MASTER REPURCHASE AGREEMENT GOVERNING
PURCHASES AND SALES OF ASSETS
Dated as of August 9, 1999
Between:
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., as Buyer
and
CONTIFINANCIAL CORPORATION, as Seller
1. APPLICABILITY
From time to time, the parties hereto shall, subject to the terms of
this Agreement, enter into transactions in which ContiFinancial Corporation
("Seller"), a Delaware corporation, agrees to transfer to Greenwich Capital
Financial Products, Inc. ("Buyer"), a Delaware corporation, certain Assets
against the transfer of funds by Buyer, with a simultaneous agreement by Buyer
to transfer to Seller such Assets at a date certain not later than thirty (30)
days after the date of transfer, as specified in the Purchase Request, 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. Buyer shall, at the request of the Seller in
accordance with the provisions set forth in this Agreement, upon the completion
of a Transaction and receipt or giving, as applicable, of a Purchase Request,
enter additional Transactions with respect to the Assets, provided that the
duration of the Transactions shall not extend beyond the Final Repurchase Date
and the terms and conditions in this Agreement shall otherwise be satisfied.
2. DEFINITIONS
"Accepted Servicing Practices" means, with respect to any Purchased
Asset, those loan servicing practices set forth in the Interim Servicing
Addendum attached hereto as Exhibit XI, which Interim Servicing Addendum is
incorporated herein by reference.
"Acquisition Agreement" means, with respect to any Eligible Asset
and Fallout Asset, the document governing the acquisition of such Asset by the
Seller.
"Act of Insolvency" means, with respect to Seller and its Material
Subsidiaries, (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 of the Seller or any of its Material Subsidiaries, or
suffering any such petition or proceeding to be commenced by another; provided
that any actively disputed petition or proceeding commenced by another shall not
constitute an Act of Insolvency unless such petition or proceeding is not
dismissed within 30 days of its
commencement, (ii) seeking the appointment of a receiver, trustee, custodian or
similar official for Seller or a Material Subsidiary or any substantial part of
the property of either, (iii) the appointment of a receiver, conservator, or
manager for Seller or a Material Subsidiary or any substantial part of the
property of either by any governmental agency or authority having the
jurisdiction to do so, (iv) the making or offering by Seller or a Material
Subsidiary of a composition with its respective creditors or a general
assignment for the benefit of creditors, (v) the admission in writing by Seller
or a Material Subsidiary of such party's inability to pay its ordinary course
trade debts as they become due or mature, or (vi) 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 Seller or a Material Subsidiary, or shall have taken any action
to displace the management of such party or to curtail its authority in the
conduct of the business of such party.
"Additional Eligible Asset" means an Eligible Asset provided by
Seller to Buyer or its designee pursuant to Section 4(a).
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (together with
the correlative meanings of "controlled by" and "under common control with")
means possession, directly or indirectly, of the power (a) to vote 10% or more
of the securities (on a fully diluted basis) having ordinary voting power for
the directors or managing general partners (or their equivalent) of such Person,
or (b) to direct or cause the direction of the management or policies of such
Person, whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise.
"Affiliate Transaction" shall have the meaning assigned thereto in
Section 11(h) hereto.
"Agreement" means this Master Repurchase Agreement Governing
Purchases and Sales of Assets, as amended, supplemented or otherwise modified
from time to time.
"American General" means American General Finance, Inc., a Delaware
corporation.
"American General Loan" means a Mortgage Loan the origination of
which has been financed by American General pursuant to a certain warehouse
financing agreement or repurchase agreement by and between the Seller (or one of
its Affiliates) and American General (or one of its Affiliates).
"Appraised Value" means the reconciled value of the Mortgaged
Property as set forth in the appraisal prepared in accordance with the
Underwriting Guidelines made in connection with the origination of the related
Eligible Asset.
"Asset" means an Eligible Asset, a Fallout Asset or any other asset
as mutually agreed upon by Buyer and Seller.
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"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Seller or any Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of (i) any shares of Capital Stock of a
Subsidiary (other than directors' qualifying shares or shares required by
applicable law to be held by a Person other than the Seller or a Subsidiary),
(ii) all or substantially all the assets of any division or line of business of
the Seller or any Subsidiary, (iii) any other assets of the Seller or any
Subsidiary outside of the ordinary course of business of the Seller or such
Subsidiary, (iv) any Investment in a Strategic Alliance Client or (v) any Excess
Spread Receivables (other than in the case of (i), (ii), (iii), (iv) and (v)
above, (x) a disposition by a Subsidiary to the Seller or the Seller or a
Subsidiary to a Subsidiary, (y) a disposition that constitutes a Restricted
Payment permitted hereunder, or (z) a disposition of assets (including related
assets) for an aggregate consideration of $1.0 million or less).
"Asset Documents" means the documents comprising the Asset File.
"Asset File" means the documents and information required to be
delivered to the Custodian by the Seller for each Eligible Asset and Fallout
Asset, pursuant to the related Custodial Agreement, together with any additional
documents and information required to be delivered to Buyer or its designee
(including the Custodian).
"Asset Representations" means the Mortgage Loan Representations set
forth in Exhibit V hereto, and any other representations required for additional
Eligible Assets or Fallout Assets that may be accepted by Buyer from time to
time.
"Asset Schedule" means the schedule attached hereto as Exhibit I.
"Asset Tape" means a computer-readable magnetic transmission
containing the information with respect to each Asset, to be delivered by the
Seller to the Buyer pursuant to Section 3(b)(v) hereof and with the fields
indicated on Exhibit X attached hereto.
"Assignment and Conveyance" shall mean that certain agreement in the
form of Exhibit VII attached hereto by and between the Seller, the Buyer and the
Servicer, pursuant to which the Seller shall assign and convey to the Buyer all
of its right title and interest in and to the applicable Acquisition Agreement
and the applicable Servicing Agreement to the extent related to the Purchased
Assets hereunder.
"Assignment of Mortgage" means, 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 property is located to reflect the assignment and pledge of the
Mortgage.
"Available Amount" shall mean the Committed Amount minus the sum of
the aggregate Purchase Price with respect to Transactions outstanding hereunder.
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"Board of Directors" means the Board of Directors of the Seller or
any committee thereof duly authorized to act on behalf of such Board of
Directors.
"Breach", as that term relates to any representation, warranty or
covenant in this Agreement, means that such representation or warranty was
incorrect or untrue in any material respect when made or repeated or deemed to
have been made or repeated, or Seller has failed to comply with a covenant in
any material respect.
"Breakage Costs" has the meaning specified in Section 3(f)(iii).
"Business Day" means any day other than (i) a Saturday or Sunday or
(ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of New
York or the Custodian is authorized or obligated by law or executive order to be
closed or (iii) a day on which the Buyer is closed for business.
"Buyer" means Greenwich Capital Financial Products, Inc.
"Buyer's Account" has the meaning specified in Section 25(f).
"Capital Stock" of any Person means any and all shares, interests,
share capital, rights to subscribe for or purchase, warrants, options,
participations, or other equivalents of or interests or membership interests in
(however designated) equity of such Person, including any Preferred Stock, any
limited or general partnership interest and any limited liability company
membership interest (but excluding any debt securities convertible into such
equity), any rights to subscribe for or purchase any thereof.
"Cash Equivalents" means (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.
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"Change in Control" means the occurrence of any of the following
events:
(i) Any "person" (as such term is used in Section 13(d) and 14(d) of
the Exchange Act), other than any Permitted Holder, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 35% of the total voting power
of the Voting Stock of such Person; provided, however, that the Permitted
Holders beneficially own (as defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the Seller or
any Material Subsidiary than such other person and do not have the right
or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors (for the purposes of
this clause (i), such other person shall be deemed to beneficially own any
Voting Stock of a corporation held by another corporation (a "parent
corporation"), if such other person is the beneficial owner (as defined
above for such person), directly or indirectly, of more than 35% of the
voting power of the Voting Stock of such parent corporation and the
Permitted Holders beneficially own (as defined above for the Permitted
Holders), directly or indirectly, in the aggregate a lesser percentage of
the voting power of the Voting Stock of such parent corporation and do not
have the right or ability by voting power, contract or otherwise to elect
or designate for election a majority of the board of directors of such
parent corporation);
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together
with any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Seller or any Material
Subsidiary was approved by a vote of 66-2/3% of the directors of the
Seller or any Material Subsidiary then still in office who were either
directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office; or
(iii) the merger or consolidation of the Seller or any Material
Subsidiary with or into another Person or the merger of another Person
with or into the Seller or any Material Subsidiary, as the case may be, or
the liquidation, wind-up or dissolution of the Seller or any Material
Subsidiary, as the case may be, or the sale of all or substantially all
the assets of the Seller or any Material Subsidiary, as the case may be,
to another Person (other than a Person that is controlled by the Permitted
Holders), and, in the case of any such merger or consolidation, the
securities of the Seller or any Material Subsidiary, as the case may be,
that are outstanding immediately prior to such transaction and which
represent 100% of the aggregate voting power of the Voting Stock of the
Seller or any Material Subsidiary, as the case may be, are changed into or
exchanged for cash, securities or property, unless pursuant to such
transaction such securities are changed into or exchanged for, in addition
to any other consideration, securities of the surviving
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corporation that represent immediately after such transaction, at least a
majority of the aggregate voting power of the Voting Stock of the surviving
corporation; provided, however, that the sale by the Seller or its
Subsidiaries from time to time solely of Receivables to a trust for the
purpose solely of effecting one or more securitizations shall not be
treated hereunder as a sale of all or substantially all the assets of the
Seller.
Notwithstanding the foregoing, if at any time (i) Buyer shall have
no obligation to purchase Assets hereunder that were previously financed
by ContiTrade Services L.L.C. or California Lending Group, Inc. and (ii)
no Purchased Assets subject to Transactions constitute Assets previously
financed by ContiTrade Services L.L.C. or California Lending Group, Inc.,
then ContiTrade Services L.L.C. or California Lending Group, Inc. shall
not be considered Material Subsidiaries for purposes of the definition of
the term "Change of Control".
Notwithstanding anything contained in this Agreement to the
contrary, a Change of Control accompanied by an equity infusion in the
Seller of not less than $100,000,000 shall not constitute an Event of
Default under this Agreement for 60 days after the date of such equity
infusion, unless an additional Change of Control shall occur during such
60 day period.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" has the meaning specified in Section 6.
"Collateral Amount" means, with respect to any Transaction, the
amount obtained by application of the Collateral Amount Percentage to the Market
Value of the Purchased Assets for such Transaction.
"Collateral Amount Percentage" means (i) with respect to each
Eligible Asset (other than Collateralized Notes) (A) for the period from the
date of this Agreement until August 23, 1999, the percentage specified by the
Buyer in its sole discretion and (B) from and after August 23, 1999, 95%, (ii)
with respect to each Fallout Asset, the percentage applicable to such Asset that
is specified in Schedule 4 attached hereto, (iii) with respect to Collateralized
Notes, the percentage specified by the Buyer, if Buyer approves such Assets for
purchase hereunder, and (iv) with respect to all other Assets, the percentage
specified in writing by Buyer, if Buyer approves such Assets for purchase
hereunder; provided, however, that (A) each of the following categories of
Assets set forth below as a percentage of all Assets subject to Transactions
hereunder shall not exceed the applicable sublimits set forth below and (B):
(1) On and after August 23, 1999, Collateral Amount
Percentage shall be zero with respect to all Assets which in the
aggregate exceed the following applicable sublimits based on the
aggregate Collateral Amount of all Assets subject to Transactions
hereunder:
Fixed Rate Loan Adjustable Rate Loan
Sublimit Sublimit
-------- --------
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LTV:
>85% 20% until August 31, 1999; 15% until August 31,1999;
15% thereafter, provided Buyer may 10% thereafter, provided Buyer may
increase the percentage to 20% increase the percentage to 15%
following Seller's development of following Seller's development of
a High LTV/FICO program a High LTV/FICO program
satisfactory to Buyer satisfactory to Buyer
>90% 1% 0%
>100% 0% 0%
(2) On and after August 23, 1999, Collateral Amount
Percentage shall be zero with respect to all Assets that are Second
Lien Mortgage Loans which in the aggregate exceed 10% of the aggregate
Collateral Amount of all such Assets subject to Transactions hereunder.
(3) On and after August 23, 1999, Collateral Amount
Percentage shall be zero with respect to all Assets that are Second
Lien Mortgage Loans which in the aggregate exceed the following
applicable sublimits based on the aggregate Collateral Amount of all
such Assets subject to Transactions hereunder:
CLTV Sublimit
>85% 25%
>90% 1%
>95% 0%
(4) On and after August 23, 1999, Collateral Amount
Percentage shall be zero with respect to all Assets that have FICO
scores less than 550 (to the extent a FICO score is available for such
Asset) which in the aggregate exceed the following applicable sublimits
based on the aggregate Collateral Amount of all such Assets subject to
Transactions hereunder:
Fixed Rate Loan Adjustable Rate Loan
Sublimit Sublimit
--------------------------- --------------------------------
10% until August 31, 1999; 10% until August 31, 1999; 5%
5% thereafter thereafter
(5) Collateral Amount Percentage shall be zero with
respect to all Assets that constitute American General Loans which in
the aggregate exceed 10% of the aggregate Collateral Amount of all
Assets subject to Transactions hereunder.
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(6) On and after August 23, 1999, Collateral Amount
Percentage shall be zero with respect to all Assets that constitute
Section 32 Mortgage Loans which in the aggregate exceed 10% of the
aggregate Collateral Amount of all Assets subject to Transactions
hereunder.
(7) Collateral Amount Percentage shall be zero with
respect to all Empire Collateralized Notes (I) that exceed the
applicable Collateralized Note Sublimit or (II) which have not been
repurchased by Seller hereunder by the earlier of (x) 45 days after the
applicable Purchase Date and (y) November 3, 1999.
(8) Collateral Amount Percentage shall be zero with
respect to all Collateralized Notes that exceed the applicable
Collateralized Note Sublimit.
(9) Collateral Amount Percentage shall be zero (I)
with respect to all Eligible Assets that cease to qualify as either
Eligible Assets or Fallout Assets and (II) with respect to all Fallout
Assets that cease to qualify as Fallout Assets or exceed the Fallout
Loan Sublimit.
"Collateral Deficit" has the meaning specified in Section 4(a).
"Collateralized Note" means a promissory note made in favor of the
Seller, or a Subsidiary of Seller and endorsed by such subsidiary to the Seller,
and secured by pools of Underlying Mortgage Loans; provided, however, that the
obligor under such Collateralized Note has pledged and hypothecated to the
Seller, and has granted a continuing lien and first priority security interest
in favor of the Seller in collateral compromised of Eligible Assets; and
provided further, however, that the Seller has pledged such collateral to the
Buyer, has granted to Buyer a continuing lien on and first priority security
interest in such collateral, as of the related Purchase Date, and has delivered
to Buyer each of the documents set forth in Section 3(b)(xi), in form and
substance satisfactory to Buyer and its counsel.
"Collateralized Note Sublimit" means (i) with respect to all Empire
Collateralized Notes, $25,000,000, and (ii) with respect to all Collaterized
Notes other than Empire Collateralized Notes, $50,000,000.
"Combined LTV" or "CLTV" shall mean with respect to any Mortgage
Loan, the ratio of (a) the Par Amount as of the related date of origination of
such Second Lien Mortgage Loan of (i) the Second Lien Mortgage Loan plus (ii)
the mortgage loan constituting the first lien (if any) to (b) the Appraised
Value of the Mortgaged Property.
"Committed Amount" means $200,000,000 (provided that during the
Overadvance Period the amount shall be $250,000,000).
"Commitment Fee" means the commitment fee specified in the Master
Facilities Agreement.
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"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with Seller within the meaning of
Section 4001 of ERISA or is part of a group which includes Seller and which is
treated as a single employer under Section 414 of the Code.
"Contractual Obligation" means as to any Person, any provision of
any agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound or any provision of any security
issued by such Person.
"Custodial Agreement" means that certain custodial agreement, dated
as of August 9, 1999, among the Custodian, Buyer and Seller, as the same shall
be modified and supplemented and in effect from time to time.
"Custodian" means Manufacturers and Traders Trust Company, as
custodian under the Custodial Agreement, and its successors and permitted
assigns thereunder.
"Default" means an event that with notice or lapse of time or both
would become an Event of Default.
"Delinquent" means, with respect to any Asset, the period of time
from the date on which an Obligor fails to pay an obligation under the terms of
such Asset (without regard to any applicable grace periods) to the date on which
such payment is made.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in each case in whole or in part on or prior to the first anniversary of the
Stated Maturity of the Securities; provided, however, that any Capital Stock
that would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the first anniversary of the Stated Maturity of the
Securities shall not constitute Disqualified Stock if the "asset sale" or
"change of control" provisions applicable to such Capital Stock are not more
favorable to the holders of such Capital Stock that the provisions of the
Indenture.
"Eligible Asset" means a Mortgage Loan secured by a first or
second Mortgage lien on a one-to-four family residential Mortgaged Property or
Mixed Use Mortgaged Property as to which the Mortgage Loan Representations are
true and correct, and (i) which has not been subject to Transactions for a
period in excess of 90 days from the date on which it is first made subject to a
Transaction, (ii) which is not 29 days or more Delinquent, (iii) which was
originated not more than (A) sixty (60) days prior to the date the Mortgage Loan
is first subject to a Transaction provided such Mortgage Loan was originated by
the Seller or a Qualified Originator affiliated with the Seller or (B)
seventy-five (75) days prior to the date the Mortgage Loan is first subject to a
Transaction provided such Mortgage Loan was originated by a Qualified Originator
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not affiliated with the Seller, (iv) which has not been released from the
possession of the Custodian to the Seller or its designee in excess of the time
permitted by the Custodial Agreement, (v) which is not subject to a Material
Exception (as defined in the Custodial Agreement), (vi) which complies in all
material respects with the Underwriting Guidelines, (vii) which has been
originated by the Seller or a Qualified Originator, (viii) which has not been
subject to any prior financing or previously purchased by any Person other than
the Buyer pursuant to this Agreement or the Seller pursuant to an Acquisition
Agreement, except for American General Loans, and (ix) which, in the case of a
Second Lien Mortgage Loan, does not bear interest at an adjustable rate.
Eligible Asset shall also mean certain Collateralized Notes which Buyer has
approved for purchase hereunder.
"Empire Collateralized Note" means that certain Collateralized Note
secured by the Collateral defined in the Amended and Restated Interim Warehouse
and Security Agreement, dated as of March 29, 1995, among ContiTrade Services
Corporation (the "Lender") and Empire Funding Corp. (the "Borrower"), amending
and restating the Interim Warehouse and Security Agreement dated as of October
15, 1993, as amended by an agreement dated as of August 18, 1994 (the "Original
Warehouse Agreement") and conforming to the representations and warranties set
forth in Exhibit V(A) hereto.
"Empire Collateralized Note Representations" means the
representations and warranties set forth in Exhibit V(A) hereto.
"Engagement Letter" means that certain engagement letter, dated the
date of this Agreement, among Seller, ContiMortgage Corporation, ContiWest
Corporation, Greenwich Capital Markets, Inc. and Buyer relating to, among other
things, the securitization, after the date hereof, of certain mortgage loans
originated or purchased by Seller and its Affiliates.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means 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 the Seller 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 the Seller
is a member.
"Event of Default" has the meaning specified in Section 13.
"Exception" has the meaning specified in the Custodial Agreement.
"Excess Spread" means, over the life of a "pool" of Receivables that
have been sold by a Person to a trust or other Person in a securitization or
sale, the rights retained by such Person or its Subsidiaries at or subsequent to
the closing of such securitization or sale to receive cash flows attributable to
such "pool".
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"Excess Spread Receivable" of a Person means the contractual or
certificated right to Excess Spread capitalized on such Person's consolidated
balance sheet (the amount of which shall be the present value of the Excess
Spread, calculated in accordance with GAAP).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Repo Facility" means the Master Repurchase Agreement
Governing Purchases and Sales of Eligible Assets, dated as of December 21, 1998,
between Seller and Buyer, as amended, supplemented or otherwise modified from
time to time.
"Exit Fee" means, (i) with respect to each Purchased Asset
repurchased by the Seller and sold by the Seller to a third party without the
Buyer's guaranty of or assumption of responsibility for the representations and
warranties relating to such Asset, an amount equal to 0.25% of the Par Amount of
such Asset on the applicable Repurchase Date, and (ii) with respect to each
Purchased Asset repurchased by the Seller and sold by the Seller to a third
party with the Buyer's guaranty of or assumption of responsibility for the
representations and warranties relating to such Asset, an amount equal to 1% of
the Par Amount of such Asset on the applicable Repurchase Date.
"Facility Documents" has the meaning specified in Section 3(a).
"Fallout Asset" means certain Mortgage Loans each of which (a)(i)
does not qualify as an Eligible Asset on the applicable Purchase Date or (ii)
qualifies as an Eligible Asset on the applicable Purchase Date but thereafter
ceases to be an Eligible Asset and (b) falls into one of the categories listed
on Schedule 4 hereto.
"Fallout Asset Sublimit" means $50,000,000.
"Federal Funds Rate" means, for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Buyer from three
federal funds brokers of recognized standing selected by it.
"Final Repurchase Date" means the earlier of (i) March 31, 2000 and
(ii) the date of the occurrence of an uncured Event of Default.
"First Lien Mortgage Loan" means a Mortgage Loan secured by the lien
on the Mortgaged Property, subject to no prior liens on such Mortgaged Property.
"GAAP" means generally accepted accounting principles in effect in
the United States as amended from time to time.
"Governmental Authority" means any nation or government, any state,
agency, instrumentality or other political subdivision thereof, any entity
exercising executive, legislative,
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judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator having jurisdiction over the Seller, any of its
Subsidiaries or any of its properties.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any Person and any obligation, direct or indirect, contingent or otherwise,
of such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation of such Person
(whether arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to take-or-pay or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"HOEPA" means the Home Ownership and Equity Protection Act of 1994.
"Income" means, with respect to any Asset at any time, any principal
thereof then payable and all interest or dividends or other distributions
payable thereon less any related servicing fee(s) charged by the Servicer, as
approved by Buyer.
"Indebtedness" shall mean, of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under financing leases, (d) all obligations of such Person in respect of letters
of credit, acceptances or similar instruments issued or created for the account
of such Person and (e) all liabilities secured by any lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Indenture" means the Indenture, dated as of August 15, 1996 between
Seller and Chase Manhattan Bank.
"Interest Period" means, with respect to any Transaction, (i)
initially, the period commencing on the Purchase Date and ending on the day
immediately preceding the next Payment Date (the "Interest Reset Date"), and
(ii) thereafter, each period commencing on the Payment Date of a month and
ending on the calendar day prior to the Payment Date of the next succeeding
month. Notwithstanding the foregoing: (A) no Interest Period may end after the
Final Repurchase Date; and (B) each Interest Period that would otherwise end on
a day that is not a Business Day shall end on the next succeeding Business Day.
"Interest Reset Date" has the meaning set forth in the definition of
Interest Period.
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"Interim Servicer" means ContiMortgage Corporation in its capacity
as the party obligated to maintain or cause the Purchased Assets to be serviced
in accordance with Accepted Serving Practices during the Interim Servicing
Period in accordance with Section 25.
"Interim Servicing Period" means, with respect to any Purchased
Asset, the period commencing on the related Purchase Date and ending on the
earlier to occur of (i) the successful completion of the transfer to the
servicer of servicing of such Purchased Asset, including all applicable system
transfers, document transfers and mailing of required notices, and (ii) 30 days
after such Purchase Date; provided, that Buyer shall have the option to extend
the Interim Servicing Period for one or more 30-day periods upon written notice
to the Interim Servicer. The Buyer and Seller contemplate that such transfer of
servicing will be completed within 30 days after the Purchase Date of each
Purchased Asset.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as trade accounts on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person.
"Investment Company Act" means the Investment Company Act of 1940,
as amended.
"LIBO Base Rate" means for any Transaction, with respect to each day
during each Interest Period pertaining to such Transaction, the rate per annum
equal to the rate appearing at page 3750 of the Telerate Screen as one-month
"LIBOR" on the first day of such Interest Period, and if such rate shall not be
so quoted, the rate equal to the average of the rates per annum at which
deposits in dollars are offered for the relevant Interest Period to major banks
in the London interbank market by any three major banks, and if such rate is
unascertainable the rate per annum at which the Buyer is offered dollar deposits
at or about 11:00 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 one month, and in an amount comparable to the amount
of the Transactions to be outstanding on such day.
"LIBO Rate" means with respect to each day during each Interest
Period pertaining to a Transaction, a rate per annum determined by the Buyer in
accordance with the following formula (rounded upwards to the nearest 1/100th of
one percent), which rate as determined by the Buyer shall be conclusive, absent
manifest error by the Buyer:
LIBO Base Rate
--------------------------------
1.00 - LIBO Reserve Requirements
"LIBO Reserve Requirements" means for any Interest Period for any
Transaction, the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve
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requirements in effect on such day or during such Interest Period, as applicable
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect
thereto), dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of such
Board) maintained by a member bank of such Governmental Authority. As of the
date hereof, such reserve requirement is equal to zero.
"Lien" means any mortgage, lien, pledge, charge, security interest
or similar encumbrance.
"LTV" means with respect to any Asset, the ratio of (a) the Par
Amount of the Asset as of the date of origination (unless otherwise indicated)
to (b) the Appraised Value of the Mortgaged Property or if the loan was made in
connection with the purchase of the related Mortgaged Property, the lesser of
the Appraised Value and the sales price of such property.
"Losses" means, with respect to any Person (and its officers,
directors, agents and employees), any and all liabilities, losses, claims,
damages, judgments, costs and expenses of any kind (including reasonable
attorneys' fees and disbursements) which may be imposed on, incurred by, or
asserted against such Person (and its officers, directors, agents and
employees), relating to or arising out of, this Agreement, any other document or
agreement entered into between or among any of the parties to this Agreement in
connection herewith or any transaction contemplated hereby or thereby, and costs
and expenses incurred in connection with the enforcement or the preservation of
rights under this Agreement, or any amendment, supplement or modification of, or
any waiver or consent under or in respect of, this Agreement, any such other
document or agreement entered into between or among any of the parties to this
Agreement in connection herewith or any transaction contemplated hereby or
thereby, including, without limitation, those Losses resulting from a Breach.
Losses must be accounted for, documented in reasonable detail, and presented for
reimbursement.
"Market Value" means the value, determined by Buyer in its sole good
faith discretion, of the Mortgage Loans as if sold in their entirety to a single
third-party purchaser. Seller acknowledges that Buyer's determination of Market
Value is for the limited purpose of determining value hereunder without the
ability to perform customary purchaser's due diligence and is not necessarily
equivalent to a determination of the fair market value of the Mortgage Loans
achieved by obtaining competing bids in an orderly market in which the
originator/servicer is not in default and the bidders have adequate opportunity
to perform customary loan and servicing due diligence.
"Master Facilities Agreement" means that certain master facilities
agreement, dated the date of this Agreement, among Buyer, Greenwich Capital
Markets, Inc., Seller, ContiMortgage Corporation and ContiWest Corporation.
"Material Adverse Effect" means a material adverse effect upon (i)
the business operations, properties or assets of Seller and its Subsidiaries,
taken as a whole, (ii) the ability of Seller to perform its obligations, or of
Buyer to enforce any of its rights or remedies, under this
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Agreement or any of documents to be executed and/or delivered hereunder, (iii)
the validity or enforceability of any of the Facility Documents; or (iv) the
Collateral taken as a whole, in the case of (i), (ii), (iii) and (iv) above (A)
taking into consideration the financial condition of the Seller and its
Subsidiaries as of the date of this Agreement and (B) without taking into
consideration any further deterioration of the financial condition of the Seller
and its Subsidiaries after the date of this Agreement.
"Material Subsidiary" means (a) any Subsidiary identified as a
Material Subsidiary on Schedule 1 attached hereto, and (b) any Subsidiary
created or acquired after the date of this Agreement that is a Significant
Subsidiary of the Seller.
"Maximum Transaction Amount" means, at any time, the sum of (i) the
aggregate Purchase Price for Purchased Assets subject to Transactions and (ii)
the aggregate initial purchase price of mortgage loans subject to the Purchase
Facility.
"Mixed Use Mortgaged Property" means a Mortgage Loan secured by a
Mortgaged Property that is used primarily for residential purposes, but which is
also used for non-residential purposes.
"Monoline Insurance Company" means Ambac Assurance Corporation,
Municipal Bond Investors Assurance Corporation, Financial Guaranty Insurance
Company, Capital Markets Assurance Corporation, Financial Security Assurance
Inc. or GE Mortgage Insurance Company.
"Monthly Payment" means the scheduled monthly payment of principal
and interest on an Asset as adjusted in accordance with changes in the Note
Interest Rate pursuant to the provisions of the Note for an adjustable rate
Asset.
"Moody's" means ▇▇▇▇▇'▇ Investor Service, Inc.
"Mortgage" means a mortgage, deed of trust, deed to secure debt or
other instrument, creating a valid and enforceable first or second lien (as
identified in the related Asset Tape) on an estate in fee simple in real
property and the improvements thereon, securing a Mortgage Note or similar
evidence of indebtedness (or, with respect to multifamily or commercial Mortgage
Loans, if accepted hereunder, the fee or leasehold estate, in real property
securing the Mortgage Note; and the assignment of rents and leases related
thereto).
"Mortgage Loan" means a mortgage loan which the Custodian has been
instructed to hold for the Buyer pursuant to the Custodial Agreement, and which
Mortgage Loan includes, without limitation, a Mortgage Note and related
Mortgage.
"Mortgage Loan Representations" means the representations set forth
in Exhibit V hereto.
"Mortgage Note" means a note or other evidence of indebtedness of a
Mortgagor secured by a Mortgage.
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"Mortgaged Property" means the real property securing repayment of
the debt evidenced by a Mortgage Note.
"Mortgagee" means the record holder of a Mortgage Note secured by a
Mortgage.
"Mortgagor" means the obligor on a Mortgage Note and the grantor of
the related Mortgage.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Non-Excluded Taxes" has the meaning provided in Section 29(f)
hereof.
"Note" means a Mortgage Note or other promissory note or other
evidence of indebtedness of an Obligor.
"Note Interest Rate" means the annual rate of interest borne on a
Note, which shall be adjusted from time to time with respect to an adjustable
rate Mortgage Loan or other Asset.
"Obligor" means, with respect to an Asset, the mortgagor/borrower
thereunder.
"Officer's Certificate" means, with respect to any Person, a
certificate of its Responsible Officer.
"Overadvance Period" means, with respect to each calendar month, the
last three Business Days of such month and the first two Business Days of the
succeeding month.
"Par Amount" means, in respect of an Asset at any time, the
outstanding principal balance of such Asset at such time.
"Payment Date" means the first day of each calendar month, or if
such day is not a Business Day, the next succeeding ------------ Business Day.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to subtitle A of Title IV of ERISA.
"Periodic Payment" has the meaning specified in Section 5(b).
"Permitted Holders" means lineal descendants of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
including any individual legally adopted; spouses of such descendants; trusts,
the beneficiaries of which are any of the foregoing; partnerships, corporations,
or other entities in which any of the foregoing (individually or collectively)
has a controlling interest; and charitable organizations established by any of
the foregoing.
"Permitted Investment" means an Investment by the Seller or any
Subsidiary in (i) a Subsidiary or a Person that will, upon the making of such
Investment, become a Subsidiary; provided, however, that the primary business of
such Subsidiary is a Related Business; (ii) a
- 16 -
Strategic Alliance Client to the extent that such Investment consists of
options, warrants or other securities that are convertible or exchangeable for
equity securities of such Strategic Alliance Client and is received by the
Seller or a Subsidiary without the payment of any consideration other than the
concurrent provision by the Seller or such Subsidiary to such Strategic Alliance
Client of financing or asset securitization expertise on terms determined by the
Seller to be fair and reasonable to the Seller or such Subsidiary from a
financial point of view without taking into consideration any value that may
inhere in such option, warrant or convertible or exchangeable security; (iii)
another Person if as a result of such Investment such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all of
its assets to, the Seller or a Subsidiary; provided, however, that such Person's
primary business is a Related Business; (iv) Temporary Cash Investments; (v)
receivables owing to the Seller or any Subsidiary if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; (vi) payroll, travel and similar advances to cover
matters that are expected at the time of such advances ultimately to be treated
as expenses for accounting purposes and that are made in the ordinary course of
business; (vii) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Seller or such Subsidiary; (viii)
stock, obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Seller or any Subsidiary or in
satisfaction of judgments; (ix) any Person to the extent such Investment
represents the non-cash portion of the consideration received for an Asset
Disposition as permitted pursuant to the Indenture; (x) Receivables; (xi) a
Strategic Alliance Client to the extent such Investment consists of (A)
Indebtedness of such Strategic Alliance Client that is secured by Receivables
owned by such Strategic Alliance Client in an aggregate principal amount at any
time outstanding not to exceed 100% of the aggregate market value of such
Receivables; provided, however, that such Receivables are eligible to be
characterized under GAAP as held for sale on the balance sheet of such Strategic
Alliance Client and such Indebtedness has not been outstanding in excess of 364
days; and (B) Indebtedness of such Strategic Alliance Client that is secured by
Excess Spread Receivables owned by such Strategic Alliance Client; provided,
however, that such Excess Spread Receivables are attributed solely to one or
more "pools" of Receivables that were securitized in one or more transactions in
which the Seller or its Subsidiaries either acted as underwriters or placement
agent or provided all or a portion of the financing for such "pool" prior to
such securitization; and (xii) Excess Spread Receivables; provided, however,
that such Excess Spread Receivables represent interests in one or more "pools"
of Receivables that were securitized in one or more transactions in which the
Seller or its Subsidiaries acted as sponsor, underwriter or placement agent or
provided all or a portion of the financing for such "pool" prior to such
securitization.
"Person" means any individual, corporation, company, voluntary
association, partnership, joint stock company, joint venture, limited liability
company, trust, unincorporated organization or association, Governmental
Authority, or any other entity of whatever nature.
"Plan" means at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which Seller or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
- 17 -
"Post-Default Rate" means, in respect of any principal of any
Transaction or any other amount under this Agreement or any other Facility
Document that is not paid when due to the Buyer (whether at stated maturity, by
acceleration, by optional or mandatory prepayment or otherwise), a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to 2% per annum plus the Pricing
Rate otherwise applicable to such Transaction or other amount.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"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" means LIBO Rate plus 200 basis points or such rate as
otherwise mutually agreed to by the parties herein.
"Prime Rate" means the rate of interest published by The Wall Street
Journal, northeast edition, as the "prime rate".
"Property" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Purchase Date" means the date on which Purchased Assets are
transferred by Seller to Buyer or its designee (including the Custodian) as
specified in the related Purchase Request.
"Purchase Facility" means that certain Master Mortgage Loan Purchase
Facility by and between the Buyer and the Seller dated as of August 9, 1999, as
the same may be amended, supplemented or otherwise modified from time to time.
"Purchase Price" means on each Purchase Date, the price at which
Assets are purchased by Buyer from Seller equal to the lesser of (a) 95% of Par
Amount, or (b) the Collateral Amount.
"Purchase Request" means a written notice to the Buyer of Seller's
request for a purchase of Eligible Assets by the Buyer, in the form of Exhibit I
hereto.
"Purchased Assets" means the Assets sold by Seller to Buyer in a
Transaction and any Substituted Assets.
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"Qualified Insurer" means an insurance company duly qualified as
such under the laws of the states in which the Mortgaged Property is located,
duly authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided and whose claims paying ability at
the time of determination is (i) rated not less than A3 by Moody's or A- or
better by Standard & Poor's or (ii) if such insurance company is not rated by
either Moody's or Standard & Poor's, rated A VII by Best's Insurance Reports.
"Qualified Originator" means the Seller, ContiMortgage Corporation,
ContiWest Corporation or another originator of Assets acceptable to the Buyer,
in its sole discretion.
"Receivables" means consumer and commercial loans, leases and
receivables purchased or originated by the Seller, any Subsidiary or a Strategic
Alliance Client in the ordinary course of business; provided, however, that for
purposes of determining the amount of a Receivable at any time, such amount
shall be determined in accordance with GAAP, consistently applied, as of the
most recent practicable date.
"Regulations T, U and X" means 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.
"Related Business" means any consumer or commercial finance business
or any financial service business.
"Reorganization" means, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of Section 4241
of ERISA.
"Replacement Assets" has the meaning specified in Section 14(b)(ii).
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under Sections .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss.
4043.
"Repurchase Date" means the date on which Seller is to repurchase
the Purchased Assets from Buyer, including any date determined by application of
the provisions of Sections 3 or 14 hereof, or the Final Repurchase Date,
accelerated or otherwise, whichever date is earlier.
"Repurchase Price" means the price at which Purchased Assets are to
be transferred from Buyer or its designee (including the Custodian) to Seller
upon termination of a Transaction, which will be determined in each case as the
sum of (i) the Purchase Price, (ii) the Exit Fee (if any) and (iii) the Price
Differential as of the date of such determination decreased by all cash, Income
and Periodic Payments actually received by Buyer pursuant to Sections 4(a), 5(a)
and 5(b), respectively.
"Requirement of Law" means 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
- 19 -
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.
"Responsible Officer" means, as to any Person, the chief executive
officer, vice president and treasurer, or with respect to financial matters, the
chief financial officer or treasurer of such Person; provided, that in the event
any such officer is unavailable at any time he or she is required to take any
action hereunder, Responsible Officer shall mean any officer authorized to act
on such officer's behalf as demonstrated to the Buyer to its reasonable
satisfaction.
"Restricted Payment" means (i) the declaration or payment of any
dividends or any other distributions of any sort in respect to its Capital Stock
or similar payment to the direct or indirect holders of its Capital Stock (other
than (A) dividends or distributions payable solely in its Capital Stock (other
than Disqualified Stock), (B) dividends or distributions payable solely to the
Seller or a Subsidiary and (C) pro rata dividends or other distributions made by
a Subsidiary that is not a Wholly Owned Subsidiary to minority shareholders (or
owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation)), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Seller held by any Person or
of any Capital Stock of a Subsidiary held by any Affiliate of the Seller (other
than a Subsidiary), including the exercise of any option to exchange any Capital
Stock (other than into Capital Stock of the Seller that is not Disqualified
Stock), (iii) the purchase, repurchase, redemption defeasance or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations in
respect to such series (other than the purchase, repurchase or other acquisition
of such Subordinated Obligations purchased in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of acquisition).
"Second Lien Mortgage Loan" means a Mortgage Loan secured by the
lien on the Mortgaged Property, subject to only one prior lien on such Mortgaged
Property.
"Section 32 Mortgage Loan" means a Mortgage Loan secured by a
Mortgage on a one- to four-family residence which is subject to HOEPA and which
shall bear either fixed or adjustable rates of interest and shall have been
underwrittent in accordance with the Underwriting Guidelines.
"Securities" means the Securities issued under the Indenture.
"Security Agreement" means the Pledge and Security Agreement, dated
the date of this Agreement, made by Seller in favor of Buyer, as amended,
supplemented or otherwise modified from time to time.
"Seller" means ContiFinancial Corporation.
"Seller/Affiliate Agreement" shall have the meaning specified in
Section 25.
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"Servicer" means (i) Seller, provided that a Monoline Insurance
Company and its related rating agencies commit in writing to permit Seller to
act as Servicer in a securitization of Assets without unreasonable restrictions,
conditions or credit enhancement levels, as determined by Buyer in its
reasonable discretion, or (ii) if no such commitment is obtained or Seller
declines to undertake such function, any servicer expressly approved by Buyer in
writing in its sole discretion.
"Servicing Agreement" has the meaning specified in Section 25.
"Servicing Records" has the meaning specified in Section 25.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Seller within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Single Employer Plan" means any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date specified in such security as the
fixed date on which the final payment of principal of such security is due and
payable, including pursuant to any mandatory redemption provision (but excluding
any provision providing for the repurchase of such security at the option of the
holder thereof upon the happening of any contingency unless such contingency has
occurred).
"Standard & Poor's" means Standard & Poor's Rating Services, a
division of the McGraw Hill Companies, Inc.
"Strategic Alliance Client" means any Person (other than a
Subsidiary) engaged in a Related Business to which the Seller provides, or
reasonably expects to provide, financing or asset securitization expertise in
return for asset-backed underwriting or placement agent commitments.
"Subordinated Obligation" means any Indebtedness of the Seller
(whether outstanding on the date hereof or thereafter incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement to that effect.
"Subservicer" means ContiMortgage Corporation or any subservicer
expressly approved by Buyer in writing in its sole discretion.
"Subservicing Notification Letter" has the meaning specified in
Section 25.
"Subsidiary" means, with respect to any Person, any other Person 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 or other entity (irrespective of whether or not at the
- 21 -
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.
"Substituted Asset" means (i) with respect to any Eligible Asset,
another Eligible Asset, and (ii) with respect to any Fallout Asset, another
Fallout Asset or an Eligible Asset, in each case substituted for a Purchased
Asset in accordance with Section 9 hereof.
"Takeout Commitment" means an agreement by an investor or financial
institution to purchase Purchased Assets on a forward delivery basis.
"Takeout Investor" means the investor or financial institution which
agrees to purchase Purchased Assets pursuant to a Takeout Commitment.
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations of the United States of America or any agency
thereof or obligations guaranteed by the United States of America or any agency
thereof, (ii) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company that is not an Affiliate of the Seller
and which is organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States, and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of $50,000,000 (or the foreign currency equivalent thereof) and has
outstanding debt which is rate "A" (or such similar equivalent rating) or higher
by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities and Exchange Act) or any money-market
fund sponsored by a registered broker dealer or mutual fund distributor, (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above, (iv) investments in
commercial paper, maturing not more than 90 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Seller) organized and in
existence under the laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time as of which
any investment therein is made of "P-1" (or higher) according to ▇▇▇▇▇'▇
Investors Service, Inc. or "A-1" (or higher)
"Transaction" has the meaning specified in Section 1 hereof.
"Trust Receipt" shall have the meaning assigned thereto in the
Custodial Agreement.
"Underlying Mortgage Loans" means, with respect to each
Collateralized Note, the Mortgage Loans securing such Note which qualify as
Eligible Assets, and (i) which, in the case of a Mortgage Loan securing an
Empire Collateralized Note, (A) has a FICO score of at least (x) 660 if the LTV
of such Mortgage Loan is 100% or greater or (y) 620 if its LTV is less than
100%, (B) the weighted average FICO score of all such Mortgage Loans is at least
685 and
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(C) is not Delinquent, and (ii) which, in the case of Mortgage Loans securing a
Collateralized Note other than an Empire Collateralized Note, (A) no more than
$15,000,000 of such Mortgage Loans shall be from 45 to 60 days Delinquent and
(B) no more than $3,000,000 of such Mortgage Loans shall be from 60 to 90 days
Delinquent.
"Underwriting Guidelines" means the underwriting guidelines attached
as Exhibit IX hereto, as modified by the Underwriting Guideline modifications
attached as Exhibit IX(A) hereto, or such other guidelines mutually agreed upon
by Seller and Buyer.
"Uniform Commercial Code" or "UCC" means 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 or the effect of
perfection or non-perfection of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "Uniform Commercial Code" or "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection.
"Voting Stock" of a Person means all classes of Capital Stock or
other interests (including partnership interests or membership interests) of
such Person then outstanding and normally entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof.
"Warehouse Indebtedness" means, as to any Person, such Person's
obligations under repurchase agreements or other similar arrangements.
"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock
of which (other than directors' qualifying shares and shares held by other
Persons to the extent such shares are required by applicable law to be held by a
Person other than the Seller or a Subsidiary) is owned by the Seller or one or
more Wholly Owned Subsidiaries.
"Year 2000 Program" shall have the meaning provided thereto in
Section 10(b)(xxiv).
3. CONDITIONS PRECEDENT; INITIATION; PURCHASE REQUEST; TERMINATION; COMMITMENT
FEE; MAXIMUM TRANSACTION AMOUNT
(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 concurrent with such Transaction, of the conditions
precedent that Buyer shall have received the Commitment Fee, which shall be
non-refundable, and any other fees and expenses due from Seller and all of the
following documents, each of which shall be satisfactory to Buyer and its
counsel in form and substance (collectively, the "Facility Documents"):
(i) Agreement. This Agreement, duly completed, and executed
and delivered by Seller and the Interim Servicer;
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(ii) Custodial Agreement. The Custodial Agreement, duly
executed and delivered by Seller and the Custodian;
(iii) Security Agreement. The Security Agreement, duly
executed and delivered by Seller;
(iv) [Intentionally Omitted]
(v) Uniform Commercial Code Filings and Searches. Any filings
requested by Buyer or required under the Uniform Commercial Code, duly
completed, executed and delivered by Seller, and such evidence as required
by Buyer that all other actions have been taken that are necessary or, in
the sole discretion of the Buyer, desirable to perfect and protect the
security interests and Liens created pursuant to this Agreement; and
delivery of UCC searches;
(vi) Opinions of Seller's Counsel. An opinion or opinions of
counsel to the Seller and the Interim Servicer, addressing the matters set
forth in the form attached hereto as Exhibit VIII, dated the initial
Purchase Date and otherwise in form and substance acceptable to the Buyer
and covering such other matters incident to the transactions contemplated
by this Agreement as the Buyer may reasonably request;
(vii) Subservicing Notification Letter. The Subservicing
Notification Letter;
(viii) Organizational Documents. The Seller shall deliver to
Buyer a certificate of good standing and a certificate of its Secretary or
Assistant Secretary certifying: (A) a copy of its articles of
incorporation, (B) a copy of its by-laws; (C) the names and signatures of
the officers authorized on its behalf to execute, deliver and perform
under the Facility Documents, as applicable, and any other documents to be
delivered by it from time to time in connection therewith (on which the
Buyer may conclusively rely until such time as the Buyer shall receive
from the Seller a duly authorized revised certificate); and (D) a copy of
the resolutions of the Board of Directors of the Seller, authorizing
Seller to execute, perform, and deliver the Facility Documents, as
applicable;
(ix) Officer's Certificate. An Officer's Certificate of
Seller, regarding representations and warranties;
(x) Power of Attorney. A fully executed omnibus power of
attorney, substantially in the form of Exhibit III attached hereto,
irrevocably appointing Buyer its attorney-in-fact with full power to
complete and record the assignment of Purchased Assets, complete the
endorsement of the related Note or instrument and take such other steps as
may be necessary or desirable to enforce Buyer's rights against such
Purchased Assets and the related Trust Receipts, Asset Files, and
Servicing Records upon three (3) Business Days' written notice to Seller
and if Seller fails to act in a manner acceptable to
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Buyer, then Buyer may so act, provided that such notice need not be given
if an Event of Default has occurred;
(xi) Income Payment Letters. Fully executed irrevocable
letters of instructions to Subservicer, substantially in the form of
Exhibit IV attached hereto, directing such Subservicer to make all
payments of Income directly to Buyer;
(xii) True Sale Opinion. With respect to any Asset that was
funded in the name of or acquired by a Qualified Originator which is an
Affiliate of the Seller, the Buyer may, in its sole discretion, require
the Seller to provide evidence sufficient to satisfy the Buyer that such
Asset was acquired in a legal sale, including without limitation, an
opinion of counsel with respect thereto, in form and substance and from an
attorney, in both cases, acceptable to the Buyer in its sole discretion,
UCC financing statements, Acquisition Agreements, Affiliates'
organizational documents, etc.;
(xiii) Year 2000 Diligence. Satisfactory results of Year 2000
Program diligence;
(xiv) Insurance Policies. Insurance policies, or other
evidence of insurance acceptable to Buyer;
(xv) Related Documents. The Purchase Facility, the Engagement
Letter and the Master Facilities Agreement, duly completed, and executed
and delivered by Seller and each applicable Affiliate thereof;
(xvi) 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 Transaction and also after giving effect thereto to
the intended use thereof:
(i) Seller shall have delivered to Buyer or its designee,
documents evidencing the transfer of the ownership of the related Assets
from Seller to Buyer, including delivery to Custodian of the Assets
File(s) and deliver of a duly executed bond power or transfer instrument
for the related Asset;
(ii) Seller shall have instructed the applicable Custodian,
debtor, trustee, paying agent, authenticating agent, transfer agent,
registrar, predecessor in interest, owner, and Servicer, if any, in
respect of the related Assets to: (A) reflect on their books and records
the transfer of such Assets to Buyer, as owner or secured party (if the
Assets are in the form of a security agreement), and (B) re-register in
the name of Buyer all Trust Receipts, collateral receipts or other
applicable instruments relating to each Purchased Asset on or prior to the
related Purchase Date;
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(iii) Custodian shall have delivered to Buyer all Trust
Receipt(s) relating to the Purchased Assets, and an Asset Schedule noting
such Exceptions as are acceptable to Buyer in its sole discretion in
respect of Assets to be sold hereunder on such Business Day, in each case
dated such Business Day and duly completed;
(iv) Seller shall have delivered a Purchase Request to Buyer,
at least two (2) Business Days prior to the proposed Purchase Date
specified in such Purchase Request;
(v) Seller shall have delivered to Buyer, no later than 2:00
p.m. New York time at least one (1) Business Day prior to the Purchase
Date, the Asset Schedule, and an Asset Tape with respect to each Asset to
be purchased on such Purchase Date and the Custodian shall have received
the Asset Schedule no later than 12:00 noon New York time one (1) Business
Day prior to such Purchase Date;
(vi) In the event Buyer has provided Seller with written
notice at least two (2) Business Days prior to its receipt of any Purchase
Request of its intent to conduct pre-funding due diligence prior to any
Purchase Date, Buyer shall have completed its due diligence to its
satisfaction with respect to each Asset to be purchased on the relevant
Purchase Date, and the results of such investigation (and all other legal
and documentary matters with respect to such Asset) supports the Mortgage
Loan Representations and shall be satisfactory to Buyer in its sole
discretion in accordance with Section 15 hereof.
(vii) No Event of Default or Default shall have occurred and
be continuing, and there shall not have occurred one or more events that,
in the reasonable judgment of the Buyer, constitutes or could reasonably
be expected to constitute a Material Adverse Effect;
(viii) Seller shall have provided Buyer with a copy of any
changes to Seller's Underwriting Guidelines prior to Buyer's purchase of
any Asset affected by such change and Buyer shall have approved such
changes;
(ix) Buyer shall have received the most recent available
servicing or like reports, if any, with respect to the Assets; and
(x) If requested by Buyer due to a question arising as to
validity, enforceability or compliance with law, an opinion or opinions of
counsel to the Seller and the Interim Servicer, addressing the matters set
forth in the form attached hereto as Exhibit VIII, then Seller shall, upon
the request of Buyer, deliver an opinion of counsel in such state
acceptable to the Buyer, substantially in the form of items number 11, 13
and 14 of Exhibit VIII.
(xi) With respect to any Collateralized Note, the Buyer shall
have received (1) the original Collateralized Note endorsed to the Buyer,
(2) the original certification and trust receipt issued by the applicable
Custodian with respect to the Mortgage Loans securing such Collateralized
Note, (3) a "notice of pledge" executed by
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the Seller and the applicable Custodian, and (4) a "notice and consent"
executed by the maker and each endorsee of the Collateralized Note.
(xii) All terms and conditions set forth in the Master
Facilities Agreement shall be satisfied to the reasonable satisfaction of
the Buyer.
(c) Initiation; Purchase Request.
(i) An agreement to enter into a Transaction shall be
initiated by Seller's delivery of an irrevocable Purchase Request to
Buyer; provided, however, that Buyer shall have no obligation to enter
into any Transaction hereunder, except as provided in subsection (g) of
this Section 3. Seller shall deliver to Buyer a Purchase Request at least
two (2) Business Days prior to the proposed Purchase Date for any
Transaction (unless otherwise agreed by the parties). Such Purchase
Request shall (A) specify the requested Purchase Date and Repurchase Date
and the other matters specified on the form attached hereto as Exhibit I,
and (B) include the Asset Schedule containing information with respect to
Assets that the Seller proposes to sell to Buyer in connection with such
Transaction. Each Purchase Request accepted by Buyer shall be irrevocable
and binding on Buyer and Seller. The Seller shall not be entitled to
initiate a Transaction hereunder and the Buyer shall have no obligation to
purchase any Assets hereunder if a Default or an Event of Default has
occurred or will result from such Transaction.
(ii) Notwithstanding anything set forth in Section 17 hereof,
any Purchase Request shall be deemed to have been received by Buyer upon
telephonic confirmation by Seller that Buyer has actually received such
Purchase Request.
(d) Limitation on Pricing Rate Used; Illegality. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of the
Pricing Rate:
(i) the Buyer determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits
referred to in the definition of "LIBO Base Rate" in Section 2 hereof are
not being provided in the relevant amounts or for the relevant maturities
for purposes of determining the Pricing Rates as provided herein; or
(ii) the Buyer determines, which determination shall be
conclusive, that the relevant rate of interest referred to in the
definition of "Pricing Rate" in Section 2 hereof upon the basis of which
the Pricing Rate is to be determined is not likely adequately to cover the
cost to the Buyer of purchasing the Assets using such Pricing Rate; or
(iii) it becomes unlawful for the Buyer to honor its
obligation to purchase Assets hereunder using a Pricing Rate based upon
the LIBO Rate;
then Buyer shall give the Seller prompt notice thereof and, so long as such
condition remains in effect, Seller shall, either repurchase all Purchased
Assets then subject to a Transaction or the
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Pricing Rate shall be determined based upon the rate selected by Buyer in a
manner that is reasonably satisfactory to Buyer so as to adequately reflect the
cost to Buyer of purchasing the Purchased Assets using such substituted Pricing
Rate (in which case Buyer shall continue to be obligated to enter into
additional Transactions using that substituted Pricing Rate).
(e) Additional Costs.
(i) If Buyer determines that additional amounts are necessary
to compensate Buyer for any costs that Buyer determines are attributable
to its using a LIBO Rate for the Pricing Rate or its obligation to use a
the LIBO Rate Pricing Rate hereunder, or any reduction in any amount
receivable by Buyer hereunder in respect of the Pricing Rate (such
increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any change that:
(A) shall subject Buyer to any tax, duty or other charge
in respect of such Pricing Rate or changes the basis of taxation of
any amounts payable to such Buyer under this Agreement in respect of
any of such Pricing Rate (excluding changes in the rate of tax on
the overall net income of such Buyer by the jurisdiction in which
Buyer has its principal office); or
(B) imposes or modifies any reserve, special deposit or
similar requirements relating to any Pricing Rate; or
(C) imposes any other condition affecting this Agreement
materially and adversely affecting Buyer's rights or the
transactions contemplated hereby or thereby, then Buyer shall give
prompt notice thereof and Seller shall either repurchase all
Purchased Assets subject to a Transaction or pay such Additional
Costs.
(ii) If any Requirement of Law (other than with respect to any
amendment made to the 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 the 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:
(A) shall subject the Buyer to any tax of any kind
whatsoever with respect to this Agreement or any Transaction made
hereunder (excluding net income taxes) or change the basis of
taxation of payments to the Buyer in respect thereof;
(B) shall impose, modify or hold applicable any reserve,
special deposit, compulsory advance 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 the Seller which is not
otherwise included in the determination of the LIBO Base Rate
hereunder, and which is deemed applicable to Transactions;
(C) shall impose on the Buyer any other condition;
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and the result of any of the foregoing is to increase the cost to the
Buyer, by an amount which the Buyer deems to be material, of making,
continuing or maintaining any Transaction or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, Buyer
shall give prompt notice thereof and the Seller shall either repurchase
all Purchased Assets subject to a Transaction or pay such Additional Costs
promptly, as will compensate the Buyer for such increased cost or reduced
amount receivable.
(iii) If the 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 the 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 the Buyer or
any corporation controlling the 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 the Buyer's or such
corporation's capital as a consequence of its obligations hereunder to a
level below that which the Buyer or such corporation (taking into
consideration the Buyer's or such corporation's policies with respect to
capital adequacy) by an amount deemed by the Buyer to be material, then
from time to time, Buyer shall give prompt notice thereof and the Seller
shall either repurchase all Purchased Assets subject to a Transaction or
promptly pay such Additional Costs as will compensate the Buyer for such
reduction.
(iv) If the Buyer becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Seller
of the event by reason of which it has become so entitled. Buyer shall
deliver to Seller a statement setting forth the amount and basis of
determination of any Additional Costs in such detail as determined in good
faith by Buyer to be adequate, it being agreed that such statement and the
method of its calculation shall be adequate and shall be conclusive and
binding upon Seller, absent manifest error.
(v) Notwithstanding anything in this subsection (e) to the
contrary, to the extent any notice or request pursuant to this subsection
(e) is given by Buyer more than five (5) Business Days after Buyer has
obtained or should have obtained knowledge of the occurrence of an event
giving rise to Additional Costs as described hereunder, Buyer shall not be
entitled to compensation under this subsection (e) for any Additional
Costs incurred or accruing prior to the giving of such notice to Seller.
(vi) Buyer will, to the extent of Additional Costs or
reductions in the amounts receivable referred to above relate to Buyer's
loans or commitments in general and are not specifically attributable to
amounts owing hereunder, use averaging and attribution methods which cover
all loans and commitments similar to the Transactions hereunder in similar
circumstances for comparable customers whether or not the documentation
for such other loans or commitments permits Buyer to make the
determination specified in this clause (vi).
(f) Termination and Repurchase.
(i) On the Repurchase Date, termination of the Transaction
will be effected by transfer to Seller or its designee of the Purchased
Assets (and any Income in
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respect thereof received by Buyer not previously credited or transferred
to, or applied to the obligations of, Seller pursuant to Section 5)
against the simultaneous transfer of the Repurchase Price plus any
Breakage Costs, as defined below, payable by Seller to Buyer pursuant to
paragraph 3(f)(iii) hereof, to an account of Buyer. Seller is obligated to
obtain the Asset Files from Buyer or its designee at Seller's expense on
the Repurchase Date.
(ii) Seller may at any time and from time to time repurchase
the Purchased Assets on other than a scheduled Repurchase Date, in whole
or in part, upon at least one (1) Business Day's irrevocable notice to
Buyer, specifying the new Repurchase Date for such repurchase and the
Repurchase Price. Such demand shall be made by Seller by telephone or
otherwise, no later than 1:00 p.m. New York time on the Business Day
immediately prior to the day on which such termination will be effective.
If any such notice is given, the Repurchase Price specified in such notice
shall be due and payable on the new Repurchase Date specified therein,
together with any amounts payable pursuant to the succeeding paragraph.
(iii) If Seller repurchases the Purchased Assets on any day
which is not a Repurchase Date for such Purchased Assets, Seller shall
indemnify Buyer and hold Buyer harmless from any loss or expense which
Buyer may sustain or incur arising from the reemployment of funds obtained
by Buyer hereunder or from fees payable to terminate the deposits from
which such funds were obtained, but not including loss of profit
("Breakage Costs"). Buyer shall deliver to Seller a statement setting
forth the amount and basis of determination of any Breakage Costs in such
detail as determined in good faith by Buyer to be adequate, it being
agreed that such statement and the method of its calculation shall be
adequate and shall be conclusive and binding upon Seller, absent manifest
error. This Section shall survive termination of this Agreement and
repurchase of all Purchased Assets subject to Transactions hereunder.
(iv) The Seller shall repurchase from the Buyer all Purchased
Assets outstanding on the Final Repurchase Date.
(v) With respect to any Purchased Asset repurchased by the
Seller pursuant to this Section 3(f), the Seller shall not resell any such
Asset to any Person for a purchase price less than the purchase price
applicable to such Assets set forth in the Purchase Facility.
(g) Commitment Fee; Maximum Transaction Amount. In consideration of
the Commitment Fee, Buyer shall, for the term of this Agreement, commit to
purchase Assets from Seller so long as (i) the Purchase Price for Assets to be
purchased on any single Purchase Date shall be at least $5,000,000, (ii) the
aggregate Purchase Price for Purchased Assets subject to Transactions at any one
time does not exceed the Committed Amount; (iii) the aggregate Purchase Price
for Fallout Assets subject to Transactions at any one time does not exceed the
Fallout Asset Sublimit; (iv) the aggregate Purchase Price for Empire
Collateralized Notes and all other Collateralized Notes subject to Transactions
at any one time does not exceed the applicable
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Collateralized Note Sublimit; (v) the Assets comply with the representations and
warranties set forth herein, or in the case of each Fallout Asset, the Seller
identifies on the applicable Asset Schedule each representation and warranty
that such Asset does not satisfy; and (vi) the conditions precedent set forth in
3(b) are satisfied. Buyer shall have no obligation to enter into any Transaction
if, as a result of such transaction, (i) the aggregate Purchase Price for all
Transactions subject to then outstanding Transactions under this Agreement shall
exceed the Committed Amount or (ii) the Maximum Transaction Amount shall exceed
$650,000,000. Buyer shall not enter into any Transaction if the aggregate
Purchase Price of such Purchased Assets exceeds the Available Amount.
4. COLLATERAL AMOUNT MAINTENANCE
(a) If at any time the aggregate Repurchase Price of Purchased
Assets subject to then outstanding Transactions is greater than the Collateral
Amount for such Transaction (a "Collateral Deficit"), then Buyer may by notice
to Seller, require Seller to transfer to Buyer or its designee (including the
Custodian) (at Buyer's option) additional Eligible Assets, ("Additional Eligible
Assets"), or cash, so that the Collateral Amount equals or exceeds the
Repurchase Price. Any cash remitted by Seller to Buyer pursuant to this Section
4(a) shall be deemed a payment of all or part of the Repurchase Price.
(b) Notice required pursuant to subsection (a) above may be given by
means of facsimile transmission. A notice for the payment or delivery in respect
of a Collateral Deficit received before 12:00 noon New York time on a Business
Day must be met not later than 4:00 p.m. New York time on the next Business Day
on which the notice was given. Any notice given on a Business Day after 12:00
noon New York time shall be met not later than 4:00 p.m. New York time on the
second Business Day following such notice. The failure of Buyer, on any one or
more occasions, to exercise its rights under subsection (a) of this Section
shall not change or alter the terms and conditions to which Seller is subject
under this Agreement or limit the right of the Buyer to exercise its rights at a
later date. Buyer agrees that a failure or delay to exercise its rights under
subsection (a) of this Section shall not limit its rights under this Agreement
or otherwise existing by law or in any way create additional rights for Seller.
(c) In the event that Seller fails to comply with the provisions of
this Section 4, Buyer shall have the option not to enter any additional
Transactions hereunder from the date of such failure, and to terminate this
Agreement.
5. INCOME PAYMENTS
(a) Where a particular Transaction's term extends over an Income
payment date for Purchased Assets subject to a Transaction, such Income shall be
the property of Buyer. All Income attributable to the Purchased Assets subject
to Transactions which is collected and received by the Seller or the Interim
Servicer, as the case may be, shall be remitted by the Seller or the Interim
Servicer, as the case may be, within two Business Days of such receipt, directly
to the Buyer's Account in accordance with the Accepted Servicing Practices,
until and unless Buyer directs Seller or Interim Servicer, as the case may be,
that such Income should be remitted as directed by Buyer for and on behalf of
Buyer or to remit such Income directly to Seller.
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(b) Notwithstanding that Buyer and Seller intend that the
Transactions hereunder be sales to Buyer of the Purchased Assets, Seller shall
pay by wire transfer to Buyer the accreted value of the Price Differential (less
any amount of such Price Differential previously paid by Seller to Buyer) (each
such payment, a "Periodic Payment") on the first Business Day of each month (the
"Payment Date").
6. SECURITY INTEREST
(a) 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 under this Agreement and the Transactions
entered into pursuant to this Agreement, Seller grants Buyer, as collateral
security for any obligations outstanding under this Agreement, any outstanding
Transactions, any asset backed warehouse financing agreements or any other
repurchase agreements between Buyer or any of its Affiliates on the one hand and
Seller or any of its Affiliates on the other hand, a first priority security
interest in the Purchased Assets and all distributions in respect thereof, the
proceeds of any and all of the foregoing, Servicing Agreements and any other
arrangement for the servicing of the Purchased Assets (including the right to
contract for servicing), Servicing Records, servicing fees, insurance,
guarantees, indemnities and warranties and proceeds thereof, relating to the
Purchased Assets, Income, collections, custodial accounts and escrow accounts
relating to the Purchased Assets and any other contract rights (including the
right to receive principal and interest payments or finance charges with respect
to the Purchased Assets and the right to enforce such payments, and the
collateral securing such obligation), the Asset Documents and other agreements
or arrangements of whatever character from time relating to the Purchased
Assets, security agreements, financing statements, general intangibles,
investment property, inventory, instruments, chattel paper, equipment, goods,
accounts and other assets, whether real or personal property, relating to the
Purchased Assets or any interest in the Purchased Assets (including, without
limitation, the Collateralized Notes and the indebtedness evidenced thereby and
all collateral security therefor including, without limitation, all security
agreements, mortgage loans, deeds of trusts and all other assets and properties
securing such Collateralized Notes), securities backed by or representing an
interest in such Purchased Assets, Takeout Commitments and all collateral of
Seller, however defined, held from time to time by Buyer, and any and all
replacements, substitutions, distributions on or proceeds of any and all of the
foregoing (collectively, the "Collateral"). Seller represents that with respect
to all Purchased Assets in the form of a participation certificate or other
instrument evidencing ownership of an underlying pool of assets there has been a
UCC-1 financing statement filed evidencing the security interest of the issuer,
for the benefit of the holders of such certificate or instrument, in such pool
of assets, including any chattel paper related to such assets. Seller also
represents that, with respect to all Collateralized Notes subject to
Transactions, a UCC-1 financing statement has been filed and is in effect naming
Seller the secured party with respect to the collateral securing such
Collateralized Notes.
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(b) Seller shall pay all fees and expenses associated with
perfecting Buyer's security interest in the Collateral, or establishing Buyer's
Lien on Assets, including, without limitation, the cost of filing financing
statements under the Uniform Commercial Code and recording assignments of
Mortgage, as and when required by Buyer in its sole discretion.
7. PAYMENT, TRANSFER AND CUSTODY
(a) Unless otherwise mutually agreed in writing, all transfers of
funds hereunder shall be in immediately available funds.
(b) In connection with each sale, transfer, conveyance and
assignment, or pledge, on or prior to each Purchase Date with respect to each
Purchased Asset, the Seller shall deliver or cause to be delivered and released
to the Custodian the original documents consisting of the Asset File pertaining
to each of the Purchased Assets identified in the Asset Schedule delivered
therewith. On the Purchase Date, upon receipt of the Trust Receipt and Asset
Schedule containing no Material Exceptions (as defined in the Custodial
Agreement) or as otherwise acceptable to Buyer in its sole discretion, Buyer
shall transfer the Purchase Price for the Transaction to Seller to the account
specified by Seller in the Purchase Request (the "Seller's Account").
(c) On the Purchase Date for each Transaction, ownership of the
Purchased Assets shall be transferred to Buyer or its designee (including the
Custodian) simultaneous with the transfer of the Purchase Price to Seller's
Account. Seller, simultaneously with the delivery to Buyer or its designee
(including the Custodian) of the Purchased Assets relating to each Transaction
hereby sells, transfers, conveys and assigns to Buyer or its designee (including
the Custodian), 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 insurance policies. Upon transfer of the Purchased
Assets to Buyer as set forth-herein and until termination of any Transactions as
set forth in this Agreement, record title in the name of Seller to each
Purchased Asset shall be retained by Seller in trust, for the benefit of Buyer,
for the sole purpose of facilitating the servicing and the supervision of the
servicing of the Purchased Assets by Seller in accordance with Section 25
hereof.
(d) Buyer may deposit the Trust Receipts representing the Purchased
Assets, or direct that the Trust Receipts be deposited directly, with a designee
acting in the capacity of bailee for Buyer. If the Trust Receipts are delivered
to Buyer or its designee, Buyer or its designee shall exercise reasonable and
prudent care in the maintenance thereof, during the term of this Agreement.
(e) Any Asset Files not delivered to Buyer or its designee
(including the 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 complete copy of the Asset File and any originals of the Asset
Documents not delivered to Buyer or its designee. The possession of the Asset
File by Seller or its designee is at the will of the Buyer for the sole purpose
of servicing the related Purchased Asset, and such retention and possession by
the Seller or its designee is in a custodial capacity only. Each Asset File
retained or held by Seller or its designee shall be
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segregated on Seller's books and records from the other assets of Seller or its
designee and the books and records (including, without limitation, any computer
records or tapes) of Seller or its designee and shall be marked appropriately to
reflect clearly the sale of the related Purchased Asset to Buyer. Seller or its
designee (including the Custodian) shall release its custody of the Asset File
only in accordance with written instructions from Buyer and in accordance with
the Custodial Agreement, unless such release is required as incidental to the
servicing of the Purchased Assets or is in connection with a repurchase of any
Purchased Assets by Seller.
8. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS
Title to all Purchased Assets shall pass to Buyer and Buyer shall
have free and unrestricted use of all Purchased Assets. Nothing in this
Agreement shall preclude Buyer from engaging in repurchase transactions with the
Purchased Assets or otherwise pledging, repledging, hypothecating, or
rehypothecating the Purchased Assets, but no such transaction shall relieve
Buyer of its obligations to transfer Purchased Assets to Seller pursuant to
Section 3. Nothing contained in this Agreement shall obligate Buyer to segregate
any Purchased Assets delivered to Buyer by Seller.
9. SUBSTITUTION
(a) Subject to Section 9(b), Seller may, upon one (1) Business Day's
written notice to Buyer, with a copy to Custodian, substitute (i) other Eligible
Assets for any Eligible Assets or Fallout Assets subject to Transactions or (ii)
other Fallout Assets for any Fallout Assets subject to Transactions. Such
substitution shall be made by (i) transfer to the related Custodian of the Asset
Files for such other Eligible Assets, together with an Asset Schedule and
transfer to Seller or its designee of the Purchased Assets requested for
release, and (ii) wire transfer to Buyer of the Exit Fee related to the released
Assets to the extent such Assets are sold by the Seller to a Person other than
the Buyer on or after the substitution date. After substitution, the Substituted
Assets, shall be deemed to be Purchased Assets subject to the same Transaction
as the released Asset. The Custodian shall issue a new Asset Schedule to Buyer,
deleting the released Asset, and adding the substituted Purchased Asset.
(b) Notwithstanding anything to the contrary in this Agreement,
Seller may not substitute other Assets for any Purchased Assets if (i) after
taking into account such substitution, a Collateral Deficit were to occur, or
(ii) such substitution would cause a Breach of any provision of this Agreement,
or (iii) Buyer does not consent to such substitution.
(c) In the case of any Transaction for which the Repurchase Date is
other than the Business Day immediately following the Purchase Date and with
respect to which Seller does not have any existing right to substitute
substantially the same Assets for the Purchased Assets, Seller shall have the
right, subject to the proviso to this sentence, upon notice to Buyer, which
notice shall be given at or prior to 10 am (New York time) on such Business Day,
to substitute substantially the same Assets for any Purchased Asset; provided,
however, that Buyer may elect, by the close of business on the Business Day
notice is received, or by the close of the next Business Day if notice is given
after 10 am (New York time) on such day, not to accept such substitution. In the
event such substitution is accepted by Buyer, such substitution shall be made
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by Seller's transfer to Buyer of such other Assets and Buyer's transfer to
Seller of such Purchased Assets, and after such substitution, the Substituted
Assets shall be deemed to be Purchased Assets. In the event Buyer elects not to
accept such substitution, Buyer shall offer Seller the right to terminate the
Transaction.
(d) In the event Seller exercises its rights to substitute or
terminate under sub-paragraph (c), Seller shall be obligated to pay to Buyer, by
the close of the Business Day of such substitution or termination, as the case
may be, an amount equal to (A) Buyer's actual cost (including all fees, expenses
and commissions) of (i) entering into replacement transactions; (ii) entering
into or terminating hedge transactions; and/or (iii) terminating transactions or
substituting securities in like transactions with third parties in connection
with or as a result of such substitution or termination, and (B) to the extent
Buyer determines not to enter into replacement transactions, the loss incurred
by Buyer directly arising or resulting from such substitution or termination.
The foregoing amounts shall be solely determined and calculated by Buyer in good
faith, absent manifest error.
10. REPRESENTATIONS AND WARRANTIES
(a) Buyer and Seller Representations and Warranties. As of each
Purchase Date, each of Buyer and Seller represents and warrants to the other
that (i) it is duly authorized to execute and deliver this Agreement, to enter
into the Transactions contemplated hereunder and to perform its obligations
hereunder and it has taken all necessary action to authorize such execution,
delivery and performance; (ii) it 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); (iii) the person signing this
Agreement on its behalf is duly authorized to do so on its behalf (or on behalf
of any such disclosed principal); (iv) no approval, consent, authorization,
notice to, filing with, or other act by, or in respect of, any Governmental
Authority or any other Person is required or necessary in connection with the
Transactions contemplated by this Agreement, or with the execution, delivery,
performance, validity or enforceability of this Agreement or any Facility
Document (other than filings and recordings in respect of the Liens created
hereunder), or, if required, such approval, consent, authorization, notice, or
filing has been or will, prior to the Purchase Date, be obtained and will be in
full force and effect; (v) the execution, delivery, and performance of this
Agreement and the Transactions hereunder will not violate any law, regulation,
order, judgment, decree, ordinance, charter, by-law, or rule applicable to it or
its property or constitute a default (or an event which, with notice or lapse of
time, or both would constitute a default) under or result in a breach of any
material agreement or other instrument by which it is bound or by which any of
its assets are affected; (vi) it has received approval and authorization to
enter into this Agreement and each and every Transaction actually entered into
hereunder pursuant to its internal policies and procedures; and (vii) neither
this Agreement nor any Transaction or transfer of any Asset pursuant hereto is
entered into in contemplation of insolvency or with any intent to hinder, delay
or defraud any creditor.
(b) Seller Representations and Warranties. Seller represents and
warrants to Buyer that as of the Purchase Date for the purchase of any Assets by
Buyer from Seller and as of
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the date of this Agreement and any Transaction hereunder and at all times while
this Agreement and any Transaction thereunder is in full force and effect:
(i) All Documents True and Correct. All representations and
warranties made and all information, reports, financial statements,
exhibits, schedules, and documents or copies of documents furnished to
Buyer by or on behalf of Seller pursuant to or in connection with the
negotiation, preparation, delivery or performance of this Agreement and
the other Facility Documents, or with the transactions contemplated
hereby, are and will be true, correct, and complete in every material
respect or (in the case of projections, based on reasonable estimates), at
the time when made and at all times thereafter under this Agreement or, if
limited to a specific date, as of the date to which they refer, and no
such writing or information contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading. There is no fact known to a
Responsible Officer of the Seller that, after due inquiry, should
reasonably be expected to have a Material Adverse Effect that has not been
disclosed herein, in the other Facility Documents or in a report,
financial statement, exhibit, schedule, disclosure letter or other writing
furnished to the Buyer for use in connection with the transactions
contemplated hereby or thereby.
(ii) Due Authority and Organization. Seller is duly organized
and validly existing, and in good standing under the laws and regulations
of the state of Delaware, and is duly licensed, qualified to do business,
and in good standing under the laws of each jurisdiction in which the
nature of the business conducted by it makes such qualification necessary
and where failure so to qualify could be reasonably expected (either
individually or in the aggregate) to have a Material Adverse Effect.
Seller has the authority under its charter and by-laws and applicable law
to enter into this Agreement and to perform all acts contemplated hereby
or in connection herewith, and to borrow money, sell Assets, and grant
Liens hereunder; and has taken all corporate action necessary to authorize
the execution, delivery and performance of this Agreement and the other
Facility Documents to which it is a party and to authorize the sale, the
borrowings, and the granting of Liens on the terms and conditions of the
Agreement and the other Facility Documents, and is in compliance in all
material respects with all Requirements of Law, and has all governmental
licenses, authorizations, consents and approvals necessary to own and
operate its Property, to lease the Property it operates as lessee, and to
carry on its business as now being or as proposed to be conducted.
(iii) Binding Obligations. This Agreement and every other
document to be executed by Seller pursuant to this Agreement, is and will
be, duly and validly executed and delivered by the Seller and constitutes
a legal, valid, binding and subsisting obligation of Seller, enforceable
against the Seller in accordance with its respective terms, except that
(a) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws (whether statutory,
regulatory or decisional) now or hereafter in effect relating to
creditors' rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be
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subject to certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought, whether a proceeding
at law or in equity;
(iv) No Litigation. There is no action, suit, proceeding,
inquiry, investigation, arbitration or investigation, at law or in equity,
or before, or by any court, Governmental Authority, arbitrator, public
board or body pending, in each case, as to which Seller has received
service of process, or, to Seller's knowledge, threatened against or
affecting Seller or any of its Subsidiaries or against any of its or their
respective Properties or revenues, which, either in any one instance or in
the aggregate, which if adversely determined would individually or in the
aggregate result in any Material Adverse Effect, or in any material
impairment of the right or ability of Seller to carry on its business
substantially as now conducted, or to fulfill its obligations hereunder,
or in any material liability on the part of the Seller.
(v) Financial Statements.
(A) (i) The audited financial statements of the Seller
and its consolidated Subsidiaries as of March 31, 1999, heretofore furnished to
Buyer and as of the end of Seller's fiscal year, thereafter furnished to Buyer,
fairly present the financial position of Seller and its consolidated
subsidiaries on a consolidated basis as of March 31 of such year and for the one
year period then ended, subject to any qualifications set forth therein.
(ii) The unaudited quarterly financial statements of
the Seller and its consolidated Subsidiaries as of the most recent date of
delivery, are true complete and correct, and present fairly the consolidated
financial position of the Seller and its consolidated Subsidiaries as at such
dates and the consolidated results of their operations and their consolidated
cash flows for the fiscal quarter then ended, subject to any qualifications set
forth therein.
(B) Such financial statements, including the related
schedules and notes thereto, has been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed
therein).
(C) Neither the Seller nor any of its consolidated
Subsidiaries had, at the date of the financial statement referred to above, any
material guarantee obligation, contingent liability or liability for taxes, or
any long-term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction, or other financial derivative of the nature required to be
disclosed by GAAP in such financial statements, which is not reflected in the
foregoing statements or in the notes thereto.
(vi) [Intentionally Omitted.]
(vii) Investment Company Act and Other Limits on Incurring
Indebtedness. Seller is not required to be registered as an "investment company"
under the
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Investment Company Act of 1940, as amended, and Seller is not a company
"controlled" by an "investment company". Seller is not subject to regulation
under any Federal or state statute or regulation which limits its ability to
incur Indebtedness.
(viii) Transfer of Assets. All actions necessary to transfer
to Buyer the interests in the Eligible Assets and the Fallout Assets to be
purchased have been or are currently being taken and Seller has not offered or
sold, and will not offer or sell, any such Assets in any manner that would
render the issuance and sale of the such Assets a violation of Section 5 of the
Securities Act of 1933, as amended, or any state securities or "Blue Sky" laws
or require registration pursuant thereto, nor has it authorized, nor will it
authorize, any person to act in such manner;
(ix) Chief Executive Office; Chief Operating Office. The
Seller's chief executive office and Chief Operating Office on the date hereof
is, and for the immediately preceding four months, was located at ▇▇▇ ▇▇▇▇ ▇▇▇.,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(x) Location of Books and Records. The location where the
Seller keeps its books and records (excluding all computer tapes and records
relating to the Assets which are held by the Subservicer) is its chief executive
office or its chief operating office.
(xi) Subsidiaries. Seller has identified on Schedule 1 of this
Agreement, each Material Subsidiary which exists on the date hereof.
(xii) No Legal Bar. The execution, delivery and performance of
this Agreement and the Facility Documents, the sale and borrowings hereunder and
the use of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligation of the Seller or of any of its Material Subsidiaries and
will not result in, or require, the creation or imposition of any Lien (other
than the Liens created hereunder) on any of its or their respective Properties
or revenues pursuant to any such Requirement of Law or Contractual Obligation.
(xiii) Margin Regulations. No part of the proceeds of any
Transactions will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under, or for any
other purpose which violates or would be inconsistent with the provisions of
Regulations T, U, or X.
(xiv) Taxes. Each of the Seller and its Subsidiaries has filed
all Federal and state income tax returns and all other material tax returns that
are required to be filed by them and has paid all taxes due pursuant to such
returns or pursuant to any assessment received by any of them, except for any
such taxes or assessments, if any, that are being appropriately contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves in conformity with GAAP have been provided. The charges,
accruals and reserves on Seller's books in respect of taxes and other
governmental charges are, in Seller's opinion, adequate. No tax Lien has been
filed, and, to the knowledge of the Seller, no claim is being asserted, with
respect to any such tax or assessment.
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(xv) 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.
(xvi) 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 Purchase Assets
pursuant to this Agreement.
(xvii) Collateral. (A) The provisions of this Agreement,
together with delivery of the Asset Files as contemplated herein are effective
to either (i) convey to the Buyer ownership of each Purchased Assets, or (ii)
create in favor of the Buyer a valid first priority perfected security interest
in all right, title and interest of the Seller, in, to, and under the
Collateral.
(B) Seller represents and warrants to Buyer (i) with
respect to each Collateralized Note (other than any Empire Collateralized Note)
purchased hereunder that such Collateralized Note is secured by Mortgage Loans
which conform in all respects to the appropriate representations and warranties
set forth above, including, without limitation, the representations and
warranties set forth in Exhibit V hereto and all other representations and
warranties that Buyer shall reasonably require from time to time, and (ii) with
respect to each Empire Collateralized Note purchased hereunder that such Empire
Collateralized Note is secured by Mortgage Loans which conform in all respects
to the representations and warranties set forth in Exhibit V(A) hereto.
(xviii) UCC Filing. Upon (1) receipt by the Custodian of each
Note, and (2) the filing of financing statements on Form UCC-1 naming the Buyer
as "Secured Party" and the Seller as "Debtor", and describing the Collateral, in
the jurisdictions and recording offices listed on Schedule 2 attached hereto, in
both instances, the security interests granted hereunder in the Collateral will
constitute fully perfected first-priority security interests (to the extent such
interest can be perfected by filing under the Uniform Commercial Code) under the
Uniform Commercial Code in all right, title and interest of the Seller in, to
and under such Collateral.
(xix) Origination Practices. The origination and collection
practices used by Seller or the Qualified Originator, if applicable, with
respect to each Asset (i) have been and are in all respects legal, proper,
prudent and customary in the origination and loan servicing business for that
type of asset, and (ii) are materially in accordance with the Underwriting
Guidelines attached hereto and the documentation is consistent in form and
substance with the Seller's loan documents approved by Buyer for use under this
Agreement, and each deviation therefrom would not be deemed to be material by a
prudent lender experienced in originating Assets of that nature, and in no event
will have a Material Adverse Effect.
(xx) [Intentionally Omitted]
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(xx) No Event of Default. Neither the Seller nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing
hereunder.
(xxi) No Violation of Environmental Laws. Neither Seller nor
any of its Subsidiaries has received any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance with any environmental laws with regard to any of its Properties,
nor does Seller have knowledge or reason to believe that any such notice will be
received or is being threatened.
(xxii) True Sales. Any Asset funded in the name of or acquired
by a Qualified Originator which is an Affiliate of the Seller has been conveyed
to the Seller pursuant to a legal sale, and if so requested by the Buyer, is
covered by an opinion of counsel to that effect in form and substance acceptable
to the Buyer.
(xxiii) Selection Process. The Purchased Assets were selected
from among the Assets in Seller's portfolio as to which the representations and
warranties set forth in this Agreement could be made and such selection was not
intentionally made in a manner so as to result in a Material Adverse Effect upon
Buyer, or so as to intentionally result in Assets less desirable or less
valuable than other comparable assets owned by the Seller.
(xxiv) Computer System. Seller and Subservicer have each made
a full and complete assessment of all issues which may be related to the
occurrence of the year 2000, including all issues related to its computer
program and software (the "Year 2000 Issues"), and has a realistic and
achievable program for remediating the Year 2000 Issues on a timely basis (the
"Year 2000 Program"). Based on such assessment and on the Year 2000 Program,
Seller does not reasonably anticipate that Year 2000 Issues will have a material
adverse effect on Seller's operations or financial condition.
(c) Interim Servicer Representations and Warranties. Interim
Servicer represents and warrants to Buyer that, as of the Purchase Date for the
purchase of any Assets by Buyer from Seller and as of the date of this Agreement
and any Transaction hereunder and at all times while this Agreement and any
Transaction thereunder is in full force and effect, each of the representations
and warranties set forth in Subsection 7.01(b) of the Purchase Facility are true
and correct in all material respects.
11. NEGATIVE 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 it will not:
(a) exercise any right to change or consent to a change in a
Servicer of Purchased Assets without the prior written consent of the Buyer, or
permit any Person other than the Servicer or the Subservicer, as the case may
be, to service Purchased Assets without the prior written consent of Buyer;
- 40 -
(b) after the occurrence and during the continuation of an Event of
Default make any Restricted Payment;
(c) take any action which would directly or indirectly impair or
adversely affect (i) Buyer's title to or lien on any Purchased Assets or any
other Collateral or (ii) the value of any Purchased Assets or any other
Collateral except, in the case of this clause (ii), any action solely relating
to, resulting solely from, or arising solely out of the financial condition of
the Seller;
(d) pledge, assign, convey, grant, bargain, sell, set over, deliver
or otherwise transfer any interest in the Purchased Assets to any Person other
than Buyer, nor will Seller create, incur, or permit to exist any Lien,
encumbrance or security interest in or on the Purchased Assets or any of the
Collateral;
(e) permit or allow others to amend, modify, terminate, or waive any
provision of any Purchased Asset in any manner which should reasonably be
expected to materially and adversely affect the value of such Purchased Asset;
(f) take any action which could reasonably be expected to result in
a Material Adverse Effect;
(g) engage, to any substantial extent, in any line or lines of
business activity other than the businesses now generally carried out by it, or
cease or take any action to cease (or permit any Subsidiary of Seller to cease
or to take any action to cease) to be in the business of originating Mortgage
Loans;
(h) (A) permit any of its Subsidiaries to sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates (an "Affiliate Transaction") unless the terms thereof (i) are
no less favorable to the Seller or such Subsidiary than those that could be
obtained at the time of such transaction in arm's-length dealings with a Person
who is not such an Affiliate, (ii) if such Affiliate Transaction involves an
amount in excess of $2,000,000 (or the equivalent amount in any foreign
currency) (x) are set forth in writing and (y) have been approved by a majority
of the members of the Board of Directors having no personal stake in such
Affiliate Transaction and (iii) if such Affiliate Transaction involves an amount
in excess of $10,000,000 (or the equivalent amount in any foreign currency),
have been determined by a nationally recognized investment banking firm to be
fair from a financial standpoint, to the Seller and its Subsidiaries.
(B) Without limiting the generality of any other provisions
set forth in this Agreement, the provisions of this Section (A)(i) shall not
prohibit (i) any Permitted Investment, (ii) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans
approved by the Board of Directors, (iii) the grant of stock options or similar
rights to employees and directors of the Seller pursuant to plans approved by
the Board of Directors, (iv) loans or advances to employees in the ordinary
course of business in accordance
- 41 -
with the past practices of the Seller or its Subsidiaries, but in any event not
to exceed $10,000,000 (or the equivalent amount in any foreign currency) in
aggregate principal amount outstanding at any one time, (v) the payment of
reasonable fees to directors of the Seller and its Subsidiaries who are not
employees of the Seller or its Subsidiaries, (vi) any Affiliate Transactions
between the Seller and a Subsidiary or between consolidated Subsidiaries (in
each case other than any Subsidiary that is an "affiliate" (as such term is
defined in the Securities and Exchange Act) of any Affiliate (other than any
Subsidiary) of the Seller and (vii) transactions pursuant to any agreement as in
existence as of the date between the Seller or its Subsidiaries and Continental
Grain Company, a Delaware corporation, or one of its Subsidiaries.
(i) become an "investment company" or a company "controlled" by an
"investment company, within the meaning of the Investment Company Act, as
amended.
(j) move its chief executive office from its address as of the date
hereof unless it shall have provided Buyer 30 days' prior written notice of such
change and an amendment to the UCC-1 filed pursuant thereto.
12. AFFIRMATIVE COVENANTS OF SELLER
(a) Financial Statements. Seller covenants that promptly upon
preparation, but in no event later than 90 days following the end of each fiscal
quarter (other than the end of each fiscal year which is expressly addressed
below), Seller shall deliver to Buyer the financial statements of Seller and its
consolidated Subsidiaries as of the end of each fiscal quarter. In the event the
parties hereto agree to extend the term of this Agreement, Seller shall deliver
to Buyer promptly upon preparation, but in no event later than 105 days
following the end of such fiscal year, the audited financial statements of
Seller and its consolidated Subsidiaries as of the end of each fiscal year. Each
financial statement delivered pursuant to this Section 12(a) shall be
accompanied by a certificate of a Responsible Officer of the Seller, which
certificate shall state that said consolidated financial statement fairly
presents the consolidated and consolidating financial condition and results of
operations of the 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 audit adjustments and any relevant qualifications) and which
shall also set forth the calculations demonstrating compliance with the
covenants set forth in Section 12(e) hereof.
(b) Reports. Seller, with respect to any Purchased Assets serviced
by Seller, Subservicer or any of Seller's Affiliates, shall periodically
deliver, or with respect to any other Purchased Assets, otherwise use its best
efforts to cause to be periodically delivered, to Buyer, the report, if any,
prepared by the relevant trustee or servicer setting forth payment activity
including the last paid-to date, defaults and delinquencies with respect to the
underlying loans or receivables in respect of each Purchased Asset and shall
prepare and deliver reports each month, detailing, with respect to all
Transactions, such information as Buyer may, from time to time, reasonably
request, including, but not limited to, purchase activity and valuation of
Purchased Assets, which reports shall be rendered no later than the 15th
calendar day of any month; provided, however, that such information (i) is of
the type usually provided by servicers and
- 42 -
master servicers of such type of Purchased Asset and (ii) is available without
undue hardship or expenses being incurred by Seller, any of its Affiliates or
any servicer of the Purchased Assets.
(c) Compliance With Laws. Seller will comply in all material
respects with all laws, rules and regulations to which it is or may become
subject.
(d) Conduct of Business. Seller will do, and will cause each of its
Material Subsidiaries to do, all things necessary to remain duly incorporated,
validly existing and in good standing in its jurisdiction of incorporation and
will maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted, except where such failure to
maintain such authority or be in good standing could not reasonably be expected
to have a Material Adverse Effect.
(e) [Intentionally Omitted]
(f) Year 2000 Compliance. The Seller shall take and shall cause each
of its Material Subsidiaries and Subservicer to take all such actions as are
reasonably necessary to successfully implement the Year 2000 Program and to
assure that the Year 2000 Issues will not have a material adverse effect on the
Seller's operations or financial condition. By September 30, 1999, the Seller
will provide written assurance that it is Year 2000 compliant (i.e., completed
all testing satisfactorily and taken all other steps reasonably necessary to
ensure Year 2000 readiness). If satisfactory assurances can not be made, Buyer
will have the right to cease further Transactions. After a 30 calendar day
remedy period, the non-compliance will constitute an Event of Default.
(g) Taxes. Each of the Seller and its Subsidiaries shall file all
Federal and state income tax returns and all other material tax returns that are
required to be filed by them and shall pay all taxes due pursuant to such
returns or pursuant to any assessment received by any of them, except for any
such taxes or assessments, if any, that may be appropriately contested in good
faith by appropriate proceedings diligently conducted and with respect to which
adequate reserves in conformity with GAAP have been provided.
(h) Notifications. Seller will notify Buyer in writing of any of the
following promptly upon learning of the occurrence thereof, describing the same
and, if applicable, any remedial steps being taken with respect thereto:
(i) The occurrence of an Event of Default or Default
hereunder;
(ii) The institution of any litigation, arbitration proceeding
or governmental proceeding which, in the opinion of counsel to Seller,
will have a Material Adverse Effect;
(iii) The occurrence of any event which would allow the
obligee under any material loan agreement to which Seller or any of its
Material Subsidiaries is bound to declare an event of default or
accelerate the obligations of Seller or any of its Material Subsidiaries
thereunder;
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(iv) The occurrence of an event of default under any servicing
agreement which relates to Purchased Assets to which the Seller or
Subservicer is a party;
(v) Promptly upon receipt of notice or knowledge that an
underlying Mortgaged Property has been damaged by waste, fire, earthquake
or earth movement, windstorm, flood, tornado or other casualty, or
otherwise damaged so as to affect adversely its Market Value;
(vi) Promptly upon receipt of notice or knowledge of (i) any
default related to any Purchased Asset, (ii) any Lien or security interest
(other than security interests created hereby) on, or claim asserted
against, any of the Purchased Assets or (iii) any event or change in
circumstances which could reasonably be expected to have a Material
Adverse Effect;
(vii) Promptly upon discovery that any representation or
warranty contained herein is untrue or incorrect in any material respect;
(viii) Promptly upon receipt of notice or knowledge of the
occurrence of Seller's inability or failure to meet the terms of any
covenant in any of the Facility Documents;
(ix) Promptly upon the entry of any judgment or decree against
Seller or any Material Subsidiary of Seller if the aggregate amount of all
judgments and decrees then outstanding against Seller or Seller's Material
Subsidiary exceeds $2,500,000;
(x) Promptly upon receipt of notice or knowledge that the
arrival of the year 2000 will materially and adversely affect Seller's
business or any Transactions executed herewith; and
(xi) Promptly upon the acquisition or formation of any
additional Material Subsidiaries.
(i) The Seller will defend the Purchased Assets against, and will
take such other action as is necessary to remove, any Lien, security interest or
claim on or to the Purchased Assets, other than the security interests created
hereunder, and the Seller will defend the right, title and interest of the Buyer
in and to any of the Purchased Assets against the claims and demands of all
Persons whomsoever.
(j) If at any time there exists a Collateral Deficiency, the Seller
shall cure same in accordance with Section 4(a) hereof.
(k) In the event that the Assets to be purchased would cause the
aggregate outstanding principal balance of Assets to consist of Mortgaged
Property from any state to exceed such concentration percentage as determined by
the Buyer in its sole good faith discretion then, upon request by the Buyer, the
Seller deliver an opinion of counsel acceptable to the Buyer in such state,
substantially in the form of items #12 and 13 of Exhibit VIII.
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(l) Within one (1) Business Day following a Change of Control of the
Seller, the Seller shall pay the Repurchase Price for all Transactions then
outstanding plus all other amounts due and owing to the Buyer hereunder.
(m) Within one (1) Business Day following a Default hereunder, the
Seller shall deliver to Buyer a duly executed Assignment and Conveyance.
13. EVENTS OF DEFAULT
(a) If any of the following events (each an "Event of Default")
occur, Seller and Buyer shall have the rights set forth in Section 14, as
applicable:
(i) Seller fails to pay the Repurchase Price in full when due
or Buyer fails to deliver the Purchased Assets against full payment
therefor;
(ii) Seller or Buyer fails to satisfy or perform any material
obligation or covenant under this Agreement (including any breach of the
obligations set forth in Section 4), or Seller or Buyer shall fail to
satisfy or perform any payment or purchase or repurchase obligation when
due hereunder;
(iii) an Act of Insolvency occurs with respect to Seller or
Buyer;
(iv) any Breach, occurs, other than a Breach of an Asset
Representation, or any Breach of an Asset Representation occurs, and such
Breach is not corrected within five (5) Business Days, or any certificate
furnished to the Buyer shall prove to have been false or misleading in any
material respect as of the time made or furnished;
(v) Seller or Buyer shall admit its inability to, or its
intention not to, perform any of its obligations hereunder;
(vi) any governmental, regulatory, or self-regulatory
authority takes any action to remove, limit, restrict, suspend or
terminate the rights, privileges, or operations of Seller or any of its
Material Subsidiaries, including suspension as an issuer, lender or
seller/servicer of related types of assets, which in each case materially
adversely affects the value of the Purchased Assets or Buyer's interest in
the Purchase Assets;
(vii) any Change of Control of the Seller or any Material
Subsidiary shall have occurred without the prior consent of the Buyer
which consent with respect to any Change of Control of a Material
Subsidiary shall not be unreasonably withheld;
(viii) Buyer, in its good faith judgment, believes that a
Material Adverse Effect has occurred;
(ix) The occurrence and continuance of a material "event of
default" or of an "event of termination" on the part of Seller under the
Purchase Facility or any other agreement between Seller (or an
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Affiliate thereof) on the one hand, and Buyer (or an Affiliate thereof) on
the other hand, which has not been waived by Buyer (or its Affiliate),
provided that such event of default or event of termination does not arise
solely as a result of a default under an agreement to which Seller (or its
Affiliate) is not a party;
(x) This Agreement shall for any reason cease to create a
valid, first priority security interest in any of the Purchased Assets
purported to be covered hereby.
(b) In making a determination as to whether an Event of Default has
occurred, Buyer shall be entitled to rely on reports published or broadcast by
media sources believed by Buyer to be generally reliable and on information
provided to it by any other sources believed by it to be generally reliable,
provided that Buyer reasonably and in good faith believes such information to be
accurate and has taken such steps as may be reasonable in the circumstances to
attempt to verify such information.
14. REMEDIES
(a) If an Event of Default occurs with respect to Seller, the
following rights and remedies are available to Buyer:
(i) 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),
the Repurchase Date for each Transaction hereunder shall be deemed
immediately to occur. Notwithstanding that the Repurchase Date shall be
deemed immediately to have occurred upon the exercise or deemed exercise
of such option by Buyer, for purposes of determining the Repurchase Price,
the Repurchase Date shall be the date specified in the Purchase Request
for such Transaction.
(ii) If Buyer exercises or is deemed to have exercised the
option referred to in subsection (a)(i) of this Section:
(A) Seller's obligations hereunder to repurchase all
Purchased Assets in such Transactions shall thereupon become immediately
due and payable;
(B) to the extent permitted by applicable law, the
Pricing Rate shall be the Post Default Rate; and
(C) all Income actually received by Buyer pursuant to
Section 5 shall be applied to the aggregate unpaid Repurchase Price owed
by Seller.
(iii) After two (2) Business Days' notice to Seller (which
notice need not be given if an Act of Insolvency shall have occurred, and
which may be the notice given under subsection (a)(i) of this Section),
Buyer may (A) immediately sell, without notice or demand of any kind, at a
public or private sale, on a servicing-released basis, and at such price
or prices as Buyer may reasonably deem satisfactory any or all Purchased
Assets subject to a Transaction hereunder or (B) in its sole discretion
elect, in lieu of selling all or a portion of such Purchased Assets, give
Seller credit for such
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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 incurred by Buyer
in connection with Seller's Default; second to consequential damages,
including, but not limited to, costs of cover and/or related hedging
transactions; third to the Repurchase Price; and fourth to any other
outstanding obligation of Seller to Buyer or its Affiliates.
(iv) Buyer or an Affiliate thereof may deliver the Purchased
Assets which are subject to a Takeout Commitment, or a purchase commitment
by a purchaser, to the Takeout Investor, or such other purchaser, as the
case may be, in exchange for securities or cash, which securities or cash
shall then be treated as Purchased Assets, and Seller hereby irrevocably
appoints Buyer to act as its attorney-in-fact and agent to take such
action upon the occurrence of an Event of Default as may be necessary to
obtain such securities or cash.
(v) The parties recognize that it may not be possible to
purchase or sell all of the Purchased Assets on a particular Business Day,
or in a transaction with the same purchaser, or in the same manner because
the market for such Purchased Assets may not be liquid. In view of the
nature of the Purchased Assets, the parties agree that liquidation of a
Transaction or the underlying Purchased Assets does not require a public
purchase or sale and that a good faith private purchase or sale shall be
deemed to have been made in a commercially reasonable manner. Accordingly,
Buyer may elect, in its sole discretion, the time and manner of
liquidating any Purchased Asset and nothing contained herein shall (A)
obligate Buyer to liquidate any Purchased Asset on the occurrence of an
Event of Default or to liquidate all Purchased Assets in the same manner
or on the same Business Day or (B) constitute a waiver of any right or
remedy of Buyer. However, in recognition of the parties' agreement that
the Transactions hereunder have been entered into in consideration of and
in reliance upon the fact that all Transactions hereunder constitute a
single business and contractual relationship and that each Transaction has
been entered into in consideration of the other Transactions, the parties
further agree that Buyer shall use its best efforts to liquidate all
Transactions hereunder upon the occurrence of an Event of Default as
quickly as is prudently possible in the sole good faith discretion of
Buyer.
(vi) Buyer shall, without regard to the adequacy of the
security for Seller's obligations under this Agreement, be entitled to the
appointment of a receiver by any court having jurisdiction, without
notice, to take possession of and protect, collect, manage, liquidate, and
sell the Collateral or any portion thereof, and collect the payments due
with respect to the Collateral or any portion thereof. Seller shall pay
all costs and expenses incurred by Buyer in connection with the
appointment and activities of such receiver, including, without
limitation, reasonable out-of-pocket legal fees.
(vii) Seller agrees that Buyer may obtain an injunction or an
order of specific performance to compel Seller, as the Interim Servicer,
to fulfill its obligations as
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set forth in Section 25, if Seller, as the Interim Servicer, fails or
refuses to perform its obligations as set forth therein.
(viii) Seller shall be liable to Buyer for (A) the amount of
all expenses, including reasonable legal or other expenses incurred by
Buyer in connection with or as a consequence of an Event of Default, and
(B) actual damages, including, without limitation, all reasonable legal
fees and expenses and other costs incurred in connection with hedging or
covering transactions.
(ix) Buyer shall have all the rights and remedies provided
herein, provided by applicable federal, state, foreign, and local laws
(including, without limitation, the rights and remedies of a secured party
under the Uniform Commercial Code of the State of New York, to the extent
that the Uniform Commercial Code is applicable, and the right to offset
any mutual debt and claim), in equity, and under any other agreement
between Buyer and Seller.
(x) 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)(i) and (iii) of this
Section, 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.
(xi) In addition to its rights hereunder, Buyer shall have the
right to proceed against any assets of Seller which may be in the
possession of Buyer, its Affiliates or their designee (including the
Custodian), including the right to liquidate such assets and to set off
the proceeds against monies owed by Seller to Buyer pursuant to this
Agreement. Buyer may set off cash, the proceeds of the liquidation of the
Purchased Assets, any Collateral or its proceeds, and all other sums or
obligations owed by Buyer or its Affiliates to Seller against all of
Seller's obligations to Buyer, whether under this Agreement, under a
Transaction, or under any other agreement between the parties, or
otherwise, whether or not such obligations are then due, without prejudice
to Buyer's right to recover any deficiency. Any cash, proceeds, or
property in excess of any amounts due, or which Buyer reasonably believes
may become due, to it from Seller shall be returned to Seller after
satisfaction of all obligations of Seller to Buyer.
(xii) 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
Seller might otherwise have arising from the use of nonjudicial process,
enforcement and sale of all or any portion of the Collateral, 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.
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(b) Upon the occurrence of one or more Events of Default, and in
addition to the remedies otherwise provided herein, Buyer shall have the right
to obtain physical possession of the Servicing Records 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. Seller shall be responsible for paying
any fees of any Subservicer resulting from the termination of a Subservicer due
to an Event of Default. Buyer shall be entitled to specific performance of all
agreements of Seller contained in this Agreement.
(c) If an Event of Default occurs with respect to Buyer, the
following rights and remedies are available to Seller:
(i) Upon tender by Seller of payment of the aggregate
Repurchase Price for all such Transactions, Buyer's right, title and
interest in all Purchased Assets subject to such Transactions shall be
deemed transferred to Seller, and Buyer shall deliver or cause to be
transferred all such Purchased Assets to Seller or its designee at Buyer's
expense.
(ii) If Seller exercises the option referred to in subsection
(b)(i) of this Section and Buyer fails to deliver or cause to be delivered
the Purchased Assets to Seller or its designee, after three (3) Business
Day's notice to Buyer, Seller may (A) purchase Assets or securities
("Replacement Assets") that are as similar as is reasonably practicable in
characteristics, outstanding principal amounts (as a pool) and Note
Interest Rate to any Purchased Assets that are not delivered by Buyer to
Seller or its designee as required hereunder or (B) in its sole discretion
elect, in lieu of purchasing Replacement Assets, to be deemed to have
purchased Replacement Assets at a price therefor on such date, equal to
the Market Value of the Purchased Assets.
(iii) Buyer shall be liable to Seller (A) with respect to
Purchased Assets (other than Additional Eligible Assets), for any excess
of the price paid (or deemed paid) by Seller for Replacement Assets
therefor over the Repurchase Price for such Purchased Assets, (B) with
respect to Additional Eligible Assets, for the price paid (or deemed paid)
by Seller for the Replacement Assets therefor, and (C) for actual damages,
including, without limitation, all costs incurred in connection with
hedging or covering transactions. In addition, Buyer shall be liable to
Seller for interest on such remaining liability with respect to each such
purchase (or deemed purchase) of Replacement Assets calculated on a
360-day year basis for the actual number of days during the period from
and including the date of such purchase (or deemed purchase) until paid in
full by Buyer. Such interest shall be at the greater of the Pricing Rate
or the Prime Rate.
15. DUE DILIGENCE
(a) Seller acknowledges that Buyer has the right to perform
continuing due diligence reviews with respect to the Assets for purposes of
verifying compliance with the representations, warranties and specifications
made hereunder, or otherwise (the "Due Diligence Review"), and Seller agrees
that upon prior notice to Seller, provided that, if a Default or Event
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of Default shall have occurred, then without notice, Buyer or its authorized
representatives will be permitted during normal business hours to examine,
inspect, and make copies and extracts of, the Asset Files, Servicing Records and
any and all documents, records, agreements, instruments or information relating
to such Assets in the possession or under the control of Seller, any other
Servicer or subservicer and/or the Custodian. Seller agrees that Buyer may, at
Buyer's sole expense and with prior notice to Seller, conduct additional Due
Diligence Reviews. Seller also shall make available to Buyer a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Asset Files and the Assets. Without limiting the generality of
the foregoing, Seller acknowledges that Buyer may enter into Transactions with
the Seller based solely upon the information provided by Seller to Buyer 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 Assets. Buyer may underwrite such Assets
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
Assets in the possession, or under the control, of Seller. Seller further agrees
that Seller shall reimburse Buyer for any and all out-of-pocket costs and
expenses reasonably incurred by Buyer in connection with Buyer's activities
pursuant to this Section 15.
16. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereunto 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
Transactions hereunder and (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.
17. NOTICES AND OTHER COMMUNICATIONS
Unless another address is specified in writing by the respective
party to whom any written notice or other communication is to be given
hereunder, all such notices or communications shall be in writing or confirmed
in writing and delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof. Any notices or other
communications permitted or required hereunder shall be in writing and shall be
deemed conclusively to have been given if (a) personally delivered, (b) mailed
by registered or certified mail, postage prepaid, and return receipt requested,
(c) sent by express
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courier delivery service and received by the party to whom it is sent, or (d)
transmitted by confirmed telex or facsimile transmission (or any other type of
electronic transmission agreed upon by the parties).
18. ENTIRE AGREEMENT; SEVERABILITY
This Agreement constitutes the entire understanding between Buyer
and Seller with respect to the subject matter it covers and shall supersede any
existing agreements (including any summary of terms and conditions) between the
parties containing general terms and conditions for repurchase transactions
involving 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.
19. EFFECTIVENESS; BINDING EFFECT; ASSIGNABILITY
This Agreement shall become effective when it shall have been
executed by the Buyer and Seller and thereafter shall be binding upon and inure
to the benefit of the Buyer and Seller and their respective successors and
permitted assigns. The Seller may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Buyer, which
consent may be granted or withheld in the Buyer's sole discretion. The Buyer may
assign all or any portion of its rights and obligations hereunder with the prior
consent of the Seller which shall not be unreasonably withheld or delayed. Any
request by Buyer for consent hereunder shall be deemed consented to by Seller if
not objected to by Seller in writing within two (2) Business Days' following
receipt thereof. If the Buyer so sells or assigns all or a portion of its rights
hereunder, any reference in this Agreement to the Buyer shall thereafter refer
to the Buyer and to the respective assignee to the extent of their respective
interests and the assignee shall have, to the extent of such assignment (unless
otherwise provided therein) the same rights and benefits as it would if it were
the Buyer. Each assignment pursuant to this Section shall be effected by the
Buyer (or its successor) and the assignee executing an assignment agreement
(appropriately completed) satisfactory to the Buyer. The Seller agrees to
execute such documents (including, without limitation, amendments to this
Agreement and the other Facility Documents) as shall be necessary to effect the
foregoing. Nothing in this Agreement, express or implied, shall give to any
Person, other than the parties to this Agreement and their successor hereunder,
any benefit or any legal or equitable right, power, remedy, or claim under this
Agreement.
20. TERMINABILITY
This Agreement shall be terminated on the Final Repurchase Date, and
any outstanding Transactions shall become due on such date. Notwithstanding any
such termination or the occurrence of an Event of Default, all of the
representations, warranties and covenants, and indemnities hereunder (including
those made in the Asset Representations) shall continue and survive.
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21. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
22. CONSENT TO JURISDICTION
The parties irrevocably agree to submit to the personal jurisdiction
of the United States District Court for the Southern District of New York, the
parties irrevocably waiving any objection thereto and waive all rights to a
trial by jury. If, for any reason, federal jurisdiction is not available, and
only if federal jurisdiction is not available, the parties irrevocably agree to
submit to the personal jurisdiction of the Supreme Court of the State of New
York, the parties irrevocably waiving any objection thereto and waive all rights
to a trial by jury.
23. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party
shall constitute a waiver of any other Event of Default and no exercise of any
remedy hereunder by any party shall constitute a waiver of its right to exercise
any other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto. Any such waiver or modification shall be effective only in the
specific instance and for the specific purpose for which it was given.
24. INTENTIONALLY OMITTED
25. SERVICING
(a) The Interim Servicer, at the Buyer's option and request, as
independent contract interim servicer, shall interim service and administer the
Purchased Assets during the Interim Servicing Period in accordance with the
Accepted Servicing Practices. Upon the termination of the Interim Servicing
Period, the Interim Servicer shall cooperate fully with the Buyer and any
servicer to whom servicing or master servicing of any Purchased Asset is to be
transferred and shall promptly provide Buyer or such successor servicer, as
applicable, all documents and records reasonably requested by it to enable it to
assume the Interim Servicer's functions as servicer hereunder and shall within
one (1) Business Day of receipt transfer to the Buyer or such successor
servicer, as applicable, all amounts which should have been deposited in the
Buyer's Account by the Interim Servicer or which are thereafter received with
respect to the Purchased Assets, it being agreed that the Seller will pay all
fees and expenses incurred in connection with such transfer. A servicing
transfer shall be complete when the Buyer or its designated servicer confirms to
the Interim Servicer that it has received all necessary data and documents to
perform its primary servicing or master servicing function, as applicable, and
all required notices have been mailed by the Interim Servicer. Notwithstanding
the purchase of Purchased Assets by Buyer, during the Interim Servicing Period
the Interim Servicer shall continue to service the Purchased Assets for the
benefit of Buyer, and, if Buyer shall exercise its
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rights to pledge or hypothecate the Purchased Assets prior to the related
Repurchase Date pursuant to Section 8, for the benefit of Buyer's assigns. The
Interim Servicer may retain legal title to the Purchased Assets solely for the
purpose of servicing or supervising the servicing of such Purchased Assets
during the Interim Servicing Period. Any beneficial or equitable interest in
Purchased Assets shall remain in Buyer. The Buyer will pay the Interim Servicer
a monthly interim servicing fee to service the Purchased Assets to be calculated
in accordance with the terms and provisions of the Purchase Facility. To the
extent the Interim Servicer (or an Affiliate thereof) is authorized to
sub-service the Purchased Assets on behalf of the Servicer after the termination
of the Interim Servicing Period, the Buyer will pay such Subservicer a monthly
sub-servicing fee to be calculated in accordance with the terms and provisions
of the Purchase Facility. All servicing fees and compensation with respect to
the servicing of the Assets shall be customary, reasonable and consistent with
industry practice.
(b) The Seller agrees that the Seller assigns to the Buyer, and the
Buyer is the owner of the entire right, title and interest of the Seller, if
any, in and to all servicing rights and Servicing Records relating to the
Purchased Assets, 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 Purchased Assets (the "Servicing
Records"). Seller grants Buyer a security interest in all servicing fees and
rights relating to the Purchased Assets and all Servicing Records to secure the
obligation of Seller or its designee to service in conformity with this Section
and any other obligation of Seller to Buyer. Seller covenants to safeguard such
Servicing Records and to deliver them promptly to Buyer or its designee
(including the Custodian) at Buyer's request.
(c) If the Purchased Assets are serviced by a third party
Subservicer (including an Affiliate of Interim Servicer), Interim Servicer (i)
shall provide a copy of the servicing agreement to Buyer (the "Servicing
Agreement"); (ii) hereby irrevocably assigns to Buyer and Buyer's successors and
assigns all right, title, interest and the benefits of the Servicing Agreements
with respect to the Purchased Assets; and (iii) shall provide to Buyer a letter
from the Subservicer in the form attached hereto as Exhibit II (the
"Subservicing Notification Letter") to the effect that upon the earlier to occur
of (i) the termination of the Interim Servicing Period or (ii) the occurrence of
an Event of Default, Buyer may terminate the Servicing Agreement and transfer
such servicing to its designee, at no cost or expense to Buyer, it being agreed
that Seller will pay any and all fees required to terminate the Servicing
Agreement and will cooperate to effectuate the transfer of servicing to Buyer or
its designee including paying the costs of shipping the Servicing Records to
Buyer or its designee. If an Affiliate of Interim Servicer is servicing the
Purchased Assets, such Affiliate, Interim Servicer and Buyer shall enter a
Seller/Affiliate Agreement in the form of Exhibit VI hereto.
(d) Interim Servicer shall not employ sub-servicers other than the
Subservicer to service the Purchased Assets during the Interim Servicing Period
or thereafter without the prior written approval of Buyer. Seller shall cause
any sub-servicers engaged by Interim Servicer to execute a letter agreement with
Buyer acknowledging Buyer's ownership of the Purchased Assets and agreeing that,
upon notice from Buyer (or the Custodian on its behalf) that the Interim
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Servicing Period has terminated or an Event of Default has occurred and is
continuing hereunder, it shall deposit all Income with respect to the Purchased
Assets in the account specified in Section 5.
(e) Upon the earlier to occur of (i) the termination of the Interim
Servicing Period or (ii) the occurrence and continuance of an Event of Default
or (iii) the failure of the Interim Servicer or any sub-servicer to meet
Accepted Servicing Practices, Buyer may, in its sole discretion, (i) sell its
right to the Purchased Assets on a servicing-released basis or (ii) terminate
the Interim Servicer or any Subservicer or sub-servicer as servicer of the
Purchased Assets with or without cause, in each case without payment of any
termination fee, in which case Interim Servicer will promptly, within one (1)
Business Day, transfer servicing, or cause servicing to be transferred, to the
servicer designated by Buyer.
(f) The Interim Servicer shall use one or more of the following
types of accounts, in each case maintained at an institution that is independent
of and unaffiliated with Seller, into which all sums collected in respect of
Assets shall be deposited and maintained (the "Buyer's Account"): (i) a trust
account or accounts maintained for the benefit of Buyer with the trust
department of a federally chartered depository institution or trust company
acting in its fiduciary capacity or (ii) a trust account or accounts maintained
for the benefit of Buyer with the trust department of a state chartered
depository institution or trust company acting in its fiduciary capacity and
subject to regulations regarding fiduciary funds on deposit therein
substantially similar to 12 CFR ss. 9.10(b), or (iii) an account or accounts (a)
maintained with a depository institution the debt obligations of which are rated
by Standard & Poor's Ratings Group in one of its two highest rating categories
at the time of any deposit therein or (b) the deposits of which are insured by
the FDIC, to the limits established by the FDIC, and the uninsured deposits in
which are otherwise secured such that, as evidenced by an opinion of counsel,
Buyer has a claim with respect to the funds in such account or a perfected first
security interest against any collateral securing such funds that is superior to
claims of any other depositor or creditors of the depository institution with
which such account is maintained.
(g) Interim Servicer shall provide to Buyer on the 15th calendar day
of each month, (i) a remittance report with respect to all Purchased Assets
subject to any Transaction hereunder containing all of the information necessary
for Buyer to determine the Market Value of such Purchased Assets, and (ii) all
other reports specified in the Interim Servicing Addendum attached hereto as
Exhibit XI.
(h) Each of the terms and provisions contained in Exhibit 9 to the
Purchase Facility (together with all related definitions and ancillary
provisions) are hereby incorporated by reference as if set forth herein in their
entirety; provided, that (i) references to "Purchaser" shall mean and be a
reference to the Buyer as defined herein, (ii) references to "this Agreement",
"herein", "hereunder", and words of similar import shall mean and be a reference
to this Agreement, (iii) references to "Mortgage Loans" shall mean and be a
reference to Purchased Assets as defined herein, and (iv) references to Sections
in such incorporated Sections shall be references to Sections of the Purchase
Facility, provided that to the extent such referenced
- 54 -
Sections are themselves incorporated in this Agreement by reference, references
herein to such Sections shall be such Sections as they are incorporated.
26. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
The parties acknowledge that they have been advised that in the case
of Transactions in which one of the parties is an "insured depository
institution" as that term is defined in Section 1831 (a) of Title 12 of the
United States Code, as amended, funds held by the financial institution pursuant
to a Transaction hereunder are not a deposit and therefore are not insured by
the Federal Deposit Insurance Corporation, the Savings Association Insurance
Fund or the Bank Insurance Fund, as applicable.
27. NETTING
If Buyer and Seller are "financial institutions" as now or
hereinafter defined in Section 4402 of Title 12 of the United States Code
("Section 4402") and any rules or regulations promulgated thereunder:
(a) All amounts to be paid or advanced by one party to or on behalf
of the other under this Agreement or any Transaction hereunder shall be deemed
to be "payment obligations" and all amounts to be received by or on behalf of
one party from the other under this Agreement or any Transaction hereunder shall
be deemed to be "payment entitlements" within the meaning of Section 4402, and
this Agreement shall be deemed to be a "netting contract" as defined in Section
4402.
(b) The payment obligations and the payment entitlements of the
parties hereto pursuant to this Agreement and any Transaction hereunder shall be
netted as follows. In the event that either party (the "Defaulting Party") shall
fail to honor any payment obligation under this Agreement or any Transaction
hereunder, the other party (the "Nondefaulting Party") shall be entitled to
reduce the amount of any payment to be made by the Nondefaulting Party to the
Defaulting Party by the amount of the payment obligation that the Defaulting
Party failed to honor.
28. CONFIDENTIALITY
This Agreement and its terms and contents are proprietary to Buyer
and to Seller and shall be held by Buyer and Seller in strict confidence and
shall not be disclosed to any third party without the consent of the other
except for (i) disclosure to such party's attorneys or accountants, provided
that such attorneys and accountants likewise agree to be bound by this covenant
of confidentiality or (ii) disclosure required by law, rule, regulation or order
of a court or other regulatory body.
29. COSTS, EXPENSES, TAXES AND INDEMNIFICATION
(a) The Seller agrees to pay on demand (i) all reasonable
out-of-pocket costs and expenses of the Buyer in connection with the
preparation, execution and delivery of this
- 55 -
Agreement, and the administration, modification and amendment of this Agreement
(including, without limitation, (A) all due diligence costs pursuant to Section
15 hereof, collateral review, syndication, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of counsel
for the Buyer with respect thereto with respect to advising the Buyer as to its
rights and responsibilities, or the perfection, protection or preservation of
rights or interests, under this Agreement, with respect to negotiations with the
Seller or with other creditors of the Seller arising out of any Default or any
events or circumstances that may give rise to a Default and with respect to
presenting claims in or otherwise participating in or monitoring any bankruptcy,
insolvency or other similar proceeding involving creditors' rights generally and
any proceeding ancillary thereto with respect to the Seller) and (ii) all costs
and expenses of the Buyer in connection with the enforcement of this Agreement,
whether in any action, suit or litigation, any bankruptcy, insolvency or other
similar proceeding affecting creditors' rights generally (including, without
limitation, the reasonable fees and expenses of counsel for the Buyer with
respect thereto).
(b) Seller shall indemnify Buyer and hold it harmless against any
Losses incurred by Buyer as a result of any failure by Seller to timely deliver
the Assets subject to such Transaction, which Losses shall be limited to costs
reasonably incurred by Buyer by reason of the liquidation or re-employment of
funds acquired by Buyer to fund such Transaction. In addition, Buyer shall
undertake to take all commercially reasonable steps to mitigate Seller's
indemnity hereunder.
(c) Without limiting any other rights which Buyer or Seller have
hereunder or under applicable law, and in addition to any other indemnity
provided hereunder, (a) Seller hereby agrees to hold Buyer harmless from and
indemnify Buyer and its respective officers, directors, agents and employees
(each, an "Indemnified Party") any and all claims, damages, losses, liabilities
and expenses from and against any and all Losses incurred by or asserted or
awarded against any Indemnified Party directly arising out of, related to, or as
a result of this Agreement or any Transaction involving Assets, including any
investigation, proceeding or preparation of any defense in connection therewith,
whether or not such investigation, litigation or proceeding is brought by the
Seller, its members, or creditors or an Indemnified Party or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated, and Seller will reimburse each Indemnified
Party as the same is incurred upon receipt by the Seller of documentation
evidencing the same, excluding, however, Losses to the extent arising from the
gross negligence or willful misconduct on the part of Buyer. Without limiting
the generality of the foregoing, Seller agrees to pay on demand, and shall
indemnify Buyer for Losses relating to or resulting from:
(i) any representation or warranty made by Seller (or any
Responsible Officer or authorized agent of Seller) under or in connection
with this Agreement, any periodic report required to be furnished
hereunder or any other information or document delivered by Seller
pursuant hereto, which shall have been false or incorrect in any material
respect when made or deemed made, or any other Breach hereunder;
- 56 -
(ii) the failure by Seller to comply with any applicable law,
rule or regulation with respect to any Transaction;
(iii) violations of any environmental law, rule or regulation
or any consumer credit laws, including without limitation ERISA, the Truth
in Lending Act and/or the Real Estate Settlement Procedures Act; or
(iv) the failure by Seller (if so requested by Buyer) to
execute and properly file, or any delay in executing and properly filing,
financing statements or other similar instruments or documents under the
Uniform Commercial Code of any applicable jurisdiction or other applicable
laws with respect to the Purchased Assets.
(v) the actual or alleged presence of Hazardous Materials on
any Mortgaged Property or any Environmental Action relating in any way to
any Mortgaged Property, except to the extent such claim, damage, loss,
liability or expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified
Party's gross negligence or willful misconduct.
(d) In any suit, proceeding or action brought by Buyer in connection
with any Purchased Asset for any sum owing thereunder, or to enforce any
provisions of any Purchased Asset, Seller will save, indemnify and hold Buyer
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 hereby acknowledges that, the obligation
of Seller hereunder is a recourse obligation of Seller.
(e) All payments made by the Seller under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, or other assessments, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, including without limitation, excise, property, sale and franchise
taxes (including in each such case, any interest, penalties or additions
attributable to or imposes on or with respect to any such assessment) (all such
assessments, "Non-Excluded Taxes"), but excluding net income taxes and franchise
taxes imposed in lieu of net income taxes imposed on the Buyer as a result of a
present or former connection between the Buyer and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Buyer having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement). If any such Non-Excluded Taxes are
required to be withheld from any amounts payable to the Buyer hereunder, the
amounts so payable to the Buyer shall be increased to the extent necessary to
yield to the Buyer, based on Buyer's effective tax rate in effect from time to
time, (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement; provided, however, that the Seller shall not
- 57 -
be required to increase any such amounts payable to the Buyer that is not
organized under the laws of the United States of America or a state thereof if
the Buyer fails to comply with the requirements of clause (f)(i) of this
Section. Whenever any Non-Excluded Taxes are payable by the Seller, as promptly
as possible thereafter the Seller shall send to the Buyer, as the case may be, a
certified copy of an original official receipt received by the Seller showing
payment thereof. If the Seller fails to pay any Non-Excluded Taxes when due to
the appropriate taxing authority or fails to remit to the Buyer the required
receipts or other required documentary evidence, the Seller shall indemnify the
Buyer for any incremental taxes, interest or penalties that may become payable
by the Buyer as a result of any such failure. The agreements in this Section
shall survive the termination of this Agreement and the payment of all amounts
payable hereunder.
(g) Without prejudice to the survival of any other agreement of the
Seller hereunder, the agreements and obligations of the Seller contained in this
Section shall survive the payment in full of the Repurchase Price and all other
amounts payable hereunder and delivery of the Purchased Assets by the Buyer
against full payment therefor.
30. 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 under this
Agreement, the Existing Repo Facility, the Purchase Facility, the Engagement
Letter or the Master Facilities Agreement (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, 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.
31. MISCELLANEOUS
(a) Time is of the essence under this Agreement and all Transactions
and all references to a time shall mean New York time in effect on the date of
the action unless otherwise expressly stated in this Agreement.
(b) Buyer shall be authorized to accept orders and take any other
action affecting any accounts of Seller in response to instructions given in
writing or orally by telephone or otherwise by any person with apparent
authority to act on behalf of Seller, and Seller shall indemnify Buyer, defend,
and hold Buyer harmless from and against any and all Losses arising out of or in
connection with any action taken by Buyer in response to such instructions
received or reasonably believed to have been received from Seller.
- 58 -
(c) If there is any conflict between the terms of this Agreement or
any Transaction entered into hereunder and the Custodial Agreement or any other
Facility Document, this Agreement shall prevail.
- 59 -
(d) This Agreement may be executed in counterparts, each of which so
executed shall be deemed to be an original, but all of such counterparts shall
together constitute but one and the same instrument.
(f) The headings in this Agreement are for convenience of reference
only and shall not affect the interpretation or construction of this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
- 60 -
IN WITNESS WHEREOF, the parties have entered into this Agreement as
of the date set forth above.
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.,
Buyer
By:
---------------------------------
Name:
Title:
ADDRESS FOR NOTICES:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (203) ____________
CONTIFINANCIAL CORPORATION,
Seller
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title:
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title:
ADDRESS FOR NOTICES:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
- 61 -
With a copy to:
Attention: ▇▇▇▇ ▇▇▇▇▇▇, General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CONTIMORTGAGE CORPORATION,
Interim Servicer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
ADDRESS FOR NOTICES:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
- 62 -
SCHEDULES
---------
SCHEDULE 1 SELLER'S MATERIAL SUBSIDIARIES
SCHEDULE 2 FILING JURISDICTIONS
SCHEDULE 3 INDEBTEDNESS DOCUMENTS
SCHEDULE 4 FALLOUT ASSETS
EXHIBITS
--------
EXHIBIT I Form of Purchase Request including the Eligible Asset Schedule
EXHIBIT II Interim Servicing Notification Letter
EXHIBIT III Form of Power of Attorney
EXHIBIT IV Letter of Instruction to Master Servicer and Servicers
EXHIBIT V Representations and Warranties Regarding Mortgage Loans
EXHIBIT V(A) Representations and Warranties Regarding Empire Mortgage Loans
EXHIBIT VI Seller/Affiliate Agreement
EXHIBIT VII Assignment and Conveyance Agreement
EXHIBIT VIII Opinion of Seller's Counsel
EXHIBIT IX Underwriting Guidelines
EXHIBIT IX(A) Modifications to Underwriting Guidelines
EXHIBIT X Asset Tape Fields
EXHIBIT ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
- ▇▇ -
▇▇▇▇▇▇▇▇ 1
----------
Seller's Material Subsidiaries
------------------------------
ContiMortgage Corporation
ContiWest Corporation
ContiTrade Services L.L.C.
California Lending Group, Inc.
[SPC that owns Excess Spread Receivable to be Pledged to Greenwich]
[Affiliates of ▇▇▇▇▇ that are counterparties to swaps with Greenwich]
- 64 -
Schedule 2
----------
Filing Jurisdictions
--------------------
Secretary of State of the State of New York
Secretary of County of New York County
Secretary of State of the State of Pennsylvania
Secretary of County of ▇▇▇▇▇▇▇▇▇▇ County
- 65 -
Schedule 3
----------
Indebtedness Documents
----------------------
Indenture, dated as of August 15, 1996, relating to the ContiFinancial
Corporation 8 3/8% Senior Notes Due 2003, as amended, supplemented or otherwise
modified from time to time
Credit Agreement, dated as of January 7, 1997, among ContiFinancial Corporation
and Credit Suisse First Boston, as amended, supplemented or otherwise modified
from time to time
Indenture, dated as of March 1, 1997, relating to the ContiFinancial Corporation
7-1/2% Senior Notes Due 2002, as amended, supplemented or otherwise modified
from time to time
Amended and Restated Letter of Credit and Reimbursement Agreement, dated as of
September 9, 1997, among ContiFinancial Corporation, Credit Suisse First Boston,
New York Branch and Dresdner Bank AG, New York Branch, as amended, supplemented
or otherwise modified from time to time
Indenture, dated March 4, 1998, relating to certain securities issuable by
ContiFinancial Corporation, as amended, supplemented or otherwise modified from
time to time
- 66 -
Schedule 4
Fallout Assets
Collateral Amount
Mortgage Loan Category Time Period Percentage
---------------------- ----------- ----------
Delinquent Loan 30 - 59 days 90%
60 - 89 days 80%
90 - 119 days 50%
120+ days 0%
Sublimit Exception Loan 1st 60 days 90%
Next 30 days 85%
Thereafter 0%
Exception Loan in excess 1st 60 days 80%
of Exception Limit Next 30 days 75%
Thereafter 0%
Repurchased Loan 1st 60 days following repurchase 70%
Next 30 days 60%
Thereafter 0%
Category 4 Loan 1st 60 days 70%
Next 30 days 60%
Thereafter 0%
As used herein, the following terms shall have the following meanings:
"Category 4 Loan" means a Mortgage Loan that would qualify as an Exception Loan
except that it has an implied purchase price of less than 80% of the unpaid
principal balance thereof.
"Delinquent Loan" means a Mortgage Loan which is more than 29 days Delinquent.
"Sublimit Exception Loan" means a Mortgage Loan the Collateral Amount Percentage
of which would be zero as a result of one or more of the sublimits set forth in
the definition of the term "Collateral Amount Percentage", except that a
Mortgage Loan the Collateral Amount Percentage of which would be zero as a
result of paragraph (9) of the definition of the term "Collateral Amount
Percentage" shall not qualify as a Sublimit Exception Loan.
"Exception Limit" shall have the meaning for such term that is set forth in the
Purchase Facility.
"Exception Loan" shall have the meaning for such term that is set forth in the
Purchase Facility.
- 67 -
"Repurchased Loan" means a Mortgage Loan (a) which has been repurchased by the
Seller (i) from the Buyer under the terms of the Purchase Facility or (ii) from
a securitization trust in accordance with Seller's obligation to repurchase
certain securitized mortgage loans, and (b) which has a Market Value greater
than 50% of the Par Amount of such Mortgage Loan.
- 68 -
EXHIBIT I
Form of Purchase Request
[Date]
Greenwich Capital Financial Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Pursuant to Section 3(a) of the Master Repurchase Agreement
Governing Purchases and Sale of Assets dated as of August 9, 1999 (the
"Agreement") between you ("Buyer") and us ("Seller"), Seller hereby irrevocably
requests that Buyer enter into a repurchase transaction involving the following
Eligible Assets, to be governed by the Agreement:
Buyer: Greenwich Capital Financial Products, Inc.
Seller: ContiFinancial Corporation
Type of [Eligible] [Fallout] Assets:
Specific Assets to be Sold: Attached on Asset Schedule
Requested Purchase Date:
Par Amount (UPB):
Requested by
CONTIFINANCIAL CORPORATION
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
Exh I.1
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By:
--------------------------------
Name:
Title:
Exh I.2
EXHIBIT I
Asset Schedule
--------------
[Note: If any Asset to be sold to the Buyer constitutes a Fallout Asset, the
Seller shall list on this Schedule the reasons why such Asset does not qualify
as an Eligible Asset]
(1) the Seller's Mortgage Loan identifying number;
(2) the Mortgagor's first andlast name;
(3) the street address of the Mortgaged Property including the state and zip
code;
(4) a code indicating whether the Mortgaged Property is owner-occupied;
(5) the type of residential dwelling constituting the Mortgaged Property;
(6) the original months to maturity;
(7) the original date of the Mortgage Loan and the remaining months to
maturity from the Purchase Date, based on the original amortization
schedule;
(8) the Loan-to-Value Ratio at origination;
(9) the Mortgage Interest Rate in effect immediately following the Purchase
Date;
(10) the date on which the first Monthly Payment was due on the Mortgage Loan;
(11) the stated maturity date;
(12) the amount of the Monthly Payment at origination;
(13) with respect to each adjustable rate Mortgage Loan, the amount of the
Monthly Payment as of the Purchase Date;
(14) the last due date on which a Monthly Payment was actually applied to the
unpaid stated principal balance;
(15) the original principal amount of the Mortgage Loan;
(16) the stated principal balance of the Mortgage Loan as of the close of
business on the Purchase Date;
(17) with respect to each adjustable rate Mortgage Loan, the first adjustment
date;
(18) with respect to each adjustable rate Mortgage Loan, the gross margin;
(19) a code indicating the purpose of the loan (i.e., purchase financing,
refinancing);
(20) with respect to each adjustable rate Mortgage Loan, the maximum mortgage
interest rate under the terms of the Mortgage Note;
(21) with respect to each adjustable rate Mortgage Loan, the minimum mortgage
interest rate under the terms of the Mortgage Note;
(22) the mortgage interest rate at origination;
(23) with respect to each adjustable rate Mortgage Loan, the periodic rate cap;
(24) with respect to each adjustable rate Mortgage Loan, the first adjustment
date immediately following the Purchase Date;
(25) with respect to each adjustable rate Mortgage Loan, the index;
(26) the date on which the first Monthly Payment was due on the Mortgage Loan
and, if such date is not consistent with the due date currently in effect,
such due date;
(27) a code indicating whether the Mortgage Loan is an adjustable rate Mortgage
Loan or a fixed rate Mortgage Loan;
(28) a code indicating the documentation style (i.e., full, alternative or
reduced);
Exh I.3
(29) a code indicating if the Mortgage Loan is subject to the provisions of
HOEPA;
(30) the Appraised Value of the Mortgaged Property;
(31) the sale price of the Mortgaged Property, if applicable;
(32) a code indicating whether the Mortgage is a First Lien or Second Lien;
(33) the Mortgagor's FICO score (to the extent a FICO score is available);
(34) a code indicating whether the Mortgage Loan is a retention mortgage loan;
(35) a code indicating if interest on such Mortgage Loan is calculated on a
30/360 basis;
(36) the Mortgagor's social security number;
(37) a code identifying origination source;
(38) a code indicating if the Mortgage Loan is a balloon Mortgage Loan;
(39) a code indicating the Mortgage Note class (borrower grade);
(40) with respect to each adjustable rate Mortgage Loan, the adjustment
frequency;
(41) the ratio of original principal balance of the Mortgage Loan to the
Mortgagor's income;
(42) a code indicating the prepayment penalty, if any; and
(43) with respect to any Second Lien Mortgage Loan, the outstanding principal
balance of the First Lien on the date of origination of such Second Lien
Mortgage Loan.
With respect to the Asset Schedules in the aggregate, the Asset Schedule shall
set forth the following information, as of the related Purchase Date: (1) the
number of Mortgage Loans; (2) the stated principal balance (or Par Amount) of
the Mortgage Loans; (3) the weighted average mortgage interest rate of the
Mortgage Loans; and (4) the weighted average maturity of the Mortgage Loans.
Exh I.4
EXHIBIT II
INTERIM SERVICING NOTIFICATION LETTER
INTERIM SERVICING NOTIFICATION
CONTIFINANCIAL CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
August 9, 1999
To the Parties Receiving this Notification
Ladies and Gentlemen:
Reference is made to (i) the Master Repurchase Agreement
Governing Purchases and Sales of Assets ("Master Repurchase Agreement") dated as
of August 9, 1999, between Greenwich Capital Financial Products, Inc. ("Buyer")
and ContiFinancial Corporation ("Seller"). This letter of notification
("Notification") confirms the Seller's acknowledgment of Buyer's rights and
interest as to the matters set forth below. Capitalized terms used herein but
not defined shall have the meaning ascribed to such terms in the Master
Repurchase Agreement.
1. The Seller hereby acknowledges and agrees that the Buyer is the owner of
the Mortgage Loans set forth on Exhibit A attached hereto (the "Mortgage
Loans") and that in the event that such interest is recharacterized as a
loan, the Buyer has a perfected first lien priority interest in the
Mortgage Loans.
2. Upon receipt by you of this Notification, signed by Seller (which may be
in the form of a photocopy) certified by Buyer that the Interim Servicing
Period has terminated or an Event of Default has occurred, (a) you shall
make all remittances with respect to the Mortgage Loans in accordance with
the instructions of the Buyer and (b) in no event shall you remit any
funds in connection with the Mortgage Loans to the Seller.
3. You shall continue to service the Mortgage Loans serviced by you for the
benefit of the Buyer and its successors and assigns (as owner) in
accordance with the terms of the related servicing agreement.
4. This Notification may not be withdrawn, revoked, nullified or modified
without the written consent of the Buyer.
Exh II.1
5. This Notification may be assigned in whole or in part by Buyer; and shall
inure to the benefit of the Buyer and their respective successors and
assigns.
Very truly yours,
CONTIFINANCIAL CORPORATION
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
THE UNDERSIGNED HEREBY CERTIFIES THAT (i) THE INTERIM SERVICING
PERIOD HAS TERMINATED OR (ii) AN EVENT OF DEFAULT HAS OCCURRED AND HEREBY
INSTRUCTS YOU TO FOLLOW THE INSTRUCTIONS SET FORTH HEREIN IN ADDITION TO ANY
OTHER INSTRUCTIONS OF THE UNDERSIGNED HEREAFTER:
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By:
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Name:
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Title:
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Please acknowledge receipt and acceptance of the terms of this
Notification by signing below and returning a copy to Greenwich Capital
Financial Products, Inc.
By:
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Name:
-------------------------------
Title:
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Exh II.2
EXHIBIT III
Exh III.2
Form of Power of Attorney
Notice: The powers granted by this document are broad and sweeping. They are
defined in New York General Obligations Law, Article 5, Title 15, sections
5-1502A through 51503, which expressly permits the use of any other different
form of power of attorney desired by the parties concerned.
Know All Men by These Presents, which are intended to constitute a GENERAL POWER
OF ATTORNEY pursuant to Article 5, Title 15 of the New York General Obligations
Law: That ContiFinancial Corporation ("Seller"), does hereby appoint Greenwich
Capital Financial Products, Inc. ("Buyer"), its attorney-in-fact to act in
Seller's name, place and stead in any way which Seller could do with respect to
(i) completing endorsements and recording instruments relating to the Assets
purchased by Buyer pursuant to a Master Repurchase Agreement Governing Purchases
and Sales of Assets dated as of August 9, 1999 between Seller and Buyer (the
"Repurchase Agreement") and to take such other steps as may be necessary or
desirable to enforce Buyer's rights under the Repurchase Agreement, and against
such Assets, the related Asset Files and the Servicing Records, to the extent
that Seller is permitted by law to act through an agent.
TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY THIRD
PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY ACT
HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS TO
SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OF SUCH REVOCATION
OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND SELLER ON ITS
OWN BEHALF AND ON BEHALF OF SELLER'S LEGAL REPRESENTATIVES AND ASSIGNS, HEREBY
AGREES TO INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY
AND ALL CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD
PARTY HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.
Exh III.1
IN WITNESS WHEREOF, Seller has caused this Power of Attorney to be
executed and Seller's seal to be affixed this _____ day of __________, 1999.
CONTIFINANCIAL CORPORATION
By:
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Name:
Title:
By:
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Name:
Title:
Exh III.2
EXHIBIT IV
Letter of Instructions to Master Servicer and Subservicers
[Servicer]
Ladies/Gentlemen:
On August 9, 1999, ContiFinancial Corporation ("Seller") sold to
Greenwich Capital Financial Products, Inc. ("Buyer") all of Seller's right,
title and interest in and to the assets identified on Appendix A attached to
this letter and made a part hereof (the "Assets"). Accordingly, Seller hereby
unconditionally and irrevocably instructs you to pay to Buyer, pursuant to the
terms of our existing servicing arrangements, any and all monies received by you
on or after __________, 199__ which would have been payable from time to time by
you to Seller on account of or otherwise in connection with the Assets,
including, without limitation, any and all principal, interest, partial
prepayments, prepayments in full, penalties, advance payments, or expenses;
provided, however, that any such monies representing scheduled payments of
principal of or interest on such Assets due prior to __________, 199__ shall be
paid to Seller.
All such monies should be paid by you to the order of Buyer in the
manner and on the date such monies would have been payable to Seller, as
follows:
ABA #__________ for the account of Greenwich Capital Financial
Products, Inc.
Acct. #__________
Attn.: __________
Seller further instructs you that all rights and powers of Seller
under the existing servicing arrangements with respect to the Assets have been
transferred to Buyer and that Buyer has the sole right as the owner of the
Assets to direct your actions under such servicing arrangements with respect to
the Assets and to exercise such rights and powers.
Very truly yours,
CONTIFINANCIAL CORPORATION
By:
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Name:
Title:
By:
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Name:
Title:
Exh IV.1
EXHIBIT V
Representations and Warranties
Regarding Mortgage Loans
Reference is hereby made to the Purchase Facility for a statement of the terms
thereof. All terms used in this Exhibit V which are defined in the Purchase
Facility and which are not otherwise defined in this Agreement shall have the
same meanings herein as set forth therein.
Seller shall be deemed to make the following representations and warranties (and
such additional representations and warranties set forth in the Confirmation
with respect thereto) to the Buyer with respect to each Purchased Asset which is
a residential Mortgage Loan sold in a Transaction hereunder, as of the related
Purchase Date and as of each day such Transaction is in effect and except as
shall be specifically disclosed in the schedule attached to the Purchase
Request. With respect to any representations and warranties made to the best of
Seller's knowledge, to Seller's knowledge or in reliance on or based on
information, in the event that it is discovered that the circumstances with
respect to the related Mortgage Loan are not accurately reflected in such
representation and warranty notwithstanding the actual knowledge or lack of
knowledge of Seller, then, notwithstanding that such representation and warranty
is made to the best of Seller's knowledge, to Seller's knowledge or in reliance
on or based on information, the Market Value of such Mortgage Loans may, in the
Buyer's sole good faith discretion, be reduced to zero. It is understood and
agreed that the representations and warranties set forth in the Asset
Representations and the Confirmation, if any, shall survive delivery of the
Assets to Buyer or its designee (including the Custodian).
1. Mortgage Loans as Described. The information set forth in the Asset
Schedule with respect to the Mortgage Loan is complete, true, complete and
correct in all material respects.
2. Payments Current. On the applicable Purchase Date, and all other times,
all payments required to be made for the Mortgage Loan under the terms of
the Mortgage Note have been made and credited, provided that such Mortgage
Loan may be Delinquent for no more than 29 days.
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 is delinquent and which has
been assessed but is not yet due and payable. Neither the Seller nor the
Qualified Originator from which the Seller acquired the Mortgage Loan has
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, except for interest accruing from the date of the
Mortgage Note or date of disbursement of the proceeds of the Mortgage
Loan, whichever is earlier, to the day which precedes by one (1) month the
due date of the first installment of principal and interest thereunder.
4. Original Terms Unmodified. The terms of the Mortgage Note and Mortgage
have not been impaired, waived, altered or modified in any respect, from
the date of origination; except by a written instrument which has been
recorded, if necessary to protect the interests of the Buyer, and which
has been delivered to the Buyer or its designee and the terms of which are
reflected in the Asset Schedule. The substance of any such waiver,
alteration or modification has been approved by the title insurer, to the
extent required, and its terms are reflected on the Asset Schedule. No
Mortgagor in respect of the Mortgage Loan 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 such policy, and which assumption
agreement is part of the Asset File delivered to the Buyer or its designee
and the terms of which are reflected in the Asset Schedule.
5. No Defenses. The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, 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 and no such right of rescission, set-off, counterclaim
or defense has been asserted with respect thereto, and no Mortgagor in
respect of the Mortgage Loan was a debtor in any state or Federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated. The Seller has no knowledge nor has it received any notice
that any Mortgagor in respect of the Mortgage Loan is a debtor in any
state or Federal bankruptcy or insolvency proceeding.
6. Hazard Insurance. A hazard insurance policy covering the Mortgaged
Property in an amount not less than the amount of the Mortgage Loan, plus
any senior liens, is in full force.
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 have
been complied with by the Qualified Originator and the Seller and the
consummation by the Seller of the transactions contemplated hereby will
not involve the violation of any such laws or regulations.
8. No Satisfaction of Mortgage. The Mortgage has not been satisfied,
canceled, subordinated (other than, if a Second Lien Mortgage Loan, as
expressly set forth herein) 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 (other than, if a Second
Lien Mortgage Loan, in connection with the first lien referenced herein)
or rescission. The 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 the Seller waived any default resulting from any action
or inaction by the Mortgagor.
9. Location and Type of Mortgaged Property. 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, or an
individual condominium unit in a low-rise condominium project, or an
individual unit in a planned unit development or a de minimis planned unit
development, provided, however, that no residence or dwelling is a mobile
home or a manufactured dwelling. Except with respect to the Mortgaged
Property securing a Mixed-Use Mortgage Loan, which may have a partial
commercial use, no portion of the Mortgaged Property is used for
commercial purposes.
10. Valid Lien. The Mortgage is a valid, subsisting, enforceable and perfected
(A) first lien or second lien 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 (i) the lien of current real property
taxes and assessments not yet due and payable; (ii) 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 (a)
referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan or (b) which do not adversely affect the
Appraised Value of the Mortgaged Property set forth in such appraisal;
(iii) 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 (iv) in the case of a Second Lien
Mortgage Loan, a first lien on the Mortgaged Property.
11. Security Agreement. 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 security interest with respect to each Mortgage Loan
which is indicated to be a First Lien Mortgage Loan (as indicated on the
Asset Tape), or (B) second lien and second priority security interest with
respect to each Mortgage Loan which is indicated by Seller to be a Second
Lien Mortgage Loan (as reflected on the Asset Tape), in either case, on
the property described therein and Seller has full right to sell, pledge
and assign the same to Buyer. To the best of Seller's knowledge, 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.
12. Validity of Mortgage Documents. The Mortgage Note and the Mortgage and any
other agreement executed and delivered by a Mortgagor or guarantor, if
applicable, in connection with a Mortgage Loan are genuine, and each is
the legal, valid and binding
obligation of the maker thereof enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law). All
parties to the Mortgage Note, the Mortgage and any other such related
agreement had legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note, the Mortgage and any such agreement
and to convey the estate therein purported to be conveyed, and the
Mortgage Note, the Mortgage and any other such related agreement have been
duly and properly executed by such related parties. No fraud, error,
omission, misrepresentation, negligence or similar occurrence with respect
to a Mortgage Loan has taken place on the part of any Person, including,
without limitation, the Mortgagor, any appraiser, any builder or
developer, or any other party involved in the origination of the Mortgage
Loan. The Seller 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.
13. First Lien Consent. With respect to each Mortgage Loan which is a Second
Lien Mortgage Loan, (i) if the related first lien provides for negative
amortization, the LTV was calculated at the maximum principal balance of
such first lien that could result upon application of such negative
amortization feature, and (ii) either no consent for the Mortgage Loan is
required by the holder of the first lien or such consent has been obtained
and is contained in the Asset File.
14. 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
further 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.
15. Ownership. The Seller is the sole owner and holder of the Mortgage Loan.
The Mortgage Loan is not assigned or pledged or otherwise conveyed or
encumbered except to Buyer, and the Seller has good, indefeasible and
marketable title thereto, and has full right to sell, transfer, pledge and
assign the Mortgage Loan to the 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 assign, transfer
and pledge each Mortgage Loan pursuant to this Agreement and following the
pledge of each Mortgage Loan, the Buyer will hold such Mortgage Loan free
and clear of any encumbrance, equity, participation interest, lien,
pledge, charge, claim or security interest except any such security
interest created pursuant to the terms of Agreement.
16. 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) (i) in compliance with any and
all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (ii) either (A) organized under the
laws of such state, (B) qualified to do business in such state, (C) a
Federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (D) not doing business in such
state.
17. Title Insurance. The Seller holds a title insurance policy or a marked-up
title commitment, title insurance binder or title certificate which is in
full force and effect; which has an insurance limit at least as great as
the outstanding principal balance of the Mortgage Loan; which names the
Seller, its successors and assigns, as the insured party and which is
issued by an Qualified Insurer that is qualified to do business in the
jurisdiction where the Mortgaged Property is located. Said policy shall:
o Insure the lien of the Mortgage consistent with the agreed-upon lien
priority;
o Insure the absence of any prior lien of taxes or other assessments;
o Disclose whether all taxes and other lienable assessments due as of
the date of the policy have been paid-in-full; and
o Disclose all other matters to which the Mortgaged Property is
subject.
18. No Defaults; Right to Cure; No Failure to Cure. If a First Lien Mortgage
Loan, there is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event has occurred
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 other than those payment delinquencies permitted by
paragraph 2 hereof, and neither the Seller nor its predecessors have
waived any default, breach, violation or event of acceleration. With
respect to each Mortgage Loan which is indicated by Seller to be a Second
Lien Mortgage Loan (as reflected on the Asset Schedule) (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 has occurred 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 other than those payment delinquencies permitted
by paragraph 2 hereof, 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 under the First Lien Mortgage
Loan, by payment in full or otherwise under the prior mortgage, and Seller
has not received notice of any such default which has not been cured.
19. 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 Mortgaged Property which are or may
be liens prior to, or equal or coordinate with, the lien of the Mortgage.
20. Location of Improvements; No Encroachments. All improvements which were
considered in determining the Appraised Value of the Mortgaged Property
lie 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.
21. Origination; Payment Terms. The Mortgage Loan was originated or purchased
by or in conjunction with a mortgagee approved by the Secretary of Housing
and Urban Development pursuant to Sections 203 and 211 of the National
Housing Act, a savings and loan association, a savings bank, a commercial
bank, credit union, insurance company or similar banking institution which
is supervised and examined by a Federal or state authority. Principal
payments on the Mortgage Loan commenced no more than 60 days after funds
were disbursed in connection with the Mortgage Loan. The Note Interest
Rate is adjusted, with respect to adjustable rate Mortgage Loans, on each
Interest Rate Adjustment Date to equal the Index plus the Gross Margin
(rounded up or down to the nearest .125%), subject to the Interest Rate
Cap. The Mortgage Note is payable each month in equal monthly installments
of principal and interest, which installments of interest, with respect to
adjustable rate Mortgage Loans, are subject to change due to the
adjustments to the Note 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, 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.
22. Customary Provisions. The Mortgage Note has a stated maturity. 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 a Mortgagor which would interfere with the right to sell the
Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage.
23. Conformance with Underwriting Guidelines. The Mortgage Loan was generally
underwritten in accordance with the applicable Qualified Originator's
Underwriting Guidelines applicable to Mortgage Loans.
24. Occupancy of the Mortgaged Property. As of the Purchase Date, the
Mortgaged Property is lawfully occupied under applicable law. 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. The 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. The Seller has not received
notice of any violation or failure to conform with any such law,
ordinance, regulation, standard, license or certificate. The Mortgagor
represented at the time of origination of the Mortgage Loan that the
Mortgagor would occupy the Mortgaged Property as the Mortgagor's primary
residence.
25. No Additional Collateral. Except as otherwise disclosed to the Buyer, 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.
26. 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 the
Buyer or its designee or the Buyer to the trustee under the deed of trust,
except in connection with a trustee's sale after default by the Mortgagor.
27. Delivery of Mortgage Documents. The Mortgage Note, the Mortgage, the
Assignment of Mortgage and any other documents required to be delivered
under the Custodial Agreement for each Mortgage Loan have been delivered
to the Buyer or its designee. The Custodian is in possession of a
complete, true and accurate Asset File with respect to each Eligible Asset
which is to be purchased.
28. 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.
29. 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.
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 the 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 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 to the
Mortgagor prior to the 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 (A) first lien priority
with respect to each Mortgage Loan which is indicated by such Seller to be
a First Lien Mortgage Loan (as reflected on the Asset Schedule), or (B)
second lien priority with respect to each Mortgage Loan which is indicated
by Seller to be a Second Lien Mortgage Loan (as reflected on the Asset
Schedule), in either case, by a title insurance policy, an endorsement to
the policy insuring the mortgagee's consolidated interest or by other
title evidence. The consolidated principal amount does not exceed the
original principal amount of the Mortgage Loan.
32. Mortgaged Property Undamaged. 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 and each Mortgaged Property is in good repair.
There have not been any condemnation proceedings with respect to the
Mortgaged Property and the Seller has no knowledge of any such
proceedings.
33. Collection Practices; Escrow Deposits; Interest Rate Adjustments. To the
best of the Seller's knowledge, the origination and collection practices
used by the originator, each servicer of the Mortgage Loan and the Seller
with respect to the Mortgage Loan have been in all respects materially in
compliance with Accepted Servicing Practices, applicable laws and
regulations, and have been in all respects legal and proper. With respect
to escrow deposits and escrow payments (other than with respect to each
Mortgage Loan which is indicated by such Seller to be a Second Lien
Mortgage Loan and for which the mortgagee under the prior mortgage lien is
collecting escrow payments (as reflected on the Asset Schedule), all such
payments are in the possession of, or under the control of, the Seller and
there exist no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. All escrow payments
have been collected in full compliance with state and federal law. An
escrow of funds is not prohibited by applicable law and has been
established in an amount sufficient to pay for every item that remains
unpaid and has been assessed but is not yet due and payable. No escrow
deposits or escrow payments or other charges or payments due the Seller
have been capitalized under the Mortgage or the Mortgage Note. All Note
Interest Rate adjustments have been made in strict compliance with state
and federal law and the terms of the related Mortgage Note. Any interest
required to be paid pursuant to state, federal and local law has been
properly paid and credited. The Mortgage Loan is denominated in U.S.
Dollars.
34. Conversion to Fixed Interest Rate. With respect to adjustable rate
Mortgage Loans, the Mortgage Loan is not convertible to a fixed interest
rate Mortgage Loan.
35. Other Insurance Policies. No action, inaction or event has occurred and no
state of facts exists or has existed that has resulted or will result in
the exclusion from, denial of, or defense to coverage under any applicable
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 the Seller or by any officer, director, or employee of the
Seller or any designee of the Seller or any corporation in which the
Seller or any officer, director, or employee had a financial interest at
the time of placement of such insurance.
36. Soldiers' and Sailors' Civil Relief Act. The Mortgagor has not notified
the Seller, and the Seller has no knowledge, of any relief requested or
allowed to the Mortgagor under the Soldiers' and Sailors' Civil Relief Act
of 1940.
37. Appraisal. All required documentation has been received by the Servicer.
Each of the documents and instruments included in the Asset File and in
the Servicing File is duly executed and in due and proper form and each
such document or instrument is in a form generally acceptable to prudent
institutional mortgage lenders that regularly originate and purchase
Mortgage Loans. The Servicing File contains an appraisal of the related
Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the Seller, who
had no interest, direct or indirect in the Mortgaged Property or in any
loan made on the security thereof, and whose compensation is not affected
by the approval or disapproval of the Mortgage Loan, and the appraisal and
appraiser both satisfy the requirements of Title XI of the Federal
Institutions Reform, Recovery, and Enforcement Act of 1989 as amended and
the regulations promulgated thereunder, as in effect on the date the
Mortgage Loan was originated. In the event that the Mortgage Loan had a
principal balance at origination equal to or greater than (a) $300,000
with respect to each Mortgage Loan as to which the related Mortgaged
Property is located in California, and (b) $250,000 in all other cases,
the Servicing File contains a drive-by appraisal performed not more than
30 days prior to the applicable Purchase Date which confirms the Appraised
Value of the Mortgaged Property.
38. Disclosure Materials. The Mortgagor has executed a statement to the effect
that the Mortgagor has received all disclosure materials required by
applicable law with respect to the making of adjustable rate mortgage
loans, and the Seller maintains such statement in the Servicing File.
39. Construction or Rehabilitation of Mortgaged Property. No Mortgage Loan was
made in connection with the construction or rehabilitation of a Mortgaged
Property or facilitating the trade-in or exchange of a Mortgaged Property.
40. No Defense to Insurance Coverage. No action has been taken or failed to be
taken, no event has occurred and no state of facts exists or has existed
on or prior to the Purchase Date (whether or not known to the Seller on or
prior to such date) which has resulted or will result in an exclusion
from, denial of, or defense to coverage under any private mortgage
insurance (including, without limitation, any exclusions, denials or
defenses which would limit or reduce the availability of the timely
payment of the full amount of the loss otherwise due thereunder to the
insured) whether arising out of actions, representations, errors,
omissions, negligence, or fraud of the Seller, the related Mortgagor or
any party involved in the application for such coverage, including the
appraisal, plans and specifications and other exhibits or documents
submitted therewith to the insurer under such insurance policy, or for any
other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy
or such insurer's financial inability to pay.
41. Capitalization of Interest. The Mortgage Note does not by its terms
provide for negative amortization or forbearance of interest.
42. 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 the Seller has not financed
nor does it own directly or indirectly, any equity of any form in the
Mortgaged Property or the Mortgagor.
43. 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 the Seller or any Affiliate or correspondent of
Seller.
44. Origination Date. The Origination Date is no earlier than (A) sixty (60)
days prior to the date the Mortgage Loan is first subject to a Transaction
provided such Mortgage Loan was originated by the Seller or a Qualified
Originator affiliated with the Seller or (B) seventy-five (75) days prior
to the date the Mortgage Loan is first subject to a Transaction provided
such Mortgage Loan was originated by a Qualified Originator not affiliated
with the Seller.
45. Qualified Originator. The Mortgage Loan has been originated by, and, if
applicable, purchased by the Seller from, a Qualified Originator.
46. 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.
47. LTV; CLTV. No adjustable rate First Lien Mortgage Loan or Second Lien
Mortgage Loan has an LTV or a CLTV, as applicable, greater than 90%, and
no fixed rate First
Lien Mortgage Loan or Second Lien Mortgage Loan has an LTV or a CLTV, as
applicable, greater than 100%.
48. Signatures and Statements. All signatures, names, addresses, amounts and
other statements entered in the documentation referred to above, are, to
the best knowledge of Seller, true and correct.
49. Securitizable Asset. The Eligible Asset shall be of a type and quality
which the Buyer determines, in its reasonable discretion, is eligible for
sale in the secondary market or for securitization without unreasonable
credit enhancement.
50. No Foreclosure. There has been no default by a Mortgagor on a Mortgage
Loan resulting in the foreclosure on, or trustee's sale of, the Mortgaged
Property.
51. True Sale. Any Mortgage Loan funded in the name of or acquired by a
Qualified Originator which is an Affiliate of the Seller has been conveyed
to the Seller pursuant to a legal sale, and if so requested by the Buyer,
is covered by an opinion of counsel to that effect in form and substance
acceptable to the Buyer.
Purchase Facility:
(i) The information with respect to each Mortgage Loan and the information
set forth in the related Mortgage Loans Schedule is true and correct as of the
Cut-off Date;
(ii) The Mortgage Note, the Mortgage, the Assignment of Mortgage and any
other documents required to be delivered with respect to each Mortgage Loan
pursuant to the Custodial Agreement, have been delivered to the Custodian all in
compliance with the specific requirements of the Custodial Agreement. With
respect to each Mortgage Loan, the Seller is in possession of a complete
Mortgage File in compliance with Exhibit 5, except for such documents as have
been delivered to the Custodian and except for the Servicing File, which has
been delivered to the Interim Servicer;
(iii) Each Mortgage Loan is an Eligible Mortgage Loan or an Exception Loan
within the applicable Exception Limit;
(iv) Each Mortgaged Property is improved by a Residential Dwelling. If the
Residential Dwelling on the Mortgaged Property is a condominium unit or a unit
in a planned unit development (other than a de minimis planned unit development)
such condominium or planned unit development project meets the eligibility
requirements of ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac;
(v) No Second Lien Mortgage Loan had a CLTV at origination equal to or
greater than 95%. No Mortgage Loan had a combined LTV (including the amount of
all liens senior to or subordinate to the lien of the related Mortgage) greater
than 100%;
(vi) Each Mortgage Note with respect to the Mortgage Loans will provide
for a schedule of substantially level and equal Monthly Payments which are
sufficient to amortize fully the principal balance of such Mortgage Note on or
before its maturity date. Unless stated on the Mortgage Loan Schedule, no
Mortgage Loan has a balloon payment feature;
(vii) As of the Closing Date, each Mortgage is a valid and subsisting
first lien on the Mortgaged Property with respect to each Mortgage Loan which is
indicated to be a First Lien (as reflected on the related Mortgage Loan
Schedule) or second lien on the Mortgaged Property with respect to each Mortgage
Loan which is indicated to be a Second Lien Mortgage Loan (as reflected on the
related Mortgage Loan Schedule) and subject in all cases to the exceptions to
title set forth in the title insurance policy or attorney's opinion of title
with respect to the related Mortgage Loan, which exceptions are generally
acceptable to banking institutions in connection with their regular mortgage
lending activities, and such other exceptions to which similar properties are
commonly subject and which do not individually, or in the aggregate, materially
and adversely affect the benefits of the security intended to be provided by
such Mortgage;
(viii) Immediately prior to the transfer and assignment of the Mortgage
Loans, the Seller held good and indefeasible title to, and was the sole owner
of, each Mortgage Loan (including the related Mortgage Note) conveyed by such
Seller subject to no liens, charges, mortgages, encumbrances or rights of others
except as set forth in clause (vii) or other liens which will be released
simultaneously with such transfer and assignment; and immediately upon the
transfer and assignment herein contemplated, the Purchaser will hold good and
indefeasible title to, and be the sole owner of, each Mortgage Loan subject to
no liens, charges, mortgages, encumbrances or rights of others except as set
forth in paragraph (vii) or other liens which will be released simultaneously
with such transfer and assignment;
(ix) No payment required to be made on the Mortgage Loan is more than 29
days delinquent from its contractual Due Date as of the close of business on the
related Closing Date; the Seller has not advanced funds, or induced, solicited
or knowingly received any advance of funds from a party other than the owner of
the related Mortgaged Property, directly or indirectly, for the payment of any
amount required by the Mortgage Note or Mortgage; such Mortgage Loan was
originated no later than 60 days prior to the related Closing Date; and there
has been no delinquency, exclusive of any period of grace, in any payment by the
Mortgagor thereunder since origination;
(x) There is no delinquent tax or assessment lien on any Mortgaged
Property, and each Mortgaged Property is free of substantial damage and is in
good repair;
(xi) There is no valid and enforceable offset, defense or counterclaim to
any Mortgage Note or Mortgage, including the obligation of the related Mortgagor
to pay the unpaid principal of or interest on such Mortgage Note;
(xii) There is no mechanics' lien or claim for work, labor or material
affecting any Mortgaged Property which is or may be a lien prior to, or equal
with, the lien of the related
Mortgage except those which are insured against by any title insurance policy
referred to in paragraph (xiv) below;
(xiii) Each Mortgage Loan at the time it was made complied in all material
respects with applicable state and federal laws and regulations, including,
without limitation, the federal Truth-in-Lending Act and other consumer
protection laws, usury, equal credit opportunity, disclosure and recording laws;
(xiv) With respect to each Mortgage Loan either (a) an attorney's opinion
of title has been obtained but no title policy has been obtained, or (b) a
lender's title insurance policy, issued in standard American Land Title
Association form by a title insurance company authorized to transact business in
the state in which the related Mortgaged Property is situated, in an amount at
least equal to the original balance of such Mortgage Loan, insuring the
mortgagee's interest under the related Mortgage Loan as the holder of a valid
first or second mortgage lien of record on the real property described in the
related Mortgage, subject only to exceptions of the character referred to in
paragraph (vii) above, was effective on the date of the origination of such
Mortgage Loan, and, as of the Closing Date, such policy is valid and thereafter
such policy shall continue in full force and effect;
(xv) The improvements upon each Mortgaged Property are covered by a valid
and existing hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage representing coverage not less than the
least of (A) the outstanding principal balance of the related Mortgage Loan
(together, in the case of a Second Lien Mortgage Loan, with the outstanding
principal balance of the Senior Lien), (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (C) the full
insurable value of the Mortgaged Property;
(xvi) If any Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration is in effect with
respect to such Mortgaged Property with a generally acceptable carrier in an
amount representing coverage not less than the least of (A) the outstanding
principal balance of the related Mortgage Loan (together, in the case of a
Second Lien Mortgage Loan, with the outstanding principal balance of the Senior
Lien), (B) the minimum amount required to compensate for damage or loss on a
replacement cost basis or (C) the maximum amount of insurance that is available
under the Flood Disaster Protection Act of 1973;
(xvii) Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), and all parties to
each Mortgage Loan had full legal capacity to execute all documents relating to
such Mortgage Loan and convey the estate therein purported to be conveyed;
(xviii) The Seller has caused and will cause to be performed any and all
acts required to be performed to preserve the rights and remedies of the
Purchaser in any insurance policies applicable to any Mortgage Loans including,
without limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured, joint loss
payee and mortgagee rights in favor of the Purchaser;
(xix) As of the Closing Date, no more than 1.0% of the aggregate Stated
Principal Balance of the Mortgage Loans will be secured by Mortgaged Properties
located within any single zip code area;
(xx) Each original Mortgage was recorded or is in the process of being
recorded, and all subsequent assignments of the original Mortgage have been
delivered for recordation or have been recorded in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof as against
creditors of or purchasers from the Seller delivering the related Mortgage Loan;
(xxi) The terms of each Mortgage Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to maintain the lien priority of the
Mortgage, and which have been delivered to the Custodian; the substance of any
such waiver, alteration or modification is reflected on the related Mortgage
Loan Schedule. No instrument of waiver, alteration or modification has been
executed, and no Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement, which assumption agreement has been
delivered to the Custodian and the terms of which are reflected in the related
Mortgage Loan Schedule;
(xxii) The proceeds of each Mortgage Loan have been fully disbursed, and
there is no obligation on the part of the mortgagee to make future advances
thereunder. Any and all requirements as to completion of any onsite or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing or
recording such Mortgage Loans were paid;
(xxiii) The related Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(xxiv) No Mortgage Loan was originated under a buydown plan;
(xxv) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;
(xxvi) Each Mortgaged Property is located in the state identified in the
respective Schedule of Mortgage Loans and consists of one or more parcels of
real property with a residential dwelling erected thereon;
(xxvii) Each Mortgage contains a provision for the acceleration of the
payment of the unpaid principal balance of the related Mortgage Loan in the
event the related Mortgaged Property is sold without the prior consent of the
mortgagee thereunder;
(xxviii) Any advances made after the date of origination of a Mortgage
Loan but prior to the Cut-off Date have been consolidated with the outstanding
principal amount secured by the related Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term
reflected on the respective Schedule of Mortgage Loans. The consolidated
principal amount does not exceed the original principal amount of the related
Mortgage Loan. No Mortgage Note permits or obligates the Seller to make future
advances to the related Mortgagor at the option of the Mortgagor;
(xxix) There is no proceeding pending or threatened for the total or
partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and each Mortgaged Property is undamaged by waste, fire,
water, flood, earthquake or earth movement;
(xxx) All of the improvements which were included for the purposes of
determining the Appraised Value of any Mortgaged Property lie wholly within the
boundaries and building restriction lines of such Mortgaged Property, and no
improvements on adjoining properties encroach upon such Mortgaged Property,
unless any such improvements and are stated in the title insurance policy and
affirmatively insured;
(xxxi) No improvement located on or being part of any Mortgaged Property
is in violation of any applicable zoning law or regulation. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of each 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 and such Mortgaged Property is lawfully occupied under
the applicable law;
(xxxii) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
related Mortgagor;
(xxxiii) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security, including (A) in the case of a Mortgage designated as a deed of trust,
by trustee's sale and (B) otherwise by judicial foreclosure. There is no
homestead or other exemption available to the related Mortgagor which would
materially interfere with the right to sell the related Mortgaged Property at a
trustee's sale or the right to foreclose the related Mortgage. The Mortgagor has
not notified the Seller and the Seller has no knowledge of any relief requested
or allowed to the Mortgagor under the Soldiers and Sailors Civil Relief Act of
1940;
(xxxiv) There is no default, breach, violation or event of acceleration
existing under any Mortgage or the related 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 the Seller has not waived any default, breach, violation or event of
acceleration. With respect to each Mortgage Loan which is indicated to be a
Second Lien Mortgage Loan (as reflected on the related Mortgage Loan Schedule)
(i) the Mortgage Note is in full force and effect, (ii) there is no default,
breach, violation or event of acceleration existing under such Mortgage Note
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 Mortgage Note 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 Mortgage Note mortgage;
(xxxv) No instrument of release or waiver has been executed in connection
with any Mortgage Loan, and no Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement which has been approved by the
primary mortgage guaranty insurer, if any, and which has been delivered to the
Purchaser;
(xxxvi) Each Mortgage Loan was originated based upon a full appraisal,
which included an interior inspection of the subject property and was made and
signed, prior to the approval of the Mortgage Loan application, by a qualified
appraiser, duly appointed by the originator, who had no interest, direct or
indirect in the Mortgaged Property or in any loan made on the security thereof,
whose compensation is not affected by the approval or disapproval of the
Mortgage Loan. Each appraisal of the Mortgage Loan was made in accordance with
the relevant provisions of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989;
(xxxvii) The Mortgage Loans were not selected for inclusion in the related
Mortgage Loan Package by the Seller on any basis intended to adversely affect
the Purchaser;
(xxxviii) The Seller has any actual knowledge that there exist any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation on any Mortgaged Property;
(xxxix) Seller was properly licensed or otherwise authorized, to the
extent required by applicable law, to originate or purchase each Mortgage Loan;
and the consummation of the transactions herein contemplated, including, without
limitation, the receipt of the ownership of the Mortgage Loans by the Purchaser
will not involve the violation of such laws;
(xl) With respect to each Mortgaged Property subject to a ground lease (i)
the current ground lessor has been identified and all ground rents which have
previously become due and owing have been paid; (ii) the ground lease term
extends, or is automatically renewable, for at least five years beyond the
maturity date of the related Mortgage Loan; (iii) the ground lease has
been duly executed and recorded; (iv) the amount of the ground rent and any
increases therein are clearly identified in the lease and are for predetermined
amounts at predetermined times; (v) the ground rent payment is included in the
borrower's monthly payment as an expense item; (vi) the Purchaser has the right
to cure defaults on the ground lease; and (vii) the terms and conditions of the
leasehold do not prevent the free and absolute marketability of the Mortgaged
Property;
(xli) 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;
(xlii) As of the Closing Date, neither Seller has received a notice of
default of any Mortgage Loan secured by any Mortgaged Property which has not
been cured by a party other than such Seller;
(xliii) All of the Adjustable Rate Mortgage Loans are in a first lien
position;
(xliv) The Seller shall, at its own expense, cause each Mortgage Loan to
be covered by a Tax Service Contract which is assignable to the Purchaser or its
designee; provided however, that if the Seller fails to purchase such Tax
Service Contract, the Seller shall be required to reimburse the Purchaser for
all costs and expenses incurred by the Purchaser in connection with the purchase
of any such Tax Service Contract;
(xlv) Each Mortgage Loan was originated by an affiliate of Seller and was
conveyed to Seller pursuant to a legal sale, and if so requested by the
Purchaser, is covered by an opinion of counsel to that effect in form and
substance acceptable to the Purchaser;
(xlvi) In the event that the Mortgage Loan had a principal balance at
origination equal to or greater than (a) $300,000 with respect to each Mortgage
Loan as to which the related Mortgaged Property is located in California, and
(b) $250,000 in all other cases, the Mortgage File contains a drive-by appraisal
performed not more than 30 days prior to the Closing Date which confirms that
the LTV of the Mortgage Loan satisfies the Underwriting Guidelines for the
applicable loan program;
(xlvii) Except to the extent that the Mortgage Loan is an AmGen Mortgage
Loan, the Mortgage Loan has not been previously financed or purchased by any
third party. Following the purchase of such Mortgage Loan, the aggregate unpaid
principal balance of the AmGen Mortgage Loans shall not exceed 10% of the
aggregate unpaid principal balance of all of the Portfolio Mortgage Loans
purchased hereunder;
(xlviii) No Mortgage Loan was made in connection with (a) the construction
or rehabilitation of a Mortgaged Property; (b) facilitating the trade-in or
exchange of a Mortgaged
Property; (c) facilitating the sale of an REO property or (d) the refinancing of
a delinquent mortgage loan originated or acquired by Seller which was more than
60 days delinquent;
(xlix) No Fixed Rate Mortgage Loan has an LTV greater than 100% and no
Adjustable Rate Mortgage Loan has an LTV greater than 90%;
(l) 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) in compliance with any and
all applicable "doing business" and licensing requirements of the laws of the
state wherein the Mortgaged Property is located;
(li) The Mortgage Loan was originated (within the meaning of the Secondary
Mortgage Market Enhancement Act of 1984) by 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, or by a mortgagee
approved as such by the Secretary of HUD;
(lii) The origination and collection practices used by the Seller and any
other originator with respect to each Mortgage Note and Mortgage have been in
all respects legal, proper, prudent and customary in the mortgage origination
and servicing industry. The Mortgage Loan has been serviced by the Seller and
any predecessor servicer in accordance with the terms of the Mortgage Note.
[With respect to escrow deposits and Escrow Payments, if any, (other than with
respect to each Mortgage Loan which is indicated to be a Second Lien Mortgage
Loan and for which the mortgagee under the Mortgage Note is collecting Escrow
Payments), all such payments are in the possession of, or under the control of,
the Seller and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made.] No escrow
deposits or Escrow Payments or other charges or payments due the Seller have
been capitalized under any Mortgage or the related Mortgage Note and no such
escrow deposits or Escrow Payments are being held by the Seller for any work on
a Mortgaged Property which has not been completed;
(liii) The Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines in effect at the time the Mortgage Loan was originated;
(liv) No error, omission, misrepresentation, negligence, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on the part of any
person, including without limitation the Mortgagor, any appraiser, any builder
or developer, or any other party involved in the origination of the Mortgage
Loan or in the application of any insurance in relation to such Mortgage Loan;
(lv) 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;
(lvi) No Mortgage Loan which is a Cash-out Refinancing was originated in
the State of Texas;
(lvii) With respect to each Mortgage Loan which is a Second Lien, (i) if
the related Mortgage Note provides for negative amortization, the LTV was
calculated at the maximum principal balance of such Mortgage Note that could
result upon application of such negative amortization feature, and (ii) either
no consent for the Mortgage Loan is required by the holder of the Mortgage Note
or such consent has been obtained and is contained in the Mortgage File; and
(lviii) With respect to each Mortgage Loan which is subject to the
provisions of HOEPA, the Mortgage Loan is identified as such on the Mortgage
Loan Schedule, and the related Mortgage File contains a notice from the
originator and a copy of a notice to each entity which was a purchaser or
assignee of the Mortgage Loan satisfying the provisions of HOEPA and the
regulations issued thereunder to the effect that the Mortgage Loan is subject to
special truth-in-lending rules.
EXHIBIT V(A)
Representations and Warranties
Regarding Empire Mortgage Loans
(a) The Borrower represents and warrants to the Lender that:
(1) It has been duly organized and is validly existing as a
corporation under the laws of its state of incorporation.
(2) It is duly qualified in each state in which it transacts
business and is not in default of such state's applicable laws, rules and
regulations.
(3) It has the requisite power and authority and legal right to own
and ▇▇▇▇▇ ▇ ▇▇▇▇ on all of its right, title and interest in and to the
Collateral and to execute and deliver, engage in the transactions contemplated
by, and perform and observe the terms and conditions of, this Agreement, the
Secured Note and the Custodial Agreement.
(4) It is solvent and is not in default under any mortgage,
borrowing agreement or other instrument or agreement pertaining to indebtedness
for borrowed money, and the execution and delivery by it of this Agreement and
the Custodial Agreement and the execution by it of the Secured Note will not
result in any violation of any such mortgage, instrument or agreement.
(5) All of its audited and unaudited financial statements, budgets
and certificates or any certificates of its officers furnished to the Lender are
true and complete and do not omit to disclose any material liabilities,
contingent or otherwise, or other facts relevant to its condition. All such
audited and unaudited financial statements have been prepared in accordance with
GAAP.
(6) This Agreement, the Secured Note and the Custodial Agreement
have each been duly authorized and executed by it and each is valid, binding and
enforceable against it in accordance with its terms, and the execution, delivery
and performance by it of this Agreement and the Custodial Agreement and the
execution by it of the Secured Note do not conflict with, or will not result in
a breach of, any term or provision of its certificate of incorporation or
by-laws or any material agreement or instrument to which it is bound (including,
without limitation, its license from HUD as an authorized originator and
servicer of Title I Loans) or any law, rule, regulation, order, judgment, writ,
injunction or decree applicable to it of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it.
(7) No consent, approval, authorization or order of, registration or
filing with, or notice to any governmental authority or court is required under
applicable law in connection with the execution, delivery and performance by it
of this Agreement, the Custodial Agreement and the Secured Note.
Exh V(A)-1
(8) There is no action, proceeding or investigation pending or, to
the best knowledge of it, threatened against it before any court, administrative
agency or other tribunal (A) asserting the invalidity of this Agreement, the
Custodial Agreement or the Secured Note, (B) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement, the Custodial
Agreement or the Secured Note, or (C) which might materially and adversely
affect the validity of the Home Improvement Loans or the performance by it of
its obligations under, or the validity or enforceability of, this Agreement, the
Custodial Agreement or the Secured Note.
(9) Since the date of this Agreement, there has been no change in
the business, operations, financial condition, properties or prospects of it
which would have a material adverse affect on its ability to perform its
obligations under this Agreement, the Custodial Agreement or the Secured Note.
(b) With respect to each Title I Loan delivered by the Borrower to the
Custodian, the Borrower represents and warrants to the Lender that:
(1) Such Title I Loan and all accompanying documents are complete
and authentic and all signatures thereon are genuine.
(2) Such Title I Loan arose from a bona fide dealer or direct loan,
as defined in the Title I Regulations, complying with all applicable state and
Federal laws and regulations, to persons having legal capacity to contract and
is not subject to any defense, set-off or counterclaim
(3) All amounts represented to be payable on such Title I Loan are,
in fact, payable in accordance with the provisions of such Title I Loan.
(4) No default has occurred in any provisions of such Title I Loan.
(5) The terms of the Note and the Mortgage, if a Mortgage is
required by the Title I Regulations, relating to such Title I Loan have not been
impaired, waived, altered or modified in any respect, except by written
instruments reflected in the documents delivered to the Custodian pursuant to
Section 2 of the Custodial Agreement, and no provision of such Note or Mortgage
has been "▇▇▇▇▇▇ out" or erased unless such modification has been initialed by
each of the parties to such Title I Loan. No instrument of waiver, alteration or
modification has been executed, and the Obligor has not been released from the
related Mortgage, if any, in whole or in part, except in connection with an
assumption agreement, which assumption agreement is part of the mortgage file
and the terms of which are reflected in the documents delivered to the Custodian
pursuant to Section 2 of the Custodial Agreement, and the Borrower shall allow
no assumption of any Mortgage.
(6) Any property subject to any security interest given in
connection with such Title I Loan is not subject to any encumbrance other than a
stated mortgage or mortgages.
Exh V(A)-2
(7) It has good and indefeasible title to, and was the sole owner
of, such Title I Loan subject to no liens, charges, mortgages, participations,
encumbrances or rights of others other than liens released simultaneously with
such pledge.
(8) Such Title I Loan conforms to the description thereof as set
forth on the related Title I Loan Schedule.
(9) All payments required to be made up to the date 30 days prior to
the date such Title I Loan is pledged hereunder (the "Pledge Date") on such
Title I Loan under the terms of the Note have been made. The Borrower has not
advanced funds, or induced, solicited or knowingly received any advance of funds
from a party other than the Obligor, directly or indirectly, for the payment of
any amount required by such Title I Loan.
(10) The Note and the Mortgage, if any, relating to such Title I
Loan are not subject to any litigation, including, without limitation, any
bankruptcy or insolvency proceeding, set-off, counterclaim or defense, including
the defense of usury, nor will the operation of any of the terms of the Note and
the Mortgage, if any, or the exercise of any right thereunder, render either the
Note or the Mortgage, if any, unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including the defense
of usury, and no such right of rescission, set-off, counterclaim or defense has
been asserted with respect thereto.
(11) Any and all requirements of any federal, state or local law
applicable to such Title I Loan have been complied with including, without
limitation, all consumer laws.
(12) The Mortgage, if any, relating to such Title I Loan has not
been satisfied, cancelled or subordinated, in whole, or rescinded, 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.
(13) The Mortgage, if any, relating to such Title I Loan is a valid,
subsisting and enforceable lien on the Mortgaged Property, including the land
and all buildings on the Mortgaged Property.
(14) The Note and the related Mortgage, if any, relating to such
Title I Loan are genuine and each is the legal, valid and binding obligation of
the maker thereof, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting creditors' rights in general and by general principles of
equity.
(15) All parties to the Note and the Mortgage, if any, relating to
such Title I Loan had legal capacity at the time to enter into the Title I Loan
and to execute and deliver the Note and the Mortgage, if a mortgage is required
by the Title I Regulations, and the Note and the Mortgage, if any, have been
duly and properly executed by such parties.
Exh V(A)-3
(16) As of the Pledge Date, the proceeds of such Title I Loan have
been fully disbursed and there is no requirement for future advances thereunder,
and any and all requirements set forth in the Title I Loan documents have been
complied with.
(17) If a mortgage is required by the Title I Regulations with
respect to such Title I Loan, it has possession of a title document with respect
to such Title I Loan reflecting that title to the Mortgaged Property is vested
at least 50% in the Obligor under such Title I Loan.
(18) To the best of its knowledge, there is no default, breach,
violation or event of acceleration existing under the Mortgage, if any, or the
Note relating to such Title I Loan and there is no event which, with the passage
of time or with notice and/or the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration, and it has not
waived any default, breach, violation or event of acceleration.
(19) If a mortgage is required by the Title I Regulations with
respect to such Title I Loan, to the best of its knowledge, there is no
proceeding pending for the total or partial condemnation of the related
Mortgaged Property.
(20) The related Mortgage, if any, 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.
(21) Such Title I Loan is a FHA Title I property improvement loan
(as defined in 24 C.F.R. Parts 201 and 202) underwritten by the Borrower in
accordance with FHA requirements for the Title I loan program as set forth in 24
C.F.R. Parts 201 and 202, and the Borrower has submitted such Title I Loan to
FHA for inclusion in the Title I program.
(22) Such Title I Loan is a fixed rate mortgage loan; the stated
fixed rate of interest on such Title I Loan is at least equal the Interest Rate
plus 300 basis points; the Note shall mature within not less than 24 months nor
more than 20 years and 32 days; the Note is payable in monthly installments of
principal and interest, with interest payable in arrears, and requires a monthly
payment which is sufficient to amortize the original principal balance over the
original term and to pay interest at the related annual interest rate; and the
Note does not provide for any extension of the original term.
(23) If a mortgage is required by the Title I Regulations with
respect to such Title I Loan, the related Note is not, and has not been, secured
by any collateral except the lien of the corresponding Mortgage.
(24) If a mortgage is required by the Title I Regulations with
respect to such Title I Loan and if the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, or a valid
substitution of trustee has been recorded or may be recorded and no
extraordinary fees or expenses are, or will become, payable by the Lender to the
trustee
Exh V(A)-4
under the deed of trust, except in connection with default proceedings
and a trustee's sale after default by the Obligor.
(25) The Borrower has no knowledge of any circumstances or
conditions not reflected in the representations set forth herein, or in the
documents delivered to the Custodian pursuant to Section 2 of the Custodial
Agreement, or, if a mortgage is required by the Title I Regulations with respect
to such Title I Loan, in the mortgage file with respect to the Mortgage, the
Mortgaged Property or the Obligor which in its opinion could reasonably be
expected to materially and adversely affect the value of the Mortgaged Property,
or the marketability of such Title I Loan or cause such Title I Loan to become
delinquent or otherwise in default.
(26) Such Title I Loan is serviced by the Borrower or by a
subservicer pursuant to the terms and conditions of a subservicing agreement to
which the Lender has consented in writing.
(27) All disclosures required by the Real Estate Settlement
Procedures Act, by Regulation X promulgated thereunder and by Regulation Z of
the Board of Governors of the Federal Reserve System promulgated pursuant to the
statute commonly known as the Truth-in-Lending Act and the Notice of the Right
of Rescission required by said statute and regulation have been properly made
and given with respect to such Title I Loan.
(28) Such Title I Loan is in respect of a home improvement loan
(including improvements to existing manufactured or mobile homes that qualify as
real property) and is not a loan in respect of the purchase of manufactured
homes or mobile homes or the land on which such manufactured homes or mobile
homes will be placed.
(29) Such Title I Loan is not more than 29 days contractually
delinquent.
(30) The proceeds of such Title I Loan have been or, with respect to
Direct Loans, will be used for improvements on the Obligor's Mortgaged Property
in compliance with the Title I Regulations.
(c) With respect to every Conventional Home Improvement Loan delivered to the
Custodian, the Borrower represents and warrants to the Lender that:
(1) Such Conventional Home Improvement Loan and all accompanying
documents are complete and authentic and all signatures thereon are genuine.
(2) Such Conventional Home Improvement Loan arose from a bona fide
loan, complying with all applicable state and Federal laws and regulations, to
persons having legal capacity to contract and is not subject to any defense,
set-off or counterclaim.
(3) All amounts represented to be payable on such Conventional Home
Improvement Loan are, in fact, payable in accordance with the provisions of such
Conventional Home Improvement Loan.
Exh V(A)-5
(4) No default has occurred in any provisions of such Conventional
Home Improvement Loan.
(5) The terms of the Note and the Mortgage, if a Mortgage is
required by the Conventional Home Improvement Loan Underwriting Guidelines, have
not been impaired, waived, altered or modified in any respect, except by written
instruments reflected in the documents delivered to the Custodian pursuant to
Section 2 of the Custodial Agreement, and no provision of such Note or Mortgage
has been "▇▇▇▇▇▇ out" or erased unless such modification has been initialed by
each of the parties to such Conventional Home Improvement Loan. No instrument of
waiver, alteration or modification has been executed, and the Obligor has not
been released from the related Mortgage, if any, in whole or in part, except in
connection with an assumption agreement, which assumption agreement is part of
the mortgage file and the terms of which are reflected in the documents
delivered to the Custodian pursuant to Section 2 of the Custodial Agreement, and
the Borrower shall allow no assumption of any Mortgage.
(6) Any property subject to any security interest given in
connection with such Conventional Home Improvement Loan is not subject to any
encumbrance other than a stated mortgage or mortgages.
(7) It has good and indefeasible title to, and was the sole owner
of, such Conventional Home Improvement Loan subject to no liens, charges,
mortgages, participations, encumbrances or rights of others other than liens
released simultaneously with such pledge. description thereof as set forth on
the related Conventional Home Improvement Loan Schedule.
(9) All payments required to be made up to the date 30 days prior to
the date such Conventional Home Improvement Loan is pledged hereunder (the
"Pledge Date") on such Conventional Home Improvement Loan under the terms of the
Note have been made. The Borrower has not advanced funds, or induced, solicited
or knowingly received any advance of funds from a party other than the Obligor,
directly or indirectly, for the payment of any amount required by such
Conventional Home Improvement Loan.
(10) The Note and the Mortgage, if any, relating to such
Conventional Home Improvement Loan are not subject to any litigation, including,
without limitation, any bankruptcy or insolvency proceeding, set-off,
counterclaim or defense, including the defense of usury, nor will the operation
of any of the terms of the Note and the Mortgage, if any, or the exercise of any
right thereunder, render either the Note or the Mortgage, if any, unenforceable,
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto.
(11) Any and all requirements of any federal, state or local law
applicable to such Conventional Home Improvement Loan have been complied with
including, without limitation, all consumer laws.
Exh V(A)-6
(12) The Mortgage, if any, relating to such Conventional Home
Improvement Loan has not been satisfied, cancelled or subordinated, in whole, or
rescinded, 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.
(13) The Mortgage, if any, relating to such Conventional Home
Improvement Loan is a valid, subsisting and enforceable lien on the Mortgaged
Property, including the land and all buildings on the Mortgaged Property.
(14) The Note and the related Mortgage, if any, relating to such
Conventional Home Improvement Loan are genuine and each is the legal, valid and
binding obligation of the maker thereof, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights in general and
by general principles of equity.
(15) All parties to the Note and the Mortgage, if any, relating to
such Conventional Home Improvement Loan had legal capacity at the time to enter
into the Conventional Home Improvement Loan and to execute and deliver the Note
and the Mortgage, if a mortgage is required by the Conventional Home Improvement
Loan Underwriting Guidelines, and the Note and the Mortgage, if any, have been
duly and properly executed by such parties.
(16) As of the Pledge Date, the proceeds of such Conventional Home
Improvement Loan have been fully disbursed and there is no requirement for
future advances thereunder, and any and all requirements set forth in the
Conventional Home Improvement Loan documents have been complied with.
(17) If a mortgage is required by the Conventional Home Improvement
Loan Underwriting Guidelines with respect to such Conventional Home Improvement
Loan, it has possession of a title document with respect to such Conventional
Home Improvement Loan reflecting that title to the Mortgaged Property is fully
vested in the Obligor under such Conventional Home Improvement Loan.
(18) To the best of its knowledge, there is no default, breach,
violation or event of acceleration existing under the Mortgage, if any, or the
Note relating to such Conventional Home Improvement Loan and there is no event
which, with the passage of time or with notice and/or the expiration of any
grace or cure period, would constitute a default, breach, violation or event of
acceleration, and it has not waived any default, breach, violation or event of
acceleration.
(19) If a mortgage is required by the Conventional Home Improvement
Loan Underwriting Guidelines with respect to such Conventional Home Improvement
Loan, to the best of its knowledge, there is no proceeding pending for the total
or partial condemnation of the related Mortgaged Property.
Exh V(A)-7
(20) The related Mortgage, if any, 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.
(21) Such Conventional Home Improvement Loan is a home improvement
loan underwritten by the Borrower in accordance with the Conventional Home
Improvement Loan Underwriting Guidelines.
(22) Such Conventional Home Improvement Loan is a fixed rate
mortgage loan; the stated fixed rate of interest on such Conventional Home
Improvement Loan is at least equal the Interest Rate plus 300 basis points; the
Note shall mature within not less than 24 months nor more than 20 years and 32
days; the Note is payable in monthly installments of principal and interest,
with interest payable in arrears, and requires a monthly payment which is
sufficient to amortize the original principal balance over the original term and
to pay interest at the related annual interest rate; and the Note does not
provide for any extension of the original term.
(23) If a mortgage is required by the Conventional Home Improvement
Loan Underwriting Guidelines with respect to such Conventional Home Improvement
Loan, the related Note is not, and has not been, secured by any collateral
except the lien of the corresponding Mortgage.
(24) If a mortgage is required by the Conventional Home Improvement
Loan Underwriting Guidelines with respect to such Conventional Home Improvement
Loan and if the Mortgage constitutes a deed of trust, a trustee, duly qualified
under applicable law to serve as such, has been properly designated and
currently so serves and is named in the Mortgage, or a valid substitution of
trustee has been recorded or may be recorded and no extraordinary fees or
expenses are, or will become, payable by the Lender to the trustee under the
deed of trust, except in connection with default proceedings and a trustee's
sale after default by the Obligor.
(25) The Borrower has no knowledge of any circumstances or
conditions not reflected in the representations set forth herein, or in the
documents delivered to the Custodian pursuant to Section 2 of the Custodial
Agreement, or, if a mortgage is required by the Conventional Home Improvement
Loan Underwriting Guidelines with respect to such Conventional Home Improvement
Loan, in the mortgage file with respect to the Mortgage, the Mortgaged Property
or the Obligor which in its opinion could reasonably be expected to materially
and adversely affect the value of the Mortgaged Property, or the marketability
of such Conventional Home Improvement Loan or cause such Conventional Home
Improvement Loan to become delinquent or otherwise in default.
(26) Such Conventional Home Improvement Loan is serviced by the
Borrower or by a subservicer pursuant to the terms and conditions of a
subservicing agreement to which the Lender has consented in writing.
Exh V(A)-8
(27) All disclosures required by the Real Estate Settlement
Procedures Act, by Regulation X promulgated thereunder and by Regulation Z of
the Board of Governors of the Federal Reserve System promulgated pursuant to the
statute commonly known as the Truth-in-Lending Act and the Notice of the Right
of Rescission required by said statute and regulation have been properly made
and given with respect to such Conventional Home Improvement Loan.
(28) Such Conventional Home Improvement Loan is in respect of a home
improvement loan (including improvements to existing manufactured or mobile
homes that qualify as real property) and is not a loan in respect of the
purchase of manufactured homes or mobile homes or the land on which such
manufactured homes or mobile homes will be placed.
(29) Such Conventional Home Improvement Loan is not more than 29
days contractually delinquent.
(30) The proceeds of such Conventional Home Improvement Loan have
been or, with respect to Direct Loans, will be used for improvements on the
Obligor's Mortgaged Property.
Exh V(A)-9
EXHIBIT VI
SELLER/AFFILIATE AGREEMENT
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
As of August 9, 1999
ContiFinancial Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Gentlemen:
Reference is made to (i) the Master Repurchase Agreement Governing
Purchases and Sales of Assets ("Master Repurchase Agreement") dated as of August
9, 1999, between Greenwich Capital Financial Products, Inc. ("Buyer") and
ContiFinancial Corporation ("Seller"). This letter agreement ("Letter
Agreement") confirms the agreement among Seller and ContiMortgage Corporation
each in its capacity as servicer ("Subservicer") and Buyer as to the matters set
forth below. Capitalized terms used herein but not defined shall have the
meaning ascribed to such terms in the Master Repurchase Agreement.
1. The Subservicer hereby represents and warrants to the Buyer that as of the
date of execution of this Letter Agreement and at each Purchase Date, the
representations and warranties on Exhibit A hereto are true and correct.
2. The Subservicer hereby acknowledges and agrees that the Buyer is the owner
of the Mortgage Loans and all of the servicing rights thereto and, in
connection therewith, the Subservicer has no rights in the Mortgage Loans,
including the servicing rights thereto, with the exception of those
limited servicing rights granted to it by Buyer pursuant to this Letter
Agreement.
3. (a) The Subservicer is hereby appointed as servicer of the Mortgage Loans
pursuant to the terms of this Letter Agreement, which servicing rights
shall be immediately terminable by Buyer upon the earlier of (i) the
termination of the Interim Servicing Period, (ii) the occurrence of an
Event of Default under the Repurchase Agreement, whether or not the
Subservicer is in any way implicated in such Event of Default, (iii) a
Subservicer Termination Event (as such term is defined in Exhibit B
hereto), or (iv) 30 days prior written notice.
4. (b) Upon such termination, the Subservicer will promptly arrange for the
transfer of servicing (including all funds and Servicing Records held) of
the specified Mortgage
Exh VI.1
Loans to the designee of the Buyer in accordance with customary mortgage
banking standards for such transfers.
5. The Subservicer shall service the Mortgage Loans serviced by it for the
benefit of the Buyer and their successors and assigns (as owner) in
accordance with the terms of the Master Repurchase Agreement and Custodial
Agreement, the terms of which are incorporated herein, and Accepted
Servicing Practices. "Accepted Servicing Practices" shall mean those
servicing practices set forth in the Interim Servicing Addendum attached
as Exhibit XI to the Master Repurchase Agreement, which Interim Servicing
Addendum is incorporated herein by reference. Buyer is aware that the
Subservicer may be entitled to a servicing fee payable by the Seller.
Subservicer acknowledges that Buyer is not liable to Subservicer for such
or any other fees or expenses.
6. If requested by either (a) Buyer at any time following an Event of Default
of Seller under the Master Repurchase Agreement or (b) a person or entity
("Subsequent Owner"), (at its sole option) which has acquired ownership of
the related Mortgage Loans, through or from Buyer, the Subservicer shall
promptly enter into a market-standard whole loan servicing agreement
substantially in the form typically entered into by affiliates of New York
investment banks as owners of whole loans with respect to the Mortgage
Loans then serviced by it.
7. Subservicer hereby indemnifies and holds harmless Buyer and its successors
assigns from and against any losses, liabilities, damages, judgments,
costs (including attorney fees) and expenses incurred by Buyer or such
successors or assigns in any way related to a breach by Subservicer of any
covenant, representation or warranty of Subservicer herein.
8. This letter Agreement is not assignable by Subservicer; may be assigned in
whole or in part by Buyer; and shall inure to the benefit of Subservicer
and Buyer and their respective successors and assigns.
9. This Letter Agreement shall not be changed except by a written instrument
signed by each of the parties, shall be governed by and construed in
accordance with the internal laws of the State of New York without
reference to principles of conflicts of laws, and shall be binding upon
and inure to the benefit of the parties and their respective successors
and assigns, provided, however that neither this Letter Agreement nor any
rights in respect of the servicing of the Mortgage Loans (including,
without limitation, the right to possession of any Servicing Records)
shall be assignable by Subservicer to any Person other than an affiliate
of the Subservicer without the prior written consent of Buyer, and
Subservicer shall give Buyer prior written notice of any assignment to an
affiliate. The Subservicer, at its sole cost, may subcontract its
obligations hereunder or portions thereof provided it remains liable for
all obligations hereunder but shall continue either (a) to retain all
Servicing Records and documentation necessary to service the Mortgage
Loans hereunder, or (b) to maintain authority over such Servicing Records
and documentation in cases where transferring possession of such Servicing
Records and
Exh VI.2
documentation is necessary to do business with outside counsel, leasing
agents and other similar third party contractors, unless, in either case,
Buyer otherwise agrees.
Very truly yours,
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By:
----------------------------
ACCEPTED AND AGREED TO:
CONTIFINANCIAL CORPORATION
By:
----------------------------
Name:
Title:
CONTIMORTGAGE CORPORATION
By:
----------------------------
Name:
Title:
Exh VI.3
EXHIBIT A
REPRESENTATIONS AND WARRANTIES OF SERVICER
1. The Subservicer is duly organized, validly existing and in good standing
under the laws of the state of its organization and is qualified to
transact business in and is in good standing under the laws of each state
in which it is necessary for it to be so qualified in order to carry on its
business as now being conducted and has all licenses necessary to carry on
its business as now being conducted expect where the failure to so qualify
or have such license would not have a material adverse effect on the
Subservicer's ability to enter into this Letter Agreement and to consummate
the transactions contemplated hereby, on the Mortgage Loans or on the
ability of Subservicer or its assigns to enforce the Mortgage Loans; the
Subservicer has full corporate power and authority to execute, deliver and
perform under this Letter Agreement, and to consummate the transactions set
forth herein, this Letter Agreement has been fully executed and delivered
by the Subservicer and constitutes the valid and legally binding obligation
of the Subservicer enforceable against the Subservicer in accordance with
its respective terms, except that (i) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and such remedies may be subject to the
discretion of the court which any proceeding therefor may be brought;
2. The Subservicer is not required to obtain the consent of any other party or
obtain the consent, license (except those licenses already obtained by the
Subservicer prior to the date of this Letter Agreement), approval or
authorization of, or make any registration or declaration with, any
governmental authority, bureau or agency in connection with the execution,
delivery, performance, validity or enforceability of this Letter Agreement.
3. The consummation of the transactions contemplated by this Letter Agreement
will not result in the breach of any term or provision of the certificate
of incorporation or by-laws of the Subservicer or result in the violation
of any law, rule, regulation, order, judgment or decree to which the
Subservicer or its property or the Mortgage Loans are subject;
4. The Subservicer is not a party to, bound by or in breach or violation of
any indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
it, which materially and adversely affects, or may in the future materially
and adversely affect, the ability of the Subservicer to perform its
obligations under this Letter Agreement or the interest of the Buyer in any
material respect; and
5. There are no actions, suits proceedings or investigations pending or, to
the Subservicer's knowledge, threatened against the Subservicer, before any
court, regulatory body, administrative agency or other tribunal or
governmental instrumentality (A) asserting the invalidity of this Letter
Agreement, (B) seeking to prevent the consummation of any of the
transactions contemplated by this letter Agreement, (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Subservicer of its obligations under, or the validity or
enforceability of, this Letter Agreement, or (D) that could have a material
adverse effect on the Mortgage Loans.
6. The Subservicer's fidelity bond and errors and omissions insurance policy,
a copy of which was furnished to Buyer, is in full force and effect, and
Subservicer shall give Buyer at least 30 days' prior written notice of any
change in such status.
EXH. A-1
EXHIBIT B
SERVICER TERMINATION EVENT:
"Subservicer Termination Event" means the occurrence of any of the following:
1. Any failure by Subservicer to make any material deposit into an account
required to be made hereunder and the continuance of such failure for a
period of one (1) Business Day after Subservicer has become aware, or
should have become aware, that such deposit was required;
2. Failure on Subservicer's part to observe or perform in any material respect
any covenant or agreement in this Letter Agreement, which failure continues
unremedied for fifteen (15) days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to
Subservicer by Custodian or Buyer or to Subservicer and Custodian by Buyer
or, if such remedy cannot reasonably be cured within fifteen (15) days,
failure on the part of the Subservicer to commence or pursue a remedy
within such fifteen days, or failure of the Subservicer to reasonably
pursue such remedy thereafter;
3. Any representation or warranty made by the Servicer in this Letter
Agreement or any related agreement is incorrect or untrue in any material
respect (to the extent that any such representation or warranty does not
incorporate a materiality limitation in its terms);
4. Any assignment by Subservicer of its duties or rights hereunder, or any
attempt to make such an assignment except as permitted by this Letter
Agreement;
5. Any failure by Subservicer to maintain its rating, if any, as a servicer or
originator of mortgage loans or land contracts;
6. Any independent certified public accountant shall have issued an opinion to
the effect that the Subservicer's servicing practices have not been
conducted in compliance with the Uniform Single Audit Program for Mortgage
Bankers and that there are material exceptions;
7. A court or other governmental authority having jurisdiction in the premises
shall have entered a decree or order for relief in respect of Subservicer
in an involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall have appointed a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Subservicer, as the case may be, for any substantial
liquidation of its affairs, and such order remains undischarged and
unstayed for at least 60 days;
8. Subservicer shall have commenced a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
shall have consented to the entry of an order for relief in an involuntary
case under any such law, or shall have consented to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian
or sequestrator (or other similar official) of Subservicer or for any
substantial part of its property, or shall have made any general assignment
for the benefit of its creditors, or shall have failed to, or admitted in
writing its inability to, pay its debts as they become due, or shall have
taken any corporate action in furtherance of the foregoing.
EXH. B-1
EXHIBIT VII
Assignment and Conveyance Agreement
This is an Assignment and Conveyance Agreement ("Conveyance
Agreement") made this 9th day of August, 1999, among Greenwich Capital Financial
Products, Inc., ContiFinancial Corporation (the "Seller") and ContiMortgage
Corporation (the "Servicer"). The Buyer and the Seller wish to enter, from time
to time, into transactions (each, a "Transaction") pursuant to which the Buyer
shall agree to purchase Assets (defined in the Master Repurchase Agreement
referred to below) originated by ContiMortgage Corporation, ContiWest
Corporation or ContiTrade Services, L.L.C. (each as applicable, the "Company")
and thereafter purchased by the Seller pursuant to the Agreement for Sale,
Purchase and Servicing of Assets by and between Seller and ContiTrade Services,
L.L.C. dated as of March 1, 1998, the Master Agreement for Sale, Purchase and
Servicing of Mortgages by and between Seller and ContiWest Corporation dated as
of September 18, 1998, and the Master Agreement for Sale, Purchase and Servicing
of Mortgages by and between Seller and Servicer, as seller, dated as of
September 18, 1998 (each as applicable, the "Acquisition and Servicing
Agreement"), between the Seller and each Company, as applicable and serviced by
the Servicer pursuant to the applicable Acquisition and Servicing Agreement,
such Assets purchased by the Buyer, "Purchased Assets"), with a simultaneous
agreement by the Seller to repurchase such Purchased Assets on the Repurchase
Date, in accordance with the terms and conditions of the Master Repurchase
Agreement Governing Purchases and Sales of Assets (the "Master Repurchase
Agreement"), dated as of August 9, 1999, between the Buyer and the Seller and a
request for purchase (the "Purchase Request") by the Seller (as to each
Transaction, the related Purchase Request, the related Transaction Notice (as
defined below) and the Master Repurchase Agreement are referred to collectively
herein as the "Repurchase Agreement"). The custody of the Purchased Assets shall
be maintained by Manufacturers and Traders Trust Company (the "Custodian")
pursuant to that certain Custodial Agreement dated as of August 9, 1999 among
Buyer, Seller and Custodian. All terms not otherwise defined herein shall have
the meanings set forth in the Master Repurchase Agreement.
In consideration of the mutual promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree that the Purchased Assets
identified on the schedule attached hereto shall be subject to the terms of this
Conveyance Agreement.
WARRANTIES
1. The Company and the Seller warrant and represent that attached
hereto as Exhibit One is a true, accurate and complete copy of each Purchase and
Servicing Agreement which agreements are in full force and effect as of the date
hereof and have not been waived, amended or modified in any respect nor have any
notices of termination been given thereunder.
ASSIGNMENT
2. The Seller hereby assigns to the Buyer all of its right, title,
and interest in, to, and under the Acquisition and Servicing Agreement to the
extent of the Purchased Assets. Notwithstanding the Seller's assignment herein
of all of its right, title and interest, in, to, and under the Acquisition and
Servicing Agreement to the extent of the Purchased Assets, the Seller shall not
be relieved of its obligations under the Acquisition and Servicing Agreement (as
incorporated hereunder and made a part hereof) to the extent of the Purchased
Assets and shall be the sole obligor to the Servicer thereunder with respect to
the Purchased Assets.
3. From and after the date hereof and until the Seller repurchases
the Purchased Assets from the Buyer pursuant to the Repurchase Agreement, the
Buyer hereby authorizes and directs the Servicer to remit all Income from, and
all proceeds of, the Purchased Assets to the Seller, and to otherwise deal with
the Seller in all respects pursuant to the applicable Acquisition and Servicing
Agreement (each as incorporated hereunder and made a part hereof), in each case
until otherwise notified by the Buyer. The Buyer shall so notify the Servicer
only in the event that the Buyer determines that the Seller is in default under
the Master Repurchase Agreement or the related agreements. The receipt of such
Income and proceeds by the Seller shall not create nor imply any interest or
right whatsoever of the Seller in or to the Purchased Assets or such Income or
proceeds. The Seller shall have no right to terminate the Servicer as Servicer
of the Purchased Assets or amend the applicable Acquisition and Servicing
Agreement without the prior written consent of the Buyer (which consent shall
not be unreasonably withheld).
GOVERNING LAW
4. THIS CONVEYANCE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT
TO THE EXTENT PREEMPTED BY FEDERAL LAW.
IN WITNESS WHEREOF, the parties hereto have executed this Conveyance
Agreement the day and year first above written.
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By:
--------------------------------
Name:
Title:
CONTIFINANCIAL CORPORATION
By:
--------------------------------
its Member
By:
--------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED TO BY:
CONTIMORTGAGE CORPORATION
By:
--------------------------------
Name:
Title:
Schedule 1 to Assignment and
Conveyance Agreement
Asset Schedule
Exhibit One to Assignment and
Conveyance Agreement
Purchase and Servicing Agreements
EXHIBIT VIII
Opinion of Counsel
(date)
Greenwich Capital Financial Products, Inc.
address
Dear Sirs and Mesdames:
We have acted as counsel to ContiFinancial, a [_________]
corporation (the "Seller"), with respect to certain matters in connection with
that certain Master Repurchase Agreement Governing Purchases and Sales of
Assets, dated as of August 9, 1999 (the "Agreement"), by and between the Seller
and Greenwich Capital Financial Products, Inc. (the "Buyer"), provided for under
the Transaction Documents described below, whereby Seller may sell to Buyer, and
Buyer will purchase from, and agree to retransfer to, Seller, upon certain terms
and conditions set forth in the Agreement, Asset [originated or acquired by
Seller]. Capitalized terms used in this Opinion not otherwise defined herein
have the same meanings set forth in the Agreement.
In [our] [my] capacity as counsel to Seller, [we] [I] have examined
the following documents as executed in connection with the Agreement:
1. Master Repurchase Agreement Governing Purchases and Sales of
Assets, dated as of _______________, 199_ (defined above as
the "Agreement");
2. Custodial Agreement dated _______________, 199_ between Buyer
and the related Custodian;
3. Uniform Commercial Code ("UCC") Financing Statements listed on
Schedule 1 (collectively, the "Financing Statements"),
attached to this letter, naming the Seller as debtor and the
Buyer as secured party and describing the Collateral (as
defined in the Agreement) as to which security interests may
be perfected by filing under the UCC of the States listed on
Schedule 1 (the "Filing Collateral"), which I understand will
be filed in the filing offices listed on Schedule 1 (the
"Filing Offices");
4. Power of Attorney from Seller to Buyer (the form of which is
attached to the Agreement as Exhibit III);
5. Servicing Agreement dated _______________, 199_, between
Seller and Servicer; and
6. UCC Search Reports listed on Schedule 2, attached to this
letter, as to UCC Financing Statements (collectively, the "UCC
Search Report");
7. Articles of Incorporation of [ ] , certified by....
8. Certificate of Good Standing for Seller issued by the
9. Bylaws and Minute Book of Seller
10. Such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
The documents listed in paragraphs 1-6 are collectively referred to
as the "Transaction Documents." The documents list in paragraphs 8-11 are
collectively referred to as the "Organizational Documents." All the documents
listed in paragraph 1-11 are collectively referred to as the "Documents."
[We] [I] have assumed the authenticity of all documents submitted to
us/me 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 and upon such investigation as we have
deemed necessary, it is [our] [my] opinion that:
1. The Seller is a [________] corporation duly organized, validly
existing and in good standing under the laws of [__________] and is qualified to
transact business in, and is in good standing under, the laws of the state[s] of
[ states ].
2. The Seller has the corporate power and authority to carry on its
business as presently conducted, to own and operate the property and assets now
being operated by it, to engage in the transactions contemplated by the
Transaction Documents and all requisite corporate power, authority and legal
right to execute, perform and deliver Transaction Documents and observe the
terms and conditions of such instruments. The Seller has all requisite corporate
power sell and pledge assets, to borrow and to grant a security interest in the
Collateral pursuant to the Agreement, and to perform all of its obligations
under the Agreement.
3. The execution and delivery of the Transaction Documents by the
Seller, and the performance of the obligations contemplate therein, including
the sale of Purchased Assets by the Seller and the pledge of the Collateral
under the Agreement, have been duly and validly authorized by all necessary
corporate action on the part of the Seller. Each of Transaction Documents have
been executed and delivered by the Seller and are legal, valid and binding
agreements enforceable in accordance with their respective terms against the
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 the Buyer's security interest in the Purchased
Assets.
4. No approval, consent, authorization, order of, notice to, or
filing or registration with or other act by or in respect of any Governmental
Authority or any other Person is required or necessary in connection with the
Transactions contemplated by this Agreement or the granting of a security
interest thereunder, or with the execution, delivery, performance, validity or
enforceability of this Agreement or any Facility Document. No approval of
holders of capital stock of Seller other than such as have been obtained and are
in effect are required under applicable law to consummate the Agreement, and no
approvals are required pursuant to a shareholders agreement or other Contractual
Obligation which is binding on Seller in order to consummate the Agreement.
5. Each of the Transaction Documents to which Seller is a party is
the valid and binding obligation of Seller, enforceable against Seller in
accordance with its respective terms, except as may be limited by: (i)
bankruptcy, insolvency, reorganization, moratorium and other laws affecting the
rights of creditors generally of the collection of debtor's obligations
generally, and (ii) general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
6. The execution, delivery and performance by the Seller of, and the
consummation of the transactions contemplated by, the Transaction Documents do
not and will not (a) violate or conflict with any provision of the Seller's
Articles of Incorporation or by-laws, (b) violate, conflict with or require the
authorization, consent, approval or action of any governmental or regulatory
agency or authority under any applicable law, rule or regulation or ordinance,
(c) violate or conflict with any order, writ, injunction or decree of any court
or Governmental Authority or agency or any arbitral award applicable to the
Seller of which I/we have knowledge (after due inquiry) or (d) conflict with,
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, mortgage, indenture, contract, agreement, lease, instrument,
restriction, judgment, ruling, injunction, decree or other obligation or court
order of which I/we have knowledge (after due inquiry) to which the Seller is a
party or by which it is bound or to which it or any of its properties or assets
is subject, or (except for the Liens created pursuant to the Agreement) result
in the creation or imposition of any Lien, charge or encumbrance upon any
Property of the Seller pursuant to the terms of any such agreement or instrument
to which the Seller is a party or by which any of its properties is bound.
7. There is no action, suit, proceeding or investigation or
litigation before any court, public board or body pending or, to the best of
[our] [my] knowledge, after due inquiry, threatened against the Seller which, in
[our] [my] judgment, either in any one instance or in the aggregate, would be
reasonably likely to result in any material adverse change in the properties,
business or financial condition, or prospects of the Seller or in any material
impairment of the right or ability of the Seller to carry on its business
substantially as now conducted or in any material liability on the part of the
Seller or which would draw into question the validity of Transaction Documents
or the Assets or of any action taken or to be taken in connection with the
transactions contemplated thereby, or which would be reasonably likely to impair
materially the ability of the Seller to perform under the terms of the
Transaction Documents or the Assets.
8. The Agreement is effective to create, in favor of the Buyer, a
valid security interest under the UCC in all of the right, title and interest of
the Seller in, to and under the Collateral as collateral security for all
obligations of the payment or performance of Seller under or pursuant to the
Transaction Documents, which security interests, upon filing of the UCC
Financing Statements will be perfected under the UCC, except that (a) such
security interests will continue in Collateral after its sale, exchange or other
disposition only to the extent provided in Section 9-306 of the UCC, (b) the
security interests in Collateral in which the Seller acquires rights after the
commencement of a case under the Bankruptcy Code in respect of the Seller may be
limited by Section 552 of the Bankruptcy Code.
9. When the Mortgage Notes are delivered to the Custodian, endorsed
in blank by a duly authorized officer of the Seller, the security interest
referred to in paragraph 8 above in the Mortgage Notes will constitute a fully
perfected first priority security interest in all right, title and interest of
the Seller therein, in the Mortgage Note.
10. (a) Upon the filing of financing statements on Form UCC-1 naming
the Buyer as "Secured Party" and the Seller as "Debtor", and describing the
Collateral, in the jurisdictions and recording offices listed on Schedule 1
attached hereto, the security interests referred to in paragraph 9 above are in
the appropriate form for filing with the states listed on Schedule 1 and will
constitute fully perfected security interests under the UCC in all right, title
and interest of the Seller in, to and under such Collateral, which can be
perfected by filing under the UCC.
(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 Filing
Collateral as of the dates and times specified on Schedule 2. Except for the
matters listed on Schedule 2, the UCC Search Report identifies no Person who has
filed in any Filing Office a financing statement describing the Filing
Collateral prior to the effective dates of the UCC Search Report.
[11. The Assignments of Mortgage are in recordable form, except for
the insertion of the name of the assignee, and upon the name of the assignee
being inserted, are acceptable for recording under the laws of the state where
each related Mortgaged Property is located.]
12. The Seller is duly registered as a [____________] in each state
in which Assets were originated to the extent such registration is required by
applicable law, and has obtained all other licenses and governmental approvals
in each jurisdiction to the extent that the failure to obtain such licenses and
approvals would render any Asset unenforceable or would materially and adversely
affect the ability of the Seller to perform any of its obligations under, or the
enforceability of, the Asset Documents.
[13. Assuming that all other elements necessary to render a Mortgage
Loan legal, valid, binding and enforceable were present in connection with the
execution, delivery and performance of each Mortgage Loan (including completion
of the entire Mortgage Loan fully, accurately and in compliance with all
applicable laws, rules and regulations) and assuming further that no action was
taken in connection with the execution, delivery and performance of each
Mortgage Loan (including in connection with the sale of the related Mortgaged
Property) that would give rise to a defense to the legality, validity, binding
effect and enforceability of such Mortgage Loan, nothing in the forms of such
Mortgage Loans, as attached hereto as Exhibit A, would render such Mortgage
Loans other than legal, valid, binding and enforceable.]
[14. Assuming their validity, binding effect and enforceability in
all other respects (including completion of the entire Mortgage Loan fully,
accurately and in compliance with all applicable laws, rules and regulations),
the forms of Mortgage Loans attached hereto as Exhibit A are in sufficient
compliance with ________ law and Federal consumer protection laws so as not to
be rendered void or voidable at the election of the Mortgagor thereunder.]
Very truly yours,
Seller's Underwriting Guidelines
EXHIBIT IX
EXHIBIT IX(A)
Underwriting Guidelines Modifications
1. No loans to facilitate REO or to rewrite loans delinquent more than 60
days.
2. Homes listed for sale are not eligible for refinancing transactions.
3. Property conditions must be average or better as reported by the appraiser
or as observable from photos in file.
4. No mixed use after 8/31/99.
5. Retention Loans (as defined in the Purchase Facility) must meet
Underwriting Guidelines (as modified) except that the appraisal may be up
to 18 months old.
6. Purchase money transactions require verification of downpayment and
verification of source.
7. No escrow holdbacks for completion or repair of property.
8. If the proposed mortgagor owns the property under a land contract, the
appraised value used to compute the LTV for the proposed loan may not be
higher than the mortgagor's land contract purchase price unless it can be
demonstrated (via utility or tax invoices or otherwise) that the mortgagor
has owned the property for at least 12 months.
9. If credit is to be given for mortgagor payments under a lease option or
land contract, the payments must be independently verified via a source
other than the lessor or the seller under the land contract (e.g.,
cancelled checks).
EXH. IX(A)-1
EXHIBIT X
Asset Tape Fields
EXHIBIT XI
Interim Servicing Addendum
Reference is hereby made to the Purchase Facility for a statement of
the terms thereof. All terms used in this Exhibit XI which are defined in the
Purchase Facility and which are not otherwise defined in this Agreement shall
have the same meanings herein as set forth therein.
Subsection 11.01 Interim Servicer.
The Interim Servicer, as independent contract servicer, shall
interim service and administer the Mortgage Loans in accordance with this
Agreement during the Interim Servicing Period and shall have full power and
authority, acting alone, to do or cause to be done any and all things in
connection with such interim servicing and administration which the Interim
Servicer may deem necessary or desirable and consistent with the terms of this
Agreement.
Consistent with the terms of this Agreement, the Interim Servicer
may waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Interim Servicer's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Purchaser; provided, however, that unless the Interim
Servicer has obtained the prior written consent of the Purchaser, the Interim
Servicer shall not permit any modification with respect to any Mortgage Loan
that would change the Mortgage Interest Rate, defer or forgive the payment
thereof or of any principal or interest payments, reduce the outstanding
principal amount (except for actual payments of principal), make additional
advances of additional principal or extend the final maturity date on such
Mortgage Loan. Without limiting the generality of the foregoing, the Interim
Servicer shall continue, and is hereby authorized and empowered, to execute and
deliver on behalf of itself, and the Purchaser, all instruments of satisfaction
or cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect to
the Mortgaged Property. If reasonably required by the Interim Servicer, the
Purchaser shall furnish the Interim Servicer with any powers of attorney at the
Purchaser's option and other documents necessary or appropriate to enable the
Interim Servicer to carry out its interim servicing and administrative duties
under this Agreement.
In interim servicing and administering the Mortgage Loans, the
Interim Servicer shall employ procedures including collection procedures and
exercise the same care that it customarily employs and exercises in servicing
and administering mortgage loans for its own account and mortgage loans which
are securitized by Purchaser in a rated transaction, giving due consideration to
accepted mortgage servicing practices of prudent lending institutions (such
practices, "Accepted Servicing Practices"). If Interim Servicer elects to
utilize a subservicer to perform any or all of Interim Servicer's duties
hereunder, Interim Servicer shall remain liable as though such duties were
performed directly by Interim Servicer and Interim Servicer shall be responsible
for the payment of any and all fees of any such subservicer.
Subsection 11.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest
on all Mortgage Loans are paid in full, the Interim Servicer shall proceed
diligently to collect all payments due under each Mortgage Loan when the same
shall become due and payable and shall, to the extent such procedures shall be
consistent with this Agreement, follow such collection procedures as it follows
with respect to mortgage loans comparable to the Mortgage Loans and held for its
own account. Further, the Interim Servicer shall take special care in
ascertaining and estimating annual ground rents, taxes, assessments, water
rates, fire and hazard insurance premiums and all other charges that, as
provided in the Mortgage, will become due and payable to the end that the
installments payable by the Mortgagors will be sufficient to pay such charges as
and when they become due and payable.
Subsection 11.03 Realization Upon Defaulted Mortgage Loans.
(a) The Interim Servicer shall use its best efforts, consistent with
the procedures that the Interim Servicer would use in servicing loans for its
own account, to foreclose upon or otherwise comparably convert the ownership of
such Mortgaged Properties as come into and continue in default and as to which
no satisfactory arrangements can be made for collection of delinquent payments
pursuant to Subsection 11.01. The Interim Servicer shall use its best efforts to
realize upon defaulted Mortgage Loans in such a manner as will maximize the
receipt of principal and interest by the Purchaser, taking into account, among
other things, the timing of foreclosure proceedings. The foregoing is subject to
the provisions that, in any case in which Mortgaged Property shall have suffered
damage, the Interim Servicer shall not be required to expend its own funds
toward the restoration of such property in excess of $2,000 unless it consults
with the Purchaser with respect to a course of action to be taken and determines
in its discretion (i) that such restoration will increase the proceeds of
liquidation of the related Mortgage Loan to the Purchaser after reimbursement to
itself for such expenses, and (ii) that such expenses will be recoverable by the
Interim Servicer through Insurance Proceeds or Liquidation Proceeds from the
related Mortgaged Property, as contemplated in Subsection 11.05. In the event
that any payment due under any Mortgage Loan is not paid when the same becomes
due and payable, or in the event the Mortgagor fails to perform any other
covenant or obligation under the Mortgage Loan and such failure continues beyond
any applicable grace period, the Interim Servicer shall take such action as it
shall deem to be in the best interest of the Purchaser. In the event that any
payment due under any Mortgage Loan remains delinquent for a period of ninety
(90) days or more, the Interim Servicer shall notify the Purchaser and receive
instruction as to whether to commence foreclosure proceedings in accordance with
Accepted Servicing Practices. The Interim Servicer shall be responsible for all
costs and expenses incurred by it in any such proceedings; provided, however,
that it shall be entitled to reimbursement thereof from the related Mortgaged
Property, as contemplated in Subsection 11.05.
(b) Notwithstanding the foregoing provisions of this Subsection
11.03, with respect to any Mortgage Loan as to which the Interim Servicer has
received actual notice of, or has actual knowledge of, the presence of any toxic
or hazardous substance on the related Mortgaged Property the Interim Servicer
shall not either (i) obtain title to such Mortgaged Property as a result of or
in lieu of foreclosure or otherwise, or (ii) otherwise acquire possession of, or
take any other action, with respect to, such Mortgaged Property if, as a result
of any such action, the Purchaser would be considered to hold title to, to be a
mortgagee-in-possession of, or to be an owner or operator of such Mortgaged
Property within the meaning of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, or any
comparable law, unless the Interim Servicer has immediately consulted with the
Purchaser with respect to a course of action to be taken in accordance with
Accepted Servicing Practices.
The cost of the environmental audit report contemplated by this
Subsection 11.03 shall be advanced by the Interim Servicer, subject to the
Interim Servicer's right to be reimbursed therefor from the Custodial Account as
contemplated in Subsection 11.05.
If the Interim Servicer determines, as described above, that it is
in the best economic interest of the Purchaser to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Interim Servicer shall take such action as it deems to be in the best
economic interest of the Purchaser. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Interim Servicer,
subject to the Interim Servicer's right to be reimbursed therefor from the
Custodial Account as contemplated in Subsection 11.05.
(c) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds in respect of any Mortgage Loan, will
be applied in the following order of priority: first, to reimburse the Interim
Servicer for any related unreimbursed Servicing Advances; second, to accrued and
unpaid interest on the Mortgage Loan, to the date of the Final Recovery
Determination; and third, as a recovery of principal of the Mortgage Loan.
Subsection 11.04 Establishment of Custodial Accounts; Deposits in
Custodial Accounts.
The Interim Servicer shall segregate and hold all funds collected
and received pursuant to each Mortgage Loan separate and apart from any of its
own funds and general assets.
The Interim Servicer shall deposit in the Custodial Account within
24 hours of receipt, and retain therein the following payments and collections
received by it subsequent to the Cut-off Date, or received by it prior to the
Cut-off Date but allocable to a period subsequent thereto, other than in respect
of principal and interest on the Mortgage Loans due on or before the Cut-off
Date:
(i) all payments on account of principal on the Mortgage Loans
including any Principal Prepayments and any prepayment penalties or premiums;
(ii) all payments on account of interest on the Mortgage Loans;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Subsections 11.10 and 11.11, other than proceeds to be
held in the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with the Interim
Servicer's normal servicing procedures, the loan documents or applicable law;
(v) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with the Interim Servicer's
normal servicing procedures, the loan documents or applicable law;
(vi) all proceeds of any Mortgage Loan repurchased in accordance
with Subsections 7.03 and 7.04 and all amounts required to be deposited by the
Seller in connection with shortfalls in principal amount of Qualified Substitute
Mortgage Loans pursuant to Subsection 7.03;
(vii) any amounts required to be deposited by the Interim Servicer
pursuant to Subsection 11.11 in connection with the deductible clause in any
blanket hazard insurance policy. Such deposit shall be made from the Interim
Servicer's own funds, without reimbursement therefor;
(viii) any amounts required to be deposited by the Interim Servicer
in connection with any REO Property pursuant to Subsection 11.13; and
(ix) any amounts required to be deposited in the Custodial Account
pursuant to Subsections 11.19 or 11.20.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges, assumption
fees, to the extent permitted by Subsection 11.01, and the Interim Servicing Fee
as permitted by Section 11.21, need not be deposited by the Interim Servicer in
the Custodial Account. Such Custodial Account shall be an Eligible Account. Any
interest or earnings on funds deposited in the Custodial Account by the
depository institution shall accrue to the benefit of the Purchaser. The Interim
Servicer shall give notice to the Purchaser of the location of the Custodial
Account when established and prior to any change thereof.
Subsection 11.05 Permitted Withdrawals From the Custodial Account.
The Purchaser, as owner of the Custodial Account, shall be entitled
to withdraw any and all funds deposited in the Custodial Account as owner
thereto. All withdrawals from the Custodial Account shall be made by the
Purchaser and the Interim Servicer shall have no withdrawal rights with respect
thereto.
Simultaneously with the delivery of the Remittance Report, the
Interim Servicer shall deliver an invoice to the Purchaser, along with
reasonable documentation, requesting payment for the following:
(i) to pay the Interim Servicer for unreimbursed Servicing Advances,
the Interim Servicer's right to payment pursuant to this subclause (i) with
respect to any Mortgage Loan being limited to related Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Interim Servicer from the Mortgagor or otherwise relating to
the Mortgage Loan, it being understood that, in the case of such reimbursement,
the Interim Servicer's right thereto shall be prior to the rights of the
Purchaser, except that, where the Interim Servicer is required to repurchase a
Mortgage Loan, pursuant to Subsection 7.03, the Interim Servicer's right to such
payment shall be subsequent to the payment to the Purchaser of the Repurchase
Price pursuant to Subsection 7.03 and all other amounts required to be paid to
the Purchaser with respect to such Mortgage Loans;
(ii) to pay the Interim Servicer with respect to each Mortgage Loan
that has been repurchased pursuant to Subsection 7.03 all amounts received
thereon and not distributed as of the date on which the related Repurchase Price
is determined; and
(iii) to pay, or to reimburse the Interim Servicer for advances in
respect of, expenses incurred in connection with any Mortgage Loan pursuant to
Subsection 11.03(b), but only to the extent of amounts received in respect of
the Mortgage Loans to which such expense is attributable.
Absent a good faith dispute on the amount set forth on such invoice,
the Purchaser shall remit to the Interim Servicer the amount specified in such
invoice within five (5) Business Days of receipt thereof by the Purchaser.
In the event that any amount is mistakenly deposited into the
Custodial Account by the Interim Servicer, the Purchaser shall withdraw such
amount from the Custodial Account and remit it to the Interim Servicer as
quickly as possible, and if possible on the date the Purchaser receives
notification from the Interim Servicer of such mistaken deposit.
Subsection 11.06 Establishment of Escrow Accounts; Deposits in
Escrow Accounts.
The Interim Servicer shall segregate and hold all funds collected
and received pursuant to each Mortgage Loan which constitute Escrow Payments
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Escrow Accounts, in the form of time deposit
or demand accounts. The creation of any Escrow Account shall be evidenced by
Escrow Account Letter Agreement in the form of Exhibit 8.
The Interim Servicer shall deposit in the Escrow Account or Accounts
within 24 hours of receipt, and retain therein, (i) all Escrow Payments
collected on account of the Mortgage Loans, for the purpose of effecting timely
payment of any such items as required under the terms of this Agreement, and
(ii) all Insurance Proceeds which are to be applied to the restoration or repair
of any Mortgaged Property. The Interim Servicer shall make withdrawals therefrom
only to effect such payments as are required under this Agreement, and for such
other purposes as shall be as set forth or in accordance with Subsection 11.08.
The Interim Servicer shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution other than
interest on escrowed funds required by law to be paid to the Mortgagor and, to
the extent required by law, the Interim Servicer shall pay interest on escrowed
funds to the Mortgagor notwithstanding that the Escrow Account is non-interest
bearing or that interest paid thereon is insufficient for such purposes.
Subsection 11.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Interim
Servicer (i) to effect timely payments of ground rents, taxes, assessments,
water rates, hazard insurance premiums and comparable items, (ii) to reimburse
the Interim Servicer for any Servicing Advance made by the Interim Servicer with
respect to a related Mortgage Loan but only from amounts received on the related
Mortgage Loan which represent late payments or collections of Escrow Payments
thereunder, (iii) to refund to the Mortgagor any funds as may be determined to
be overages, (iv) for transfer to the Custodial Account in accordance with the
terms of this Agreement, (v) for application to restoration or repair of the
Mortgaged Property, (vi) to pay to the Interim Servicer, or to the Mortgagor to
the extent required by law, any interest paid on the funds deposited in the
Escrow Account, or (vii) to clear and terminate the Escrow Account on the
termination of this Agreement.
Subsection 11.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Interim Servicer shall
maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Mortgaged Property and the status of fire and hazard insurance coverage and
shall obtain, from time to time, all bills for the payment of such charges,
including insurance renewal premiums and shall effect payment thereof prior to
the applicable penalty or termination date and at a time appropriate for
securing maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in the Escrow Account which shall have been estimated and accumulated
by the Interim Servicer in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage and applicable law. To the extent that the
Mortgage does not provide for Escrow Payments, the Interim Servicer shall
determine that any such payments are made by the Mortgagor at the time they
first become due. The Interim Servicer assumes full responsibility for the
timely payment of all such bills and shall effect timely payments of all such
bills irrespective of the Mortgagor's faithful performance in the payment of
same or the making of the Escrow Payments and shall make advances from its own
funds to effect such payments.
Upon the termination of the Interim Servicing Period or the transfer
of servicing with respect to any Mortgage Loan, the successor servicer shall
reimburse the Interim Servicer for amounts the Interim Servicer actually
expended as interim servicer pursuant to this Agreement for which the Interim
Servicer would have otherwise been entitled to be reimbursed and which would
otherwise have been recovered by the Interim Servicer pursuant to this Agreement
but for the appointment of the successor servicer.
Subsection 11.09 Transfer of Accounts.
The Interim Servicer may transfer the Custodial Account or the
Escrow Account to a different depository institution from time to time. Such
transfer shall be made only upon obtaining the consent of the Purchaser, which
consent shall not be unreasonably withheld. In any case, the Custodial Account
and Escrow Account shall be Eligible Accounts.
Subsection 11.10 Maintenance of Hazard Insurance.
The Interim Servicer shall cause to be maintained for each Mortgage
Loan fire and hazard insurance with extended coverage as is customary in the
area where the Mortgaged Property is located in an amount which is at least
equal to the lesser of (i) the amount necessary to fully compensate for any
damage or loss to the improvements which are a part of such property on a
replacement cost basis or (ii) the outstanding principal balance of the Mortgage
Loan, in each case in an amount not less than such amount as is necessary to
prevent the Mortgagor and/or the Mortgagee from becoming a co-insurer. If the
Mortgaged Property is in an area identified on a Flood Hazard Boundary Map or
Flood Insurance Rate Map issued by the Flood Emergency Management Agency as
having special flood hazards and such flood insurance has been made available,
the Interim Servicer will cause to be maintained a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable insurance carrier, in an amount
representing coverage not less than the lesser of (i) the outstanding principal
balance of the Mortgage Loan or (ii) the maximum amount of insurance which is
available under the National Flood Insurance Act of 1968 or the Flood Disaster
Protection Act of 1973, as amended. The Interim Servicer also shall maintain on
any REO Property, fire and hazard insurance with extended coverage in an amount
which is at least equal to the lesser of (i) the maximum insurable value of the
improvements which are a part of such property and (ii) either (A) the
outstanding principal balance of the related Mortgage Loan at the time it became
an REO Property plus accrued interest at the Mortgage Interest Rate and related
Servicing Advances with respect to each First Lien Mortgage Loan or (B) with
respect to each Second Lien Mortgage Loan, the sum of the outstanding principal
balance of the First Lien Mortgage Loan and the outstanding principal balance of
the Second Lien Mortgage Loan plus accrued interest at the Mortgage Interest
Rate and related Servicing Advances, liability insurance and, to the extent
required and available under the National Flood Insurance Act of 1968 or the
Flood Disaster Protection Act of 1973, as amended, flood insurance in an amount
as provided above. Pursuant to Subsection 11.04, any amounts collected by the
Interim Servicer under any such policies other than amounts to be deposited in
the Escrow Account and applied to the restoration or repair of the Mortgaged
Property or REO Property, or released to the Mortgagor in accordance with the
Interim Servicer's normal servicing procedures, shall be deposited in the
Custodial Account. Any cost incurred by the Interim Servicer in maintaining any
such insurance shall not, for the purpose of calculating distributions to the
Purchaser, be added to the unpaid principal balance of the related Mortgage
Loan, notwithstanding that the terms of such Mortgage Loan so permit. It is
understood and agreed that no earthquake or other additional insurance need be
required by the Interim Servicer of the Mortgagor or maintained on property
acquired in respect of the Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. All such policies shall be endorsed with standard
mortgagee clauses with loss payable to the Interim Servicer, or upon request to
the Purchaser, and shall provide for at least thirty days prior written notice
of any cancellation, reduction in the amount of, or material change in, coverage
to the Interim Servicer. The Interim Servicer shall not interfere with the
Mortgagor's freedom of choice in selecting either his insurance carrier or
agent, provided, however, that the Interim Servicer shall not accept any such
insurance policies from insurance companies unless such companies currently
reflect a General Policy Rating of A:VI or better in Best's Key Rating Guide and
are licensed to do business in the state wherein the property subject to the
policy is located.
Subsection 11.11 Maintenance of Mortgage Impairment Insurance
Policy.
In the event that the Interim Servicer shall obtain and maintain a
mortgage impairment or blanket policy issued by an insurer that has a Best
rating of A:VI insuring against hazard losses on all of Mortgaged Properties
securing the Mortgage Loans, then, to the extent such policy provides coverage
in an amount equal to the amount required pursuant to Subsection 11.10 and
otherwise complies with all other requirements of Subsection 11.10, the Interim
Servicer shall conclusively be deemed to have satisfied its obligations as set
forth in Subsection 11.10, it being understood and agreed that such policy may
contain a deductible clause, in which case the Interim Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with Subsection 11.10, and there
shall have been one or more losses which would have been covered by such policy,
deposit in the Custodial Account the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as servicer of the Mortgage Loans, the Interim Servicer agrees to
prepare and present, on behalf of the Purchaser, claims under any such blanket
policy in a timely fashion in accordance with the terms of such policy. Upon
request of the Purchaser, the Interim Servicer shall cause to be delivered to
the Purchaser a certified true copy of such policy and a statement from the
insurer thereunder that such policy shall in no event be terminated or
materially modified without thirty days prior written notice to the Purchaser.
Subsection 11.12 Fidelity Bond, Errors and Omissions Insurance.
The Interim Servicer shall maintain, at its own expense, a blanket
fidelity bond and an errors and omissions insurance policy, with broad coverage
with responsible companies that would meet the requirements of ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac on all officers, employees or other persons acting in any capacity
with regard to the Mortgage Loans to handle funds, money, documents and papers
relating to the Mortgage Loans. The fidelity bond and errors and omissions
insurance shall be in the form of the Mortgage Banker's Blanket Bond and shall
protect and insure the Interim Servicer against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
persons. Such fidelity bond shall also protect and insure the Interim Servicer
against losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Subsection 11.12 requiring the fidelity
bond and errors and omissions insurance shall diminish or relieve the Interim
Servicer from its duties and obligations as set forth in this Agreement. The
minimum coverage under any such bond and insurance policy shall be at least
equal to the corresponding amounts required by ▇▇▇▇▇▇ Mae in the ▇▇▇▇▇▇ ▇▇▇
Servicing Guide or by ▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ Mac Interim Servicers' and
Servicers' Guide. Upon request of the Purchaser, the Interim Servicer shall
cause to be delivered to the Purchaser a certified true copy of the fidelity
bond and insurance policy and a statement from the surety and the insurer that
such fidelity bond or insurance policy shall in no event be terminated or
materially modified without thirty days' prior written notice to the Purchaser.
Subsection 11.13 Title, Management and Disposition of REO Property.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the person designated by the Purchaser, or in the
event such person is not authorized or permitted to hold title to real property
in the state where the REO Property is located, or would be adversely affected
under the "doing business" or tax laws of such state by so holding title, the
deed or certificate of sale shall be taken in the name of such Person or Persons
as shall be consistent with an opinion of counsel obtained by the Interim
Servicer from an attorney duly licensed to practice law in the state where the
REO Property is located. Any Person or Persons holding such title other than the
Purchaser shall acknowledge in writing that such title is being held as nominee
for the benefit of the Purchaser.
The Interim Servicer shall either itself or through an agent
selected by the Interim Servicer, manage, conserve, protect and operate each REO
Property (and may temporarily rent the same) in the same manner that it manages,
conserves, protects and operates other foreclosed property for its own account,
and in the same manner that similar property in the same locality as the REO
Property is managed. The Interim Servicer shall cause each REO Property to be
inspected promptly upon the acquisition of title thereto and shall cause each
REO Property to be inspected at least annually thereafter. The Interim Servicer
shall make or cause to be made a written report of each such inspection. Such
reports shall be retained in the Mortgage File and copies thereof shall be
forwarded by the Interim Servicer to the Purchaser. The Interim Servicer shall
use its best efforts to dispose of the REO Property as soon as possible and
shall sell such REO Property in any event within one year after title has been
taken to such REO Property, unless the Interim Servicer determines, and gives
appropriate notice to the Purchaser, that a longer period is necessary for the
orderly liquidation of such REO Property. If a period longer than one year is
necessary to sell any REO property, (i) the Interim Servicer shall report
monthly to the Purchaser as to the progress being made in selling such REO
Property and (ii) if, with the written consent of the Purchaser, a purchase
money mortgage is taken in connection with such sale, such purchase money
mortgage shall name the Interim Servicer as mortgagee, and a separate servicing
agreement between the Interim Servicer and the Purchaser shall be entered into
with respect to such purchase money mortgage.
The Interim Servicer shall deposit or cause to be deposited, within
twenty four (24) hours of receipt, in the Custodial Account all revenues
received with respect to the related REO Property and shall advance funds
necessary for the proper operation, management and maintenance of the REO
Property, including the cost of maintaining any hazard insurance pursuant to
Subsection 11.10 hereof and the fees of any managing agent acting on behalf of
the Interim Servicer. The Purchaser shall reimburse any such advance pursuant to
Subsection 11.05. The Interim Servicer shall separately account for each REO
Property and any amounts received with respect thereto.
The Interim Servicer shall furnish to the Purchaser on the fifteenth
calendar day of each month or the next following Business Day if such fifteenth
day is not a Business Day, an operating statement for each REO Property covering
the operation of each REO Property for the previous month. Such operating
statement shall be accompanied by such other information as the Purchaser shall
reasonably request.
Each REO Disposition shall be carried out by the Interim Servicer at
such price and upon such terms and conditions as the Interim Servicer deems to
be in the best interest of the Purchaser only with the prior written consent of
the Purchaser. If as of the date title to any REO Property was acquired by the
Interim Servicer there were outstanding unreimbursed Servicing Advances with
respect to the REO Property, the Interim Servicer, upon an REO Disposition of
such REO Property, shall be entitled to reimbursement for any related
unreimbursed Servicing Advances from proceeds received in connection with such
REO Disposition. The proceeds from the REO Disposition shall be deposited in the
Custodial Account within twenty four hours of receipt and the Purchaser shall
thereafter reimburse such unreimbursed Servicing Advances to the Interim
Servicer.
Subsection 11.14 [Reserved]
Subsection 11.15 Remittance Reports.
No later than the fifteenth calendar day of each month or the next
following Business Day if such 15th calendar day is not a Business Day, the
Interim Servicer shall furnish to the Purchaser or its designee in electronic
form, and by hard copy, the monthly data for the prior month in form and
substance acceptable to the Purchaser, together with such other information with
respect to the Mortgage Loans as the Purchaser may reasonably require to
allocate distributions made pursuant to this Agreement and provide appropriate
statements with respect to such distributions.
Subsection 11.16 Statements to the Purchaser.
Upon request of the Purchaser, and not later than the fifteenth day
of each month, the Interim Servicer shall forward to the Purchaser or its
designee a statement prepared by the Interim Servicer setting forth the status
of the Custodial Account as of the close of business on such date and showing,
for the period covered by such statement, the aggregate amount of deposits into
the Custodial Account of each category of deposit specified in Subsection 11.04.
Subsection 11.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Subsection 11.02,
with respect to any REO Property, the Interim Servicer shall furnish to the
Purchaser a statement covering the Interim Servicer's efforts in connection with
the sale of such REO Property and any rental of such REO Property incidental to
the sale thereof for the previous month, together with the operating statement.
Such statement shall be accompanied by such other information as the Purchaser
shall reasonably request.
Subsection 11.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the
acquisition thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure,
the Interim Servicer shall submit to the Purchaser a liquidation report with
respect to such Mortgaged Property.
Subsection 11.19 Assumption Agreements.
The Interim Servicer shall, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged Property
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under any "due-on-sale" clause applicable thereto; provided, however, that the
Interim Servicer shall not exercise any such rights if prohibited by law from
doing so. If the Interim Servicer reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, the Interim Servicer shall
enter into an assumption agreement with the person to whom the Mortgaged
Property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. Where an assumption
is allowed pursuant to this Subsection 11.01, the Interim Servicer is authorized
to enter into a substitution of liability agreement with the person to whom the
Mortgaged Property has been conveyed or is proposed to be conveyed pursuant to
which the original Mortgagor is released from liability and such Person is
substituted as Mortgagor and becomes liable under the related Mortgage Note. Any
such substitution of liability agreement shall be in lieu of an assumption
agreement.
In connection with any such assumption or substitution of liability,
the Interim Servicer shall follow the underwriting practices and procedures of
prudent mortgage lenders in the state in which the related Mortgaged Property is
located and Accepted Servicing Practices. With respect to an assumption or
substitution of liability, Mortgage Interest Rate, the amount of the Monthly
Payment, and the final maturity date of such Mortgage Note may not be changed.
The Interim Servicer shall notify the Purchaser that any such substitution of
liability or assumption agreement has been completed by forwarding to the
Purchaser the original of any such substitution of liability or assumption
agreement, which document shall be added to the related Mortgage File and shall,
for all purposes, be considered a part of such Mortgage File to the same extent
as all other documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraphs of this Subsection or any
other provision of this Agreement, the Interim Servicer shall not be deemed to
be in default, breach or any other violation of its obligations hereunder by
reason of any assumption of a Mortgage Loan by operation of law or any
assumption which the Interim Servicer may be restricted by law from preventing,
for any reason whatsoever. For purposes of this Subsection 11.19, the term
"assumption" is deemed to also include a sale of the Mortgaged Property subject
to the Mortgage that is not accompanied by an assumption or substitution of
liability agreement.
Subsection 11.20 Satisfaction of Mortgages and Release of Mortgage
Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Interim Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes the Interim Servicer will act in accordance
with Accepted Servicing Practices. In addition, upon the request of the
Purchaser at any time, the Interim Servicer shall notify the Purchaser of any
Mortgage Loans which have been paid in full or as to which the Interim Servicer
has received notification that a payoff in full will be made. Upon request by
the Interim Servicer, the Purchaser, shall promptly release the related mortgage
documents to the Interim Servicer and the Interim Servicer shall prepare and
process any satisfaction or release. No expense incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the
Custodial Account or the Purchaser.
In the event the Interim Servicer satisfies or releases a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or should it otherwise prejudice any right the Purchaser may have under
the mortgage instruments, the Interim Servicer, upon written demand, shall remit
to the Purchaser the then outstanding principal balance of the related Mortgage
Loan by deposit thereof in the Custodial Account. The Interim Servicer shall
maintain the fidelity bond insuring the Interim Servicer against any loss it may
sustain with respect to any Mortgage Loan not satisfied in accordance with the
procedures set forth herein.
From time to time and as appropriate for the servicing or
foreclosure of the Mortgage Loan the Purchaser shall, upon request of the
Interim Servicer and delivery to the Purchaser of a servicing receipt signed by
a Servicing Officer, release the requested portion of the Mortgage File held by
the Purchaser to the Interim Servicer. Such servicing receipt shall obligate the
Interim Servicer to return the related Mortgage documents to the Purchaser when
the need therefor by the Interim Servicer no longer exists, unless the Mortgage
Loan has been liquidated and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the Custodial Account or the Mortgage File or such
document has been delivered to an attorney, or to a public trustee or other
public official as required by law, for purposes of initiating or pursuing legal
action or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Interim Servicer has delivered to the
Purchaser a certificate of a Servicing Officer certifying as to the name and
address of the Person to which such Mortgage File or such document was delivered
and the purpose or purposes of such delivery. Upon receipt of a certificate of a
Servicing Officer stating that such Mortgage Loan was liquidated, the servicing
receipt shall be released by the Purchaser to the Interim Servicer.
Subsection 11.21 Servicing Compensation.
As compensation for its services hereunder, the Interim Servicer
shall be entitled to retain from interest payments on the Mortgage Loans the
amounts provided for as the Interim Servicing Fee for such calendar month. The
Interim Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for.
Subsection 11.22 Notification of Adjustments.
On each Adjustment Date, the Interim Servicer shall make interest
rate adjustments for each Adjustable Rate Mortgage Loan in compliance with the
requirements of the related Mortgage and Mortgage Note. The Interim Servicer
shall execute and deliver the notices required by each Mortgage and Mortgage
Note regarding interest rate adjustments. The Interim Servicer also shall
provide timely notification to the Purchaser of all applicable data and
information regarding such interest rate adjustments and the Interim Servicer's
methods of implementing such interest rate adjustments. Upon the discovery by
the Interim Servicer or the Purchaser that the Interim Servicer has failed to
adjust a Mortgage Interest Rate or a Monthly Payment pursuant to the terms of
the related Mortgage Note and Mortgage, the Interim Servicer shall immediately
deposit in the Custodial Account from its own funds the amount of any interest
loss caused thereby without reimbursement therefor.
Subsection 11.23 Statement as to Compliance.
The Interim Servicer will deliver to the Purchaser not later than 90
days following the end of each fiscal year of the Interim Servicer, which as of
the Closing Date ends on the last day in December in each calendar year, an
Officers' Certificate stating, as to each signatory thereof, that (i) a review
of the activities of the Interim Servicer during the preceding year and of
performance under this Agreement has been made under such officers' supervision
and (ii) to the best of such officers' knowledge, based on such review, the
Interim Servicer has fulfilled all of its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof. Copies of such statement shall be provided by the
Purchaser to any Person identified as a prospective purchaser of the Mortgage
Loans.
Subsection 11.24 Independent Public Accountants' Servicing Report.
Not later than 90 days following the end of each fiscal year of the
Interim Servicer, the Interim Servicer at its expense shall cause a firm of
independent public accountants (which may also render other services to the
Interim Servicer) which is a member of the American Institute of Certified
Public Accountants to furnish a statement to the Purchaser or its designee to
the effect that such firm has examined certain documents and records relating to
the servicing of the Mortgage Loans under this Agreement or of mortgage loans
under pooling and servicing agreements (including the Mortgage Loans and this
Agreement) substantially similar one to another (such statement to have attached
thereto a schedule setting forth the pooling and servicing agreements covered
thereby) and that, on the basis of such examination conducted substantially in
compliance with the Uniform Single Attestation Program for Mortgage Bankers,
such firm confirms that such servicing has been conducted in compliance with
such pooling and servicing agreements except for such significant exceptions or
errors in records that, in the opinion of such firm, the Uniform Single
Attestation Program for Mortgage Bankers requires it to report. Copies of such
statement shall be provided by the Purchaser to any Person identified as a
prospective purchaser of the Mortgage Loans.
Subsection 11.25 Access to Certain Documentation.
The Interim Servicer shall provide to the Office of Thrift
Supervision, the FDIC and any other federal or state banking or insurance
regulatory authority that may exercise authority over the Purchaser access to
the documentation regarding the Mortgage Loans serviced by the Interim Servicer
required by applicable laws and regulations. Such access shall be afforded
without charge, but only upon reasonable request and during normal business
hours at the offices of the Interim Servicer. In addition, access to the
documentation will be provided to the Purchaser and any Person identified to the
Interim Servicer by the Purchaser without charge, upon reasonable request during
normal business hours at the offices of the Interim Servicer.
Subsection 11.26 Reports and Returns to be Filed by Interim
Servicer.
The Interim Servicer shall comply with Code rules and regulations
and other applicable laws and prepare and report information, statements or
other filings required to be delivered to any governmental taxing authority or
to any Purchaser pursuant to any applicable law with respect to the Mortgage
Loans and the transactions contemplated hereby in accordance with Accepted
Servicing Practices. In addition, the Interim Servicer shall provide the
Purchaser with such information concerning the Mortgage Loans as is necessary
for the Purchaser to prepare its federal income tax return as any Purchaser may
reasonably request from time to time.
In accordance with Accepted Servicing Practices, the Interim
Servicer shall file information reports with respect to the receipt of mortgage
interest received in a trade or business, reports of foreclosures and
abandonments of any Mortgaged Property and information returns relating to
cancellation of indebtedness income with respect to any Mortgaged Property.