Document:

exv10w1

Exhibit 10.1

EXECUTION VERSION

 

MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT

between

PHH MORTGAGE CORPORATION,

Seller

and

BANK OF AMERICA, N.A.,

Purchaser

Dated July 23, 2010

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	Section 1. Definitions
	 	 	2	 
	Section 2. Procedures for Purchases of Participation Certificates
	 	 	17	 
	Section 3. Takeout Commitments
	 	 	18	 
	Section 4. Holdback Amount
	 	 	18	 
	Section 5. Issuance of Securities
	 	 	19	 
	Section 6. Servicing of the Mortgage Loans; Servicer Termination
	 	 	20	 
	Section 7. Transfers of Participation Certificates and Securities by Purchaser
	 	 	27	 
	Section 8. Record Title to Mortgage Loans; Intent of Parties; Security Interest
	 	 	27	 
	Section 9. Conditions Precedent
	 	 	28	 
	Section 10. Representations and Warranties
	 	 	31	 
	Section 11. Affirmative Covenants
	 	 	38	 
	Section 12. Negative Covenants
	 	 	44	 
	Section 13. Term
	 	 	48	 
	Section 14. Set-Off
	 	 	48	 
	Section 15. Indemnification
	 	 	49	 
	Section 16. Exclusive Benefit of Parties; Assignment
	 	 	49	 
	Section 17. Amendments; Waivers; Cumulative Rights
	 	 	49	 
	Section 18. Execution in Counterparts
	 	 	49	 
	Section 19. Effect of Invalidity of Provisions
	 	 	49	 
	Section 20. Governing Law
	 	 	50	 
	Section 21. Notices
	 	 	50	 
	Section 22. Entire Agreement
	 	 	51	 
	Section 23. Costs of Enforcement
	 	 	51	 

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	 	 	Page	 
	Section 24. Securities Contract; Netting Agreement
	 	 	51	 
	Section 25. Construction
	 	 	52	 
	Section 26. Confidentiality
	 	 	52	 

EXHIBITS

	 	 	 

	Exhibit A
	 	[Reserved]

	Exhibit B
	 	Trade Assignment

	Exhibit C
	 	Form of Seller’s Officer’s Compliance Certificate

	Exhibit D
	 	Form of PHH Parent’s Officer’s Compliance Certificate

	Exhibit E
	 	Assignment

	Exhibit F
	 	Form of Confirmation

	Exhibit G
	 	Seller’s Secretary’s Certificate

	Exhibit H
	 	Seller’s Board Resolutions

	Exhibit I
	 	Seller’s Monthly Report

	Exhibit J
	 	Permitted Affiliate Agreements

	Exhibit K
	 	Form of Power of Attorney

	Exhibit L
	 	Existing Indebtedness

	Annex A
	 	Seller’s Delivery Instructions

	Annex B
	 	Purchaser Notices

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MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT

          This is a MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT (“Agreement”), dated
as of July 23, 2010, between Bank of America, N.A. (“Purchaser”) and PHH Mortgage
Corporation (“Seller”).

PRELIMINARY STATEMENT

          Seller desires to sell to Purchaser from time to time all of Seller’s beneficial right, title
and interest in and to designated pools of fully amortizing first lien residential Mortgage Loans
eligible in the aggregate to back Securities, with the terms described in related Takeout
Commitments, each in the form of a 100% undivided beneficial ownership interest evidenced by a
Participation Certificate.

          Purchaser desires to purchase and will purchase such Participation Certificates from Seller in
accordance with the terms and conditions set forth in this Agreement. Seller, subject to the terms
hereof, will cause (a) the Related Mortgage Loans to back a GNMA Security issued by Seller and
guaranteed by GNMA, a Fannie Mae Security issued and guaranteed by Fannie Mae, or a FHLMC Security
issued and guaranteed by FHLMC and (b) Delivery of such GNMA Security, Fannie Mae Security, or
FHLMC Security by GNMA, Fannie Mae, or FHLMC, respectively, to Purchaser or its designee in
exchange for the Related Participation Certificate, which GNMA Security, Fannie Mae Security or
FHLMC Security, as applicable, will be purchased by the Takeout Investor.

          Purchaser’s purchase of any Participation Certificate evidencing a beneficial interest in the
Related Mortgage Loans is based on Purchaser’s expectation, in reliance upon Seller’s
representations and warranties herein, that (a) such Mortgage Loans in the aggregate, constitute a
pool or pools of mortgage loans that are eligible to back a Security, (b) such Mortgage Loans are
sufficient for Seller to issue and GNMA to guarantee the GNMA Security, Fannie Mae to issue and
guarantee a Fannie Mae Security, or FHLMC to issue and guarantee a FHLMC Security, as applicable,
(c) such Security will be issued in the amount and with the terms described in the related Takeout
Commitment, and (d) Purchaser will receive Delivery of such Security on the specified Anticipated
Delivery Date.

          The amount of the Purchase Price to be paid by Purchaser to Seller with respect to each
Participation Certificate will be calculated on the expectation of Purchaser, based upon the
representations and warranties of Seller herein, that Purchaser will receive Delivery of the
Security to be backed by the Related Mortgage Loans on the specified Anticipated Delivery Date, and
that failure to receive such Delivery will result in a material decrease in the market value of the
Participation Certificate and the Related Mortgage Loans considered as a whole. During the period
from the purchase of a Participation Certificate to Delivery of the related Security, Purchaser
expects to rely entirely upon Seller to service the Related Mortgage Loans for the benefit of
Purchaser, it being acknowledged that the continued effectiveness of Seller’s Approvals during such
period constitutes an essential factor in the calculation by Purchaser of the Purchase Price paid
to Seller for the Related Participation Certificate and that loss of such

 

 

Approvals by Seller would result in a material decrease in the market value of the
Participation Certificate and the Related Mortgage Loans considered as a whole.

          In consideration of the mutual promises and agreements herein contained the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

          Section 1. Definitions.
Capitalized terms used but not defined herein shall have the meanings set forth in the
Custodial Agreement. As used in this Agreement, the following terms shall have the following
meanings:

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

          “Accrued Interest”: With respect to each Security related to a Participation
Certificate, an amount equal to the product obtained by multiplying (a) the number of days in the
period beginning on the related Issuance Date to but not including the Anticipated Delivery Date
for the related Security, (b) the rate of interest to be borne by the related Security, and (c) the
aggregate principal amount of the Related Mortgage Loans, and dividing such number by three hundred
and sixty (360).

          “Act of Insolvency”: With respect to any Person: (i) becoming insolvent or admitting
in writing its inability to pay its debts as they come due, or the commencement of a voluntary case
under the federal bankruptcy laws, as now or hereafter in effect, or any other present or future
federal or state bankruptcy, insolvency or similar law, or the consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official or of any substantial part of its property or the making of an assignment for the
benefit of creditors or the failure generally to pay debts as such debts become due or the taking
of action in furtherance of any of the foregoing; (ii) a petition or a proceeding shall have been
filed or commenced against such Person seeking (a) a decree or order for relief in an involuntary
case under the federal bankruptcy laws, as now or hereafter in effect, or any other present or
future federal or state bankruptcy laws or similar law, as now or hereafter in effect, (b) the
appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar
official of such Person or of any substantial part of its property, or (c) the winding up or
liquidation of the affairs of such Person and such petition or proceeding shall not have been
dismissed for a period of thirty (30) consecutive days, or an order or decree for relief against
such Person shall be entered in any such proceeding; (iii) the making or offering by such Person of
a concession with its creditors or a general assignment for the benefit of creditors; or (iv) such
Person shall (a) either fail or admit in writing its inability to pay or discharge its debts or
obligations generally as they become due or mature, (b) admit in writing its inability to, or
intention not to, perform any of its material obligations, or (c) voluntarily suspend payment
of any of its debts or obligations as they become due or mature.

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          “Additional Collateral”: As defined in Section 8(c).

          “Affiliate”: With respect to any specified entity, any other entity controlling or
controlled by or under common control with such specified entity. For the purposes of this
definition, “control” when used with respect to a specified entity means the power to direct the
management and policies of such entity, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise, and the terms “controlling” and “controlled” having
meanings correlative to the foregoing.

          “Agency Audit”: Any Applicable Agency, HUD, FHA or VA audits, examinations,
evaluations, monitoring reviews and reports of Seller’s origination and servicing operations
(including those prepared on a contract basis for any such entity).

          “Agency Eligible Mortgage Loan”: A Mortgage Loan that is originated in Strict
Compliance with the Agency Guides and the eligibility requirements specified for the applicable
Agency Program, and is eligible for sale to or securitization by Fannie Mae, FHLMC or GNMA.

          “Agency Guide”: The FHLMC Guide, the Fannie Mae Guide, or the GNMA Guide, as
applicable.

          “Agency Program”: The FHLMC Program, the Fannie Mae Program, or the GNMA Program, as
applicable.

          “Anticipated Delivery Date”: With respect to a Security, the date specified in the
related Form HUD 11705 (Schedule of Subscribers), Fannie Mae Form 2014 (Delivery Schedule) or FHLMC
Form 939 (Settlement and Information Multiple Registration Form), as applicable, on which it is
anticipated that Delivery of the Security by the Applicable Agency will be made.

          “Applicable Agency”: GNMA, Fannie Mae, or FHLMC, as applicable.

          “Applicable Agency TBA Trade Price”: The price on the original Takeout Commitment
assigned by Seller to Purchaser pursuant to a Trade Assignment into which the Related Mortgage
Loans will be delivered.

          “Applicable Law”: All provisions of statutes, rules, regulations and orders of
governmental bodies or regulatory agencies applicable to a Person, and all orders and decrees of
all courts and arbitrators in proceedings or actions in which the Person in question is a party.

          “Applicable Percentage”: Shall have the meaning assigned thereto in the Pricing Side
Letter.

          “Approvals”: With respect to Seller, the approvals obtained from the Applicable
Agency, or HUD designation of Seller as a GNMA-approved issuer, a GNMA-approved servicer, a
FHA-approved mortgagee, a VA-approved lender, a Fannie Mae-approved lender or a
FHLMC-approved Seller/Servicer, as applicable, in good standing; provided that in the
event Seller shall not have the approvals from the Applicable Agency to be both a Fannie
Mae-approved lender and a FHLMC-approved Seller/Servicer, Seller shall be deemed to have all

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Approvals for the purposes of this Agreement so long as (a) Seller maintains the approvals from the
Applicable Agency or HUD designation to be (i) either a Fannie Mae-approved lender or a
FHLMC-approved Seller/Servicer and (ii) a GNMA-approved issuer, a GNMA-approved servicer, a
FHA-approved mortgagee and a VA-approved lender and (b) Seller shall not have had its approval
withdrawn from Fannie Mae or FHLMC, as applicable.

          “Approved Agency Guidelines”: The underwriting guidelines required by the Applicable
Agency as modified for the Seller and approved by the Purchaser, if required by, and in accordance
with, Section 12(n).

          “Asset Securitization Subsidiary”: (i) Any Subsidiary engaged solely in the business
of effecting asset securitization transactions permitted by this Agreement and activities
incidental thereto or (ii) any Subsidiary whose primary purpose is to hold title or ownership
interests in vehicles, equipment, leases, mortgages, relocation assets, financial assets and
related assets under management.

          “Assignee”: As defined in Section 7.

          “Assignment of Mortgage”: An assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the sale of the beneficial interest in the
Mortgage to the Purchaser.

          “Available Borrowing Capacity”: Committed borrowing capacity which may be drawn
(taking into account required reserves and discounts) upon or has been drawn upon by PHH Parent or
any of its Subsidiaries under committed Mortgage Warehouse Facilities.

          “Bankruptcy Code”: Title 11 United States Code, Section 101 et seq.,
as amended from time to time.

          “Basic Collateral”: As defined in Section 8(c).

          “Business Day”: Any day other than a Saturday, Sunday and any day on which banks
located in the State of New York are authorized or required to close for business.

          “Capital Lease”: As applied to any Person, any lease of any property (whether real,
personal or mixed) by that Person as lessee which, in accordance with GAAP, is or should be
accounted for as a capital lease on the balance sheet of that Person.

          “Change of Control”: Any of the following (i) the acquisition by any Person or group
(within the meaning of the Securities Exchange Act of 1934, as amended, and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof), directly or
indirectly, beneficially or of record, of ownership or control of in excess of 50% of the voting
common stock of PHH Parent on a fully diluted basis at any time, (ii) if at any time, PHH Parent
shall cease to own, directly or indirectly, 100% of the shares of Seller or (iii) if at any time,
individuals who on the date hereof constituted the Board of Directors of PHH Parent (together
with any new directors whose election by such Board of Directors or whose nomination for election
by the shareholders of PHH Parent, as the case may be, was approved by a vote of the

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majority of
the directors then still in office who were either directors on the date hereof or whose election
or nomination for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of PHH Parent then in office.

          “Code”: The Internal Revenue Code of 1986, as amended from time to time, any
successor statute thereto, and any temporary or final regulations of the United States Department
of the Treasury promulgated pursuant thereto.

          “Collateral”: As defined in Section 8(c).

          “Commitment Fee”: Shall have the meaning assigned thereto in the Pricing Side Letter.

          “Collections”: With respect to any Related Mortgage Loan at any time, any principal
and/or interest thereon and all dividends, sale proceeds and other collections and distributions
thereon, but not including any Escrow Payments, commitment fees and/or origination fees accrued in
respect of periods on or after the Purchase Date with respect to the related Participation
Certificate.

          “Confirmation”: A written confirmation, which may be delivered by electronic means,
confirming Purchaser’s purchase of a Participation Certificate, which written confirmation shall be
substantially in the form attached hereto as Exhibit F.

          “Consolidated Assets”: For any Person, as of any date of determination, the total
assets of such Person and its Consolidated Subsidiaries as of such date, determined in accordance
with GAAP.

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

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

          “Custodial Account”: As defined in Section 6(c).

          “Custodial Agreement”: The Custodial Agreement, dated of even date herewith, among
Seller, Purchaser, Custodian and, solely for the purposes of its obligations under Section 3(a) to
the Custodial Agreement, The Bank of New York Mellon, as amended, supplemented or otherwise
modified from time to time.

          “Custodian”: The Bank of New York Mellon Trust Company, N.A., and its permitted
successors under the Custodial Agreement.

          “Daily Holdback Reduction Amount”: Shall have the meaning assigned thereto in the
Pricing Side Letter.

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          “Defective Mortgage Loan”: With respect to a Participation Certificate, a Related
Mortgage Loan that is not in Strict Compliance with the GNMA Program, Fannie Mae Program, or FHLMC
Program, as applicable.

          “Delivery”: (i) With respect to any Security issued by GNMA, when Purchaser is
registered as the registered owner of such Security on GNMA’s central registry and (ii) with
respect to any Security issued by Fannie Mae or FHLMC, the later to occur of (a) the issuance of
the related Security and (b) the transfer of all of the right, title and ownership interest in that
Security to Purchaser or its designee.

          “Discount Rate”: As of any date of determination, a rate equal to (i) LIBOR on such
date plus (ii) the Applicable Percentage.

          “Electronic Agent”: Shall have the meaning assigned to such term in Section 2
of the Electronic Tracking Agreement.

          “Electronic Tracking Agreement”: The Electronic Tracking Agreement, dated as of the
date hereof, among the Purchaser, the Seller, the Electronic Agent and MERS, as the same shall be
amended, supplemented or otherwise modified from time to time.

          “ERISA Affiliate”: Any person (as defined in Section 3(9) of ERISA) that together
with Seller or any of its subsidiaries would be a member of the same “controlled group” within the
meaning of Section 414(b), (m), (c) and (o) of the Internal Review Code of 1986, as amended.

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

          “Existing Mortgage Warehouse Facilities”: The mortgage warehouse facilities listed on
Schedule 5.1(c) to the Revolving Credit Facility as of the Revolver Fourth Amendment
Effective Date.

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

          “Fannie Mae Guide”: The Fannie Mae MBS Selling and Servicing Guide, as such Guide may
hereafter from time to time be amended.

          “Fannie Mae Mortgage Loan”: With respect to any Fannie Mae Participation Certificate
or any Fannie Mae Security, a mortgage loan that is in Strict Compliance with the eligibility
requirements specified for the applicable Fannie Mae Program described in the Fannie Mae Guide.

          “Fannie Mae Participation Certificate”: With respect to the Fannie Mae Program, a
certificate, in the form of an exhibit to the Custodial Agreement, issued by Seller and
authenticated by Custodian, evidencing the 100% undivided beneficial ownership interest in the

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Mortgage Loans set forth on a copy of Fannie Mae Form 2005 (Schedule of Mortgages) attached to such
Participation Certificate.

          “Fannie Mae Program”: Any of the Fannie Mae Guaranteed Mortgage-Backed Securities
Programs, as described in the Fannie Mae Guide.

          “Fannie Mae Security”: An ownership interest in a pool of Fannie Mae Mortgage Loans,
evidenced by a book-entry account in a depository institution having book-entry accounts at the
Federal Reserve Bank of New York, in substantially the principal amount and with substantially the
other terms as specified with respect to such Fannie Mae Security in the related Takeout
Commitment, if any.

          “FDIA”: Title 12 United States Code, Section 1811 et seq., as amended
from time to time.

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

          “FHA”: The Federal Housing Administration or any successor thereto.

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

          “FHLMC”: Freddie Mac or any successor thereto.

          “FHLMC Guide”: The Freddie Mac Sellers’ and Servicers’ Guide, as such Guide may
hereafter from time to time be amended.

          “FHLMC Mortgage Loan”: With respect to any FHLMC Participation Certificate or any
FHLMC Security, a mortgage loan that is in Strict Compliance with the eligibility requirements
specified for the applicable FHLMC Program described in the FHLMC Guide.

          “FHLMC Participation Certificate”: With respect to the FHLMC Program, a certificate,
in the form of an exhibit to the Custodial Agreement, issued by Seller and authenticated by
Custodian, evidencing the 100% undivided beneficial ownership interest in the Mortgage Loans that
are either (a) set forth on a copy of the FHLMC Form 1034 (Fixed-Rate Custodial Certification
Schedule) attached to such Participation Certificate or (b) identified on a computer tape
compatible with Selling System as belonging to the mortgage loan pool described in such
Participation Certificate.

          “FHLMC Program”: The FHLMC Home Mortgage Guarantor Program or the FHLMC FHA/VA Home
Mortgage Guarantor Program, as described in the FHLMC Guide.

          “FHLMC Security”: A modified pass-through mortgage-backed participation certificate,
evidenced by a book-entry account in a depository institution having book-entry
accounts at the Federal Reserve Bank of New York, issued and guaranteed, with respect to
timely payment of interest and ultimate payment of principal, by FHLMC and backed by a pool of
FHLMC Mortgage Loans, in substantially the principal amount and with substantially the

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other terms
as specified with respect to such FHLMC Security in the related Takeout Commitment, if any.

          “Fleet Asset Securitization Facilities”: The asset-backed financing arrangements
relating to the securitization of vehicle fleet leases originated and serviced by an Affiliate of
the Seller as more fully described in (i) that certain Amended and Restated Base Indenture, dated
as of December 17, 2008, between Chesapeake Funding LLC, as Issuer, and JPMorgan Chase Bank, N.A.,
as Indenture Trustee, as the same may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof, and such other program documents relating thereto, and
(ii) that certain Trust Indenture dated as of November 16, 2009, between BNY Trust Company of
Canada as issuer trustee of Fleet Leasing Receivables Trust and ComputerShare Trust Company Of
Canada, as amended, supplemented or otherwise modified from time to time in accordance with the
terms thereof and such other program documents relating thereto.

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

          “GNMA”: Government National Mortgage Association or any successor thereto.

          “GNMA Guide”: Any of the GNMA Mortgage-Backed Securities Guide I or II, as such Guide
may hereafter from time to time be amended.

          “GNMA Mortgage Loan”: With respect to any GNMA Participation Certificate or any GNMA
Security, a mortgage loan that is in Strict Compliance with the eligibility requirements specified
for the applicable GNMA Program in the applicable GNMA Guide.

          “GNMA Participation Certificate”: With respect to the GNMA Program, a certificate, in
the form of an exhibit to the Custodial Agreement, issued by Seller and authenticated by Custodian,
evidencing the 100% undivided beneficial ownership interest in the Mortgage Loans set forth on a
copy of Form HUD 11706 (Schedule of Pooled Mortgages) attached to such Participation Certificate.

          “GNMA Program”: Any of the GNMA Mortgage-Backed Securities Programs, as described in
a GNMA Guide.

          “GNMA Security”: A fully-modified pass-through mortgage-backed certificate guaranteed
by GNMA, credited by book-entry to a securities account maintained by a bank or broker at the
Federal Reserve Bank of New York and backed by a pool of Mortgage Loans, in substantially the
principal amount and with substantially the other terms as specified with respect to such Security
in the related Takeout Commitment.

          “Government-Sponsored Enterprise”: (i) Fannie Mae, (ii) FHLMC, (iii) GNMA or (iv) any
other HUD entity.

          “Governmental Authority”: With respect to any Person, any nation or government, any
state or other political subdivision, agency or instrumentality thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or pertaining

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to
government and any court or arbitrator having jurisdiction over such Person, any of its
subsidiaries or any of its properties.

          “Guaranty”: With respect to any Person, any direct or indirect obligation of such
Person guaranteeing or intended to guarantee any Indebtedness, Capital Lease, dividend or other
monetary obligation (“primary obligation”) of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (b) to advance or supply funds
(i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services, in each case, primarily for the
purpose of assuring the owner of any such primary obligation of the repayment of such primary
obligation or (d) as a general partner of a partnership or a joint venturer of a joint venture in
respect of indebtedness of such partnership or such joint venture which is treated as a general
partnership for purposes of Applicable Law. The amount of any Guaranty shall be deemed to be an
amount equal to the stated or determinable amount (or portion thereof) of the primary obligation in
respect of which such Guaranty is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to perform thereunder);
provided that the amount of any Guaranty shall be limited to the extent necessary
so that such amount does not exceed the value of the assets of such Person (as reflected on a
consolidated balance sheet of such Person prepared in accordance with GAAP) to which any creditor
or beneficiary of such Guaranty would have recourse. Notwithstanding the foregoing definition, the
term “Guaranty” shall not include any direct or indirect obligation of a Person as a general
partner of a general partnership or a joint venturer of a joint venture in respect of Indebtedness
of such general partnership or joint venture, to the extent such Indebtedness is contractually non
recourse to the assets of such Person as a general partner or joint venturer (other than assets
comprising the capital of such general partnership or joint venture).

          “Holdback Amount”: Shall have the meaning assigned thereto in the Pricing Side
Letter.

          “HUD”: United States Department of Housing and Urban Development or any successor
thereto.

          “Indebtedness”: With respect to any Person, (i) all indebtedness, obligations and
other liabilities of such Person and its Subsidiaries which are, at the date as of which
Indebtedness is to be determined, includable as liabilities in a consolidated balance sheet of such
Person and its Subsidiaries, other than (w) accounts payable, accrued expenses and derivatives
transactions entered into in the ordinary course of business pursuant to hedging programs, (x)
advances from clients obtained in the ordinary course of the relocation management services
business of such Person and its Subsidiaries, (y) current and deferred income taxes and other
similar liabilities and (z) minority interest, plus (ii) without duplicating any items included in
Indebtedness pursuant to the foregoing clause (i) (but excluding reinsurance obligations of
Atrium Insurance Corporation and its successors and assigns), the maximum aggregate amount of
all liabilities of such Person or any of its Subsidiaries under any Guaranty, indemnity or similar
undertaking given or assumed of, or in respect of, the indebtedness, obligations or other

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liabilities, assets, revenues, income or dividends of any Person other than such Person whose
Indebtedness is being determined or one of its Subsidiaries and (iii) all other obligations or
liabilities of such Person or any of its Subsidiaries in relation to the discharge of the
obligations of any Person other than such Person whose Indebtedness is being determined or one of
its Subsidiaries.

          “Insurer”: A private mortgage insurer, which is acceptable to Purchaser.

          “Interest Rate Protection Agreement”: Any interest rate swap agreement, interest rate
cap agreement or other similar financial agreement or arrangement.

          “Issuance Date”: With respect to a Security, the first day of the month in which the
Security is issued.

          “Key Personnel”: Any employee, officer, director, agent or representative of Seller
identified in the Pricing Side Letter as a Key Person.

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

          “Losses”: Any and all losses, claims, judgments, damages, liabilities, costs or
expenses (including reasonable attorney’s fees) imposed on, incurred by or asserted against any
Person specified.

          “Material Adverse Effect”: The occurrence of (i) a material and adverse change with
respect to the business, operations, properties or financial condition of Seller or PHH Parent or a
material and adverse change with respect to the prospects of Seller and PHH Parent taken as a
whole, (ii) a material adverse effect on the ability of Seller or PHH Parent to perform its
obligations under any of the Program Documents to which it is a party, (iii) a material adverse
effect on the validity or enforceability against Seller or PHH Parent of any of the Program
Documents to which it is a party, (iv) a material adverse effect on the rights and remedies of
Purchaser under any of the Program Documents, or (v) a material adverse effect, other than due to
market conditions, on the marketability, collectability, value or enforceability of a material
portion of the Related Mortgage Loans, in case of any of (i), (ii), (iii), (iv) or (v), as such
material adverse effect is determined by Purchaser.

          “Material Subsidiary”: For any Person, any Subsidiary of such Person, which together
with its own Subsidiaries at the time of determination had assets constituting 10% or more of such
Person’s Consolidated Assets, accounts for 10% or more of such Person’s Consolidated Net Worth, or
accounts for 10% or more of the revenue of such Person and its Consolidated Subsidiaries for the
Rolling Period immediately preceding the date of determination.

          “Maximum Aggregate Purchase Price”: $500,000,000.

-10-

 

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

          “MERS Mortgage Loan”: Any Mortgage Loan as to which the related Mortgage or
Assignment of Mortgage, has been recorded in the name of MERS, as agent for the holder from time to
time of the Mortgage Note and which is identified as a MERS Mortgage Loan on the related schedule
attached to the Related Participation Certificate.

          “MIN”: The mortgage identification number of Mortgage Loans registered with MERS on
the MERS System.

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

          “Mortgage File”: As defined in the Custodial Agreement.

          “Mortgage Loan”: A GNMA Mortgage Loan, Fannie Mae Mortgage Loan or FHLMC Mortgage
Loan.

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

          “Mortgage Warehouse Facilities”: (i) The Existing Mortgage Warehouse Facilities and
(ii) each other credit facility for the warehousing or gestation of mortgages that provides
financing to PHH Parent or any of its Subsidiaries.

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

          “Mortgagee”: The record holder of a Mortgage Note secured by a Mortgage.

          “Mortgagor”: The obligor of a Mortgage Loan.

          “Multiemployer Plan”: A multiemployer plan within the meaning of Section 4001(a)(3)
of ERISA.

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

          “Participation Certificate”: A GNMA Participation Certificate, Fannie Mae
Participation Certificate or FHLMC Participation Certificate.

          “PBGC”: The Pension Benefit Guaranty Corporation and any successor thereto.

          “Permitted Affiliate Agreement”: An agreement listed on Exhibit J hereto, as
such agreement may be amended, restated, supplemented or otherwise modified from time to time.

          “Permitted Affiliate Transactions”: (a) Purchases and sales by Seller of Mortgage
Loans to or from any of its Subsidiaries or Affiliates or the brokering of Mortgage Loans

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between
Seller and any Subsidiary or Affiliate thereof, (b) proceeds received by Seller in connection with
fees required to be paid under the PHH Management Services Agreement as existing on the date
hereof, together with any increase in such existing fees but excluding any separate or additional
fees not required under the PHH Management Services Agreement, (c) proceeds received by Seller in
connection with servicing fees required to be paid by its Subsidiaries, (d) loans or advances by
Seller to or from PHH Parent or any Subsidiary thereof (and the repayment thereof), (e)
distributions and other transfers by Seller of its properties or assets to PHH Parent or any
Subsidiary thereof and (g) any transaction contemplated by, and fees payable pursuant to, the
Permitted Affiliate Agreements not otherwise referenced in this definition.

          “Person”: Any individual, corporation, company, voluntary association, partnership,
joint venture, limited liability company, trust, unincorporated association or government (or any
agency, instrumentality or political subdivision thereof).

          “PHH Home Loans Entities”: PHH Home Loans, LLC, a Delaware limited liability company,
and its Subsidiaries.

          “PHH Home Loans Intercompany Credit Agreement”: The intercompany loan agreement
between PHH Parent and PHH Home Loans, LLC, as borrower, providing for working capital to PHH Home
Loans, LLC, dated as of December 11, 2009, as modified, supplemented, amended or restated from time
to time.

          “PHH Management Services Agreement”: That certain Management Services Agreement, dated
as of March 31, 2006, by and among PHH Home Loans, LLC, Seller and the other parties listed
therein, as amended, restated, supplemented or otherwise modified from time to time.

          “PHH Parent”: PHH Corporation, a Maryland corporation.

          “Plan”: Any Multiemployer Plan or single-employer plan as defined in Section 4001 of
ERISA, that is maintained and contributed to by (or to which there is an obligation to contribute
of), or at any time during the five (5) calendar years preceding the date of this Agreement was
maintained or contributed to by (or to which there is an obligation to contribute of), Seller or by
a Subsidiary of Seller or an ERISA Affiliate.

          “Potential Servicing Termination Event”: A Servicing Termination Event or an event
that with notice or lapse of time or both would become a Servicing Termination Event.

          “Power of Attorney”: That certain power of attorney attached hereto as Exhibit
K.

          “Present Value Adjustment Amount”: With respect to each Participation Certificate, an
amount equal to the product of (a) the number of days in the period beginning on the related
Purchase Date to but not including the Anticipated Delivery Date for the related Security, and (b)
the Discount Rate determined as of the related Purchase Date, multiplied by the difference between
(i) the related Trade Principal, minus (ii) the Holdback Amount, and dividing
such number by 360.

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          “Pricing Side Letter”: The Pricing Side Letter, dated of even date herewith, among
Seller and Purchaser.

          “Pro Forma Basis”: In connection with any transaction for which a determination on a
Pro Forma Basis is required to be made hereunder, that such determination shall be made (i) after
giving effect to any issuance of Indebtedness, any acquisition, any disposition or any other
transaction (as applicable) and (ii) assuming that the issuance of Indebtedness, acquisition,
disposition or other transaction and, if applicable, the application of any proceeds therefrom,
occurred at the beginning of the most recent Rolling Period ending at least thirty (30) days prior
to the date on which such issuance of Indebtedness, acquisition, disposition or other transaction
occurred.

          “Program Documents”: This Agreement, the Pricing Side Letter, the Custodial
Agreement, the Electronic Tracking Agreement, the Participation Certificates and all other
agreements, documents and instruments entered into by Seller and Purchaser, in connection herewith
or therewith with respect to the transactions contemplated hereunder.

          “Purchase Date”: With respect to a Participation Certificate, the date on which
Purchaser purchases such Participation Certificate.

          “Purchase Price”: With respect to each Participation Certificate, a price determined
as of the related Purchase Date equal to the sum of (i) the related Trade Principal, plus (ii) the
related Accrued Interest, minus (iii) the related Present Value Adjustment Amount, minus (iv)
related hedging costs, if any, which are mutually agreed-upon by the Purchaser and Seller.

          “Purchase Price Adjustment Amount”: With respect to each Participation Certificate,
an amount equal to the product of (a) the number of days in the period beginning on the related
Purchase Date to but not including the Settlement Date for the related Security, and (b) the
average daily Discount Rate for such period, multiplied by the difference between (i) the related
Trade Principal, minus (ii) the Holdback Amount, and dividing such number by 360.

          “Purchaser”: Bank of America, N.A. and its successors in interest, including, but not
limited to, any lender, designee or assignee to whom a Participation Certificate or a Security
shall be pledged or assigned.

          “REO Assets”: With respect to any Person, means a real estate asset owned by such
Person and acquired as a result of the foreclosure or other enforcement of a lien on such asset
securing a Servicing Advance or loans and other mortgage-related receivables purchased or
originated by PHH Parent or any of its Subsidiaries in the ordinary course of business.

          “Related Mortgage Loan”: A Mortgage Loan in which a Participation Certificate
purchased by the Purchaser hereunder evidences the 100% undivided beneficial ownership interest.

          “Related Participation Certificate”: The Participation Certificate relating to a pool
of Mortgage Loans.

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          “Reportable Event”: An event described in Section 4043(b) of ERISA with respect to a
Plan as to which the thirty (30) days notice requirement has not been waived by the PBGC.

          “Replacement Shortfall”: As defined in Section 5(c).

          “Responsible Officer”: With respect to any Person, the chief executive officer, chief
financial officer, president or treasurer of such Person.

          “Revolver Fourth Amendment Effective Date”: June 25, 2010.

          “Revolving Credit Facility”: That certain Amended and Restated Competitive Advance and
Revolving Credit Agreement, dated as of January 6, 2006 as amended through the Fourth Amendment,
dated as of June 25, 2010, among PHH Parent, as Borrower, PHH Vehicle Management Services Inc., as
Canadian Subsidiary Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, the lenders from
time to time party thereto and others, as further amended from time to time.

          “Rolling Period”: With respect to any fiscal quarter, such fiscal quarter and the
three immediately preceding fiscal quarters considered as a single accounting period.

          “SEC”: The Securities Exchange Commission or any successor thereto.

          “Securitization Indebtedness”: Indebtedness incurred by any structured
bankruptcy-remote Subsidiary of PHH Parent which does not permit or provide for recourse to PHH
Parent or any Subsidiary of PHH Parent (other than such structured bankruptcy-remote Subsidiary) or
any property or asset of PHH Parent or any Subsidiary of PHH Parent (other than the property or
assets of such structured bankruptcy-remote Subsidiary). Securitization Indebtedness shall
include, without limitation, the Fleet Asset Securitization Facilities and other similar financing
facilities.

          “Security”: A GNMA Security, Fannie Mae Security or FHLMC Security.

          “Security Issuance Deadline”: The date by which the Security is scheduled to be
issued and delivered to Purchaser, which, unless otherwise agreed to by Purchaser as provided
herein, shall be the Anticipated Delivery Date.

          “Security Issuance Failure”: Failure of the Security to be issued due to or as a
result of Seller’s failure to perform (x) any of its obligations under this Agreement or any other
Program Document or (y) in Strict Compliance with the related Agency Program; provided
that, such failure shall not constitute a Securities Issuance Failure if the failure of the
Security to be issued is due solely to an administrative or ministerial failure and Seller cures
such administrative or ministerial failure within one (1) Business Day of such failure.

          “Selling System”: The FHLMC automated system by which sellers and servicers of
mortgage loans to FHLMC transfer mortgage summary and record data or mortgage accounting and
servicing information from their computer system or service bureau to FHLMC, as more fully
described in the FHLMC Guide.

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          “Servicing Advances”: Advances made by PHH Parent or any of its Subsidiaries in its
capacity as servicer of any mortgage-related receivables to fund principal, interest, escrow,
foreclosure, insurance, tax or other payments or advances when the borrower on the underlying
receivable is delinquent in making payments on such receivable; to enforce remedies, manage and
liquidate REO Assets; or that PHH Parent or any of its Subsidiaries otherwise advances in its
capacity as servicer pursuant to any servicing agreement.

          “Servicing Advance Facility”: Any funding arrangement with lenders based in whole or
in part upon Servicing Advances under which advances are made to PHH Parent or any of its
Subsidiaries.

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

          “Servicing Term”: As defined in Section 6(b).

          “Servicing Termination Events”: As defined in Section 6(e).

          “Settlement Date”: The date specified in a Takeout Commitment upon which the related
Security is scheduled to be delivered, against payment, to the specified Takeout Investor;
provided, that in no event shall the Settlement Date occur more than forty-five (45) days
after the Purchase Date with respect to the related Participation Certificate.

          “Special Purpose Vehicle Subsidiary”: PHH Caribbean Leasing, Inc. and any Subsidiary
engaged in the fleet-leasing management business that (i) is, at any time, a party to one or more
lease agreements with only one lessee, and (ii) finances, at any one time, its investments in lease
agreements or vehicles with only one lender (which lender may be the Seller if and to the extent
that such loans and/or advances by the Seller are not prohibited hereby).

          “Strict Compliance”: Compliance of Seller and the Related Mortgage Loans with the
requirements of the GNMA Guide, Fannie Mae Guide, or FHLMC Guide, as applicable, and as amended by
any agreements between Seller and the Applicable Agency, sufficient to enable Seller to issue and
GNMA to guarantee or Fannie Mae or FHLMC to issue and guarantee a Security; provided,
that, all modifications to such Approved Agency Guidelines shall be in accordance with
Section 12(n) hereof.

          “Subordinated Indebtedness”: Indebtedness of Seller that has been subordinated to the
obligations of Seller to Purchaser as provided in this Agreement or as otherwise approved by
Purchaser.

          “Subsidiary”: With respect to any Person, any corporation, association, joint
venture, partnership or other business entity (whether now existing or hereafter organized) of
which at least a majority of the voting stock or other ownership interests having ordinary voting
power for the election of directors (or the equivalent) is, at the time as of which any

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determination is being made, owned or controlled by such Person or one or more subsidiaries of
such Person or by such Person and one or more subsidiaries of such Person.

          “Successor Servicer”: An entity with the necessary Approvals, as the circumstances
may require, and designated by Purchaser, in conformity with Section 6(f), to replace
Seller as issuer and servicer, mortgagee or seller/servicer of the Related Mortgage Loans or the
Securities related thereto.

          “Takeout Commitment”: A trade confirmation provided in oral (but only with respect to
Takeout Investors that are members of the Mortgage-Backed Securities Clearing Corporation) or
electronic format from the Takeout Investor to Seller confirming the details of a forward trade
between the Takeout Investor and Seller with respect to one or more Securities relating to a
Participation Certificate, which trade confirmation shall be enforceable and in full force and
effect, and shall be validly and effectively assigned to Purchaser pursuant to a Trade Assignment,
and relate to pools of Related Mortgage Loans that satisfy the “good delivery standards” of
the Public Securities Association as set forth in the Public Securities Association Uniform
Practices Guide.

          “Takeout Investor”: (i) Any member of the Mortgage-Backed Securities Clearing
Corporation that is an approved counterparty of the Purchaser or its Affiliates or (ii) any other
Person approved by Purchaser on a transaction by transaction basis.

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

          “Termination Date”: The earlier of (i) July 22, 2011 and (ii) at Purchaser’s option,
upon the occurrence of a Servicing Termination Event.

          “Trade Assignment”: A letter substantially in the form of Exhibit B or such
other form acceptable to Purchaser.

          “Trade Discount”: Shall have the meaning assigned thereto in the Pricing Side Letter.

          “Trade Price”: The price (expressed as a percentage of the initial principal amount
of the Security, as specified in the related Takeout Commitment) equal to (i) 100% of the
Applicable Agency TBA Trade Price, minus (ii) Trade Discount.

          “Trade Principal”: An amount equal to the product of (a) the Trade Price and (b) the
initial principal amount of the related Security, as specified in the related Takeout Commitment.

          “VA”: United States Department of Veterans Affairs or any successor thereto.

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          “Warehouse Lender”: Any lender providing financing to Seller for the purpose of
originating Mortgage Loans, which prior to the Purchase Date has a security interest in such
Mortgage Loans as collateral for the obligations of Seller to such lender.

          “Warehouse Lender’s Release”: A letter from a Warehouse Lender in the form of
Exhibit D to the Custodial Agreement or such other form acceptable to Purchaser in its sole
discretion.

          Section 2. Procedures for Purchases of Participation Certificates.
(a) From time to time until the Termination Date and subject to the terms and conditions
contained herein, Purchaser shall purchase Participation Certificates from Seller that are
delivered to Purchaser at Seller’s request in accordance with the terms of the Custodial Agreement;
provided, that the aggregate Purchase Price of Participation Certificates owned by
Purchaser at any given time for which Purchaser has not been paid the purchase price for the
Related Security by the applicable Takeout Investor as specified in the applicable Takeout
Commitment shall not exceed the Maximum Aggregate Purchase Price. In connection with Purchaser’s
purchase of any such Participation Certificate, Seller, on behalf of Purchaser, shall arrange for
the Delivery to Purchaser of a Security backed by the Related Mortgage Loans, which Security shall
be subject to a Takeout Commitment. The purchase of any Participation Certificate shall be subject
to the satisfaction of the conditions set forth in Section 9. In accordance with the
provisions of the Electronic Tracking Agreement, the Seller shall, at its sole cost and expense,
(1) cause each Related Mortgage Loan with respect to which a Participation Certificate is to be
sold to the Purchaser on a Purchase Date, the Mortgage for which is recorded in the name of MERS,
to be designated a MERS Mortgage Loan and (2) cause the Purchaser to be designated interim funder
(as defined in the Electronic Tracking Agreement) with respect to each such MERS Mortgage Loan.

          (b) In connection with the purchase of any Participation Certificate hereunder, Purchaser
shall pay (i) to Seller or (ii) upon the receipt of a Warehouse Lender’s Release, to a Warehouse
Lender, on the Purchase Date, the amount of the Purchase Price (less the Holdback Amount) for such
Participation Certificate upon receipt of a duly executed and properly completed copy of the
Participation Certificate, provided that, if the Purchase Price (less the Holdback Amount)
is insufficient to pay the release amount due to the Warehouse Lender, Seller shall remit to
Purchaser the difference between the Purchase Price (less the Holdback Amount) and such release
amount and Purchaser shall remit the full release amount to the Warehouse Lender. Effective upon
execution and delivery of such copy of the Participation Certificate to Purchaser, Seller hereby
assigns to Purchaser all of Seller’s right, title and interest in and to such Participation
Certificate and a 100% undivided beneficial ownership interest in the Related Mortgage Loans. In
the event that Purchaser does not transmit such payment, (i) any Participation Certificate
delivered by Custodian to Purchaser in anticipation of such purchase shall automatically be null
and void, (ii) Purchaser will not consummate the transactions contemplated in the applicable Trade
Assignment and (iii) to the extent that Purchaser shall nevertheless receive the Security backed by
the Related Mortgage Loans prior to the Related Participation Certificate becoming null and void as
provided in clause (i) above, Purchaser shall take all reasonable actions necessary to ensure that
such Security shall be delivered in accordance with Seller’s delivery instructions specified in
Annex A.

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          (c) Purchaser shall provide a Confirmation to Seller on or before the Purchase Date or as soon
as practicable after such Purchase Date. In the event of any conflict between the terms of a
Confirmation and this Agreement, the Confirmation shall prevail.

          (d) The terms and conditions of the purchase of each Participation Certificate shall be as set
forth in this Agreement. Each Participation Certificate shall be deemed to incorporate, and Seller
shall be deemed to make as of the applicable dates specified in Section 10, for the benefit
of Purchaser and each Assignee of such Participation Certificate, the representations and
warranties set forth in Section 10.

          Section 3. Takeout Commitments.
Seller hereby assigns to Purchaser, free of any security interest, lien, claim or encumbrance
of any kind, Seller’s rights under each Takeout Commitment to deliver the Security specified
therein to the related Takeout Investor and to receive the purchase price therefor from such
Takeout Investor. Subject to Purchaser’s rights hereunder, Purchaser agrees that it will satisfy
the obligation under the Takeout Commitment to deliver the Security to the Takeout Investor on the
Settlement Date specified therein. Seller understands that, as a result of this Section 3
and each Trade Assignment, Purchaser will succeed to the rights of Seller with respect to each
Takeout Commitment subject to a Trade Assignment, and that in satisfying each such Takeout
Commitment, Purchaser, will stand in the shoes of Seller and, consequently, will be acting as a
non-dealer in exercising its rights and fulfilling its obligations assigned pursuant to this
Section 3 and each Trade Assignment. Each Trade Assignment delivered by Seller to
Purchaser shall be delivered by Seller in a timely manner sufficient to enable Purchaser to
facilitate the settlement of the related trade on the trade date in accordance with Chapter 8 of
the Public Securities Association’s Uniform Practices for the Clearance and Settlement of Mortgage
Backed Securities and other Related Securities, as amended from time to time.

          Section 4. Holdback Amount.
(a) Subject to the terms of this Agreement, Purchaser shall pay to Seller the Holdback Amount
for each Participation Certificate that Purchaser purchases hereunder. The Holdback Amount with
respect to a Participation Certificate shall be paid by Purchaser to Seller as provided in
Section 4(b) below.

          (b) Subject to Section 5(b) and the Purchaser’s right of set-off set forth in
Section 14, the Holdback Amount relating to each Participation Certificate shall be paid by
Purchaser to Seller not later than the Settlement Date of the related Security; provided,
that on the date of any such payment to the Seller, the Holdback Amount shall be (i) reduced by the
amount, if positive, equal to (x) the Purchase Price Adjustment Amount minus (y) the Present Value
Adjustment Amount with respect to such Participation Certificate or (ii) increased by the amount,
if positive, equal to (x) the Present Value Adjustment Amount minus (y) the Purchase Price
Adjustment Amount with respect to such Participation Certificate. Notwithstanding any provision
hereof to the contrary, no Holdback Amount shall be owed by Purchaser to Seller upon issuance of
any Security in the circumstances contemplated in Section 6(f) or if the related Security
shall not be issued as a result of a Security Issuance Failure. No exercise by Purchaser of its
rights under this Section 4(b) shall relieve Seller of responsibility or liability for any
breach of this Agreement.

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          (c) Upon exercise by Purchaser of its remedies under Section 6(f), Purchaser’s
obligation to pay and Seller’s right to receive any portion of the Holdback Amount relating to such
Mortgage Loans shall automatically be canceled and become null and void; provided, that such
cancellation shall in no way relieve Seller or otherwise affect the obligation of Seller to
indemnify and hold Purchaser harmless as specified in Section 15.

          Section 5. Issuance of Securities.
(a) (i) In connection with the purchase of a Participation Certificate, Seller shall
instruct (and, if Seller fails to instruct, then Purchaser may instruct) Custodian to deliver to
the Applicable Agency, the documents listed for delivery to such Applicable Agency in an exhibit to
the Custodial Agreement, as applicable, in respect of the Related Mortgage Loans, in the manner and
at the time set forth in the Custodial Agreement. Seller shall thereafter promptly deliver to the
Applicable Agency any and all additional documents requested by the Applicable Agency to enable the
Applicable Agency to make Delivery to Purchaser of a Security backed by the Related Mortgage Loans
on the related Anticipated Delivery Date. Seller shall not revoke such instructions to Custodian
and shall not revoke its instructions to the Applicable Agency to make Delivery to Purchaser or its
designee of a Security backed by such Mortgage Loans.

     (ii) Seller shall notify Purchaser, not later than 12:00 noon, Eastern Time, on the
second (2nd) Business Day prior to the applicable Settlement Date (a) of the amount of any
change in the principal amount of the Mortgage Loans backing each Security to be delivered
on such Settlement Date and (b) with respect to FHLMC Securities, the FHLMC mortgage loan
pool number applicable to each Security to be delivered on such Settlement Date. Upon
Delivery of such Security to Purchaser or its designee, Purchaser shall cease to have any
interest under the Related Participation Certificate and in exchange shall have a 100%
ownership interest in the related Security. It is understood and agreed that for so long as
Seller is servicing Related Mortgage Loans, Seller shall retain only bare legal title (and
not an equitable interest) in all such Mortgage Loans (other than MERS Mortgage Loans) for
the sole purpose of servicing such Mortgage Loans.

          (b) If Delivery of a Security backed by the Mortgage Loans evidenced by a Participation
Certificate purchased hereunder has not occurred by 1:00 p.m. (Eastern Time), on the related
Settlement Date as a result of a Securities Issuance Failure, then subject to the exercise by
Purchaser of its rights set forth in Section 4(c), the Holdback Amount relating to such
Participation Certificate shall be reduced on each day during the period from the Settlement Date
to (but not including) the earlier of (x) the date of Delivery of such Security, and (y) the date
of satisfaction of the obligations of Seller pursuant to the exercise by Purchaser of any remedial
election authorized by this Section 5, by an amount equal to the Daily Holdback Reduction
Amount. The Holdback Amount (reduced the applicable Daily Holdback Reduction Amounts) relating to
such Participation Certificate, if any, shall not be payable until the end of the period specified
in the preceding sentence.

          (c) If a breach by Seller of this Agreement results in any Related Mortgage Loan being a
Defective Mortgage Loan on the Purchase Date of the related Participation Certificate, Purchaser in
its sole discretion may require Seller, upon receipt of notice from Purchaser of its exercise of
such right, to either (x) immediately repurchase Purchaser’s

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beneficial ownership interest in such Defective Mortgage Loan by remitting to Purchaser the
allocable amount paid by Purchaser for such beneficial interest plus accrued interest on a per
annum basis at the rate specified in the related Mortgage Note on the principal amount thereof from
the Purchase Date of such Participation Certificate to the date of such repurchase together with
any Losses suffered by Purchaser relating to such repurchase (including, without limitation, any
Losses incurred by Purchaser resulting from adjustments to the trade required by the Takeout
Investor), or (y) deliver to Custodian a Mortgage Loan eligible to back such Security in exchange
for such Defective Mortgage Loan, which newly delivered Mortgage Loan shall be in all respects
acceptable under the applicable Agency Program and acceptable to Purchaser in Purchaser’s sole
discretion, and (i) such newly delivered Mortgage Loan will thereupon become one of the Related
Mortgage Loans relating to the Participation Certificate and (ii) the Defective Mortgage Loan will
thereupon cease being one of the Related Mortgage Loans, cease being subject to the Related
Participation Certificate and the Seller shall be deemed to have repurchased 100% of the beneficial
ownership interest in such Defective Mortgage Loan. If the aggregate principal balance of any
Mortgage Loans that are accepted by Purchaser pursuant to clause (y) of the immediately preceding
sentence is less than the aggregate principal balance of any Defective Mortgage Loan that is being
replaced by such Mortgage Loan, Seller shall remit with such Mortgage Loan to Purchaser an amount
equal to the difference between the aggregate principal balance of the new Mortgage Loan accepted
by Purchaser and the aggregate principal balance of the Defective Mortgage Loan being replaced
thereby (the “Replacement Shortfall”) plus accrued interest on such Defective Mortgage Loan
at the rate specified in the related Mortgage Note on the Replacement Shortfall from the Purchase
Date of Purchaser’s purchase of the Related Participation Certificate to the date of substitution.
If any Related Mortgage Loan becomes thirty (30) or more days past due with respect to the first
scheduled monthly payment due Purchaser after the date on which such Related Mortgage Loan was
originated and prior to the Anticipated Delivery Date, Seller shall repurchase the beneficial
interest in such Related Mortgage Loan as if it were a Defective Mortgage Loan upon direction by
Purchaser given no later than one hundred twenty (120) days after the Purchase Date,
provided that Seller shall have no obligation to repurchase such Related Mortgage Loan
after a Security backed by such Related Mortgage Loan is issued.

          (d) No exercise by Purchaser of its rights under this Section 5 shall relieve Seller
of responsibility or liability for any breach of this Agreement.

          (e) Notwithstanding anything contained in the Custodial Agreement, after the occurrence of a
Security Issuance Failure (as defined in the Custodial Agreement), Purchaser shall not request a
release or transfer of any Mortgage File related to such Security Issuance Failure (as defined in
the Custodial Agreement), unless such Security Issuance Failure (as defined in the Custodial
Agreement) also constitutes a Security Issuance Failure under this Agreement.

          Section 6. Servicing of the Mortgage Loans; Servicer Termination.
(a) Seller and Purchaser each agrees and acknowledges that upon payment of the Purchase Price
(subject to Section 4), a 100% undivided beneficial ownership interest in the Related
Mortgage Loans shall be sold to Purchaser, such that Purchaser shall own a 100% undivided
beneficial interest in the Related Mortgage Loans. Seller and Purchaser each agrees and
acknowledges that Seller shall service each Related Mortgage Loan for the benefit of Purchaser (and
any other registered holder

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of the related Participation Certificate) as beneficial owner of such Related Mortgage Loan
from the Purchase Date of the Related Participation Certificate through the issuance date of the
related Security, subject to the servicing termination rights and automatic servicing termination
provisions set forth in Sections 6(b) and 6(f) hereof. Seller shall have no
further servicing obligations or duties to Purchaser under the terms of this Agreement with respect
to the Related Mortgage Loans upon issuance of the Security.

          For so long as a Participation Certificate is outstanding, Seller shall neither assign,
encumber or pledge its obligation to service the Related Mortgage Loans in whole or in part, nor
delegate its rights or duties under this Agreement without the prior written consent of Purchaser,
the granting of which consent shall be in the sole discretion of Purchaser. Seller hereby
acknowledges and agrees that (i) Purchaser is entering into this Agreement in reliance upon
Seller’s representations as to the adequacy of its financial standing, servicing facilities,
personnel, records, procedures, reputation and integrity, and the continuance thereof; and (ii)
Seller’s designation hereunder to provide mortgage servicing for the benefit of Purchaser (and any
other registered holder of the Participation Certificate) is intended by the parties to be a
“personal service contract” and Seller is hereunder intended by the parties to be an
“independent contractor”.

          (b) Seller shall service and administer the Related Mortgage Loans relating to a Participation
Certificate on behalf of Purchaser in accordance with Accepted Servicing Practices. Seller shall
service each Related Mortgage Loan as servicer for Purchaser for a term of sixty (60) days
following the related Purchase Date (the “Servicing Term”), which is renewable for
subsequent sixty (60) day periods (or such other period agreed to by Purchaser) upon written
agreement by Purchaser. Seller shall not modify or alter the terms of any Related Mortgage Loan or
consent to the modification or alteration of the terms of any Related Mortgage Loan except in
Strict Compliance with the related Agency Program. Seller shall at all times maintain accurate and
complete records of its servicing of the Related Mortgage Loans, and Purchaser may, at any time
during Seller’s business hours on reasonable notice, examine and make copies of such Servicing
Records. Seller covenants to hold all Servicing Records with respect to the Related Mortgage Loans
for the benefit of Purchaser in Seller’s capacity as servicer and to safeguard such Servicing
Records and to deliver copies of them promptly to Purchaser or its designee (including the
Custodian) at Purchaser’s request or otherwise as required by operation of this Section
6(f). In addition, if Delivery of a Security is not made to Purchaser on or before the
Anticipated Delivery Date, Seller shall deliver to Purchaser monthly reports regarding the status
of those Related Mortgage Loans for which a Security has not yet been issued, which reports shall
include, but shall not be limited to, a description of those Related Mortgage Loans in default for
more than thirty (30) days, and such other circumstances with respect to any Related Mortgage Loans
(whether or not such Related Mortgage Loans are included in the foregoing list) that could
materially adversely affect any of such Related Mortgage Loans, Purchaser’s beneficial interest in
such Related Mortgage Loans or the collateral securing any of such Related Mortgage Loans. Seller
shall deliver such a report to Purchaser every thirty (30) days until (i) Delivery of the related
Security to Purchaser or (ii) the exercise by Purchaser of any remedial election pursuant to
Section 5. In no event shall Seller delegate any of its servicing duties hereunder to any
other Person without first obtaining the prior written consent of Purchaser.

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          (c) Seller, as servicer, shall establish and maintain a separate custodial account (the
“Custodial Account”) entitled “PHH Mortgage Corporation Custodial Account, for the benefit
of Bank of America, N.A. and its assignees” and shall promptly deposit into such account in the
form received, with any necessary endorsements, all Collections received in respect of the Related
Mortgage Loans.

          (d) Amounts deposited in the Custodial Account with respect to any Related Mortgage Loan shall
be held for the benefit of Purchaser and shall be released only as follows:

     (i) except as otherwise provided in Section 6(d)(ii), to the Seller upon the
earlier to occur of either (x) the Settlement Date (unless there is a Securities Issuance
Failure) or (y) the date required by the Applicable Agency Guide, provided that if any
amounts are due and owing by the Seller to the Purchaser hereunder on such Settlement Date,
the Purchaser shall withdraw and retain such amounts from the Custodial Account on such
Settlement Date, prior to such amounts from the Custodial Account being released to Seller
on such Settlement Date. The amounts paid to Seller (if any) pursuant to this Section
6(d)(i) shall constitute Seller’s sole compensation for servicing the Related Mortgage
Loans as provided in this Section 6;

     (ii) to Purchaser promptly upon delivery of such Mortgage Loans to a Successor Servicer
either under the circumstances set forth in Section 6(f) or otherwise; and

     (iii) if a Security is not issued solely as a result of a Security Issuance Failure
during the month in which the related Settlement Date occurs, in any period thereafter
during which Seller remains as servicer, in accordance with Purchaser’s written
instructions.

          (e) Purchaser (or any other registered holder of the Related Participation Certificate) shall
be entitled to effect termination of Seller’s servicing rights and obligations respecting the
affected Related Mortgage Loans in the event any of the following circumstances or events
(“Servicing Termination Events”) occur and are continuing:

     (i) any failure by Seller to remit to Purchaser (or other registered holder of the
Participation Certificate) when due any payment required to be made under the terms of this
Agreement or such Participation Certificate which failure continues unremedied for a period
of two (2) Business Days;

     (ii) any failure by Seller duly to observe or perform any of the covenants set forth in
Sections 11(p), 11(q) or Section 12;

     (iii) any failure by Seller duly to observe or perform in any material respect any of
Seller’s other covenants or agreements set forth in this Agreement or in the Custodial
Agreement, which failure continues unremedied for a period of five (5) Business Days (or
such longer period provided in the relevant notice to Seller) after the date on which
written notice of such failure, requiring the same to be remedied, shall have been given to
Seller by Purchaser;

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     (iv) (i) default in payment shall be made with respect to any Indebtedness or Interest
Rate Protection Agreements of PHH Parent, Seller or any of Seller’s Subsidiaries (other than
Securitization Indebtedness) where the amount or amounts of such Indebtedness or Interest
Rate Protection Agreements exceeds (A) with respect to PHH Parent, $25,000,000 (or its
equivalent thereof in any other currency) in the aggregate and (B) with respect to Seller or
any of Seller’s Subsidiaries, $10,000,000 (or its equivalent thereof in any other currency)
in the aggregate; or (ii) default shall be made with respect to the observance or
performance of any other agreement or condition with respect to any Indebtedness or Interest
Rate Protection Agreements of PHH Parent, Seller or any of Seller’s Subsidiaries (other than
Securitization Indebtedness) where the amount or amounts of such Indebtedness or Interest
Rate Protection Agreements exceeds (A) with respect to PHH Parent, $25,000,000 (or its
equivalent thereof in any other currency) in the aggregate and (B) with respect to Seller or
any of Seller’s Subsidiaries, $10,000,000 (or its equivalent thereof in any other currency)
in the aggregate, if the effect of such default is to result in the acceleration of the
maturity of such Indebtedness or Interest Rate Protection Agreement; or (iii) any other
circumstance shall arise (other than the mere passage of time) by reason of which PHH
Parent, Seller or any of Seller’s Subsidiaries is required to redeem or repurchase, or offer
to holders the opportunity to have redeemed or repurchased, any such Indebtedness or
Interest Rate Protection Agreement (other than Securitization Indebtedness) where the amount
or amounts of such Indebtedness or Interest Rate Protection Agreement exceeds (A) with
respect to PHH Parent, $25,000,000 (or its equivalent thereof in any other currency) in the
aggregate and (B) with respect to Seller or any of Seller’s Subsidiaries, $10,000,000 (or
its equivalent thereof in any other currency) in the aggregate; provided
that clause (iii) shall not apply to secured Indebtedness or Interest Rate
Protection Agreement that becomes due as a result of a voluntary sale of the property or
assets securing such Indebtedness or Interest Rate Protection Agreement or Indebtedness that
is redeemed or repurchased at the option of PHH Parent, Seller or any of Seller’s
Subsidiaries or with respect to any Indebtedness that is convertible, in whole or in part,
into shares of capital stock of PHH Parent and/or cash based on any formula(s) that
reference the trading price of shares of capital stock of PHH Parent, any payment for
settlement (whether in cash or otherwise) upon conversion thereof and provided,
further, that clauses (ii) and (iii) shall not apply to any
Indebtedness or Interest Rate Protection Agreement of any of Seller’s Subsidiaries issued
and outstanding prior to the date such Subsidiary became a Subsidiary of Seller (other than
Indebtedness or Interest Rate Protection Agreement issued in connection with, or in
anticipation of, such Subsidiary becoming a Subsidiary of Seller) if such default or
circumstance arises solely as a result of a “change of control” provision applicable to such
Indebtedness or Interest Rate Protection Agreement which becomes operative as a result of
the acquisition of such Subsidiary by Seller or any of its Subsidiaries;

     (v) any representation, warranty or certification made or deemed made herein or in any
other Program Document by Seller or any certificate furnished to Purchaser pursuant to the
provisions thereof, shall prove to have been false or misleading in any material respect as
of the time made or furnished;

     (vi) an Act of Insolvency shall have occurred with respect to Seller, any of Seller’s
Subsidiaries, PHH Parent or any of PHH Parent’s Material Subsidiaries; or Seller

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shall admit in writing its inability to, or intention not to, perform any of its
obligations under this Agreement or any of the other Program Documents; or Purchaser shall
have determined in good faith that Seller is unable to meet its financial commitments as
they come due;

     (vii) the respective audited consolidated annual financial statements of either Seller
or PHH Parent, or the notes thereto or other opinions or conclusions stated therein shall be
qualified or limited by reference to the status of Seller or PHH Parent, as applicable, as a
“going concern” or a reference of similar import or shall indicate that Seller or PHH
Parent, as applicable, has a negative net worth or is insolvent;

     (viii) one or more final judgment(s) or decrees shall be entered against PHH Parent,
Seller or any of Seller’s Subsidiaries involving a liability of (A) with respect to PHH
Parent, $25,000,000 or more and (B) with respect to Seller or any of Seller’s Subsidiaries,
$10,000,000 or more (in each case, to the extent that it is, in the reasonable determination
of Purchaser, uninsured and provided that any insurance or other credit posted in connection
with an appeal shall not be deemed insurance for these purposes), and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending appeal within
thirty (30) days after entry thereof;

     (ix) any Plan maintained by Seller, any Affiliate of Seller or any ERISA Affiliate
shall be terminated within the meaning of Title IV of ERISA or a trustee shall be appointed
by an appropriate United States District Court to administer any Plan, or the Pension
Benefit Guaranty Corporation (or any successor thereto) shall institute proceedings to
terminate any Plan or to appoint a trustee to administer any Plan if as of the date thereof
Seller’s liability, any such Subsidiary’s liability or any ERISA Affiliate’s liability to
the PBGC, the Plan or any other entity on termination under the Plan exceeds the then
current value of assets accumulated in such Plan by more than fifty thousand ($50,000)
dollars (or in the case of a termination involving Seller as a “substantial employer” (as
defined in Section 4001 (a)(2) of ERISA) the withdrawing employer’s proportionate share of
such excess shall exceed such amount);

     (x) Seller as employer under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and the plan sponsor of such Multiemployer Plan
shall have notified such withdrawing employer that such employer has incurred a withdrawal
liability in (a) an annual amount exceeding fifty thousand ($50,000) dollars, or (b) an
aggregate amount exceeding five hundred thousand ($500,000) dollars;

     (xi) (a) Seller or any ERISA Affiliate shall engage in any “prohibited transaction” (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (b) a
determination that a Plan is “at risk” (within the meaning of Section 303 of ERISA) or any
Lien in favor of the PBGC or a Plan shall arise on the assets of Seller or any ERISA
Affiliate, (c) a Reportable Event shall occur with respect to, or proceedings shall commence
to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate,
any Plan, which Reportable Event or commencement of proceedings or appointment of a trustee
is, in the reasonable opinion of Purchaser, likely to result in the

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termination of such Plan for purposes of Title IV of ERISA, (d) any Plan shall
terminate for purposes of Title IV of ERISA, (e) Seller or any ERISA Affiliate shall, or in
the reasonable opinion of Purchaser is likely to, incur any liability in connection with a
withdrawal from, or the insolvency or reorganization of, a Multiemployer Plan, (f) Seller or
any ERISA Affiliate shall file an application for a minimum funding waiver under Section 302
of ERISA or Section 412 of the Code with respect to any Plan, (g) any obligation for
post-retirement medical costs (other than as required by COBRA) exists, or (h) any other
event or condition shall occur or exist with respect to a Plan; and in each case in clauses
(a) through (h) above, such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to have a Material Adverse Effect or (i)
the assets of Seller become plan assets within the meaning of 29 CFR 2510.3-101 as modified
by Section 3(42) of ERISA;

     (xii) any Governmental Authority or any person, agency or entity acting or purporting
to act under governmental authority shall have taken any action to (a) condemn, seize or
appropriate, or to assume custody or control of, all or any substantial part of the property
or assets of PHH Parent, Seller or any of Seller’s Subsidiaries; (b) displace the management
of PHH Parent, Seller or any of Seller’s Subsidiaries or to curtail its authority in the
conduct of their respective business; or (c) to remove, revoke, suspend or materially
restrict the approval of Seller or any of Seller’s Subsidiaries as an issuer, buyer or
seller/servicer of Mortgage Loans or securities backed thereby, and any such action provided
for in this Section 6(e)(xii) shall not have been discontinued or stayed within
thirty (30) days;

     (xiii) Seller shall notify Purchaser orally or in writing of its intent to disavow
Seller’s obligations hereunder or shall contest the validity or enforceability of the
Program Documents or Purchaser’s interest in any Related Mortgage Loan or Participation
Certificate and within one (1) Business Day after written notice from Purchaser of such
notification, a Responsible Officer of the Seller fails to reaffirm in writing Seller’s
obligations hereunder, the validity and enforceability of the Program Documents, Purchaser’s
interest in any Related Mortgage Loans and Purchaser’s interest in any Participation
Certificates then outstanding;

     (xiv) a default shall occur and be continuing beyond the expiration of any applicable
grace period under any other Program Document;

     (xv) a Material Adverse Effect shall occur;

     (xvi) [Reserved];

     (xvii) a Change of Control shall occur, without prior written consent of Purchaser;

     (xviii) (a) any Program Document shall for whatever reason (including an event of
default thereunder) be terminated, without the consent of Purchaser (other than, with
respect to the Custodial Agreement, due to the resignation of the Custodian for reasons
other than a breach by Seller of the Custodial Agreement), or (b) this Agreement shall for

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any reason cease to create a valid ownership interest upon transfer in any of
the Participation Certificates (other than as a result of the action or inaction that
constitutes gross negligence or willful misconduct of the Purchaser and as long as Seller
shall cure such failure within one (1) Business Day);

     (xix) if Seller is a member of MERS, Seller’s membership in MERS is terminated for any
reason other than due to MERS ceasing its operations;

     (xx) Seller ceases to meet the qualifications for maintaining all Approvals,
provided that, there shall not be a Servicing Termination Event under this
Section 6(e)(xx) in the event that Seller intentionally terminates its Approvals
with Fannie Mae or FHLMC (not as a result of Fannie Mae or FHLMC expressing its intention to
terminate such Approval), so long as Seller maintains the approvals from the Applicable
Agency or HUD designation to be (i) either a Fannie Mae-approved lender or a FHLMC-approved
Seller/Servicer and (ii) a GNMA-approved issuer, a GNMA-approved servicer, a FHA-approved
mortgagee and a VA-approved lender;

     (xxi) Seller attempts to assign its right to servicing compensation hereunder or to
resell an ownership interest in a Related Mortgage Loan in a manner inconsistent with the
terms hereof, or Seller attempts without the consent of Purchaser to assign this Agreement
or the servicing responsibilities hereunder or to delegate its duties hereunder or any
portion thereof;

     (xxii) failure of Seller to be in compliance with the “doing business” or licensing
laws of any jurisdiction where a Mortgaged Property is located if such failure is reasonably
likely to result in a Material Adverse Effect; or

     (xxiii) a Security Issuance Failure.

          (f) Purchaser, in its sole discretion, may terminate Seller’s rights and obligations as
servicer of the affected Related Mortgage Loans and require Seller to deliver the related Servicing
Records to Purchaser or its designee upon the occurrence of (i) a Servicing Termination Event, (ii)
Seller’s failure to comply with any of its obligations set forth in Section 5(c), or (iii)
Seller’s breach of Section 10(a)(xxiv), by delivering written notice to Seller requiring
such termination. Such termination shall be effective upon Seller’s receipt of such written
notice; provided, that Seller’s servicing rights shall be terminated immediately upon the
occurrence of any event described in Section 6(e)(vi) or the conclusion of the Servicing
Term (absent a renewal of the Servicing Term), regardless of whether notice of such event shall
have been given to or by Purchaser or Seller. Upon any such termination, all authority and power
of Seller respecting its rights to service Related Mortgage Loans and duties under this Agreement
relating thereto, shall pass to and be vested in the Successor Servicer appointed by Purchaser and
Purchaser is hereby authorized and empowered to transfer such rights to service the Related
Mortgage Loans for such price and on such terms and conditions as Purchaser shall reasonably
determine; provided, that to the extent the Applicable Agency proceeds to issue a Security
with respect to the Related Mortgage Loans, Purchaser shall convey the servicing rights and the
rights to service such Mortgage Loans in accordance with such Applicable Agency’s instructions.
Seller shall promptly take such actions and furnish to Purchaser such documents that Purchaser

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deems necessary or appropriate to enable Purchaser to obtain a Security backed by such
Mortgage Loans or to enforce such Mortgage Loans, as appropriate, and shall perform all acts and
take all actions so that the Related Mortgage Loans and all files and documents relating to such
Mortgage Loans held by Seller, together with all escrow amounts relating to such Mortgage Loans,
are delivered to Successor Servicer, including but not limited to preparing, executing and
delivering to the Successor Servicer any and all documents and other instruments, placing in the
Successor Servicer’s possession all Servicing Records pertaining to such Mortgage Loans and doing
or causing to be done any other actions requested by Purchaser, all at Seller’s sole expense. To
the extent that the approval of the Applicable Agency is required for any such sale or transfer,
Seller shall fully cooperate with Purchaser to obtain such approval. All amounts paid by any
purchaser of such rights to service the Related Mortgage Loans shall be the property of Purchaser.
The servicing required to be delivered to Successor Servicer in accordance with this Section
6(f) shall be delivered free of any rights in favor of Seller or any third party (other than
Purchaser) and free of any title, interest, lien, encumbrance or claim of any kind of Seller. No
exercise by Purchaser of its rights under this Section 6(f) shall relieve Seller of
responsibility or liability for any breach of this Agreement.

          Section 7. Transfers of Participation Certificates and Securities by Purchaser.
Purchaser may, in its sole discretion and without the consent of Seller, assign all of its
right, title and interest or grant a security interest in any Participation Certificate, each
Security in respect thereof of which Delivery is made to Purchaser and all rights of Purchaser
under this Agreement (including, but not limited to, the Custodial Account) in respect of such
Participation Certificate and such Security, to any person (an “Assignee”), subject only to
an obligation on the part of the Assignee to deliver each such Security to the Takeout Investor or
to permit Purchaser or its designee to make delivery thereof to the Takeout Investor. Assignment
by Purchaser of a Participation Certificate as provided in this Section 7 will not release
Purchaser from its obligations otherwise under this Agreement.

          Without limitation of the foregoing, an assignment of a Participation Certificate to an
Assignee, as described in this Section 7, shall be effective upon delivery of the
Participation Certificate to the Assignee or its designee, together with a duly executed Assignment
substantially in the form of Exhibit E (with a copy to Seller).

          Section 8. Record Title to Mortgage Loans; Intent of Parties; Security Interest.
(a) From and after the issuance and delivery of the Related Participation Certificate, and
subject to the remedies of Purchaser in Section 5, Seller as servicer shall remain the last
named payee or endorsee of each Mortgage Note and the mortgagee or assignee of record of each
Mortgage (except with respect to any MERS Mortgage Loan) and shall retain only bare legal title
(and not an equitable interest) in the Related Mortgage Loan, all for the benefit of Purchaser for
the sole purpose of facilitating the servicing of such Mortgage Loan and the issuance of a Security
backed by such Mortgage Loan.

          (b) Seller shall maintain a complete set of books and records for each Related Mortgage Loan
in accordance with industry practice which shall be clearly marked to reflect the beneficial
ownership interest in each Related Mortgage Loan of the holder of the Related Participation
Certificate. Seller shall notify MERS of Purchaser’s interest in each MERS Mortgage Loan as
“interim funder”.

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          (c) Purchaser and Seller confirm that the transactions contemplated herein are intended to be
sales of the Participation Certificates by Seller to Purchaser rather than borrowings secured by
the Participation Certificates. In the event, for any reason, any transaction is construed by any
court or regulatory authority as a borrowing rather than as a sale, in order to secure the Seller’s
obligations hereunder and any other obligations between the Seller on the one hand and the
Purchaser and its Affiliates on the other, and in any event, Seller and Purchaser intend that
Purchaser or its Assignee, as the case may be, shall have, and the Seller hereby grants, assigns
and pledges to Purchaser or its Assignee a perfected first priority security interest in Seller’s
interest in the Participation Certificates, the Custodial Account and all amounts on deposit
therein, the Related Mortgage Loans, all documents, records, instruments and data evidencing the
Related Mortgage Loans, the Securities to be issued as contemplated hereunder and all proceeds
thereof, the Takeout Commitments and the proceeds of any and all of the foregoing in all instances,
whether now owned or hereafter acquired, now existing or hereafter created (collectively, the
“Basic Collateral”), free and clear of adverse claims. In such case, Seller shall be
deemed to have hereby granted to Purchaser or its Assignee, as the case may be, a first priority
security interest in and lien upon the Basic Collateral, free and clear of adverse claims. In such
event, this Agreement shall constitute a security agreement, the Custodian shall be deemed to be an
independent custodian for purposes of perfection of the security interest herein granted to
Purchaser, and Purchaser or each such Assignee shall have all of the rights of a secured party
under applicable law.

          In the event that the servicing of the Related Mortgage Loans is deemed a separate property
right severable from the Related Mortgage Loans and Participation Certificates, and in any event,
Seller and Purchaser intend that Purchaser or its Assignee, as the case may be, shall have, and the
Seller hereby grants and pledges to Purchaser or its Assignee a perfected first priority security
interest in Seller’s right, title and interest in the servicing rights to the Related Mortgage
Loans and the Servicing Records related thereto and the proceeds of any and all of the foregoing in
all instances, whether now owned or hereafter acquired, now existing or hereafter created
(“Additional Collateral”; together with the Basic Collateral, the “Collateral”)
free and clear of adverse claims.

          Upon request of Purchaser, Seller shall prepare and deliver to MERS an Assignment of Mortgage
from MERS to Purchaser or its designee. Upon due execution by MERS, Seller shall cause such
Assignment of Mortgage to be recorded in the public land records upon request of Purchaser.

          Section 9. Conditions Precedent.

          (a) Purchase of initial Participation Certificate.
As conditions precedent to Purchaser purchasing the initial Participation Certificate
hereunder:

     (i) Seller shall have delivered to Purchaser, in form and substance satisfactory to
Purchaser:

     (A) each of the Program Documents duly executed by each party thereto and in
full force and effect, free of any modification, breach or waiver;

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     (B) an opinion of Seller’s counsel as to such matters as Purchaser may
reasonably request, including, without limitation, with respect to Purchaser’s first
priority lien on and perfected security interest in the Related Mortgage Loans; a
non-contravention, enforceability and corporate opinion with respect to Seller; an
opinion with respect to the inapplicability of the Investment Company Act of 1940 to
Seller; and a true sale opinion, each in form and substance acceptable to Purchaser;

     (C) a Power of Attorney duly executed by Seller and notarized;

     (D) a certified copy of Seller’s articles or certificate of incorporation and
bylaws (or corresponding organizational documents if Seller is not a corporation)
and, if required by Purchaser, a certificate of good standing issued by the
appropriate official in Seller’s jurisdiction of organization, in each case, dated
no less recently than fourteen (14) days prior to the initial Purchase Date;

     (E) a certificate of Seller’s corporate secretary or assistant secretary,
substantially in the form of Exhibit G hereto, dated as of the date hereof,
as to the incumbency and authenticity of the signatures of the officers of Seller
executing the Program Documents and the resolutions of the board of directors of
Seller (or its equivalent governing body or Person), substantially in the form of
Exhibit H hereto;

     (F) independently audited financial statements of Seller (and its Subsidiaries,
on a consolidated basis) for each of the two (2) fiscal years most recently ended
(if available), containing a balance sheet and related statements of income,
stockholders’ equity and cash flows, all prepared in accordance with GAAP, applied
on a basis consistent with prior periods, and otherwise acceptable to Purchaser,
together with an auditor’s opinion that is unqualified or otherwise is consented to
in writing by Purchaser;

     (G) if more than six (6) months has passed since the close of the most recently
ended fiscal year, interim financial statements of Seller covering the period from
the first day of the current fiscal year to the last day of the month prior to the
most recently ended month;

     (H) copies of Seller’s errors and omissions insurance policy or mortgage
impairment insurance policy and blanket bond coverage policy or certificates of
insurance for such policies, all in form and content satisfactory to Purchaser,
showing compliance by Seller with Section 11(k);

     (I) the Commitment Fee; and

     (J) such other documents as Purchaser or its counsel may reasonably request.

     (ii) Purchaser shall have determined that it has received satisfactory evidence that
the appropriate Uniform Commercial Code Financial Statements (UCC-1) and/or

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such other instruments as may be necessary in order to create in favor of Purchaser, a
perfected first priority security interest in the Related Mortgage Loans should any of the
transactions hereunder be deemed to be loans, are appropriately prepared for filing or
recording in each office of each jurisdiction in which such filings and recordation’s are
required to perfect such first priority security interest.

     (iii) Purchaser shall have determined that it has satisfactorily completed its due
diligence review of Seller’s operations, business, financial condition and underwriting and
origination of Mortgage Loans.

     (iv) Seller shall have provided evidence, satisfactory to Purchaser, that Seller has
all Approvals and such Approvals are in good standing.

          (b) All Purchases of Participation Certificates.
As conditions precedent to Purchaser purchasing any Participation Certificate hereunder,
including the initial Participation Certificate:

     (i) Seller shall have delivered to Purchaser, in form and substance satisfactory to
Purchaser and not later than the related Purchase Date:

     (A) the fully completed, executed and authenticated Participation Certificate
together with the certifications of the Custodian provided by Sections 2 and
4 of the Custodial Agreement;

     (B) a Trade Assignment executed by Seller with respect to the Security to be
backed by the Mortgage Loans evidenced by such Participation Certificate; and

     (C) to the extent that an event or circumstance shall occur which Purchaser
determines in its sole discretion is likely to be material and adverse to Seller,
such other documents as Purchaser or its counsel may from time to time reasonably
request to provide assurances determined to be adequate by the Purchaser.

     (ii) Seller shall have paid all fees (including Commitment Fees), expenses, indemnity
payments and other amounts that are then due and owing under the Program Documents;

     (iii) the representations and warranties of Seller set forth in Section 10
hereof shall be true and correct in all material respects as if made on and as of each
Purchase Date or if such representation or warranty is expressly stated to have been made as
of a specific date, as of such specific date;

     (iv) after giving effect to the purchase of a Participation Certificate, there shall
exist no Servicing Termination Event or Potential Servicing Termination Event hereunder;

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     (v) no Potential Servicing Termination Event, Servicing Termination Event or Material
Adverse Effect shall have occurred and be continuing;

     (vi) Purchaser shall have received a security release certification for each Related
Mortgage Loan that is subject to a security interest (including any precautionary security
interest) immediately prior to the Purchase Date that is duly executed by the related
secured party and Seller, if necessary, and in form and substance satisfactory to Purchaser,
and such secured party shall have filed Uniform Commercial Code termination statements in
respect of any Uniform Commercial Code filings made in respect of such Related Mortgage
Loan, if necessary, and each such release and Uniform Commercial Code termination statement
has been delivered to Purchaser prior to each purchase of a Related Participation
Certificate and to the Custodian as part of the Mortgage File; and

     (vii) Seller shall have deposited all amounts required under Section 6(c) into
the Custodial Account.

          (c) Satisfaction of Conditions.
The purchase of any Participation Certificate prior to or without the fulfillment by Seller of
all the conditions precedent thereto, whether or not known to Purchaser, shall not constitute a
waiver by Purchaser of the requirements that all conditions, including the non-performed
conditions, shall be satisfied with respect to such purchase. All conditions precedent hereunder
are imposed solely and exclusively for the benefit of Purchaser and may be freely waived or
modified in whole or in part by Purchaser. Any waiver or modification asserted by Seller to have
been agreed to by Purchaser must be in writing. Purchaser shall not be liable to Seller for any
costs, losses or damages arising from Purchaser’s determination that Seller has not satisfactorily
complied with any applicable condition precedent.

          Section 10. Representations and Warranties.

          (a) Representations and Warranties Concerning Seller.
Seller represents and warrants to Purchaser that the following representations and warranties
are true and correct as of the date hereof and as of each Purchase Date.

     (i) Due Formation and Good Standing.
Seller is (i) duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, (ii) has the full legal power and authority and has
all governmental licenses, authorizations, consents and approvals, necessary to own its
property and to carry on its business as currently conducted, unless, in any instance, the
failure to have such power, authority, governmental licenses, authorizations, consents and
approvals is not reasonably likely (either individually or in the aggregate) to cause a
Material Adverse Effect and (iii) is duly qualified to do business and is in good standing
in each jurisdiction in which the transaction of its business makes such qualification
necessary unless, in any instance, the failure to be so qualified or in good standing is not
reasonably likely (either individually or in the aggregate) to cause a Material Adverse
Effect.

     (ii) Authorization.
The execution, delivery and performance by Seller of the Program Documents and all
other documents and transactions contemplated thereby, are

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within Seller’s corporate powers, have been duly authorized by all necessary corporate
action and do not constitute or will not result in (i) a breach of any of the terms,
conditions or provisions of Seller’s articles or certificate of incorporation or bylaws (or
corresponding organizational documents if Seller is not a corporation); (ii) a material
breach of any legal restriction or any agreement or instrument to which Seller is now a
party or by which it is bound; (iii) a material default or an acceleration under any of the
foregoing; (iv) the violation of any material law, material rule, material regulation,
material order, material judgment or material decree to which Seller or its property is
subject; (v) the violation of any policy, regulation or guideline of the FHA or VA, unless,
in any instance, such violation is not reasonably likely (either individually or in the
aggregate) to cause a Material Adverse Effect or otherwise not reasonably likely to
jeopardize Seller’s FHA or VA approvals; or (vi) the voiding or reduction of the FHA
insurance, VA guarantee or any other insurance or guarantee in respect of any Mortgage Loan,
or otherwise render such Mortgage Loans, individually or in the aggregate, ineligible
(pursuant to the applicable Agency Guide or otherwise) for inclusion in a pool of mortgages
supporting a Security.

     (iii) Enforceable Obligation.
The Program Documents and all other documents contemplated thereby constitute legal,
binding and valid obligations of Seller, enforceable against Seller in accordance with their
respective terms, except as limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditor’s rights.

     (iv) Approvals.
The execution and delivery of the Program Documents and all other documents
contemplated thereby and the performance of Seller’s obligations thereunder do not require
any license, consent, approval, authorization or other action of any Governmental Authority
or any other Person, or if required, such license, consent, approval, authorization or other
action has been obtained prior to the date hereof.

     (v) Compliance with Laws.
Seller is not in violation of any of its articles or certificate of incorporation or
bylaws (or corresponding organizational documents if Seller is not a corporation), of any
provision of any applicable law, or of any judgment, award, rule, regulation, order, decree,
writ or injunction of any court or public regulatory body or authority that might have a
Material Adverse Effect with respect to Seller.

     (vi) Financial Condition.
All financial statements of Seller delivered to Purchaser fairly and accurately present
the financial condition of the parties for whom such statements are submitted. The
financial statements of Seller have been prepared in accordance with GAAP consistently
applied throughout the periods involved, and there are no contingent liabilities not
disclosed thereby that would adversely affect the financial condition of Seller. Since the
close of the period covered by the latest financial statement delivered to Purchaser with
respect to Seller, there has been no material adverse change in the assets, liabilities or
financial condition of Seller nor is Seller aware of any facts that, with or without notice
or lapse of time or both, would or could result in any such material adverse change. No
event has occurred, including, without limitation, any litigation or administrative
proceedings, and no condition exists or, to the knowledge of Seller, is threatened, that (a)
might render Seller unable to perform its obligations under the Program Documents and all
other documents contemplated thereby; (b) would

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     constitute a Potential Servicing Termination Event or Servicing Termination Event; or (c) is
reasonably likely to have a Material Adverse Effect with respect to Seller.

     (vii) [Reserved.]

     (viii) Title to Assets. Seller has good, valid, insurable (in the case of real
property) and marketable title to all of its properties and other assets, whether real or
personal, tangible or intangible, reflected on the financial statements delivered to
Purchaser with respect to Seller, except for such properties and other assets that have been
disposed of in the ordinary course of business of Seller’s mortgage banking business, and
all such properties and other assets are free and clear of all liens except as disclosed in
such financial statements.

     (ix) Litigation. There are no actions, claims, suits, investigations or
proceedings pending, or to the knowledge of Seller, threatened or reasonably anticipated
against or affecting Seller or any of its Subsidiaries or Affiliates or any of the property
thereof in any court or before or by any arbitrator, government commission, board, bureau or
other administrative agency that, if adversely determined, may reasonably be expected to
result in a Material Adverse Effect.

     (x) Payment of Taxes. Seller has timely filed all tax returns and reports
required to be filed and has paid all taxes, assessments, fees and other governmental
charges levied upon it or its property or income that are due and payable, including
interest and penalties, or has provided adequate reserves for the payment thereof. Any
taxes, fees and other governmental charges payable by Seller in connection with a
transaction hereunder and the execution and delivery of the Program Documents have been
paid, except for any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which adequate reserves are
being maintained.

     (xi) No Defaults. Seller is not in default under any indenture, mortgage, deed
of trust, agreement or other instrument or contractual or legal obligation to which it is a
party or by which it is bound in any respect that may reasonably be expected to result in a
Material Adverse Effect.

     (xii) ERISA. Seller is in compliance in all material respects with the
requirements of ERISA and the Code, and no Reportable Event has occurred under any Plan
maintained by Seller. The present value of all accumulated benefit obligations under each
Plan subject to Title IV of ERISA (based on the assumptions used for purposes of Statement
of Financial Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed the fair market value of the assets of
such Plan, and the present value of all accumulated benefit obligations of all Plans (based
on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87)
did not, as of the date of the most recent financial statements reflecting such amounts,
exceed the fair market value of the assets of all such Plans. Seller and its Subsidiaries
do not provide any material medical or health benefits to former employees other than as
required by the Consolidated Omnibus Budget

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Reconciliation Act, as amended, or similar state or local law (collectively,
“COBRA”) at no cost to the employer. The assets of Seller are not “plan assets”
within the meaning of 29 CFR 2510.3-101 as modified by Section 3(42) of ERISA.

     (xiii) Approved Mortgagee. Seller is approved by the Applicable Agency or HUD
designation to be (a) either or both (1) a Fannie Mae-approved lender and (2) a
FHLMC-approved Seller/Servicer and (b) a GNMA-approved issuer, a GNMA-approved servicer, a
FHA-approved mortgagee and a VA-approved lender.

     (xiv) True and Complete Disclosure. The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of Seller or any of
its Subsidiaries to Purchaser in connection with the negotiation, preparation or delivery of
this Agreement and the other Program Documents or included herein or therein or delivered
pursuant hereto or thereto, when taken as a whole, do not contain any untrue statement of
material fact or omit to state any material fact necessary to make the statements herein or
therein, in light of the circumstances under which they were made, not misleading. There is
no fact known to Seller that, after due inquiry, could reasonably be expected to have a
Material Adverse Effect that has not been disclosed herein, in the other Program Documents
or in a report, financial statement, exhibit, schedule, disclosure letter or other writing
furnished to Purchaser for use in connection with the transactions contemplated hereby or
thereby.

     (xv) Ownership; Priority of Liens. Seller owns all Related Mortgage Loans
proposed to be sold subject to a Participation Certificate to Purchaser in any transaction
hereunder, and any sale of a Participation Certificate hereunder shall convey all of
Seller’s right, title and interest in and to the Participation Certificate and the Related
Mortgage Loans to Purchaser. This Agreement creates in favor of Purchaser, a valid,
enforceable first priority lien and security interest in the Participation Certificate and
the Related Mortgage Loans, prior to the rights of all third Persons and subject to no other
liens.

     (xvi) Investment Company Act. Neither Seller nor any of its Subsidiaries is an
“investment company” or a company controlled by an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.

     (xvii) Seller Solvent; Fraudulent Conveyance. As of the date hereof and
immediately after giving effect to each purchase of a Participation Certificate hereunder,
the fair value of the assets of Seller is greater than the fair value of the liabilities
(including, without limitation, contingent liabilities if and to the extent required to be
recorded as a liability on the financial statements of Seller in accordance with GAAP) of
Seller and Seller is and will be solvent, is and will be able to pay its debts as they
mature and does not and will not have an unreasonably small capital to engage in the
business in which it is engaged and proposes to engage. Seller does not intend to incur, or
believe that it has incurred, debts beyond its ability to pay such debts as they mature.
Seller is not contemplating the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator, conservator,

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trustee or similar official in respect of Seller or any of its assets. Seller is not
transferring any Mortgage Loans with any intent to hinder, delay or defraud any of its
creditors.

     (xviii) Custodial Account. All funds required to be segregated and deposited
into the Custodial Account have been so segregated and deposited.

     (xix) Chief Executive Office. Seller’s chief executive office is located at 1
Mortgage Way, Mount Laurel, NJ 08054.

     (xx) True Sales. For any Related Mortgage Loan with respect to which the
originator or prior owner is an Affiliate of Seller, any and all interest in such Mortgage
Loans of such originator or prior owner has been sold, transferred, conveyed and assigned to
Seller pursuant to a legal and true sale and such originator or prior owner retains no
interest in such Related Mortgage Loan.

     (xxi) No Adverse Selection. Seller used no selection procedures that
identified the Mortgage Loans offered for sale to Purchaser hereunder as being less
desirable or valuable than other comparable Mortgage Loans owned by Seller.

     (xxii) No Broker. Seller has not dealt with any broker, investment banker,
agent, or other person, except for Purchaser, who may be entitled to any commission or
compensation in connection with the sale of the Participation Certificate and the Related
Mortgage Loans pursuant to this Agreement; provided, that if Seller has dealt with
any broker, investment banker, agent, or other person, except for Purchaser, who may be
entitled to any commission or compensation in connection with the sale of the Participation
Certificate and the Related Mortgage Loans pursuant to this Agreement, such commission or
compensation shall have been paid in full by Seller.

     (xxiii) MERS. Seller is a member of MERS in good standing.

     (xxiv) Agency Approvals. Seller has all requisite Approvals.

     (xxv) Custodian. If the Custodian is a Person other than Purchaser, such
Custodian is an eligible custodian under each applicable Agency Guide and Agency Program,
and is not an Affiliate of Seller.

     (xxvi) No Adverse Actions. Seller has not received from any Applicable Agency,
HUD, FHA or VA a notice of extinguishment or a notice indicating material breach, material
default or material non-compliance which Purchaser could reasonably determine is reasonably
likely to entitle such Applicable Agency or HUD, FHA or VA to terminate or suspend Seller or
to have a Material Adverse Effect, or a notice from any Applicable Agency, HUD, FHA or VA
indicating any adverse fact or circumstance in respect of Seller which Purchaser could
reasonably determine is reasonably likely to entitle such Applicable Agency or HUD, FHA or
VA, as the case may be, to revoke any Approval or otherwise terminate, suspend Seller as an
approved issuer, seller or servicer, as applicable, or with respect to which such adverse
fact or circumstance has caused any Applicable Agency, HUD, FHA or VA to terminate Seller.
Seller has not received from any Applicable Agency, HUD, FHA or VA a notice of a sanction or
a levy of penalties

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against the Seller which Purchaser could reasonably determine is reasonably likely to
have a Material Adverse Effect.

          (b) Representations and Warranties Concerning Related Mortgage Loans. Seller hereby
represents and warrants to Purchaser with respect to each Related Mortgage Loan as of the Purchase
Date in respect of the Related Participation Certificate that:

     (i) Such Related Mortgage Loan was, immediately prior to the sale to Purchaser of the
Participation Certificate, owned solely by Seller, is not subject to any lien, claim or
encumbrance, including, without limitation, any such interest pursuant to a loan or credit
agreement for warehousing mortgage loans other than a lien, claim or encumbrance that will
be released simultaneously with payment of the Purchase Price for such Participation
Certificate, and was originated and serviced in accordance with all applicable law and
regulations, including without limitation the Federal Truth-in-Lending Act, the Real Estate
Settlement Procedures Act, regulations issued pursuant to any of the aforesaid, and any and
all rules, requirements, guidelines and announcements of the Applicable Agency, and, as
applicable, the FHA and VA, as the same may be amended from time to time;

     (ii) The improvements on the land securing such Mortgage Loan are and will be kept
insured at all times by responsible insurance companies acceptable to the Applicable
Agencies and the Agency Guidelines against fire and extended coverage hazards under
policies, binders or certificates of insurance with a standard mortgagee clause in favor of
Seller and its assigns, providing that such policy may not be canceled without prior notice
to Seller. Any proceeds of such insurance shall be held in trust for the benefit of
Purchaser. The scope and amount of such insurance shall satisfy the rules, requirements,
guidelines and announcements of the Applicable Agency, and shall in all cases be at least
equal to the lesser of (A) the principal amount of such Mortgage Loan or (B) the maximum
amount permitted by applicable law, and shall not be subject to reduction below such amount
through the operation of a coinsurance, reduced rate contribution or similar clause;

     (iii) Each Mortgage is a valid first lien on the Mortgaged Property and is covered by
an attorney’s opinion of title acceptable to the Applicable Agency or by a policy of title
insurance on a standard ALTA, CLTA or similar lender’s form in favor of Seller and its
assigns, subject only to exceptions permitted by the applicable Agency Program. Seller
shall hold for the benefit of Purchaser such policy of title insurance, and, upon request of
Purchaser, shall, as soon as practicable, deliver such policy to Purchaser or to the
Custodian on behalf of Purchaser;

     (iv) To the extent applicable, either (i) such Mortgage Loan has been submitted to and
not rejected by the FHA or the Department of Housing and Urban Development, as applicable,
and is eligible for and pending receipt of insurance by the FHA under the National Housing
Act or (ii) such Mortgage Loan is insured by the FHA under the National Housing Act, and in
either case will be insured by FHA. To the extent applicable, either (i) such Mortgage Loan
has been submitted to and not rejected by the VA and is eligible for and pending receipt of
the guaranty by the VA under the

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Servicemen’s Readjustment Act of 1944 or (ii) such Mortgage Loan is guaranteed by the
VA under the Servicemen’s Readjustment Act of 1944. If such Mortgage Loan is not to be
insured by the FHA under the National Housing Act or guaranteed by the VA under the
Servicemen’s Readjustment Act of 1944 then such Mortgage Loan is otherwise insured or
guaranteed in accordance with the requirements of the applicable Agency Program and is not
subject to any defect that would prevent recovery in full or in part against the FHA, VA or
other insurer or guarantor, as the case may be;

     (v) Such Mortgage Loan is in Strict Compliance with the requirements and specifications
(including, without limitation, all representations and warranties required in respect
thereof) set forth in the applicable Agency Guide;

     (vi) Such Mortgage Loan conforms in all respects with all requirements of the Takeout
Commitment applicable to the Security to be backed by such Mortgage Loan. Each Takeout
Commitment is valid and enforceable and Seller has no knowledge that Takeout Investor will
not be able to perform under the terms of such Takeout Commitment;

     (vii) With respect to each MERS Mortgage Loan, a MIN has been assigned and such MIN is
accurately provided on the schedule of Mortgage Loans attached to the Related Participation
Certificate;

     (viii) With respect to each MERS Mortgage 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;

     (ix) To the extent applicable, each Mortgage Loan is being serviced by a mortgage
sub-servicer having all Approvals necessary to make such Mortgage Loan eligible to back a
GNMA Security, Fannie Mae Security, or FHLMC Security, as applicable;

     (x) Each Mortgage Loan is eligible for sale to the Applicable Agency, and fully
complies with all of the terms and conditions, including any covenants, representations and
warranties, in the applicable Agency Guide; and

     (xi) Other than those certain purchase and sale agreements between Seller and its
correspondent sellers or private label clients, no servicing agreement has been entered into
with respect to the Mortgage Loan, or any such servicing agreement has been terminated.

          The representations and warranties of Seller in this Section 10(b) are unaffected by
and supersede any provision in any endorsement of any Related Mortgage Loan or in any assignment
with respect to such Mortgage Loan to the effect that such endorsement or assignment is without
recourse or without representation or warranty. The representations and warranties set forth in
this Agreement shall survive transfer of the Related Mortgage Loans to Purchaser and shall continue
for so long as the Related Mortgage Loans are subject to this Agreement.

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          Section 11. Affirmative Covenants.Seller hereby covenants and agrees with Purchaser that during the term of this Agreement and
for so long as there remain any obligations of Seller to be paid or performed under the Program
Documents:

          (a) Financial Statements and Other Reports.

          (i) Interim Statements. Seller shall cause to be delivered to Purchaser:

     (A) as soon as is practicable, but in any event within 45 days after the end of
each calendar month, the unaudited consolidated balance sheet of PHH Parent and its
Consolidated Subsidiaries, as at the end of such month, and the related unaudited
consolidated statements of income and cash flows for PHH Parent and its Consolidated
Subsidiaries for such month and for the portion of the then current fiscal year
through the end of such month; and

     (B) as soon as is practicable, but in any event within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of PHH Parent, either
(1) the Form 10-Q filed by PHH Parent with the SEC or (2) the unaudited consolidated
balance sheet of PHH Parent and its Consolidated Subsidiaries, as at the end of such
fiscal quarter, and the related unaudited statements of income and cash flows for
such quarter and for the period from the beginning of the then current fiscal year
to the end of such fiscal quarter and the corresponding figures as of the end of the
preceding fiscal year, and for the corresponding period in the preceding fiscal
year;

     (ii) Annual Statements. Seller shall deliver or shall cause to be delivered to
Purchaser:

     (A) as soon as is practicable, but in any event within 90 days after the end of
each fiscal year of Seller, (1) consolidated statements of income (or operations)
and consolidated statements of cash flows and changes in stockholders’ equity of
Seller and its Consolidated Subsidiaries for such year and the related consolidated
balance sheets as at the end of such year and (2) an opinion of independent
certified public accountants of recognized national standing, which opinion shall
state that said consolidated financial statements fairly present the consolidated
financial position and results of operations of Seller and its Consolidated
Subsidiaries as at the end of, and for, such fiscal year and that such financial
statements were prepared in accordance with GAAP applied consistently throughout the
periods reflected therein and with prior periods; and

     (B) as soon as is practicable, but in any event within 90 days after the end of
each fiscal year of PHH Parent, (1) either (x) consolidated statements of income (or
operations) and consolidated statements of cash flows and changes in stockholders’
equity of PHH Parent and its Consolidated Subsidiaries for such year and the related
consolidated balance sheets as at the end of such year, or (y) the Form 10-K filed
by PHH Parent with the SEC and (2) if not included in such

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Form 10-K, an opinion of independent certified public accountants of recognized
national standing, which opinion shall state that said consolidated financial
statements fairly present the consolidated financial position and results of
operations of PHH Parent and its Consolidated Subsidiaries as at the end of, and
for, such fiscal year and that such financial statements were prepared in accordance
with GAAP applied consistently throughout the periods reflected therein and with
prior periods;

     (iii) Projections. Seller shall cause to be delivered to Purchaser, as soon as
practicable, but in any event within 90 days after the end of each fiscal year of PHH
Parent, detailed projections of PHH Parent and its Consolidated Subsidiaries for the then
current year and, as soon as available, significant revisions of any such projections,
provided that, since such projections are by their nature only estimates, to
the extent delivered to the best of knowledge and in good faith, such projections shall be
delivered without any representation or warranty by Seller or PHH Parent as to the accuracy
or completeness of such projections;

     (iv) Officer’s Certificate. (a) Together with the financial statements
required to be delivered pursuant to Sections 11(a)(ii)(A), Seller shall deliver to
Purchaser an officer’s certificate substantially in the form of Exhibit C hereto and
(b) together with the financial statements and projections required to be delivered pursuant
to Sections 11(a)(i)(A), 11(i)(B) , 11(ii)(B) and 11(iii),
Seller shall cause to be delivered to Purchaser an officer’s certificate substantially in
the form of Exhibit D hereto;

     (v) Reports and Information Regarding Related Mortgage Loans. Seller shall
deliver to Purchaser, (a) with reasonable promptness, copies of any reports regarding the
Related Mortgage Loans and any other information in Seller’s possession concerning the
Related Mortgage Loans as Purchaser may reasonably request and (b) on a monthly basis, a
report substantially in the form of Exhibit I hereto setting forth any demand(s) by
a Takeout Investor or Insurer for the repurchase of a mortgage loan(s) or indemnification;
and

     (vi) Other Reports. As may be reasonably requested by Purchaser from time to
time, Seller shall deliver to Purchaser, within thirty (30) days of filing or receipt (a)
copies of all regular or periodic financial or other reports, if any, that Seller files with
any governmental, regulatory or other agency and (b) copies of all audits, examinations and
reports concerning the operations of Seller from any Takeout Investor or Insurer or a
licensing authority. Seller shall also deliver to Purchaser, with reasonable promptness,
such further information reasonably related to the business, operations, properties or
financial condition of Seller, in such detail and at such times as Purchaser may reasonably
request.

          (b) Inspection of Properties and Books. At no cost to Purchaser, Seller shall permit
authorized representatives of Purchaser to discuss the business, operations, assets and financial
condition of PHH Parent, Seller and any of Seller’s Subsidiaries with their officers and employees
and to examine their books of account and make copies and/or extracts thereof, upon reasonable
notice to Seller at Seller’s place of business during normal business hours. Seller also

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shall make available to Purchaser a knowledgeable financial or accounting officer for the
purpose of answering questions respecting the Mortgage Loans and the financial affairs of PHH
Parent, Seller and any of Seller’s Subsidiaries.

          (c) Notice. Seller shall give Purchaser prompt (but in no event later than three (3)
Business Days after becoming aware) written notice (which can be in the form of automatic notices),
in reasonable detail, of:

     (i) any action, suit or proceeding instituted by or against Seller in any federal or
state court or before any commission or other regulatory body (federal, state or local,
foreign or domestic), or any such action, suit or proceeding threatened against Seller, in
any case, if such action, suit or proceeding, or any such action, suit or proceeding
threatened against Seller, (i) involves a potential liability, on an individual or aggregate
basis, equal to or greater than ten percent (10%) of Seller’s Tangible Net Worth, (ii) is
reasonably likely to result in a Material Adverse Effect if determined adversely, or (iii)
questions or challenges the validity or enforceability of any of the Program Documents.

     (ii) the filing, recording or assessment of any material federal, state or local tax
lien against it, or any of its assets;

     (iii) the occurrence of any Potential Servicing Termination Event or a Servicing
Termination Event;

     (iv) the actual or threatened suspension, revocation or termination of any of Seller’s
Approvals;

     (v) the suspension, revocation or termination of any existing credit or investor
relationship to facilitate the sale and/or origination of residential mortgage loans, where
the amount or amounts of credit or investment involved exceed(s) $10,000,000;

     (vi) [reserved];

     (vii) the filing of any registration statements or other “corporate finance” SEC filing
(other than 8-Ks, 10-Ks, 10-Qs and proxy statements) by PHH Parent or any of its Affiliates
along with a copy of such filing, within five (5) Business Days of such filing;

     (viii) any Related Mortgage Loan is or becomes a Defective Mortgage Loan;

     (ix) any Takeout Investor threatens to set-off any amounts owed by Seller to such
Takeout Investor exceeding $5,000,000 in the aggregate against the purchase proceeds owed by
the Takeout Investor to Purchaser;

     (x) any change in any Key Personnel of Seller;

     (xi) any other action, event or condition of any nature that could reasonably be
expected to result in a Material Adverse Effect with respect to Seller or that, with notice
or lapse of time or both, would constitute a default under any material agreement,

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instrument or indenture to which Seller is a party or to which Seller, its properties
or assets may be subject;

     (xii) any (i) change to the location of its chief executive office/chief place of
business from that specified in Section 10(a)(xix), (ii) change in the name,
identity or existence as a corporation or change in the location where Seller maintains its
records with respect to the Related Mortgage Loans, or (iii) reincorporation or
reorganization of Seller under the laws of another jurisdiction;

     (xiii) upon Seller becoming aware of any penalties, sanctions or charges levied, or
threatened to be levied, against Seller or any change or threatened change in Approval
status, or the commencement of any investigation, or the institution of any adverse action
or the written threat of institution of any adverse action against Seller by any Applicable
Agency, HUD, FHA or VA or any other agency, or any supervisory or regulatory Governmental
Authority supervising or regulating the origination or servicing of mortgage loans by, or
the issuer or seller status of, Seller;

     (xiv) upon Seller becoming aware of any termination or threatened termination by any
Applicable Agency of the Custodian as an eligible custodian; and

     (xv) any change to the date on which Seller’s fiscal year begins from Seller’s current
fiscal year beginning date; and

     (xvi) any material change in respect of any secondary marketing, underwriting, third
party origination and interest rate risk management practices of Seller. By way of example
but not limitation, any change to Seller’s hedging strategy, any change to add a new line of
Mortgage Loan products or any change to add third party origination shall be considered
material change.

          (d) Existence, Etc. Seller shall (i) preserve and maintain its legal existence, (ii)
preserve and maintain all of its material rights, privileges, licenses and franchises necessary for
Seller to conduct its business and to perform its obligations under the Program Documents if the
failure to comply with such requirements would be reasonably likely (either individually or in the
aggregate) to have a Material Adverse Effect, (iii) comply with the requirements of all applicable
laws, rules, regulations and orders of Governmental Authorities (including, without limitation,
truth in lending, real estate settlement procedures and all environmental laws) if the failure to
comply with such requirements would be reasonably likely (either individually or in the aggregate)
to have a Material Adverse Effect, (iv) maintain adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied, and (v) pay and
discharge all taxes, assessments and governmental charges or levies imposed on it or on its income
or profits or on any of its properties prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being maintained.

          (e) Solvency. Seller will be solvent at all relevant times prior to, and will not be
rendered insolvent by, any sale of a Participation Certificate to Purchaser.

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          (f) Servicing of Mortgage Loans. Subject to Section 6 above, Seller shall
service all Related Mortgage Loans at Seller’s expense and without charge of any kind to Purchaser.
Seller shall service such Related Mortgage Loans with the degree of care and in accordance with
the servicing standards generally prevailing in the industry, including those required by Fannie
Mae, FHLMC and GNMA.

          (g) Evidence of Purchase. Seller shall indicate on its computer records that each
Participation Certificate and Related Mortgage Loan has been sold to Purchaser and, at the request
of Purchaser, place on each of its written records pertaining to each Participation Certificate and
Related Mortgage Loan a legend, in form and content satisfactory to Purchaser, indicating that such
Participation Certificate and Related Mortgage Loan has been sold to Purchaser.

          (h) Defense of Title; Protection of Purchased Mortgage Loans. Seller warrants and
will defend the right, title and interest of Purchaser in and to all Participation Certificates and
Related Mortgage Loans against all adverse claims and demands of all Persons whomsoever. Seller
will comply in all material respects with all applicable laws, rules and regulations of any
Governmental Authority applicable to Seller or relating to the Participation Certificates and
Related Mortgage Loans and cause the Participation Certificates and Related Mortgage Loans to
comply with all applicable laws, rules and regulations of any such Governmental Authority. Seller
shall allow Purchaser (a) to inspect any Mortgaged Property relating to a Related Mortgage Loan;
(b) to appear in or intervene in any proceeding or matter affecting any Related Mortgage Loan or
the value thereof; (c) to initiate, commence, appear in and defend any foreclosure, action,
bankruptcy or proceeding which could affect Purchaser’s ownership or security of the Related
Mortgage Loans or the value thereof, or the rights and powers of Purchaser; (d) to contest by
litigation or otherwise any lien asserted against the Related Mortgage Loans or against the related
Mortgaged Property, the improvements, or the personal property identified therein; and/or (e) to
make payments on account of such encumbrances, charges, or liens and to service any Related
Mortgage Loan and take any action it may deem appropriate to collect any Related Mortgage Loans or
any part thereof or to enforce any rights with respect thereto. All reasonable costs and expenses,
including reasonable attorneys’ fees (including, but not limited to, those incurred on appeal),
that Purchaser may incur with respect to any of the foregoing and any expenditures it may make to
protect or preserve the Related Mortgage Loans or the rights of Purchaser, shall be for the account
of Seller. Seller shall repay the same to Purchaser.

          (i) Available Financing. PHH Parent and its Subsidiaries shall maintain aggregate
Available Borrowing Capacity of at least $1,000,000,000 (excluding uncommitted warehouse capacity
provided by Government-Sponsored Enterprises), provided that no more than
$500,000,000 of such capacity is in respect of facilities that are exclusively gestation
facilities.

          (j) Further Assurances. Seller shall, at its expense, promptly procure, execute and
deliver to Purchaser, upon request, all such other and further documents, agreements and
instruments in compliance with or accomplishment of the covenants and agreements of Seller in this
Agreement.

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          (k) Fidelity Bonds and Insurance. Seller shall maintain an insurance policy, in a
form and substance satisfactory to each Applicable Agency, covering against loss or damage relating
to or resulting from any breach of fidelity by Seller, or any officer, director, employee or agent
of Seller, any loss or destruction of documents (whether written or electronic), fraud, theft,
misappropriation and errors and omissions. This policy shall name Purchaser as an additional
insured or a loss payee and shall be at a minimum in such amounts required by the Applicable
Agency. Seller shall notify Purchaser of any material change in the terms of any such insurance.

          (l) Sharing of Information. Notwithstanding anything herein or in any other Program
Agreement to the contrary, Seller shall allow Purchaser to exchange information related to the
terms and conditions of the Program Documents and the Related Mortgage Loans with Persons who are
providing or are contemplating providing credit of any kind to Seller and Seller shall permit each
such Person to share such information with Purchaser, provided that, Purchaser may
not share any information delivered to it pursuant to Sections 11(a)(i)-(iv),
11(a)(v)(b) and 11(a)(vi) hereof.

          (m) ERISA. As soon as reasonably possible, and in any event within fifteen (15) days
after Seller knows or has reason to believe that any of the events or conditions specified below
with respect to any Plan has occurred or exists, a statement signed by a senior financial officer
of Seller setting forth details respecting such event or condition and the action, if any, that
Seller or its ERISA Affiliate proposes to take with respect thereto (and a copy of any report or
notice required to be filed with or given to PBGC by Seller or an ERISA Affiliate with respect to
such event or condition):

     (i) any Reportable Event or failure to meet minimum funding standards, provided that a
failure to meet the minimum funding standard of Section 412 of the Code or Sections 302 or
303 of ERISA, including, without limitation, the failure to make on or before its due date a
required installment under Section 430(j) of the Code or Section 303(j) of ERISA, shall be a
reportable event regardless of the issuance of any waivers in accordance with Section 412(d)
of the Code or any request for a waiver under Section 412(c) of the Code for any Plan;

     (ii) the distribution under Section 4041(c) of ERISA of a notice of intent to terminate
any Plan or any action taken by Seller or an ERISA Affiliate to terminate any Plan;

     (iii) the institution by PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the receipt by
Seller, any Subsidiary or any ERISA Affiliate of a notice from a Multiemployer Plan that
such action has been taken by PBGC with respect to such Multiemployer Plan;

     (iv) the complete or partial withdrawal from a Multiemployer Plan by Seller, any Subsidiary or any ERISA Affiliate that results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a result of a purchaser default) or the receipt by Seller, any Subsidiary or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or

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4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of
ERISA;

     (v) the institution of a proceeding by a fiduciary of any Multiemployer Plan against
Seller, any Subsidiary or any ERISA Affiliate to enforce Section 515 of ERISA, which
proceeding is not dismissed within 30 days; and

     (vi) the adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of
the Code, would result in the loss of tax-exempt status of the trust of which such Plan is a
part if Seller, any Subsidiary or an ERISA Affiliate fails to timely provide security to
such Plan in accordance with the provisions of said Sections.

          (n) MERS. Seller will comply in all material respects with the rules and procedures
of MERS in connection with the servicing of all Related Mortgage Loans that are registered with
MERS for as long as such Related Mortgage Loans are so registered.

          (o) Agency Audit and Approval Maintenance. Seller shall (i) at all times maintain
copies of relevant portions of all Agency Audits in which there are material adverse findings,
including without limitation notices of defaults, notices of termination of approved status,
notices of imposition of supervisory agreements or interim servicing agreements, and notices of
probation, suspension, or non-renewal, (ii) provide Purchaser with copies of such Agency Audits
promptly upon Purchaser’s request, and (iii) take all actions necessary to maintain its respective
Approvals.

          (p) Minimum Consolidated Net Worth. PHH Parent shall have a Consolidated Net Worth on
the last day of any fiscal quarter ended after the Revolver Fourth Amendment Effective Date of at
least $1,000,000,000.

          (q) Maximum Leverage Ratio. PHH Parent and its Subsidiaries shall at all times have a
ratio of Indebtedness to Tangible Net Worth of no greater than 6.5 to 1.0.

          (r) Accuracy of Wire Instructions. With respect to each Related Mortgage Loan subject
to a Takeout Commitment, Seller shall provide to the related Takeout Investor the wire transfer
instructions identical to Purchaser’s designated wire instructions, or other wire transfer
instructions approved by Purchaser in writing.

          Section 12. Negative Covenants.Seller hereby covenants and agrees with Purchaser that during the term of this Agreement and
for so long as there remain any obligations of Seller to be paid or performed under this Agreement,
Seller shall comply with the following:

          (a) Indebtedness. No Material Subsidiary of PHH Parent (or in the case of
Sections 12(a)(x) and (xii), its Subsidiaries) shall incur, assume or suffer to
exist any Indebtedness, except:

     (i) Indebtedness in existence on the Revolver Fourth Amendment Effective Date, or
required to be incurred pursuant to a contractual obligation in existence on the Revolver
Fourth Amendment Effective Date, which in either case (to the extent not otherwise permitted
by paragraphs (ii)-(ix) of this Section 12(a)), is listed on Exhibit
L

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hereto, but not any extensions or renewals thereof, unless effected on substantially
the same terms or on terms not more adverse to the Lenders (as defined in the Revolving
Credit Facility as of the Revolver Fourth Amendment Effective Date);

     (ii) purchase money Indebtedness (including Capital Leases);

     (iii) Indebtedness owing by any Material Subsidiary of PHH Parent to PHH Parent or any
other Subsidiary of PHH Parent;

     (iv) Indebtedness of any Material Subsidiary of PHH Parent issued and outstanding prior
to the date on which such Subsidiary became a Subsidiary of PHH Parent (other than
Indebtedness issued in connection with, or in anticipation of, such Subsidiary becoming a
Subsidiary of PHH Parent); provided that immediately prior and on a Pro
Forma Basis after giving effect to such Person becoming a Subsidiary of PHH Parent, no
Default or Event of Default (as such terms are defined in the Revolving Credit Facility as
of the Revolver Fourth Amendment Effective Date) shall occur or then be continuing and the
aggregate principal amount of such Indebtedness, when added to the aggregate outstanding
principal amount of Indebtedness permitted by paragraphs (v) and (vi) below,
shall not exceed $150,000,000;

     (v) any renewal, extension or modification of Indebtedness under paragraph (iv)
above so long (a) as such renewal, extension or modification is effected on substantially
the same terms or on terms which, in the aggregate, are not more adverse to the Lenders (as
defined in the Revolving Credit Facility as of the Revolver Fourth Amendment Effective Date)
and (b) the principal amount of such Indebtedness is not increased;

     (vi) other Indebtedness of any Material Subsidiary of PHH Parent (to the extent not
otherwise permitted by this Section 12(a)), in an aggregate principal amount which,
when added to the aggregate outstanding principal amount of Indebtedness permitted by
paragraphs (iv) and (v) above, does not exceed $150,000,000;

     (vii) Indebtedness of Special Purpose Vehicle Subsidiaries incurred to finance
investments in lease agreements and vehicles by such Subsidiaries, so long as the lender
(and any other party) in respect of such Indebtedness has recourse, if any, solely to the
assets of such Special Purpose Vehicle Subsidiary;

     (viii) Indebtedness of any Asset Securitization Subsidiary incurred solely to finance
asset securitization transactions as long as the lender (and any other party) in respect of
such Indebtedness has recourse (other than customary limited recourse based on
misrepresentations or failure of such assets to meet customary eligibility criteria), if
any, solely to the assets securitized in the applicable asset securitization transaction
and, if such Asset Securitization Subsidiary is of the type described in clause (i) of the
definition of “Asset Securitization Subsidiary”, the capital stock of such Asset
Securitization Subsidiary;

     (ix) Indebtedness (other than Indebtedness of Asset Securitization Subsidiaries
incurred to finance asset securitization transactions permitted by this Agreement)

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consisting of the obligation to repurchase mortgages and related assets or secured by
mortgages and related assets in connection with Mortgage Warehouse Facilities;

     (x) Indebtedness of PHH Home Loans, LLC incurred under the PHH Home Loans Intercompany
Credit Agreement, in an aggregate principal amount not to exceed $100,000,000;

     (xi) Indebtedness of any Subsidiary Borrower (as defined in the Revolving Credit
Facility as of the Revolver Fourth Amendment Effective Date) incurred under the Revolving
Credit Facility;

     (xii) guarantees by any Subsidiary of PHH Parent of any senior notes issued by PHH
Parent after the Revolver Fourth Amendment Effective Date; and

     (xiii) Indebtedness incurred in connection with any Servicing Advance Facility entered
into with Government-Sponsored Enterprises, in an aggregate principal amount not to exceed
$120,000,000.

Notwithstanding the foregoing, PHH Parent and its Subsidiaries shall not incur or issue
after the date hereof any Indebtedness for borrowed money which has scheduled or mandatory
principal maturities prior to March 31, 2013 (other than, (1) Indebtedness incurred pursuant
to Sections 12(a)(iii) (provided that such Indebtedness incurred pursuant to
Section 12(a)(iii) is senior Indebtedness), (vii), (viii),
(ix), (x) and (xiii), (2) in the case of secured Indebtedness,
prepayments required from the sale of the applicable collateral, (3) any other Indebtedness
requiring prepayments in connection with a change of control offer (and any such change of
control shall be incorporated herein and be deemed to be included in the definition of
“Change of Control”) and (4) any renewals, extensions or modifications of existing
Indebtedness permitted pursuant to this Section 12(a).

          (b) Lines of Business. Seller shall not make any material change in the nature of its
business as carried on at of the date hereof.

          (c) [Reserved.]

          (d) Loss of Eligibility. Seller shall not, either directly or indirectly, without the
prior written consent of Purchaser, take, or fail to take, any action that would cause Seller to
lose any of its Approvals, provided that, it shall not be a breach of this
Section 12(d) in the event that Seller intentionally terminates its Approvals with Fannie
Mae or FHLMC (not as a result of Fannie Mae or FHLMC expressing its intention to terminate such
Approval), so long as Seller maintains the approvals from the Applicable Agency or HUD designation
to be (i) either a Fannie Mae-approved lender or a FHLMC-approved Seller/Servicer and (ii) a
GNMA-approved issuer, a GNMA-approved servicer, a FHA-approved mortgagee and a VA-approved lender.

          (e) Loans and Advances. Seller shall not, either directly or indirectly, without the
prior written consent of Purchaser, make any personal loans or advances to any officers, employees
or shareholders of Seller in an aggregate amount exceeding ten percent (10%) of Seller’s Tangible
Net Worth.

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          (f) [Reserved.]

          (g) No Prepayment. PHH Parent and its Subsidiaries shall not prepay or redeem any
Indebtedness for borrowed money if such prepayment or redemption would result in a breach of a
covenant under the Revolving Credit Facility as of the Revolver Fourth Amendment Effective Date.

          (h) Liens on Purchased Mortgage Loans and Purchased Assets. Seller acknowledges that
with each sale of a Participation Certificate it shall have sold the Related Mortgage Loans and
shall have granted to Purchaser a first priority security interest in such assets in the event such
transaction is deemed a loan. Accordingly, Seller shall not create, incur, assume or suffer to
exist any lien upon the Participation Certificate, the Related Mortgage Loans or the Collateral,
other than as granted to Purchaser herein.

          (i) Transactions with Affiliates. Seller shall not, directly or indirectly, enter
into any transaction with its Affiliates, if any, without the prior written consent of Purchaser,
including, without limitation, (a) making any loan, advance, extension of credit or capital
contribution to an Affiliate, (b) transferring, selling, pledging, assigning or otherwise disposing
of any of its assets to or on behalf of an Affiliate, (c) purchasing or acquiring assets from an
Affiliate, or (d) paying management fees to or on behalf of an Affiliate; provided,
however, that Seller may, without the prior written consent of Purchaser, and provided that a
Potential Servicing Termination Event or a Servicing Termination Event is not existing and will not
occur as a result thereof, engage in a transaction(s) with any or all of its Affiliates if (i) such
transaction is in the ordinary course of Seller’s mortgage banking business, and (ii) such
transaction is upon fair and reasonable terms no less favorable to Seller had Seller entered into a
comparable arm length’s transaction with a Person which is not an Affiliate. For the avoidance of
doubt the Permitted Affiliate Transactions shall not constitute a violation of this Section
12(i).

          (j) Consolidation, Merger, Sale of Assets and Change of Control. Seller shall not,
directly or indirectly, (a) wind up, liquidate or dissolve its affairs; (b) enter into any
transaction of merger or consolidation with any Person; (c) form or enter into any partnership,
joint venture, syndicate or other combination which could have a Material Adverse Effect or (d)
sell or dispose of all or substantially all of Seller’s assets (consummate any transaction, or
series of related transactions, having similar effect); provided, however, that
Seller may acquire and sell Mortgage Loans in the ordinary course of Seller’s mortgage banking
business and such activity shall not constitute a breach of this clause (d).

          (k) [Reserved.]

          (l) Participation Certificate; Related Mortgage Loans. Seller shall not attempt to
resell, reassign, retransfer or otherwise dispose of, or grant any option with respect to, or
pledge or otherwise encumber (except pursuant to this Agreement) any of the Participation
Certificate, the Related Mortgage Loans, the servicing rights to the Related Mortgage Loans or any
other interest therein.

          (m) [Reserved.]

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          (n) Underwriting Guidelines. Without the prior written consent of Purchaser, such
consent not to be unreasonably withheld, Seller shall not amend or otherwise modify the Seller’s
Approved Agency Guidelines in any material respect. If Seller requests Purchaser’s consent and
Purchaser fails to respond to Seller’s request within ten (10) Business Days following the date of
Seller’s request, Purchaser shall be deemed to have consented to Seller’s request. In the event
that Seller makes any material amendment or modification to the Approved Agency Guidelines, Seller
shall promptly deliver to Purchaser a complete copy of the amended or modified Approved Agency
Guidelines specifying in detail the amendments and modifications set forth therein from the
previous copy delivered.

          Section 13. Term. This Agreement shall continue in effect until the Termination Date; provided, that no
termination will affect the obligations hereunder as to any of the Participation Certificates then
outstanding hereunder or any Security not yet delivered to the related Takeout Investor.

          Section 14. Set-Off. (a) In addition to any rights and remedies of Purchaser provided by this Agreement and by
law, Purchaser shall have the right, without prior notice to Seller, any such notice being
expressly waived by Seller to the extent permitted by applicable law, upon any amount becoming due
and payable by Seller hereunder to set-off and appropriate and apply against such amount any and
all property and deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by
Purchaser or any Affiliate thereof to or for the credit or the account of Seller (including,
without limitation, the amount of any accrued and unpaid Holdback Amounts). Purchaser may also
set-off cash and all other sums or obligations owed by Purchaser or its Affiliates to Seller
(whether under this Agreement or under any other agreement between the parties or between Seller
and any Affiliate of Purchaser) against all of Seller’s obligations to Purchaser or its Affiliates
(whether under this Agreement or under any other agreement between the parties or between Seller
and any Affiliate of Purchaser), whether or not such obligations are then due. The exercise of any
such right of set-off shall be without prejudice to Purchaser’s or its Affiliate’s right to recover
any deficiency.

          (b) In addition to the rights in subsection (a) above, Purchaser and its Affiliates
(collectively, “Bank of America Related Entities”), shall have the right to set-off and to
appropriate or apply any and all deposits of money or property or any other indebtedness at any
time held or owing by the Bank of America Related Entity to or for the credit of the account of
Seller, PHH Parent and any of its Material Subsidiaries (other than pursuant to any Securitization
Indebtedness or to the credit of an Asset Securitization Subsidiary or PHH Home Loans Entity)
against and on account of the obligations of Seller under any agreement(s) between Seller, PHH
Parent and any of its Material Subsidiaries, on the one hand (other than an agreement related to
any Securitization Indebtedness or with an Asset Securitization Subsidiary or PHH Home Loans
Entity), and the Bank of America Related Entity, on the other hand, irrespective of whether or not
the Bank of America Related Entity shall have made any demand hereunder and whether or not said
obligations shall have matured. If a Bank of America Related Entity other than Purchaser intends
to exercise its right to set-off in this subsection (b), such Bank of America Related Entity shall
provide Seller prior notice thereof, and upon Seller’s receipt of such notice, if the basis for
such right to set-off is Seller’s breach or default of its obligations to the Bank of

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America Related Entity, Seller shall have three (3) Business Days to cure any such breach or
default in order to avoid such set-off.

          Section 15. Indemnification. Seller shall indemnify and hold Purchaser harmless against any and all Losses (including,
without limitation, Losses incurred by Purchaser on account of fees paid by Purchaser to the
Applicable Agency to cause the Securities to be issued or any Losses in connection with any
indemnification by Purchaser of the Applicable Agency) resulting from Seller’s negligence, willful
misconduct or breach of its obligations (including, without limitation, any failure to perform
servicing obligations) in strict compliance with the terms of this Agreement. Without prejudice to
the survival of any other agreement of Seller hereunder, the covenants and obligations of Seller
contained in this Section 15 shall survive the termination of this Agreement.

          Section 16. Exclusive Benefit of Parties; Assignment. This Agreement is for the exclusive benefit of the parties hereto and their respective
successors and assigns and shall not be deemed to give any legal or equitable right to any other
person, including the Takeout Investor and Custodian. Except as provided in Section 7, no
rights or obligations created by this Agreement may be assigned by either party hereto without the
prior written consent of the other party.

          Any Person into which Seller may be merged or consolidated, or any corporation resulting from
any merger, conversion or consolidation to which Seller shall be a party, or any Person succeeding
to the business of Seller, shall be the successor of Seller hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding

          Section 17. Amendments; Waivers; Cumulative Rights. This Agreement may be amended from time to time only by written agreement of Seller and
Purchaser. Any forbearance, failure or delay by either party in exercising any right, power or
remedy hereunder shall not be deemed to be a waiver thereof, and any single or partial exercise by
either party of any right, power or remedy hereunder shall not preclude the further exercise
thereof or the exercise of any other right, power or remedy hereunder. Every right, power and
remedy of either party shall continue in full force and effect until specifically waived by such
party in writing. No right, power or remedy shall be exclusive, and each such right, power or
remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred
hereby or hereafter available at law or in equity or by statute or otherwise.

          Section 18. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument. The parties agree that
this Agreement, any documents to be delivered pursuant to this Agreement and any notices hereunder
may be transmitted between them by email and/or by facsimile. The parties intend that faxed
signatures and electronically imaged signatures such as .pdf files shall constitute original
signatures and are binding on all parties. The original documents shall be promptly delivered, if
requested.

          Section 19.
Effect of Invalidity of Provisions. In case any one or more of the provisions contained in this Agreement should be or become
invalid, illegal or unenforceable in

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any respect, the validity, legality and enforceability of the remaining provisions contained
herein or therein shall in no way be affected, prejudiced or disturbed thereby.

          Section 20. Governing Law. THE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO ANY CONFLICTS OF LAW PROVISIONS (EXCEPT FOR SECTION 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 THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT PREEMPTED BY
FEDERAL LAW.

          EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:

          (a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY
THEREOF;

          (b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE
EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

          (c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING
A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 21; AND

          (d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

          Section 21. Notices. Any notices, consents, elections, directions and other communications given under this
Agreement shall be in writing and shall be deemed to have been duly given when telecopied, emailed
or delivered by overnight courier to, personally delivered to, or on the third Business Day
following the placing thereof in the mail, first class postage prepaid to, the parties hereto at
the related address set forth in Annex B or to such other address as either party shall
give notice to the other party pursuant to this Section. Notices to any Assignee shall be given to
such address as the Assignee shall provide to Seller in writing. In all cases, to the extent that
the related individual set forth in the respective “Attention” line is no longer employed by the
respective Person, such notice may be given to the attention of a

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Responsible Officer of the respective Person or to the attention of such individual or
individuals as subsequently notified in writing by a Responsible Officer of the respective Person.

          Section 22. Entire Agreement. This Agreement and the other Program Documents contain the entire agreement between the
parties hereto with respect to the subject matter hereof, and supersede all prior and
contemporaneous agreements between them, oral or written, of any nature whatsoever with respect to
the subject matter hereof.

          Section 23. Costs of Enforcement. (a) In addition to any other indemnity specified in this Agreement, Seller agrees to pay as
and when billed by Purchaser all of the out-of-pocket costs and expenses incurred by Purchaser in
connection with the development, preparation, and execution of, and any amendment, supplement or
modification to, and enforcement of this Agreement, any other related document or any other
documents prepared in connection herewith or therewith. Seller agrees to pay as and when billed by
Purchaser all of the out-of-pocket costs and expenses incurred in connection with the consummation,
monitoring and administration of the transactions contemplated hereby and thereby including,
without limitation, (i) all the reasonable fees, disbursements and expenses of counsel to
Purchaser, provided however, that Seller’s obligations to pay for the fees, disbursements
and expenses of counsel to Purchaser shall be limited to the fees, disbursements and expenses of
one law firm and (ii) all the due diligence, inspection, testing and review costs and expenses
incurred by Purchaser with respect to the Related Mortgage Loans under this Agreement.

          (b) If Seller fails to pay when due any costs, expenses or other amounts payable by it under
this Agreement, including, without limitation, reasonable fees and expenses of counsel and
indemnities, such amount may be paid on behalf of Seller by Purchaser, in its sole discretion and
Sellers shall remain liable for any such payments by Purchaser. No such payment by Purchaser shall
be deemed a waiver of any of Purchaser’s rights under this Agreement.

          (c) In addition to any other indemnity specified in this Agreement, in the event of a breach
by Seller of this Agreement or any other Program Document, Seller agrees to pay the reasonable
attorneys’ fees and expenses of Purchaser and/or any Assignee incurred as a consequence of such
breach.

          Section 24. Securities Contract; Netting Agreement. (a) Seller and Purchaser recognize that each sale of a Participation Certificate (including
and the related servicing rights) under this Agreement is a “securities contract” and a “master
netting agreement” as those terms are defined in Section 741 and Section 101(38A)(A) of the
Bankruptcy Code, respectively, and a “qualified financial contract” as that term is defined in the
FDIA. Seller and Purchaser further recognize that the beneficial interest in the Related Mortgage
Loans evidenced by a Participation Certificate shall constitute an “interest in a mortgage loan” as
that term is used in Section and 741(7)(A)(i) of Bankruptcy Code.

          (b) It is understood that the Purchaser shall have the right to liquidate, terminate and
accelerate, or exercise any other remedies permitted upon the occurrence of any Servicing
Termination Event, and that such liquidation, termination and acceleration rights constitute
contractual rights to liquidate, terminate and accelerate the transactions under a “securities
contract” and a “master netting agreement” as described in Section 555 and

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Section 561 of the Bankruptcy Code, respectively, and a “qualified financial contract” as described
Section 1821(e)(8)(A)(i) of the FDIA.

          (c) The parties hereto agree and acknowledge that if a party hereto is an “insured depository
institution,” as such term is defined in the FDIA, then each transaction hereunder is a “qualified
financial contract,” as that term is defined in the FDIA and any rules, orders or policy statements
thereunder (except insofar as the type of assets subject to such transaction would render such
definition inapplicable).

          (d) It is understood that this Agreement constitutes a “netting contract” as defined in and
subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991
(“FDICIA”) and each payment entitlement and payment obligation hereunder shall constitute a
“covered contractual payment entitlement” or “covered contractual payment obligation,”
respectively, as defined in and subject to FDICIA.

          (e) The provision related to the grant of a security interest in the Additional Collateral is
intended to constitute a security agreement or other arrangement or other credit enhancement
related to the Agreement and the transactions hereunder as defined under Section 741(7)(A)(xi) of
the Bankruptcy Code.

          Section 25. Construction. The headings in this Agreement are for convenience only and are not intended to influence its
construction. References to Sections, Exhibits and Annexes in this Agreement are to the Sections
of and Exhibits and Annexes to this Agreement. The Exhibits and Annexes are part of this
Agreement. In this Agreement, the singular includes the plural, the plural the singular, and the
words “and” and “or” are used in the conjunctive or disjunctive as the sense and circumstances may
require.

          Section 26. Confidentiality. Notwithstanding anything in this Agreement to the contrary, Purchaser shall comply with all
applicable local, state and federal laws, including, without limitation, all privacy and data
protection law, rules and regulations that are applicable to the Related Mortgage Loans and/or any
applicable terms of this Agreement (the “Seller Confidential Information”). Purchaser
understands that the Seller Confidential Information may contain “nonpublic personal information”,
as that term is defined in Section 509(4) of the Gramm-Leach-Bliley Act (the “Act”), and
Purchaser agrees to maintain such nonpublic personal information that it receives hereunder in
accordance with the Act and other applicable federal and state privacy laws. Purchaser shall
implement such physical and other security measures as shall be necessary to (i) ensure the
security and confidentiality of the “nonpublic personal information” of the “customers”,
“consumers” (as those terms are defined in the Act) and Mortgagors of Seller or any Affiliate of
Seller which Purchaser holds, (ii) protect against any threats or hazards to the security and
integrity of such nonpublic personal information, and (iii) protect against any unauthorized access
to or use of such nonpublic personal information. Purchaser represents and warrants that it has
implemented appropriate measures to meet the objectives of Section 501(b) of the Act and of the
applicable standards adopted pursuant thereto, as now or hereafter in effect. Purchaser shall
notify Seller timely following discovery of any breach or compromise of the security,
confidentiality, or integrity of nonpublic personal information of the customers, consumers and
Mortgagors of Seller or any Affiliate of Seller provided directly to the Purchaser by Seller or
such Affiliate. Purchaser shall provide such

-52-

 

notice to Seller by personal delivery, by facsimile with confirmation of receipt, or by
overnight courier with confirmation of receipt to the applicable requesting individual.

[SIGNATURE PAGE FOLLOWS]

-53-

 

          IN WITNESS WHEREOF, Purchaser and Seller have duly executed this Agreement as of the date and
year set forth on the cover page hereof.

	 	 	 	 	 
	 	BANK OF AMERICA, N.A.

 	 
	 	By:  	/s/ J. Craig Weakley
 	 
	 	 	Name:  	J. Craig Weakley 	 
	 	 	Title:  	Managing Director 	 
	 
	 	PHH MORTGAGE CORPORATION

 	 
	 	By:  	/s/ Mark E. Johnson
 	 
	 	 	Name:  	Mark E. Johnson 	 
	 	 	Title:  	SVP and Treasurer 	 
	 

 

EXHIBIT A

[RESERVED]

A-1

 

EXHIBIT B

TRADE ASSIGNMENT

                     (“Takeout Investor”)

(Address)

Attention:

Fax No.:

Dear Sirs:

          You have a commitment (the “Commitment”), trade-dated                     ___, ___, to purchase
$______of ___% ___year,

(Check Box)

	 	 	 	 	 	 	 

	 

	 	o
	 	(a)
	 	Government National Mortgage Association;
	 
	 	 	 	 	 	 
	 

	 	o
	 	(b)
	 	Federal National Mortgage Association; or
	 
	 	 	 	 	 	 
	 

	 	o
	 	(c)
	 	Federal Home Loan Mortgage Corporation.

mortgage-backed pass-through securities (“Securities”) at a purchase price of                     
from                      on (insert Settlement Date). Our intention is to assign $_______of this Commitment’s
full amount. This is to confirm that (i) the form of this assignment conforms to the PSA
guidelines, (ii) the Commitment is in full force and effect, (iii) the Commitment has been assigned
to Bank of America, N.A. (“BANA”) whose acceptance of such assignment is indicated below,
(iv) you will accept delivery of such Securities directly from BANA or its designee and (v) you
will pay BANA for such Securities. Payment will be made “delivery versus payment (DVP)” to BANA in
immediately available funds.

          If you have any questions, please call                      at (___) ___-___immediately or contact
him by fax at (___) ___-___.

	 	 	 	 	 	 	 

	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	PHH MORTGAGE CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Title:
	 	 
	 

	 	 	 	Date:	 	 

B-1

 

Agreed to:

[                    ]

	 	 	 	 	 

	By:
	 	 	 	 
	 

	 	 

Title:
	 	 
	 

	 	Date:	 	 

Notice of delivery and confirmation of receipt are the obligations of BANA. Prompt notification of
incorrect information or rejection of the trade assignment should be made to [___].

B-2

 

EXHIBIT C

FORM OF SELLER’S OFFICER’S COMPLIANCE CERTIFICATE

[PERIOD END                     ]

[Date]1

I, [  ] hereby certify:

     1. I am the duly elected and authorized [Chief Financial Officer or Vice President responsible
for financial administration or Chief Accounting Officer] of PHH Mortgage Corporation, a New Jersey
corporation (the “Company”).

     2. I am familiar with the terms and conditions of the Mortgage Loan Participation Purchase and
Sale Agreement dated as of July 23, 2010, between the Company and Bank of America, N.A. (as such
agreement may be amended, supplemented or otherwise modified, renewed or replaced from time to
time, the “Purchase Agreement”). All capitalized terms used herein and not otherwise defined shall
have the meaning assigned to them in the Purchase Agreement.

     3. The attached financial statements of the Company and its Subsidiaries for the end of the
fiscal year referred to above have been prepared from the books of the Company and its Subsidiaries
in accordance with the generally accepted accounting principles used in the preparation of
financial statements and, to the best of my knowledge, information, and belief, upon due inquiry,
present fairly the financial position of the Company and its Consolidated Subsidiaries as at the
end of such period and the results of their operations for the period then ended.

     4. To the best of my knowledge, information, and belief, after due inquiry, there is no
Potential Servicing Termination Event or Servicing Termination Event, except as may be otherwise
set forth herein.

     The foregoing certifications and the financial statements attached to this certificate in
support hereof, are made and delivered the day and year first written above pursuant to Sections
11(a)(ii)(A) and 11(a)(iv) of the Purchase Agreement.

 

			
	1	 	Date of delivery of compliance certificate.

C-1

 

Attachments

	1.	 	financial statements

C-2

 

EXHIBIT D

FORM OF PHH PARENT’S OFFICER’S COMPLIANCE CERTIFICATE

[PERIOD END                     ]

[Date]1

I, [  ] hereby certify:

     1. I am the duly elected and authorized [Chief Financial Officer or Vice President responsible
for financial administration or Chief Accounting Officer] of PHH Corporation, a Maryland
corporation (the “Company”).

     2. I am familiar with the terms and conditions of the Mortgage Loan Participation Purchase and
Sale Agreement dated as of July 23, 2010, between PHH Mortgage Corporation and Bank of America,
N.A. (as such agreement may be amended, supplemented or otherwise modified, renewed or replaced
from time to time, the “Purchase Agreement”). All capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the Purchase Agreement.

     3. The attached financial statements of the Company and its Subsidiaries for the end of the
fiscal [month][quarter][year] referred to above have been prepared from the books of the Company
and its Subsidiaries in accordance with the generally accepted accounting principles used in the
preparation of financial statements and, to the best of my knowledge, information, and belief, upon
due inquiry, present fairly the financial position of the Company and its Consolidated Subsidiaries
as at the end of such fiscal period and the results of their operations for the period then ended,
subject, in the case of monthly or quarterly statements, to year-end audit and audit adjustments
and to the absence of footnote disclosure.

     4. Attached hereto, in reasonable detail, are the computations and comparisons required to
demonstrate compliance with the provisions of Sections 11(i), (p) and (q) of the Purchase
Agreement.

     5. Attached hereto is a schedule (in the form of Schedule 5.1(c) to the Revolving Credit
Facility) describing the Mortgage Warehouse Facilities available to PHH Parent or its Subsidiaries
on the last day of the most recently ended fiscal quarter.

     6. The attached are detailed projections of the Company and its Consolidated Subsidiaries for
the current fiscal year.2

 

			
	1	 	Date of delivery of compliance certificate.
	 
	2	 	Only applicable to financial projections, and
as applicable, any significant revisions of such projections.

D-1

 

     The foregoing certifications, together with the computations and comparisons set forth in the
attachments hereto and the financial statements attached to this certificate in support hereof, are
made and delivered the day and year first written above pursuant to Sections [11(a)(i)(A)],
[11(a)(i)(B)], [11(a)(ii)(B)], [11(a)(iii)] and 11(a)(iv) of the Purchase Agreement.

D-2

 

Attachments

	 	1.	 	financial statements;
	 
	 	2.	 	the computations and comparisons (in reasonable detail)
required to demonstrate compliance with the provisions of Sections
11(i), (p) and (q) of the Purchase Agreement;
	 
	 	3.	 	a schedule of Mortgage Warehouse Facilities; and
	 
	 	4.	 	detailed projections of the Company and its Consolidated
Subsidiaries for the current fiscal year.1

 

			
	1	 	Only applicable to financial projections, and
as applicable, any significant revisions of such projections.

D-3

 

EXHIBIT E

ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sell(s) and assign(s) and transfer(s) unto

(Please print or typewrite name and address, including postal zip code of assignee)

an undivided Participation Interest Equal to                                          % of the beneficial interest in the
Mortgage Loans relating to the within Participation Certificate, Pool No. (or FHLMC Contract No.):
                                         , Pass-Through Rate                      , Discount                      and
hereby authorize(s) the transfer of registration of such interest to assignee.

	 	 	 	 	 
	 	[Assignor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated:                                                             

E-1

 

EXHIBIT F

FORM OF CONFIRMATION

Subject: Confirmation of purchase of a Participation Certificate on [purchase date].

Bank of America, N.A. (“Purchaser”) is pleased to confirm its purchase from PHH Mortgage
Corporation (“Seller”) of a Participation Certificate evidencing a 100% undivided beneficial
ownership interest in the Mortgage Loans relating to the pool number referred to herein, pursuant
to the Mortgage Loan Participation Purchase and Sale Agreement, dated as of July 23, 2010 (the
“Agreement”), between Purchaser and Seller, under the following terms and conditions:

Agency: GNMA

Pool Type: GNMA II

Pool Number: [     ]

CUSIP: TBA

Coupon: [     ]

Term: [     ]

Allocated Amount: [     ]

Early Funding Date/Trade Date: [     ]

Issue Date: [     ]

Settlement Date: [     ]

Trade Price: [     ]

100% of GNMA TBA Price: [     ]

PC Purchase Price: [     ]

Interest on PC (financing fee): [     ]

Interest on Pool: [     ]

Trade Discount: [     ]

Holdback Amount: [     ]

Initial Payment to Seller: [     ]

F-1

 

 

EXHIBIT G

SELLER’S SECRETARY’S CERTIFICATE

     I,                     , hereby certify that I am the duly elected                      of PHH Mortgage
Corporation, a New Jersey corporation (“Seller”), and further certify, on behalf of Seller
as follows:

     1. Attached hereto as Attachment I is a true and correct copy of the certificate of
incorporation of Seller as are in full force and effect on the date hereof.

     2. Attached hereto as Attachment II is a true and correct copy of the bylaws of Seller which
are in full force and effect on the date hereof.

     3. Attached hereto as Attachment III is a Certificate of Good Standing of Seller, issued by
the State of New Jersey Department of the Treasury dated ___, ___. No event has occurred since
___, ___which has affected the good standing of Seller under the laws of the State of New
Jersey.

     4. Each person who, as an officer or attorney-in-fact of Seller, signed or will sign (a) the
Mortgage Loan Participation Purchase and Sale Agreement (the “Purchase Agreement”), dated
as of July 23, 2010, by and between Seller and Bank of America, N.A. (the “Purchaser”);
(b) the Custodial Agreement (the “Custodial Agreement”), dated as of July 23, 2010, by and
among Seller, Purchaser, The Bank of New York Mellon Trust Company, N.A. and, solely for the
purposes of its obligations under Section 3(a) of the Custodial Agreement, The Bank of New York
Mellon; (c) the Pricing Side Letter (the “Pricing Side Letter”), dated as of July 23, 2010,
by and among Seller and Purchaser; and (d) any other document delivered prior hereto or on the date
hereof in connection with transactions contemplated in the Purchase Agreement was, at the
respective times of such signing and delivery, and is as of the date hereof, duly elected or
appointed, qualified and acting as such officer or attorney-in-fact, and the signatures of such
persons appearing on such documents are their genuine signatures.

     5. Attached hereto as Attachment IV is a true and correct copy of the resolutions duly adopted
by the board of directors of Seller on ___, ___(the “Resolutions”) with respect to
the authorization and approval of the transactions contemplated in the Purchase Agreement; said
Resolutions have not been amended, modified, annulled or revoked and are in full force and effect
on the date hereof.

     6. Incumbency of Officers. The below named persons have been duly elected or appointed, and
have been duly qualified as officers of Seller holding the respective office below set opposite his
or her name, and the signature below set opposite his or her name is his or her genuine signature.

	 	 	 	 	 
	Name	 	Office	 	Signature
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 

G-1

 

 

     All capitalized terms used herein and not otherwise defined shall have the meaning assigned to
them in the Purchase Agreement.

     IN WITNESS WHEREOF, I have hereunto signed my name.

Dated:                     , ___

	 	 	 	 	 	 	 

	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

G-2

 

 

EXHIBIT H

SELLER’S BOARD RESOLUTIONS

     THE UNDERSIGNED, being all of the members of the Board of Directors of PHH Mortgage
Corporation, a New Jersey corporation (“PHH Mortgage”), hereby adopt the resolutions set forth
below with the same force and effect as if such resolutions were approved and adopted at a duly
constituted meeting of the Board of Directors of the PHH Mortgage.

     RESOLVED, that the execution, delivery and performance by PHH Mortgage of (i) the Mortgage
Loan Participation Purchase and Sale Agreement (the “Purchase Agreement”), to be entered into by
and between PHH Mortgage and Bank of America, N.A. (the “Purchaser”) substantially in the form
attached hereto as Exhibit A, and (ii) the Pricing Side Letter (the “Pricing Side Letter”) to be
entered into by and between PHH Mortgage and the Purchaser are hereby authorized and approved and
that the President, the Chief Financial Officer, any Executive Vice President, any Senior Vice
President or the Treasurer (collectively, the “Authorized Officers”) of PHH Mortgage be and each of
them hereby is authorized and directed to execute and deliver the Purchase Agreement and Pricing
Side Letter to the Purchaser with such changes as the officer executing the same shall approve, his
execution and delivery thereof to be conclusive evidence of such approval; and be it further

     RESOLVED, that the execution, delivery and performance by PHH Mortgage of the Custodial
Agreement (the “Custodial Agreement”) to be entered into by PHH Mortgage, the Purchaser, The Bank
of New York Mellon Trust Company, N.A., as custodian, and, solely for the purposes of its
obligations under Section 3(a) to the Custodial Agreement, The Bank of New York Mellon,
substantially in the form attached hereto as Exhibit B, are hereby authorized and approved and that
the Authorized Officers of PHH Mortgage be and each of them hereby is authorized and directed to
execute and deliver the Custodial Agreement to the Purchaser and Custodian with such changes as the
officer executing the same shall approve, his execution and delivery thereof to be conclusive
evidence of such approval; and be it further

     RESOLVED, that the Authorized Officers hereby are, and each hereby is, authorized to execute
and deliver all such aforementioned agreements on behalf of PHH Mortgage and to do or cause to be
done, in the name and on behalf of PHH Mortgage, any and all such acts and things, and to execute,
deliver and file in the name and on behalf of PHH Mortgage, any and all such agreements,
applications, certificates, instructions, receipts and other documents and instruments, as such
Authorized Officer may deem necessary, advisable or appropriate in order to carry out the purposes
of the foregoing resolutions; and be it further

     RESOLVED, that the proper officers, agents and counsel of PHH Mortgage are, and each of such
officers, agents and counsel is, hereby authorized for and in the name and on behalf of PHH
Mortgage to take all such further actions and to execute and deliver all such other agreements,
instruments and documents, and to make all governmental filings, in the name and on behalf of PHH
Mortgage and such officers are authorized to pay such fees, taxes and expenses, as advisable in
order to fully carry out the intent and accomplish the purposes of the resolutions heretofore
adopted hereby; and be it further

H-1

 

 

     RESOLVED, that this document may be signed in counterparts, each of which shall be deemed an
original and all of which taken together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the undersigned have duly executed this unanimous written consent of the
Board of Directors as of the ___day of July, 2010.

	 	 	 	 	 	 	 

	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

H-2

 

 

EXHIBIT I

SELLER’S MONTHLY REPORT

I-1

 

 

EXHIBIT J

PERMITTED AFFILIATE AGREEMENTS

     • Strategic Relationship Agreement, dated as of January 31, 2005, by and among Cendant
Real Estate Services Group, LLC, Cendant Real Estate Services Venture Partner, Inc., PHH
Corporation, PHH Mortgage Corporation, PHH Broker Partner Corporation, and PHH Home Loans, LLC

     • Management Services Agreement, dated as of March 31, 2006, by and among PHH Home
Loans, LLC, PHH Mortgage Corporation and others

     • Flow Servicing Agreement, dated as of May 1, 2010, among certain Subsidiaries of PHH
Mortgage Corporation, as owners, and PHH Mortgage Corporation, as servicer.

     • Sublease, dated as of June 1, 2005, between PHH Mortgage Corporation and PHH Home
Loans, LLC

     • Loan Purchase and Sale Agreement, dated October 1, 2005, between PHH Mortgage
Corporation and PHH Home Loans, LLC

     • Correspondent Agreements between PHH Mortgage Corporation and certain of its
Subsidiaries

     • Indemnity Agreement, dated as of May 18, 2009, between PHH Mortgage Corporation and
PHH Home Loans, LLC

J-1

 

EXHIBIT K

FORM OF POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS:

     WHEREAS, Bank of America, N.A. (“Purchaser”) and PHH Mortgage Corporation (“Seller”)
have entered into the Participation Purchase and Sale Agreement, dated as of July 23, 2010 (the
“Agreement”), pursuant to which Purchaser has agreed to purchase from Seller certain
mortgage loans from time to time, subject to the terms and conditions set forth therein;

     WHEREAS, Seller has agreed to give to Purchaser a power of attorney on the terms and
conditions contained herein in order for Purchaser to take any action that Purchaser may deem
necessary or advisable to accomplish the purposes of the Agreement;

     NOW, THEREFORE, Seller hereby irrevocably constitutes and appoints Purchaser its true and
lawful Attorney-in-Fact, with full power and authority hereby conferred in its name, place and
stead and for its use and benefit, to do and perform the following in connection with mortgage loan
purchased by Purchaser from Seller under the Agreement (the “Purchased Assets”) or as otherwise
provided below:

     (1) to receive, endorse and collect all checks made payable to the order of Seller
representing any payment on account of the Purchased Assets;

     (2) to assign or endorse any mortgage, deed of trust, promissory note or other instrument
relating to the Purchased Assets;

     (3) to correct any assignment, mortgage, deed of trust or promissory note or other instrument
relating to the Purchased Assets, including, without limitation, unendorsing and re- endorsing a
promissory note to another investor;

     (4) to complete and execute lost note affidavits or other lost document affidavits relating to
the Purchased Assets;

     (5) to issue title requests and instructions relating to the Purchased Assets;

     (6) to give notice to any individual or entity of its interest in the Purchased Assets under
the Agreement; and

     (7) to service and administer the Purchased Assets, including, without limitation, the receipt
and collection of all sums payable in respect of the Purchased Assets.

     Seller hereby ratifies and confirms all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.

K-1

 

     TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY THIRD PARTY
RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY ACT HEREUNDER, AND THAT
REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL
ACTUAL NOTICE OR KNOWLEDGE OF SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD
PARTY, AND PURCHASER ON ITS OWN BEHALF AND ON BEHALF OF PURCHASER’S ASSIGNS, HEREBY AGREES TO
INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL CLAIMS THAT MAY ARISE
AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY HAVING RELIED ON THE PROVISIONS OF THIS
INSTRUMENT.

[SIGNATURES FOLLOW]

K-2

 

     IN WITNESS WHEREOF Seller has caused this Power of Attorney to be executed and Seller’s
seal to be affixed this ___ day of                     , 201_.

	 	 	 	 	 
	 	PHH MORTGAGE CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Acknowledgment of Execution by Seller (Principal):

	 	 	 	 	 	 	 
	STATE OF [              ]

	 	 	)

)	 	 	ss.:
	COUNTY OF [          ]

	 	 	)	 	 	 

     On the ___ day of
                    , 201___before me,
the undersigned, a Notary Public in and for said
State, personally appeared                 
                    
                    
                    
                    
                    
                    
                    
    , personally known
to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed above and acknowledged to me that he
executed the within instrument in his capacity as             
                    
                    
                    
                    
                    
                    
                    
       
and that by his signature on the instrument, the person upon behalf of which the individual
acted, executed the instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the day and year in
this certificate first above written.

           
                    
                    
         

Notary Public

     My Commission expires   
                     
                     
               

K-3

 

EXHIBIT L

EXISTING INDEBTEDNESS*

PHH Corporation

Amended and Restated Competitive Advance and Revolving Credit Agreement, dated as of January 6,
2006 as amended through the Fourth Amendment, dated as of June 25, 2010, among PHH Parent, as
Borrower, PHH Vehicle Management Services Inc., as Canadian Subsidiary Borrower, JPMorgan Chase
Bank, N.A., as Administrative Agent, the lenders from time to time party thereto and others, as
further amended from time to time.

Senior Notes due 2013

Indenture dated as of November 6, 2000 between PHH Corporation and The Bank of New York Mellon
(formerly known as The Bank of New York, as successor in interest to Bank One Trust Company, N.A.),
as Trustee.

Supplemental Indenture No. 1 dated as of November 6, 2000 between PHH Corporation and The Bank of
New York Mellon (formerly known as The Bank of New York, as successor in interest to Bank One Trust
Company, N.A.), as Trustee.

Supplemental Indenture No. 2 dated as of January 30, 2001 between PHH Corporation and The Bank of
New York Mellon (formerly known as The Bank of New York, as successor in interest to Bank One Trust
Company, N.A.), as Trustee.

Supplemental Indenture No. 3 dated as of May 30, 2002 between PHH Corporation and The Bank of New
York Mellon (formerly known as The Bank of New York, as successor in interest to Bank One Trust
Company, N.A.), as Trustee.

Convertible Notes due 2012

Indenture dated as of April 2, 2008, by and between PHH Corporation and The Bank of New York, as
Trustee.

Convertible Notes due 2014

Indenture dated as of September 29, 2009, by and between PHH Corporation and The Bank of New York
Mellon, as Trustee.

Chesapeake Funding, LLC

Amended and Restated Base Indenture dated as of December 17, 2008 among Chesapeake Finance Holdings
LLC, as Issuer, and JP Morgan Chase Bank, N.A., as Indenture Trustee.

Series 2009-1 Indenture Supplement, dated as of June 9, 2009, among Chesapeake Funding LLC, as
issuer, and The Bank of New York Mellon, as indenture trustee.

L-1

 

Series 2009-2 Indenture Supplement, dated as of September 11, 2009, among Chesapeake Funding LLC,
as issuer, and The Bank of New York Mellon, as indenture trustee.

Series 2009-3 Indenture Supplement, dated as of November 18, 2009, among Chesapeake Funding LLC, as
issuer, and The Bank of New York Mellon, as indenture trustee.

Series 2009-4 Indenture Supplement, dated as of December 18, 2009, among Chesapeake Funding LLC, as
issuer, and The Bank of New York Mellon, as indenture trustee.

Series 2010-1 Indenture Supplement dated as of December 17, 2008, among Chesapeake Funding, LLC as
issuer, PHH Vehicles Management Services, LLC, a wholly-owned subsidiary of the Company, as
administrator, JPMorgan Chase Bank N.A. as administrative agent, certain non-conduit purchasers,
certain CP conduit purchaser groups, funding agents for the CP conduit purchaser groups and certain
Class B Note Purchasers

PHH Mortgage Corporation

Second Amended and Restated Master Repurchase Agreement, dated as of June 25, 2010, between PHH
Mortgage Corporation, as seller, and The Royal Bank of Scotland plc, as buyer and agent

Master Repurchase Agreement, dated May 26, 2010, by and among PHH Mortgage Corporation, as seller,
PHH Corporation, as guarantor, and Credit Suisse First Boston Mortgage Capital, LLC, as buyer

Letter Agreement dated February 9, 2010 constituting Amendment No. 7 of the Master Agreement and
Contract (No. MP04311) between PHH Mortgage Corporation and Fannie Mae (“Service Advance Early
Reimbursement Mechanics”)

Sooner Than Pooled Agreement dated March 12, 2009 between PHH Mortgage Corporation and Fannie Mae

As Soon As Pooled Plus Agreement dated January 8, 2008 between PHH Mortgage Corporation and Fannie
Mae

Second Amendment dated May 30, 2010 to the Credit Agreement dated December 17, 2008 between PHH
Mortgage Corporation and Manufacturers and Traders Trust Company as amended

 

			
	*	 	As of the Revolver Fourth Amendment Effective Date, the Material Subsidiaries of PHH Parent are:
PHH Mortgage Corporation, Atrium Insurance Corporation, D. L. Peterson Trust, Chesapeake Funding,
LLC, Chesapeake Finance Holdings, LLC, and PHH Vehicle Management Services, LLC (d/b/a PHH Arval).

L-2

 

ANNEX A

SELLER’S DELIVERY INSTRUCTIONS

          (1) In the case of certificated Securities, Purchaser will pick up the Securities upon receipt
of notification of issuance from Seller and promptly deliver such Securities in negotiable form to:

	 	 	 	 	 

	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 

          (2) In the case of book-entry Securities, upon receipt by Purchaser of such Securities,
Purchaser will wire the Securities to:

	 	 	 	 	 

	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 

Annex A-1

 

ANNEX B

PURCHASER NOTICES

	 	 	 

	Name:

	 	Eileen Albus
	 
	 	 
	Address:

	 	Bank of America, N.A.

One Bryant Park, 11th floor

New York, NY 10036
	 
	 	 
	Telephone:

	 	646-855-0946
	 
	 	 
	Telecopy:

	 	646-651-4512
	 
	 	 
	Email:

	 	eileen.albus@baml.com

SELLER NOTICES

	 	 	 

	Name:

	 	Mark Johnson
	 
	 	 
	Address:

	 	PHH Mortgage Corporation

1 Mortgage Way

Mt. Laurel, New Jersey 08054
	 
	 	 
	Telephone:

	 	856-917-0176
	 
	 	 
	Telecopy:

	 	856-917-6910
	 
	 	 
	Email:

	 	mark.johnson@phhmail.com

with copy to:

	 	 	 

	Name:

	 	General Counsel
	 
	 	 
	Address:

	 	PHH Mortgage Corporation

1 Mortgage Way

Mt. Laurel, New Jersey 08054
	 
	 	 
	Telephone:
	 	 
	 
	 	 
	Telecopy:

	 	856-917-7295
	 
	 	 
	Email:

	 	legalnotice@phhmail.com

Annex B-1

 

with copy to:

	 	 	 

	Name:

	 	E. Lee Smith, Esq.
	 
	 	 
	Address:

	 	Sonnenschein Nath & Rosenthal LLP

Two World Financial Center

New York, NY 10281
	 
	 	 
	Telephone:

	 	212-768-6938
	 
	 	 
	Telecopy:

	 	212-768-6800
	 
	 	 
	Email:

	 	elsmith@sonnenschein.com

Annex B-2exv4w1

Exhibit 4.1

REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of July 28, 2010, is by and
between Omeros Corporation, a Washington corporation (the
“Company”), and Azimuth Opportunity, Ltd., an
international business company incorporated under the laws of the British Virgin Islands (the
“Investor”).

RECITALS

     A. The Company and the Investor have entered into that certain Common Stock Purchase
Agreement, dated as of the date hereof (the “Purchase Agreement”), pursuant to which the Company
may issue, from time to time, to the Investor up to the lesser of (i) $40,000,000 of newly issued
shares of the Company’s common stock, $0.01 par value (“Common Stock”), and (ii) the Trading Market
Limit (as defined in the Purchase Agreement), as provided for therein.

     B. Pursuant to the terms of, and in consideration for the Investor entering into, the Purchase
Agreement, and to induce the Investor to execute and deliver the Purchase Agreement, the Company
has agreed to provide the Investor with certain registration rights with respect to the Registrable
Securities (as defined herein) as set forth herein.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises, the representations, warranties, covenants
and agreements contained herein and in the Purchase Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally
bound hereby, the Company and the Investor hereby agree as follows:

1. Definitions.

     Capitalized terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Purchase Agreement. As used in this Agreement, the following terms shall
have the following meanings:

     (a) “Business Day” means any day other than Saturday, Sunday or any other day on which
commercial banks in New York, New York are authorized or required by law to remain closed.

     (b) “Closing Date” shall mean the date of this Agreement.

     (c) “Effective Date” means the date that the applicable Registration Statement has been
declared effective by the SEC.

     (d) “Effectiveness Deadline” means (i) with respect to the initial Registration Statement
required to be filed to pursuant to Section 2(a), the earlier of (A) the 120th calendar
day after the Closing Date (or the 180th calendar day after the Closing Date if such
Registration Statement is subject to review by the SEC) and (B) the fifth Business Day after the
date the

1

 

Company is notified (orally or in writing, whichever is earlier) by the SEC that such
Registration Statement will not be reviewed or will not be subject to further review and (ii) with
respect to any additional Registration Statements that may be required to be filed by the Company
pursuant to this Agreement, the earlier of (A) the 120th calendar day following the date
on which the Company was required to file such additional Registration Statement (or the
180th calendar day after such date if such Registration Statement is subject to review
by the SEC) and (B) the fifth Business Day after the date the Company is notified (orally or in
writing, whichever is earlier) by the SEC that such Registration Statement will not be reviewed or
will not be subject to further review.

     (e) “Filing Deadline” means (i) with respect to the initial Registration Statement required to
be filed to pursuant to Section 2(a), the 60th calendar day after the Closing Date and (ii) with
respect to any additional Registration Statements that may be required to be filed by the Company
pursuant to this Agreement, the later of (A) the 60th calendar day following the sale of
substantially all of the Registrable Securities included in the initial Registration Statement or
the most recent prior additional Registration Statement, as applicable, and (B) six months
following the Effective Date of the initial Registration Statement or the most recent prior
additional Registration Statement, as applicable, or such earlier date as permitted by the SEC.

     (f) “Person” means any person or entity, whether a natural person, trustee, corporation,
partnership, limited partnership, limited liability company, trust, unincorporated organization,
business association, firm, joint venture, governmental agency or authority.

     (g) “register,” “registered,” and “registration” refer to a registration effected by preparing
and filing one or more Registration Statements in compliance with the Securities Act and pursuant
to Rule 415 and the declaration of effectiveness of such Registration Statement(s) by the SEC.

     (h) “Registrable Securities” means 4,297,495 Shares and any capital stock of the Company
issued or issuable with respect to such Shares, including, without limitation, (i) as a result of
any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (ii)
shares of capital stock of the Company into which the shares of Common Stock are converted or
exchanged and shares of capital stock of a successor entity into which the shares of Common Stock
are converted or exchanged.

     (i) “Registration Statement” means a registration statement or registration statements of the
Company filed under the Securities Act covering the resale by the Investor of Registrable
Securities, as such registration statement or registration statements may be amended and
supplemented from time to time (including pursuant to Rule 462(b) under the Securities Act),
including all documents filed as part thereof or incorporated by reference therein.

     (j) “Rule 144” means Rule 144 promulgated by the SEC under the Securities Act, as such rule
may be amended from time to time, or any other similar or successor rule or regulation of the SEC
that may at any time permit the Investor to sell securities of the Company to the public without
registration.

2

 

     (k) “Rule 415” means Rule 415 promulgated by the SEC under the Securities Act, as such rule
may be amended from time to time, or any other similar or successor rule or regulation of the SEC
providing for offering securities on a delayed or continuous basis.

     (l) “SEC” means the U.S. Securities and Exchange Commission or any successor entity.

2. Registration.

     (a) Mandatory Registration. The Company shall prepare and, as soon as practicable,
but in no event later than the Filing Deadline, file with the SEC an initial Registration Statement
on Form S-1, or such other form reasonably acceptable to the Investor and Legal Counsel, covering
the resale by the Investor of Registrable Securities in an amount equal to 4,297,495 shares of
Common Stock. Such initial Registration Statement shall contain (except if otherwise directed by
the Investor) the “Selling Shareholder” and “Plan of Distribution” sections in
substantially the form attached hereto as Exhibit B. The Company shall use its commercially
reasonable efforts to have such initial Registration Statement, and each other Registration
Statement required to be filed pursuant to the terms hereof, declared effective by the SEC as soon
as practicable, but in no event later than the applicable Effectiveness Deadline.

     (b) Legal Counsel. Subject to Section 5 hereof, the Investor shall have the right to
select one legal counsel to review and oversee, solely on its behalf, any registration pursuant to
this Section 2 (“Legal Counsel”), which shall be Greenberg Traurig, LLP or such other counsel as
thereafter designated by the Investor. Except as provided under Section 10.1 of the Purchase
Agreement, the Company shall have no obligation to reimburse the Investor for any and all legal
fees and expenses of the Legal Counsel incurred in connection with the transactions contemplated
hereby.

     (c) Intentionally Omitted.

     (d) Sufficient Number of Shares Registered. If at any time all Registrable Securities
are not covered by the initial Registration Statement filed pursuant to Section 2(a) as a result of
Section 2(h) or otherwise, the Company shall file with the SEC one or more additional Registration
Statements (on the short form available therefor, if applicable), so as to cover all of the
Registrable Securities not covered by such initial Registration Statement, in each case, as soon as
practicable (taking into account any Staff position with respect to date on which the Staff will
permit such additional Registration Statement(s) to be filed with the SEC), but in no event later
than the applicable Filing Deadline for such additional Registration Statement(s). The Company
shall use its commercially reasonable efforts to cause such additional Registration Statement(s) to
become effective as soon as practicable following the filing thereof with the SEC, but in no event
later than the applicable Effectiveness Deadline for such Registration Statement.

     (e) Piggyback Registrations. Without limiting any of the Company’s obligations
hereunder or under the Purchase Agreement, if there is not an effective Registration Statement
covering all of the Registrable Securities and the Company shall determine to prepare and file with
the SEC a registration statement relating to an offering for its own account or the account of

3

 

others under the Securities Act of any of its equity securities (other than on Form S-4 or
Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any entity or business
or equity securities issuable in connection with the Company’s stock option or other employee
benefit plans), then the Company shall deliver to the Investor a written notice of such
determination and, if within five (5) days after the date of the delivery of such notice, the
Investor shall so request in writing, the Company shall include in such registration statement all
or any part of such Registrable Securities the offer and sale of which the Investor requests to be
registered; provided, however, the Company shall not be required to register the
offer and sale of any Registrable Securities pursuant to this Section 2(e) that are eligible for
resale pursuant to Rule 144 without restriction (including, without limitation, volume
restrictions) and without the need for current public information required by Rule 144(c)(1) (or
Rule 144(i)(2), if applicable) or that are the subject of a then-effective Registration Statement.

     (f) No Inclusion of Other Securities. In no event shall the Company include any
securities other than Registrable Securities on any Registration Statement without the prior
written consent of the Investor. Subject to the proviso in Section 2(e), in connection with any
offering involving an underwriting of shares, the Company shall not be required under this Section
2 or otherwise to include the Registrable Securities of any Investor therein unless such Investor
accepts and agrees to the terms of the underwriting, which shall be reasonable and customary, as
agreed upon between the Company and the underwriters selected by the Company.

     (g) Offering. If the staff of the SEC (the “Staff”) or the SEC seeks to characterize
any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting
an offering of securities that does not permit such Registration Statement to become effective and
be used for resales by the Investor on a delayed or continuous basis under Rule 415 at
then-prevailing market prices (and not fixed prices) (or as otherwise may be acceptable to the
Investor), or if after the filing of the initial Registration Statement with the SEC pursuant to
Section 2(a), the Company is otherwise required by the Staff or the SEC to reduce the number of
Registrable Securities included in such initial Registration Statement, then the Company shall
reduce the number of Registrable Securities to be included in such Registration Statement (with the
prior consent of the Investor and Legal Counsel as to the specific Registrable Securities to be
removed therefrom) until such time as the Staff and the SEC shall so permit such Registration
Statement to become effective and be used as aforesaid. Notwithstanding anything in this Agreement
to the contrary, if after giving effect to the actions referred to in the immediately preceding
sentence, the Staff or the SEC does not permit such Registration Statement to become effective and
be used for resales by the Investor on a delayed or continuous basis under Rule 415 at
then-prevailing market prices (and not fixed prices) (or as otherwise may be acceptable to the
Investor), the Company shall not request acceleration of the Effective Date of such Registration
Statement, the Company shall promptly (but in no event later than 48 hours) request the withdrawal
of such Registration Statement pursuant to Rule 477 under the Securities Act, and the Effectiveness
Deadline shall automatically be deemed to have elapsed with respect to such Registration Statement
at such time as the Staff or the SEC has made a final and non-appealable determination that the SEC
will not permit such Registration Statement to be so utilized (unless prior to such time the
Company and the Investor have received assurances from the Staff or the SEC reasonably acceptable
to Legal Counsel that a new Registration Statement filed by the Company with the SEC promptly
thereafter may be so utilized). In the event of any reduction in

4

 

Registrable Securities pursuant to this paragraph, the Company shall file additional
Registration Statements in accordance with Section 2(d) until such time as all Registrable
Securities have been included in Registration Statements that have been declared effective and the
prospectus contained therein is available for use by the Investor.

3. Related Obligations.

     The Company shall use its commercially reasonable efforts to effect the registration of the
Registrable Securities in accordance with the intended method of disposition thereof, and, pursuant
thereto, the Company shall have the following obligations:

     (a) The Company shall promptly prepare and file with the SEC a Registration Statement with
respect to the Registrable Securities (but in no event later than the applicable Filing Deadline)
and use its commercially reasonable efforts to cause such Registration Statement to become
effective as soon as practicable after such filing (but in no event later than the applicable
Effectiveness Deadline). Subject to Allowable Grace Periods, the Company shall keep each
Registration Statement effective (and the prospectus contained therein available for use) pursuant
to Rule 415 for resales by the Investor on a delayed or continuous basis at then-prevailing market
prices (and not fixed prices) at all times until the earlier of (i) the date as of which the
Investor may sell all of the Registrable Securities required to be covered by such Registration
Statement (disregarding any reduction pursuant to Section 2(g)) without restriction pursuant to
Rule 144 and without the need for current public information as required by Rule 144(c)(1) (or Rule
144(i)(2), if applicable) and (ii) the date on which the Investor shall have sold all of the
Registrable Securities covered by such Registration Statement (the “Registration Period”).
Notwithstanding anything to the contrary contained in this Agreement (but subject to the provisions
of Section 3(q) hereof), the Company shall ensure that, when filed and at all times while
effective, each Registration Statement (including, without limitation, all amendments and
supplements thereto) and the prospectus (including, without limitation, all amendments and
supplements thereto) used in connection with such Registration Statement (1) shall not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading and (2) will disclose (whether directly or
through incorporation by reference to other SEC filings to the extent permitted) all material
information regarding the Company and its securities. The Company shall submit to the SEC, within
two (2) Business Days after the later of the date that (i) the Company learns that no review of a
particular Registration Statement will be made by the Staff or that the Staff has no further
comments on a particular Registration Statement (as the case may be) and (ii) the approval of Legal
Counsel is obtained pursuant to Section 3(c) (which approval shall be promptly sought), a request
for acceleration of effectiveness of such Registration Statement to a time and date not later than
forty-eight (48) hours after the submission of such request.

     (b) Subject to Section 3(q) of this Agreement, the Company shall prepare and file with the SEC
such amendments (including, without limitation, post-effective amendments) and supplements to each
Registration Statement and the prospectus used in connection with each such Registration Statement,
which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may
be necessary to keep each such Registration Statement effective (and the prospectus contained
therein current and available for use) at all times during the

5

 

Registration Period for such Registration Statement, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all Registrable Securities of
the Company required to be covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration Statement. Without
limiting the generality of the foregoing, the Company covenants and agrees that (i) at or before
8:30 a.m. (New York City time) on the Trading Day immediately following each Effective Date, the
Company shall file with the SEC in accordance with Rule 424(b) under the Securities Act the final
prospectus to be used in connection with sales pursuant to the applicable Registration Statement,
and (ii) if the transactions contemplated by any Fixed Request (as defined in the Purchase
Agreement) are material to the Company (individually or collectively with all other prior Fixed
Requests, the consummation of which have not previously been reported in any prospectus supplement
filed with the SEC under Rule 424(b) under the Securities Act or in any periodic report filed by
the Company with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), or if otherwise required under the Securities Act, in each case as reasonably determined by
the Company or the Investor, then, on the first Trading Day immediately following the last Trading
Day of the Pricing Period with respect to such Fixed Request, the Company shall file with the SEC a
prospectus supplement pursuant to Rule 424(b) under the Securities Act with respect to the
applicable Fixed Request(s), disclosing the total Fixed Amount Requested or the Alternative Fixed
Amount Requested (as applicable) pursuant to such Fixed Request(s), the total number of Shares that
have been (or are to be) issued and sold to the Investor pursuant to such Fixed Request(s), the
total purchase price for the Shares subject to such Fixed Request(s), the applicable Discount
Price(s) for such Shares and the net proceeds that have been (or are to be) received by the Company
from the sale of such Shares. To the extent not previously disclosed in the prospectus or a
prospectus supplement, the Company shall disclose in its Quarterly Reports on Form 10-Q and in its
Annual Reports on Form 10-K the information described in the immediately preceding sentence
relating to any Fixed Request(s) consummated during the relevant fiscal quarter. In the case of
amendments and supplements to any Registration Statement or prospectus which are required to be
filed pursuant to this Agreement (including, without limitation, pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 8-K, Form 10-Q or Form 10-K or any analogous report
under the Exchange Act, the Company shall have incorporated such report by reference into such
Registration Statement and prospectus, if applicable, or shall file such amendments or supplements
to the Registration Statement or prospectus with the SEC on the same day on which the Exchange Act
report is filed which created the requirement for the Company to amend or supplement such
Registration Statement or prospectus, for the purpose of including or incorporating such report
into such Registration Statement and prospectus. The Company consents to the use of the prospectus
(including, without limitation, any supplement thereto) included in each Registration Statement in
accordance with the provisions of the Securities Act and with the securities or “Blue Sky” laws of
the jurisdictions in which the Registrable Securities may be sold by the Investor, in connection
with the resale of the Registrable Securities and for such period of time thereafter as such
prospectus (including, without limitation, any supplement thereto) (or in lieu thereof, the notice
referred to in Rule 173(a) under the Securities Act) is required by the Securities Act to be
delivered in connection with resales of Registrable Securities.

     (c) The Company shall (A) permit Legal Counsel to review and comment upon (i) each
Registration Statement at least five (5) Business Days prior to its filing with the SEC (or

6

 

such shorter period as may be agreed to by the Investor and Legal Counsel) and (ii) all
amendments and supplements to each Registration Statement (including, without limitation, the
prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K, and any similar or successor reports or prospectus supplements
the contents of which is limited to that set forth in such reports) within a reasonable number of
days prior to their filing with the SEC, and (B) not file any Registration Statement or amendment
or supplement thereto or to any prospectus contained therein in a form to which Legal Counsel
reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of
a Registration Statement or any amendment or supplement thereto without the prior consent of Legal
Counsel, which consent shall not be unreasonably withheld. The Company shall promptly furnish to
Legal Counsel, without charge, (i) electronic copies of any correspondence from the SEC or the
Staff to the Company or its representatives relating to each Registration Statement (which
correspondence shall be redacted to exclude any material, non-public information regarding the
Company or any of its Subsidiaries), (ii) after the same is prepared and filed with the SEC, one
(1) electronic copy of each Registration Statement and any amendment(s) and supplement(s) thereto,
including, without limitation, financial statements and schedules, all documents incorporated
therein by reference, if requested by the Investor, and all exhibits and (iii) upon the
effectiveness of each Registration Statement, one (1) electronic copy of the prospectus included in
such Registration Statement and all amendments and supplements thereto. The Company shall
reasonably cooperate with Legal Counsel in performing the Company’s obligations pursuant to this
Section 3.

     (d) Without limiting any obligation of the Company under the Purchase Agreement, the Company
shall promptly furnish to the Investor, without charge, (i) after the same is prepared and filed
with the SEC, at least one (1) electronic copy of each Registration Statement and any amendment(s)
and supplement(s) thereto, including, without limitation, financial statements and schedules, all
documents incorporated therein by reference, if requested by the Investor, all exhibits and each
preliminary prospectus, (ii) upon the effectiveness of each Registration Statement, ten (10) copies
of the prospectus included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as the Investor may reasonably request from time to time)
and (iii) such other documents, including, without limitation, copies of any preliminary or final
prospectus, as the Investor may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by the Investor.

     (e) The Company shall take such action as is necessary to (i) register and qualify, unless an
exemption from registration and qualification applies, the resale by the Investor of the
Registrable Securities covered by a Registration Statement under such other securities or “Blue
Sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those
jurisdictions, such amendments (including, without limitation, post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify
the Registrable Securities for sale in such jurisdictions; provided, however, the
Company shall not be required in connection therewith or as a condition thereto to (x) qualify to
do business in any jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (y)

7

 

subject itself to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify Legal Counsel and
the Investor of the receipt by the Company of any notification with respect to the suspension of
the registration or qualification of any of the Registrable Securities for sale under the
securities or “Blue Sky” laws of any jurisdiction in the United States or its receipt of actual
notice of the initiation or threatening of any proceeding for such purpose.

     (f) The Company shall notify Legal Counsel and the Investor in writing of the happening of any
event, as promptly as practicable after becoming aware of such event, as a result of which the
prospectus included in a Registration Statement, as then in effect, includes an untrue statement of
a material fact or omission to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material, non-public
information regarding the Company or any of its Subsidiaries), and, subject to Section 3(q),
promptly prepare a supplement or amendment to such Registration Statement and such prospectus
contained therein to correct such untrue statement or omission and deliver ten (10) copies of such
supplement or amendment to Legal Counsel and the Investor (or such other number of copies as Legal
Counsel or the Investor may reasonably request). The Company shall also promptly notify Legal
Counsel and the Investor in writing (i) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, when a Registration Statement or any post-effective
amendment has become effective (notification of such effectiveness shall be delivered to Legal
Counsel and the Investor by facsimile or e-mail on the same day of such effectiveness and by
overnight mail), and when the Company receives written notice from the SEC that a Registration
Statement or any post-effective amendment will be reviewed by the SEC, (ii) of any request by the
SEC for amendments or supplements to a Registration Statement or related prospectus or related
information, (iii) of the Company’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate and (iv) of the receipt of any request by the SEC or
any other federal or state governmental authority for any additional information relating to the
Registration Statement or any amendment or supplement thereto or any related prospectus. The
Company shall respond as promptly as practicable to any comments received from the SEC with respect
to a Registration Statement or any amendment thereto. Nothing in this Section 3(f) shall limit any
obligation of the Company under the Purchase Agreement.

     (g) The Company shall (i) use its reasonable best efforts to prevent the issuance of any stop
order or other suspension of effectiveness of a Registration Statement or the use of any prospectus
contained therein, or the suspension of the qualification, or the loss of an exemption from
qualification, of any of the Registrable Securities for sale in any jurisdiction and, if such an
order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest
possible time and (ii) notify Legal Counsel and the Investor of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.

     (h) Upon the written request of the Investor, the Company shall make available for inspection
during normal business hours by (i) the Investor, (ii) legal counsel for the Investor and (iii) one
(1) firm of accountants or other agents retained by such Investor (collectively, the “Inspectors”),
all pertinent financial and other records, and pertinent corporate documents and

8

 

properties of the Company (collectively, the “Records”), as shall be reasonably deemed
necessary by each Inspector, and cause the Company’s officers, directors and employees to supply
all information which any Inspector may reasonably request; provided, however, each
Inspector shall agree in writing to hold in strict confidence and not to make any disclosure
(except to the Investor) or use of any Record or other information which the Company’s board of
directors determines in good faith to be confidential, and of which determination the Inspectors
are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required under the
Securities Act, (b) the release of such Records is ordered pursuant to a final, non-appealable
subpoena or order from a court or government body of competent jurisdiction, or (c) the information
in such Records has been made generally available to the public other than by disclosure in
violation of this Agreement or any other Transaction Document (as defined in the Purchase
Agreement). The Investor agrees that it shall, upon learning that disclosure of such Records is
sought in or by a court or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential.
Nothing herein (or in any other confidentiality agreement between the Company and the Investor, if
any) shall be deemed to limit the Investor’s ability to sell Registrable Securities in a manner
which is otherwise consistent with applicable laws and regulations.

     (i) The Company shall hold in confidence and not make any disclosure of information concerning
the Investor provided to the Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration Statement or is otherwise
required to be disclosed in such Registration Statement pursuant to the Securities Act, (iii) the
release of such information is ordered pursuant to a subpoena or other final, non-appealable order
from a court or governmental body of competent jurisdiction, or (iv) such information has been made
generally available to the public other than by disclosure in violation of this Agreement or any
other Transaction Document. The Company agrees that it shall, upon learning that disclosure of such
information concerning the Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt written notice to the Investor and allow the
Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.

     (j) Without limiting any obligation of the Company under the Purchase Agreement, the Company
shall use its reasonable best efforts either to (i) cause all of the Registrable Securities covered
by each Registration Statement to be listed on each securities exchange on which securities of the
same class or series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange or (ii) secure
designation and quotation of all of the Registrable Securities covered by each Registration
Statement on the OTC Bulletin Board, or (iii) if, despite the Company’s reasonable best efforts to
satisfy the preceding clauses (i) or (ii) the Company is unsuccessful in satisfying the preceding
clauses (i) or (ii), without limiting the generality of the foregoing, to use its reasonable best
efforts to arrange for at least two market makers to register with the Financial Industry
Regulatory Authority (f/k/a the National Association of Securities Dealers, Inc.) (“FINRA”) as such
with respect to such Registrable Securities. In addition, the Company shall cooperate with

9

 

the Investor and any Broker-Dealer through which the Investor proposes to sell its Registrable
Securities in effecting a filing with FINRA pursuant to FINRA Rule 5110 as requested by the
Investor. The Company shall pay all fees and expenses in connection with satisfying its obligation
under this Section 3(j).

     (k) The Company shall cooperate with the Investor and, to the extent applicable, facilitate
the timely preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts (as the case may be) as the
Investor may reasonably request from time to time and registered in such names as the Investor may
request. Certificates for Registrable Securities free from all restrictive legends may be
transmitted by the transfer agent to the Investor by crediting an account at DTC as directed by the
Investor.

     (l) If requested by the Investor, the Company shall as soon as practicable after receipt of
notice from the Investor and subject to Section 3(q) hereof, (i) incorporate in a prospectus
supplement or post-effective amendment such information as the Investor reasonably requests to be
included therein relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the offering of the
Registrable Securities to be sold in such offering; (ii) make all required filings of such
prospectus supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or
make amendments to any Registration Statement or prospectus contained therein if reasonably
requested by the Investor.

     (m) The Company shall use its reasonable best efforts to cause the Registrable Securities
covered by a Registration Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to consummate the disposition of such Registrable
Securities.

     (n) The Company shall make generally available to its security holders as soon as practical,
but not later than ninety (90) days after the close of the period covered thereby, an earnings
statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under
the Securities Act) covering a twelve-month period beginning not later than the first day of the
Company’s fiscal quarter next following the applicable Effective Date of each Registration
Statement.

     (o) The Company shall otherwise use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC in connection with any registration hereunder.

     (p) Within one (1) Business Day after each Registration Statement which covers Registrable
Securities is declared effective by the SEC, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with
copies to the Investor) confirmation that such Registration Statement has been declared effective
by the SEC in the form attached hereto as Exhibit A.

10

 

     (q) Notwithstanding anything to the contrary herein (but subject to the last sentence of this
Section 3(q)), at any time after the Effective Date of a particular Registration Statement, the
Company may delay the disclosure of material, non-public information concerning the Company or any
of its Subsidiaries the disclosure of which at the time is not, in the good faith opinion of the
board of directors of the Company, in the best interest of the Company and, in the opinion of
counsel to the Company, otherwise required (a “Grace Period”), provided that the Company shall
promptly, but in no event later than 9:30 a.m. (New York City time) on the second Trading Day
immediately prior to the commencement of any Grace Period (except for such case where it is
impossible to provide such two-Trading Day advance notice, in which case the Company shall provide
such notice as soon as possible), notify the Investor in writing of the (i) existence of material,
non-public information giving rise to a Grace Period (provided that in each such notice the Company
shall not disclose the content of such material, non-public information to the Investor) and the
date on which such Grace Period will begin and (ii) date on which such Grace Period ends, provided
further that (I) no Grace Period shall exceed 20 consecutive Trading Days and during any 365-day
period all such Grace Periods shall not exceed an aggregate of 60 Trading Days; provided,
further, that the Company shall not register any securities for the account of itself or
any other shareholder during any such Grace Period (other than pursuant to a registration statement
on Form S-4 or S-8), (II) the first day of any Grace Period must be at least three Trading Days (or
such shorter period as may be agreed by the parties) after the last day of any prior Grace Period
and (III) no Grace Period may exist during (A) the first 10 consecutive Trading Days after the
Effective Date of the particular Registration Statement or (B) the five-Trading Day period
following each Settlement Date (each, an “Allowable Grace Period”). For purposes of determining the
length of a Grace Period above, such Grace Period shall begin on and include the date set forth in
the notice referred to in clause (i) above, provided that such notice is received by the Investor
not later than 9:30 a.m. (New York City time) on the second Trading Day immediately prior to such
commencement date (except for such case where it is impossible to provide such two-Trading Day
advance notice, in which case the Company shall provide such notice as soon as possible) and shall
end on and include the later of the date the Investor receives the notice referred to in clause
(ii) above and the date referred to in such notice. The provisions of Section 3(l) hereof shall not
be applicable during the period of any Allowable Grace Period. Upon expiration of each Grace
Period, the Company shall again be bound by the first sentence of Section 3(f) with respect to the
information giving rise thereto unless such material, non-public information is no longer
applicable. Notwithstanding anything to the contrary contained in this Section 3(q), the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of the
Investor in accordance with the terms of the Purchase Agreement in connection with any sale of
Registrable Securities with respect to which the Investor has entered into a contract for sale, and
delivered a copy of the prospectus included as part of the particular Registration Statement to the
extent applicable, prior to the Investor’s receipt of the notice of a Grace Period and for which
the Investor has not yet settled.

     (r) The Company shall take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of its Registrable Securities pursuant to each Registration Statement.

4. Obligations of the Investor.

11

 

     (a) At least five Business Days prior to the first anticipated filing date of each
Registration Statement (or such shorter period to which the parties agree), the Company shall
notify the Investor in writing of the information the Company requires from the Investor with
respect to such Registration Statement. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to the Registrable
Securities of the Investor that the Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method of disposition of
the Registrable Securities held by it, as shall be reasonably required to effect and maintain the
effectiveness of the registration of such Registrable Securities and shall execute such documents
in connection with such registration as the Company may reasonably request.

     (b) The Investor, by its acceptance of the Registrable Securities, agrees to cooperate with
the Company as reasonably requested by the Company in connection with the preparation and filing of
each Registration Statement hereunder, unless the Investor has notified the Company in writing of
the Investor’s election to exclude all of the Investor’s Registrable Securities from such
Registration Statement.

     (c) The Investor agrees that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 3(g) or the first sentence of 3(f), the Investor will
immediately discontinue disposition of Registrable Securities pursuant to any Registration
Statement(s) covering such Registrable Securities until the Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of Section
3(f) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to
the contrary in this Section 4(c), the Company shall cause its transfer agent to deliver unlegended
shares of Common Stock to a transferee of the Investor in accordance with the terms of the Purchase
Agreement in connection with any sale of Registrable Securities with respect to which the Investor
has entered into a contract for sale prior to the Investor’s receipt of a notice from the Company
of the happening of any event of the kind described in Section 3(g) or the first sentence of
Section 3(f) and for which the Investor has not yet settled.

     (d) The Investor covenants and agrees that it will comply with the prospectus delivery and
other requirements of the Securities Act as applicable to it in connection with sales of
Registrable Securities pursuant to a Registration Statement.

5. Expenses of Registration.

     All reasonable expenses, other than underwriting discounts and commissions, incurred in
connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including,
without limitation, all registration, listing and qualifications fees, printers and accounting
fees, FINRA filing fees (if any) and fees and disbursements of counsel for the Company shall be
paid by the Company. For the avoidance of doubt, the Company shall not be responsible for any fees
of counsel to the Investor, except as explicitly set forth in Article IX and 10.01(i) of the
Agreement and Section 6 hereof.

6. Indemnification.

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     (a) In the event any Registrable Securities are included in any Registration Statement under
this Agreement, to the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend the Investor, each of its directors, officers, shareholders,
members, partners, employees, agents, advisors, representatives (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding the lack of such title
or any other title) and each Person, if any, who controls the Investor within the meaning of the
Securities Act or the Exchange Act and each of the directors, officers, shareholders, members,
partners, employees, agents, advisors, representatives (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding the lack of such title or any other
title) of such controlling Persons (each, an “Investor Party” and collectively, the “Investor
Parties”), against any losses, obligations, claims, damages, liabilities, judgments, fines,
penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’ fees,
costs of defense and investigation), amounts paid in settlement or expenses, joint or several,
(collectively, “Claims”) incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an Investor Party is or may be a party thereto (“Indemnified Damages”),
to which any of them may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration Statement or any
post-effective amendment thereto or in any filing made in connection with the qualification of the
offering under the securities or other “Blue Sky” laws of any jurisdiction in which Registrable
Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein not misleading or
(ii) any untrue statement or alleged untrue statement of a material fact contained in any
prospectus (as amended or supplemented) or in any prospectus supplement or the omission or alleged
omission to state therein any material fact necessary to make the statements made therein, in light
of the circumstances under which the statements therein were made, not misleading (the matters in
the foregoing clauses (i) and (ii) being, collectively, “Violations”). Subject to Section 6(c), the
Company shall reimburse the Investor Parties, promptly as such expenses are incurred and are due
and payable, for any legal fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a
Claim by an Investor Party arising out of or based upon a Violation which occurs in reliance upon
and in conformity with information furnished in writing to the Company by such Investor Party for
such Investor Party expressly for use in connection with the preparation of such Registration
Statement, prospectus or prospectus supplement or any such amendment thereof or supplement thereto;
(ii) shall not be available to the Investor to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus (as amended or supplemented) made
available by the Company (to the extent applicable), including, without limitation, a corrected
prospectus, if such prospectus (as amended or supplemented) or corrected prospectus was timely made
available by the Company pursuant to Section 3(d) and then only if, and to the extent that,
following the receipt of the corrected prospectus no grounds for such Claim would have existed; and
(iii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be unreasonably withheld
or

13

 

delayed. Such indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Investor Party and shall survive the transfer of any of the Registrable
Securities by the Investor pursuant to Section 9.

     (b) In connection with any Registration Statement in which the Investor is participating, the
Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act (each, an “Company Party”),
against any Claim or Indemnified Damages to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or are based upon any Violation, in each case, to the extent, and only to the extent, that
such Violation occurs in reliance upon and in conformity with written information relating to the
Investor furnished to the Company by the Investor expressly for use in connection with such
Registration Statement; and, subject to Section 6(c) and the below provisos in this Section 6(b),
the Investor will reimburse a Company Party any legal or other expenses reasonably incurred by such
Company Party in connection with investigating or defending any such Claim; provided,
however, the indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the Investor, which
consent shall not be unreasonably withheld or delayed, provided further that the Investor shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not
exceed the net proceeds to the Investor as a result of the applicable sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Company Party and shall survive
the transfer of any of the Registrable Securities by the Investor pursuant to Section 9.

     (c) Promptly after receipt by an Investor Party or Company Party (as the case may be) under
this Section 6 of notice of the commencement of any action or proceeding (including, without
limitation, any governmental action or proceeding) involving a Claim, such Investor Party or
Company Party (as the case may be) shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to participate in, and, to
the extent the indemnifying party so desires, jointly with any other indemnifying party similarly
noticed, to assume control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Investor Party or the Company Party (as the case may be);
provided, however, an Investor Party or Company Party (as the case may be) shall
have the right to retain its own counsel with the fees and expenses of such counsel to be paid by
the indemnifying party if: (i) the indemnifying party has agreed in writing to pay such fees and
expenses; (ii) the indemnifying party shall have failed promptly to assume the defense of such
Claim and to employ counsel reasonably satisfactory to such Investor Party or Company Party (as the
case may be) in any such Claim; or (iii) the named parties to any such Claim (including, without
limitation, any impleaded parties) include both such Investor Party or Company Party (as the case
may be) and the indemnifying party, and such Investor Party or such Company Party (as the case may
be) shall have been advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Investor Party or such Company

14

 

Party and the indemnifying party (in which case, if such Investor Party or such Company Party
(as the case may be) notifies the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, then the indemnifying party shall not have the
right to assume the defense thereof on behalf of the indemnified party and such counsel shall be at
the expense of the indemnifying party, provided further that in the case of clause (iii) above the
indemnifying party shall not be responsible for the reasonable fees and expenses of more than one
(1) separate legal counsel for all Investor Parties or Company Parties (as the case may be). The
Company Party or Investor Party (as the case may be) shall reasonably cooperate with the
indemnifying party in connection with any negotiation or defense of any such action or Claim by the
indemnifying party and shall furnish to the indemnifying party all information reasonably available
to the Company Party or Investor Party (as the case may be) which relates to such action or Claim.
The indemnifying party shall keep the Company Party or Investor Party (as the case may be)
reasonably apprised at all times as to the status of the defense or any settlement negotiations
with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim
or proceeding effected without its prior written consent; provided, however, the
indemnifying party shall not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the prior written consent of the Company Party or Investor Party
(as the case may be), consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Company Party or Investor Party (as the case may be) of a release from all
liability in respect to such Claim or litigation, and such settlement shall not include any
admission as to fault on the part of the Company Party. For the avoidance of doubt, the immediately
preceding sentence shall apply to Sections 6(a) and 6(b) hereof. Following indemnification as
provided for hereunder, the indemnifying party shall be subrogated to all rights of the Company
Party or Investor Party (as the case may be) with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been made. The failure to deliver
written notice to the indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the Investor Party or Company
Party (as the case may be) under this Section 6, except to the extent that the indemnifying party
is materially and adversely prejudiced in its ability to defend such action.

     (d) No Person involved in the sale of Registrable Securities who is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with
such sale shall be entitled to indemnification from any Person involved in such sale of Registrable
Securities who is not guilty of fraudulent misrepresentation.

     (e) The indemnification required by this Section 6 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, as and when bills are received or
Indemnified Damages are incurred; provided that the Investor shall promptly reimburse the
Company for all such payments to the extent a court of competent jurisdiction determines that any
Investor Party was not entitled to such payments.

     (f) The indemnity and contribution agreements contained herein shall be in addition to (i) any
cause of action or similar right of the Company Party or Investor Party against the indemnifying
party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the
law.

15

 

7. Contribution.

     To the extent any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to any amounts for
which it would otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however: (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards set forth in Section
6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities which Person is
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
in connection with such sale shall be entitled to contribution from any Person involved in such
sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii)
contribution by any seller of Registrable Securities shall be limited in amount to the amount of
net proceeds received by such seller from the applicable sale of such Registrable Securities
pursuant to such Registration Statement. Notwithstanding the provisions of this Section 7, the
Investor shall not be required to contribute, in the aggregate, any amount in excess of the amount
by which the net proceeds actually received by the Investor from the applicable sale of the
Registrable Securities subject to the Claim exceeds the amount of any damages that the Investor has
otherwise been required to pay, or would otherwise be required to pay under Section 6(b), by reason
of such untrue or alleged untrue statement or omission or alleged omission.

8. Reports Under the Exchange Act.

     With a view to making available to the Investor the benefits of Rule 144, the Company agrees
to:

     (a) use its reasonable best efforts to make and keep public information available, as those
terms are understood and defined in Rule 144;

     (b) use its reasonable best efforts to file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the Exchange Act so long as
the Company remains subject to such requirements (it being understood that nothing herein shall
limit any of the Company’s obligations under the Purchase Agreement) and the filing of such reports
and other documents is required for the applicable provisions of Rule 144;

     (c) furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon
request, (i) a written statement by the Company, if true, that it has complied with the reporting,
submission and posting requirements of Rule 144 and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and documents so filed by
the Company with the SEC if such reports are not publicly available via EDGAR, and (iii) such other
information as may be reasonably requested to permit the Investor to sell such securities pursuant
to Rule 144 without registration; and

     (d) take such additional action as is reasonably requested by the Investor to enable the
Investor to sell the Registrable Securities pursuant to Rule 144, including, without limitation,
delivering all such legal opinions, consents, certificates, resolutions and instructions to the
Company’s Transfer Agent as may be reasonably requested from time to time by the Investor

16

 

and otherwise fully cooperate with Investor and Investor’s broker to effect such sale of
securities pursuant to Rule 144.

9. Assignment of Registration Rights.

     All or any portion of the rights under this Agreement shall be automatically assignable by the
Investor to any transferee or assignee of all or any portion of the Investor’s Registrable
Securities if: (i) the Investor agrees in writing with such transferee or assignee to assign all or
any portion of such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such registration rights are
being transferred or assigned; (iii) immediately following such transfer or assignment the further
disposition of such securities by such transferee or assignee is restricted under the Securities
Act or applicable state securities laws if so required; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence such transferee or
assignee agrees in writing with the Company to be bound by all of the provisions contained herein;
(v) such transfer or assignment shall have been made in accordance with the applicable requirements
of the Purchase Agreement; and (vi) such transfer or assignment shall have been conducted in
accordance with all applicable federal and state securities laws. The term “Investor” in this
Agreement shall also include all such transferees and assignees.

10. Amendment of Registration Rights.

     Provisions of this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor, provided that the Investor may give a waiver in
writing as to itself. Any amendment or waiver effected in accordance with this Section 10 shall be
binding upon the Investor and the Company. No such amendment or waiver (unless given pursuant to
the foregoing proviso in the case of a waiver) shall be effective to the extent that it applies to
less than all of the holders of the Registrable Securities. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any provision of this
Agreement unless the same consideration also is offered to all of the parties to this Agreement.

11. Miscellaneous.

     (a) Solely for purposes of this Agreement, a Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from such record owner of such Registrable Securities.

     (b) Any notices, consents, waivers or other communications required or permitted to be given
under the terms of this Agreement shall be given in accordance with Section 10.4 of the Purchase
Agreement.

17

 

     (c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. The
Company and the Investor acknowledge and agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that either party shall be entitled to
an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement by the
other party and to enforce specifically the terms and provisions hereof (without the necessity of
showing economic loss and without any bond or other security being required), this being in
addition to any other remedy to which either party may be entitled by law or equity.

     (d) All questions concerning the construction, validity, enforcement and interpretation of
this Agreement shall be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the State of New York
or any other jurisdictions) that would cause the application of the laws of any jurisdictions other
than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of
the federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

     (e) The Transaction Documents set forth the entire agreement and understanding of the parties
solely with respect to the subject matter thereof and supersedes all prior and contemporaneous
agreements, negotiations and understandings between the parties, both oral and written, solely with
respect to such matters. There are no promises, undertakings, representations or warranties by
either party relative to subject matter hereof not expressly set forth in the Transaction
Documents. Notwithstanding anything in this Agreement to the contrary and without implication that
the contrary would otherwise be true, nothing contained in this Agreement shall limit, modify or
affect in any manner whatsoever (i) the conditions precedent to a Fixed Request contained in
Article VII of the Purchase Agreement, including, without limitation, the condition precedent
contained in Section 7.2(iii) thereof or (ii) any of the Company’s obligations under the Purchase
Agreement.

18

 

     (f) Subject to compliance with Section 9, this Agreement shall inure to the benefit of and be
binding upon the permitted successors and assigns of each of the parties hereto. This Agreement is
not for the benefit of, nor may any provision hereof be enforced by, any Person, other than the
parties hereto, their respective permitted successors and assigns and the Persons referred to in
Sections 6 and 7 hereof.

     (g) The headings in this Agreement are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof. Unless the context clearly indicates otherwise, each
pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof. The terms “including,” “includes,” “include” and words of like import shall be
construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the
provision in which they are found.

     (h) This Agreement may be executed in two or more identical counterparts, all of which shall
be considered one and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. If any signature is delivered by facsimile
transmission or by an e-mail which contains a portable document format (.pdf) file of an executed
signature page, such signature page shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force and effect as if such
signature page were an original thereof.

     (i) Each party shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements, certificates, instruments and
documents as any other party may reasonably request in order to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the transactions contemplated hereby.

     (j) The language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will be applied against
any party.

[signature pages follow]

19

 

     IN WITNESS WHEREOF, Investor and the Company have caused their respective signature page to
this Registration Rights Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	COMPANY:

OMEROS CORPORATION

 	 
	 	By:  	/s/ Gregory A. Demopulos
 	 
	 	 	Name:  	Gregory A. Demopulos 	 
	 	 	Title:  	President and Chief Executive Officer 	 

20

 

	 	 	 	 	 

     IN WITNESS WHEREOF, Investor and the Company have caused their respective signature page to
this Registration Rights Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	INVESTOR:

AZIMUTH OPPORTUNITY, LTD.

 	 
	 	By:  	/s/ Deirdre M. McCoy
 	 
	 	 	Name:  	Deirdre M. McCoy 	 
	 	 	Title:  	Corporate Secretary 	 

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EXHIBIT A

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

                                        

                                        

                                        

Attention:                     

          Re:   Omeros Corporation

Ladies and Gentlemen:

          [We are][I am] counsel to Omeros Corporation, a Washington corporation (the “Company”), and
have represented the Company in connection with that certain Common Stock Purchase Agreement, dated
as of July 28, 2010 (the “Purchase Agreement”), entered into by and among the Company and the
Investor named therein (the “Holder”) pursuant to which the Company will issue to the Holder from
time to time shares of the Company’s common stock, $0.01 par value per share (the “Common Stock”).
Pursuant to the Purchase Agreement, the Company also has entered into a Registration Rights
Agreement with the Holder (the “Registration Rights Agreement”) pursuant to which the Company
agreed, among other things, to register the offer and sale of the Registrable Securities (as
defined in the Registration Rights Agreement) under the Securities Act of 1933, as amended (the
“Securities Act”). In connection with the Company’s obligations under the Registration Rights
Agreement, on                           , 2010, the Company filed a Registration Statement on Form S-1 (File
No. 333-                    ) (the “Registration Statement”) with the Securities and Exchange Commission
(the “SEC”) relating to the Registrable Securities which names the Holder as an underwriter and a
selling shareholder thereunder.

          In connection with the foregoing, based solely upon oral advice from the staff of the SEC, the
Registration Statement was declared effective under the Securities Act on [ENTER DATE OF
EFFECTIVENESS], and no stop order suspending its effectiveness has been issued and no proceedings
for that purpose have been instituted or overtly threatened.

          This letter shall serve as our standing opinion to you that the shares of Common Stock are
freely transferable by the Holder pursuant to the Registration Statement, provided the Registration
Statement remains effective.

	 	 	 	 	 
	 	Very truly yours,

[ISSUER’S COUNSEL]

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 

CC: Azimuth Opportunity, Ltd.

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EXHIBIT B

SELLING SHAREHOLDER

     This prospectus relates to the possible resale from time to time by the selling shareholder of
any or all of the shares of common stock that may be issued by us to Azimuth under the Purchase
Agreement. For additional information regarding the issuance of common stock covered by this
prospectus, see “Prospectus Summary—Committed Equity Line Financing With Azimuth” above. We are
registering the shares of common stock pursuant to the provisions of the Registration Rights
Agreement we entered into with Azimuth on July 28, 2010 in order to permit the selling shareholder to
offer the shares for resale from time to time. Except for the transactions contemplated by the
Purchase Agreement and the Registration Rights Agreement, Azimuth has not had any material
relationship with us within the past three years.

     The table below presents information regarding the selling shareholder and the shares of
common stock that it may offer from time to time under this prospectus. This table is prepared
based on information supplied to us by the selling shareholder, and reflects holdings as of
                    , 2010. As used in this prospectus, the term “selling shareholder” includes Azimuth and any
donees, pledgees, transferees or other successors in interest selling shares received after the
date of this prospectus from the selling shareholder as a gift, pledge, or other non-sale related
transfer. The number of shares in the column “Maximum Number of Shares of Common Stock to be
Offered Pursuant to this Prospectus” represents all of the shares of common stock that the selling
shareholder may offer under this prospectus. The selling shareholder may sell some, all or none of
its shares in this offering. We do not know how long the selling shareholder will hold the shares
before selling them, and we currently have no agreements, arrangements or understandings with the
selling shareholder regarding the sale of any of the shares. Because the purchase price of the
shares of common stock issuable under the Purchase Agreement is determined on each settlement date,
the number of shares that may actually be sold by the Company under the Purchase Agreement may be
fewer than the number of shares being offered by this prospectus. The fourth column assumes the
sale of all of the shares offered by the selling shareholder pursuant to this prospectus.

     Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC
under the Exchange Act, and includes shares of common stock with respect to which the selling
shareholder has voting and investment power.

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	 	 	 	 	 	 	 	 	 	 	Maximum Number of Shares	 	 	 	 
	 	 	Number of Shares of	 	 	of Common Stock to be	 	 	Number of Shares of	 
	 	 	Common Stock Owned	 	 	Offered Pursuant to this	 	 	Common Stock Owned	 
	Name of Selling Shareholder	 	Prior to Offering	 	 	Prospectus	 	 	After Offering	 
	 	 	Number	 	 	Percent	 	 	 	 	 	 	Number	 	 	Percent	 
	Azimuth Opportunity, Ltd. (4)
	 	 	—	 	 	 	—	 	 	 	4,297,495	 	 	 	—	 	 	 	—	 

 

			
	(1)	 	In accordance with Rule 13d-3(d) under the Exchange Act, we have excluded from the number
of shares beneficially owned prior to the offering all of the shares that Azimuth may be required
to purchase under the Purchase Agreement because the issuance of such shares is solely at our
discretion and is subject to certain conditions, the satisfaction of all of which are outside
of Azimuth’s control, including the registration statement of which this prospectus is a part
becoming and remaining effective. Furthermore, the maximum dollar value of each put of common
stock to Azimuth under the Purchase Agreement is subject to certain agreed upon threshold
limitations set forth in the Purchase Agreement, which are based on the market price of our
common stock at the time of the draw down and, if we determine in our sole discretion, a
percentage of the daily trading volume of our common stock during the Draw Down Period as
well. Also, under the terms of the Purchase Agreement, we may not issue shares of our common
stock to Azimuth to the extent that Azimuth or any of its affiliates would, at any time,
beneficially own more than 9.9% of our outstanding common stock. This beneficial ownership
limitation may not be waived by the parties.
	 
	(2)	 	Applicable percentage ownership is based on [                    ] shares of our common stock
outstanding as of                     , 2010.
	 
	(3)	 	Assumes the sale of all shares being offered pursuant to this prospectus.
	 
	(4)	 	The business address of Azimuth is c/o Folio Administrators Limited, Folio House, P.O. Box 800, Road Town, Tortola VG1110, British Virgin Islands. Azimuth’s principal
business is that of an international business company. We have been advised that Azimuth is not
a member of the Financial Industry Regulatory Authority, or FINRA, or an independent
broker-dealer, and that neither Azimuth nor any of its affiliates is an affiliate or an
associated person of any FINRA member or independent broker-dealer.
Peter W. Poole and Graham J. Farinha are the directors of Azimuth and consequently
may be deemed to have shared voting control and investment discretion over securities
owned by Azimuth. The foregoing should not be construed in and of itself as an admission
by Mr. Poole or Mr. Farinha as to the beneficial ownership of the securities owned by Azimuth.

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PLAN OF DISTRIBUTION

     We are registering shares of common stock that may be issued by us from time to time to Azimuth
under the Purchase Agreement to permit the resale of these shares of common stock after the
issuance thereof by the selling shareholder from time to time after the date of this prospectus. We
will not receive any of the proceeds from the sale by the selling shareholder of the shares of
common stock. We will bear all fees and expenses incident to our obligation to register the shares
of common stock.

     The selling shareholder may decide not to sell any shares of common stock. The selling
shareholder may sell all or a portion of the shares of common stock beneficially owned by it and
offered hereby from time to time directly or through one or more underwriters, broker-dealers or
agents, who may receive compensation in the form of discounts, concessions or commissions from the
selling shareholder and/or the purchasers of the shares of common stock for whom they may act as
agent. In effecting sales, broker-dealers that are engaged by the selling shareholder may arrange
for other broker-dealers to participate. Azimuth is an “underwriter” within the meaning of the
Securities Act. Any brokers, dealers or agents who participate in the distribution of the shares of
common stock by the selling shareholder may also be deemed to be “underwriters,” and any profits on
the sale of the shares of common stock by them and any discounts, commissions or concessions
received by any such brokers, dealers or agents may be deemed to be underwriting discounts and
commissions under the Securities Act. Azimuth has advised us that it will use an unaffiliated
broker-dealer to effectuate all resales of our common stock. To our knowledge, Azimuth has not entered
into any agreement, arrangement or understanding with any particular broker-dealer or market maker
with respect to the shares of common stock offered hereby, nor do we know the identity of the
broker-dealers or market makers that may participate in the resale of the shares. Because Azimuth is,
and any other selling shareholder, broker, dealer or agent may be deemed to be, an “underwriter”
within the meaning of the Securities Act, Azimuth will (and any other selling shareholder, broker,
dealer or agent may) be subject to the prospectus delivery requirements of the Securities Act and
may be subject to certain statutory liabilities of the Securities Act (including, without
limitation, Sections 11, 12 and 17 thereof) and Rule 10b-5 under the Exchange Act.

     The selling shareholder will act independently of us in making decisions with respect to the
timing, manner and size of each sale. The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the sale, at varying
prices determined at the time of sale, or at negotiated prices. These sales may be effected in
transactions, which may involve crosses or block transactions, pursuant to one or more of the
following methods:

	 	•	 	on any national securities exchange or quotation service on which the securities
may be listed or quoted at the time of sale;
	 
	 	•	 	in the over-the-counter market in accordance with the rules of NASDAQ;

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	 	•	 	in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
	 
	 	•	 	through the writing or settlement of options, whether such options are listed on an
options exchange or otherwise;
	 
	 	•	 	ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
	 
	 	•	 	block trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to facilitate the
transaction;
	 
	 	•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for its
account;
	 
	 	•	 	an exchange distribution in accordance with the rules of the applicable exchange;
	 
	 	•	 	privately negotiated transactions;
	 
	 	•	 	broker-dealers may agree with the selling shareholder to sell a specified number of
such shares at a stipulated price per share;
	 
	 	•	 	a combination of any such methods of sale; and
	 
	 	•	 	any other method permitted pursuant to applicable law.

     The selling shareholder may also sell shares of common stock covered by this prospectus
pursuant to Rule 144 promulgated under the Securities Act, if available, rather than under this
prospectus. In addition, the selling shareholder may transfer the shares of common stock by other
means not described in this prospectus.

     Any broker-dealer participating in such transactions as agent may receive commissions from the
selling shareholder (and, if they act as agent for the purchaser of such shares, from such
purchaser). Azimuth has informed us that each such broker-dealer will receive commissions from Azimuth
which will not exceed customary brokerage commissions. Broker-dealers may agree with the selling
shareholder to sell a specified number of shares at a stipulated price per share, and, to the
extent such a broker-dealer is unable to do so acting as agent for the selling shareholder, to
purchase as principal any unsold shares at the price required to fulfill the broker-dealer
commitment to the selling shareholder. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in one or more transactions (which may involve
crosses and block transactions and which may involve sales to and through other broker-dealers,
including transactions of the nature described above and pursuant to the one or more of the methods
described above) at fixed prices, at prevailing market prices at the time of the sale, at varying
prices determined at the time of sale, or at negotiated prices, and in

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connection with such resales may pay to or receive from the purchasers of such shares
commissions computed as described above. To the extent required under the Securities Act, an
amendment to this prospectus or a supplemental prospectus will be filed, disclosing:

	 	•	 	the name of any such broker-dealers;
	 
	 	•	 	the number of shares involved;
	 
	 	•	 	the price at which such shares are to be sold;
	 
	 	•	 	the commission paid or discounts or concessions allowed to such broker-dealers,
where applicable;
	 
	 	•	 	that such broker-dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus, as supplemented;
and
	 
	 	•	 	other facts material to the transaction.

     Azimuth has informed us that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the common stock. Pursuant to a requirement
of the Financial Industry Regulatory Authority, or FINRA, the maximum commission or discount and
other compensation to be received by any FINRA member or independent broker-dealer shall not be
greater than eight percent (8%) of the gross proceeds received by us for the sale of any securities
being registered pursuant to Rule 415 under the Securities Act.

     Under the securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. In addition, in some states the
shares of common stock may not be sold unless such shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is available and is complied
with.

     There can be no assurance that the selling shareholder will sell any or all of the shares of
common stock registered pursuant to the registration statement, of which this prospectus forms a
part.

     Underwriters and purchasers that are deemed underwriters under the Securities Act may engage
in transactions that stabilize, maintain or otherwise affect the price of the common stock,
including the entry of stabilizing bids or syndicate covering transactions or the imposition of
penalty bids. The selling shareholder and any other person participating in the sale or
distribution of the shares of common stock will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder (including, without limitation, Regulation M of the
Exchange Act), which may restrict certain activities of, and limit the timing of purchases and
sales of any of the shares of common stock by, the selling shareholder and any other participating
person. To the

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extent applicable, Regulation M may also restrict the ability of any person engaged in the
distribution of the shares of common stock to engage in market-making and certain other activities
with respect to the shares of common stock. In addition, the anti-manipulation rules under the
Exchange Act may apply to sales of the shares of common stock in the market. All of the foregoing
may affect the marketability of the shares of common stock and the ability of any person or entity
to engage in market-making activities with respect to the shares of common stock.

     We have agreed to pay all expenses of the registration of the shares of common stock pursuant
to the registration rights agreement, estimated to be $[   ] in total, including, without
limitation, Securities and Exchange Commission filing fees and expenses of compliance with state
securities or “Blue Sky” laws; provided, however, Azimuth will pay all selling commissions,
concessions and discounts, and other amounts payable to underwriters, dealers or agents, if any, as
well as transfer taxes and certain other expenses associated with the sale of the shares of common
stock. We have agreed to indemnify Azimuth and certain other persons against certain liabilities in
connection with the offering of shares of common stock offered hereby, including liabilities
arising under the Securities Act or, if such indemnity is unavailable, to contribute amounts
required to be paid in respect of such liabilities. Azimuth has agreed to indemnify us against
liabilities under the Securities Act that may arise from any written information furnished to us by
Azimuth specifically for use in this prospectus or, if such indemnity is unavailable, to contribute
amounts required to be paid in respect of such liabilities.

     At any time a particular offer of the shares of common stock is made by the selling
shareholder, a revised prospectus or prospectus supplement, if required, will be distributed. Such
prospectus supplement or post-effective amendment will be filed with the Securities and Exchange
Commission to reflect the disclosure of any required additional information with respect to the
distribution of the shares of common stock. We may suspend the sale of shares by the selling
shareholder pursuant to this prospectus for certain periods of time for certain reasons, including
if the prospectus is required to be supplemented or amended to include additional material
information.

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