the Servicing Criteria specified on Exhibit H hereto which
are indicated as applicable to a “custodian”. Notwithstanding the foregoing, an
Assessment of Compliance or Attestation Report is not required to be delivered by any
Custodian unless it is required as part of a Form 10-K with respect to the Trust Fund.

          The Custodian has not and shall not engage any Subcontractor which is
“participating in the servicing function” within the meaning of Item 1122 of Regulation
AB, unless such Subcontractor provides, beginning March 1, 2008, a report and a
statement of a registered public accounting firm certifying its compliance with the
applicable servicing criteria in Item 1122(d) of Regulation AB.

          Failure of the Servicer or Master Servicer to timely comply with this Section 3.21
shall be deemed a Servicer Event of Termination or Master Servicer Event of Termination,
as applicable, and the Indenture Trustee shall, at the direction of the Depositor, in
addition to whatever rights the Indenture Trustee may have under this Agreement and at
law or equity or to damages, including injunctive relief and specific performance, upon
notice immediately terminate all the rights and obligations of the Servicer or Master
Servicer, as applicable, under this Agreement and in and to the Mortgage Loans and the
proceeds thereof without compensating the Servicer or Master Servicer, as applicable,
for the same (other than as provided herein with respect to unreimbursed Advances or
Servicing Advances or accrued and unpaid Servicing Fees). This paragraph shall supercede
any other provision in this Agreement or any other agreement to the contrary. The
Successor Servicer or Successor Master Servicer shall immediately assume the rights and
obligations of the Servicer or Master Servicer, as applicable, under this Agreement.

 

 

          The Servicer shall indemnify and hold harmless the Depositor, the Custodian, the
Master Servicer, the Securities Administrator, the Sponsor, the Owner Trustee and the
Indenture Trustee and their respective officers, directors and Affiliates against and
from any actual losses, damages, claims, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses that such
Person may sustain based upon a breach of the Servicer’s obligations under this Section
3.21.

          The Master Servicer shall indemnify and hold harmless the Depositor, the Sponsor,
the Owner Trustee and the Indenture Trustee and their respective officers, directors and
Affiliates against and from any actual losses, damages, claims, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments and other
costs and expenses that such Person may sustain based upon a breach of the Master
Servicer’s obligations under this Section 3.21.

          The Securities Administrator shall indemnify and hold harmless the Depositor, the
Sponsor, the Owner Trustee and the Indenture Trustee and their respective officers,
directors and Affiliates against and from any actual losses, damages, claims, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs, judgments and
other costs and expenses that such Person may sustain based upon a breach of the
Securities Administrator’s obligations under this Section 3.21.

          Notwithstanding the foregoing provisions of Section 3.21, in any calendar year in
which an annual report on Form 10-K is not required to be filed, then, in each such
event, the Servicer, Master Servicer and Securities Administrator may, in lieu of
providing an assessment of compliance and attestation thereon in accordance with Item
1122 of Regulation AB, provide (and cause each Subservicer and Subcontractor described
above to provide) to the Depositor, the Sponsor and the Master Servicer, by not later
than March 1 of such calendar year, an Annual Independent Public Accountants’ Servicing
Report. If the Servicer, Master Servicer or Securities Administrator provides an Annual
Independent Public Accountants’ Servicing Report pursuant to this paragraph, then the
certification required to be delivered by the Servicer, Master Servicer and Securities
Administrator, as applicable (and its Subservicers and Subcontractors), shall be in the
form of Exhibit G-1 attached hereto.

          Section 3.22. Access to Certain Documentation.

          The Servicer shall provide to the Office of Thrift Supervision, the FDIC, and any
other federal or state banking or insurance regulatory authority that may exercise
authority over any Noteholder, access to the documentation regarding the Mortgage Loans
required by applicable laws and regulations. Such access shall be afforded without
charge, but only upon reasonable request and during normal business hours at the offices
of the Servicer designated by it. In addition, access to the documentation regarding the
Mortgage Loans will be provided to any Noteholder, the Indenture Trustee, the Owner
Trustee, the Master Servicer and to any Person identified to the Servicer as a
prospective transferee of a Note, upon reasonable request during normal business hours
at the offices of the Servicer designated by it, at the expense of the Person requesting
such access.

          Section 3.23. Title, Management and Disposition of REO Property.

          (a) The deed or certificate of sale of any REO Property shall, subject to
applicable laws, be taken in the name of the Indenture Trustee, or its nominee, in trust
for the benefit of the Noteholders or in the name of the Servicer in accordance with the
Servicer’s customary servicing practices and held for the benefit of the Trust. The
Servicer, on behalf of the Issuing Entity, shall sell any REO Property as soon as
practicable and in any event no later than the end of the third full taxable year after
the taxable year in which such Issuing Entity acquires ownership of such REO Property
for purposes of the Code or request from the Internal Revenue Service, no later than 60
days before the day on which the three-year grace period would otherwise expire, an
extension of such three-year period. The Servicer shall manage, conserve, protect and
operate each REO Property for the Noteholders solely for the purpose of its prompt
disposition and sale in a manner which does not cause such REO Property to fail to
qualify as “foreclosure property” within the meaning of the Code.

          (b) The Servicer shall separately account for all funds collected and received in
connection with the operation of any REO Property and shall establish and maintain, or
cause to be established and maintained, with respect to REO Properties an account held
in trust for the Indenture Trustee for the benefit of the Noteholders (the “REO
Account”), which shall be an Eligible Account. The Servicer shall be permitted to allow
the Collection Account to serve as the REO Account, subject to separate ledgers for each
REO Property. The Servicer shall be entitled to retain or withdraw any interest income
paid on funds deposited in the REO Account.

          (c) The Servicer shall have full power and authority, subject only to the specific
requirements and prohibitions of this Agreement, to do any and all things in connection
with any REO Property as are consistent with the manner in which the Servicer manages
and operates similar property owned by the Servicer or any of its Affiliates, all on
such terms and for such period (subject to the requirement of prompt disposition set
forth in Section 3.23(a)) as the Servicer deems to be in the best interests of
Noteholders. In connection therewith, the Servicer shall deposit, or cause to be
deposited in the REO Account, in no event more than two Business Days after the
Servicer’s receipt thereof, all revenues received by it with respect to an REO Property
and shall withdraw therefrom funds necessary for the proper operation, management and
maintenance of such REO Property including, without limitation:

          (i) all insurance premiums due and payable in respect of such REO Property;

          (ii) all real estate taxes and assessments in respect of such REO Property
that may result in the imposition of a lien thereon; and

          (iii) all costs and expenses necessary to maintain, operate and dispose of
such REO Property.

          To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through (iii) above
with respect to such REO Property, the Servicer shall advance from its own funds such
amount as is necessary for such purposes if, but only if, the Servicer would make such
advances if the Servicer owned the REO Property and if in the Servicer’s judgment, the
payment of such amounts will be recoverable from the rental or sale of the REO Property.

          The Servicer may contract with any Independent Contractor for the operation and
management of any REO Property, provided that:

          (i) the terms and conditions of any such contract shall not be inconsistent
herewith;

 

 

          (ii) any such contract shall require, or shall be administered to require,
that the Independent Contractor pay all costs and expenses incurred in connection
with the operation and management of such REO Property, including those listed
above and remit all related revenues (net of such costs and expenses) to the
Servicer as soon as practicable, but in no event later than thirty days following
the receipt thereof by such Independent Contractor;

          (iii) none of the provisions of this Section 3.23(c) relating to any such
contract or to actions taken through any such Independent Contractor shall be
deemed to relieve the Servicer of any of its duties and obligations to the
Indenture Trustee on behalf of the Noteholders with respect to the operation and
management of any such REO Property; and

          (iv) the Servicer shall be obligated with respect thereto to the same extent
as if it alone were performing all duties and obligations in connection with the
operation and management of such REO Property.

          The Servicer shall be entitled to enter into any agreement with any Independent
Contractor performing services for it related to its duties and obligations hereunder
for indemnification of the Servicer by such Independent Contractor, and nothing in this
Agreement shall be deemed to limit or modify such indemnification. The Servicer shall be
solely liable for all fees owed by it to any such Independent Contractor, irrespective
of whether the Servicer’s compensation pursuant to Section 3.18 is sufficient to pay
such fees; provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the Servicer, such
amounts shall be reimbursable as Servicing Advances made by the Servicer.

          (d) In addition to the withdrawals permitted under Section 3.23(c), the Servicer
may from time to time make withdrawals from the REO Account for any REO Property: (i) to
pay itself or any Sub-Servicer unpaid Servicing Fees in respect of the related Mortgage
Loan; and (ii) to reimburse itself or any Sub-Servicer for unreimbursed Servicing
Advances and Advances made in respect of such REO Property or the related Mortgage Loan.
On the Servicer Remittance Date, the Servicer shall withdraw from each REO Account
maintained by it and deposit into the Note Account in accordance with Section
3.10(d)(ii), for payment on the related Payment Date in accordance with Section 3.05 of
the Indenture, the income from the related REO Property received during the prior
calendar month, net of any withdrawals made pursuant to Section 3.23(c) or this Section
3.23(d).

          (e) Subject to the time constraints set forth in Section 3.23(a), each REO
Disposition shall be carried out by the Servicer in a manner, at such price and upon
such terms and conditions as shall be normal and usual in the Servicing Standard.

          (f) The proceeds from the REO Disposition, net of any amount required by law to be
remitted to the Mortgagor under the related Mortgage Loan and net of any payment or
reimbursement to the Servicer or any Sub-Servicer as provided above, shall be deposited
in the Note Account in accordance with Section 3.10(d)(ii) on the Servicer Remittance
Date in the month following the receipt thereof for payment on the related Payment Date
in accordance with Section 3.05 of the Indenture. Any REO Disposition shall be for cash
only (unless changes in the REMIC Provisions made subsequent to the Closing Date allow a
sale for other consideration).

          (g) The Servicer shall file information returns with respect to the receipt of
mortgage interest received in a trade or business, reports of foreclosures and
abandonments of any Mortgaged Property and cancellation of indebtedness income with
respect to any Mortgaged Property as required by the Code. Such reports shall be in form
and substance sufficient to meet the reporting requirements of the Code.

          Section 3.24. Obligations of the Servicer in Respect of Prepayment
Interest Shortfalls.

          Not later than 4:00 p.m. New York time on each Servicer Remittance Date, the
Servicer shall remit to the Note Account an amount (“Compensating Interest”) equal to
the lesser of (A) the aggregate of the Prepayment Interest Shortfalls for the related
Payment Date and (B) its aggregate Servicing Fee for the related Payment Date. The
Servicer shall not have the right to reimbursement for any amounts remitted to the
Securities Administrator in respect of Compensating Interest. Such amounts so remitted
shall be included in the Available Funds and paid therewith on the next Payment Date.
The Servicer shall not be obligated to pay Compensating Interest with respect to Relief
Act Interest Shortfalls.

          Section 3.25. [Reserved].

          Section 3.26. Obligations of the Servicer in Respect of Mortgage Rates
and Monthly Payments.

          In the event that a shortfall in any collection on or liability with respect to the
Mortgage Loans in the aggregate results from or is attributable to adjustments to
Mortgage Rates, Monthly Payments or Stated Principal Balances that were made by the
Servicer in a manner not consistent with the terms of the related Mortgage Note and this
Agreement, the Servicer, upon discovery or receipt of notice thereof, immediately shall
deposit in the Collection Account from its own funds the amount of any such shortfall
and shall indemnify and hold harmless the Trust, the Indenture Trustee, the Depositor,
the Securities Administrator, the Master Servicer and any successor servicer in respect
of any such liability. Such indemnities shall survive the resignation or termination of
the Servicer or the termination or discharge of this Agreement or the Indenture.
Notwithstanding the foregoing, this Section 3.26 shall not limit the ability of the
Servicer to seek recovery of any such amounts from the related Mortgagor under the terms
of the related Mortgage Note, as permitted by law.

          Section 3.27. [Reserved].

          Section 3.28. [Reserved].

          Section 3.29. Advance
Facility.

 

 

          The Servicer is hereby authorized to enter into a financing or other facility (any
such arrangement, an “Advance Facility”) under which (1) the Servicer sells, assigns or
pledges to another Person (together with such Person’s successors and assigns, an
“Advancing Person”) the Servicer’s rights under this Agreement to be reimbursed for any
Advances or Servicing Advances and/or (2) an Advancing Person agrees to fund some or all
Advances and/or Servicing Advances required to be made by the Servicer pursuant to this
Agreement. No consent of the Depositor, the Indenture Trustee,the Master Servicer, the
Securities Administrator the Noteholders or any other party shall be required before the
Servicer may enter into an Advance Facility. The Servicer shall notify each other party
to this Agreement in writing prior to or promptly after entering into or terminating any
Advance Facility stating the identity of the Advancing Person. Notwithstanding the
existence of any Advance Facility under which an Advancing Person agrees to fund
Advances and/or Servicing Advances on the Servicer’s behalf, the Servicer shall remain
obligated pursuant to this Agreement to make Advances and Servicing Advances pursuant to
and as required by this Agreement. If the Servicer enters into an Advance
Facility, and for so long as an Advancing Person remains entitled to receive
reimbursement for any Advances including Nonrecoverable Advances (“Advance Reimbursement
Amounts”) and/or Servicing Advances including Nonrecoverable Advances (“Servicing
Advance Reimbursement Amounts” and together with Advance Reimbursement Amounts,
“Reimbursement Amounts”) (in each case to the extent such type of Reimbursement Amount
is included in the Advance Facility), as applicable, pursuant to this Agreement, then
the Servicer shall identify, in the Officer’s Certificate described in the next two
sentences, such Reimbursement Amounts consistent with the reimbursement rights set forth
in Section 3.11(a)(ii), (iii), (vi) and (vii) and remit such Reimbursement Amounts in
accordance with Section 3.10(b) or otherwise in accordance with the documentation
establishing the Advance Facility to such Advancing Person or to a trustee, agent or
custodian (an “Advance Facility Trustee”) designated by such Advancing Person.
Notwithstanding the foregoing, if so required pursuant to the terms of the Advance
Facility, the Servicer may direct, and if so directed the Securities Administrator is
hereby authorized to and shall pay to the Advance Facility Trustee the Reimbursement
Amounts identified pursuant to the preceding sentence. To the extent that an Advancing
Person funds any Advance and the Servicer provides the Securities Administrator and
Master Servicer with an Officer’s Certificate that such Advancing Person is entitled to
reimbursement, such Advancing Person shall be entitled to receive reimbursement pursuant
to this Agreement for such amount to the extent provided in this section. Such Officer’s
Certificate must specify the amount of the reimbursement, the remittance date, the
Section of this Agreement that permits the applicable Advance to be reimbursed and
either the section(s) of the Advance Facility that entitle the Advancing Person to
request reimbursement from the Securities Administrator, rather than the Servicer, or
proof of an event of default by the Servicer under the Advance Facility entitling the
Advancing Person to reimbursement from the Securities Administrator. Notwithstanding
anything to the contrary herein, in no event shall Advance Reimbursement Amounts or
Servicing Advance Reimbursement Amounts be included in the Available Funds or paid to
Noteholders.

          Reimbursement Amounts shall consist solely of amounts in respect of Advances and/or
Servicing Advances made with respect to the Mortgage Loans for which the Servicer would
be permitted to reimburse itself in accordance with this Agreement, assuming the
Servicer or the Advancing Person had made the related Advance(s) and/or Servicing
Advance(s). Notwithstanding the foregoing, except with respect to reimbursement of
Nonrecoverable Advances as set forth in this Agreement, no Person shall be entitled to
reimbursement from funds held in the Collection Account for future payment to
Noteholders pursuant to this Agreement. None of the Depositor, Master Servicer,
Securities Administrator or the Indenture Trustee shall have any duty or liability with
respect to the calculation of any Reimbursement Amount and shall be entitled to rely,
without independent investigation, on the Officer’s Certificate provided pursuant to
this Section 3.29, nor shall the Depositor, Master Servicer, Securities Administrator or
the Indenture Trustee have any responsibility to track or monitor the administration of
any Advance Facility and the Depositor shall not have any responsibility to track,
monitor or verify the payment of Reimbursement Amounts to the related Advancing Person
or Advance Facility Trustee. The Servicer shall maintain and provide to any successor
servicer and (upon request) the Indenture Trustee, Master Servicer or Securities
Administrator a detailed accounting on a loan by loan basis as to amounts advanced by,
sold, pledged or assigned to, and reimbursed to any Advancing Person. The Successor
Servicer shall be entitled to rely on any such information provided by the predecessor
servicer, and the Successor Servicer shall not be liable for any errors in such
information. Any Successor Servicer shall reimburse the predecessor Servicer and itself
for outstanding Advances and Servicing Advances, respectively, with respect to each
Mortgage Loan on a first in, first out (“FIFO”) basis; provided that the Successor
Servicer has received prior written notice from the predecessor Servicer or the
Advancing Person of reimbursement amounts owed to the predecessor Servicer. Liquidation
Proceeds with respect to a Mortgage Loan shall be applied to reimburse Advances
outstanding with respect to that Mortgage Loan before being applied to reimburse
Servicing Advances outstanding with respect to that Mortgage Loan.

          An Advancing Person who receives an assignment or pledge of the rights to be
reimbursed for Advances and/or Servicing Advances, and/or whose obligations hereunder
are limited to the funding or purchase of Advances and/or Servicing Advances shall not
be required to meet the criteria for qualification of a subservicer set forth in this
Agreement.

          Upon the direction of and at the expense of the Servicer, the Securities
Administrator agrees to execute such acknowledgments, certificates, and other documents
provided by the Servicer recognizing the interests of any Advance Facility Trustee in
such Reimbursement Amounts as the Servicer may cause to be made subject to Advance
Facilities pursuant to this Section 3.29.

          The Servicer shall remain entitled to be reimbursed for all Advances and Servicing
Advances funded by the Servicer to the extent the related rights to be reimbursed
therefor have not been sold, assigned or pledged to an Advancing Person.

          The Servicer shall indemnify the Depositor, the Indenture Trustee, the Owner
Trustee, the Master Servicer, the Securities Administrator, any Successor Servicer and
the Trust for any loss, liability or damage resulting from any Advance Facility,
including, without limitation, any claim by the related Advancing Person, except to the
extent that such claim, loss, liability or damage resulted from or arose out of
negligence, recklessness or willful misconduct or breach of its duties hereunder on the
part of the Depositor, the Indenture Trustee or any successor servicer.

          Any amendment to this Section 3.29 or to any other provision of this Agreement that
may be necessary or appropriate to effect the terms of an Advance Facility as described
generally in this Section 3.29, including amendments to add provisions relating to a
successor servicer, may be entered into by the Indenture Trustee, the Depositor and the
Servicer without the consent of any Noteholder but with the consent of the Majority
Certificateholder, provided such amendment complies with Section 7.01 hereof. All
reasonable costs and expenses (including attorneys’ fees) of each party hereto of any
such amendment shall be borne solely by the Servicer. Prior to entering into an Advance
Facility, the Servicer shall notify the Advancing Person in writing that: (a) the
Advances and/or Servicing Advances purchased, financed by and/or pledged to the
Advancing Person are obligations owed to the Servicer on a non-recourse basis payable
only from the cash flows and proceeds received under this Agreement for reimbursement of
Advances and/or Servicing Advances only to the extent provided herein, and none of the
Indenture Trustee, the Securities Administrator nor the Trust are otherwise obligated or
liable to repay any Advances and/or Servicing Advances financed by the Advancing Person
and (b) none of the Indenture Trustee, Master Servicer or Securities Administrator shall
have any responsibility to calculate any Reimbursement Amounts or to track or monitor
the administration of the Advance Facility between the Servicer and the Advancing
Person.

          Section 3.30. Master Servicer.

          The Master Servicer shall supervise, monitor and oversee the obligation of the
Servicer to service and administer the Mortgage Loans in accordance with the terms of
the Agreement and shall have full power and authority to do any and all things which it
may deem necessary or desirable in connection with such master servicing and
administration. In performing its obligations hereunder, the Master Servicer shall act
in a manner consistent with Accepted Master Servicing Practices. Furthermore, the Master
Servicer shall oversee and consult with the Servicer as necessary from time-to-time to
carry out the Master Servicer’s obligations hereunder, shall receive, review and
evaluate all reports, information and other data provided to the Master Servicer by the
Servicer and shall enforce the obligations of the Servicer to perform and observe the
covenants, obligations and conditions to be performed or observed by the Servicer under
this Agreement. The Master Servicer shall independently and separately monitor the
Servicer’s servicing activities with respect to each related Mortgage Loan, reconcile
the results of such monitoring with such information provided in the previous sentence
on a monthly basis and coordinate corrective adjustments to the Servicer’s and Master
Servicer’s records. The Master Servicer shall reconcile the results of its Mortgage Loan
monitoring with the actual remittances of the Servicer to the Note Account pursuant to
the terms hereof based on information provided to the Master Servicer by the Securities
Administrator pursuant to the third paragraph of Section 6.01(j) of the Indenture.

 

 

          The Indenture Trustee, Master Servicer, Custodian and Securities Administrator
shall provide access, in each case to the records and documentation in possession of the
Indenture Trustee, the Mater Servicer, the Custodian, or the Securities Administrator,
as the case may be, regarding the related Mortgage Loans and REO Property and the
servicing thereof to the Noteholders, the FDIC, and the supervisory agents and examiners
of the FDIC, such access being afforded only upon reasonable prior written request and
during normal business hours at the office of the Indenture Trustee, the Custodian or
the Securities Administrator; provided, however, that, unless otherwise required by law,
none of the Indenture Trustee, the Custodian or the Securities Administrator shall be
required to provide access to such records and documentation if the provision thereof
would violate the legal right to privacy of any Mortgagor. The Indenture Trustee, the
Custodian and the Securities Administrator shall allow representatives of the above
entities, in each case to photocopy any of the records and documentation and shall
provide equipment for that purpose at a charge that covers the Indenture Trustee’s, the
Custodian’s or the Securities Administrator’s, as the case may be, actual costs.

          Section 3.31. Monitoring of Servicer.

          (a) The Master Servicer shall be responsible for monitoring the compliance by the
Servicer with its duties under this Agreement. In the review of the Servicer’s
activities, the Master Servicer may rely upon an Officer’s Certificate of the Servicer
with regard to the Servicer’s compliance with the terms of this Agreement. In the event
that the Master Servicer, in its judgment, determines that the Servicer should be
terminated in accordance with the terms hereof, or that a notice should be sent pursuant
to the terms hereof with respect to the occurrence of an event that, unless cured, would
constitute a Servicer Event of Termination, the Master Servicer shall notify the
Servicer, the Seller and the Indenture Trustee thereof and the Master Servicer shall
issue such notice or take such other action as it deems appropriate.

          (b) The Master Servicer, for the benefit of the Indenture Trustee and the
Noteholders, shall enforce the obligations of the Servicer under this Agreement, and
shall, in the event that the Servicer fails to perform its obligations in accordance
with this Agreement, subject to the preceding paragraph, Article III and Article VI, to
terminate the rights and obligations of the Servicer hereunder in accordance with the
provisions of Article VI. Such enforcement, including, without limitation, the legal
prosecution of claims and the pursuit of other appropriate remedies, shall be in such
form and carried out to such an extent and at such time as the Master Servicer, in its
good faith business judgment, would require were it the owner of the related Mortgage
Loans; provided that the Master Servicer shall not be required to prosecute or defend
any legal action except to the extent that the Master Servicer shall have received
reasonable indemnity for its costs and expenses in pursuing such action.

          (c) The Master Servicer shall be entitled to be reimbursed by the Servicer (or from
amounts on deposit in the Note Account if the Servicer does not timely fulfill its
obligations hereunder) for all Servicing Transfer Costs (or if the predecessor Servicer
is the Master Servicer, from the Servicer immediately preceding the Master Servicer),
including without limitation, any reasonable out-of-pocket or third party costs or
expenses associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the Master
Servicer to correct any errors or insufficiencies in the servicing data or otherwise to
enable the Master Servicer to service the Mortgage Loans properly and effectively, upon
presentation of reasonable documentation of such costs and expenses.

          (d) The Master Servicer shall require the Servicer to comply with the remittance
requirements and other obligations set forth in this Agreement.

          (e) If the Master Servicer acts as successor Servicer, it will not assume liability
for the representations and warranties of the terminated Servicer.

          (f) The Master Servicer shall not be liable for any acts or omissions of the
Servicer.

          Section 3.32. Fidelity Bond.

          The Master Servicer, at its expense, shall maintain in effect a blanket fidelity
bond and an errors and omissions insurance policy, affording coverage with respect to
all directors, officers, employees and other Persons acting on such Master Servicer’s
behalf, and covering errors and omissions in the performance of the Master Servicer’s
obligations hereunder. The errors and omissions insurance policy and the fidelity bond
shall be in such form and amount generally acceptable for entities serving as master
servicers or trustees. Upon reasonable request of the Depositor or the Sponsor, the
Master Servicer shall provide to the Depositor or the Sponsor evidence of such insurance
or fidelity bond.

          Section 3.33. Power to Act; Procedures.

          The Master Servicer shall master service the Mortgage Loans and shall have full
power and authority to do any and all things that it may deem necessary or desirable in
connection with the master servicing and administration of the Mortgage Loans, including
but not limited to the power and authority (i) to execute and deliver, on behalf of the
Noteholders and the Indenture Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged Property and
assumptions of the Mortgage Notes and related Mortgages, (iii) to collect any Insurance
Proceeds and Liquidation Proceeds, and (iv) to effectuate foreclosure or other
conversion of the ownership of the Mortgaged Property. The Indenture Trustee shall
furnish the Master Servicer, upon written request from a Master Servicing Officer, with
any powers of attorney (in form delivered and acceptable to the Indenture Trustee)
empowering the Master Servicer or the Servicer to execute and deliver instruments of
satisfaction or cancellation, or of partial or full release or discharge, and to
foreclose upon or otherwise liquidate Mortgaged Property, and to appeal, prosecute or
defend in any court action relating to the Mortgage Loans or the Mortgaged Property, in
accordance with this Agreement, and the Indenture Trustee shall execute and deliver such
other documents, as the Master Servicer or the Servicer may request, to enable the
Master Servicer to master service and administer the Mortgage Loans and carry out its
duties hereunder, in each case in accordance with Accepted Master Servicing Practices
(and the Indenture Trustee shall have no liability for misuse of any such powers of
attorney by the Master Servicer or the Servicer and shall be indemnified by the Master
Servicer or the Servicer, as applicable, for any cost, liability or expense incurred by
the Indenture Trustee in connection with such Person’s use or misuse of any such power
of attorney). If the Master Servicer or the Indenture Trustee has been advised that it
is likely that the laws of the state in which action is to be taken prohibit such action
if taken in the name of the Indenture Trustee or that the Indenture Trustee would be
adversely affected under the “doing business” or tax laws of such state if such action
is taken in its name, the Master Servicer shall join with the Indenture Trustee in the
appointment of a co-trustee pursuant to Section 6.10 of the Indenture. In the
performance of its duties hereunder, the Master Servicer shall be an independent
contractor and shall not, except in those instances where it is taking action in the
name of the Indenture Trustee, be deemed to be the agent of the Indenture Trustee.

 

 

          Section 3.34. Due-on-Sale Clauses; Assumption Agreements.

          To the extent Mortgage Loans contain enforceable due-on-sale clauses, the Master
Servicer shall cause the Servicer to enforce such clauses in accordance with this
Agreement.

          Section 3.35. Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee.

          (a) The Master Servicer shall transmit to the Indenture Trustee or Custodian such
documents and instruments coming into the possession of the Master Servicer from time to
time as are required by the terms hereof to be delivered to the Indenture Trustee or
Custodian. Any funds received by the Master Servicer in respect of any Mortgage Loan or
which otherwise are collected by the Master Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan shall be remitted to the Securities
Administrator for deposit in the Note Account. The Master Servicer shall, and, subject
to Section 3.11, shall enforce the obligations of the Servicer to, provide access to
information and documentation regarding the Mortgage Loans to the Indenture Trustee, its
agents and accountants at any time upon reasonable request and during normal business
hours, and to Noteholders that are savings and loan associations, banks or insurance
companies, the Office of Thrift Supervision, the FDIC and the supervisory agents and
examiners of such Office and Corporation or examiners of any other federal or state
banking or insurance regulatory authority if so required by applicable regulations of
the Office of Thrift Supervision or other regulatory authority, such access to be
afforded without charge but only upon reasonable request in writing and during normal
business hours at the offices of the Master Servicer designated by it. In fulfilling
such a request the Master Servicer shall not be responsible for determining the
sufficiency of such information.

          (b) All funds collected or held by, or under the control of, the Master Servicer,
in respect of any Mortgage Loans, whether from the collection of principal and interest
payments or from Liquidation Proceeds or Insurance Proceeds, shall be remitted to the
Securities Administrator for deposit in the Note Account.

          Section 3.36. Possession of Certain Insurance Policies and Documents.

          The Custodian, shall retain possession and custody of the originals (to the extent
available) of any primary mortgage insurance policies, or certificate of insurance if
applicable, and any Notes of renewal as to the foregoing as may be issued from time to
time as contemplated by this Agreement. Until all amounts payable in respect of the
Notes has been paid in full and the Master Servicer and the Servicer have otherwise
fulfilled their respective obligations under this Agreement, the Custodian shall also
retain possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions of this Agreement. The Master Servicer shall promptly deliver
or cause to be delivered to the Custodian, upon the execution or receipt thereof the
originals of any primary mortgage insurance policies, any Notes of renewal, and such
other documents or instruments related to the Mortgage Loans that come into the
possession of the Master Servicer from time to time.

          Section 3.37. Compensation for the Master Servicer.

          As compensation for the activities of the Master Servicer hereunder, the Master
Servicer shall be entitled to the Master Servicing Fee, payable to the Master Servicer
on each Payment Date (with respect to the calendar month that immediately preceded the
month of such Payment Date) from funds in the Note Account. The Master Servicing Fee
payable to the Master Servicer in respect of any Payment Date shall be reduced in
accordance with Section 3.38. The Master Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as provided in this Agreement.

          Section 3.38. Obligation of the Master Servicer in Respect of Prepayment
Interest Shortfalls.

          In the event that the Servicer fails to perform on any Servicer Remittance Date its
obligations pursuant to Section 3.24, the Master Servicer shall remit to the Securities
Administrator not later than the Payment Date an amount equal to the lesser of (i) the
aggregate amounts required to be paid by the Servicer with respect to Prepayment
Interest Shortfalls attributable to Principal Prepayments on the related Mortgage Loans
for the related Payment Date, and not so paid by the Servicer and (ii) the Master
Servicing Fee for such Payment Date, without reimbursement therefor.

          Section 3.39. Merger or Consolidation.

          Any Person into which the Master Servicer may be merged or consolidated, or any
Person resulting from any merger, conversion, other change in form or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the business of
the Master Servicer, shall be the successor to the Master Servicer 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; provided, however, that
the successor or resulting Person to the Master Servicer or its Affiliate whose primary
business is the servicing of conventional residential mortgage loans shall be a Person
that is an Approved Servicer.

          Section 3.40. Resignation of Master Servicer.

          Except as otherwise provided in Sections 3.39 and 3.41 hereof, the Master Servicer
shall not resign from the obligations and duties hereby imposed on it unless the Master
Servicer’s duties hereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried on by it
and cannot be cured. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an independent Opinion of Counsel to such effect
delivered to the Issuer, the Depositor, the Seller and the Indenture Trustee. No such
resignation shall become effective until the Indenture Trustee shall have assumed, or a
Successor Master Servicer shall have been appointed by the Sponsor or the Indenture
Trustee and until such successor shall have assumed, the Master Servicer’s
responsibilities and obligations under this Agreement. Notice of such resignation shall
be given promptly by the Master Servicer to the Indenture Trustee.

          If, at any time, the Master Servicer resigns under this Section 3.40, or transfers
or assigns its rights and obligations under Section 4.16, or is removed as Master
Servicer pursuant to Section 6.07, then at such time Wells Fargo Bank, N.A. also shall
resign (and shall be entitled to resign) as Securities Administrator, Custodian, Paying
Agent and Note Registrar. In such event, the obligations of each such party shall be
assumed by the Indenture Trustee or such Successor Master Servicer appointed by the
Indenture Trustee (subject to the provisions of Section 6.07); provided, however, the
Indenture Trustee shall have the same right to appoint, or petition a court to appoint,
a successor Securities Administrator, Paying Agent or Note Registrar as it has pursuant
to Section 6.07 with respect to a successor Master Servicer.

 

 

          Section 3.41. Assignment or Delegation of Duties by the Master Servicer.

          Except as expressly provided herein, the Master Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other Person, or
delegate to or subcontract with, or authorize or appoint any other Person to perform any
of the duties, covenants or obligations to be performed by the Master Servicer
hereunder; provided, however, that the Master Servicer shall have the right with the
prior written consent of the Indenture Trustee and the Seller (which consent shall not
be unreasonably withheld), and upon delivery to the Indenture Trustee and the Seller of
a letter from each Rating Agency to the effect that such action shall not result in a
downgrading of the Notes, to delegate or assign to or subcontract with or authorize or
appoint any qualified Person to perform and carry out any duties, covenants or
obligations to be performed and carried out by the Master Servicer hereunder. Notice of
such permitted assignment shall be given promptly by the Master Servicer to the Seller
and the Indenture Trustee. If, pursuant to any provision hereof, the duties of the
Master Servicer are transferred to a Successor Master Servicer, the entire amount of the
Master Servicing Fees and other compensation payable to the Master Servicer pursuant
hereto shall thereafter be payable to such Successor Master Servicer. Such Successor
Master Servicer shall also pay the fees of the Indenture Trustee and the Securities
Administrator, as provided herein.

ARTICLE IV

REMITTANCE REPORTS; ADVANCES; EXCHANGE ACT REPORTING

          Section 4.01. Remittance Reports and Advances.

          (a) On the 10th calendar day of each month, the Servicer shall deliver to the
Master Servicer and the Sponsor by telecopy or electronic mail (or by such other means
as the Servicer and the Master Servicer may agree from time to time) a Remittance Report
in the format attached as Exhibit J, Exhibit K and Exhibit L with respect to the related
Payment Date. Not later than the second Business Day following each Determination Date,
the Servicer shall deliver or cause to be delivered to the Master Servicer in addition
to the information provided in the Remittance Report, information with respect to the
Principal Prepayments in full from the portion of the Prepayment Period from the 1st to
the 15th of each calendar month and such other information reasonably available to it
with respect to the Mortgage Loans as the Master Servicer may reasonably require to
perform the calculations necessary to make the payments contemplated by Section 3.05 of
the Indenture and to prepare the statements to Noteholders contemplated by Section 3.26
of the Indenture. The Master Servicer shall not be responsible to recompute, recalculate
or verify any information provided to it by the Servicer.

          (b) The amount of Advances to be made by the Servicer for any Payment Date shall
equal, subject to Section 4.01(d), the sum of (i) the aggregate amount of Monthly
Payments (net of the related Servicing Fee), due during the related Due Period in
respect of the Mortgage Loans, which Monthly Payments were delinquent on a contractual
basis as of the Close of Business on the related Determination Date and (ii) with
respect to each REO Property, which REO Property was acquired during or prior to the
related Due Period and as to which REO Property an REO Disposition did not occur during
the related Due Period, an amount equal to the excess, if any, of the REO Imputed
Interest on such REO Property for the most recently ended calendar month, over the net
income from such REO Property transferred to the Note Account pursuant to Section 3.23
for payment on such Payment Date.

          On or before 2:00 p.m. New York time on the Servicer Remittance Date, the Servicer
shall remit in immediately available funds to the Securities Administrator for deposit
in the Note Account an amount equal to the aggregate amount of Advances, if any, to be
made in respect of the Mortgage Loans and REO Properties for the related Payment Date
either (i) from its own funds or (ii) from the Collection Account, to the extent of
funds held therein for future payment (in which case it will cause to be made an
appropriate entry in the records of the Collection Account that amounts held for future
payment have been, as permitted by this Section 4.01, used by the Servicer in discharge
of any such Advance) or (iii) in the form of any combination of (i) and (ii) aggregating
the total amount of Advances to be made by the Servicer with respect to the Mortgage
Loans and REO Properties. Any amounts held for future payment used by the Servicer to
make an Advance as permitted in the preceding sentence shall be appropriately reflected
in the Servicer’s records and replaced by the Servicer by deposit in the Collection
Account on or before any future Servicer Remittance Date to the extent that the
Available Funds for the related Payment Date (determined without regard to Advances to
be made on the Servicer Remittance Date) shall be less than the total amount that would
be paid to the Classes of Noteholders pursuant to Section 3.05 of the Indenture on such
Payment Date if such amounts held for future payments had not been so used to make
Advances. The Securities Administrator will provide notice to the Servicer by telecopy
by the Close of Business on any Servicer Remittance Date in the event that the amount
remitted by the Servicer to the Securities Administrator on such date is less than the
Advances required to be made by the Servicer for the related Payment Date, as set forth
in the related Remittance Report.

          (c) The obligation of the Servicer to make such Advances is mandatory,
notwithstanding any other provision of this Agreement but subject to (d) below, and,
with respect to any Mortgage Loan, shall continue until the Mortgage Loan is paid in
full or until all Liquidation Proceeds thereon have been recovered, or a Final Recovery
Determination has been made thereon.

          (d) Notwithstanding anything herein to the contrary, no Advance or Servicing
Advance shall be required to be made hereunder by the Servicer if such Advance or
Servicing Advance would, if made, constitute a Nonrecoverable Advance. The determination
by the Servicer that it has made a Nonrecoverable Advance or that any proposed Advance
or Servicing Advance, if made, would constitute a Nonrecoverable Advance, shall be
evidenced by an Officers’ Certificate of the Servicer delivered to the Sponsor and the
Master Servicer. Furthermore, the Servicer shall not be required to advance Relief Act
Interest Shortfalls.

          (e) If the Servicer fails to remit any Monthly Advance required to be made pursuant
to this Section, the Master Servicer shall make, or the Successor Servicer shall make,
such Advance. If the Master Servicer determines that a Monthly Advance is required, it
shall on the Business Day preceding the related Payment Date immediately following such
Determination Date remit to the Securities Administrator from its own funds (or funds
advanced by the applicable Servicer) for deposit in the Note Account immediately
available funds in an amount equal to such Monthly Advance. The Master Servicer shall be
entitled to be reimbursed for all Monthly Advances made by it. Notwithstanding anything
to the contrary herein, in the event the Master Servicer determines in its reasonable
judgment that a Monthly Advance is a Nonrecoverable Advance, the Master Servicer shall
be under no obligation to make such Monthly Advance. If the Master Servicer determines
that a Monthly Advance is a Nonrecoverable Advance, it shall, on or prior to the related
Payment Date, deliver an Officer’s Certificate to the Indenture Trustee and the
Securities Administrator to such effect.

 

 

          Section 4.02. Exchange Act Reporting.

          (a) (i) (A) Within 15 days after each Distribution Date, the Securities
Administrator shall, in accordance with industry standards, prepare and, in accordance
with Section (a)(i)(C) below, file with the Commission via the Electronic Data Gathering
and Retrieval System (“EDGAR”), a Distribution Report on Form 10-D, signed by the Master
Servicer, with a copy of the Monthly Statement to be furnished by the Securities
Administrator to the Certificateholders for such Distribution Date; provided that, the
Securities Administrator shall have received no later than five (5) calendar days after
the related Distribution Date, all information required to be provided to the Securities
Administrator as described in clause (a)(iv) below. Any disclosure that is in addition
to the Monthly Statement and that is required to be included on Form 10-D (“Additional
Form 10-D Disclosure”) shall be, pursuant to the paragraph immediately below, reported
by the parties set forth on Exhibit I to the Securities Administrator and the Depositor
and approved for inclusion by the Depositor, and the Securities Administrator will have
no duty or liability for any failure hereunder to determine or prepare any Additional
Form 10-D Disclosure absent such reporting (other than in the case where the Securities
Administrator is the reporting party as set forth in Exhibit I) and approval.

          (B) Within five (5) calendar days after the related Distribution Date, (i) the
parties set forth in Exhibit I shall be required to provide, pursuant to Section
4.02(a)(iv) below, to the Securities Administrator and the Depositor, to the extent
known by a responsible officer thereof, in EDGAR-compatible format, or in such other
form as otherwise agreed upon by the Securities Administrator and the Depositor and such
party, the form and substance of any Additional Form 10-D Disclosure, if applicable, and
(ii) the Depositor will approve, as to form and substance, or disapprove, as the case
may be, the inclusion of the Additional Form 10-D Disclosure on Form 10-D. The Issuing
Entity shall be responsible for any reasonable fees and expenses assessed or incurred by
the Securities Administrator in connection with including any Additional Form 10-D
Disclosure on Form 10-D pursuant to this Section.

          (C) After preparing the Form 10-D, the Securities Administrator shall forward
electronically a copy of the Form 10-D to the Depositor, the Sponsor and the Master
Servicer for review. Within two Business Days after receipt of such copy, but no later
than the 12th calendar day after the Distribution Date (provided that, the Securities
Administrator forwards a copy of the Form 10-D no later than the 10th calendar after the
Distribution Date), the Depositor shall notify the Securities Administrator in writing
(which may be furnished electronically) of any changes to or approval of such Form 10-D.
In the absence of receipt of any written changes or approval, the Securities
Administrator shall be entitled to assume that such Form 10-D is in final form and the
Securities Administrator may proceed with the execution and filing of the Form 10-D. No
later than the 13th calendar day after the related Distribution Date, a duly authorized
officer of the Master Servicer shall sign the Form 10-D and, in the case where the
Master Servicer and the Securities Administrator are not affiliated, return an
electronic or fax copy of such signed Form 10-D (with an original executed hard copy to
follow by overnight mail) to the Securities Administrator. If a Form 10-D cannot be
filed on time or if a previously filed Form 10-D needs to be amended, the Securities
Administrator shall follow the procedures set forth in Section 3.17(a)(v)(B). Promptly
(but no later than one (1) Business Day) after filing with the Commission, the
Securities Administrator shall make available on its internet website identified in
Section 7.04 of the Indenture, a final executed copy of each Form 10-D filed by the
Securities Administrator. The signing party at the Master Servicer can be contacted as
set forth in Section 7.04. Form 10-D requires the registrant to indicate (by checking
“yes” or “no”) that it (1) has filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. The Depositor shall notify the Securities
Administrator in writing, no later than the fifth calendar day after the related
Distribution Date with respect to the filing of a report on Form 10-D, if the answer to
the questions should be “no”. The Securities Administrator shall be entitled to rely on
the representations in Section 2.05(ix) and in any such notice in preparing, executing
and/or filing any such report. The parties to this Agreement acknowledge that the
performance by the Master Servicer and the Securities Administrator of their respective
duties under Sections 4.02(a)(i) and (v) related to the timely preparation, execution
and filing of Form 10-D is contingent upon such parties strictly observing all
applicable deadlines in the performance of their duties under such Sections. Neither the
Master Servicer nor the Securities Administrator shall have any liability for any loss,
expense, damage, claim arising out of or with respect to any failure to properly
prepare, execute and/or timely file such Form 10-D, where such failure results from a
party’s failure to deliver, on a timely basis, any information from any such party
needed to prepare, arrange for execution or file such Form 10-D, not resulting from its
own negligence, bad faith or willful misconduct.

          (ii) (A) Within four (4) Business Days after the occurrence of an event requiring
disclosure on Form 8-K (each such event, a “Reportable Event”), the Securities
Administrator shall prepare and, at the direction of the Depositor, file on behalf of
the Trust, any Form 8-K, as required by the Exchange Act; provided that, the Depositor,
upon receipt from the Sponsor of the relevant final Basic Documents within 14 days after
the Closing Date, shall file the initial Form 8-K in connection with the issuance of the
Notes. Any disclosure or information related to a Reportable Event or that is otherwise
required to be included on Form 8-K (“Form 8-K Disclosure Information”) shall be,
pursuant to the paragraph immediately below, reported by the parties set forth on
Exhibit I to the Securities Administrator and the Depositor and approved for inclusion
by the Depositor, and the Securities Administrator will have no duty or liability for
any failure hereunder to determine or prepare any Form 8-K Disclosure Information absent
such reporting (other than in the case where the Securities Administrator is the
reporting party as set forth in Exhibit I) and approval.

          (B) For so long as the Trust is subject to the Exchange Act reporting requirements,
no later than the close of business on the 2nd Business Day after the occurrence of a
Reportable Event (i) the parties set forth in Exhibit I shall be required pursuant to
Section 4.02(a)(iv) below to provide to the Securities Administrator and the Depositor,
to the extent known by a responsible officer thereof, in EDGAR-compatible format, or in
such other form as otherwise agreed upon by the Securities Administrator and the
Depositor and such party, the form and substance of any Form 8-K Disclosure Information,
if applicable, and (ii) the Depositor shall approve, as to form and substance, or
disapprove, as the case may be, the inclusion of the Form 8-K Disclosure Information on
Form 8-K. The Issuing Entity shall be responsible for any reasonable fees and expenses
assessed or incurred by the Securities Administrator in connection with including any
Form 8-K Disclosure Information on Form 8-K pursuant to this Section.

          (C) After preparing the Form 8-K, the Securities Administrator shall forward
electronically a copy of the Form 8-K to the Depositor and the Master Servicer for
review. No later than the close of business New York City time on the 3rd Business Day
after the Reportable Event, or in the case where the Master Servicer and Securities
Administrator are affiliated, no later than noon New York City time on the 4th Business
Day after the Reportable Event, a duly authorized officer of the Master Servicer shall
sign the Form 8-K and, in the case where the Master Servicer and the Securities
Administrator are not affiliated, return an electronic or fax copy of such signed Form
8-K (with an original executed hard copy to follow by overnight mail) to the Securities
Administrator. Promptly, but no later than the close of business on the 3rd Business Day
after the Reportable Event (provided that, the Securities Administrator forwards a copy
of the Form 8-K no later than noon New York time on the third Business Day after the
Reportable Event), the Depositor shall notify the Securities Administrator in writing
(which may be furnished electronically) of any changes to or approval of such Form 8-K.
In the absence of receipt of any written changes or approval, the Securities
Administrator shall be entitled to assume that such Form 8-K is in final form and the
Securities Administrator may proceed with the execution and filing of the Form 8-K. If a
Form 8-K cannot be filed on time or if a previously filed Form 8-K needs to be amended,
the Securities Administrator shall follow the procedures set forth in Section
4.02(a)(v)(B). Promptly (but no later than one (1) Business Day) after filing with the
Commission, the Securities Administrator shall, make available on its internet website a
final executed copy of each Form 8-K filed by the Securities Administrator. The signing
party at the Master Servicer can be contacted as set forth in Section 7.03. The parties
to this Agreement acknowledge that the performance by Master Servicer and the Securities
Administrator of their respective duties under this Section 4.02(a)(ii) related to the
timely preparation, execution and filing of Form 8-K is contingent upon such parties
strictly observing all applicable deadlines in the performance of their duties under
this Section 4.02(a)(ii). Neither the Master Servicer nor the Securities Administrator
shall have any liability for any loss, expense, damage, claim arising out of or with
respect to any failure to properly prepare, execute and/or timely file such Form 8-K,
where such failure results from a party’s failure to deliver, on a timely basis, any
information from such party needed to prepare, arrange for execution or file such Form
8-K, not resulting from its own negligence, bad faith or willful misconduct.

 

 

          (iii) (A) Within 90 days after the end of each fiscal year of the Trust or such
earlier date as may be required by the Exchange Act (the “10-K Filing Deadline”) (it
being understood that the fiscal year for the Trust ends on December 31st of each year),
commencing in March 2008, the Securities Administrator shall prepare and file on behalf
of the Trust a Form 10-K, in form and substance as required by the Exchange Act. Each
such Form 10-K shall include the following items, in each case to the extent they have
been delivered to the Securities Administrator within the applicable time frames set
forth in this Agreement, (I) an annual compliance statement for each Servicer, the
Master Servicer, the Securities Administrator and any subservicer or subcontractor, as
applicable, as described under Section 3.20, (II)(A) the annual reports on assessment of
compliance with Servicing Criteria for each Servicer, the Master Servicer, each
subservicer and subcontractor participating in the servicing function, the Securities
Administrator and the Custodians, as described under Section 3.21, and (B) if any such
report on assessment of compliance with Servicing Criteria described under Section 3.21
identifies any material instance of noncompliance, disclosure identifying such instance
of noncompliance, or if any such report on assessment of compliance with Servicing
Criteria described under Section 3.21 is not included as an exhibit to such Form 10-K,
disclosure that such report is not included and an explanation why such report is not
included, (III)(A) the registered public accounting firm attestation report for each
Servicer, the Master Servicer, the Securities Administrator, each subservicer, each
subcontractor, as applicable, and the Custodians, as described under Section 3.21, and
(B) if any registered public accounting firm attestation report described under Section
3.21 identifies any material instance of noncompliance, disclosure identifying such
instance of noncompliance, or if any such registered public accounting firm attestation
report is not included as an exhibit to such Form 10-K, disclosure that such report is
not included and an explanation why such report is not included, and (IV) a
Sarbanes-Oxley Certification as described in Section 4.02 (a)(iii)(D) below (provided,
however, that the Securities Administrator, at its discretion, may omit from the Form
10-K any annual compliance statement, assessment of compliance or attestation report
that is not required to be filed with such Form 10-K pursuant to Regulation AB). Any
disclosure or information in addition to (I) through (IV) above that is required to be
included on Form 10-K (“Additional Form 10-K Disclosure”) shall be, pursuant to the
paragraph immediately below, reported by the parties set forth on Exhibit I to the
Securities Administrator and the Depositor and approved for inclusion by the Depositor,
and the Securities Administrator will have no duty or liability for any failure
hereunder to determine or prepare any Additional Form 10-K Disclosure absent such
reporting (other than in the case where the Securities Administrator is the reporting
party as set forth in Exhibit I) and approval.

          (B) No later than March 15th of each year that the Trust is subject to the Exchange
Act reporting requirements, commencing in 2008, (i) the parties set forth in Exhibit I
shall be required to provide pursuant to Section 4.02(a)(iv) below to the Securities
Administrator and the Depositor, to the extent known by a responsible officer thereof,
in EDGAR-compatible format, or in such other form as otherwise agreed upon by the
Securities Administrator and the Depositor and such party, the form and substance of any
Additional Form 10-K Disclosure, if applicable, and (ii) the Depositor will approve, as
to form and substance, or disapprove, as the case may be, the inclusion of the
Additional Form 10-K Disclosure on Form 10-K. The Issuing Entity shall be responsible
for any reasonable fees and expenses assessed or incurred by the Securities
Administrator in connection with including any Additional Form 10-K Disclosure on Form
10-K pursuant to this Section.

          (C) After preparing the Form 10-K, the Securities Administrator shall forward
electronically a copy of the Form 10-K to the Depositor (only in the case where such
Form 10-K includes Additional Form 10-K Disclosure and otherwise if requested by the
Depositor) and the Master Servicer for review. Within three Business Days after receipt
of such copy, but no later than March 25th (provided that, the Securities Administrator
forwards a copy of the Form 10-K no later than the third Business Day prior to March
25th), the Depositor shall notify the Securities Administrator in writing (which may be
furnished electronically) of any changes to or approval of such Form 10-K. In the
absence of receipt of any written changes or approval, the Securities Administrator
shall be entitled to assume that such Form 10-K is in final form and the Securities
Administrator may proceed with the execution and filing of the Form 10-K. No later than
the close of business Eastern Standard time on the 4th Business Day prior to the 10-K
Filing Deadline, an officer of the Master Servicer in charge of the master servicing
function shall sign the Form 10-K and, in the case where the Master Servicer and the
Securities Administrator are unaffiliated, return an electronic or fax copy of such
signed Form 10-K (with an original executed hard copy to follow by overnight mail) to
the Securities Administrator. If a Form 10-K cannot be filed on time or if a previously
filed Form 10-K needs to be amended, the Securities Administrator will follow the
procedures set forth in Section 4.02(a)(v)(B). Promptly (but no later than one (1)
Business Day) after filing with the Commission, the Securities Administrator shall make
available on its internet website a final executed copy of each Form 10-K filed by the
Securities Administrator. The signing party at the Master Servicer can be contacted as
set forth in Section 7.03. Form 10-K requires the registrant to indicate (by checking
“yes” or “no”) that it (1) has filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. The Depositor shall notify the Securities
Administrator in writing, no later than March 15th of each year in which the Trust is
subject to the requirements of the Exchange Act with respect to the filing of a report
on Form 10-K, if the answer to the question should be “no”. The Securities Administrator
shall be entitled to rely on such response and in any such notice in preparing,
executing and/or filing any such report. The parties to this Agreement acknowledge that
the performance by the Master Servicer and the Securities Administrator of their
respective duties under Sections 4.02(a)(iv) and (v) related to the timely preparation,
execution and filing of Form 10-K is contingent upon such parties strictly observing all
applicable deadlines in the performance of their duties under such Sections and Sections
3.20 and Section 3.21. Neither the Master Servicer nor the Securities Administrator shall
have any liability for any loss, expense, damage, claim arising out of or with respect
to any failure to properly prepare, execute and/or timely file such Form 10-K, where
such failure results from the Master Servicer’s or the Securities Administrator’s
inability or failure to receive, on a timely basis, any information from any other party
hereto needed to prepare, arrange for execution or file such
 Form 10-K, not resulting
from its own negligence, bad faith or willful misconduct.

          (D) Each Form 10-K shall include a certification (the “Sarbanes-Oxley
Certification”) required to be included therewith pursuant to the Sarbanes-Oxley Act
which shall be signed by the Certifying Person and delivered to the Securities
Administrator no later than March 15th of each year in which the Trust is subject to
the reporting requirements of the Exchange Act. The Master Servicer shall cause the
Servicer, and any subservicer or subcontractor engaged by it to, provide to the Person
who signs the Sarbanes-Oxley Certification (the “Certifying Person”), by March 10th of
each year in which the Trust is subject to the reporting requirements of the Exchange
Act (or such other date specified in the related Servicing Agreement) and otherwise
within a reasonable period of time upon request, a certification (each, a “Back-Up
Certification”), in the form attached hereto as Exhibit _, upon which the Certifying
Person, the entity for which the Certifying Person acts as an officer, and such entity’s
officers, directors and Affiliates (collectively with the Certifying Person,
“Certification Parties”) can reasonably rely. In addition, the Mortgage Loan Seller and,
in the case where the Master Servicer and Securities Administrator are not affiliated,
the Securities Administrator shall sign a Back-Up Certification substantially in the
form of Exhibit _; provided, however, the Mortgage Loan Seller and the Securities
Administrator shall not be required to undertake an analysis of any accountant’s report
attached as an exhibit to the Form 10-K. An officer of the Master Servicer in charge of
the master servicing function shall serve as the Certifying Person on behalf of the
Trust. Such officer of the Certifying Person can be contacted as set forth in Section
7.03.

 

 

          (iv) With respect to any Additional Form 10-D Disclosure, Additional Form 10-K
Disclosure or any Form 8-K Disclosure Information (collectively, the “Additional
Disclosure”) relating to the Trust Fund, the Securities Administrator’s obligation to
include such Additional Information in the applicable Exchange Act report is subject to
receipt from the entity that is indicated in Exhibit I as the responsible party for
providing that information, if other than the Securities Administrator, as and when
required as described in Section 4.02(a)(i) through (iii) above. Such Additional
Disclosure shall be accompanied by a notice substantially in the form of Exhibit M. Each
of the Servicer, the Master Servicer, the Seller, the Securities Administrator and the
Depositor hereby agrees to notify and provide, to the extent known to the Servicer, the
Master Servicer, the Seller, the Securities Administrator and the Depositor all
Additional Disclosure relating to the Trust Fund, with respect to which such party is
indicated in Exhibit I as the responsible party for providing that information. The
Issuing Entity shall be responsible for any reasonable fees and expenses assessed or
incurred by the Securities Administrator in connection with including any Additional
Disclosure information pursuant to this Section.

          So long as the Depositor is subject to the filing requirements of the Exchange Act
with respect to the Trust Fund, the Indenture Trustee shall notify the Securities
Administrator and the Depositor of any bankruptcy or receivership with respect to the
Indenture Trustee or of any proceedings of the type described under Item 1117 of
Regulation AB that have occurred as of the related Due Period, together with a
description thereof, no later than the date on which such information is required of
other parties hereto as set forth under this Section 4.02. In addition, the Indenture
Trustee shall notify the Securities Administrator and the Depositor of any affiliations
or relationships that develop after the Closing Date between the Indenture Trustee and
the Depositor, the Seller, the Servicer, the Securities Administrator, the Master
Servicer or the Custodian of the type described under Item 1119 of Regulation AB,
together with a description thereof, no later than March 15 of each year that the Trust
is subject to the Exchange Act reporting requirements, commencing in 2008. Should the
identification of any of the Depositor, the Servicer, the Seller, the Securities
Administrator, the Master Servicer or the Custodian change, the Depositor and the
Sponsor, to the extent known by them, shall each promptly notify the Indenture Trustee.

          (v) (A) On or prior to January 30th of the first year in which the Securities
Administrator is able to do so under applicable law, the Securities Administrator shall
prepare and file a Form 15 relating to the automatic suspension of reporting in respect
of the Trust under the Exchange Act.

          (B) In the event that the Securities Administrator is unable to timely file with
the Commission all or any required portion of any Form 8-K, 10-D or 10-K required to be
filed by this Agreement because required disclosure information was either not delivered
to it or delivered to it after the delivery deadlines set forth in this Agreement or for
any other reason, the Securities Administrator shall promptly notify the Depositor and
the Master Servicer. In the case of Form 10-D and 10-K, the Depositor, the Master
Servicer and the Securities Administrator shall cooperate to prepare and file a Form
12b-25 and a 10-DA and 10-KA as applicable, pursuant to Rule 12b-25 of the Exchange Act.
In the case of Form 8-K, the Securities Administrator will, upon receipt of all required
Form 8-K Disclosure Information and upon the approval of the Depositor, include such
disclosure information on the next Form 10-D. In the event that any previously filed
Form 8-K, 10-D or 10-K needs to be amended, and such amendment relates to any Additional
Disclosure, the Securities Administrator shall notify the Depositor and the parties
affected thereby and such parties will cooperate to prepare any necessary Form 8-K,
10-DA or 10-KA. Any Form 15, Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K
shall be signed by an appropriate officer of the Master Servicer. The parties hereto
acknowledge that the performance by the Master Servicer and the Securities Administrator
of their respective duties under this Section 3.15(a)(v) related to the timely
preparation, execution and filing of Form 15, a Form 12b-25 or any amendment to Form
8-K, 10-D or 10-K is contingent upon the Master Servicer and the Depositor timely
performing their duties under this Section. Neither the Master Servicer nor the
Securities Administrator shall have any liability for any loss, expense, damage or claim
arising out of or with respect to any failure to properly prepare, execute and/or timely
file any such Form 15, Form 12b-25 or any amendments to Form 8-K, 10-D or 10-K, where
such failure results from a party’s failure to deliver, on a timely basis, any
information from such party needed to prepare, arrange for execution or file such Form
15, Form 12b-25 or any amendments to Form 8-K, 10-D or 10-K, not resulting from its own
negligence, bad faith or willful misconduct.

          The Depositor and the Sponsor each agrees to promptly furnish to the Securities
Administrator, from time to time upon reasonable request, such further information,
reports and financial statements within its control and related to this Agreement and
the Mortgage Loans as the Securities Administrator that it reasonably deems appropriate
in order to prepare and file all necessary reports with the Commission. The Securities
Administrator shall have no responsibility to file any items other than those specified
in this Section 4.02; provided, however, the Securities Administrator shall cooperate
with the Depositor in connection with any additional filings with respect to the Trust
Fund as the Depositor deems necessary under the Exchange Act. Fees and expenses incurred
by the Securities Administrator in connection with this Section 4.02 shall not be
reimbursable from the Trust Fund.

          (b) The Securities Administrator shall indemnify and hold harmless the Depositor,
the Indenture Trustee, the Servicer, the Seller and the Sponsor and each of its
officers, directors and affiliates from and against any losses, damages, claims,
penalties, fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach of the
Securities Administrator’s obligations under Sections 3.20, 3.21 and 4.02 or the
Securities Administrator’s negligence, bad faith or willful misconduct in connection
therewith. In addition, the Securities Administrator shall indemnify and hold harmless
the Depositor, the Indenture Trustee, the Servicer, the Seller and the Sponsor and each
of their respective officers, directors and affiliates from and against any losses,
damages, claims, penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments and other costs and expenses arising out of or based upon (i)
any untrue statement or alleged untrue statement of any material fact contained in any
Back-Up Certification, any Annual Statement of Compliance, any Assessment of Compliance
or any Additional Disclosure provided by the Securities Administrator on its behalf or
on behalf of any subservicer or subcontractor engaged by the Securities Administrator
pursuant to Section 3.20, 3.21 or 4.02 (the “Securities Administrator Information”), or
(ii) any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, by way of
clarification, that this paragraph shall be construed solely by reference to the
Securities Administrator Information and not to any other information communicated in
connection with the Notes, without regard to whether the Securities Administrator
Information or any portion thereof is presented together with or separately from such
other information.

 

 

          The Depositor shall indemnify and hold harmless the Securities Administrator, the Servicer,
the Seller, the Indenture Trustee, the Sponsor, the Custodian and the Master Servicer and each of
its officers, directors and affiliates from and against any losses, damages, claims, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs, judgments and other
costs and expenses arising out of or based upon a breach of the obligations of the Depositor to
deliver the information to be provided by it as set forth in Exhibit I or the Depositor’s
negligence, bad faith or willful misconduct in connection therewith. In addition, the Depositor
shall indemnify and hold harmless the Master Servicer, the Servicer, the Indenture Trustee, the
Seller, the Sponsor, the Custodian, the Securities Administrator and each of its respective
officers, directors and affiliates from and against any losses, damages, claims, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments and other costs and
expenses arising out of or based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Additional Disclosure provided by the Depositor that is required to
be filed pursuant to this Section 4.02 (the “Depositor Information”), or (ii) any omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were made, not misleading;
provided, by way of clarification, that this paragraph shall be construed solely by reference to
the Depositor Information that is required to be filed and not to any other information
communicated in connection with the Notes, without regard to whether the Depositor Information or
any portion thereof is presented together with or separately from such other information.

          The Master Servicer shall indemnify and hold harmless the Indenture Trustee, the Servicer, the
Seller, the Sponsor, and the Depositor and each of its respective officers, directors and
affiliates from and against any losses, damages, claims, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments and other costs and expenses arising out of
or based upon a breach of the obligations of the Master Servicer under Sections 3.20, 3.21 and 4.02
or the Master Servicer’s negligence, bad faith or willful misconduct in connection therewith. In
addition, the Master Servicer shall indemnify and hold harmless the Indenture Trustee, the
Depositor, the Servicer, the Seller, the Sponsor, and each of their officers, directors and
affiliates from and against any losses, damages, claims, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments and other costs and expenses arising out of
or based upon (i) any untrue statement or alleged untrue statement of any material fact contained
in any Annual Statement of Compliance, any Assessment of Compliance or any Additional Disclosure
provided by the Master Servicer on its behalf or on behalf of any subservicer or subcontractor
engaged by the Master Servicer pursuant to Section 3.20, 3.21 or 4.02 (the “Master Servicer
Information”), or (ii) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading; provided, by way of clarification, that this paragraph shall
be construed solely by reference to the Master Servicer Information and not to any other
information communicated in connection with the Notes, without regard to whether the Master
Servicer Information or any portion thereof is presented together with or separately from such
other information.

          The Servicer shall indemnify and hold harmless the Securities Administrator, the Master
Servicer, the Securities Administrator, the Custodian, the Indenture Trustee, and the Depositor and
each of its respective officers, directors and affiliates from and against any losses, damages,
claims, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments and other costs and expenses arising out of or based upon a
breach of the obligations of the Servicer under Sections 3.20, 3.21 and 4.02 or the Servicer’s
negligence, bad faith or willful misconduct in connection therewith. In addition, the Servicer
shall indemnify and hold harmless Securities Administrator, the Master Servicer, the Securities
Administrator, the Custodian, the Indenture Trustee, and the Depositor, and each of their officers,
directors and affiliates from and against any losses, damages, claims, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments and other costs and
expenses arising out of or based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Annual Statement of Compliance, any Assessment of Compliance or any
Additional Disclosure provided by the Servicer on its behalf or on behalf of any subservicer or
subcontractor engaged by the Servicer pursuant to Section 3.20, 3.21 or 4.02 (the “Servicer
Information”), or (ii) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading; provided, by way of clarification, that this paragraph shall
be construed solely by reference to the Servicer Information and not to any other information
communicated in connection with the Notes, without regard to whether the Servicer Information or
any portion thereof is presented together with or separately from such other information.

          The Custodian shall indemnify and hold harmless the Securities Administrator, the Master
Servicer, the Servicer, the Seller, the Sponsor, the Indenture Trustee, and the Depositor and each
of its respective officers and directors from and against any losses, damages, claims, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs, judgments and other
costs and expenses directly resulting from a material breach of the obligations of the Custodian
under Sections 3.20, 3.21 and 4.02 of this Agreement constituting negligence, bad faith or willful
misconduct on behalf of the Custodian in connection therewith. In addition, the Custodian shall
indemnify and hold harmless Securities Administrator, the Master Servicer, the Securities
Administrator, the Servicer, the Seller, the Sponsor, the Indenture Trustee, and the Depositor, and
each of their officers, directors and affiliates from and against any losses, damages, claims,
penalties, fines, forfeitures, reasonable and necessary legal fees and related costs, judgments and
other costs and expenses directly resulting from (i) any untrue statement or alleged untrue
statement of any material fact contained in any Annual Statement of Compliance, any Assessment of
Compliance or any Additional Disclosure provided by the Custodian on its behalf or on behalf of any
subservicer or subcontractor engaged by the Custodian pursuant to Section 3.20, 3.21 or 4.02 of
this Agreement (the “Custodian Information”), or (ii) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading; provided, by way of
clarification, that this paragraph shall be construed solely by reference to the Custodian
Information and not to any other information communicated in connection with the Notes, without
regard to whether the Custodian Information or any portion thereof is presented together with or
separately from such other information.

          The Sponsor shall indemnify and hold harmless the Securities Administrator, the Depositor, the
Indenture Trustee, the Custodian, the Securities Administrator and the Master Servicer and each of
its officers, directors and affiliates from and against any losses, damages, claims, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs, judgments and other
costs and expenses arising out of or based upon a breach of the obligations of the Sponsor under
Section 4.02 or the Sponsor’s negligence, bad faith or willful misconduct in connection therewith.
In addition, the Sponsor shall indemnify and hold harmless the Depositor, the Indenture Trustee,
the Custodian, the Securities Administrator and the Master Servicer and each of its respective
officers, directors and affiliates from and against any losses, damages, claims, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments and other costs and
expenses arising
out of or based upon (i) any untrue statement or alleged untrue statement of any material fact
contained in any Additional Disclosure provided by the Sponsor that is required to be filed
pursuant to this Section 4.02 (the “Sponsor Information”), or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not misleading;
provided, by way of clarification, that this paragraph shall be construed solely by reference to
the Sponsor Information that is required to be filed and not to any other information communicated
in connection with the Notes, without regard to whether the Sponsor Information or any portion
thereof is presented together with or separately from such other information.

 

 

          If the indemnification provided for herein is unavailable or insufficient to hold harmless the
Depositor, the Securities Administrator, the Sponsor, the Servicer, the Seller or the Master
Servicer, as applicable, then the defaulting party, in connection with any conduct for which it is
providing indemnification under this Section 4.02(b), agrees that it shall contribute to the amount
paid or payable by the other parties as a result of the losses, claims, damages or liabilities of
the other party in such proportion as is appropriate to reflect the relative fault and the
relative benefit of the respective parties.

          The indemnification provisions set forth in this Section 4.02(b) shall survive the termination of
this Agreement or the termination of any party to this Agreement.

          (c) Failure of the Master Servicer to comply with Section 3.20, 3.21 and this Section 4.02
(including with respect to the timeframes required herein) shall constitute a Master Servicer
Event of Termination, and at the written direction of the Depositor, the Indenture Trustee shall,
in addition to whatever rights the Indenture Trustee may have under this Agreement and at law or
equity or to damages, including injunctive relief and specific performance, upon notice immediately
terminate all of the rights and obligations of the Master Servicer under this Agreement and in and
to the Mortgage Loans and the proceeds thereof without compensating the Master Servicer for the
same (but subject to the Master Servicer rights to payment of any Master Servicing Compensation
and reimbursement of all amounts for which it is entitled to be reimbursed prior to the date of
termination). Failure of the Securities Administrator to comply with this Section 3.17 (including
with respect to the timeframes required in this Section) which failure results in a failure to
timely file the related Form 10-K, shall, at the written direction of the Depositor, constitute a
default and the Indenture Trustee at the direction of the Depositor shall, in addition to whatever
rights the Indenture Trustee may have under this Agreement and at law or equity or to damages,
including injunctive relief and specific performance, upon notice immediately terminate all of the
rights and obligations of the Securities Administrator under this Agreement and in and to the
Mortgage Loans and the proceeds thereof without compensating the Securities Administrator for the
same (but subject to the Securities Administrator’s right to reimbursement of all amounts for
which it is entitled to be reimbursed prior to the date of termination). This paragraph shall
supersede any other provision in this Agreement or any other agreement to the contrary. In
connection with the termination of the Master Servicer or the Securities Administrator pursuant to
this Section 4.02, the Indenture Trustee shall be entitled to reimbursement of all costs and
expenses associated with such termination to the extent set forth in Section 6.08 of the
Indenture. Notwithstanding anything to the contrary in this Agreement, no Event of Default by the
Master Servicer or default by the Securities Administrator shall have occurred with respect to any
failure to properly prepare, execute and/or timely file any report on Form 8-K, Form 10-D or Form
10-K, any Form 15 or Form 12b-25 or any amendments to Form 8-K, 10-D or 10-K, where such failure
results from a party’s failure to deliver, on a timely basis, any information from such party
needed to prepare, arrange for execution or file any such report, Form or amendment, and does not
result from its own negligence, bad faith or willful misconduct.

          (d) Notwithstanding the provisions of Section 7.01, this Section 4.02 may be amended without the
consent of the Noteholders.

          (e) Any report, notice or notification to be delivered by the Master Servicer or the Securities
Administrator to the Depositor pursuant to this Section 4.02, may be delivered via email to
RegABNotifications@bear.com or, in the case of a notification, telephonically by calling Reg AB
Compliance Manager at 212-272-7525.

          (f) Each of the parties acknowledges and agrees that the purpose of Sections 3.20, 3.21 and 4.02 of
this Agreement is to facilitate compliance by the Sponsor, the Depositor and the Master Servicer
with the provisions of Regulation AB. Therefore, each of the parties agrees that (a) the
obligations of the parties hereunder shall be interpreted in such a manner as to accomplish that
purpose, (b) the parties’ obligations hereunder will be supplemented and modified as necessary to
be consistent with any such amendments, interpretive advice or guidance, convention or consensus
among active participants in the asset-backed securities markets, advice of counsel, or otherwise
in respect of the requirements of Regulation AB, (c) the parties shall comply with reasonable
requests made by the Sponsor, the Depositor, the Master Servicer or the Securities Administrator
for delivery of additional or different information as the Sponsor, the Depositor, the Master
Servicer or the Securities Administrator may determine in good faith is necessary to comply with
the provisions of Regulation AB, and (d) no amendment of this Agreement shall be required to
effect any such changes in the obligations of the parties to this transaction as are necessary to
accommodate evolving interpretations of the provisions of Regulation AB.

          Section 4.03. Swap Account.

          (a) On the Closing Date, the Securities Administrator shall establish and maintain a separate,
segregated trust account titled, “Swap Account, The Bank of New York, as Indenture Trustee, in
trust for the registered Noteholders of Newcastle Mortgage Securities Trust 2007-1, Asset-Backed
Notes, Series 2007-1.” Such account shall be an Eligible Account and funds on deposit therein shall
be held separate and apart from, and shall not be commingled with, any other moneys, including,
without limitation, other moneys of the Securities Administrator held pursuant to this Agreement.
Amounts therein shall be held uninvested.

          (b) On the Business Day prior to Payment Date, prior to any payment to any Note, the Securities
Administrator shall deposit into the Swap Account the amount of any Net Swap Payment or Swap
Termination Payment (other than any Swap Termination Payment resulting from a Swap Provider Trigger
Event) owed to the Swap Provider (after taking into account any upfront payment received from the
counterparty to a replacement interest rate swap agreement) from funds collected and received with
respect to the Mortgage Loans prior to the determination of Available Funds and all amounts
received by it from the Swap Provider.

          (c) The Securities Administrator shall use any payment received from the Owner Trustee pursuant to
Section 2.03 of the Trust Agreement to make any upfront payment required under a replacement swap
agreement and any upfront payment received from the counterparty to a replacement swap agreement
shall be used to pay any Swap Termination Payment owed to the Swap Provider.

          Section 4.04. Cap Account.

          (a) On the Closing Date, the Securities Administrator shall establish and maintain
a separate, segregated trust account titled, “Cap Account, The Bank of New York, as
Indenture Trustee, in trust for the registered Noteholders of Newcastle Mortgage
Securities Trust 2007-1, Asset-Backed Notes, Series 2007-1.” Such account shall be an
Eligible Account and funds on deposit therein shall be held separate and apart from, and
shall not be commingled with, any other moneys, including, without limitation, other
moneys of the Securities Administrator held pursuant to this Agreement. Amounts therein
shall be held uninvested.

 

 

ARTICLE V

THE SERVICER AND THE DEPOSITOR

          Section 5.01. Liability of the Servicer, Master Servicer and the Depositor.

          The Servicer and Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by Servicer or Master
Servicer, as the case may be, herein. The Depositor shall be liable in accordance herewith
only to the extent of the obligations specifically imposed upon and undertaken by the
Depositor.

          Section 5.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer or the Depositor.

          Any entity into which the Servicer or Depositor may be merged or consolidated, or any
entity resulting from any merger, conversion or consolidation to which the Servicer or the
Depositor shall be a party, or any corporation succeeding to the business of the Servicer
or the Depositor, shall be the successor of the Servicer or the Depositor, as the case may
be, 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; provided,
however, that the successor Servicer shall satisfy all the requirements of Section 6.02
with respect to the qualifications of a successor Servicer.

          Section 5.03. Limitation on Liability of the Servicer, Master Servicer and Others.

          None of the Servicer, the Master Servicer, the Depositor nor any of the directors or
officers or employees or agents of the Servicer, the Master Servicer or the Depositor
shall be under any liability to the Trust or the Noteholders for any action taken or for
refraining from the taking of any action by the Servicer the Master Servicer, or the
Depositor in good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Servicer, the Master Servicer, the
Depositor or any such Person against any liability which would otherwise be imposed by
reason of its willful misfeasance, bad faith or negligence in the performance of duties of
the Servicer, the Master Servicer, or the Depositor, as the case may be, or by reason of
its reckless disregard of its obligations and duties as Servicer, Master Servicer, or
Depositor, as the case may be, hereunder. The Servicer and Master Servicer, and any
director or officer or employee or agent of the Servicer or Master Servicer may rely in
good faith on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Servicer, the Master Servicer and the
Depositor, and any director or officer or employee or agent of the Servicer, the Master
Servicer or the Depositor, shall be indemnified by the Trust and held harmless against any
loss, liability or expense incurred in connection with (i) any legal action relating to
this Agreement or the Notes, other than any loss, liability or expense incurred by reason
of its willful misfeasance, bad faith or negligence or by reason of its reckless disregard
of its obligations and duties hereunder or by reason of its failure to perform its
obligations or duties hereunder and (ii) any breach of a representation or warranty
regarding the Mortgage Loans. The Servicer, the Master
Servicer or the Depositor may undertake any such action which it may deem necessary
or desirable in respect of this Agreement, and the rights and duties of the parties hereto
and the interests of the Noteholders hereunder. In such event, unless the Depositor, the
Master Servicer or the Servicer acts without the consent of the Holders of 51% of the
aggregate Note Balance of the Notes, the reasonable legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and liabilities of
the Trust and the Servicer shall be entitled to be reimbursed therefor from the Collection
Account as and to the extent provided in Section 3.11, any such right of reimbursement
being prior to the rights of the Noteholders to receive any amount in the Collection
Account. The Master Servicer shall be indemnified by the Issuing Entity pursuant to
Section 6.07 of the Indenture.

          The Servicer’s and the Depositor’s right to indemnity or reimbursement pursuant to
this Section shall survive any resignation or termination of the Servicer pursuant to
Section 5.04 or 6.01 with respect to any losses, expenses, costs or liabilities arising
prior to such resignation or termination (or arising from events that occurred prior to
such resignation or termination). The Master Servicer’s right to indemnity or
reimbursement pursuant to this Section 5.03 shall survive any resignation or termination
of the Master Servicer pursuant to Section 3.40 or 6.06 with respect to any losses,
expenses, costs or liabilities arising prior to such resignation or termination (or
arising from events that occurred prior to such resignation or termination).

          Section 5.04. Servicer Not to Resign.

          The Servicer shall not resign from the obligations and duties hereby imposed on it
except upon determination that its duties hereunder are no longer permissible under
applicable law. Any such determination pursuant to the preceding sentence permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such effect
obtained at the expense of the Servicer and delivered to the Master Servicer. No
resignation of the Servicer shall become effective until the Servicer appoints a successor
servicer and the successor servicer shall have assumed the Servicer’s responsibilities,
duties, liabilities (other than those liabilities arising prior to the assumption of
servicing duties by the Successor Servicer) and obligations under this Agreement. Any such
resignation shall not relieve the Servicer of responsibility for any of the obligations
specified in Sections 6.01 and 6.02 as obligations that survive the resignation or receipt
of notice of termination of the Servicer

          Except as expressly provided in this Agreement, the Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other Person, or
delegate to or subcontract with, or authorize or appoint any other Person to perform any
of the duties, covenants or obligations to be performed by the Servicer hereunder. The
foregoing prohibition on assignment shall not prohibit the Servicer from designating a
Sub-Servicer as payee of any indemnification amount payable to the Servicer hereunder;
provided, however, no Sub-Servicer shall be a third-party beneficiary hereunder and the
parties hereto shall not be required to recognize any Sub-Servicer as an indemnitee under
this Agreement.

          Section 5.05. Delegation of Duties.

          In the ordinary course of business, the Servicer at any time may delegate any of its
duties hereunder to any Person, including any of its Affiliates, who agrees to conduct
such duties in accordance with standards comparable to those set forth in Section 3.01.
Such delegation shall not relieve the Servicer of its liabilities and responsibilities
with respect to such duties and shall not constitute a resignation within the meaning of
Section 5.04. Except as provided in Section 3.02, no such delegation is permitted that
results in the delegee subservicing any Mortgage Loans. The Servicer shall
provide the Indenture Trustee, Master Servicer and Securities Administrator with 60 days
prior written notice prior to the delegation of any of its duties to any Person other than
any of the Servicer’s Affiliates or their respective successors and assigns.

 

 

          Section 5.06. Indemnification.

          (a) The Servicer agrees to indemnify and hold the Indenture Trustee, the Owner
Trustee, the Sponsor, the Master Servicer, the Securities Administrator, the Seller, the
Sponsor and the Depositor harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees and
expenses that the Indenture Trustee, the Owner Trustee, the Sponsor, the Master Servicer,
the Securities Administrator, the Seller, the Sponsor or the Depositor may sustain in any
way related to the failure of the Servicer to perform its duties and service the Mortgage
Loans in compliance with the terms of this Agreement.

          (b) The Master Servicer shall indemnify and hold harmless the Trust, the Securities
Administrator, the Servicer, the Seller, the Sponsor, the Depositor, the Indenture Trustee
and the Owner Trustee from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of the Master Servicer’s willful misfeasance, bad faith or
negligence in the performance of its activities in master servicing or administering the
Mortgage Loans pursuant to this Agreement, including, but not limited to, any judgment,
award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or claim
related to the Master Servicer’s misfeasance, bad faith or negligence. Any such
indemnification shall not be payable from the assets of the Trust. The provisions of this
Section 5.06(b) shall survive the termination of this Agreement.

          (c) The Custodian shall indemnify and hold harmless the Trust, the Servicer, the
Seller, the Sponsor, the Depositor and the Indenture Trustee from and against any loss,
liability, expense, damage or injury directly resulting from a Custodial Delivery Failure.
The provisions of this Section 5.06(c) shall survive the termination of this Agreement.

          Section 5.07. Inspection

          The Servicer, in its capacity as Servicer, shall afford the Indenture Trustee and the
Master Servicer, upon reasonable notice, during normal business hours, access to all
records maintained by the Servicer in respect of its rights and obligations hereunder and
access to officers of the Servicer responsible for such obligations.

ARTICLE VI

DEFAULT

          Section 6.01. Servicer Events of Termination.

          (a) If any one of the following events (“Servicer Events of Termination”) shall occur
and be continuing:

          (i) (A) The failure by the Servicer to make any Advance; or (B) any other
failure by the Servicer to deposit in the Collection Account or the Note Account any
deposit required to be made under the terms of this Agreement which continues
unremedied for a period of one Business Day after the date upon which written notice
of such failure shall have been given to the Servicer by the Master Servicer,
Securities Administrator or Indenture
Trustee or to the Servicer and the Indenture Trustee by any Holders of not less
than 25% of the aggregate Note Balances of the Notes; or

          (ii) The failure by the Servicer to make any required Servicing Advance which
failure continues unremedied for a period of 30 days, or the failure by the Servicer
duly to observe or perform, in any material respect, any other covenants,
obligations or agreements of the Servicer as set forth in this Agreement, which
failure continues unremedied for a period of 30 days (or if such failure or breach
cannot be remedied within 30 days, then such remedy shall have been commenced within
30 days and diligently pursued thereafter; provided, however, that in no event shall
such failure or breach be allowed to exist for a period of greater than 90 days),
after the date (A) on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Master Servicer, Securities
Administrator or Indenture Trustee or to the Indenture Trustee by any Holders of not
less than 25% of the aggregate Note Balance of the Notes or (B) of actual knowledge
of such failure by a Servicing Officer of the Servicer; or

          (iii) The entry against the Servicer of a decree or order by a court or agency
or supervisory authority having jurisdiction in the premises for the appointment of
a trustee, conservator, receiver or liquidator in any insolvency, conservatorship,
receivership, readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period of 60
days;

          (iv) Reserved; or

          (v) The Servicer shall voluntarily go into liquidation, consent to the
appointment of a conservator or receiver or liquidator or similar person in any
insolvency, readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to all or substantially
all of its property; or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a conservator,
receiver, liquidator or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the winding-up
or liquidation of its affairs, shall have been entered against the Servicer and such
decree or order shall have remained in force undischarged, unbonded or unstayed for
a period of 60 days; or the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the benefit
of its creditors or voluntarily suspend payment of its obligations;

          (b) then, and in each and every such case, so long as a Servicer Event of Termination
shall not have been remedied within the applicable grace period, (x) with respect solely
to clause (i)(A) above, if such Advance is not made by 11:00 A.M., New York time, on the
Business Day immediately following the Servicer Remittance Date (provided the Master
Servicer shall give the Servicer, and the Servicer shall have received, notice of such
failure to advance by 5:00 P.M. New York time on the Servicer Remittance Date), the Master
Servicer shall terminate all of the rights and obligations of the Servicer under this
Agreement and the Successor Servicer appointed in accordance with Section 6.02, shall
immediately make such Advance and assume, pursuant to Section 6.02, the duties of a
successor Servicer and (y) in the case of (i)(B), (ii), (iii) and (iv) above, the Master
Servicer shall,
at the direction of the Holders of each Class of Notes evidencing Percentage Interests
aggregating not less than 51%, by notice then given in writing to the Servicer and Master
Servicer (and to the Indenture Trustee if given by Holders of Notes), terminate all of the
rights and obligations of the Servicer as servicer under this Agreement. Any such notice
to the Servicer shall also be given to each Rating Agency, the Depositor, the Sponsor and
the Seller. On or after the receipt by the Servicer (and by the Indenture Trustee if such
notice is given by the Holders) of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Notes or the Mortgage Loans or
otherwise, shall pass to and be vested in the Successor Servicer pursuant to and under
this Section; and, without limitation, and the Successor Servicer is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage Loan and
related documents or otherwise. The Servicer agrees to cooperate with the Successor
Servicer (or the applicable successor Servicer) in effecting the termination of the
responsibilities and rights of the Servicer hereunder, including, without limitation, the
delivery to the Successor Servicer of all documents and records requested by it to enable
it to assume the Servicer’s functions under this Agreement within ten Business Days
subsequent to such notice, the transfer within one Business Day subsequent to such notice
to the Successor Servicer for the administration by it of all cash amounts that shall at
the time be held by the Servicer and to be deposited by it in the Collection Account, the
Note Account, any REO Account or any Escrow Account or that have been deposited by the
Servicer in such accounts or thereafter received by the Servicer with respect to the
Mortgage Loans or any REO Property received by the Servicer. All Servicing Transfer Costs
shall be paid by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses and to the extent not paid by the Servicer, by the Trust.

 

 

          Notwithstanding the termination of the Servicer hereunder, the Servicer shall be
entitled to reimbursement of all unpaid Servicing Fees and all unreimbursed Advances and
Servicing Advances in the manner and at the times set forth herein.

          Section 6.02. Master Servicer to Act; Appointment of Successor.

          (a) From the time the Servicer (and the Indenture Trustee, if notice is sent by the
Holders) receives a notice of termination pursuant to Section 6.01, the Master Servicer
(or such other successor Servicer as is approved in accordance with this Agreement) shall
be the successor in all respects to the Servicer in its capacity as servicer under this
Agreement (the “Successor Servicer”) and the transactions set forth or provided for herein
and shall be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof arising on and after its
succession. Notwithstanding the foregoing, the parties hereto agree that the Successor
Servicer, immediately will assume all of the obligations of the Servicer to make Advances
subject to Section 4.01. Notwithstanding the foregoing, the Successor Servicer shall not
be responsible for the lack of information and/or documents that it cannot obtain through
reasonable efforts. It is understood and agreed by the parties hereto that there will be a
period of transition (not to exceed 90 days) before the transition of servicing
obligations is fully effective. As compensation therefor, the Successor Servicer shall be
entitled to such compensation as the Servicer would have been entitled to hereunder if no
such notice of termination or resignation had been given. The appointment of the Successor
Servicer shall not affect any liability of the predecessor Servicer which may have arisen
under this Agreement prior to its termination as Servicer to pay any deductible under an
insurance policy pursuant to Section 3.14 or to reimburse the Successor Servicer pursuant
to Section 3.06, nor shall any Successor Servicer be liable for any acts or omissions of
the predecessor Servicer or for any breach by such Servicer of any of its representations
or warranties contained herein or in any related document or agreement. The Successor
Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. All reasonable
Servicing Transfer Costs shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs, and if such predecessor Servicer defaults in its
obligation to pay such costs, such costs shall be paid by the Successor Servicer (in which
case the Successor Servicer shall be entitled to reimbursement therefor from the assets of
the Trust).

          Notwithstanding the above, (a) if the Master Servicer is to act as successor servicer
and is legally unable so to act, the Indenture Trustee shall act as Successor Servicer and
(b) if the Indenture Trustee is to act as successor servicer and (i) if the Indenture
Trustee is unwilling to act as Successor Servicer or (ii) if the Indenture Trustee is
legally unable so to act, the Indenture Trustee shall appoint (with the consent of the
Majority Certificateholder) or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank or other mortgage loan or home
equity loan servicer having a net worth of not less than $50,000,000 as the successor to
the Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder; provided, that the appointment of any
such successor Servicer will not result in the qualification, reduction or withdrawal of
the ratings assigned to the Notes by the Rating Agencies as evidenced by a letter to such
effect from the Rating Agencies. Pending appointment of a successor to the Servicer
hereunder, unless the Indenture Trustee is prohibited by law from so acting, the Indenture
Trustee shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation which the Servicer would
otherwise have received pursuant to Section 3.18 (or such other compensation as the
Indenture Trustee and such successor shall agree, not to exceed the Servicing Fee).

          (b) Any Successor Servicer shall during the term of its service as servicer continue
to service and administer the Mortgage Loans for the benefit of Noteholders, and maintain
in force a policy or policies of insurance covering errors and omissions in the
performance of its obligations as Servicer hereunder and a fidelity bond in respect of its
officers, employees and agents to the same extent as the Servicer is so required pursuant
to Section 3.14.

          (c) In connection with the termination or resignation of the Servicer hereunder,
either (i) the Successor Servicer, including the Master Servicer or the Indenture Trustee
if acting as a Successor Servicer, shall represent and warrant that it is a member of MERS
in good standing and shall agree to comply in all material respects with the rules and
procedures of MERS in connection with the servicing of the related Mortgage Loans that are
registered with MERS, in which case the predecessor Servicer shall cooperate with the
Successor Servicer in causing MERS to revise its records to reflect the transfer of
servicing to the Successor Servicer as necessary under MERS’ rules and regulations, or
(ii) the predecessor Servicer shall cooperate with the Successor Servicer in causing MERS
to execute and deliver an Assignment in recordable form to transfer the Mortgage from MERS
to the Indenture Trustee and to execute and deliver such other notices, documents and
other instruments as may be necessary or desirable to effect a transfer of such Mortgage
Loan or servicing of such Mortgage Loan on the MERS® System to the Successor Servicer. The
predecessor Servicer shall file or cause to be filed any such Assignment in the
appropriate recording office. The predecessor Servicer shall bear any and all fees of
MERS, costs of preparing any Assignments, and fees and costs of filing any Assignments
that may be required under this Section 6.02(c).

          Section 6.03. Waiver of Defaults.

          The Majority Noteholders may, on behalf of all Noteholders, waive, in writing, any
events permitting removal of the Servicer as servicer or the Master Servicer as master
servicer pursuant to this Article VI, provided, however, that the Majority Noteholders may
not waive a default in making a required payment on a Note without the written consent of
the Holder of such Note. Upon any waiver of a past default, such default shall cease to
exist and any Servicer Event of Termination or Master Servicer Event of Termination, as
applicable, arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default or impair
any right consequent thereto except to the extent expressly so waived. Notice of any such
waiver shall be given by the Securities Administrator to the Sponsor and the Rating
Agencies.

 

 

          Section 6.04. Notification to Noteholders.

          (a) Upon any termination or appointment of a successor to the Servicer or Master
Servicer pursuant to this Article VI or Section 5.04, the Securities Administrator shall
give prompt written notice thereof to the Owner Trustee, the Sponsor, the Depositor and
the Noteholders at their respective addresses appearing in the Note Register and each
Rating Agency.

          (b) No later than the later of (a) 60 days after the occurrence of any event which
constitutes or which, with notice or lapse of time or both, would constitute a Servicer
Event of Termination or (b) within five Business Days after a Responsible Officer of the
Securities Administrator becomes aware of the occurrence of such an event, the Securities
Administrator shall transmit by mail to all Noteholders notice of such occurrence unless
such default or Servicer Event of Termination shall have been waived or cured.

          Section 6.05. Survivability of Liabilities.

          Notwithstanding anything herein to the contrary, upon termination of the Servicer or
Master Servicer hereunder, any liabilities of the Servicer or Master Servicer, as the case
may be, which accrued prior to such termination shall survive such termination.

          Section 6.06. Master Servicer Events of Termination.

          (a) If any one of the following events (“Master Servicer Events of Default”) shall
occur and be continuing:

          (i) If the Master Servicer is not the Securities Administrator, any failure by
the Master Servicer to furnish the Securities Administrator the Mortgage Loan data
sufficient to prepare the reports described in Section 7.05 of the Indenture which
continues unremedied for a period of one Business Day after the date upon which
written notice of such failure shall have been given to such Master Servicer by the
Indenture Trustee or the Securities Administrator or to such Master Servicer, the
Securities Administrator and the Indenture Trustee by the Holders of not less than
25% of the aggregate Note Balance of the Notes; or

          (ii) Any failure on the part of the Master Servicer duly to observe or perform
in any material respect any other of the covenants or agreements (other than those
referred to in clauses (viii) and (ix) below) on the part of the Master Servicer
contained in this Agreement which continues unremedied for a period of thirty (30)
days after the date on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Master Servicer by the Indenture Trustee
or the Securities Administrator, or to the Master Servicer, the Securities
Administrator and the Indenture Trustee by the Holders of not less than 25% of the
aggregate Note Balance of the Notes; or

          (iii) A decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have been
entered against the Master Servicer, and such decree or order shall have remained in
force undischarged or unstayed for a period of sixty (60) days or any Rating Agency
reduces or withdraws or threatens to reduce or withdraw the rating of the Notes
because
of the financial condition or loan servicing capability of such Master
Servicer; or

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

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

          (vi) The Master Servicer shall be dissolved, or shall dispose of all or
substantially all of its assets, or consolidate with or merge into another entity or
shall permit another entity to consolidate or merge into it, such that the resulting
entity does not meet the criteria for a Successor Master Servicer as specified in
Section 6.04 hereof; or

          (vii) If a representation or warranty set forth in Section 2.01(b) hereof shall
prove to be incorrect as of the time made in any respect that materially and
adversely affects the interests of the Noteholders, and the circumstance or
condition in respect of which such representation or warranty was incorrect shall
not have been eliminated or cured within 30 days after the date on which written
notice of such incorrect representation or warranty shall have been given to the
Master Servicer by the Indenture Trustee or the Securities Administrator, or to the
Master Servicer, the Securities Administrator and the Indenture Trustee by the
Holders of not less than 25% of the aggregate Note Balance of the Notes; or

          (viii) A sale or pledge of any of the rights of the Master Servicer hereunder
or an assignment of this Agreement by the Master Servicer or a delegation of the
rights or duties of the Master Servicer hereunder shall have occurred in any manner
not otherwise permitted hereunder and without the prior written consent of the
Indenture Trustee and the Holders of not less than 50% of the aggregate Note Balance
of the Notes; or

          (ix) Any failure of the Master Servicer to make any Monthly Advances when such
Monthly Advances are due, as required to be made hereunder.

          (b) then, and in each and every such case, so long as a Master Servicer Event of
Default shall not have been remedied, (x) with respect solely to clause (ix) above, upon
receipt of written notice or discovery by a Responsible Officer of the Indenture Trustee
or of the Securities Administrator of such failure, the Indenture Trustee shall give
immediate telephonic notice of such failure to a Master Servicing Officer of the Master
Servicer and the Indenture Trustee shall terminate all of the rights and obligations of
the Master Servicer under this Agreement and the Successor Master
Servicer appointed in accordance with Section 6.07 shall immediately make such Monthly
Advance (provided, if the Successor Master Servicer determines in its reasonable judgment
that a Monthly Advance is a Nonrecoverable Advance or if it is prohibited by law from
doing so, the Successor Master Servicer shall be under no obligation to make such Monthly
Advance) prior to the payment of funds on the related Payment Date and assume, pursuant to
Section 6.07, the duties of a Successor Master Servicer and (y) in the case of clauses
(i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) above, the Indenture Trustee shall, at
the direction of the Holders of not less than 51% of the aggregate Note Balance of the
Notes by notice then given in writing to the Master Servicer (and to the Indenture Trustee
if given by Holders of Notes), terminate all of the rights and obligations of the Master
Servicer as servicer under this Agreement. Any such notice to the Master Servicer shall
also be given to each Rating Agency and the Seller. On or after receipt by the Master
Servicer of such written notice, all authority and power of the Master Servicer under this
Agreement, whether with respect to the Notes or the Mortgage Loans or otherwise, shall
pass to and be vested in the Successor Master Servicer pursuant to and under this Section
6.06; and, without limitation, the Successor Master Servicer is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage Loan and
related documents, or otherwise. The Master Servicer agrees to cooperate with the
Successor Master Servicer, the Servicer, the Securities Administrator and the Indenture
Trustee in effecting the termination of the responsibilities and rights of the Master
Servicer hereunder. All Servicing Transfer Costs and other reasonable out-of-pocket costs
and expenses (including attorneys’ fees) incurred in connection with transferring any
Mortgage Files to the Successor Master Servicer and amending this Agreement to reflect
such succession as Master Servicer pursuant to this Section 6.06 shall be paid by the
predecessor Master Servicer within 90 days of written demand, itemized in reasonable
detail, or, to the extent not paid by the predecessor Master Servicer, by the Trust prior
to payments to Noteholders (or, if the predecessor Master Servicer is the Indenture
Trustee, by the initial Master Servicer), upon presentation of reasonable documentation of
such costs and expenses. If the predecessor Master Servicer is required but fails to pay
the amounts specified in the preceding sentence and such amounts are paid by the Trust,
the Securities Administrator shall, at the direction and expense of the
Certificateholders, take appropriate action to enforce such obligation and recover such
amounts on behalf of such Certificateholders.

          Notwithstanding any termination of the activities of the Master Servicer hereunder,
the Master Servicer shall continue to be entitled to receive from the Trust, payment of
all the accrued and unpaid portion of the Master Servicing Fees to which the Master
Servicer would have been entitled and reimbursement for all outstanding Monthly Advances
which amount shall be remitted by the Successor Master Servicer to the terminated Master
Servicer as permitted under Section 3.01 of the Indenture on a first-in, first-out basis.
The Master Servicer shall continue to be entitled to the benefits of Section 5.03,
notwithstanding any termination hereunder, with respect to events occurring prior to such
termination.

 

 

          Section 6.07. Appointment of Successor Master Servicer.

          (a) The Issuer and the Indenture Trustee hereby appoint, and The Bank of New York,
hereby accepts appointment, on behalf of itself or an affiliate, subject to the provisions
of Sections 3.40 and 6.07(d) hereof, upon receipt by the Master Servicer of a notice of
termination pursuant to Section 6.06 or upon resignation of the Master Servicer pursuant
to Section 3.40, to be the successor (the “Successor Master Servicer”) in all respects to
the Master Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof arising on and after its succession; provided, however, that,
without affecting the immediate termination of the rights of the Master Servicer
hereunder, it is understood and acknowledged by the parties hereto that there will be a
period of transition not to exceed 90 days (the “Master Servicer Transition Period”)
before the master servicing transfer is fully effected.

          During the Master Servicer Transition Period, neither the Successor Master Servicer,
the Securities Administrator nor the Indenture Trustee shall be responsible for the lack
of information and documents that it cannot reasonably obtain on a practicable basis under
the circumstances.

          As compensation therefor, the Successor Master Servicer shall be entitled to such
compensation as the Master Servicer would have been entitled to hereunder if no such
notice of termination had been given. Notwithstanding the above, if the Successor Master
Servicer is legally unable to act as successor servicer, the Indenture Trustee may appoint
or petition a court of competent jurisdiction to appoint, any established housing and home
finance institution, bank or other mortgage loan or home equity loan servicer that is an
Approved Servicer (defined for this purpose by (i) striking the words “the Master
Servicer” in clause 1 of the definition thereof and (ii) striking clause 2(a) in the
definition thereof) as the successor to the Master Servicer hereunder in the assumption of
all or any part of the responsibilities, duties or liabilities of the Master Servicer
hereunder; provided that the appointment of any such Successor Master Servicer will not
result in the qualification, reduction or withdrawal of the ratings assigned to the
Offered Notes by the Rating Agencies. Pending appointment of a successor to the Master
Servicer hereunder, unless the Successor Master Servicer is prohibited by law from so
acting, the Successor Master Servicer shall act in such capacity as hereinabove provided.
In connection with such appointment and assumption, the successor shall be entitled to
receive compensation out of payments on the Mortgage Loans in an amount equal to the
compensation which the Master Servicer would otherwise have received pursuant to Section
3.37 (or such lesser compensation as the Indenture Trustee and such successor shall
agree). The appointment of a Successor Master Servicer shall not affect any liability of
the predecessor Master Servicer which may have arisen under this Agreement prior to its
termination as Master Servicer to indemnify the Indenture Trustee, the Servicer and the
Securities Administrator pursuant to Section 5.06, nor shall any Successor Master Servicer
be liable for any acts or omissions of the predecessor Master Servicer or for any breach
by such Master Servicer of any of its representations or warranties contained herein or in
any related document or agreement. The Indenture Trustee, the Securities Administrator or
a Successor Master Servicer shall have no responsibility or obligation (i) to repurchase
or substitute for any of the Mortgage Loans or (ii) for any acts or omissions of a
predecessor Master Servicer. The Indenture Trustee, the Securities Administrator and such
successor shall take such action, at the expense of the Trust, consistent with this
Agreement, as shall be necessary to effectuate any such succession.

          (b) Any successor, including the Successor Master Servicer, to the Master Servicer as
servicer shall during the term of its service as master servicer (i) continue to master
service and administer the Mortgage Loans for the benefit of Noteholders and (ii) maintain
in force a policy or policies of insurance covering errors and omissions in the
performance of its obligations as Master Servicer hereunder and a fidelity bond in respect
of its officers, employees and agents to the same extent as the Master Servicer is so
required pursuant to Section 3.32.

          (c) In connection with the termination or resignation of the Master Servicer
hereunder, the Successor Master Servicer, including the Indenture Trustee if the Indenture
Trustee is acting as Successor Master Servicer, shall represent and warrant that it is a
member of MERS in good standing and shall agree to comply in all material respects with
the rules and procedures of MERS in connection with the servicing of the Mortgage Loans
that are registered with MERS.

          (d) Notwithstanding the above, the Indenture Trustee may, if it shall be unwilling to
continue to so act, or shall, if it is unable to so act, petition a court of competent
jurisdiction to appoint, or appoint on its own behalf any established housing and home
finance institution servicer, master servicer, servicing or mortgage servicing institution
having a net worth of not less than $25,000,000 and meeting such other standards for a
successor master servicer as are set forth in this Agreement, as the successor to such
Master Servicer in the assumption of all of the responsibilities, duties or liabilities of
a master servicer, like the Master Servicer.

          Neither the Indenture Trustee nor any other Successor Master Servicer shall be deemed
to be in default hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof or any failure to perform, or any delay in
performing, any duties or responsibilities hereunder, in either case caused by the failure
of the Master Servicer to deliver or provide, or any delay of the Master Servicer in
delivering or providing, any cash, information, documents or records to it.

          Notwithstanding anything herein to the contrary, in no event shall the Indenture
Trustee be liable for any Servicing Fee or Master Servicing Fee or for any differential in
the amount of the Servicing Fee or Master Servicing Fee paid hereunder and the amount
necessary to induce any Successor Servicer or Successor Master Servicer to act as
Successor Servicer or Successor Master Servicer, as applicable, under this Agreement and
the transactions set forth or provided for herein.

 

 

ARTICLE VII

MISCELLANEOUS PROVISIONS

          Section 7.01. Amendment.

          This Agreement may be amended from time to time by the parties hereto (with the
consent of the Majority Certificateholder), provided that any amendment be accompanied by
(i) a letter from the Rating Agencies that the amendment will not result in the
downgrading or withdrawal of the rating then assigned to the Notes and (ii) an Officer’s
Certificate of the Sponsor, that such amendment will not cause the Trust to fail to
qualify as a “qualified special purpose entity” under Financial Accounting Standards No.
140.

          Section 7.02. GOVERNING LAW.

          THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

          Section 7.03. Notices.

          All demands, notices and communications hereunder shall be in writing and shall be
deemed to have been duly given if when delivered to:

          (a) in the case of the Depositor:

	 	 	 	Bear Stearns Asset Backed Securities I LLC

383 Madison Avenue

New York, New York, 10179

Attention: General Counsel

          (b) in the case of the Originator

	 	 	 	Fremont Investment & Loan

2727 East Imperial Highway

Brea, CA 92821

Attn: Senior Vice President, Capital Markets

Attn: Vice President, Secondary Marketing

          (c) in the case of the Servicer:

	 	 	 	Nationstar Mortgage LLC

350 Highland Drive

Lewisville, Texas 75067

Attn: Jay Bray

          (d) in the case of Rating Agencies:

	 	 	 	Moody’s Investors Service, Inc.

4th Floor

99 Church Street

New York, New York 10007

Attention: Residential Mortgage Monitoring Unit
	 
	 	 	 	Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

55 Water Street — 41st Floor

New York, New York 10041

Attention: Asset Backed Surveillance Group

          (e) in the case of the Owner Trustee, the Corporate Trust Office:

	 	 	 	Wilmington Trust Company
Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890

Attention: Corporate Trust Administration

          (f) in the case of the Issuing Entity:

	 	 	 	Newcastle Mortgage Securities Trust 2007-1

c/o Newcastle Investment Corp.

750 B Street, Suite 2700

San Diego, CA 92101

Attention: Legal

with a copy to the Sponsor at the address in (g) below.

          (g) in the case of the Indenture Trustee:

	 	 	 	The Bank of New York,

101 Barclay Street, Floor 4W

New York, New York 10286

Attn: Structured Finance — Newcastle Mortgage Securities Trust 2007-1

          (h) in the case of the Sponsor:

	 	 	 	Newcastle Investment Corp.
1245
Avenue of the Americas
New York, New
York 10022
Attention: Debra Hess

          (i) in the case of the Master Servicer:

	 	 	 	Wells Fargo Bank, N.A,
9062 Old
Annapolis Road,
Columbia, Maryland
24105,

Attn: Corporate Trust — Newcastle 2007-1

          (j) in the case of the Securities Administrator:

	 	 	 	Wells Fargo Bank, N.A,

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

          (k) in the case of the Custodian:

	 	 	 	Wells Fargo Bank, N.A,
24 Executive
Park, Suite 200
Irvine, CA 92614

Attn: Corporate Trust — Newcastle 2007-01

 

 

or, as to each party, at such other address as shall be designated by such party in a
written notice to each other party. Any notice required or permitted to be mailed to a
Noteholder shall be given by first class mail, postage prepaid, at the address of such
Noteholder as shown in the Note Register. Any notice so mailed within the time prescribed
in this Agreement shall be conclusively presumed to have been duly given, whether or not
the Noteholder receives such notice. Any notice or other document required to be delivered
or mailed by the Securities Administrator to any Rating Agency shall be given on a
reasonable efforts basis and only as a matter of courtesy and accommodation and the
Securities Administrator shall have no liability for failure to deliver such notice or
document to any Rating Agency.

          Section 7.04. Severability of Provisions.

          If any one or more of the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the Notes or the rights
of the Noteholders thereof.

          Section 7.05. Third-Party Beneficiaries.

          This Agreement will inure to the benefit of and be binding upon the parties hereto,
the Noteholders, the Owner Trustee, the Indenture Trustee and their respective successors
and permitted assigns. Except as otherwise provided in this Agreement, no other Person
will have any right or obligation hereunder. The Indenture Trustee shall have the right to
exercise all rights of the Issuing Entity under this Agreement.

          Section 7.06. Counterparts.

          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.

          Section 7.07. 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 7.08. Termination.

          The respective obligations and responsibilities of the Servicer and the Issuing
Entity created hereby shall terminate upon the satisfaction and discharge of the Indenture
pursuant to Section 4.10 thereof.

          Section 7.09. No Petition.

          The Servicer, by entering into this Agreement, hereby covenants and agrees that it
will not at any time institute against the Depositor or the Issuing Entity, or join in any
institution against the Issuing Entity, any bankruptcy proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations of the
Depositor or the Issuing Entity. This section shall survive the termination of this
Agreement by one year.

          Section 7.10. No Recourse.

          The Servicer acknowledges that no recourse may be had against the Depositor or the
Issuing Entity, except as may be expressly set forth in this Agreement.

          Section 7.11. Indenture Trustee Rights.

          The Indenture Trustee shall be entitled to the same rights, protections, indemnities
and immunities afforded to it under the Indenture as if specifically set forth herein.

          Section 7.12. Compliance.

          In order to comply with its duties under the U.S.A. Patriot Act, the Indenture
Trustee may obtain and verify certain information and documentation from the Servicer or
any other party hereto, including but not limited to such such party’s name, address, and
other identifying information.

          Section 7.13. Intention of the Parties and Interpretation.

          Each of the parties acknowledges and agrees that the purpose of Sections 3.20, 3.21
and 4.02 of this Agreement is to facilitate compliance by the Depositor with the
provisions of Regulation AB promulgated by the Securities and Exchange Commission under
the 1934 Act (17 C.F.R. §§ 229.1100 — 229.1123), as such may be amended from time to time
and subject to clarification and interpretive advice as may be issued by the staff of the
Securities and Exchange Commission from time to time. Therefore, each of the parties
agrees that (a) the obligations of the parties hereunder shall be interpreted in such a
manner as to accomplish that purpose, (b) the parties’ obligations hereunder will be
supplemented and modified as necessary to be consistent with any such amendments,
interpretive advice or guidance, convention or consensus among active participants in the
asset-backed securities markets, advice of counsel, or otherwise in respect of the
requirements of Regulation AB, (c) the parties shall comply with reasonable requests made
by the Depositor for delivery of additional or different information as the Depositor may
determine in good faith is necessary to comply with the provisions of Regulation AB, and
(d) no amendment of this Agreement shall be required to effect any such changes in the
parties’ obligations as are necessary to accommodate evolving interpretations of the
provisions of Regulation AB.

 

 

ARTICLE VIII

DUTIES OF THE ADMINISTRATOR

          Section 8.01. Administrative Duties.

          (a) Duties with Respect to the Indenture. The Administrator shall perform all its
duties and the duties of the Issuing Entity under the Indenture. In addition, the
Administrator shall consult with the Owner Trustee as the Administrator deems appropriate
regarding the duties of the Issuing Entity under the Indenture. The Administrator shall
monitor the performance of the Issuing Entity and shall advise the Owner Trustee when
action is necessary to comply with the Issuing Entity’s duties under the Indenture. The
Administrator shall prepare for execution by the Issuing Entity or shall cause the
preparation by other appropriate Persons of all such documents, reports, filings,
instruments, Notes and opinions as it shall be the duty of the Issuing Entity to prepare,
file or deliver pursuant to the Indenture. In furtherance of the foregoing, the
Administrator shall take all necessary action that is the duty of the Issuing Entity to
take pursuant to the Indenture.

          (b) Duties with Respect to the Issuing Entity.

          (i) In addition to the duties of the Administrator set forth in this Agreement
or any of the Basic Documents, the Administrator shall perform such calculations and
shall prepare for execution by the Issuing Entity or the Owner Trustee or shall
cause the preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuing Entity or the Owner Trustee to prepare, file or deliver pursuant to this
Agreement or any of the Basic Documents or under state and federal tax and
securities laws (including, but not limited to, UCC filings in applicable
jurisdictions and annual compliance certificates, if any), and at the request of the
Owner Trustee or the Indenture Trustee shall take all appropriate action that it is
the duty of the Issuing Entity to take pursuant to this Agreement or any of the
Basic Documents. In accordance with the directions of the Issuing Entity or the
Owner Trustee, the Administrator shall administer, perform or supervise the
performance of such other activities in connection with the Notes (including the
Basic Documents) as are not covered by any of the foregoing provisions and as are
expressly requested by the Issuing Entity, the Indenture Trustee or the Owner
Trustee.

          (ii) Notwithstanding anything in this Agreement or any of the Basic Documents
to the contrary, the Administrator shall be responsible for promptly notifying the
Owner Trustee and Certificate Paying Agent in the event that any withholding tax is
imposed on the Issuing Entity’s payments (or allocations of income) to an Owner (as
defined in the Trust Agreement)
as contemplated in Section 5.03 of the Trust Agreement. Any such notice shall
be in writing and specify the amount of any withholding tax required to be withheld
by the Owner Trustee or the Certificate Paying Agent pursuant to such provision.

          (iii) In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Administrator may enter into transactions with or
otherwise deal with any of its Affiliates; provided, however, that the terms of any
such transactions or dealings shall be in accordance with any directions received
from the Issuing Entity and shall be, in the Administrator’s opinion, no less
favorable to the Issuing Entity in any material respect than with terms made
available to unrelated third parties.

          (c) Tax Matters. The Administrator shall prepare, on behalf of the Owner Trustee,
financial statements and such annual or other reports of the Issuing Entity as are
necessary for the preparation by the Securities Administrator of tax returns and
information reports as provided in Section 5.03 of the Trust Agreement, including, without
limitation, Form 1099.

          (d) Non-Ministerial Matters. With respect to matters that in the reasonable judgment
of the Administrator are non-ministerial, the Administrator shall not take any action
pursuant to this Article VIII unless within a reasonable time before the taking of such
action, the Administrator shall have notified the Owner Trustee and the Indenture Trustee
of the proposed action and the Owner Trustee and, with respect to items (A), (B), (C) and
(D) below, the Indenture Trustee shall not have withheld consent or provided an
alternative direction. For the purpose of the preceding sentence, “non-ministerial
matters” shall include:

     (A) the amendment of or any supplement to the Indenture;

     (B) the initiation of any claim or lawsuit by the Issuing Entity and the
compromise of any action, claim or lawsuit brought by or against the Issuing
Entity (other than in connection with the collection of the Mortgage Loans);

     (C) the amendment, change or modification of this Agreement or any of the
Basic Documents to which the Indenture Trustee or the Owner Trustee, as
applicable, is a party;

     (D) the appointment of successor Certificate Paying Agents and successor
Indenture Trustees pursuant to the Indenture or the appointment of successor
Servicers or the consent to the assignment by the Certificate Registrar,
Certificate Paying Agent or Indenture Trustee of its obligations under the
Indenture; and

     (E) the removal of the Indenture Trustee.

          (e) Sponsor shall act as Administrator. By execution of this Agreement, the
Sponsor agrees to be bound as Administrator and shall perform the obligations of the
Administrator as described herein.

          Section 8.02. Records.

          The Administrator shall maintain appropriate books of account and records relating to
services performed under this Agreement, which books of account and records shall be
accessible for inspection by the Issuing Entity, the Indenture Trustee, the Securities
Administrator, the Depositor and the Owner Trustee at any time during normal business
hours.

          Section 8.03. Additional Information to be Furnished.

          The Administrator shall furnish to the Issuing Entity, the Indenture Trustee, the
Securities Administrator and the Owner Trustee from time to time such additional
information regarding the Mortgage Loans and the Notes as the Issuing Entity, the
Indenture Trustee, the Securities Administrator or the Owner Trustee shall reasonably
request.

          Section 8.04. No Recourse to Owner Trustee.

          It is expressly understood and agreed by the parties hereto that (a) this Agreement
is executed and delivered by Wilmington Trust Company, not individually or personally, but
solely as Owner Trustee of Newcastle Mortgage Securities Trust 2007-1, in the exercise of
the powers and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuing Entity is made and
intended not as personal representations, undertakings and agreements by Wilmington Trust
Company but is made and intended for the purpose for binding only the Issuing Entity, (c)
nothing herein contained shall be construed as creating any liability of Wilmington Trust
Company, individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the parties hereto
and by any Person claiming by, through or under the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuing Entity or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the Issuing
Entity under this Agreement or any other related documents.

 

 

          IN WITNESS WHEREOF, the parties hereto have caused this Sale and Sale and Servicing
Agreement to be duly executed by their respective officers or representatives all as of
the day and year first above written.

	 	 	 	 	 
	 	BEAR STEARNS ASSET BACKED SECURITIES I LLC

as Depositor

 	 
	 	By:  	/s/ Matthew Perkins	 
	 	 	Name:  	Matthew Perkins	 
	 	 	Title:  	CEO & President	 
	 
	 	NATIONSTAR MORTGAGE LLC,

as Servicer

 	 
	 	By:  	/s/ Gregory A. Oniu	 
	 	 	Name:  	Gregory A. Oniu	 
	 	 	Title:  	Senior Vice President	 
	 
	 	NEWCASTLE MORTGAGE SECURITIES TRUST 2007-1, as Issuing Entity

By: Wilmington Trust Company, not in its individual capacity, but
solely as Owner Trustee

 	 
	 	By:  	/s/ Donald G. MacKelcan	 
	 	 	Name:  	Donald G. MacKelcan	 
	 	 	Title:  	Senior Vice President	 
	 
	 	THE BANK OF NEW YORK,

not in its individual capacity, but solely as as Indenture Trustee

 	 
	 	By:  	/s/ Michael J. Wiblis Hauser	 
	 	 	Name:  	Michael J. Wiblis Hauser	 
	 	 	Title:  	Assistant Vice President	 
	 
	 	WELLS FARGO BANK, N.A.
as Master Servicer, Securities Administrator and Custodian

 	 
	 	By:  	/s/ Darron C. Woodus	 
	 	 	Name:  	Darron C. Woodus	 
	 	 	Title:  	Assistant Vice President	 
	 

	 	 	 	 	 
	For purposes of Article IV and Article VIII:

NEWCASTLE INVESTMENT CORP.,

as Sponsor and Administrator

 	 
	By:  	/s/ Debra Hess	 
	 	Name:  	Debra Hess	 
	 	Title:  	Chief Financial Officer	 
	 

 

 

EXHIBIT A

FORM OF ASSIGNMENT AGREEMENT

 

 

ASSIGNMENT AND RECOGNITION AGREEMENT

     THIS ASSIGNMENT AND RECOGNITION AGREEMENT, dated July 12, 2007, (“Agreement”) among
NIC WL II LLC (the “Assignor”), Bear Stearns Asset Backed Securities I LLC (the
“Assignee”), Fremont Investment & Loan (the “Originator”) and Nationstar Mortgage
LLC (“Nationstar”):

The parties hereto hereby agree as follows:

Assignment and Conveyance

          1. The Assignor hereby conveys, sells, grants, transfers and assigns to the Assignee, without
recourse and as of the date hereof (the “Closing Date”), all of the right, title and
interest of the Assignor, as purchaser, in, to and under: (i) those certain Mortgage Loans listed
on the schedule (the “Mortgage Loan Schedule”) attached hereto as Exhibit A (the
“Mortgage Loans”), all interest accruing thereon on and after June 1, 2007 and all
collections in respect of interest and principal due after June 1, 2007 (other than collections of
interest accrued prior to June 1, 2007); (ii) property which secured each such Mortgage Loan and
which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) its interest in any
insurance policies in respect of the Mortgage Loans; and (iv) that certain Master Mortgage Loan
Purchase and Interim Servicing Agreement dated as of March 15, 2007, as amended (the “Purchase
Agreement”), between the Assignor, as initial purchaser, and the Originator, as seller and
servicer, solely insofar as the Purchase Agreement relates to the Mortgage Loans.

          The Assignor specifically reserves and does not assign to the Assignee hereunder any and all
right, title and interest in, to and under and any obligations of the Assignor with respect to (i)
any mortgage loans subject to the Purchase Agreement which are not the Mortgage Loans set forth on
the Mortgage Loan Schedule and are not the subject of this Agreement, (ii) any collections in
respect of interest and principal due on or before June 1, 2007 and any collections of interest
accrued prior to June 1, 2007 and (iii) the Holdback Amount (as defined in the Purchase Agreement).

          In consideration for the Mortgage Loans assigned hereunder, the Assignee shall, on the date
hereof, deliver to or upon the order of the Assignor or its designee (i) an amount, in immediately
available funds, equal to the net proceeds of the sale of the Class 1-A-1, Class 2-A1, Class 2-A-2,
Class 2-A-3, Class 2-A-4, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class
M-7-A and Class M-8-A Notes, (ii) the Class M-7-B, Class M-8-B, Class M-9 and Class M-10 Notes (the
“Retained Notes”) and (iii) the Owner Trust Certificates.

Recognition of Trust by Originator

          2. From and after the date hereof, the Originator shall and does hereby recognize that (i) the
Assignee will transfer the Mortgage Loans and assign its rights under the Purchase Agreement
(solely to the extent set forth herein) and this Agreement to Newcastle Mortgage Securities Trust
2007-1 (the “Trust”) created pursuant to the Amended and Restated Trust Agreement, dated as
of July 12, 2007, among the Assignee, Wilmington Trust Company as

 

 

owner trustee (the “Owner Trustee”) and Wells Fargo Bank, N.A., as securities
administrator (the “Securities Administrator”) (the “Trust Agreement”) and the
Indenture, dated as of July 12, 2007, between the Trust and The Bank of New York; as indenture
trustee (the “Indenture Trustee”) (the “Indenture”) and (ii) the initial Servicer
of the Mortgage Loans for the benefit of the Trust will be Nationstar. The Originator hereby
acknowledges and agrees that from and after the date hereof (i) the Trust will be the owner of the
Mortgage Loans, (ii) the Originator shall look solely to the Trust for performance of any
obligations of the Assignor insofar as they relate to the enforcement of the representations,
warranties and covenants with respect to the Mortgage Loans, (iii) the Trust (including the
Indenture Trustee and the Servicer acting on the Trust’s behalf) shall have all the rights and
remedies available to the Assignor, insofar as they relate to the Mortgage Loans, under the
Purchase Agreement, including, without limitation, the enforcement of the document delivery
requirements and remedies with respect to breaches of representations and warranties set forth in
the Purchase Agreement and repurchases for Mortgage Loans that are EPD Loans (as defined in the
Purchase Agreement), and shall be entitled to enforce all of the obligations of the Originator
thereunder insofar as they relate to the Mortgage Loans, and (iv) all references to the Purchaser
(insofar as they relate to the rights, title and interest and, with respect to obligations of the
Purchaser, only insofar as they relate to the enforcement of the representations, warranties and
covenants of the Originator) or the Custodian under the Purchase Agreement insofar as they relate
to the Mortgage Loans, shall be deemed to refer to the Trust (including the Indenture Trustee and
the Servicer acting on the Trust’s behalf). Neither the Originator nor the Assignor shall amend or
agree to amend, modify, waiver, or otherwise alter any of the terms or provisions of the Purchase
Agreement which amendment, modification, waiver or other alteration would in any way affect the
Mortgage Loans or the Originator’s performance under the Purchase Agreement with respect to the
Mortgage Loans without the prior written consent of the Indenture Trustee.

Representations and Warranties of the Originator and Nationstar

          3. The Originator warrants and represents to the Assignor, the Assignee and the Trust as of
the date hereof that:

     (a) The Originator is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization;

     (b) The Originator has full power and authority to execute, deliver and perform its
obligations under this Agreement and has full power and authority to perform its obligations under
the Purchase Agreement. The execution by the Originator of this Agreement is in the ordinary
course of the Originator’s business and will not conflict with, or result in a breach of, any of
the terms, conditions or provisions of the Originator’s charter or bylaws or any legal restriction,
or any material agreement or instrument to which the Originator is now a party or by which it is
bound, or result in the violation of any law, rule, regulation, order, judgment or decree to which
the Originator or its property is subject. The execution, delivery and performance by the
Originator of this Agreement have been duly authorized by all necessary corporate action on part of
the Originator. This Agreement has been duly executed and delivered by the Originator,

-2 -

 

and, upon the due authorization, execution and delivery by the Assignor and the Assignee, will
constitute the valid and legally binding obligation of the Originator, enforceable against the
Originator in accordance with its terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or hereafter in effect relating to
creditors’ rights generally, and by general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law;

     (c) No consent, approval, order or authorization of, or declaration, filing or registration
with, any governmental entity is required to be obtained or made by the Originator in connection
with the execution, delivery or performance by the Originator of this Agreement; and

     (d) There is no action, suit, proceeding or investigation pending or threatened against the
Originator, before any court, administrative agency or other tribunal, which would draw into
question the validity of this Agreement or the Purchase Agreement, or which, either in any one
instance or in the aggregate, would result in any material adverse change in the ability of the
Originator to perform its obligations under this Agreement or the Purchase Agreement, and the
Originator is solvent.

          4. Pursuant to Section 12 of the Purchase Agreement, the Originator hereby makes as of the
date hereof, the representations and warranties set forth in Exhibit B hereto for the benefit of
Assignor, Assignee and the Trust. The foregoing representations and warranties shall in not in any
way limit, alter or otherwise supersede the representations and warranties made by the Originator
in the Purchase Agreement as of the related date of the original sale of the Mortgage Loans to the
Assignor or any of the remedies available therein with respect to a breach of such representations
and warranties.

          5. Nationstar hereby represents and warrants that the representations and warranties set forth
in Exhibit C hereto are true and correct as of the date hereof.

          6. The Assignor hereby represents and warrants that the representations and warranties set
forth in Exhibit D hereto are true and correct as of the date hereof.

Remedies for Breach of Representations and Warranties

          7. The Originator hereby acknowledges and agrees that the remedies available to the Assignor,
the Assignee and the Trust (including the Indenture Trustee or the Custodian or Servicer acting on
the Trust’s behalf) in connection with any breach of the representations and warranties made by the
Originator set forth in Sections 3 and 4 hereof shall be as set forth in Subsection 7.03 and 7.04
of the Purchase Agreement as if they were set forth herein (including without limitation the
repurchase and indemnity obligations set forth therein).

          Notwithstanding the foregoing, the Assignor may, at its option, (i) satisfy any obligation of
the Originator with respect to any breach of representation and warranty made by the Originator
regarding the Mortgage Loans or repurchase obligation with respect to an EPD

-3 -

 

Loan and (ii) in such event, the Assignor shall retain the right to enforce such
representations and warranties and obligations of the Originator and the Mortgage Loans against the
Originator and, if applicable, require the Originator to repurchase such Mortgage Loan from the
Assignor.

          The parties hereto agree that the Purchase Agreement shall be amended to remove the words
“within five (5) Business Days of the Purchaser’s request” from the first sentence of Section
7.04(a) and replace them with the words “on the fifteenth (15th) day of the month (or if such day
is not a Business Day on the immediately following Business Day) following such date which is one
month after the related due date.”

          To the extent the price required to be paid by the Originator for a repurchased Mortgage Loan
is less than the Purchase Price as defined in the Indenture, the Seller shall pay the difference
between that amount and the Purchase Price.

Miscellaneous

          8. This Agreement shall be construed in accordance with the laws of the State of New York,
without regard to conflicts of law principles, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.

          9. No term or provision of this Agreement may be waived or modified unless such waiver or
modification is in writing and signed by the party against whom such waiver or modification is
sought to be enforced, with the prior written consent of the Indenture Trustee.

          10. This Agreement shall inure to the benefit of (i) the successors and assigns of the parties
hereto and (ii) the Trust (including the Indenture Trustee and the Servicer acting on the Trust’s
behalf). Any entity into which Assignor, Assignee or Originator may be merged or consolidated
shall, without the requirement for any further writing, be deemed Assignor, Assignee or Originator,
respectively, hereunder. The Trust shall be an express third-party beneficiary hereunder.

          11. Each of this Agreement and the Purchase Agreement shall survive the conveyance of the
Mortgage Loans and the assignment of the Purchase Agreement (to the extent assigned hereunder) by
Assignor to Assignee and by Assignee to the Trust and nothing contained herein shall supersede or
amend the terms of the Purchase Agreement, except with respect to the last sentence of Section 2
hereof.

          12. This Agreement may be executed simultaneously in any number of counterparts. Each
counterpart shall be deemed to be an original and all such counterparts shall constitute one and
the same instrument.

          13. In the event that any provision of this Agreement conflicts with any provision of the
Purchase Agreement with respect to the Mortgage Loans, the terms of this Agreement shall control
and this Section 11 shall control in the event of any conflict with Section 10 hereof.

-4 -

 

          14. The Assignor shall notify the Assignee of any disposition of the Retained Notes to an
unaffiliated third party in advance of settlement of such disposition. If such disposition would
require the delivery of an updated prospectus supplement (as determined by either the Assignor or
the Assignee in its reasonable discretion) the Assignor shall provide to the Assignee all
information about the disposition and the prospective transferees which the Assignee reasonably
requests in advance of settlement of such disposition. The Assignor shall be responsible for all
costs associated with the preparation and delivery of an updated prospectus supplement.

          If such disposition would require the delivery of an updated prospectus supplement as
determined above, the Assignor and the Assignee shall reasonably cooperate with one another in
connection with the preparation and use of any supplement to the Prospectus Supplement required by
the Assignee or the Assignor in its reasonable discretion in order to correct any untrue statement
of a material fact in the Prospectus Supplement, or to prevent any omission of a material fact
necessary to make the statements in the Prospectus Supplement not misleading in light of the
circumstances in which they are made in connection with the disposition of the Retained Notes.

          15. Capitalized terms used in this Agreement (including the exhibits hereto unless otherwise
stated) but not defined in this Agreement shall have the meanings given to such terms in the
Indenture.

[SIGNATURE PAGE FOLLOWS]

-5 -

 

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

	 	 	 	 	 	 	 

	 	 	NIC WL II LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 
 

	 	 
	 	 	Name: Ken Riis	 	 
	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	 	 	BEAR STEARNS ASSET BACKED SECURITIES 

I LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	FREMONT INVESTMENT & LOAN	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	NATIONSTAR MORTGAGE LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

 

 

EXHIBIT A

Mortgage Loan Schedule

[Intentionally omitted]

 

 

EXHIBIT B

Representations and Warranties

     For purposes of this Exhibit the term “Servicing Transfer Date” therein shall mean the close
of business on July 5, 2007. Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Purchase Agreement.

			
	      Subsection 7.01.	 	Representations and Warranties Respecting the Seller

          (a) The Seller represents, warrants and covenants as of the date hereof (the “Reconstitution
Date”) that:

          (i) The Seller is an industrial bank duly organized, validly existing and in good standing
under the laws of California. The Seller has all licenses necessary to carry out its business as
now being conducted, and is licensed and qualified to transact business in and is in good standing
under the laws of each state in which any Mortgaged Property is located or is otherwise exempt
under applicable law from such licensing or qualification or is otherwise not required under
applicable law to effect such licensing or qualification and no demand for such licensing or
qualification has been made upon the Seller by any such state, and in any event the Seller is in
compliance with the laws of any such state to the extent necessary to ensure the enforceability of
each Mortgage Loan and the servicing of the Mortgage Loans in accordance with the terms of this
Agreement. No licenses or approvals obtained by the Seller have been suspended or revoked by any
court, administrative agency, arbitrator or governmental body and no proceedings are pending which
might result in such suspension or revocation;

          (ii) The Seller has the full corporate power and authority to hold each Mortgage Loan, to sell
each Mortgage Loan, and to execute, deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Seller has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and delivered this Agreement, and
this Agreement, assuming due authorization, execution and delivery by the Purchaser, constitutes a
legal, valid and binding obligation of the Seller, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy, insolvency or
reorganization;

          (iii) The execution and delivery of this Agreement by the Seller and the performance of and
compliance with the terms of this Agreement will not violate the Seller’s organizational documents
or constitute a default under or result in a breach or acceleration of, any material contract,
agreement or other instrument to which the Seller is a party or which may be applicable to the
Seller or its assets;

          (iv) The Seller is not in violation of, and the execution and delivery of this Agreement by
the Seller and its performance and compliance with the terms of this Agreement will not constitute
a violation with respect to, any order or decree of any court or any order or

 

 

regulation of any federal, state, municipal or governmental agency having jurisdiction over
the Seller or its assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the Seller or its
assets or might have consequences that would materially and adversely affect the performance of its
obligations and duties hereunder;

          (v) The Seller does not believe, nor does it have any reason or cause to believe, that it
cannot perform each and every covenant contained in this Agreement applicable to the Seller;

          (vi) Immediately prior to the payment of the Purchase Price for each Mortgage Loan, the Seller
or the Servicer was the owner of the related Mortgage and the indebtedness evidenced by the related
Mortgage Note and upon the payment of the Purchase Price by the Purchaser;

          (vii) There are no actions, proceedings or regulatory orders (including the Cease and Desist
Order) against, or investigations of, the Seller before any court, administrative, regulatory body
or other tribunal (A) that might prohibit its entering into this Agreement, (B) seeking to prevent
the sale of the Mortgage Loans or the consummation of the transactions contemplated by this
Agreement or (C) that might prohibit or materially and adversely affect the performance by the
Seller of its obligations under, or the validity or enforceability of, this Agreement or any
Mortgage Loan;

          (viii) No consent, approval, authorization or order of any court or governmental agency or
body is required for the execution, delivery and performance by the Seller of, or compliance by the
Seller with, this Agreement or the consummation of the transactions contemplated by this Agreement,
except for such consents, approvals, authorizations or orders, if any, that have been obtained
prior to the Reconstitution Date;

          (ix) The consummation of the transactions contemplated by this Agreement are in the ordinary
course of business of the Seller, and the transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions;

          (x) Neither this Agreement nor any written statement, report or other document prepared and
furnished or to be prepared and furnished by the Seller pursuant to this Agreement or in connection
with the transactions contemplated hereby contains any untrue statement of material fact or omits
to state a material fact necessary to make the statements contained herein or therein not
misleading;

          (xi) The transfer of the Mortgage Loans shall be treated as a sale on the books and records of
Seller, and Seller has determined that, and will treat, the disposition of the Mortgage Loans
pursuant to this Agreement for tax and accounting purposes as a sale;

 

 

          (xii) The consideration received by the Seller upon the sale of the Mortgage loans constitutes
fair consideration and reasonably equivalent value for such Mortgage Loans;

          (xiii) Seller is solvent and will not be rendered insolvent by the consummation of the
transactions contemplated hereby. The Seller is not transferring any Mortgage loan with any intent
to hinder, delay or defraud any of its creditors;

          (xiv) The Seller has not dealt with any broker, investment banker, agent or other person that
may be entitled to any commission or compensation in connection with the sale of the Mortgage
Loans;

          (xv) As of the Closing Date the Seller was the sole legal, beneficial and equitable owner of
the Mortgage Note and the Mortgage and has full right to transfer and sell the Mortgage Loan to the
Purchaser free and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest;

          (xvi) The Mortgage Loans were not intentionally selected in a manner so as to affect adversely
the interests of the Purchaser;

          (xvii) The Seller is a member of MERS in good standing, and will comply in all material
respects with the rules and procedures of MERS in connection with the servicing of the MERS
Designated Mortgage Loans for as long as such Mortgage Loans are registered with MERS; and

          (xviii) The Sale of the Mortgage Loans will not result in a Material Adverse Change with
respect to the Seller.

			
	     Subsection 7.02	 	Representations and Warranties Regarding Individual Mortgage Loans.

          The Seller hereby represents and warrants as to each Mortgage Loan, as of the Reconstitution
Date, except as otherwise provided herein:

          (i) The information set forth in the Mortgage Loan Schedule attached hereto as Exhibit A is
complete, true and correct;

          (ii) The Mortgage Loan is in compliance with all requirements set forth in the related
Confirmation, and the characteristics of the related Mortgage Loan Package as set forth in the
related Confirmation are true and correct; provided, however, that in the event of any conflict
between the terms of any Confirmation and this Agreement, the terms of the Agreement, subject to
the exceptions disclosed on Exhibit B-1 with respect to the period commencing on the day following
the sale of the related Mortgage Loan to the Initial Purchaser (the “Original Sale Date”) to and
including the Servicing Transfer Date, shall control;

 

 

          (iii) Except as otherwise disclosed on Exhibit B-1 with respect to the period commencing on
the day following the Original Sale Date to and including the Servicing Transfer Date, all payments
required to be made up to the close of business on the Cut-off Date for such Mortgage Loan under
the terms of the Mortgage Note have been made; neither the Seller nor the Servicer has advanced
funds, or induced, solicited or knowingly received any advance of funds from a party other than the
owner of the related Mortgaged Property, directly or indirectly, for the payment of any amount
required by the Mortgage Note or Mortgage;

          (iv) As of the Servicing Transfer Date, there are no delinquent taxes, ground rents, water
charges, sewer rents, assessments, insurance premiums, leasehold payments, including assessments
payable in future installments or other outstanding charges affecting the related Mortgaged
Property;

          (v) The terms of the Mortgage Note and the Mortgage have not been impaired, waived, altered or
modified in any respect, except by written instruments, recorded in the applicable public recording
office if necessary to maintain the lien priority of the Mortgage, and which have been delivered to
the Custodian; the substance of any such waiver, alteration or modification has been approved by
the title insurer, to the extent required by the related policy, and is reflected on the related
Mortgage Loan Schedule. No instrument of waiver, alteration or modification has been executed, and
no Mortgagor has been released, in whole or in part, except in connection with an assumption
agreement approved by the title insurer, to the extent required by the policy, and which assumption
agreement has been delivered to the Custodian and the terms of which are reflected in the related
Mortgage Loan Schedule;

          (vi) The Mortgage Note and the Mortgage are not subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will the operation of any of the terms
of the Mortgage Note and the Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, and, as of the Servicing Transfer Date, no such right of
rescission, set-off, counterclaim or defense has been asserted with respect thereto. Each
Prepayment Charge or penalty with respect to any Mortgage Loan is permissible, enforceable and
collectible under applicable federal, state and local law;

          (vii) All buildings upon the Mortgaged Property are insured by a Qualified Insurer acceptable
to Fannie Mae and Freddie Mac against loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where the Mortgaged Property is located, pursuant to insurance
policies providing coverage in an amount not less than the greatest of (i) 100% of the replacement
cost of all improvements to the Mortgaged Property, (ii) either (A) the outstanding principal
balance of the Mortgage Loan with respect to each first lien Mortgage Loan or (B) with respect to
each second lien Mortgage Loan, the sum of the outstanding principal balance of the related first
lien mortgage loan and the outstanding principal balance of the second lien Mortgage Loan, or (iii)
the amount necessary to avoid the operation of any co-insurance provisions with respect to the
Mortgaged Property, and consistent with the

 

 

amount that would have been required as of the date of origination in accordance with the
Underwriting Guidelines; provided that, such amount shall not exceed the amount provided under
applicable law. All such insurance policies contain a standard mortgagee clause naming the Seller,
its successors and assigns as mortgagee and all premiums thereon have been paid. If the Mortgaged
Property is in an area identified on a Flood Hazard Map or Flood Insurance Rate Map issued by the
Federal Emergency Management Agency as having special flood hazards (and such flood insurance has
been made available) a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect which policy conforms to the requirements of
Fannie Mae and Freddie Mac. The Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor’s cost and expense, and on the Mortgagor’s failure to do so, authorizes
the holder of the Mortgage to maintain such insurance at Mortgagor’s cost and expense and to seek
reimbursement therefor from the Mortgagor;

          (viii) Any and all requirements of any federal, state or local law including, without
limitation, usury, truth in lending, real estate settlement procedures, predatory, abusive and fair
lending laws, consumer credit protection, equal credit opportunity, fair housing or disclosure laws
and orders from regulatory authorities applicable to the origination and servicing of mortgage
loans of a type similar to the Mortgage Loans and applicable to any prepayment penalty associated
with the Mortgage Loans at origination have been complied with in all material respects;

          (ix) The Mortgage has not been satisfied, cancelled, subordinated or rescinded, in whole or in
part, and the Mortgaged Property has not been released from the lien of the Mortgage, in whole or
in part, nor has any instrument been executed that would effect any such satisfaction,
cancellation, subordination, rescission or release;

          (x) The Mortgage (including any Negative Amortization which may arise thereunder) is a
valid, existing and enforceable (A) first lien and first priority security interest with respect
to each Mortgage Loan which is indicated by the Seller to be a first lien (as reflected on the
Mortgage Loan Schedule), or (B) second lien and second priority security interest with respect to
each Mortgage Loan which is indicated by the Seller to be a second lien (as reflected on the
Mortgage Loan Schedule), in either case, on the Mortgaged Property, including all improvements on
the Mortgaged Property subject only to (a) the lien of current real property taxes and
assessments not yet due and payable, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of recording being acceptable to
mortgage lending institutions generally and specifically referred to in the lender’s title
insurance policy delivered to the originator of the Mortgage Loan and which do not adversely
affect the Appraised Value of the Mortgaged Property, (c) with respect to each Mortgage Loan
which is indicated by the Seller to be a second lien Mortgage Loan (as reflected on the Mortgage
Loan Schedule) a first lien on the Mortgaged Property; and (d) other matters to which like
properties are commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment,

 

 

value or marketability of the related Mortgaged Property. Any security agreement, chattel
mortgage or equivalent document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, existing and enforceable first or second lien and first or
second priority security interest (in each case, as indicated on the Mortgage Loan Schedule) on
the property described therein and the Seller has full right to sell and assign the same to the
Purchaser;

          (xi) The Mortgage Note and the related Mortgage are genuine and each is the legal, valid and
binding obligation of the maker thereof, enforceable in accordance with its terms;

          (xii) All parties to the Mortgage Note and the Mortgage had legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note and the Mortgage, and the Mortgage Note
and the Mortgage have been duly and properly executed by such parties. The Mortgagor is a natural
person;

          (xiii) The proceeds of the Mortgage Loan have been fully disbursed to or for the account of
the Mortgagor and there is no obligation for the Mortgagee to advance additional funds thereunder
and any and all requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the Mortgage have been paid,
and the Mortgagor is not entitled to any refund of any amounts paid or due to the Mortgagee
pursuant to the Mortgage Note or Mortgage;

          (xiv) The Seller was the sole legal, beneficial and equitable owner of the Mortgage Note and
the Mortgage and on the Original Sale Date had full right to transfer and sell the Mortgage Loan to
the Purchaser free and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest;

          (xv) All parties other than the Initial Purchaser, Nationstar or any of their assignees, which
have had any interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise,
are (or, during the period in which they held and disposed of such interest, were) in compliance
with any and all applicable “doing business” and licensing requirements of the laws of the state
wherein the Mortgaged Property is located;

          (xvi) The Mortgage Loan is covered by an American Land Title Association (“ALTA”) lender’s
title insurance policy or a comparable form in the States of California or Texas (which, in the
case of an Adjustable Rate Mortgage Loan has an adjustable rate mortgage endorsement in the form of
ALTA 6.0 or 6. 1), issued by a title insurer acceptable to Fannie Mae and Freddie Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located, insuring (subject to
the exceptions contained in (x)(a) and (b), and with respect to any second lien Mortgage Loan (c),
above) the Seller or the Servicer, its successors and assigns as to the first or second priority
lien (as indicated on the Mortgage Loan Schedule) of the Mortgage in the original principal amount
of the Mortgage Loan (including, if the Mortgage Loan provides

 

 

for Negative Amortization, the maximum amount of Negative Amortization in accordance with the
Mortgage) and, with respect to any Adjustable Rate Mortgage Loan, against any loss by reason of the
invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing
for adjustment in the Mortgage Interest Rate and Monthly Payment and Negative Amortization
provisions of the Mortgage Note. Additionally, such lender’s title insurance policy affirmatively
insures ingress and egress to and from the Mortgaged Property, and against encroachments by or upon
the Mortgaged Property or any interest therein. The Seller is the sole insured of such lender’s
title insurance policy, and such lender’s title insurance policy is in full force and effect and
will be in full force and effect upon the consummation of the transactions contemplated by this
Agreement. As of the Servicing Transfer Date, no claims have been made under such lender’s title
insurance policy, and no prior holder of the related Mortgage, including the Seller, has done, by
act or omission, anything which would impair the coverage of such lender’s title insurance policy;

          (xvii) Other than payment delinquencies of less than one calendar month, there is no default,
breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no
event which, with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration, and neither the
Seller nor the Servicer has waived any default, breach, violation or event of acceleration. With
respect to each second lien Mortgage Loan (i) to the best of the Seller’s knowledge, as of the
Servicing Transfer Date, the related first lien mortgage loan is in full force and effect, (ii) to
the best of the Seller’s knowledge after inquiry based on Accepted Servicing Practices, other than
payment delinquencies of less than one calendar month, there is no default, breach, violation or
event of acceleration existing under such first lien mortgage or the related mortgage note, (iii)
to the best of the Seller’s knowledge after inquiry based on Accepted Servicing Practices, as of
the Servicing Transfer Date, there is no current event other than payment defaults of less than one
month which, with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration thereunder, (iv)
either (A) the first lien mortgage contains a provision which allows or (B) applicable law
requires, the mortgagee under the second lien Mortgage Loan to receive notice of, and affords such
mortgagee an opportunity to cure any default by payment in full or otherwise under the first lien
mortgage, (v) the related first lien does not provide for or permit negative amortization under
such first lien Mortgage Loan, and (vi) either no consent for the Mortgage Loan is required by the
holder of the first lien or such consent has been obtained and is contained in the Mortgage File;

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

          (xix) All improvements which were considered in determining the Appraised Value of the related
Mortgaged Property lay wholly within the boundaries and building

 

 

restriction lines of the Mortgaged Property, and no improvements on adjoining properties
encroach upon the Mortgaged Property;

          (xx) The Mortgage Loans were originated by the Seller or by a savings and loan association, a
savings bank, a commercial bank or similar banking institution which is supervised and examined by
a federal or state authority, or by a mortgagee approved as such by the Secretary of HUD;

          (xxi) Principal payments on the Mortgage Loan commenced no more than sixty (60) days after the
proceeds of the Mortgage Loan were disbursed. The Mortgage Loan bears interest at the Mortgage
Interest Rate. With respect to each Mortgage Loan which is not a Negative Amortization Loan, the
Mortgage Note is payable on the day of each month specified in the related Mortgage Note in Monthly
Payments, which, in the case of a Fixed Rate Mortgage Loans, are sufficient to fully amortize the
original principal balance over the original term thereof (other than with respect to a Mortgage
Loan identified on the related Mortgage Loan Schedule as an interest-only Mortgage Loan during the
interest-only period or a Mortgage Loan which is identified on the related Mortgage Loan Schedule
as a Balloon Mortgage Loan) and to pay interest at the related Mortgage Interest Rate, and, in the
case of an Adjustable Rate Mortgage Loan, are changed on each Adjustment Date, and in any case, are
sufficient to fully amortize the original principal balance over the original term thereof (other
than with respect to a Mortgage Loan identified on the related Mortgage Loan Schedule as an
interest-only Mortgage Loan during the interest-only period or a Mortgage Loan which is identified
on the related Mortgage Loan Schedule as a Balloon Mortgage Loan) and to pay interest at the
related Mortgage Interest Rate. With respect to each Negative Amortization Mortgage Loan, the
related Mortgage Note requires a Monthly Payment which is sufficient during the period following
each Payment Adjustment Date, to fully amortize the outstanding principal balance as of the first
day of such period (including any Negative Amortization) over the then remaining term of such
Mortgage Note and to pay interest at the related Mortgage Interest Rate; provided, that the Monthly
Payment shall not increase to an amount that exceeds 107.5% of the amount of the Monthly Payment
that was due immediately prior to the Payment Adjustment Date; provided, further, that the payment
adjustment cap shall not be applicable with respect to the adjustment made to the Monthly Payment
that occurs in a year in which the Mortgage Loan has been outstanding for a multiple of five (5)
years and in any such year the Monthly Payment shall be adjusted to fully amortize the Mortgage
Loan over the remaining term. With respect to each Mortgage Loan identified on the Mortgage Loan
Schedule as an interest-only Mortgage Loan, the interest-only period shall not exceed ten (10)
years (or such other period specified on the Mortgage Loan Schedule) and following the expiration
of such interest-only period, the remaining Monthly Payments shall be sufficient to fully amortize
the original principal balance over the remaining term of the Mortgage Loan and to pay interest at
the related Mortgage Interest Rate. With respect to each Balloon Mortgage Loan, the Mortgage Note
requires a monthly payment which is sufficient to fully amortize the original principal balance
over a term greater than the original term thereof and to pay interest at the related Mortgage
Interest Rate and requires a final Monthly Payment substantially greater than the preceding monthly
payment

 

 

which is sufficient to repay the remaining unpaid principal balance of the Balloon Mortgage
Loan at the Due Date of such monthly payment. The Index for each Adjustable Rate Mortgage Loan is
as set forth on the Mortgage Loan Schedule. No Mortgage Loan is a Convertible Mortgage Loan. No
Balloon Mortgage Loan has an original stated maturity of less than seven (7) years;

          (xxii) The origination, servicing and collection practices used with respect to each Mortgage
Note and Mortgage including, without limitation, the establishment, maintenance and servicing of
the Escrow Accounts and Escrow Payments, if any, since origination and to and including the
Servicing Transfer Date, have been in all respects legal, proper, prudent and customary in the
mortgage origination and servicing industry. The Mortgage Loan has been serviced by the Servicer
and any predecessor servicer in accordance with the terms of the Mortgage Note and Accepted
Servicing Practices up to the Servicing Transfer Date. With respect to escrow deposits and Escrow
Payments, if any, and as of the Servicing Transfer Date, all such payments are in the possession
of, or under the control of, the Servicer and there exist no deficiencies in connection therewith
for which customary arrangements for repayment thereof have not been made. No escrow deposits or
Escrow Payments or other charges or payments due the Servicer have been capitalized under any
Mortgage or the related Mortgage Note and no such escrow deposits or Escrow Payments are being held
by the Servicer for any work on a Mortgaged Property which has not been completed; provided that up
to the Servicing Transfer Date, certain Insurance Proceeds may be held by the Servicer in escrow
pending the completion of repairs which are required to be made to a Mortgaged Property in
connection with the payment of such Insurance Proceeds;

          (xxiii) To the best of the Seller’s knowledge, after inquiry based on Accepted Servicing
Practices and subject to the exceptions in Exhibit B-1 with respect to the period commencing on the
day following the sale of the related Mortgage Loan to the Initial Purchaser to and including the
Servicing Transfer Date, the Mortgaged Property is free of damage and waste and there is no
proceeding pending for the total or partial condemnation thereof;

          (xxiv) The Mortgage and related Mortgage Note contain customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the realization
against the Mortgaged Property of the benefits of the security provided thereby, including, (a) in
the case of a Mortgage designated as a deed of trust, by trustee’s sale, and (b) otherwise by
judicial foreclosure. The Mortgaged Property is not subject to any bankruptcy proceeding or
foreclosure proceeding and the Mortgagor has not filed for protection under applicable bankruptcy
laws. There is no homestead or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee’s sale or the right to foreclose the
Mortgage. As of the Servicing Transfer Date, the Mortgagor has not notified the Servicer and the
Servicer has no knowledge of any relief requested or allowed to the Mortgagor under the
Servicemembers’ Civil Relief Act or any similar state law;

 

 

          (xxv) The Mortgage Loan was underwritten in accordance with the published underwriting
standards of Seller in effect at the time the Mortgage Loan was originated; and the Mortgage Note
and Mortgage are on forms acceptable to prudent lenders in the secondary market;

          (xxvi) The Mortgage Note is not and has not been secured by any collateral except the lien of
the corresponding Mortgage on the Mortgaged Property and the security interest of any applicable
security agreement or chattel mortgage referred to in (x) above;

          (xxvii) The Mortgage File contains an appraisal of the related Mortgaged Property which
satisfied the standards of Fannie Mae and Freddie Mac, was on appraisal form 1004, form 1025 and
form 1073 with an interior inspection and was made and signed, prior to the approval of the
Mortgage Loan application, by a qualified appraiser, duly appointed by the Servicer, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on the security thereof,
whose compensation is not affected by the approval or disapproval of the Mortgage Loan and who met
the minimum qualifications of Fannie Mae and Freddie Mac. Each appraisal of the Mortgage Loan was
made in accordance with the relevant provisions of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989;

          (xxviii) In the event the Mortgage constitutes a deed of trust, a trustee, duly qualified
under applicable law to serve as such, has been properly designated and currently so serves and is
named in the Mortgage, and no fees or expenses are or will become payable by the Purchaser to the
trustee under the deed of trust, except in connection with a trustee’s sale after default by the
Mortgagor;

          (xxix) No Mortgage Loan contains provisions pursuant to which Monthly Payments are (a) paid or
partially paid with funds deposited in any separate account established by the Servicer, the
Mortgagor, or anyone on behalf of the Mortgagor, (b) paid by any source other than the Mortgagor or
(c) contains any other similar provisions which may constitute a “buydown” provision. The Mortgage
Loan is not a graduated payment mortgage loan and the Mortgage Loan does not have a shared
appreciation or other contingent interest feature;

          (xxx) The Mortgagor has executed a statement to the effect that the Mortgagor has received all
disclosure materials required by applicable law with respect to the making of fixed rate mortgage
loans in the case of Fixed Rate Mortgage Loans, and adjustable rate mortgage loans in the case of
Adjustable Rate Mortgage Loans and rescission materials with respect to Refinanced Mortgage Loans,
and such statement is and will remain in the Mortgage File;

          (xxxi) No Mortgage Loan was made in connection with (a) the construction or rehabilitation of
a Mortgaged Property (other than a construction to permanent loan that has converted to a permanent
loan in accordance with Fannie Mae guidelines; or (b) facilitating the trade-in or exchange of a
Mortgaged Property;

 

 

          (xxxii) The Servicer has no knowledge of any circumstances or condition with respect to the
Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor’s credit standing that can
reasonably be expected to cause the Mortgage Loan to be an unacceptable investment, cause the
Mortgage Loan to become delinquent, or adversely affect the value of the Mortgage Loan;

          (xxxiii) No Mortgage Loan had an LTV or a CLTV at origination in excess of 100%. No Mortgage
Loan is subject to a lender paid primary mortgage insurance policy;

          (xxxiv) To the best of the Seller’s knowledge, after inquiry based on Accepted Servicing
Practices, the Mortgaged Property is lawfully occupied under applicable law; all inspections,
licenses and certificates required to be made or issued with respect to all occupied portions of
the Mortgaged Property and, with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy, have been made or obtained from the appropriate authorities;

          (xxxv) No error, omission, misrepresentation, negligence, fraud or similar occurrence with
respect to a Mortgage Loan has taken place on the part of any person, including without limitation
the Mortgagor, any appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or in the application of any insurance in relation to such
Mortgage Loan;

          (xxxvi) The Assignment of Mortgage is in recordable form, except for the name of the assignee
which is blank, and is acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;

          (xxxvii) Any principal advances made to the Mortgagor prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the Mortgage, and the secured
principal amount, as consolidated, bears a single interest rate and single repayment term. The
lien of the Mortgage securing the consolidated principal amount is expressly insured as having
first or second (as indicated on the Mortgage Loan Schedule) lien priority by a title insurance
policy, an endorsement to the policy insuring the mortgagee’s consolidated interest. The
consolidated principal amount does not exceed the original principal amount of the Mortgage Loan
plus any Negative Amortization;

          (xxxviii) If the Residential Dwelling on the Mortgaged Property is a condominium unit or a
unit in a planned unit development (other than a de minimis planned unit development) such
condominium or planned unit development project meets the eligibility requirements of Fannie Mae
and Freddie Mac;

          (xxxix) The source of the down payment with respect to each Mortgage Loan has been fully
verified by the Servicer;

 

 

          (xl) Interest on each Mortgage Loan is calculated on the basis of a 360-day year consisting of
twelve 30-day months;

          (xli) The Mortgaged Property is in compliance with all applicable environmental laws
pertaining to environmental hazards including, without limitation, asbestos, and neither the Seller
or the Servicer nor, to the Seller’s or the Servicer’s knowledge, the related Mortgagor, has
received any notice of any violation or potential violation of such law;

          (xlii) The Servicer shall, at its own expense, cause each Mortgage Loan to be covered by a Tax
Service Contract which is assignable to the Purchaser or its designee; provided however, that if
the Servicer fails to purchase such Tax Service Contract, the Servicer shall be required to
reimburse the Purchaser for all costs and expenses incurred by the Purchaser in connection with the
purchase of any such Tax Service Contract;

          (xliii) Each Mortgage Loan is covered by a Flood Zone Service Contract which is assignable to
the Purchaser or its designee or, for each Mortgage Loan not covered by such Flood Zone Service
Contract, the Servicer agrees to purchase such Flood Zone Service Contract;

          (xliv) No Mortgage Loan (a) (1) is subject to the provisions of the Homeownership and Equity
Protection Act of 1994 as amended (“HOEPA”), (2) that is secured by the borrower’s principal
residence has an APR or total points and fees that exceed the thresholds set by HOEPA and its
implementing regulations, including 12 CFR 226.32 (a)(1)(i) and (ii)) and such requirement applies
to other second mortgage loans or (3) has an “annual percentage rate” or “total points and fees”
payable by the borrower (as each such term is defined under HOEPA) that equal or exceed the
applicable thresholds defined under HOEPA (Section 32 of Regulation Z, 12 C.F.R. Section
226.32(a)(1)(i) and (ii)), (b) is a “high cost” mortgage loan, “covered” mortgage loan (excluding
home loans defined as “covered home loans” pursuant to clause (1) of the definition of that term in
the New Jersey Home Ownership Security Act that were originated between November 26, 2003 and July
7, 2004), “high risk home” mortgage loan, or “predatory” mortgage loan or any other comparable
term, no matter how defined under any federal, state or local law, (c) is subject to any comparable
federal, state or local statutes or regulations, or any other statute or regulation providing for
heightened regulatory scrutiny or assignee liability to holders of such mortgage loans, or (d) is a
High Cost Loan or Covered Loan, as applicable (as such terms are defined in the current Standard &
Poor’s LEVELS® Glossary which is now Version 6.0 Revised, Appendix E);

          (xlv) No predatory, abusive, or deceptive lending practices, including but not limited to, the
extension of credit to a Mortgagor without regard for the Mortgagor’s ability to repay the Mortgage
Loan and the extension of credit to a mortgagor which has no apparent benefit to the Mortgagor,
were employed in connection with the origination of the Mortgage Loan;

 

 

          (xlvi) The debt-to-income ratio of the related Mortgagor was not greater than 60% at the
origination of the related Mortgage Loan;

          (xlvii) No Mortgagor was required to purchase any credit insurance product (e.g., life,
mortgage, disability, accident, unemployment or health insurance product) or debt cancellation
agreement as a condition of obtaining the extension of credit. No Mortgagor obtained a prepaid
single premium credit insurance policy (e.g., life, mortgage, disability, accident, unemployment,
health insurance or property) or debt cancellation agreement in connection with the origination of
the Mortgage Loan. No proceeds from any Mortgage Loan were used to purchase single premium credit
insurance policies or debt cancellation agreements as part of the origination of, or as a condition
to closing, such Mortgage Loan;

          (xlviii) The Mortgage Loans were not selected from the outstanding one- to four-family
mortgage loans in the Seller’s portfolio as to which the representations and warranties set forth
in this Agreement could be made at the Reconstitution Date in a manner so as to affect adversely
the interests of the Purchaser;

          (xlix) The Mortgage contains an enforceable provision for the acceleration of the payment of
the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold
or transferred without the prior written consent of the mortgagee thereunder;

          (l) The Mortgage Loan complies with all applicable consumer credit statutes and regulations,
including, without limitation, the respective Uniform Consumer Credit Code laws in effect in
Alabama, Colorado, Idaho, Indiana, Iowa, Kansas, Maine, Oklahoma, South Carolina, Utah, West
Virginia and Wyoming, has been originated by a properly licensed entity, and in all other respects,
complies with all of the material requirements of any such applicable laws;

          (li) The information set forth in the Mortgage Loan Schedule as to Prepayment Charges is
complete, true and correct in all material respects and each Prepayment Charge is permissible,
enforceable and collectable in accordance with its terms upon the Mortgagor’s full and voluntary
principal payment under applicable law and each Prepayment Charge was originated in compliance with
all applicable federal, state and local laws;

          (lii) Except as otherwise disclosed on Exhibit B-1 with respect to the period commencing on
the day following the Original Sale Date to and including the Servicing Transfer Date, the Mortgage
Loan was not prepaid in full prior to the Servicing Transfer Date and the Servicer has not received
notification from a Mortgagor that a prepayment in full shall be made after the Servicing Transfer
Date;

          (liii) No Mortgage Loan is secured by cooperative housing, commercial property or mixed use
property;

 

 

          (liv) As of the Reconstitution Date, each Mortgage Loan is eligible for sale in the secondary
market or for inclusion in a Securitization Transaction without unreasonable credit enhancement;

          (lv) Except as set forth on the related Mortgage Loan Schedule, none of the Mortgage Loans are
subject to a Prepayment Charge. With respect to any Mortgage Loan that contains a provision
permitting imposition of a premium upon a prepayment prior to maturity: (i) prior to the loan’s
origination, the Mortgagor agreed to such premium in exchange for a monetary benefit, including but
not limited to a rate or fee reduction, (ii) prior to the loan’s origination, the Mortgagor was
offered the option of obtaining a Mortgage Loan that did not require the payment of such a premium;
(iii) the Prepayment Charge was adequately disclosed to the Mortgagor in the loan documents
pursuant to applicable state and federal law; (iv) the duration of the Prepayment Charge shall not
exceed three (3) years from the date of the Mortgage Note; and (v) notwithstanding any state or
federal law to the contrary, the Servicer shall not impose such Prepayment Charge in any instance
when the mortgage debt is accelerated as the result of the Mortgagor’s default in making the loan
payments;

          (lvi) Seller has complied with all applicable anti-money laundering laws and
regulations, including without limitation the USA Patriot Act of 2001 (collectively, the
“Anti-Money Laundering Laws”); Seller has established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the requisite due diligence in
connection with the origination of each Mortgage Loan for purposes of the Anti-Money Laundering
Laws, including with respect to the legitimacy of the applicable Mortgagor and the origin of the
assets used by the said Mortgagor to purchase the Mortgaged Property, and maintains, and will
maintain, sufficient information to identify and verify the identification of the applicable
Mortgagor for purposes of the Anti-Money Laundering Laws. No Mortgage Loan is subject to
nullification pursuant to Executive Order 13224 (the “Executive Order”) or the regulations
promulgated by the Office of Foreign Assets Control of the United States Department of the Treasury
(the “OFAC Regulations”) or in violation of the Executive Order or the OFAC Regulations, and no
Mortgagor is subject to the provisions of such Executive Order or the OFAC Regulations nor listed
as a “specially designated national or blocked person” for purposes of the OFAC Regulations;

          (lvii) Reserved;

          (lviii) With respect to each Mortgage Loan, the Servicer has fully furnished, in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate and complete
information (i.e., favorable and unfavorable) on the related borrower credit files to Equifax,
Experian and Trans Union Credit Information Originator (three of the credit repositories), on a
monthly basis and, for each Mortgage Loan, the Servicer will furnish, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on its borrower credit files to Equifax, Experian, and Trans Union
Credit Information Originator (three of the credit repositories, on a monthly basis;

 

 

          (lix) All points and fees related to each Mortgage Loan were disclosed in writing to the
related Mortgagor in accordance with applicable state and federal laws and regulations. Except as
set forth on the Mortgage Loan Schedule, no Mortgagor was charged Points and Fees (whether or not
financed) in an amount that exceeds the greater of (1) 5% of the principal amount of the Mortgage
Loan or (2) $1,000. Except as set forth on the Mortgage Loan Schedule, no Mortgagor of a mortgage
loan that is secured by the Mortgagor’s principal residence was charged Points and Fees in an
amount greater than (a) $1,000 or (b) 5% of the principal amount of such loan, whichever is
greater. “Points and Fees” (a) include origination, underwriting, broker and finder’s fees and
charges that the lender imposed as a condition of making the mortgage loan, whether they are paid
to the lender or a third party, and (b) exclude bona fide discount points, fees paid for actual
services rendered in connection with the origination of the mortgage (such as attorneys’ fees,
notaries fees and fees paid for property appraisals, credit reports, surveys, title examinations
and extracts, flood and tax certifications, and home inspections); the cost of mortgage insurance
or credit-risk price adjustments; the costs of title, hazard, and flood insurance policies; state
and local transfer taxes or fees; escrow deposits for the future payment of taxes and insurance
premiums; and other miscellaneous fees and charges, which miscellaneous fees and charges, in total,
do not exceed 0.25 percent of the loan amount. All points, fees and charges (including finance
charges) and whether or not financed, assessed, collected or to be collected in connection with the
origination and servicing of each Mortgage Loan were disclosed in writing to the related Mortgagor
in accordance with applicable state and federal laws and regulations;

          (lx) As of the Servicing Transfer Date, the Servicer has transmitted full-file credit
reporting data for each Mortgage Loan pursuant to Fannie Mae Guide Announcement 95-19 and for each
Mortgage Loan, Servicer agrees it shall report one of the following statuses each month as follows:
new origination, current, delinquent (30-, 60-, 90-days, etc.), foreclosed, or charged-off;

          (lxi) With respect to any Mortgage Loan which is secured by manufactured housing, if such
Mortgage Loans are permitted hereunder, such Mortgage Loan satisfies the requirements for inclusion
in residential mortgage backed securities transactions rated by Standard & Poor’s Ratings Services
and such manufactured housing will be the principal residence of the Mortgagor upon the origination
of the Mortgage Loan. With respect to any Mortgage Loan which is secured by manufactured housing,
upon the origination of such mortgage loan the manufactured housing unit either: (i) will be the
principal residence of the Mortgagor or (ii) will be classified as real property under applicable
state law;

          (lxii) No Mortgage Loan is a “High-Risk Home Loan” as defined in the Illinois High-Risk Home
Loan Act effective January 1, 2004 (815 Ill. Comp. Stat. 137/1 et seq.). Each Mortgage Loan
secured by property located within the Cook County, Illinois anti-predatory lending Pilot Program
area (i.e., ZIP Codes 60620, 60621, 60623, 60628, 60629, 60632, 60636, 60638, 60643 and 60652)
complies with the recording requirements outlined in Illinois House

 

 

Bill 4050 and Senate Bill 304 effective September 1, 2006 for the period of time such Pilot
Program was in effect;

          (lxiii) No Mortgage Loan is secured by real property or secured by a manufactured home located
in the state of Georgia unless (x) such Mortgage Loan was originated prior to October 1, 2002 or
after March 6, 2003, or (y) the property securing the Mortgage Loan is not, nor will be, occupied
by the Mortgagor as the Mortgagor’s principal dwelling. No Mortgage Loan is a “High Cost Home
Loan” as defined in the Georgia Fair Lending Act, as amended (the “Georgia Act”). Each Mortgage
Loan that is a “Home Loan” under the Georgia Act complies with all applicable provisions of the
Georgia Act. No Mortgage Loan secured by owner occupied real property or an owner occupied
manufactured home located in the State of Georgia was originated (or modified) on or after October
1, 2002 through and including March 6, 2003. No Mortgage Loan originated on or after October 1,
2002 through March 6, 2003 is governed by the Georgia Fair Lending Act;

          (lxiv) No Mortgage Loan is a “High-Cost” loan as defined under the New York Banking Law
Section 6-1, effective as of April 1, 2003;

          (lxv) No Mortgage Loan (a) is secured by property located in the State of New York; (b) had an
unpaid principal balance at origination of $300,000 or less, and (c) has an application date on or
after April 1, 2003, the terms of which Mortgage Loan equal or exceed either the APR or the points
and fees threshold for “high-cost home loans”, as defined in Section 6-1 of the New York State
Banking Law;

          (lxvi) No Mortgage Loan is a “High Cost Home Loan” as defined in the Arkansas Home Loan
Protection Act effective July 16, 2003 (Act 1340 or 2003);

          (lxvii) No Mortgage Loan is a “High Cost Home Loan” as defined in the Kentucky high-cost loan
statute effective June 24, 2003 (Ky. Rev. Stat. Section 360.100);

          (lxviii) No Mortgage Loan secured by property located in the State of Nevada is a “home loan”
as defined in the Nevada Assembly Bill No. 284;

          (lxix) No Mortgage Loan is a “manufactured housing loan” or “home improvement home loan”
pursuant to the New Jersey Home Ownership Act. No Mortgage Loan is a “High-Cost Home Loan” or a
refinanced “Covered Home Loan,” in each case, as defined in the New Jersey Home Ownership Act
effective November 27, 2003 (N.J.S.A. 46;10B-22 et seq.);

          (lxx) No Mortgage Loan is a subsection 10 mortgage under the Oklahoma Home Ownership and
Equity protection Act;

 

 

          (lxxi) No Mortgage Loan is a “High-Cost Home Loan” as defined in the New Mexico Home Loan
Protection Act effective January 1, 2004 (N.M. Stat. Ann. §§ 58-21A-1 et seq.);

          (lxxii) No Mortgage Loan is a “High-Risk Home Loan” as defined in the Illinois High-Risk Home
Loan Act effective January 1, 2004 (815 Ill. Comp. Stat. 137/1 et seq.);

          (lxxiii) No Loan that is secured by property located within the State of Maine meets the
definition of a (i) “high-rate, high-fee” mortgage loan under Article VIII, Title 9-A of the Maine
Consumer Credit Code or (ii) “High-Cost Home Loan” as defined under the Maine House Bill 383 L.D.
494, effective as of September 13, 2003;

          (lxxiv) Reserved;

          (lxxv) No Mortgage Loan is a “High Cost Home Mortgage Loan” as defined in the Massachusetts
Predatory Home Loan Practices Act, effective November 7, 2004 (Mass. Ann. Laws Ch. 183C). No
Mortgage Loan secured by a Mortgaged Property located in the Commonwealth of Massachusetts was made
to pay off or refinance an existing loan or other debt of the related borrower (as the term
“borrower” is defined in the regulations promulgated by the Massachusetts Secretary of State in
connection with Massachusetts House Bill 4880 (2004)) unless either (1) (a) the related Mortgage
Interest Rate (that would be effective once the introductory rate expires, with respect to
Adjustable Rate Mortgage Loans) did or would not exceed by more than 2.25% the yield on United
States Treasury securities having comparable periods of maturity to the maturity of the related
Mortgage Loan as of the fifteenth day of the month immediately preceding the month in which the
application for the extension of credit was received by the related lender or (b) the Mortgage Loan
is an “open-end home loan” (as such term is used in the Massachusetts House Bill 4880 (2004)) and
the related Mortgage Note provides that the related Mortgage Interest Rate may not exceed at any
time the Prime rate index as published in The Wall Street Journal plus a margin of one percent, or
(2) such Mortgage Loan is in the “borrower’s interest,” as documented by a “borrower’s interest
worksheet” for the particular Mortgage Loan, which worksheet incorporates the factors set forth in
Massachusetts House Bill 4880 (2004) and the regulations promulgated thereunder for determining
“borrower’s interest,” and otherwise complies in all material respects with the laws of the
Commonwealth of Massachusetts;

          (lxxvi) No Loan is a “High Cost Home Loan” as defined by the Indiana Home Loan Practices Act,
effective January 1, 2005 (Ind. Code Ann. §§ 24-9-1 et seq.);

          (lxxvii) The Mortgagee has not made or caused to be made any payment in the nature of an
“average” or “yield spread premium” to a mortgage broker or a like Person which has not been fully
disclosed to the Mortgagor;

          (lxxviii) The sale or transfer of the Mortgage Loan by the Seller complies with all applicable
federal, state, and local laws, rules, and regulations governing such sale or transfer,

 

 

including, without limitation, the Fair and Accurate Credit Transactions Act (“FACT Act”) and
the Fair Credit Reporting Act, each as may be amended from time to time, and the Seller has not
received any actual or constructive notice of any identity theft, fraud, or other misrepresentation
in connection with such Mortgage Loan or any party thereto;

          (lxxix) With respect to each MERS Loan, a MIN has been assigned by MERS and such MIN is
accurately provided on the Mortgage Loan Schedule. The related Assignment of Mortgage to MERS has
been duly and properly recorded, or has been delivered for recording to the applicable recording
office;

          (lxxx) With respect to each MERS Loan, Seller has not received any notice of liens or legal
actions with respect to such Mortgage Loan and no such notices have been electronically posted by
MERS;

          (lxxxi) With respect to each second lien Mortgage Loan, either no consent for the Mortgage
Loan is required by the holder of the first lien or such consent has been obtained and is contained
in the Mortgage File;

          (lxxxii) No Mortgage Loan contains any obligation, conditional or otherwise, requiring the
owner of such Mortgage Loan to offer a new loan to the related Mortgagor to refinance the principal
balance of the Mortgage Loan, or any portion thereof, or to extend the maturity date thereof;

          (lxxxiii) Each Mortgage Loan contains a customary “due on sale” clause;

          (lxxxiv) Any leasehold estate securing a Mortgage Loan has a term of not less than five years
in excess of the term of the related Mortgage Loan;

          (lxxxv) If the Mortgage Loan provides that the interest rate on the principal balance of the
related Mortgage Loan may be adjusted, all of the terms of the related Mortgage pertaining to
interest rate adjustments and adjustments of the outstanding principal balance have been made in
accordance with the terms of the related Mortgage Noted and applicable law and are enforceable and
such adjustments will not affect the priority of the Mortgage lie;

          (lxxxvi) Each Mortgage Loan constitutes a “qualified mortgage” under Section 860G(a)(3)(A) of
the Code and Treasury Regulation Section 1.860G-2(a)(1);

          (lxxxvii) No Mortgage Loan is currently delinquent and has not been more than 30 days
delinquent within twelve (12) months of the related Cut-off Date under the Office of Thrift
Supervision delinquency methodology;

          (lxxxviii) Reserved;

          (lxxxix) With respect to each Mortgage Loan originated on or after August 1, 2004, neither the
related mortgage nor the related mortgage note requires the borrower to submit

 

 

to arbitration to resolve any dispute arising out of or relating in any way to the mortgage
loan transaction;

          (xc) With respect to any subordinate lien Mortgage Loan and except as set forth on the
Mortgage Loan Schedule, such lien is on a one- to four-family residence that is (or will be) the
principal residence of the Mortgagor; (i) no subordinate lien mortgage loan has an original
principal balance that exceeds one-half of the one-unit limitation for first lien mortgage loans,
i.e. $208,500 (in Alaska, Guam, Hawaii, Virgin Islands: $312,750), without regard to the number of
units; and (ii) the original principal balance of the first lien mortgage loan plus the original
principal balance of the any subordinate lien mortgage loans relating to the same mortgaged
property does not exceed the applicable Freddie Mac loan limit for first lien mortgage loans for
that property type;

          (xci) Except as set forth on the Mortgage Loan Schedule, no first lien mortgage loan has an
original principal balance that exceeds the applicable Freddie Mac loan limit;

          (xcii) Except as set forth on the Mortgage Loan Schedule, no mortgage loan is “seasoned” (a
seasoned mortgage loan is one where the date of the mortgage note is more than 1 year before the
date of issuance of the related security);

          (xciii) No Mortgage Loan that was originated on or after October 31, 2004, is subject to
mandatory arbitration except when the terms of the arbitration also contain a waiver provision that
provides that in the event of a sale or transfer of the Mortgage Loan or interest in the Mortgage
Loan to Fannie Mae, the terms of the arbitration are null and void and cannot be reinstated. The
seller hereby covenants that the seller or servicer of the Mortgage Loan, as applicable, will
notify the borrower in writing within 60 days of the sale or transfer of the Mortgage Loan to
Fannie Mae that the terms of the arbitration are null and void;

          (xciv) No Mortgagor was encouraged or required to select a Mortgage Loan product offered by
the Mortgage Loan’s originator which is a higher cost product designed for less creditworthy
borrowers, unless at the time of the Mortgage Loan’s origination, such borrower did not qualify
taking into account credit history and debt to income ratios for a lower cost credit product then
offered by the Mortgage Loan’s originator or any affiliate of the Mortgage Loan’s originator. If,
at the time of loan application, the borrower may have qualified for a lower cost credit product
then offered by any mortgage lending affiliate of the Mortgage Loan’s originator, the Mortgage
Loan’s originator referred the borrower’s application to such affiliate for underwriting
consideration;

          (xcv) The methodology used in underwriting the extension of credit for each Mortgage Loan
employs objective mathematical principles which relate the borrower’s income, assets and
liabilities to the proposed payment and such underwriting methodology does not rely on the extent
of the borrower’s equity in the collateral as the principal determining factor in approving such
credit extension. Such underwriting methodology confirmed that at the time of

 

 

origination (application/approval) the borrower had a reasonable ability to make timely
payments on the Mortgage Loan.

 

 

EXHIBIT B-1

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Next	 	 	 	 
	Loan Number	 	ARM	 	Note Date	 	Maturity	 	Loan Balance	 	Status
	3000718007
	 	Y	 	07/01/07	 	12/1/2056	 	$133,143.75	 	Delinquent Taxes
	3000771571
	 	Y	 	07/01/07	 	12/1/2036	 	$163,893.96	 	Delinquent Insurance
	3001178994
	 	N	 	07/01/07	 	2/1/2037	 	$343,824.92	 	Delinquent Insurance
	3001219265
	 	N	 	07/01/07	 	3/1/2037	 	$464,314.26	 	Delinquent Taxes
	3001104347
	 	Y	 	07/01/07	 	2/1/2057	 	$373,888.11	 	Delinquent Taxes
	3001068673
	 	N	 	08/01/07	 	2/1/2037	 	$447,923.90	 	Risk Management 
Litigation, Risk
	3001069845
	 	Y	 	07/01/07	 	2/1/2037	 	$108,892.96	 	    Management
	3000984384
	 	Y	 	07/01/07	 	1/1/2057	 	$197,330.18	 	Sailors and Soldiers
	3000984578
	 	N	 	07/01/07	 	1/1/2037	 	$49,116.44	 	Sailors and Soldiers
	3000724232
	 	Y	 	07/01/07	 	12/1/2036	 	$294,012.86	 	Delinquent Insurance
	3001054531
	 	Y	 	07/01/07	 	2/1/2037	 	$179,380.89	 	Delinquent Taxes
	3001116808
	 	Y	 	07/01/07	 	2/1/2037	 	$63,793.74	 	Delinquent Taxes
	3001185185
	 	N	 	07/01/07	 	3/1/2037	 	$135,797.73	 	Delinquent Taxes
	3001219540
	 	Y	 	07/01/07	 	3/1/2037	 	$230,614.65	 	Bankruptcy
	3001175263
	 	Y	 	08/01/07	 	2/1/2037	 	$527,222.37	 	Sailors and Soldiers
	3001023613
	 	Y	 	08527	 	7/1/2007	 	$57,346.00	 	Delinquent Insurance
	3000827269
	 	Y	 	33023	 	7/1/2007	 	$57,346.00	 	Delinquent Insurance
	3000818097
	 	Y	 	46552	 	8/1/2007	 	$53,693.00	 	Delinquent Taxes
	3000979720
	 	Y	 	46342	 	7/1/2007	 	$50,041.00	 	Delinquent Taxes
	3001075821
	 	Y	 	46320	 	8/1/2007	 	$50,072.00	 	Delinquent Taxes

 

 

EXHIBIT C

Nationstar hereby represents and warrants as to each Mortgage Loan and as of the date hereof:

	(i)	 	Except as otherwise disclosed on the Mortgage Loan Schedule, all payments required to be made
between the Servicing Transfer Date and the date hereof for such Mortgage Loan under the terms
of the Mortgage Note have been made; Nationstar has not advanced funds, or induced, solicited
or knowingly received any advance of funds from a party other than the owner of the related
Mortgaged Property, directly or indirectly, for the payment of any amount required by the
Mortgage Note or Mortgage;
	 
	(ii)	 	During the period commencing on the Servicing Transfer Date to and including the date hereof,
there are no delinquent taxes, ground rents, water charges, sewer rents, assessments,
insurance premiums, leasehold payments, including assessments payable in future installments
or other outstanding charges affecting the related Mortgaged Property;
	 
	(iii)	 	During the period commencing on the Servicing Transfer Date to and including the date
hereof, no claims have been made under such lender’s title insurance policy, and no prior
holder of the related Mortgage, including the Originator, has done, by act or omission,
anything which would impair the coverage of such lender’s title insurance policy;
	 
	(iv)	 	With respect to each second lien Mortgage Loan (i) during the period commencing on the
Servicing Transfer Date to and including the date hereof, the related first lien mortgage loan
is in full force and effect, (ii) during the period commencing the day after the Servicing
Transfer Date to and including the date hereof, there is no current event which, with the
passage of time or with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration thereunder;
	 
	(v)	 	The origination, servicing and collection practices used with respect to each Mortgage Note
and Mortgage including, without limitation, the establishment, maintenance and servicing of
the Escrow Accounts and Escrow Payments, if any, during the period commencing on the Servicing
Transfer Date to and including the date hereof,, have been in all respects legal, proper,
prudent and customary in the mortgage origination and servicing industry. The Mortgage Loan
has been serviced by Nationstar in accordance with the terms of the Mortgage Note and Accepted
Servicing Practices. With respect to escrow deposits and Escrow Payments, if any, during the
period commencing the day after the Servicing Transfer Date to and including the date hereof,
all such payments are in the possession of, or under the control of, Nationstar and there
exist no deficiencies in connection therewith for which customary arrangements for repayment
thereof have not been made. No escrow deposits or Escrow Payments or other charges or
payments due Nationstar have been capitalized under any Mortgage or the related Mortgage Note
and no such escrow deposits or Escrow Payments are being held by Nationstar for any work on a
Mortgaged Property which has not been completed; provided that, certain Insurance Proceeds may
be held by Nationstar in escrow pending the completion of repairs which are required to be
made to a Mortgaged Property in connection with the payment of such Insurance Proceeds;

 

 

	(vi)	 	During the period commencing on the Servicing Transfer Date to and including the date hereof,
the Mortgagor has not notified Nationstar and Nationstar has no knowledge of any relief
requested or allowed to the Mortgagor under the Servicemembers’ Civil Relief Act or any
similar state law;
	 
	(vii)	 	The Mortgage Loan was not prepaid in full prior during the period commencing on the
Servicing Transfer Date to and including the date hereof, and Nationstar has not received
notification from a Mortgagor that a prepayment in full shall be made after the Closing Date;
	 
	(viii)	 	As of the Closing Date, Nationstar will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Fannie Mae Guide Announcement 95-19 and for each Mortgage Loan,
Servicer agrees it shall report one of the following statuses each month as follows: new
origination, current, delinquent (30-, 60-, 90-days, etc.), foreclosed, or charged-off; and
	 
	(ix)	 	To the best of the Nationstar’s knowledge, after inquiry based on Accepted Servicing
Practices and with respect to the period commencing on the Servicing Transfer Date to and
including the date hereof, the Mortgaged Property is free of damage and waste and there is no
proceeding pending for the total or partial condemnation thereof.

 

 

EXHIBIT D

Assignor hereby represents and warrants as of the date hereof:

(a) Each Mortgage Loan and the prepayment penalty associated with such Mortgage Loan, if any, at
the time of origination complied in all material respects with applicable local, state and federal
laws, including, but not limited to, all applicable predatory and abusive lending laws;

(b) No Mortgage Loan is a High Cost Loan or Covered Loan, as applicable (as such terms are defined
in the then current Standard & Poor’s LEVELS® Glossary which is now Version 6.0, Appendix E);

(c) No Mortgage Loan originated on or after October 1, 2002 through March 6, 2003 is governed by
the Georgia Fair Lending Act

 

 

EXHIBIT B

MORTGAGE LOAN SCHEDULE

[Intentionally omitted]

 

 

EXHIBIT C

FORM OF REQUEST FOR RELEASE

Wells Fargo Bank, N.A.

24 Executive Park, Suite 100

Irvine, California 92614

Attn: Mortgage Document Custody

			
	Re:	 	Sale and Servicing Agreement, dated as of July 12, 2007, among Bear Stearns
Asset Backed Securities I LLC, Newcastle Mortgage Securities Trust 2007-1,
Nationstar Mortgage LLC, Wells Fargo Bank, N.A and The Bank of New York

             In connection with the administration of the Mortgage Loans held by you, as
Custodian, pursuant to the above-captioned Sale and Servicing Agreement, we request the
release, and hereby acknowledge receipt, of the Mortgage File for the Mortgage Loan
described below, for the reason indicated.

Mortgage Loan Number:

Mortgagor Name, Address & Zip Code:

Reason for Requesting Documents (check one):

	 	 	 	 	 	 	 

	____

	 	 	1.	 	 	Mortgage Paid in Full
	 
	____

	 	 	2.	 	 	Foreclosure
	 
	____

	 	 	3.	 	 	Substitution
	 
	____

	 	 	4.	 	 	Other Liquidation
	 
	____

	 	 	5.	 	 	Nonliquidation Reason: ______________________

	 	 	 	 	 	 	 

	 

	 	By:
	 	 
	 	 	 	 	 	 	 
	 	 	(authorized signer)
	 	 	 	 	 	 	 
	 	 	[Servicer] [Master Servicer]:
	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Address:  	 	 	 
	 

	 	 	 	 	 	 
	 	 	Date:
	 	 

Custodian

Wells Fargo Bank, N.A.

Please acknowledge the execution of the above request by your signature and date below:

	 	 	 	 	 

	 
	 	 	 	 
	 

	 	 

	 	 
	Signature

	 	Date	 	 
	 
	 	 	 	 
	Documents returned to Custodian:

	 	 
	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	Custodian

	 	Date	 	 

 

 

EXHIBIT D-1

FORM OF CUSTODIAN’S INITIAL CERTIFICATION

[Date]

Newcastle Mortgage Securities Trust 2007-1

c/o Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19990-0001

Attention: Corporate Trust Administration

The Bank of New York,

101 Barclay Street, Floor 4W

New York, New York 10286

Bear Stearns Asset Backed Securities I LLC

383 Madison Avenue

New York, New York, 10179

Attention: General Counsel

Nationstar Mortgage LLC

350 Highland Drive

Lewisville, Texas 75067

			
	Re:	 	Sale and Servicing Agreement,
dated as of July 12, 2007, among Bear Stearns
Asset Backed Securities I LLC,
Newcastle Mortgage Securities Trust 2007-1,
Nationstar Mortgage LLC, Wells Fargo Bank, N.A and The Bank of New York

Ladies and Gentlemen:

      In accordance with Section 2.01(i)-(vi) of the Sale and Servicing Agreement, the
undersigned, as Custodian, hereby certifies that as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in the Exception Report annexed hereto as not being covered by
such certification) (i) all documents constituting part of such Mortgage File (other
than such documents described in Section 2.01(vi) of the Sale and Servicing Agreement)
required to be delivered to it pursuant to the Agreement are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and relate to
such Mortgage Loan and (iii) based on its examination and only as to the foregoing, the
information set forth in the Mortgage Loan Schedule that corresponds to items (i),
(iii), (x), (xi), (xii), (xviii) and (xxv) (but only as to Gross Margin and Maximum
Mortgage Rate) of the definition of “Mortgage Loan Schedule” accurately reflects
information set forth in the Mortgage File.

      The Custodian makes no representations as to: (i) the validity, legality,
sufficiency, enforceability, recordability or genuineness of any of the documents
contained in the Mortgage File of any of the Mortgage Loans identified on the Mortgage
Loan Schedule, (ii) the collectability, insurability, effectiveness or suitability of
any such Mortgage Loan, or (iii) whether any Mortgage File included any of the documents
specified in clause (vi) of Section 2.01 of the Sale and Servicing Agreement.

      Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the above-captioned Indenture.

	 	 	 	 	 
	 	WELLS FARGO BANK, N.A., as Custodian

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

EXHIBIT D-2

FORM OF CUSTODIAN’S FINAL CERTIFICATION

[Date]

Newcastle Mortgage Securities Trust 2007-1

c/o Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19990-0001

Attention: Corporate Trust Administration

The Bank of New York,

101 Barclay Street, Floor 4W

New York, New York 10286

Bear Stearns Asset Backed Securities I LLC

383 Madison Avenue

New York, New York, 10179

Attention: General Counsel

Nationstar Mortgage LLC

350 Highland Drive

Lewisville, Texas 75067

			
	Re:	 	Sale and Servicing Agreement,
dated as of July 12, 2007, among Bear Stearns
Asset Backed Securities I LLC,
Newcastle Mortgage Securities Trust 2007-1,
Nationstar Mortgage LLC, Wells Fargo Bank, N.A and The Bank of New York

Ladies and Gentlemen:

      In accordance with Section 2.01(i)-(vi) of the Sale and Servicing Agreement, the
undersigned, as Custodian, hereby certifies that as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in the Exception Report annexed hereto as not being covered by
such certification) (i) all documents constituting part of such Mortgage File (other
than such documents described in Section 2.01(vi) of the Sale and Servicing
Agreement) required to be delivered to it pursuant to the Sale and Servicing Agreement
are in its possession.

      The undersigned hereby certifies that as to each Mortgage Loan identified on the
Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I hereto, it has
reviewed the documents listed above and has determined that each such document appears
to be regular on its face and relates to such Mortgage Loan and, based on an examination
of such documents, the information set forth in (i) of the definition of Mortgage Loan
Schedule accurately reflects information in the Mortgage File.

      We have made no independent examination of any documents contained in each Mortgage
File beyond the review specifically required in the Sale and Servicing Agreement. We
make no representations as to (i) the validity, legality, sufficiency, recordability,
enforceability or genuineness of any of the documents contained in the Mortgage File
pertaining to the Mortgage Loans identified on the Mortgage Loan Schedule, (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage Loan or
(iii) whether any Mortgage File includes any of the documents specified in clause (vi)
of Section 2.01 of the Sale and Servicing Agreement.

      Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the Agreements. This Certificate is qualified in all respects by the
terms of said Agreements.

	 	 	 	 	 
	 	[CUSTODIAN]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

EXHIBIT E

FORM OF LOST NOTE AFFIDAVIT

     Personally appeared before me the undersigned authority to administer oaths,
_____________________ who first being duly sworn deposes and says: Deponent is
___________________________ of ____________________________, successor by merger to
_________________________ (“Seller”) and who has personal knowledge of the facts set out
in this affidavit.

     On _______________________, ____________________________ did execute and deliver a
promissory note in the principal amount of $___________________.

     That said note has been misplaced or lost through causes unknown and is presently
lost and unavailable after diligent search has been made. Seller’s records show that an
amount of principal and interest on said note is still presently outstanding, due, and
unpaid, and Seller is still owner and holder in due course of said lost note.

     Seller executes this Affidavit for the purpose of inducing The Bank of New York, as
indenture trustee on behalf of Newcastle Mortgage Securities Trust 2007-1, Asset-Backed
Notes, Series 2007-1, to accept the transfer of the above described loan from Seller.

     Seller agrees to indemnify The Bank of New York harmless for any losses incurred by
such parties resulting from the above described promissory note has been lost or
misplaced.

	 	 	 	 
	 	 
	By:  	 	 
	 	  	 	 
	 	 	 
	 

	 	 	 	 	 	 	 	 	 

	STATE OF

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	SS:
	 	 
	COUNTY OF

	 	 	)	 	 	 	 	 

     On this ______ day of ______________, 20_, before me, a Notary Public, in and for
said County and State, appeared , who acknowledged the extension of the foregoing and
who, having been duly sworn, states that any representations therein contained are true.

     Witness my hand and Notarial Seal this _________ day of 20_.

_________________________________

_________________________________

My commission expires __________________________

 

 

EXHIBIT F

FORM OF POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that The Bank of New York, a national banking
association, having a place of business at ________________, as Indenture Trustee (and
in no personal or other representative capacity), under the Sale and Servicing
Agreement, dated July __, 2007, among Bear Stearns Asset Backed Securities I LLC,
Newcastle Mortgage Securities Trust 2007-1, Nationstar Mortgage LLC, Wells Fargo Bank,
N.A and The Bank of New York, as Indenture Trustee (as amended, restated, supplemented
or otherwise modified from time to time, the “Agreement”; capitalized terms not defined
herein have the definitions assigned to such terms in the Agreement), relating to
Newcastle Mortgage Securities 2007-1, hereby appoints ______________________, in its
capacity as the Servicer under the Agreement as the Indenture Trustee’s true and lawful
Special Attorney-in-Fact, in the Indenture Trustee’s name, place and stead and for the
Indenture Trustee’s benefit, but only in its capacity as Indenture Trustee aforesaid, to
perform all acts and execute all documents as may be customary, necessary and
appropriate to effectuate the following enumerated transactions in respect of any
mortgage, deed of trust, promissory note or real estate owned from time to time owned
(beneficially or in title, whether the Indenture Trustee is named therein as mortgagee
or beneficiary or has become mortgagee or beneficiary by virtue of endorsement,
assignment or other conveyance) or held by or registered to the Indenture Trustee
(directly or through custodians or nominees), or in respect of which the Indenture
Trustee has a security interest or other lien, all as provided under the Agreement and
only to the extent the Indenture Trustee has an interest therein under the Agreement,
and in respect of which the Servicer is acting as servicer pursuant to the Agreement
(collectively the “Mortgage Documents”).

     This appointment shall apply to the following enumerated transactions under the
Agreement only:

     1. The modification or re-recording of any Mortgage Document for the purpose of
correcting it to conform to the original intent of the parties thereto or to correct
title errors discovered after title insurance was issued and where such modification or
re-recording does not adversely affect the lien under the Mortgage Document as insured.

     2. The subordination of the lien under a Mortgage Document to an easement in favor
of a public utility company or a state or federal agency or unit with powers of eminent
domain including, without limitation, the execution of partial
satisfactions/releases, partial reconveyances and the execution of requests to
trustees to accomplish same.

     3. The conveyance of the properties subject to a Mortgage Document to the
applicable mortgage insurer, or the closing of the title to the property to be acquired
as real estate so owned, or conveyance of title to real estate so owned.

     4. The completion of loan assumption and modification agreements in respect of
Mortgage Documents.

     5. The full or partial satisfaction/release of a Mortgage Document or full
conveyance upon payment and discharge of all sums secured thereby, including, without
limitation, cancellation of the related note.

     6. The assignment of any Mortgage Document, in connection with the repurchase of
the mortgage loan secured and evidenced thereby.

     7. The full assignment of a Mortgage Document upon payment and discharge of all
sums secured thereby in conjunction with the refinancing thereof, including, without
limitation, the assignment of the related note.

 

 

     8. With respect to a Mortgage Document, the foreclosure, the taking of a deed in
lieu of foreclosure, or the completion of judicial or non-judicial foreclosure or
termination, cancellation or rescission of any such foreclosure, including, without
limitation, any and all of the following acts:

     a. the substitution of indenture trustee(s) serving under a deed of trust, in
accordance with state law and the deed of trust;

     b. the preparation and issuance of statements of breach or
non-performance;

     c. the preparation and filing of notices of default
and/or notices of sale;

     d. the cancellation/rescission of notices of
default and/or notices of sale; 

     e. the taking of a deed in lieu of
foreclosure; and

     f. the preparation and execution of such other documents and performance of such
other actions as may be necessary under the terms of the Mortgage Document or state law
to expeditiously complete said transactions in paragraphs 8(a) through 8(e), above.

     9. Demand, sue for, recover, collection and receive each and every sum of money,
debt, account and interest (which now is, or hereafter shall become due and payable)
belonging to or claimed by the Indenture Trustee under the Mortgage Documents, and to
use or take any lawful means for recovery thereof by legal process or otherwise.

     10. Endorse on behalf of the Indenture Trustee all checks, drafts and/or negotiable
instruments made payable to the Indenture Trustee in respect of the Mortgage Documents.

     The Indenture Trustee gives the Special Attorney-in-Fact full power and authority
to execute such instruments and to do and perform all and every act and thing necessary
and proper to carry into effect the power or powers granted by this Limited Power of
Attorney, subject to the terms and conditions set forth in the Agreement including the
standard of care applicable to servicers in the Agreement, and hereby does ratify and
confirm to what such Special Attorney-in-Fact shall lawfully do or cause to be done by
authority hereof.

     This Power of Attorney is effective for one (1) year from the date hereof or the
earlier of (i) revocation by the Indenture Trustee, (ii) the Attorney shall no longer be
retained on behalf of the Indenture Trustee or an affiliate of the Indenture Trustee; or
(iii) the expiration of one year from the date of execution.

     The authority granted to the attorney-in-fact by the Power of Attorney is not
transferable to any other party or entity.

     This Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York without regard to its conflicts of law principles.

     IN WITNESS WHEREOF, the Indenture Trustee has caused its corporate name and seal to
be
hereto signed and affixed and these presents to be acknowledged by its duly elected and
authorized officer this ______ day of _________, 200__.

	 	 	 	 	 
	 	THE BANK OF NEW YORK,

as Indenture Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	WITNESS:

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	WITNESS:

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 

	STATE OF NEW YORK
	 	 
	 

	 	ss:
	COUNTY OF NEW YORK
	 	 

     On _______________, 2007, before me, the undersigned, a Notary Public in and for
said state, personally appeared _______________________, personally known to me to be
the person whose name is subscribed to the within instrument and to be a duly authorized
and acting Senior Vice President of The Bank of New York and such person acknowledged to
me that such person executed the within instrument in such person’s authorized capacity
as a Senior Vice President of The Bank of New York, and that by such signature on the
within instrument the entity upon behalf of which such person acted executed the
instrument.

     WITNESS my hand and official seal.

                                      

      Notary Public

 

 

EXHIBIT G-1

FORM OF CERTIFICATION TO BE PROVIDED BY THE SERVICER TO THE MASTER SERVICER

Certification

				
	 	Re:	 	Newcastle Mortgage Securities Trust 2007-1 (the “Trust” or the
“Issuing Entity”)
Asset-Backed Notes, Series 2007-1

       I, [identify the certifying individual], certify, that:

          (i) 1. I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the “Compliance
Statement”), the report on assessment of the Company’s compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB (the “Servicing
Criteria”), provided in accordance with Rules 13a-18 and 15d-18 under Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and Item 1122 of
Regulation AB (the “Servicing Assessment”), the registered public accounting
firm’s attestation report provided in accordance with Rules 13a-18 and 15d-18
under the Exchange Act and Section 1122(b) of Regulation AB (the “Attestation
Report”), and all servicing reports, officer’s certificates and other
information relating to the servicing of the Mortgage Loans by the Company
during 200[ ] that were delivered by the Company to the Depositor and the Master
Servicer pursuant to the Agreement (collectively, the “Company Servicing
Information”);

          (ii) Based on my knowledge, the Company Servicing Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in the light of the
circumstances under which such statements were made, not misleading with respect
to the period of time covered by the Company Servicing Information;

          (iii) Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been provided to
the Depositor and the Master Servicer;

          (iv) I am responsible for reviewing the activities performed by the Company
as servicer under the Agreement, and based on my knowledge and the compliance
review conducted in preparing the Compliance Statement and except as disclosed
in the Compliance Statement, the Servicing Assessment or the Attestation Report,
the Company has fulfilled its obligations under the Agreement in all material
respects; and

          (v) The Compliance Statement required to be delivered by the Company
pursuant to this Agreement, and the Servicing Assessment and Attestation Report
required to be provided by the Company and by any Subservicer and Subcontractor
pursuant to the Agreement, have been provided to the Depositor and the Master
Servicer. Any material instances of noncompliance described in such reports have
been disclosed to the Depositor and the Master Servicer. Any material instance
of noncompliance with the Servicing Criteria has been disclosed in such reports.

Date: ___________________

	 	 	 	 	 
	 	NATIONSTAR MORTGAGE LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	Date:  	 	 

 

 

	 	 	 	 	 

EXHIBIT G-2

FORM CERTIFICATION TO BE PROVIDED BY THE MASTER SERVICER

WITH FORM 10-K

Newcastle Mortgage Securities Trust 2007-1 (the “Trust” or the “Issuing Entity”)

Asset-Backed Notes, Series 2007-1

     I, [identify the certifying individual], certify that:

     1. I have reviewed this annual report on Form 10-K, and all reports on Form 10-D
required to be filed in respect of the period covered by this report on Form 10-K
[identify issuing entity] (i.e., the name of the specific deal to which this
certification relates rather than just the name of the Depositor)] (the “Exchange Act
periodic reports”);

     2. Based on my knowledge, the Exchange Act periodic reports, taken as a whole, do
not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, all of the distribution, servicing and other information
required to be provided under Form 10-D for the period covered by this report is
included in the Exchange Act periodic reports;

     4. I am responsible for reviewing the activities performed by the servicer and
based on my knowledge and the compliance review conducted in preparing the servicer
compliance statement required in this report under Item 1123 of Regulation AB, and
except as disclosed in the Exchange Act periodic reports, the servicer has fulfilled its
obligations under the servicing agreement in all material respects; and

     5. All of the reports on assessment of compliance with servicing criteria for
asset-backed securities and their related attestation reports on assessment of
compliance with servicing criteria for asset-backed securities required to be included
in this report in accordance with Item 1122 of Regulation AB and Exchange Act Rules
13a-18 and 15d-18 have been included as an exhibit to this report, except as otherwise
disclosed in this report. Any material instances of noncompliance described in such
reports have been disclosed in this report on Form 10-K.

     In giving the certifications above, I have reasonably relied on information
provided to me by the following unaffiliated party: Nationstar Mortgage, LLC.

	 	 	 	 	 
	 	WELLS FARGO BANK, N.A.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	Date:  	 	 
	 

 

 

EXHIBIT H

SERVICING CRITERIA TO BE ADDRESSED

IN ASSESSMENT OF COMPLIANCE

Definitions

Primary Servicer — transaction party having borrower contact

Master Servicer — aggregator of pool assets

Securities Administrator — waterfall calculator (may be the Master Servicer, or may be the Servicer)

Custodian — safe keeper of pool assets

Paying Agent — distributor of funds to ultimate investor

Indenture Trustee — fiduciary of the transaction

Note: The definitions above describe the essential function that the party performs,
rather than the party’s title.

Where there are multiple checks for criteria the attesting party will identify in their
management assertion that they are attesting only to the portion of the distribution
chain they are responsible for in the related transaction agreements.

	 	 	 	 	 

	Key:

	 	X -
	 	obligation
	 

	 	XX -
	 	only needs to be provided if transaction documents
Require custodial accounts to be maintained at a federally insured
depository institution
	 

	 	XXX -
	 	will be provided by entity acting as custodian
	 

	 	[X] -
	 	under consideration for obligation

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Master Servicer/	 	 	 	 
	 	 	 	 	 	 	Securities	 	 	 	 
	Reg AB Reference	 	Servicing Criteria	 	Primary Servicer	 	Administrator	 	Indenture Trustee	 	Custodian
	 

	 	General Servicing Considerations	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(1)(i)

	 	Policies and procedures
are instituted to
monitor any performance
or other triggers and
events of default in
accordance with the
transaction agreements.
	 	X
	 	X
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(1)(ii)

	 	If any material servicing activities are
outsourced to third parties, policies
and procedures are instituted to monitor
the third party’s performance and
compliance with such servicing
activities.
	 	X
	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(1)(iii)

	 	Any requirements in the transaction
agreements to maintain a back-up
servicer for the Pool Assets are
maintained.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(1)(iv)

	 	A fidelity bond and errors and omissions
policy is in effect on the party
participating in the servicing function
throughout the reporting period in the
amount of coverage required by and
otherwise in accordance with the terms
of the transaction agreements.
	 	X
	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Cash Collection and Administration	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(2)(i)

	 	Payments on pool assets are deposited
into the appropriate custodial bank
accounts and related bank clearing
accounts no more than two business days
following receipt, or such other number
of days specified in the transaction
agreements.
	 	X
	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(2)(ii)

	 	Disbursements made via wire transfer on
behalf of an obligor or to an investor
are made only by authorized personnel.
	 	X
	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(2)(iii)

	 	Advances of funds or guarantees
regarding collections, cash flows or
paymnets, and any interest or other fees
charged for such advances, are made,
reviewed and approved as specified in
the transaction agreements.
	 	X
	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(2)(iv)

	 	The related accounts for the
transaction, such as cash reserve
accounts or accounts established as a
form of over collateralization, are
separately maintained (e.g., with
respect to commingling of cash) as set
forth in the transaction agreements.
	 	X
	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(2)(v)

	 	Each custodial account is maintained at
a federally insured depository
institution as set forth in the
transaction agreements. For purposes of
this criterion, “federally insured
depository institution” with respect to
a foreign financial institution means a
foreign financial institution that meets
the requirements of Rule 13k-1(b)(1) of
the Securities Exchange Act.
	 	X
	 	X	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Master Servicer/	 	 	 	 
	 	 	 	 	 	 	Securities	 	 	 	 
	Reg AB Reference	 	Servicing Criteria	 	Primary Servicer	 	Administrator	 	Indenture Trustee	 	Custodian
	1122(d)(2)(vi)

	 	Unissued checks are safeguarded so as to
prevent unauthorized access.
	 	X	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(2)(vii)

	 	Reconciliations are prepared on a
monthly basis for all asset-backed
securities related bank accounts,
including custodial accounts and related
bank clearing accounts. These
reconciliations are (A) mathematically
accurate; (B) prepared within 30
calendar days after the bank statement
cutoff date, or such other number of
days specified in the transaction
agreements; (C) reviewed and approved by
someone other than the person who
prepared the reconciliation; and (D)
contain explanations for reconciling
items. These reconciling items are
resolved within 90 calendar days of
their original identification, or such
other number of days specified in the
transaction agreements.
	 	X
	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Investor Remittances and Reporting	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(3)(i)

	 	Reports to investors,
including those to be
filed with the
Commission, are
maintained in accordance
with the transaction
agreements and
applicable Commission
requirements.
Specifically, such
reports (A) are prepared
in accordance with
timeframes and other
terms set forth in the
transaction agreements;
(B) provide information
calculated in accordance
with the terms specified
in the transaction
agreements; (C) are
filed with the
Commission as required
by its rules and
regulations; and (D)
agree with investors’ or
the indenture trustee’s
records as to the total
unpaid principal balance
and number of Pool
Assets serviced by the
Servicer.
	 	X
	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(3)(ii)

	 	Amounts due to investors
are allocated and
remitted in accordance
with timeframes,
distribution priority
and other terms set
forth in the transaction
agreements.
	 	X
	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(3)(iii)

	 	Disbursements made to an
investor are posted
within two business days
to the Servicer’s
investor records, or
such other number of
days specified in the
transaction agreements.
	 	X
	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(3)(iv)

	 	Amounts remitted to
investors per the
investor reports agree
with cancelled checks,
or other form of
payment, or custodial
bank statements.
	 	X
	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Pool Asset Administration	 	 	 	 	 	 	 	 
	 
	1122(d)(4)(i)

	 	Collateral or security
on pool assets is
maintained as required
by the transaction
agreements or related
pool asset documents.
	 	X
	 	 	 	 	 	X
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(ii)

	 	Pool assets and related
documents are
safeguarded as required
by the transaction
agreements
	 	X
	 	 	 	 	 	X
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(iii)

	 	Any additions, removals
or substitutions to the
asset pool are made,
reviewed and approved in
accordance with any
conditions or
requirements in the
transaction agreements.
	 	X	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(iv)

	 	Payments on pool assets,
including any payoffs,
made in accordance with
the related pool asset
documents are posted to
the Servicer’s obligor
records maintained no
more than two business
days after receipt, or
such other number of
days specified in the
transaction agreements,
and allocated to
principal, interest or
other items (e.g.,
escrow) in accordance
with the related pool
asset documents.
	 	X	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(v)

	 	The Servicer’s records
regarding the pool
assets agree with the
Servicer’s records with
respect to an obligor’s
unpaid principal
balance.
	 	X	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(vi)

	 	Changes with respect to
the terms or status of
an obligor’s pool assets
(e.g., loan
modifications or
re-agings) are made,
reviewed and approved by
authorized personnel in
accordance with the
transaction agreements
and related pool asset
documents.
	 	X	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Master Servicer/	 	 	 	 
	 	 	 	 	 	 	Securities	 	 	 	 
	Reg AB Reference	 	Servicing Criteria	 	Primary Servicer	 	Administrator	 	Indenture Trustee	 	Custodian
	1122(d)(4)(vii)

	 	Loss mitigation or
recovery actions (e.g.,
forbearance plans,
modifications and deeds
in lieu of foreclosure,
foreclosures and
repossessions, as
applicable) are
initiated, conducted and
concluded in accordance
with the timeframes or
other requirements
established by the
transaction agreements.
	 	X	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(viii)

	 	Records documenting
collection efforts are
maintained during the
period a pool asset is
delinquent in accordance
with the transaction
agreements. Such
records are maintained
on at least a monthly
basis, or such other
period specified in the
transaction agreements,
and describe the
entity’s activities in
monitoring delinquent
pool assets including,
for example, phone
calls, letters and
payment rescheduling
plans in cases where
delinquency is deemed
temporary (e.g., illness
or unemployment).
	 	X	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(ix)

	 	Adjustments to interest
rates or rates of return
for pool assets with
variable rates are
computed based on the
related pool asset
documents.
	 	X	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(x)

	 	Regarding any funds held
in trust for an obligor
(such as escrow
accounts): (A) such
funds are analyzed, in
accordance with the
obligor’s pool asset
documents, on at least
an annual basis, or such
other period specified
in the transaction
agreements; (B) interest
on such funds is paid,
or credited, to obligors
in accordance with
applicable pool asset
documents and state
laws; and (C) such funds
are returned to the
obligor within 30
calendar days of full
repayment of the related
pool assets, or such
other number of days
specified in the
transaction agreements.
	 	X	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(xi)

	 	Payments made on behalf
of an obligor (such as
tax or insurance
payments) are made on or
before the related
penalty or expiration
dates, as indicated on
the appropriate bills or
notices for such
payments, provided that
such support has been
received by the servicer
at least 30 calendar
days prior to these
dates, or such other
number of days specified
in the transaction
agreements.
	 	X	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(xii)

	 	Any late payment
penalties in connection
with any payment to be
made on behalf of an
obligor are paid from
the Servicer’s funds and
not charged to the
obligor, unless the late
payment was due to the
obligor’s error or
omission.
	 	X	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(xiii)

	 	Disbursements made on
behalf of an obligor are
posted within two
business days to the
obligor’s records
maintained by the
servicer, or such other
number of days specified
in the transaction
agreements.
	 	X	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(xiv)

	 	Delinquencies,
charge-offs and
uncollectible accounts
are recognized and
recorded in accordance
with the transaction
agreements.
	 	X
	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1122(d)(4)(xv)

	 	Any external enhancement
or other support,
identified in Item
1114(a)(1) through (3)
or Item 1115 of
Regulation AB, is
maintained as set forth
in the transaction
agreements.
	 	 	 	X	 	 	 	 

 

 

EXHIBIT
I

FORM 10-D, FORM 8-K AND FORM 10-K

REPORTING RESPONSIBILITY

As to each item described below, the entity indicated as the Responsible Entity shall be
primarily responsible for reporting the information to the Securities Administrator
pursuant to Section 4.02(b). If the Securities Administrator is indicated below as to
any item, then the Securities Administrator is primarily responsible for obtaining that
information.

Under Item 1 of Form 10-D: a) items marked “7.05 statement” are satisfied by the
provision of the periodic Payment Date statement under Section 7.05 of the Indenture,
provided by the Securities Administrator based on information received from the
Servicer; and b) items marked “Form 10-D report” are required to be in the Form 10-D
report but not the 7.05 statement, provided by the party indicated. Information under
all other Items of Form 10-D is to be included in the Form 10-D report.

	 	 	 	 	 	 	 	 	 
	Form	 	Item	 	Description	 	Responsible Entity
	10-D

	 	Must be filed
within 15 days of
the Payment Date.

	 
	 	 	 	 	 	 	 	 
	 

	 	 	1	 	 	Distribution and
Pool Performance
Information	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Item 1121(a) -
Distribution and
Pool Performance
Information	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	(1) Any applicable
record dates,
accrual dates,
determination dates
for calculating
payments and actual
payment dates for
the payment period.
	 	7.05 statement
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	(2) Cash flows
received and the
sources thereof for
payments, fees and
expenses.
	 	7.05 statement
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	(3) Calculated amounts and
distribution of the flow of funds
for the period itemized by type and
priority of payment, including:

	 	7.05 statement
	 
	 	 
	 	 	 	 	 	 	     
(i)Fees or expenses accrued and paid, with an identification of the general purpose of such fees and the party receiving such fees or expenses.

	 	7.05 statement
	 
	 	 
	 	 	 	 	 	 	     (ii) Payments accrued or paid with
respect to enhancement or other
support identified in Item 1114 of
Regulation AB (such as insurance
premiums or other enhancement
maintenance fees), with an
identification of the general
purpose of such payments and the
party receiving such payments.

	 	7.05 statement
	 
	 	 
	 

	 	 	 	 	 	     (iii) Principal, interest and other
distributions accrued and paid on
the asset-backed securities by type
and by class or series and any
principal or interest shortfalls or
carryovers.

	 	7.05 statement
	 
	 	 
	 

	 	 	 	 	 	     (iv) The amount of excess cash flow
or excess spread and the disposition
of excess cash flow.

	 	7.05 statement
	 
	 	 
	 

	 	 	 	 	 	(4) Beginning and ending principal
balances of the asset-backed
securities.

	 	7.05 statement
	 
	 	 
	 

	 	 	 	 	 	(5) Interest rates applicable to the
pool assets and the asset-backed
securities, as applicable. Consider
providing interest rate information
for pool assets in appropriate
distributional groups or incremental
ranges.

	 	7.05 statement
	 
	 	 
	 

	 	 	 	 	 	(6) Beginning and ending balances of
transaction accounts, such as
reserve accounts, and material
account activity during the period.

	 	7.05 statement
	 
	 	 
	 

	 	 	 	 	 	(7) Any amounts drawn on any credit
enhancement or other support
identified in Item 1114 of
Regulation AB, as applicable, and
the amount of coverage remaining
under any such enhancement, if known
and applicable.

	 	7.05 statement
	 
	 	 
	 

	 	 	 	 	 	(8) Number and amount of pool assets
at the beginning and ending of each
period, and updated pool composition
information, such as weighted
average coupon, weighted average
life, weighted average remaining
term, pool factors and prepayment
amounts.

	 	7.05 statement 

Updated Pool composition information
fields to be as specified by
Servicer from time to time

 

 

	 	 	 	 	 	 	 	 	 
	Form	 	Item	 	Description	 	Responsible Entity
	 

	 	 	 	 	 	(9) Delinquency and loss information for the period. 

	 	7.05 statement. 
	 

	 

	 	 	 	 	 	
In addition, describe any material
changes to the information specified in
Item 1100(b)(5) of Regulation AB
regarding the pool assets.

	 	Form 10-D report: Servicer
	 
	 	 
	 

	 	 	 	 	 	(10) Information on the amount,
terms and general purpose of any
advances made or reimbursed during
the period, including the general
use of funds advanced and the
general source of funds for
reimbursements.

	 	7.05 statement
	 
	 	 
	 

	 	 	 	 	 	(11) Any material modifications,
extensions or waivers to pool asset
terms, fees, penalties or payments
during the distribution period or
that have cumulatively become
material over time.

	 	Form 10-D report; Servicer
	 
	 	 
	 

	 	 	 	 	 	(12) Material breaches of pool asset
representations or warranties or
transaction covenants.

	 	Form 10-Dreport: Servicer, Master
Servicer
	 
	 	 
	 

	 	 	 	 	 	(13) Information on ratio, coverage
or other tests used for determining
any early amortization, liquidation
or other performance trigger and
whether the trigger was met.

	 	7.05 statement
	 
	 	 
	 

	 	 	 	 	 	(14) Information regarding any new
issuance of asset-backed securities
backed by the same asset pool,

[information regarding] any pool
asset changes (other than in
connection with a pool asset
converting into cash in accordance
with its terms), such as additions
or removals in connection with a
prefunding or revolving period and
pool asset substitutions and
repurchases (and purchase rates, if
applicable), and cash flows
available for future purchases, such
as the balances of any prefunding or
revolving accounts, if applicable.

Disclose any material changes in the
solicitation, credit-granting,
underwriting, origination,
acquisition or pool selection
criteria or procedures, as
applicable, used to originate,
acquire or select the new pool
assets.

	 	Form 10-D report: Sponsor 

Form 10-D report: Seller 

Form 10-D report: Seller
	 
	 	 
	 

	 	 	 	 	 	Item 1121(b) — Pre-Funding or
Revolving Period Information Updated
pool information as required under
Item 1121(b).

	 	N/A

	 	 	 	 	 	 	 	 	 

	 

	 	 	2	 	 	Legal Proceedings	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Item 1117 — Legal proceedings pending against
the following entities, or their respective
property, that is material to Noteholders,
including proceedings known to be
contemplated by governmental authorities:	 	 
	 

	 	 	 	 	 	Seller	 	 
	 

	 	 	 	 	 	Depositor
	 	Seller
	 

	 	 	 	 	 	Indenture Trustee
	 	Depositor
	 

	 	 	 	 	 	Issuing entity
	 	Indenture Trustee
	 

	 	 	 	 	 	Master Servicer
	 	Sponsor
	 

	 	 	 	 	 	Securities Administrator
	 	Master Servicer
	 

	 	 	 	 	 	Servicer
	 	Securities Administrator
	 

	 	 	 	 	 	Originator
	 	Servicer
	 

	 	 	 	 	 	Custodian
	 	Originator
	 

	 	 	 	 	 	 	 	Custodian
	 
	 	 	 	 	 	 	 	 
	 

	 	 	3	 	 	Sales of Securities and Use of Proceeds	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Information from Item 2(a) of Part II of Form
10-Q:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	With respect to any sale of securities by the
sponsor, depositor or issuing entity, that
are backed by the same asset pool or are
otherwise issued by the issuing entity,
whether or not registered, provide the sales
and use of proceeds information in Item 701
of Regulation S-K. Pricing information can be
omitted if securities were not registered.
	 	Depositor, Sponsor, Issuing

Entity, as applicable
	 
	 	 	 	 	 	 	 	 
	 

	 	 	4	 	 	Defaults Upon Senior Securities	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Information from Item 3 of Part II of Form
10-Q:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Report the occurrence of any Event of Default
(after expiration of any grace period and
provision of any required notice)
	 	Securities Administrator

 

 

	 	 	 	 	 	 	 	 	 
	Form	 	Item	 	Description	 	Responsible Entity

	 

	 	 	5	 	 	Submission of Matters to a Vote of Security
Holders	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Information from Item 4 of Part II of Form
10-Q
	 	Securities Administrator

Indenture Trustee
	 
	 	 	 	 	 	 	 	 
	 

	 	 	6	 	 	Significant Obligors of Pool Assets	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 		 	 	Item 1112(b) — Significant Obligor Financial Information	 	N/A 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	*This information need only be reported on
the Form 10-D for the distribution period in
which updated information is required
pursuant to the Item.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	7	 	 	Significant
Enhancement
Provider
Information	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Item 1114(b)(2) —
Credit Enhancement
Provider Financial
Information*

Determining
applicable
disclosure threshold
Obtaining required
financial
information or
effecting
incorporation by
reference
	 	

N/A

N/A
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Item 1115(b) —
Derivative
Counterparty
Financial
Information*

Determining current
maximum probable
exposure
Determining current
significance
percentage
Obtaining required
financial
information or
effecting
incorporation by
reference
	 	

Depositor

Securities Administrator

Depositor
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	*This information
need only be
reported on the
Form 10-D for the
distribution period
in which updated
information is
required pursuant
to the Items.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	8	 	 	Other Information	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Disclose any
information
required to be
reported on Form
8-K during the
period covered by
the Form 10-D but
not reported
	 	The Responsible Entity for the applicable Form 8-K item as indicated below
	 
	 	 	 	 	 	 	 	 
	 

	 	 	9	 	 	Exhibits	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Distribution report
	 	Securities Administrator
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Exhibits required
by Item 601 of
Regulation S-K,
such as material
agreements
	 	All parties that are a party to such exhibit and if none, Sponsor
	 
	 	 	 	 	 	 	 	 
	8-K

	 	Must be filed within four business
days of an event reportable on Form 8-K.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.01	 	 	Entry into a Material Definitive Agreement	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Disclosure is
required regarding
entry into or
amendment of any
definitive
agreement that is material to the securitization, even if
depositor is not a party.

Examples: Sale and Servicing Agreement, custodial
agreement.

Note: disclosure not required as to definitive
agreements that are fully disclosed in the
prospectus	 	All parties
	 
	 	 	 	 
	

	 	 	1.02 	 	 	Termination of a Material Definitive Agreement	 	All parties
	 
	 	 	 	 
	 

	 	 	 	 	 	Disclosure is required regarding termination of
any definitive agreement that is material
to the securitization (other than expiration in
accordance with its terms), even if depositor is
not a party. 
Examples: Sale and Servicing
Agreement, custodial agreement.
	 	All parties
	 
	 	 	 	 
	

	 	 	1.03 	 	 	Bankruptcy or Receivership	 	 
	 
	 	 	 	 
	

	 	 	 	 	 	Disclosure is required
regarding the bankruptcy
or receivership, if known to
the Depositor or
Servicer, with respect to any
of the following:
Sponsor (Seller),
Depositor,
Servicer,
Master
Servicer, Securities
Administrator,
Indenture
Trustee, Swap Provider, Cap
Provider, Custodian
	 	Sponsor (Seller), Depositor,

Servicer, Master Servicer,

Securities Administrator,

Indenture Trustee,
Custodian

 

 

	 	 	 	 	 	 	 	 	 
	Form	 	Item	 	Description	 	Responsible Entity
	 	 	 	2.04

	 	 	Triggering Events that
Accelerate
or Increase a
Direct Financial
Obligation
or
an
Obligation
under an Off-Balance Sheet
Arrangement	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Includes an early
amortization, performance
trigger or other event,
including event of default,
that would materially alter
the payment
priority/distribution of cash
flows/amortization schedule.

Disclosure will be made of
events other than waterfall
triggers which are disclosed
in the 7.05 statement
	 	Master Servicer
Securities Administrator
	 	 	 	 
	 	 	 	 	 
	 	 	 	3.03

	 	 	Material Modification to
Rights of Security Holders	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Disclosure is
required of any material modification to documents
defining the rights of Noteholders, including the
Pooling and Sale and Servicing Agreement
	 	Party requesting
material modification
	 	 	 	 
	 	 	 	 	 
	 	 	 	5.03

	 	 	Amendments to Articles of Incorporation or
Bylaws; Change in Fiscal Year	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Disclosure is required of any amendment “to the governing documents
of the issuing entity”
	 	Sponsor
	 	 	 	 
	 	 	 	 	 
	 	 	 	5.06

	 	 	Change in Shell Company Status	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	[Not applicable to ABS Issuing
Entitys]
	 	N/A
	 	 	 	 
	 	 	 	 	 
	 	 	 	6.01

	 	 	ABS Informational and
Computational Material	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	[Not included in reports to be
filed under Section 4.07]
	 	N/A
	 	 	 	 
	 	 	 	 	 
	 	 	 	6.02

	 	 	Change of Master Servicer,
Servicer, Securities
Administrator or Indenture
Trustee	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Requires disclosure of any
removal, replacement,
substitution or addition of
any master servicer,
affiliated servicer, other
servicer servicing 10% or more
of pool assets at time of
report, other
material servicers or indenture
trustee (in the case of the
Indenture Trustee, only with
respect to itself). Reg AB
disclosure about any new
servicer or indenture trustee
is also required.
	 	Indenture Trustee, Securities Administrator,
Servicer or Master Servicer
	 	 	 	 
	 	 	 	 	 
	 	 	 	6.03

	 	 	Change in Credit Enhancement

or Other External Support	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Covers termination of any
enhancement in manner other
than by its terms, the addition
of an enhancement, or a
material change in the
enhancement provided. Applies
to external credit
enhancements as well as
derivatives. Reg AB
disclosure about any new
enhancement provider is also
required.
	 	Depositor/Securities Administrator/Indenture
Trustee
	 	 	 	 
	 	 	 	 	 
	 	 	 	6.04

	 	 	Failure to Make a Required
Payment
	 	Securities Administrator
	 	 	 	 
	 	 	 	 	 
	 	 	 	6.05

	 	 	Securities Act Updating
Disclosure	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	If any material pool
characteristic differs by 5%
or more at the time of
issuance of the securities
from the description in the
final prospectus,
provide updated Reg AB
disclosure about the actual
asset pool.
	 	Sponsor
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	If there are any new servicers
or originators required to be
disclosed under Regulation AB
as a result of the foregoing,
provide the information called for in Items 1108 and 1110 respectively.
	 	Sponsor

 

 

	 	 	 	 	 	 	 	 	 
	Form	 	Item	 	Description	 	Responsible Entity
	 	 	 	7.01

	 	 	Regulation FD Disclosure
	 	All parties
	 	 	 	 
	 	 	 	 	 
	 	 	 	8.01

	 	 	Other Events	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Any event, with respect
to which information is
not otherwise called
for in Form 8-K, that
the registrant deems of
importance to security
holders.
	 	Depositor, Sponsor
	 	 	 	 
	 	 	 	 	 
	 	 	 	9.01

	 	 	Financial Statements
and Exhibits
	 	The Responsible Entity applicable
to reportable event
	 	 	 	 
	 	 	 	 	 
	10-K	 	 	Must be filed within 90 days of the fiscal year end for the registrant.
	 	 	 	 
	 	 	 	 	 
	 	 	 	9B

	 	 	Other Information	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Disclose any
information required to
be reported on Form 8-K
during the fourth
quarter covered by the
Form 10-K but not
reported
	 	The Responsible Entity for the
applicable Form 8-K item as
indicated above
	 	 	 	 
	 	 	 	 	 
	 	 	 	15

	 	 	Exhibits and Financial
Statement Schedules	 	 
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Item 1112(b) —
Significant Obligor
Financial Information
	 	N/A
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Item 1114(b)(2) —
Credit Enhancement
Provider Financial
Information
 Determining
applicable disclosure
threshold Obtaining
required financial
information or
effecting incorporation
by reference
	 	
N/A

N/A
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Item 1115(b) —
Derivative Counterparty
Financial
Information

Determining current
maximum probable
exposure Determining
current significance
percentage
Obtaining required
financial information
or
effecting incorporation
by reference
	 	
Securities Administrator

Securities Administrator

Depositor
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Item 1117 — Legal
proceedings
pending against the
following entities, or
their respective
property, that is
material to
Noteholders, including
proceedings known to be
contemplated by
governmental
authorities:	 	 
	 	 	 	 

	 	 	Seller

Depositor
 Indenture
Trustee
 Issuing entity

Master Servicer

Securities
Administrator
 Servicer

Originator

Custodian
	 	Seller
 Depositor
 Indenture Trustee

Sponsor
 Master Servicer
 Securities
Administrator
 Servicer

Originator
 Custodian
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Item 1119 — Affiliations and
relationships between the following
entities, or their respective
affiliates, that are material to
Noteholders:	 	 
	 	 	 	 

	 	 	Seller
 Depositor
 Indenture
Trustee
 Issuing entity
 Master Servicer

Securities Administrator
 Servicer

Originator
 Custodian
 Credit
Enhancer/Support Provider, if any

Significant Obligor, if any
	 	Seller
 Depositor

Indenture Trustee

Issuing entity

Master Servicer

Securities
Administrator
 Servicer

Originator

Custodian
 Depositor

Sponsor
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Item 1122 — Assessment
of Compliance with
Servicing Criteria
	 	Each Party participating in the

servicing function
	 	 	 	 
	 	 	 	 	 
	 	 	 	 

	 	 	Item 1123 — Servicer
Compliance Statement
	 	Servicer, Master Servicer

 

 

EXHIBIT J

STANDARD FILE LAYOUT-SCHEDULED/SCHEDULED

Standard Loan Level File Layout — Master Servicing

Exhibit 1: Layout

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Max
	Column Name	 	Description	 	Decimal	 	Format Comment	 	Size
	Each file requires the following fields:	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SER_INVESTOR_NBR

	 	A value assigned by
the Servicer to
define a group of
loans.
	 	 	 	 	 	Text up to 20 digits
	 	 	20	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	LOAN_NBR

	 	A unique identifier
assigned to each
loan by the
investor.
	 	 	 	 	 	Text up to 10 digits
	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SERVICER_LOAN_NBR

	 	A unique number
assigned to a loan
by the Servicer.
This may be
different than the
LOAN_NBR.
	 	 	 	 	 	Text up to 10 digits
	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SCHED_PAY_AMT

	 	Scheduled monthly
principal and
scheduled interest
payment that a
borrower is
expected to pay,
P&I constant.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	NOTE_INT_RATE

	 	The loan interest
rate as reported by
the Servicer.
	 	 	4	 	 	Max length of 6
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	NET_INT_RATE

	 	The loan gross
interest rate less
the service fee
rate as reported by
the Servicer.
	 	 	4	 	 	Max length of 6
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SERV_FEE_RATE

	 	The servicer’s fee
rate for a loan as
reported by the
Servicer.
	 	 	4	 	 	Max length of 6
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SERV_FEE_AMT

	 	The servicer’s fee
amount for a loan
as reported by the
Servicer.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	NEW_PAY_AMT

	 	The new loan
payment amount as
reported by the
Servicer.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	NEW_LOAN_RATE

	 	The new loan rate
as reported by the
Servicer.
	 	 	4	 	 	Max length of 6
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	ARM_INDEX_RATE

	 	The index the
Servicer is using to
calculate a
forec asted rate.
	 	 	4	 	 	Max length of 6
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	ACTL_BEG_PRIN_BAL

	 	The borrower’s
actual principal
balance at the
beginning of the
processing cycle.
	 	 	2	 	 	 No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	ACTL_END_PRIN_BAL

	 	The borrower’s
actual principal
balance at the end
of the processing
cycle.
	 	 	2	 	 	 No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	BORR_NEXT_
PAY_DUE_DATE

	 	The date at the end
of processing cycle
that the borrower’s
next payment is due
to the Servicer, as
reported by
Servicer.
	 	 	 	 	 	MM/DD/YYYY
	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SERV_CURT_AMT_1

	 	The first
curtailment amount
to be applied.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SERV_CURT_DATE_1

	 	The curtailment
date associated
with the first
curtailment amount.
	 	 	 	 	 	MM/DD/YYYY
	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	CURT_ADJ_ AMT_1

	 	The curtailment
interest on the
first curtailment
amount, if
applicable.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SERV_CURT_AMT_2

	 	The second
curtailment amount
to be applied.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SERV_CURT_DATE_2

	 	The curtailment
date associated
with the second
curtailment amount.
	 	 	 	 	 	MM/DD/YYYY
	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	CURT_ADJ_ AMT_2

	 	The curtailment
interest on the
second curtailment
amount, if
applicable.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 

 

Exhibit 1: Continued          Standard Loan Level File Layout

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Column Name	 	Description	 	Decimal	 	Format Comment	 	Max
 Size
	SERV_CURT_AMT_3

	 	The third curtailment amount to be applied.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SERV_CURT_DATE_3

	 	The curtailment date associated with the
third curtailment amount.
	 	 	 	 	 	MM/DD/YYYY
	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	CURT_ADJ_AMT_3

	 	The curtailment interest on the third
curtailment amount, if applicable.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	PIF_AMT

	 	The loan “paid in full” amount as reported
by the Servicer.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	PIF_DATE

	 	The paid in full date as reported by the
Servicer.
	 	 	 	 	 	MM/DD/YYYY
	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Action Code Key:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	ACTION_CODE

	 	The standard FNMA
numeric code used to
indicate the
default/delinquent
status of a
particular loan.
	 	 	2	 	 	15=Bankruptcy,
 30=Foreclosure,

60=PIF,

63=Substitution,
65=Repurchase,
70=REO	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	INT_ADJ_AMT

	 	The amount of the
interest adjustment
as reported by the
Servicer.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SOLDIER_SAILOR_
ADJ_AMT

	 	The Soldier and
Sailor Adjustment
amount, if
applicable.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	NON_ADV_LOAN_AMT

	 	The Non Recoverable
Loan Amount, if
applicable.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	LOAN_LOSS_AMT

	 	The amount the
Servicer is passing
as a loss, if
applicable.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Plus the following applicable fields:	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SCHED_BEG_PRIN_BAL

	 	The scheduled
outstanding principal
amount due at the
beginning of the
cycle date to be
passed through to
investors.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SCHED_END_PRIN_BAL

	 	The scheduled
principal balance due
to investors at the
end of a processing
cycle.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SCHED_PRIN_AMT

	 	The scheduled
principal amount as
reported by the
Servicer for the
current cycle — only
applicable for
Scheduled/Scheduled
Loans.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SCHED_NET_INT

	 	The scheduled gross
interest amount less
the service fee
amount for the
current cycle as
reported by the
Servicer — only
applicable for
Scheduled/Scheduled
Loans.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	ACTL_PRIN_AMT

	 	The actual principal
amount collected by
the Servicer for the
current reporting
cycle — only
applicable for
Actual/Actual Loans.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	ACTL_NET_INT

	 	The actual gross
interest amount less
the service fee
amount for the
current reporting
cycle as reported by
the Servicer — only
applicable for
Actual/Actual Loans.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	PREPAY_PENALTY_ AMT

	 	The penalty amount
received when a
borrower prepays on
his loan as reported
by the Servicer.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	PREPAY_PENALTY_ WAIVED

	 	The prepayment
penalty amount for
the loan waived by
the servicer.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 

Exhibit 1: Continued          Standard Loan Level File Layout

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Column Name	 	Description	 	Decimal	 	Format Comment	 	Max
 Size
	MOD_DATE

	 	The Effective Payment
Date of the
Modification for the
loan.
	 	 	 	 	 	MM/DD/YYYY
	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	MOD_TYPE

	 	The Modification Type.
	 	 	 	 	 	Varchar — value can be alpha or
numeric
	 	 	30	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DELINQ_P&I_ADVANCE_AMT

	 	The current
outstanding principal
and interest advances
made by Servicer.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	BREACH_FLAG

	 	Flag to indicate if
the repurchase of a
loan is due to a
breach of
Representations and
Warranties
	 	 	 	 	 	Y=Breach
N=NO Breach Let blank if N/A
	 	 	1	 

 

EXHIBIT K

STANDARD FILE LAYOUT—DELINQUENCY REPORTING

	 	 	 	 	 	 	 	 	 
	Column/Header Name	 	Description	 	Decimal	 	Format Comment
	SERVICER_LOAN_NBR

	 	A unique number assigned to a loan by the Servicer. This may be different than the LOAN_NBR	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	LOAN_NBR

	 	A unique identifier assigned to each loan by the originator.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	CLIENT_NBR

	 	Servicer Client Number	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	SERV_INVESTOR_NBR

	 	Contains a unique number as assigned by an external servicer to identify a group of loans in their system.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	BORROWER_FIRST_NAME

	 	First Name of the Borrower.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	BORROWER_LAST_NAME

	 	Last name of the borrower.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PROP_ADDRESS

	 	Street Name and Number of Property	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PROP_STATE

	 	The state where the property located.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PROP_ZIP

	 	Zip code where the property is located.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	BORR_NEXT_PAY_DUE_DATE

	 	The date that the borrower’s next payment is due to the servicer at the end of processing
cycle, as reported by Servicer.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	LOAN_TYPE

	 	Loan Type (i.e. FHA, VA, Conv)	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	BANKRUPTCY_FILED_DATE

	 	The date a particular bankruptcy claim was filed.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	BANKRUPTCY_CHAPTER_CODE

	 	The chapter under which the bankruptcy was filed.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	BANKRUPTCY_CASE_NBR

	 	The case number assigned by the court to the bankruptcy filing.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	POST_PETITION_DUE_DATE

	 	The payment due date once the bankruptcy has been approved by the courts
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	BANKRUPTCY_DCHRG_DISM_DATE

	 	The Date The Loan Is Removed From Bankruptcy. Either by Dismissal, Discharged and/or a
Motion For Relief Was Granted.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	LOSS_MIT_APPR_DATE

	 	The Date The Loss Mitigation Was Approved By The Servicer
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	LOSS_MIT_TYPE

	 	The Type Of Loss Mitigation Approved For A Loan Such As;	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	LOSS_MIT_EST_COMP_DATE

	 	The Date The Loss Mitigation /Plan Is Scheduled To End/Close
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	LOSS_MIT_ACT_COMP_DATE

	 	The Date The Loss Mitigation Is Actually Completed
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	FRCLSR_APPROVED_DATE

	 	The date DA Admin sends a letter to the servicer with instructions to begin foreclosure
proceedings.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	ATTORNEY_REFERRAL_DATE

	 	Date File Was Referred To Attorney to Pursue Foreclosure
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	FIRST_LEGAL_DATE

	 	Notice of 1st legal filed by an Attorney in a Foreclosure Action
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	FRCLSR_SALE_EXPECTED_DATE

	 	The date by which a foreclosure sale is expected to occur.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	FRCLSR_SALE_DATE

	 	The actual date of the foreclosure sale.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	FRCLSR_SALE_AMT

	 	The amount a property sold for at the foreclosure sale.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 
	 	 	 	 	 	 	 	 
	EVICTION_START_DATE

	 	The date the servicer initiates eviction of the borrower.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	EVICTION_COMPLETED_DATE

	 	The date the court revokes legal possession of the property from the borrower.
	 	 	 	 	 	MM/DD/YYYY

 

 

	 	 	 	 	 	 	 	 	 
	Column/Header Name	 	Description	 	Decimal	 	Format Comment
	LIST_PRICE

	 	The price at which an REO property is marketed.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 
	 	 	 	 	 	 	 	 
	LIST_DATE

	 	The date an REO property is listed at a particular price.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	OFFER_AMT

	 	The dollar value of an offer for an REO property.
	 	 	2	 	 	No commas(,) or dollar signs ($)
	 
	 	 	 	 	 	 	 	 
	OFFER_DATE_TIME

	 	The date an offer is received by DA Admin or by the Servicer.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	REO_CLOSING_DATE

	 	The date the REO sale of the property is scheduled to close.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	REO_ACTUAL_CLOSING_DATE

	 	Actual Date Of REO Sale
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	OCCUPANT_CODE

	 	Classification of how the property is occupied.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PROP_CONDITION_CODE

	 	A code that indicates the condition of the property.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PROP_INSPECTION_DATE

	 	The date a property inspection is performed.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	APPRAISAL_DATE

	 	The date the appraisal was done.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	CURR_PROP_VAL

	 	The current “as is” value of the property based on brokers price opinion or appraisal.
	 	 	2	 	 	 
	 
	 	 	 	 	 	 	 	 
	REPAIRED_PROP_VAL

	 	The amount the property would be worth if repairs are completed pursuant to a broker’s
price opinion or appraisal.
	 	 	2	 	 	 
	 
	 	 	 	 	 	 	 	 
	If applicable:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	DELINQ_STATUS_CODE

	 	FNMA Code Describing Status of Loan	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	DELINQ_REASON_CODE

	 	The circumstances which caused a borrower to stop paying on a loan. Code indicates the
reason why the loan is in default for this cycle.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	MI_CLAIM_FILED_DATE

	 	Date Mortgage Insurance Claim Was Filed With Mortgage Insurance Company.
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	MI_CLAIM_AMT

	 	Amount of Mortgage Insurance Claim Filed
	 	 	 	 	 	No commas(,) or dollar signs ($)

	 	 	 	 	 	 	 	 	 

	MI_CLAIM_PAID_DATE

	 	Date Mortgage Insurance Company Disbursed Claim Payment
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	MI_CLAIM_AMT_PAID

	 	Amount Mortgage Insurance Company Paid On Claim
	 	 	2	 	 	No commas(,) or dollar

signs ($)
	 
	 	 	 	 	 	 	 	 
	POOL_CLAIM_FILED_DATE

	 	Date Claim Was Filed With Pool Insurance Company
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	POOL_CLAIM_AMT

	 	Amount of Claim Filed With Pool Insurance Company
	 	 	2	 	 	No commas(,) or dollar

signs ($)
	 
	 	 	 	 	 	 	 	 
	POOL_CLAIM_PAID_DATE

	 	Date Claim Was Settled and The Check Was Issued By The Pool Insurer
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	POOL_CLAIM_AMT_PAID

	 	Amount Paid On Claim By Pool Insurance Company
	 	 	2	 	 	No commas(,) or dollar

signs ($)
	 
	 	 	 	 	 	 	 	 
	FHA_PART_A_CLAIM_FILED_DATE

	 	Date FHA Part A Claim Was Filed With HUD
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	FHA_PART_A_CLAIM_AMT

	 	Amount of FHA Part A Claim Filed
	 	 	2	 	 	No commas(,) or dollar

signs ($)
	 
	 	 	 	 	 	 	 	 
	FHA_PART_A_CLAIM_PAID_DATE

	 	Date HUD Disbursed Part A Claim Payment
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	FHA_PART_A_CLAIM_PAID_AMT

	 	Amount HUD Paid on Part A Claim
	 	 	2	 	 	No commas(,) or dollar

signs ($)
	 
	 	 	 	 	 	 	 	 
	FHA_PART_B_CLAIM_FILED_DATE

	 	Date FHA Part B Claim Was Filed With HUD
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	FHA_PART_B_CLAIM_AMT

	 	Amount of FHA Part B Claim Filed
	 	 	2	 	 	No commas(,) or dollar

signs ($)
	 
	 	 	 	 	 	 	 	 
	FHA_PART_B_CLAIM_PAID_DATE

	 	Date HUD Disbursed Part B Claim Payment
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	FHA_PART_B_CLAIM_PAID_AMT

	 	Amount HUD Paid on Part B Claim
	 	 	2	 	 	No commas(,) or dollar

signs ($)
	 
	 	 	 	 	 	 	 	 
	VA_CLAIM_FILED_DATE

	 	Date VA Claim Was Filed With the Veterans Admin
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	VA_CLAIM_PAID_DATE

	 	Date Veterans Admin. Disbursed VA Claim Payment
	 	 	 	 	 	MM/DD/YYYY
	 
	 	 	 	 	 	 	 	 
	VA_CLAIM_PAID_AMT

	 	Amount Veterans Admin. Paid on VA Claim
	 	 	2	 	 	No commas(,) or dollar

signs ($)

 

 

Exhibit 2: Standard File Codes — Delinquency Reporting

The Loss Mit Type field should show the approved Loss Mitigation Code as follows:

	 	 	 	 	 	 	 

	 

	 	o
	 	ASUM —
	 	Approved Assumption
	 

	 	o
	 	BAP —
	 	Borrower Assistance Program
	 

	 	o
	 	CO —
	 	Charge Off
	 

	 	o
	 	DIL —
	 	Deed-in-Lieu
	 

	 	o
	 	FFA —
	 	Formal Forbearance Agreement
	 

	 	o
	 	MOD —
	 	Loan Modification
	 

	 	o
	 	PRE —
	 	Pre-Sale
	 

	 	o
	 	SS —
	 	Short Sale
	 

	 	o
	 	MISC —
	 	Anything else approved by the PMI or Pool Insurer

NOTE: Wells Fargo Bank will accept alternative Loss Mitigation Types to those above,
provided that they are consistent with industry standards. If Loss Mitigation Types other than
those above are used, the Servicer must supply Wells Fargo Bank with a description of each of the
Loss Mitigation Types prior to sending the file. The Occupant Code field should show the current
status of the property code as follows:

	 	 	 	 	 

	 

	 	o
	 	Mortgagor
	 

	 	o
	 	Tenant
	 

	 	o
	 	Unknown
	 

	 	o
	 	Vacant

The Property Condition field should show the last reported condition of the property
as follows:

	 	 	 	 	 

	 

	 	o
	 	Damaged
	 

	 	o
	 	Excellent
	 

	 	o
	 	Fair
	 

	 	o
	 	Gone
	 

	 	o
	 	Good
	 

	 	o
	 	Poor
	 

	 	o
	 	Special Hazard
	 

	 	o
	 	Unknown

Exhibit 2: Standard File Codes — Delinquency Reporting, Continued The FNMA
Delinquent Reason Code field should show the Reason for Delinquency as follows:

	 	 	 
	Delinquency Code	 	Delinquency Description
	001

	 	FNMA-Death of principal mortgagor
	 
	 	 
	002

	 	FNMA-Illness of principal mortgagor
	 
	 	 
	003

	 	FNMA-Illness of mortgagor’s family member
	 
	 	 
	004

	 	FNMA-Death of mortgagor’s family member
	 
	 	 
	005

	 	FNMA-Marital difficulties
	 
	 	 
	006

	 	FNMA-Curtailment of income
	 
	 	 
	007

	 	FNMA-Excessive Obligation
	 
	 	 
	008

	 	FNMA-Abandonment of property
	 
	 	 
	009

	 	FNMA-Distant employee transfer
	 
	 	 
	011

	 	FNMA-Property problem
	 
	 	 
	012

	 	FNMA-Inability to sell property
	 
	 	 
	013

	 	FNMA-Inability to rent property
	 
	 	 
	014

	 	FNMA-Military Service
	 
	 	 
	015

	 	FNMA-Other
	 
	 	 
	016

	 	FNMA-Unemployment
	 
	 	 
	017

	 	FNMA-Business failure
	 
	 	 
	019

	 	FNMA-Casualty loss
	 
	 	 
	022

	 	FNMA-Energy environment costs
	 
	 	 
	023

	 	FNMA-Servicing problems
	 
	 	 
	026

	 	FNMA-Payment adjustment
	 
	 	 
	027

	 	FNMA-Payment dispute
	 
	 	 
	029

	 	FNMA-Transfer of ownership pending
	 
	 	 
	030

	 	FNMA-Fraud
	 
	 	 
	031

	 	FNMA-Unable to contact borrower
	 
	 	 
	INC

	 	FNMA-Incarceration

 

 

Exhibit 2: Standard File Codes — Delinquency Reporting, Continued

The FNMA Delinquent Status Code field should show the Status of Default as follows:

	 	 	 
	Status Code	 	Status Description
	09

	 	Forbearance
	 
	 	 
	17

	 	Pre-foreclosure Sale Closing Plan Accepted
	 
	 	 
	24

	 	Government Seizure
	 
	 	 
	26

	 	Refinance
	 
	 	 
	27

	 	Assumption
	 
	 	 
	28

	 	Modification
	 
	 	 
	29

	 	Charge-Off
	 
	 	 
	30

	 	Third Party Sale
	 
	 	 
	31

	 	Probate
	 
	 	 
	32

	 	Military Indulgence
	 
	 	 
	43

	 	Foreclosure Started
	 
	 	 
	44

	 	Deed-in-Lieu Started
	 
	 	 
	49

	 	Assignment Completed
	 
	 	 
	61

	 	Second Lien Considerations
	 
	 	 
	62

	 	Veteran’s Affairs-No Bid
	 
	 	 
	63

	 	Veteran’s Affairs-Refund
	 
	 	 
	64

	 	Veteran’s Affairs-Buydown
	 
	 	 
	65

	 	Chapter 7 Bankruptcy
	 
	 	 
	66

	 	Chapter 11 Bankruptcy
	 
	 	 
	67

	 	Chapter 13 Bankruptcy

 

 

EXHIBIT L

CALCULATION OF REALIZED LOSS/GAIN FORM 332

     WELLS FARGO BANK, N.A. — Calculation of Realized Loss/Gain Form 332

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	Prepared by: 	 	 	 	 	 	 	 	 	Date: 	 	 	 
	 	 	 	 	 	 	 	 	 	 	   	 
	 	Phone: 	 	 	 	 	 	Email Address: 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 

	 

	 	 
	 	 
	Servicer Loan No.

	 	Servicer Name
	 	Servicer Address
	 
	 
	 	 	 	 
	 

	 	 
	 	 

WELLS FARGO BANK, N.A. Loan No.                                                             

Borrower’s
Name:
                                                                                

Property Address:                                                                                                     

	 	 	 	 	 	 	 	 	 

	Liquidation Type:
	 	REO Sale
	 	3rd Party Sale
	 	Short Sale
	 	Charge Off

	 	 	 	 	 	 	 	 	 

	Was this loan granted a Bankruptcy deficiency or cramdown
	 	Yes	 	No

If “Yes”, provide deficiency or cramdown amount                                                             

	 	 	 	 	 

	Liquidation and Acquisition Expenses:
	 	 	 	 
	(1) Actual Unpaid Principal Balance of Mortgage Loan
	 	$	                                   	(1)
	(2) Interest accrued at Net Rate
	 	 	                                 	(2)
	(3) Accrued Servicing Fees
	 	 	                                 	(3)
	(4) Attorney’s Fees
	 	 	                                 	(4)
	(5) Taxes (see page 2)
	 	 	                                 	(5)
	(6) Property Maintenance
	 	 	                                 	(6)
	(7) MI/Hazard Insurance Premiums (see page 2)
	 	 	                                 	(7)
	(8) Utility Expenses
	 	 	                                 	(8)
	(9) Appraisal/BPO
	 	 	                                 	(9)
	(10) Property Inspections
	 	 	                                                           	(10)
	(11) FC Costs/Other Legal Expenses
	 	 	                                                          	(11)
	(12) Other (itemize)
	 	 	                                                          	(12)
	Cash for Keys                                                             
	 	 	                      	(12)
	HOA/Condo Fees                                                             
	 	 	                                   	(12)
	                                                                                                    
	 	 	                                   	(12)
	 
	 	 	 	 
	Total Expenses
	 	$	                                	(13)
	 
	 	 	 	 
	Credits:
	 	 	 	 
	(14) Escrow Balance
	 	$	                                	(14)
	(15) HIP Refund
	 	 	                                           	(15)
	(16) Rental Receipts
	 	 	                                           	(16)
	(17) Hazard Loss Proceeds
	 	 	                                           	(17)
	(18) Primary Mortgage Insurance / Gov’t Insurance
	 	 	                                           	(18a)
	HUD Part A
	 	 	 	 
	 
	 	 	                                           	(18b)
	HUD Part B
	 	 	 	 
	(19) Pool Insurance Proceeds
	 	 	                                           	(19)
	(20) Proceeds from Sale of Acquired Property
	 	 	                                           	(20)
	(21) Other (itemize)
	 	 	                                           	(21)
	                                                                                                    
	 	 	                                           	(21)
	 
	Total Credits
	 	$	                                	(22)
	 
	 	 	 	 
	Total Realized Loss (or Amount of Gain)
	 	$	                                 	(23)

Escrow Disbursement Detail

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Type	 	 	 	Period of	 	 	 	 	 	 	 	 
	(Tax /Ins.)	 	Date Paid	 	Coverage	 	Total Paid	 	Base Amount	 	Penalties	 	Interest
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

 

 

WELLS FARGO BANK, N.A.

Calculation of Realized Loss/Gain Form 332- Instruction Sheet

NOTE: Do not net or combine items. Show all expenses individually and all credits
as separate line items. Claim packages are due on the remittance report date.
Late submissions may result in claims not being passed until the following month.

(b) The numbers on the 332 form correspond with the numbers listed below.

Liquidation and Acquisition Expenses:

	 	  1.	 	The Actual Unpaid Principal Balance of the Mortgage Loan. For
documentation, an Amortization Schedule from date of default through
liquidation breaking out the net interest and servicing fees advanced is
required.
	 
	 	  2.	 	The Total Interest Due less the aggregate amount of servicing fee
that would have been earned if all delinquent payments had been made as
agreed. For documentation, an Amortization Schedule from date of default
through liquidation breaking out the net interest and servicing fees
advanced is required.
	 
	 	  3.	 	Accrued Servicing Fees based upon the Scheduled Principal Balance of
the Mortgage Loan as calculated on a monthly basis. For documentation, an
Amortization Schedule from date of default through liquidation breaking out
the net interest and servicing fees advanced is required.
	 
	 	  4-12.	 	 Complete as applicable. Required documentation:

	 	*	 	For interest advances — an amortization schedule (evidencing
calculation of interest advances)
	 
	 	*	 	For taxes and insurance advances — see page 2 of 332 form — breakdown
required showing period of coverage, base tax, interest, penalty.
Advances prior to default require evidence of servicer efforts to recover
advances.
	 
	 	*	 	For escrow advances — complete payment history (to calculate advances from last positive escrow balance forward)
	 
	 	*	 	Other expenses — copies of corporate advance history showing all payments
	 
	 	*	 	REO repairs &gt; $1500 require explanation
	 
	 	*	 	REO repairs &gt;$3000 require evidence of at least 2 bids.
	 
	 	*	 	Short Sale or Charge Off require P&L supporting the decision and WFB’s approved officer cert
	 
	 	*	 	Unusual or extraordinary items may require further documentation.

	 	  13.	 	The total of lines 1 through 12.
	 
	 	  (c)	 	Credits:
	 
	 	  14-21. 	 	 Complete as applicable. Required documentation:

	 	*	 	Copy of the HUD 1 from the REO sale. If a 3rd Party Sale bid instructions, copy of attorney letter of Foreclosure proceeds.
	 
	 	*	 	Copy of EOB for any MI or gov’t guarantee
	 
	 	*	 	All other credits need to be clearly defined on the 332 form

	 	  22.	 	The total of lines 14 through 21.

	 	Please Note: For HUD/VA loans, use line (18a) for Part A/Initial proceeds and line (18b) for Part B/Supplemental proceeds.
	 
	 	Total Realized Loss (or Amount of Any Gain)

	 	  23.	 	The total derived from subtracting line 22 from 13. If the amount represents
a realized gain, show the amount in parenthesis (      ).

 

 

EXHIBIT M

ADDITIONAL DISCLOSURE NOTIFICATION

Wells Fargo Bank, N.A. as Securities Administrator

9062 Old Annapolis Road

Columbia, Maryland 21045

Fax: (410) 715-2380

E-mail: cts.sec.notifications@wellsfargo.com

Attn: Corporate Trust Services — Newcastle 2007-1-SEC REPORT PROCESSING

RE: **Additional Form [      ] Disclosure**Required

Ladies and Gentlemen:

          In accordance with Section 4.02 of the Sale and Servicing Agreement, dated as of
July 12, 2007, among Bear Stearns Asset Backed Securities I LLC, Newcastle Mortgage
Securities Trust 2007-1, Nationstar Mortgage LLC, Wells Fargo Bank, N.A and The Bank of
New York, the undersigned hereby notifies you that
certain events have come to our attention that [shall] [may] need to be disclosed on Form [      ].

Description of Additional Form [      ] Disclosure:

List of Any Attachments hereto to be included in the Additional Form [      ] Disclosure:

          Any inquiries related to this notification should be directed to [      ], phone
number: [      ]; email address: [      ].

	 	 	 	 	 
	 	[NAME OF PARTY]

as [role]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:exv4w1

Exhibit 4.1

LINN ENERGY, LLC

LINN ENERGY FINANCE CORP.

AND

THE GUARANTORS NAMED ON THE SIGNATURE PAGE HEREOF

 

6.500% SENIOR NOTES DUE 2019

 

INDENTURE

Dated as of May 13, 2011

 

U.S. BANK NATIONAL ASSOCIATION,

As Trustee

 

 

CROSS-REFERENCE TABLE*

	 	 	 	 	 
	Trust Indenture	 	Indenture	 
	Act Section	 	Section	 
	310(a)(1)

	 	 	7.10	 
	(a)(2)

	 	 	7.10	 
	(a)(3)

	 	 	N/A	 
	(a)(4)

	 	 	N/A	 
	(a)(5)

	 	 	7.10	 
	(b)

	 	 	7.10	 
	(c)

	 	 	N/A	 
	311(a)

	 	 	7.11	 
	(b)

	 	 	7.11	 
	(c)

	 	 	N/A	 
	312(a)

	 	 	2.05	 
	(b)

	 	 	11.03	 
	(c)

	 	 	11.03	 
	313(a)

	 	 	7.06	 
	(b)(1)

	 	 	7.06	 
	(b)(2)

	 	 	7.06, 7.07	 
	(c)

	 	 	7.06, 11.02	 
	(d)

	 	 	7.06	 
	314(a)

	 	 	4.03, 4.04, 11.02	 
	(b)

	 	 	N/A	 
	(c)(1)

	 	 	11.04	 
	(c)(2)

	 	 	11.04	 
	(c)(3)

	 	 	N/A	 
	(d)

	 	 	N/A	 
	(e)

	 	 	11.05	 
	(f)

	 	 	N/A	 
	315(a)

	 	 	7.01	 
	(b)

	 	 	7.05, 11.02	 
	(c)

	 	 	7.01	 
	(d)

	 	 	7.01	 
	(e)

	 	 	6.11	 
	316(a)(last sentence)

	 	 	2.08	 
	(a)(1)(A)

	 	 	6.05	 
	(a)(1)(B)

	 	 	6.04	 
	(a)(2)

	 	 	N/A	 
	(b)

	 	 	6.07	 
	(c)

	 	 	9.04	 
	317(a)(1)

	 	 	6.08	 
	(a)(2)

	 	 	6.09	 
	(b)

	 	 	2.04	 
	318(a)

	 	 	11.01	 
	(b)

	 	 	N/A	 
	(c)

	 	 	11.01	 

 

			
	N/A	 	means not applicable.
	 
	*	 	This Cross-Reference Table is not part of the Indenture.

i

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
	 	 	1	 
	Section 1.01 Definitions
	 	 	1	 
	Section 1.02 Other Definitions
	 	 	34	 
	Section 1.03 Incorporation by Reference of Trust Indenture Act
	 	 	35	 
	Section 1.04 Rules of Construction
	 	 	35	 
	 
	 	 	 	 
	ARTICLE 2 THE NOTES
	 	 	36	 
	Section 2.01 Form and Dating
	 	 	36	 
	Section 2.02 Execution and Authentication
	 	 	36	 
	Section 2.03 Registrar and Paying Agent
	 	 	37	 
	Section 2.04 Paying Agent to Hold Money in Trust
	 	 	37	 
	Section 2.05 Noteholder Lists
	 	 	37	 
	Section 2.06 Transfer and Exchange
	 	 	37	 
	Section 2.07 Replacement Notes
	 	 	38	 
	Section 2.08 Outstanding Notes
	 	 	38	 
	Section 2.09 Temporary Notes
	 	 	39	 
	Section 2.10 Cancellation
	 	 	39	 
	Section 2.11 Defaulted Interest
	 	 	39	 
	Section 2.12 CUSIP Numbers
	 	 	39	 
	Section 2.13 Issuance of Additional Notes
	 	 	39	 
	Section 2.14 Persons Deemed Owners
	 	 	40	 
	 
	 	 	 	 
	ARTICLE 3 REDEMPTION AND PREPAYMENT
	 	 	40	 
	Section 3.01 Notices to Trustee
	 	 	40	 
	Section 3.02 Selection of Notes to Be Redeemed
	 	 	41	 
	Section 3.03 Notice of Redemption
	 	 	41	 
	Section 3.04 Effect of Notice of Redemption
	 	 	42	 
	Section 3.05 Deposit of Redemption Price
	 	 	42	 
	Section 3.06 Notes Redeemed in Part
	 	 	43	 
	Section 3.07 Optional Redemption
	 	 	43	 
	Section 3.08 Mandatory Redemption
	 	 	44	 
	Section 3.09 Offer to Purchase by Application of Excess Proceeds
	 	 	44	 
	 
	 	 	 	 
	ARTICLE 4 COVENANTS
	 	 	46	 
	Section 4.01 Payment of Notes
	 	 	46	 
	Section 4.02 Maintenance of Office or Agency
	 	 	46	 
	Section 4.03 Reports
	 	 	47	 
	Section 4.04 Compliance Certificate
	 	 	48	 
	Section 4.05 Taxes
	 	 	48	 
	Section 4.06 Stay, Extension and Usury Laws
	 	 	48	 
	Section 4.07 Limitation on Restricted Payments
	 	 	49	 
	Section 4.08 Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries
	 	 	54	 

ii

 

	 	 	 	 	 
	Section 4.09 Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock
	 	 	56	 
	Section 4.10 Limitation on Asset Sales
	 	 	60	 
	Section 4.11 Limitation on Transactions with Affiliates
	 	 	62	 
	Section 4.12 Limitation on Liens
	 	 	64	 
	Section 4.13 Additional Subsidiary Guarantees
	 	 	64	 
	Section 4.14 Existence
	 	 	65	 
	Section 4.15 Offer to Repurchase Upon Change of Control
	 	 	65	 
	Section 4.16 No Partial Inducements
	 	 	68	 
	Section 4.17 Limitations on Finance Corp. Activities
	 	 	68	 
	Section 4.18 Designation of Restricted and Unrestricted Subsidiaries
	 	 	68	 
	Section 4.19 Covenant Termination
	 	 	68	 
	 
	 	 	 	 
	ARTICLE 5 SUCCESSORS
	 	 	69	 
	Section 5.01 Merger, Consolidation, or Sale of Assets
	 	 	69	 
	Section 5.02 Successor Substituted
	 	 	71	 
	 
	 	 	 	 
	ARTICLE 6 DEFAULTS AND REMEDIES
	 	 	71	 
	Section 6.01 Events of Default
	 	 	71	 
	Section 6.02 Acceleration
	 	 	73	 
	Section 6.03 Other Remedies
	 	 	74	 
	Section 6.04 Waiver of Past Defaults
	 	 	74	 
	Section 6.05 Control by Majority
	 	 	74	 
	Section 6.06 Limitation on Suits
	 	 	75	 
	Section 6.07 Rights of Holders of Notes to Receive Payment
	 	 	75	 
	Section 6.08 Collection Suit by Trustee
	 	 	75	 
	Section 6.09 Trustee is Authorized to File Proofs of Claim
	 	 	75	 
	Section 6.10 Priorities
	 	 	76	 
	Section 6.11 Undertaking for Costs
	 	 	76	 
	 
	 	 	 	 
	ARTICLE 7 TRUSTEE
	 	 	77	 
	Section 7.01 Duties of Trustee
	 	 	77	 
	Section 7.02 Rights of Trustee
	 	 	78	 
	Section 7.03 Individual Rights of Trustee
	 	 	79	 
	Section 7.04 Trustee’s Disclaimer
	 	 	79	 
	Section 7.05 Notice of Defaults
	 	 	80	 
	Section 7.06 Reports by Trustee to Holders of the Notes
	 	 	80	 
	Section 7.07 Compensation and Indemnity
	 	 	80	 
	Section 7.08 Replacement of Trustee
	 	 	81	 
	Section 7.09 Successor Trustee by Merger, etc.
	 	 	82	 
	Section 7.10 Eligibility; Disqualification
	 	 	82	 
	Section 7.11 Preferential Collection of Claims Against Issuers
	 	 	83	 
	 
	 	 	 	 
	ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
	 	 	83	 
	Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance
	 	 	83	 
	Section 8.02 Legal Defeasance and Discharge
	 	 	83	 

iii

 

	 	 	 	 	 
	Section 8.03 Covenant Defeasance
	 	 	84	 
	Section 8.04 Conditions to Legal or Covenant Defeasance
	 	 	84	 
	Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions
	 	 	85	 
	Section 8.06 Repayment to Issuers
	 	 	86	 
	Section 8.07 Reinstatement
	 	 	86	 
	Section 8.08 Discharge
	 	 	87	 
	 
	 	 	 	 
	ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER
	 	 	88	 
	Section 9.01 Without Consent of Holders of Notes
	 	 	88	 
	Section 9.02 With Consent of Holders of Notes
	 	 	89	 
	Section 9.03 Compliance with Trust Indenture Act
	 	 	90	 
	Section 9.04 Revocation and Effect of Consents
	 	 	90	 
	Section 9.05 Notation on or Exchange of Notes
	 	 	91	 
	Section 9.06 Trustee to Sign Amendments, etc.
	 	 	91	 
	Section 9.07 Acts of Holders
	 	 	91	 
	 
	 	 	 	 
	ARTICLE 10 GUARANTEES OF NOTES
	 	 	92	 
	Section 10.01 Subsidiary Guarantees
	 	 	92	 
	Section 10.02 Guarantors May Consolidate, etc., on Certain Terms
	 	 	94	 
	Section 10.03 Releases of Subsidiary Guarantees
	 	 	94	 
	Section 10.04 Limitation on Guarantor Liability
	 	 	95	 
	Section 10.05 “Trustee” to Include Paying Agent
	 	 	95	 
	 
	 	 	 	 
	ARTICLE 11 MISCELLANEOUS
	 	 	95	 
	Section 11.01 Trust Indenture Act Controls
	 	 	95	 
	Section 11.02 Notices
	 	 	95	 
	Section 11.03 Communication by Holders of Notes with Other Holders of Notes
	 	 	97	 
	Section 11.04 Certificate and Opinion as to Conditions Precedent
	 	 	97	 
	Section 11.05 Statements Required in Certificate or Opinion
	 	 	97	 
	Section 11.06 Rules by Trustee and Agents
	 	 	98	 
	Section 11.07 No Personal Liability of Directors, Officers, Employees and Unitholders
	 	 	98	 
	Section 11.08 Governing Law
	 	 	98	 
	Section 11.09 No Adverse Interpretation of Other Agreements
	 	 	99	 
	Section 11.10 Successors
	 	 	99	 
	Section 11.11 Severability
	 	 	99	 
	Section 11.12 Table of Contents, Headings, etc.
	 	 	99	 
	Section 11.13 Counterparts
	 	 	99	 
	Section 11.14 Benefits of Indenture
	 	 	99	 
	Section 11.15 Language of Notices, Etc.
	 	 	99	 

iv

 

APPENDIX AND ANNEX

	 	 	 

	RULE 144A/REGULATION S APPENDIX

	 	App. – 1
	EXHIBIT 1 Form of Initial Note

	 	Exhibit 1 to App. – 1
	EXHIBIT 2 Form of Exchange Note

	 	Exhibit 2 to App. – 1
	ANNEX A Form of Supplemental Indenture

	 	A – 1

v

 

     This INDENTURE, dated as of May 13, 2011 is among LINN ENERGY, LLC, a Delaware limited
liability company (the “Company”), LINN ENERGY FINANCE CORP., a Delaware corporation (“Finance
Corp.” and, together with the Company, the “Issuers”), the guarantors listed on the signature page
hereof (each, a “Guarantor” and, collectively, the “Guarantors”) and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as trustee (the “Trustee”).

     The Issuers, the Guarantors and the Trustee agree as follows for the benefit of each other and
for the equal and ratable benefit of the Holders of the Issuers’ Initial Notes, Exchange Notes and
Additional Notes:

ARTICLE 1

DEFINITIONS AND INCORPORATION

BY REFERENCE

Section 1.01 Definitions.

     “Additional Assets” means:

     (1) any assets used or useful in the Oil and Gas Business, other than Indebtedness or
Capital Stock;

     (2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of
the acquisition of such Capital Stock by the Company or any of its Restricted Subsidiaries;
or

     (3) Capital Stock constituting a minority interest in any Person that at such time is a
Restricted Subsidiary; provided, however, that any such Restricted Subsidiary described in
clause (2) or (3) is primarily engaged in the Oil and Gas Business.

     “Additional Interest” means all Additional Interest then owing pursuant to Section 5 of the
Registration Rights Agreement referred to in clause (1) of the definition of “Registration Rights
Agreement” in the Appendix. Unless the context indicates otherwise, all references to “interest”
in this Indenture or the Notes shall be deemed to include any Additional Interest.

     “Additional Notes” means, subject to the Company’s compliance with Section 4.09,
6.500% Senior Notes due 2019 issued from time to time after the Initial Issuance Date under the
terms of this Indenture (other than pursuant to Section 2.06, 2.07, 2.09,
3.06, 4.10, 4.15 or 9.05 of this Indenture or Sections 2.3 or 2.4
of the Appendix and other than Exchange Notes issued pursuant to an exchange offer for Initial
Notes outstanding under this Indenture).

     “Adjusted Consolidated Net Tangible Assets” of a specified Person means (without duplication),
as of the date of determination:

     (1) the sum of:

     (a) discounted future net revenue from proved crude oil and natural gas
reserves of such Person and its Restricted Subsidiaries calculated in

 

 

accordance with SEC guidelines before any state or federal or other income
taxes, as estimated by such Person in a reserve report prepared as of the end of the
fiscal year of such Person for which audited financial statements are available, as
increased by, as of the date of determination, the estimated discounted future net
revenue from:

     (i) estimated proved crude oil and natural gas reserves of such Person
and its Restricted Subsidiaries attributable to acquisitions consummated
since the date of such reserve report, which reserves were not reflected in
such reserve report, and

     (ii) estimated crude oil and natural gas reserves of such Person and
its Restricted Subsidiaries attributable to extensions, discoveries and
other additions and upward revisions of estimates of proved crude oil and
natural gas reserves (including previously estimated development costs
incurred during the period and the accretion of discount since the prior
period end) due to exploration, development or exploitation, production or
other activities which would, in accordance with standard industry practice,
cause such revisions, in the case of clauses (i) and (ii) calculated in
accordance with SEC guidelines (utilizing the prices for the fiscal quarter
ending prior to the date of determination),

and decreased by, as of the date of determination, the estimated discounted future
net revenue attributable to:

     (A) estimated proved crude oil and natural gas reserves of such
Person and its Restricted Subsidiaries reflected in such reserve
report produced or disposed of since the date of such reserve report,
and

     (B) reductions in the estimated crude oil and natural gas
reserves of such Person and its Restricted Subsidiaries reflected in
such reserve report since the date of such reserve report due to
changes in geological conditions or other factors which would, in
accordance with standard industry practice, cause such revisions, in
the case of clauses (A) and (B) calculated in accordance with SEC
guidelines (utilizing the prices for the fiscal quarter ending prior
to the date of determination);

provided, however, that, in the case of each of the determinations made pursuant to
clauses (i), (ii), (A) and (B) above, such increases and decreases shall be
estimated by the Company’s petroleum engineers;

     (b) the capitalized costs that are attributable to crude oil and natural gas
properties of such Person and its Restricted Subsidiaries to which no proved crude
oil and natural gas reserves are attributable, based on such Person’s books

2

 

and records as of a date no earlier than the date of such Person’s latest
available annual or quarterly financial statements;

     (c) the Net Working Capital of such Person as of a date no earlier than the
date of such Person’s latest available annual or quarterly financial statements; and

     (d) the greater of:

     (i) the net book value of other tangible assets of such Person and its
Restricted Subsidiaries as of a date no earlier than the date of such
Person’s latest available annual or quarterly financial statements, and

     (ii) the appraised value, as estimated by independent appraisers, of
other tangible assets of such Person and its Restricted Subsidiaries as of a
date no earlier than the date of such Person’s latest available annual or
quarterly financial statements (provided that such Person shall not be
required to obtain such an appraisal of such assets if no such appraisal has
been performed);

minus

     (2) the sum of:

     (a) Minority Interests;

     (b) to the extent not otherwise taken into account in determining Adjusted
Consolidated Net Tangible Assets, any net natural gas balancing liabilities of such
Person and its Restricted Subsidiaries reflected in such Person’s latest audited
financial statements;

     (c) to the extent included in clause (1)(a) above, the discounted future net
revenue, calculated in accordance with SEC guidelines (utilizing the prices utilized
in such Person’s year end reserve report), attributable to reserves subject to
participation interests, overriding royalty interests or other interests of third
parties, pursuant to participation, partnership, vendor financing or other
agreements then in effect, or which otherwise are required to be delivered to third
parties;

     (d) to the extent included in clause (1)(a) above, the discounted future net
revenue calculated in accordance with SEC guidelines (utilizing the prices utilized
in such Person’s year end reserve report), attributable to reserves that are
required to be delivered to third parties to fully satisfy the obligations of such
Person and its Restricted Subsidiaries with respect to Volumetric Production
Payments on the schedules specified with respect thereto; and

     (e) the discounted future net revenue, calculated in accordance with SEC
guidelines, attributable to reserves subject to Dollar-Denominated

3

 

Production Payments that, based on the estimates of production and price
assumptions included in determining the discounted future net revenue specified in
clause (1)(a) above, would be necessary to satisfy fully the obligations of such
Person and its Restricted Subsidiaries with respect to Dollar-Denominated Production
Payments on the schedules specified with respect thereto.

     If the Company changes its method of accounting from the full cost method to the successful
efforts method or a similar method of accounting, “Adjusted Consolidated Net Tangible Assets” of
the Company will continue to be calculated as if the Company were still using the full cost method
of accounting.

     “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
purposes of this definition, “control,” as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies
of such Person, whether through the ownership of voting securities, by agreement or otherwise. For
purposes of this definition, the terms “controlling,” “controlled by” and “under common control
with” have correlative meanings.

     “Agent” means any Registrar or Paying Agent.

     “Applicable Law,” except as the context may otherwise require, means all applicable laws,
rules, regulations, ordinances, judgments, decrees, injunctions, writs and orders of any court or
governmental or congressional agency or authority and rules, regulations, orders, licenses and
permits of any United States federal, state, municipal, regional, or other governmental body,
instrumentality, agency or authority.

     “Applicable Procedures” of a Depository means, with respect to any matter at any time, the
policies and procedures of such Depository, if any, that are applicable to such matter at such
time.

     “Asset Sale” means:

     (1) the sale, lease, conveyance or other disposition of any properties or assets
(including by way of a Production Payment or a sale and leaseback transaction or mergers,
consolidations or otherwise); provided, however, that the disposition of all or
substantially all of the properties or assets of the Company and its Restricted Subsidiaries
taken as a whole will not be an “Asset Sale,” but will be governed by the provisions of
Section 4.15 and/or the provisions of Section 5.01 and not by the provisions
of Section 4.10; and

     (2) the issuance of Equity Interests in any of the Company’s Restricted Subsidiaries or
the sale of Equity Interests in any of its Restricted Subsidiaries (other than directors’
qualifying shares or shares required by Applicable Law to be held by a Person other than the
Company or a Restricted Subsidiary of the Company).

4

 

     Notwithstanding the preceding, the following items will not be deemed to be Asset Sales:

     (1) any single transaction or series of related transactions that involves properties
or assets having a fair market value of less than $20.0 million;

     (2) a disposition of assets between or among any of the Company and its Restricted
Subsidiaries;

     (3) an issuance or sale of Equity Interests by a Restricted Subsidiary to the Company
or to another Restricted Subsidiary;

     (4) any disposition, abandonment, relinquishment or expiration of equipment, inventory,
products, accounts receivable or other properties or assets in the ordinary course of
business;

     (5) the disposition of cash or Cash Equivalents, Hedging Contracts or other financial
instruments in the ordinary course of business;

     (6) a Restricted Payment that is permitted by Section 4.07 or a Permitted
Investment (or a disposition that would constitute a Restricted Payment but for the
exclusion from the definition thereof);

     (7) the farm-out, lease or sublease of developed or undeveloped crude oil or natural
gas properties owned or held by the Company or any of its Restricted Subsidiaries in the
ordinary course of business or in exchange for crude oil and natural gas properties owned or
held by another Person;

     (8) (i) any trade or exchange by the Company or any of its Restricted Subsidiaries of
Hydrocarbon properties or other properties or assets for Hydrocarbon properties or other
properties or assets owned or held by one or more other Persons, and (ii) any transfer or
sale of assets, or lease, assignment or sublease of any real or personal property, (A) in
exchange for services (including in connection with any outsourcing arrangements), and/or
(B) in exchange for such transferee, lessee or assignee (or an Affiliate thereof) agreeing
to pay all or a portion of the costs and expenses related to the exploration, development,
completion and/or production (and related activities) of properties of the Company or any
Restricted Subsidiary, and/or (C) in exchange for properties or assets satisfying the
requirements of clause (i) above ((A), (B) and (C) being referred to herein as a “carry”);
provided that the fair market value of the properties or assets traded, exchanged,
transferred, sold, leased, assigned or subleased by the Company or such Restricted
Subsidiary (together with any cash and Cash Equivalents) is reasonably equivalent or of less
market value to the fair market value of the properties, assets, services or carry (together
with any cash and Cash Equivalents) expected to be received by the Company or such
Restricted Subsidiary, as determined in good faith by the Company, and provided further that
any cash received must be applied in accordance with the provisions described in Section
4.10;

5

 

     (9) the creation or perfection of a Lien (but not, except to the extent contemplated in
clause (10) below, the sale or other disposition of the properties or assets subject to such
Lien);

     (10) the creation or perfection of a Permitted Lien and the exercise by any Person in
whose favor a Permitted Lien is granted of any of its rights in respect of that Permitted
Lien;

     (11) a surrender or waiver of contract rights or the settlement, release or surrender
of contract, tort or other claims of any kind;

     (12) the grant in the ordinary course of business of any non-exclusive license or
sublicense of patents, trademarks, registrations therefor and other similar intellectual
property, including without limitation licenses of seismic data;

     (13) the disposition of oil and natural gas properties in connection with tax credit
transactions complying with Section 45K of the Code or any successor or analogous provisions
of the Code;

     (14) the sale or other disposition (whether or not in the ordinary course of business)
of oil and gas properties, provided at the time of such sale or other disposition such
properties do not have associated with them any proved reserves, and provided further that
the sale or other disposition is for not less than the fair market value of such oil and gas
properties, as determined in good faith by the Company;

     (15) any sale or other disposition of Equity Interests in, or other ownership interests
in or assets or property, including Indebtedness, or other securities of, an Unrestricted
Subsidiary;

     (16) any disposition of Equity Interests of a Restricted Subsidiary pursuant to an
agreement or other obligation with or to a Person (other than the Company or a Restricted
Subsidiary) from whom such Restricted Subsidiary was acquired or from whom such Restricted
Subsidiary acquired its business and assets (having been newly formed in connection with
such acquisition), made as part of such acquisition and in each case comprising all or a
portion of the consideration in respect of such sale or acquisition; and

     (17) the sale and leaseback of any asset within 180 days of the acquisition thereof.

     “Attributable Debt” in respect of a sale and leaseback transaction means, at the time of
determination, the present value of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be extended. Such
present value shall be calculated using a discount rate equal to the rate of interest implicit in
such transaction, determined in accordance with GAAP. As used in the preceding sentence, the “net
rental payments” under any lease for any period shall mean the sum of rental and other payments
required to be paid with respect to such period by the lessee thereunder, excluding any amounts

6

 

required to be paid by such lessee on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges. In the case of any lease that is terminable by the
lessee upon payment of penalty, such net rental payment shall also include the amount of such
penalty, but no rent shall be considered as required to be paid under such lease subsequent to the
first date upon which it may be so terminated.

     “Available Cash” has the meaning assigned to such term in the LLC Agreement, as in effect on
the date of this Indenture.

     “Bankruptcy Law” means Title 11, United States Code, as may be amended from time to time, or
any similar federal or state law for the relief of debtors.

     “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, except that in calculating the beneficial ownership of any particular “person”
(as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to
have beneficial ownership of all securities that such “person” has the right to acquire by
conversion or exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and
“Beneficially Owned” have correlative meanings.

     “Board of Directors” means:

     (1) with respect to Finance Corp., the board of directors of Finance Corp.;

     (2) with respect to the Company, the board of directors of the Company or any
authorized committee thereof; and

     (3) with respect to any other Person, the board or committee of such Person serving a
similar function.

     “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the applicable Person to have been duly adopted by the Board of Directors of such
Person and to be in full force and effect on the date of such certification, and delivered to the
Trustee.

     “Business Day” means each day that is not a Saturday, Sunday or other day on which banking
institutions in Houston, Texas or in New York, New York or another place of payment are authorized
or required by law to close.

     “Capital Lease Obligation” means, at the time any determination is to be made, the amount of
the liability in respect of a capital lease that would at that time be required to be capitalized
on a balance sheet in accordance with GAAP, and the Stated Maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the first date upon
which such lease may be prepaid by the lessee without payment of a penalty.

     “Capital Stock” means:

     (1) in the case of a corporation, corporate stock;

7

 

     (2) in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate stock;

     (3) in the case of a partnership or limited liability company, partnership interests
(whether general or limited) or membership interests, as applicable; and

     (4) any other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing Person,

but excluding from all of the foregoing any debt securities convertible into Capital Stock,
regardless of whether such debt securities include any right of participation with Capital Stock.

     “Cash Equivalents” means:

     (1) United States dollars;

     (2) securities issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality of the United States government (provided that
the full faith and credit of the United States is pledged in support of those securities)
having maturities of not more than one year from the date of acquisition;

     (3) marketable general obligations issued by any state of the United States of America
or any political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at the time of
acquisition thereof, having a credit rating of “A” or better from either S&P or Moody’s;

     (4) certificates of deposit, demand deposits and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers’ acceptances with
maturities not exceeding one year and overnight bank deposits, in each case, with any
domestic commercial bank having capital and surplus in excess of $500.0 million;

     (5) repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (2), (3) and (4) above entered into with any
financial institution meeting the qualifications specified in clause (4) above;

     (6) commercial paper having one of the two highest ratings obtainable from Moody’s or
S&P and, in each case, maturing within one year after the date of acquisition; and

     (7) money market funds at least 95% of the assets of which constitute Cash Equivalents
of the kinds described in clauses (1) through (6) of this definition.

     “Change of Control” means the occurrence of any of the following:

     (1) the direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related transactions,

8

 

of all or substantially all of the properties or assets (including Capital Stock of the
Restricted Subsidiaries) of the Company and its Restricted Subsidiaries taken as a whole, to
any “person” (as that term is used in Section 13(d)(3) of the Exchange Act), which
occurrence is followed by a Rating Decline within 90 days of the consummation of such
transaction;

     (2) the adoption by the unitholders of the Company of a plan relating to the
liquidation or dissolution of the Company; or

     (3) the consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any “person” (as that term is used in Section
13(d)(3) of the Exchange Act) becomes the Beneficial Owner, directly or indirectly, of more
than 50% of the Voting Stock of the Company, measured by voting power rather than number of
 shares, units or the like, which occurrence is followed by a Rating Decline within 90 days
of the consummation of such transaction.

     Notwithstanding the preceding, a conversion of the Company or any of its Restricted
Subsidiaries from a limited liability company, corporation, limited partnership or other form of
entity to a limited liability company, corporation, limited partnership or other form of entity or
an exchange of all of the outstanding Equity Interests in one form of entity for Equity Interests
in another form of entity shall not constitute a Change of Control, so long as following such
conversion or exchange the “persons” (as that term is used in Section 13(d)(3) of the Exchange Act)
who Beneficially Owned the Capital Stock of the Company immediately prior to such transactions
continue to Beneficially Own in the aggregate more than 50% of the Voting Stock of such entity, or
continue to Beneficially Own sufficient Equity Interests in such entity to elect a majority of its
directors, managers, trustees or other persons serving in a similar capacity for such entity, and,
in either case no “person” Beneficially Owns more than 50% of the Voting Stock of such entity.

     “Clearstream” means Clearstream Banking, S.A., or any successor securities clearing agency.

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

     “Consolidated Cash Flow” means, with respect to any specified Person for any period, the
Consolidated Net Income of such Person for such period plus, without duplication:

     (1) an amount equal to any net loss realized by such Person or any of its Restricted
Subsidiaries in connection with an Asset Sale, to the extent such losses were deducted in
computing such Consolidated Net Income; plus

     (2) provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was deducted in
computing such Consolidated Net Income; plus

9

 

     (3) the Fixed Charges of such Person and its Restricted Subsidiaries for such period,
to the extent that such Fixed Charges were deducted in computing such Consolidated Net
Income; plus

     (4) depreciation, depletion, amortization (including amortization of intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior period),
impairment and other non-cash expenses (excluding any such non-cash expense to the extent
that it represents an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of such Person and
its Restricted Subsidiaries for such period to the extent that such depreciation, depletion,
amortization, impairment and other non-cash expenses were deducted in computing such
Consolidated Net Income; plus

     (5) unrealized non-cash losses resulting from foreign currency balance sheet
adjustments required by GAAP to the extent such losses were deducted in computing such
Consolidated Net Income; plus

     (6) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or
expense; minus

     (7) non-cash items increasing such Consolidated Net Income for such period, other than
items that were accrued in the ordinary course of business; and minus

     (8) to the extent increasing such Consolidated Net Income for such period, the sum of
(a) the amount of deferred revenues that are amortized during such period and are
attributable to reserves that are subject to Volumetric Production Payments and (b) amounts
recorded in accordance with GAAP as repayments of principal and interest pursuant to
Dollar-Denominated Production Payments;

in each case, on a consolidated basis and determined in accordance with GAAP.

     “Consolidated Net Income” means, with respect to any specified Person for any period, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a
consolidated basis, determined in accordance with GAAP, provided that:

     (1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or
that is accounted for by the equity method of accounting will be included, but only to the
extent of the amount of dividends or distributions paid in cash to the specified Person or a
Restricted Subsidiary of the Person;

     (2) the Net Income of any Restricted Subsidiary of the Company will be excluded to the
extent that the declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, partners or members;

10

 

     (3) the cumulative effect of a change in accounting principles will be excluded;

     (4) any gain (loss) realized upon the sale or other disposition of any property, plant
or equipment of such Person or its consolidated Restricted Subsidiaries (including pursuant
to any sale or leaseback transaction) which is not sold or otherwise disposed of in the
ordinary course of business and any gain (loss) realized upon the sale or other disposition
of any Capital Stock of any Person will be excluded;

     (5) any asset impairment writedowns on oil and gas properties under GAAP or SEC
guidelines will be excluded;

     (6) unrealized losses and gains under Hedging Contracts included in the determination
of Consolidated Net Income, including, without limitation, those resulting from the
application of FASB ASC Topic 815, “Derivatives and Hedging,” will be excluded;

     (7) to the extent deducted in the calculation of Net Income, any non-cash or
nonrecurring charges relating to any premium or penalty paid, write off of deferred
financing costs or other financial recapitalization charges in connection with redeeming or
retiring any Indebtedness prior to its Stated Maturity will be excluded;

     (8) items classified as extraordinary or nonrecurring gains and losses (less all fees
and expenses related thereto) and the related tax effects, in each case according to GAAP,
will be excluded; and

     (9) income resulting from transfers of assets (other than cash) between such Person or
any of its Restricted Subsidiaries, on the one hand, and an Unrestricted Subsidiary of such
Person, on the other hand, will be excluded.

     “Consolidated Net Worth” means, with respect to any specified Person as of any date, the sum
of:

     (1) the consolidated equity of the common stockholders of, or the consolidated capital
of the unitholders of, such Person and its consolidated Subsidiaries as of such date; plus

     (2) the respective amounts reported on such Person’s balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be declared and paid
only out of net earnings in respect of the year of such declaration and payment, but only to
the extent of any cash received by such Person upon issuance of such preferred stock.

     “Corporate Trust Office of the Trustee” means the office of the Trustee in the City of New
York at which at any time its corporate trust business shall be administered, which office at the
date hereof is located at 100 Wall Street, Suite 1600, New York, New York 10005, Attn: Corporate
Trust Department, or such other address in the City of New York as the Trustee may

11

 

designate from time to time by notice to the Holders and the Issuers, or the principal
corporate trust office in the City of New York of any successor Trustee (or such other address as a
successor Trustee may designate from time to time by notice to the Holders and the Issuers).

     “Credit Agreement” means that certain Fifth Amended and Restated Credit Agreement dated as of
May 2, 2011, among the Company, BNP Paribas, as Administrative Agent, and the other lenders party
thereto, including any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, in each case as amended, restated, modified, renewed, refunded,
replaced or refinanced from time to time.

     “Credit Facilities” means one or more debt facilities (including, without limitation, the
Credit Agreement), commercial paper facilities or Debt Issuances, in each case with banks or other
institutional lenders or institutional investors providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders or to special
purpose entities formed to borrow from such lenders against such receivables), letters of credit or
other borrowings or Debt Issuances, in each case, as amended, restated, modified, renewed,
refunded, replaced or refinanced (including refinancing with any capital markets transaction) in
whole or in part from time to time.

     “Custodian” means any receiver, trustee, assignee, liquidator, sequestrator or similar
official under any Bankruptcy Law.

     “date of this Indenture” means May 13, 2011.

     “Debt Issuance” means, with respect to the Company or any of its Restricted Subsidiaries, one
or more issuances after the date of this Indenture of Indebtedness evidenced by notes, debentures,
bonds or other similar securities or instruments.

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

     “De Minimis Guaranteed Amount” means a principal amount of Indebtedness that does not exceed
$5.0 million.

     “Depository” has the meaning provided in the Appendix.

     “Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any
security into which it is convertible, or for which it is exchangeable, in each case at the option
of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the
final stated maturity date of the Notes. Notwithstanding the preceding sentence, any Capital Stock
that would constitute Disqualified Stock solely because the holders of the Capital Stock have the
right to require the Company to repurchase or redeem such Capital Stock upon the occurrence of a
change of control or an asset sale will not constitute Disqualified Stock if (x) the terms of such
Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant
to such provisions unless such repurchase or redemption complies with Section 4.07 or (y)
the terms of such Capital Stock provide that the Company may not

12

 

repurchase or redeem any such Capital Stock pursuant to such provisions prior to the Company’s
purchase of the Notes as is required to be purchased pursuant to the terms of this Indenture. The
amount (or principal amount) of Disqualified Stock deemed to be outstanding at any time for
purposes of this Indenture will be the maximum amount that the Company and its Restricted
Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory
redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

     “Dollar-Denominated Production Payments” means production payment obligations recorded as
liabilities in accordance with GAAP, together with all undertakings and obligations in connection
therewith.

     “Domestic Subsidiary” means any Restricted Subsidiary of the Company that was formed under the
laws of the United States or any state of the United States or the District of Columbia.

     “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire
Capital Stock (but excluding any debt security that is convertible into, or exchangeable for,
Capital Stock).

     “Equity Offering” means any public or private sale of Capital Stock (other than Disqualified
Stock) made for cash on a primary basis by the Company after the date of this Indenture.

     “Equity Repurchase” means the repurchase or other acquisition or retirement for value of any
Equity Interests of the Company pursuant to any stock repurchase plan of the Company approved by
the Board of Directors of the Company and effected in accordance with Rule 10b-18 under the
Exchange Act, or otherwise in accordance with Applicable Law.

     “Euroclear” means Euroclear Bank S.A./N.V. or any successor securities clearing agency.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Exchange Notes” has the meaning provided in the Appendix.

     “Existing Immaterial Subsidiaries” means, collectively, Linn Western Operating, Inc. and
Barron Operating LLC.

     “Existing Indebtedness” means the aggregate principal amount of Indebtedness of the Company
and its Restricted Subsidiaries (other than Indebtedness under the Credit Agreement and
intercompany Indebtedness, but including the Existing Senior Notes) in existence on the date of
this Indenture, until such amounts are repaid.

     “Existing Senior Notes” means the $255,927,000 aggregate principal amount of 97⁄8% Senior Notes
due 2018 issued by the Issuers on June 27, 2008, the $250,000,000 aggregate principal amount of
113/4% Senior Notes due 2017 issued by the Issuers on May 18, 2009, the $[ ] aggregate principal
amount of 85⁄8% Senior Notes due 2020 issued by the Issuers on April 6, 2010 and the $[ ] aggregate
principal amount of 73/4% Senior Notes due 2021 issued by the Issuers on September 8, 2010.

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     “Fixed Charge Coverage Ratio” means with respect to any specified Person for any four-quarter
reference period, the ratio of the Consolidated Cash Flow of such Person for such period to the
Fixed Charges of such Person for such period. In the event that the specified Person or any of its
Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or
otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred stock subsequent to the commencement of the applicable
four-quarter reference period and on or prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed
Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption,
guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or
such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom,
as if the same had occurred at the beginning of the applicable four-quarter reference period.

     In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

     (1) acquisitions that have been made by the specified Person or any of its Restricted
Subsidiaries, including through mergers, consolidations or otherwise (including acquisitions
of assets used or useful in the Oil and Gas Business), or any Person or any of its
Restricted Subsidiaries acquired by the specified Person or any of its Restricted
Subsidiaries, and including in each case any related financing transactions and increases in
ownership of Restricted Subsidiaries, during the applicable four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date, will be given
pro forma effect as if they had occurred on the first day of the four-quarter reference
period, and the Consolidated Cash Flow for such reference period will be calculated giving
pro forma effect to any expense and cost reductions or synergies that have occurred or are
reasonably expected to occur, in the reasonable judgment of the chief financial or
accounting officer of the Company (regardless of whether those cost savings or operating
improvements could then be reflected in pro forma financial statements in accordance with
Regulation S-X promulgated under the Securities Act or any other regulation or policy of the
SEC related thereto);

     (2) the Consolidated Cash Flow attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses (and ownership interests therein)
disposed of prior to the Calculation Date, will be excluded;

     (3) the Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses (and ownership interests therein)
disposed of prior to the Calculation Date, will be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations of the specified
Person or any of its Restricted Subsidiaries following the Calculation Date;

     (4) any Person that is a Restricted Subsidiary of the specified Person on the
Calculation Date will be deemed to have been a Restricted Subsidiary of the specified Person
at all times during such four-quarter period;

14

 

     (5) any Person that is not a Restricted Subsidiary of the specified Person on the
Calculation Date will be deemed not to have been a Restricted Subsidiary of the specified
Person at any time during such four-quarter period; and

     (6) if any Indebtedness bears a floating rate of interest, the interest expense on such
Indebtedness will be calculated as if the rate in effect on the Calculation Date had been
the applicable rate for the entire period (taking into account any obligations arising under
any Hedging Contract applicable to such Indebtedness if such Hedging Contract has a
remaining term as at the Calculation Date in excess of 12 months).

     “Fixed Charges” means, with respect to any specified Person for any period, the sum, without
duplication, of:

     (1) the consolidated interest expense of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued (excluding any interest attributable to
Dollar-Denominated Production Payments but including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to Attributable
Debt, commissions, discounts and other fees and charges incurred in respect of letter of
credit or bankers’ acceptance financings), and net of the effect of all payments made or
received pursuant to interest rate Hedging Contracts; plus

     (2) the consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period; plus

     (3) any interest expense on Indebtedness of another Person that is guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person
or one of its Restricted Subsidiaries, whether or not such guarantee or Lien is called upon
(other than a Lien of the type described in clause (9) of the definition of “Permitted
Liens”); plus

     (4) all dividends on any series of preferred securities of such Person or any of its
Restricted Subsidiaries, whether paid or accrued and whether or not in cash, other than
dividends on Equity Interests payable solely in Equity Interests of the Company (other than
Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company,

in each case, on a consolidated basis and in accordance with GAAP.

     “GAAP” means generally accepted accounting principles in the United States, which are in
effect on the date of this Indenture.

     “Global Note” has the meaning provided in the Appendix.

     “Government Securities” means direct obligations of, or obligations guaranteed by, the United
States of America for the payment of which guarantee or obligations the full faith and credit of
the United States is pledged.

15

 

     The term “guarantee” means a guarantee other than by endorsement of negotiable instruments for
collection in the ordinary course of business, direct or indirect, in any manner including, without
limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements
in respect thereof, of all or any part of any Indebtedness or entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part). When used as a verb, “guarantee”
has a correlative meaning.

     “Guarantors” means each of (a) the Restricted Subsidiaries of the Company, other than Finance
Corp. and the Existing Immaterial Subsidiaries, executing this Indenture as initial Guarantors, (b)
any other Restricted Subsidiary of the Company that executes a supplement to this Indenture in
accordance with Section 4.13 or 10.02 hereof and (c) the respective successors and
assigns of such Restricted Subsidiaries in each case until such time as any such Restricted
Subsidiary shall be released and relieved of its obligations pursuant to Section 4.13,
8.02, 8.03 or 10.04 hereof.

     “Hedging Contracts” means, with respect to any specified Person:

     (1) interest rate swap agreements, interest rate cap agreements and interest rate
collar agreements entered into with one of more financial institutions and designed to
protect the Person or any of its Restricted Subsidiaries entering into the agreement against
fluctuations in interest rates, or to otherwise reduce the cost of borrowing of such Person
or any of such Restricted Subsidiaries, with respect to Indebtedness incurred;

     (2) foreign exchange contracts and currency protection agreements entered into with one
of more financial institutions and designed to protect the Person or any of its Restricted
Subsidiaries entering into the agreement against fluctuations in currency exchange rates;

     (3) any commodity futures contract, commodity swap, commodity option, commodity forward
sale or other similar agreement or arrangement designed to protect against fluctuations in
the price of Hydrocarbons used, produced, processed or sold by that Person or any of its
Restricted Subsidiaries at the time; and

     (4) other agreements or arrangements designed to protect such Person or any of its
Restricted Subsidiaries against fluctuations in interest rates, commodity prices or currency
exchange rates,

and in each case are entered into only in the normal course of business and not for speculative
purposes.

     “Holder” or “Noteholder” means a Person in whose name a Note is registered.

     “Hydrocarbons” means crude oil, natural gas, casinghead gas, drip gasoline, natural gasoline,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all constituents, elements or
compounds thereof and products refined or processed therefrom.

16

 

     “Indebtedness” means, with respect to any specified Person, any indebtedness of such Person,
whether or not contingent:

     (1) in respect of borrowed money;

     (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit
(or reimbursement agreements in respect thereof);

     (3) in respect of bankers’ acceptances;

     (4) representing Capital Lease Obligations or Attributable Debt in respect of sale and
leaseback transactions;

     (5) representing the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade payable or that is
payable solely in Capital Stock; or

     (6) representing any obligations under Hedging Contracts,

if and to the extent any of the preceding items (other than letters of credit and obligations under
Hedging Contracts) would appear as a liability upon a balance sheet of the specified Person
prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness
of other Persons secured by a Lien on any asset of the specified Person, whether or not such
Indebtedness is assumed by the specified Person (provided that the amount of such Indebtedness will
be the lesser of (a) the fair market value of such asset at such date of determination and (b) the
amount of such Indebtedness of such other Person), and, to the extent not otherwise included, the
guarantee by the specified Person of any Indebtedness of any other Person (including, with respect
to any Production Payment, any warranties or guarantees of production or payment by such Person
with respect to such Production Payment, but excluding other contractual obligations of such Person
with respect to such Production Payment).

     Notwithstanding the foregoing, the following shall not constitute or be deemed “Indebtedness”:

     (i) any indebtedness which has been defeased in accordance with GAAP or defeased
pursuant to the deposit of cash or Cash Equivalents (in an amount sufficient to satisfy all
such indebtedness obligations at maturity or redemption, as applicable, and all payments of
interest and premium, if any) in a trust or account created or pledged for the sole benefit
of the holders of such indebtedness, and subject to no other Liens, and the other applicable
terms of the instrument governing such indebtedness;

     (ii) any obligation of a Person in respect of a farm-in agreement or similar
arrangement whereby such Person agrees to pay all or a share of the drilling, completion or
other expenses of an exploratory or development well (which agreement may be subject to a
maximum payment obligation, after which expenses are shared in accordance with the working
or participation interest therein or in accordance with the agreement of the parties) or
perform the drilling, completion or other operation on such well in exchange for an
ownership interest in an oil or gas property;

17

 

     (iii) any obligations arising from agreements of a Person providing for
indemnification, guarantees, adjustment of purchase price, holdbacks, contingent payment
obligations based on a final financial statement or performance of acquired or disposed of
assets or similar obligations (other than guarantees of Indebtedness), in each case,
incurred or assumed by such Person in connection with the acquisition or disposition of
assets (including through mergers, consolidations or otherwise);

     (iv) subject to the parenthetical at the end of the preceding sentence, any
Dollar-Denominated Production Payments or Volumetric Production Payments;

     (v) any Disqualified Stock; and

     (vi) Indebtedness secured by any Lien of the type described in clause (9) of the
definition of “Permitted Liens.”

     The amount (or principal amount) of any Indebtedness outstanding as of any date will be:

     (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with
original issue discount;

     (2) in the case of obligations under any Hedging Contracts, the termination value of
the agreement or arrangement giving rise to such obligations that would be payable by such
Person at such date; and

     (3) the principal amount of the Indebtedness, together with any interest on the
Indebtedness that is more than 30 days past due, in the case of any other Indebtedness.

     The amount of Indebtedness of any Person at any date will be the outstanding balance at such
date of all unconditional obligations as described above and the maximum liability, upon the
occurrence of the contingency giving rise to the obligation, of any contingent obligations at such
date.

     “Indenture” means this Indenture, as amended or supplemented from time to time.

     “Initial Issuance Date” means May 13, 2011.

     “Initial Notes” has the meaning provided in the Appendix.

     “Initial Purchasers” has the meaning provided in the Appendix.

     “Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by
Moody’s and BBB- (or the equivalent) by S&P.

     “Investments” means, with respect to any Person, all direct or indirect investments by such
Person in other Persons (including Affiliates) in the forms of loans, advances or extensions of
credit (including guarantees or similar arrangements, but excluding (1) commission, travel and
similar advances to officers and employees made in the ordinary course of business and (2) advances
to customers in the ordinary course of business that are recorded as accounts

18

 

receivable on the balance sheet of the lender), or capital contributions or purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other securities (excluding any
interest in a crude oil or natural gas leasehold to the extent constituting a security under
applicable law), together with all items that are or would be classified as investments on a
balance sheet of such Person prepared in accordance with GAAP. If the Company or any Restricted
Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or
indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company will be
deemed to have made an Investment on the date of any such sale or disposition in an amount equal to
the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of
in an amount determined as provided in the final paragraph of Section 4.07. The
acquisition by the Company or any Subsidiary of the Company of a Person that holds an Investment in
a third Person will be deemed to be an Investment made by the Company or such Subsidiary in such
third Person in an amount equal to the fair market value of the Investment held by the acquired
Person in such third Person on the date of any such acquisition in an amount determined as provided
in the final paragraph of Section 4.07. Except as otherwise provided in this Indenture,
the amount of an Investment will be determined at the time the Investment is made and without
giving effect to subsequent changes in value or write-ups, write-downs or write-offs with respect
to such Investment.

     “Joint Venture” means any Person that is not a direct or indirect Subsidiary of the Company in
which the Company or any of its Restricted Subsidiaries makes any Investment.

     “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under Applicable Law, including any conditional sale or other title retention agreement,
any lease in the nature thereof, other than a precautionary financing statement respecting a lease
not intended as a security agreement.

     “LLC Agreement” means the Third Amended and Restated Limited Liability Company Agreement of
Linn Energy, LLC, dated as of September 3, 2010, as in effect on the date of this Indenture and as
such may be further amended, modified or supplemented from time to time.

     “Make Whole Premium” means, with respect to a Note at any time, the excess, if any, of (a) the
present value at such time of (i) the redemption price of such Note at May 15, 2015 pursuant to
Section 3.07(a) plus (ii) any required interest payments due on such Note through May 15,
2015 (except for currently accrued and unpaid interest), computed using a discount rate equal to
the Treasury Rate at such time plus 50 basis points, discounted to the redemption date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months), over (b) the
principal amount of such Note.

     “Measurement Date” means June 27, 2008.

     “Minority Interest” means the percentage interest represented by any Capital Stock of a
Restricted Subsidiary of the Company that are not owned by the Company or a Restricted Subsidiary
of the Company.

19

 

     “Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business
thereof.

     “Net Income” means, with respect to any specified Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect of preferred stock
dividends, excluding, however:

     (1) any gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with: (a) any Asset Sale; or (b) the disposition of
any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of
any Indebtedness of such Person or any of its Restricted Subsidiaries; and

     (2) any extraordinary gain (but not loss), together with any related provision for
taxes on such extraordinary gain (but not loss).

     “Net Proceeds” means the aggregate cash proceeds received by the Company or any of its
Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration received in any Asset
Sale), net of:

     (1) the direct costs relating to such Asset Sale, including, without limitation, legal,
accounting and investment banking fees, title and recording tax expenses and sales
commissions, and any relocation expenses incurred as a result of the Asset Sale,

     (2) taxes paid or payable or required to be accrued as a liability under GAAP as a
result of the Asset Sale, in each case, after taking into account any available tax credits
or deductions and any tax sharing arrangements,

     (3) amounts required to be applied to the repayment of Indebtedness secured by a Lien
on the properties or assets that were the subject of such Asset Sale, or which must by its
terms, or in order to obtain a necessary consent to such Asset Sale or by applicable law, be
repaid out of the proceeds from such Asset Sale,

     (4) all distributions and other payments required to be made to minority interest
holders in Restricted Subsidiaries or Joint Ventures as a result of such Asset Sale, and

     (5) any amounts to be set aside in any reserve established in accordance with GAAP or
any amount placed in escrow, in either case for adjustment in respect of the sale price of
such properties or assets or for liabilities associated with such Asset Sale and retained by
the Company or any of its Restricted Subsidiaries until such time as such reserve is
reversed or such escrow arrangement is terminated, in which case Net Proceeds shall include
only the amount of the reserve so reversed or the amount returned to the Company or its
Restricted Subsidiaries from such escrow arrangement, as the case may be.

20

 

     “Net Working Capital” means (a) all current assets of the Company and its Restricted
Subsidiaries except current assets from commodity price risk management activities arising in the
ordinary course of business, less (b) all current liabilities of the Company and its Restricted
Subsidiaries, except current liabilities included in Indebtedness and any current liabilities from
commodity price risk management activities arising in the ordinary course of business and current
liabilities associated with asset retirement obligations related to oil and gas properties, in each
case as set forth in the consolidated financial statements of the Company prepared in accordance
with GAAP (excluding any adjustments made pursuant to FASB ASC Topic 815, “Derivatives and
Hedging”).

     “Non-Recourse Debt” means Indebtedness:

     (1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides
credit support of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise,
or (c) is the lender (except in the case of items (a) and (b), a lien of the type described
in clause (9) of the definition of “Permitted Liens”);

     (2) no default with respect to which (including any rights that the holders of the
Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would
permit upon notice, lapse of time or both any holder of any other Indebtedness (other than
the Notes) of the Company or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable
prior to its Stated Maturity; and

     (3) the explicit terms of which provide there is no recourse against any of the assets
of the Company or its Restricted Subsidiaries, except as contemplated by clause (9) of the
definition of “Permitted Liens.”

     For purposes of determining compliance with Section 4.09, in the event that any
Non-Recourse Debt of any of the Company’s Unrestricted Subsidiaries ceases to be Non-Recourse Debt
of such Unrestricted Subsidiary, such event will be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of the Company.

     “Notes” has the meaning provided in the Appendix.

     “Notes Custodian” has the meaning specified in the Appendix.

     “Obligations” means any principal, premium, if any, interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization, whether or not a claim for
post-filing interest is allowed in such proceeding), penalties, fees, charges, expenses,
indemnifications, reimbursement obligations, damages, guarantees, and other liabilities or amounts
payable under the documentation governing any Indebtedness or in respect thereto.

     “Offering Memorandum” means the offering memorandum of the Issuers dated May 10, 2011 relating
to the offering of the Initial Notes.

21

 

     “Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer,
any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice
President of such Person.

     “Officers’ Certificate” means a certificate signed on behalf of each of the Company and
Finance Corp. by two of its Officers, one of whom must be the principal executive officer, the
principal financial officer, the treasurer or the principal accounting officer of the Company or
Finance Corp., as the case may be, that meets the requirements of Section 11.05 hereof.

     “Oil and Gas Business” means:

     (1) the acquisition, exploration, development, production, operation and disposition of
interests in oil, gas and other Hydrocarbon properties;

     (2) the gathering, marketing, treating, processing (but not refining), storage,
distribution, selling and transporting of any production from such interests or properties;

     (3) any business relating to exploration for or development, production, treatment,
processing (but not refining), storage, transportation or marketing of oil, gas and other
minerals and products produced in association therewith;

     (4) any other business that generates gross income that constitutes “qualifying income”
under Section 7704(d) of the Code; and

     (5) any activity that is ancillary, complementary or incidental to or necessary or
appropriate for the activities described in clauses (1) through (4) of this definition.

     “Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable to the
Trustee, that meets the requirements of Section 11.05 hereof. The counsel may be an
employee of or counsel to the Company, any Subsidiary of the Company or the Trustee.

     “Pari Passu Indebtedness” means, with respect to any Excess Proceeds from Asset Sales,
Indebtedness of an Issuer or any Guarantor that ranks equally in right of payment with the Notes or
the Subsidiary Guarantees, as the case may be, and the terms of which require the Company or any of
its Restricted Subsidiaries to apply such Excess Proceeds to offer to repurchase such Indebtedness.

     “Permitted Acquisition Indebtedness” means Indebtedness or Disqualified Stock of the Company
or any of its Restricted Subsidiaries to the extent such Indebtedness or Disqualified Stock was
Indebtedness or Disqualified Stock of any other Person existing at the time (a) such Person became
a Restricted Subsidiary of the Company or (b) such Person was merged or consolidated with or into
the Company or any of its Restricted Subsidiaries, or (c) assets of such Person were acquired by
the Company or any of its Restricted Subsidiaries and such Indebtedness was assumed in connection
therewith (excluding any such Indebtedness that is repaid contemporaneously with such event),
provided that on the date such Person became a Restricted Subsidiary of the Company or the date
such Person was merged or consolidated with

22

 

or into the Company or any of its Restricted Subsidiaries, or on the date of such asset
acquisition, as applicable, either:

     (1) immediately after giving effect to such transaction on a pro forma basis as if the
same had occurred at the beginning of the applicable four-quarter period, the Company or
such Restricted Subsidiary, as applicable, would be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09,

     (2) immediately after giving effect to such transaction on a pro forma basis as if the
same had occurred at the beginning of the applicable four-quarter period, the Fixed Charge
Coverage Ratio of the Company would be equal to or greater than the Fixed Charge Coverage
Ratio of the Company immediately prior to such transaction, or

     (3) immediately after giving effect to such transaction on a pro forma basis, the
Consolidated Net Worth of the Company would be greater than the Consolidated Net Worth of
the Company immediately prior to such transaction.

     “Permitted Business Investments” means Investments made in the ordinary course of, and of a
nature that is or shall have become customary in, the Oil and Gas Business, including investments
or expenditures for actively exploring for, acquiring, developing, producing, processing,
gathering, marketing or transporting Hydrocarbons through agreements, transactions, interests or
arrangements that permit one to share risk or costs, comply with regulatory requirements regarding
local ownership or satisfy other objectives customarily achieved through the conduct of the Oil and
Gas Business jointly with third parties, including without limitation:

     (1) direct or indirect ownership of crude oil, natural gas, other restricted
Hydrocarbon properties or any interest therein, gathering, transportation, processing,
storage or related systems, or ancillary real property interests and interests therein; and

     (2) the entry into operating agreements, joint ventures, processing agreements, working
interests, royalty interests, mineral leases, farm-in agreements, farm-out agreements,
development agreements, production sharing agreements, area of mutual interest agreements,
contracts for the sale, transportation or exchange of crude oil and natural gas and related
Hydrocarbons and minerals, unitization agreements, pooling arrangements, joint bidding
agreements, service contracts, partnership agreements (whether general or limited), or other
similar or customary agreements, transactions, properties, interests or arrangements, and
Investments and expenditures in connection therewith or pursuant thereto, in each case made
or entered into in the ordinary course of the Oil and Gas Business, excluding, however,
Investments in corporations and publicly-traded limited partnerships.

     “Permitted Investments” means:

     (1) any Investment in the Company or in a Restricted Subsidiary of the Company;

     (2) any Investment in cash and Cash Equivalents;

23

 

     (3) any Investment by the Company or any Restricted Subsidiary of the Company in a
Person, if as a result of such Investment:

     (a) such Person becomes a Restricted Subsidiary of the Company; or

     (b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its properties or assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company;

     (4) any Investment made as a result of the receipt of non-cash consideration:

     (a) from an Asset Sale that was made pursuant to and in compliance with
Section 4.10;

     (b) any other disposition of assets deemed not to be Asset Sales under the
definition of “Asset Sale;”

     (5) any Investment in any Person (a) in exchange for the issuance of Equity Interests
(other than Disqualified Stock) of the Company, or (b) with the net cash proceeds from a
substantially concurrent (i) contribution (other than from a Restricted Subsidiary of the
Company) to the equity capital of the Company or (ii) issuance of, Equity Interests of the
Company (other than Disqualified Stock), with an issuance being deemed substantially
concurrent with such Investment if occurring not more than 120 days after such issuance;
provided that the amount of any such net cash proceeds will be excluded or deducted from the
calculation of Available Cash and Incremental Funds;

     (6) any Investments received in compromise or resolution of, or upon satisfaction of
judgments with respect to, (a) obligations of trade creditors or customers that were
incurred in the ordinary course of business, including pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of any trade
creditor or customer, or (b) litigation, arbitration or other disputes (including pursuant
to any bankruptcy or insolvency proceedings) with Persons who are not Affiliates;

     (7) Hedging Contracts;

     (8) Guarantees of Indebtedness permitted under Section 4.09;

     (9) guarantees by the Company or any of its Restricted Subsidiaries of operating leases
(other than Capital Lease Obligations) or of other obligations that do not constitute
Indebtedness, in each case entered into by any Restricted Subsidiary of the Company in the
ordinary course of business;

     (10) Permitted Business Investments;

     (11) Investments that are in existence on the date of this Indenture;

     (12) Investments in any Person to the extent such Investments consist of prepaid
expenses, negotiable instruments held for collection and lease, utility and

24

 

workers’ compensation, performance and other similar deposits made in the ordinary
course of business by the Company or any of its Restricted Subsidiaries;

     (13) guarantees of performance or other obligations (other than Indebtedness) arising
in the ordinary course in the Oil and Gas Business, including obligations under oil and
natural gas exploration, development, joint operating and related agreements and licenses or
concessions related to the Oil and Gas Business;

     (14) loans or advances to officers, directors or employees made in the ordinary course
of business consistent with past practices of the Company or the applicable Restricted
Subsidiary and otherwise in compliance with Section 4.11 of this Indenture;

     (15) Investments of a Restricted Subsidiary acquired after the date of this Indenture
or of any entity merged into or consolidated with the Company or a Restricted Subsidiary in
accordance with Section 5.01 of this Indenture, the extent that such Investments
were not made in contemplation of or in connection with such acquisition, merger or
consolidation and were in existence on the date of such acquisition, merger or
consolidation;

     (16) Investments received as a result of a foreclosure by, or other transfer of title
to, the Company or any of its Restricted Subsidiaries with respect to any secured Investment
in default;

     (17) Liens of the type described in clause (9) of the definition of “Permitted Liens;”
and

     (18) other Investments in any Person having an aggregate fair market value (measured on
the date each such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to this clause (18)
that are at the time outstanding, not to exceed the greater of $100.0 million and 2.0% of
the Company’s Adjusted Consolidated Net Tangible Assets determined at the time of such
Investment (after giving effect to any dividends, interest payments, return of capital and
subsequent reduction in the amount of any Investment made pursuant to this clause as a
result of the repayment or other disposition thereof, in an amount not to exceed the amount
of such Investments previously made pursuant to this clause); provided, however, that if any
Investment pursuant to this clause (18) is made in any Person that is not a Restricted
Subsidiary of the Company at the date of the making of such Investment and such Person
becomes a Restricted Subsidiary of the Company after such date, such Investment shall
thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have
been made pursuant to this clause (18) for so long as such Person continues to be a
Restricted Subsidiary;

provided, however, that with respect to any Investment, the Company may, in its sole
discretion, allocate all or any portion of any Investment and later re-allocate all or any
portion of any Investment to one or more of the above clauses (1) through (18) so that the
entire Investment would be a Permitted Investment.

     “Permitted Liens” means:

25

 

     (1) Liens securing any Indebtedness under any of the Credit Facilities;

     (2) Liens in favor of the Company or the Guarantors;

     (3) Liens on property (including Capital Stock) of a Person existing at the time such
Person is merged with or into or consolidated with the Company or any Restricted Subsidiary
of the Company, provided that such Liens were in existence prior to the contemplation of
such merger or consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company or the Restricted Subsidiary;

     (4) Liens on property existing at the time of acquisition of the property by the
Company or any Restricted Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition;

     (5) any interest or title of a lessor to the property subject to a Capital Lease
Obligation;

     (6) Liens on any asset or property acquired, constructed or improved by the Company or
any of its Restricted Subsidiaries; provided that (a) such Liens are in favor of the seller
of such asset or property, in favor of the Person or Persons developing, constructing,
repairing or improving such asset or property, or in favor of the Person or Persons that
provided the funding for the acquisition, development, construction, repair or improvement
cost, as the case may be, of such asset or property, (b) such Liens are created within 360
days after the acquisition, development, construction, repair or improvement, (c) the
aggregate principal amount of the Indebtedness secured by such Liens is otherwise permitted
to be incurred under this Indenture and does not exceed the greater of (i) the cost of the
asset or property so acquired, constructed or improved plus related financing costs and (ii)
the fair market value (as determined by an executive officer involved in or otherwise
familiar with such acquisition, construction or improvement of such asset or property, if
such fair market value is greater than $25.0 million but not in excess of $50.0 million, or,
if such fair market value is in excess of $50.0 million, the Board of Directors of the
Company) of the asset or property so acquired, constructed or improved, measured at the date
of such acquisition, or the date of completion of such construction or improvement, and (d)
such Liens are limited to the asset or property so acquired, constructed or improved
(including the proceeds thereof, accessions thereto, upgrades thereof and improvements
thereto);

     (7) Liens existing on the date of this Indenture other than Liens securing the Credit
Facilities;

     (8) Liens to secure the performance of tenders, bids, statutory obligations, surety or
appeal bonds, government contracts, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;

     (9) Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any
Joint Venture owned by the Company or any Restricted Subsidiary of

26

 

the Company to the extent securing Non-Recourse Debt or other Indebtedness of such
Unrestricted Subsidiary or Joint Venture;

     (10) Liens in respect of Production Payments and Reserve Sales;

     (11) Liens on pipelines or pipeline facilities that arise by operation of law;

     (12) Liens arising under operating agreements, joint venture agreements, partnership
agreements, oil and gas leases, farm-out agreements, farm-in agreements, division orders,
contracts for the sale, transportation or exchange of crude oil and natural gas and related
Hydrocarbons and minerals, unitization and pooling declarations and agreements, area of
mutual interest agreements and other agreements arising in the ordinary course of business
of the Company and its Restricted Subsidiaries that are customary in the Oil and Gas
Business;

     (13) Liens reserved in oil and gas mineral leases for bonus or rental payments and for
compliance with the terms of such leases;

     (14) Liens upon specific items of inventory, receivables or other goods or proceeds of
the Company or any of its Restricted Subsidiaries securing such Person’s obligations in
respect of bankers’ acceptances or receivables securitizations issued or created for the
account of such Person to facilitate the purchase, shipment or storage of such inventory,
receivables or other goods or proceeds and permitted by Section 4.09;

     (15) Liens securing Obligations of the Issuers or the Guarantors under the Notes or the
Subsidiary Guarantees, as the case may be, and Liens securing other obligations of the
Issuers or the Guarantors under this Indenture;

     (16) Liens to secure payment and performance of Hedging Contracts of the Company or any
of its Restricted Subsidiaries;

     (17) Liens for taxes, assessments or governmental charges or claims that are not yet
delinquent by more than sixty (60) days or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded; provided that any
reserve or other appropriate provision as is required in conformity with GAAP has been made
therefor;

     (18) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
like Liens arising by contract or statute in the ordinary course of business and with
respect to amounts which are not yet delinquent by more than sixty (60) days or are being
contested in good faith by appropriate proceedings;

     (19) pledges or deposits made in the ordinary course of business (A) in connection with
leases, tenders, bids, statutory obligations, surety or appeal bonds, government contracts,
performance bonds and similar obligations, or (B) in connection with workers’ compensation,
unemployment insurance and other social security or similar legislation;

27

 

     (20) any attachment or judgment Lien that does not constitute an Event of Default;

     (21) survey exceptions, easements or reservations of, or rights of others for,
licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the use of real property that were
not incurred in connection with Indebtedness and that do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in the
operation of the business of the Company or any of its Restricted Subsidiaries;

     (22) Liens arising solely by virtue of any statutory or common law provisions relating
to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts
or other funds maintained or deposited with a depositary institution; provided that (A) such
deposit account is not a dedicated cash collateral account and is not subject to
restrictions against access by the Company in excess of those set forth by regulations
promulgated by the Federal Reserve Board and (B) such deposit account is not intended by the
Company or any of its Restricted Subsidiaries to provide collateral to the depositary
institution;

     (23) Liens arising from Uniform Commercial Code financing statement filings regarding
operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary
course of business;

     (24) leases or subleases granted to others that do not materially interfere with the
ordinary course of business of the Company and its Restricted Subsidiaries, taken as a
whole;

     (25) Liens arising under this Indenture in favor of the trustee for its own benefit and
similar Liens in favor of other trustees, agents and representatives arising under
instruments governing Indebtedness permitted to be incurred under this Indenture, provided,
however, that such Liens are solely for the benefit of the trustees, agents or
representatives in their capacities as such and not for the benefit of the holders of such
Indebtedness;

     (26) Liens arising from the deposit of funds or securities in trust for the purpose of
decreasing or defeasing Indebtedness so long as such deposit of funds or securities and such
decreasing or defeasing of Indebtedness are permitted under Section 4.07 of this
Indenture;

     (27) Liens (other than Liens securing Indebtedness) on, or related to, assets to secure
all or part of the costs incurred in the ordinary course of the Oil and Gas Business for the
exploration, drilling, development, production, processing, transportation, marketing,
storage or operation thereof;

     (28) Liens arising from royalties, overriding royalties, revenue interests, net revenue
interests, net profit interests, reversionary interests, production payments, preferential
rights of purchase, working interests and other similar interests, all as

28

 

ordinarily exist with respect to properties and assets of the Company and its
Restricted Subsidiaries or otherwise as are customary in the Oil and Gas Business;

     (29) Liens incurred in the ordinary course of business of the Company or any Restricted
Subsidiary of the Company, provided that, after giving effect to any such incurrence, the
aggregate principal amount of all Indebtedness then outstanding and secured by any Liens
incurred pursuant to this clause (29) does not exceed the amount set forth in clause (17) of
the second paragraph of Section 4.09 of this Indenture; and

     (30) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred
under this Indenture and incurred to refinance Indebtedness that was previously so secured,
provided that any such Lien is limited to all or part of the same property or assets (plus
improvements, accessions, proceeds or dividends or distributions in respect thereof) that
secured (or, under the written arrangements under which the original Lien arose, could
secure) the Indebtedness being refinanced or is in respect of property or assets that is the
security for a Permitted Lien hereunder.

     “Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any of its
Restricted Subsidiaries or any Disqualified Stock of the Company incurred or issued in exchange
for, or the net proceeds of which are used to extend, refinance, renew, replace, defease,
discharge, refund or otherwise retire for value, in whole or in part, any other Indebtedness of the
Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness) or any
Disqualified Stock of the Company; provided that:

     (1) the principal amount, or in the case of Disqualified Stock, the amount thereof as
determined in accordance with the definition of Disqualified Stock, of such Permitted
Refinancing Indebtedness does not exceed the principal amount of the Indebtedness or amount
of the Disqualified Stock being exchanged, extended, refinanced, renewed, replaced,
defeased, discharged, refunded or retired (plus all accrued and unpaid interest on the
Indebtedness or accrued and unpaid dividends on the Disqualified Stock, as the case may be,
and the amount of all fees, expenses and premiums incurred in connection therewith);

     (2) such Permitted Refinancing Indebtedness has a final maturity date or redemption
date, as applicable, later than the final maturity date or redemption date, as applicable,
of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of, the Indebtedness or Disqualified Stock being exchanged,
extended, refinanced, renewed, replaced, defeased, discharged, refunded or retired;

     (3) if the Indebtedness or Disqualified Stock being exchanged, extended, refinanced,
renewed, replaced, defeased, discharged, refunded or retired is contractually subordinated
or otherwise junior in right of payment to the Notes or the Subsidiary Guarantees, such
Permitted Refinancing Indebtedness is contractually subordinated or otherwise junior in
right of payment to the Notes or the Subsidiary Guarantees on terms at least as favorable to
the Holders of Notes as those contained in the documentation

29

 

governing the Indebtedness or Disqualified Stock being exchanged, extended, refinanced,
renewed, replaced, defeased, discharged, refunded or retired; and

     (4) such Indebtedness is not incurred (other than by way of a guarantee) by a
Restricted Subsidiary of the Company (other than Finance Corp.) if the Company is the
issuer or other primary obligor on the Indebtedness being exchanged, extended, refinanced,
renewed, replaced, defeased, discharged, refunded or retired.

     Notwithstanding the foregoing, any Indebtedness incurred under Credit Facilities shall be
subject to the refinancing provision of the definition of Credit Facilities and not pursuant to the
requirements set forth in this definition of Permitted Refinancing Indebtedness.

     “Person” means any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, limited liability company or government or
other entity.

     “Production Payments” means, collectively, Dollar-Denominated Production Payments and
Volumetric Production Payments.

     “Production Payments and Reserve Sales” means the grant or transfer by the Company or a
Restricted Subsidiary of the Company to any Person of a royalty, overriding royalty, net profits
interest, production payment (whether volumetric or dollar denominated), partnership or other
interest in oil and gas properties, reserves or the right to receive all or a portion of the
production or the proceeds from the sale of production attributable to such properties, including
any such grants or transfers pursuant to incentive compensation programs on terms that are
reasonably customary in the oil and gas business for geologists, geophysicists and other providers
of technical services to the Company or a Subsidiary of the Company.

     “Purchase Agreement” has the meaning provided in the Appendix.

     “QIB” means a “qualified institutional buyer” as defined in Rule 144A under the Securities
Act.

     “Rating Category” means:

     (1) with respect to S&P, any of the following categories: AAA, AA, A, BBB, BB, B, CCC,
CC, C and D (or equivalent successor categories); and

     (2) with respect to Moody’s, any of the following categories: Aaa, Aa, A, Baa, Ba, B,
Caa, Ca, C and D (or equivalent successor categories).

     “Rating Decline” means a decrease in the rating of the notes by either Moody’s or S&P by one
or more gradations (including gradations within Rating Categories as well as between Rating
Categories). In determining whether the rating of the notes has decreased by one or more
gradations, gradations within Rating Categories, namely + or— for S&P, and 1, 2, and 3 for
Moody’s, will be taken into account; for example, in the case of S&P, a rating decline either from
BB+ to BB or BB- to B+ will constitute a decrease of one gradation.

30

 

     “Ratings Agencies” means each of Moody’s and S&P.

     “Registered Exchange Offer” has the meaning provided in the Appendix.

     “Registration Rights Agreement” has the meaning provided in the Appendix.

     “Regulation S” has the meaning provided in the Appendix.

     “Reporting Default” means a Default described in Section 6.01(d).

     “Responsible Officer,” when used with respect to the Trustee, means any officer within the
corporate trust department of the Trustee having direct responsibility for the administration of
this Indenture.

     “Restricted Global Note” has the meaning provided in the Appendix.

     “Restricted Investment” means an Investment other than a Permitted Investment.

     “Restricted Notes Legend” means the legend set forth in Section 2.3(b)(i) of the Appendix.

     “Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an
Unrestricted Subsidiary. Notwithstanding anything in this Indenture to the contrary, Finance Corp.
shall be a Restricted Subsidiary of the Company.

     “Rule 144A” has the meaning provided in the Appendix.

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.,
or any successor to the rating agency business thereof.

     “SEC” means the Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Senior Debt” means

     (1) all Indebtedness of the Company or any of its Restricted Subsidiaries outstanding
under Credit Facilities and all obligations under Hedging Contracts with respect thereto;

     (2) any other Indebtedness of the Company or any of its Restricted Subsidiaries
permitted to be incurred under the terms of this Indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it is subordinated in right of
payment to the Notes or any Subsidiary Guarantee; and

     (3) all Obligations with respect to the items listed in the preceding clauses (1) and
(2).

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     Notwithstanding anything to the contrary in the preceding sentence, Senior Debt will not
include:

     (a) any intercompany Indebtedness of the Company or any of its Restricted Subsidiaries
to the Company or any of its Affiliates; or

     (b) any Indebtedness that is incurred in violation of this Indenture.

     For the avoidance of doubt, “Senior Debt” will not include any trade payables or taxes owed or
owing by the Company or any of its Restricted Subsidiaries.

     “Shelf Registration Statement” has the meaning provided in the Appendix.

     “Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as
defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as
such Regulation is in effect on the date of this Indenture.

     “Stated Maturity” means, with respect to any installment of interest or principal on any
series of Indebtedness, the date on which the payment of interest or principal was scheduled to be
paid in the original documentation governing such Indebtedness, and will not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

     “Subsidiary” means, with respect to any specified Person:

     (1) any corporation, association or other business entity (other than a partnership or
limited liability company) of which more than 50% of the total voting power of Voting Stock
is at the time owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person (or a combination thereof); and

     (2) any partnership (whether general or limited) or limited liability company (a) the
sole general partner or member of which is such Person or a Subsidiary of such Person, or
(b) if there is more than a single general partner or member, either (x) the only managing
general partners or managing members of which are such Person or one or more Subsidiaries of
such Person (or any combination thereof) or (y) such Person owns or controls, directly or
indirectly, a majority of the outstanding general partner interests, member interests or
other Voting Stock of such partnership or limited liability company, respectively.

     “Subsidiary Guarantee” means the joint and several guarantee pursuant to Article 10
hereof by a Guarantor of the Obligations of the Issuers under this Indenture and the Notes.

     “TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) and the rules and
regulations thereunder, as in effect on the date on which this Indenture is qualified under the TIA
(except as provided in Sections 9.01(i) and 9.03 hereof).

     “Transfer Restricted Securities” has the meaning provided in the Appendix.

32

 

     “Treasury Rate” means, as of any redemption date, the yield to maturity as of such redemption
date of United States Treasury securities with a constant maturity (as compiled and published in
the most recent Federal Reserve Statistical Release H.15(519) which has become publicly available
at least two Business Days prior to the redemption date (or, if such Statistical Release is no
longer published, any publicly available source of similar market data)) most nearly equal to the
period from the redemption date to May 15, 2015; provided, however, that if such period is not
equal to the constant maturity of a United States Treasury security for which a weekly average
yield is given, the Company shall obtain the Treasury Rate by linear interpolation (calculated to
the nearest one-twelfth of a year) from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the period from the redemption date to
May 15, 2015 is less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used. The Company will
(a) calculate the Treasury Rate on the second Business Day preceding the applicable redemption date
and (b) prior to such redemption date file with the Trustee an Officers’ Certificate setting forth
the Make Whole Premium and the Treasury Rate and showing the calculation of each in reasonable
detail.

     “Trustee” means the party named as such in the introductory paragraph hereto until a successor
replaces it in accordance with the applicable provisions of this Indenture, and thereafter means
the successor serving hereunder.

     “Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to
time.

     “Unrestricted Subsidiary” means any Subsidiary of the Company (other than Finance Corp.) that
is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary:

     (1) has no Indebtedness other than Non-Recourse Debt owing to any Person other than the
Company or any of its Restricted Subsidiaries;

     (2) is not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons who are not
Affiliates of the Company (excluding any agreement or transaction of the type described in
clauses (6), (10) and (12) of the covenant described in Section 4.11);

     (3) is a Person with respect to which neither the Company nor any of its Restricted
Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity
Interests or (b) to maintain or preserve such Person’s financial condition or to cause such
Person to achieve any specified levels of operating results; and

     (4) has not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries.

     Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced
to the Trustee by filing with the Trustee a Board Resolution giving effect to such

33

 

designation and an Officers’ Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07. If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will
thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date
under Section 4.09, the Company will be in default of such covenant.

     “Volumetric Production Payments” means production payment obligations recorded as deferred
revenue in accordance with GAAP, together with all related undertakings and obligations.

     “Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at
the time entitled (without regard to the occurrence of any contingency) to vote in the election of
the Board of Directors of such Person.

     “Weighted Average Life to Maturity” means, when applied to any Indebtedness or Disqualified
Stock at any date, the number of years obtained by dividing:

     (1) the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity or redemption, in respect of the Indebtedness
or Disqualified Stock, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment; by

     (2) the then outstanding aggregate principal amount of such Indebtedness or
Disqualified Stock.

Section 1.02 Other Definitions.

	 	 	 	 	 
	Term	 	Defined in Section
	“Affiliate Transaction”
	 	 	4.11	 
	“Appendix”
	 	 	2.01	 
	“Asset Sale Offer”
	 	 	3.09	 
	“Change of Control Offer”
	 	 	4.15	 
	“Change of Control Payment”
	 	 	4.15	 
	“Change of Control Purchase Date”
	 	 	4.15	 
	“Change of Control Settlement Date”
	 	 	4.15	 
	“Covenant Defeasance”
	 	 	8.03	 
	“Discharge”
	 	 	8.08	 
	“Event of Default”
	 	 	6.01	 
	“Excess Proceeds”
	 	 	4.10	 
	“Incremental Funds”
	 	 	4.07	 
	“incur”
	 	 	4.09	 
	“Legal Defeasance”
	 	 	8.02	 
	“Offer Amount”
	 	 	3.09	 
	“Offer Period”
	 	 	3.09	 

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	Term	 	Defined in Section
	“Paying Agent”
	 	 	2.03	 
	“Payment Default”
	 	 	6.01	 
	“Permitted Debt”
	 	 	4.09	 
	“Register”
	 	 	2.03	 
	“Registrar”
	 	 	2.03	 
	“Restricted Payments”
	 	 	4.07	 
	“Settlement Date”
	 	 	3.09	 
	“Termination Date”
	 	 	3.09	 

Section 1.03 Incorporation by Reference of Trust Indenture Act.

     Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture. Any terms incorporated in this Indenture that are
defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the
TIA have the meanings so assigned to them.

Section 1.04 Rules of Construction.

     Unless the context otherwise requires:

     (1) a term has the meaning assigned to it;

     (2) an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;

     (3) “or” is not exclusive;

     (4) words in the singular include the plural, and in the plural include the singular;

     (5) provisions apply to successive events and transactions;

     (6) references to sections of or rules under the Securities Act or the Exchange Act
shall be deemed to include substitute, replacement or successor sections or rules adopted by
the SEC from time to time;

     (7) “herein,” “hereof” and other words of similar import refer to this Indenture as a
whole (as amended or supplemented from time to time) and not to any particular Article,
Section or other subdivision of this Indenture; and

     (8) “including” means “including, without limitation.”

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ARTICLE 2

THE NOTES

Section 2.01 Form and Dating.

     Provisions relating to the Initial Notes and the Exchange Notes are set forth in the Rule
144A/Regulation S Appendix attached hereto (the “Appendix”) which is hereby incorporated in and
expressly made part of this Indenture. The Initial Notes and the Trustee’s certificate of
authentication therefor shall be substantially in the form of Exhibit 1 to the Appendix which is
hereby incorporated in and expressly made a part of this Indenture. The Exchange Notes and the
Trustee’s certificate of authentication therefor shall be substantially in the form of Exhibit 2 to
the Appendix, which is hereby incorporated in and expressly made a part of this Indenture. The
Notes may have notations, legends or endorsements required by law, stock exchange rule, agreements
to which an Issuer is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). Each Note shall be dated the date of its
authentication. The terms of the Notes set forth in the Appendix are part of the terms of this
Indenture.

Section 2.02 Execution and Authentication.

     An Officer of each Issuer shall sign the Notes on behalf of such Issuer by manual or facsimile
signature.

     If an Officer of either Issuer whose signature is on a Note no longer holds that office at the
time the Trustee authenticates the Note, the Note shall be valid nevertheless.

     A Note shall not be valid until an authorized signatory of the Trustee manually signs the
certificate of authentication on the Note. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.

     On the Initial Issuance Date, the Trustee shall authenticate and deliver $750,000,000 of
6.500% Senior Notes due 2019 and, at any time and from time to time thereafter, the Trustee shall
authenticate and deliver Notes for original issue in an aggregate principal amount specified in a
written order of the Issuers. Such order shall specify the amount of the Notes to be
authenticated, the date on which the original issue of Notes is to be authenticated and to whom the
Notes shall be registered and delivered and, in the case of an issuance of Additional Notes
pursuant to Section 2.13 after the Initial Issuance Date, shall certify that such issuance
is in compliance with Section 4.09.

     The Trustee may appoint an authenticating agent reasonably acceptable to the Issuers to
authenticate the Notes. Unless limited by the terms of such appointment, an authenticating agent
may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An authenticating agent has
the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

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Section 2.03 Registrar and Paying Agent.

     The Issuers shall at all times maintain an office or agency where Notes may be presented for
registration of transfer or for exchange (the “Registrar”) and an office or agency in New York, New
York where Notes may be presented for payment (the “Paying Agent”). The Registrar shall keep a
register of the Notes and of their transfer and exchange (the “Register”). The Issuers may have
one or more co-registrars and one or more additional paying agents. The term “Registrar” includes
any co-registrar, and the term “Paying Agent” includes any additional paying agent.

     The Issuers shall enter into an appropriate agency agreement with any Registrar or Paying
Agent not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement
shall implement the provisions of this Indenture that relate to such agent. The Issuers shall
notify the Trustee of the name and address of any such agent. If the Issuers fail to maintain a
Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate
compensation therefor pursuant to Section 7.07. The Company or any Subsidiary may act as
Paying Agent or Registrar.

     The Issuers initially appoint the Trustee as Registrar and Paying Agent in connection with the
Notes at the Corporate Trust Office of the Trustee.

Section 2.04 Paying Agent to Hold Money in Trust.

     Prior to 11:00 a.m. New York City time, on each due date of the principal and interest on any
Note, an Issuer shall deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Issuers shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of
Noteholders or the Trustee all money held by the Paying Agent for the payment of principal of or
interest on the Notes and shall notify the Trustee of any default by the Issuers in making any such
payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by
it as Paying Agent and hold it as a separate trust fund. The Issuers at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by
the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.

Section 2.05 Noteholder Lists.

     The Trustee shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of Noteholders. If the Trustee is not the
Registrar, the Issuers shall furnish to the Trustee in writing, at least five Business Days before
each interest payment date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names and addresses of
Noteholders.

Section 2.06 Transfer and Exchange.

     The Notes shall be issued in registered form and shall be transferable only upon the surrender
of a Note for registration of transfer. When a Note is presented to the Registrar or a

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co-registrar with a request to register a transfer, the Registrar shall register the transfer
as requested if the requirements of this Indenture and Section 8-401(a) of the Uniform Commercial
Code are met. When Notes are presented to the Registrar with a request to exchange them for an
equal principal amount of Notes of other denominations, the Registrar shall make the exchange as
requested if the same requirements are met. The Issuers may require payment of a sum sufficient to
cover any taxes, assessments or other governmental charges in connection with any transfer or
exchange pursuant to this Section (other than any such transfer taxes, assessments or similar
governmental charge payable upon exchange or transfer pursuant to Section 3.06,
4.10, 4.15 or 9.05).

Section 2.07 Replacement Notes.

     If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the
Note has been lost, destroyed or wrongfully taken, the Issuers shall issue and the Trustee shall
authenticate a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code
are met and the Holder satisfies any other reasonable requirements of the Trustee. If required by
the Trustee or the Issuers, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Issuers and the Trustee to protect the Issuers, the Trustee, the Paying Agent and the
Registrar from any loss which any of them may suffer if a Note is replaced. The Issuers and the
Trustee may charge the Holder for their expenses in replacing a Note. In the event any such Note
shall have matured, instead of issuing a new Note, the Trustee may pay the same without surrender
thereof upon the Holder furnishing the Issuers and the Trustee with indemnity satisfactory to them
and complying with such other reasonable regulations as the Trustee may prescribe and paying such
reasonable expenses as the Issuers and the Trustee may incur in connection therewith.

     Every replacement Note is an additional obligation of the Issuers.

Section 2.08 Outstanding Notes.

     Notes outstanding at any time are all Notes authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in this Section as not
outstanding. Except as otherwise provided in TIA § 316(a), a Note does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Note.

     If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the
Trustee, any provider of an indemnity bond and the Issuers receive proof satisfactory to them that
the replaced Note is held by a bona fide purchaser.

     If the Paying Agent segregates and holds in trust, in accordance with this Indenture, by 11:00
a.m. New York time, on a redemption date or other maturity date money sufficient to pay all
principal, interest, premium, and Additional Interest, if any, payable on that date with respect to
the Notes (or portions thereof) to be redeemed or maturing, as the case may be, then on and after
that date such Notes (or portions thereof) shall cease to be outstanding and interest and
Additional Interest, if any, on them shall cease to accrue.

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Section 2.09 Temporary Notes.

     Until definitive Notes are ready for delivery, the Issuers may prepare and the Trustee shall
authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive
Notes but may have variations that the Issuers consider appropriate for temporary Notes. Without
unreasonable delay, the Issuers shall prepare and the Trustee shall authenticate definitive Notes
and deliver them in exchange for temporary Notes.

Section 2.10 Cancellation.

     An Issuer at any time may deliver Notes to the Trustee for cancellation. The Registrar and
the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange, replacement or payment. The Trustee and no one else shall cancel and destroy
(subject to the record retention requirements of the Exchange Act) all Notes surrendered for
registration of transfer, exchange, replacement, payment or cancellation. Upon written request,
the Trustee will deliver a certificate of such cancellation to the Issuers unless the Issuers
direct the Trustee to deliver canceled Notes to the Issuers instead. The Issuers may not issue new
Notes to replace Notes they have redeemed, paid or delivered to the Trustee for cancellation.

Section 2.11 Defaulted Interest.

     If the Issuers default in a payment of interest on the Notes, the Issuers shall pay defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The
Issuers may pay the defaulted interest to the Persons who are Noteholders on a subsequent special
record date. The Issuers shall fix or cause to be fixed any such special record date and payment
date to the reasonable satisfaction of the Trustee and shall promptly mail to each Noteholder a
notice that states the special record date, the payment date and the amount of defaulted interest
to be paid.

Section 2.12 CUSIP Numbers.

     The Issuers in issuing the Notes may use “CUSIP” numbers and corresponding “ISINs” (if then
generally in use) and, if so, the Trustee shall use “CUSIP” numbers and corresponding “ISINs” in
notices of redemption as a convenience to Holders; provided, however, that any such notice may
state that no representation is made as to the correctness of such numbers either as printed on the
Notes or as contained in any notice of a redemption and that reliance may be placed only on the
other identification numbers printed on the Notes, and any such redemption shall not be affected by
any defect in or omission of such numbers.

Section 2.13 Issuance of Additional Notes.

     The Issuers shall be entitled, subject to their compliance with Section 4.09, to issue
Additional Notes under this Indenture which shall have identical terms as the Initial Notes issued
on the Initial Issuance Date, other than with respect to the date of issuance and issue price. The
Initial Notes issued on the Initial Issuance Date, and any Additional Notes and all Exchange Notes
issued in exchange therefor shall be treated as a single class for all purposes under this
Indenture, including, without limitation, waivers, consents, directions, declarations, amendments,
redemptions and offers to purchase.

39

 

     With respect to any Additional Notes, the Issuers shall set forth in an Officers’ Certificate,
which shall be delivered to the Trustee, the following information:

     (1) the aggregate principal amount of such Additional Notes to be authenticated and
delivered pursuant to this Indenture;

     (2) the issue price, the issue date (and the corresponding date from which interest
shall accrue thereon and the first interest payment date therefor) and the CUSIP number and
any corresponding ISIN of such Additional Notes; provided, however, that any issuance of
Additional Notes (i) is treated as part of the same issue as the Initial Notes within the
meaning of Treasury Regulation § 1.1275-1(f), (ii) is a qualified reopening of the Initial
Notes within the meaning of Treasury Regulation § 1.1275-2(k), or (iii) is otherwise
fungible with the Initial Notes for U.S. federal income tax purposes, in the case of each of
clauses (i), (ii) and (iii), so that such Additional Notes will trade as part of a single
class with the Initial Notes; and

     (3) whether such Additional Notes shall be Transfer Restricted Securities and issued in
the form of Initial Notes as set forth in Exhibit 1 to the Appendix or shall be issued in
the form of Exchange Notes as set forth in Exhibit 2 to the Appendix.

Section 2.14 Persons Deemed Owners.

     Prior to due presentment of a Note for registration of transfer, the Company, the Trustee, any
Agent or any other agent of the Company or the Trustee may treat the Person in whose name such Note
is registered as the absolute owner of such Note for the purpose of receiving payment of principal
of (and premium, if any) and interest on, such Note and for all other purposes whatsoever, whether
or not such Note be overdue, and neither the Company, the Trustee, any Agent nor any other agent of
the Company or the Trustee shall be affected by notice to the contrary.

ARTICLE 3

REDEMPTION AND PREPAYMENT

Section 3.01 Notices to Trustee.

     If the Issuers elect to redeem Notes pursuant to the optional redemption provisions of
Section 3.07 hereof, they shall furnish to the Trustee, at least five Business Days (unless
a shorter period shall be agreeable to the Trustee) before the date of giving notice of the
redemption pursuant to Section 3.03, an Officers’ Certificate setting forth (i) the clause
of Section 3.07 pursuant to which the redemption shall occur, (ii) the redemption date,
(iii) the principal amount of Notes to be redeemed, (iv) the redemption price, and (v) whether the
Issuers request that the Trustee give notice of such redemption. Any such notice may be cancelled
at any time prior to the mailing of notice of such redemption to any Holder and shall thereupon be
void and of no effect.

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Section 3.02 Selection of Notes to Be Redeemed.

     If less than all of the Notes are to be redeemed at any time, the Trustee shall select the
Notes to be redeemed among the Holders of the Notes as follows: (1) if the Notes are listed on any
national securities exchange, in compliance with the requirements of the principal national
securities exchange on which the Notes are listed; or (2) if the Notes are not listed on any
national securities exchange, on a pro rata basis (except that any notes represented by a note in
global form will be selected by such method as DTC may require). In the event of partial
redemption other than on a pro rata basis, the particular Notes to be redeemed shall be selected,
not less than five (5) Business Days (unless a shorter period shall be agreeable to the Trustee)
prior to the giving of notice of the redemption pursuant to Section 3.03, by the Trustee
from the outstanding Notes not previously called for redemption.

     The Trustee shall promptly notify the Issuers in writing of the Notes selected for redemption
and, in the case of any Note selected for partial redemption, the principal amount thereof to be
redeemed. Notes and portions of Notes selected shall be in amounts of $2,000 or whole multiples of
$1,000 in excess of $2,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be
redeemed. Provisions of this Indenture that apply to Notes called for redemption also apply to
portions of Notes called for redemption.

     The provisions of the two preceding paragraphs of this Section 3.02 shall not apply
with respect to any redemption affecting only a Global Note, whether such Global Note is to be
redeemed in whole or in part. In case of any such redemption in part, the unredeemed portion of
the principal amount of the Global Note shall be in an authorized denomination.

Section 3.03 Notice of Redemption.

     Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than
60 days before a redemption date (except that redemption notices may be mailed more than 60 days
prior to a redemption date if the notice is issued in connection with a Legal Defeasance, Covenant
Defeasance or Discharge), the Issuers shall mail or cause to be mailed, by first class mail, a
notice of redemption to each Holder whose Notes are to be redeemed at its registered address.

     The notice shall identify the Notes to be redeemed and shall state:

     (a) the redemption date;

     (b) the redemption price or, if the redemption price is not then determinable, the
manner in which it is to be determined;

     (c) if any Note is being redeemed in part, the portion of the principal amount of such
Note to be redeemed and that, after the redemption date upon surrender of such Note, a new
Note or Notes in a principal amount equal to the unredeemed portion shall be issued in the
name of the applicable Holder upon cancellation of the original Note;

     (d) the name and address of the Paying Agent;

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     (e) that Notes called for redemption must be surrendered to the Paying Agent to collect
the redemption price;

     (f) that, unless the Issuers default in making such redemption payment, interest and
Additional Interest, if any, on Notes called for redemption shall cease to accrue on and
after the redemption date and the only remaining right of the Holders of such Notes is to
receive payment of the redemption price upon surrender to the Paying Agent of the Notes
redeemed;

     (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the
Notes called for redemption are being redeemed; and

     (h) that no representation is made as to the correctness or accuracy of the CUSIP or
ISIN number, if any, listed in such notice or printed on the Notes.

     If any of the Notes to be redeemed is in the form of a Global Note, then the Issuers shall
modify such notice to the extent necessary to accord with the procedures of the Depository
applicable to redemption.

     At the Issuers’ request, the Trustee shall give the notice of optional redemption in the
Issuers’ names and at their expense; provided, however, that the Issuers shall have delivered to
the Trustee, as provided in Section 3.01, an Officers’ Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such notice as provided
in the second preceding paragraph.

Section 3.04 Effect of Notice of Redemption.

     Once notice of redemption is mailed in accordance with Section 3.03 hereof, subject to
the following sentence, Notes called for redemption become irrevocably due and payable on the
applicable redemption date at the applicable redemption price. Notice of any redemption,
including, without limitation, upon an Equity Offering, may, at the Company’s discretion, be
subject to one or more conditions precedent, including, but not limited to, completion of the
related Equity Offering. If mailed in the manner provided for in Section 3.03, the notice
of redemption shall be conclusively presumed to have been given whether or not a Holder receives
such notice. Failure to give timely notice or any defect in the notice shall not affect the
validity of the redemption.

Section 3.05 Deposit of Redemption Price.

     Prior to 11:00 a.m., New York City time, on the redemption date, the Issuers shall deposit
with the Paying Agent (or, if the Company or a Subsidiary thereof is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 2.04 hereof) money sufficient in
same day funds to pay the redemption price of and accrued interest and Additional Interest, if any,
on all Notes to be redeemed on that date. The Paying Agent shall promptly return to the Issuers
any money deposited with the Paying Agent by an Issuer in excess of the amounts necessary to pay
the redemption price of and accrued interest and Additional Interest, if any, on all Notes to be
redeemed.

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     If the Issuers comply with the provisions of the preceding paragraph, on and after the
redemption date, interest and Additional Interest, if any, shall cease to accrue on the Notes or
the portions of Notes called for redemption whether or not such Notes are presented for payment,
and the only remaining right of the Holders of such Notes shall be to receive payment of the
redemption price upon surrender to the Paying Agent of the Notes redeemed. If any Note called for
redemption shall not be so paid upon surrender for redemption because of the failure of an Issuer
to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the
redemption date until such principal is paid, and to the extent lawful, on any interest and
Additional Interest, if any, not paid on such unpaid principal, in each case at the rate provided
in the Notes and in Section 4.01 hereof.

Section 3.06 Notes Redeemed in Part.

     Upon surrender of a Note that is redeemed in part, the Issuers shall issue in the name of the
applicable Holder and the Trustee shall authenticate for such Holder at the expense of the Issuers
a new Note equal in principal amount to the unredeemed portion of the Note surrendered.

Section 3.07 Optional Redemption.

     (a) Except as set forth in clauses (b) and (c) of this Section 3.07, the
Issuers shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to May 15, 2015. On or after May 15, 2015, the Issuers shall have the option to
redeem the Notes, in whole or in part at any time, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid interest and
Additional Interest, if any, on the Notes redeemed to the applicable redemption date
(subject to the right of Holders of record on the relevant record date to receive interest
due on an interest payment date that is on or prior to the redemption date), if redeemed
during the twelve-month period beginning on May 15 of the years indicated below:

	 	 	 	 	 
	YEAR	 	PERCENTAGE
	2015
	 	 	103.250	%
	2016
	 	 	101.625	%
	2017 and thereafter
	 	 	100.0000	%

     (b) Notwithstanding the provisions of clause (a) of this Section 3.07, at any
time prior to May 15, 2014, the Issuers may on one or more occasions redeem up to 35% of the
aggregate principal amount of Notes (including any Additional Notes) issued under this
Indenture at a redemption price of 106.500% of the principal amount thereof, plus accrued
and unpaid interest, if any, and Additional Interest, if any, thereon to the redemption date
(subject to the right of Holders of record on the relevant record date to receive interest
due on an interest payment date that is on or prior to the redemption date), in an amount
equal to the net cash proceeds of one or more Equity Offerings, provided that, with respect
to each such redemption:

     (1) at least 65% of the aggregate principal amount of Notes (including any Additional
Notes) issued under this Indenture remains outstanding immediately after the

43

 

occurrence of such redemption (excluding any Notes held by the Company and its
Subsidiaries); and

     (2) such redemption occurs within 180 days after the date of the closing of the related
Equity Offering.

     (c) Prior to May 15, 2015, the Issuers may redeem on one or more occasions all or part
of the Notes at a redemption price equal to the sum of:

     (1) 100% of the principal amount thereof, plus

     (2) the Make Whole Premium at the redemption date, plus

     (3) accrued and unpaid interest, if any, to the redemption date (subject to the right
of Holders of record on the relevant record date to receive interest due on an interest
payment date that is on or prior to the redemption date).

     (d) Any redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Section 3.01 through Section 3.06 hereof.

Section 3.08 Mandatory Redemption.

     Except as set forth under Sections 4.10 and 4.15 hereof, neither of the
Issuers shall be required to make mandatory redemption or sinking fund payments with respect to the
Notes or to repurchase the Notes at the option of the Holders.

Section 3.09 Offer to Purchase by Application of Excess Proceeds.

     In the event that, pursuant to Section 4.10 hereof, the Company shall be required to
commence an offer to all Holders to purchase Notes (an “Asset Sale Offer”), it shall follow the
procedures specified below.

     The Asset Sale Offer shall remain open for a period of 20 Business Days following its
commencement and no longer, except to the extent that a longer period is required by Applicable Law
(the “Offer Period”). No later than five Business Days after the termination of the Offer Period
(the “Settlement Date”), the Company shall purchase and pay for the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the “Offer Amount”) or, if less
than the Offer Amount has been tendered, all Notes validly tendered in response to the Asset Sale
Offer. Payment for any Notes so purchased shall be made in the manner prescribed in the Notes.

     Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a
notice to each of the Holders, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset
Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the
terms of the Asset Sale Offer, shall state:

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     (a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and
Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open,
including the time and date the Asset Sale Offer will terminate (the “Termination Date”);

     (b) the Offer Amount and the purchase price;

     (c) that any Note not tendered or accepted for payment shall continue to accrue
interest and Additional Interest, if any;

     (d) that, unless the Company defaults in making such payment, any Note accepted for
payment pursuant to the Asset Sale Offer shall cease to accrue interest and Additional
Interest, if any, after the Settlement Date;

     (e) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer
shall be required to surrender the Note, properly endorsed for transfer, together with the
form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed and
such customary documents as the Company may reasonably request, to the Company or a Paying
Agent at the address specified in the notice, before the Termination Date;

     (f) that Holders shall be entitled to withdraw their election if the Company or the
Paying Agent, as the case may be, receives, prior to the Termination Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;

     (g) that, if the aggregate principal amount of Notes surrendered by Holders, and Pari
Passu Indebtedness surrendered by holders or lenders, collectively, exceeds the amount the
Company is required to repurchase, the Trustee shall select the Notes and Pari Passu
Indebtedness to be purchased on a pro rata basis on the basis of the aggregate principal
amount of tendered Notes and Pari Passu Indebtedness (with such adjustments as may be deemed
appropriate by the Trustee so that only Notes in denominations of $2,000, or integral
multiples of $1,000 in excess of $2,000, shall be purchased); and

     (h) that Holders whose Notes were purchased only in part shall be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $2,000 in principal amount or an integral multiple of
$1,000 in excess of $2,000.

     If any of the Notes subject to an Asset Sale Offer is in the form of a Global Note, then the
Company shall modify such notice to the extent necessary to accord with the procedures of the
Depository applicable to repurchases.

     Promptly after the Termination Date, the Company shall, to the extent lawful, accept for
payment Notes or portions thereof tendered pursuant to the Asset Sale Offer in the aggregate
principal amount required by Section 4.10 hereof, and prior to the Settlement Date it shall
deliver to the Trustee an Officers’ Certificate stating that such Notes or portions thereof were
accepted for payment by the Company in accordance with the terms of this Section 3.09 and
Section 4.10.

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Prior to 11:00 a.m., New York City time, on the Settlement Date, the Company or the Paying
Agent, as the case may be, shall mail or deliver to each tendering Holder an amount equal to the
purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and
the Company shall issue a new Note, and the Trustee shall authenticate and mail or deliver such new
Note to such Holder, in a principal amount equal to any unpurchased portion of the Note
surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on or
before the Settlement Date.

ARTICLE 4

COVENANTS

Section 4.01 Payment of Notes.

     The Issuers shall pay or cause to be paid the principal of, interest, premium, and Additional
Interest, if any, on, the Notes on the dates and in the manner provided in the Notes. Principal,
interest, premium, and Additional Interest, if any, 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 by an Issuer or a Guarantor in immediately available
funds and designated for and sufficient to pay all principal, interest, premium, and Additional
Interest, if any, then due.

     The Issuers shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate specified therefor in the Notes to the extent
lawful; and they shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Additional Interest, if any (without regard
to any applicable grace period), at the same rate to the extent lawful.

Section 4.02 Maintenance of Office or Agency.

     The Issuers shall maintain an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee) in New York, New York where Notes may be presented or surrendered for
payment and they shall maintain an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee) where Notes may be surrendered for registration of transfer or for
exchange and where notices and demands to or upon the Issuers in respect of the Notes and this
Indenture may be served. The Issuers shall 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 Issuers
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.

     The Issuers may also from time to time designate one or more other offices or agencies where
the Notes may be presented or surrendered for any or all such purposes and may from time to time
rescind such designations. Further, if at any time there shall be no such office or agency in the
City of New York where the Notes may be presented or surrendered for payment, the Issuers shall
forthwith designate and maintain such an office or agency in the City of New York, in order that
the Notes shall at all times be payable in the City of New York. The Issuers

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shall 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.

     The Issuers hereby designate the Corporate Trust Office of the Trustee as one such office or
agency of the Company in accordance with Section 2.03.

     With respect to any Global Notes, the Corporate Trust Office of the Trustee shall be the
office or agency where such Global Notes may be presented or surrendered for payment or for
registration of transfer or exchange, or where successor Notes may be delivered in exchange
therefor; provided, however, that any such presentation, surrender or delivery effected pursuant to
the Applicable Procedures of the Depository shall be deemed to have been effected at such office or
agency in accordance with the provisions of this Indenture.

Section 4.03 Reports.

     (a) Notwithstanding that the Company may not be subject to the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act, so long as any Notes are outstanding, the Company
will file with the SEC for public availability within the time periods specified in the SEC’s rules
and regulations (unless the SEC will not accept such a filing, in which case the Company will
furnish to the Trustee and, upon its prior request, to any of the Holders of the Notes, within the
time periods specified in the SEC’s rules and regulations):

     (1) all quarterly and annual financial information with respect to the Company and its
Subsidiaries that would be required to be contained in a filing with the SEC on Forms 10-Q
and 10-K if the Company were required to file such forms, including a “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and, with respect
to the annual information only, a report thereon by the Company’s certified independent
accountants; and

     (2) all current reports that would be required to be filed with the SEC on Form 8-K if
the Company were required to file such reports.

The Company shall at all times comply with TIA § 314(a).

     (b) For as long as the Notes remain outstanding, if at any time the Company is not
required to file the reports required by this Section 4.03 with the SEC, the Company
and the Guarantors shall furnish to the Holders of the Notes, and to securities analysts and
prospective investors in the Notes, upon their request, the information, if any, required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act. The Company will be
deemed to have provided such information to the Holders of the Notes, securities analysts
and prospective investors in the Notes if it has filed reports containing such information
with the SEC via the EDGAR filing system and such reports are publicly available.

     (c) If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries,
then, to the extent material, the quarterly and annual financial information required by
paragraph (a) of this Section 4.03 shall include a reasonably detailed presentation,
either on the face of the financial statements or in the footnotes to the

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financial statements and in Management’s Discussion and Analysis of Financial Condition
and Results of Operations, of the financial condition and results of operations of the
Company and its Restricted Subsidiaries separate from the financial condition and results of
operations of the Unrestricted Subsidiaries of the Company.

     (d) Delivery of reports, information and documents to the Trustee under this Section is
for informational purposes only and the Trustee’s receipt of the foregoing shall not
constitute constructive notice of any information contained therein or determinable from
information contained therein.

Section 4.04 Compliance Certificate.

     (a) The Issuers shall deliver to the Trustee, within 90 days after the end of each
fiscal year ending on or after December 31, 2011, an Officers’ Certificate stating that a
review of the activities of the Issuers and their Restricted Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Issuers have kept, observed, performed and fulfilled their
obligations under this Indenture, and further stating, as to each such Officer signing such
certificate, that, to the best of his or her knowledge, the Issuers have kept, observed,
performed and fulfilled each and every covenant contained in this Indenture and are not in
default in the performance or observance of any of the terms, provisions and conditions of
this Indenture (or, if a Default or Event of Default shall have occurred, describing all
such Defaults or Events of Default of which he or she may have knowledge and what action the
Issuers are taking or propose to take with respect thereto).

     (b) The Issuers shall, so long as any of the Notes are outstanding, deliver to the
Trustee, forthwith upon any of their respective Officers becoming aware of any Default or
Event of Default, an Officers’ Certificate specifying such Default or Event of Default and
what action the Issuers are taking or propose to take with respect thereto.

Section 4.05 Taxes.

     The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency,
all material taxes, assessments, and governmental levies except such as are contested in good faith
and by appropriate proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Notes.

Section 4.06 Stay, Extension and Usury Laws.

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

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Section 4.07 Limitation on Restricted Payments.

     The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly:

     (1) declare or pay any dividend or make any other payment or distribution on account of
the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation involving the Company
or any of its Restricted Subsidiaries) or to the holders of the Company’s or any of its
Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of the Company or
payable to the Company or a Restricted Subsidiary of the Company);

     (2) purchase, redeem or otherwise acquire or retire for value (including, without
limitation, in connection with any merger or consolidation involving the Company) any Equity
Interests of the Company or any direct or indirect parent of the Company (other than in
exchange for Capital Stock of the Company (other than Disqualified Stock));

     (3) make any principal payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated in right of
payment to the Notes or any Subsidiary Guarantee (excluding (a) any intercompany
Indebtedness between or among the Company and any of its Restricted Subsidiaries, (b) the
purchase, redemption, defeasance, repurchase or other acquisition or retirement for value of
Indebtedness that is subordinated in right of payment to the Notes or the Subsidiary
Guarantees purchased, redeemed, defeased or otherwise acquired or retired for value in
anticipation of satisfying a sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of purchase, redemption, defeasance,
repurchase or other acquisition or retirement for value, and (c) any payment of principal at
the Stated Maturity thereof); or

     (4) make any Restricted Investment (all such payments and other actions set forth in
these clauses (1) through (4) being collectively referred to as “Restricted Payments”),

unless, at the time of and after giving effect to such Restricted Payment, no Default (except a
Reporting Default) or Event of Default has occurred and is continuing or would occur as a
consequence of such Restricted Payment and either:

     (I) if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full
fiscal quarters for which internal financial statements are available at the time of such
Restricted Payment is not less than 2.25 to 1.0, such Restricted Payment, together with the
aggregate amount of all other Restricted Payments made by the Company and its Restricted
Subsidiaries (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (8),
(9), (11) and (12) of the next succeeding paragraph) with

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respect to the quarter for which such Restricted Payment is made, is less than the sum,
without duplication, of:

     (a) Available Cash as of the end of the Company’s preceding fiscal quarter,
plus

     (b) 100% of the aggregate net cash proceeds and the fair market value of any
Capital Stock of Persons engaged primarily in the Oil and Gas Business or any other
assets that are used or useful in the Oil and Gas Business, in each case received by
the Company after the Measurement Date as a contribution to its common equity
capital or from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale of convertible or exchangeable
Disqualified Stock or convertible or exchangeable debt securities of the Company
that have been converted into or exchanged for such Equity Interests (other than
Equity Interests (or Disqualified Stock or debt securities) sold to a Restricted
Subsidiary of the Company), plus

     (c) the amount equal to the net reduction in Restricted Investments made by the
Company or any of its Restricted Subsidiaries in any Person since the Measurement
Date resulting from:

     (i) repurchases or redemptions of such Restricted Investments by such
Person, proceeds realized upon the sale of such Restricted Investment to a
purchaser other than the Company or a Subsidiary of the Company, repayments
of loans or advances or other transfers of assets (including by way of
dividend or distribution) by such Person to the Company or any Restricted
Subsidiary of the Company; plus

     (ii) the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries or the merger or consolidation of an Unrestricted Subsidiary
with and into, or the transfer of its assets to, or liquidation into, the
Company or any Restricted Subsidiary (valued in each case as provided in the
definition of “Investment”) not to exceed, in the case of any Unrestricted
Subsidiary, the amount of Restricted Investments previously made by the
Company or any Restricted Subsidiary of the Company in such Unrestricted
Subsidiary; plus

     (iii) any amount which previously qualified as a Restricted Payment on
account of any guarantee entered into by the Company or any Restricted
Subsidiary after the Issue Date, to the extent that such guarantee has not
been called upon and the obligation arising under such guarantee no longer
exists or has been reduced; plus

     (iv) the Company or any Restricted Subsidiary making any Investment in
a Person that, as a result of or in connection with such Investment, becomes
a Restricted Subsidiary or is merged or consolidated with the Company or a
Restricted Subsidiary, to the extent of the

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Company’s or any Restricted Subsidiary’s Restricted Investment in such
Person prior to the time it became a Restricted Subsidiary or the time of
such merger or consolidation,

in each case to the extent such amounts have not been included in Available Cash for
any period commencing on or after the Measurement Date (items (b) and (c) being
referred to as “Incremental Funds”), minus

     (d) the aggregate amount of Incremental Funds previously expended pursuant to
this clause (I) and clause (II) below; or

     (II) if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full
fiscal quarters for which internal financial statements are available at the time of such
Restricted Payment is less than 2.25 to 1.0, such Restricted Payment, together with the
aggregate amount of all other Restricted Payments made by the Company and its Restricted
Subsidiaries (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (8),
(9), (11) and (12) of the next succeeding paragraph) with respect to the quarter for which
such Restricted Payment is made (such Restricted Payments for purposes of this clause (II)
meaning only distributions on units of the Company), is less than the sum, without
duplication, of:

     (a) $500.0 million less the aggregate amount of all prior Restricted Payments
made by the Company and its Restricted Subsidiaries pursuant to this clause (II)(a)
since the date of this Indenture, plus

     (b) Incremental Funds to the extent not previously expended pursuant to this
clause (II) or clause (I) above.

     The preceding provisions will not prohibit:

     (1) the payment of any dividend or distribution within 60 days after the date of its
declaration, if at the date of declaration the payment would have complied with the
provisions of this Indenture;

     (2) the redemption, repurchase, retirement, defeasance or other acquisition of any
subordinated Indebtedness or Disqualified Stock of the Company or any Restricted Subsidiary
or of any Equity Interests of the Company in exchange for, or out of the net cash proceeds
of the substantially concurrent (a) contribution (other than from a Restricted Subsidiary of
the Company) to the equity capital of the Company or (b) sale (other than to a Restricted
Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified
Stock), with a sale being deemed substantially concurrent if such redemption, repurchase,
retirement, defeasance or acquisition occurs not more than 120 days after such sale;
provided, however, that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition will be excluded or
deducted from the calculation of Available Cash and Incremental Funds;

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     (3) the defeasance, redemption, repurchase, retirement or other acquisition of
subordinated Indebtedness of the Company or any Restricted Subsidiary with the net cash
proceeds from a substantially concurrent incurrence of, or in exchange for, Permitted
Refinancing Indebtedness, with an incurrence of Permitted Refinancing Indebtedness being
deemed substantially concurrent if such defeasance, redemption, repurchase, retirement or
acquisition occurs not more than 120 days after such incurrence;

     (4) the payment of any dividend or distribution by a Restricted Subsidiary of the
Company to the holders of such Restricted Subsidiary’s Equity Interests on a pro rata basis
or on a basis more favorable to the Company or a Restricted Subsidiary;

     (5) so long as no Default (other than a Reporting Default) or Event of Default shall
have occurred and be continuing or would be caused thereby, the repurchase, redemption or
other acquisition or retirement for value of any Equity Interests of the Company or any
Restricted Subsidiary of the Company pursuant to any director or employee equity
subscription agreement or equity option agreement or other employee benefit plan or to
satisfy obligations under any Equity Interests appreciation rights or option plan or similar
arrangement; provided, however, that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests may not exceed $3.0 million in any calendar
year (with any portion of such $3.0 million amount that is unused in any calendar year to be
carried forward to successive calendar years and added to such amount) plus, to the extent
not previously applied or included,

     (a) the cash proceeds received by the Company or any of its Restricted
Subsidiaries from sales of Equity Interests of the Company to employees or directors
of the Company or its Affiliates that occur after the date of this Indenture (to the
extent the cash proceeds from the sale of such Equity Interests have not otherwise
been applied to the payment of Restricted Payments by virtue of clauses (I)(b) or
(II)(b) of the first paragraph of this Section 4.07); and

     (b) the cash proceeds of key man life insurance policies received by the
Company or any of its Restricted Subsidiaries after the date of this Indenture.

     (6) any purchase, redemption, defeasance, retirement or other acquisition of
Indebtedness that is subordinated in right of payment to the Notes or a Subsidiary Guarantee
at a purchase price not greater than (i) 101% of the principal amount of such subordinated
Indebtedness in the event of a Change of Control or (ii) 100% of the principal amount of
such subordinated Indebtedness in the event of an Asset Sale, in each case plus accrued and
unpaid interest thereon, in connection with any change of control offer or asset sale offer
required by the terms of such Indebtedness, but only if:

     (a) in the case of a Change of Control, the Company has first complied with and
fully satisfied its obligations under Section 4.15; or

     (b) in the case of an Asset Sale, the Company has complied with and fully
satisfied its obligations in accordance with Section 4.10;

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     (7) the repurchase, redemption or other acquisition for value of Equity Interests of
the Company or any Restricted Subsidiary of the Company representing fractional shares of
such Equity Interests in connection with a merger or consolidation involving the Company or
such Restricted Subsidiary or any other transaction permitted by this Indenture;

     (8) repurchases of Equity Interests deemed to occur upon the exercise or conversion of
stock options, warrants or other convertible securities if such Equity Interests represent a
portion of the exercise or conversion price thereof;

     (9) the defeasance, repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by
any current or former officers, directors or employees of the Company or any of its
Restricted Subsidiaries in connection with the exercise or vesting of any equity
compensation (including, without limitation, stock options, restricted stock and phantom
stock) in order to satisfy any tax withholding obligation with respect to such exercise or
vesting;

     (10) any payments in connection with a consolidation, merger or transfer of assets in
connection with a transaction that is not prohibited by this Indenture not to exceed $10.0
million since the date of this Indenture;

     (11) Equity Repurchases on or after the date of this Indenture that, when combined with
any Equity Repurchases made pursuant to this clause (11) on or after the Measurement Date
and prior to the date of this Indenture, are in an aggregate amount not in excess of $100.0
million; or

     (12) so long as no Default (other than a Reporting Default) or Event of Default shall
have occurred and be continuing or would be caused thereby, other Restricted Payments in an
aggregate amount not to exceed at any one time outstanding the greater of (i) $50.0 million
and (ii) 1.0% of the Company’s Adjusted Consolidated Net Tangible Assets determined as of
the date of such Restricted Payment (after giving effect to any dividends, interest
payments, return of capital and subsequent reduction in the amount of any Investments made
pursuant to this clause as a result of the repayment or other disposition thereof, in an
amount not to exceed the amount of such Investments previously made pursuant to in this
clause); provided, however, that if any Investment pursuant to this clause (12) is made in
any Person that is not a Restricted Subsidiary of the Company at the date of the making of
such Investment and such Person becomes a Restricted Subsidiary of the Company after such
date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) of
the definition of “Permitted Investments” and shall cease to have been made pursuant to this
clause (12) for so long as such Person continues to be a Restricted Subsidiary.

     The amount of all Restricted Payments (other than cash) will be the fair market value on the
date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued
by the Company or any of its Restricted Subsidiaries, as the case may be, pursuant to the
Restricted Payment, except that the amount of a non-cash Restricted Payment referred to in

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clause (1) will be the Fair Market Value on the date of declaration. The fair market value of
any assets or securities that are required to be valued by this covenant will be determined, in the
case of amounts in excess of $25.0 million but no greater than $50.0 million, by an officer of the
Company and, in the case of amounts over $50.0 million, by the Board of Directors of the Company,
whose determination shall be evidenced by a Board Resolution. For purposes of determining
compliance with this Section 4.07, (x) in the event that a Restricted Payment meets the
criteria of more than one of the categories of Restricted Payments described in the preceding
clauses (1) — (12), the Company will be permitted to divide or classify (or later divide, classify
or reclassify in whole or in part in its sole discretion) such Restricted Payment in any manner
that complies with this Section 4.07; and (y) in the event a Restricted Payment is made
pursuant to clause (I) or (II) of the second preceding paragraph, the Company will be permitted to
classify whether all or any portion thereof is being (and in the absence of such classification
shall be deemed to have classified the minimum amount possible as having been) made with
Incremental Funds.

Section 4.08      Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries.

     The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create or permit to exist or become effective any consensual encumbrance or restriction
on the ability of any Restricted Subsidiary of the Company to:

     (1) pay dividends or make any other distributions on its Capital Stock to the Company
or any of its Restricted Subsidiaries, or pay any Indebtedness or other obligations owed to
the Company or any of its Restricted Subsidiaries;

     (2) make loans or advances to the Company or any of its Restricted Subsidiaries; or

     (3) sell, lease or transfer any of its properties or assets to the Company or any of
its Restricted Subsidiaries.

     However, the preceding restrictions of this Section 4.08 will not apply to
encumbrances or restrictions existing under or by reason of:

     (1) agreements (including in respect of any Credit Facilities) as in effect on the date
of this Indenture and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of those agreements (or the agreements
referred to in this clause (1)) or the Indebtedness to which those agreements (or the
agreements referred to in this clause (1)) relate, provided that the amendments,
modifications, restatements, renewals, increases, supplements, refundings, replacements or
refinancings are no more restrictive, taken as a whole, with respect to such dividend,
distribution and other payment restrictions than those contained in those agreements on the
date of this Indenture, as determined by the Board of Directors of the Company in its
reasonable and good faith judgment;

     (2) this Indenture, the Notes and the Subsidiary Guarantees;

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     (3) Applicable Law or similar restriction;

     (4) any instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness or Capital Stock was incurred in connection with or
in contemplation of such acquisition), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired; provided that, in the case of Indebtedness,
such Indebtedness was otherwise permitted by the terms of this Indenture to be incurred;

     (5) instruments governing other Indebtedness of the Company or any of its Restricted
Subsidiaries permitted to be incurred pursuant to an agreement entered into subsequent to
the date of this Indenture in accordance with Section 4.09; provided that the
provisions relating to such encumbrance or restriction contained in such instruments are not
materially more restrictive, taken as a whole, than the provisions contained in the Credit
Agreement and in this Indenture as in effect on the date of this Indenture, as determined by
the Board of Directors of the Company in its reasonable and good faith judgment;

     (6) customary non-assignment provisions in Hydrocarbon purchase and sale or exchange
agreements or similar operational agreements or in licenses or leases, in each case entered
into in the ordinary course of business;

     (7) Capital Lease Obligations, mortgage financings or purchase money obligations, in
each case for property acquired in the ordinary course of business that impose restrictions
on that property purchased or leased of the nature described in clause (3) of the preceding
paragraph;

     (8) any agreement for the sale or other disposition of a Restricted Subsidiary of the
Company that restricts distributions by that Restricted Subsidiary pending its sale or other
disposition;

     (9) Permitted Refinancing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are not materially more
restrictive, taken as a whole, than those contained in the agreements governing the
Indebtedness being refinanced, as determined by the Board of Directors of the Company in its
reasonable and good faith judgment;

     (10) Liens securing Indebtedness otherwise permitted to be incurred under the
provisions of Section 4.12 that limit the right of the debtor to dispose of the
assets subject to such Liens;

     (11) provisions limiting the disposition or distribution of assets or property in joint
venture agreements, asset sale agreements, stock sale agreements and other similar
agreements entered into (a) in the ordinary course of business, or (b) with the approval of
the Company’s Board of Directors, which limitations are applicable only to the assets or
property that are the subject of such agreements;

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     (12) any agreement or instrument relating to any property or assets acquired after the
date of this Indenture, so long as such encumbrance or restriction relates only to the
property or assets so acquired and is not and was not created in anticipation of such
acquisition;

     (13) restrictions on cash, Cash Equivalents or other deposits or net worth imposed by
customers or lessors under contracts or leases entered into in the ordinary course of
business;

     (14) customary encumbrances and restrictions contained in agreements of the types
described in the definition of “Permitted Business Investments”;

     (15) Hedging Contracts permitted from time to time under this Indenture;

     (16) the issuance of preferred securities by a Restricted Subsidiary of the Company or
the payment of dividends thereon in accordance with the terms thereof; provided that
issuance of such preferred securities is permitted pursuant to Section 4.09 and the
terms of such preferred securities do not expressly restrict the ability of a Restricted
Subsidiary of the Company to pay dividends or make any other distributions on its Equity
Interests (other than requirements to pay dividends or liquidation preferences on such
preferred securities prior to paying any dividends or making any other distributions on such
other Equity Interests); and

     (17) any Permitted Investment.

Section 4.09      Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock.

     The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness, the
Company will not issue any Disqualified Stock, and the Company will not permit any of its
Restricted Subsidiaries to issue any preferred securities; provided, however, that the Company and
any of its Restricted Subsidiaries may incur Indebtedness or the Company may issue Disqualified
Stock, if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal
quarters for which internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock is issued, as the case
may be, would have been at least 2.25 to 1.0, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional Indebtedness had been
incurred or Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.

     The first paragraph of this Section 4.09 will not prohibit the incurrence of any of
the following items of Indebtedness or the issuance of any Disqualified Stock described in clause
(5), (12) or (15) or any preferred securities described in clause (11) below (collectively,
“Permitted Debt”):

     (1) the incurrence by the Company or any of its Restricted Subsidiaries of additional
Indebtedness (including letters of credit) under one or more Credit Facilities,

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provided that, after giving effect to any such incurrence, the aggregate principal
amount of all Indebtedness incurred under this clause (1) (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability of the Company
and its Subsidiaries thereunder) and then outstanding does not exceed the greater of (a)
$2.0 billion and (b) an amount equal to 35.0% of the Company’s Adjusted Consolidated Net
Tangible Assets determined as of the date of such incurrence;

     (2) the incurrence by the Company or its Restricted Subsidiaries of the Existing
Indebtedness;

     (3) the incurrence by the Company and the Guarantors of Indebtedness represented by (a)
the Notes issued and sold on the Initial Issuance Date and the related Subsidiary Guarantees
to be issued on the Initial Issuance Date and (b) the Exchange Notes and the related
Subsidiary Guarantees to be issued pursuant to any Registration Rights Agreement;

     (4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
represented by Capital Lease Obligations, mortgage financings or purchase money obligations,
in each case incurred for the purpose of financing all or any part of the purchase price or
cost of construction or improvement of property, plant or equipment used in the business of
the Company or such Restricted Subsidiary and related financing costs, and Attributable Debt
in respect of sale and leaseback transactions, including all Permitted Refinancing
Indebtedness incurred to extend, refinance, renew, replace, defease, refund, discharge or
otherwise retire for value any Indebtedness incurred pursuant to this clause (4), provided
that after giving effect to any such incurrence, the aggregate principal amount of all
Indebtedness incurred pursuant to this clause (4) and then outstanding does not exceed the
greater of (a) $50.0 million and (b) 1.0% of the Company’s Adjusted Consolidated Net
Tangible Assets determined as of the date of such incurrence;

     (5) the incurrence or issuance by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease, discharge, refund or otherwise retire for value,
in whole or in part, Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness) or Disqualified Stock of the Company, in each case
that was permitted by this Indenture to be incurred under this Indenture (including
Indebtedness previously incurred pursuant to this clause (5));

     (6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany
Indebtedness between or among any of the Company and any of its Restricted Subsidiaries;
provided, however, that:

     (a) if the Company is the obligor on such Indebtedness and a Guarantor is not
the obligee, such Indebtedness must be expressly subordinated to the prior payment
in full in cash of all Obligations with respect to the Notes, or if a Guarantor is
the obligor on such Indebtedness and neither the Company nor another Guarantor is
the obligee, such Indebtedness must be expressly

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subordinated to the prior payment in full in cash of all Obligations with
respect to the Subsidiary Guarantee of such Guarantor; and

     (b) (i) any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than the Company or a Restricted
Subsidiary of the Company and (ii) any sale or other transfer of any such
Indebtedness to a Person that is neither the Company nor a Restricted Subsidiary of
the Company will be deemed, in each case, to constitute an incurrence (as of the
date of such issuance, sale or transfer) of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that was not permitted by this clause
(6);

     (7) the incurrence by the Company or any of its Restricted Subsidiaries of obligations
under Hedging Contracts;

     (8) the guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness
of the Company or any of its Restricted Subsidiaries that was permitted to be incurred by
another provision of this Section 4.09;

     (9) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
relating to net gas balancing positions arising in the ordinary course of business and
consistent with past practice;

     (10) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness in respect of bid, performance, surety and similar bonds issued for the account
of the Company and any of its Restricted Subsidiaries in the ordinary course of business,
including guarantees and obligations of the Company or any of its Restricted Subsidiaries
with respect to letters of credit supporting such obligations (in each case other than an
obligation for money borrowed);

     (11) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to
any of its Restricted Subsidiaries of any preferred securities; provided, however, that:

     (a) any subsequent issuance or transfer of Equity Interests that results in any
such preferred securities being held by a Person other than the Company or a
Restricted Subsidiary of the Company; and

     (b) any sale or other transfer of any such preferred securities to a Person
that is not either the Company or a Restricted Subsidiary of the Company shall be
deemed, in each case, to constitute an issuance (as of the date of such issuance,
sale or transfer) of such preferred securities by such Restricted Subsidiary that
was not permitted by this clause (11);

     (12) Permitted Acquisition Indebtedness;

     (13) the incurrence by the Company or its Restricted Subsidiaries of Indebtedness
arising from the honoring by a bank or other financial institution of a check,

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draft or similar instrument inadvertently drawn against insufficient funds in the
ordinary course of business;

     (14) the incurrence by the Company or its Restricted Subsidiaries of Indebtedness
consisting of the financing of insurance premiums in customary amounts consistent with the
operations and business of the Company and the Restricted Subsidiaries;

     (15) accounts payable or other obligations of the Company or any of its Restricted
Subsidiaries to trade creditors created or assumed by the Company or such Restricted
Subsidiary in the ordinary course of business in connection with the obtaining of goods or
services;

     (16) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness arising from agreements of the Company or any Restricted Subsidiary of the
Company providing for indemnification, adjustment of purchase price, earn outs, or similar
obligations, in each case, incurred or assumed in connection with the disposition or
acquisition of any business, assets or Capital Stock of a Subsidiary in a transaction
permitted by this Indenture, other than guarantees of Indebtedness incurred or assumed by
any Person acquiring all or any portion of such business, assets or Subsidiary for the
purpose of financing such acquisition; and

     (17) the incurrence by the Company or any of its Restricted Subsidiaries of additional
Indebtedness or the issuance by the Company of additional Disqualified Stock, provided that,
after giving effect to any such incurrence or issuance, the aggregate principal amount of
all Indebtedness and Disqualified Stock incurred or issued under this clause (17) and then
outstanding does not exceed the greater of (a) $100.0 million and (b) 2.0% of the Company’s
Adjusted Consolidated Net Tangible Assets determined as of the date of such incurrence or
issuance.

     For purposes of determining compliance with this Section 4.09, in the event that an
item of Indebtedness or Disqualified Stock meets the criteria of more than one of the categories of
Permitted Debt described in clauses (1) through (17) above, or is entitled to be incurred or issued
pursuant to the first paragraph of this Section 4.09, the Company will be permitted to
divide and classify (or later classify, reclassify or re-divide in whole or in part in its sole
discretion) such item of Indebtedness or Disqualified Stock in any manner that complies with this
Section 4.09. Any Indebtedness under Credit Facilities on the date of this Indenture shall
be considered incurred under the first paragraph of this Section 4.09. For purposes of
determining any particular amount of Indebtedness under this covenant, (i) guarantees of, or
obligations in respect of letters of credit relating to, Indebtedness otherwise included in the
determination of such amount shall not also be included and (ii) if obligations in respect of
letters of credit are incurred pursuant to a Credit Facility and are being treated as incurred
pursuant to clause (1) of the definition of “Permitted Debt” and the letters of credit relate to
other Indebtedness, then such other Indebtedness shall not be included.

     The accrual of interest, the accretion or amortization of original issue discount, the payment
of interest on any Indebtedness in the form of additional Indebtedness with the same

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terms, and the payment of dividends on Disqualified Stock or preferred securities in the form
of additional shares of the same class of Disqualified Stock or preferred securities will not be
deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred
securities for purposes of this Section 4.09, provided, in each such case, that the amount
thereof is included in Fixed Charges of the Company as accrued.

Section 4.10      Limitation on Asset Sales.

     The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an
Asset Sale unless:

     (1) the Company (or the Restricted Subsidiary, as the case may be) receives
consideration (including by way of relief from, or any Person assuming responsibilities for,
any liabilities, contingent or otherwise), determined on the date of contractually agreeing
to such Asset Sale, at least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of; and

     (2) at least 75% of the aggregate consideration received by the Company and its
Restricted Subsidiaries in the Asset Sale (determined on the date of contractually agreeing
to such Asset Sale) and all other Asset Sales since the date of this indenture, on a
cumulative basis, is in the form of cash or Cash Equivalents. For purposes of this
provision, each of the following will be deemed to be cash:

     (a) any liabilities, as shown on the Company’s or such Restricted Subsidiary’s
most recent balance sheet, of the Company or any Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated in right of payment
to the Notes or any Subsidiary Guarantee) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the Company or
such Subsidiary from further liability;

     (b) any securities, notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are, within 180 days after the
Asset Sale, converted by the Company or such Subsidiary into cash, to the extent of
the cash received in that conversion; and

     (c) accounts receivable of a business retained by the company or any of its
Restricted Subsidiaries, as the case may be, following the sale of such business,
provided that such accounts receivable (i) are not past due more than 90 days and
(ii) do not have a payment date greater than 120 days from the date of the invoices
creating such accounts receivable.

     Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company (or the
applicable Restricted Subsidiary, as the case may be) may apply those Net Proceeds at its option to
any combination of the following:

     (I) to prepay, repay, redeem, defease or repurchase Senior Debt, including the notes;

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     (II) to invest in or acquire Additional Assets; or

     (III) to make capital expenditures in respect of the Company’s or its Restricted
Subsidiaries’ Oil and Gas Business.

     The requirement of clause (II) or (III) of the preceding paragraph shall be deemed to be
satisfied if a bona fide binding contract committing to make the investment, acquisition or
expenditure referred to therein is entered into by the Company or any of its Restricted
Subsidiaries with a Person other than an Affiliate of the Company within the time period specified
in the preceding paragraph and such Net Proceeds are subsequently applied in accordance with such
contract within six months following the date such agreement is entered into.

     Pending the final application of any Net Proceeds, the Company or any Restricted Subsidiary of
the Company may temporarily reduce Indebtedness or otherwise invest the Net Proceeds in any manner
that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not applied
or invested as provided in the preceding paragraph will constitute “Excess Proceeds.”

     On the 366th day after an Asset Sale (or, at the Company’s option, any earlier date), if the
aggregate amount of Excess Proceeds then exceeds $40.0 million, the Company will make an Asset Sale
Offer to all Holders of Notes, and to all holders of Pari Passu Indebtedness then outstanding to
purchase, on a pro rata basis, the maximum principal amount of Notes and such Pari Passu
Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale
Offer will be equal to 100% of principal amount plus accrued and unpaid interest and Additional
Interest, if any, thereon to the Settlement Date, subject to the right of Holders of record on the
relevant record date to receive interest due on an interest payment date that is on or prior to the
Settlement Date, and will be payable in cash. If any Excess Proceeds remain after consummation of
an Asset Sale Offer, the Company may use those Excess Proceeds for any purpose not otherwise
prohibited by this Indenture. If the aggregate principal amount of Notes tendered into such Asset
Sale Offer exceeds the amount of Excess Proceeds allocated for purchase of the Notes, the Trustee
will select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Trustee so that only Notes in denominations of $2,000, or integral multiples of
$1,000 in excess of $2,000, shall be purchased). Upon surrender of a Note that is repurchased in
part, the Issuers shall issue in the name of the applicable Holder and the Trustee shall
authenticate for such Holder at the expense of the Issuers a new Note equal in principal amount to
the non-repurchased portion of the Note surrendered. Upon completion of each Asset Sale Offer, the
amount of Excess Proceeds will be reset at zero.

     The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent those laws and regulations are
applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the
extent that the provisions of any securities laws or regulations conflict with the provisions of
this Section 4.10, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under such provisions by virtue
of such compliance.

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Section 4.11      Limitation on Transactions with Affiliates.

     The Company will not, and will not permit any of its Restricted Subsidiaries to, make any
payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of
the Company (each, an “Affiliate Transaction”), unless:

     (1) the Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Restricted Subsidiary with an unrelated Person or, if in
the good faith judgment of the Company’s Board of Directors, no comparable transaction is
available with which to compare such Affiliate Transaction, such Affiliate Transaction is
otherwise fair to the Company or the relevant Restricted Subsidiary from a financial point
of view; and

     (2) the Company delivers to the Trustee:

     (a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $25.0 million but no
greater than $50.0 million, an Officers’ Certificate certifying that such Affiliate
Transaction complies with this Section 4.11; and

     (b) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $50.0 million, a
resolution of the Board of Directors of the Company set forth in an Officers’
Certificate certifying that such Affiliate Transaction complies with this
Section 4.11 and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors of the Company.

     The following items will not be deemed to be Affiliate Transactions and, therefore, will not
be subject to the provisions of the prior paragraph of this Section 4.11:

     (1) any employment agreement or arrangement, equity award, equity option or equity
appreciation agreement or plan, employee benefit plan, officer or director indemnification
agreement, severance agreement or other compensation plan or arrangement entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of business, and
payments, awards, grants or issuances of securities pursuant thereto;

     (2) transactions between or among any of the Company and its Restricted Subsidiaries
(or any entity that becomes a Restricted Subsidiary as a result of such transaction);

     (3) transactions with a Person (other than an Unrestricted Subsidiary of the Company)
that is an Affiliate of the Company solely because the Company owns, directly or indirectly,
an Equity Interest in, or otherwise controls, such Person;

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     (4) customary compensation, indemnification and other benefits made available to
officers, directors or employees of the Company or a Restricted Subsidiary or Affiliate of
the Company, including reimbursement or advancement of out-of-pocket expenses and provisions
of officers’ and directors’ liability insurance;

     (5) sales of Equity Interests (other than Disqualified Stock) to, or receipt of capital
contributions from, Affiliates of the Company;

     (6) any Permitted Investments or Restricted Payments that are permitted by Section
4.07 (and any transaction that would constitute a Restricted Payment but for the
exclusions from the definition thereof);

     (7) transactions between the Company or any of its Restricted Subsidiaries and any
Person that would not otherwise constitute an Affiliate Transaction except for the fact that
one director of such other Person is also a director of the Company or such Restricted
Subsidiary, as applicable; provided that such director abstains from voting as a director of
the Company or such Restricted Subsidiary, as applicable, on any matter involving such other
Person;

     (8) the existence of, and the performance of obligations of the Company or any of its
Restricted Subsidiaries under the terms of, any written agreement to which the Company or
any of its Restricted Subsidiaries is a party on the date of this Indenture and which is
described in the Offering Memorandum, as such agreements may be amended, modified or
supplemented from time to time; provided, however, that any amendment, modification or
supplement entered into after the date of this Indenture will be permitted to the extent
that its terms are not materially more disadvantageous, taken as a whole, to the Holders of
the Notes than the terms of the agreements in effect on the date of this Indenture;

     (9) any transaction in which the Company or any of its Restricted Subsidiaries, as the
case may be, delivers to the Trustee a letter from an accounting, appraisal or investment
banking firm of national standing stating that such transaction is fair to the Company or
such Restricted Subsidiary from a financial point of view or that such transaction meets the
requirements of clause (1) of this Section 4.11;

     (10) (a) guarantees by the Company or any of its Restricted Subsidiaries of performance
of obligations of the Company’s Unrestricted Subsidiaries in the ordinary course of
business, except for guarantees of Indebtedness in respect of borrowed money, and (b)
pledges by the Company or any Restricted Subsidiary of the Company of Equity Interests in
Unrestricted Subsidiaries for the benefit of lenders or other creditors of the Company’s
Unrestricted Subsidiaries;

     (11) any Affiliate Transaction with a Person in its capacity as a holder of
Indebtedness or Capital Stock of the Company or any Restricted Subsidiary of the Company if
such Person is treated no more favorably than the other holders of Indebtedness or Capital
Stock of the Company or such Restricted Subsidiary;

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     (12) transactions with Unrestricted Subsidiaries, customers, clients, suppliers or
purchasers or sellers of goods or services, or lessors or lessees of property, in each case
in the ordinary course of business and otherwise in compliance with the terms of this
Indenture which are, in the aggregate (taking into account all the costs and benefits
associated with such transactions), not materially less favorable to the Company and its
Restricted Subsidiaries than those that would have been obtained in a comparable transaction
by the Company or such Restricted Subsidiary with an unrelated Person, in the good faith
determination of the Company’s Board of Directors or any executive officer of the Company
involved in or otherwise familiar with such transaction, or are on terms at least as
favorable as might reasonably have been obtained at such time from an unaffiliated party;

     (13) transactions entered into by a Person prior to the time such Person becomes a
Subsidiary or is merged or consolidated into the Company or a Subsidiary (provided such
transaction is not entered into in contemplation of such event); and

     (14) dividends and distributions to the Company and its Restricted Subsidiaries by any
Unrestricted Subsidiary or Joint Venture.

Section 4.12      Limitation on Liens.

     The Company will not, and will not permit any of its Restricted Subsidiaries to, create,
incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other
than Permitted Liens) upon any of its property or assets (whether now owned or hereafter acquired),
securing Indebtedness, unless the Notes or any Subsidiary Guarantee of such Restricted Subsidiary,
as applicable, is secured on an equal and ratable basis with (or, in the case of obligations
subordinated in right of payment to the Notes or such Subsidiary Guarantee, as the case may be, on
a basis senior (to at least the same extent as the Notes are senior in right of payment) to) the
obligations so secured until such time as such obligations are no longer secured by a Lien.

     Any Lien on any property or assets of the Company or any of its Restricted Subsidiaries
created for the benefit of the Holders of the Notes pursuant to the preceding paragraph shall
provide by its terms that such Lien shall be automatically and unconditionally released and
discharged at such time as there are no other Liens of any kind (other than Permitted Liens) on
such property or assets securing Indebtedness.

Section 4.13      Additional Subsidiary Guarantees.

     If, after the date of this Indenture, any Restricted Subsidiary of the Company that is not
already a Guarantor guarantees any other Indebtedness of either of the Issuers or any Indebtedness
of any Guarantor in excess of the De Minimis Guaranteed Amount, or any Domestic Subsidiary, if not
then a Guarantor, incurs any Indebtedness under any of the Credit Facilities, then in either case
that Subsidiary shall become a Guarantor by executing a supplemental indenture substantially in the
form of Annex A hereto and delivering it to the Trustee within 30 Business Days of the date on
which it guaranteed or incurred such Indebtedness, as the case may be, together with any Officers’
Certificate or Opinion of Counsel

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required by Section 9.06; provided, however, that the preceding shall not apply to
Subsidiaries of the Company that have properly been designated as Unrestricted Subsidiaries in
accordance with this Indenture for so long as they continue to constitute Unrestricted
Subsidiaries. Notwithstanding the preceding, any Subsidiary Guarantee of a Restricted Subsidiary
that was incurred pursuant to this Section 4.13 shall provide by its terms that it shall be
automatically and unconditionally released at such time as such Guarantor ceases both (x) to
guarantee any other Indebtedness of either of the Issuers and any Indebtedness of any other
Guarantor (except as a result of payment under any such other guarantee) and (y) if such Guarantor
is a Domestic Subsidiary, to be an obligor with respect to any Indebtedness under any Credit
Facility.

     Each Subsidiary Guarantee shall also be released in accordance with Article 10.

Section 4.14     Existence.

     Except as otherwise permitted pursuant to the terms hereof (including consolidation and merger
permitted by Section 5.01), the Company shall do or cause to be done all things necessary
to preserve and keep in full force and effect its limited liability company existence, and the
corporate, partnership, limited liability company or other existence of each of its Restricted
Subsidiaries, in accordance with the respective organizational documents (as the same may be
amended from time to time) of the Company or any such Restricted Subsidiary; provided, however,
that the Company shall not be required to preserve the existence of any of its Restricted
Subsidiaries (except Finance Corp.) if the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company and its Restricted
Subsidiaries taken as a whole and that the loss thereof is not adverse in any material respect to
the Holders of the Notes.

Section 4.15      Offer to Repurchase Upon Change of Control.

     Within 30 days following the occurrence of a Change of Control, the Company shall make an
offer (a “Change of Control Offer”) to repurchase all or any part (equal to $2,000 or an integral
multiple of $1,000 in excess of $2,000) of each Holder’s Notes at a purchase price (the “Change of
Control Payment”) in cash equal to 101% of the aggregate principal amount of Notes repurchased,
plus accrued and unpaid interest and Additional Interest, if any, thereon to the date of settlement
(the “Change of Control Settlement Date”), subject to the right of Holders of record on the
relevant record date to receive interest due on an interest payment date that is on or prior to the
Change of Control Settlement Date. Within 30 days following a Change of Control, the Company shall
mail a notice of the Change of Control Offer to each Holder and the Trustee describing the
transaction that constitutes the Change of Control and stating:

     (a) that the Change of Control Offer is being made pursuant to this Section
4.15 and that all Notes validly tendered and not withdrawn pursuant to the Change of
Control Offer will be accepted for payment;

     (b) the purchase price and the purchase date, which shall be no earlier than 30 days
but no later than 60 days from the date such notice is mailed (the “Change of Control
Purchase Date”);

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     (c) that the Change of Control Offer will expire as of the time specified in such
notice on the Change of Control Purchase Date and that the Company shall pay the Change of
Control Purchase Price for all Notes purchased properly tendered prior to the expiration
date specified in such notice promptly thereafter on the Change of Control Settlement Date;

     (d) that any Note not tendered will continue to accrue interest and Additional
Interest, if any;

     (e) that, unless the Company defaults in the payment of the Change of Control Payment,
all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue
interest and Additional Interest, if any, after the Change of Control Settlement Date;

     (f) that Holders electing to have any Notes purchased pursuant to a Change of Control
Offer will be required to surrender the Notes, properly endorsed for transfer, together with
the form entitled “Option of Holder to Elect Purchase” on the reverse of the Notes completed
and such customary documents as the Company may reasonably request, to the Paying Agent at
the address specified in the notice prior to the termination of the Change of Control Offer
on the Change of Control Purchase Date;

     (g) that Holders will be entitled to withdraw their election if the Paying Agent
receives, prior to the termination of the Change of Control Offer, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing its election to have
the Notes purchased; and

     (h) that Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $2,000 in principal amount or an integral multiple of
$1,000 in excess of $2,000.

     If any of the Notes subject to a Change of Control Offer is in the form of a Global Note, then
the Company shall modify such notice to the extent necessary to accord with the procedures of the
Depository applicable to repurchases. Further, the Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the repurchase of Notes as a
result of a Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.15, the Company will comply with
the applicable securities laws and regulations and will not be deemed to have breached its
obligations under such provisions by virtue of such compliance.

     Promptly after expiration of the Change of Control Offer, the Company shall, to the extent
lawful, accept for payment all Notes or portions thereof (in integral multiples of $1,000) properly
tendered pursuant to the Change of Control Offer. Promptly thereafter on the Change of Control
Settlement Date, the Company shall:

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     (i) deposit with the Paying Agent by 11:00 a.m., New York City time, an amount equal to
the Change of Control Payment in respect of all Notes or portions thereof so tendered; and

     (ii) deliver or cause to be delivered to the Trustee the Notes so accepted together
with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of
Notes being purchased by the Company.

     On the Change of Control Settlement Date, the Paying Agent shall mail to each Holder of Notes
properly tendered the Change of Control Payment for such Notes (or, if all the Notes are then in
global form, make such payment through the facilities of the Depository) and the Trustee shall
authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered, if any; provided, however,
that each such new Note will be in a principal amount of $2,000 or an integral multiple of $1,000
in excess of $2,000. The Company shall publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Settlement Date.

     The Change of Control provisions described in this Section 4.15 shall be applicable
whether or nor any other provisions of this Indenture are applicable.

     Prior to complying with any of the provisions of this Section 4.15, but in any event
no later than the Change of Control Purchase Date, the Company or any Guarantor shall either repay
all of its other outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing such Senior Debt to permit the repurchase of Notes required by this
Section 4.15.

     The Company shall not be required to make a Change of Control Offer following a Change of
Control if (1) a third party makes the Change of Control Offer in the manner, at the time and
otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of
Control Offer made by the Company and purchases all Notes properly tendered and not withdrawn under
such Change of Control Offer or (2) notice of redemption of all Notes has been given pursuant to
Section 3.07, unless there is a default in payment of the applicable redemption price.

     A Change of Control Offer may be made in advance of a Change of Control, and conditioned upon
the occurrence of such Change of Control, if a definitive agreement is in place for such Change of
Control at the time of making the Change of Control Offer.

     In the event that Holders of not less than 90% of the aggregate principal amount of the
outstanding Notes accept a Change of Control Offer and the Company (or the third party making the
Change of Control Offer as provided in this Section 4.15) purchases all of the Notes held
by such Holders, the Company will have the right, upon not less than 30 nor more than 60 days’
prior notice, given not more than 30 days following the purchase pursuant to such Change of Control
Offer, to redeem all of the Notes that remain outstanding following such purchase at a purchase
price equal to the Change of Control Payment plus, to the extent not included in the Change of
Control Payment, accrued and unpaid interest on the Notes that remain outstanding, to

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the date of redemption (subject to the right of Holders on the relevant record date to receive
interest due on the relevant interest payment date that is on or prior to such date of redemption).

Section 4.16      No Partial Inducements.

     The Company shall not, and the Company shall not permit any of its Subsidiaries, either
directly or indirectly, to pay (or cause to be paid) any consideration, whether by way of interest,
fee or otherwise, to any Beneficial Owner or Holder of the Notes for or as an inducement to any
consent to any waiver, supplement or amendment of any terms or provisions of this Indenture or the
Notes, unless such consideration is offered to be paid (or agreed to be paid) to all Beneficial
Owners and Holders of the Notes which so consent in the time frame set forth in the solicitation
documents relating to such consent.

Section 4.17      Limitations on Finance Corp. Activities.

     Finance Corp. shall not incur Indebtedness unless (1) the Company is a co-issuer or guarantor
of such Indebtedness or (2) the net proceeds of such Indebtedness are loaned to the Company, used
to acquire outstanding debt securities issued by the Company or used to repay Indebtedness of the
Company as permitted under Section 4.09. Finance Corp. shall not engage in any business
not related directly or indirectly to obtaining money or arranging financing for the Company or its
Restricted Subsidiaries.

Section 4.18      Designation of Restricted and Unrestricted Subsidiaries.

     The Board of Directors of the Company may designate any Restricted Subsidiary of the Company
to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted
Subsidiary of the Company is designated as an Unrestricted Subsidiary, the aggregate fair market
value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the
Subsidiary properly designated as an Unrestricted Subsidiary will be deemed to be an Investment
made as of the time of the designation and will reduce the amount available for Restricted Payments
under the first paragraph of Section 4.07 or represent Permitted Investments, as determined
by the Company. That designation shall only be permitted if the Investment would be permitted at
that time and if the Subsidiary so designated otherwise meets the definition of an Unrestricted
Subsidiary.

     The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary of
the Company to be a Restricted Subsidiary of the Company; provided that such designation will be
deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be
permitted if (1) such Indebtedness is permitted under Section 4.09, calculated on a pro
forma basis as if such designation had occurred at the beginning of the four-quarter reference
period, and (2) no Default or Event of Default would be in existence following such designation.

Section 4.19      Covenant Termination

     Notwithstanding any provision of this Indenture or of the Notes to the contrary, if at any
time (a) the ratings assigned to the Notes by both Ratings Agencies is an Investment Grade Rating
and (b) no Default has occurred and is continuing under this Indenture, the Company and

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its Restricted Subsidiaries will no longer be subject to Sections 4.07, 4.08,
4.09, 4.10, 4.11 and 4.17 of this Indenture and no Default or Event
of Default shall result from any failure to comply with any of the provisions of such Sections.

ARTICLE 5

SUCCESSORS

Section 5.01      Merger, Consolidation, or Sale of Assets.

     Neither of the Issuers may, directly or indirectly, (x) consolidate or merge with or into
another Person (whether or not such Issuer is the survivor), or (y) sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or assets, in one or more
related transactions to another Person, unless:

     (a) either (1) such Issuer is the survivor or (2) the Person formed by or surviving any
such consolidation or merger (if other than such Issuer) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made is a Person organized
or existing under the laws of the United States, any state of the United States or the
District of Columbia; provided, however, that Finance Corp. may not consolidate or merge
with or into any Person other than a corporation satisfying such requirement so long as the
Company is not a corporation;

     (b) the Person formed by or surviving any such consolidation or merger (if other than
such Issuer) or the Person to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made assumes all the obligations of such Issuer under the
Notes, this Indenture and the applicable Registration Rights Agreement pursuant to a
supplemental indenture or other agreement in a form reasonably satisfactory to the Trustee;

     (c) immediately after such transaction, no Default or Event of Default exists;

     (d) in the case of a transaction involving the Company and not Finance Corp., either

     (i) the Company or the Person formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made will, at the time of
such transaction immediately after giving pro forma effect thereto and any related
financing transaction as if the same had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 4.09 hereof; or

     (ii) immediately after giving effect to such transaction and any related
financing transactions on a pro forma basis as if the same had occurred at the
beginning of the Company’s most recently ended four full quarters for which internal
financial statements are available immediately preceding the date of the
transactions, the Fixed Charge Coverage Ratio of the Company or the Person

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formed by or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, lease, conveyance or other
disposition has been made, will be equal to or greater than the Fixed Charge
Coverage Ratio of the Company immediately prior to such transaction; or

     (iii) immediately after giving effect to such transaction and any related
financing transactions on a pro forma basis, the Consolidated Net Worth of the
Company or the Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition has been made, will be greater than the Consolidated
Net Worth of the Company immediately prior to such transaction; and

     (e) such Issuer has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or disposition and such supplemental
indenture (if any) comply with this Indenture.

     Notwithstanding the restrictions described in the foregoing clause (c) and (d), any Restricted
Subsidiary of the Company (other than an Issuer) may consolidate with, merge into or dispose of all
or part of its properties and assets to the Company, and the Company will not be required to comply
with the preceding clause (e) in connection with any such consolidation, merger or disposition.

     Notwithstanding the second preceding paragraph of this Section 5.01, the Company may
reorganize as any other form of entity in accordance with the following procedures provided that:

     (1) the reorganization involves the conversion (by merger, sale, contribution or
exchange of assets or otherwise) of the Company into a form of entity other than a limited
liability company formed under Delaware law;

     (2) the entity so formed by or resulting from such reorganization is an entity
organized or existing under the laws of the United States, any state thereof or the District
of Columbia;

     (3) the entity so formed by or resulting from such reorganization assumes all the
obligations of the Company under the Notes, this Indenture and the applicable Registration
Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee;

     (4) immediately after such reorganization no Default or Event of Default exists; and

     (5) such reorganization is not materially adverse to the Holders or Beneficial Owners
of the Notes (for purposes of this clause (5) a reorganization will not be considered
materially adverse to the Holders or Beneficial Owners of the Notes solely because the
successor or survivor of such reorganization (a) is subject to federal or state income
taxation as an entity or (b) is considered to be an “includable corporation” of an

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affiliated group of corporations with the meaning of Section 1504(b)(i) of the Code or
any similar state or local law).

     For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a
single transaction or series of transactions) of all or substantially all of the properties or
assets of one or more Restricted Subsidiaries of the Company, the Capital Stock of which
constitutes all or substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of the Company.

Section 5.02      Successor Substituted.

     Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the properties or assets of an Issuer in
accordance with Section 5.01 hereof, in which such Issuer is not the surviving entity, the
successor formed by such consolidation or into or with which such Issuer is merged or to which such
sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, such Issuer under this Indenture with
the same effect as if such successor had been named as such Issuer herein and shall be substituted
for such Issuer (so that from and after the date of such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition, the provisions of this Indenture referring to the
“Company” or “Finance Corp.,” as the case may be, shall refer instead to the successor and not to
the Company or Finance Corp., as the case may be); and thereafter, if an Issuer is dissolved
following a transfer of all or substantially all of its properties or assets in accordance with
this Indenture (except in the case of a lease of all or substantially all of such Issuer’s assets),
it shall be discharged and released from all obligations and covenants under this Indenture and the
Notes. The Trustee shall enter into a supplemental indenture to evidence the succession and
substitution of such successor and such discharge and release of such Issuer.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01      Events of Default.

     An “Event of Default” occurs if one of the following shall have occurred and be continuing
(whatever the reason for such Event of Default and whether it shall be involuntary or be effected
by operation of law):

     (a) an Issuer defaults in the payment when due of interest or Additional Interest, if
any, with respect to the Notes, and such default continues for a period of 30 days;

     (b) an Issuer defaults in the payment of the principal of or premium, if any, on the
Notes when due at their Stated Maturity, upon optional redemption, upon required repurchase,
upon acceleration or otherwise;

     (c) the Company fails to comply with the provisions of Section 5.01 hereof or
to consummate a purchase of Notes when required pursuant to the provisions of Section
3.09, 4.10 or 4.15 hereof;

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     (d) the Company fails to comply with the provisions of Section 4.03 for 180
days after notice to the Company by the Trustee or the Holders of at least 25% in principal
amount of the Notes then outstanding of such failure;

     (e) the Company fails to comply with any other covenant or other agreement in this
Indenture or the Notes (including the provisions of Section 3.09, 4.10 or
4.15 to the extent not described in clause (c) of this Section 6.01) for 60
days after notice to the Company by the Trustee or the Holders of at least 25% in principal
amount of the Notes then outstanding of such failure;

     (f) a default occurs under any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed
by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or
guarantee now exists or is created after the Initial Issuance Date, if such default:

     (1) is caused by a failure to pay principal of, or interest or premium, if any,
on such Indebtedness prior to the expiration of any grace period provided in such
Indebtedness (a “Payment Default”); or

     (2) results in the acceleration of such Indebtedness prior to its Stated
Maturity

and, in each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a Payment Default
or the maturity of which has been so accelerated, aggregates $50.0 million or more;
provided, however, that if any such default is cured or waived or any such acceleration
rescinded, or such Indebtedness is repaid, within a period of 30 days from the expiration of
the applicable grace period or the occurrence of such acceleration, as the case may be, such
Event of Default and any consequential acceleration of the Notes shall be automatically
rescinded, so long as such rescission does not conflict with any judgment or decree;

     (g) the Company or any of its Restricted Subsidiaries fails to pay final judgments
aggregating in excess of $50.0 million (to the extent not covered by insurance by a
reputable and creditworthy insurer as to which the insurer has not disclaimed coverage),
which judgments are not paid, discharged or stayed for a period of 60 consecutive days;

     (h) (1) any Subsidiary Guarantee is held in any judicial proceeding to be unenforceable
or invalid or ceases for any reason to be in full force and effect or (2) any Guarantor, or
any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its
Subsidiary Guarantee, except, in each case, by reason of the release of such Subsidiary
Guarantee in accordance with the provisions of this Indenture; and

     (i) the Company, Finance Corp., any of the Company’s Restricted Subsidiaries that is a
Significant Subsidiary of the Company or any group of Restricted

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Subsidiaries of the Company that, taken as a whole, would constitute a Significant
Subsidiary of the Company, pursuant to or within the meaning of Bankruptcy Law:

     (1) commences a voluntary case,

     (2) consents in writing to the entry of an order for relief against it in an
involuntary case,

     (3) consents in writing to the appointment of a Custodian of it or for all or
substantially all of its property,

     (4) makes a general assignment for the benefit of its creditors, or

     (5) admits in writing it generally is not paying its debts as they become due;
or

     (j) a court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:

     (1) is for relief against the Company, Finance Corp., any of the Company’s
Restricted Subsidiaries that is a Significant Subsidiary of the Company or any group
of Restricted Subsidiaries of the Company that, taken as a whole, would constitute a
Significant Subsidiary of the Company, in an involuntary case;

     (2) appoints a Custodian (x) of the Company, Finance Corp., any of the
Company’s Restricted Subsidiaries that is a Significant Subsidiary of the Company or
any group of Restricted Subsidiaries of the Company that, taken as a whole, would
constitute a Significant Subsidiary of the Company, or (y) for all or substantially
all of the property of the Company, Finance Corp., any of the Company’s Restricted
Subsidiaries that is a Significant Subsidiary of the Company or any group of
Restricted Subsidiaries of the Company, that, taken together, would constitute a
Significant Subsidiary of the Company; or

     (3) orders the liquidation of the Company, Finance Corp., any of the Company’s
Restricted Subsidiaries that is a Significant Subsidiary of the Company or any group
of Restricted Subsidiaries of the Company that, taken as a whole, would constitute a
Significant Subsidiary of the Company;

and the order or decree remains unstayed and in effect for 60 consecutive days.

Section 6.02     Acceleration.

     If any Event of Default occurs and is continuing, the Trustee, by notice to the Issuers, or
the Holders of at least 25% in principal amount of the then outstanding Notes, by notice to the
Issuers and the Trustee, may declare all the Notes to be due and payable immediately. Upon any
such declaration, the Notes shall become due and payable immediately, together with all accrued and
unpaid interest, Additional Interest, if any, and premium, if any, thereon. Notwithstanding

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the preceding, if an Event of Default specified in clause (i) or (j) of Section 6.01
hereof occurs with respect to the Company, Finance Corp., any of the Company’s Restricted
Subsidiaries that is a Significant Subsidiary of the Company or any group of Restricted
Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary of the
Company, all outstanding Notes shall become due and payable immediately without further action or
notice, together with all accrued and unpaid interest, Additional Interest, if any, and premium, if
any, thereon. The Holders of a majority in principal amount of the then outstanding Notes by
notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree and if all existing
Events of Default (except with respect to nonpayment of principal, interest, premium or Additional
Interest, if any, that have become due solely because of the acceleration) have been cured or
waived.

Section 6.03      Other Remedies.

     If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy
to collect the payment of principal of and interest, premium, and Additional Interest, if any, on,
the Notes or to enforce the performance of any provision of the Notes or this Indenture.

     The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not
produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note
in exercising any right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

Section 6.04      Waiver of Past Defaults.

     Holders of a majority in principal amount of the then outstanding Notes by notice to the
Trustee may on behalf of the Holders of all of the Notes waive (including, without limitation, in
connection with a purchase of, or tender offer or exchange offer for, Notes) any existing Default
or Event of Default and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, or interest, premium, or Additional Interest, if any, on, the
Notes. 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 6.05      Control by Majority.

     Holders of a majority in principal amount of the then outstanding Notes may direct the time,
method and place of conducting any proceeding for exercising any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal
liability. In case an Event of Default has occurred and is continuing, prior to taking any action
hereunder, the Trustee shall be entitled to reasonable indemnification against all loss, liability
and expenses caused by the taking or not taking of such action.

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Section 6.06      Limitation on Suits.

     A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if:

     (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of
Default;

     (b) the Holders of at least 25% in principal amount of the then outstanding Notes make
a written request to the Trustee to pursue the remedy;

     (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the
Trustee indemnity or security satisfactory to the Trustee against any loss, liability or
expense;

     (d) the Trustee does not comply with the request within 60 days after receipt of the
request and the offer and, if requested, the provision of indemnity; and

     (e) during such 60-day period, the Holders of a majority in principal amount of the
then outstanding Notes do not give the Trustee a direction inconsistent with the request.

A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note
or to obtain a preference or priority over another Holder of a Note.

Section 6.07      Rights of Holders of Notes to Receive Payment.

     Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal of and interest, premium, and Additional Interest, if any, on, the
Note, on or after the respective due dates expressed in the Note (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such Holder.

Section 6.08      Collection Suit by Trustee.

     If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an
express trust against the Issuers and the Guarantors for the whole amount of principal of,
interest, premium, and Additional Interest, if any, remaining unpaid on the Notes and interest on
overdue principal and, to the extent lawful, interest and Additional Interest, if any, and 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.

Section 6.09      Trustee is Authorized to File Proofs of Claim.

     The Trustee is authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents

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and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the
Issuers (or any other obligor upon the Notes), their creditors or their property and shall be
entitled and empowered to collect, receive and distribute any money or other property payable or
deliverable on any such claims, and any custodian 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 to 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 7.07
hereof. To the extent that the payment of any such compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any
reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the Holders may be entitled
to receive in such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained 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 Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10      Priorities.

     If the Trustee collects any money pursuant to this Article, it shall pay out the money in the
following order:

     First: to the Trustee, its agents and attorneys for amounts due under Section
7.07 hereof, including payment of all compensation, expense and liabilities incurred,
and all advances made, by the Trustee and the Trustee’s costs and expenses of collection;

     Second: to Holders of Notes for amounts due and unpaid on the Notes for principal,
interest, premium, and Additional Interest, if any, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes for principal, interest,
premium and Additional Interest, if any, respectively; and

     Third: to the Issuers or to such party as a court of competent jurisdiction shall
direct.

     The Trustee may fix a record date and payment date for any payment to Holders of Notes
pursuant to this Section 6.10.

Section 6.11      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 or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’
fees, against any party litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit

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by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.

ARTICLE 7

TRUSTEE

Section 7.01      Duties of Trustee.

     (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in its exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.

     (b) Except during the continuance of an Event of Default:

     (i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and

     (ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.

     (c) The Trustee may not be relieved from liabilities for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:

     (i) this paragraph does not limit the effect of paragraph (b) of this
Section 7.01;

     (ii) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it is proved that the Trustee was negligent
in ascertaining the pertinent facts; and

     (iii) the Trustee shall not be liable with respect to any action it takes or
omits to take in good faith in accordance with a direction received by it pursuant
to Section 6.05 hereof.

     (d) Whether or not therein expressly so provided, every provision of this Indenture
that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this
Section 7.01.

     (e) The Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with an Issuer. Money held in trust by the Trustee need
not be segregated from other funds except to the extent required by law.

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     (f) No provision of this Indenture shall require the Trustee to expend or risk its own
funds or incur any liability. In case an Event of Default occurs and is continuing, the
Trustee will be under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holder unless such Holder has offered to the Trustee
reasonable indemnity or security against any loss, liability or expense.

     (g) The rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder and in its capacity as
Trustee under any other agreement executed in connection with the Indenture to which the
Trustee is a party.

Section 7.02      Rights of Trustee.

     (a) The Trustee may conclusively rely upon any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not investigate
any fact or matter stated in the document.

     (b) Before the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officers’ Certificate or
Opinion of Counsel. The Trustee may consult with counsel of its own selection and the
written advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.

     (c) The Trustee may act through its attorneys and agents and shall not be responsible
for the misconduct or negligence of any agent appointed by it with due care.

     (d) The Trustee shall not be liable for any action it takes or omits to take in good
faith that it believes to be authorized or within the rights or powers conferred upon it by
this Indenture.

     (e) Unless otherwise specifically provided in this Indenture, any demand, request,
direction or notice from an Issuer shall be sufficient if signed by an Officer of such
Issuer. The Trustee may, from time to time or at any time, request that the Issuers deliver
an Officers’ Certificate setting forth the names of individuals and/or titles of officers of
each Issuer authorized at such time to deliver, on behalf of such Issuer, an Officers’
Certificate or order to, or otherwise take specified actions on behalf of such Issuer with
respect to, the Trustee pursuant to this Indenture, which Officers’ Certificate may be
signed on behalf of such Issuer by any person authorized, on behalf of such Issuer, to sign
an Officers’ Certificate, including any person specified as so authorized in any such
certificate previously delivered by such Issuer.

     (f) 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 unless such
Holder shall have offered to the Trustee security or indemnity satisfactory to

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the Trustee against the costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction.

     (g) The Trustee shall have no duty to inquire as to the performance of the Company’s
covenants in Article 4 hereof. In addition, the Trustee shall not be deemed to have
knowledge of any Default or Event of Default except: (1) any Event of Default occurring
pursuant to Section 6.01(a) or 6.01(b) hereof; or (2) any Default or Event
of Default of which a Responsible Officer shall have received written notification or
obtained actual knowledge.

     (h) The permissive right of the Trustee to act hereunder shall not be construed as a
duty.

     (i) In no event shall the Trustee be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited to, loss of
profit) irrespective of whether the Trustee has been advised of the likelihood of such loss
or damage and regardless of the form of action.

     (j) The delivery of documents and information to the Trustee under Section 4.03
is for informational purposes only, and the Trustee’s receipt of the foregoing shall not
constitute constructive notice of any information contained therein or determinable from the
information contained therein, including the Company’s compliance with any of its covenants
hereunder, except to the extent that such documents and information would constitute notice
under Section 7.02(g) of this Indenture.

Section 7.03      Individual Rights of Trustee.

     The Trustee in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuers, any Guarantor or any Affiliate of the Company with the
same rights it would have if it were not Trustee. However, in the event that the Trustee acquires
any conflicting interest (as defined in the TIA) after a Default has occurred and is continuing, it
must eliminate such conflict within 90 days, apply to the SEC for permission to continue as Trustee
(if this Indenture is then qualified under the TIA) or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.

Section 7.04      Trustee’s Disclaimer.

     The Trustee shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for either Issuer’s use of the
proceeds from the Notes or any money paid to an Issuer or upon either Issuer’s direction under any
provision of this Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document in connection with
the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

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Section 7.05      Notice of Defaults.

     If a Default or Event of Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90
days after it occurs. Except in the case of a Default or Event of Default in payment of principal
of, or interest, premium, or Additional Interest, if any, on, any Note, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.

Section 7.06      Reports by Trustee to Holders of the Notes.

     Within 60 days after each April 15 beginning with the April 15 following the date of this
Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of
the Notes a brief report dated as of such reporting date that complies with TIA § 313(a) (but if no
event described in TIA § 313(a) has occurred within the twelve months preceding the reporting date,
no report need be transmitted). The Trustee also shall comply with TIA § 313(b)(2), to the extent
applicable, and § 313(b)(1). The Trustee shall also transmit by mail all reports as required by
TIA § 313(c).

     A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to
the Issuers and filed with the SEC and each stock exchange (if any) on which the Notes are listed
in accordance with TIA § 313(d). The Company shall promptly notify the Trustee when the Notes are
listed on or de-listed from any stock exchange.

Section 7.07      Compensation and Indemnity.

     The Issuers shall pay to the Trustee from time to time such reasonable compensation as the
Issuers and the Trustee may agree in writing for the Trustee’s acceptance of this Indenture and
services hereunder. The Trustee’s compensation shall not be limited by any law on compensation of
a trustee of an express trust. The Issuers shall reimburse the Trustee promptly upon request for
all reasonable disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee’s agents and counsel.

     The Issuers and the Guarantors shall indemnify the Trustee, jointly and severally, against any
and all losses, liabilities, damages, claims or expenses, including taxes (other than those based
upon, measured by or determined by the income of the Trustee) and the reasonable out of pocket fees
and expenses of counsel, incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and expenses of enforcing
this Indenture against the Issuers and the Guarantors (including this Section 7.07) and
defending itself against any claim (whether asserted by an Issuer, any Guarantor or any Holder or
any other Person) or liability in connection with the exercise or performance of any of its powers
or duties hereunder, except to the extent any such loss, liability, damage, claim or expense may be
attributable to its gross negligence, bad faith or willful misconduct. The Trustee shall notify
the Issuers and the Guarantors promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Issuers and the Guarantors shall not relieve the Issuers or the
Guarantors of their obligations hereunder. The Issuers and the Guarantors shall

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defend the claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Issuers and the Guarantors shall pay the reasonable fees and expenses of
such counsel; provided that the Issuers and the Guarantors will not be required to pay such fees
and expenses if they assume the Trustee’s defense with counsel acceptable to and approved by the
Trustee (such approval not to be unreasonably withheld) and there is no conflict of interest
between the Issuers and the Trustee in connection with such defense. The Issuers and the
Guarantors need not pay for any settlement made without their consent, which consent shall not be
unreasonably withheld.

     The obligations of the Issuers and the Guarantors under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.

     To secure the Issuers’ and the Guarantors’ payment obligations in this Section 7.07,
the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the
Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien
shall survive the satisfaction and discharge of this Indenture and the resignation or removal of
the Trustee.

     When the Trustee incurs expenses or renders services after an Event of Default specified in
Section 6.01(i) or 6.01(j) hereof occurs, the expenses and the compensation for the
services (including the fees and expenses of its agents and counsel) are intended to constitute
expenses of administration under any Bankruptcy Law.

     The Trustee shall comply with the provisions of TIA § 313(b)(2) to the extent applicable.

Section 7.08      Replacement of Trustee.

     A resignation or removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.

     The Trustee may resign in writing upon thirty (30) days notice at any time and be discharged
from the trust hereby created by so notifying the Issuers. The Holders of Notes of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee
and the Issuers in writing and may appoint a successor trustee with the consent of the Issuers.
The Issuers may remove the Trustee if:

     (a) the Trustee fails to comply with Section 7.10 hereof;

     (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law;

     (c) a receiver, Custodian or public officer takes charge of the Trustee or its
property; or

     (d) the Trustee becomes incapable of acting.

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     If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, the Issuers shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the
Issuers.

     If a successor Trustee does not take office within 30 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Issuers or the Holders of Notes of at least 10% in
aggregate principal amount of the then outstanding Notes may petition any court of competent
jurisdiction, at the expense of the Issuers, for the appointment of a successor Trustee.

     If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note
for at least six months, fails to comply with Section 7.10 hereof, such Holder of a Note
may petition any court of competent jurisdiction for the removal of the Trustee and the appointment
of a successor Trustee.

     A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Issuers. Thereupon, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid
and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement
of the Trustee pursuant to this Section 7.08, the Issuers’ and the Guarantors’ obligations
under Section 7.07 hereof shall continue for the benefit of the retiring Trustee.

Section 7.09 Successor Trustee by Merger, etc.

     If the Trustee consolidates with, or merges or converts into, or transfers or sells all or
substantially all of its corporate trust business or assets to, another corporation or banking
association, the successor corporation or banking association without any further act shall be the
successor Trustee. As soon as practicable, the successor Trustee shall mail a notice of its
succession to the Issuers and the Holders of the Notes.

Section 7.10 Eligibility; Disqualification.

     There shall at all times be a Trustee hereunder that is a corporation organized and doing
business under the laws of the United States of America or of any state thereof that is authorized
under such laws to exercise corporate trustee power, that is subject to supervision or examination
by federal or state authorities and that has a combined capital and surplus of at least $100
million as set forth in its most recent published annual report of condition. No obligor upon the
Notes shall serve as a Trustee.

     This Indenture shall always have a Trustee who satisfies the requirements of TIA § 310(a)(1),
(2) and (5). The Trustee is subject to TIA § 310(b).

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Section 7.11 Preferential Collection of Claims Against Issuers.

     The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA §
311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent
indicated therein.

ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.

     The Issuers may, at the option of their respective Boards of Directors evidenced by a
resolution set forth in an Officers’ Certificate, at any time, exercise their rights under either
Section 8.02 or 8.03 hereof with respect to all outstanding Notes upon compliance
with the conditions set forth below in this Article 8.

Section 8.02 Legal Defeasance and Discharge.

     Upon the Issuers’ exercise under Section 8.01 hereof of the option applicable to this
Section 8.02, the Issuers shall, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, be deemed to have discharged their obligations with respect to all
outstanding Notes, and each Guarantor shall be deemed to have discharged its obligations with
respect to its Subsidiary Guarantee, on the date the conditions set forth in Section 8.04
below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, Legal Defeasance means
that the Issuers shall be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Notes, and each Guarantor shall be deemed to have paid and discharged its
Subsidiary Guarantee (which in each case shall thereafter be deemed to be “outstanding” only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in
(a) and (b) below) and to have satisfied all its other obligations under such Notes or Subsidiary
Guarantee and this Indenture (and the Trustee, on demand of and at the expense of the Issuers,
shall execute proper instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof,
and as more fully set forth in such Section, payments in respect of the principal of and interest,
premium, and Additional Interest, if any, on, such Notes when such payments are due, (b) the
Issuers’ obligations with respect to such Notes under Sections 2.03, 2.04,
2.07, 2.09 and 4.02 hereof and the Appendix, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the Issuers’ and the Guarantors’
obligations in connection therewith and (d) the Legal Defeasance provisions of this Article
8. Subject to compliance with this Article 8, the Issuers may exercise their option
under this Section 8.02 notwithstanding the prior exercise of their option under
Section 8.03 hereof.

     If the Issuers exercise their Legal Defeasance option, each Guarantor will be released and
relieved of any obligations under its Subsidiary Guarantee, and any security for the Notes (other
than the trust) will be released.

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Section 8.03 Covenant Defeasance.

     Upon the Issuers’ exercise under Section 8.01 hereof of the option applicable to this
Section 8.03, the Issuers shall, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, be released from their obligations under the covenants contained in
Article 4 (other than those in Sections 4.01, 4.02 and 4.06 and,
solely with respect to the Issuers, 4.14) and in clause (d) of Section 5.01 hereof
on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter,
“Covenant Defeasance”), and the Notes shall thereafter be deemed not “outstanding” for the purposes
of any direction, waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all
other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for
accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Issuers and any Guarantor may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by
reason of any reference in any such covenant to any other provision herein or in any other document
and such omission to comply shall not constitute a Default or an Event of Default under Section
6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby. In addition, upon the Issuers’ exercise under Section 8.01
hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of
the conditions set forth in Section 8.04 hereof, Section 6.01(d) and Sections
6.01(f) through 6.01(h) hereof shall not constitute Events of Default.

     If the Issuers exercise their Covenant Defeasance option, each Guarantor will be released and
relieved of any obligations under its Subsidiary Guarantee and any security for the Notes (other
than the trust) will be released.

Section 8.04 Conditions to Legal or Covenant Defeasance.

     In order to exercise either Legal Defeasance or Covenant Defeasance:

     (a) the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized
investment banking firm, appraisal firm or firm of independent public accountants, to pay
the principal of, and interest, premium, and Additional Interest, if any, on, the
outstanding Notes on the date of fixed maturity or on the applicable redemption date, as the
case may be, and the Issuers must specify whether the Notes are being defeased to the date
of fixed maturity or to a particular redemption date;

     (b) in the case of an election under Section 8.02 hereof, the Issuers shall
have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that:

     (1) the Issuers have received a ruling from, or a ruling has been published by,
the Internal Revenue Service; or

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     (2) since the Initial Issuance Date, there has been a change in the applicable
federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm
that, the Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times as would
have been the case if such Legal Defeasance had not occurred;

     (c) in the case of an election under Section 8.03 hereof, the Issuers shall
have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Covenant Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not occurred;

     (d) no Default or Event of Default shall have occurred and be continuing on the date of
such deposit (other than a Default or Event of Default resulting from the incurrence of
Indebtedness or other borrowing of funds or the grant of Liens securing such Indebtedness or
other borrowing, all or a portion of the proceeds of which will be applied to such deposit
pursuant to this Section 8.04);

     (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under, any material agreement or instrument (other
than this Indenture) to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries is bound;

     (f) the Issuers shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit was not made by the Issuers with the intent of preferring the Holders over
the other creditors of the Issuers or with the intent of defeating, hindering, delaying or
defrauding creditors of the Issuers or others; and

     (g) the Issuers shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.

			
	Section 8.05	 	Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous
Provisions.

     Subject to Section 8.06 hereof, all money and non-callable Government Securities
(including the proceeds thereof) deposited with the Trustee pursuant to Section 8.04 or
8.08 hereof in respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company or any of its Subsidiaries acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, interest, premium, and Additional Interest, if any, but
such money need not be segregated from other funds except to the extent required by law.

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     The Issuers shall pay and indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against the cash or non-callable Government Securities deposited pursuant to
Section 8.04 or 8.08 hereof 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 the outstanding Notes.

     Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver
or pay to the Issuers from time to time upon the written request of the Issuers any money or
non-callable Government Securities held by it as provided in Section 8.04 or 8.08
hereof which, in the opinion of a nationally recognized investment banking, appraisal firm or firm
of independent public accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of
the amount thereof that would then be required to be deposited to effect an equivalent Legal
Defeasance, Covenant Defeasance or Discharge, as the case may be.

Section 8.06 Repayment to Issuers.

     Subject to applicable escheat and abandoned property laws, any money or non-callable
Government Securities deposited with the Trustee or any Paying Agent, or then held by an Issuer, in
trust for the payment of the principal of, or interest, premium, or Additional Interest, if any,
on, any Note and remaining unclaimed for two years after such principal, interest, premium, or
Additional Interest, if any, has become due and payable shall be paid to the Issuers on their
written request or (if then held by an Issuer) shall be discharged from such trust; and the Holder
of such Note shall thereafter, as an unsecured creditor, look only to the Issuers for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money or
non-callable Government Securities, and all liability of the Issuers 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 Issuers cause to be published once, in the New
York Times and The Wall Street Journal (national edition), 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 notification or publication, any unclaimed balance of such money then remaining will be repaid
to the Issuers.

Section 8.07 Reinstatement.

     If the Trustee or Paying Agent is unable to apply any money or non-callable Government
Securities in accordance with Section 8.05 hereof, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuers’ obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03
hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.05 hereof; provided, however, that, if an Issuer makes any
payment of principal of, interest, premium, or Additional Interest, if any, on, any Note following
the reinstatement of its obligations, such Issuer shall be subrogated to the rights of the Holders
of such Notes to receive such payment from the money or Government Securities deposited with or
held by the Trustee or Paying Agent.

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Section 8.08 Discharge.

     This Indenture shall be satisfied and discharged and shall cease to be of further effect as to
all Notes issued hereunder (except for (a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in clause (b) of this Section 8.08, and as more fully
set forth in such clause (b), payments in respect of the principal of and interest, premium and
Additional Interest, if any, on, such Notes when such payments are due, (b) the Issuers’
obligations with respect to such Notes under Sections 2.03, 2.04, 2.07,
2.09 and 4.02 hereof and the Appendix and (c) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Issuers’ obligations in connection therewith), and
the Trustee, at the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to all the Notes, when:

     (1) either:

     (a) all Notes that have been authenticated, except lost, stolen or destroyed
Notes that have been replaced or paid and Notes for whose payment money has been
deposited in trust and thereafter repaid to the Issuers, have been delivered to the
Trustee for cancellation; or

     (b) all Notes that have not been delivered to the Trustee for cancellation have
become due and payable or will become due and payable within one year by reason of
the mailing of a notice of redemption or otherwise, and the Issuers or any Guarantor
has irrevocably deposited or caused to be deposited with the Trustee as trust funds
in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable
Government Securities, or a combination of cash in U.S. dollars and non-callable
Government Securities, in amounts as will be sufficient without consideration of any
reinvestment of interest, to pay and discharge the entire indebtedness on the Notes
not delivered to the Trustee for cancellation for principal, accrued interest,
premium, if any, and Additional Interest, if any, to the date of fixed maturity or
redemption;

     (2) no Default or Event of Default has occurred and is continuing on the date of the
deposit or will occur as a result of the deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness or other borrowing of funds or the grant of
Liens securing such Indebtedness or other borrowing, all or a portion of the proceeds of
which will be applied to such deposit) and the deposit will not result in a breach or
violation of, or constitute a default under, any material agreement or instrument (other
than this Indenture) to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries is bound;

     (3) the Issuers and the Guarantors have paid or caused to be paid all other sums
payable by them under this Indenture;

     (4) the Issuers have delivered irrevocable instructions to the Trustee to apply the
deposited money toward the payment of the Notes at fixed maturity or the redemption date, as
the case may be; and

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     (5) the Issuers have delivered an Officers’ Certificate and an Opinion of Counsel to
the Trustee stating that all conditions precedent to satisfaction and discharge of this
Indenture (“Discharge”) have been satisfied.

ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01 Without Consent of Holders of Notes.

     Notwithstanding Section 9.02 of this Indenture, the Issuers, the Guarantors and the
Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder of a
Note:

     (a) to cure any ambiguity, defect or inconsistency;

     (b) to provide for uncertificated Notes in addition to or in place of certificated
Notes;

     (c) to provide for the assumption of an Issuer’s obligations to the Holders of Notes
pursuant to Article 5 hereof;

     (d) to make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights hereunder of any
such Holder, provided that any change to conform this Indenture to the Offering Memorandum
shall not be deemed to adversely affect the legal rights hereunder of any Holder;

     (e) to secure the Notes or the Subsidiary Guarantees pursuant to the requirements of
Section 4.12 or otherwise;

     (f) to provide for the issuance of Additional Notes in accordance with the limitations
set forth in this Indenture;

     (g) to add any additional Guarantor with respect to the Notes or to evidence the
release of any Guarantor from its Subsidiary Guarantee in accordance with Article 10
hereof;

     (h) to comply with requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the TIA;

     (i) to evidence or provide for the acceptance of appointment under this Indenture of a
successor Trustee; or

     (j) to conform the text of this Indenture, the Subsidiary Guarantees or the Notes to
any provision described in the “Description of Notes” contained in the Offering Memorandum.

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     Upon the request of the Company accompanied by a resolution of its Board of Directors
authorizing the execution of any such amended or supplemental indenture, and upon receipt by the
Trustee of the documents described in Section 9.06 hereof, the Trustee shall join with the
Issuers and the Guarantors in the execution of any amended or supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or immunities under this
Indenture or otherwise.

Section 9.02 With Consent of Holders of Notes.

     Except as provided above in Section 9.01 and below in this Section 9.02, the
Issuers, the Guarantors and the Trustee may amend or supplement this Indenture and the Notes may be
amended or supplemented with the consent of the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes (including consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes), and, subject to Sections 6.04
and 6.07 hereof, any existing Default or Event of Default or compliance with any provision
of this Indenture or the Notes may be waived with the consent of the Holders of at least a majority
in aggregate principal amount of the then outstanding Notes (including consents obtained in
connection with a purchase of, tender offer or exchange offer for Notes). However, without the
consent of each Holder affected, an amendment, supplement or waiver may not (with respect to any
Notes held by a non-consenting Holder):

     (a) reduce the percentage of principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;

     (b) reduce the principal of or change the fixed maturity of any Note or alter any of
the provisions with respect to the redemption or repurchase of the Notes (other than the
provisions relating to the covenants in Sections 3.09, 4.10 and 4.15
hereof);

     (c) reduce the rate of or change the time for payment of interest, including default
interest, on any Note;

     (d) waive a Default or Event of Default in the payment of principal of, or interest,
premium, or Additional Interest, if any, on, the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in principal amount of the Notes and a
waiver of the payment default that resulted from such acceleration);

     (e) make any Note payable in money other than that stated in the Notes;

     (f) make any change in the provisions of this Indenture relating to waivers of past
Defaults or Events of Default or the rights of Holders of Notes to receive payments of
principal of, or interest, premium, or Additional Interest, if any, on, the Notes (except as
permitted in clause (g) below);

     (g) waive a redemption or repurchase payment with respect to any Note (other than a
payment required by Sections 3.09, 4.10 and 4.15 hereof);

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     (h) release any Guarantor from any of its obligations under its Subsidiary Guarantee or
this Indenture, except in accordance with the terms of this Indenture; or

     (i) make any change in the preceding amendment, supplement and waiver provisions.

     Upon the request of the Issuers accompanied by Board Resolutions authorizing their execution
of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt
by the Trustee of the documents described in Section 9.06 hereof, the Trustee shall join
with the Issuers and the Guarantors in the execution of such amended or supplemental indenture,
unless such amended or supplemental indenture affects the Trustee’s own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental indenture.

     It shall not be necessary for the consent of the Holders of Notes under this Section
9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it
shall be sufficient if such consent approves the substance thereof.

     After an amendment, supplement or waiver under this Section becomes effective, the Company
shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment,
supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such amended or supplemental
Indenture or waiver.

Section 9.03 Compliance with Trust Indenture Act.

     Every amendment or supplement to this Indenture or the Notes shall be set forth in an amended
or supplemental Indenture that complies with the TIA as then in effect.

     A consent to any amendment, supplement or waiver under this Indenture by any Holder given in
connection with a purchase, tender or exchange of such Holder’s Notes shall not be rendered invalid
by such purchase, tender or exchange.

Section 9.04 Revocation and Effect of Consents.

     Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a
Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of
the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written notice of revocation
before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and, except as provided in the second
succeeding paragraph, thereafter binds every Holder.

     The Company may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to consent to any amendment, supplement or waiver. If a record
date is fixed, then notwithstanding the second to last sentence of the immediately

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preceding paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to consent to such amendment or
waiver or revoke any consent previously given, whether or not such Persons continue to be Holders
after such record date. No consent shall be valid or effective for more than 90 days after such
record date except to the extent that the requisite number of consents to the amendment, supplement
or waiver have been obtained within such 90-day period or as set forth in the next paragraph of
this Section 9.04.

     After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless
it makes a change described in any of clauses (a) through (i) of Section 9.02, in which
case, the amendment, supplement or waiver shall bind only each Holder of a Note who has consented
to it and every subsequent Holder of a Note or portion of a Note that evidences the same
indebtedness as the consenting Holder’s Note.

Section 9.05 Notation on or Exchange of Notes.

     The Trustee may place an appropriate notation about an amendment, supplement or waiver on any
Note thereafter authenticated. The Issuers, in exchange for all Notes, may issue and the Trustee
shall authenticate new Notes that reflect the amendment, supplement or waiver.

     Failure to make the appropriate notation or issue a new Note shall not affect the validity and
effect of such amendment, supplement or waiver.

Section 9.06 Trustee to Sign Amendments, etc.

     The Trustee shall sign any amended or supplemental indenture authorized pursuant to this
Article 9 if the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If any such amendment or supplement does adversely
affect the rights, duties, liabilities or immunities of the Trustee, the Trustee may, but need not,
sign such amended or supplemented Indenture. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the
execution of such amended or supplemental indenture is authorized or permitted by this Indenture.

Section 9.07 Acts of Holders.

     (a) Any request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given, made or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly required, to the Company.
Such instrument or instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the “Act” of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject to Section
7.01) conclusive in favor of the Trustee and the Company, if made in the manner provided
in this Section.

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     Without limiting the generality of this Section, unless otherwise provided in or
pursuant to this Indenture, (i) a Holder, including a Depository or its nominee that is a
Holder of a Global Note, may give, make or take, by an agent or agents duly appointed in
writing, any request, demand, authorization, direction, notice, consent, waiver or other
action provided in or pursuant to this Indenture to be given, made or taken by Holders, and
a Depository or its nominee that is a Holder of a Global Note may duly appoint in writing as
its agent or agents members of, or participants in, such Depository holding interests in
such Global Note in the records of such Depository; and (ii) with respect to any Global Note
the Depository for which is The Depository Trust Company (“DTC”), any consent or other
action given, made or taken by an “agent member” of DTC by electronic means in accordance
with the Automated Tender Offer Procedures system or other customary procedures of, and
pursuant to authorization by, DTC shall be deemed to constitute the “Act” of the Holder of
such Global Note, and such Act shall be deemed to have been delivered to the Company and the
Trustee upon the delivery by DTC of an “agent’s message” or other notice of such consent or
other action having been so given, made or taken in accordance with the customary procedures
of DTC.

     (b) 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 Person acting in a capacity other than such
Person’s individual capacity, such certificate or affidavit shall also constitute sufficient
proof of the authority of the Person executing the same. 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 which the Trustee deems sufficient.

     (c) The ownership of Notes shall be proved by the Register.

     (d) Without limiting the foregoing, a Holder entitled hereunder to give, make or take
any action hereunder with regard to any particular Note may do so, or duly appoint in
writing any Person or Persons as its agent or agents to do so, with regard to all or any
part of the principal amount of such Note.

ARTICLE 10

GUARANTEES OF NOTES

Section 10.01 Subsidiary Guarantees.

     Subject to this Article 10, each of the Guarantors hereby, jointly and severally,
unconditionally guarantees, on a senior unsecured basis, to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the
validity and enforceability of this Indenture, the Notes held thereby and the Obligations of the
Issuers hereunder and thereunder, that: (a) the principal of, and interest, premium and Additional
Interest, if any, on, the Notes will be promptly paid in full when due, subject to any applicable
grace period, whether at Stated Maturity, by acceleration, upon repurchase or redemption or
otherwise, and interest on the overdue principal of, premium, and (to the extent permitted by

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law) interest and Additional Interest, if any, on, the Notes, and all other payment
Obligations of the Issuers to the Holders or the Trustee under the Indenture or the Notes will be
promptly paid in full and performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Notes or any of such other
Obligations, the same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period, whether at Stated
Maturity, by acceleration, upon repurchase or redemption or otherwise. Failing payment when so due
of any amount so guaranteed for whatever reason, the Guarantors will be jointly and severally
obligated to pay the same immediately. An Event of Default under this Indenture or the Notes shall
constitute an event of default under the Subsidiary Guarantees, and shall entitle the Holders to
accelerate the obligations of the Guarantors hereunder in the same manner and to the same extent as
the Obligations of the Issuers.

     The Guarantors hereby agree that their obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder with respect to any
provisions hereof or thereof, the recovery of any judgment against an Issuer, any action to enforce
the same or any other circumstance (other than complete performance) which might otherwise
constitute a legal or equitable discharge or defense of a Guarantor. Each Guarantor further, to
the extent permitted by law, hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of an Issuer, any right to require a
proceeding first against an Issuer, protest, notice and all demands whatsoever and covenants that
its Subsidiary Guarantee will not be discharged except by complete performance of the Obligations
contained in the Notes and this Indenture.

     If any Holder or the Trustee is required by any court or otherwise to return to an Issuer, the
Guarantors, or any Custodian, Trustee or other similar official acting in relation to any of the
Issuers or the Guarantors, any amount paid by an Issuer or any Guarantor to the Trustee or such
Holder, the Subsidiary Guarantees, to the extent theretofore discharged, shall be reinstated in
full force and effect. Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any Obligations guaranteed hereby until
payment in full of the Obligations guaranteed hereby.

     Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (a) the maturity of the Obligations guaranteed hereby
may be accelerated as provided in Article 6 hereof for the purposes of its Subsidiary
Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration
in respect of the Obligations guaranteed thereby, and (b) in the event of any declaration of
acceleration of such Obligations as provided in Article 6 hereof, such Obligations (whether
or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of
its Subsidiary Guarantee. The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the rights of the
Holders under the Subsidiary Guarantees.

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Section 10.02 Guarantors May Consolidate, etc., on Certain Terms.

     (a) No Guarantor shall sell or otherwise dispose of, in one or more related
transactions, all or substantially all of its properties or assets to, or consolidate with
or merge with or into (whether or not such Guarantor is the surviving Person), another
Person (other than the Company or another Guarantor), unless, (i) either (1) the Person
acquiring the properties or assets in any such sale or other disposition or the Person
formed by or surviving any such consolidation or merger (if other than the Company or such
Guarantor) unconditionally assumes, pursuant to a supplemental indenture substantially in
the form of Annex A hereto, all the obligations of such Guarantor under the Notes, this
Indenture and its Subsidiary Guarantee on terms set forth therein, or (2) such transaction
or series of related transactions complies with the provisions of Section 4.10, and
(ii) immediately after giving effect to such transaction or series of related transactions,
no Default or Event of Default exists.

     (b) In the case of any such consolidation or merger and upon the assumption by the
successor Person, by supplemental indenture, executed and delivered to the Trustee and
substantially in the form of Annex A hereto, of the Subsidiary Guarantee of, and the due and
punctual performance of all of the covenants of this Indenture to be performed by, the
applicable Guarantor, such successor Person shall succeed to and be substituted for such
Guarantor with the same effect as if it had been named herein as a Guarantor.

Section 10.03 Releases of Subsidiary Guarantees.

     The Subsidiary Guarantee of a Guarantor shall be released: (1) in connection with any sale or
other disposition of all or substantially all of the properties or assets of such Guarantor
(including by way of merger or consolidation) to a Person that is not (either before or after
giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the
sale or other disposition complies with Section 4.10; (2) in connection with any sale or
other disposition of the Capital Stock of such Guarantor to a Person that is not (either before or
after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if
the sale or other disposition complies with Section 4.10 and such Guarantor ceases to be a
Restricted Subsidiary of the Company as a result of such disposition; (3) if such Guarantor is a
Restricted Subsidiary and the Company designates such Guarantor as an Unrestricted Subsidiary in
accordance with Section 4.18 of this Indenture; (4) upon Legal Defeasance or Covenant
Defeasance or Discharge in accordance with Article 8; (5) upon the liquidation or
dissolution of such Guarantor provided no Default or Event of Default has occurred or is
continuing; (6) at such time as such Guarantor ceases both (x) to guarantee any other Indebtedness
of either of the Issuers and any Indebtedness of any other Guarantor (except as a result of payment
under any such other guarantee) and (y) to be an obligor with respect to any Indebtedness under any
Credit Facility; or (7) upon such Guarantor consolidating with, merging into or transferring all of
its properties or assets to the Company or another Guarantor, and as a result of, or in connection
with, such transaction such Guarantor dissolving or otherwise ceasing to exist.

     Upon delivery by the Company to the Trustee of an Officers’ Certificate to the effect that any
of the conditions described in the foregoing clauses (1) — (7) has occurred, the Trustee shall

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execute any documents reasonably requested by the Company in order to evidence the release of
any Guarantor from its obligations under its Subsidiary Guarantee. Any Guarantor not released from
its obligations under its Subsidiary Guarantee shall remain liable for the full amount of principal
of and interest, premium, and Additional Interest, if any, on, the Notes and for the other
obligations of such Guarantor under this Indenture as provided in this Article 10.

Section 10.04 Limitation on Guarantor Liability.

     The obligations of each Guarantor under its Subsidiary Guarantee will be limited to the
maximum amount as will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under its Subsidiary
Guarantee or pursuant to its contribution obligations under this Indenture, result in the
obligations of such Guarantor under its Subsidiary Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law and not otherwise being void or
voidable under any similar laws affecting the rights of creditors generally.

Section 10.05 “Trustee” to Include Paying Agent.

     In case at any time any Paying Agent other than the Trustee shall have been appointed and be
then acting hereunder, the term “Trustee” as used in this Article 10 shall in each case
(unless the context shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully and for all intents and purposes as if such Paying Agent were
named in this Article 10 in place of the Trustee.

ARTICLE 11

MISCELLANEOUS

Section 11.01 Trust Indenture Act Controls.

     If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by
TIA § 318(c), such TIA-imposed duties shall control. If any provision hereof limits, qualifies or
conflicts with a provision of the TIA which is required to be a part of and govern this Indenture,
such required provision of the TIA shall control. If any provision of this Indenture modifies or
excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA
shall be deemed to apply to this Indenture as so modified or shall be excluded, as the case may be.

Section 11.02 Notices.

     Any notice or communication by an Issuer, any Guarantor or the Trustee to the other parties
hereto is duly given if in writing (in the English language) and delivered in person or mailed by
first class mail (registered or certified, return receipt requested), facsimile or overnight air
courier guaranteeing next day delivery, to their respective addresses:

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     If to any of the Issuers or the Guarantors:

Linn Energy, LLC

600 Travis, Suite 5100

Houston, Texas 77002

Attention: Chief Financial Officer

Facsimile No.: (281) 840-4186

     with a copy to (which shall not constitute notice):

Baker Botts L.L.P.

One Shell Plaza, 910 Louisiana

Houston, Texas 77002

Attention: Kelly Rose

Facsimile No.: (713) 229-7996

     If to the Trustee:

U.S. Bank National Association

Corporate Trust Services

5555 San Felipe Street, Suite 1150

Houston, Texas 77056

Attention: Steven A. Finklea

Facsimile No.: (713) 235-9213

     An Issuer, any of the Guarantors or the Trustee, by notice to the other parties hereto, may
designate additional or different addresses for subsequent notices or communications.

     All notices and communications (other than those sent to Holders) shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged, if sent by
facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery, in each case to the address shown above.

     Any notice or communication to a Holder shall be mailed by first class mail, certified or
registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to
its address shown on the register kept by the Registrar. All notices and communications to a
Holder shall be deemed to have been duly given: five Business Days after being deposited in the
mail, postage prepaid, if mailed, and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery, in each case to the address of the
Holder shown on the register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA § 313(c), to the extent required by the TIA. Failure to mail
a notice or communication to a Holder or any defect in it shall not affect its sufficiency with
respect to other Holders.

     If a notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it.

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     If either of the Issuers mails a notice or communication to Holders, it shall mail a copy to
the Trustee and each Agent at the same time.

     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.

     Where this Indenture provides for notice of any event to a Holder of a Global Note, such
notice shall be sufficiently given if given to the Depository for such Note (or its designee),
pursuant to its Applicable Procedures, not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice.

Section 11.03 Communication by Holders of Notes with Other Holders of Notes.

     Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their
rights under this Indenture or the Notes. The Issuers, the Trustee, the Registrar and anyone else
shall have the protection of TIA § 312(c).

Section 11.04 Certificate and Opinion as to Conditions Precedent.

     Upon any request or application by an Issuer to the Trustee to take any action or refrain from
taking any action under this Indenture, such Issuer shall furnish to the Trustee:

     (a) an Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee (which shall include the statements set forth in Section 11.05 hereof)
stating that, in the opinion of the signers, all conditions precedent and covenants, if any,
provided for in this Indenture relating to the proposed action have been satisfied; and

     (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
(which shall include the statements set forth in Section 11.05 hereof) stating that,
in the opinion of such counsel, all such conditions precedent and covenants have been
satisfied.

Section 11.05 Statements Required in Certificate or Opinion.

     Each certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) shall comply
with the provisions of TIA § 314(e) and shall include:

     (a) a statement that the person making such certificate or opinion has read such
condition or covenant;

     (b) 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;

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     (c) a statement that, in the opinion of such person, he or she has made such
examination or investigation as is necessary to enable him or her to express an informed
opinion as to whether or not such condition or covenant has been satisfied; and

     (d) a statement as to whether or not, in the opinion of such person, such condition or
covenant has been satisfied.

     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 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, or representation by, 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 stating that the information with respect to such factual
matters is in the possession of the Company 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 11.06 Rules by Trustee and Agents.

     The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar
or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 11.07 No Personal Liability of Directors, Officers, Employees and Unitholders.

     No past, present or future director, officer, partner, employee, incorporator, manager or
unitholder or other owner of Capital Stock of the Issuers or any Guarantor, as such, shall have any
liability for any obligations of the Issuers or any Guarantor under the Notes, the Subsidiary
Guarantees or this Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for issuance of the Notes.

Section 11.08 Governing Law.

     THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.

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Section 11.09 No Adverse Interpretation of Other Agreements.

     This Indenture may not be used to interpret any other indenture, loan or debt agreement of the
Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.

Section 11.10 Successors.

     All agreements of the Issuers and the Guarantors in this Indenture and the Notes shall bind
their respective successors. All agreements of the Trustee in this Indenture shall bind its
successors.

Section 11.11 Severability.

     In case any provision in this Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

Section 11.12 Table of Contents, Headings, etc.

     The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be considered a part of
this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

Section 11.13 Counterparts.

     This Indenture may be signed in counterparts and by the different parties hereto in separate
counterparts, each of which shall constitute an original and all of which together shall constitute
one and the same instrument.

Section 11.14 Benefits of Indenture.

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

Section 11.15 Language of Notices, Etc.

     Any request, demand, authorization, direction, notice, consent, waiver or Act required or
permitted under this Indenture shall be in the English language, except that any published notice
may be in an official language of the country of publication.

[Signatures on following pages]

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SIGNATURES

	 	 	 	 	 
	 	Issuers

Linn Energy, LLC 

Linn Energy Finance Corp.

 	 
	 	By:  	 /s/
Kolja Rockov	 
	 	 	Name:  	Kolja Rockov 	 
	 	 	Title:  	Executive Vice President and 
Chief

Financial Officer 	 
	 
	 	Guarantors

Linn Energy Holdings, LLC

Linn Exploration Midcontinent, LLC

Linn Exploration & Production Michigan LLC

Linn Exploration & Production Michigan 

     Midstream LLC

Linn Gas Marketing, LLC

Linn Gas Processing MI LLC

Linn Midwest Energy LLC 

Linn Operating, Inc.

Mid-Continent I, LLC

Mid-Continent II, LLC 

Mid-Continent Holdings I, LLC

Mid-Continent Holdings II, LLC 

 	 
	 	By:  	 /s/
Kolja Rockov	 
	 	 	Name:  	Kolja Rockov 	 
	 	 	Title:  	Executive Vice President and 
Chief

Financial Officer 	 
	 

Signature Page to Indenture

 

 

	 	 	 	 	 
	 	Trustee

U.S. Bank National Association, As Trustee

 	 
	 	By:  	 /s/
Steven Finklea	 
	 	 	Name:  	Steven Finklea 	 
	 	 	Title:  	Vice President 	 
	 

Signature Page to Indenture

 

 

RULE 144A/REGULATION S APPENDIX

PROVISIONS RELATING TO INITIAL NOTES

AND EXCHANGE NOTES

1. Definitions

     1.1 Definitions.

     For the purposes of this Appendix the following terms shall have the meanings indicated below:

     “Depository” means The Depository Trust Company, its nominees and their respective successors
and assigns, or such other depository institution hereinafter appointed by the Company.

     “Exchange Notes” means (1) the 6.500% Senior Notes due 2019 issued pursuant to this Indenture
in connection with a Registered Exchange Offer pursuant to a Registration Rights Agreement and (2)
Additional Notes, if any, issued pursuant to a registration statement filed with the SEC under the
Securities Act.

     “Initial Notes” means (1) $750,000,000 aggregate principal amount of 6.500% Senior Notes due
2019 issued pursuant to this Indenture on the Initial Issuance Date, (2) Additional Notes, if any,
issued in a transaction exempt from the registration requirements of the Securities Act and (3) any
6.500% Senior Notes due 2019 issued pursuant to Section 2.3(b)(ii) hereof in exchange for any
Initial Notes.

     “Initial Purchasers” means (1) with respect to the Initial Notes issued on the Initial
Issuance Date, Citigroup Global Markets Inc., Barclays Capital Inc., BNP Paribas Securities Corp.,
Credit Agricole Securities (USA) Inc., RBC Capital Markets, LLC, RBS Securities Inc., Wells Fargo
Securities, LLC, Credit Suisse Securities (USA) LLC, BMO Capital Markets Corp., Scotia Capital
(USA) Inc., UBS Securities LLC, Comerica Securities, Inc., ING Financial Markets LLC, SG Americas
Securities, LLC, U.S. Bancorp Investments, Inc., Banco Bilbao Vizcaya Argentaria, S.A., Capital One
Southcoast, Inc., DnB NOR Markets, Inc. and Mitsubishi UFJ Securities (USA), Inc. and (2) with
respect to each issuance of Additional Notes, the Persons purchasing such Additional Notes under
the related Purchase Agreement.

     “Notes” means the Initial Notes (including any Additional Notes, if any, issued in a
transaction exempt from the registration requirements of the Securities Act) and the Exchange Notes
(including any Additional Notes, if any, issued pursuant to a registration statement filed with the
SEC under the Securities Act), treated as a single class.

     “Notes Custodian” means the custodian with respect to a Global Note (as appointed by the
Depository), or any successor Person thereto and shall initially be the Trustee.

     “Purchase Agreement” means (1) with respect to the Initial Notes issued on the Initial
Issuance Date, the Purchase Agreement dated May 10, 2011 among the Issuers, the Guarantors and the
Initial Purchasers, and (2) with respect to each issuance of Additional Notes, the

App. - 1

 

purchase agreement or underwriting agreement among the Issuers and the Persons purchasing or
underwriting such Additional Notes.

     “Registered Exchange Offer” means the offer by the Issuers, pursuant to a Registration Rights
Agreement, to certain Holders of Initial Notes, to issue and deliver to such Holders, in exchange
for the Initial Notes, a like aggregate principal amount of Exchange Notes registered under the
Securities Act.

     “Registration Rights Agreement” means (1) with respect to the Initial Notes issued on the
Initial Issuance Date, the Registration Rights Agreement dated as of May 13, 2011 among the
Issuers, the Guarantors and the Initial Purchasers and (2) with respect to each issuance of
Additional Notes issued in a transaction exempt from the registration requirements of the
Securities Act, the registration rights agreement, if any, among the Issuers and the Persons
purchasing such Additional Notes under the related Purchase Agreement, in each case, as amended
from time to time.

     “Shelf Registration Statement” means the registration statement issued by the Company in
connection with the offer and sale of Initial Notes pursuant to a Registration Rights Agreement.

     “Transfer Restricted Securities” means Notes that bear or are required to bear the legend set
forth in Section 2.3(b)(i) hereof.

     “Unrestricted Initial Notes” means any Initial Notes that are not Transfer Restricted
Securities.

     1.2 Other Definitions.

	 	 	 
	Term	 	Defined in Section:
	“Agent Members”
	 	2.1(b)
	“Certificated Notes”
	 	2.1(c)
	“Distribution Compliance Period”
	 	2.1(b)
	“Global Note”
	 	2.1(a)
	“Regulation S”
	 	2.1(a)
	“Regulation S Notes”
	 	2.1(a)
	“Resale Restriction Termination Date”
	 	2.3(b)
	“Restricted Global Note”
	 	2.1(a)
	“Restricted Period”
	 	2.1(b)
	“Rule 144A”
	 	2.1(a)
	“Rule 144A Notes”
	 	2.1(a)

     2.1 The Notes.

     (a) Form and Dating. Initial Notes offered and sold to QIBs in reliance on Rule 144A
(“Rule 144A Notes”) under the Securities Act (“Rule 144A”) or in reliance on Regulation S
(“Regulation S Notes”) under the Securities Act (“Regulation S”), in each case as provided in a
Purchase Agreement, shall be issued initially in the form of one or more permanent global Notes in
definitive, fully registered form without interest coupons with the global Notes legend and

App. - 2

 

Restricted Notes legend set forth in Exhibit 1 hereto (each, unless and until becoming an
Unrestricted Initial Note in accordance with Section 2.3(b)(ii) below, a “Restricted Global Note”),
which shall be deposited on behalf of the purchasers of the Initial Notes represented thereby with
the Trustee, as custodian for the Depository (or with such other custodian as the Depository may
direct), and registered in the name of the Depository or a nominee of the Depository, duly executed
by the Issuers and authenticated by the Trustee as hereinafter provided. Beneficial interests in a
Restricted Global Note representing Initial Notes sold in reliance on either Rule 144A or
Regulation S may be held through Euroclear or Clearstream, as indirect participants in the
Depository. The aggregate principal amount of the Global Notes may from time to time be increased
or decreased by adjustments made on the records of the Trustee and the Depository or its nominee as
hereinafter provided. Exchange Notes shall be issued in global form (with the global Notes legend
set forth in Exhibit 1 hereto) or in certificated form as provided in Section 2.4 of this Appendix.
Exchange Notes issued in global form, Unrestricted Initial Notes issued in global form and
Restricted Global Notes are sometimes referred to in this Appendix as “Global Notes.”

     (b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Note
deposited with or on behalf of the Depository.

     The Issuers shall execute and the Trustee shall, in accordance with this Section 2.1(b),
authenticate and deliver initially one or more Global Notes that (a) shall be registered in the
name of the Depository for such Global Note or Global Notes or the nominee of such Depository and
(b) shall be delivered by the Trustee to such Depository or pursuant to such Depository’s
instructions or held by the Trustee as custodian for the Depository. If such Global Notes are
Restricted Global Notes, then separate Global Notes shall be issued to represent Rule 144A Notes
and Regulation S Notes so long as required by law or the Depository.

     Members of, or participants in, the Depository (“Agent Members”) shall have no rights under
this Indenture with respect to any Global Note held on their behalf by the Depository or by the
Trustee as the custodian of the Depository or under such Global Note, and the Issuers, the Trustee
and any agent of the Issuers or the Trustee shall be entitled to treat the Depository as the
absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Issuers, the Trustee or any agent of the Issuers or the Trustee
from giving effect to any written certification, proxy or other authorization furnished by the
Depository or impair, as between the Depository and its Agent Members, the operation of customary
practices of such Depository governing the exercise of the rights of a holder of a beneficial
interest in any Global Note.

     Prior to the expiration of the period through and including the 40th day after the later of
the commencement of the offering of any Initial Notes and the closing of such offering (such
period, the “Restricted Period”), beneficial interests in the Restricted Global Note representing
Regulation S Notes may be exchanged for beneficial interests in the Rule 144A Restricted Global
Note representing Rule 144A Notes only if (i) such exchange occurs in connection with a transfer of
the notes pursuant to Rule 144A, (ii) the transferor first delivers to the Trustee a written
certificate (in the form provided in Exhibit 1 hereto) to the effect that the notes are being
transferred to a Person who the transferor reasonably believes to be a QIB within the meaning of
Rule 144A and is purchasing for its own account or the account of a QIB, in each case in a

App. - 3

 

transaction meeting the requirements of Rule 144A, and (iii) the transfer is in accordance
with all applicable securities laws of the states of the United States and other jurisdictions.
After the expiration of the Restricted Period, such certification requirements shall not apply to
such transfers of beneficial interests in a Restricted Global Note representing Regulation S Notes.

     Beneficial interests in a Restricted Global Note representing Rule 144A Notes may be
transferred to a Person who takes delivery in the form of an interest in the Restricted Global Note
representing Regulation S Notes, whether before or after the expiration of the Restricted Period,
only if the transferor first delivers to the Trustee a written certificate (in the form provided in
Exhibit 1 hereto) to the effect that such transfer is being made in accordance with Rule 903 or 904
of Regulation S or Rule 144 (if available).

     (c) Certificated Notes. Except as provided in Section 2.3 or 2.4, owners of
beneficial interests in Restricted Global Notes shall not be entitled to receive physical delivery
of notes in registered, certificated form (“Certificated Notes”). Certificated Notes shall not be
exchangeable for beneficial interests in Global Notes.

     2.2 Authentication. The Trustee shall authenticate and deliver: (1) on the Initial
Issuance Date, an aggregate principal amount of $750,000,000 6.500% Senior Notes due 2019, (2) at
any time or from time to time, any Additional Notes for an original issue in an aggregate principal
amount specified in the written order of the Issuers pursuant to Section 2.02 of the Indenture and
(3) at any time or from time to time, Exchange Notes for issue only in a Registered Exchange Offer
pursuant to a Registration Rights Agreement, for a like principal amount of Initial Notes, in each
case upon a written order of the Issuers. Such order (x) shall specify (i) the aggregate principal
amount of the Notes to be authenticated, the date on which such Notes are to be authenticated and
to whom such Notes shall be registered and delivered; (ii) whether such Notes constitute Initial
Notes or Exchange Notes; (iii) whether or not such Notes constitute Additional Notes; and (iv) if
such Notes constitute Additional Notes, the issue price, the issue date (and the corresponding date
from which interest shall accrue thereon and the first interest payment date therefor) and the
CUSIP number and any corresponding ISIN of such Additional Notes and whether such Additional Notes
shall be Transfer Restricted Securities and issued in the form of Initial Notes as set forth in
Exhibit 1 hereto or shall be issued in the form of Exchange Notes as set forth in Exhibit 2 hereto
and (y) in the case of any issuance of Additional Notes pursuant to Section 2.13 of the Indenture,
shall certify that such issuance is in compliance with Section 4.09 of the Indenture. The Trustee
shall also authenticate and deliver Notes at the times and in the manner specified in Sections 2.3
and 2.4 hereof and in Sections 2.06, 2.07, 2.09, 3.06, 4.10, 4.15 or 9.05 of the Indenture.

     2.3 Transfer and Exchange.

     (a) Transfer and Exchange of Global Notes. (i) The transfer and exchange of Global
Notes or beneficial interests therein shall be effected through the Depository, in accordance with
the Indenture (including applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depository therefor. A transferor of a beneficial interest in a Global Note
shall deliver to the Registrar a written order given in accordance with the Depository’s procedures
containing information regarding the participant account of the Depository to be credited with a
beneficial interest in the Global Note. The Registrar shall, in accordance with such instructions

App. - 4

 

instruct the Depository to credit to the account of the Person specified in such instructions
a beneficial interest in the Global Note and to debit the account of the Person making the transfer
the beneficial interest in the Global Note being transferred.

     (ii) Notwithstanding any other provisions of this Appendix, a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such successor
Depository.

     (iii) In the event that a Restricted Global Note is exchanged for Notes in certificated
form pursuant to Section 2.4 of this Appendix, prior to the consummation of a Registered
Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such
Notes, such Notes may be exchanged only in accordance with such procedures as are
substantially consistent with the provisions of this Section 2.3 (including the
certification requirements set forth on the reverse of the Initial Notes intended to ensure
that such transfers comply with Rule 144A or Regulation S, as the case may be) and such
other procedures as may from time to time be adopted by the Company.

     (b) Legend.

     (i) Except as permitted by the following paragraphs (ii), (iii), (iv) and (v), each
Note certificate evidencing the Restricted Global Notes (and all Notes issued in exchange
therefor or in substitution thereof) shall bear a legend in substantially the following
form:

THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER SUCH NOTES NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THE HOLDER OF ANY NOTE EVIDENCED HEREBY BY ITS ACCEPTANCE HEREOF (1)
REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING SUCH NOTE IN AN
“OFFSHORE TRANSACTION” PURSUANT TO RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (2)
AGREES THAT IT WILL NOT, PRIOR TO THE DATE WHICH IS ONE YEAR AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF SUCH NOTE) OR THE LAST DAY ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WERE THE OWNERS OF SUCH NOTE (OR ANY PREDECESSOR OF SUCH
NOTE) (THE “RESALE RESTRICTION TERMINATION DATE”), OFFER, SELL OR OTHERWISE TRANSFER SUCH
NOTE EXCEPT (A) TO AN ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO

App. - 5

 

LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
(“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO
RULE 144 UNDER THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM SUCH NOTE IS TRANSFERRED PRIOR TO THE RESALE RESTRICTION TERMINATION DATE A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) THAT IS (A) PURSUANT TO CLAUSE (2)(D)
PRIOR TO THE END OF THE 40 DAY DISTRIBUTION COMPLIANCE PERIOD WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT OR (B) PURSUANT TO CLAUSE (2)(F) PRIOR TO THE RESALE
RESTRICTION TERMINATION DATE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING
CASES IN CLAUSES (i)(A) OR (B), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED AS TO ANY NOTE EVIDENCED HEREBY UPON DELIVERY TO THE TRUSTEE BY THE
COMPANY OR THE HOLDER THEREOF OF A WRITTEN REQUEST FOR THE REMOVAL HEREOF, IN ANY CASE AT
ANY TIME AFTER THE RESALE RESTRICTION TERMINATION DATE AS USED HEREIN, THE TERMS “OFFSHORE
TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.

     (ii) The Company, acting in its discretion, may remove the legend set forth in
paragraph (i) above from any Transfer Restricted Security at any time on or after the Resale
Restriction Termination Date applicable to such Transfer Restricted Security. Without
limiting the generality of the preceding sentence, the Company may effect such removal by
issuing and delivering, in exchange for such Transfer Restricted Security, an Unrestricted
Initial Note without such legend, registered to the same Holder and in an equal principal
amount, and upon receipt by the Trustee of a written order of the Company stating that the
Resale Restriction Termination Date applicable to such Transfer Restricted Security has
occurred and requesting the authentication and delivery of an Unrestricted Initial Note in
exchange therefor (which order shall not be required to be accompanied by any Opinion of
Counsel or any other document) given at least three Business Days in advance of the proposed
date of exchange specified therein (which shall be no earlier than such Resale Restriction
Termination Date), the Trustee shall authenticate and deliver such Unrestricted Initial Note
to the Depository or pursuant to

App. - 6

 

such Depository’s instructions or hold such Note as Note Custodian for the Depository
and shall request the Depository to, or, if the Trustee is Note Custodian of such Transfer
Restricted Security, shall itself, surrender such Transfer Restricted Security in exchange
for such Unrestricted Initial Note without such legend and thereupon cancel such Transfer
Restricted Security so surrendered, all as directed in such order. For purposes of
determining whether the Resale Restriction Termination Date has occurred with respect to any
Notes evidenced by a Transfer Restricted Security or delivering any order pursuant to this
Section 2.3(b)(ii) with respect to such Notes, (i) only those Notes which a Principal
Officer of the Company actually knows (after reasonable inquiry) to be or to have been owned
by an Affiliate of the Company shall be deemed to be or to have been, respectively, owned by
an Affiliate of the Company; and (ii) “Principal Officer” means the principal executive
officer, the principal financial officer, the treasurer or the principal accounting officer
of the Company.

For purposes of this Section 2.3(b)(ii), all provisions relating to the removal of the
legend set forth in paragraph (i) above shall relate, if the Resale Restriction Termination
Date has occurred only with respect to a portion of the Notes evidenced by a Transfer
Restricted Security, to such portion of the Notes so evidenced as to which the Resale
Restriction Termination Date has occurred.

Each holder of any Note evidenced by any Restricted Global Note, by its acceptance thereof,
(A) authorizes and consents to, (B) appoints the Company as its agent for the sole purpose
of delivering such electronic messages, executing and delivering such instruments and taking
such other actions, on such holder’s behalf, as the Depository or the Trustee may require to
effect, and (C) upon the request of the Company, agrees to deliver such electronic messages,
execute and deliver such instruments and take such other actions as the Depository or the
Trustee may require, or as shall otherwise be necessary to effect, the removal of the legend
set forth in Section 2.3(b)(i) (including by means of the exchange of all or the portion of
such Restricted Global Note evidencing such Note for a certificate evidencing such Note that
does not bear such legend) at any time after the Resale Restriction Termination Date.

     (iii) Upon any sale or transfer of a Transfer Restricted Security (including any
Transfer Restricted Security represented by a Restricted Global Note) pursuant to Rule 144
under the Securities Act, the Registrar shall permit the transferee thereof to exchange such
Transfer Restricted Security for a certificated Note that does not bear the legend set forth
above and rescind any restriction on the transfer of such Transfer Restricted Security, if
the transferor thereof certifies in writing to the Registrar that such sale or transfer was
made in reliance on Rule 144 (such certification to be in the form set forth on the reverse
of the Note).

     (iv) After a transfer of any Initial Notes pursuant to and during the period of the
effectiveness of a Shelf Registration Statement with respect to such Initial Notes, all
requirements pertaining to legends on such Initial Note will cease to apply, the requirement
that any such Initial Note issued to certain Holders be issued in global form will cease to
apply, and a certificated Initial Note or an Initial Note in global form, in each case
without restrictive transfer legends, will be available to the transferee of the

App. - 7

 

Holder of such Initial Notes upon exchange of such transferring Holder’s certificated
Initial Note or directions to transfer such Holder’s interest in the Global Note, as
applicable.

     (v) Upon the consummation of a Registered Exchange Offer with respect to the Initial
Notes, all requirements pertaining to such Initial Notes that Initial Notes issued to
certain Holders be issued in global form will still apply with respect to Holders of such
Initial Notes that do not exchange their Initial Notes, and Exchange Notes in certificated
or global form will be available to Holders that exchange such Initial Notes in such
Registered Exchange Offer.

     (c) Cancellation or Adjustment of Global Note. At such time as all beneficial
interests in a Global Note have either been exchanged for certificated Notes, redeemed, purchased
or canceled, such Global Note shall be returned to the Trustee for cancellation or retained and
canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a
Global Note is exchanged for certificated Notes, redeemed, purchased or canceled, the principal
amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on
the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with
respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction.

     (d) Obligations with Respect to Transfers and Exchanges of Notes.

     (i) To permit registrations of transfers and exchanges, the Issuers shall execute and
the Trustee shall authenticate certificated Notes and Global Notes at the Registrar’s
request.

     (ii) No service charge shall be made for any registration of transfer or exchange, but
the Issuers may require payment of a sum sufficient to cover any transfer tax, assessments
or similar governmental charge payable in connection therewith (other than any such transfer
taxes, assessments or similar governmental charge payable upon any exchange or transfer
pursuant to Sections 3.06, 4.10, 4.15 and 9.05 of the Indenture).

     (iii) The Registrar shall not be required to register the transfer of or exchange of
any Note or portion of a Note selected for redemption, except for the unredeemed portion of
any Note being redeemed in part. Also, it need not exchange or register the transfer of any
Notes for a period of 15 days before a selection of Notes to be redeemed.

     (iv) Prior to the due presentation for registration of transfer of any Note, the
Issuers, the Guarantors, the Trustee, the Paying Agent or the Registrar may deem and treat
the Person in whose name a Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of, interest, premium and Additional Interest, if
any, on, such Note and for all other purposes whatsoever, whether or not such Note is
overdue, and none of the Issuers, the Guarantors, the Trustee, the Paying Agent or the
Registrar shall be affected by notice to the contrary.

     (v) All Notes issued upon any transfer or exchange pursuant to the terms of this
Indenture shall evidence the same debt and shall be entitled to the same benefits under

App. - 8

 

this Indenture as the Notes surrendered upon such transfer or exchange. Accordingly,
for purposes of clause (3) of the second paragraph of Section 4.09 of this Indenture, “the
Notes issued and sold on the Initial Issuance Date” shall be deemed to refer to and include
any Notes issued in exchange for, or upon registration of transfer of, or in lieu of, any
such Notes (or any predecessor Notes thereof) pursuant to Sections 2.3 or 2.4 hereof or
Sections 2.06, 2.07, 2.09, 3.06, 4.10, 4.15 or 9.05 of this Indenture.

(e) No Obligation of the Trustee. The Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Note, a member of, or a participant in the
Depository or other Person with respect to the accuracy of the records of the Depository or
its nominee or of any participant or member thereof, with respect to any ownership interest
in the Notes or with respect to the delivery to any participant, member, beneficial owner or
other Person (other than the Depository) of any notice (including any notice of optional
redemption) or the payment of any amount, under or with respect to such Notes. All notices
and communications to be given to the Holders and all payments to be made to Holders under
the Notes shall be given or made only to or upon the order of the registered Holders (which
shall be the Depository or its nominee in the case of a Global Note). The rights of
beneficial owners in any Global Note shall be exercised only through the Depository subject
to the applicable rules and procedures of the Depository. The Trustee may rely and shall be
fully protected in relying upon information furnished by the Depository with respect to its
members, participants and any beneficial owners.

     (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as
to compliance with any restrictions on transfer imposed under the Indenture or under
Applicable Law with respect to any transfer of any interest in any Note (including any
transfers between or among Depository participants, members or beneficial owners in any
Global Note) other than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly required by, the
terms of the Indenture, and to examine the same to determine substantial compliance as to
form with the express requirements hereof.

     2.4 Certificated Notes.

     (a) A Global Note deposited with the Depository or with the Trustee as custodian for the
Depository pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the
form of certificated Notes in an aggregate principal amount equal to the principal amount of such
Global Note, in exchange for such Global Note, only if such transfer complies with Section 2.3 and
(i) the Depository notifies the Issuers that it is unwilling or unable to continue as Depository
for such Global Note or if at any time such Depository ceases to be a “clearing agency” registered
under the Exchange Act and in either case a successor depositary is not appointed by the Issuers
within 90 days, (ii) the Issuers, at their option, but subject to DTC’s requirements, notify the
Trustee in writing that they elect to cause the issuance of the Certificated Notes, or (iii) an
Event of Default has occurred and is continuing and DTC notifies the Trustee of its decision to
exchange the Global Notes for Certificated Notes.

     (b) Any Global Note that is transferable to the beneficial owners thereof pursuant to this
Section shall be surrendered by the Depository or the Notes Custodian to the Trustee located

App. - 9

 

at its Corporate Trust Office to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion
of such Global Note, an equal aggregate principal amount of certificated Notes of authorized
denominations. Any portion of a Global Note transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations equal to $2,000 or an integral multiple
of $1,000 in excess of $2,000, and registered in such names as the Depository shall direct. Any
certificated Note delivered in exchange for an interest in a Global Note shall, except as otherwise
provided by Section 2.3(b), bear the Restricted Notes legend set forth in Exhibit 1 hereto.

     (c) Subject to the provisions of Section 2.4(b), the Holder of a Global Note shall be entitled
to grant proxies and otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is entitled to take under
the Indenture or the Notes.

     (d) In the event of the occurrence of any of the events specified in Section 2.4(a), the
Issuers shall promptly make available to the Trustee a reasonable supply of certificated Notes in
definitive, fully registered form without interest coupons.

App. - 10

 

EXHIBIT 1 TO RULE 144A/REGULATION S APPENDIX

[FORM OF FACE OF INITIAL NOTE]

[Global Notes Legend]

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO AN ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

[Restricted Notes Legend]

     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE BY ITS
ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING SUCH NOTE IN AN
“OFFSHORE TRANSACTION” PURSUANT TO RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT, PRIOR TO THE DATE WHICH IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF (OR OF ANY PREDECESSOR OF THIS NOTE) OR THE LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE
OF THE COMPANY WERE THE OWNERS OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) (THE “RESALE
RESTRICTION TERMINATION DATE”), OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE EXCEPT (A) TO AN ISSUER
OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE

Exhibit 1 to App. - 1

 

SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL
BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO RULE 144 UNDER THE
SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED
PRIOR TO THE RESALE RESTRICTION TERMINATION DATE A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
(i) THAT IS (A) PURSUANT TO CLAUSE (2)(D) PRIOR TO THE END OF THE 40 DAY DISTRIBUTION COMPLIANCE
PERIOD WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (B) PURSUANT TO CLAUSE (2)(F)
PRIOR TO THE RESALE RESTRICTION TERMINATION DATE, TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE
FOREGOING CASES IN CLAUSES (i)(A) OR (B), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND
WILL BE REMOVED UPON DELIVERY TO THE TRUSTEE BY THE COMPANY OR THE HOLDER THEREOF OF A WRITTEN
REQUEST FOR THE REMOVAL HEREOF, IN ANY CASE AT ANY TIME AFTER THE RESALE RESTRICTION TERMINATION
DATE. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

Exhibit 1 to App. - 2

 

LINN ENERGY, LLC

LINN ENERGY FINANCE CORP.

			
	 	 	 
	No. [   ]
	 	Principal Amount $[   ]
	 	 	 
	 
	 	CUSIP No. [________]
	 	 	 
	 
	 	ISIN No. [________]

6.500% Senior Notes due 2019

     Linn Energy, LLC, a Delaware limited liability company, and Linn Energy Finance Corp., a
Delaware corporation, jointly and severally promise to pay to _____________, or registered assigns,
the principal sum of ___________ Dollars on May 15, 2019 [or such greater or lesser amount as may
be indicated on Schedule A hereto]1.

     Interest Payment Dates: May 15 and November 15

     Record Dates: May 1 and November 1

     Additional provisions of this Note are set forth on the other side of this Note.

	 	 	 	 	 	 	 

	 	 	Linn Energy, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Linn Energy Finance Corp.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

 

			
	1	 	If this is a Global note, add this provision.

Exhibit 1 to App. - 3

 

	 	 	 	 	 

	 

	 	U.S. Bank National Association,

as Trustee, certifies that this is one of the

Notes referred to in the Indenture.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Authorized Signatory
	 	 

Dated:

Exhibit 1 to App. - 4

 

[FORM OF REVERSE SIDE OF INITIAL NOTE]

6.500% Senior Notes due 2019

     Capitalized terms used herein but not defined shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

     1. Interest. Linn Energy, LLC, a Delaware limited liability company (the “Company”),
and Linn Energy Finance Corp., a Delaware corporation (the “Finance Corp.” and, together with the
Company, the “Issuers”), jointly and severally promise to pay interest on the principal amount of
this Note at 6.500% per annum from May 13, 2011 until maturity and shall pay Additional Interest
payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Issuers
will pay interest and Additional Interest, if any, semi-annually in arrears on May 15 and November
15 of each year (each an “Interest Payment Date”), commencing November 15, 2011. If an Interest
Payment Date falls on a day that is not a Business Day, the interest payment to be made on such
Interest Payment Date will be made on the next succeeding Business Day with the same force and
effect as if made on such Interest Payment Date, and no additional interest will accrue solely as a
result of such delayed payment. Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of original issuance;
provided that if there is no existing Default or Event of Default in the payment of interest, and
if this Note is authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment
Date, except in the case of the original issuance of Notes, in which case interest shall accrue
from the date of authentication. The Issuers shall pay (i) interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from
time to time on demand at a rate that is 1% higher than the then applicable interest rate on the
Notes and (ii) interest (including post-petition interest in any proceeding under any Bankruptcy
Law) on overdue installments of interest and Additional Interest (without regard to any applicable
grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

     2. Method of Payment. The Issuers will pay interest on the Notes (except defaulted
interest) and Additional Interest to the Persons who are registered Holders of Notes at the close
of business on the May 1 or November 1 next preceding the Interest Payment Date, even if such Notes
are cancelled after such record date and on or before such Interest Payment Date, except as
provided in Section 2.11 of the Indenture with respect to defaulted interest. Holders must
surrender Notes to the Paying Agent to collect payments of principal and premium, if any, together
with accrued and unpaid interest and Additional Interest, if any, due at maturity. The Notes will
be payable as to principal, interest, premium and Additional Interest, if any, at the office or
agency of the Issuers maintained for such purpose within the City and State of New York, or, at the
option of the Issuers, payment of interest and Additional Interest may be made by check mailed to
the Holders at their addresses set forth in the register of Holders, and provided that payment by
wire transfer of immediately available funds will be required with respect to any amounts due on
all Global Notes and all other Notes the Holders of which shall have provided wire transfer
instructions to the Issuers or the Paying Agent. Notwithstanding the foregoing, if this Note is a
Global Note, payment may be made pursuant to the Applicable Procedures of the

Exhibit 1 to App. - 5

 

Depository as permitted in the Indenture. Such payment shall be 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.

     3. Paying Agent and Registrar. Initially, U.S. Bank National Association, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may appoint and change
any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.

     4. Indenture. The Issuers issued the Notes under an Indenture dated as of May 13,
2011 (“Indenture”) among the Issuers, the Guarantors and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a statement of such
terms. The Notes are unsecured senior obligations of the Issuers, and the aggregate principal
amount of the Notes is unlimited.

     5. Optional Redemption.

     (a) Except as set forth in subparagraphs (b) and (c) of this Paragraph 5, the Issuers shall
not have the option to redeem the Notes prior to May 15, 2015. On or after May 15, 2015, the
Issuers shall have the option to redeem the Notes, in whole or in part at any time, upon prior
notice as set forth in Paragraph 6, at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest and Additional Interest, if any, on the
Notes redeemed to the applicable redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on an Interest Payment Date that is on or prior to the
redemption date), if redeemed during the twelve-month period beginning on May 15 of the years
indicated below:

	 	 	 	 	 
	YEAR	 	PERCENTAGE
	2015
	 	 	103.250	%
	2016
	 	 	101.625	%
	2017 and thereafter
	 	 	100.000	%

     (b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time prior
to May 15, 2014, the Issuers may on one or more occasions redeem up to 35% of the aggregate
principal amount of Notes (including any Additional Notes) issued under the Indenture at a
redemption price of 106.500% of the principal amount thereof, plus accrued and unpaid interest and
Additional Interest, if any, thereon to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on an Interest Payment Date that is on
or prior to the redemption date), in an amount equal to the net cash proceeds of one or more Equity
Offerings; provided that, with respect to each such redemption, (i) at least 65% of the aggregate
principal amount of Notes (including any Additional Notes) issued under the Indenture remains
outstanding immediately after the occurrence of such redemption (excluding any Notes held by the
Company and its Subsidiaries) and (ii) such redemption occurs within 180 days of the date of the
closing of the related Equity Offering.

Exhibit 1 to App. - 6

 

     (c) Prior to May 15, 2015, the Issuers may redeem on one or more occasions all or part of the
Notes at a redemption price equal to the sum of (1) 100% of the principal amount thereof, plus (2)
the Make Whole Premium at the redemption date, plus (3) accrued and unpaid interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant record date to receive
interest due on an interest payment date that is on or prior to the redemption date).

     6. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not
more than 60 days (except as otherwise provided in the Indenture if the notice is issued in
connection with a Legal Defeasance, Covenant Defeasance or Discharge) before the redemption date to
each Holder whose Notes are to be redeemed at its registered address. If mailed in the manner
provided for in Section 3.03 of the Indenture, the notice of optional redemption shall be
conclusively presumed to have been given whether or not a Holder receives such notice. Failure to
give timely notice or any defect in the notice shall not affect the validity of the redemption.
Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of
$1,000 in excess of $2,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest and Additional Interest, if any, cease to accrue on the Notes or
portions thereof called for redemption. The notice of redemption with respect to a redemption
described in paragraph 5(c) above need not set forth the Make Whole Premium but only the manner of
calculation thereof.

     7. Mandatory Redemption.

     Except as set forth in Paragraph 8 below, neither of the Issuers shall be required to make
mandatory redemption or sinking fund payments with respect to the Notes or to repurchase the Notes
at the option of the Holders.

     8. Repurchase at Option of Holder.

     (a) Within 30 days following the occurrence of a Change of Control, the Company shall make an
offer (a “Change of Control Offer”) to repurchase all or any part (equal to $2,000 or an integral
multiple of $1,000 in excess of $2,000) of each Holder’s Notes at a purchase price equal to 101% of
the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest and
Additional Interest, if any, to the date of settlement (the “Change of Control Settlement Date”),
subject to the right of Holders of record on the relevant record date to receive interest due on an
Interest Payment Date that is on or prior to the Change of Control Settlement Date. Within 30 days
following a Change of Control, the Company shall mail a notice of the Change of Control Offer to
each Holder and the Trustee describing the transaction that constitutes the Change of Control and
setting forth the procedures governing the Change of Control Offer as required by Section 4.15 of
the Indenture.

     (b) On the 366th day after an Asset Sale (or, at the Company’s option, any earlier date), if
the aggregate amount of Excess Proceeds then exceeds $40.0 million, the Company shall commence an
offer to all Holders of Notes (an “Asset Sale Offer”) pursuant to Section 3.09 of the Indenture,
and to all holders of any Pari Passu Indebtedness then outstanding, to purchase, on a pro rata
basis, the maximum principal amount of Notes and such Pari Passu Indebtedness that may be purchased
out of the Excess Proceeds, at an offer price in cash in an amount equal to

Exhibit 1 to App. - 7

 

100% of the principal amount of the Notes plus accrued and unpaid interest and Additional
Interest, if any, thereon to the date of settlement, subject to the right of Holders of record on
the relevant record date to receive interest due on an Interest Payment Date that is on or prior to
the date of settlement, in accordance with the procedures set forth in the Indenture. If any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such
remaining Excess Proceeds for any purpose not otherwise prohibited by the Indenture If the
aggregate principal amount of Notes tendered into such Asset Sale Offer exceeds the amount of
Excess Proceeds allocated for the purchase of the Notes, the Trustee shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Trustee so
that only Notes in denominations of $2,000, or integral multiples of $1,000 in excess of $2,000,
shall be purchased) on the basis of the aggregate principal amount of tendered Notes and Pari Passu
Indebtedness. Holders of Notes that are the subject of an offer to purchase will receive an Asset
Sale Offer from the Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled “Option of Holder to Elect Purchase” on the reverse of
the Notes.

     9. Guarantees. The payment by the Issuers of the principal of and interest, premium
and Additional Interest, if any, on, the Notes is fully and unconditionally guaranteed on a joint
and several senior unsecured basis by each of the Guarantors to the extent set forth in the
Indenture.

     10. Denominations, Transfer, Exchange. The Notes are in registered form without
coupons in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents, and the Company may require a Holder to pay any taxes due on
transfer or exchange. The Issuers need not exchange or register the transfer of any Note or
portion of a Note selected for redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, they need not exchange or register the transfer of any Notes for a period
of 15 days before a selection of Notes to be redeemed.

     11. Persons Deemed Owners. The registered Holder of a Note may be treated as its
owner for all purposes.

     12. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or
the Notes may be amended or supplemented with the written consent of the Holders of at least a
majority in principal amount of the then outstanding Notes, and any existing default or compliance
with any provision of the Indenture or the Notes may be waived with the written consent of the
Holders of a majority in principal amount of the then outstanding Notes. Without the consent of
any Holder of a Note, the Indenture or the Notes may be amended or supplemented (1) to cure any
ambiguity, defect or inconsistency, (2) to provide for uncertificated Notes in addition to or in
place of certificated Notes, (3) to provide for the assumption of an Issuer’s obligations to
Holders of the Notes pursuant to Article 5 of the Indenture, (4) to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that does not adversely
affect the legal rights under the Indenture of any such Holder, provided that any change to conform
the Indenture to the Offering Memorandum shall not be deemed to adversely affect the legal rights
under the Indenture of any Holder, (5) to secure the Notes or the

Exhibit 1 to App. - 8

 

Subsidiary Guarantees pursuant to Section 4.12 of the Indenture or otherwise, (6) to provide
for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture,
(7) to add any additional Guarantor with respect to the Notes or to evidence the release of any
Guarantor from its Subsidiary Guarantee, in each case as provided in the Indenture, (8) to comply
with the requirements of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA, (9) to evidence or provide for the acceptance of appointment under the Indenture of
a successor Trustee or (10) to conform the text of the Indenture, the Subsidiary Guarantees or the
Notes to any provision described in the “Description of Notes” contained in the Offering
Memorandum.

     13. Defaults and Remedies. Events of Default include: (i) default for 30 days in the
payment when due of interest or Additional Interest, if any, on the Notes; (ii) default in payment
when due of the principal of or premium, if any, on the Notes when due at their Stated Maturity,
upon optional redemption, upon required repurchase, upon acceleration or otherwise; (iii) failure
by the Company to comply with Section 5.01 of the Indenture or to consummate a purchase of Notes
when required pursuant to the provisions of Section 3.09, 4.10 or 4.15 of the Indenture; (iv)
failure by the Company for 180 days after notice from the Trustee or the Holders of at least 25% in
principal amount of the Notes then outstanding to comply with Section 4.03 of the Indenture; (v)
failure by the Company for 60 days after notice from the Trustee or the Holders of at least 25% in
principal amount of the Notes then outstanding to comply with any of its other agreements in the
Indenture or the Notes; (vi) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists
or is created after the Initial Issuance Date, if such default (a) is caused by a failure to pay
principal of, or interest or premium, if any, on, such Indebtedness prior to the expiration of any
grace period provided in such Indebtedness (a “Payment Default”) or (b) results in the acceleration
of such Indebtedness prior to its Stated Maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so accelerated, aggregates $50.0
million or more; provided that if any such default is cured or waived or any such acceleration
rescinded, or such Indebtedness is repaid, within a period of 30 days from the expiration of the
applicable grace period or the occurrence of such acceleration, as the case may be, such Event of
Default and any consequential acceleration of the Notes shall be automatically rescinded, so long
as such rescission does not conflict with any judgment or decree; (vii) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $50.0 million
(to the extent not covered by insurance by a reputable and creditworthy insurer as to which the
insurer has not disclaimed coverage), which judgments are not paid, discharged or stayed for a
period of 60 consecutive days; (viii)(a) any Subsidiary Guarantee is held in any judicial
proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect
or (b) any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its
obligations under its Subsidiary Guarantee, except in each case, by reason of the release of such
Subsidiary Guarantee in accordance with the provisions of the Indenture; and (ix) certain events of
bankruptcy, insolvency or reorganization with respect to the Company, Finance Corp., any of the
Company’s Restricted Subsidiaries that is a Significant Subsidiary of the Company or any group of
Restricted Subsidiaries of the Company that, taken together, would constitute a Significant

Exhibit 1 to App. - 9

 

Subsidiary of the Company as specified in Section 6.01(i) or 6.01(j) of the Indenture. If any
Event of Default occurs and is continuing, the Trustee, by notice to the Issuers, or the Holders of
at least 25% in principal amount of the then outstanding Notes, by notice to the Issuers and the
Trustee, may declare all the Notes to be due and payable immediately. Notwithstanding the
preceding, in the case of an Event of Default arising from such events of bankruptcy, insolvency or
reorganization described in Section 6.01(i) or 6.01(j) of the Indenture, all outstanding Notes will
become due and payable immediately without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in
its exercise of any trust or power conferred on it. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal, interest, premium or Additional Interest) if a committee of
Responsible Officers in good faith determines that withholding notice is in their interests. The
Holders of a majority in principal amount of the Notes then outstanding by notice to the Trustee
may on behalf of the Holders of all the Notes rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing Events of Default
(except with respect to nonpayment of principal, interest, premium, or Additional Interest, if any,
that have become due solely because of the acceleration) have been cured or waived. The Holders of
a majority in principal amount of the Notes then outstanding by notice to the Trustee may on behalf
of the Holders of all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default in the payment of
the principal of, or interest, premium, or Additional Interest, if any, on, the Notes. The Issuers
are required to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and, so long as any Notes are outstanding, the Issuers are required upon any of their
respective Officers becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.

     14. Defeasance and Discharge. The Notes are subject to defeasance and discharge upon
the terms and conditions specified in the Indenture.

     15. No Recourse Against Others. No past, present or future director, officer,
partner, employee, incorporator, manager or unitholder or other owner of Capital Stock of the
Issuers or any Guarantor, as such, shall have any liability for any obligations of the Issuers or
any Guarantor under the Notes, the Subsidiary Guarantees or the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release are part of the consideration
for the issuance of the Notes.

     16. Authentication. This Note shall not be valid until authenticated by the manual
signature of an authorized signatory of the Trustee or an authenticating agent.

     17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).

Exhibit 1 to App. - 10

 

     18. Removal of Restricted Notes Legend. Each holder of any Note evidenced by any
Restricted Global Note, by its acceptance thereof, (A) authorizes and consents to, (B) appoints the
Company as its agent for the sole purpose of delivering such electronic messages, executing and
delivering such instruments and taking such other actions, on such holder’s behalf, as the
Depository or the Trustee may require to effect, and (C) upon the request of the Company, agrees to
deliver such electronic messages, execute and deliver such instruments and take such other actions
as the Depository or the Trustee may require, or as shall otherwise be necessary to effect, the
removal of the Restricted Notes Legend set forth on the face of such Note (including by means of
the exchange of all or the portion of such Restricted Global Note evidencing such Note for a
certificate evidencing such Note that does not bear such Restricted Notes Legend) at any time after
the Resale Restriction Termination Date.

     19. Additional Rights of Holders of Transfer Restricted Securities. In addition to
the rights provided to Holders of the Notes under the Indenture, Holders of Transfer Restricted
Securities shall have all the rights set forth in the Registration Rights Agreement dated as of May
13, 2011, among the Issuers, the Guarantors and the Initial Purchasers (the “Registration Rights
Agreement”).

     20. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers and corresponding
ISIN numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the accuracy of such
numbers either as printed on the Notes or as contained in any notice of redemption and reliance may
be placed only on the other identification numbers placed thereon.

     21. Governing Law. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     22. Successors. In the event a successor assumes all the obligations of an Issuer
under the Notes and the Indenture, pursuant to the terms thereof, such Issuer will be released from
all such obligations.

     The Company will furnish to any Holder upon written request and without charge a copy of the
Indenture or any Registration Rights Agreement. Requests may be made to:

Linn Energy, LLC

600 Travis, Suite 5100

Houston, Texas 77002

Attention: Investor Relations

Exhibit 1 to App. - 11

 

ASSIGNMENT FORM

     To assign this Note, fill in the form below:

     I or we assign and transfer this Note to

 
(Print or type assignee’s name, address and zip code)

 
(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint _____________________ agent to transfer this Note on the books of the
Issuers. The agent may substitute another to act for him.

	 	 	 	 	 

	Date:                    

	Your Signature: 	 	 	 
	 

	 	 

Sign exactly as your name appears on the other side of this Note.
	 	 

Signature Guarantee:

                                                             
                   

(Signature must be guaranteed)

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of
the Registrar, which requirements include membership or participation in the Security Transfer
Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined
by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

 

[Include the following only if the Restricted Notes Legend is included hereon]

[In connection with any transfer of any of the Notes evidenced by this certificate occurring prior
to one year after the later of the date of original issuance of such Notes and the last date, if
any, on which such Notes were owned by the Company or any Affiliate of the Company (or, in the case
of Regulation S Notes, prior to the expiration of the Distribution Compliance Period), the
undersigned confirms that such Notes are being transferred in accordance with their terms:

CHECK ONE BOX BELOW

	 	 	 	 	 

	(1)

	 	 ̈
	 	to an Issuer or any Subsidiary thereof; or
	 
	 	 	 	 
	(2)

	 	 ̈
	 	pursuant to an effective registration statement under the Securities
Act of 1933; or

Exhibit 1 to App. - 12

 

	 	 	 	 	 

	(3)

	 	 ̈
	 	to a person who the undersigned reasonably believes is a “qualified
institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that is
purchasing for its own account or for the account of a qualified institutional buyer to
whom notice is given that such transfer is being made in reliance on Rule 144A, in each
case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or
	 
	 	 	 	 
	(4)

	 	 ̈
	 	pursuant to offers and sales to non-U.S. persons that occur outside the
United States within the meaning of Regulation S under the Securities Act in compliance
with Rule 904 under the Securities Act of 1933; or
	 
	 	 	 	 
	(5)

	 	 ̈
	 	pursuant to Rule 144 under the Securities Act of 1933; or
	 
	 	 	 	 
	(6)

	 	 ̈
	 	pursuant to another exemption from registration under the Securities
Act of 1933.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced
by this certificate in the name of any person other than the registered holder thereof;
provided, however, that if box (4) or (6) is checked, the Trustee shall be entitled
to require, prior to registering any such transfer of the Notes, such legal opinions,
certifications and other information as the Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933.

                                                                 
               

Signature

Exhibit 1 to App. - 13

 

TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Note for its own account or an
account with respect to which it exercises sole investment discretion and that it and any such
account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities
Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuers and any Guarantors as the
undersigned has requested pursuant to Rule 144A or has determined not to request such information
and that it is aware that the transferor is relying upon the undersigned’s foregoing
representations in order to claim the exemption from registration provided by Rule 144A.

	 	 	 	 	 

	Dated:                                        
	 	 	 	 
	 

	 	 

Notice: To be executed by an executive officer
	 	 

Exhibit 1 to App. - 14

 

OPTION OF HOLDER TO ELECT PURCHASE

     If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or
4.15 of the Indenture, check the box below:

	 	 	 

	 ̈ Section 4.10
	 	 ̈ Section 4.15

     If you want to elect to have only part of this Note purchased by the Company pursuant to
Section 4.10 or Section 4.15 of the Indenture, state the amount (in minimum denomination of $2,000
or integral multiples of $1,000 in excess of $2,000) you elect to have purchased: $__________

	 	 	 	 	 	 	 

	Date:

	 	Your Signature	 	 	 	 
	 

	 	 	 	 

(Sign exactly as your name appears on the
other side of this Note)
	 	 
	 
	 	 	 	 	 	 
	 	 	Soc. Sec. or Tax Identification No.:                                        	 	 

	 	 	 	 	 

	Signature Guarantee:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	(signature must be guaranteed)	 	 

     Signatures must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Registrar, which requirements include membership or participation in the
Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as
may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.

Exhibit 1 to App. - 15

 

[TO BE ATTACHED TO GLOBAL NOTE]

SCHEDULE A

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The following increases or decreases in this Global Note have been made:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Principal	 	 
	 	 	Amount of	 	Amount of	 	Amount of this	 	Signature of
	 	 	decrease in	 	increase in	 	Global Note	 	authorized
	 	 	Principal	 	Principal	 	following such	 	officer of Trustee
	 	 	Amount of this	 	Amount of this	 	decrease or	 	or Notes
	Date	 	Global Note	 	Global Note	 	increase	 	Custodian
	 

	 	 	 	 	 	 	 	 

Exhibit 1 to App. - 16

 

EXHIBIT 2 TO RULE 144A/REGULATION S APPENDIX

[FORM OF FACE OF EXCHANGE NOTE]*/

 

*/ If the Note is to be issued in global form, add the Global Notes Legend from Exhibit 1 to Rule
144A/Regulation S Appendix and the attachment from such Exhibit 1 captioned “[TO BE ATTACHED TO
GLOBAL NOTES] — SCHEDULE OF INCREASES OR DECREASES IN
GLOBAL NOTE.”

All references to “Additional Interest” in the Note shall be deleted unless if, at the date of
issuance of the Exchange Note, any Registration Default (as defined in the Registration Rights
Agreement) has occurred with respect to the related Initial Notes during the interest period in
which such date of issuance occurs.

Exhibit 2 to App. - 1

 

[FORM OF FACE OF EXCHANGE NOTE]

LINN ENERGY, LLC

LINN ENERGY FINANCE CORP.

			
	 	 	 
	No. [   ]
	 	$               
	 	 	 
	 
	 	CUSIP No. [________]
	 	 	 
	 
	 	ISIN No. [________]

6.500% Senior Notes due 2019

     Linn Energy, LLC, a Delaware limited liability company, and Linn Energy Finance Corp., a
Delaware corporation, jointly and severally promise to pay to _____________, or registered assigns,
the principal sum of ___________ Dollars on May 15, 2019 [or such greater or lesser amount as may
be indicated on Schedule A hereto].2

     Interest Payment Dates: May 15 and November 15

     Record Dates: May 1 and November 1

     Additional provisions of this Note are set forth on the other side of this Note.

	 	 	 	 	 	 	 

	 	 	Linn Energy, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Linn Energy Finance Corp.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

 

			
	2	 	If this Note is a Global Note, add this provision.

Exhibit 2 to App. - 2

 

	 	 	 	 	 

	 

	 	U.S. Bank National Association,
as Trustee, certifies that this is one of the
Notes referred to in the Indenture.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Authorized Signatory
	 	 

Dated:

Exhibit 2 to App. - 3

 

[FORM OF REVERSE SIDE OF EXCHANGE NOTE]

6.500% Senior Notes due 2019

     Capitalized terms used herein but not defined shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

     1. Interest. Linn Energy, LLC, a Delaware limited liability company (the “Company”),
and Linn Energy Finance Corp., a Delaware corporation (the “Finance Corp.” and, together with the
Company, the “Issuers”), jointly and severally promise to pay interest on the principal amount of
this Note at 6.500% per annum from May 13, 2011 until maturity and shall pay Additional Interest
payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Issuers
will pay interest and Additional Interest, if any, semi-annually in arrears on May 15 and November
15 of each year (each an “Interest Payment Date”), commencing November 15, 2011. If an Interest
Payment Date falls on a day that is not a Business Day, the interest payment to be made on such
Interest Payment Date will be made on the next succeeding Business Day with the same force and
effect as if made on such Interest Payment Date, and no additional interest will accrue solely as a
result of such delayed payment. Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of original issuance;
provided that if there is no existing Default or Event of Default in the payment of interest, and
if this Note is authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment
Date, except in the case of the original issuance of Notes, in which case interest shall accrue
from the date of authentication. The Issuers shall pay (i) interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from
time to time on demand at a rate that is 1% higher than the then applicable interest rate on the
Notes and (ii) interest (including post-petition interest in any proceeding under any Bankruptcy
Law) on overdue installments of interest and Additional Interest (without regard to any applicable
grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

     2. Method of Payment. The Issuers will pay interest on the Notes (except defaulted
interest) and Additional Interest to the Persons who are registered Holders of Notes at the close
of business on the May 1 or November 1 next preceding the Interest Payment Date, even if such Notes
are cancelled after such record date and on or before such Interest Payment Date, except as
provided in Section 2.11 of the Indenture with respect to defaulted interest. Holders must
surrender Notes to the Paying Agent to collect payments of principal and premium, if any, together
with accrued and unpaid interest and Additional Interest, if any, due at maturity. The Notes will
be payable as to principal, interest, premium and Additional Interest, if any, at the office or
agency of the Issuers maintained for such purpose within the City and State of New York, or, at the
option of the Issuers, payment of interest and Additional Interest may be made by check mailed to
the Holders at their addresses set forth in the register of Holders, and provided that payment by
wire transfer of immediately available funds will be required with respect to any amounts due on
all Global Notes and all other Notes the Holders of which shall have provided wire transfer
instructions to the Issuers or the Paying Agent. Notwithstanding the foregoing, if this Note is a
Global Note, payment may be made pursuant to the Applicable Procedures of the

Exhibit 2 to App. - 4

 

Depository as permitted in the Indenture. Such payment shall be 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.

     3. Paying Agent and Registrar. Initially, U.S. Bank National Association, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may appoint and change
any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.

     4. Indenture. The Issuers issued the Notes under an Indenture dated as of May 13,
2011 (“Indenture”) among the Issuers, the Guarantors and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a statement of such
terms. The Notes are unsecured senior obligations of the Issuers, and the aggregate principal
amount of the Notes is unlimited.

     5. Optional Redemption.

     (a) Except as set forth in subparagraphs (b) and (c) of this Paragraph 5, the Issuers shall
not have the option to redeem the Notes prior to May 15, 2015. On or after May 15, 2015, the
Issuers shall have the option to redeem the Notes, in whole or in part at any time, upon prior
notice as set forth in Paragraph 6, at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest and Additional Interest, if any, on the
Notes redeemed to the applicable redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on an Interest Payment Date that is on or prior to the
redemption date), if redeemed during the twelve-month period beginning on May 15 of the years
indicated below:

	 	 	 	 	 
	YEAR	 	PERCENTAGE
	2015
	 	 	103.250	%
	2016
	 	 	101.625	%
	2017 and thereafter
	 	 	100.000	%

     (b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time prior
to May 15, 2013, the Issuers may on one or more occasions redeem up to 35% of the aggregate
principal amount of Notes (including any Additional Notes) issued under the Indenture at a
redemption price of 106.500% of the principal amount thereof, plus accrued and unpaid interest and
Additional Interest, if any, thereon to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on an Interest Payment Date that is on
or prior to the redemption date), in an amount equal to the net cash proceeds of one or more Equity
Offerings; provided that, with respect to each such redemption, (i) at least 65% of the aggregate
principal amount of Notes (including any Additional Notes) issued under the Indenture remains
outstanding immediately after the occurrence of such redemption (excluding any Notes held by the
Company and its Subsidiaries) and (ii) such redemption occurs within 180 days of the date of the
closing of the related Equity Offering.

Exhibit 2 to App. - 5

 

     (c) Prior to May 15, 2015, the Issuers may redeem on one or more occasions all or part of the
Notes at a redemption price equal to the sum of (1) 100% of the principal amount thereof, plus (2)
the Make Whole Premium at the redemption date, plus (3) accrued and unpaid interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant record date to receive
interest due on an interest payment date that is on or prior to the redemption date).

     6. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not
more than 60 days (except as otherwise provided in the Indenture if the notice is issued in
connection with a Legal Defeasance, Covenant, Defeasance or Discharge) before the redemption date
to each Holder whose Notes are to be redeemed at its registered address. If mailed in the manner
provided for in Section 3.03 of the Indenture, the notice of optional redemption shall be
conclusively presumed to have been given whether or not a Holder receives such notice. Failure to
give timely notice or any defect in the notice shall not affect the validity of the redemption.
Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of
$1,000 in excess of $2,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest and Additional Interest, if any, cease to accrue on the Notes or
portions thereof called for redemption. The notice of redemption with respect to a redemption
described in paragraph 5(c) above need not set forth the Make Whole Premium but only the manner of
calculation thereof.

     7. Mandatory Redemption. Except as set forth in Paragraph 8 below, neither of the
Issuers shall be required to make mandatory redemption or sinking fund payments with respect to the
Notes or to repurchase the Notes at the option of the Holders.

     8. Repurchase at Option of Holder.

     (a) Within 30 days following the occurrence of a Change of Control, the Company shall make an
offer (a “Change of Control Offer”) to repurchase all or any part (equal to $2,000 or an integral
multiple of $1,000 in excess of $2,000) of each Holder’s Notes at a purchase price equal to 101% of
the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest and
Additional Interest, if any, to the date of settlement (the “Change of Control Settlement Date”),
subject to the right of Holders of record on the relevant record date to receive interest due on an
Interest Payment Date that is on or prior to the Change of Control Settlement Date. Within 30 days
following a Change of Control, the Company shall mail a notice of the Change of Control Offer to
each Holder and the Trustee describing the transaction that constitutes the Change of Control and
setting forth the procedures governing the Change of Control Offer as required by Section 4.15 of
the Indenture:

     (b) On the 366th day after an Asset Sale (or, at the Company’s option, any earlier date), if
the aggregate amount of Excess Proceeds then exceeds $40.0 million, the Company shall commence an
offer to all Holders of Notes (an “Asset Sale Offer”) pursuant to Section 3.09 of the Indenture,
and to all holders of any Pari Passu Indebtedness then outstanding, to purchase, on a pro rata
basis, the maximum principal amount of Notes and such Pari Passu Indebtedness that may be purchased
out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount of the Notes plus accrued and unpaid interest and Additional Interest, if any, thereon to
the date of settlement, subject to the right of Holders of record on the

Exhibit 2 to App. - 6

 

relevant record date to receive interest due on an Interest Payment Date that is on or prior
to the date of settlement, in accordance with the procedures set forth in the Indenture. If any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such
remaining Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the
aggregate principal amount of Notes tendered into such Asset Sale Offer exceeds the amount of
Excess Proceeds allocated for the purchase of the Notes, the Trustee shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Trustee so
that only Notes in denominations of $2,000, or integral multiples of $1,000 in excess of $2,000,
shall be purchased) on the basis of the aggregate principal amount of tendered Notes and Pari Passu
Indebtedness. Holders of Notes that are the subject of an offer to purchase will receive an Asset
Sale Offer from the Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled “Option of Holder to Elect Purchase” on the reverse of
the Notes.

     9. Guarantees. The payment by the Issuers of the principal of and interest, premium
and Additional Interest, if any, on, the Notes is fully and unconditionally guaranteed on a joint
and several senior unsecured basis by each of the Guarantors to the extent set forth in the
Indenture.

     10. Denominations, Transfer, Exchange. The Notes are in registered form without
coupons in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents, and the Company may require a Holder to pay any taxes due on
transfer or exchange. The Issuers need not exchange or register the transfer of any Note or
portion of a Note selected for redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, they need not exchange or register the transfer of any Notes for a period
of 15 days before a selection of Notes to be redeemed.

     11. Persons Deemed Owners. The registered Holder of a Note may be treated as its
owner for all purposes.

     12. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or
the Notes may be amended or supplemented with the written consent of the Holders of at least a
majority in principal amount of the then outstanding Notes, and any existing default or compliance
with any provision of the Indenture or the Notes may be waived with the written consent of the
Holders of a majority in principal amount of the then outstanding Notes. Without the consent of
any Holder of a Note, the Indenture or the Notes may be amended or supplemented (1) to cure any
ambiguity, defect or inconsistency, (2) to provide for uncertificated Notes in addition to or in
place of certificated Notes, (3) to provide for the assumption of an Issuer’s obligations to
Holders of the Notes pursuant to Article 5 of the Indenture, (4) to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that does not adversely
affect the legal rights under the Indenture of any such Holder, provided that any change to conform
the Indenture to the Offering Memorandum shall not be deemed to adversely affect the legal rights
under the Indenture of any Holder, (5) to secure the Notes or the Subsidiary Guarantees pursuant to
Section 4.12 of the Indenture or otherwise, (6) to provide for the issuance of Additional Notes in
accordance with the limitations set forth in the Indenture, (7)

Exhibit 2 to App. - 7

 

to add any additional Guarantor with respect to the Notes or to evidence the release of any
Guarantor from its Subsidiary Guarantee, in each case as provided in the Indenture, (8) to comply
with the requirements of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA, (9) to evidence or provide for the acceptance of appointment under the Indenture of
a successor Trustee or (10) to conform the text of the Indenture, the Subsidiary Guarantees or the
Notes to any provision described in the “Description of Notes” contained in the Offering
Memorandum.

     13. Defaults and Remedies. Events of Default include: (i) default for 30 days in the
payment when due of interest or Additional Interest, if any, on the Notes; (ii) default in payment
when due of the principal of or premium, if any, on the Notes when due at their Stated Maturity,
upon optional redemption, upon required repurchase, upon acceleration or otherwise; (iii) failure
by the Company to comply with Section 5.01 of the Indenture or to consummate a purchase of Notes
when required pursuant to the provisions of Section 3.09, 4.10 or 4.15 of the Indenture; (iv)
failure by the Company for 180 days after notice from the Trustee or the Holders of at least 25% in
principal amount of the Notes then outstanding to comply with Section 4.03 of the Indenture; (v)
failure by the Company for 60 days after notice from the Trustee or the Holders of at least 25% in
principal amount of the Notes then outstanding to comply with any of its other agreements in the
Indenture or the Notes; (vi) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists
or is created after the Initial Issuance Date, if such default (a) is caused by a failure to pay
principal of, or interest or premium, if any, on, such Indebtedness prior to the expiration of any
grace period provided in such Indebtedness (a “Payment Default”) or (b) results in the acceleration
of such Indebtedness prior to its Stated Maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so accelerated, aggregates $50.0
million or more; provided that if any such default is cured or waived or any such acceleration
rescinded, or such Indebtedness is repaid, within a period of 30 days from the expiration of the
applicable grace period or the occurrence of such acceleration, as the case may be, such Event of
Default and any consequential acceleration of the Notes shall be automatically rescinded, so long
as such rescission does not conflict with any judgment or decree; (vii) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $50.0 million
(to the extent not covered by insurance by a reputable and creditworthy insurer as to which the
insurer has not disclaimed coverage), which judgments are not paid, discharged or stayed for a
period of 60 consecutive days; (viii) (a) any Subsidiary Guarantee is held in any judicial
proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect
or (b) any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its
obligations under its Subsidiary Guarantee, except in each case, by reason of the release of such
Subsidiary Guarantee in accordance with the provisions of the Indenture; and (ix) certain events of
bankruptcy, insolvency or reorganization with respect to the Company, Finance Corp., any of the
Company’s Restricted Subsidiaries that is a Significant Subsidiary of the Company or any group of
Restricted Subsidiaries of the Company that, taken together, would constitute a Significant
Subsidiary of the Company as specified in Section 6.01(i) or 6.01(j) of the Indenture. If any
Event of Default occurs and is continuing, the Trustee, by notice to the Issuers, or the Holders of

Exhibit 2 to App. - 8

 

at least 25% in principal amount of the then outstanding Notes, by notice to the Issuers and
the Trustee, may declare all the Notes to be due and payable immediately. Notwithstanding the
preceding, in the case of an Event of Default arising from such events of bankruptcy, insolvency or
reorganization described in Section 6.01(i) or 6.01(j) of the Indenture, all outstanding Notes will
become due and payable immediately without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in
its exercise of any trust or power conferred on it. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal, interest, premium or Additional Interest) if a committee of
Responsible Officers in good faith determines that withholding notice is in their interests. The
Holders of a majority in principal amount of the Notes then outstanding by notice to the Trustee
may on behalf of the Holders of all the Notes rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing Events of Default
(except with respect to nonpayment of principal, interest, premium, or Additional Interest, if any,
that have become due solely because of the acceleration) have been cured or waived. The Holders of
a majority in principal amount of the Notes then outstanding by notice to the Trustee may on behalf
of the Holders of all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default in the payment of
the principal of, or interest, premium, or Additional Interest, if any, on, the Notes. The Issuers
are required to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and, so long as any Notes are outstanding, the Issuers are required upon any of their
respective Officers becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.

     14. Defeasance and Discharge. The Notes are subject to defeasance and discharge upon
the terms and conditions specified in the Indenture.

     15. No Recourse Against Others. No past, present or future director, officer,
partner, employee, incorporator, manager or unitholder or other owner of Capital Stock of the
Issuers or any Guarantor, as such, shall have any liability for any obligations of the Issuers or
any Guarantor under the Notes, the Subsidiary Guarantees or the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release are part of the consideration
for the issuance of the Notes.

     16. Authentication. This Note shall not be valid until authenticated by the manual
signature of an authorized signatory of the Trustee or an authenticating agent.

     17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).

     18. Removal of Restricted Notes Legend. Each holder of any Note evidenced by any
Restricted Global Note, by its acceptance thereof, (A) authorizes and consents to, (B) appoints the
Company as its agent for the sole purpose of delivering such electronic messages, executing

Exhibit 2 to App. - 9

 

and delivering such instruments and taking such other actions, on such holder’s behalf, as the
Depository or the Trustee may require to effect, and (C) upon the request of the Company, agrees to
deliver such electronic messages, execute and deliver such instruments and take such other actions
as the Depository or the Trustee may require, or as shall otherwise be necessary to effect, the
removal of the Restricted Notes Legend set forth on the face of such Note (including by means of
the exchange of all or the portion of such Restricted Global Note evidencing such Note for a
certificate evidencing such Note that does not bear such Restricted Notes Legend) at any time after
the Resale Restriction Termination Date.

     19. [Additional Rights of Holders of Transfer Restricted Securities. In addition to
the rights provided to Holders of the Notes under the Indenture, Holders of Transfer Restricted
Securities shall have all the rights set forth in the Registration Rights Agreement dated as of May
13, 2011, among the Issuers, the Guarantors and the Initial Purchasers (the “Registration Rights
Agreement”).]3

     20. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers and corresponding
ISIN numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the accuracy of such
numbers either as printed on the Notes or as contained in any notice of redemption and reliance may
be placed only on the other identification numbers placed thereon.

     21. Governing Law. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     22. Successors. In the event a successor assumes all the obligations of an Issuer
under the Notes and the Indenture, pursuant to the terms thereof, such Issuer will be released from
all such obligations.

     The Company will furnish to any Holder upon written request and without charge a copy of the
Indenture [or any Registration Rights Agreement].4 Requests may be made to:

Linn Energy, LLC

600 Travis, Suite 5100

Houston, Texas 77002

Attention: Investor Relations

 

			
	3	 	Delete if this Note is not being issued in
exchange for an Initial Note.
	 
	4	 	Delete if this Note is not being issued in
exchange for an Initial Note.

Exhibit 2 to App. - 10

 

ASSIGNMENT FORM

     To assign this Note, fill in the form below:

     I or we assign and transfer this Note to

 
(Print or type assignee’s name, address and zip code)

 
(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint _____________________ agent to transfer this Note on the books of the
Issuers. The agent may substitute another to act for him.

	 	 	 	 	 	 	 

	Date:                                        

	 	Your Signature:	 	 	 	 
	 

	 	 	 	 

Sign exactly as your name appears on
the other side of this Note.
	 	 

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements
of the Registrar, which requirements include membership or participation in the Security Transfer
Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined
by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

Exhibit 2 to App. - 11

 

OPTION OF HOLDER TO ELECT PURCHASE

     If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or
4.15 of the Indenture, check the box below:

	 	 	 

	 ̈ Section 4.10
	 	 ̈ Section 4.15

     If you want to elect to have only part of this Note purchased by the Company pursuant to
Section 4.10 or Section 4.15 of the Indenture, state the amount (in minimum denomination of $2,000
or integral multiples of $1,000 in excess of $2,000) you elect to have purchased: $__________

	 	 	 	 	 	 	 

	Date:

	 	Your Signature	 	 	 	 
	 

	 	 	 	 

(Sign exactly as your name appears on the
other side of this Note)
	 	 
	 
	 	 	 	 	 	 
	 	 	Soc. Sec. or Tax Identification No.:                                                            	 	 

	 	 	 	 	 

	Signature Guarantee:
	 	 	 	 
	 

	 	 

(signature must be guaranteed)
	 	 

     Signatures must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Registrar, which requirements include membership or participation in the
Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as
may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.

Exhibit 2 to App. - 12

 

ANNEX A

LINN ENERGY, LLC

LINN ENERGY FINANCE CORP.

and

the Guarantors named herein

 

6.500% SENIOR NOTES DUE 2019

 

FORM OF SUPPLEMENTAL INDENTURE

DATED AS OF __________, ______

 

U.S. BANK NATIONAL ASSOCIATION,

As Trustee

 

A-1

 

     This SUPPLEMENTAL INDENTURE, dated as of ______________, ____ (this “Supplemental Indenture”)
is among Linn Energy, LLC, a Delaware limited liability company (the “Company”), Linn Energy
Finance Corp., a Delaware corporation ( “Finance Corp.” and, together with the Company, the
“Issuers”), [______________] (the “Guaranteeing Subsidiary”), which is a subsidiary of the Company,
each of the existing Guarantors (as defined in the Indenture referred to below) and U.S. Bank
National Association, a national banking association, as Trustee.

RECITALS

     WHEREAS, the Issuers, the initial Guarantors and the Trustee entered into an Indenture, dated
as of May 13, 2011 (as heretofore amended, supplemented or otherwise modified, the “Indenture”),
pursuant to which the Company has issued $750,000,000 in principal amount of 6.500% Senior Notes
due 2019 (the “Notes”);

     WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary
shall execute and deliver to the Trustee a supplemental indenture pursuant to which the
Guaranteeing Subsidiary shall become a Guarantor (as defined in the Indenture);

     WHEREAS, Section 9.01(g) of the Indenture provides that the Issuers, the Guarantors and the
Trustee may amend or supplement the Indenture in order to add any additional Guarantor with respect
to the Notes, without the consent of the Holders of the Notes; and

     WHEREAS, all acts and things prescribed by the Indenture, by law and by the Certificate of
Incorporation and the Bylaws (or comparable constituent documents) of the Issuers, of the
Guarantors and of the Trustee necessary to make this Supplemental Indenture a valid instrument
legally binding on the Issuers, the Guarantors and the Trustee, in accordance with its terms, have
been duly done and performed;

     NOW, THEREFORE, to comply with the provisions of the Indenture and in consideration of the
above premises, the Issuers, the Guaranteeing Subsidiary, the other Guarantors and the Trustee
covenant and agree for the equal and proportionate benefit of the respective Holders of the Notes
as follows:

     Section 1. Capitalized Terms. Capitalized terms used herein without definition shall
have the meanings ascribed to them in the Indenture.

     Section 2. Relation to Indenture. This Supplemental Indenture is supplemental to the
Indenture and does and shall be deemed to form a part of, and shall be construed in connection with
and as part of, the Indenture for any and all purposes.

     Section 3. Effectiveness of Supplemental Indenture. This Supplemental Indenture shall
become effective immediately upon its execution and delivery by each of the Issuers, the
Guaranteeing Subsidiary, the other Guarantors and the Trustee.

     Section 4. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees, by its
execution of this Supplemental Indenture, to be bound by the provisions of the Indenture applicable
to Guarantors to the extent provided for in Article 10 thereof.

A-2

 

     Section 5. Ratification of Obligations. Except as specifically modified herein, the
Indenture and the Notes are in all respects ratified and confirmed (mutatis mutandis) and shall
remain in full force and effect in accordance with their terms.

     Section 6. The Trustee. Except as otherwise expressly provided herein, no duties,
responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by
reason of this Supplemental Indenture. This Supplemental Indenture is executed and accepted by the
Trustee subject to all the terms and conditions set forth in the Indenture with the same force and
effect as if those terms and conditions were repeated at length herein and made applicable to the
Trustee with respect hereto.

     Section 7. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     Section 8. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of such executed copies
together shall represent the same agreement.

[Signatures on following pages]

A-3

 

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

	 	 	 	 	 
	 	Issuers

Linn Energy, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Linn Energy Finance Corp.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Guaranteeing Subsidiary

[_______________________]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Existing Guarantors1

Trustee

U.S. Bank National Association, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

			
	1	 	Insert signature blocks for each of the Guarantors existing at the time of execution
of this Supplemental Indenture.

A-4

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