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EXHIBIT 4.1  

Sale of operating assets and operating platform of HomeSide Lending, Inc.  

ASSET PURCHASE/LIABILITY ASSUMPTION AGREEMENT  

 Dated as of December 11, 2001  

 Among  

 National Australia Bank Limited

(ABN 12 004 044 937),

HomeSide Lending, Inc.

and

HomeSide International, Inc.,

as Sellers  

 and  

 Washington Mutual Bank, FA  

   TABLE OF CONTENTS  

   

	 
	 	 

	ARTICLE I

DEFINITIONS
	

1.01	
 	

Defined Terms
	

1.02	
 	

Interpretation
	
ARTICLE II

PURCHASE AND DELIVERY OF PURCHASED

ASSETS; ASSUMPTION OF ASSUMED LIABILITIES
	

2.01	
 	

Delivery of Purchased Assets; Assumption of Assumed Liabilities
	

2.02	
 	

Consideration for Purchased Assets
	

2.03	
 	

Proration of Expenses
	

2.04	
 	

Calculation of Purchase Price
	

2.05	
 	

Settlement Date Payments
	

2.06	
 	

Allocation of Purchase Price
	

2.07	
 	

No Offset
	

2.08	
 	

Interim Settlement
	

2.09	
 	

Co-Issue
	
ARTICLE III

CLOSING, TRANSFERS AND RELATED ITEMS
	

3.01	
 	

Closing and Closing Date
	

3.02	
 	

Assignment and Assumption Documents
	

3.03	
 	

Further Assistance and Assurances
	

3.04	
 	

Other Consents
	
ARTICLE IV

REPRESENTATIONS AND WARRANTIES
	

4.01	
 	

Disclosure Schedules
	

4.02	
 	

Representations and Warranties of Sellers
	

4.03	
 	

Representations and Warranties of Buyer
	

4.04	
 	

No Other Representations or Warranties

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ARTICLE V

COVENANTS
	

5.01	
 	

Conduct of Business
	

5.02	
 	

Access; Confidentiality
	

5.03	
 	

Taking of Necessary Action
	

5.04	
 	

Disclosure
	

5.05	
 	

Missing Mortgage Loan Documents
	

5.06	
 	

Post-Closing Collection of Certain Receivables
	

5.07	
 	

Granted Licenses
	

5.08	
 	

Insurance Matters
	

5.09	
 	

No Solicitation
	

5.10	
 	

Non-Competition Agreement
	

5.11	
 	

Non-Solicitation of Employees
	

5.12	
 	

Transitional Matters
	

5.13	
 	

MSR Purchases by Buyer
	

5.14	
 	

Damage or Deterioration of 7301 Baymeadows Way
	
ARTICLE VI

EMPLOYEE MATTERS
	

6.01	
 	

Employees and Service Crediting
	
ARTICLE VII

CONDITIONS TO THE CLOSING
	

7.01	
 	

Conditions to Each Party's Obligation to Effect the Purchase
	

7.02	
 	

Conditions to Obligation of Buyer
	

7.03	
 	

Conditions to Obligations of Sellers
	
ARTICLE VIII

TERMINATION
	

8.01	
 	

Termination
	

8.02	
 	

Effect of Termination and Abandonment
	
ARTICLE IX

TAX MATTERS
	

9.01	
 	

Cooperation
	

9.02	
 	

Transfer Taxes

ii

 

	
ARTICLE X

INDEMNIFICATION
	

10.01	
 	

Indemnification Not Subject to Limitations
	

10.02	
 	

Indemnification Subject to Limitations
	

10.03	
 	

Survival Periods
	

10.04	
 	

Miscellaneous
	

10.05	
 	

De Minimis Liability, Deductible and Cap
	

10.06	
 	

Third-Party Claims
	
ARTICLE XI

GENERAL PROVISIONS
	

11.01	
 	

Notices
	

11.02	
 	

Amendment and Modification; Waiver
	

11.03	
 	

Entire Agreement
	

11.04	
 	

Fees and Expenses
	

11.05	
 	

Third Party Beneficiaries
	

11.06	
 	

Assignment; Binding Effect
	

11.07	
 	

Governing Law
	

11.08	
 	
Waiver of Jury Trial
	

11.09	
 	

Counterparts
	

11.10	
 	

Severability
	

11.11	
 	

Affiliates of Buyer
	
EXHIBITS
	

Retained Portfolio Subservicing Agreement
	

Services Agreement
	

Intellectual Property Rights Agreements
	

Solicitation Rights Agreement
	

Employee Lease
	

Bill of Sale and Instrument of Assumption of Liabilities

iii

        ASSET PURCHASE/LIABILITY ASSUMPTION AGREEMENT (this "Agreement"), dated as of
December 11, 2001, among National Australia Bank Limited (ABN 12 004 044 937), an Australian corporation ("Parent"), HomeSide
Lending, Inc., a Florida corporation ("HSL") and HomeSide International, Inc., a Delaware corporation
("HSI") (collectively, "Sellers") and Washington Mutual Bank, FA, a federal savings association
("Buyer"). 

RECITALS  

        A.    HSL,
HSI and the Selling Subsidiaries (collectively, the "Selling Companies") are engaged in the Business. 

        B.    On
the terms and subject to the conditions set forth herein, Sellers desire to sell, and Buyer desires to purchase, all of the assets of the Selling Companies that are
used in connection with the Business, other than certain Excluded Assets. 

        C.    In
connection with the acquisition of the Business, Buyer agrees, on the terms and subject to the conditions set forth herein, to assume certain liabilities and
obligations of Sellers. 

        D.    Concurrently
with the execution of this Agreement, Sellers and Buyer are entering into (a) a subservicing agreement (the "Retained
Portfolio Subservicing Agreement"), which is attached hereto as Exhibit A providing for the subservicing of the Retained Servicing Portfolio, (b) a services
agreement (the "Services Agreement"), which is attached hereto as Exhibit B pursuant to which Buyer will provide certain services related to the
administration and servicing of Parent's Australian mortgages, (c) an intellectual property rights agreement (the "Intellectual Property Rights
Agreement"), which is attached hereto as Exhibit C, (d) a solicitation rights agreement (the "Solicitation Rights
Agreement"), which is attached hereto as Exhibit D and (e) an employee lease agreement (the "Employee Lease"),
which is attached hereto as Exhibit E pursuant to which Selling Companies will provide Buyer with the services of the Prospective Employees for a transition period. At Closing, Sellers and
Buyers will enter into a transitional services agreement (the "Transitional Agreement"), pursuant to which Sellers will continue to provide certain
transitional services to Buyer as described in Section 5.12, and a licensing agreement (the "License Agreement"), pursuant to which Buyer will
grant Parent and its Affiliates certain rights and licenses as described in Section 5.07. 

        NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto
agree as follows: 

ARTICLE I  

 Definitions  

 
 
        1.01    Defined Terms.     

        (a)  The
following terms are used in this Agreement with the meanings set forth below: 

        "Action" means any action, suit, arbitration, inquiry, proceeding or investigation by or before any court, Regulatory Authority or other
Governmental Authority. 

        "Advances" means, with respect to any Selling Company and Mortgage Loans, the moneys that have been advanced by such Selling Company on or
before the Closing Date from its funds in connection with its servicing of such Mortgage Loans in accordance with applicable Regulations (which moneys include principal, interest, taxes, ground rents,
assessments, insurance premiums and other costs, fees and expenses pertaining to the acquisition of title to and preservation and repair of the Mortgaged Properties and including Foreclosure Buyout
Claims). 

        "Affiliate" means, with respect to any specified Person, any other Person directly or indirectly Controlling, Controlled by or under
common Control with such specified Person. 

        "Agency" means FHA, VA, GNMA, FNMA, FHLMC, HUD or State Agency, as applicable. 

 

        "Agreement" has the meaning set forth in the preamble to this Agreement, as this Agreement may be amended or modified from time to time in
accordance with the provisions of this Agreement. 

        "ALSS Platform" means the Selling Companies' confidential information, Software, equipment, infrastructure, documentation and rights under
license and other third party contracts constituting and related to the ALSS servicing platform or embodying the same. The material components and software modules of the ALSS Platform are described
on Sellers' Disclosure Schedule 4.02(m)(1). 

        "ALSS Platform Intellectual Property" means all Intellectual Property constituting and related to the ALSS Platform. 

        "Ancillary Agreements" means the Retained Portfolio Subservicing Agreement, the Services Agreement, the Intellectual Property Rights
Agreement, the Solicitation Rights Agreement, the Employee Lease, the License Agreement and the Transitional Agreement. 

        "Assignment of Mortgage Instrument" means a written instrument that, when recorded in the appropriate office of the local jurisdiction in
which the related Mortgaged Property is located, will reflect the transfer of the Mortgage identified therein from the transferor to the transferee named therein. 

        "Business" means the business of originating, marketing, purchasing, selling, securitizing, servicing and/or subservicing residential
mortgage loans including the Servicing of the existing mortgage servicing rights portfolio conducted by the Selling Companies. In the interests of clarity, the term "Business" shall not in any way
include or refer to the Excluded Assets or Excluded Liabilities. 

        "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in Jacksonville, Florida or Seattle,
Washington generally are required or authorized by law or executive order to close. 

        "Certificate Insurer" means a provider of an insurance policy insuring against certain specified losses or shortfalls with respect to
certain mortgage-backed securities. 

        "Code" means the Internal Revenue Code of 1986, as amended, and any successor thereto. 

        "Compensation and Benefit Plans" means bonus, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, deferred and restricted stock, stock option, employment, termination, severance, compensation, medical, health or other plans, agreements, policies or
arrangements maintained by or contributed to by the Selling Companies that cover Prospective Employees. 

        "Control", "Controlling" or "Controlled"
when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. 

        "Custodial Account" means all funds held or controlled by a Selling Company with respect to any Mortgage Loan, including all principal and
interest funds and any other funds due Investors, buydown funds, suspense funds, funds for the payment of taxes, assessments, insurance premiums, ground rents and similar charges, funds for the
payment of bankruptcy and fraud coverage, funds from hazard insurance loss drafts and other mortgage escrow and impound amounts (including interest thereon for the benefit of Mortgagors, if
applicable). 

        "Custodial File" means, with respect to a Mortgage Loan, all of the documents that must be maintained on file with a document custodian or
trustee under applicable Regulations. 

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        "Damages" means any and all assessments, judgments, claims, liabilities, losses, costs, damages or expenses (including without limitation
exemplary damages, punitive damages, interest, penalties and reasonable attorneys' fees, expenses and disbursements in connection with an action, suit or proceeding). 

        "Delivery Commitment" means the optional or mandatory commitment of a Selling Company to sell a Warehouse Loan, Pipeline Loan or an
interest in a Warehouse Loan or a Pipeline Loan to another Person. 

        "Environmental Laws" means all domestic, federal, state and local laws, regulations, rules and ordinances relating to pollution or
protection of the environment, including, without limitation, laws relating to releases or threatened releases of Hazardous Substances into the environment (including, without limitation, ambient air,
surface water, ground water, land, surface and subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, release, transport or handling of
Hazardous Substances. 

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

        "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. 

        "FHLMC" means Federal Home Loan Mortgage Corporation or any successor thereto. 

        "FNMA" means Federal National Mortgage Association or any successor thereto. 

        "Foreclosure" means the process culminating in the acquisition of title to a Mortgaged Property in a foreclosure sale or by a deed in lieu
of foreclosure or pursuant to any other comparable procedure allowed under applicable Regulations. 

        "Foreclosure Buyout Claims" means reimbursement claims for principal, interest and/or other amounts paid by a Selling Company to GNMA in
accordance with applicable Regulations for the buyout of an FHA Loan or VA Loan subject to Foreclosure. 

        "GAAP" means generally accepted accounting principles in the United States which, unless otherwise indicated, are applied on a consistent
basis. 

        "GNMA" means Government National Mortgage Association or any successor thereto. 

        "Governmental Authority" means any Agency or other domestic or foreign court, administrative agency, self-regulatory authority
or commission or other body acting in an adjudicative capacity or other federal, state or local governmental or self-regulatory authority or instrumentality. 

        "Hazardous Substances" means all substances defined as such, or regulated as such, under any Environmental Law, including, but not limited
to, petroleum, asbestos or polychlorinated biphenyls. 

        "Hedging Assets" means all of the Selling Companies' interest rate swaps, caps, floors, collars, options, futures and forward contracts,
foreign exchange contracts, currency swaps, principal only trades, treasury trades, or other arrangements, in each case designed to alter the risks arising from fluctuations in interest rates or
currency values. 

        "HUD" means United States Department of Housing and Urban Development or any successor thereto. 

        "Insurer" means (i) a Person who insures or guarantees all or any portion of the risk of loss on any Mortgage Loan, including
without limitation any Agency and any provider of private mortgage insurance, standard hazard insurance, flood insurance, earthquake insurance or title 

3

 

insurance
with respect to any Mortgage Loan or related Mortgaged Property or (ii) a Person who provides, with respect to a Servicing Agreement or an applicable Regulation, any fidelity bond,
direct surety bond, letter of credit, other credit enhancement instrument or errors and omissions policy or (iii) is a Certificate Insurer. 

        "Intellectual Property" means each of the following: (i) patents, patent applications, patent disclosures and inventions (whether
or not patentable and whether or not reduced to practice) and any reissue, continuation, continuation-in-part, revision, extension or reexamination thereof (collectively,
"Patents"); (ii) trademarks, service marks, trade dress, logos, trade names and Internet domain names together with all goodwill associated
therewith, including, without limitation, the use of all translations, adaptations, derivations and combinations of the foregoing (collectively,
"Marks"); (iii) copyrights and copyrightable works (including without limitation, web sites) and all registrations, applications and renewals for
any of the foregoing (collectively, "Copyrights"); (iv) information not generally known to the public or that would constitute a trade secret
under the Uniform Trade Secrets Act, and confidential information (including, without limitation, know-how, research and development information, designs, plans, proposals, technical data,
financial, business and marketing plans, sales and promotional literature, and customer and supplier lists and related information) (collectively, "Trade
Secrets"); (v) other intellectual property rights; (vi) all copies and tangible embodiments of the foregoing (in whatever form or medium), along with all income,
royalties, damages and payments due or payable after the Closing including, without limitation, damages and payments for past or future infringements or misappropriations thereof; (vii) the
right to sue and recover for past infringements or misappropriations
thereof; (viii) any defenses related to any of the above; and (ix) any and all corresponding rights that, now or hereafter, may be secured throughout the world. 

        "Interest Rate" means the prime rate in the United States as published in The Wall Street Journal on the date that the calculation of
interest is to be made on the amount specified. If more than one rate, or a range of rates, is so published as the prime rate, the prime rate shall be the average of the rates published. 

        "Investment Commitment" means the optional or mandatory commitment of a Person to purchase a Warehouse Loan, a Pipeline Loan or an
interest in a Warehouse Loan or a Pipeline Loan owned or to be acquired by the Selling Companies. 

        "Investor" means FHLMC, FNMA, GNMA, a State Agency, the Selling Companies or an Affiliate thereof, a Private Investor or any other Person
who owns or holds Mortgage Loans, serviced or subserviced by the Selling Companies, pursuant to a Servicing Agreement, as applicable. 

        "IRS" means the Internal Revenue Service of the United States of America or any successor agency or authority. 

        "Knowledge" means, with respect to each of Sellers and Buyer, the knowledge of any of the persons whose names are set forth in
Section 1.01 of their respective Disclosure Schedules. 

        "Lease Period" has the meaning set forth in the Employee Lease. 

        "Liabilities" means any and all debts, losses, liabilities, offsets, claims, damages, fines, obligations, payments and accounts payable
(including, without limitation, those arising out of any award, demand, assessment, settlement, judgment or compromise relating to any Action), and accruals for out-of-pocket
costs and expenses (including, without limitation, reasonable attorneys' fees and reasonable expenses incurred in investigating, preparing or defending any Action). 

        "License" means any license, permit, franchise, approval, orders, qualifications, waivers or other authorization of any Governmental
Authority. 

4

 

        "Lien" means any lien, pledge, security interest, mortgage, deed of trust, claim, encumbrance, easement, servitude, encroachment, charge
or similar right of any other Person of any kind or nature whatsoever. 

        "Material Adverse Effect" means: 

        (a)  With
respect to the Business, a material adverse change in, or a material adverse effect upon, the Purchased Assets or the results of operations or financial condition
of the Business, taken as a whole, excluding any effect or change attributable to or resulting from (1) events, changes or trends in economic, business or financial conditions, including
interest rate conditions, generally or relating to companies engaged in the mortgage banking business, (2) changes in laws, regulations, interpretations of laws or regulations, GAAP or
regulatory accounting requirements applicable to mortgage banking companies or their holding companies, (3) actions, or effects of actions, taken by Sellers, or any of the Selling Companies,
either required by or contemplated in this Agreement or with the prior written consent of Buyer and (4) any change in national or international political or social conditions including, without
limitation, the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon or
within the United States, or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States,  provided, however, that none of the changes or occurrences described in this clause (4) results
in the destruction or loss of use of the Purchased Assets; and 

        (b)  With
respect to either of Sellers or Buyer, a material impairment of such Person's ability to perform its material obligations under this Agreement. 

        "Mortgage" means with respect to a Mortgage Loan, a mortgage, deed of trust or other security instrument creating a Lien upon real
property and any other property described therein which secures a Mortgage Note, together with any assignment, reinstatement, extension, endorsement or modification thereof. 

        "Mortgage Loan" means either a Warehouse Loan or Pipeline Loan or Serviced Loan. 

        "Mortgage Loan Documents" means the Custodial File and all other documents relating to Mortgage Loans required to document and service the
Mortgage Loans by applicable Regulations, whether on hard copy, microfiche or its equivalent or in electronic format and, to the extent required by applicable Regulations, credit and closing packages
and disclosures. 

        "Mortgage Note" means, with respect to a Mortgage Loan, a promissory note or notes, or other evidence of indebtedness, with respect to
such Mortgage Loan secured by a Mortgage or Mortgages, together with any assignment, reinstatement, extension, endorsement or modification thereof. 

        "Mortgaged Property" means (i) the real property and improvements thereon, (ii) the stock in a residential housing
corporation and the lease to the related dwelling unit or (iii) a manufactured home and, as applicable, the real property upon which the home is situated, in each case that secures a Mortgage
Note and that are subject to a Mortgage. 

        "Mortgagor" means the obligor(s) on a Mortgage Note. 

        "Originator" means, with respect to any Mortgage Loan, the entity or entities that (i) took the relevant Mortgagor's loan
application, (ii) processed the relevant Mortgagor's loan application or (iii) closed and/or funded such Mortgage Loan. 

5

 

        "Person" means any individual, bank, corporation, partnership, association, limited liability company, business trust, unincorporated
organization or similar organization, whether domestic or foreign, or any Governmental Authority. 

        "Previously Disclosed" by a party means information set forth in the relevant corresponding section of its Disclosure Schedule;  provided that information which, on its
face, is reasonably readily apparent to the reader that it is related to another provision of this Agreement
shall also be deemed to be Previously Disclosed with respect to such other provision. 

        "Prior Servicer" means any party that was a servicer or subservicer of any Mortgage Loan before a Selling Company or the current Servicer,
as applicable, became the servicer or subservicer of the Mortgage Loan. 

        "Private Investors" means Investors which are not Agencies. 

        "Prospective Employee" means each of the Selling Companies' employees who are employed in the Business at the Closing Date, including any
Leave Recipient, but excluding those Employees whose names or positions are set forth in Section 2.01(c)(xii) of Sellers' Disclosure Schedule and those employees who the Buyer may
designate as Retained Employees as contemplated in Section 2.01(c)(xii) of the Sellers' Disclosure Schedule. 

        "Purchase" means the purchase by Buyer of the Purchased Assets and the Assumption of the Assumed Liabilities. 

        "Rating Agency" means any nationally recognized statistical credit agency that at the time of any determination thereof has outstanding a
rating on one or more classes of mortgage-backed securities or asset-backed securities at the request of any issuer of mortgage-backed securities or asset-backed securities. 

        "Regulation" means and includes, as of the time of reference, with respect to the Mortgage Loans and the Servicing under the Servicing
Agreements, all of the following: (i) all contractual obligations of a Selling Company or any Originator or Prior Servicer with respect to Servicing under any Servicing Agreement, Mortgage
Note, Mortgage and other Mortgage Loan Document, (ii) all applicable federal, state and local legal and regulatory requirements (including statutes, rules, regulations and ordinances) binding
upon a Selling Company or any Originator or Prior Servicer, (iii) all other applicable requirements and guidelines of each governmental agency, board, commission, instrumentality and other
governmental or quasi-governmental body or office having jurisdiction, including without
limitation those of any Investor and any Insurer and (iv) all other applicable judicial and administrative judgments, orders, stipulations, awards, writs and injunctions. 

        "REO" means any residential real property owned by a Selling Company (whether for its own account or on behalf of an Investor, FHA or VA
as a result of a Foreclosure). 

        "Selling Companies Articles" means the Articles of Incorporation of HSL, as amended, and the Certificate of Incorporation of HSI, as
amended. 

        "Selling Companies By-laws" means the By-laws of HSL, as amended, and the By-laws of HSI, as amended. 

        "Selling Subsidiaries" means any Subsidiary of HSL or HSI as Previously Disclosed on Disclosure Schedule 1.01 by Sellers to Buyer
other than the Acquired Subsidiary, HomeSide Global MBS Manager, Inc. and HomeSide Mortgage Securities, Inc. 

        "Serviced Loan" means a residential mortgage loan (i) that is evidenced by a Mortgage Note and secured by a Mortgage,
(ii) with respect to which a Selling Company owns the Servicing as of the Closing Date and (iii) which is included in the Retained Servicing Portfolio. 

6

  

        "Servicer" means the Person responsible for performing the Servicing functions in connection with a Mortgage Loan in or related to the
Retained Servicing Portfolio. 

        "Servicing" means mortgage loan servicing, subservicing rights and master servicing rights and obligations including, without limitation,
one or more of the following functions (or a portion thereof): (i) the administration and collection of payments for the reduction of principal and/or the application of interest on a mortgage
loan; (ii) the collection of payments on account of taxes and insurance; (iii) the remittance of appropriate portions of collected payments; (iv) the provision of full escrow
administration; (v) the pursuit of foreclosure and alternate remedies against a related Mortgaged Property; (vi) the administration and liquidation of REO, and (vii) the right to
receive the Servicing Compensation and any ancillary fees arising from or connected to the Serviced Loans, earnings and other benefits of the related Custodial Accounts and any other related accounts
maintained by the Selling Companies pursuant to applicable Regulations and Investor and Insurer requirements and, in each case, all rights, powers and privileges incident to any of the foregoing, and
expressly includes the right to enter into arrangements with third parties that generate ancillary fees and benefits with respect to the Serviced Loans. 

        "Servicing Agreement" means an agreement between an Investor and a Selling Company pursuant to which a Selling Company owns the Servicing
and services Mortgage Loans in the Retained Servicing Portfolio. 

        "Servicing Compensation" means any servicing fees and any excess servicing compensation which a Selling Company is entitled to receive
pursuant to any Servicing Agreement. 

        "Software" means each of the following: computer programs, known by any name, whether in use or under development, including all versions
thereof, and all related documentation, training manuals and materials, user manuals, technical and support documentation, source code and object code, tools, program files, data files, computer
related data, field and data definitions and relationships, data definition specifications, data models, program and system logic, interfaces, program modules, routines, sub-routines,
algorithms, program architecture, design concepts, development tools, maintenance tools, system designs, program structure, sequence and organizations, screen displays and report layouts, and all
other material related to the said computer programs. 

        "State Agency" means any state agency or other entity with authority to regulate the mortgage-related activities of the Selling Companies
or to determine the investment or servicing requirements with regard to mortgage loan origination, purchasing, servicing or master servicing performed by Seller. 

        "Subsidiary" means, for any Person, any other person which the initial Person directly or indirectly Controls. 

        "Tax" means any federal, state, local, or foreign income, gross receipts, gains, license, payroll, employment, excise, production, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code Sec. 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, occupancy, personal property, sales, use transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto (and any penalty, fine or similar amounts related to any information return or reporting obligation notwithstanding that no tax is otherwise
payable or such obligations are properly discharged), whether disputed or not. 

        "Tax Returns" means all returns and reports required to be filed with respect to Taxes. 

7

 

        "Third Party Consents" means any consent, authorization, approval, waiver, order, license, certificate or permit or act of or from, or
notice to any Rating Agency, any party to any contract to which any Seller or Seller Subsidiary is a party or by which any of their assets or properties are bound or affected, or any other Person. 

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

        "VA Loans" means residential mortgage loans that are guaranteed, or are eligible and intended to be guaranteed, by VA. 

        "Warehouse Loan" means a mortgage loan that (i) is evidenced by a Mortgage Note and secured by a first priority Mortgage on a
one-to-four family residential property (or a second priority mortgage loan that was originated concurrently or in conjunction with a first priority mortgage loan) and
(ii) is owned by a Selling Company at the time immediately prior to the Closing. 

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

        (b)  The
following terms shall have the respective meanings set forth in the relevant Section referred to below throughout this Agreement: 

	Acquired Accounts Receivable	 	2.01(a)
	Acquired Cash and Equivalents	 	2.01(a)
	Acquired Hedging Assets	 	2.01(a)
	Acquired Intellectual Property	 	2.01(a)
	Acquired Intellectual Property Licenses	 	2.01(a)
	Acquired Mortgage Loan Documents	 	2.01(a)
	Acquired Subsidiary	 	2.01(a)
	Acquired Warehouse Loans	 	2.01(a)
	Acquisition Proposal	 	5.09
	Agreement	 	Preamble
	Applicable Law	 	4.02(g)
	Assumed Liabilities	 	2.01(b)
	Australia Specific ALSS Components	 	2.01(c)
	Buyer	 	Preamble
	Buyer GL Accounts	 	5.12(c)
	Buyer Indemnified Parties	 	10.01(a)
	Buyer Financial Statements	 	4.03(d)
	Cap	 	10.05(a)
	Chosen Courts	 	11.07(b)
	Closing	 	3.01
	Closing Date	 	3.01
	Closing Date Value	 	2.02
	Closing Date Value Calculation Schedule	 	2.04(b)
	Comparable Cash Compensation	 	6.01(a)
	Confidentiality Agreement	 	5.02(c)
	Correspondent Agreement	 	2.01(a)
	Deductible	 	10.05(a)
	Disclosure Schedule	 	4.01
	Effective Time	 	3.01
	Employee Lease	 	Recitals
	Estimated Purchase Price	 	2.02

8

 

	Excluded Assets	 	2.01(c)
	Excluded Liabilities	 	2.01(b)
	Final Purchase Price	 	2.02
	Fixed and Other Assets	 	2.01(a)
	Franchise Premium	 	2.02
	HSI	 	Preamble
	HSL	 	Preamble
	HSR Act	 	4.02(c)
	Indemnified Party	 	10.06
	Intellectual Property Rights Agreement	 	Recitals
	Interim Settlement Amount	 	2.08
	Interim Settlement Date	 	2.08
	Key Outsourcing Contracts	 	2.01(a)
	Lease Time Off Cash	 	6.01(g)
	Leave Recipients	 	6.01(c)
	License Agreement	 	Recitals
	Loan Application	 	2.01(a)
	Other Assumed Liabilities	 	2.01(b)
	Parent	 	Preamble
	Permitted Liens	 	4.02(d)
	Pipeline Loans	 	2.01(a)
	Pre-Closing Date Value	 	2.02
	Pre-Closing Date Value Calculation Schedule	 	2.04(a)
	Purchase Price Adjustment	 	2.02
	Purchased Assets	 	2.01(a)
	Regulatory Authority	 	4.02(f)
	Representatives	 	2.04(e)
	Restricted Business	 	5.10
	Retail Contracts	 	2.01(a)
	Retained Accounts Receivables	 	2.01(c)
	Retained Advances	 	2.01(c)
	Retained Cash and Equivalents	 	2.01(c)
	Retained Hedging Assets	 	2.01(c)
	Retained IP Assets	 	2.01(c)
	Retained Mortgage Loan Documents	 	2.01(c)
	Retained Portfolio Subservicing Agreement	 	Recitals
	Retained Real Estate	 	2.01(c)
	Retained Servicing Portfolio	 	2.01(c)
	Retained Warehouse Loans	 	2.01(c)
	Seller GL Accounts	 	5.12(c)
	Seller Indemnified Parties	 	10.01(b)
	Sellers	 	Preamble
	Selling Companies	 	Recitals
	Services Agreement	 	Recitals
	Servicing Advances	 	2.01(c)
	Servicing Purchase Agreements	 	2.01(a)
	Settlement Date	 	2.05
	Solicitation Rights Agreement	 	Recitals
	Specified Contracts	 	4.02(h)
	Template Letters	 	2.01(c)
	Third-Party Claim	 	10.06

9

 

	Time Off Cash	 	6.01(g)
	Transfer Taxes	 	9.02
	Transferred Employee	 	6.01(a)
	Transitional Agreement	 	Recitals

 
 

         1.02    Interpretation.     

        (a)  The
table of contents and headings contained in this Agreement are for
reference purposes only and do not limit or otherwise affect any of the provisions of this Agreement. 

        (b)  Whenever
the words "include", "includes" or
"including" are used in this Agreement, they will be deemed to be followed by the words "without
limitation". Any singular term in this Agreement will be deemed to include the plural, and any plural term the singular. All pronouns and variations of pronouns will be deemed
to refer to the feminine, masculine or neuter, singular or plural, as the identity of the person referred to may require. 

        (c)  Whenever
the words "herein" or "hereunder" are used in this Agreement,
they will be deemed to refer to this Agreement as a whole and not to any specific Section. 

        (d)  Whenever
a dollar figure ($) is used in this Agreement, it will mean United States dollars unless otherwise specified. 

ARTICLE II  

 Purchase And Delivery of Purchased

Assets; Assumption of Assumed Liabilities  

 
 

        2.01    Delivery of Purchased Assets; Assumption of Assumed Liabilities.    

        (a)  On
the terms and subject to the conditions of this Agreement, Sellers shall, at the Effective Time, sell, transfer, assign and deliver, or cause to be sold, transferred,
assigned and delivered, to Buyer, all right, title and interest of the Selling Companies in and to all of the Purchased Assets. As used herein: 

        "Purchased Assets" means all of the Selling Companies' business, properties and assets, and rights of whatever kind and nature, real or
personal, whether owned, leased or licensed, or in which the Selling Companies otherwise have an interest (but only to the extent of such interest) at the Effective Time (but specifically excluding to
the extent set forth therein the Excluded Assets (as defined in subsection (c) below)) and shall include: 

	(i)	 	all Acquired Warehouse Loans, where "Acquired Warehouse Loans" means all Warehouse Loans owned by the Selling Companies other than Retained Warehouse Loans;
	

(ii)	
 	

all Pipeline Loans, where "Pipeline Loans" means each of those pending mortgage loans to be secured by a first priority mortgage lien on a one- to four-family residential property or, in the case of a
subordinate lien mortgage loan, a mortgage loan to be entered into simultaneously with a first lien mortgage loan for the purpose of purchasing or refinancing the purchase of a one- to four-family residential property (e.g., a FNMA 80-10-10 loan), (i) with respect to which a Selling Company has (a) issued a commitment or otherwise agreed with an applicant to fund,
(b) determined to fund, (c) committed to a specified interest rate or (d) issued a commitment (including without limitation bulk commitments and assignments of trades) or otherwise agreed with a correspondent originator or purchaser to
purchase (including those mortgage loans that are pending with a correspondent originator or purchaser and that otherwise meet a Selling Company's acquisition criteria for such mortgage loans) and (ii) which has not closed (or been purchased
from the correspondent) as of the Effective Time;

10

 

	

(iii)	
 	

all Correspondent Agreements, where "Correspondent Agreement" means any agreement between a Selling Company, on the one hand, and a broker, correspondent, originator or purchaser of residential mortgage
loans on the other hand, pursuant to which such broker, correspondent, originator or purchaser may sell residential mortgage loans to such Selling Company or provide application processing services in respect of Mortgage Loans;
	

(iv)	
 	

the Retail Contracts, where "Retail Contracts" means the agreements pursuant to which a Selling Company's direct production business originates residential mortgage loans, including all affinity channel
contracts;
	

(v)	
 	

the Servicing Purchase Agreements, where "Servicing Purchase Agreements" means any agreement between a Selling Company on the one hand and any other Person, on the other hand, pursuant to which a Selling
Company purchases Servicing from such Person and includes any bulk purchase agreements, quarterly bulk purchase agreements, co-issue agreements, PMSR flow agreements and other related agreements;
	

(vi)	
 	

the Acquired Accounts Receivable, where "Acquired Accounts Receivable" means all those accrued interest and other accounts receivable of the Selling Companies (other than Servicing Advances) relating to
the Business, the Purchased Assets or the Assumed Liabilities, and all other accounts receivable not otherwise identified as "Excluded" in Section 2.01(d) of the Sellers' Disclosure Schedule as of the Effective Time but including all other
accounts receivable identified as "Purchased" by Buyer in Section 2.01(d) of the Seller's Disclosure Schedule as of the Effective Time.
	

(vii)	
 	

the Acquired Intellectual Property where "Acquired Intellectual Property" means the Intellectual Property owned by the Selling Companies and which is used in the conduct of, or which relates to, the
Business, including the ALSS Platform Intellectual Property and the Intellectual Property described on Sellers' Disclosure Schedule other than the Retained IP Assets;
	

(viii)	
 	

the Acquired Intellectual Property Licenses, where "Acquired Intellectual Property Licenses" means those agreements granting licenses to Intellectual Property or Software to a Selling Company for use as
part of the ALSS Platform or otherwise in connection with the Business, including those agreements which are listed in Section 2.01(a)(viii) of Sellers' Disclosure Schedule; provided,
however, that Buyer and Parent shall execute the Intellectual Property Rights Agreement and the license and other documents referred to in Section 5.07;
	

(ix)	
 	

the Acquired Cash Equivalents, where "Acquired Cash and Equivalents" means all cash and cash equivalent assets of the Selling Companies (other than Retained Cash and Equivalents);
	

(x)	
 	

the Fixed and Other Assets, where "Fixed and Other Assets" means those assets constituting the specific contracts and agreements, real and tangible personal property (including land, buildings, leasehold
interests, furniture, fixtures, office equipment, telecommunications equipment and computer equipment), prepaid expenses, programs, applications and data bases (whether capitalized or non-capitalized), prospect lists, training materials, procedure
manuals, origination and servicing related forms and documents and other assets related to the Business;

11

 

	

(xi)	
 	

the Loan Applications, where "Loan Application" means an application for a mortgage loan, to be secured by a first-lien on a one- to four-family residential property, or, in the case of a subordinate
lien mortgage loan, a mortgage loan to be entered into simultaneously with a first lien mortgage loan for the purpose of purchasing or refinancing the purchase of a one- to four-family residential property (e.g., a FNMA 80-10-10 loan), that has been taken or is being processed by a Selling Company as of the Effective Time but that is not a Pipeline Loan and has not, as of the Effective Time, resulted
in a Mortgage Loan;
	

(xii)	
 	

the Acquired Mortgage Loan Documents, where "Acquired Mortgage Loan Documents" means the Mortgage Loan Documents relating to the Loan Applications, the Acquired Warehouse Loans and the Pipeline
Loans;
	

(xiii)	
 	

the Acquired Hedging Assets, where "Acquired Hedging Assets" means the Hedging Assets (other than Retained Hedging Assets) used to hedge the interest rate risk associated with the Pipeline Loans and
Acquired Warehouse Loans, including all of the Delivery Commitments and Investment Commitments;
	

(xiv)	
 	

at the end of the Lease Period for each Prospective Employee, any individual employment contracts with such Prospective Employees;
	

(xv)	
 	

the ALSS Platform;
	

(xvi)	
 	

documentation, manuals, files, contractual rights and warranties relating to the Purchased Assets;
	

(xvii)	
 	

all of the stock of the Acquired Subsidiary and all rights to the stock of the Acquired Subsidiary (all of such stock being non-assessable), where "Acquired Subsidiary" means Stockton Plaza
Incorporated;
	

(xviii)	
 	

the Key Outsourcing Contracts, where "Key Outsourcing Contracts" means the contracts relating to performance of Subservicing (other than the Retained Portfolio Subservicing Agreement), including those
contracts with LOGS, ZC Sterling and Transamerica; and
	

(xix)	
 	

all goodwill associated with the foregoing.

        The
foregoing enumeration of the Purchased Assets shall not be construed to limit in any way the scope of the assets being purchased by the Buyer. 

        (b)  On
the terms and subject to the conditions of this Agreement, Buyer shall, at the Effective Time, assume all the Assumed Liabilities. Buyer assumes no Excluded Liability
or any other liability of Selling Companies or any other Person pursuant to this Agreement other than the Assumed Liabilities. As used herein: 

        "Assumed Liabilities" means only the commitments and obligations of the Selling Companies to be performed after the Effective Time, and
the Liabilities of the Selling Companies accruing or arising after the Effective Time with respect to: 

	(i)
	any
Purchased Assets listed in items (i) to (xviii) of the definition of "Purchased
Assets" in Section 2.01(a) above;

	(ii)
	Prospective
Employees (whether or not Transferred Employees but other than those described in clause (ii)(B) of the definition of
"Excluded Liabilities"), including all obligations under the individual employment contracts with such Prospective Employees relating to employment on
or after the Effective Time, all severance obligations with respect to such Prospective Employees, and any other liability, commitment or obligation of the Selling Companies specifically agreed to be
assumed under Article VI hereof; and 

12

 

	(iii)
	the
Other Assumed Liabilities, where "Other Assumed Liabilities" means the liabilities, commitments
and obligations of the Selling Companies identified as liabilities assumed by Buyer in Section 2.01(d) of Sellers' Disclosure Schedule; 

but
specifically excluding with respect to (i), (ii) and (iii) any liabilities, commitments or obligations (a) for recourse, repurchase, indemnity or warranty of the Selling
Companies with respect to periods on or prior to the Closing Date, (b) for indebtedness for borrowed money of the Selling Companies, and (c) with respect to or giving rise to liens other
than Permitted Liens (all of which set forth in (a), (b) and (c) shall be Excluded Liabilities). 

        "Excluded Liabilities" means all Liabilities of the Selling Companies and all other liabilities of the Selling Companies, whether known or
unknown, absolute or contingent, past, present, or future, other than Assumed Liabilities, and shall include: 

	(i)
	the
Selling Companies' obligations for funded debt or borrowed money including any penalties or premiums paid or payable in order to prepay or defease
any such debt;

	(ii)
	the
Selling Companies' obligations to employees (A) who are not Prospective Employees as set forth on Section 2.01 (c)(xii) of
Sellers' Disclosure Schedule or (B) who are Leave Recipients, but do not become eligible to receive an offer pursuant to Section 6.01 (c);

	(iii)
	all
tax liabilities of the Selling Companies (except to the extent otherwise provided in Article IX hereof);

	(iv)
	all
liabilities relating to Actions pending or threatened against the Selling Companies or their assets prior to the Effective Time;

	(v)
	all
environmental liabilities;

	(vi)
	all
obligations of the Selling Companies for payment of amounts arising under its 2001 Retention Bonus Plan; and

	(vii)
	all
obligations of the Selling Companies under their existing qualified and non-qualified health care, dental, disability, life, 401(k)
and other employee benefit plans except for liabilities expressly assumed by Buyer hereunder. 

        The
foregoing enumeration of the Excluded Liabilities shall not be construed to limit in any way the scope of the liabilities being retained by the Selling Companies. 

        (c)  Notwithstanding
subsections (a) and (b) of this Section 2.01, no Excluded Assets shall be purchased or sold hereunder. As used herein: 

        "Excluded Assets" means only the following: 

	(i)
	the
Retained Servicing Portfolio, where "Retained Servicing Portfolio" means all of the Servicing owned
by the Selling Companies;

	(ii)
	the
Retained Warehouse Loans, where "Retained Warehouse Loans" means

	(1)
	all
Warehouse Loans that are over 30 days delinquent (as defined in the Fannie Mae Seller's Guide) as of the Closing Date;

	(2)
	all
Warehouse Loans that have been delinquent (as defined in the Fannie Mae Seller's Guide) for more than 30 days at any time in the 12 months immediately prior to the
Closing Date;

	(3)
	all
Warehouse Loans that were purchased or originated more than 60 days prior to the Closing Date; 

13

  

	 	 	(4)	 	all Warehouse Loans that are owned by HomeSide Funding Corporation and other Warehouse Loans related to the Early Buyout Program as of the Closing Date; and
	

 	
 	

(5)	
 	

any Warehouse Loans that are not eligible for sale to the relevant Investor (the "scratch and dent loans");
	

(iii)	
 	

the Retained Mortgage Loan Documents, where "Retained Mortgage Loan Documents" means the Mortgage Loan Documents relating to the Mortgage Loans in the Retained Servicing Portfolio and the Retained
Warehouse Loans;
	

(iv)	
 	

the Retained Hedging Assets, where "Retained Hedging Assets" means the Hedging Assets used to hedge the interest rate and currency risk associated with the Retained Servicing Portfolio or any other
Excluded Assets or any Excluded Liabilities (including the medium term notes of HSL);
	

(v)	
 	

the Retained Accounts Receivable, where "Retained Accounts Receivables" means those accrued interest and other accounts receivable that are related to the Retained Servicing Portfolio, the Retained
Hedging Assets, the Retained Warehouse Loans or the Retained Real Estate (including those accounts receivable identified as retained by the Selling Companies in Section 2.01(d) of Sellers' Disclosure Schedule and including accounts receivable
with respect to Servicing ("Servicing Advances")) and any accrued interest and other accounts receivable that are assets of the Selling Companies immediately prior to the Effective Time and that have not
been collected as of the 75th day after the Closing Date;
	

(vi)	
 	

the Retained Cash and Equivalents, where "Retained Cash and Equivalents" means the cash and cash equivalent assets of the Selling Companies, related to the Retained Servicing Portfolio and the Retained
Hedging Assets as well as excess cash above levels required for the operation of the Business;
	

(vii)	
 	

the Retained Advances, where "Retained Advances" means those Advances related to the Retained Servicing Portfolio and the Retained Warehouse Loans;
	

(viii)	
 	

the assets relating to the Compensation and Benefit Plans;
	

(ix)	
 	

the stock of HSL, Mortgage Electronic Registration Systems or any Subsidiary of HSL except the stock of the Acquired Subsidiary;
	

(x)	
 	

the Retained Real Estate, where "Retained Real Estate" means:
	

 	
 	

(1)	
 	

all real property acquired by the Selling Companies as a result of a Foreclosure; and
	

 	
 	

(2)	
 	

the vacant facilities (and any tangible assets, including leasehold improvements, of such facilities) located in Indianapolis, IN and Glastonbury, CT;
	

(xi)	
 	

any claims or causes of action that any Selling Company or Parent may have against third parties arising with respect to matters occurring before the Closing Date, except any such claims or causes of action that are included within the definition of
Acquired Intellectual Property;
	

(xii)	
 	

the individual employment and ancillary agreements with the employees listed in Section 2.01(c)(xii) of Sellers' Disclosure Schedule;

14

 

	

(xiii)	
 	

the Retained IP Assets where "Retained IP Assets" means all Intellectual Property existing as of the Closing Date, if any, owned or held by Parent in (i) the business methods, business processes,
business functionality, and document and data formatting that are implemented in the Australia Specific ALSS Components and (ii) in and to the Template Letters. For purposes of this definition, "Australia Specific ALSS
Components" means components or other elements of the ALSS Platform implementing functionality for the Australia market that were added to the ALSS Platform after Parent acquired the Selling Companies. For purposes of this
definition, "Template Letters" means those template correspondences, including letters, e-mail communications and other documents, authored by or on behalf of Parent used by the ALSS Platform in
combination with specific loan information in the servicing of Australian Loans; and
	

(xiv)	
 	

the books and records of the Selling Companies.

        (d)  For
illustrative purposes and to evidence the intent of the parties as to the identity of the Purchased Assets, Excluded Assets, Assumed Liabilities and Excluded
Liabilities, Schedule 2.01(d) sets forth a trial balance of the foregoing to the extent that they are reflected on a balance sheet under generally accepted accounting principles as applied by
the Sellers as of September 30, 2001. 

 
 

         2.02    Consideration for Purchased Assets.     

        In
consideration for the Purchased Assets, Buyer will assume the Assumed Liabilities and will pay an amount (the "Purchase Price") equal
to the Estimated Purchase Price as subsequently adjusted by the Interim Settlement Amount and the Purchase Price Adjustment. The Final Purchase Price will be paid as follows: (1) at the
Closing, Buyer will pay to Sellers the Estimated Purchase Price, and (2) on each of the Interim Settlement Date and the Settlement Date, Buyer or Sellers, as the case may be, will be entitled
to the Interim Settlement Amount and the Purchase Price Adjustment, respectively. All payments under this Section 2.02 will be paid by Sellers or Buyer, as the case may be, in immediately
available federal funds to an account designated by the applicable recipient of such funds. 

        As
used herein: 

        "Closing Date Value" and "Pre-Closing Date Value" have the meanings set forth
in Schedule 2.02. 

        "Estimated Purchase Price" means the sum of (1) the Pre-Closing Date Value and (2) the Franchise Premium,
calculated in the manner set forth in Schedule 2.02. 

        "Franchise Premium" means $25 million. 

        "Purchase Price Adjustment" means (w) the Estimated Purchase Price plus (if applicable) (x) the Interim Settlement Amount,
if such amount is to be paid by Buyer to Sellers, minus (if applicable) (y) the Interim Settlement Amount, if such amount is to be paid by Sellers to Buyer minus (z) the sum of
(1) the Closing Date Value and (2) the Franchise Premium, together with interest thereon (after adjusting for any interest amount previously paid) payable at the Interest Rate from and
including the Closing Date to but excluding the Settlement Date, calculated in the manner set forth in Schedule 2.02. 

 
 

         2.03    Proration of Expenses.     

        Except
as otherwise specifically provided in this Agreement, it is the intention of the parties hereto that Sellers shall operate for their own account the Business, until the Effective
Time, and that Buyer shall operate for its own account the Business, after the Effective Time. Thus, except as otherwise specifically provided in this Agreement, with respect to the Purchased Assets
and Assumed Liabilities, items of expense, including, but not limited to, non-owner occupation fees, payment of amounts due under service contracts, payments of rent, taxes, utilities and
other amounts required to be paid by the 

15

 

tenant
under leases, and all personal property taxes applicable to the personal property to be transferred hereunder, shall be prorated to the Effective Time and reflected on the
Pre-Closing Date Value Calculation Schedule and the Closing Date Value Calculation Schedule. An estimated settlement or settlements of all such prorated items shall be made in accordance
with the procedures of Sections 2.02 and 2.04, which estimated settlement shall include reimbursement to the Selling Companies for any security deposits theretofore made pursuant to any lease which is
assigned hereunder, as well as any security deposits made by the Selling Companies in respect of Purchased Assets or Assumed Liabilities, all of which security deposits shall be held, on and after the
Closing Date, for the benefit of Buyer. Sellers shall use commercially reasonable efforts to obtain final bills for all items of expense being prorated pursuant to this Section 2.03 and any
adjustments will be made in accordance with Schedule 2.02 and the procedures of Section 2.05. 

 
 

        2.04    Calculation of Purchase Price.     

        (a)  No
later than ten Business Days prior to the Closing Date, Sellers shall deliver, or cause to be delivered, to Buyer an unaudited schedule setting out in reasonable
detail the basis of the calculation of the Pre-Closing Date Value, which calculation shall be as of the month-end for the month that is two months prior to the month in which
the Effective Time occurs (the "Pre-Closing Date Value Calculation Schedule"). 

        (b)  No
later than 120 days after the Closing Date, Sellers shall deliver, or cause to be delivered, to Buyer an unaudited schedule setting out in reasonable detail
the calculation of the Closing Date Value, which calculation shall be as of the Effective Time (the "Closing Date Value Calculation Schedule"). 

        (c)  Unless
Buyer delivers written notice to Sellers on or prior to the later of (x) the 165th day following the Closing Date or (y) the 45th day after Buyer's
receipt of the Closing Date Value Calculation Schedule specifying in reasonable detail the amount, nature and basis of all disputed items, Buyer shall be deemed to have accepted and agreed to the
Closing Date Value Calculation Schedule, and such Closing Date Value Calculation Schedule shall be deemed conclusive for purposes of determining the Final Purchase Price. 

        (d)  In
the event that Buyer and Sellers are unable to agree with respect to any item on the Closing Date Value Calculation Schedule within 45 days of notice of the
dispute and the dispute involves either (i) the mathematical calculation of the Closing Date Value or the Final Purchase Price or (ii) the appropriate accounting treatment of any asset
or liability, or item of income or expense, that affects the calculation of the Closing Date Value, then Buyer and Sellers will mutually agree to an independent public accounting firm, which will make
a determination of such dispute (but not as to any other matters) based solely upon not more than two rounds of presentations by Buyer and Sellers, and not by independent review. If Buyer and Sellers
are unable to agree on the choice of the independent accounting firm, the firm will be Ernst & Young LLP unless at such time either Buyer or Sellers has a primary audit relationship with
Ernst & Young LLP, in which case a "big-five" accounting firm (or successor thereof) selected by lot (after excluding any firm with which either Buyer or Sellers have a primary
audit relationship). The findings of such firm, which will not exceed in amount the amount claimed by either party as to any matter in dispute, shall be conclusive and binding upon Buyer and Sellers
for purposes of this Agreement. The fees and expenses of such firm will be borne 50% by Sellers and 50% by Buyer. 

        The
provisions in this Section 2.04(d) relating to resolutions of disputes by an accounting firm are not intended to and shall not be interpreted to require that the parties refer
to such a firm (i) any dispute arising out of a breach by one of the parties of its obligations under the Agreement; (ii) any dispute the resolution of which requires the construction or
interpretation of this Agreement or (iii) any other dispute other than (in the case of this clause (iii)) a dispute related to the mathematical 

16

 

calculation
of the Closing Date Value or the Final Purchase Price or the accounting treatment of any asset or liability, or item of income or expense, that affects the calculation of the Closing Date
Value. 

        (e)  Buyer
and Sellers agree that, in addition to their respective obligations under Section 5.02(d), prior to the Settlement Date, each of them and their attorneys,
accountants, officers and other authorized representatives (collectively, "Representatives") shall have any and all reasonable access that they each
reasonably believe is necessary to the books and records of the Business, the Purchased Assets and the Assumed Liabilities to the extent they relate to the calculations required or any dispute under
this
Section 2.04 (and shall permit such Representatives to examine and copy such books and records to the extent requested by such party provided that all such copies are treated confidentially by
such party and are only used for such purposes described in this Section 2.04), and shall cause their respective officers and employees to furnish all information requested by, and otherwise
cooperate with each other with respect to access to any books, records, information or other documents related to the calculations required by, or any dispute under this Section 2.04. 

 
 

         2.05    Settlement Date Payments.     

        On
a date (the "Settlement Date") within 5 days after the acceptance by Buyer of the Closing Date Value Calculation Schedule
(whether expressly or by operation of Section 2.04(c)) or the resolution of any dispute pursuant to Section 2.04(d), or such later date as the parties may agree, the following actions
shall be taken: 

        (a)  If
the Purchase Price Adjustment is a positive number, Sellers will pay Buyer an amount equal to the Purchase Price Adjustment. If the Purchase Price Adjustment is a
negative number, Buyer will pay Sellers an amount equal to the absolute value of the Purchase Price Adjustment. 

        (b)  Each
party shall take such other actions, and shall execute and deliver such other instruments or documents, as shall be required in connection with the determination
and payment of the Final Purchase Price. 

 
 

         2.06    Allocation of Purchase Price.     

        Sellers
and Buyer hereby agree to allocate the Final Purchase Price and the Assumed Liabilities among the Purchased Assets in accordance with Section 1060 of the Code and file or
cause to be filed in a timely fashion any information that may be required pursuant to regulations promulgated under the Code. 

 
 

         2.07    No Offset.
    

        Neither
Sellers or any of their Affiliates, on the one hand, nor Buyer or any of its Affiliates, on the other hand, shall have any set off or any other similar rights with respect to
(a) any of the funds received by such party pursuant to this Agreement or (b) any other amounts claimed to be owed to the other party or its Affiliates arising out of this Agreement or
any other agreement. 

 
 

         2.08    Interim Settlement.     

        Within
ten (10) calendar days following the Closing Date, Sellers will deliver to Buyer a good-faith estimate of the Closing Date Value, such estimate to be calculated
in the manner set forth in Schedule 2.02. On the basis of such good-faith estimate of the Closing Date Value, and without being subject to any challenge or dispute on the part of
Buyer, and without any loss of Buyer's rights under Section 2.04(d), the parties will determine whether Sellers or Buyer is required to make a payment to the other. The party so required
hereunder to make a payment to the other shall pay, within five (5) Business Days following the date on which such payment amount is determined (the "Interim Settlement
Date"), one hundred percent (100%) of such amount to be paid, plus interest on the amount so paid at the Interest Rate from and including the Closing Date to but excluding the
date of payment (the "Interim Settlement Amount"). The amounts, if any, required to be paid by either party under 

17

 

Section 2.05,
including the interest payments thereunder, shall be adjusted accordingly to take into account the interim settlement payment made under this Section 2.08. 

 
 

         2.09    Co-Issue.     

        Notwithstanding
anything in this Agreement to the contrary, including Article II, if by the tenth day prior to the Closing, the Seller and Buyer do not reach an agreement (which
they are not obligated to do) with respect to the purchase and assumption by Buyer of the co-issue arrangements with Bank One, Pulte and First Union (Wachovia), then each such
co-issue arrangement as to which such an agreement has not been reached shall not be part of the Purchase in any way and the Seller shall retain all interests in, and liabilities related
to, any such co-issue arrangement, and Buyer shall administer each relevant loan relating thereto for a $60 per loan set up fee and each relevant loan relating thereto shall be subserviced
by Buyer in accordance with the Retained Portfolio Subservicing Agreement. 

ARTICLE III  

 Closing, Transfers and Related Items  

 
 
        3.01    Closing and Closing Date.
    

        Unless
this Agreement shall have been terminated and the transactions herein abandoned pursuant to Section 8.01, subject to the provisions of Article VII, the closing (the
"Closing") of the purchase and sale of Purchased Assets, the assumption of the Assumed Liabilities and the payment of the amounts required to be paid
pursuant to Section 2.02 shall take place in Jacksonville, Florida on (1) the first business day of the month following the month in which the last of the conditions set forth in
Article VII has been satisfied or waived in accordance with the terms of this Agreement (other than
those conditions to be satisfied or waived on the Closing Date, unless the last of such conditions is satisfied or waived less than ten business days prior to the end of a month, in which event the
Closing Date shall occur on the first business day of the second succeeding month), or (2) such other date to which the parties may agree in writing. The date on which the Closing occurs is
herein called the "Closing Date". The parties hereby agree that the effective time (the "Effective
Time") of Closing for all purposes shall be at the opening of business in New York City on the Closing Date or such other time as shall be agreed to by the parties. 

 
 

         3.02    Assignment and Assumption Documents.
    

        (a)  On
the Closing Date, (i) the Selling Companies and Buyer shall deliver and Parent shall cause the Selling Companies to deliver a bill of sale and instrument of
assumption of liabilities substantially in the form attached hereto as Exhibit F, (ii) the Selling Companies shall deliver and Parent shall cause the Selling Companies to deliver to
Buyer such other instruments of sale, assignment, transfer and conveyance (including, if necessary, duly executed powers of attorney to transfer all of the shares of stock of the Acquired Subsidiary),
and do such other acts as are reasonably necessary to effectuate the sale, transfer, assignment and delivery to Buyer of the right, title and interest of the Selling Companies in and to the Purchased
Assets to be sold, transferred, assigned and delivered to Buyer on such date pursuant to Section 2.01(a) free and clear of any Liens other than Permitted Liens except that clause (a) of
such definition shall not apply immediately prior to the Effective Time and (iii) Buyer shall deliver to the Selling Companies such other instruments of assumption, and do or cause to be done
by third parties such other acts as are reasonably necessary to effectuate the assumption by Buyer of the Assumed Liabilities to be assumed by Buyer on such date pursuant to Section 2.01(b). 

        (b)  Without
limiting the foregoing, on or before the Closing Date, Sellers shall, at their expense, promptly take each such action as may be necessary to transfer all of the
Selling Companies' right, title and interest in and to the Acquired Warehouse Loans, including (i) endorsing or causing to be endorsed the related Mortgage Notes to Buyer without recourse,
(ii) preparing or causing to be 

18

 

prepared
Assignments of Mortgage Instruments, assigning the related Mortgages from the Selling Companies to Buyer and preparing or causing to be prepared all prior intervening Assignments of Mortgage
Instruments as reasonably required by Buyer and (iii) assigning nominal title to the other related Mortgage Loan Documents to Buyer. To the extent required by applicable Regulations with
respect to Mortgage Loans, Sellers will, at their expense, record or cause the recordation of the Assignments of Mortgage Instruments from the Selling Companies to Buyer. In addition, Sellers will, at
their expense, prepare and record, or cause the preparation and recordation of, Assignments of Mortgage Instruments from Buyer to the applicable Investor to the extent required by applicable
Regulations. Sellers shall provide to Buyer such recorded Assignments of Mortgage Instruments as soon as practicable. 

 
 

         3.03    Further Assistance and Assurances.
    

        Sellers
shall, at any time and from time to time, promptly, upon the reasonable request of Buyer, execute, acknowledge, deliver or perform, all such further acts, deeds, assignments,
transfers, conveyances, and assurances as may be required for the better vesting and conferring to Buyer of title
in and to the Purchased Assets and to effect the transactions contemplated by this Agreement. Buyer shall, at any time and from time to time, promptly, upon the reasonable request of Sellers, execute,
acknowledge, deliver or perform, all such further acts, deeds, assumption agreements, transfers and assurances as may be required for the full assumption and transfer to Buyer of the Assumed
Liabilities and to effect the transactions contemplated by this Agreement. Each party agrees that if it receives any payment or amount after the Closing Date to which another party is entitled, the
recipient shall promptly transfer such payment or amount to the party so entitled. At the Effective Time, the Sellers shall, and Parent shall cause the Selling Companies to, transfer and deliver
possession and control of the ALSS Platform to Buyer, including all copies of source code and documentation and physical and electronic access to all systems. 

 
 

        3.04    Other Consents.
    

        Sellers
shall take all commercially reasonable action, at no cost to Buyer, to obtain such other Third Party Consents as are necessary to permit the sale, transfer, assignment and
conveyance to Buyer of the Purchased Assets. Nothing in this Agreement shall be construed as an attempt or agreement to assign any Purchased Asset or Assumed Liability which is not capable of being
validly assigned, conveyed or transferred without the consent of a third party, unless such consent shall have been obtained and remain in full force and effect at the Closing. If such consent in
respect of a Purchased Asset or an Assumed Liability is not obtained prior to the Closing or does not remain in full force and effect at the Closing, Buyer and Sellers will use reasonable efforts, at
no cost to Buyer, to enter into a mutually agreeable, reasonable and lawful arrangement, including, subcontracting, sublicensing or subleasing, under which Buyer would obtain the benefit and assume
the obligations in respect thereto from and after the Closing Date in accordance with this Agreement, and under which the Selling Companies would enforce for the benefit of Buyer any and all rights of
Buyer against a third party thereto, with Buyer assuming the obligations to the same extent as if they would have constituted an Assumed Liability. 

ARTICLE IV  

 Representations and Warranties  

 
 
        4.01    Disclosure Schedules.     

        On
or prior to the execution and delivery hereof, Sellers have delivered to Buyer a schedule and Buyer has delivered to Sellers a schedule (respectively, its
"Disclosure Schedule") setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an exception to one or more 

19

 

representations
or warranties contained in Section 4.02 or Section 4.03 or to one or more of the covenants contained in Article V;  provided, however, that
the inclusion of an item in a Disclosure Schedule as an exception to a
representation, warranty or covenant will not be deemed an admission by a party that such item represents a material exception or fact, event or circumstance or that such item has had or is reasonably
likely to result in a Material Adverse Effect with respect to the disclosing party. 

 
 

         4.02    Representations and Warranties of Sellers.
    

        Subject
to Section 4.01 and except as Previously Disclosed, Sellers, jointly and severally, represent and warrant to Buyer as follows: 

        (a)    Organization, Standing and Authority.    

        (1)  Parent
has been duly organized and is an existing banking corporation in good standing under the laws of Australia. 

        (2)  HSL
and HSI have been duly incorporated and are existing corporations in good standing under the laws of the States of Florida and Delaware, respectively. Each of the
Selling Subsidiaries has been duly incorporated or organized and is an existing corporation in good standing under the laws of its respective jurisdiction of organization. 

        (3)  Each
of the Selling Companies has the requisite power and authority to own its current assets and carry on its business as currently conducted, and is duly qualified to
do business in each jurisdiction where the ownership or operation of its property and assets or the conduct of its business requires such qualification except in those jurisdictions where the failure
to so qualify would not have a Material Adverse Effect. 

        (4)  Parent
owns beneficially all of the capital stock of HSI, free and clear of all Liens. HSI owns of record and beneficially all of the capital stock of HSL, free and
clear of all Liens. HSI or another Selling Subsidiary owns of record and beneficially all of the capital stock of each Selling Subsidiary, free and clear of all Liens. There are no subscriptions,
options, warrants, calls, commitments, preemptive rights or other rights of any kind outstanding for the purchase of, nor any securities convertible or exchangeable for, any equity interests of HSI,
HSL or any Selling Subsidiary. There are no restrictions upon the voting of the capital stock of HSI, HSL or any Selling Subsidiary. Other than HSL, the Selling Subsidiaries, the Acquired Subsidiary,
Homeside Global MBS Manager, Inc., Homeside Mortgage Securities, Inc. and Mortgage Electronic Registration Systems there are no Persons in which HSI, HSL or any Selling Subsidiary owns,
of record or beneficially, any direct or indirect equity interest or other interest or right. 

        (5)  HSL
owns of record and beneficially all of the Shares of Capital Stock of the Acquired Subsidiary and all such Shares have been duly and validly authorized and issued
and are fully paid and non-assessable. 

        (b)    Corporate Authority.    This Agreement and the transactions contemplated hereby have been duly authorized by
all necessary corporate action of each Seller and this Agreement has been duly authorized, executed and delivered by each Seller. This Agreement is a valid and legally binding obligation of each
Seller, 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). Each Seller has the corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby. 

20

  

        (c)    Regulatory Approvals; No Conflicts.    

        (1)  No
consents or approvals of, or filings or registrations with, any Governmental Authority or any third party are required to be obtained or made by Sellers or any of the
Selling Subsidiaries in connection with the execution, delivery or performance by Sellers of this Agreement or to consummate the transaction contemplated hereby, except for consents, approvals,
filings, applications, notices or registrations, and the termination of any applicable waiting periods, (A) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
("HSR Act"), (B) to relevant state mortgage banking licensing or supervisory authorities, (C) to the VA, FHA, FNMA, FHLMC, GNMA and HUD,
(D) under any applicable foreign laws or regulations or to any foreign Governmental Authority, (E) to the Board of Governors of the Federal Reserve System or any other federal or state
bank regulatory agency, (F) as Previously Disclosed on Disclosure Schedule 4.02(c)(1) and (G) Third Party Consents where the failure to obtain such consents or approvals would not
individually or in the aggregate have a Material Adverse Effect on the Business or on Sellers. As of the date hereof, Sellers have no Knowledge of any reason why the approvals or consents set forth as
conditions to closing in Sections 7.01(a) will not be received in a timely manner. 

        (2)  Subject
to receipt of the regulatory approvals referred to in the preceding paragraph, and expiration of related waiting periods, required filings under federal and
state securities laws and the third party consents or approvals referred to in the preceding paragraph, the execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any judgment, decree, order, License, or contract, agreement, mortgage, indenture or instrument of any of Sellers or any Selling Subsidiary, or to
which any of them or their properties is subject or bound, (B) constitute a breach or violation of, or a default under, the Selling Companies Articles or the Selling Companies
By-Laws or the corresponding governing documents of any of Sellers, or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, License,
contract, agreement, indenture or instrument. 

        (d)    Title to and Sufficiency of Purchased Assets.    

        (1)  Subject
to the receipt of any Third Party Consents in connection therewith, the sale and delivery to Buyer of the Purchased Assets pursuant to the provisions of this
Agreement will transfer to Buyer good and marketable title to the respective assets (or, as to any leased property, a valid leasehold interest), free and clear of any Liens (other than
(A) Liens that were Previously Disclosed; (B) mechanics', carriers', workmen's, repairmen's or other like Liens arising or incurred in the ordinary course of business and Liens for Taxes
that are not due and payable or that may thereafter be paid without penalty; and (C) Liens created by Buyer (collectively, "Permitted Liens").
Other than persons having an interest in Permitted Liens that have been Previously Disclosed, no person other than Sellers and the Selling Subsidiaries has any interest in (i) any of the
Purchased Assets transferred to Buyer hereunder (provided that this representation and warranty does not apply to Acquired Intellectual Property, Acquired Intellectual Property Licenses and leases of
real or personal property) or (ii) Sellers' leasehold
interest in any leases of real or personal property included in the Purchased Assets transferred to Buyer hereunder. 

        (2)  Subject
to the receipt of any required Third Party Consents, the Purchased Assets together with Buyer's rights under the Acquired Intellectual Property Licenses, and
Ancillary Agreements are sufficient to operate the Business as it is conducted as of the date hereof and 

21

 

to
permit Buyer to perform in the ordinary course of business its obligations under the Ancillary Agreements consistent with the standards set forth therein. 

        (e)    Litigation.    Sellers have Previously Disclosed a true and complete list, as of the date hereof, of all
litigation, claims, actions, arbitrations or investigations or other proceedings before any Governmental Authority pending (or, to Sellers' Knowledge, threatened in writing) against the Selling
Companies with respect to the Business or relating to or involving any of the Purchased Assets or Assumed Liabilities of the Selling Companies (except for prosecutions of applications for
registrations of intellectual property or similar rights). To Sellers' Knowledge there does not exist any fact or circumstance that would be reasonably expected to give rise to any such litigation,
claims, actions, arbitrations or investigations or other proceedings. Except for matters that would not reasonably be expected to have a Material Adverse Effect on the Business or Sellers, no other
litigation, claim, action, arbitration, investigation or other proceeding before any Governmental Authority (except for prosecutions of applications for registrations of intellectual property or
similar rights) is pending against the Selling Companies with respect to the Business, or relating to or involving any of the Purchased Assets or Assumed Liabilities of the Selling Companies and, to
Sellers' Knowledge, no other such litigation, claim, action, arbitration, investigation or other proceeding has been threatened in writing nor, to Sellers' Knowledge, does there exist any fact or
circumstance that would be reasonably expected to give rise to any such litigation, claims, actions, arbitrations or investigations or other proceedings. In addition, except as Previously Disclosed,
no other litigation, claim, action, arbitration, investigation or other proceeding before any Governmental Authority (except for prosecutions of applications for registrations of intellectual property
or similar rights) is pending against the Acquired Subsidiary, or relating to or involving any of its assets or liabilities and, to Sellers' Knowledge, no other such litigation, claim, action,
arbitration, investigation or other proceeding has been threatened in writing nor, to Sellers' Knowledge, does there exist any fact or circumstance that would be reasonably expected to give rise to
any such litigation, claims, actions, arbitrations or investigations or other proceedings. 

        (f)    Regulatory Matters.    None of Sellers or the Selling Companies is a party to or is subject to any outstanding
order, decree, agreement, memorandum of understanding or similar supervisory arrangement with, or a commitment letter or similar submission to, or extraordinary supervisory letter from, any federal or
state governmental agency or authority charged with the supervision or regulation of banks and their holding companies, or mortgage banking (including, without limitation, the Federal Reserve Board,
the VA, FHA, FNMA, FHLMC, GNMA and HUD) or the supervision or regulation of the Selling Companies (each, a "Regulatory Authority") except any such
regulatory action that would not have in the aggregate a Material Adverse Effect on the Business or on Sellers. 

        (g)    Compliance with Laws.    

        (1)  The
Business is being conducted in compliance with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto
("Applicable Law") except where any failure to comply with Applicable Law would not have in the aggregate a Material Adverse Effect on the Business or
on Sellers; and 

        (2)  The
Selling Companies hold all permits, licenses, authorizations, orders and approvals of, and have made all filings, applications and registrations with, all
Governmental Authorities that are required in order to own or lease the Purchased Assets and to conduct the Business in all material respects as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect and, to Sellers' Knowledge, no suspension or cancellation of any of them has been threatened in writing. 

22

 

        (h)    Specified Contracts; Defaults.    

        (1)  Sellers
have Previously Disclosed (in the case of contracts described in (i)-(iv) below) and have made available or Previously Disclosed (in the case of contracts
described in (v)-(x) below) the following written contracts related to the Business in existence as of the date hereof to which one or more of the Selling Companies is a party (the
"Specified Contracts"): 

	(i)	 	any agreement, if (x) the performance remaining thereunder involves aggregate consideration to or by a Selling Company in excess of $100,000 per annum and (y) such agreement is not cancelable, without material
penalty, by the Selling Companies on 180 days' or less notice;
	

(ii)	
 	

any agreement which restricts or contains limitations on the ability of any Selling Company to compete in any line of business, to the extent that any such provisions would be binding upon, or enforceable against, Buyer in its operation of the
Business or the use of the Purchased Assets after Closing;
	

(iii)	
 	

any agreement with any of Sellers or their Affiliates (other than the Selling Companies), on the one hand, and any of Sellers and any of their Affiliates, on the other hand, relating to services provided with respect to the Business or the Purchased
Assets other than in the ordinary course of their business;
	

(iv)	
 	

any individual employment contracts binding on the Selling Companies for aggregate payments to any Prospective Employee in any calendar year in excess of $150,000;
	

(v)	
 	

any mortgage, pledge, indenture or security agreement or similar arrangement constituting a Lien upon the Purchased Assets;
	

(vi)	
 	

any agreement for the sale or purchase of personal property having a value individually, with respect to all sales or purchases thereunder, in excess of $25,000;
	

(vii)	
 	

any agreement for the sale or purchase of fixed assets or real estate having a value individually, with respect to all sales or purchases thereunder, in excess of $100,000;
	

(viii)	
 	

any agreement involving Acquired Intellectual Property or relating to the provision of data processing, network communication or other technical services to or by the Selling Companies;
	

(ix)	
 	

all material Acquired Intellectual Property Licenses; and
	

(x)	
 	

other agreements.

        (2)  (i) Each
Specified Contract is in full force and effect with respect to the Selling Companies, as applicable, (ii) the Selling Companies are not in default
under any Specified Contract in any material respect and (iii) there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default
except where any failure to comply would not have in the aggregate a Material Adverse Effect on the Business or on Sellers. 

        (i)    No Brokers.    No action has been taken by any Seller that would give rise to any valid claim against any party
hereto for a brokerage commission, finder's fee or other like payment with respect to the transactions contemplated by this Agreement, other than a fee to be paid to Cohane Rafferty
Securities, Inc. and Merrill Lynch & Co. by Sellers. 

23

 

        (j)    Liens for Taxes.    There are no Liens for Taxes upon any of the Purchased Assets nor, to Sellers' Knowledge,
is any taxing authority in the process of imposing any Lien for Taxes upon any of the Purchased Assets, except for Liens for Taxes not yet due and payable. 

        (k)    Real Property.    

        (1)  Sellers
have Previously Disclosed all real property and leasehold estates owned by the Selling Companies and used in the Business as of the date hereof. The Selling
Companies have a valid, subsisting and enforceable leasehold interest in all leasehold estates, and valid rights as lessees or owners to all property of any kind or nature used by the Selling
Companies in the Business, in each case free and clear of all Liens, other than (A) Permitted Liens, (B) subleases and similar agreements Previously Disclosed, (C) easements,
covenants, rights-of-way and other similar restrictions of record which do not materially interfere with the Selling Company's use of such property in the Business,
(D) any conditions that may be shown by a current, accurate survey or physical inspection of any real property made prior to the Closing Date and (E) (i) zoning, building and other
similar restrictions, (ii) Liens that have been placed by any developer, landlord or other third party on property over which the Selling Companies have easement rights or on any leased
property and subordination or similar
agreements relating thereto and (iii) unrecorded easements, covenants, rights-of-way and other similar restrictions. Each Selling Company as lessee has the right under
valid leases to occupy, use, possess and control all property leased by such Selling Company as now occupied, used, possessed and controlled by such Selling Company. 

        (2)  Each
lease or agreement under which a Selling Company is a lessee or lessor of any property, real or personal, is a valid and binding agreement of such Selling Company,
and no event has occurred and is continuing which, with or without notice or lapse of time, would constitute a material default or event of default by such Selling Company under any such lease or
agreement or, to Sellers' Knowledge, by any other party thereto. 

        (l)    Insurance.    Sellers have Previously Disclosed all policies of insurance relating to the Purchased Assets and
the Business (other than title insurance policies or insurance policies relating exclusively to mortgages or other loans originated or serviced by the Selling Companies) that name any Selling Company
as an insured party thereunder. Except as Previously Disclosed, all such policies are with reputable insurers against such risks and in such amounts as the management of the Selling Companies
reasonably has determined to be prudent in accordance with industry practices. All such insurance policies are in full force and effect, the Selling Companies are not in material default thereunder,
and all claims thereunder have been filed in due and timely fashion. 

        (m)    ALSS Platform.    

        (1)    Disclosure.    All material Software systems and modules, and telecommunications and computer equipment
comprising the ALSS Platform, and all Acquired Intellectual Property Licenses and service contracts related thereto, have been Previously Disclosed in Section 4.02(m)(1) of the Disclosure
Schedule (except for generally available "shrinkwrap", over-the counter, "clickwrap" and
other similar licenses that are not enterprise licenses). 

        (2)    Rights to Use.    The Selling Companies have sufficient Intellectual Property rights to use all Third Party
Software that is being used by the Selling Companies related to the ALSS Platform as currently used by them in connection with the Business by means of Acquired Intellectual Property Licenses. 

        (3)    Title.    The Selling Companies have exclusive ownership and use of the ALSS Platform in its entirety (i.e.,
taken as a whole as currently used by them in connection with the Business) which ownership and use are free of all liens, encumbrances and claims including claims for infringement except as
Previously Disclosed concerning those ALSS Platform 

24

 

components
licensed to the Selling Companies by third Persons pursuant to Acquired Intellectual Property Licenses. 

        (4)    Noninfringement.    The ALSS Platform as currently used by the Selling Companies does not violate or infringe
the Intellectual Property or proprietary rights of any other Person except as Previously Disclosed. In the three (3) years preceding this Agreement, there has not been any suit, action or other
proceeding, and to Sellers' Knowledge, no suit, action or other proceeding is pending or threatened, against them concerning any claim that the ALSS Platform infringes or violates the Intellectual
Property rights of any other Person, or that any of the Selling Companies has breached any Acquired Intellectual Property License. No claim has been asserted in writing against any of the Selling
Companies that the ALSS Platform infringes or violates the Intellectual Property rights of any other Person, or that any of the Selling Companies has breached any Acquired Intellectual Property
License. There exists no event, condition or occurrence which, with the giving of notice or lapse of time, or both, would constitute a material breach by any of the Selling Companies, or to Sellers'
Knowledge, another Person, under any Acquired Intellectual Property License. No party to any Acquired Intellectual Property License has given any of the Selling Companies notice of its intention to
cancel, terminate or fail to renew any such Acquired Intellectual Property License. To Sellers' Knowledge, no Person is infringing or violating any of the Acquired Intellectual Property in the ALSS
Platform. 

        (5)    Trademarks.    The ALSS Platform does not consist of or include any Marks. 

        (6)    Patents.    Sellers do not own any right, title or interest in any Patents covering any component of the ALSS
Platform. 

        (7)    Copyrights.    Section 4.02(m)(7) of Sellers' Disclosure Schedule contains a complete and accurate list
and summary description of all registered Copyrights owned by the Selling Companies that are part of the ALSS Platform, which registrations are currently in compliance with all formal legal
requirements, and to Sellers' Knowledge, are valid and enforceable, and are not subject to any maintenance fees or actions falling due within ninety days after the date of Closing. 

        (8)    Trade Secrets.    The following representations are solely made for Trade Secrets that are part of the ALSS
Platform. 

	

(i)	
 	

The documentation relating to the ALSS Platform is current, accurate and sufficient in detail and content to identify and explain it and to allow its full and proper use.
	

(ii)	
 	

Sellers have taken commercially reasonable precautions necessary to protect the secrecy, confidentiality and value of the Software in the ALSS Platform as a trade secret.
	

(iii)	
 	

To Sellers' Knowledge, the Trade Secrets are not part of the public knowledge or literature and have not been disclosed to any Person (other than Parent, the Selling Companies and their employees, counsel and other agents, and other Persons who are
bound by written confidentiality obligations to Sellers or have otherwise been advised of their confidentiality obligations to Sellers).

25

 

	

(iv)	
 	

Since 1993, all employees hired and consultants engaged by Sellers, and, to Sellers' Knowledge, all employees hired and consultants engaged by the predecessors of the Selling Companies, who had access to the Software in the ALSS Platform have signed
a confidentiality agreement in the Selling Companies' standard form (for employees hired by and consultants engaged by the Selling Companies), as certified by the Selling Companies and delivered to Buyer, and except as disclosed in Section 4.02
(m)(8)(iv) of the Disclosure Schedule, the Selling Companies are not aware of any breaches of any of such agreements. To Sellers' Knowledge, the employment by the Selling Companies of any of such employees and engagement of such consultants, and
their duties for the Selling Companies, do not violate any non-disclosure or non-competition agreement between an employee and a third party.

        (9)    Software.    The following representations are solely made for Software that is part of the ALSS Platform. 

	

(i)	
 	

Section 4.02(m)(9)(i) of Sellers' Disclosure Schedule lists all third party Software ("Third Party Programs") currently used by the Selling Companies as part of the ALSS Platform, and all
copies of such Third Party Programs are licensed to the Selling Companies under valid written license agreements;
	

(ii)	
 	

Copies of all the license, distribution and maintenance agreements for the Third Party Programs have been provided by Sellers to Buyer, except in respect of Third Party Programs that are covered by shrinkwrapped, clickwrapped or similar agreements
for Third Party Programs software that have been purchased off-the-shelf by the Selling Companies in order to be used by the Selling Companies, and such license and distribution agreements give the Selling Companies the right to grant unlimited
run-time licenses of the respective Third Party Program;
	

(iii)	
 	

Recipients of services utilizing the ALSS Platform do not have access to or the right or ability to possess any object or source code of the ALSS Platform, and no Person has been provided with a copy of the object code of the ALSS Platform Software
(except as Section 4.02(m)(8)(iv) contemplates);
	

(iv)	
 	

Except as disclosed in Section 4.02(m)(9)(iv) of Sellers' Disclosure Schedule, all copies in all media of the source code are currently stored only in Sellers' premises in San Antonio, Texas and all files containing source code have been
identified to Buyer. To Sellers' Knowledge, the transaction contemplated by this Agreement will not itself entitle any Person except for the rights of Parent under the Intellectual Property Rights Agreement to obtain a copy of the source code for the
Software;
	

(v)	
 	

Except as listed in Section 4.02(m)(9)(v) of Sellers' Disclosure Schedule, there are no problems or defects in the ALSS Platform Software—including bugs, logic errors or failures of the ALSS Platform Software to operate as described in
the related documentation or specifications, or as otherwise warranted to any third party, in each case that are specifically known by the Selling Companies, and, except for such disclosed problems or defects, the Software operates in accordance with
its specifications;

26

 

	

(vi)	
 	

Section 4.02(m)(9)(vi) of Sellers' Disclosure Schedule accurately describes the current material development plans and schedule for the ALSS Platform Software and discloses and describes all material internal plans and external commitments,
and commitments to Parent, to enhance or improve the ALSS Platform Software, and all related budgets and schedules, and except as disclosed in Section 4.02(m)(9)(vi) of Sellers' Disclosure Schedule, all projects there described are not
materially over budget or behind schedule;
	

(vii)	
 	

There are not now nor have there ever been any distributors, sales agents, representatives or any other persons, including VARs, OEMs or resellers, who have rights from Sellers under oral or written agreements to market or license the ALSS
Platform Intellectual Property, or the Software in the ALSS Platform; and
	

(viii)	
 	

Sellers have disclosed to Buyer all reports, analyses and investigations performed by Sellers or consultants retained by Sellers concerning the capacity of the ALSS Platform to be extended to service additional mortgage loans and Sellers have no
reason to believe that the conclusions reflected in such reports, analyses and investigations are inaccurate in any material respect.

        (n)    Employee Benefit Plans.    

        (1)  All
Compensation and Benefit Plans, other than Compensation and Benefit Plans that are not material, have been Previously Disclosed in Section 4.02(n) of Sellers'
Disclosure Schedule. True and complete copies of all such Compensation and Benefit Plans have been made available to Buyer. 

        (2)  Neither
the execution of this Agreement nor the consummation of the Purchase will entitle any Prospective Employees to severance pay or any increase in severance pay
upon any termination of employment after the date hereof, other than as set forth in Section 4.02(n) of Sellers' Disclosure Schedule. 

        (3)  None
of the Compensation and Benefit Plans are "multiemployer plans" within the meaning of section 3(37) of ERISA. 

        (o)    Labor Matters.    None of the Selling Companies is a party to or is bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or labor organization, nor is any Selling Company the subject of a proceeding asserting that it has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) or seeking to compel any of the Selling Companies to bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving any of the Selling Companies pending or, to Sellers' Knowledge, threatened in writing, nor do the Sellers have any Knowledge of any activity
involving employees of the Selling Companies seeking to certify a collective bargaining unit or engaging in other organizational activity. The Selling Companies are in material compliance with all
applicable laws respecting employment practices, terms and conditions of employment and wages and hours and have not engaged in any unfair labor practices. 

        (p)    Environmental Matters.    

        (1)  To
the Knowledge of Sellers, the Selling Companies are in compliance in all material respects with all applicable Environmental Laws. 

        (2)  To
the Knowledge of Sellers, the Selling Companies possess all permits, licenses, registrations, identification numbers, authorizations and approvals required under
applicable Environmental Laws for the operation of the Business as presently conducted. 

27

  

        (3)  The
Selling Companies have not received any written claim, notice of violation or citation concerning any violation or alleged violation of any applicable Environmental
Law or any alleged liability involving the presence of any hazardous substance pursuant to any Environmental Law during the past seven years. To Sellers' Knowledge, there have been no releases, spills
and discharges of Hazardous Substances that could reasonably be expected to require either reporting or remediation, or to result in liability pursuant to any Environmental Law on or underneath any
Purchased Asset which is real property owned or leased by any of the Selling Companies. 

        (4)  There
are no writs, injunctions, decrees, orders or judgments outstanding, or any actions, suits, proceedings or investigations pending or, to the Knowledge of Sellers,
threatened in writing, relating to compliance by the Selling Companies with any Environmental Law. 

        (5)  Notwithstanding
any other representation and warranty in this Section 4.02, the representations and warranties contained in this Section 4.02(p) constitute
the sole representations and warranties of Sellers with respect to any Environmental Law. 

        (q)    Mortgage Banking Representation.    

        (1)    Advances and Accounts Receivable.    Each Acquired Accounts Receivable is a valid and subsisting amount owing
to the Selling Companies, is carried on the books of the Selling Companies at values determined in accordance with GAAP and is not subject to any set-off or claim that could be asserted
against Buyer, and the Selling Companies 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
the Selling Companies for reimbursement in connection with an Acquired Accounts Receivable. 

        (2)    Compliance.    Each Acquired Warehouse Loan that is allocated to a particular Investor in accordance with the
standard secondary market practices of the Selling Companies is eligible for sale under an Investment Commitment or otherwise in the ordinary course of business. The origination, sale, and servicing
of the Acquired Warehouse Loans comply in all material respects with Applicable Law and Regulations and Investor and Insurer requirements. 

        (3)    Mortgage Banking Qualification.    HSL (together with each other Selling Company that services or originates
Mortgage Loans) (a) to the extent required for the conduct of the Business, is approved (i) by HUD as an approved mortgagee and servicer for FHA Loans, (ii) by VA as an approved
lender and servicer for VA Loans, (iii) by FNMA and FHLMC as an approved seller/servicer of first lien residential mortgages and (iv) by GNMA as an authorized issuer and approved
servicer of GNMA-guaranteed mortgage-backed securities, (b) has all other material certifications, authorizations, licenses, permits and other approvals, including without
limitation those required by State Agencies, that are necessary to conduct the Business (or, where legally permissible, any waiver of or exemption from any of the foregoing by such Agency or State
Agency) and (c) is in good standing under all applicable federal, state and local laws and regulations thereunder as a lender and servicer. None of Sellers or any Selling Company has received
any notice or information from any Governmental Authority that it intends to
terminate or restrict HSL's status (or that of any other Selling Company that services or originates Mortgage Loans) as an approved participant in its programs for which HSL or such
Selling Company is as of the date hereof registered, approved or authorized. 

        (4)    No Recourse.    Except with respect to the Warehouse Loans listed in Schedule 4.02(q)(4), none of the
Warehouse Loans provides for recourse to the Selling Companies. 

28

 

        (r)    Corporate Documents.    The Selling Companies have made available to Buyer true and complete copies of their
amended charters and amended by-laws. 

        (s)    Risk Management Instruments.    All Acquired Hedging Assets 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 the Selling Companies, 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 the Selling Companies, nor to Sellers' Knowledge any other party thereto, is in breach of any of its obligations
under any of the Acquired Hedging Assets. 

        (t)    Warehouse Loans.    

        (1)    Ownership.    The Selling Companies are the only owners of, and have valid title to, each Acquired Warehouse
Loan, free and clear of all Liens, except Permitted Liens. 

        (2)    Collateral.    Each Acquired Warehouse Loan is a first residential mortgage loan, subject only to
(i) the Lien of current real property taxes and assessments, (ii) covenants, conditions and restrictions, rights of way, easements and other matters of public record as of the date of
recording of the mortgage, (iii) such exceptions appearing of record which are acceptable to mortgage lending institutions generally in the area wherein the property subject to the mortgage is
located or specifically reflected in the appraisal to be obtained in connection with the origination of the related Acquired Warehouse Loan and (iv) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the security intended to be provided by such mortgage. 

        (3)    Payments/Defaults.    There is no default, breach, violation or event permitting acceleration existing under
any Acquired Warehouse Loan. Selling Companies have not waived any such default, breach, violation or event permitting acceleration of any Acquired Warehouse Loan. 

        (4)    No Waiver.    No provision of any Acquired Warehouse Loan has been waived, altered or modified in any respect,
except by instruments or documents identified in the file relating to such Acquired Warehouse Loan. 

        (5)    No Defenses.    To Sellers' Knowledge, no Acquired Warehouse Loan is subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury and, to Sellers' Knowledge, the exercise of any right under any Acquired Warehouse Loan will not render such Acquired Warehouse Loan
unenforceable in whole or in part or subject to any right of rescission (other than the statutory right of rescission), setoff, counterclaim or defense, including the defense of usury. 

        (6)    Warehouse Loans in Force.    No Acquired Warehouse Loan has been satisfied or subordinated in whole or in part
or rescinded (other than pursuant to a statutory right of rescission) and no collateral securing an Acquired Warehouse Loan has been released from the Lien of the related mortgage in whole or in part. 

        (u)    Origination of Second Mortgage Loans.    None of the Selling Companies originates any second mortgage loans
except concurrently or in conjunction with first priority mortgage loans. 

        (v)    Financial Reports; No Material Adverse Effect.    

        (1)  Sellers
have Previously Disclosed the audited consolidated financial statements for HSL for the fiscal year ended September 30, 2001 (the
"HSL Financial Statements"). Each of the balance sheets contained in the HSL Financial Statements (including the related notes and 

29

 

schedules
thereto) fairly presents in all material respects the consolidated financial position of HSL as of its date, and each of the statements of income and changes in shareholder's equity and
cash flows or equivalent statements contained in the HSL Financial Statements (including any related notes and schedules thereto) fairly presents in all material respects the consolidated results of
operations, consolidated changes in shareholder's equity and consolidated changes in cash flows, as the case may be, of HSL for the periods to which they relate, in each case in accordance with GAAP
consistently applied during the periods involved. 

        (2)  Since
September 30, 2001, (A) the Selling Companies have conducted their respective businesses in the ordinary course of their business (excluding the
incurrence of expenses related to this Agreement and the transactions contemplated hereby), (B) the Selling Companies have not incurred any material liability other than in the ordinary course
of their business and (C) no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events, is reasonably likely to have a
Material Adverse Effect on the Business or on the Sellers. 

        (3)  The
Sellers are not aware of any fact or circumstance relevant to them or any of the Selling Subsidiaries that would have a material adverse effect on Buyer's ability to
timely perform in all material respects its material obligations under the Retained Portfolio Subservicing Agreement and the Services Agreement other than the failure to receive any relevant Third
Party Consents in connection with the transactions contemplated hereby. 

        (w)    Non-ALSS Platform Intellectual Property.    The following representations are made solely with
respect to the Software, Acquired Intellectual Property and Acquired Intellectual Property Licenses that are not part of the ALSS Platform (the "Non-ALSS IP Assets"). 

        (1)  All
Software and Acquired Intellectual Property that is material and/or that is the subject of a subsisting registration or issued Patent or pending application for
registration or issued Patent has been Previously Disclosed. All Acquired Intellectual Property Licenses have been Previously Disclosed (except for generally available
"shrinkwrap", over-the-counter, "clickwrap" and other similar licenses that are
not enterprise licenses). 

        (2)  The
Selling Companies have sufficient rights to use all Software, Acquired Intellectual Property and Intellectual Property and Software licensed under the Acquired
Intellectual Property Licenses ("Licensed Intellectual Property") as currently used by them in connection with the Business. 

        (3)  The
Software and the Acquired Intellectual Property in the Non-ALSS IP Assets, and the Selling Companies' use of the Software, Acquired Intellectual Property
and Licensed Intellectual Property as currently used by them in connection with the Business, does not violate or infringe the Intellectual Property or proprietary rights of any other Person except as
Previously Disclosed. Except as Previously Disclosed in Section 4.02(w) of Sellers' Disclosure Schedule, in the three (3) years preceding this Agreement, there has not been any suit,
action or other proceeding, and to Sellers' Knowledge, no suit, action or other proceeding is pending against them concerning any claim that any of the Selling Companies' use of the Software, Acquired
Intellectual Property or Licensed Intellectual Property as currently used by them in connection with the Business infringes or violates the Intellectual Property rights of any other Person, or that
any of the Selling Companies has breached any Acquired Intellectual Property License. No claim has been asserted in writing against any of the Selling Companies that its use of the Software, Acquired
Intellectual Property or Licensed Intellectual Property as currently used by them in connection with the Business infringes or violates the Intellectual Property rights of any other Person, or that
any of the Selling Companies has breached any Acquired Intellectual Property License. 

30

 

        (4)  There
exists no event, condition or occurrence which, with the giving of notice or lapse of time, or both, would constitute a material breach by any of the Selling
Companies, or to Sellers' Knowledge another Person, under any Acquired Intellectual Property License. No party to any Acquired Intellectual Property License has given any of the Selling Companies
notice of its intention to cancel, terminate or fail to renew any such Acquired Intellectual Property License. 

        (5)  To
Sellers' Knowledge, no Person is infringing or violating any of the Selling Companies' intellectual property rights in the Software or Acquired Intellectual Property
in the Non-ALSS IP Assets. 

        (6)  Trademarks.

	(i)
	Section 4.03(w)(6)(i) of
Sellers' Disclosure Schedule contains a complete and accurate list and summary description of all federally
registered Marks, pending applications for Marks and material unregistered Marks.

	(ii)
	Except
as set forth in Section 4.03(w)(6) of Sellers' Disclosure Schedule, all Marks that have been
registered with the United States Patent and Trademark Office are currently in compliance with all legal requirements relating thereto (including the timely post-registrations filing of
affidavits of use and incontestability and renewal applications), and to the Sellers' Knowledge are valid and enforceable and are not subject to any maintenance fees or actions falling due within
ninety (90) days after the Closing Date.

	(iii)
	All
Internet domain names are subject to currently effective Internet domain name registrations.

	(iv)
	No
Mark has been or is now involved in any opposition or cancellation or any other type of proceeding challenging the Selling Companies' rights
therein, and, to the Sellers' Knowledge, no such action is threatened with the respect to any of the Marks which action or proceeding would have a Material Adverse Effect. 

        (7)  Sellers
have taken all commercially reasonable precautions necessary to protect the secrecy, confidentiality and value of the Non-ALSS IP Assets as a trade
secret. 

        (8)  All
copies of Third Party Programs in the Non-ALSS IP Assets used in the Business are licensed to the Selling Companies under valid written license
agreements. 

        (9)  E-business.

	(i)
	The
Selling Companies' web sites are in substantial compliance with all applicable regulations.

	(ii)
	The
Selling Companies have operated their web sites in substantial conformance with their privacy policies. 

        (x)    Top-Ten Investors.    Section 4.02(x) of Seller's Disclosure Schedule sets forth the
ten largest Investors in terms of volume of Servicing on the basis of unpaid principal balance and the percentage of the total volume of Servicing of such Investors. 

 
 

         4.03    Representations and Warranties of Buyer.
    

        Subject
to Section 4.01 and except as Previously Disclosed, Buyer represents and warrants to Sellers as follows: 

        (a)    Organization, Standing and Authority.    Buyer has been duly organized and is existing in good standing as a
federal savings association. Buyer has the requisite power and authority to own 

31

 

its
current assets and carry on its business as currently conducted, and is duly qualified to do business in each jurisdiction where the ownership or operation of its property and assets or the
conduct of its business requires such qualification. 

        (b)    Corporate Authority.    Buyer has full corporate power and authority to execute and deliver the Agreement and
to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. This Agreement and the transactions contemplated hereby have been duly
authorized by all necessary corporate action of Buyer and do not require the approval of any shareholder or shareholders and this Agreement has been duly authorized, executed and delivered by Buyer.
This Agreement is a valid and legally binding agreement of Buyer, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, receivership,
reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors' rights or by general equity principles). Buyer has the corporate power and
authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. 

        (c)    Regulatory Approvals; No Conflicts.    

        (1)  No
consents or approvals of, or filings with, any Governmental Authority or any Third Party Consents are required to be obtained or made by Buyer or any of its
Affiliates in connection with the execution, delivery or performance by Buyer of this Agreement or to consummate the Purchase, except for consents, approvals, filings, applications, notices or
registrations, and the termination of any applicable waiting periods, (A) under the HSR Act, (B) the VA, FHA, FNMA, FHLMC, GNMA and HUD, (C) to the Office of Thrift Supervision,
the Federal Deposit Insurance Corporation or any other federal or state bank regulatory agency and (D) as Previously Disclosed on Disclosure Schedule 4.03(c)(1). As of the date hereof,
Buyer or its Affiliates have no Knowledge of any reason why the approvals or consents set forth as conditions to closing in Section 7.01(a) will not be received in a timely manner. 

        (2)  Subject
to receipt of the regulatory approvals referred to in the preceding paragraph and the expiration of the related waiting periods, and the Third Party Consents or
approvals referred to in the preceding paragraph, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not
(A) constitute a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under, any law, rule or regulation or any
judgment, decree, order, ordinance, statute, governmental permit or license, or contract, agreement, indenture or instrument of either of Buyer or of any of its Affiliates or to which either of Buyer
or any of its Affiliates or their properties is subject or bound, (B) constitute a breach or violation of, or a default under, its charter or by-laws, or (C) require any
consent or approval under any such law, rule, regulation, judgment, decree, order, ordinance, statute, governmental permit or license, contract, agreement, indenture or instrument. 

        (d)    Financial Reports; No Material Adverse Effect.    Buyer has delivered to Sellers Buyer's annual report on
Form 10-K for the fiscal year ended 2000 and its quarterly report on Form 10-Q for the period ended September 30, 2001 (the financial statements contained
therein, the "Buyer Financial Statements"). Each of the balance sheets contained in Buyer Financial Statements (including the related notes and
schedules thereto) fairly presents in all material respects the consolidated financial position of Buyer as of its date, and each of the statements of income and changes in shareholders' equity and
cash flows or equivalent statements contained in Buyer Financial Statements (including any related notes and schedules thereto) fairly presents in all material respects the consolidated results of
operations, consolidated changes in shareholders' 

32

 

equity
and consolidated changes in cash flows, as the case may be, of Buyer for the periods to which they relate, in each case in accordance with GAAP consistently applied during the periods involved
and, in the case of the unaudited interim statements, subject to normal year-end audit adjustments. 

        (e)    No Material Adverse Effect.    Since September 30, 2001, through the date hereof no event has occurred
or fact or circumstance arisen that, individually or taken together with all other events, facts, or circumstances, is reasonably likely to have a Material Adverse Effect with respect to Buyer. 

        (f)    Litigation; Regulatory Action.    No litigation, claim, action, arbitration, investigation or other proceeding
before any Governmental Authority is pending against Buyer or any of its Affiliates and, to the best of Buyer's Knowledge, no such litigation, claim, action, arbitration, investigation or other
proceeding has been threatened in writing except where such litigation, claim, action, arbitration, investigation, or other proceeding would not have a Material Adverse Effect on Buyer. 

        (g)    Regulatory Action.    Neither of Buyer nor any of its Affiliates or properties is a party to or is subject to
any order, decree, agreement, memorandum of understanding or similar supervisory arrangement with, or a commitment letter or similar submission to, or extraordinary supervisory letter from a
Regulatory Authority, nor has either of Buyer or any of its Affiliates been advised by a Regulatory Authority that such agency is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement, memorandum of understanding, commitment letter, supervisory letter or similar submission except where any failure to comply
would not have in the aggregate a Material Adverse Effect on Buyer. 

        (h)    Compliance with Laws.    Buyer and its Affiliates are in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable to them or to the employees conducting such businesses, including the Equal Credit Opportunity Act,
the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act and all other applicable fair lending laws and other laws relating to discriminatory business practices, except
where any failure to comply would not have in the aggregate a Material Adverse Effect on Buyer. 

        (i)    No Brokers.    No action has been taken by Buyer that would give rise to any valid claim against any party
hereto for a brokerage commission, finder's fee or other like payment with respect to the transactions contemplated by this Agreement, other than a fee to be paid to Morgan Stanley Dean Witter by
Buyer. 

        (j)    Banking Regulation.    Buyer is an "insured depository
institution" as defined in the Federal Deposit Insurance Act and applicable regulations thereunder. Buyer and each of its Affiliates that is a depository institution has a
rating of "Satisfactory" or better under the Community Reinvestment Act as of the date hereof. 

        (k)    Financing.    Buyer has, or will have on the Closing Date, sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to pay the Purchase Price hereunder and to pay any other amounts to be paid by it under this Agreement. 

 
 

         4.04    No Other Representations or Warranties.     

        Except
for the representations and warranties expressly contained in this Article IV, none of Sellers, the Selling Subsidiaries, Buyer or any other Person has made or makes any
other express or implied representation or warranty, either written or oral, on behalf of any Seller, Selling Subsidiary or Buyer. 

33

  

ARTICLE V  

 Covenants  

 
 
        5.01    Conduct of Business.     

        From
the date hereof until the Closing Date, except (i) as contemplated by this Agreement, (ii) as Previously Disclosed, (iii) as required by law, (iv) in the
ordinary course of the Business, or (v) to the extent that Buyer provides prior written consent to do otherwise, which consent may not be unreasonably withheld: 

        (a)  Sellers
shall use commercially reasonable efforts to (i) maintain the Selling Companies' corporate existence in good standing, (ii) maintain the general
character of the Business and conduct the Business in a commercially reasonable manner, (iii) maintain proper business and accounting records relative to the Business, (iv) use
commercially reasonable efforts to preserve relationships with customers, suppliers, Investors and Insurers of the Business, (v) maintain the Purchased Assets in good condition and repair,
ordinary wear and tear excepted, (vi) maintain procedures for protection of the Acquired Intellectual Property, and (vii) maintain presently existing insurance coverages with respect to
the Purchased Assets and the Business; 

        (b)  Sellers
shall not permit any Selling Company to: 

	(i)	 	enter into any Specified Contract, relating to the Business (other than those contemplated by this Agreement or related to Excluded Assets or Excluded Liabilities) or terminate or amend or modify in any material respect
any such existing Specified Contracts;
	

(ii)	
 	

enter into or amend or renew any individual employment agreements with any Prospective Employee;
	

(iii)	
 	

grant any salary or wage increase or increase any employee benefit for any Prospective Employee (including incentive or bonus payments) other than regularly scheduled salary or wage increases of up to 4% in aggregate amount from those existing on the
date hereof, except in either case (A) to satisfy Previously Disclosed contractual obligations existing as of the date hereof, (B) for agreements, arrangements, grants or awards to newly hired employees consistent with past practice,
(C) as a result of any change or modification of any benefit plan of Parent not related solely to the Selling Companies, or (D) for incentive bonus awards payable in December 2001 for performance associated with the fiscal year
2001;
	

(iv)	
 	

sell, transfer, assign or otherwise dispose of or encumber any of the Purchased Assets in one transaction or a series of related transactions having a value in excess of $100,000;
	

(v)	
 	

cancel any debt or waive or compromise any claim or right relating to the Business in one transaction or a series of related transactions having a value in excess of $250,000;
	

(vi)	
 	

make any capital expenditure or commitment relating to the Business in excess of (A) $100,000 per project or related projects or (B) $1,000,000 in the aggregate other than expenditures necessary to maintain in good repair existing
assets;

34

 

	

(vii)	
 	

except with respect to endorsements of negotiable instruments in the ordinary course of their business consistent with past practice or, with respect to their mortgage banking business, the ordinary course of business in accordance with past practice,
 incur, assume or guarantee or otherwise become responsible for any indebtedness for borrowed money which will constitute an Assumed Liability as of the Closing Date;
	

(viii)	
 	

issue, sell or agree to issue or sell (a) any shares of the capital stock of the Acquired Subsidiary or (b) any securities convertible into, or options with respect to, or warrants to purchase or rights to subscribe for, any Shares of the
capital stock of the Acquired Subsidiary;
	

(ix)	
 	

enter into any joint venture, partnership or other similar arrangement, form any other new material arrangement for the conduct of its business or purchase any material assets or securities of any Person;
	

(x)	
 	

purchase new mortgage servicing rights or sell mortgage servicing rights except (a) pursuant to contractual commitments in place on the date hereof (including co-issue commitments/agreements), (b) other purchases not to exceed in the
aggregate more than $2.5 billion in outstanding principal amount of loans over any calendar month or (c) sales of servicing provided that the Selling Companies comply with the procedures in Section 8.4 of the Retained Portfolio
Subservicing Agreement as if such provision were operative and in effect;
	

(xi)	
 	

terminate, cancel or amend any material insurance coverage maintained by Sellers or Selling Subsidiaries with respect to the assets or activities of the Business which is not replaced by an adequate amount of insurance coverage at reasonable
cost;
	

(xii)	
 	

merge or consolidate with or into any other Person or permit any other Person to merge or consolidate with or into it;
	

(xiii)	
 	

transfer, mortgage, encumber or otherwise dispose of any of the Pipeline Loans or Warehouse Loans other than in the ordinary course of business;
	

(xiv)	
 	

except for residential mortgage loans or commitments for residential mortgage loans that have been previously approved by Sellers prior to the date of this Agreement (a) make or acquire any residential mortgage loan or issue a commitment for any
residential loan except for residential mortgage loans and commitments that are made or acquired in the ordinary course of business consistent with past practice and with an individual principal balance of $3,000,000 or less; or (b) take any
action that would result in any discretionary releases of collateral or guarantees or otherwise restructure any loan or commitment for any loan with a principal balance in excess of $3,000,000;
	

(xv)	
 	

except as necessary in order to comply with Regulations or the requirements of this Agreement or in response to competitive or market conditions in order to preserve the value of its franchise, make any material changes in its policies and practices
with respect to (a) underwriting, pricing, originating, acquiring, servicing, or buying or selling rights to service loans or (b) hedging the Warehouse Loans or Pipeline Loans;
	

(xvi)	
 	

make any changes to its accounting methods, practices or policies, except as may be required under law, rule, regulation or GAAP, in each case as concurred in by Seller's independent public accountant;

35

 

	

(xvii)	
 	

settle any action filed or otherwise instituted against it, the Purchased Assets or the Business if such settlement would contain any relief against the Purchased Assets or the Business other than monetary damages; or
	

(xviii)	
 	

agree to do any of the foregoing.

        (c)  Notwithstanding
the preceding provisions of this Section 5.01, during the period from the date hereof to the Closing Date, Sellers and the Selling Subsidiaries
may sell or transfer, or enter into one or more agreements to sell or transfer, any asset of the Selling Companies, except for the Purchased Assets; provided,
however, that any sale of mortgage servicing rights must comply with the procedures in Section 8.4 of the Retained Portfolio Subservicing Agreement as if such provision
were operative and in effect. From the date hereof to the Closing Date, the officers of the Selling Companies shall confer on a regular basis with Buyer as to the Business, and report periodically on
the general status of the ongoing operations thereof. 

 
 

         5.02    Access; Confidentiality.     

        (a)  Sellers
agree to permit Buyer and its Representatives to have, during the period from the date hereof to the Closing Date, reasonable access to the premises, books and
records relating to the Business and to records and documentation of the ALSS Platform and other systems, during normal business hours. Sellers agree to make available to Buyer upon reasonable advance
notice and during normal business hours, the employees of the Selling Companies involved in the conduct of the Business and the operation of the ALSS Platform and other systems, as Buyer may
reasonably request, provided that such availability shall not unreasonably interfere with the normal operations of the Selling Companies. Sellers shall
furnish Buyer with such financial and operational data and other information relating to the Business as Buyer shall from time to time reasonably request and shall reasonably cooperate with Buyer with
respect to Buyer's need to plan for and coordinate the integration of the Purchased Assets and to prepare to undertake its obligations under the Ancillary Agreements. 

        (b)  Buyer
agrees that it will not, and will cause its Representatives not to, use any information obtained pursuant to this Section 5.02 (as well as any other
information obtained prior to the date hereof in connection with the entering into of this Agreement) for any purpose unrelated to the consummation of the transactions contemplated by this Agreement.
Subject to the requirements of applicable law, and other exceptions set forth in the Confidentiality Agreement, Buyer will keep confidential, and will cause its Representatives to keep confidential,
all information and documents obtained pursuant to this Section 5.02 (as well as any other information obtained prior to the date hereof in connection with the entering into of this Agreement)
unless such information (1) was already known to such party, (2) becomes available to such party from other sources not known by Buyer to be bound by a confidentiality obligation,
(3) is disclosed with the prior written approval of Sellers or (4) is or becomes readily ascertainable from published information or trade sources. In the event that this Agreement is
terminated or the transactions contemplated by this Agreement will otherwise fail to be consummated, Buyer will promptly cause all copies of documents or extracts thereof containing information and
data as to Sellers, any Selling Subsidiary or the Acquired Subsidiary to be returned to Sellers at Buyer's expense, or (at Sellers' option) confirm in writing to Sellers that they have completely
destroyed all such copies, documents, extracts, information and data. 

        (c)  In
addition to the confidentiality arrangements contained in this Agreement, all information provided or obtained in connection with the transactions contemplated by
this Agreement (including pursuant to clause (a) above) will be held by Buyer in accordance with and subject to the terms of the Confidentiality Agreement, dated October 2, 2001, between
Buyer and Parent (the "Confidentiality Agreement"). In the event of a conflict or inconsistency between the terms of this Agreement and the
Confidentiality Agreement, the terms of this Agreement will govern. 

36

 

        (d)  Buyer
agrees that following the Closing Date, Sellers and their Representatives shall have reasonable access, during normal business hours, to the documentation,
manuals, files and other information or data of the Business to the extent they relate to the Purchased Assets or Assumed Liabilities during the period prior to the Closing Date (but subject to the
provisions and limitations of the Intellectual Property Rights Agreement regarding access to the ALSS Platform) (and shall permit such Persons to examine and copy such documentation, manuals, files
and other information or data to the extent reasonably requested by such party), and shall cause the officers and employees of the Business to furnish (to Sellers or any of their Affiliates, or any
regulator of Sellers or any of their
Affiliates) all information reasonably requested by, and otherwise cooperate with (including, without limitation, causing employees to assist Sellers or any of their Affiliates by requiring such
employees to avail themselves for trial, depositions, interviews and other Action-related litigation endeavors) Sellers or any of their Affiliates with respect to the Business, Purchased Assets or
Assumed Liabilities, in connection with regulatory compliance, indemnification claim verification, pending or threatened litigation, financial reporting and tax matters (including financial and tax
audits and tax contests) and other similar business purposes. During the period required under the longer of Buyer's record retention policy or Seller's record retention policy, Buyer shall not
destroy or dispose of or permit the destruction or disposition of any such documentation, manuals, files and other information or data except as it relates to the ALSS Platform without first offering,
in writing, at least sixty (60) days prior to such destruction or disposition to surrender them to Seller. Anything foregoing to the contrary not withstanding, Buyer shall not be required to
disclose or deliver trade secrets or other confidential information regarding the ALSS Platform Software or Acquired Intellectual Property unless required by the Intellectual Property Rights Agreement
or the Services Agreement or required by law or legal proceedings and under the type of protection provisions in the Intellectual Property Rights Agreement. 

        (e)  Sellers
agree that following the Closing Date, Buyer and its Representatives shall have reasonable access, during normal business hours, to the books, records,
documentation, manuals, files and other information or data of the Selling Companies to the extent they relate to the Business or Purchased Assets or Assumed Liabilities during the period prior to the
Closing Date (and shall permit such Persons to examine and copy such books, records, documentation, manuals, files and other information or data of the Selling Companies to the extent reasonably
requested by such party), and shall cause the officers and employees of the Selling Companies to furnish (to Buyer or any of its Affiliates, or any regulator of Buyer or any of its Affiliates) all
information reasonably requested by, and otherwise cooperate with (including, without limitation, causing employees to assist Buyer or any of its Affiliates by requiring such employees to avail
themselves for trial, depositions, interviews and other Action-related litigation endeavors) Buyer with respect to the Business, Purchased Assets or Assumed Liabilities, in connection with regulatory
compliance, indemnification claim verification, pending or threatened litigation, financial reporting and tax matters (including financial and tax audits and tax contests) and other similar business
purposes. During the period required under the longer of Buyer's record retention policy or Seller's record retention policy, Sellers shall not destroy or dispose of or permit the destruction or
disposition of any such books, records, documentation, manuals, files and other information or data without first offering, in writing, at least sixty (60) days prior to such destruction or
disposition to surrender them to Buyer. 

 
 

         5.03    Taking of Necessary Action.     

        (a)  Both
Sellers and Buyer will cooperate and use their respective commercially reasonable efforts to prepare all documentation, to effect all filings and to obtain all
permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary to consummate the transactions contemplated by this Agreement. Each of Sellers and Buyer
will have the right to review in advance, and to the extent practicable each will consult with the other with respect to, all material written information submitted to any third party or any
Governmental Authority in connection with the transactions contemplated by this Agreement, in each case subject to applicable laws relating to the 

37

 

exchange
of information. In exercising the foregoing right, each of the parties hereto agrees to act reasonably and as promptly as practicable. Each of Buyer and Sellers commits to submit all
required applications or notices to the appropriate Governmental Authorities within 15 Business Days of the date of this Agreement. Each party hereto agrees that it will consult with the other party
hereto with respect to the obtaining of all material permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other party appraised of the status of material matters relating to completion of the transactions contemplated hereby. To the
extent necessary, Buyer and Sellers shall cause their respective Affiliates to take any action necessary in connection with the foregoing. 

        (b)  Each
party agrees, upon request, to furnish the other party with all information concerning itself, its Subsidiaries, directors, officers and stockholders and such other
matters as may be reasonably necessary or advisable in connection with any filing, notice or application made by or on behalf of such other party or any of its Subsidiaries to any third party or
Governmental Authority. 

        (c)  Each
party shall designate a person to act as that party's representative for purposes of coordinating with the other party in connection with activities and conduct
necessary or appropriate to effect the closing of the transaction contemplated by this Agreement, the transition the Business from the Selling Companies to Buyer, to prepare for the performance of the
Ancillary Agreements and to communicate concerning Buyer's rights under the Solicitation Rights Agreement. The Sellers initially designate Simon Moore as the representative of each of them. Buyer
initially designates Melba Bartels as its representative. The representatives shall meet or otherwise communicate with each other on a regular basis. 

 
 

         5.04    Disclosure.     

        Except
as contemplated by the terms of this Agreement or as may otherwise be required by law, neither Sellers nor Buyer, 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. Sellers and Buyer agree to consult with each other prior to
issuing any press release relating to the transactions contemplated by this Agreement. Sellers will not make or deliver any written communication with borrowers or other customers of the Selling
Companies or with Prospective Employees or Leave Recipients related to the transactions contemplated hereby without the prior consent of Buyer which consent shall not be unreasonably withheld. 

 
 

         5.05    Missing Mortgage Loan Documents.     

        Sellers
agree, at their own expense, to use commercially reasonable efforts before the Closing Date to obtain any Mortgage Loan Documents for any Acquired Warehouse Loan that is missing
and must be obtained by the Selling Companies pursuant to the applicable Regulations. To the extent any such missing document is not obtained by the Selling Companies by the Closing Date, Buyer
agrees, at its own expense, to use commercially reasonable efforts to obtain such document from and after the Closing Date. 

 
 

         5.06    Post-Closing Collection of Certain Receivables.     

        (a)  Buyer
shall use commercially reasonable efforts in accordance with applicable Regulations and with at least the same level of diligence as Buyer would exercise for its
own account to collect the Retained Accounts Receivable on behalf of Sellers and the Selling Companies. Such collection effort shall be made by Buyer without cost to Sellers or any of their
Affiliates. To aid Buyer in its collections efforts, Sellers shall compile and deliver to Buyer a list of all relevant Retained Accounts Receivable as soon as practicable after the Closing Date. 

38

  

        (b)  Buyer shall remit to Sellers or the Selling Subsidiaries all amounts received with respect to Retained Accounts Receivable during a month by no later than the 10th day
of the following month, in one or more remittances. Upon receipt of any such amounts by Buyer and prior to the remittance of such amounts to Sellers, Buyer shall place such amounts in an interest
bearing account, and any interest earned thereon shall be for the benefit of Sellers. With each such remittance Buyer shall deliver a report with respect to the status of the Retained Accounts
Receivable in form reasonably satisfactory to Sellers. Sellers and their accountants and other advisors shall be given full access at all reasonable times to all books and records necessary to perform
an audit regarding Buyer's collections with respect to the Retained Accounts Receivable. 

 
 

         5.07    Granted Licenses.     

        (a)  Effective
upon Closing, Buyer grants Parent and its Affiliates (including the Selling Companies) a royalty-free right and license to use the Marks identified
in Schedule 4.02(w) nonexclusively in North America solely for the purpose of the Selling Companies' servicing the Retained Servicing Portfolio and in connection with HomeSide Mortgage
Securities Trust 2001-1 and its issued securities. Such license will be coterminous with the Retained Portfolio Subservicing Agreement and the term of the issued securities, as the case
may be. Buyer and Parent shall enter into a Trademark License Agreement effective on the Closing Date on such terms as well as other terms mutually agreeable between them. 

 
 

        5.08    Insurance Matters.     

        Buyer
acknowledges and agrees that no policy of insurance relating to the Purchased Assets or the Business will be transferred or assigned pursuant to this Agreement (other than title
insurance policies or policies relating exclusively to individual Acquired Warehouse Loans that may be transferred or assigned pursuant to Section 3.02), and that from and after the Closing,
Buyer bears the entire, subject to Article X hereof, risk of loss related to the Purchased Assets and the Business. 

 
 

        5.09    No Solicitation.     

        Prior
to the Closing only, each of Sellers and the Selling Subsidiaries shall immediately cease and cause to be terminated any activities, discussions or negotiations commenced prior to
the date of this Agreement with any parties other than Buyer with respect to the sale of the Business as a whole. Nothing in this provision shall prohibit the sale of the Retained Servicing Portfolio
provided that the Selling Companies comply with the procedures of Section 8.4 of the Retained Portfolio Subservicing Agreement as if such provisions were operative and in effect. 

 
 

         5.10    Non-Competition Agreement.     

        (a)  For
a period of three (3) years following the Closing Date, Sellers shall not, and shall not permit any of their Affiliates to, in any state in the United States
(i) directly or indirectly, either as a principal, partner, agent, manager, stockholder, director, officer or in any other capacity, enter into a business that competes in the mortgage software
business in the United States (the "Restricted Business") on a de novo basis; provided, however, that
ownership of less than 5% of the voting stock of any corporation engaged in the Restricted Business shall not constitute a violation hereof or (ii) acquire or enter into an agreement to acquire
or merge or consolidate with any corporation or other business entity whose primary business on a consolidated or combined basis with all its Affiliates is the Restricted Business. 

        (b)  For
a period of three (3) years following the Closing Date, Buyer shall not, and shall not permit any of its Affiliates to, offer services by means of the ALSS
Platform or any modification thereof in Australia or New Zealand. 

39

 

 
 

         5.11    Non-Solicitation of Employees.     

        (a)  For
the period from the Closing Date until the third anniversary of the end of the Lease Period, neither Sellers nor any of their Affiliates shall, directly or
indirectly solicit for employment, retain as an independent contractor or consultant, induce to terminate employment with Buyer or otherwise interfere with Buyer's employment relationship with any
Prospective Employee located in San Antonio, Texas as of the date of this Agreement; provided, however, that this Section 5.11 shall not apply
(a) if any such employee has been terminated by Buyer or any of its Affiliates for any reason, or by the Selling Companies during the Lease Period at Buyer's request or (b) if such
employee is hired by a Seller or any of its Affiliates as a result of a general solicitation for employment in newspaper advertisements or other periodicals of general solicitation not specifically
targeted to employees of Buyer or (c) if Buyer indicates by written consent that this Section 5.11 shall not apply to a specific employee. 

        (b)  In
the event that this Agreement is terminated pursuant to Article VIII, Buyer and its Affiliates will not, without Sellers' prior written consent: (a) for
a period of three years from the date of termination of this Agreement (other than pursuant to any general solicitations for employment in newspaper advertisements or other periodicals of general
circulation or through recruitment firms not specifically targeted to employees of any Selling Company; provided, however, that Buyer will not instruct
any recruiting firm to specifically recruit employees of any Selling Company), directly or indirectly solicit for employment any person who is then employed by any Selling Company holding the title of
vice president or higher or (b) use any material, information or document obtained in connection with the entering into of this Agreement directly or indirectly to solicit any customer or
supplier of any Selling Company. The preceding sentence shall not prohibit Buyer from employing any such person to whom an offer of employment may have been extended by Buyer prior to the date hereof.
Notwithstanding the foregoing, in the event that this Agreement is terminated pursuant to Article VIII as a result of a
willful breach by Sellers, the restrictions set forth in clause (a) of the first sentence of this Section 5.11(b) shall terminate on January 2, 2003. 

 
 

         5.12    Transitional Matters.     

        (a)  Each
of the parties acknowledges and agrees that the transition of the Business from the Selling Companies to Buyer will require that certain transactions and
relationships will need to be entered into, restructured and reorganized in connection with the transition of the Business from the Selling Companies to Buyer. The parties agree that prior to the
Closing Date, the parties shall cooperate with each other to identify all such transactions and relationships and negotiate in good faith to enter into a mutually acceptable Transitional Agreement
effective as of the Closing Date, which agreement shall provide for all such transactions and relationships as are reasonably necessary to provide, 

	(i)
	for
(A) the operation of the Business and use of the Purchased Assets by Buyer, (B) the operation and use of the Excluded Assets by
Sellers and the Selling Subsidiaries and (C) the separation of the Business, the Purchased Assets and the Assumed Liabilities from Parent and its Affiliates (including the Selling Companies),
in each case during the period commencing on and after the Closing Date and ending no later than the one year anniversary of the Closing Date or such longer period as the parties may agree, including
the following: 

        (1)  the
transitioning of the financial systems, assets and hedging valuation systems, asset management systems, payroll and employee benefits systems and any other
applicable business operating systems; 

        (2)  the
provision of rights of access (provided that access to the ALSS Platform shall be governed and limited by the Intellectual Property Rights Agreement and the 

40

 

Services
Agreement) to the Parent and its Affiliates to Intellectual Property currently owned (or licensed) by the Selling Companies (and included in the Purchased Assets) and used by Parent or the
Selling Companies in the ordinary course of their business, or required by the Selling Companies for the operation and use of the Excluded Assets or Excluded Liabilities; provided, that access to the
ALSS Platform and other Software shall be governed solely by the Intellectual Property Rights Agreement and the Services Agreement and, provided
further, anything foregoing to the contrary notwithstanding, Buyer shall not be required to disclose or deliver trade secret or confidential information regarding the ALSS
Platform, Software or Acquired Intellectual Property unless required by the Intellectual Property Rights Agreement, the Services Agreement or required by law or legal proceedings and under the type of
protective provisions in the Intellectual Property Rights Agreement. 

        (3)  the
provision of rights of access (to the extent not covered by the Intellectual Property Rights Agreement) to Buyer to Intellectual Property currently owned (or
licensed) by Parent (or the Selling Companies) and used by the Selling Companies in connection with the Purchased Assets or Assumed Liabilities; 

        (4)  moving
corporate records related to the Selling Companies; and 

        (5)  the
provision of office space, computer equipment and supplies sufficient to enable the Selling Companies to complete any transition services; and 

	(ii)
	for
such services and facilities as Sellers and Selling Subsidiaries may require to monitor compliance with, and implementation of the Subservicing
Agreement, during its term, including the provision of office space, computer equipment and supplies sufficient to enable Sellers to monitor compliance with the Retained Portfolio Subservicing
Agreement throughout its term. 

        (b)  In
addition to the matters to be identified pursuant to paragraph (a) of this Section 5.12, the Transition Agreement shall specifically provide for the
transactions and matters outlined in Section 5.12 of Sellers' Disclosure Schedule. 

        (c)  For
the purpose of facilitating the transition of the financial system, on or prior to the 15th day prior to the Closing Date, the Selling Companies shall create on
their general ledger, a separate general ledger company ("GL Company"), as well as accounts for such GL Company ("Buyer GL
Accounts"), which accounts shall be duplicative of the Selling Companies' own accounts ("Seller GL Accounts") and are intended
to be used by the Buyer in the operation of the Business, the Purchased Assets and the Assumed Liabilities from and after the Closing Date. From and after the creation of the Buyer GL Accounts, until
Closing, the Selling Companies shall maintain such accounts (as duplicate entries on the books of the Selling Companies in the name of the GL Company). From and after Closing until the completion of
the transition of the financial system of the Selling Companies, the Buyer shall operate the Business by recording entries using the Buyer GL Accounts, and shall maintain on behalf of the Selling
Companies, the Seller GL Accounts on its general ledger. 

        (d)  The
party receiving service under the Transitional Agreement shall pay to the party providing service the costs incurred by such providing party. Services provided under
the Transitional Agreement shall be performed at the same standard as the providing party performs such service for its own account. 

 
 

         5.13    MSR Purchases by Buyer.     From and after January 1, 2002 to the Closing Date, any purchases by
Buyer of mortgage servicing rights or the purchase of any business principally engaged
in the Servicing of FNMA, FHLMC or GNMA residential mortgage loan servicing rights shall comply with the procedures in Section 8.4 of the Retained Portfolio Subservicing Agreement as if such
provision were operative and in effect. 

41

 

 
 

         5.14    Damage or Deterioration of 7301 Baymeadows Way.     

        Prior
to the Closing, Sellers and the Selling Companies shall maintain all existing insurance policies in respect of 7301 Baymeadows Way. In the event of any damage to 7301 Baymeadows
Way that results in a recovery under such insurance policies prior to the Closing, Sellers and the Selling Companies shall
transfer the proceeds thereof to Buyer and, for purposes of Article II, the Closing Date Value of 7301 Baymeadows Way shall not reflect any changes arising out of, or in connection with, such
damage to the extent covered by insurance or condemnation proceeds. 

ARTICLE VI  

 Employee Matters  

 
 

         6.01    Employees and Service Crediting.     

 
 

         (a)    Offer of Employment with Buyer.     Within 90 days after the Closing Date, but in no event later
than the date that is 20 days before the end of the Lease Period, Buyer shall make a
written offer of employment to each Prospective Employee and, subject to subsection (c) below, to each Leave Recipient, which offer shall include (i) total cash compensation until
December 31, 2002 that is Comparable Cash Compensation, where "Comparable Cash Compensation" means cash compensation that in the aggregate is
comparable to the total cash compensation (including, but not limited to, short-term and long-term bonus opportunities and commission/incentives opportunities) provided by the
Selling Companies to the relevant employee as of the Closing, and (ii) the covenant of Buyer set forth in subsections 6.01(d)(ii), 6.01(e), 6.01(f) and 6.01(g) below. The Selling Companies
shall cooperate with and use reasonable efforts to assist Buyer in its efforts to secure reasonably satisfactory employment arrangements with the Prospective Employees. Each Prospective Employee who
does not reject an offer of employment with Buyer shall become an employee of Buyer on the last day of the employee leasing period, if any, with respect to such Prospective Employee, in the Employee
Lease (the "Lease Period"), and shall be referred to herein as a "Transferred Employee". 

 
 

         (b)    Adjustment of Prospective Employees for Subsequently Hired Employees.     Prior to the Closing Date,
the Selling Companies shall furnish to Buyer an updated list of all Prospective Employees as of a date that is approximately
30 days prior to the Closing, which list shall indicate each Prospective Employee's prior service, projected to the Closing Date. 

 
 

         (c)    Special Provisions for Leave Recipients.     

        (1)  With
respect to any Prospective Employee who is not actively at work on the Closing Date as a result of short-term disability leave, or other approved
personal leave (including, without limitation, military leave with reemployment rights under federal law and leave under the Family Medical Leave Act of 1993) (collectively, the
"Leave Recipients") Buyer will explain to Leave Recipients Buyer's intention to make an offer of employment in the manner required by
Section 6.01(a) contingent on such
Prospective Employee's return to active status at the termination of such disability or approved leave of absence, respectively, provided that he or she
returns to active service before the later of (A) the end of the Lease Period or (B) the date such employee's reemployment rights expire under applicable laws or under the Compensation
and Benefit Plans. 

        (2)  When
the Leave Recipient returns to active status pursuant to the terms of clause (1) above, such Leave Recipient shall be considered a Transferred Employee (as
defined above) and the following provisions shall apply: (A) the Leave Recipient shall become eligible for coverage and benefits under all employee benefit plans or programs maintained by Buyer
under the same terms and conditions that apply to other Transferred Employees; and (B) the Leave Recipient's period of leave shall be treated as a period of service under the employee benefit
plans and 

42

 

programs
of Buyer to the same extent as if the Leave Recipient had received benefits under a similar plan or was subject to a similar policy of Selling Companies except to the extent such service
credit will result in duplication of benefits to the Leave Recipient. 

 
 

         (d)    Buyer Benefit Obligation.     

	(i)
	Buyer
shall establish and maintain, until at least December 31, 2002, employee benefit plans, programs, policies and arrangements for Transferred
Employees which provide benefits to the Transferred Employees that are no less favorable in the aggregate to those provided to them under the applicable Compensation and Benefit Plans in effect on the
Closing Date.

	(ii)
	Notwithstanding
the above aggregation, (A) Buyer shall accept assignment, and assume, from Sellers, all agreements to which any Prospective
Employee is a party and (B) Buyer shall provide severance pay and benefits pursuant to the severance terms set forth in Section 6.01(d) of Sellers' Disclosure Schedule, to Prospective
Employees whose employment becomes terminated under circumstances set forth therein from the Closing Date until July 1, 2003. 

 
 

         (e)    Recognition of Service.     For purposes of eligibility, vesting, vacation entitlement and severance
benefits and benefit accrual for sick leave under all employee compensation and benefit
plans of Buyer, each Transferred Employee shall receive full credit from Buyer for all prior service properly credited under the Compensation and Benefit Plans; provided,
however, that for purposes of Buyer's cash balance pension plan, each Transferred Employee shall receive such prior service credit only for the period between the Closing Date
and the end of the Lease Period. The schedule of service provided by Sellers prior to the end of the Lease Period may be conclusively relied upon by Buyer in crediting service in accordance with this
Section 6.01(b). 

 
 

         (f)    Welfare Plans and Other Unfunded Plans.     Buyer shall offer coverage under employer-sponsored medical
and dental plans and agree to cause each of such medical and dental plans that provides coverage to a
Transferred Employee to (A) waive any pre-existing conditions, waiting periods and actively at work requirements under such plans, and (B) cause such plans to honor any
expenses (including any expenses paid for purposes of satisfying applicable deductibles, co-insurance and maximum out-of-pocket limits) incurred by the Transferred
Employees and their beneficiaries under similar plans of the Selling Companies during the portion of the calendar year prior to the Closing Date for purposes of satisfying applicable deductible and
maximum out-of-pocket expenses under Buyer's plans. 

 
 

        (g)    Time Off.     On the Closing Date, the Selling Companies shall pay out to each Prospective Employee an
amount in cash equal to the time off benefits earned but not yet used by
such employee as of the Closing Date, if any. In addition, the Selling Companies shall pay out to each Prospective Employee an amount in cash equal to the time off benefit earned but not used during
the Lease Period, if any (the "Lease Time Off Cash"). Buyer shall reimburse the Selling Companies pursuant to the Employee Lease for the Lease Time Off
Cash as part of the Base Fee (as defined in Section 3.1(a) of the Employee Lease). Buyer shall waive any service requirements or other applicable internal guidelines, to allow Transferred
Employees to take unpaid time off from Buyer up to the number of days represented by the Lease Time Off Cash, beginning immediately after the end of the Lease Period, subject to a department manager's
request to meet reasonable business needs. 

 
 

         (h)    WARN Act and Health Care Continuance Requirements.     Buyer shall be responsible for providing or
discharging any and all notifications, benefits, and liabilities to Transferred Employees and Governmental Authorities
required by the WARN Act or by any other applicable law relating to plant closings or employee separations or severance pay that are first required to be provided or discharged on or after the Closing
Date, including pre-closing notice or liabilities if actions by Buyer on or after 

43

 

the
Closing Date result in a notice requirement or liability under such laws. Upon Buyer's reasonable request, during the Lease Period Selling Companies shall provide any notification described under
the WARN Act to any Prospective Employees identified by Buyer, in order to attempt to minimize Buyer's liability under the first sentence of this subsection. All employees involuntarily separated from
employment by any of the Selling Companies within 90 days of the Closing Date, the involuntary separation of whom could result in a notice requirement covered by this Section, shall be
identified on a schedule to be prepared by the Selling Companies and submitted to Buyer on the Closing Date. Buyer and the Selling Companies shall cooperate with each other to provide timely notice,
if required, to any Governmental Entity of the consummation of this Agreement and the related transfer of employees. The Selling Companies shall retain the obligations with respect to COBRA
continuation coverage for all Prospective Employees who are not Transferred Employees. 

ARTICLE VII  

 Conditions To The Closing  

 
 
        7.01    Conditions to Each Party's Obligation to Effect the Purchase.     

        The
respective obligations of each of Sellers and Buyer to consummate the Purchase are subject to the fulfillment or written waiver, at or prior to the Closing Date, of each of the
following conditions: 

        (a)    Regulatory Approvals.    All Governmental Authority approvals required to consummate the transactions
contemplated hereby will have been obtained and will remain in full force and effect and all statutory waiting periods in respect thereof will have expired, unless the failure to obtain any such
approval is not reasonably likely to have a Material Adverse Effect on the Business. 

        (b)    No Injunction.    No Governmental Authority of competent jurisdiction will have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and prohibits consummation of the
transactions contemplated by this Agreement as a whole. 

        (c)    Certain Representations.    The representation and warranty of Sellers set forth in Section 4.03(v)(3)
shall be true and correct as of the Closing Date. 

 
 

         7.02    Conditions to Obligation of Buyer.     

        The
obligations of Buyer to consummate the Purchase are also subject to the fulfillment or written waiver, at or prior to the Closing Date, of each of the following conditions: 

        (a)    Representations and Warranties.    The representations and warranties of Sellers set forth in this Agreement
will be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except that representations and warranties that by their terms speak
as of the date of this Agreement or some other date will be true and correct as of such date only) and Buyer will have received certificates, dated the Closing Date, signed on behalf of each of
Sellers to such effect; provided, however, that for purposes of determining the satisfaction of this condition, no effect shall be given to any
exception or qualification in such representations and warranties relating to materiality or a Material Adverse Effect; and provided further that, for
purposes of this condition, such representations and warranties (other than the representations and warranties in Section 4.02(b), which shall be true in all respects) shall be deemed to be
true and correct in all respects unless the failure of such representations and warranties to be so true and correct, individually
or in the aggregate, results or would reasonably be expected to result in a Material Adverse Effect on Sellers or on the Business. 

        (b)    Performance of Obligations of Sellers.    Sellers will have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing 

44

 

Date
and Buyer will have received certificates, dated the Closing Date, signed on behalf of each of Sellers to such effect. 

        (c)    Third Party Consents.    All consents or approvals of all Persons, other than Governmental Authorities,
required for or in connection with the execution, delivery and performance of this Agreement (including consummation of the Purchase) will have been obtained and will be in full force and effect,
unless the failure to obtain any such consent or approval is not reasonably likely to have a Material Adverse Effect on the Business; provided, however,
that all consents and approvals listed on Exhibit 7.02(c) and all consents and approvals with respect to agreements listed on Exhibit 7.02(c) must be obtained and in full force and
effect. 

 
 

        7.03    Conditions to Obligations of Sellers.     

        The
obligations of Sellers to consummate the Purchase are also subject to the fulfillment or written waiver, at or prior to the Closing Date, of each of the following conditions: 

        (a)    Representations and Warranties.    The representations and warranties of Buyer set forth in this Agreement will
be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except that representations and warranties that by their terms speak as of
the date of this Agreement or some other date will be true and correct as of such date only) and Sellers will have received a certificate, dated the Closing Date, signed on behalf of Buyer to such
effect; provided, however, that for purposes of determining the satisfaction of this condition, no effect shall be given to any exception or
qualification in such representations and warranties relating to materiality or a Material Adverse Effect; and provided further that, for purposes of
this condition, such representations and warranties (other than the representations and warranties in Section 4.03(b), which shall be true in all respects) shall be deemed to be true and
correct in all respects unless the failure of such representations and warranties to be so true and correct, individually or in the aggregate, results or would reasonably be expected to result in a
Material Adverse Effect on Buyer. 

        (b)    Performance of Obligations of Buyer.    Buyer will have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing Date and Sellers will have received a certificate, dated the Closing Date, signed on behalf of Buyer to such effect. 

        (c)    Third Party Consents.    All consents or approvals of all Persons, other than Governmental Authorities,
required for or in connection with the execution, delivery and performance of this Agreement (including consummation of the Purchase) will have been obtained and will be in full force and effect,
unless the failure to obtain any such consent or approval is not reasonably likely to have a Material Adverse Effect on the Business; provided, however,
that all consents and approvals listed on Exhibit 7.02(c) and all consents and approvals with respect to agreements listed on Exhibit 7.02(c) must be obtained and in full force and
effect. 

45

  

ARTICLE VIII  

 Termination  

 
 

         8.01    Termination.     

        This
Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date: 

        (a)    Mutual Consent.    By the mutual written consent of Sellers and Buyer. 

        (b)    Breach.    By Sellers or Buyer, by written notice, in the event of either: (1) a breach by the other
party of any representation or warranty contained herein, which breach cannot be cured or which has not been cured within 30 days after the giving of written notice to the breaching party of
such breach, or (2) a breach by the other party of any of the covenants or agreements contained herein, which breach cannot be cured or which has not been cured within 30 days after the
giving of written notice to the breaching party of such breach, provided that such breach (whether under (1) or (2)) would be reasonably likely,
individually or in the aggregate with other breaches, to result in a Material Adverse Effect. 

        (c)    Delay.    By Sellers or Buyer, by written notice, in the event that the Purchase is not consummated by the
first day of the month after the month in which the six-month anniversary of execution of this Agreement occurs, except to the extent that the failure of the Purchase then to be
consummated arises out of or results from the action or inaction of the party seeking to terminate pursuant to this Section 8.01(c). 

        (d)    No Approval.    By Sellers or Buyer, by written notice, in the event the approval of any Governmental Authority
required for consummation of the transactions contemplated hereby will have been denied by final nonappealable action of such Governmental Authority or if such Governmental Authority will have issued
an order, decree or ruling or taken any other action in effect permanently restraining, enjoining or otherwise prohibiting consummation of the transactions contemplated by this Agreement, and such
order, decree, ruling or other action will have become final and nonappealable, unless the failure to obtain any such approval is not reasonably likely to have a Material Adverse Effect on the
Business. 

 
 

        8.02    Effect of Termination and Abandonment.     

        In
the event of termination of this Agreement and the abandonment of the Purchase pursuant to this Article VIII, no party to this Agreement will have any liability or further
obligation to any other party to this Agreement, except (a) for obligations arising under Sections 5.02(b), 5.02(c), 5.04 and 5.11(b), this Section 8.02 and Article XI and
(b) that termination will not relieve a breaching party from liability for any willful breach of this Agreement giving rise to such termination. 

ARTICLE IX  

 Tax Matters  

 
 

         9.01    Cooperation.     

        Buyer
shall provide Sellers and their designees with such assistance as may reasonably be requested by Sellers or any such designee in connection with the preparation of any Tax Return,
audit or judicial or administrative proceeding or determination relating to Taxes with respect to the Purchased Assets for periods prior to Closing, including, without limitation, access to the books
and records that relate to the Purchased Assets, and the assistance of the officers and employees of Buyer and their respective Affiliates. 

46

 

 
 

         9.02    Transfer Taxes.     

        All
stamp, transfer, excise, documentary, sales, use, registration and other such taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the
transactions contemplated hereby (collectively, the "Transfer Taxes") shall be split evenly between Buyer and Seller. Buyer shall properly file on a
timely basis all necessary tax returns and other documentation with respect to, any Transfer Tax and provide to Sellers evidence of filing and payment of all Transfer Taxes. 

ARTICLE X  

 Indemnification  

 
 

         10.01    Indemnification Not Subject to Limitations.     

        Without
regard to the DeMinimis Liability Restriction (as hereinafter defined), the Deductible (as hereinafter defined), the Cap (as hereinafter defined) or the periods of survival set
forth in and applicable to certain of the other provisions of this Article X, from and after the Closing Date: 

        (a)  Sellers
shall jointly and severally indemnify and hold harmless Buyer and its Affiliates, each of their respective directors, officers, employees and agents, and each of
the respective heirs, executors, successors and assigns of any of the foregoing (collectively, the "Buyer Indemnified Parties") from and against any and
all Liabilities incurred by or asserted against any of Buyer Indemnified Parties in connection with or arising from: 

	(i)
	any
breach of any representation, warranty or agreement made by, or on behalf of, Sellers under Section 2.02 (Consideration for Purchased
Assets), Section 2.03 (Proration of Expenses), Section 2.04 (Calculation of Purchase Price), Section 2.05 (Settlement Date Payment), Section 2.06 (Allocation of Purchase
Price), Section 2.07 (No Offset), Section 2.08 (Interim Settlement), Section 2.09 (Co-Issue), Section 4.02(d) (Title to and Sufficiency of Purchased Assets)
(but in the case of Section 4.02(d)(2), only for breaches arising within one year of the Closing Date), Section 4.02(m) (ALSS Platform), Section 4.02(j) (Liens for Taxes),
Section 4.02(t)(1) (Warehouse Loans Ownership), Section 4.02(v)(3) (Financial Reports; No Material Adverse Effect) (but in the case of Section 4.02(v)(3), only for breaches
arising within one year of the Closing Date), Article VI (Employee Matters) and Article IX (Tax Matters) of this Agreement;

	(ii)
	any
Tax or Lien for Taxes imposed upon any of the Excluded Assets, any of the Excluded Liabilities or the Business, the Purchased Assets or the Assumed
Liabilities for any period on or prior to the Closing Date and any audit or judicial or administrative proceedings or determinations relating to such Taxes or such Liens;

	(iii)
	any
litigation, claims, actions, arbitrations or investigations or other proceedings before any Governmental Authority pending or threatened as of the
Closing Date against the Selling Companies, Purchased Assets or Assumed Liabilities;

	(iv)
	any
Excluded Liabilities; or

	(v)
	any
Excluded Assets; 

provided, however, there shall be excluded from the indemnification obligation any Liabilities resulting from a fact or circumstance which constitutes a
breach by Buyers of any representation, warranty or agreement set forth in this Agreement. 

        (b)  Buyer
shall indemnify and hold harmless Sellers and Sellers' Affiliates, each of their respective directors, officers, employees and agents, and each of the respective
heirs, executors, 

47

 

successors
and assigns of any of the foregoing (collectively, the "Seller Indemnified Parties") from and against any and all Liabilities incurred by or
asserted against any of Seller Indemnified Parties in connection with or arising from: 

	(i)
	any
breach of any representation, warranty or agreement made by, or on behalf of, Buyer under Section 2.02 (Consideration for Purchased Assets),
Section 2.03 (Proration of Expenses), Section 2.04 (Calculation of Purchase Price), Section 2.05 (Settlement Date Payment), Section 2.06 (Allocation of Purchase Price),
Section 2.07 (No Offset), Section 2.08 (Interim Settlement), Section 2.09 (Co-Issue), Article VI (Employees) and Article IX (Tax Matters) of this
Agreement;

	(ii)
	any
Tax or Lien for Taxes imposed upon any of the Purchased Assets, any of the Assumed Liabilities or the Business for any period after the Closing
Date and any audit or judicial or administrative proceedings or determinations relating to such Taxes or such Liens;

	(iii)
	any
Assumed Liabilities;

	(iv)
	any
Purchased Assets; or

	(v)
	the
operation of the Business or the Purchased Assets from and after the Closing Date. 

provided, however, there shall be excluded from the indemnification obligation any Liabilities resulting from a fact or circumstance which constitutes a
breach by Sellers of any representation, warranty or agreement set forth in this Agreement. 

 
 

         10.02    Indemnification Subject to Limitations.     

        Subject
to the De Minimis Liability Restriction (as hereinafter defined), the Deductible (as hereinafter defined), the Cap (as hereinafter defined) and the periods of survival set forth
below and applicable to the indemnification obligations of Sellers and Buyer under this Section 10.02, from and after the Closing Date: 

        (a)  Sellers
shall jointly and severally indemnify and hold harmless Buyer Indemnified Parties from and against any and all Liabilities incurred by or asserted against any of
Buyer Indemnified Parties in connection with or arising from: 

	(i)
	any
breach of any representation, warranty or agreement made by, or on behalf of, Sellers under this Agreement other than those specifically referred to
in Section 10.01(a)(i); or

	(ii)
	the
operation or ownership of the Business or the Purchased Assets on or prior to the Closing Date. 

        (b)  Buyer
shall indemnify and hold harmless Seller Indemnified Parties from and against any and all Liabilities incurred by or asserted against any of Seller Indemnified
Parties in connection with or arising from any breach of any representation, warranty or agreement made by, or on behalf of, Buyer under this Agreement other than those specifically referred to in
Section 10.01(b)(i). 

 
 

         10.03    Survival Periods.     

        The
obligations to indemnify and hold harmless any party pursuant to Section 10.02(a) or 10.02(b) shall terminate on June 30, 2003. The obligations to indemnify and hold
harmless any party pursuant to Section 10.01(a) and 10.01(b) shall survive indefinitely. 

48

 

 
 

         10.04    Miscellaneous.     

        (a)  After
the Closing, and except for any claims made under Sections 5.02(b), (c), (d), (e), 5.04, 5.05, 5.06, 5.07, 5.08, 5.10, 5.11, 5.12 and 5.13 and Article IX,
and the Ancillary Agreements, the indemnification expressly provided in this Article X shall be the sole and exclusive remedy for any matter arising out of or relating to this Agreement or the
transactions contemplated hereby by any party. Nothing herein shall preclude a party hereto from applying to a court for equitable relief to enforce its rights under this Agreement. 

        (b)  Each
indemnitee under this Article X shall use its reasonable efforts to mitigate Liabilities for which it seeks or reasonably anticipates seeking indemnification
hereunder. 

        (c)  For
purposes of determining whether a breach of a representation or warranty in this Agreement has occurred for purposes of this Article X no effect shall be
given to any exception or qualification relating to materiality or Material Adverse Effect. 

        (d)  In
calculating any amount of Liabilities payable to Sellers or Buyer under this Article X, the indemnifying party shall receive credit for (1) any
reduction in tax liability of the Indemnified Party (as defined herein) as a result of the facts giving rise to the claim for indemnification, (2) any insurance recoveries offsetting the amount
of loss and (3) any recoveries from third parties pursuant to indemnification or otherwise with respect thereto. Any party receiving indemnity shall assign to the indemnifying party all of its
claims for recovery against third parties as to such Liabilities whether by insurance coverage, contribution claims, subrogation or otherwise. 

 
 

         10.05    De Minimis Liability, Deductible and Cap.     

        (a)  Sellers
shall not have any Liability whatsoever under Section 10.02(a) for any individual Liability that is less than $25,000 (the "De
Minimis Liability Restriction"). Sellers shall not have any liability whatsoever under Section 10.02(a) for any Liability until the aggregate of all Liabilities for
which Sellers would be liable under Section 10.02(a) exceeds on a cumulative basis an amount equal to $3,500,000 (the "Deductible"), and then
only to the extent of any such excess. The maximum liability of Sellers (collectively) under Section 10.02(a) shall be equal to $125,000,000 (the
"Cap"). 

        (b)  Buyer
shall not have any Liability whatsoever under Section 10.02(b) for any individual Liability that is less than $25,000. Buyer shall not have any liability
whatsoever under Section 10.02(b) for any Liability until the aggregate of all Liabilities for which Buyer would be liable under Section 10.02(b) exceeds on a cumulative basis an amount
equal to the Deductible, and then only to the extent of any such excess. The maximum liability of Buyer under Section 10.02(b) shall be equal to the Cap. 

 
 

         10.06    Third-Party Claims.     

        If
a claim by a third party (a "Third-Party Claim") is made against a Seller Indemnified Party or Buyer Indemnified Party (collectively,
an "Indemnified Party"), and if such Indemnified Party intends to seek indemnity with respect thereto under this Article X, such Indemnified
Party shall promptly notify in writing the indemnifying party of such claims; provided, that, that failure to promptly notify the indemnifying party
will not relieve the indemnifying party of any liability it may have to the indemnified party, except to the extent that the indemnifying party demonstrates that the defense of such Third-Party Claim
is prejudiced by the indemnified party's failure to give notice within such time period. The indemnifying party shall have 30 days after receipt of such notice to undertake, conduct and
control, through counsel of its own choosing and at its own expense, the settlement or defense thereof, and the Indemnified Party shall cooperate with it in connection therewith;  provided that the
indemnifying party shall permit the Indemnified Party to participate in such settlement or defense through counsel chosen by such
Indemnified Party, provided that the fees and expenses of such counsel shall be borne by such Indemnified Party. If the indemnifying party so chooses to
assume the defense it shall do so promptly 

49

 

and
diligently. So long as the indemnifying party is reasonably contesting any such claim in good faith, the Indemnified Party shall not pay or settle any such claim. Notwithstanding the foregoing,
the Indemnified Party shall have the right to pay or settle any such claim, provided that, in such event, it shall waive any right to indemnity therefor
by the indemnifying party. If the indemnifying party does not notify the Indemnified Party in writing within 30 days after the receipt of the Indemnified Party's written notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the Indemnified Party shall have the right to contest, settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement. The indemnifying party shall not, except with the written consent of the Indemnified Party, enter into any settlement unless (A) there is no
finding or admission of any violation of Applicable Law, (B) the sole relief provided is monetary damages that are paid in full by the indemnifying party, (C) the indemnified party or
its Affiliates shall have no liability with respect to any compromise or settlement of such Third-Party Claim, and (D) the compromise or settlement provides to all indemnified parties and their
Affiliates and agents an unconditional release from all liability with respect to such Third-Party Claim or the facts underlying such Third-Party Claim. With respect to any Third-Party Claim subject
to indemnification under this Article X, (i) both the Indemnified Party and the indemnifying party, as the case may be, shall keep the other party reasonably informed of the status of
such Third-Party Claim and any related proceedings at all stages thereof, (ii) the parties agree to render to each other such assistance as they may reasonably require of each other and to
cooperate in good faith with each other in order to ensure the proper and adequate defense of any Third-Party Claim and (iii) with respect to any Third-Party Claim subject to indemnification
under this Article X, the parties agree to cooperate in such a manner as to preserve in full (to the extent possible) the confidentiality of all confidential information and the attorney-client
and work-product privileges. 

ARTICLE XI  

 General Provisions  

 
 

         11.01    Notices.     

        All
notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed given if delivered personally, transmitted by facsimile (and
telephonically confirmed), mailed by registered or certified mail with postage prepaid and return receipt requested, or sent by commercial overnight courier, courier fees prepaid, to the parties at
the following addresses: 

        (a)  if
to Buyer, to it at: 

	 	 	Washington Mutual Bank, FA

1501 4th Avenue, 6th Floor

Seattle, WA 98101
	 	 	Attention:	 	Melba Bartels

Senior Vice President
	 	 	Facsimile:	 	(206) 554-2887
	

 	
 	

with copies to:
	

 	
 	

Washington Mutual Bank, FA

1201 Third Avenue, 17th Floor

Seattle, WA 98101
	 	 	Attention:	 	Carey M. Brennan

Senior Vice President and Associate General Counsel
	 	 	Facsimile:	 	(206) 377-6244

50

 

	

 	
 	

Heller Ehrman White & McAuliffe LLP

701 Fifth Avenue, Suite 6100

Seattle, WA 98104
	 	 	Attention:	 	Bernard L. Russell
	 	 	Facsimile:	 	(206) 389-6217

        (b)  if
to Sellers, to them at: 

	 	 	HomeSide Lending, Inc.

Office of the CEO

200 Park Avenue

New York, NY 10166
	 	 	Attention:	 	Joseph J. Whiteside
	 	 	Facsimile:	 	(212) 983-1969
	

 	
 	

with copies to:
	

 	
 	

National Australia Bank Limited

Legal Department, Level 24

500 Bourke Street

Melbourne, Victoria 3000
	 	 	Attention:	 	David Krasnostein, Esq.

Group General Counsel
	 	 	Facsimile:	 	61-3-8641-4902/4906
	

 	
 	

and
	

 	
 	

Sullivan & Cromwell

125 Broad Street

New York, NY 10004-2498
	 	 	Attention:	 	Mark J. Menting
	 	 	Facsimile:	 	212-558-3588

or
to such other Person or address as either party shall specify by notice in writing to the other party in accordance with this Section 11.01. All such notices or other communications shall be
deemed to have been received on the date of the personal delivery or facsimile transmission (with telephone confirmation) or on the third Business Day after the mailing or dispatch thereof;  provided
that notice of change of address shall be effective only upon receipt. 

 
 

         11.02    Amendment and Modification; Waiver.     

        (a)  This
Agreement and the Disclosure Schedules hereto may not be amended except by an instrument or instruments in writing signed and delivered on behalf of each of the
parties hereto. 

        (b)  At
any time prior to the Closing Date, any party hereto which is entitled to the benefits hereof may, by an instrument in writing, (i) extend the time for the
performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracy in the representations and warranties of the other party contained herein or in any schedule
hereto or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements of the other party or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be valid if set forth in an instrument in writing signed and delivered on behalf of such party. 

 
 

         11.03    Entire Agreement.     

        This
Agreement (including the Disclosure Schedules and Exhibits (but excluding the Ancillary Agreements)) constitute the entire agreement and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the subject matter hereof. 

51

  

 
 

         11.04    Fees and Expenses.     

        Except
as otherwise expressly provided herein, Sellers shall be responsible for all transfer and recording fees, costs with respect to delivery of the custodial and other loan files and
mortgage servicing records relating to the Acquired Warehouse Loans and the Pipeline Loans and other related costs incurred by Sellers in their performance of their obligations under this Agreement,
together with fees of Sellers' document custodian, attorneys and accountants. Buyer shall pay all data processing costs incurred by Buyer in connection with this Agreement, and other related costs of
Buyer in its performance of its obligations under this Agreement, together with fees of Buyer's attorneys and accountants. 

 
 

         11.05    Third Party Beneficiaries.     

        Nothing
in this Agreement, express or implied, is intended to confer upon any Person (including, without limitation, employees of Sellers or Investors) other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. 

 
 

         11.06    Assignment; Binding Effect.     

        This
Agreement shall not be assigned by any of Sellers or (until payment of the Final Purchase Price) Buyer hereto without the prior written consent of the other parties;  provided, however, that this
Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and
permitted assigns, and provided further that Buyer shall have the right to assign to a Subsidiary of Buyer, Buyer's right hereunder to purchase any
Purchased Assets so long as (a) Buyer irrevocably and unconditionally guarantees all of the obligations of such Subsidiary hereunder and (b) such assignment shall not affect Buyer's
obligations hereunder, delay the Closing, adversely affect Buyer's ability to consummate the transaction contemplated hereby or otherwise adversely affect any interest (economic, tax, regulatory or
otherwise) of Sellers in this Agreement. 

 
 

         11.07    Governing Law.     

        (a)  This
Agreement shall be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely within the State of New York, without regard to the conflicts of law principles of the State of New York. 

        (b)  Each
party hereto agrees that it will bring any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions contemplated
hereby or thereby exclusively in the United States District Court for the Southern District of New York or the Supreme Court of the State of New York for New York County (the
"Chosen Courts") and solely in connection with claims arising under this Agreement or the transactions contained in or contemplated by this Agreement
(1) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (2) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (3) to
the fullest extent permitted by law, waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto and (4) agrees that service of
process upon such party in any such action or proceeding will be effective if notice is given in accordance with Section 11.01. 

 
 

         11.08    Waiver of Jury Trial.     

        Each party hereto acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues, and
therefore each such party hereby irrevocably and unconditionally waives any right such party may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating
to this Agreement, or the transactions contemplated by this Agreement. Each party certifies and acknowledges that (a) 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, (b) each party understands  

52

 

 and has considered the implications of this waiver, (c) each party makes this waiver voluntarily, and (d) each party has been induced to enter into this Agreement by, among other
things, the mutual waivers and certifications in this Section 11.08.

 
 

         11.09    Counterparts.     

        This
Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. 

 
 

         11.10    Severability.     

        The
provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions
hereof. If any provision of this Agreement, or the application thereof to any person or entity or any circumstance, is found by a court or other Governmental Authority of competent jurisdiction to be
invalid or unenforceable, (a) a
suitable and equitable provision will be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and
(b) the remainder of this Agreement and the application of such provision to other persons, entities or circumstances will not be affected by such invalidity or unenforceability, nor will such
invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. 

 
 

        11.11    Affiliates of Buyer.     

        To
the extent that this Agreement obligates any Affiliate of Buyer either to take or to refrain from taking certain actions, Buyer shall cause such Affiliate to comply with such
covenant. 

*                *                *  

[The next page is a signature page.]  

53

 

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on their behalf by their respective officers hereunto duly authorized. 

	 	 	Sellers:

NATIONAL AUSTRALIA BANK LIMITED
	

 	
 	

By:	
 	

/s/  SIMON MOORE      
 Name: Simon Moore

Title: Head of Investments and Advisory
	

 	
 	

HOMESIDE INTERNATIONAL, INC.
	

 	
 	

By:	
 	

/s/  JOSEPH J. WHITESIDE      
 Name: Joseph J. Whiteside

Title: Chief Executive Officer
	

 	
 	

HOMESIDE LENDING, INC.
	

 	
 	

By:	
 	

/s/  JOSEPH J. WHITESIDE      
 Name: Joseph J. Whiteside

Title: Chairman and Chief Executive Officer
	

 	
 	
Buyer:

WASHINGTON MUTUAL BANK, FA
	

 	
 	

By:	
 	

/s/  CRAIG E. TALL      
 Name: Craig E. Tall

Title: Vice Chair

54

  

Exhibit F  

BILL OF SALE AND INSTRUMENT OF ASSUMPTION OF LIABILITIES  

        This BILL OF SALE AND INSTRUMENT OF ASSUMPTION OF LIABILITIES (this "Agreement"), made and entered into as of
                        , 2002, by and between HomeSide International, Inc., a Delaware corporation ("HSI"), HomeSide Lending, Inc., a Florida
corporation ("HSL"), [other Selling Subsidiaries] (the "Selling Subsidiaries",
and together with HSI and HSL, the "Assignors") and Washington Mutual Bank, FA, a federal savings association
("Buyer" or "Assignee"). 

W I T N E S S E T H:  

        WHEREAS, pursuant to that certain Asset Purchase/Liability Assumption Agreement, dated as of December 10, 2001 (the "Purchase
Agreement"), by and among Buyer, Assignee and Assignors, among other things, Assignee has agreed to purchase from Assignors and Assignors have agreed to sell, transfer, assign,
convey, and deliver to Assignee, all of their right, title and interest in certain of their assets, properties and business and Assignee has agreed to assume certain of Assignors' liabilities upon the
terms and conditions set forth in the Purchase Agreement; 

        NOW,
THEREFORE, pursuant to the Purchase Agreement and the assignment described above and in consideration of the premises set forth therein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, Assignors and Buyer hereby agree as follows: 

 
 

        Section 1.    Conveyance and Assignment of the Purchased Assets.     

        (a)  In
accordance with all the terms and conditions of the Purchase Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignors by this Agreement hereby sell, convey, assign, transfer and deliver to, and vest in Assignee, its successors and assigns, to have and to hold forever, effective as of the date
hereof, all of the right, title and interest, legal and equitable, of Assignors in and to the Purchased Assets. 

        (b)  Assignors
hereby authorize Assignee to take any appropriate or reasonable action to protect the right, title and interest hereby conveyed in connection with the
Purchased Assets hereby sold, assigned, transferred, conveyed and delivered to Assignee in the name of Assignors or Assignee or any other
name (but for the benefit of Assignee and its successors and assigns) against each and every person or persons whomsoever claiming or asserting any claim against any or all of the same. 

 
 

         Section 2.    Assumption of Liabilities.     

        (a)  In
partial consideration for the foregoing sale, conveyance, assignment, transfer and delivery of the Purchased Assets on the date hereof, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignee, by this Agreement, hereby assumes, becomes responsible for and agrees to pay and hold Assignors harmless
from and against the Assumed Liabilities. 

        (b)  The
assumption by Assignee of the Assumed Liabilities shall not be construed to defeat, impair or limit in any way any rights and remedies of Assignee to contest or
dispute the validity or amount thereof. 

 
 

        Section 3.    Power of Attorney.     Each Assignor hereby constitutes and appoints Assignee, its
successors and assigns, the true and lawful attorney of Assignor with full power of substitution in
the name and stead of such Assignor, but on behalf and for the benefit and at the expense of Assignee, its successors and assigns, to demand and receive any and all of the Purchased Assets assigned by
such Assignor of Assignee pursuant to this Agreement and to give receipts and releases for and in respect of 

F-1

 

the
same or any part thereof, to endorse any claim or right of any kind in respect thereof and to do all acts and things in relation to the above-mentioned Purchased Assets which Assignee, its
successors or assigns, may deem desirable, such Assignor hereby declaring that the foregoing powers are coupled with an interest and are not revocable and shall not be revoked by such Assignor for any
reason whatsoever. 

 
 

         Section 4.    Further Assurances.     Assignors shall, at any time and from time to time, promptly, upon
the reasonable request of Assignee, execute, acknowledge, deliver or perform, all such further
acts, deeds, assignments, transfers, conveyances, and assurances as may be required for the better vesting and conferring to Assignee of title in and to the Purchased Assets, to effect the
transactions contemplated by this Agreement. Assignee shall, at any time and from time to time, promptly, upon the reasonable request of the Assignors, execute, acknowledge, deliver or perform, all
such further acts, deeds, assumption agreements, transfers, and assurances as may be required for the full assumption and transfer to the Assignee of the Assumed Liabilities, to effect the
transactions contemplated by this Agreement. 

 
 

        Section 5.    Notices.     All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed given if delivered personally,
transmitted by facsimile (and telephonically confirmed), mailed by registered or certified mail with postage prepaid and return receipt requested, or sent by commercial overnight courier, courier fees
prepaid, to the parties at the following addresses: 

        (a)  if
to Assignee, to them at: 

	 	 	Washington Mutual Bank, FA

1501 4th Avenue, 6th Floor

Seattle, WA 98101
	 	 	Attention:	 	Melba Bartels

Senior Vice President
	 	 	Facsimile:	 	(206) 554-2887
	

 	
 	

with copies to:
	

 	
 	

Washington Mutual Bank, FA

1201 Third Avenue, 17th Floor

Seattle, WA 98101
	 	 	Attention:	 	Carey M. Brennan

Senior Vice President and

Associate General Counsel
	 	 	Facsimile:	 	(206) 377-6244
	

 	
 	

Heller Ehrman White & McAuliffe LLP

701 Fifth Avenue, Suite 6100

Seattle, WA 98104
	 	 	Attention:	 	Bernard L. Russell
	 	 	Facsimile:	 	(206) 389-6217

        (b)  if
to Assignors, to them at: 

	 	 	HomeSide Lending, Inc.

Office of the CEO

200 Park Avenue

New York, NY 10166
	 	 	Attention:	 	Joseph J. Whiteside
	 	 	Facsimile:	 	(212) 983-1969

F-2

 

	

 	
 	

with copies to:
	

 	
 	

National Australia Bank Limited

Legal Department, Level 24

500 Bourke Street

Melbourne, Victoria 3000
	 	 	Attention:	 	David Krasnostein, Esq.

Group General Counsel
	 	 	Facsimile:	 	61-3-8641-4902/4906
	

 	
 	

and	
 	

 
	

 	
 	

Sullivan & Cromwell

125 Broad Street

New York, NY 10004-2498
	 	 	Attention:	 	Mark J. Menting
	 	 	Facsimile:	 	212-558-3588

or
to such other Person or address as either party shall specify by notice in writing to the other party in accordance with this Section 5. All such notices or other communications shall be
deemed to have been received on the date of the personal delivery or facsimile transmission (with telephone confirmation) or on the third Business Day after the mailing or dispatch thereof;  provided
that notice of change of address shall be effective only upon receipt. 

 
 

         Section 6.    Governing Law.     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed entirely
within the State of New York, without regard to the conflicts of law principles of the State of New York. 

 
 

         Section 7.    Succession and Assignment.     This Agreement shall be binding upon and inure to the
benefit of the parties named herein and their respective successors and permitted assigns. No party may
assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other party, provided,  however, that Buyer may assign this Agreement or any of its rights, interests or obligations hereunder to an Affiliate without the prior written
approval of the Assignors, provided that with respect to this Agreement Sellers shall only be obligated to the original Buyer and Assignee and Assignors continue to interact for all purposes of this
Agreement solely with the original Assignee. 

 
 

         Section 8.    Counterparts.     This Agreement may be executed in two or more counterparts, all of which
shall be considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the parties and delivered to the other party. 

 
 

        Section 9.    Conflicts.     In the event that the terms of this Agreement and the terms of the Purchase
Agreement are inconsistent or otherwise conflict, the terms of the Purchase Agreement
shall be deemed to be controlling. 

 
 

        Section 10.    Definitions.     Capitalized terms used, but not defined herein shall have those meanings
assigned to them in the Purchase Agreement. 

F-3

        IN WITNESS WHEREOF, the parties hereto have duly executed or caused this Agreement to be duly executed on the date first above written. 

	 	 	HOMESIDE INTERNATIONAL, INC.
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Name:

Title:
	

 	
 	

HOMESIDE LENDING, INC.
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Name:

Title:
	

 	
 	

WASHINGTON MUTUAL BANK, FA
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Name:

Title:

QuickLinks

1.01 Defined Terms.

1.02 Interpretation.

Delivery of Purchased Assets; Assumption of Assumed Liabilities

2.02 Consideration for Purchased Assets.

2.03 Proration of Expenses.

2.04 Calculation of Purchase Price.

2.05 Settlement Date Payments.

2.06 Allocation of Purchase Price.

2.07 No Offset .

2.08 Interim Settlement.

2.09 Co-Issue.

3.01 Closing and Closing Date .

3.02 Assignment and Assumption Documents .

3.03 Further Assistance and Assurances .

3.04 Other Consents .

4.01 Disclosure Schedules.

4.02 Representations and Warranties of Sellers .

4.03 Representations and Warranties of Buyer .

4.04 No Other Representations or Warranties.

5.01 Conduct of Business.

5.02 Access; Confidentiality.

5.03 Taking of Necessary Action.

5.04 Disclosure.

5.05 Missing Mortgage Loan Documents.

5.06 Post-Closing Collection of Certain Receivables.

5.07 Granted Licenses.

5.08 Insurance Matters.

5.09 No Solicitation.

5.10 Non-Competition Agreement.

5.11 Non-Solicitation of Employees.

5.12 Transitional Matters.

5.13 MSR Purchases by Buyer.

5.14 Damage or Deterioration of 7301 Baymeadows Way.

6.01 Employees and Service Crediting.

(a)  Offer of Employment with Buyer.

(b)  Adjustment of Prospective Employees for Subsequently Hired Employees.

(c)  Special Provisions for Leave Recipients.

(d)  Buyer Benefit Obligation.

(e)  Recognition of Service.

(f)  Welfare Plans and Other Unfunded Plans.

(g)  Time Off.

(h)  WARN Act and Health Care Continuance Requirements.

7.01 Conditions to Each Party's Obligation to Effect the Purchase.

7.02 Conditions to Obligation of Buyer.

7.03 Conditions to Obligations of Sellers.

8.01 Termination.

8.02 Effect of Termination and Abandonment.

9.01 Cooperation.

9.02 Transfer Taxes.

10.01 Indemnification Not Subject to Limitations.

10.02 Indemnification Subject to Limitations.

10.03 Survival Periods.

10.04 Miscellaneous.

10.05 De Minimis Liability, Deductible and Cap.

10.06 Third-Party Claims.

11.01 Notices.

11.02 Amendment and Modification; Waiver.

11.03 Entire Agreement.

11.04 Fees and Expenses.

11.05 Third Party Beneficiaries.

11.06 Assignment; Binding Effect.

11.07 Governing Law.

11.08 Waiver of Jury Trial.

11.09 Counterparts.

11.10 Severability.

11.11 Affiliates of Buyer.

Section 1. Conveyance and Assignment of the Purchased Assets.

Section 2. Assumption of Liabilities.

Section 3. Power of Attorney.

Section 4. Further Assurances.

Section 5. Notices.

Section 6. Governing Law.

Section 7. Succession and Assignment.

Section 8. Counterparts.

Section 9. Conflicts.

Section 10. Definitions.QuickLinks
 -- Click here to rapidly navigate through this document

EXHIBIT 4.2  

Sale of SR Investment, Inc.  

STOCK PURCHASE AGREEMENT  

 Dated as of August 27, 2002  

 Among  

 National Australia Bank Limited

(ABN 12 004 044 937),

MSRA Holdings, Inc.

HomeSide Lending, Inc.

and

SR Investment, Inc.  

 and  

 Washington Mutual Bank, FA  

   TABLE OF CONTENTS  

   

	 
	 	 

	ARTICLE I. DEFINITIONS
	 	

1.01	
 	

Defined Terms.
	 	1.02	 	Interpretation.
	
ARTICLE II. PURCHASE AND SALE OF SRI CAPITAL STOCK
	 	

2.01	
 	

Purchase and Sale of SRI Capital Stock.
	 	2.02	 	Consideration.
	 	2.03	 	Calculation of Purchase Price.
	 	2.04	 	Settlement Date Payments.
	 	2.05	 	No Offset.
	 	2.06	 	Interim Settlement.
	
ARTICLE III. CLOSING, TRANSFERS AND RELATED ITEMS
	 	

3.01	
 	

Closing and Closing Date.
	 	3.02	 	Deliveries at Closing.
	 	3.03	 	Further Assistance and Assurances.
	
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
	 	

4.01	
 	

Disclosure Schedules.
	 	4.02	 	Representations and Warranties of Sellers.
	 	4.03	 	Representations and Warranties of Buyer.
	 	4.04	 	No Other Representations or Warranties.
	
ARTICLE V. COVENANTS
	 	

5.01	
 	

Transfer of Excluded Assets and Excluded Liabilities; Management of Excluded Litigation.
	 	5.02	 	Conduct of Business.
	 	5.03	 	Access; Confidentiality.
	 	5.04	 	Taking of Necessary Action.
	 	5.05	 	Disclosure; Legend
	 	5.06	 	Delinquent Accounts Receivable.
	 	5.07	 	No Solicitation.
	 	5.08	 	Non-Competition Agreement.
	 	5.09	 	Servicing Portfolio Expenses.
	 	5.10	 	2001 Agreements.
	 	5.11	 	Transactions with Affiliates.
	 	5.12	 	Prepayment or Satisfaction of Indebtedness; Hedges.
	 	5.13	 	Subservicing of Excluded Assets.
	 	5.14	 	Loan Solicitations.
	 	5.15	 	Agreements Currently in Place.
	 	5.16	 	VA No-bid Protection.
	 	5.17	 	Liability for Breach of Covenants.
	 	5.18	 	Prohibition on Certain Purchases or Sales.
	
ARTICLE VI. EMPLOYEES
	 	

6.01	
 	

Employees.

i

 

	ARTICLE VII. TAXES
	 	

7.01	
 	

Tax Representations and Warranties.
	 	7.02	 	Indemnification Obligations With Respect to Taxes.
	 	7.03	 	Tax Returns and Payment Responsibility.
	 	7.04	 	Contest Provisions.
	 	7.05	 	Tax Sharing Agreements.
	 	7.06	 	Assistance and Cooperation.
	 	7.07	 	Tax Records.
	 	7.08	 	Other Provisions.
	
ARTICLE VIII. CONDITIONS TO THE CLOSING
	 	

8.01	
 	

Conditions to Each Party's Obligation to Effect the Purchase.
	 	8.02	 	Conditions to Obligation of Buyer.
	 	8.03	 	Conditions to Obligations of Sellers.
	
ARTICLE IX. TERMINATION
	 	

9.01	
 	

Termination.
	 	9.02	 	Effect of Termination and Abandonment.
	
ARTICLE X. INDEMNIFICATION
	 	

10.01	
 	

Indemnification Not Subject to Limitations.
	 	10.02	 	Indemnification for Mortgage Operations and Mortgage Loans.
	 	10.03	 	Indemnification Subject to Limitations.
	 	10.04	 	Survival Periods.
	 	10.05	 	Miscellaneous.
	 	10.06	 	De Minimis Liability Restriction, Deductible and Cap.
	 	10.07	 	Third-Party Claims.
	 	10.08	 	Future Indemnification Protocol
	
ARTICLE XI. GENERAL PROVISIONS
	 	

11.01	
 	

Notices.
	 	11.02	 	Amendment and Modification; Waiver.
	 	11.03	 	Entire Agreement.
	 	11.04	 	Fees and Expenses.
	 	11.05	 	Third Party Beneficiaries.
	 	11.06	 	Assignment; Binding Effect.
	 	11.07	 	Governing Law.
	 	11.08	 	Waiver of Jury Trial.
	 	11.09	 	Counterparts.
	 	11.10	 	Severability.
	 	11.11	 	Affiliates of Buyer.

	EXHIBITS
	

Hedge Valuations	
 	

A
	

Matrix Pricing Grid	
 	

B

ii

  

        STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of August 27, 2002, among
National Australia Bank Limited (ABN 12 004 044 937), an Australian corporation ("NAB"), MSRA Holdings, Inc., a Delaware corporation
("MSRA"), HomeSide Lending, Inc., a Florida corporation ("HomeSide") and SR
Investment, Inc., a Delaware corporation ("SR Investment") and Washington Mutual Bank, FA, a federal savings association
("Buyer"). 

RECITALS  

        A.    NAB
owns, through wholly-owned Subsidiaries, all of the capital stock of MSRA. MSRA owns all of the capital stock of SR Investment. SR Investment owns all of the capital
stock of HomeSide. 

        B.    On
the terms and subject to the conditions set forth herein, Sellers desire to sell to Buyer, and Buyer desires to purchase from MSRA, all of the shares of the capital
stock of SR Investment (the "SRI Capital Stock") issued and outstanding as of the Effective Time. 

        NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto
agree as follows: 

ARTICLE I.  

 Definitions  

 
 

         1.01    Defined Terms.     

        (a)  The
following terms are used in this Agreement with the meanings set forth below: 

        "Accounts Receivable" means any and all accounts receivable owned by a Subject Company (other than any account receivable that is either
an Excluded Asset, Peoples Receivable or an Accrued Servicing Fee). 

        "Accrued Servicing Fee" means any Servicing fee accrued in accordance with GAAP including any accrued late charge fees or penalties net of
applicable guarantee fees. 

        "Acquired Hedge Assets" means all of the Hedge Assets except for the Excluded Hedge Assets. 

        "Action" means any action, suit, arbitration, inquiry, proceeding or investigation by or before any court, Regulatory Authority or other
Governmental Authority. 

        "Administration Agreements" means the Administration Agreement dated as of March 1, 2002 between HomeSide and Buyer (relating to ZC
Sterling Insurance Agency, Inc.), the Administration Agreement dated as of March 1, 2002 between HomeSide and Buyer (relating to LOGS National Servicing Agency, Inc.) and the
Administration Agreement dated as of March 1, 2002 among HSL Realty Tax Services Corporation (now known as MSR Services Corporation), HomeSide and Buyer. 

        "Advances" means, with respect to any Subject Company, the moneys that have been advanced by such Subject Company on or before the Closing
Date from its funds in connection with its servicing of Mortgage Loans in accordance with applicable Regulations (which moneys include principal, interest, taxes, ground rents, assessments, insurance
premiums and other costs, fees and expenses pertaining to the acquisition of title to and preservation and repair of the Mortgaged Properties). 

        "Affiliate" means, with respect to any specified Person, any other Person directly or indirectly Controlling, Controlled by or under
common Control with such specified Person. 

        "Agency" means FHA, VA, GNMA, FNMA, FHLMC, HUD or State Agency, as applicable. 

1

 

        "Agreement" has the meaning set forth in the preamble to this Agreement, as this Agreement may be amended or modified from time to time in
accordance with the provisions of this Agreement. 

        "ARM Loan" means a Mortgage Loan that is an adjustable rate loan. 

        "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in Jacksonville, Florida or Seattle,
Washington generally are required or authorized by law or executive order to close. 

        "Buyer Affiliate" means an Affiliate of Buyer and shall include each Subject Company after the Closing but not prior thereto. 

        "Certificate Insurer" means a provider of an insurance policy insuring against certain specified losses or shortfalls with respect to
certain mortgage-backed securities. 

        "Code" means the Internal Revenue Code of 1986, as amended, and any successor thereto. 

        "Compensation and Benefit Plans" means bonus, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, deferred and restricted stock, stock option, employment, termination, severance, compensation, medical, health or other plans, agreements, policies or
arrangements maintained by or contributed to by the Sellers, a NAB Affiliate or a Subject Company that cover past or present employees of either Subject Company. 

        "Control," "Controlling" or "Controlled"
when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. 

        "Custodial Account" means all funds held or controlled by any Seller or Subject Company with respect to any Mortgage Loan, including all
principal and interest funds and any other funds due Investors, buydown funds, suspense funds, funds for the payment of taxes, assessments, insurance premiums, ground rents and similar charges, funds
for the payment of bankruptcy and fraud coverage, funds from hazard insurance loss drafts and other mortgage escrow and impound amounts (including interest thereon for the benefit of Mortgagors, if
applicable). 

        "Custodial File" means, with respect to a Mortgage Loan, the Mortgage, the Mortgage Note, assignments of mortgage instruments and all of
the other documents that must be maintained on file with a document custodian or trustee under applicable Regulations. 

        "Damages" means, subject to the limitations in Section 10.05(g) when applicable, any and all assessments, judgments, claims,
Liabilities, losses, costs, damages or expenses (including, without limitation, exemplary damages, punitive damages, interest, penalties and reasonable attorneys' fees, expenses and disbursements in
connection with an action, suit or proceeding and including, without limitation, the cost of any letter of credit required by GNMA). 

        "Delinquent Accounts Receivable" means accounts receivable that as of the Effective Time are 90 days delinquent or otherwise deemed
impaired or uncollectible. 

        "EBO Loans" means any Mortgage Loan owned by a Subject Company at the time immediately prior to the Effective Time and acquired as a
result of purchasing the Mortgage Loan out of a GNMA pool, accrued and unpaid interest thereon and any related outstanding Advances. 

        "Environmental Laws" means all domestic, federal, state and local laws, regulations, rules and ordinances relating to pollution or
protection of the environment, including, without limitation, laws relating to releases or threatened releases of Hazardous Substances into the environment (including, without limitation, ambient air,
surface water, ground water, land, surface and 

2

 

subsurface
strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, release, transport or handling of Hazardous Substances. 

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

        "Excluded Assets" means all of the following assets of the Subject Companies: 

	(i)	 	All of the shares of capital stock of each of the HomeSide Subsidiaries (and any promissory notes, purchase money obligations or other account receivables received by a Subject Company in connection with the transfer of
such stock in accordance with Section 5.01);
	

(ii)	
 	

All assets relating to the business of a HomeSide Subsidiary, including, without limitation, any Servicing Rights, contractual rights, indemnification rights or repurchase rights relating to Mortgage Loans owned by a HomeSide Subsidiary or previously
transferred by a HomeSide Subsidiary including, as it pertains to Funding Corp., all rights and obligations of HomeSide and Funding Corp. under the Funding Corp. Documents and Funding Corp.'s beneficial interest in that certain HomeSide Mortgage Loan
Buyout Trust 1998-A (the "Buyout Trust"), subject to the obligations of HomeSide and Buyer to service the Mortgage Loans owned by the Buyout Trust;
	

(iii)	
 	

All leasehold interests and associated leasehold improvements;
	

(iv)	
 	

All Excluded Hedge Assets;
	

(v)	
 	

All Excluded IP Assets;
	

(vi)	
 	

All of the employment agreements set forth in Schedule 1.01(a)-1 hereto;
	

(vii)	
 	

The assets relating to the Compensation and Benefit Plans of HomeSide and SR Investment (including, without limitation, split-dollar insurance policies);
	

(viii)	
 	

The rights and benefits accruing to the Subject Companies under the MidFirst Transaction, including the $10 million holdback receivable;
	

(ix)	
 	

All EBO Loans;
	

(x)	
 	

All furniture, fixtures, computer hardware and other equipment situated on and within the leasehold premises located at 8659 Baypine Road, Suite 300, Jacksonville, FL 32256;
	

(xi)	
 	

Indemnification obligations of Buyer with respect to the Subject Companies arising pursuant to rights existing prior to the Effective Time;
	

(xii)	
 	

The rights and benefits accruing to the Subject Companies under the Peoples Transaction; and
	

(xiii)	
 	

Accounts receivable, rights of action and indemnity rights relating to any asset described in clauses (i) through (xii) above.

        "Excluded IP Assets" means the Retained IP Assets as such term is defined in the 2001 Purchase Agreement. 

        "Excluded Hedge Assets" means (i) all of the Hedge Assets so identified in  Exhibit A hereto, if any, and (ii) any Hedge Asset relating to the medium term
notes of the Subject Companies that are no longer
outstanding as of the Effective Time. 

        "Excluded Liabilities" means all of the following liabilities of the Subject Companies: 

	(i)
	All
obligations for funded debt or borrowed money, including payment, prepayment or other satisfaction of the remaining payment obligations other than
with respect to 

3

 

HomeSide's
outstanding medium term notes and unpaid debt owing immediately prior to the Effective Time by Subject Companies to NAB or a NAB Affiliate (the "Intercompany Debt") arising after the
Effective Time and any penalties or premiums paid or payable in connection with any payment, prepayment or satisfaction thereof; 

	(ii)
	All
Liabilities arising after the Effective Time from the employment of current and former employees (including, without limitation, severance
obligations and obligations under any employment agreement, retention bonus plan, split-dollar insurance policies and any other Compensation and Benefit Plans but excluding obligations assumed by
Buyer to Prospective Employees pursuant to the 2001 Purchase Agreement, it being understood that Liability for the threatened Action listed on Section 1.01(a)-3 of the Disclosure
Schedule is not Excluded Liabilities);

	(iii)
	All
Liabilities relating to the MidFirst Transaction;

	(iv)
	All
Liabilities (including any Third Party Claim, as defined in Section 10.06, regardless of when such Third Party Claim is filed or threatened)
relating to Excluded Assets or to any Subsidiary of the Subject Companies which was dissolved during the last three years, including, but not limited to, (A) Liabilities arising from a Subject
Company's (1) status as the direct or indirect owner of an Excluded Asset, (2) management or operation of an Excluded Asset, or (3) transactions it engaged in with respect to an
Excluded Asset, subject to the provisions in Section 5.15(f) and (B), as it pertains to Funding Corp., Liabilities of Funding Corp. and HomeSide under the Funding Corp. Documents, subject to
the agreement of HomeSide and Buyer to provide Servicing of the Mortgage Loans owned by the Buyout Trust after the Closing in accordance with the terms of Section 5.13 hereof;

	(v)
	All
obligations and related Liabilities to current and former officers, directors, employees, consultants, independent contractors, agents and attorneys
of a Subject Company to indemnify or hold harmless the Person from and against Liabilities for such Person's acts or omissions occurring prior to
the Effective Time, whether arising under a Subject Company's charter or bylaws, a contract or a statute, and all obligations of a Subject Company to maintain policies of insurance covering such
Liabilities;

	(vi)
	All
Liabilities relating to the Peoples Transaction; and

	(vii)
	All
indemnification obligations of a Subject Company and any Liability of a Subject Company relating to or arising from performance of the covenants
and obligations applicable to it under the 2001 Purchase Agreement and other agreements executed in connection therewith, including, without limitation, the Subservicing Agreement, the Solicitation
Rights Agreement, the Transitional Agreement and the Administration Agreements, in each instance subject to any limitations, restrictions or qualifications on such Liability that are set forth in the
applicable agreement. 

        "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. 

        "FHLMC" means Federal Home Loan Mortgage Corporation or any successor thereto. 

        "FNMA" means Federal National Mortgage Association or any successor thereto. 

        "Foreclosure" means the process culminating in the acquisition of title to a Mortgaged Property in a foreclosure sale or by a deed in lieu
of foreclosure or pursuant to any other comparable procedure allowed under applicable Regulations. 

4

 

        "Funding Corp." means HomeSide Funding Corporation, a wholly-owned subsidiary of HomeSide. 

        "Funding Corp. Documents" means that certain Mortgage Loan Purchase and Sale Agreement dated December 4, 1998, between Funding
Corp. and HomeSide, that certain Pooling and Servicing Agreement dated December 4, 1998, among Funding Corp., HomeSide and Bank One Trust Company, and that certain Certificate Purchase
Agreement dated December 4, 1998, among Funding Corp., HomeSide, Enterprise Funding Corporation and Nationsbank, N.A. 

        "GAAP" means generally accepted accounting principles in the United States which, unless otherwise indicated, are applied on a consistent
basis. 

        "GNMA" means Government National Mortgage Association or any successor thereto. 

        "Governmental Authority" means any Agency or other domestic or foreign court, administrative agency, self-regulatory authority
or commission or other body acting in an adjudicative capacity or other federal, state or local governmental or self-regulatory authority or instrumentality. 

        "Guides" means (a) the FNMA Selling and Servicing Guides with respect to FNMA Mortgage Loans, (b) the FHLMC Sellers' and
Servicers' Guides with respect to FHLMC Mortgage Loans, (c) the Handbook of GNMA 5500.1, Government National Mortgage Association GNMA I Mortgage-Backed Securities Guide or the Handbook GNMA
5500.2 Government National Mortgage Association GNMA II Mortgage-Backed Securities Guide with respect to the GNMA Mortgage Loans, (d) the HUD 4155.1 REV-4, Mortgage Credit Analysis
for Mortgage Insurance on 1-to-4 Family Properties, HUD 4000.2 REV-2 Mortgagee Handbook Application Through Insurance (Single Family), HUD 4000.4 REV-1,
Single Family Direct Endorsement Program, HUD 4145.1 REV-2, Architectural Processing and Inspections for Home Mortgage Insurance, 4150.1 REV-1 Valuation Analysis for Home
Mortgage Insurance, HUD 4060-1 REV-1, Mortgagee Approval Handbook, (e) the VA Lender's Handbook, (f) any seller or servicer guide or manual published from time to
time by a Private Investor and (g) any and all rules, regulations, guidelines, and memoranda issued by each Investor and Insurer, in each case, as such Guide may be amended or supplemented from
time to time. 

        "Hazardous Substances" means all substances defined as such, or regulated as such, under any Environmental Law, including, but not limited
to, petroleum, asbestos or polychlorinated biphenyls. 

        "Hedge Assets" means all of HomeSide's interest rate swaps, caps, floors, collars, options, swaptions, futures and forward contracts,
foreign exchange contracts, currency swaps, principal only trades, mortgage TBAs, treasury trades, or other arrangements (including those described on  Exhibit A hereto), in each case designed to
alter the risks arising from fluctuations in interest rates or currency values. 

        "HomeSide Subsidiaries" means all of the Subsidiaries of HomeSide. The HomeSide Subsidiaries are listed on Section 4.02(a)(vi)(a)
of the Disclosure Schedule. 

        "HUD" means United States Department of Housing and Urban Development or any successor thereto. 

        "Insurer" means (i) a Person who insures or guarantees all or any portion of the risk of loss on any Mortgage Loan, including,
without limitation, any Agency and any provider of private mortgage insurance, standard hazard insurance, flood insurance, earthquake insurance or title insurance with respect to any Mortgage Loan or
related Mortgaged Property or (ii) a Person who provides, with respect to a Servicing Agreement or an applicable Regulation, any fidelity bond, direct surety bond, letter of credit, other
credit enhancement instrument or errors and omissions policy or (iii) is a Certificate Insurer. 

5

 

        "Intellectual Property" means each of the following: (i) patents, patent applications, patent disclosures and inventions (whether
or not patentable and whether or not reduced to practice) and any reissue,
continuation, continuation-in-part, revision, extension or reexamination thereof (collectively, "Patents");
(ii) trademarks, service marks, trade dress, logos, trade names and Internet domain names together with all goodwill associated therewith, including, without limitation, the use of all
translations, adaptations, derivations and combinations of the foregoing (collectively, "Marks"); (iii) copyrights and copyrightable works
(including, without limitation, web sites) and all registrations, applications and renewals for any of the foregoing (collectively, "Copyrights");
(iv) information not generally known to the public or that would constitute a trade secret under the Uniform Trade Secrets Act, and confidential information (including, without limitation,
know-how, research and development information, designs, plans, proposals, technical data, financial, business and marketing plans, sales and promotional literature, and customer and
supplier lists and related information) (collectively, "Trade Secrets"); (v) other intellectual property rights; (vi) all copies and
tangible embodiments of the foregoing (in whatever form or medium), along with all income, royalties, damages and payments due or payable after the Closing including, without limitation, damages and
payments for past or future infringements or misappropriations thereof; (vii) the right to sue and recover for past infringements or misappropriations thereof; (viii) any defenses
related to any of the above; and (ix) any and all corresponding rights that, now or hereafter, may be secured throughout the world. 

        "Interest Rate" means the prime rate in the United States as published in The Wall Street Journal on the date that the calculation of
interest is to be made on the amount specified. If more than one rate, or a range of rates, is so published as the prime rate, the prime rate shall be the average of the rates published. 

        "Investor" means FHLMC, FNMA, GNMA, any State Agency, a Seller, a NAB Affiliate, a Subject Company, a HomeSide Subsidiary, a Private
Investor or any other Person who owns or holds Mortgage Loans, serviced or subserviced by any Seller, NAB Affiliate, Subject Company or HomeSide Subsidiary, pursuant to a Servicing Agreement, as
applicable. 

        "IRS" means the Internal Revenue Service of the United States of America or any successor agency or authority. 

        "Knowledge" means, with respect to each of Sellers and Buyer, the knowledge of any of the persons whose names are set forth in
Section 1.01 of their respective Disclosure Schedules. 

        "Liabilities" means any and all debts, losses, liabilities, offsets, claims, Damages, fines, penalties, interest, obligations, payments
and accounts payable (including, without limitation, those arising out of any award, demand, assessment, settlement, judgment or compromise relating to any Action), and accruals for
out-of-pocket costs and expenses (including, without limitation, reasonable attorneys' fees and reasonable expenses incurred in investigating, preparing, defending or
litigating any Action). 

        "License" means any license, permit, franchise, approval, orders, qualifications, waivers or other authorization of any Governmental
Authority. 

        "Lien" means any lien, pledge, security interest, mortgage, deed of trust, claim, encumbrance, easement, servitude, encroachment, charge
or similar right of any other Person of any kind or nature whatsoever (other than those customarily arising under securities laws). 

        "Material Adverse Effect" means: 

        (a)  With
respect to the Subject Companies, (I) a material adverse change in, or a material adverse effect upon, the assets, the results of operations or the financial
condition of the Subject Companies, taken as a whole, excluding any effect or change attributable to or 

6

 

resulting
from (1) events, changes or trends in economic, business or financial conditions, including interest rate conditions, generally or relating to companies engaged in the mortgage
banking business, (2) changes in laws, regulations, interpretations of laws or regulations, GAAP or regulatory accounting requirements applicable to mortgage banking companies or their holding
companies, (3) actions, or effects of actions, taken by Sellers or the Subject Companies that either are required by or contemplated in this Agreement or are taken with the prior written
consent of Buyer, (4) any change in national or international political or social conditions including, without limitation, the engagement by the United States in hostilities, whether or not
pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon or within the United States, or any of its territories, possessions or diplomatic
or consular offices or upon any military installation, equipment or personnel of the United States, (5) any change in Excluded Assets or Excluded Liabilities or any change affecting, but only
to the extent affecting, Excluded Assets or Excluded Liabilities, and (6) changes in net operating losses, built-in losses or other tax attributes of the subject companies or
(II) a material impairment of the Sellers' or Subject Companies' ability to perform their material obligations under this Agreement; and 

        (b)  With
respect to Buyer, a material impairment of Buyer's ability to perform its material obligations under this Agreement. 

        "MidFirst Agreement" means the Mortgage Servicing Purchase Agreement, dated May 31, 2002, among MidFirst Bank, HomeSide and NAB. 

        "MidFirst Transaction" means the actions contemplated by the MidFirst Agreement. 

        "Missing Loan Documents" means Mortgage Loan Documents that are (i) lost or missing, or (ii) completed, executed or
otherwise created or maintained in a manner that does not comply with applicable Regulations. 

        "Mortgage" means with respect to a Mortgage Loan, a mortgage, deed of trust or other security instrument creating a Lien upon real
property and any other property described therein which secures a Mortgage Note, together with any assignment, reinstatement, extension, endorsement or modification thereof. 

        "Mortgage Loan" means either an Owned Loan or Serviced Loan. 

        "Mortgage Loan Documents" means the Custodial File and all other documents relating to Mortgage Loans required to document and service the
Mortgage Loans by applicable Regulations, whether on hard copy, microfiche or its equivalent or in electronic format and, to the extent required by applicable
Regulations, credit and closing packages and disclosures. 

        "Mortgage Note" means, with respect to a Mortgage Loan, a promissory note or notes, or other evidence of indebtedness, with respect to
such Mortgage Loan secured by a Mortgage or Mortgages, together with any assignment, reinstatement, extension, endorsement or modification thereof. 

        "Mortgaged Property" means (i) the real property and improvements thereon, (ii) the stock in a residential housing
corporation and the lease to the related dwelling unit or (iii) a manufactured home and, as applicable, the real property upon which the home is situated, in each case that secures a Mortgage
Note and that is subject to a Mortgage. 

        "Mortgagor" means the obligor(s) on a Mortgage Note. 

        "NAB Affiliate" means an Affiliate of NAB other than a Subject Company. 

7

  

        "Originator" means, with respect to any Mortgage Loan, the entity or entities that (i) took the relevant Mortgagor's loan
application, (ii) processed the relevant Mortgagor's loan application or (iii) closed and/or funded such Mortgage Loan. 

        "Owned Loan" means a mortgage loan owned by a Subject Company that is evidenced by a Mortgage Note and secured by a first priority
Mortgage on a one-to-four family residential property (or a second priority mortgage loan that was originated concurrently or in conjunction with a first priority mortgage
loan). 

        "Peoples Receivable" means the $950,000 Receivable due and owing HomeSide pursuant to the terms of the Peoples Transaction. 

        "Peoples Transaction" means the Settlement Agreement among Buyer, HomeSide, SR Investment and Peoples Bank dated August 2, 2002. 

        "Person" means any individual, bank, corporation, partnership, association, limited liability company, business trust, unincorporated
organization or similar organization, whether domestic or foreign, or any Governmental Authority. 

        "Previously Disclosed" by a party means information set forth in the relevant corresponding section of its Disclosure Schedule;  provided that information which, on its
face, is reasonably readily apparent to the reader that it is related to another provision of this Agreement
shall also be deemed to be Previously Disclosed with respect to such other provision. 

        "Prior Owner" means, with respect to a Mortgage Loan, any Person (other than either Seller, either Subject Company, any HomeSide
Subsidiary, any Originator or any Investor), who at any time had a beneficial interest in, or was a record owner of, such Mortgage Loan or any trustee acting on behalf of such Person. 

        "Prior Servicer" means any party that was a servicer or subservicer of any Mortgage Loan before any Seller, Subject Company, HomeSide
Subsidiary or the current Servicer, as applicable, became the servicer or subservicer of the Mortgage Loan. 

        "Private Investors" means Investors which are not Agencies. 

        "Prospective Employees" has the meaning set forth in Section 1.01(a) of the 2001 Purchase Agreement. 

        "Rating Agency" means any nationally recognized statistical credit agency that at the time of any determination thereof has outstanding a
rating on one or more classes of mortgage-backed securities or asset-backed securities at the request of any issuer of mortgage-backed securities or asset-backed securities. 

        "Recourse Obligation" means, with respect to any Mortgage Loan, any arrangement pursuant to which any Seller, Subject Company or HomeSide
Subsidiary bears the risk of any part of the ultimate credit losses incurred in connection with a default under or Foreclosure of the Mortgage Loan not owned by such Seller, Subject Company or
HomeSide Subsidiary, except insofar as such risk of loss is based upon (i) a breach by such Seller, Subject Company or HomeSide Subsidiary of any of their contractual representations,
warranties or covenants, (ii) expenses, such as legal fees, in excess of the reimbursement limits, if any, set forth in the applicable Regulations, or (iii) an early payment default
based on a delinquency or default under the Mortgage Loan within the first year after the closing of such Mortgage Loan. The parties hereto acknowledge that no Recourse Obligation results from or
arises under the applicable Regulations pertaining to GNMA. 

        "Regulation" means and includes, as of the time of reference, with respect to the Mortgage Loans and the Servicing under the Servicing
Agreements, all of the following: (i) all contractual obligations of a Seller, Subject Company, HomeSide Subsidiary or any Originator or Prior Servicer 

8

 

with
respect to Servicing under any Servicing Agreement, Mortgage Note, Mortgage and other Mortgage Loan Document, the applicable Guides and an agreement with any Investor or any Insurer,
(ii) all applicable federal, state and local legal and regulatory requirements (including statutes, rules, regulations and ordinances) binding upon a Seller, Subject Company, HomeSide
Subsidiary or any Originator or Prior Servicer, (iii) all Guides and other applicable requirements and guidelines of each Agency or other Regulatory Authority or Governmental Authority having
jurisdiction, including, without limitation, those of any Insurer and (iv) all other applicable judicial and administrative judgments, orders, stipulations, awards, writs and injunctions. 

        "REO" means any residential real property owned by a Seller, a Subject Company, a HomeSide Subsidiary (whether for its own account or on
behalf of an Investor, FHA or VA as a result of a Foreclosure). 

        "Repurchase Equivalent Event" means with respect to a Mortgage Loan or the related Servicing the event of (i) a denial or
rescission of mortgage insurance coverage by an Insurer, including, but not limited to, a determination by the VA or FHA with respect to a VA Loan or FHA Loan, as applicable, that such Mortgage Loan
is not eligible to be guaranteed or insured by such Agency, (ii) an Investor repurchase or indemnification demand, (iii) an Investor determination of Significant Underwriting Deficiency
or (iv) the commission of fraud by any Seller or Subject Company, any Originator, any Prior Owner or any Prior Servicer that materially and adversely affects the value or marketability of the
Mortgage Loan or related Servicing (in each case other than as a result of any action, error or omission by Buyer that constitutes a failure of Buyer to fulfill its obligations under the Subservicing
Agreement). 

        "Sellers" means NAB and MSRA. 

        "Serviced Loan" means a residential mortgage loan (i) that is evidenced by a Mortgage Note and secured by a Mortgage,
(ii) with respect to which a Seller, a Subject Company or a HomeSide Subsidiary owns the Servicing as of the Closing Date and (iii) which is included in the Servicing Rights Portfolio. 

        "Servicer" means the Person responsible for performing the Servicing functions in connection with a Mortgage Loan in or related to the
Servicing Rights Portfolio. 

        "Servicing" means mortgage loan servicing, subservicing rights and master servicing rights and obligations including, without limitation,
one or more of the following functions (or a portion thereof): (i) the administration and collection of payments for the reduction of principal and/or the application of interest on a mortgage
loan; (ii) the collection of payments on account of taxes and insurance; (iii) the remittance of appropriate portions of collected payments; (iv) the provision of full escrow
administration; (v) the pursuit of Foreclosure remedies against a related Mortgaged Property; (vi) the administration and liquidation of REO, and (vii) the right to receive the
Servicing Compensation and any ancillary fees arising from or connected to the Serviced Loans, earnings and other benefits of the related Custodial Accounts and any other related accounts maintained
pursuant to applicable Regulations and Investor and Insurer requirements and, in each case, all rights, powers and privileges incident to any of the foregoing, and expressly includes the right to
enter into arrangements with third parties that generate ancillary fees and benefits with respect to the Serviced Loans. 

        "Servicing Agreement" means an agreement between an Investor and any of Sellers, Subject Companies or HomeSide Subsidiaries pursuant to
which such Person owns the Servicing and services Mortgage Loans. 

        "Servicing Compensation" means any servicing fees and any excess servicing compensation which a Seller, a Subject Company or a HomeSide
Subsidiary is entitled to receive pursuant to any Servicing Agreement. 

9

 

        "Servicing Rights" means the ownership of Servicing. 

        "Servicing Rights Portfolio" means the Servicing Rights held by SR Investment and HomeSide. 

        "Significant Underwriting Deficiency" means (a), with respect to a Mortgage Loan as to which FNMA is the Investor, any defect or condition
described in writing by FNMA as a "significant underwriting deficiency," (b), with respect to a Mortgage Loan as to which FHLMC is the Investor, means that an FHLMC quality control feedback letter has
been issued that calls into question the eligibility of such Mortgage Loan for sale to FHLMC and (c) with respect to a VA Loan or FHA Loan, a determination by the VA or FHA, as applicable, that
an underwriting deficiency exists with respect to such Mortgage Loan and that such Mortgage Loan is not eligible to be guaranteed or insured by such Agency. 

        "Solicitation Rights Agreement" means the Solicitation Rights Agreement dated as of December 11, 2001 among HomeSide, NAB and
Buyer. 

        "SR Funding" means SR Funding Corp., formerly known as HomeSide Funding Corporation. 

        "SRI Capital Stock" means all of the outstanding shares of capital stock of SR Investment as of the Effective Time. 

        "State Agency" means any state agency or other entity with authority to regulate the mortgage-related activities of SR Investment or
HomeSide or to determine the investment or servicing requirements with regard to mortgage loan origination, purchasing, servicing or master servicing performed by SR Investment or HomeSide. 

        "Subject Companies" means SR Investment and HomeSide. 

        "Subservicing Agreement" means the Retained Portfolio Subservicing Agreement dated as of December 11, 2001 among NAB, HomeSide and
Buyer, as amended as of February 28, 2002. 

        "Subsidiary" means, for any Person, any other person which the initial Person directly or indirectly Controls. 

        "Tax" (including "Taxes") means (A) all federal, state, local, foreign and other
net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges in the nature of a tax, together with any interest and any penalties, additions to tax or
additional amounts with respect thereto, (B) any Liability for payment of amounts described in clause (A) whether as a result of transferee Liability, joint and several liability for
being a member of an affiliated, consolidated, combined or unitary group for any period, or otherwise through operation of law, and (C) any Liability for the payment of amounts described in
clauses (A) or (B) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other person. 

        "Tax Return" means any return, declaration, report, statement, information statement and other document filed or required to be filed with
respect to Taxes. 

        "Third Party Consents" means any consent, authorization, approval, waiver, order, license, certificate or permit or act of or from, or
notice to any Rating Agency, any party to any contract to which any Seller or Seller Subsidiary is a party or by which any of their assets or properties are bound or affected, or any other Person. 

        "Transferred Employees" has the meaning set forth in Section 6.01(a) of the 2001 Purchase Agreement. 

10

 

        "Transitional Agreement" means the Transitional Services Agreement dated as of December 11, 2001 among NAB, HomeSide, SR
Investment, Inc. (under its prior name, HomeSide International, Inc.) and Buyer. 

        "2001 Agreements" means the 2001 Purchase Agreement, the Transitional Agreement, the Subservicing Agreement, the Solicitation Rights
Agreement, the Employee Lease Agreement, the Trademark License Agreement and the Administration Agreements. 

        "2001 Purchase Agreement" means that Asset Purchase/Liability Assumption Agreement dated as of December 11, 2001, among NAB,
HomeSide and SR Investment, Inc. (under its prior name, HomeSide International, Inc.) and Buyer, as amended. 

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

        "VA Buydown" means the waiver by Buyer or a Subject Company of a portion of the indebtedness of a VA Loan, which can take the form of a
reduction of the principal, a credit to escrow or unapplied funds, the forgiveness of accrued interest or any combination of the foregoing, and which causes the VA to pay off the remaining amount of
the indebtedness owed or acquire the related Mortgage Property. 

        "VA Loans" means residential mortgage loans that are guaranteed, or are eligible and intended to be guaranteed, by VA. 

        "VA No Bid" means a Mortgage Loan as to which the VA notifies the Servicer that it intends to pay the VA guarantee and leave the Mortgaged
Property with HomeSide or Buyer, as applicable. 

        The
following terms shall have the respective meanings set forth in the relevant Section referred to below throughout this Agreement: 

	Actual Excluded Assets	 	5.01(d)
	Actual Excluded Liabilities	 	5.01(c)
	Agreement	 	Preamble
	Applicable Law	 	4.02(i)
	Attempted Excluded Asset	 	5.01(d)
	Attempted Excluded Liability	 	5.01(c)
	Buyer	 	Preamble
	Buyer Financial Statements	 	4.03(d)
	Buyer Indemnified Parties	 	10.01(a)
	Buyer's Dispute Notice	 	2.03(c)
	Buyout Trust	 	Excluded Assets Definition
	Cap	 	10.05(a)
	Chosen Courts	 	11.07(b)
	Closing	 	3.01
	Closing Date	 	3.01
	Closing Date Balance Sheet	 	2.03(b)
	Closing Date Value	 	2.02
	Closing Date Value Calculation Schedule	 	2.03(b)
	Comparable Cash Compensation	 	6.01(a)
	Copyrights	 	Intellectual Property Definition
	Correspondent Agreement	 	2.01(a)
	De Minimis Liability Restriction	 	10.06(a)
	Deductible	 	10.06(a)
	Disclosure Schedule	 	4.01

11

 

	Effective Time	 	3.01
	Estimated Purchase Price	 	2.02
	Final Purchase Price	 	2.02
	Fixed and Other Assets	 	2.01(a)
	HomeSide	 	Preamble
	HSL Financial Statements	 	4.02(s)(i)
	HSR Act	 	4.02(c)(i)
	Indemnified Party	 	10.07(a)
	Intercompany Debt	 	1.01
	Interim Settlement Amount	 	2.06
	Interim Settlement Date	 	2.06
	Loan Property	 	4.02(n)(vi)
	Marks	 	Intellectual Property Definition
	Mortgage Escrow Accounts	 	4.02(q)(xxi)
	MSRA	 	Preamble
	NAB	 	Preamble
	Participation Facility	 	4.02(n)(vi)
	Patents	 	Intellectual Property Definitions
	Permitted Liens	 	4.02(j)(i)
	Pre-Closing Date Value	 	2.02
	Pre-Closing Date Value Calculation Schedule	 	2.04(a)
	Purchase Price	 	2.02
	Purchase Price Adjustment	 	2.02
	Regulatory Authority	 	4.02(f)
	Representatives	 	2.03(f)
	Restricted Business	 	5.08
	Retained Accounts Receivables	 	2.01(c)
	Seller Indemnified Parties	 	10.01(b)
	Servicing Advances	 	2.01(c)
	Servicing Purchase Agreements	 	2.01(a)
	Settlement Date	 	2.04
	Specified Contracts	 	4.02(h)(i)
	SR Investment	 	Preamble
	SRI Capital Stock	 	Recitals
	SRI Financial Statements	 	4.02(s)(ii)
	Stock Acquisition	 	2.01
	Straddle Periods	 	7.02(a)(ii)
	Subject Employee	 	6.01
	Tape	 	4.02(s)(iv)
	Third-Party Claim	 	10.07(a)
	Trade Secrets	 	Intellectual Property Definition

 
 

         1.02    Interpretation.     

        (a)  The
table of contents and headings contained in this Agreement are for
reference purposes only and do not limit or otherwise affect any of the provisions of this Agreement. 

        (b)  Whenever
the words "include," "includes" or
"including" are used in this Agreement, they will be deemed to be followed by the words "without limitation." Any singular term in this Agreement will
be deemed to include the plural, and any plural term the singular. All pronouns and variations of pronouns will be deemed to refer to the feminine, masculine or neuter, singular or plural, as the
identity of the person referred to may require. 

12

 

        (c)  Whenever
the words "herein" or "hereunder" are used in this Agreement,
they will be deemed to refer to this Agreement as a whole and not to any specific Section. 

        (d)  Whenever
a dollar figure ($) is used in this Agreement, it will mean United States dollars unless otherwise specified. 

        (e)  Whenever
the context requires, "and" means "or" and "or" means "and." 

ARTICLE II.  

 Purchase and Sale of SRI Capital Stock  

 
 

         2.01    Purchase and Sale of SRI Capital Stock.     

        On
the terms and subject to the conditions of this Agreement, Sellers shall, at the Effective Time, sell, transfer, assign, convey and deliver, or cause to be sold, transferred, assigned
and delivered, to Buyer, all right, title and interest in and to the SRI Capital Stock (the "Stock Acquisition"). Buyer shall purchase and accept from
MSRA the SRI Capital Stock. 

 
 

         2.02    Consideration.     

        In
consideration for the SRI Capital Stock, Buyer will pay MSRA an amount (the "Final Purchase Price") equal to the Estimated Purchase
Price as subsequently adjusted by the Interim Settlement Amount and the Purchase Price Adjustment. The Final Purchase Price will be paid as follows: (1) at the Closing, Buyer will pay to MSRA
the Estimated Purchase Price, and (2) on each of the Interim Settlement Date and the Settlement Date, Buyer or MSRA, as the case may be, will be entitled to the Interim Settlement Amount and
the Purchase Price Adjustment, respectively. All payments under this Section 2.02 will be paid by MSRA or Buyer, as the case may be, in immediately available federal funds to an account
designated by the applicable recipient of such funds. 

        As
used herein: 

        "Closing Date Value" and "Pre-Closing Date Value" have the meanings set forth
in Schedule 2.02. 

        "Estimated Purchase Price" means an amount equal to the Pre-Closing Date Value. 

        "Purchase Price Adjustment" means (w) the Estimated Purchase Price plus (if applicable) (x) the Interim Settlement Amount,
if such amount was paid by Buyer to MSRA on the Interim Settlement Date,
minus (if applicable) (y) the Interim Settlement Amount, if such amount was paid by MSRA to Buyer on the Interim Settlement Date minus (z) the Closing Date Value, together with interest
thereon (after adjusting for any interest amount previously paid) payable at the Interest Rate from and including the Closing Date to but excluding the Settlement Date, calculated in the manner set
forth in Schedule 2.02. 

 
 

         2.03    Calculation of Purchase Price.     

        (a)  No
later than five Business Days prior to the Closing Date, NAB shall deliver, or cause to be delivered, to Buyer an unaudited schedule setting out in reasonable detail
the basis of the calculation of the Estimated Purchase Price, which calculation shall be as of the month-end for the month that is two months prior to the month in which the Effective Time
occurs (the "Pre-Closing Date Value Calculation Schedule"). NAB shall consult with Buyer regarding the expected contents and preparation of
the Pre-Closing Date Value Calculation Schedule at least 10 Business Days prior to its delivery. In preparing the Pre-Closing Date Value Calculation Schedule, Sellers shall
comply with their covenants and agreements set forth in Schedule 2.02 and elsewhere in this Agreement (including, but not limited to, Section 5.02(e)). 

13

 

        (b)  No
later than 60 days after the Closing Date, Sellers shall deliver, or cause to be delivered, to Buyer an unaudited balance sheet reflecting the assets and
liabilities of the Subject Companies as of the Effective Time (the "Closing Date Balance Sheet") and an unaudited schedule setting out in reasonable
detail the calculation of the Closing Date Value, which calculation shall be as of the Effective Time (the "Closing Date Value Calculation Schedule").
In preparing the Closing Date Value Calculation Schedule, Sellers shall comply with their covenants and agreements set forth in Schedule 2.02 and elsewhere in this Agreement (including, but not
limited to, Section 5.02(e)). 

        (c)  Unless
Buyer delivers written notice to Sellers on or prior to the later of (x) the 105th day following the Closing Date or (y) the 45th day after Buyer's
receipt of the Closing Date Value Calculation Schedule disputing the Closing Date Value ("Buyer's Dispute Notice"), Buyer shall be deemed to have
accepted and agreed to the Closing Date Value Calculation Schedule, and such Closing Date Value Calculation Schedule shall be deemed conclusive for purposes of determining the Final Purchase Price.
Buyer's Dispute Notice shall specify in reasonable detail (i) the amount, nature and basis of all disputed matters, including specific line items on Schedule 2.02 that are disputed, and
(ii) which, if any, of such matters are alleged to involve errors in mathematical calculations or inappropriate accounting treatment. 

        (d)  In
the event that Buyer and Sellers are unable to agree on the Closing Date Value within 45 days after delivery of Buyer's Dispute Notice and the dispute involves
either (i) the mathematical calculation of the Closing Date Value or the Final Purchase Price or (ii) the appropriate accounting treatment of any asset or liability, or item of income or
expense, that affects the calculation of the Closing Date Value, then Buyer and Sellers will mutually agree to an independent public accounting firm, which will make a determination of such dispute
(but not as to any other matters) based solely upon not more than two rounds of presentations by Buyer and NAB, and not by independent review. If Buyer and Sellers are unable to agree, within
60 days after delivery of Buyer's Dispute Notice of the dispute, on
the choice of the independent accounting firm, the firm will be selected by lot (after excluding any firm with which either Buyer or NAB has a primary audit relationship). The findings of such firm,
which will not exceed in amount the amount claimed by either party as to any matter in dispute, shall be conclusive and binding upon Buyer and Sellers for purposes of this Agreement. The fees and
expenses of such firm will be borne 50% by Sellers and 50% by Buyer. Notwithstanding anything in this Agreement to the contrary, Buyer shall not have the right to dispute the amount of any reserve or
account identified in Section 5.02(e) hereof or Schedule 5.02(e) hereto except on the basis that the Sellers or the Subject Companies breached their respective obligations under
Section 5.02(e). 

        (e)  The
provisions in Section 2.03(c) and this Section 2.03(d) relating to resolutions of disputes by an accounting firm are not intended to and shall not be
interpreted to require that the parties refer to such a firm (i) any dispute arising out of a breach by one of the parties of its obligations under the Agreement; (ii) any dispute the
resolution of which requires the construction or interpretation of this Agreement or (iii) any other dispute other than (in the case of this clause (iii)) a dispute related to the
mathematical calculation of the Closing Date Value or the Final Purchase Price or the accounting treatment of any asset or liability, or item of income or expense, that affects the calculation of the
Closing Date Value. 

        (f)    Buyer
and Sellers agree that, in addition to their respective obligations under Section 5.02(c), prior to the Settlement Date, each of them and their attorneys,
accountants, officers and other authorized representatives (collectively, "Representatives") shall have any and all reasonable access that they each
reasonably believe is necessary to the books and records of the Subject Companies, the Excluded Assets and the Excluded Liabilities to the extent they relate to the calculations required or any
dispute under this Section 2.03 (and shall permit such Representatives to examine and copy such books and records to the extent requested by such party,  provided that all such copies are treated
confidentially by such party and are only used for such purposes described in this Section 2.03), and
shall cause their respective officers and employees to furnish all information requested by, and 

14

 

otherwise
cooperate with each other with respect to access to any books, records, information or other documents related to the calculations required by, or any dispute under this
Section 2.03. 

 
 

         2.04    Settlement Date Payments.     

        On
a date (the "Settlement Date") within 5 days after the acceptance by Buyer of the Closing Date Value Calculation Schedule
(whether expressly or by operation of Section 2.03(c)) or the resolution of any dispute pursuant to Section 2.03(d), or such later date as the parties may agree, the following actions
shall be taken: 

        (a)  If
the Purchase Price Adjustment is a positive number, MSRA will pay Buyer an amount equal to the Purchase Price Adjustment. If the Purchase Price Adjustment is a
negative number, Buyer will pay MSRA an amount equal to the absolute value of the Purchase Price Adjustment. 

        (b)  Each
party shall take such other actions, and shall execute and deliver such other instruments or documents, as shall be required in connection with the determination
and payment of the Final Purchase Price. 

 
 

         2.05    No Offset.     

        Neither
NAB or any of its Affiliates, on the one hand, nor Buyer or any of its Affiliates, on the other hand, shall have any set off or any other similar rights with respect to
(i) any of the funds received by such party pursuant to this Agreement or (ii) any other amounts claimed to be owed to the other party or its Affiliates arising out of this Agreement or
any other agreement. 

 
 

         2.06    Interim Settlement.     

        Within
ten (10) calendar days following the Closing Date, NAB will deliver to Buyer a good-faith estimate of the Closing Date Value, such estimate to be calculated in
the manner set forth in Schedule 2.02 and as otherwise set forth in this Agreement. NAB shall consult with Buyer regarding the expected contents and preparation of the Closing Date Value
estimate. On the basis of such good-faith estimate of the Closing Date Value, and without being subject to any challenge or dispute on the part of Buyer, and without any loss of Buyer's
rights under Sections 2.03(c) and 2.03(d), the parties will determine whether MSRA or Buyer is required to make a payment to the other. The party so required hereunder to make a payment to the other
shall pay, within five (5) Business Days following the date on which such payment amount is determined (the "Interim Settlement Date"), one
hundred percent (100%) of such amount to be paid, plus interest on the amount so paid at the Interest Rate from and including the Closing Date to but excluding the date of payment (the
"Interim Settlement Amount"). The amounts, if any, required to be paid by either party under Section 2.04, including the interest payments
thereunder, shall be adjusted accordingly to take into account the interim settlement payment made under this Section 2.06. 

ARTICLE III.  

 Closing, Transfers and Related Items  

 
 
        3.01    Closing and Closing Date.     

        Unless
this Agreement shall have been terminated and the transactions herein abandoned pursuant to Section 9.01, subject to the provisions of Article VIII, the closing (the
"Closing") of the Stock Acquisition and the payment of the amounts required to be paid pursuant to Section 2.02 shall take
place in Seattle, Washington on (1) October 1, 2002, unless the conditions set forth in Article VIII (other than those conditions which relate to actions to be taken at Closing)
have not been satisfied or waived as of October 1, 2002, in which event the Closing shall occur on the first Business Day which is the first Business Day of a month and as of which the
conditions set forth in Article VIII have been satisfied or waived, or (2) such other date to which the parties may agree in writing. The date on which the Closing occurs is herein
called the "Closing Date." The parties hereby agree that the effective time (the "Effective Time") of
Closing for all purposes shall be the opening of business in New York City on the Closing Date or such other time as shall be agreed to by the parties. 

15

  

 
 

        3.02    Deliveries at Closing.     

        (a)  At
the Closing, Buyer shall deliver, or cause to be delivered, to Sellers (i) by wire transfer of immediately available same day funds in dollars to MSRA at an
account designated by MSRA, an amount equal to the Estimated Purchase Price and (ii) the officer's certificates contemplated by Section 8.02(a) and (b). 

        (b)  At
the Closing, Sellers shall deliver, or cause to be delivered, to Buyer: 

	(i)	 	one or more certificates representing all of the shares of capital stock of each of the Subject Companies, and in the case of the SRI Capital Stock a duly executed Stock Certificate endorsed in blank or accompanied by
stock powers duly executed in blank, in proper form for transfer so as to transfer and assign to Buyer good and valid title to the SRI Capital Stock free and clear of all Liens and to constitute Buyer the sole record and beneficial owner
thereof;
	

(ii)	
 	

all such other documents (including any necessary waivers or consents) as may be required to enable Buyer and/or its nominee to be registered as the holder(s) of the SRI Capital Stock;
	

(iii)	
 	

a letter of resignation in a form reasonably acceptable to Buyer duly executed by each of the directors of each of the Subject Companies required to resign by Buyer;
	

(iv)	
 	

a letter of resignation in a form reasonably acceptable to Buyer duly executed by each of the officers of each of the Subject Companies required to resign by Buyer;
	

(v)	
 	

the officer's certificates contemplated by Section 8.03(a) and (b);
	

(vi)	
 	

the corporate minute books for each of the Subject Companies;
	

(vii)	
 	

a certificate (in form and substance reasonably satisfactory to Buyer) that, as of the Closing Date, MSRA is not a foreign person within the meaning of section 1445 of the Code and the Treasury Regulations thereunder, such certificate to be
substantially in the form described in Treasury Regulations section 1.1445-2(b)(2)(iii)(B); and
	

(viii)	
 	

any other documents required to be delivered by Sellers at the Closing under this Agreement.

 
 

         3.03    Further Assistance and Assurances.     

        The
Sellers and Subject Companies shall, at any time and from time to time, promptly, upon the reasonable request of Buyer, execute, acknowledge, deliver or perform, all such further
acts, deeds, assignments, transfers, conveyances, and assurances as may be required to effect the transactions contemplated by this Agreement. Buyer shall, at any time and from time to time, promptly,
upon the reasonable request of Sellers, execute, acknowledge, deliver or perform, all such further acts, deeds, assumption agreements, transfers and assurances as may be required to effect the
transactions contemplated by this Agreement. Each party agrees that if it receives any payment or amount after the Closing Date to which another party is entitled, the recipient shall promptly
transfer such payment or amount to the party so entitled. 

ARTICLE IV.  

 Representations and Warranties  

 
 

        4.01    Disclosure Schedules.     

        On
or prior to the execution and delivery hereof, Sellers and the Subject Companies have delivered to Buyer a schedule and Buyer has delivered to Sellers a schedule (respectively, its 

16

 

"Disclosure Schedule") setting forth, among other things, items the disclosure of which is 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 Section 4.02 or Section 4.03 or to one or more of the
covenants contained in Article V; provided, however, that the inclusion of an item in a
Disclosure Schedule as an exception to a representation, warranty or covenant will not be deemed an admission by a party that such item represents a material exception or fact, event or circumstance
or that such item has had or is reasonably likely to result in a Material Adverse Effect with respect to the disclosing party. 

 
 

        4.02    Representations and Warranties of Sellers.     

        Subject
to Section 4.01 and except as Previously Disclosed, Sellers jointly and severally represent and warrant to Buyer as follows: 

        (a)    Organization, Standing and Capitalization.    

	(i)
	NAB
is incorporated and validly existing under the laws of Victoria and is authorized to carry on the business of banking under the Banking Act 1959 of
Australia.

	(ii)
	MSRA,
HomeSide and SR Investment have each been duly incorporated and each are existing corporations in good standing under the laws of the States of
Delaware, Florida and Delaware, respectively.

	(iii)
	Each
of the Subject Companies has the requisite power and authority to own its current assets and carry on its business as currently conducted, and is
duly qualified to do business in each jurisdiction where the ownership or operation of its property and assets or the conduct of its business requires such qualification except in those jurisdictions
where the failure to so qualify would not have a Material Adverse Effect. SR Investment is not qualified in and does not do business in any state other than the State of Delaware.

	(iv)
	The
authorized capital stock of SR Investment consists of 100 shares of common stock, par value $0.01 per share, of which 1.724 are issued and
outstanding, and 195,000 shares of preferred stock, par value $1.00 per share, of which none are issued and outstanding. No shares of capital stock of SR Investment are reserved for issuance upon
exercise of outstanding stock options or otherwise. The authorized capital stock of HomeSide consists of 10,000 shares of common stock, par value $1.00 per share, of which 185.7 are issued and
outstanding, and no preferred stock authorized. No shares of capital stock of HomeSide are reserved for issuance upon exercise of outstanding stock options or otherwise.

	(v)
	MSRA
owns of record and beneficially all of the SRI Capital Stock, free and clear of all Liens, and all such shares have been duly and validly
authorized and issued and are fully paid and non-assessable. SR Investment owns of record and beneficially all of the capital stock of HomeSide, free and clear of all Liens, and all such
shares have been duly and validly authorized and issued and are fully paid and non-assessable. There are no subscriptions, options, warrants, calls, commitments, preemptive rights or other
rights of any kind outstanding for the purchase of, nor any securities convertible or exchangeable for, any equity interests of the Subject Companies. There are no restrictions upon the voting of the
capital stock of the Subject Companies. Other than HomeSide and the HomeSide Subsidiaries (as of the date hereof), there is no Person in which SR Investment owns, of record or beneficially, any direct
or indirect equity interest or other interest or right. Other than the HomeSide Subsidiaries (as of the date hereof), there is no Person in which HomeSide owns, of record or beneficially, any direct
or indirect equity interest or 

17

 

other
interest or right. SR Investment has no assets or Liabilities other than those listed on Section 4.02(a)(v) of the Disclosure Schedule. 

	(vi)
	Section 4.02(a)(vi) of
the Disclosure Schedule contains a true and complete list of each Person that is or has been a Subsidiary of SR
Investment in the past 3 years and each Person that is or has been a Subsidiary of HomeSide in the past 3 years.

	(vii)
	The
copies of the certificate of incorporation or articles of incorporation (as the case may be), bylaws or similar governing documents of each of the
Subject Companies, copies of which have previously been made available to Buyer, are true, complete and correct copies of such documents as in effect as of the date of this Agreement. The minute books
of each of the Subject Companies contain true, complete and correct records of all meetings and other corporate actions held or taken in the past 3 years of its stockholders and board of
directors (including committees of its board of directors). 

        (b)    Corporate Authority.    This Agreement and the transactions contemplated hereby have been duly authorized by
all necessary corporate action of each Seller and Subject Company and this Agreement has been duly authorized, executed and delivered by each Seller and Subject Company. This Agreement is a valid and
legally binding obligation of each Seller and Subject Company, 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). Each Seller and Subject Company has the corporate
power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. 

        (c)    Regulatory Approvals; No Conflicts.    

	(i)
	No
consents or approvals of, or filings or registrations with, any Governmental Authority or any third party are required to be obtained or made by
Sellers or Subject Companies in connection with the execution, delivery or performance by Sellers and Subject Companies of this Agreement or to consummate the transaction contemplated hereby, except
for consents, approvals, filings, applications, notices or registrations, and the termination of any applicable waiting periods, (A) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR Act"), (B) to relevant state mortgage banking licensing or supervisory authorities, (C) to the VA, FHA,
FNMA, FHLMC, GNMA and HUD, (D) under any applicable foreign laws or regulations or to any foreign Governmental Authority, (E) to the Board of Governors of the Federal Reserve System or
any other federal or state bank regulatory agency, (F) as Previously Disclosed on Disclosure Schedule 4.02(c)(i) and (G) Third Party Consents where the failure to obtain
such consents or approvals would not individually or in the aggregate have a Material Adverse Effect on the Subject Companies. As of the date hereof, Sellers have no Knowledge of any reason why the
approvals or consents set forth as conditions to closing in Sections 8.01(a) will not be received in a timely manner.

	(ii)
	Subject
to receipt of the regulatory approvals referred to in the preceding paragraph, and expiration of related waiting periods, required filings
under federal and state securities laws and the third party consents or approvals referred to in the preceding paragraph, the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby do not and will not (A) constitute a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or 

18

 

regulation
or any judgment, decree, order, License, or contract, agreement, mortgage, indenture or instrument of any of Sellers, Subject Companies or any HomeSide Subsidiary, or to which any of them
or their properties is subject or bound, (B) constitute a breach or violation of, or a default under, Articles or the By-Laws of any Subject Company or HomeSide Subsidiary, or
(C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, License, contract, agreement, indenture or instrument. 

        (d)    Title to SRI Capital Stock.    The sale and delivery to Buyer of the SRI Capital Stock pursuant to the
provisions of this Agreement will transfer to Buyer good and marketable title to the SRI Capital Stock, free and clear of any Lien. 

        (e)    Litigation.    Sellers have Previously Disclosed a true and complete list, as of the date hereof, of all
litigation, claims, actions, arbitrations or investigations by or proceedings before any Governmental Authority pending (or, to Sellers' Knowledge, threatened in writing) against any Seller (with
respect to a Subject Company, a HomeSide Subsidiary, their business, or this Agreement), any Subject Companies or any HomeSide Subsidiary (except for prosecutions of applications for registrations of
intellectual property or similar rights). To Sellers' Knowledge there does not exist any fact or circumstance that would be reasonably expected to give rise to any such litigation, claims, actions,
arbitrations or investigations or other proceedings. Except for matters that would not reasonably be expected to have a Material Adverse Effect on the Subject Companies, no other litigation, claim,
action, arbitration, investigation by or proceeding before any Governmental Authority (except for prosecutions of applications for registrations of intellectual property or similar rights) is pending
against any Seller (with respect to the Subject Companies, the HomeSide Subsidiaries, their business or this Agreement) any Subject Company and, to Sellers' Knowledge, no other such litigation, claim,
action, arbitration, investigation or other proceeding has been threatened in writing nor, to Sellers' Knowledge, does there exist any fact or circumstance that would be reasonably expected to give
rise to any such litigation, claims, actions, arbitrations or investigations or other proceedings. 

        (f)    Regulatory Matters.    None of Sellers, Subject Companies or HomeSide Subsidiaries is a party to or is subject
to any outstanding order, decree, agreement, memorandum of understanding or similar supervisory arrangement with, or a commitment letter or similar submission to, or extraordinary supervisory letter
from, any federal or state governmental agency or authority charged with the supervision or regulation of banks and their holding companies, or mortgage banking (including, without limitation, the
Federal Reserve Board, the VA, FHA, FNMA, FHLMC, GNMA and HUD) or the supervision or regulation of the Sellers (each, a "Regulatory Authority") except
any such regulatory action that would not have in the aggregate a Material Adverse Effect on the Subject Companies. Each of the Sellers, Subject Companies and HomeSide Subsidiaries has timely filed
all reports, registrations and statements, together with any amendments required to be made with respect thereto, that it was required to file during the past three (3) years with any
Regulatory Authority, and has paid all fees and assessments due and payable in connection therewith except for matters that would not reasonably be expected to have a Material Adverse Effect on the
Subject Companies. Except for normal examinations conducted by a Regulatory Agency in the regular course of the business of HomeSide, no Regulatory Authority has initiated any proceeding or
investigation into the business or operations of any of the Subject Companies or HomeSide Subsidiaries that remains ongoing. There is no unresolved material violation, criticism, or exception by any
Regulatory Authority with respect to any report or statement relating to any examinations of the Subject Companies or HomeSide Subsidiaries. 

19

 

        (g)    Compliance with Laws.    

	(i)
	The
business of the Subject Companies and the HomeSide Subsidiaries is being conducted in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto ("Applicable Law") except where any failure to
comply with Applicable Law would not have in the aggregate a Material Adverse Effect on the Subject Companies; and

	(ii)
	The
Subject Companies hold all permits, licenses, authorizations, orders and approvals of, and have made all filings, applications and registrations
with, all Governmental Authorities that are required in order to conduct their business in all material respects as presently conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to Sellers' Knowledge, no suspension or cancellation of any of them has been threatened in writing. 

        (h)    Specified Contracts; Defaults.    

	(i)
	Sellers
have Previously Disclosed in Sections 4.02(h)(1)-(4) of the Disclosure Schedule (in the case of contracts described in (1)-(4) below) and have
made available or Previously Disclosed (in the case of contracts described in (5)-(7) below) the following written contracts in existence as of the date hereof to which one or more of the Subject
Companies is a party (the "Specified Contracts"):

	(1)
	any
agreement, excluding individual employment contracts, if (x) the performance remaining thereunder involves aggregate consideration to or by a
Subject Company in excess of $100,000 per annum and (y) such agreement is not cancelable, without material penalty, by such Person on 180 days' or less notice;

	(2)
	any
agreement which restricts or contains limitations on the ability of any Subject Company or HomeSide Subsidiary to compete in any line of business,
to the extent that any such provisions would be binding upon, or enforceable against, Buyer or the Subject Companies in their operation of the business of the Subject Companies after Closing;

	(3)
	any
agreement with any of Sellers or the NAB Affiliates;

	(4)
	any
individual employment contracts binding on either Subject Company for aggregate payments to any Subject Employee in any calendar year in excess of
$150,000;

	(5)
	any
mortgage, pledge, indenture or security agreement or similar arrangement constituting a Lien upon the assets of either Subject Company;

	(6)
	any
agreement for the sale or purchase of tangible personal property having a value individually, with respect to all sales or purchases thereunder, in
excess of $25,000; and

	(7)
	any
agreement for the sale or purchase of fixtures or real estate having a value individually, with respect to all sales or purchases thereunder, in
excess of $100,000 (other than sales of REO in the ordinary course of business consistent with past practice). 

	(ii)
	(1)
Each Specified Contract is in full force and effect with respect to the applicable Subject Company, (2) no Subject Company or HomeSide
Subsidiary is in default under any Specified Contract (except with respect to the underlying contracts 

20

 

administered
by Buyer pursuant to the Administration Agreements) in any material respect, (3) with respect to the underlying contracts administered by Buyer pursuant to the Administration
Agreements, to Seller's Knowledge no Subject Company or HomeSide Subsidiary is in default under such contracts in any material respect and (4) there has not occurred any event that, with the
lapse of time or the giving of notice or both, would constitute such a default except where any exception to the foregoing would not have in the aggregate a Material Adverse Effect on the Subject
Companies. 

	(iii)
	Neither
of the Sellers nor any NAB Affiliate has guaranteed any obligation of either Subject Company, nor is any Seller or NAB Affiliate jointly and
severally liable for any obligation of either Subject Company (other than any 2001 Agreements). 

        (i)    No Brokers.    No action has been taken by any Seller that would give rise to any valid claim against any party
hereto for a brokerage commission, finder's fee or other like payment with respect to the transactions contemplated by this Agreement, other than fees to be paid to Cohane Rafferty LLC by Sellers. 

        (j)    Property.    

	(i)
	The
Subject Companies will have as of the Closing Date good and marketable title to each asset reflected on or included in the Closing Date Balance
Sheet, which are not Excluded Assets, free and clear of any Liens other than (A) mechanics', carriers', workmen's, repairmen's or other like Liens arising or incurred in the ordinary course of
business and Liens for Taxes that are not due and payable, and (B) Liens created by Buyer (collectively, "Permitted Liens"). Other than Persons
having an interest in Permitted Liens, no person other than the Subject Companies has any interest in (i) any of the assets reflected on or included in the Closing Date Balance Sheet or
(ii) any leasehold interest of the Subject Companies as of the Effective Time.

	(ii)
	The
Subject Companies own no real property and hold no leasehold interests except leasehold interests which constitute Excluded Assets and REO. 

        (k)    Insurance.    Sellers have Previously Disclosed all policies of insurance as of the date hereof relating to the
Subject Companies (other than title insurance policies or insurance policies relating exclusively to mortgages or other loans originated or serviced by the Subject Companies). Except as Previously
Disclosed, all such policies are with reputable insurers against such risks and in such amounts as the management of NAB reasonably has determined to be prudent in accordance with industry practices,
and in the case of the errors and omissions policy or policies that covers the Subject Companies, satisfy the requirement of all Agencies. All such insurance policies are in full force and effect,
none of the Sellers, NAB Affiliates, Subject Companies is in material default thereunder, and all claims thereunder have been filed in due and timely fashion. 

        (l)    Employee Benefit Plans.    

	

(i)	
 	

All Compensation and Benefit Plans, other than Compensation and Benefit Plans that are not material, have been Previously Disclosed in Section 4.02(l)(i) of the Disclosure Schedule.
	

(ii)	
 	

Neither the execution of this Agreement nor the consummation of the Stock Acquisition will (i) entitle any current or former employee or officer of the Subject Companies to severance pay or any increase in severance pay upon any termination of
employment after the date hereof, (ii) accelerate the time of payment or vesting, or increase the amount of compensation due to any such employee or officer, other than as set forth in Section 4.02(l)(ii) of the Disclosure
Schedule.

21

  

	(iii)	 	None of the Compensation and Benefit Plans are "multiemployer plans" within the meaning of section 3(37) of ERISA.
	

(iv)	
 	

No Liability under Title IV or section 302 of ERISA has been incurred by any Subject Company or any ERISA Affiliate that has not been satisfied in full, and no condition exists that presents a material risk to any Subject Company or any ERISA
Affiliate of incurring any such Liability, other than Liability for premiums due the Pension Benefit Guaranty Corporation (which premiums have been paid when due).
	

(v)	
 	

Each Compensation and Benefit Plan has been operated and administered in all material respects in accordance with its terms and applicable law, including but not limited to ERISA and the Code.
	

(vi)	
 	

Each Compensation and Benefit Plan intended to be "qualified" within the meaning of section 401(a) of the Code is so qualified and the trusts maintained thereunder are exempt from taxation under section 501(a) of the Code.
	

(vii)	
 	

There are no pending, threatened or anticipated claims by or on behalf of any Compensation and Benefit Plan, by any employee or beneficiary covered under any such Compensation and Benefit Plan, or otherwise involving any such Compensation and Benefit
Plan (other than routine claims for benefits).
	

(viii)	
 	

No Subject Company has any obligation to provide or pay for any director or officer indemnification or indemnification insurance as of the Effective Time that is not an Excluded Liability.

        (m)    Labor Matters.    None of the Subject Companies is a party to or is bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or labor organization, nor are any of the Subject Companies the subject of a proceeding asserting that it has committed an
unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel any Subject Company to bargain with any labor organization as to wages or conditions of employment,
nor is there any strike or other labor dispute involving any Subject Company pending or, to Sellers' Knowledge, threatened in writing, nor do the Sellers have any Knowledge of any activity involving
employees of the Subject Companies seeking to certify a collective bargaining unit or engaging in other organizational activity. The Subject Companies are in compliance in all material respects with
all applicable laws respecting employment practices, terms and conditions of employment and wages and hours and have not engaged in any unfair labor practices. 

        (n)    Environmental Matters.    

	(i)
	Each
of the Subject Companies is, and has been at all times since December 11, 1995, in compliance in all materials respects with all applicable
Environmental Laws.

	(ii)
	To
the Knowledge of Sellers, the Subject Companies possess all permits, licenses, registrations, identification numbers, authorizations and approvals
required under applicable Environmental Laws for the operation of their business as presently conducted.

	(iii)
	There
is no pending or, to the Knowledge of Sellers, threatened claim or Action against any Subject Company under any Environmental Law that would
have a Material Adverse Effect on the Subject Companies. None of Sellers, the Subject Companies or the HomeSide Subsidiaries has received written notice from any Person since December 11, 1995
alleging that any of the Subject Companies or HomeSide Subsidiaries is in violation of any applicable Environmental Law or has any Liability involving the presence of any Hazardous Materials pursuant
to any 

22

 

Environmental
Law, which violation or Liability is unresolved and would have a Material Adverse Effect on the Subject Companies. None of the Subject Companies or the HomeSide Subsidiaries is subject
to a judicial or administrative order that is still in effect relating to any applicable Environmental Law, other than such orders that would not have a Material Adverse Effect on the Subject Company. 

	(iv)
	To
the Knowledge of Sellers, there have been no releases, spills or discharges of Hazardous Substances (i) on or underneath any of the real
property owned, or (ii) on or underneath any of the real property leased, by any Subject Company or HomeSide Subsidiary that would have a Material Adverse Effect on the Subject Companies.

	(v)
	During
the period of (i) a Subject Company's ownership or operation of any of their respective current or former properties, (ii) a
Subject Company's participation in the management of any Participation Facility, or (iii) to the Knowledge of Sellers, the interest of any Subject Company in a Loan Property, there has been no
release of Hazardous Materials in, on, under or affecting any such property, Participation Facility or Loan Property. To the Knowledge of Sellers, prior to the period of (i) a Subject Company's
ownership or operation of any of their respective current or former properties, (ii) a Subject Company's participation in the management of any Participation Facility, or (iii) the
interest of any Subject Company in a Loan Property, there was no release or threatened release of Hazardous Materials in, on, under or affecting any such property, Participation Facility or Loan
Property.

	(vi)
	The
following definitions apply for purposes of this Section 4.02(n): (i) "Loan Property"
means any property in which a Subject Company holds a security interest, and, where required by the context, said term means the owner or operator of such property; and
(ii) "Participation Facility" means any facility in which a Subject Company participates in the management and, where required by the context,
said term means the owner or operator of such property. 

        (o)    Mortgage Banking Representations.    

        (i)    Advance.    Each Advance made by a Subject Company (excluding those Advances made by Buyer on behalf of any
such Subject Company) was made in accordance with the Regulations, is a valid and subsisting amount owing to such Subject Company, is carried on the books of such Subject Company at values determined
in accordance with GAAP and is not subject to any set-off or claim that could be asserted against Buyer, and no Subject Company has 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 a Subject Company for reimbursement in connection with an Advance. 

        (ii)    Mortgage Banking Qualification.    HomeSide: (a) to the extent required for the ownership of the
Servicing or Mortgage Loans, is approved (i) by HUD as an approved mortgagee and servicer for FHA Loans, (ii) by VA as an approved lender and servicer for VA Loans, (iii) by FNMA
and FHLMC as an approved seller/servicer of first lien residential mortgages and (iv) by GNMA as an authorized issuer and approved servicer of GNMA-guaranteed mortgage-backed
securities, (b) has all other material certifications, authorizations, licenses, permits and other approvals, including, without limitation, those required by State Agencies, that are necessary
to own the Servicing or Mortgage Loans (or, where legally permissible, any waiver of or exemption from any of the foregoing by such Agency or State Agency) and (c) is in good standing under all
applicable federal, state and local laws and regulations thereunder as a lender and servicer except for matters that would not reasonably be expected to have a Material Adverse Effect on the Subject
Companies. No 

23

 

Seller,
Subject Company or HomeSide Subsidiary has received any notice or information from any Governmental Authority that it intends to terminate or restrict HomeSide's status as an approved
participant in its programs for which such HomeSide is as of the date hereof registered, approved or authorized. 

        (p)    Risk Management Instruments.    All Acquired Hedge Assets 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 HomeSide, 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 Subject Company nor, to Sellers' Knowledge, any other party thereto is in breach of any of its obligations under any of the Acquired
Hedge Assets. 

        (q)    Mortgage Loans.    Each of the representations and warranties in this Section 4.02(q) pertain to
Serviced Loans. The only representations and warranties in this Section 4.02(q) which pertain to Owned Loans are in Sections (ii)(3), (ii)(5), (iii), (v), (vi), (viii), (ix)(1), (x), (xi),
(xviii), (xxii) and (xxiii). If Buyer has knowledge of any exceptions to Sellers' representations and warranties which pertain to Serviced Loans arising in the course of its performance under
the Subservicing Agreement, then such exceptions shall be deemed Previously Disclosed solely for purposes of this Section 4.02(q) and Section 4.02(o)(i) (but only as they pertain
to Serviced Loans) and not for purposes of any other representations or warranties or for those under this Section 4.02(q) as they pertain to Owned Loans. 

        (i)    Information.    All information contained in each file containing all of the Mortgage Loan Documents with
respect to a Mortgage Loan with regard to loan origination and servicing activity by the Originator, Prior Servicer, Sellers, or Subject Companies is complete and accurate in all material respects as
of the effective dates of such information, and all monies received with respect to each Mortgage Loan have been properly accounted for and applied. 

        (ii)    Origination and Sale of Mortgage Loans.    

	(1)
	Each
Mortgage Loan has been originated, serviced and/or sold in accordance with applicable Regulations, including, without limitation, applicable state
or federal laws, rules, or regulations pertaining to consumer credit, truth-in-lending and usury.

	(2)
	The
selling, origination and servicing representations and warranties made to Investors by any of Seller, Subject Company or any Originator or Prior
Servicer of the Mortgage Loans under the Servicing Agreements are true and correct as of the date made.

	(3)
	The
full original principal amount of each Mortgage Note listed has been advanced to the Mortgagor and there is no requirement for any future advance to
be made.

	(4)
	Each
Mortgage Loan conforms to the requirements and specifications of the applicable Investor and Insurer, and each Mortgage Loan was eligible for sale
to, insurance by, or pooling to back securities pertaining to the Servicing issued or guaranteed by, the applicable Investor or Insurer (as applicable).

	(5)
	The
related mortgage instrument has been duly acknowledged and recorded (except as Previously Disclosed) and is a valid and subsisting first lien in the
Mortgaged Property; provided that with respect to each Co-op Loan, the related 

24

 

mortgage
instrument is a valid and subsisting first perfected security interest in the stock in the residential housing corporation and the Co-op Lease that were pledged to secure such
Co-op Loan. 

        (iii)    Enforceability.    Each Mortgage Note and Mortgage has been duly executed by the appropriate obligor; the
appropriate obligor had the legal capacity to execute the Mortgage Note and Mortgage and each is a valid and enforceable document, subject only to applicable antideficiency and bankruptcy and similar
statutes and to application of the rules of equity. There are no defenses, setoffs or counterclaims against any Mortgage Loan, nor is any Mortgage Loan subject to any right of rescission. 

        (iv)    General Servicing of Mortgage Loans.    

	(1)
	Each
Mortgage Loan has been serviced in accordance with applicable Regulations.

	(2)
	None
of the Sellers or Subject Companies nor any Prior Servicer has taken any action or failed to take any action required to be taken by it pursuant to
applicable Regulations that might cause the cancellation of or otherwise affect any of the insurance contracts pertaining to Servicing of a Mortgage Loan (including, without, limitation primary
mortgage guaranty insurance and any guaranty or insurance provided by the VA or FHA).

	(3)
	Except
as Previously Disclosed, none of the Servicing Agreements contain provisions that vary from
the published applicable Regulations of the applicable Investor that would materially increase HomeSide's obligations thereunder. No waivers with respect to any published or unpublished applicable
Regulations have been obtained which adversely affect the credit quality of any Mortgage Loan.

	(4)
	SR
Investment is not a party to any Servicing Agreement. 

        (v)    Custodial Accounts.    

	(1)
	All
Custodial Accounts are maintained in accordance with applicable Regulations. Except as to payments which are past due under the Mortgage Loan, all
Custodial Account balances required by the Mortgage Loan Documents and paid to HomeSide for the account of the Mortgagor and HomeSide are on deposit in the appropriate Custodial Accounts.

	(2)
	All
payments for taxes, assessments, ground rents, mortgage insurance, hazard and flood insurance or other payments made from the Custodial Accounts
have been made on a timely basis, and HomeSide has paid to the Mortgagor interest on any such payments deposited in the Custodial Accounts to the extent such payment is required by applicable
Regulations.

	(3)
	Where
required by applicable Regulations, HomeSide has notified each Mortgagor, in accordance with applicable Regulations, as to any payment adjustments
which resulted from an escrow analysis. 

        (vi)    No Modifications.    Except with respect to partial releases, actions required by a divorce decree,
assumptions, or as otherwise permitted under applicable Regulations, (a) the terms of each Mortgage Note and Mortgage have not been modified by any Seller, Subject Company or Prior Servicer,
(b) no party thereto has been released in whole or in part by any Seller, Subject Company or Prior Servicer and (c) no part of the Mortgaged Property has been released by any Seller,
Subject Company, HomeSide Subsidiary or Prior Servicer. 

25

 

        (vii)    Mortgage Insurance or Guaranty.    

	(1)
	If
required by the applicable Investor, the Mortgage Loans are validly insured by primary mortgage guaranty insurance that complies with applicable
Regulations, and all premiums or other charges due in connection with such insurance have been paid.

	(2)
	There
are no defenses, counterclaims, or rights of set-off affecting the validity or enforceability of any such primary mortgage guaranty
insurance with respect to the Mortgage Loan.

	(3)
	Each
Mortgage Loan that is represented by Sellers to have FHA Insurance is, or is eligible in the normal course of business to be, insured by the FHA.
Each Mortgage Loan that is represented by
Sellers to be guaranteed by the VA is, or is eligible in the normal course of business to be, guaranteed by the VA. 

        (viii)    Hazard Insurance.    There is in force with respect to each Mortgaged Property a hazard insurance policy
that provides, at a minimum, for fire and extended coverage in an amount which is in no event less than the amount required under applicable Regulations. If required by the Flood Disaster Protection
Act of 1973, as amended, or by the Investor, each Mortgaged Property is and will be covered by a flood insurance policy in an amount not less than the maximum amount of insurance required under
applicable Regulations. All such insurance policies are in full force and effect, and all premiums with respect to such policies have been paid and will inure to the benefit of Buyer on behalf of the
Investor upon the consummation of the transactions contemplated by this Agreement. The related mortgage instrument obligates the Mortgagor to maintain such insurance policies at the Mortgagor's cost
and expense and on the Mortgagor's failure to do so, authorizes the holder of the mortgage instrument or its agent to obtain and maintain such insurance at such Mortgagor's cost and expense and to
obtain reimbursement therefor from the Mortgagor. None of Sellers or Subject Companies has engaged in any act or omission that would impair the coverage of any such policy, the benefits of the
endorsement provided for therein, or the validity and binding effect of either. 

        (ix)    Condition of Mortgaged Property; Casualties.    

	(1)
	There
exists no material damage to any Mortgaged Property from fire, windstorm, earthquake, other casualty, environmental hazard, or any other physical
circumstances or conditions relating to the condition of the Mortgaged Property that would cause any Mortgage Loan to become delinquent or otherwise materially and adversely affect the value or
marketability of such Mortgage Loan or related Mortgaged Property, except to the extent covered by in-place hazard insurance. Notwithstanding anything to the contrary contained in this
Section, to the extent that timely repairs are presently being undertaken utilizing casualty insurance proceeds pursuant to an insurance claim which is being timely processed with the insurance
company, such repairs shall not constitute a breach of this warranty provided, however, that upon completion of such repairs, the collateral value of
the repaired Mortgaged Property shall not by virtue of the casualty giving rise to the insurance claim be diminished materially from its value prior to such casualty loss and that such repair and
disbursement of proceeds is conducted in accordance with applicable Regulations.

	(2)
	There
are (i) no uninsured casualty losses and (ii) no insured casualty losses relating to any Mortgaged Property where coinsurance has
been, or Seller has reason to believe it will be, claimed by the insurance company or where the loss, 

26

 

exclusive
of contents, is greater than the net recovery from the insurance carrier. Casualty insurance proceeds paid with respect to a Mortgage Loan have been used either to reduce the Mortgage Loan
balance or for the purpose of making repairs to the Mortgaged Property. Unless such insurance proceeds have been used to reduce the Mortgage Loan balance, all damage with respect to which casualty
insurance proceeds have been received by or through HomeSide has been properly repaired or is in the process of being repaired with such proceeds. 

	(3)
	None
of the Sellers, Subject Companies nor any Prior Servicer has engaged in any activity that involves or involved the generation, use, manufacture,
treatment, transportation, storage in tanks or otherwise, or disposal of Hazardous Material on or from any Mortgaged Property and no presence,
release, threatened release, discharge, spillage or migration of Hazardous Material in violation of existing applicable Regulations has occurred on or from any Mortgaged Property. 

        (x)    Lien Priority; Title Insurance.    As required by applicable Regulations, with respect to each Mortgage Loan
that is not a Co-op Loan, a title policy or attorney's opinion as to title, as the case may be, has been issued and is currently in effect for each Mortgage Loan insuring that the related
Mortgage is a valid first lien on the Mortgaged Property, which such Mortgaged Property is free and clear of all encumbrances and liens having priority over the first lien of the Mortgage, except for
liens for real estate taxes and special assessments not yet due and payable, easements and restrictions of record identified in such title policy, and other matters that are permissible under Investor
requirements. With respect to each Co-op Loan, no changes have occurred that may materially affect title to the Mortgaged Property since the issuance of a title policy on the related
cooperative housing project. No claims have been made under such policy and none of the Sellers, Subject Companies, nor any Prior Servicer or Prior Owner has done, by act or omission, anything that
would impair the coverage of such policy. There are no mechanics' or similar liens or claims that have been filed for work, labor, or material (and no rights are outstanding that under law could give
rise to such lien) affecting the Mortgaged Property, which are or may be liens prior to, or on a parity with, the lien of the mortgage instrument. 

        (xi)    Condemnation; Forfeiture.    Except as Previously Disclosed, no Mortgaged Property has been subject to an
action seeking total or partial condemnation or forfeiture of such Mortgaged Property, and no facts or circumstances currently exist that could give rise to such an action. 

        (xii)    Custodial Files.    Except as set forth on Section 4.02(q)(xii) of the Disclosure Schedules,
the Custodial Files for each Mortgage Loan contain all Mortgage Loan Documents required by the applicable Investor to be contained in the Custodial Files. 

        (xiii)    FHLMC Notes.    Subject to applicable Regulations, the original Mortgage Notes evidencing Mortgage Loans in
the Servicing Portfolio as to which FHLMC is the Investor that are not held by HomeSide's custodian or delivered to Buyer's Custodian are held by FHLMC. 

        (xiv)    Exception Loans.    Except as Previously Disclosed, no Mortgage Loan is (a) insured under Sections
235, 245 or 265 of the National Housing Act, (b) secured by manufactured housing that is not affixed to a permanent structure, (c) a reverse mortgage loan, (d) a graduated payment
loan that is still in the adjustment period of loan, (e) a housing authority loan, (f) an FmHA loan, (g) a "buydown" loan or a loan subject to shared appreciation, contingent
interest features or interest rate subsidies, or (h) a balloon loan. 

27

  

        (xv)    Investor Repurchase and Indemnification.    Except as Previously Disclosed, no Mortgage Loan is subject to
(a) a pending request (including initial inquiries) for either repurchase or indemnification by an Investor, nor has any event occurred which could give rise to such a request; (b) an
Investor indemnification agreement, including an agreement that requires Seller to indemnify the Investor or any third parties for any acts or omissions of Originators or Prior Servicers and/or
(c) an Investor determination of Significant Underwriting Deficiency. 

        (xvi)    Fraud.    No fraudulent action with respect to a Mortgage Loan has taken place on the part of Sellers,
Subject Companies, the Originator, any Prior Owner or Prior Servicer or, to the knowledge of Sellers, any other Person, including, without limitation, the Mortgagor, any appraiser, any builder or
developer or any other party involved in (a) the origination of the Mortgage Loan or (b) the application of any insurance proceeds with respect to a Mortgage Loan, Mortgaged Property or
REO. 

        (xvii)    Soldiers and Sailors Act.    Except as Previously Disclosed, none of Sellers or Subject Companies has
received notice from any Mortgagor or other party with respect to the Mortgage Loans of a request for relief pursuant to or invoking any of the provisions of the Soldiers and Sailors Relief Act of
1940 or any similar law which would have the effect of suspending or reducing the Mortgagor's payment obligations under a Mortgage Loan or which would prevent such loan from going into foreclosure. 

        (xviii)    Deeds of Trust.    In the event the related mortgage instrument constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly designated and currently so serves, and is named in such mortgage instrument. No fees or expenses are or will become payable by
Buyer, the applicable Investor or their respective successors or assigns to the trustee under the deed of trust, except in connection with a trustee's sale or services after default by the Mortgagor. 

        (xix)    Required Pool and Lender-paid Insurance.    All pool or lender-paid insurance
policies required with respect to Mortgage Loans are in place and Sellers have made available to Buyer evidence (i) of the existence of such policies, (ii) that payments under such
policies are current, and (iii) reconciliation of the insurance amounts for such policies and the respective insurers' records. 

        (xx)    Release of Fully-paid Mortgage Loans.    All Mortgage Loans that have been fully paid have been
released within the time period specified by applicable law. 

        (xxi)    Mortgage Escrow Accounts.    All payments into, disbursements from and calculations with respect to the
escrow and custodial accounts maintained in connection with each of the Mortgage Loans ("Mortgage Escrow Accounts") have been executed and performed in
compliance with all Regulations, except where failure to do so would not have, in the aggregate, a Material Adverse Effect on the Subject Companies. Subject to and in accordance with Regulations
pertaining generally to the type, size or capitalization of depository institutions qualified to hold such balances of Investors, Insurers and Governmental Authorities, the Sellers and Subject
Companies have the right and power to determine the financial institution in which the Mortgage Escrow Accounts are held and are not bound by any agreement that would limit the Subject Companies'
ability to move any Mortgage Escrow Account to
any other financial institution or impose a fee in connection with any such move. All Mortgage Escrow Accounts are maintained in accordance with Applicable Law in all material respects. There are no
pledged accounts in lieu of escrow deposits. 

        (xxii)    Co-Op Loans.    If such Mortgage Loan is a Co-op Loan, to the extent required by
applicable Regulations with respect to the Serviced Loans, (a) the Seller or Subject Company, 

28

 

as
the case may be, and the cooperative housing corporation have entered into a recognition agreement, which sets forth the specific rights of Seller and any successor servicer and the
responsibilities of the cooperative housing corporation to the Seller or Subject Company, as the case may be, and any successor servicer and (b) the stock that is pledged as security for such
Mortgage Loan is held by a Person as a tenant-stockholder (as that term is defined in Section 216 of the Code) in a cooperative housing corporation (as that term is defined by
Section 216 of the Code). 

        (xxiii)    ARM Loans.    If such Mortgage Loan is an ARM Loan, the related Mortgage Note has been timely and
appropriately adjusted, if such adjustment is required, and the respective Mortgagor has been timely and appropriately advised. All such adjustments have been made in compliance with applicable law
and in accordance with the terms of the Mortgage Loan Documents. 

        (r)    Origination of Mortgage Loans; Sale of EBO Loans.    None of the Subject Companies has originated any Mortgage
Loans since March 1, 2002, excluding loan assumptions and modifications. None of the Subject Companies has issued a commitment or otherwise agreed with an applicant to fund, determined to fund,
committed to a specified interest rate or issued a commitment (including, without limitation, bulk commitments and assignments of trades) or otherwise agreed with a correspondent Originator or
purchaser to purchase any Mortgage Loan which has not closed (or been purchased). HomeSide has not sold or transferred any Mortgage Loans to SR Funding since September 30, 2001. 

        (s)    Financial Reports; Data Tape; No Material Adverse Effect.    

	(i)
	Sellers
have Previously Disclosed the audited consolidated financial statements for HomeSide for the fiscal year ended September 30, 2001 and the
unaudited consolidated financial statements for HomeSide for the periods ended March 31, 2002 and June 30, 2002 (the "HSL Financial
Statements"). Each of the balance sheets contained in the HSL Financial Statements (including the related notes and schedules thereto, if any) fairly presents in all material
respects the consolidated financial position of HomeSide as of its date, and each of the statements of income and changes in shareholders' equity and cash flows or equivalent statements contained in
the HSL Financial Statements (including any related notes and schedules thereto, if any) fairly presents in all material respects the consolidated results of operations, consolidated changes in
shareholders' equity and consolidated changes in cash flows, as the case may be, of HomeSide for the periods to which they relate, in each case in accordance with GAAP consistently applied during the
periods involved.

	(ii)
	Sellers
have Previously Disclosed the audited consolidated financial statements for SR Investment for the fiscal year ended September 30, 2001
and the unaudited consolidated financial statements for HomeSide for the quarter ended March 31, 2002, the month ended May 31, 2002, and the quarter ended June 30, 2002 (the
"SRI Financial Statements"). Each of the balance sheets contained in the SRI Financial Statements (including the related notes and schedules thereto, if
any) fairly presents in all material respects the consolidated financial position of SR Investment as of its date, and each of the statements of income and changes in shareholders' equity and cash
flows or equivalent statements contained in the SRI Financial Statements (including any related notes and schedules thereto, if any) fairly presents in all material respects the consolidated results
of operations, consolidated changes in shareholders' equity and consolidated changes in cash flows, as the case may be, of 

29

 

SRI
for the periods to which they relate, in each case in accordance with GAAP consistently applied during the periods involved. 

	(iii)
	Since
May 31, 2002, (A) the Subject Companies have conducted their respective businesses in the ordinary course of their business
(excluding the incurrence of expenses related to this Agreement and the 2001 Purchase Agreement and the transactions contemplated hereby and thereby), (B) the Subject Companies have not
incurred any material Liability other than in the ordinary course of their business, (C) the Subject Companies have not materially increased the compensation, pension, or other fringe benefits
or perquisites payable to any officer, employee or director of the Subject Companies from the amount thereof in effect as of December 31, 2001, and (D) no event has occurred or
circumstance arisen that, individually or taken together with all other facts, circumstances and events, is reasonably likely to have a Material Adverse Effect on the Subject Companies.

	(iv)
	Sellers
have previously delivered to Buyer certain tapes (electronic media) on which information regarding the Serviced Loans as of June 30,
2002 is recorded (the "Tape"). The information contained in the Tape is accurate and complete in all material respects as of June 30, 2002. 

        (t)    Intellectual Property.    No Subject Company owns any Intellectual Property other than Excluded IP Assets. 

        (u)    Anti-takeover Provisions.    Neither of the Subject Companies nor any of their properties is subject to any
takeover provisions under any statute, rights plan or agreement that would adversely affect Sellers' authority to consummate the sale of the SRI Capital Stock to Buyer. 

        (v)    Indebtedness for Money Borrowed.    Set forth in Section 4.02(v) of the Disclosure Schedules is a
list of all indebtedness (including debt owed to Affiliates) issued or owed by the Subject Companies including in each case information on whether the Subject Companies are legally and contractually
permitted to pay, prepay or otherwise satisfy all indebtedness prior to the Effective Time. 

 
 

         4.03    Representations and Warranties of Buyer.     

        Subject
to Section 4.01 and except as Previously Disclosed, Buyer represents and warrants to Sellers as follows: 

        (a)    Organization, Standing and Authority.    Buyer (i) has been duly organized and is existing in good
standing as a federal savings association and has the requisite power and authority to own its current assets and carry on its business as currently conducted, and (ii) is duly qualified to do
business in each jurisdiction where the ownership or operation of its property and assets or the conduct of its business requires such qualification. 

        (b)    Corporate Authority.    Buyer has full corporate power and authority to execute and deliver the Agreement and
to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. This Agreement and the transactions contemplated hereby have been duly
authorized by all necessary corporate action of Buyer and do not require the approval of any shareholder or shareholders and this Agreement has been duly authorized, executed and delivered by Buyer.
This Agreement is a valid and legally binding agreement of Buyer, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, receivership,
reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors' rights or by general equity principles). Buyer has the corporate power and
authority to execute, deliver and 

30

 

perform
its obligations under this Agreement and to consummate the transactions contemplated hereby. 

        (c)    Regulatory Approvals; No Conflicts.    

	(i)
	No
consents or approvals of, or filings with, any Governmental Authority or any Third Party Consents are required to be obtained or made by Buyer or any
of its Affiliates in connection with the execution, delivery or performance by Buyer of this Agreement or to consummate the Purchase, except for consents, approvals, filings, applications, notices or
registrations, and the termination of any applicable waiting periods, (A) under the HSR Act, (B) the VA, FHA, FNMA, FHLMC, GNMA and HUD, (C) to the Office of Thrift Supervision,
the Federal Deposit Insurance Corporation or any other federal or state bank regulatory agency and (D) as Previously Disclosed on Disclosure Schedule 4.03(c)(1). As of the date hereof,
Buyer or its Affiliates have no Knowledge of any reason why the approvals or consents set forth as conditions to closing in Section 8.01(a) will not be received in a timely manner.

	(ii)
	Subject
to receipt of the regulatory approvals referred to in the preceding paragraph and the expiration of the related waiting periods, and the Third
Party Consents or approvals referred to in the preceding paragraph, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and
will not (A) constitute a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under, any law, rule or regulation or
any judgment, decree, order, ordinance, statute, governmental permit or license, or contract, agreement, indenture or instrument of either of Buyer or of any of its Affiliates or to which either of
Buyer or any of its Affiliates or their properties is subject or bound, (B) constitute a breach or violation of, or a default under, its charter or by-laws, or (C) require
any consent or approval under any such law, rule, regulation, judgment, decree, order, ordinance, statute, governmental permit or license, contract, agreement, indenture or instrument. 

        (d)    Financial Reports; No Material Adverse Effect.    Buyer has delivered to Sellers Buyer's annual report on
Form 10-K for the fiscal year ended 2001 and its quarterly report on Form 10-Q for the period ended June 30, 2002 (the financial statements contained
therein, the "Buyer Financial Statements"). Each of the balance sheets contained in Buyer Financial Statements (including the related notes and
schedules thereto) fairly presents in all material respects the consolidated financial position of Buyer as of its date, and each of the statements of income and changes in shareholders' equity and
cash flows or equivalent statements contained in Buyer Financial Statements (including any related notes and schedules thereto) fairly presents in all material respects the consolidated results of
operations, consolidated changes in shareholders' equity and consolidated changes in cash flows, as the case may be, of Buyer for the periods to which they relate, in each case in accordance with GAAP
consistently applied during the periods involved and, in the case of the unaudited interim statements, subject to normal year-end audit adjustments. 

        (e)    No Material Adverse Effect.    Since June 30, 2002, through the date hereof no event has occurred or
fact or circumstance arisen that, individually or taken together with all other events, facts, or circumstances, is reasonably likely to have a Material Adverse Effect with respect to Buyer. 

        (f)    Litigation; Regulatory Action.    No litigation, claim, action, arbitration, investigation or other proceeding
before any Governmental Authority is pending against Buyer or any of its 

31

 

Affiliates
and, to the best of Buyer's Knowledge, no such litigation, claim, action, arbitration, investigation or other proceeding has been threatened in writing except where such litigation, claim,
action, arbitration, investigation, or other proceeding would not have a Material Adverse Effect on Buyer. 

        (g)    Regulatory Action.    Neither of Buyer nor any of its Affiliates or properties is a party to or is subject to
any order, decree, agreement, memorandum of understanding or similar supervisory arrangement with, or a commitment letter or similar submission to, or extraordinary supervisory letter from a
Regulatory Authority, nor has either of Buyer or any of its Affiliates been advised by a Regulatory Authority that such agency is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement, memorandum of understanding, commitment letter, supervisory letter or similar submission except where any failure to comply
would not have in the aggregate a Material Adverse Effect on Buyer. 

        (h)    Compliance with Laws.    Buyer and its Affiliates are in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable to them or to the employees conducting such businesses, including the Equal Credit Opportunity Act,
the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act and all other applicable fair lending laws and other laws relating to discriminatory business practices, except
where any failure to comply would not have in the aggregate a Material Adverse Effect on Buyer. 

        (i)    No Brokers.    No action has been taken by Buyer that would give rise to any valid claim against any party
hereto for a brokerage commission, finder's fee or other like payment with respect to the transactions contemplated by this Agreement, other than a fee to be paid to Morgan Stanley Dean Witter by
Buyer. 

        (j)    Banking Regulation.    Buyer is an "insured depository
institution" as defined in the Federal Deposit Insurance Act and applicable regulations thereunder. Buyer and each of its Affiliates that is a depository institution has a
rating of "Satisfactory" or better under the Community Reinvestment Act as of the date hereof. 

        (k)    Financing.    Buyer has, or will have on the Closing Date, sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to pay the Purchase Price hereunder and to pay any other amounts to be paid by it under this Agreement. 

        (l)    Investment Intent.    Buyer is acquiring the SRI Capital Stock for investment for its own account, not as a
nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. Buyer understands that the SRI Capital Stock has not been, and will not be, registered under the
Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona
fide nature of the investment intent of the Buyer. Buyer is an "accredited investor" within the meaning of Regulation D under the Securities Act. 

 
 

         4.04    No Other Representations or Warranties.     

        Except
for the representations and warranties expressly contained in this Article IV, none of Sellers, the Subject Companies, Buyer or any other Person has made or makes any other
express or implied representation or warranty, either written or oral, on behalf of any Seller, Selling Subsidiary or Buyer. 

32

 
ARTICLE V.  

 Covenants  

 
 
        5.01    Transfer of Excluded Assets and Excluded Liabilities; Management of Excluded Litigation.     

        (a)  Prior
to the Closing, except as provided in Sections 5.01(c) or 5.01(d), (i) the Subject Companies will transfer all of the Excluded Assets to NAB, one or more
NAB Affiliates or third parties and (ii) the Subject Companies will transfer all of the Excluded Liabilities to, and NAB, one or more NAB Affiliates or third parties will assume all of the
Excluded Liabilities. The transfer of the Excluded
Assets and the transfer and assumption of the Excluded Liabilities will be effected in a manner so that after Closing neither Subject Company will have any Liability whatsoever in connection with any
Excluded Asset, any Excluded Liability or the transfer of any Excluded Asset or Excluded Liability (including, without limitation, Liabilities arising from representations, warranties or covenants
made in connection with the transfer). With respect to the Compensation and Benefit Plans, the Sellers and Subject Companies shall change the sponsorship and administration of such Compensation and
Benefit Plans so that none of Subject Companies retains any duties or Liabilities under such Compensation and Benefit Plans after the Effective Time and none of such Compensation and Benefit Plans
will constitute a "multiemployer plan" within the meaning of Section 3(37) of ERISA after the Effective Time. 

        (b)  The
purchase price for all transfers of Excluded Assets that are made to NAB or an Affiliate of NAB shall be at book value and shall be paid in cash or, in the case of
transfers to NAB, reduction of intercompany indebtedness owed by either Subject Company. 

        (c)  To
the extent (i) Sellers are legally unable to effect the transfer of an Excluded Liability prior to the Effective Time or (ii) after analyzing in good
faith the implications of doing so, Sellers reasonably determine that the costs and expenses necessary to effect the transfer of an Excluded Liability prior to the Effective Time render it
commercially unreasonable or impracticable to do so, such Excluded Liability ("Attempted Excluded Liability") shall be retained by the appropriate
Subject Company, and the Sellers shall indemnify Buyer against all Liabilities relating thereto (whether arising prior to or after the Effective Time). Any Excluded Liability which is not an Attempted
Excluded Liability is an "Actual Excluded Liability." 

        (d)  To
the extent (i) Sellers are legally unable to effect the transfer of an Excluded Asset (other than the assets described in clauses (i), (ii) (subject to
Sections 5.13 and 5.15(b)) and (vii)) prior to the Effective Time or (ii) after analyzing in good faith the implications of doing so, Sellers reasonably determine that the costs and expenses
necessary to effect the transfer of the Excluded Asset (other than the assets described in clauses (i), (ii) (subject to Sections 5.13 and 5.15(b)) and (vii)) prior to the Effective Time render
it commercially unreasonable or impracticable to do so, such Excluded Asset ("Attempted Excluded Asset") shall be retained by the appropriate Subject
Company. In each such event (i) the Sellers shall indemnify Buyer against all Liabilities relating to the Attempted Excluded Asset (whether arising prior to or after the Effective Time), and
(ii) Buyer shall transfer to or pay over to Sellers any and all benefits relating thereto (whether arising prior to or after the Effective Time). Any Excluded Asset which is not an Attempted
Excluded Asset is an "Actual Excluded Asset." 

        (e)  Sellers
and Buyer shall cooperate to reconcile the amounts of the accounts receivable and accounts payable owing from or to the Subject Companies on the one hand and the
Buyer and Buyer Affiliates on the other hand. 

33

  

 
 

         5.02    Conduct of Business.     

        (a)  From
the date hereof until the Closing Date, unless otherwise required by law, contemplated by this agreement or consented to in writing by Buyer, which consent may not
be unreasonably withheld, Subject Companies shall, and Sellers shall cause the Subject Companies to: 

	(i)
	maintain
the corporate existence of each of the Subject Companies in good standing; and

	(ii)
	maintain
proper business and accounting records relative to the business of each of the Subject Companies. 

        (b)  From
the date hereof until the Closing Date, unless otherwise required by law, contemplated by this agreement or consented to in writing by Buyer, which consent may not
be unreasonably withheld, Subject Companies shall, and Sellers shall cause the Subject Companies to use commercially reasonable efforts to: 

	(i)
	maintain
the general character of the business of each of the Subject Companies and conduct the business of each of the Subject Companies in a
commercially reasonable manner;

	(ii)
	preserve
relationships with customers, suppliers, Investors and Insurers of each of the Subject Companies;

	(iii)
	maintain
the assets of the Subject Companies in good condition and repair, ordinary wear and tear excepted;

	(iv)
	maintain
presently existing insurance coverages with respect to the business of each of the Subject Companies; and

	(v)
	take
any action by the Subject Companies with respect to the assets disposed of by HomeSide pursuant to the MidFirst Agreement, so long as such actions
are not prohibited by the terms of the MidFirst Agreement and are not prohibited under any other terms of this Agreement (it being understood that any amendment, waiver or any similar actions would
not require the consent of Buyer other than the postponement of the Transfer Date (as therein defined)) and pay Buyer the termination fee under the Subservicing Agreement and any other amounts due
Buyer under the Subservicing Agreement shall be paid in accordance with the Subservicing Agreement as it may be amended as provided in Section 5.15. 

        (c)  From
the date hereof until the Closing Date, except (i) as contemplated by this Agreement (including in connection with the transfer of Excluded Assets and
Excluded Liabilities or as may be necessary or appropriate to comply with Sellers' covenants hereunder), (ii) as Previously Disclosed, (iii) as required by law or (iv) to the
extent that Buyer provides prior written consent to do otherwise, which consent may not be unreasonably withheld, Subject Companies shall not, and Sellers shall not permit the Subject Companies to: 

	(i)	 	enter into any Specified Contract, relating to the business of any of the Subject Companies (other than those contemplated by this Agreement or in connection with the transfer or assumption of Excluded Assets or Excluded
Liabilities in accordance with Section 5.01) or terminate or amend or modify in any material respect any such existing Specified Contracts;
	

(ii)	
 	

enter into or amend or renew any individual employment agreements with any employee other than with respect to new temporary employees; provided, however, that following September 30, 2002, the
restrictions in this clause shall apply only with respect to Subject Employees;

34

 

	

(iii)	
 	

grant any salary or wage increase or increase any employee benefit for any employee (including incentive or bonus payments) except to satisfy Previously Disclosed contractual obligations existing as of the date hereof or in the ordinary course of
business; provided, however, that following September 30, 2002, the restrictions in this clause shall apply only with respect to Subject Employees;
	

(iv)	
 	

other than in the ordinary course of business sell, transfer, assign or otherwise dispose of or encumber any of the assets of the Subject Companies (other than in connection with the transfer or assumption of Excluded Assets or Excluded Liabilities
in accordance with Section 5.01 and other than the sale, transfer or other disposition of Hedge Assets of the Subject Companies consistent with their existing hedge trading or as otherwise contemplated in this Agreement);
	

(v)	
 	

cancel any debt or waive or compromise any claim or right relating to the business of Subject Companies other than payment or satisfaction of the medium term notes and indebtedness owed to Affiliates;
	

(vi)	
 	

make any capital expenditure or commitment relating to the business of the Subject Companies;
	

(vii)	
 	

except in the ordinary course of their business consistent with past practice since March 1, 2002, incur, assume or guarantee or otherwise become responsible for any indebtedness to a third party unless such obligation constitutes an Actual
Excluded Liability as of the Closing Date;
	

(viii)	
 	

issue, sell, transfer, mortgage encumber or otherwise dispose of, or agree to issue, sell, transfer, mortgage, encumber or otherwise dispose of (a) any shares of the capital stock of any Subject Company or (b) any securities convertible
into, or options with respect to, or warrants to purchase or rights to subscribe for, any shares of the capital stock of Subject Company;
	

(ix)	
 	

enter into any joint venture, partnership or other similar arrangement, form any other new material arrangement for the conduct of its business or purchase any material assets or securities of any Person;
	

(x)	
 	

make any dividend or any other distribution of capital in cash or in kind or accept any capital contributions or forgiveness of indebtedness;
	

(xi)	
 	

other than in connection with the purchase and sale of Mortgage Loans permitted hereunder, purchase new Servicing Rights, or sell Servicing Rights;
	

(xii)	
 	

terminate, cancel or amend any material insurance coverage maintained with respect to the assets or activities of the business of the Subject Companies which is not replaced by an adequate amount of insurance coverage at reasonable cost;
	

(xiii)	
 	

merge or consolidate SR Investment or HomeSide with or into any other Person or permit any other Person to merge or consolidate with or into SR Investment or HomeSide;
	

(xiv)	
 	

sell, transfer, mortgage, encumber or otherwise dispose of any Owned Loans to SR Funding;

35

 

	

(xv)	
 	

(a) except for loans acquired pursuant to existing contractual obligations, make or acquire any residential mortgage loan or issue a commitment for any residential loan other than in the ordinary course of business with respect to the management of
Servicing; or (b) take any action that would result in any discretionary releases of collateral or guarantees or otherwise restructure any loan with a principal balance in excess of $1,000,000;
	

(xvi)	
 	

except as necessary in order to comply with Regulations or the requirements of this Agreement or in response to competitive or market conditions, make any material changes in the policies and practices of the Subject Companies with respect to
(a) servicing loans or (b) hedging practices and methodologies (including, without limitation, any material change in the general risk characteristics of the Hedge Assets relative to the risk portfolio of the Servicing Rights or its current
advisor with respect to the Hedge Assets) except in accordance with the procedures set forth in Exhibit A;
	

(xvii)	
 	

make any changes to its book or tax accounting methods, practices or policies which are prohibited under Article VII hereof, except as may be required under law, rule, regulation or GAAP, in each case as concurred in by NAB's independent public
accountant;
	

(xviii)	
 	

make any changes to its Mortgage Loan reserve policies, provided, however, that the Subject Companies are permitted to reverse the reserves held against the categories of assets and liabilities set forth
on Section 5.02(c)(xviii) of the Disclosure Schedules except to the extent that any such reserve includes accounts payable or other amounts due and owing and unpaid immediately prior to the Effective Time;
	

(xix)	
 	

settle any Action filed or otherwise instituted against it if such settlement would contain any relief other than monetary damages;
	

(xx)	
 	

amend the certification of incorporation, by-laws or other similar governing documents of the Subject Companies or adopt resolutions inconsistent therewith;
	

(xxi)	
 	

enter into any new line of business;
	

(xxii)	
 	

execute or consent to any waivers extending the statutory period of limitations with respect to any Action or the collection or assessment of any Taxes, or amend any Tax Returns;
	

(xxiii)	
 	

amend any Tax Returns, prepare or file any Tax Return in a manner that is inconsistent with its past practice in preparing or filing similar Tax Returns in prior periods, or make or rescind any express or deemed election relating to Taxes or change
any of its methods of reporting income or deductions for Tax purposes;
	

(xxiv)	
 	

commence any litigation or proceeding with respect to any Tax Liability or settle or compromise any Tax Liability;
	

(xxv)	
 	

take any action intended or reasonably likely to result in (A) a Material Adverse Effect with respect to the Subject Companies, (B) any of the representations and warranties of Sellers set forth in this Agreement being or becoming untrue in
any material respect at any time at or prior to the Closing Date, (C) any of the conditions set forth in Article VIII not being satisfied in a timely manner or (D) a material violation of any provision of this Agreement, except, in
each case, as required by applicable Law;
	

(xxvi)	
 	

transfer ownership of the capital stock of MSR Services Corporation to any Person other than NAB or a NAB Affiliate, or dissolve MSR Services Corporation, prior to October 31, 2002; or
	

(xxvii)	
 	

agree to do any of the foregoing.

36

 

        (d)  Prior
to the Closing Date, Sellers shall pay Buyer transfer costs of $25 for each Mortgage Loan the Servicing on which is or will be transferred as a result of any
transfer of Excluded Assets plus Buyer's out-of-pocket costs incurred in connection therewith. 

        (e)  Prior
to the Closing Date, Sellers shall cause the Subject Companies to increase or decrease, as applicable, the reserve accounts as specified in Schedule 2.02.
Sellers shall reflect the adjusted amount of each of such reserve balances in the Pre-Closing Date Value Calculation, the Closing Date Balance Sheet and the Closing Date Value Calculation
Schedule. 

        (f)    From
the date hereof to the Closing Date, the officers of the Sellers shall confer on a regular basis with Buyer as to the business of the Subject Companies, and report
periodically on the general status of the ongoing operations thereof. 

        (g)  From
the date hereof to the Closing Date, NAB will not permit an "ownership change" (as defined in Section 332(g) of the Code) of a Subject Company to occur other
than as a result of the Stock Acquisition contemplated in the Agreement or as a result of a change in the stock ownership or Control of NAB. 

 
 

         5.03    Access; Confidentiality.     

        (a)  Sellers
and Subject Companies agree to permit Buyer and its Representatives to have, during the period from the date hereof to the Closing Date, reasonable access to the
premises, books and records relating to the Subject Companies during normal business hours. Sellers and Subject Companies agree to make available to Buyer upon reasonable advance notice and during
normal business hours, the employees of any Seller involved in the conduct of the business of the Subject Companies, as Buyer may reasonably request,  provided that such availability shall not
unreasonably interfere with the normal operations of the Sellers or Subject Companies. Sellers and Subject
Companies shall furnish Buyer with such financial and operational data and other information relating to the business of the Subject Companies as Buyer shall from time to time reasonably request and
shall reasonably cooperate with Buyer with respect to Buyer's need to plan for and coordinate the Stock Acquisition. Without limiting the foregoing, Sellers and Subject Companies shall provide to
Buyer information relating to the value of the Hedge Assets and the Servicing Rights Portfolio in the manner set forth on Exhibit A. Sellers and
Subject Companies acknowledge that notwithstanding any provision of this Agreement to the contrary, Buyer shall be permitted to use the information provided pursuant to this Section 5.03(a) to
prepare for sales of Servicing following the Effective Time. 

        (b)  Buyer
agrees that it will not, and will cause its Representatives not to, use any information obtained pursuant to this Section 5.03 (as well as any other
information obtained prior to the date hereof in connection with the entering into of this Agreement) for any purpose unrelated to the consummation of the transactions contemplated by this Agreement
or preparation for sales of Servicing following the Effective Time. Except as required by Applicable Law and the regulations, rules and requirements of a recognized stock exchange or regulatory
authority, Buyer will keep confidential, and will cause its Representatives to keep confidential, all information and documents obtained pursuant to this Section 5.03 (as well as any other
information obtained prior to the date hereof in connection with the entering into of this Agreement) unless such information (1) was already known to such party, (2) becomes available
to such party from other sources not known by Buyer to be bound by a confidentiality obligation, (3) is disclosed with the prior written approval of Sellers or (4) is or becomes readily
ascertainable from published information or trade sources. In the event that this Agreement is terminated or the transactions contemplated by this Agreement will otherwise fail to be consummated,
Buyer will promptly cause all copies of documents or extracts thereof containing information and data as to Sellers and Subject Companies to be returned to Sellers at Buyer's expense, or (at Sellers'
option) confirm in writing to Sellers that they have completely destroyed all such copies, documents, extracts, information and data. 

37

 

        (c)  Buyer
agrees that following the Closing Date, (i) Sellers and their Representatives shall have reasonable access, during normal business hours, to the
documentation, manuals, files and other
information or data in the possession of Buyer relating to the business of the Subject Companies and HomeSide Subsidiaries, (ii) Buyer shall permit such Persons to examine and copy such
documentation, manuals, files and other information or data to the extent reasonably requested by such party, and (iii) Buyer shall cause its employees to furnish to NAB, the NAB Affiliates or
any regulator of Sellers or the NAB Affiliates all information reasonably requested by, and otherwise cooperate with (including, without limitation, causing employees to assist Sellers or any of the
NAB Affiliates by requiring such employees to avail themselves for trial, depositions, interviews and other Action-related litigation endeavors) Sellers or any of the NAB Affiliates with respect to
the business of the Subject Companies or HomeSide Subsidiaries in connection with regulatory compliance, indemnification claim verification, pending or threatened litigation, financial reporting and
tax matters (including financial and tax audits and tax contests) and other similar business purposes. During the period required under the longer of Buyer's record retention policy or NAB's record
retention policy, Buyer shall not destroy or dispose of or permit the destruction or disposition of any such documentation, manuals, files and other information or data without first offering, in
writing, at least sixty (60) days prior to such destruction or disposition to surrender them to Sellers. Any information in the possession of Buyer that solely relates to HomeSide Subsidiaries,
shall be returned to Sellers. 

        (d)  Sellers
agree that following the Closing Date, (i) Buyer and its Representatives shall have reasonable access, during normal business hours, to the books,
records, documentation, manuals, files and other information or data of Sellers and their Affiliates to the extent they relate to the business of the Subject Companies during the period prior to the
Closing Date, (ii) Sellers shall permit such Persons to examine and copy such books, records, documentation, manuals, files and other information or data of Sellers and their Affiliates to the
extent reasonably requested by such party, and (iii) Sellers shall cause the officers and employees of Sellers and their Affiliates to furnish to Buyer or any of its Affiliates, or any
regulator of Buyer or any of its Affiliates all information reasonably requested by, and otherwise cooperate with (including, without limitation, causing employees to assist Buyer or any of its
Affiliates by requiring such employees to avail themselves for trial, depositions, interviews and other Action-related litigation endeavors) Buyer with respect to the business of the Subject Companies
in connection with regulatory compliance, indemnification claim verification, pending or threatened litigation, financial reporting and tax matters (including financial and tax audits and tax
contests) and other similar business purposes. During the period required under the longer of Buyer's record retention policy or NAB's record retention policy, Sellers shall not destroy or dispose of
or permit the destruction or disposition of any such books, records, documentation, manuals, files and other information or data without first offering, in writing, at least sixty (60) days
prior to such destruction or disposition to surrender them to Buyer. 

 
 

         5.04    Taking of Necessary Action.     

        (a)  Both
Sellers and the Subject Companies, on the one hand, and Buyer, on the other hand, will cooperate and use their respective commercially reasonable efforts at their
own expense to prepare all documentation, to effect all filings and to obtain all permits, consents, approvals and authorizations of all third parties and Governmental Authorities required on the part
of such Person that are necessary to consummate the transactions contemplated by this Agreement. Each of Sellers and Buyer will have the right to review in advance, and to the extent practicable each
will consult with the other with respect to, all material written information submitted to any third party or any Governmental Authority in connection with the transactions contemplated by this
Agreement, in each case subject to applicable laws relating to the exchange of information. In exercising the foregoing right, each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each of Buyer, Sellers and Subject Companies commits to submit all required applications or notices to the appropriate Governmental Authorities not later than August 30, 2002. Each
party hereto agrees that it will consult with the other 

38

 

party
hereto with respect to the obtaining of all material permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other party appraised of the status of material matters relating to completion of the transactions contemplated hereby. To the
extent necessary, Buyer and Sellers shall cause their respective Affiliates to take any action necessary in connection with the foregoing. Sellers and Subject Companies agree that, promptly after the
date hereof, they will begin seeking all permits, consents, approvals and authorizations from third parties and Governmental Authorities to transfer the Excluded Assets and Excluded Liabilities
consistent with Seller's obligations under Section 5.01 and to consummate the Stock Acquisition. In the event that not all such permits, consents, approvals and authorizations are obtained
prior to the Effective Time, Sellers will continue after the Effective Time to use their reasonable best efforts to obtain such permits, consents, approvals and authorizations. 

        (b)  Each
party agrees, upon request, to furnish the other party with all information concerning itself, its Subsidiaries, directors, officers and stockholders and such other
matters as may be reasonably necessary or advisable in connection with any filing, notice or application made by or on behalf of such other party or any of its Subsidiaries to any third party or
Governmental Authority. 

 
 

         5.05    Disclosure; Legend     

        (a)  Except
as contemplated by the terms of this Agreement or as may otherwise be required by law, none of Sellers, Subject Companies nor Buyer, 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. Sellers and Buyer agree to
consult with each other prior to issuing any press release relating to the transactions contemplated by this Agreement. Sellers will not make or deliver any written communication with borrowers or
other customers of the Subject Companies related to the transactions contemplated hereby without the prior consent of Buyer which consent shall not be unreasonably withheld. 

        (b)  Buyer
agrees that all certificates or other instruments representing the shares of SRI Capital Stock will bear a legend substantially to the following effect: 

"THE
SHARES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED
OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS." 

 
 

        5.06    Delinquent Accounts Receivable.     

        Buyer
shall use commercially reasonable efforts for a period of 180 days following the Effective Time in accordance with applicable Regulations to collect delinquent Accounts
Receivable and Sellers shall reimburse Buyer for (i) any and all amounts which Buyer does not collect, (ii) interest thereon at the Interest Rate with respect to any uncollected accounts
receivable from the 91st day through the date of reimbursement by Seller, and (iii) any and all unpaid collection costs, provided that Buyer
transfer such delinquent Accounts Receivables to Sellers upon such reimbursement. Buyer shall have no obligation to use a collection agency or to commence any Action in connection with its collection
efforts. 

 
 

         5.07    No Solicitation.     

        Prior
to the Closing only, each of Sellers and the Selling Subsidiaries shall immediately cease and cause to be terminated any activities, discussions or negotiations commenced prior to
the date of this 

39

 

Agreement
with any parties other than Buyer with respect to the sale of the capital stock of either Subject Company or the assets of the Subject Companies other than the Excluded Assets. 

 
 

         5.08    Non-Competition Agreement.     

        For
a period of three (3) years following the Closing Date, Sellers shall not, and shall not permit any of their Affiliates to, in any state in the United States, directly or
indirectly, either as a principal, partner, agent, manager, stockholder, director, officer or in any other capacity, enter into a business that competes in the residential mortgage servicing business
in the United States (the "Restricted Business") on a de novo basis; provided, however, (i) that
ownership of less than 5% of the voting stock of any corporation engaged in the Restricted Business shall not constitute a violation hereof or (ii) that entering into or engaging in the
Restricted Business as the result of any acquisition, merger, consolidation, or similar business combination shall not constitute a violation hereof if the entity with which such transaction occurs is
an entity (a) whose primary business on a consolidated or combined
basis with all its Affiliates is not the Restricted Business or (b) incorporated or headquartered outside of the United States that has outside the United States or derives from outside the
United States more than 50% of its assets, revenues or net income on a consolidated or combined basis with all its Affiliates (based on the financial statements publicly available immediately prior to
the entering into of a definitive agreement for such transaction). 

 
 

         5.09    Servicing Portfolio Expenses.     

        (a)  Buyer
shall pay all fees, expenses and costs of (i) Investor transfer fees, (ii) assigning transferable life-of-loan tax service
contracts, (iii) assigning transferable life-of-loan contracts, (iv) for non-MERS loans, recording any assignments, registering any loans with MERS
and the endorsement of any notes, (v) for MERS loans, transferring any rights with the MERS system and (vi) custodial fees incurred in connection with the transfer of the Mortgage Escrow
Accounts. 

        (b)  From
and after the Effective Time, NAB shall reimburse Buyer and Buyer Affiliates for all out-of-pocket costs and expenses (including letter of
credit fees) necessary to provide for the outstanding recertification or final pool certification with respect to the Servicing Rights Portfolio as set forth in Section 5.09(b) of the
Disclosure Schedule as it is constituted as of the Effective Time except if such costs and expenses are of the type intended to be covered by the Servicing Transfer Reserve (GL Account
No. 24350). 

        (c)  NAB
shall have no obligation to reimburse Buyer or Buyer Affiliates for costs incurred in obtaining and correcting Missing Loan Documents. 

 
 

         5.10    2001 Agreements.     

        Prior
to the Effective Time, NAB shall release SR Investment and HomeSide from all obligations to pay or reimburse NAB or any NAB Affiliate for legal, advisory or other fees and costs
incurred in connection with any of the 2001 Agreements or the transactions contemplated in connection therewith. 

 
 

         5.11    Transactions with Affiliates.     

        On
or prior to the Effective Time, each of the Subject Companies shall pay and discharge all amounts of indebtedness owed by it to NAB or any NAB Affiliate. All transactions between a
Subject Company, on the one hand, and NAB or any NAB Affiliate, on the other hand, between the date of this Agreement and the Effective Time shall be conducted only in a manner consistent with past
practice and, at a minimum, on terms reasonably believed to be as favorable to the Subject Company as the Subject Company could receive from an unaffiliated third party. 

 
 

         5.12    Prepayment or Satisfaction of Indebtedness; Hedges.     

        Prior
to the Effective Time HomeSide shall pay, prepay or satisfy all of its obligations with respect to funded debt for money borrowed and owed to third parties constituting Excluded
Liabilities and 

40

 

shall
pay all amounts owed to NAB and its Affiliates and as much of the Intercompany Debt as its available cash will allow. Immediately after the Closing, Buyer shall cause the Subject Companies to
pay and satisfy all of such obligations then unsatisfied to NAB and any of its Affiliates. 

 
 

        5.13    Subservicing of Excluded Assets.     

        Buyer
shall continue to subservice, in accordance with the terms and conditions of the Subservicing Agreement or another mutually agreeable agreement, all Mortgage Loans or Servicing
Rights which are Excluded Assets or owned by any of the HomeSide Subsidiaries within the meaning of this Agreement. 

 
 

         5.14    Loan Solicitations.     

        From
the date hereof to the Effective Time, Buyer shall not directly (through the use of a customer list or otherwise) solicit any holder of a Mortgage Loan subserviced by Buyer pursuant
to the Servicing Agreement in connection with the refinancing of such Mortgage Loan; provided, however, that this prohibition shall not apply to
(i) responding to holders who contact Buyer on their own initiative without any prohibited solicitation by Buyer and referring such holders to Buyer's sales staff, (ii) general
solicitations not targeted specifically at such holders, (iii) solicitations to such holders who have a customer relationship to Buyer independent of such Mortgage Loan, or (iv) holders
who have contacted Buyer in connection with refinancing such Mortgage Loan prior to the date of this Agreement or who contact Buyer as a result of solicitations made prior to the date hereof. 

 
 

         5.15    Agreements Currently in Place.     

        The
parties agree that prior to the Closing Date they will negotiate in good faith any amendment to, or the termination of, the 2001 Agreements which may be required in order to
implement the intention of the parties pursuant to this Agreement. It is the intention of the parties that any indemnity provisions which are included in any Administration Agreement will survive the
termination of such Administration Agreement. 

 
 

         5.16    VA No-bid Protection.     

        Sellers
shall indemnify and hold harmless Buyer and Buyer's Affiliates for and against all Liabilities incurred by any of them resulting from VA Buydowns and VA No Bids as to which the
VA provides its notice of intention not to bid at Foreclosure within two years following the Effective Time. 

 
 

         5.17    Liability for Breach of Covenants.     

        All
covenants in this Agreement of Sellers and/or the Subject Companies shall, prior to the Effective Time, be the joint and several liability of each Seller and each Subject Company.
After the Effective Time, such covenants shall be the joint and several liability of the Sellers only. After the Effective Time, the Subject Companies shall have no Liability with respect to the
performance of such covenants or with respect to any breach of such covenants (whether occurring before or after the Effective Time), and neither Seller shall have any right of contribution,
reimbursement or similar recourse against the Subject Companies. 

 
 

         5.18    Prohibition on Certain Purchases or Sales.     

        For
the seven days before the MSR Hedge Valuation Date (as defined in Exhibit A), Buyer and its Affiliates or agents (acting in their capacity as agent), shall not, directly or
indirectly, sell any principal only MBS securities or derivatives thereof. For the seven days before the MSR Hedge Valuation Date (as defined in Exhibit A), Sellers and their Affiliates or
agents (acting in their capacity as agent) shall not, directly or indirectly, purchase any principal only MBS securities or derivatives thereof. 

        On
the MSR Hedge Valuation Date, Buyer and its Affiliates or agents (acting in their capacity as agent) shall not, directly or indirectly, purchase any TBA mortgage backed securities or
derivatives thereof after 12:00 p.m. New York time. On the MSR Hedge Valuation Date, Sellers and their 

41

 

Affiliates
or agents (acting in their capacity as agent) shall not, directly or indirectly, sell any TBA mortgage backed securities or derivatives thereof after 12:00 p.m. New York time;  provided, however,
that such restriction shall not apply to the Subject Companies and their agents (acting in their capacity as agent) in order to
comply with Exhibit A. 

        Neither
Sellers, Buyer nor any of their respective Affiliates or agents shall, directly or indirectly, undertake any activity that may or is intended to distort market prices relevant
for the calculation of asset values under this Agreement, including Schedule 2.02 and Exhibit A thereto. 

        On
or after the Effective Time, Sellers may request from Buyer, and Buyer may request from Sellers, a complete list of trades executed during the period commencing seven days before the
MSR Hedge Valuation Date and ending on the day after the MSR Hedge Valuation Date. 

ARTICLE VI.  

 Employees  

 
 
        6.01    Employees.     

        Each
Subject Company shall immediately prior to the Effective Time terminate all of its employees. Buyer shall have the right to offer employment following the Closing, subject to such
terms and conditions as Buyer may determine in its sole discretion, to any employee of a Subject Company or MSR Services Corporation, provided that Buyer shall have designated such employee in writing
to Sellers prior to September 20, 2002 (such designated employee, the "Subject Employee"). Buyer shall have no obligation to offer employment to
any employee following the Closing and may commence making such offers with respect to an employee at any time after that employee has been designated as a Subject Employee effective as of the
Effective Time. 

ARTICLE VII.  

 Taxes  

 
 
        7.01    Tax Representations and Warranties.     

        Sellers,
jointly and severally, represent and warrant to Buyer as follows: 

        (a)  Within
the times and in the manner prescribed by applicable law, the Subject Companies (and their predecessors) have properly prepared and filed all Tax Returns required
by applicable law and have timely paid or properly accrued all Taxes due and payable. All such Tax Returns are true and complete in all material respects. The Subject Companies (and their
predecessors) have complied in all material respects with all applicable laws relating to Taxes. 

        (b)  None
of the Subject Companies (or any predecessor thereof) (i) has filed a consent or agreement pursuant to Section 341(f) of the Code, (ii) is a
party to or bound by any closing agreement, offer in compromise or any other agreement with any Tax authority or any Tax indemnity or Tax sharing agreement with any person, (iii) has present or
contingent Liabilities for Taxes, other than Taxes incurred in the ordinary course of business thereof and reflected on the most recent balance sheet
included in the SRI Financial Statements and the HSL Financial Statements, as applicable, or incurred in the ordinary course of business since June 30, 2002 in amounts consistent with prior
years, (iv) has engaged in a trade or business, or had a permanent establishment (within the meaning of an applicable tax treaty), within a country other than the United States, or
(v) is a party to an agreement that could give rise to an "excess parachute payment" within the meaning of Section 280G of the Code. 

        (c)  There
are and have been no (i) proposed, threatened or actual assessments, audits, examinations or disputes as to Taxes relating to the Subject Companies (or
their predecessors), 

42

 

except
as set forth in Section 7.01(c) of the Disclosure Schedule, and (ii) adjustments under Section 481 of the Code or any similar adjustments with respect to the Company or
any Subsidiary (or their predecessors), or waivers or extensions of the statute of limitations with respect to Taxes for which the Company or any Subsidiary could be held liable. There are no Liens
for Taxes upon any of the assets of the Subject Companies nor, to Sellers' Knowledge, is any taxing authority in the process of imposing any Lien for Taxes upon such assets, except for Liens for Taxes
not yet due and payable. 

        (d)  As
of the date hereof, none of the Subject Companies (nor any predecessor thereof) has been a "distributing corporation" or a "controlled corporation" in connection with
a distribution described in Section 355 of the Code, since February 10, 1998. 

        (e)  None
of the Subject Companies (nor any predecessor thereof) has been a member of an affiliated group of corporations, within the meaning of Section 1504 of the
Code, or a member of a combined, consolidated or unitary group for state, local or foreign Tax purposes, other than an affiliated group the common parent of which is the Company since
February 10, 1998. 

 
 

         7.02    Indemnification Obligations With Respect to Taxes.     

        (a)  The
Sellers shall be liable for, and shall indemnify, defend and hold harmless the Buyer and its Affiliates (and, after the Closing Date, the Subject Companies) from and
against: 

	(i)
	all
Taxes of the Subject Companies that are due with respect to periods ending on or prior to the Closing Date, including, without limitation, any Taxes
resulting from the Subject Companies ceasing to be a member of a consolidated, combined, affiliated, or unitary group;

	(ii)
	all
Taxes of the Subject Companies that are due with respect to periods ("Straddle Periods") that
include but do not end on the Closing Date to the extent attributable to the portion of the Straddle Period ending at the close of business on the Closing Date; and

	(iii)
	all
Taxes resulting from any inaccuracy in or breach of (A) any tax representations and warranties contained in Section 7.01 of this
Agreement without regard to whether such matters were Previously Disclosed and (B) any covenant relating to Tax matters (including covenants contained in this Article VII and in Sections
5.02(c)(xvii), (xxii), (xxiii), (xxiv) and (xvi) relating to Tax Matters); and

	(iv)
	all
Liabilities other than Taxes imposed on or sustained by the Buyer or its Affiliates (including the Subject Companies after the Closing Date),
directly or indirectly, by reason of or in connection wijth the foregoing amounts. 

        (b)  For
purposes of this Agreement, whenever it is necessary to determine the Liability for Taxes of the Subject Companies for a Straddle Period, the determination of the
Taxes of such member for the portion of the Straddle Period ending on and including, and the portion of the Straddle Period beginning after, the Closing Date shall be determined by assuming that the
Straddle Period consisted of two taxable years or periods, one which ended at the close of the Closing Date and the other which began at the beginning of the day following the Closing Date, and items
of income, gain, deduction, loss or credit, and state and local apportionment factors of the Subject Companies for the Straddle Period shall be allocated between such two taxable years or periods on a
"closing of the books basis" by assuming that the books of the Subject Companies were closed at the close of the Closing Date. However, (i) exemptions, allowances or deductions that are
calculated on an annual basis, such as the deduction for depreciation and (ii) periodic taxes such real and personal property taxes shall be apportioned ratably between such periods on a daily
basis. 

43

  

        (c)  All tax representations and warranties contained in Section 7.01 and all obligations of Sellers and Buyer under this Agreement with respect to Tax Matters
(including those contained in this Article VII and those contained in Sections 5.02(c)(xvii), (xxiii), (xxiii), (xxiv) and (xvi) shall survive indefinitely. Notwithstanding
anything to the contrary in this Agreement, the obligations of Sellers under this section shall be unconditional and absolute and shall not be subject to limitations (such as those set forth in
Section 10.06) and shall remain in effect without limitations as to time. 

        (d)  The
Sellers shall be entitled to any refund, or credit against, Taxes of the Subject Companies received in respect of any period for which Sellers are liable under
Section 7.02; provided that the amount to be received by the Sellers under this section shall be reduced by the net tax cost to the Buyer or its Affiliates (including the Subject Company)
resulting from the claim for or receipt of such refund or credit, including any additional Taxes imposed on Buyer or such Affiliate as a result of the adjustments giving rise to such refund or credit. 

        (e)  Buyer
shall be liable for, and shall indemnify, defend and hold harmless the Sellers from and against all Taxes of the Subject Companies for any taxable year or period
beginning after the Closing Date, including the portion of the Straddle Period beginning on the day following the Closing Date, except to the extent that Sellers are obligated to indemnify Buyer for
such Taxes pursuant to another provision of this Article VII. 

 
 

         7.03    Tax Returns and Payment Responsibility.     

        (a)  Sellers
will be responsible for and will cause to be prepared and duly filed (i) all Tax Returns of the Subject Companies that are due before the Closing Date and
(ii) all Tax Returns of the Subject Companies that are income Tax Returns and are prepared on a consolidated, unitary, or combined basis for all taxable periods ending on or before the Closing
Date. Sellers shall pay any Taxes due in respect of the Tax Returns described in the preceding sentence. Buyer shall file or cause to be filed when due all Tax Returns with respect to the Subject
Companies, other than those that are the responsibility of Seller pursuant to this paragraph. Without affecting the indemnification obligations of Sellers under this Agreement, in the event that
Sellers fail to prepare and file or cause to be prepared and filed any Tax Return that it is required to file pursuant to this paragraph, Buyer shall have the right, but not the obligation, to prepare
and file all such Tax Returns at Sellers' expense; provided that Buyer has notified Sellers in writing allowing Sellers 30 days from such written
notice to file such tax returns. Sellers shall pay by wire transfer to the Buyer the Taxes for which Sellers are liable pursuant to Section 7.03(a), but which are payable with Tax Returns to be
filed by the Buyer pursuant to the previous sentence or pursuant to this paragraph at least three days prior to the due date for the payment of such Taxes. 

        (b)  All
Tax Returns that are to be prepared and filed by the Buyer pursuant to the preceding paragraph and that relate to Taxes for which Sellers are liable under
Section 7.02(a)(i) and (ii) shall be submitted to Sellers not later than forty-five (45) days prior to the due date for filing of such Tax Returns (or if such
due date is within 45 days following the Closing Date, as promptly as practicable following the Closing Date). Sellers shall have the right to review such Tax Returns and to review all work
papers and procedures used to prepare any such Tax Return. If Sellers, within ten (10) Business Days after delivery of any such Tax Return, notify the Buyer in writing that they object to any
of the items in such Tax Return, the Buyer and Sellers shall attempt in good faith to resolve the dispute and, if they are unable to do so, the disputed items shall be resolved (within a reasonable
time, taking into account the deadline for filing such Tax Return) by a nationally recognized independent accounting firm chosen in accordance with the procedures set forth Section 2.03(d).
Upon resolution of all such items, the relevant Tax Return shall be filed on that basis. The costs, fees and expenses of such accounting firm shall be borne equally by the Buyer and Sellers. 

        (c)  All
income Tax Returns that are to be prepared and filed by the Sellers pursuant to Section 7.03(a) shall be submitted to Buyer not later than
forty-five (45) days prior to the due date for 

44

 

filing
of such Tax Returns (or if such due date is within 45 days after the execution of this Agreement, as promptly as practicable following the execution of this Agreement). Buyer shall have
the right to review such Tax Returns and to review all work papers and procedures used to prepare any such Tax Return and to consult with Sellers prior to the filing of such Tax Returns. Sellers shall
consider, and in Sellers' discretion (which shall be exercised in good faith) incorporate any comments or suggestions made by Buyer with respect to such Tax Returns. 

        (d)  The
Buyer shall not (and shall not cause or permit the Subject Companies to) amend, refile or otherwise modify (or grant an extension of any statute of limitations with
respect to) any Tax Return relating in whole or in part to Company and its subsidiaries with respect to any taxable year or period ending on or before the Closing Date or with respect to any Straddle
Period without the prior written consent of Sellers, which consent may not be unreasonably withheld. Sellers shall not (and shall not cause or permit any of its Affiliates to) amend, refile, or
otherwise modify any such Tax Return except as set forth in Section 7.03(d) of the Disclosure Schedule. If any such action (including those disclosed in Section 7.03(d) of the Disclosure
Schedule) could have an adverse affect on the Liability of the Subject Companies for any Taxes for the post-closing portion of a Straddle Period or for any Taxes for a taxable year or
period beginning after the Closing Date, such action shall not be taken without the prior written consent of the Buyer, which consent may not be unreasonably withheld, except that this sentence shall
not apply to matters Previously Disclosed as it relates to Section 7.01(c) and with respect to matters relating to net operating losses, built-in losses or other tax attributes that
would otherwise carry forward to Buyer. 

        (e)  All
sales, use, transfer and other similar Taxes, including any stock or asset transfer stamp Taxes that are payable in connection with the transactions contemplated by
this Agreement shall be borne by Seller. 

 
 

         7.04    Contest Provisions.     

        (a)  In
the event (i) Buyer or its Affiliates or (ii) Sellers receive notice of any pending or threatened Tax audits or assessments or other disputes concerning
Taxes with respect to which the other party may incur Liability under this Article, the party in receipt of such notice shall promptly notify the other
party of such matter in writing, provided that failure to comply with this provision shall not affect a party's right to indemnification hereunder
unless and to the extent the other party is actually damaged thereby. 

        (b)  The
Sellers shall have the right to represent the interests of the Subject Companies in any Tax audit or administrative or court proceeding relating to any period for
which Sellers may be liable under Section 7.02(a)(i) and (ii), and to employ counsel of its choice at its expense, provided that the
Sellers shall provide prompt notice to Buyer of any substantive meeting or telephone conference with any taxing authority with respect to such matters and Buyer shall have the right to participate at
its expense in any such meeting or conference. Notwithstanding the foregoing, the Sellers shall not be entitled to settle, either administratively or after the commencement of litigation, any claim
for Taxes which would adversely affect the Liability for Taxes of the Buyer or the Subject Companies without the prior written consent of the Buyer, which consent shall not be unreasonably withheld,
except that this sentence shall not apply to matters Previously Disclosed as it relates to Section 7.01(c) and with respect to matters relating to net operating losses, built-in
losses or other tax attributes that would otherwise carry forward to Buyer. The Buyer shall have the sole right to represent the interests of the Subject Companies in all Tax audits and administrative
and court proceedings (other than those referred to in the first sentence of the paragraph) and to employ counsel of its choice at its expense for those years commencing after the Closing Date. 

45

 

 
 

         7.05    Tax Sharing Agreements.     

        Any
Tax allocation or sharing agreement or arrangement, whether or not written, that may have been entered into by Sellers or any affiliate of Sellers and any Subject Company shall be
terminated as to the Subject Companies as of the Closing Date, and no payments which are owed by or to the Subject Companies pursuant thereto shall be made thereunder. 

 
 

         7.06    Assistance and Cooperation.     

        After
the Closing Date, each of Sellers and the Buyer shall (and shall cause their respective Affiliates to): 

	(i)
	assist
the other party in preparing and filing any Tax Returns or reports which such other party is responsible for preparing and filing in accordance
with this clause;

	(ii)
	cooperate
fully in preparing for any audits of, or disputes with taxing authorities regarding, any Tax Returns of the Subject Companies;

	(iii)
	make
available to the other and to any taxing authority as reasonably requested all information, records, and documents relating to Taxes of the
Subject Companies;

	(iv)
	provide
timely notice to the other in writing of any pending or threatened Tax audits or assessments of the Subject Companies for taxable periods for
which the other may have a Liability under this Article; and

	(v)
	furnish
the other with copies of all correspondence received from any taxing authority in connection with any Tax audit or information request with
respect to any such taxable period. 

        (b)  On
September 15, 2002 and, if the Closing has not occurred prior thereto, on October 20, 2002, Seller shall (and shall cause their respective Affiliates
to) provide to Buyer a schedule listing the estimated total amount of the unutilized net operating losses of the Subject Companies and the estimated tax basis of the assets of the Subject Companies as
of end of the second month preceding the delivery date. 

 
 

        7.07    Tax Records.     

        At
Closing, Sellers shall provide Buyer with all requested records and documents that relate solely to Taxes of the Subject Companies and shall provide Buyer with copies of records or
information that is pertinent to the Taxes of the Subject Companies. After the Closing, Sellers and Buyer (including the Subject Companies) will preserve all information, records or documents relating
to Liabilities for Taxes of the Subject Companies until six (6) months after the expiration of any applicable statute of limitations (including extensions thereof) with respect to the
assessment of such Taxes, provided that neither party shall dispose of any of the foregoing items without first offering such items to the other party. 

 
 

         7.08    Other Provisions.     

        (a)  The
provisions of this Article VII shall govern all indemnity claims with respect to Tax matters of the Company and its subsidiaries. No other provisions of this
Agreement and no provisions contained in this Agreement shall apply to such Tax matters. 

        (b)  Notwithstanding
anything in this Agreement to the contrary, Sellers do not make any representation or warranty to Buyer and shall have no responsibility or obligation
whatsoever to Buyer with respect to Buyer's acquisition of or ability to utilize for tax purposes in taxable years beginning on or after the Closing Date, including the Straddle Period, any net
operating losses, built-in losses or other tax attributes, including the amounts thereof, of the Subject Companies; provided, however, that this Section 7.08(b) shall not relieve
Sellers from or modify any covenants in this Agreement relating to cooperation or providing information with respect to such tax attributes. 

46

 

        (c)  Except
for any amount required to be treated for Tax purposes as interest, all indemnity payments made by Sellers under this Agreement shall be treated as an adjustment
to the purchase price paid for the SRI Capital Stock for tax purposes. 

        (d)  Notwithstanding
anything to the contrary in this Agreement, Sellers shall not and shall not permit the Subject Companies to change the tax method for accounting for
Servicing Rights in order to recognize the deductibility of worthless normal Servicing Rights, including as contemplated in Section 7.03(d) of the Disclosure Schedule unless, prior to making
such change, the consolidated group of companies including National Americas Investment Inc. (the "NAI Group") has fully utilized all net operating losses and net operating loss carry forwards
for the current and all prior tax years that are allowable in the current year. 

        (e)  Notwithstanding
anything to the contrary in this Agreement, Sellers shall not and shall not permit the Subject Companies or any other member of the NAI Group to elect
pursuant to Section 1.1502-20(g) of the Treasury Regulations to reattribute net operating losses. 

ARTICLE VIII.  

 Conditions To The Closing  

 
 
        8.01    Conditions to Each Party's Obligation to Effect the Purchase.     

        The
respective obligations of each of Sellers and Buyer to consummate the Stock Acquisition are subject to the fulfillment or written waiver, at or prior to the Closing Date, of each of
the following conditions: 

        (a)    Regulatory Approvals.    All Governmental Authority approvals required to consummate the transactions
contemplated hereby will have been obtained and will remain in full force and effect and all statutory
waiting periods in respect thereof will have expired, unless the failure to obtain any such approval is not reasonably likely to have a Material Adverse Effect on the Subject Companies. 

        (b)    No Injunction.    No Governmental Authority of competent jurisdiction will have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and prohibits consummation of the
transactions contemplated by this Agreement as a whole. 

 
 

         8.02    Conditions to Obligation of Buyer.     

        The
obligations of Buyer to consummate the Stock Acquisition are also subject to the fulfillment or written waiver, at or prior to the Closing Date, of each of the following conditions: 

        (a)    Representations and Warranties.    The representations and warranties of Sellers set forth in this Agreement
will be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except that representations and warranties that by their terms speak
as of the date of this Agreement or some other date will be true and correct as of such date only) and Buyer will have received certificates, dated the Closing Date, signed on behalf of each of
Sellers to such effect; provided, however, that for purposes of determining the satisfaction of this condition, no effect shall be given to any
exception or qualification in such representations and warranties relating to materiality or a Material Adverse Effect; and provided further that, for
purposes of this condition, such representations and warranties (other than the representations and warranties in Sections 4.02(a)(ii), (iv), (v) and (vii) and 4.02(b), which shall be
true in all respects) shall be deemed to be true and correct in all respects unless the failure of such representations and warranties to be so true and correct, individually or in the aggregate,
results or would reasonably be expected to result in a Material Adverse Effect on the Subject Companies. 

47

 

        (b)    Performance of Obligations of Sellers.    Sellers will have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing Date and Buyer will have received certificates, dated the Closing Date, signed on behalf of each of Sellers to such
effect. 

        (c)    Third Party Consents.    All consents or approvals of all Persons, other than Governmental Authorities,
required for or in connection with the execution, delivery and performance of this Agreement (including consummation of the Stock Acquisition) will have been obtained and will be in full force and
effect, unless the failure to obtain any such consent or approval is not reasonably likely to have a Material Adverse Effect on the Subject Companies; provided,
however, that consents and approvals listed on Exhibit 8.02(c) and all consents and approvals with respect to agreements listed on Exhibit 8.02(c) must be
obtained and in full force and effect. 

        (d)    Condition of Subject Companies.    Since the date of this Agreement there has been no Material Adverse Effect
on the Subject Companies. 

        (e)  GNMA
will have approved the "Transfer of Issuer Responsibility" from HomeSide to MidFirst Bank in connection with the sale of substantially all, but not all, of the
Servicing Rights pertaining to the MidFirst Transaction, and Buyer will have received copies of such approvals. Sellers shall cause the Subject Companies to recognize fully the gains on the sale of
substantially all, but not all, of such Servicing Rights in the tax year in which HomeSide received such GNMA approvals. Buyer acknowledges that completion of the sale of the remainder of the
Servicing Rights pertaining to the MidFirst Transaction shall occur subsequent to the Effective Time. 

 
 

         8.03    Conditions to Obligations of Sellers.     

        The
obligations of Sellers to consummate the Stock Acquisition are also subject to the fulfillment or written waiver, at or prior to the Closing Date, of each of the following
conditions: 

        (a)    Representations and Warranties.    The representations and warranties of Buyer set forth in this Agreement will
be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except that representations and warranties that by their terms speak as of
the date of this Agreement or some other date will be true and correct as of such date only) and Sellers will have received a certificate, dated the Closing Date, signed on behalf of Buyer to such
effect; provided, however, that for purposes of determining the satisfaction of this condition, no effect shall be given to any exception or
qualification in such representations and warranties relating to materiality or a Material Adverse Effect; and provided further that, for purposes of
this condition, such representations and warranties (other than the representations and warranties in Section 4.03(b), which shall be true in all respects) shall be deemed to be true and
correct in all respects unless the failure of such representations and warranties to be so true and correct, individually or in the aggregate, results or would reasonably be expected to result in a
Material Adverse Effect on Buyer. 

        (b)    Performance of Obligations of Buyer.    Buyer will have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing Date and Sellers will have received a certificate, dated the Closing Date, signed on behalf of Buyer to such effect. 

        (c)    Third Party Consents.    All consents or approvals of all Persons, other than Governmental Authorities,
required for or in connection with the execution, delivery and performance of this Agreement (including consummation of the Purchase) will have been obtained and will be in full force and effect,
unless the failure to obtain any such consent or approval is not reasonably likely to have a Material Adverse Effect on the Subject Companies; provided,
however, that all consents and approvals listed on Exhibit 8.02(c) and all consents and approvals with respect to agreements listed on Exhibit 8.02(c) must be
obtained and in full force and effect. 

48

 
ARTICLE IX.  

 Termination  

 
 
        9.01    Termination.     

        This
Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date: 

        (a)    Mutual Consent.    By the mutual written consent of Sellers and Buyer. 

        (b)    Breach.    By Sellers or Buyer, by written notice, in the event of either: (1) a breach by the other
party of any representation or warranty contained herein, which breach cannot be cured or which has not been cured within 30 days after the giving of written notice to the breaching party of
such breach, or (2) a breach by the other party of any of the covenants or agreements contained herein, which breach cannot be cured or which has not been cured within 30 days after the
giving of written notice to the breaching party of such breach, provided that such breach (whether under (1) or (2)) would be reasonably likely,
individually or in the aggregate with other breaches, to result in a Material Adverse Effect. 

        (c)    Delay.    By Sellers or Buyer, by written notice, in the event that the Purchase is not consummated on or by
December 1, 2002, except to the extent that the failure of the Stock Acquisition then to be consummated arises out of or results from the action or inaction of the party seeking to terminate
pursuant to this Section 9.01(c). 

        (d)    No Approval.    By Sellers or Buyer, by written notice, in the event the approval of any Governmental Authority
required for consummation of the transactions contemplated hereby will have been denied by final nonappealable action of such Governmental Authority or if such Governmental Authority will have issued
an order, decree or ruling or taken any other action in effect permanently restraining, enjoining or otherwise prohibiting consummation of the transactions contemplated by this Agreement, and such
order, decree, ruling or other action will have become final and nonappealable, unless the failure to obtain any such approval is not reasonably likely to have a Material Adverse Effect on the Subject
Companies. 

 
 

         9.02    Effect of Termination and Abandonment.     

        In
the event of termination of this Agreement and the abandonment of the Stock Acquisition pursuant
to this Article IX, no party to this Agreement will have any Liability or further obligation to any other party to this Agreement, except (a) for obligations arising under Sections
5.03(b), 5.05(a), this Section 9.02 and Article XI and (b) that termination will not relieve a breaching party from Liability for any willful breach of this Agreement giving rise
to such termination. 

ARTICLE X.  

 Indemnification  

        10.01    Indemnification Not Subject to Limitations.    

        Without
regard to the De Minimis Liability Restriction (as hereinafter defined), the Deductible (as hereinafter defined), the Cap (as hereinafter defined) or the periods of survival set
forth in and applicable to certain of the other provisions of this Article X, from and after the Closing Date: 

        (a)  Sellers
shall indemnify and hold harmless Buyer and its Affiliates (including the Subject Companies following the Effective Time), each of their respective directors,
officers, employees and agents, and each of the respective heirs, executors, successors and assigns of any of the foregoing (collectively, the "Buyer Indemnified
Parties") from and against any and all Liabilities 

49

 

incurred
by or asserted against any of Buyer Indemnified Parties in connection with or arising from: 

	(i)
	any
breach of any representation, warranty or agreement made by, or on behalf of, Sellers under Section 2.02 (Consideration), Section 2.03
(Calculation of Purchase Price), Section 2.04 (Settlement Date Payment), Section 2.05 (No Offset), Section 2.06 (Interim Settlement), Sections 4.02(a)(ii), (iv),
(v) (Organization, Standing and Capitalization), Section 4.02(b) (Corporate Authority), Section 4.02(d) (Title to SRI Capital Stock), Section 4.02(j)(i) (Property),
Section 4.02(q)(xii) (Custodial Files), Section 4.02(q)(xix) (Required Pool and Lender-paid Insurance), and Section 4.02(q)(xx) (Release of
Fully-paid Mortgage Loans) of this Agreement;

	(ii)
	any
litigation, claims, Actions, arbitrations or investigations or other proceedings before any Governmental Authority pending or threatened as of the
Closing Date against any of the Sellers, the Subject Companies or their respective assets and Liabilities by any Person other than the Buyer or any of its Affiliates; provided,
however, if such litigation, claim, action, arbitration, investigation or proceeding pertains to the Servicing of Mortgage Loans, the indemnification hereunder shall be only
with respect to the Mortgage Loans which were Serviced by the Subject Companies. Sellers or the HomeSide Subsidiaries prior to the Closing Date;

	(iii)
	any
Liabilities related to Environmental Laws;

	(iv)
	any
Excluded Liabilities (including Attempted Excluded Liabilities);

	(v)
	any
Excluded Assets (including Attempted Excluded Assets); or

	(vi)
	any
Repurchase Equivalent Event arising from the circumstances described in clause (i) of the definition of such term. 

provided, however, there shall be excluded from the indemnification obligation any Liabilities in connection with or arising or resulting from any act
or omission by Buyer or any Affiliate of Buyer or fact or circumstance that constitutes a failure of Buyer or any Affiliate of Buyer to fulfill its obligations or otherwise constitutes a breach of a
representation, warranty or covenant under this Agreement or any other agreement between Buyer and Sellers, any NAB Affiliate, Subject Company prior to the Effective Time or HomeSide Subsidiary or
under the Peoples Transaction. 

        (b)  Buyer
shall indemnify and hold harmless Sellers and Sellers' Affiliates, each of their respective directors, officers, employees and agents, and each of the respective
heirs, executors, successors and assigns of any of the foregoing (collectively, the "Seller Indemnified Parties") from and against any and all
Liabilities incurred by or asserted against any of Seller Indemnified Parties in connection with or arising from: 

	(i)
	any
breach of any representation, warranty or agreement made by, or on behalf of, Buyer under Section 2.02 (Consideration), Section 2.03
(Calculation of Purchase Price), Section 2.04 (Settlement Date Payment), Section 2.05 (No Offset), Section 2.06 (Interim Settlement), and Section 4.03(b) (Corporate
Authority) of this Agreement; or

	(ii)
	the
operation of the Subject Companies from and after the Closing Date; 

provided, however, there shall be excluded from the indemnification obligation any Liabilities in connection with or arising or resulting from any act
or omission by Seller or fact or circumstance that constitutes a failure by Sellers or any Affiliates of Sellers to fulfill its obligations or otherwise constitutes a breach of a representation,
warranty or covenant under this Agreement or any other 

50

 

agreement
between Buyer and Sellers, any NAB Affiliate, Subject Company prior to the Effective Time or HomeSide Subsidiary or under the Peoples Transaction. 

 
 

        10.02    Indemnification for Mortgage Operations and Mortgage Loans.     

        Without
regard to the De Minimis Liability Restriction, but subject to the Deductible, the Cap and the periods of survival specified in Section 10.04, from and after the Closing
Date Sellers shall indemnify
and hold harmless the Buyer Indemnified Parties from and against any and all Liabilities incurred by or asserted against any of the Buyer Indemnified Parties in connection with or arising from: 

        (a)  to
the extent not covered by Section 10.01(a), in connection with or arising from any breach of any representation, warranty or agreement made by, or on behalf
of, Sellers under Sections 4.02(o)(i) (Advances) and 4.02(q) (Mortgage Loans); or 

        (b)  any
Repurchase Equivalent Event arising from the circumstances described in clauses (ii), (iii) or (iv) of the definition of such term; 

provided, however, there shall be excluded from the indemnification obligation any Liabilities in connection with or arising or resulting from any act
or omission by Buyer or any Affiliate of Buyer or fact or circumstance that constitutes a failure of Buyer or any Affiliate of Buyer to fulfill its obligations or otherwise constitutes a breach of a
representation, warranty or covenant under this Agreement or any other agreement between Buyer and Sellers, any NAB Affiliate, Subject Company prior to the Effective Time or HomeSide Subsidiary or
under the Peoples Transaction. 

 
 

         10.03    Indemnification Subject to Limitations.     

        Subject
to the De Minimis Liability Restriction, the Deductible, the Cap and the periods of survival set forth in Section 10.04 and applicable to the indemnification obligations
of Sellers and Buyer under this Section 10.03, from and after the Closing Date: 

        (a)  Sellers
shall indemnify and hold harmless Buyer Indemnified Parties from and against any and all Liabilities incurred by or asserted against any of Buyer Indemnified
Parties in connection with or arising from any breach of any representation, warranty or agreement made by, or on behalf of, Sellers under this Agreement other than those specifically referred to in
Section 10.01(a)(i) or 10.02(a); provided, however, there shall be excluded from the indemnification obligation any Liabilities in
connection with or arising or resulting from any act or omission by Buyer or any Affiliate of Buyer or fact or circumstance that constitutes a failure of Buyer or any Affiliate of Buyer to fulfill its
obligations or otherwise constitutes a breach of a representation, warranty or covenant under this Agreement or any other agreement between Buyer and Sellers, any NAB Affiliate, Subject Company prior
to the Effective Time or HomeSide Subsidiary or the Peoples Transaction. 

        (b)  Buyer
shall indemnify and hold harmless Seller Indemnified Parties from and against any and all Liabilities incurred by or asserted against any of Seller Indemnified
Parties in connection with or arising from any breach of any representation, warranty or agreement made by, or on behalf of, Buyer under this Agreement other than those specifically referred to in
Section 10.01(b); provided, however, there shall be excluded from the indemnification obligation any Liabilities in connection with or arising or
resulting from any act or omission by Sellers or fact or circumstance that constitutes a failure by Sellers or any Affiliates of Sellers to fulfill its obligations or otherwise constitutes a breach of
a representation, warranty or covenant under this Agreement or any other agreement between Buyer and Sellers, any NAB Affiliate, Subject Company prior to the Effective Time or HomeSide Subsidiary or
the Peoples Transaction. 

 
 

        10.04    Survival Periods.     

        The
obligations to indemnify and hold harmless any party pursuant to Section 10.01(a) and 10.01(b) shall survive indefinitely. The obligations to indemnify and hold harmless Buyer
pursuant to 

51

 

Sections
10.02 and 10.03 shall terminate four years after the Effective Time. The obligation to indemnify or hold harmless Buyer pursuant to Section 5.16 shall terminate two years after the
Effective Time. No claim may be brought with respect to obligations to indemnify pursuant to Sections 10.02 and 10.03 unless the party seeking indemnification delivers written notice thereof to the
party from which the indemnification is being sought no later than the last day of the applicable survival period set forth in this Section 10.04, (i) setting forth actual Liabilities
that have begun to accrue but in respect of which the total liability has not yet been fixed or (ii) containing a notice from a third party of a claim that will cause actual Liabilities to
accrue after such applicable survival period, including without limitation, pending curtailments, lawsuits or government investigations, in which case such survival period will be extended in order to
cover the finally determined Liabilities related hereto. 

 
 

         10.05    Miscellaneous.     

        (a)  Anything
in this Article X to the contrary notwithstanding, the rights and obligations of the parties with respect to indemnification for any and all Tax matters
and any and all inaccuracies of any representation, agreement or covenant relating to Taxes made by Sellers in Article VII of this Agreement shall be governed by Article VII and shall
not be subject to the limitations set forth in Section 10.02 and Section 10.03. The indemnification expressly provided for in Article VII shall be the sole and exclusive remedy
for any Tax matter arising out of or relating to this Agreement or the transactions contemplated hereby by any party. 

        (b)  After
the Closing, and except for any claims made under Sections 5.03(b), (c), (d), 5.05, 5.06, 5.07, 5.08, 5.09, 5.10, 5.13, 5.15, 5.16 and 10.8 and Article VII,
the indemnification expressly provided in this Article X shall be the sole and exclusive remedy for any matter arising out of or relating to this Agreement or the transactions contemplated
hereby by any party. Nothing herein shall preclude a party hereto from applying to a court for equitable relief to enforce its rights under this Agreement. 

        (c)  Each
indemnitee under this Article X shall use its reasonable efforts to mitigate Liabilities for which it seeks or reasonably anticipates seeking indemnification
hereunder, including, without limitation, (i) the obligation of Buyer and Affiliates of Buyer to use commercially reasonable efforts to obtain and correct missing Custodial Files and Missing
Loan Documents, and (ii) the obligations of an Indemnified Party to seek recovery from third-parties in the same manner, and to the same extent, as if there were no indemnification obligations
under this Agreement. 

        (d)  For
purposes of determining whether a breach of a representation or warranty in this Agreement has occurred for purposes of this Article X, (i) no effect
shall be given to any exception or qualification
relating to materiality or Material Adverse Effect and (ii) in the case of the representations and warranties in Sections 4.02(q)(xii) (Custodial Files), (xix) (Required Pool and
Lender-paid Insurance) and (xx) (Release of Fully-paid Mortgage Loans), no effect shall be given to exceptions Previously Disclosed. For purposes of this
Article X, subject to clause (ii) of the foregoing sentence, a representation and warranty shall include the update of such representation and warranty contained in the certificates
referred to in Sections 8.02(a) or 8.03(a). 

        (e)  In
calculating any amount of Liabilities payable to Sellers or Buyer under this Article X, the indemnifying party shall receive credit for (1) any
reduction in Tax Liability of the Indemnified Party (as defined herein) as a result of the facts giving rise to the claim for indemnification, (2) any insurance recoveries offsetting the amount
of loss and (3) any recoveries from third parties pursuant to indemnification or otherwise with respect thereto. Any party receiving indemnity shall assign to the indemnifying party all of its
claims for recovery against third parties as to such Liabilities whether by insurance coverage, contribution claims, subrogation or otherwise. 

52

  

        (f)    Any breach of any representation, warranty or agreement under this Agreement by any Subject Company that gives rise to a claim for indemnification shall be a Liability
of the Sellers (and not of the Subject Companies) if such claim is not paid prior to the Closing, and Sellers shall have no contribution, reimbursement or other rights of recovery against the Subject
Companies. 

        (g)  Notwithstanding
anything to the contrary contained herein, the parties agree that, in a dispute between the parties, the Liabilities payable to Sellers or Buyer under
this Article X will not include (i) consequential damages consisting of speculative lost profits, lost investment or business opportunity, damages to reputation or operating losses,
(ii) punitive or treble damages not actually imposed against or incurred by the Indemnified Party, or (iii) Liabilities attributable to or arising from overhead allocations or general
and administrative costs and expenses, but may include the actual cost for the time of either party's employees excluding in the case of Buyer, the actual costs for the time of its employees to seek
to obtain or correct the Missing Loan Documents; provided, however, that the exclusions set forth in clauses (i) and (ii) above do not
apply if and to the extent any such Damages or Liabilities are actually incurred in payment to a third party or Governmental Authority. 

        (h)  Anything
in this Article X to the contrary notwithstanding, Sellers shall not indemnify and hold any Buyer Indemnified Party harmless from and against any
Liability pertaining to a fact or circumstance as to which reserves are recorded on the consolidated balance sheet of SR Investment as of the Closing Date. 

        (i)    For
purposes of the Sellers' indemnification obligations under Sections 10.01(a)(vi) and 10.02(b), the amount of Damages with respect to any Mortgage Loan shall
include (A) for any Repurchase Equivalent Event occurring on or before the second anniversary of the Closing Date, an amount equal to (i) the outstanding unpaid principal balance of the
Mortgage Loan as of the date of repurchase or, in the case of REO, at the time of completion of the Foreclosure of the Mortgage Loan, multiplied by the Servicing Rights Factor (as defined in
Exhibit B and reflected in the Closing Date Value), multiplied by .01, minus (ii) Servicing Compensation received by the Buyer or any of the Subject Companies in respect of such Mortgage
Loan after the Effective Time, (B) in the case of a Mortgage Loan that is in Foreclosure or has been converted to REO, the difference between the repurchase price paid by the Buyer to the
Investor and the total amount of proceeds (after reimbursement to Buyer of liquidation costs) obtained by Buyer or any of the Subject Companies upon Foreclosure or other realization on the Mortgage
Loan, (C) in the case of Mortgage Loan that is not in Foreclosure and as to which no default by the Mortgagor exists giving rise to a right to commence Foreclosure, the difference between the
repurchase price paid by the Buyer or any of the Subject Companies to the Investor and the net proceeds realized by the Buyer and the Subject Companies upon a sale of such Mortgage Loan,
(iv) the amount of any outstanding Advances relating to such Mortgage Loan and (v) any Damages incurred by Buyer and the Subject Companies through the date on which the Mortgage Loan is
fully liquidated or sold or the defect giving rise to the repurchase demand is cured. Notwithstanding the foregoing, with respect to any Mortgage Loan described in clause (ii) of the foregoing
sentence, the Sellers shall have the right to repurchase such Mortgage Loan from the Buyer and the Subject Companies at a price equal to the sum of (x) the repurchase price paid by the Buyer or
any of the Subject Companies to the Investor, (y) the amount of outstanding Advances relating to such Mortgage Loan and (z) any Damages incurred by the Buyer and the Subject Companies
through the date on which the Sellers repurchase such Mortgage Loan. 

 
 

        10.06    De Minimis Liability Restriction, Deductible and Cap.     

        (a)  Sellers
shall not have any Liability whatsoever under Section 10.03(a) for any individual Liability that is less than $25,000 (the "De
Minimis Liability Restriction"). Sellers shall not have any Liability whatsoever under Section 10.02 or Section 10.03(a) for any Liability until the aggregate of
all Liabilities for which Sellers would be liable under Section 10.02 and Section 10.03(a) exceeds on a cumulative basis an amount equal to $5,000,000
(the"Deductible"), and then only to the extent of any 

53

 

such
excess. The maximum Liability of Sellers (collectively) under Section 10.02 or Section 10.03(a) shall be $150,000,000 in the aggregate (the
"Cap"). 

        (b)  Buyer
shall not have any Liability whatsoever under Section 10.03(b) for any individual Liability that is less than $25,000. Buyer shall not have any Liability
whatsoever under Section 10.03(b) for any Liability until the aggregate of all Liabilities for which Buyer would be liable under Section 10.03(b) exceeds on a cumulative basis an amount
equal to the Deductible, and then only to the extent of any such excess. The maximum Liability of Buyer under Section 10.03(b) shall be equal to the Cap. 

 
 

         10.07    Third-Party Claims.     

        (a)  If
a claim by a third party (a "Third-Party Claim") is made against a Seller Indemnified Party or Buyer Indemnified Party
(collectively, an "Indemnified Party"), and if such Indemnified Party intends to seek indemnity with respect thereto under this Article X, such
Indemnified Party shall promptly notify in writing the indemnifying party of such claim; provided, that, that failure to promptly notify the
indemnifying party will not relieve the indemnifying party of any Liability it may have to the Indemnified Party, except to the extent that the indemnifying party demonstrates that the defense of such
Third-Party Claim is prejudiced by the Indemnified Party's failure to give notice within such time period. The indemnifying party shall have 30 days after receipt of such notice to undertake,
conduct and control, through counsel of its own choosing and at its own expense, the settlement or defense thereof, and the Indemnified Party shall cooperate with it in connection therewith;  provided
that the indemnifying party shall permit the Indemnified Party to participate in such settlement or defense through counsel chosen by such
Indemnified Party, provided that the fees and expenses of such counsel shall be borne by such Indemnified Party. If the indemnifying party so chooses to
assume the defense it shall do so promptly and diligently. 

        (b)  So
long as the indemnifying party is reasonably and diligently contesting any such claim in good faith, the Indemnified Party shall not pay or settle any such claim
without the prior written consent of the indemnifying party, such consent not to be unreasonably withheld. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay or settle
any such claim, provided that, in such event, it shall waive any right to indemnity therefor by the indemnifying party. If the indemnifying party does
not notify the Indemnified Party in writing within 30 days after the receipt of the Indemnified Party's written notice of a claim of indemnity hereunder that it elects to undertake the defense
thereof, the Indemnified Party shall have the right to contest, settle or compromise the claim but shall not thereby
waive any right to indemnity therefor pursuant to this Agreement. The indemnifying party shall not, except with the written consent of the Indemnified Party, such consent not to be unreasonably
withheld, enter into any settlement unless (A) there is no finding or admission of any violation of Applicable Law, (B) the sole relief provided is monetary damages that are paid in full
by the indemnifying party, (C) the Indemnified Party or its Affiliates shall have no Liability with respect to any compromise or settlement of such Third-Party Claim, and (D) the
compromise or settlement provides to all Indemnified Parties and their Affiliates and agents an unconditional release from all Liability with respect to such Third-Party Claim or the facts underlying
such Third-Party Claim. Notwithstanding the foregoing, the indemnifying party will not settle any Third Party Claims as part of a class action or representative action including, but not limited to
those arising under Section 17200 of the California Business and Professions Code or any similar statute without the prior written consent of the Indemnified Party, such consent not to be
unreasonably withheld. 

        (c)  With
respect to any Third-Party Claim subject to indemnification under this Article X, (i) both the Indemnified Party and the indemnifying party, as the
case may be, shall keep the other party reasonably informed of the status of such Third-Party Claim and any related proceedings at all stages thereof, (ii) the parties agree to render to each
other such assistance as they may reasonably require of each other and to cooperate in good faith with each other in order to ensure the proper and adequate 

54

 

defense
of any Third-Party Claim and (iii), with respect to any Third-Party Claim subject to indemnification under this Article X, the parties agree to cooperate (including, when appropriate,
by entering into joint defense agreements or retaining joint counsel) in such a manner as to preserve to the fullest extent possible the confidentiality of all confidential information and the
attorney-client and work-product privileges. 

        (d)  The
defense and litigation of all Actions pending on the Closing Date with respect to which Sellers are obligated to indemnify the Buyer Indemnified Parties pursuant to
Section 10.01(a)(ii) shall be conducted in accordance with this Section 10.07 provided that, for purposes of applying the
provisions hereof (i) no notice or demand for indemnification shall be required, (ii) Sellers shall be the indemnifying party, (iii) the Buyer Indemnified Parties shall be the
Indemnified Party, and (iv) the provisions of Section 2.2(f) of the Subservicing Agreement shall continue to apply to the administration and management of Default Litigation (as defined
therein) after the Closing Date. 

 
 

         10.08    Future Indemnification Protocol     

        The
parties shall meet monthly for a period of six (6) months commencing from the date hereof and regularly thereafter for purposes of coordinating with the other party in
connection with the activities and conduct necessary or appropriate to effect the Closing of the Stock Acquisition and to develop a mutually acceptable protocol for administering indemnification
claims and litigation matters. The Sellers initially designate Myshele Shaw or her written designee as the representative of each of them. Buyer initially designates Carey Brennan as its
representative. 

ARTICLE XI.  

 General Provisions  

 
 
        11.01    Notices.     

        All
notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed given if delivered personally, transmitted by facsimile (and
telephonically confirmed), mailed by registered or certified mail with postage prepaid and return receipt requested, or sent by commercial overnight courier, courier fees prepaid, to the parties at
the following addresses: 

	 	 	(a)    if to Buyer, to it at:
	

 	
 	

Washington Mutual Bank, FA

1201 Third Avenue, 16th Floor

Seattle, WA 98101
	 	 	Attention:	 	Todd Baker, Executive Vice President
	 	 	Facsimile:	 	(206) 461-5739
	

 	
 	

with copies to:
	

 	
 	

Washington Mutual Bank, FA

1201 Third Avenue, 17th Floor

Seattle, WA 98101
	 	 	Attention:	 	Carey M. Brennan

Senior Vice President and Associate General Counsel
	 	 	Facsimile:	 	(206) 377-6244

55

 

	

 	
 	

and
	

 	
 	

Heller Ehrman White & McAuliffe LLP

701 Fifth Avenue, Suite 6100

Seattle, WA 98104
	 	 	Attention:	 	Bernard L. Russell
	 	 	Facsimile:	 	(206) 389-6217
	

 	
 	

if to Sellers or Subject Companies, to them at:
	

 	
 	

HomeSide Lending, Inc.

8659 Baypine Road

Suite 300

Jacksonville, FL 32256
	 	 	Attention:	 	Joseph J. Whiteside
	 	 	Facsimile:	 	(904) 807-3475
	

 	
 	

with copies to:
	

 	
 	

National Australia Bank Limited

Legal Department, Level 24

500 Bourke Street

Melbourne, Victoria 3000
	 	 	Attention:	 	David Krasnostein, Esq., Group General Counsel
	 	 	Facsimile:	 	61-3-8641-4902/4906
	

 	
 	

and
	

 	
 	

Sullivan & Cromwell

125 Broad Street

New York, NY 10004-2498
	 	 	Attention:	 	Mark J. Menting
	 	 	Facsimile:	 	212-558-3588
	

 	
 	

and
	

 	
 	

Kirkpatrick & Lockhart LLP

1800 Massachusetts Ave., N.W.

Washington, DC 20036
	 	 	Attention:	 	Laurence E. Platt
	 	 	Facsimile:	 	202-778-9100

or
to such other Person or address as either party shall specify by notice in writing to the other party in accordance with this Section 11.01. All such notices or other communications shall be
deemed to have been received on the date of the personal delivery or facsimile transmission (with telephone confirmation) or on the third Business Day after the mailing or dispatch thereof;  provided
that notice of change of address shall be effective only upon receipt. 

 
 

         11.02    Amendment and Modification; Waiver.     

        (a)  This
Agreement and the Disclosure Schedules hereto may not be amended except by an instrument or instruments in writing signed and delivered on behalf of each of the
parties hereto. 

        (b)  At
any time prior to the Closing Date, any party hereto which is entitled to the benefits hereof may, by an instrument in writing, (i) extend the time for the
performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracy in the representations and warranties of the other party contained herein or in any schedule
hereto or in any document delivered 

56

 

pursuant
hereto and (iii) waive compliance with any of the agreements of the other party or conditions contained herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed and delivered on behalf of such party. 

 
 

         11.03    Entire Agreement.     

        This
Agreement (including the Disclosure Schedules and Exhibits) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof. 

 
 

         11.04    Fees and Expenses.     

        Except
as otherwise expressly provided herein, NAB shall be responsible for all costs incurred by Sellers in their performance of their obligations under this Agreement, including fees
of Subject Companies, their advisors, attorneys and accountants. In addition, any costs required to be paid by SR Investment or HomeSide pursuant to this Agreement which are not paid by SR Investment
or HomeSide prior to the Effective Time shall be paid by NAB or any other NAB Affiliate and shall not be reimbursed by Buyer or any of its Affiliates (including SR Investment and HomeSide after the
Effective Time). Buyer shall pay all costs of Buyer in its performance of its obligations under this Agreement, including fees of Buyer's advisors, attorneys and accountants. 

 
 

         11.05    Third Party Beneficiaries.     

        Nothing
in this Agreement, express or implied, is intended to confer upon any Person (including, without limitation, employees of Sellers or Investors) other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or Liabilities under or by reason of this Agreement. 

 
 

         11.06    Assignment; Binding Effect.     

        This
Agreement shall not be assigned by any of Sellers or (until payment of the Final Purchase Price) Buyer hereto without the prior written consent of the other parties;  provided, however, that this
Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and
permitted assigns, and provided further that Buyer shall have the right to assign to a Subsidiary of Buyer, Buyer's right hereunder to acquire the SRI
Capital Stock so long as (a) Buyer irrevocably and unconditionally guarantees all of the obligations of such Subsidiary hereunder and (b) such assignment shall not affect Buyer's
obligations hereunder, delay the Closing, adversely affect Buyer's ability to consummate the transaction contemplated hereby or otherwise adversely affect any interest (economic, tax, regulatory or
otherwise) of Sellers in this Agreement. Notwithstanding anything to the contrary herein, after the Closing MSRA may assign its rights and obligations hereunder to an Affiliate of NAB. 

 
 

        11.07    Governing Law.     

        (a)  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be
performed entirely within the State of New York, without regard to the conflicts of law principles of the State of New York.

        (b)  Each
party hereto agrees that it will bring any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions contemplated
hereby or thereby exclusively in the United States District Court for the Southern District of New York or the Supreme Court of the State of New York for New York County (the
"Chosen Courts") and solely in connection with claims arising under this Agreement or the transactions contained in or contemplated by this Agreement
(1) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (2) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (3) to
the fullest extent permitted by law, waives any objection that the Chosen Courts are an inconvenient forum or do 

57

 

not
have jurisdiction over any party hereto and (4) agrees that service of process upon such party in any such action or proceeding will be effective if notice is given in accordance with
Section 11.01. The provisions in this Section 11.07(b) are not intended to and shall not operate to restrict a party from joining another party to this Agreement in any Action arising
from a Third Party Claim pending in a forum other than the Chosen Courts. 

 
 

         11.08    Waiver of Jury Trial.     

        Each party hereto acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues, and
therefore each such party hereby irrevocably and unconditionally waives any right such party may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating
to this Agreement, or the transactions contemplated by this Agreement. Each party certifies and acknowledges that (a) 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, (b) each party understands and has considered the implications of this
waiver, (c) each party makes this waiver voluntarily, and
(d) each party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 11.08.

 
 

         11.09    Counterparts.     

        This
Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. 

 
 

        11.10    Severability.     

        The
provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions
hereof. If any provision of this Agreement, or the application thereof to any person or entity or any circumstance, is found by a court or other Governmental Authority of competent jurisdiction to be
invalid or unenforceable, (a) a suitable and equitable provision will be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such
invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other persons, entities or circumstances will not be affected by such
invalidity or unenforceability, nor will such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. 

 
 

         11.11    Affiliates of Buyer.     

        To
the extent that this Agreement obligates any Affiliate of Buyer either to take or to refrain from taking certain actions, Buyer shall cause such Affiliate to comply with such
covenant. 

        *                        *        
                *
 

        [The next page is a signature page.] 

58

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on their behalf by their respective officers hereunto duly authorized. 

	 	 	Sellers:

NATIONAL AUSTRALIA BANK LIMITED
	

 	
 	

By:	
 	

    

	 	 	Name:	 	    

	 	 	Title:	 	    

	

 	
 	
MSRA HOLDINGS, INC.
	

 	
 	

By:	
 	

    

	 	 	Name:	 	    

	 	 	Title:	 	    

	

 	
 	
Subject Companies:

SR INVESTMENT, INC.
	

 	
 	

By:	
 	

    

	 	 	Name:	 	    

	 	 	Title:	 	    

	

 	
 	
HOMESIDE LENDING, INC.
	

 	
 	

By:	
 	

    

	 	 	Name:	 	    

	 	 	Title:	 	    

	

 	
 	
Buyer:

WASHINGTON MUTUAL BANK, FA
	

 	
 	

By:	
 	

    

	 	 	Name:	 	    

	 	 	Title:	 	    

59

QuickLinks

1.01 Defined Terms.

1.02 Interpretation.

2.01 Purchase and Sale of SRI Capital Stock.

2.02 Consideration.

2.03 Calculation of Purchase Price.

2.04 Settlement Date Payments.

2.05 No Offset.

2.06 Interim Settlement.

3.01 Closing and Closing Date.

3.02 Deliveries at Closing.

3.03 Further Assistance and Assurances.

4.01 Disclosure Schedules.

4.02 Representations and Warranties of Sellers.

4.03 Representations and Warranties of Buyer.

4.04 No Other Representations or Warranties.

5.01 Transfer of Excluded Assets and Excluded Liabilities; Management of Excluded Litigation.

5.02 Conduct of Business.

5.03 Access; Confidentiality.

5.04 Taking of Necessary Action.

5.05 Disclosure; Legend

5.06 Delinquent Accounts Receivable.

5.07 No Solicitation.

5.08 Non-Competition Agreement.

5.09 Servicing Portfolio Expenses.

5.10 2001 Agreements.

5.11 Transactions with Affiliates.

5.12 Prepayment or Satisfaction of Indebtedness; Hedges.

5.13 Subservicing of Excluded Assets.

5.14 Loan Solicitations.

5.15 Agreements Currently in Place.

5.16 VA No-bid Protection.

5.17 Liability for Breach of Covenants.

5.18 Prohibition on Certain Purchases or Sales.

6.01 Employees.

7.01 Tax Representations and Warranties.

7.02 Indemnification Obligations With Respect to Taxes.

7.03 Tax Returns and Payment Responsibility.

7.04 Contest Provisions.

7.05 Tax Sharing Agreements.

7.06 Assistance and Cooperation.

7.07 Tax Records.

7.08 Other Provisions.

8.01 Conditions to Each Party's Obligation to Effect the Purchase.

8.02 Conditions to Obligation of Buyer.

8.03 Conditions to Obligations of Sellers.

9.01 Termination.

9.02 Effect of Termination and Abandonment.

10.02 Indemnification for Mortgage Operations and Mortgage Loans.

10.03 Indemnification Subject to Limitations.

10.04 Survival Periods.

10.05 Miscellaneous.

10.06 De Minimis Liability Restriction, Deductible and Cap.

10.07 Third-Party Claims.

10.08 Future Indemnification Protocol

11.01 Notices.

11.02 Amendment and Modification; Waiver.

11.03 Entire Agreement.

11.04 Fees and Expenses.

11.05 Third Party Beneficiaries.

11.06 Assignment; Binding Effect.

11.07 Governing Law.

11.08 Waiver of Jury Trial.

11.09 Counterparts.

11.10 Severability.

11.11 Affiliates of Buyer.

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