EXHIBIT 10.30.1
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MASTER REPURCHASE AGREEMENT
BETWEEN
CDC MORTGAGE CAPITAL INC., AS BUYER
AND
OAK STREET MORTGAGE, LLC, AS SELLER
Dated as of August 25, 2004
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TABLE OF CONTENTS
Page
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1. APPLICABILITY........................................................................................... 1
2. DEFINITIONS............................................................................................. 1
3. INITIATION; TERMINATION................................................................................. 18
4. MARGIN AMOUNT MAINTENANCE............................................................................... 26
5. INCOME PAYMENTS......................................................................................... 26
6. REQUIREMENTS OF LAW..................................................................................... 27
7. SECURITY INTEREST....................................................................................... 28
8. PAYMENT, TRANSFER AND CUSTODY........................................................................... 29
9. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS............................................................. 30
10. SELLER REPRESENTATIONS.................................................................................. 30
11. COVENANTS OF SELLER..................................................................................... 36
12. EVENTS OF DEFAULT....................................................................................... 43
13. REMEDIES................................................................................................ 45
14. INDEMNIFICATION AND EXPENSES............................................................................ 47
15. RECORDING OF COMMUNICATIONS............................................................................. 49
16. SINGLE AGREEMENT........................................................................................ 49
17. NOTICES AND OTHER COMMUNICATIONS........................................................................ 49
18. ENTIRE AGREEMENT; SEVERABILITY; MODIFICATIONS........................................................... 50
19. NON-ASSIGNABILITY....................................................................................... 50
20. TERMINABILITY........................................................................................... 50
21. GOVERNING LAW........................................................................................... 51
22. SUBMISSION TO JURISDICTION; WAIVERS..................................................................... 51
23. NO WAIVERS, ETC......................................................................................... 52
24. SERVICING............................................................................................... 52
25. INTENT.................................................................................................. 53
26. PERIODIC DUE DILIGENCE REVIEW........................................................................... 53
27. BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT................................................................. 54
28. MISCELLANEOUS........................................................................................... 55
29. CONFIDENTIALITY......................................................................................... 56
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30. CONFLICTS............................................................................................... 56
31. SET-OFF................................................................................................. 57
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EXHIBITS
SCHEDULE 1 Representations and Warranties Re: Mortgage Loans
EXHIBIT I Transaction Request
EXHIBIT II Underwriting Guidelines
EXHIBIT III Form of Opinion Letter
EXHIBIT IV UCC Filing Jurisdictions
EXHIBIT V Form of Account Agreement
EXHIBIT VI Form of True Sale Certification
EXHIBIT VII Form of Servicer Notice
EXHIBIT VIII Form of Request for Additional Transactions For
Excess Margin
EXHIBIT IX Form of Compliance Report
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MASTER REPURCHASE AGREEMENT
This is a MASTER REPURCHASE AGREEMENT, dated as of August 25, 2004,
between OAK STREET MORTGAGE, LLC, a Delaware limited liability company
("Seller"), and CDC MORTGAGE CAPITAL INC., a New York corporation ("Buyer").
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in which
Seller agrees to transfer to Buyer Mortgage Loans against the transfer of
funds by Buyer, with a simultaneous agreement by Buyer to transfer to
Seller such Mortgage Loans on demand by Buyer or at a date certain not
later than 364 days after the date of transfer, against the transfer of
funds by Seller. Each such transaction shall be referred to herein as a
"Transaction" and shall be governed by this Agreement, unless otherwise
agreed in writing.
2. DEFINITIONS
As used herein, the following terms shall have the following meanings (all
terms defined in this Section 2 or in other provisions of this Agreement
in the singular to have the same meanings when used in the plural and vice
versa). Terms otherwise not defined herein shall have the meanings
assigned thereto in the Custodial and Disbursement Agreement.
"180-day Mortgage Loan" shall mean as of any date of determination, an
Eligible Asset which was first purchased by Buyer hereunder more than 120
days and less than 180 days prior to such date of determination.
"180-day Mortgage Loan Sub-Limit" shall mean (i) from the Effective Date
hereof through but not including January 29, 2005, an amount equal to
$100,000,000 and (ii) at any time thereafter, $25,000,000.
"Account Agreement" shall mean a letter agreement among Seller, Buyer, and
the Bank substantially in the form of Exhibit V attached hereto.
"Act of Insolvency" shall mean, with respect to any Person, (i) the filing
of a petition, commencing, or authorizing the commencement of any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar law relating to the protection of creditors, or
suffering any such petition or proceeding to be commenced by another which
is consented to, not timely contested or results in entry of an order for
relief; (ii) the seeking or consenting to the appointment of a receiver,
trustee, custodian or similar official for such Person or any substantial
part of the property of such Person; (iii) the appointment of a receiver,
conservator, or manager for such Person by any governmental agency or
authority having the jurisdiction to do so; (iv) the making or offering by
such Person of a composition with its creditors or a general assignment
for the benefit of creditors; (v) the admission by such Person of its
inability to pay its debts or discharge its obligations as they become due
or mature; or (vi) that any governmental authority or agency or any
person, agency or entity acting or purporting to act under
governmental authority shall have taken any action to condemn, seize or
appropriate, or to assume custody or control of, all or any substantial
part of the property of such Person, or shall have taken any action to
displace the management of such Person or to curtail its authority in the
conduct of the business of such Person.
"Affiliate" shall mean with respect to any Person, any "affiliate" of such
Person, as such term is defined in the Bankruptcy Code.
"Agreement" shall mean this Master Repurchase Agreement, as the same may
be further amended, supplemented or otherwise modified in accordance with
the terms hereof.
"ALTA" shall mean the American Land Title Association.
"Alt-A Mortgage Loan" shall mean an Eligible Asset which is a Mortgage
Loan made to a Mortgagor of "A" or "A-" credit quality, which is a secured
by a lien on a single-family Residential Dwelling and for which the
related Mortgagor has a FICO score of greater than 600. In no event shall
any Mortgage Loan be an "Alt-A Mortgage Loan" if the related Mortgagor
does not have a FICO score of at least 600 as of the date of origination.
"Alt-A First Mortgage Loan" shall mean an Eligible Asset which is an Alt-A
Mortgage Loan and a First Lien Mortgage Loan.
"Alt-A Second Mortgage Loan" shall mean an Eligible Asset which is an
Alt-A Mortgage Loan and a Second Lien Mortgage Loan.
"Appraised Value" shall mean the value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value
of the Mortgaged Property.
"Asset Schedule and Exception Report" shall have the meaning assigned
thereto in the Custodial and Disbursement Agreement.
"Asset Value" shall mean as of any date of determination with respect to
each Eligible Asset, the lesser of (a) the Purchase Percentage applicable
to such Eligible Asset multiplied by the Market Value of such Mortgage
Loan as of such date and (b) the outstanding principal balance of such
Eligible Asset as of such date; provided, that, the following additional
limitations on Asset Value shall apply:
(1) after giving effect to any requested Transaction, the aggregate
Asset Value of all Wet-Ink Mortgage Loans owned hereunder by Buyer as of
such date of determination may not exceed the Wet-Ink Sub-Limit;
(2) after giving effect to any requested Transaction, the aggregate
Asset Value of all Sub-Prime Second Mortgage Loans owned hereunder by
Buyer as of such date of determination may not exceed the Sub-Prime Second
Lien Sub-Limit;
(3) after giving effect to any requested Transaction, the aggregate
Asset Value of all Second Lien Mortgage Loans which are Sub-Prime Mortgage
Loans or Alt-A
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Mortgage Loans owned hereunder by Buyer as of such date of determination
may not exceed the Second Lien Sub-Limit;
(4) after giving effect to any requested Transaction, the aggregate
Asset Value of all Mortgage Loans which have a FICO Score of less than 550
and greater than or equal to 500 owned hereunder by Buyer as of such date
of determination may not exceed the FICO Score Sub-Limit;
(5) after giving effect to any requested Transaction, the aggregate
Asset Value of all 180-day Mortgage Loans owned hereunder by Buyer as of
such date of determination may not exceed the 180-day Mortgage Loan
Sub-Limit;
(6) after giving effect to any requested Transaction, the aggregate
Asset Value of all Leasehold Mortgage Loans owned hereunder by Buyer as of
such date of determination may not exceed the Leasehold Mortgage Loan
Sub-Limit;
(7) after giving effect to any requested Transaction, the aggregate
Asset Value of all Condominium Mortgage Loans owned hereunder by Buyer as
of such date of determination may not exceed the Condominium Mortgage Loan
Sub-Limit;
(8) after giving effect to any requested Transaction, the aggregate
Asset Value of all Interest-Only Mortgage Loans owned hereunder by Buyer
as of such date of determination may not exceed the Interest-Only
Sub-Limit; and
(9) the Asset Value shall be deemed to be zero with respect to each
Mortgage Loan (i) in respect of which there is a breach of a
representation and warranty set forth in Schedule 1 (assuming each
representation and warranty is made as of the date the Asset Value is
determined), (ii) in respect of which there is a delinquency in the
payment of principal and/or interest which continues for a period in
excess of twenty nine (29) calendar days (without regard to any applicable
grace periods), (iii) which has not been repurchased by Seller by the
earlier to occur of (A) the Termination Date and (B) the 180th day after
the date on which it is first purchased by Buyer, (iv) which has been
released from the possession of Custodian under the Custodial and
Disbursement Agreement to Seller for a period in excess of twelve (12)
calendar days, (v) which exceed the Sub-Limit for the related Class or
(vi) which is a Wet-Ink Mortgage Loan, for which Custodian has failed to
receive the related Mortgage Documents by the eighth (8th) Business Day
following the applicable Purchase Date.
"Assignment of Mortgage" shall mean, with respect to any Mortgage, an
assignment of the Mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the assignment of the
Mortgage to Buyer.
"Bank" shall mean Deutsche Bank National Trust Company, a national banking
association, and its successors in interest, or such other depository
institution as may be acceptable to Buyer in its sole discretion, and
their respective successors in interest.
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"Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978, as
amended from time to time.
"Business Day" shall mean any day other than (i) a Saturday or Sunday or
(ii) a day on which banks in the State of New York (or state in which any
of Custodian, Disbursement Agent, Seller or Buyer is located) is
authorized or obligated by law or executive order to be closed.
"Buyer" shall mean CDC Mortgage Capital Inc., a New York corporation, and
its successors in interest and assigns.
"Cash" shall mean all cash and Cash Equivalents, as shown on the balance
sheet of such Person prepared in accordance with GAAP.
"Cash Equivalents" shall mean (a) securities with maturities of 90 days or
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with maturities of 90 days or less
from the date of acquisition and overnight bank deposits of any commercial
bank having capital and surplus in excess of $500,000,000, (c) repurchase
obligations of any commercial bank satisfying the requirements of clause
(b) of this definition, having a term of not more than seven days with
respect to securities issued or fully guaranteed or insured by the United
States Government, (d) commercial paper of a domestic issuer rated at
least A-1 or the equivalent thereof by Standard and Poor's Ratings Group
("S&P") or P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service,
Inc. ("Moody's") and in either case maturing within 90 days after the day
of acquisition, (e) securities with maturities of 90 days or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the case
may be) are rated at least A by S&P or A by Moody's, (f) securities with
maturities of 90 days or less from the date of acquisition backed by
standby letters of credit issued by any commercial bank satisfying the
requirements of clause (b) of this definition or (g) shares of money
market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
"Capital Lease Obligations" shall mean, for any Person, all obligations of
such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person under GAAP, and, for purposes of
this Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP.
"Class" shall mean each group of Mortgage Loans where each Mortgage Loan
within such group qualifies as at least one of the following: "Conforming
Mortgage Loan", "Jumbo Mortgage Loan", "Alt-A First Mortgage Loan", "Alt-A
Second Mortgage Loan", "Second Lien Mortgage Loan", "Sub-Prime First
Mortgage Loan", "Sub-Prime Second
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Mortgage Loan", "180-day Mortgage Loan", "Condominium Mortgage Loan",
"Leasehold Mortgage Loan", "Interest-Only Mortgage Loan" or "Wet-Ink
Mortgage Loan"; provided, that a Mortgage Loan may be within more than one
Class as of any date of determination.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collection Account" shall mean the account established by the Bank
subject to an Account Agreement, into which Income shall be deposited in
accordance with Section 5.
"Combined Loan-to-Value Ratio or CLTV" shall mean with respect to any
Second Lien Mortgage Loan, the sum of the original principal balance of
such Second Lien Mortgage Loan at the time of origination and the
outstanding principal balance of any related first lien loan as of the
date of origination of such Second Lien Mortgage Loan, divided by the
lesser of (a) the Appraised Value of the related Mortgage Property as of
the date of origination of such Second Lien Mortgage Loan and (b) if the
related Mortgaged Property was purchased within twelve (12) months of the
origination of such Second Lien Mortgage Loan, the purchase price of such
Mortgaged Property.
"Commitment Fee" shall mean the fee payable by Seller to Buyer pursuant to
Section 3(a) equal to $375,000 (0.15% per annum of the Maximum Amount).
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with such Person within the
meaning of Section 4001 of ERISA or is part of a group which includes such
Person and which is treated as a single employer under Section 414 of the
Code.
"Condominium Mortgage Loan" shall mean an Eligible Asset secured by a
first lien on a unit in a condominium project.
"Condominium Mortgage Loan Sub-Limit" shall mean, as of any date, an
amount equal to $10,000,000, provided Buyer shall have the right, upon
written notice to Seller, from time to time, to reduce the Condominium
Sub-Limit to 4% of the then outstanding Purchase Price of the
Transactions.
"Confirmation" shall have the meaning specified in Section 3(c).
"Conforming Mortgage Loan" shall mean an Eligible Asset which (i) meets
all criteria of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, or (ii) meets all criteria of
the FHA and is insured by such agency, or (iii) meets all criteria of the
Department of Veterans Affairs and is insured by such agency.
"CSFB Facility" shall mean that Master Repurchase Agreement, dated as of
March 1, 2002, between Credit Suisse First Boston Mortgage Capital, LLC
and Seller (fka Cresleigh Financial Services, LLC), as amended and as the
same may be amended from time to time, and all other documents or
agreements executed in connection therewith, or replacement facilities
with substantially similar terms (including, but not limited to, amounts
and rates) with financial institutions approved by Buyer.
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"Custodial and Disbursement Agreement" shall mean that custodial and
disbursement agreement, dated as of the date hereof, by and among Buyer,
Seller, Custodian and Disbursement Agent, as the same shall be modified
and supplemented and in effect from time to time.
"Custodial Identification Certificate" shall have the meaning assigned
thereto in the Custodial and Disbursement Agreement.
"Custodian" shall mean Deutsche Bank National Trust Company, a national
banking association, and its successors in interest, as custodian under
the Custodial and Disbursement Agreement, and any successor Custodian
under the Custodial and Disbursement Agreement.
"Default" shall mean an Event of Default or an event that with notice or
lapse of time or both would become an Event of Default.
"Disbursement Agent" shall mean Deutsche Bank National Trust Company, a
national banking association, and its successors in interest, as
disbursement agent under the Custodial and Disbursement Agreement, and any
successor Disbursement Agent under the Custodial and Disbursement
Agreement.
"Dollars" and "$" shall mean lawful money of the United States of America.
"Due Diligence Review" shall mean the performance by Buyer of any or all
of the reviews permitted under Section 26 with respect to any or all of
the Mortgage Loans, as desired by Buyer from time to time.
"Effective Date" shall mean the date upon which the conditions precedent
set forth in Section 3(a) shall have been satisfied.
"Electronic Agent" shall mean MERSCORP, INC., and its successors in
interest.
"Electronic Tracking Agreement" shall mean the Electronic Tracking
Agreement, in a form substantially similar to the form set forth in Annex
19 to the Custodial and Disbursement Agreement, to be entered into among
Buyer, Seller, Electronic Agent and MERS, if any, as the same shall be
amended, supplemented or otherwise modified from time to time; provided
that if no Mortgage Loans are or will be MERS Designated Mortgage Loans,
all references herein to the Electronic Tracking Agreement shall be
disregarded.
"Electronic Transmission" shall mean the delivery of information in an
electronic format acceptable to the applicable recipient thereof. An
Electronic Transmission shall be considered written notice for all
purposes hereof (except when a request or notice by its terms requires
execution). Any document that requires signature that is delivered by
Electronic Transmission via email that includes the sender's name shall
satisfy such signature requirement.
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"Eligible Asset" shall mean a Mortgage Loan, including a Wet-Ink Mortgage
Loan, (i) as to which the representations and warranties in Schedule 1
attached hereto are true and correct, (ii) which is underwritten strictly
in accordance with Seller's Underwriting Guidelines, a copy of which is
attached hereto as Exhibit II or with such exceptions as Buyer shall
approve pursuant to Section 3(b)(9), and (iii) which is secured by a
Residential Dwelling.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that is
a member of any group of organizations (i) described in Section 414(b) or
(c) of the Code of which such Person is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Code and the lien created under Section 302(f)
of ERISA and Section 412(n) of the Code, described in Section 414(m) or
(o) of the Code of which such Person is a member.
"Escrow Instruction Letter" shall have the meaning assigned thereto in the
Custodial and Disbursement Agreement.
"Eurodollar Rate" shall mean, with respect to each day a Transaction is
outstanding (and reset on each day a Transaction is outstanding), the rate
per annum equal to the rate appearing at page 5 of the Telerate Screen as
one-month LIBOR at or about 9:00 a.m., New York City time, on such date
(and if such date is not a Business Day, the Eurodollar Rate in effect on
the Business Day immediately preceding such date), and if such rate shall
not be so quoted, the average rate per annum at which three mutually
acceptable banks are offered Dollar deposits at or about 8:00 a.m., New
York City time, on such date by prime banks in the interbank eurodollar
market where the eurodollar and foreign currency exchange operations in
respect of its transactions are then being conducted for delivery on such
day for a period of thirty (30) days and in an amount comparable to the
amount of the Transactions to be outstanding on such day. The Eurodollar
Rate shall be reset by Buyer as described above and Buyer's determination
of Eurodollar Rate shall be conclusive upon the parties absent manifest
error on the part of Buyer.
"Event of Default" has the meaning specified in Section 12.
"Excess Margin" has the meaning specified in Section 3(o).
"Existing Financing Facilities" shall mean the CSFB Facility, the
Huntington Bank Facility, the RFC Facility and the Star Financial
Facility.
"▇▇▇▇▇▇ Mae" shall mean the Federal National Mortgage Association, and its
successors in interest.
"FBR" shall mean Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc., a Delaware
corporation, and its successors in interest, as buyer under the MLPA.
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"FICO Score" shall mean the credit report score issued with respect to a
Mortgagor by Fair ▇▇▇▇▇ & Co. or any successor thereto.
"FICO Score Sub-Limit" shall mean, as of any date, an amount equal to
$10,000,000, provided Buyer shall have the right, upon written notice to
Seller, from time to time, to reduce the FICO Score Sub-Limit to 5% of the
then outstanding Purchase Price of the Transactions.
"First Lien Mortgage Loan" shall mean an Eligible Asset secured by a first
lien on the related Mortgaged Property.
"Foreclosed Loan" shall mean a loan the property securing which has been
foreclosed upon by Seller.
"▇▇▇▇▇▇▇ Mac" shall mean the Federal Home Loan Mortgage Corporation, and
its successors in interest.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction
over such Person, any of its Subsidiaries or any of their properties.
"Guarantee" shall mean, as to any Person, any obligation of such Person
directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any
other Person or otherwise protecting the holder of such Indebtedness
against loss (whether by virtue of partnership arrangements, by agreement
to keep-well another Person, to purchase assets, goods, securities or
services, or to agree to take-or-pay arrangement or otherwise); provided
that the term "Guarantee" shall not include (i) endorsements for
collection or deposit in the ordinary course of business, or (ii)
obligations to make servicing advances for delinquent taxes and insurance,
or other obligations in respect of a Mortgaged Property, or other
principal and interest advances made in the ordinary course of servicing
the Mortgage Loans. The amount of any Guarantee of a Person shall be
deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee is made or, if not
stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms
"Guarantee" and "Guaranteed" used as verbs shall have correlative
meanings.
"Huntington Bank Facility" shall mean that Loan Agreement, dated as of
September 30, 2003, between The Huntington National Bank and Seller, as
amended to the date hereof and as the same may be amended from time to
time, and all other documents or agreements executed in connection
therewith, or replacement facilities with substantially similar terms
(including, but not limited to, amounts and rates) with financial
institutions approved by Buyer.
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"Income" shall mean, with respect to any Mortgage Loan at any time, all
collections and proceeds on or in respect of the Mortgage Loans,
including, without limitation, any principal thereof then payable and all
interest or other distributions payable thereon less any related servicing
fee(s) charged by Servicer.
"Indebtedness" shall mean, for any Person: (a) obligations created, issued
or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise,
to repurchase such Property from such Person); (b) obligations of such
Person to pay the deferred purchase or acquisition price of Property or
services, other than trade accounts payable (other than for borrowed
money) arising, and accrued expenses incurred, in the ordinary course of
business so long as such trade accounts payable are payable within 90 days
of the date the respective goods are delivered or the respective services
are rendered; (c) Indebtedness of others secured by a Lien on the Property
of such Person, whether or not the respective Indebtedness so secured has
been assumed by such Person; (d) obligations (contingent or otherwise) of
such Person in respect of letters of credit or similar instruments issued
or accepted by banks and other financial institutions for account of such
Person; (e) obligations of such Person under repurchase agreements,
sale/buy-back agreements or like arrangements; (f) Indebtedness of others
Guaranteed by such Person; (g) all obligations of such Person incurred in
connection with the acquisition or carrying of fixed assets by such
Person; (h) Indebtedness of general partnerships of which such Person is
secondarily or contingently liable (other than by endorsement of
instruments in the course of collection), whether by reason of any
agreement to acquire such indebtedness to supply or advance sums or
otherwise; and (i) Capital Lease Obligations of such Person.
"Interest-Only Mortgage Loan" shall mean an Eligible Asset that pays
interest only during an initial period of no more than 10 years and then,
following such initial period, fully amortizes during the remaining term.
"Interest-Only Sub-Limit" shall mean an amount not to exceed $37,500,000;
provide Buyer shall have the right, upon written notice to Seller, from
time to time, to reduce the Interest-Only Sub-Limit to an amount not less
than 15% of the then aggregate outstanding Purchase Price of the
Transactions.
"Interest Rate Protection Agreement" shall mean, with respect to any or
all of the Mortgage Loans, any short sale of US Treasury securities, or
futures contract, or options related contract, or interest rate swap, cap
or collar agreement or similar arrangement providing for protection
against fluctuations in interest rates or the exchange of nominal interest
obligations, either generally or under specific contingencies and
acceptable to Buyer.
"Interim Funder" shall mean, with respect to each MERS Designated Mortgage
Loan, the Person named on the MERS(R) System as the interim funder
pursuant to the MERS Procedures Manual.
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"Investor" shall mean, with respect to each MERS Designated Mortgage Loan,
the Person named on the MERS(R) System as the investor pursuant to the
MERS Procedures Manual.
"Jumbo Mortgage Loan" shall mean an Eligible Asset that would be a
Conforming Mortgage Loan except that such Mortgage Loan has a principal
balance as of origination of more than $333,700.
"Late Payment Fee" has the meaning specified in Section 5(b).
"Leasehold Mortgage Loan" shall mean an Eligible Asset secured by a first
lien on a dwelling situated on a leasehold estate (with respect to real
property located in jurisdictions in which the use of leasehold estates
for residential properties is a widely accepted practice).
"Leasehold Mortgage Loan Sub-Limit" shall mean, as of any date, an amount
equal $5,000,000, provided Buyer shall have the right, upon written notice
to Seller, from time to time, to reduce the Leasehold Mortgage Loan
Sub-Limit 2% of the then outstanding Purchase Price of the Transactions.
"Letter Agreement" shall mean that certain letter agreement, dated as of
the date hereof, between Seller and Buyer, as may be amended from time to
time.
"Lien" shall mean any mortgage, lien, pledge, charge, security interest or
similar encumbrance.
"Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage Loan,
the ratio of the original outstanding principal amount of such Mortgage
Loan at the time of origination to the lesser of (a) the Appraised Value
of the related Mortgaged Property at origination of such Mortgage Loan and
(b) if the related Mortgaged Property was purchased within twelve (12)
months of the origination of such Mortgage Loan, the purchase price of the
related Mortgaged Property.
"Margin Base" shall mean the aggregate Asset Value of all Purchased Assets
which are Eligible Assets.
"Margin Deficit" has the meaning specified in Section 4.
"Market Value" shall mean, as of any date in respect of any Mortgage Loan,
the price at which such Mortgage Loan could readily be sold as determined
in Buyer's sole discretion exercised in good faith, which price may be
determined to be zero. Buyer's determination of Market Value shall be
conclusive upon the parties absent manifest error on the part of Buyer.
"Material Adverse Effect" shall mean with respect to any Person, a
material adverse effect on (a) the Property, business, operations or
financial condition of such Person, (b) the ability of such Person to
perform its obligations under any of the Repurchase Documents to which it
is a party, (c) the validity or enforceability of any of the
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▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, (▇) the rights and remedies of Buyer under any of
the Repurchase Documents, (e) the timely payment of any amounts payable
under any of the Repurchase Documents to which it is a party, or (f) the
Asset Value of the Purchased Assets.
"Maximum Amount" shall mean $250,000,000.
"MERS" shall mean Mortgage Electronic Registration Systems, Inc., and its
successors in interest.
"MERS Designated Mortgage Loan" shall mean a Mortgage Loan for which the
Seller has designated or will designate MERS as, and has taken or will
take such action as is necessary to cause MERS to be, the mortgagee of
record, as nominee for the Seller, in accordance with the MERS Procedure
Manual.
"MERS Procedure Manual" shall mean the MERS Procedures Manual attached as
Exhibit B to the Electronic Tracking Agreement, as it may be amended,
supplemented or otherwise modified from time to time.
"MERS Report" shall mean the schedule listing MERS Designated Mortgage
Loans and other information prepared by the Electronic Agent pursuant to
the Electronic Tracking Agreement.
"MERS(R) System" shall mean the Electronic Agent's mortgage electronic
registry system, as more particularly described in the MERS Procedures
Manual.
"MLPA" shall mean the Mortgage Loans Purchase Agreement, dated as of the
date hereof, between FBR and Buyer, as may be amended from time to time.
"Mortgage" shall mean the mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien or second lien on a
fee simple Residential Dwelling securing the Mortgage Note or a leasehold
estate with respect to real property located in jurisdictions in which the
use of leasehold estates for residential properties is a widely accepted
practice.
"Mortgage File" shall have the meaning assigned thereto in the Custodial
and Disbursement Agreement.
"Mortgage Loan" shall mean a mortgage loan originated in accordance with
the Underwriting Guidelines which Custodian has been instructed to hold
for Buyer pursuant to the Custodial and Disbursement Agreement including
any Wet-Ink Mortgage Loan listed on a Transaction Request, and which
Mortgage Loan includes, without limitation, (i) a Mortgage Note and
related Mortgage, and (ii) all right, title and interest of Seller in and
to the Mortgaged Property covered by such Mortgage.
"Mortgage Note" shall mean the original executed promissory note or other
evidence of the indebtedness of a Mortgagor with respect to a Mortgage
Loan.
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"Mortgaged Property" shall mean a fee simple interest in or a leasehold
estate with respect to real property located in jurisdictions in which the
use of leasehold estates for residential properties is a widely accepted
practice the real property (including all improvements, buildings,
fixtures and building equipment thereon and all additions, alterations and
replacements made at any time with respect to the foregoing) and all other
collateral securing repayment of the debt evidenced by a Mortgage Note.
"Mortgagee" shall mean the record holder of a Mortgage Note secured by a
Mortgage.
"Mortgagor" shall mean the obligor or obligors on a Mortgage Note,
including any person who has assumed or guaranteed the obligations of the
obligor thereunder.
"Multiemployer Plan" shall mean a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been or are required to
be made by Seller or any ERISA Affiliate and that is covered by Title IV
of ERISA.
"Net Income" shall mean, with respect to any Person for any period, the
consolidated net income of such Person and its Subsidiaries for such
period as determined in accordance with GAAP.
"Non-Use Fee" shall mean the fee payable to the Buyer pursuant to Section
3(n) in an amount on such date of determination equal to the Required
Amount on such date.
"Payment Calculation Date" shall mean the tenth (10th) day of each month.
"Payment Date" shall mean two (2) Business Days after the Payment
Calculation Date.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Periodic Advance Repurchase Payment" has the meaning specified in Section
5(b).
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality
or political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
maintained by such Person or any ERISA Affiliate of such Person and
covered by Title IV of ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any day a Transaction is
outstanding or any other amount under this Agreement or any other
Repurchase Document that is not paid when due to Buyer at the stated
Repurchase Date or otherwise when due (a "Post-Default Day"), a rate per
annum on a 360 day per year basis during the period from and including the
due date to but excluding the date on which such amount is paid in full
equal to 3% per annum plus the Prime Rate on such Post-Default Day.
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"Price Differential" means, with respect to any Transaction hereunder as
of any date, the aggregate amount obtained by daily application of the
Pricing Rate for such Transaction to the Purchase Price for such
Transaction on a 360 day per year basis for the actual number of days
during the period commencing on (and including) the Purchase Date for such
Transaction and ending on (but excluding) the Repurchase Date (reduced by
any amount of such Price Differential previously paid by Seller to Buyer
with respect to such Transaction).
"Pricing Rate" shall mean with respect to any Class of Mortgage Loans and
any date of determination a rate per annum equal to the sum of (a) the
Eurodollar Rate applicable on such date plus (b) the Pricing Spread for
such Class applicable on such date.
"Pricing Spread" shall have the meaning given thereto in the Letter
Agreement.
"Prime Rate" shall mean the prime rate announced to be in effect from time
to time, as published as the average rate in The Wall Street Journal.
"Property" shall mean any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Agreement" shall mean any purchase agreement by and between
Seller and any third party, including without limitation, any Affiliate of
Seller, pursuant to which Seller has purchased assets subsequently sold to
Buyer hereunder.
"Purchase Date" shall mean the date on which Purchased Assets are
transferred by Seller to Buyer or its designee (including Custodian).
"Purchase Percentage" shall have the meaning given thereto in the Letter
Agreement.
"Purchase Price" shall mean on each Purchase Date, the price at which
Purchased Assets are transferred by Seller to Buyer or its designee
(including Custodian) which shall equal the Asset Value for such Purchased
Assets on the Purchase Date.
"Purchased Assets" shall mean the Mortgage Loans sold by Seller to Buyer
in a Transaction.
"Purchased Items" has the meaning specified in Section 7.
"Qualified Originator" means an originator of Mortgage Loans acceptable to
Buyer in its sole discretion.
"Regulations T, U and X" shall mean Regulations T, U and X of the Board of
Governors of the Federal Reserve System (or any successor), as the same
may be modified and supplemented and in effect from time to time.
"REO Property" shall mean real property acquired by Seller, including a
Mortgaged Property acquired through foreclosure of a Mortgage Loan or by
deed in lieu of such foreclosure.
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"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA or a successor provision thereof, other than those events
as to which the thirty day notice period is waived under subsections .13,
.14, .16, .18, .19 or .20 of PBGC Reg. Section 2615 or one or more
successor provision thereof.
"Repurchase Date" shall mean the date on which Seller is to repurchase the
Purchased Assets from Buyer as specified in the related Confirmation
including any date determined by application of the provisions of Sections
3 or 13 which date shall be specified as "open" unless otherwise requested
by Seller and agreed by Buyer; provided that in no event shall the
Repurchase Date be in excess of 364 days after the Purchase Date. If the
Transaction is "open", the Repurchase Date shall be one (1) Business Day
after the date upon which either Buyer (in its sole discretion) or the
Seller (in its sole discretion) provides to the other written notice of
its intention to sell or repurchase, as applicable, the applicable
Mortgage Loans; provided that the Repurchase Date shall not, in any event,
exceed 364 days from the date hereof.
"Repurchase Documents" shall mean this Agreement, the Custodial and
Disbursement Agreement, the Account Agreement, the Letter Agreement and
the MLPA, and all other documents or agreements executed in connection
therewith.
"Repurchase Obligations" shall have the meaning specified in Section 7(b).
"Repurchase Price" means the price at which Purchased Assets are to be
transferred from Buyer or its designee (including Custodian) to Seller
upon termination of a Transaction, which will be determined in each case
(including Transactions terminable upon demand) as the sum of the Purchase
Price and the Price Differential as of the date of such determination,
including any amounts paid pursuant to Requests for Additional
Transactions for Excess Margin under Section 3(o), decreased by all cash,
Income and Periodic Advance Repurchase Payments (including Late Payment
Fees, if any) actually received by Buyer pursuant to Sections 5(a), 5(b)
or 11(r), respectively.
"Request for Additional Transactions for Excess Margin" shall have the
meaning specified in Section 3(o)(1).
"Required Amount" shall mean the difference, as of the date specified,
between (a) all amounts actually paid to Buyer hereunder in respect of the
Commitment Fee and/or the Non-Use Fee and all amounts in respect of the
Pricing Spread and (b)(1) as of November 25, 2004, $700,000, (2) as of
February 25, 2005, $1,000,000, (3) as of May 25, 2005, $1,400,000 and (4)
as of August 24, 2005, $1,800,000.
"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Residential Dwelling" shall mean any one of the following: (i) a detached
single family dwelling, (ii) a two-to-four family dwelling, (iii) a
detached single family dwelling in a
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planned unit development, (iv) a unit in a condominium project or (v) a
dwelling situated on a leasehold estate (with respect to real property
located in jurisdictions in which the use of leasehold estates for
residential properties is a widely accepted practice). Mortgaged
Properties that consist of the following property types are not
Residential Dwellings: (a) co-operative units, (b) log homes, (c) earthen
homes, (d) underground homes, (e) mobile homes or manufactured housing
units or (f) any dwelling situated on more than ten acres of property.
"Responsible Officer" shall mean, as to any Person, the chief executive
officer, the chief financial officer, the treasurer or the chief operating
officer of such Person.
"RFC Facility" shall mean that First Amended and Restated Warehousing
Credit and Security Agreement, dated as of August 31, 2002, between
Residential Funding Corporation and Seller, Oak Street Mortgage, Inc., Oak
Street Mortgage of Tennessee LLC, as amended to the date hereof and as the
same may be amended from time to time, and all other documents or
agreements executed in connection therewith, or replacement facilities
with substantially similar terms (including, but not limited to, amounts
and rates) with financial institutions approved by Buyer.
"Second Lien Mortgage Loan" shall mean an Eligible Asset secured by a lien
on the Mortgaged Property, which is subject to one prior lien on such
Mortgaged Property.
"Second Lien Sub-Limit" shall mean, as of any date, an amount equal to
$25,000,000, provided Buyer shall have the right, upon written notice to
Seller, from time to time, to reduce the Second Lien Sub-Limit to 10% of
the then outstanding Purchase Price of the Transactions.
"Security Agreement" shall mean with respect to any Mortgage Loan, any
contract, instrument or other document related to security for repayment
thereof (other than the related Mortgage and Mortgage Note), executed by
the Mortgagor and/or others in connection with such Mortgage Loan,
including without limitation, any security agreement, guaranty, title
insurance policy, hazard insurance policy, chattel mortgage, letter of
credit or certificate of deposit or other pledged accounts, and any other
documents and records relating to any of the foregoing.
"Seller" shall mean Oak Street Mortgage LLC a Delaware limited liability
company, and its successors in interest.
"Seller Asset Schedule" shall have the meaning assigned thereto in the
Custodial and Disbursement Agreement.
"Seller-Related Obligations" shall mean any obligations, representations,
warranties and covenants of Seller hereunder and under any other
arrangement between Seller or an Affiliate of Seller on the one hand and
Buyer or an Affiliate of Buyer on the other hand.
"Servicer" shall have the meaning specified in Section 24.
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"Servicer Account" shall mean any account established by Servicer in
connection with the servicing of the Mortgage Loans.
"Servicer Notice" shall mean the notice from Seller to Servicer,
substantially in the form of Exhibit VII attached hereto.
"Servicing Agreement" has the meaning specified in Section 24.
"Servicing File" means with respect to each Mortgage Loan, the file
retained by Seller consisting of originals of all documents in the
Mortgage File which are not delivered to a Custodian and copies of all
documents in the Mortgage File set forth in Section 2 of the Custodial and
Disbursement Agreement.
"Servicing Records" has the meaning specified in Section 24.
"Settlement Agent" shall mean, with respect to any Transaction, the entity
approved by Buyer, in its sole discretion, which may be a title company,
escrow company or attorney in accordance with local law and practice in
the jurisdiction where the related Wet-Ink Mortgage Loan is being
originated, to which the proceeds of such Transaction are to be wired
pursuant to Section 3.
"Star Financial Facility" shall mean that Credit Agreement, dated as of
November 27, 2001, between Cresleigh Financial Services, LLC, Cresleigh
Bancorp and Star Financial Bank, as amended and as the same may be amended
from time to time, and all other documents or agreements executed in
connection therewith, or replacement facilities with substantially similar
terms (including, but not limited to, amounts and rates) with financial
institutions approved by Buyer.
"Sub-Limit" shall mean each of the 180-day Mortgage Loan Sub-Limit,
Alt-A/Sub-Prime Second Lien Sub-Limit, the Condominium Mortgage Loan
Sub-Limit, the FICO Score Sub-Limit, the Leasehold Mortgage Loan
Sub-Limit, the Sub-Prime Second Lien Sub-Limit and the Wet-Ink Sub-Limit:
"Sub-Prime First Mortgage Loan" shall mean an Eligible Asset which is a
Sub-Prime Mortgage Loan and a First Lien Mortgage Loan.
"Sub-Prime Mortgage Loan" shall mean an Eligible Asset which is a Mortgage
Loan made to a Mortgagor of less than "A-" credit quality but greater than
"C+" credit quality secured by a lien on a single-family Residential
Dwelling.
"Sub-Prime Second Lien Sub-Limit" shall mean, as of any date, an amount
equal to $10,000,000, provided Buyer shall have the right, upon written
notice to Seller, from time to time, to reduce the Sub-Prime Second Lien
Sub-Limit to 5% of the then outstanding Purchase Price of the
Transactions.
"Sub-Prime Second Mortgage Loan" shall mean an Eligible Asset which is a
Sub-Prime Mortgage Loan and a Second Lien Mortgage Loan.
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"Subordinated Loan Agreement" shall mean that NASD Revolving Subordinated
Loan Agreement, between ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Group, Inc. and FBR, as
the same may be amended from time to time, and all other documents or
agreements executed in connection therewith.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership, limited liability company or other entity of which at least a
majority of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such
corporation, partnership, limited liability company or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership
or other entity shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned
or controlled by such Person or one or more Subsidiaries of such Person or
by such Person and one or more Subsidiaries of such Person.
"Tangible Net Worth" shall mean, with respect to any Person, as of a
particular date,
(a) all amounts which would be included under capital on a balance
sheet of such Person at such date, determined on a consolidated basis in
accordance with GAAP, less
(b) (i) without duplication of amounts eliminated in consolidation,
amounts owing to such Person from Affiliates, or from officers, employees,
partners, members, directors, shareholders or other Persons similarly
affiliated with such Person or their respective Affiliates, (ii)
intangible assets (such as capitalized servicing rights, goodwill and
trademarks), and (iii) the value of REO Property and Foreclosed Loans.
"Termination Date" shall mean the earliest of (a) the date which is 364
days from the date hereof which shall be August 24, 2005 or (b) the date
that is 45 days prior to the termination of the Subordinated Loan
Agreement or (c) such earlier date on which this Agreement shall terminate
in accordance with the provisions hereof or by operation of law, as may be
extended pursuant to Section 3(m).
"Termination Fee" shall mean a fee payable by Seller to Buyer in
accordance with Section 20 hereof equal to the Required Amount as of such
date.
"Test Period" shall have the meaning specified in Section 11(m).
"Total Indebtedness" shall mean with respect to any Person, for any
period, the aggregate consolidated Indebtedness of such Person during such
period maintained in accordance with GAAP.
"Transaction" has the meaning specified in Section 1.
"Transaction Request" means a request from Seller to Buyer, in the form
attached as Exhibit I hereto, to enter into a Transaction, which may be
delivered via Electronic
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Transmission, which identifies the third party purchaser whose
underwriting guidelines are applicable to each Mortgage Loan Seller is
requesting Buyer purchase.
"True Sale Certification" shall mean a true sale certification in the form
of Exhibit VI attached hereto.
"Trust Receipt" shall mean a trust receipt issued by Custodian to Buyer
confirming Custodian's possession of certain Mortgage Files which are held
by Custodian for the benefit of Buyer or the registered holder of such
trust receipt.
"Underwriting Guidelines" shall mean the underwriting guidelines delivered
by Seller to Buyer on or prior to the Effective Date and as may be
modified or supplemented from time to time thereafter as approved by Buyer
in its sole discretion attached hereto as Exhibit II; provided that with
respect to the underwriting guidelines that consist of separate guidelines
developed by third party purchasers from Seller of mortgage loans similar
to the Mortgage Loans, the applicable underwriting guidelines shall
clearly identify who the applicable third party purchaser is and, each
Transaction Request shall indicate on the attached schedule which third
party underwriting guidelines are applicable to each Mortgage Loan Seller
is requesting Buyer purchase.
"Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial Code
as in effect on the date hereof in the State of New York; provided that if
by reason of mandatory provisions of law, the perfection, the effect of
perfection or non-perfection and the priority of the security interest in
any Purchased Items is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than New York, "Uniform Commercial Code"
shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection, effect of perfection or non-perfection and the priority.
"Wet-Ink Mortgage Loan" shall mean an Eligible Asset which is sold to
Buyer simultaneously with the origination thereof by Seller, which
origination is in accordance with the Underwriting Guidelines and is
funded in part or in whole with proceeds of the sale of the Eligible Asset
to Buyer advanced directly to a Settlement Agent.
"Wet-Ink Sub-Limit" shall mean, as of any date, an amount equal to
$60,000,000, provided Buyer shall have the right, upon written notice to
Seller, from time to time, to reduce the Wet-Ink Sub-Limit to 25% of the
then outstanding Purchase Price of the Transactions.
3. INITIATION; TERMINATION
(a) Conditions Precedent to Initial Transaction. Buyer's obligation to enter
into the initial Transaction hereunder is subject to the satisfaction,
immediately prior to or concurrently with the making of such Transaction,
of the condition precedent that Buyer shall have received from Seller any
fees and expenses payable hereunder, including without limitation, the
Commitment Fee, and all of the following documents, each of which shall be
satisfactory in form and substance to Buyer and its counsel in their sole
discretion exercised in good faith:
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(1) Master Repurchase Agreement. This Master Repurchase Agreement duly
completed and executed by the parties thereto. In addition, Seller
shall have taken such other action as Buyer shall have requested in
order to perfect the security interests created pursuant to this
Agreement, including filing of UCC financing statements in form and
substance satisfactory to Buyer;
(2) Custodial and Disbursement Agreement. The Custodial and Disbursement
Agreement, duly executed and delivered by each party thereto. In
addition, Seller shall have taken such other action as Buyer shall
have requested in order to transfer the Purchased Assets pursuant to
this Agreement;
(3) Account Agreement. An Account Agreement, duly executed and delivered
by the parties thereto;
(4) Opinions of Counsel. An opinion or opinions of outside counsel to
each of Seller and FBR, substantially in the form of Exhibit IIIA or
IIIB, as applicable;
(5) Organizational Documents. A good standing certificate and certified
copies of the charter and by-laws (or equivalent documents) of each
of Seller and FBR, and of all corporate or other authority for each
of Seller and FBR, with respect to the execution, delivery and
performance of the Repurchase Documents to which it is a party and
each other document to be delivered by Seller from time to time in
connection herewith (and Buyer may conclusively rely on such
certificate until it receives notice in writing from Seller to the
contrary);
(6) Consents and Waivers. Any and all consents and waivers required
under the Existing Financing Facilities;
(7) UCC Financing Statements. UCC Financing Statements in form and
substance satisfactory to Buyer naming Seller as Debtor and Buyer as
Secured Party and describing the Purchased Items;
(8) Underwriting Guidelines. A copy of Seller's current Underwriting
Guidelines, and any material changes to the Underwriting Guidelines
made since the Underwriting Guidelines were last delivered to Buyer;
(9) Servicing Agreement(s). Any Servicing Agreement, certified as a
true, correct and complete copy of the original, with a letter
attached thereto acknowledged by the applicable Servicer directing
Servicer to remit all payments on account of the Mortgage Loans
directly to Buyer upon receipt of notice from Buyer of the
occurrence of an Event of Default; and
(10) Other Documents. Such other documents as Buyer may reasonably
request, in form and substance reasonably acceptable to Buyer.
(b) Conditions Precedent to all Transactions. Buyer's obligation to enter into
each Transaction (including the initial Transaction) is subject to the
satisfaction of the following further conditions precedent, both
immediately prior to entering into such
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Transaction and also after giving effect to the consummation thereof and
the intended use of the proceeds of the sale:
(1) Seller shall have delivered a Transaction Request via Electronic
Transmission in accordance with the procedures set forth in Section
3(c).
(2) no Default or Event of Default shall have occurred and be continuing
under the Repurchase Documents;
(3) after giving effect to the requested Transaction, the aggregate
outstanding Purchase Price of the Transactions outstanding shall not
exceed the Maximum Amount;
(4) both immediately prior to the requested Transaction and also after
giving effect thereto and to the intended use thereof, the
representations and warranties made by Seller in Section 10, shall
be true, correct and complete on and as of such Purchase Date in all
material respects with the same force and effect as if made on and
as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such
specific date);
(5) after giving effect to the requested Transaction, the aggregate
outstanding Purchase Price of the Transactions outstanding shall not
exceed the Asset Value of all the Purchased Assets subject to
outstanding Transactions;
(6) subject to Buyer's right to perform one or more Due Diligence
Reviews pursuant to Section 26, Buyer shall have completed its due
diligence review of the Mortgage File for each Purchased Asset, and
such other documents, records, agreements, instruments, mortgaged
properties or information relating to such Purchased Asset as Buyer
in its sole discretion exercised in good ▇▇▇▇▇ ▇▇▇▇▇ appropriate to
review and such review shall be satisfactory to Buyer in its sole
discretion exercised in good faith, provided the Buyer hereby
acknowledges that Seller is under no obligation to deliver the
Mortgage Loan Documents to Buyer or its Custodian with respect to a
Wet-Ink Loan until the eighth (8th) Business Day after the related
Purchase Date;
(7) with respect to any Eligible Asset to be purchased hereunder on the
related Purchase Date which is not serviced by the Seller, Seller
shall have provided to Buyer a copy of the related Servicing
Agreement, certified as a true, correct and complete copy of the
original, together with a Servicer Notice, fully executed by Seller
and the Servicer;
(8) Buyer shall have received (i) all fees and expenses of counsel to
Buyer as contemplated by Section 14(b), (ii) to the extent Seller is
required hereunder to reimburse Buyer for such amounts, all
reasonable costs and expenses incurred by Buyer in connection with
the entering into of any Transaction hereunder, including, without
limitation, costs associated with appraisal review and due diligence
recording or other administrative expenses necessary or incidental
to the execution of any Transaction hereunder, and (iii) any Non-Use
Fee contemplated
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by Section 3(n), which amounts, at Buyer's option, may be withheld
from the sale proceeds of any Transaction hereunder;
(9) Buyer shall have approved, in its sole discretion, all exceptions to
the Underwriting Guidelines;
(10) to the extent there are any MERS Designated Mortgage Loans, Buyer
shall have received from Seller a copy of a fully executed
Electronic Tracking Agreement;
(11) Buyer shall have received from Seller, with respect to MERS
Designated Mortgage Loans, a MERS Report reflecting Seller as
Investor and no Person named in the Interim Funder field for each
such MERS Designated Mortgage Loan;
(12) none of the following shall have occurred and/or be continuing:
(A) an event or events shall have occurred in the good
faith determination of Buyer resulting in the effective
absence of a "repo market" or comparable "lending market" for
financing debt obligations secured by mortgage loans or
securities or an event or events shall have occurred resulting
in Buyer not being able to finance Purchased Assets through
the "repo market" or "lending market" with traditional
counterparties at rates which would have been reasonable prior
to the occurrence of such event or events; or
(B) an event or events shall have occurred resulting in
the effective absence of a "securities market" for securities
backed by mortgage loans or an event or events shall have
occurred resulting in Buyer not being able to sell securities
backed by mortgage loans at prices which would have been
reasonable prior to such event or events; or
(C) there shall have occurred a material adverse change
in the financial condition of Buyer which materially and
adversely affects the ability of Buyer to fund its obligations
under this Agreement;
(13) with respect to each Eligible Asset that is not a Wet-Ink Mortgage
Loan, Buyer shall have received from Custodian on each Purchase Date
an Asset Schedule and Exception Report, dated the Purchase Date,
duly completed and with exceptions acceptable to Buyer in its sole
discretion in respect of Eligible Assets to be purchased hereunder
on such Business Day;
(14) Buyer shall have received from Seller a Warehouse Lender's Release
Letter substantially in the form attached to the Custodial and
Disbursement Agreement (or such other form acceptable to Buyer) or a
Seller's Release Letter substantially in the form attached to the
Custodial and Disbursement Agreement (or such other form acceptable
to Buyer) covering each Eligible Asset to be sold to Buyer;
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(15) prior to the purchase of any Mortgage Loan acquired (by purchase or
otherwise) by Seller from any third party, including without
limitation, any Affiliate of Seller, Buyer shall have received a
True Sale Certification;
(16) with respect to each Eligible Asset that is a Wet-Ink Mortgage Loan,
Buyer shall have received an insured closing letter from each
Settlement Agent that is not a title insurance company
(17) Buyer shall not have determined that the introduction of, or a
change in, any Requirement of Law or in the interpretation or
administration of any Requirement of Law applicable to Buyer has
made it unlawful, and no Governmental Authority shall have asserted
that it is unlawful, for Buyer to enter into Transactions;
(18) each Transaction Request will have an aggregate Purchase Price at
least equal to $500,000; and
(19) the Repurchase Date for such Transaction is not later than the
Termination Date.
Each Transaction Request delivered by Seller hereunder shall constitute a
certification by Seller that all the conditions set forth in this Section
3(b) have been satisfied (both as of the date of such notice or request
and as of the date of such purchase).
(c) Seller shall request a Transaction by delivering to Custodian,
Disbursement Agent and Buyer via Electronic Transmission a request in the
form of Exhibit I attached hereto (a "Transaction Request") in accordance
with the timeframe set forth in Section 3(a) of the Custodial and
Disbursement Agreement. Such Transaction Request shall describe the
Purchased Assets in a Seller Asset Schedule and set forth (i) the Purchase
Date, (ii) the Purchase Price, (iii) the Repurchase Date, (iv) the Pricing
Rate applicable to the Transaction, (v) the applicable Purchase
Percentages, (vi) the applicable Class or Classes for each Mortgage Loan
for which Seller is requesting the Transaction and (vii) additional terms
or conditions not inconsistent with this Agreement.
On each Purchase Date, Buyer shall forward to Seller a confirmation (a
"Confirmation") by Electronic Transmission setting forth with respect to
each Transaction funded on such date, (1) the mortgage loan number, (2)
the Purchase Price for such Purchased Assets, (3) the Market Value of the
related Mortgage Loans as of the date of such Confirmation, (4) the
outstanding principal amount of the related Mortgage Loans, (5) the
Repurchase Date, (6) the Pricing Rate and (7) the Class designations of
such Purchased Assets. Buyer shall forward to Seller a revised
Confirmation by Electronic Transmission notifying Seller as to any changes
made by Buyer in the Pricing Spread or Purchase Percentage pursuant to the
terms hereof.
On each date that all the documents set forth in Section 2(a)(i) of the
Custodial and Disbursement Agreement are received by the Custodian with
respect to any Wet-Ink Mortgage Loan, and Custodian delivers to Buyer a
Trust Receipt attaching an Asset Schedule and Exception Report with
respect to such Eligible Assets, Buyer shall forward to Seller a new
Confirmation by Electronic Transmission setting forth the following
information, updated to reflect the revised Pricing Rate, and, if
applicable, Market Value
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as a result of the conversion of such Mortgage Loan, (1) the mortgage loan
number, (2) the Purchase Price for such Purchased Assets, (3) the Market
Value of the related Mortgage Loans, (4) the outstanding principal amount
of the related Mortgage Loans, (5) the Repurchase Date, (6) the Pricing
Rate and (7) the Class designations of such Purchased Assets.
In the event Seller disagrees with any terms of the Confirmation, Seller
shall notify Buyer in writing of such disagreement within one (1) Business
Day after receipt of such Confirmation unless a corrected Confirmation is
sent by Buyer. An objection sent by Seller must state specifically that it
is an objection, must specify the provision(s) being objected to by
Seller, must set forth such provision(s) in the manner that Seller
believes they should be stated, and must be received by Buyer no more than
one (1) Business Day after the Confirmation was received by Seller.
(d) Any Confirmation by Buyer shall be deemed to have been received by Seller
on the date actually received by Seller.
(e) Except as set forth in Section 3(c), each Confirmation, together with this
Agreement, shall constitute conclusive evidence of the terms agreed
between Buyer and Seller with respect to the Transaction to which the
Confirmation relates, and Seller's acceptance of the related proceeds
shall constitute Seller's agreement to the terms of such Confirmation. It
is the intention of the parties that each Confirmation shall not be
separate from this Agreement but shall be made a part of this Agreement.
(f) On the Repurchase Date, termination of a Transaction will be effected by
transfer to Seller or its designee of the Purchased Assets (and any Income
in respect thereof received by Buyer not previously credited or
transferred to, or applied to the obligations of, Seller pursuant to
Section 5) which amount shall be netted against the simultaneous receipt
of the Repurchase Price by Buyer. To the extent a net amount is owed to
one party, the other party shall pay such amount to such party. Seller is
obligated to obtain the Mortgage Files from Buyer or its designee
(including Custodian) at Seller's expense on the Repurchase Date.
(g) Subject to the terms and conditions of this Agreement, during the term of
this Agreement Seller may sell to Buyer, repurchase from Buyer and resell
to Buyer Eligible Assets hereunder.
(h) In no event shall a Transaction be entered into when any Default or Event
of Default has occurred and is continuing or when the Repurchase Date for
such Transaction would be later than the Termination Date.
(i) With respect to each Eligible Asset that is not a Wet-Ink Mortgage Loan,
Seller shall deliver to Custodian the Mortgage File pertaining to each
Eligible Asset to be purchased by Buyer no later than the time set forth
in the Custodial and Disbursement Agreement.
(j) With respect to each Eligible Asset that is not a Wet-Ink Mortgage Loan,
pursuant to the Custodial and Disbursement Agreement, Custodian shall
deliver to Buyer and Seller an Asset Schedule and Exception Report with
respect to the Eligible Assets which Seller has
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requested Buyer purchase on such Purchase Date, and no later than 5 p.m.,
New York City time, on each Purchase Date, Custodian shall deliver to
Buyer a Trust Receipt in respect of all such Eligible Assets purchased by
Buyer on such Purchase Date. Subject to the provisions of this Section 3
and Section 11 of the Custodial and Disbursement Agreement, the Purchase
Price for each Eligible Asset that is not a Wet-Ink Mortgage Loan will be
made available to Seller by Disbursement Agent transferring, the aggregate
amount of such Purchase Price in accordance with the Custodial and
Disbursement Agreement.
(k) With respect to each Eligible Asset that is a Wet-Ink Mortgage Loan, at
the request of Buyer, Seller shall cause the Settlement Agent to send the
Custodian a facsimile of the associated Escrow Instruction Letter on each
Purchase Date. Subject to the provisions of this Section 3 and Section 8
of the Custodial and Disbursement Agreement, the Purchase Price for each
Eligible Asset which is a Wet-Ink Mortgage Loan will then be made
available to Seller by Disbursement Agent transferring the aggregate
amount of such Purchase Price in accordance with the Custodial and
Disbursement Agreement. Seller shall deliver the Mortgage File related
thereto and, to the extent requested by Buyer, the original Escrow
Instruction Letter to Custodian, for receipt by Custodian no later than
eight (8) Business Days following the Purchase Date.
(l) Seller may repurchase Purchased Assets without penalty or premium, but
subject to the last sentence of this Section 3(l), on any date. The
Repurchase Price payable for the repurchase of any such Purchased Asset
shall be reduced as provided in Section 5(d). If Seller intends to make
such a repurchase, Seller shall give one (1) Business Day's prior written
notice thereof to Buyer, designating the Purchased Assets to be
repurchased. If such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, and, on receipt,
such amount shall be applied to the Repurchase Price for the designated
Purchased Assets. The amount of the original Purchase Price of the
Purchased Assets thus repurchased shall be available for subsequent
Transactions subject to the terms of this Agreement. If any Purchased
Asset is repurchased on any date other than the Repurchase Date for such
Transaction, Seller shall pay to Buyer any amount determined by Buyer, in
its sole discretion, as necessary to compensate Buyer for any additional
losses, costs or expenses which it may reasonably incur as a result of
such repurchase, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by Buyer to fund or maintain such Transaction.
(m) At the request of Seller made at least 90 days, but in no event earlier
than 120 days, prior to the then current Termination Date, Buyer may in
its sole discretion extend the Termination Date for a period of 364
additional days or such other period to be determined by Buyer in its sole
discretion by giving written notice of such extension to Seller no later
than sixty (60) days after Buyer's receipt of Seller's request. Any
failure by Buyer to deliver such notice of extension shall be deemed to be
Buyer's determination not to extend the then current Termination Date.
(n) Seller agrees to pay to Buyer the Non-Use Fee, in each case payable
quarterly in arrears on the first Business Day following each quarterly
anniversary of the Effective Date and
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on the Termination Date, commencing on October 29, 2004, such payment to
be made in Dollars, in immediately available funds, without deduction,
set-off or counterclaim, to Buyer at the account set forth in Section 8(a)
hereof.
(o) On any day on which the Margin Base exceeds the aggregate outstanding
Purchase Price of all Transactions, so long as no Default or Event of
Default has occurred and is continuing:
(1) Seller may prepare a Request for Additional Transactions for Excess
Margin in the form of Exhibit VIII attached hereto ("Request for
Additional Transactions for Excess Margin"), (A) specifying (i) the
increase in Purchase Price for all outstanding Transactions and the
requested Purchase Date, (ii) the Excess Margin with respect to all
outstanding Transactions before giving effect to the requested
Transaction, (iii) the remaining Excess Margin after giving effect
to the requested Transaction, and (iv) the aggregate outstanding
Purchase Price of the Transactions after giving effect to the
requested Transaction, and (B) including a certification that, upon
the consummation of the additional Transactions, the Margin Base
will be equal to or greater than the aggregate outstanding Purchase
Price of all Transactions, and the excess of the Margin Base over
the aggregate outstanding Purchase Price, after giving effect to the
Transaction, shall be the "Excess Margin".
(2) Seller shall transmit via Electronic Transmission the Request for
Additional Transactions for Excess Margin to Disbursement Agent and
Buyer prior to 12:00 noon, New York City time, on the requested
Purchase Date. Upon confirming that the Request for Additional
Transactions for Excess Margin correctly reflects the information
set forth in Section 3(o)(1) and that, after giving effect to the
requested Transaction, the amount of the Margin Base would be equal
to or greater than the aggregate outstanding Purchase Prices of all
Transactions, Buyer shall remit or cause Disbursement Agent to remit
the additional Purchase Price in the amount set forth in such
Request for Additional Transactions for Excess Margin and send a
revised Confirmation with respect to such Purchased Assets. In the
event that Buyer's assessment of the Margin Base would alter the
information set forth in any Request for Additional Transactions for
Excess Margin, Buyer shall promptly notify Seller in writing of such
assessment.
(3) Buyer shall not be obligated to remit or cause Disbursement Agent to
remit the additional Purchase Price requested pursuant to a Request
for Additional Transactions for Excess Margin which (i) Buyer
reasonably determines is based on erroneous information or would
result in a Transaction other than in accordance with the terms of
this Agreement, or (ii) does not reflect Buyer's current
determination of Market Value as provided in the definition thereof.
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4. MARGIN AMOUNT MAINTENANCE
(a) If at any time the Margin Base is less than the aggregate Purchase Price
for all outstanding Transactions (a "Margin Deficit"), then Buyer may by
notice to Seller (as such notice is more particularly set forth below, a
"Margin Deficit Notice") require Seller to transfer to Buyer or its
designee (including Custodian) cash to be applied to reduce the Purchase
Price with respect to all outstanding Transactions such that the aggregate
Asset Value of the Purchased Assets will thereupon equal or exceed the
aggregate Purchase Price for all outstanding Transactions. If Buyer
delivers a Margin Deficit Notice to Seller on or prior to 10 a.m., New
York City time, on any Business Day, then Seller shall transfer such cash
to Buyer no later than 4 p.m. New York City time, on such Business Day. In
the event Buyer delivers a Margin Deficit Notice to Seller after 10 a.m.,
New York City time, on any Business Day, Seller shall be required to
transfer such cash no later than 4 p.m., New York City time, on the
subsequent Business Day. All cash transferred to Buyer pursuant to this
Section 4(a) shall be deposited in the account set forth in Section 8(a)
hereof.
(b) Buyer's election, in its sole discretion, not to deliver a Margin Deficit
Notice at any time there is a Margin Deficit shall not in any way limit or
impair its right to deliver a Margin Deficit Notice at any time a Margin
Deficit exists.
5. INCOME PAYMENTS
(a) Where a particular Transaction's term extends over an Income payment date
on the Purchased Assets subject to that Transaction such Income shall be
the property of Buyer. Buyer agrees that until a Default or an Event of
Default has occurred and Buyer otherwise directs as contemplated in each
Servicer Notice, each Servicer that is not Seller shall be permitted to
continue to remit Income in accordance with the respective Servicing
Agreement. In the event that Seller is the Servicer of any Mortgage Loans,
Buyer agrees that until a Default or an Event of Default has occurred,
Seller shall be permitted to continue to remit or retain Income with
respect to such Mortgage Loans in accordance with its current existing
business practice. Upon notice of a Default or an Event of Default to
Seller hereunder or to Servicer pursuant to a Servicer Notice, Seller
shall, and pursuant to the Servicer Notice, Servicer shall be required to,
deposit promptly all Income in a deposit account (the title of which shall
indicate that the funds therein are being held in trust for Buyer) (the
"Collection Account") with the Bank and which is subject to the Account
Agreement. All funds in the Collection Account may be withdrawn by Buyer
and applied as determined by Buyer. Seller may not give any instruction
with respect to the Collection Account after a Default or an Event of
Default.
(b) Notwithstanding that Buyer and Seller intend that the Transactions
hereunder be sales to Buyer of the Purchased Assets, Seller shall pay to
Buyer the accreted value of the Price Differential (less any amount of
such Price Differential previously paid by Seller to Buyer) of each
Transaction through but not including the Payment Calculation Date (each
such payment, a "Periodic Advance Repurchase Payment") on each Payment
Date. Buyer shall deliver to Seller, via Electronic Transmission, notice
of the required Periodic Advance Repurchase Payment on or prior to the
second Business Day preceding each
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Payment Date. If Seller fails to make all or part of the Periodic Advance
Repurchase Payment by 5:00 p.m., New York City time, on the Payment Date,
Seller shall be obligated to pay to Buyer (in addition to, and together
with, the Periodic Advance Repurchase Payment) interest on the unpaid
amount of the Periodic Advance Repurchase Payment at a rate per annum
equal to the Post-Default Rate (the "Late Payment Fee") until the overdue
Periodic Advance Repurchase Payment is received in full by Buyer.
(c) Seller shall hold or cause to be held for the benefit of, and in trust
for, Buyer all Income received by or on behalf of Seller with respect to
such Purchased Assets. All such Income shall be held in trust for Buyer,
shall constitute the property of Buyer and shall not be commingled with
other property of Seller, any affiliate of Seller or the applicable
Servicer except as expressly permitted above in this Section 5. Funds
deposited in the Collection Account during any month shall be held
therein, in trust for Buyer.
(d) Buyer shall offset against the Repurchase Price of each such Transaction
all Income and Periodic Advance Repurchase Payments actually received by
Buyer for such Transaction pursuant to Sections 5(a), 5(b) or 11(r) as of
the applicable Repurchase Date, respectively, excluding any Late Payment
Fees paid pursuant to Section 5(b); it being understood that the Late
Payment Fees are properties of Buyer that are not subject to offset
against the Repurchase Price.
6. REQUIREMENTS OF LAW
(a) If any Requirement of Law (other than with respect to any amendment made
to Buyer's certificate of incorporation and by-laws or other
organizational or governing documents) or any change in the interpretation
or application thereof or compliance by Buyer with any request or
directive (whether or not having the force of law) from any central bank
or other Governmental Authority made subsequent to the date hereof:
(1) shall subject Buyer to any tax of any kind whatsoever with
respect to this Agreement or any Transaction (excluding net
income taxes) or change the basis of taxation of payments to
Buyer in respect thereof;
(2) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account
of, advances, or other extensions of credit by, or any other
acquisition of funds by, any office of Buyer which is not
otherwise included in the determination of the Eurodollar Rate
hereunder;
(3) shall impose on Buyer any other condition;
and the result of any of the foregoing is to increase the cost to
Buyer, by an amount which Buyer deems to be material, of entering,
continuing or maintaining any Transaction or to reduce any amount due
or owing hereunder in respect thereof, then, in any such case, Seller
shall promptly pay Buyer such additional
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amount or amounts as calculated by Buyer in good faith as will
compensate Buyer for such increased cost or reduced amount receivable.
(b) If Buyer shall have determined that the adoption of or any change in any
Requirement of Law (other than with respect to any amendment made to
Buyer's certificate of incorporation and by-laws or other organizational
or governing documents) regarding capital adequacy or in the
interpretation or application thereof or compliance by Buyer or any
corporation controlling Buyer with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof shall have the
effect of reducing the rate of return on Buyer's or such corporation's
capital as a consequence of its obligations hereunder to a level below
that which Buyer or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration Buyer's or such
corporation's policies with respect to capital adequacy) by an amount
deemed by Buyer to be material, then from time to time, Seller shall
promptly pay to Buyer such additional amount or amounts as will compensate
Buyer for such reduction.
(c) Any payments made by Seller to Buyer shall be free and clear of, and
without deduction or withholding for, any taxes; provided, however, that
if Seller shall be required by law to deduct or withhold any taxes from
any sums payable to Buyer, then Seller shall (A) make such deductions or
withholdings and pay such amounts to the relevant authority in accordance
with applicable law, (B) pay to Buyer the sum that would have been payable
had such deduction or withholding not been made, and (C) at the time the
Price Differential is paid, pay to Buyer all additional amounts as
specified by Buyer to preserve the after-tax yield Buyer would have been
received had such tax not been imposed.
(d) If Buyer becomes entitled to claim any additional amounts pursuant to this
Section, it shall promptly notify Seller of the event by reason of which
it has become so entitled. A certificate as to any additional amounts
payable pursuant to this Section 6(d) submitted by Buyer to Seller shall
be conclusive in the absence of manifest error.
7. SECURITY INTEREST
(a) Each of the following items or types of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever
located, is hereinafter referred to as the "Purchased Items": all Mortgage
Loans, all rights under each Purchase Agreement (but not the obligations
thereunder), all Interest Rate Protection Agreements, all Mortgage Files,
including without limitation all promissory notes, all Servicing Records
relating to the Mortgage Loans, all Servicing Agreements relating to the
Mortgage Loans and any other collateral pledged hereunder or otherwise
relating to such Mortgage Loans, together with all files, documents,
instruments, surveys, certificates, correspondence, appraisals, computer
programs, computer storage media, accounting records and other books and
records relating thereto, all mortgage guaranties and insurance (issued by
governmental agencies or otherwise) and any mortgage insurance certificate
or other document evidencing such mortgage guaranties or insurance
relating to any Mortgage Loan, all servicing fees to which such Seller is
entitled and servicing and other rights relating to the Mortgage Loans,
all Servicer Accounts established
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pursuant to any Servicing Agreement and all amounts on deposit therein,
from time to time, other agreements or contracts relating to,
constituting, or otherwise governing, any or all of the foregoing, in each
case, only to the extent they relate to the Purchased Assets including the
right to receive principal and interest payments with respect to the
Purchased Assets and the right to enforce such payments, the Collection
Account and all monies from time to time on deposit in the Collection
Account, all "general intangibles", "accounts", "chattel paper", "deposit
accounts" and "investment property" as defined in the Uniform Commercial
Code as in effect from time to time relating to or constituting any and
all of the foregoing, and any and all replacements, substitutions,
distributions on or proceeds of any and all of the foregoing.
(b) Buyer and Seller intend that the Transactions hereunder be sales to Buyer
of the Purchased Assets and not loans from Buyer to Seller secured by the
Purchased Assets. However, in order to preserve Buyer's rights under this
Agreement in the event that a court or other forum recharacterizes the
Transactions hereunder as loans and as security for the performance by
Seller of all of Seller's obligations to Buyer hereunder and the
Transactions entered into hereunder ("Repurchase Obligations") and the
Seller-Related Obligations, Seller hereby assigns, pledges and grants a
security interest in all of its right, title and interest in, to and under
the Purchased Items and the Purchased Assets to Buyer to secure the
Repurchase Obligations and the Seller-Related Obligations, including
without limitation the repayment of all amounts owing to Buyer hereunder.
The assignment, pledge and grant of security interest contained herein
shall be, and Seller hereby represents and warrants to Buyer that it is, a
first priority perfected security interest. Seller agrees to ▇▇▇▇ its
computer records and tapes to evidence the interests granted to Buyer
hereunder. All Purchased Items shall secure the payment of all obligations
of Seller now or hereafter existing under this Agreement, including,
without limitation, Seller's obligation to repurchase Purchased Assets, or
if such obligation is so recharacterized as a loan, to repay such loan,
for the Repurchase Price and to pay any and all other amounts owing to
Buyer hereunder.
(c) Pursuant to the Custodial and Disbursement Agreement, Custodian shall hold
the Mortgage Files as exclusive bailee and agent for Buyer pursuant to the
terms of the Custodial and Disbursement Agreement and shall deliver to
Buyer Trust Receipts each to the effect that Custodian has reviewed such
Mortgage Files in the manner and to the extent required by the Custodial
and Disbursement Agreement and identifying any deficiencies in such
Mortgage Files as so reviewed.
8. PAYMENT, TRANSFER AND CUSTODY
(a) Unless otherwise mutually agreed in writing, all transfers of funds to be
made by Seller hereunder shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to Buyer at
the following account maintained by Buyer; Account No. GLA 111569, account
name SER, Bank of New York, ABA No. ▇▇▇▇▇▇▇▇▇, Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, not
later than 3 p.m., New York City time, on the date on which such payment
shall become due (and each such payment made after such time shall be
deemed to have been made on the next succeeding Business Day). Seller
acknowledges that it has no rights of withdrawal from the foregoing
account.
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(b) On the Purchase Date for each Transaction, ownership of the Purchased
Assets shall be transferred to Buyer or its designee (including Custodian)
against the simultaneous transfer of the Purchase Price as set forth in
Section 11 of the Custodial and Disbursement Agreement not later than 6
p.m., New York City time, simultaneously with the delivery to Custodian of
the Purchased Assets relating to each Transaction. Seller hereby sells,
transfers, conveys and assigns to Buyer or its designee (including
Custodian) without recourse, but subject to the terms of this Agreement,
all the right, title and interest of Seller in and to the Purchased Assets
together with all right, title and interest in and to the proceeds of any
related Purchased Items.
(c) In connection with such sale, transfer, conveyance and assignment, on or
prior to each Purchase Date, Seller shall deliver or cause to be delivered
and released to Buyer or its designee (including Custodian) (i) the
Custodial Identification Certificate and (ii) the documents identified in
the Custodial and Disbursement Agreement.
(d) Any Mortgage Files not delivered to Buyer or its designee (including
Custodian) are and shall be held in trust by Seller or its designee for
the benefit of Buyer as the owner thereof. Seller or its designee shall
maintain a copy of the Mortgage File and the originals of the Mortgage
File not delivered to Buyer or its designee (including Custodian). The
possession of the Mortgage File by Seller or its designee is at the will
of Buyer for the sole purpose of servicing the related Purchased Asset,
and such retention and possession by Seller or its designee is in a
custodial capacity only. Each Mortgage File retained or held by Seller or
its designee shall be segregated on Seller's books and records from the
other assets of Seller or its designee and the books and records of Seller
or its designee shall be marked appropriately to reflect clearly the sale
of the related Purchased Asset to Buyer. Seller or its designee shall
release its custody of the Mortgage File only in accordance with written
instructions from Buyer, unless such release is required as incidental to
the servicing of the Purchased Assets or is in connection with a
repurchase of any Purchased Asset by Seller.
9. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS
Title to all Purchased Assets and Purchased Items shall pass to Buyer and Buyer
shall have free and unrestricted use of all Purchased Assets and Purchased
Items. Nothing in this Agreement shall preclude Buyer from engaging in
repurchase transactions with the Purchased Assets and Purchased Items or
otherwise pledging, repledging, transferring, hypothecating, or rehypothecating
the Purchased Assets and Purchased Items, all on terms that Buyer may determine
in its sole discretion; provided, that Buyer shall remain obligated to resell
the Purchased Assets to Seller as provided herein. Nothing contained in this
Agreement shall obligate Buyer to segregate any Purchased Assets and Purchased
Items delivered to Buyer by Seller.
10. SELLER REPRESENTATIONS
Seller represents and warrants to Buyer that as of the Purchase Date for the
purchase of any Purchased Assets by Buyer from Seller and as of the date of this
Agreement and any Transaction
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hereunder and at all times while the Repurchase Documents and any Transaction
hereunder is in full force and effect:
(a) Acting as Principal. Seller will engage in such Transactions as principal
(or, if agreed in writing in advance of any Transaction by the other party
hereto, as agent for a disclosed principal);
(b) Solvency. Neither the Repurchase Documents nor any Transaction thereunder
are entered into in contemplation of insolvency or with intent to hinder,
delay or defraud any of Seller's creditors. The transfer of the Mortgage
Loans subject hereto and the obligation to repurchase such Mortgage Loans
is not undertaken with the intent to hinder, delay or defraud any of
Seller's creditors. Seller is not insolvent within the meaning of 11
U.S.C. Section 101(32) or any successor provision thereof and the transfer
and sale of the Mortgage Loans pursuant hereto and the obligation to
repurchase such Mortgage Loan (i) will not cause Seller to become
insolvent, (ii) will not result in Seller having unreasonably small
capital, and (iii) will not result in debts that would be beyond Seller's
ability to pay as the same mature. Seller received reasonably equivalent
value in exchange for the transfer and sale of the Purchased Assets and
Purchased Items subject hereto;
(c) No Broker. Seller has not dealt with any broker, investment banker, agent,
or other person, except for Buyer, who may be entitled to any commission
or compensation in connection with the sale of Purchased Assets pursuant
to this Agreement;
(d) Ability to Perform. Seller does not believe, nor does it have any reason
or cause to believe, that either it or FBR cannot perform each and every
covenant contained in the Repurchase Documents applicable to such Person;
(e) No Defaults. No Default or Event of Default has occurred and is continuing
hereunder;
(f) Legal Name; Existence; Organizational Identification Number. Seller's
exact legal name is, and for the immediately preceding four months has
been, Oak Street Mortgage LLC. Seller (a) is, and for the immediately
preceding twelve months has been, a limited liability company duly and
exclusively organized, validly existing and in good standing under the
laws of Delaware; (b) has all requisite corporate or other power, and has
all governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to
have a Material Adverse Effect; and (c) is qualified to do business and is
in good standing in all other jurisdictions in which the nature of the
business conducted by it makes such qualification necessary, except where
failure so to qualify could not be reasonably likely (either individually
or in the aggregate) to have a Material Adverse Effect. Seller's
organizational identification number assigned by the state of Delaware is
3104536.
(g) Financial Condition. Seller has heretofore furnished to Buyer a copy of
(a) its consolidated balance sheet and the consolidating balance sheets of
its consolidated
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Subsidiaries for the fiscal year ended December 31, 2003, and the related
consolidated statements of income and retained earnings and of cash flows
for Seller and its consolidated Subsidiaries for such fiscal year, each
audited by and with the unqualified opinion thereon of Deloitte & Touche
LLP and (b) its consolidated balance sheet and the consolidating balance
sheets of its consolidated Subsidiaries for the quarterly fiscal period of
Seller ended March 31, 2004 and the related consolidated statements of
income and retained earnings and of cash flows for Seller and its
consolidated Subsidiaries for such quarterly fiscal period, setting forth
in each case in comparative form the figures for the previous year. All
such financial statements are complete and correct and fairly present, in
all material respects, the consolidated financial position of Seller and
its Subsidiaries and the consolidated results of their operations as at
such dates and for such fiscal periods, all in accordance with GAAP
applied on a consistent basis. Since March 31, 2004, there has been no
material adverse change in the consolidated business, operations or
financial condition of Seller and its consolidated Subsidiaries taken as a
whole from that set forth in said financial statements.
(h) Litigation. There are no actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are pending or
threatened) or other legal or arbitrable proceedings affecting Seller or
any of its Subsidiaries or affecting any of the Property of any of them
before any Governmental Authority which (i) questions or challenges the
validity or enforceability of the Repurchase Documents or any action to be
taken in connection with the transactions contemplated hereby, (ii) other
than with respect FBR, makes a claim or claims in an aggregate amount
greater than $1,000,000, or (iii) individually or in the aggregate, if
adversely determined, could reasonably be likely to have a Material
Adverse Effect.
(i) No Breach. Neither (a) the execution and delivery of the Repurchase
Documents nor (b) the consummation of the transactions therein
contemplated to be entered into by Seller in compliance with the terms and
provisions thereof will conflict with or result in a breach of the
organizational documents of Seller or any applicable law, rule or
regulation, or any order, writ, injunction or decree of any Governmental
Authority, or any Servicing Agreement or other material agreement or
instrument to which Seller or any of its Subsidiaries is a party or by
which any of them or any of their Property is bound or to which any of
them is subject, or constitute a default under any such material agreement
or instrument or result in the creation or imposition of any Lien (except
for the Liens created pursuant to the Repurchase Documents) upon any
Property of Seller or any of its Subsidiaries pursuant to the terms of any
such agreement or instrument.
(j) Action. Seller has all necessary corporate or other power, authority and
legal right to execute, deliver and perform its obligations under each of
the Repurchase Documents to which it is a party, as applicable; the
execution, delivery and performance by Seller of each of the Repurchase
Documents to which it is a party have been duly authorized by all
necessary corporate or other action on its part; and each Repurchase
Document to which it is a party has been duly and validly executed and
delivered by Seller and constitutes a legal, valid and binding obligation
of Seller enforceable against Seller in accordance with its terms.
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(k) Approvals. No authorizations, approvals or consents of, and no filings or
registrations with, any Governmental Authority or any securities exchange
are necessary for the execution, delivery or performance by Seller of the
Repurchase Documents or for the legality, validity or enforceability
thereof, except for filings and recordings in respect of the Liens created
pursuant to the Repurchase Documents.
(l) Margin Regulations. Neither any Transaction hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation T, U or X. In addition, Seller agrees that it will not use any
proceeds obtained from or through Transactions for the purpose of buying,
carrying or trading in securities or buying or carrying any part of an
investment contract security within the meaning of Section 220.2 of
Regulation T promulgated by the Board of Governors of the Federal Reserve
System pursuant to Section 7 of the Securities Exchange Act of 1934.
(m) Taxes. Seller and its respective Subsidiaries have filed all federal
income tax returns and all other material tax returns that are required to
be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by it or any of its Subsidiaries,
except for any such taxes as are being appropriately contested in good
faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves have been provided. The charges, accruals and
reserves on the books of Seller and its respective Subsidiaries in respect
of taxes and other governmental charges are, in the opinion of Seller,
adequate.
(n) Investment Company Act. Neither Seller nor any of its Subsidiaries is an
"investment company", or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.
(o) Purchased Assets.
(1) Seller has not assigned, pledged, or otherwise conveyed or
encumbered any Mortgage Loan to any other Person, and immediately
prior to the sale of such Mortgage Loan to Buyer, Seller was the
sole legal and beneficial owner of such Mortgage Loan and had good
and marketable title thereto, free and clear of all Liens, in each
case except for Liens to be released simultaneously with the sale to
Buyer hereunder. No Mortgage Loan sold to Buyer hereunder was
acquired (by purchase or otherwise) by Seller from an Affiliate of
Seller unless a True Sale Certification has been delivered to Buyer
and unless such transaction (1) is not otherwise expressly
prohibited under this Agreement, (2) was upon fair and reasonable
terms no less favorable to Seller than it would obtain in a
comparable arm's length transaction with a Person which is not an
Affiliate and (3) was a sale that would not be recharacterized as a
financing in the event of a bankruptcy, insolvency or other similar
proceeding.
(2) The provisions of this Agreement are effective to either constitute
a sale of Purchased Items to Buyer or to create in favor of Buyer a
valid and fully perfected first priority security interest in all
right, title and interest of Seller in, to and under the Purchased
Items.
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(3) Upon receipt by Custodian of each Mortgage Note, endorsed in blank
by a duly authorized officer of Seller, either a purchase shall have
been completed by Buyer of each Mortgage Note or Buyer shall have a
valid and fully perfected first priority security interest in the
applicable Mortgage Note and in such Seller's interest in the
related Mortgaged Property.
(4) Upon the filing of financing statements on Form UCC-1 naming Buyer
as "Secured Party", Seller as "Debtor" and describing the Purchased
Items, in the jurisdictions and recording offices listed on Exhibit
IV attached hereto, the security interests granted hereunder in the
Purchased Items will constitute valid and fully perfected security
interests under the Uniform Commercial Code in all right, title and
interest of Seller in, to and under such Purchased Items, which can
be perfected by filing under the Uniform Commercial Code.
(5) Upon execution and delivery of the Account Agreement, Buyer shall
either be the owner of, or have a valid and fully perfected first
priority security interest in, the investment property and all
deposit accounts comprising Purchased Items.
(6) With respect to each Purchased Asset, each of the representations
and warranties on Schedule 1 is true and correct.
(p) Location of Books and Records. The location where Seller keeps its books
and records, including all computer tapes and records related to the
Purchased Items is its chief executive office.
(q) Hedging Policies. (1) Seller shall hedge all Purchased Assets in
accordance with the Hedging Policies. Seller shall not make any material
change to its Hedging Policies without the prior written consent of Buyer,
which shall be deemed given if written notice to the contrary, including
the reason(s) therefor, is not received by Seller within five (5) Business
Days following Seller's written notice to Buyer, confirmed via telephone,
of any such change, and Seller shall review the Hedging Policies
periodically to confirm that they are being complied with in all material
respects and are adequate to meet Seller's business objectives. (2) In the
event Seller makes any amendment or modification to the Hedging Policies,
Seller shall within 30 days of such amendment or modification deliver to
Buyer a complete copy of the amended or modified Hedging Policies.
Additionally, Buyer may in its reasonable discretion request a current
copy of its Hedging Policies at any time.
(r) Servicing Agreements. Seller has delivered to Buyer all Servicing
Agreements with respect to the Purchased Assets and no default or event of
default exists thereunder.
(s) Existing Financing Facilities. All credit facilities, repurchase
facilities or substantially similar facilities of Seller which are
presently in effect are listed under the definition of "Existing Financing
Facilities" and no defaults or events of default exist thereunder. The
financial covenants hereunder are at least equal to those Seller makes
under each of the Existing Financing Facilities. Seller shall give Buyer
10 Business Days prior notification of any amendment to any financial
covenant in any Existing Financing Facility that
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increases the obligations or requirements of Seller thereunder, and Buyer
shall have the option, at Buyer's sole discretion, to amend this Agreement
to incorporate a substantially similar financial covenant.
(t) True and Complete Disclosure. The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of
Seller to Buyer in connection with the negotiation, preparation or
delivery of this Agreement and the other Repurchase Documents or included
herein or therein or delivered pursuant hereto or thereto (other than with
respect to the Mortgage Loans), when taken as a whole, do not contain any
untrue statement of material fact or omit to state any material fact
necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by or on behalf of Seller to
Buyer in connection with this Agreement and the other Repurchase Documents
and the transactions contemplated hereby (other than with respect to the
Mortgage Loans) and thereby will be true, complete and accurate in every
material respect, or (in the case of projections) based on reasonable
estimates, on the date as of which such information is stated or
certified. There is no fact known to a Responsible Officer of Seller,
after due inquiry, that could reasonably be expected to have a Material
Adverse Effect that has not been disclosed herein, in the other Repurchase
Documents or in a report, financial statement, exhibit, schedule,
disclosure letter or other writing furnished to Buyer for use in
connection with the transactions contemplated hereby or thereby.
(u) ERISA. Each Plan to which Seller or any of its Subsidiaries make direct
contributions, and, to the knowledge of Seller, each other Plan and each
Multiemployer Plan, is in compliance in all material respects with, and
has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other Federal or State
law. No event or condition has occurred and is continuing as to which
Seller would be under an obligation to furnish a report to Buyer under
Section 11(a)(4).
(v) No Reliance. Seller has made its own independent decisions to enter into
the Repurchase Documents and each Transaction and as to whether such
Transaction is appropriate and proper for it based upon its own judgment
and upon advice from such advisors (including without limitation, legal
counsel and accountants) as it has deemed necessary. Seller is not relying
upon any advice from Buyer as to any aspect of the Transactions, including
without limitation, the legal, accounting or tax treatment of such
Transactions.
(w) Compliance with Anti-Money Laundering Laws. Seller has complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 (collectively, the "Anti-Money
Laundering Laws"); Seller has established an adequate anti-money
laundering compliance program as required by the Anti-Money Laundering
Laws, has conducted the requisite due diligence in connection with the
origination of each Mortgage Loan for purposes of the Anti-Money
Laundering Laws, including with respect to the legitimacy of the
applicable Mortgagor and the origin of the assets used by the said
Mortgagor to purchase the property in question, and maintains, and will
maintain, sufficient information to identify the applicable Mortgagor for
purposes of the Anti-Money Laundering Laws.
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(x) Other Security Agreements. Seller has not become bound under Section
9-203(d) of the UCC by a Security Agreement previously entered into by
another Person.
11. COVENANTS OF SELLER
On and as of the date of this Agreement and each Purchase Date and until
this Agreement is no longer in force with respect to any Transaction,
Seller covenants that:
(a) Financial Statements. Seller shall deliver to Buyer:
(1) as soon as available and in any event within thirty (30) calendar
days after the end of each calendar month, the unaudited
consolidated balance sheets of Seller and its consolidated
Subsidiaries as at the end of such period and the related unaudited
consolidated statements of income and retained earnings and of cash
flows for Seller and its consolidated Subsidiaries for such period
and the portion of the fiscal year through the end of such period,
accompanied by a certificate of a Responsible Officer of Seller,
which certificate shall state that said consolidated financial
statements fairly present in all material respects the consolidated
financial condition and results of operations of Seller and its
consolidated Subsidiaries in accordance with GAAP, consistently
applied, as at the end of, and for, such period (subject to normal
year-end adjustments);
(2) as soon as available and in any event within ninety (90) days after
the end of each fiscal year of Seller, the consolidated balance
sheets of Seller and its consolidated Subsidiaries as at the end of
such fiscal year and the related consolidated statements of income
and retained earnings and of cash flows for Seller and its
consolidated Subsidiaries for such year, setting forth in each case
in comparative form the figures for the previous year, accompanied
by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall not be qualified
as to scope of audit or going concern and shall state that said
consolidated financial statements fairly present the consolidated
financial condition and results of operations of Seller and its
respective consolidated Subsidiaries as at the end of, and for, such
fiscal year in accordance with GAAP, and a certificate of such
accountants stating that, in making the examination necessary for
their opinion, they obtained no knowledge, except as specifically
stated, of any Default or Event of Default;
(3) from time to time such other information regarding the financial
condition, operations, or business of Seller as Buyer may reasonably
request; and
(4) as soon as reasonably possible, and in any event within thirty (30)
days after a Responsible Officer of Seller knows, or with respect to
any Plan or Multiemployer Plan to which Seller or any of its
Subsidiaries makes direct contributions, has reason to believe, that
any of the events or conditions specified below with respect to any
Plan or Multiemployer Plan has occurred or exists, a statement
signed by a senior financial officer of Seller setting forth details
respecting such event or condition and the action, if any, that
Seller or its ERISA
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Affiliate proposes to take with respect thereto (and a copy of any
report or notice required to be filed with or given to PBGC by
Seller or an ERISA Affiliate with respect to such event or
condition):
(A) any reportable event, as defined in Section 4043(c)
of ERISA or any successor provision thereof and the
regulations issued thereunder, with respect to a Plan, as to
which PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within thirty
(30) days of the occurrence of such event (provided that a
failure to meet the minimum funding standard of Section 412 of
the Code or Section 302 of ERISA or any successor provision
thereof, including without limitation the failure to make on
or before its due date a required installment under Section
412(m) of the Code or Section 302(e) of ERISA or any successor
provision thereof, shall be a reportable event regardless of
the issuance of any waivers in accordance with Section 412(d)
of the Code or any successor provision thereof); and any
request for a waiver under Section 412(d) of the Code or any
successor provision thereof for any Plan;
(B) the distribution under Section 4041(c) of ERISA or
any successor provision thereof of a notice of intent to
terminate any Plan or any action taken by Seller or an ERISA
Affiliate to terminate any Plan;
(C) the institution by PBGC of proceedings under Section
4042 of ERISA or any successor provision thereof for the
termination of, or the appointment of a trustee to administer,
any Plan, or the receipt by Seller or any ERISA Affiliate of a
notice from a Multiemployer Plan that such action has been
taken by PBGC with respect to such Multiemployer Plan;
(D) the complete or partial withdrawal from a
Multiemployer Plan by Seller or any ERISA Affiliate that
results in liability under Section 4201 or 4204 of ERISA or
any successor provision thereof (including the obligation to
satisfy secondary liability as a result of a purchaser
default) that would have a Material Adverse Effect or the
receipt by Seller or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or any successor
provision thereof or that it intends to terminate or has
terminated under Section 4041A of ERISA or any successor
provision thereof;
(E) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against Seller or any ERISA Affiliate
to enforce Section 515 of ERISA or any successor provision
thereof, which proceeding is not dismissed within thirty (30)
days; and
(F) the adoption of an amendment to any Plan that would
result in the loss of tax-exempt status of the trust of which
such Plan is a part if
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Seller or an ERISA Affiliate fails to provide timely security
to such Plan in accordance with the provisions of Section
401(a)(29) of the Code or Section 307 of ERISA or any
successor provision thereof.
Seller will furnish to Buyer, at the ▇▇▇▇ ▇▇▇▇▇▇ furnishes each set of
financial statements pursuant to paragraphs (a)(1) and (a)(2) above, a
certificate of a Responsible Officer of Seller to the effect that, to the
best of such Responsible Officer's knowledge, Seller during such fiscal
period or year has observed or performed in all material respects all of
its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Repurchase Documents to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate (and, if any Default or Event of Default has
occurred and is continuing, describing the same in reasonable detail and
describing the action Seller has taken or proposes to take with respect
thereto).
(b) Litigation. Seller will promptly, and in any event within ten (10) days
after service of process on any of the following, give to Buyer notice of
all litigation, actions, suits, arbitrations, investigations (including,
without limitation, any of the foregoing which are threatened or pending)
or other legal or arbitrable proceedings affecting FBR, Seller or any of
their respective Subsidiaries or affecting any of the Property of any of
them before any Governmental Authority that (i) questions or challenges
the validity or enforceability of any of the Repurchase Documents or any
action to be taken in connection with the transactions contemplated
hereby, (ii) other than with respect to FBR, makes a claim or claims in an
aggregate amount greater than $1,000,000, or (iii) which, individually or
in the aggregate, if adversely determined, could be reasonably likely to
have a Material Adverse Effect.
(c) Existence, etc. Seller shall:
(1) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises necessary for the
operation of its business (provided that nothing in this Section
11(c)(1) shall prohibit any transaction expressly permitted under
Section 11(d));
(2) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including,
without limitation, all environmental laws) if failure to comply
with such requirements could be reasonably likely (either
individually or in the aggregate) to have a Material Adverse Effect;
(3) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied;
(4) not (i) cause or permit any change to be made in its name,
organizational identification number, identity or corporate
structure, each as described in Section 10(f) or (ii) change its
jurisdiction of organization, unless it shall have provided Buyer
thirty (30) days' prior written notice of such change and shall
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have first taken all action required by Buyer for the purpose of
perfecting or protecting the lien and security interest of Buyer
established hereunder;
(5) pay and discharge all taxes, assessments and governmental charges or
levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is
being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained; and
(6) permit representatives of Buyer, upon reasonable notice (unless a
Default shall have occurred and is continuing, in which case, no
prior notice shall be required), during normal business hours, to
examine, copy and make extracts from its books and records, to
inspect any of its Properties, and to discuss its business and
affairs with its officers, all to the extent reasonably requested by
Buyer.
(d) Prohibition of Fundamental Changes. Seller shall not enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind
up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets; provided,
that Seller may merge or consolidate with (i) any wholly owned subsidiary
of Seller, or (ii) any other Person if Seller is the surviving entity; and
provided, further, that if after giving effect thereto, no Default would
exist hereunder.
(e) Margin Deficit. If at any time there exists a Margin Deficit, Seller shall
cure same in accordance with Section 4.
(f) Notices. Seller shall give notice to Buyer:
(1) promptly upon receipt of notice or knowledge of the occurrence of
any Default or Event of Default;
(2) with respect to any Purchased Asset, promptly upon receipt of any
principal prepayment (in full) of such Purchased Asset;
(3) with respect to any Purchased Asset hereunder, promptly upon receipt
of notice or knowledge that the underlying Mortgaged Property has
been damaged by waste, fire, earthquake or earth movement, flood,
tornado or other casualty, or otherwise damaged so as to affect
adversely the Asset Value of such Purchased Asset;
(4) promptly upon receipt of notice or knowledge of (i) any material
default related to any Purchased Item, (ii) any Lien or security
interest on, or claim asserted against, any Purchased Item (other
than the Lien created hereby) or (iii) any event or change in
circumstances which could reasonably be expected to have a Material
Adverse Effect;
(5) promptly upon any material change in the market value of any or all
of Seller's assets which could reasonably be expected to have a
Material Adverse Effect;
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(6) upon any material amendment to the Existing Financing Facilities,
any decrease in the gross amount available to be borrowed
thereunder, or any change in custodian or custodial arrangements
relating thereto; and
(7) promptly upon the occurrence of any default or event of default
under the Existing Financing Facilities.
Each notice pursuant to this Section shall be accompanied by a statement
of a Responsible Officer of Seller setting forth details of the occurrence
referred to therein and stating what action Seller has taken or proposes
to take with respect thereto.
(g) Reports. Within forty-five calendar days of the end of each calendar
quarter, Seller shall provide Buyer with a quarterly report, which report
shall include, among other items, (i) a summary of such Seller's
delinquency and loss experience with respect to Mortgage Loans serviced by
Seller, any Servicer or any designee of either, operating statements and
the occupancy status of such Mortgaged Property and other property level
information, including internal quality control reports, (ii) with respect
to any MERS Designated Mortgage Loan, MERS Reports, plus (iii) any such
additional reports as Buyer may reasonably request with respect to Seller
or any Servicer's servicing portfolio or pending originations of Mortgage
Loans.
(h) Underwriting Guidelines. All Eligible Assets will conform with the
Underwriting Guidelines. Seller shall not make any material change in the
Underwriting Guidelines without the prior written consent of Buyer and
shall review the Underwriting Guidelines periodically to confirm that they
are being complied with in all material respects and are adequate to meet
Seller's business objectives. In the event Seller makes any amendment or
modification to the Underwriting Guidelines, Seller shall promptly deliver
to Buyer a complete copy of the amended or modified Underwriting
Guidelines.
(i) Transactions with Affiliates. Seller shall not enter into any transaction
with or make any payment to an Affiliate, including without limitation,
any purchase, sale, lease or exchange of property or the rendering of any
service, unless such transaction or payment is not otherwise expressly
prohibited under this Agreement, and any such transaction is effected upon
fair and reasonable terms no less favorable to Seller than it would obtain
in a comparable arm's length transaction with a Person which is not an
Affiliate; provided, that the foregoing shall not limit Seller and
Affiliates from engaging in (i) the acquisition of equity or stock or
warrants of an Affiliate and (ii) the payment of dividends (subject to the
express limitations of this Agreement) and (iii) the purchase or sale of
loans in the ordinary course of business which is a true sale and does not
constitute a fraudulent conveyance. In no event shall Seller transfer to
Buyer hereunder any Mortgage Loan acquired by Seller from an Affiliate of
Seller unless a True Sale Certification has been delivered to Buyer prior
to such sale.
(j) Limitation on Liens. Immediately upon notice of a Lien or any circumstance
which could give rise to a Lien on the Purchased Items, Seller will defend
the Purchased Items against, and will take such other action as is
necessary to remove, any Lien, security interest or claim on or to the
Purchased Items (other than any security interest created
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under this Agreement), and Seller will defend the right, title and
interest of Buyer in and to any of the Purchased Items against the claims
and demands of all persons whomsoever.
(k) Limitations on Guarantees. Seller shall not create, incur, assume or
suffer to exist any Guarantees, other than the Limited Continuing Guaranty
in favor of Bank One, N.A. dated August 27, 2003, in respect of
obligations of Oak Street Funding, LLC.
(l) Limitation on Distributions. After the occurrence and during the
continuation of any Default, Seller shall not make any payment on account
of, or set apart assets for, a sinking or other analogous fund for the
purchase, redemption, defeasance, retirement or other acquisition of any
equity or partnership interest of Seller, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of
Seller.
(m) Maintenance of Profitability. Seller shall not permit, for any period of
three (3) consecutive calendar months (each such period, a "Test Period"),
Net Income of Seller for such Test Period determined on a monthly basis,
before income taxes for such Test Period and distributions made during
such Test Period, to be less than $1.00.
(n) Maintenance of Tangible Net Worth. Seller shall not permit Tangible Net
Worth of Seller as determined as of the last calendar day of each month to
be less than (i) through September 30, 2004, $13,000,000 and (iii) on and
after October 1, 2004, $15,000,000. Seller shall maintain at all times at
least $5,000,000 of Cash and available borrowing capacity, with such
capacity under warehouse facilities determined as the value of collateral
pledged at any such time over the outstanding borrowed amount advanced at
such time against such collateral under each Existing Financing Facility
(taking into account any required overcollateralization) (including, for
this purpose, any renewal, extension, substitution or replacement
thereof).
(o) Maintenance of Ratio of Total Indebtedness to Tangible Net Worth. Seller
shall not permit the ratio of Total Indebtedness to Tangible Net Worth of
Seller at any time to be greater than 20:1.
(p) Servicer; Servicing Tape. Seller shall provide to Buyer and to
Disbursement Agent via Electronic Transmission, a remittance report on a
monthly basis by no later than the 12th day of each month (the "Reporting
Date") containing servicing information, including without limitation
those fields reasonably requested by Buyer from time to time, on a
loan-by-loan basis and in the aggregate, with respect to the Purchased
Assets serviced hereunder by Seller or any Servicer for the month (or any
portion thereof) prior to the Reporting Date (such remittance report, an
"Asset Tape"). Seller shall not cause the Mortgage Loans to be serviced by
any servicer other than a servicer expressly approved in writing by Buyer,
which approval shall be deemed granted by Buyer with respect to Seller
with the execution of this Agreement.
(q) Required Filings. Seller shall promptly provide Buyer with copies of all
documents which Seller or any Subsidiary of Seller is required to file
with any regulatory body in
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accordance with its regulations other than (i) routine filings in the
ordinary course of business with regulatory bodies (other than the
Securities and Exchange Commission) which related to obtaining or
maintaining licenses to do business or corporate qualifications and (ii)
periodic filings, if any, that are made with the Securities and Exchange
Commission, that are publicly available when filed; provided that Seller
provides to Buyer notice of such filing and the location (the "url" of the
internet page on which such filing can be found) of such filing.
(r) Remittance of Prepayments. Seller shall remit or cause to be remitted to
Buyer, with sufficient detail via Electronic Transmission to enable Buyer
to appropriately identify the Mortgage Loan to which any amount remitted
applies, all full principal prepayments on any Purchased Asset that Seller
or Servicer has received no later than one (1) Business Day following the
date such prepayment was received.
(s) Custodial and Disbursement Agreement and Account Agreement. Seller shall
each of the Custodial and Disbursement Agreement and Account Agreement in
full force and effect and shall not amend or modify the Custodial and
Disbursement Agreement or the Account Agreement or waive compliance with
any provisions thereunder without the prior written consent of Buyer.
(t) UCC-1. Seller shall use best efforts to amend the UCC financing statement
related to the RFC Facility within 30 days following the Effective Date.
(u) Compliance Report. Seller shall provide Buyer no later than the thirtieth
(30th) calendar day of each month a compliance report, in the form of
Exhibit IX attached hereto, demonstrating therein the calculations Seller
utilized to determine its compliance with the financial covenants set
forth in clauses (m), (n) and (o) of this Section 11 as of the end of the
immediately preceding month. Such compliance report shall be delivered by
seller to Buyer in accordance with Section 17 and shall also be delivered
by Seller to Buyer at ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇, Telephone No.: (212)
891-6261.
(v) Sub-Limits. Seller shall not sell to Buyer any Eligible Assets if, after
giving effect to such Transaction, the aggregate principal balance of all
Purchased Assets are in excess of any Sub-Limit as set forth in the
definition of "Asset Value".
(w) Inconsistent Agreements. Seller will not, and will not permit any of its
Subsidiaries to, directly or indirectly, enter into any agreement
containing any provision which would be violated or breached by any
Transaction hereunder or by the performance by Seller of its obligations
under any Repurchase Document.
(x) Escrow Imbalance. Seller will, no later than five (5) Business Days after
learning (from any source) of any material imbalance in any escrow
account, fully and completely correct and eliminate such imbalance
including, without limitation, depositing its own funds into such account
to eliminate any overdrawal or deficit.
(y) Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any of such covenants, the
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fact that it would be permitted by an exception to, or be otherwise within
the limitations of, another covenant shall not avoid the occurrence of an
Event of Default or Default if such action is taken or condition exists.
12. EVENTS OF DEFAULT
If any of the following events (each, an "Event of Default") occur, Seller
and Buyer shall have the rights set forth in Section 13, as applicable:
(a) Seller shall default in the payment of any Repurchase Price due or any
amount under Section 5 when due (whether at stated maturity, upon
acceleration or at mandatory or optional prepayment); or
(b) Seller shall default in the payment of any other amount payable by it
hereunder or under any other Repurchase Document after notification by
Buyer of such default, and such default shall have continued unremedied
for one (1) Business Day; or
(c) any representation, warranty or certification made or deemed made herein
or in any other Repurchase Document by Seller or any certificate furnished
to Buyer pursuant to the provisions hereof or thereof or any information
with respect to the Mortgage Loans furnished in writing by on behalf of
Seller shall prove to have been false or misleading in any material
respect as of the time made or furnished (other than the representations
and warranties set forth in Schedule 1, which shall be considered solely
for the purpose of determining the Asset Value of the Purchased Assets,
unless (i) Seller shall have made any such representations and warranties
with actual knowledge that they were materially false or misleading at the
time made; or (ii) any such representations and warranties have been
determined in good faith by Buyer in its sole discretion to be materially
false or misleading on a regular basis); or
(d) any representation, warranty or certification made or deemed made in the
MLPA by FBR or any certificate furnished to Buyer pursuant to the
provisions hereof or thereof shall prove to have been false or misleading
in any material respect as of the time made or furnished; or
(e) Seller shall fail to comply with the requirements of Section 11(c) through
Section 11(e), or Sections 11(f) through 11(s); or except as otherwise set
forth in Sections 12(a), 12(b), 12(c), or 12(d), Seller shall fail to
observe or perform any other covenant or agreement contained in this
Agreement or any other Repurchase Document and such failure to observe or
perform shall continue unremedied for a period of ten (10) Business Days;
or
(f) FBR shall fail to comply with any of the requirements of Section 6 (other
than Section 6(a)(C), 6(d), 6(k), 6(m) or 6(n)) of the MLPA and such
failure to observe or perform shall continue unremedied for a period of 1
Business Day; or FBR shall fail to observe or perform any other covenant
or agreement contained in the MLPA and such failure to observe or perform
shall continue unremedied for a period of 10 Business Days; or
(g) a final judgment or judgments for the payment of money in excess of
$1,000,000 (or, with respect to FBR, that would have a Material Adverse
Effect) in the aggregate shall be
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rendered against FBR, Seller or any of their respective Affiliates by one
or more courts, administrative tribunals or other bodies having
jurisdiction and the same shall not be satisfied, discharged (or provision
shall not be made for such discharge) or bonded, or a stay of execution
thereof shall not be procured, within 30 days from the date of entry
thereof; or
(h) an Act of Insolvency shall have occurred with respect to FBR, Seller or
any of their respective Affiliates; or
(i) the Custodial and Disbursement Agreement, the MLPA, the Account Agreement
or any Repurchase Document shall for whatever reason be terminated or
cease to be in full force and effect, or the enforceability thereof shall
be contested by Seller or FBR; or
(j) Seller shall grant, or suffer to exist, any Lien on any Purchased Item
(except any Lien in favor of Buyer); or the Purchased Items shall not have
been sold to Buyer free and clear of any Liens in favor of any Person
other than Buyer, or the Liens contemplated hereby shall cease or fail to
be first priority perfected Liens on any Purchased Items in favor of Buyer
or shall be Liens in favor of any Person other than Buyer; or
(k) Seller or any of their respective Affiliates shall be in default under (i)
any Indebtedness in excess of $300,000 of such Person which default (1)
involves the failure to pay a matured obligation, or (2) permits the
acceleration of the maturity of obligations by any other party to or
beneficiary with respect to such Indebtedness, (ii) any other contract to
which such Person is a party which default (1) involves the failure to pay
a matured obligation, or (2) permits the acceleration of the maturity of
obligations by any other party to or beneficiary of such contract, or
(iii) any Seller-Related Obligation; or
(l) any material adverse change in the Property, business or financial
condition of either FBR or Seller or any of its respective Affiliates
shall occur, in each case as determined by Buyer in its sole discretion,
or any other condition shall exist which, in Buyer's sole discretion,
constitutes a material impairment of FBR's or Seller's, as applicable,
ability to perform its obligations under this Agreement or any other
Repurchase Document to which it is a party; or
(m) with respect to either of Seller or FBR, (i) such Person shall engage in
any "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) involving any Plan, (ii) any material
"accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in
favor of the PBGC or a Plan shall arise on the assets of such Person or
any Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed, or
a trustee shall be appointed, to administer or to terminate, any Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of Buyer, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Plan
shall terminate for purposes of Title IV of ERISA, (v) such Person or any
Commonly Controlled Entity shall, or in the reasonable opinion of Buyer is
likely to, incur any liability in connection with a withdrawal from, or
the insolvency or reorganization of, a Multiemployer Plan or
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(vi) any other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(n) upon any event of default under the Existing Financing Facilities; or
(o) if the Buyer has purchased MERS Designated Mortgage Loans, the Electronic
Tracking Agreement has for whatever reason been terminated or ceases to be
in full force and effect and the Buyer (or the Custodian as its designee)
shall not have received an assignment of mortgage with respect to each
MERS Designated Mortgage Loan, in blank, in recordable form, but
unrecorded; or
(p) upon any material adverse change in the terms of, or any material
reduction in amounts available to Seller or its Affiliates, under any of
the Existing Financing Facilities; provided that no Event of Default shall
be deemed to have occurred under this subsection in respect of a reduction
of availability that results from (i) utilization of such facility as
currently in effect; or (ii) a planned, voluntary reduction that takes
effect only after Seller has provided 10 calendar days advance written
notice to Buyer of such reduction and Buyer has not notified Seller,
within such 10 calendar day period, in writing of its objection to such
reduction of availability; or
(q) any of the events specified in Section 3(b)(12) have occurred; or
(r) upon (i) an acceleration, a default or an event of default occurs under
the Subordinate Loan Agreement, (ii) the termination of the Subordinate
Loan Agreement prior to the Termination Date hereof or (iii) upon the
prepayment of the amounts outstanding under the Subordinate Loan Agreement
prior to the maturity thereof.
13. REMEDIES
(a) If an Event of Default occurs, the following rights and remedies are
available to Buyer; provided, that an Event of Default shall be deemed to
be continuing unless expressly waived by Buyer in writing.
(1) At the option of Buyer, exercised by written notice to Seller (which
option shall be deemed to have been exercised, even if no notice is
given, immediately upon the occurrence of an Act of Insolvency of
Seller), the Repurchase Date for each Transaction hereunder, if it
has not already occurred, shall be deemed immediately to occur.
Buyer shall (except upon the occurrence of an Act of Insolvency of
Seller) give notice to Seller of the exercise of such option as
promptly as practicable.
(2) If Buyer exercises or is deemed to have exercised the option
referred to in subsection (a)(1) of this Section 13,
(A) (i) Seller's obligations in such Transactions to
repurchase all Purchased Assets, at the Repurchase Price
therefor on the Repurchase
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Date, and to pay all other amounts owed by Seller hereunder,
shall thereupon become immediately due and payable, (ii) all
Income paid after such exercise or deemed exercise shall be
retained by Buyer and applied to the aggregate unpaid
Repurchase Prices and any other amounts owed by Seller
hereunder, and (iii) Seller shall immediately deliver to Buyer
any Purchased Assets subject to such Transactions then in
Seller's possession or control;
(B) to the extent permitted by applicable law, the
Repurchase Price with respect to each such Transaction shall
be increased by the aggregate amount obtained by daily
application of, on a 360-day per year basis for the actual
number of days during the period from and including the date
of the exercise or deemed exercise of such option to but
excluding the date of payment of the Repurchase Price, (x) the
Post-Default Rate to (y) the Repurchase Price for such
Transaction as of the Repurchase Date (decreased as of any day
by (i) any amounts actually in the possession of Buyer
pursuant to clause (C) of this subsection, (ii) any proceeds
from the sale of Purchased Assets applied to the Repurchase
Price pursuant to subsection (a)(4) of this Section 13, and
(iii) any amounts applied to the Repurchase Price pursuant to
subsection (a)(4) of this Section 13); and
(C) all Income actually received by Buyer pursuant to
Section 5 (excluding any Late Payment Fees paid pursuant to
Section 5(b)) shall be applied to the aggregate unpaid
Repurchase Price owed by Seller.
(3) Upon the occurrence of one or more Events of Default, Buyer shall
have the right to obtain physical possession of the Servicing
Records (subject to the provisions of the Custodial and Disbursement
Agreement) and all other files of Seller relating to the Purchased
Assets and all documents relating to the Purchased Assets which are
then or may thereafter come in to the possession of Seller or any
third party acting for Seller and Seller shall deliver to Buyer such
assignments as Buyer shall request and Buyer shall have the right to
appoint any Person to act as Servicer for the Purchased Assets.
Buyer shall be entitled to specific performance of all agreements of
Seller contained in the Repurchase Documents.
(4) At any time on the Business Day following notice to Seller (which
notice may be the notice given under subsection (a)(1) of this
Section 13), in the event Seller has not repurchased all Purchased
Assets, Buyer may (A) immediately sell, without demand or further
notice of any kind, at a public or private sale and at such price or
prices as Buyer may deem satisfactory any or all Purchased Assets
subject to such Transactions hereunder and apply the proceeds
thereof to the aggregate unpaid Repurchase Price and any other
amounts owing by Seller hereunder or (B) in its sole discretion
elect, in lieu of selling all or a portion of such Purchased Assets,
to give Seller credit for such Purchased Assets in an amount equal
to the Market Value of the Purchased Assets against the aggregate
unpaid Repurchase Price and any other amounts owing by Seller
hereunder. The proceeds of any disposition of Purchased Assets shall
be applied first to the costs and expenses
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incurred by Buyer in connection with Seller's default; second to
costs of related covering and/or related hedging transactions; third
to the Repurchase Price; and fourth to any other outstanding
obligation of Seller to Buyer or its Affiliates. In connection with
any sale pursuant to clause (A) of this subsection (a)(4), Buyer may
(i) sell any such Purchased Assets without giving any warranties and
(ii) specifically disclaim or modify any warranties of title or the
like, and this procedure shall not be considered to adversely effect
the commercial reasonableness of any such sale of Purchased Assets.
(5) Seller agrees that Buyer may obtain an injunction or an order of
specific performance to compel Seller to fulfill its obligations as
set forth in Section 24, if Seller fails or refuses to perform its
obligations as set forth therein.
(6) Seller shall be liable to Buyer, payable as and when incurred by
Buyer, for (A) the amount of all actual out-of-pocket expenses,
including legal or other expenses incurred by Buyer in connection
with or as a consequence of an Event of Default, and (B) all costs
incurred in connection with hedging or covering transactions.
(7) Buyer shall have, in addition to its rights hereunder, any rights
otherwise available to it under any other agreement or applicable
law.
(b) Buyer may exercise one or more of the remedies available to Buyer
immediately upon the occurrence of an Event of Default and, except to the
extent provided in subsections (a)(1) and (4) of this Section 13, at any
time thereafter without notice to Seller. All rights and remedies arising
under this Agreement as amended from time to time hereunder are cumulative
and not exclusive of any other rights or remedies which Buyer may have.
(c) Buyer may enforce its rights and remedies hereunder without prior judicial
process or hearing, and Seller hereby expressly waives any defenses Seller
might otherwise have to require Buyer to enforce its rights by judicial
process. Seller also waives any defense (other than a defense of payment
or performance) Seller might otherwise have arising from the use of
nonjudicial process, enforcement and sale of all or any portion of the
Purchased Items, or from any other election of remedies. Seller recognizes
that nonjudicial remedies are consistent with the usages of the trade, are
responsive to commercial necessity and are the result of a bargain at
arm's-length.
(d) To the extent permitted by applicable law, Seller shall be liable to Buyer
for interest on any amounts owing by Seller hereunder, from the date
Seller becomes liable for such amounts hereunder until such amounts are
(i) paid in full by Seller or (ii) satisfied in full by the exercise of
Buyer's rights hereunder. Interest on any sum payable by Seller to Buyer
under this paragraph 13(d) shall be at a rate equal to the Post-Default
Rate.
14. INDEMNIFICATION AND EXPENSES
(a) Seller agrees to hold Buyer and its Affiliates and their present and
former respective officers, directors, employees, agents, advisors and
other representatives (each, an "Indemnified Party") harmless from and
indemnify any Indemnified Party against all liabilities, losses, damages,
judgments, costs and expenses of any kind which may be
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imposed on, incurred by or asserted against such Indemnified Party
(including counsel's fees and disbursements) (collectively, "Costs"),
relating to or arising out of this Agreement, any other Repurchase
Document or any transaction contemplated hereby or thereby, or any
amendment, supplement or modification of, or any waiver or consent under
or in respect of, this Agreement, any other Repurchase Document or any
transaction contemplated hereby or thereby, that, in each case, results
from anything other than the Indemnified Party's gross negligence or
willful misconduct. Without limiting the generality of the foregoing,
Seller agrees to hold any Indemnified Party harmless from and indemnify
such Indemnified Party against all Costs with respect to all Mortgage
Loans relating to or arising out of any violation or alleged violation of
any environmental law, rule or regulation or any consumer credit laws,
including without limitation the federal Truth in Lending Act and/or the
federal Real Estate Settlement Procedures Act, that, in each case, results
from anything other than the Indemnified Party's gross negligence or
willful misconduct. In any suit, proceeding or action brought by an
Indemnified Party in connection with any Mortgage Loan for any sum owing
thereunder, or to enforce any provisions of any Mortgage Loan, Seller will
save, indemnify and hold such Indemnified Party harmless from and against
all expense, loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by Seller of
any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such account
debtor or obligor or its successors from Seller. Seller also agrees to
reimburse an Indemnified Party as and when billed by such Indemnified
Party for all the Indemnified Party's costs and expenses incurred in
connection with the enforcement or the preservation of Buyer's rights
under this Agreement, any other Repurchase Document or any transaction
contemplated hereby or thereby, including without limitation the fees and
disbursements of its counsel.
(b) Seller agrees to pay as and when billed by Buyer all of the out-of-pocket
costs and expenses (including legal fees and any costs associated with any
upfront due diligence costs, including appraisals) incurred by Buyer in
connection with the development, preparation and execution of, this
Agreement, any other Repurchase Document or any other documents prepared
in connection herewith (the "Initial Costs"). Seller agrees to pay as and
when billed by Buyer, as part of the Initial Costs, all of the
out-of-pocket costs and expenses incurred in connection with any
amendment, supplement or modification to this Agreement or any other
Repurchase Document or any other document prepared in connection
therewith. Seller agrees to pay as and when billed by Buyer all of the
out-of-pocket costs and expenses incurred in connection with the
consummation and administration of the transactions contemplated hereby
and thereby including without limitation all fees, disbursements and
expenses of counsel to Buyer which amount shall be deducted from the
Purchase Price paid for the first Transaction hereunder; provided that the
Initial Costs shall not exceed $65,000 without the prior written consent
of Seller, which such consent shall not be unreasonably withheld. Subject
to the limitations set forth in Section 26, Seller agrees to pay Buyer all
the out-of-pocket due diligence, inspection, appraisals, testing and
review costs and expenses incurred by Buyer with respect to Mortgage Loans
submitted by Seller for purchase under this Agreement,
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including, but not limited to, those out-of-pocket costs and expenses
incurred by Buyer pursuant to Sections 24 and 26.
15. RECORDING OF COMMUNICATIONS
Buyer and Seller shall have the right (but not the obligation) from time
to time to make or cause to be made tape recordings of communications
between its employees and those of the other party with respect to
Transactions upon notice to the other party of such recording. Buyer and
Seller consent to the admissibility of such tape recordings in any court,
arbitration, or other proceedings. The parties agree that a duly
authenticated transcript of such a tape recording shall be deemed to be a
writing conclusively evidencing the parties' agreement.
16. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in reliance
upon the fact that, all Transactions hereunder constitute a single
business and contractual relationship and that each has been entered into
in consideration of the other Transactions. Accordingly, each of Buyer and
Seller agrees (i) to perform all of its obligations in respect of each
Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all
Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction
against obligations owing to them in respect of any other Transaction
hereunder; (iii) that payments, deliveries, and other transfers made by
either of them in respect of any Transaction shall be deemed to have been
made in consideration of payments, deliveries, and other transfers in
respect of any other Transactions hereunder, and the obligations to make
any such payments, deliveries, and other transfers may be applied against
each other and netted and (iv) to promptly provide notice to the other
after any such set off or application.
17. NOTICES AND OTHER COMMUNICATIONS
Except as otherwise expressly permitted by this Agreement, all notices,
requests and other communications provided for herein and under the
Custodial and Disbursement Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Agreement)
shall be given or made in writing (including without limitation by email,
telex or telecopy) delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof or
thereof); or, as to any party, at such other address as shall be
designated by such party in a written notice to each other party. Except
as otherwise provided in this Agreement and except for notices given under
Section 3 (which shall be effective only on receipt), all such
communications shall be deemed to have been duly given when transmitted by
telecopy or personally delivered or, in the case of a mailed notice, upon
receipt.
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18. ENTIRE AGREEMENT; SEVERABILITY; MODIFICATIONS
This Agreement together with the other Repurchase Documents and the
Account Agreement constitute the entire understanding between Buyer and
Seller with respect to the subject matter it covers and shall supersede
any existing agreements between the parties containing general terms and
conditions for repurchase transactions involving Purchased Assets. By
acceptance of this Agreement, Buyer and Seller acknowledge that they have
not made, and are not relying upon, any statements, representations,
promises or undertakings not contained in this Agreement. Each provision
and agreement herein shall be treated as separate and independent from any
other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or
agreement. No amendment, modification or release from any provision of
this Agreement shall be effective unless in writing and executed by or on
behalf of the party or parties to be charged therewith and shall be
effective only in the specific instance and for the specific purpose for
which given.
19. NON-ASSIGNABILITY
The rights and obligations of the parties under this Agreement and under
any Transaction shall not be assigned by Seller without the prior written
consent of Buyer, and any attempted assignment without such consent shall
be null and void. It is understood and agreed the Buyer at any time may
assign this Agreement and each other Repurchase Document to FBR in its
sole discretion. Subject to the foregoing, this Agreement and any
Transactions shall be binding upon and shall inure to the benefit of the
parties and their respective successors and assigns. Nothing in this
Agreement express or implied, shall give to any person, other than the
parties to this Agreement and their successors hereunder, any benefit of
any legal or equitable right, power, remedy or claim under this Agreement.
20. TERMINABILITY
Except as set forth below, this Agreement may not be terminated. This
Agreement may be terminated by Seller upon 30 days' written notice to
Buyer; provided Seller shall pay to Buyer the Termination Fee, except that
this Agreement shall, notwithstanding such notice, remain applicable to
any Transaction then outstanding. Each representation and warranty made or
deemed to be made by entering into a Transaction, herein or pursuant
hereto shall survive the making of such representation and warranty, and
Buyer shall not be deemed to have waived any Default that may arise
because any such representation or warranty shall have proved to be false
or misleading, notwithstanding that Buyer may have had notice or knowledge
or reason to believe that such representation or warranty was false or
misleading at the time the Transaction was made. Notwithstanding any such
termination or the occurrence of an Event of Default, all of the
representations and warranties and covenants hereunder shall continue and
survive. The obligations of Seller under Section 14 shall survive the
termination of this Agreement.
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21. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW
PRINCIPLES.
22. SUBMISSION TO JURISDICTION; WAIVERS
EACH OF BUYER AND SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER REPURCHASE
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE EXCLUSIVE PERSONAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN,
THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS
BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM
THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY
BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID,
TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER
ADDRESS OF WHICH BUYER SHALL HAVE BEEN NOTIFIED;
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE
OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT TO ▇▇▇ IN ANY OTHER JURISDICTION; AND
(E) WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER REPURCHASE DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
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23. NO WAIVERS, ETC.
No failure on the part of Buyer to exercise and no delay in exercising,
and no course of dealing with respect to, any right, power or privilege
under any Repurchase Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege under any
Repurchase Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.
An Event of Default shall be deemed to be continuing unless expressly
waived by Buyer in writing.
24. SERVICING
(a) Seller covenants to maintain or cause the servicing of the Mortgage Loans
to be maintained in conformity with accepted and prudent servicing
practices in the industry for the same type of mortgage loans as the
Mortgage Loans and in a manner at least equal in quality to the servicing
Seller provides for mortgage loans which it owns. In the event that the
preceding language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate automatically upon
the earliest of (i) an Event of Default, (ii) the date on which this
Agreement terminates or (iii) the transfer of servicing approved by Buyer.
(b) If the Mortgage Loans are serviced by Seller, Seller agrees that Buyer is
the owner of all servicing records, including but not limited to any and
all servicing agreements, files, documents, records, data bases, computer
tapes, copies of computer tapes, proof of insurance coverage, insurance
policies, appraisals, other closing documentation, payment history
records, and any other records relating to or evidencing the servicing of
the Mortgage Loans (the "Servicing Records"). Seller covenants to
safeguard such Servicing Records and to deliver them promptly to Buyer or
its designee (including Custodian) at Buyer's request.
(c) If the Mortgage Loans are serviced by a person other than Seller (such
third party the "Servicer"), Seller (i) shall, in accordance with Section
(3)(b)(7), provide a copy of the servicing agreement to Buyer, which shall
be in form and substance acceptable to Buyer (the "Servicing Agreement"),
and shall provide a Servicer Notice to Buyer substantially in the form of
Exhibit VII hereto, fully executed by Seller and the Servicer; and (ii)
hereby irrevocably assigns to Buyer and Buyer's successors and assigns all
right, title and interest of Seller in, to and under, and the benefits of,
any Servicing Agreement with respect to the Mortgage Loans. Seller agrees
that no Person shall assume the servicing obligations with respect to the
Mortgage Loans as successor to the Servicer unless such successor is
approved in writing by Buyer prior to such assumption of servicing
obligations.
(d) If the servicer of the Mortgage Loans is Seller, upon the occurrence of an
Event of Default, Buyer shall have the right to terminate the Seller as
servicer of the Mortgage Loans and transfer servicing to Buyer's
designated Servicer, at no cost or expense to Buyer, at any time
thereafter. If the Servicer of the Mortgage Loans is not Seller, Buyer
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shall have the right, as contemplated in the applicable Servicer Notice,
upon the occurrence of an Event of Default, to terminate any applicable
Servicing Agreement and transfer servicing to Buyer's designated Servicer,
at no cost or expense to Buyer, it being agreed that Seller will pay any
and all fees required to terminate such Servicing Agreement and to
effectuate the transfer of servicing to Buyer's designated Servicer, as
well as any servicing fees and expenses payable to such Servicer.
(e) After the Purchase Date, until the repurchase of any Mortgage Loan, Seller
will have no right to modify or alter the terms of such Mortgage Loan and
Seller will have no obligation or right to repossess such Mortgage Loan or
substitute another Mortgage Loan, in each case except as provided in the
Custodial and Disbursement Agreement.
(f) In the event Seller or its Affiliate is servicing the Mortgage Loans,
Seller shall permit Buyer to inspect Seller's or its Affiliate's servicing
facilities, as the case may be, for the purpose of satisfying Buyer that
Seller or its Affiliate, as the case may be, has the ability to service
the Mortgage Loans as provided in this Agreement.
25. INTENT
(a) The parties recognize that each Transaction is a "repurchase agreement" as
that term is defined in Section 101 of Title 11 of the United States Code,
as amended (except insofar as the type of Purchased Assets subject to such
Transaction or the term of such Transaction would render such definition
inapplicable), and a "securities contract" as that term is defined in
Section 741 of Title 11 of the United States Code, as amended (except
insofar as the type of Purchased Assets subject to such Transaction would
render such definition inapplicable).
(b) It is understood that either party's right to liquidate Purchased Assets
delivered to it in connection with Transactions hereunder or to exercise
any other remedies pursuant to Section 16 hereof is a contractual right to
liquidate such Transaction as described in Sections 555 and 559 of Title
11 of the United States Code, as amended.
26. PERIODIC DUE DILIGENCE REVIEW
Seller acknowledges that Buyer has the right to perform continuing due
diligence reviews with respect to the Mortgage Loans, for purposes of
verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, and Seller agrees that upon
reasonable (but no less than five (5) Business Days') prior notice unless
an Event of Default shall have occurred, in which case no notice is
required, to Seller, Buyer or its authorized representatives will be
permitted during normal business hours to examine, inspect, and make
copies and extracts of, the Mortgage Files and any and all documents,
records, agreements, instruments or information relating to such Mortgage
Loans in the possession or under the control of Seller and/or Custodian.
Seller also shall make available to Buyer a knowledgeable financial or
accounting officer for the purpose of answering questions respecting the
Mortgage Files and the Mortgage Loans. Without limiting the generality of
the foregoing, Seller acknowledges that Buyer may purchase Mortgage Loans
from Seller based solely upon the information provided by Seller to
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Buyer in the Seller Asset Schedule and the representations, warranties and
covenants contained herein, and that Buyer, at its option, has the right
at any time to conduct a partial or complete due diligence review on some
or all of the Mortgage Loans purchased in a Transaction, including without
limitation ordering new credit reports and new appraisals on the related
Mortgaged Properties and otherwise re-generating the information used to
originate such Mortgage Loan. Buyer may underwrite such Mortgage Loans
itself or engage a mutually agreed upon third party underwriter to perform
such underwriting. Seller agrees to cooperate with Buyer and any third
party underwriter in connection with such underwriting, including, but not
limited to, providing Buyer and any third party underwriter with access to
any and all documents, records, agreements, instruments or information
relating to such Mortgage Loans in the possession, or under the control,
of Seller. Buyer shall pay all out-of-pocket costs and expenses incurred
by Buyer in connection with Buyer's activities pursuant to this Section 26
("Due Diligence Costs"); provided that, (i) in the event that a Default or
an Event of Default shall have occurred or (ii) in the event that Buyer
shall determine the need to confirm compliance with local, state or
federal laws concerning the regulation of predatory lending practices,
Seller shall reimburse Buyer for all Due Diligence Costs for any and all
reasonable out-of-pocket costs and expenses incurred by Buyer in
connection with Buyer's activities pursuant to this Section 26.
27. BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT
(a) Seller hereby irrevocably constitutes and appoints Buyer and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place
and stead of Seller and in the name of Seller or in its own name, from
time to time in Buyer's discretion, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be reasonably
necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, Seller hereby gives
Buyer the power and right, on behalf of Seller, without assent by, but
with notice to, Seller, to do the following:
(1) in the name of Seller, or in its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under
any mortgage insurance or with respect to any other Purchased Items
and to file any claim or to take any other action or proceeding in
any court of law or equity or otherwise deemed appropriate by Buyer
for the purpose of collecting any and all such moneys due under any
such mortgage insurance or with respect to any other Purchased Items
whenever payable;
(2) to pay or discharge taxes and Liens levied or placed on or
threatened against the Purchased Items;
(3) (A) to direct any party liable for any payment under any Purchased
Items to make payment of any and all moneys due or to become due
thereunder directly to Buyer or as Buyer shall direct; (B) to ask or
demand for, collect, receive payment of and
-54-
receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Purchased
Items; (C) to sign and endorse any invoices, assignments,
verifications, notices and other documents in connection with any
Purchased Items; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Purchased Items or any proceeds thereof
and to enforce any other right in respect of any Purchased Items;
(E) to defend any suit, action or proceeding brought against Seller
with respect to any Purchased Items; (F) to settle, compromise or
adjust any suit, action or proceeding described in clause (E) above
and, in connection therewith, to give such discharges or releases as
Buyer may deem appropriate; and (G) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise deal with
any Purchased Items as fully and completely as though Buyer were the
absolute owner thereof for all purposes, and to do, at Buyer's
option and Seller's expense, at any time, and from time to time, all
acts and things which Buyer deems necessary to protect, preserve or
realize upon the Purchased Items and Buyer's Liens thereon and to
effect the intent of this Agreement, all as fully and effectively as
such Seller might do;
(4) to direct the actions of Custodian with respect to the Purchased
Items under the Custodial and Disbursement Agreement; and
(5) to execute, from time to time, in connection with any sale provided
for in Section 13, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Purchased
Items.
Seller hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
(b) The powers conferred on Buyer hereunder are solely to protect Buyer's
interests in the Purchased Items and Purchase Assets and shall not impose
any duty upon it to exercise any such powers. Buyer shall be accountable
only for amounts that it actually receives as a result of the exercise of
such powers, and neither it nor any of its officers, directors, employees
or agents shall be responsible to Seller for any act or failure to act
hereunder, except for its or their own gross negligence or willful
misconduct.
28. MISCELLANEOUS
(a) If there is any conflict between the terms of this Agreement or any
Transaction entered into hereunder and the Custodial and Disbursement
Agreement, this Agreement shall prevail.
(b) This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Agreement by signing any such
counterpart.
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(c) The captions and headings appearing herein are for included solely for
convenience of reference and are not intended to affect the interpretation
of any provision of this Agreement.
(d) Seller hereby acknowledges that:
(1) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Repurchase Documents;
(2) Buyer has no fiduciary relationship to Seller; and
(3) no joint venture exists between Buyer and Seller.
29. CONFIDENTIALITY
Seller hereby acknowledges and agrees that all information regarding the
terms set forth in any of the Repurchase Documents or the Transactions
contemplated thereby (the "Confidential Terms") shall be kept confidential
and shall not be divulged to any party without the prior written consent
of such other party except to the extent that (i) it is necessary to do so
in working with legal counsel, auditors, taxing authorities or other
governmental agencies or regulatory bodies or in order to comply with any
applicable federal or state laws (ii) any of the Confidential Terms are in
the public domain other than due to a breach of this covenant, (iii) in
the event of a Default or an Event of Default Buyer determines such
information to be necessary or desirable to disclose in connection with
the marketing and sales of the Purchased Assets or otherwise to enforce or
exercise Buyer's rights hereunder or (iv) Buyer determines it necessary to
disclose such information to its counterparties or agents in connection
with Buyer's rights under Section 9. The provisions set forth in this
Section 29 shall survive the termination of this Agreement for a period of
one year following such termination. Notwithstanding the foregoing or
anything to the contrary contained herein or in any other Repurchase
Document, the parties hereto may disclose to any and all Persons, without
limitation of any kind, the federal income tax treatment of the
Transactions, any fact relevant to understanding the federal tax treatment
of the Transactions, and all materials of any kind (including opinions or
other tax analyses) relating to such federal income tax treatment;
provided that Seller may not disclose the name of or identifying
information with respect to Buyer or any pricing terms or other nonpublic
business or financial information (including any sublimits and financial
covenants) that is unrelated to the purported or claimed federal income
tax treatment of the Transactions and is not relevant to understanding the
purported or claimed federal income tax treatment of the Transactions,
without the prior written consent of the Buyer. Notwithstanding the
foregoing, Seller or its Affiliates may disclose the terms hereof in any
filing with the Securities and Exchange Commission to the extent, based on
advice of counsel, Seller determines such filing or disclosure is required
by applicable law or regulation.
30. CONFLICTS
In the event of any conflict between the terms of this Agreement, any
other Repurchase Document and any Confirmation, the documents shall
control in the following order of
-56-
priority: first, the terms of the Confirmation shall prevail, then the
terms of this Agreement shall prevail, and then the terms of the other
Repurchase Documents shall prevail.
31. SET-OFF
In addition to any rights and remedies of Buyer provided by this Agreement
and by law, Buyer shall have the right, without prior notice to Seller,
any such notice being expressly waived by Seller to the extent permitted
by applicable law, upon any amount becoming due and payable by Seller to
Buyer hereunder or otherwise (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against
such amount any and all monies and other property of Seller, any and all
deposits (general or special, time or demand, provisional or final), in
any currency, and any and all other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, and in each case at any time held or
owing by Buyer or any Affiliate thereof to or for the credit or the
account of Seller. Buyer agrees promptly to notify Seller after any such
set-off and application made by Buyer; provided that the failure to give
such notice shall not affect the validity of such set-off and application.
[SIGNATURE PAGE FOLLOWS]
-57-
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date set forth above.
BUYER:
CDC MORTGAGE CAPITAL INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director
Address for Notices: with a copy to:
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇ Attn: ▇▇ ▇▇▇▇▇, Esq., General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇-▇▇▇▇.▇▇▇ Email: ▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇-▇▇▇▇.▇▇▇
and with a copy to:
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇-▇▇▇▇.▇▇▇
SELLER:
OAK STREET MORTGAGE, LLC
By: /s/ ▇▇▇▇▇ Royal
----------------------------
Name: ▇▇▇▇▇ Royal
Title:Chief Financial Officer
Address for Notices:
Oak Street Mortgage LLC
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. Royal,
Chief Financial Officer
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
STATE OF Indiana)
) ss.:
COUNTY OF ▇▇▇▇▇▇)
On this 25th day of August, 2004, before me, the undersigned, a Notary
Public in and for the State of Indiana, duly commissioned and sworn, personally
appeared ▇▇▇▇▇ Royal, to me known who, by me duly sworn, did depose
and acknowledge before me and say that he/she is Chief Financial Officer of Oak
Street Mortgage LLC, a Delaware limited liability company, the limited liability
company described in and that executed the foregoing instrument; and that he/she
signed his/her name thereto under authority of the board of managers of said
company and on behalf of such company.
WITNESS my hand and seal hereto affixed the day and year first above
written.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Notary Public in and for the
State of Indiana
[SEAL]
My Commission expires:
October 5, 2006
----------------------------
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
PART I: RESIDENTIAL MORTGAGE LOANS
Seller represents and warrants to Buyer, with respect to each Mortgage Loan,
that the following representations are true as of the Purchase Date for the
purchase of any Purchased Assets by Buyer from Seller and as of the date of this
Agreement and any Transaction hereunder and at all times while the Repurchase
Documents and any Transaction hereunder is in full force and effect that the
following representations are true. For purposes of this Schedule 1 and the
representations and warranties set forth herein, a breach of a representation or
warranty shall be deemed to have been cured with respect to a Mortgage Loan if
and when Seller has taken or caused to be taken action such that the event,
circumstance or condition that gave rise to such breach no longer adversely
affects such Mortgage Loan.
(1) Mortgage Loans as Described. The information set forth in the Seller
Asset Schedule is complete, true and correct;
(2) Payments Current. All payments required to be made up to the related
Purchase Date for the Mortgage Loan under the terms of the Mortgage
Note have been made and credited. No payment required under the
Mortgage Loan is delinquent nor has any payment under the Mortgage
Loan been delinquent for 30 days or more. The first and second
Monthly Payments shall be made, or shall have been made, with
respect to the Mortgage Loan on its Due Date or within the grace
period, all in accordance with the terms of the related Mortgage
Note;
(3) No Outstanding Charges. There are no defaults in complying with the
terms of the Mortgage securing the Mortgage Loan, and all taxes,
governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every
such item which remains unpaid and which has been assessed but is
not yet due and payable. Except for (A) payments in the nature of
escrow payments and (B) interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage proceeds,
whichever is greater, to the day which precedes by one month the Due
Date of the first installment of principal and interest, including,
without limitation, taxes and insurance payments, Seller has not
advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required under the
Mortgage Loan;
(4) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any
respect, except by a written instrument which has been recorded, if
necessary to protect the interests of Buyer and which has been
delivered to Custodian and the terms of which are reflected in the
Seller Asset Schedule. The substance of any such waiver, alteration
or
Sch. 1-1
modification has been approved by the title insurer, to the extent
required by the policy. No Mortgagor has been released, in whole or
in part, except in connection with an assumption agreement approved
by the title insurer, to the extent required by the policy, and
which assumption agreement is part of the Mortgage File delivered to
Custodian and the terms of which are reflected in the Seller Asset
Schedule;
(5) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, nor will the operation of any of
the terms of the Mortgage Note or the Mortgage, or the exercise of
any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable, in whole or in part, or subject to any right
of rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect
thereto, and no Mortgagor was a debtor in any state or federal
bankruptcy or insolvency proceeding at, or subsequent to, the time
the Mortgage Loan was originated;
(6) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are
insured by a generally acceptable insurer against loss by fire,
hazards of extended coverage and such other hazards as are customary
in the area where the Mortgaged Property is located pursuant to
insurance policies conforming to the requirements of ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac in an amount not less than the greater of (i) 100% of
the replacement cost of all improvements to the Mortgaged Property
or (ii) the outstanding principal balance of the Mortgage Loan, but
in any event at least equal to the amount necessary to avoid the
operation of any co-insurance provisions with respect to the
Mortgaged Property, and consistent with the amount that would have
been required as of the date of origination in accordance with that
required by ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac. If upon origination of the
Mortgage Loan, the Mortgaged Property was in an area identified in
the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made
available) a flood insurance policy meeting the requirements of the
current guidelines of the Federal Flood Insurance Administration is
in effect which policy conforms to the requirements of ▇▇▇▇▇▇ Mae
and ▇▇▇▇▇▇▇ Mac. All individual insurance policies contain a
standard mortgagee clause naming Seller and its successors and
assigns as mortgagee, and all premiums thereon have been paid and
such policies may not be reduced, terminated or cancelled without 30
days' prior written notice to the mortgagee. The Mortgage obligates
the Mortgagor thereunder to maintain the hazard insurance policy at
the Mortgagor's cost and expense, and on the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to obtain and maintain
such insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the Mortgagor. Where required by state
law or regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance, provided the
policy is not a "master" or "blanket" hazard insurance policy
covering the common facilities of a planned unit development.
Sch. 1-2
The hazard insurance policy is the valid and binding obligation of
the insurer, is in full force and effect, and will be in full force
and effect and inure to the benefit of Buyer upon the consummation
of the transactions contemplated by this Agreement. Seller has not
engaged in, and has no knowledge of the Mortgagor's or any
subservicer's having engaged in, any act or omission which would
impair the coverage of any such policy, the benefits of the
endorsement provided for therein, or the validity and binding effect
of either, including, without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value of any
kind has been or will be received, retained or realized by any
attorney, firm or other person or entity, and no such unlawful items
have been received, retained or realized by Seller;
(7) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable
to the Mortgage Loan including, without limitation, any provisions
relating to prepayment fees, have been complied with, the
consummation of the transactions contemplated hereby will not
involve the violation of any such laws or regulations and Seller
shall maintain in its possession, available for Buyer's inspection,
and shall deliver to Buyer, upon demand, evidence of compliance with
all such requirements;
(8) No Satisfaction of Mortgage. The Mortgage has not been satisfied,
canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the
Mortgage, in whole or in part, nor has any instrument been executed
that would effect any such release, cancellation, subordination or
rescission. Seller has not waived the performance by the Mortgagor
of any action, if the Mortgagor's failure to perform such action
would cause the Mortgage Loan to be in default, nor has Seller
waived any default resulting from any action or inaction by the
Mortgagor;
(9) Location and Type of Mortgaged Property. The Mortgaged Property is a
fee simple property located in the state identified in the Seller
Asset Schedule except with respect to real property located in
jurisdictions in which the use of leasehold estates for residential
properties is a widely-accepted practice, the mortgaged property
consists of a single parcel of real property with a detached single
family residence erected thereon, or a two- to four-family dwelling,
an individual unit in a planned unit development, a unit in a
condominium project or a dwelling situated on a leasehold estate
(with respect to real property located in jurisdictions in which the
use of leasehold estates for residential properties is a widely
accepted practice) and no residence or dwelling thereon is (a)
co-operative units, (b) log homes, (c) earthen homes, (d)
underground homes, (e) mobile homes or manufactured housing units or
(f) any dwelling situated on more than ten acres of property
provided, however, that any planned unit development shall not fall
within any of the "Ineligible Projects" of part XII, Section 102 of
the ▇▇▇▇▇▇ Mae Selling Guide and shall conform with the Underwriting
Guidelines. No portion of the Mortgaged Property is used for
commercial purposes;
Sch. 1-3
(10) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected first or second lien and first or second
priority security interest on the Mortgaged Property, including all
buildings on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning
systems located in or annexed to such buildings, and all additions,
alterations and replacements made at any time with respect to the
foregoing. The lien of the Mortgage is subject only to:
(A) the lien of current real property taxes and
assessments not yet due and payable;
(B) covenants, conditions and restrictions, rights of
way, easements and other matters of the public record as of
the date of recording acceptable to prudent mortgage lending
institutions generally and specifically referred to in the
lender's title insurance policy delivered to the originator of
the Mortgage Loan and (i) referred to or otherwise considered
in the appraisal made for the originator of the Mortgage Loan
or (ii) which do not adversely affect the appraised value of
the Mortgaged Property set forth in such appraisal;
(C) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of
the security intended to be provided by the Mortgage or the
use, enjoyment, value or marketability of the related
Mortgaged Property; and
(D) with respect to each Second Lien Mortgage Loan a
prior mortgage lien on the Mortgaged Property.
Any Security Agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable (A)
first lien and first priority perfected security interest with
respect to each First Lien Mortgage Loan, or (B) second lien and
second priority perfected security interest with respect to each
Second Lien Mortgage Loan, in either case, on the property described
therein and Seller has full right to sell and assign the same to
Buyer. The Mortgaged Property was not, as of the date of origination
of the Mortgage Loan, subject to a mortgage, deed of trust, deed to
secure debt or other security instrument creating a lien subordinate
to the lien of the Mortgage;
(11) Validity of Mortgage Loan Documents. The Mortgage Note, the Mortgage
and any other agreement executed and delivered by a Mortgagor or
guarantor, if applicable, in connection with the Mortgage Loan are
genuine, and each is the legal, valid and binding obligation of the
maker thereof enforceable in accordance with its terms (including,
without limitation, any provisions therein relating to prepayment
fees). All parties to the Mortgage Note, the Mortgage and any other
related agreement had legal capacity to enter into the Mortgage Loan
and to execute and deliver the Mortgage Note, the Mortgage and any
other related
Sch. 1-4
agreement, and the Mortgage Note, the Mortgage and any other related
agreement have been duly and properly executed by such parties. The
documents, instruments and agreements submitted for loan
underwriting were not falsified and contain no untrue statement of
material fact or omit to state a material fact required to be stated
therein or necessary to make the information and statements therein
not misleading. No fraud, error, negligence, misrepresentation or
omission of fact with respect to a Mortgage Loan has taken place on
the part of Seller or the Mortgagor or any other party involved in
the origination or servicing of the Mortgage Loan. Seller or its
agent has reviewed all of the documents constituting the Servicing
File and has made such inquiries as it deems necessary to make and
confirm the accuracy of the representations set forth herein;
(12) Full Disbursement of Proceeds. The Mortgage Loan has been closed and
the proceeds of the Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder, and any and
all requirements as to completion of any on-site or off-site
improvement and as to disbursements of any escrow funds therefor
have been complied with. All costs, fees and expenses incurred in
making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any refund
of any amounts paid or due under the Mortgage Note or Mortgage;
(13) Ownership. Seller is the sole owner of record and holder of the
Mortgage Loan. The Mortgage Loan is not assigned or pledged, and
Seller has good, indefeasible and marketable title thereto, and has
full right to transfer and sell the Mortgage Loan therein to Buyer
free and clear of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest, and has full right
and authority subject to no interest or participation of, or
agreement with, any other party, to sell and assign each Mortgage
Loan pursuant to this Agreement and following the sale of each
Mortgage Loan, Buyer will own such Mortgage Loan free and clear of
any encumbrance, equity, participation interest, lien, pledge,
charge, claim or security interest;
(14) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise,
are (or, during the period in which they held and disposed of such
interest, were) (1) in compliance with any and all applicable
licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (2) organized under the laws of
such state, or (3) qualified to do business in such state, or (4)
federal savings and loan associations or national banks having
principal offices in such state, or (5) not doing business in such
state;
(15) LTV; FICO. The Mortgage Loan does not have an LTV greater than 100%.
At origination of the Mortgage Loan, the Mortgagor did not have a
FICO score of less than 500.
(16) Title Insurance. The Mortgage Loan is covered by an ALTA lender's
title insurance policy or other generally acceptable form of policy
of insurance
Sch. 1-5
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, issued by a title insurer
acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and qualified to do business
in the jurisdiction where the Mortgaged Property is located,
insuring Seller, its successors and assigns, as to the first or
second priority lien of the Mortgage in the original principal
amount of the Mortgage Loan, and against any loss by reason of the
invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment in the Mortgage
Interest Rate and Monthly Payment, subject only to the exceptions
contained in clauses (A), (B), and (C), and with respect to each
Second Lien Mortgage Loan clause (D) of Paragraph (10) of this
Schedule I. Where required by state law or regulation, the Mortgagor
has been given the opportunity to choose the carrier of the required
mortgage title insurance. Additionally, such lender's title
insurance policy affirmatively insures ingress and egress, and
against encroachments by or upon the Mortgaged Property or any
interest therein. The title policy does not contain any special
exceptions (other than the standard exclusions) for zoning and uses
and has been marked to delete the standard survey exception or to
replace the standard survey exception with a specific survey
reading. Seller its successors and assigns is the sole insured of
such lender's title insurance policy, and such lender's title
insurance policy is in full force and effect and will be in force
and effect upon the consummation of the transactions contemplated by
this Agreement. No claims have been made under such lender's title
insurance policy, and no prior holder or servicer of the Mortgage,
including Seller, has done, by act or omission, anything which would
impair the coverage of such lender's title insurance policy,
including, without limitation, no unlawful fee, commission, kickback
or other unlawful compensation or value of any kind has been or will
be received, retained or realized by any attorney, firm or other
Person, and no such unlawful items have been received, retained or
realized by Seller;
(17) No Defaults. There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no
event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration, and neither Seller nor
its predecessors have waived any default, breach, violation or event
of acceleration. With respect to each Second Lien Mortgage Loan, (i)
the prior mortgage is in full force and effect, (ii) there is no
default, breach, violation or event of acceleration existing under
such prior mortgage or the related mortgage note, (iii) no event
which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a default, breach,
violation or event of acceleration thereunder, and either (A) the
prior mortgage contains a provision which allows or (B) applicable
law requires, the mortgagee under the Second Lien Mortgage Loan to
receive notice of, and affords such mortgagee an opportunity to cure
any default by payment in full or otherwise under the prior
mortgage;
(18) No Mechanics' Liens. There are no mechanics' or similar liens or
claims which have been filed for work, labor or material (and no
rights are outstanding that under the law could give rise to such
liens) affecting the related Mortgaged
Sch. 1-6
Property which are or may be liens prior to, or equal or coordinate
with, the lien of the related Mortgage;
(19) Location of Improvements; No Encroachments. All improvements which
were considered in determining the Appraised Value of the Mortgaged
Property lay wholly within the boundaries and building restriction
lines of the Mortgaged Property and no improvements on adjoining
properties encroach upon the Mortgaged Property. No improvement
located on or being part of the Mortgaged Property is in violation
of any applicable zoning and building law, ordinance or regulation;
(20) Origination: Payment Terms. At the time the Mortgage Loan was
originated, the originator was a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to Sections 203 and 211 of
the National Housing Act or a savings and loan association, a
savings bank, a commercial bank or similar banking institution which
is supervised and examined by a Federal or State authority. No
Mortgage Loan contains terms or provisions which would result in
negative amortization. Principal payments on the Mortgage Loan
commenced no more than 60 days after funds were disbursed in
connection with the Mortgage Loan other than with respect to
Interest-Only Loans. The Mortgage Interest Rate is adjusted, with
respect to adjustable rate Mortgage Loans, on each Interest Rate
Adjustment Date to equal the applicable index plus the Gross Margin
(rounded up or down to the nearest 0.125%), subject to the Maximum
Mortgage Interest Rate. The Mortgage Note is payable on the first
day of each month in equal monthly installments of principal (other
than with respect to Interest-Only Loans) and interest, which
installments of interest, with respect to adjustable rate Mortgage
Loans, are subject to change due to the adjustments to the Mortgage
Interest Rate on each Interest Rate Adjustment Date, with interest
calculated and payable in arrears, sufficient to amortize the
Mortgage Loan fully by the stated maturity date (other than with
respect to Interest-Only Loans), over an original term of not more
than 30 years from commencement of amortization. The due date of the
first payment under the Mortgage Note is no more than 60 days from
the date of the Mortgage Note;
(21) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security provided thereby,
including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial
foreclosure. Upon default by a Mortgagor on a Mortgage Loan and
foreclosure on, or trustee's sale of, the Mortgaged Property
pursuant to the proper procedures, the holder of the Mortgage Loan
will be able to deliver good and merchantable title to the Mortgaged
Property. There is no homestead or other exemption available to the
Mortgagor which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage
subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption;
Sch. 1-7
(22) Conformance with Underwriting Guidelines and Agency Standards. The
Mortgage Loan was underwritten in accordance with Seller's
underwriting guidelines in effect at the time the Mortgage Loan was
originated, a copy of which underwriting guidelines are attached as
Exhibit II hereto. The Mortgage Note and Mortgage are on forms
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Seller has not made any
representations to a Mortgagor that are inconsistent with the
mortgage instruments used;
(23) Occupancy of the Mortgaged Property. As of the related Purchase Date
the Mortgaged Property is lawfully occupied under applicable law by
the Mortgagor as its primary residence. All inspections, licenses
and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the
use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have
been made or obtained from the appropriate authorities. Seller has
not received notification from any Governmental Authority that the
Mortgaged Property is in material non-compliance with such laws or
regulations, is being used, operated or occupied unlawfully or has
failed to have or obtain such inspection, licenses or certificates,
as the case may be. Seller has not received notice of any violation
or failure to conform with any such law, ordinance, regulation,
standard, license or certificate;
(24) No Additional Collateral. The Mortgage Note is not and has not been
secured by any collateral except the lien of the corresponding
Mortgage and the security interest of any applicable Security
Agreement or chattel mortgage referred to in Paragraph (10) above;
(25) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law
to serve as such, has been properly designated and currently so
serves and is named in the Mortgage, and no fees or expenses are or
will become payable by Custodian or Buyer to the trustee under the
deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(26) Acceptable Investment. The Mortgagor is not in bankruptcy or
insolvent and Seller has no knowledge of any circumstances or
conditions with respect to the Mortgage, the Mortgaged Property, the
Mortgagor or the Mortgagor's credit standing that can reasonably be
expected to cause private institutional investors to regard the
Mortgage Loan as an unacceptable investment, cause the Mortgage Loan
to become delinquent, or adversely affect the value or marketability
of the Mortgage Loan. No Mortgaged Property is located in a state,
city, county or other local jurisdiction which the Buyer has
determined in its sole good faith discretion (and so certified by
notice to Seller prior to the applicable Purchase Date) would cause
the related Mortgage Loan to be ineligible for whole loan sale or
securitization in a transaction consistent with the prevailing sale
and securitization industry (including, without limitation, the
practice of the rating agencies) with respect to substantially
similar mortgage loans;
Sch. 1-8
(27) Delivery of Mortgage Loan Documents. Other than with respect to
Wet-Ink Mortgage Loans, the Mortgage Note, the Mortgage, the
Assignment of Mortgage and any other documents required to be
delivered by Seller under this Agreement have been delivered to
Buyer or its Custodian. Seller is in possession of a complete, true
and accurate Mortgage File in compliance with Section 2 of the
Custodial and Disbursement Agreement, except for such documents the
originals of which have been delivered to Buyer or its Custodian;
(28) Due on Sale. The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the Mortgagee
thereunder;
(29) Transfer of Mortgage Loans. The Assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of
the jurisdiction in which the Mortgaged Property is located;
(30) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to
which Monthly Payments are paid or partially paid with funds
deposited in any separate account established by Seller, the
Mortgagor or anyone on behalf of the Mortgagor, or paid by any
source other than the Mortgagor nor does it contain any other
similar provisions currently in effect which may constitute a
"buydown" provision. The Mortgage Loan is not a graduated payment
mortgage loan and the Mortgage Loan does not have a shared
appreciation or other contingent interest feature;
(31) Consolidation of Future Advances. Any future advances made prior to
the related Purchase Date have been consolidated with the
outstanding principal amount secured by the Mortgage, and the
secured principal amount, as consolidated, bears a single interest
rate and single repayment term. The lien of the Mortgage securing
the consolidated principal amount is expressly insured as having
first or second lien priority by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated
interest or by other title evidence acceptable to ▇▇▇▇▇▇ Mae and
▇▇▇▇▇▇▇ Mac. The consolidated principal amount does not exceed the
original principal amount of the Mortgage Loan;
(32) Mortgaged Property Undamaged. There is no proceeding pending or
threatened for the total or partial condemnation of the Mortgaged
Property. The Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the
premises were intended;
(33) Collection Practices; Escrow Deposits; Adjustable Rate Mortgage Loan
Adjustments. The origination and collection practices used with
respect to the Mortgage Loan have been in accordance with Accepted
Servicing Practices and in all respects in compliance with all
applicable laws and regulations. With respect
Sch. 1-9
to escrow deposits and Escrow Payments (other than with respect to
Second Lien Mortgage Loans for which the mortgagee under the prior
mortgage lien is collecting Escrow Payments), all such payments are
in the possession of Seller and there exist no deficiencies in
connection therewith for which customary arrangements for repayment
thereof have not been made. Each Mortgage Loan is covered by a life
of loan tax service contract. All Escrow Payments have been
collected in full compliance with state and federal laws. An escrow
of funds is not prohibited by applicable law and has been
established in an amount sufficient to pay for every item which
remains unpaid and which has been assessed but is not yet due and
payable. No escrow deposits or Escrow Payments or other charges or
payments due Seller have been capitalized under the Mortgage or the
Mortgage Note. All Mortgage Interest Rate adjustments have been made
in strict compliance with state and federal laws and the terms of
the related Mortgage Note. Any interest required to be paid pursuant
to state and local laws has been properly paid and credited;
(34) Appraisal. The Servicing File includes an appraisal of the Mortgaged
Property signed prior to the approval of the Mortgage application by
an appraiser qualified under ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac guidelines
who (i) is licensed in the state where the Mortgaged Property is
located, (ii) has no interest, direct or indirect, in the Mortgaged
Property or in any Mortgage Loan or the security therefor, and (iii)
does not receive compensation that is affected by the approval or
disapproval of the Mortgage Loan. The appraisal shall have been made
within one hundred and eighty (180) days of the origination of the
Mortgage Loan, be completed in compliance with the Uniform Standards
of Professional Appraisal Practice and all applicable Federal and
state laws and regulations. If the appraisal was made more than one
hundred and twenty (120) days before the origination of the Mortgage
Loan, Seller shall have received and included in the Servicing File
a recertification of the appraisal.
(35) Servicemembers Civil Relief Act. The Mortgagor has not notified
Seller, and Seller has no knowledge of, any relief requested or
allowed to the Mortgagor under the Servicemembers Civil Relief Act,
as amended or any similar state statute;
(36) Environmental Matters. The Mortgaged Property is free from any and
all toxic or hazardous substances and there exists no violation of
any local, state or federal environmental law, rule or regulation.
There is no pending action or proceeding directly involving any
Mortgaged Property of which Seller is aware in which compliance with
any environmental law, rule or regulation is an issue; and to the
best of Seller's knowledge, nothing further remains to be done to
satisfy in full all requirements of each such law, rule or
regulation consisting a prerequisite to use and enjoyment of said
property;
(37) No Construction Loans No Mortgage Loan was made in connection with
(a) facilitating the trade-in or exchange of a Mortgaged Property or
(b) the construction or rehabilitation of a Mortgaged Property,
unless the Mortgage Loan
Sch. 1-10
is a construction-to-permanent mortgage loan listed on the Seller
Asset Schedule which has been fully disbursed, all construction work
is complete and a completion certificate has been issued;
(38) No Denial of Insurance. No action, inaction, or event has occurred
and no state of fact exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage
under any applicable pool insurance policy, primary mortgage
insurance policy, special hazard insurance policy, or bankruptcy
bond, irrespective of the cause of such failure of coverage. In
connection with the placement of any such insurance, no commission,
fee, or other compensation has been or will be received by Seller or
any designee of Seller or any corporation in which Seller or any
officer, director, or employee had a financial interest at the time
of placement of such insurance;
(39) Regarding the Mortgagor. The Mortgagor is one or more natural
persons and/or trustees for an Illinois land trust or a trustee
under a "living trust" and such "living trust" is in compliance with
▇▇▇▇▇▇ Mae guidelines for such trusts;
(40) Mortgagor Acknowledgment. The Mortgagor has received all disclosure
materials required by applicable law with respect to the making of
Adjustable Rate Mortgage Loans. Seller shall maintain such documents
in the Mortgage File;
(41) Predatory Lending Regulations; High Cost Loans. No Mortgage Loan is
a High Cost Loan or Covered Loan, as applicable, and no Mortgage
Loan originated on or after October 1, 2002 through March 6, 2003 is
governed by the Georgia Fair Lending Act. No Mortgage Loan is
covered by the Home Ownership and Equity Protection Act of 1994 and
no Mortgage Loan is in violation of any comparable state or local
law. The Mortgaged Property is not located in a jurisdiction where a
breach of this representation with respect to the related Mortgage
Loan may result in additional assignee liability to Buyer or as to
which Buyer has notified Seller prior to the Purchase Date that
Buyer has determined in its reasonable discretion that it may result
in the imposition of additional assignee liability to Buyer;
(42) Qualified Mortgage. The Mortgage Loan is a "qualified mortgage"
within the meaning of Section 860G(a)(3) or any successor provision
thereof of the Internal Revenue Code of 1986, as amended;
(43) Insurance. Seller has caused or will cause to be performed any and
all acts required to preserve the rights and remedies of Buyer in
any insurance policies applicable to the Mortgage Loans including,
without limitation, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of
coinsured, joint loss payee and mortgagee rights in favor of Buyer;
(44) Simple Interest Mortgage Loans. None of the Mortgage Loans are
simple interest Mortgage Loans;
Sch. 1-11
(45) Prepayment Fee. With respect to each Mortgage Loan that has a
prepayment fee feature, each such prepayment fee is enforceable and
will be enforced by Seller for the benefit of Buyer, and each
prepayment fee is permitted pursuant to federal, state and local law
and is only payable (i) with respect to a Mortgage Loan originated
prior to October 1, 2002, during the first 5 years of the term of
the Mortgage Loan, and (ii) with respect to a Mortgage Loan
originated on or after October 1, 2002, during the first 3 years of
the term of the Mortgage Loan. Each such prepayment fee is in an
amount equal to the maximum amount permitted under applicable law;
(46) Flood Certification Contract. Seller shall have obtained a life of
loan, transferable flood certification contract for each Mortgage
Loan and shall assign all such contracts to Buyer;
(47) CLTV. No Second Lien Mortgage Loan has a CLTV in excess of 100%; and
(48) Consent. In the case of any Second Lien Mortgage Loan, either (a) no
consent for the Second Lien Mortgage Loan is required by the holder
of the related first lien or (b) such consent has been obtained and
is contained in the Mortgage File;
(49) Wet-Ink Mortgage Loans. With respect to each Mortgage Loan that is a
Wet-Ink Mortgage Loan, the Settlement Agent has been instructed in
writing by Seller to hold the related Mortgage File as agent and
bailee for Buyer or Buyer's agent and to promptly forward such
Mortgage File in accordance with the provisions of the Custodial and
Disbursement Agreement and the Escrow Instruction Letter.
(50) No Equity Participation. No document relating to the Mortgage Loan
provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a
sharing in the appreciation of the value of the Mortgaged Property.
The indebtedness evidenced by the Mortgage Note is not convertible
to an ownership interest in the Mortgaged Property or the Mortgagor
and Seller has not financed nor does it own directly or indirectly,
any equity of any form in the Mortgaged Property or the Mortgagor;
(51) Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan have
not been and shall not be used to satisfy, in whole or in part, any
debt owed or owing by the Mortgagor to Seller or any Affiliate or
correspondent thereof unless such debt was originated more than 12
months prior to the origination of such Mortgage Loan;
(52) Withdrawn Mortgage Loans. If the Mortgage Loan has been released to
Seller or its designee pursuant to a Request for Release as
permitted under Section 5 of the Custodial and Disbursement
Agreement, then the Mortgage Note relating to the Mortgage Loan was
returned to Custodian within twelve (12) calendar days;
(53) Origination Date. The Origination Date is no earlier than 60 days
prior to the date the Mortgage Loan is initially purchased by Buyer;
Sch. 1-12
(54) No Exception. Custodian has not noted any material exceptions on a
Seller Asset Schedule and Exception Report (as defined in the
Custodial and Disbursement Agreement) with respect to the Mortgage
Loan which would materially and adversely affect the Mortgage Loan
or Buyer's ownership of the Mortgage Loan, unless consented to by
Buyer;
(55) Mortgage Submitted for Recordation. The Mortgage either has been or
will promptly be submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the
Mortgaged Property is located;
(56) Endorsements. Each Mortgage Note has been endorsed by Seller for its
own account and not as a fiduciary, trustee, trustor or beneficiary
under a trust agreement;
(57) Fair Credit Reporting Act. The Seller has (or has caused the
Servicer to), in its capacity as servicer, for each Mortgage Loan,
fully furnished, in accordance with the Fair Credit Reporting Act
and its implementing regulations, accurate and complete information
(e.g., favorable and unfavorable) on its borrower credit files to
Equifax, Experian and Trans Union Credit Information Company (three
of the credit repositories), on a monthly basis;
(58) Accuracy of Information. All information provided to Buyer by Seller
with respect to the Mortgage Loans is accurate in all material
respects;
(59) Single Premium Credit Insurance. No Mortgagor was offered or
required to purchase single premium credit insurance in connection
with the origination of the related Mortgage Loan; and
(60) Ground Leases.
(i) The Ground Lease or a memorandum thereof has been duly
recorded, the Ground Lease permits the interest of the lessee
thereunder to be encumbered by the related Mortgage, does not
restrict the use of the Mortgaged Property by the lessee or
its successors and assigns in a manner that would adversely
affect the security provided by the related Mortgage, and
there has not been a material change in the terms of the
Ground Lease since its recordation, with the exception of
written instruments which are part of the related Mortgage
File;
(ii) The Ground Lease is not subject to any liens or encumbrances
superior to, or of equal priority with, the related Mortgage,
other than the related ground lessor's related fee interest;
and
(iii) The Ground Lease either (i) has a term which extends not less
than five years beyond the maturity date of the related
Mortgage Loan or (ii) grants the lessee the option to extend
the term of the lease for a period (in the aggregate) which
exceeds five years beyond the maturity date of the related
Mortgage Loan; and
Sch. 1-13
(61) No Arbitration. No Mortgage Loan originated on or after July 1, 2004
requires the related Mortgagor to submit to arbitration to resolve
any dispute arising out of or relating in any way to the Mortgage
Loan transaction.
Sch. 1-14
Part II: Defined Terms
In addition to terms defined elsewhere in the Repurchase Agreement,
the following terms shall have the following meanings when used in this Schedule
1:
"Accepted Servicing Practices" shall mean, with respect to any
Mortgage Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loans in the jurisdiction where the related Mortgaged Property is located.
"Adjustable Rate Mortgage Loan" shall mean an Adjustable Rate
Mortgage Loan purchased pursuant to this Agreement.
"Covered Loan" shall mean a Mortgage Loan categorized as Covered
pursuant to Appendix E of Standard & Poor's Glossary."
"Due Date" shall mean the day on which the Monthly Payment is due on
a Mortgage Loan, exclusive of any days of grace.
"Escrow Payments" shall mean with respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water charges, sewer
rents, municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and other payments as may be required to be
escrowed by the Mortgagor with the Mortgagee pursuant to the terms of any
Mortgage Note, Mortgage or any other document.
"First Lien Mortgage Loan" shall mean a Mortgage Loan secured by a
first lien Mortgage on the related Mortgaged Property.
"Fixed Rate Mortgage Loan" shall mean a fixed rate Mortgage Loan
purchased pursuant to this Repurchase Agreement.
"Gross Margin" shall mean, with respect to each Adjustable Rate
Mortgage Loan, the fixed percentage amount set forth in the related Mortgage
Note which amount is added to the index in accordance with the terms of the
related Mortgage Note to determine on each Interest Rate Adjustment Date the
Mortgage Interest Rate for such Mortgage Loan.
"Ground Lease" shall mean the original executed instrument
evidencing a leasehold estate with respect to a Mortgaged Property.
"High Cost Loan" A Mortgage Loan classified as (a) a "high cost"
loan under the Home Ownership and Equity Protection Act of 1994, (b) a "high
cost home," "threshold," "covered," (excluding New Jersey "Covered Home Loans"
as that term is defined in clause (1) of the definition of that term in the New
Jersey Home Ownership Security Act of 2002), "high risk home," "predatory" or
similar loan under any other applicable state, federal or local law (or a
similarly classified loan using different terminology under a law imposing
heightened regulatory scrutiny or additional legal liability for residential
mortgage loans having high interest rates, points and/or fees) or (c) a Mortgage
Loan categorized as High Cost pursuant to Appendix E of
Sch. 1-15
Standard & Poor's Glossary. For avoidance of doubt, the parties agree that this
definition shall apply to any law regardless of whether such law is presently,
or in the future becomes, the subject of judicial review or litigation."
"Home Loan" shall mean a Mortgage Loan categorized as Home Loan
pursuant to Appendix E of Standard & Poor's Glossary."
"Interest Rate Adjustment Date" shall mean with respect to each
Adjustable Rate Mortgage Loan, the date set forth in the related Mortgage Note
on which the Mortgage Interest Rate on the Mortgage Loan is adjusted in
accordance with the terms of the Mortgage Note.
"Maximum Mortgage Interest Rate" shall mean with respect to each
Adjustable Rate Mortgage Loan, a rate that is set forth on the related Seller
Asset Schedule and in the related Mortgage Note and is the maximum interest rate
to which the Mortgage Interest Rate on such Mortgage Loan may be increased on
any Interest Rate Adjustment Date.
"Minimum Mortgage Interest Rate" shall mean with respect to each
Adjustable Rate Mortgage Loan, a rate that is set forth on the related Seller
Asset Schedule and in the related Mortgage Note and is the minimum interest rate
to which the Mortgage Interest Rate on such Mortgage Loan may be decreased on
any Interest Rate Adjustment Date.
"Monthly Payment" shall mean with respect to any Mortgage Loan, the
scheduled combined payment of principal and interest payable by a Mortgagor
under the related Mortgage Note on each Due Date.
"Mortgage Interest Rate" shall mean with respect to each Mortgage
Loan, the annual rate at which interest accrues on such Mortgage Loan from time
to time in accordance with the provisions of the related Mortgage Note.
"Origination Date" shall mean with respect to each Mortgage Loan,
the date on which the applicable lien was placed on the related Mortgaged
Property.
"Standard & Poor's Glossary" shall mean the Standard & Poor's
LEVELS(R) Glossary, as may be in effect from time to time.
Sch. 1-16
EXHIBIT I
FORM OF TRANSACTION REQUEST
[Date]
CDC Mortgage Capital Inc.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Confirmation No.:_____________________
Ladies/Gentlemen:
This letter is a request for you to purchase from us the Mortgage
Loans listed in Appendix I hereto, pursuant to the Master Repurchase Agreement
governing purchases and sales of Mortgage Loans between us, dated as of August
25, 2004 (the "Agreement"), as follows:
Requested Purchase Date:
Eligible Assets requested to be Purchased: See Appendix I hereto.
[Appendix I to Transaction Request Letter will list Mortgage Loans]
Aggregate Principal Amount of Eligible Assets requested to be
purchased:
Purchase Price:
Pricing Rate:
Repurchase Date(1):
Repurchase Price:
Purchase Percentage:
---------------------
(1) If marked as "open", the Repurchase Date shall be one (1) Business Day after
the date upon which either Buyer (in its sole discretion) or the Seller (in its
sole discretion) provides to the other written notice of its intention to sell
or repurchase, as applicable, the Mortgage Loans on Appendix I hereto; provided
that the Repurchase Date shall not, in any event, exceed 364 days from the date
hereof.
Exh. I-1
Names and addresses for communications:
Buyer:
CDC Mortgage Capital Inc.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Email: ▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇-▇▇▇▇.▇▇▇
with copies to:
▇▇▇▇ ▇▇▇▇
Email: ▇▇▇▇▇@▇▇▇▇▇▇▇-▇▇▇▇.▇▇▇
Seller:
Oak Street Mortgage LLC
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Royal
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
This Transaction Request constitutes certification by Seller that:
1. No Default or Event of Default has occurred and is continuing on the
date hereof nor will occur after giving effect to such Transaction
as a result of such Transaction.
2. Each of the conditions precedent set forth in Section 3 with respect
to the Transaction has been satisfied.
3. Each of the representations and warranties made by Seller in or
pursuant to the Agreement is true and correct in all material
respects on and as of such date and as of the date hereof (or, if
any such representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date).
Exh. I-2
4. Seller is in compliance with all governmental licenses and
authorizations and is qualified to do business and is in good
standing in all required jurisdictions.
All capitalized terms used herein shall have the meaning assigned thereto
in the Agreement.
OAK STREET MORTGAGE, LLC
By:_________________________
Name:
Title:
Exh. I-3
EXHIBIT II
UNDERWRITING GUIDELINES
[TO BE PROVIDED BY SELLER]
Exh. II-1
EXHIBIT IIIA
FORM OF OPINIONS
CDC Mortgage Capital Inc.
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
You have requested our opinion as counsel to [ ], a [ ] organized and existing
under the laws of [________________] (the "Seller"), with respect to certain
matters in connection with that certain Master Repurchase Agreement governing
purchases and sales of certain Mortgage Loans, dated as of August 25, 2004 (the
"Repurchase Agreement"), by and between Seller and CDC Mortgage Capital Inc.
(the "Buyer"), the Custodial and Disbursement Agreement, dated as of August 25,
2004 (the "Custodial and Disbursement Agreement"), among Seller, Buyer and
[___________]as custodian and disbursement agent Capitalized terms not otherwise
defined herein have the meanings set forth in the Repurchase Agreement.
1. the Repurchase Agreement;
2. the Custodial and Disbursement Agreement;
4. Letter Agreement, dated as of August 25, 2004 between Seller
and Buyer (the "Letter Agreement");
3. the Account Agreement;
4. unfiled copies of the financing statements listed on Schedule
1 (collectively, the "Financing Statements") naming Seller as
Debtor and Buyer as Secured Party and describing the Purchased
Items (as defined in the Master Repurchase Agreement) as to
which security interests may be perfected by filing under the
Uniform Commercial Code of the States listed on Schedule 1
attached hereto (the "Filing Collateral"), which I understand
will be filed in the filing offices listed on Schedule 1 (the
"Filing Offices");
5. the reports listed on Schedule 2 attached hereto as to UCC
financing statements (collectively, the "UCC Search Report");
and
6. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
The Repurchase Agreement, the Account Agreement, the Letter
Agreement and the Custodial and Disbursement Agreement are hereinafter
collectively referred to as the "Governing Agreements." To the extent [we] [I]
have deemed necessary and proper, [we] [I] have relied upon the representations
and warranties of Seller contained in the Repurchase Agreement. [We] [I] have
assumed the authenticity of all documents submitted to me [us] as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.
Exh. III-1
Based upon the foregoing, it is [our] [my] opinion that:
1. Seller is a limited liability company duly organized, validly
existing and in good standing under the laws of the [State of_____________] and
is qualified to transact business in, and is in good standing under, the laws of
the [State of ______________].
2. The execution, delivery and performance by Seller of the
Governing Agreements to which it is a party, and the sales by Seller and the
pledge of the Purchased Items under the Repurchase Agreement have been duly
authorized by all necessary corporate action on the part of Seller. Seller has
all necessary corporate or other power, authority and legal right to enter into,
execute, deliver and perform its obligations under each of the Governing
Agreements. Each of the Governing Agreements have been duly executed and
delivered by Seller and are legal, valid and binding agreements enforceable in
accordance with their respective terms against Seller, subject to bankruptcy
laws and other similar laws of general application affecting rights of creditors
and subject to the application of the rules of equity, including those
respecting the availability of specific performance, none of which will
materially interfere with the realization of the benefits provided thereunder or
with Buyer's purchase of the Purchased Assets and/or security interest in the
Purchased Assets.
3. No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of Seller for the execution, delivery or performance by
Seller of the Governing Agreements to which it is a party or for the sales by
Seller under the Repurchase Agreement or the sale of the Purchased Items to
Buyer and/or granting of a security interest to Buyer in the Purchased Items,
pursuant to the Repurchase Agreement.
4. The execution, delivery and performance by Seller of, and the
consummation of the transactions contemplated by the Governing Agreements to
which it is a party do not and will not (a) violate any provision of Seller's
charter or by-laws, (b) violate any applicable law, rule or regulation, (c)
violate any order, writ, injunction or decree of any court or governmental
authority or agency or any arbitral award applicable to Seller or (d) result in
a breach of, constitute a default under, require any consent under, or result in
the acceleration or required prepayment of any indebtedness pursuant to the
terms of, any agreement or instrument to which Seller is a party or by which it
is bound or to which it is subject, or (except for the Liens created pursuant to
the Repurchase Agreement) result in the creation or imposition of any Lien upon
any Property of Seller pursuant to the terms of any such agreement or
instrument.
5. There is no action, suit, proceeding or investigation pending or,
to the best of [our] [my] knowledge, threatened against Seller which, in [our]
[my] judgment, either in any one instance or in the aggregate, could be
reasonably likely to result in any material adverse change in the properties,
business or financial condition, or prospects of Seller or in any material
impairment of the right or ability of Seller to carry on its business
substantially as now conducted or in any material liability on the part of
Seller or which would draw into question the validity of the Governing
Agreements to which it is a party or the Mortgage Loans or of any action taken
or to be taken in connection with the transactions contemplated thereby, or
which could be reasonably likely to impair materially the ability of Seller to
perform under the terms of the Governing Agreements to which it is a party or
the Mortgage Loans.
Exh. III-2
6. The Repurchase Agreement is effective to create, in favor of
Buyer, either a valid sale of the Purchased Items to Buyer or a valid security
interest under the Uniform Commercial Code in all of the right, title and
interest of Seller in, to and under the Purchased Items as collateral security
for the payment of Seller's obligations under the Repurchase Agreement, except
that (a) such security interests will continue in Purchased Items after its
sale, exchange or other disposition only to the extent provided in Section 9-315
of the Uniform Commercial Code, (b) the security interests in Purchased Items in
which Seller acquires rights after the commencement of a case under the
Bankruptcy Code in respect of Seller may be limited by Section 552 of the
Bankruptcy Code.
7. When the Mortgage Notes are delivered to Custodian, endorsed in
blank by a duly authorized officer of Seller, the security interest referred to
in Section 6 above in the Mortgage Notes will constitute a fully perfected first
priority security interest in all right, title and interest of Seller therein.
8. Assuming the Bank has (i) opened the Collection Account for the
benefit of Buyer and (ii) agreed to collect items therefor, Buyer, as the
customer with respect to the related Collection Account, will have a perfected
security interest therein under the Uniform Commercial Code.
9. (a) Upon the filing of financing statements on Form UCC-1 naming
Buyer as "Secured Party" and Seller as "Debtor", and describing the Purchased
Items, in the jurisdictions and recording offices listed on Schedule 1 attached
hereto, the security interests referred to in Section 6 above will constitute
fully perfected security interests under the Uniform Commercial Code in all
right, title and interest of Seller in, to and under such Purchased Items, which
can be perfected by filing under the Uniform Commercial Code, or, will
demonstrate a completion of the sale of the Mortgage Loans to Buyer.
(b) The UCC Search Report sets forth the proper filing offices and
the proper debtors necessary to identify those Persons who have on file in the
jurisdictions listed on Schedule 1 financing statements covering the Purchased
Items as of the dates and times specified on Schedule 2. The UCC Search Report
identifies no Person who has filed in any Filing Office a financing statement
describing the Purchased Items prior to the effective dates of the UCC Search
Report.
10. Seller is not an "investment company", or a company "controlled"
by an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
Very truly yours,
Exh. III-3
EXHIBIT IIIB
FORM OF OPINIONS
CDC Mortgage Capital Inc.
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Dear Sirs and Mesdames:
You have requested our opinion as counsel to [______], a [_______] organized and
existing under the laws of [________________] (the "FBR"), with respect to
certain matters in connection with that certain Mortgage Loans Purchase
Agreement, dated August 25, 2004 (the "MLPA"), between FBR and CDC Mortgage
Capital Inc. (the "Buyer") Capitalized terms not otherwise defined herein have
the meanings set forth in the MLPA.
1. the MLPA;
2. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I]
have relied upon the representations and warranties of FBR contained in the
MLPA. [We] [I] have assumed the authenticity of all documents submitted to me
[us] as originals, the genuineness of all signatures, the legal capacity of
natural persons and the conformity to the originals of all documents.
Based upon the foregoing, it is [our] [my] opinion that:
1. FBR is a corporation duly organized, validly existing and in good
standing under the laws of the [State of ____________] and is qualified to
transact business in, and is in good standing under, the laws of the [State of
____________].
2. The execution, delivery and performance by FBR of the MLPA has
been duly authorized by all necessary corporate action on the part of FBR. FBR
has all necessary corporate or other power, authority and legal right to enter
into, execute, deliver and perform its obligations under the MLPA. The MLPA has
been duly executed and delivered by FBR and is a legal, valid and binding
agreement enforceable in accordance with its terms against FBR, subject to
bankruptcy laws and other similar laws of general application affecting rights
of creditors and subject to the application of the rules of equity, including
those respecting the availability of specific performance, none of which will
materially interfere with the realization of the benefits provided thereunder.
3. No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of FBR for the execution, delivery or performance by FBR of
the MLPA.
Exh. III-1
4. The execution, delivery and performance by FBR of, and the
consummation of the transactions contemplated by the MLPA do not and will not
(a) violate any provision of FBR's charter or by-laws, (b) violate any
applicable law, rule or regulation, (c) violate any order, writ, injunction or
decree of any court or governmental authority or agency or any arbitral award
applicable to FBR or (d) result in a breach of, constitute a default under,
require any consent under, or result in the acceleration or required prepayment
of any indebtedness pursuant to the terms of, any agreement or instrument to
which FBR is a party or by which it is bound or to which it is subject, or
result in the creation or imposition of any Lien upon any Property of FBR
pursuant to the terms of any such agreement or instrument.
5. There is no action, suit, proceeding or investigation pending or,
to the best of [our] [my] knowledge, threatened against FBR which, in [our] [my]
judgment, either in any one instance or in the aggregate, could be reasonably
likely to result in any material adverse change in the properties, business or
financial condition, or prospects of FBR or in any material impairment of the
right or ability of FBR to carry on its business substantially as now conducted
or in any material liability on the part of FBR or which would draw into
question the validity of the MLPA or of any action taken or to be taken in
connection with the transactions contemplated thereby, or which could be
reasonably likely to impair materially the ability of FBR to perform under the
terms of the MLPA.
6. FBR is not an "investment company", or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
Very truly yours,
Exh. III-2
EXHIBIT IV
UCC FILING JURISDICTIONS
Secretary of State of Delaware
Exh. IV-1
EXHIBIT V
[FORM OF ACCOUNT AGREEMENT]
[_______ ], 200_
[SELLER], as Seller
[ADDRESS]
Attn:
[BANK], as Bank
[ADDRESS]
Attn:
Re: Collection Account established by Oak Street Mortgage LLC (the
"Seller") at Deutsche Bank National Trust Company, a national
banking association (the "Bank") pursuant to that certain Master
Repurchase Agreement (as amended, supplemented or otherwise modified
from time to time, the "Repurchase Agreement"), dated as of August
25, 2004, between CDC Mortgage Capital Inc. (the "Buyer") and
Seller.
Ladies and Gentlemen:
Seller has entered into a Repurchase Agreement pursuant to which
Buyer may from time to time purchase mortgage loans (the "Purchased Assets")
secured by, among other things, the payments made by mortgagors on account of
Purchased Assets sold to Buyer under the Repurchase Agreement. As a requirement
of such transactions, upon a default or an event of default under the Repurchase
Agreement, all such payments are required to be forwarded daily to Buyer at the
Collection Account identified below within one (1) Business Day of receipt.
Seller has established a collection account, Account No. [___], for
the account of Buyer, with the Bank, ABA# [_______________] (the "Collection
Account") which the Bank maintains in the name of, and in trust for, Buyer as
the Bank's customer. Seller has granted to Buyer a security interest in all
payments deposited in the Collection Account with respect to the Purchased
Assets sold to Buyer under the Repurchase Agreement.
In the event the Bank receives notice from Buyer that a default or
an event of default has occurred and is continuing under the Repurchase
Agreement (a "Notice of Event of Default") from Buyer, the Bank shall in no
event (a) transfer funds from the Collection Account to Seller or any other
person other than pursuant to Buyer's direction, (b) act on the instruction of
Seller or any person other than Buyer or (c) cause or permit withdrawals from
the Collection Account in any manner not approved by Buyer in writing. Until
receipt of a Notice of an Event of Default, Seller shall be permitted to
withdraw funds or cause funds to be transferred from the Collection Account
without Buyer's approval.
Exh. V-1
The Bank hereby waives any right that the Bank may now or hereafter
have to security interest, bank's or other possessory liens, rights to offset or
other claims against the funds in the Collection Account.
In addition, the Bank acknowledges that (a) Seller has granted to
Buyer a security interest in all of Seller's right, title and interest in and to
any funds from time to time on deposit in the Collection Account with respect to
the Purchased Assets sold to Buyer under the Repurchase Agreement, (b) that such
funds are received by the Bank in trust for the benefit of Buyer and, except as
provided herein, are for application against Seller's obligations to Buyer, and
(c) that the Bank shall comply with Buyer's instructions regarding the
disposition of funds in the Collection Account without the consent of Seller
until the Bank receives notice from Buyer that it has released its lien on the
Collection Account and all funds deposited therein. The Bank shall be afforded
the same rights, protections, immunities and indemnities as the Custodian set
forth in [Section 13(a) and Section 14] of the Custodial and Disbursement
Agreement, dated as of August 25, 2004, among Seller, Buyer, Deutsche Bank
National Trust Company as custodian, and Deutsche Bank National Trust Company as
disbursement agent, as if specifically set forth herein.
All bank statements in respect to the Collection Account shall be
sent to Buyer at:
CDC Mortgage Capital Inc.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Email: ▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇-▇▇▇▇.▇▇▇
with copies to Seller at:
Oak Street Mortgage LLC
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▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Royal
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
THIS ACCOUNT AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES.
Exh. V-2
Kindly acknowledge your agreement with the terms of this agreement
by signing the enclosed copy of this letter and returning it to the undersigned.
Very truly yours,
CDC MORTGAGE CAPITAL INC.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
Agreed and acknowledged:
OAK STREET MORTGAGE, LLC, as Seller
By:______________________________
Name:
Title:
Agreed and acknowledged:
DEUTSCHE BANK NATIONAL TRUST COMPANY, as Bank
By:______________________________
Name:
Title:
Exh. V-3
EXHIBIT VI
FORM OF TRUE SALE CERTIFICATION
CERTIFICATE OF [PURCHASER]
In connection with the transaction pursuant to the Master Repurchase
Agreement, dated as of August 25, 2004 between CDC Mortgage Capital Inc. and
[______] (the "Purchaser"), the undersigned certifies, on behalf of Purchaser
that:
1. I personally participated as the __________ of the Purchaser in
the transaction (the "Transaction"), pursuant to which [NAME OF SELLING ENTITY]
(the "Seller") sold [DESCRIBE ASSETS] (the "Assets") to the Purchaser. In such
capacity, I reviewed the purchase and sale agreement relating to the Transaction
dated as of __________ __, 200_ (the "Purchase and Sale Agreement").
2. Due to my close involvement in the Transaction, I can accurately
and diligently certify the facts listed herein on behalf of the Purchaser.
3. Seller has shifted all of the risks and burdens which are
associated with the ownership of the Assets to the Purchaser.
4. Seller has shifted all of the benefits and rewards which are
associated with the Assets to the Purchaser. Subsequent to the consummation of
the Transaction, Seller had no control rights with respect to the Assets, and
all legal rights and title with respect to the Assets vested in the Purchaser.
5. There has been no recourse to Seller with respect to the
performance of the Assets.
6. As of the date of the consummation of the Transaction, Seller
received from the Purchaser reasonably equivalent value for the transferred
Assets, in the form of [DESCRIBE CONSIDERATION].
7. The Purchase and Sale Agreement represented the intention of
Seller and the Purchaser to accomplish a complete and irrevocable sale of the
Assets.
8. Seller neither was obligated to repurchase, nor had any "call"
rights with respect to, the Assets.
9. The Purchaser neither was obligated to sell the Assets back to
Seller, nor had any "put" rights with respect to the Assets.
10. The Purchaser's books and records reflect that the Transaction
was a sale of the Assets, rather than a secured financing or a loan.
Exh. VI-1
11. The Purchaser treated the Transaction as a sale for accounting
and tax purposes.
12. The Transaction was duly authorized by the Purchaser's officers
and directors, as required by the Purchaser's organizational documents and
applicable law.
I have been duly authorized to execute this certificate on behalf of
Purchaser.
[PURCHASER]
By:______________________________
Name:
Title:
Exh. VI-2
CERTIFICATE OF [NAME OF SELLING ENTITY]
In connection with the transaction pursuant to the Master Repurchase
Agreement, dated as of August 25, 2004 between CDC Mortgage Capital Inc. and Oak
Street Mortgage LLC (the "Purchaser"), the undersigned certifies, on behalf of
[NAME OF SELLING ENTITY] (the "Seller") that:
1. I personally participated as the __________ of Seller in the
transaction (the "Transaction") pursuant to which Seller sold [DESCRIBE ASSETS]
(the "Assets") to the Purchaser. In such capacity, I reviewed the purchase and
sale agreement relating to the Transaction dated as of __________ __, 200_ (the
"Purchase and Sale Agreement").
2. Due to my close involvement in the Transaction, I can accurately
and diligently certify the facts listed herein on behalf of Seller.
3. Seller has shifted all of the risks and burdens which are
associated with the ownership of the Assets to the Purchaser.
4. Seller has shifted all of the benefits and rewards which are
associated with the Assets to the Purchaser. Subsequent to the consummation of
the Transaction, Seller had no control rights with respect to the Assets, and
all legal rights and title with respect to the Assets vested in the Purchaser.
5. There has been no recourse to Seller with respect to the
performance of the Assets.
As of the date of the consummation of the Transaction, Seller
received from the Purchaser reasonably equivalent value for the transferred
Assets, in the form of [DESCRIBE CONSIDERATION].
6. The Purchase and Sale Agreement represented the intention of
Seller and the Purchaser to accomplish a complete and irrevocable sale of the
Assets.
7. Seller neither was obligated to repurchase, nor had any "call"
rights with respect to, the Assets.
8. The Purchaser neither was obligated to sell the Assets back to
Seller, nor had any "put" rights with respect to the Assets.
9. Seller's books and records reflect that the Transaction was a
sale of the Assets, rather than a secured financing or a loan.
10. Seller treated the Transaction as a sale for accounting and tax
purposes.
11. The Transaction was duly authorized by Seller's officers and
directors, as required by Seller's organizational documents and applicable law.
Exh. VI-3
I have been duly authorized to execute this certificate on behalf of
[NAME OF SELLER].
[SELLING ENTITY]
By:______________________________
Name:
Title:
Exh. VI-4
EXHIBIT VII
[FORM OF SERVICER NOTICE]
____________ __, 200_
[SERVICER], as Servicer
[ADDRESS]
Attention:
Re: Master Repurchase Agreement, dated as of August 25, 2004 (the
"Agreement"), by and between Oak Street Mortgage LLC (the "Seller")
and CDC Mortgage Capital Inc. (the "Buyer").
Ladies and Gentlemen:
[SERVICER] (the "Servicer") is servicing certain mortgage loans for Seller
pursuant to certain [name servicing agreements] (the "Servicing Agreement")
between the Servicer and Seller. Pursuant to the Agreement between Buyer and
Seller, the Servicer is hereby notified that Seller has sold to Buyer certain
mortgage loans which are serviced by Servicer.
Upon receipt of a notice (a "Default Notice") from Buyer in which Buyer shall
(a) represent that a default or an event of default has occurred with respect to
Seller's obligations to Buyer and (b) identify the mortgage loans which are then
owned by Buyer under the Agreement (the "Mortgage Loans"), the Servicer shall
segregate all amounts collected on account of such Mortgage Loans, hold them in
trust for the sole and exclusive benefit of Buyer, and remit such collections in
accordance with Buyer's written instructions. Following receipt of such Default
Notice, Servicer shall follow the instructions of Buyer with respect to the
Mortgage Loans, and shall deliver to Buyer any information with respect to the
Mortgage Loans reasonably requested by Buyer.
Upon a receipt of a Default Notice, Buyer shall have the right to terminate the
Servicing Agreement and transfer servicing to its designee, at no cost or
expense to Buyer, and Seller shall pay any and all fees required to terminate
the Servicing Agreement and to effectuate the transfer of servicing to the
designee of Buyer.
Notwithstanding any contrary information which may be delivered to the Servicer
by Seller, the Servicer may conclusively rely on any information or Default
Notice delivered by Buyer, and Seller shall indemnify and hold the Servicer
harmless for any and all claims asserted against it for any actions taken in
good faith by the Servicer in connection with the delivery of such information
or Default Notice.
Exh. VII-1
Please acknowledge receipt of this instruction letter by signing in the
signature block below and forwarding an executed copy to Buyer promptly upon
receipt. Any notices to Buyer should be delivered to the following address: ▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇▇▇▇.
Very truly yours,
[SELLER]
By:______________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
______________________________________
as Servicer
By: __________________________________
Title:
Telephone:
Facsimile:
Exh. VII-2
EXHIBIT VIII
[FORM OF REQUEST FOR ADDITIONAL TRANSACTIONS FOR EXCESS MARGIN]
Capitalized terms used and not otherwise defined herein shall have
the respective meanings ascribed thereto in the Repurchase Agreement, dated as
of August 25, 2004 between Oak Street Mortgage LLC (the "Seller") and CDC
Mortgage Capital Inc. ("Buyer").
Pursuant to Section 3(o) of the Repurchase Agreement, Seller hereby
requests the advance of additional Transactions, and in connection with such
request provides the following information:
Requested Increase in
Purchase Price $____________________
Requested Purchase Date _____________________
Excess Margin prior to
giving effect to
Requested Transaction $____________________
Remaining Excess Margin
After Giving Effect to
such Transaction $____________________
Aggregate Outstanding
Purchase Price of the
Transactions as of Date
Hereof after giving
effect to the Requested
Transaction $____________________
Seller hereby certifies that, after giving effect to the Transaction
requested pursuant hereto, the Margin Base will be equal to or greater than the
aggregate Purchase Price of the Transactions.
This Request For Additional Transactions For Excess Margin is dated
__________.
OAK STREET MORTGAGE LLC
By:______________________________
Name:
Title:
Exh. VIII-1
EXHIBIT IX
FORM OF COMPLIANCE CERTIFICATE
OFFICER'S CERTIFICATE
I, ____________, the duly appointed, qualified and acting
____________ of Oak Street Mortgage LLC, a Delaware limited liability company
(the "Company"), hereby certify to CDC Mortgage Capital Inc. ("CDC") as follows:
1. This certificate is being furnished to Buyer pursuant to
Section 11(u) of the Master Repurchase Agreement, dated as of
August 25, 2004 (the "Repurchase Agreement"), between the
Company and CDC.
2. After a review of the Company's activities during the period
from _______, 200_ ended _______, 200_ (the "Subject Period"),
I have determined the following: (a) if applicable for the
Subject Period, the Company has complied with the financial
covenant set forth in Sections 11(m), 11(n) and 11(o) of the
Repurchase Agreement; and (b) compliance by the Company with
the above-referenced financial covenants is accurately
calculated on Schedule 1 attached hereto.
Capitalized terms used herein without definition have the meanings
given them in the Repurchase Agreement.
[SIGNATURE PAGE FOLLOWS]
Exh. IX-1
IN WITNESS WHEREOF, I have signed my name this [__] day of
[________], 200_.
By:______________________________
Name:
Title:
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