Exhibit 10.2

 

Execution Copy

 

 

CONTINGENT PAYMENT AGREEMENT

 

This Contingent Payment Agreement (the “Agreement”), dated as of August 12,
2005, is among Select Portfolio Servicing, Inc. (“SPS”), Credit Suisse First
Boston (USA), Inc. (the “Option Holder”), Greenrange Partners LLC
(“Greenrange”), The PMI Group, Inc. (“PMI”) and FSA Portfolio Management, Inc.
(“FSA”, and together with Greenrange and PMI, each a “Payee” and collectively
the “Payees”).

 

Background

 

A.                                   Pursuant to the Option Agreement (as
defined herein), the Option Holder has acquired an option (the “Option”),
exercisable on or before August 12, 2005, to acquire 100% of the outstanding
capital stock of SPS Holding Corp. (“Holding”) from the Payees.  SPS is a
wholly-owned subsidiary of Holding.  The purchase price for such acquisition
will be comprised of a “Cash Payment” (as defined in the Option Agreement), a
series of “Monthly Contingent Payments” (as defined below) and the “Final
Payment Amount” (as defined below).

 

B.                                     The parties hereto wish to provide for
the calculation of the Monthly Contingent Payments and the Final Payment Amount
and for the remittance thereof by the Option Holder to the Payees to the extent
applicable hereunder.

 

Agreement

 

In consideration of the mutual premises and mutual obligations set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:

 

Section 1.  Definitions.  Whenever used in this Agreement, the following words
and phrases shall have the following meanings:

 

“Accountants”: As defined in Section 3(e).

 

“Advance”: Any servicing advance or advance related to delinquent principal
and/or interest made by SPS in respect of a Mortgage Loan.

 

“Affiliate”:  As defined in the Option Agreement.

 

“Aggregate Unit Cost”: With respect to any calendar month, the sum of the Unit
Costs for each Mortgage Loan serviced by SPS on the first day of such calendar
month.

 

“Agreement”: As defined in the preamble hereto.

 

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“Ancillary Income”: With respect to a Mortgage Loan, all income received by SPS
from such Mortgage Loan (other than servicing and sub-servicing fees and
prepayment penalties) including, but not limited to, late charges,
non-sufficient fund charges, speed pay fees, assignment fees, demand fees,
payoff statement fees, loan document fees and any other incidental fees and
charges, in each case, to the extent that collection of such amounts is not
prohibited by the applicable Servicing Requirements or applicable law.

 

“Business Day”: A day of the week other than (a) Saturday or Sunday or (b) a day
on which banking or savings institutions in New York or Utah are authorized or
permitted under applicable law to be closed.

 

“Cash Payment”: As defined in the Option Agreement.

 

“Closing Balance Sheet”: As defined in the Option Agreement.

 

“Consent Order”: Order Preliminarily Approving Stipulated Final Judgment and
Order as to Fairbanks Capital Corp. and Fairbanks Capital Holding Corp., entered
by the United States District Court for the District of Massachusetts on
November 21, 2003, as the same may be modified from time to time in accordance
with the terms thereof.

 

 “Cumulative Shortfall”: For any calendar month, (i) the sum of the Shortfall
for that month and for any prior month less (ii) the Cumulative Shortfall
Deductible Amount, if any, for all prior months.

 

“Cumulative Shortfall Deductible Amount”: For any calendar month, the lesser of
(i) the Cumulative Shortfall for such calendar month and (ii) the Monthly
Contingent Payment for such calendar month, calculated assuming that the
Cumulative Shortfall Deductible Amount for such month is zero.

 

“Curry Settlement”: The Settlement Agreement and Release, dated November 14,
2003, entered into by Fairbanks Capital Corp., and Alanna Curry and certain
other plaintiffs in connection with Civil Action No. 03-10895-DPW, and approved
by the United States District Court for the District of Massachusetts, as the
same may be modified from time to time in accordance with the terms thereof.

 

“Customer Accommodation”: An amount paid by SPS to a customer, or a credit by
SPS to a customer’s account, in either case after the Option Closing Date, that
(x) does not qualify as a Customer Reversal and (y) is a consequence of the
customer alleging a Mortgage Loan Servicing Error or SPS identifying a Mortgage
Loan Servicing Error, in each case which (i) occurred prior to the Option
Closing Date (and which may or may not have continued thereafter) and (ii) SPS
believes is reasonably likely to result in Private Litigation or a Regulatory
Action; provided, however, that in no event will any Customer Accommodation
(i) also be included in any calculation of Designated Litigation Expenses,
(ii) include any amounts payable in connection with a Private Litigation or
Regulatory Action or (iii) include any matter related to the Specified Disputes.

 

“Customer Accommodation Amount”: With respect to any calendar month, the sum of
all Customer Accommodations for such calendar month; provided, however, that:

 

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(i)            for any Customer Accommodation based in part upon Mortgage Loan
Servicing Errors that occur both before the Option Closing Date and more than
180 days after the Option Closing Date, the related Customer Accommodation
Amount (including pursuant to the immediately succeeding clause (ii)) shall be
reduced by fifty percent (50%);

 

(ii)           any Customer Accommodation in excess of $10,000 made by SPS
without the prior written approval of FSA and PMI shall be reduced by one-third
(1/3) of the excess of such Customer Accommodation over $10,000; and

 

(iii)          for any Customer Accommodation involving only Mortgage Loan
Servicing Errors occurring after the Option Closing Date, the related Customer
Accommodation Amount shall be zero.

 

“Customer Information”: As defined in Section 8(g).

 

“Customer Reversal”: An amount paid by SPS to a customer, or a credit by SPS to
a customer’s account, in either case after the Option Closing Date, of an
erroneous, duplicative or excessive fee or charge to such customer prior to the
Option Closing Date that resulted from a Mortgage Loan Servicing Error which
occurred prior to the Option Closing Date (and which may or may not have
continued thereafter), except to the extent that SPS had established a reserve
with respect thereto prior to the Option Closing Date and such reserve amount
has not been reduced to zero as a result of a prior Customer Reversal Amount;
provided, however, that in no event will any Customer Reversal (i) also be
included in any calculation of Designated Litigation Expenses, (ii) include any
amounts payable in connection with a Private Litigation or Regulatory Action or
(iii) include any matter related to the Specified Disputes.

 

“Customer Reversal Amount”: With respect to any calendar month, the sum of all
Customer Reversals for such calendar month; provided, however, that:

 

(i)                                     the Customer Reversal Amount shall not
include any portion of a Customer Reversal that resulted from a Mortgage Loan
Servicing Error that occurred after the Option Closing Date, unless, and only to
the extent that, the erroneous, duplicative or excessive fee or charge billed to
the customer after the Option Closing Date was included in the Monthly
Contingent Payment actually paid to the Payees hereunder;

 

(ii)                                  the portion of the Customer Reversal
Amount that is permitted to be included pursuant to the immediately preceding
clause (i) shall be reduced by fifty percent (50%) if the Mortgage Loan
Servicing Error giving rise to the Customer Reversal continued to occur more
than 180 days after the Option Closing Date; and

 

(iii)                               for any Customer Reversal involving only
Mortgage Loan Servicing Errors occurring after the Option Closing Date, the
related Customer Reversal Amount shall be zero.

 

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“Delinquent”: With respect to any Mortgage Loan, when all or part of the related
monthly payment or, where applicable, the escrow payment, is not paid on the
related due date, as calculated using the method established by the Mortgage
Bankers Association and commonly referred to as the MBA method.

 

“Designated Litigation Expense Adjustment”: Until such time as the Litigation
Reserve Amount has been reduced to zero, the Designated Litigation Expense
Adjustment shall equal zero.  Thereafter, with respect to any calendar month (or
portion thereof), the Designated Litigation Expense Adjustment shall equal the
Designated Litigation Expenses paid by SPS during such calendar month (or
portion thereof); provided, however, that to the extent the Litigation Reserve
Amount has been reduced to zero and a Cumulative Shortfall exists with respect
to a given calendar month, the Designated Litigation Expense Adjustment for such
month shall equal zero.

 

“Designated Litigation Expenses”: With respect to any calendar month, the
aggregate, without duplication, out-of-pocket costs related to damages,
judgments, settlements, penalties, fines or expenses of any kind paid by SPS
during such calendar month arising out of any Private Litigation, including
interest, penalties, reasonable attorneys’ fees and expenses of outside counsel
and all reasonable amounts paid in connection with the investigation, defense or
settlement of any such claim; provided, however, that:

 

(i)                                     for any Private Litigation based in part
upon Mortgage Loan Servicing Errors that occur both before the Option Closing
Date and more than 180 days after the Option Closing Date, the related
Designated Litigation Expenses  (including pursuant to the immediately
succeeding clause (ii)) shall be reduced by fifty percent (50%);

 

(ii)                                  for any Private Litigation that is settled
by SPS without the prior written approval of FSA and PMI which results in
Designated Litigation Expenses in excess of $15,000, the related Designated
Litigation Expenses shall be reduced by one-third (1/3) of the excess of such
Designated Litigation Expenses over $15,000;

 

(iii)                               for any Private Litigation involving only
Mortgage Loan Servicing Errors occurring after the Option Closing Date, the
related Designated Litigation Expenses shall be zero; and

 

(iv)                              in no event will any Designated Litigation
Expense (x) also be included in any calculation of Designated Nonrecoverable
Advances, Customer Accommodation Amounts or Customer Reversal Amounts, (y)
include any amounts payable in connection with any Regulatory Action or
Origination Litigation, or (z) include the Specified Disputes.

 

“Designated Nonrecoverable Advances”: With respect to any calendar month, the
sum of any Advance (other than any servicing, delinquency or other advance that
was purchased, rather than made, by SPS) made by SPS prior to the Option Closing
Date that

 

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SPS reasonably determines during such calendar month, consistent with the
practices of SPS during the six month period prior to the Option Closing Date,
to be a Nonrecoverable Advance; provided, however, that in no event will any
Designated Nonrecoverable Advance include any matter relating to the Specified
Disputes.

 

“Designated Representative”: As defined in Section 8(d).

 

“Fee Matrix”:  As defined in the Option Agreement.

 

“Final Payment Amount”:  As defined in Section 3(c).

 

“FSA”: As defined in the preamble to the Agreement.

 

“Governmental Entity”:  As defined in the Option Agreement.

 

“Greenrange”: As defined in the preamble to the Agreement.

 

“Holding”: As defined in the preamble to the Agreement.

 

“Indemnified Party”: As defined in Section 11(a).

 

“Indemnifying Party”: As defined in Section 11(a).

 

“Interest Expense”: With respect to any calendar month, an amount equal to the
product of (i) the average outstanding balance of Advances on the Mortgage Loans
during such calendar month, times (ii) 85%, times (iii) one-month LIBOR as of
the first Business Day of the month preceding such calendar month plus 2%, times
(iv) 1/12.

 

“Interest Income”: With respect to any calendar month, an amount equal to the
sum of all interest income (including, without limitation, income received under
the Pledge Agreement), float income and/or earnings credit and interest on
Advances received by SPS during such calendar month, to the extent that such
amounts relate to the Servicing Agreements or the Subsequent Designated
Agreements, in each case, to the extent such amounts may be collected in
accordance with the related Servicing Agreements or the Subsequent Designated
Agreements, as applicable, and the collection thereof is not prohibited by
applicable law.

 

“Litigation Reserve Amount”: As of any date of calculation, an amount equal to
the (i) the sum of the reserve for legal disputes (other than reserves for the
Specified Disputes) and the “reserve for unasserted claims in Mississippi”, in
each case as included on or reflected in the Closing Balance Sheet, minus
(ii) the aggregate Designated Litigation Expenses paid by SPS prior to such date
of calculation but during the Payment Period; provided, however, that the result
shall not be less than zero.

 

“Measurement Date”: As defined in the Option Agreement.

 

“Monthly Contingent Payment”: With respect to any Payment Date, an amount paid
to the Payees pursuant to Section 3(b), as such amount is received from
collections

 

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on the Mortgage Loans.  Each Monthly Contingent Payment shall equal the
following, for the calendar month preceding the calendar month in which the
Payment Date occurs: (a) the sum of, without duplication, (i) all Servicing
Income for such preceding calendar month, (ii) all Professional Services Income
for such preceding calendar month, (iii) the Recovery Amount for such preceding
calendar month, and (iv) the Interest Income for such preceding calendar month;
less (b) the sum of, without duplication, (i) the Aggregate Unit Cost for such
preceding calendar month, (ii) the Designated Litigation Expense Adjustment for
such preceding calendar month or, to the extent that the Litigation Reserve
Amount has been reduced to zero and a Cumulative Shortfall exists, the
Cumulative Shortfall Deductible Amount, (iii) the Designated Nonrecoverable
Advances for such preceding calendar month, (iv) the Customer Accommodation
Amount for such preceding calendar month, (v) the Customer Reversal Amount for
such preceding calendar month, and (vi) the Interest Expense for such preceding
calendar month; provided, however, that if the Monthly Contingent Payment for
any calendar month is a negative amount, then the Monthly Contingent Payment for
such month shall be zero, and a “Shortfall” shall be created in accordance with
the definition thereof.  All components of each Monthly Contingent Payment, as
itemized in Exhibit A, other than the Aggregate Unit Cost, the Designated
Litigation Expense Adjustment, the Customer Accommodation Amount and the
Interest Expense, shall be charged, collected, calculated and applied by SPS in
a manner consistent with methods utilized by SPS during the six months
immediately preceding the Option Closing Date, consistently applied; provided,
however, that the Servicing Income and the Professional Services Income
components of each Monthly Contingent Payment, as itemized in Exhibit A, shall
be charged, collected, calculated and applied by SPS subject to Section 7(b);
provided, further, that SPS shall use its commercially reasonable efforts and
act in good faith to achieve the same outcome on individual Customer
Accommodations and Designated Litigation Expenses that was realized for
comparable situations during the six months prior to the Option Closing Date.

 

“Mortgage Loan”: An individual mortgage loan related to a Servicing Agreement or
Subsequent Designated Agreement.  As applicable, “Mortgage Loan” shall be deemed
to refer to the related REO Property.

 

“Mortgage Loan Servicing Error”: With respect to any Portfolio Mortgage Loan, a
violation by SPS of applicable laws or applicable Servicing Requirements in its
servicing of such Portfolio Mortgage Loan.

 

“Nonrecoverable Advance”: Any Advance (other than any servicing, delinquency or
other advance that was purchased, rather than made, by SPS) with respect to a
Portfolio Mortgage Loan that was made by SPS prior to the Option Closing Date as
a result of a Servicing Process Error, which (i) SPS has reasonably determined
will not be recovered from payments by or on behalf of the underlying obligor,
liquidation proceeds or other amounts related to such Portfolio Mortgage Loan,
or the related noteholder pursuant to the terms of the related Servicing
Agreement and (ii) was not in a category included in SPS’s calculation of
“Reserves for advance receivables” on the Closing Balance Sheet.

 

“Notification Date”: The twentieth (20th) day of each calendar month (or, if
such day is not a Business Day, the next succeeding Business Day) beginning with
the second

 

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month of the Payment Period and ending on January 20, 2008 (or, if such day is
not a Business Day, the next succeeding Business Day).  For purposes of
illustration only, Exhibit B sets forth a sample timeline which identifies the
Notification Date in relation to certain other dates relevant to this Agreement.

 

“Notification Summary”: As defined in Section 3(a).

 

“Objection”: As defined in Section 3(e).

 

“Option”:  As defined in the preamble.

 

“Option Agreement”: The Option Agreement, dated as of August 12, 2005, among the
Option Holder, Holding and the Payees.

 

“Option Closing Date”:  The “Closing Date” as defined in the Option Agreement.

 

“Option Holder”: As defined in the preamble.

 

“Origination Litigation”:  Any litigation, action, suit, proceeding or claim to
the extent relating to the origination, rather than the servicing, of a
Portfolio Mortgage Loan.

 

“Payee”: As defined in the preamble to the Agreement.

 

“Payee Designated Representative”: As defined in Section 8(d).

 

“Payment Date”: The twenty-fifth (25th) day of each calendar month (or, if such
day is not a Business Day, the next succeeding Business Day) beginning with the
second month of the Payment Period and ending on January 25, 2008 (or, if such
day is not a Business Day, the next succeeding Business Day).

 

“Payment Period”: The period commencing on the first day of the first calendar
month immediately following the Measurement Date and ending on December 31,
2007.

 

“Peer Group”: Four Subprime Servicers, which shall initially be:  Countrywide
Home Loans, Inc., Ocwen Loan Servicing, Inc., Litton Loan Servicing, and Wells
Fargo Bank, National Association doing business as America’s Servicing Company,
and any successor thereto, each solely in its (or its Affiliates’) capacity as a
Subprime Servicer.  If any of such entities ceases to be a Subprime Servicer or
acts as Subprime Servicer for a subprime mortgage loan portfolio of less than
$10 billion, files or is the subject of an involuntary filing for bankruptcy
protection or becomes insolvent, dissolves, liquidates, or sells all or
substantially all of its assets to an unaffiliated entity, or merges with or
into another member of the Peer Group, then PMI and FSA may (but shall not be
required to) jointly propose to the Option Holder a replacement Subprime
Servicer, which, subject to the consent of the Option Holder (not to be
unreasonably withheld or delayed), shall replace the affected Supbrime Servicer
as a member of the Peer Group.

 

“Pledge Agreement”: The Security Agreement-Pledge (CDs, Commercial Paper, Loan
Participations and Investment Property Accounts) executed by SPS and dated May
8, 2001

 

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(in error, the actual date thereof being May 8, 2002), together with any
Revolving Credit Note executed by SPS in connection therewith.

 

“PMI”: As defined in the preamble to the Agreement.

 

“Portfolio Mortgage Loan”:  An individual mortgage loan for which SPS has been
appointed as the servicer, subservicer and/or master servicer (excluding any
loans assigned to SPS’s Loss Recovery Division for collection which are not
otherwise being serviced by SPS).  As applicable, “Portfolio Mortgage Loan”
shall be deemed to refer to the related REO Property.  For the avoidance of
doubt, “Portfolio Mortgage Loans” shall include all Mortgage Loans (as defined
herein), as well as all other mortgage loans and REO Properties serviced by SPS.

 

“Privacy and Collection Legislation”:  (a) the Fair Debt Collection Practices
Act, (b) the Gramm-Leach-Bliley Act, (c) federal and state collections licensing
laws, (d) federal and state truth-in-lending laws, consumer credit protection
laws, equal credit opportunity laws, predatory and abusive disclosure laws, and
(e) personal data privacy laws, and all applicable regulations passed under any
such legislation, all as the same may be amended or replaced from time to time.

 

“Private Litigation”: Any action, suit or proceeding initiated by or on behalf
of a borrower in any federal or state court of competent jurisdiction alleging
commission of a Mortgage Loan Servicing Error by SPS prior to the Option Closing
Date; provided, however, that (i) solely for purposes of the definition of
Designated Litigation Expenses other than clause (iii) of the proviso contained
therein, Private Litigation may include the alleged commission of a Mortgage
Loan Servicing Error by SPS that occurred both prior and subsequent to the
Option Closing Date; and (ii) Private Litigation shall exclude any Regulatory
Action.

 

“Professional Services Income”: All income earned from professional services
performed by SPS or its Affiliates (including, without limitation, Alta Real
Estate Services, Inc., Residential RealEstate Review, Inc., Mountain West Realty
Corp., Pelatis Insurance Agency Corp. and Pelatis Insurance Limited), in each
case to the extent derived from or related to the Mortgage Loans, less the
amount of all direct or indirect, fixed or variable, costs or expenses derived
from or related to such professional services.

 

“Proprietary Information”: As defined in Section 8(g).

 

“Recovery Amount”: For any calendar month, the aggregate amount recovered during
such month on account of any Designated Nonrecoverable Advances irrespective of
when such Designated Nonrecoverable Advance was deducted from the Monthly
Contingent Payment.

 

“Regulatory Action”: As defined in the Option Agreement.

 

“Regulatory Fee Scrutiny”: Any of the following shall have occurred with respect
to any fee or charge billed to a borrower which is included in the Fee Matrix:

 

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(i)            SPS is examined or receives a direct communication from a Federal
or state regulator alleging that the fee or charge imposed by SPS violates
applicable law or that the amount of such fee or charge by SPS might subject SPS
to regulatory sanctions;

 

(ii)           Either (A) a Federal or state regulator has made a statement that
it intends to, or has taken an action to, subject Subprime Servicers to
regulatory sanctions for imposing such fee or charge at a rate which equals or
exceeds the rate being imposed by SPS or (B) Subprime Servicers have generally
reduced the rate at which they impose such fees or charges to a rate that is
less than the corresponding fee or charge included in the Fee Matrix; or

 

(iii)          any such fee or charge in the Fee Matrix is shown to exceed the
highest such fee or charge billed to borrowers by members of the Peer Group with
respect to subprime mortgage loans that are substantially similar to the
Mortgage Loans by more than 20%; provided, however, that for purposes of this
clause (iii), the Option Holder shall use its commercially reasonable best
efforts to obtain the amount of such fee or charge billed by each member of the
Peer Group.

 

“REO Property”: A mortgaged property acquired by SPS, as servicer, through
foreclosure, by deed in lieu of foreclosure or otherwise.

 

“Servicing Agreement”: Each pooling and servicing agreement, whole loan
servicing agreement, subservicing agreement and similar agreement listed on
Schedule 1 hereto.

 

“Servicing Income”: All servicing fees earned, subservicing fees earned and
Ancillary Income, in each case to the extent derived from or related to the
Mortgage Loans, as reduced by any compensating interest payments required to be
made by SPS related to the Mortgage Loans.  Servicing Income for the applicable
month shall be itemized and shown on each Monthly Contingent Payment report
delivered pursuant to Section 3(a).  Subject to Section 7(b), all components of
Servicing Income shall be charged, collected, calculated and applied in a manner
consistent with methods utilized by SPS during the six months immediately
preceding the Option Closing Date, consistently applied.

 

“Servicing Process Error”: A clearly erroneous application by SPS of the “net
present value” formula that it utilized prior to the Option Closing Date to
determine that an Advance would be reimbursable to SPS under the Servicing
Agreement governing the Portfolio Mortgage Loan for which the Advance was being
made.

 

“Servicing Requirements”: With respect to each Mortgage Loan, the applicable
provisions of the related Servicing Agreement with respect to the servicing,
control and administration of such Mortgage Loan.

 

“Servicing Rights”: Any and all of SPS’s right, title and interest in and to:
(1) all rights of subservicing, servicing and/or master servicing of Mortgage
Loans pursuant to

 

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any Servicing Agreement or Subsequent Designated Agreement; (2) all rights under
each applicable Servicing Agreement to receive or retain amounts in respect of
servicing fees, ancillary income, reimbursement for advances or other expenses
and costs, and investment earnings or other benefits from positive account
balances, together with all contract rights, incidental income and benefits to
the extent payable to SPS; (3) rights to possession and use of servicing files
and records directly or indirectly related to each Mortgage Loan or pertaining
to the past, present or prospective servicing of such Mortgage Loan, including,
without limitation, borrower lists, insurance policies and tax service
agreements; (4) all agreements or documents creating, defining or evidencing any
such servicing rights and all rights of SPS thereunder; (5) all accounts and
other rights to payment related to any of the property described in this
paragraph; and (6) all rights, powers and privileges incident to any of the
foregoing.

 

“Shortfall”: For any calendar month after the Litigation Reserve Amount has been
reduced to zero, the dollar amount, if any (expressed as a positive number), by
which the Monthly Contingent Payment for such calendar month is a negative
amount.

 

“Specified Disputes”: As defined in the Option Agreement.

 

“SPS”: As defined in the preamble to the Agreement.

 

“SPS Designated Representative”: As defined in Section 8(d).

 

“Subprime Servicer”: An entity which services, master services and/or
subservices subprime one-to-four family residential mortgage loans located
within the United States, in each case solely in its capacity as such.

 

“Subsequent Designated Agreement”: As defined in Section 9(b).

 

“Unit Cost”: For any calendar month: (i) with respect to any Mortgage Loan which
is less than ninety (90) days Delinquent as of the end of the last day of such
calendar month, the Unit Cost is $18.35; and (ii) with respect to any Mortgage
Loan which is ninety (90) days or more Delinquent as of the end of the last day
of such calendar month, the Unit Cost is $50.96.  The Unit Cost shall apply to
each Mortgage Loan which is serviced by SPS for the related month and is subject
to servicing as of the first day of such calendar month.

 

Section 2.  Acknowledgment

 

(a)                                  Mortgage Loans.  The parties to this
Agreement acknowledge that some, but not all, of the Portfolio Mortgage Loans
will be factored into the calculation of the Cash Payment made by the Option
Holder to the Payees pursuant to the Option Agreement.  The Monthly Contingent
Payments and the Final Payment Amount will be based upon the Mortgage Loans, and
may reflect reductions, to the extent provided herein, with respect to
Designated Litigation Expenses, Customer Accommodations, Customer Reversals, and
Designated Nonrecoverable Advances relating to both the Mortgage Loans and all
other Portfolio Mortgage Loans.

 

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(b)                                  Designated Litigation Expenses.  The
parties to this Agreement acknowledge that the Cash Payment made by the Option
Holder to the Payees pursuant to the Option Agreement will not include an amount
equal to the Litigation Reserve Amount.  Accordingly, the Monthly Contingent
Payments to be made to the Payees hereunder will only be reduced for Designated
Litigation Expenses once the Litigation Reserve Amount shall have been reduced
to zero, as more specifically described in the definition of “Designated
Litigation Expense Adjustment”.

 

Section 3.  Payments

 

(a)                                  Payment Notification.  On each Notification
Date, SPS shall notify the Payees of the amount of the Monthly Contingent
Payment to be made on the next Payment Date.  Such notification shall include a
detailed summary of each component of such Monthly Contingent Payment in
substantially the form of Exhibit A hereto (the “Notification Summary”),
together with a certificate of the Chief Financial Officer of SPS (or, if there
is a vacancy in such office, the Chief Executive Officer of SPS) stating that
such statement was prepared on the basis described herein.

 

(b)                                  Monthly Contingent Payments.  On each
Payment Date, the Option Holder shall remit (or cause SPS to remit on the Option
Holder’s behalf) to the Payees the Monthly Contingent Payment, if any, for such
Payment Date.

 

(c)                                  Final Payment.  On March 31, 2008 the
Option Holder shall remit (or cause SPS to remit on the Option Holder’s behalf)
to the Payees an amount (the “Final Payment Amount”) equal to (i) the net
present value, as of December 31, 2007, of the anticipated Monthly Contingent
Payments (excluding, for purposes of such anticipated Monthly Contingent
Payments, any deduction on account of Designated Litigation Expense Adjustment,
Designated Nonrecoverable Advances, Customer Accommodation Amount, or Customer
Reversal Amount) through the expected remaining term of the Servicing Rights,
calculated using a discount rate of twenty percent (20%) per annum, reduced by
(ii) the Cumulative Shortfall Deductible Amount, if any, as of such date.  The
calculation of the Final Payment Amount shall assume that the revenue
components, the Aggregate Unit Costs and Interest Expense included in the
calculation of Monthly Contingent Payments are made or incurred in accordance
with SPS’s financial projections as of December 31, 2007, which shall be
prepared by SPS in good faith and in a manner that SPS reasonably believes will
represent the Monthly Contingent Payments through the remaining term of the
Servicing Rights, and, in the case of the one-month LIBOR rate used to calculate
the Interest Expense, projected in accordance with the forward one-month LIBOR
curve.  SPS shall deliver to the Payees such projections and a detailed
calculation of the Final Payment Amount no later than February 15, 2008,
together with all related back-up material that may be reasonably requested by
the Payees in reviewing such projections and calculation.  SPS shall cooperate
in good faith with the Payees in their review of such projections and
calculation.

 

(d)                                  Payment Instructions.  All payments
pursuant to this Section 3 shall be made as follows: 61.36500% of each Monthly
Contingent Payment and the Final Payment Amount shall be paid to PMI, 37.40412%
of each Monthly Contingent Payment

 

11

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and the Final Payment Amount shall be paid to FSA and 1.23088% of each Monthly
Contingent Payment and the Final Payment Amount shall be paid to Greenrange. 
Such payments shall be made by wire transfer as follows:

 

In the case of PMI:

 

Bank:

Bank of New York

ABA #:

021 000 018

Account #:

290430

Account Name:  The PMI Group, Inc.

Reference: Please include full details on the wire

 

 

In the case of FSA:

 

Bank:

The Bank of New York

 

One Wall Street

 

New York, NY  10286

Bank ABA:

021 000 018

or

SWIFT Code:

IRVTUS3N

For Further Credit:

FSA Portfolio Management Inc.

Account # :  8900 298 073

Reference:     Please include full details on the wire.

 

 

In the case of Greenrange:

 

Name of Bank:  Mellon Bank

Address of Bank:  Pittsburgh, PA

ABA Number: 043-000-261

Credit to:  Merrill Lynch A/C 101-1730

 

For credit to:  81N-07016 n/o

Greenrange Partners

 

Reference:

Please include full details on the wire

 

Each Payee may change its wire transfer instructions by providing the Option
Holder and SPS with written notice of such Payee’s new wire transfer
instructions.

 

(e)                                  Reconciliation and Dispute Resolution.  SPS
shall deliver to the Payee Designated Representatives, within five (5) days
after its receipt of written notice from the Payee Designated Representatives,
all related back-up material that may be reasonably requested to verify the
accuracy of the related Monthly Contingent Payment report delivered pursuant to
Section 3(a) and to recalculate the related Monthly Contingent Payment.  SPS
shall cooperate in good faith with the Payees in their review of such material
and in the Payees’ reconciliation.  In the event that that PMI or FSA does not
agree with the amount of any particular Monthly Contingent Payment or the Final
Payment Amount, such Payee may deliver to SPS (with a copy to the Option Holder)
a notice objecting to the amount of such payment (an “Objection”).  If PMI or
FSA delivers an Objection to SPS (with a copy to the Option Holder), the Payees
and SPS shall negotiate in good faith with a view to resolving the disputed
items and arriving at a mutually agreed amount for such payment.  If such
negotiations fail to resolve all

 

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disputed items within thirty (30) days after the Objection was delivered to SPS,
the remaining disputed items shall be submitted to Ernst & Young LLP (or such
other “Big Four” accounting firm as is mutually agreed to by SPS and the Payees)
(the “Accountants”) for final and exclusive resolution.  The Accountants shall
afford each of SPS and the Payees and their respective representatives the
opportunity to present their positions as to the disputed items (which
opportunity shall not extend for more than thirty (30) days after the expiration
of the thirty (30) day period described in the previous sentence).  Each
presentation shall include a statement of the Monthly Contingent Payment or
Final Payment Amount, as applicable, proposed by such party and shall be
accompanied by reasonably detailed supporting documentation.  No later than ten
(10) days after the presentations to the Accountants by SPS and the Payees of
their respective positions on the disputed items, the Accountants shall deliver
their decision with respect to the disputed items, which decision shall be in
writing and shall include a reasonably detailed description of the basis for
such determination.  The Accountants’ determination shall be final and binding
upon all parties hereto and shall be reflected in any necessary revisions to the
relevant Notification Summary, and SPS shall promptly remit to the Payees any
amounts due, if applicable, as a result of the Accountants’ determination, in
proportion to the percentages identified in Section 3(d).  The fees, costs and
expenses of the Accountants in connection with any such determination shall be
borne by SPS if the amount adopted as correct by the Accountants is closer to
the amount proposed by the Payees than the Monthly Contingent Payment or the
Final Payment Amount, as the case may be, originally proposed by the Option
Holder and shall otherwise be borne by the Payees in proportion to the
percentages identified in Section 3(d).  The Accountants’ decision may be
enforced in any state or federal court of competent jurisdiction.  The failure
to deliver an Objection with respect to any particular Monthly Contingent
Payment (or the component calculations thereof) shall in no way prejudice the
rights of the Payees to object to other Monthly Contingent Payments or the Final
Payment Amount.

 

(f)                                    Payments Unsecured.  The Monthly
Contingent Payment obligations owing under this Agreement shall be unsecured. 
No Payee will require, solicit or accept the pledge, mortgage, assignment or
hypothecation of any property or property rights or interests of SPS or the
Option Holder, including, without limitation, the Servicing Rights, as direct or
indirect security for such Monthly Contingent Payment obligations, or any
covenant to pledge any of the same, and the parties hereto agree that any such
pledge, mortgage, assignment or hypothecation shall be void ab initio.  Nothing
in this Agreement, including the preceding sentence, shall be construed to
prevent or limit the Payees from assigning their right to receive all or a
portion of the Monthly Contingent Payments and the Final Payment Amount.

 

(g)                                 No Set Off.  All payments to be made by the
Option Holder or SPS to a Payee hereunder (including, without limitation, the
Monthly Contingent Payments and the Final Payment Amount) shall be made without
any setoff, abatement, withholding, deduction, counter claim or reduction in
respect of, or otherwise affected by, any claim or dispute related to the Option
Agreement, any Servicing Agreement or any Subsequent Designated Agreement, that
the Option Holder or SPS or any of their respective parents,

 

13

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subsidiaries or Affiliates may have with any of the Payees or their respective
parents, subsidiaries or Affiliates.  For the avoidance of doubt:

 

(i)            the Monthly Contingent Payment may be reduced by the Aggregate
Unit Cost, Designated Litigation Expense Adjustment or Cumulative Shortfall
Deductible Amount (as applicable), Customer Accommodation Amount, Customer
Reversal Amount, Designated Nonrecoverable Advances and Interest Expense, as
provided herein;

 

(ii)           the Final Payment Amount may be reduced by the Aggregate Unit
Cost and the Interest Expense, as contemplated by Section 3(c); and

 

(iii)          nothing in the immediately preceding sentence shall preclude the
Option Holder from seeking indemnification pursuant to and in accordance with
the provisions of Section 11.2(d) of the Option Agreement.

 

(h)                                 No Sale of Servicing Rights.  SPS shall not
sell, transfer or assign, and the Option Holder shall not permit the direct or
indirect sale, transfer or assignment of, its respective right, title or
interest in and to the Servicing Agreements and Designated Servicing
Agreements.  SPS shall, and the Option Holder shall cause SPS to, maintain its
corporate existence until this Agreement is terminated in accordance with
Section 10 hereof.

 

Section 4.  Effective Date.

 

This Agreement shall become effective on the Option Closing Date.

 

Section 5.  Representations and Warranties of SPS

 

SPS represents and warrants to each Payee and the Option Holder that, as of the
date hereof and the Option Closing Date:

 

(a)                                  SPS is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization.  SPS
has all requisite power and authority to own its properties and carry on its
business as and where now being conducted.  SPS has all requisite power and
authority to enter into this Agreement, and the agreements to which it is or
will become a party as contemplated by this Agreement, and to carry out the
transactions contemplated hereby.

 

(b)                                  The execution and delivery by SPS of this
Agreement, and of the agreements to be entered into pursuant hereto, and the
consummation of the transactions contemplated hereby have each been duly and
validly authorized by all necessary action, and this Agreement and such other
agreements constitute valid and legally binding agreements enforceable in
accordance with their respective terms.

 

(c)                                  The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
violate, conflict with, result in a breach of, constitute a default under or be
prohibited by, or require any additional approval, waiver

 

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or consent under SPS’s charter or other agreement relating to its organization
or any instrument or agreement to which it is a party or by which it is bound or
any federal or state law, rule or regulation or any judicial or administrative
decree, order, ruling or regulation applicable to it.

 

(d)                                  There is no litigation or action at law or
in equity pending, or, to SPS’s knowledge, threatened against SPS and no
proceeding or investigation of any kind is pending or, to its knowledge,
threatened, by any federal, state or local governmental or administrative body,
which could reasonably be expected to materially affect SPS’s ability to
consummate the transactions contemplated hereby.

 

(e)                                  SPS holds and maintains all required
permits, licenses, approvals and registrations for the servicing of the Mortgage
Loans, except where the failure to hold any such permit, license, approval or
registration would not have a material adverse effect on the servicing of the
Mortgage Loans or the ability of SPS to perform its obligations hereunder.

 

Section 6.  Representations and Warranties of the Option Holder

 

The Option Holder represents and warrants to the Payees and to SPS that, as of
the date hereof and the Option Closing Date:

 

(a)                                  The Option Holder is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization.  The Option Holder has all requisite power and authority to own
its properties and carry on its business as and where now being conducted.  The
Option Holder has all requisite power and authority to enter into this
Agreement, and the agreements to which it is or will become a party as
contemplated by this Agreement, and to carry out the transactions contemplated
hereby.

 

(b)                                  The execution and delivery by the Option
Holder of this Agreement, and of the agreements to be entered into pursuant
hereto, and the consummation of the transactions contemplated hereby have each
been duly and validly authorized by all necessary action, and this Agreement and
such other agreements constitute valid and legally binding agreements
enforceable in accordance with their respective terms.

 

(c)                                  The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
violate, conflict with, result in a breach of, constitute a default under or be
prohibited by, or require any additional approval, waiver or consent under the
Option Holder’s charter or other agreement relating to its organization or any
instrument or agreement to which it is a party or by which it is bound or any
federal or state law, rule or regulation or any judicial or administrative
decree, order, ruling or regulation applicable to it.

 

(d)                                  There is no litigation or action at law or
in equity pending, or, to the Option Holder’s knowledge, threatened against the
Option Holder and no proceeding or investigation of any kind is pending or, to
its knowledge, threatened, by any federal, state or local governmental or
administrative body, which could reasonably be expected to

 

15

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materially affect the Option Holder’s ability to consummate the transactions
contemplated hereby.

 

Section 7.  Servicing of the Mortgage Loans

 

(a)                                  Compliance with Servicing Agreements.  From
and after the Option Closing Date, SPS shall service the Mortgage Loans in
accordance with the Servicing Requirements, and in compliance with the Consent
Order, the Curry Settlement, all consent agreements or similar documents to
which SPS is a party with any other federal, state, or local regulatory
authority or any other similar agreement, and applicable laws, rules and
regulations and shall have full power and authority, acting alone, to do any and
all things in connection with such servicing and administration that SPS may
deem reasonably necessary or desirable, consistent with the terms of this
Agreement and the Servicing Requirements.  From and after the Option Closing
Date, with respect to the Mortgage Loans, SPS shall apply the Servicing
Requirements, consistent with the practices employed by SPS during the six month
period prior to the Option Closing Date, unless prohibited by applicable law.

 

(b)                                  Ancillary Income.  Notwithstanding anything
herein to the contrary, all components of Servicing Income and Professional
Services Income for any calendar month based on fees or charges billed directly
to borrowers shall be determined as if the rate for each such fee or charge
utilized by SPS is the same as the rate for such fee or charge utilized by SPS
during the six months prior to the Option Closing Date (regardless of whether
SPS actually continues to impose such fees or charges at such rates) or, if
greater, the highest rate for such fee or charge actually utilized by SPS in the
applicable jurisdiction during such calendar month for the Portfolio Mortgage
Loans; provided, however, that:

 

(i)            if any such fee or charge is shown to, or due to a change in law
will, violate applicable law, the rate deemed to be used for the jurisdiction
subject to such law shall be limited to amounts that do not violate applicable
law;

 

(ii)           if a regulator with jurisdiction over SPS requires that SPS
reduce such fee or charge, or indicates that SPS might face adverse regulatory
consequences for failing to reduce such fee or charge, the rate deemed to be
used in such jurisdiction shall be limited to the rate required, or requested in
order to avoid adverse regulatory consequences, by the regulator; and

 

(iii)          subject to Sections 7(b)(i) and 7(b)(ii), if any Regulatory Fee
Scrutiny exists with respect to a particular fee or charge billed directly to
borrowers that is included in the Fee Matrix in effect on the Option Closing
Date, the rate of such particular fee or charge used for all Mortgage Loans
within the jurisdiction of the applicable regulator shall be deemed to be equal
to the greater of:

 

(x)                       the highest rate for such fee or charge actually
utilized by SPS in the applicable jurisdiction during such calendar month for
the Portfolio Mortgage Loans, and

 

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(y)                     (1) the amount shown by the Option Holder to be the
average of the top two (2) rates at which members of the Peer Group impose such
fee or charge in the applicable jurisdiction, if it has obtained such
information from at least two (2) members of the Peer Group, or (2) if the
Option Holder obtains information from only one (1) member of the Peer Group,
98% of the rate at which such member imposes such fee or charge; provided,
however, that for purposes of this clause (y), (a) the Option Holder shall use
its commercially reasonable efforts to obtain the amount of such fee or charge
billed by each member of the Peer Group in such jurisdiction, (b) if the Option
Holder has been unable to obtain information from a member of the Peer Group
(after using its commercially reasonable efforts to do so), the average
described in clause (y)(1) shall be based on only the Peer Group members’ fees
or charges as to which the Option Holder has obtained such information, and
(c) for the avoidance of doubt, if the top two (or more) rates of Peer Group
members are identical, the fee or charge to be used hereunder shall be equal to
98% of such rate.

 

(c)                                  Standard of Care.  From and after the
Option Closing Date, SPS shall assure that the Mortgage Loans are generally
serviced with the same degree of care, attention and skill as the other
Portfolio Mortgage Loans.

 

(d)                                  Termination of Servicing Agreements.  SPS
will not waive any material right which it may have under a Servicing Agreement
without the prior written consent of the Payee Designated Representatives,
unless such waiver will not adversely affect the Payees’ right to or interest in
the Monthly Contingent Payments or the Final Payment Amount.

 

(e)                                  Quarterly Accounting Forecast.  Not later
than 15 days before the end of any calendar quarter (any such date being a
“Forecast Date”), beginning with the calendar quarter in which the Closing
occurs and ending with the last quarter of 2007, the Company shall deliver to
the Payees a forecast (each such forecast being a “Forecast”) prepared as
follows: for each calendar quarter beginning with the quarter immediately
following the Forecast Date and ending with the last quarter of 2009, the
Company shall estimate the amounts to be realized on account of Servicing
Income, Interest Income, Professional Services Income, Interest Expense and
Aggregate Unit Costs (the “Forecasted Items”), as those terms are used in, and
with the supporting detail provided by, Exhibit A hereto.  The estimates will be
prepared using substantially the same procedures that the Company used in the
six months prior to the Option Closing Date hereof to derive the cash flow
projections used in its determination of the GAAP balance sheet values for the
Servicing Rights.  The Payees acknowledge that (i) the Forecasts are being
prepared by the Company only as an accommodation to certain reporting
requirements of the Payees and (ii) SPS shall not be deemed to make any
representations or warranties as to whether the Forecasts will reflect the
future performance of SPS or its business or whether the Forecasts will be
achieved.  Monthly Contingent Payments paid to the Payees from time to time
shall be determined from amounts actually received or paid on account of the
Forecasted Items and not from the amounts shown in any of the

 

17

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Forecasts.  SPS shall reasonably promptly provide each Payee with any additional
information reasonably requested by such Payee in order for such Payee to
prepare its audited financial statements and to satisfy any financial reporting
obligations applicable to it.  Notwithstanding anything to the contrary
contained herein, in no event shall the Option Holder nor SPS have any liability
for the accuracy of the information that it provides pursuant to this
Section 7(e).

 

Section 8.  Monitoring and Consultation Rights

 

(a)                                  Monthly Reporting.  SPS agrees that from
and after the Option Closing Date, to the extent not prohibited by applicable
law or the Servicing Requirements, SPS shall provide the Payees with: (i) access
to all loan-level and pool-level monthly servicing reports and all other
reports, notices and certifications that are delivered by SPS with respect to
the Servicing Agreements, together with copies of such reports, notices and
certifications upon request, and (ii) all documentation and information
reasonably requested in writing by any Payee Designated Representative to verify
the accuracy of any Monthly Contingent Payment report delivered pursuant to
Section 3(a).

 

(b)                                  Access to Information.  Upon reasonable
written prior notice to SPS, SPS shall provide the Payees and their respective
counsel, accountants and other representatives with reasonable access during
normal business hours to all of SPS’s files, books and records relating to the
Mortgage Loans; provided, however, that SPS shall be entitled to take reasonable
and appropriate actions to assure that the Payees maintain the confidentiality
of the names and addresses of the borrowers under the Mortgage Loans and all
non-public information obtained in any such investigation that could reasonably
be construed to be of a confidential or proprietary nature.  SPS shall provide
the Payees with access to and reasonable cooperation of SPS’s officers and
employees in connection with any such investigation.

 

(c)                                  On-site Monitoring.  PMI and FSA shall have
the collective right, but not the obligation, to designate one individual to
conduct onsite monitoring, to the extent not prohibited by law, of SPS’s
compliance with this Agreement.  PMI and FSA shall have the collective right,
exercisable in their sole discretion at any time, to remove any individual
designated to conduct onsite monitoring pursuant to this Section 8(c) and may,
if they collectively so elect, designate a new individual to conduct onsite
monitoring pursuant to this Section 8(c).  SPS shall provide (without cost to
the Payees) such individual with an assigned workspace, reasonably requested
support from SPS’s Information Technology Department and access, during normal
business hours, to all of SPS’s files, books and records relating to the
Mortgage Loans, with such access subject to SPS’s normal security procedures for
third party access to such information.  It is expressly understood and agreed
that the designated individual shall in no event be deemed an officer or
employee of SPS.

 

(d)                                  Designated Representatives.  SPS shall
designate two individuals (each an “SPS Designated Representative”) and PMI and
FSA shall each designate one individual (each a “Payee Designated
Representative”, and together with the SPS Designated Representatives, the
“Designated Representatives”) as contacts for SPS, PMI

 

18

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and FSA, respectively, for all communications relating to this Agreement.  Each
of PMI and FSA shall have the individual right, exercisable in its sole
discretion at any time, to remove any individual designated by it pursuant to
the preceding sentence and to designate a new individual as a contact for such
Payee.  Each of the Payee Designated Representatives and at least one of the SPS
Designated Representatives shall meet in person not less frequently than monthly
during the first 18 months following the Option Closing Date, and beginning in
the 19th month following the Option Closing Date and each quarter thereafter
until the payment of the Final Payment Amount and conclusion of any dispute
resolution proceedings pursuant to Section 3(e) hereof with respect thereto, to
review any issues identified by SPS or the Payees with respect to this
Agreement.

 

(e)                                  Designated Litigation Expense and
Regulatory Matters Review. In addition to the meetings referred to in
Section 8(d) hereof, each of the Payee Designated Representatives and at least
one of the SPS Designated Representatives (together with, if appropriate, one or
more officers of SPS responsible for litigation and regulatory procedures) shall
meet in person (except as otherwise mutually agreed to by such Designated
Representatives) not less frequently than monthly to review (i) all Regulatory
Actions (other than routine examinations, except to the extent that the
applicable regulator identifies any matters which may give rise to matters
subject to the indemnity provided in Section 11.2(f) of the Option Agreement),
(ii) any action initiated by or on behalf of a consumer in any federal, state or
arbitral forum in respect of a Mortgage Loan which is classified as a “Risk
Rated 5” action by SPS, and (iii) any Designated Litigation Expenses which were
used to reduce prior Contingent Monthly Payments or resulted in a Cumulative
Shortfall Deductible Amount.  The meetings referred to in this Section 8(e) and
Section 8(d) shall be held at a mutually convenient location in New York, New
York (with telephonic access provided upon request to each Payee Designated
Representative and SPS Designated Representative), or via teleconference.

 

(f)                                    Payees’ Consultation Rights.  Each Payee
may (but has no obligation to) provide SPS with advice regarding the management
of specific Mortgage Loans, which advice may be made in writing, in the form of
electronic mail or orally.  Such advice may be based on observations made in
conjunction with the information provided pursuant to Section 8(a), 8(b), 8(c),
8(d) and 8(e) of this Agreement, or in conjunction with any Payee’s general
review of SPS’s operations.  Each party to this Agreement acknowledges that
(i) such advice is made in the form of recommendations, and that the Payees do
not have the right (nor any obligation) to direct SPS in performing its duties
under the Servicing Agreements and (ii) SPS has no obligation to follow or adopt
such recommendation.

 

(g)                                 Confidentiality.  The Payees shall keep
confidential and shall not divulge to any party, without the prior written
consent of SPS, any documents, files or other information pertaining to the
Mortgage Loans or any mortgagor thereunder (“Customer Information”), except to
the extent that it is appropriate for the Payees to do so in enforcing their
rights hereunder or working with their respective legal counsel, auditors,
taxing authorities, other governmental agencies, insurance carriers, any
property inspector, or other person necessary to fulfill such Payee’s
obligations hereunder.  To the extent that the Customer Information includes
information which constitutes “nonpublic

 

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personal information” under 16 C.F.R. 314 (2002), the Payees will maintain
appropriate safeguards to safeguard such Customer Information in accordance with
the “Standards for Safeguarding Customer Information” as required by 16 C.F.R.,
Chapter I, Part 314.  Notwithstanding any provision of this Agreement, the
trademarks, trade secrets, know-how, business methods and practices, internal
procedures and other intellectual property and confidential information of SPS
(“Proprietary Information”) shall remain vested in SPS, and are not hereby
transferred to the other party, and SPS shall have the right to take all actions
necessary to protect the Proprietary Information.  Notwithstanding any provision
of this Agreement, this Agreement and its terms may be disclosed by the Payees
without restriction.

 

Section 9.  Option Holder

 

(a)                                  Compliance with Agreement.  From and after
the Option Closing Date, the Option Holder shall cause SPS to fully and
completely perform each of SPS’s obligations under the Agreement in the manner
and at the times set forth herein.

 

(b)                                  Subsequent Designated Agreements.  With
respect to any mortgage servicing rights acquired or to be acquired by SPS after
November 30, 2004 and prior to the Option Closing Date from any third party not
affiliated with the Option Holder, SPS may request that the Option Holder
indicate whether the purchase price to be bid by SPS for such servicing rights
is acceptable to the Option Holder.  The Option Holder shall respond to any such
request within three (3) Business Days.  If the Option Holder shall have
notified SPS that the purchase price is acceptable, then such servicing rights
will not constitute Subsequent Designated Agreements for purposes of the Cash
Payment.  If the Option Holder shall not have notified SPS that the purchase
price is acceptable, but SPS proceeds with the transaction, then the related
pooling and servicing agreement, whole loan servicing agreement, subservicing
agreement or similar agreement shall be considered a “Subsequent Designated
Agreement”.  Nothing in this Section 9(b) shall be deemed to limit SPS’s ability
to acquire mortgage servicing rights from any third party not affiliated with
the Option Holder.  The Subsequent Designated Agreements in effect as of the
date hereof are identified on Schedule 1 hereto.  On the Option Closing Date,
SPS shall deliver to the Payees a revised Schedule 1 that identifies all of the
Subsequent Designated Agreements as of such date.

 

Section 10.  Termination of the Agreement

 

Except as otherwise specifically set forth herein, the obligations and
responsibilities of the parties to this Agreement shall terminate upon the date
(the “Termination Date”) which is the earliest to occur of: (i) the date on
which all Monthly Contingent Payments and the Final Payment Amount have been
paid in full to the Payees in the manner required hereunder and are not subject
to dispute under Section 3(e) hereof; and (ii) such other date as shall have
been agreed upon by all of the parties hereto.  Section 8(g) of this Agreement
shall survive any termination of this Agreement.  Section 11 of this Agreement
shall survive any termination of this Agreement until the date (the
“Indemnification Expiration Date”) that is 18 months after the Termination Date;
provided, however, that, notwithstanding the foregoing, the Option Holder shall
remain

 

20

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obligated under Section 11 with respect to any matter giving rise to
indemnification thereunder as to which an Indemnified Party shall have given
written notice to the Option Holder prior to the Indemnification Expiration
Date.

 

Section 11.  Indemnification

 

(a)                                  Indemnification Obligations.  Option Holder
(the “Indemnifying Party”) shall indemnify, defend and hold harmless each of the
Payees and their respective parents, subsidiaries, Affiliates, directors,
officers, shareholders, representatives, successors and assigns (each an
“Indemnified Party”), from and against, without duplication, any and all actual
losses, costs, obligations, liabilities, damages, settlement payments, awards,
judgments, fines, penalties, damages, deficiencies or other charges (including
without limitation reasonable attorneys’ fees and expenses and reasonable
accountants’ fees and expenses), whether or not arising out of any claims by or
on behalf of a third party, to the extent arising from: (i) the willful
misconduct or gross negligence of the Indemnifying Party, SPS (from and after
the Closing Date) or any of their respective agents in the performance of the
duties and obligations of SPS (from and after the Closing Date) or the Option
Holder hereunder; or (ii) the breach by the Indemnifying Party or SPS (from and
after the Closing Date) of any of the representations, warranties or covenants
of SPS or the Option Holder set forth herein; provided, however, that, in the
event that the loss giving rise to such indemnification results from a Mortgage
Loan Servicing Error occurring both before and after the Option Closing Date,
then (i) such indemnity shall not apply to the portion of any such loss that
results solely from a Mortgage Loan Servicing Error that occurred before the
Option Closing Date and continues for no more than 180 days after the Option
Closing Date; and (ii) the amount of loss indemnified shall be reduced by 50% of
the portion of any such loss that results solely from a Mortgage Loan Servicing
Error that occurred before the Option Closing Date and continues for more than
180 days after the Option Closing Date.  Notwithstanding anything to the
contrary contained herein, the Option Holder agrees that a Mortgage Loan
Servicing Error that occurs solely after the Option Closing Date shall not
adversely affect or otherwise diminish the foregoing indemnity in any respect.

 

(b)                                  Indemnification Procedures.  (i)  Within
ten (10) days after receipt by an Indemnified Party of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the Indemnifying Party under this Agreement,
deliver a claim notice to the Indemnifying Party; provided, however, that the
omission to so notify the Indemnifying Party shall not relieve the Indemnifying
Party from any liability that the Indemnifying Party may have to the Indemnified
Party unless such delay has materially prejudiced the Indemnifying Party.  In
the event that such claim is made or action brought against the Indemnified
Party and the Indemnified Party notifies the Indemnifying Party of the
commencement thereof, the Indemnifying Party shall be entitled to participate
therein and, to the extent that it shall wish, to assume the defense thereof
with counsel reasonably satisfactory to the Indemnified Party.  The Indemnifying
Party shall give prompt notice to the Indemnified Party of whether it intends to
participate and/or assume the Indemnified Party’s defense.

 

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(ii)  The Indemnified Party may also employ separate counsel in any action or
claim and to participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party unless:  (i) the
employment thereof has been specifically authorized by the Indemnifying Party in
writing; (ii) the named parties to such action (including any impleaded parties)
include both the Indemnified Party and the Indemnifying Party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them; or (iii) the Indemnifying Party has
failed to assume the defense of such action and employ counsel reasonably
satisfactory to the Indemnified Party.  If such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party in accordance with the preceding sentence, the
Indemnifying Party shall not have the right to assume the defense of such action
on behalf of such Indemnified Party, it being understood, however, that the
Indemnifying Party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to local
counsel) at any time for all Indemnified Parties.

 

(iii)  Upon the payment in full of any claim hereunder, the Indemnifying Party
shall be subrogated to the rights of the Indemnified Party against any person
with respect to the subject matter of such claim.  In the event of a dispute,
the parties shall proceed in good faith to negotiate a resolution of such
dispute.

 

(iv)  The Indemnifying Party shall not be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the Indemnifying Party
agrees to indemnify and hold harmless any Indemnified Party from and against any
loss or liability by reason of such settlement or judgment.  The Indemnifying
Party shall not, without prior written consent of the Indemnified Party, effect
any settlement of any pending or threatened action in respect of which such
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party unless such settlement includes an
unconditional release of such Indemnified Party from all liability on any claims
that are the subject matter of such action.

 

(v)  In the event that the Indemnifying Party reimburses the Indemnified Party
with respect to any third party claim and the Indemnified Party subsequently
receives reimbursement from another person with respect to that third party
claim, then the Indemnified Party shall remit such reimbursement from such other
person to the Indemnifying Party within fifteen (15) business days of receipt
thereof.

 

(c)                                  Tax Treatment of Indemnification Payments. 
The parties agree to treat any indemnification payment made pursuant to this
Agreement as an adjustment to the Exercise Price (as defined in the Option
Agreement) for tax purposes.

 

22

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Section 12.  Miscellaneous

 

(a)                                  Amendments.  This Agreement may be amended
from time to time by the parties hereto only by written agreement signed by all
of the parties hereto.

 

(b)                                  Further Assurances.  Each party hereto
covenants and agrees that, subsequent to the execution of this Agreement, and
without any additional consideration, such party will execute and deliver any
further legal instruments and perform any acts which are or may become necessary
to effectuate the purposes of this Agreement.

 

(c)                                  GOVERNING LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ITS CHOICE OF LAW PROVISIONS.

 

(d)                                  WAIVER OF JURY TRIAL.  EACH PARTY HERETO
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY 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 BY THIS AGREEMENT.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(1) 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 THE FOREGOING WAIVER, (2) EACH PARTY UNDERSTANDS AND
HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (3) EACH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (4) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

(e)                                  Notices.  Any notices or other
communications permitted or required hereunder shall be in writing and shall be
deemed conclusively to have been given if delivered by overnight courier
(delivery being evidenced by a written receipt) to, personally delivered at,
mailed by registered mail, postage prepaid, and return receipt requested to or
transmitted by confirmed facsimile, to (i) in the case of SPS, if by overnight
courier, personal delivery or registered mail, 3815 South West Temple, Salt Lake
City, Utah 84115-4412, Attn: General Counsel or, if by facsimile (801) 293-2555,
or such other address or telecopy number as may hereafter be furnished to the
other parties hereto in writing by SPS; (ii) in the case of FSA, if by overnight
courier, personal delivery or registered mail, 31 West 52nd Street, New York,
New York 10019, Attn: General Counsel, if by e-mail to generalcounsel@fsa.com
or, if by facsimile [(212) 339-3560, or such other address or telecopy number as
may hereafter be furnished to the other parties hereto in writing by FSA;
provided, however, that the Notification Summary to be delivered to FSA shall be
delivered via telecopy or e-mail to the Payee Designated Representative of FSA
at such telecopy or e-mail address as such Payee Designated

 

23

--------------------------------------------------------------------------------

 

Representative may specify; (iii) in the case of PMI, if by overnight courier,
personal delivery or registered mail, 3003 Oak Road, Walnut Creek, California
94597, Attn: General Counsel, or, if by facsimile (925) 658-6384, or such other
address or telecopy number as may hereafter be furnished to the other parties
hereto in writing by PMI; provided, however, that the Notification Summary to be
delivered to PMI shall be delivered via telecopy or e-mail to the Payee
Designated Representative of PMI at such telecopy or e-mail address as such
Payee Designated Representative may specify; (iv) in the case of Greenrange, if
by registered mail, P.O. Box 975, Darien Connecticut  06820, Attn: James H.
Ozanne, and if by overnight courier or personal delivery to 114 Goodwives River
Road, Darien, Connecticut  06820 or, if by facsimile (203) 655-6044, or such
other address or telecopy number as may hereafter be furnished to the other
parties hereto in writing by Greenrange; and (v) in the case of the Option
Holder, if by overnight courier, personal delivery or registered mail, 11
Madison Avenue, 4th Floor, New York, NY  10010, Attn: Bruce Kaiserman, or, if by
facsimile (917) 326-7936, with a copy to One Madison Avenue, 9th Floor, New
York, NY  10010, Attn:  Colleen A. Graham, Esq., or if by facsimile (212)
325-8282, or such other address or telecopy number as may hereafter be furnished
to the other parties hereto in writing by the Option Holder.

 

(f)                                    Exhibits and Schedules.  The Exhibits and
Schedules to this Agreement are hereby incorporated and made a part hereof and
are an integral part of this Agreement.

 

(g)                                 Severability.  Any part, provision,
representation or warranty of this Agreement which is prohibited or which is
held to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof.  Any part, provision, representation or warranty of this Agreement which
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.  To the extent permitted by applicable law, the parties
hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof.  If the invalidity of any part, provision,
representation or warranty of this Agreement shall deprive any party of the
economic benefit intended to be conferred by this Agreement, the parties shall
negotiate, in good-faith, to develop a structure the economic effect of which is
as close as possible to the economic effect of this Agreement without regard to
such invalidity.

 

(h)                                 General Interpretive Principles.      For
purposes of this Agreement, except as otherwise expressly provided or unless the
context otherwise requires:

 

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

 

(ii)                                  accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally accepted
accounting principles;

 

24

--------------------------------------------------------------------------------

 

(iii)                               references herein to “Sections,”
“Subsections” and other subdivisions without reference to a document are to
designated Sections, Subsections and other subdivisions of this Agreement;

 

(iv)                              the words “herein,” “hereof,” “hereunder” and
other words of similar import refer to this Agreement as a whole and not to any
particular provision; and

 

(v)                                 the term “include” or “including” shall mean
without limitation by reason of enumeration.

 

(i)                                    Reproduction of Documents.  This
Agreement and all documents relating thereto, including, without limitation,
(i) consents, waivers and modifications which may hereafter be executed,
(ii) documents received by any party at the closing, and (iii) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process.  The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

 

(j)                                    Counterparts.  This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one instrument.  It
shall not be necessary in making proof of this Agreement or any counterpart
thereof to produce or account for any other counterpart.  Telecopy signatures
shall be deemed valid and binding to the same extent as originals.

 

(k)                                Expenses.  Each of the parties hereto shall
bear its own expenses incurred in connection with the transactions contemplated
by this Agreement.

 

(l)                                    Entire Agreement, Successors and
Assigns.  This Agreement and the Option Agreement constitute the entire
agreement between the parties hereto and supersedes all rights and prior
agreements and understandings, oral and written, between the parties hereto with
respect to the subject matter hereof.  This Agreement shall not be assignable,
directly or indirectly, in whole or in part by any party hereto without the
prior written consent of the other parties hereto.  Notwithstanding the
foregoing, in the case of any assignment by the Payees, consent shall not be
unreasonably withheld or delayed by the Option Holder or SPS; provided, however,
that such consent may be unreasonably withheld or delayed by the Option Holder
or SPS if the assignee is a competitor of one or more of the mortgage or
mortgage-related businesses conducted by the Option Holder or any of its
Affiliates or any of the businesses conducted by SPS; and provided, further,
that the Payees may assign their rights under this Agreement to any of their
respective Affiliates without the consent of any other party hereto.  This
Agreement and any rights, remedies, obligations or liabilities under or by
reason of the Agreement shall inure to the

 

25

--------------------------------------------------------------------------------

 

benefit of and be binding on the parties hereto and on their respective
successors and permitted assigns.

 

 

Rest of Page left Blank Intentionally

 

26

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by
their respective officers thereunto duly authorized, as of the dates set forth
below.

 

 

SELECT PORTFOLIO SERVICING, INC.

 

 

 

 

 

By:

/s/ Matt Hollingsworth

 

 

 

Name: Matt Hollingsworth

 

 

Title: CEO

 

 

 

 

 

CREDIT SUISSE FIRST BOSTON (USA), INC.

 

 

 

 

 

By:

/s/ James P. Healy

 

 

 

Name: James P. Healy

 

 

Title: Managing Director

 

 

 

 

 

THE PMI GROUP, INC.

 

 

 

 

 

By:

/s/ Victor J. Bacigalupi

 

 

 

Name: Victor J. Bacigalupi

 

 

Title: Executive Vice President, Chief Administrative Officer and General
Counsel

 

 

 

 

 

By:

/s/ Donald P. Lofe, Jr.

 

 

 

Name: Donald P. Lofe, Jr.

 

 

Title: Executive Vice President and Chief Financial Officer

 

 

 

 

 

FSA PORTFOLIO MANAGEMENT, INC.

 

 

 

 

 

By:

/s/ Bruce E. Stern

 

 

 

Name: Bruce E. Stern

 

 

Title: General Counsel and Managing Director

 

 

 

 

 

GREENRANGE PARTNERS LLC

 

 

 

 

 

By:

/s/ James H. Ozanne

 

 

 

Name:

 

 

Title:

 

Signature Page to Contingent Payment Agreement

 

--------------------------------------------------------------------------------

 

Exhibit A
to
Contingent Payment Agreement

 

Monthly Contingent Payment Calculation

 

Prepared for Calendar Month                  , 20

 

1.  Servicing Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing fees and subservicing fees, earned

 

$

xxxxxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus Ancillary Income

 

$

xxxxxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less BofA Mortgage Loan demand fee applied against outstanding receivable on
balance sheet

 

$

(xxxxx

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less compensating interest paid by SPS under the related Servicing Agreement

 

$

(xxxxx

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Servicing Income

 

 

 

$

xxxxxx

 

 

2.  Professional Services Income (PSI)

 

 

 

ARS

 

RRR

 

MWR

 

PIA

 

PIL

 

 

 

 

 

All income earned from professional services

 

$

xxx

 

$

xxx

 

$

xxx

 

$

xxx

 

$

xxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Divided by # Units(1) and Portfolio Mortgage Loans generating income from
professional services

 

xxx

 

xxx

 

xxx

 

xxx

 

xxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit Margin

 

$

xxx

 

$

xxx

 

$

xxx

 

$

xxx

 

$

xxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Multiplied by # of Mortgage Loans generating income from professional services

 

xxx

 

xxx

 

xxx

 

xxx

 

xxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculated PSI by business

 

$

xxx

 

$

xxx

 

$

xxx

 

$

xxx

 

$

xxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal calculated PSI

 

 

 

 

 

 

 

 

 

 

 

 

 

$

xxxxxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.  Recovery Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

$

xxxxxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.  Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

xxxxxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2a.  Subtotal Monthly Net Cash Flow Revenues

 

 

 

 

 

$

xxxxxx

 

 

--------------------------------------------------------------------------------

(1) When the income earned from professional services is derived from both
Portfolio Mortgage Loans and other sources, those other sources will be measured
in units assigned so that the effort required to obtain income earned from
professional services for the unit is comparable to the effort so required for a
Portfolio Mortgage Loan.

 

--------------------------------------------------------------------------------

 

5.  Aggregate Unit Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit Cost for Mortgage Loans less than 90 days Delinquent

$

18.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Mortgage Loans less than than 90 days Delinquent

Xxxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Costs for Mortgage Loan less than 90 days Delinquent

 

 

$

xxxxxx

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit Cost for Mortgage Loan 90 days or more Delinquent

$

50.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Mortgage Loans 90 days or more Delinquent

xxxx

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Costs for Mortgage Loans 90 days or more Delinquent

 

 

$

xxxxxx

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Aggregate Unit Costs

 

 

 

 

$

(xxxxx

)

 

 

 

 

 

 

 

 

 

 

6.  Designated Litigation Expense Adjustment

 

$

(xxxxx

)

 

 

 

 

 

 

OR (if the Litigation Reserve Amount has been
reduced to zero and a Cumulative Shortfall exists):

 

 

 

 

 

 

 

 

 

 

 

 

6.  Cumulative Shortfall Deductible Amount

 

$

(xxxxx

)

 

 

 

 

 

7.  Designated Nonrecoverable Advances

 

$

(xxxxx

)

 

 

 

 

 

8.  Customer Accommodation Amount

 

$

(xxxxx

)

 

 

 

 

 

9.  Customer Reversal Amount

 

$

(xxxxx

)

 

 

 

 

 

10.  Interest Expense

 

$

(xxxxx

)

 

 

 

 

 

 

Average outstanding Advances during the calendar month

 

 

$

xxxx

 

 

 

 

One-month LIBOR as of the first Business Day of the immediately preceding
calendar month

 

 

 

        

%

 

 

 

 

 

 

 

 

 

 

 

10a.  Subtotal Monthly Net Cash Flow Expenses

 

$

(xxxxx

)

 

 

 

 

 

Monthly Net Cash Flow

 

$

xxxxxx

 

 

--------------------------------------------------------------------------------

 

For your information:

 

 

 

 

 

 

 

 

 

1.  The remaining Litigation Reserve Amount at the end of the calendar month was

 

$

xxxxxxx

 

 

 

 

 

 

2.  The Shortfall for the calendar month and all prior months was

 

$

xxxxxxx

 

 

 

 

 

 

3.  The Cumulative Shortfall Deductible Amount for all prior months was

 

$

xxxxxxx

 

 

 

 

 

 

4.  The Cumulative Shortfall at the end of the calendar month was

 

$

xxxxxxx

 

 

--------------------------------------------------------------------------------

 

Exhibit B
to
Contingent Payment Agreement

 

Sample Timeline

 

For purposes of illustration only, assuming that on August 12, 2005 the Option
Holder delivered notice of its intent to exercise the Option and close the
purchase of the Option Shares on September 30, 2005, the following dates would
become relevant under this Agreement.

 

 

August 12, 2005

 

Option Exercise Date

 

 

 

September 30, 2005
(month end for SPS)

 

Measurement Date

 

 

 

October 3, 2005 (first
Business Day after the
Measurement Date)

 

Option Closing Date

 

 

 

October 1, 2005 (first
day of the first calendar
month following the
Measurement Date)

 

Commencement of the Payment Period under the Contingent Payment Agreement

 

 

 

November 21, 2005
(first Business Day
following the 20th day
of such calendar month)

 

The initial Notification Date under the Contingent Payment Agreement (relating
to payment accruing during the month of October)

 

 

 

November 25, 2005

 

The initial Payment Date under the Contingent Payment Agreement (relating to
payment accruing during the month of October)

 

--------------------------------------------------------------------------------