EXHIBIT 10.1



EXECUTION

 

 

 

 

 

ASSET PURCHASE AGREEMENT 

  

  BETWEEN 

  

  METLIFE BANK, NATIONAL ASSOCIATION 

  

  AND 

  

  FIRST TENNESSEE BANK NATIONAL ASSOCIATION

  

  Dated as of JUNE 3, 2008 

 

 

 











TABLE OF CONTENTS 

	
ARTICLE I   DEFINITIONS  	   	
1  
	
            1.1 Certain Definitions  	   	
1  
	
            1.2 Terms Defined Elsewhere in this Agreement  	   	
13  
	
            1.3 Other Definitional and Interpretive Matters  	   	
15  
	
    ARTICLE II   PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES 
	 	15
	
            2.1 Purchase and Sale of Assets  	   	
15  
	
            2.2 Excluded Assets  	   	
17  
	
            2.3 Assumption of Liabilities  	   	
18  
	
            2.4 Excluded Liabilities  	   	
19  
	
            2.5 Further Conveyances and Assumptions; Consent of Third Parties  	   	
21  
	
            2.6 Purchase Price Allocation  	   	
23  
	
            2.7 Proration of Certain Expenses  	   	
23  
	
ARTICLE III   CONSIDERATION  	   	
24  
	
            3.1 Purchase Price  	   	
24  
	
            3.2 Estimated Purchase Price  	   	
25  
	
            3.3 Closing Payment  	   	
25  
	
            3.4 Purchase Price Adjustment  	   	
26  
	
            3.5 Final Purchase Price Calculation  	   	
26  
	
ARTICLE IV   CLOSING AND TERMINATION  	   	
28  
	
            4.1 Closing Date  	   	
28  
	
            4.2 Termination of Agreement  	   	
28  
	
            4.3 Purchaser Extension  	   	
29  
	
            4.4 Effect of Termination  	   	
30  





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ARTICLE V   REPRESENTATIONS AND WARRANTIES OF SELLER  	   	
    30 

	
            5.1 Organization; Valid Existence; Capitalization  	   	
    30 

	
            5.2 Authorization of Agreement  	   	
    31 

	
            5.3 Conflicts; Consents of Third Parties  	   	
    32 

	
            5.4 Financial Data  	   	
    33 

	
            5.5 No Undisclosed Liabilities  	   	
    34 

	
            5.6 Title to Purchased Assets  	   	
    34 

	
            5.7 Absence of Certain Developments  	   	
    34 

	
            5.8 Taxes  	   	
    34 

	
            5.9 Real Property  	   	
    37 

	
            5.10 Tangible Personal Property  	   	
    38 

	
            5.11 Intellectual Property  	   	
    38 

	
            5.12 Purchased Contracts  	   	
    40 

	
            5.13 Employee Benefits  	   	
    42 

	
            5.14 Labor  	   	
    42 

	
            5.15 Litigation  	   	
    44 

	
            5.16 Compliance with Laws; Permits  	   	
    45 

	
            5.17 Environmental Matters  	   	
    46 

	
            5.18 Pipeline Loans  	   	
    46 

	
            5.19 Accounts Receivable  	   	
    47 

	
            5.20 Mortgage Servicing Qualification  	   	
    47 

	
            5.21 Risk Management Instruments  	   	
    47 

	
            5.22 Financial Advisors  	   	
    47 

	
            5.23 No Regulatory Impediment  	   	
    48 

	
            5.24 Sufficiency of Assets  	   	
    48 






ii 











	
            5.25 Diligence Materials  	   	
    48 

	
            5.26 Full Disclosure  	   	
    48 

	
ARTICLE VI   REPRESENTATIONS AND WARRANTIES OF PURCHASER  	   	
    48 

	
            6.1 Organization; Valid Existence  	   	
    48 

	
            6.2 Authorization of Agreement  	   	
    49 

	
            6.3 Conflicts; Consents of Third Parties  	   	
    49 

	
            6.4 Litigation  	   	
    49 

	
            6.5 No Regulatory Impediment  	   	
    50 

	
            6.6 Financial Advisors  	   	
    50 

	
ARTICLE VII   COVENANTS  	   	
    50 

	
            7.1 Access to Information  	   	
    50 

	
            7.2 Conduct of the Business Pending the Closing  	   	
    50 

	
            7.3 Consents  	   	
    54 

	
            7.4 Regulatory Approvals  	   	
    55 

	
            7.5 Further Assurances  	   	
    57 

	
            7.6 Preservation of Records  	   	
    57 

	
            7.7 Publicity  	   	
    57 

	
            7.8 Notice to Pipeline Loan Mortgagors and Others  	   	
    58 

	
            7.9 Use of Trade Names  	   	
    58 

	
            7.10 Covenants Not to Compete and Not to Solicit  	   	
    60 

	
            7.11 Transfer of Assets Following the Closing  	   	
    64 

	
            7.12 Notice of Developments  	   	
    65 

	
            7.13 ARM Corrections  	   	
    65 

	
            7.14 Monthly Financial Information  	   	
    65 

	
            7.15 Fixed Asset Inventory  	   	
    66 






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            7.16 Transition Services Agreement  	   	
    66 

	
            7.17 Evaluated Business  	   	
    66 

	
            7.18 Document Custodian Services  	   	
    67 

	
            7.19 Purchaser Warehouse Line of Credit  	   	
    67 

	
ARTICLE VIII   EMPLOYEES AND EMPLOYEE BENEFITS  	   	
    67 

	
            8.1 Employment  	   	
    67 

	
            8.2 Personnel Files  	   	
    69 

	
            8.3 Standard Procedure  	   	
    69 

	
            8.4 Terminated Employees  	   	
    70 

	
ARTICLE IX CONDITIONS TO CLOSING  	   	
    70 

	
            9.1 Conditions Precedent to Obligations of Purchaser  	   	
    70 

	
            9.2 Conditions Precedent to Obligations of Seller  	   	
    72 

	
ARTICLE X   INDEMNIFICATION  	   	
    74 

	
            10.1 Survival of Representations, Warranties, and Covenants  	   	
    74 

	
            10.2 Indemnification  	   	
    74 

	
            10.3 Indemnification Procedures  	   	
    76 

	
            10.4 Limitations on Indemnification  	   	
    78 

	
            10.5 Tax Treatment of Indemnity Payments  	   	
    80 

	
            10.6 Right to Indemnification  	   	
    80 

	
            10.7 Exclusive Right to Indemnification  	   	
    80 

	
            10.8 Mitigation of Losses  	   	
    80 

	
ARTICLE   XI TAXES  	   	
    80 

	
            11.1 Transfer Taxes  	   	
    80 

	
            11.2 Prorations  	   	
    81 

	
            11.3 Cooperation on Tax Matters  	   	
    82 






iv 











	
            11.4 Election Under Code Section 338(h)(10)  	   	
    82 

	
            11.5 Preparation and Filing of Tax Returns  	   	
    82 

	
            11.6 Tax Indemnification  	   	
    83 

	
            11.7 Tax Refunds  	   	
    83 

	
    ARTICLE XII   MISCELLANEOUS 
	   	
    83 

	
            12.1 Expenses  	   	
    83 

	
            12.2 Submission
 to Jurisdiction; Consent to Service of Process; Waiver of Jury Trial  	   	  

	
            12.3 Entire Agreement; Amendments and Waivers  	   	
    84 

	
            12.4 Governing Law  	   	
    85 

	
            12.5 Notices  	   	
    85 

	
            12.6 Severability  	   	
    86 

	
            12.7 Binding Effect; Assignment  	   	
    86 

	
            12.8 Knowledge  	   	
    86 

	
            12.9 Disclosure Memorandum  	   	
    87 

	
            12.10 Counterparts  	   	
    88 





 

 

 

 

 

 

 

v










	
Schedules  	   	   
	 

  
	
1.1  	            	
List of Acquisition Contracts  
	
2.1(d)  	   	
List of Purchased Intellectual Property  
	
2.1(h)  	   	
List of Purchased Branch Offices  
	
2.1(i)  	   	
List of Purchased Contracts  
	
2.2(b)  	   	
List of Retained Mortgage Production Offices Outside of Tennessee  
	
2.2(d)  	   	
List of Excluded Personal Property  
	
2.2(e)  	   	
Excluded Intellectual Property  
	
2.3(g)  	   	
List of Specific Assumed Liabilities  
	
3.1(a)(i)  	   	
Pipeline Loan Calculation Example  
	
3.4(A)  	   	
Deductions from Purchase Price Adjustment  
	
3.4(B)  	   	
Specific Exclusions to Deductions from Purchase Price Adjustment  
	
7.14  	   	
Information Regarding each Transferred Mortgage Loan  
	
7.16  	   	
Services to be provided in the Transition Services Agreement  
	
12.8(B)  	   	
Knowledge of Purchaser  
	 

  
	 

  
	
Disclosure Memorandum  
	 

  
	
Section  	   	   
	
5.1  	   	
Joint Venture Entities and Subsidiary  
	
5.3(a)  	   	
Conflicts  
	
5.3(b)  	   	
Consents  
	
5.3(c)  	   	
Orders  
	
5.3(d)  	   	
Permits  
	
5.7  	   	
Absence of Certain Developments  
	
5.8(b)  	   	
Waiver or extension of time relating to Taxes  
	
5.8(g)  	   	
Joint Venture Tax Returns  
	
5.10  	   	
Personal Property  
	
5.11(a)  	   	
Intellectual Property  
	
5.11(g)  	   	
Software  
	
5.12(b)  	   	
Purchased Contracts with Restrictions on Competition  
	
5.12(c)  	   	
Specific Purchased Contracts  
	
5.12(d)  	   	
Related Party Contracts  
	
5.12(e)  	   	
Top Ten Broker Contracts  
	
5.14(d)  	   	
Employee Claims  
	
5.14(f)  	   	
Employment Compliance  
	
5.15  	   	
Litigation  
	
5.16(c)  	   	
Material Proceedings or Investigations of Governmental Bodies  
	
7.1(a)(i)  	   	
Exceptions to Ordinary Course of Business  
	
7.2(b)(i)  	   	
Conduct of Business Pending Closing  
	
12.8(A)  	   	
Knowledge of Seller  
	 

  
	
Exhibits  	   	   
	
A  	   	
Example of Calculation of Purchase Price  
	
B  	   	
Calculation of Hedging Instruments Fair Market Value  




vi 











	
C  	                     	
Servicing Rights Purchase and Sale Agreement  
	
D  	   	
Subservicing Agreement  
	
E  	   	
Form of Bill of Sale  
	
F-1  	   	
Form of Assignment and Assumption Agreement for Purchased Contracts  
	
F-2  	   	
Form of Assignment and Assumption Agreement for Office Leases  
	
F-3  	   	
Form of Assignment and Assumption Agreement for Acquisition  
	   	   	
Contracts  
	
F-4  	   	
Form of Joint Venture Interest Assignment and Acceptance Agreements  
	
F-5  	   	
Form of Subsidiary Assignment and Acceptance Agreement  
	
F-6  	   	
Non-Negotiable Promissory Note (Subsidiary)  
	
G  	   	
Form of Opinion of Seller’s Counsel  
	
H  	   	
Form of Lease for the Headquarters  
	
I  	   	
Licensed Marks  
	
J  	   	
Licensed Uses Policies  
	
K  	   	
Form of Purchaser’s Opinion  



 

 

 

 

 

 

 

vii











ASSET PURCHASE AGREEMENT


                    This ASSET PURCHASE AGREEMENT made as of June 3, 2008 (the “Agreement”) is hereby mutually agreed upon and entered into by and
between MetLife Bank, National Association, a national banking association organized under the laws of the United States (“Purchaser”) and First Tennessee Bank National
Association, a national banking association organized under the laws of the United States (“Seller”). 


BACKGROUND


                    First Horizon Home Loans, an operating division of Seller (“FHHL”), presently conducts the business of marketing, soliciting,
originating, selling, and servicing Mortgage Loans throughout the United States (the “Business”), and Seller desires to sell, transfer and assign to Purchaser, and Purchaser
desires to acquire and assume from Seller, certain of the assets and liabilities related to the Business, all as more specifically provided herein. 


                    NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties, intending to be legally bound, hereby agree as follows: 


ARTICLE I 



DEFINITIONS


          1.1     Certain Definitions.


                    For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1: 


                    “Acquired Accounts Receivable” means all rights of Seller or FHHL to payment for goods sold or services rendered (other than
Servicing Advances) to the extent relating to the Purchased Assets or the Assumed Liabilities. 


                    “Acquisition Contracts” means those certain asset purchase agreements between Seller and certain third parties in which Seller
acquired certain assets relating to the Business, as identified on Schedule 1.1. 


                    “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such Person, and the term “control” 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 ownership of a majority of such Person’s outstanding voting securities, by contract or otherwise, and the terms “controlled by” and “under common control with” have correlative meanings.



                    “Agency” means Fannie Mae, Freddie Mac, Ginnie Mae, HUD, FHA, VA, FHLB or any State Agency, as applicable. 












                    “Ancillary Agreements” means collectively the Servicing Rights Purchase and Sale Agreement; the Subservicing Agreement; the
Transition Services Agreement; the Bill of Sale; the Lease for the Headquarters; Assignment and Assumption Agreement for Purchased Contracts; Assignment and Assumption Agreement for Office Leases; Assignment and Assumption Agreement for Acquisition
Contracts; Joint Venture Interest Assignment and Acceptance Agreements in the form attached as Exhibit F-4; Subsidiary Assignment and Acceptance Agreement in the form attached as Exhibit F-5; and Non-Negotiable Promissory Note (Subsidiary) in the
form attached as Exhibit F-6. 


                    “Applicable Law” means, as of the time of reference and as applicable, any Law or Order that is applicable to the Business. As
used herein a state or local Law or Order may not be considered an Applicable Law and may not apply to Seller or Purchaser pursuant to the terms of the National Bank Act or regulations of the Office of the Comptroller of the Currency or federal case
law interpreting the National Bank Act or regulations of the Comptroller of the Currency although the Parties mutually agree to comply with such state or local law or Order. 


                    “Applicable Pipeline Requirements” means and includes, as of the time of reference, (i) all Applicable Laws; (ii) all contractual
obligations of FHHL contained in a Pipeline Loan Document with respect to FHHL’s origination of Pipeline Loans; (iii) all applicable underwriting and servicing guidelines of the Seller or FHHL; (iv) all Orders; and (v) all other applicable
requirements and guidelines, including without limitation requirements or guidelines related to the procurement of settlement services (e.g., appraisals, title insurance or alternative title
products, and insurance), of each Governmental Body, Agency, Insurer, and Investor relating to the Pipeline Loans. 


                    “Applicable Servicing Requirements” has the meaning assigned to such term in the Servicing Rights Purchase and Sale Agreement
inclusive of any definitions incorporated in such term in the Servicing Rights Purchase and Sale Agreement. 


                    “ARM Loan” means a Mortgage Loan with an adjustable rate or adjustable payment feature. 


                    “Assignment and Assumption Agreement for Purchased Contracts” means the agreement between Purchaser and Seller describing the
terms and conditions upon which Seller shall transfer certain of the Purchased Contracts and Assumed Liabilities associated with the Purchased Contracts to Purchaser, a form of which is attached as Exhibit
F-1. 


                    “Assignment and Assumption Agreement for Office Leases” means the agreement between Purchaser and Seller describing the terms and
conditions upon which Seller shall transfer certain of the Real Property Leases and Assumed Liabilities associated with the Real Property Leases to Purchaser, a form of which is attached as Exhibit F-2. 


                    “Assignment and Assumption Agreement for Acquisition Contracts” means the agreement between Purchaser and Seller describing the
terms and conditions upon which Seller shall transfer certain of the rights arising under the Acquisition Agreements and certain Assumed Liabilities relating to the Acquisition Contracts to Purchaser, a form of which is attached as Exhibit F-3. 


2












                    “Bank Branch” means an office of Seller that qualifies as a “branch” pursuant to 12 U.S.C. § 36. 


                    “Bill of Sale” means the agreement between Purchaser and Seller describing the terms and conditions upon which Seller shall
transfer certain of the Purchased Assets to Purchaser, a form of which is attached as Exhibit E. 


                    “Book Value” means the value accorded to a particular asset or liability as reflected on the books and records of Seller,
calculated in accordance with GAAP applied on a consistent basis with the same accounting principles and practices used by Seller in the Ordinary Course of Business (but only to the extent consistent with GAAP). 


                    “Branch Office” means an operating branch office of FHHL or a FHHL office in which custodial, administrative, or managerial
activities are conducted in connection with the Business. 


                    “Business Day” means any day other than (i) a Saturday or Sunday, or (ii) a day on which banking and savings and loan
institutions in the states where the parties are located are authorized or obligated by Applicable Law or executive order to be closed. 


                    “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. 


                    “Code” means the Internal Revenue Code of 1986, as amended. 


                    “Consents” shall mean any consents, registrations, approvals, declarations, Permits, expiration of any applicable waiting periods
or authorizations. 


                    “Contract” means any contract, agreement, indenture, note, bond, loan, instrument, lease, commitment or other arrangement or
understanding, whether written or oral. 


                    “Documents” means all files, documents, instruments, papers, books, reports, records, tapes, microfilms, photographs, letters,
budgets, forecasts, ledgers, journals, title policies, customer lists, regulatory filings, operating data and plans, technical documentation (design specifications, functional requirements, operating instructions, logic manuals, flow charts, etc),
user documentation (installation guides, user manuals, training materials, release notes, working papers, etc.), marketing documentation (sales brochures, flyers, pamphlets, web pages, etc.), and other similar materials related to the Business and
the Purchased Assets, in each case whether or not in electronic form. 


                    “Employee” means all individuals (including common law employees, independent contractors and individual consultants), as of the
date hereof, who are employed by (or, with respect to any independent contractor or individual consultant, contract with) Seller and assigned to FHHL to perform services in connection with the Business, together with individuals who are hired by
FHHL in respect of the Business after the date hereof. 


                    “Employee Benefit Plan” means each “employee pension benefit plan” as defined in Section 3(2) of ERISA, (B) each
“employee welfare benefit plan” as defined in Section 3(1) of 


3











ERISA, and (C) each employment, bonus or other incentive compensation, stock option, stock purchase, stock or other equity-related award, restricted stock, phantom stock, deferred compensation, profit-sharing, severance pay,
change in control, retention, salary continuation, sick leave, vacation pay, leave of absence, paid time off, loan, educational assistance, legal assistance, and other material fringe benefit plan, program, agreement, arrangement or commitment,
whether written or unwritten, which is sponsored, maintained, contributed to or required to be contributed to by Seller on behalf of any Employee or former Employee. 


                    “Environmental Law” means any foreign, federal, state or local statute, regulation, ordinance, rule of common law or other legal
requirement as now or hereafter in effect in any way relating to the protection of human health and safety, the environment or natural resources, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et
seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean
Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), as each has been or may be amended and the regulations promulgated pursuant thereto. 


                    “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. 


                    “Evaluated Business Assets” means all assets of the Business relating to the Evaluated Business, including Branch Offices,
Furniture and Equipment, and Intellectual Property. 


                    “Evaluated Business” means Seller’s One-Time Close division of the Business. 


                    “Excluded
Employee” means an Employee that is not a
Transferred Employee. 


                    “Fannie Mae” means the Federal National Mortgage Association (FNMA), or any successor thereto. 


                    “Fed Funds Rate” means, for any date, the weighted average of the rates set forth in the weekly statistical release H.15(519) (or
any successor publication) published by the Board of Governors of the Federal Reserve System opposite the caption “Federal Funds (Effective).” 


                    “FHA” means Federal Housing Administration or any successor thereto. 


                    “FHA Loans” means residential mortgage loans that are insured, or are eligible and intended to be insured, by FHA. 


                    “Freddie Mac” means the Federal Home Loan Mortgage Corporation (FHLMC), or any successor thereto. 


                    “FT/E Mortgage” means FT/E Mortgage Solutions, LLC, a Delaware limited liability company. 


4












                    “FT Real Estate” means FT Real Estate Information Mortgage Solutions, Inc., a Delaware corporation and indirect subsidiary of
Seller. 


                    “Furniture and Equipment” means all furniture, fixtures, furnishings, equipment, vehicles, leasehold improvements and all other
fixed assets owned or leased by FHHL in the conduct of the Business, including artwork, desks, chairs, tables, Hardware, copiers, telephone lines and numbers, telecopy machines and other telecommunication equipment, cubicles and miscellaneous office
furnishings and supplies. 


                    “GAAP” means U.S. generally accepted accounting principles, consistently applied. 


                    “Ginnie Mae” means Government National Mortgage Association (GNMA), or any successor thereto. 


                    “Governmental Body” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether
foreign, federal, national, supranational, state, provincial, or local, or any similar government, governmental, regulatory or administrative agency, commission, instrumentality or authority thereof (including without limitation the Federal Reserve
Board and any Agency), or any court, tribunal, judicial or arbitrator (public or private), or self-regulatory organization. 


                    “Hardware” means any and all computer and computer-related hardware, including computers, file servers, facsimile servers,
scanners, color printers, laser printers and networks used in the Business. 


                    “Hazardous Material” means any substance, material or waste that is regulated, classified, or otherwise characterized under or
pursuant to any Environmental Law as “hazardous,” “toxic,” “pollutant,” “contaminant,” “radioactive,” or words of similar meaning or effect, including, without limitation, petroleum and its
by-products, asbestos, polychlorinated biphenyls, radon, mold or other fungi, and urea formaldehyde insulation. 


                    “Headquarters” means the principal office location of FHHL located at 4000 Horizon Way, Irving, Texas 75063. 


                    “Hedging Instruments” means all interest rate swaps, caps, floors, collars and option agreements or other interest rate risk
management arrangements entered into between Seller and a third party in connection with the Business. 


                    “Hedging Instruments Fair Market Value” means the fair market value of the Purchased Hedging Instruments, calculated in
accordance with Exhibit B. 


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


                    “Independent Accountant” means an independent nationally recognized auditing firm selected by the Seller and Purchaser that is
not the independent auditing firm for either the Purchaser or the Seller. 


5












                    “Insurer” means a Person who insures or guarantees all or any portion of the risk of Loss on any Mortgage Loan or Pipeline Loan,
including any Agency, any private mortgage insurer and any insurer or guarantor under any standard hazard insurance policy, any federal flood insurance policy, earthquake insurance policy, title insurance policy or alternative title product, or any
other insurance policy applicable to any Mortgage Loan, Pipeline Loan or related Mortgaged Property, and any successor thereto. 


                    “Intellectual Property” means all right, title and interest in or relating to intellectual property and industrial property,
whether protected, created or arising under the Laws of the United States or any other jurisdiction, including: (i) all patents and applications therefor, including all continuations, divisionals, and continuations-in-part thereof and patents
issuing thereon, along with all reissues, reexaminations and extensions thereof (collectively, “Patents”), (ii) all trademarks, service marks, trade names, service names, brand
names, trade dress rights, logos, corporate names, trade styles, logos and other source or business identifiers and general intangibles of a like nature, along with all applications, registrations, renewals and extensions thereof (collectively,
“Marks”), (iii) all Internet domain names, (iv) all copyrights and all mask work, database and design rights, whether or not registered or published, all registrations and
recordations thereof and all applications in connection therewith, along with all reversions, extensions and renewals thereof (collectively, “Copyrights”), (iv) trade secrets
(“Trade Secrets”), (v) all other intellectual property and industrial property rights arising from or relating to Technology, and (vi) all Contracts granting any right relating
to or under the foregoing. 


                    “Intellectual Property Licenses” means (i) any grant to a third Person of any right relating to or under Seller’s
Intellectual Property and (ii) any grant to Seller of any right relating to or under any third Person’s Intellectual Property that is related to or used in connection with the Business. 


                    “Intellectual Property Platform” means the Seller’s and FHHL’s computer systems, networks, hardware, Software,
databases, Internet web sites and equipment used to process, store, maintain and operate data, information and functions to the extent used primarily in connection with the Business, including systems to operate billing/receivables, payables,
inventory, asset tracking and customer service functions, other than the Excluded Assets; provided, that with respect to any versions, updates, corrections, enhancements and modifications to any Software constituting part of the Intellectual
Property Platform, only the versions, updates, corrections, enhancements and modifications held by or in the possession of Seller or FHHL shall be deemed to be included in the “Intellectual Property Platform”. 


                    “Investor” means any private investor, Agency or any other Person who owns or holds Mortgage Loans or any interest therein,
serviced or subserviced by Seller or FHHL pursuant to a Servicing Agreement, as applicable, singly or in the aggregate. 


                    “IRS” means the Internal Revenue Service. 


                    “Joint Venture Entities” means collectively, TCS, TMS, FT/E Mortgage, and JV Mortgage.


6












                    “Joint Venture Interest Assignment and Acceptance Agreements” means collectively, the agreements between Purchaser and Seller or
Purchaser and an Affiliate of Seller in which the JV Interests will be transferred to Purchaser, a form of which is attached as Exhibit F-4.


                    “JPMorgan” means JPMorgan Chase & Co., or any Affiliate thereof.


                    “JV Interests” means the membership interests in FT/E Mortgage and JV Mortgage owned by Seller and all of the limited partnership
interests of TCS and TMS owned by FT Real Estate. 


                    “JV Mortgage” means JV Mortgage Solutions, LLC, a Delaware limited liability company. 


                    “Law” means any federal, state, local, municipal, foreign, international, multinational, or other constitution, law, rule,
standard, requirement, administrative ruling, order, ordinance, principle of common law, legal doctrine, code, regulation, statute, treaty or process, including, without limitation, those relating to consumer credit and mortgage lending, selling,
servicing, brokering or securitizing (including but not limited to the Real Estate Settlement Procedures Act, the federal Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Home Mortgage Disclosure Act, the Federal Trade Commission Act, the Gramm-Leach-Bliley Act and all applicable state laws related to the foregoing) and laws covering predatory lending, fair housing and unfair and
deceptive practices, the Code, state adaptations of the Uniform Commercial Code and the Uniform Consumer Credit Code, any Environmental Law, ERISA and the Securities Laws. 


                    “Legal Proceeding” means any judicial, administrative or arbitral actions, suits, proceedings (public or private) or claims or
any proceedings by or before a Governmental Body, including any civil, criminal, investigative or informal actions, audits, demands, claims, hearings, litigations, disputes, inquiries, investigations or other proceedings of any kind or nature.



                    “Liability” means any debt, Loss, damage, adverse claim, liability or obligation (whether direct or indirect, known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due, and whether in contract, tort, strict liability or otherwise), and including all reasonable costs and expenses relating
thereto. 


                    “Lien” means any lien, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, proxy, voting trust or agreement, transfer restriction under any shareholder or similar agreement, encumbrance or any other restriction or limitation whatsoever. 


                    “Loss” or “Losses” means any and all actual losses,
damages, deficiencies, claims, costs or expenses, including without limitation, reasonable attorneys' fees and disbursements and out-of-pocket costs and expenses that are reasonable and documented. 


7












                    “Material Adverse Effect” means (i) a material adverse effect on the business, condition (financial or otherwise), assets, or
results of operations of the Business, taken as a whole, or (ii) a material impairment of, or delay in, Seller’s ability to effect the transactions contemplated herein or to perform its obligations under this Agreement; provided, that none of
the following shall be deemed to constitute or shall be taken into account in determining whether there has been a Material Adverse Effect: (a) any event, circumstance, change or effect arising out of or attributable to changes in the economy or
securities, credit, or financial markets, including, prevailing interest rates and market conditions, generally in the United States or that are the result of acts of war or terrorism, except to the extent any of the same materially
disproportionately adversely affects the Business as compared to other companies in the industry in which the Business operates, (b) changes in, or in the application of, GAAP, or (c) changes in Applicable Laws except to the extent any of the same
materially disproportionately adversely affects FHHL as compared to other companies in the industry in which FHHL operates. 


                    “Mortgage Instrument” means any deed of trust, security deed, mortgage, security agreement or any other instrument which
constitutes a lien on real estate securing payment by a Mortgagor of a Mortgage Note.


                    “Mortgage Loan” means any loan that is, or upon closing or funding, will be, evidenced by a Mortgage Instrument securing payment
by a Mortgagor of a Mortgage Note. 


                    “Mortgage Note” means the promissory note executed by a Mortgagor and secured by a Mortgage Instrument evidencing the
indebtedness of the Mortgagor under a Mortgage Loan. 


                    “Mortgaged Property” means a fee simple property (or such other estate in real property as is commonly accepted as collateral for
mortgage loans that are subject to secondary mortgage sales or securitizations) that secures a Mortgage Note and that is subject to a Mortgage Instrument. 


                    “Mortgagor” means any obligor under a Mortgage Note or a Mortgage Instrument. 


                    “National Sales Support” means a division of the Business that is principally engaged in consumer direct telemarketing to
existing and prospective customers. 


                    “One Time Close” means a division of the Business that is principally engaged in construction to permanent financing for
Mortgagors for the construction or rehabilitation of a residence. 


                    “Order” means any order, injunction, judgment, decree, ruling, writ, assessment, agreement, directive, memorandum of
understanding, commitment, or arbitration award of or with a Governmental Body. 


                    “Ordinary Course of Business” means the ordinary and usual course of normal day-to-day operations of the Business through the
date hereof consistent with past practice (including consistent with FHHL’s credit and underwriting policies as applicable). 


8












                    “Paid-Off Loan” means a mortgage loan or any other type of loan that, as at any time as of or prior to Closing, has been owned
and/or serviced (including, without limitation, master servicing and subservicing) by the Seller or FHHL (including any predecessor in interest) and has been paid off, foreclosed, or otherwise liquidated. 


                    “Party or Parties” means Seller and Purchaser.


                    “Permits” means any approvals, authorizations, Consents, licenses, permits or certificates of a Governmental Body. 


                    “Permitted Exceptions” means (i) all defects, exceptions, restrictions, easements, rights of way and encumbrances disclosed in
policies of title insurance which have been made available to Purchaser; (ii) statutory liens for current Taxes, assessments or other governmental charges not yet due and payable or the amount or validity of which is being contested in good faith by
appropriate proceedings or the making of appropriate demands, notices or filings; provided that an appropriate reserve is established therefor against the carrying amount of the related assets; (iii) mechanics’, carriers’,
workers’, repairers’ and similar Liens arising or incurred in the Ordinary Course of Business that are not material to the business, operations and financial condition of the Business that are not resulting from a breach, default or
violation by Seller of any Contract or Applicable Law that (a) are not overdue for a period of more than 60 days and (b) are not in excess of $25,000 in the case of a single property or $250,000 in the aggregate at any time; and (iv) minor survey
exceptions, reciprocal easement agreements and other customary encumbrances on title to real property that (a) do not render title to the property encumbered thereby unmarketable and (b) do not, individually or in the aggregate, materially detract
from the value of or materially interfere with the value of or the use of such property for its current and anticipated purposes 


                    “Person” means an individual, a corporation, a partnership, a limited liability company, a joint venture, a trust, an
unincorporated association or organization, or a government body, agency or instrumentality.


                    “Pipeline Loans” means applications in process for residential mortgage loans to be made by Seller which (x) for purposes of
calculating the Purchase Price have been registered and designated as price protected on Seller’s residential mortgage loan origination system and (y) for all other purposes, whether or not registered or designated as price protected on the
Seller’s residential mortgage loan origination system and, in either case, which have not closed or funded as of the Closing Date, each of which is identified on the Pipeline Loan Tape; provided, however, that in no event shall the term
“Pipeline Loans” include any applications in process for residential mortgage loans received in the One Time Close division of the Business.


                    “Pipeline Loan Documents” means the documents relating to Pipeline Loans required by Applicable Pipeline Requirements to
originate the Pipeline Loans, whether on hard copy, microfiche or its equivalent or in electronic format and, to the extent required by Applicable Pipeline Requirements, credit and closing packages and disclosures. 


9












                    “Pipeline Loan Tape” means, with respect to the Pipeline Loans, an electronic data file to be dated as of the day immediately
prior to the Closing Date and furnished by Seller to Purchaser on such day in connection with the transactions contemplated by this Agreement. 


                    “Post-Closing Period” means any taxable period (or portion thereof) beginning after the Closing Date. 


                    “Prepaid Assets” means all security deposits (including security for rent, electricity, telephone or otherwise) and prepaid
charges and expenses, including any prepaid rent, prepaid insurance premiums, prepaid utility expenses and interest reflected on Seller’s books and records with respect to the Business. 


                    “Previously Disposed of Loans” means mortgage loans or any other type of loans or loan servicing rights that, at any time as of
or prior to Closing, the Seller or any predecessor in interest of the Seller owned and subsequently sold, transferred, conveyed or assigned and for which the Seller retains a contingent liability to third parties for failure to originate, service,
sell, securitize, or otherwise handle such loans or servicing rights in accordance with the then current applicable Investor or Insurer requirements or Applicable Laws, including, without limitation, the obligation to repurchase or indemnify the
purchaser pursuant to the applicable loan or servicing purchase agreement. 


                    “Real Property Lease” means a lease for real property in which Seller or its Affiliate is a lessee for a Branch Office where the
leased real property is used entirely as a Branch Office and a sublease for a portion of real property in which Seller or its Affiliate is a lessee for a Branch Office where the subleased portion of the real property is used entirely as a Branch
Office. 


                    “Recourse” has the meaning assigned to such term in the Servicing Rights Purchase and Sale Agreement inclusive of any definitions
incorporated in such term in the Servicing Rights Purchase and Sale Agreement. 


                    “REO” means a Mortgaged Property acquired by FHHL through foreclosure, acceptance of a deed in lieu of foreclosure or otherwise
in connection with the default or imminent default of a Mortgage Loan. 


                    “Representatives” means each of the parties and their attorneys, accountants, officers and other authorized representatives.



                    “Securities Laws” means the Securities Act of 1933, as amended; the Securities Exchange Act of 1934, as amended; the Investment
Company Act of 1940, as amended; the Investment Advisers Act of 1940, as amended; the Trust Indenture Act of 1939, as amended; the rules and regulations of the Securities and Exchange Commission promulgated thereunder, including without limitation
Regulation AB, and state securities or “blue sky” laws. 


                    “Servicer” has the meaning assigned to such term in the Servicing Rights Purchase and Sale Agreement inclusive of any definitions
incorporated in such term in the Servicing Rights Purchase and Sale Agreement. 


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                    “Servicing Advance” has the meaning assigned to such term in the Servicing Rights Purchase and Sale Agreement inclusive of any
definitions incorporated in such term in the Servicing Rights Purchase and Sale Agreement. 


                    “Servicing” has the meaning assigned to such term in the Servicing Rights Purchase and Sale Agreement inclusive of any
definitions incorporated in such term in the Servicing Rights Purchase and Sale Agreement.


                    “Servicing Agreement” has the meaning assigned to such term in the Servicing Rights Purchase and Sale Agreement inclusive of any
definitions incorporated in such term in the Servicing Rights Purchase and Sale Agreement. 


                    “Servicing Rights” has the meaning assigned to such term in the Servicing Rights Purchase and Sale Agreement inclusive of any
definitions incorporated in such term in the Servicing Rights Purchase and Sale Agreement. 


                    “Servicing Rights Purchase and Sale Agreement” means the agreement between Purchaser and Seller describing the terms and
conditions upon which certain identified Servicing Rights owned by Seller shall be sold to Purchaser, a form of which is attached hereto as Exhibit C. 


                    “Software” means any and all (i) computer programs, including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (iii) descriptions, flow-charts and other work product used to design,
plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons, and (iv) all documentation including user manuals and other training documentation related
to any of the foregoing. 


                    “State Agency” means any state agency or regulatory authority with authority to regulate the activities of FHHL relating to the
origination or servicing of Mortgage Loans or Pipeline Loans, determine the investment or servicing requirements with regard to mortgage loan origination, purchasing, servicing, master servicing or certificate administration performed by FHHL, or
otherwise participate in or promote mortgage lending. 


                    “Subserviced Loan” means each Mortgage Loan which Purchaser shall subservice subject to the Subservicing Agreement. 


                    “Subservicing Agreement” means the agreement between Purchaser and Seller describing the terms and conditions in which Purchaser
shall subservice Subserviced Loans, a form of which is attached as Exhibit D. 


                    “Subsidiary” means Federal Flood Certification Corporation.


                    “Subsidiary Assignment and Acceptance Agreement” means the agreement between Purchaser and Seller in which the Subsidiary Stock
will be transferred to Purchaser, a form of which is attached as Exhibit F-5. 


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                    “Subsidiary Stock” means all of the outstanding equity interests of Subsidiary.


                    “Tax” or “Taxes” means (i) any and all federal, state,
local or foreign taxes, charges, fees, imposts, levies or other assessments, including, without limitation, all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever imposed or administered by any Taxing
Authority, (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any Taxing Authority in connection with any item described in clause (i), and (iii) any Liability in respect of any items described in clauses (i)
and/or (ii) payable by reason of contract, assumption, transferee Liability, operation of law, Treasury Regulation Section 1.1502 -6(a) (or any predecessor or successor thereof or any analogous or similar provision under law) or otherwise.



                    “Taxing Authority” means the U.S. Internal Revenue Service and any other Governmental Body responsible for the administration of
any Tax. 


                    “Tax Contest” means a notice of deficiency, proposed adjustment, assessment, inquiry, audit, examination, or any administrative
or judicial proceeding involving any matter relating to Taxes or Tax Returns. 


                    “Tax Return” means any return, report or statement required to be filed with respect to any Tax (including any attachments
thereto, and any amendment thereof) including, but not limited to, any information return, claim for refund, amended return or declaration of estimated Tax, and including, where permitted or required, combined, consolidated or unitary returns for
any group of entities that includes Seller, any of the Subsidiaries, or any of their Affiliates. 


                    “TCS” means Total Credit Services, L.P., a Delaware limited partnership.


                    “Technology” means, collectively, all Software, information, designs, formulae, algorithms, procedures, methods, techniques,
ideas, know-how, research and development, technical data, programs, subroutines, tools, materials, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced to practice), apparatus, creations,
improvements, works of authorship and other similar materials, and all recordings, graphs, drawings, reports, analyses, and other writings, and other tangible embodiments of the foregoing, in any form whether or not specifically listed herein, and
all related technology, that are used in, incorporated in, embodied in, displayed by or relate to, or are used in connection with the foregoing. 


                    “Third Party Claim” means any Legal Proceeding by a third party. 


                    “TMS” means Total Mortgage Solutions, L.P. , a Delaware limited partnership.


                    “Transition Services Agreement” means an agreement pursuant to which Seller will provide, or cause its Affiliates to provide,
certain transition services to Purchaser following the Closing Date and Purchaser will provide, or cause its Affiliates to provide, certain transition


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services to Seller following the Closing Date, in form and substance which is mutually agreed to by Seller and Purchaser.


                    “VA” means the United States Department of Veterans Affairs and any successor thereto. 


                    “WARN” means the Worker Adjustment and Retraining Notification Act of 1988, as amended. 


          1.2     Terms Defined Elsewhere in this Agreement. 


          For purposes of this Agreement, the following terms have meanings set forth in the sections indicated: 

	     	
Term  	   	
Section  
	   
	 	
Acquisition Proposal  	   	
7.2(b)(xvii)  
	 	
Agreement  	   	
Recitals  
	 	
Antitrust Laws  	   	
7.4(b)  
	 	
Assumed Liabilities  	   	
2.3  
	 	
Balance Sheet Data  	   	
5.4(a)  
	 	
Balance Sheet Date  	   	
5.4(a)  
	 	
Business  	   	
Recitals  
	 	
Cap  	   	
10.4(f)  
	 	
Closing  	   	
4.1  
	 	
Closing Date  	   	
4.1  
	 	
Closing Payment  	   	
3.3  
	 	
Competing Business  	   	
7.10(b)  
	 	
Copyrights  	   	
1.1 (in Intellectual Property definition)  
	 	
Correspondent  	   	
7.10(a)(iii)  
	 	
Deductible  	   	
10.4(a)  
	 	
Diligence Materials  	   	
5.25  
	 	
Disclosure Memorandum  	   	
12.9  
	 	
Dispute Notice  	   	
3.5(d)  
	 	
Employee Release  	   	
8.2  
	 	
ERISA Affiliate  	   	
5.13(a)  
	 	
Estimated Closing Balance Sheet  	               	
3.2  
	 	
Estimated Purchase Price  	   	
3.2  
	 	
Excluded Assets  	   	
2.2  
	 	
Excluded Branch Offices  	   	
2.2(c)  
	 	
Licensed Excluded IP/IT  	   	
7.9(f)  
	 	
Excluded Liabilities  	   	
2.4  
	 	
FHHL  	   	
Recitals  
	 	
FIRPTA Certificate  	   	
9.1(i)  
	 	
Fixed Assets Inventory  	   	
7.15  
	 	
Final Calculation Statement  	   	
3.5(c)  
	 	
Final Purchase Price  	   	
3.5(e)  




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Term  	   	
Section  
	   
	 	
Knowledge of Purchaser  	   	
12.8(b)  
	 	
Knowledge of Seller  	   	
12.8(a)  
	 	
Licensed Marks  	   	
7.9(b)  
	 	
Licensed Uses  	   	
7.9(b)  
	 	
Marks  	   	
1.1 (in Intellectual Property definition)  
	 	
Monthly Unaudited Company  	   	
7.14  
	 	
Financial Sheet  	   	   
	 	
Mortgage Production Office  	   	
7.10(a)(v)  
	 	
Nonassignable Assets  	   	
2.5(c)  
	 	
Other Data  	   	
5.4(a)  
	 	
Patents  	   	
1.1 (in Intellectual Property definition)  
	 	
Paying Party  	   	
11.1  
	 	
Property Taxes  	   	
11.2  
	 	
Prospective Transferred Employee  	   	
8.1(a)  
	 	
Purchased Assets  	   	
2.1  
	 	
Purchased Branch Offices  	   	
2.1(h)  
	 	
Purchased Contracts  	   	
2.1(i)  
	 	
Purchased Fixed Assets  	   	
2.1(b)  
	 	
Purchased Hedging Instruments  	   	
2.1(g)  
	 	
Purchased Intellectual Property  	   	
2.1(d)  
	 	
Purchased Prepaid Assets  	   	
2.1(c)  
	 	
Purchase Price  	   	
3.1  
	 	
Purchase Price Adjustment  	   	
3.4  
	 	
Purchaser  	   	
Recitals  
	 	
Purchaser Benefit Plans  	   	
8.1(e)  
	 	
Purchaser Documents  	   	
6.2  
	 	
Purchaser Warehouse Line of Credit`  	        	
7.19  
	 	
Related Party  	   	
5.12(d)  
	 	
Reporting Party  	   	
11.1  
	 	
Residential Mortgage Loans  	   	
7.10(b)  
	 	
Resolution Period  	   	
3.5(d)  
	 	
Retail  	   	
7.10(a)(iv)  
	 	
Seller  	   	
Recitals  
	 	
Seller Documents  	   	
5.2  
	 	
Seller Patents  	   	
7.9(g)  
	 	
Seller Retained Trade Names  	   	
7.9  
	 	
Straddle Tax Period  	   	
11.5  
	 	
Survival Period  	   	
10.1  
	 	
Third Party Claim  	   	
10.3(b)  
	 	
Trade Secrets  	   	
1.1 (in Intellectual Property definition)  
	 	
Transfer Taxes  	   	
11.1  
	 	
Transferred Employees  	   	
8.1(a)  
	 	
Transferred Mortgage Loans  	   	
7.10(d)  
	 	
Wholesale  	   	
7.10(a)(ii)  





14












          1.3     Other Definitional and Interpretive Matters 


            (a)      Unless
      otherwise expressly provided, for purposes of this Agreement, the following
      rules of interpretation shall apply: 



                    Calculation of Time Period. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this
Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day. 


                    Dollars. Any reference in this Agreement to $ shall mean U.S. dollars. 


                    Exhibits/Schedules.  The Exhibits and Disclosure Memorandum to this Agreement are hereby incorporated and made a part hereof as if set forth in full herein and are an
integral part of this Agreement. Any capitalized terms used in the Disclosure Memorandum or any Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement. 


                    Gender and Number. Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice
versa. 


                    Headings. The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “Section” are to the
corresponding Section of this Agreement unless otherwise specified. 


                    Herein.  The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this
Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires. 


                    Including.  The word “including” or any variation thereof means “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific items immediately
following it. 


            (b)      The
      parties hereto have participated jointly in the negotiation and drafting
      of this Agreement and, in the event an ambiguity or question of intent
      or interpretation arises, this Agreement shall be construed as jointly
      drafted by the parties hereto and no presumption or burden of proof shall
      arise favoring or disfavoring any party by virtue of the authorship of
  any provision of this Agreement. 



ARTICLE II 


PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES 


          2.1     Purchase and Sale of Assets. 


15












          On the terms and subject to the conditions set forth in this Agreement, at the Closing, Purchaser shall (or shall cause its designated Affiliate or Affiliates to) purchase, acquire and accept from
Seller and its Affiliates, and Seller shall (and shall cause its Affiliates to) sell, transfer, assign, convey and deliver to Purchaser (or its designated Affiliate or Affiliates) all of Seller’s and its Affiliates’ right, title and
interest of whatever kind and nature, real or personal, whether owned, leased, or licensed, or in which Seller or FHHL otherwise have an interest (but only to the extent of such interest) in, to and under the Purchased Assets, free and clear of all
Liens except, in the case of tangible property, for Permitted Exceptions.  “Purchased Assets” shall mean each of the following assets: 


            (a)      Pipeline
  Loans and all prepaid fees and deposits related to Pipeline Loans; 

             (b)      all
      Furniture and Equipment used in the Purchased Branch Offices and the Headquarters,
      other than the Furniture and Equipment that is specifically listed as an
      Excluded Asset (the “Purchased Fixed
      Assets”); 

             (c)      all
      Prepaid Assets relating to the Purchased Branch Offices and the Headquarters
      (the “Purchased Prepaid Assets”); 

             (d)      Intellectual
      Property identified on Schedule 2.1(d) of this Agreement (the “Purchased
      Intellectual Property”); 

             (e)      the
      Intellectual Property Platform; 

             (f)      subject
      to Section 2.5,
      certain specific rights set forth in the Assignment and Assumption Agreement
      for Acquisition Contracts, a form of which is attached hereto as Exhibit
      F-3. 

             (g)      all
      Hedging Instruments that are related to the other Purchased Assets (the “Purchased
      Hedging Instruments”); 

             (h)      subject
      to Section 2.5,
      all rights of Seller under each Real Property Lease for the Branch Offices
      listed on Schedule 2.1(h), together with all improvements, fixtures and
      other appurtenances thereto and rights in respect thereof (the “Purchased
      Branch Offices”); 

             (i)      subject
      to Section 2.5,
      all of Seller’s right and interest to the Contracts identified on
      Schedule 2.1(i), including all claims or causes of action with respect
      to such Contracts (the “Purchased Contracts”); 

            (j)      all
      Documents that are used in or related to the Purchased Assets, 

            (k)      all
      files, books of account, general, and financial records that are related
      to or used primarily in connection with the Purchased Assets or the Business,
      including, if permissible under Applicable Servicing Requirements, all
      customer information and data relating to Paid Off Loans and Previously
      Disposed Loans, subject to any restrictions on the use of such information
      by any Person, other than the documents set forth in Section 2.2(r);



16











            (l)       Subject
      to Section 8.2,
      all personnel files for Transferred Employees; 

             (m)     To
      the extent assignable to Purchaser, all rights of Seller and its Affiliates
      under or pursuant to all warranties, representations and guarantees made
      by suppliers, manufacturers and contractors for the benefit of Seller or
      any Affiliate with respect to any Purchased Assets or Assumed Liabilities; 

             (n)      any
      assignable Permit related to the Purchased Assets; 

             (o)      all
      third party property and casualty insurance proceeds, and all rights to
      third party property and casualty insurance proceeds, in each case to the
      extent received or receivable after the Closing Date in respect of the
      Purchased Assets;

             (p)      all
      Acquired Accounts Receivable; 

            (q)      subject
      to Section 2.5(c), the JV Interests; 

            (r)      the
      Subsidiary Stock; and 

             (s)      all
      other assets primarily used in the Business other than the Excluded Assets. 



          2.2     Excluded Assets. 


          Nothing herein contained shall be deemed to sell, transfer, assign or convey the Excluded Assets to Purchaser, and Seller or an Affiliate shall retain all right, title and interest to, in and under
the Excluded Assets. “Excluded Assets” shall mean all of Seller’s assets that are not specifically included within the definition of Purchased Asset, including without
limitation, each of the following assets: 



          (a)      all assets that are not primarily used in the Business; 


          (b)      all assets related to the portion of the loan origination Business wholly conducted within the State of Tennessee, in any Bank Branch, and
in the Branch Offices listed on Schedule 2.2(b); 


          (c)      all assets relating to offices that are not Purchased Branch Offices (the “Excluded Branch
Offices”), including Furniture and Equipment, Prepaid Assets, and Real Estate Leases with respect to Excluded Branch Offices; 


          (d)      all Furniture and Equipment listed on Schedule 2.2(d); 


          (e)      all Intellectual Property that is not Purchased Intellectual Property or the Intellectual Property Platform, including the Intellectual
Property listed on Schedule 2.2(e) that are specifically noted as Excluded Assets; 




17












            (f)      any
      and all Contracts that are not Purchased Contracts, including Contracts
      pursuant to which Seller previously sold or currently sells Mortgage Loans
      to Investors, including any amounts due from such Investors pursuant to
  such Contracts; 

             (g)      the
      Headquarters; 

             (h)      all
      Hedging Instruments that are not Purchased Hedging Instruments; 

             (i)      Mortgage
      Loans held for sale, held to maturity, held in securitization trusts or
      held for investment; 

             (j)      Mortgage
      Loans repurchased by Seller from any Investor; 

             (k)      REO; 

             (l)       cash,
      cash equivalents and restricted cash held in accounts owned by Seller or
      FHHL; 

             (m)     investment
      securities available for sale (other than as specifically identified as
      Purchased Assets); 

             (n)      any
      amount relating to Taxes as of, or for any period, or any portion thereof,
      preceding, the Closing Date (for the avoidance of doubt, such amounts shall
      include, without limitation, any deferred tax assets as of, or for any
      period, or any portion thereof, preceding, the Closing Date), of Seller; 

             (o)      except
      as otherwise provided in Article XI, tax assets, claims for Tax refunds,
      Tax Returns and Tax workpapers; 

             (p)      all
      Permits used by FHHL in the operation of the Business other than those
      pursuant to Section 2.1(n); 

             (q)      all
      rights in connection with, and assets of, any Employee Benefit Plan, except
      to the extent otherwise provided in Article
      VIII hereof;

             (r)      subject
      to Section 11.3 hereof,
      all minute books, organizational documents, stock registers and such other
      books and records of Seller or any Affiliate as pertain to ownership, organization
      or existence of Seller and each Affiliate and duplicate copies of such
      records as are necessary to enable Seller and its Affiliates to prepare
      or file Tax Returns; and 

             (s)      all
      assets relating to National Sales Support; and 

             (t)      subject
      to Purchaser’s exercise of its rights pursuant to Section
      7.17, the Evaluated Business Assets. 





18









          2.3     Assumption of Liabilities. 




          On the terms and subject to the conditions set forth in this Agreement, at the Closing, Purchaser shall (or shall cause its designated Affiliate or Affiliates to) assume, effective as of the Closing,
the following liabilities of Seller and its Affiliates (collectively, the “Assumed Liabilities”): 


            (a)      all
      obligations of Seller under the Pipeline Loans that arise out of or relate
      to the period after the Closing; provided that, except as otherwise provided
      in this Agreement, the Purchaser shall not assume (A) any Liability arising
      under any Pipeline Loan that is not assigned to the Purchaser at the Closing
      due to the failure to receive any Permit or Consent, except as provided
      in Section 2.5(c) or (B) any Liability relating to the conduct of the Business,
      or arising out of a breach of or non-performance under any Pipeline Loan,
  prior to the Closing; 

             (b)      all
      Liabilities of Seller and its Affiliates under each Real Property Lease
      for the Purchased Branch Offices that arise out of or relate to the period
      after the Closing; provided that, except as otherwise provided in this
      Agreement, the Purchaser shall not assume (A) any Liability arising under
      any Real Property Lease that is not assigned to the Purchaser at the Closing
      due to the failure to receive any third party Permit or otherwise except
      as provided in Section 2.5(c) or
      (B) any Liability relating to the conduct of the Business, or arising out
      of a breach of or non-performance under any Real Property Lease, prior
      to the Closing; 

             (c)      all
      Liabilities of Seller and its Affiliates under the Purchased Contracts
      that arise out of or relate to the period after the Closing; provided that
      (A) the Purchaser shall not assume any Liability arising under any Purchased
      Contract that is not assigned to the Purchaser at the Closing due to the
      failure to receive any third party Permit or otherwise except as provided
      in Section 2.5(c) and
      (B) the Purchaser shall not assume any Liability relating to the conduct
      of the Business, or arising out of a breach of or non-performance under
      a Purchased Contract, prior to the Closing; 

             (d)      certain
      Liabilities of Seller under the Acquisition Contracts that arise out of
      or relate to the period after the Closing, as set forth in the Assignment
      and Assumption Agreement for Purchased Contracts; 

             (e)      all
      Liabilities of Seller under the Purchased Hedging Instruments that arise
      out of or relate to the period after the Closing; provided that (A) the
      Purchaser shall not assume any Liability arising under any Purchased Hedging
      Instrument that is not assigned to the Purchaser at the Closing due to
      the failure to receive any third party Permit or otherwise except as provided
      in Section 2.5(c) and
      (B) the Purchaser shall not assume any Liability relating to the conduct
      of the Business, or arising out of a breach of or non-performance under
      a Purchased Hedging Instrument, prior to the Closing; 

             (f)      all
      Liabilities that relate directly to the Purchased Assets and that arise
      out of or relate to the conduct of the Business by Purchaser after the
      Closing; and 

             (g)      all
      Liabilities set forth on Schedule 2.3(g).




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          2.4     Excluded Liabilities.



          Purchaser will not assume or be liable for any Excluded Liabilities.  “Excluded Liabilities” shall mean all Liabilities of Seller
and its Affiliates arising out of or relating to the Business or the Purchased Assets prior to the Closing and all other Liabilities of Seller and its Affiliates other than the Assumed Liabilities, including the following Liabilities: 


            (a)      all
      Liabilities in respect of any and all products (including Mortgage Loans)
      sold and/or services performed, actions, or omissions by Seller or its
      Affiliates prior to the Closing or any occurrence which occurred prior
  to the Closing Date; 

             (b)      all
      Liabilities in connection with Paid-Off Loans and Previously Disposed Loans,
      except for any Liabilities that the Investor obligates the Purchaser to
      assume in order to acquire the related Servicing Rights but subject to
      Seller’s indemnification of Purchaser for such Liabilities in the
      Servicing Rights Purchase and Sale Agreement. 

             (c)      all
      Liabilities arising out of, relating to or with respect to: (i) the employment
      or performance of services, or termination of employment or services by
      Seller or any of its Affiliates, of any individual employed by or engaged
      to provide services for or on behalf of Seller or any of its Affiliates
      prior to the Closing Date, including but not limited to any claims that
      relate to the period prior to the Closing Date, irrespective of whether
      such claims are made prior to or after the Closing Date; (ii) any compensation
      plan, program or contract of Seller; (iii) workers’ compensation
      claims against Seller or any of its Affiliates that relate to the period
      prior to the Closing, irrespective of whether such claims are made prior
      to or after the Closing or (iv) any Employee Benefit Plan; 

             (d)      all
      Liabilities arising out of, under or in connection with the Excluded Real
      Property Leases and Excluded Contracts and, with respect to Purchased Contracts,
      Liabilities in respect of a breach by or default of Seller or any Affiliate
      accruing under such Purchased Contracts with respect to any period prior
      to Closing; 

             (e)      all
      Liabilities arising out of, under or in connection with the Acquisition
      Contracts, except for those Liabilities being specifically assumed pursuant
      to the Assignment and Assumption Agreement for Acquisition Contracts; 

             (f)      all
      Liabilities arising out of, under or in connection with any indebtedness
      of Seller or any of its Affiliates for borrowed money or any other indebtedness; 

             (g)      all
      Liabilities for (i) Taxes of Seller and its Affiliates, (ii) Taxes that
      relate to the Purchased Assets or the Assumed Liabilities for taxable periods
      (or portions thereof) as of, or for any period, or any portion thereof,
      preceding, the Closing Date (for the avoidance of doubt, such amounts shall
      include, without limitation, any deferred tax liabilities as of, or for
      any period, or any portion thereof, preceding the Closing Date), including
      any Liabilities of Seller or any of its Affiliates for Taxes relating to
      consummation of the transactions contemplated by this Agreement, except
      as set forth in Sections 11.1 or 11.2,
      and (iii) payments under any Tax allocation, sharing, Tax reimbursement,
      or similar agreement (whether oral or written) which relate, in whole or
      in part, to any transaction or arrangement of Seller or its Affiliate in
      existence prior to the



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  Closing Date. Seller shall remain liable
      for any Tax Liability enumerated in (i), (ii), and (iii) above without
      regard to whether Seller breached any of its representation or warranty
      herein or provided or made available to Purchaser any Tax-related disclosure
      pursuant to any provision of this Agreement or otherwise; 

             (h)      all
      Liabilities in respect of any pending or threatened Legal Proceeding, or
      any claim arising out of, relating to or otherwise in respect of (i) the
      operation of the Business to the extent such Legal Proceeding or claim
      relates to such operation prior to the Closing, including any claim for
      preferential payment by a bankruptcy trustee in respect of payment received
      by Seller or its Affiliates prior to the Closing; (ii) any violation of
      any Applicable Law, rule, or regulation by Seller or FHHL; or (iii) any
      Excluded Asset; 

             (i)       all
      Liabilities relating to any material dispute with any customer of the Business
      existing as of the Closing or based upon, relating to or arising out of
      events, actions, or failures to act prior to the Closing; 

             (j)       any
      amounts due to Investors in the Mortgage Loans, including servicing premium
      rebates, purchase price premium rebates, repurchase amounts and indemnification
      payments; 

             (k)      any
      amounts payable for securities purchased;

             (l)       all
      environmental Liabilities arising prior to the Closing Date with respect
      to the Purchased Assets;

             (m)     all
      Liabilities arising out of, under or in connection with National Sales
      Support and, with respect to National Sales Support, Liabilities in respect
      of a breach by or default of Seller or any Affiliate accruing under such
      Purchased Contracts with respect to any period prior to Closing; 

             (n)      all
      fees, commissions and expenses payable to Milestone Advisors LLC and UBS
      Investment Bank;

             (o)      any
      amounts due to any Affiliate of Seller by Seller or an Affiliate of Seller;
      and 

             (p)      all
      Liabilities arising out of, under or in connection with any Employees in
      Excluded Branch Offices, except for any Liabilities that arise out of or
      relate to the period after the Closing pertaining to Employees in Excluded
      Branch Offices who are Transferred Employees. 



          2.5     Further Conveyances and Assumptions; Consent of Third Parties. 


            (a)      From
      time to time following the Closing, subject to Section
      8.2 of this Agreement, and except as prohibited
      by Applicable Law, Seller shall, or shall cause its Affiliates to, make
      available to Purchaser such data in personnel records of Transferred 



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  Employees as is reasonably necessary
  for Purchaser to transition such employees into Purchaser’s records. 

             (b)      From
      time to time following the Closing, Seller and Purchaser shall, and shall
      cause their respective Affiliates to, execute, acknowledge and deliver
      all such further conveyances, notices, assumptions, releases and acquittances
      and such other instruments, and shall take such further actions, as may
      be necessary or appropriate to assure fully to Purchaser and its respective
      successors or assigns, all of the properties, assets, rights, titles, interests,
      estates, remedies, powers and privileges intended to be conveyed to Purchaser
      under this Agreement and the Seller Documents and to assure fully to Seller
      and its Affiliates and their successors and assigns, the assumption of
      the liabilities and obligations intended to be assumed by Purchaser under
      this Agreement, and to otherwise make effective the transactions contemplated
      hereby and thereby.

             (c)      Nothing
      in this Agreement nor the consummation of the transactions contemplated
      hereby shall be construed as an attempt or agreement to assign any Purchased
      Asset, including any Contract, Permit, Seller’s ownership interest
      in the Joint Venture Entities, any certificate, approval, authorization
      or other right, which by its terms or by Applicable Law is nonassignable
      without the Consent of a third party or a Governmental Body of competent
      jurisdiction or is cancelable by a third party in the event of an assignment
      or purported assignment (“Nonassignable
      Assets”) unless and until such Consent
      shall have been obtained. Seller shall, and shall cause its Affiliates
      to, use its commercially reasonable efforts to, with the cooperation of
      Purchaser, obtain at the earliest practical date all Consents and approvals
      required to consummate the transactions contemplated by this Agreement.
      Other than with respect to fees relating to filings made under the Antitrust
      Laws which shall be paid by parties in accordance with Section
      7.4(d), Purchaser shall not be required to
      pay any consideration in connection with obtaining or attempting to obtain
      any Consent. Other than with respect to fees relating to filings made under
      the Antitrust Laws which shall be paid by parties in accordance with Section
      7.4(d) or as set forth on Schedule
      3.4(A), Seller shall be responsible for payment
      and is required to pay any consideration in connection with obtaining or
      attempting to obtain any Consent required pursuant to this Agreement. To
      the extent permitted by Applicable Law, in the event Consents to the assignment
      thereof cannot be obtained, such Nonassignable Assets shall be held, as
      of and from the Closing Date, by Seller or the applicable Affiliate of
      Seller in trust for Purchaser and the covenants and obligations thereunder
      shall be performed by Purchaser in Seller’s or such Affiliate’s
      name and all benefits and obligations existing thereunder shall be for
      Purchaser’s account. Seller shall take or cause to be taken at Seller’s
      expense such actions in its name or otherwise as Purchaser may reasonably
      request so as to provide Purchaser with the benefits of the Nonassignable
      Assets and to effect collection of money or other consideration that becomes
      due and payable under the Nonassignable Assets, and Seller or the applicable
      Affiliate of Seller shall promptly pay over to Purchaser all money or other
      consideration received by it after the Closing Date in respect of all Nonassignable
      Assets. As of and from the Closing Date, Seller on behalf of itself and
      its Affiliates authorizes Purchaser, to the extent permitted by Applicable
      Law and the terms of the Nonassignable Assets, at Purchaser’s expense,
      to perform all the obligations and receive all the benefits of Seller or
      its Affiliates under the Nonassignable Assets and



22











  appoints Purchaser its attorney-in-fact
      to act in its name on its behalf or in the name of the applicable Affiliate
      of Seller and on such Affiliate’s behalf with respect thereto. Seller
      shall assign and Purchaser shall assume each Nonassignable Asset promptly
      upon Seller procuring the requisite Consent, and upon such assignment and
      assumption, such Nonassignable Asset shall be deemed a Purchased Asset
      and the obligations arising from such Nonassignable Asset from and after
      the date of assignment shall be deemed an Assumed Liability. 

             (d)      The
      parties acknowledge that the list of Purchased Assets set forth in Section
      2.1 and Assumed Liabilities in Section
      2.3 is intended to include all assets and
      liabilities associated with the portion of the Business being purchased
      by Purchaser, except as specifically excluded in Sections
      2.2 and 2.4. Five Business Days prior to
      the Closing Date, Seller shall deliver to Purchaser amendments to Schedules
      2.1(d)(List of Purchased Intellectual Property), 2.1(h)(List of Purchased
      Branch Offices), and 2.1(i)(List of Purchased Contracts) to reflect the
      changes in such lists arising out of the Ordinary Course of Business from
      the date of this Agreement to the Closing Date in compliance with Section
      7.2 of this Agreement, and the completion
      of Seller’s review of all Purchased Contracts to determine whether
      Consent is required for assignment. The amended schedules delivered to
      Purchaser, subject to Purchaser’s review and consent, which consent
      will not be unreasonably withheld, will thereby be incorporated into this
      Agreement and substituted in lieu of such schedules delivered as of the
      date of this Agreement. 



          2.6     Purchase Price Allocation.


          Purchaser shall prepare one or more schedules allocating the Purchase Price (including, for these purposes, the purchase price paid for the acquired Servicing Rights) no later than sixty (60) days
following the Closing. Seller shall have thirty (30) days to review such schedules and provide its comments to Purchaser. Seller and Purchaser shall cooperate and use their reasonable best efforts to agree upon a final allocation statement within
ninety (90) days of the Closing. If Seller and Purchaser are unable to agree upon the allocation of such Purchase Price, the Purchase Price shall be allocated pursuant to arbitration pursuant to the Rules of the American Arbitration Association. The
arbitration tribunal shall consist of three arbitrators knowledgeable in matters of federal taxation.  One arbitrator shall be chosen by each of the parties who shall together choose a third arbitrator. The arbitration shall be conducted in the
Dallas, Texas metropolitan area. The arbitration award shall be final and binding upon the parties and subject to no appeal, and shall deal with the question of costs of arbitration (including attorneys’ fees) and all matters related thereto.
Judgment upon the arbitration award may be entered into any court having jurisdiction, or applications may be made to such court for an order for enforcement. Seller and Purchaser agree to prepare and file an IRS Form 8594 in a timely fashion in
accordance with the rules under Section 1060 (and, where applicable, Section 338(a)(10)) of the Code. To the extent that such Purchase Price is adjusted after the Closing Date, the parties agree to revise and amend the schedule and IRS Form 8594 in
the same manner and according to the same procedure. The determination and allocation of the Purchase Price derived pursuant to this Section 2.6 shall be binding on Seller and Purchaser for
all Tax reporting purposes. 

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          2.7     Proration of Certain Expenses.




          Subject to Section 11.2 with respect to Taxes, all expenses and other payments in respect of all rents and other payments due under the
Purchased Assets shall be prorated between Seller and its Affiliates, on the one hand, and Purchaser, on the other hand, as of the Closing Date. Seller shall be responsible for all rents (including any percentage rent, additional rent and operating
expense reimbursements and escalations), charges and other payments of any kind accruing during any period under the Purchased Assets up to and including the Closing Date. Purchaser shall be responsible for all such rents, charges and other payments
accruing during any period under the Purchased Assets after the Closing Date. Purchaser shall pay the full amount of any invoices received by it after the Closing and shall submit a request for reimbursement to Seller for Seller’s pro rata
share of such expenses, along with any supporting documentation that Seller may reasonably request, and Seller shall pay the full amount of any invoices received by it and Purchaser shall reimburse Seller for Purchaser’s share of such
expenses. 


ARTICLE III 



CONSIDERATION


          3.1     Purchase Price.


          The purchase price (the “Purchase Price”) shall be an amount equal to the sum of the following components: 


            (a)      the
  Book Value of the following Purchased Assets as of the Closing Date: 

  
              (i)      the
        Pipeline Loans, and all prepaid fees and deposits relating to the Pipeline
        Loans (an example of which Book Value calculation of the Pipeline Loans
        is set forth in Schedule 3.1(a)(i)); 

    	          	(ii)   	the Purchased Fixed
              Assets;

	 
	 	(iii)   	the Purchased Prepaid
              Assets;

	 
	 	(iv)   	the Purchased Intellectual
              Property;

	 
	 	(v)   	the Intellectual Property
              Platform;

	 
	 	(vi)   	the Acquired Accounts
              Receivable;

	 
	 	(vii)   	the JV Interests; and

	 
	 	(viii)   	the Subsidiary Stock;
              PLUS



  

            (b)      the
      Hedging Instruments Fair Market Value; PLUS 

             (c)      any
      amounts payable pursuant to the Non-Negotiable Promissory Note attached
      as Exhibit F-6;
      LESS 

             (d)      the
      Book Value of the Assumed Liabilities as of the Closing Date; LESS 



24











            (e)      the
      Purchase Price Adjustment, calculated in accordance with Section
      3.4.



          An example of the calculation of the Purchase Price is attached hereto as Exhibit A.


          3.2     Estimated Purchase Price.


          Seller shall furnish to Purchaser, at least five Business Days prior to the Closing, a balance sheet of the Business as of the date which is the last day of the month prior to the day before the
Closing Date (the “Estimated Closing Balance Sheet”) and a statement detailing the estimated calculation of the Purchase Price (“Estimated
Purchase Price”). The Estimated Closing Balance Sheet shall be prepared in accordance with GAAP applied on a consistent basis throughout the periods covered (except that the Estimated Closing Balance Sheet does
not contain footnotes). The Estimated Purchase Price shall equal the following: 


           (a)      the
      Book Value of the following Purchased Assets reflected on the Estimated
      Closing Balance Sheet: 

  
                (i)      the
          Pipeline Loans and all prepaid fees and deposits relating to the Pipeline
          Loans; 

    	          	(ii)   	the Purchased Fixed
                Assets;

	 
	 	(iii)   	the Purchased Prepaid
                Assets

	 
	 	(iv)   	the Purchased Intellectual
                Property;

	 
	 	(v)   	the Intellectual
                Property Platform;

	 
	 	(vi)   	the Acquired Accounts
                Receivable;

	 
	 	(vii)   	the JV Interests;
                and

	 
	 	(viii)   	the Subsidiary Stock;
                PLUS



  

            (b)      the
      Hedging Instruments Fair Market Value; PLUS

             (c)      any
      amounts payable pursuant to the Non-Negotiable Promissory Note attached
      as Exhibit F-6;
      LESS 

             (d)      the
      Book Value of the Assumed Liabilities reflected on the Estimated Closing
      Balance Sheet; LESS 

             (e)      the
      Purchase Price Adjustment, calculated in accordance with Section
      3.4.



          The Purchase Price shall be finally determined following the Closing in accordance with Section 3.5. 

25











          3.3     Closing Payment.



          Purchaser agrees to pay to Seller (the “Closing Payment”) the Estimated Purchase Price (excluding any amounts payable following
Closing pursuant to the terms of the Non-Negotiable Promissory Note attached as Exhibit F-6, which shall be paid in accordance with such terms) at the Closing by wire transfer of immediately
available funds to an account of Seller.  Such account shall be designated by Seller to Purchaser at least five Business Days prior to the Closing. 


          3.4     Purchase Price Adjustment.


          Purchaser and Seller agree that the Purchase Price shall be adjusted (the “Purchase Price Adjustment”) by an amount equal to (i)
ten million dollars ($10,000,000), LESS (ii) costs incurred by Seller prior to the Closing Date as set forth on Schedule 3.4(A), which may be amended by Purchaser and Seller in writing prior
to the Closing Date, (but specifically excluding those costs set forth on Schedule 3.4(B), which will not be deducted from (i)), LESS (iii) if the Closing Date occurs after July 31, 2008, an
amount equal to (a) one million dollars ($1,000,000) multiplied by (b) the number of full calendar months plus the fractional portion of any calendar month occurring after July 31, 2008 and prior to the date on which the Closing Date occurs. For the
avoidance of doubt, nothing in this Section 3.4 shall affect in any manner the parties’ rights and obligations set forth in Article IV with respect to the Closing Date and termination
of this Agreement. The amount calculated in accordance with clause (iii) of the first sentence of this Section 3.4 shall be zero if the primary reason for the Closing Date occurring after July 31, 2008 is (1) Seller’s breach of this Agreement,
(2) pursuant to Purchaser’s exercise of the Purchaser Extension in Section 4.3 and the Closing occurring on or before August 31, 2008, or (3) Purchaser’s inability to satisfy the
condition specified in Section 9.1(g) hereof; provided, that Purchaser makes any required filings to initiate the process of applying for such Permits within three (3) Business Days after
the date of this Agreement and uses its commercially reasonable efforts to obtain such Permits. Notwithstanding any other provision of this Agreement, in no event shall the amount calculated in accordance with such clause (iii) exceed five million
dollars ($5,000,000). If the Purchase Price Adjustment is a positive number, then the Purchase Price Adjustment will reduce the Purchase Price pursuant to the calculation in Sections 3.1 and 3.2. If the Purchase Price Adjustment is a negative number, then the absolute value of the Purchase Price Adjustment will increase the Purchase Price pursuant to the calculation in Sections 3.1 and
3.2. 


          3.5     Final Purchase Price Calculation.


          Upon the earlier to occur of (i) the Parties’ agreement (or deemed agreement pursuant to Section 3.5(d)) with respect to the
calculation of the Purchase Price and (ii) the delivery of any report of the Independent Accountant as provided in Section 3.5(e) with respect to the Purchase Price, as applicable:



            (a)      if
      the Estimated Purchase Price is greater than the Final Purchase Price,
      Seller shall pay to Purchaser, within five Business Days after the earlier
      to occur of the events described in clauses (i) and (ii) of the first sentence
      of this Section 3.5,
      the amount of the difference between the Estimated Purchase Price and Final
      Purchase Price, plus simple interest on the amount of such difference from
      the Closing Date to the date of payment at an interest rate equal to the
  Fed Funds Rate per annum by wire transfer of

  

26











  immediately available funds to such account
      or accounts of Purchaser as Purchaser specifies in writing to Seller in
      the manner specified herein for the delivery of notices; and 

             (b)      if
      the Final Purchase Price is greater than the Estimated Purchase Price,
      then Purchaser shall pay to Seller, within five Business Days after the
      earlier to occur of the events described in clauses (i) and (ii) of the
      first sentence of this Section 3.5,
      the amount of the difference between the Final Purchase Price and the Estimated
      Purchase Price (excluding any amounts payable thereafter pursuant to the
      terms of the Non-Negotiable Promissory Note attached as Exhibit
      F-6, which shall be paid in accordance with
      such terms), plus simple interest on the amount of such difference from
      the Closing Date to the date of payment at an interest rate equal to the
      Fed Funds Rate per annum by wire transfer of immediately available funds
      to such account or accounts of Seller as Seller specifies in writing to
      the Purchaser in the manner specified herein for the delivery of notices. 

             (c)      As
      soon as practicable after the Closing, but in no event later than 75 days
      after the Closing Date, Seller will prepare (or cause to be prepared) and
      deliver to Purchaser a calculation of the Purchase Price as of the Closing
      Date, calculated in accordance with the methodology used to calculate the
      Estimated Closing Balance Sheet set forth in Section
      3.1 hereof (the “Final
      Calculation Statement”). 

             (d)      Purchaser
      shall have 30 days from receipt of the Final Calculation Statement, to
      give Seller written notice of its objection to any item or calculation
      contained in the Final Calculation Statement specifying in reasonable detail
      all disputed items and the basis therefor (a “Dispute
      Notice”). If Purchaser concurs with
      the Final Calculation Statement or otherwise does not give Seller a Dispute
      Notice within such 30-day period, such Final Calculation Statement shall
      be deemed final and conclusive with respect to the determination of the
      Purchase Price, and shall be binding on the Parties for all purposes under
      this Agreement. If, however, Seller delivers to Purchaser a Dispute Notice
      objecting to any items or calculations contained in the Final Calculation
      Statement within the applicable 30-day period, the Parties shall meet within
      30 days following the date of the Dispute Notice (in each case, the “Resolution
      Period”) and shall attempt in good
      faith to resolve such objections and any written resolution by them as
      to any disputed amount shall be deemed final and conclusive with respect
      to the determination of the Purchase Price, and shall be binding on the
      Parties for all purposes under this Agreement. Any amounts that were not
      timely disputed pursuant to a Dispute Notice (or if so disputed, subsequently
      resolved) may not be disputed. In all events the Final Calculation Statement
      shall be final and binding, except to the extent of those amounts timely
      identified in a Dispute Notice as disputed items in accordance with this
      paragraph. 

             (e)      If
      the parties are unable to resolve Purchaser’s objections within the
      Resolution Period, then all amounts and issues remaining in dispute and
      Seller’s responses thereto will be submitted by Purchaser and Seller
      for review by the Independent Accountant. All Parties agree to execute,
      if requested by the Independent Accountant, a reasonable engagement letter
      with respect to the determination to be made by the Independent Accountant.
      The Independent Accountant will determine only those




27











  issues still in dispute at the end of
      the applicable Resolution Period and the Independent Accountant’s
      determination will be based upon and consistent with the terms and conditions
      of this Agreement. The determination by the Independent Accountant will
      be based solely on presentations with respect to such disputed items by
      Purchaser and Seller to the Independent Accountant and not on the Independent
      Accountant’s independent review. Each of Purchaser and Seller will
      use its commercially reasonable efforts to make its presentation as promptly
      as practicable following submission to the Independent Accountant of the
      disputed items, and each such Party will be entitled, as part of its presentation,
      to respond to the presentation of the other Party and any questions and
      requests of the Independent Accountant. Discovery shall be limited to documents
      designated by the Independent Accountant as necessary for it to assess
      the proper calculation of the Purchase Price, consistent with this Agreement.
      The Independent Accountant’s determination will be made within 30
      days after its engagement (which engagement will be made no later than
      five Business Days after the end of the applicable Resolution Period),
      or as soon thereafter as possible, and will be set forth in a written statement
      delivered to Purchaser and Seller. The Final Calculation Statement, as
      finalized by the Independent Accountant shall be deemed final and conclusive
      with respect to the Purchase Price and shall be binding on Purchaser and
      Seller for all purposes under this Agreement. In deciding any matter, the
      Independent Accountant (A) will be bound by the provisions of this Section
      3.5 and (B) may not assign a value to any
      item greater than the greatest value for such item claimed by either Purchaser
      or Seller or less than the smallest value for such item claimed by Purchaser
      or Seller. The fees and expenses of the Independent Accountant in resolving
      all such objections shall be borne by (A) Purchaser in an amount equal
      to the proportion of the total disputed amount that the Independent Accountant
      finds in favor of Seller and (B) Seller in an amount equal to the proportion
      of the total disputed amount that the Independent Accountant finds in favor
      of Purchaser. Except as provided in the preceding sentence, all other costs
      and expenses incurred by the Parties in connection with resolving any dispute
      hereunder before the Independent Accountant will be borne by the Party
      incurring such cost and expense. “Final
      Purchase Price” means the Purchase
      Price as finally adjusted in accordance with this Section
      3.5. 




ARTICLE IV

CLOSING AND TERMINATION


          4.1     Closing Date.


          Subject to the satisfaction of the conditions set forth in Sections 9.1 and 9.2 hereof (or the waiver thereof by the party entitled to waive
that condition), the closing of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities provided for in Article II hereof (the “Closing”) shall take place at such place as the parties may mutually agree on July 31, 2008, subject to the exercise by Purchaser of the Purchaser Extension, as set forth in Section 4.3. The date on which the Closing shall be held is referred to in this Agreement as the “Closing Date”. 

28










          4.2     Termination of Agreement.




          This Agreement may be terminated prior to the Closing as follows:


            (a)      by
  mutual written consent of Seller and Purchaser; 

             (b)      by
      Seller or Purchaser if there shall be in effect a final nonappealable Order
      of a Governmental Body of competent jurisdiction restraining, enjoining
      or otherwise prohibiting the consummation of the transactions contemplated
      hereby, it being agreed that the parties hereto shall promptly appeal any
      adverse determination which is not nonappealable (and pursue such appeal
      with reasonable diligence); 

             (c)      by
      Purchaser, if there shall have been a material breach by Seller of any
      representation, warranty, covenant or agreement of Seller set forth in
      this Agreement, which breach would give rise to a failure of a condition
      set forth in Sections 9.1(a) or 9.1(b) and
      is incapable of being cured or, if capable of being cured, shall not have
      been cured within 30 days following receipt by Seller of notice of such
      breach from Purchaser; or 

             (d)      by
      Seller, if there shall have been a material breach by Purchaser of any
      representation, warranty, covenant or agreement of Purchaser set forth
      in this Agreement, which breach would give rise to a failure of a condition
      set forth in Sections 9.2(a) or 9.2(b) and
      is incapable of being cured or, if capable of being cured, shall not have
      been cured within 30 days following receipt by Purchaser of notice of such
      breach from Seller. 



          4.3     Purchaser Extension 


          In the event all of the conditions to closing set forth in Article IX are fulfilled as of July 31, 2008, other than the conditions with respect to (i) the actions the respective Parties will take at
the Closing itself, (ii) the approval by Ginnie Mae of Purchaser as an “issuer”, and (iii) the completion of the steps required by Purchaser to employ the Transferred Employees as of the Closing Date, Purchaser may elect to defer the
Closing to August 31, 2008 by providing Seller notice of its election no later than July 25, 2008 (the “Purchaser Extension”).  In the event Purchaser provides Seller notice of
its election by July 25, 2008, the obligation of Purchaser to consummate the transactions contemplated by this Agreement shall not be subject to the conditions precedent set forth in Section 9.1 of this Agreement, but shall be subject only to the
fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Purchaser in whole or in part to the extent permitted by Applicable Law):


            (a)      the
      representations and warranties of Seller set forth in this Agreement that
      are qualified as to materiality or that contain a Material Adverse Effect
      qualifier shall be true and correct, and those not so qualified shall be
      true and correct in all material respects, as of the date of this Agreement
      and as of July 31, 2008 as though made at and as of July 31, 2008, (except
      that with respect to the representations and warranties set forth in Sections
      5.1(Organization; Valid Existence), 5.2(Authorization
      of Agreement), 5.6(Title
      to Purchased Assets), 5.8(Taxes), 5.13(Employee
      Benefits), or 5.24(Sufficiency of
      Assets), such representations and warranties
      shall be true and correct in all material respects, as of the date of this
      Agreement and the Closing Date, as though made at and as 



29











  of the Closing Date) and except to the
      extent such representations and warranties expressly relate to an earlier
      date (in which case such representations and warranties that are qualified
      as to materiality or that contain a Material Adverse Effect qualifier shall
      be true and correct, and those not so qualified shall be true and correct
  in all material respects, on and as of such earlier date); 

             (b)      Seller
      shall have performed and complied in all material respects with all obligations
      and agreements required in this Agreement or the Ancillary Agreements to
      be performed or complied with by it prior to the Closing Date; 

             (c)      Purchaser
      shall have received a certificate signed by an authorized officer of Seller,
      dated the Closing Date, to the effect that each of the conditions specified
      above in Sections 4.3(a)-(b) have
      been satisfied; 

             (d)      there
      shall not be in effect any Order by a Governmental Body of competent jurisdiction
      restraining, enjoining or otherwise prohibiting the consummation of the
      transactions contemplated hereby and no Legal Proceedings shall have been
      instituted or threatened or claim or demand made by any third party against
      Seller or Purchaser seeking to restrain or prohibit or to obtain substantial
      damages with respect to the consummation of the transactions contemplated
      hereby; provided, however, that with respect to a threat, claim, or demand,
      counsel for the affected party has concluded in its opinion that there
      is a credible basis for such threat, claim, or demand; 

             (e)      Purchaser
      shall be approved by Ginnie Mae as an “issuer”;

             (f)      Seller
      shall have delivered, or caused to be delivered, to Purchaser the certificates,
      instruments, and documents set forth in Section
      9.1(i), duly executed by Seller (or in the
      case of the opinion of counsel, duly executed by Seller’s counsel): 



          4.4     Effect of Termination.


          In the event that this Agreement is validly terminated as provided herein, then each of the parties shall be relieved of their duties and obligations arising under this Agreement after the date of
such termination and such termination shall be without Liability to Purchaser or Seller; except (a) as set forth in Sections 7.7, 12.1, 12.2, 12.3, 12.4, 12,6, 12.7, and 12.10 and (b) nothing in this Section 4.4 shall relieve Purchaser or Seller of
any Liability for a willful breach of this Agreement prior to the effective date of such termination. 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER


                    Seller hereby represents and warrants to Purchaser that: 


          5.1     Organization; Valid Existence; Capitalization.


          Seller is a national banking association duly organized and validly existing under the laws of the United States of America, with full power and authority to conduct its business as it

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is now being conducted, to own or use the properties or assets that it purports to own or use. Each of the Joint Venture Entities and the Subsidiary is duly organized and validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate or entity power and authority to conduct its business as it is now being conducted, to own or use the properties or assets that it purports to own or use. Each of the Joint Venture
Entities and the Subsidiary is duly qualified or otherwise authorized in all material respects as a foreign corporation to conduct its business and is in good standing in each jurisdiction where such authorization or qualification is required for
the conduct of its business or the ownership of its assets, except where the failure to qualify would not have a material adverse effect on the operation of the business of the Joint Venture Entities or the Subsidiary.  True, complete and correct
copies of the organizational documents of each of the Joint Venture Entities and the Subsidiary as of the date of this Agreement have been previously made available to Purchaser. FT/E Mortgage is the general partner of TCS.  JV Mortgage is the
general partner of TMS. Section 5.1 of the Disclosure Memorandum sets forth a complete and accurate list of each Joint Venture Entity’s and the Subsidiary’s authorized equity
interests and the number of equity units or shares which are issued and outstanding. No shares or equity units of any other class or series of equity any of the Joint Venture Entities or the Subsidiary are authorized, issued or outstanding. All of
the shares or units of equity of each of the Joint Venture Entities and the Subsidiary have been duly and validly authorized and issued, and are fully paid and nonassessable. Seller owns of record and beneficially the shares or units of equity of
each of the Joint Venture Entities and the Subsidiary listed in Section 5.1 of the Disclosure Memorandum free and clear of all Liens, including without limitation, any agreement, understanding or restriction affecting the voting rights or other
incidents of record or beneficial ownership pertaining to the equity, other than the requirement to obtain the Consent of the other owners of the Joint Venture Entities prior to transfer of any ownership interests.  There are no subscriptions,
options, warrants, calls, commitments, preemptive rights or other rights of any kind outstanding for the purchase of, or any securities convertible or exchangeable for, any equity interests of any of the Joint Venture Entities and the Subsidiary.
There are no restrictions upon the voting or transfer of any shares or units of equity of any of the Joint Venture Entities and the Subsidiary, subject to compliance with Securities Laws and subject to obtaining the Consent of the other owners of
the Joint Venture Entities, pursuant to the charter or bylaws or other organizational documents of any of the Joint Venture Entities and the Subsidiary or any agreement or other instrument to which any of the Joint Venture Entities, the Subsidiary,
Seller or any Affiliate of Seller is a party or by which the any of the Joint Venture Entities, the Subsidiary, Seller or any Affiliate of Seller is bound.


          5.2     Authorization of Agreement.


          Seller has all requisite power, authority and legal capacity to execute and deliver this Agreement and Seller has all requisite power, authority and legal capacity to execute and deliver each other
agreement, document, or instrument or certificate contemplated by this Agreement to be executed by Seller in connection with the consummation of the transactions contemplated by this Agreement (the “Seller
Documents”), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Seller Documents and the
consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Seller. The approval of the shareholder of Seller is not required in connection with

31












          the execution and delivery of this Agreement by Seller or the consummation of the transactions contemplated hereby. This Agreement has been, and each of the Seller Documents will be at or prior to the Closing (other than such
Seller Documents which are required to be duly and validly executed and delivered by Seller on a date after the Closing Date), duly and validly executed and delivered by Seller and (assuming the due authorization, execution and delivery by the other
parties hereto and thereto) this Agreement constitutes, and each of the Seller Documents when so executed and delivered will constitute, legal, valid and binding obligations of Seller, enforceable against it in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, or the rights of creditors of depository institutions the accounts of which are insured by the
FDIC, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). 


          5.3     Conflicts; Consents of Third Parties. 


            (a)      Except
      as set forth in Section 5.3(a) of
      the Disclosure Memorandum, none of the execution and delivery by Seller
      of this Agreement or by Seller of the Seller Documents, the consummation
      of the transactions contemplated hereby or thereby, or compliance by Seller
      with any of the provisions hereof or thereof will conflict with, or result
      in any violation of or default (with or without notice or lapse of time,
      or both) under, or give rise to a right of termination, cancellation or
      acceleration of any obligation or to loss of a material benefit under,
      or give rise to any obligation of Seller to make any payment under, or
      to the increased, additional, accelerated or guaranteed rights or entitlements
      of any Person under, or result in the creation of any Liens upon any of
      the properties or assets of Seller under, any provision of (i) the articles
      of association and bylaws or comparable organizational documents of Seller
      or any of the Joint Venture Entities and the Subsidiary; (ii) any material
      Contract or Permit to which Seller or any of the Joint Venture Entities
      and the Subsidiary is a party or by which any of the properties or assets
      of Seller or any of the Joint Venture Entities and the Subsidiary are bound;
      (iii) any Order of any Governmental Body of competent jurisdiction or by
      which any of the properties or assets of Seller are bound; or (iv) any
  Applicable Law. 

             (b)      Except
      for filings of applications and notices with, receipt of approvals or nonobjections
      from, and expiration of related waiting periods required by Section
      7.4 of this Agreement, no material Consent,
      waiver, approval, Permit or authorization of, or filing with, or notification
      to, any Person or Governmental Body of competent jurisdiction is required
      on the part of Seller in connection with (i) the execution and delivery
      of this Agreement or the Seller Documents, the compliance by Seller with
      any of the provisions hereof or thereof, the consummation of the transactions
      contemplated hereby or thereby or the taking by Seller of any other action
      contemplated hereby or thereby or (ii) the continuing validity and effectiveness
      immediately following the Closing of any Contract or Permit of Seller,
      except as set forth in Section 5.3(b) of
      the Disclosure Memorandum. 

             (c)      Except
      as set forth in Section 5.3(c) of
      the Disclosure Memorandum, neither Seller nor FHHL is a party to or subject
      to any outstanding Order, agreement, 



32











  memorandum
      of understanding or similar supervisory arrangement with, or a commitment
      letter or similar submission to, or extraordinary supervisory letter from,
      any Governmental Body charged with the supervision or regulation of banks
      and their holding companies, or mortgage banking (including the Federal
      Reserve Board, the VA, FHA, Fannie Mae, Freddie Mac, Ginnie Mae, and HUD)
      or the supervision or regulation of Seller or FHHL relating to the Business.
      Neither Seller nor FHHL has been advised by any Governmental Body that
      it is contemplating issuing or requesting (or is considering the appropriateness
      of issuing or requesting) any such Order, agreement, memorandum of understanding,
      commitment letter, supervisory letter or similar submission relating to
      the Business and to the Knowledge of Seller, none are threatened to be
      issued or requested. Section 5.3(c) of
      the Disclosure Memorandum sets forth a brief description of each Order
      applicable to Seller, each of the Joint Venture Entities, the Subsidiary
      or FHHL relating to the Business or the Purchased Assets issued within
      the past three years. There is no Order applicable to Seller, the Joint
      Venture Entities, or the Subsidiary that currently restricts or will in
      the future restrict in any material respect the conduct of the Business,
      its credit policies, its management or its business, and none of them has
      received any communication requesting that they enter into any of the foregoing. 

             (d)      Section
        5.3(d) of the Disclosure Memorandum sets
        forth a list of each Permit required in connection with Seller’s
        consummation of the transactions contemplated by this Agreement.



          5.4     Financial Data.


            (a)      Seller
      has previously delivered to Purchaser certain unaudited balance sheet data
      (the “Balance Sheet Data”)
      of the Business, which, except as otherwise indicated, is as of April 30,
      2008 (the “Balance Sheet Date”)
      and other financial and performance data of the Business, as of the dates
      and for the periods specified thereon (the “Other
      Data”). The Balance Sheet Data and
      the Other Data were prepared in good faith from the books and records of
      Seller and are accurate and complete in all material respects in relation
      to the Business taken as a whole, and fairly present, in all material respects,
      the information purported to be set forth therein. The Balance Sheet Data
      and the Other Data have been prepared in accordance with GAAP applied on
      a consistent basis throughout the periods covered (except that the Balance
      Sheet Data and the Other Data do not contain footnotes). 

             (b)      The
      books of account and other financial records of the Business: (i) are in
      all material respects complete and correct and do not contain or reflect
      any material inaccuracies or discrepancies and (ii) have been maintained
      in all material respects in accordance with good business and accounting
      practices prepared on a basis consistent with the past practices of the
      Seller. 

             (c)      Seller
      has conducted an assessment of internal control over financial reporting
      with respect to its business as of December 31, 2007 pursuant to Section
      404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated
      thereunder by the Securities and Exchange Commission. Seller has provided
      to the Purchaser true and 




33











  complete copies of all reports relating
      to the Business prepared in connection with such assessment or with Seller’s
  disclosure controls and procedures relating to the Business.

  

          5.5     No Undisclosed Liabilities.


          None of Seller, the Joint Venture Entities, or the Subsidiary has any indebtedness, obligations or Liabilities of any kind relating to the Business other than those (i) fully reflected in, reserved
against or otherwise described in the Balance Sheet Data or the notes thereto; or (ii) that are immaterial to Seller, the Joint Venture Entities, and the Subsidiary, respectively, and incurred in the Ordinary Course of Business since the Balance
Sheet Date. 


          5.6     Title to Purchased Assets.


          Seller owns and has good title to each of the Purchased Assets, free and clear of all Liens other than Permitted Exceptions.  Subject to receipt of the third party Permits and Consents, the Seller and
FHHL have the right to sell, assign, transfer, convey and deliver the Purchased Assets to the Purchaser.  Other than any Liens arising as a result of action by Purchaser, following the consummation of the transactions contemplated by this Agreement,
the execution of the instruments of transfer contemplated by this Agreement and the receipt of the third party Permits, the Purchaser will own, with good, valid and marketable title, or lease, under valid and subsisting leases, or otherwise acquire
the interests of Seller and FHHL in the Purchased Assets free and clear of any Liens, other than Permitted Exceptions.  Upon consummation of the transactions contemplated by this Agreement, Purchaser will be the owner of the JV Interests and the
Subsidiary Stock, free and clear of all Liens other than any Liens arising as a result of action by Purchaser. 


          5.7     Absence of Certain Developments.


          Except as expressly contemplated by this Agreement or as set forth in Section 5.7 of the Disclosure Memorandum, since the Balance Sheet Date
(i) each of Seller, the Joint Venture Entities, and Subsidiary has conducted the Business only in the Ordinary Course of Business; (ii) neither Seller not FHHL has incurred any material liability relating to the Purchased Assets other than in the
Ordinary Course of Business; and (iii) there has not occurred any event, change, effect or circumstance that has had or is reasonably likely to have a Material Adverse Effect. 


          5.8     Taxes. 


            (a)
      (i) All material Tax Returns that are or were required to be filed by or
      with respect to Seller, any of the Joint Venture Entities, or any of their
      respective Affiliates, either separately or as a member of an affiliated,
      combined, consolidated or unitary group, have been filed on a timely basis
      (taking into account all extensions of due dates) in accordance with Applicable
      Law; (ii) all Tax Returns referred to in clause (i) are true and complete
      in all material respects; and (iii) all material amounts of Taxes due for
      the periods covered by such Tax Returns (whether or not shown on any Tax
      Return), including any Taxes payable pursuant to any assessment made by
      the IRS or other Taxing Authorities in respect of such periods, have been
      paid in full. 



34











            (b)     There
      is no material dispute or claim concerning any Tax liability of Seller,
      any of the Joint Venture Entities, or any of their respective Affiliates
      claimed or raised by any Taxing Authority in writing or of which any director
      or officer (or employee responsible for tax matters) of Seller is otherwise
      aware. All material deficiencies asserted or assessments made as a result
      of an examination of any Tax Return filed by Seller, any of the Joint Venture
      Entities, or any of their respective Affiliates have been paid in full,
      and no issues that were raised by any Taxing Authority in connection with
      any such examination are currently pending. Except as set forth in Section
      5.8(b) of the Disclosure Memorandum, neither
      Seller, any of the Joint Venture Entities, nor any of their respective
      Affiliates has given or been requested to give a currently effective waiver
      (or is subject to such a waiver given by any other Person) of any statute
      of limitations relating to Taxes or agreed to any currently effective extension
      of time with respect to a Tax assessment or deficiency. No unresolved claim
      has ever been made by an authority in any jurisdiction in which Seller,
      any of the Joint Venture Entities, or any their respective Affiliates does
      not file Tax Returns that Seller, or any of the Joint Venture Entities,
      or any of their respective Affiliates is or may be subject to taxation
      in such jurisdiction.

             (c)     No
      Tax is required to be withheld pursuant to Section 1445 of the Code as
      a result of the transfer contemplated by this Agreement. 

             (d)     There
      are no Liens, except for Permitted Exceptions, relating or attributable
      to Taxes with respect to, or in connection with, the Purchased Assets (including,
      for these purposes, the Servicing Rights). There is no basis for the assertion
      of any claim for Taxes (excluding Taxes of Purchaser and its Affiliates)
      which, if adversely determined, could reasonably be expected to result
      in the imposition of any Lien on the Purchased Assets or otherwise adversely
      affect Purchaser, the Business or Purchaser’s use of such assets. 

             (e)     All
      material amounts of Taxes that Seller, any of the Joint Venture Entities,
      or any of their respective Affiliates is or was required by Applicable
      Law to withhold or collect have been duly withheld or collected and, to
      the extent required by Applicable Law, have been paid to the proper Governmental
      Body or other Person and all related Tax Returns, including Forms W-2 and
      1099, have been properly completed and timely filed. 

             (f)     Each
      of the Joint Venture Entities has been qualified as a domestic partnership
      under Section 7701(a)(2) and (4) of the Code since its inception and will
      be so qualified immediately prior to the Closing. Except as reflected in Section
      5.8 of the Disclosure Memorandum, none of
      the Joint Venture Entities or Subsidiary has ever held an equity interest
      in any other legal entity formed under domestic or foreign law.

             (g)     Seller
      provided to Purchaser all federal, state, local and foreign Tax Returns
      filed with respect to each of the Joint Venture Entities and Subsidiary
      (provided that where Subsidiary was included in a consolidated or unitary
      Tax Return filed by Seller or Seller’s corporate parent, only pro-forma
      separate Tax Returns related to Subsidiary shall be provided to Purchaser)
      for taxable periods ending on or after




35











  December 31, 2003. Section
        5.8(g) of the Disclosure Memorandum indicates
        such Tax Returns that have been audited and indicates those Tax Returns
        that currently are the subject of audit. Seller has delivered to Purchaser
        accurate and complete copies of all notices of deficiencies, notices
        of proposed adjustments, notices of assessments, revenue agent reports,
        closing agreements, settlement agreements, information document requests
        and other similar documents, notices, or correspondence having substantially
        the same effect that relate to any of the Joint Venture Entities or Subsidiary
        that Seller, any of the Joint Ventures, or any of their respective Affiliates
        (or any of their representatives) has received from, sent to, or entered
        into with the IRS or other Taxing authority for taxable periods ending
        on or after December 31, 2003.

             (h)     [Intentionally
      omitted.] 

             (i)      None
      of the Joint Venture Entities or Subsidiary has engaged in a reportable
      transaction described in Treasury Regulation Section 1.6011 -4 or participated
      in any “tax shelter” within the meaning of Section 6111 of
      the Code, and none of the Joint Venture Entities or Subsidiary has any
      obligation to pay the Taxes (or gross-up such Taxes) of another Person
      pursuant to any tax sharing agreement or otherwise. 

             (j)      There
      has been no waiver of any statute of limitations in respect of Taxes or
      Tax Returns of or in respect of Subsidiary, and there are no agreements
      or waivers to extend the period of assessment or collection of Taxes for
      or in respect of Subsidiary; 

             (k)     Seller
      or Subsidiary, as the case may be, each (i) has disclosed on their federal
      income Tax Returns all positions therein, which, if not disclosed, could
      reasonably be expected to give rise to accuracy related penalties under
      Section 6662 against or in respect of Subsidiary, and (ii) has not taken
      positions that could reasonably be expected to give rise to accuracy related
      penalties under Section 6662(d)(2)(C) against or in respect of Subsidiary. 

             (l)      Except
      as reflected in Section 5.8(l) of the Disclosure Memorandum, there is no
      obligation by Subsidiary to pay the Taxes of another Person pursuant to
      any tax sharing agreement or otherwise, or any obligation to pay the amount
      of Tax benefits or Tax refunds realized or received by or for Subsidiary
      (or an amount in reference to any such Tax benefits or Tax refunds realized
      or received by Subsidiary) to any former stockholder(s) or other Person(s),
      and Subsidiary has no liability for Taxes of any Person under Treasury
      Regulations Section 1.1502 -6 (or any similar provision of state, local,
      or foreign law). 

             (m)    Within
      forty-eight months prior to the Closing Date, Subsidiary has not distributed
      stock of another Person, or has had its stock distributed by another Person,
      in a transaction that was purported to be or intended to be governed in
      whole or in part by Section 355 or Section 361 of the Code. 

             (n)     Subsidiary
      is not required to include an item of income, or exclude an item of deduction,
      for any period after the Closing Date as a result of (a) an installment
      sale transaction occurring on or before the Closing governed by Section
      453 of the Code (or 




36











  any similar provision of foreign, state
      or local Law); (b) a transaction occurring on or before the Closing reported
      as an open transaction for federal income tax purposes (or any similar
      doctrine for foreign, state or local tax purposes); (c) prepaid amounts
      received on or prior to the Closing Date; (d) a change in method of accounting
      requested or required, or proposed or initiated by a Governmental Authority
      in writing or, to the knowledge of Seller, otherwise, to be made under
      applicable Laws on or prior to the Closing Date, or (e) an agreement entered
      into with any Taxing authority on or prior to the Closing Date. 

             (o)     Subsidiary
      is not a party to an agreement, contract, arrangement or plan covering
      any employee or former employee or independent contractor or former independent
      contractor of Subsidiary that, individually or collectively, could reasonably
      be expected to give rise to a (or already has resulted in a) payment (or
      a provision of some other benefit such as accelerated vesting) by Subsidiary
      that would not be deductible by reason of Code section 280G or subject
      to an excise tax under Code section 4999; and Subsidiary does not have
      any indemnity obligations for any Taxes imposed under Code section 4999
      or 409A. 

             (p)     Any
      Tax-sharing agreement between Seller or any of its Affiliates (excluding
      Subsidiary), on one hand, and Subsidiary, on the other hand, shall be terminated
      as of the Closing Date and shall have no further effect. Any and all existing
      powers of attorney with respect to Taxes or Tax Returns to which Subsidiary
      is a party shall be terminated as of the Closing Date.



          5.9     Real Property. 


            (a)      Prior
      to the Closing Date, Seller shall provide to the Purchaser for Purchaser’s
      review true, correct and complete copies of the Real Property Leases relating
      to the Purchased Branch Offices, together with all amendments, modifications
      or supplements thereto, including any assignments thereof. Seller and its
      Affiliates have a valid and enforceable leasehold interest under each of
      the Real Property Leases relating to the Purchased Branch Offices, subject
      to applicable bankruptcy, insolvency, reorganization, moratorium and similar
      laws affecting creditors’ rights and remedies generally and subject,
      as to enforceability, to general principles of equity (regardless of whether
      enforcement is sought in a proceeding at law or in equity). Each of the
      Real Property Leases relating to the Purchased Branch Offices is in full
      force and effect, and neither Seller nor any of its Affiliates has received
      or given any notice of any default or event that with notice or lapse of
      time, or both, would constitute a default by Seller or any Affiliate under
      any of the Real Property Leases relating to the Purchased Branch Offices
      and, to the Knowledge of Seller, no other party is in default thereof,
      and no party to any of the Real Property Leases relating to the Purchased
  Branch Offices has exercised any termination rights with respect thereto. 

             (b)      Seller
      and its Affiliates have all material certificates of occupancy and Permits
      of any Governmental Body required under Applicable Law for the current
      use and operation of each Purchased Branch Office, and Seller and its Affiliates
      have fully complied with all material conditions of the Permits applicable
      to them. No default or 



37











  violation, or event that with the lapse
      of time or giving of notice or both would become a material default or
      violation, has occurred in the due observance of any Permit. 

             (c)      There
      does not exist any actual or, to the Knowledge of Seller, threatened or
      contemplated condemnation or eminent domain proceedings that affect any
      Purchased Branch Office or any part thereof, and Seller has not received
      any notice, oral or written, of the intention of any Governmental Body
      or other Person to take or use all or any part thereof. 

             (d)      Neither
      Seller nor any Affiliate has received any notice from any insurance company
      that has issued a policy with respect to any Purchased Branch Office requiring
      performance of any structural or other repairs or alterations to such Purchased
      Branch Office. 

             (e)      Neither
      Seller nor any Affiliate owns or holds, and is not obligated under or a
      party to, any option, right of first refusal or other contractual right
      to purchase, acquire, sell, assign or dispose of any Purchased Branch Office
      or any portion thereof or interest therein. 



          5.10    Tangible
      Personal Property. 


            (a)      Seller
      and its Affiliates have good and marketable title to the Purchased Fixed
  Assets, free and clear of any and all Liens, other than Permitted Exceptions. 

             (b)      Section
        5.10 of the Disclosure Memorandum sets
        forth all Personal Property Leases involving annual payments in excess
        of $50,000 relating to personal property that is located at a Purchased
        Branch Office or by which any of the Purchased Assets are bound. All
        of the items of personal property under the Personal Property Leases
        are in all material respects in the condition required of such property
        by the terms of the lease applicable thereto during the term of the lease.
        Prior to the Closing Date, Seller shall provide to the Purchaser for
        Purchaser’s review true, correct and complete copies of the Personal
        Property Leases, together with all amendments, modifications or supplements
        thereto. 

             (c)      Seller
      and its Affiliates have a valid and enforceable leasehold interest under
      each of the Personal Property Leases under which it is a lessee, subject
      to applicable bankruptcy, insolvency, reorganization, moratorium and similar
      laws affecting creditors’ rights and remedies generally and subject,
      as to enforceability, to general principles of equity (regardless of whether
      enforcement is sought in a proceeding at law or in equity). Each of the
      Personal Property Leases is in full force and effect. There is no default
      under any Personal Property Lease by the Seller or any of its Affiliates
      or, to the Knowledge of Seller, by any other party thereto, and no event
      has occurred that with the lapse of time or the giving of notice or both
      would constitute a default thereunder. No party to any of the Personal
      Property Leases has exercised any termination rights with respect thereto. 



38










          5.11    Intellectual
      Property



            (a)      Section
        5.11(a) of the Disclosure Memorandum sets
        forth an accurate and complete list of all Patents, registered Marks,
        pending applications for registration of Marks, unregistered Marks, registered
        Copyrights, and pending applications for registration of Copyrights included
        in the Purchased Intellectual Property. Section
        5.11(a) of the Disclosure Memorandum lists
        (i) the jurisdictions in which each such item of Purchased Intellectual
        Property has been issued, registered, otherwise arises or in which any
        such application for such issuance and registration has been filed and
  (ii) the registration or application date, as applicable. 

             (b)      Seller
      and its Affiliates are the sole and exclusive owners of all right, title
      and interest in and to all of the Purchased Intellectual Property and the
      Purchased Intellectual Property includes each of the Copyrights in any
      works of authorship prepared by or for Seller or any of its Affiliates
      that resulted from or arose out of any work performed by or on behalf of
      Seller or its Affiliate or by any employee, officer, consultant or contractor
      of any of them. To the Knowledge of Seller, Seller and its Affiliates are
      the sole and exclusive owners of, or have valid and continuing rights to
      use, sell and license, as the case may be, all other Purchased Intellectual
      Property as the same is used, sold and licensed in the Business as presently
      conducted and proposed to be conducted, free and clear of all Liens or
      obligations to others. 

             (c)      To
      the Knowledge of Seller, the Purchased Intellectual Property, the manufacturing,
      licensing, marketing, importation, offer for sale, sale or use of any products
      and services in connection with the Business as presently and as currently
      proposed to be conducted, and the present and currently proposed business
      practices, methods and operations of Seller and its Affiliates do not infringe,
      constitute an unauthorized use, misappropriation or violation of any Copyright,
      Trade Secret or other similar right of any Person and, to the Knowledge
      of Seller, do not infringe, constitute an unauthorized use of, misappropriate,
      dilute or violate any other Intellectual Property or other right of any
      Person (including pursuant to any non-disclosure agreements or obligations
      to which Seller or any of its Affiliates or any of their present or former
      employees is a party). 

             (d)      Each
      of the Intellectual Property Licenses is in full force and effect and is
      the legal, valid and binding obligation of the Seller and/or its Affiliates,
      enforceable against them in accordance with its terms, subject to applicable
      bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
      creditors’ rights and remedies generally and subject, as to enforceability,
      to general principles of equity (regardless of whether enforcement is sought
      in a proceeding at law or in equity). Neither Seller nor any of its Affiliates
      is in default under any Intellectual Property License, nor, to the Knowledge
      of Seller, is any other party to an Intellectual Property License in default
      thereunder, and no event has occurred that with the lapse of time or the
      giving of notice or both would constitute a default thereunder. No party
      to any of the Intellectual Property Licenses has exercised any termination
      rights with respect thereto. Seller and its Affiliates have good and valid
      title to the Intellectual Property Licenses, free and clear of all Liens
      other than Permitted Exceptions. Seller has delivered or otherwise made
      available to Purchaser true, correct and complete copies of all of the
      Intellectual Property Licenses, together with all amendments, modifications
      or supplements thereto. 




39











            (e)      As
      of the date hereof, Seller is not the subject of any material pending or,
      to the Knowledge of Seller, threatened Legal Proceedings which involve
      a claim of infringement, unauthorized use, misappropriation, dilution or
      violation by any Person against Seller or any of its Affiliates or challenging
      the ownership, use, validity or enforceability of any Purchased Intellectual
      Property. None of Seller or its Affiliates has received written notice
      of any such threatened claim and, to the Knowledge of Seller, there are
      no facts or circumstances that would form the basis for any such claim
      or challenge. The Purchased Intellectual Property, and all of Seller’s
      and its Affiliates’ rights in and to the Purchased Intellectual Property,
  are valid and enforceable. 

             (f)      To
      the Knowledge of Seller, no Person is infringing, violating, misusing or
      misappropriating any Purchased Intellectual Property, and no such claims
      have been made against any Person by Seller or any of its Affiliates. 

             (g)      Section
        5.11(g) of the Disclosure Memorandum sets
        forth a complete and accurate list of (i) all Software included in the
        Purchased Intellectual Property owned or licensed exclusively by Seller
        and its Affiliates that is material to the operation of the Business
        and (ii) all other Software used in the Business that is not exclusively
        owned or licensed by Seller and its Affiliates, in which Seller incurs
        expenditures of $250,000 or more per annum. 

             (h)      Except
      for the Excluded Assets, and subject to the receipt of any required third
      party Permits, the Purchased Assets together with the Purchaser’s
      rights under the Ancillary Agreements (i) include all the Intellectual
      Property used or held for use in connection with the Business and (ii)
      include all Intellectual Property necessary for the Purchaser to conduct
      the Business as currently conducted, except as such conduct may be modified
      by the requirements of Applicable Law or Order applicable to the Purchaser
      that are not applicable to the Seller’s or FHHL’s operation
      of the Business or use of the Purchased Assets. 




          5.12    Purchased
      Contracts. 


            (a)      Seller
      has provided Purchaser with copies of each of the Purchased Contracts.
      Each of the Purchased Contracts is in full force and effect and is the
      legal, valid and binding obligation of Seller and/or its Affiliate, enforceable
      against them in accordance with its terms, subject to applicable bankruptcy,
      insolvency, reorganization, moratorium and similar laws affecting creditors’ rights
      and remedies generally and subject, as to enforceability, to general principles
      of equity (regardless of whether enforcement is sought in a proceeding
      at law or in equity). Neither Seller nor any of its Affiliates is in material
      default under any Purchased Contract, nor, to the Knowledge of Seller,
      is any other party to any Purchased Contract in material default thereunder,
      and no event has occurred that with the lapse of time or the giving of
      notice or both would constitute a material default thereunder. No party
      to any of the Purchased Contracts has exercised any termination rights
      with respect thereto. Subject to Section 2.5,
      Seller and its Affiliates have the right to, and will at the Closing, assign
      the Purchased Contracts to Purchaser. Seller has delivered or otherwise
      made available to Purchaser true, correct 



40











  and complete copies of all of the Purchased
      Contracts, together with all amendments, modifications or supplements thereto. 

             (b)      Except
      as set forth in Section 5.12(b) of
      the Disclosure Memorandum, none of the Purchased Contracts contains any
      restrictions prohibiting or limiting the ability of Seller (or Purchaser
      following the Closing) to (1) engage in any line of business, (2) compete
      with, obtain products or services from, or provide services or products
      to, any Person, (3) carry on or expand the nature or geographical scope
      of the Business anywhere in the world, or (4) enter into any Contract with
      any other Person.

             (c)      Except
      as set forth in Section 5.12(c) of
      the Disclosure Memorandum, none of the Purchased Contracts (1) with respect
      to the Purchased Assets relates to the borrowing of money by the Seller
      or FHHL or the guarantee by either such entity of any such obligation;
      (2) is for any joint venture or partnership; (3) limits the payment of
      dividends by Seller or FHHL or any assignee thereof; (4) provides for any
      future payments that are conditioned, in whole or part, on an assignment
      of the Purchased Contract other any payments Seller is liable for in connection
      with procuring the assignment pursuant to Section
      2.5 of this Agreement; (5) contains a “most
      favored nation” or similar clause obligating a party to change the
      material terms and conditions of such Purchased Contract based upon better
      terms and conditions provided to other parties in similar contracts; (6)
      contains indemnification agreements (other than individual loan-level indemnifications
      with an Investor or Insurer or routine agreements in the Ordinary Course
      of Business providing for customary indemnification provisions due to breaches
      and other enumerated risks thereunder (including without limitation standard
      lessee indemnifications in the office leases for the Purchased Branch Offices));
      (7) provides for aggregate expenditures or revenues in excess of $250,000
      per annum; (8) provides for the sale or purchase of personal property,
      fixed assets, or real property having a value individually, with respect
      to all sales or purchases thereunder, in excess of $250,000; (9) grants
      any right of first refusal or right of first offer or similar right to
      third parties or limits or purports to limit the ability of Seller or FHHL
      in any material respect to pledge, sell, transfer or otherwise dispose
      of any material amount of assets or business (other than entered into in
      the Ordinary Course of Business) that require that the particular transactions
      that are the subject thereof to be conducted with the counterparty or counterparties;
      or (10) is any Contract to indemnify any current or former officers or
      employees of Seller or Seller’s Affiliates.

             (d)      Except
      as set forth on Section 5.12(d) of
      the Disclosure Memorandum, there are no outstanding amounts advanced by,
      payable to, or receivable from Seller or any of its Affiliates, to any
      director, officer or employee of Seller (“each a “Related
      Party”) that are related to the Purchased
      Assets. Except as set forth on Section 5.12(d) of
      the Disclosure Memorandum, (i) none of the Purchased Assets consist of
      assets Seller has purchased, acquired or leased from a Related Party and
      (ii) none of the counterparties with respect to any Purchased Contract
      is a Related Party. 

             (e)      Section
        5.12(e) of the Disclosure Memorandum lists
        the contracts between Seller or FHHL and each of the ten (10) mortgage
        brokers set forth on such schedule that have brokered the ten (10) largest
  amounts of residential mortgage loans (measured by



41












  aggregate original principal amount)
  made during the twelve months prior to the date of this Agreement. 

  

          5.13    Employee
      Benefits. 


            (a)      Purchaser
      will not incur any liability whatsoever with respect to any Employee Benefit
      Plan sponsored, maintained or contributed to by the Seller, or any entity
      which is under common control with the Seller under Section 4001(a)(14)
      of ERISA or considered one employer with the Seller under Section 414(b),
      (c), (m) or (o) of the Code (“ERISA
      Affiliate”) currently maintained by
      Seller for the benefit of any Employee who is to become a Transferred Employee.

             (b)      No
      actions, suits or claims with respect to an Employee Benefit Plan (other
      than routine claims for benefits) are pending, or to the Knowledge of the
      Seller, have been threatened which could result in or subject Purchaser
      to Liability. 

             (c)      None
      of the Employee Benefit Plans is a “multiemployer plan” within
      the meaning of Section 3(37) of ERISA, and neither the Seller, nor any
      of its ERISA Affiliates have maintained, been required to contribute to
      or been required to pay any amount with respect to a “multiemployer
      plan”. The First Horizon National Corporation Savings Plan and its
      related trust are qualified under Sections 401(a) and 501(a) of the Code,
      respectively, and Seller has received a favorable determination letter
      from the IRS and, to the Knowledge of the Seller, nothing has occurred
      with respect to such Employee Benefit Plan since the date of such determination
      letter which the Seller reasonably believes would cause the loss of such
      qualification or the imposition of any material Liability, penalty or Tax
      under ERISA or the Code. 

             (d)      The
      First Horizon National Corporation Pension Plan (“FHNC Pension Plan”)
      is subject to the funding requirements of Code Section 412 and ERISA Section
      302. Except for the FHNC Pension Plan, none of the Employee Benefit Plans
      is subject to Title IV of ERISA or to the funding requirements of Section
      412 of the Code or Section 302 of ERISA. There has been no failure by Seller
      or any of its ERISA Affiliates to satisfy the funding requirements of the
      Code or ERISA with respect to the FHNC Pension Plan.

             (e)      All
      group health plans of the Company have been operated in compliance in all
      material respects with the applicable requirements of COBRA. 

             (f)      None
      of the Purchased Contracts or any Employee Benefit Plan covering Transferred
      Employees for which Purchaser would have Liability require the payment
      of a benefit or other compensation upon or following a “change in
      control” of Seller or FHHL.




          5.14    Labor. 


            (a)      There
      is no labor or collective bargaining agreement with any union or similar
      labor organization covering any Employee. 



42 











            (b)      No
      petition for certification or union election is existing or pending with
      respect to any Employee and no union, labor organization or collective
      bargaining unit has sought certification or recognition within the preceding
  three (3) years with respect to any Employee. 

             (c)      There
      have been no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations
      or (ii) material grievances or other labor disputes pending or, to the
      Knowledge of Seller, threatened against or involving Seller or any of its
      Affiliates involving any Employee within the preceding three (3) years
      with respect to any Employee.

             (d)      Except
      as disclosed in Section 5.14(d) of
      the Disclosure Memorandum, there are no pending, or to the Knowledge of
      Seller, threatened: (i) unfair labor practice charges, grievances, complaints,
      demands, investigations, or inquires of, to, or relating to, the Seller,
      by any Employee, or by any arbitrator, court, public authority or other
      Governmental Body responsible for the arbitration, mediation, investigation,
      or enforcement of alleged or possible violations of any labor, employment
      or other Applicable Laws relating to the relationship or the termination
      of the relationship, between the Seller and any Employee; (ii) strikes,
      work stoppages, slowdowns, lockouts, or arbitrations; or (iii) material
      grievances or other labor disputes. To the Knowledge of the Seller, there
      are no facts or circumstances which would form the basis for any of the
      foregoing. 

             (e)      Seller
      has delivered to Purchaser a list of all Employees that, to Seller’s
      Knowledge as of the date of this Agreement, will become Prospective Transferred
      Employees, with such information regarding such Prospective Transferred
      Employees as Purchaser has reasonably requested.

             (f)      Except
      as disclosed in Section 5.14(f) of
      the Disclosure Memorandum, to the Knowledge of Seller, Seller is, and at
      all times within the preceding six (6) years has been, in material compliance
      with Applicable Laws respecting employment practices, terms and conditions
      of employment and wages and hours, including but not limited to the lawful
      classification of all of Seller’s employees as exempt or non-exempt
      from overtime pay requirements, and has not engaged in unfair labor practices.

             (g)      Seller
      shall remain liable for and pay, perform, discharge and/or defend any and
      all employment, wage, hour, business expense reimbursement, compensation
      and employee benefit liabilities, responsibilities and obligations of Seller
      and its Affiliates including, without limitation, any and all claims under
      any city, local, state, or federal statute, regulation or ordinance, including,
      without limitation, Title VII of the Civil Rights Act of 1964, as amended;
      the Civil Rights Act of 1991; the Age Discrimination in Employment Act
      of 1967, as amended by the Older Workers Benefit Protection Act of 1990,
      the Americans with Disabilities Act of 1990, any and all claims under the
      Family and Medical Leave Act, the Fair Labor Standards Act, as amended,
      and Section 510 of ERISA, which Liabilities, responsibilities and obligations
      are incurred, arising or in effect prior to the Closing, regardless of
      whether claims are made or reported prior to the Closing. Purchaser shall
  use its commercially reasonable efforts to cooperate with Seller



43












  in Seller’s handling of the matters
      described herein, including but not limited to permitting reasonable access
      to Transferred Employees for all necessary purposes, and encouraging the
      full cooperation of Transferred Employees with Seller and its attorneys. 

             (h)      Seller
      is solely responsible for any payments that may become due pursuant to
      any compensation and/or retention agreements entered into between Seller,
      any Joint Venture Entity or the Subsidiary with any Transferred Employee,
      and neither Purchaser nor its Affiliates shall assume as an asset or incur
      any Liability with respect to any such compensation and/or retention agreements. 

             (i)      Seller
      shall be responsible for satisfying its and its Affiliates obligations
      under WARN with respect to Employees of Seller and its Affiliates. Purchaser
      shall be responsible for satisfying its and its Affiliates’ obligations
      under WARN with respect to employees of Purchaser and its Affiliates, including
      the Transferred Employees. 

             (j)      To
      the extent permitted by Applicable Law, Seller shall cooperate (including
      providing all information reasonably requested by Purchaser with respect
      to any Prospective Transferred Employees) and shall allow access to the
      Employees during normal business hours to the extent not unreasonably disruptive
      to the operations of the Business for the purpose of allowing Purchaser
      to plan for the Prospective Transferred Employees’ potential employment
      with and provision of employment related benefits by Purchaser or any of
      its Affiliates. 



          5.15     Litigation. 


            (a)      Except
      as set forth in Section 5.15 of
      the Disclosure Memorandum, there is no Legal Proceeding pending or, to
      the Knowledge of Seller, threatened against Seller or any of its Affiliates
      (including the Joint Venture Entities and the Subsidiary) relating to the
      Business, or to which Seller or any of its Affiliates (including the Joint
      Venture Entities and the Subsidiary) is otherwise a party, before any Governmental
      Body, except for such Legal Proceedings that have not had, and are not
      reasonably likely to have, a Material Adverse Effect; nor, to the Knowledge
      of Seller, is there any reasonable basis for any such Legal Proceeding
      relating to the Business. Except as set forth in Section 5.15 of
      the Disclosure Memorandum, neither Seller nor any of its Affiliates (including
      the Joint Venture Entities and the Subsidiary) is subject to any Order
      relating to the Business, except for such Orders that have not had, and
      are not reasonably likely to have, a Material Adverse Effect.

             (b)      There
      are no Legal Proceedings or Orders issued, pending or, to the Knowledge
      of Seller, threatened, against Seller or any of Seller’s assets,
      at law, in equity or otherwise, in, before, by, or otherwise involving,
      any Governmental Body, arbitrator or other Person that question or challenge
      the validity or legality of, or have the effect of prohibiting, preventing,
      restraining, restricting, delaying, making illegal or otherwise interfering
      with, this Agreement, the Seller Documents, the consummation of the transactions
      contemplated hereby or thereby or any action taken or proposed to be taken
      by Seller pursuant hereto or in connection with the transactions contemplated
      hereby or thereby. To the Knowledge of Seller, no event has occurred or
      circumstance exists that 



44











  could reasonably be expected to give
      rise to or serve as a basis for the commencement of any such Legal Proceeding
      or the issuance of any such Order. 

             (c)      The
      consummation of the transactions contemplated by this Agreement will not
      result in any revocation, cancellation or suspension of any Permit to conduct
      the Business as presently conducted, and there is no pending or, to the
      Knowledge of Seller or its counsel, threatened Litigation with respect
      to revocation, cancellation, suspension or nonrenewal thereof and there
      has occurred no event which (whether with notice or lapse of time or both)
      will result in such a revocation, cancellation, suspension or nonrenewal
      thereof. 



          5.16    Compliance
      with Laws; Permits. 


            (a)      Seller
      and its Affiliates, including without limitation each of the Joint Venture
      Entities and the Subsidiary are, and have been since January 1, 2005, operating
      in compliance in all material respects with all Applicable Laws, including
      all licensing and escheat laws, applicable to the Purchased Assets or their
      conduct of the Business. To the Knowledge of Seller, neither Seller nor
      any of its Affiliates, including without limitation each of the Joint Venture
      Entities and the Subsidiary, is under investigation with respect to the
      violation of any Applicable Law with respect to the Business or the Purchased
      Assets and there are no facts or circumstances which could form the basis
      for any such violation. Seller has not received any notification from any
      agency or department of Federal, state or local government, (i) asserting
      a material violation of any Applicable Law, (ii) threatening to revoke
  any material Permit or (iii) limiting its operations in any material respect.

             (b)      Seller
      and its Affiliates, including without limitation each of the Joint Venture
      Entities and the Subsidiary currently have, and have had since January
      1, 2005, all material Permits which are required for the operation of the
      Business as presently conducted. Neither Seller nor any of its Affiliates,
      including without limitation each of the Joint Venture Entities and the
      Subsidiary, is in default or violation in any material respect, and no
      event has occurred which, with notice or the lapse of time or both, would
      constitute a default or violation, in any material respect of any term,
      condition or provision of any Permit to which it is a party, to which the
      Business is subject or by which any of the Purchased Assets are bound and,
      to the Knowledge of Seller, there are no facts or circumstances which could
      form the basis for any such default or violation.

             (c)      Except
      for normal examinations conducted by any court, administrative agency or
      commission or other Governmental Body in the regular course of the Business
      or as set forth in Section 5.16(c) of
      the Disclosure Memorandum, no Governmental Body has initiated any material
      proceeding within the past three years or, to the Knowledge of Seller,
      threatened a material investigation into the Business that is ongoing or
      pending. Except as set forth in Section 5.16(c) of
      the Disclosure Memorandum, there is no material unresolved violation by
      any Governmental Body with respect to any report or statement relating
      to any examinations of the Business. 



45











            (d)      Since
      January 1, 2007, Seller, each of the Joint Venture Entities, the Subsidiary,
      and FHHL have timely filed all regulatory reports, schedules, forms, registrations
      and other documents, together with any amendments required to be made with
      respect thereto, that each was required to file since January 1, 2005 with
      any Governmental Body related to the Business (the
    “Reports”),
    and have timely paid all fees and assessments due and payable in connection
    therewith, except where the failure to make such payments and filings would
    not be material. There is no material unresolved violation or exception asserted
    by any such Governmental Body with respect to any of the Reports. As of their
    respective dates, the Reports complied in all material respects with all
    requirements of Applicable Law. Seller has made available to Purchaser true
    and complete copies of all Reports to the extent permitted by Applicable
    Law.




          5.17    Environmental
      Matters. 


            (a)      No
      Hazardous Materials have been used, stored or otherwise handled in any
      manner by Seller or any of its Affiliates on, in, from or affecting any
      Purchased Branch Office except in compliance with Applicable Laws; 

             (b)      To
      the Knowledge of Seller, no Hazardous Materials have at any time been released
      into or stored on or in any Purchased Branch Offices; 

             (c)      Seller
      has not received any notice of any violations (and, to the Knowledge of
      Seller, there are no existing violations) of any Applicable Law governing
      the use, storage, treatment, transportation, manufacture, refinement, handling,
      production or disposal of Hazardous Materials on, in, from or affecting
      any Purchased Branch Offices and there are no Legal Proceedings pending
      or, to the Knowledge of Seller, threatened by any Person with respect to
      any such violations; and 

             (d)      All
      Purchased Branch Offices are currently being, and have in the past been,
      operated by Seller in all material respects in accordance and in compliance
      with all Applicable Laws. 



          5.18    Pipeline
      Loans. 


            (a)      Seller
      is in compliance with all Applicable Pipeline Requirements in all material
      respects. Seller has timely filed, or will have timely filed by the Closing
      Date, all reports that any Governmental Body of competent jurisdiction
      or Insurer requires that it file with respect to the Business. No Agency
      has indicated to Seller in writing, or to the Knowledge of Seller, in any
      other manner, that it has terminated or intends to terminate its relationship
      with Seller for poor performance, poor loan quality or concern with respect
      to Seller’s compliance with Applicable Laws and/or Applicable Pipeline
      Loan Requirements or that Seller is in default under or not in compliance
      with respect to any Applicable Pipeline Requirements, except as would not,
      individually or in the aggregate have a Material Adverse Effect. 

             (b)      The
      Pipeline Loan Tape contains a list and brief description of all Pipeline
      Loans, which description includes (i) the loan number of the Pipeline Loan,
      (ii) the 




46











  principal balance of the Pipeline Loan,
      (iii) the interest rate of the Pipeline Loan and (iv) the state in which
      the Mortgaged Property is to be located.



          5.19    Accounts
      Receivable.


          Each material Acquired Accounts Receivable is a valid and subsisting amount owing to Seller or FHHL, is carried on the books of Seller or FHHL at values determined in accordance with GAAP and is not
subject to any set-off or claim that could be asserted against the Purchaser, and Seller or FHHL have not received any notice from an Investor, Insurer or other appropriate party in which the Investor, Insurer or other party disputes or denies a
claim by Seller or FHHL for reimbursement in connection with an Acquired Accounts Receivable. 


          5.20    Mortgage
Servicing Qualification.


          Seller: (a) to the extent required for the ownership or administration of the Servicing, is (i) approved by HUD as a Title II Supervised Mortgagee and servicer for FHA Loans, (ii) approved by Fannie
Mae and Freddie Mac as an approved seller and servicer of residential mortgages, (iii) approved by Ginnie Mae as an “issuer”, and (iv) with respect to Servicing rated RPS3 – “Full Approval” or better for RMBS Primary
Servicer and Specialty Servicer-Subservicer of Alt A and Prime with respect to Fitch Ratings Ltd., SQ3 – “Average” or better of RMBS Primary Servicer of Conventional Prime First Liens and Alt A with respect to Moody's Corporation,
and Average or better for RMBS Primary Servicer and Subservicer Jumbo, Alt A with respect to Standard & Poor's, LLC; (b) has all other material Permits that are necessary to own or administer the Servicing (or, where legally permissible, any
waiver of or exemption from any of the foregoing by such Agency); and (c) is in good standing under all applicable federal, state and local Laws thereunder as a Servicer, except in any such case as would not materially and adversely affect the
ability of FHHL to carry out the Business or its obligations under, and to consummate the transactions contemplated by, this Agreement and the Ancillary Agreements. FHHL has not received any notice or information from any Governmental Body that it
intends to terminate or restrict FHHL’s status as an approved participant in its programs for which FHHL is as of the date hereof registered, approved or authorized. 


          5.21    Risk
Management Instruments.


          All Purchased Hedging Instruments were entered into in accordance with all applicable laws, rules, regulations and regulatory policies; and each of them constitutes the valid and legally binding
obligation of Seller or FHHL, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating
to or affecting creditors’ rights or by general equity principles), and each is in full force and effect. Neither of Seller or FHHL, nor to Seller’s Knowledge any other party thereto, is in breach of any of its obligations under any of
the Purchased Hedging Instruments. 


          5.22    Financial
Advisors.


          Except for Milestone Advisors LLC and UBS Investment Bank, whose fees shall be paid by Seller, no Person has acted, directly or indirectly, as a broker, finder or financial advisor

47











for Seller or any of its Affiliates in connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like payment in respect thereof. 


          5.23    No
Regulatory Impediment.


          To Seller’s Knowledge, there is no fact relating to Seller’s, FHHL’s, or the Business’s business, operations, financial condition or legal status that might reasonably be
expected to impair in any material respect its ability to obtain all consents, orders, authorizations, and approvals from federal or state Governmental Bodies necessary for the consummation of the transactions contemplated hereby within the time
period contemplated by this Agreement. 


          5.24    Sufficiency
of Assets.


          Except for the Excluded Assets, subject to the receipt of any required Consents, the Purchased Assets, together with the Purchaser’s rights under the Ancillary Agreements (y) constitute all the
properties, assets and rights that are primarily used in the operation of the Business and (z) include all assets, properties and rights as have been necessary for Seller to conduct the Business prior to Closing as currently conducted, except as
such conduct may be modified by Applicable Laws applicable to the Purchaser that are not applicable to the Seller’s operation of the business or use of such assets. 


          5.25    Diligence
Materials.


          All written due diligence information previously furnished to the Buyer pertaining to historical financial statements, accounting reports, legal opinions, historical marketing and sales information, customer lists, employment and
compensation information (such information, the “Diligence Materials”) is true and correct in all material respects and does not misstate or omit a material fact in order to make
the information false or misleading.


          5.26    Full
Disclosure.


          No representation or warranty or other statement made by the Seller in this Agreement, the Disclosure Memorandum, any supplement to the Disclosure Memorandum, the certificates delivered pursuant to
Section 9.1(d) in connection with the transaction contemplated by this Agreement or the Ancillary Agreements contains any untrue statement or omits to state a material fact necessary to make
any of the statements, in light of the circumstances in which it was made, not misleading. 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER


                    Purchaser hereby represents and warrants to Seller that: 


          6.1     Organization; Valid Existence.


          Purchaser is a national banking association, and is duly organized and validly existing under the laws of the United States of America, with full power and authority to conduct its

48











business as it is now being conducted, to own or use the properties or assets that it purports to own or use. 


          6.2     Authorization of Agreement.


          Purchaser has full corporate power and authority to execute and deliver this Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed by
Purchaser in connection with the consummation of the transactions contemplated hereby and thereby (the “Purchaser Documents”), and to consummate the transactions contemplated
hereby and thereby.  The execution, delivery and performance by Purchaser of this Agreement and each Purchaser Document have been duly authorized by all necessary corporate action on behalf of Purchaser.  This Agreement has been, and each Purchaser
Document will be at or prior to the Closing, duly executed and delivered by Purchaser and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Purchaser Document when
so executed and delivered will constitute, legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally, or the rights of creditors of depository institutions the accounts of which are insured by the FDIC, and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). 


          6.3     Conflicts; Consents of Third Parties. 


            (a)      Neither
      of the execution and delivery by Purchaser of this Agreement and of the
      Purchaser Documents, nor the compliance by Purchaser with any of the provisions
      hereof or thereof will (i) conflict with, or result in the breach of, any
      provision of the charter or by-laws of Purchaser, (ii) conflict with, violate,
      result in the breach of, or constitute a default under any securitization,
      forward commitment, note, bond, mortgage, indenture, license, agreement
      or other obligation to which Purchaser is a party or by which Purchaser
      or its properties or assets are bound or (iii) violate any statute, rule,
      regulation or Order by which Purchaser is bound, except, in the case of
      clauses (ii) and (iii), for the Permits required pursuant to Section 9.1(g)
      or such violations, breaches or defaults as would not, individually or
      in the aggregate, have a material adverse effect on the ability of Purchaser
  to consummate the transactions contemplated by this Agreement. 

             (b)      Except
      for the Permits required pursuant to Section 9.1(g) and for filings of
      applications and notices with, receipt of approvals or nonobjections from,
      and expiration of related waiting periods required by Section
      7.4 of this Agreement, no Consent, waiver,
      approval, Order, Permit or authorization of, or declaration or filing with,
      or notification to, any Person or Governmental Body of competent jurisdiction
      is required on the part of Purchaser in connection with the execution and
      delivery of this Agreement or the Purchaser Documents or the compliance
      by Purchaser with any of the provisions hereof or thereof. 



49










          6.4     Litigation. 



          There are no Legal Proceedings pending or, to the Knowledge of Purchaser, threatened that are reasonably likely to prohibit or restrain the ability of Purchaser to enter into this Agreement or
consummate the transactions contemplated hereby. 


          6.5     No Regulatory Impediment.


          To Purchaser’s Knowledge, there is no fact relating to Purchaser’s business, operations, financial condition or legal status that might reasonably be expected to impair in any material
respect its ability to obtain all consents, orders, authorizations, and approvals from federal or state Governmental Bodies necessary for the consummation of the transactions contemplated hereby within the time period contemplated by this Agreement.



          6.6     Financial Advisors.


          No Person has acted, directly or indirectly, as a broker, finder or financial advisor for Purchaser or any of its Affiliates in connection with the transactions contemplated by this Agreement for whom
Seller is responsible for any fee or commission or like payment in respect thereof. 

ARTICLE VII



COVENANTS


          7.1     Access to Information.


          Seller shall, and shall cause its Affiliates to, afford Purchaser, its officers, employees, advisors, attorneys, accountants and representatives reasonable access to make such investigation of the
properties, businesses and operations of Seller and its Affiliates as they relate to the Business or Purchased Assets and such examination of the books, records and financial condition of Seller and its Affiliates as they relate to the Business or
Purchased Assets as it reasonably requests and to make extracts and copies of such books and records, except to the extent such disclosure of books and records is not permitted under Applicable Law, and access to the members of management and
personnel of the Business. Any such investigation, examination, discussion and review shall be conducted during the period prior to the Closing, during regular business hours and under reasonable circumstances and Seller shall cooperate fully
therein. No investigation by Purchaser prior to or after the date of this Agreement shall diminish or obviate any of the representations, warranties, covenants or agreements of Seller contained in this Agreement or the Seller Documents. In order
that Purchaser may have full opportunity to make such physical, business, accounting and legal review, examination or investigation as it may reasonably request of the affairs of Seller and its Affiliates as they relate to the Business or Purchased
Assets, Seller shall cause the officers, employees, consultants, agents, accountants, attorneys and other representatives of Seller and its Affiliates to cooperate fully with such representatives in connection with such review and examination.



          7.2     Conduct of the Business Pending the Closing. 


            (a)      Except
      (i) otherwise expressly provided by this Agreement, (ii) as required by
      Applicable Law, (iii) as conducted in the Ordinary Course of Business,
      or (iv) as 



50 











  conducted with the prior written consent
      of Purchaser, and subject to Seller’s stated intent to sell the operating
      assets of the Business that are not Purchased Assets to one or more third
      parties, Seller shall: 

  
              (i)      Except
        as set forth in Section 7.2(a)(i) of
        the Disclosure Memorandum, conduct the Business only in the Ordinary
        Course of Business; 

               (ii)      use
        their commercially reasonable efforts to (A) preserve its present business
        operations, organization (including, without limitation, management and
        the sales force) and goodwill of Seller as they relate to the Business
        or Purchased Assets and (B) maintain its present relationships with Persons
        having business dealings with Seller (including, without limitation,
        customers, suppliers, officers, employees, underwriters, agents, brokers,
        sales representatives, correspondents, landlords and investors) with
        respect to the Business or the Purchased Assets; 

               (iii)      maintain
        (A) all of the assets and properties of Seller that relate to the conduct
        of the Business or the Purchased Assets in their current condition, ordinary
        wear and tear excepted and (B) insurance upon all of the assets and properties
        of Seller that relate to the conduct of the Business or the Purchased
        Assets in such amounts and of such kinds comparable to that in effect
        on the date of this Agreement; 

               (iv)     (A)
        maintain the books, accounts and records of Seller that relate to the
        conduct of the Business or the Purchased Assets in the Ordinary Course
        of Business, (B) continue to collect accounts receivable and pay accounts
        payable that relate to the conduct of the Business or the Purchased Assets
        utilizing normal procedures and without discounting or accelerating payment
        of such accounts, and (C) comply in all material respects with all contractual
        and other obligations applicable to the operation the Business and the
        Purchased Assets; 

               (v)      comply
        in all material respects with all Applicable Laws that relate to the
        conduct of the Business or the Purchased Assets; 

               (vi)      pay
        all maintenance and similar fees and take all other appropriate actions
        as necessary to prevent the abandonment, loss or impairment of all Purchased
        Intellectual Property; 

               (vii)     continue
        the existing credit collection control of delinquencies and other policies
        and practices relating to the conduct of the Business;

               (viii)    not
        take any action which would adversely affect the ability of the parties
        to consummate the transactions contemplated by this Agreement; and 

               (ix)      pay
        all applicable Taxes as such Taxes become due and payable.

  

            (b)      Except
      as (i) otherwise expressly provided by this Agreement, (ii) as required
      by Applicable Law, (iii) as conducted in the Ordinary Course of Business,
  or



51












  (iv) as conducted with the prior written
      consent of Purchaser, Seller shall not with respect to the Business or
      the Purchased Assets: 

  
              (i)      Except
        as set forth in Section 7.2(b)(i) of
        the Disclosure Memorandum or as required pursuant to existing written
        agreements or Employee Benefit Plans as in effect prior to the execution
        of this Agreement, (A) increase the compensation payable or to become
        payable (including bonuses or bonus opportunities) or the benefits provided
        to any Employees; (B) grant any retention, severance, termination or
        similar pay to any Employee; or (C) establish, adopt, enter into, renew,
        terminate or amend any new or existing Employee Benefit Plan for the
        benefit of any Employee, except amendments and terminations required
        by Applicable Law;

               (ii)      make
        any loan or advance to any Person other than in the Ordinary Course of
        Business; 

               (iii)      incur
        or assume any indebtedness other than in the Ordinary Course of Business; 

               (iv)      subject
        to any Lien or otherwise encumber or, except for Permitted Exceptions,
        permit, allow or suffer to be encumbered, any of the Purchased Assets; 

               (v)      sell,
        assign, license, transfer, convey, lease or otherwise dispose of any
        of the Purchased Assets; 

               (vi)      except
        in the Ordinary Course of Business, deviate from or change (which changes
        and updates shall be presented to the Purchaser prior to implementation)
        in any respect any (A) collections, pricing, origination, credit or underwriting
        policies or procedures or collateral eligibility standards or procedures
        of Seller; (B) financial accounting policies, practices or procedures,
        (C) servicing practices, policies and procedures; or (D) actuarial, reserving,
        investment or risk management or other similar policies of the Business,
        except in the case of (D) to respond to changes in GAAP and Applicable
        Laws; 

               (vii)      enter
        into, modify or terminate any labor or collective bargaining agreement
        or, through negotiation or otherwise, make any commitment or incur any
        Liability to any labor organization with respect to any Employee; 

               (viii)     except
        as may be necessary to assign a Purchased Contract to Purchaser, enter
        into any transaction or enter into, modify, amend, terminate or renew
        any Purchased Contract which by reason of its size, terms or otherwise
        is not in the Ordinary Course of Business; 

               (ix)      enter
        into any Contract, understanding or commitment that restrains, restricts,
        limits or impedes the ability of Purchaser, to compete with or conduct
        any business or line of business in any geographic area;

  



52











            (x)      affect
      any write-off of any material Acquired Account Receivable, except write-offs
  in the Ordinary Course of Business; 

             (xi)      except
      as set forth in Section 7.2(b)(xi) of
      the Disclosure Memorandum, terminate, amend, restate, supplement or waive
      any rights under any Purchased Contract, Real Property Lease related to
      a Purchased Branch Office which by reason of its size, terms or otherwise
      is not in the Ordinary Course of Business; 

             (xii)      amend
      the certificate of organization or incorporation or by-laws (or other similar
      governing documents) of Seller in a manner that would adversely impact
      the consummation of the transactions contemplated hereby;

             (xiii)     agree
      to do anything (A) prohibited by this Section
      7.2; (B) which would make any of the representations
      and warranties of Seller in this Agreement untrue or incorrect in any material
      respect;(C) that would reasonably be expected to have a Material Adverse
      Effect; or (D) that would reasonably be expected to adversely affect or
      delay its ability to obtain any approvals required to consummate the transactions
      contemplated hereby; 

             (xiv)     issue
      any material communications to Employees with respect to any personnel,
      employee benefit and other human resources matter relating to the transactions
      or actions contemplated by this Agreement without the prior consultation
      with Purchaser including providing Purchaser an opportunity to review,
      comment upon and concur with and use reasonable efforts to agree on the
      substance of such communications; provided that this provision shall not
      restrict the ability of Seller from responding to questions or to providing
      Employees with information relating to any benefits or compensation obligations
      of Seller. 

             (xv)      make
      any capital expenditure or any new commitment to make any capital expenditure,
      except for such expenditures or commitments made in the Ordinary Course
      of Business or not exceeding $250,000 in the aggregate; 

             (xvi)     settle
      any Litigation that contains terms that binds the way the Purchaser will
      conduct the Business after the Closing Date; 

             (xvii)     authorize
      or permit any of Seller’s, Seller’s Affiliates or the Seller’s
      Representatives to directly or indirectly solicit, initiate or encourage
      any inquiries relating to, or that may reasonably be expected to lead to,
      the making of, any proposal that constitutes an Acquisition Proposal (as
      defined below), or recommend or endorse any Acquisition Proposal, or participate
      in any discussions or negotiations, or provide third parties with any nonpublic
      information, relating to any such Acquisition Proposal or otherwise facilitate
      any effort or attempt to make or implement an Acquisition Proposal. Each
      of Seller, Seller’s Affiliates and the Seller’s officers, directors,
      employees, representatives or agents will immediately cease and cause to
      be terminated any activities, discussions or negotiations conducted prior
  to the date of this Agreement with any parties other



53












  than Purchaser with respect to any Acquisition
      Proposal and, to the extent it is able to do so, require the return (or
      if permitted by the terms of the applicable confidentiality agreement,
      the destruction) of all confidential information previously provided to
      such parties. As used in this Agreement, “Acquisition
      Proposal” means any inquiry, proposal
      or offer relating primarily to any proposal for a purchase of the Purchased
      Assets, except for (i) the transactions contemplated by this Agreement;
      (ii) as otherwise expressly permitted elsewhere in this Section
      7.2; and (iii) Seller’s stated intention
      to sell the operating assets of the Business that are not Purchased Assets
      to one or more third parties. Notwithstanding the foregoing, the restrictions
      set forth in this Section 7.2(b)(xvii) shall
      not apply in the event Seller determines in good faith, after consultation
      with outside counsel, that the failure to consider an Acquisition Proposal
      would constitute a breach of Seller’s Board of Directors’ fiduciary
      duties under Applicable Law. 

             (xviii)    take
      any action that is intended or may reasonably be expected to result in
      any of its representations and warranties set forth in this Agreement being
      or becoming untrue in any material respect at any time prior to the Closing
      Date, or in any of the conditions set forth in Section
      9 not being satisfied in any material respect
      or in a material violation of any provision of this Agreement, except,
      in each case, as may be required by Applicable Laws;

             (xix)     amend
      any Schedule to this Agreement, including without limitation Schedule
      5.14; or 

             (xx)      consent
      to any extension or waiver of the limitation period applicable to any Tax
      claim relating to Subsidiary or any of the Joint Venture Entities or make
      or change any Tax election for or in regard to Subsidiary or any of the
      Joint Venture Entities. 


  

          (c)      Seller represents that as of the date of this Agreement, each of the Purchased Branch Offices, as listed on Schedule 2.1(h), are being operated in the Ordinary Course of Business.  In the event Seller determines, after consultation with Purchaser, that any of the Purchased Branch Offices should not continue to
operate for business reasons, including due to the loss of employees or the lack of demand for services provided by such Branch Office, Seller will take such actions as appropriate to discontinue the operation of the Branch Office; provided that
Seller will provide Purchaser with a written list of all Branch Offices of Seller which as of the date provided to Purchaser have produced less than 30% (on an annualized basis) of their calendar year 2007 loan origination and Seller shall consult
with Purchaser as to whether such Branch Offices are being operated in the Ordinary Course of Business.  In the event Seller discontinues the operation of any Purchased Branch Office prior to the date which is five Business Days before the Closing
Date, Seller shall amend Schedule 2.1(h) to delete such Branch Office in accordance with Section 2.5(d) of this Agreement, and such
Branch Office will no longer be a Purchased Branch Office.



54










          7.3     Consents.




          Seller shall use (and shall cause each of its Affiliates to use) its commercially reasonable efforts, and Purchaser shall cooperate with Seller, to obtain at the earliest practicable date all Consents
and approvals required to consummate the transactions contemplated by this Agreement and the Ancillary Agreements, including, without limitation, the Consents and approvals referred to in Sections 5.3(b) and
6.3(b).


          7.4     Regulatory Approvals. 


            (a)      Each
      of Purchaser and Seller shall use commercially reasonable efforts to (i)
      make or cause to be made all filings required of each of them or any of
      their respective Subsidiaries or Affiliates under any Antitrust Laws with
      respect to the transactions contemplated hereby as promptly as practicable
      and, in any event, within ten Business Days after the date of this Agreement,
      (ii) comply at the earliest practicable date with any request under any
      Antitrust Laws for additional information, documents, or other materials
      received by each of them or any of their respective Subsidiaries from the
      FTC, the Antitrust Division of the Department of Justice or any other Governmental
      Body in respect of such filings or such transactions and (iii) cooperate
      with each other in connection with any such filing (including, to the extent
      permitted by Applicable Law, providing copies of all such documents to
      the non-filing parties prior to filing and considering all reasonable additions,
      deletions or changes suggested in connection therewith) and in connection
      with resolving any investigation or other inquiry of any of the FTC, the
      Antitrust Division or other Governmental Body under any Antitrust Laws
      with respect to any such filing or any such transaction. Each such party
      shall use commercially reasonable efforts to furnish to each other all
      information required for any application or other filing to be made pursuant
      to any Applicable Law in connection with the transactions contemplated
      by this Agreement. Each such party shall promptly inform the other parties
      hereto of any oral communication with, and provide copies of written communications
      with, any Governmental Body regarding any such filings or any such transaction.
      No party hereto shall independently participate in any formal meeting with
      any Governmental Body in respect of any such filings, investigation, or
      other inquiry without giving the other parties hereto prior notice of the
      meeting and, to the extent permitted by such Governmental Body, the opportunity
      to attend and/or participate. Subject to Applicable Law, the parties hereto
      will consult and cooperate with one another in connection with any analyses,
      appearances, presentations, memoranda, briefs, arguments, opinions and
      proposals made or submitted by or on behalf of any party hereto relating
  to proceedings under any Antitrust Laws. 

             (b)      Each
      of Purchaser and Seller shall use commercially reasonable efforts to resolve
      such objections, if any, as may be asserted by any Governmental Body with
      respect to the transactions contemplated by this Agreement under the Sherman
      Act, as amended, the Clayton Act, as amended, the Federal Trade Commission
      Act, as amended, and any other United States federal or state or foreign
      statutes, rules, regulations, orders, decrees, administrative or judicial
      doctrines or other laws that are designed to prohibit, restrict or regulate
      actions having the purpose or effect of monopolization or restraint of
      trade (collectively, the
    “Antitrust Laws”).
    In connection therewith, if any Legal Proceeding is instituted (or threatened
    to be instituted) challenging any transaction contemplated by this Agreement
  as in violation of any Antitrust Law, Seller shall use  



55












  commercially reasonable efforts, and
      Purchaser shall cooperate with Seller, to contest and resist any such Legal
      Proceeding, and to have vacated, lifted, reversed, or overturned any decree,
      judgment, injunction or other order whether temporary, preliminary or permanent,
      that is in effect and that prohibits, prevents, or restricts consummation
      of the transactions contemplated by this Agreement, including by pursuing
      all available avenues of administrative and judicial appeal and all available
      legislative action, unless, by mutual agreement, Purchaser and Seller decide
      that litigation is not in their respective best interests. Each of Purchaser
      and Seller shall use commercially reasonable efforts to take such action
      as may be required to cause the expiration of the notice periods under
      any Antitrust Laws with respect to such transactions as promptly as possible
      after the execution of this Agreement. Notwithstanding anything to the
      contrary provided herein, neither Purchaser nor any of its Affiliates shall
      be required (i) to hold separate (including by trust or otherwise) or divest
      any of its businesses, product lines or assets, or any of the Purchased
      Assets, (ii) to agree to any limitation on the operation or conduct of
      the Business, or (iii) to waive any of the conditions to this Agreement
      set forth in Section 9.1.

             (c)      Each
      party hereto hereby agrees to cooperate with each other party and to promptly
      prepare and file all necessary filings, applications and other documents,
      to obtain as promptly as practicable all Consents of Governmental Bodies
      necessary or advisable to consummate the transactions contemplated hereby
      and to lift any injunction or other legal bar to the consummation of the
      transactions contemplated by this Agreement (and, in such case, to proceed
      with the consummation of the transactions contemplated by this Agreement
      as expeditiously as possible), including through all possible appeals;
      provided, that Purchaser shall not be required to consummate the transactions
      contemplated hereby if, in the reasonable good faith judgment of Purchaser,
      any conditions or restrictions imposed by any third party or Governmental
      Body of competent jurisdiction in connection with any such Consent may
      reasonably be expected to materially impair the ability of Purchaser to
      consummate the transactions contemplated hereby or operate the Business
      or any other business operated by Purchaser or its Affiliates following
      the Closing in substantially the same manner it has been operated prior
      to the date of this Agreement. Subject to the timely receipt of all necessary
      information and materials from Seller, Purchaser shall, if necessary, file,
      on or prior to five Business Days after the date hereof, the appropriate
      application with the Office of the Comptroller of the Currency necessary
      to obtain the appropriate Consent required to consummate the transactions
      contemplated by this Agreement. Each party shall have the right to review
      in advance, and to the extent practicable each will consult the other on,
      in each case subject to Applicable Laws relating to the exchange of information,
      all information relating to Purchaser or Seller, as the case may be, that
      is reasonably relevant to such party in terms of obtaining any Consents
      of Governmental Bodies and which appears in any filing made with, or other
      written materials submitted to, any third party or Governmental Body in
      connection with the transactions contemplated by this Agreement. In exercising
      the foregoing right, each of Purchaser and Seller shall act reasonably
      and as promptly as practicable. Purchaser and Seller agree that they will
      keep the other apprised of the status of matters relating to completion
      of the transactions contemplated by this Agreement, including, subject
      to Applicable Laws relating to the exchange of information, promptly furnishing
      the other with copies of notice or other communications



56











  received by Purchaser or Seller, as the
      case may be, from any third party or Governmental Body with respect to
      the transactions contemplated hereby. 

             (d)      The
      costs, expenses, and fees relating to filings made under the Antitrust
      Laws shall be paid equally by the Seller and Purchaser.



          7.5     Further Assurances.


          Each of Seller and Purchaser shall use its commercially reasonable efforts to (i) take all actions necessary or appropriate to consummate the transactions contemplated by this Agreement and (ii) cause
the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement.


          7.6     Preservation of Records.


            (a)      Seller
      may retain for its records and not for use, disclosure, sale or other dissemination
      to any Person or in any manner, except for any purpose reasonably related
      to Seller’s prior ownership of the Business, one copy of all of the
  Documents that constitute Purchased Assets.

             (b)      Seller
      and Purchaser each agrees that it shall preserve and keep the records held
      by it or its Affiliates relating to the Purchased Assets for a period of
      six years from the Closing Date and shall make such records (including
      information relating to Taxes, and Mortgage Loan information relating to
      the Pipeline Loans and Servicing related to the Servicing Rights) and personnel
      available to the other as may be reasonably required by such party in connection
      with, among other things, any insurance claims by, Legal Proceedings against
      or governmental investigations of Seller or any of its Affiliates or Purchaser
      or any of its Affiliates, in order to enable Seller or Purchaser to comply
      with its obligations under this Agreement and each other agreement, document
      or instrument contemplated hereby or thereby, and in order to enable Seller
      to comply with requests from third parties. In the event Seller wishes
      to destroy (or permit to be destroyed) such records after that time, Seller
      shall first give 90 days prior written notice to Purchaser and Purchaser
      shall have the right at its option and expense, upon prior written notice
      given to Seller within that 90 day period, to take possession of the records
      within 180 days after the date of such notice. 



          7.7     Publicity.


          The parties hereto shall consult in good faith with each other as to the form and substance of any press releases or other public announcements, including any related question and answer guidelines
prepared or used by Seller, related to the transactions contemplated hereby and any filings with any Governmental Body or with any national securities exchange or interdealer quotation service with respect thereto prior to issuing any press release
or other public announcement or making any filing.  Without limitation of the foregoing, the parties hereby acknowledge that Seller’s sole shareholder will announce the execution of this Agreement on a Form 8-K to be filed with the SEC within
four Business Days after the date of this Agreement, and shall attach an executed copy of this Agreement as an exhibit to the Form 8-K. In addition, certain Ancillary Agreements may also be filed as an exhibit to a Form 8-K to be filed
upon

57











execution of the Ancillary Agreements. Except as contemplated by the terms of this Agreement or as may otherwise be required by law, neither Seller or FHHL nor Purchaser, nor any of their respective Affiliates, will disclose to
any Person not a party hereto (other than Affiliates and Representatives, who shall be bound by this provision) the terms of this Agreement. Notwithstanding anything herein to the contrary, nothing in this Agreement shall be deemed to prohibit any
party from making any disclosure or filing that it determines, upon the advice of counsel to the party seeking to disclose, is required by Applicable Law or by obligations pursuant to any listing agreement with or rules of any national securities
exchange or interdealer quotation service or necessary in connection with any Tax return or other document required to be filed with any Governmental Body or to prohibit Seller from making disclosures in connection with other discussions, questions
or comments in connection with investor relations matters the principal focus of which is not specifically related to the transactions contemplated hereby provided that such disclosures or comments are not designed to adversely affect the reputation
or business of a party or its Affiliates.


          7.8     Notice to Pipeline Loan Mortgagors and Others.


          Purchaser and Seller shall notify each Mortgagor under the Pipeline Loans of the sale of the Pipeline Loans in accordance with Applicable Laws.


          7.9     Use of Trade Names.


            (a)      Except
      as provided in this Section 7.9,
      within the timeframe set forth in the Transition Services Agreement, Purchaser
      will take such action necessary to ensure that the Business does not retain,
      do business under, or have any ownership right in, any Licensed Mark, except
      as specifically provided in this Section 7.9.

             (b)      Seller
      hereby grants to Purchaser and its Affiliates following the Closing Date,
      a non exclusive, non transferable, fully paid and royalty free license
      to use the trademarks and service marks shown in Exhibit
      I in the United States of America as have
      been used by the Business prior to the Closing Date (the
      “Licensed Marks”)
      in the manner the Licensed Marks were used by Business prior to the Closing
      Date and on stationery, signage and other business materials (whether in
      tangible or electronic form) (the “Licensed
      Uses”). Purchaser and its Affiliates
      shall comply with Exhibit J in
      connection with the Licensed Uses except as and to the extent that use
      of the Licensed Marks by Seller or the Business prior to the Closing Date
      in connection with their mortgage businesses did not so comply.

             (c)      Notwithstanding
      the foregoing, Purchaser shall use reasonable efforts to change all references
      to the Licensed Marks used by the Business as soon as reasonably practicable
      following the Closing Date. The license granted by this Section
      7.9 shall be effective as of the Closing
      Date and shall terminate on the date set forth in the Transition Services
      Agreement, subject to any longer period of use that may be required under
      Applicable Law. Purchaser acknowledges, covenants and agrees that, except
      as specifically provided or permitted under this Agreement, Purchaser shall
      not acquire hereunder any right, title or interest in or to the Licensed
      Marks and shall not use in any manner, any Licensed Mark (except for descriptive
      or other fair use), and any content or 




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  text owned by Seller that is subject
      to state or federal copyright protection (except for descriptive or other
      fair use).

             (d)      Purchaser
      agrees that it shall, during the term of its license to the Licensed Marks
      under Section 7.9(b): 

  
              (i)      use
        the Licensed Marks hereunder only for the Licensed Uses, and in conformity
        with this Section 7.9; 

               (ii)      take
        reasonable steps to guard against the dilution and misuse of the Licensed
        Marks by using the Licensed Marks hereunder only for the Licensed Uses;

               (iii)     take
        reasonable steps to guard against use of the Licensed Marks in a manner
        that causes the public to view the Business as continuing to be owned
        by Seller; 

               (iv)     promptly
        inform Seller of any known infringement of the Licensed Marks; and 

               (v)     ensure
        that all of the services identified by the Licensed Marks (x) comply
        in all material respect with applicable local, state and federal government
        laws and regulations pertaining to such services, and (y) meet standards
        for such services generally accepted in the mortgage banking industry,
        except if and to the extent such services of Seller or the Business do
        not so comply prior to the Closing Date. 

  

            (e)      Seller
      and Purchaser agree that the Licensed Marks are a valuable asset of Seller
      and its Affiliates and any misuse of the Licensed Marks in violation of
      this Section 7.9 may
      cause Seller and its Affiliates irreparable harm for which it may have
      no adequate remedy at law; therefore, Seller shall be entitled to seek
      a preliminary injunction and other equitable relief to prevent any further
      misuse of the Licensed Marks. 

             (f)      Seller
      shall license that portion of the Excluded Assets used in the Transition
      Services Agreement by the Business (the
    “Licensed Excluded IP/IT”)
    to the Purchaser on a limited basis, or use such Licensed Excluded IP/IT
    on Purchaser’s behalf, to allow Purchaser to conduct the Business as
    it was conducted prior to the Closing Date, for such period as set forth
    in the Transition Services Agreement, pursuant to this Section
    7.9 and as shall be further documented in the
    Transition Services Agreement. Prior to the Closing and during the applicable
    transition period, Seller shall reasonably assist Purchaser in acquiring
    such rights in such Licensed Excluded IP/IT as are reasonably necessary to
    the Business’s day-to-day business operations in accordance with the
    Transition Services Agreement. 

             (g)      Seller
      covenants and agrees not to bring any action against Purchaser or any of
      its Affiliates on the grounds that Purchaser or any of its Affiliates has
      violated Seller’s rights under any patent or patent application owned
      by the Seller or its Affiliates that are used in the Business as of the
      Closing Date (the “Seller Patents”)
      by practicing




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  one or more of the claims of the Seller
      Patents without obtaining a license to do so. Purchaser covenants and agrees
      not to bring any action against Seller or any of its Affiliates on the
      grounds that Seller has violated the Purchaser’s intellectual property
      and proprietary rights by exercising Seller’s rights to the Seller
      Patents.

             (h)      Within
      the timeframe set forth in the Transition Services Agreement, Seller shall,
      and shall cause its Affiliates to, cancel, withdraw or otherwise abandon
      all trademark, service mark, and Internet domain name registrations and
      applications which are Purchased Assets that include any Mark or other
      trademark, service mark, trade dress or other identifying symbol, indicator
      or label of Seller or its Affiliates.

             (i)       Seller
      shall defend and hold harmless Purchaser against any claims of any kind,
      made against Purchaser relating to the Licensed Marks; provided that Purchaser
      utilizes such Licensed Marks pursuant to this Section
      7.9. 



          7.10    Covenants
      Not to Compete and Not to Solicit. 


            (a)      For
  purposes of this Agreement: 

  
              (i)      a
        loan is made “with a consumer purpose” if
        it is made for (i) personal, family or household purposes including second
        and vacation homes (ii) investment property or (iii) reasons incidental
        to clauses (i) and (ii). Residential Mortgage Loans do not include loans
        made for commercial, corporate, business or agricultural purposes, or
        for multi-family loans (5+).

               (ii)      “Wholesale” means
        the acquisition by Seller or any Affiliate or Purchaser or any Affiliate
        thereof, as applicable, of (x) Residential Mortgage Loans in process
        that are originated by a third party mortgage broker and placed with
        Seller or any of its Affiliates or Purchaser or any of its Affiliates,
        as applicable, to be closed in the name of and funded by the Seller or
        any of its Affiliates or Purchaser or any of its Affiliates, as applicable,
        but excludes the origination of Residential Mortgage Loans by Seller
        or any Affiliate or Purchaser or any of its Affiliates, as applicable,
        as a mortgage broker for placement with and to be closed in the name
        of and funded by a third party lender or (y) Residential Mortgage Loans
        that are originated and closed in the name of a third party mortgage
        lender for simultaneous sale to Seller or any Affiliate or Purchaser
        or any of its Affiliates, as applicable, and for which the purchase price
        paid by the Seller or any of its Affiliates or Purchaser or any of its
        Affiliates, as applicable, is the source of funds used by the mortgage
        lender to make the Residential Mortgage Loan.

               (iii)      “Correspondent” means
        the acquisition by Seller or any Affiliate or Purchaser or any of its
        Affiliates, as applicable, of closed and funded Residential Mortgage
        Loans that are processed, underwritten, made and funded by a third party
        lender in accordance with the specified eligibility requirements of and
        for sale to Seller or any Affiliate or Purchaser or any Affiliate, as
        applicable, pursuant to one or more optional or mandatory delivery commitments
        and related 

  

  

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  master form mortgage loan purchase agreements
      that are executed and in effect prior to the making of such Residential
      Mortgage Loans by the lender. 

             (iv)      “Retail” means
      the direct origination of a Residential Mortgage Loan by the Seller or
      any Affiliate or Purchaser or any Affiliate, as applicable, in its own
      name and with its own funds, provided that such Seller or any Affiliate
      or Purchaser or any Affiliate, as applicable, may use one or more contractors
      to perform origination assistance or fulfillment services for and on its
      behalf. 

             (v)      “Mortgage
        Production Office” means a physical
        office location for the purpose of marketing, soliciting, or originating
        Mortgage Loans that is not a Bank Branch. 

             (vi)      “Current
        Bank Footprint” means the geographic
        area consisting of the State of Tennessee and a twenty-five (25) mile
        radius of any Bank Branch of Seller outside the State of Tennessee or
        any Branch Office that is not a Purchased Branch Office existing as of
        the date of this Agreement. 

             (vii)     “Future
        Bank Footprint” means the geographic
        area consisting of a twenty-five (25) mile radius of any Bank Branch
        of Seller established after the date of this Agreement. 

             (viii)    “Target
        Bank” means a commercial bank or
        savings and loan association whose deposits are insured by the Federal
        Deposit Insurance Corporation. 

             (ix)     “Target
        Broker-Dealer” means a Person registered
        as a broker-dealer under Section 15 of the Exchange Act with annual revenues
        in excess of $10,000,000. 


  

          (b)      Except as provided in Section 7.10(c), during the period beginning on the
Closing Date and ending on the date which is two (2) years following the Closing Date, none of Seller, FHHL, nor any Affiliate of Seller that is an entity shall, within the United States of America, without the prior written consent of Purchaser:
engage in the business of originating or purchasing one-to-four family residential mortgage loans with a consumer purpose (“Residential Mortgage Loans”) through Retail,
Wholesale, or Correspondent contractual arrangements (a “Competing Business”).  During the period beginning on the Closing Date and ending on the date which is two (2) years
following the Closing Date, neither Seller nor any Affiliate of Seller that is an entity shall, without the prior written consent of Purchaser, engage in the business of servicing Residential Mortgage Loans itself or by contracting with third
parties to perform servicing of Residential Mortgage Loans except (i) servicing activities for Residential Mortgage Loans owned by such entity; (ii) interim servicing activities of Seller or any Affiliate of Seller in connection with the sale of
loans; (iii) servicing activities pursuant to the Subservicing Agreement; (iv) servicing activities with respect to servicing rights owned by Seller or any Affiliate of Seller on the Closing Date; (v) servicing activities with respect to servicing
rights created from any refinancing of any Residential Mortgage



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          Loan or servicing owned by Seller or any Affiliate of Seller on the Closing Date; or (vi) servicing rights created from the origination of Residential Mortgage Loans by Seller or any Affiliate as permitted under the terms of this
Section 7.10, in which the Residential Mortgage Loans are sold to a third party with servicing retained by Seller or its Affiliates.


            (c)      Notwithstanding
      the foregoing, Seller and its Affiliates shall not be prohibited from or
  restricted in: 

  
              (i)      Engaging
        in the business of originating Residential Mortgage Loans on a Retail
        basis: 

    
                (1)      by
          establishing or operating any Bank Branch or Mortgage Production Office
          that is within the Current Bank Footprint or the Future Bank Footprint;
          provided that the Seller will not open a new Mortgage Production Office
          outside the State of Tennessee except for Mortgage Production Offices
          that are located within a twenty five (25) mile radius of any Bank
          Branch of Seller existing as of the date of this Agreement; or 

                 (2)      through
          the internet on a website owned by Seller or any Affiliate; or 

                 (3)      to
          existing customers of the Seller within the Current Bank Footprint
          or to mortgagors to refinance any mortgage loans that the Seller owns
          or as to which the Seller owns the related servicing rights.

    

              (ii)      Engaging
        the business of originating Residential Mortgage Loans on a Wholesale
        or Correspondent basis:

    
                (1)      through
          relationships with mortgage brokers and loan correspondents that either
          are (A) existing brokers and loan correspondents for Residential Mortgage
          Loans originated by divisions of Seller other than the Business as
          of the date of this Agreement, (B) existing commercial customers of
          the Seller as of date of this Agreement or (C) become commercial customers
          after the date of this Agreement as part of a larger commercial banking
          relationship, with respect to Residential Mortgage Loans made to consumers
          who reside within 100 miles of the Current Bank Footprint, except where
          any loans made to consumers outside of this geographic area are immaterial
          and such activities are not being employed as a pretext to avoid the
          restrictive covenants set forth in this Section
          7.10; or 

                 (2)      by
          purchasing Residential Mortgage Loans secured by properties located
          within Current Bank Footprint or the Future Bank Footprint to hold
          for one year or more in Seller's investment portfolio. 

    

              (iii)      Merging
        with, or otherwise combining in any form with or acquiring any Target
        Bank or Target Broker-Dealer in any transaction in which Seller or any
        of its Affiliates is the surviving entity or ultimate controlling person

  

  

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  following such transaction, in which
      event the entities in existence after such transaction shall be entitled
      to continue their existing businesses provided that the restrictions set
      forth in Section 7.10 will
      apply to any offices of such entities established subsequent to such transaction;
      provided that the parties have not structured the transaction as a pretext
      to avoid the restrictive covenants in this Section
      7.10; or 

             (iv)      Merging
      into, or otherwise combining in any form with or being acquired by any
      entity in any transaction in which Seller or any of its Affiliates is not
      the surviving entity or ultimate controlling person following such transaction,
      in which event none of the restrictions set forth in this Section
      7.10 shall continue to apply, provided that
      the parties have not structured the transaction as a pretext to avoid the
      restrictive covenants in this Section 7.10. 

  

          (d)      Seller agrees that for the period commencing on the Closing Date and ending on the date that is two (2) years after the Closing Date, it
shall not solicit (in writing or otherwise) any Mortgagors of Pipeline Loans or Mortgagors of the Mortgage Loans that are identified on the Mortgage Loan Schedule attached to the Servicing Rights Purchase and Sale Agreement (collectively, the
“Transferred Mortgage Loans”) to refinance a Transferred Mortgage Loan; provided that (i) mass advertising or mailings (such as placing advertisements on television, on radio, in
magazines or in newspapers or including messages in billing statements) that are not made on a targeted basis to the Mortgagors of any Transferred Mortgage Loans on the basis of information that they obtained as a result of Seller’s ownership
of the Business or as a result of a targeted search for such information, or (ii) a solicitation for financial services other than Mortgages to any Mortgagor with whom Seller or an Affiliate has a customer relationship unrelated to the Transferred
Mortgage Loans and that are not made on a targeted basis to the Mortgagors of any Transferred Mortgage Loans on the basis of information that they obtained as a result of Seller’s ownership of the Business or as a result of a targeted search
for such information shall not constitute solicitation and shall not violate this covenant.  Without the prior written consent of Purchaser, Seller shall not sell or distribute any customer list incorporating the names of Mortgagors of any
Transferred Mortgage Loans and shall not itself use any such list to solicit or promote, or to allow any other person to solicit or promote, the sale of any services or products to any such Mortgagor of any Transferred Mortgage Loans, in each case
using information that it or they obtained as a result of Seller’s ownership of the Purchased Assets.


          (e)      For a period of two (2) years from the date of this Agreement, neither Seller nor its Affiliates will directly or indirectly hire any
Transferred Employee for employment or as an independent contractor, or otherwise engage the services of such Transferred Employee.  Notwithstanding the foregoing, subject to the restrictions on solicitation set forth in Section 7.10(g), Seller may
hire any such person who has been terminated by Purchaser or its Affiliates without cause, provided Seller provides notice to Purchaser of such hiring prior to the commencement of services by such person. 


          (f)       For a period of two (2) years from the date of this Agreement, neither Purchaser nor its Affiliates will directly or indirectly hire any
Excluded Employee for



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  employment or as an independent contractor,
      or otherwise engage the services of such Excluded Employee. Notwithstanding
      the foregoing, subject to the restrictions on solicitation set forth in
      Section 7.10(h), Purchaser may hire any such person who has been terminated
      by Seller or its Affiliates without cause, provided Purchaser provides
      notice to Seller of such hiring prior to the commencement of services by
  such person.

             (g)      For
      a period of three (3) years from the date of this Agreement, no employee,
      agent or other representative of Seller or its Affiliates will solicit
      or cause to be solicited for employment, directly or indirectly, any Transferred
      Employee. Notwithstanding the foregoing, upon expiration of the restrictions
      set forth in Section 7.10(e),
      Seller may (a) hire any such person who has been terminated by Purchaser
      or its Affiliates before the commencement of employment discussions; (b)
      solicit and hire such person through general public advertisements that
      are not primarily targeted at such person; (c) hire any such person who,
      of his/her own initiative and without any direct or indirect encouragement
      by Seller or its Affiliates, approaches Seller or its Affiliates seeking
      employment; and/or (d) hire any person contacted by a third party recruiter
      provided such contractor is not directed to contact the Transferred Employee. 

             (h)      For
      a period of three (3) years from the date of this Agreement, no employee,
      agent or other representative of Purchaser or its Affiliates will solicit
      or cause to be solicited for employment, directly or indirectly, any Excluded
      Employee. Notwithstanding the foregoing, upon expiration of the restrictions
      set forth in Section 7.10(f),
      Purchaser may (a) hire any such person who has been terminated by Seller
      or its Affiliates before the commencement of employment discussions; (b)
      solicit and hire such person through general public advertisements that
      are not primarily targeted at such person; (c) hire any such person who,
      of his/her own initiative and without any direct or indirect encouragement
      by Purchaser or its Affiliates, approaches Purchaser or its Affiliates
      seeking employment; and/or (d) hire any person contacted by a third party
      recruiter provided such contractor is not directed to contact such Excluded
      Employee. 

             (i)       If
      the final judgment of a court of competent jurisdiction declares that any
      term or provision of this Section 7.10 is
      invalid or unenforceable, the parties hereto agree that the court making
      the determination of invalidity or unenforceability shall have the power
      to reduce the scope or duration of the term or provision, to delete specific
      words or phrases, or to replace any invalid or unenforceable term or provision
      with a term or provision that is valid and enforceable and that comes closest
      to expressing the intention of the invalid or unenforceable term or provision,
      and this Agreement shall be enforceable as so modified after the expiration
      of the time within which the judgment may be appealed.

             (j)      Seller
      agrees and acknowledge that remedies under Applicable Law for any breach
      of its obligations under this Section 7.10 are
      inadequate and that in addition thereto the Purchaser shall be entitled
      to seek equitable relief, including injunction and specific performance,
      in the event of any such breach. 



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          7.11    Transfer
      of Assets Following the Closing. 



          In the event that, at any time on or after the Closing, Seller or the Purchaser shall receive or otherwise possess any asset that is allocated to the other party pursuant to this Agreement, such party
(the “Transferor”) shall, to the extent permitted by Applicable Law, promptly transfer, or cause to be transferred, such asset to the party so entitled thereto or to have been
responsible therefor (the “Transferee”), and such Transferee shall accept or assume, or cause to be accepted or assumed, such asset. Prior to such transfer, the Transferor shall
hold such asset in trust for the benefit of the Transferee and shall perform all obligations of the Transferee under such agreement following the Closing.  Unless otherwise required by Applicable Law, as determined in good faith by the party
reporting the transaction, each of Seller and the Purchaser shall (a) treat for all Tax purposes the receipt of any such asset as having been originally received or accrued by the Transferee rather than the Transferor and (b) neither report nor take
any Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by a good faith resolution of a Tax Contest relating to such treatment). 


          7.12    Notice
of Developments.


          Prior to the Closing, the Seller shall promptly notify the Purchaser in writing of (a) all events, circumstances, facts and occurrences arising subsequent to the date of this Agreement which would be
reasonably likely to result in any breach of a representation or warranty or covenant of the Seller in this Agreement or which would be reasonably likely to have the effect of making any representation or warranty of the Seller in this Agreement
untrue or incorrect in any material respect, (b) any breach by any Seller of any of the representations, warranties and covenants of the Seller in this Agreement and (c) all other material developments affecting the assets, Liabilities, business,
financial condition, operations, results of operations, customer or supplier relations, employee relations, projections or prospects of the Business. 


          7.13    ARM
Corrections.


          Seller shall cause an ARM Loan audit to be performed based on a sample of up to 250 ARM Loans using industry standard sampling techniques identified by Purchaser after consultation with the
Seller’s internal audit group. The sample shall be selected by the Purchaser in its sole discretion within 10 Business Days after the receipt by Purchaser of Seller’s list of ARM Loans currently serviced by Seller, which shall be
provided to Purchaser within five Business Days following the date hereof, and the audit shall be completed within 60 days after Seller is notified by the Purchaser of the sample selected by Purchaser. Based on the findings in such audit, Seller
shall (i) cause all identified servicing errors in any Mortgage Loan that is an ARM Loan to be corrected in compliance with Applicable Servicing Requirements, (ii) with respect to such identified errors, pay at their expense all necessary and
appropriate refunds to affect consumers, and (iii) if any systemic errors are discovered, correct all such errors at their expense with respect to all affected loans in accordance with the Seller’s normal policy and procedures. 


          7.14    Monthly
Financial Information.


          Not later than the 10th Business Day of each month between the date of this Agreement and the Closing Date, Seller shall provide Purchaser with (i) an unaudited consolidated balance sheet and income
statement of the Business, inclusive of the current fair market value of the

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          Purchased Hedging Instruments, as of the most recently completed month-end period (a “Monthly Unaudited Company Financial Sheet”) which shall be accompanied by
a certificate, duly executed by the chief financial officer of FHHL stating that such Monthly Unaudited Company Financial Sheet fairly presents, in all material respects, the consolidated financial position of Seller as of the date indicated
therein, in accordance with GAAP (as of the date of such Monthly Unaudited Company Financial Sheet); and (ii) a report delivered as a computer tape containing, with respect to each Transferred Mortgage Loan, the information specified on
Schedule 7.14 as of the most recent month-end period.


          7.15    Fixed
Asset Inventory.


          No later than 10 Business Days prior to the Closing, Seller shall take an inventory of the fixed assets of the Business to be included in the Purchased Assets for the purpose of preparing the Final
Calculation Statement (the “Fixed Assets Inventory”).  The Fixed Assets Inventory shall be conducted in accordance with the Seller’s past practices of inventory
determination and valuation in the preparation of the financial statements of the Business and calculated in accordance with GAAP applied on a consistent basis with the same accounting principles and practices used by Seller in the Ordinary Course
of Business (but only to the extent consistent with GAAP). At the conclusion of the Fixed Assets Inventory, Seller shall prepare and deliver to the Purchaser a report consistent with reports customarily prepared by Seller in connection with its
performance of a physical inventory with respect to the Business.


          7.16    Transition
Services Agreement.


          Seller and Purchaser will negotiate and will use their commercially reasonable efforts to finalize the terms of a Transition Services Agreement by June 30, 2008. The Transition Services Agreement will
provide for certain services each party will provide to the other party for an interim period of time, with the fees owed by a party for such services to be equal to the actual cost incurred by the party providing the services.  A list of the
services contemplated to be provided by each party as of the date of this Agreement is set forth on Schedule 7.16 of this Agreement.


          7.17    Evaluated
Business.


          Purchaser shall continue to evaluate whether it desires to purchase the Evaluated Business and Evaluated Business Assets.  In the event Purchaser determines that it desires to purchase the Evaluated
Business, it shall notify Seller in writing of such decision on or before June 30, 2008.  Upon notification to Seller that Purchaser desires to purchase the Evaluated Business and the Evaluated Business Assets, the Evaluated Business Assets and the
Evaluated Business will be Purchased Assets pursuant to Section 2.1 of this Agreement and the Liabilities of Evaluated Business and Evaluated Business Assets that arise out of or relate to
the period after the Closing will be Assumed Liabilities under Section 2.3 of this Agreement; provided that except as otherwise provided in this Agreement, the Purchaser shall not assume (A)
any Liability arising pertaining to the Evaluated Business and Evaluated Business Assets that is not assigned to the Purchaser at the Closing due to the failure to receive any third party Permit or otherwise except as provided in Section 2.5(c). In the event Purchaser fails to notify Seller by June 30, 2008 that it desires to purchase the Evaluated Business and the Evaluated Business Assets, the

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          Evaluated Business Assets and the Evaluated Business will be Excluded Assets pursuant to Section 2.2 of this Agreement and all Liabilities of Evaluated Business and
Evaluated Business Assets will be Excluded Liabilities under Section 2.3 of this Agreement. 


          7.18    Document
Custodian Services.


          Subject to Applicable Servicing Requirements and the continuation of Servicer’s Past Practices (as defined in the Subservicing Agreement), and conditioned upon terms and conditions (including
without limitation pricing) that are as good or better than terms available to Seller through alternative custodial arrangements, Purchaser shall act as the Document Custodian (as defined in the Subservicing Agreement) until the third anniversary of
the Closing Date with respect to all Mortgage Loans for which Seller serves as document custodian as of the Closing Date. 


          7.19    Purchaser
Warehouse Line of Credit.


          Subject to Closing the transactions contemplated herein, Seller agrees to participate in a line of credit to be extended to Purchaser after the Closing Date for the purpose of funding the origination
of Mortgage Loans (the “Purchaser Warehouse Line of Credit”) in a maximum amount not to exceed $50,000,000 for a term not to exceed twelve months; provided, however that the
following conditions are met: 


            (a)      the
      Purchaser Warehouse Line of Credit is extended on market terms and conditions,
      consistent with similar types of lending arrangements extended by commercial
      lenders in the financial services industry at the time of origination; 

             (b)      the
      agent arranging the Purchaser Warehouse Line of Credit is JPMorgan, and
      JPMorgan participates in the Purchaser Warehouse Line of Credit in an amount
      equal to at least two times the amount of Seller’s participation;
      and 

             (c)      in
      the event the aggregate commitment amount of lenders desiring to participate
      in the Purchaser Warehouse Line of Credit is oversubscribed, Seller’s
      commitment to participate in the Purchaser Warehouse Line of Credit shall
      be reduced by the amount of the oversubscription. 



ARTICLE VIII

EMPLOYEES AND EMPLOYEE BENEFITS


          8.1     Employment. 


            (a)      Transferred
        Employees. The Purchaser or its Affiliates
        shall extend offers of employment effective on the first Business Day
        immediately following the Closing Date, and otherwise on terms Purchaser
        or its Affiliates shall determine in their discretion, to substantially
        all Employees who have been identified by Seller on the list to be provided
        to Purchaser under Section 5.14(e) (the “Prospective
        Transferred Employees”), subject to routine employment screening
        and all other measures determined in Purchaser’s discretion and
        as generally applicable to Purchaser’s new hires, and 




67











  otherwise in accordance with all Applicable
      Laws. At least ten (10) Business Days prior to the Closing Date Purchaser
      shall deliver, in writing, the offers of employment to substantially all
      Prospective Transferred Employees. Each such offer of employment shall
      be at comparable compensation plan levels as in effect immediately prior
      to the date of this Agreement. Such individuals who accept such offer on
      or before the first Business Day immediately following the Closing Date
      are hereinafter referred to as the “Transferred
      Employees.”

             (b)      Nonsolicitation
        of Prospective Transferred Employees. Seller
        agrees that prior to the Closing Date, neither it nor any of its Affiliates
        will solicit or cause to be solicited any Prospective Transferred Employee
        to induce such Prospective Transferred Employee to continue in the employment
        of Seller or an Affiliate of Seller after the Closing Date. Seller agrees
        to cooperate in assisting and supporting Purchaser’s hiring of
        the Prospective Transferred Employees.

             (c)      At
      the sole discretion of Purchaser, Purchaser shall provide employee benefits
      (including, without limitation, health, life and disability insurance,
      but specifically excluding stock options, restricted stock or other plans
      involving the potential issuance of securities or equity rights) to Transferred
      Employees that are no less favorable in the aggregate to such Transferred
      Employees and any dependents and beneficiaries of such Transferred Employees,
      as appropriate, than those provided to a similarly situated employee of
      Purchaser or its Affiliates who is not a Transferred Employee, taking into
      account the employee’s performance and geographic location. Except
      as specifically set forth in the immediately preceding sentence with respect
      to benefits for Transferred Employees, nothing in this Agreement shall
      be construed as restricting Purchaser or Seller or any of their Affiliates,
      in the exercise of its independent business judgment, in modifying any
      of the terms and conditions of the employment of any employee following
      the Closing or terminating the employment of any employee, including any
      Transferred Employee, following the Closing. 

             (d)      With
      respect to the benefit plans of Purchaser in which any Transferred Employee
      participates after the Closing (each, a “Purchaser Benefit Plan”),
      Purchaser shall cause each such Purchaser Benefit Plan to recognize the
      service of each such Transferred Employee prior to the Closing with Seller
      and its Affiliates as employment with Purchaser and its Affiliates for
      purposes of eligibility and benefit entitlement (e.g., vesting), but not
      for purposes of benefit accrual under any retirement benefit program, under
      each such Purchaser Benefit Plan. With respect to medical, dental and other
      health and welfare Purchaser Benefit Plans covering Transferred Employees
      as required herein, Purchaser shall waive any waiting periods or limitations,
      for the calendar year in which the Closing Date occurs, or exclusions relating
      to pre-existing conditions to the extent that such periods, limitations
      or exclusions were not applicable to or had been satisfied by such Transferred
      Employees immediately prior to the Closing Date under applicable Employee
      Benefit Plans of Seller or its Affiliate. 

             (e)      Purchaser
      shall not be responsible (and Seller shall be responsible) for any health
      and accident claims and expenses which is incurred prior to the Closing
      with respect to the Transferred Employees. Except to the extent that the
  normal operation of



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  FSA accounts sponsored by Seller for
      Transferred Employees would allow claims post-closing, Seller shall not
      be responsible (and Purchaser shall be responsible) for any health and
      accident claims and expenses which is incurred from and after the Closing
      Date with respect to the Transferred Employees. Purchaser agrees to provide
      continuation coverage required by COBRA to all Transferred Employees and
      their covered beneficiaries who become entitled to COBRA coverage in connection
      with a “qualifying event” (as such term is defined in ERISA)
      that occurs after the Closing Date. Seller shall provide continuation coverage
      required by COBRA to all Transferred Employees and their covered beneficiaries
      who became entitled to COBRA coverage in connection with a “qualifying
      event” that occurred on or before the Closing Date. 

             (f)      Nothing
      in this Article VIII shall
      require Purchaser or Seller to provide or continue any specific plans,
      programs, policies or arrangements. Furthermore, Purchaser shall not assume
      any Employee Benefit Plan which is maintained, contributed to or required
      to be contributed to by Seller or any Affiliate of Seller, and Seller shall
      retain all Liabilities and obligations for all benefits incurred, accrued,
      or legally committed to, if any, under such Employee Benefit Plans including,
      but not limited to, responsibility for all welfare plan claims incurred
      by Employees and all long or short-term disability claims arising from
      disabilities that arose prior to Closing. For this purpose, a claim is
      incurred when the medical or other service giving rise to the claim is
      performed, except that in the case of death, a claim is incurred upon death.
      Seller shall retain all Liabilities and obligations to provide post-retirement
      health and life insurance benefits to former employees and Employees (and
      their covered spouses and dependents) incurred under the terms of the Employee
      Benefit Plans which is maintained, contributed to or required to be contributed
      to by Seller. 

             (g)      Notwithstanding
      anything in this Agreement to the contrary, the terms of this Agreement
      shall not amend or have the effect of amending the terms of any Employee
      Benefit Plan or Purchaser Benefit Plan. 




          8.2     Personnel Files.


          From time to time from and after the Closing Date, Seller shall transfer and deliver to Purchaser the personnel files, background check reports and fingerprinting records of any Transferred Employee
who consents to such transfer of files in writing pursuant to a consent and release in form and substance reasonably satisfactory to Seller (each, an “Employee Release”). Seller
shall transfer and deliver to Purchaser these files within ten (10) Business Days after Seller shall have received a duly executed Employee Release signed by the Transferred Employee. Seller shall have no obligation to transfer or deliver to
Purchaser any personnel files of any Transferred Employee unless and until Seller receives a duly executed Employee Release signed by the Transferred Employee. 


          8.3     Standard Procedure.


          Pursuant to the “Standard Procedure” provided in Section 4 of Revenue Procedure 2004-53, 2004-34 IRB 320, (i) Purchaser and Seller shall report on a predecessor/successor basis as set
forth therein, (ii) Seller will not be relieved from filing a Form W 2 with respect to any

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          Transferred Employees, and (iii) Purchaser will undertake to file (or cause to be filed) a Form W 2 for each such Transferred Employee only with respect to the portion of the year during which such Employees are employed by the
Purchaser that includes the Closing Date, excluding the portion of such year that such Employee was employed by Seller. 


          8.4     Terminated Employees.


          At the Closing, Seller shall deliver to Purchaser a true and complete list of all Employees who suffered an “employment loss” as defined in WARN within 90 days prior to the Closing Date.


ARTICLE IX

CONDITIONS TO CLOSING


          9.1     Conditions Precedent to Obligations of Purchaser.


          The obligation of Purchaser to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or
all of which may be waived by Purchaser in whole or in part to the extent permitted by Applicable Law): 


            (a)      the
      representations and warranties of Seller set forth in this Agreement that
      are qualified as to materiality or that contain a Material Adverse Effect
      qualifier shall be true and correct, and those not so qualified shall be
      true and correct in all material respects, as of the date of this Agreement
      and as of the Closing as though made at and as of the Closing, except to
      the extent such representations and warranties expressly relate to an earlier
      date (in which case such representations and warranties that are qualified
      as to materiality or that contain a Material Adverse Effect qualifier shall
      be true and correct, and those not so qualified shall be true and correct
      in all material respects, on and as of such earlier date); 

             (b)      Seller
      shall have performed and complied in all material respects with all obligations
      and agreements required in this Agreement or the Ancillary Agreements to
      be performed or complied with by it prior to the Closing Date; 

             (c)      there
      shall not have been or occurred any event, change, occurrence or circumstance
      that has had or has a reasonable likelihood of having a Material Adverse
      Effect since the date of this Agreement; 

             (d)      Purchaser
      shall have received a certificate signed by an authorized officer of Seller,
      dated the Closing Date, to the effect that each of the conditions specified
      above in Sections 9.1(a)-(c) have
      been satisfied; 

             (e)      there
      shall not be in effect any Order by a Governmental Body of competent jurisdiction
      restraining, enjoining or otherwise prohibiting the consummation of the
      transactions contemplated hereby and no Legal Proceedings shall have been
      instituted or threatened or claim or demand made against Seller or Purchaser
      seeking to



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  restrain or prohibit or to obtain substantial
      damages with respect to the consummation of the transactions contemplated
      hereby; provided, however, that with respect to a threat, claim, or demand,
      counsel for the affected party has concluded in its opinion that there
  is a credible basis for such threat, claim, or demand; 

             (f)      Seller
      shall have obtained (i) any Consent, approval, Order or authorization of,
      or registration, declaration or filing with, any Governmental Body of competent
      jurisdiction required to be obtained or made in connection with the execution
      and delivery of this Agreement or the performance of the transactions contemplated
      herein, (ii) all Consents, waivers and approvals under all Antitrust Laws
      and those Consents, waivers and approvals referred to in Section
      5.3(b) in a form and substance satisfactory
      to Purchaser, and (iii) the Consent of the other owners of the Joint Venture
      Entities to consummate the acquisition of the JV Interests, including the
      consent of each member or partner of each Joint Venture Entity to making
      an election under Section 754 of the Code in the sole discretion of Purchaser,
      as contemplated herein; 

             (g)      Purchaser
      shall be approved by (i) HUD as a Title II Supervised Mortgagee and servicer
      for FHA Loans, (ii) approved by Fannie Mae and Freddie Mac as an approved
      seller and servicer of residential mortgages, and (iii) Ginnie Mae as an “issuer”;

             (h)      Purchaser
      shall have completed the steps required to employ the Transferred Employees
      as of the Closing Date; 

             (i)       Seller
      shall have delivered, or caused to be delivered, to Purchaser the following
      certificates, instruments, and documents duly executed by Seller (or in
      the case of the opinion of counsel, duly executed by Seller’s counsel): 

  
              (i)      the
        Servicing Rights Purchase and Sale Agreement in the form of Exhibit
        C;

               (ii)      the
        Subservicing Agreement in the form of Exhibit
        D; (iii)      the
        Transition Services Agreement; (iv)      the
        Bill of Sale in the form of Exhibit E; 

               (v)      the
        Assignment and Assumption Agreement for Purchased Contracts in the form
        of Exhibit F-1; 

               (vi)      the
        Assignment and Assumption Agreement for Office Leases in the form of Exhibit
        F-2; 

               (vii)     the
        Assignment and Assumption Agreement for Acquisition Contracts in the
        form of Exhibit F-3; 

  

  

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            (viii)    a
      Joint Venture Interest Assignment and Acceptance Agreement with respect
      to each of the JV Interests to be transferred to Purchaser, a form of which
  is attached as Exhibit F-4; 

             (ix)     a
      Subsidiary Assignment and Acceptance Agreement in the form attached as Exhibit
      F-5. 

             (x)      an
      opinion of counsel in the form of Exhibit
      G; 

             (xi)      the
      lease with respect to the Headquarters in the form of Exhibit
      H;

             (xii)      a
      certificate of non-foreign status as described in Treas. Reg. Section 1.1445
      -2(b)(2) (a “FIRPTA Certificate”);
      and 

             (xiii)     all
      such other documents as Purchaser may reasonably request in order to consummate
      the transactions contemplated under this Agreement. 



          9.2     Conditions Precedent to Obligations of Seller.


          The obligations of Seller to consummate the transactions contemplated by this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all
of which may be waived by Seller in whole or in part to the extent permitted by Applicable Law): 


            (a)      the
      representations and warranties of Purchaser set forth in this Agreement
      that are qualified as to materiality or that contain a Material Adverse
      Effect qualifier shall be true and correct, and those not so qualified
      shall be true and correct in all material respects, as of the date of this
      Agreement and as of the Closing as though made at and as of the Closing,
      except to the extent such representations and warranties expressly relate
      to an earlier date (in which case such representations and warranties that
      are qualified as to materially or that contain a Material Adverse Effect
      qualifier shall be true and correct, and those not so qualified shall be
      true and correct in all material respects, on and as of such earlier date); 

             (b)      Purchaser
      shall have performed and complied in all material respects with all obligations
      and agreements required by this Agreement or the Ancillary Agreements to
      be performed or complied with by Purchaser on or prior to the Closing Date; 

             (c)      Seller
      shall have received a certificate signed by an authorized officer of Purchaser,
      dated the Closing Date, to the effect that each of the conditions specified
      above in Sections 9.2(a)-(b) have
      been satisfied; 

             (d)      there
      shall not be in effect any Order by a Governmental Body of competent jurisdiction
      restraining, enjoining or otherwise prohibiting the consummation of the
      transactions contemplated hereby and no Legal Proceedings shall have been
      instituted or threatened or claim or demand made against Seller or Purchaser
      seeking to restrain or prohibit or to obtain substantial damages with respect
      to the consummation of the transactions contemplated hereby; provided,
      however, that with respect to a threat,



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  claim, or demand, counsel for the affected
      party has concluded in its opinion that there is a credible basis for such
      threat, claim, or demand; 

             (e)      Purchaser
      shall have obtained (i) any Consent, approval, Order or authorization of,
      or registration, declaration or filing with, any Governmental Body of competent
      jurisdiction required to be obtained or made in connection with the execution
      and delivery of this Agreement or the performance of the transactions contemplated
      herein, and (ii) all Consents, waivers and approvals under all Antitrust
      Laws and those Consents, waivers and approvals referred to in Section
      6.3(b) in a form and substance satisfactory
      to Seller; 

             (f)      Purchaser
      shall be approved by (i) HUD as a Title II Supervised Mortgagee and servicer
      for FHA Loans, (ii) approved by Fannie Mae and Freddie Mac as an approved
      seller and servicer of residential mortgages, and (iii) Ginnie Mae as an “issuer”; 

             (g)      Purchaser
      shall have delivered, or caused to be delivered, to Seller the following
      certificates, instruments, and documents duly executed by Purchaser (or
      in the case of the opinion of counsel, duly executed by Purchaser’s
      counsel, who may be an employee of Purchaser): 

  
              (i)      the
        Servicing Rights Purchase and Sale Agreement in the form of Exhibit
        C;

               (ii)      the
        Subservicing Agreement in the form of Exhibit
        D; 

               (iii)      the
        Transition Services Agreement; 

               (iv)      the
        Assignment and Assumption Agreement for Purchased Contracts in the form
        of Exhibit F-1; 

               (v)      the
        Assignment and Assumption Agreement for Office Leases in the form of Exhibit
        F-2; 

               (vi)     the
        Assignment and Assumption Agreement for Acquisition Contracts in the
        form of Exhibit F-3; 

               (vii)     a
        Joint Venture Interest Assignment and Acceptance Agreement with respect
        to each of the JV Interests to be transferred to Purchaser, a form of
        which is attached as Exhibit F-4; 

               (viii)    a
        Subsidiary Assignment and Acceptance Agreement in the form attached as Exhibit
        F-5; 

               (ix)     the
        Non-Negotiable Promissory Note in the form attached as Exhibit
        F-6; 

               (x)      the
        lease with respect to the Headquarters in the form of Exhibit
        H;

  

  

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            (xi)      an
      opinion of counsel in the form of Exhibit
      K; and

             (xii)     such
      other documents as Seller may reasonably request in order to consummate
      the transactions contemplated under this Agreement. 



ARTICLE X 



INDEMNIFICATION


          10.1    Survival
of Representations, Warranties, and Covenants.


          The representations, warranties, and covenants of the parties contained in this Agreement or any Seller Document or Purchaser Document shall survive the Closing as follows: 


            (a)      the
      representations and warranties in Sections
      5.1, 5.2, 6.1, and 6.2 shall survive the
      Closing indefinitely; 

             (b)      the
      representations and warranties in Section
      5.8 shall survive the Closing and will not
      terminate until 30 calendar days after the expiration of the statute of
      limitations applicable to the matters covered thereby; 

             (c)      the
      representations and warranties in Section
      5.17 shall survive the Closing and will not
      terminate until the third anniversary of the Closing Date;

             (d)      all
      representations and warranties relating to the Joint Venture Entities and
      the Subsidiary, other than those representations and warranties addressed
      in Sections 5.1, 5.2, and 5.8 which
      shall be governed by the survival period set forth in Section
      10.1(a)-(c) above, shall survive the Closing
      and will not terminate until the third anniversary of the Closing Date;

             (e)      all
      other representations and warranties in this Agreement shall survive the
      Closing and will not terminate for 365 calendar days following the Closing
      Date; and 

             (f)      The
      covenants and agreements of the parties hereto contained in this Agreement
      shall, subject to the express terms thereof, survive the Closing indefinitely
      (items 10.1(a) through (e) collectively, the “Survival
      Period”); 




provided, that any obligation to indemnify and hold harmless shall not terminate with respect to any Losses as to which the Person to be indemnified shall have given notice (stating in reasonable detail the basis of the claim for
indemnification) to the indemnifying party in accordance with Section 10.3(a) before the termination of the Survival Period.


          10.2    Indemnification. 


          (a)      Subject to Sections 10.1, and 10.4, Seller hereby agrees to indemnify and hold Purchaser harmless from and against: 

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            (i)      any
      and all Losses based upon, attributable to or resulting from the failure
      of any of the representations or warranties of Seller set forth in this
      Agreement or in any Seller Document to be true and correct in all respects
      at the date hereof and at the Closing Date (it being understood and agreed
      that such representations and warranties shall be interpreted without giving
      effect to any such limitations or qualifications as to “Knowledge”, “materiality” or “Material
      Adverse Effect” set forth therein); 

             (ii)      any
      and all Losses based upon, attributable to or resulting from the breach
      of any covenant or other agreement on the part of Seller under this Agreement
      (including without limitation those covenants set forth in Article
      VII) or any Seller Document; 

             (iii)     any
      and all Losses attributable to any Transferred Employee resulting from
      or based upon (A) any employment-related Liability (statutory or otherwise)
      with respect to employment or termination of employment on or prior to
      the Closing Date, (B) except as set forth in the Transition Services Agreement,
      any Liability relating to, arising under or in connection with any Employee
      Benefit Plan, including any Liability under COBRA, whether arising prior
      to, on or within three years after the Closing Date (C) any Liability under
      WARN, or (D) any failure of Seller or its Affiliates to comply with any
      applicable wage and hour laws, including without limitation the Fair Labor
      Standards Act and any applicable state laws or regulation attributable
      to or in connection with any improper classification of Employees as exempt
      or nonexempt; and 

             (iv)     any
      and all Losses arising out of, based upon or relating to any Excluded Asset,
      Excluded Liability or Excluded Employee or to Seller’s operation
      of the Business prior to the Closing (notwithstanding any exception listed
      in the Disclosure Memorandum). 




          (b)      Subject to Sections 10.1 and 10.4, Purchaser hereby agrees to indemnify and hold Seller harmless from and against: 


            (i)      any
      and all Losses based upon, attributable to or resulting from the failure
      of any of the representations or warranties of Purchaser set forth in this
      Agreement or any Purchaser Document, to be true and correct at the date
      hereof and at the Closing Date; 

             (ii)      any
      and all Losses based upon, attributable to or resulting from the breach
      of any covenant or other agreement on the part of Purchaser under this
      Agreement or any Purchaser Document;

             (iii)     any
      and all Losses arising out of, based upon or relating to any Assumed Liability;
      and 

             (iv)     any
      and all Losses arising out of, based upon or relating to any Purchased
      Asset, Assumed Liability or Transferred Employee, in each case arising
      solely from Purchaser’s operation of the Business after the Closing. 

  


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          10.3    Indemnification
Procedures. 


            (a)      A
      claim for indemnification for any matter not involving a third party claim
      may be asserted by written notice to the party from whom indemnification
      is sought, which notice shall include a reasonable description of the basis
      for the claim. 

             (b)      In
      the event that any Legal Proceedings shall be instituted or that any Third
      Party Claim is asserted, the indemnified party shall reasonably and promptly
      cause written notice of the assertion of any Third Party Claim of which
      it has knowledge which is covered by this indemnity to be forwarded to
      the indemnifying party. If the indemnifying party acknowledges in writing
      its obligation to indemnify the indemnified party hereunder against any
      Losses that may result from such Third Party Claim, the indemnifying party
      shall have the right, at its sole expense, to be represented by counsel
      mutually acceptable to the indemnified party and the indemnifying party
      and to defend against, negotiate, settle or otherwise deal with any Third
      Party Claim which relates to any Losses for which indemnification is sought
      hereunder. If the indemnifying party elects to defend against, negotiate,
      settle or otherwise deal with any Third Party Claim which relates to any
      Losses for which indemnification is sought hereunder, it shall within ten
      days (or sooner, if the nature of the Third Party Claim so requires) notify
      the indemnified party of its intent to do so. If the indemnifying party
      elects not to defend against, negotiate, settle or otherwise deal with
      any Third Party Claim which relates to any Losses for which indemnification
      is sought hereunder, fails to notify the indemnified party of its election
      as herein provided the indemnified party may then, but only then, defend
      against, negotiate, settle or otherwise deal with such Third Party Claim.
      If the indemnified party defends any Third Party Claim, then the indemnifying
      party shall reimburse the indemnified party for the reasonable expenses
      of defending such Third Party Claim upon submission of periodic bills.
      If the indemnifying party shall assume the defense of any Third Party Claim,
      the indemnified party may participate, at his or its own expense, in the
      defense of such Third Party Claim; provided, that such indemnified party
      shall be entitled to participate in any such defense with separate counsel
      at the expense of the indemnifying party if (i) so requested by the indemnifying
      party to participate, (ii) in the reasonable opinion of counsel to the
      indemnified party a conflict or potential conflict exists between the indemnified
      party and the indemnifying party that would make such separate representation
      advisable, or (iii) Purchaser reasonably anticipates the Third Party Claim
      to have a material and adverse effect upon either the Purchaser’s
      use of the Purchased Assets and/or the conduct or reputation of the Business
      after the Closing Date; and provided, further, that the indemnifying party
      shall not be required to pay for more than one such counsel (and any appropriate
      local counsel) for all indemnified parties in connection with any Third
      Party Claim. The parties hereto agree to cooperate fully with each other
      in connection with the defense, negotiation or settlement of any such Third
      Party Claim. The parties acknowledge and agree that a class action claim
      against the Purchaser and/or its Affiliates based on Purchaser’s
      method of servicing Mortgage Loans is reasonably anticipated to have such
      a material and adverse effect pursuant to subsection (iii) in the prior
      sentence; provided, however, that Purchaser’s method of servicing
      Mortgage Loans is in accordance with Seller’s past practices of servicing
      Mortgage Loans. Notwithstanding anything in this Section
      10.3 to the contrary, neither the indemnifying
      party nor the indemnified party shall, without the 




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  written consent of the other party, settle
      or compromise any Third Party Claim or permit a default or consent to entry
      of any judgment unless the claimant and such party provide to such other
      party an unqualified release from all Liability in respect of the Third
      Party Claim. Notwithstanding the foregoing, if a settlement offer solely
      for money damages is made by the applicable third party claimant, and the
      indemnifying party notifies the indemnified party in writing of the indemnifying
      party’s willingness to accept the settlement offer and, subject to
      the applicable limitations of Section 10.4,
      pay the amount called for by such offer, and the indemnified party declines
      to accept such offer, the indemnified party may continue to contest such
      Third Party Claim, free of any participation by the indemnifying party,
      and the amount of any ultimate Liability with respect to such Third Party
      Claim that the indemnifying party has an obligation to pay hereunder shall
      be limited to the lesser of (A) the amount of the settlement offer that
      the indemnified party declined to accept plus the Losses of the indemnified
      party relating to such Third Party Claim through the date of its rejection
      of the settlement offer or (B) the aggregate Losses of the indemnified
      party with respect to such Third Party Claim. If the indemnifying party
      makes any payment on any Third Party Claim, the indemnifying party shall
      be subrogated, to the extent of such payment, to all rights and remedies
      of the indemnified party to any insurance benefits or other claims of the
      indemnified party with respect to such Third Party Claim. Notwithstanding
      the foregoing and regardless of whether or not such Third Party Claim is
      reasonably anticipated to have a material and adverse effect upon either
      the Purchaser’s use of the Purchased Assets and/or the conduct or
      reputation of the Business after the Closing Date, an indemnified party
      shall have the right both to employ separate counsel at the indemnifying
      party’s expense and to control the defense of any Third Party Claim
      if, (x) in the reasonable opinion of counsel to the indemnified party a
      conflict or potential conflict exists between the indemnified party and
      the indemnifying party that would make such separate representation advisable,
      (y) such claim is based upon an investigation, inquiry, or other proceeding
      by a Governmental Body, or (z) such claim pertains to allegations that
      the indemnified party reasonably believes that such assumption of defense
      is necessary to assure that its authority and approvals to service are
      not materially impaired.

             (c)      After
      any final judgment or award shall have been rendered by a Governmental
      Body of competent jurisdiction and the expiration of the time in which
      to appeal therefrom, or a settlement shall have been consummated, or the
      indemnified party and the indemnifying party shall have arrived at a mutually
      binding agreement with respect to an Third Party Claim hereunder, the indemnified
      party shall forward to the indemnifying party notice of any sums due and
      owing by the indemnifying party pursuant to this Agreement with respect
      to such matter and the indemnifying party shall be required to pay all
      of the sums so due and owing to the indemnified party by wire transfer
      of immediately available funds within five Business Days after the date
      of such notice. 

             (d)      The
      failure of the indemnified party to give reasonably prompt notice of any
      Third Party Claim shall not release, waive or otherwise affect the indemnifying
      party’s obligations with respect thereto except to the extent that
      the indemnifying party can demonstrate actual Loss and prejudice as a result
      of such failure. 



77











            (e)      In
      the event that Purchaser repurchases any Pipeline Loans sold to Investors
      or any other Person by Purchaser under facts or circumstances in which
      Seller would be obligated to indemnify Purchaser pursuant to this Agreement,
      then Seller may elect to repurchase such Pipeline Loans from Purchaser
      instead of indemnifying Purchaser pursuant to this Article
      X. To exercise its right to repurchase any
      Pipeline Loan under this Section 10.3(e),
      Seller must provide Purchaser with written notice of such election within
      five Business Days of receipt of notice from Purchaser pursuant to this Section
      10.3 of an indemnification claim for which
      Purchaser is seeking indemnification from Seller. The purchase price for
      any Pipeline Loan which Seller elects to repurchase from Purchaser pursuant
      to this Section 10.3(e) shall
      be equal to the sum of (i) the purchase price paid by Purchaser to repurchase
      such Pipeline Loan plus (ii) Purchaser’s actual out-of-pocket costs
      and expenses for holding, servicing and administering such Pipeline Loan
      prior to the repurchase of such Pipeline Loan by Seller less (iii) any
      principal or interest paid by the borrower to Purchaser with respect to
      such Pipeline Loan. 



          10.4    Limitations
      on Indemnification. 


            (a)      Seller
      shall not have any Liability under Section
      10.2(a) and Purchaser shall not have any
      Liability under Section 10.2(b) unless
      and until the aggregate amount of Losses to the indemnified parties to
      arise thereunder based upon, attributable to or resulting from a breach
      of any representation or warranty exceeds $400,000 (the “Deductible”)
      and, in such event, the indemnifying party shall be required to pay only
      the amount of such Losses that exceeds the Deductible. 

             (b)      Until
      the amount of claims exceeds an aggregate of $100,000 and subject to the
      Deductible as applicable, no single claim for Losses may be made for indemnification
      or aggregated with any other claim for indemnification if the amount of
      such claim does not exceed $5,000.

             (c)      Notwithstanding
      the foregoing, the Deductible shall not apply to the extent Purchaser seeks
      reimbursement or indemnification for (i) Losses resulting from fraud; (ii)
      Losses resulting from intentional misrepresentation; (iii) Losses under Sections 10.2(a)(ii), 10.2(a)(iii),
      or 10.2(a)(iv);
      (iv) amounts due under Section 2.7;
      (v) Losses resulting from a breach of any representations and warranties
      set forth in Sections 5.1(Organization;
      Valid Existence), 5.2(Authorization
      of Agreement), 5.6(Title to Purchased
      Assets), 5.8(Taxes), 5.13(Employee
      Benefits), or 5.24(Sufficiency
      of Assets) or (vi) Losses resulting from
      a breach of any of Seller’s representations and warranties relating
      to the Joint Venture Entities or the Subsidiary. Breaches by Seller of
      any representations or warranties relating to the Joint Venture Entities
      or the Subsidiary (other than as set forth in subsections (i)-(v) of this Section
      10.4(c)) shall not be subject to the Deductible;
      provided, however, that Seller shall not have any Liability under Section
      10.2(a) with respect to a breach of a representation or warranty relating
      to the Joint Venture Entities or the Subsidiary unless and until the aggregate
      amount of Losses to the indemnified parties to arise thereunder based upon,
      attributable to or resulting from such breaches exceeds $1,000,000 with
      respect to any TMS or JV Mortgage breaches, 




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  $500,000 with respect to any TCS or FT/E
      Mortgage breaches, or $500,000 with respect to any Subsidiary Breaches.

             (d)      Notwithstanding
      the foregoing, the Deductible shall not apply to the extent Seller seeks
      reimbursement or indemnification for (i) Losses resulting from fraud; (ii)
      Losses resulting from intentional misrepresentation; (iii) Losses under Sections
      10.2(b)(ii), 10.2(b)(iii),
      or 10.2(b)(iv);
      (iv) amounts due under Section 2.7;
      (v) Losses resulting from a breach of any representations and warranties
      set forth in Sections 6.1(Organization; Valid
      Existence), or 6.2(Authorization
      of Agreement),

             (e)      Notwithstanding
      the foregoing, (i) Seller shall not have any Liability under Section
      10.2(a)(ii) for breaches of any covenant
      under Section 7.2 and
      (ii) Purchaser shall not have any Liability under Section
      10.2(b)(ii) for breaches of any covenant
      under Section 7.2 unless
      and until in the case of (i) or (ii) as applicable the aggregate amount
      of Losses to the indemnified parties to arise thereunder based upon, attributable
      to or resulting from a breach of any covenant under Section
      7.2 exceeds $1,000,000 and, in such event,
      the indemnifying party shall be required to pay all Losses incurred with
      respect to any breach of a covenant under Section
      7.2. 

             (f)       Neither
      Seller nor Purchaser shall be required to indemnify, any Person under Section
      10.2(a) or 10.2(b) for
      an aggregate amount of Losses exceeding $4,000,000 (the “Cap”).

             (g)      Notwithstanding
      the foregoing, the Cap shall not apply to the extent Purchaser seeks reimbursement
      or indemnification for (i) Losses resulting from fraud; (ii) Losses resulting
      from intentional misrepresentation; (iii) Losses under Sections
      10.2(a)(ii), 10.2(a)(iii),
      or 10.2(a)(iv);
      (iv) amounts due under Section 2.7;
      (v) Losses resulting from a breach of any representations and warranties
      set forth in Sections 5.1(Organization; Valid
      Existence), 5.2(Authorization
      of Agreement), 5.6(Title to Purchased Assets), 5.8(Taxes), 5.13(Employee
      Benefits), or 5.24(Sufficiency
      of Assets) or (vi) Losses resulting from
      a breach of any of Seller’s representations and warranties relating
      to the Joint Venture Entities or the Subsidiary. Seller shall not be required
      to indemnify any Person under Section 10.2(a) (other
      than as set forth in subsections (i)-(v) of this Section
      10.4(g)) for an aggregate amount of Losses
      exceeding $6,000,000 with respect to any breaches relating to the Joint
      Venture Entities or the Subsidiary.

             (h)      Notwithstanding
      the foregoing, the Cap shall not apply to the extent Seller seeks reimbursement
      or indemnification for (i) Losses resulting from fraud; (ii) Losses resulting
      from intentional misrepresentation; (iii) Losses under Sections
      10.2(b)(ii), 10.2(b)(iii), or 10.2(b)(iv);
      (iv) amounts due under Section 2.7;
      or (v) Losses resulting from a breach of any representations and warranties
      set forth in Sections 6.1(Organization; Valid
      Existence), or 6.2(Authorization
      of Agreement).

             (i)      Neither
      Seller nor Purchaser shall be required to indemnify, any Person under Section
      10.2(a)(ii) for breaches of any covenant
      under Section 7.2 and
      under Section 10.2(b)(ii) for
      breaches of any covenant under Section 7.2 for
      an aggregate amount of Losses exceeding $10,000,000. 




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          10.5    Tax
Treatment of Indemnity Payments.


          All indemnification payments under this Article X shall be paid by the indemnifying party net of any Tax benefits and any portion of insurance proceeds actually received by the indemnified party under
its insurance coverage (net of tax costs), less the sum of any costs incurred in the collection of such insurance proceeds and any amounts paid or expected to be paid as premiums or increased premiums in connection with such insurance coverage. The
Tax benefits in the form of any refund, credit, deduction or other reduction in income Tax shall be computed in good faith by the indemnified party taking into account, among other things, any Tax detriment which is reasonably expected to result
from the receipt of any indemnity payment, without any affirmative obligation to provide actual tax returns. All indemnification payments under this Article X shall be deemed adjustments to the Purchase Price. 


          10.6    Right
to Indemnification.


          The right of the Purchaser to indemnification, reimbursement or other remedy based upon any such representation, warranty, or covenant will not be affected by any investigation conducted with respect
to, or any knowledge of Purchaser acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of such representation or
warranty or inability to perform any covenant.


          10.7    Exclusive
Right to Indemnification.


          Other than the rights of Purchaser set forth in Section 7.10, anything to the contrary contained in this Agreement notwithstanding, it is
understood and agreed that, except in the event of fraud, the obligation of the Seller to indemnify the Purchaser as provided in this Article X and in Section
11.6 constitute the sole and exclusive remedy of the Purchaser respecting a breach of Seller’s representations, warranties or covenants contained in this Agreement.


          10.8    Mitigation
of Losses.


          An indemnified party shall, to the extent practicable and reasonably within its control, make good faith and commercially reasonable efforts to mitigate any Losses of which it has adequate notice.
With respect to any matter for which Seller may be liable pursuant to the provisions of this Agreement, Purchaser shall use commercially reasonable efforts to pursue any and all rights and remedies under agreements and contracts with third parties,
including Agencies, Insurers and the Investor, reasonably likely to be successful. Nothing in this Section 10.8 shall be construed as obligating either Party to pursue deficiency judgments
from borrowers on foreclosed Mortgage Loans, to commence and pursue litigation or to act in a manner which it reasonably believes is adverse to its own best interests. 

ARTICLE XI



TAXES 


           11.1    Transfer
Taxes.  All sales, use, stamp, documentary, filing,
recording, transfer, real estate transfer,  stock transfer, gross receipts, registration,
duty, securities transactions or

80











similar fees or taxes or governmental charges (together with any interest or penalty, addition to tax or additional amount imposed) as levied by any Taxing Authority in connection with the transactions contemplated by this
Agreement (collectively, “Transfer Taxes”) shall be paid by the party customarily responsible for payment under Applicable Law (the “Paying Party”). The party customarily responsible for reporting under Applicable Law (the
“Reporting Party”) shall timely file or caused to be filed, with the cooperation of the other party, all necessary documents (including all Tax Returns) with respect to Transfer Taxes.  If the Paying Party is not the Reporting Party and
the Reporting Party is responsible for the collection of the Tax from the Paying Party, then the Paying Party shall make payment to the Reporting Party within ten (10) days of notice of the amount due. In the event that either party is aware that an
exemption from an applicable Transfer Tax is available, such party shall deliver to the other party any applicable exemption certificate, duly signed and executed, or any other applicable documentation required by applicable Tax law in connection
with such Transfer Tax exemption. 


           11.2    Prorations.
(a)    All real property taxes, personal property taxes, or ad valorem
obligations and  similar recurring taxes and fees on the Purchased Assets (“Property
Taxes”) for taxable periods beginning before, and ending after, the Closing
Date, shall be prorated between Purchaser and Sellers as of the Closing Date,
computed by  multiplying the amount of Property Taxes for the fiscal year for
which the same are levied by a fraction, the numerator of which is the number
of days in such fiscal year up to and including the Closing Date and the denominator
of which is the  number of days in such fiscal year. If the exact amount of such
Property taxes is not available, parties shall use their best efforts to estimate
such amounts based on the analogous Taxes for the prior year and all other relevant
information. Seller  shall be responsible for all such taxes and fees on the
Purchased Assets accruing during any period up to and including the Closing Date.
Purchaser shall be responsible for all such taxes and fees on the Purchased Assets
accruing during any period  after the Closing Date. With respect to Taxes described
in this Section 11.2, unless otherwise required by Applicable Law, Seller shall
timely file all Tax Returns due before the Closing Date with respect to such
Taxes and Purchaser shall prepare  and timely file all Tax Returns due after
the Closing Date with respect to such Taxes. If one party remits to the appropriate
Taxing Authority payment for Taxes which are subject to proration under this
Section 11.2 and such payment includes the  other party’s share of such
Taxes, such other party shall promptly reimburse the remitting party for its
share of such Taxes upon demand therefor, accompanied by reasonably satisfactory
evidence of such payment; and (b) in the case of any  Taxes (other than any property
Taxes) that are payable for the Straddle Tax Period by, for or in relation to
any of the Joint Venture Entities or Subsidiary, to the extent permitted by law
or administrative practice, the taxable year of Subsidiary  that includes the
Closing Date shall be treated as closing on (and including) such Closing Date.
In the case of any Tax that is payable for a Straddle Tax Period that is not
treated under the preceding sentence as closing on the Closing Date, the  portions
of such Tax that relate to the pre-Closing Tax period shall be deemed to be that
amount which would be payable if the relevant Tax period ended on the Closing
Date based on the actual operations of the Joint Venture Entities and Subsidiary.
 For purposes of this subsection (b), in the case of any income Tax attributable
to the ownership of any of the Joint Venture Entities, the portion of such income
Tax that relates to any pre-Closing Tax period shall be deemed to be the amount
that  would be payable if the relevant Tax period of such Joint Venture Entity
ended on the Closing Date. Seller shall be responsible for all such Taxes and
fees on accruing during any period up to and including the Closing Date. 

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           11.3    Cooperation
on Tax Matters.  Purchaser and Seller shall furnish
or cause to be furnished to each other,  as promptly as practicable, such information
and assistance relating to the Purchased Assets, the Assumed Liabilities, the
Joint Venture Entities and Subsidiary as is reasonably necessary for the preparation
and filing of any Tax Return, claim for  refund or other filings relating to
Tax matters, for the preparation for any Tax audit, for the preparation for any
Tax protest, and for the prosecution or defense of any suit or other proceeding
relating to Tax matters, and each party, who, under  the other provisions of
this Agreement, shall either receive the transfer of the original business records
containing such tax information or shall be entitled to be entitled to retain
such original records, shall maintain any such information until  the expiration
of any applicable period for assessment under applicable Tax Law and shall provide
it to the other party, upon the reasonable request by the other party. 


           11.4    Election
Under Code Section 338(h)(10). (a) At Purchaser’s
request, Seller, and, where applicable,  any of its Affiliates, on one hand,
and Purchaser, on the other hand, shall join in making an election under Code
Section 338(h)(10) (and any corresponding election under state, local or foreign
Tax law) with respect to the sale and purchase of  Subsidiary (the “Section
338(h)(10) Election”), and Seller and any of its Affiliates shall cooperate
fully with Buyer in a manner consistent with the Code in making the Section 338(h)(10)
Election, including executing and filing IRS Form  8023 and all other forms,
returns, elections, schedules, and documents required to effect the Section 338(h)(10)
Election; and (b) Seller, and, where applicable, any of its Affiliates, agrees
that, except as required by Applicable Law or a final  determination with any
Taxing authority, they will not take, or cause to be taken, any action in connection
with the filing of any Tax Return or otherwise which would be inconsistent with
or prejudice the Section 338(h)(10) Election. 


           11.5    Preparation
and Filing of Tax Returns.  Seller (or, where applicable,
Seller’s ultimate corporate
parent) shall prepare, or cause to be prepared, and, to the extent permitted
by any Applicable Law, file all Tax Returns required to be filed by Subsidiary
or any of the Joint Ventures for any Tax period that ends on or before the Closing
Date.  Purchaser shall prepare and file, or cause to be prepared and filed, all
Tax Returns for any complete Tax period that includes but does not end on the
Closing Date (the “Straddle Tax Period”) required to be filed by
Subsidiary, any of  the Joint Venture Entities or related to Property Taxes.
Purchaser shall prepare and file, or cause to be prepared and filed, all other
Tax Returns required to be filed by Subsidiary or any of the Joint Venture Entities
after the Closing Date.  Seller’s (or Seller’s ultimate corporate
parent’s) consolidated federal income Tax Return that includes Subsidiary
for the taxable period that includes the Closing Date shall be filed in accordance
with past practices and pursuant  to Treasury Regulations Section 1.1502 -76(b)(2)(i).
All such Tax Returns prepared or caused to be prepared by Seller under this subsection
shall be reviewed by Purchaser (including any intended or contemplated Tax election
to be made by Seller or  its ultimate corporate parent) before finalizing any
such Return, with the Purchaser having the right to promptly comment on any such
Tax Return, which comments shall not be unreasonably refused by Seller, provided
that Seller shall not be required  to submit any consolidated, combined, or unitary
Tax Return that includes entities other than Subsidiary but shall be required
to submit the relevant pro forma separate Tax Returns related to Subsidiary.
All Tax Returns prepared or caused to be  prepared by Purchaser under this subsection
for a Straddle Tax Period shall be reviewed by Seller (including any intended
or contemplated Tax election to be made by or on behalf of Purchaser) before
finalizing any such Return, with Seller having the  right to promptly

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comment on any such Tax Return, which comments shall not be unreasonably refused by Purchaser, provided that Purchaser shall not be required to submit information other than that with respect to the Purchased Assets and the
Assumed Liabilities. 


           11.6    Tax
Indemnification.  From and after the Closing Date,
Seller shall indemnify Purchaser and its  Affiliates (including Subsidiary) against,
and hold them harmless from, any losses to the extent attributable to (a) any
Taxes imposed on or with respect to Subsidiary (or for which any such entity
is otherwise liable), in each case, with respect to  any pre-Closing Tax period,
including any such liability arising under principles of transferee or successor
liability; (b) all Taxes arising by virtue of Subsidiary, on or prior to the
Closing Date, having been a member of a consolidated,  affiliated, combined or
unitary group that had a common parent of Seller (or Seller’s ultimate
corporate parent) or any Affiliate thereof; (c) income Taxes arising from the
inclusion by Subsidiary of any income or gain in any post-Closing Tax  period
under Section 453 of the Code (or any similar provision of state, local or foreign
Law) in respect of any transaction occurring prior to the Closing Date; (d) Taxes
arising with respect to Subsidiary from any adjustment under Section 481 of
the Code (or any similar provision of state, local or foreign Law) arising from
the manner in which any item was reported for a taxable period (or portion thereof)
ending on or prior to the Closing Date; and (e) all Taxes otherwise allocated
to  Seller under section 11.2 hereof. 


           11.7    Tax
Refunds.  Any Tax refund (including interest paid
thereon) to the extent received by Subsidiary or  any of the Joint Venture Entities
in their capacity as a taxpayer and not a pass-through entity, with respect to
a Tax period that actually ends on or prior to the applicable Closing Date shall
be for Seller’s account, except for any such Tax
refund attributable to any post-Closing deduction, loss, credit or similar Tax
benefit. The portion of any Tax refund (including interest paid thereon, to the
extent so received) attributable to the pre-Closing portion of any Straddle Tax
Period  shall be for Seller’s account, except for any refund attributable
to any post-Closing deduction, loss, credit or similar Tax benefit. All other
Tax refunds to the extent received by Subsidiary or any of the Joint Venture
Entities in their  capacity as a taxpayer and not a pass-through entity shall
be for Purchaser’s account. 

ARTICLE XII 



MISCELLANEOUS


          12.1    Expenses.


          Except as otherwise provided in this Agreement, each of Seller and Purchaser shall bear its own expenses incurred in connection with the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby. 


          12.2    Submission
to Jurisdiction; Consent to Service of Process; Waiver of Jury Trial. 


            (a)      The
      parties hereto hereby irrevocably submit to the exclusive jurisdiction
      of the United States District Court for the Southern District of New York
      (and any courts from which appeals from judgments of that court are heard)
      as to any dispute or claim as 



83











  to which there is subject matter jurisdiction
      in that court and, for all other disputes or claims, the parties consent
      to exclusive jurisdiction in the Supreme Court of the State of New York,
      New York County (and any courts from which appeals from judgments of that
      court are heard) over any dispute arising out of or relating to this Agreement
      or any of the transactions contemplated hereby and each party hereby irrevocably
      agrees that all claims in respect of such dispute or any suit, action proceeding
      related thereto may be heard and determined in such courts. The parties
      hereby irrevocably waive, to the fullest extent permitted by Applicable
      Law, any objection which they may now or hereafter have to the laying of
      venue of any such dispute brought in such court or any defense of inconvenient
      forum for the maintenance of such dispute. Each of the parties hereto agrees
      that a judgment in any such dispute may be enforced in other jurisdictions
      by suit on the judgment or in any other manner provided by Applicable Law. 

             (b)      EACH
      PARTY HERETO HEREBY 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,
      ANY DOCUMENT REFERRED TO IN THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
      HEREBY AND THEREBY. 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
      THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED
      THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER
      VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
      AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
      IN THIS SECTION 12.2. 

             (c)      Each
      of the parties hereto hereby consents to process being served by any party
      to this Agreement in any suit, action or proceeding by the delivery of
      a copy thereof in accordance with the provisions of Section
  12.5. 




          12.3    Entire
Agreement; Amendments and Waivers. 


          This Agreement, the Ancillary Agreements, and the Non-Disclosure Agreement dated January 24, 2008 (including the schedules and exhibits hereto and the Disclosure Memorandum) represents the entire
understanding and agreement between the parties hereto with respect to the subject matter hereof.  This Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference
to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought.  No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement

84












          contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach.
No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any
other or further exercise thereof or the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and are not exclusive of any other remedies provided by Applicable Law. 


          12.4    Governing
Law.


          This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to conflicts of law principles contrary thereto (with references to Section 5-1401
of the New York General Obligation Law which by its terms applies to this Agreement). 


          12.5    Notices.


          All notices and other communications under this Agreement shall be in writing and shall be deemed given (i) when delivered personally by hand (with written confirmation of receipt); (ii) one Business
Day following the day sent by overnight courier (with written confirmation of receipt); (iii) when delivered by facsimile transmission (with electronic confirmation of receipt), in each case at the following addresses (or to such other address as a
party may have specified by notice given to the other party pursuant to this provision): 


  	If to Seller, to: 
	 
	First Tennessee Bank National
          Association 
	165 Madison 
	Memphis, TN 38103 
	Attention: General Counsel 
	 
	With a copy to: 
	 
	Baker, Donelson, Bearman, Caldwell & Berkowitz,
          P.C. 
	165 Madison Suite 2000 
	Memphis, TN 38103 
	Attention: Jackie G. Prester and
          Desiree M. Franklin 
	 
	If to Purchaser, to: 
	 
	MetLife Bank, National Association 
	c/o MetLife, Inc. 
	1 MetLife Plaza 
	27-01 Queens Plaza North 
	Long Island City, New York 11101 
	Attention: Robert F. Nostramo 






85 












  	With a copy to: 
	 
	Kirkpatrick & Lockhart Preston
          Gates Ellis LLP 
	1601 K St, N.W. 
	Washington, D.C. 20006 
	Attention: Laurence E. Platt 







          12.6    Severability.


          If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid,
illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the greatest extent possible. 


          12.7    Binding
Effect; Assignment.


          This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.  Nothing in this Agreement shall create or be deemed to create any
third party beneficiary rights in any Person or entity not a party to this Agreement except as provided below.  No assignment of this Agreement or of any rights or obligations hereunder may be made by either Seller or Purchaser (by operation of law
or otherwise) without the prior written consent of the other parties hereto and any attempted assignment without the required consents shall be void; provided, that Purchaser may assign this Agreement and any or all rights or obligations hereunder
(including, without limitation, Purchaser’s rights to purchase the Purchased Assets and assume the Assumed Liabilities and Purchaser’s rights to seek indemnification hereunder) to any Affiliate of Purchaser, or any Person to which
Purchaser or any of its Affiliates proposes to sell all or substantially all of the assets relating to the Purchased Assets; provided, however, that Purchaser shall remain obligated to fulfill its obligations pursuant to this Agreement. Upon any
such permitted assignment, the references in this Agreement to Purchaser shall also apply to any such assignee unless the context otherwise requires. 


          12.8    Knowledge. 


            (a)      When
      references are made in this Agreement to information being to the “Knowledge
      of Seller”, “Seller’s
      Knowledge” or similar language, such
      knowledge shall refer to the knowledge of the individuals listed in Section
      12.8(A) of the Disclosure Memorandum. Such
      individuals shall be deemed to have “knowledge” of a particular
      fact or other matter if: (x) such individual is actually aware of such
      fact or other matter; (y) a prudent individual could be expected to discover
      or otherwise become aware of such fact or other matter in the course of
  conducting a reasonably comprehensive investigation 



86











  concerning the existence of such fact
      or other matter; or (z) a prudent individual could be expected to discover
      or otherwise become aware of such fact or other matter that are within
  his or her area of responsibility. 

             (b)      When
      references are made in this Agreement to information being to the “Knowledge
      of Purchaser”, “Purchaser’s
      Knowledge” or similar language, such
      knowledge shall refer to the knowledge of the individuals listed in Schedule
      12.8(B). Such individuals shall be deemed
      to have “knowledge” of a particular fact or other matter if:
      (x) such individual is actually aware of such fact or other matter; (y)
      a prudent individual could be expected to discover or otherwise become
      aware of such fact or other matter in the course of conducting a reasonably
      comprehensive investigation concerning the existence of such fact or other
      matter; or (z) a prudent individual could be expected to discover or otherwise
      become aware of such fact or other matter that are within his or her area
      of responsibility. 




          12.9    Disclosure
      Memorandum. 


            (a)      Concurrently
      with the execution and delivery of this Agreement, Seller is delivering
      to Purchaser a disclosure memorandum (the
    “Disclosure Memorandum”)
    that sets forth all of the items that are necessary or appropriate either
    in response to an express disclosure requirement contained in a provision
    hereof or as an exception to one or more representations or warranties contained
    in Article V or to one or more of the covenants of Seller contained in this
    Agreement; provided, that the mere inclusion of an item in the Disclosure
    Memorandum as an exception to a representation or warranty shall not be deemed
    an admission by Seller that such item represents a material exception or
    event, state of facts, circumstance, development, change or effect or that
    such item is reasonably likely to have or result in a Material Adverse Effect;
    provided, further, that any disclosures made with respect to a section or
    subsection of this Agreement shall be deemed to qualify such only sections
    or subsections specifically referenced or cross-referenced, as well as other
    sections or subsections to the extent such disclosure is readily apparent
    as constituting disclosure in the light of the substance of the disclosure
    in respect of such other sections or subsections. In the event of an inconsistency
    between the statements in the body of this Agreement and those in the Disclosure
    Memorandum (other than an exception expressly set forth in the Disclosure
    Schedule with respect to a specifically identified section or subsection),
    the statements in the body of this Agreement will control. 

             (b)      Five
      Business Days prior to the Closing Date, Seller shall deliver to Purchaser
      amendments to the Disclosure Memorandum (the
    “Amended Disclosure Memorandum”),
    which list and amendments, if acceptable to the Purchaser upon its consent,
    which will not be unreasonably withheld, will thereby be incorporated into
    the relevant sections of the Disclosure Memorandum delivered by Seller pursuant
    to this Agreement on the date hereof. For the avoidance of doubt, no Schedule
    to this Agreement, including without limitation Section
    5.14 of the Disclosure Memorandum, may be amended
    without the prior written consent of Purchaser and Seller.




87











            (c)      All
      references to the Disclosure Memorandum shall be deemed to have been, and
      will thereafter be, references to the Amended Disclosure Memorandum. 



          12.10   Counterparts.


          This Agreement may be executed and delivered in one or more counterpart signature pages executed and delivered via facsimile transmission, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. 

[Signatures on following page]

 

 

 

 

 

 

 

88











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


  	
        FIRST TENNESSEE BANK NATIONAL  
	
        ASSOCIATION  
	 	   
	 	   
	By: 	
/s/ John Kubiak
	 	Name:  John Kubiak  
	 	 Title:     SVP  
	 	   
	 	   
	
        METLIFE BANK, NATIONAL ASSOCIATION  
	 	   
	 	   
	By:	
/s/ Joseph Michalik
	 	 Name:  Joseph Michalik  
	 	 Title:     VP & Chief Credit Officer