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EXHIBIT 10.34
MASTER FORWARD COMMITMENT AGREEMENT
THIS MASTER FORWARD COMMITMENT AGREEMENT (the "Agreement") is entered into and
effective as of October 1, 1998 by and between REDWOOD TRUST, INC. (the "REIT")
and RWT HOLDINGS, INC. ("Holdings").
W I T N E S S E T H:
WHEREAS, the REIT acquires and holds in portfolio residential and
commercial mortgage loans ("Mortgage Loans") in the normal course of its
business; and
WHEREAS, Holdings desires to acquire certain types of Mortgage Loans for
purposes of selling such loans in whole loan sale transactions or
securitizing such loans in a REMIC or other securitization transaction;
and
WHEREAS, the REIT and Holdings desire to set forth the terms and
conditions under which the REIT will offer to sell Mortgage Loans to
Holdings from time to time and Holdings will commit to purchase from the
REIT such Mortgage Loans; and
WHEREAS, the REIT and Holdings desire to set forth their specific rights
and duties with respect to such Mortgage Loans prior to and following
delivery thereof to Holdings.
NOW, THEREFORE, in consideration of the agreements herein contained, the
REIT and Holdings agree as follows:
Section 1. Definitions. Each term defined in this Section, when used in
this Agreement, shall, unless the context otherwise requires, have the
following meaning:
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means, in the case of any Mortgage Loans offered to
Holdings for purchase, the related commitment made by Holdings to
acquire such Mortgage Loans from the REIT.
"Commitment Term" means, with respect to any Commitment, the period
commencing on the date on which such Commitment becomes effective and
ending on the 90th day after the later of (a) such effective date or (b)
the date on which the REIT purchases the Mortgage Loans that are the
subject of the Commitment, or such later day as may be mutually agreed
upon by the REIT and Holdings.
"Eligible Mortgage Loans" means Mortgage Loans that meet the loan
eligibility criteria specified in writing by Holdings from time to time,
but excluding any Mortgage Loans that are 60 or more days delinquent on
the Settlement Date therefor, unless expressly determined to be
includable by Holdings in its sole discretion.
"Expenses" means all expenses associated with the acquisition of
Mortgage Loans, including, without limitation, costs associated with
production, marketing, hedging, underwriting, funding, document control,
file control and quality control.
"Law" means any constitutional provision, statute or other law, rule,
regulation or interpretation of any government or any agency, bureau,
board, commission, court, department official, political subdivision,
tribunal or other instrumentality of any government, whether federal,
state or local, domestic or foreign, or any decree, injunction,
judgment, order, ruling, assessment or writ.
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"Mortgage Loan" means any mortgage loan (a) that is owned or acquired by
the REIT during the term of this Agreement, and (b) that the REIT offers
to sell to Holdings hereunder.
"REMIC" means any real estate mortgage investment conduit as defined in
Section 860D(a) of the Code.
"reverse repurchase agreement" means any reverse repurchase agreement
entered into and effective from time to time by and between the REIT
and/or Holdings and a counterparty-purchaser.
"Settlement Date" means, as to any Mortgage Loans, the earliest of:
(i) the date on which such Mortgage Loans are sold by
Holdings as part of a whole loan sale;
(ii) the date on which such Mortgage Loans are contributed to
a REMIC or other securitization vehicle by Holdings; or
(iii) the last day of the applicable Commitment Term for such
Mortgage Loans.
Section 2. The REIT's Rights and Obligations Under the Commitment.
(a) Subject to and upon compliance with the terms and conditions of
this Agreement, the REIT agrees to offer from time to time
Mortgage Loans which constitute Eligible Mortgage Loans for sale
to Holdings. Each such offer will be in the form of a Commitment
to be signed by Holdings upon acceptance of such offer. The REIT
agrees to sell all of its rights with respect to Mortgage Loans
covered by a signed Commitment pursuant to the terms thereof and
this Agreement.
(b) It is expressly understood that the REIT may acquire assets for
its portfolio including Eligible Mortgage Loans and the REIT
shall be under no obligation to sell such other assets to
Holdings pursuant to the terms of this Agreement unless it
determines, in its sole discretion, to issue a Commitment to
Holdings with respect thereto.
Section 3. Holdings's Rights and Obligations Under the Commitments.
(a) Subject to and upon compliance with the terms and conditions of
this Agreement, Holdings agrees to purchase and assume all of
the REIT's rights and obligations with respect to Mortgage Loans
covered by a Commitment accepted by Holdings.
(b) It is expressly understood that, except as otherwise provided in
Section 2(a) hereof, Holdings shall be under no obligation
pursuant to this Agreement to purchase any Mortgage Loans which
the REIT may offer to sell from its portfolio.
Section 4. Purchase Price. The purchase price to be paid by Holdings for
Mortgage Loans will be specified in the Commitment relating to such
Mortgage Loans. The purchase price will be a percentage of the
outstanding principal balance of the Mortgage Loans as of the Settlement
Date for such loans.
Section 5. Settlement.
(a) At any time during the Commitment Term for a pool of Mortgage
Loans, Holdings may schedule a Settlement Date within such
Commitment Term by delivering written notice to the REIT not
less than three (3) business days prior to such proposed
Settlement Date. The REIT agrees to use reasonable efforts to
facilitate the transfer of such Mortgage Loans on the Settlement
Date so specified by Holdings.
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(b) On the Settlement Date for a Commitment, (i) the REIT shall sell
and assign to Holdings all of the REIT's rights with respect to
each pool of Mortgage Loans subject to settlement on such
Settlement Date, as identified by Holdings, and (ii) shall
purchase and assume all of the REIT's rights and obligations
with respect to such loans, in each case pursuant to the terms
and conditions of this Agreement.
(c) To the extent Holdings causes a Settlement Date to occur prior
to the 90th day after the effective date of the related
Commitment, Holdings shall pay to the REIT on such Settlement
Date in addition to the purchase price an amount equal to: (i)
the purchase price, times (ii) .0025, times (iii) ((A) 90 minus
the number of days from such effective date to but not including
the Settlement Date, divided by (B) 360).
Section 6. No Security for Commitment. Holdings will not be required to
deliver any security to support its purchase obligation under any
Commitment, regardless of any changes in the fair market value of the
Mortgage Loans covered by such Commitment between the time of entering
into the Commitment and the Settlement Date thereunder.
Section 7. Obligation to Purchase Limited to Eligible Mortgage Loans;
Repurchase Obligation.
(a) Notwithstanding any provision in this Agreement to the contrary,
Holdings shall have no obligation to purchase Mortgage Loans
covered by a Commitment hereunder unless such Mortgage Loans
qualify as Eligible Mortgage Loans on, and are not incapable of
delivery because they failed to close or were paid off prior to,
the Settlement Date.
(b) The parties agree that Holdings shall not amend or modify the
general loan eligibility criteria without obtaining the prior
written consent of the REIT.
(c) In the case of any Mortgage Loans purchased or to be purchased
by Holdings hereunder and determined, by the mutual agreement of
the REIT and Holdings, not to qualify as Eligible Mortgage Loans
as of the related Settlement Date, the REIT shall, if Holdings
so elects (i) retain such Mortgage Loans if not theretofore
purchased by Holdings or (ii) if already purchased by Holdings,
repurchase such Mortgage Loans at a price equal to the price
paid by Holdings for such Mortgage Loans, net of any principal
payments received by Holdings on or in respect of Mortgage Loans
prior to the date of such repurchase.
(d) In the case of Mortgage Loans purchased or to be purchased by
Holdings hereunder and determined by Holdings to qualify as
Eligible Mortgage Loans but to be unmarketable (for reasons
including, without limitation, relating to loan characteristics
or insufficient volume of loans with similar characteristics),
Holdings may request that the REIT either (i) retain such
Mortgage Loans if not theretofore purchased by Holdings or (ii)
repurchase such Mortgage Loans; it being understood that the
REIT shall be under no obligation to honor either of such
requests. In the event that the REIT agrees to repurchase such
Mortgage Loans, the repurchase price shall equal the "fair
market value" of such Mortgage Loans as determined in accordance
with a methodology approved by the respective boards of
directors of the REIT and Holdings.
Section 8. Allocation of Risks, Expenses and Payments.
(a) Prior to each Settlement Date, the REIT shall be the legal and
beneficial owner of the Mortgage Loans and accordingly:
(i) the REIT shall bear (x) all prepayment risk and (y) all
credit risk of the related Mortgage Loans;
(ii) any payments accruing on such Mortgage Loans shall be
solely for the account of the REIT;
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(iii) the portion of any repurchase or other debt obligation
attributable to interest accruing on a reverse
repurchase agreement or other debt obligation entered
into by the REIT with respect to such Mortgage Loans
prior to such Settlement Date shall be charged to the
account of the REIT; and
(iv) the REIT shall bear, and shall not be reimbursed for,
any Expenses it might incur in respect of such Mortgage
Loans.
(b) On and after each Settlement Date, legal and beneficial
ownership of the Mortgage Loans shall be transferred to Holdings
and accordingly:
(i) Holdings shall thereafter bear (x) all prepayment risk
and (y) all credit risk of the related Mortgage Loans;
(ii) any payments accruing on such Mortgage Loans shall be
for the sole account of Holdings;
(iii) the portion of the repurchase or other debt obligation
attributable to interest accruing on a reverse
repurchase agreement or other debt obligation entered
into by Holdings with respect to such Mortgage Loans
subsequent to the Settlement Date shall be charged to
the account of Holdings; and
(iv) Holdings shall bear any Expenses it might incur in
respect of such Mortgage Loans.
Section 9. Notice Requirements.
(a) Holdings shall notify the REIT of the Mortgage Loans subject to
each Settlement Date at least three (3) business days prior to
such Settlement Date as provided in Section 5(a) above.
(b) Contemporaneously with each Settlement Date, the REIT shall
notify the counterparty-purchaser to any reverse repurchase
agreement or the obligee under any other debt obligation entered
into by the REIT with respect to the related Mortgage Loans of
(i) the transfer to Holdings of such Mortgage Loans pursuant to
the terms and conditions of this Agreement and (ii) the
assumption, if any, by Holdings of the rights and obligations
under any reverse repurchase agreement or any debt obligation to
which such counterparty-purchaser or obligee is a party.
Section 10. Indemnification.
(a) Subject to Sections 7 and 8 hereof, Holdings agrees to indemnify
and hold harmless the REIT from and against all costs, including
without limitation reasonable attorney's fees, damages,
liabilities, losses or expenses of any nature, relating to (i)
any obligations with respect to any Mortgage Loans that arise on
or after the related Settlement Date or (ii) any failure by
Holdings to purchase the REIT's rights or assume the REIT's
obligations with respect to any Mortgage Loans as required under
this Agreement.
(b) Subject to Sections 7 and 8 hereof, the REIT agrees to indemnify
and hold harmless Holdings from and against all costs, including
without limitation, reasonable attorney's fees, damages,
liabilities, losses or expenses of any nature, relating to (i)
any obligations with respect to any Mortgage Loans that arise
prior to the related Settlement Date or (ii) any failure by the
REIT to sell and assign any Mortgage Loans to Holdings as
required under this Agreement.
Section 11. Term of Agreement.
(a) The term of this Agreement shall be for one year from the date
first written above and shall thereafter be automatically
renewed for successive one-year periods; provided, however, that
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this Agreement may be terminated upon sixty (60) days' written
notice by either party to the other.
(b) Notwithstanding any termination of this Agreement pursuant to
Section 11(a) hereof, the provisions of Sections 4(c), 7(c),
7(d), 8, 10 and 12 hereof and this Section 11(b) shall survive
any such termination. In addition, upon any such termination of
this Agreement, any Commitment or portion thereof which remains
unfulfilled shall survive such termination.
Section 12. Miscellaneous.
(a) Waiver of Law. No provision of the Law is waived except as
expressly provided herein; provided, however, that the REIT and
Holdings hereby expressly waive the provisions of the Law to the
full extent permitted by the Law in order to uphold the
provisions and validity of this Agreement and to cause this
Agreement to be valid, binding and enforceable in accordance
with its terms upon each of them and their respective
transferees, successors and assigns.
(b) Notices. Unless otherwise specified in this Agreement, any
notice required by this Agreement shall be transmitted in
writing or by any other form of communication (including without
limitation electronic mail) acceptable to the party to whom it
is given, addressed to the President, with a copy to the
Treasurer, of the party to whom it is given, and shall be
effective and deemed delivered only when received by such
persons.
(c) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
(d) Captions. The captions to the sections, subsections and
paragraphs in this Agreement are inserted for convenience only
and shall not affect the construction or interpretation hereof.
(e) Counterparts and Duplicate Originals. This Agreement and all
amendments hereto may be executed in several counterparts and
each counterpart shall constitute a duplicate of the same
instrument.
(f) Successors. Anything in this Agreement to the contrary
notwithstanding, any transferee, successor or assign, whether
voluntary, by operation of law or otherwise, of the shares of
the REIT or Holdings shall be subject to and bound by the terms
and conditions of this Agreement as fully as though such person
was a signatory hereto.
(g) Severability. Any provision hereof prohibited by or unlawful or
unenforceable under any applicable law of any jurisdiction shall
as to such jurisdiction be ineffective without affecting any
other provision of this Agreement. To the full extent, however,
that the provisions of such applicable law may be waived, they
are hereby waived to the end that this Agreement be deemed to be
a valid and binding agreement enforceable in accordance with its
terms.
(h) Arbitration. Any controversy or claim arising out of, or
relating to this Agreement, the breach hereof or thereof, or
coverage of this arbitration provision, shall be settled by
arbitration which shall be in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The
arbitration of such issues, including the determination of any
amount of damages suffered by either party hereto by reason of
the acts or omissions of either party, shall be final and
binding upon both parties. Notwithstanding the foregoing, the
arbitrator shall not be authorized to award punitive damages
with respect to any such claim or controversy. Neither party
shall seek punitive damages relating to any matter under,
arising out of or relating to this Agreement in any other forum.
(i) Third Parties. This Agreement is for the sole benefit of the
parties hereto. No creditor of either party shall have any right
to enforce any of the provisions hereof against the other party
to this
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Agreement. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or
by reason of this Agreement on any persons other than the
parties to this Agreement and their respective permitted
transferees, successors and assigns of shares pursuant to
Section 12(f) hereof, nor is anything in this Agreement intended
to relieve or discharge the obligation or liability of any third
party to either party to this Agreement, nor shall any provision
give any third person any right of subrogation or action over or
against either party to this Agreement.
(j) Assignment. Neither this Agreement nor either party's rights or
obligations under it are assignable without the written consent
of the other party, which consent may be withheld for any reason
whatsoever (whether or not reasonable).
(k) Recovery of Expenses. In the event a dispute arises with respect
to this Agreement, the party prevailing in such dispute shall be
entitled to recover all expenses, including without limitation
reasonable attorney's fees and expenses, incurred in
ascertaining such party's rights, in preparing to enforce, or in
enforcing such party's rights under this Agreement, whether or
not it was necessary for such party to institute suit.
(l) Other Remedies. Subject to Section 12(h) hereof, the parties
hereto shall have all remedies for breach of this Agreement
available to them provided by law or equity. Without limiting
the generality of the foregoing, the parties agree that in
addition to all other rights and remedies available at law or in
equity, the parties shall be entitled to obtain specific
performance of the obligations of each party to this Agreement
and immediate injunctive relief and that in the event any action
or proceeding is brought in equity to enforce the same, neither
party will use, as a defense, that there is an adequate remedy
at law. The failure by either party to this Agreement to
exercise any such remedy does not constitute a waiver of that
remedy in the future.
(m) Intention of Parties. It is the express intent of the parties
hereto that each conveyance of Mortgage Loans from the REIT to
Holdings pursuant to a Commitment be, and be construed as, an
absolute sale thereof on the Settlement Date. It is, further,
not the intention of the parties that prior to such conveyances,
this Agreement or the Commitments be deemed to effect a sale of
the Mortgage Loans or to create a borrowing arrangement between
the REIT and Holdings. However, in the event that,
notwithstanding the intent of the parties, such assets are held
for purposes of any Law to be the property of Holdings prior to
the applicable Settlement Date, or if for any other reason this
Agreement is held or deemed to create a borrowing arrangement
between the REIT and Holdings, then (i) this Agreement shall be
deemed to be a security agreement within the meaning of the
Uniform Commercial Code of the State of California and (ii) this
Agreement and the Confirmations shall be deemed to be an
assignment and a grant by Holdings to the REIT of a security
interest in all of the assets subject thereto, whether now owned
or hereafter acquired.
(n) Servicing. During the Commitment Term of each Commitment, the
REIT agrees to cause the servicing of the Mortgage Loans subject
to such Commitment to be maintained in accordance with accepted
and prudent mortgage servicing practices of prudent mortgage
lending institutions which service mortgage loans in the
jurisdictions where the related mortgaged properties are
located. The REIT will pay the servicing fees of any servicers
employed for such purposes and, in the case of any Mortgage
Loans serviced by Holdings, will pay the servicing fee specified
in the related Commitment.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.
REDWOOD TRUST, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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RWT HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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