Exhibit 10.1
 
STOCK PURCHASE AGREEMENT
by and between
H&R BLOCK, INC.,
BLOCK FINANCIAL CORPORATION
and
OOMC ACQUISITION CORP.
dated as of
April 19, 2007
 

 

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TABLE OF CONTENTS

         
I. Purchase and Sale
    1  
1.01. Purchase and Sale
    1  
1.02. Purchase Price
    1  
1.03. Closing; Closing Deliveries and Actions
    1  
1.04. Purchase Price Adjustment
    4  
1.05. Earnout Payment
    9  
II. Representations and Warranties of Seller
    13  
2.01. Organization
    13  
2.02. Authority; Enforceability
    13  
2.03. Non-Contravention
    14  
2.04. Consents and Approvals
    15  
2.05. Ownership of Shares
    15  
2.06. Capitalization
    15  
2.07. Financial Statements
    16  
2.08. Events Subsequent to Balance Sheet Date
    19  
2.09. Taxes
    19  
2.10. Litigation
    20  
2.11. Compliance with Law; Permits
    20  
2.12. Employee Benefits
    21  
2.13. Labor Relations
    23  
2.14. Real Property
    23  
2.15. Intellectual Property
    24  
2.16. Material Contracts
    25  
2.17. Environmental Matters
    28  
2.18. Affiliate Transactions
    29  
2.19. Brokers
    29  
2.20. Sufficiency of Assets
    30  
2.21. Risk Management Instruments
    30  
2.22. Origination and Servicing
    30  
2.23. Securitizations and Warehouse Facilities
    31  
2.24. EPDs; Recourse
    32  
2.25. Insurance
    33  
2.26. Board Minutes
    33  
2.27. No Other Representations or Warranties
    34  
III. Representations and Warranties of Purchaser
    34  
3.01. Organization
    34  
3.02. Authority; Enforceability
    34  
3.03. Non-Contravention
    35  
3.04. Governmental Consents
    35  
3.05. Availability of Funds
    35  
3.06. Litigation
    36  
3.07. Investment Intent
    36  
3.08. No Other Representations or Warranties
    36  
IV. Covenants of Seller
    36  
4.01. Conduct of the Business
    36  

 

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4.02. Access; Confidentiality
    40  
4.03. Assistance in Transfer of Licenses, Permits and Registrations
    43  
4.04. Third-Party Consents
    43  
4.05. Extinguishment of Intercompany Indebtedness and Certain Affiliate
Transactions; Restructuring Activities
    43  
4.06. Servicer Ratings
    44  
V. Covenants of Purchaser
    44  
5.01. Access
    44  
5.02. Releases under Certain Contracts; Termination of Intercompany Credit
Agreement; Intercompany Indebtedness
    44  
5.03. Contacts with Customers, Suppliers, Employees, etc
    45  
VI. Covenants of Purchaser and Seller
    45  
6.01. Commercially Reasonable Efforts; Further Assurances
    45  
6.02. HSR Clearance
    46  
6.03. Post-Closing Litigation Cooperation
    47  
6.04. Public Announcements
    47  
6.05. Trademarks and Tradenames of Seller
    48  
6.06. Notices of Certain Events
    48  
6.07. Non-Solicitation
    49  
VII. Tax Matters
    50  
7.01. General
    50  
7.02. Tax Cooperation
    50  
7.03. Tax Sharing Agreements; Apportionment; Return Filings; Refunds and Credits
    51  
7.04. Tax Indemnification
    54  
7.05. Section 338(g) and Section 338(h)(10) Elections
    55  
VIII. Employees And Employee Benefits
    56  
8.01. Employee Benefits and Compensation
    56  
8.02. Employee Matters
    58  
8.03. No Third Party Beneficiaries
    58  
IX. Conditions to Closing
    59  
9.01. Conditions to Each Party’s Obligations
    59  
9.02. Conditions to Obligation of Purchaser
    59  
9.03. Conditions to Obligation of Seller
    61  
9.04. Frustration of Closing Conditions
    61  
X. Termination
    61  
10.01. Grounds for Termination
    61  
10.02. Effect of Termination
    62  
XI. Survival; Indemnification
    62  
11.01. Survival
    62  
11.02. Indemnification of Purchaser by Seller
    63  
11.03. Indemnification of Seller by Purchaser
    65  
11.04. Procedures Relating to Indemnification
    66  
11.05. Limitations on Indemnification
    68  
11.06. Exclusive Remedy
    69  
11.07. Adjustments of Purchase Price
    69  

 

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XII. Miscellaneous
    69  
12.01. Definitions
    69  
12.02. Notices
    88  
12.03. Amendments and Waivers
    89  
12.04. Expenses
    89  
12.05. Successors and Assigns
    89  
12.06. Governing Law
    90  
12.07. Specific Performance; Jurisdiction
    90  
12.08. Waiver of Punitive and Other Damages and Jury Trial
    90  
12.09. Counterparts; Effectiveness; Third Party Beneficiaries
    91  
12.10. Other Definitional and Interpretative Provisions
    91  
12.11. Entire Agreement
    91  
12.12. Disclosure Schedules
    91  
12.13. Severability
    92  
12.14. Fulfillment of Obligations
    92  
12.15. Parent Guarantee
    92  

 

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TABLE OF EXHIBITS AND SCHEDULES

     
Exhibits
   
 
   
Exhibit A
  Closing Balance Sheet Methodologies
Exhibit B
  Earnout Methodologies
Exhibit C
  Transition Services Agreement
Exhibit D
  Mutual Release
Exhibit E
  Financing Commitments
 
    Purchaser Disclosure Schedule
 
   
Section 9.02(h)
  Approvals, Consents and Filings
 
    Seller Disclosure Schedules
 
   
Section 1.04(a)(i)
  Target Tangible Net Assets Statement
Section 2.03
  Non-Contravention
Section 2.04
  Consents and Approvals
Section 2.06(b)
  Capitalization
Section 2.07
  Financial Statements
Section 2.08
  Events Subsequent to Balance Sheet Date
Section 2.09
  Taxes
Section 2.10
  Litigation
Section 2.11
  Compliance with Laws; Permits
Section 2.12
  Employee Benefits
Section 2.13
  Labor Relations
Section 2.14
  Real Property
Section 2.15
  Intellectual Property
Section 2.16
  Material Contracts
Section 2.17
  Environmental
Section 2.18
  Affiliate Transactions
Section 2.20
  Sufficiency of Assets
Section 2.22
  Origination and Servicing
Section 2.23
  Securitizations and Warehouse Facilities
Section 2.24
  EPDs; Recourse
Section 4.01
  Conduct of Business
Section 4.05
  Extinguishment of Intercompany Indebtedness and Certain Affiliate Transactions
Section 8.01
  Employee Plans to be Maintained
Section 9.02(d)
  Conditions to Closing Warehouse Facilities
Section 12.01
  Knowledge of Seller

 

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STOCK PURCHASE AGREEMENT
     This STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of April 19,
2007, is by and between OOMC Acquisition Corp., a Delaware corporation
(“Purchaser”), Block Financial Corporation, a Delaware corporation (“Seller”)
and H&R Block, Inc., a Missouri corporation (the “Parent”).
     WHEREAS, Seller is engaged, directly or indirectly, in the origination,
purchase, sale and servicing of residential mortgage loans through Option One
Mortgage Corporation, a California corporation (the “Company”), and the
Company’s Subsidiaries; and
     WHEREAS, upon the terms and conditions contained in this Agreement, Seller
desires to sell to Purchaser and Purchaser desires to purchase from Seller all
of the outstanding shares of capital stock (the “Shares”) of the Company.
     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, upon the terms and
subject to the conditions set forth in this Agreement the parties hereto hereby
agree as follows:
I. PURCHASE AND SALE
          1.01. Purchase and Sale. At the Closing, Seller will sell and transfer
the Shares to Purchaser, free and clear of any Liens other than those arising
from acts of Purchaser or its Affiliates, and Purchaser will purchase the Shares
from Seller (the “Purchase”).
          1.02. Purchase Price. At the Closing, in consideration for the
transfer by Seller to Purchaser of the Shares, Purchaser will pay to Seller an
amount equal to (a) $969,027,000 (the “Purchase Price”), plus (b) the Estimated
Tangible Net Assets Surplus, if any, and minus (c) the Estimated Tangible Net
Assets Shortfall, if any (such sum, the “Closing Date Cash Payment”). Such
payment will be made by wire transfer of immediately available funds to an
account or accounts designated by Seller to Purchaser in writing no later than
two Business Days prior to the Closing.
          1.03. Closing; Closing Deliveries and Actions. (a) Closing. The
closing of the Purchase (the “Closing”) will take place at the offices of
Schulte Roth & Zabel LLP located at 919 Third Avenue, New York, New York (or at
such other place as the parties may designate in writing) at 10:00 a.m. (New
York City time) on (i) the last Business Day of the Company’s fiscal month in
which the last of the conditions set forth in Article IX to be fulfilled or
waived are fulfilled or waived (other than those conditions that by their nature
are to be satisfied at the Closing, but subject to the satisfaction or waiver of
such conditions), or (ii) at such other date or place as Purchaser and Seller
may agree in writing (the date on which the Closing occurs, the “Closing Date”).
Legal title, equitable title and risk of loss with respect to the Shares will
transfer to Purchaser at the

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Closing, which transfer will be deemed effective for accounting and other
computational purposes as of 12:01 a.m. (Eastern Standard Time) on the Closing
Date.
               (b) Deliveries by Purchaser at the Closing. At the Closing,
Purchaser will deliver, or cause to be delivered, to Seller the following:
                    (i) the Closing Date Cash Payment payable to Seller as set
forth in Section 1.02;
                    (ii) the certificate to be delivered by Purchaser pursuant
to Section 9.03(c);
                    (iii) the certificate of incorporation (or equivalent
organizational document) of Purchaser, certified as of a recent date by the
Secretary of State of Delaware;
                    (iv) a certificate of the Secretary of State of Delaware as
to the good standing as of a recent date of Purchaser in such jurisdiction;
                    (v) a certificate of an officer of Purchaser, given by such
officer on behalf of Purchaser and not in such officer’s individual capacity,
certifying as to the bylaws (or equivalent governing document) of Purchaser and
as to resolutions of the board of directors (or equivalent governing body) of
Purchaser authorizing this Agreement and the Transaction Agreements and the
transactions contemplated hereby and thereby;
                    (vi) a transition services agreement, in the form of
Exhibit C (the “Transition Services Agreement”), duly executed by Purchaser; and
                    (vii) such other documents and instruments as may be
reasonably required to consummate the transactions contemplated by this
Agreement and the Transaction Agreements.
               (c) Deliveries by Seller at the Closing. At the Closing, Seller
will deliver, or cause to be delivered, to Purchaser the following:
                    (i) certificates representing the Shares, duly endorsed in
blank or accompanied by stock powers duly endorsed in blank in proper form for
transfer, with appropriate transfer tax stamps, if any, affixed;
                    (ii) the certificate to be delivered by Seller pursuant to
Section 9.02(f);
                    (iii) the certificate of incorporation (or equivalent
organizational document) of Seller and the Company, certified as of a recent
date by the Secretary of State of the applicable jurisdiction of incorporation;

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                    (iv) a certificate of the Secretary of State of the
applicable jurisdiction of incorporation as to the good standing as of a recent
date of Seller and the Company in such jurisdiction;
                    (v) a certificate of an officer of Seller and the Company,
given by such officer on behalf of Seller or the Company, as applicable, and not
in such officer’s individual capacity, certifying as to the bylaws (or
equivalent governing document) of Seller or the Company, as applicable, and as
to resolutions of the board of directors (or equivalent governing body) of
Seller authorizing this Agreement and the Transaction Agreements and the
transactions contemplated hereby and thereby;
                    (vi) a certificate of an officer of Parent, given by such
officer on behalf of Parent, and not in such officer’s individual capacity,
certifying as to resolutions of the board of directors of Parent authorizing the
Guarantee;
                    (vii) the Transition Services Agreement, duly executed by
Parent;
                    (viii) a mutual release in the form annexed hereto as
Exhibit D, duly executed by the Company, on behalf of itself and each of its
Subsidiaries, and Parent, on behalf of itself and each of its subsidiaries
(other than the Company and its Subsidiaries);
                    (ix) original corporate record books and stock record books
of the Company;
                    (x) written resignations of (A) Mark A. Ernst as a director
of the Company, and (B) James E. Karlin and Kennion K. Yano as officers of the
Company and the Subsidiaries of which they are officers, and to the extent
requested by Purchaser at least three Business Days prior to the Closing Date,
written resignations of any other member of the board of directors, board of
managers or equivalent governing body, as applicable, of the Company and its
majority-owned Subsidiaries;
                    (xi) a certificate signed by Seller dated as of the Closing
Date, in the form required by the Treasury Regulations issued under Section 1445
of the Code, to the effect that Seller is not a foreign person for purposes of
Section 1445 of the Code;
                    (xii) evidence, reasonably satisfactory to Purchaser, that
Parent or Seller shall have completed the Restructuring Activities; and
                    (xiii) such other documents and instruments as may be
reasonably required to consummate the transactions contemplated by this
Agreement and the Transaction Agreements.

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          1.04. Purchase Price Adjustment.
               (a) Estimate Statement.
                    (i) From and after the date hereof, each of Purchaser and
Seller agree to take all of the actions contemplated to be taken by the
applicable party as set forth on Exhibit A (such Exhibit including the Annexes
thereto, the “Closing Balance Sheet Methodologies Schedule”).
                    (ii) Approximately 35 Business Days prior to the anticipated
Closing Date, the Company shall deliver to Purchaser mortgage loan tapes
providing the relevant data with respect to the Specified Line Items of the
Business as such Specified Line Items existed as of a date as close in time to
35 Business Days prior to the anticipated Closing Date as reasonably practicable
(but in no case earlier than the 45th Business Day prior to the anticipated
Closing Date) (such tapes, the “Tapes”)) and provide Purchaser five Business
Days to review the Tapes. At the end of such five-Business Day period, the
Company shall deliver the Tapes (taking into account any reasonable comments
thereon by Purchaser) to each of the Investment Banks (as defined by the Closing
Balance Sheet Methodologies Schedule), with a copy to Purchaser. The Company
shall cooperate with, and timely respond to, all reasonable requests from the
Investment Banks for information to be used to conduct any determinations
contemplated by this Section 1.04. The Company shall notify Purchaser of any
such requests and provide Purchaser with copies of all information provided in
response to such requests. For purposes of complying with the terms set forth in
this Section 1.04, each party will cooperate with and make available to the
other party and its representatives all information, records, data and working
papers (subject to the execution of customary access letters, if requested, with
respect to the work product of a party’s independent accountant), and will
permit access to its facilities and personnel, as may reasonably be required in
connection with the preparation and analysis of the Initial Estimate Statement,
the Estimate Statement and the Final Statement, as applicable, including with
respect to any valuations to be performed and bids to be obtained in connection
therewith.
                    (iii) Each Investment Bank shall be instructed to deliver
(i) its written determination of the Fair Market Value of the applicable
Specified Line Item as of 10 Business Days prior to the anticipated Closing Date
(each such determination for any Specified Line Item, an “Initial Pre-Closing
Determination” and such date, the “Initial Estimate Date”)) and (ii) a written
schedule setting forth the prepayment speed and default curve vector graphs
contemplated by item (j) of Annex C to the Closing Balance Sheet Methodologies
Schedule, signed by a duly authorized officer of the applicable Investment Bank,
to each of Seller and Purchaser by the close of business on the 10th Business
Day prior to the anticipated Closing Date in the case of clause (i) and the 20th
Business Day prior to the anticipated Closing Date in the case of clause (ii).
Each Initial Pre-Closing Determination shall take into account the information
in the Tapes and be determined in accordance with the applicable valuation
methodology to be used for the Estimate Statement set forth on the Closing
Balance Sheet Methodologies Schedule. The fees and expenses of the Investment
Banks incurred

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pursuant to this Section 1.04 shall be split equally between Seller and
Purchaser and, upon the request of any Investment Bank, the Company will enter
into a customary indemnification arrangement with such Investment Bank. For
purposes of this sub-section (iii), “Fair Market Value” shall mean the net
aggregate value (as defined in the Closing Balance Sheet Methodologies Schedule)
that would be paid in cash by the applicable Investment Bank to a willing seller
as of the specified date, based on current market conditions, in a manner
specified in the Final Statement specifications set forth in the Closing Balance
Sheet Methodologies Schedule of the specified assets in a binding, unconditional
sale transaction with no due diligence “kick out” rights, where the buyer would
be committed to such price for one Business Day after receipt by the seller and
would receive customary representations, warranties and indemnities (except in
the case of the Auctioned Mortgage Loans which would be sold on an “as is” basis
with representations and warranties consistent with a sale on such a basis (and
no indemnity)). Seller shall calculate the amount of Repurchase Liability on the
Estimate Statement on a pro forma basis to take into account any change in
exposure that would occur due to such representations, warranties and
indemnities had such sale been effected on such a basis prior to Closing.
                    (iv) Approximately 30 Business Days prior to the anticipated
Closing Date, the Company shall deliver to Purchaser mortgage servicing rights
tapes (but solely limited to those Eligible Servicing Rights that require
valuation by the MSR Valuation Firms pursuant to the Closing Balance Sheet
Methodologies Schedule) providing the relevant data with respect to the Mortgage
Servicing Rights (“MSR Tapes”) as of a date approximately 30 Business Days prior
to the anticipated Closing Date and provide Purchaser five Business Days to
review the MSR Tapes. At the end of such five Business Day period, the Company
shall deliver the MSR Tapes (taking into account any reasonable comments thereon
by Purchaser) to Countrywide Servicing Exchange and MIAC (each, an “MSR
Valuation Firm”), with a copy to Purchaser. The Company shall cooperate with,
and timely respond to, all reasonable requests from the MSR Valuation Firms for
information to be used to conduct any determinations contemplated by this
Section 1.04. The Company shall notify Purchaser of any such requests and
provide Purchaser with copies of all information provided in response to such
requests.
                    (v) Each MSR Valuation Firm shall be instructed to deliver
in writing its valuations of Mortgage Servicing Rights (the “MSR Valuations”),
signed by a duly authorized officer of the applicable MSR Valuation Firm, to
each of Seller and Purchaser by the close of business on the 10th Business Day
prior to the anticipated Closing Date. The MSR Valuations shall take into
account the information in the MSR Tapes and the prepayment speed and default
curve vector graphs prepared by the Investment Banks and provided to the MSR
Valuation Firms in accordance with the Closing Balance Sheet Methodologies
Schedule and be determined in accordance with the applicable valuation
methodology to be used for the Estimate Statement set forth in the Closing
Balance Sheet Methodologies Schedule. The fees and expenses of the MSR Valuation
Firms incurred pursuant to this Section 1.04 shall be split equally between
Seller and Purchaser and, upon the request of any MSR Valuation Firm, the

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Company will enter into a customary indemnification arrangement with such MSR
Valuation Firm.
                    (vi) Approximately 30 Business Days prior to the anticipated
Closing Date, the Company shall deliver to Purchaser pipeline mortgage loan
tapes providing the relevant data with respect to Pipeline Mortgage Loans
(“Pipeline Tapes”) as of a date approximately 30 Business Days prior to the
anticipated Closing Date and provide Purchaser five Business Days to review the
Pipeline Tapes. At the end of such five-Business Day period, the Company shall
deliver the Pipeline Tapes (taking into account any reasonable comments thereon
by Purchaser) to the Investment Banks, with a copy to Purchaser.
                    (vii) Each Investment Bank shall be instructed to deliver in
writing its valuation of the Pipeline Mortgage Loans (the “Pipeline
Valuations”), signed by a duly authorized officer of the applicable Investment
Bank, to each of Seller and Purchaser by the close of business on the 10th
Business Day prior to the anticipated Closing Date. The Pipeline Valuations
shall take into account the information in the Pipeline Tapes and be determined
in accordance with the applicable valuation methodology to be used for the
Estimate Statement set forth on the Closing Balance Sheet Methodologies
Schedule.
                    (viii) No less than seven Business Days prior to the Closing
Date, Seller will provide Purchaser a statement (the “Initial Estimate
Statement”) setting forth Seller’s good faith estimate of the Closing Tangible
Net Assets (the “Estimated Closing Tangible Net Assets”), together with a
calculation showing in reasonable detail how the Estimated Closing Tangible Net
Assets was calculated. The Initial Estimate Statement shall reflect (i) the
Estimated Value of each of the Specified Line Items, (ii) the value of the
Mortgage Servicing Rights as determined pursuant to the Closing Balance Sheet
Methodologies Schedule based on the MSR Valuations and (iii) the value of the
Pipeline Mortgage Loans as determined pursuant to the Closing Balance Sheet
Methodologies based on the Pipeline Valuations. The Initial Estimate Statement
will be prepared by Seller on an unaudited basis, in the same form as that
utilized in the Target Tangible Net Assets Statement, and utilizing (A) the
accounting principles, practices, methodologies and policies specifically set
forth on the Closing Balance Sheet Methodologies Schedule and (B) to the extent
not specifically set forth on the Closing Balance Sheet Methodologies Schedule
and to the extent that the same are consistent with GAAP, the accounting
principles, practices, methodologies and policies utilized in the preparation of
the Target Tangible Net Assets Statement and (C) to the extent that the
accounting principles, practices, methodologies and policies utilized in the
preparation of the Target Tangible Net Assets Statement are not consistent with
GAAP, then in accordance with GAAP (collectively, the “Accounting Principles”).
                    (ix) Each Investment Bank shall be instructed to deliver its
determination of the Fair Market Value of the applicable Specified Line Item as
of two Business Days prior to the anticipated Closing Date (each such
determination for any Specified Line Item, a “Pre-Closing Determination” and
such date, the “Estimate Date”))

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in writing, signed by a duly authorized officer of the applicable Investment
Bank, to each of Seller and Purchaser by the close of business on the second
Business Day prior to the anticipated Closing Date. Each Pre-Closing
Determination shall be determined in accordance with the applicable valuation
methodology set forth on the Closing Balance Sheet Methodologies Schedule.
                    (x) No less than one Business Day prior to the Closing Date,
Seller will provide Purchaser an updated statement (the “Estimate Statement”)
setting forth the Estimated Closing Tangible Net Assets, together with a
calculation showing in reasonable detail how the Estimated Closing Tangible Net
Assets was calculated. The Estimate Statement shall reflect (i) the Estimated
Value of each of the Specified Line Items, (ii) the value of the Mortgage
Servicing Rights as determined pursuant to the Closing Balance Sheet
Methodologies Schedule based on the MSR Valuations and (iii) the value of the
Pipeline Mortgage Loans as determined pursuant to the Closing Balance Sheet
Methodologies based on the Pipeline Valuations. The Estimate Statement will be
prepared by Seller on an unaudited basis, in the same form as that utilized in
the Target Tangible Net Assets Statement, and utilizing the Accounting
Principles.
               (b) Final Statement.
                    (i) By no later than 10 Business Days after the Closing
Date, the Company shall deliver to the Investment Banks updated Pipeline Tapes
providing the relevant data with respect to Pipeline Mortgage Loans as of the
Closing Date, with a copy to Seller.
                    (ii) Each Investment Bank shall be instructed to deliver in
writing its valuation of the Pipeline Mortgage Loans based on the updated
Pipeline Tapes (the “Updated Pipeline Valuations”), signed by a duly authorized
officer of the applicable Investment Bank, to each of Seller and Purchaser by
the close of business on the 15th Business Day after the Closing Date. The
Updated Pipeline Valuations shall take into account the information in the
updated Pipeline Tapes and be determined in accordance with the applicable
valuation methodology to be used for the Final Statement set forth on the
Closing Balance Sheet Methodologies Schedule.
                    (iii) By no later than 20 Business Days after receipt of
those third-party valuations and firm bids required to be obtained after the
Closing pursuant to the Closing Balance Sheet Methodologies Schedule and receipt
of all other information necessary to calculate the value of the Specified Line
Items as contemplated by the Closing Balance Sheet Methodologies Schedule,
Purchaser will prepare a statement (as finally determined pursuant to
Section 1.04, the “Final Statement”) of the Closing Tangible Net Assets (as
finally determined pursuant to this Section 1.04, the “Final Closing Tangible
Net Assets”) and deliver it to Seller. The Final Statement will reflect each of
the values determined pursuant to the Closing Balance Sheet Methodologies
Schedule. The Final Statement will be prepared by Purchaser on an unaudited
basis, in the same form as that utilized in the Target Tangible Net Assets
Statement, and utilizing the Accounting Principles.

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               (c) Dispute. Seller will provide to Purchaser within 30 days
after Purchaser’s delivery of the Final Statement a notice to Purchaser
disagreeing with any such calculation and setting forth Seller’s calculation of
the Final Closing Tangible Net Assets (the “Seller’s Objection”), which shall
describe in reasonable detail the specific nature and amount of each
disagreement and shall state in reasonable detail all bases upon which Seller
believes the Final Statement is not in conformity with Section 1.04. Seller
shall be deemed to have agreed with all other items and amounts contained in the
Final Statement that are not specifically identified as a disagreement in the
Seller’s Objection. If Seller shall fail to deliver a Seller’s Objection within
such 30-day period, Seller shall be deemed to have agreed with Purchaser as to
the Final Statement. Purchaser and Seller will negotiate in good faith any
disagreements contained in the Seller’s Objection during the 30-day period
immediately following the delivery of the Seller’s Objection. If Purchaser and
Seller agree to a Final Statement and calculation of the Final Closing Tangible
Net Assets within such 30-day period, the appropriate party will make the
payment contemplated by Section 1.04(d) or (e), as applicable. If Purchaser and
Seller, notwithstanding these good faith efforts, fail to agree on a Final
Statement and calculation of the Final Closing Tangible Net Assets, then as
promptly as practicable (but in any event within 10 Business Days after
expiration of such 30-day period), Purchaser and Seller jointly will engage the
firm of Crowe Chizek and Company LLP or such other nationally recognized
accounting firm mutually selected by Purchaser and Seller (the “Accounting
Firm”) to resolve any dispute. As promptly as practicable thereafter (but in any
event within 15 Business Days of engagement of the Accounting Firm), Purchaser
and Seller will each prepare and submit a presentation to the Accounting Firm
setting forth such party’s proposed version of a Final Statement and calculation
of the Final Closing Tangible Net Assets. The scope of the disputes to be
resolved by the Accounting Firm will be limited to whether such Final Statements
and calculations were prepared in accordance with this Section 1.04, and the
Accounting Firm is not to make any other determination, including any
determination as to whether GAAP was followed (except to the extent required by
the Accounting Principles). As soon as practicable thereafter (but in any event
within 20 Business Days), Purchaser and Seller will instruct the Accounting Firm
to render a determination of Final Closing Tangible Net Assets, such
determination to be based solely upon the presentations by Purchaser and Seller.
In making such determination, the Accounting Firm will act as an expert and not
as an arbitrator in conducting its analysis, and may not assign a value to Final
Closing Tangible Net Assets greater than the greatest value claimed by either
party or less than the smallest value for Final Closing Tangible Net Assets
claimed by either party. All fees and expenses relating to the work, if any, to
be performed by the Accounting Firm shall be borne pro rata as between
Purchaser, on the one hand, and Seller, on the other hand, in proportion to the
allocation of the dollar value of the amounts remaining in dispute between
Purchaser and Seller made by the Accounting Firm such that the prevailing party
pays the lesser proportion of the fees and expenses. All determinations made by
the Accounting Firm will be final, conclusive and binding on the parties.
               (d) Downward Adjustments. If the Final Cash Payment is less than
the Closing Date Payment, then the Seller will pay or cause to be paid to
Purchaser by wire transfer of immediately available funds to an account
designated in

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writing by Purchaser an amount in cash equal to such shortfall. Such payment
will be made within five Business Days of the date on which Final Statement is
finally determined as aforesaid. For purposes of this Agreement, the “Final Cash
Payment” means (i) the Purchase Price, plus (ii) if Final Closing Tangible Net
Assets exceeds Estimated Closing Tangible Net Assets, an amount equal to such
excess, and minus (iii) if Final Closing Tangible Net Assets is less than
Estimated Closing Tangible Net Assets, an amount equal to such shortfall, in
each case of clause (ii) and (iii), disregarding any assets acquired or
liabilities assumed by Seller from the Company and its Subsidiaries pursuant to
the Closing Balance Sheet Methodologies Schedule.
               (e) Upward Adjustments. If the Final Cash Payment is greater than
the Closing Date Payment, then Purchaser will pay or cause to be paid to Seller
by wire transfer of immediately available funds to an account designated in
writing by Seller an amount in cash equal to such excess. Such payment will be
made within five Business Days of the date on which Final Statement is finally
determined as aforesaid.
               (f) Interest. Any amount required to be paid pursuant to
Section 1.04(d) or (e) shall bear interest from and including the Closing Date
to but excluding the actual date of payment at the Reference Rate compounded
quarterly. Such interest shall be payable at the same time as the payment to
which it relates and shall be calculated daily on the basis of a year of
365 days and the actual number of days elapsed.
          1.05. Earnout Payment.
               (a) As soon as reasonably practicable after the completion of the
Calculation Period, but in no event later than 30 days after the Calculation
Period End Date, Purchaser shall furnish (or cause to be furnished) to the
Seller:
                    (i) an unaudited consolidated balance sheet of the Business,
as of the Calculation Period End Date, together with a related unaudited
consolidated statement of operations in respect of the financial period from the
Closing Date through the Calculation Period End Date, prepared in accordance
with U.S. GAAP, subject to the accounting principles, practices, methodologies
and policies set forth on Exhibit B (the “Earnout Methodologies”), and
                    (ii) a statement setting forth the Earnout Amount (as
finally determined pursuant to this Section 1.05, the “Final Earnout Amount”),
together with a calculation showing in reasonable detail how the Earnout Amount
was calculated, prepared by Purchaser (the “Earnout Statement”).
               (b) Seller will provide to Purchaser within 45 days after
Purchaser’s delivery of the Earnout Statement a notice to Purchaser disagreeing
with any such calculation and setting forth Seller’s calculation of the Earnout
Amount (the “Seller’s Earnout Objection”), which shall describe in reasonable
detail the specific nature and amount of each disagreement and shall state in
reasonable detail all bases upon which Seller believes the Earnout Statement is
not in conformity with this Section 1.05. Seller

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shall be deemed to have agreed with all other items and amounts contained in the
Earnout Statement that are not specifically identified as a disagreement in the
Seller’s Earnout Objection. If Seller shall fail to deliver a Seller’s Earnout
Objection within such 45-day period, Seller shall be deemed to have agreed with
Purchaser as to the Earnout Statement. Purchaser and Seller will negotiate in
good faith any disagreements contained in the Seller’s Earnout Objection during
the 45 day period immediately following the delivery of the Seller’s Earnout
Objection. If Purchaser and Seller agree to a Earnout Statement and calculation
of the Earnout Amount within such 45-day period, Purchaser will pay the Earnout
Amount to Seller in accordance with Section 1.05(c). If Purchaser and Seller,
notwithstanding these good faith efforts, fail to agree on the Earnout Statement
and calculation of the Earnout Amount, then as promptly as practicable (but in
any event within 10 Business Days after expiration of such 45-day period),
Purchaser and Seller jointly will engage the Accounting Firm to resolve any
dispute. As promptly as practicable thereafter (but in any event within 15
Business Days of engagement of the Accounting Firm), Purchaser and Seller will
each prepare and submit a presentation to the Accounting Firm setting forth such
party’s proposed version of the Earnout Statement and calculation of the Earnout
Amount in each case prepared in accordance with Section 1.05. The scope of the
disputes to be resolved by the Accounting Firm will be limited to whether such
Earnout Statements and calculations were prepared in accordance with this
Section 1.05, and the Accounting Firm is not to make any other determination,
including any determination as to whether U.S. GAAP was followed (except to the
extent required by this Section 1.05). As soon as practicable thereafter (but in
any event within 20 Business Days), Purchaser and Seller will instruct the
Accounting Firm to render a determination of the Earnout Amount, such
determination to be based solely upon the presentations by Purchaser and Seller.
In making such determination, the Accounting Firm will act as an expert and not
as an arbitrator in conducting its analysis, and may not assign a value to the
Earnout Amount greater than the greatest value claimed by either party or less
than the smallest value for the Earnout Amount claimed by either party. All fees
and expenses relating to the work, if any, to be performed by the Accounting
Firm shall be borne pro rata as between Purchaser, on the one hand, and Seller,
on the other hand, in proportion to the allocation of the dollar value of the
amounts remaining in dispute between Purchaser and Seller made by the Accounting
Firm such that the prevailing party pays the lesser proportion of the fees and
expenses. All determinations made by the Accounting Firm will be final,
conclusive and binding on the parties.
               (c) Purchaser shall pay or cause to be paid the Final Earnout
Amount to the Seller by wire transfer of immediately available funds to an
account designated in writing by the Seller. Such payment will be made within
five Business Days of the date on which Final Earnout Amount is finally
determined as provided in this Section 1.05. It is understood that there will be
no payment if the Final Earnout Amount is $0 or a negative number.
               (d) During the Calculation Period the Purchaser shall be free to
take, or cause to be taken, any actions with respect to the Company or its
Subsidiaries or the Business, including the restructuring of the origination
platform of the Company or its Subsidiaries or the Business; provided, that the
Purchaser shall not, and shall cause

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the Company and its Subsidiaries not to, engage in any outsourcing arrangement
with an Affiliate of Purchaser other than the Company or any of its
Subsidiaries, unless the terms of such arrangement are on an arm’s length basis
and are no less favorable to the Company than the terms available at such time
from third parties that are not Affiliates of Purchaser (it being understood and
agreed that this proviso shall not apply to any costs and expenses of any
consultants affiliated with Cerberus Capital Management, L.P. or any of its
Affiliates). This covenant shall not apply after a Business Combination Closing
Date pursuant to which Purchaser has provided a Termination Payout Election
Notice.
               (e) Notwithstanding anything to the contrary in Section 12.05, to
the extent there is a Sale Transaction pursuant to which either (i) all or a
majority of the origination platform assets of the Company and its Subsidiaries
or (ii) all of the outstanding capital stock of the Company and its Subsidiaries
are acquired by an Acquiring Party that is not an Affiliate of Purchaser,
Purchaser shall have the right either to (x) assign all of its obligations under
this Section 1.05 to the Acquiring Party effective as of the applicable Business
Combination Closing Date or (y) pay Seller the Earnout Termination Payment in
accordance with subsection (h) below.
               (f) To the extent Purchaser elects to pay Seller an Earnout
Termination Payment pursuant to subsection (e) above, Purchaser shall provide
written notice to Seller of such election prior to the Business Combination
Closing Date (such notice, the “Termination Payout Election Notice”). As soon as
reasonably practicable after the Business Combination Closing Date, but in no
event later than 90 days thereafter, Purchaser shall furnish (or cause to be
furnished) to the Seller:
                    (i) an unaudited consolidated balance sheet of the Business,
as of the Business Combination End Date, together with a related unaudited
consolidated statement of operations in respect of the financial period from the
Closing Date through the Business Combination End Date, prepared in accordance
with U.S. GAAP, subject to the Earnout Methodologies, and
                    (ii) a statement setting forth the Earnout Termination
Payment (as finally determined pursuant to this Section 1.05, the “Final Earnout
Termination Payment”), together with a calculation showing in reasonable detail
how the Earnout Termination Payment was calculated (including reasonable detail
how the Sale Profit and components thereof were calculated), prepared by
Purchaser (the “Termination Payment Statement”).
               (g) Seller shall provide Purchaser within 45 days after
Purchaser’s delivery of the Termination Payment Statement a notice to Purchaser
disagreeing with any such calculation and setting forth Seller’s calculation of
the Earnout Termination Payment (the “Seller’s Termination Payment Objection”),
which shall describe in reasonable detail the specific nature and amount of each
disagreement and shall state in reasonable detail all bases upon which Seller
believes the Termination Payment Statement is not in conformity with this
Section 1.05. Seller shall be deemed to have agreed with all other items and
amounts contained in the Termination Payment

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Statement that are not specifically identified as a disagreement in the Seller’s
Termination Payment Objection. If Seller shall fail to deliver a Seller’s
Termination Payment Objection within such 45-day period, Seller shall be deemed
to have agreed with Purchaser as to the Termination Payment Statement. Purchaser
and Seller will negotiate in good faith any disagreements contained in the
Seller’s Termination Payment Objection during the 45 day period immediately
following the delivery of the Seller’s Termination Payment Objection. If
Purchaser and Seller agree to a Termination Payment Statement and calculation of
the Earnout Termination Payment within such 45-day period, Purchaser will pay
the Earnout Termination Payment to Seller in accordance with Section 1.05(h). If
Purchaser and Seller, notwithstanding these good faith efforts, fail to agree on
the Termination Payment Statement and calculation of the Earnout Termination
Payment, then as promptly as practicable (but in any event within 10 Business
Days after expiration of such 45-day period), Purchaser and Seller jointly will
engage the Accounting Firm to resolve any dispute. As promptly as practicable
thereafter (but in any event within 15 Business Days of engagement of the
Accounting Firm), Purchaser and Seller will each prepare and submit a
presentation to the Accounting Firm setting forth such party’s proposed version
of the Termination Payment Statement and calculation of the Earnout Termination
Payment in each case prepared in accordance with Section 1.05. The scope of the
disputes to be resolved by the Accounting Firm will be limited to whether such
Termination Payment Statements and calculations were prepared in accordance with
this Section 1.05, and the Accounting Firm is not to make any other
determination, including any determination as to whether U.S. GAAP was followed
(except to the extent required by this Section 1.05). As soon as practicable
thereafter (but in any event within 20 Business Days), Purchaser and Seller will
instruct the Accounting Firm to render a determination of the Earnout
Termination Payment, such determination to be based solely upon the
presentations by Purchaser and Seller. In making such determination, the
Accounting Firm will act as an expert and not as an arbitrator in conducting its
analysis, and may not assign a value to the Earnout Termination Payment greater
than the greatest value claimed by either party or less than the smallest value
for the Earnout Termination Payment claimed by either party. All fees and
expenses relating to the work, if any, to be performed by the Accounting Firm
shall be borne pro rata as between Purchaser, on the one hand, and Seller, on
the other hand, in proportion to the allocation of the dollar value of the
amounts remaining in dispute between Purchaser and Seller made by the Accounting
Firm such that the prevailing party pays the lesser proportion of the fees and
expenses. All determinations made by the Accounting Firm will be final,
conclusive and binding on the parties.
               (h) Purchaser shall pay or cause to be paid the Final Earnout
Termination Payment to the Seller by wire transfer of immediately available
funds to an account designated in writing by the Seller. Such payment will be
made within five Business Days of the date on which Final Earnout Termination
Payment is finally determined as provided in this Section 1.05. Upon the payment
of the Earnout Termination Payment, Purchaser’s obligations under Section 1.05
shall be extinguished.
               (i) After the Closing, Purchaser shall, as soon as practicable,
but in any event no later than 15 Business Days after each fiscal month end of
the Company

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after the Closing Date, deliver to Seller a copy of the normal, internal
operating balance sheet and internal profit and loss statement of the Company
and its Subsidiaries (as such internal reports are then generated by the
Business) in respect of such fiscal month, for each fiscal month that is
included, in whole or in part, in the Calculation Period. All information that
is provided to Seller pursuant to the preceding sentence shall be considered
Confidential Information subject to the restrictions of
Section 4.02(d).
II. REPRESENTATIONS AND WARRANTIES OF SELLER
     Seller hereby represents and warrants to Purchaser that, except as set
forth in the applicable sections of the Seller Disclosure Schedule:
          2.01. Organization. (a) Seller is duly organized, validly existing and
in good standing under the Laws of the State of Delaware. Seller is duly
qualified to do business and is in good standing (where such concept exists) as
a foreign corporation in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so organized, qualified or in good
standing or to have such power or authority would not, individually or in the
aggregate, reasonably be expected to prevent, materially delay or materially
impair the ability of Seller to consummate the transactions contemplated by this
Agreement or the Transaction Agreements.
               (b) The Company is duly organized, validly existing and in good
standing under the Laws of the State of California, and has the requisite
corporate power and authority to own its properties and to carry on its business
as presently conducted and is duly qualified to do business and is in good
standing (where such concept exists) as a foreign corporation in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, except where the failure to
be so organized, qualified or in good standing or to have such power or
authority would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Seller has made available to Purchaser a correct
and complete copy of the charter and bylaws, or other governing documents, of
the Company, as amended to the date of this Agreement, and each such document is
in full force and effect.
          2.02. Authority; Enforceability. Seller has all necessary corporate
power and authority to execute and deliver this Agreement and Seller, the
Company and each of the Company’s Subsidiaries have all necessary corporate
power and authority to execute and deliver each of the Transaction Agreements
with respect to which such Person is a party, to perform such Person’s
obligations hereunder and thereunder, as the case may be, and to consummate the
transactions contemplated hereby and thereby, as the case may be. The execution,
delivery and performance of this Agreement and the Transaction Agreements and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action on the part of
Seller, the Company and the Company’s Subsidiaries, as applicable, and no other
corporate action on the part of any such

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Person or such Person’s board of directors (or the equivalent thereof) is
necessary pursuant to its governing documents or the Laws of its jurisdiction of
organization to authorize this Agreement or the Transaction Agreements, as
applicable, or to consummate the transactions contemplated hereby or thereby, as
applicable. This Agreement has been duly executed and delivered by Seller, and
each Transaction Agreement will be duly executed and delivered by each of
Seller, the Company and the Company’s Subsidiaries to the extent a party thereto
and, assuming due authorization, execution and delivery by Purchaser,
constitutes or will constitute a legal, valid and binding agreement of Seller,
the Company, and the Subsidiaries, as applicable, enforceable against such
Person in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
Laws relating to or affecting creditors’ rights generally and general equitable
principles, whether considered in a proceeding in equity or at law
(collectively, the “General Enforceability Exceptions”).
          2.03. Non-Contravention.
               (a) The execution, delivery and performance of this Agreement by
Seller and of the Transaction Agreements, by Seller, the Company and the
Company’s Subsidiaries to the extent a party, and the consummation of the
transactions contemplated hereby and thereby and the compliance by each such
Person with the applicable terms and conditions hereof or thereof, does not and
will not (a) conflict with or violate the organizational or governing documents
of any such Person, (b) assuming that all Required Regulatory Approvals have
been obtained or made, as applicable, conflict with or violate any Law
applicable to any such Person, or (c) assuming that all Third Party Consents
have been obtained or made, as applicable, result in any breach or violation of
or constitute a default (or an event which with notice would become a default)
or result in the loss of a benefit under, or give rise to any right of
termination, cancellation, modification, amendment or acceleration of (whether
after the filing of notice or otherwise), or require any notice under, any
Material Contract or Permit of any such Person, except for any such conflict,
violation, breach, default, loss, right or other occurrence that would not, in
the case of clauses (b) and (c), reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect or materially delay or materially
impair the consummation of the transactions contemplated by this Agreement or
any of the Transaction Agreements.
               (b) Without limiting the generality of Section 2.03(a), the
execution and delivery by Seller, the Company and the Company’s Subsidiaries of
this Agreement and the Transaction Agreements, as applicable, and the
performance by each such Person of their respective obligations hereunder and
thereunder, as applicable, and the consummation of the transactions contemplated
hereby and thereby, do not and will not operate to invalidate or materially
impair (i) any private mortgage or loan insurance or commitment of any private
insurer relating to any Loans of the Company and Subsidiaries, (ii) any title
insurance policy relating to any Loans of the Company and Subsidiaries,
(iii) any hazard insurance policy relating to any Loans of the Company and
Subsidiaries, (iv) any flood insurance policy relating to any Loans of the
Company and Subsidiaries, (v) any fidelity bond, direct surety bond, or errors
and

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omissions insurance policy required by any Governmental Authority or private
insurer, or any surety or guaranty agreement relating to any Loans of the
Company and Subsidiaries, or (vi) any insurance or guaranty obtained from any
Governmental Authority relating to any Loans of the Company and Subsidiaries.
          2.04. Consents and Approvals. (a) Section 2.04(a) of the Seller
Disclosure Schedule, sets forth each consent, waiver, authorization, notice or
filing that is material to the Business and is required to be obtained from, or
to be given to, any Governmental Authority in connection with the execution,
delivery or performance of this Agreement or any of the Transaction Agreements
and the consummation of the transactions contemplated hereby and thereby, other
than those that may be required solely by reason of Purchaser’s (as opposed to
any other third party’s) participation in the transactions contemplated hereby.
The consents, waivers, authorizations, notices and filings listed on
Section 2.04(a) of the Seller Disclosure Schedule are referred to herein as the
“Required Regulatory Approvals”.
               (b) Section 2.04(b) of the Seller Disclosure Schedule, sets forth
each consent, waiver, authorization, notice or filing that is material to the
Business and is required to be obtained from, or to be given to, any Person
other than a Governmental Authority in connection with the execution, delivery
or performance of this Agreement or any of the Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby. The consents,
waivers, authorizations, notices and filings listed on Section 2.04(b) of the
Seller Disclosure Schedule are referred to herein as the “Required Third Party
Consents”.
          2.05. Ownership of Shares. Seller is the sole legal and beneficial
owner of the Shares, in each case, free and clear of all Liens. Each of the
Shares is held of record by Seller. Seller is not a party to any option,
warrant, purchase right, or other contract or commitment (other than this
Agreement) that could require Seller to sell, transfer, or otherwise dispose of
any capital stock or other equity interests of the Company. Seller is not a
party to any voting trust, proxy, or other agreement or understanding with
respect to the voting of any capital stock or other equity interests of the
Company. Upon delivery to Purchaser at the Closing of certificates representing
the Shares, duly endorsed by Seller for transfer to Purchaser, Seller’s entire
ownership interest in and to the Shares will pass to Purchaser, free and clear
of any Liens, other than those arising from acts of Purchaser or its Affiliates.
          2.06. Capitalization. (a) The authorized capital stock of the Company
consists of 1,000,000 shares of common stock, par value $0.01 per share, of
which 250,000 shares are issued and outstanding. Except for the Shares, there
are no shares of capital stock or other equity securities of the Company issued,
reserved for issuance or outstanding. The Shares are duly authorized, validly
issued, fully paid and nonassessable and are not subject to or issued in
violation of any purchase option, call option, voting trust agreement, proxy,
right of first refusal, preemptive right or subscription right or organizational
documents of the Company or any Contract to which the Company is a party or
otherwise bound.

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               (b) Section 2.06(b) of the Seller Disclosure Schedule lists for
each Subsidiary (i) its name and jurisdiction of incorporation, (ii) the shares
of capital stock or equity interests of such Subsidiary that are authorized and
(iii) the number of shares or equity interests that are issued and outstanding,
the names of the holders thereof, and the number of shares or other equity
interests held by each such holder. All issued and outstanding shares of capital
stock or other equity securities of each of the Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable, and are not subject to
or issued in violation of any purchase option, call option, voting trust
agreement, proxy, right of first refusal, preemptive right or subscription right
or organizational documents of such Subsidiary or any Contract to which such
Subsidiary is a party or otherwise bound. All of the outstanding shares of
capital stock or other equity interests of each Subsidiary are owned, directly
or indirectly, by the Company.
               (c) There are no options, warrants or other securities
authorized, issued or outstanding, calls, purchase rights, subscription rights,
exchange rights, convertible or exchangeable securities, “phantom” stock rights,
stock appreciation rights, stock-based performance units, Contracts or
undertakings of any kind to which the Company or any Subsidiary is a party or by
which it is bound (i) obligating the Company or any Subsidiary to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity interests in, or any security convertible or exercisable
for or exchangeable into any capital stock of or other equity interest in, or
any contractual rights containing any equity features (including stock
appreciation, phantom stock, profit participation, or similar rights with
respect to the Company or any of its Subsidiaries), the Company or any
Subsidiary or (ii) obligating the Company or any Subsidiary to issue, grant,
extend or enter into any such option, warrant, call, right, unit, Contract or
undertaking. There are no outstanding contractual obligations of the Company or
any Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any Subsidiary.
               (d) With the exception of Subsidiaries, as of the date of this
Agreement, neither the Company nor any Subsidiary owns, directly or indirectly,
any capital stock, membership interest, partnership interest, joint venture
interest or other equity interest in any Person. There are no Contracts that
require the Company or any of its Subsidiaries to make any investments (in the
form of a loan, capital contribution or otherwise) in any Person.
          2.07. Financial Statements. (a) Section 2.07(a) of the Seller
Disclosure Schedule sets forth a true and correct copy of (i) the audited
consolidated balance sheet of the Company and the Subsidiaries as of April 30,
2005 and April 30, 2006 and the related audited consolidated statements of
operations, stockholders’ equity and cash flows of the Company and the
Subsidiaries for the years then ended, together with the notes thereto (the
“2006 Audited Financial Statements”), (ii) the unaudited consolidated balance
sheet of the Company and the Subsidiaries as of January 31, 2007 (such balance
sheet, the “Most Recent Balance Sheet” and such date, the “Balance Sheet Date”)
and the related unaudited consolidated statements of operations, stockholders’
equity and cash flows of the Company and the Subsidiaries for the nine months
then ended (the “Unaudited Financial Statements,” and together

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with the 2006 Audited Financial Statements and the 2007 Financial Statements,
the “Financial Statements” provided that, notwithstanding anything to the
contrary in this Agreement, to the extent Closing occurs prior to the delivery
of the 2007 Unaudited Financial Statements, the term “Financial Statements”
shall not include the 2007 Unaudited Financial Statements) and (iii) the pro
forma balance sheet of the Company and its Subsidiaries as of January 31, 2007,
together with the related pro forma statement of operations for the nine-month
period ended January 31, 2007, as if the Divestment Activities had occurred as
of the beginning of the relevant period for the period (the “January 31 Pro
Forma Financial Statements” and, together with the April 30 Pro Forma Financial
Statements, the “Pro Forma Financial Statements”).
               (b) The Financial Statements (i) have been (or in the case of the
2007 Financial Statements will be) based upon the information contained in the
books and records of the Company and its Subsidiaries, (ii) have been prepared
(or in the case of the 2007 Financial Statements, will be prepared), in all
material respects, in accordance with GAAP applied on a consistent basis as at
the dates and for the periods presented (except, in the case of the Unaudited
Financial Statements, for the absence of footnote disclosures and normal
year-end adjustments), and (iii) present fairly (or in the case of the 2007
Financial Statements, will present fairly), in all material respects, the
financial position and the results of operations and cash flows of the Company
on a consolidated basis as at the dates and for the periods presented. The
Target Tangible Net Assets Statement was derived from the Most Recent Balance
Sheet, reflects the Tangible Net Assets of the Company and its Subsidiaries
(adjusted to exclude HRBMC and all noneconomic residuals) as of the Balance
Sheet Date and has been prepared utilizing the accounting principles, practices,
methodologies and policies as used in the 2006 Audited Financial Statements,
except as set forth on Section 2.07(b) of the Seller Disclosure Schedule. The
January 31 Pro Forma Financial Statements have been (or in the case of the
April 30 Pro Forma Financial Statements will be) based upon the information
contained in the books and records of the Company and its Subsidiaries, have
been (or in the case of the April 30 Pro Forma Financial Statements will be) be
derived from the Unaudited Financial Statements or the 2007 Audited Financial
Statements, as applicable, and reflect (or in the case of the April 30 Pro Forma
Financial Statements will reflect) and reflect all material adjustments required
to present fairly in all material respects the pro forma financial position and
the results of operations and cash flows of the Company on a consolidated basis
as at the dates and for the periods presented as if the Divestment Activities
had occurred as of the beginning of the relevant period for the period or as of
the date set forth therein.
               (c) The books and records of the Company and its Subsidiaries
have been maintained in material compliance with applicable legal and accounting
requirements, and such books and records fairly reflect in all material respects
all dealings and transactions in respect of the business, assets, liabilities
and affairs of the Company and its Subsidiaries. Parent maintains, or causes to
be maintained, internal controls over financial reporting to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements of Parent and its Subsidiaries (including the Company
and its Subsidiaries) on a consolidated, enterprise-wide basis, for external
purposes in accordance with GAAP, including

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policies and procedures that (i) pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of Parent and its Subsidiaries (including the Company
and its Subsidiaries), (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements of Parent
and its Subsidiaries (including the Company and its Subsidiaries) in accordance
with GAAP, and that receipts and expenditures of the Company and its
Subsidiaries are being made only in accordance with authorizations of applicable
management and directors of Parent and its Subsidiaries (including the Company
and its Subsidiaries) and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the assets of Parent and its Subsidiaries (including the Company and its
Subsidiaries). The Company and its Subsidiaries have disclosed to KPMG LLP, the
Company’s independent auditor, (i) all significant deficiencies and material
weaknesses in the design or operation of internal controls over financial
reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably
likely to adversely affect in any material respect the ability of the Company or
any of its Subsidiaries to record, process, summarize and report financial data
and (ii) any fraud, whether or not material, that involves management or other
employees who have a significant role in the internal controls over financing
reporting of the Company and its Subsidiaries. Seller has made available to
Purchaser a summary of any such disclosure made by Parent or any of its
Subsidiaries or any such Person’s management since April 30, 2005.
               (d) Since April 30, 2004 none of the Company or any of its
Subsidiaries nor, to the Seller’s Knowledge, any director, officer, auditor,
accountant, consultant or representative of the Company or any of its
Subsidiaries has received or otherwise has or obtained Knowledge of any material
substantive complaint, allegation, assertion or claim, whether written or oral,
that the Company or any of its Subsidiaries has engaged in questionable
accounting or auditing practices. Seller has made available to Purchaser (to the
extent not publicly available as of the date of this Agreement on the SEC’s
Electronic Data Gathering, Analysis and Retrieval (EDGAR) database) true and
compete copies of all correspondence directly related to the Business between
the SEC, on the one hand, and Parent or any of its Subsidiaries, on the other,
since April 30, 2004, including all responses to such comment letters by or on
behalf of the Company.
               (e) There are no material off balance sheet transactions,
arrangements, obligations or relationships attributable to the Business or to
which the Company or any of its Subsidiaries is a party or bound (or has any
commitment to be a party to or bound by), including any joint venture,
partnership agreement or any similar Contract relating to any transaction,
arrangement or relationship between or among Parent or any of its Subsidiaries,
on the one hand, and any unconsolidated affiliate (including any structured
finance, special purpose or limited purpose entity or Person, on the other hand
(such as any arrangement described in Section 303(a)(4) of Regulation S-K)),
other than those incurred after the date hereof in the ordinary course of
business consistent with past practice.

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               (f) As of the date hereof, the Company and its Subsidiaries have
no Liabilities of a type required to be reflected on a balance sheet in
accordance with GAAP other than (i) Liabilities expressly reflected, reserved
against or otherwise disclosed in the Most Recent Balance Sheet, (ii)
Liabilities incurred after the Balance Sheet Date in the ordinary course of
business and (iii) those Liabilities set forth in Section 2.07(f) of the Seller
Disclosure Schedule. On the Closing Date, the Company and its Subsidiaries have
no Liabilities of a type required to be reflected on a balance sheet in
accordance with GAAP except to extent fully reflected on, or fully reserved
against in, the balance sheet of the Company and its Subsidiaries in accordance
with the Accounting Methodologies and taken into account in the final
determination of Final Closing Tangible Net Assets pursuant to Section 1.04.
          2.08. Events Subsequent to Balance Sheet Date. Since the Balance Sheet
Date, (i) the Company and its Subsidiaries have conducted the Business only in
the ordinary course, (ii) there has been no Material Adverse Effect, and
(iii) there has not been any material damage, destruction or other casualty loss
with respect to any material asset or property owned, leased or otherwise used
by the Company or any of its Subsidiaries, whether or not covered by insurance.
Without limiting the generality of the foregoing, since the Balance Sheet Date,
none of the Seller, the Company or any of the Company’s Subsidiaries has taken
any action (or failed to take any action) that, if taken (or failed to be taken)
after the date hereof without the prior written consent of Purchaser would
constitute a breach of Section 4.01.
          2.09. Taxes. The Company and each of the Subsidiaries has timely filed
all material U.S. federal, state, local and foreign Tax Returns that it was
required to file and has paid or withheld all Taxes shown thereon as due and
owing. All such Tax Returns were correct and complete in all material respects.
Neither the Company nor any of the Subsidiaries has agreed to any extension or
waiver of the statute of limitations applicable to any Tax Return, or agreed to
any extension of time with respect to a Tax assessment or deficiency, which
period (after giving effect to such extension or waiver) has not yet expired.
Neither the Company nor any of the Subsidiaries is a party to any Tax allocation
or Tax sharing agreement (other than Tax allocation or Tax sharing agreements
which will be terminated prior to Closing and with respect to which no
post-Closing liabilities or obligations will exist); provided, however, leases
and other contracts which are listed on the Seller Disclosure Schedule that
provide tangentially for an allocation or apportionment of Tax liabilities
generated or related to such contracts will not constitute Tax allocation or Tax
sharing agreements. As of the date of this Agreement, there is no audit, claim
or controversy currently pending or threatened in writing with respect to the
Company or any of the Subsidiaries in respect of any Tax. Neither the Company
nor any of the Subsidiaries (i) has been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code (other than a group
the common parent of which is Seller) or (ii) has any liability for Taxes of any
Person (other than any other corporation that is a member of the affiliated
group filing a federal consolidated income tax return that the Company or such
Subsidiary is currently a member) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign Law), as a transferee or
successor, by contract or otherwise. Neither the Company nor any Subsidiary has
filed with respect to any item a disclosure

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statement pursuant to Section 6662 of the Code or any comparable disclosure with
respect to foreign, state or local Tax statutes. Set forth on Section 2.09 of
the Seller Disclosure Schedule is a list of all federal income Tax audits that
have ended within five years of the date of this Agreement and that have been
completed by the IRS. Set forth on Section 2.09 of the Seller Disclosure
Schedule is a list of all federal income Tax audits by the IRS that are
currently open. Set forth on Section 2.09 of the Seller Disclosure Schedule is a
list of all state, local and foreign Tax audits that have ended within five
years of the date of this Agreement that have been completed by any state, local
or foreign Taxing Authority. Set forth on Section 2.09 of the Seller Disclosure
Schedule is a list of all state, local and foreign Tax audits by state, local or
foreign Taxing Authorities that are currently open. The Company and each
Subsidiary has withheld and paid to the applicable Taxing Authority all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, customer,
vendor, supplier or other third party. Neither the Company nor any Subsidiary
will be required to include any material item of income or gain in, nor will the
Company nor any Subsidiary exclude any material item of deduction or loss from,
any Post-Closing Tax Period or Post-Closing Straddle Period as a result of any:
(i) change in method of accounting for a Pre-Closing Tax Period or a Pre-Closing
Straddle Period under Code Section 481(a) (or any corresponding provision of
state Tax law), (ii) “closing agreement” described in Code Section 7121 (or any
corresponding or similar provision of state, local or foreign Tax law) executed
on or prior to the Closing Date, (iii) installment sale or open transaction made
on or prior to the Closing Date, or (iv) prepaid amount received on or prior to
the Closing Date.
          2.10. Litigation. As of the date hereof, there are no Actions pending
or, to Seller’s Knowledge, threatened against the Company or any of its
Subsidiaries or the Business that, if determined adversely to the Company, its
Subsidiaries or the Business, would reasonably be expected to be material and
(ii) no present or former officer, or director of the Company or any of its
Subsidiaries has made a claim, or has notified the Company or any of its
Subsidiaries of his or her intention to make a claim, for indemnification that,
individually or in the aggregate is material. As of the Closing Date, no Actions
shall be pending or, to the Seller’s Knowledge, threatened against the Company
or any of its Subsidiaries or the Business that would be reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is a party or are subject to, and the
Business is not otherwise bound by, any order, writ, judgment, injunction,
agreement, decree or award of, memorandum of understanding, supervisory
agreement, cease and desist order or similar arrangement with, or a commitment
letter or similar submission to, or supervisory letter from, any Governmental
Authority nor, to Seller’s Knowledge, is any such action contemplated or
threatened, in any such case, that is material.
          2.11. Compliance with Law; Permits. The Company and its Subsidiaries,
together with the Business, have been and are in compliance with applicable Law,
except for any noncompliance or possible noncompliance that, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. No investigation or review by any Governmental Authority with respect

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to the Company, its Subsidiaries or the Business is pending or, to the Seller’s
Knowledge, threatened, nor has any Governmental Authority indicated an intention
to conduct the same, except for those the outcome of which would not reasonably
be expected to be, individually or in the aggregate, material. The Company and
its Subsidiaries, and any other Persons performing origination or servicing
activities under contract to the Company or its Subsidiaries, have obtained and
are in compliance, in all material respects, with all governmental permits,
licenses, franchises, variances, exemptions, exceptions, orders and other
governmental authorizations, consents, clearances and approvals necessary to
conduct the Business as presently conducted (collectively, the “Permits”),
except those Permits the absence of which would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. The Company
and each of its Subsidiaries has filed or caused to be filed all reports,
notifications and filings with, and have paid all regulatory fees to, the
applicable Governmental Authority necessary to maintain all of the Permits in
full force and effect, except in each case for any Permits the failure of which
to be in full force and effect would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. To Seller’s
Knowledge, no material change is required in the Company’s or any Subsidiaries’
processes, properties or procedures in connection with any such Laws in effect
as of the date hereof. Since January 31, 2007 to the date hereof, no
Governmental Authority with respect to which a Required Regulatory Approval is
required to be obtained or made has indicated an intent to (i) take any action
or fail to take any action that could be reasonably expected to restrain,
prohibit, materially delay or impair the consummation of the transactions
contemplated by this Agreement or (ii) impose any obligation, condition or
damages in connection with such Required Regulatory Approval that could
reasonably be expected to result in, individually or in the aggregate, a
material liability to Purchaser or any of its Affiliates (including the Company
or any of its Subsidiaries).
          2.12. Employee Benefits. (a) (i) Section 2.12(a)(i) of the Seller
Disclosure Schedule sets forth a correct and complete list identifying each
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, employment, consulting, change of control, disability, death benefit,
hospitalization, medical insurance, life insurance, welfare, severance or other
employee benefit plan, agreement, arrangement or understanding that is
maintained, administered or contributed to by Seller or its Affiliates, that
covers any current or Former Employee or consultant to the Company. Such plans
are referred to collectively herein as the “Employee Plans.”
                    (ii) Section 2.12(a)(i) of the Seller Disclosure Schedule
identifies each Employee Plan that is sponsored, maintained or entered into
solely by either the Company or any Subsidiary (a “Company Employee Plan”), and
each Employee Plan that is not a Company Employee Plan (a “Seller Employee
Plan”).
                    (iii) True and correct copies (or descriptions of any
informal arrangements) of each Employee Plan have been made available to
Purchaser in the Data Room and, to the extent applicable: (i) any related trust
agreement or other

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funding instrument; (ii) the most recent determination letter, if applicable;
(iii) the most recent summary plan description; and (iv) for each Company
Employee Plan, the two most recent (A) the Form 5500 and attached schedules,
(B) audited financial statements, and (C) actuarial valuation reports.
                    (iv) No Employee Plans are subject to Title IV of ERISA and
neither Seller nor its Affiliates has at any time within the past 6 years
sponsored or contributed to, or has or had within the past 6 years any liability
or obligation in respect of, any plan subject to Title IV of ERISA. Neither
Seller nor any of its Affiliates has incurred any current or projected liability
in respect of post-employment or post-retirement health, medical or life
insurance benefits for Employees for Former Employees, except as required to
avoid an excise tax under Section 4980B of the Code, and except as would not
reasonably be expected to have a material liability on the Company or its
Subsidiaries.
                    (v) No Employee Plan exists that, as a result of the
transactions contemplated by this Agreement (whether alone or in connection with
any subsequent event(s)), could result in (i) the payment to any Employee or
Former Employee of severance pay or any increase in severance pay upon any
termination of employment of such Employee after the date of this Agreement,
(ii) with respect any Employee, accelerate the time of payment or vesting or
result in any payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or result in any
other material obligation pursuant to, any of the Employee Plans, or (iii)
result in payments with respect to Employees or Former Employees under any of
the Employee Plans which would not be deductible under Sections 162(m) or 280G
of the Code.
               (b) Except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect:
                    (i) Each Employee Plan that is intended to be qualified
under Sections 401(a) and 401(k) of the Code (A) has been maintained, operated
and administered in compliance with its terms and applicable Laws and (B) has
received or has timely applied for a favorable determination letter from the
IRS, and there are no circumstances currently pending that could reasonably be
expected to result in revocation of any such favorable determination letter.
                    (ii) All Company Employee Plans are in compliance with ERISA
(to the extent such Company Employee Plans are subject to ERISA), the Code or
other applicable Law.
                    (iii) As of the date hereof, there are no pending or, to
Seller’s Knowledge, threatened, Actions relating to the Company Employee Plans.
                    (iv) With respect to the Seller Employee Plans, no event has
occurred and there exists no condition or set of circumstances in connection
with which the Company or any Subsidiary could be subject to any liability under
the terms of

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or as a result of such Seller Employee Plans, ERISA, the Code or any other
applicable Law.
          2.13. Labor Relations. (a) There are no labor or collective bargaining
agreements which pertain to Employees; no Employees are represented by any labor
organization; no labor organization or group of Employees has made a pending
demand for recognition or certification to Seller and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened to be brought or filed
with the National Labor Relations Board or any other labor relations tribunal or
authority relating to the Seller. Except as would not reasonably be expected to
have a Material Adverse Effect, no labor strike, work stoppage, slowdown or
dispute is pending or, to Seller’s Knowledge, threatened that involves any
Employees.
               (b) The Company and the Subsidiaries have not committed any
unfair labor practice, and there is no charge or complaint against either of the
Company or any Subsidiary by the National Labor Relations Board pending or, to
Seller’s Knowledge, threatened, except for any such matters that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. There is no charge of discrimination in employment or employment
practices that has been asserted or is now pending or, to Seller’s Knowledge,
threatened before the United States Equal Employment Opportunity Commission, or
any other Governmental Authority against the Company or any Subsidiary in any
jurisdiction in which Employees are located, except for any such matters that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
          2.14. Real Property.
               (a) Section 2.14(a) of the Seller Disclosure Schedule lists all
material real property which is owned by the Company or any Subsidiary other
than the REO (the “Owned Real Property”). Except in each case as, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect, (A) either the Company or one of the Subsidiaries, as the case may be,
has title to the Owned Real Property, free and clear of all Liens except
Permitted Liens and (B) except for the Leased Real Property or in connection
with any Permitted Liens, no Person owns any real property occupied by the
Company or any Subsidiary except the Company and the Subsidiaries. Other than
the rights of Purchaser pursuant to this Agreement, there are no outstanding
options to purchase, lease or use, or right of first refusal or first offer to
purchase, lease, or other rights to purchase, lease or otherwise use or occupy
any Owned Real Property or any portion thereof or interest therein or contract
relating to the right to receive any portion of the income or profits from the
sale, operation or development thereof.
               (b) Section 2.14(b) of the Seller Disclosure Schedule lists all
material real property leased or subleased by the Company or any Subsidiary as a
tenant or subtenant (the “Leased Real Property”) and sets forth the address of
each Leased Real Property. Seller has made available to Purchaser correct and
complete

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copies of all real property leases and subleases relating to the Leased Real
Property (the “Leases”) and any and all material ancillary documents pertaining
thereto and to which the Company or any Subsidiary is a party or is bound. To
Seller’s Knowledge, (i) each Lease is in full force and effect and is
enforceable against the lessor that is party thereto in accordance with its
terms, subject to the General Enforceability Exceptions, (ii) there are no
existing defaults under any Lease by any party thereto, and (iii) no event has
occurred that would reasonably be expected to constitute a breach or default (or
an event which with notice or lapse of time or both would become a default)
under any such Lease by any party thereto, except, in each case, where a failure
to be in full force and effect or enforceable or where a default or an event has
not had and would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the ownership, or use or occupancy
thereof.
               (c) The leasing, occupancy or use of the Owned Real Property and
the Leased Real Property (collectively, the “Real Property”), is not in
violation of any Law, including any building, zoning or other Law, except as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. Neither the Company nor any Subsidiary has received
written notice of, nor, to Seller’s Knowledge, is there threatened, with respect
to any part of the Real Property or portion of either thereof or interest
therein, (i) any violation of any zoning, subdivision or building Law applicable
thereto, (ii) taking or intent to take by eminent domain any part of such
property, or (iii) commencement of enforcement proceedings with respect to
delinquent Taxes that in any such case would materially adversely affect the
ownership, use or occupancy or value thereof.
          2.15. Intellectual Property. Notwithstanding any other representation
or warranty contained in this Article II, the representations and warranties
contained in this Section 2.15 constitute the sole representations and
warranties of Seller relating to the Company Intellectual Property.
               (a) Section 2.15(a) of the Seller Disclosure Schedule sets forth
a correct and complete list of each item of Company Intellectual Property that
is registered with, or subject to application for registration with, any
Governmental Authority, indicating for each such item the applicable
registration or application number and the applicable filing jurisdiction.
Section 2.15(a) of the Seller Disclosure Schedule also sets forth a correct and
complete list of the material Licensed Intellectual Property. The Company or a
Subsidiary has good title to each item of Company Intellectual Property, free
and clear of any Lien (other than Permitted Liens) and has the right to use
pursuant to a license, sublicense, agreement or other permission all items of
Licensed Intellectual Property. The Company Intellectual Property and the
Licensed Intellectual Property, together with Intellectual Property in the
public domain that is used in the Business, constitutes all Intellectual
Property that is used in or necessary for the conduct of the Business as
currently conducted. No item of Company Intellectual Property is licensed by the
Company or any Subsidiary to any unaffiliated third party, except for such
licenses granted in the ordinary course of business. None of the Company
Intellectual Property is subject to any outstanding order, judgment, decree or
agreement adversely affecting the Company’s or any Subsidiary’s use thereof or
rights

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thereto. There is no litigation, opposition, cancellation, proceeding, objection
or claim pending, asserted or, to Seller’s Knowledge, threatened by or against
the Company or any Subsidiary concerning the ownership, validity, register
ability, enforceability, infringement or use of, or licensed right to use, any
Company Intellectual Property or any Licensed Intellectual Property, except for
such of the foregoing as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
               (b) No third party is infringing any Company Intellectual
Property right and none of the Company Intellectual Property infringes on or
violates the intellectual property rights of any Person, except for such of the
foregoing as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
               (c) The Company and each Subsidiary has taken reasonable measures
to protect the secrecy, confidentiality and value of all Company Intellectual
Property and has a corporate policy addressing confidentiality that is
applicable to all officers, directors and employees with access to the Company
Intellectual Property. A copy of this policy is included in Section 2.15(c) of
the Seller Disclosure Schedule.
               (d) The IT Systems used in or necessary for the conduct of the
Business as currently conducted are adequate in all material respects for their
intended use and for the operation of the Business as currently conducted and
contemplated to be conducted, and are in good working condition (normal wear and
tear excepted). There has not been any material malfunction with respect to any
such IT Systems that has not been remedied or replaced since April 30, 2006.
               (e) Section 2.15(e) of the Seller Disclosure Schedules sets forth
a correct and complete list of all Names used in the operation of the Business.
          2.16. Material Contracts. (a) Section 2.16(a) of the Seller Disclosure
Schedule sets forth a correct and complete list (to the extent applicable,
arranged in subsections corresponding to subsections (iii), (iv), (v), (vi),
(viii), (x), (xv) and (xix) set forth below) of each of the Material Contracts
in effect as of the date of this Agreement. The term “Material Contracts” means
all of the following types of executory Contracts to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any of their
assets are bound or otherwise subject as of the date hereof (other than
(I) agreements related to employee benefits and employment agreements (which are
provided for in Section 2.12) and (II) the Leases and other Contracts relating
to real estate (which are provided for in Section 2.14)):
                    (i) (1) any joint venture, partnership, strategic alliance,
limited liability company, teaming, cooperation and any other similar Contract
involving a sharing of profits or losses, costs or Liabilities to which the
Company or any Subsidiary is a party or bound or (2) any other Contract that
relates to the formation, creation, operation, management or control of any
Person (other than a wholly-owned

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Subsidiary) that is a legal entity to which the Company or any Subsidiary is a
party or bound;
                    (ii) any Contract that is reasonably expected to require the
payment by, or to, the Company or any of the Subsidiaries of more than $500,000,
in the aggregate, during any 12-month period;
                    (iii) any Contract executed on or after January 1, 2004 or
that otherwise has any executory indemnification obligations relating to the
acquisition, lease or disposition, directly or indirectly by merger or
otherwise, of assets or capital stock or other equity interests of another
Person for aggregate consideration under such Contract in excess of $500,000
(other than acquisitions or dispositions of Loans in the ordinary course of
business);
                    (iv) any Contract that (1) limits, or purports to limit, the
ability of the Company or any Subsidiary after the Closing to compete in any
line of business or with any Person or to operate in any geographic area or
during any period of time; or (2) contains an exclusivity, minimum commitment or
“take-or-pay” obligation of, grant of “most favored nation” status or grant of
“preferred pricing arrangements” by, the Company, or any Subsidiary (including
any Contract pursuant to which the Company or any Subsidiary is party or bound
that imposes any such obligation on any of their current or future Affiliates);
                    (v) any Contract that (1) grants any right of first refusal
or first offer or similar right or that could require the disposition of any
material assets or line of the Business, the Company or any Subsidiary or
(2) limits the payment of dividends or other distributions by the Company or any
of its Subsidiaries;
                    (vi) any Contract containing any covenant limiting the
freedom of the Company, any Subsidiary or the Business to solicit for employment
or hire Persons for employment or consultancy (including any Contract pursuant
to which the Company or any Subsidiary is party or bound that imposes such any
such obligation on any of their current or future Affiliates);
                    (vii) any Contract (1) evidencing an Affiliate Transaction;
or (2) pursuant to which the Company or any of its Subsidiaries currently
benefits from any economies of scale or preferred pricing arrangements through
their affiliation with Parent and/or any of its Subsidiaries;
                    (viii) any Warehouse Facility, securitization facility or
other material agreement related to any Securitization;
                    (ix) any whole loan sale agreement or other arrangement
pursuant to which the Company or any of its Subsidiaries has sold or agreed to
sell mortgage loans to any Person, but only to the extent that the Company or
any of its Subsidiaries has any remaining Liabilities thereunder;

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                    (x) solely to the extent the Company or any of its
Subsidiaries has any remaining Liability thereunder, any Contract under which
the Company or any of the Subsidiaries either (i) agreed to purchase, guarantee
or make any payment with respect to any security issued by, or interest in, any
Person (“Loan Purchaser”) which purchased Loan receivables from the Company or
any Subsidiary (each such transaction, a “Loan Sale”) or (ii) agreed to
repurchase any Loans included in a Loan Sale or agreed that the Loan Purchaser
otherwise would have a right to payment from, or recourse against, the Company
or any of the Subsidiaries in connection with a Loan Sale;
                    (xi) any Seller Guarantees or Company Guarantees (including
with respect to any Warehouse Facility or Securitization);
                    (xii) any unexpired Derivative Contract;
                    (xiii) any Contract pursuant to which the Business currently
performs mortgage loan servicing, including in connection with a Loan Sale (each
a “Servicing Agreement”);
                    (xiv) all Contracts relating to Indebtedness of the Company
or any of its Subsidiaries in excess of $5,000,000, other than loans to direct
or indirect wholly-owned Subsidiaries made in the ordinary course of business;
                    (xv) any Contract providing for “earn-out” or other similar
contingent payment obligations, in each case that after the date hereof could,
if determined or otherwise resolved in a manner adverse to the Company, result
in payments that, individually or in the aggregate, are in excess of $500,000;
                    (xvi) any Contract involving material Licensed Intellectual
Property, except licenses to non-custom software, and all Contracts granting a
license or other permission under any Company Intellectual Property;
                    (xvii) any settlement agreement entered into since April 30,
2006, other than (A) releases immaterial in nature or amount entered into with
Former Employees or independent contractors in the ordinary course of business
in connection with the routine cessation of such employee’s or independent
contractor’s employment or (B) settlement agreements for cash only that do not
exceed $500,000 as to such settlement;
                    (xviii) any settlement agreement, assurance of
discontinuance, consent agreement, or memorandum of understanding with any
Governmental Authority, and any other Contract entered into with any
Governmental Authority other than in the ordinary course of business, and
                    (xix) each Contract not entered into on arm’s length terms.
               (b) Seller has made available to Purchaser correct and complete
copies of each Material Contract (including all material amendments,

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modifications, extensions, renewals, guarantees, schedules, exhibits or
ancillary agreements with respect thereto, or in the case of oral Contracts,
written descriptions of the material terms thereof). Each Material Contract is
in full force and effect and is valid, binding and enforceable against the
parties thereto in accordance with its terms, subject to the General
Enforceability Exceptions. Neither the Company nor any Subsidiary nor, to
Seller’s Knowledge, any other party thereto, is in material breach or violation
of, or default under, any Material Contract, and none of Seller, the Company and
the Subsidiaries has received notice (and Seller does not have Knowledge) of any
event or condition that would constitute a violation, breach or event of default
(or an event which with notice or lapse of time or both would become a default)
under any Material Contract, except, where such breach, violation or default has
not resulted in and would not reasonably be expected to result in, individually
or in the aggregate, a Material Adverse Effect.
               (c) As of the date hereof, none of Parent or any of its
Subsidiaries is engaged in discussions with any of the financing sources for the
Financing Facilities regarding any cancellation, termination or adverse
modification of any financial source’s relationship with the Business in any
manner that would reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect (regardless of any Seller Guarantees that
may be effected prior to the Closing). Since January 31, 2007 to the date
hereof, none of such financing sources have sought to renegotiate any of the
significant terms of its relationship with the Business, except as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect (regardless of any Seller Guarantees that may be effected prior
to the Closing).
               (d) Seller has made available to Purchaser correct and complete
copies of all waivers and consents obtained since January 31, 2007 through the
date hereof by or on behalf of Parent or any of its Subsidiaries related to the
Financing Facilities.
               (e) Seller has made available to Purchaser a copy of each
standard form Contract currently used by the Company or any of its Subsidiaries.
          2.17. Environmental Matters. Notwithstanding any other representation
or warranty contained in this Article II, the representations and warranties
contained in this Section 2.17 constitute the sole representations and
warranties of Seller relating to any Environmental Law. Except as set forth in
Section 2.17 of the Seller Disclosure Schedule, and with such exceptions as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect:
               (a) each of the Company and the Subsidiaries is and has been for
the past 5 years in compliance with applicable Environmental Laws and has
received and is and has been for the past 5 years in compliance with all
necessary permits or authorizations required under Environmental Laws to operate
its facilities, assets or business (“Environmental Permits”);

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               (b) neither the Company nor any of the Subsidiaries has been for
the past 3 years or is presently the subject of any Environmental Claim and, to
Seller’s Knowledge, no Environmental Claim is pending or threatened against
either the Company or any of the Subsidiaries or against any Person whose
liability for the Environmental Claim was retained or assumed contractually by
either the Company or any of the Subsidiaries;
               (c) to Seller’s Knowledge, there has been no Release of Hazardous
Substances on, at or beneath any of the Real Property or any of the properties
previously owned or leased by the Company or any of the Subsidiaries, or any REO
in amounts or circumstances that would reasonably be expected to form the basis
for an Environmental Claim against either the Company or any of the
Subsidiaries;
               (d) to Seller’s Knowledge, none of the Real Property or any REO
contains any underground storage tanks, aboveground storage tanks, asbestos or
asbestos-containing material, polychlorinated biphenyls, radioactive materials
or any Releases of Hazardous Substances that presently require investigation,
remediation, removal or cleanup by the Company or any of its Subsidiaries
pursuant to any Environment Law;
               (e) no Lien imposed by any Governmental Authority pursuant to any
Environmental Law is currently outstanding and no material financial assurance
obligation is in force as to any of the Real Property;
               (f) the Company and the Subsidiaries have no material obligation
or liability relating to or arising under Environmental Law by Contract; and
               (g) each of the Company and the Subsidiaries further represents
that is has made available to Purchaser correct and complete copies of all
environmental site assessment reports, studies, investigations or material
correspondence, in its possession or, to Seller’s Knowledge, in its control,
regarding any of its Environmental Liabilities at any of the Real Property.
          2.18. Affiliate Transactions. (a) Except for employment arrangements
and Employee Plans set forth on Section 2.12(a)(i) of the Seller Disclosure
Schedule, there are no transactions, agreements, arrangements or understandings
between the Company or its Subsidiaries, on the one hand, and any Affiliate
(including any director or officer) thereof, but not including any wholly owned
Subsidiary of the Company, on the other hand (an “Affiliate Transaction”).
               (b) The Company and the Subsidiaries do not currently utilize the
services or assets of Seller or any of its Affiliates (other than the Company
and the Subsidiaries) to conduct their business or operations in the ordinary
course.
     2.19. Brokers. Except for Goldman, Sachs & Co., whose fees and expenses
will be paid by Seller, no broker, investment banker, financial advisor or other
Person is entitled to any broker’s, finder’s, financial advisor’s or other
similar fee or

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commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent, Seller, the Company or
the Subsidiaries (other than as will be paid by Parent or Seller, or as will be
paid by the Company or the Subsidiaries prior to the Closing).
          2.20. Sufficiency of Assets. Except for the services and assets
contemplated to be performed or provided to Purchaser pursuant to the
Transaction Agreements, the assets of the Company and its Subsidiaries
constitute all assets, properties and rights necessary to conduct the Business
in all material respects as currently conducted (taking into account the actions
contemplated by the Restructuring Plan).
          2.21. Risk Management Instruments. All Derivative Contracts, whether
entered into for the account of the Company or the Subsidiaries or for the
account of a customer or financing source of any such Person, were entered into
in the ordinary and usual course of business and in accordance in all material
respects with applicable rules, regulations and policies of all applicable
Governmental Authorities and with counterparties the Company believes to be
financially responsible.
          2.22. Origination and Servicing. (a) The Company and its Subsidiaries
have been and are, in compliance in all material respects with all Applicable
Requirements. The Company and its Subsidiaries have been and are in compliance
in all material respects with the restrictions under the applicable Servicing
Agreements on solicitation of existing borrowers for the purposes of refinancing
their Loans. Each Loan, to Seller’s Knowledge, constituted the legal, valid and
binding obligation of the obligor named therein, except for those Loans that
have been fully reserved against in the financial statements of the Company and
taken into account in the final determination of Final Closing Tangible Net
Assets pursuant to Section 1.04.
               (b) Since April 30, 2005, no Governmental Authority, Investor or
private mortgage Insurer has (i) provided written notice to the Company or any
Subsidiary claiming that the Company or any of its Subsidiaries has violated,
breached or not complied with any Applicable Requirements in connection with the
Company’s or any of its Subsidiaries’ origination or servicing activities, or
(ii) imposed restrictions on the mortgage loan origination activities (including
commitment authority) of the Company or any Subsidiary, other than violations,
breaches, instances of non-compliance or restrictions (y) that have not had and
could not reasonably be expected to have, individually or in the aggregate, a
material liability or (z) that have been in the financial statements of the
Company, taken into account in the final determination of Final Closing Tangible
Net Assets pursuant to Section 1.04.
               (c) As of the date specified in the applicable mortgage loan
tape, the information set forth in each mortgage loan, mortgage servicing rights
and mortgage service advancing tape delivered to Purchaser prior to the date
hereof in connection with the transactions contemplated by this Agreement is
correct and complete in all material respects as of the applicable date
specified in such mortgage loan, mortgage servicing rights and mortgage service
advance tape.

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               (d) Set forth on Section 2.22(d) of the Seller Disclosure
Schedule is a correct and complete description, as of the date hereof, of the
credit standards, policies with respect to accruals of provisions for credit
losses, Lending Policies and loan reserve policies of the Company and its
Subsidiaries (the “Company Loan Policies”), including the written policies and
practices relating to (i) documentation procedures, (ii) collateralization
practices (including loan to value ratios and valuation and appraisal of
collateral), (iii) procedures for (including frequency of) billing and on-going
monitoring and auditing of Loans, collections and review of past-due accounts,
and (iv) making of charge-offs, write downs, specific accruals and specific
valuation reserves for Loans and the placing of Loans on a non-accrual status.
The Business is being operated in compliance with the Company Loan Policies and
the Company Loan Policies have not been modified, superseded or otherwise
rendered inapplicable in any material respect.
               (e) Except as would not reasonably be expected, individually or
in the aggregate, to be material the Company and the Subsidiaries have not
originated and currently do not originate “high cost” mortgage loans as such
term is defined in § 1602 of the Truth-In-Lending Act, 15 USC § 1602 and §
226.32 of its implementing regulation, Regulation Z ,12 CFR § 226.32, as well as
under applicable state Law.
          2.23. Securitizations and Warehouse Facilities. (a) Except to the
extent fully reserved against and taken into account in the final determination
of Final Closing Tangible Assets pursuant to Section 1.04: (i) each Loan sold by
the Company or any of its Subsidiaries was made in all respects in accordance
with the Applicable Requirements and, as of the date each such Loan was sold,
was evidenced in all material respects by appropriate and sufficient
documentation and constituted the legal, valid and binding obligation of the
obligor named therein, subject to the General Enforceability Exceptions;
(ii) upon origination of the underlying Loan, the Loan Documents for all such
Loans were in compliance in all material respects with Applicable Requirements
and were complete in all material respects; and (iii) no Governmental Authority
or other Person has (x) claimed that the Company or any of its Subsidiaries has
violated or not complied with the applicable underwriting standards with respect
to the Loans sold by such Person to any Investor or (y) imposed restrictions on
the activities (including commitment authority) on such Person.
               (b) Set forth on Section 2.23(b)(i) of the Seller Disclosure
Schedule is a correct and complete list of Securitizations and Warehouse
Facilities (along with a reasonable explanation of the facts and circumstances
of such Securitizations and Warehouse Facilities) in which the Company or any of
the Subsidiaries have provided a guarantee, funds for a reserve account,
liquidity facility, Derivative Contract or similar credit enhancement. Set forth
on Section 2.23(b)(ii) of the Seller Disclosure Schedule sets forth a correct
and complete list, by securitization trust, of the unreimbursed servicing
advances of each of the Company and its the Subsidiaries as of February 28,
2007. There are no executory agreements (in writing or otherwise) in which the
Company or any of the Subsidiaries has a continuing obligation to purchase
securities issued by a Securitization Trust or Warehouse Facility.

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               (c) Set forth on Section 2.23(c) of the Seller Disclosure
Schedule is a correct and complete list of Securitizations and Warehouse
Facilities by the Company or any of the Subsidiaries, specifying those that are
properly treated as debt and those that are properly treated as a sale for U.S.
federal income Tax purposes. All such Securitizations are, and have since their
inception been, properly structured and operated in a manner so that the entity
which owns the underlying mortgage assets is not, for U.S. federal income Tax
purposes, a corporation, an association taxable as a corporation, a taxable
mortgage pool or a publicly traded partnership.
               (d) Set forth on Section 2.23(d) of the Seller Disclosure
Schedule is a correct and complete list of securities issued by a Securitization
Trust and owned on the date hereof by the Company or any of the Subsidiaries.
               (e) Set forth on Section 2.23(e) of the Seller Disclosure
Schedule is a correct and complete list, as of the date hereof, of
Securitizations and Warehouse Facilities (including under pooling and servicing
agreements and insurance agreements) (and the facts and circumstances) in which
there is a default, event of default, termination event or servicer default or
termination event or, in which with the giving of notice or the passage of time,
will be a default, event of default, termination event or servicer default or
termination event.
               (f) No trigger event has occurred and is continuing with respect
to the Securitizations and Warehouse Facilities (including under pooling and
servicing agreements and insurance agreements) that has caused an increase in a
reserve requirement, an early amortization of securities, or the removal (or
right to remove) the servicer.
               (g) No private placement memorandum or other offering document of
the Company or any Subsidiary, or any amendments or supplements thereto,
contained, as of the date on which it was issued in connection with any
Securitization or Warehouse Facility, any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading and there are no pending or, to the Seller’s Knowledge,
threatened, lawsuits, actions, proceedings or claims so alleging. No securities
were issued or sold by the Company in violation of Section 5 of the Securities
Act in any Securitization. Neither the Company nor any Subsidiary is required to
register as an investment company under the Investment Company Act of 1940, as
amended.
               (h) The servicer in each of the Securitizations is entitled to
pay or reimburse itself for all advances, servicing advances, servicing fees and
all other amounts due to the Servicer from all collections on the Loans prior to
any amounts being paid or distributed to any other Person.
          2.24. EPDs; Recourse. (a) Neither the Company nor any of its
Subsidiaries is a party to (A) any Contract with (or otherwise obligated to) any
Person, including an Investor, Governmental Authority or Insurer, to repurchase
from any such

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Person any Loans or Receivables; or (B) any Contract to reimburse, indemnify or
hold harmless any Person or otherwise assume any Liability with respect to any
loss arising from Loans or Receivables, including in the event of fraud on the
part of a borrower.
               (b) Except (i) as expressly reflected, reserved against or
otherwise disclosed in the Most Recent Balance Sheet, (ii) except to extent
fully reflected on, or fully reserved against in, the balance sheet of the
Company and its Subsidiaries and taken into account in the final determination
of Final Closing Tangible Net Assets pursuant to Section 1.04 or (iii) as would
not reasonably be expected to result in, individually or in the aggregate, a
material liability, no event has occurred that may give rise to an obligation to
repurchase a Loan or Receivable or group of Loans or Receivables or reimburse,
indemnify or hold harmless any Person or otherwise assume any Liability with
respect to any loss arising from a Loan or Receivable.
               (c) Set forth on Section 2.24(c) of the Seller Disclosure
Schedule is a correct and complete list (including with loan amount information)
of all requests in excess of $1,000,000 to repurchase any Loans or Receivables
or reimburse, indemnify or hold harmless any Person or otherwise assume any
Liability in excess of $1,000,000 with respect to any loss arising from any Loan
or Receivable received by the Company and/or the Subsidiaries during the
ten-month period ended February 28, 2007.
               (d) Set forth on Section 2.24(d) of the Seller Disclosure
Schedule is a correct and complete list as to the EPD repurchase obligations
with respect to Loans or Receivables sold by the Company or its Subsidiaries in
sale transactions that closed during the period commencing on January 1, 2006
and ending on February 28, 2007.
          2.25. Insurance. Seller has made available to Purchaser correct and
complete copies of all material and currently effective insurance policies
issued in favor of the Company or any of the Subsidiaries. With respect to each
such policy, except as has not been, or would not reasonably be expected to be,
individually or in the aggregate, material, (i) the policy is in full force and
effect and premiums due thereon have been paid, (ii) neither the Company nor any
of the Subsidiaries is in breach or default, and no such Person has taken any
action or failed to take any action which would constitute a breach or default
(or an action or inaction which with notice or lapse of time or both would
become a default) thereunder or permit termination or modification of, any such
policy, and (iii) no insurer on any such policy has been declared insolvent or
placed in receivership, conservatorship or liquidation, and no notice of
cancellation or termination has been received with respect to any policy. The
Company and the Subsidiaries maintain insurance policies that are customary for
companies of similar size in the industries in which the Company participates.
          2.26. Board Minutes. Seller has made available to Purchaser current
and complete copies of (i) the charter and bylaws or other governing documents
of each of the Company’s Subsidiaries, as amended to the date of this Agreement,
and each such documents is in full force and effect and (ii) the minutes of all
meetings of the

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stockholders, the Board of Directors (or the equivalent thereof) and each
committee thereto of the Company and each of the Company’s controlled
Subsidiaries, held between January 1, 2005 and the date hereof.
          2.27. No Other Representations or Warranties. Except for the
representations and warranties of Seller expressly set forth in this Agreement,
neither Seller nor any other Person makes any other express or implied
representation or warranty on behalf of Seller with respect to Seller, the
Company or the Subsidiaries or the transactions contemplated by this Agreement
and the Transaction Agreements. The representations and warranties made in this
Agreement with respect to the Company, the Subsidiaries and the Shares and the
transactions contemplated by this Agreement and the Transaction Agreements are
in lieu of all other representations and warranties Seller might have given
Purchaser, including implied warranties of merchantability and implied
warranties of fitness for a particular purpose. Purchaser acknowledges that all
other warranties that Seller or anyone purporting to represent Seller gave or
might have given, or which might be provided or implied by applicable Law or
commercial practice, with respect to the Company, the Subsidiaries and the
Shares, are hereby expressly excluded. Purchaser acknowledges that neither
Seller nor any other Person acting on its behalf will have or be subject to any
liability or indemnification obligation to Purchaser or any other Person acting
on its behalf resulting from the distribution in written or oral communication
to Purchaser, or use by Purchaser of, any information, documents, projections,
forecasts or other material made available to Purchaser in the Data Room,
confidential information memoranda or management interviews and presentations in
expectation of the transactions contemplated by this Agreement and the
Transaction Agreements.
III. REPRESENTATIONS AND WARRANTIES OF PURCHASER
     Purchaser hereby represents and warrants to Seller that:
          3.01. Organization. Purchaser is duly organized, validly existing and
in good standing under the Laws of the state of its organization, and has the
requisite corporate or similar power and authority to own its properties and to
carry on its business as presently conducted and is duly qualified to do
business and is in good standing (where such concept exists) as a foreign
corporation in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so organized, qualified or in good standing or
have such power or authority would not prevent or materially delay the
consummation of the transactions contemplated by this Agreement or the
Transaction Agreements.
          3.02. Authority; Enforceability. Purchaser has all necessary corporate
or other power and authority to execute and deliver this Agreement and the
Transaction Agreements, to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Purchaser of this Agreement and the Transaction
Agreements and the consummation by Purchaser of the transactions contemplated
hereby and thereby have

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been duly and validly authorized by all necessary action on the part of
Purchaser, and no other corporate proceedings on the part of Purchaser are
necessary pursuant to its governing documents or the Laws of its jurisdiction of
organization to authorize this Agreement or the Transaction Agreements or to
consummate the transactions contemplated hereby or thereby. This Agreement and
each Transaction Agreement to which Purchaser is a party has been or will be
duly executed and delivered by Purchaser and, assuming due authorization,
execution and delivery by the other parties hereto and thereto, constitutes or
will constitute a legal, valid and binding agreement of Purchaser, enforceable
against Purchaser in accordance with its terms, subject to the General
Enforceability Exceptions.
          3.03. Non-Contravention. The execution, delivery and performance by
Purchaser of this Agreement and the Transaction Agreements to which Purchaser is
a party, and the consummation of the transactions contemplated hereby and
thereby and the compliance by each Purchaser with the applicable terms and
conditions hereof or thereof, does not and will not (a) conflict with or violate
its organizational documents, (b) assuming that all consents, approvals and
authorizations contemplated by Section 3.04 have been obtained and all filings
described therein have been made, conflict with or violate any Law applicable to
Purchaser or (c) result in any breach or violation of or constitute a default
(or an event which with notice would become a default) or result in the loss of
a benefit under, or give rise to any right of termination, cancellation,
modification, amendment or acceleration of (whether after the filing of notice
or otherwise), any Contract or permit to which Purchaser is a party or by which
Purchaser or any of Purchaser’s respective properties or assets are bound,
except for any such conflict, violation, breach, default, loss, right or other
occurrence which would not, individually or in the aggregate, prevent or
materially delay the consummation of the transactions contemplated hereby.
          3.04. Governmental Consents. No consent, waiver, authorization,
permit, notice or filing is required to be obtained from, or given to, any
Governmental Authority in connection with the execution, delivery and
performance by Purchaser of this Agreement and the consummation by Purchaser of
the transactions contemplated hereby and thereby, except for (a) the Required
Regulatory Approvals, and (b) those consents, approvals, authorizations or
permits of, actions by, filings with or notifications the failure of which to be
made or obtained would not, individually or in the aggregate, prevent or
materially delay the consummation of the transactions contemplated hereby.
          3.05. Availability of Funds. Attached as Exhibit E are correct and
complete copies of debt and equity commitment letters and related term sheets
(collectively, excluding any engagement and fee letters associated therewith,
the “Financing Commitments”) to be used in connection with the transaction
contemplated hereby (“Acquisition Financing”). As of the date hereof, the
Financing Commitments are in full force and effect, have not been withdrawn or
terminated or otherwise amended or modified in any respect, and, as of the date
hereof, Purchaser has no reason to believe that the Financing Commitments will
not lead to the Acquisition Financing contemplated thereby. The proceeds from
such Acquisition Financing constitute all of the financing required to be
provided by Purchaser for the consummation of the transactions

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contemplated hereby. The Financing Commitments (other than the engagement and
fee letters entered into in connection therewith) constitute, as of the date
hereof, the entire and complete agreement between the parties thereto with
respect to the financing contemplated thereby, and to the Buyer’s knowledge,
there are no conditions precedent or other contingencies related to the funding
of the Acquisition Financing other than as set forth in the Financing
Commitments.
          3.06. Litigation. There is no Action pending against, or to
Purchaser’s Knowledge, threatened against or affecting, Purchaser that in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement and the Transaction Agreements.
          3.07. Investment Intent. Purchaser is acquiring the Shares for its own
account, for the purpose of investment only and not with a view to, or for sale
in connection with, any distribution thereof in violation of applicable
securities Laws.
          3.08. No Other Representations or Warranties. Except for the
representations and warranties of Purchaser expressly set forth in this
Agreement, neither Purchaser nor any other Person makes any other express or
implied representation or warranty on behalf of Purchaser with respect to
Purchaser or the transactions contemplated by this Agreement and the Transaction
Agreements.
IV. COVENANTS OF SELLER
          4.01. Conduct of the Business. Except as set forth on Section 4.01 of
the Seller Disclosure Schedule, from the date of this Agreement until the
Closing, Seller will cause the Company and the Subsidiaries to conduct their
business in the ordinary course and use their respective commercially reasonable
efforts to preserve intact the Business and its relationships with customers,
suppliers, creditors and employees. Without limiting the generality of the
foregoing, except as set forth on Section 4.01 of the Seller Disclosure
Schedule, as required by applicable Law, in connection with the implementation
of the Restructuring Activities in accordance with Section 4.05 or as consented
to by Purchaser (which consent may not be unreasonably withheld, conditioned or
delayed solely in the case of clause (i) of Section 4.01(k) and clause (ii) of
Section 4.01(n)), from the date of this Agreement until the Closing, Seller will
cause the Company and each of the Subsidiaries not to:
               (a) transfer, sell, lease, license, surrender, divest, cancel,
abandon or allow to lapse or expire or otherwise dispose of any of its material
assets, product lines or businesses, including capital stock of any of its
Subsidiaries, other than in the ordinary course of business;
               (b) (i) acquire, purchase, license or lease (in each case,
whether by merger, consolidation or by any other manner) any business or Person
or any material assets or securities thereof, other than purchases of mortgages
in the ordinary course of business consistent with the Lending Policies or
(ii) subject to any Lien (other

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than Permitted Liens) any of their material properties or assets, other than in
the ordinary course of business pursuant to the Financing Facilities;
               (c) (i) except in the ordinary course of business, modify or
amend in any material respect, or terminate, release, assign or waive any
material rights or claims under, any Material Contract or material Lease,
(ii) except in the ordinary course of business in accordance with Section 4.01
of the Seller Disclosure Schedules, enter into any Contract that, if the Company
or Subsidiary had entered into such Contract immediately prior to the date of
this Agreement, would be a Material Contract, or (iii) enter into any material
Lease;
               (d) except pursuant to those existing written, binding agreements
in effect (and made available to Purchaser) prior to the date hereof or as set
forth in Section 4.01 of the Seller Disclosure Schedule, with respect to
Employees and Former Employees (i) enter into, establish, grant, amend,
terminate or renew any severance or termination pay in excess of $50,000 per
Employee or $1,000,000 in the aggregate, (ii) increase or accelerate the
compensation or benefits payable under any existing severance or termination pay
agreement or arrangement or other Employee Plan, (iii) enter into, establish,
amend, terminate or renew any employment, consultancy, bonus, severance,
termination pay, retirement or other similar agreement or arrangement (or amend
any such existing agreement or arrangement in a manner that would increase the
Liabilities of the Company and its Subsidiaries), (iv) enter into, establish,
amend, terminate or renew any collective bargaining, profit-sharing, thrift,
pension, retirement, deferred compensation, incentive compensation, equity
compensation or other material benefit plan or arrangement in a manner that
would increase the Liabilities of the Company and its Subsidiaries (it being
understood and agreed that this clause (iv) does not restrict the hiring of
employees (which is addressed in clause (vi) below)), (v) make any increase in
compensation or benefits (except for increases in salary or hourly wage rates of
employees (other than officers) in the ordinary course of business consistent
with past practice), (vi) hire any employees or retain any independent
contractor with a base salary or annual compensation, as applicable, over
$150,000, (vii) take any action to accelerate the vesting or payment of, or fund
or in any other way secure the payment of, compensation or benefits under any
Employee Plan, to the extent not already provided in such Employee Plan as of
the date hereof, (viii) change any actuarial or other assumptions used to
calculate funding obligations with respect to any Company Employee Plan or
change the manner in which contributions to such plans are made by the Company
or any Subsidiary or the basis on which such contributions are determined,
except as may be required by Law, or (ix) forgive any loans to directors or
officers;
               (e) with respect to any Employee or Former Employee grant any
equity or equity-based compensation (whether in the form of options, restricted
stock, restricted units or otherwise) or renew any previously terminated equity
compensation plan, other than any action that is required under any Employee
Plan (as in effect as of the date hereof) or as required by Law;

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               (f) (i) redeem or otherwise acquire any shares of its capital
stock or issue, deliver, pledge, encumber, dispose of or otherwise distribute or
cause to be granted to any Person any capital stock or ownership interests of or
in the Company or any Subsidiary, or securities convertible or exchangeable into
or exercisable for any shares of such capital stock, or any options, warrants or
other rights of any kind to acquire any shares of such capital stock or such
convertible or exchangeable securities or amend, or authorize or propose to take
any such action with respect thereto or (ii) adopt, modify or propose an
amendment or modification to any of its organizational documents;
               (g) other than (A) in the ordinary course of business on terms
not materially less favorable than the applicable terms to which the Company and
its Subsidiaries are subject as of the date hereof pursuant to the Company’s and
its Subsidiaries’ existing credit agreements, warehouse facilities, wholesale
loan agreements, indentures, securitization facilities and other financing
arrangements (including any amendments or supplements thereto and any renewals
or replacements thereof entered into after the date hereof in accordance with
this Section 4.01) as set forth in Section 2.16 of the Seller Disclosure
Schedule (collectively, the “Financing Facilities”) to the extent not otherwise
inconsistent with Section 4.01 of the Seller Disclosure Schedule or (B) by, to,
between or among the Company and the wholly-owned Subsidiaries of the Company,
incur any Indebtedness for borrowed money, issue or sell any debt securities
(including securities issued in any form, debt or otherwise, in connection with
securitization transactions) or warrants or other rights to acquire any of its
debt securities, assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any Person, or make any Loans,
advances or capital contributions to, or investments in, any other Person or
create any special purpose funding or variable interest entity; provided, that,
notwithstanding anything to the contrary in this Agreement, neither the Company
nor any of its Subsidiaries shall (i) enter into a new NIM securitization other
than in a manner consistent with their past practices (and which new NIM
securitizations shall not include covenants that differ in any material respect
from the covenants included in NIM securitizations historically undertaken by
the Company and the Subsidiaries) or (ii) have any obligations to purchase any
instrument issued in a securitization (except to the extent solely resulting
from the Current Warehouse Facilities (or replacement Warehouse Facilities)) as
of the Closing;
               (h) Except (i) as otherwise required in connection with a Final
Tax Determination of any Pending Federal Tax Matter or (ii) to the extent that
it would not have the effect of materially increasing the Tax liability or
reducing any Tax Asset of the Company, any Subsidiary, Purchaser or any
Affiliate of Purchaser, make or change any Tax election, change any annual Tax
accounting period, adopt or change any method of Tax accounting, change any GAAP
accounting method, file any amended Return, enter into any closing agreement,
settle any Tax Proceeding, surrender any right to claim a Tax refund, consent to
any extension or waiver of the limitation period applicable to any Tax
Proceeding or take or omit to take any other action without the prior written
consent of the Purchaser;

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               (i) merge or consolidate itself with any other Person, or
restructure, reorganize or completely or partially liquidate or otherwise enter
into any agreements or arrangements imposing material changes or restrictions on
its assets, operations or businesses;
               (j) settle or compromise or commit to settle or compromise any
Action pursuant to terms which, individually or in the aggregate, would
reasonably be expected to adversely affect in any material respect the
post-Closing operation of the Business or Purchaser or any of its Affiliates in
any manner;
               (k) (i) fail to make any capital expenditures in accordance with
Section 4.01(k) of the Seller Disclosure Schedule or (ii) enter into any
agreement or binding obligation with third party to make any capital
expenditures after the Closing in excess of $250,000 individually or $1,500,000
in the aggregate;
               (l) fail to file any material reports or take any steps necessary
to comply with all Laws in all material respects and to maintain, in good
standing, all material Permits;
               (m) fail to operate the Business in all material respects in
accordance with all Applicable Requirements;
               (n) (i) enter into any new line of business, or (ii) change its
Lending Policies in any material respect except as required by applicable Law;
               (o) fail to comply in all material respects with the Company’s
current policy of contacting Investors on a routine basis to solicit EPD
information;
               (p) fail to use commercially reasonable efforts to settle demands
received by the Company or any of its Subsidiaries to (i) repurchase any Loans
or Receivables or (ii) reimburse, indemnify or hold harmless any Person or
otherwise assume any Liability with respect to any loss arising from Loans or
Receivables, including in the event of fraud on the part of a borrower;
provided, that nothing in this clause (p) shall permit the Company or any of its
Subsidiaries to commit (or purport to commit) Purchaser or any of its Affiliates
(including the Company or any of its Subsidiaries) to any settlement involving
any obligations to be performed, or amounts required to be paid, after the
Closing;
               (q) fail to use commercially reasonable efforts to cause the
current insurance policies maintained by such Person not to be cancelled or
terminated or any of the coverage thereunder to lapse;
               (r) other than in the ordinary course of business in respect of
immaterial amounts, delay or postpone the payment of any accounts payable,
               (s) (i) enter into any Affiliate Transaction the terms of which
are inconsistent with Section 5.02 or (ii) except as expressly contemplated by
Section 5.02, modify or amend the terms of any Affiliate Transaction; or

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               (t) enter into a binding written agreement or commitment to do
any of the foregoing.
          4.02. Access; Confidentiality. (a) Subject to applicable Law, Seller
will, and will cause the Company and each of its Subsidiaries to, (i) permit
Purchaser, its counsel, financial advisors, financial sources, consultants and
auditors and other authorized representatives full reasonable access, during
normal business hours and upon reasonable notice, and without undue interruption
to the Business, to the employees, premises and properties, books, records (with
respect to income Tax records, only to the extent directly related to the
Company or any of its Subsidiaries), Contracts and other documents of or
pertaining to the Company or any of its Subsidiaries or the Business and
Seller’s outside accountants and other advisors, (ii) furnish to Purchaser, its
counsel, financial advisors, financial sources, consultants and auditors and
other authorized representatives such financing and operating data and other
information relating to the Company and the Subsidiaries as Purchaser may
reasonably request, and (iii) instruct the employees of the Company and its
Subsidiaries and the legal counsel, accountants, and financial advisors of
Parent and its Subsidiaries to reasonably cooperate with Purchaser and its
representatives in connection with the foregoing. To the extent that Seller or
its Affiliates incurs any incremental out-of-pocket costs in processing,
retrieving or transmitting any such information pursuant to this Section 4.02,
Purchaser will reimburse Seller for the reasonable out-of-pocket costs thereof
(including attorneys’ fees, but excluding reimbursement for general overhead,
salaries and employee benefits) promptly upon submission to Purchaser of an
invoice therefor accompanied by reasonable supporting documentation.
          (b) In addition to and not by way of limitation of the foregoing:
                    (i) Subject to applicable Law, Seller and its Affiliates
will cooperate with Purchaser in connection with the financing contemplated by
the Financing Commitments, including providing information to and permitting the
financing sources and their representatives full access to the employees,
premises and properties, books, records (with respect to income Tax records,
only to the extent directly related to the Company or any of its Subsidiaries),
Contracts and other documents of or pertaining to the Company or any of its
Subsidiaries or the Business (including the right to conduct non-invasive
environmental assessments and compliance audits), the accountants and other
advisors of Seller and/or its Affiliates, participating in meetings with
prospective investors and warehouse lenders and (permitting members of senior
management of the Business to participate) in “road shows” in connection with
the financing contemplated by the Financing Commitments, participating in
meetings with rating agencies, participating in drafting sessions related to the
offering materials for the debt financing of Purchaser contemplated by the
Financing Commitments, causing the present independent accountants for the
Company to participate in drafting sessions related to the offering materials
for any financing sought by Purchaser in connection with the transactions
contemplated hereby and making work papers available to Purchaser, the
underwriters or placement agents for the debt financing and their respective
representatives. Commencing on the date hereof, to the fullest extent permitted
by applicable Law, Seller shall provide the Purchaser with the right to

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designate at least two persons to have access at the offices of the Company and
its Subsidiaries during normal business hours.
                    (ii) As soon as practicable, but in any event no later than
15 Business Days after each fiscal month-end following the date hereof that
occurs prior to the Closing Date, Seller will deliver to Purchaser a copy of
(i) the normal, internal operating balance sheet and internal profit and loss
statement of the Company and its Subsidiaries (as such internal reports are
currently generated by the Business) (the “Interim Monthly Financial
Statements”) and (ii) the early payment default (“EPD”) reports, the key assets
financial package and the servicing assets financial package (including mortgage
servicing rights tapes) of the Company and its Subsidiaries for the preceding
month (in the same form as such data is currently presented to the management of
the Business). Promptly upon the Purchaser’s request, Seller will deliver to
Purchaser a copy of the mortgage loan tape for the preceding month (in the same
form as such data is currently presented to the management of the Business).
                    (iii) As soon as reasonably practicable, but in no event
later than July 31, 2007, Seller shall furnish to Purchaser the following
financial statements for the Company and its Subsidiaries: (x) the audited
combined balance sheets of the Company and its Subsidiaries, as of April 30,
2007 and April 30, 2006, together with the related audited combined statements
of operations and combined statements of cash flows for the twelve-month periods
ended April 30, 2007 and April 30, 2006 (collectively, “2007 Audited Financial
Statements”) and (y) the pro forma balance sheet of the Company and its
Subsidiaries as of April 30, 2007, together with the related pro forma statement
of operations for the twelve-month period ended April 30, 2007, as if the
Divestment Activities had occurred as of the beginning of the relevant period
for the period or as of the date set forth therein (the “April 30 Pro Forma
Financial Statements”) prepared in a manner consistent with the January 31 Pro
Forma Financial Statements.
                    (iv) As soon as reasonably practicable, but in no event
later than September 15, 2007, Seller shall furnish to Purchaser, the unaudited
balance sheet of the Company and its Subsidiaries as of July 31, 2007, together
with the related unaudited statement of operations and statement of cash flows
for the three-month period then ended and the unaudited balance sheet and
related unaudited statement of operations and statement of cash flows for the
comparable period of the prior fiscal year thereto (the “2007 Unaudited
Financial Statements”).
                    (v) Seller shall cause the Company to execute true and
complete management representation letters to permit KPMG LLP (“KPMG”) to issue
its report with respect to the 2007 Audited Financial Statements.
               (c) Seller and their Affiliates shall afford to the
representatives of Purchaser, upon reasonable notice and without undue
interruption to Seller and its Affiliates, reasonable access during normal
business hours to the books and records of Parent and its Subsidiaries (other
than the Company and its Subsidiaries) pertaining to the operations of the
Business prior to the Closing Date for a period of eight years

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following the Closing Date in connection with financial statements and SEC
reporting obligations, and the assets and liabilities of the Company and its
Subsidiaries, and other reasonable business purposes; provided, that nothing
herein shall limit Purchaser’s rights of discovery. Seller agrees to hold all of
the books and records of the Business existing as of the Closing Date in
accordance with Parent’s standard record retention policies. Without limiting
the generality of the foregoing, Seller and its Affiliates shall cooperate with
Purchaser and its representatives in connection with the preparation of audited
and unaudited U.S. GAAP financial statements for the Business (including the
Company and its Subsidiaries) that comply with Regulation S-X promulgated under
the Securities Act of 1933, as amended, with appropriate presentation to reflect
the Divestment Activities any other assets not acquired for all periods required
prior to consummation of the Purchase), including providing reasonable access
during normal business hours to the personnel of Parent and its Subsidiaries and
books and records of such Persons pertaining to the operations of the Business
prior to the Closing Date to the extent reasonably necessary for the preparation
of such audited and unaudited financial statements.
               (d) After the Closing, Seller and its Affiliates will hold, and
will use their commercially reasonable efforts to cause their respective
officers, directors, employees, advisors and agents (collectively,
“Representatives”) to hold, in confidence, all information (written or
otherwise), in any form or medium, that is confidential, proprietary or
otherwise not generally available to the public and exclusively relates to the
Company or the Subsidiaries (the “Confidential Information”), except to the
extent that such information can be shown to have been (i) in the public domain
prior to the Closing, (ii) in the public domain at or after the Closing through
no fault of Seller or its Affiliates or Representatives or (iii) later lawfully
acquired by Seller or its Affiliates or Representatives from sources other than
those related to its prior ownership of the Company and the Subsidiaries. The
obligation of Seller and its Affiliates to hold the Confidential Information in
confidence after the Closing will be satisfied if Seller exercises the same care
with respect to the Confidential Information as it would take to preserve the
confidentiality of its own similar information in the ordinary course of
business. Nothing in this Agreement will restrict the ability of Seller to keep
copies of any Confidential Information after the Closing, including copies of
any and all books and records of the Company and the Subsidiaries. If, after the
Closing, Seller or any of its Representatives are legally required to disclose
any Confidential Information, Seller will (A) promptly notify Purchaser to
permit Purchaser, at its expense, to seek a protective order or take other
appropriate action and (B) cooperate as reasonably requested by Purchaser in
Purchaser’s efforts to obtain a protective order or other reasonable assurance
that confidential treatment will be accorded such Confidential Information, but
only at Purchaser’s sole cost and expense. If, after the Closing and in the
absence of a protective order, Seller or any of its Representatives are
compelled as a matter of Law to disclose Confidential Information to a third
party, Seller and its Representatives may disclose to the third party compelling
disclosure only the part of such Confidential Information as is required by Law
to be disclosed; provided, however, that, prior to any such disclosure, Seller
and its Representatives will use good faith efforts to advise and consult with
Purchaser and its counsel as to such disclosure and the nature and wording of
such disclosure.

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          4.03. Assistance in Transfer of Licenses, Permits and Registrations.
Seller will use its commercially reasonable efforts to assist Purchaser in
obtaining the transfer of any transferable Permits, including directing its
employees to cooperate with such transfer and making any notifications required
to be sent by Seller prior to the Closing. Purchaser will be responsible for any
out-of-pocket expenses associated with any of the foregoing transfers or
assignments, and Seller will not have any Liability for the failure to obtain
the transfer of any such Permit (except to the extent arising from a breach of
any of Seller’s representations and warranties in Article II or any of Seller’s
covenants in Article VI).
          4.04. Third-Party Consents. (a) Without limiting the effect of
Section 6.01, Seller will, and will cause each of the Company and its
Subsidiaries to, (i) give any notices to Persons required to be delivered
pursuant to any Contract of the Company or any of its Subsidiaries in connection
with the consummation of the transaction contemplated under this Agreement or
any of the Transaction Agreements and (ii) use their respective commercially
reasonable efforts to obtain all approvals, consents, authorizations and waivers
required to be obtained pursuant any Contract of the Company and its
Subsidiaries (other than Contracts relating to the Warehouse Facilities) in
connection with the consummation of the transaction contemplated under this
Agreement or any of the Transaction Agreements (collectively, “Third Party
Consents”).
               (b) From the date hereof until the Closing, Seller will be solely
responsible for any costs or expenses associated with obtaining the Third Party
Consents (excluding any costs or expenses of any outside advisors or consultants
of Purchaser or any of its Affiliates related thereto) and neither Purchaser nor
any of its Affiliates shall be required to make any payments or offer or grant
any accommodation (financial or otherwise) in exchange therefor. In connection
with this Section 4.04, neither Seller nor any of its Affiliate shall consent to
any modification of any Material Contract or otherwise obligate the Company or
any of its Subsidiaries to take or omit to take any action after the Closing
without the prior consent of Purchaser.
          4.05. Extinguishment of Intercompany Indebtedness and Certain
Affiliate Transactions; Restructuring Activities.
               (a) Prior to the Closing, Seller will cause all Intercompany
Indebtedness to be paid in full, cancelled, forgiven, terminated or otherwise
cease to be obligations and rights of the Company and the Subsidiaries (in each
case, without Liability to Purchaser or any of its Affiliates including, after
the Closing, the Company any its Subsidiaries) such that as of the Closing there
will be no Intercompany Indebtedness.
               (b) Prior to the Closing, Seller will terminate, or cause to be
terminated, all Affiliate Transactions (other than the Transaction Agreements
and those Affiliate Transactions set forth on Section 4.05(b) of the Seller
Disclosure Schedule), in each case, without Liability to Purchaser or any of its
Affiliates including, after the Closing, the Company any its Subsidiaries.

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               (c) Prior to Closing, Seller shall have taken, or caused one or
more of its Subsidiaries to have taken, each of the actions set forth on
Section 4.05(c) of the Seller Disclosure Schedule (such actions, the “Divestment
Activities”).
               (d) Prior to Closing, Seller shall have taken, or caused one or
more of its Subsidiaries to have taken, each of the actions set forth on
Section 4.05(d) of the Seller Disclosure Schedule (such actions, together with
the Divestment Activities, the “Restructuring Activities”). Sections 4.05(c) and
(d) of the Seller Disclosure Schedule are referred to in this Agreement,
collectively, as the “Restructuring Plan.”
          4.06. Servicer Ratings. No earlier than 45 Business Days prior to the
anticipated Closing Date and no later than 30 Business Days prior to the
anticipated Closing Date, Seller shall cause the Company and its Subsidiaries to
(i) request that each of the current rating agencies of the Company and its
Subsidiaries assess the Company’s primary servicer rating and (ii) use their
respective commercially reasonable efforts to obtain such updated primary
servicer ratings prior to the Closing.
V. COVENANTS OF PURCHASER
          5.01. Access. Other than with respect to Tax matters, which are
governed solely by Article VII, after the Closing, Purchaser will furnish to
Seller, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information relating
to the Company and the Subsidiaries as Seller may reasonably request. Seller
will bear all of the out-of-pocket costs and expenses (including attorneys’
fees, but excluding reimbursement for general overhead, salaries and employee
benefits) reasonably incurred in connection with the foregoing.
          5.02. Releases under Certain Contracts; Termination of Intercompany
Credit Agreement; Intercompany Indebtedness. (a) Following the Closing,
Purchaser will (i) use its commercially reasonable efforts to procure the
release by the applicable counterparty of any continuing obligation of Seller or
its Affiliates with respect to the Greenwich Facility Guarantee, the JPM
Facility Guarantee or the UBS Facility Guarantee and (ii) indemnify and hold
harmless Seller and its Affiliates from and against any Liability directly
resulting from any continuing obligation of Seller or its Affiliates with
respect to any Seller Guarantee (other than any Liability with respect to which
any Purchaser Indemnified Party is indemnified by Seller pursuant to
Section 7.04 or Article XI); provided, that, notwithstanding anything to the
contrary in this Agreement, Parent shall be solely liable with respect to any
reimbursement obligations (or guaranty thereof) arising from any NIM
transactions that have been consummated prior to the Closing (or that are
pending as of the Closing Date), other than any liability resulting from the
failure after the Closing of the Company or any of its Subsidiaries to comply
with its obligations under the related pooling and servicing agreements, and
Parent shall indemnify and hold Purchaser, the Company and its Subsidiaries
harmless from and against any Liability resulting therefrom.

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               (b) Purchaser acknowledges that the Intercompany Credit Agreement
will be terminated at or immediately prior to the Closing and consents to such
termination for all purposes of this Agreement.
          5.03. Contacts with Customers, Suppliers, Employees, etc. From the
date of this Agreement until the Closing, Purchaser (and all of its Affiliates
and Representatives) will have the right to contact and communicate with
(i) each of the counterparties to the Financing Facilities provided that
Purchaser shall afford Seller a reasonable opportunity to be present at or
participate in any such contract or communication by notice to Rebecca Shulman,
Treasurer, H&R Block, Inc., and (ii) only with Seller’s prior written consent
(which shall not be unreasonably withheld, conditioned or delayed), each of the
employees, consultants, customers, suppliers and distributors of the Company and
the Subsidiaries, in each case, in connection with the transactions contemplated
by this Agreement and the Transaction Agreements.
VI. COVENANTS OF PURCHASER AND SELLER
          6.01. Commercially Reasonable Efforts; Further Assurances.
(a) Purchaser and Seller will use their commercially reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, and assist and
cooperate with the other parties to this Agreement in doing, all things
necessary or desirable under applicable Law to consummate, in the most
expeditious manner practicable, the transactions contemplated by this Agreement
and the Transaction Agreements.
               (b) Purchaser and Seller will use their commercially reasonable
efforts to: (i) prepare, as soon as practicable, all filings and other
presentations in connection with seeking the Required Regulatory Approvals,
exemption or other authorization from any Governmental Authority necessary to
consummate the transactions contemplated by this Agreement and the Transaction
Agreements, (ii) prosecute such filings and other presentations with diligence,
and (iii) oppose any objections to, appeals from or petitions to reconsider or
reopen any such approval by Persons not party to this Agreement. Purchaser and
Seller will use their commercially reasonable efforts to facilitate obtaining
any final order or orders approving the transactions contemplated by this
Agreement and the Transaction Agreements, or to remove any impediment to the
consummation of the transactions contemplated hereby and thereby. Purchaser and
Seller will use their commercially reasonable efforts to furnish all information
in connection with the approvals of or filings with regard to the Required
Regulatory Approvals with any Governmental Authority and will promptly cooperate
with and furnish information in connection with any such requirements imposed
upon Purchaser, Seller or any of their respective Affiliates in connection with
this Agreement and the Transaction Agreements and the transactions contemplated
hereby and thereby; provided, however, that, notwithstanding the foregoing,
Purchaser shall not have any obligation to disclose confidential information
relating to itself or its Affiliates to Seller or any other Person, except to a
Governmental Authority where such Governmental Authority would afford
confidential treatment to such information. Each of the parties will use its
commercially reasonable best efforts to obtain the Required Regulatory Approvals
required to be obtained by such party. Neither party will not have

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any Liability to the other party for the failure to obtain any such Required
Regulatory Approvals to the extent such party has satisfied its obligations
under this Section 6.01. Purchaser and Seller will each advise the other party
promptly of any material communication received by such party or any of its
Affiliates from the Federal Trade Commission, Department of Justice, any state
attorney general or any other Governmental Authority regarding any of the
transactions contemplated by this Agreement and the Transaction Agreements, and
of any understandings, undertakings or agreements (oral or written) such party
proposes to make or enter into with the Federal Trade Commission, Department of
Justice, any state attorney general or any other Governmental Authority in
connection with the transactions contemplated hereby and thereby. To the fullest
extent reasonably practicable, neither Seller nor Purchaser will independently
participate in any meeting with any Governmental Authority in respect of any
findings or inquiry in connection with the transactions contemplated hereby
without giving the other prior notice of the meeting and the opportunity to
attend and/or participate, in each case, unless prohibited by the Governmental
Authority. Seller and Purchaser will consult and cooperate with one another in
connection with any information or proposals submitted in connection with
proceedings under or relating to the HSR Act in connection with the transactions
contemplated hereby. Subject to applicable Laws relating to the exchange of
information and consistent with their obligations hereunder, the parties shall
jointly direct all matters with any Governmental Authorities, except where the
matter or disclosure solely concerns Purchaser, in which case Purchaser shall
have the right to direct the matter.
               (c) Without limiting the generality of Section 6.01(b) above,
Parent and Seller shall use their respective best efforts to cause the
conditions set forth in Sections 9.02(d)(i) and 9.02(d)(ii) to be satisfied;
provided, however, that Purchaser’s remedies for any failure by Parent or Seller
to comply with their obligations pursuant to this Section 6.01(c) shall be
limited to those provided in Articles IX and X of this Agreement.
          6.02. HSR Clearance (a) In furtherance and not in limitation of the
provisions set forth in Section 6.01, each of Purchaser and Seller will make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act (an
“HSR Filing”) with respect to the transactions contemplated hereby as promptly
as practicable after the date hereof (and in no case less than 10 Business Days
after the date hereof), and thereafter make any other required submissions with
respect to the transactions contemplated hereby under the HSR Act and take all
other appropriate actions reasonably necessary, proper or advisable to cause the
expiration or termination of the applicable waiting period under the HSR Act as
soon as practicable (the “HSR Clearance”).
               (b) Notwithstanding anything to the contrary contained in this
Agreement, nothing in this Agreement, including, without limitation,
Section 6.01 or Section 6.02, shall require, or be construed to require,
(i) Purchaser or any of its Affiliates to proffer to, or agree to, sell divest,
lease, license, transfer, dispose of or otherwise encumber or hold separate and
agree to sell, divest, transfer, dispose of or otherwise encumber before or
after the Closing, any assets, licenses, operations, rights,

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product lines, businesses or interests therein of Purchaser, the Company or any
of their respective Affiliates (or to consent to any sale, divestiture, lease,
license, transfer, disposition or other encumberment by the Company or any of
its Subsidiaries of any of their respective assets, licenses, operations,
rights, product lines, businesses, or interest therein or to any agreement by
any such Person to take any of the foregoing actions) or to agree to make any
material changes (including, without limitation, through a licensing
arrangement) or restriction on, or other impairment of Purchaser’s ability to
own or operate, of any such assets, licenses, product lines, businesses or
interests therein or Purchaser’s or any of its Affiliate’s ability to vote,
transfer, receive dividends, or otherwise exercise full ownership rights with
respect to the capital stock of the Company or any of its Subsidiaries or
(ii) Purchaser or any of its Affiliates to take any other action under
Section 6.01 or Section 6.02 if the DOJ or FTC authorizes its staff to seek a
preliminary injunction or restraining order to enjoin the consummation of the
transactions contemplated by this Agreement.
          6.03. Post-Closing Litigation Cooperation. From and after the Closing,
except as would be reasonably expected to materially impair, or interfere with,
the operation of such party’s business, if and for so long as any party hereto
is actively contesting or defending against any claim or legal proceeding
arising in connection with (i) the transactions contemplated under this
Agreement or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act or
transaction on or prior to the Closing Date involving the Company or any of the
Subsidiaries (other than an action brought by one party to this Agreement
against another party or parties under the terms of this Agreement or in
connection with the transactions contemplated hereby), each of the parties will
reasonably cooperate with the contesting or defending party and its counsel in
the contest or defense, make available its personnel, and provide such testimony
and, subject to any applicable confidentiality restrictions, access to its books
and records as is reasonably necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending party
(unless the contesting or defending party is entitled to indemnification
therefor under Article VIII).
          6.04. Public Announcements. From the date hereof through the Closing
Date, no public release or announcement concerning the transactions contemplated
by this Agreement and the Transaction Agreements will be issued by Purchaser or
any of its Affiliates or their respective Representatives without the prior
consent of Seller (which consent will not be unreasonably withheld, conditioned
or delayed), and no public release or announcement concerning the transactions
contemplated hereby and thereby will be issued by Seller or any of its
Affiliates or their respective Representatives without the prior consent of
Purchaser (which consent will not be unreasonably withheld, conditioned or
delayed), except, in each case, as such release or announcement as a party may
determine in good faith may be required to be made by it or any of its
Affiliates by Law or the rules, regulations or policies of any United States or
foreign securities exchange, in which case such party will use its commercially
reasonable efforts to allow the other party reasonable time to comment on such
release or announcement in advance of such issuance; provided, however, that
Seller and its Affiliates may make internal announcements regarding the
transaction

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contemplated by this Agreement and the Transaction Agreements to their employees
after reasonable prior notice to, and consultation with, Purchaser.
          6.05. Trademarks and Tradenames of Seller. (a) Except as provided in
Section 6.05(b), immediately following the Closing, Purchaser and its Affiliates
will not use the Names or other names confusingly similar thereto. In addition,
upon termination of Purchaser’s and its Affiliates’ rights to use the Names,
Purchaser and Affiliates will amend or terminate any certificate of assumed name
or d/b/a/ filings containing any Names so as to eliminate its or its Affiliates’
right to use the Names. Nothing in this Agreement will constitute or be
interpreted to grant or transfer to the Purchaser, its Affiliates, the Company
and the Subsidiaries any rights in any Names, except as provided in this
Section 6.05. Notwithstanding anything to the contrary in this Agreement, the
Purchaser and its Affiliates shall have the right to: (i) keep records and other
historical or archived documents containing or referencing the Names and (ii)
refer to the historical fact that the Business was previously conducted under
the Names.
               (b) After the Closing, Purchaser and its Affiliates will have the
right to use existing labeling, stationery, business forms, supplies,
advertising and promotional materials and any similar materials bearing the
Names for 30 days following the Closing; provided, however, that (i) neither
Purchaser nor any of its Affiliates will take any action that could reasonably
be expected to impair the value of the Names, (ii) when using the items listed
above in the context of entering into or conducting contractual relationships,
Purchaser will make clear to all other applicable parties that Purchaser, rather
than Seller or its Affiliates, is the party entering into or conducting the
contractual relationship, and (iii) that personnel of Purchaser or its
Affiliates using the above items will not, and will have no authority to, hold
themselves out as officers, employees or agents of Seller or any Affiliate of
Seller.
               (c) Purchaser will use its commercially reasonable efforts to
minimize its use of the Names, and, in any event, will cease using, and cause
its Affiliates (including the Company and the Subsidiaries) to cease using, the
Names as soon as practicable and in any event within 30 days after the Closing.
               (d) Following the Closing, Seller will not, and will cause its
controlled subsidiaries not to, conduct business under or use the name “Option
One” or any confusingly similar name.
          6.06. Notices of Certain Events. From the date hereof until the
Closing Date, each party will promptly notify the other party of:
               (a) any material notice or other communication from any Person
alleging that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement and the Transaction
Agreements;
               (b) any written notice or other written communication from any
Governmental Authority in connection with the transactions contemplated by this
Agreement and the Transaction Agreements; and

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               (c) any change or fact of which it is aware that will or is
reasonably expected to result in any of the conditions set forth in Article IX
becoming incapable of being satisfied;
provided, however, that the delivery of any notice pursuant to this Section 6.06
shall not limit or otherwise affect the representations and warranties of the
delivering party or remedies available hereunder to the party receiving that
notice.
          6.07. Non-Solicitation. (a) Seller agrees that for a period of
24 months from the Closing Date, Seller will not, and will cause Parent and
Parent’s other subsidiaries not to, without obtaining the prior written consent
of the Purchaser:
                    (i) employ (or refer to another Person for the purpose of
such Person soliciting or employing) any of the management-level employees of
the Company or any of the Subsidiaries so long as they are employed by the
Company or any of the Subsidiaries; provided, however, that neither the Seller
nor Parent nor Parent’s subsidiaries shall be deemed to have solicited any such
person and may hire any such person who (i) responds to any public advertisement
placed by or on behalf of the Seller, Parent or any of Parent’s subsidiaries or
(ii) has been terminated by the Purchaser or its subsidiaries prior to the
employment relations with the Seller, Parent or any of Parent’s subsidiaries; or
                    (ii) solicit any current wholesale broker or servicing
customer of the Business or otherwise take any action reasonably likely to have
the effect of discouraging any such broker or servicing customer from
maintaining the same business relationships in respect of the Business with
Purchaser and its Subsidiaries (including the Company and its Subsidiaries)
after the Closing as maintained by the Company and its Subsidiaries as of the
date hereof; provided, however, that neither the Seller nor Parent nor Parent’s
subsidiaries shall be deemed to have solicited any such person who responds to
any public advertisement placed by or on behalf of the Seller, Parent or any of
Parent’s subsidiaries.
               (b) Except as may be required by applicable Law, promptly
following the Closing, Seller will, and will cause Parent and Parent’s other
subsidiaries to, destroy all copies of broker lists or servicing customer lists
pertaining to wholesale brokers or servicing customers, as the case may be, of
the Business in existence as of the Closing in the possession or control of any
such Person. Within five Business Days of Closing, Seller will provide Purchaser
with a written confirmation, signed by a duly authorized officer of Parent, to
the effect that all such copies have been destroyed.
               (c) Purchaser agrees that for a period of 24 months from the
Closing Date, neither Purchaser nor any of its controlled Affiliates will,
without obtaining the prior written consent of the Seller, employ (or refer to
another Person for the purpose of such Person soliciting or employing) any of
the management-level employees of Parent or any of its subsidiaries so long as
they are employed by Parent or any of its subsidiaries; provided, however, that
neither the Purchaser nor its controlled Affiliates shall be deemed to have
solicited any such person and may hire

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any such person who (i) responds to any public advertisement placed by or on
behalf of the Purchaser or any of its controlled Affiliates or (ii) has been
terminated by the Seller or its subsidiaries prior to the employment relations
with the Purchaser or its controlled Affiliates.
VII. TAX MATTERS
          7.01. General. Notwithstanding any other provision in this Agreement
(with the exception of Sections 2.09 and 4.01(h) hereof), this Article VII will
exclusively govern Tax matters.
          7.02. Tax Cooperation. (a) Purchaser and Seller will furnish to each
other, upon request, as promptly as practicable, such information and assistance
relating to the Company and the Subsidiaries (including access to books and
records) as is reasonably necessary for the filing of all Tax Returns, the
making of any election relating to Taxes, the preparation for any audit by any
Taxing Authority and the prosecution or defense of any Action relating to any
Tax. The party requesting any such information will bear all of the reasonable
out-of-pocket costs and expenses (including attorneys’ fees, but excluding
reimbursement for salaries and employee benefits) reasonably incurred in
connection with providing such information. Except with respect to information
that is generally available to the public, the party requesting such information
will (a) hold all such information in the strictest confidence, except as
required by applicable Law or which must be disclosed in connection with any
audit or Taxing Authority inquiry, (b) disseminate such information only to its
Representatives who have been advised of the confidential nature of such
information, and only on an as-needed basis, (c) return any original documents
promptly, after (i) the filing of such Tax Returns, the making of such election,
or the conclusion of such audit or Action and (ii) upon request of the other
party, all copies of the information received by it, and (d) take all steps
necessary to cause its officers, directors, employees and Representatives to
comply with the terms and conditions of this Section 7.02. Purchaser and Seller
will retain all books and records with respect to Taxes pertaining to the
Company and the Subsidiaries for a period of seven years following the Closing
or, if longer, until the statute of limitations has run on any Pre-Closing Tax
Period or Straddle Period. Subject to Section 7.04(c), Purchaser and Seller will
cooperate with each other in the conduct of any audit or other proceeding
relating to Taxes involving the Company and the Subsidiaries. Notwithstanding
the foregoing, Purchaser will not have access to any books, records, Tax Returns
or other information of Seller that do not relate exclusively to the Company and
the Subsidiaries.
               (b) Elections. At Seller’s reasonable request, Purchaser will
cause the Company and/or any of the Subsidiaries to make and/or join with Seller
(or any of its Affiliates) in making any election if the making of such election
could not have any adverse impact on Purchaser, the Company or the Subsidiaries
for a Post-Closing Tax Period or Post-Closing Straddle Period.
               (c) Transfer Taxes. Purchaser will timely file all Tax Returns
with respect to all excise, sales, use, value added, registration, stamp,
recording,

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documentary, conveyancing, franchise, transfer, transaction privilege and
similar Taxes, levies, charges and fees incurred in connection with the
transactions contemplated by this Agreement (collectively, the “Transfer Taxes”)
and all such Transfer Taxes (and all out-of-pocket costs for preparation of such
Tax Returns) shall be borne equally by Purchaser and Seller, whether or not
reflected on a Tax Return. Within 10 days prior to payment of such Transfer
Taxes being due, Purchaser will provide Seller with copies of all such Tax
Returns, and Seller will pay to Purchaser within 7 days thereof 50% of the
amount of such Transfer Taxes. Purchaser and Seller will reasonably cooperate to
reduce or eliminate Transfer Taxes to the extent permitted by applicable Law. If
Seller or Purchaser pays a Transfer Tax at the Closing or pursuant to a
post-Closing assessment by a Taxing Authority, the other party will reimburse
the paying party for 50% of the amount of such Tax within 14 days of the paying
party’s written demand therefor.
          7.03. Tax Sharing Agreements; Apportionment; Return Filings; Refunds
and Credits. (a) Seller will cause the provisions of any Tax sharing or Tax
allocation agreement or arrangement solely between the Seller or any of its
Affiliates (other than the Company and the Subsidiaries), and the Company or any
of the Subsidiaries, to be terminated on or before the Closing Date. After the
Closing Date, no party will have any rights or obligations under any such Tax
sharing or Tax allocation agreement or arrangement.
               (b) For purposes of this Agreement, the portion of Tax with
respect to the income, property or operations of the Company and the
Subsidiaries that relate to any taxable period that includes but does not end on
the Closing Date (a “Straddle Period”) will be apportioned between the period of
the Straddle Period that extends before the Closing Date through the Closing
Date (the “Pre-Closing Straddle Period”) and the period of the Straddle Period
that extends from the day after the Closing Date to the end of the Straddle
Period (the “Post-Closing Straddle Period”) in accordance with this Section
7.03(b). The portion of such Tax attributable to the Pre-Closing Straddle Period
will (i) in the case of any Taxes other than sales or use taxes, value-added
taxes, employment taxes, withholding taxes and any Tax based on, or measured by
income, receipts or profits earned during a Straddle Period, be deemed equal to
the amount that would be payable for the entire Straddle Period (or, in the case
of such Taxes determined on an arrears basis, the amount of such Taxes for the
immediately preceding period), multiplied by a fraction, the numerator of which
is the number of days in the Pre-Closing Straddle Period, and denominator of
which is the number of days in the Straddle Period and (ii) in the case of any
sales or use taxes, value added taxes, employment taxes, withholding taxes, and
any Tax based on or measured by income, receipts or profits earned during a
Straddle Period, be deemed equal to the amount that would be payable if the
Straddle Period ended on and included the Closing Date. To the extent that any
Tax for a Straddle Period is based on the greater of a Tax on net income, on the
one hand, and a Tax measured by net worth or some other basis not otherwise
measured by income, on the other hand, the portion of such Tax related to the
Pre-Closing Straddle Period will be determined based on the foregoing and based
on the manner in which the actual Tax liability for the entire Straddle Period
is determined. For purposes of this Section 7.03(b), any exemption,

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deduction, credit or other item that is calculated on an annual basis will be
allocated to the Pre-Closing Straddle Period on a pro rata basis by multiplying
the total amount of such items for the Straddle Period by a fraction, the
numerator of which is the number of calendar days in the Pre-Closing Straddle
Period, and the denominator of which is the number of calendar days in the
Straddle Period. The portion of Tax attributable to a Post-Closing Straddle
Period will be calculated in a corresponding manner. All transactions not in the
ordinary course of business occurring on the Closing Date after the Closing will
be allocated to a Post-Closing Straddle Period or a Post-Closing Tax Period, as
the case may be, to the extent permitted by Treasury Regulation
Section 1.1502-76(b)(1)(ii)(B).
               (c) Preparation of Tax Returns.
                    (i) Seller or its designee will prepare and timely file
(including extensions), or cause to be prepared and timely filed (including
extensions), in proper form with the appropriate Taxing Authority all necessary
Tax Returns of or which include or relate to the Company and the Subsidiaries
for (A) Pre-Closing Tax Periods that are required to be filed (including
extensions) on or prior to the Closing Date and (B) for all other Pre-Closing
Tax Periods to the extent that such Tax Returns are filed reflecting the effect
of a 338(h)(10) Election. Seller will pay or will cause to be paid any and all
Taxes due with respect to such Tax Returns.
                    (ii) Seller or its designee will prepare and timely file
(including extensions), or cause to be prepared and timely filed (including
extensions), in proper form with the appropriate Taxing Authority all
consolidated, combined or unitary Tax Returns of Seller that include or relate
to the Company and the Subsidiaries and any income Tax Return of the Company and
the Subsidiaries that reflect any Pre-Closing Straddle Period or any Pre-Closing
Tax Period (including any short period) that are not required to be filed on or
prior to the Closing Date (“Seller Tax Returns”). Seller will pay or will cause
to be paid any and all Taxes due with respect to such Seller Tax Returns.
Purchaser will provide or cause to be provided to Seller in a timely manner all
reasonably necessary data and other information to prepare all Seller Tax
Returns.
                    (iii) Seller will have the exclusive authority and
obligation to prepare or cause to be prepared all Tax Returns subject to Section
7.03(c)(i) and Section 7.03(c)(ii). Such authority will include, but not be
limited to, the determination of the manner in which any items of income, gain,
deduction, loss or credit arising out of the income, properties and operations
of the Company and the Subsidiaries will be reported or disclosed in such Tax
Returns; provided, however, that all such Tax Returns which affect or may affect
the Tax liability of the Company or any Subsidiaries with respect to a
Post-Closing Tax Period or Post-Closing Straddle Period shall be as filed
correct and complete and all such determinations shall be made in a manner
consistent with the Company’s past practices or as may be required by a Final
Tax Determination of any Pending Federal Tax Matter.
                    (iv) Purchaser or its designee will prepare and timely file
(including extensions), or cause to be prepared and timely filed (including
extensions),

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in proper form with the appropriate Taxing Authority all Tax Returns of the
Company and the Subsidiaries for which Seller is not responsible pursuant to
Section 7.03(c)(i) and Section 7.03(c)(ii). Purchaser will deliver to Seller any
Tax Returns that relate to any Pre-Closing Straddle Period or Pre-Closing Tax
Period, as the case may be, (and any relevant workpapers or other documents
reasonably requested by Seller) for Seller’s review and comment at least 45 days
prior to the due date of such Tax Returns (or such shorter period as is
necessary to allow for the timely filing of such Tax Returns), and Seller will
provide Purchaser with Seller’s comments no later than 10 days before the
respective due dates of such Tax Returns (or such shorter period as is necessary
to allow for the timely filing of such Tax Returns). Purchaser will (A)
reasonably consider any revisions that relate to any Pre-Closing Straddle Period
or Pre-Closing Tax Period to such Tax Returns as are requested by Seller, and
(B) make any revisions requested by Seller which are required by a Final Tax
Determination of any Pending Federal Tax Matter. Purchaser will pay or cause to
be paid any and all Taxes allocable to any Post-Closing Straddle Period or
Post-Closing Tax Period, as the case may be, pursuant to Section 7.03(b) and
Seller will pay to Purchaser, at least 3 days prior to the date on which payment
is due to the applicable Taxing Authority, Taxes allocable to any Pre-Closing
Straddle Period or Pre-Closing Tax Period, provided, however, that Seller shall
not have to pay to Purchaser any such Taxes to the extent accrued reserves for
such Taxes were included in the Most Recent Balance Sheet.
                    (v) Neither Purchaser nor any of its Affiliates will amend,
refile, revoke or otherwise modify any Tax Return or Tax election of the Company
or the Subsidiaries with respect to a Pre-Closing Tax Period or Pre-Closing
Straddle Period without the prior written consent of Seller. Seller may not
amend, refile, revoke or otherwise modify or cause or permit to be amended,
refiled, revoked or otherwise modified any Tax Return or Tax election of the
Company or any Subsidiaries that affects or may affect the Tax liability of the
Company or any Subsidiaries with respect to a Post-Closing Tax Period or
Post-Closing Straddle Period without the prior written consent of Purchaser,
except to the extent that such amendment, refiling, revocation or other
modification is required by a Final Tax Determination of any Pending Federal Tax
Matter.
                    (vi) With respect to any Tax Returns for any Straddle
Period, to the extent permissible, but not required, pursuant to applicable Tax
Law, Seller may and Purchaser or its Affiliates will, at Seller’s direction,
cause the Company to (A) take all steps as are or may be reasonably necessary,
including the filing of elections or returns with applicable Taxing Authorities,
to cause such period to end on the Closing Date or (B) if clause (A) is
inapplicable, report the operations of the Company only for that portion of such
period ending on the Closing Date in a combined, consolidated, or unitary Tax
Return filed by Seller or an Affiliate of Seller, notwithstanding that such
taxable period does not end on the Closing Date.
               (d) Purchaser will pay or cause to be paid to Seller any refunds
or credits of Income Taxes (including interest thereon) with respect to any
Pre-Closing Tax Period or Pre-Closing Straddle Period received by or credited to
Purchaser, the Company, any Subsidiary or any of their Affiliates within 10
Business Days after the

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receipt of such refund or the realization of such credit. At Seller’s reasonable
request, Purchaser and its Affiliates will cooperate with Seller in obtaining
such refunds or credits, including through the filing of amended Tax Returns or
refund claims as prepared by Seller, at Seller’s own expense; provided, however,
that such assistance shall not include the carryback of losses or other action
which has or could reasonably have an adverse economic impact on Purchaser, the
Company or any of the Affiliates thereof, except to the extent such other
actions are required by the Final Tax Determination of any Pending Federal Tax
Matter. Purchaser will permit Seller to control the prosecution of any such
refund claim and, where deemed appropriate by Seller, will authorize by
appropriate powers of attorney such Persons as Seller will designate to
represent the Company and/or the Subsidiaries with respect to such refund claim.
          7.04. Tax Indemnification. (a) From and after the Closing, Seller will
indemnify the Purchaser Indemnified Parties against and hold them harmless from
(i) all liability for Taxes of the Company and the Subsidiaries or any
affiliated group of which the Company or any Subsidiary has ever been a member
for the Pre-Closing Tax Period or the Pre-Closing Straddle Period, (ii) subject
to Section 7.02(c), all liability for Taxes as a result of the Purchase,
including all liability for Taxes arising from any 338(h)(10) Election,
(iii) any breach by the Company, the Subsidiaries or any affiliated group of
which the Company or any Subsidiary has ever been a member of any representation
set forth in Section 2.09 (determined without regard to any Material Adverse
Effect or materiality qualifiers) or any certificate delivered pursuant to
Section 1.03(c)(xii), any covenant in Section 4.01(h) or any covenant in
Article VII; and (iv) all liability for reasonable accounting and legal fees and
expenses attributable to any item in clauses (i) through (iii). Notwithstanding
anything to the contrary in the foregoing, any indemnity payment payable
pursuant to this Section 7.04(a) in respect of Non-Income Taxes for any
Pre-Closing Tax Period or Pre-Closing Straddle Period shall only be payable as a
Covered Loss pursuant to Section 11.05(a).
               (b) From and after the Closing, Purchaser will indemnify the
Seller Indemnified Parties and hold them harmless from (i) all liability for
Taxes of the Company and the Subsidiaries for any Post-Closing Tax Period or
Post-Closing Straddle Period, (ii) pursuant to Section 7.02(c), 50% of the
amount of any Transfer Taxes, (iii) any breach by the Company, the Subsidiaries
or Purchaser of any covenant in Article VII, and (iv) all liability for
reasonable legal fees and expenses attributable to any item in clauses (i) or
(iii).
               (c) Procedures Relating to Defense of Tax Claims.
                    (i) If notice of a claim will be made by any Taxing
Authority, which, if successful, might result in an indemnity payment to any
Purchaser Indemnified Party pursuant to this Section 7.04(c) (a “Tax Claim”),
Purchaser will promptly notify Seller in writing of such claim after receipt of
notice by the Purchaser Indemnified Party; provided, however, that the failure
to forward such notices and communications to the indemnifying party shall not
release the indemnifying party from

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any of its obligations under this Section 7.04(c) except to the extent (and only
to the extent) the indemnifying party is actually and materially prejudiced by
such failure.
                    (ii) With respect to any Tax Claim relating solely to Taxes
of the Company or any of the Subsidiaries, Seller will control all proceedings
taken in connection with such Tax Claim (including selection of counsel) and,
without limiting the foregoing, may in its sole discretion pursue or forego any
and all administrative appeals, proceedings, suits, contests, hearings and
conferences with any Taxing Authority with respect thereto (each, a “Tax
Proceeding”), and may, in its sole discretion, either pay the Tax claimed and
sue for a refund where applicable Law permits such refund suits or contest the
Tax Claim in any permissible manner; provided, however, that Seller first
acknowledges in writing that it has sole liability (except however, in the case
of Non-Income Taxes, to the extent Seller would not be liable by virtue of the
application of Section 11.05(a)) for any Taxes that might arise from or in
connection with such Tax Proceeding. Seller shall keep Purchaser reasonably and
regularly informed about such Tax Proceedings. With respect to any Tax Claim
relating to Taxes of the Company or any of the Subsidiaries (A) for a Straddle
Period, Purchaser may participate in, at its expense, and may control the
Post-Closing portion of any Tax Proceeding involving a Tax Claim and (B) for a
Tax Proceeding involving Non-Income Taxes which Seller might not be liable in
whole or in part by virtue of the application of Section 11.05(a) hereof,
Purchaser may participate in, at its expense, and may control the portion of any
such Tax Proceeding for which Seller may not be liable. In any case under this
Section 7.04(c)(ii) where a Taxing Authority fails to permit both the Seller and
the Purchaser to control a Tax Proceeding, the party with the greater financial
exposure shall control such Tax Proceeding provided however that it will not
settle or otherwise compromise any such Tax Proceeding without the other party’s
prior written consent, which consent will not be unreasonably withheld,
conditioned or delayed.
               (d) Any indemnification of a party pursuant to this Section 7.04
will be effected by wire transfer or transfers of immediately available funds
from the indemnifying party to an account or accounts designated by the
indemnified party within 15 days of the final determination thereof.
          7.05. Section 338(g) and Section 338(h)(10) Elections. (a) Neither
Seller nor any of its Affiliates shall make any election pursuant to Section
338(g) of the Code and the U.S. Treasury Regulations promulgated thereunder (or
any comparable election under state or local Tax law) with respect to the
Company or any Subsidiaries.
               (b) Seller shall join Purchaser in making an election (each, a
“338(h)(10) Election”) under Section 338(h)(10) of the Code (or any comparable
provision of state or local law) with respect to the acquisition by Purchaser of
the Company and any Subsidiaries (each, a “338(h)(10) Acquired Company”). Seller
and Purchaser shall each execute (or cause to be executed) on a timely basis all
documentation required to be submitted to any Taxing Authority in accordance
with any applicable Tax law for each 338(h)(10) Election.

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               (c) On or prior to the Closing Date, Seller and Purchaser shall
agree to an allocation of the Purchase Price among the Company and any
Subsidiaries. Seller and Purchaser agree to further allocate any amounts
allocated to a 338(h)(10) Acquired Company pursuant to the immediately preceding
sentence (plus any Liabilities of 338(h)(10) Acquired Companies assumed by
Purchaser) (for each 338(h)(10) Company, the “338(h)(10) Amount”) among the
assets of such 338(h)(10) Acquired Company in accordance with Section 7.05(d).
               (d) Within 45 days after the determination of the Final Closing
Tangible Net Assets pursuant to Sections 1.04(b) or 1.04(c), as the case may be,
Purchaser shall deliver to Seller a statement (the “Asset Allocation Statement”)
allocating each 338(h)(10) Amount among the assets of the relevant 338(h)(10)
Acquired Company (and among the assets of any Acquired Company that is a
disregarded entity for U.S. federal income tax purposes); provided that such
allocations be consistent with U.S. federal income tax law and, to the extent
consistent therewith, also be consistent with the Final Statement. If no changes
are proposed in writing to Purchaser within thirty (30) days after delivery of
the Asset Allocation Statement, Seller shall be deemed to have agreed to the
Asset Allocation Statement. If within thirty (30) days after delivery of the
Asset Allocation Statement, Seller notifies Purchaser in writing that Seller
objects to an allocation set forth in the Asset Allocation Statement, Purchaser
and Seller shall use commercially reasonable efforts to resolve such dispute
within thirty (30) days; provided, however, that if Purchaser and Seller are
unable to resolve their dispute within such thirty day period, Purchaser and
Seller shall jointly retain the Accounting Firm to resolve the disputed items.
Upon resolution of the disputed items, the allocations reflected on the Asset
Allocation Statement shall be adjusted to reflect such resolution. The costs,
fees and expenses of the Accounting Firm in resolving any dispute pursuant to
this Section 7.05(d) shall be borne equally by Purchaser and Seller.
               (e) If an adjustment is made to the Purchase Price pursuant to
Section 1.04 or Section 1.05, Seller and Purchaser agree, for all Tax purposes,
to allocate the adjustment among the Company and any Subsidiaries and/or the
assets of the 338(h)(10) Acquired Companies based on the item or items to which
such adjustment is principally attributable. Neither Seller nor Purchaser (nor
any of their respective Affiliates) shall file any Tax Return, or take a
position with a Taxing Authority, that is inconsistent with this Section 7.05 or
that treats the transactions under this Agreement in a manner inconsistent with
the terms of this Agreement.
VIII. EMPLOYEES AND EMPLOYEE BENEFITS
          8.01. Employee Benefits and Compensation. (a) Except as otherwise
provided in this Section 8.01, the Company and the Subsidiaries will be
responsible following the Closing for all employee benefit (other than with
respect to Seller Employee Plans) and employment-related liabilities (whether
incurred before, on or after the Closing Date) with respect to the Employees,
Persons who are former employees of the Company or any Subsidiary (“Former
Employees”) and their spouses or dependents, including liability for
continuation coverage under group health plans pursuant to Section 4980B of the
Code and Part 6 of Subtitle B of Title I of ERISA.

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               (b) Until the first anniversary of the Closing Date, Purchaser
will, or will cause the Company and the Subsidiaries to, provide Employees with
a level of aggregate employee benefits and compensation that is substantially
comparable in the aggregate to the aggregate employee benefits and compensation
(other than equity-based compensation) provided to the Employees as of
immediately prior to the Closing taking into account all Employee Plans and
other programs (other than equity-based compensation) sponsored or maintained by
Seller and its Affiliates (the term “Affiliates” as used herein to include the
Company and the Subsidiaries prior to the Closing). Purchaser will, or will
cause the Company and the Subsidiaries to, assume and honor in accordance with
their terms the Company Employee Plans and the Seller Employee Plans set forth
on Section 8.01(b) of the Seller Disclosure Schedule.
               (c) Purchaser will, or will cause the Company and the
Subsidiaries to, cause all plans and programs of Purchaser, the Company and the
Subsidiaries that provide benefits to Employees to recognize all service of the
Employees with Seller or any of its predecessors and Affiliates to the same
extent and for the same purposes thereunder as such service was counted under
similar benefit plans of the Seller or any of its predecessors and Affiliates
for all purposes (except that, with respect to benefit accrual, such service
will not be counted to the extent that it would result in a duplication of
benefits and will not be required to be counted for purposes of benefit accrual
under any defined benefit pension plan). Any medical, dental or health plan of
Purchaser, the Company or any Subsidiary that is adopted or continued after the
Closing to provide group health benefits to Employees (a “Purchaser Group Health
Plan”) will not include with respect to any Employee any restrictions or
limitations with respect to pre-existing condition exclusions or any
actively-at-work requirements (except to the extent such restrictions or
limitations were applicable as of the Closing Date under the Company’s or any
Subsidiary’s current group health plans in effect as of the Closing Date or any
similar plans of the Seller or any of its predecessors or Affiliates (an
“Existing Group Health Plan”)), and any eligible expenses incurred by any
Employee and his or her covered dependents during the portion of the plan year
of such Existing Group Health Plan ending on the date such Employee’s
participation in such Purchaser Group Health Plan begins will be taken into
account under the Purchaser Group Health Plan for purposes of satisfying all
deductible, coinsurance and maximum out-of-pocket requirements applicable to
such Employee and his or her covered dependents for the applicable plan year as
if such amounts had been paid in accordance with such Purchaser Group Health
Plan.
               (d) Active participation of all Employees, Former Employees and
their respective spouses and dependents under the Seller Employee Plans will
terminate effective immediately prior to the Closing Date and, except as set
forth in Section 8.01(b), Seller shall retain all liabilities and obligations
related to the Seller Employee Plans (whether incurred prior to, on or after the
Closing Date). Following the Closing Date, the Seller Employee Plans will be
liable for benefits accrued (in the case of pension plans within the meaning of
Section 3(1) of ERISA) and claims incurred (in the case of welfare plans within
the meaning of Section 3(2) of ERISA) under the Seller Employee Plans prior to
the Closing Date with respect to Employees, Former Employees and their
respective spouses and dependents, and the Companies and the

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Subsidiaries will retain sponsorship of and any and all Liabilities under the
Company Employee Plans following the Closing Date. A claim will be deemed
“incurred” on the date that the event that gives rise to the claim occurs (for
purposes of life insurance, sickness, accident and disability programs) or on
the date that treatment or services are provided (for purposes of health care
programs).
               (e) Following the Closing, Seller will cause its 401(k)
Retirement Plan (the “Seller Retirement Plan”) to make distributions to
Employees in accordance with the terms of the Seller Retirement Plan. Purchaser
will cause a defined contribution plan or plans sponsored by Purchaser to accept
direct rollovers (described in Section 401(c) of the Code) of lump sum
distributions which Employees receive from the Seller Retirement Plan.
               (f) Effective as of the Closing Date, Purchaser will establish,
or will cause the Company to establish, a medical flexible spending account plan
(“Purchaser’s Flexible Spending Account Plan”) for the benefit of Employees
which will recognize the elections that Employees had in effect for purposes of
the plan year in which the Closing Date occurs under the medical flexible
spending account plan of Seller (“Seller’s Flexible Spending Account Plan”). As
soon as practicable after the Closing Date, Purchaser will cause Purchaser’s
Flexible Spending Account Plan to assume the account balances associated with
the Employees’ flexible spending accounts under Seller’s Flexible Spending
Account Plan. After the Closing Date, Purchaser ‘s Flexible Spending Account
Plan will be responsible for reimbursement of all previously unreimbursed
reimbursable medical claims incurred by Employees in the Seller’s plan year in
which the Closing Date occurs.
          8.02. Employee Matters. (a) It is expressly agreed and understood that
neither Purchaser nor Seller has any right, power or authority to control,
direct or regulate the labor relations and human resources policies and
procedures of the other, that neither is deemed to constitute the agent or
representative of the other, and that neither is liable in any manner whatsoever
for the acts or omissions of the other, its agents, representatives or
employees.
               (b) At all times prior to the Closing, Seller will have sole and
exclusive responsibility for the operation and management of the Company and the
Subsidiaries, for the employment and control of the Employees, for compliance
with all Laws governing the employment relationship, and for compliance with the
terms of any employment Contract or Employee Plan covering the Employees or any
of Seller’s Former Employees. At all times subsequent to the Closing, Purchaser
will have sole and exclusive responsibility for the operation and management of
the Company and the Subsidiaries, for the employment and control of Employees,
for compliance with all Laws governing the employment relationship, and for
compliance with the terms of any employment Contract or Company Employee Plan
covering Employees.
          8.03. No Third Party Beneficiaries. No provision of this Article VIII
creates any third-party beneficiary or other rights in any Employee or Former
Employee (including any beneficiary or dependent thereof) of Seller, the
Company, any

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Subsidiary, the Purchaser or any other Person other than the parties hereto and
their respective successors and assigns, or constitute or create an employment
agreement or an amendment to or adoption of any employee benefit plan of or by
Seller, the Company, any Subsidiary or Purchaser.
IX. CONDITIONS TO CLOSING
          9.01. Conditions to Each Party’s Obligations. The obligations of each
party hereto to consummate the transactions contemplated hereby are subject to
the satisfaction of the following conditions:
               (a) the waiting period under the HSR Act relating to the Purchase
shall have been terminated or expired; and
               (b) no court or other Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law (and if an injunction, whether temporary, preliminary or permanent) that is
in effect and prevents, restrains, enjoins or otherwise prohibits the
consummation of any of the transactions contemplated by this Agreement or makes
such consummation illegal (collectively, an “Order”).
          9.02. Conditions to Obligation of Purchaser. The obligation of
Purchaser to consummate the transactions contemplated hereby are subject to the
satisfaction of the following further conditions:
               (a) Seller shall have performed in all material respects all of
its obligations hereunder required to be performed by it on or prior to the
Closing Date, provided, however, for the avoidance of doubt, neither the
Purchaser’s receipt of the financing contemplated by the Financing Commitments,
nor the receipt by Purchaser of the proceeds of any other financing, is a
condition to the Purchaser’s obligation to consummate the transactions
contemplated hereby,
               (b) the representations and warranties of Seller contained in
this Agreement and in any certificate or other writing delivered by Purchaser
pursuant hereto shall be true and correct (without regard to any qualifications
therein to materiality or Material Adverse Effect, other than the reference to
Material Adverse Effect in the first sentence of Section 2.08) as of the date
hereof and at and as of the Closing, as if made at and as of such time (or, if
made as of a specific date, at and as of such specified date), except for such
inaccuracies that would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect; provided, however, that the
representations and warranties set forth in Sections 2.01, 2.02, 2.05 and 2.06
shall be true and correct in all respects.
               (c) since the date of this Agreement, there shall not have
occurred any change, effect or development that has had, or could reasonably be
expected to have, a Material Adverse Effect;

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               (d) (i) except as otherwise provided in Section 9.02(d)(ii) of
the Seller Disclosure Schedule, from the date hereof through the Closing, (A) no
less than $8,000,000,000 (of which at least $2,000,000,000 shall be in the form
of unused capacity as of the Closing Date) of the Current Warehouse Facilities
(or replacement Warehouse Facilities incurred in accordance with Section
4.01(g)) shall be in full force and effect and (B) there shall not be any
default (or any event that would have constituted a default with notice) under
or with respect to any such Warehouse Facilities; (ii) there shall not have
occurred a Servicer Downgrade; and (iii) as of the Closing, there shall be at
least $2,000,000,000 of BIT Mortgage Loans that will have been funded within 60
days of the Closing Date excluding any BIT Mortgage Loans sourced out of the
Business’ relationship with HRBMC or funded through the Business’ correspondent
channel (the most recently originated $2,000,000,000 of such BIT Mortgage Loans,
as measured by unpaid principal balance as of the Closing Date, being referred
to as the “BIT Requirement Loans”);
               (e) all Intercompany Indebtedness shall have been extinguished in
accordance with Section 4.05;
               (f) Purchaser shall have received a certificate signed by an
officer of Parent certifying that the conditions set forth in Sections 9.02(a)
through (e) shall have been satisfied;
               (g) Purchaser will have received at least five Business Days
prior to Closing the 2007 Audited Financial Statements, including an auditor’s
opinion prepared by KPMG that contains no exceptions, qualifications or
disclaimers, except for (i) those exceptions, qualifiers or disclaimers that
were contained in the auditor’s opinion of KPMG to the 2006 Audited Financial
Statements, and (ii) the explanatory paragraph described in Section 9.02(g)(ii)
of the Purchaser Disclosure Schedule; and
               (h) (i) all of the approvals, consents, authorizations, orders,
permits and filings listed in Section 9.02(h)(i) of the Purchaser Disclosure
Schedule shall have been obtained (without the imposition of any material
limitations, restrictions or conditions) or made and be in full force and
effect, (ii) all other approvals, consents, authorizations, orders, permits and
filings required to be obtained from or made with a Governmental Authority to
consummate the transactions contemplated hereby or otherwise operate the Company
or any of its Subsidiaries immediately after the Effective Time as presently
conducted shall have been obtained (without the imposition of any material
limitations, restrictions or conditions) or made and be in full force and
effect; provided, that, this clause (ii) shall be deemed to be satisfied to the
extent (x) all approvals, consents, authorizations, orders, permits and filings
required to be obtained from or made with 50% of the U.S. states and territories
not listed on Section 9.02(h)(i) of the Purchaser Disclosure Schedule (the
“Other Regulatory Approvals”) have been obtained (without the imposition of any
material limitations, restrictions or conditions) or made and are in full force
and effect and (y) the failure to obtain or make all other approvals, consents,
authorizations, orders, permits and filings required to be obtained from
Governmental Authorities would not reasonably be expected to provide a
reasonable basis to conclude that Purchaser or any of its Affiliates (including
the

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Company and its Subsidiaries) would be subject to risk of criminal sanctions;
and (iii) all other approvals or consents (excluding those consents set forth on
Section 9.02(h)(iii) of the Purchaser Disclosure Schedule) required to be
obtained from a Person other than a Governmental Authority to consummate the
transactions contemplated hereby or otherwise operate the Company or any of its
Subsidiaries immediately after the Effective Time as presently conducted shall
have been obtained (without the imposition of any material limitations,
restrictions or conditions) or made and be in full force and effect, other than
those, with respect to this clause (iii), the absence of which, individually or
in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect.
          9.03. Conditions to Obligation of Seller. The obligation of Seller to
consummate the transactions contemplated hereby is subject to the satisfaction
of the following further conditions:
               (a) Purchaser shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to the
Closing Date;
               (b) the representations and warranties of Purchaser contained in
this Agreement and in any certificate or other writing delivered by Purchaser
pursuant hereto will be true in all material respects as of the date hereof and
at and as of the Closing, as if made at and as of such time (or if made as of a
specific date, at and as of such date); provided, however, that the
representations and warranties set forth in Sections 3.01 and 3.02 shall be true
and correct in all respects; and
               (c) Seller shall have received a certificate signed by an officer
of Purchaser certifying that the conditions set forth in Sections 9.03(a) and
(b) shall have been satisfied;
          9.04. Frustration of Closing Conditions. Neither Purchaser nor Seller
may rely on the failure of any condition set forth in Sections 9.01, 9.02 or
9.03, as the case may be, to be satisfied if such failure was caused by such
party’s failure to comply with its obligations to consummate the transactions
contemplated by this Agreement as required by the provisions of this Agreement,
including Section 6.01.
X. TERMINATION
          10.01. Grounds for Termination. This Agreement may be terminated at
any time prior to the Closing:
               (a) by mutual written agreement of Seller and Purchaser;
               (b) by either Seller or Purchaser if the Closing has not been
consummated on or before December 31, 2007 (the “Termination Date”); provided,
however, that the right to terminate this Agreement pursuant to this Section
10.01(b) will not be available to the party seeking to terminate if any action
of such party or the failure of such party to perform any of its obligations
under this Agreement required to be performed at or prior to the Closing has
been the proximate cause of the failure of

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the Closing to occur on or before the Termination Date and such action or
failure to perform constitutes a breach of this Agreement;
               (c) by Seller in the event that Purchaser has materially breached
any applicable representation, warranty, or covenant contained in this Agreement
such that the condition set forth in Section 9.03(a) or (b) would not be
satisfied, and which has not been cured, if capable of being cured, prior to the
earlier of (i) thirty (30) days after the notice of breach and (ii) the
Termination Date;
               (d) by Purchaser in the event that (1) Seller has materially
breached any applicable representation, warranty, or covenant contained in this
Agreement such that the condition set forth in Section 9.02(a) or (b) would not
be satisfied, and which has not been cured, if capable of being cured, prior to
the earlier of (i) thirty (30) days after the notice of breach and (ii) the
Termination Date; or (2) a change, event or development (or series of changes,
events, or developments) has occurred that, individually or in the aggregate,
has had or would be reasonably likely to have a Material Adverse Effect.
The party desiring to terminate this Agreement pursuant to Section 10.01(b),
will give written notice of such termination to the other party.
          10.02. Effect of Termination. If this Agreement is terminated as
permitted by Section 10.01, such termination will be without liability of any
party hereto (or any equityholder, director, officer, employee, agent,
consultant or representative of any such party) to any other party to this
Agreement; provided, however, that nothing herein will relieve any party from
liability for any willful and material breach hereof. The provisions of Sections
6.04 (Public Announcements), 10.02 (Effect of Termination) and Article XII
(Miscellaneous) will survive any termination hereof pursuant to 10.01.
XI. SURVIVAL; INDEMNIFICATION
          11.01. Survival. (a) The representations and warranties of the
Purchaser and Seller contained in this Agreement and all claims with respect
thereto shall expire upon the second anniversary of the Closing Date; provided,
however, that (i) the representations and warranties contained in Section 2.06
(Capitalization), Section 2.11 (Compliance with Laws; Permits) and
Section 2.23(g) (Securitizations and Warehouse Facilities) shall expire upon the
fifth anniversary of the Closing Date, (ii) the representations and warranties
contained in Section 2.17 (Environmental Matters) and Section 2.22 (Origination
and Servicing) shall expire upon the third anniversary, (iii) the
representations and warranties contained in Section 2.09 (Taxes) and
Section 2.12 (Employee Benefits) shall expire 90 days after the applicable
statute of limitations, including any extensions or waivers thereof and (iv) the
representations and warranties contained in Sections 2.01 (Organization), 2.02
(Authority; Enforceability), 2.05 (Ownership of Shares), 3.01 (Organization) and
3.02 (Authority; Enforceability) will survive the Closing indefinitely.

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               (b) The covenants and agreements of the parties hereto contained
in this Agreement will survive in accordance with their respective terms.
               (c) No investigation made (including any environmental
investigation or assessment or any due diligence review or investigation) or
knowledge acquired or capable of being acquired by or on behalf of a party
hereto at any time before or after the date of this Agreement shall affect any
representation, warranty, covenant or undertaking of the other party contained
in this Agreement or the indemnification obligations of any party under this
Agreement.
          11.02. Indemnification of Purchaser by Seller. (a) Except with respect
to the matters specifically provided for in Section 7.04, from and after the
Closing Date, Seller will indemnify and save and hold harmless Purchaser and its
Affiliates, and the Company and its Subsidiaries, and each of their respective
officers, directors, shareholders, partners, members and employees and their
heirs, successors and permitted assigns (collectively, the “Purchaser
Indemnified Parties”) from and against any Covered Losses imposed on, incurred,
asserted against or suffered by any such Purchaser Indemnified Party, whether in
respect of a Third-Party Claim or otherwise, directly or indirectly, resulting
from or arising out of: (i) any misrepresentation of or inaccuracy in any
representation or warranty of Seller in this Agreement (other than in respect of
(1) Actions under Section 2.10 (which is addressed in clause (iv) below), (2)
Section 2.22(a) or (d) or Section 2.23(a) (which are addressed in clause
(iv) below) and Section 2.23(f) (insofar as it solely relates to events causing
an increase in the reserve requirements relating to loan repurchases) and
Section 2.24 (which are addressed in clause (v) below)) or by Seller or in any
document or certificate delivered pursuant hereto (it being understood that for
purposes of this Section 11.02, any qualifications relating to materiality or
“Material Adverse Effect” contained in any such representation or warranty
(other than in the first sentence of Section 2.08) shall be disregarded),
(ii) any nonfulfillment or breach of any covenant or agreement made by Seller in
this Agreement or in any document or certificate delivered pursuant hereto, and
(iii) the Restructuring Activities or any Liabilities relating to HRBMC or the
operation of HRBMC prior to the Closing Date (except to the extent any such
Losses are of a nature addressed pursuant to clause (v) below, in which case the
Purchaser Indemnified Parties shall be indemnified pursuant to such clause,
unless such Losses are also of a nature addressed pursuant to clause (iv)(A)
below, in which case the Purchaser Indemnified Parties shall be indemnified
pursuant to clause (iv) below and not clause (v)); (iv) (A) any
misrepresentation of or inaccuracy in Section 2.22(a) or (d) or Section 2.23(a)
in this Agreement (it being understood that for purposes of this clause (iv),
any qualifications relating to materiality or “Material Adverse Effect”
contained in any such representation or warranty shall be disregarded) in so far
as it relates to origination or servicing of Loans or Receivables or any Action
alleging a violation of Law or act of fraud or predatory lending or failure to
disclose or meet borrower suitability standards by the Company or any of its
Subsidiaries or any of its employees, representatives, agents or any other
Person or entity acting on behalf of any such Person or the Business prior to
the Closing (including, without limitation, any failure to obtain or comply with
any Permit) in connection with the origination or servicing of Loans or
Receivables and (B) any of the Actions listed (or required to be listed) in
Section 2.10 of the Seller Disclosure

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Schedule or other Actions against the Company or any of its Subsidiaries or the
Business arising after the date hereof and prior to the Closing, in each case
clause (A) and (B), to the extent that the sum of such Covered Losses exceeds
(such excess, “Compliance/Actions Covered Losses”) the amount of reserves for
such non-compliance or Actions incorporated in the final determination of Final
Closing Tangible Net Assets pursuant to Section 1.04; provided, that, Seller
shall only be obligated to indemnify and hold harmless the Purchaser Indemnified
Parties from and against 75% of the first $10,000,000 of Compliance/Actions
Covered Losses (it being understood and agreed that Seller shall be obligated to
indemnify and hold harmless the Purchaser Indemnified Parties from and against
100% of all Compliance/Actions Covered Losses in excess of $10,000,000), (v) any
Company Guarantee in respect of any sales of Loans or Receivables by the Company
or any of its Subsidiaries prior to the Closing or any misrepresentation of or
inaccuracy in Section 2.23(f) (insofar as it solely relates to events causing an
increase in the reserve requirements relating to loan repurchases) and
Section 2.24, but only to the extent that the Covered Losses of the Company and
its Subsidiaries in respect of such Company Guarantees and/or arising from any
such misrepresentation or inaccuracy exceed in the aggregate (such excess, the
“Repurchase Obligation Covered Losses”) the sum of (A) the amount reflected as
“Repurchase Liabilities” in the calculation of Final Closing Tangible Net Assets
and (B) $5,000,000; provided, that, Seller shall only be obligated to indemnify
and hold harmless the Purchaser Indemnified Parties from and against 75% of the
first $50,000,000 of Repurchase Obligation Covered Losses (it being understood
and agreed that Seller shall be obligated to indemnify and hold harmless the
Purchaser Indemnified Parties from and against 100% of all Repurchased
Obligation Covered Losses in excess of such dollar amount), and (vi) any failure
to fund any Loans prior to Closing in violation of contractual obligations
resulting from any change in the Company’s underwriting guidelines since
January 31, 2007.
               (b) The Purchaser Indemnified Parties will not be entitled to
assert any indemnification pursuant to Section 11.02(a)(i) after the expiration
of the applicable survival period with respect to misrepresentations of or
inaccuracies in the representations and warranties of Seller referenced in
Section 11.01; provided, however, that if, on or prior to such expiration of the
applicable survival period, a notice of claim will have been given to Seller in
accordance with Section 11.04 (Procedures Relating to Indemnification) for such
indemnification, the Purchaser Indemnified Parties will continue to have the
right to be indemnified with respect to such indemnification claim until such
claim for indemnification has been satisfied or otherwise resolved as provided
in this Article XI.
               (c) Any indemnification of a Purchaser Indemnified Party pursuant
to this Section 11.02 will be effected by wire transfer or transfers of
immediately available funds from Seller to an account or accounts designated in
writing by the applicable Purchaser Indemnified Party to Seller within 15 days
following receipt from a Purchaser Indemnified Party of a written demand for
indemnification in respect of Covered Losses, together with reasonable back-up
documentation, unless Seller in good faith disputes in whole or in part the
demand for reimbursement in which event the recipient of the indemnification
claim shall so notify the Purchaser Indemnified Party

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and, following any Final Determination of such disputed claim, shall make
payment within five Business Days thereof. A “Final Determination” is deemed to
have occurred for purposes of this Article XI when (i) the parties to the
dispute have reached an agreement in writing, (ii) a court of competent
jurisdiction shall have entered into a final non-appealable order or judgment or
(iii) an arbitration or similar panel shall have rendered a final,
non-appealable determination with respect to disputes the Parties have agreed to
submit thereto; provided, that to the extent an indemnified party is required to
pay any Taxes, fees, fines, penalties or payments to any Governmental Authority
in respect of a purported indemnified matter and a court of competent
jurisdiction shall have entered into an order or judgment that, among other
things, provides that the indemnified party is liable hereunder in respect of
the claim, the indemnifying party shall be required to fund any such Taxes,
fees, fines, penalties or payments due to the Governmental Authority at the time
such decision or order is rendered; provided, however, that to the extent
failure to pay any such Taxes, fees, fines, penalties or payments at the time
demanded by such Governmental Authority could reasonably be expected to
adversely effect such indemnified party in any material respect, then the
indemnifying party shall be required to fund such Taxes, fees, fines, penalties
or payments due at the time demanded by such Governmental Authority; provided,
further, that to the extent there is a final non-appealable order or judgment
holding that all or a portion of the Taxes, fees, fines, penalties or payments
paid to such Governmental Authority were not required to be paid, the
indemnified party shall reasonably cooperate with the indemnifying party in
effort to obtain the remittance of such amount of Taxes, fees, fines, penalties
or payments that were not required to be paid, and the indemnified party shall
remit to the indemnifying party such Taxes, fees, fines, penalties or payments
promptly upon reimbursement by the applicable Governmental Authority.
          11.03. Indemnification of Seller by Purchaser. (a) Except with respect
to the matters specifically provided for in Section 7.04, from and after the
Closing Date, Purchaser and its Affiliates will indemnify and save and hold
harmless Seller and its Affiliates and their respective officers, directors,
shareholders, partners, members, and employees and their heirs, successors and
permitted assigns (collectively, the “Seller Indemnified Parties”) from and
against any Covered Losses suffered by any such Seller Indemnified Parties
resulting from or arising out of: (i) any misrepresentation of or inaccuracy in
any representation or warranty of Purchaser in this Agreement or in any document
or certificate delivered pursuant hereto or (ii) any nonfulfillment or breach of
any covenant or agreement made by Purchaser in this Agreement or in any document
or certificate delivered pursuant hereto.
               (b) The Seller Indemnified Parties will not be entitled to assert
any indemnification in accordance with Section 11.03(a) after the expiration of
the applicable survival period with respect to misrepresentations of or
inaccuracies in the representations and warranties of Purchaser referenced in
Section 11.01; provided, however, that if on or prior to the expiration of the
applicable survival period, a notice of claim will have been given to Purchaser
pursuant to Section 11.04 (Procedures Relating to Indemnification) for such
indemnification, the Seller Indemnified Parties will continue to have the right
to be indemnified with respect to such indemnification claim until such

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claim for indemnification has been satisfied or otherwise resolved as provided
in this Article XI.
               (c) Any indemnification of a Seller Indemnified Party pursuant to
this Section 11.03 will be effected by wire transfer or transfers of immediately
available funds from Purchaser to an account or accounts designated by the
applicable Seller Indemnified Party to Purchaser within 15 days following
receipt by Purchaser from a Seller Indemnified Party of a written demand for
indemnification in respect of Covered Losses, together with reasonable back-up
documentation, unless Purchaser in good faith disputes in whole or in part the
demand for reimbursement in which event the recipient of the indemnification
claim shall so notify the Seller Indemnified Party and, following any Final
Determination of such disputed claim, shall make payment within five Business
Days thereof.
          11.04. Procedures Relating to Indemnification. (a) In order for an
indemnified party to be entitled to any indemnification provided for under this
Article XI in respect of, arising out of or involving a claim or demand made by
any Person (other than a party hereto or Affiliate thereof) against the
indemnified party (a “Third-Party Claim”), such indemnified party must notify
the indemnifying party in writing, and in reasonable detail, of the Third-Party
Claim as promptly as reasonably practicable after receipt by such indemnified
party of written notice of the Third-Party Claim (the “Claim Notice”); provided,
however, that failure to give such notification will not affect the
indemnification provided hereunder except to the extent, and solely to the
extent, the indemnifying party’s defense or other rights available to it will
have been actually prejudiced as a result of such failure. The indemnified party
will deliver to the indemnifying party, within ten Business Days after the
indemnified party’s receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the
Third-Party Claim. For the avoidance of doubt, all indemnifiable Taxes shall not
be governed by this Section 11.04 and shall, instead, be governed by Section
7.04(c).
               (b) The indemnifying party will have twenty (20) days (or such
lesser number of days as set forth in the Claim Notice as may be required by
court proceeding in the event of a litigation matter) after receipt of the Claim
Notice to notify the indemnified party that it desires to assume and thereafter
conduct the defense of the Third-Party Claim with counsel of its choice
reasonably satisfactory to the indemnified party, unless the indemnified party
has notified the indemnifying party that it has determined in good faith that
(i) there is a reasonable probability that such claim may adversely effect it or
its Affiliates in any material respect (other than the payment of money damages
in an amount that does not exceed the Cap), (ii) a conflict of interest exists
in respect of such claim, (iii) there are specific defenses available to the
indemnified party that are different from or additional to those available to
the indemnifying party and that could be adverse to the indemnifying party; and
(iv) the claim involves money damages in an amount in excess of the Cap. If the
indemnifying party assumes the defense of the Third-Party Claim, it shall have
conclusively established its obligation to indemnify the indemnified party with
respect to such Third-Party Claim.

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               (c) If the indemnifying party assumes such defense, the
indemnified party will have the right to participate in the defense thereof and
to employ counsel, at its own expense except that such counsel shall be at the
expense of the indemnifying party in the instances specified in clauses (i),
(ii), (iii) or (iv) of Section 11.04(b)) separate from the counsel employed by
the indemnifying party, it being understood that the indemnifying party will
control such defense. The indemnifying party will be liable for the fees and
expenses of counsel employed by the indemnified party for any period during
which the indemnifying party has not assumed the defense thereof.
               (d) If the indemnifying party chooses to defend any Third-Party
Claim, all the parties hereto will cooperate in the defense or prosecution
thereof. Such cooperation will include the retention and (upon the indemnifying
party’s request) the provision to the indemnifying party of records and
information that are reasonably relevant to such Third-Party Claim, and the use
of commercially reasonable efforts to make employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. All reasonable out-of-pocket costs incurred by an
indemnified party in connection with any such cooperation shall constitute
“Covered Losses” for purposes of this Article XI. Whether or not the
indemnifying party shall have assumed the defense of a Third-Party Claim, the
indemnified party will not admit any liability with respect to, or settle,
compromise or discharge, such Third-Party Claim without the indemnifying party’s
prior written consent (which consent will not be unreasonably withheld,
conditioned or delayed). The indemnifying party shall not admit any liability or
wrongdoing with respect to, consent to the entry of any judgment or enter into
any settlement or compromise with respect to the Third-Party Claim without the
prior written consent of the indemnified party (not to be unreasonably withheld,
conditioned or delayed) unless the judgment or settlement involves only the
payment of money damages all of which will be borne by the indemnifying party in
accordance with its indemnification obligations hereunder and does not
(i) impose an injunction or other equitable relief upon the indemnified party,
or (ii) involve any admission of liability or wrongdoing by the indemnified
party or its Affiliates or (iii) otherwise involve any other remedy materially
adverse to the indemnified party.
               (e) If any indemnified party desires to assert any claim for
indemnification provided for under this Article XI other than a claim in respect
of, arising out of or involving a Third-Party Claim, such indemnified party will
notify the indemnifying party in writing, and in reasonable detail (taking into
account the information actually known by such indemnified party as of the
notification date), of such claim promptly after becoming aware of the existence
of such claim; provided, however, that the failure of an indemnified party to
notify the indemnifying party will relieve the indemnifying party from its
obligation to indemnify only to the extent that the indemnifying party is
actually and materially prejudiced as a result of such failure.
               (f) If the indemnifying party (i) elects not to defend the
indemnified party against a Third-Party Claim, whether by not giving the
indemnified party timely notice of its desire to so defend or otherwise, (ii) is
not entitled to defend the

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Third-Party Claim as a result of the indemnified party’s election to defend the
Third-Party Claim as provided in Section 11.04(b), or (iii) after assuming the
defense of a Third-Party Claim, fails to take reasonable steps necessary to
defend diligently such Third-Party Claim within ten days after receiving written
notice from the indemnified party to the effect that the indemnifying party has
so failed, the indemnified party shall have the right but not the obligation to
assume its own defense; it being understood that the indemnified party’s right
to indemnification for a Third-Party Claim shall not be adversely affected by
assuming the defense of such Third-Party Claim. Unless and until an indemnifying
party assumes the defense of a Third-Party Claim, the indemnified party may
defend against the Third-Party Claim in any manner it may reasonably deem
appropriate at the expense of the Indemnifying Party, subject to Section
11.04(d).
          11.05. Limitations on Indemnification. (a) Seller will have no
liability for indemnification pursuant to clause (i) of Section 11.02(a) or, but
solely in respect of Non-Income Taxes, Section 7.04(a) with respect to:
                    (i) Covered Losses for which indemnification is provided
thereunder unless such Covered Losses exceed in the aggregate an amount equal to
1.0% of the Final Closing Tangible Net Assets (the “Deductible”), in which case
Seller will be liable for all such Covered Losses in excess of such amount
(subject to the other limitations set forth in this Agreement, including those
set forth in clause (ii) of this Section 11.05(a)); provided, however, that the
Deductible shall not apply to the representations and warranties contained in
Sections 2.01 (Organization), 2.02 (Authority; Enforceability), or 2.05
(Ownership of Shares), or 2.06 (Capitalization), or
                    (ii) Covered Losses for which indemnification is provided
thereunder to the extent that such Covered Losses exceed in the aggregate an
amount equal to $250,000,000 (the “Cap”), in which case Seller will not be
liable for the portion of such Covered Losses in excess of such amount;
provided, however, that the Cap shall be the Purchase Price with respect to the
representations and warranties contained in Sections 2.01 (Organization), 2.02
(Authority; Enforceability), 2.05 (Ownership of Shares) or 2.06
(Capitalization).
               (b) Purchaser will have no liability for indemnification pursuant
to clause (i) of Section 11.03(a) with respect to:
                    (i) Covered Losses for which indemnification is provided
thereunder unless such Covered Losses exceed in the aggregate the Deductible, in
which case Purchaser will be liable for all such Covered Losses in excess of
such amount (subject to the other limitations set forth in this Agreement,
including those set forth in clause (ii) of this Section 11.05(b)); provided,
however, that the Deductible shall not apply to the representations and
warranties contained in Sections 3.01 (Organization) or 3.02 (Authority;
Enforceability); or
                    (ii) Covered Losses for which indemnification is provided
thereunder to the extent that such Covered Losses exceed in the aggregate an
amount equal to the Cap, in which case Purchaser will not be liable for the
portion of such

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Covered Losses in excess of such amount; provided, however, that the Cap shall
be the Purchase Price with respect to the representations and warranties
contained in Sections 3.01 (Organization) or 3.02 (Authority; Enforceability).
               (c) No indemnified party will be entitled to recover from an
indemnifying party more than once in respect of the same Covered Loss.
               (d) For the avoidance of doubt, losses relating to Income Taxes
and Transfer Taxes indemnified under Section 7.04 shall not be subject to the
limitations of Section 11.05.
          11.06. Exclusive Remedy. Except as otherwise provided in Article VII,
this Article XI will be the exclusive remedy of the parties hereto following the
Closing for any losses arising out of any misrepresentation or breach of the
representations, warranties, covenants or agreements of the parties contained in
this Agreement or any document or certificate delivered pursuant hereto, except
for (a) any fraudulent breach, (b) a party’s right to specific performance under
this Agreement or (c) as otherwise provided in this Agreement. In furtherance of
the foregoing, each of the parties hereto hereby waives, to the fullest extent
permitted under applicable Law, any and all rights, claims and causes of action
it may have against the other parties hereto, arising under or based upon any
Law (including CERCLA and other Environmental Laws), other than the right to
seek indemnity pursuant to this Article XI.
          11.07. Adjustments of Purchase Price. Any indemnification payments
made pursuant to Articles VII and XI shall be deemed to be adjustments of
Purchase Price, to the extent permitted by the Code.
XII. MISCELLANEOUS
          12.01. Definitions. The following terms, as used herein, have the
following meanings:
     “2006 Audited Financial Statements” has the meaning set forth in Section
2.07(a).
     “2007 Audited Financial Statements” has the meaning set forth in Section
4.02(b)(iii).
     “2007 Financial Statements” means the 2007 Audited Financial Statements and
the 2007 Unaudited Financial Statements.
     “2007 Unaudited Financial Statements” has the meaning set forth in Section
4.02(b)(iv).
     “338(h)(10) Acquired Company” has the meaning set forth in Section 7.05(b).
     “338(h)(10) Amount” has the meaning set forth in Section 7.05(c).

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     “338(h)(10) Election” has the meaning set forth in Section 7.05(b).
     “Accounting Firm” has the meaning set forth in Section 1.04(c).
     “Accounting Principles” has the meaning set forth in Section 1.04(a)(viii).
     “Acquiring Party” means the Party that acquires the portion of the Business
that is the subject of the Sale Transaction.
     “Acquisition Financing” has the meaning set forth in Section 3.05.
     “Acquisition Transaction” means any acquisition or purchase by the Company
or any of its Subsidiaries of any business or Person or any material assets or
securities thereof (whether by merger, stock purchase, asset purchase,
consolidation or similar transaction), other than purchases of mortgage loans in
the ordinary course of business
     “Action” means any civil, criminal or administrative claim, demand, action,
suit, proceeding (public or private), investigation, hearing litigation,
prosecution, arbitration, mediation, SEC “Wells” process or audit by or before
any Governmental Authority.
     “Adjustment Fraction” means, with respect to any Specified Line Item, a
fraction equal to (x) the Applicable Determination of such Specified Line Item,
over (y) the estimated book value of such Specified Line Item as of the
Applicable Estimation Date.
     “Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such other
Person as of the date on which, or at any time during the period for which, the
determination of affiliation is being made. For purposes of this definition, the
term “control” (including, with correlative meanings, the terms “controlled by”
and “under common control with”), as used with respect to any Person means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by Contract or otherwise.
     “Affiliate Transaction” has the meaning set forth in Section 2.18(a).
     “Agreement” has the meaning set forth in the Preamble.
     “Applicable Determination” means the average of the Initial Pre-Closing
Determinations in the case of the Initial Estimate Statement and the average of
the Pre-Closing Determinations in the case of the Estimate Statement; provided,
that in the case of Beneficial Interests in Trust, the term has the meaning set
forth in the Closing Balance Sheet Methodologies Schedule under the heading
“Beneficial Interest in Trust.”
     “Applicable Estimation Date” means the Initial Estimate Date in the case of
the Initial Estimate Statement and the Estimate Date in the case of the Estimate
Statement.
     “Applicable Requirements” means, with respect to the Company and its
Subsidiaries: (A) all obligations under any Material Contracts pertaining to the

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origination, sale and/or servicing of Loans, (B) all Laws and Orders pertaining
to the origination, sale and/or servicing of Loans applicable to the Company or
any of its Subsidiaries and (C) the Company Loan Policies and all other
applicable requirements, handbooks, manuals and guidelines of the Company and
its Subsidiaries.
     “April 30 Pro Forma Financial Statements” has the meaning set forth in
Section 4.02(b)(iii).
     “Asset Allocation Statement” has the meaning set forth in Section 7.05(d).
     “Balance Sheet Date” has the meaning set forth in Section 2.07(a).
     “BIT Requirement Loans” has the meaning set forth in Section 9.02(d)(iii).
     “Business” means the origination, purchase, sale and servicing of
residential mortgage loans as presently conducted by the Company and its
Subsidiaries (excluding any business conducted by HRBMC).
     “Business Combination” means any Acquisition Transaction or Sale
Transaction.
     “Business Day” means a day, other than Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by Law
to close.
     “Calculation Period” means the 18-month period immediately following the
Closing.
     “Calculation Period End Date” means the last day of the 18th month
immediately following the Closing.
     “Cap” has the meaning set forth in Section 11.05(a)(ii).
     “CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. §§ 9601 et seq.
     “Claim Notice” has the meaning set forth in Section 11.04(a).
     “Closing” has the meaning set forth in Section 1.03(a).
     “Closing Balance Sheet Methodologies Schedule” has the meaning set forth in
Section 1.04 (a)(i).
     “Closing Date” has the meaning set forth in Section 1.03(a).
     “Closing Date Cash Payment” has the meaning set forth in Section 1.02.
     “Closing Tangible Net Assets” means the Tangible Net Assets of the Company
and its Subsidiaries (adjusted to exclude HRBMC and all noneconomic residuals)
as of 11:59 PM (Eastern Standard Time) on the day immediately preceding the
Closing Date.

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     “Code” means the Internal Revenue Code of 1986, as amended.
     “Company” has the meaning set forth in the Recitals.
     “Company Employee Plan” has the meaning set forth in Section 2.12(a)(ii).
     “Company Guarantees” means all guarantees, surety bonds, covenants,
indemnities, representations and warranties, obligations to repurchase
(including obligations to repurchase arising out of borrower fraud), letters of
credit, letters of comfort, commitments and similar credit assurances provided
by the Company or any of its Subsidiaries.
     “Company Intellectual Property” means all Intellectual Property owned by
the Company or any Subsidiary.
     “Company Loan Policies” has the meaning set forth in Section 2.22(d).
     “Compliance/Actions Covered Losses” has the meaning set forth in Section
11.02(a).
     “Confidential Information” has the meaning set forth in Section 4.02(d).
     “Contract” means any agreement, contract, commitment, instrument,
undertaking, lease, note, mortgage, indenture, sales or purchase order, license
or arrangement, whether written or oral.
     “Covered Loss” means any and all losses, Liabilities, claims, fines,
deficiencies, damages, obligations, payments (including those arising out of any
settlement, judgment or compromise relating to any Action and any D&O Required
Payments), reasonable costs and expenses (including interest and penalties due
and payable with respect thereto and reasonable attorneys’ and accountants’ fees
and any other reasonable out-of-pocket expenses incurred in investigating,
preparing, defending, avoiding or settling any Action) (collectively, “Losses”),
arising under, out of or in connection with any matter that is the subject of
indemnification pursuant to: (a) Article XI (disregarding any of the
cost-sharing principles or thresholds set forth in Section 11.02(a)(iv) or (v)
or (b) solely in respect of Non-Income Taxes, Section 7.04(a)); provided,
however, that Covered Loss excludes (i) any loss or Liability having an
aggregate value of less than $100,000, (ii) any loss or Liability that has been
reflected in the calculation of the Final Closing Tangible Net Assets, but
solely to the extent of such reserve; provided, that such loss or Liability has
resulted in an adjustment of the Purchase Price in favor of the indemnified
party or its affiliates as finally determined pursuant to Section 1.4, (iii) any
punitive, exemplary, consequential or similar damages and any diminution in
value or lost profit, in each case, except to the extent awarded by a court of
competent jurisdiction in connection with a Third-Party Claim or in the case of
consequential or similar damages (other than punitive damages) or any loss of
anticipated or future business or profits, to the extent reasonably foreseeable.
The amount of any Covered Loss subject to indemnification hereunder shall be
calculated net of any insurance proceeds received by the indemnitee on

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account of such Covered Loss net of any actual costs, expenses or premiums
incurred in connection with securing or obtaining such proceeds. The indemnitee
shall use commercially reasonable efforts to (i) seek full recovery from any
third parties and under all insurance policies covering any Covered Loss and
(ii) use commercially reasonable efforts to mitigate any actual Covered Loss, in
each case to the same extent as it would if such Covered Loss were not subject
to indemnification pursuant to the terms of this Agreement. In the event that
insurance proceeds are received by the indemnitee with respect to any Covered
Loss for which it has received indemnification proceeds hereunder, then a refund
equal to the net amount of the recovery shall be made promptly to the indemnitor
that provided such indemnification to the indemnitee; provided, that the
indemnified party shall not be required to refund any amount in excess of the
indemnification proceeds received from the indemnifying party.
     “Current Warehouse Facilities” means the Warehouse Facilities of the
Company and its Subsidiaries listed (or required to be listed) on
Section 2.16(a)(viii) of the Seller Disclosure Schedule.
     “D&O Required Payments” means any payments required to be made to any
present or former employee, officer or director of the Company or its
Subsidiaries in respect of any Losses incurred in connection with any Action
arising out of or pertaining to matters existing or occurring at or prior to the
Closing (and whether asserted or claimed prior to, at or after the Closing) that
are, in whole or in part, based on or arising out of the fact that such person
is or was a director, officer, employee of the Company or any of Subsidiary,
including the transactions contemplated by this Agreement or served as a
fiduciary under, or with respect to, any Employee Plan at any time maintained by
or contributed to by the Company or any of its Subsidiaries.
     “Data Room” means that certain virtual data room relating to the Company
established by Seller and its Affiliates through WebEx WebOffice as such data
room existed on the Business Day immediately preceding the date of this
Agreement.
     “Deductible” has the meaning set forth in Section 11.05(a)(i).
     “Derivative Contract” means any swap transaction, option, warrant, forward
purchase or sale transaction, futures transaction, cap transaction, floor
transaction or collar transaction relating to one or more currencies,
commodities, emissions allowances, renewable energy credits, bonds, equity
securities, loans, interest rates, catastrophe events, weather-related events,
credit-related events or conditions on any indexes, or any other similar
transaction (including any option with respect to any of these transactions) or
combination of any of these transactions, including collateralized mortgage
obligations or other similar instruments or any debt or equity instruments
evidencing or embedding any such types of transactions, and any related credit
support, collateral or other similar arrangements related to such transactions.
     “Disclosure Schedules” has the meaning set forth in Section 12.12.
     “Divestment Activities” has the meaning set forth in Section 4.05(c).

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     “Domain Names” means Internet electronic addresses, uniform resource
locators and alpha-numeric designations associated therewith registered with or
assigned by any domain name registrar, domain name registry or other domain name
registration authority as part of an electronic address on the Internet and all
applications for any of the foregoing.
     “Earnout Amount” means the lower of (i) 50% of the Net Income during the
Calculation Period and (ii) $300,000,000.
     “Earnout Methodologies” has the meaning set forth in Section 1.05(a)(i).
     “Earnout Statement” has the meaning set forth in Section 1.05(a)(ii).
     “Earnout Termination Payment” means, with respect to a Sale Transaction,
the amount equal to (i) the Earnout Amount calculated for the period from the
Closing Date to the applicable Business Combination Closing Date plus
(ii) solely to the extent such Earnout Amount is less than $300,000,000, the Pro
Rata Sale Profit; provided, that in no event shall the Earnout Termination
Payment exceed $300,000,000.
     “Employee” means any individual who, as of the Closing, is actively
employed (whether full- or part-time) by the Company or any Subsidiary or any
such individual who is on short-term disability leave, authorized leave of
absence, military service or lay-off with recall rights as of the Closing.
     “Employee Plans” has the meaning set forth in Section 2.12(a)(i).
     “Environment” means any ambient, air, surface water, drinking water,
groundwater, land surface (whether below or above water), and subsurface strata.
     “Environmental Claim” means any claim, cause of action, investigation or
notice by any Person or any Governmental Authority threatening or alleging
potential liability (including potential liability for investigatory costs,
cleanup or remediation costs, governmental or third party response costs,
natural resource damages, property damage, personal injuries, or fines or
penalties) based on or resulting from (a) the presence or Release of any
Hazardous Substances at any location, whether or not owned or operated by the
Company or any of the Subsidiaries, or (b) any violation of any Environmental
Law.
     “Environmental Laws” means any Law relating to: (i) protection and
reclamation of the Environment, (ii) exposure of employees or third parties to
any Hazardous Substances, (iii) any Release or threatened Release of any
Hazardous Substances, including investigation, assessment, testing, monitoring,
containment, removal, remediation and cleanup of any such Release or threatened
Release, or (iv) the management of any Hazardous Substances, including the
disposal, storage, treatment, transport, or recycling of any Hazardous
Materials.
     “Environmental Liabilities” means any monetary obligations, losses,
liabilities (including strict liability), damages, punitive damages,
consequential damages, treble

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damages, costs and expenses (including all reasonable out-of-pocket fees,
disbursements and expenses of counsel, out-of-pocket expert and consulting fees
and out-of-pocket costs for environmental site assessments, remedial
investigation and feasibility studies), fines, penalties, sanctions and interest
incurred as a result of any Environmental Claim filed by any Governmental
Authority or any third party which relate to any violations of Environmental
Laws, Remedial Actions, Releases or threatened Releases of Hazardous Substances
from or onto any property presently or formerly owned by the Company and the
Subsidiaries.
     “Environmental Permits” has the meaning set forth in Section 2.17(a).
     “EPD” has the meaning set forth in Section 4.02(b)(ii).
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
     “Estimate Date” has the meaning set forth in Section 1.04(a)(ix).
     “Estimate Statement” has the meaning set forth in Section 1.04(a).
     “Estimated Closing Tangible Net Assets” has the meaning set forth in
Section 1.04(a).
     “Estimated Tangible Net Assets Shortfall” means the amount, if any, by
which the Target Tangible Net Assets exceeds the Estimated Closing Tangible Net
Assets.
     “Estimated Tangible Net Assets Surplus” means the amount, if any, by which
the Estimated Closing Tangible Net Assets exceeds the Target Tangible Net
Assets.
     “Estimated Value” means, with respect to any Specified Line Item required
to be set forth on the Initial Estimate Statement or the Estimate Statement, as
the case may be, the product of (x) the estimated book value of such Specified
Line Item as at the Closing Date, and (y) the applicable Adjustment Fraction.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “Existing Group Health Plan” has the meaning set forth in Section 8.01(c).
     “Fair Market Value” has the meaning set forth in Section 1.04 (a)(iii).
     “Final Cash Payment” has the meaning set forth in Section 1.04(d).
     “Final Closing Tangible Net Assets” has the meaning set forth in Section
1.04(b)(iii).
     “Final Determination” has the meaning set forth in Section 11.02(c).
     “Final Earnout Amount” has the meaning set forth in Section 1.05(a)(ii).

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     “Final Earnout Termination Payment” has the meaning set forth in Section
1.05(f)(ii).
     “Final Residuals” means any “Residuals” reflected on the Final Statement.
     “Final Statement” has the meaning set forth in Section 1.04(b)(iii).
     “Final Tax Determination” means (i) a closing agreement, settlement
agreement or similar agreement settling a Tax Proceeding entered into among the
Seller, the Company and the IRS between or (ii) a final non-appealable order or
judgment rendered by a court of competent jurisdiction concluding a Tax
Proceeding.
     “Financial Statements” has the meaning set forth in Section 2.07(a).
     “Financing Commitments” has the meaning set forth in Section 3.05.
     “Financing Facilities” has the meaning set forth in Section 4.01(g).
     “Former Employees” has the meaning set forth in Section 8.01(a).
     “GAAP” means United States generally accepted accounting principles,
consistently applied.
     “General Enforceability Exceptions” has the meaning set forth in
Section 2.02.
     “Governmental Authority” means any federal, state, local or foreign
government (including any political or other subdivision or judicial,
legislative, executive or administrative branch, agency, commission, authority
or other body of any of the foregoing).
     “Greenwich Facility Guarantee” means the Guaranty, dated as of April 1,
2001, of H&R Block, Inc. in favor of Wells Fargo Bank Minnesota, National
Association under that certain Indenture, dated as of April 1, 2001, between
Option One Owner Trust 2001-1A and Wells Fargo Bank Minnesota, National
Association, and the Noteholders parties thereto.
     “Hazardous Substance” means any “hazardous substance” and any “pollutant or
contaminant“ as those terms are defined in CERCLA; any “hazardous waste” as that
term is defined in the Resource Conservation and Recovery Act, as amended
(“RCRA”); and any “hazardous material” as that term is defined in the Hazardous
Materials Transportation Act (49 U.S.C. § 1801 et seq.), as amended and
including, any petroleum product or byproduct, radioactive material, asbestos,
and polychlorinated biphenyls (or PCBs).
     “HRBMC” means H&R Block Mortgage Corporation, a Massachusetts corporation.

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     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
     “HSR Clearance” has the meaning set forth in Section 6.02(a).
     “HSR Filing” has the meaning set forth in Section 6.02(a).
     “Income Taxes” means any taxes imposed by a Taxing Authority on or measured
by net income (or in the case of Texas, gross receipts), or any franchise taxes
imposed in lieu thereof, including any interest, penalties or additions to tax
attributable to such Taxes.
     “Indebtedness” means, without duplication, (i) any indebtedness for
borrowed money, whether secured or unsecured, or issued in substitution for or
exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by
any note, bond, debenture or other debt security, or are liabilities in respect
of mandatorily redeemed or purchasable capital stock or securities convertible
into capital stock; (iii) any obligations as lessee under capital leases,
(iv) obligations under conditional sale or other title retention agreement
relating to property purchased by such Person, (v) obligations under Derivative
Contracts (valued at the termination value thereof), (vi) any guaranty of any of
the foregoing (including with respect to any third party) and (vii) any fees,
penalties, premiums (in the case of prepayments or otherwise) or accrued and
unpaid interest with respect to the foregoing.
     “Initial Estimate Date” has the meaning set forth in Section (1.04(a)(iii).
     “Initial Estimate Statement” has the meaning set forth in Section
1.04(a)(viii).
     “Initial Pre-Closing Determination” has the meaning set forth in Section
1.04(a)(iii).
     “Insurer” means (i) a Person who insures or guarantees all or any portion
of the risk of loss on any Loan, including any provider of PMI, standard hazard
insurance, flood insurance, earthquake insurance or title insurance with respect
to any Loan or related mortgaged real property.
     “Intellectual Property” means any and all patents and patent applications;
trademarks, service marks, trade names, brand names, trade dress, slogans, and
logos, Domain Names and other indicia of origin, and the goodwill associated
with any of the foregoing; inventions (whether patentable or not), industrial
designs, discoveries, improvements, ideas, designs, models, formulae, patterns,
compilations, data collections, drawings, blueprints, mask works, devices,
methods, techniques, processes, know-how, proprietary information, customer
lists, software, technical information, IT Systems and trade secrets;
copyrights, copyrightable works, and rights in databases and data collections;
moral and economic rights or authors and inventors; other intellectual or
industrial property rights and foreign equivalent or counterpart rights and
forms of protection of a similar or analogous nature to any of the foregoing or
having similar effect in any jurisdiction throughout the world; and
registrations and

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applications for registration of any of the foregoing, including any renewals,
extensions, continuations (in whole or in part), divisionals, re-examinations or
reissues or equivalent or counterpart thereof; and all documentation and
embodiments of the foregoing.
     “Intercompany Credit Agreement” means that certain Credit Agreement dated
April 30, 2006 by and between Seller and the Company, and any successor
agreement or any other agreement that provides for H&R Block, Inc. or any
Affiliate of H&R Block, Inc. to make loans or extend credit to the Company or
any of its Affiliates.
     “Intercompany Indebtedness” means all Indebtedness owed by, or to, the
Company and the Subsidiaries, on the one hand, and Seller and its Affiliates
(other than the Company and the Subsidiaries), on the other hand.
     “Interim Monthly Financial Statements” has the meaning set forth in Section
4.02(b)(ii).
     “Investment Bank” has the meaning given in the Closing Balance Sheet
Methodologies Schedule.
     “Investor” means any Person who owns or holds Loans, or servicing rights
related thereto, sold by the Company or any Subsidiary.
     “IRS” means the United States Internal Revenue Service.
     “IT Systems” means electronic data processing, information, recordkeeping,
communications, telecommunications, networking, account management, inventory
management and other such applications, software, hardware, equipment and
services (including all applications and software installed on all hardware and
equipment), and all documentation related to the foregoing.
     “January 31 Pro Forma Financial Statements” has the meaning set forth in
Section 2.07(a).
     “JPM Facility Guarantee” means the Guaranty, dated as of August 8, 2003,
made by Parent in favor of Wells Fargo Bank Minnesota, N.A., as indenture
trustee under the Indenture, dated as of August 8, 2003, between Option One
Owner Trust 2003-4 and the indenture trustee, and the noteholders defined
therein.
     “Knowledge” means the actual knowledge, after due inquiry, of (i) with
respect to Seller, any person listed in Section 12.01(d) of the Seller
Disclosure Schedule, and (ii) with respect to Purchaser, of any officer of
Purchaser.
     “KPMG” has the meaning set forth in Section 4.02(b)(v).
     “Law” means any statute, law, ordinance, regulation, rule, code or other
requirement of a Governmental Authority or any Order.
     “Leased Real Property” has the meaning set forth in Section 2.14(b).

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     “Leases” has the meaning set forth in Section 2.14(b).
     “Lending Policies” means the written policies and procedures used by the
Company and the Subsidiaries in the origination, administration and servicing of
the Loans.
     “Liability” means any direct or indirect liability, debt, obligation,
commitment, guaranty, claim, loss, damage, deficiency, fine, cost or expense of
any kind, whether relating to payment, performance or otherwise, known or
unknown, fixed, absolute or contingent, accrued or unaccrued, matured or
unmatured, disputed or undisputed, liquidated or unliquidated, secured or
unsecured, joint or several, due or to become due, asserted or unasserted,
vested or unvested, executory, determined, determinable or otherwise, whenever
and however arising (including whether or not required to be reflected or
reserved against on the financial statements of the obligor under GAAP).
     “Licensed Intellectual Property” means all Intellectual Property that the
Company or any Subsidiary is licensed or otherwise permitted by other Persons to
use.
     “Lien” means any security interest, pledge, mortgage, lien (including liens
imposed by Law, such as but not limited to, mechanics’ liens), charge,
hypothecation, option to purchase or lease or otherwise acquire any interest,
conditional sales agreement, adverse claim of ownership or use, title defect,
easement, right of first refusal, encumbrance, right of way or other encumbrance
of any kind, other than those arising by reason of restrictions on transfers
under federal, state and foreign securities Laws.
     “Loan Documents” means the documents relating to Loans required by
Applicable Requirements to document and service the Loans, whether on hard copy,
microfiche or its equivalent or in electronic format and, to the extent required
by Applicable Requirements, credit and closing packages and disclosures.
     “Loan Purchaser” has the meaning set forth in Section 2.16(a)(x).
     “Loan Sale” has the meaning set forth in Section 2.16(a)(x).
     “Loans” means any loan, loan agreement, note, borrowing arrangement or
extension of credit, including letters of credit, leases, credit enhancements,
guarantees and similar interest-bearing assets, as well as commitments to extend
any of the same.
     “Material Adverse Effect” means an event, change, occurrence, fact,
variation, development or circumstance having or resulting in, or that could be
reasonably be expected to have or result in, a material adverse effect on the
business, operations, assets, liabilities, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole; provided,
however, that any such effect resulting or arising from any of the following
matters will not be considered when determining whether a Material Adverse
Effect has occurred or could be reasonably be expected to occur: (i) any
conditions in the United States general economy or the general economy in which
the Company and its Subsidiaries operate;

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(ii) political conditions including acts of war (whether or not declared), armed
hostilities and terrorism, or developments or changes therein; (iii) any
conditions resulting from natural disasters; (iv) compliance by Seller with its
covenants and agreements contained in this Agreement (but nothing in this clause
shall affect Seller’s representations and warranties in this Agreement or
Purchaser’s rights under Article XI with respect thereto); (v) the failure of
the financial or operating performance of the Company and Subsidiaries, taken as
a whole, to meet internal projections or budgets for any period prior to, on or
after the date of this Agreement (but the underlying reason for failure to meet
such projections or budgets may be considered); (vi) any action taken or omitted
to be taken by or at the written request or with the written consent of
Purchaser (including the completion of the Restructuring Activities);
(vii) effects or conditions resulting from the announcement of this Agreement or
the transactions contemplated hereby or the identity of the Purchaser (including
any employee departures); (viii) changes in any Laws or GAAP; or (ix) any action
that is expressly permitted to be taken by Parent or its Affiliates pursuant to
Section 9.02(d)(ii) of the Seller Disclosure Schedule (but nothing in this
clause (ix) shall exclude any adverse effect resulting from any such action from
being taken into account for purposes of determining whether a Material Adverse
Effect has occurred or could be reasonably be expected to occur)); provided,
further, that with respect to clauses (i), (ii), (iii), or (viii), such event,
change or occurrence shall be considered to the extent that it
disproportionately affects the Company and its Subsidiaries as compared to
businesses of similar size operating in the same industries and geographic areas
as the Company and its Subsidiaries operate.
     “Material Contracts” has the meaning set forth in Section 2.16(a).
     “Most Recent Balance Sheet” has the meaning set forth in Section 2.07(a).
     “MSR Tapes” has the meaning set forth in Section 1.04(a)(iv).
     “MSR Valuation Firm” has the meaning set forth in Section 1.04(a)(iv).
     “MSR Valuations” has the meaning set forth in Section 1.04(a)(v).
     “Names” means the trade names, service marks, and trademarks owned or
licensed by Seller, and any variations and derivatives thereof, but excluding
the Company Intellectual Property.
     “Net Income” means the amount equal to (i) the net income of the Company
and its Subsidiaries, less (ii) Servicing Net Income, in each case, as reported
in accordance with U.S. GAAP, subject to the Earnout Methodologies, plus
(iii) the difference between (A) the fair market value as of the Calculation
Period End Date of any Loans held in the Company’s Warehouse Facilities that
were originated prior to the 75th day immediately preceding the Calculation
Period End Date and (B) the book value of such Loans as of the Calculation
Period End Date; provided, that “Net Income” shall not include any income
arising from any Final Residuals or any impairment charges taken in respect of
any such Final Residuals; provided, further, that for purposes of calculating
the net income derived by the Company and its Subsidiaries from the BIT
Requirement Loans

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held by the Company and its Subsidiaries immediately following the Closing, the
book value of such BIT Requirement Loans shall be deemed to be the value for
such BIT Requirement Loans as set forth on the Final Statement and not the book
value ascribed to such BIT Requirement Loans according to U.S. GAAP on the
opening balance sheet of the Company.
     “Non-Income Taxes” means any Taxes other than Income Taxes and Transfer
Taxes.
     “OOMC Branches” means the branch offices of the Company or any of its
Subsidiaries, disregarding any branch offices acquired pursuant to any
Acquisition Transaction or any branch offices of another Person combined with
the Company or any of its Subsidiaries in connection with any Sale Transaction.
     “Order” has the meaning set forth in Section 9.01(b).
     “Other Regulatory Approvals” has the meaning set forth in Section 9.02(h).
     “Owned Real Property” has the meaning set forth in Section 2.14(a).
     “Parent” has the meaning set forth in the Preamble.
     “Pending Federal Tax Matters” means the IRS audits and the Company’s
requests to the IRS for changes in accounting method listed on Section 2.09 of
the Seller Disclosure Schedule.
     “Permits” has the meaning set forth in Section 2.11.
     “Permitted Liens” means: (i) Liens that relate to Taxes imposed upon the
Company or the Subsidiaries that are not yet due and payable or that are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been made, in each case, in an amount that would not be material;
(ii) Liens imposed by Law that relate to obligations that are not yet due and
have arisen in the ordinary course of business; (iii) pledges or deposits to
secure obligations under workers’ compensation Laws or similar legislation or to
secure public or statutory obligations; (iv) mechanics’, carriers’, workers’,
repairers’ and similar Liens imposed upon the Company or the Subsidiaries
arising or incurred in the ordinary course of business; (v) the effect of
zoning, entitlement and other land use and Environmental Laws;
(vi) imperfections or irregularities in title, charges, easements, survey
exceptions, leases, subleases, license agreements and other occupancy
agreements, reciprocal easement agreements, restrictions and other customary
encumbrances on title to or use of real property; (vii) any utility company or
Governmental Authority rights, easements or franchises for electricity, water,
sanitary sewer, steam, surface water drainage, gas, telephone or other service
or the right to use and maintain poles, lines, wires, cables, pipes, boxes and
other fixtures and facilities in, over, under and upon any of the Real Property
or other general easements granted to Governmental Authorities in the ordinary
course of developing or operating any Real Property; (viii) any encroachments of
stoops, areas, cellar steps, trim and cornices, if any, upon any street or
highway or

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other matters which would be shown by a current, accurate survey or physical
inspection of any Real Property; provided, however, that in the case of clauses
(v) through (viii), none of the foregoing materially interfere with the use or
occupancy of such Real Property in the operation of the Business taken as a
whole, individually or in the aggregate, would reasonably be expected to have a
Materially Adverse Effect on the continued use of the property in a manner;
(ix) Liens existing in connection with any Warehouse Facilities of the Company
or any of the Subsidiaries, and (x) any matters disclosed any title commitment
procured by Purchaser or of record.
     “Person” means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
Governmental Authority.
     “Pipeline Tapes” has the meaning set forth in Section 1.04(a)(vi).
     “Pipeline Valuations” has the meaning set forth in Section 1.04(a)(vii).
     “PMI” means the default insurance provided by private mortgage insurance
companies.
     “Post-Closing Straddle Period” has the meaning set forth in
Section 7.03(b).
     “Post-Closing Tax Period” means all taxable periods beginning after the
Closing Date.
     “Pre-Closing Determination” has the meaning set forth in
Section 1.04(a)(ix).
     “Pre-Closing Straddle Period” has the meaning set forth in Section 7.03(b).
     “Pre-Closing Tax Period” means all taxable periods or portions thereof
ending on or before the Closing Date.
     “Pro Forma Financial Statements” has the meaning set forth in Section
2.07(a).
     “Pro Rata Sale Profit” means, with respect to a Sale Transaction, the
product of (i) 50% of the Sale Profit and (ii) the fraction obtained by dividing
(A) the number of days remaining in the Calculation Period calculated from the
applicable Business Combination Closing Date into (B) 548.
     “Purchase” has the meaning set forth in Section 1.01.
     “Purchase Allocation Fraction” means the fraction equal to the amount of
proceeds allocated to the origination platform business of the Company and its
Subsidiaries in connection with the Sale in accordance with Section 7.05 divided
by the total amount of proceeds allocated to the assets of the Business sold in
the Purchase in accordance with Section 7.05.
     “Purchase Price” has the meaning set forth in Section 1.02.

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     “Purchaser” has the meaning set forth in the Preamble.
     “Purchaser Disclosure Schedule” means the disclosure schedule delivered by
Purchase to Seller prior to the execution and delivery of this Agreement.
     “Purchaser’s Flexible Spending Account Plan” has the meaning set forth in
Section 8.01(f).
     “Purchaser Group Health Plan” has the meaning set forth in the Section
8.01(c).
     “Purchaser Indemnified Parties” has the meaning set forth in
Section 11.02(a).
     “Real Property” has the meaning set forth in the Section 2.14(c).
     “Receivable” means (i) a Loan or right to payment which is secured by a
Lien on or other interest in real or personal property, (ii) any debt or equity
security (including a participation certificate) that represents an interest in
(or represents an ownership interest in, or a debt obligation of, a Person which
owns, directly or indirectly) a pool of instruments described in clause
(i) above, or (iii) an interest in servicing or other rights, relating to clause
(i) or (ii) above.
     “Reference Rate” means the rate per annum equal to the “Prime Rate” as
published in The Wall Street Journal, Eastern Edition.
     “Release” means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, placing,
discarding, abandonment, or disposing into the environment.
     “Remedial Action” means all actions taken to (i) clean up, remove,
remediate, contain, treat, monitor, assess, or evaluate Hazardous Substances in
the Environment, (ii) prevent or minimize a Release or threatened Release of
Hazardous Substances so they do not migrate or endanger or threaten to endanger
public health or welfare or the Environment, or (iii) perform pre-remedial
studies and investigations and post-remedial operation and maintenance
activities.
     “REO” means a real property, together with any improvements thereon,
securing a mortgagor’s indebtedness under a mortgage loan and that was acquired
by the Company or the Subsidiaries as a result of the foreclosure, liquidation
or other termination or settlement of such mortgage loan.
     “Representatives” has the meaning set forth in Section 4.02(d).
     “Repurchase Obligation Covered Losses” has the meaning set forth in Section
11.02(a).
     “Required Regulatory Approvals” has the meaning set forth in
Section 2.04(a).
     “Required Third Party Consents” has the meaning set forth in
Section 2.04(b).

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     “Restructuring Activities” has the meaning set forth in Section 4.05(d).
     “Restructuring Plan” has the meaning set forth in Section 4.05(d).
     “Sale Allocation Fraction” means, in connection with a Sale Transaction,
the fraction equal to the amount of proceeds allocated to the origination
platform business of the Company and its Subsidiaries divided by the total
amount of proceeds allocated to the assets of the Business sold in the Sale
Transaction, in each case, pursuant to the definitive transaction documents;
provided, that if the definitive transaction documents do not allocate such
values, then the term “Sale Allocation Fraction” shall mean the fraction equal
to the fair market value of such origination platform business as at the
applicable Business Combination Closing Date (as determined by an independent
investment bank retained by Purchaser) divided by the fair market value of all
assets of the Business sold in the Sale Transaction as at the applicable
Business Combination Closing Date.
     “Sale Profit” means:
     (i) with respect to a Sale Transaction pursuant to which all or
substantially all of the assets of, or all of the outstanding capital stock of,
the Company and its Subsidiaries is sold, the amount equal to (A) the proceeds
received by the Company and its Subsidiaries (or Purchaser, in the case of a
stock sale) in such Sale Transaction, minus (B) the transaction expenses
incurred by the Company and its Subsidiaries (or Purchaser, in the case of a
stock sale) in such Sale Transaction, minus (C) the amount of the Final Cash
Payment, minus (D) the transaction expenses incurred by Purchaser in connection
with the Purchase, minus (E) the amount of capital (debt or equity) funded into
the Business on or after the Closing (including Direct Capital and Other Third
Party Debt) in existence as of the Business Combination Closing Date, less any
such debt assumed by the Acquiring Party, and less any repayments or returns of
capital paid to Purchaser or any of its Affiliates in respect of such capital on
the Business Combination Closing Date; and
     (ii) with respect to any other Sale Transaction described in
Section 1.05(e), the amount equal to (A) the product of (x) the proceeds
received by the Company and its Subsidiaries (or Purchaser, in the case of a
stock sale) in such Sale Transaction and (y) the Sale Allocation Fraction, minus
(B) the product of (x) the transaction expenses incurred by the Company and its
Subsidiaries (or Purchaser, in the case of a stock sale) in such Sale
Transaction and (y) the Sale Allocation Fraction, minus (C) the amount of the
Final Cash Payment allocated to the origination platform business of the Company
and its Subsidiaries consistent with Section 7.05, minus (D) the product of
(x) the transaction expenses incurred by Purchaser in connection with the
Purchase and (y) the Purchase Allocation Fraction, minus (E) the amount of
Excess Capital as at the applicable Business Combination Closing Date without
deduction for the Excess Capital Threshold.

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     “Sale Transaction” means any sale on a going concern basis of more than 20%
(based on book value as of the Closing Date) of the origination platform assets
of the Company and its Subsidiaries, taken as a whole, in one transaction or a
series of related transactions, whether by merger, consolidation,
recapitalization, sale of assets or otherwise, excluding any sale of mortgage
loans in the ordinary course of business.
     “Securitization” means a public or private sale or other transfer of
Receivables or interests therein, including any transactions involving the sale
of Receivables to a Securitization Trust.
     “Securitization Trust” means any Person which has been established for the
purpose of issuing debt or equity securities in connection with any
Securitization.
     “Seller” has the meaning set forth in the Preamble.
     “Seller Disclosure Schedule” means the disclosure schedule delivered by
Seller to Purchaser prior to the execution and delivery of this Agreement.
     “Seller Employee Plan” has the meaning set forth in Section 2.12(a)(ii).
     “Seller Guarantees” means all guarantees, surety bonds, covenants,
indemnities, letters of credit, letters of comfort and similar credit assurances
provided by Parent or any of its Affiliates (other than the Company or any
Subsidiaries) that relate exclusively or primarily to the Business.
     “Seller Indemnified Parties” has the meaning set forth in Section 11.03(a).
     “Seller Retirement Plan” has the meaning set forth in Section 8.01(e).
     “Seller Tax Returns” has the meaning set forth in Section 7.03(c)(ii).
     “Seller’s Earnout Objection” has the meaning set forth in Section 1.05(b).
     “Seller’s Flexible Spending Account Plan” has the meaning set forth in
Section 8.01(f).
     “Seller’s Objection” has the meaning set forth in Section 1.04(c).
     “Seller’s Termination Payment Objection” has the meaning set forth in
Section 1.05(g).
     “Servicer Downgrade” has the meaning set forth in Section 9.02(d)(i) of the
Seller Disclosure Schedule.
     “Servicing Agreement” has the meaning set forth in Section 2.16(a)(xiii).
     “Servicing Net Income” means the (i) revenues derived by the servicing
platform and servicing assets of the Company and its Subsidiaries less (ii) the
expenses attributable to the servicing platform and servicing assets of the
Company and its

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Subsidiaries (which shall include an allocation of the corporate overhead of the
Company and its Subsidiaries, based on the same methodology used for allocating
corporate overhead in the valuation of Eligible Servicing Rights set forth on
Annex C of Exhibit A), as reported in accordance with U.S. GAAP, subject to the
Earnout Methodologies.
     “Shares” has the meaning set forth in the Recitals.
     “Specified Line Items” means each of the following line items in respect of
the Company and its Subsidiaries: Mortgage Loans Held for Sale – Net of Loss
Reserves, Beneficial Interests in Trust and Residuals – Available for Sale and
Held for Trade.
     “Straddle Period” has the meaning set forth in Section 7.03(b).
     “Subject Branch” means any branch office of the Company or any of its
Subsidiaries that is acquired pursuant to a Sale Transaction.
     “Subsidiaries” means the direct and indirectly owned subsidiaries of the
Company (each, a “Subsidiary”).
     “subsidiary” of any Person means another Person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person
or by another subsidiary of such first Person; provided, that to the extent
under applicable Law any other Person constitutes a “subsidiary” of the Company
or any of the Company’s subsidiaries, such Person shall be deemed to be a
“subsidiary” of the Company for purposes of this Agreement.
     “Tangible Net Assets” means (i) the sum of “Cash,” “Cash – Restricted,”
“Mortgage Loans Held for Sale, Net of Loss Reserves,” “Beneficial Interest in
Trust,” “Residuals – Available for Sale,” “Residuals – Held for Trade,”
“Mortgage Servicing Rights,” “Property, Plant and Equipment,” “Servicing and
Related Assets”, “Mortgage Loans Held for Investment,” “Other Real Estate
Owned,” “Pipeline Mortgage Loans,” and “Other Assets,” less (ii) the sum of
“Repurchase Liability,” “Borrowings and Due to Warehouse,” and “Other
Liabilities.” Each of the capitalized terms in clauses (i) and (ii) of the
preceding sentence have meanings consistent with the meanings given to such
terms in the Target Tangible Net Assets Statement. Notwithstanding anything to
the contrary herein, the calculation of Tangible Net Assets will not include any
Intercompany Indebtedness, Deferred Tax Asset, Deferred Tax Liability or any
liabilities or assets related to Taxes or other matters which Seller has agreed
to pay or provide indemnity hereunder.
     “Tapes” has the meaning set forth in Section 1.04(a)(ii).
     “Target Tangible Net Assets” means $1,269,027,000.

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     “Target Tangible Net Assets Statement” means the unaudited statement of
Tangible Net Assets of the Company and its Subsidiaries (adjusted to exclude
HRBMC and all noneconomic residuals) as of the Balance Sheet Date set forth on
Section 1.04(a)(i) of the Seller Disclosure Schedule.
     “Tax” means all taxes, fees, levies or other assessments imposed by a
Taxing Authority, including income, gross receipts, excise, real and personal
property, municipal, capital, sales, use, transfer, license, payroll and
franchise taxes, and such term will include any interest, penalties, or
additions to tax attributable to such taxes, fees, levies or other assessments.
     “Tax Asset” means any net operating loss, net capital loss, Tax basis in
any asset, investment Tax credit, or any other credit or Tax attribute which
could reduce Taxes (including deductions and credits related to alternative
minimum Taxes).
     “Tax Claim” has the meaning set forth in Section 7.04(c)(i).
     “Tax Proceeding” has the meaning set forth in Section 7.04(c)(ii).
     “Tax Returns” means any return, report or information return required to be
filed with any Taxing Authority in connection with Taxes, and any supplement,
schedule or amendment thereto.
     “Taxing Authority” means any Governmental Authority responsible for the
administration or imposition of any Tax.
     “Termination Date” has the meaning set forth in Section 10.01(b).
     “Termination Payment Statement” has the meaning set forth in Section
1.05(f)(ii).
     “Termination Payout Election Notice” has the meaning set forth in Section
1.05(f).
     “Third Party Claim” has the meaning set forth in Section 11.04(a).
     “Third Party Consents” has the meaning set forth in Section 4.04(a).
     “Transaction Agreements” means, collectively, the Transition Services
Agreement and the License Agreement.
     “Transfer Taxes” has the meaning set forth in Section 7.02(c).
     “Transition Services Agreement” has the meaning set forth in Section
1.03(b)(vi).
     “UBS Facility Guarantee” means the Guaranty, dated as of July 2, 2002, made
by Parent in favor of Wells Fargo Bank Minnesota, N.A., as facility
administrator under the Facility Administration Agreement, dated as of July 2,
2002, between Option One Owner Trust 2002-3 and the facility administrator, and
the noteholders defined therein.
     “Unaudited Financial Statements” have the meaning set forth in Section
2.07(a).

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     “Updated Pipeline Valuations” has the meaning set forth in Section
1.04(b)(ii).
     “U.S. GAAP” means U.S. generally accepted accounting principles as
consistently applied by Purchaser.
     “Warehouse Facility” means any funding arrangement pursuant to which one or
more lenders, purchasers, conduit or special purpose vehicles and other
financial institutions provide financing to purchase, originate, sell,
securitize, carry, service or maintain Receivables or other financial assets or
servicing rights.
          12.02. Notices. All notices, requests and other communications to any
party hereunder will be in writing (including electronic facsimile transmission)
and will be given:
if to Purchaser, to:
OOMC Acquisition Corp.
c/o Cerberus Capital Management, L.P.
299 Park Avenue
New York, New York 10171
Attention: Mark A. Neporent
Facsimile No.: (212) 891-2153
with a copy to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York
Attention: Stuart D. Freedman
Facsimile No: (212) 593-5955
if to Seller, to:
Block Financial Corporation
c/o H&R Block, Inc.
One H&R Block Way
Kansas City, MO 64105
Attention: Carol Graebner
Facsimile No.: (816) 854 8500

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with a copy to:
Jones Day
222 East 41st Street
New York, NY 10017
Attention: Robert A. Profusek, Esq.
Facsimile No.: (212) 755-7306
and
Jones Day
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Christopher J. Hewitt, Esq.
Facsimile No.: (216) 579-0212
or such other address or electronic facsimile number as such party may hereafter
specify for the purpose by notice to the other parties hereto. All such notices,
requests and other communications will be deemed received on the date of receipt
by the recipient thereof if received prior to 5:00 p.m. in the place of receipt
and such day is a Business Day in the place of receipt. Otherwise, any such
notice, request or communication will be deemed not to have been received until
the next succeeding Business Day in the place of receipt.
          12.03. Amendments and Waivers. Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by each party to this Agreement, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by any party in exercising any right, power or privilege
hereunder will operate as a waiver thereof nor will any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
          12.04. Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement will be paid by the party
incurring such cost or expense.
          12.05. Successors and Assigns. The provisions of this Agreement will
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto, except that Purchaser
may (unless such assignment would impair or delay the consummation of the
Closing or result in additional Liability to Seller) (i) assign any or all of
its rights and interests hereunder to one or more of its Affiliates, to any
purchaser of all or any portion of the Business, or to any of the lenders
providing the Financing (or any replacement financing or refinancing thereof)
and (ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases Purchaser (A) nonetheless shall remain
responsible for the performance

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of all of its obligations hereunder and (B) shall indemnify Seller for any
out-of-pocket costs and expenses directly arising as a result of such
assignment).
          12.06. Governing Law This Agreement will be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
regard to the conflict of laws rules thereof.
          12.07. Specific Performance; Jurisdiction. The parties 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 the parties will be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in the courts of
the State of New York, this being in addition to any other remedy to which such
party is entitled at law or in equity. In addition, each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of the courts of the
State of New York (and, with respect to claims in which the exclusive subject
matter jurisdiction of such claims is federal, any federal district court
located in the State of New York) in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from such court, (c) agrees that it will not bring
any action relating to this Agreement or any of the transactions contemplated by
this Agreement in any other court, and (d) to the fullest extent permitted by
Law, consents to service being made through the notice procedures set forth in
Section 12.02.
          12.08. Waiver of Punitive and Other Damages and Jury Trial (a) Except
as expressly provided in this Agreement, each party to this Agreement expressly
waives and foregoes any right to recover punitive, exemplary, consequential or
similar damages and any diminution in value or lost profits in any arbitration,
lawsuit, litigation or proceeding arising out of or resulting from any
controversy or claim arising out of or relating to this Agreement or the
transactions contemplated hereby.
               (b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
               (c) EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE EITHER OF THE FOREGOING WAIVERS, (ii) IT UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS
VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS

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AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET
FORTH IN THIS SECTION 12.08.
          12.09. Counterparts; Effectiveness; Third Party Beneficiaries. This
Agreement may be signed in any number of counterparts, each of which will be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. The electronic facsimile transmission of any signed
original counterpart of this Agreement will be deemed to be the delivery of an
original counterpart of this Agreement. Except with respect to the use of
electronic facsimile transmissions permitted hereunder, the Seller and Purchaser
disclaim the applicability of the Federal Electronic Signatures in Global and
National Commerce Act and the New York Electronic Signatures and Records Act to
this Agreement and the Transaction Agreements. No provision of this Agreement is
intended to confer any rights, benefits, remedies or Liabilities hereunder upon
any Person other than the parties hereto, their respective successors and
assigns and the Purchaser Indemnified Parties and the Seller Indemnified
Parties.
          12.10. Other Definitional and Interpretative Provisions. The words
“hereof,” “herein” and “hereunder” and words of like import used in this
Agreement will refer to this Agreement as a whole and not to any particular
provision of this Agreement. Terms defined in the singular in this Agreement
will also include the plural and vice versa. The captions and headings herein
are included for convenience of reference only and will be ignored in the
construction or interpretation hereof. References to Articles, Sections,
Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this
Agreement unless otherwise specified. Whenever the words “include,” “includes”
or “including” are used in this Agreement, they will be deemed to be followed by
the words “without limitation,” whether or not they are in fact followed by
those words or words of like import. The phrases “the date of this Agreement,”
“the date hereof” and phrases of similar import, unless the context otherwise
requires, will be deemed to refer to the date set forth in the Preamble to this
Agreement. The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. If any ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly by
the parties hereto, and no presumption or burden of proof will arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
          12.11. Entire Agreement. This Agreement, together with the Seller
Disclosure Schedule, the Transaction Agreements and that certain Confidentiality
Agreement, by and between Seller and Cerberus Capital Management, L.P., dated
October 10, 2006, as amended on October 27, 2006, constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, both oral and written,
between the parties hereto with respect to the subject matter hereof.
          12.12. Disclosure Schedules There may be included in the Seller
Disclosure Schedule or Purchaser Disclosure Schedule (collectively, the
“Disclosure Schedules”) items and information that are not “material,” and
inclusion in the

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Disclosure Schedules will not be deemed to be an acknowledgment or agreement
that any such item or information (or any non-disclosed item or information of
comparable or greater significance) is “material,” or to affect the
interpretation of such term for purposes of this Agreement. Matters reflected in
the Disclosure Schedules are not necessarily limited to matters required by this
Agreement to be disclosed in the Seller Disclosure Schedule or Purchaser
Disclosure Schedule, as the case may be. The Disclosure Schedules set forth
items of disclosure with specific reference to the particular Section or
subsection of this Agreement to which the information in such Disclosure
Schedule relates; provided, however, that any information set forth in one
Section pertaining to representations and warranties of the Seller Disclosure
Schedule or Purchaser Disclosure Schedule, as the case may be, will be deemed to
apply to each other Section or subsection thereof pertaining to representations
and warranties to the extent it is reasonably apparent on the face of such
disclosure it is relevant to such other sections of the Seller Disclosure
Schedule or Purchaser Disclosure Schedule, as the case may be.
          12.13. Severability. Whenever possible, each provision of this
Agreement will be interpreted so as to be effective and valid under applicable
Law, but if any provision or portion of any provision of this Agreement is held
invalid, illegal or unenforceable in any respect under any applicable Law, then
such invalidity, illegality or unenforceability will not affect the validity,
legality or enforceability of any other provision or portion of any provision of
this Agreement, and this Agreement will be re-formed, construed and enforced in
such manner as will effect as nearly as lawfully possible the purposes and
intent of such invalid, illegal or unenforceable provision or portion of any
provision of this Agreement.
          12.14. Fulfillment of Obligations. Any obligation of any party to any
other party under this Agreement, or any of the Transaction Agreements, which
obligation is performed, satisfied or fulfilled completely by an Affiliate of
such party, shall be deemed to have been performed, satisfied or fulfilled by
such party.
          12.15. Parent Guarantee.
               (a) Parent hereby fully, irrevocably and unconditionally
guarantees to each of the Purchaser Indemnified Parties the full and timely
performance of all of the obligations of Seller, including any required payment,
under the provisions of Section 7.04 and Article XI of this Agreement. At the
time any payment is due under Section 7.04 or Article XI from Seller, Parent
agrees to pay, or cause to be paid, the amount due promptly. This is a guarantee
of payment and performance, and not of collection, and Parent acknowledges and
agrees that this guarantee is full and unconditional, and no release or
extinguishment of Seller’s obligations or liabilities (other than in accordance
with the terms of the Agreement) shall affect the continuing validity and
enforceability of this Section 12.15(a).
               (b) Parent hereby waives, for the benefit of each of the
Purchaser Indemnified Parties, (i) any right to require any such Purchaser
Indemnified Party as a condition of payment or performance by Parent, to proceed
against Seller or

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pursue any other remedy whatsoever and (ii) to the fullest extent permitted by
law, any defenses or benefits that may be derived from or afforded by law or at
equity which limit the liability of or exonerate guarantors or sureties, except
to the extent that any such defense is available to Seller.
[SIGNATURE PAGE FOLLOWS THIS PAGE]

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

            OOMC ACQUISITION CORP.
      By:   /s/ Lenard B. Tessler       Name:   Lenard B. Tessler       Title:  
President       BLOCK FINANCIAL CORPORATION
      By:   /s/ Mark A. Ernst         Name:   Mark A. Ernst        Title:  
President        H&R BLOCK, INC.
      By:   /s/ Mark A. Ernst         Name:   Mark A. Ernst        Title:  
President and
Chief Executive Officer     

[Stock Purchase Agreement — Signature Page]

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EXHIBIT A
CLOSING BALANCE SHEET METHODOLOGIES SCHEDULE
Investment Banks To Be Utilized for Purposes of Section 1.04(a) (Estimate
Statement)
No later than 40 Business Days after the date of this Agreement, each of
Purchaser and Seller will select one investment bank from the list set forth on
Annex A attached hereto.
If any such investment bank becomes unavailable to perform the services
contemplated by Section 1.04, the party that selected that investment bank may
select another investment bank from the above list.
The investment banks selected by the parties pursuant to the foregoing
provisions are referred to herein as “Investment Banks”.
Bidders To Be Utilized for Purposes of Section 1.04(b) (Final Statement)
For purposes of obtaining firm bids on the Mortgage Loans Held for Sale, BIT
Mortgage Loans and Residuals, Seller and the Company shall solicit firm bids
from the institutions set forth on the applicable lists set forth on Annex B
attached hereto. These institutions are referred to herein as “Bidders.”
* * * * *
For purposes of calculating Estimated Closing Tangible Net Assets and Closing
Tangible Net Assets, the value of Tangible Net Assets using the Valuation
Methodologies set forth below shall be determined as if any impairment charges
required solely because the purchase price to be paid by Purchaser is less than
the Tangible Net Assets of the Company and its Subsidiaries as of January 31,
2007 were taken solely at the Parent level, notwithstanding any requirement of
GAAP to the contrary.
Valuation Methodologies

1. Cash: valued at book value determined in accordance with GAAP.
2. Cash-restricted: valued at book value determined in accordance with GAAP.
3. Mortgage Loans Held for Sale, Net of Loss Reserves: Prior to the Closing, the
Company may sell to a third party or distribute to Parent or its Affiliates all
or a portion of the remaining balance of existing Mortgage Loans Held for Sale
(i) on a servicing-released basis, or (ii) on a servicing-retained basis
(provided that mortgage loans sold on a servicing-retained basis are either
(A) sold to a warehouse lender in connection with a Warehouse Facility, or
(B) are sold to a Securitization Trust in connection with a securitization or in
a whole loan sale that is not a sale of “scratch-and-dent” mortgage loans). To
the extent any Mortgage Loans Held for Sale exist as at the Closing, the value
of Mortgage Loans Held for Sale, Net of Loss Reserves shall be determined as set
forth below.
For purposes of preparing the Estimate Statement:
This value shall be calculated in accordance with the provisions of Section 1.04
of the Agreement.

 

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For purposes of preparing the Final Statement:
As soon as practicable after the Closing Date, but in no event later than
75 days after the Closing Date, Seller and the Company shall jointly cause the
Mortgage Loans Held for Sale (including accrued interest through the Closing
Date)1 other than Mortgage Loans Under Contract (the “Auctioned Mortgage Loans”)
to be auctioned for cash (whether for one or more pools of such mortgage loans)
through a process of obtaining firm bids (with the same value date as determined
by Purchaser and Seller) from the Bidders.
Seller will be permitted to set reserve prices on the Auctioned Mortgage Loans,
and if the highest price included in the firm bids for some or all of the
Auctioned Mortgage Loans does not exceed the reserve price (or if no firm bids
are received in accordance with this Exhibit A), such Auctioned Mortgage Loans
shall be acquired by Seller prior to the expiration of the 75-day period for
cash in an amount equal to the amount of such Auctioned Mortgage Loans reflected
on the Estimate Statement (it being understood that such acquisition will be
effected without any representations, warranties or indemnities from Purchaser,
the Company or the Subsidiaries) and the amount attributed to such Auctioned
Mortgage Loans for purposes of determining the value of the Final Closing
Tangible Net Assets shall be the amount of cash paid to the Company.
Each loan pool will be auctioned on a servicing-released basis.
In conducting the auction, the Company shall provide (and shall so indicate to
the Bidders) that at least the HFS Minimum Amount will be sold to the highest
Bidder of such Auctioned Mortgage Loans as long as the price bid exceeds any
reserve price for such Auctioned Mortgage Loans. For purposes of this Exhibit A,
the “HFS Minimum Amount” shall be the greater of (i) 25% of the total Auctioned
Mortgage Loans and (ii) $50MM of par value of Auctioned Mortgage Loans. In the
event that the aggregate par value of the Auctioned Mortgage Loans is less than
$50MM, the HFS Minimum Amount shall be the entire portfolio of Auctioned
Mortgage Loans.
Upon receipt of the firm bids, the Company may (as so directed by Purchaser),
elect to sell some or all of the Auctioned Mortgage Loans to the relevant
winning Bidder(s) or may elect to retain some or all of the Auctioned Mortgage
Loans (subject to compliance with its obligation to sell at least the HFS
Minimum Amount).
Mortgage Loans Held for Sale, Net of Loss Reserves shall be valued based on:
     (a) with respect to the Auctioned Mortgage Loans, the net aggregate value
of the highest firm bid(s) received for each loan pool of Auctioned Mortgage
Loans; plus
     (b) with respect to Mortgage Loans Under Contract, the aggregate cash
purchase price received for such mortgage loans sold prior to the expiration of
the 75-day period; plus
     (c) the amount of the accrued interest on the Auctioned Mortgage Loans and
Mortgage Loans Under Contract as of the Closing Date (without duplication of any
accrued interest taken into account in the firm bid referenced in clause
(a) above); provided, that any accrued interest related to mortgage loans past
due more than 30
 

1   The Estimate Statement and Final Statement shall each reflect the treatment
of accrued interest income and accrued interest expense consistent with this
Exhibit A.

 

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days (such accrued interest, “Excluded Interest”) shall be valued at zero; and
further provided that any amounts collected by or on behalf of the Company or
its affiliates subsequent to Closing in respect of the Excluded Interest shall
be promptly remitted when received to the Seller (and the Company shall use
commercially reasonable efforts to collect such Excluded Interest).
The term “net aggregate value” with respect to any firm bid means the aggregate
cash value of the firm bid, net of all applicable fees and expenses and taking
into account any price fluctuation provision permitted under this definition of
“firm bid”; provided, that, with respect to any firm bid that has been accepted
by the Company prior to or at the time of valuation, such firm bid shall be
valued at the aggregate cash purchase price received by the Company in respect
of such firm bid.
The term “Mortgage Loans Under Contract” means any mortgage loans in respect of
which, as of the Closing Date, the Company is subject to a binding contractual
obligation to sell all, but not less than all, of the mortgage loans prior to
the expiration of the 75-day period on an “as is” basis for a specified cash
price that is not subject to adjustment or interest rate fluctuation to an
unaffiliated third party that is subject to a binding, unconditional contractual
obligation to purchase such mortgage loans with representations and warranties
consistent with a sale on an “as is” basis and no indemnity.
The parties agree that to the extent a breach of contract occurs with respect to
any Mortgage Loans Under Contract prior to the expiration of the 75-day period,
that mortgage loan (together with any right to recover for breach of contract
against the proposed purchaser under the applicable contract) shall be acquired
by Seller for cash in an amount equal to the amount of such Mortgage Loans
reflected on the Estimate Statement prior to the expiration of the 75-day period
(it being understood that such sale will be effected without any
representations, warranties or indemnities from Purchaser, the Company or the
Subsidiaries) and the value shall be attributed to such acquired Mortgage Loans
Under Contract for purposes of determining Final Closing Tangible Net Assets
shall be the amount of cash paid to the Company.
For purposes of Section 1.4 and this Exhibit A, the term “firm bid” means:
     (a) with respect to the Mortgage Loans Held for Sale or the Residuals, a
binding commitment to acquire all, and not less than all (i.e., no “kickout”
rights), of the assets offered for sale, and
     (b) with respect to the BIT Mortgage Loans, a binding commitment to acquire
all of the assets offered for sale subject to the right to reject specific
mortgage loans that do not conform to the bid specifications (i.e. subject to
“kickout rights”),
in each case, it being understood that (i) assets may be marketed in specified
pools, in which case the bid shall be for all of the assets in such pool
(subject to “kickout rights”, in the case of pools of BIT Mortgage Loans);
(ii) each binding commitment must be (w) at a specified cash price, (x) fully,
irrevocably and unconditionally executable by the Company subject only to the
applicable assumptions, terms and conditions expressly set forth in this
Exhibit A, (y) received by 10:30 am (New York City time) on the specified bid
date and (z) valid at least until 5:00 pm (New York City time) on the specified
bid date; and (iii) in making their bids, if applicable, the Bidders will assume
receipt of customary representations, warranties and indemnities in such bids
(except in the case of the Auctioned Mortgage Loans which the parties agree
shall be sold on an “as is” basis with representations and warranties consistent
with a sale on such a basis (and no

 

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indemnity)), with the exposure under such representations, warranties and
indemnities taken into account for purposes of determining Repurchase Liability
below; provided, that the terms of such contract shall not include any
adjustment or recourse for price fluctuation other than adjustment for price
fluctuation to the date the firm bid is valued for purposes of this Exhibit A.
4. Beneficial Interest in Trust: Prior to Closing, Seller will not be deemed to
have violated any of its representations, warranties or covenants under the
Agreement if existing mortgage loans in the warehouse trusts underlying the
Beneficial Interest in Trust (the “BIT Mortgage Loans”) other than the BIT
Requirement Loans are sold to a third party or distributed to Parent or its
Affiliates, in each case on a servicing-retained basis. To the extent any BIT
Mortgage Loans exist as at the Closing, the value of the Beneficial Interest in
Trust shall be determined as set forth below. For the avoidance of doubt, no
debt issued in a securitization by the Company or any of the Subsidiaries that
is held by the Company or any of the Subsidiaries after the closing of such
securitization or NIM securitizations (“NIM Securitizations”) shall be included
in “Beneficial Interest in Trust” and shall instead be treated as set forth
under “5. Residuals” below (any such debt held by the Company or any of its
Subsidiaries after the applicable closing, “Retained Securitization Debt”).
For purposes of preparing the Estimate Statement:
The Tapes delivered by the Company to the Investment Banks pursuant to
Section 1.04 shall identify the BIT Mortgage Loans on a loan pool-by-pool basis
(with the BIT Requirement Loans identified in a pool or pools separate from the
other BIT Mortgage Loans) for valuation by the Investment Banks pursuant to
Section 1.04. The Investment Banks shall determine the Fair Market Value of such
BIT Mortgage Loans according to such loan pool identification, together with
valuation on a loan-level basis for each of the BIT Requirement Loans (and if
loan-level data is not provided with respect to any pool, loan-level valuation
shall be calculated on an average basis for such pool).
For purposes of Section 1.04, the term “Applicable Determination” means, with
respect to Beneficial Interest in Trust, the aggregate value of the pools of BIT
Mortgage Loans, which shall be calculated as follows:
     (a) for each pool of BIT Requirement Loans, its value shall be equal to the
difference (positive or negative) between:
          (i) the aggregate amount for the pool of mortgage loans of the lower
of, determined on a loan level basis, (1) the sum of (i) par, plus (ii) FAS 91
expenses determined in accordance with GAAP, plus (iii) the BIT Repurchase
Reserve or (2) the average of the Fair Market Values provided by the Investment
Banks in respect of such BIT Requirement Loan, plus, if valued on a
servicing-retained basis, the BIT MSR Value for such mortgage loan, and
          (ii) the par value of the debt being held against such pool of BIT
Mortgage Loans (i.e., the warehouse advance); and
     (b) for each pool of BIT Mortgage Loans other than the BIT Requirement
Loans, its value shall be an amount (positive or negative) equal to:
          (i) the average of the Fair Market Values provided by the Investment
Banks in respect of such pool of BIT Mortgage Loans pursuant to Section 1.04,
plus for those loans valued on a servicing-retained basis, the aggregate amount
of BIT MSR Value for such loans,

 

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minus (ii) the par value of the debt being held against such BIT Mortgage Loans
(i.e., the warehouse advance), plus (iii) the aggregate amount of accrued
interest as of the Closing Date on the BIT Mortgage Loans in such pool, net of
accrued interest on any debt being held against any such BIT Mortgage Loans;
provided that any accrued interest on any BIT Mortgage Loans more than 30 days
past due shall be valued at zero.
The term “BIT Repurchase Reserve” shall mean, with respect to any mortgage loan,
an amount equal to 0.35% of the par amount of such loan.
The term “BIT MSR Value” shall mean, with respect to any mortgage loan, an
amount equal to the lower of (i) 0.75% of the par amount of such reference loan
and (ii) the rate determined by the Company in the ordinary course of business
using current market values.
For purposes of preparing the Final Statement:
As soon as practicable after the Closing Date, but in no event later than
75 days after the Closing Date, Seller and the Company shall jointly approach
the trustee(s) of the warehouse trusts of the Company and shall propose that all
of the mortgage loans in the warehouse trusts (including accrued interest
through the Closing Date) other than any BIT Mortgage Loans Under Contract (the
“Auctioned BIT Mortgage Loans”) be auctioned (whether for one or more pools of
such mortgage loans) through a process of obtaining firm bids for each pool
(with the same value date as determined by Purchaser and Seller) from the
Bidders in respect of each loan pool, together with, to the extent reasonably
possible, valuation on a loan-level basis for each of the BIT Requirement Loans
(and if loan-level data is not provided with respect to any pool, loan-level
valuation shall be calculated on an average basis for such pool).
To the extent the Company notifies Seller within 30 calendar days after the
Closing that the Company intends to effect a securitization of any of its
mortgage loans held in any warehouse trust, Seller and the Company shall
instruct the Bidders to provide a firm bid on the Residual to be created from
such securitized mortgage loans and such value shall be reflected in the
aggregate value of Beneficial Interests in Trust set forth on the Final
Statement.
Seller will be permitted to propose to the trustee(s) reserve prices on each
pool of Auctioned BIT Mortgage Loans being auctioned, and if the highest price
included in the bids for such pool of mortgage loans does not exceed the reserve
price (or if no firm bids are received in accordance with this Exhibit A), the
Company may propose that such pool of Auctioned BIT Mortgage Loans be sold to
Seller prior to the expiration of the 75-day period for cash in an amount equal
to the amount of such pool of Auctioned BIT Mortgage Loans reflected on the
Estimate Statement (it being understood that such sale will be effected without
any representations, warranties or indemnities from Purchaser, the Company or
the Subsidiaries) and in the event of such transfer the value attributed to such
pool of Auctioned BIT Mortgage Loans for purposes of determining the value of
the Final Closing Tangible Net Assets shall be the amount of cash paid to the
Company.
Prior to the auction, the Company may propose to the trustee whether each loan
pool will be auctioned on a servicing-released or servicing-retained basis.
In conducting the auction, the Company shall propose that the trustee(s) provide
(and to so indicate to the Bidders) that at least the BIT Minimum Amount will be
sold to the highest Bidder of each pool of Auctioned BIT Mortgage Loans as long
as the price bid exceeds any reserve price for such pool of Auctioned BIT
Mortgage Loans. For purposes of this Exhibit A, the “BIT Minimum Amount” shall
be the greater of (i) 25% of the total pool of Auctioned BIT Mortgage

 

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Loans, or (ii) $250MM of par value of Auctioned BIT Mortgage Loans. In the event
that the aggregate par value of the pool of Auctioned BIT Mortgage Loans is less
than $250MM, the BIT Minimum Amount shall be the entire pool of Auctioned BIT
Mortgage Loans.
Upon receipt of the firm bids, the Company may (as so directed by Purchaser),
elect to propose to the trustee to sell some or all of the pools of Auctioned
BIT Mortgage Loans to the relevant winning Bidder or may elect to propose to the
trustee that some or all of the pools of Auctioned BIT Mortgage Loans be
retained (subject to compliance with its obligation to propose that at least the
BIT Minimum Amount to be sold).
For purposes of the Final Statement, the value of the Beneficial Interest in
Trust will be equal to the aggregate value of the pool of BIT Mortgage Loans,
which shall be calculated as follows:
     (a) for each pool of BIT Requirement Loans: its value shall be equal to the
sum of (i) the BIT Requirement Loan Amount, minus (ii) the aggregate amount
(determined on a loan level basis) of the Offsetting Par Value, plus (iii) the
aggregate amount (determined on a loan level basis) of Accrued Interest Amount;
and
     (b) for any pool of BIT Mortgage Loans other than BIT Requirement Loans:
its value shall be equal to the sum of (i) the Other BIT Mortgage Loan Amount,
minus (ii) the aggregate amount of the Offsetting Par Value, plus (iii) the
aggregate amount of the Accrued Interest Amount.
The “BIT Requirement Loan Amount” means, with respect to any pool of BIT
Requirement Loans, the amount that is equal to the sum of, for each mortgage
loan in such pool, the lesser of:
     (a) the sum of (i) the par value, (ii) any deferred FAS 91 expenses
determined in accordance with GAAP, and (iii) the BIT Repurchase Reserve, or
     (b) (i) if the BIT Requirement Loan is an Auctioned BIT Mortgage Loan, the
value of the BIT Requirement Loan as per the highest firm bid received for such
pool of Auctioned BIT Mortgage Loans plus, if sold on a servicing-retained
basis, the BIT MSR Value in respect of such mortgage loan, or (ii) if such BIT
Requirement Loan is a BIT Mortgage Loan Under Contract, the cash purchase price
received for such mortgage loan sold (determined on a loan level basis) prior to
the expiration of the 75-day period plus, if such BIT Mortgage Loan is sold on a
servicing-retained basis, the BIT MSR Value in respect of such mortgage loan.
The “Other BIT Mortgage Loan Amount” means, with respect to any pool of BIT
Mortgage Loans other than pool of BIT Requirement Loans, the amount that is
equal to the sum of:
     (a) (i) if such pools of BIT Mortgage Loans are Auctioned BIT Mortgage
Loans, the value of the highest firm bid received for such pools of Auctioned
BIT Mortgage Loan, or (ii) if such pools of BIT Mortgage Loans are BIT Mortgage
Loans Under Contract, the aggregate cash purchase price received for such pools
of mortgage loan sold prior to the expiration of the 75-day period, plus
     (b) if such pools of BIT Mortgage Loans are sold on a servicing-retained
basis, the BIT MSR Value in respect of such pools of mortgage loans.

 

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The “Offsetting Par Value” means, with respect to any BIT Mortgage Loan, the par
value the debt being held against such BIT Mortgage Loan (i.e., the warehouse
advance), plus any accrued interest on any debt being held against such BIT
Mortgage Loan.
The “Accrued Interest Amount” means, with respect to any BIT Mortgage Loan, the
amount of the accrued interest on such BIT Mortgage Loan as of the Closing Date;
provided that any accrued interest related to such BIT Mortgage that is past due
more than 30 days (“Excluded BIT Interest”) shall be valued at zero; provided
further, however, that any amounts collected by or on behalf of the Company or
its affiliates subsequent to Closing in respect of the Excluded BIT Interest
shall be promptly remitted when received to the Seller (and the Company shall
use commercially reasonable efforts to collect such Excluded BIT Interest).
The term “BIT Mortgage Loans Under Contract” means any pool of mortgage loans
held on behalf of the Company or its Subsidiaries in one of their warehouses in
respect of which, as of the Closing Date, (i) the warehouse trust is subject to
a binding contractual obligation to sell all, but not less than all, of the pool
of mortgage loans prior to the expiration of the 75-day period for a specified
cash price on terms and with conditions consistent with industry practice
(including customary representations, warranties and indemnities), or (ii) such
pool of mortgage loans have been contracted to be sold as a part of a
securitization transaction that has been priced prior to Closing and settles
within 20 calendar days of Closing, in each case, to an unaffiliated third party
that is subject to a binding, unconditional contractual obligation to purchase
such mortgage loans, with the exposure under such representations, warranties
and indemnities taken into account for purposes of determining Repurchase
Liability, below.
The parties agree that to the extent a breach of contract occurs with respect to
a mortgage loan under any BIT Mortgage Loans Under Contract prior to the
expiration of the 75-day period, that loan (together with any right to recover
for breach of contract against the proposed purchaser under the applicable
contract) shall be acquired by Seller prior to the expiration of the 75-day
period for cash in an amount equal to the amount of such BIT Mortgage Loans
Under Contract reflected on the Estimate Statement (it being understood that
such sale will be effected without any representations, warranties or
indemnities from Purchaser, the Company or the Subsidiaries) and the value
attributed to such transferred BIT Mortgage Loans Under Contract for purposes of
determining Final Closing Tangible Net Assets shall be the amount of cash paid
to the Company.
The value of firm bids on BIT Mortgage Loans where those firm bids include “kick
out” rights shall be deemed to be:
     (a) for Auctioned BIT Mortgage Loans which the Company elects to be sold
and the BIT Mortgage Loans Under Contract and any BIT Requirement Loans sold:
          (i) The value shall be the cash actually received by the Company upon
settlement of the sale, less with respect to any BIT Mortgage Loans Under
Contract sold in a securitization, all costs and expenses incurred by the
Company or any of its Subsidiaries in respect of such securitization.
          (ii) Any mortgage loans kicked-out of the loan pool prior to
settlement will be, to the extent commercially reasonable and consistent with
the Company’s customary practices, cured and disposed of by the Company within
90 days of the Closing based on its customary practices, with the proceeds
received from those loan dispositions promptly remitted to Seller upon receipt
by the Company and no value shall be attributed to such kicked-out loans for
purposes of determining Final Closing Tangible Net Assets.

 

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     (b) For Auctioned BIT Mortgage Loans that are not sold and for those BIT
Requirement Loans not sold:
          (i) The value shall be the specified cash price of the firm bid, less
an estimate of the cost of kick-outs based on the Company’s actual experience
over the prior 12 months on kick-out percentages, cure rates and severity of
loss on disposition; provided, that, with respect to any kicked-out loans, the
Company shall have the right to sell such kicked-out loans to Seller for cash in
an amount equal to the amount of such loans reflected on the Estimate Statement
(it being understood that such sale will be effected without any
representations, warranties or indemnities from Purchaser, the Company or the
Subsidiaries) and the value attributed to such loans for purposes of determining
the value of the Final Closing Tangible Net Assets shall be the amount of cash
paid to the Company.
5. Residuals — Available for Sale and Held for Trade: Prior to Closing, the
Company may distribute to Parent or its Affiliates or sell to third parties all
or a portion of the remaining balance of existing Residuals—Available for Sale
and Held for Trade (collectively, the “Residuals”) and Retained Securitization
Debt. To the extent any Residuals or Retained Securitization Debt exist as at
the Closing, “Residuals—Available for Sale and Held for Trade” shall be
determined as set forth below. Notwithstanding the foregoing, to the extent the
book value of the Residuals as at Closing is less than $25MM (the “Retained
Residuals”), the parties agree that the Retained Residuals shall be retained by
Seller (it being understood that no representations, warranties or indemnities
shall be given from the Company or the Subsidiaries) and no value shall be
attributed to such Retained Residuals for purposes of Section 1.04.
For purposes of preparing the Estimate Statement:
The Residuals shall be valued in accordance with the provisions of Section 1.04
of the Agreement.
For purposes of preparing the Final Statement:
As soon as practicable after the Closing Date, but in no event later than
75 days after the Closing Date, Seller and the Company shall jointly cause
(i) the Residuals other than the Residuals Under Contract (the “Auctioned
Residuals”) and (ii) the Retained Securitization Debt (the “Auctioned Retained
Securitization Debt”) to be auctioned through a process of obtaining firm bids
(with the same value date as determined by Purchaser and Seller) from the
Bidders. The auction of Auctioned Residuals and Auctioned Retained
Securitization Debt shall be conducted on a separate basis.
Seller will be permitted to set reserve prices on the Auctioned Residuals and
Auctioned Retained Securitization Debt, and if the highest price included in the
firm bids for such Auctioned Residuals or Auctioned Retained Securitization
Debt, as applicable, does not exceed the applicable reserve price (or if no firm
bids are received in accordance with this Exhibit A), such Auctioned Residuals
or Auctioned Retained Securitization Debt, as the case may be, shall be acquired
by Seller prior to the expiration of the 75-day period for cash in an amount
equal to the amount of such Auctioned Residuals or Auctioned Retained
Securitization Debt, as applicable, reflected on the Estimate Statement (it
being understood that such acquisition will be effected without any
representations, warranties or indemnities from Purchaser, the Company or the
Subsidiaries) and the value attributed to such Auctioned Residuals or Auctioned
Retained Securitization Debt, as the case may be, for purposes of determining
the value of the Final Closing Tangible Net Assets shall be the amount of cash
received by the Company.

 

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In conducting the auction of Auctioned Residuals, the Company shall provide (and
shall so indicate to the Bidders) that at least the Residual Minimum Amount will
be sold to the highest Bidder of such Auctioned Residuals as long as the price
bid exceeds any reserve price for such Auctioned Residuals. For purposes of this
Exhibit A, the “Residual Minimum Amount” shall be the greater of (i) 25% of the
total Residuals present at Closing and (ii) $25MM book value of Residuals.
In the event that the Auctioned Residuals existing at Closing have a book value
of less than $25MM, such Auctioned Residuals shall be acquired by Seller prior
to the expiration of the 75-day period for cash in an amount equal to the amount
of such Auctioned Residuals reflected on the Estimate Statement (it being
understood that such acquisition will be effected without any representations,
warranties or indemnities from Purchaser, the Company or the Subsidiaries) and
the value attributed to such Auctioned Residuals for purposes of determining the
value of the Final Closing Tangible Net Assets shall be the amount of cash
received by the Company.
Upon receipt of the firm bids, the Company may (as so directed by Purchaser),
elect to sell some or all of the Residuals and/or Auctioned Retained
Securitization Debt, as applicable, to the relevant winning Bidder or may elect
to retain some or all of the Auctioned Residuals (subject to compliance with its
obligation to sell at least the Residual Minimum Amount) and/or Auctioned
Retained Securitization Debt, as applicable.
In either case, the Residuals—Available for Sale and Held for Trade shall be
valued based on:
     (a) with respect to the Auctioned Residuals, the net aggregate value of the
highest firm bid(s) received for such Auctioned Residuals,
     (b) with respect to Residuals Under Contract, the cash purchase price for
such Residuals under the binding obligations in place as of the Closing pursuant
to which such Residuals will be sold, and
     (c) with respect to the Auctioned Retained Securitization Debt, the net
aggregate value of the highest firm bid(s) received for such Auctioned Retained
Securitization Debt.
The term “Residuals Under Contract” means any Residuals (excluding, for the
avoidance of doubt, any noneconomic residuals to be retained by Seller) held on
behalf of the Company or its Subsidiaries in respect of which, as of the Closing
Date, the Company or any of its Subsidiaries is subject to a binding contractual
obligation to sell all, but not less than all, of the Residuals prior to the
expiration of the 75-day period for a specified price on terms and conditions
consistent with industry practice (including customary representations,
warranties and indemnities) to an unaffiliated third party that is subject to a
binding, unconditional contractual obligation to purchase such Residuals, with
the exposure under such representations, warranties and indemnities taken into
account for purposes of determining Repurchase Liability, below.
The parties agree that to the extent a breach or default occurs with respect to
a Residual under any Residuals Under Contract prior to the expiration of the
75-day period, that Residual (together with any right to recover for breach of
contract against the proposed purchaser under the applicable contract) shall be
transferred to Seller prior to the expiration of the 75-day period (it being
understood that such transfer will be effected without any representations,
warranties or indemnities from Purchaser, the Company or the Subsidiaries) and
no value shall be attributed to such transferred Residuals Under Contract for
purposes of determining Final Closing Tangible Net Assets.

 

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The non-economic residuals owned by the Company and the Subsidiaries shall be
distributed to Seller prior to the Closing in accordance with Section 4.05.
6. Mortgage Servicing Rights.
For purposes of preparing the Estimate Statement:
The Company and Seller shall jointly obtain a valuation of the Company’s
Eligible Servicing Rights as provided in Section 1.04 and this Exhibit A. Each
MSR Valuation Firm (as defined in Section 1.04) shall provide two valuation
ranges for the Eligible Servicing Rights based on the MSR Tapes, one valuation
range based on the Vector Graphs provided by one of the Investment Banks and the
other value based on the Vector Graphs provided by the other Investment Bank.
The value of the Eligible Servicing Rights to be used by the Seller for purposes
of the Estimate Statement shall be equal to the average of: (a) the average of
the midpoints of the valuation ranges obtained from Countrywide Servicing
Exchange (or, if a valuation range from Countrywide Servicing Exchange cannot be
obtained, from another reputable independent third-party appraiser mutually
acceptable to Seller and Purchaser) based on the MSR Tapes and Vector Graphs and
(b) the average of the midpoints of the valuation range obtained by MIAC (or if
a valuation range from MIAC cannot be obtained, from another reputable
independent third party appraiser mutually acceptable to Seller and Purchaser)
based on the MSR Tapes and Vector Graphs.
Each of Countrywide and MIAC shall follow the parameters and assumptions set
forth on Annex C hereto.
The term “Eligible Servicing Rights” means all servicing rights arising under
pooling and servicing agreements, sale and servicing agreements, securitization
servicing agreements, or servicing agreements (or similar agreements) of the
Company or any of its wholly-owned Subsidiaries under which such Person has
agreed to service pools of mortgage loans held by bankruptcy remote entities,
which mortgage loans have been assigned or pledged to a trustee to secure or
otherwise back mortgage-backed securities, excluding, in each case, servicing
under loans that constitute Beneficial Interests in Trust or Mortgage Loans Held
for Sale.
The term “Vector Graphs” means the prepayment speed and default curve vector
graphs that are described in item (j) of Annex C to this Exhibit A and
contemplated to be provided to the MSR Valuation Firms by the Investment Banks
pursuant to Section 1.04.
For purposes of preparing the Final Statement:
As soon as practicable after the Closing Date, but in any event no later than
75 days after the Closing Date, the Company and Seller shall jointly obtain
valuations of the Company’s Eligible Servicing Rights as of the Closing Date
from the MSR Valuation Firms in accordance with this paragraph.
No later than 15 Business Days after the Closing, (a) the Investment Banks shall
provide Vector Graphs with information as of the Closing Date to the MSR
Valuation Firms, with a copy to the Company and Seller; and (b) the Company
shall provide updated MSR Tapes with information as of the Closing Date to the
MSR Valuation Firms, with a copy to Seller.

 

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No later than 20 Business Days after receipt of such updated Vector Graphs and
updated MSR Tapes, each MSR Valuation Firm shall provide two valuation ranges
for the Eligible Servicing Rights based on such updated MSR Tapes, one valuation
range based on the updated Vector Graphs provided by one of the Investment Banks
and the other valuation range based on the updated Vector Graphs provided by the
other Investment Bank.
The value of the Eligible Servicing Rights to be used by Purchaser for purposes
of the Final Statement shall be equal to the average of: (a) the average of the
midpoints of the valuation ranges obtained from Countrywide Servicing Exchange
(or, if a valuation range from Countrywide Servicing Exchange cannot be
obtained, from another reputable independent third-party appraiser mutually
acceptable to Seller and Purchaser) based on such updated MSR Tapes and updated
Vector Graphs and (b) the average of the midpoints of the valuation range
obtained by MIAC (or if a valuation range from MIAC cannot be obtained, from
another reputable independent third party appraiser mutually acceptable to
Seller and Purchaser) based on the updated MSR Tapes and updated Vector Graphs.
Each of Countrywide and MIAC follow the parameters and assumptions set forth on
Annex C hereto.
7. Property, Plant and Equipment: Valued at book value determined in accordance
with GAAP with impairment charges taken for the Restructuring Activities.
8. Servicing and Related Assets: Servicing and Related Assets shall be valued at
book value, determined in accordance with GAAP, with additional provisions
recorded for the following asset categories: (a) no assets will be recorded for
Late Fee Income Receivables (Account 1809); (b) no assets will be recorded, for
any type of advance (excluding amounts disregarded as per item (a) above), for
individual securitizations or whole loan sales with less than 10% of the
original unpaid principal balance outstanding and where the total advances
receivable is greater than 75% of the total unpaid principal balance; and (c) no
assets will be recorded for advances related to Mortgage Loans Held for Sale or
BIT Mortgage Loans; provided, that, in each case, (i) if any servicing advances
are uncollectible under GAAP for any reason, they shall be reflected at zero and
(ii) all advances related to delinquent loans (through REO process) shall be
reflected at their present value assuming collection twelve months later using a
discount rate of LIBOR plus 50 basis points; provided, further, that for assets
recorded as zero per items (a), (b) and (c) above, any amounts collected by the
Company or its affiliates subsequent to Closing in respect of those assets shall
be promptly remitted when received to Seller (and the Company shall use
commercially reasonable efforts to collect such amounts).
9. Mortgage Loans Held for Investment: To the extent the Company or any of its
Subsidiaries owns any loans that are classified as Held for Investment, such
loans shall be valued on a loan-by-loan basis at the lower of (a) amortized cost
less any allowance for losses or (b) market value (based on a firm bid).
10. Other Real Estate Owned: Other Real Estate Owned shall be valued at the
lower of cost or market value, on a property-by-property basis, with market
value being determined based on the net cash proceeds received from the
applicable sale within 75 days after the Closing Date, or estimated net cash
proceeds for properties under contract to be sold within 75 days after the
Closing Date, and if not sold or under contract to be sold within such
timeframe, from an independent appraisal obtained within 75 days of the Closing
Date by an independent appraisal firm mutually acceptable to the Company and
Seller.

 

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11. Pipeline Mortgage Loans: As contemplated by Section 1.04, the Investment
Banks shall conduct, prior to Closing and after Closing, valuations of the
mortgage loans which the Company has committed to fund (taking into account
applications in a manner consistent with the Company’s past practices) but has
not actually funded at Closing (the “Pipeline Mortgage Loans”). The Pipeline
Mortgage Loans shall be valued at the difference between (a) the estimated
market value as if the Pipeline Mortgage Loans had been funded and sold on a
servicing-released basis, plus an amount equal to 35 basis points of the par
amount of the Pipeline Mortgage Loans and (b) the sum of par plus an estimate of
FAS 91 deferred expenses determined in accordance with GAAP based on the
Company’s actual experience for the 60-day period prior to Closing.
For purposes of determining the Pipeline Mortgage Loans entry for both the
Estimate Statement and the Final Statement:
The value of the Pipeline Mortgage Loans determined by the Investment Banks in
accordance with Section 1.04 and this Exhibit A shall be added to the value of
any derivatives identified by the Company as hedging the Pipeline Mortgage
Loans, and this sum:
     (a) if positive, will be reflected on the Estimate Statement or the Final
Statement, as applicable, as zero; and
     (b) if negative, will be reflected on the Estimate Statement or the Final
Statement, as applicable, as a contra-asset as “Pipeline Mortgage Loans”.
The derivatives associated with the Pipeline Mortgage Loans will be removed from
Other Assets and/or Other Liabilities in calculating the book value of those
assets.
12. Other Assets (excluding Other Real Estate Owned, Mortgage Loans Held for
Investment and Pipeline Mortgage Loans)4: valued at book value determined in
accordance with GAAP with impairment charges taken for the Restructuring
Activities; provided, that, to the extent any other asset is a marketable
security or marketable financial instrument (each, an “Additional Marketable
Asset”), the Additional Marketable Asset shall be valued as provided in the
applicable bullet points below:
With respect to the Estimated Statement:
Approximately 30 Business Days prior to the anticipated Closing Date, the
Company shall deliver to Purchaser all material information within the Company’s
possession or control necessary to determine the Fair Market Value of the
Additional Marketable Asset (or series of related Additional Marketable Assets)
as of a date that is approximately 30 Business Days prior to the anticipated
Closing Date and provide Purchaser five Business Days to review.
At the end of such five business day period, the Company shall deliver to each
of the Investment Banks such information (taking into account any reasonable
comments thereon by Purchaser), with a copy to Purchaser.
Each Investment Bank shall be instructed to deliver within 10 Business Days
prior to the Closing such Investment Bank’s written determination of the Fair
Market Value of the Additional
 

4   Any other mortgage loans on the balance sheet shall be included in Auctioned
Mortgage Loans Held for Sale and included in the auction process discussed above
under the heading “Mortgage Loans Held for Sale, Net of Loss Reserves”.

 

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Marketable Asset (or series of related Additional Marketable Assets) as of 10
Business Days prior to the anticipated Closing, signed by a duly authorized
officer of such Investment Bank.
The value of the Additional Marketable Asset (or series of related Additional
Marketable Assets) shall be equal to the average of the Fair Market Values
provided by the Investment Banks pursuant to this sentence.
With respect to the Final Statement:
As soon as practicable after the Closing Date, but in no event later than
75 days after the Closing Date, Seller and the Company shall jointly cause the
Additional Marketable Asset (or series of related Additional Marketable Assets)
to be auctioned for cash through a process of obtaining firm bids (with the same
value date as determined by Purchaser and Seller) from the Investment Banks.
Seller will be permitted to set reserve prices on the Additional Marketable
Assets, and if the highest price included in the firm bids for the Additional
Marketable Assets does not exceed the reserve price (or if no firm bids are
received in accordance with this Exhibit A), such Additional Marketable Assets
shall be acquired by Seller prior to the expiration of the 75-day period for
cash in an amount equal to the amount of such Additional Marketable Assets
reflected on the Estimate Statement (it being understood that such acquisition
will be effected without any representations, warranties or indemnities from
Purchaser, the Company or the Subsidiaries) and the amount attributed to such
Additional Marketable Assets for purposes of determining the value of the Final
Closing Tangible Net Assets shall be the amount of cash paid to the Company.
Upon receipt of the firm bids, the Company may (as so directed by Purchaser),
elect to sell some or all of the Additional Marketable Assets to the relevant
winning Bidder(s) or may elect to retain some or all of the Additional
Marketable Assets.
The value of each Additional Marketable Asset (or series of related Additional
Marketable Assets) shall be based on the net aggregate value of the highest firm
bid(s) received for such Additional Marketable Asset (or series of related
Additional Marketable Assets).
If a firm bid is not received for any Additional Marketable Asset then such
Additional Marketable Asset shall be acquired by Seller prior to the expiration
of the 75-day period for cash in an amount equal to the amount of such
Additional Marketable Asset reflected on the Estimate Statement (it being
understood that such acquisition will be effected without any representations,
warranties or indemnities from Purchaser, the Company or the Subsidiaries) and
the amount attributed to such Additional Marketable Asset for purposes of
determining the value of the Final Closing Tangible Net Assets shall be the
amount of cash paid to the Company.
13. Repurchase Liability: Repurchase reserves shall be calculated in accordance
with GAAP and shall take into account (without limitation) the exposure under
the representations, warranties and indemnities provided to any of the
investment banks or other buyers as discussed in “Mortgage Loans Held for Sale,
Net of Loss Reserves” and “Beneficial Interest in Trust” above (including in
respect of Mortgage Loans under Contract and BIT Mortgage Loans under Contract,
but excluding loans sold to Seller after the Closing without any
representations, warranties or indemnities) and Pipeline Loans assuming
customary representations, warranties and indemnities. Initial reserve level
shall be set based on historical repurchase rates, early payment default rates,
severity and cure rates during the 60-day period prior to the Closing Date.
Adjustments to the initial reserve level are based upon several factors
including, but not limited to, estimated repurchases from whole loan sales or
warehouse based on contractual obligations

 

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(with cure rates applied), early payment default rates, whole loan repurchases
during the 60-day period prior to the Closing Date, current loans on problem
loan list (including warehouse and whole loan repurchases) using estimated
severity and losses based on loan sales during the 60-day period prior to the
Closing Date. Notwithstanding anything to the contrary herein, (i) to the extent
any mortgage loan has an early payment default (“EPD”) and to the extent that a
loss reserve had not already been established for such mortgage loan, an
additional loss reserve shall be set based on current severity rates during the
60-day period prior to the Closing Date and (ii) a representation and warranty
reserve shall be taken for any known or threatened exposure outstanding as of
the Closing and any known or threatened repurchase obligation shall be fully
provisioned for.
14. Borrowings and Due to Warehouse: Principal amount and accrued interest and
fees, calculated in accordance with GAAP.
15. Other Liabilities (including Retention Payments): Valued at book value
determined in accordance with GAAP with impairment charges or accruals taken for
the Restructuring Activities. All retention payments required to be paid to any
officer or employee of the Company and its Subsidiaries on or after the Closing
shall be included in “Other Liabilities” in accordance with GAAP.
Notwithstanding anything to the contrary in this Exhibit A, (i) to the extent
the Investment Banks or Bidders attribute value to any assets as part of their
Fair Market Valuations or firm bids on any other asset set forth in this
Exhibit A, such asset shall be classified (without duplication) on the Estimate
Statement or Final Statement, as applicable, together with the asset that is the
subject of the Fair Market Valuation or firm bid, as applicable, and valued
(without duplication) according to the asset that is the subject of the Fair
Market Valuation or firm bid and (ii) to the extent the Investment Banks or
Bidders include any asset as part of their Fair Market Valuations or firm bids
on any other asset set forth in this Exhibit A and attribute zero value to such
Other Asset, or disregard such asset even though it relates to the asset being
valued, such asset shall be classified (without duplication) on the Estimate
Statement or Final Statement, as applicable, together with the asset that is the
subject of the Fair Market Valuation or firm bid, as applicable, and valued at
zero for purposes of the Estimate Statement and/or Final Statement, as
applicable.

 

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ANNEX A
List of Potential Investment Banks
Bear Stearns
Greenwich Capital Markets
Lehman Brothers
Morgan Stanley
Wachovia
Citigroup

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Annex B
Potential Bidders on Loans and Residuals
Potential Bidders for Mortgage Loans Held for Sale
Bayview
Bear Stearns
C-BASS
Citibank
Deustche
GMAC
Goldman
Greenthal
Lehman Brothers
RFC
Truman Capital
UBS
Wachovia

 

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Potential Bidders for BIT Mortgage Loans
Bank of America
Barclays
Bear Stearns
Carrington
Citibank
Credit Suisse
Deutsche Bank
Fortress
GMAC
Goldman Sachs
Greenwich
HSBC
JP Morgan/Chase
Lehman Brothers
Merrill Lynch
Morgan Stanley
RFC
Soc Gen
UBS
Wachovia
Winter Group

 

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Potential Bidders for Residuals
Bear Stearns
Blue Wave (Carlisle)
Carrington
C-BASS
Citadel
Ellington
Fortress
HBK
Goldman
Greenwich
JP Morgan Arb
Lehman
Morgan Stanley
Stark
Wachovia

 

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Annex C
Agreed Parameters/Assumptions
to be Used in the Valuation of Eligible Servicing Rights
Each firm engaged to provide a valuation of the Eligible Servicing Rights shall
be instructed to determine the Value of the Eligible Servicing Rights as of the
Closing Date. The term “Value” shall mean, with respect to each Eligible
Servicing Right (other than any Eligible Servicing Right for which a Delinquency
Master Servicer Termination Trigger has occurred (which shall be valued at
zero)), the fair market value that a willing buyer would pay to a willing seller
for the actual discounted economic cash-flows expected to be generated by the
Eligible Servicing Right by the Company based, to the extent possible, on the
following parameters and assumptions:

(a)   Cost Parameters: The fully loaded cost to service (including corporate
overhead) broken out by 30, 60, 90, foreclosure and REO and bankruptcy buckets
based on actual historical experience during the 4 month period prior to the
Closing. Non-recurring extraordinary gain or losses should be excluded from
figures.

(b)   Ancillary Income: Fixed dollar amount per loan per year, calculated using
a historical average for the 4 month period prior to the Closing of the
Company’s total monthly income earned and collected exclusive of late fees,
converted to an annual number, divided by the aggregate number of loans serviced
during each monthly period. Late Fees will be expressed as the current average
late fee charge that is assessed as a percentage of the contractually eligible
monthly P&I payment, multiplied by the actual historical collection rate for the
4 month period prior to the Closing for 15/30/60/90 day delinquencies, and
projected based on expected delinquency behavior as determined by the chosen
delinquency curves (i.e., 30/60/90 delinquent and foreclosure) and prepayment
and default curves.

(c)   Discount Rate: The higher of (a) 19% and (b) the midpoint of the discount
rates that each of the engaged firms would otherwise use in the ordinary course
in connection with an independent valuation of mortgage servicing rights similar
to the Eligible Servicing Rights.

(d)   Expense Inflation Rate: The higher of 2% or the Company’s actual
annualized expense inflation rate experienced in the prior 4 months for each
cost parameter described above.

(e)   Escrow Growth Rate: The difference between (a) the Company’s actual
average T&I constant per loan for the 4 month period prior to the Closing and
(b) the Company’s actual average T&I constant per loan for the same 4 month
period during the prior calendar year.

(f)   Escrow Earning Rate: The Company’s actual escrow earnings rate (expressed
relative to 1 month LIBOR) over the 12 month period prior to the Closing.

(g)   Float Earnings Rate: The Company’s actual float earnings rate (expressed
relative to 1 month LIBOR) over the 12 month period prior to the Closing.

(h) Cost of Advance: 1-month LIBOR + 200bps

(i)   Investor Remittance and Float Assumptions: Each of the Interest Shortfall
on Prepayments, Prepayment Interest Expense, Remittance Type and Advance
Requirements shall be determined based on the specific remittance provisions in
the Company’s Pooling and Servicing Agreements. The cutoff dates, remittance
dates, and advance obligations shall be

 

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    determined by the individual Pooling and Servicing Agreements, whereas each
of the number of days of P&I Float, Prepayment Float, Interest Shortfall on
Prepayments, Prepayment Interest Excess, assumed P&I collection dates and
prepayment dates shall be based on an average of the Company’s actual experience
during the 4 month period prior to Closing subject to the applicable collars set
forth below:

  •   Days of P&I Float will be calculated based on the Company’s 4 month
historical average, subject to a minimum of 6 days and a maximum of 12 days.    
•   Days Payoff Float will be calculated based on the Company’s 4 month
historical average, subject to a minimum of 17 days and a maximum of 25 days.  
  •   Days of Interest Shortfall will be calculated based on the Company’s
4 month historical average, subject to a minimum of 5 days and a maximum of
15 days.

(j)   Prepayment Speed and Default Curves: Based on vector graphs provided by
the            Investment Banks for the servicing portfolio. Prepayment curves
to be broken out by product (at a minimum fixed and ARM also including
prepayment penalties and no prepayment penalties). To the extent that the loans
being considered are the same as the residuals valuation, to the fullest extent
reasonably practicable, the same vector graphs should be utilized as the ones
utilized by the Bidders providing firm bids for those assets.

(k)   Any assumptions not included above: Should be determined by referring to
recent actual experience, except for forward-looking assumptions related to
credit or prepayment characteristics, which should be utilized using assumptions
provided by the Investment Banks.

 

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EXHIBIT B
The Earnout Methodologies

•   On the Closing Date, the opening consolidated balance sheet of the Company
and its Subsidiaries shall be adjusted to reflect purchase accounting
adjustments required by U.S. GAAP.

•   During the Calculation Period, the accounts of the Company and its
Subsidiaries will be recorded in accordance with U.S. GAAP, subject to the
following:

  •   For purposes of calculating “Net Income,” each of the following items will
be excluded from such calculation:

  (a)   any extraordinary or unusual charges incurred in connection with any
restructuring plans, including branch closures and related employee
terminations, incurred subsequent to the six-month anniversary of the Closing;
provided, however, that charges incurred after the six-month anniversary arising
from restructurings implemented prior to the six-month anniversary, including
obligations in respect of retention payments, shall be included,     (b)  
Covered Losses for which the Seller has actually reimbursed the Purchaser
Indemnified Parties under the indemnifications provisions in the Agreement,    
(c)   board monitoring fees, reimbursements to board members for costs and
expenses of attending board meetings and any monitoring, management or other
costs or expenses of or payable to Purchaser or any of its Affiliates, but
including costs and expenses of any consultants affiliated with Cerberus Capital
Management, L.P. or any of its Affiliates to the extent retained by the Company
or any of its Subsidiaries on arm’s length terms,     (d)   any internal or
external advisory, legal, and other similar transaction expenses of Purchaser or
its Affiliates (including the Company and the Subsidiaries) directly arising
from the Purchase or any Business Combination, whether or not consummated,    
(e)   losses and gains (including any write-offs or write-ups) resulting from
the sale of any assets of the Business to the extent the Person effecting such
sale is granted the right to repurchase such asset, and     (f)   any impairment
charges taken or any income related to negative goodwill created as of the
Closing Date with respect to any of the assets of the Business.

  •   Neither the Company nor its Subsidiaries will elect to account for
mortgage loans held for sale at fair value or any other financial assets or
liabilities at fair value (that are not currently accounted for at fair value)
as permitted under FAS 159 (“The Fair

 

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Value Option for Financial Assets and Financial Liabilities Including an
Amendment of FASB Statement No. 115”).

  •   Residuals resulting from gain-on-sale transactions shall be accounted for
as “Available for Sale.”     •   An assumed tax rate of 38% shall be applied
with respect to determining Net Income.     •   A capital charge shall be
applied to all Direct Capital in an amount equal to the applicable interest rate
or dividend rate associated therewith. The term “Direct Capital” means capital
specifically identifiable to the assets of the Business’ origination platform or
servicing platform of the Business (whether on-balance sheet or off-balance
sheet, such as warehouse facilities (including, during the Stub Period,
warehouse facilities of the Acquiring Party to the extent used for the
Business)).     •   Any third party debt incurred in respect of the Business
(including, during the Stub Period, third party debt incurred by any Acquiring
Party in respect of the Business that is the subject of the Sale Transaction)
other than Direct Capital shall be applied a capital charge in an amount equal
to the applicable interest rate (“Other Third Party Debt”).     •   A capital
charge shall be applied to any Excess Capital during the Calculation Period
equal to 20% (on an annualized basis).

  •   The term “Excess Capital” means, with respect to any financial period, the
amount of capital (debt or equity) funded into the Business on or after the
Closing in existence for such period (other than Direct Capital or Other Third
Party Debt) less any repayments or returns of capital paid to the applicable
investors of such capital during such period, less $400,000,000 (the “Excess
Capital Threshold”), less the Servicing Capital Amount, and less the Residuals
Capital Amount.     •   To the extent Excess Capital is a negative number, no
cost of capital shall be applied.     •   The term “Servicing Capital Amount”
means, with respect to any financial period, the amount equal to:

  a.   the value of “Mortgage Servicing Rights” reflected on the Final Statement
and any Property, Plant & Equipment related to the servicing platform, less    
b.   the amount of debt available to be funded on “Mortgage Servicing Rights” at
Closing or within 60 days thereafter, plus     c.   the value of “Servicing and
Related Assets” reflected on the Final Statement, less

 

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  d.   the amount of debt available to be funded in respect of servicer advances
at Closing or within 60 days thereafter.

  •   The term “Residuals Capital Amount” means, with respect to any financial
period, the amount equal to:

  a.   the value of Final Residuals, less     b.   the amount of debt available
to be funded on Final Residuals at Closing or within 60 days thereafter.

•   Notwithstanding anything to the contrary above or in Section 1.05, to the
extent a Business Combination occurs during the Calculation Period, then for
purposes of the calculation of “Net Income,” the following treatment shall be
applied for the period from the date of consummation of such Business
Combination (the “Business Combination Closing Date”) until the end of the
Calculation Period (the “Stub Period”):

  •   In the case of a Sale Transaction involving all of the OOMC Branches, the
term “net income of the Company and its Subsidiaries” shall be deemed to be
solely the net income generated by subprime Loans originated by the OOMC
Branches (taking into account all expenses incurred at the OOMC Branch-level
(including expenses arising out of liabilities associated with such origination,
such as litigation and regulatory compliance expenses) and all Indirect
Expenses).     •   In the case of a Sale Transaction involving less than all of
the OOMC Branches, the term “net income of the Company and its Subsidiaries”
shall be deemed to include the net income generated by subprime Loans originated
by the Subject Branches (taking into account all expenses incurred at the
Subject Branch-level (including all expenses arising out of liabilities
associated with such origination, such as litigation and regulatory compliance
expenses) and the applicable amount of Indirect Expenses in respect of such
Subject Branches).     •   In the case of an Acquisition Transaction, the term
“net income of the Company and its Subsidiaries” shall be deemed to be solely
the net income generated by subprime Loans originated by the OOMC Branches
(taking into account all expenses incurred at the OOMC Branch-level (including
all expenses arising out of liabilities associated with such origination, such
as litigation and regulatory compliance expenses) and all Indirect Expenses).  
  •   All restructuring costs incurred in connection with such Business
Combination shall be disregarded.     •   All refinancing costs incurred in
connection with such Business Combination shall be disregarded.     •   When
calculating Excess Capital in connection with any Sale Transaction, the
following definition shall be used:

 

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  •   The term “Excess Capital” shall means, with respect to any financial
period, the amount equal to (i) the sum of (A) amount of capital (debt or
equity) funded into the Business on or after the Closing in existence for such
period (other than Direct Capital or Other Third Party Debt), plus (B) any
capital of the Acquiring Entity funded in respect of the Business of the Subject
Branches (other than Direct Capital or Other Third Party Debt), in each case,
less any repayments or returns of capital paid to the applicable investors of
such capital during such period, less (ii) $400,000,000 (the “Excess Capital
Threshold”), less (iii) the Servicing Capital Amount.

  •   The term “Indirect Expenses” shall mean all expenses attributable to the
operation of origination platform of the Business (other than those incurred at
an OOMC Branch-level basis), including, corporate general and administrative
expenses. Indirect Expenses shall be allocated for the Stub Period to each
Subject Branch on a pro rata basis based on the amount of subprime Loans
generated by such Subject Branch (on a UPB basis) during the 90-day period
immediately prior to the Sale Transaction Closing Date as compared to the amount
of subprime Loans generated by all OOMC Branches (on a UPB basis) during the
90-day period immediately prior to the Sale Transaction Closing Date (such pro
rata amount, the “Pro Rata Amount”); provided, that if the Company’s
fully-loaded cost to originate for the 60-day period prior to Closing is less
than 1.25% of its origination settlement, then the amount of Indirect Expenses
that shall be allocated during the Stub Period with respect to any Subject
Branch shall be the lower of (A) the applicable Pro Rata Amount and (b) the
actual amount of expenses attributable to the operation of such Subject Branch
during the Stub Period (other than those expenses incurred at the Subject
Branch-level basis), including corporate general and administrative expenses,
allocated by the Acquiring Party to the Subject Branches during the Stub Period.