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EXHIBIT 10.32
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PURCHASE AND SALE AGREEMENT
BETWEEN
CAPSTEAD INC.
"SELLER"
AND
GMAC MORTGAGE CORPORATION
"PURCHASER"
DATED AS OF
NOVEMBER 30, 1998
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION PAGE
Definitions..................................................................1
ARTICLE II
SALE AND TRANSFER OF SERVICING
2.1 Items to be Sold; Assumption of Servicing Responsibilities ........12
2.2 Covenants Regarding the Sale and Transfer..........................12
2.3 Obligations of Seller..............................................12
2.4 Purchase Price and Terms of Payment................................12
2.5 Computation; Adjustment............................................14
2.6 [RESERVED].........................................................17
2.7 Reconciliation.....................................................17
2.8 Assignment of Hedging Instruments..................................17
2.9 Update of Schedules and Exhibits...................................17
2.10 Acknowledgment.....................................................18
2.11 Certain Matters Relating to Forward Delivery Agreements............18
ARTICLE III
GENERAL REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Organization.......................................................19
3.2 Good Standing......................................................19
3.3 Validity of Agreement..............................................19
3.4 No Conflict........................................................19
3.5 Compliance with Applicable Requirements; No Default................20
3.6 Title to the Servicing and Related Escrow Accounts.................20
3.7 Litigation.........................................................20
3.8 Disclosure of Material Facts.......................................21
3.9 No Accrued Liabilities.............................................21
3.10 Errors and Omissions and Fidelity Bond.............................21
3.11 Non-Recourse Servicing.............................................21
3.12 Settlement Agreement...............................................22
3.13 Financial Condition................................................22
3.14 Qualification as Lender............................................23
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SECTION PAGE
ARTICLE IV
REPRESENTATIONS AND WARRANTIES RELATING TO MORTGAGE LOANS
4.1 Information........................................................24
4.2 Origination and Sale of Mortgage Loans.............................24
4.3 Enforceability.....................................................24
4.4 General Servicing of Mortgage Loans................................24
4.5 Escrow Accounts....................................................25
4.6 No Modifications...................................................25
4.7 Mortgage Insurance.................................................26
4.8 Hazard Insurance...................................................26
4.9 Condition of Mortgaged Property; Casualties........................26
4.10 Lien Priority; Title Insurance.....................................27
4.11 Condemnation; Forfeiture...........................................27
4.12 Custodial Files....................................................27
4.13 FHLMC Notes........................................................27
4.14 Exception Loans....................................................28
4.15 Investor Repurchase and Indemnification............................28
4.16 Fraud..............................................................28
4.17 Soldiers and Sailors...............................................28
4.18 Tax Service Contracts..............................................28
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Organization.......................................................29
5.2 Good Standing......................................................29
5.3 Validity of Agreement..............................................29
5.4 No Conflict........................................................29
5.5 Brokers or Finders.................................................30
5.6 Qualification as Lender............................................30
ARTICLE VI
INVESTOR APPROVALS
6.1 Seller's Obligations...............................................31
6.2 Purchaser's Obligations............................................31
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
7.1 Conditions on Closing Date.........................................32
7.2 Non-satisfaction of Condition......................................34
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SECTION PAGE
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
8.1 Conditions on Closing Date.........................................35
8.2 Non-satisfaction of Condition......................................36
ARTICLE IX
COVENANTS
9.1 Mutual Cooperation.................................................37
9.2 [RESERVED].........................................................37
9.3 Subservicing Agreement.............................................37
9.4 Transfer Costs.....................................................37
9.5 [RESERVED].........................................................38
9.6 Form 1099, Form 1098 - Purchaser's Obligation......................38
9.7 Reimbursement of Advances..........................................38
9.8 Payment of Interest................................................38
9.9 FHLMC Quality Control Program......................................38
9.10 Bulk Transfer Laws Compliance......................................38
9.11 Press Releases.....................................................39
9.12 Certain Notifications..............................................39
9.13 [RESERVED].........................................................39
9.14 Forward Delivery Pricing Adjustment................................39
9.15 Addendum...........................................................40
ARTICLE X
INDEMNIFICATION AND REMEDIES
10.1 Indemnification by Seller..........................................41
10.2 Repurchase; Purchaser's Remedies...................................42
10.3 No Effect of Knowledge.............................................43
10.4 Indemnification by Purchaser.......................................43
10.5 Notice of Claim....................................................43
10.6 Limitation of Liability............................................44
10.7 Right of Offset....................................................44
ARTICLE XI
MISCELLANEOUS
11.1 Costs and Expenses.................................................46
11.2 Confidentiality....................................................46
11.3 Broker's Fees......................................................46
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SECTION PAGE
11.4 No Solicitation....................................................47
11.5 Survival...........................................................47
11.6 Notices............................................................47
11.7 Governing Law......................................................48
11.8 Entire Agreement...................................................48
11.9 Waivers and Amendments.............................................49
11.10 Third Party Beneficiaries..........................................49
11.11 Construction.......................................................49
11.12 Headings...........................................................49
11.13 Counterparts.......................................................49
11.14 Attorneys' Fees....................................................49
11.15 Binding Effect.....................................................50
11.16 No Assignment......................................................50
11.17 Location of Closing................................................50
11.18 Severability of Provisions.........................................50
11.19 Grant of Security Interest.........................................50
LIST OF SCHEDULES AND EXHIBITS ..............................................52
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is dated as of November 30, 1998 by
and between Capstead Inc. ("Seller"), a Delaware corporation with its principal
office located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and
GMAC Mortgage Corporation ("Purchaser"), a Pennsylvania corporation with its
principal office located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
RECITALS
1. Seller is or will be the servicer of certain mortgage loans
identified on the schedule attached hereto as Exhibit A-1, having an aggregate
outstanding principal balance of approximately $37.6 billion as of September 30,
1998 and certain Identified Forward Delivery Loans having an aggregate
outstanding principal balance of approximately $1.7 billion as of September 30,
1998 identified on the schedule attached hereto as Exhibit A-2. Seller will also
be the servicer of certain Unidentified Forward Delivery Loans identified on the
schedule attached hereto as Exhibit A-3 and certain Cutoff Date Refinanced Loans
identified on the schedule attached hereto as Exhibit A-4. The mortgage loans
identified in Exhibits ▇-▇, ▇-▇, ▇-▇ and A-4 are hereinafter referred to
collectively as the "Mortgage Loans." The Mortgage Loans are residential (1-4
family) mortgage loans which (a) have been delivered to FNMA or FHLMC for cash
or to back mortgage-backed securities or participation certificates issued by
FNMA and FHLMC, respectively or (b) are owned by Capstead Mortgage Corporation,
an Affiliate of Seller.
2. Seller desires to sell and Purchaser desires to purchase all right,
title, and interest in and to the Servicing and certain other assets in
accordance with the terms and conditions of this Agreement, subject to Investor
approval. In connection with such sale, Purchaser shall assume certain
liabilities and obligations of Seller as provided in this Agreement.
3. Seller and its Affiliates, Capstead Mortgage Corporation and
Capstead Holdings, Inc. are entering into an asset purchase agreement dated as
of December 9, 1998 with HomeComings Financial Network, Inc. (the "HomeComings
Asset Purchase Agreement"), for the sale of certain assets and the assumption of
certain liabilities and obligations, related to the operation of Seller's
residential mortgage servicing and origination business.
4. Seller and Purchaser are entering into an Addendum as of an even
date with the Agreement for the sale by Seller of the servicing rights related
to certain mortgage loans which are Post-Cutoff Date Refinanced Loans and
Post-Payoff Adjustment Date Refinanced Loans during the period from the Cutoff
Date to the closing of the transaction contemplated by the HomeComings Asset
Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
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ARTICLE I
Definitions
All words or phrases defined in this Article I (except as herein
otherwise expressly provided or unless the context otherwise requires) shall,
for the purposes of this Agreement, have the respective meanings specified in
this Article.
1.1 ADDENDUM means the Addendum to this Agreement dated as of November
30, 1998 and in the form attached hereto as Exhibit J.
1.2 AFFILIATE means, with respect to any party hereto, any person or
entity which controls, is controlled by, or is under common control with, such
party.
1.3 AGREEMENT means this Purchase and Sale Agreement and all Exhibits
and Schedules hereto, all of which are incorporated herein by this reference,
and any written and agreed to amendments or modifications hereto signed by both
Seller and Purchaser.
1.4 ANCILLARY INCOME means all servicing income derived from the
Mortgage Loans other than servicing fees, including without limitation benefits
derived from related Escrow Accounts, late charges, fees, commissions or expense
reimbursements relating to insurance, other incidental fees, and revenues
arising from the cross-selling of services and products.
1.5 APPLICABLE REQUIREMENTS means, with respect to each and every
Mortgage Loan and each and every REO Property (a) all applicable contractual
obligations, including without limitation those contractual obligations
contained (i) in the Mortgage Note, Mortgage and related mortgage loan
documents, and any amendments thereto, (ii) in the Servicing Agreements, (iii)
in policies of mortgage insurance, or (iv) in policies of hazard (including
flood) insurance pertaining to any Mortgaged Property, (b) all applicable
statutes, rules, regulations and ordinances of any federal, state, local and
other governmental or regulatory authority (including without limitation RESPA,
Truth-In-Lending, ECOA, HMDA, fair lending, usury and environmental laws), (c)
all applicable requirements and guidelines of each Investor and each
governmental agency, government-sponsored entity, board, commission,
instrumentality and other governmental body or officer having jurisdiction
(including without limitation FNMA, FHLMC, and their respective selling and/or
servicing guides), (d) all applicable requirements and guidelines of PMI
companies, (e) all applicable judicial and administrative judgments, consent
decrees, Orders, stipulations, awards, settlement agreements, writs and
injunctions, and (f) the reasonable and customary mortgage servicing practices
of prudent mortgage lending institutions that service mortgage loans of the same
type as the Mortgage Loans in the jurisdictions in which the related Mortgaged
Properties are located.
1.6 ARBITRATION PROCEDURES means the procedures set forth in Exhibit M
attached hereto.
1.7 ARM LOAN means a Mortgage Loan that is an adjustable rate loan.
1.8 ASSIGNED CONTRACTS means (i) the Mortgage Loan Servicing Rights
Purchase and Sale Agreements, the Indemnification Agreements and the Forward
Delivery Agreements, in each case identified on Schedule 1.8 hereto, to the
extent the Seller has obtained any required consent to the assignment of the
applicable agreement to Purchaser and (ii) the Servicing Agreement among Seller,
Capstead Mortgage Corporation and CMC Investment Partnership dated July 1, 1994.
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1.9 ASSUMED LIABILITIES means the liabilities identified on Schedule
1.9, as updated as provided in Section 2.9.
1.10 BREACH: a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation or other provision, or
(b) any claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence or circumstance.
1.11 BUSINESS means Seller's residential mortgage loan servicing,
subservicing and origination operations and all assets, whether owned by Seller,
Capstead Holdings, Inc., Capstead Mortgage Corporation or any other affiliate of
Capstead Mortgage Corporation, which are used or held for use in, related to or
associated with, directly or indirectly (in whole or in part), such operations.
1.12 BUSINESS DAY means any day of the week other than a Saturday,
Sunday, or a legal holiday or a bank holiday in the Commonwealth of
Pennsylvania, the State of Iowa, or the State of Texas.
1.13 BUYDOWN LOAN means a Mortgage Loan as to which a specified amount
of interest is paid out of a related Escrow Account in accordance with a related
buydown agreement.
1.14 CAPSTEAD LITIGATION means the class action lawsuit styled ▇▇▇▇▇▇
▇. Netsky, et al. v. Capstead Mortgage Corporation, et al. pending in the U.S.
District Court of the Northern District of Texas, Dallas Division, Civil Action
No. 3-98CV1716-R (the "Netsky action") and any other lawsuits naming Capstead
Mortgage Corporation and/or certain of its officers and directors as defendants,
whether or not consolidated with other such actions, which (i) relate to or
arise out of such lawsuits, (ii) relate to or arise out of the facts or
allegations which are, in whole or in part, the subject of the Netsky action, or
(iii) relate to or arise out of federal or state securities laws or other state
law, common law, or equity actions or claims, including without limitation,
stockholder derivative actions. This definition shall be deemed to include any
action to which the Seller and/or Capstead Holdings, Inc. may be named or
joined.
1.15 CLAIMANT shall have the meaning given in Section 10.5 of the
Agreement.
1.16 CLOSING DATE means December 21, 1998, or such other date as may be
agreed upon by the parties.
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1.17 CLOSING DATE PAYMENT means the portion of the Purchase Price
payable on the Closing Date as specified in Schedule 1.73.
1.18 CONSENT means any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
1.19 CONTRACT means any agreement, contract, commitment, obligation,
promise, arrangement, understanding, or undertaking (whether written or oral and
whether express or implied) that is legally binding.
1.20 CUSTODIAL FILE means the documents required by the applicable
Investor under the Servicing Agreement to be retained by a document custodian
acceptable to Investor, or by Investor.
1.21 CUSTODIAN means Bank of Maryland, or such other document custodian
as may be designated by Purchaser or defined by the Investor.
1.22 CUTOFF DATE means the end of business on November 30, 1998.
1.23 CUTOFF DATE REFINANCED LOAN means a mortgage loan resulting from
the refinancing of a Mortgage Loan by Seller on or prior to the Cutoff Date, as
identified in the schedule to be attached hereto as Exhibit A-4.
1.24 DEFECT means a breach in any respect of any representation or
warranty herein contained with respect to a Mortgage Loan or any failure by
Seller to comply with any covenant herein contained with respect to a Mortgage
Loan which could reasonably be expected to result in a loss or damage to
Purchaser or the imposition of additional servicing burdens with respect to such
Mortgage Loan.
1.25 DELINQUENT LOAN means a Mortgage Loan which, as of the Cutoff
Date, is ninety (90) days or more past due (i.e., payment due September 1, 1998
or earlier has not been made), or is in bankruptcy, in litigation, or in
foreclosure or REO status. The term "IN BANKRUPTCY" shall mean with respect to a
Mortgage Loan that the related Mortgagor has sought relief under or has
otherwise been subjected to the federal bankruptcy laws or any other similar
laws of general application for the relief of debtors through the institution of
appropriate Proceedings, and such Proceedings are continuing, and shall continue
until the related Mortgaged Property is released from the jurisdiction of the
bankruptcy or other court in which the matter is pending, regardless of whether
such Proceeding is dismissed, finally concluded, or otherwise. The term "IN
FORECLOSURE" shall mean, as to any Mortgage Loan, that the first action
necessary to be taken to commence Proceedings in foreclosure or a sale under
power of sale under the law of the state wherein the Mortgage is to be enforced,
has been taken, and such Proceedings are continuing, or should have been taken
in accordance with applicable Investor standards. The term "IN LITIGATION" shall
mean a legal action in foreclosure of a Mortgage Loan, or for a deficiency
thereunder, in which the sale of the Mortgaged Property in foreclosure (whether
by action, power of sale, or otherwise) has been delayed by reason of the
defense of such action by the Mortgagor, or any other action commenced or
pending which involves the Mortgage Loan. The term "REO
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STATUS" shall mean the ownership of real property as a result of foreclosure of
a Mortgage or acquisition of a deed in lieu of foreclosure with respect to a
Mortgaged Property.
1.26 ELECTRONIC DATA FILE means tape(s) containing Mortgage Loan and/or
Servicing information (a) delivered in connection with the offering materials
and Purchaser's due diligence review, and (b) prepared as of each Physical
Transfer Date (as that term is defined in the Subservicing Agreement) for the
related Mortgage Loans.
1.27 ELIGIBLE MORTGAGE LOAN means a Mortgage Loan which is not a
Delinquent Loan.
1.28 ESCROW ACCOUNTS means those accounts established and maintained by
Seller with commercial banking institutions or savings and loan associations
under the provisions of the Servicing Agreements for (i) the deposit and
retention of interest and principal on account of the Mortgage Loans; (ii) the
deposit and retention of all collections of taxes, assessments, ground rents,
hazard and mortgage insurance or comparable items on account of the Mortgage
Loans; and/or (iii) the deposit and retention of buydown funds on account of the
Mortgage Loans, and all other escrow or similar accounts maintained by Seller
with respect to the Mortgage Loans.
1.29 ESCROW AGREEMENT means the Escrow Agreement pertaining to the
administration of the Reserved Funds, in the form attached as Exhibit B hereto.
1.30 ESCROW DEPOSITS means funds held in Escrow Accounts.
1.31 FHA means the Federal Housing Administration of the Department of
Housing and Urban Development of the United States of America and any successor
or assignee thereof.
1.32 FHLMC means the Federal Home Loan Mortgage Corporation and any
successor or assignee thereof.
1.33 FHLMC MORTGAGE LOAN means a Mortgage Loan which has been delivered
to FHLMC for cash or to back participation certificates issued by FHLMC.
1.34 FMHA means the Farmers Home Administration of the United States of
America acting through Rural Housing Service or its successor, the U.S.
Department of Agriculture and any successor or assignee thereof.
1.35 FNMA means the Federal National Mortgage Association and any
successor or assignee thereof.
1.36 FNMA MORTGAGE LOAN means a Mortgage Loan which has been delivered
to FNMA for cash or to back mortgage-backed securities issued by FNMA.
1.37 FORWARD DELIVERY AGREEMENT means an agreement for the purchase and
sale of mortgage loan servicing between Seller and a third-party seller which is
specified on Schedule 1.37 hereto.
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1.38 GOVERNMENTAL AUTHORIZATION means any approval, consent, license,
permit, waiver or other authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
1.39 GOVERNMENTAL BODY means any (a) nation, state, county, city, town,
village, district or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority or any nature (including any governmental agency,
branch, department, official or entity and any court or other tribunal); (d)
multi-national organization or body; or (e) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.
1.40 HAZARDOUS MATERIALS means any substance, chemical, waste, or other
material which is or may be at any time before the Closing Date listed, defined
or otherwise identified as hazardous, toxic or dangerous under applicable law
including, without limitation, asbestos, PCB's, petroleum, petroleum product or
by-product, crude oil, natural gas, natural gas liquids, liquefied natural gas,
or synthetic gas.
1.41 HEDGING INSTRUMENTS means certain hedging instruments maintained
by Seller or an Affiliate to manage interest rate risk pertaining to the
Servicing, as listed on Schedule 2.8 hereto, as such Schedule may be amended as
mutually agreed in writing by Seller and Purchaser.
1.42 HOMECOMINGS ASSET PURCHASE AGREEMENT has the meaning assigned to
such term in the Recitals.
1.43 IDENTIFIED FORWARD DELIVERY LOAN means a Mortgage Loan for which
the related Servicing Rights were sold to Seller on or prior to September 30,
1998 and will be transferred to Seller or Purchaser by a third-party seller
pursuant to a Forward Delivery Agreement, and which is listed on Exhibit A-2
hereto.
1.44 INCLUDED ASSETS means the Escrow Deposits and those assets
identified on Schedule 1.44, as updated as provided in Section 2.9.
1.45 INDEMNIFIABLE CLAIM shall have the meaning given in Section 10.5
of the Agreement.
1.46 INDEMNIFYING PARTY shall have the meaning given in Section 10.5 of
the Agreement.
1.47 INTEREST RATE means the average thirty (30) day rate for high
grade commercial paper (unsecured notes sold through dealers by major
corporations) as published daily in the Wall Street Journal
1.48 INVESTOR(S) means FNMA, FHLMC, and/or Capstead Mortgage
Corporation, as the case may be.
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1.49 INVESTOR TRANSFER DATE means the close of business on the Cutoff
Date.
1.50 KNOWLEDGE OF SELLER means (a) the actual knowledge of the senior
management of Seller, including without limitation, the senior servicing officer
of Seller, at or prior to the date of this Agreement, and/or (b) information
which such officers are presumed to know based on facts, circumstances or
information contained or described at any time prior to the date hereof in the
books, records, files or other documents of Seller.
1.51 LEGAL REQUIREMENT means any federal, state, local, municipal,
foreign, international, multinational or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty.
1.52 LIABILITY means, with respect to any Person, any and all
liabilities, debts or other obligations contingent or otherwise, however imposed
or incurred, at any time, including without limitation (a) its liabilities for
borrowed money or any other indebtedness; (b) its liabilities for the deferred
purchase price of property acquired by such Person, including accounts payable
arising in the ordinary and usual course of business or otherwise; and including
all liabilities created or arising under any conditional sale or other title
retention agreement with respect to any such property; (c) all liabilities
required to be included on its balance sheet in accordance with GAAP (in respect
of capital leases or otherwise); (d) all liabilities for borrowed money secured
by any Lien with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities); and (e) all
liabilities in respect of any Guaranty.
1.53 LIEN means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income or exercise of any other attribute of
ownership.
1.54 LOSSES shall have the meaning given in Section 10.1 of the
Agreement.
1.55 MATERIAL ADVERSE EFFECT means, with respect to any Person, the
Business, or the Purchased Assets, any event, change, occurrence or effect,
direct or indirect, (other than as a result of changes as may affect the
mortgage industry generally and other than financial changes directly associated
with hedging activities) on the business, operations, properties (including
tangible properties), condition (financial or otherwise), assets, obligations or
Liabilities (whether absolute, accrued or contingent) of such Person, and its
respective subsidiaries (in the case of a Person) or on the Business or the
Purchased Assets, as applicable, that has had, or would reasonably be expected
to have a material adverse effect upon such Person, the Business or the
Purchased Assets, as applicable.
1.56 MORTGAGE means a valid and enforceable mortgage, deed of trust, or
other security instrument creating a first lien upon described real property
improved by a single family dwelling which secures a Mortgage Note.
1.57 MORTGAGE LOAN means an individual residential (1-4 family)
mortgage loan which is the subject of the Servicing Agreements and this
Agreement, which shall consist of the
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mortgage loans identified in the schedules attached hereto as Exhibits ▇-▇, ▇-▇,
▇-▇ and A-4 as updated as provided in Section 2.9.
1.58 MORTGAGE LOAN FILE means, with respect to a Mortgage Loan, those
origination and servicing documents, escrow documents, and other documents (as
stored in various media, including but not limited to paper, microfiche, and
electronically stored data) required to be maintained by the servicer of such
Mortgage Loan pursuant to the applicable Servicing Agreement including without
limitation those specified in Exhibit C to this Agreement.
1.59 MORTGAGE NOTE means a written promise to pay a sum of money at a
stated interest rate during a specified term that is secured by a Mortgage along
with any riders thereto.
1.60 MORTGAGED PROPERTY means real property which is subject to a lien
created by a Mortgage as security for the related Mortgage Loan.
1.61 MORTGAGOR means the obligor on a Mortgage Note.
1.62 ORDER means any award, decision, injunction, judgment, order,
ruling, subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator.
1.63 P & I means principal and interest.
1.64 PAYOFF ADJUSTMENT DATE means the 60th day following the Cutoff
Date.
1.65 PAYOFF LOAN means any Mortgage Loan that (a) is not a Delinquent
Loan as of the Cutoff Date; and (b) is paid off within sixty (60) days after the
Cutoff Date.
1.66 PERSON means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or Governmental Body.
1.67 PMI means private mortgage insurance.
1.68 POOL OR POOLS means any pool(s) of Mortgage Loans identified on
the Summary of Pools attached hereto as Exhibit D.
1.69 POST-CUTOFF DATE REFINANCED LOAN means an individual residential
(1-4 family) mortgage loan (a) funded by Seller or any of its Affiliates after
the Cutoff Date or (b) included in the Unclosed Pipeline Listing (as defined in
the HomeComings Asset Purchase Agreement), in either case funded on or before
the Payoff Adjustment Date, the proceeds of which are applied to pay off a
Payoff Loan and for which the related servicing rights are assigned to or
acquired by Purchaser or any of its Affiliates pursuant to this Agreement.
1.70 POST-CUTOFF DATE REFINANCED LOAN CREDIT means, with respect to a
Post-Cutoff Date Refinanced Loan, the applicable percentage of unpaid principal
balance specified in Schedule 1.74(d).
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1.71 POST-PAYOFF ADJUSTMENT DATE REFINANCED LOAN means an individual
residential (1-4 family) mortgage loan funded by Seller or any of its Affiliates
after the Payoff Adjustment Date, the proceeds of which are applied to pay off a
Mortgage Loan and for which the related servicing rights are assigned to or
acquired by Purchaser or any of its Affiliates pursuant to this Agreement. It is
understood that if the closing of the transaction contemplated by the
HomeComings Asset Purchase Agreement occurs on or before the Payoff Adjustment
Date, there will not be any Post-Payoff Adjustment Date Refinanced Loans. It is
further understood that Seller's ability to fund mortgage loans ceases upon the
closing contemplated by the HomeComing Asset Purchase Agreement.
1.72 PROCEEDING means any action, arbitration, audit, hearing,
investigation, inquiry, litigation, suit or appeal (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted or
heard by or before, or otherwise involving, any Governmental Body or arbitrator.
1.73 PURCHASE PRICE means the purchase price for the Purchased Assets
as defined in Schedule 1.73.
1.74 PURCHASE PRICE PERCENTAGE means (a) with respect to each Mortgage
Loan other than an Identified Forward Delivery Loan, an Unidentified Forward
Delivery Loan or a Refinanced Loan, the corresponding percentage stated in
Schedule 1.74(a), (b) with respect to Identified Forward Delivery Loans, the
corresponding percentage stated in Schedule 1.74(b), (c) with respect to
Unidentified Forward Delivery Loans, the purchase price percentage determined
pursuant to the applicable Forward Delivery Agreement as adjusted pursuant to
Section 9.14 and (d) with respect to Cutoff Date Refinanced Loans, the
percentage determined as specified in Schedule 1.74(d). Notwithstanding the
foregoing, for all purposes of this Agreement, the Purchase Price Percentage for
a Delinquent Loan shall be deemed to be zero percent (0%).
1.75 PURCHASED ASSETS means the Servicing Rights, the Included Assets,
the Hedging Instruments and the Assigned Contracts.
1.76 RECOURSE OBLIGATION means, with respect to any Mortgage Loan, any
obligation or liability (actual or contingent) of the servicer of such Mortgage
Loan (a) for losses incurred in connection with the foreclosure or other
disposition of, or other realization or attempt to realize upon the collateral
securing, such Mortgage Loan (including, without limitation, losses relating to
loss mitigation or obtaining deeds in lieu of foreclosure); (b) to repurchase
such Mortgage Loan in the event that the Mortgagor of such Mortgage Loan is in
bankruptcy, in foreclosure or in litigation; or (c) to repurchase such Mortgage
Loan in the event of a delinquency or other payment default thereunder by the
Mortgagor. Notwithstanding the foregoing, a Mortgage Loan shall not be
considered subject to a Recourse Obligation merely because the Servicer retains
a contingent liability to repurchase a Mortgage Loan that is determined to have
been ineligible for sale to the applicable Investor due to a breach of one or
more representations and warranties.
1.77 RELATED AGREEMENT means any other agreement or document referred
to herein,
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executed in connection herewith or contemplated hereby to which Seller and
Purchaser are parties.
1.78 REO PROPERTY means, with respect to a Mortgage Loan, the real
property to which Purchaser has taken ownership as a result of foreclosure of a
Mortgage or acceptance of a deed in lieu of foreclosure with respect to a
Mortgaged Property.
1.79 REPURCHASE PRICE means the repurchase price for certain
repurchased Mortgages Loans as defined in Schedule 1.79.
1.80 RESERVED FUNDS means those funds held in the Reserved Funds Escrow
Account.
1.81 RESERVED FUNDS ESCROW ACCOUNT means the escrow account established
pursuant to the Escrow Agreement.
1.82 SERVICING AGREEMENT means a pool purchase contract or whole loan
sale and servicing contract pursuant to which a Mortgage Loan was originated,
purchased, sold and/or serviced for the benefit of an Investor.
1.83 SERVICING RIGHTS OR SERVICING means the right, title, and interest
in and to the servicing of the Mortgage Loans and the maintenance and servicing
of the Escrow Accounts, along with the right to receive the servicing fee income
and any and all Ancillary Income arising from or connected to any Mortgage Loan.
1.84 SERVICING RIGHTS PURCHASE PRICE has the meaning specified in
Section 2.4.
1.85 SETTLEMENT AGREEMENT means an agreement entered into by Seller in
settlement of class action claims and/or litigation.
1.86 SIGNIFICANT UNDERWRITING DEFICIENCY shall, with respect to a FNMA
Mortgage Loan, have the meaning assigned to it in the FNMA Selling/Servicing
Guides, as amended, and, with respect to FHLMC Mortgage Loan, shall mean that a
FHLMC quality control feedback letter has been issued with respect to the
eligibility of such Mortgage Loan for sale to FHLMC.
1.87 SUBSERVICER means (a) during the term of the Subservicing
Agreement, the Seller, and (b) upon the termination of the Subservicing
Agreement, the subservicer designated by Purchaser.
1.88 SUBSERVICING AGREEMENT means the Subservicing Agreement, dated as
of the date of the Agreement in the form attached hereto as Exhibit L, between
Seller and Purchaser.
1.89 T & I means taxes and insurance.
1.90 THREATENED: a claim, Proceeding, dispute, action or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing),
or if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding,
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dispute, action or other matter is likely to be asserted, commenced, taken or
otherwise pursued in the future.
1.91 UNIDENTIFIED FORWARD DELIVERY LOAN means a Mortgage Loan for which
the related Servicing Rights were sold to Seller between October 1, 1998 and the
Cutoff Date, and which will be transferred to Seller or Purchaser by a third
party seller pursuant to a Forward Delivery Agreement. The Unidentified Forward
Delivery Loans shall be identified on a schedule to be attached to the Agreement
as Exhibit A-3, as updated as provided in Section 2.9.
1.92 VA means the Department of Veterans Affairs of the United States
of America and any successor or assignee thereof.
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ARTICLE II
SALE AND TRANSFER OF SERVICING
2.1 ITEMS TO BE SOLD; ASSUMPTION OF SERVICING RESPONSIBILITIES.
(a) Subject to, and upon the terms and conditions of this Agreement,
Purchaser agrees to purchase from the Seller, and Seller agrees to sell,
transfer, assign and deliver to Purchaser, on the Closing Date, all of Seller's
right, title and interest in and to, including all economic benefit derived
from, the Purchased Assets.
(b) On the Closing Date, Purchaser shall (i) assume and agree to pay or
discharge when due in accordance with their respective terms the Assumed
Liabilities to the extent they become due on or after the Closing Date and (ii)
assume Seller's obligations under the Assigned Contracts to the extent they
become due or performable on or after the Closing Date, except as may be
provided in a mutually agreeable Assignment and Assumption Agreement. Except as
provided in the preceding sentence, Purchaser will not assume or otherwise be
responsible for in any way whatsoever any other duties, obligations or
liabilities of, or claims against, Seller or Seller's shareholders (or any of
their respective agents, officers, directors, trustees, or Affiliates), that
accrue or otherwise relate to the period prior to the Closing Date with respect
to the Servicing Rights or otherwise.
2.2 COVENANTS REGARDING THE SALE AND TRANSFER.
On the Closing Date, Seller will sell, transfer, assign and deliver all
of its right, title, and interest in and to the Servicing Rights and Escrow
Deposits, including without limitation record title and the obligation to
service the Mortgage Loans, to Purchaser. Except as provided herein and as
required under the terms of the Subservicing Agreement, on the Closing Date,
Seller shall cease all servicing responsibilities with regard to the Mortgage
Loans and shall sever its mortgage servicing relationships with the Mortgagors.
2.3 OBLIGATIONS OF SELLER.
Seller covenants and agrees that, Seller shall pay, perform and
discharge all liabilities and obligations relating to ownership of the Servicing
Rights with respect to each Mortgage Loan until the related Investor Transfer
Date.
2.4 PURCHASE PRICE AND TERMS OF PAYMENT.
(a) The purchase price for the Servicing Rights (the "Servicing
Rights Purchase Price") shall be calculated as follows:
(1) The Servicing Rights Purchase Price shall be calculated for
the Mortgage Loans shown on Exhibit ▇-▇, ▇-▇, ▇-▇ and A-4, as
applicable, by multiplying (A) the unpaid principal balance,
as of the
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Cutoff Date, of each Eligible Mortgage Loan listed on such
Exhibits by (B) the corresponding Purchase Price Percentage
for each such Mortgage Loan.
(2) No Purchase Price shall be paid for Servicing Rights
related to Mortgage Loans which are not Eligible Mortgage
Loans as of the Cutoff Date.
(b) The purchase price for the Purchased Assets (the "Purchase
Price") shall be paid as follows:
(1) On the Closing Date, Purchaser shall pay Seller the Closing
Date Payment.
(2) On the Closing Date, Purchaser shall pay into the Reserved
Funds Escrow Account the balance of the Purchase Price.
(3) (A) Within ten (10) Business Days following the Payoff
Adjustment Date (or on such earlier date as such information
may become available using reasonable efforts) Purchaser
shall cause Subservicer to provide to Purchaser and Seller in
an electronic format the schedules of Payoff Loans and
Post-Cutoff Date Refinanced Loans and a statement setting
forth in reasonable detail the calculation of the amount set
forth in Section 2.4(b)(3)(B)(II) below (the "Payoff
Adjustment Factor") which shall include, where appropriate,
an estimate of the Post-Cutoff Date Refinanced Loan Credit
and (B) within five (5) Business Days following Seller's
receipt of such schedules, Seller shall pay to Purchaser an
amount equal to the lesser of (I) $16,000,000 and (II) the
amount, if any, by which (x) the aggregate of the amounts,
computed with respect to each Payoff Loan, equal to (i) the
applicable Purchase Price Percentage with respect to such
Payoff Loan multiplied by (ii) the unpaid principal balance
of such Payoff Loan as of the Cutoff Date, exceeds (y) the
aggregate of the amounts computed or estimated with respect
to each Post-Cutoff Date Refinanced Loan equal to (i) the
Post-Cutoff Date Refinanced Loan Credit for the servicing
rights with respect to such Post-Cutoff Date Refinanced Loan
(as specified in the Addendum) multiplied by (ii) principal
balance at origination of each Post-Cutoff Date Refinanced
Loan. If Seller and Purchaser cannot agree on the amount of
the Payoff Adjustment Factor during the five (5) Business Day
period referred to above, Seller shall pay to Purchaser any
amount payable under this Section 2.4(b)(3) which is not in
dispute, and Seller and Purchaser shall work in good faith
during the next ten (10) Business Days toward
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resolving such disagreement. If a resolution is reached
within such ten (10) Business Day period, then the balance of
the agreed amount shall be calculated as provided above on
the Business Day immediately following the end of such ten
(10) Business Day period and paid to Purchaser, together with
interest thereon at the Interest Rate for the period
commencing with the date on which the five (5) Business Day
Period referred to above ends, through and including the date
on which such payment is made. Unless a mutually agreeable
resolution to such disagreement is reached and the disputed
amount is paid within such ten (10) Business Day period,
Purchaser and Seller shall act in accordance with the
Arbitration Procedures.
(4) The Reserved Funds will be administered in accordance with
the provisions of the Escrow Agreement.
(c) Unless otherwise agreed by the parties, all payments required
hereunder shall be made by bank wire transfer in immediately available
funds.
2.5 COMPUTATION; ADJUSTMENT.
It is understood and agreed that:
(a) All wiring instructions and Purchase Price information necessary
to effect payment of the Purchase Price shall be provided to the
appropriate party at least two Business Days prior to the date of
payment.
(b) If, during the ninety (90) day period following the Closing Date,
information pertaining to any Mortgage Loan or Mortgage Loans used
in computing the payment of the Servicing Rights Purchase Price,
the amount of any Post-Cutoff Date Refinanced Loan Credit or any
computation of such a payment, shall be found to be incorrectly
computed, the party discovering such incorrect computation shall
promptly notify the other. Seller and Purchaser shall cooperate to
resolve any such discrepancies. No later than five (5) Business
Days after the expiration of the ninety (90) day period referred
to in the preceding sentence, Seller and Purchaser shall agree on
an appropriate adjustment to the Servicing Rights Purchase Price,
and an adjusting payment in the amount of any such overpayment or
underpayment, as applicable, shall be made by the appropriate
party, together with interest thereon at the Interest Rate for the
period commencing with the Closing Date through and including the
date on which such payment is made. If Seller and Purchaser cannot
agree on the amount of such adjustment during the five (5)
Business Day period referred to above, to the extent that Seller
and Purchaser have agreed that any adjustment is appropriate,
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then the applicable party shall pay to the other party such amount
which is not in dispute, together with interest thereon at the
Interest Rate for the period commencing with the Closing Date
through and including the date on which such payment is made, and
Seller and Purchaser shall work in good faith during the next ten
(10) Business Days toward resolving such disagreement. If a
resolution is reached within such ten (10) Business Day period,
then the balance of the agreed amount shall be calculated as
provided above on the Business Day immediately following the end
of such ten (10) Business Day period and paid to the appropriate
party, together with interest thereon at the Interest Rate for the
period commencing with the Closing Date through and including the
date on which such payment is made. Unless a mutually agreeable
resolution to such disagreement is reached and the disputed amount
is paid within such ten (10) Business Day period, Purchaser and
Seller shall act in accordance with the Arbitration Procedures.
(c) (i) Within five (5) Business Days following the Closing Date,
Seller will provide Purchaser with its preliminary, good
faith estimate of the Adjustment Amount as defined in Section
2.5(c)(iii) below (such estimate, the "Preliminary Adjustment
Amount"). If the Preliminary Adjustment Amount is positive,
Purchaser shall remit by wire transfer to Seller or its
successor) the Preliminary Adjustment Amount. If the
Preliminary Adjustment Amount is negative, Seller shall remit
by wire transfer to Purchaser the Preliminary Adjustment
Amount, in either case on the sixth (6th) Business Day
following the Closing Date.
(ii) Within ninety (90) calendar days following the Closing Date,
Purchaser shall deliver to Seller true and correct copies of
statements of the Assumed Liabilities and the Included Assets
as of the Closing Date (the "Closing Date Statements"). The
Closing Date Statements shall be in a form substantially
comparable to Schedules 1.9 and 1.44, respectively, attached
hereto (such Schedules, the "Cutoff Date Schedules").
(iii) The "Adjustment Amount" (which may be a positive or negative
number) shall be calculated based on the Closing Date
Statements and shall be an amount equal to (a) the amount of
any increase or decrease in the book value of the Assumed
Liabilities (which may be a positive or negative number, with
a positive number being associated with a decrease in the
book value of the Assumed Liabilities), plus (b) the amount
of any increase or decrease in the book value of the Included
Assets (which may be a positive or
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negative number, with a positive number being associated with
an increase in such book value of the Included Assets), each
for the period between the Cutoff Date and the Closing Date.
For purposes of determining the Adjustment Amount, the Cutoff
Date value of the Assumed Liabilities and the Included Assets
will be the book values set forth in the Cutoff Date
Schedules, and the Closing Date values of the Assumed
Liabilities and the Included Assets will be the book values
set for in the Closing Date Statements. The book value of any
assets and liabilities shall be determined in accordance with
generally accepted accounting principles ("GAAP") and the
reporting requirements of Seller applied on a basis
consistent with past practice.
(iv) The Adjustment Amount shall be calculated by Purchaser, and
Purchaser shall notify Seller of the Adjustment Amount,
within five (5) Business Days of the delivery of the Closing
Date Statements to Purchaser and shall be net of any
Preliminary Adjustment Amount paid. Subject to the following
paragraph, Seller shall have a period of eight (8) Business
Days from the date of notification to review the Adjustment
Amount as determined by Purchaser. If Seller agrees with
Purchaser as to the Adjustment Amount, then (x) if the
Adjustment Amount is positive, Purchaser shall remit by wire
transfer to Seller (or its successor) the Adjustment Amount,
and (y) if the Adjustment Amount is negative, Seller shall
remit by wire transfer to Purchaser the Adjustment Amount, in
either case on the Business Day immediately following the end
of such eight (8) Business Day period together with interest
thereon at the Interest Rate for the period commencing with
the Closing Date through and including the date on which such
payment is made.
(v) If Seller does not agree with the Adjustment Amount
calculated by Purchaser, Seller shall deliver to Purchaser,
within eight (8) Business Days following notification of
Seller by Purchaser of the Adjustment Amount, written notice
containing specific objections (prepared in good faith) to
the Adjustment Amount as determined by Purchaser. If Seller
and Purchaser cannot agree on the calculation of the
Adjustment Amount during the five (5) Business Day period
following Purchaser's receipt of the notice from Seller
referred to in the preceding sentence to the extent that
Seller and Purchaser have agreed as to any portion of the
Adjustment Amount, then the applicable party shall pay to the
other party such amount which is not in dispute, together
with interest thereon at the Interest Rate for the period
commencing with the Closing Date through and including the
date on which
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such payment is made, and Seller and Purchaser shall work in
good faith during the next ten (10) Business Days toward
resolving such disagreement. If a resolution is reached
within such ten (10) Business Day period, then the agreed
Adjustment Amount shall be paid in accordance with clause (x)
or (y) of the immediately preceding paragraph on the Business
Day immediately following the end of such ten (10) Business
Day period together with interest thereon at the Interest
Rate for the period commencing with the Closing Date through
and including the date on which such payment is made.
(vi) Unless a mutually agreeable resolution to such disagreement
is reached and the disputed amount is paid within such ten
(10) Business Day period, Purchaser and Seller shall act in
accordance with the Arbitration Procedures.
2.6 [RESERVED]
2.7 RECONCILIATION.
No later than five (5) Business Days after the Closing Date, Seller
shall fully reconcile on a loan level basis as of the Cutoff Date (i) the
reports generated by Seller's computers with respect to the applicable Escrow
Accounts and advances with the reports generated by Seller's electronic data
processing servicing system; and (ii) the reports of Seller's electronic data
processing servicing system with Investor records and reports for the applicable
Servicing Rights. Seller shall be responsible for any payments necessary to
bring such Escrow Accounts and advances to full reconciliation.
2.8 ASSIGNMENT OF HEDGING INSTRUMENTS.
On the Closing Date, the Hedging Instruments will be assigned to
Purchaser at their agreed upon value as specified in Schedule 2.8.
2.9 UPDATE OF SCHEDULES AND EXHIBITS.
On the Closing Date, Seller shall deliver to Purchaser updated versions
of all Schedules and Exhibits provided for hereunder, updated based on the most
current information available at that time. Within fifteen (15) Business Days
following the Closing Date, Seller shall deliver to Purchaser (a) Exhibits ▇-▇,
▇-▇, ▇-▇ and A-4 updated as of the Cutoff Date to reflect, among other things,
deletions of Mortgage Loans that paid off on or prior to the Cutoff Date; and
(b) all Schedules provided for hereunder (except for the Cutoff Date Schedules),
updated through and including the Closing Date.
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2.10 ACKNOWLEDGMENT.
Contemporaneously with the execution of this Agreement, Seller is
entering into the HomeComings Asset Purchase Agreement to sell its servicing
business and operations. Upon closing of that transaction, Purchaser
acknowledges that Seller will no longer have the people or resources necessary
to perform any post-closing accounting and operational functions and has made
arrangements with HomeComings Financial Network, Inc. ("HomeComings") to perform
such functions. Purchaser agrees to look directly HomeComings for performance of
such functions. However, nothing contained herein shall reduce Seller's
indemnity or other financial obligations contained herein.
2.11 CERTAIN MATTERS RELATING TO FORWARD DELIVERY AGREEMENTS.
If on the Closing Date, Seller is unable to assign to Purchaser a
Forward Delivery Agreement, promptly following the Closing Date, Purchaser and
Seller shall enter into an agreement substantially identical to such Forward
Delivery Agreement to provide for the sale by Seller to Purchaser of servicing
rights acquired by Seller under such Forward Delivery Agreement, simultaneously
with the acquisition thereof by Seller, at a price equal to the price paid
therefor by Seller, subject to adjustment pursuant to Section 9.14.
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ARTICLE III
GENERAL REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement, Seller
represents and warrants, as of the Closing Date and as of each Investor Transfer
Date, as follows:
3.1 ORGANIZATION.
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Seller has all requisite
corporate power and authority to own, lease and operate its properties and
assets in the manner in which such properties and assets are now owned, leased
and operated and to carry on the business in which it is now engaged. Prior to
the date hereof, Seller has delivered to Purchaser true and complete copies of
its Certificate of Incorporation and its by-laws, as currently in effect.
3.2 GOOD STANDING.
To the extent required by applicable law, Seller is qualified to
transact business and is in good standing as a foreign corporation in all
appropriate jurisdictions and to conduct all activities performed with respect
to the origination and servicing of the Mortgage Loans. Schedule 3.2 sets forth
the states in which Seller has qualified. There is no other jurisdiction in
which the ownership, leasing, licensing or use of property or assets by Seller
or the conduct of its Business makes such qualification necessary, and where the
failure to be so qualified would have a material adverse effect on the business
of financial condition of Seller.
3.3 VALIDITY OF AGREEMENT.
Seller has full corporate power and authority to execute and deliver
this Agreement, and any applicable Related Agreement. This Agreement
constitutes, and any Related Agreement, when executed and delivered, will
constitute the valid and binding obligations of Seller enforceable against it in
accordance with its respective terms. The execution, delivery and performance of
this Agreement and any Related Agreement by Seller and consummation of the
transactions contemplated hereby and thereby have been duly authorized by the
board of directors (and if necessary, stockholders) of Seller and any other vote
or corporate consent necessary for due authorization and such execution and
delivery, and the consummation of such transaction, does not require the consent
of any other Person other than such as may be required under the HSR Act and by
the applicable Investors whose approval is required in Order to effectuate the
transaction of Servicing.
3.4 No Conflict.
The execution and delivery of this Agreement and any Related Agreement
by Seller and the performance of its obligations hereunder or thereunder (a) are
not in violation or breach of, and will not conflict with or constitute a
default under, any of the terms of the charter documents
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or by-laws of Seller or any note, debt instrument, security agreement, lease,
deed of trust or mortgage, license, franchise, permit or any other contract
binding upon Seller or upon any of its assets or properties; (b) will not result
in the creation or imposition of any Lien in favor of any third party upon any
of the material assets or properties of Seller (including, without limitation,
any of the Purchased Assets); and (c) will not conflict with or violate any
applicable Legal Requirement of any Governmental Body having jurisdiction over
Seller, or any of the Purchased Assets. The attached Schedule 3.4 contains a
true and complete list of all permits, authorizations and Consents of third
parties required to be obtained by Seller in connection with (i) the execution
and delivery of this Agreement and any applicable Related Agreement by Seller
and the performance of its obligations hereunder or thereunder or (ii) the sale,
transfer and assignment of the Purchased Assets (including, without limitation,
any Consents), and the assumption by Purchaser of the Assumed Liabilities, in
each case in Order to avoid a Breach, default, termination, acceleration or
modification of any Contract included in the foregoing or any Order.
3.5 COMPLIANCE WITH APPLICABLE REQUIREMENTS; NO DEFAULT.
(a) With respect to the Mortgage Loans, Seller has complied in all
material respects with all Applicable Requirements or, prior to the Closing
Date, will have cured any such material non-compliance. Seller has done and
Seller will do no act or thing which may materially and adversely affect the
Servicing. Seller has not received any notice of alleged violations of the
foregoing.
(b) No event has occurred and is continuing which, under the provisions
of such contracts or such other documents or agreements but for the passage of
time or the giving of notice, or both, would constitute an event of default
under any Servicing Agreement, and Seller has not received any notice of default
or other information from any Investor that it has terminated any applicable
Servicing Agreement or that it intends to do so.
(c) To the Knowledge of Seller, there exists no noncompliance by Seller
with Applicable Requirements which would cause the cancellation of any insurance
coverage provided with respect to any Mortgage Loan by any PMI company.
3.6 TITLE TO THE SERVICING AND RELATED ESCROW ACCOUNTS.
Seller is the lawful owner of the Servicing, is custodian of the Escrow
Accounts and has the sole right and authority to transfer the Servicing as
contemplated hereby. The transfer, assignment and delivery of the Servicing and
of the Escrow Accounts in accordance with the terms and conditions of this
Agreement shall vest in Purchaser all rights as servicer, free and clear of any
and all claims, charges, defenses, offsets and encumbrances of any kind or
nature whatsoever, including but not limited to those of Seller. Except as
disclosed in Schedule 3.6 hereto, neither the Mortgage Loans nor the Servicing
Rights have been, and continue to be, hypothecated, assigned, or pledged as
collateral by Seller for any loan or for any other purpose.
3.7 LITIGATION.
Except as disclosed in Schedule 3.7 hereto, and whether or not covered
by insurance, to
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the extent it relates to or is associated with, directly or indirectly (in whole
or in part) the Business, there is no claim, dispute, Proceeding, appeal or, to
the Knowledge of Seller, investigation or inquiry, at law or in equity,
involving Seller, or involving any of the Purchased Assets before any court,
agency, authority, arbitration panel or other Governmental Body (other than
those, if any, with respect to which service of process or similar notice has
not yet been made on Seller), and, to the Knowledge of Seller, none have been
Threatened against Seller. To the Knowledge of Seller, there are no facts which,
if known to shareholders, customers, Governmental Bodies, bondholders or other
investors, mortgage insurance companies, HUD, FHLMC, FNMA or other Persons,
would form the basis of any such claim, dispute, Proceeding or appeal which
would have a Material Adverse Effect on the Business. Except as disclosed in
Schedule 3.7 hereto, Seller is not subject to any settlement agreement, writ,
injunction, decree or other Order (including any consent decree) of any court
agency, authority, arbitration panel or other Governmental Body relating to, or
associated with, directly or indirectly (in whole or in part), the Business or
that would affect the execution or performance of this Agreement or any Related
Agreement or the performance of Seller's obligations hereunder or thereunder.
3.8 DISCLOSURE OF MATERIAL FACTS.
To the Knowledge of Seller, the representations and warranties
contained in Articles III and IV of this Agreement and in the Schedules hereto,
and any other documents or information furnished to Purchaser by or on behalf of
Seller, including, but not limited to any offering memorandum and data tapes, do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in Order to make the statements contained herein and
therein, in the light of the circumstances under which they were made, not
misleading.
3.9 NO ACCRUED LIABILITIES.
There are no accrued liabilities of Seller with respect to any Mortgage
Loan or the related Servicing or circumstances under which such accrued
liabilities will arise against Purchaser as successor to the Servicing, with
respect to occurrences prior to the Closing Date.
3.10 ERRORS AND OMISSIONS AND FIDELITY BOND.
Seller has in full force and effect an errors and omissions policy or
policies and fidelity bond with respect to its servicing operations and a
blanket bond in accordance with Investor requirements.
3.11 NON-RECOURSE SERVICING.
Except as disclosed in Schedule 3.11, the Servicing does not impose a
Recourse Obligation on the Servicer, and Purchaser shall not be responsible to
Seller or any other person for any losses sustained by Investors arising out of
any foreclosure of any Mortgaged Property or the acquisition and subsequent
holding or disposition of such Mortgaged Property, including without limitation
third party expenses such as attorneys' fees and costs, special hazard losses
(including earthquake-related losses), and restoration expenses, except to the
extent that such losses are attributable to Purchaser's failure to perform
Servicing as required by the Servicing
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Agreements after the Closing Date.
3.12 SETTLEMENT AGREEMENT.
Except as disclosed in Schedule 3.7, Seller has not entered into any
Settlement Agreement with respect to class action litigation that will bind
Purchaser as Servicer of the Mortgage Loans or otherwise materially and
adversely affect the Servicing.
3.13 FINANCIAL CONDITION.
(a) Seller is solvent; and no bankruptcy, reorganization, insolvency
or similar Proceeding with respect to Seller has been initiated or is presently
planned;
(b) Seller has received reasonably equivalent value for the Purchased
Assets from Purchaser;
(c) The transactions contemplated by this Agreement and the Related
Agreements are not being entered into:
(i) with any intent to hinder, delay or defraud any Person to
which Seller was or will become indebted on or after the
Closing Date;
(ii) while Seller was insolvent, nor will the consummation of
such contemplated transactions render Seller insolvent;
(iii) at a time when or under circumstances where Seller was
engaged in Business or a transaction, for which any
property remaining with the transferor would constitute
unreasonably small capital; or
(iv) at a time when or under circumstances where Seller intended
to incur, or believed that it would incur, Liabilities that
would be beyond the ability of Seller to pay as such
Liabilities matured.
(d) To the Knowledge of Seller, the Purchaser is not a creditor of
Seller and the transactions contemplated by this Agreement and the Related
Agreements are not being made on account of or in satisfaction of any claim held
by the Purchaser, other than such claim or claims that might arise or have
arisen in connection with the execution of this Agreement or any Related
Agreement; and
(e) Except as set forth in Schedule 3.13(e), since November 30, 1997,
there have been no transfers, sales or assignments between or among Seller and
its Affiliates with respect to any of the Purchased Assets or Assumed
Obligations. Each such sale, transfer or assignment set forth on Schedule
3.13(e) was for consideration at least equal to the fair value of such asset or
property.
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3.14 QUALIFICATION AS LENDER.
Seller is approved by the U.S. Department of Housing and Urban
Development (HUD) as a lender and servicer of mortgage loans and meets all
applicable HUD regulations so as to be entitled to originate and service
mortgage loans sold to or insured by HUD. Seller is also an approved servicer of
mortgage loans to the Federal Home Loan Mortgage Corporation (FHLMC) and the
Federal National Mortgage Association (FNMA) and meets all applicable FHLMC and
FNMA guidelines so as to be entitled to service mortgage loans sold to FHLMC and
FNMA. In addition Seller is in good standing and eligible to sell mortgage loans
to each of FHLMC and FNMA. Seller is in good standing and is eligible as a
mortgage lender and servicer under applicable rules, regulations and procedures
promulgated by each of the mortgage participation or sale of mortgage-backed
bond and pass-through certificate programs for which Seller originates and
services mortgage loans.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES RELATING TO MORTGAGE LOANS
As further inducement to Purchaser to enter into this Agreement, Seller
represents and warrants to Purchaser as of the Closing Date and as of each
Investor Transfer Date, with respect to each Mortgage Loan, as follows:
4.1 INFORMATION.
(a) All information contained in each Mortgage Loan File, and in any
Electronic Data File, with regard to loan origination and servicing activity is
complete and accurate in all material respects, and all monies received with
respect to each Mortgage Loan have been properly accounted for and applied.
Except as disclosed on Schedule 4.1 hereto, each Mortgage Loan File is complete
in all material respects with regard to origination and servicing activity.
(b) The amount of the unpaid balance for each Mortgage Loan which is
reflected on Exhibit A-1, Exhibit ▇-▇, ▇▇▇▇▇▇▇ ▇-▇ or Exhibit A-4 is true and
correct as of the date of such Exhibit.
4.2 ORIGINATION AND SALE OF MORTGAGE LOANS.
(a) Each Mortgage Loan has been originated, serviced and/or sold in
accordance, in all material respects, with Applicable Requirements, including
without limitation, applicable state or federal laws, rules, or regulations
pertaining to consumer credit, truth-in-lending and usury.
(b) The selling and origination representations and warranties made to
Investors under the Servicing Agreements are true and correct in all material
respects as of the date made.
(c) The full original principal amount of each Mortgage Note listed
has been advanced to the Mortgagor.
4.3 ENFORCEABILITY.
Each Mortgage Note and each Mortgage has been duly executed by the
appropriate obligor and each is a valid and enforceable document, subject only
to applicable antideficiency and bankruptcy statutes and to application of the
rules of equity, and there are no defenses, setoffs or counterclaims against any
Mortgage Loan.
4.4 GENERAL SERVICING OF MORTGAGE LOANS.
(a) Each Mortgage Loan has been serviced in accordance with Applicable
Requirements in all material respects.
(b) Seller has not taken any action or failed to take any action which
might cause the
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cancellation of or otherwise affect any of the insurance contracts pertaining to
Servicing of a Mortgage Loan (including without limitation PMI) or which might
otherwise materially and adversely affect the Servicing. To the Knowledge of
Seller, no prior servicer has taken any action or failed to take any action
which might cause the cancellation of or otherwise affect any of the insurance
contracts.
(c) None of the Servicing Agreements contains, in light of common
industry practices as of the Closing Date, any unusual or burdensome servicing
obligations with respect to the Servicing Rights, or contains provisions which
vary from published Applicable Requirements of the Investor, and no waivers with
respect to any published or unpublished Applicable Requirements have been
obtained which adversely affect the credit quality of any Mortgage Loan.
4.5 ESCROW ACCOUNTS.
(a) All Escrow Accounts required by Applicable Requirements are
maintained in accordance with such Applicable Requirements. Except as to
payments which are past due under the Mortgage Loan, all Escrow Account
balances required by Applicable Requirements and paid to Seller for the account
of the Mortgagor and Seller are on deposit in the appropriate Escrow Accounts.
(b) All payments for taxes, assessments, ground rents, mortgage
insurance, hazard and flood insurance or other payments made from any related T
& I Escrow Account have been made on a timely basis, and Seller has paid to the
Mortgagor interest on Escrow Deposits only to the extent such payment is
required by Applicable Requirements. Seller shall have properly conducted an
escrow analysis for each Mortgage Loan for which a T & I Escrow Account is
required by Applicable Requirements within the twelve (12) month period
immediately preceding the Closing Date. All books and records with respect to
each such Mortgage Loan shall be in good condition and shall have been adjusted
to reflect properly the results of the escrow analysis.
(c) With respect to any Mortgage Loan for which a negative escrow
balance existed prior to the Closing Date, Seller has performed an escrow
analysis on such Mortgage Loan for the purpose of correcting the negative escrow
balance, and has adjusted the related monthly escrow payment on Seller's
servicing system as a result of such analysis.
(d) Where applicable, Seller has notified each Mortgagor, in
accordance with Applicable Requirements, as to any payment adjustments which
resulted from an escrow analysis. Seller shall provide Purchaser with copies of
any notices and analyses prepared in accordance with subsection 4.5(b) above.
(e) Every Escrow Account established with respect to a Buydown Loan
has been fully funded by Seller, and not discounted to present value or
otherwise.
4.6 NO MODIFICATIONS.
Except with respect to partial releases, actions required by a divorce
decree, assumptions,
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or as otherwise permitted under Applicable Requirements, (a) the terms of each
Mortgage Note and Mortgage have not been modified by Seller, (b) no party
thereto has been released in whole or in part by Seller and (c) no part of the
Mortgaged Property has been released by Seller.
4.7 MORTGAGE INSURANCE.
As required by the applicable Investor, the Mortgage Loans are validly
insured by mortgage insurance, and all premiums or other charges due in
connection with such insurance have been paid. To the Knowledge of Seller, there
has been no act or omission which would or may invalidate any such insurance
with respect to Purchaser. There are no defenses, counterclaims or rights of
setoff against Purchaser affecting the validity or enforceability of any
mortgage insurance with respect to a Mortgage Loan.
4.8 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 the lesser of (i) the outstanding principal balance of the
Mortgage Loan or (ii) the full insurable value of improvements, but in no event
less than the amount required under Applicable Requirements. 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 lesser of (i) the outstanding principal balance of the
applicable Mortgage Loan, or (ii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973, as amended.
4.9 CONDITION OF MORTGAGED PROPERTY; CASUALTIES.
(a) To the Knowledge of Seller, there exists no damage to any
Mortgaged Property from fire, windstorm, earthquake, other casualty,
environmental hazard, or any other circumstances or conditions that would cause
the related Mortgage Loan to become delinquent or otherwise materially and
adversely affect the value or marketability of such Mortgage Loan or related
Mortgaged Property. 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
be diminished materially from its value prior to such casualty loss.
(b) To the Knowledge of Seller, 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, exclusive of contents, is greater
than the net recovery from the fire insurance carrier. To the Knowledge of
Seller, 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. To the Knowledge of Seller, unless
such insurance proceeds have been used to reduce the Mortgage Loan balance, all
damage with respect to which casualty insurance proceeds have
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been received by or through Seller has been properly repaired or is in the
process of being repaired with such proceeds.
(c) To the Knowledge of Seller, (i) neither Seller nor any prior
servicer is or 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 (ii) no presence, release, Threatened release, discharge, spillage or
migration of Hazardous Material in violation of existing Applicable
Requirements, is occurring or has occurred on or from any such Mortgaged
Property.
4.10 LIEN PRIORITY; TITLE INSURANCE.
If required by Applicable Requirements, 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 has not been modified, and that 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 and except for easements
and restrictions of record identified in such title policy.
4.11 CONDEMNATION; FORFEITURE.
Except as disclosed in Schedule 4.11 hereto, to the Knowledge of
Seller, no Mortgaged Property has been or will be subject to an action seeking
condemnation or forfeiture of such Mortgaged Property.
4.12 CUSTODIAL FILES.
Except as disclosed in Schedule 4.12 hereto, the Custodial Files for
each Mortgage Loan contain all items required by the applicable Investor to be
contained therein, including in the case of FNMA Mortgage Loans and FHLMC
Mortgage Loans, if applicable, all items required for the certification of the
related Pool. Except as disclosed in Schedule 4.12 hereto, all Pools relating to
FNMA Mortgage Loans or FHLMC Mortgage Loans have been certified in accordance
with, and the securities backed by such Pools are issued on uniform documents
promulgated in, the applicable FNMA or FHLMC Guide without any material
deviation therefrom. Except as disclosed in Schedule 4.12 hereto, Pools shall
be, as of the related Investor Transfer Date, eligible for recertification by
Custodian, and Seller will be responsible for costs incurred with respect to the
cure of any deficiencies, existing as of such related Investor Transfer Date,
necessary for recertification. Pool balances relating to FNMA Mortgage Loans or
FHLMC Mortgage Loans have been reconciled. The principal balances outstanding
and owing on the Mortgage Loans in each Pool relating to FNMA Mortgage Loans or
FHLMC Mortgage Loans equal or exceed the amounts owing to the security holders
of such Pool.
4.13 FHLMC NOTES.
Subject to Applicable Requirements, original FHLMC Mortgage Notes are
held by
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FHLMC or Seller's custodian.
4.14 EXCEPTION LOANS.
Except as disclosed in Schedule 4.14 hereto, no Mortgage Loan is (a) a
VA guaranteed loan, (b) insured under the National Housing Act, (c) subject to a
bi-weekly payment plan, (d) secured by manufactured housing that is not affixed
to a permanent structure, (e) a reverse mortgage loan, (f) a graduated payment
loan that is still in the adjustment period of loan, (g) a housing authority
loan, or (h) an FmHA loan.
4.15 INVESTOR REPURCHASE AND INDEMNIFICATION.
Except as disclosed in Schedule 4.15 hereto, no Mortgage Loan is
subject to (a) a pending or potential request (including initial inquiries) for
either repurchase or indemnification by an Investor; (b) an Investor
indemnification agreement, and/or (c) an Investor determination of Significant
Underwriting Deficiency.
4.16 FRAUD.
To the Knowledge of Seller, no fraudulent action, error, omission,
misrepresentation, negligence, or similar occurrence with respect to a Mortgage
Loan has taken place on the part of any 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
Property.
4.17 SOLDIERS AND SAILORS.
Except as disclosed in Schedule 4.17 hereto, Seller has not received
notice from any Mortgagor or other party with respect to a Mortgage Loan 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.
4.18 TAX SERVICE CONTRACTS.
Each Mortgage Loan is currently covered by a tax service contract and
the applicable tax service has a valid tax identification/parcel number
therefor.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement, Purchaser
represents and warrants, as of the Closing Date and as of each Investor Transfer
Date, as follows:
5.1 ORGANIZATION.
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania.
5.2 GOOD STANDING.
To the extent required by applicable law, Purchaser is qualified to
transact business and is in good standing as a foreign corporation in all
appropriate jurisdictions and to conduct all activities to be performed with
respect to the servicing of the Mortgage Loans.
5.3 VALIDITY OF AGREEMENT.
Purchaser has full corporate power and authority to execute this
Agreement and any applicable Related Agreement and to perform its obligations
hereunder and thereunder. This Agreement constitutes, and any Related Agreement
to which Purchaser is a party, when executed and delivered, will constitute the
valid and binding obligation of Purchaser enforceable against it in accordance
with its terms. The execution and delivery of this Agreement and any applicable
Related Agreement by Purchaser, and the consummation of such transactions do not
require the consent, approval or authorization of any other person, public
authority or other entity, other than the Board of Directors of GMAC Mortgage
Corporation, GMAC Mortgage Group, Inc., General Motors Acceptance Corporation,
and General Motors Corporation and such as may be required under the HSR Act,
subject to obtaining the approval of the applicable Investor to the transfer of
the Servicing.
5.4 NO CONFLICT.
The execution and delivery of this Agreement and any Related Agreement
by Purchaser and the performance of its obligations hereunder and thereunder are
not in violation or breach of, and will not conflict with or constitute a
default under, any of the terms of its Articles of Incorporation or bylaws (each
as amended to date) or any note, debt instrument, security agreement, lease,
deed of trust or mortgage, license, franchise, permit or any other contract,
agreement or commitment binding upon Purchaser or any of its assets or
properties subject to obtaining the approval of the applicable Investor to the
transfer of the Servicing; and will not result in the creation or imposition of
any lien, encumbrance, equity or restriction in favor of any third party upon
any of the assets or properties of Purchaser; or conflict with or violate any
applicable law, rule, regulation, judgment, Order or decree of any government,
governmental instrumentality or court having jurisdiction over Purchaser or its
assets or properties of Purchaser.
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5.5 BROKERS OR FINDERS.
Purchaser has not incurred, nor will it incur, directly or indirectly,
any liability for brokerage or finders fees or agents commissions or any similar
charges in connection with this Agreement or the transactions contemplated
hereby, except for fees to Countrywide Capital Markets, which fees shall be the
sole responsibility of Purchaser.
5.6 QUALIFICATION AS LENDER.
Purchaser is approved by the U.S. Department of Housing and Urban
Development (HUD) as a lender and servicer of mortgage loans and meets all
applicable HUD regulations so as to be entitled to originate and service
mortgage loans sold to or insured by HUD. Purchaser is also an approved servicer
of mortgage loans to the Federal Home Loan Mortgage Corporation (FHLMC) and the
Federal National Mortgage Association (FNMA) and meets all applicable FHLMC and
FNMA guidelines so as to be entitled to service mortgage loans sold to FHLMC and
FNMA. In addition Purchaser is in good standing and eligible to sell mortgage
loans to each of FHLMC and FNMA.
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ARTICLE VI
APPROVALS
6.1 SELLER'S OBLIGATIONS.
(a) Seller shall request and shall do all things appropriate to secure
the approval of the Investors to transfer the Servicing Rights to Purchaser on
the Investor Transfer Date.
(b) Seller shall satisfy all Investor requirements applicable to
Seller to transfer effectively the Servicing Rights from Seller to Purchaser.
(c) With respect to each Mortgage Loan, Seller will file for the
period through and including the Cutoff Date all required reports including but
not limited to reports to all governmental agencies having jurisdiction over the
Servicing and all appropriate PMI companies.
6.2 PURCHASER'S OBLIGATIONS.
Purchaser shall cooperate with and assist Seller in obtaining the
approval of the Investors, and shall provide all financial and other information
required by the Investors to be furnished by a transferee of servicing for
approval of a transfer of servicing.
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
7.1 CONDITIONS ON CLOSING DATE.
The obligations of Purchaser hereunder on the Closing Date shall be
subject to satisfaction of each of the following conditions, except as Purchaser
may waive the same in writing in accordance with Section 11.6 of the Agreement:
(a) Representations. The representations and warranties made by
Seller in this Agreement shall continue to be true and correct in all material
respects.
(b) Compliance with this Agreement. All of the terms,
covenants, and conditions of this Agreement required to be complied with and
performed by Seller at or prior to the Closing Date shall have been duly
complied with and performed in all material respects.
(c) Additional Documentation. Purchaser and Seller shall have
approved and accepted any and all documentation which may be reasonably required
to effectuate the sale and assignment of Servicing to Purchaser.
(d) Corporate Resolution. A Secretary's Certificate of
Seller, together with a corporate resolution approving the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, in form and substance acceptable to Purchaser, shall be delivered to
Purchaser no later than the Closing Date.
(e)Opinion. An Opinion of Counsel of Seller in the form
attached as Exhibit E to this Agreement, shall be delivered to Purchaser
no later than the Closing Date.
(f) Guaranty. A Guaranty executed by Capstead Holdings, Inc., a
Delaware corporation and Capstead Mortgage Corporation, a Maryland corporation,
in the form attached as Exhibit F to this Agreement, shall be delivered to
Purchaser no later than the Closing Date.
(g) Officer's Certificate. An Officer's Certificate of a
senior officer of the Seller in the form attached as Exhibit G to this
Agreement, shall be delivered to Purchaser no later than the Closing Date.
(h) UCC Search Results. In the event any UCC financing
statement obtained by Purchaser shows Seller (or any Affiliate of Seller) as
Debtor and refers or relates to, in the opinion of Purchaser and its counsel,
any of the Seller's Servicing Rights or Escrow Accounts, Seller shall obtain
from the Secured Party shown on such UCC financing statements and deliver to
Purchaser on or before the Closing Date (i) a release or termination of such UCC
financing statements in a form acceptable to Purchaser and the applicable filing
office or (ii) a written agreement, in form and substance acceptable to
Purchaser, to the effect that such
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Secured Party releases any right, title and interest it may have in the
Servicing Rights and/or the Escrow Accounts.
(i) Material Adverse Effect. From September 30, 1998 to the
Closing Date, there shall have been no Material Adverse Effect with respect to
the Business, and there shall not have been any occurrence, circumstance or
combination thereof (whether arising heretofore or hereafter), including,
without limitation, pending Proceedings or, to the Knowledge of Seller,
Threatened Proceedings which could have a Material Adverse Effect with respect
to the Business either before or after the Closing Date.
(j) No Proceedings. Immediately prior to the Closing Date,
there shall (a) have been no Order issued or any other action taken by any
Governmental Body, restraining, enjoining, otherwise prohibiting the
transactions contemplated under this Agreement or the HomeComings Asset Purchase
Agreement or that would prevent, delay, make illegal or otherwise materially
interfere with or materially affect the ability of Seller to perform its
obligations under this Agreement (including, without limitation, paying claims
made under Article X); and (b) be no Proceeding pending or Threatened with
respect to Seller or Purchaser, which, if decided adversely to such party would
have a Material Adverse Effect with respect to Seller, the Business, any of the
Purchased Assets or the right of Purchaser to purchase or retain the Purchased
Assets or Seller's ability to continue the operations of the Business and which,
in good faith judgment of Purchaser would make the consummation of this
Agreement inadvisable; provided, however, that the foregoing condition shall not
apply to the Capstead Litigation pending on the date of this Agreement so long
as no further event shall have occurred with respect to such litigation after
the date of this Agreement that would fall within the matters described in the
preceding clauses (a) and (b).
(k) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇.
(i) Seller and its parent shall prepare and
file, and shall in all respects cooperate with
Purchaser and its parent in the preparation and filing
of, any documents required in connection with providing
notification to the Federal Trade Commission ("FTC")
and the Antitrust Division of the Department of Justice
of the transactions contemplated hereunder, and shall
respond, or cooperate in responding, to any inquiry
made by either with respect to such transactions; and
(ii) Any waiting period following such a filing shall
have expired without governmental action or shall be
the subject of early termination by FTC.
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(l) Limited Power of Attorney. A Limited Power of Attorney
executed by Seller, in the form attached as Exhibit H to this Agreement, shall
be delivered to Purchaser no later than the Closing Date.
(m) [RESERVED]
(n) Right of First Refusal. Any and all rights of first
refusal or similar rights pertaining to any or all of the Servicing Rights under
any Assigned Contract or other agreement under which Seller is subject, shall
have been terminated, released, refused, or, in some other fashion satisfactory
to Purchaser, rendered of no further force or effect, at the cost of Seller.
Notwithstanding anything to the contrary contained in this Agreement,
non-satisfaction of the condition stated in this Section 7.1(o) shall result in
exclusion from the sale and transfer of the affected Servicing, but shall not,
by itself, constitute grounds for termination of the Agreement.
(o) UCC-1 Financing Statement.Not later than the Closing
Date, Seller shall deliver to Purchaser satisfactory evidence that a UCC-1
Financing Statement in form and substance acceptable to Purchaser has been filed
in all requisite jurisdictions under applicable law, which Financing Statement
shall have the effect of perfecting any security interest of Purchaser in
general intangibles including without limitation the Servicing Rights.
(p) FNMA/FHLMC Approvals.
(i) Delivery by Seller to Purchaser of written
approval from FNMA or FHLMC, as applicable, for the
transfer of the applicable Servicing Rights from Seller
to Purchaser prior to the Closing Date; and
(ii) Acceptance by Purchaser of any and all
conditions or restrictions which may be imposed by
FNMA and/or FHLMC on the sale and assignment of
Servicing Rights by Seller to Purchaser.
7.2 NON-SATISFACTION OF CONDITION.
In the event any of the foregoing conditions have not been satisfied,
or have become incapable of being satisfied by the Closing Date, Purchaser may,
upon written notice to Seller, terminate this Agreement.
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ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
8.1 CONDITIONS ON CLOSING DATE.
The obligations of Seller hereunder on the Closing Date shall be
subject to satisfaction of each of the following conditions, except as Seller
may waive the same in writing in accordance with Section 11.6 of the Agreement:
(a) Representations. The representations and warranties made
by Purchaser in this Agreement shall continue to be true and correct in all
material respects.
(b) Compliance with this Agreement. All of the terms,
covenants, and conditions of this Agreement required to be complied with and
performed by Purchaser at or prior to the Closing Date shall have been duly
complied with and performed in all material respects.
(c) Additional Documentation. Purchaser and Seller shall
have approved and accepted any and all documentation which may be reasonably
required to effectuate the sale and assignment of Servicing to Purchaser.
(d) Corporate Resolution. A Secretary's Certificate of
Purchaser, together with a corporate resolution approving the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, in form and substance acceptable to Seller, shall be delivered to Seller
no later than the Closing Date.
(e) Opinion. An Opinion of Counsel of Purchaser in the form
attached as Exhibit I to this Agreement, shall be delivered to Seller no later
than the Closing Date.
(f) No Proceedings. Immediately prior to the Closing Date,
there shall have been no Order issued or any other action taken by any
Governmental Body, restraining, enjoining, otherwise prohibiting the
transactions contemplated under this Agreement or the HomeComings Asset Purchase
Agreement or that would prevent, delay, make illegal or otherwise materially
interfere with or materially affect the ability of Seller to perform its
obligations under this Agreement (including, without limitation, paying claims
made under Article X).
(g) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇.
(i) Purchaser and its parent shall prepare and
file, and shall in all respects cooperate with
Seller and its parent in the preparation and
filing of, any documents required in connection
with providing notification to the Federal Trade
Commission ("FTC") and the Antitrust Division of
the Department of Justice of the transactions
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contemplated hereunder, and shall respond, or
cooperate in responding, to any inquiry made by
either with respect to such transactions; and
(ii) Any waiting period following such a filing
shall have expired without governmental action or
shall be the subject of early termination by FTC.
(h) FNMA/FHLMC Approvals.
(i) Delivery by Seller to Purchaser of written
approval from FNMA or FHLMC, as applicable, for
the transfer of the applicable Servicing Rights
from Seller to Purchaser prior to the Closing
Date; and
(ii) Acceptance by Seller of any and all conditions
or restrictions which may be imposed by FNMA
and/or FHLMC on the sale and assignment of
Servicing Rights by Seller to Purchaser.
8.2 NON-SATISFACTION OF CONDITION.
In the event any of the foregoing conditions have not been satisfied,
or have been incapable of being satisfied by the Closing Date, Seller may, upon
written notice to Purchaser, terminate this Agreement.
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ARTICLE IX
COVENANTS
9.1 MUTUAL COOPERATION.
To the extent possible, each of the parties hereto shall cooperate and
assist the other, as requested, in carrying out the other's covenants,
agreements, duties and responsibilities under this Agreement and the Related
Agreements, and in connection therewith, shall from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
all such additional instruments, assignments, endorsements, papers, documents
and instruments as may be necessary and appropriate to further express the
intention, or to facilitate the performance, of this Agreement during the term
hereof. The parties agree to use commercially reasonable efforts to effectuate
the transfer of Servicing contemplated herein and in the Subservicing Agreement
in accordance with MBA-approved industry standards for servicing transfers, and
with Investor requirements for the transfer of servicing. In addition, the
parties will reasonably cooperate with each other to resolve issues which may
arise in connection with the Mortgage Loans or related Servicing Rights after
the Closing Date. Purchaser shall, in its reasonable discretion and at Seller's
sole cost and expense, take such actions as Seller may reasonably request with
respect to any Mortgage Loan which may become the subject of an Indemnifiable
Claim.
9.2 [RESERVED.]
9.3 SUBSERVICING AGREEMENT.
Purchaser and Seller shall, on the date of the Agreement, enter into
the Subservicing Agreement.
9.4 TRANSFER COSTS.
Purchaser or its Affiliate shall pay all costs associated with the
transfer of the Servicing to Purchaser pursuant to the Agreement and the
Subservicing Agreement, including without limitation, (a) costs of securing
Investor approval, and of any transfer fees due Investors; (b) custodian fees
for each Mortgage Loan for the period commencing with the day after the related
Investor Transfer Date through the date the related Custodial File is
transferred to Custodian; (c) costs related to preparing and recording
assignments of Mortgage Loans in connection with the transfer of Servicing; (d)
costs of transfer of each Custodial File to Custodian; (e) any costs associated
with the Seller's obligation to complete the automated transfer of Servicing to
Purchaser, including but not limited to Seller's data processing costs with
respect to preparation of the Electronic Data File; (f) costs associated with
the shipment and delivery of Mortgage Loan Files and information to Purchaser,
and any conversions of image data with respect to the Mortgage Loans, and (g)
costs associated with preparation and submission by Seller of transfer
notifications to hazard/flood carriers, PMI carriers, Pool insurers, tax
authorities and tax service
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companies. Notwithstanding anything to the contrary contained in this Section
9.4, it is understood and agreed that, in the event that the transaction
contemplated by the HomeComings Asset Purchase Agreement is not consummated by
March 31, 1999 or such later date as may be specified in any written extension
executed by Seller and HomeComings Financial Network, Inc., Seller shall bear,
or reimburse Purchaser for, the costs described in subsections (a), (c), (d) to
the extent that such transfer occurs within one year following the Cutoff Date,
(e), (f) and (g) above.
9.5 [RESERVED]
9.6 FORM 1099, FORM 1098-PURCHASER'S OBLIGATION.
Purchaser shall mail, on or before the date required by law, IRS Form
No. 1099 to all parties entitled to receive interest on Escrow Accounts for all
periods after the Closing Date, where applicable, as well as IRS Form No. 1098
to each Mortgagor for all periods after the Closing Date. Purchaser shall file
all required reporting with the IRS, including without limitation IRS Form No.
1041 and IRS Form K-1 where applicable, on or before the date required by law,
for all periods after the Closing Date.
9.7 REIMBURSEMENT OF ADVANCES.
In the event that any advance included in the Purchased Assets is
subsequently determined to be non-recoverable under Applicable Requirements,
Seller shall reimburse Purchaser in the amount of such advance.
9.8 PAYMENT OF INTEREST.
Seller shall be responsible through the Cutoff Date for (a) payment of
any interest on Escrow Accounts, to the extent required by law, and for posting
such payments to individual Mortgagors' accounts, and (b) payment of any
interest shortfall between the amount of interest collected and the amount of
interest required to be remitted to Investors, including without limitation
interest payable on pay-offs and curtailments, where applicable.
9.9 FHLMC QUALITY CONTROL PROGRAM.
Seller covenants and agrees that, on the Investor Transfer Date for the
FHLMC Mortgage Loans, Seller shall provide Purchaser with records of any quality
control findings, along with documentation of any corrective action taken,
reported to FHLMC for any Mortgage Loans included in the transfer which were
originated within three (3) years prior to the Closing Date. This requirement is
pursuant to Sections 48.1-48.12 of the FHLMC Sellers' and Servicers' Guide (the
"Guide"), as amended from time to time.
9.10 BULK TRANSFER LAWS COMPLIANCE.
Seller shall comply with all requirements of applicable laws relating
to the transfer of assets in bulk, including the Uniform Commercial Code-Bulk
Transfers and any similar statutory
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provisions in effect in any applicable jurisdiction, and shall provide any and
all notices which may be required to ensure that the transfer of the Servicing
to Purchaser hereunder is not subject to any defect by reason of non-compliance
with any such requirements.
9.11 PRESS RELEASES.
No party will issue or authorize to be issued any press release or
similar announcement concerning this Agreement or any of the transactions
contemplated hereby without the prior approval of the other party, which
approval shall not be unreasonably withheld, and shall be given in Order to
allow compliance with the disclosure requirements of applicable laws and
regulators.
9.12 CERTAIN NOTIFICATIONS.
Each party shall promptly notify the other in writing of the occurrence
of any event which will or could reasonably be expected to result in the failure
to satisfy any of the conditions to the obligations of such other party
specified in Article VII or VIII of the Agreement, as applicable.
9.13 [RESERVED]
9.14. FORWARD DELIVERY PRICING ADJUSTMENT.
With respect to any purchase of mortgage loan servicing pursuant to a
Forward Delivery Agreement, for which the Sale Date under such Forward Delivery
Agreement occurs subsequent to September 30, 1998 and during the original term
of such Forward Delivery Agreement, Seller agrees to reimburse Purchaser for any
price differential applicable to such purchase computed in accordance with
Schedule 9.14. Such reimbursements shall be made monthly as follows:
(a) For the time period commencing on the Closing Date and
continuing through the term of the Subservicing Agreement, Seller shall, on or
before the 10th Business Day of each month, submit to Purchaser loan-level data
(in a format reasonably acceptable to Purchaser) with respect to each Sale Date
Group (as defined below) that became a Settled Sale Date Group (as defined
below) prior to the end of the preceding calendar month. Following the
termination of the Subservicing Agreement, Purchaser shall generate such data or
cause such data to be generated on or before the 10th Business Day of each
month. Within ten (10) Business Days following its receipt of such loan-level
data for each Sale Date Group (as defined below) that became a Settled Sale Date
Group (as defined below) prior to the end of the preceding calendar month,
Purchaser shall submit to Seller a statement of the amount of the price
differential, computed in accordance with Schedule 9.14, on a Sale Date
Group-by-Sale Date Group basis and on an aggregate basis. Such statement shall
include supporting documentation setting forth in reasonable detail Purchaser's
calculation of such price differential. Subject to the following paragraph,
Seller shall have a period of ten (10) Business Days from the date such
statement is delivered to Seller to review such statement. If Seller agrees with
Purchaser as to the amount of the applicable price differential, then on the
Business Day immediately following the end of such ten (10) Business Day Period
(the "Planned Payment Date") (i) Seller and Purchaser shall submit joint
instructions under the Escrow Agreement to withdraw the applicable amount
payable from
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the Reserved Funds and pay such amount to Purchaser, and (ii) to the extent the
Reserved Funds are insufficient to make such payment, Seller shall remit to wire
transfer to Purchaser the amount necessary to result in Purchaser receiving full
payment of the applicable amount.
(b) If Seller does not agree with the amount of the price
differential set forth in a statement delivered by Purchaser pursuant to the
preceding paragraph, Seller shall deliver to Purchaser, within the ten (10)
Business Day period following Seller's receipt of the applicable statement from
Purchaser referred to in the preceding paragraph, written notice containing
specific objections (prepared in good faith) to the amount of such price
differential as determined by Purchaser. If Seller and Purchaser cannot agree on
the calculation of such price differential during the five (5) Business Day
period following Purchaser's receipt of the notice from Seller referred to in
the preceding sentence, to the extent that Seller and Purchaser have agreed as
to any portion of such price differential, then (i) such amount which is not in
dispute, together with interest thereon at the Interest Rate for the period
commencing with the related Planned Payment Date through and including the date
on which such payment is made, shall be paid in the manner set forth in the
preceding paragraph, and (ii) Seller and Purchaser shall work in good faith
during the next ten (10) Business Days towards resolving such disagreement. If a
resolution is reached within such ten (10) Business Day period, then on the
Business Day immediately following the end of such ten (10) Business Day period
any remaining payment of the applicable price differential, together with
interest thereon at the Interest Rate for the period commencing with the related
Planned Payment Date through and including the date on which such payment is
made, shall be paid in the manner set forth in the preceding paragraph. Unless a
mutually agreeable resolution to such disagreement is reached, and the disputed
amount is paid, within such ten (10) Business Day period, Purchaser and Seller
shall act in accordance with the Arbitration Procedures.
(c) In no event shall the aggregate amount of reimbursement
payments made by Seller to Purchaser pursuant to this Section 9.14 exceed
$4,500,000.
(d) As used in this Section 9.14, (i) the term "Sale Date Group"
has the meaning assigned to it in each Forward Delivery Agreement and (ii) the
term "Settled Sale Date Group" means a Sale Date Group with respect to which
both (A) the payment required to be made pursuant to Section 3.1(d) of the
related Forward Delivery Agreement has been made and (B) with respect to which
the amount required to be reimbursed by the "Seller" under such Forward Delivery
Agreement with respect to mortgage loans that payoff within a specified period
of time after the applicable "Sale Date" has been determined. Any amount payable
by a "Seller" as referred to in clause (B) of the preceding sentence shall be
taken into account in determining the price differential for the related Settled
Sale Date Group.
9.15 ADDENDUM.
Purchaser and Seller shall, on the date of the Agreement enter into the
Addendum.
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ARTICLE X
INDEMNIFICATION AND REMEDIES
10.1 INDEMNIFICATION BY SELLER.
Seller will and hereby does indemnify and hold Purchaser and any
Affiliate of Purchaser and their respective officers, directors and employees
harmless from and against any and all losses, damages, deficiencies, claims,
liabilities, judgments, verdicts, causes of action, costs or expenses of any
nature (including reasonable attorneys' fees and expenses) (collectively,
"Losses") resulting or arising, directly or indirectly, from or in conjunction
with:
(a) any breach of any representation and/or warranty of Seller
contained in this Agreement, in any Related Agreement, or in
any exhibit, schedule, statement or certificate furnished by
Seller pursuant to this Agreement. Seller shall indemnify
Purchaser as set forth in this Section 10.1 for breaches of
representations and warranties regardless of any
qualifications as to or the Knowledge of Seller concerning the
truth or accuracy of such representations and warranties when
made. Seller's indemnity includes Losses arising out of or
resulting from any acts or omissions or practices concerning
administration of escrow accounts and ARM Loans;
(b) the breach of any covenant or obligation of Seller contained
in this Agreement or in any Related Agreement; provided,
however, that Seller shall not be obligated to so indemnify
Purchaser to the extent that such payments are attributable to
a breach by Purchaser of any representation, warranty or
covenant made by Purchaser contained in this Agreement
(c) any Defect in any Mortgage Loan existing as of the Closing
Date (including those Defects subsequently discovered), or as
a result of any act or omission of Seller prior thereto;
(d) any and all items listed as exceptions to Seller's
representations and warranties on the Schedules attached to,
or otherwise made a part of, or delivered by Seller to
Purchaser pursuant to, this Agreement (including without
limitation updated Schedules);
(e) any litigation pending or Threatened against Purchaser arising
out of events occurring on or prior to the Closing Date in
connection with the Seller's servicing of the Mortgage Loans;
or
(f) the Capstead Litigation.
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10.2 REPURCHASE; PURCHASER'S REMEDIES.
(a) In the event of (1) an Investor repurchase demand or
make-whole request with respect to a Mortgage Loan or (2) an Investor
determination of Significant Underwriting Deficiency with respect to a Mortgage
Loan, which in any event arises out of or results from the origination, delivery
or servicing of the related Mortgage Loan prior to the Cutoff Date, the
provisions of this Section 10.2 shall apply.
(b) Purchaser shall use commercially reasonable efforts to provide
Seller with written notice of any event described in Section 10.2(a)(1) or (2)
(such notice, a "10.2 Notice"), within ten (10) Business Days following
Purchaser's receipt of notice. Seller shall have an opportunity to cure the
defect or condition giving rise to such request or determination and/or
negotiate with the applicable Investor for a cure period to be calculated as the
lesser of sixty (60) days from Seller's receipt of the 10.2 Notice, or such
lesser period as may be required by the applicable Investor. Notwithstanding
anything to the contrary contained in this section, any failure by Purchaser to
provide a timely 10.2 Notice to Seller of any such denial, rescission, request
or determination affecting a Mortgage Loan shall not in any event be construed
to limit remedies available to Purchaser under Section 10.1 of the Agreement
except to the extent that Seller is materially prejudiced by such failure to
provide a timely 10.2 Notice.
(c) If Purchaser provides a 10.2 Notice to Seller with respect to
a Mortgage Loan which is not a Cutoff Date Refinanced Loan, a Post-Cutoff Date
Refinanced Loan or a Post-Payoff Adjustment Date Refinanced Loan, Purchaser
agrees that it will use commercially reasonable efforts to enforce any
contractual remedies that may be available to it under the applicable Assigned
Contract, provided, however, that should the applicable third-party seller
refuse to perform its obligations of the indemnification or repurchase under
such Assigned Contract in a timely fashion, then, upon expiration of any
applicable cure period, Seller will perform such obligations in a timely
fashion. In that event, Seller shall, at Purchaser's option, (i) repurchase the
related Mortgage Loan for the Repurchase Price, (ii) in the case of an Investor
make-whole request, pay to Purchaser the Repurchase Price, or (iii) in the case
of a Significant Underwriting Deficiency, agree to provide the remedy described
in subsection (i) above upon demand by Purchaser at such future time as
Purchaser may, in its sole discretion, direct.
(d) If, pursuant to Section 10.2(c), Seller is required to perform
the obligations of a third-party seller pursuant to an Assigned Contract,
Purchaser shall, upon Seller's request, seek recovery from the applicable
third-party seller, on behalf of Seller and at Seller's cost and direction, of
any losses, damages, deficiencies, claims, liabilities, judgments, verdicts,
causes of action, costs or expenses of any nature incurred by Seller as a result
of the third-party seller's failure to perform.
(e) Upon repurchase of a Mortgage Loan or REO Property by Seller
under sub-section (a) or (c) above, Purchaser shall use reasonable commercial
efforts to sell such REO Property or Mortgage Loan, servicing released, for the
account of Seller. Promptly following any such sale, Purchaser shall remit to
Seller the proceeds from such sale, less Purchaser's reasonable expenses
(including its direct internal costs) incurred in connection therewith. During
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the applicable marketing period, Purchaser shall continue to service the
applicable Mortgage loan or REO Property for the account of Seller.
(f) In the event that Seller should fail to make any payment to
Purchaser required to be made pursuant to this Article X within thirty (30) days
following demand therefor, or within such other timeframe as may be specified
under the applicable provisions of Section 10.1 or Section 10.2, interest shall
accrue on such payment, to be compounded daily at the Interest Rate plus 200
basis points, from the date of demand (or, in the case of repurchase, the date
on which repurchase funds are due Investor) until such payment is received by
Purchaser.
10.3 NO EFFECT OF KNOWLEDGE.
The obligations of Seller under this Agreement for the breach of any
representation or warranty made by Seller hereunder shall not be affected in any
manner or to any extent by any knowledge obtained by (or which could have been
obtained by) Purchaser prior to the Closing Date, whether in the course of
Purchaser's due diligence activities or otherwise.
10.4 INDEMNIFICATION BY PURCHASER.
Purchaser will and hereby does indemnify and hold Seller and any
Affiliate of Seller and their respective officers, directors and employees
harmless from and against any and all losses, damages, deficiencies, claims,
liabilities, judgments, verdicts, causes of action, costs or expenses of any
nature (including reasonable attorneys' fees and expenses)
(a) Resulting from or arising out of any breach of any
representation and/or warranty of Purchaser contained in this Agreement, in any
Related Agreement, or in any exhibit, schedule, statement or certificate
furnished by Purchaser pursuant to this Agreement; or
(b) Resulting from or arising out of the breach of any covenant or
obligation of Purchaser contained in this Agreement or in any Related Agreement;
provided, however, that Purchaser shall not be obligated to so indemnify Seller
to the extent that such payments are attributable to a breach by Seller of any
representation, warranty or covenant made by Seller contained in this Agreement.
10.5 NOTICE OF CLAIM.
If any action is brought against any person entitled to indemnification
pursuant to Section 10.1 or Section 10.4 (a "Claimant") in respect of a claim
under Section 10.1 or Section 10.4, as applicable (an "Indemnifiable Claim"),
the Claimant shall promptly notify Purchaser or Seller, as the case may be, in
writing of the institution of such action (but the failure so to notify shall
not relieve Seller or Purchaser, as the case may be (the "Indemnifying Party")
from any liability the Indemnifying Party may have except to the extent such
failure materially prejudices the Indemnifying Party). With the prior written
consent of the Claimant, the Indemnifying Party may assume and direct the
defense of such action, including the employment of counsel, and all fees, costs
and expenses incurred in connection with defending or settling the Indemnifiable
Claim shall be borne solely by the Indemnifying Party; provided, however, that
the Indemnifying
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Party shall not compromise any claim without the prior written consent of the
Claimant, which consent shall not be unreasonably withheld; provided, further
that notwithstanding the foregoing, Purchaser may assume the defense or
prosecution of any such claim, suit, demand or Proceeding, at the cost of the
Indemnifying Party, if it reasonably believes that such assumption is necessary
or appropriate to assure that its right or ability to service a material portion
of its mortgage loans and servicing rights (including the Mortgage Loans or
Servicing Rights) or its method of doing business or its authority and approvals
to service or its reputation, goodwill, financing condition or business are not
materially impaired. Notwithstanding a request by the Indemnifying Party to
assume the defense of such action or Proceeding, the Claimant shall have the
right to employ separate counsel and to participate in the defense of such
action or Proceeding, and the Indemnifying Party shall bear the reasonable fees,
costs and expenses of such separate counsel (and shall pay such fees, costs and
expenses at least quarterly).
10.6 LIMITATION OF LIABILITY.
(a) In no event will either Purchaser or Seller be liable to the
other party to this Agreement for incidental or consequential damages,
including, without limitation, loss of profit or loss of business or business
opportunity, regardless of the form of action whether in contract, tort or
otherwise.
(b) Except as provided in Section 10.6(c) below, the obligations
of the parties under this Article X shall be limited to the seven (7) year
period following the Closing Date.
(c) Notwithstanding anything to the contrary contained herein, the
obligations of Seller under this Article X shall continue in full force and
effect with respect to any Mortgage Loan which, on or before the seven-year
anniversary of the Closing Date, becomes the subject of an agreement to
indemnify the related Investor for losses, damages, costs and/or expenses
occurring as a result of Defects in the origination, delivery and/or servicing
(prior to the Closing Date) of such Mortgage Loan. Notwithstanding anything to
the contrary contained in this Section 10.6(c), any obligation of Seller under
this Article X which is extended beyond the seven-year anniversary of the
Closing Date shall not in any event extend beyond the duration of Purchaser's
obligation to indemnify the related Investor.
10.7 RIGHT OF OFFSET.
In the event an Indemnifying Party is required to indemnify or make
payments to any Claimant under any provision of this Agreement or any Related
Agreement, in addition to any other right available to the Claimant hereunder,
at law or in equity, the Claimant shall (only upon the exhaustion of the
Reserved Funds, in any case where Purchaser, any of its Affiliates or any of
their respective officers, directors or employees is the Claimant) be entitled
to offset or recoup the amount of such required indemnity or any claim from any
and all amounts owed by any Claimant, or any affiliate of a Claimant, to any
Indemnifying Party or any affiliate of any Indemnifying Party, hereunder or
otherwise. With respect to Indemnifiable Claims against Seller, Purchaser's
right of offset or recoupment, as applicable, shall extend to the Reserved
Funds.
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ARTICLE XI
MISCELLANEOUS
11.1 COSTS AND EXPENSES.
Except as otherwise provided herein, each party shall be responsible
for its accounting, legal and related costs and expenses incurred with respect
to the transfer of Servicing, including without limitation costs and expenses
incurred in compliance with the provisions of Section 7.1(k) or 8.1(g) hereof,
as the case may be, whether or not the transaction contemplated by the Agreement
is consummated.
11.2 CONFIDENTIALITY.
All information which is not public knowledge (including without
limitation Mortgagor or customer information of any kind, proprietary business
procedures, servicing fees or prices, policies or business plans) disclosed
heretofore or hereafter by any party to any other party (including its
attorneys, accountants or other representatives) in connection with the
transaction contemplated by this Agreement (including the existence of this
Agreement and the terms hereof) shall be kept confidential by the other party
and shall not be used by such other party other than for use as herein
contemplated, except to the extent (a) it is or hereafter becomes public
knowledge or becomes lawfully obtainable from other sources, including a third
party who is under no obligation of confidentiality to the party disclosing such
information or to whom information was released without restrictions, or (b)
such other party is compelled to disclose such information by judicial or
administrative process or, in the opinion of its counsel, by other requirements
of law, or (c) such duty as to confidentiality and non-use is waived by such
disclosing party. In the event of termination of this Agreement, each party
shall exercise all reasonable efforts to return, upon request, to the other
party, all documents and reproductions thereof received from such other party
(and, in the case of reproductions, all reproductions made by the receiving
party) that include information not within the exceptions contained in the first
sentence of this Section 11.2.
11.3 BROKER'S FEES.
Seller shall be responsible for fees due ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Securities, Inc. ("Brokers"). Each party hereto represents and warrants
to the other that it has made no agreement to pay any agent, finder, or broker
or any other representative, any fee or commission in the nature of a finder's
or originator's fee arising out of or in connection with the subject matter of
this Agreement, except for such fees as may be payable to the Brokers by Seller,
and both the parties hereto covenant with each other and agree to indemnify and
hold each other harmless from and against any such obligation or liability and
any expense incurred in investigation or defending (including reasonable
attorneys' fees) any claim based upon the other party's actions in connection
with such obligation.
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11.4 NO SOLICITATION.
(a) Seller agrees that, commencing on the Closing Date, without
the prior written consent of Purchaser, neither Seller nor any Affiliate of
Seller shall use information derived from the origination, sale or servicing of
the Mortgage Loans to solicit, or assist in the solicitation of, for any purpose
including without limitation refinance, home equity or insurance, any of the
Mortgagors related to the Mortgage Loans. Seller shall not provide a listing of
Mortgagors to any third party.
(b) Seller further agrees to use its best efforts, including the
exercise of any available contractual remedies, to cause any Affiliate and/or
originator of the Mortgage Loans to refrain from taking any action which is
prohibited under this section with respect to the Mortgage Loans and/or
Mortgagors. Notwithstanding the foregoing, it is understood and agreed that
promotions undertaken by Seller, any originator or any Affiliate of Seller which
are directed to the general public at large, including without limitations mass
mailings based on commercially acquired mailing lists, newspaper, radio and
television advertisement, shall not constitute solicitations under this
paragraph.
(c) Seller agrees to refrain from engaging in any program to
recover accrued late charges with respect to Mortgage Loans, other than in the
normal course of servicing or customary past practices as disclosed to Purchaser
prior to the Closing Date.
11.5 SURVIVAL.
Except as otherwise provided herein, the representations and
warranties, covenants and agreements contained in or made pursuant to this
Agreement (including without limitation the rights of indemnification and other
remedies provided in Article X of the Agreement), and in any document delivered
or to be delivered pursuant hereto, shall survive the execution hereof, the
Closing Date for a period of seven (7) years commencing on the Closing Date,
except as otherwise provided in Section 10.6(c) of the Agreement. No
representation or warranty contained herein shall be deemed to have been waived,
affected or impaired by any investigation made by or knowledge of any party to
this Agreement.
11.6 NOTICES.
Any notice or other communication required or which may be given
hereunder shall be in writing and either delivered personally to the addressee,
telegraphed or faxed to the addressee or mailed, certified or registered mail,
postage prepaid, and shall be deemed given when so delivered personally,
telegraphed or by confirmed facsimile transmission, or if mailed, two days after
the date of mailing, as follows:
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(a) If to the Purchaser, to:
GMAC Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
General Counsel
GMAC Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
GMAC Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Manager
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Seller, to:
Capstead Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
or to such other address as Purchaser or Seller shall have specified in writing
to the other.
11.7 GOVERNING LAW.
This Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania applicable to agreements made and to be performed entirely within
such state.
11.8 ENTIRE AGREEMENT.
This Agreement (including the Exhibits, Schedules and certifications
hereto, all of which are incorporated herein by reference) and any Related
Agreements contain the entire agreement between the parties with respect to the
transactions contemplated hereby, and supersede all prior agreements and
understandings relating to the subject matter of the Agreement. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AS TO THE SUBJECT MATTER OF
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THE AGREEMENT, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES; AND THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
11.9 WAIVERS AND AMENDMENTS.
This Agreement may be amended, modified, superseded, canceled, renewed
or extended, and the terms and conditions hereof may be waived, only by a
written instrument signed by the parties or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege hereunder,
nor any single or partial exercise of any right, power or privilege hereunder,
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
11.10 THIRD PARTY BENEFICIARIES.
This Agreement is intended for the benefit of the parties hereto only.
There shall be no third party beneficiaries hereof.
11.11 CONSTRUCTION.
In construing the words of this Agreement, all pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular or
plural as the identify of the person or persons may require. The words "herein,"
"hereof," and other similar compounds of the word "here" shall mean and refer to
this entire Agreement, not to any particular provision, section, or subsection
of it. This Agreement constitutes a negotiated document. In case of any alleged
ambiguity in any term of this Agreement, such term shall not be construed in
favor of or against either party by reason of the participation of such party or
its attorneys in the negotiation or drafting of this Agreement.
11.12 HEADINGS.
The headings in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
11.13 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
11.14 ATTORNEYS' FEES.
If any action of law or in equity, including an action for declaratory
relief, is brought to enforce or interpret the provisions of this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys' fees and
costs from the other party. Such fees may be set by the Court in the trial of
such action or may be enforced in a separate action brought for that purpose.
Such fees shall be in addition to any other relief that may be awarded.
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11.15 BINDING EFFECT.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer on any person other than
the parties hereto and their successors and permitted assigns, any rights,
obligations, remedies or liabilities.
11.16 NO ASSIGNMENT.
This Agreement is not assignable except by operation of law, except
that Purchaser may assign its rights or obligations under this Agreement to any
affiliate of Purchaser provided that Purchaser shall continue to be bound by
this Agreement.
11.17 LOCATION OF CLOSING.
On the Closing Date, the closing of this transaction shall take place
at the respective offices of Purchaser and Seller via facsimile transmission
between Purchaser and Seller. Original signed documents shall be exchanged
between the two parties by overnight courier.
11.18 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable form the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
11.19 GRANT OF SECURITY INTEREST.
Seller intends that the conveyance of Seller's right, title and
interest in and to the Purchased Assets pursuant to this Agreement shall
constitute a sale and not a pledge of security for a loan. If such conveyance is
deemed to be a pledge of security for a loan, however, Seller intends that the
rights and obligations of the parties to such loan shall be established pursuant
to the terms of this Agreement. Seller also intends and agrees that, in such
event, (a) Seller shall be deemed to have granted to Purchaser a first priority
security interest in the Seller's entire right, title and interest in and to the
Purchased Assets, and all of the Seller's right, title and interest in and to
the proceeds of any title, hazard or other insurance policies related to the
Purchased Assets, and (b) this Agreement shall constitute a security agreement
under applicable law. Seller shall file or cause to be filed, as a precautionary
filing, a Form UCC-1 in form and substance satisfactory to Purchaser in all
appropriate locations promptly following the execution of this Agreement.
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IN WITNESS WHEREOF, each of the undersigned parties to this Purchase
and Sale Agreement has caused this Purchase and Sale Agreement to be duly
executed in its corporate name by one of its duly authorized officers, all as of
the date first above written.
"PURCHASER"
ATTEST: GMAC MORTGAGE CORPORATION
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------- -----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ITS: Vice President
----------------------------------
"SELLER"
ATTEST: CAPSTEAD INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BY: ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------- -----------------------------------
Asst. Secretary ITS: Chairman and CEO
----------------------------------
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LIST OF SCHEDULES AND EXHIBITS
Schedule 1.8 Schedule of Assigned Contracts
Schedule 1.9 Schedule of Assumed Liabilities
Schedule 1.37 Schedule of Forward Delivery Agreements
Schedule 1.44 Schedule of Included Assets
Schedule 1.73 Schedule of Purchase Price Calculation
Schedule 1.74(a) Schedule of Purchase Price Percentage (Mortgage Loans
other than Identified Forward Delivery Loans,
Unidentified Forward Delivery Loans and Cutoff Date
Refinanced Loans)
Schedule 1.74(b) Schedule of Purchase Price Percentage (Identified
Forward Delivery Loans
Schedule 1.74(c) Schedule of Purchase Price Percentage (Unidentified
Forward Delivery Loans)
Schedule 1.74(d) Schedule of Purchase Price Percentage (Cutoff Date
Refinanced Loans)
Schedule 1.79 Schedule of Repurchase Price Calculation
Schedule 2.8 Schedule of Hedging Instruments
Schedule 3.2 States Seller Qualified in
Schedule 3.4 Schedule of Permits, Authorizations and Consents
Schedule 3.6 Schedule of Mortgage Loans/Servicing Pledged as
Collateral
Schedule 3.7 Schedule of Litigation
Schedule 3.11 Schedule of Recourse Servicing
Schedule 3.13(e) Schedule of Sales, Transfers or Assignments
Schedule 4.1 Schedule of Documents Missing from Mortgage Loan Files
Schedule 4.11 Schedule of Condemnation/Forfeiture Proceedings
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LIST OF SCHEDULES AND EXHIBITS (CONTINUED)
Schedule 4.12 Schedule of Missing Custodial File Documents and
Uncertified Pools
Schedule 4.14 Schedule of Exception Loans
Schedule 4.15 Schedule of Investor Indemnification Agreements
Schedule 4.17 Schedule of Soldier and Sailor Loans
Schedule 9.14 Schedule of Forward Delivery Pricing Adjustments
Exhibit A-1 Schedule of Mortgage Loans
A-2 Schedule of Identified Forward Delivery Loans
A-3 Schedule of Unidentified Forward Delivery Loans
A-4 Schedule of Cutoff Date Refinanced Loans
Exhibit B Form of Escrow Agreement
Exhibit C Contents of Mortgage Loan Files
Exhibit D [RESERVED]
Exhibit E Form of Seller's Opinion of Counsel
Exhibit F Form of Guaranty
Exhibit G Form of Seller's Officer's Certificate
Exhibit H Seller's Limited Power of Attorney
Exhibit I Form of Purchaser's Opinion of Counsel
Exhibit J Form of Addendum
Exhibit K [RESERVED]
Exhibit L Form of Subservicing Agreement
Exhibit M Arbitration Procedures
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