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EXHIBIT 10.6
EXECUTION COPY
MASTER REPURCHASE AGREEMENT
Between:
DLJ MORTGAGE CAPITAL, INC., AS BUYER
and
STARNET MORTGAGE, INC., AS SELLER
Dated as of May 31, 2000
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TABLE OF CONTENTS
Page
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1. APPLICABILITY ......................................................................................... 1
2. DEFINITIONS ........................................................................................... 1
3. INITIATION; TERMINATION ............................................................................... 12
4. MARGIN AMOUNT MAINTENANCE ............................................................................. 16
5. INCOME PAYMENTS ....................................................................................... 16
6. REQUIREMENTS OF LAW ................................................................................... 17
7. SECURITY INTEREST ..................................................................................... 18
8. PAYMENT, TRANSFER AND CUSTODY ......................................................................... 19
9. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS ........................................................... 20
10. REPRESENTATIONS ....................................................................................... 20
11. COVENANTS OF THE SELLER ............................................................................... 25
12. EVENTS OF DEFAULT ..................................................................................... 30
13. REMEDIES .............................................................................................. 33
14. INDEMNIFICATION AND EXPENSES .......................................................................... 35
15. RECORDING OF COMMUNICATIONS ........................................................................... 36
16. SINGLE AGREEMENT ...................................................................................... 36
17. NOTICES AND OTHER COMMUNICATIONS ...................................................................... 37
18. ENTIRE AGREEMENT; SEVERABILITY ........................................................................ 37
19. NON-ASSIGNABILITY ..................................................................................... 37
20. TERMINABILITY ......................................................................................... 37
21. GOVERNING LAW ......................................................................................... 38
22. SUBMISSION TO JURISDICTION; WAIVERS ................................................................... 38
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23. NO WAIVERS, ETC. ...................................................................................... 39
24. SERVICING ............................................................................................. 39
25. PERIODIC DUE DILIGENCE REVIEW ......................................................................... 40
26. BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT ............................................................... 41
27. MISCELLANEOUS ......................................................................................... 42
28. CONFIDENTIALITY ....................................................................................... 43
29. CONFLICTS ............................................................................................. 43
30. MAXIMUM CHARGES ....................................................................................... 43
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EXHIBITS
SCHEDULE 1 Representations and Warranties Re: Mortgage Loans
EXHIBIT I Form of Confirmation Letter
EXHIBIT II Underwriting Guidelines
EXHIBIT III Form of Opinion Letter
EXHIBIT IV UCC Filing Jurisdictions
EXHIBIT V Form of Account Agreement
EXHIBIT VI Form of True Sale Certification
EXHIBIT VII Takeout Investors
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MASTER REPURCHASE AGREEMENT
This is a MASTER REPURCHASE AGREEMENT, dated as of May 31,
2000, between STARNET MORTGAGE, INC., a Delaware corporation (the "Seller"), and
DLJ MORTGAGE CAPITAL, INC., a New York corporation (the "Buyer").
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in
which Seller agrees to transfer to Buyer Mortgage Loans against the
transfer of funds by Buyer, with a simultaneous agreement by Buyer to
transfer to Seller such Mortgage Loans at a date certain not later than
364 days after the date of transfer, against the transfer of funds by
Seller. Each such transaction shall be referred to herein as a
"Transaction" and shall be governed by this Agreement, unless otherwise
agreed in writing.
2. DEFINITIONS
As used herein, the following terms shall have the following meanings
(all terms defined in this Section 2 or in other provisions of this
Repurchase Agreement in the singular to have the same meanings when
used in the plural and vice versa) Terms otherwise not defined herein
shall have the meanings set forth in the Custodial Agreement.
"Account Agreement" shall mean a letter agreement between the Seller,
the Buyer, and the Bank substantially in the form of Exhibit V attached
hereto.
"Act of Insolvency" shall mean, with respect to any party and its
Affiliates, (i) the filing of a petition, commencing, or authorizing
the commencement of any case or proceeding under any bankruptcy,
insolvency, reorganization, liquidation, dissolution or similar law
relating to the protection of creditors, or suffering any such petition
or proceeding to be commenced by another which is consented to, not
timely contested or results in entry of an order for relief; (ii) the
seeking the appointment of a receiver, trustee, custodian or similar
official for such party or an Affiliate or any substantial part of the
property of either; (iii) the appointment of a receiver, conservator,
or manager for such party or an Affiliate by any governmental agency or
authority having the jurisdiction to do so; (iv) the making or offering
by such party or an Affiliate of a composition with its creditors or a
general assignment for the benefit of creditors; (v) the admission by
such party or an Affiliate of such party of its inability to pay its
debts or discharge its obligations as they become due or mature; or
(vi) that any governmental authority or agency or any person, agency or
entity acting or purporting to act under governmental authority shall
have taken any action to condemn, seize or appropriate, or to assume
custody or control of, all or any substantial part of the property of
such party or of any of its Affiliates, or shall have taken any action
to displace the management of such party or of any of its Affiliates or
to curtail its authority in the conduct of the business of such party
or of any of its Affiliates.
"Additional Purchased Assets" shall mean Mortgage Loans or cash
provided by Seller to Buyer or its designee pursuant to Section 4 of
the Repurchase Agreement.
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"Affiliate" shall mean with respect to any Person, any "affiliate" of
such Person, as such term is defined in the Bankruptcy Code.
"ALTA" shall mean the American Land Title Association.
"Anticipated Settlement Date" shall mean, with respect to each Mortgage
Loan, that date specified in the related Takeout Commitment as the
expiration date for such Takeout Commitment.
"Appraised Value" shall mean the value set forth in an appraisal made
in connection with the origination of the related Mortgage Loan as the
value of the Mortgaged Property.
"Asset Medium" shall mean a computer-readable transmission containing
information with respect to each Mortgage Loan to be delivered by the
Seller to the Buyer pursuant to Section 3(c) hereof and shall contain
the information set forth in Annex 1 attached to the Custodial
Agreement.
"Asset Schedule" shall have the meaning assigned thereto in the
Custodial Agreement.
"Asset Schedule and Exception Report" shall mean an Asset Schedule and
Exception Report prepared by the Custodian pursuant to the Custodial
Agreement.
"Asset Value" shall mean with respect to each Eligible Asset, the
lesser of (a) the Applicable Collateral Percentage of the Market Value
of such Mortgage Loan, and (b) the outstanding principal balance of
such Eligible Asset; provided, that, the following additional
limitations on Asset Value shall apply:
(i) The Asset Value shall be deemed to be zero with respect to
each Mortgage Loan (1) in respect of which there is a breach of a
representation and warranty set forth in Schedule 1 (assuming each
representation and warranty is made as of the date Asset Value is
determined), (2) in respect of which there is a delinquency in the
payment of principal and/or interest which continues for a period in
excess of twenty nine (29) calendar days (without regard to any
applicable grace periods), (3) which has not been repurchased by the
Seller by the 180th day after the date on which it is first purchased
by Buyer, (4) which has been released from the possession of the
Custodian under the Custodial Agreement to the Seller for a period in
excess of ten (10) calendar days, or (5) which exceed the limitation on
Asset Value set forth below.
(ii) The Asset Value of Mortgage Loans that are Second Lien
Mortgage Loans shall not exceed 15% of the Repurchase Price.
"Assignment of Mortgage" shall mean, with respect to any Mortgage, an
assignment of the Mortgage, notice of transfer or equivalent instrument
in recordable form, sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect the
assignment of the Mortgage to the Buyer.
"Bank" shall mean Bank United, N.A., in its capacity as bank with
respect to the Account Agreement.
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"Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978,
as amended from time to time.
"Business Day" shall mean a day other than (i) a Saturday or Sunday, or
(ii) a day in which the New York Stock Exchange, the Federal Reserve
Bank of New York or Custodian is authorized or obligated by law or
executive order to be closed.
"Buyer" shall mean DLJ Mortgage Capital, Inc., its successors in
interest and assigns.
"Capital Lease Obligations" shall mean, for any Person, all obligations
of such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a
capital lease on a balance sheet of such Person under GAAP, and, for
purposes of this Repurchase Agreement, the amount of such obligations
shall be the capitalized amount thereof, determined in accordance with
GAAP.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collection Account" shall mean the account established by the Bank
subject to an Account Agreement, into which all Collections shall be
deposited.
"Collections" shall mean all collections and proceeds on or in respect
of the Mortgage Loans, excluding collections required to be paid to the
Servicer or a Mortgagor on the Mortgage Loans.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Seller within the
meaning of Section 4001 of ERISA or is part of a group which includes
the Seller and which is treated as a single employer under Section 414
of the Code.
"Custodial Agreement" shall mean that custodial agreement, dated as of
August 19, 1999, by and among Buyer, Seller and the Custodian, as the
same shall be modified and supplemented and in effect from time to
time.
"Custodial Identification Certificate" shall have the meaning specified
in the Custodial Agreement.
"Custodian" shall mean Bank One, N.A. as custodian under the Custodial
Agreement, and its successors and permitted assigns thereunder.
"Default" shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.
"DLJ Obligations" shall mean any obligations of the Seller hereunder
and under any other arrangement between the Seller or an Affiliate of
the Seller on the one hand and the Buyer or an Affiliate of the Buyer
on the other hand.
"Dollars" and "$" shall mean lawful money of the United States of
America.
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"Due Diligence Review" shall mean the performance by Buyer of any or
all of the reviews permitted under Section 27 hereof with respect to
any or all of the Mortgage Loans, as desired by the Buyer from time to
time.
"Effective Date" shall mean the date upon which the conditions
precedent set forth in Section 3(a) shall have been satisfied.
"Eligible Asset" shall mean a Mortgage Loan (i) as to which the
representations and warranties in Schedule 1 hereof are correct (ii)
which is underwritten substantially in accordance with the Seller's
Underwriting Guidelines, a copy of which is attached hereto as Exhibit
II, (iii) which is secured by a Residential Dwelling, and (iv) which is
in strict compliance with any Investor Requirements for purchase by the
related Takeout Investor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that
is a member of any group of organizations (i) described in Section
414(b) or (c) of the Code of which 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.
"Eurodollar Rate" shall mean, with respect to each day a Transaction is
outstanding, the rate per annum equal to the rate appearing at page
3750 of the Telerate Screen as one-month LIBOR on such date (and if
such date is not a Business Day, the Eurodollar Rate in effect on the
Business Day immediately preceding such date), and if such rate shall
not be so quoted, the average rate per annum at which three mutually
acceptable banks are offered Dollar deposits at or about 10:00 a.m.,
New York City time, on such date by prime banks in the interbank
eurodollar market where the eurodollar and foreign currency exchange
operations in respect of its Transactions are then being conducted for
delivery on such day for a period of thirty (30) days and in an amount
comparable to the amount of the Transactions to be outstanding on such
day.
"Event of Default" has the meaning specified in Section 12 hereof.
"▇▇▇▇▇▇ ▇▇▇" shall mean the Federal National Mortgage Association, or
any successor thereto.
"FICO Score" shall mean the statistical credit scores obtained by
lenders in connection with a loan application to help assess a
Mortgagor's creditworthiness.
"Foreclosed Loan" shall mean a loan owned by the Seller, the Property
securing which has been foreclosed upon by the Seller.
"▇▇▇▇▇▇▇ Mac" means the Federal Home Loan Mortgage Corporation, or any
successor thereto.
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"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator;
including without limitation, the Appropriate Federal Banking Agency
having jurisdiction over the Seller, any of its Subsidiaries or any of
their properties.
"Guarantee" shall mean, as to any Person, any obligation of such Person
directly or indirectly guaranteeing any Indebtedness of any other
Person or in any manner providing for the payment of any Indebtedness
of any other Person or otherwise protecting the holder of such
Indebtedness against loss (whether by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, or to take-or-pay or otherwise); provided that
the term "Guarantee" shall not include (i) endorsements for collection
or deposit in the ordinary course of business, or (ii) obligations to
make servicing advances for delinquent taxes and insurance, or other
obligations in respect of a Mortgaged Property, or other principal and
interest advances made in the ordinary course of servicing the Mortgage
Loans. The amount of any Guarantee of a Person shall be deemed to be an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee is made or, if not stated
or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms
"Guarantee" and "Guaranteed" used as verbs shall have correlative
meanings.
"Income" shall mean, with respect to any Mortgage Loan at any time, any
principal thereof then payable and all interest, dividends or other
distributions payable thereon less any related servicing fee(s) charged
by the Servicer.
"Indebtedness" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to
another Person subject to an understanding or agreement, contingent or
otherwise, to repurchase such Property from such Person); (b)
obligations of such Person to pay the deferred purchase or acquisition
price of Property or services, other than trade accounts payable (other
than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are
payable within 90 days of the date the respective goods are delivered
or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the
respective Indebtedness so secured has been assumed by such Person; (d)
obligations (contingent or otherwise) of such Person in respect of
letters of credit or similar instruments issued or accepted by banks
and other financial institutions for account of such Person; (e)
obligations of such Person under repurchase agreements, sale/buy-back
agreements or like arrangements; (f) Indebtedness of others Guaranteed
by such Person; (g) all obligations of such Person incurred in
connection with the acquisition or carrying of fixed assets by such
Person; and (h) Indebtedness of general partnerships of which such
Person is a general partner; and (i) Capital Lease Obligations of such
Person.
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"Investor Requirements" shall mean the underwriting standards or
guidelines of the Takeout Investor, with respect to the related
Mortgage Loans and the delivery and servicing thereof.
"Late Payment Fee" has the meaning specified in Section 5(b) hereof.
"Lien" shall mean any mortgage, lien, pledge, charge, security interest
or similar encumbrance.
"Loan-to-Value Ratio" or "LTV" means with respect to any Mortgage Loan,
the ratio of the original outstanding principal amount of the Mortgage
Loan to the lesser of (a) the Appraised Value of the Mortgaged Property
at origination or (b) if the Mortgaged Property was purchased within
twelve (12) months of the origination of the Mortgage Loan, the
purchase price of the Mortgaged Property.
"Margin Percentage" shall mean such percentage as is acceptable to the
Buyer in its sole discretion and set forth in the related Confirmation.
"Margin Deficit" has the meaning specified in Section 4.
"Market Value" shall mean, as of any date with respect to any Mortgage
Loans, the price at which such Mortgage Loan could readily be sold as
determined in good faith by Buyer.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the Property, business, operations, financial condition or prospects of
the Seller, (b) the ability of the Seller to perform its obligations
under any of the Repurchase Documents to which it is a party, (c) the
validity or enforceability of any of the Repurchase Documents, (d) the
rights and remedies of the Buyer under any of the Repurchase Documents,
(e) the timely payment of any amounts payable under the Repurchase
Documents, or (f) the Asset Value of the Purchased Assets.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc. or any successors
thereto.
"Mortgage" shall mean the mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien on a fee simple
Residential Dwelling securing the Mortgage Note.
"Mortgage File" shall mean the documents specified as the "Mortgage
File" in Section 2 of the Custodial Agreement.
"Mortgage Loan" shall mean 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, (i) a Mortgage
Note and related Mortgage, and (ii) all right, title and interest of
the Seller in and to the Mortgaged Property covered by such Mortgage.
"Mortgage Loan Documents" shall mean, with respect to a Mortgage Loan,
the documents comprising the Mortgage File for such Mortgage Loan.
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"Mortgage Note" shall mean the original executed promissory note or
other evidence of the indebtedness of a Mortgagor with respect to a
Mortgage Loan.
"Mortgaged Property" shall mean the real property (including all
improvements, buildings, fixtures, building equipment and personal
property thereon and all additions, alterations and replacements made
at any time with respect to the foregoing) and all other collateral
securing repayment of the debt evidenced by a Mortgage Note.
"Mortgagee" shall mean the record holder of a Mortgage Note secured by
a Mortgage.
"Mortgagor" shall mean the obligor or obligors on a Mortgage Note,
including any person who has assumed or guaranteed the obligations of
the obligor thereunder.
"Multiemployer Plan" shall mean a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been or are required
to be made by the Seller or any ERISA Affiliate and that is covered by
Title IV of ERISA.
"Net Income" shall mean, for any period, the net income of the Seller
for such period as determined in accordance with GAAP.
"1934 Act" shall mean the Securities and Exchange Act of 1934, as
amended.
"Payment Date" shall mean the 10th Business Day of each month.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Periodic Advance Repurchase Payment" has the meaning specified in
Section 5(b).
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company,
trust, unincorporated association or government (or any agency,
instrumentality or political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
maintained by any Seller or any ERISA Affiliate and covered by Title IV
of ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any Transaction or any
other amount under this Repurchase Agreement or any other Repurchase
Document that is not paid when due to the Buyer at the stated
Repurchase Date or otherwise when due, 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 3% per annum plus the Prime
Rate.
"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
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amount of such Price Differential previously paid by Seller to Buyer
with respect to such Transaction).
"Pricing Rate" shall mean a rate per annum equal to the lesser of (i)
the sum of (a) the Eurodollar Rate plus (b) the Pricing Spread, and
(ii) the maximum non-usurious interest rate that then may be contracted
for, charged or received by the Purchaser from Seller in connection
with the Transactions.
"Pricing Spread" shall mean the weighted average of the applicable
rates per annum set forth in the applicable Confirmation for each day
of the Transaction calculated as the sum of the product, for each
category of Eligible Assets assigned a separate rate per annum, of (i)
a fraction equal to the Asset Value of Eligible Assets for each
category of Eligible Assets assigned a separate rate per annum, divided
by the Asset Value of all Eligible Assets multiplied by (b) the
applicable rate per annum assigned to the related category of Assets.
"Prime Rate" shall mean the prime rate announced to be in effect from
time to time, as published as the average rate in The Wall Street
Journal.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible
or intangible.
"Purchase Agreement" shall mean any purchase agreement by and between
the Seller and any third party, including without limitation, any
Affiliate of the Seller, pursuant to which the Seller has purchased
assets subsequently sold to the Buyer hereunder.
"Purchase Date" shall mean the date on which Purchased Assets are
transferred by Seller to the Buyer or its designee (including the
Custodian).
"Purchase Price" shall mean on each Purchase Date, the price at which
Purchased Assets are transferred by Seller to Buyer or its designee
(including the Custodian) which shall equal the Asset Value for such
Purchased Assets on the Purchase Date.
"Purchased Assets" shall mean the Mortgage Loans sold by Seller to
Buyer in a Transaction, and any Additional Purchased Assets.
"Purchased Items" has the meaning specified in Section 7.
"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
approved as an insurer by ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
"Qualified Originator" means an originator of Mortgage Loans reasonably
acceptable to the Buyer.
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"Regulations T, U and X" shall mean Regulations T, U and X of the Board
of Governors of the Federal Reserve System (or any successor), as the
same may be modified and supplemented and in effect from time to time.
"REO Property" shall mean real property acquired by the Seller,
including a Mortgaged Property acquired through foreclosure of a
Mortgage Loan or by deed in lieu of such foreclosure.
"Reportable Event" shall mean 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 subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. Section 2615.
"Repurchase Agreement" shall mean this Master Repurchase Agreement
between Buyer and the Seller, dated as of the date hereof as the same
may be further amended, supplemented or otherwise modified in
accordance with the terms hereof.
"Repurchase Date" shall mean the date on which Seller is to repurchase
the Purchased Assets from Buyer as specified in the related
Confirmation, including any date determined by application of the
provisions of Sections 3 or 13.
"Repurchase Documents" shall mean this Repurchase Agreement, the
Custodial Agreement and the Account Agreement.
"Repurchase Obligations" shall have the meaning provided in Section
7(b) hereof.
"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 (including Transactions terminable upon demand) as the sum of
the Purchase Price and the Price Differential as of the date of such
determination decreased by all cash, Income and Periodic Advance
Repurchase Payments actually received by Buyer pursuant to Sections
5(a) and 5(b), respectively.
"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Residential Dwelling" shall mean any one of the following: (i) a
detached single family dwelling, (ii) a two-to-four family dwelling,
(iii) a unit in a condominium project, or (iv) a detached single family
dwelling in a planned unit development. Mortgaged Properties that
consist of the following property types are not Residential Dwellings:
(a) co-operative units, (b) log homes, (c) earthen homes, (d)
underground homes, (e) mobile homes, (f) any dwelling situated on more
than ten acres of property and (g) any dwelling situated on a leasehold
estate.
"Responsible Officer" shall mean, as to any Person, the chief executive
officer, the chief financial officer, the treasurer or the chief
operating officer of such Person.
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"S&P" shall mean Standard & Poor's Ratings Services, or any successor
thereto.
"Second Lien Mortgage Loan" shall mean a Mortgage Loan secured by a
second lien Mortgage on the related Mortgaged Property.
"Security Agreement" shall mean with respect to any Mortgage Loan, any
contract, instrument or other document related to security for
repayment thereof (other than the related Mortgage and Mortgage Note),
executed by the Mortgagor and/or others in connection with such
Mortgage Loan, including without limitation, any security agreement,
guaranty, title insurance policy, hazard insurance policy, chattel
mortgage, letter of credit or certificate of deposit or other pledged
accounts, and any other documents and records relating to any of the
foregoing.
"Seller" shall mean StarNet Mortgage, Inc.
"Servicer" has the meaning specified in Section 24 hereof.
"Servicer Account" shall mean any account established by the Servicer
in connection with the servicing of the Mortgage Loans.
"Servicing Agreement" has the meaning specified in Section 24 hereof.
"Servicing File" means with respect to each Mortgage Loan, the file
retained by Seller consisting of originals of all documents in the
Mortgage File which are not delivered to a Custodian and copies of the
Mortgage Loan Documents set forth in Section 2 of the Custodial
Agreement.
"Servicing Records" has the meaning specified in Section 24 hereof.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes
of such corporation, partnership or other entity shall have or might
have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person or
one or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person.
"Takeout Commitment" shall mean a trade confirmation from the Takeout
Investor to the Seller confirming the details of a forward trade
between the Takeout Investor (as buyer) and the Seller (as seller)
constituting a valid, binding and enforceable mandatory delivery
commitment by a Takeout Investor to purchase on the Anticipated
Settlement Date and at a given Takeout Price described therein.
"Takeout Investor" shall mean any buyer, loan program, securities
broker-dealer or other institution which has made a Takeout Commitment
and which may be listed on Exhibit VII hereto, from time to time
following approval by the Buyer. The Buyer shall provide
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at least ten (10) Business Days' prior notice in the event any Takeout
Investor is to be removed from Exhibit VII.
"Takeout Price" shall mean as to each Takeout Commitment the purchase
price (expressed as a percentage of par) set forth therein.
"Tangible Net Worth" shall mean shall mean, as of a particular date,
(a) all amounts which would be included under capital on a
balance sheet of the Seller at such date, determined in accordance with
GAAP, less
(b) (i) amounts owing to the Seller from Affiliates, or from
officers, employees, shareholders or other Persons that are Affiliates
of the Seller, (ii) intangible assets, and (iii) the value of REO
Property and Foreclosed Loans.
"Termination Date" shall mean the date which is 364 days from the date
hereof which shall be May 30, 2001.
"Test Period" shall have the meaning provided in Section 11(l) hereof.
"Total Indebtedness" shall mean, for any period, the aggregate
Indebtedness of the Seller during such period less the amount of any
nonspecific balance sheet reserves maintained in accordance with GAAP
"Transaction" has the meaning specified in Section 1.
"True Sale Certification" shall mean a true sale certification in the
form of Exhibit VI attached hereto.
"Trust Receipt" shall mean a trust receipt issued by Custodian to Buyer
confirming the Custodian's possession of certain Mortgage Files which
are held by Custodian for the benefit of the Buyer or the registered
holder of such trust receipt.
"Underwriting Guidelines" shall mean the underwriting guidelines
delivered by the Seller to the Buyer on or prior to the Effective Date
and as may be supplemented from time to time thereafter.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect on the date hereof in the State of New York; provided that if by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any Purchased
Items is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "Uniform Commercial Code" shall mean
the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect
of perfection or non-perfection.
"Wire Disbursement Authorization Letter" shall mean a wire disbursement
authorization letter substantially in the form of Exhibit 17 to the
Custodial Agreement.
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3. INITIATION; TERMINATION
(a) Conditions Precedent to Initial Transaction. Buyer's obligation to
enter into the initial Transaction hereunder is subject to the
satisfaction, immediately prior to or concurrently with the making of
such Transaction, of the condition precedent that Buyer shall have
received from Seller any fees and expenses payable hereunder, and all
of the following documents, each of which shall be satisfactory to
Buyer and its counsel in form and substance:
(1) The following Repurchase Documents delivered to the Buyer:
(A) Master Repurchase Agreement, duly completed and
executed by the parties thereto. In addition, the Seller shall
have taken such other action as the Buyer shall have requested
in order to perfect the security interests created pursuant to
this Repurchase Agreement, including execution of UCC-1 and
UCC-3 financing statements in form and substance satisfactory
to the Buyer;
(B) Custodial Agreement. The Custodial Agreement,
duly executed and delivered by the Seller and the Custodian.
In addition, the Seller shall have taken such other action as
the Buyer shall have requested in order to transfer the
Purchased Assets pursuant to this Repurchase Agreement; and
(C) Account Agreement. An Account Agreement, duly
executed by the parties thereto.
(2) Opinions of Counsel. An opinion or opinions of outside counsel to
the Seller, substantially in the form of Exhibit III;
(3) Organizational Documents. Certified copies of the charter and
by-laws (or equivalent documents) of the Seller and of all
corporate or other authority for the Seller with respect to the
execution, delivery and performance of the Repurchase Documents
and each other document to be delivered by the Seller from time
to time in connection herewith (and the Buyer may conclusively
rely on such certificate until it receives notice in writing from
the Seller to the contrary);
(4) Asset Schedule and Exception Report. An Asset Schedule and
Exception Report, dated the Effective Date, from the Custodian,
duly completed;
(5) Underwriting Guidelines. A copy of Seller's current Underwriting
Guidelines, and any material changes to the Underwriting
Guidelines made since the Underwriting Guidelines were last
delivered to Buyer;
(6) Servicing Agreement(s). Any Servicing Agreement, certified as a
true, correct and complete copy of the original, with a letter
attached thereto acknowledged by the applicable Servicer
directing the Servicer to remit all payments on account of
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the Mortgage Loans directly to the Buyer upon receipt of notice
from the Buyer of the occurrence of an Event of Default;
(7) 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:
(1) Buyer shall have executed and delivered a Confirmation in
accordance with the procedures set forth in Section 3(c).
(2) no Default or Event of Default shall have occurred and be
continuing under the Repurchase Documents;
(3) both immediately prior to the Transaction and also after giving
effect thereto and to the intended use thereof, the
representations and warranties made by the Seller in Section 10
hereof, shall be true, correct and complete on and as of such
Purchase Date in all material respects with the same force and
effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made
as of a specific date, as of such specific date).
(4) the aggregate outstanding Purchase Price of the Transactions
outstanding shall not exceed the Asset Value of all the Purchased
Assets subject to Transactions;
(5) subject to the Buyer's right to perform one or more Due Diligence
Reviews pursuant to Section 27 hereof, the Buyer shall have
completed its due diligence review of the Mortgage Loan Documents
for each Purchased Asset, and such other documents, records,
agreements, instruments, mortgaged properties or information
relating to such Purchased Asset as the Buyer in its sole
discretion deems appropriate to review and such review shall be
satisfactory to the Buyer in its sole discretion;
(6) the Buyer shall have received from the Custodian a Trust Receipt
on the initial Purchase Date and on each Purchase Date an Asset
Schedule and Exception Report with exceptions acceptable to the
Buyer in its sole discretion in respect of Eligible Assets to be
purchased hereunder on such Business Day;
(7) the Buyer shall have received from the Seller copies of each
Servicing Agreement relating to the Assets and the Buyer shall
have reviewed and approved each such Servicing Agreement in its
sole discretion;
(8) the Buyer shall have received all fees and expenses of counsel to
the Buyer as contemplated by Section 14(b) which amount, at the
Buyer's option, may be withheld from any Transaction hereunder.
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(9) the Buyer shall have approved, in its sole discretion, all
exceptions to the Underwriting Guidelines;
(10) none of the following shall have occurred and/or be continuing:
(A) DLJ's corporate bond rating as calculated by S&P
or ▇▇▇▇▇'▇ has been lowered or downgraded to a rating below
BBB as indicated by S&P or below BAA as indicated by ▇▇▇▇▇'▇;
(B) an event or events shall have occurred in the
good faith determination of the Buyer resulting in the
effective absence of a "repo market" or comparable "lending
market" for financing debt obligations secured by mortgage
loans or securities or an event or events shall have occurred
resulting in the Buyer not being able to finance Purchased
Assets through the "repo market" or "lending market" with
traditional counterparties at rates which would have been
reasonable prior to the occurrence of such event or events; or
(C) an event or events shall have occurred resulting
in the effective absence of a "securities market" for
securities backed by mortgage loans or an event or events
shall have occurred resulting in the Buyer not being able to
sell securities backed by mortgage loans at prices which would
have been reasonable prior to such event or events; or
(D) there shall have occurred a material adverse
change in the financial condition of the Buyer which affects
(or can reasonably be expected to affect) materially and
adversely the ability of the Buyer to fund its obligations
under this Repurchase Agreement; or
(11) prior to the sale of any Mortgage Loan acquired (by purchase or
otherwise) by the Seller from any third party, including without
limitation, any Affiliate of the Seller, the Buyer shall have
received a True Sale Certification.
Each Confirmation delivered by the Seller hereunder shall constitute a
certification by the Seller that all the conditions set forth in this
Section 3(b) have been satisfied (both as of the date of such notice or
request and as of the date of such purchase).
(c) An agreement to enter into a Transaction may be entered into orally
or in writing at the initiation of either Buyer or Seller. In any
event, Buyer shall confirm the terms of each Transaction by issuing a
written confirmation to Seller promptly after the parties enter into
such Transaction in the form of Exhibit I attached hereto (a
"Confirmation"). Such Confirmation shall describe the Purchased Assets
in an Asset Medium and set forth (i) the Purchase Date, (ii) the
Purchase Price, (iii) the Repurchase Date, unless the Transaction is to
be terminable on demand, (iv) the Pricing Rate applicable to the
Transaction, (v) the applicable Margin Percentages and (vi) additional
terms or conditions not inconsistent with this Agreement. After receipt
of the Confirmation, Seller shall, subject to the provisions of
subsection (e) below, sign the Confirmation and promptly return it to
Buyer.
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(d) Any Confirmation by Buyer shall be deemed to have been received by
Seller on the date actually received by Seller.
(e) Each Confirmation, together with this Agreement, shall be
conclusive evidence of the terms of the Transaction(s) covered thereby
unless objected to in writing by Seller no more than two (2) Business
Days after the date the Confirmation was received by Seller or unless a
corrected Confirmation is sent by Buyer. An objection sent by Seller
must state specifically that writing which is an objection, must
specify the provision(s) being objected to by Seller, must set forth
such provision(s) in the manner that the Seller believes they should be
stated, and must be received by Buyer no more than two (2) Business
Days after the Confirmation was received by Seller.
(f) In the case of Transactions terminable upon demand, such demand
shall be made by Buyer or Seller by telephone or otherwise, no later
than 1:00 p.m. (New York time) on the Business Day prior to the day on
which such termination will be effective.
(g) 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 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 to an account of Buyer. Seller is obligated to obtain
the Mortgage Files from Buyer or its designee at Seller's expense on
the Repurchase Date.
(h) Subject to the terms and conditions of this Repurchase Agreement,
during such period the Seller may sell, repurchase and resell Eligible
Assets hereunder.
(i) In no event shall a Transaction be entered into when any Default or
Event of Default has occurred and is continuing.
(j) No later than 3:00 p.m., New York City time, one (1) Business Day
prior to the requested Purchase Date, the Seller shall deliver to the
Custodian the Mortgage File, as applicable, pertaining to each Eligible
Asset to be purchased by the Buyer.
(k) Pursuant to the Custodial Agreement, the Custodian shall deliver to
the Buyer and the Seller, by no later than 12:00 noon, New York City
time on a Purchase Date, an Asset Schedule and Exception Report in
respect of all Eligible Assets purchased by the Buyer on such Purchase
Date. Subject to the provisions of this Section 3, the Purchase Price
will then be made available to the Seller by the Buyer transferring,
via wire transfer, in the aggregate amount of such borrowing in funds
immediately available pursuant to Wire Instructions set forth in the
Confirmation (subject to the purchase limits set forth in Section 3(l)
hereof).
(l) The Seller shall, at the request of the Buyer, deliver to the Buyer
a Takeout Commitment for each Mortgage Loan. In the event that any
Takeout Commitment should expire, the Seller shall enter into a new
Takeout Commitment, accompanied by a Takeout Assignment, within three
(3) Business Days following the date of such expiration.
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(m) The Seller may repurchase Purchased Assets without penalty or
premium, on any date. The Repurchase Price payable for the repurchase
of any such Purchased Asset shall be reduced as provided in Section
5(c). If the Seller intends to make such a repurchase, the Seller shall
give one (1) Business Day's prior written notice thereof to the Buyer,
designating the Purchased Assets to be repurchased. If such notice is
given, the amount specified in such notice shall be due and payable on
the date specified therein, and, on receipt, such amount shall be
applied to the Repurchase Price for the designated Purchased Assets.
The amount of the original Purchase Price of the Purchased Assets thus
repurchased shall be available for subsequent Transactions subject to
the terms of this Repurchase Agreement.
(n) 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 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 to an account of Buyer. Seller is obligated to obtain
the Mortgage Files from Buyer or its designee (including the Custodian)
at Seller's expense on the Repurchase Date.
4. MARGIN AMOUNT MAINTENANCE
If at any time the aggregate Asset Value of the related Purchased
Assets subject to all Transactions is less than the aggregate Purchase
Price for all such Transactions (a "Margin Deficit"), then Buyer may by
notice to Seller (as such notice is more particularly set forth below,
a "Margin Deficit Notice"), require Seller to either (a) transfer to
Buyer or its designee (including the Custodian) Eligible Assets
("Additional Purchased Assets"), so that the aggregate Asset Value of
the Purchased Assets, including any such Additional Purchased Assets,
will thereupon equal or exceed the aggregate Asset Value, or (b) remit
to Buyer a payment (the "Margin Deficit Payment") (to be applied
against the Purchase Price) in such amount as may be necessary to
reduce the outstanding Purchase Price such that it is less than or
equal to the Asset Value. If Buyer delivers a Margin Deficit Notice to
Seller on or prior to 5 p.m. (New York City time) on any Business Day,
then Seller shall transfer Additional Purchased Assets or remit the
Margin Deficit Payment to Buyer no later than 5 p.m. (New York City
time) the following Business Day. In the event the Buyer delivers a
Margin Deficit Notice to Seller after 5 p.m. (New York City time) on
any Business Day, then such Margin Deficit Notice shall be deemed to
have been delivered on the following Business Day and Seller shall be
required to transfer Additional Purchased Assets or remit the Margin
Deficit Payment no later than 5 p.m. (New York City time) on the
subsequent Business Day.
5. INCOME PAYMENTS
(a) Where a particular Transaction's term extends over an Income
payment date on the Purchased Assets subject to that Transaction such
Income shall be the property of Buyer. Notwithstanding the foregoing,
Buyer agrees that until an Event of Default has occurred and is
continuing and Buyer otherwise directs, Servicer shall continue to
remit Income in accordance with the Account Agreement.
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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
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 Advance Repurchase Payment") on each Payment
Date. If Seller fails to make all or part of the Periodic Advance
Repurchase Payment by 5:00 p.m. (New York time) on the Payment Date,
Seller shall be obligated to pay to Buyer (in addition to, and together
with, the Periodic Advance Repurchase Payment) interest on the unpaid
amount of the Periodic Advance Repurchase Payment at a rate per annum
equal to the Post-Default Rate (the "Late Payment Fee") until the
Periodic Advance Repurchase Payment is received in full by Buyer.
(c) Buyer shall offset against the Repurchase Price of each such
Transaction all Income and Periodic Advance Repurchase Payments
actually received by Buyer pursuant to Sections 5(a) and (b),
respectively, excluding any Late Payment Fees paid pursuant to Section
5(b).
6. REQUIREMENTS OF LAW
(a) 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:
(1) shall subject the Buyer to any tax of any kind whatsoever with
respect to this Repurchase Agreement or any Transaction
(excluding net income taxes) or change the basis of taxation of
payments to the Buyer in respect thereof;
(2) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, or other extensions of credit by, or any other
acquisition of funds by, any office of the Buyer which is not
otherwise included in the determination of the Eurodollar Rate
hereunder;
(3) shall impose on the Buyer any other condition;
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 entering, continuing or
maintaining any Transaction or to reduce any amount due or owing hereunder in
respect thereof, then, in any such case, the Seller shall promptly pay the Buyer
such additional amount or amounts as calculated by the Buyer in good faith as
will compensate the Buyer for such increased cost or reduced amount receivable.
(b) 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
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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 could have
achieved but for such adoption, change or compliance (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, the Seller shall promptly pay to the Buyer such
additional amount or amounts as will compensate the Buyer for such
reduction.
(c) If the Buyer becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Seller of the
event by reason of which it has become so entitled. A certificate as to
any additional amounts payable pursuant to this Section submitted by
the Buyer to the Seller shall be conclusive in the absence of manifest
error.
7. SECURITY INTEREST
(a) Each of the following items or types of property, whether now owned
or hereafter acquired, now existing or hereafter created and wherever
located, is hereinafter referred to as the ("Purchased Items"): all
Mortgage Loans, all rights under each Purchase Agreement (but not the
obligations thereunder), all Mortgage Loan Documents, including without
limitation all promissory notes, all Servicing Records (as defined in
Section 24(c)), servicing agreements and any other collateral pledged
or otherwise relating to such Mortgage Loans, together with all files,
documents, instruments, surveys, certificates, correspondence,
appraisals, computer programs, computer storage media, accounting
records and other books and records relating thereto, all mortgage
guaranties and insurance (issued by governmental agencies or otherwise)
and any mortgage insurance certificate or other document evidencing
such mortgage guaranties or insurance relating to any Mortgage Loan,
all servicing fees to which such Seller is entitled and rights relating
to the Mortgage Loans, any Servicer accounts established pursuant to
any Servicing Agreement and all amounts on deposit therein, from time
to time, all purchase agreements or other agreements or contracts
relating to, constituting, or otherwise governing, any or all of the
foregoing to the extent they relate to the Purchased Assets including
the right to receive principal and interest payments with respect to
the Purchased Assets and the right to enforce such payments, the
Collection Account and all monies from time to time on deposit in the
Collection Account, all Takeout Commitments now existing or hereafter
arising, covering any part of the foregoing Purchased Items, all rights
to deliver the Mortgage Loans to Takeout Investors or to permanent
investors and other purchasers pursuant thereto and all proceeds
resulting from the disposition of such Purchased Items pursuant
thereto, including the Seller's right and entitlement to receive the
entire Takeout Price specified in each Takeout Commitment, all "general
intangibles", "accounts", "chattel paper" and "investment property" as
defined in the Uniform Commercial Code relating to or constituting any
and all of the foregoing, and any and all replacements, substitutions,
distributions on or proceeds of any and all of the foregoing.
(b) The Buyer and the Seller intend that the Transactions hereunder be
sales to the Buyer of the Purchased Assets and not loans from the Buyer
to the Seller secured by the
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Purchased Assets. However, in order to preserve the Buyer's rights
under this Repurchase Agreement in the event that a court or other
forum recharacterizes the Transactions hereunder as loans and as
security for the performance by the Seller of all of the Seller's
obligations to the Buyer hereunder and the Transactions entered into
hereunder (the "Repurchase Obligations") and DLJ Obligations, the
Seller hereby assigns, pledges and grants a security interest in all of
its right, title and interest in, to and under the Purchased Items to
the Buyer to secure the Repurchase Obligations and DLJ Obligations
including without limitation the repayment of all amounts owing to the
Buyer hereunder. The assignment, pledge and grant of security interest
contained herein shall be, and the Seller hereby represents and
warrants to the Buyer that it is, a first priority security interest.
The Seller agrees to ▇▇▇▇ its computer records and tapes to evidence
the interests granted to the Buyer hereunder. All Purchased Items shall
secure the payment of all obligations of the Seller now or hereafter
existing under this Repurchase Agreement, including, without
limitation, Seller's obligation to repurchase Purchased Assets, or if
such obligation is so recharacterized as a loan, to repay such loan,
for the Repurchase Price and to pay any and all other amounts owing to
the Buyer hereunder.
(c) Pursuant to the Custodial Agreement, the Custodian shall hold the
Mortgage Loan Documents as exclusive bailee and agent for the Buyer
pursuant to the terms of the Custodial Agreement and shall deliver to
the Buyer Trust Receipts each to the effect that it has reviewed such
Mortgage Loan Documents in the manner and to the extent required by the
Custodial Agreement and identifying any deficiencies in such Mortgage
Loan Documents as so reviewed.
8. PAYMENT, TRANSFER AND CUSTODY
(a) Unless otherwise mutually agreed in writing, all transfers of funds
to be made by the Seller hereunder shall be made in Dollars, in
immediately available funds, without deduction, set-off or
counterclaim, to the Buyer at the following account maintained by the
Buyer; Account No. ▇▇▇-▇▇▇-▇▇▇, for the account of DLJ Mortgage
Capital, Inc., The Chase Manhattan Bank, ABA No. ▇▇▇-▇▇▇-▇▇▇, Attn:
StarNet P&I, not later than 3:00 p.m. New York City time, on the date
on which such payment shall become due (and each such payment made
after such time shall be deemed to have been made on the next
succeeding Business Day). The Seller acknowledges that it has no rights
of withdrawal from the foregoing account.
(b) On the Purchase Date for each Transaction, ownership of the
Purchased Assets shall be transferred to the Buyer or its designee
(including the Custodian) against the simultaneous transfer of the
Purchase Price to the following account of Seller; Account No. ▇▇▇▇▇▇▇,
for the account of StarNet Mortgage, Inc., Bank United, N.A., ABA No.
▇▇▇▇▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, not later than 3:00 p.m. New York
City time, simultaneously with the delivery to the Custodian of the
Purchased Assets relating to each Transaction hereby sells, transfers,
conveys and assigns to Buyer or its designee (including the Custodian)
without recourse, but subject to the terms of this Repurchase
Agreement, all the right, title and interest of Seller in and to the
Purchased Assets together with all right, title and interest in and to
the proceeds of any related Purchased Items.
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(c) Notwithstanding anything to the contrary in this Repurchase
Agreement, including agreements to enter into a Transaction pursuant to
Section 3, Buyer shall have no obligation to purchase any Mortgage
Loans on any Purchase Date if, after such purchase:
(1) an Event of Default by the Seller will have occurred and be
continuing, or an Event of Default by the Seller would occur with
notice or the passing of time; or
(2) the Repurchase Date for such Transaction would be later than the
Termination Date.
(d) In connection with such sale, transfer, conveyance and assignment,
on or prior to each Purchase Date, the Seller shall deliver or cause to
be delivered and released to Buyer or its designee (including the
Custodian) (i) the Custodial Identification Certificate and (ii) the
documents identified in the Custodial Agreement.
(e) Any Mortgage Files not delivered to Buyer or its designee
(including the Custodian) are and shall be held in trust by the Seller
or its designee for the benefit of the Buyer as the owner thereof. The
Seller or its designee shall maintain a copy of the Mortgage File and
the originals of the Mortgage File not delivered to Buyer or its
designee (including the Custodian). The possession of the Mortgage File
by the Seller or its designee is at the will of the Buyer for the sole
purpose of servicing the related Purchased Mortgage Loan, and such
retention and possession by the Seller or its designee is in a
custodial capacity only. Each Mortgage File retained or held by the
Seller or its designee shall be segregated on the Seller's books and
records from the other assets of the Seller or its designee and the
books and records of the Seller or its designee shall be marked
appropriately to reflect clearly the sale of the related Purchased
Mortgage Loan to the Buyer. The Seller or its designee shall release
its custody of the Mortgage File only in accordance with written
instructions from the Buyer, unless such release is required as
incidental to the servicing of the Purchased Assets or is in connection
with a repurchase of any Purchased Asset by Seller.
9. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS
Title to all Purchased Assets shall pass to Buyer and Buyer shall have
free and unrestricted use of all Purchased Assets. Nothing in this
Repurchase Agreement shall preclude the Buyer from engaging in
repurchase transactions with the Purchased Assets or otherwise
pledging, repledging, transferring, hypothecating, or rehypothecating
the Purchased Assets. Nothing contained in this Repurchase Agreement
shall obligate the Buyer to segregate any Purchased Assets delivered to
the Buyer by the Seller.
10. REPRESENTATIONS
The Seller represents and warrants to the Buyer that as of the Purchase
Date for the purchase of any Purchased Assets by the Buyer from the
Seller and as of the date of this Repurchase Agreement and any
Transaction hereunder and at all times while the Repurchase Documents
and any Transaction hereunder is in full force and effect:
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(1) Acting as Principal. The Seller will engage in such Transactions
as principal (or, if agreed in writing in advance of any
Transaction by the other party hereto, as agent for a disclosed
principal);
(2) Solvency. Neither the Repurchase Documents nor any Transaction
thereunder are entered into in contemplation of insolvency or
with intent to hinder, delay or defraud any of the Seller's
creditors. The transfer of the Mortgage Loans subject hereto is
not undertaken with the intent to hinder, delay or defraud any of
the Seller's creditors. The Seller is not insolvent within the
meaning of 11 U.S.C. Section 101(32) and the transfer and sale of
the Mortgage Loans pursuant hereto (i) will not cause the Seller
to become insolvent, (ii) will not result in any property
remaining with the Seller to be unreasonably small capital, and
(iii) will not result in debts that would be beyond the Seller's
ability to pay as same mature. The Seller received reasonably
equivalent value in exchange for the transfer and sale of the
Purchased Assets subject hereto.
(3) No Broker. The Seller has not dealt with any broker, investment
banker, agent, or other person, except for the Buyer, who may be
entitled to any commission or compensation in connection with the
sale of Purchased Assets pursuant to this Repurchase Agreement;
(4) Ability to Perform. Seller does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant contained in the Repurchase Documents to which it is a
party on its part to be performed;
(5) No Defaults. No Event of Default has occurred and is continuing
hereunder;
(6) Existence. The Seller (a) is a corporation duly organized,
validly existing and in good standing under the laws of Delaware,
(b) has all requisite corporate or other power, and has all
governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now
being or as proposed to be conducted, except where the lack of
such licenses, authorizations, consents and approvals would not
be reasonably likely to have a Material Adverse Effect; and (c)
is qualified to do business and is in good standing in all other
jurisdictions in which the nature of the business conducted by it
makes such qualification necessary, except where failure so to
qualify would not be reasonably likely (either individually or in
the aggregate) to have a Material Adverse Effect.
(7) Financial Condition. The Seller has heretofore furnished to the
Buyer a copy of (a) its balance sheet for the fiscal year ended
March 31, 1999, and the related consolidated statements of income
and retained earnings and of cash flows for the Seller for such
fiscal year, (b) its balance sheet for the quarterly fiscal
period of the Seller ended December 31, 1999 and the related
consolidated statements of income and retained earnings and of
cash flows for the Seller for such quarterly fiscal period,
setting forth in each case in comparative form the figures for
the previous year, and (c) Starnet Financial Inc.'s Annual Report
on Form 10-K which includes audited financial statements at and
for the fiscal year ended
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March 31, 1999 with the opinion thereon of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
All such financial statements are complete and correct and fairly
present, in all material respects, the consolidated financial
condition of the Seller and Starnet Financial Inc. and the
results of their operations as at such dates and for such fiscal
periods, all in accordance with GAAP applied on a consistent
basis. Since December 31, 1999, there has been no material
adverse change in the business, operations or financial condition
of the Seller or Starnet Financial Inc. from that set forth in
said financial statements.
(8) Litigation. There are no actions, suits, arbitrations,
investigations (including, without limitation, any of the
foregoing which are pending or threatened) or other legal or
arbitrable proceedings affecting the Seller or any of its
Subsidiaries, if any, or affecting any of the Property of any of
them before any Governmental Authority which (i) questions or
challenges the validity or enforceability of the Repurchase
Documents or any action to be taken in connection with the
transactions contemplated hereby, (ii) makes a claim or claims in
an aggregate amount greater than $100,000, (iii) individually or
in the aggregate, if adversely determined, could reasonably be
likely to have a Material Adverse Effect, or (iv) requires filing
with the Office of the Comptroller of the Currency in accordance
with its regulations.
(9) No Breach. Neither (a) the execution and delivery of the
Repurchase Documents nor (b) the consummation of the transactions
therein contemplated to be entered into by the Seller in
compliance with the terms and provisions thereof will conflict
with or result in a breach of the charter or by-laws of the
Seller, or any applicable law, rule or regulation, or any order,
writ, injunction or decree of any Governmental Authority, or any
Servicing Agreement or other material agreement or instrument to
which the Seller or any of its Subsidiaries, if any, is a party
or by which any of them or any of their Property is bound or to
which any of them is subject, or constitute a default under any
such material agreement or instrument or result in the creation
or imposition of any Lien (except for the Liens created pursuant
to the Repurchase Documents) upon any Property of the Seller, or
any of its Subsidiaries, if any, pursuant to the terms of any
such agreement or instrument.
(10) Action. The Seller has all necessary corporate or other power,
authority and legal right to execute, deliver and perform its
obligations under each of the Repurchase Documents, as
applicable; the execution, delivery and performance by the Seller
of each of the Repurchase Documents have been duly authorized by
all necessary corporate or other action on its part; and each
Repurchase Document has been duly and validly executed and
delivered by the Seller, as applicable, and constitutes a legal,
valid and binding obligation of the Seller enforceable against
the Seller in accordance with its terms.
(11) Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority or any
securities exchange are necessary for the execution, delivery or
performance by the Seller of the Repurchase Documents or for the
legality, validity or enforceability thereof,
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except for filings and recordings in respect of the Liens created
pursuant to the Repurchase Documents.
(12) Margin Regulations. Neither any Transaction hereunder, nor the
use of the proceeds thereof, will violate or be inconsistent with
the provisions of Regulation T, U or X.
(13) Taxes. The Seller and its Subsidiaries, if any, have filed all
Federal income tax returns and all other material tax returns
that are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received
by or any of its Subsidiaries, if any, except for any such taxes
as are being appropriately contested in good faith by appropriate
proceedings diligently conducted and with respect to which
adequate reserves have been provided. The charges, accruals and
reserves on the books of the Seller and its Subsidiaries, if any,
in respect of taxes and other governmental charges are, in the
opinion of the Seller, adequate.
(14) Investment Company Act. Neither the Seller nor any of its
Subsidiaries is an "investment company", or a company
"controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
(15) Purchased Assets.
(A) The Seller has not assigned, pledged, or otherwise
conveyed or encumbered any Mortgage Loan to any other
Person, and immediately prior to the sale of such Mortgage
Loan to the Buyer, the Seller was the sole owner of such
Mortgage Loan and had good and marketable title thereto,
free and clear of all Liens, in each case except for Liens
to be released simultaneously with the sale to the Buyer
hereunder. No Mortgage Loan sold to the Buyer hereunder was
acquired (by purchase or otherwise) by the Seller from an
Affiliate of the Seller unless a True Sale Certification has
been delivered to the Buyer.
(B) The provisions of this Repurchase Agreement are
effective to either constitute a sale of Purchased Items to
the Buyer or to create in favor of the Buyer a valid
security interest in all right, title and interest of the
Seller in, to and under the Purchased Items.
(C) Upon receipt by the Custodian of each Mortgage
Note, endorsed in blank by a duly authorized officer of the
Seller, either a purchase shall have been completed by the
Buyer of each Mortgage Note or the Buyer shall have a fully
perfected first priority security interest in the applicable
Mortgage Note and in such Seller's interest in the related
Mortgaged Property.
(D) Upon the filing of financing statements on Form
UCC-1 naming the Buyer as "Secured Party", the Seller as
"Debtor" and describing the Purchased Items, in the
jurisdictions and recording offices
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listed on Exhibit IV attached hereto, the security interests
granted hereunder in the Purchased Items will constitute
fully perfected security interests under the Uniform
Commercial Code in all right, title and interest of the
Seller in, to and under such Purchased Items, which can be
perfected by filing under the Uniform Commercial Code.
(16) Chief Executive Office/Jurisdiction of Organization. On the
Effective Date, and during the four months immediately preceding
the Effective Date, the Seller's chief executive office, is, and
has been located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. On the Effective Date, the Seller's
jurisdiction of organization is Delaware.
(17) Location of Books and Records. The location where the Seller
keeps its books and records, including all computer tapes and
records related to the Purchased Items is its chief executive
office.
(18) True and Complete Disclosure. (a) The information, reports,
financial statements, exhibits and schedules furnished in writing
by or on behalf of the Seller to the Buyer in connection with the
negotiation, preparation or delivery of this Repurchase Agreement
and the other Repurchase Documents or included herein or therein
or delivered pursuant hereto or thereto (other than with respect
to the Mortgage Loans), when taken as a whole, do not contain any
untrue statement of material fact or omit to state any material
fact necessary to make the statements herein or therein, in light
of the circumstances under which they were made, not misleading.
All written information furnished after the date hereof by or on
behalf of the Seller to the Buyer in connection with this
Repurchase Agreement and the other Repurchase Documents and the
transactions contemplated hereby (other than with respect to the
Mortgage Loans) and thereby will be true, complete and accurate
in every material respect, or (in the case of projections) based
on reasonable estimates, on the date as of which such information
is stated or certified. There is no fact known to a Responsible
Officer of the Seller, after due inquiry, that could reasonably
be expected to have a Material Adverse Effect that has been
disclosed herein, in the other Repurchase 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.
(19) ERISA. Each Plan to which the Seller or any of its Subsidiaries
make direct contributions, and, to the knowledge of the Seller,
each other Plan and each Multiemployer Plan, is in compliance in
all material respects with, and has been administered in all
material respects in compliance with, the applicable provisions
of ERISA, the Code and any other Federal or State law. No event
or condition has occurred and is continuing as to which the
Seller would be under an obligation to furnish a report to the
Buyer under Section 11(a)(4) hereof.
(20) Takeout Assignments; Takeout Commitments. Each Takeout Commitment
constitutes a valid, binding and subsisting obligation of a
Takeout Investor,
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enforceable against the Seller and the Takeout Investor
respectively, in accordance with its terms (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 relating to specific performance).
11. COVENANTS OF THE SELLER
On and as of the date of this Repurchase Agreement and each Purchase
Date and until this Repurchase Agreement is no longer in force with
respect to any Transaction, the Seller covenants that it will:
(a) Financial Statements. The Seller shall deliver to the Buyer:
(1) as soon as available and in any event within twenty (20) calendar
days after the end of each calendar month, the unaudited balance
sheets of Seller as at the end of such period and the related
unaudited consolidated statements of income and retained earnings
and of cash flows for the Seller for such period and the portion
of the fiscal year through the end of such period, accompanied by
a certificate of a Responsible Officer of Seller, which
certificate shall state that said financial statements fairly
present in all material respects the financial condition and
results of operations of Seller in accordance with GAAP,
consistently applied, as at the end of, and for, such period
(subject to normal year-end adjustments);]
(2) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of Seller, the balance sheets
of Seller as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of
cash flows for the Seller for such year, setting forth in each
case in comparative form the figures for the previous year,
accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall
not be qualified as to scope of audit or going concern and shall
state that said financial statements fairly present the financial
condition and results of operations of as at the end of, and for,
such fiscal year in accordance with GAAP, and a certificate of
such accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge, except
as specifically stated, of any Default or Event of Default;
(3) from time to time such other information regarding the financial
condition, operations, or business of the Seller as the Buyer may
reasonably request; and
(4) as soon as reasonably possible, and in any event within thirty
(30) days after a Responsible Officer of the Seller knows, or
with respect to any Plan or Multiemployer Plan to which the
Seller or any of its Subsidiaries makes direct contributions, has
reason to believe, that any of the events or conditions specified
below with respect to any Plan or Multiemployer Plan has occurred
or exists, a statement signed by a senior financial officer of
the Seller setting forth details respecting such event or
condition and the action, if any, that the Seller or its ERISA
Affiliate proposes to take with respect thereto (and a copy of
any report or
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notice required to be filed with or given to PBGC by the Seller
or an ERISA Affiliate with respect to such event or condition):
(A) any reportable event, as defined in Section 4043(c)
of ERISA and the regulations issued thereunder, with respect
to a Plan, as to which PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified
within thirty (30) days of the occurrence of such event
(provided that a failure to meet the minimum funding
standard of Section 412 of the Code or Section 302 of ERISA,
including without limitation the failure to make on or
before its due date a required installment under Section
412(m) of the Code or Section 302(e) of ERISA, shall be a
reportable event regardless of the issuance of any waivers
in accordance with Section 412(d) of the Code); and any
request for a waiver under Section 412(d) of the Code for
any Plan;
(B) the distribution under Section 4041(c) of ERISA of
a notice of intent to terminate any Plan or any action taken
by the Seller or an ERISA Affiliate to terminate any Plan;
(C) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Seller or any ERISA Affiliate of a notice
from a Multiemployer Plan that such action has been taken by
PBGC with respect to such Multiemployer Plan;
(D) the complete or partial withdrawal from a
Multiemployer Plan by the Seller or any ERISA Affiliate that
results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as
a result of a purchaser default) that would have a Material
Adverse Effect or the receipt by the Seller or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or
4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;
(E) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against the Seller or any ERISA
Affiliate to enforce Section 515 of ERISA, which proceeding
is not dismissed within thirty (30) days; and
(F) the adoption of an amendment to any Plan that would
result in the loss of tax-exempt status of the trust of
which such Plan is a part if the Seller or an ERISA
Affiliate fails to provide timely security to such Plan in
accordance with the provisions of Section 401(a)(29) of the
Code or Section 307 of ERISA.
The Seller will furnish to the Buyer, at the time the Seller furnishes
each set of financial statements pursuant to paragraphs (a)(1) and
(a)(2) above, a certificate of a Responsible
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Officer of the Seller to the effect that, to the best of such
Responsible Officer's knowledge, the Seller during such fiscal period
or year has observed or performed in all material respects all of its
covenants and other agreements, and satisfied every condition,
contained in this Repurchase Agreement and the other Repurchase
Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event
of Default except as specified in such certificate (and, if any Default
or Event of Default has occurred and is continuing, describing the same
in reasonable detail and describing the action the Seller has taken or
proposes to take with respect thereto).
(b) Litigation. The Seller will promptly, and in any event within ten
(10) days after service of process on any of the following, give to the
Buyer notice of all litigation, actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing
which are threatened or pending) or other legal or arbitrable
proceedings affecting the Seller or any of its Subsidiaries or
affecting any of the Property of any of them before any Governmental
Authority that (i) questions or challenges the validity or
enforceability of any of the Repurchase Documents or any action to be
taken in connection with the transactions contemplated hereby, (ii)
makes a claim or claims in an aggregate amount greater than $100,000,
(iii) which, individually or in the aggregate, if adversely determined,
could be reasonably likely to have a Material Adverse Effect, or (iv)
requires filing with the Securities and Exchange Commission in
accordance with the 1934 Act and any rules thereunder.
(c) Existence, etc. The Seller will:
(1) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises necessary for the
operation of its business (provided that nothing in this Section
11(c)(i) shall prohibit any transaction expressly permitted under
Section 11(d) hereof);
(2) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including,
without limitation, all environmental laws) if failure to comply
with such requirements would be reasonably likely (either
individually or in the aggregate) to have a Material Adverse
Effect;
(3) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently
applied;
(4) not move its chief executive office from the address referred to
in Section 10(xvi) or change its jurisdiction of organization
unless it shall have provided the Buyer thirty (30) days' prior
written notice of such change;
(5) pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of
its Property prior to the date on which penalties attach thereto,
except for any such tax, assessment, charge or levy the payment
of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being
maintained; and
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(6) permit representatives of the Buyer, upon reasonable notice
(unless a Default shall have occurred and is continuing, in which
case, no prior notice shall be required), during normal business
hours, to examine, copy and make extracts from its books and
records, to inspect any of its Properties, and to discuss its
business and affairs with its officers, all to the extent
reasonably requested by the Buyer.
(d) Prohibition of Fundamental Changes. The Seller shall not enter into
any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation,
winding up or dissolution) or sell all or substantially all of its
assets; provided, that the Seller may merge or consolidate with (a) any
wholly owned subsidiary of the Seller, or (b) any other Person if the
Seller is the surviving corporation; and provided further, that if
after giving effect thereto, no Default would exist hereunder.
(e) Margin Deficit. If at any time there exists a Margin Deficit the
Seller shall cure same in accordance with Section 4 hereof.
(f) Notices. The Seller shall give notice to the Buyer:
(1) promptly upon receipt of notice or knowledge of the occurrence of
any Default or Event of Default;
(2) with respect to any Purchased Asset, promptly upon receipt of any
principal prepayment (in full or partial) of such Purchased
Asset;
(3) with respect to any Purchased Asset hereunder, promptly upon
receipt of notice or knowledge that the underlying Mortgaged
Property has been damaged by waste, fire, earthquake or earth
movement, flood, tornado or other casualty, or otherwise damaged
so as to affect adversely the Asset Value of such Purchased
Asset;
(4) promptly upon receipt of notice or knowledge of (i) any material
default related to any Purchased Item, (ii) any Lien or security
interest on, or claim asserted against, any Purchased Item or
(iii) any event or change in circumstances which could reasonably
be expected to have a Material Adverse Effect;
(5) promptly upon any material change in the market value of any or
all of the Seller's assets which could reasonably be expected to
have a Material Adverse Effect; and
(6) promptly upon any expected or actual change in the senior
management of the Seller.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of the Seller setting forth details
of the occurrence referred to therein and stating what action the
Seller has taken or proposes to take with respect thereto.
(g) Reports. The Seller shall provide the Buyer with a quarterly
report, which report shall include, among other items, a summary of
such Seller's delinquency and loss experience with respect to Mortgage
Loans serviced by the Seller, any Servicer or any
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designee of either operating statements, the occupancy status of such
Mortgaged Property and other property level information, plus any such
additional reports as the Buyer may reasonably request with respect to
the Seller or any Servicer's servicing portfolio or pending
originations of Mortgage Loans.
(h) Underwriting Guidelines. In the event the Seller makes any
amendment or modification to the Underwriting Guidelines, the Seller
shall promptly deliver to the Buyer a complete copy of the amended or
modified Underwriting Guidelines.
(i) Transactions with Affiliates. The Seller shall not enter into any
transaction, including without limitation any purchase, sale, lease or
exchange of property or the rendering of any service, with any
Affiliate (except for (i) the acquisition of equity or stock or
warrants of an Affiliate and (ii) the payment of dividends, in either
case, in the ordinary course of business, and (iii) the purchase or
sale of loans in the ordinary course of business which is a true sale
and does not constitute a fraudulent conveyance) unless such
transaction is (a) not otherwise expressly prohibited under this
Repurchase Agreement, (b) in the ordinary course of the Seller's
business (c) upon fair and reasonable terms no less favorable to the
Seller than it would obtain in a comparable arm's length transaction
with a Person which is not an Affiliate, or make a payment that is not
otherwise permitted by this Section 11(i) to any Affiliate. In no event
shall the Seller transfer to the Buyer hereunder any Mortgage Loan
acquired by the Seller from an Affiliate of the Seller unless a True
Sale Certification has been delivered to the Buyer prior to such sale.
(j) Limitation on Liens. Immediately upon notice of a Lien or any
circumstance which could give rise to a Lien on the Purchased Items,
the Seller will defend the Purchased Items against, and will take such
other action as is necessary to remove, any Lien, security interest or
claim on or to the Purchased Items (other than any security interest
created under this Repurchase Agreement), and the Seller will defend
the right, title and interest of the Buyer in and to any of the
Purchased Items against the claims and demands of all persons
whomsoever.
(k) Limitation on Distributions. After the occurrence and during the
continuation of any Event of Default, the Seller shall not make any
payment on account of, or set apart assets for, a sinking or other
analogous fund for the purchase, redemption, defeasance, retirement or
other acquisition of any equity or partnership interest of the Seller,
whether now or hereafter outstanding, or make any other distribution in
respect thereof, either directly or indirectly, whether in cash or
property or in obligations of the Seller.
(l) Maintenance of Profitability. The Seller shall not permit, for any
period of six (6) consecutive calendar months (each such period, a
"Test Period"), Net Income for such Test Period determined on a monthly
basis, before income taxes for such Test Period and distributions made
during such Test Period, to be less than $1.00.
(m) Maintenance of Tangible Net Worth. The Seller shall not permit
Tangible Net Worth at any time to be less than the sum of (i)
$1,000,000 plus (ii) an amount equal to 75% of the aggregate or
positive Net Income (without deduction for quarterly losses).
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(n) Maintenance of Ratio of Total Indebtedness to Tangible Net Worth.
The Seller shall not permit the ratio of Total Indebtedness to Tangible
Net Worth at any time to be greater than 15:1.
(o) Servicer; Servicing Tape. The Seller shall provide to the Buyer,
electronically, in a format mutually acceptable to the Buyer and
Seller, a remittance report on a monthly basis by no later than the
20th day of each month (the "Reporting Date") containing servicing
information, including without limitation those fields reasonably
requested by the Buyer from time to time, on a loan-by-loan basis and
in the aggregate, with respect to the Purchased Mortgage Loans serviced
hereunder by the Seller or any Servicer for the month (or any portion
thereof) prior to the Reporting Date (such remittance report, an "Asset
Tape"). The Seller shall not cause the Mortgage Loans to be serviced by
any servicer other than a servicer expressly approved in writing by the
Buyer, which approval shall be deemed granted by the Buyer with respect
to the Seller with the execution of this Repurchase Agreement.
(p) Remittance of Prepayments. The Seller shall remit, with sufficient
detail to enable the Buyer to appropriately identify the Mortgage Loan
to which any amount remitted applies, all principal prepayments
relating to a Mortgage Loan that the Seller has received after the sale
of the Mortgage Loan to the Buyer no later than one (1) Business Day
following the date such prepayment was received.
(q) Custodial Agreement. The Seller shall maintain the Custodial
Agreement in full force and effect and shall not amend or modify the
Custodial Agreement or waive compliance with any provisions thereunder
without the prior written consent of the Buyer.
(r) The Seller shall provide the Buyer on a monthly basis, in a letter
format acceptable to the Buyer in its sole discretion, a compliance
report demonstrating therein the calculations the Seller utilized to
determine its compliance with the financial covenants set forth in
clauses (l) (m) and (n) of this Section 11.
(s) Takeout Commitments. The Borrower shall at all times have in place
a Takeout Commitment covering each Mortgage Loan pledged as Collateral
hereunder; provided that, in the event that any Takeout Commitment
should expire, the Borrower shall arrange a new Takeout Commitment
within three (3) Business Days from the date of such expiration.
12. EVENTS OF DEFAULT
If any of the following events (each an "Event of Default") occur, the
Seller and Buyer shall have the rights set forth in Section 13, as
applicable:
(a) the Seller shall default in the payment of any Repurchase Price due
or any amount due under Section 5 hereof when due (whether at stated
maturity, upon acceleration or at mandatory or optional prepayment); or
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(b) the Seller shall default in the payment of any other amount payable
by it hereunder or under any other Repurchase Document after
notification by the Buyer of such default, and such default shall have
continued unremedied for one (1) Business Day; or
(c) any representation, warranty or certification made or deemed made
herein or in any other Repurchase Document by the Seller or any
certificate furnished to the Buyer pursuant to the provisions hereof or
thereof or any information with respect to the Mortgage Loans furnished
in writing by on behalf of the Seller shall prove to have been false or
misleading in any material respect as of the time made or furnished
(other than the representations and warranties set forth in Schedule 1,
which shall be considered solely for the purpose of determining the
Asset Value of the Purchased Assets; unless (i) the Seller shall have
made any such representations and warranties with actual knowledge that
they were materially false or misleading at the time made; or (ii) any
such representations and warranties have been determined in good faith
by the Buyer in its sole discretion to be materially false or
misleading on a regular basis); or
(d) the Seller shall fail to comply with the requirements of 11(c)(i),
Section 11(d), Section 11(e), or Sections 11(h) through 11(t) hereof;
or
(e) the Seller shall otherwise fail to comply with the requirements of
Section 11(c), Section 11(f), or Section 11(p) hereof and such default
shall continue unremedied for a period of 5 Business Days; or
(f) the Seller shall fail to observe or perform any other covenant or
agreement contained in this Repurchase Agreement or any other
Transaction Document and such failure to observe or perform shall
continue unremedied for a period of 10 Business Days; or
(g) a final judgment or judgments for the payment of money in excess of
$100,000 in the aggregate shall be rendered against the Seller or any
of its Affiliates by one or more courts, administrative tribunals or
other bodies having jurisdiction and the same shall not be satisfied,
discharged (or provision shall not be made for such discharge) or
bonded, or a stay of execution thereof shall not be procured, within 30
days from the date of entry thereof, and the Seller or any such
Affiliate shall not, within said period of 30 days, or such longer
period during which execution of the same shall have been stayed or
bonded, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
(h) an Act of Insolvency shall have occurred with respect to the
Seller; or
(i) the Custodial Agreement or any Repurchase Document shall for
whatever reason be terminated or cease to be in full force and effect
and with respect to the Custodial Agreement, shall not have been
replaced with a comparable agreement acceptable to the Seller, provided
that, the comparable agreement is in full force and effect prior to or
at the time such agreement is terminated or ceases to be in full force
and effect, or the enforceability of the Custodial Agreement or any
Repurchase Document shall be contested by the Seller or any party
thereto; or
(j) the Seller shall grant, or suffer to exist, any Lien on any
Purchased Item (except any Lien in favor of the Buyer); or (A) the
Purchased Items shall not have been sold to the
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Buyer, or (B) the Liens contemplated hereby shall cease or fail to be
first priority perfected Liens on any Purchased Items in favor of the
Buyer or shall be Liens in favor of any Person other than the Buyer; or
(k) the Seller or any of the Seller's Affiliates shall be in default
under (i) any Indebtedness of the Seller or of such Affiliate which
default (1) involves the failure to pay a matured obligation, or (2)
permits the acceleration of the maturity of obligations by any other
party to or beneficiary with respect to such Indebtedness, or (ii) any
other contract to which the Seller or such Affiliate is a party which
default (1) involves the failure to pay a matured obligation, or (2)
permits the acceleration of the maturity of obligations by any other
party to or beneficiary of such contract; or
(l) any material adverse change in the Property, business or financial
condition of the Seller or any of its Affiliates shall occur, in each
case as determined by the Buyer in its sole good faith discretion, or
any other condition shall exist which, in the Buyer's sole good faith
discretion, constitutes a material impairment of the Seller's ability
to perform its obligations under this Repurchase Agreement or any other
Repurchase Document; or
(m)(i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving
any Plan, (ii) any material "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Seller or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Plan, which
Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Buyer, likely to result in
the termination of such Plan for purposes of Title IV of ERISA, (iv)
any Plan shall terminate for purposes of Title IV of ERISA, (v) the
Seller or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Buyer is likely to, incur any liability in connection
with a withdrawal from, or the insolvency or reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
(n) The Seller's Tangible Net Worth at any time, has declined by either
(a) 25% or more from the Seller's Tangible Net Worth as calculated
based upon the Seller's audited financial statements from the most
recent fiscal year, or (b) 35% or more from the Seller's highest
Tangible Net Worth as calculated on any date during the Seller's
current fiscal quarter.
(o) DLJ's corporate bond rating as calculated by S&P or ▇▇▇▇▇'▇ has
been lowered or downgraded to a rating below BBB as indicated by S&P or
below BAA as indicated by ▇▇▇▇▇'▇ and the Seller shall have failed to
both (i) repurchase all Purchased Assets then subject to Transactions
and (ii) pay all other Repurchase Obligations, within ninety (90)
calendar days following demand therefor by the Buyer.
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13. REMEDIES
(a) If an Event of Default occurs with respect to the Seller, the
following rights and remedies are available to the Buyer; provided,
that an Event of Default shall be deemed to be continuing unless
expressly waived by the Buyer in writing.
(1) At the option of the Buyer, exercised by written notice to the
Seller (which option shall be deemed to have been exercised, even
if no notice is given, immediately upon the occurrence of an Act
of Insolvency of the Seller), the Repurchase Date for each
Transaction hereunder, if it has not already occurred, shall be
deemed immediately to occur. The Buyer shall (except upon the
occurrence of an Act of Insolvency of the Seller) give notice to
the Seller of the exercise of such option as promptly as
practicable.
(2) If the Buyer exercises or is deemed to have exercised the option
referred to in subsection (a)(1) of this Section,
(A) the Seller's obligations in such Transactions to
repurchase all Purchased Assets, at the Repurchase Price
therefor on the Repurchase Date determined in accordance with
subsection (a)(1) of this Section, (1) shall thereupon become
immediately due and payable, (2) all Income paid after such
exercise or deemed exercise shall be retained by the Buyer and
applied to the aggregate unpaid Repurchase Prices and any
other amounts owed by the Seller hereunder, and (3) the Seller
shall immediately deliver to the Buyer any Purchased Assets
subject to such Transactions then in the Seller's possession
or control;
(B) to the extent permitted by applicable law, the
Repurchase Price with respect to each such Transaction shall
be increased by the aggregate amount obtained by daily
application of, on a 360 day per year basis for the actual
number of days during the period from and including the date
of the exercise or deemed exercise of such option to but
excluding the date of payment of the Repurchase Price as so
increased, (x) the Post-Default Rate to (y) the Repurchase
Price for such Transaction as of the Repurchase Date as
determined pursuant to subsection (a)(1) of this Section
(decreased as of any day by (i) any amounts actually in the
possession of Buyer pursuant to clause (C) of this subsection,
(ii) any proceeds from the sale of Purchased Assets applied to
the Repurchase Price pursuant to subsection (a)(7) of this
Section, and (iii) any amounts applied to the Repurchase Price
pursuant to subsection (a)(7) of this Section); and
(C) all Income actually received by the Buyer
pursuant to Section 5 (excluding any Late Payment Fees paid
pursuant to Section 5(b)) shall be applied to the aggregate
unpaid Repurchase Price owed by the Seller.
(3) Upon the occurrence of one or more Events of Default with respect
to the Seller, the Buyer shall have the right to obtain physical
possession of the Servicing
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Records (subject to the provisions of the Custodial Agreement)
and all other files of the 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 the
Seller or any third party acting for the Seller and such Seller
shall deliver to the Buyer such assignments as the Buyer shall
request and the Buyer shall have the right to appoint any Person
to act as Servicer for the Purchased Assets. The Buyer shall be
entitled to specific performance of all agreements of the Seller
contained in the Repurchase Documents.
(4) At any time on the Business Day following notice to the Seller
(which notice may be the notice given under subsection (a)(1) of
this Section), in the event the Seller has not repurchased all
Purchased Assets, the Buyer may (A) immediately sell, without
demand or further notice of any kind, at a public or private sale
and at such price or prices as the Buyer may deem satisfactory
any or all Purchased Assets subject to such Transactions
hereunder and apply the proceeds thereof to the aggregate unpaid
Repurchase Prices and any other amounts owing by the Seller
hereunder or (B) in its sole discretion elect, in lieu of selling
all or a portion of such Purchased Assets, to give the Seller
credit for such Purchased Assets in an amount equal to the Market
Value of the Purchased Assets against the aggregate unpaid
Repurchase Price and any other amounts owing by the Seller
hereunder. The proceeds of any disposition of Purchased Assets
shall be applied first to the costs and expenses incurred by the
Buyer in connection with the Seller's default; second to costs of
cover and/or related hedging transactions; third to the
Repurchase Price; and fourth to any other outstanding obligation
of the Seller to the Buyer or its Affiliates.
(5) Seller agrees that Buyer may obtain an injunction or an order of
specific performance to compel Seller to fulfill its obligations
as set forth in Section 24, if Seller fails or refuses to perform
its obligations as set forth therein.
(6) Seller shall be liable to Buyer, payable as and when incurred by
Buyer, for (A) the amount of all actual reasonable out-of-pocket
expenses, including reasonable legal or other expenses incurred
by Buyer in connection with or as a consequence of an Event of
Default, and (B) all reasonable costs incurred in connection with
hedging or covering transactions.
(7) The Buyer shall have any rights otherwise available to it under
any other agreement or applicable law. Subject to the terms and
conditions of this Agreement, the Seller shall have, in addition
to its rights hereunder, any rights otherwise available to it
under applicable law and under any other agreement between the
parties hereto; provided, however, that in the event of a
conflict between this Agreement and any other agreement, this
Agreement shall prevail unless expressly superseded by a separate
written agreement.
(b) Buyer may exercise one or more of the remedies available to Buyer
immediately upon the occurrence of an Event of Default and, except to
the extent provided in subsections (a)(1) and (4) of this Section, at
any time thereafter without notice to Seller.
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All rights and remedies arising under this Repurchase Agreement as
amended from time to time hereunder are cumulative and not exclusive of
any other rights or remedies which Buyer may have.
(c) Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Seller hereby expressly waives any
defenses Seller might otherwise have to require Buyer to enforce its
rights by judicial process. Seller also waives any defense (other than
a defense of payment or performance) Seller might otherwise have
arising from the use of nonjudicial process, enforcement and sale of
all or any portion of the Purchased Items, or from any other election
of remedies. Seller recognizes that nonjudicial remedies are consistent
with the usages of the trade, are responsive to commercial necessity
and are the result of a bargain at arm's length.
(d) To the extent permitted by applicable law, the Seller shall be
liable to the Buyer for interest on any amounts owing by the Seller
hereunder, from the date the Seller becomes liable for such amounts
hereunder until such amounts are (i) paid in full by the Seller or (ii)
satisfied in full by the exercise of the Buyer's rights hereunder.
Interest on any sum payable by the Seller to the Buyer under this
paragraph 13(d) shall be at a rate equal to the Post-Default Rate.
14. INDEMNIFICATION AND EXPENSES
(a) The Seller agrees to hold the Buyer, and its Affiliates and their
officers, directors, employees, agents and advisors (each an
"Indemnified Party") harmless from and indemnify any Indemnified Party
against all liabilities, losses, damages, judgments, costs and expenses
of any kind which may be imposed on, incurred by or asserted against
such Indemnified Party (collectively, "Costs"), relating to or arising
out of this Repurchase Agreement, any other Repurchase Document or any
transaction contemplated hereby or thereby, or any amendment,
supplement or modification of, or any waiver or consent under or in
respect of, this Repurchase Agreement, any other Repurchase Document or
any transaction contemplated hereby or thereby, that, in each case,
results from anything other than the Indemnified Party's gross
negligence or willful misconduct. Without limiting the generality of
the foregoing, the Seller agrees to hold any Indemnified Party harmless
from and indemnify such Indemnified Party against all Costs with
respect to all Mortgage Loans relating to or arising out of any
violation or alleged violation of any environmental law, rule or
regulation or any consumer credit laws, including without limitation
the Truth in Lending Act and/or the Real Estate Settlement Procedures
Act, that, in each case, results from anything other than the
Indemnified Party's gross negligence or willful misconduct. In any
suit, proceeding or action brought by an Indemnified Party in
connection with any Mortgage Loan for any sum owing thereunder, or to
enforce any provisions of any Mortgage Loan, the Seller will save,
indemnify and hold such Indemnified Party harmless from and against all
expense, loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by the
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 the Seller.
The Seller also agrees to reimburse an
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Indemnified Party as and when billed by such Indemnified Party for all
the Indemnified Party's costs and expenses incurred in connection with
the enforcement or the preservation of the Buyer's rights under this
Repurchase Agreement, any other Repurchase Document or any transaction
contemplated hereby or thereby, including without limitation the
reasonable fees and disbursements of its counsel.
(b) The Seller agrees to pay as and when billed by the Buyer all of the
out-of-pocket costs and expenses incurred by the Buyer in connection
with the development, preparation and execution of, and any amendment,
supplement or modification to, this Repurchase Agreement, any other
Repurchase Document or any other documents prepared in connection
herewith or therewith. The Seller agrees to pay as and when billed by
the Buyer all of the reasonable out-of-pocket costs and expenses
incurred in connection with the consummation and administration of the
transactions contemplated hereby and thereby including without
limitation all the reasonable fees, disbursements and expenses of
counsel to the Buyer which amount shall be deducted from the Purchase
Price paid for the first Transaction hereunder. Subject to the
limitations set forth in Section 27 hereof, the Seller agrees to pay
the Buyer all the reasonable out of pocket due diligence, inspection,
testing and review costs and expenses incurred by the Buyer with
respect to Mortgage Loans submitted by Seller for purchase under this
Repurchase Agreement, including, but not limited to, those out of
pocket costs and expenses incurred by the Buyer pursuant to Sections
13(a), 24 and 27 hereof.
15. RECORDING OF COMMUNICATIONS
Buyer and Seller shall have the right (but not the obligation) from
time to time to make or cause to be made tape recordings of
communications between its employees and those of the other party with
respect to Transactions upon notice to the other party of such
recording. Buyer and Seller consent to the admissibility of such tape
recordings in any court, arbitration, or other proceedings. The parties
agree that a duly authenticated transcript of such a tape recording
shall be deemed to be a writing conclusively evidencing the parties'
agreement.
16. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in
reliance upon the fact that, all Transactions hereunder constitute a
single business and contractual relationship and that each has been
entered into in consideration of the other Transactions. Accordingly,
each of Buyer and Seller agrees (i) to perform all of its obligations
in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in
respect of all Transactions hereunder, (ii) that each of them shall be
entitled to set off claims and apply property held by them in respect
of any Transaction against obligations owing to them in respect of any
other Transaction hereunder; (iii) that payments, deliveries, and other
transfers made by either of them in respect of any Transaction shall be
deemed to have been made in consideration of payments, deliveries, and
other transfers in respect of any other Transactions hereunder, and the
obligations to make any such payments, deliveries, and other transfers
may be
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applied against each other and netted and (iv) to promptly provide
notice to the other after any such set off or application.
17. NOTICES AND OTHER COMMUNICATIONS
Except as otherwise expressly permitted by this Repurchase Agreement,
all notices, requests and other communications provided for herein and
under the Custodial Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this
Repurchase Agreement) shall be given or made in writing (including
without limitation by telex or telecopy) delivered to the intended
recipient at the "Address for Notices" specified below its name on the
signature pages hereof or thereof); or, as to any party, at such other
address as shall be designated by such party in a written notice to
each other party. Except as otherwise provided in this Repurchase
Agreement and except for notices given under Section 3 (which shall be
effective only on receipt), all such communications shall be deemed to
have been duly given when transmitted by telecopy or personally
delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.
18. ENTIRE AGREEMENT; SEVERABILITY
This Repurchase Agreement together with the Custodial Agreement
constitute the entire understanding between Buyer and Seller with
respect to the subject matter it covers and shall supersede any
existing agreements between the parties containing general terms and
conditions for repurchase transactions involving Purchased Assets. By
acceptance of this Repurchase 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
Repurchase 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. NON-ASSIGNABILITY
The rights and obligations of the parties under this Repurchase
Agreement and under any Transaction shall not be assigned by Seller
without the prior written consent of Buyer. Subject to the foregoing,
this Repurchase Agreement and any Transactions shall be binding upon
and shall inure to the benefit of the parties and their respective
successors and assigns. Nothing in this Repurchase Agreement express or
implied, shall give to any person, other than the parties to this
Repurchase Agreement and their successors hereunder, any benefit of any
legal or equitable right, power, remedy or claim under this Repurchase
Agreement.
20. TERMINABILITY
This Repurchase Agreement may be canceled by either party upon giving
written notice to the other except that this Repurchase Agreement
shall, notwithstanding such notice, remain applicable to any
Transaction then outstanding. Each representation and warranty made or
deemed to be made by entering into a Transaction, herein or pursuant
hereto
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shall survive the making of such representation and warranty, and the
Buyer shall not be deemed to have waived any Default that may arise
because any such representation or warranty shall have proved to be
false or misleading, notwithstanding that the Buyer may have had notice
or knowledge or reason to believe that such representation or warranty
was false or misleading at the time the Transaction was made.
Notwithstanding any such termination or the occurrence of an Event of
Default, all of the representations and warranties and covenants
hereunder shall continue and survive. The obligations of the Seller
under Section 14 hereof shall survive the termination of this
Repurchase Agreement.
21. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF.
22. SUBMISSION TO JURISDICTION; WAIVERS
BUYER AND SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS REPURCHASE AGREEMENT AND THE OTHER
REPURCHASE DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE GENERAL JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS
BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE
SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY
BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL
(OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF
WHICH THE BUYER SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE
OF PROCESS IN ANY OTHER MANNER
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PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO ▇▇▇ IN ANY OTHER
JURISDICTION.
(E) THE BUYER AND THE SELLER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS REPURCHASE
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
23. NO WAIVERS, ETC.
No failure on the part of the Buyer to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power
or privilege under any Repurchase Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power
or privilege under any Repurchase Document preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. An Event of Default shall be
deemed to be continuing unless expressly waived by the Buyer in
writing.
24. SERVICING
(a) The Seller covenants to maintain or cause the servicing of the
Mortgage Loans, to be maintained in conformity with accepted and
prudent servicing practices in the industry for the same type of
mortgage loans as the Mortgage Loans and in a manner at least equal in
quality to the servicing the Seller provides for mortgage loans which
it owns. In the event that the preceding language is interpreted as
constituting one or more servicing contracts, each such servicing
contract shall terminate automatically upon the earliest of (i) an
Event of Default, (ii) the date on which all the Repurchase Obligations
have been paid in full or (iii) the transfer of servicing approved by
the Seller.
(b) All remittances from the Servicer under the Servicing Agreement, so
long as the Buyer shall not have notified the Servicer and the Seller
that a Default or an Event of Default has occurred and is continuing
(in which event the Buyer shall be entitled to apply such amounts as
the Buyer may determine in its sole discretion), shall be applied by
the Buyer on each Payment Date in the following order of priority:
(1) to the payment of the Servicer's servicing fee;
(2) to the payment of any Repurchase Obligations then due and
payable; and;
(3) to the extent any amounts remain, to the Seller.
(c) If the Purchased Mortgage Loans are serviced by the Seller, (i) the
Seller agrees that Buyer is the owner of all servicing records,
including but not limited to any and all servicing agreements, files,
documents, records, data bases, computer tapes, copies of computer
tapes, proof of insurance coverage, insurance policies, appraisals,
other closing
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documentation, payment history records, and any other records relating
to or evidencing the servicing of Mortgage Loans (the "Servicing
Records"). The Seller covenants to safeguard such Servicing Records and
to deliver them promptly to the Buyer or its designee (including the
Custodian) at Buyer's request following a Default.
(d) If the servicer of the Mortgage Loans is the Seller or the Servicer
is an Affiliate of the Seller, the Seller shall provide to the Buyer a
letter from the Seller or the Servicer, as the case may be, to the
effect that upon the occurrence of an Event of Default, the Buyer may
terminate any Servicing Agreement and transfer servicing to its
designee, at no cost or expense to the Buyer, it being agreed that the
Seller will pay any and all fees required to terminate the Servicing
Agreement and to effectuate the transfer of servicing to the designee
of the Buyer.
(e) In the event the Seller or its respective Affiliate is servicing
the Mortgage Loans, the Seller shall, upon one (1) Business Day's prior
notice, permit the Buyer to inspect the Seller's or its Affiliate's
servicing facilities, as the case may be, during normal business hours
for the purpose of satisfying the Buyer that the Seller or its
Affiliate, as the case may be, has the ability to service the Mortgage
Loans as provided in this Repurchase Agreement.
25. PERIODIC DUE DILIGENCE REVIEW
The Seller acknowledges that the Buyer has the right to perform
continuing due diligence reviews with respect to the Mortgage Loans,
for purposes of verifying compliance with the representations,
warranties and specifications made hereunder, or otherwise, and the
Seller agrees that upon reasonable (but no less than one (1) Business
Day's) prior notice unless an Event of Default shall have occurred, in
which case no notice is required, to the Seller, the Buyer or its
authorized representatives will be permitted during normal business
hours to examine, inspect, and make copies and extracts of, the
Mortgage Files and any and all documents, records, agreements,
instruments or information relating to such Mortgage Loans in the
possession or under the control of the Seller and/or the Custodian. The
Seller also shall make available to the Buyer a knowledgeable financial
or accounting officer for the purpose of answering questions respecting
the Mortgage Files and the Mortgage Loans. Without limiting the
generality of the foregoing, the Seller acknowledges that the Buyer may
purchase Mortgage Loans from the Seller based solely upon the
information provided by the Seller to the Buyer in the Asset Medium and
the representations, warranties and covenants contained herein, and
that the Buyer, at its option, has the right at any time to conduct a
partial or complete due diligence review on some or all of the Mortgage
Loans purchased in a Transaction, including without limitation ordering
new credit reports and new appraisals on the related Mortgaged
Properties and otherwise re-generating the information used to
originate such Mortgage Loan. The Buyer may underwrite such Mortgage
Loans itself or engage a mutually agreed upon third party underwriter
to perform such underwriting. The Seller agrees to cooperate with the
Buyer and any third party underwriter in connection with such
underwriting, including, but not limited to, providing the Buyer and
any third party underwriter with access to any and all documents,
records, agreements, instruments or information relating to such
Mortgage Loans in the possession, or under the control, of
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the Seller. The Seller further agrees that the Buyer shall pay all
out-of-pocket costs and expenses incurred by the Buyer in connection
with the Buyer's activities pursuant to this Section 25 (collectively,
the "Due Diligence Costs"); provided that, in the event that a Default
or an Event of Default shall have occurred, the Seller shall reimburse
the Buyer for all Due Diligence Costs.
26. BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT
(a) The Seller hereby irrevocably constitutes and appoints the Buyer
and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of the Seller and in the name of the
Seller or in its own name, from time to time in the Buyer's discretion
from and after the occurrence of a Default with respect to the Seller,
for the purpose of carrying out the terms of this Repurchase Agreement,
to take any and all appropriate action and to execute any and all
documents and instruments which may be reasonably necessary or
desirable to accomplish the purposes of this Repurchase Agreement, and,
without limiting the generality of the foregoing, the Seller hereby
gives the Buyer the power and right, on behalf of the Seller, without
assent by, but with notice to, the Seller, if an Event of Default shall
have occurred and be continuing, to do the following:
(1) in the name of the Seller, or in its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys
due under any mortgage insurance or with respect to any other
Purchased Items and to file any claim or to take any other action
or proceeding in any court of law or equity or otherwise deemed
appropriate by the Buyer for the purpose of collecting any and
all such moneys due under any such mortgage insurance or with
respect to any other Purchased Items whenever payable;
(2) to pay or discharge taxes and Liens levied or placed on or
threatened against the Purchased Items;
(3) (A) to direct any party liable for any payment under any
Purchased Items to make payment of any and all moneys due or to
become due thereunder directly to the Buyer or as the Buyer shall
direct; (B) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any
Purchased Items; (C) to sign and endorse any invoices,
assignments, verifications, notices and other documents in
connection with any Purchased Items; (D) to commence and
prosecute any suits, actions or proceedings at law or in equity
in any court of competent jurisdiction to collect the Purchased
Items or any proceeds thereof and to enforce any other right in
respect of any Purchased Items; (E) to defend any suit, action or
proceeding brought against the Seller with respect to any
Purchased Items; (F) to settle, compromise or adjust any suit,
action or proceeding described in clause (E) above and, in
connection therewith, to give such discharges or releases as the
Buyer may deem appropriate; and (G) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise deal
with any
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Purchased Items as fully and completely as though the Buyer were
the absolute owner thereof for all purposes, and to do, at the
Buyer's option and the Seller's expense, at any time, and from
time to time, all acts and things which the Buyer deems necessary
to protect, preserve or realize upon the Purchased Items and the
Buyer's Liens thereon and to effect the intent of this Repurchase
Agreement, all as fully and effectively as such Seller might do;
and
(4) to direct the actions of the Custodian with respect to the
Purchased Items under the Custodial Agreement.
The Seller hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
(b) The Seller also authorizes the Buyer, if an Event of Default shall
have occurred with respect to the Seller, from time to time, to
execute, in connection with any sale provided for in Section 13 hereof,
any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Purchased Items.
(c) The powers conferred on the Buyer hereunder are solely to protect
the Buyer's interests in the Purchased Items and shall not impose any
duty upon it to exercise any such powers. The Buyer shall be
accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to the Seller for
any act or failure to act hereunder, except for its or their own gross
negligence or willful misconduct.
27. MISCELLANEOUS
(a) If there is any conflict between the terms of this Repurchase
Agreement or any Transaction entered into hereunder and the Custodial
Agreement, this Repurchase Agreement shall prevail.
(b) This Repurchase Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this
Repurchase Agreement by signing any such counterpart.
(c) The captions and headings appearing herein are for included solely
for convenience of reference and are not intended to affect the
interpretation of any provision of this Repurchase Agreement.
(d) The Seller hereby acknowledges that:
(1) it has been advised by counsel in the negotiation, execution and
delivery of this Repurchase Agreement and the other Repurchase
Documents;
(2) the Buyer has no fiduciary relationship to the Seller; and
(3) no joint venture exists between the Buyer and the Seller.
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28. CONFIDENTIALITY
The Buyer and Seller hereby acknowledge and agree that all written or
computer-readable information provided by one party to the other
regarding the terms set forth in any of the Repurchase Documents or the
Transactions contemplated thereby (the "Confidential Terms") shall be
kept confidential and shall not be divulged to any party without the
prior written consent of such other party except to the extent that (i)
it is necessary to do so in working with legal counsel, auditors,
taxing authorities or other governmental agencies or regulatory bodies
or in order to comply with any applicable federal or state laws, (ii)
any of the Confidential Terms are in the public domain other than due
to a breach of this covenant, or (iii) in the Event of a Default the
Buyer determines such information to be necessary or desirable to
disclose in connection with the marketing and sales of the Purchased
Assets or otherwise to enforce or exercise the Buyer's rights
hereunder. The provisions set forth in this Section 30 shall survive
the termination of this Repurchase Agreement for a period of one year
following such termination.
29. CONFLICTS
In the event of any conflict between the terms of this Repurchase
Agreement, any other Repurchase Document and any Confirmation, the
documents shall control in the following order of priority: first, the
terms of the Confirmation shall prevail, then the terms of this
Repurchase Agreement shall prevail, and then the terms of the
Repurchase Documents shall prevail.
30. MAXIMUM CHARGES
In no event whatsoever shall interest and other charges charged
hereunder for the use, forebearance or detention of money exceed the
highest rate permissible under law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto.
In the event that the Purchaser has received interest and other charges
hereunder in excess of the highest rate permissible hereto, such excess
amount shall be first applied to any unpaid principal balance owned by
the Seller, and if the then remaining excess amount is greater than the
previously unpaid principal balance, the Purchaser shall promptly
refund such excess amount to the Seller and the provisions hereof shall
be deemed amended to provide for such permissible rate.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have entered into this Repurchase
Agreement as of the date set forth above.
BUYER:
DLJ MORTGAGE CAPITAL, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------
Title: Vice President
Address for Notices:
DLJ Mortgage Capital, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
DLJ Mortgage Capital, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
49
SELLER:
STARNET MORTGAGE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Title: President
Address for Notices:
StarNet Mortgage, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice)
to:
Gardere & ▇▇▇▇▇, L.L.P.
3000 Thanksgiving Tower
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: I. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
50
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
Part I: Residential Mortgage Loans
The Seller represents and warrants to the Buyer, with respect to each Mortgage
Loan, that as of the Purchase Date for the purchase of any Purchased Assets by
the Buyer from the Seller and as of the date of this Repurchase Agreement and
any Transaction hereunder and at all times while the Repurchase Documents and
any Transaction hereunder is in full force and effect. For purposes of this
Schedule 1 and the representations and warranties set forth herein, a breach of
a representation or warranty shall be deemed to have been cured with respect to
a Mortgage Loan if and when the Seller has taken or caused to be taken action
such that the event, circumstance or condition that gave rise to such breach no
longer adversely affects such Mortgage Loan.
(1) Mortgage Loans as Described. The information set forth in the
Asset Medium is complete, true and correct;
(2) Payments Current. All payments required to be made up to the
related Purchase Date for the Mortgage Loan under the terms of
the Mortgage Note have been made and credited. No payment
required under the Mortgage Loan is delinquent nor has any
payment under the Mortgage Loan been delinquent for more than
30 days more than once in the 12 months preceding the related
Purchase Date. The first and second Monthly Payments shall be
made with respect to the Mortgage Loan on or within 30 days of
its Due Date, all in accordance with the terms of the related
Mortgage Note;
(3) No Outstanding Charges. There are no defaults in complying
with the terms of the Mortgage, and all taxes, governmental
assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously
became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such
item which remains unpaid and which has been assessed but is
not yet due and payable. Except for (A) payments in the nature
of escrow payments and (B) interest accruing from the date of
the Mortgage Note or date of disbursement of the Mortgage
proceeds, whichever is greater to the day which precedes by
one month the Due Date of the first installment of principal
and interest, including, without limitation, taxes and
insurance payments, the Seller has not advanced funds, or
induced, solicited or knowingly received any advance of funds
by a party other than the Mortgagor, directly or indirectly,
for the payment of any amount required under the Mortgage
Loan, except for interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage Loan
proceeds, whichever is earlier, to the day which precedes by
one month the Due Date of the first installment of principal
and interest;
(4) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified
in any respect, except by a written
Sch. 1-1
51
instrument which has been recorded, if necessary to protect
the interests of the Buyer and which has been delivered to the
Buyer. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the
extent required by the policy, and its terms are reflected on
the Asset Medium. No Mortgagor has been released, in whole or
in part, except in connection with an assumption agreement
approved by the title insurer, to the extent required by the
policy, and which assumption agreement is part of the Mortgage
File delivered to the Buyer and the terms of which are
reflected in the Asset Medium;
(5) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including
without limitation the defense of usury, nor will the
operation of any of the terms of the Mortgage Note or the
Mortgage, or the exercise of any right thereunder, render
either the Mortgage Note or the Mortgage unenforceable, in
whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including without limitation
the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor was a debtor in any state or
federal bankruptcy or insolvency proceeding at the time the
Mortgage Loan was originated;
(6) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property
are insured by a generally acceptable insurer against loss by
fire, hazards of extended coverage and such other hazards as
are customary in the area where the Mortgaged Property is
located pursuant to insurance policies conforming to the
requirements of ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac in an amount not
less than the greatest of (i) 100% of the replacement cost of
all improvements to the Mortgaged Property, (ii) either (A)
the outstanding principal balance of the Mortgage Loan 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, or (iii) the amount necessary to avoid the operation of
any co-insurance provisions with respect to the Mortgaged
Property, and consistent with the amount that would have been
required as of the date of origination in accordance with the
requirements of ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac. If upon
origination of the Mortgage Loan, the Mortgaged Property was
in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards
(and such flood insurance has been made available) a flood
insurance policy meeting the requirements of the current
guidelines of the Federal Flood Insurance Administration is in
effect which policy conforms to the requirements of ▇▇▇▇▇▇ Mae
and ▇▇▇▇▇▇▇ Mac. All individual insurance policies contain a
standard mortgagee clause naming the Seller and its successors
and assigns as mortgagee, and all premiums thereon have been
paid. The Mortgage obligates the Mortgagor thereunder to
maintain the hazard insurance policy at the Mortgagor's cost
and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain
such insurance at such Mortgagor's cost and expense, and to
seek reimbursement therefor from the Mortgagor. Where
52
required by state law or regulation, the Mortgagor has been
given an opportunity to choose the carrier of the required
hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering the common
facilities of a planned unit development. The hazard insurance
policy is the valid and binding obligation of the insurer, is
in full force and effect, and will be in full force and effect
and inure to the benefit of the Buyer upon the consummation of
the transactions contemplated by this Agreement. The Seller
has not engaged in, and has no knowledge of the Mortgagor's or
any subservicer's having engaged in, any act or omission which
would impair the coverage of any such policy, the benefits of
the endorsement provided for herein, or the validity and
binding effect of either, including, without limitation, no
unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be
received, retained or realized by any attorney, firm or other
person or entity, and no such unlawful items have been
received, retained or realized by the Seller;
(7) Compliance with Applicable Laws. Any and all requirements of
any federal, state or local law including, without limitation,
usury, truth-in-lending, real estate settlement procedures,
consumer credit protection, equal credit opportunity or
disclosure laws applicable to the Mortgage Loan have been
complied with, and the Seller shall maintain in its
possession, available for the Buyer's inspection, evidence of
compliance with all such requirements;
(8) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in
part, and the Mortgaged Property has not been released from
the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such release,
cancellation, subordination or rescission. 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 is a fee simple property located in the state
identified in the Asset Medium except that with respect to
real property located in jurisdictions in which the use of
leasehold estates for residential properties is a
widely-accepted practice, the mortgaged property may be a
leasehold estate and 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
residential condominium unit in a low-rise condominium
project, or an individual unit in a planned unit development,
and that no residence or dwelling is (i) a mobile home or (ii)
a manufactured dwelling unless such manufactured dwelling is
(x) permanently affixed to the Mortgaged Property, (y)
considered real estate under applicable local law and (z)
conforms to all ▇▇▇▇▇▇ Mae requirements. No portion of the
Mortgaged Property is used for commercial purposes;
(10) Valid First or Second Lien. The Mortgage is a valid,
subsisting enforceable and perfected first or second lien on
the Mortgaged Property, including all buildings
53
on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning
systems located in or annexed to such buildings, and all
additions, alterations and replacements made at any time with
respect to the foregoing. The lien of the Mortgage is subject
only to:
(A) the lien of current real property taxes
and assessments not yet due and payable;
(B) covenants, conditions and restrictions,
rights of way, easements and other matters of the
public record as of the date of recording acceptable
to mortgage lending institutions generally and
specifically referred to in the lender's title
insurance policy delivered to the originator of the
Mortgage Loan and (i) referred to or to otherwise
considered in the appraisal made for the originator
of the Mortgage Loan or (ii) which do not adversely
affect the appraised value of the Mortgaged Property
set forth in such appraisal;
(C) other matters to which like properties
are commonly subject which do not materially
interfere with the benefits of the security intended
to be provided by the Mortgage or the use, enjoyment,
value or marketability of the related Mortgaged
Property; and
(D) with respect to each Second Lien
Mortgage a prior mortgage lien on the Mortgaged
Property.
Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable (A) first lien and first priority security interest
with respect to each First Lien Mortgage Loan, or (B) second lien and second
priority security interest with respect to each Second Lien Mortgage Loan, in
either case, on the property described therein and the Seller has full right to
sell and assign the same to the Buyer;
(11) Validity of Mortgage Loan Documents. The Mortgage Note and the
Mortgage are genuine, and each is the legal, valid and binding
obligation of the maker thereof enforceable in accordance with
its terms. All parties to the Mortgage Note and the Mortgage
and any other related agreement had legal capacity to enter
into the Mortgage Loan and to execute and deliver the Mortgage
Note and the Mortgage and any other related agreement, and the
Mortgage Note and the Mortgage and any other related agreement
have been duly and properly executed by such parties. The
documents, instruments and agreements submitted for loan
underwriting were not falsified and contain no untrue
statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the
information and statements therein not misleading. No fraud,
error, negligence, misrepresentation or omission of fact with
respect to a Mortgage Loan has taken place on the part of the
Seller or the Mortgagor or any other party involved in the
origination or servicing of the Mortgage Loan. The Seller has
reviewed all of the documents constituting the Servicing File
and has made such inquiries as it deems
54
necessary to make and confirm the accuracy of the
representations set forth herein;
(12) Full Disbursement of Proceeds. The Mortgage Loan has been
closed and the proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future advances
thereunder, and any and all requirements as to completion of
any on-site or off-site improvement and as to disbursements of
any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage
Loan and the recording of the Mortgage were paid, and the
Mortgagor is not entitled to any refund of any amounts paid or
due under the Mortgage Note or Mortgage;
(13) Ownership. The Seller is the sole owner of record and holder
of the Mortgage Loan. The Mortgage Loan is not assigned or
pledged, and the Seller has good and marketable title thereto,
and has full right to transfer and sell the Mortgage Loan
therein 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 sell and assign each Mortgage Loan pursuant to this
Agreement;
(14) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and
disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2)
organized under the laws of such state, or (3) qualified to do
business in such state, or (4) federal savings and loan
associations or national banks having principal offices in
such state, or (5) not doing business in such state;
(15) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy or other generally acceptable
form of policy of insurance acceptable to ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac, issued by a title insurer acceptable to ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring
the Seller, its successors and assigns, as to the first or
second priority lien of the Mortgage in the original principal
amount of the Mortgage Loan, and against any loss by reason of
the invalidity or unenforceability of the lien resulting from
the provisions of the Mortgage providing for adjustment in the
Mortgage Interest Rate and Monthly Payment, subject only to
the exceptions contained in clauses (A), (B), and (C), and
with respect to each Second Lien Mortgage Loan clause (D) of
Paragraph (10) of this Schedule I. Where required by state law
or regulation, the Mortgagor has been given the opportunity to
choose the carrier of the required mortgage title insurance.
Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against
encroachments by or upon the Mortgaged Property or any
interest therein. The Seller is the sole insured of such
lender's title insurance policy, and such lender's title
insurance policy is in full force and effect and will be in
force and effect upon the consummation of the transactions
55
contemplated by this Agreement. No claims have been made under
such lender's title insurance policy, and no prior holder of
the Mortgage, including the Seller, has done, by act or
omission, anything which would impair the coverage of such
lender's title insurance policy including without limitation,
no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be
received, retained or realized by any attorney, firm or other
person or entity, and no such unlawful items have been
received, retained or realized by the Seller;
(16) No Defaults. There is no default, breach, violation or event
of acceleration existing under the Mortgage or the Mortgage
Note and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of
acceleration, and neither the Seller nor its predecessors have
waived any default, breach, violation or event of
acceleration. With respect to each Second Lien Mortgage Loan,
(i) the prior mortgage is in full force and effect, (ii) there
is no default, breach, violation or event of acceleration
existing under such prior mortgage or the related mortgage
note, (iii) no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of
acceleration thereunder, and either (A) the prior mortgage
contains a provision which allows or (B) applicable law
requires, the mortgagee under the Second Lien Mortgage Loan to
receive notice of, and affords such mortgagee an opportunity
to cure any default by payment in full or otherwise under the
prior mortgage;
(17) No Mechanics' Liens. There are no mechanics' or similar liens
or claims which have been filed for work, labor or material
(and no rights are outstanding that under the law could give
rise to such liens) affecting the related Mortgaged Property
which are or may be liens prior to, or equal or coordinate
with, the lien of the related Mortgage;
(18) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of
the Mortgaged Property lay wholly within the boundaries and
building restriction lines of the Mortgaged Property and no
improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part of
the Mortgaged Property is in violation of any applicable
zoning law or regulation;
(19) Origination: Payment Terms. At the time the Mortgage Loan was
originated, the originator was a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to
Sections 203 and 211 of the National Housing Act or a savings
and loan association, a savings bank, a commercial bank or
similar banking institution which is supervised and examined
by a Federal or State authority. No Mortgage Loan contains
terms or provisions which would result in negative
amortization. The Mortgage Note is payable in equal monthly
installments of principal and interest, which installments of
interest are subject to change due to adjustments to the
Mortgage Interest Rate, with interest calculated
56
and payable in arrears, sufficient to amortize the Mortgage
Loan fully by the stated maturity date, over an original term
of not more than thirty years from commencement of
amortization;
(20) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization
against the Mortgaged Property of the benefits of the security
provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure. Upon default by a Mortgagor
on a Mortgage Loan and foreclosure on, or trustee's sale of,
the Mortgaged Property pursuant to the proper procedures, the
holder of the Mortgage Loan will be able to deliver good and
merchantable title to the Mortgaged Property. There is no
homestead or other exemption available to the Mortgagor which
would interfere with the right to sell the Mortgaged Property
at a trustee's sale or the right to foreclose the Mortgage
subject to applicable federal and state laws and judicial
precedent with respect to bankruptcy and right of redemption;
(21) Conformance with Underwriting Guidelines. The Mortgage Loan
was underwritten in accordance with the Seller's underwriting
guidelines in effect at the time the Mortgage Loan was
originated, a copy of which underwriting guidelines are
attached as Exhibit II hereto. The Mortgage Note and Mortgage
are on forms acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac;
(22) Occupancy of the Mortgaged Property. As of the related
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;
(23) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the
corresponding Mortgage and the security interest of any
applicable security agreement or chattel mortgage referred to
in Paragraph (10) above;
(24) Deeds of Trust. In the event 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, and no fees or expenses
are or will become payable by the Buyer to the trustee under
the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(25) Acceptable Investment. The Mortgagor is not in bankruptcy or
insolvent and the Seller has no knowledge of any circumstances
or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing
that can reasonably be expected to cause private institutional
investors to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage
57
Loan to become delinquent, or adversely affect the value or
marketability of the Mortgage Loan;
(26) Delivery of Mortgage Loan Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents
required to be delivered by the Seller under this Agreement
have been delivered to the Buyer or its Custodian. The Seller
is in possession of a complete, true and accurate Mortgage
File in compliance with Section 2 of the Custodial Agreement,
except for such documents the originals of which have been
delivered to the Buyer or its Custodian;
(27) 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;
(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) 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 currently in
effect which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other
contingent interest feature;
(30) Consolidation of Future Advances. Any future advances made
prior to the related Purchase Date have been consolidated with
the outstanding principal amount secured by the Mortgage, and
the secured principal amount, as consolidated, bears a single
interest rate and single repayment term. The lien of the
Mortgage securing the consolidated principal amount is
expressly insured as having first or second lien priority by a
title insurance policy, an endorsement to the policy insuring
the mortgagee's consolidated interest or by other title
evidence acceptable to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac. The
consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;
(31) Mortgaged Property Undamaged. There is no proceeding pending
or threatened for the total or partial condemnation of the
Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty so as to affect adversely the value
of the Mortgaged Property as security for the Mortgage Loan or
the use for which the premises were intended;
58
(32) Collection Practices; Escrow Deposits; Adjustable Rate
Mortgage Loan Adjustments. The origination and collection
practices used with respect to the Mortgage Loan have been in
accordance with Accepted Servicing Practices and in all
respects in compliance with all applicable laws and
regulations. With respect to escrow deposits and Escrow
Payments (other than with respect to Second Lien Mortgage
Loans for which the mortgagee under the prior mortgage lien is
collecting Escrow Payments), all such payments are in the
possession of 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
which remains unpaid and which has been assessed but is not
yet due and payable. No escrow deposits or Escrow Payments or
other charges or payments due the Seller have been capitalized
under the Mortgage or the Mortgage Note. All Mortgage Interest
Rate adjustments have been made in strict compliance with
state and federal law and the terms of the related Mortgage
Note. Any interest required to be paid pursuant to state and
local law has been properly paid and credited;
(33) Appraisal. The Seller has delivered to the Buyer an appraisal
of the Mortgaged Property signed prior to the approval of the
Mortgage application by a appraiser qualified under ▇▇▇▇▇▇ ▇▇▇
and ▇▇▇▇▇▇▇ Mac guidelines who (i) is licensed in the state
where the Mortgaged Property is located, (ii) has no interest,
direct or indirect, in the Mortgaged Property or in any Loan
or the security therefor, and (iii) does not receive
compensation that is affected by the approval or disapproval
of the Loan. The appraisal shall have been made within one
hundred and eighty (180) days of the origination of the Loan,
be completed in compliance with the Uniform Standards of
Professional Appraisal Practice, any additional requirements
set forth for appraisals in Section 10 of the Repurchase
Agreement, and all applicable Federal and state laws and
regulations. If the appraisal was made more than one hundred
and twenty (120) days before the origination of the Loan, the
Seller shall have received and deliver to the purchase a
recertification of the appraisal.
(34) Soldiers' and Sailors' 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;
(35) Environmental Matters. The Mortgaged Property is free from any
and all toxic or hazardous substances and there exists no
violation of any local, state or federal environmental law,
rule or regulation. There is no pending action or proceeding
directly involving any Mortgaged Property of which the Seller
is aware in which compliance with any environmental law, rule
or regulation is an issue; and to the best of the Seller's
knowledge, nothing further remains to be done to satisfy in
full all requirements of each such law, rule or regulation
consisting a prerequisite to use and enjoyment of said
property;
59
(36) No Construction Loans No Mortgage Loan was made in connection
with (a) facilitating the trade-in or exchange of a Mortgaged
Property or (b) the construction or rehabilitation of a
Mortgaged Property, unless the Mortgage Loan is a
construction-to-permanent mortgage loan listed on the Asset
Medium which has been fully disbursed, all construction work
is complete and a completion certificate has been issued;
(37) No Denial of Insurance. No action, inaction, or event has
occurred and no state of fact exists or has existed that has
resulted or will result in the exclusion from, denial of, or
defense to coverage under any applicable pool insurance
policy, 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 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;
(38) Regarding the Mortgagor. The Mortgagor is one or more natural
persons and/or trustees for an Illinois land trust or a
trustee under a "living trust" and such "living trust" is in
compliance with ▇▇▇▇▇▇ ▇▇▇ guidelines for such trusts;
(39) Mortgagor Acknowledgment. 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. The Seller
shall maintain such statement in the Mortgage File;
(40) ▇▇▇▇▇▇ Act. None of the Mortgage Loans are classified as "high
cost" loans under the Home Ownership and Equity Protection Act
of 1994;
(41) Texas Home Equity Loans. With respect to any Loan which is a
Texas Home Equity Loan, any and all requirements of Section
50, Article XVI of the Texas Constitution applicable to Texas
Home Equity Loans which were in effect at the time of the
origination of the Mortgage Loan have been complied with.
Specifically, without limiting the generality of the
foregoing,
(a) all fees paid by the owner of the Mortgaged
Property or such owner's spouse, to any person, that
were necessary to originate, evaluate, maintain,
record, insure or service the Mortgage Loan are
reflected in the closing statement for such Mortgage
Loan;
(b) the Mortgage Loan was closed only at the office
of the mortgage lender, an attorney at law, or a
title company;
(c) the Mortgagee has not been found by a federal
regulatory agency to have engaged in the practice of
refusing to make loans because the applicants for the
loans reside or the property proposed to secure the
loans is located in a certain area;
60
(d) the owner of the Mortgaged Property was not
required to apply the proceeds of the Loan to repay
another debt except debt secured by the Mortgaged
Property or debt to a lender other than the
Mortgagee;
(e) the owner of the Mortgaged Property did not sign
any documents or instruments relating to the Loan in
which blanks were left to be filled in; and
(f) if discussions between the Mortgagee and the
Seller were conducted primarily in a language other
than English, the Mortgagee provided to the owner of
the Mortgaged Property, prior to closing, a copy of
the notice required by Section 50(g), Article XVI of
the Texas Constitution translated into the written
language in which the discussions were conducted.
All notices, acknowledgments and disclosure statements required by Section 50,
Article XVI of the Texas Constitution applicable to Texas Home Equity Loans are
contained in the Mortgage File for each such Mortgage Loan.
(42) Insurance. The Seller has caused or will cause to be performed
any and all acts required to preserve the rights and remedies
of the Buyer in any insurance policies applicable to the
Mortgage Loans including, without limitation, any necessary
notifications of insurers, assignments of policies or
interests therein, and establishments of coinsured, joint loss
payee and mortgagee rights in favor of the Buyer;
(43) Simple Interest Mortgage Loans. None of the Mortgage Loans are
simple interest Mortgage Loans;
(44) Prepayment Fee. With respect to each Mortgage Loan that has a
Prepayment Fee feature, each such Prepayment Fee is
enforceable and will be enforced by the Seller for the benefit
of Buyer, and each Prepayment Fee is permitted pursuant to
federal, state and local law. Each such Prepayment Fee is in
an amount equal to the maximum amount permitted under
applicable law;
(45) Flood Certification Contract. The Seller shall have obtained a
life of loan, transferable flood certification contract for
each Mortgage Loan and shall assign all such contracts to the
Buyer;
(46) CLTV; Equity LTV. No Second Lien Mortgage Loan has a CLTV in
excess of 100%. No Mortgage Loan has an Equity LTV in excess
of 125%; and
(47) Consent. Either (a) no consent for the Second Lien Mortgage
Loan is required by the holder of the related first lien or
(b) such consent has been obtained and is contained in the
Mortgage File.
(48) "Takeout Commitment" Each Takeout Commitment constitutes a
legal, valid and binding obligation of Seller and the Takeout
Investor (subject to bankruptcy laws
61
and other similar laws of general application affecting rights
of creditors and subject to the application of the rules of
equity, including those relating to specific performance),
respectively, enforceable against Seller and the Takeout
Investor, respectively, in accordance with its terms.
62
Part II: Defined Terms
In addition to terms defined elsewhere in the Repurchase Agreement, the
following terms shall have the following meanings when used in this Schedule 1:
"Accepted Servicing Practices" shall mean, with respect to any Mortgage
Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loans in the jurisdiction where the related Mortgaged Property is located.
"Adjustable Rate Mortgage Loan" shall mean an Adjustable Rate Mortgage
Loan purchased pursuant to this Agreement.
"Combined Loan-to-Value Ratio or CLTV" shall mean with respect to any
Second Lien Mortgage Loan, the sum of the original principal balance of such
Mortgage Loan and the outstanding principal balance of any related first lien as
of the date of origination of the Mortgage Loan, divided by the lesser of the
Appraised Value of the Mortgage Property as of the origination date or the
purchase price of the Mortgaged Property.
"Due Date" shall mean the day on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.
"Equity Loan-to-Value Ratio or Equity LTV" shall mean with respect to
any Second Lien Mortgage Loan, the original principal balance of such Second
Lien Mortgage Loan, divided by the Equity.
"Escrow Payments" shall mean with respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water charges, sewer
rents, municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and other payments as may be required to be
escrowed by the Mortgagor with the Mortgagee pursuant to the terms of any
Mortgage Note, Mortgage or any other document.
"First Lien Mortgage Loan" shall mean a Mortgage Loan secured by a
first lien Mortgage on the related Mortgaged Property.
"Fixed Rate Mortgage Loan" shall mean a fixed rate Mortgage Loan
purchased pursuant to this Repurchase Agreement.
"Interest Rate Adjustment Date" shall mean with respect to each
Adjustable Rate Mortgage Loan, the date set forth in the related Mortgage Note
on which the Mortgage Interest Rate on the Mortgage Loan is adjusted in
accordance with the terms of the Mortgage Note.
"Maximum Mortgage Interest Rate" shall mean with respect to each
Adjustable Rate Mortgage Loan, a rate that is set forth on the related Asset
Medium and in the related Mortgage Note and is the maximum interest rate to
which the Mortgage Interest Rate on such Mortgage Loan may be increased on any
Adjustment Date.
63
"Minimum Mortgage Interest Rate" shall mean with respect to each
Adjustable Rate Mortgage Loan, a rate that is set forth on the related Asset
Medium and in the related Mortgage Note and is the minimum interest rate to
which the Mortgage Interest Rate on such Mortgage Loan may be decreased on any
Adjustment Date.
"Monthly Payment" shall mean with respect to any Mortgage Loan, the
scheduled combined payment of principal and interest payable by a Mortgagor
under the related Mortgage Note on each Due Date.
"Mortgage Interest Rate" shall mean with respect to each Mortgage Loan,
the annual rate at which interest accrues on such Mortgage Loan from time to
time in accordance with the provisions of the related Mortgage Note.
"Primary Mortgage Insurance Policy" shall mean each primary policy of
mortgage insurance represented to be in effect pursuant to Paragraph (35) of
this Schedule I.
64
EXHIBIT I
FORM OF CONFIRMATION LETTER
[ ], 2000
---------------------------
---------------------------
---------------------------
---------------------------
Attention:
Confirmation No.:
----------------------
Ladies/Gentlemen:
This letter confirms our oral agreement to purchase from you the
Mortgage Loans listed in Appendix I hereto, pursuant to the Master Repurchase
Agreement governing purchases and sales of Mortgage Loans between us, dated as
of _______ _ , 2000 (the "Agreement"), as follows. All capitalized terms herein
shall have the meaning as provided in the Agreement.
Purchase Date:
Mortgage Loans to be Purchased: See Appendix I hereto.
[Appendix I to Confirmation Letter will list Mortgage Loans]
Aggregate Principal Amount of Purchased Mortgage Loans:
Purchase Price:
Pricing Spread:
Repurchase Date:
Repurchase Price:
Margin Percentage:
Names and addresses for communications:
Buyer:
DLJ Mortgage Capital, Inc.
DLJ Mortgage Capital, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
65
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
DLJ Mortgage Capital, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Seller:
StarNet Mortgage, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
Gardere & ▇▇▇▇▇, L.L.P.
3000 Thanksgiving Tower
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: I. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Seller's wire transfer instructions for this transaction:
[BANK]
ABA #___________________
Account Name:_____________
A/C #:____________________
Attention:
66
DLJ MORTGAGE CAPITAL, INC.
By:
-----------------------------
Name:
Title:
Agreed and Acknowledged:
STARNET MORTGAGE, INC.
By:
----------------------------
Name:
Title:
67
EXHIBIT II
UNDERWRITING GUIDELINES
[ON FILE WITH BUYER]
68
EXHIBIT III
FORM OF OPINIONS
DLJ Mortgage Capital, Inc.
[Address]
Dear Sirs and Mesdames:
You have requested our opinion as counsel to [____________], a [___________]
organized and existing under the laws of [________] (the "Seller"), with
respect to certain matters in connection with that certain Master Repurchase
Agreement governing purchases and sales of certain Mortgage Loans, dated
_______, 2000 (the "Repurchase Agreement"), by and between the Seller and DLJ
Mortgage Capital, Inc. (the "Buyer"). The Master Repurchase Agreement and the
Supplemental Terms and Conditions are hereinafter collectively referred to as
the "Governing Agreements." Capitalized terms not otherwise defined herein have
the meanings set forth in the Repurchase Agreement.
[We] [I] have examined the following documents:
1. the Repurchase Agreement;
2. unfiled copies of the financing statements listed on Schedule
1 (collectively, the "Financing Statements") naming the Seller
as Debtor and the Buyer as Secured Party and describing the
Purchased Items (as defined in the Master Repurchase
Agreement) as to which security interests may be perfected by
filing under the Uniform Commercial Code of the States listed
on Schedule 1 (the "Filing Collateral"), which I understand
will be filed in the filing offices listed on Schedule 1 (the
"Filing Offices");
3. the reports listed on Schedule 2 as to UCC financing
statements (collectively, the "UCC Search Report");
4. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I] have
relied upon the representations and warranties of the Seller contained in the
Repurchase Agreement. [We] [I] have assumed the authenticity of all documents
submitted to me [us] as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all
documents.
Based upon the foregoing, it is [our] [my] opinion that:
1. The Seller is a corporation duly organized, validly existing and in
good standing under the laws of the [State of _________] and is qualified to
transact business in, and is in good standing under, the laws of the [State of
_________].
69
2. The execution, delivery and performance by the Seller of the
Governing Agreements to which it is a party, and the sales by the Seller and the
pledge of the Purchased Items under the Repurchase Agreement have been duly
authorized by all necessary corporate action on the part of the Seller. Each of
the Governing Agreements have been executed and delivered by the Seller and are
legal, valid and binding agreements enforceable under Texas and federal law 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 purchase of the Purchased Assets and/or security interest in
the Purchased Assets.
3. To the best of our knowledge, after due inquiry, no consent,
approval, authorization or order of, and no filing or registration with, any
court or governmental agency or regulatory body is required on the part of the
Seller for the execution, delivery or performance by the Seller of the Governing
Agreements to which it is a party or for the sales by the Seller under the
Repurchase Agreement or the sale of the Purchased Items to the Buyer and/or
granting of a security interest to the Buyer in the Purchased Items, pursuant to
the Repurchase Agreement.
4. The execution, delivery and performance by the Seller of, and the
consummation of the transactions contemplated by the Governing Agreements to
which it is a party do not and will not (a) violate any provision of the
Seller's charter or by-laws, (b) violate any applicable law, rule or regulation,
(c) violate any order, writ, injunction or decree of any court or governmental
authority or agency or any arbitral award applicable to the Seller of which I
[we] have knowledge (after due inquiry) or (d) result in a breach of, constitute
a default under, require any consent under, or result in the acceleration or
required prepayment of any indebtedness pursuant to the terms of, any agreement
or instrument of which I have knowledge (after due inquiry) to which the Seller
is a party or by which it is bound or to which it is subject, or (except for the
Liens created pursuant to the Repurchase Agreement) result in the creation or
imposition of any Lien upon any Property of the Seller pursuant to the terms of
any such agreement or instrument.
5. There is no action, suit, proceeding or investigation pending or, to
the best of [our] [my] knowledge, threatened against 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 the Governing
Agreements to which it is a party or the Mortgage Loans or of any action taken
or to be taken in connection with the transactions contemplated thereby, or
which would be reasonably likely to impair materially the ability of the Seller
to perform under the terms of the Governing Agreements to which it is a party or
the Mortgage Loans.
6. The Repurchase Agreement is effective to create, in favor of the
Buyer, either a valid sale of the Purchased Items to the Buyer under Texas law
or a valid security interest under the Uniform Commercial Code in all of the
right, title and interest of the Seller in,
70
to and under the Purchased Items as collateral security for the payment of the
Seller's obligations under the Repurchase Agreement, except that (a) such
security interests will continue in Purchased Items after its sale, exchange or
other disposition only to the extent provided in Section 9-306 of the Uniform
Commercial Code, (b) the security interests in Purchased Items 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.
7. 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 Section 6 above in the Mortgage Notes will constitute a fully perfected
first priority security interest in all right, title and interest of the Seller
therein.
8. (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
Purchased Items, in the jurisdictions and recording offices listed on Schedule 1
attached hereto, the security interests referred to in Section 6 above will
constitute fully perfected security interests under [Texas] law in all right,
title and interest of the Seller in, to and under such Purchased Items, which
can be perfected by filing under [Texas] law, or, will demonstrate a completion
of the sale of the Mortgage Loans to the Buyer.
(b) The UCC Search Report sets forth the proper filing offices and the
proper debtors necessary to identify those Persons who have on file in the
jurisdictions listed on Schedule 1 financing statements covering the Purchased
Items as of the dates and times specified on Schedule 2. The UCC Search Report
identifies no Person who has filed in any Filing Office a financing statement
describing the Purchased Items prior to the effective dates of the UCC Search
Report.
9. The Seller is not an "investment company", or a company "controlled"
by an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
Very truly yours,
71
EXHIBIT IV
UCC FILING JURISDICTIONS
Secretary of State of Delaware
Secretary of State of Texas
Exh. IV-1
72
EXHIBIT V
ACCOUNT AGREEMENT
May 31, 2000
StarNet Mortgage, Inc., as Seller
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Bank United, N.A., as Bank
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
Re: Collection Account Established by StarNet Mortgage, Inc. (the "Seller")
at Bank United, N.A. (the "Bank") pursuant to that certain Master
Repurchase Agreement (as amended, supplemented or otherwise modified
from time to time, the "Repurchase Agreement"), dated May 31, 2000,
between DLJ Mortgage Capital, Inc. (the "Buyer") and Seller.
Ladies and Gentlemen:
The Seller has entered into a Repurchase Agreement pursuant to which
the Buyer may from time to time enter into Transactions (as defined therein)
secured by, among other things, the payments made by mortgagors on account of
Purchased Assets sold to the Buyer under the Repurchase Agreement. As a
requirement of such Transactions, all such payments are required to be forwarded
daily to the Buyer at the Collection Account identified below within one (1)
Business Day of receipt.
The Seller has established a collection account, Account No.
8005171189, for the account of DLJ Mortgage Capital, Inc., with the Bank, ABA#
▇▇▇▇▇▇▇▇▇ (the "Collection Account") which the Bank maintains in the name and in
trust for the Buyer. The Seller has granted to the Buyer a security interest in
all payments deposited in the Collection Account with respect to the Purchased
Items sold to the Buyer under the Repurchase Agreement.
The Buyer agrees to release such funds no later than one (1) Business
Day following the later to occur of the (i) receipt of the related Asset Tape
from the Seller detailing such deposits made to Collection Account and (ii)
receipt of the accrued and unpaid Periodic Advance Repurchase Payment with
respect to outstanding Transactions. The Buyer shall withdraw and apply or remit
to the Seller (as applicable) such deposits in the following order:
(a) any amounts due on account of a Price Differential in
accordance with Section 5(b) of the Repurchase Agreement,
73
(b) any amounts due on account of a Margin Deficit in accordance
with Section 4 of the Repurchase Agreement,
(c) any other fees or amounts due the Buyer under the Repurchase
Agreement, and
(d) the remainder of funds to the Seller.
In addition, the Bank acknowledges that (a) the Seller has granted a
security interest in all of the Seller's right, title and interest in and to any
funds from time to time on deposit in the Collection Account with respect to the
Purchased Assets sold to the Buyer under the Repurchase Agreement, (b) that such
funds are received by the Bank in trust for the benefit of Buyer and, except as
provided below, are for application against the Seller's liabilities to Buyer,
and (c) that the Bank shall transfer funds from the Collection Account in
accordance with the Buyer's instructions until the Bank receives notice from the
Buyer that it has released its lien on the Collection Account and all funds
deposited therein.
In the event the Bank receives notice from the Buyer that an event of
default has occurred and is continuing under the Repurchase Agreement (a "Notice
of Event of Default") from the Buyer, the Bank shall in no event (a) transfer
funds from the Collection Account to the Seller, (b) act on the instruction of
the Seller or (3) cause or permit withdrawals from the Collection Account in any
manner not approved by the Buyer in writing.
All bank statements in respect to the Collection Account shall be sent
to the Buyer at:
DLJ Mortgage Capital, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
DLJ Mortgage Capital, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
74
with copies to the Seller at:
StarNet Mortgage, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
Gardere & ▇▇▇▇▇, L.L.P.
3000 Thanksgiving Tower
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: I. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Kindly acknowledge your agreement with the terms of this agreement by
signing the enclosed copy of this letter and returning it to the undersigned.
Very truly yours,
DLJ MORTGAGE CAPITAL, INC.
By:
---------------------------------
Title:
Agreed and acknowledged:
STARNET MORTGAGE, INC., as Seller
By:
------------------------------
Title:
75
Agreed and acknowledged:
BANK UNITED, N.A., as Bank
By:
------------------------------
Title:
76
EXHIBIT VI
FORM OF TRUE SALE CERTIFICATION
CERTIFICATE OF STARNET MORTGAGE, INC. (THE "PURCHASER")
In connection with the transaction pursuant to the Master Repurchase
Agreement, dated as of [ ], 2000 between DLJ Mortgage Capital, Inc. and StarNet
Mortgage, Inc., the undersigned certifies, on behalf of Purchaser that:
1. I personally participated as the __________ of the Purchaser in the
transaction (the "Transaction"), pursuant to which [NAME OF SELLER] (the
"Seller") sold [DESCRIBE ASSETS] (the "Assets") to the Purchaser. In such
capacity, I reviewed the purchase and sale agreement relating to the Transaction
dated as of __________ __, 2000 (the "Purchase and Sale Agreement").
2. Due to my close involvement in the Transaction, I can accurately and
diligently certify the facts listed herein on behalf of the Purchaser.
3. The Seller has shifted all of the risks and burdens which are
associated with the ownership of the Assets to the Purchaser.
4. The Seller has shifted all of the benefits and rewards which are
associated with the Assets to the Purchaser. Subsequent to the consummation of
the Transaction, the Seller had no control rights with respect to the Assets,
and all legal rights and title with respect to the Assets vested in the
Purchaser.
5. There has been no recourse to the Seller with respect to the
performance of the Assets.
6. As of the date of the consummation of the Transaction, the Seller
received from the Purchaser reasonably equivalent value for the transferred
Assets, in the form of [DESCRIBE CONSIDERATION].
7. The Purchase and Sale Agreement represented the intention of the
Seller and the Purchaser to accomplish a complete and irrevocable sale of the
Assets.
8. The Seller neither was obligated to repurchase, nor had any "call"
rights with respect to, the Assets.
9. The Purchaser neither was obligated to sell the Assets back to the
Seller, nor had any "put" rights with respect to the Assets.
10. The Purchaser's books and records reflect that the Transaction was
a sale of the Assets, rather than a secured financing or a loan.
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11. The Purchaser treated the Transaction as a sale for accounting and
tax purposes.
12. The Transaction was duly authorized by the Purchaser's officers and
directors, as required by the Purchaser's organizational documents and
applicable law.
I have been duly authorized to execute this certificate on behalf of
Purchaser.
STARNET MORTGAGE, INC.
By:
------------------------------------
Name:
Title:
78
CERTIFICATE OF [NAME OF SELLER]
In connection with the transaction pursuant to the Master
Repurchase Agreement, dated as of July 15, 1999 between DLJ Mortgage Capital,
Inc. and [PURCHASER] (the "Purchaser"), the undersigned certifies, on behalf of
[NAME OF SELLER] (the "Seller") that:
1. I personally participated as the __________ of the Seller in the
transaction (the "Transaction") pursuant to which Seller sold [DESCRIBE ASSETS]
(the "Assets") to the Purchaser. In such capacity, I reviewed the purchase and
sale agreement relating to the Transaction dated as of __________ __, 2000 (the
"Purchase and Sale Agreement").
2. Due to my close involvement in the Transaction, I can accurately and
diligently certify the facts listed herein on behalf of the Seller.
3. The Seller has shifted all of the risks and burdens which are
associated with the ownership of the Assets to the Purchaser.
4. The Seller has shifted all of the benefits and rewards which are
associated with the Assets to the Purchaser. Subsequent to the consummation of
the Transaction, the Seller had no control rights with respect to the Assets,
and all legal rights and title with respect to the Assets vested in the
Purchaser.
5. There has been no recourse to the Seller with respect to the
performance of the Assets. As of the date of the consummation of the
Transaction, the Seller received from the Purchaser reasonably equivalent value
for the transferred Assets, in the form of [DESCRIBE CONSIDERATION].
6. The Purchase and Sale Agreement represented the intention of the
Seller and the Purchaser to accomplish a complete and irrevocable sale of the
Assets.
7. The Seller neither was obligated to repurchase, nor had any "call"
rights with respect to, the Assets.
8. The Purchaser neither was obligated to sell the Assets back to the
Seller, nor had any "put" rights with respect to the Assets.
9. The Seller's books and records reflect that the Transaction was a
sale of the Assets, rather than a secured financing or a loan.
10. The Seller treated the Transaction as a sale for accounting and tax
purposes.
11. The Transaction was duly authorized by the Seller's officers and
directors, as required by the Seller's organizational documents and applicable
law.
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I have been duly authorized to execute this certificate on behalf of
StarNet Mortgage, Inc.
[SELLER]
By:
--------------------------------
Name:
Title:
80
EXHIBIT VII
TAKEOUT INVESTORS