Document:

Exhibit 10.50

 

FORM OF
TAX SEPARATION AGREEMENT

 

THIS TAX
SEPARATION AGREEMENT (this “Agreement”) dated as of        , 2009
is made and entered into by Walter Industries, Inc., a Delaware
corporation (“Walter”) and the Walter Affiliates (as defined below), and Walter
Investment Management LLC, a Delaware limited liability company (“Spinco”) and
the Spinco Affiliates (as defined below).

 

RECITALS

 

WHEREAS,
Walter is the common parent corporation of an “affiliated group” of
corporations within the meaning of Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the “Code”), and of certain combined groups
as defined under similar laws of other jurisdictions and Spinco and the Spinco
Affiliates and WMC and the WMC Affiliates are, as of the date hereof, and have
been members of such groups;

 

WHEREAS, the
groups of which Walter is the common parent and Spinco and the Spinco
Affiliates and WMC and the WMC Affiliates are members file or intend to file
Consolidated Returns and Combined Returns (each as defined below);

 

WHEREAS, on      , 2009,
JWHHC’s interests in WMC, Walter Investment Reinsurance Co. Ltd. and Best
Insurors, Inc. were sold by JWHHC to Walter in exchange for cash or a note
executed by Walter;

 

WHEREAS, on      ,
2009, Walter contributed its interests in WMC, Walter Investment Reinsurance
Co. Ltd. and Best Insurors, Inc. to Spinco in exchange for all the limited
liability company interests in Spinco;

 

WHEREAS, as of
the date of this Agreement, Walter intends to make a distribution (the “Distribution”)
of the issued and outstanding limited liability company interests of Spinco pro
rata to the holders of Walter capital stock in a transaction that is intended
to qualify as a tax-free distribution under Section 355 of the Code;

 

WHEREAS,
following the Distribution, Spinco intends to merge (the “Merger”) into Hanover
Capital Mortgage Holdings, Inc. (“HCM”), with HCM being the surviving
corporation in the Merger and a successor to Spinco;

 

WHEREAS, at
the effective time of the Merger, the surviving corporation will be renamed
Walter Investment Management Corporation; and

 

WHEREAS,
Walter and Spinco desire to set forth their agreement regarding the allocation
of taxes, the filing of tax returns, the administration of tax contests and
other related matters;

 

NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

 

 

SECTION 1.                                DEFINITIONS

 

1.1                                 “ADDITIONAL TAXABLE DIVIDEND” means a dividend required to be paid
by Spinco (under Section 860 of the Code or otherwise) in order to meet
the requirement of Section 857(a)(2)(B) of the Code and maintain its
status as a “real estate investment trust” for United States federal income tax
purposes, and resulting solely from an E+P Adjustment.

 

1.2                                 “ADJUSTMENT AMOUNT” means with respect to any taxable year, and with
respect to any Non-Audit Adjustment, the amount determined under Section 3.9
of this Agreement.

 

1.3                                 “AUDIT” includes any audit, assessment of Taxes, other examination
by any Tax Authority, proceeding, or appeal of such proceeding, relating to
Taxes, whether administrative or judicial.

 

1.4                                 “COMBINED GROUP” means a group of corporations or other entities
that files a Combined Return.

 

1.5                                 “COMBINED RETURN” means any Tax Return with respect to Non-Federal
Taxes filed on a consolidated, combined (including nexus combination, worldwide
combination, domestic combination, line of business combination or any other
form of combination) or unitary basis wherein one or more members of the WMC
Group or Spinco Group join in the filing of a Tax Return with Walter or a
Walter Affiliate that is not also a member of either such group.

 

1.6                                 “CONSOLIDATED GROUP” means the affiliated group of corporations within
the meaning of Section 1504(a) of the Code of which Walter is the
common parent and which includes the Spinco Group and WMC Group.

 

1.7                                 “CONSOLIDATED RETURN” means any Tax Return with respect to Federal
Income Taxes filed by the Consolidated Group pursuant to Section 1501 of
the Code.

 

1.8                                 “CURRENT TAXABLE PERIODS” means, as applicable, the taxable period
commencing on January 1, 2009 and ending on the Distribution Date, and the
taxable year commencing on January 1, 2008 and ending on December 31,
2008.

 

1.9                                 “DISTRIBUTION DATE” means the day on which the Distribution is
effective.

 

1.10                           “DISTRIBUTION TAXES” means any (i) Taxes imposed on, or
increase in Taxes incurred by, Walter or any Walter Affiliate and (ii) any
Taxes of a Walter shareholder (or former Walter shareholder) that are required
to be paid or reimbursed by Walter or any Walter Affiliate pursuant to a legal
determination, resulting from, or arising in connection with, the failure of
the Distribution to qualify as a tax-free transaction under Section 355 of
the Code (including, without limitation, any Tax resulting from the application
of Section 355(d) or Section 355(e) of the Code to the
Distribution) or corresponding provisions of the laws of any other
jurisdictions.  Any Tax referred to in
the immediately preceding sentence shall be determined using the highest
applicable statutory rate with respect to such Taxes for the relevant taxable
period (or portion thereof).

 

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1.11                           “E+P ADJUSTMENT” means, as a result of a Final Determination, any
positive adjustment to the earnings and profits (as determined for United
States federal income tax purposes) of the Consolidated Group or any member of
the Consolidated Group arising from any redetermination of any item of income,
gain, loss, deduction or credit of any member of the Consolidated Group.

 

1.12                           “ESTIMATED TAX INSTALLMENT DATE” means the installment due dates
prescribed in Section 6655(c) of the Code (presently April 15, June 15,
September 15 and December 15).

 

1.13                           “FEDERAL INCOME TAX” OR “FEDERAL INCOME TAXES” means any tax imposed
under Subtitle A of the Code (including the taxes imposed by Sections 11, 55,
59A, and 1201(a) of the Code), including any interest, additions to Tax,
or penalties applicable thereto, and any other income based Federal Tax which
is hereinafter imposed upon corporations.

 

1.14                           “FEDERAL TAX” means any Tax imposed
under the Code or otherwise under United States federal Tax law.

 

1.15                           “FINAL DETERMINATION” means (a) the final resolution of any Tax
(or other matter) for a taxable period, including any related interest or
penalties, that, under applicable law, is not subject to further appeal, review
or modification through proceedings or otherwise, including (1) by the expiration
of a statute of limitations (giving effect to any extension, waiver or
mitigation thereof) or a period for the filing of claims for refunds, amended
returns, appeals from adverse determinations, or recovering any refund
(including by offset), (2) by a decision, judgment, decree, or other order
by a court of competent jurisdiction, which has become final and unappealable, (3) by
a closing agreement or an accepted offer in compromise under Section 7121
or 7122 of the Code, or comparable agreements under laws of other
jurisdictions, (4) by execution of an IRS Form 870-AD, or by a
comparable form under the laws of other jurisdictions (excluding, however, any
such form that reserves (whether by its terms or by operation of law) the right
of the taxpayer to file a claim for refund and/or the right of the Tax
Authority to assert a further deficiency), or (5) by any allowance of a
refund or credit, but only after the expiration of all periods during which
such refund or credit may be recovered (including by way of offset) or (b) the
payment of Tax by any member of the Consolidated Group or Combined Group with
respect to any item disallowed or adjusted by a Tax Authority provided that
Walter determines that no action should be taken to recoup such payment.

 

1.16                           “HOMES” means Jim Walter Homes, LLC, a subsidiary of Walter, and any
of its subsidiaries.

 

1.17                           “IRS” means the Internal Revenue Service.

 

1.18                           “JWHHC” means JWH Holding Company, LLC, a Delaware limited liability
company.

 

1.19                           “MARKET VALUATION” means as of the first business day immediately
following the date on which the Distribution is effected (i) with respect
to Spinco, the fair market value of all of its issued and outstanding limited
liability company interests as of such date, or (ii) with respect to
Walter, the fair market value of all of its issued and outstanding

 

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stock
(measured using the mean of the high and low of the public trading price as
published in The Wall Street Journal) as of such date.

 

1.20                           “NON-AUDIT ADJUSTMENT” means the redetermination of any item of
income, gain, loss, deduction or credit of any member of the Consolidated Group
or any Combined Group other than as a result of an Audit or any settlement or
compromise with any Tax Authority, provided that such redetermination is
attributable to misleading or inaccurate information provided by Spinco, any
Spinco Affiliate, WMC or any WMC Affiliate to Walter, or the failure by Spinco,
any Spinco Affiliate, WMC or any WMC Affiliate to provide material information
to Walter.

 

1.21                           “NON-FEDERAL COMBINED TAXES” means any Non-Federal Taxes with
respect to which a Combined Return is filed.

 

1.22                           “NON-FEDERAL INCOME TAX” means any income-based Non-Federal Tax
imposed by any Tax Authority, including any interest, additions to Tax, or
penalties applicable thereto.

 

1.23                           “NON-FEDERAL SEPARATE TAXES” means any Non-Federal Taxes that are
not Non-Federal Combined Taxes.

 

1.24                           “NON-FEDERAL TAXES” means any Tax other than a Federal Tax.

 

1.25                           “OFFICER’S CERTIFICATE” means a letter
executed by an officer of Walter or Spinco and provided to Tax Counsel as a
condition for the completion of a Tax Opinion or Supplemental Tax Opinion.

 

1.26                           “POST-DISTRIBUTION PERIOD” means a taxable period beginning after
the Distribution Date.

 

1.27                           “PRE-DISTRIBUTION PERIOD” means any taxable period beginning on or
prior to the Distribution Date.

 

1.28                           “PRO FORMA SPINCO GROUP COMBINED RETURN” means a pro forma
non-federal combined tax return or other schedule prepared pursuant to Section 3.6
of this Agreement.

 

1.29                           “PRO FORMA SPINCO GROUP CONSOLIDATED RETURN” means a pro forma
consolidated federal income tax return prepared pursuant to Section 3.5 of
this Agreement.

 

1.30                           “PRO FORMA WMC GROUP COMBINED RETURN” means a pro forma non-federal
combined tax return or other schedule prepared pursuant to Section 3.6 of
this Agreement.

 

1.31                           “PRO FORMA WMC GROUP CONSOLIDATED RETURN” means a pro forma
consolidated federal income tax return prepared pursuant to Section 3.5 of
this Agreement.

 

1.32                           “RULING” means (i) any private letter ruling issued by the IRS
in connection with the Distribution in response to a request for such a private
letter ruling filed by Walter (or any Walter Affiliate) prior to the date of
the Distribution, and (ii) any similar ruling issued

 

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by any other
Tax Authority addressing the application of a provision of the laws of another
jurisdiction to the Distribution.

 

1.33                           “RULING DOCUMENTS” means (i) the request for a Ruling filed
with the IRS, together with any supplemental filings or other materials
subsequently submitted on behalf of Walter, its Affiliates and shareholders to
the IRS, or on behalf of Spinco, its Affiliates and shareholders to the IRS the
appendices and exhibits thereto, and any Ruling issued by the IRS to Walter (or
any Walter Affiliate) or Spinco (or any Spinco Affiliate) in connection with
the Distribution and (ii) any similar filings submitted to, or rulings
issued by, any other Tax Authority in connection with the Distribution.

 

1.34                           “SPINCO” means Walter Investment Management LLC, a Delaware limited
liability company.

 

1.35                           “SPINCO AFFILIATE” means any corporation or other entity, including
any entity that is a disregarded entity for federal income tax purposes,
directly or indirectly “controlled” by Spinco where “control” means the
ownership of fifty percent (50%) or more of the ownership interests of such
corporation or other entity (by vote or value) or the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such corporation or other entity.

 

1.36                           “SPINCO BUSINESS” means the business and operations conducted by
Spinco and its Affiliates as such business and operations will continue after
the date of the Distribution.

 

1.37                           “SPINCO GROUP” means the affiliated group of corporations, including
any entity that is a disregarded entity for federal income tax purposes, as
defined in Section 1504(a) of the Code, or similar group of entities
as defined under similar laws of other jurisdictions, of which Spinco would be
the common parent if it were not a subsidiary of Walter, and any corporation or
other entity, including any entity that is a disregarded entity for federal
income tax purposes, which may be or become a member of such group from time to
time.

 

1.38                           “SPINCO GROUP COMBINED TAX LIABILITY” means, with respect to any
taxable year, the Spinco Group’s liability for Non-Federal Combined Taxes as determined
under Section 3.6 of this Agreement.

 

1.39                           “SPINCO GROUP FEDERAL INCOME TAX LIABILITY” means, with respect to
any taxable year, the Spinco Group’s liability for Federal Income Taxes as
determined under Section 3.5 of this Agreement.

 

1.40                           “SUPPLEMENTAL RULING” means (i) any ruling (other than the
Ruling) issued by the IRS in connection with the Distribution, and (ii) any
similar ruling issued by any other Tax Authority addressing the application of
a provision of the laws of another jurisdiction to the Distribution.

 

1.41                           “SUPPLEMENTAL RULING DOCUMENTS” means (i) the request for a
Supplemental Ruling, together with any supplemental filings or other materials
subsequently submitted, the appendices and exhibits thereto, and any
Supplemental Rulings issued by the IRS in connection with the Distribution and (ii) any
similar filings submitted to, or rulings issued by, any other Tax Authority in
connection with the Distribution.

 

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1.42                           “SUPPLEMENTAL TAX OPINION” has the meaning set forth in Section 4.2(c) of
this Agreement.

 

1.43                           “TAX” or “TAXES” means any charges, fees, levies, imposts, duties,
or other assessments of a similar nature, including without limitation, income,
alternative or add-on minimum, gross receipts, excise, employment, sales, use,
transfer, license, payroll, franchise, severance, stamp, occupation, windfall
profits, withholding, Social Security, unemployment, disability, ad valorem,
estimated, highway use, commercial rent, capital stock, paid up capital,
recording, registration, property, real property gains, value added, business
license, custom duties, or other tax or governmental fee of any kind
whatsoever, imposed or required to be withheld by any Tax Authority including
any interest, additions to Tax, or penalties applicable thereto.

 

1.44                           “TAX ASSET” means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction or any other
deduction, credit or tax attribute which could reduce Taxes (including without
limitation deductions and credits related to alternative minimum taxes).

 

1.45                           “TAX AUTHORITY” includes the IRS and any state, local, or other
governmental authority responsible for the administration of any Taxes.

 

1.46                           “TAX COUNSEL” means a nationally recognized law firm or accounting
firm selected by Walter to provide a Tax Opinion or a Supplemental Tax Opinion.

 

1.47                           “TAX OPINION” means an opinion issued by PricewaterhouseCoopers LLP
addressing certain United States federal income tax consequences of the
Distribution under Section 355 of the Code as one of the conditions to
completing the Distribution.

 

1.48                           “TAX RETURN” OR “TAX RETURNS” means any return, declaration,
statement, report, schedule, certificate, form, information return or any other
document (and any related or supporting information) including an amended tax
return required to be supplied to, or filed with, a Tax Authority with respect
to Taxes.

 

1.49                           “TAXABLE DIVIDEND” means the dividend paid by Spinco in the form of
cash and Spinco interests immediately subsequent to the Distribution and
immediately preceding the Merger.

 

1.50                           “WALTER AFFILIATE” means any corporation or other entity,
including any entity that is disregarded for federal income tax purposes,
directly or indirectly “controlled” by Walter where “control” means the
ownership of fifty percent (50%) or more of the ownership interests of such
corporation or other entity (by vote or value) or the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such corporation or other entity, but at all times excluding Spinco
and any Spinco Affiliate, and WMC and any WMC affiliate, as applicable.

 

1.51                           “WALTER BUSINESS” means all of the businesses and operations
conducted by Walter and any Walter Affiliates, excluding the Spinco Business or
the WMC Business, at any time, whether prior to, or after the Distribution
Date.

 

1.52                           “WALTER GROUP” means the affiliated group of corporations, including
any entity that is a disregarded entity for federal income tax purposes, as
defined in

 

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Section 1504(a) of
the Code, or similar group of entities as defined under similar laws of other
jurisdictions, of which Walter is the common parent, and any corporation or other
entity, including any entity that is a disregarded entity for federal income
tax purposes, which may be or become a member of such group from time to time.

 

1.53                           “WMC” means Walter Mortgage Company LLC, a Delaware limited
liability company.

 

1.54                           “WMC AFFILIATE” means (i) any corporation or other entity, including
any entity that is disregarded for federal income tax purposes, directly or
indirectly “controlled” by WMC where “control” means the ownership of fifty
percent (50%) or more of the ownership interests of such corporation or other
entity (by vote or value) or the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
corporation or other entity, (ii) Best Insurors, Inc. and (iii) Walter
Investment Reinsurance Co., Ltd.

 

1.55                           “WMC BUSINESS” means all of the businesses and operations conducted
by WMC and any WMC Affiliates, as such business and operations will continue
after the date of the Distribution.

 

1.56                           “WMC GROUP COMBINED TAX LIABILITY” means, with respect to any
taxable year, the WMC Group’s liability for Non-Federal Combined Taxes as determined
under Section 3.6 of this Agreement.

 

1.57                           “WMC GROUP FEDERAL INCOME TAX LIABILITY” means, with respect to any
taxable year, the WMC Group’s liability for Federal Income Taxes as determined
under Section 3.5 of this Agreement.

 

1.58                           “WMC GROUP” means the affiliated group of corporations, including
any entity that is a disregarded entity for federal income tax purposes, as
defined in Section 1504(a) of the Code, or similar group of entities
as defined under similar laws of other jurisdictions, of which WMC would be the
common parent if it were not a subsidiary of Spinco, and any corporation or
other entity, including any entity that is a disregarded entity for federal
income tax purposes, which may be or become a member of such group from time to
time. Such group shall also include Best Insurors, Inc. and Walter
Investment Reinsurance Co., Ltd.

 

SECTION 2.                                PREPARATION AND FILING OF TAX RETURNS

 

2.1                                 IN GENERAL.  (a)  Walter
shall have the sole and exclusive responsibility for the preparation and filing
of any Consolidated Return or Combined Return.

 

(b) Spinco
shall, subject to Section 2.2 of this Agreement, be responsible for
preparing and filing all Tax Returns of Spinco and the Spinco Affiliates, and
of WMC and the WMC Affiliates, other than those described in Section 2.1(a) of
this Agreement.

 

2.2                                 PREPARATION AND FILING OF RETURNS.  (a) All Tax Returns described in Section 2.1
of this Agreement shall be (1) prepared in a manner that is consistent
with Section 4 of this Agreement and the Code, and (2) filed on a
timely basis (taking into account applicable extensions) by the party
responsible for such filing under Section 2.1 of this Agreement.

 

7

 

(b)                                 Subject to Section 2.2(a) of this
Agreement, Walter, in its sole discretion, shall have the exclusive right with
respect to any Consolidated Return or Combined Return (a) to determine (1) the
manner in which such Tax Return shall be prepared and filed, including, without
limitation, the manner in which any item of income, gain, loss, deduction or
credit shall be reported, (2) whether any extensions may be requested, (3) the
elections that will be made by any member of the Consolidated Group or
applicable Combined Group, and (4) whether any amended Tax Returns should
be filed, (b) to control, contest, and represent the interests of the
Consolidated Group and  any Combined
Group in any Audit and to resolve, settle, or agree to any adjustment or
deficiency proposed, asserted or assessed as a result of any Audit, (c) to
file, prosecute, compromise or settle any claim for refund, and (d) to
determine whether any refunds, to which the Consolidated Group or applicable
Combined Group may be entitled, shall be paid by way of refund or credited
against the Tax liability of the Consolidated Group or applicable Combined
Group. Spinco, for itself and its subsidiaries, hereby irrevocably appoints
Walter as its agent and attorney-in-fact to take such action (including the
execution of documents) as Walter may deem appropriate to effect the foregoing.

 

2.3                                 FURNISHING INFORMATION. (a) Spinco (or the applicable Spinco  Affiliate) shall (i) furnish to Walter in
a timely manner such information, documents and assistance as Walter may
reasonably request for purposes of (1) preparing any original or amended
Consolidated Return or Combined Return, (2) contesting or defending any
Audit relating to a Consolidated Return or a Combined Return, and (3) making
any determination or computation necessary or appropriate under this Agreement;
(ii) cooperate and provide assistance in any Audit of any Consolidated
Return or Combined Return; (iii) retain and provide on demand books,
records, documentation or other information relating to any Tax Return and
maintain and provide support to Walter (including the provision of the
appropriate personnel) with respect to any electronic financial systems that
provide information relating to historical data, until the later of (1) the
expiration of the applicable statute of limitations (giving effect to any
extension, waiver, or mitigation thereof) and (2) in the event any claim
is made under this Agreement for which such information is relevant, until a
Final Determination with respect to such claim; and (iv) take such action
as Walter may deem appropriate in connection therewith. For purposes of this Section 2.3(a),
such assistance shall include, but not be limited to, the making available of
individuals with expertise relating to matters that are the subject of any
Audit or proceeding, or relating to any information or documents requested
under this Section 2.3(a), at the times and in the manner requested by
Walter.

 

(b)                                 Walter
shall furnish to Spinco (or the applicable Spinco Affiliate) in a timely manner
such assistance as Spinco may reasonably require for purposes of preparing any
Tax Return relating to the Taxes of the Spinco Group for any Pre-Distribution
Period, and Walter shall provide Spinco (or the applicable Spinco Affiliate)
any assistance reasonably required in providing any information requested
pursuant to Section 2.3(a). For purposes of this Section 2.3(b), such
assistance shall include, but not be limited to, the making available of individuals
with expertise relating to the matters described in Section 2.3(a) and
this Section 2.3(b), at the times and in the manner reasonably requested
by Spinco. For the avoidance of doubt, the obligations of Walter under this Section 2.3(b) shall
in no way limit its obligations under any other agreements entered into in
connection with the Distribution.

 

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SECTION 3.                                PAYMENT OF TAXES AND TAX SHARING AMOUNTS

 

3.1                                 FEDERAL INCOME TAXES. Walter shall pay (or cause to be paid) to the
IRS all Federal Income Taxes, if any, of the Consolidated Group.

 

3.2                                 NON-FEDERAL COMBINED TAXES. Walter shall pay (or cause to be paid)
to the appropriate Tax Authorities all Non-Federal Combined Taxes, if any, of
any Combined Group.

 

3.3                                 NON-FEDERAL SEPARATE TAXES AND OTHER TAXES. Spinco shall pay to the
appropriate Tax Authorities all Non-Federal Separate Taxes and any other Taxes
(other than those described in Section 3.1 and Section 3.2 of this
Agreement), if any, of Spinco and the Spinco Affiliates, and of WMC and the WMC
Affiliates, including, without limitation, those for any Pre-Distribution
Period (or portion thereof ending on the Distribution Date) arising as a result
of a Final Determination with respect to Federal Income Taxes that requires an
adjustment to any Taxes described in this Section 3.3. Notwithstanding the
foregoing, any 1098 reporting penalties imposed by the IRS relating to a
Pre-Distribution Period shall be paid by Walter. For purposes of this Section, “1098
reporting penalties” shall mean any penalties that result solely from a
determination that the amount of interest reported with respect to the
financing contracts associated with the sale of homes by Homes was incorrectly
reported on IRS Form 1098.

 

3.4                                 SPINCO LIABILITY FOR FEDERAL INCOME TAXES AND NON-FEDERAL COMBINED
TAXES FOR CURRENT TAXABLE YEARS.  For
each Current Taxable Period, Spinco shall pay to Walter an amount equal to,
without duplication, the sum of (1) the WMC Group Federal Income Tax
Liability, (2) the WMC Group Combined Tax Liability, (3) the Spinco
Group Federal Income Tax Liability and (4) the Spinco Group Combined Tax
Liability, for such period, as determined pursuant to Sections 3.5 and 3.6 of
this Agreement, and in the manner described in Section 3.8 of this
Agreement.

 

3.5                                 WMC GROUP AND SPINCO GROUP FEDERAL INCOME TAX LIABILITY.  (a)  WMC GROUP FEDERAL INCOME TAX
LIABILITY. The WMC Group Federal Income Tax Liability for a Current Taxable
Period shall be the WMC Group’s liability for Federal Income Taxes for such
taxable period, as determined on a Pro Forma WMC Group Consolidated Return
prepared in accordance with Section 3.5(b) of this Agreement.

 

(b)                                 PRO FORMA WMC GROUP CONSOLIDATED RETURN. With respect to a Current
Taxable Period, Walter shall prepare or cause to be prepared (and, as requested
by Walter, Spinco shall cooperate in preparing) a Pro Forma WMC Group
Consolidated Return as if the WMC Group were not and never were part of the
Consolidated Group, but rather were a separate affiliated group of corporations
of which WMC were the common parent filing a consolidated federal income tax
return for such period pursuant to Section 1501 of the Code.

 

(c)                                  SPINCO GROUP FEDERAL INCOME TAX LIABILITY. The Spinco Group Federal
Income Tax Liability for a Current Taxable Period shall be the Spinco Group’s
liability for Federal Income Taxes for such taxable period, as determined on a
Pro Forma Spinco Group Consolidated Return prepared in accordance with Section 3.5(d) of
this Agreement.

 

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(d)                                 PRO FORMA SPINCO GROUP CONSOLIDATED RETURN. With respect to a
Current Taxable Period, Walter shall prepare or cause to be prepared (and, as
requested by Walter, Spinco shall cooperate in preparing) a Pro Forma Spinco
Group Consolidated Return as if the Spinco Group were not and never were part
of the Consolidated Group, but rather were a separate affiliated group of
corporations of which Spinco were the common parent filing a consolidated
federal income tax return for such period pursuant to Section 1501 of the
Code.

 

3.6                                 WMC GROUP AND SPINCO GROUP COMBINED TAX LIABILITY.  (a) WMC GROUP COMBINED TAX LIABILITY.
The WMC Group Combined Tax Liability for a Current Taxable Period shall be the
sum for such taxable period of the WMC Group’s liability for each Non-Federal
Combined Tax, as determined on Pro Forma WMC Group Combined Returns prepared in
a manner consistent with the principles and procedures set forth in Section 3.5(b) hereof.

 

(b)                                 SPINCO GROUP COMBINED TAX LIABILITY. The Spinco Group Combined Tax Liability
for a Current Taxable Period shall be the sum for such taxable period of the
Spinco Group’s liability for each Non-Federal Combined Tax, as determined on
Pro Forma Spinco Group Combined Returns prepared in a manner consistent with
the principles and procedures set forth in Section 3.5(d) hereof.

 

3.7                                 TAX SHARING INSTALLMENT PAYMENTS. 
(a)  WMC GROUP FEDERAL INCOME TAXES. For each Estimated Tax
Installment Date with respect to any Current Taxable Period, Walter shall
determine under Section 6655 of the Code the estimated amount of the
related installment of the WMC Group Federal Income Tax Liability and shall
notify Spinco of such amount. Spinco shall then pay to Walter, not later than
15 business days after it is notified by Walter of such amount, the amount thus
determined.

 

(b)                                 WMC GROUP NON-FEDERAL COMBINED TAXES. For each estimated tax
installment date with respect to Non-Federal Combined Taxes for any Current
Taxable Period, Walter shall determine the estimated amount of the related
installment of the WMC Group Combined Tax Liability and shall notify Spinco of
such amount.  Spinco shall pay to Walter,
not later than 15 business days after it is notified by Walter of such amount,
the amount thus determined.

 

(c)                                  SPINCO GROUP FEDERAL INCOME TAXES. For each Estimated Tax
Installment Date with respect to any Current Taxable Period, Walter shall
determine under Section 6655 of the Code the estimated amount of the
related installment of the Spinco Group Federal Income Tax Liability and shall
notify Spinco of such amount. Spinco shall then pay to Walter, not later than
15 business days after it is notified by Walter of such amount, the amount thus
determined.

 

(d)                                 SPINCO GROUP NON-FEDERAL COMBINED TAXES. For each estimated tax
installment date with respect to Non-Federal Combined Taxes for any Current
Taxable Period, Walter shall determine the estimated amount of the related
installment of the Spinco Group Combined Tax Liability and shall notify Spinco
of such amount.  Spinco shall pay to
Walter, not later than 15 business days after it is notified by Walter of such
amount, the amount thus determined.

 

3.8                                 TAX SHARING TRUE-UP PAYMENTS. 
(a)  FEDERAL INCOME TAXES. 
Not later than 60 business days after the Consolidated Return is filed
with respect

 

10

 

to any Current
Taxable Period, Walter shall deliver to Spinco a Pro Forma WMC Group
Consolidated Return and a Pro Forma Spinco Group Consolidated Return or other
comparable schedules reflecting the WMC Group Federal Income Tax Liability and
Spinco Group Federal Income Tax Liability for such period. Not later than 10
business days after the date such Pro Forma WMC Group Consolidated Return and
Pro Forma Spinco Group Consolidated Return or other schedules are delivered,
Spinco shall pay to Walter, or Walter shall pay to Spinco, as appropriate, an
amount equal to (i) the difference, if any, between the WMC Group Federal
Income Tax Liability for such taxable period and the aggregate amount paid by
Spinco with respect to such taxable period under Section 3.7(a) of
this Agreement, and (ii) the difference, if any, between the Spinco Group
Federal Income Tax Liability for such taxable period and the aggregate amount
paid by Spinco with respect to such taxable period under Section 3.7(c) of
this Agreement. Notwithstanding anything to the contrary herein, Walter shall
only be required to make a payment to Spinco pursuant to this Section 3.8(a) to
the extent it has received a refund of Federal Income Taxes attributable to such
amounts; and in no event shall such payment be required prior to 15 days after
the receipt of such refund.

 

(b)                                 NON-FEDERAL COMBINED TAXES. 
Not later than 60 business days after the Combined Return is filed with
respect to any taxable period described in Section 3.4, Walter shall
deliver to Spinco a Pro Forma WMC Group Combined Return and a Pro Forma Spinco
Group Combined Return or other comparable schedules reflecting the WMC Group
Combined Tax Liability and Spinco Group Combined Tax Liability for such taxable
year (or portion thereof ending on the Distribution Date). Not later than 10
business days following delivery of such Pro Forma WMC Group Combined Return
and Pro Forma Spinco Group Combined Return or other schedules, Spinco shall pay
to Walter, or Walter shall pay to Spinco, as appropriate, an amount equal to (i) the
difference, if any, between the WMC Group Combined Tax Liability for such
taxable year (or portion thereof ending on the Distribution Date) and the
amount paid by Spinco with respect to such taxable year (or portion thereof
ending on the Distribution Date) under Section 3.7(b) of this
Agreement, and (ii) the difference, if any, between the Spinco Group
Combined Tax Liability for such taxable period and the aggregate amount paid by
Spinco with respect to such taxable period under Section 3.7(d) of
this Agreement. Notwithstanding anything to the contrary herein, Walter shall
only be required to make a payment to Spinco pursuant to this Section 3.8(b) to
the extent it has received a refund of Non-Federal Combined Taxes attributable
to such amounts; and in no event shall such payment be required prior to 15
days after the receipt of such refund.

 

3.9                                 ADJUSTMENT AMOUNT.  (a) 
IN GENERAL.  In the event of any
Non-Audit Adjustment, Spinco shall pay Walter the Adjustment Amount.

 

(b)                                 COMPUTATION.  The Adjustment
Amount shall be equal to the sum of (A) the difference between (1) the
sum of the WMC Group Federal Income Tax Liability and the WMC Group Combined
Tax Liability that would have been computed under Sections 3.5 and 3.6 for the
taxable year to which the Non-Audit Adjustment relates had such year been a
Current Taxable Period, taking such Non-Audit Adjustment into account, and (2) the
sum of the WMC Group Federal Income Tax Liability and the WMC Group Combined
Tax Liability that would have been computed under Sections 3.5 and 3.6 for the
taxable year to which the Non-Audit Adjustment relates had such year been a
Current Taxable Period, without regard to such Non-Audit Adjustment; and (B) the
difference between (1) the sum of the Spinco Group Federal Income Tax
Liability and the Spinco Group Combined Tax Liability that

 

11

 

would have been computed under Sections 3.5
and 3.6 for the taxable year to which the Non-Audit Adjustment relates had such
year been a Current Taxable Period, taking such Non-Audit Adjustment into
account, and (2) the sum of the Spinco Group Federal Income Tax Liability
and the Spinco Group Combined Tax Liability that would have been computed under
Sections 3.5 and 3.6 for the taxable year to which the Non-Audit Adjustment
relates had such year been a Current Taxable Period, without regard to such
Non-Audit Adjustment.

 

(c)                                  PAYMENT.  Walter shall deliver
to Spinco a schedule reflecting the computation of any Adjustment Amount with
respect to any applicable taxable year. Not later than 5 business days after
the date such schedule is delivered, Spinco shall pay Walter such Adjustment
Amount.

 

3.10                           INTEREST ON LATE PAYMENTS.  Payments made between Walter and Spinco
under this
Section 3 that are not made within the prescribed period shall thereafter
bear interest at the short term applicable federal rate, (as defined in Section 1274
of the Code and as determined by the IRS from time to time) plus 350 basis
points.

 

SECTION 4.                                DISTRIBUTION TAXES

 

4.1                                 CONTINUING COVENANTS.  Spinco,
for itself, the Spinco Affiliates, WMC and the WMC Affiliates, covenants that
on or after the Distribution Date it will not (nor will it cause or permit any
member of the Spinco Group to), (i) make or change any tax election, (ii) change
any accounting method, (iii) amend any Tax Return or take any Tax position
on any Tax Return that is inconsistent with any Tax position on any Tax Return
of the Walter Group, or (iv) take any action, omit to take any action or
enter into any transaction that results in any increased Tax liability or
reduction of any Tax Asset of the Walter Group; unless any such action is
required by a Final Determination.

 

4.2                                 ADDITIONAL CONTINUING COVENANTS. 
(a)  Spinco RESTRICTIONS. 
Spinco agrees that it will not take or fail to take, or permit any
Spinco Affiliate, WMC or any WMC Affiliate to take or fail to take, any action
where such action or failure to act would be inconsistent with any material,
information, covenant or representation that relates to facts or matters
related to Spinco or WMC, any Spinco Affiliate or WMC Affiliate, or the Spinco
Business or WMC Business or that is within the control of Spinco, any Spinco
Affiliate, WMC or any WMC Affiliate, and is contained in an Officer’s
Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents,
Supplemental Ruling Documents, Ruling, or Supplemental Ruling.  For this purpose an action is considered
inconsistent with a representation if the representation states that there is
no plan or intention to take such action. 
Spinco agrees that it will not take (and it will cause the Spinco
Affiliates, WMC and the WMC Affiliates to refrain from taking) any position on
a Tax Return that is inconsistent with the treatment of the Distribution as a
tax-free transaction under Section 355 of the Code.

 

(b)                                 WALTER RESTRICTIONS.  Walter
agrees that it will not take or fail to take, or permit any Walter Affiliate to
take or fail to take, any action where such action or failure to act would be
inconsistent with any material, information, covenant or representation that
relates to facts or matters related to Walter (or any Walter Affiliate) or
within the control of Walter and is contained in an Officer’s Certificate, Tax
Opinion, Supplemental Tax Opinion, Ruling Documents, Supplemental Ruling
Documents, Ruling, or Supplemental Ruling. 
For this purpose an action is considered inconsistent with a
representation if the representation states that there is no plan or intention
to take such action.  Walter agrees that
it will not take

 

12

 

(and it will cause the Walter Affiliates to
refrain from taking) any position on a Tax Return that is inconsistent with the
treatment of the Distribution as a tax-free transaction under Section 355
of the Code.

 

(c)                                  CERTAIN SPINCO ACTIONS FOLLOWING THE DISTRIBUTION.  Spinco agrees that, during the 2-year period
following the Distribution, without first obtaining, at Spinco’s own expense,
either a supplemental opinion from Tax Counsel that such action will not result
in Distribution Taxes (a “Supplemental Tax Opinion”) or a Supplemental Ruling
that such action will not result in Distribution Taxes, unless in any such case
Walter and Spinco agree in writing otherwise, Spinco shall not (1) sell
all or substantially all of the assets of Spinco or any Spinco Affiliate, (2) merge
Spinco or any Spinco Affiliate with another entity, without regard to which
party is the surviving entity, (3) transfer any assets of Spinco in a
transaction described in Section 351 (other than a transfer to a
corporation which files a consolidated return with Spinco and which is
wholly-owned, directly or indirectly, by Spinco) or subparagraph (C) or (D) of
Section 368(a)(1) of the Code, (4) issue stock of Spinco or any
Spinco Affiliate (or any instrument that is convertible or exchangeable into
any such stock) in an acquisition or public or private offering, or (5) facilitate
or otherwise participate in any acquisition of stock in Spinco  that would result in any shareholder owning
five percent (5%) or more of the outstanding stock of Spinco.  Spinco or any Spinco Affiliate shall only
undertake any of such actions after Walter’s receipt of such Supplemental Tax
Opinion or Supplemental Ruling and pursuant to the terms and conditions of any
such Supplemental Tax Opinion or Supplemental Ruling or as otherwise consented
to in writing in advance by Walter.  The
parties hereby agree that they will act in good faith to take all reasonable
steps necessary to amend this Section 4.2(c), from time to time, by mutual
agreement, to (i) add certain actions to the list contained herein, or (ii) remove
certain actions from the list contained herein, in either case, in order to
reflect any relevant change in law, regulation or administrative interpretation
occurring after the date of this Agreement. For the avoidance of doubt, nothing
in this Agreement shall in any way prevent or prohibit Spinco from consummating
the Merger.

 

(d)                                 NOTICE OF SPECIFIED TRANSACTIONS. 
Not later than 30 days prior to entering into any oral or written
contract or agreement, and not later than 5 days after it first becomes aware
of any negotiations, plan or intention (regardless of whether it is a party to
such negotiations, plan or intention), regarding any of the transactions
described in Section 4.2(c) of this Agreement, Spinco shall provide
written notice of its intent to consummate such transaction or the
negotiations, plan or intention of which it becomes aware, as the case may be,
to Walter.

 

4.3                                 DISTRIBUTION TAXES.  The
parties have set forth how certain Tax matters with respect to a Distribution
would be handled. Notwithstanding Section 3 of this Agreement, this Section 4.3
shall govern with respect to any and all Distribution Taxes whenever imposed.

 

(a)                                  WALTER’S LIABILITY FOR DISTRIBUTION TAXES. Walter and each Walter
Affiliate shall be jointly and severally liable for any Distribution Taxes, to
the extent that such Distribution Taxes are attributable to, caused by, or
result from, one or more of the following:

 

(1)                                  any action or omission by Walter (or any Walter Affiliate)
inconsistent with any material, information, covenant or representation related
to Walter, any Walter Affiliate, or the Walter Business in an Officer’s
Certificate, Tax Opinion, Supplemental Tax

 

13

 

Opinion,
Ruling Documents, Supplemental Ruling Documents, Ruling, or Supplemental Ruling
(for the avoidance of doubt, disclosure of any action or fact that is
inconsistent with any material, information, covenant or representation
submitted to Tax Counsel, the IRS, or other Tax Authority, as applicable, in
connection with an Officer’s Certificate, Tax Opinion, Supplemental Tax Opinion,
Ruling Documents, Supplemental Ruling Documents, Ruling, or Supplemental Ruling
shall not relieve Walter (or any Walter Affiliate) of liability under this
Agreement);

 

(2)                                  any action or omission by Walter (or any Walter Affiliate),
including a cessation, transfer to affiliates, or disposition of its active
trades or businesses, or an issuance of stock, stock buyback or payment of an
extraordinary dividend by Walter (or any Walter Affiliate) following the
Distribution;

 

(3)                                  any acquisition of any stock or assets of Walter (or any Walter
Affiliate) by one or more other persons (other than Spinco or a Spinco
Affiliate) prior to or following the Distribution; or

 

(4)                                  any issuance of stock by Walter (or any Walter Affiliate).

 

(b)                                 SPINCO’S LIABILITY FOR DISTRIBUTION TAXES.  Spinco and each Spinco Affiliate shall be
jointly and severally liable for any Distribution Taxes, to the extent that
such Distribution Taxes are attributable to, caused by, or result from, one or
more of the following:

 

(1)                                  any action or omission by Spinco (or any Spinco Affiliate) after the
Distribution at any time, that is inconsistent with any material, information,
covenant or representation related to Spinco or WMC, or any Spinco Affiliate or
WMC Affiliate, or the Spinco Business or the WMC Business, in an Officer’s
Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents,
Supplemental Ruling Documents, Ruling, or Supplemental Ruling (for the
avoidance of doubt, disclosure by Spinco (or any Spinco Affiliate) to Walter
(or any Walter Affiliate) of any action or fact that is inconsistent with any
material, information, covenant or representation submitted to Tax Counsel, the
IRS, or other Tax Authority, as applicable, in connection with an Officer’s
Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents,
Supplemental Ruling Documents, Ruling, or Supplemental Ruling shall not relieve
Spinco (or any Spinco Affiliate) of liability under this Agreement);

 

(2)                                  any action or omission by Spinco (or any Spinco Affiliate) after the
date of the Distribution (including any act or omission that is in furtherance
of, connected to, or part of a plan or series of related transactions (within
the meaning of Section 355(e) of the Code) occurring on or prior to
the date of the Distribution) including a cessation, transfer to affiliates or
disposition of the active trades or businesses of Spinco (or any Spinco
Affiliate), stock buyback or payment of an extraordinary dividend (other than
the payment of the Taxable Dividend);

 

(3)                                  any acquisition (other than the Merger, and for the avoidance of
doubt, other than in connection with the Taxable Dividend) of any stock (or
limited liability company interests) or assets of Spinco (or any Spinco
Affiliate) by one or more other persons (other than Walter or any Walter
Affiliate) prior to or following the Distribution; or

 

14

 

(4)                                  any issuance of stock (or limited liability company interests) by
Spinco (or any Spinco Affiliate) after the Distribution, including any issuance
pursuant to the exercise of employee stock options or other employment related
arrangements or the exercise of warrants, other than in connection with the
Taxable Dividend.

 

(c)                                  JOINT LIABILITY FOR REMAINING DISTRIBUTION TAXES.  Walter and each Walter Affiliate shall be
liable for a percentage of any Distribution Taxes (not otherwise allocated by
Sections 4.3(a) or (b) of this Agreement) equal to the quotient of (i) Walter’s
Market Valuation, divided by (ii) the sum of (x) Walter’s Market
Valuation, and (y) Spinco’s Market Valuation.  Spinco and each Spinco Affiliate shall be
jointly and severally liable for a percentage of any Distribution Taxes (not
otherwise allocated by Sections 4.3(a) or (b) of this Agreement)
equal to the quotient of (i) Spinco’s Market Valuation, divided by (ii) the
sum of (x) Walter’s Market Valuation, and (y) Spinco’s Market
Valuation.

 

SECTION 5.                                EARNINGS AND PROFITS ADJUSTMENTS

 

5.1                                 NOTICE. Walter shall notify Spinco within 75 days of an E+P
Adjustment.

 

5.2                                 REIMBURSEMENT.

 

(a)                                  IN GENERAL. To the extent that Spinco is required to pay an
Additional Taxable Dividend, Walter shall pay Spinco an amount in cash equal to
the lesser of (i) the Additional Taxable Dividend actually paid by Spinco
multiplied by [the percentage of the Taxable Dividend that was paid in cash]
and (ii) the amount of such Additional Taxable Dividend actually paid in
cash.

 

(b)                                 TIMING. Such payment shall be made no later than 2 business days
after the date on which such Additional Taxable Dividend is made.

 

SECTION 6.                                MISCELLANEOUS

 

6.1                                 TERM.  All rights and
obligations arising hereunder shall survive until they are fully effectuated or
performed provided that, notwithstanding anything in this Agreement to the
contrary, this Agreement shall remain in effect and its provisions shall
survive for the full period of all applicable statutes of limitation (giving
effect to any extension, waiver or mitigation thereof).

 

6.2                                 ALLOCATIONS.  (a)  IN
GENERAL.  All computations with respect
to any Pre-Distribution Period shall be made pursuant to the principles of
Treasury Regulations Section 1.1502-76(b), taking into account such
elections thereunder as Walter, in its sole discretion, shall make.

 

(b)                                 TAX ASSETS.  Walter shall
advise Spinco in writing within 90 days after the filing of the Consolidated
Return for the taxable year that includes the Distribution Date of the
allocation of any Tax Assets among Walter, each Walter Affiliate, Spinco, and
each Spinco Affiliate.  The parties
hereby agree that, for purposes of determining such allocation, Walter shall be
free to use any legally permissible method of allocation in its sole
discretion.

 

6.3                                 FINAL DETERMINATIONS. Spinco and the Spinco Affiliates agree to be
bound by (and to report its Taxes consistently with) any Final Determination
relating to Spinco, any Spinco Affiliate, WMC and any WMC Affiliate for any
Pre-Distribution Period

 

15

 

(or portion
thereof ending on the Distribution Date), even if such Final Determination
affects a Post-Distribution Period (or portion of a Pre-Distribution Period
beginning after the Distribution Date).

 

6.4                                 CHANGES IN LAW.  Any reference
to a provision of the Code or a similar law of another jurisdiction shall
include a reference to any successor provision to such provision.

 

6.5                                 CONFIDENTIALITY. Each party shall hold and cause its advisors and
consultants to hold in strict confidence, unless compelled to disclose by
judicial or administrative process or, in the opinion of its counsel, by other
requirements of law, all information (other than any such information relating
solely to the business or affairs of such party) concerning the other parties
hereto furnished it by such other party or its representatives pursuant to this
Agreement (except to the extent that such information can be shown to have been
(a) previously known by the party to which it was furnished, (b) in
the public domain through no fault of such party, or (c) later lawfully
acquired from other sources not under a duty of confidentiality by the party to
which it was furnished), and each party shall not release or disclose such
information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants who shall be advised of and agree to be
bound by the provisions of this Section 6.5. Each party shall be deemed to
have satisfied its obligation to hold confidential information concerning or
supplied by the other party if it exercises the same care as it takes to
preserve confidentiality for its own similar information.

 

6.6                                 SUCCESSORS. This Agreement shall be binding on and inure to the
benefit of any successor, by merger, acquisition of assets or otherwise, to any
of the parties hereto (including any successor of Walter and Spinco succeeding
to the tax attributes of such party under Section 381 of the Code), to the
same extent as if such successor had been an original party, and shall apply
after the Merger to Walter Investment Management Corporation as successor to
Spinco.

 

6.7                                 AUTHORIZATION, ETC.  Each of
the parties hereto hereby represents and warrants that it has the power and
authority to execute, deliver and perform this Agreement, that this Agreement
has been duly authorized by all necessary corporate action on the part of such
party, that this Agreement constitutes a legal, valid and binding obligation of
each such party and that the execution, delivery and performance of this
Agreement by such party does not contravene or conflict with any provision of
law or of its charter or bylaws or any agreement, instrument or order binding
on such party.

 

6.8                                 ENTIRE AGREEMENT. This Agreement contains the entire agreement among
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements.

 

6.9                                 SECTION CAPTIONS.  Section captions
used in this Agreement are for convenience and reference only and shall not
affect the construction of this Agreement.

 

6.10                           GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to laws
and principles relating to conflicts of law.

 

16

 

6.11                           COUNTERPARTS.  This Agreement
may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
Agreement.

 

6.12                           WAIVERS AND AMENDMENTS.  This
Agreement shall not be waived, amended or otherwise modified except in writing,
duly executed by all of the parties hereto.

 

6.13                           SEVERABILITY.  In case any one
or more of the provisions in this Agreement should be invalid, illegal or
unenforceable, the enforceability of the remaining provisions hereof will not
in any way be effected or impaired thereby.

 

6.14                           NO THIRD PARTY BENEFICIARIES. 
This Agreement is solely for the benefit of the parties to this
Agreement and each Walter Affiliate and Spinco Affiliate and should not be
deemed to confer upon third parties any remedy, claim, liability, reimbursement,
claim of action or other rights in excess of those existing without this
Agreement.

 

6.15                           OTHER REMEDIES.  Spinco
recognizes that any failure by it or any Spinco Affiliate (and WMC or any WMC
Affiliates) to comply with its obligations under Section 4 of this
Agreement would result in Distribution Taxes that would cause irreparable harm
to Walter, Walter Affiliates, and their stockholders.  Accordingly, Walter shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which Walter is entitled at law or in equity.

 

17

 

IN WITNESS
WHEREOF, each of the parties hereto has caused this Agreement to be executed by
a duly authorized officer as of the date first above written.

 

	
   

  	
  WALTER INDUSTRIES, INC.

  
	
   

  	
  on behalf of itself and the Walter
  Affiliates

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WALTER INVESTMENT MANAGEMENT LLC,

  
	
   

  	
  on behalf of itself and the Spinco Affiliates

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:Exhibit 10.51

 

Walter
Industries, Inc.

Walter
Investment Management LLC

FORM OF
JOINT LITIGATION AGREEMENT

 

THIS
JOINT LITIGATION AGREEMENT (this “Agreement”) is made
between Walter Industries, Inc., a Delaware corporation (“WLT”),
and Walter Investment Management LLC,
a Delaware limited liability company (“WIMLLC” and, together with WLT,
the “Principals”), and by each of them for their respective subsidiaries
(the “Subsidiary Parties” and, together with the Principals, the “Parties”),
and the Parties’ respective directors, officers, partners, employees, advisors,
affiliates, representatives and agents (“Representatives”), all to the
extent reflected in this Agreement, effective as of                                             ,
2009 (the “Distribution Date”).

 

WHEREAS,
WLT owns all the limited liability company units of WIMLLC;

 

WHEREAS, WLT, JWH Holding Company, LLC, a
Delaware limited liability company (“JWHHC”), WIMLLC and Hanover Capital
Mortgage Holdings, Inc., a Maryland corporation (“Hanover”), are party
to that certain Second Amended and Restated Agreement and Plan of Merger (as
further amended, supplemented, restated or otherwise modified from time to
time, the “Merger Agreement”), pursuant to which in connection with
related transactions, (i) certain assets and businesses of JWHHC will be
acquired by WLT and transferred to WIMLLC, (ii) prior to the Effective
Time on the Closing Date, WLT shall distribute all of the  outstanding limited liability company
interests in WIMLLC to WLT’s stockholders (such time of the distribution, the “Distribution”
or the “Distribution Date”) and (iii) at the Effective Time, WIMLLC
shall merge into Hanover, with Hanover being the Surviving Corporation
following the Merger.  Capitalized terms
used but not defined herein shall have the meaning ascribed to such terms in
the Merger Agreement;

 

WHEREAS,
the Parties have been involved in, or may in the future be involved in, pending
or potential claims and litigation made by third parties unaffiliated with the
Principals, including, without limitation, claims and litigation specifically
referred to herein and in the schedules hereto (collectively referred to as “Litigation”)
that involve or could potentially involve Parties that will not be affiliated
with each other after the Distribution;

 

WHEREAS,
the Parties and their Representatives have developed a substantial amount of
evidence and work product relating to the Litigation and have, prior to the
effective date of the Distribution, engaged in communications that are
protected by the attorney work product, attorney-client, and joint defense
privileges;

 

WHEREAS,
the Parties and their Representatives currently share certain information that
is protected as confidential, or under attorney-client privileges, or as
attorney work product, and the Parties agree that after the Distribution such
information should continue to be treated as confidential, or protected by
attorney work product or attorney-client privileges;

 

1

 

WHEREAS,
the Parties are willing to, and are willing to cause their respective
Representatives to, provide access to such evidence and work product on certain
conditions; and

 

WHEREAS,
the Parties desire to allocate responsibilities for the Litigation as provided
herein and to share insurance coverages and indemnification from third parties
that may be available to the Parties;

 

NOW,
THEREFORE, in consideration of the foregoing premises and of
the mutual agreements and for other good and valuable consideration hereinafter
set forth, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, do hereby agree as follows:

 

1.      Statement
of Intent. The Parties acknowledge that the intent of the Distribution will
be to separate the mortgage lending, mortgage servicing and insurance
businesses of WIMLLC from the homebuilding, coal mining, natural gas and other
businesses of WLT.  The Parties note that such businesses are, and have
historically been, unique and separate businesses, and that it is the intent of
the Parties that the Litigation referred to herein, and any subsequent
Litigation related to any of the businesses of any of the Parties, should be
allocated as much as possible to the type of business out of which the Litigation
arose.  Thus, it is the intent of the Parties that WIMLLC and its
Subsidiary Parties be responsible for all Litigation arising from the mortgage
lending, mortgage servicing and insurance business of WIMLLC, and that WLT and
its Subsidiary Parties be responsible for all Litigation arising from the
homebuilding, coal mining, natural gas and other businesses, including the
business of Cardem Insurance Co. Ltd. (except to the extent such Litigation
relates to and arises from the mortgage lending, mortgage servicing or
insurance businesses of WIMLLC), and that Litigation that relates to both
WIMLLC and WLT businesses shall be allocated and shared as agreed to by the
Principals, or as determined by the Arbitrator as set out below.

 

2.      Allocation
of Responsibility for Litigation and Claims.

 

(a)                                       Schedule
A Litigation.  WLT shall indemnify, defend and hold harmless WIMLLC
and its Subsidiary Parties and its and their Representatives as of and
following the effective time of the Distribution (the “WIMLLC Corporate
Entities”), from and against any costs, expenses and damages assessed as a
result of the Litigation listed on Schedule A hereto.  Such Litigation
shall be referred to herein as the “Schedule A Litigation”.

 

(b)                                      Schedule
B Litigation.  WIMLLC shall indemnify, defend and hold harmless WLT
and its Subsidiary Parties and its and their Representatives as of and
following the effective time of the Distribution (the “WLT Corporate
Entities”), from and against any costs, expenses and damages assessed as a
result of the Litigation listed on Schedule B hereto.  Such Litigation
shall be referred to herein as the “Schedule B Litigation”.

 

(c)                                       Schedule
C Litigation.  The Parties shall share the costs, expenses and damages

 

2

 

assessed as a result of
the Litigation listed on Schedule C hereto, according to the allocations set
out in Schedule C hereto, or, if no allocations have been agreed between the
Principals, then in such amounts as the Principals may agree in the future, or
as their interests in the Litigation may ultimately be decided (the “Allocated
Share”).  Such Litigation shall be referred to herein as the “Schedule
C Litigation”.

 

3.      Future
Litigation.

 

(a)                                       With
respect to future Litigation, as soon as practicable after the identification
of such Litigation by any Party, the Principals and any other relevant Party
shall consult in good faith for the purpose of securing an agreement between
the Principals regarding an appropriate allocation of responsibility for such
Litigation among the Parties in accordance with the statement of intent set
forth in Section 1 of this Agreement.  It is the intent of the
Parties that the responsibility for the Litigation be assumed fully by one
Party, or that the Principals agree to allocate responsibility for such
Litigation among the Parties in the same fashion as envisioned for the Schedule
C Litigation.

 

(b)                                      If
the Principals are unable to allocate responsibility for any Litigation within
a reasonable period of time following identification of such Litigation, but in any event by the earlier to occur
of  (x) the date by which action
must be taken in connection with such Litigation to avoid prejudice to one of
the Parties in connection therewith or (y) the 30th day after
identification of the Litigation, then the Principals may agree that
such allocations shall be as determined by any third party (such as an outside
law firm) who has been granted authority by the Principals to determine such
allocation, or any party may elect to cause any such allocation of
responsibility to be determined by an Arbitrator as described in Section 9
hereof.

 

4.      Fees and
Expenses.

 

(a)                                       Except
as provided herein or otherwise agreed among the Principals, the Parties agree
to pay their own expenses in connection with any Litigation, including
attorneys’ fees and the fees and expenses of their respective affiliates and
agents.

 

(b)                                      WLT
shall be responsible for all out-of-pocket costs and expenses associated with
the Schedule A Litigation, including the costs of depositions, testimony and
discovery imposed on WIMLLC and its Subsidiary Parties and their respective
Representatives. For the avoidance of
doubt, WIMLLC and its Subsidiary Parties shall, and shall cause their
respective Representatives to, bear the costs of their respective internal
legal counsel and other personnel.

 

(c)                                       WIMLLC
shall be responsible for all out-of-pocket costs and expenses associated with
the Schedule B Litigation, including the costs of depositions, 

 

3

 

testimony and discovery
imposed on WLT and its Subsidiary Parties and their respective Representatives.
For the avoidance of
doubt, WLT and its Subsidiary Parties shall, and shall cause their respective
Representatives to, bear the costs of their respective internal legal counsel
and other personnel.

 

(d)                                      Except
as provided on Schedule C, each of the Principals agrees to share the expenses
of the Schedule C Litigation in proportion to their Allocated Share, with each
bearing their own expenses as they are incurred, sharing (in proportion to
their Allocated Share) other more extraordinary expenses (such as expert
witness fees), and then reconciling their expenses incurred for their common
benefit when any Litigation is finally concluded or at such other time as
agreed by the Principals.

 

(e)                                       The
Principals shall regularly discuss the need for payments hereunder, or to
offset the payments incurred by the Subsidiary Parties.  Unless otherwise agreed by the Principals,
with respect to any specific Litigation or series of related Litigations, no
payments hereunder are required until the amount to be paid is greater than
$10,000 (unless the Principals agree on a final settlement of the amounts to be
paid in respect of such Litigation or series of related Litigations under this
Agreement), or until the amount owed to either Principal (including, for this
purpose, its Subsidiary Parties and its and their Representatives) hereunder
exceeds $50,000.  The Principals shall consult with each other at least
once each quarter during the first year following the execution of this
Agreement and semi-annually thereafter regarding any payments required or
proposed to be made hereunder and any proposed modification of the terms of
this Agreement or the schedules hereto.

 

(f)                                           Any
amounts owing hereunder shall, to the extent not paid within 30 days after any
agreement by the Principals regarding payment, bear interest at the Prime Rate
until such amounts are paid in full.  As used herein, “Prime Rate” shall
mean the fluctuating interest rate announced from time to time as published in
the Wall Street Journal as the U.S. Prime Rate.

 

5.    Protection
of Information.

 

(a)                                       For
purposes of this Agreement, the Parties record that they have a common interest
in the Litigation, recognizing that they were under common control and
ownership in connection with prior actions and communications with respect to
the Litigation.

 

(b)                                      The
Parties agree to share evidence and work product in connection with the
Litigation, including with their respective counsel, provided, however, that in
the event of disagreements regarding whether to settle any Litigation, the
Parties shall be free to settle any such Litigation, provided that the work
product, evidence, privileged materials and confidential information retained
by the settling Party shall not be shared with any third parties without the
consent of 

 

4

 

any Party that would have
the right to prevent the disclosure of any such information had the
Distribution not occurred.

 

(c)                                       Each
Party agrees to protect, and shall cause its Representatives to protect, any
work product, evidence, privileged materials and confidential information
related to the Litigation against disclosure as if it were their own
information and to assert the joint litigation privilege as a bar to the
production of any such information.

 

6.    Prior
Coverages and Indemnification.

 

(a)                                       Prior
Coverage

 

(i)                                         With
respect to Litigation or other liabilities against a Party and its
Representatives (such Party, an “Exposed Entity”) that are or may be, in the
reasonable judgment of the Principal that is affiliated with such Exposed
Entity, covered by insurance policies held by an unaffiliated Party or by
indemnification otherwise available to an unaffiliated Party (a “Covered Entity”)
in respect of periods prior to the Distribution Date (“Prior Coverage”), such
Exposed Entity may pursue, or, to the extent possible, such Covered Entity
shall be authorized to pursue, claims in respect of such Litigation or other
liabilities on behalf of the Exposed Entity in the amounts and in accordance
with the terms of such Prior Coverage, provided that such claims relate to
matters that arose on or prior to the Distribution Date. Each Principal
affiliated with a Covered Entity agrees that it will not, and will not permit
any affiliate (including any Covered Entity) to, terminate any Prior Coverage
without the other Principal’s consent.  Promptly upon receipt of the
proceeds of any such Prior Coverage resulting from such claims, the Covered
Entity shall cause such proceeds to be paid to the Exposed Entity; provided
that the amount of such proceeds paid by the Covered Entity to the Exposed
Entity shall be, without duplication, (i) reduced by the amount of any
fees and expenses reasonably incurred, or incurred with the Exposed Entity’s
written consent, by the Covered Entity in pursuit of such claims, (ii) adjusted
in good faith by the Covered Entity to reflect the present value of any increased
fees and expenses associated with continuing to maintain the policy or
indemnity from which the Prior Coverage arises that is attributable to the
pursuit of such claim and (iii) adjusted in good faith by the Covered
Entity to reflect any likely benefit to the Covered Entity attributable to the
pursuit of such claim including, without limitation, any estimated benefits
associated with the satisfaction of a deductible under any policy or indemnity
providing the Prior Coverage.

 

(ii)                                      Any
Covered Entity pursuing a claim for Prior Coverage will, or will cause its
affiliates to, diligently pursue all claims for Prior Coverage at 

 

5

 

the Exposed Entity’s
expense, provided that in no event shall the Covered Entity be obligated to
litigate or pursue any other extraordinary remedies against any insurer or
indemnitor, except as provided in (iii) below.  The Principals agree
to consult in good faith with respect to the pursuit of any claim for Prior
Coverage hereunder.  Each Party shall, and shall cause its Representatives
to, take all reasonable and necessary steps not inconsistent with its or their
own interests to maintain the availability of Prior Coverage to the Parties and
their Representatives.

 

(iii)                               If the Principal
affiliated with an Exposed Entity, in its sole discretion, determines that it
is necessary to pursue litigation or make a claim for Prior Coverage against
any insurer or indemnitor in order to protect its and its affiliates’ and
Representatives’ rights hereunder with respect to any claim, it shall so advise
the Principal affiliated with the applicable Covered Entity, and the Principal
affiliated with the Exposed Entity, the Exposed Entity and their respective
Representatives may pursue such litigation or claim.

 

(c)                                       WIMLLC
Policies

 

WLT shall cause to be transferred all stand-alone
insurance policies applicable to WIMLLC and its subsidiaries, subject to
insurance company approval and agreement to transfer.

 

(d)                                      First
Come/First Served

 

The Parties acknowledge
that the provisions set forth in Section 6(a) hereof could result in
the exhaustion of Prior Coverage policy or indemnity limits by one or a small
number of Exposed Parties as a result of the “first come/first served” nature
of the provision.  With respect to the application of the provisions set
forth in Section 6(a), the Parties agree to, and shall cause their
respective Representatives to, act in good faith and to avoid taking any
actions for the purpose of, or with the intention of, accelerating or delaying
claims payments or losses in order to obtain some advantage vis-à-vis the other
Parties and their Representatives in connection with the Prior Coverage,
including, without limitation, anticipated exhaustion of applicable Prior
Coverage limits and the anticipated costs associated with satisfying Prior
Coverage deductible requirements.  In addition, the Parties shall not, and
shall cause their Representatives not to, enter into any written settlement
agreement with any insurer that has the effect of reducing Prior Coverage
limits or increasing Prior Coverage deductibles, including “tipping basket”
deductibles that would otherwise be potentially available under this Agreement
to any Party and its Representatives without first giving the affected Party at
least thirty (30) days’ advance written notice of its intention to enter into
such settlement accompanied by a copy of the proposed settlement so that the
other Party may have an opportunity to consider the impact of such proposed
settlement on its interests 

 

6

 

and those of its
Representatives.  The Parties agree to, and shall cause their respective
Representatives to, consult with each other and negotiate in good faith about
such impacts.

 

7.    Directors
and Officers Liability Insurance. For the six-year period commencing
immediately after the Distribution Date, WLT shall maintain in effect WLT’s
current directors’ and officers’ liability insurance policies providing
coverage for acts or omissions occurring prior to the Distribution Date with
respect to those Persons who are currently covered by WLT’s directors’ and
officers’ liability insurance policy on terms and at limits no less favorable
to WIMLLC’s current and former directors and officers currently covered by
policies in effect on the Distribution Date; provided that, if WLT’s current
directors’ and officers’ liability insurance expires, is terminated or is
canceled during such six-year period, WLT shall obtain directors’ and officers’
liability insurance covering such acts or omissions with respect to each such
Person on terms and at limits no less favorable to WIMLLC’s directors and
officers currently covered by policies in effect immediately prior to the date
of such expiration, termination or cancellation (the “Existing D&O Policy”); 
provided further, that: (i)  WLT may substitute for the
Existing D&O Policy a policy or policies of comparable coverage, including
a “tail” insurance policy; and (ii) WLT shall not be required to pay
annual premiums for any substitute or “tail” policies in excess of two times
the annual premiums paid for the Existing D&O Policy as of the Distribution
Date (the “Maximum Premium”). 
In the event any future annual premiums for the Existing D&O Policy (or any
substitute policies) exceed the Maximum Premium, WLT shall be entitled to
reduce the amount of coverage of the Existing D&O Policy (or any substitute
or “tail” policies) to the amount of coverage that can be obtained for a
premium equal to the Maximum Premium. This Section is intended to benefit
each of the current and former directors and officers of WIMLLC covered by the
Existing D&O Policy as of the Distribution Date, and shall be enforceable
by each such Person and his or her heirs and representatives.

 

8.    Further
Assurances.

 

(a)                                       Each
Party shall, and shall cause its respective Representatives to (i) cooperate
with each other Party and its Representatives, (ii) use commercially
reasonable efforts to take or cause to be taken all appropriate actions
required of such Party and its Representatives hereunder, (iii) do or
cause to be done all things reasonably necessary or appropriate to effectuate
the provisions and purposes of this Agreement and the transactions contemplated
hereby (including, without limitation, the execution of additional documents or
instruments of any kind and the obtaining of consents that, in each case, may
be reasonably necessary or appropriate in furtherance of the provisions hereof)
and (iv) take all such other actions as may be reasonably requested by
another Party, for itself and its Representatives, from time to time consistent
with and in furtherance of the terms of this Agreement.  Each Party shall,
and shall cause its Representatives to, furnish to the other Parties all information
and documentation as may reasonably be required in the pursuit of any
Litigation or litigation under this Section.  Each Principal shall
regularly, and in any event no less frequently than 

 

7

 

quarterly or as otherwise
agreed by the Principals, consult with the other with respect to any
Litigation, and each Principal shall promptly advise the other as to any
material developments.    Each of the Principals shall take all
action reasonably required to ensure that any former subsidiary shall have
access to the Prior Coverage following any merger or liquidation of either of
the Principals.

 

(b)                                      By
way of enumeration and not of limitation, each Party shall, and shall cause its
Representatives to, upon the reasonable request of any other Party (whether for
itself or on behalf of its Representatives), promptly:  (i)  provide
copies of insurance policies or evidence of the existence of insurance to any
other Party; (ii)  provide information reasonably necessary or helpful to
any other Party and its Representatives (including, without limitation,
currently valued loss runs on an annual basis for all lines of insurance for
five calendar years after the Distribution Date) in connection with any
requesting Party’s efforts to obtain insurance coverage; (iii)  provide
information to any other Party regarding amounts applied to the limits of
policies or self-insured retentions potentially applicable to both, and the
basis for the application of such amounts to such limits, so that each Party
can monitor the exhaustion of such limits; and (iv)  execute further
reasonable assignments or allow any other Party to reasonably pursue reasonable
claims in its name (subject to rights of participation and consultation in
respect of the pursuit of such claims) at the sole expense of the requesting
Party, including by means of arbitration or litigation, to the extent necessary
or helpful to the other Party’s efforts to obtain Prior Coverage to which it or
its Representatives are entitled under this Agreement.

 

(c)                                       Each
Party shall, and shall cause its Representatives to, reimburse each other for
out-of-pocket costs and expenses reasonably incurred in connection with
providing cooperation and assistance to the other pursuant to this Agreement in
accordance with Section 4 of this Agreement.

 

9.    Arbitration.

 

(a)                                       Commencement. 
In the event of any dispute arising out of or in connection with this Agreement
or relating to the subject matter hereof (a “Dispute”), including without
limitation a breach, default, misrepresentation or failure to agree pursuant to
any provision which expressly requires agreement among the Parties, the
disputing Party shall notify the other relevant Parties and the Principals of,
and shall describe in reasonable detail, the Dispute, and shall indicate in
such notice that such disputing Party wishes to resolve such Dispute by
mediation or arbitration.  If the relevant Parties are unable to reach a
mutually acceptable resolution of the Dispute within thirty (30) days of the
receipt of notice by the relevant Parties, any of the relevant Parties may
elect to submit the Dispute for final, binding settlement by arbitration by a single arbitrator
(the “Arbitrator”) by delivering a notice of such election to each of the other
relevant Parties and by requesting from the International Institute for
Conflict Prevention and Resolution (“CPR”), simultaneously with or as soon as 

 

8

 

reasonably practical (and
in no event more than ten (10) days) following delivery of such notice of
election, a list of qualified arbitrators pursuant to paragraph (b) of
this Section 9.

 

(b)                                      Rules of
Arbitration.  Such arbitration shall be presided over by a sole
arbitrator (the “Arbitrator”), appointed by mutual agreement of the relevant
Parties from a list proposed by CPR in response to the request described in
paragraph (a) of this Section 9 of no less than 10 members of the CPR
Panels of Distinguished Neutrals qualified to arbitrate the Dispute.  If the relevant Parties are unable to agree
upon a sole arbitrator prior to the later to occur of (i) the thirtieth
(30th) day after
receipt by the all relevant Parties of the notice of intent to arbitrate and (ii) the
tenth (10th) day after
receipt by the relevant Parties of a proposed list of arbitrators from CPR, the
sole arbitrator shall be chosen by CPR
in accordance with Article 6 of the 2007 CPR Rules for Non-Administered Arbitration (the “Rules”).

 

(c)                                       Arbitration
Procedure.  The place and situs of arbitration shall be Tampa,
Florida, or such other location as the relevant Parties may agree
to.   The arbitration shall
be conducted in accordance with the Rules. The parties agree to
facilitate the arbitration by (i) making available to each other and to
the Arbitrator for inspection and extraction all documents, books and records
as the Arbitrator shall determine to be relevant to the dispute, (ii) making
personnel under their control available to other parties and the Arbitrator and
(iii) observing strictly the time periods established by the Arbitrator
for the submission of evidence and pleadings.  The Arbitrator may impose sanctions in its discretion to enforce
compliance with discovery and other obligations imposed by the Arbitrator and
the Rules.  Once the Arbitrator has been
selected, such arbitration shall be the exclusive manner pursuant to which any
Dispute shall or may be resolved except by mutual agreement of the relevant
Parties.  The Arbitrator shall
have the power to render declaratory judgments in accordance with the Rules, to
grant, temporary, preliminary and permanent relief, including, without
limitation, injunctive relief and specific performance, as well as to award
monetary claims or to render claims that the Arbitrator deems equitable and just,
provided that the Arbitrator shall not have the power to act (x) outside
the prescribed scope of this Agreement, or (y) without providing an
opportunity to each Party to be represented before the Arbitrator.  The
Arbitrator shall endeavor to render final decisions in writing within sixty
(60) days of the selection of the Arbitrator.

 

(d)                                      Arbitration
Award; Enforcement.  The Arbitrator’s final decision shall be
delivered in writing to each of the relevant Parties.  The Arbitrator may
allocate the costs and expenses of the proceedings between the relevant Parties
and shall award interest as the Arbitrator deems appropriate.  The
arbitration judgment shall be final and binding on each of the relevant
Parties.  Judgment on the Arbitrator’s award may be entered in any court
of competent jurisdiction by any of the relevant Parties.

 

9

 

10.                                      Immunities.
This Agreement may not be introduced in any court to establish any fact   of this Agreement except to permit any Party
hereto to secure its rights and the rights of its Representatives under this
Agreement.  The terms of this Agreement have been reached as a settlement
between the Parties and its terms are without prejudice to the ability of any
Party hereto to assert claims against any third party, or defend itself against
claims asserted it by any third party.

 

11.                                      Authority.
Each Principal represents and warrants that it has the right, power and
authority to enter into this Joint Litigation Agreement, and to cause its
affiliates, including, without limitation, its Subsidiary Parties, and its
Representatives to abide by this Agreement to the extent necessary to enforce
the terms hereof as fully as if they were signatories to this Agreement.

 

12.                                      Amendments.
This Agreement may be amended, supplemented, restated or otherwise modified by
the mutual written agreement of the Principals, and all parties who derive
rights under this Agreement shall be bound by such written agreement.  This Agreement may not be discharged except
by performance in accordance with its terms or by a writing signed by the Party
that would otherwise benefit from such performance if properly discharged.

 

13.                                      Assignments.  This Agreement shall be binding on the
successors and assigns of the Principals and their respective Subsidiary
Parties, and each Party hereto
acknowledges and consents to the assignment, by operation of law or otherwise,
of this Agreement to the successor in interest of WIMLLC pursuant to the
Merger, and this Agreement shall remain binding and in full force and effect
following the Merger.

 

14.                                      Third
Party Rights. This Agreement shall not confer any rights or benefit upon
any person or entity other than the Parties and their respective successors and
permitted assigns.

 

15.                                      Legal
Enforceability. If any provision of this Agreement or the application of
any such provision to any person or circumstance shall be declared to be
invalid, unenforceable or void, such declaration shall not have the effect of
invalidating or voiding the remainder of this Agreement, it being the intent
and agreement of the Parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to render it valid, legal and
enforceable while preserving its intent or, if such modification is not
possible, by substituting therefor another provision that is valid, legal and
enforceable and that achieves the same objective.  Any such prohibition or unenforceability in
any jurisdiction shall not invalidate, render unenforceable such provision in
any other jurisdiction.

 

16.                                      Governing
Law. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to contracts made 

 

10

 

and to be performed
therein. Each of the Parties hereby waive personal service of any and all
process upon it and consent that all such service of process may be made by
registered or certified mail (return receipt requested) directed to the
Principal affiliated with such Party at its address set forth on the signature pages below,
and service so made shall be deemed to be completed three (3) days after
the same shall have been so deposited in the U.S. Mails, or on one day
following delivery by email or by telecopy as provided below, with evidence of
delivery, provided that any delivery by email or telecopy shall be followed by
a telephone call alerting the recipient to the notice being so delivered.

 

[Signature pages to
follow]

 

11

 

IN
WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first above written.

 

	
  WALTER INDUSTRIES, INC.

  	
   

  	
  WALTER INVESTMENT
  MANAGEMENT LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  	
  Signature:

  	
   

  
	
  Name:

  	
  Victor P. Patrick

  	
   

  	
  Name:

  	
  Mark J. O’Brien

  
	
  Title:

  	
  Vice Chairman and Chief
  Financial Officer

  	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  
	
  Address:

  	
  4211 W. Boy Scout
  Boulevard

  	
   

  	
  Address:

  	
  4211 W. Boy Scout
  Blvd., 4th Floor

  
	
   

  	
  Tampa, FL 33607

  	
   

  	
   

  	
  Tampa, FL 33607

  
	
  Facsimile:

  	
  813-871-4420

  	
   

  	
  Facsimile:

  	
  813-871-4420

  

 

12

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