STRATEGIC RELATIONSHIP AGREEMENT

Exhibit 10.10

STRATEGIC RELATIONSHIP AGREEMENT

BY AND AMONG

CENDANT REAL ESTATE SERVICES GROUP, LLC,

CENDANT REAL ESTATE SERVICES VENTURE PARTNER, INC.,

PHH CORPORATION,

CENDANT MORTGAGE CORPORATION,

PHH BROKER PARTNER CORPORATION,

AND

PHH HOME LOANS, LLC

January 31, 2005

 

*	The term “Confidential” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Table of Contents

 

 

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Index of Defined Terms

 

 

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This STRATEGIC RELATIONSHIP AGREEMENT, dated as of January 31, 2005 (this “ Agreement ”), is by and among Cendant Real Estate Services Group, LLC, a Delaware limited liability company (“ Cendant Real Estate ”), Cendant Real Estate Services Venture Partner, Inc., a Delaware corporation (the “ Cendant Member ”), PHH Corporation, a Maryland corporation (“ PHH ”), Cendant Mortgage Corporation, a New Jersey corporation (to be renamed “PHH Mortgage Corporation”) (“ PMC ”), PHH Broker Partner Corporation, a Maryland corporation (the “ PHH Member ”) and PHH Home Loans, LLC, a Delaware limited liability company (the “ Company ”). Each of Cendant Real Estate, the Cendant Member, PHH, PMC, the PHH Member and the Company is sometimes referred to herein as a “ Party ” and, collectively, as the “ Parties .”

W I T N E S S E T H :

WHEREAS, the PHH Member and the Cendant Member formed the Company on November 3, 2004, for the principal purpose of originating and selling mortgage loans sourced through Cendant’s residential real estate brokerage and corporate relocations businesses and from employees of Cendant and its Subsidiaries, in accordance with the terms and provisions of this Agreement and the Operating Agreement; and

WHEREAS, this Agreement sets forth, among other things, certain matters related to the business relationship among the Parties.

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants, promises and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . As used in this Agreement, the following terms shall each have the meaning set forth in this Article (unless the context otherwise requires). All capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Operating Agreement.

“ Additional Services ” has the meaning set forth in Section 11.1(b).

“ Affiliate ” means, when used with reference to a specific Person, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specific Person. For the avoidance of doubt, neither the Company nor any of the “Brand Franchisees” shall be deemed to be an Affiliate of Cendant or any of Cendant’s Affiliates.

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

“ Applicable Requirements ” means, as of the time of reference, collectively, (A) with respect to the Mortgage Loans, all of the following: (i) all contractual obligations, including those contractual obligations contained in this Agreement, in any agreement with any investor or insurer or in the applicable Mortgage Loan; (ii) all applicable federal, state and local legal and regulatory requirements (including statutes, rules, administrative interpretations, regulations and ordinances), including all Mortgage Lending Laws; (iii) all other applicable requirements and guidelines of each investor, insurer, governmental agency, board, commission, instrumentality and other governmental body or office having jurisdiction; (iv) all other applicable judicial and administrative judgments, orders, stipulations, awards, writs and injunctions; and (v) the reasonable and customary mortgage origination practices of prudent mortgage lending institutions which make mortgage loans of the same type as the Mortgage Loans in the jurisdictions in which the related mortgaged properties are located; and (B) the Foreign Corrupt Practices Act of 1977, as amended.

“ Brand Franchisee ” means any residential real estate brokerage business that (i) operates under a Cendant Real Estate Franchisee Brand and (ii) is not owned by Cendant Real Estate or any of its Subsidiaries; provided , that the Parties acknowledge that the “Sotheby’s International Realty” brand may not be included in this definition for certain aspects of this Agreement.

“ Cendant ” means Cendant Corporation, a Delaware corporation.

“ Cendant Competitor ” has the meaning set forth in Section 10.1(c).

“ Cendant Customer ” means any customer of the Cendant Entities or any of their respective Subsidiaries; provided , however , that for purposes of this Agreement the term “Cendant Customer” shall not include any Brand Franchisee or any employee or independent sale associate thereof acting in such capacity.

“ Cendant Employees ” means, collectively, all U.S.-based employees of Cendant and its Subsidiaries.

“ Cendant Entities ” means, collectively, Cendant Real Estate and the Cendant Member.

“ Cendant Indemnitees ” has the meaning set forth in Section 13.3(a).

“ Cendant Indemnitor ” has the meaning set forth in Section 13.3(b).

“ Cendant Member ” has the meaning set forth in the preamble.

“ Cendant Mobility ” means Cendant Mobility Services Corporation, a Delaware Corporation.

“ Cendant Mobility Broker Network ” means the network of real estate brokers who have executed agreements with Cendant Mobility to assist customers of Cendant Mobility clients in acquiring or disposing of a home.

 

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“ Cendant Mobility Office ” means any office comprising part of Cendant’s corporate relocation business, including, without limitation, any office of Cendant Mobility or any of its Subsidiaries.

“ Cendant Owned Real Estate Office ” means any residential real estate brokerage office owned as of the date hereof or acquired or opened hereafter by Cendant Real Estate or one of its Subsidiaries, including, without limitation, NRT.

“ Cendant Owned Real Estate Offices Tradenames ” means, collectively, the real estate brand names or trade names owned or licensed as of the date hereof or acquired or licensed hereafter by Cendant Real Estate or one of its Subsidiaries under which the Cendant Owned Real Estate Offices operate, including those brand names and trade names listed in Exhibit A .

“ Cendant Real Estate ” has the meaning set forth in the preamble.

“ Cendant Real Estate Franchisee Brands ” means, collectively, the real estate brand names or trade names owned or licensed as of the date hereof or acquired or licensed hereafter by the franchisor Subsidiaries of Cendant Real Estate or one of its Subsidiaries, including those brand names and trade names listed in Exhibit B ; provided , that the Parties acknowledge that the “Sotheby’s International Realty” brand may not be included in this definition for certain aspects of this Agreement.

“ Cendant Real Estate Services Division ” means (i) the residential and commercial real estate brokerage business owned and operated by NRT and its Subsidiaries; (ii) the relocation business owned and operated by Cendant Mobility and its Subsidiaries; and (iii) the Settlement Services business owned and operated by CSSG and its Subsidiaries (it being understood that for all purposes of this Agreement, the Cendant Real Estate Services Division shall not include Century 21 Real Estate LLC, Coldwell Banker Real Estate Corporation, ERA Franchise Systems, Inc. and Sotheby’s International Realty Affiliates, Inc.).

“ Cendant Restricted Brands ” means the “Sotheby’s International Realty” trade name and any other real estate brand name or trade name that may be licensed or acquired by Cendant or any of its Subsidiaries but which has not been licensed to PMC or an Affiliate thereof pursuant to either the License Agreement or a similar agreement between Cendant or an Affiliate thereof, on the one hand, and PMC or an Affiliate thereof, on the other hand.

“ Cendant Websites ” means (i) all Websites operated by, or on behalf of, any of the Cendant Owned Real Estate Offices or the Cendant Mobility Offices and (ii) all Cendant Owned Real Estate Offices Tradename Websites and Cendant Real Estate Franchisee Brand Websites operated by Cendant Real Estate, Cendant Mobility, or a Subsidiary thereof, in either case through which inquiries or applications for Mortgage Loans may be made. For the avoidance of doubt, the term “Cendant Websites” shall not include any Website operated by, or on behalf of, any Brand Franchisee.

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

 

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“ Company Loan Officers ” has the meaning set forth in Section 3.3(b)(i).

“ Company Pricing ” has the meaning set forth in Section 3.2(a).

“ Competitor Data Point ” has the meaning set forth in Section 3.15(a).

“ Competitors ” has the meaning set forth in Section 3.15(c)(ii).

“ Content ” means, with respect to any Person, all content which such Person has created or may hereafter create, has licensed or may hereafter license, or has acquired or may hereafter acquire, in any form and in any medium now known or hereafter developed, including: (a) art, audiovisual works, animations, cartoons, characters, choreography, compilations, collective works, computer software and programs, data, designs, emblems, films, film clips, graphics, images, illustrations, likenesses, literary works, logos, motion pictures, musical compositions, music videos, performances, photographs, pictorial works, songs, song lyrics, sound recordings, scripts, screenplays, templates, text, video recordings, copyrightable subject matter, works of authorship, trade secrets (including customer and vendor lists), and other proprietary rights; (b) all rights under copyright and moral rights associated with the foregoing; (c) all copyrightable derivative works, enhancements, improvements, modifications, updates, new releases or other revisions of the foregoing; (d) all publicity rights or privacy rights (or waivers or quitclaims thereof) of any person or entity, and (e) all rights corresponding to the foregoing throughout the world.

“ CSSG ” means Cendant Settlement Services Group LLC, a Delaware limited liability company.

“ Cure Period ” has the meaning set forth in Section 2.2(a).

“ Customer ” means any individual who contacts the Company, whether in person, by mail, phone, via the Internet (including by electronic mail), or otherwise, or who is so contacted by the Company, about the possibility of obtaining a Mortgage Loan through the Company, or who otherwise obtains a Mortgage Loan from or through the Company.

“ Customer Fees and Charges ” means, with respect to any Mortgage Loan, an amount equal to the sum of: (i) all reasonable charges or fees paid or incurred by the Mortgage Loan originator for taking the Mortgage Loan application, locking-in Mortgage Loan Pricing, surveys, title insurance premiums, appraisal fees, abstract and attorneys’ fees, recording or registration charges, escrow fees, document preparation fees, credit report charges, tax service fees and similar charges, and all other reasonable and customary third-party charges for settlement services contracted for and permitted by applicable law related to the origination of a Mortgage Loan; and (ii) all origination and discount points or other similar amounts described in the Mortgage Loan Pricing for such Mortgage Loan.

 

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“ Customer Information ” means any personally identifiable information or records in any form (written, electronic, or otherwise) relating to a Customer, including a Customer’s name, address, telephone number, electronic mail address, loan number, loan payment history, delinquency status, insurance carrier or payment information, tax amount or payment information, the fact that the Customer has a relationship with the Company or the Cendant Entities or the Brand Franchisees or their respective Affiliates and any other personally identifiable information.

“ Customer Payment ” has the meaning set forth in Section 3.3(a)(i)(C).

“ Customer Survey ” has the meaning set forth in Section 3.16(a).

“ Dispute ” has the meaning set forth in Section 13.11(a).

“ Disputing Party ” has the meaning set forth in Section 13.11(b).

“ Domain Name ” means the unique name that identifies an Internet site.

“ FHLMC ” has the meaning set forth in Section 3.5.

“ FNMA ” has the meaning set forth in Section 3.5.

“ Franchisee Customer ” means any customer of a Brand Franchisee that contacts PMC or an Affiliate thereof, whether in person, by mail, phone, via the Internet (including by electronic mail), or otherwise, or who is so contacted by PMC or such Affiliate, about the possibility of obtaining a Mortgage Loan through PMC or an Affiliate thereof, or who otherwise obtains a Mortgage Loan from or through PMC or an Affiliate thereof.

“ Franchisee Customer Survey ” has the meaning set forth in Section 8.12.

“ Franchisee Key Customer Question ” has the meaning set forth in Section 8.12.

“ Franchisee Key Referral Question ” has the meaning set forth in Section 8.12.

“ Franchisee Mortgage Content ” has the meaning set forth in Section 8.2(a)(ii)(A).

“ Franchisee Referral Survey ” has the meaning set forth in Section 8.12.

“ Franchisee Surveys ” has the meaning set forth in Section 8.12.

“ Franchisee Telephone Lines ” has the meaning set forth in Section 8.2(a)(i)(A).

“ Guarantee ” has the meaning set forth in Section 13.1(a).

“ Guarantee Amount ” has the meaning set forth in Section 3.3(a)(i)(C).

 

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“ HMDA ” has the meaning set forth in the definition of “Mortgage Lending Law.”

“ Hyperlink ” means an electronic link providing direct access from one distinctively marked place in a World Wide Web page to another place in the same or a different World Wide Web page.

“ Information Security Program ” means the Company’s information security program to (i) insure the security and confidentiality of Customer Information, (ii) protect against any anticipated threats or hazards to the security or integrity of the Customer Information and (iii) protect against unauthorized access to or use of the Customer Information that could result in substantial harm or inconvenience to any Customer.

“ Interagency Guidelines ” has the meaning set forth in Section 7.2(b).

“ Internet ” means the electronic communications network that connects computer networks and organizational computer facilities around the world.

“ Internet Customer Payment ” has the meaning set forth in Section 3.3(a)(ii)(D).

“ Key Customer Question ” has the meaning set forth in Section 3.16(a).

“ Key Referral Question ” has the meaning set forth in Section 3.16(a).

“ Losses ” has the meaning set forth in Section 13.3(a).

“ Managing Member ” means the PHH Member or such other member as may replace the PHH Member as managing member pursuant to the Operating Agreement.

“ Mediation Request ” has the meaning set forth in Section 13.11(b).

“ Mortgage Content ” has the meaning set forth in Section 3.3(a)(ii)(A).

“ Mortgage Lending Law ” means any federal, state or local constitution, statute, rule, regulation, order or similar legal or regulatory requirement applicable to: the communication with, and marketing directed toward Mortgage Loan customers; the application process for Mortgage Loans; the Pre-Approval Decision process; the processing of Mortgage Loan applications; the communication to the customer of a Mortgage Loan underwriting decision; the closing and funding of a Mortgage Loan; and the preparation, execution and delivery of Mortgage Loan Documents and Mortgage Loan Disclosures. Mortgage Lending Laws include, but are not limited to, the following: (i) the record keeping and reporting requirements of the Home Mortgage Disclosure Act (“ HMDA ”); (ii) the Real Estate Settlement Procedures Act and Regulation X (24 C.F.R. Part 3500); (iii) the Fair Housing Act; (iv) the Fair Credit Reporting Act; (v) the Flood Disaster Protection Act; (vi) the Truth-in-Lending Act and (Regulation Z); (vii) the National Housing Act; (viii) the Servicemen’s Readjustment Act; (ix) the Equal Credit Opportunity Act and (Regulation B); (x) any usury laws or regulations; and (xi) the Homeowner’s Protection Act.

 

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“ Mortgage Loan ” means a mortgage loan (including a home equity line of credit) evidenced by one or more promissory notes and secured by a mortgage or deed of trust on one or more residential real estate properties.

“ Mortgage Loan Disclosure ” shall mean any disclosure, notice or other document or statement that, according to a Mortgage Lending Law, must be provided to a customer by or on behalf of the Person originating the Mortgage Loan in connection with the origination, closing and funding of a Mortgage Loan or an application for a Mortgage Loan.

“ Mortgage Loan Documents ” means the Mortgage Instruments, Mortgage Notes and Assignments.

“ Mortgage Loan Pricing ” means the interest rates, discount points, loan origination fees, loan application fee, closing costs and other associated cost elements for a Mortgage Loan.

“ Mortgage Loan Types ” means the various types of Mortgage Loans offered by the Company from time to time.

“ MSA ” shall have the meaning set forth in the Operating Agreement.

“ Non-Competitive ” has the meaning set forth in Section 3.15(b).

“ Nonperformance Jurisdiction ” has the meaning set forth in Section 2.2(a).

“ NRT ” means NRT Incorporated, a Delaware corporation.

“ Operating Agreement ” means the Amended and Restated Limited Liability Company Operating Agreement of the Company, dated as of January 31, 2005, as it may be amended from time to time.

“ Origination Channels ” means the PIMI Origination Channel, Point of Sale Origination Channel and the Other Origination Channels, together with any improvements made thereto from time to time.

“ Other Origination Channels ” has the meaning set forth in Section 3.1.

“ Party ” or “ Parties ” has the meaning set forth in the preamble.

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

“ PHH Affiliates ” has the meaning set forth in Section 13.1(a).

“ PHH Data Point ” has the meaning set forth in Section 3.15(a).

 

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“ PHH Entities ” means, collectively, PHH, PMC and the PHH Member.

“ PHH Indemnitees ” has the meaning set forth in Section 13.3(b).

“ PHH Indemnitor ” has the meaning set forth in Section 13.3(a).

“ PHH Member ” has the meaning set forth in the Preamble.

“ PIMI Origination Channel ” means the system of exclusive and dedicated toll-free telephone lines, Websites, World Wide Web pages, electronic mail addresses, or other means of remote electronic communication established from time to time to meet the Mortgage Loan needs of the Customers and Franchisee Customers.

“ Pipeline Loans ” has the meaning set forth in Section 12.2(c).

“ PLS ” has the meaning set forth in Section 6.3.

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

“ PMC Mortgage Loan Types ” means the various types of Mortgage Loans now or hereafter offered by PMC and its Affiliates.

“ PMC Pricing ” has the meaning set forth in Section 8.1.

“ PMC Underwriting Guidelines ” has the meaning set forth in Section 8.4.

“ Point of Sale Origination Channel ” means the system, including related software, hardware and other facilities (including Telephone Lines, Websites, World Wide Web pages, electronic mail addresses, or other means of communication) established from time to time to meet the Mortgage Loan needs of Customers through Company Loan Officers located in or near Cendant Owned Real Estate Offices and other field locations. The “Point of Sale Origination Channel” shall include the origination channel referred to as the “My Choice” origination channel whereby loan officers can take Mortgage Loan applications and submit them through the PIMI Origination Channel, or through processing systems used in the PIMI Origination Channel.

“ Pre-Approval Decision ” means the process by which (i) the Company or PMC, as the case may be, requests certain information from a Customer or Franchisee Customer, as the case may be, and, with such customer’s permission, obtains a credit report on such customer; (ii) the Company or PMC, as the case may be, analyzes the information provided by the Customer or Franchisee Customer, as the case may be, and the credit report and (iii) then advises the Customer or Franchisee Customer, as the case may be, whether or not it is likely that he or she will be approved for a Mortgage Loan and, if so, the maximum amount of such Mortgage Loan.

“ Premier Agent Program ” means a program sponsored by PMC whereby certain real estate agents whose real estate sales performances (based on buyer controlled sales, gross commission income and/or sales volume) reach a target level are invited (at their option) to participate in a program in which PMC provides certain resources, including telephone services (800 numbers and priority handling), personalized marketing materials and post-closing customer gifts.

 

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“ Pricing Occurrence ” has the meaning set forth in Section 3.15(a).

“ Pricing Ratio ” has the meaning set forth in Section 3.15(b).

“ Privacy Requirements ” has the meaning set forth in Section 7.2(b).

“ Private Label Business Channel ” means PHH’s and its Affiliates’ lending partners, the financial institutions, the depository institution Subsidiaries of the foregoing and the investment securities brokers/dealers utilizing a private label telemarketing program for first lien mortgage loans.

“ Programs ” has the meaning set forth in Section 3.15(c)(i).

“ Purchase Price ” has the meaning set forth in Section 9.1(a).

“ Qualifying Target ” has the meaning set forth in Section 9.1(a).

“ Qualifying Target EBITDA Multiple ” has the meaning set forth in Section 9.1(a)(i).

“ Qualifying Target Mortgage Business ” has the meaning set forth in Section 9.1(a).

“ Rates ” has the meaning set forth in Section 3.15(a).

“ Referral Agent ” has the meaning set forth in Section 3.16(a)

“ Referral Survey ” has the meaning set forth in Section 3.16(a).

“ Rules ” has the meaning set forth in Section 13.11(b).

“ Settlement Services ” means the provision of title, closing, escrow or search-related services for residential real estate transactions and all other mortgage-related transactions (including, without limitation, first mortgage loans, second mortgage loans, home equity lines of credit, other home equity loans and refinance transactions), including the issuance of title insurance policy (including title search procedures), property tax tracking service and closing escrow service; provided , however , that Settlement Services shall not include, by way of example, credit review services, appraisal review services or flood zone determinations for properties.

“ Small Corp Notification ” has the meaning set forth in Section 9.1(a).

“ Small Corps ” means, collectively, the companies listed in Exhibit C .

“ SRA Termination Event ” has the meaning set forth in Section 12.2(a).

 

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“ STARS ” means Speedy Title and Appraisal Review Services LLC, a Delaware limited liability company.

“ Survey Failure ” has the meaning set forth in Section 3.16(b).

“ Surveys ” has the meaning set forth in Section 3.16(a).

“ Telephone Lines ” has the meaning set forth in Section 3.3(a)(i)(A).

“ Termination Assistance Period ” has the meaning set forth in Section 11.1(a).

“ Termination Assistance Services ” has the meaning set forth in Section 11.1(a).

“ URL ” means the address of a computer or a document on the Internet that consists of a communications protocol followed by a colon and two slashes (as http://), the identifier of a location of computer, or a path through a directory to a file.

“ Venture Underwriting Guidelines ” has the meaning set forth in Section 3.5.

“ Website ” means a group of World Wide Web pages containing Hyperlinks to each other.

“ World Wide Web ” means the part of the Internet designed to allow easier navigation through the use of graphical user interfaces and Hyperlinks between different URLs.

Section 1.2 Interpretation . Each definition in this Agreement includes the singular and the plural, and reference to the neuter gender includes the masculine and feminine where appropriate. References to any statute or Treasury Regulations means such statute or regulations as amended at the time and include any successor legislation or regulations. The word “including” or any variations thereof means “including, without limitation” and shall not be construed to limit any general statement that it follow to the specific or similar items or matters immediately following it. The headings to the Articles and Sections are for convenience of reference and shall not affect the meaning or interpretation of this Agreement. Except as otherwise stated, reference to Articles, Exhibits, Sections and Schedules mean the Articles, Exhibits, Sections and Schedules of this Agreement. The Exhibits and Schedules are hereby incorporated by reference into and shall be deemed a part of this Agreement.

 

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ARTICLE II

EXCLUSIVITY; MARKETING

Section 2.1 Exclusivity; Marketing .

(a) The Cendant Entities hereby agree that, except as set forth below or elsewhere in this Agreement, the Cendant Real Estate Services Division shall exclusively recommend the Company as provider of Mortgage Loans to (a) the independent sales associates affiliated with a Cendant Entity or any Subsidiary thereof (provided that, for the avoidance of doubt, this clause (a) shall not include any independent sale associate of a Brand Franchisee acting in such capacity), (b) all Cendant Customers, and (c) all Cendant Employees. The Cendant Entities further agree that the Cendant Real Estate Services Division shall actively and exclusively promote the Company and its Mortgage Loan origination services to Cendant Customers and Cendant Employees; provided , however that:

(i) the Cendant Real Estate Services Division shall not be required, in any manner whatsoever, to condition doing business with a customer on such customer obtaining a Mortgage Loan from, having to contact, or having to agree to be contacted by, the Company; and

(ii) the Company and PMC acknowledge that neither Cendant nor any of its Affiliates have the right to co-brand with a Person that is not a Cendant Affiliate the “Sotheby’s International Realty” name and mark and that all marketing materials directed to the customers of the Sotheby’s brand will be branded as “PHH Home Loans.”

(b) For the avoidance of doubt, for purposes of this Section 2.1, the “Cendant Real Estate Services Division” shall not include Cendant’s and its Affiliates’ hospitality services business, including the business of selling vacation ownership and fractional ownership interests, or any successor business thereto.

Section 2.2 Termination of Exclusivity . Notwithstanding anything to the contrary contained in this Agreement:

(a) The Cendant Entities shall have the right to terminate the exclusivity provisions of Section 2.1, following notice and an opportunity to cure within the applicable Cure Period set forth below, (i) if the Company is prohibited by law, regulation, rule, order or other legal or regulatory restriction, or for any other reason, from performing its origination function in any jurisdiction (the “ Nonperformance Jurisdiction ”), but in such case exclusivity shall only be terminated with respect to the Nonperformance Jurisdiction; (ii) in the event there is a material violation or breach by PHH or any of its respective Affiliates (including the PHH Member acting in any capacity whatsoever, including as Managing Member) of any representation, warranty, covenant or other agreement contained in this Agreement or any other Transaction Document; or (iii) upon the occurrence of a “PHH Regulatory Event” or a “Company Regulatory Event,” as each are defined in the Operating Agreement. The “ Cure Period ” shall be (x) in the case of (ii) and (iii) above, thirty (30) calendar days after notice of such event has been provided by any of the Cendant Entities to the PHH Entities; provided ,

 

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however , that PHH shall have an additional thirty (30) day cure period (other than in respect of breaches resulting from payment defaults) if it is diligently pursuing a cure and the Cendant Member, in its reasonable judgment, believes that the event will be cured within such extension period, and (y) in the case of (i) above, ninety (90) calendar days after notice of such event has been provided by any of the Cendant Entities to the PHH Entities; provided , however , that PHH shall have an additional thirty (30) day cure period if it is diligently pursuing a cure and the Cendant Member, in its reasonable judgment, believes that the event will be cured within such extension.

(b) The exclusivity provisions of Section 2.1 shall not be applicable to any Cendant Owned Real Estate Office or Cendant Mobility Office acquired by Cendant Real Estate, Cendant Mobility or any of their respective Subsidiaries after the date hereof, which at the time of such acquisition is subject to an agreement, arrangement or understanding with respect to the origination of Mortgage Loans for customers of such office that would conflict with the provisions of this Agreement; provided , however , that nothing in this Section 2.2(b) shall affect any of the obligations of the Parties pursuant to Article IX hereof.

Section 2.3 Marketing . The Cendant Entities shall, and shall cause their Subsidiaries to, cooperate with and support the Company in the marketing of Mortgage Loans through the Origination Channels to Cendant Customers and Cendant Employees, and arrange for the Company to have reasonable access thereto. Cendant Real Estate shall make information provided by the Company related to the Origination Channels available to its and its Subsidiaries’ employees, sales agents and sales associates and provide other information to its sales agents and sales associates with respect to such Origination Channels as Cendant Real Estate may deem appropriate in its sole discretion. Cendant Real Estate shall use its commercially reasonable best efforts to ensure that each Cendant Owned Real Estate Office and Cendant Mobility Office, and their respective office managers, agents and sales associates, to the fullest extent practicable, market the goods and services which are the subject of the Origination Channels, it being understood that such “commercially reasonable best efforts” shall not include taking actions against any sales associates which Cendant Real Estate reasonably believes will have any negative impact on its business.

Section 2.4 Variable Compensation . Without reimbursement by any PHH Entity or the Company, Cendant Real Estate may pay, or cause to be paid, to each NRT and/or Cendant Mobility office manager that is an employee of Cendant Real Estate or a Subsidiary thereof a variable component of annual compensation, which component may be based on either (i) the volume of Mortgage Loans originated by such manager’s Cendant Owned Real Estate Office or Cendant Mobility Office, as the case may be, (ii) penetration rate of Mortgage Loans, or (iii) any other measure; provided , however , that Cendant shall have sole control over determining the form of such program and the right to modify or terminate any such program at any time, so long as such program is replaced with another program, policy or arrangement that, in Cendant’s sole and exclusive discretion, is intended to incentivize NRT and/or Cendant Mobility office managers.

 

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ARTICLE III

LOAN ORIGINATION

The Company shall, and the PHH Member shall cause the Company to, operate in accordance with the provisions of this Article III.

Section 3.1 Marketing . The Company shall market the PIMI Origination Channel, Point of Sale Origination Channel and any other origination channels that may be developed by the Company (“ Other Origination Channels ”), at its expense, to Cendant Customers and Cendant Employees, and shall secure, at its expense, such forms of insurance coverage and other protection from liability as is customary in the industry for similar originators of Mortgage Loans, including but not limited to insurance coverage and protections from liability for the acts or failures of its employees, officers, agents and other representatives.

Section 3.2 Mortgage Loan Types .

(a) The Company shall offer to the Customers a variety of Mortgage Loan Types in order to permit Customers to select a Mortgage Loan Type best suited to their financial needs. The Company shall be responsible for developing the various Mortgage Loan Types and establishing the Mortgage Loan Pricing associated therewith (the “ Company Pricing ”); provided , however , that the Company shall offer to the Customers the full range of Mortgage Loan Types that are currently offered or may in the future be offered by PHH or any of its Affiliates to their customers.

(b) From time to time, the Cendant Entities may request that a Mortgage Loan Type not offered by the Company be made available to Customers pursuant to this Agreement and the Company shall, and the PHH Member shall cause the Company to, make such Mortgage Loan Type available to Customers. Upon such request, the Parties shall mutually agree upon the cost allocation of the set-up and processing functions to be implemented by the Company and the PHH Entities to accommodate the Cendant Entities’ request. The Parties acknowledge that the typical start-up time necessary for any such product is 6 to 8 weeks from the time the Parties mutually agree to make such product available.

Section 3.3 Company Origination Channels .

(a)  PIMI Origination Channel . The Company’s PIMI Origination Channel shall be operated in accordance with the provisions of this Section 3.3(a).

(i) Telephone Lines .

(A) The Company shall provide to the Cendant Owned Real Estate Offices, Cendant Mobility Offices and participants in the Cendant Real Estate Services Division’s Premier Agent Program, dedicated and exclusive toll-free telephone lines established and operated at the expense of and by the Company (“ Telephone Lines ”), which the Company reasonably believes are adequate to meet the reasonably anticipated needs of the current and prospective Customers.

 

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(B) Trained Company personnel shall answer Telephone Lines in the name of (i) the appropriate Cendant Owned Real Estate Offices Tradename, if such Telephone Line has been assigned to a Cendant Owned Real Estate Office; provided , however , that the Telephone Lines dedicated to a Cendant Owned Real Estate Office operating under a Cendant Restricted Brand shall be answered in the name of “PHH Home Loans,” (ii) “PHH Home Loans,” if such Telephone Line has been assigned to a Cendant Mobility Office, (iii) the appropriate Small Corps entity, if such Telephone Line has been assigned to the Point of Sale Origination Channel, or (iv) the appropriate Cendant Owned Real Estate Offices Tradename, if such Telephone Line has been assigned to the Premier Agent Program, as the case may be. Such personnel shall explain to the Customer, as appropriate: (a) the procedure to be followed in obtaining a Mortgage Loan; (b) the various Mortgage Loan Types available and their associated Mortgage Loan Pricing; and (c) their short- and long-term financial implications. Such personnel shall provide counsel and advice to the Customer as to the Mortgage Loan Types that might best serve the Customer’s needs, including answering any questions the Customer might have regarding the process.

(C) The Company shall provide each Customer who utilizes the Telephone Lines with a same day Pre-Approval Decision and Guarantee. A “same day” Pre-Approval Decision and Guarantee means that the Company will provide the Customer with a Pre-Approval Decision during the same day the Customer provided the Company with the information requested from the Customer for purposes of making a Pre-Approval Decision for that Customer or, if the Company does not provide the Customer with such a Pre-Approval Decision, the Company will promptly pay the Customer the Guarantee Amount (a “ Customer Payment ”). The Cendant Entities and their respective Subsidiaries shall have the right to publicize and advertise to their customers the availability of such Pre-Approval Decisions and Guarantees in accordance with all Mortgage Lending Laws. For purposes of this Agreement, the “ Guarantee Amount ” shall mean an amount equal to the higher of (a) $250 and (b) such other amount as may be offered by PMC or any Affiliate thereof to customers under a similar program (exclusive of client subsidized programs).

(D) The Company will provide to Customers for whom it has made a Pre-Approval Decision and which Customer is likely to be approved for a Mortgage Loan information tailored to the Customer’s individual circumstances. Such information will be designed to enable the Customer to determine the nature of the Mortgage Loan the Customer may qualify for if an appropriate property securing the Mortgage Loan is identified and all information submitted is verified.

 

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(ii) Internet .

(A) The Company will take applications for Mortgage Loans via the Internet. In order to accomplish this, the Company will provide each operator of a Cendant Website with Hyperlinks to such Content as the Company reasonably believes is adequate to meet the reasonably anticipated needs of the current and prospective Customers (the “ Mortgage Content ”). The Cendant Entities shall, and shall cause their respective Subsidiaries to, embed such Hyperlinks prominently in a consumer oriented and contextually relevant position on each Cendant Website. The Parties will cooperate in structuring and embedding such Hyperlinks so that, by clicking on the Hyperlink at the Cendant Websites, the Customer will be immediately transferred to the Mortgage Content via the Internet. Except in the case of Cendant Restricted Brands, such Mortgage Content will be presented by the Company in such a way that it will appear as if it were on a World Wide Web page or series of World Wide Web Pages on the Cendant Website from which the Hyperlink originated to the extent it is consistent with Applicable Requirements to do so. The form and substance of such World Wide Web pages will be subject to the prior written consent of the Cendant Entities. In order to improve the graphical compatibility of the Cendant Websites and the Company’s sites, the Company and the Cendant Entities will consult with each other when developing or modifying such World Wide Web pages, and also when considering the design of future releases of their respective Websites. The Company shall not permit the Mortgage Content accessed by Customers via Hyperlinks from the Cendant Websites contemplated by this Agreement to display any advertising, except in such instances where the Cendant Entities have provided their prior written consent to such advertising.

(B) The Mortgage Content will include information about the Mortgage Loans and Mortgage Loan Types, Mortgage Loan calculators, counseling regarding down payments and Mortgage Loan affordability, pre-qualification tools to be used by consumers and Mortgage Loan application modules. The Company will ensure that a Customer shall be able to complete and submit a Mortgage Loan application by means of the Mortgage Content without any other contact with the Company.

(C) Customers utilizing the Mortgage Content to initiate the Mortgage Loan process will be offered the option of communicating with a processing team or other persons contemplated in Section 3.9 of this Agreement, either by electronic mail or by telephone, or by a combination of electronic mail and telephone.

 

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(D) Each Customer initiating the origination process via the Internet shall receive a Pre-Approval Decision within 24 hours of the time such Customer either (i) submits a complete Mortgage Loan application via the Mortgage Content, or (ii) first speaks with a Company loan consultant by telephone after submitting certain information not constituting a complete Mortgage Loan application through the Mortgage Content, or the Company shall promptly pay the Customer the Guarantee Amount (the “ Internet Customer Payment ”).

(b)  Point of Sale Origination Channel .

(i) Cendant Real Estate shall have the right to request at any time that the Company designate a specific number of loan officers (“ Company Loan Officers ”) to be located in and around any Cendant Owned Real Estate Office and other field locations identified by Cendant Real Estate, provided that the number of Company Loan Officers requested shall be commercially reasonable. The Company shall use reasonable best efforts to satisfy any such request within 90 days after it is first delivered in writing to the Company.

(ii) Company Loan Officers will be Company employees and will take loan applications from Customers in a face-to-face setting, unless Cendant Real Estate and the Company agree otherwise. Company Loan Officers will promptly transmit applications taken in a face-to-face setting to the Company via the Point of Sale Origination Channel, unless Cendant Real Estate and the Company agree otherwise. The Company shall provide dedicated Telephone Lines for Company Loan Officers that use the “My Choice” origination channel described in the definition of “Point of Sale Origination Channel.”

(iii) The Company shall pay Cendant Real Estate a fee for the lease or sublease of the office space occupied by any Company Loan Officer in any Cendant Owned Real Estate Office, in each case as set forth in the Master Sublease Agreement, as defined in the Operating Agreement.

Section 3.4 Mortgage Loan Application Processing . For each Customer who applies for a Mortgage Loan through the origination channels described in Section 3.3, the Company shall arrange for the receipt by the Customer, as promptly as practicable under the circumstances, and in any event in accordance with applicable law, of (i) the Mortgage Loan application for the Customer to review and sign, accompanied by a request for appropriate Customer documents and (ii) all Mortgage Loan Disclosures. In addition, and to the extent required or permitted under the Venture Underwriting Guidelines, as applicable, the Company shall: (i) verify the Customer’s credit history;

 

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(ii) obtain an appraisal or other appropriate valuation of the real property that will secure the Customer’s Mortgage Loan; (iii) cause to be conducted a review of or report on the status of the legal title to the real property prepared by either (A) CSSG, if the Company is permitted to make the service provider decision under Applicable Requirements, or (B) a qualified title company or other entity acceptable to the PHH Member and the Cendant Member, if the Company does not make the service provider decision; (iv) evaluate the Customer’s employment history; (v) evaluate any information provided with respect to the Customer by a Cendant Entity or any of their respective Subsidiaries, (vi) perform such other underwriting functions as the Company deems appropriate, all in accordance with the Venture Underwriting Guidelines; and (vii) communicate a loan decision or counteroffer to the Customer in accordance with all applicable laws.

Section 3.5 Underwriting Guidelines . The Company shall develop appropriate underwriting guidelines for each Mortgage Loan Type (the “ Venture Underwriting Guidelines ”), which Venture Underwriting Guidelines shall be consistent with the underwriting guidelines followed by PHH and its Affiliates in connection with Mortgage Loans offered to their own customers for the same products in the same geographic area and at the same time. Unless the Venture Underwriting Guidelines specify otherwise for specific Mortgage Loan Types, all Mortgage Loans shall be underwritten in accordance with the standards of the Federal Home Loan Mortgage Corporation (“ FHLMC ”), the Federal National Mortgage Association (“ FNMA ”) and other applicable federal agencies providing standards for the sale of loans in the secondary market for mortgage loans. The Company shall issue approval letters on those applications which generally satisfy the Venture Underwriting Guidelines.

Section 3.6 Degree of Care . The Company shall perform the origination, processing, underwriting, approval, closing, shipping, and other origination services on all Mortgage Loans in all material respects in accordance with all Mortgage Lending Laws and with no less degree of care than PMC or any of its Affiliates exercises in originating Mortgage Loans for its own account or the account of any third party with a similar regulatory profile, provided , that in no event shall the Company exercise a lesser degree of care than PMC exercised in originating Mortgage Loans prior to the Closing Date.

Section 3.7 Mortgage Loan Closing . The Company shall use its best efforts to complete the processing and closing of all Mortgage Loans originated pursuant to this Agreement in the time frame requested by the Customer at the time of submission of the Mortgage Loan application. The Company shall: (i) prepare all required Mortgage Loan closing documents in accordance with all applicable Mortgage Lending Laws; (ii) arrange for their execution by the Customer; (iii) provide the Customer with a copy of the Company’s privacy policy in accordance with the Privacy Requirements; and (iv) arrange for the Mortgage Loan closing. All Mortgage Loans shall be closed in the name of the Company or the name under which the Company is doing business in the appropriate jurisdiction. On purchase money Mortgage Loans, the Company shall meet the closing date set by the Customer or the Company shall reduce the interest rate payable on that Customer’s Mortgage Loan by one-eighth percent (1/8%) for the life of loan. For refinance loans, the Company shall use its best efforts (taking

 

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into consideration factors such as periods of high volume loan refinance activity (as substantiated by the Refinance Application Index as promulgated by the Mortgage Bankers Association)) to perform its obligations hereun