Exhibit 10.1
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MASTER REPURCHASE AGREEMENT
Among:
DB STRUCTURED PRODUCTS, INC., as Buyer
DEUTSCHE BANK SECURITIES INC., as Agent
and
CHIMERA INVESTMENT CORP., as Seller
Dated as of January 31, 2008
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TABLE OF CONTENTS
1. APPLICABILITY...........................................................1
2. DEFINITIONS AND INTERPRETATION..........................................1
3. THE TRANSACTIONS.......................................................15
4. CONFIRMATION...........................................................16
5. PAYMENT AND TRANSFER...................................................16
6. MARGIN MAINTENANCE.....................................................17
7. INCOME PAYMENTS........................................................17
8. TAXES; TAX TREATMENT...................................................17
9. SECURITY INTEREST; BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT............19
10. CONDITIONS PRECEDENT...................................................20
11. RELEASE OF PURCHASED ASSETS............................................24
12. RELIANCE...............................................................24
13. REPRESENTATIONS AND WARRANTIES.........................................24
14. COVENANTS OF SELLER....................................................27
15. TERMINATION EVENTS.....................................................34
16. REPURCHASE OF PURCHASED ASSETS; CHANGE OF LAW..........................34
17. SUBSTITUTION...........................................................35
18. RESERVED...............................................................35
19. EVENTS OF DEFAULT......................................................35
20. REMEDIES...............................................................38
21. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE..............................40
22. USE OF EMPLOYEE PLAN ASSETS............................................40
23. INDEMNITY..............................................................40
24. WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS.............................41
25. REIMBURSEMENT; SET-OFF.................................................41
26. FURTHER ASSURANCES.....................................................42
27. ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION...............................43
28. TERMINATION............................................................43
29. REHYPOTHECATION; ASSIGNMENT............................................43
30. AMENDMENTS, ETC........................................................44
31. SEVERABILITY...........................................................44
32. BINDING EFFECT; GOVERNING LAW..........................................44
33. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION AND VENUE;
SERVICE OF PROCESS.....................................................44
34. SINGLE AGREEMENT.......................................................45
35. INTENT.................................................................45
36. NOTICES AND OTHER COMMUNICATIONS.......................................45
37. CONFIDENTIALITY........................................................46
38. DUE DILIGENCE..........................................................46
39. RESERVED...............................................................47
40. RESERVED...............................................................47
41. THE AGENT..............................................................47
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SCHEDULES AND EXHIBITS
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SCHEDULE 1 LIST OF APPROVED SERVICERS (SERVICING RELEASED LOANS)
SCHEDULE 2 LIST OF APPROVED SERVICERS (SERVICING RETAINED LOANS)
EXHIBIT A MONTHLY CERTIFICATION
EXHIBIT B-1 REPRESENTATIONS AND WARRANTIES WITH RESPECT TO LOANS
EXHIBIT B-2 REPRESENTATIONS AND WARRANTIES WITH RESPECT TO SECURITIES
EXHIBIT C RESERVED
EXHIBIT D-1 FORM OF LOAN TRANSACTION NOTICE
EXHIBIT D-2 FORM OF SECURITY TRANSACTION NOTICE
EXHIBIT E SERVICER'S SIDE LETTER
EXHIBIT F FORM OF GOODBYE LETTER
EXHIBIT G FORM OF WAREHOUSE LENDER'S RELEASE
EXHIBIT H FORM OF SELLER'S RELEASE
EXHIBIT I LIST OF INDEBTEDNESS
EXHIBIT J FORM OF TRUSTEE INSTRUCTION LETTER
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MASTER REPURCHASE AGREEMENT
Dated as of January 31, 2008
AMONG:
DB STRUCTURED PRODUCTS, INC. ("Buyer"),
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DEUTSCHE BANK SECURITIES INC. ("Agent")
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and
CHIMERA INVESTMENT CORP. ("Seller").
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1. APPLICABILITY
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Buyer shall from time to time, upon the terms and conditions set forth
herein, agree to enter into transactions in which Seller sells to Buyer Eligible
Assets against the transfer of funds by Buyer, with a simultaneous agreement by
Buyer, to transfer to Seller such Purchased Assets at a date certain, against
the transfer of funds by Seller. Each such transaction shall be referred to
herein as a "Transaction", and, unless otherwise agreed in writing, shall be
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governed by this Agreement.
2. DEFINITIONS AND INTERPRETATION
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(a) Defined Terms.
"30-Day Delinquent Loan" means a Loan that at any time since
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origination has been thirty (30) days or more Delinquent, but not more than
fifty-nine (59) days Delinquent.
"Accepted Servicing Practices" means with respect to any Loan, those
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accepted, customary and prudent mortgage servicing practices (including
collection procedures) of prudent mortgage banking institutions which service
mortgage loans of the same type as the Loans in the jurisdiction where the
related Mortgaged Property is located, and which are in accordance with ▇▇▇▇▇▇
▇▇▇ servicing practices and procedures for MBS pool mortgages, as defined in the
▇▇▇▇▇▇ Mae servicing guides including future updates.
"Acquisition Guidelines" means, with respect to a Loan, the related
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Approved Originator's residential mortgage loan underwriting guidelines in
effect as of the related Origination Date.
"Additional Purchased Assets" shall have the meaning assigned thereto
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in Section 6(a) hereof.
"Adjustable Rate Loan" means a Loan which provides for the adjustment
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of the Mortgage Interest Rate payable in respect thereto.
"Adjusted Tangible Net Worth" means consolidated Net Worth, less
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goodwill, intangible assets, intercompany/interaffiliate receivables (each
calculated in accordance with GAAP) and other items agreed to among the parties.
"Adjustment Date" means with respect to each Adjustable Rate Loan, the
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date set forth in the related Note on which the Mortgage Interest Rate on the
Loan is adjusted in accordance with the terms of the Note.
"Affiliate" means, with respect to any specified Person, any other
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Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" means the power to direct
the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise and the
terms "controlling", "controlled by" and "under common control with" have
meanings correlative to the meaning of "control". Notwithstanding anything to
the contrary contained herein, the term "Affiliate" with respect to Seller shall
not include Annaly Capital Management, Inc. or Fixed Income Discount Advisory
Company ("FIDAC") or any fund managed or advised by FIDAC or any of their
respective Affiliates, other than Seller.
"Agreement" means this Master Repurchase Agreement (including all
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exhibits, schedules and other addenda thereto), as supplemented by the Pricing
Side Letter, as it may be amended, further supplemented or otherwise modified
from time to time.
"Alt-A Loan" means a Loan that satisfies the guidelines for such loans
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set forth in the Acquisition Guidelines, or as otherwise determined by Buyer in
its sole discretion.
"ALTA" means the American Land Title Association.
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"Applicable Margin" shall have the meaning assigned thereto in the
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Pricing Side Letter.
"Appraised Value" means the value set forth in an appraisal made in
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connection with the origination of the related Loan as the value of the
Mortgaged Property.
"Approved Originator" means an mortgage loan originator that has not
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been disapproved by Buyer.
"Asset" shall mean a Loan or Security, as the context may require.
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"Asset Documents" shall mean (i) with respect to each Loan, the
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documents comprising the related Mortgage File, and (ii) with respect to each
Security, the documents comprising the related Security File.
"Asset File" shall mean, with respect to an Asset, the related Mortgage
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File or Security File, as applicable.
"Assignment and Acceptance" shall have the meaning assigned thereto in
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Section 29(b).
"Assignment of Mortgage" means, with respect to any Mortgage, an
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assignment of the Mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the assignment of the Mortgage
to Buyer.
"Balloon Loan" means, a Loan with a final Monthly Payment that is
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significantly larger than the other scheduled Monthly Payments for such Loan.
"Bankruptcy Code" shall have the meaning assigned thereto in Section
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35.
"Breakage Costs" shall have the meaning assigned thereto in Section
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3(d).
"Business Day" means any day other than (i) a Saturday or Sunday, (ii)
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a day upon which the New York Stock Exchange or the Federal Reserve Bank of New
York is closed or (iii) with respect to any day on which the parties hereto have
obligations to the Custodian or on which the Custodian has obligations to any
party hereto, a day upon which the Custodian's offices are closed.
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"Cash Equivalents" shall mean any of the following: (a) marketable
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direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within one (1) year from
the date of acquisition; (b) mortgage-backed securities issued or guaranteed by
any agency of the United States Government with an implied rating of AAA or with
an express rating of AAA by either Standard & Poor's Ratings Services ("S&P") or
by ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"); (c) mortgage-backed securities
issued by an entity other than an agency of the United States Government rated
AAA by both S&P and Moody's; (d) certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits having maturities of six (6)
months or less from the date of acquisition issued by any commercial bank
organized under the laws of the United States or of any state thereof having
combined capital and surplus of not less than $500,000,000; (e) commercial paper
of an issuer rated at least A-1 by S&P or P-1 by Moody's, or carrying an
equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper issuers
generally, and maturing within six months from the date of acquisition; (f)
repurchase obligations of any commercial bank satisfying the requirements of
clause (d) of this definition, having a term of not more than thirty (30) days,
with respect to securities issued or fully guaranteed or insured by the United
States government; (g) securities with maturities of one (1) year or less from
the date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States, by any political subdivision or taxing authority
of any such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (h) securities with maturities of six (6) months or less
from the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the requirements of clause (d) of this definition; or
(i) shares of money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (a) through (h) of this
definition.
"Change in Control" shall mean, with respect to Seller, the acquisition
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by any other Person, or two or more other Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of outstanding
shares of voting stock of Seller at any time if after giving effect to such
acquisition such Person or Persons owns fifty percent (50%) or more of such
outstanding voting stock.
"Change in Law" means (a) the adoption of any law, rule or regulation
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after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by Buyer (or any Affiliate
thereof) with any request, guideline or directive (whether or not having the
force of law) of any Governmental Authority made or issued after the date of
this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
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time to time.
"Combined Loan-to-Value Ratio" or "CLTV" means with respect to any
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Loan, the sum of the original principal balance of such Loan, at the time of
origination and the outstanding principal balance of any other loan which is
secured by a Lien on the related Mortgaged Property, as of the Origination Date
of such Loan, divided by the lesser of (a) the Appraised Value of the related
Mortgaged Property as of the Origination Date of such Loan, as applicable, and
(b) if the related Mortgaged Property was purchased within twelve (12) months of
the origination of such Loan, the purchase price of such Mortgaged Property.
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"Conforming Mortgage Loan" means a Loan which meets all criteria of,
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and is eligible for sale to, ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and which is secured by a
first lien on the Mortgaged Property.
"Custodial Agreement" means the Custodial and Disbursement Agreement,
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dated as of January 31, 2008, among Seller, Buyer and Custodian, as the same may
be amended, modified or supplemented from time to time.
"Custodian" means ▇▇▇▇▇ Fargo Bank, N.A., and its successors and
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permitted assigns.
"DBSI" means Deutsche Bank Securities Inc., or any successor thereto.
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"Default" means any event that, with the giving of notice or the
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passage of time or both, would constitute an Event of Default.
"Default Rate" means, as of any date of determination, the lesser of
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(i) the Prime Rate plus two percent (2%) and (ii) the maximum rate permitted by
applicable law. The Default Rate is calculated on the basis of a 360-day year
and the actual number of days elapsed between the date of Default and the date
of determination.
"Delinquent" means, with respect to a Loan, that a Monthly Payment due
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thereon is not made by the close of business on the Due Date.
"Dollars" or "$" means, unless otherwise expressly stated, lawful
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money of the United States of America.
"Due Date" means the day of the month on which the Monthly Payment is
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due on a Loan, exclusive of any days of grace.
"Effective Date" shall mean the date set forth on the top of page 1 of
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this Agreement.
"Electronic Tracking Agreement" means the electronic tracking agreement
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in form and substance acceptable to Buyer, dated as of January 31, 2008 among
Buyer, Seller, MERSCORP, Inc. and Mortgage Electronic Registration, Systems,
Inc., as the same may be amended, modified or supplemented from time to time.
"Electronic Transmission" means the delivery of information in an
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electronic format acceptable to the applicable recipient thereof. An Electronic
Transmission shall be considered written notice for all purposes hereof (except
when a request or notice by its terms requires execution).
"Eligible Assets" shall mean Eligible Loans and/or Eligible Securities,
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as the context may require.
"Eligible Loan" means any Loan that satisfies the criteria set forth in
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the definition of "Eligible Loan" in the Pricing Side Letter.
"Eligible Security" means any Security that satisfies the criteria set
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forth in the definition of "Eligible Security" in the Pricing Side Letter.
"ERISA" shall have the meaning assigned thereto in Section 22.
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"Escrow Payments" means the amounts constituting ground rents, taxes,
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assessments, water charges, sewer rents, mortgage insurance premiums, fire and
hazard insurance premiums and other payments as may be required to be escrowed
by the Mortgagor with the Mortgagee pursuant to the terms of any Note or
Mortgage.
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"Event of Default" shall have the meaning assigned thereto in Section
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19 hereof.
"Expiration Date" means January 29, 2010.
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"▇▇▇▇▇▇ ▇▇▇" means ▇▇▇▇▇▇ Mae, and its successors in interest.
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"FHA" means the Federal Housing Administration, an agency within HUD,
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or any successor thereto, and including the Federal Housing Commissioner and the
Secretary of Housing and Urban Development where appropriate under the FHA
regulations.
"FICO Score" means the credit score of the Mortgagor provided by Fair,
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▇▇▇▇▇ & Company, Inc. or such other organization providing credit scores at the
time of the origination of a Loan.
"Foreign Buyer" shall have the meaning assigned thereto in Section
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8(d).
"▇▇▇▇▇▇▇ Mac" means ▇▇▇▇▇▇▇ Mac, and its successors in interest.
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"GAAP" means generally accepted accounting principles in the United
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States of America in effect from time to time.
"▇▇▇▇▇▇ Mae" means ▇▇▇▇▇▇ ▇▇▇ and its successors in interest.
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"Governmental Authority" shall mean any nation or government, any state
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or other political subdivision, agency or instrumentality thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator having
jurisdiction over Seller.
"Gross Margin" means with respect to each Adjustable Rate Loan, the
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fixed percentage amount set forth in the related Note and the Seller Loan
Schedule that is added to the Index on each Adjustment Date in accordance with
the terms of the related Note to determine the new Mortgage Interest Rate for
such Loan.
"Hedge Instrument" means any interest rate cap agreement, interest rate
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floor agreement, interest rate swap agreement or other interest rate hedging
agreement entered into by a Buyer pursuant to Section 20, or by Seller with a
counterparty reasonably acceptable to Buyer, in each case with respect to the
Purchased Loans.
"High Cost Loan" means a Loan that is (a) subject to, covered by or in
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violation of the provisions of the Homeownership and Equity Protection Act of
1994, as amended, (b) a "high cost", "covered", "abusive", "predatory" or "high
risk" mortgage loan under any federal, state or local law, or any similarly
classified loan using different terminology under any law imposing heightened
regulation, scrutiny or additional legal liability for residential mortgage
loans having high interest rates, points and/or fees, or any other state or
other regulation providing assignee liability to holders of such mortgage loans,
(c) subject to or in violation of any such or comparable federal, state or local
statutes or regulations, or (d) a "High Cost Loan" or "Covered Loan," as
applicable, as such terms are defined in the current version of the Standard &
Poor's LEVELS(R) Glossary Revised, Appendix E.
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"HUD" means the Department of Housing and Urban Development, or any
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federal agency or official thereof which may from time to time succeed to the
functions thereof with regard to FHA mortgage insurance. The term "HUD", for
purposes of this Agreement, is also deemed to include subdivisions thereof such
as the FHA and Government National Mortgage Association.
"Income" means, with respect to any Purchased Asset at any time, any
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principal and/or interest thereon and all dividends, sale proceeds (including,
without limitation, any proceeds from the securitization of any Purchased Loan
or resecuritization of any Purchased Security or other disposition thereof), all
other proceeds as defined in Section 9-102(64) of the Uniform Commercial Code
and other collections and distributions thereon (including, without limitation,
any proceeds received in respect of mortgage insurance), but not including any
commitment fees, origination fees and/or servicing fees accrued in respect of
periods on or after the initial Purchase Date with respect to such Purchased
Asset or distributions thereon or other income or receipts therefrom or in
respect thereof.
"Indebtedness" shall mean, for Seller: (a) all obligations for borrowed
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money; (b) obligations 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 and paid within
ninety (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 Seller, whether or not the respective indebtedness so secured
has been assumed by Seller; (d) obligations (contingent or otherwise) in respect
of letters of credit or similar instruments issued for account of Seller; (e)
capital lease obligations; (f) obligations under repurchase agreements or like
arrangements; (g) indebtedness of others guaranteed on a recourse basis by
Seller; (h) all obligations incurred in connection with the acquisition or
carrying of fixed assets; (i) indebtedness of general partnerships of which
Seller, is a general partner; and (j) any other known or contingent liabilities,
in each case, including non-recourse indebtedness.
"Indemnified Party" shall have the meaning assigned thereto in Section
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23(b).
"Index" means with respect to each Adjustable Rate Loan, the index
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identified on the related Seller Loan Schedule and set forth in the related Note
for the purpose of calculating the interest rate thereon.
"Interest Only Loan" means a mortgage loan that provides for interest
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only monthly payments for a specified period of time.
"Investment Company Act" means the Investment Company Act of 1940, as
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amended, including all rules and regulations promulgated thereunder.
"Jumbo Loan" means a Loan other than a Conforming Mortgage Loan with an
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original principal balance greater than the single-family mortgage loan limit
determined by ▇▇▇▇▇▇ ▇▇▇, as amended from time to time, or as otherwise
determined by Buyer in its sole discretion, and less than or equal to
$2,000,000.
"LIBOR" shall have the meaning assigned thereto in the Pricing Side
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Letter.
"Lien" shall mean any mortgage, deed of trust, lien, pledge, charge,
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security interest or similar encumbrance.
"Loan" means a first lien, fixed rate or adjustable rate, residential
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mortgage loan.
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"Loan-to-Value Ratio" or "LTV" means, with respect to any Loan, the
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ratio of the outstanding principal amount of such Loan at the time of
origination to the lesser of (a) the Appraised Value of the related Mortgaged
Property at origination of such Loan and (b) if the related Mortgaged Property
was purchased within twelve (12) months of the origination of such Loan, the
purchase price of the related Mortgaged Property.
"Loan Transaction Notice" means a written request of Seller to enter
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into a Transaction with respect to Loans, in a form attached as Exhibit D-1
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hereto or such other form as shall be mutually agreed upon among Seller and
Buyer, which is delivered to the Buyer.
"Manufactured Home" means a prefabricated or manufactured home, a lien
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on which secures a Loan and which is considered and treated as "real property"
under applicable state law.
"Margin Call" shall have the meaning assigned thereto in Section 6(a)
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hereof.
"Margin Deficit" shall have the meaning assigned thereto in Section
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6(a) hereof.
"Market Value" means (i) with respect to any Purchased Asset that is an
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Eligible Asset, as of any date of determination, the value ascribed thereto by
Buyer in its sole discretion as marked to market daily in Buyer's sole
discretion (but in no event greater than the Market Value of such Purchased
Asset on the related initial Purchase Date), and (ii) zero, with respect to a
Purchased Asset that is not an Eligible Asset.
"Master Netting Agreement" shall mean the Master Netting Agreement,
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dated as of January 31, 2008, among Buyer, Seller and certain Affiliates and
Subsidiaries of Buyer and Seller, as the same may be amended, supplemented or
otherwise modified from time to time.
"Master Servicer" shall mean ▇▇▇▇▇ Fargo Bank, N.A.
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"Material Adverse Change" means, with respect to a Person, any material
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adverse change in the business, condition (financial or otherwise), operations,
performance, properties or prospects of such Person.
"Material Adverse Effect" means (a) a Material Adverse Change with
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respect to Seller or any of its Affiliates taken as a whole; (b) a material
impairment of the ability of Seller or any of its Affiliates that is a party to
any Program Document to perform under any Program Document and to avoid any
Default or Event of Default; (c) a material adverse effect upon the legality,
validity, binding effect or enforceability of any Program Document against
Seller or any of its Affiliates that is a party to any Program Document; or (d)
a material adverse effect upon the value or marketability of a material portion
of the Purchased Assets.
"Maximum Aggregate Purchase Price" means Three Hundred Fifty Million
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Dollars ($350,000,000) on a committed basis.
"MERS" shall have the meaning assigned thereto in the Custodial
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Agreement.
"MERS Designated Mortgage Loan" shall have the meaning assigned thereto
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in the Custodial Agreement.
"MERS Identification Number" shall have the meaning assigned thereto in
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the Custodial Agreement.
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"Monthly Payment" means, with respect to any Loan, the scheduled
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combined payment of principal and/or interest payable by a Mortgagor under the
related Note on each Due Date.
"Mortgage" means a mortgage, deed of trust, or other instrument that
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creates a Lien on the related Mortgaged Property and secures a Note.
"Mortgage File" shall have the meaning assigned thereto in the
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Custodial Agreement.
"Mortgage Interest Rate" means, with respect to each Loan, the annual
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rate at which interest accrues on such Loan from time to time in accordance with
the provisions of the related Note.
"Mortgage Loan Documents" shall have the meaning assigned thereto in
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the Custodial Agreement.
"Mortgaged Property" means, with respect to a Loan, the related
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Mortgagor's fee interest in real property or leasehold interest in real property
improved by a Residential Dwelling and all other collateral securing repayment
of the debt evidenced by the related Note.
"Mortgagee" means the record holder of a Note secured by a Mortgage.
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"Mortgagor" means the obligor or obligors on a Note, including any
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person who has assumed or guaranteed the obligations of the obligor thereunder.
"MV Margin Amount" means, with respect to any Transaction, as of any
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date of determination, the product of the MV Margin Percentage and the
Repurchase Price for such Transaction as of such date.
"MV Margin Percentage" shall have the meaning assigned thereto in the
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Pricing Side Letter.
"Negative Amortization" shall mean the portion of interest accrued at
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the Mortgage Interest Rate in any month which exceeds the Monthly Payment on the
related Loan for such month and which, pursuant to the terms of the Note, is
added to the principal balance of the Loan.
"Net Worth" shall mean, with respect to Seller, as of any date of
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determination, the excess of Seller's total assets, over Seller's total
liabilities, determined in accordance with GAAP.
"Note" means, with respect to any Loan, the related promissory note
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together with all riders and amendments thereto and other evidence of
indebtedness of the related Mortgagor.
"Notice Date" shall have the meaning assigned thereto in Section 3(a)
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hereof.
"Obligations" means (a) all of Seller's obligation to pay the
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Repurchase Price on the Repurchase Date and other obligations and liabilities of
Seller to Buyer, its Affiliates, Custodian or any other Person arising under, or
in connection with, the Program Documents or directly related to the Purchased
Assets, whether now existing or hereafter arising; (b) any and all sums paid by
Buyer or on behalf of Buyer pursuant to the Program Documents in order to
preserve any Purchased Asset or its interest therein; (c) in the event of any
proceeding for the collection or enforcement of any of Seller's indebtedness,
obligations or liabilities referred to in clause (a), the reasonable expenses of
retaking, holding, collecting, preparing for sale, selling or otherwise
disposing of or realizing on any Purchased Asset, or of any exercise by Buyer or
any such Affiliate thereof of their rights under the Program Documents,
including without limitation, reasonable attorneys' fees and disbursements and
court costs; and (d) all of Seller's indemnity obligations to Buyer pursuant to
the Program Documents.
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"Origination Date" shall mean the date on which a Loan was originated
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by the related originator.
"Other Taxes" shall have the meaning assigned thereto in Section 8(b).
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"Par Margin Amount" means, with respect to any Transaction, as of any
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date of determination, the amount obtained by application of the Par Margin
Percentage to the Repurchase Price for such Transaction as of such date.
"Par Margin Percentage" shall have the meaning assigned thereto in the
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Pricing Side Letter.
"Person" means any legal person, including any individual, corporation,
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partnership, association, joint stock company, trust, limited liability company,
unincorporated organization, governmental entity or other entity of similar
nature.
"Pooling Agreement" shall mean a pooling and servicing agreements,
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indentures or similar document pursuant to which a Security is issued. Each such
Pooling Agreement shall include all manuals and guides incorporated therein by
reference, and shall be certified by Seller or the related Trustee as a true,
correct and complete copy of the original.
"Price Differential" means, with respect to each Transaction as of any
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date of determination, the aggregate amount obtained by daily application of the
Pricing Rate (or during the continuation of an Event of Default, by daily
application of the Default Rate) for such Transaction to the Purchase Price for
such Transaction on a 360-day-per-year basis for the actual number of days
elapsed during the period commencing on (and including) the Purchase Date and
ending on (but excluding) the Repurchase Date (reduced by any amount of such
Price Differential in respect of such period previously paid by Seller to Buyer
with respect to such Transaction).
"Pricing Rate" means the per annum percentage rate for determination of
------------
the Price Differential as set forth in the Pricing Side Letter.
"Pricing Side Letter" means the pricing side letter, dated as of
-------------------
January 31, 2008, among Seller, Agent and Buyer, as the same may be amended,
supplemented or modified from time to time.
"Prime Rate" means the daily prime loan rate as reported in The Wall
----------
Street Journal or if more than one rate is published, the highest of such rates.
"Program Documents" means this Agreement, the Custodial Agreement, the
-----------------
Master Netting Agreement, any Servicing Agreement, all Servicer's Side Letters,
any assignment of Hedge Instrument, the Pricing Side Letter, the Electronic
Tracking Agreement, if any, and any other agreement entered into by Seller
and/or any Servicer, on the one hand, and Buyer or one of its Affiliates (or
Custodian on its behalf) on the other, in connection herewith or therewith.
"Property" means any right or interest in or to property of any kind
--------
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Purchase Date" means, with respect to each Transaction, the date on
-------------
which Purchased Assets are sold by Seller to the related Buyer hereunder.
"Purchase Price" shall have the meaning assigned thereto in the Pricing
--------------
Side Letter.
- 9 -
"Purchased Assets" means all of the following assets sold by Seller to
----------------
Buyer in a Transaction, whether now existing or hereafter acquired: (i) the
Assets, (ii) the related Records and all rights of Seller to receive from any
third party or to take delivery of any Records or other documents which
constitute a part of the Mortgage File, Security File or Servicing File, (iii)
with respect to all Servicing Released Loans, all related Servicing Rights, (iv)
Seller's rights under any related Hedge Instruments, (v) Seller's rights under
any takeout commitment related to the Assets, (vi) such other property, rights,
titles or interest as are specified on a related Transaction Notice, (vii) all
mortgage guarantees and insurance relating to such Assets (issued by
governmental agencies or otherwise) or the related Mortgaged Property and any
mortgage insurance certificate or other document evidencing such mortgage
guarantees or insurance and all claims and payments thereunder, (viii) all
guarantees or other support for such Assets, (ix) all rights to Income and the
rights to enforce such payments arising from any of the Assets and any other
contract rights, payments, rights to payment (including payments of interest or
finance charges) with respect to the Assets, (x) all "accounts", "deposit
accounts" and "securities accounts", each as defined in the Uniform Commercial
Code, relating to or constituting any or all of the foregoing, (xi) all
instruments, chattel paper, securities, investment property and general
intangibles and other assets comprising or relating to the Assets, (xii) any
purchase agreements or other agreements or contracts relating to or constituting
any or all of the foregoing, (xiii) any other collateral pledged or otherwise
relating to such Purchased Loans, together with all files, material documents,
instruments, surveys (if available), certificates, correspondence, appraisals,
computer records, computer storage media, Loan accounting records and other
books and records relating thereto, and (xiv) any and all replacements,
substitutions, distributions on, or proceeds with respect to, any of the
foregoing. The term "Purchased Assets" with respect to any Transaction at any
time also shall include Additional Purchased Assets delivered pursuant to
Section 6(a) hereof and Substitute Assets delivered pursuant to Section 17
hereof. For the avoidance of doubt, with respect to any Servicing Retained Loan,
the term "Purchased Assets" shall not include Servicing Rights.
"Purchased Loan" shall mean a Purchased Asset that is a Loan.
--------------
"Purchased Security" shall mean a Purchased Asset that is a Security.
------------------
"Reacquired Assets" shall have the meaning assigned thereto in Section
-----------------
17.
"Records" means all instruments, agreements and other books, records,
-------
and reports and data generated by other media for the storage of information
maintained by Seller or any other person or entity with respect to a Purchased
Asset. Records shall include, without limitation, the Notes, any Mortgages, the
Mortgage Files, the Servicing Files, and any other instruments necessary to
document or service an Asset that is a Purchased Asset, including, without
limitation, the complete payment and modification history of each Asset that is
a Purchased Asset.
"Recourse Indebtedness" means, for any date of determination, for any
---------------------
Person the aggregate of Indebtedness of such Person on a consolidated basis
during such period maintained in accordance with GAAP; provided, however, that
for any period, the aggregate Indebtedness of such Person during such period
maintained in accordance with GAAP shall be calculated less the aggregate amount
of any such Indebtedness that is reflected on the balance sheet of such Person
in respect of obligations incurred pursuant to a securitization transaction or
other long term non-recourse lending transaction which utilizes a bankruptcy
remote special purpose entity, solely to the extent such obligations are secured
by the assets subject to such transaction and are non recourse to such Person.
"REIT" shall mean a real estate investment trust, as defined in Section
----
856 of the Code.
- 10 -
"Relevant System" shall mean (i) The Depository Trust Company in New
---------------
York, New York or (ii) such other clearing organization or book entry system as
is designated in writing by Buyer.
"Repurchase Date" means the earlier of (i) the 15th day of each month,
---------------
or a day of the month as agreed between Buyer and Seller (or if such day is not
a Business Day, the next succeeding Business Day), (ii) the Termination Date as
set forth in Section 3(c) hereof, or (iii) the date on which Seller tenders the
Repurchase Price for Purchased Assets, as applicable.
"Repurchase Price" means the price at which Purchased Assets are to be
----------------
transferred from Buyer to Seller upon termination of a Transaction, which will
be determined in each case (including Transactions terminable upon demand) as
the sum of: (i) any portion of the Purchase Price not yet repaid to Buyer, (ii)
the Price Differential, and (iii) any accrued and unpaid fees or expenses or
indemnity amounts owing under the Program Documents from Seller to Buyer.
"Requirement of Law" means as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in 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" means any one of the following: (i) a detached
--------------------
single family dwelling, (ii) a two-to-four family dwelling, (iii) a one-family
dwelling unit in a ▇▇▇▇▇▇ ▇▇▇ eligible condominium project, (iv) a townhouse, or
(v) a detached single family dwelling in a planned unit development none of
which is a co-operative or commercial property. Mortgaged Properties that
consist of the following property types are not Residential Dwellings: (a) mixed
use properties, (b) log homes, (c) earthen homes, (d) underground homes, (e)
Manufactured Homes, (f) mobile homes or manufactured housing units not secured
by real property, (g) any dwelling situated on more than ten acres of property
and (h) any dwelling situated on a leasehold estate.
"SEC" shall have the meaning ascribed thereto in Section 37.
---
"Security" shall mean a publicly or privately issued mortgage-backed
--------
security that is either rated investment grade or non-investment grade and that
the Buyer can value using Buyer's customary valuation models.
"Security Agreement" means, with respect to any Loan, any contract,
------------------
instrument or other document related to security for repayment thereof (other
than the related Mortgage and Note), executed by the Mortgagor and/or others in
connection with such 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.
"Security File" shall mean, with respect to any Purchased Asset that is
-------------
a Security: (A) a copy of the executed Pooling Agreements governing such
Security and/or any supplements thereto, and the offering documents related to
such Security, each certified by the Seller as a true, correct and complete copy
of the original, and all ancillary documents required to be delivered to the
certificateholders under the Pooling Agreements, (B) an officer's certificate as
may be requested by Buyer, (C) opinions of counsel in form and substance
reasonably satisfactory to the Buyer, (D) the Security in accordance with
Section 10(b), (E) a Trustee Instruction Letter executed by the Sellers, (F) if
such Security is in uncertificated form, evidence that such Security has been
registered in the name of the Agent or the Buyer on the books of the issuer
itself or its transfer agent, (G) all related Transfer Documents, (H) copies of
distribution statements delivered to the Agent for two months prior to the month
in which the related Purchase Date occurs, if any,
- 11 -
(I) any other documents or instruments necessary in the reasonable opinion of
the Buyer to effect and perfect a legally valid transfer of the relevant
interest granted therein to the Buyer under the Program Documents, (J) any other
documents required under Section 10(b).
"Security Transaction Notice" means a written request of Seller to
---------------------------
enter into a Transaction with respect to Securities, in a form attached as
Exhibit D-2 hereto or such other form as shall be mutually agreed upon among
-----------
Seller and Buyer, which is delivered to the Agent with a copy to Buyer.
"Seller Asset Schedule" means the list of Purchased Assets or Assets
---------------------
proposed to be purchased delivered by Seller to Buyer and Custodian together
with each Transaction Notice and attached by the Custodian to the related Trust
Receipt. Each Seller Asset Schedule shall set forth the information set forth on
Annex 1 or Annex-1-A to the Custodial Agreement, or such other information as
------- ---------
may be required by Buyer.
"Seller's Release" shall mean a letter, in the form of Exhibit H, from
----------------
the Seller to Buyer, unconditionally releasing all of such Seller's right, title
and interest in certain Assets identified therein upon receipt of the related
Purchase Price.
"Servicer" means, with respect to Servicing Released Loans, the
--------
servicers listed on Schedule 1 attached hereto, and with respect to the
Servicing Retained Loans, the servicers listed on Schedule 2 attached hereto,
and any successor thereto, or any other servicer mutually acceptable to Buyer
and Seller. Seller shall have the right to amend Schedule 1 and Schedule 2 from
time to time to add or remove servicers; provided that Buyer shall be entitled
to disapprove any servicer added to such Schedule, and any such disapproved
servicer shall not be deemed a "Servicer" hereunder.
"Servicing Agreement" means any agreement (other than the Custodial
-------------------
Agreement) giving rise or relating to Servicing Rights with respect to a
Purchased Loan, including any assignment or other agreement relating to such
agreement.
"Servicing Released Loan" means a Purchased Loan with respect to which
-----------------------
the related Servicing Rights were sold to Seller and subsequently purchased by
Buyer on the related Purchase Date.
"Servicing Retained Loan" means Purchased Loan with respect to which
-----------------------
the related Servicing Rights were retained by a third party Servicer upon the
sale of such Loan to Seller and subsequent sale to Buyer on the related Purchase
Date.
"Servicer's Side Letter" means each side letter agreement to be entered
----------------------
into among Buyer, Seller and the related Servicer, in a form attached hereto as
Exhibit E.
"Servicing File" means with respect to each Loan, the file retained by
--------------
Seller consisting of all documents that a prudent originator and servicer would
include, including copies of the Mortgage Loan Documents, all documents
necessary to document and service the Loans and any and all documents required
to be delivered pursuant to any of the Program Documents.
"Servicing Rights" means contractual, possessory or other rights of
----------------
Seller or any other Person, whether arising under a Servicing Agreement or
otherwise, to administer or service a Purchased Loan or to possess the Servicing
File.
"Subsidiary" means, 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)
- 12 -
are 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.
"Substitute Assets" has the meaning assigned thereto in Section 17.
-----------------
"Taxes" shall have the meaning assigned thereto in Section 8(a).
-----
"Termination Date" means the earlier of (i) the Expiration Date, (ii)
----------------
at Buyer' option, upon the occurrence of an Event of Default, (iii)the
occurrence of a Termination Event that is not otherwise waived by Buyer, or (iv)
at Buyer's option upon the occurrence of the events set forth in Section 16(c)
or 25(b).
"Termination Event" has the meaning assigned thereto in Section 15.
-----------------
"Transaction" has the meaning assigned thereto in Section 1.
-----------
"Transaction Notice" means a Loan Transaction Notice or Securities
------------------
Transaction Notice, as the case may be.
"Transfer Documents" shall mean all documents required to re-register
------------------
Securities in the name of the Agent or the Buyer, as applicable, or otherwise to
effect a delivery thereof in accordance with Section 3(b) hereof, including
without limitation, with respect to certificated securities, the original
certificate.
"Trust" means any trust formed for the purpose of issuing securities
-----
backed by mortgage loans.
"Trust Receipt" shall have the meaning assigned thereto in the
-------------
Custodial Agreement.
"Trustee" shall mean any trustee or paying agent or other Person
-------
responsible for the distribution of funds under a Pooling Agreement.
"Trustee Instruction Letter" shall mean the applicable letter agreement
--------------------------
between Seller and each Trustee substantially in the form of Exhibit J, attached
---------
hereto, in which such Persons acknowledge the Buyer's ownership interest in the
Purchased Assets that are Securities and agree to remit any Income received by
it with respect to such Purchased Assets as Buyer may so direct from time to
time, which Trustee Instruction Letter shall be delivered to Buyer pursuant to
Section 10(b).
"Uniform Commercial Code" means the Uniform Commercial Code as in
-----------------------
effect on the date hereof in the State of New York or the Uniform Commercial
Code as in effect in the applicable jurisdiction.
"Unrestricted Cash" means cash and Cash Equivalents that are not
-----------------
subject to a Lien in favor of any Person or that are not required to be
maintained by Seller pursuant to a contractual agreement or requirement of law.
"Warehouse Lender" shall mean any lender providing financing to Seller
----------------
for the purpose of warehousing, originating or purchasing the Asset, which
lender has a security interest in such Asset to be purchased by Buyer.
- 13 -
"Warehouse Lender's Release" shall mean a letter, in the form of
--------------------------
Exhibit G, from a Warehouse Lender to Buyer, unconditionally releasing all of
---------
Warehouse Lender's right, title and interest in certain Assets identified
therein upon payment to the Warehouse Lender.
(b) Capitalized terms used but not defined in this Agreement shall
have the meanings assigned thereto in the Custodial Agreement.
(c) Interpretation.
--------------
Headings are for convenience only and do not affect
interpretation. The following rules of this subsection (c) apply unless the
context requires otherwise. The singular includes the plural and conversely. A
gender includes all genders. Where a word or phrase is defined, its other
grammatical forms have a corresponding meaning. A reference to a subsection,
Section, Annex or Exhibit is, unless otherwise specified, a reference to a
section of, or annex or exhibit to, this Agreement. A reference to a party to
this Agreement or another agreement or document includes the party's successors
and permitted substitutes or assigns. A reference to an agreement or document is
to the agreement or document as amended, modified, novated, supplemented or
replaced, except to the extent prohibited by any Program Document. A reference
to legislation or to a provision of legislation includes any modification or
re-enactment of it, a legislative provision substituted for it and a regulation
or statutory instrument issued under it. A reference to writing includes a
facsimile transmission and any means of reproducing words in a tangible and
permanently visible form. A reference to conduct includes, without limitation,
an omission, statement or undertaking, whether or not in writing. An Event of
Default exists until it has been waived in writing by Buyer or has been timely
cured. The words "hereof", "herein", "hereunder" and similar words refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
term "including" is not limiting and means "including without limitation". In
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including", the words "to" and "until"
each mean "to but excluding", and the word "through" means "to and including".
This Agreement may use several different limitations, tests or measurements to
regulate the same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in accordance with their
terms. Unless the context otherwise clearly requires, all accounting terms not
expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP,
consistently applied. References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of Seller.
Except where otherwise provided in this Agreement, any
determination, consent, approval, statement or certificate made or confirmed in
writing with notice to Seller by Buyer or an authorized officer of Buyer as
required by this Agreement is conclusive and binds the parties in the absence of
manifest error. A reference to an agreement includes a security interest,
guarantee, agreement or legally enforceable arrangement whether or not in
writing related to such agreement.
A reference to a document includes an agreement (as so
defined) in writing or a certificate, notice, instrument or document, or any
information recorded in electronic form. Where Seller is required to provide any
document to Buyer under the terms of this Agreement, the relevant document shall
be provided in writing or printed form unless Buyer requests otherwise. At the
request of Buyer, the document shall be provided in electronic form or both
printed and computer disk form.
This Agreement is the result of negotiations among, and has
been reviewed by counsel to, Buyer and Seller, and is the product of all
parties. In the interpretation of this Agreement, no rule of construction shall
apply to disadvantage one party on the ground that such party proposed or was
involved in the preparation of any particular provision of this Agreement or
this Agreement itself. Except where otherwise expressly stated, Buyer may give
or withhold, or give conditionally, approvals and consents and may form opinions
and make determinations in its absolute sole discretion.
- 14 -
Except as specifically required herein, any requirement of good faith,
discretion or judgment by Buyer shall not be construed to require Buyer to
request or await receipt of information or documentation not immediately
available from or with respect to Seller, a servicer of the Purchased Loans, any
other Person or the Purchased Assets themselves.
3. THE TRANSACTIONS
----------------
(a) Subject to the terms and conditions of the Program Documents, Buyer
may enter into Transactions with an aggregate Purchase Price for all Purchased
Assets acquired by Buyer and sold by Seller not to exceed the Maximum Aggregate
Purchase Price. With respect to the purchase of any Assets, Seller shall
deliver, no later than 11:00 a.m. (New York City time) two (2) Business Days
prior to the proposed Purchase Date (the date on which such notice is so given,
the "Notice Date", provided that if such notice is given after 11:00 a.m. (New
York City time), the Notice Date shall be deemed to be the next succeeding
Business Day and the proposed Purchase Date shall be no earlier than three (3)
Business Days after the date such notice is given), the following: (i) a
Transaction Notice to Buyer, (ii) a Seller Asset Schedule in a format acceptable
to Buyer and Custodian, and (iii) the Asset File to Agent (in the case of
Securities) or Custodian (in the case of Loans) for each Asset subject to such
Transaction.
(b) With respect to Securities, the Seller shall deliver the Securities
to the Agent no later than 11:00 a.m. (New York City time) two (2) Business Days
prior to the proposed Purchase Date as follows:
(i) with respect to Securities delivered or held in definitive,
certificated form, the Sellers shall deliver to the Agent, original,
definitive certificate representing ownership of such Purchased Securities
in form suitable for transfer, with accompanying, duly executed instruments
of transfer or appropriate instruments of assignment in the name of the
Agent as agent for the benefit of the Buyer (or as the Buyer may otherwise
determine in its sole discretion), transfer tax stamps, and any other
documents or instruments necessary in the reasonable opinion of the Buyer
to effect and perfect a legally valid delivery of such security or other
item of investment property to the Buyer.
(ii) With respect to Securities delivered through a Relevant
System in book-entry form and credited to or otherwise held in an account,
the Seller shall provide written instructions to the relevant financial
institution or other entity, and a copy thereof to the Agent, sufficient if
complied with to effect and perfect a legally valid delivery of the
relevant interest granted therein to Buyer hereunder. The Seller shall
cause the registration of such Securities or other items of investment
property in the name of the Agent. In connection with any account to which
the Securities are credited or otherwise held, the Seller shall execute and
deliver such other and further documents or instruments necessary, in the
reasonable opinion of the Buyer, to effect and perfect a legally valid
delivery of the relevant interest granted therein to Buyer hereunder. Any
account to which the Securities are credited or otherwise shall be
designated "DB Structured Products, Inc. Account" or such variation thereon
as the Buyer may direct.
(c) Upon Seller's request to enter into a Transaction pursuant to
Section 3(a), DBSP shall, assuming all conditions precedent set forth in this
Section 3 and in Sections 10(a) and (b) have been met, and provided no Default
or Event of Default shall have occurred and be continuing, on the requested
Purchase Date purchase the Eligible Assets included in the related Transaction
Notice by transferring, via wire transfer (pursuant to wire transfer
instructions provided by Seller on or prior to such Purchase Date), the Purchase
Price. Seller acknowledges and agrees that the Purchase Price paid in connection
with any Servicing Released Loan that is purchased in any Transaction includes a
mutually negotiated premium allocable to the portion of such Purchased Loan that
constitutes the related Servicing Rights.
- 15 -
(d) On each Repurchase Date with respect to a Transaction, Seller shall
remit the Repurchase Price to Buyer (together with any other Obligations then
due and payable) and shall repurchase all Purchased Assets subject to such
Transaction. Each obligation to repurchase exists without regard to any prior or
intervening liquidation or foreclosure with respect to any Purchased Asset.
Seller is obligated to obtain such Purchased Assets from Buyer or its designee
(including the Custodian) at Seller's expense on (or after) the related
Repurchase Date. Provided that the applicable conditions in Sections 10(a) and
(b) have been satisfied, each Purchased Asset that is repurchased by Seller on
the related Repurchase Date shall automatically roll forward into a new
Transaction (each such forward roll, a "Roll"), unless (i) Buyer in its sole
discretion otherwise notify Seller at least one (1) Business Day prior to any
such Repurchase Date (provided that no such notice shall be required if a
Default or an Event of Default shall have occurred and is continuing) or (ii)
Seller otherwise notifies Buyer at least one (1) Business Day prior to any such
Repurchase Date, and if such Purchased Asset shall not be subject to a Roll,
Seller shall remit to Buyer the entire Repurchase Price for such Purchased
Asset. It is hereby understood that if a Purchased Asset becomes subject to a
Roll on a Repurchase Date (such date, a "Roll Date"), (i) such Roll Date will be
the Purchase Date for the new Transaction, (ii) if the Repurchase Date for such
new Transaction is later than the Termination Date, the Repurchase Date for such
new Transaction shall automatically be the Termination Date, and the provisions
of this Section 3(d) as they might relate to such new Transaction shall expire
on the Termination Date, (iii) Seller will be deemed to have remitted the
Repurchase Price to Buyer on such Roll Date, and (iv) Buyer will be deemed to
have remitted the related Purchase Price to Seller on such Roll Date; provided,
however, in such case, Seller shall be obligated to remit the related Price
Differential (together with any other Obligations then due and payable) to Buyer
in immediately available funds on such Roll Date.
(e) If Seller repurchases Purchased Assets on any day which is not a
Repurchase Date for such Purchased Assets or if Seller fails to give one (1)
Business Day written notice prior to repurchasing related Purchased Assets on a
Repurchase Date for such Purchased Assets, Seller shall indemnify the related
Buyer and hold such Buyer harmless from any losses, costs and/or expenses which
such Buyer may sustain or incur arising from the reemployment of funds obtained
by such Buyer hereunder or from fees payable to terminate the deposits from
which such funds were obtained ("Breakage Costs"), in each case for the
remainder of the applicable 30-day period. Such Buyer shall deliver to Seller a
statement setting forth the amount and basis of determination of any Breakage
Costs in such detail as determined in good faith by such Buyer to be adequate,
it being agreed that such statement and the method of its calculation shall be
adequate and shall be conclusive and binding upon Seller, absent manifest error.
The provisions of this Section 3(e) shall survive termination of this Agreement.
4. CONFIRMATION.
-------------
In the event that parties hereto desire to enter into a Transaction on
terms other than as set forth in this Agreement (as amended by the Pricing Side
Letter), the parties shall execute a "Confirmation" specifying such terms prior
to entering into such Transaction, including, without limitation, the Purchase
Date, the Purchase Price, the Pricing Rate therefor and the Repurchase Date. Any
such Confirmation and the related Transaction Notice, together with this
Agreement, shall constitute conclusive evidence of the terms agreed to between
Buyer and Seller with respect to the Transaction to which the Confirmation
relates. In the event of any conflict between this Agreement and a Confirmation,
the terms of the Confirmation shall control with respect to the related
Transaction.
5. PAYMENT AND TRANSFER
--------------------
Unless otherwise agreed, all transfers of funds hereunder shall be in
immediately available funds and all Purchased Loans transferred shall be
transferred to the Custodian pursuant to the Custodial Agreement.
- 16 -
Any Repurchase Price or Price Differential received by Buyer after 5:00 p.m.
(New York City time) shall be applied on the next succeeding Business Day.
6. MARGIN MAINTENANCE
------------------
(a) If at any time either (i) the aggregate Market Value of all Purchased
Assets subject to all Transactions is less than the aggregate MV Margin Amount
for all such Transactions, or (ii) the aggregate unpaid principal balance of the
Purchased Assets for all Transactions is less than the aggregate Par Margin
Amount for all such Transactions (either such event, a "Margin Deficit"), then
Buyer may, by notice to Seller, require Seller to transfer to Buyer cash or, at
Buyer's option (and provided Seller has additional Eligible Assets), additional
Eligible Assets ("Additional Purchased Assets") within one (1) Business Day of
such notice by such Buyer, so that both (x) the cash and aggregate Market Value
of such Purchased Assets, including any such Additional Purchased Assets, will
thereupon equal or exceed such aggregate MV Margin Amount, and (y) the cash and
unpaid principal balance of such Purchased Assets, including any such Additional
Purchased Assets and any Purchased Assets, will thereupon equal or exceed such
aggregate Par Margin Amount (either such requirement, a "Margin Call"). Any cash
transferred by Seller in satisfaction of any such Margin Call shall be deposited
into the account designated by Buyer.
(b) Notice required pursuant to Section 6(a) may be given by any means
provided in Section 36 hereof. Any notice given on a Business Day shall be met,
and the related Margin Call satisfied, no later than 1:00 p.m. (New York City
time) on the following Business Day. The failure of any Buyer, on any one or
more occasions, to exercise its rights hereunder, shall not change or alter the
terms and conditions to which this Agreement is subject or limit the right of
such Buyer to do so at a later date. Seller and Buyer each agree that a failure
or delay by a Buyer to exercise its rights hereunder shall not limit or waive
Buyer's rights under this Agreement or otherwise existing by law or in any way
create additional rights for Seller.
7. INCOME PAYMENTS
---------------
(a) Where a particular term of a Transaction extends over the date on
which Income is paid in respect of any Purchased Asset subject to that
Transaction, (i) Seller shall deposit or cause to be deposited such Income into
an account designated by Buyer pursuant to Section 14(u) hereof no later than
one (1) Business Day after receipt thereof, and (ii) such Income shall be the
property of Buyer subject to Sections 7(b) and (c).
(b) With respect to each Transaction referenced in Section 7(a), Buyer
shall, on the related Repurchase Date, either (i) cause the transfer to Seller
of all such Income held with respect to the Purchased Assets subject to such
Transaction, or (ii) if a Margin Deficit then exists, apply the Income to reduce
the amount, if any, to be transferred to Buyer by Seller upon termination of
such Transaction.
(c) Notwithstanding anything herein to the contrary, Buyer shall not be
obligated to take any action pursuant to Section 7(b)(i), (i) to the extent that
such action would result in the creation of a Margin Deficit, unless prior
thereto or simultaneously therewith Seller transfers to Buyer cash or Additional
Purchased Assets sufficient to eliminate such Margin Deficit, or (ii) if a
Default or Event of Default is then continuing.
8. TAXES; TAX TREATMENT
--------------------
(a) All payments made by Seller under this Agreement shall be made free
and clear of, and without deduction or withholding for or on account of, any
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities (including penalties, interest and additions to tax) with
respect thereto imposed by any Governmental Authority therewith or thereon,
excluding income taxes, branch profits taxes, franchise taxes or any other tax
imposed on net income by the United States, a state or a foreign jurisdiction
under the laws of which the applicable Buyer is organized or of its applicable
lending office, or any political subdivision thereof (collectively, "Taxes"),
all of which shall be paid by Seller for its own account not later than the date
when due.
- 17 -
If Seller is required by law or regulation to deduct or withhold any Taxes
from or in respect of any amount payable hereunder, it shall: (a) make such
deduction or withholding, (b) pay the amount so deducted or withheld to the
appropriate Governmental Authority not later than the date when due, (c) deliver
to the applicable Buyer, promptly, original tax receipts and other evidence
satisfactory to Buyer of the payment when due of the full amount of such Taxes;
and (d) pay to the applicable Buyer such additional amounts as may be necessary
so that such Buyer receives, free and clear of all Taxes, a net amount equal to
the amount it would have received under this Agreement, as if no such deduction
or withholding had been made.
(b) In addition, Seller agrees to pay to the relevant Governmental
Authority in accordance with applicable law any current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies (including, without limitation, mortgage recording taxes, transfer taxes
and similar fees) imposed by the United States or any taxing authority thereof
or therein that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
("Other Taxes").
(c) Seller agrees to indemnify Buyer for the full amount of Taxes
(including additional amounts with respect thereto) and Other Taxes, and the
full amount of Taxes of any kind imposed by any jurisdiction on amounts payable
under this Section 8, and any liability (including penalties, interest and
expenses arising thereon or with respect thereto) arising therefrom or with
respect thereto, provided that Buyer shall have provided Seller with evidence,
reasonably satisfactory to Seller, of payment of Taxes or Other Taxes, as the
case may be.
(d) Any Buyer that is not incorporated under the laws of the United
States, any State thereof, or the District of Columbia (a "Foreign Buyer") shall
provide Seller with properly completed United States Internal Revenue Service
("IRS") Form W-8BEN or W-8ECI or any successor form prescribed by the IRS,
certifying that such Foreign Buyer is entitled to benefits under an income tax
treaty to which the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States on or prior to the date upon which each such
Foreign Buyer becomes a Buyer. Each Foreign Buyer will resubmit the appropriate
form on the earliest of (A) the third anniversary of the prior submission or (B)
on or before the expiration of thirty (30) days after there is a "change in
circumstances" with respect to such Foreign Buyer as defined in Treas. Reg.
Section 1.1441(e)(4)(ii)(D). For any period with respect to which a Foreign
Buyer has failed to provide Seller with the appropriate form or other relevant
document pursuant to this Section 8(d) (unless such failure is due to a change
in treaty, law, or regulation occurring subsequent to the date on which a form
originally was required to be provided), such Foreign Buyer shall not be
entitled to any "gross-up" of Taxes or indemnification under Section 8(c) with
respect to Taxes imposed by the United States; provided, however, that should a
Foreign Buyer, which is otherwise exempt from a withholding tax, become subject
to Taxes because of its failure to deliver a form required hereunder, Seller
shall take such steps as such Foreign Buyer shall reasonably request to assist
such Foreign Buyer to recover such Taxes.
(e) Without prejudice to the survival or any other agreement of Seller
hereunder, the agreements and obligations of Seller contained in this Section 8
shall survive the termination of this Agreement. Nothing contained in this
Section 8 shall require Buyer to make available any of their tax returns or
other information that it deems to be confidential or proprietary.
- 18 -
(f) Each party to this Agreement acknowledges that it is its intent for
purposes of U.S. federal, state and local income and franchise taxes to treat
each Transaction as indebtedness of Seller that is secured by the Purchased
Assets and that the Purchased Assets are owned by Seller in the absence of an
Event of Default by Seller. All parties to this Agreement agree to such
treatment and agree to take no action inconsistent with this treatment, unless
required by law.
9. SECURITY INTEREST; BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT
----------------------------------------------------------
(a) Seller and Buyer intend that the Transactions hereunder be sales to
Buyer of the Purchased Assets and not loans from Buyer to Seller secured by the
Purchased Assets. However, in order to preserve Buyer's rights under this
Agreement in the event that a court or other forum recharacterizes the
Transactions hereunder as other than sales, and as security for Seller's
performance of all of its Obligations, Seller hereby grants to Buyer a first
priority security interest in the Purchased Assets. Seller acknowledges and
agrees that its rights with respect to the Purchased Assets are and shall
continue to be at all times junior and subordinate to the rights of Buyer
hereunder. In addition, any collateral that secures any obligations under any
other agreement between Buyer and Seller shall collateralize the Seller's
obligations hereunder.
(b) Seller hereby irrevocably constitutes and appoints Buyer and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of Seller and in the name of Seller or in its own name, from time to
time in Buyer's discretion, to file such financing statement or statements
relating to the Purchased Assets as Buyer at its option may deem appropriate,
and if an Event of Default shall have occurred and be continuing, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be reasonably necessary or desirable to accomplish the purposes of this
Agreement, , and, without limiting the generality of the foregoing, Seller
hereby gives Buyer the power and right, on behalf of Seller, without assent by,
but with notice to, Seller and the Servicer (if other than the Seller), to do
the following:
(i) in the name of Seller, or in its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due with respect
to any other Purchased Assets and to file any claim or to take any other
action or initiate and maintain any appropriate proceeding in any
appropriate court of law or equity or otherwise deemed appropriate by Buyer
for the purpose of collecting any and all such moneys due with respect to
any other Purchased Assets whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Purchased Assets;
(iii) (A) to direct any party liable for any payment under any
Purchased Assets to make payment of any and all moneys due or to become due
thereunder directly to Buyer or as Buyer shall direct including, without
limitation, the right to send "hello" letters or direct "goodbye" letters
in the form of Exhibit F on behalf of the Seller with respect to
Servicing Released Loans; (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
Assets; (C) to sign and endorse any invoices, assignments, verifications,
notices and other documents in connection with any Purchased Assets; (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
Assets or any proceeds thereof and to enforce any other right in respect of
any Purchased Assets; (E) to defend any suit, action or proceeding brought
against Seller with respect to any Purchased Assets; (F) to settle,
compromise or adjust any suit, action or proceeding described in clause
- 19 -
(E) above and, in connection therewith, to give such discharges or releases
as Buyer may deem appropriate; and (G) generally, to sell, transfer, pledge
and make any agreement with respect to or otherwise deal with any Purchased
Assets as fully and completely as though Buyer was the absolute owner
thereof for all purposes, and to do, at Buyer's option and Seller's
expense, at any time, and from time to time, all acts and things which
Buyer deems necessary to protect, preserve or realize upon the Purchased
Assets and Buyer's Liens thereon and to effect the intent of this
Agreement, all as fully and effectively as Seller might do.
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.
Seller also authorizes Buyer, from time to time and if an Event of Default
shall have occurred and be continuing, to execute any endorsements, assignments
or other instruments of conveyance or transfer with respect to the Purchased
Assets in connection with any sale provided for in Section 20 hereof.
The powers conferred on Buyer hereunder are solely to protect Buyer's
interests in the Purchased Assets and shall not impose any duty upon it to
exercise any such powers. Buyer shall be accountable only for amounts that they
actually receive as a result of the exercise of such powers, and neither Buyer
nor any of its officers, directors, employees or agents shall be responsible to
Seller for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
10. CONDITIONS PRECEDENT
--------------------
(a) As conditions precedent to the initial Transaction, Buyer shall have
received on or before the day of such initial Transaction the following, in
form and substance satisfactory to Buyer and duly executed by each party
thereto (as applicable):
(i) The Program Documents duly executed and delivered by the
parties thereto and being in full force and effect, free of any
modification, breach or waiver;
(ii) A certified copy of Seller's consents or corporate
resolutions, as applicable, approving the Program Documents and
Transactions thereunder (either specifically or by general
resolution), and all documents evidencing other necessary corporate
action or governmental approvals as may be required in connection with
the Program Documents;
(iii) An incumbency certificate of the secretary of Seller
certifying the names, true signatures and titles of Seller's
representatives who are duly authorized to request Transactions
hereunder and to execute the Program Documents and the other documents
to be delivered thereunder;
(iv) An opinion of Seller's counsel as to such matters as Buyer
may reasonably request (including, without limitation, with respect to
Buyer's first priority lien on and perfected security interest in the
Purchased Assets, a non-contravention, enforceability and corporate
opinion with respect to Seller, an opinion with respect to the
inapplicability of the Investment Company Act of 1940 to Seller, an
opinion that this Agreement constitutes a "repurchase agreement" and a
"securities contract" within the meaning of the Bankruptcy Code and an
opinion that no Transaction constitutes an avoidable transfer under
Section 546(f) of the Bankruptcy Code, each in form and substance
acceptable to Buyer;
- 20 -
(v) Seller shall have paid to Buyer and Buyer shall have
received all accrued and unpaid fees and expenses owed to Buyer in
accordance with the Program Documents;
(vi) A copy of the insurance policies required by Section 14(o)
of this Agreement;
(vii) Buyer shall have completed the due diligence review pursuant
to Section 38, and such review shall be satisfactory to Buyer in its
sole discretion;
(viii) Evidence that all other actions necessary to perfect and
protect Buyer's interest in the Purchased Assets have been taken,
including, without limitation, duly executed and filed Uniform
Commercial Code financing statements acceptable to Buyer and covering
the Purchased Assets on Form UCC-1; and
(ix) Any other documents reasonably requested by Buyer.
(b) The obligation of Buyer to enter into each Transaction pursuant to
this Agreement is subject to the following conditions precedent:
(i) Buyer or its designee shall have received on or before the
Purchase Date with respect to Purchased Loans that are to be the
subject of such Transaction (unless otherwise specified in this
Agreement) the following, in form and substance satisfactory to Buyer
and (if applicable) duly executed:
(A) The Loan Transaction Notice and Seller Asset Schedule with
respect to such Purchased Loans, delivered pursuant to
Section 3(a);
(B) The Trust Receipt with respect to all Purchased Loans, with
the Seller Asset Schedule attached;
(C) Such certificates, customary opinions of counsel or other
documents as Buyer may reasonably request, provided that
such opinions of counsel shall not be required routinely in
connection with each Transaction but shall only be required
from time to time as deemed necessary by Buyer in its
commercially reasonable judgment;
(D) A copy of the related Acquisition Guidelines certified by
Seller as a true and complete copy (to the extent not
already delivered to Buyer); and
(E) The Buyer shall have received a Servicer's Side Letter duly
executed by the Seller and the related Servicer, together
with a completed Schedule 1 attached thereto and the related
Servicing Agreement, or, if a Servicer's Side Letter
executed by such Servicer shall have been delivered to Buyer
in connection with a prior Transaction, the Seller shall
instead deliver to such Servicer and Buyer an updated
Schedule 1 reflected the Loans proposed to be purchased that
are serviced by such Servicer.
(ii) Buyer or its designee shall have received on or before the Purchase
Date with respect to Purchased Securities that are to be the subject of such
Transaction (unless otherwise specified in this Agreement) the following, in
form and substance satisfactory to Buyer and (if applicable) duly executed (or
in the case of items (F) through (H) below, such items shall have been performed
or otherwise be true and correct prior to the consummation of the Transaction):
- 21 -
(A) the Security Transaction Notice with respect to such
Securities, each in accordance with the delivery procedures
specified in Section 3(a);
(B) the Securities (and all related documentation) and the
related Security Files with respect to such Securities, each
in accordance with the applicable delivery procedures
specified in Section 3(b);
(C) a copy of the fully executed applicable Trustee Instruction
Letter (acknowledged in writing by the related Trustee) to
the Buyer prior to the consummation of the Transaction, in
which Seller has (1) notified the related Trustee of the
sale of the related Securities hereunder, and (2) instructed
the Trustee to pay all amounts payable to the holders of the
Securities to an account specified from time to time by the
Buyer;
(D) such certificates, customary opinions of counsel or other
documents to Buyer or its designee prior to the consummation
of the Transaction, as Buyer may reasonably request,
provided that such opinions of counsel shall not be required
routinely in connection with each Transaction but shall only
be required from time to time as deemed necessary by Buyer
in its commercially reasonable judgment;
(E) a copy of each of the related Pooling Agreements to the
Buyer, each certified by Seller, the related trustee or the
related master servicer as a true, correct and complete copy
of the original;
(F) any delivery of a Security shall be sufficient to cause the
Buyer to have a perfected, first priority security interest
in, and to be the "entitlement holder" (as defined in
Section 8-102(a)(7) of the Uniform Commercial Code of the
State of the New York (the "UCC")) with respect to such
Securities;
(G) no Security, whether certificated or uncertificated, shall
remain in the possession of, or, at the Buyer's discretion,
in the name of, Seller or any of its agents, or in any
account in the name of Seller or any of its agents; and
(H) at the request of the Buyer, Seller shall take such other
and further steps, and shall execute and deliver such
documents or instruments necessary in the opinion of the
Buyer, to effect and perfect a legally valid delivery of the
relevant interest granted in the Security to the Buyer
hereunder.
(iii) No Default or Event of Default shall have occurred and be continuing;
(iv) Buyer shall not have reasonably determined that the introduction of
or a change in any Requirement of Law or in the interpretation or administration
of any requirement of law applicable to Buyer has made it unlawful, and no
Governmental Authority shall have asserted that it is unlawful, for Buyer to
enter into Transactions with the applicable Pricing Rate;
(v) All representations and warranties in the Program Documents shall be
true and correct on the date of such Transaction and Seller is in compliance
with the terms and conditions of the Program Documents;
- 22 -
(vi) The then aggregate outstanding Repurchase Price for all Purchased
Assets, when added to the Purchase Price for the requested Transaction, shall
not exceed the Maximum Aggregate Purchase Price;
(vii) Satisfaction of any conditions precedent to the initial Transaction
as set forth in clause (a) of this Section 10 that were not satisfied prior to
such initial Purchase Date;
(viii) Buyer shall have determined that all actions necessary or, in the
opinion of Buyer, desirable to maintain Buyer's perfected security interest in
the Purchased Assets have been taken;
(ix) Seller shall have paid to Buyer and Buyer shall have received any
accrued and unpaid fees and expenses owed to Buyer in accordance with the
Program Documents;
(x) Buyer or their designee shall have received any other documents
reasonably requested by Buyer;
(xi) Such Transaction, when added to all other Transactions previously
entered into on such Business Day shall not exceed two (2) Transactions;
(xii) There is no Margin Deficit at the time immediately prior to entering
into a new Transaction;
(xiii) The Purchase Price for the requested Transaction shall not be
less than $5,000,000 in any one Business Day;
(xiv) No event or events shall have been reasonably determined by Buyer to
have occurred resulting in the effective absence of a whole-loan or
asset-backed-securities market or commercial-paper market;
(xv) Each Warehouse Lender (including any party that has a
precautionary security interest in an Asset) has duly executed a Warehouse
Lender's Release and has released all of its right, title and interest in, to
and under such Asset (including, without limitation, any security interest that
such secured party or secured party's agent may have by virtue of its
possession, custody or control thereof) and has filed Uniform Commercial Code
termination statements in respect of any Uniform Commercial Code filings made in
respect of such Asset, and each such Warehouse Lender's Release and Uniform
Commercial Code termination statement has been delivered to Buyer prior to such
Transaction and to the Custodian as part of the Asset File;
(xvi) Except with respect to Assets subject to a Warehouse Lender's
Release, the Seller shall duly execute and deliver to Buyer a Seller's Release;
and
(xvii) Seller shall have satisfied all then-outstanding repurchase
obligations in connection with the mortgage loans that may be required under
mortgage loan purchase agreements between Buyer and Seller or Seller's
Affiliates or any of Buyer's Affiliates and Seller or Seller's Affiliates.
- 23 -
11. RELEASE OF PURCHASED ASSETS
---------------------------
Upon timely payment in full of the Repurchase Price and all other
Obligations (if any) then owing with respect to a Purchased Asset, unless a
Default or Event of Default shall have occurred and be continuing, then (a)
Buyer shall be deemed to have terminated any security interest that Buyer may
have in such Purchased Asset, (b) all of Buyer's right, title and interest in
such Purchased Assets shall be deemed transferred to Seller, and (c) with
respect to such Purchased Asset, Buyer shall or shall direct Custodian to
release such Purchased Asset to Seller unless such release and termination would
give rise to or perpetuate a Margin Deficit. Except as set forth in Sections
6(a) and 17, Seller shall give at least one (1) Business Day prior written
notice to Buyer if such repurchase shall occur on any date other than the
Repurchase Date.
If such a Margin Deficit is applicable, Buyer shall notify Seller of the
amount thereof and Seller may thereupon satisfy the Margin Call in the manner
specified in Section 6.
12. RELIANCE
--------
With respect to any Transaction, Buyer may conclusively rely upon, and
shall incur no liability to Seller in acting upon, any request or other
communication that Buyer reasonably believe to have been given or made by a
person authorized to enter into a Transaction on Seller's behalf.
13. REPRESENTATIONS AND WARRANTIES
------------------------------
Seller hereby represents and warrants, and shall on and as of the Purchase
Date for any Transaction and on and as of each date thereafter through and
including the related Repurchase Date be deemed to represent and warrant that:
(a) Due Organization and Qualification. Seller is duly organized,
validly existing and in good standing under the laws of the State of Maryland,
the jurisdiction in which it is organized. Seller is duly qualified to do
business and has obtained all necessary licenses, permits, charters,
registrations and approvals necessary for the conduct of its business as
currently conducted and the performance of its obligations under the Program
Documents except where any failure to obtain such a license, permit, charter,
registration or approval will not cause a Material Adverse Effect with respect
to Seller or impair the enforceability of any Asset. Seller is organized and
will operate in conformity with the requirements for qualification and taxation
as a REIT under Sections 856 through 860 of the Code and the regulations and
published interpretations thereunder, for all taxable years commencing with its
taxable year ended December 31, 2007.
(b) Power and Authority. Seller has all necessary power and authority to
conduct its business as currently conducted, to execute, deliver and perform its
obligations under the Program Documents and to consummate the Transactions.
(c) Due Authorization. The execution, delivery and performance of the
Program Documents by Seller has been duly authorized by all necessary action and
do not require any additional approvals or consents or other action by, or any
notice to or filing with, any Person other than any that have heretofore been
obtained, given or made.
- 24 -
(d) Noncontravention. None of the execution and delivery of the Program
Documents by Seller or the consummation of the Transactions and transactions
thereunder:
(i) conflicts with, breaches or violates any provision of the
organizational documents or material agreements of Seller or any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award currently in effect having applicability to Seller or its properties;
(ii) constitutes a material default by Seller under any loan or
repurchase agreement, mortgage, indenture or other agreement or instrument
to which Seller is a party or by which it or any of its properties is or
may be bound or affected; or
(iii) results in or requires the creation of any Lien upon or in
respect of any of the assets of Seller except the Liens relating to the
Program Documents.
(e) Legal Proceeding. There is no action, proceeding or investigation by
or before any court, governmental or administrative agency or arbitrator
affecting any of the Purchased Assets, Seller or any of its Affiliates, pending
or threatened, which, if decided adversely, would have a Material Adverse Effect
with respect to Seller.
(f) Valid and Binding Obligations. Each of the Program Documents to
which Seller is a party, when executed and delivered by Seller will constitute
the legal, valid and binding obligations of Seller, enforceable against Seller,
in accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
(g) Financial Statements. The financial statements of Seller, copies of
which have been furnished to Buyer, (i) are, as of the dates and for the periods
referred to therein, complete and correct in all material respects, (ii) present
fairly the financial condition and results of operations of Seller as of the
dates and for the periods indicated and (iii) have been prepared in accordance
with GAAP consistently applied, except as noted therein (subject as to interim
statements to normal year-end adjustments). Since the date of the most recent
financial statements, there has been no Material Adverse Change with respect to
Seller. Except as disclosed in such financial statements or pursuant to Section
14(h) hereof, Seller is not subject to any contingent liabilities or commitments
that, individually or in the aggregate, have a material possibility of causing a
Material Adverse Change with respect to Seller.
(h) Accuracy of Information. None of the documents or information
prepared by or on behalf of Seller and provided to Buyer relating to Seller's
financial condition contain any statement of a material fact with respect to
Seller, or the Transactions that was untrue or misleading in any material
respect when made. Since the furnishing of such documents or information, there
has been no change, nor any development or event involving a prospective change
known to Seller, that would render any of such documents or information untrue
or misleading in any material respect.
(i) No Consents. No consent, license, approval or authorization from, or
registration, filing or declaration with, any regulatory body, administrative
agency or other governmental instrumentality, nor any consent, approval, waiver
or notification of any creditor, lessor or other non-governmental Person, is
required in connection with the execution, delivery and performance by Seller of
this Agreement or any other Program Document, other than any that have
heretofore been obtained, given or made.
- 25 -
(j) Compliance With Law, Etc. No practice, procedure or policy employed
or proposed to be employed by Seller in the conduct of their businesses violates
any law, regulation, judgment, agreement, regulatory consent, order or decree
applicable to it which, if enforced, would result in either a Material Adverse
Change or a Material Adverse Effect with respect to Seller.
(k) Solvency: Fraudulent Conveyance. Seller is solvent and will not be
rendered insolvent by the Transaction and, after giving effect to such
Transaction, Seller will not be left with an unreasonably small amount of
capital with which to engage in its business. Seller does not intend to incur,
nor believes that it has incurred, debts beyond its ability to pay such debts as
they mature. Seller is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
Seller or any of its assets. The amount of consideration being received by
Seller upon the sale of the Purchased Assets to Buyer constitutes reasonably
equivalent value and fair consideration for such Purchased Assets. Seller is not
transferring any Purchased Assets with any intent to hinder, delay or defraud
any of its creditors.
(l) Investment Company Act Compliance. Seller is not required to be
registered as an "investment company" as defined under the Investment Company
Act nor as an entity under the control of an entity required to be registered as
an "investment company" as defined under the Investment Company Act.
(m) Taxes. Seller has filed all federal and state tax returns which are
required to be filed and paid all taxes, including any assessments received by
it, to the extent that such taxes have become due (other than for taxes that are
being contested in good faith or for which it has established adequate
reserves). Any taxes, fees and other governmental charges payable by Seller in
connection with a Transaction and the execution and delivery of the Program
Documents have been paid.
(n) Additional Representations. With respect to each Asset to be sold
hereunder by Seller to Buyer, Seller hereby makes all of the applicable
representations and warranties set forth in Exhibit B-1 or Exhibit B-2, as
applicable, as of the date the related Asset File is delivered to Buyer or the
Custodian with respect to the Assets and continuously while such Asset is
subject to a Transaction. Further, as of each Purchase Date, Seller shall be
deemed to have represented and warranted in like manner that Seller has no
knowledge that any such representation or warranty may have ceased to be true in
a material respect as of such date, except as otherwise stated in a Transaction
Notice, any such exception to identify the applicable representation or warranty
and specify in reasonable detail the related knowledge of Seller.
(o) No Broker. Seller has not dealt with any broker, investment banker,
agent, or other person, except for Buyer, who may be entitled to any commission
or compensation in connection with the sale of Purchased Assets pursuant to this
Agreement; provided, that if Seller has dealt with any broker, investment
banker, agent, or other person, except for Buyer, who may be entitled to any
commission or compensation in connection with the sale of Purchased Assets
pursuant to this Agreement, such commission or compensation shall have been paid
in full by Seller.
(p) Corporate Separateness.
(i) The capital of Seller is adequate for the businesses and
undertakings of Seller.
(ii) Other than as provided in this Agreement and the other
Program Documents, Seller is not engaged in any business transactions with
any of its Affiliates other than transactions in the ordinary course of its
business, conducted in a commercially reasonable manner and on an "arm's
length" basis.
- 26 -
(iii) The funds and assets of Seller are not and will not be,
commingled with the funds of any other Person.
(q) Pooling Agreement. To the extent the Seller is the servicer under
any Pooling Agreement related to a Purchased Security, all of the
representations and warranties of the Seller made thereunder (which shall not
include any mortgage loan level representations and warranties) are true and
correct in all material respects and are incorporated herein by reference
mutatis mutandis; or any such breach thereof does not and will not have a
Material Adverse Effect. The Seller is not in default under any related Pooling
Agreement related to any Purchased Security.
(r) Acquisition Guidelines. The Acquisition Guidelines provided to Buyer
are the true and complete Acquisition Guidelines of the related Approved
Originator.
The representations and warranties set forth in this Agreement shall
survive transfer of the Purchased Assets to Buyer and shall continue for so long
as the Purchased Assets are subject to this Agreement.
14. COVENANTS OF SELLER
-------------------
Seller hereby covenants with Buyer as follows:
(a) Defense of Title. Seller warrants and will defend the right,
title and interest of Buyer in and to all Purchased Assets against all adverse
claims and demands.
(b) No Amendment or Compromise. none of Seller or those acting on
Seller's behalf shall amend, modify, or waive any term or condition of, or
settle or compromise any claim in respect of, any item of the Purchased Assets,
any related rights or any of the Program Documents without the prior written
consent of Buyer, except if such amendment or modification does not (i) affect
the amount or timing of any payment of principal or interest payable with
respect to a Purchased Asset, extend its scheduled maturity date, modify its
interest rate, or constitute a cancellation or discharge of its outstanding
principal balance or (i) materially and adversely affect the security afforded
by the real property, furnishings, fixtures, or equipment securing the Asset.
Notwithstanding the foregoing, the Servicer of a Purchased Loan may amend,
modify or waive any term or condition of the Purchased Loans in accordance with
the servicing standard set forth in the related Servicing Agreement, provided
that Seller shall cause such Servicer to promptly notify Buyer of any such
amendment, modification or waiver.
(c) No Assignment. Except as permitted herein, none of Seller or
any Servicer shall sell, assign, transfer or otherwise dispose of, or grant any
option with respect to, or pledge, hypothecate or grant a security interest in,
or Lien on or otherwise encumber (except pursuant to the Program Documents) any
of the Purchased Assets or any interest therein, provided that this Section
14(c) shall not prevent any of the following: any contribution, sale,
assignment, transfer or conveyance of Purchased Assets in accordance with the
Program Documents and any forward purchase commitment or other type of take out
commitment for the Purchased Assets (without vesting rights in the related
purchases as against Buyer).
(d) Servicing of Loans. Seller shall cause each Servicer to
service the Purchased Loans in accordance with Accepted Servicing Practices,
pending any delivery of such servicing to Buyer pursuant to Section 14(r),
employing at least the same procedures and exercising the same care that
Servicer customarily employs in servicing Loans for its own account. With
respect to all Servicing Released Loans, Seller shall service and shall cause
the related Servicer to service such Purchased Loans for a term of thirty (30)
days (the "Servicing Term") commencing as of the date of the related initial
Purchase Date. Each such Servicing Term shall be deemed to be renewed or
terminated by Buyer in accordance with Section 14(r) hereof.
- 27 -
If such Servicing Term is not renewed by Buyer (which determination shall be
made in Buyer's sole discretion), Seller agrees that Buyer may terminate Seller
and the related Servicer in their respective servicing capacities and terminate
any Servicing Agreement at will, and Seller shall transfer such servicing to
Buyer or its designee at no cost or expense to Buyer. Seller shall cause the
Servicer to hold or cause to be held all escrow funds collected with respect to
such Loans in trust accounts in trust for Buyer and shall apply the same for the
purposes for which such funds were collected. If Seller should discover that,
for any reason whatsoever, the Servicer has failed to perform fully its
servicing obligations with respect to the Purchased Loans, Seller shall promptly
notify Buyer. As a condition to purchasing any Loans, Buyer shall have the right
to approve each related Servicer and the related Servicing Agreement and shall
have the right to require that Seller and such Servicer enter into a Servicer's
Side Letter with Buyer, in form and substance acceptable to Buyer in its sole
discretion, pursuant to which such servicer shall agree to take direction from
Buyer with respect to such Loans after the occurrence of an Event of Default
hereunder.
(e) Preservation of Purchased Assets. Seller shall do all things
necessary to preserve the Purchased Assets so that they remain subject to a
first priority perfected security interest hereunder. Without limiting the
foregoing, Seller will comply with all applicable laws, rules, regulations and
other laws of any Governmental Authority applicable to Seller relating to the
Purchased Assets and cause the Purchased Assets to comply with all applicable
laws, rules, regulations and other laws of any such Governmental Authority.
Seller will not allow any default to occur for which Seller is responsible under
any Purchased Assets or any Program Documents and Seller shall fully perform or
cause to be performed when due all of its obligations under any Purchased Assets
or the Program Documents.
(f) Maintenance of Papers, Records and Files. Seller shall
acquire, and Seller shall build, maintain and have available, a complete file in
accordance with lending industry custom and practice for each Purchased Asset.
Seller will maintain or will cause the Servicers to maintain all such Records
not in the possession of Custodian in good and complete condition in accordance
with industry practices and preserve them against loss.
(i) Seller shall collect and maintain or cause to be collected
and maintained all Records relating to the Purchased Assets in accordance
with industry custom and practice, including those maintained pursuant to
the preceding subsection, and all such Records shall be in Buyer's or
Custodian's possession unless Buyer otherwise approve in writing. Seller
shall deliver or cause to be delivered to Buyer updates of all Records in
the possession of Seller that are related to the servicing of the Purchased
Assets at least monthly. Seller will not cause or authorize any such
papers, records or files that are an original or an only copy to leave
Custodian's possession, except for individual items removed in connection
with servicing a specific Loan, in which event Seller will obtain or cause
to be obtained a receipt from the Custodian for any such paper, record or
file.
(ii) For so long as Buyer has an interest in or Lien on any
Purchased Asset, Seller will hold or cause to be held all related Records
in trust for Buyer. Seller shall notify, or cause to be notified, every
other party holding any such Records of the interests and Liens granted
hereby.
(iii) Upon reasonable advance notice from Custodian or Buyer,
Seller shall (x) make any and all such Records available to Custodian or
Buyer for examination, either by its own officers or employees, or by
agents or contractors, or both, and make copies of all or any portion
thereof, (y) permit Buyer or its authorized agents to discuss the affairs,
finances and accounts of Seller with their respective chief operating
officers and chief financial officers and to discuss the affairs, finances
and accounts of Seller with its independent certified public accountants.
- 28 -
(g) Financial Statements and Other Information; Financial Covenants.
---------------------------------------------------------------
(i) Seller shall keep or cause to be kept in reasonable detail
books and records setting forth an account of its assets and business and,
as applicable, shall clearly reflect therein the transfer of Purchased
Assets to Buyer. Seller shall furnish or cause to be furnished to Buyer the
following:
(A) Financial Statements. (x) As soon as available and
in any event within ninety (90) days after the end of each fiscal
year, its consolidated, audited balance sheet as of the end of each
such fiscal year and its consolidated, audited financial statements
of income and changes in equity and audited statement of cash flows,
each for such fiscal year, (y) as soon as available and in any event
within forty-five (45) days after the end of each of the first three
quarters of each fiscal year, its consolidated, unaudited balance
sheets as of the end of each quarter, and its unaudited financial
statements of income and changes in equity and unaudited statement
of cash flows, each for the portion of the fiscal year then
ended, and (z) within thirty (30) days after the end of each
month, its monthly consolidated and unaudited financial
statements (excluding cash flow statements) and balance sheet as
provided in clause (y), all of which shall have been prepared in
accordance with GAAP and certified by Seller's chief financial
officer in the form of a compliance certificate to be delivered
along with such financial statements. Seller shall furnish or
cause to be furnished to Buyer any other financial information
reasonably requested by Buyer.
(B) Asset Data. As requested by Buyer from time to
time, reports in form and scope satisfactory to Buyer, setting
forth data regarding the performance of the Purchased Assets for
the immediately preceding month, and such other information as
Buyer may reasonably request, including, without limitation, all
collections, delinquencies, losses and recoveries related to the
Purchased Assets, cash flows and any other information regarding
the Purchased Assets requested by Buyer and the performance of
any loans serviced by or on behalf of Servicer and any other
financial information regarding Seller reasonably requested by
Buyer.
(C) Monthly Servicing Diskettes. On or before the
tenth (10th) day of each calendar month (or if such day is not a
Business Day, the immediately following Business Day), or at any
other time as Buyer request, (i) a computer tape or a diskette
(or any other Electronic Transmission acceptable to Buyer) in a
format acceptable to Buyer containing such information with
respect to the Purchased Assets as Buyer may reasonably request,
(ii) with respect to the Purchased Assets that are Securities,
all remittance reports and other reports delivered to the related
Trustee or certificateholders pursuant to the related Pooling
Agreement, when delivered to such Trustee or certificateholders,
and (iii) an updated Seller Asset Schedule, no less frequently
than on a monthly basis, with respect to each Purchased Loan as
to which the related Servicer has amended, modified, or waived
any terms or conditions of any such Loan, which sets forth
amendments, modifications and waivers.
(D) Other Information. Upon the request of Buyer, such
other information or reports as Buyer may from time to time
reasonably request.
- 29 -
(ii) Seller shall comply with the following financial covenants:
(A) the Adjusted Tangible Net Worth of Seller shall
at all times equal or exceed $400,000,000;
(B) the ratio of Seller's total Recourse Indebtedness
to Adjusted Tangible Net Worth shall at no time be greater than
or equal to 10:1;
(C) Seller shall at all times maintain Unrestricted
Cash at least equal to the greater of (i) $100,000,000 and (ii)
three percent (3%) of the unpaid principal balance, the face
value or the carrying value, as applicable, of all assets of
Seller that are subject to any repurchase or secured credit
arrangement to which Seller is a party; and
(D) Seller's net income, before (i) income taxes and
(ii) the effect of any unrealized gain or loss due to
▇▇▇▇-to-market adjustments made through earnings for fluctuation
of the value of financial instruments as mandated under the
Statement of Financial Accounting Standards No. 133 (or any
successor statement), for any period of two consecutive fiscal
quarters commencing with the period ending on March 31, 2008,
shall not be less than $1.00.
(iii) Certifications. Seller shall execute and deliver a monthly
certification substantially in the form of Exhibit A attached hereto within
thirty (30) days after the end of each calendar month.
(h) Notice of Material Events. Seller shall promptly inform Buyer in
writing of any of the following:
(i) any Default, Event of Default or default or breach by Seller
or any other Person of any material obligation under any Program Document,
or the occurrence or existence of any event or circumstance that Seller
reasonably expects will with the passage of time become a Default, Event of
Default or such a default or breach by Seller or any other Person;
(ii) any material change in the insurance coverage of Seller or
any other Person pursuant to any Program Document, with copy of evidence of
same attached;
(iii) any material dispute, litigation, investigation, proceeding
or suspension between Seller, on the one hand, and any Governmental
Authority or any other Person, on the other;
(iv) any material adverse change in accounting policies or
financial reporting practices of Seller;
(v) the occurrence of any material employment dispute or
licensing issue within Seller and a description of the strategy for
resolving it;
(vi) any event, circumstance or condition that has resulted, or
has a reasonable likelihood of resulting in either a Material Adverse
Change or a Material Adverse Effect with respect to Seller; or
(vii) a Material Margin Call shall have been made to Seller, which
"Material Margin Call" shall mean a margin, maintenance, credit or similar
call made to Seller in connection with a financing facility, repurchase
agreement, credit agreement or other arrangement under which Seller has
sold collateral or pledged or posted or is required to pledge or post
collateral to secure or guarantee obligations thereunder, which call is for
an amount equal to or greater than $10,000,000.
- 30 -
(i) Maintenance of Licenses. Seller shall (i) maintain all
licenses, permits or other approvals necessary for Seller to conduct its
business and to perform its obligations under the Program Documents, (ii) remain
in good standing under the laws of each state in which it conducts business or
any Mortgaged Property is located, and (iii) conduct its business strictly in
accordance with applicable law.
(j) Taxes, Etc. Seller shall pay and discharge or cause to be paid and
discharged, when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income and profits or upon any of its property,
real, personal or mixed (including without limitation, the Purchased Assets) or
upon any part thereof, as well as any other lawful claims which, if unpaid,
might become a Lien upon such properties or any part thereof, except for any
such taxes, assessments and governmental charges, levies or claims as are
appropriately contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are provided. Seller shall
file on a timely basis all federal, and state and local tax and information
returns, reports and any other information statements or schedules required to
be filed by or in respect of it.
(k) Nature of Business. Seller shall not make any material change in the
nature of its business as carried on at the date hereof.
(l) Limitation on Distributions. Seller shall have the right to pay
dividends so long as Seller remains in compliance with the financial covenants
set forth in Section 14(g)(ii) immediately following such dividend distribution.
Notwithstanding the foregoing, if a Default has occurred and is occurring,
Seller shall not pay any dividends or make distributions with respect to any
capital stock or other equity interests, respectively, thereof, whether now or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of Seller.
(m) Use of Custodian. Without the prior written consent of Buyer, Seller
shall use no third party custodian as document custodian other than the
Custodian with respect to third party purchasers, prospective third party
purchasers, lenders and prospective third party lenders.
(n) Merger of Seller. Seller shall not, at any time, directly or
indirectly (i) liquidate or dissolve or enter into any consolidation or merger
or be subject to a Change in Control or sell all or substantially all of its
Property (other than in connection with an asset-based financing or other
secondary market transaction related to the Seller's assets in the ordinary
course of the Seller's business) without Buyer's prior consent; (ii) form or
enter into any partnership, joint venture, syndicate or other combination which
would have a Material Adverse Effect with respect to Seller; or (iii) make any
Material Adverse Change with respect to Seller or Seller's Affiliates.
(o) Insurance. Seller will, and Seller shall cause the Servicer to
obtain and maintain insurance with responsible companies in such amounts and
against such risks as are customarily carried by business entities engaged in
similar businesses similarly situated, and will furnish Buyer on request full
information as to all such insurance, and provide within fifteen (15) days after
receipt of such request the certificates or other documents evidencing renewal
of each such policy. Seller shall continue to maintain coverage, for itself and
its subsidiaries, that encompasses employee dishonesty, forgery or alteration,
theft, disappearance and destruction, robbery and safe burglary, property (other
than money and securities), and computer fraud in an aggregate amount of at
least $1,000,000.
- 31 -
(p) Affiliate Transaction. Seller shall not, at any time, directly or
indirectly, sell, lease or otherwise transfer any property or assets to, or
otherwise acquire any property or assets from, or otherwise engage in any
transactions with, any of its Affiliates unless the terms thereof are no less
favorable to Seller, than those that could be obtained at the time of such
transaction in an arm's length transaction with a Person who is not such an
Affiliate.
(q) Change of Fiscal Year. Seller shall not, at any time, directly or
indirectly, except upon ninety (90) days' prior written notice to Buyer, change
the date on which its fiscal year begins from its current fiscal year beginning
date.
(r) Delivery of Servicing Rights, Servicing Files and Servicing. With
respect to the Servicing Rights of each Purchased Loan that is a Servicing
Released Loan, Seller shall deliver such Servicing Rights to Buyer on the
related Purchase Date. With respect to the Servicing Files for each Purchased
Loan that is either a Servicing Released Loan or Servicing Retained Loan and the
physical and contractual servicing of each Purchased Loan that is a Servicing
Released Loan, to the extent in the possession of Seller, Seller shall deliver
(or cause the Servicer to deliver) such Servicing Files and the servicing to
Buyer or its designee within thirty (30) days of the related Purchase Date for
such Loan; provided that on each Repurchase Date that is subject to a new
Transaction, such delivery requirement will be deemed restated for such new
Transaction (and the immediately preceding delivery requirement will be deemed
to be rescinded) in the absence of directions to the contrary from Buyer, and a
new thirty (30) day period will be deemed to commence as of such Repurchase
Date. For the avoidance of doubt, Seller shall deliver (or cause the related
Servicer to deliver) to Buyer or its designee, within thirty (30) days after the
last Purchase Date, all of (x) the Servicing Files for each Purchased Loan and
(y) the servicing relating to each Purchased Loan that is a Servicing Released
Loan, except, in each case, if such Purchased Loan becomes subject to a new
Transaction on the related Repurchase Date or is repurchased in full by the
Seller in accordance with the provisions of this Agreement. Seller's transfer of
the Servicing Rights, Servicing Files and the physical and contractual servicing
under this Section shall be in accordance with customary standards in the
industry including the transfer of the gross amount of all escrows held for the
related Mortgagors (without reduction for unreimbursed advances or "negative
escrows").
(s) Acquisition Guidelines. Seller shall use its best efforts to deliver
to Buyer a copy of all material modifications and amendments to any of the
Acquisition Guidelines if such modifications or amendments affect any of the
Purchased Loans.
(t) No Other Indebtedness. Without the prior written consent of Buyer,
except as otherwise required or allowed pursuant to the terms of this Agreement,
Seller shall not incur any Indebtedness or guaranty the Indebtedness of any
other Person other than (i) any Indebtedness deemed incurred under the Program
Documents, (ii) Indebtedness in an aggregate amount not to exceed $5,000,000,
(iii) obligations to pay taxes; (iv) liabilities for accounts payable, non
capitalized equipment or operating leases and similar liabilities incurred in
the ordinary course of business; (v) accrued expenses, deferred credits and loss
contingencies that are properly classified as liabilities under GAAP; (vi)
Indebtedness incurred in the ordinary course of business to hedge the risk of
interest rate fluctuations or any of the Seller's portfolios of Loans under this
Agreement or in respect of other Indebtedness permitted hereunder; (vii)
Indebtedness under other committed or uncommitted mortgage warehouse lines of
credit (including committed and uncommitted mortgage loan repurchase agreements)
now or hereafter existing, the papers evidencing, securing, governing or
otherwise related to which Indebtedness impose covenants and conditions on the
Seller that are no more restrictive or onerous than the covenants and conditions
imposed on the Seller by this Agreement; and (viii) the specific Indebtedness
described on Exhibit I.
- 32 -
(u) Remittance Upon Default or Event of Default. If a Default or an
Event of Default has occurred and is continuing, Seller shall segregate all
Income collected with respect to the Purchased Assets and shall remit or cause
the Servicer to remit such amounts to an account designated by Buyer in
accordance with Section 7 hereof. Seller shall deposit or credit, and shall
cause Servicer to deposit or credit to such account, to the all items to be
deposited or credited thereto irrespective of any right of setoff or
counterclaim arising in favor of Seller or Servicer (or any third party claiming
through either of them) under any other agreement or arrangement.
(v) MERS. Seller will cause each Servicer to be a member of MERS in good
standing as of the date hereof, and will cause each Servicer to remain a member
of MERS in good standing at all times thereafter, unless otherwise agreed to by
Buyer.
(w) Limitation on Distributions. Seller shall have the right to pay
dividends so long as Seller remains in compliance with the financial covenants
set forth in Section 14(g)(ii) immediately following such dividend distribution
and notwithstanding the foregoing shall be permitted to make any distribution
necessary to maintain its status as a REIT. Notwithstanding the foregoing, if a
Default has occurred and is continuing, without Buyer's consent, 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 stock or senior or subordinate debt of Seller, whether now
or hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
Seller, other than distributions necessary to maintain its status as a REIT.
(x) Fees and Expenses. Subject to Section 4 of the Pricing Side Letter,
Seller shall timely pay to Buyer all fees and expenses required to be paid by
Seller hereunder and under any other Program Document to Buyer.
(y) Entitlement Holder; Additional Proceeds. Seller acknowledges that
the Buyer shall be an "entitlement holder" (as defined in Section 8-102(a) of
the Uniform Commercial Code) with respect to the Purchased Securities hereunder
and shall be entitled to receive all cash dividends and distributions therefrom
and treated as Income. Seller and the Buyer agree that the Seller shall direct
the Trustee to make all payments with respect to any such Securities directly to
the Buyer. With respect to any sums of money or property paid or distributed in
respect of such Securities that are received by Seller, Seller shall, until such
money or property is paid or delivered to the Buyer as required hereunder, hold
such money or property as Income, in trust for the Buyer, segregated from other
funds of the Seller, as part of the Purchased Assets pending the repurchase by
Seller of the applicable Securities. If Seller shall become entitled to receive
or shall receive any rights, whether in addition to, in substitution of, as a
conversion of, or in exchange for such Securities, or otherwise in respect
thereof, Seller shall accept the same as the Buyer's agent, hold the same in
trust for the Buyer and deliver the same forthwith to the Buyer in the exact
form received, duly endorsed by Seller to the Buyer, if required, together with
an undated security power covering such certificate duly executed in blank and
with, if the Buyer so requests, signature guaranteed, to be held by the Buyer
hereunder as part of the Purchased Assets.
(z) Agency Status. Once the Seller or any of its subservicers has
obtained any statuses with any of ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac mortgage
loan pools for which Seller is Servicer, Seller shall not take or omit to take
any act that (i) would result in the suspension or loss of any of such status,
or (ii) after which Seller or any such relevant subservicer would no longer be
in good standing with respect to such status, or (iii) after which Seller or any
such relevant subservicer would no longer satisfy all applicable ▇▇▇▇▇▇ Mae,
▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac net worth requirements, if both (x) all of the
material effects of such act or omission shall not have been cured by Seller or
waived by the relevant agency before termination of such status and (y) it could
reasonably be expected to have a Material Adverse Effect on Seller or any of its
subsidiaries.
- 33 -
(aa) Voting Rights. Unless a Default or an Event of Default shall have
occurred and be continuing, the Seller shall be entitled to exercise all voting
and corporate rights with respect to Purchased Securities, and Buyer shall
exercise such rights on the Seller's behalf during the time in which Buyer is
the registered holder of such Securities, provided, however, that no vote shall
be cast or other action taken which, in Buyer's judgment, would impair such
Securities or which would be inconsistent with or result in any violation of any
provision of this Agreement.
(bb) Actions under the Pooling Agreements. The Seller shall not cancel,
terminate, amend, modify or supplement or consent to any cancellation,
amendment, modification or supplement to any Pooling Agreement related to any
Purchased Security, or waive any provision thereof or take, direct, instruct or
request any action under any such Pooling Agreement in contravention of the
direction of the Buyer or where the permission of the Seller is so required,
permit any party to such Pooling Agreement to take any action thereunder which
would reasonably be likely to have a Material Adverse Effect or which would
violate the terms of this Agreement.
15. TERMINATION EVENTS
------------------
The occurrence of any outbreak or material escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis, the effect of which on the financial markets is such as to
make it, in the reasonable judgment of Buyer, impracticable to continue this
Agreement shall, at Buyer's option, constitute a "Termination Event".
Upon the occurrence of such Termination Event, Buyer shall have no further
obligation to purchase any Assets hereunder and this Agreement shall terminate
and be of no further force and effect. Seller shall repurchase all Purchased
Assets and shall satisfy all other outstanding Obligations hereunder within the
earlier of (x) the next succeeding Repurchase Date, or (y) thirty (30) days
following such Termination Event.
16. REPURCHASE OF PURCHASED ASSETS; CHANGE OF LAW
---------------------------------------------
(a) Upon discovery by Seller of a breach of any of the representations
and warranties set forth on Exhibit B to this Agreement, Seller shall give
prompt written notice thereof to Buyer. Upon any such discovery by Buyer, Buyer
will notify Seller. It is understood and agreed that the representations and
warranties set forth in Exhibit B to this Agreement with respect to the
Purchased Assets shall survive delivery of the respective Asset Files to the
Buyer or Custodian with respect to the Purchased Assets and shall inure to the
benefit of Buyer. The fact that Buyer has conducted or have failed to conduct
any partial or complete due diligence investigation in connection with their
purchase of any Purchased Asset shall not affect Buyer's right to demand
repurchase as provided under this Agreement. Seller shall, within five (5)
Business Days of the earlier of Seller's discovery or receipt of notice with
respect to any Purchased Asset of (i) any breach of a representation or warranty
contained in Exhibit B-1 or Exhibit B-2, as applicable, of this Agreement or
(ii) any failure to deliver any of the items required to be delivered as part of
the Mortgage File within the time period required for delivery pursuant to the
Custodial Agreement, promptly cure such breach or delivery failure in all
material respects. If within five (5) Business Days after the earlier of
Seller's discovery of such breach or delivery failure or receipt of notice
thereof that such breach or delivery failure has not been remedied by Seller,
Seller shall promptly upon receipt of written instructions from Buyer, at
Buyer's option, either (i) repurchase such Purchased Asset at a purchase price
equal to the Repurchase Price with respect to such Purchased Asset by wire
transfer to the account designated by Buyer, or (ii) transfer comparable
Substitute Assets to Buyer, as provided in Section 17 hereof. In the event that
it is discovered that the circumstances with respect to any Purchased Asset are
not accurately reflected in any of the applicable representations and warranties
made by the Seller set forth in Exhibit B-1 or Exhibit B-2, as applicable,
hereto, notwithstanding the actual knowledge or lack of knowledge of Seller, and
notwithstanding that such representation and warranty is made "to the best of
the Seller's knowledge," then such representation and warranty shall be deemed
to be breached, such Purchased Asset shall cease to be an Eligible Asset, and
- 34 -
Seller shall either cure such breach, repurchase the affected Purchased Asset or
deliver a comparable substitute therefore as provided in this Section 16. The
remedies set forth in this Section 16(a) shall be the sole remedies with respect
to a breach of a representation or warranty set forth in Exhibit B-1 or Exhibit
B-2, as applicable.
(b) If Buyer determines that the introduction of, any change in, or the
interpretation or administration of, any Requirement of Law has made it unlawful
or commercially impracticable to engage in any Transactions with the applicable
Pricing Rate based on LIBOR, then Seller (i) shall, upon its receipt of notice
of such fact and demand from Buyer (with a copy of such notice to Custodian),
repurchase the Purchased Assets subject to the Transaction on the next
succeeding Business Day and, at Seller's election, concurrently enter into a new
Transaction with Buyer with a Pricing Rate based on the Prime Rate plus the
Applicable Margin set forth in the Pricing Side Letter as part of the Pricing
Rate and (ii) may elect, by giving notice to Buyer and Custodian, that all new
Transactions shall have Pricing Rates based on the Prime Rate plus such
Applicable Margin.
(c) If Buyer determines in their sole discretion that any Change in Law
or any change in accounting rules regarding capital requirements has or would
have the effect of reducing the rate of return on Buyer's capital or on the
capital of any Affiliate of Buyer under this Agreement as a consequence of such
Change in Law or change in accounting rules, then from time to ▇▇▇▇ ▇▇▇▇▇▇ will
compensate Buyer or Buyer's Affiliate, as applicable, for such reduced rate of
return suffered as a consequence of such Change in Law or change in accounting
rules on terms similar to those imposed by Buyer on its other similarly affected
customers. Buyer shall provide Seller with prompt notice as to any such Change
in Law or change in accounting rules.
17. SUBSTITUTION
------------
Seller may, subject to agreement with and acceptance by Buyer upon one (1)
Business Day's notice, substitute other assets which are substantially the same
as the Purchased Assets (the "Substitute Assets") for any Purchased Assets. Such
substitution shall be made by transfer to Buyer by Seller of such other
Substitute Assets and transfer to Seller by Buyer of such Purchased Assets (the
"Reacquired Assets") along with the other information to be provided with
respect to the applicable Purchased Asset as described in Section 3. After
substitution, the Substitute Assets shall be deemed to be Purchased Assets, the
Reacquired Assets shall no longer be deemed Purchased Assets, and Buyer shall be
deemed to have terminated any security interest that Buyer may have in the
Reacquired Assets unless such termination and release would give rise to or
perpetuate a Margin Deficit. Concurrently with any termination and release
described in this Section 17, Buyer shall execute and deliver to Seller upon
request and Buyer hereby authorize Seller to file and record such documents as
Seller may reasonably deem necessary or advisable in order to evidence such
termination and release.
18. RESERVED
--------
19. EVENTS OF DEFAULT
-----------------
With respect to any Transactions covered by or related to this Agreement,
the occurrence of any of the following events shall constitute an "Event of
Default":
(a) Seller fails to transfer the Purchased Assets to the applicable
Buyer on the applicable Purchase Date (provided such Buyer has tendered the
related Purchase Price);
- 35 -
(b) Seller either fails to repurchase the Purchased Assets on the
applicable Repurchase Date or fails to perform its obligations under Section 6
or the last sentence of Section 16(a);
(c) Seller fails to perform, observe or comply with any other material
term, condition, covenant or agreement contained in the Program Documents,
including without limitation, failure of the Seller to satisfy a Margin Call
pursuant to Section 6 (other than the other "Events of Default" set forth in
this Section 19) or any other contracts or agreements, and such failure is not
cured within the time period expressly provided for therein, or, if no such cure
period is provided, within five (5) Business Days (or one (1) Business Day with
respect to a default on any payment obligation of principal or interest under
this Agreement or any other note document or if the Purchased Assets exceed any
applicable sublimits) of the earlier of (i) Seller's receipt of written notice
from Buyer or Custodian of such breach or (ii) the date on which Seller obtains
notice or knowledge of the facts giving rise to such breach;
(d) Any representation or warranty made by Seller (or any of Seller's
officers) in the Program Documents or in any other document delivered in
connection therewith, or in any other contract or agreement, shall have been
incorrect or untrue in any material respect when made or repeated or deemed to
have been made or repeated (other than the representations or warranties in
Exhibit B which shall be considered solely for the purpose of determining
whether the related Purchased Asset is an Eligible Asset, unless (i) Seller
shall have made any such representation or warranty with the knowledge that it
was materially false or misleading at the time made or repeated or deemed to
have been made or repeated, or (ii) any such representation or warranty shall
have been determined by Buyer in its sole discretion to be materially false or
misleading on a regular basis (notwithstanding the fact that such
representations and warranties shall have been made to Seller's knowledge or to
the best of Seller's knowledge));
(e) Seller or any of its Affiliates shall be in default under, or fail
to perform as requested under, or shall otherwise breach the material terms of
any agreement relating to, in each case beyond any applicable cure period, (i)
any Indebtedness between Seller or any of its Affiliates, on the one hand, and
any Buyer or any of Buyer's Affiliates, on the other hand, or (ii) any
Indebtedness of Seller or any of its Affiliates in excess of $1,000,000 or (2)
any Indebtedness of Seller or any of its Affiliates, which default, failure or
breach shall entitle any counterparty thereto to accelerate the maturity of such
Indebtedness;
(f) A custodian, receiver, conservator, liquidator, trustee,
sequestrator or similar official for Seller or any of Seller's Affiliates or of
any of Seller's Property (as a debtor or creditor protection procedure) is
appointed or takes possession of such Property; or Seller or any of Seller's
Affiliates generally fails to pay its debts as they become due; or Seller or any
of Seller's Affiliates is adjudicated bankrupt or insolvent; or an order for
relief is entered under the Bankruptcy Code, or any successor or similar
applicable statute, or any administrative insolvency scheme, against Seller or
any of Seller's Affiliates; or any of Seller's or Seller's Affiliates' Property
is sequestered by court or administrative order; or a petition is filed against
Seller or any of Seller's Affiliates under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, moratorium,
delinquency or liquidation law of any jurisdiction, whether now or subsequently
in effect;
(g) Seller or any of Seller's Affiliates files a voluntary petition in
bankruptcy, seeks relief under any provision of any bankruptcy, reorganization,
moratorium, delinquency, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction whether now or subsequently
in effect; or consents to the filing of any petition against it under any such
law; or consents to the appointment of or taking possession by a custodian,
receiver, conservator, trustee, liquidator, sequestrator or similar official for
Seller or any of Seller's Affiliates, or of all or any part of Seller's or
Seller's Affiliates' Property; or makes an assignment for the benefit of
Seller's or any of Seller's Affiliates' creditors;
- 36 -
(h) Any final judgment or order for the payment of money in excess of
$2,000,000 in the aggregate (to the extent that it is, in the reasonable
determination of Buyer, uninsured and provided that any insurance or other
credit posted in connection with an appeal shall not be deemed insurance for
these purposes) shall be rendered against Seller or any of Seller's Affiliates
by one or more courts, administrative tribunals or other bodies having
jurisdiction over them and the same shall not be discharged (or provisions shall
not be made for such discharge) satisfied, or bonded, or a stay of execution
thereof shall not be procured, within sixty (60) days from the date of entry
thereof and Seller or any of Seller's Affiliates, as applicable, shall not,
within said period of sixty (60) 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;
(i) Any Governmental Authority or any person, agency or entity acting or
purporting to act under governmental authority shall have taken any action to
condemn, seize or appropriate, or to assume custody or control of, all or any
substantial part of the Property of Seller or any of Seller's Affiliates, or
shall have taken any action to displace the management of Seller or any of
Seller's Affiliates or to curtail its authority in the conduct of the business
of Seller or any of Seller's Affiliates, or takes any action in the nature of
enforcement to remove, limit or restrict the approval of Seller or any of
Seller's Affiliates as an issuer, buyer or a seller/servicer of Loans or
securities backed thereby;
(j) Seller, shall fail to comply with any of the financial covenants set
forth in Section 14(g)(ii);
(k) In the good faith judgment of Buyer any Material Adverse Effect
shall have occurred;
(l) Either (i) Seller shall admit in writing its inability to, or
intention not to, perform any of its material Obligations, (ii) Buyer shall have
determined in good faith that Seller is unable to meet its commitments, or (iii)
Seller's audited annual financial statements or the notes thereto or other
opinions or conclusions stated therein shall be qualified or limited by
reference to the status of Seller as a "going concern" or a reference of similar
import or shall indicate that Seller has a negative net worth or is insolvent;
(m) This Agreement shall for any reason cease to create a valid first
priority security interest or ownership interest upon transfer in any material
portion of the Purchased Assets purported to be covered hereby;
(n) A Change in Control of Seller shall have occurred which has not been
approved by Buyer;
(o) Buyer shall reasonably request, specifying the reasons for such
request, reasonable information, and/or written responses to such requests,
regarding the financial well-being of Seller, and such reasonable information
and/or responses shall not have been provided within five (5) Business Days of
such request;
(p) A material event of default shall have occurred and be continuing
beyond the expiration of any applicable cure periods under any of the Program
Documents;
(q) The failure of Seller to continue to be (i) qualified as a REIT as
defined in Section 856 of the Code or (ii) entitled to a dividend paid deduction
under Section 857 of the Code with respect to dividends paid by it with respect
to each taxable year for which it claims a deduction on its Form 1120 - REIT
filed with the United States Internal Revenue Service for such year, or the
entering into by Seller of any material "prohibited transactions" as defined in
Sections 857(b) and 856(c) of the Code; or
- 37 -
(r) The resignation or removal of Fixed Income Discount Advisory Company
as the manager of the Seller unless approved by Buyer (which approval shall not
be unreasonably withheld).
20. REMEDIES
--------
Upon the occurrence of an Event of Default, Buyer, at its option (which
option shall be deemed to have been exercised immediately upon the occurrence of
an Event of Default pursuant to Section 19(f), (g) or (l) hereof), shall have
the right to exercise any or all of the following rights and remedies:
(a) (i) The Repurchase Date for each Transaction hereunder shall, if
it has not already occurred, be deemed immediately to occur (except that, in the
event that the Purchase Date for any Transaction has not yet occurred as of the
date of such exercise or deemed exercise, such Transaction shall be deemed
immediately canceled). Seller's Obligations hereunder, to repurchase all
Purchased Assets at the Repurchase Price therefor on the Repurchase Date in such
Transactions shall thereupon become immediately due and payable; all Income paid
after such exercise or deemed exercise shall be remitted to and retained by
Buyer and applied to the aggregate Repurchase Prices and any other amounts owing
by Seller hereunder; each of Seller and Servicer (unless Servicer is not an
Affiliate of Seller) shall immediately deliver to Buyer or its designee any and
all original papers, records and files relating to the Purchased Assets subject
to such Transaction then in its possession and/or control; and all right, title
and interest in and entitlement to such Purchased Assets and Servicing Rights
thereon (with respect solely to the Servicing Released Loans) shall become
property of Buyer.
(ii) Buyer may (A) sell, on or following the Business Day
following the date on which the Repurchase Price becomes due and payable
pursuant to Section 20(a)(i) without notice or demand of any kind, at a public
or private sale and at such price or prices as Buyer may reasonably deem
satisfactory, any or all or portions of the Purchased Assets on a
servicing-released or servicing-retained basis, as the case may be, and/or (B)
in their sole discretion elect, in lieu of selling all or a portion of such
Purchased Assets, to give Seller credit for such Purchased Assets in an amount
equal to the Market Value of the Purchased Assets against the aggregate unpaid
Repurchase Price and any other amounts owing by Seller hereunder. Seller shall
remain liable to Buyer for any amounts that remain owing to Buyer following a
sale and/or credit under the preceding sentence. The proceeds of any disposition
of Purchased Assets shall be applied first to the reasonable costs and expenses
including but not limited to legal fees incurred by Buyer in connection with or
as a result of an Event of Default; second to costs of cover and/or related
hedging transactions; third to the aggregate Repurchase Prices; and fourth to
all other Obligations.
(iii) The parties recognize that it may not be possible to
purchase or sell all of the Purchased Assets on a particular Business Day, or in
a transaction with the same purchaser, or in the same manner because the market
for such Purchased Assets may not be liquid. In view of these characteristics of
the Purchased Assets, the parties agree that liquidation of a Transaction or the
underlying Purchased Assets does not require a public purchase or sale and that
a good faith private purchase or sale shall be deemed to have been made in a
commercially reasonable manner. Accordingly, Buyer may elect the time and manner
of liquidating any Purchased Asset and nothing contained herein shall obligate
Buyer to liquidate any Purchased Asset upon the occurrence of an Event of
Default or to liquidate all Purchased Assets in the same manner or on the same
Business Day or shall constitute a waiver of any right or remedy of Buyer.
Notwithstanding the foregoing, the parties to this Agreement agree that the
Transactions have been entered into in consideration of and in reliance upon the
fact that all Transactions hereunder constitute a single business and
contractual obligation and that each Transaction has been entered into in
consideration of the other Transactions.
- 38 -
(b) Seller hereby acknowledges, admits and agrees that Seller's
obligations under this Agreement are recourse obligations of Seller to which
Seller pledges its full faith and credit. In addition to their rights hereunder,
Buyer shall have the right to proceed against any of Seller's assets which may
be in the possession of Buyer, any of Buyer's Affiliates or their designee
(including the Custodian), including the right to liquidate such assets and to
set-off the proceeds against monies owed by Seller to Buyer pursuant to this
Agreement. Buyer may set off cash, the proceeds of the liquidation of the
Purchased Assets and Additional Purchased Assets and all other sums or
obligations owed by Buyer to Seller or against all of Seller's Obligations to
Buyer, or Seller's obligations to Buyer under any other agreement between the
parties, or otherwise, whether or not such obligations are then due, without
prejudice to Buyer's right to recover any deficiency.
(c) Buyer shall have the right to obtain physical possession of the
Records and all other files of Seller relating to the Purchased Assets and all
documents relating to the Purchased Assets which are then or may thereafter come
into the possession of Seller or any third party acting for Seller and Seller
shall deliver to Buyer such assignments as Buyer shall request.
(d) Buyer shall have the right to direct all Persons servicing the
Purchased Assets to take such action with respect to the Purchased Assets as
Buyer determines appropriate, including, without limitation, using its rights
under a power of attorney granted pursuant to Section 9(b) hereof.
(e) Buyer shall, without regard to the adequacy of the security for the
Obligations, be entitled to the appointment of a receiver by any court having
jurisdiction, without notice, to take possession of and protect, collect,
manage, liquidate, and sell the Purchased Assets or any portion thereof, collect
the payments due with respect to the Purchased Assets or any portion thereof,
and do anything that Buyer is authorized hereunder to do. Seller shall pay all
costs and expenses incurred by Buyer in connection with the appointment and
activities of such receiver, and such shall be deemed part of the Obligations
hereunder.
(f) Buyer may, at its option, enter into one or more Hedge Instruments
covering all or a portion of the Purchased Assets, and Seller shall be
responsible for all damages, judgments, costs and expenses of any kind which may
be imposed on, incurred by or asserted against Buyer relating to or arising out
of such Hedge Instruments; including without limitation any losses resulting
from such Hedge Instruments, and such shall be deemed part of the Obligations
hereunder.
(g) In addition to all the rights and remedies specifically provided
herein, Buyer shall have all other rights and remedies provided by applicable
federal, state, foreign and local laws, whether existing at law, in equity or by
statute, including, without limitation, all rights and remedies available to a
purchaser/secured party under the Uniform Commercial Code.
Except as otherwise expressly provided in this Agreement, Buyer shall have
the right to exercise any of their rights and/or remedies without presentment,
demand, protest or further notice of any kind other than as expressly set forth
herein, all of which are hereby expressly waived by Seller.
Buyer may enforce its rights and remedies hereunder without prior judicial
process or hearing, and Seller hereby expressly waives, to the extent permitted
by law, any right Seller might otherwise have to require Buyer to enforce its
rights by judicial process. Seller also waives, to the extent permitted by law,
any defense Seller might otherwise have to the Obligations, or any guaranty
thereof, arising from use of nonjudicial process, enforcement and sale of all or
any portion of the Purchased Assets 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.
- 39 -
During any period in which an Event of Default exists and is continuing,
Seller shall cause all sums received by it with respect to the Purchased Assets
to be deposited promptly upon receipt thereof but in no event later than
forty-eight (48) hours thereafter. Seller shall be liable to Buyer for the
amount of all losses, costs and/or expenses (plus interest thereon at a rate
equal to the Default Rate) which Buyer may sustain or incur in connection with
hedging or covering transactions related to the Purchased Assets, conduit
advances and payments for mortgage insurance.
21. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE
-----------------------------------------
No failure on the part of Buyer to exercise, and no delay by Buyer in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by Buyer of any right, power
or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All rights and remedies of Buyer
provided for herein are cumulative and in addition to any and all other rights
and remedies provided by law, the Program Documents and the other instruments
and agreements contemplated hereby and thereby, and are not conditional or
contingent on any attempt by Buyer to exercise any of their its under any other
related document. Buyer may exercise at any time after the occurrence of an
Event of Default one or more remedies, as they so desire, and may thereafter at
any time and from time to time exercise any other remedy or remedies.
22. USE OF EMPLOYEE PLAN ASSETS
---------------------------
No assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") shall be
used by either party hereto in a Transaction.
23. INDEMNITY
---------
(a) Seller agrees to pay on demand (i) all reasonable out-of-pocket
costs and expenses of Buyer in connection with the initial and subsequent
negotiation, modification, renewal and amendment of the Program Documents
(including, without limitation, (A) all collateral review and UCC search and
filing fees and expenses and (B) the reasonable fees and expenses of outside
counsel for Buyer with respect to advising Buyer as to its rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under this Agreement and any other Program Document, with respect to
negotiations with Seller or with other creditors of Seller or any of their
Affiliates arising out of any Default or any events or circumstances that may
give rise to a Default and with respect to presenting claims in or otherwise
participating in or monitoring any bankruptcy, insolvency or other similar
proceeding involving creditors' rights generally and any proceeding ancillary
thereto) subject to the cap set forth in the Pricing Side Letter for the initial
drafting and negotiation of the Program Documents, and (ii) all costs and
expenses of Buyer in connection with the enforcement of this Agreement
(including any waivers), whether in any action, suit or litigation, any
bankruptcy, insolvency or other similar proceeding affecting creditors' rights
generally (including, without limitation, the reasonable fees and expenses of
outside counsel for Buyer) whether or not the transactions contemplated hereby
are consummated.
(b) Seller agrees to indemnify and hold harmless Buyer and each of its
Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "Indemnified Party") from and against (and will reimburse
each Indemnified Party as the same is incurred) any and all claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable fees
and expenses of outside counsel) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with
or by reason of (including without limitation, in connection with) (i) any
investigation, litigation or other proceeding (whether or not such Indemnified
Party is a party thereto) relating to, resulting from or arising out of any of
the Program Documents and all other documents related thereto, any breach of a
representation or warranty of Seller or Seller's officers in this Agreement or
any other Program Document, and all actions taken pursuant thereto,
- 40 -
(ii) the Transactions, the actual or proposed use of the proceeds of the
Transactions, this Agreement or any of the transactions contemplated thereby,
including, without limitation, any acquisition or proposed acquisition, or any
indemnity payable under the Servicing Agreement or other servicing arrangement,
(iii) the actual or alleged presence of hazardous materials on any Property or
any environmental action relating in any way to any Property, or (iv) the actual
or alleged violation of any federal, state, municipal or local predatory lending
laws, except to the extent such claim, damage, loss, liability or expense is
found in a final, non-appealable judgment by a court of competent jurisdiction
to have resulted directly from such Indemnified Party's gross negligence or
willful misconduct or is the result of a claim made by Seller against the
Indemnified Party, and Seller is ultimately the successful party in any
resulting litigation or arbitration. Seller also agrees not to assert (and to
cause Servicer not to assert) any claim against Buyer or any of its Affiliates,
or any of their respective officers, directors, employees, attorneys and agents,
on any theory of liability, for special, indirect, consequential or punitive
damages arising out of or otherwise relating to the Program Documents, the
actual or proposed use of the proceeds of the Transactions, this Agreement or
any of the transactions contemplated thereby. THE FOREGOING INDEMNITY AND
AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE
NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED
PARTIES.
(c) If any payment of the Repurchase Price of any Transaction is made by
Seller other than on the then scheduled Repurchase Date thereto as a result of
an acceleration of the Repurchase Date pursuant to Section 20 or for any other
reason, Seller shall pay to Buyer any Breakage Costs incurred as of a result of
such payment.
(d) If Seller fails to pay when due any costs, expenses or other amounts
payable by it under this Agreement, including, without limitation, reasonable
fees and expenses of counsel and indemnities, such amount may be paid on behalf
of Seller by Buyer, in its sole discretion and Seller shall remain liable for
any such payments by Buyer and such amounts shall be deemed part of the
Obligations hereunder. No such payment by Buyer shall be deemed a waiver of any
of Buyer's rights under the Program Documents.
(e) Without prejudice to the survival of any other agreement of Seller
hereunder, the covenants and obligations of Seller contained in this Section 23
shall survive the payment in full of the Repurchase Price and all other amounts
payable hereunder and delivery of the Purchased Assets by Buyer against full
payment therefor.
24. WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS
------------------------------------------
Seller hereby expressly waives, to the fullest extent permitted by law,
every statute of limitation on a deficiency judgment, any reduction in the
proceeds of any Purchased Assets as a result of restrictions upon Buyer or
Custodian contained in the Program Documents or any other instrument delivered
in connection therewith, and any right that they may have to direct the order in
which any of the Purchased Assets shall be disposed of in the event of any
disposition pursuant hereto.
25. REIMBURSEMENT; SET-OFF
----------------------
(a) All sums reasonably expended by Buyer in connection with the
exercise of any right or remedy provided for herein shall be and remain Seller's
obligation and such amounts shall be deemed a part of the Obligations hereunder.
Seller agrees to pay, with interest at the Default Rate to the extent that an
Event of Default has occurred, all costs and expenses, including without
limitation, reasonable attorneys' fees and disbursements (and fees and
disbursements of Buyer's outside counsel) expended or incurred by Buyer and/or
Custodian in connection with the modification, renewal, amendment and
enforcement (including any waivers) of the Program Documents (regardless of
whether a Transaction is entered into hereunder), the taking of any action,
including legal action, required or permitted to be taken by Buyer (without
duplication to Buyer) and/or Custodian pursuant thereto or by refinancing or
restructuring in the nature of a "workout".
- 41 -
Further, Seller agrees to pay, with interest at the Default Rate to the extent
that an Event of Default has occurred, all costs and expenses, including without
limitation, reasonable attorneys' fees and disbursements (and fees and
disbursements of Buyer's outside counsel) expended or incurred by Buyer in
connection with (a) the rendering of legal advice as to Buyer's rights, remedies
and obligations under any of the Program Documents, (b) the collection of any
sum which becomes due to Buyer under any Program Document, (c) any proceeding
for declaratory relief, any counterclaim to any proceeding, or any appeal, or
(d) the protection, preservation or enforcement of any rights of Buyer. For the
purposes of this Section 25, attorneys' fees shall include, without limitation,
fees incurred in connection with the following: (1) contempt proceedings; (2)
discovery; (3) any motion, proceeding or other activity of any kind in
connection with a bankruptcy proceeding or case arising out of or relating to
any petition under Title 11 of the United States Code, as the same shall be in
effect from time to time, or any similar law; (4) garnishment, levy, and debtor
and third party examinations; and (5) post-judgment motions and proceedings of
any kind, including without limitation any activity taken to collect or enforce
any judgment. Any and all of the forgoing amounts referred to in this paragraph
shall be deemed a part of the Obligations hereunder
(b) If Buyer determines that, due to the introduction of, any change in,
or the compliance by Buyer with (i) any eurocurrency reserve requirement, or
(ii) the interpretation of any law, regulation or any guideline or request from
any central bank or other Governmental Authority (whether or not having the
force of law), there shall be an increase in the cost to Buyer in engaging in
the present or any future Transactions, then Seller agrees to pay to Buyer, from
time to time, upon demand by Buyer (with a copy to Custodian) such additional
amounts as specified by Buyer to compensate Buyer for such increased costs, and
such amounts shall be deemed a part of the Obligations hereunder.
(c) In addition to any rights and remedies of Buyer hereunder and at
law, Buyer and its Affiliates shall have the right, upon any amount becoming due
and payable (whether at the stated maturity, by acceleration or otherwise) by
Seller hereunder or under any other agreement entered into between Seller on the
one hand, and Buyer or any of its Affiliates on the other hand, to set-off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final) or other credits, indebtedness or
claims, in any currency, or any other collateral (in the case of collateral not
in the form of cash or such other marketable or negotiable form, by selling such
collateral in a recognized market therefor or as otherwise permitted by law or
as may be in accordance with custom, usage or trade practice) in each case
whether direct or indirect, absolute or contingent, matured or unmatured, at any
time held or owing by Buyer or any Affiliate thereof to or for the credit or the
account of Seller. Buyer agrees to promptly notify Seller after any such set-off
and application made by Buyer; provided that the failure to give such notice
shall not affect the validity of such set-off and application. Buyer and its
Affiliates may exercise the foregoing set-offs without prior notice to Seller,
any such notice being expressly waived by Seller to the extent permitted by
applicable law.
26. FURTHER ASSURANCES
------------------
Seller agrees to do such further acts and things and to execute and deliver
to Buyer such additional assignments, acknowledgments, agreements, powers and
instruments as are reasonably required by Buyer to carry into effect the intent
and purposes of this Agreement, to perfect the interests of Buyer in the
Purchased Assets or to better assure and confirm unto Buyer its rights, powers
and remedies hereunder.
- 42 -
27. ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION
----------------------------------------
This Agreement supersedes and integrates all previous negotiations,
contracts, agreements and understandings between the parties relating to a sale
and repurchase of Purchased Assets and Additional Purchased Assets, and it,
together with the other Program Documents, and the other documents delivered
pursuant hereto or thereto, contains the entire final agreement of the parties.
No prior negotiation, agreement, understanding or prior contract shall have any
validity hereafter.
28. TERMINATION
-----------
This Agreement shall remain in effect until the Termination Date. However,
no such termination shall affect Seller's outstanding obligations to Buyer at
the time of such termination. Seller's obligations to indemnify Buyer pursuant
to this Agreement and the other Program Documents shall survive the termination
hereof.
29. REHYPOTHECATION; ASSIGNMENT
---------------------------
(a) Buyer may, in its sole election, engage in repurchase transactions
with the Purchased Assets or otherwise pledge, hypothecate, assign, transfer or
otherwise convey the Purchased Assets with a counterparty of Buyer's choice, in
all cases subject to Buyer's obligation to reconvey the Purchased Assets (and
not substitutes therefor) on the Repurchase Date, all at no cost to the Seller.
In the event Buyer engage in a repurchase transaction with any of the Purchased
Assets or otherwise pledge or hypothecate any of the Purchased Assets, Buyer
shall have the right to assign to Buyer's counterparty any of the applicable
representations or warranties in Exhibit B to this Agreement and the remedies
for breach thereof, as they relate to the Purchased Assets that are subject to
such repurchase transaction.
(b) The Program Documents are not assignable by Seller. Without any
requirement for further consent of the Seller and at no cost or expense to the
Seller, the Buyer may assign to any of its own Buyer Affiliates all or a portion
of their rights and obligations under this Agreement and the Program Documents,
provided that such assignment is to an entity with sufficient capital to
participate in the transactions contemplated under this Agreement and the
Program Documents (each, an "Eligible Assignee"). With the prior written consent
of the Seller (unless an Event Default has occurred and is continuing, in which
case the Seller's consent shall not be required) and at no cost to the Seller,
the Buyer may assign any or all of its rights and obligations under the Program
Documents to any assignee. The Seller agrees that, for any such permitted
assignment, Seller will cooperate with the prompt execution and delivery of
documents reasonably necessary to for such assignment process to the extent that
Seller incurs no cost or expense that is not paid by the Buyer. Upon such
assignment, the assignee shall be a Buyer for all purposes under this Agreement
and the other Program Documents, if the assignment is an assignment of all of
the assignor's interest in the Transactions and its security to an Eligible
Assignee, the assignor shall be automatically released from all of its
obligations and liabilities hereunder. Buyer shall maintain, for review by
Seller upon written request, a register of assignees and a copy of an executed
assignment and acceptance by Buyer and assignee ("Assignment and Acceptance"),
specifying the percentage or portion of such rights and obligations assigned.
Upon such assignment, (a) such assignee shall be a party hereto and to each
Program Document to the extent of the percentage or portion set forth in the
Assignment and Acceptance, and shall succeed to the applicable rights and
obligations of Buyer hereunder, and (b) Buyer shall, to the extent that such
rights and obligations have been so assigned by them to either (i) an Affiliate
of Buyer which assumes the obligations of Buyer hereunder or (ii) to another
Person which assumes the obligations of Buyer hereunder, be released from their
obligations hereunder accruing thereafter and under the Program Documents. The
Seller agrees that, for any such assignment, Seller will cooperate with the
prompt execution and delivery of documents reasonably necessary for such
assignment process. Unless otherwise stated in the Assignment and Acceptance,
Seller shall continue to take directions solely from Buyer unless otherwise
notified by Buyer in writing.
- 43 -
Buyer may distribute to any prospective assignee any document or other
information delivered to Buyer by Seller.
30. AMENDMENTS, ETC.
----------------
No amendment or waiver of any provision of this Agreement nor any consent
to any failure to comply herewith or therewith shall in any event be effective
unless the same shall be in writing and signed by Seller and Buyer, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
31. SEVERABILITY
------------
If any provision of any Program Document is declared invalid by any court
of competent jurisdiction, such invalidity shall not affect any other provision
of the Program Documents, and each Program Document shall be enforced to the
fullest extent permitted by law.
32. BINDING EFFECT; GOVERNING LAW
-----------------------------
This Agreement shall be binding and inure to the benefit of the parties
hereto and their respective successors and assigns, except that Seller shall not
assign or transfer any of its respective rights or obligations under this
Agreement or any other Program Document without the prior written consent of
Buyer. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF (EXCEPT FOR SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).
33. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION AND VENUE; SERVICE OF PROCESS
---------------------------------------------------------------------------
SELLER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE PROGRAM DOCUMENTS OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. SELLER HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENTS, ON BEHALF OF ITSELF AND ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS IN ANY
ACTION OR PROCEEDING. SELLER HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION IT MAY
HAVE TO, NON-EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK, WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE
PROGRAM DOCUMENTS. SELLER HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A
SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING
BROUGHT BY ANOTHER PARTY IN CONNECTION WITH THIS AGREEMENT OR THE OTHER PROGRAM
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF ITSELF OR ITS PROPERTY, IN THE
MANNER SPECIFIED IN THIS SECTION 33 AND TO SUCH PARTY'S ADDRESS SPECIFIED IN
SECTION 36 OR SUCH OTHER ADDRESS AS SUCH PARTY SHALL HAVE PROVIDED IN WRITING TO
THE OTHER PARTIES HERETO.
- 44 -
NOTHING IN THIS SECTION 33 SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO (I)
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW, OR (II)
BRING ANY ACTION OR PROCEEDING AGAINST ANY OTHER PARTY OR ITS PROPERTIES IN THE
COURTS OF ANY OTHER JURISDICTIONS.
34. SINGLE AGREEMENT
----------------
Seller and Buyer 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 have been made in consideration of each other.
Accordingly, Seller and Buyer each agree (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, and (ii) that payments, deliveries and other transfers
made by any 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 Transaction hereunder, and the obligations to make any such payments,
deliveries and other transfers may be applied against each other and netted.
35. INTENT
------
Seller and Buyer recognize that each of the Transactions and this Agreement
is a "repurchase agreement" as that term is defined in Section 101 of Title 11
of the United States Code, as amended (the "Bankruptcy Code"), a "securities
contract" as that term is defined in Section 741 of the Bankruptcy Code, and a
"master netting agreement" as that term is defined in Section 101 of the
Bankruptcy Code.
It is understood that Buyer's right to liquidate, terminate and accelerate
the Purchased Assets assigned and transferred to it in connection with any
Transaction hereunder or to exercise any other remedies pursuant to Sections 19
and 20 hereof is a contractual right to liquidate, terminate and accelerate the
Transactions under a repurchase agreement, a securities contract, and a master
netting agreement, as described in Sections 559, 555 and 561 of the Bankruptcy
Code, and a contractual right to offset under a master netting agreement and
across contracts, as described in Section 561 of the Bankruptcy Code.
The parties hereby agree that all Servicing Agreements and any provisions
hereof or in any other document, agreement or instrument that is related in any
way to the servicing of the Purchased Assets that are Servicing Released Loans
shall be deemed "related to" this Agreement within the meaning of Sections
101(38A)(A) and 101(47)(a)(v) of Title 11 of the Bankruptcy Code and part of the
"contract" as such term is used in Section 741 of Title 11 of the Bankruptcy
Code.
36. NOTICES AND OTHER COMMUNICATIONS
--------------------------------
Except as provided herein, all notices required or permitted by this
Agreement shall be in writing (including without limitation by Electronic
Transmission, email or facsimile) and shall be effective and deemed delivered
only when received by the party to which it is sent; provided, however, that a
facsimile transmission shall be deemed to be received when transmitted so long
as the transmitting machine has provided an electronic confirmation (without
error message) of such transmission and notices being sent by first class mail,
postage prepaid, shall be deemed to be received five (5) Business Days following
the mailing thereof. Any such notice shall be sent to a party at the address or
facsimile transmission number set forth below:
if to Seller: Chimera Investment Corp.
------------ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
- 45 -
if to Buyer: DB Structured Products, Inc.
----------- ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or facsimile number as either party may notify to the
others in writing from time to time.
37. CONFIDENTIALITY
---------------
The Program Documents and their respective terms, provisions, supplements
and amendments, and transactions and notices hereunder, are proprietary to Buyer
and shall be held by Seller (and Seller shall cause Servicer to hold it) in
strict confidence and shall not be disclosed to any third party without the
consent of Buyer except for (i) disclosure to Seller's direct and indirect
parent companies, directors, attorneys, agents or accountants, provided that
such attorneys or accountants likewise agree to be bound by this covenant of
confidentiality, or are otherwise subject to confidentiality restrictions or
(ii) with prior written notice to Buyer, disclosure required by law, rule,
regulation or order of a court or other regulatory body or (iii) with prior
written notice to Buyer, disclosure to any approved hedge counterparty to the
extent necessary to obtain any Hedge Instrument hereunder or (iv) with prior
written notice to Buyer, any disclosures or filing required under Securities and
Exchange Commission ("SEC") or state securities' laws; provided that in the case
of (iv), Seller shall not file any of the Program Documents other than the
Agreement with the SEC or state securities office unless Seller, shall have
provided at least thirty (30) days (or such lesser time as may be demanded by
the SEC or state securities office) prior written notice of such filing to
Buyer. Notwithstanding anything herein to the contrary, except as reasonably
necessary to comply with applicable securities laws, each party (and each
employee, representative, or other agent of each party) may disclose to any and
all persons, without limitation of any kind, the tax treatment and tax structure
of the transaction and all materials of any kind (including opinions or other
tax analyses) that are provided to it relating to such tax treatment and tax
structure. For this purpose, tax treatment and tax structure shall not include
(i) the identity of any existing or future party (or any Affiliate of such
party) to this Agreement or (ii) any specific pricing information or other
commercial terms, including the amount of any fees, expenses, rates or payments
arising in connection with the transactions contemplated by this Agreement.
38. DUE DILIGENCE
-------------
Seller agrees promptly to provide, and to cause Servicer promptly to
provide, Buyer and its agents with access to, copies of and extracts from any
and all documents, records, agreements, instruments or information (including,
without limitation, any of the foregoing in computer data banks and computer
software systems) relating to Seller's and Servicer's respective business,
operations, servicing, financial condition, performance of their obligations
under the Program Documents, the documents contained in the Servicing File or
the Purchased Assets in the possession, or under the control, of Servicer or
Seller. In addition, Buyer has the right to perform continuing due diligence
reviews on a quarterly basis, at the expense of Seller of (x) Seller, Servicer
and their respective Affiliates, directors, officers, employees and significant
shareholders, including, without limitation, their respective financial
condition and performance of their obligations under the Program Documents, and
(y) the Servicing File and the Purchased Assets.
- 46 -
Seller shall also make available, and shall cause Servicer to make available, to
Buyer a knowledgeable financial or accounting officer of Seller or Servicer, as
applicable, for the purpose of answering questions respecting the Purchased
Assets. Without limiting the generality of the foregoing, Seller acknowledges
that Buyer shall enter into transactions with Seller based solely upon the
information provided by Seller to Buyer and the representations, warranties and
covenants contained herein, and that Buyer, at its option, have the right at any
time to conduct a partial or complete due diligence review on some or all of the
Purchased Assets, including, without limitation, ordering new credit reports,
new appraisals on the related Mortgaged Properties and otherwise re-generating
the information used to originate such Purchased Assets. Any such diligence
conducted by Buyer shall not reduce or limit the Seller's representations,
warranties and covenants set forth herein.
39. RESERVED.
---------
40. RESERVED.
---------
41. THE AGENT.
----------
(a) Appointment. Each Buyer hereby irrevocably designates and appoints
Deutsche Bank Securities Inc. as Agent of such Buyer under this Agreement and
the other Program Documents, and each such Buyer irrevocably authorizes Deutsche
Bank Securities Inc., as the Agent for such Buyer, to take such action on its
behalf under the provisions of this Agreement and the other Program Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Agent by the terms of this Agreement and the other Program Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Buyer, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Program Document or otherwise exist
against the Agent.
(b) Delegations of Duties. The Agent may execute any of its duties under
this Agreement and the other Program Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
(c) Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any other Program Document (except
for its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Buyer for any recitals, statements,
representations or warranties made by the Sellers or any Subsidiary or any
officer thereof contained in this Agreement or any other Program Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or any
other Program Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Program Document or
for any failure of the Seller or any Subsidiary to perform their obligations
hereunder or thereunder. Unless otherwise set forth herein or as otherwise
directed by Buyer, the Agent shall not be under any obligation to any Buyer to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Program
Document, or to inspect the properties, books or records of the Sellers or any
Subsidiary.
- 47 -
(d) Reliance by the Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including
counsel to the Sellers), independent accountants and other experts selected by
the Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Program Document unless it shall first
receive such advice or concurrence of the Buyer, as it deems appropriate, or it
shall first be indemnified to its satisfaction by the Buyer against any and all
liability and expense (except to the extent incurred as a result of the Agent's
gross negligence or willful misconduct) which may be incurred by it by reason of
taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the other Program Documents in accordance with a request of the Buyer, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon the Buyer and any successor(s) thereto.
(e) Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default hereunder unless the Agent has
received notice from a Buyer or the Seller referring to this Agreement,
describing such Default and stating that such notice is a "notice of default".
In the event that the Agent receives such a notice, the Agent shall use its best
efforts to give prompt notice thereof to the Buyer; provided, however, that no
failure or delay by the Agent in giving such notice shall relieve any Buyer of
any obligation hereunder or give rise to any liability of the Agent. The Agent
shall take such action with respect to such Default as shall be reasonably
directed by the Buyer as appropriate; provided, however that unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interests of the Buyer or
as the Agent shall believe necessary to protect the Buyer's interests in the
Purchased Items.
(f) Non-Reliance on the Agent and Other Buyer. Buyer expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of the Seller or any Subsidiary shall be deemed to
constitute any representation or warranty by the Agent to Buyer. Buyer
represents to the Agent that it has, independently and without reliance upon the
Agent, and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, operations,
property, financial and other condition of the Seller and each Subsidiary and
made their own decision to make enter into this Agreement and the other Program
Document. Buyer also represents that it will, independently and without reliance
upon the Agent, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis, appraisals and
decisions in taking or not taking action under this Agreement and the other
Program Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition of the Seller and its Subsidiaries. Except for notices, reports and
other documents expressly required to be furnished to the Buyer by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide Buyer
with any information concerning the business, operations, property, condition
(financial or otherwise) or prospects of the Seller or any Subsidiary which may
come into the possession of the Agent or any of its respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
(g) Indemnification. The Buyer agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Seller or its Subsidiaries
and without limiting the obligation of such Persons to do so), ratably from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs (including the allocated cost of internal
counsel), expenses or disbursements of any kind whatsoever which may at any time
be imposed on, incurred by or asserted against the Agent, in its capacity as
Agent, but not as a Buyer hereunder, in any way relating to or arising out of
this Agreement, any of the other Program Documents or any documents contemplated
- 48 -
by or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing; provided, however, that no Buyer shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent resulting from the Agent's gross negligence or willful misconduct. The
agreements in this Section shall survive the termination of this Agreement.
(h) Successor Agent. The Agent may resign as Agent upon 30 days' notice
to the Buyer. If the Agent shall resign as Agent under this Agreement and the
other Program Documents, then the Buyer shall appoint a successor agent for the
Buyer, which successor agent shall be approved by the Sellers (which consent
shall not be unreasonably withheld), whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent and the term "Agent" shall
mean such successor agent, effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such former Agent or any of the
parties to this Agreement. After any retiring Agent's resignation as Agent, the
provisions of this Section shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement and the other
Program Documents.
[SIGNATURE PAGE FOLLOWS]
- 49 -
IN WITNESS WHEREOF, Seller, Agent and Buyer have caused their names to be
signed to this Master Repurchase Agreement by their respective officers
thereunto duly authorized as of the date first above written.
CHIMERA INVESTMENT CORP.,
as Seller
By:
-----------------------------------------
Name:
Title:
DB STRUCTURED PRODUCTS, INC., as Buyer
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
DEUTSCHE BANK SECURITIES INC., as Agent
By:
-----------------------------------------
Name:
Title:
Signature Page to Master Repurchase Agreement
EXHIBIT B-1
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO LOANS
Capitalized terms used but not defined in this Exhibit B-1 have the
meanings assigned to such terms in the Master Repurchase Agreement dated as of
January 31, 2008 (the "Agreement"), by and among DB Structured Products, Inc.,
(the "Buyer"), Deutsche Bank Securities Inc. ("Agent") and Chimera Investment
Corp. ("Seller"). Seller represents and warrants to the Buyer that, with respect
to each Loan sold in a Transaction hereunder, as of the related Purchase Date
and the related Repurchase Date and on each date that the Loans are subject to a
Transaction:
(a) Loans as Described. All information provided to Buyer by Seller,
including without limitation the information set forth in the Seller Loan
Schedule, with respect to the Loan is complete, true and correct.
(b) Eligible Loans. All Loans are Eligible Loans.
(c) Payments Current. The individual Purchased Loans were originated
less than ninety (90) days prior to the related Purchase Date, and other than
30-Day Delinquent Loans, which are subject to the sublimits set forth in the
Pricing Side Letter, as of the date of the related Purchase Date, (i) all
payments required to be made up to the related Purchase Date for the Loan under
the terms of the Note have been made and credited and (ii) no payment required
under any Loan is Delinquent nor has any payment under any such Loan been thirty
(30) days or more Delinquent since origination of such Loan.
(d) No Outstanding Charges. There are no defaults in complying with the
terms of the Mortgage securing the Loan, and all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have been paid,
or an escrow of funds has been established in an amount sufficient to pay for
every such item which remains unpaid and which has been assessed but is not yet
due and payable. 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 Loan,
except for interest accruing from the date of the Note or date of disbursement
of the proceeds of the Loan, whichever is earlier, to the day which precedes by
one month the Due Date of the first installment of principal and interest
thereunder.
(e) Original Terms Unmodified. The terms of the Note and Mortgage have
not been impaired, waived, altered or modified in any respect, from the date of
origination, from the date of origination, except by a written instrument which
has been recorded, if necessary to protect the interests of Buyer, and which has
been delivered to the Custodian and the terms of which are reflected in the
Seller Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required by
the title insurance policy, and its terms are reflected on the Seller Loan
Schedule. No Mortgagor in respect of the Loan has been released, in whole or in
part, except in connection with an assumption agreement approved by the title
insurer, to the extent required by such policy, and which assumption agreement
is part of the Mortgage File delivered to the Custodian and the terms of which
are reflected in the Seller Loan Schedule. Except with respect to MERS
Designated Mortgage Loans, neither the Note nor the Mortgage have any marks or
notations indicating that they are currently pledged, assigned or otherwise
conveyed to any Person other than Buyer.
(f) FICO Score/Debt-to-Income Ratio. The Loan does not have a borrower
FICO Score of less than 640, and the borrower debt-to-income ratio is not
greater than fifty-five percent (55%).
B-1 - 1
(g) No Defenses. The Loan is not subject to any right of rescission,
setoff, counterclaim or defense, including without limitation the defense of
usury, nor will the operation of any of the terms of the Note or the Mortgage,
or the exercise of any right thereunder, render either the Note or the Mortgage
unenforceable, in whole or in part and no such right of rescission, set-off,
counterclaim or defense, including without limitation, the defense of usury, has
been asserted with respect thereto, and no Mortgagor in respect of the Loan was
a debtor in any state or federal bankruptcy or insolvency proceeding at or
subsequent to the time the Loan was originated or as of the date hereof.
(h) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
fire and extended perils insurance policy, issued by an insurer acceptable to
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, and such other hazards as are customary in the area
where the Mortgaged Property is located, and to the extent required by Seller as
of the Origination Date consistent with the Acquisition Guidelines, against
earthquake and other risks insured against by Persons operating like properties
in the locality of the Mortgaged Property, in an amount not less than the
greatest of (i) 100% of the replacement cost of all improvements to the
Mortgaged Property, (ii) the outstanding principal balance of the Loan, but in
any event at least equal to the amount necessary to avoid the operation of any
co-insurance provisions with respect to the Mortgaged Property, and consistent
with the amount that would have been required as of the Origination Date in
accordance with ▇▇▇▇▇▇ Mae, ▇▇▇▇▇▇▇ Mac or the Acquisition Guidelines, or (iii)
the amount necessary to fully compensate for any damage or loss to the
improvements that are a part of such property on a replacement cost basis. If
any portion of the Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy meeting the current guidelines of the Federal
Insurance Administration is in effect with a generally acceptable insurance
carrier and such policy conforms to the requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇
Mac, in an amount representing coverage not less than the least of (1) the
outstanding principal balance of the Loan, (2) the full insurable value of the
Mortgaged Property, and (3) the maximum amount of insurance available under the
Flood Disaster Protection Act of 1973, as amended. All such insurance policies
(collectively, the "hazard insurance policy") contain a standard mortgagee
clause naming the originator and its successors and assigns (including without
limitation, subsequent owners of the Loan), as mortgagee, and all premiums due
and owing thereon have been paid and such policies may not be reduced,
terminated or cancelled without thirty (30) days' prior written notice to the
mortgagee. No such notice has been received by the Seller. The related Mortgage
obligates the Mortgagor thereunder to maintain all such insurance policy at
Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the mortgagee to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor. Where required by state law or regulation, the Mortgagor has been
given an opportunity to choose the carrier of the required hazard insurance,
provided the policy is not a "master" or "blanket" hazard insurance policy
covering the common facilities of a planned unit development. The hazard
insurance policy is the valid and binding obligation of the insurer, is in full
force and effect and will continue to be in full force and effect and inure to
the benefit of 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 therein, or the validity and binding effect of either including,
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other Person, and no such unlawful items have
been received, retained or realized by the Seller.
(i) Compliance with Applicable Laws. The Loan and, if any, related
prepayment charge, complies in all material respects with 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 (including Uniform Consumer Credit Code Laws), fair credit reporting,
unfair collection practices, equal credit opportunity, fair housing and
disclosure laws, all applicable high cost lending laws, all applicable predatory
B-1 - 2
and abusive lending laws or disclosure laws applicable to the solicitation,
origination, servicing and collection of the Loan or otherwise applicable to the
Loan have been complied with, the Mortgagor received all disclosure materials
required by applicable law with respect to the making of mortgage loans of the
same type as the Loan, the consummation of the transactions contemplated hereby
will not involve the violation of any such laws or regulations, and the Seller
shall maintain or shall cause its agent to maintain in its possession, available
for the inspection of the Buyer, and shall deliver to the Buyer, upon demand,
evidence of compliance with all such requirements.
(j) 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 Loan to be in default, nor has the Seller
waived any default resulting from any action or inaction by the Mortgagor.
(k) Location and Type of Mortgaged Property. The Mortgaged Property is a
fee simple property located in the state identified in the Seller Loan Schedule
and, except with respect to those Purchased Loans originated in the State of
Hawaii, is not secured by an interest in a leasehold estate, the Mortgaged
Property consists of a single parcel of real property with a detached single
family residence erected thereon, or a two to four family dwelling, or a ▇▇▇▇▇▇
Mae eligible condominium project, or an individual unit in a planned unit
development or a co-operative unit and such residence or dwelling is not a
mobile home or a manufactured home; provided, however, that any condominium unit
or planned unit development shall not fall within any of the "Ineligible
Projects" of Part VIII, Section 102 of the ▇▇▇▇▇▇ ▇▇▇ Selling Guide and shall
conform with the Acquisition Guidelines. As of the respective appraisal date for
each Mortgaged Property, no portion of the Mortgaged Property was being used for
commercial or mixed-use purposes and, to the Seller's knowledge, since the date
of such appraisal, no portion of the Mortgaged Property has been used for
commercial purposes. No Loan finances builder inventory.
(l) Valid Lien. The Mortgage is a valid, subsisting, enforceable and
perfected first lien and first priority security interest with respect to each
Loan on the real property included in the Mortgaged Property, including all
buildings on the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems located in or annexed
to such buildings, and all additions, alterations and replacements made at any
time with respect to the foregoing. The lien of the Mortgage is subject only to:
(i) the lien of current real property taxes and assessments not
yet due and payable;
(ii) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to prudent mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered
to the originator of the Loan and (a) referred to or otherwise considered
in the appraisal made for the originator of the Loan or (b) which do not
adversely affect the Appraised Value of the Mortgaged Property set forth in
such appraisal;
(iii) other matters to which like properties are commonly subject
which do not individually or in the aggregate 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
B-1 - 3
(iv) in the case of a Mortgaged Property that is a condominium or
an individual unit in a planned unit development, Liens for common charges
permitted by statute.
Any security agreement or equivalent document related to and delivered in
connection with the Loan establishes and creates a valid, subsisting and
enforceable first lien and first priority security interest with respect to each
Loan (as reflected on the Seller Loan Schedule), on the property described
therein and the Seller has full right to pledge and assign the same to the
Buyer. The Mortgaged Property was not, as of the Origination Date of the Loan,
subject to a mortgage, deed of trust, deed to secure debt or other security
instrument creating a Lien subordinate to the lien of the Mortgage.
(m) Validity of Mortgage Documents. The Note, the Mortgage and any other
agreement executed and delivered by a Mortgagor or guarantor, if applicable, in
connection with the Loan 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 Note, the Mortgage and any other related agreement had legal
capacity to enter into the Loan and to execute and deliver the Note, the
Mortgage and any other related agreement, and the Note, the Mortgage and any
other related agreement have been duly and properly executed by such parties. To
Seller's knowledge, the documents, instruments and agreements submitted for loan
underwriting were not falsified as of the Origination Date 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 Loan has taken place on the part of the Seller or, to the
Seller's knowledge, the Mortgagor, any appraiser, any builder, any developer or
any other party involved in the origination or servicing of the Loan or in the
application of any insurance in relation to such Loan or in connection with the
sale of such Loan to Buyer. The Seller has reviewed all of the documents
constituting the Servicing File and have made such inquiries as they deem
necessary to make and confirm the accuracy of the representations set forth
herein.
(n) Full Disbursement of Proceeds. As of the Origination Date, the Loan
has been closed and the proceeds of the 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 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 Note or Mortgage.
(o) Ownership. On the date hereof, the Seller or MERS as nominee for the
Seller is the sole owner of record and holder of the Loan. The Loan is not
assigned or pledged, and the Seller has good, indefeasible and marketable title
thereto, and has full right to transfer and sell the Loan therein to the related
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 Loan pursuant to this Agreement and following the sale
of each Loan, the related Buyer will own such Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, except such security interest created pursuant to the terms
of this Agreement.
(p) Doing Business. All parties which have had any interest in the Loan,
whether as Mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located.
(q) LTV; PMI Policy. As of the Origination Date of the Loan, the LTV and
CLTV (if applicable) are as identified on the Seller Loan Schedule, and no
individual Loan has had a CLTV as of the Origination Date in excess of 100%.
B-1 - 4
Each Loan is covered by a PMI Policy to the extent required pursuant to the
Acquisition Guidelines. Any Loan having an original LTV of 80% or greater is
guaranteed by the Department of Veterans Affairs, insured by the FHA, or covered
by a PMI Policy. All provisions of such PMI Policy have been and are being
complied with, such policy is in full force and effect, and all premiums due
thereunder have been paid. The insurer under such PMI Policy is an insurer
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac. Any Loan subject to a PMI Policy
obligates the Mortgagor thereunder to maintain the PMI Policy and to pay all
premiums and charges in connection therewith. Any such premium is not payable
from any portion of the Mortgage Interest Rate.
(r) Title Insurance. The 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 Mortgagee, its successors and
assigns, as to the first priority lien of the Mortgage in the original principal
amount of the 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) of
Paragraph (j) of this Exhibit B. Where required by state law or regulation, the
Mortgagor has been given the opportunity to choose the carrier of the required
mortgage title insurance. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against encroachments by or upon
the Mortgaged Property or any interest therein. The title policy does not
contain any special exceptions (other than the standard exclusions) for zoning
and uses and has been marked to delete the standard survey exception or to
replace the standard survey exception with a specific survey reading. The
Mortgagee, its successors and assigns is the sole insured of such lender's title
insurance policy, and such lender's title insurance policy is in full force and
effect and will be in force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such lender's
title insurance policy, and no prior holder or servicer of the Mortgage,
including Seller, have done, by act or omission, anything which would impair the
coverage of such lender's title insurance policy, including, without limitation,
no unlawful fee, commission, kickback or other unlawful compensation or value of
any kind has been or will be received, retained or realized by any attorney,
firm or other Person, and no such unlawful items have been received, retained or
realized by Seller.
(s) No Defaults. There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Note and no event which, with
the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration,
and neither Seller nor any of its predecessors have waived any default, breach,
violation or event of acceleration.
(t) 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.
(u) Location of Improvements; No Encroachments. As of the date the
Appraised Value was determined, all improvements which were considered in
determining the Appraised Value of the Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property and no
improvements on adjoining properties encroach upon the Mortgaged Property. No
improvement located on or being part of the Mortgaged Property is in violation
of any applicable zoning and building law, ordinance or regulation.
B-1 - 5
(v) Origination; Payment Terms. The related originator is an Approved
Originator. As of the Origination Date, 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 Loan may result in Negative
Amortization. Other than Interest Only Loans, principal payments on the Loan
commenced no more than sixty (60) days after funds were disbursed in connection
with the origination of the Loan. The Mortgage Interest Rate is adjusted, with
respect to adjustable rate Loans, on each Adjustment Date to equal the
applicable Index plus the Gross Margin (rounded up or down to the nearest
0.125%), subject to the Maximum Mortgage Interest Rate. To the extent permitted,
the Note is payable on the first day of each month in equal monthly installments
of principal and interest, which installments of interest, with respect to an
Adjustable Rate Loan, are subject to change due to the adjustments to the
Mortgage Interest Rate on each Adjustment Date, with interest calculated and
payable in arrears, sufficient to amortize the Loan fully by the stated maturity
date, over an original term of not more than thirty (30) years from commencement
of amortization. The Due Date of the first payment under the Note is no more
than sixty (60) days from the date of the Note.
(w) 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 Loan and foreclosure on,
or trustee's sale of, the Mortgaged Property pursuant to the proper procedures,
the holder of the 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.
(x) Conformance with Acquisition Guidelines and Agency Standards. The
Loan was originated or acquired or underwritten in accordance with the
Acquisition Guidelines or the originator's residential mortgage loan
underwriting guidelines (unless such originator is disapproved by Buyer), as the
case may be, in effect at the time the Loan was originated. The Note and
Mortgage are on forms acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Seller has not
made any representations to a Mortgagor that are inconsistent with the mortgage
instruments used.
(y) Occupancy of the Mortgaged Property. As of the related Purchase Date
for a Loan, the related 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. Seller has not received notification
from any Governmental Authority that the Mortgaged Property is in material non
compliance with such laws or regulations, is being used, operated or occupied
unlawfully or has failed to have or obtain such inspection, licenses or
certificates, as the case may be. Seller has not received notice of any
violation or failure to conform with any such law, ordinance, regulation,
standard, license or certificate.
(z) No Additional Collateral. The Note is not and has not been secured
by any collateral, pledge account or other security except the lien of the
corresponding Mortgage and the security interest of any applicable Security
Agreement.
B-1 - 6
(aa) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by Custodian or
Buyer to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor.
(bb) Acceptable Investment. The Mortgagor is not in bankruptcy or
insolvent and Seller has no knowledge of any circumstances or conditions with
respect to the Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can reasonably be expected to cause private
institutional investors to regard the Loan as an unacceptable investment, cause
the Loan to become Delinquent, or adversely affect the value or marketability of
the Loan.
(cc) Value of Mortgaged Property. Seller has no knowledge of any
circumstances existing that should reasonably be expected to adversely affect
the value or the marketability of the Mortgaged Property or the Loan or to cause
the Loan to prepay during any period materially faster or slower than the Loans
originated by the Seller generally.
(dd) Delivery of Mortgage Loan Documents. The Note, the Mortgage, the
Assignment of Mortgage and any other documents required to be delivered by
Seller under this Agreement and the Custodial Agreement have been delivered to
Buyer or Custodian. Each Mortgage securing a Loan (other than a MERS Designated
Mortgage Loan) has been duly recorded in the appropriate governmental recording
office of the jurisdiction where the Mortgaged Property is located. If the
Mortgage securing a Loan does not name the applicable Seller as the related
holder, then a valid and recordable assignment assigning to the Seller or the
Custodian the Mortgage underlying the Loan has been duly recorded in the
appropriate governmental recording office for the jurisdiction in which the
Mortgaged Property is located, and the related Seller has delivered to the
Custodian a true certified copy of the original assignment delivered to the
appropriate governmental recording office. Seller is in possession of a
complete, true and accurate Mortgage File in compliance with the Custodial
Agreement, except for such documents the originals of which have been delivered
to Buyer or Custodian. Each of the documents and instruments included in a
Mortgage File is duly executed and in due and proper form and each such document
or instrument is in a form generally acceptable to prudent institutional
mortgage lenders that regularly originate or purchase mortgage loans.
(ee) Due on Sale. The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Loan in the
event that the Mortgaged Property is sold or transferred without the prior
written consent of the Mortgagee thereunder.
(ff) Transfer of 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.
(gg) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Loan does not contain provisions pursuant to which Monthly
Payments are paid or partially paid with funds deposited in any separate account
established by Seller, the Mortgagor or anyone on behalf of the Mortgagor, or
paid by any source other than the Mortgagor nor does it contain any other
similar provisions currently in effect which may constitute a "buydown"
provision. The Loan is not a graduated payment mortgage loan and the Loan does
not have a shared appreciation or other contingent interest feature.
(hh) 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.
B-1 - 7
The lien of the Mortgage securing the consolidated principal amount is expressly
insured as having first 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 ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac. The consolidated
principal amount does not exceed the original principal amount of the Loan with
respect to a Loan.
(ii) Mortgaged Property Undamaged. There is no proceeding pending or
threatened for the total or partial condemnation of the Mortgaged Property, nor
is such a proceeding currently occurring. The Mortgaged Property is in good
repair and 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 Loan or the use for which the premises
were intended. As of the Origination Date, the Loan was not originated in a
jurisdiction that is subject to a "Major Disaster Declaration" by FEMA due to a
hurricane or other weather-related condition.
(jj) Collection Practices; Escrow Deposits; Adjustable Rate Loan
Adjustments. The origination and collection practices used with respect to the
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, all such payments are in the possession of
Seller, Servicer or any third-party servicer and there exist no deficiencies in
connection therewith for which customary arrangements for repayment thereof have
not been made. Each Loan is covered by a life of loan tax service contract.
Where applicable, all Escrow Payments have been collected in full compliance
with state and federal laws. An escrow of funds is not prohibited by applicable
law and has been established in an amount sufficient to pay for every item which
remains unpaid and which has been assessed but is not yet due and payable. No
escrow deposits or Escrow Payments or other charges or payments due Seller have
been capitalized under the Mortgage or the Note. All Mortgage Interest Rate
adjustments have been made in strict compliance with state and federal laws and
the terms of the related Note. Any interest required to be paid pursuant to
state and local laws has been properly paid and credited.
(kk) Appraisal. The Servicing File includes an appraisal of the Mortgaged
Property signed prior to the final approval of the Mortgage application by a
state certified or licensed appraiser on a ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac appraisal
form who at that time (i) was licensed in the state where the Mortgaged Property
is located, (ii) had no interest, direct or indirect, in the Mortgaged Property
or in any Loan or the security therefor, and (iii) did not receive compensation
that was 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 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, Seller shall have received and included
in the Servicing File a recertification of the appraisal.
(ll) Servicemembers' Civil Relief Act. The Mortgagor has not notified
Seller, and Seller has no knowledge of, any relief requested or allowed to the
Mortgagor under the Servicemembers' Civil Relief Act or any similar state
statute.
(mm) Environmental Matters. The Mortgaged Property is free from any and
all toxic or hazardous substances and there exists no violation of any local,
state or federal environmental law, rule or regulation. There is no pending
action or proceeding directly involving any Mortgaged Property of which Seller
is aware in which compliance with any environmental law, rule or regulation is
an issue; and 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; the underlying Mortgaged Property is not
subject to any lien related to the existence of any clean-up of a hazardous
substance;
B-1 - 8
the underlying Mortgaged Property is not subject to any Lien related to the
existence of any clean-up of a hazardous substance.
(nn) No Construction Loans. As of the related Origination Date, no 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 Loan is a construction to permanent mortgage loan listed on
the Seller Loan Schedule which has been fully disbursed, all construction work
is complete and a completion certificate has been issued.
(oo) No Denial of Insurance. No action, inaction, or event has occurred
and no state of fact exists or has existed that has resulted or will result in
the exclusion from, denial of, or defense to coverage under any applicable pool
insurance policy, primary mortgage insurance policy, special hazard insurance
policy, or bankruptcy bond, irrespective of the cause of such failure of
coverage. In connection with the placement of any such insurance, no commission,
fee, or other compensation has been or will be received by Seller or any
officer, director, employee or designee of Seller or any corporation in which
Seller or any officer, director, or employee had a financial interest at the
time of placement of such insurance.
(pp) Regarding the Mortgagor. The Mortgagor is one or more natural
persons and/or trustees for an Illinois land trust or a trustee under a "living
trust" and such "living trust" is in compliance with ▇▇▇▇▇▇ Mae guidelines for
such trusts.
(qq) Mortgagor Acknowledgment. As of the Origination Date, the Mortgagor
has received all disclosure materials required by applicable law with respect to
the making of Adjustable Rate Loans. Seller shall maintain such documents in the
Servicing File.
(rr) Predatory Lending Regulations. No Loan is a High Cost Loan.
(ss) Insurance. Seller has caused or will cause to be performed any and
all acts required to preserve the rights and remedies of Buyer in any insurance
policies applicable to the Loans including, without limitation, any necessary
notifications of insurers, assignments of policies or interests therein, and
establishments of coinsured, joint loss payee and mortgagee rights in favor of
Buyer.
(tt) Simple Interest Loans. None of the Loans are simple interest Loans.
(uu) Prepayment Fee. With respect to each Loan that has a prepayment fee
feature, each such prepayment fee is enforceable and was originated in
compliance with all applicable federal, state and local laws and will be
enforced by Seller for the benefit of Buyer, and is only payable during the
first three (3) years of the term of the Loan.
(vv) Flood Certification Contract. To the extent required by applicable
law, Seller has obtained a life of loan, transferable flood certification
contract for each Loan and shall assign all such contracts to Buyer.
(ww) No Equity Participation. No document relating to the Loan provides
for any contingent or additional interest in the form of participation in the
cash flow of the Mortgaged Property or a sharing in the appreciation of the
value of the Mortgaged Property. The indebtedness evidenced by the Note is not
convertible to an ownership interest in the Mortgaged Property or the Mortgagor
and Seller has not financed nor do they own directly or indirectly, any equity
of any form in the Mortgaged Property or the Mortgagor.
(xx) Proceeds of Loan. The proceeds of the Loan have not been and shall
not be used to satisfy, in whole or in part, any debt owed or owing by the
B-1 - 9
Mortgagor to Seller or any Affiliate or correspondent thereof unless such debt
was originated more than 12 months prior to the origination of such Loan.
(yy) Qualified Originator. The Loan has been originated by, and, if
applicable, purchased by the Seller from, an originator duly licensed and
validly authorized under applicable law to originate mortgage loans in the
related jurisdiction.
(zz) Mortgage Submitted for Recordation. The Mortgage either has been or
will promptly be submitted for recordation in the appropriate governmental
recording office of the jurisdiction where the Mortgaged Property is located.
(aaa) Endorsements. Each Note has been endorsed by a duly authorized
officer of Seller for its own account and not as a fiduciary, trustee, trustor
or beneficiary under a trust agreement.
(bbb) Single Premium Credit Insurance. No Mortgagor was required to
purchase any single premium credit insurance policy (e.g., life, mortgage,
disability, accident, unemployment, property or health insurance product) or
debt cancellation agreement as a condition of obtaining the extension of credit.
No Mortgagor obtained a prepaid single premium credit insurance policy (e.g.,
life, mortgage, disability, accident, unemployment, property or health insurance
product) or debt cancellation agreement in connection with the origination of
the Loan. No proceeds from any Loan were used to purchase single premium credit
insurance policies (e.g., life, mortgage, disability, accident, unemployment,
property or health insurance product) or debt cancellation agreements as part of
the origination of, or as a condition to closing, such Loan.
(ccc) No Agency Loans. No Loan will be guaranteed or underwritten by
▇▇▇▇▇▇ ▇▇▇. No Loan is insured by the Federal Housing Administration or
guaranteed by the U.S. Department of Veterans Affairs.
(ddd) HOEPA. No Mortgage Loan is (a) subject to, covered by or in
violation of the provisions of the Homeownership and Equity Protection Act of
1994, as amended, (b) a "high cost", "covered", "abusive", "predatory",
"threshold", "home loan", "Oklahoma Section 10" or "high risk" mortgage loan (or
a similarly designated loan using different terminology) under any federal,
state or local law, including without limitation, the provisions of the Georgia
Fair Lending Act, New York Banking Law, Section 6-1, the City of Oakland,
California Anti-Predatory Lending Ordinance No. 12361, the Arkansas Home Loan
Protection Act, effective as of June 14, 2003, Kentucky State Statute KRS
360.100, effective as of June 25, 2003, the New Jersey Home Ownership Security
Act of 2002 (the "NJ Act") (or "covered refinancings", "home improvement loans",
or loans secured by manufactured housing under the NJ Act), the New Mexico Home
Loan Protection Act (N.M. Stat. ▇▇▇. ▇▇.▇▇. 58-21A-1 et seq.), the Illinois
High-Risk Home Loan Act (815 Ill. Comp. Stat. 137/1 et seq.), the Oklahoma Home
Ownership and Equity Protection Act, Nevada Assembly ▇▇▇▇ No. 284, effective as
of Oct. 1, 2003, the Minnesota Residential Mortgage Originator and Servicer
Licensing Act (MN Stat. ss.58.137), the South Carolina High-Cost and Consumer
Home Loans Act, effective January 1, 2004, or any other statute or regulation
providing assignee liability to holders of such mortgage loans, or (c) subject
to or in violation of any such or comparable federal, state or local statutes or
regulations.
(eee) Balloon Loans. No Loan is a Balloon Loan.
(fff) Fair Credit Reporting Act. Each of the Seller and any predecessor
servicer has fully furnished, in accordance with the Fair Credit Reporting Act
and its implementing regulations, accurate and complete information (e.g.,
favorable and unfavorable) on its borrower credit files to Equifax, Experian and
B-1 - 10
Trans Union Credit Information Company (three of the credit repositories), on a
monthly basis; and the Seller will fully furnish, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files to
Equifax, Experian and Trans Credit Information Company (three of the credit
repositories), on a monthly basis.
(ggg) Predatory Lending Practices. No predatory, abusive or deceptive
lending practices, including but not limited to, the extension of credit to a
Mortgagor without regard for the Mortgagor's ability to repay the Loan and the
extension of credit to a Mortgagor which has no tangible net benefit to the
Mortgagor, were employed in connection with the origination of the Loan. Each
Loan is in compliance with the anti predatory lending eligibility for purchase
requirements of ▇▇▇▇▇▇ Mae's Selling Guide.
(hhh) USA Patriot Act of 2001. The Seller has complied with all applicable
anti money laundering laws and regulations, including without limitation the USA
Patriot Act of 2001 (collectively, the "Anti-Money Laundering Laws"). The Seller
has established an anti-money laundering compliance program as required by the
Anti-Money Laundering Laws, has conducted the requisite due diligence in
connection with the origination of each Loan for purposes of the Anti-Money
Laundering Laws, including with respect to the legitimacy of the applicable
mortgagor and the origin of the assets used by the said mortgagor to purchase
the property in question, and maintains, and will maintain, sufficient
information to identify the applicable mortgagor for purposes of the Anti-Money
Laundering Laws. No Loan is subject to nullification pursuant to Executive Order
13224 (the "Executive Order") or the regulations promulgated by the Office of
Foreign Assets Control of the United States Department of the Treasury (the
"OFAC Regulations") or in violation of the Executive Order or the OFAC
Regulations, and no Mortgagor is subject to the provisions of such Executive
Order or the OFAC Regulations nor listed as a "blocked person" for purposes of
the OFAC Regulations.
(iii) Compliance with Predatory Laws. Any and all requirements of any
federal, state or local predatory and abusive lending laws applicable to the
origination and servicing of mortgage loans of a type similar to the Loans have
been complied with and the consummation of the transactions contemplated hereby
will not involve the violation of any such laws, and the Seller shall maintain
in its possession, available for the inspection of the Buyer or its designees,
and shall deliver to the Buyer or their designees, upon two Business Days'
request, evidence of compliance with such requirements.
(jjj) Eligibility Criteria. The Loan is an Eligible Loan and complies with
any other eligibility requirements set forth in the Pricing Side Letter.
(kkk) Zoning. The Mortgaged Property is not subject to a zoning or
building code violation that would have to be eliminated under applicable law,
would otherwise affect the marketability of such Mortgaged Property or would
subject the owner, Mortgagor, operator or any Buyer to liability under
applicable law.
(lll) [Reserved.]
(mmm) No Arbitration. With respect to each Loan, neither the related
Mortgage nor the related Note requires the Mortgagor to submit to arbitration to
resolve any dispute arising out of or relating in any way to the Loan
transaction.
(nnn) No Higher Cost Product. No Mortgagor was encouraged or required to
select a Loan product offered by the Loan's originator which is a higher cost
product designed for less creditworthy borrowers, taking into account such facts
as, without limitation, the loan's requirements and the Mortgagor's credit
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history, income, assets and liabilities. Any borrower who sought financing
through an originator's higher-priced subprime lending channel was directed
towards or offered the originator's standard mortgage line if the borrower was
able to qualify for one of the standard products. If, at the time of the related
loan application, the Mortgagor may have qualified for a lower cost credit
product then offered by any mortgage lending affiliate of Seller, Seller
referred the Mortgagor's application to such affiliate for underwriting
consideration.
(ooo) Methodology. The methodology used in underwriting the extension of
credit for each Loan did not rely on the extent of the Mortgagor's equity in the
collateral as the principal determining factor in approving such extension of
credit. The methodology employed objective criteria that related such facts as,
without limitation, the Mortgagor's credit history, income, assets or
liabilities, to the proposed mortgage payment and, based on such methodology,
the Loan's originator made a reasonable determination that at the time of
origination the Mortgagor had the ability to make timely payments on the Loan.
(ppp) Agency Points and Fees. All points, fees and charges, including
finance charges (whether or not financed, assessed, collected or to be
collected), in connection with the origination and servicing of any Loan were
disclosed in writing to the related Mortgagor in accordance with applicable
state and federal law and regulation and no related Mortgagor was charged
"points and fees" (whether or not financed) in an amount that exceeds the
greater of (1) 5% of the principal amount of such loan or (2) $1,000. For the
purposes of this representation, "points and fees" (a) include origination,
underwriting, broker and finder's fees and charges that the lender imposed as a
condition of making the Loan, whether they are paid to the lender or a third
party; and (b) exclude bona fide discount points, fees paid for actual services
rendered in connection with the origination of the Loan (such as attorneys'
fees, notaries fees and fees paid for property appraisals, credit reports,
surveys, title examinations and extracts, flood and tax certifications, and home
inspections) and the cost of mortgage insurance or credit-risk price
adjustments; the costs of title, hazard, and flood insurance policies; state and
local transfer taxes or fees; escrow deposits for the future payment of taxes
and insurance premiums; and other miscellaneous fees and charges that, in total,
do not exceed 0.25 percent of the loan amount).
(qqq) MERS Designated Loans. With respect to each MERS Designated Loans, a
Mortgage Identification Number has been assigned by MERS and such Mortgage
Identification Number is accurately provided on the Seller Loan Schedule. The
related Assignment of Mortgage to MERS has been duly and properly recorded. With
respect to each MERS Loan, no Mortgagor has received any notice of liens or
legal actions with respect to such Loan and no such notices have been
electronically posted by MERS.
(rrr) Residential Dwelling. The Loan is secured by a first priority or
mortgage or deed of trust on real residential property that is improved by a
completed Residential Dwelling.
(a) Leasehold Estate. Each Mortgaged Property consists of the related
Mortgagor's fee simple estate in real estate (the "Fee Interest") or the related
Loan is secured in whole or in part by the interest of the related Mortgagor as
a lessee under a ground lease of the Mortgaged Property (a "Ground Lease"), and
if secured in whole or in part by a Ground Lease, either (1) the ground lessor's
fee interest is subordinated to the lien of the Mortgage and the Mortgage will
not be subject to any lien or encumbrances on the ground lessor's fee interest,
other than permitted encumbrances, and the holder of the Mortgage is permitted
to foreclose the ground lessor's fee interest within a commercially reasonable
time period or (2) the following apply to such Ground Lease:
1. Such Ground Lease or a memorandum thereof has been or will
be duly recorded; such Ground Lease (or the related estoppel letter or
lender protection agreement between the originator and related lessor)
permits the interest of the lessee thereunder to be encumbered by the
related Mortgage;
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does not restrict the use of the related Mortgaged Property by the lessee
or its permitted successors and assigns in a manner that would materially
and adversely affect the security provided by the related Mortgage; and
there has been no material change in the payment terms of such Ground Lease
since the origination of the related Mortgage Loan, with the exception of
material changes reflected in written instruments that are a part of the
related Mortgage File;
2. The lessee's interest in such Ground Lease is not subject to
any liens or encumbrances superior to, or of equal priority with, the
related Mortgage, other than the ground lessor's related fee interest and
permitted encumbrances;
3. The Mortgagor's interest in such Ground Lease is assignable
to the Buyer and its successors and assigns upon notice to, but (except in
the case where such consent cannot be unreasonably withheld) without the
consent of, the lessor thereunder (or, if such consent is required, it has
been obtained prior to the related closing date) and, in the event that it
is so assigned, is further assignable by the Buyer and its successors and
assigns upon notice to, but without the need to obtain the consent of, such
lessor (except in the case where such consent cannot be unreasonably
withheld);
4. Such Ground Lease is in full force and effect, and the
Seller has received no notice that an event of default has occurred
thereunder, and, to the best of Seller's and Guarantor's knowledge, there
exists no condition that, but for the passage of time or the giving of
notice, or both, would result in an event of default under the terms of
such Ground Lease;
5. Such Ground Lease, or an estoppel letter or other
agreement, requires the lessor under such Ground Lease to give notice of
any material default by the lessee to the mortgagee (concurrent with notice
given to the lessee), provided that the mortgagee has provided the lessor
with notice of its lien in accordance with the provisions of such Ground
Lease, and such Ground Lease, or an estoppel letter or other agreement,
further provides that no notice of termination given under such Ground
Lease is effective against the mortgagee unless a copy has been delivered
to the mortgagee. The Seller has provided the lessor under the Ground Lease
with notice of the Seller's lien on the Mortgaged Property in accordance
with the provisions of such Ground Lease;
6. A mortgagee is permitted a reasonable opportunity
(including, where necessary, sufficient time to gain possession of the
interest of the lessee under such Ground Lease) to cure any default under
such Ground Lease, which is curable after the receipt of notice of any such
default, before the lessor thereunder may terminate such Ground Lease by
reason of such default;
7. Such Ground Lease has an original term, along with any
extensions set forth in such Ground Lease, not less than 10 years beyond
the full amortization term of the Mortgage Loan;
8. Under the terms of such Ground Lease and the related
Mortgage, taken together, any related insurance proceeds, other than for a
total loss or taking, will be applied either to the repair or restoration
of all or part of the related Mortgaged Property, with the mortgagee or a
trustee appointed by the mortgagee having the right to hold and disburse
such proceeds as the repair or restoration progresses (except in such cases
where a provision entitling another party to hold and disburse such
proceeds would not be viewed as commercially unreasonable by a prudent
multi-family, commercial or mixed-use mortgage lender (as applicable)), or
to the payment of the outstanding principal balance of the Loan together
with any accrued interest thereon, and any insurance proceeds in respect of
B-1 - 13
a total or substantially total loss or taking may be applied either to
payment of outstanding principal and interest on the Loan (except as
otherwise provided by law) or to rebuilding of the Mortgaged Property;
9. Such Ground Lease does not impose any restrictions on
subletting which would be viewed, as of the date of origination of the
related Mortgage Loan, as commercially unreasonable by the Seller; and such
Ground Lease contains a covenant that the lessor thereunder is not
permitted, in the absence of an uncured default, to disturb the possession,
interest or quiet enjoyment of any subtenant of the lessee, or in any
manner, which would materially and adversely affect the security provided
by the related Mortgage;
10. Such Ground Lease or an estoppel or other agreement requires
the lessor to enter into a new lease with the Seller or its successors or
assigns under terms which do not materially vary from the economic terms of
the Ground Lease, in the event of a termination of the Ground Lease by
reason of a default by the Mortgagor under the Ground Lease, including
rejection of the Ground Lease in a bankruptcy proceeding; and
11. Such Ground Lease may not be materially amended, modified
or, except in the case of a default, cancelled or terminated without the
prior written consent of the holder of the Mortgage Loan, and any such
action without such consent is not binding on such holder, including any
increase in the amount of rent payable by the lessee thereunder during the
term of the Mortgage Loan.
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REPRESENTATIONS AND WARRANTIES WITH RESPECT TO SECURITIES
Capitalized terms used but not defined in this Exhibit B-2 have the
meanings assigned to such terms in the Master Repurchase Agreement dated as of
January 31, 2008 (the "Agreement"), by and among DB Structured Products, Inc.,
(the "Buyer") , Deutsche Bank Securities Inc. ("Agent") and Chimera Investment
Corp. ("Seller"). Seller represents and warrants to the Buyer that, with respect
to each Security sold in a Transaction hereunder, as of the related Purchase
Date and the related Repurchase Date and on each date that the Securities are
subject to a Transaction:
(i) Compliance with Applicable Laws. All of the Securities have been
validly issued, and are fully paid and non assessable, and the Securities have
been offered, issued and sold in compliance with all applicable laws.
(ii) No Encumbrances. There are (i) no outstanding rights, options,
warrants or agreements (other than as created by Buyer) for a purchase, sale or
issuance, in connection with the Securities, (ii) no agreements on the part of
the Seller to issue, sell or distribute the Securities, and (iii) no obligations
on the part of the Seller (contingent or otherwise) to purchase, redeem or
otherwise acquire any securities or any interest therein or to pay any dividend
or make any distribution in respect of the Securities.
(iii) Ownership. The Seller is the record and beneficial owner of, and
has, good title to, the Securities, free of any and all liens or options in
favor of, or claims of, any other Person, except the security interest created
by this Agreement.
(iv) Unencumbered Assets. The Securities are unencumbered (other than
Liens created in favor of Buyer or Agent pursuant to this Agreement and Liens
created by or through Buyer or Agent).
(v) Proper Form. The Securities are certificated securities in
registered form, or are in uncertificated form and (i) held through the
facilities of a Relevant System, or (ii) registered on the books of the issuer
thereof.
(vi) Take out Commitments. To the extent that a Security is covered by a
take out commitment with any third party, such take out commitment is a valid,
binding and subsisting obligation enforceable in accordance with its terms.
(vii) Validity of Pooling Agreement. The related Pooling Agreements and
any other agreement executed and delivered in connection with each Security are
genuine, and each is the legal, valid and binding obligation of the maker
thereof enforceable in accordance with its terms. The Trustee (and the Seller,
to the extent it is a party thereto) had legal capacity to enter into the
Pooling Agreements and the Trustee had the legal capacity to execute and deliver
the Pooling Agreements and any such agreement, and the Pooling Agreements and
any such other related agreement to which the Seller or the Trustee are parties
have been duly and properly executed by the Seller and the Trustee, as
applicable. The Pooling Agreements to which the Trustee is a party constitute
the legal, valid, binding and enforceable obligation of the Trustee. The Pooling
Agreements are each in full force and effect, and the enforceability of the
Pooling Agreements has not been contested by the Trustee.
(viii) Original Terms Unmodified. The terms of the related Pooling
Agreements have not been waived, cancelled, terminated, amended, impaired,
altered or modified in any respect.
B-2 - 1
(ix) No Waiver. The Seller has not waived the performance by the Trustee
of any action, if the Trustee's failure to perform such action would cause any
of the related Pooling Agreements to be in default, nor has the Seller waived
any default resulting from any action or inaction by the Trustee.
(x) No Defaults. There is no default, breach, violation or event of
acceleration existing under any of the related Pooling Agreements and no event
has occurred which, with the passage of time or giving of notice or both and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration thereunder, and neither the Seller nor its
predecessors in interest have waived any such default, breach, violation or
event of acceleration.
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