EXHIBIT 10.5.1
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MASTER REPURCHASE AGREEMENT
Between:
Goldman Sachs Mortgage Company,
a New York limited partnership, as Buyer
and
American Home Mortgage Acceptance, Inc.,
a Maryland corporation
and
American Home Mortgage Corp.,
a New York corporation, as Sellers
Dated as of August 31, 2005
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TABLE OF CONTENTS
Page
Section 1. Applicability....................................................1
Section 2. Definitions......................................................1
Section 3. Initiation; Termination.........................................12
Section 4. Margin Amount Maintenance.......................................15
Section 5. Periodic Advance Repurchase Payments; Late Payment Fee;
Income..........................................................16
Section 6. Requirements of Law.............................................16
Section 7. Taxes...........................................................17
Section 8. Security Interest; Buyer's Appointment as Attorney-In-Fact......20
Section 9. Payment, Transfer and Custody...................................21
Section 10. Intentionally Omitted...........................................22
Section 11. Representations.................................................22
Section 12. Covenants.......................................................26
Section 13. Events of Default...............................................30
Section 14. Remedies........................................................31
Section 15. Indemnification and Expenses; Recourse..........................33
Section 16. Servicing.......................................................34
Section 17. Due Diligence...................................................35
Section 18. Assignability...................................................35
Section 19. Transfer and Maintenance of Register............................36
Section 20. Hypothecation or Pledge of Purchased Mortgage Loans.............36
Section 21. Tax Treatment...................................................37
Section 22. Set-Off.........................................................37
Section 23. Terminability...................................................37
Section 24. Notices and Other Communications................................37
Section 25. Entire Agreement; Severability; Single Agreement................37
Section 26. Governing Law...................................................38
Section 27. Submission to Jurisdiction; Waivers.............................38
Section 28. No Waivers, Etc.................................................39
Section 29. Netting.........................................................39
Section 30. Confidentiality.................................................39
Section 31. Intent..........................................................40
Section 32. Disclosure Relating to Certain Federal Protections..............40
Section 33. Authorizations..................................................41
Section 34. Acknowledgement of Anti-Predatory Lending Policies..............41
Section 35. Miscellaneous...................................................41
Section 36. Joint and Several Liability.....................................41
Section 37. General Interpretive Principles.................................41
EXHIBITS
SCHEDULE 1 Representations and Warranties Re: Mortgage Loans
SCHEDULE 2 UCC Filing Jurisdiction
EXHIBIT A Form of Opinion Letter
EXHIBIT B Form of Transaction Request
EXHIBIT C Mortgage Loan Schedule Fields
EXHIBIT D Underwriting Guidelines
EXHIBIT E Servicer Notice
EXHIBIT F Form of Section 7 Certificate
MASTER REPURCHASE AGREEMENT
This is a MASTER REPURCHASE AGREEMENT dated as of August 31, 2005, between
AMERICAN HOME MORTGAGE ACCEPTANCE, INC., a Maryland corporation ("AHMA"),
AMERICAN HOME MORTGAGE CORP., a New York corporation ("AHMC"; AHMA and AHMC are
also each referred to as a "Seller," and collectively as "Sellers") and GOLDMAN
SACHS MORTGAGE COMPANY, a New York limited partnership ("Buyer").
Section 1. Applicability
From time to time, the parties hereto may enter into transactions in which
Sellers agree to sell to Buyer certain Eligible Mortgage Loans (as defined
below) in exchange for an amount paid by Buyer, with a simultaneous agreement by
Sellers to re-purchase from Buyer such Eligible Mortgage Loans at a date certain
in exchange for an amount paid by Sellers. As more fully described herein, each
such transaction shall be referred to as a "Transaction" and, unless otherwise
agreed in writing, shall be governed by this Agreement.
Section 2. Definitions
As used herein, the following terms shall have the following meanings (all
terms defined in this Section 2 or in other provisions of this Agreement in the
singular to have the same meanings when used in the plural and vice versa):
"1934 Act" shall have the meaning set forth in Section 32 hereof.
"Accepted Servicing Practices" shall mean, with respect to any Mortgage
Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage Loan
in the jurisdiction where the related Mortgaged Property is located.
"Additional Purchased Mortgage Loans" shall have the meaning specified in
Section 4.
"Affiliate" shall mean with respect to any Person, any "affiliate" of such
Person, as such term is defined in the Bankruptcy Code.
"Agreement" shall mean this Master Repurchase Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
"AHMA" shall have the meaning provided in the heading hereof.
"AHMC" shall have the meaning provided in the heading hereof.
"Appraised Value" shall mean the value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.
"Assignment and Acceptance" shall have the meaning set forth in Section 18
hereof.
"Assignment of Mortgage" shall have the meaning set forth in the Custodial
Agreement.
"Asset Value" shall mean with respect to each Mortgage Loan, as of any
date of determination, the lesser of (i) the Purchase Price Percentage
multiplied by the Market Value of such Mortgage Loan and (ii) the outstanding
principal balance of such Mortgage Loan. Without limiting the generality of the
foregoing, Sellers acknowledge that the Asset Value may be reduced to zero by
Buyer if:
(a) such Mortgage Loan ceases to be an Eligible Mortgage Loan;
(b) a First Payment Default occurs with respect to such Purchased Mortgage
Loan;
(c) such Purchased Mortgage Loan contains a breach of a representation or
warranty made by any Seller in the Facility Documents;
(d) the Purchased Mortgage Loan has been released from the possession of
Custodian for a period in excess of 10 calendar days or 45 days in the case of a
release to any Person previously approved by Buyer in its reasonable discretion;
(e) Buyer has determined in its sole discretion that the Purchased
Mortgage Loan is not eligible for whole loan sale or securitization in a
transaction consistent with the prevailing sale and securitization industry;
(f) Sellers have delivered a lost note affidavit in lieu of an original
Mortgage Note, unless the then current Market Value of all Mortgage Loans that
Sellers have delivered a lost note affidavit in lieu of an original Mortgage
Note is less than $5,000,000 ;
(g) a judgment for foreclosure has been entered or which has otherwise
been comparably converted to REO Property.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978, as
amended from time to time.
"Business Day" shall mean a day other than (i) a Saturday or Sunday, (ii)
any day on which banking institutions are authorized or required by law,
executive order or governmental decree to be closed in the State of New York or
(iii) any day on which the New York Stock Exchange is closed.
"Buyer" shall have the meaning provided in the heading hereof.
"Capital Lease Obligations" shall mean, for any Person, all obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
"Cash Equivalents" shall mean (a) securities with maturities of 90 days or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of Buyer or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of Buyer or of any commercial bank satisfying the requirements of clause (b) of
this definition, having a term of not more than seven days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-1 or the
equivalent thereof by S&P or P-1 or the equivalent thereof by Moody's and in
either case maturing within 90 days after the day of acquisition, (e) securities
with maturities of 90 days or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's, (f)
securities with maturities of 90 days or less from the
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date of acquisition backed by standby letters of credit issued by Buyer or any
commercial bank satisfying the requirements of clause (b) of this definition or
(g) shares of money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (a) through (f) of this
definition.
"Change in Control" shall mean:
(a) any transaction or event as a result of which Guarantor ceases to own all
of the capital stock and other beneficial interests of AHMA or any
transaction as a result of which American Home Mortgage Holdings, Inc., a
Delaware corporation, ceases to own all of the capital stock and other
beneficial interests in AHMC; or
(b) the sale, transfer, or other disposition of all or substantially all of a
Seller's assets (excluding any such action taken in connection with any
whole loan sale or securitization transaction); or
(c) the consummation of a merger or consolidation of a Seller with or into
another entity or any other corporate reorganization (in one transaction
or in a series of transactions).
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"CLTV" shall mean, with respect to any Second Lien Mortgage Loan, the sum
of the original principal balance of such Mortgage Loan and the outstanding
principal balance of any other loan secured by the applicable Mortgaged Property
as of the date of origination of the Mortgage Loan, divided by the Appraised
Value of such Mortgaged Property as of the origination date.
"Confidential Terms" shall have the meaning set forth in Section 30
hereof.
"Costs" shall have the meaning set forth in Section 15(a) hereof.
"Custodial Agreement" shall mean that certain Custodial Agreement dated as
of the date hereof, among Sellers, Buyer and Custodian, as the same may be
amended from time to time.
"Custodian" shall mean Deutsche Bank National Trust Company, or any
successor thereto under the Custodial Agreement.
"Default" shall mean an Event of Default or an event that with notice or
lapse of time or both would become an Event of Default.
"Defaulting Party" shall have the meaning set forth in Section 29 hereof.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Due Date" shall mean the day of the month on which the Monthly Payment is
due on a Mortgage Loan, exclusive of any days of grace.
"Due Diligence Costs" shall have the meaning set forth in Section 17
hereof.
"Due Diligence Review" shall mean the performance by Buyer of any or all
of the reviews permitted under Section 17 hereof with respect to any or all of
the Mortgage Loans, as desired by Buyer from time to time.
"Effective Date" shall mean the date upon which the conditions precedent
set forth in Section 3(a) shall have been satisfied.
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"Electronic Tracking Agreement" shall mean that certain Electronic
Tracking Agreement dated as of the date hereof, among Buyer, Sellers, Custodian,
MERS and MERSCORP, Inc., a Delaware corporation, as the same may be amended from
time to time.
"Eligible Mortgage Loan" shall mean a Purchased Mortgage Loan which
complies with the representations and warranties set forth on Schedule 1 to this
Agreement.
"ERISA" shall, with respect to any Person, mean the Employee Retirement
Income Security Act of 1974, as amended from time to time and any successor
thereto, and the regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" shall, with respect to any Person, mean any Person which
is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which such Person is a member, or (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which such Person
is a member.
"Escrow Payments" shall mean, with respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
"Event of Default" shall have the meaning specified in Section 13 hereof.
"Event of ERISA Termination" shall, with respect to any Seller or
Guarantor, mean (i) with respect to any Plan, a reportable event, as defined in
Section 4043 of ERISA, as to which the PBGC has not by regulation waived the
reporting of the occurrence of such event, or (ii) the withdrawal of such Person
or any of its ERISA Affiliates from a Plan during a plan year in which it is a
substantial employer, as defined in Section 4001(a)(2) of ERISA, or (iii) the
failure by such Person or any of its ERISA Affiliates thereof to meet the
minimum funding standard of Section 412 of the Code or Section 302 of ERISA with
respect to any Plan, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of the Code or
Section 302(e) of ERISA, or (iv) the distribution under Section 4041 of ERISA of
a notice of intent to terminate any Plan or any action taken by such Person or
any of its ERISA Affiliates to terminate any Plan, or (v) the adoption of an
amendment to any Plan that, pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA, would result in the loss of tax-exempt status of the trust
of which such Plan is a part if such Person or any of its ERISA Affiliates fails
to timely provide security to the Plan in accordance with the provisions of said
Sections, or (vi) the institution by the PBGC of proceedings under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan, or (vii) the receipt by such Person or any of its ERISA Affiliates of
a notice from a Multiemployer Plan that action of the type described in the
previous clause (vi) has been taken by the PBGC with respect to such
Multiemployer Plan, or (viii) any event or circumstance exists which may
reasonably be expected to constitute grounds for such Person or any of its ERISA
Affiliates to incur liability under Title IV of ERISA or under Section
412(c)(11) of the Code with respect to any Plan.
"Excluded Taxes" shall have the meaning specified in Section 7(e) hereof.
"Facility Documents" shall mean this Agreement, the Custodial Agreement,
the Guaranty Agreement, the Electronic Tracking Agreement and, in each case, any
other documents executed and delivered in connection therewith
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"Fannie Mae" shall mean Fannie Mae, or any successor thereto.
"FDIA" shall have the meaning set forth in Section 31 hereof.
"FDICIA" shall have the meaning set forth in Section 31 hereof.
"Financial Statements" shall mean the consolidated financial statements of
Sellers prepared in accordance with GAAP for the year or other period then
ended. Such financial statements will be audited, in the case of annual
statements, by Deloitte & Touche LLP.
"First Lien Mortgage Loan" shall mean a Mortgage Loan secured by a first
Lien on the related Mortgaged Property.
"First Payment Default" shall mean, with respect to a Mortgage Loan, the
failure of the Mortgagor to make the first Monthly Payment due under such
Mortgage Loan on or before its scheduled Due Date.
"Fitch" shall mean Fitch Ratings, Inc., or any successor thereto.
"Freddie Mac" shall mean Freddie Mac, or any successor thereto.
"GAAP" shall mean generally accepted accounting principles in the United
States of America, applied on a consistent basis and applied to both
classification of items and amounts, and shall include, without limitation, the
official interpretations thereof by the Financial Accounting Standards Board,
its predecessors and successors.
"Governmental Authority" shall mean any nation or government, any state,
county, municipality or other political subdivision thereof or any governmental
body, agency, authority, department or commission (including, without
limitation, any taxing authority) or any instrumentality or officer of any of
the foregoing (including, without limitation, any court or tribunal) exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation, partnership or other entity
directly or indirectly owned by or controlled by the foregoing.
"GS Indebtedness" shall mean any Indebtedness of Sellers or Guarantor
under the Facility Documents and under any other arrangement between any Seller,
Guarantor and/or any of their respective Affiliates on the one hand, and Buyer
and/or an Affiliate of Buyer on the other hand.
"Guarantee" shall mean, as to any Person, any obligation of such Person
directly or indirectly guaranteeing any Indebtedness of any other Person or in
any manner providing for the payment of any Indebtedness of any other Person or
otherwise protecting the holder of such Indebtedness against loss (whether by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, or to take-or-pay or otherwise); provided
that the term "Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business. The amount of any Guarantee of a
Person shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms
"Guarantee" and "Guaranteed" used as verbs shall have correlative meanings.
"Guarantor" shall mean American Home Mortgage Investment Corp., a
Maryland corporation.
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"Guaranty Agreement" shall mean that certain Guaranty dated as of the date
hereof, executed by Guarantor in favor of Buyer.
"High Cost Mortgage Loan" shall mean a Mortgage Loan classified as (a) a
"high cost" loan under the Home Ownership and Equity Protection Act of 1994 or
(b) a "high cost," "threshold," "covered," or "predatory" loan under any other
applicable state, federal or local law (or a similarly classified loan using
different terminology under a law, regulation or ordinance imposing heightened
regulatory scrutiny or additional legal liability for residential mortgage loans
having high interest rates, points and/or fees).
"Income" shall mean, with respect to any Mortgage Loan at any time, any
principal thereof then payable and all interest, dividends or other
distributions payable thereon.
"Increased Cost Certificate" shall have the meaning set forth in Section
6(a) hereof.
"Indebtedness" shall mean, with respect to any Person, (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business, so long as such trade
accounts payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for the account of such Person; (e) Capital Lease Obligations of such Person;
(f) obligations of such Person under repurchase agreements, sale/buy-back
agreements or like arrangements; (g) Indebtedness of others Guaranteed by such
Person; (h) all obligations of such Person incurred in connection with the
acquisition or carrying of fixed assets by such Person; and (i) Indebtedness of
general partnerships of which such Person is a general partner.
"Indemnified Party" shall have the meaning set forth in Section 15(a)
hereof.
"Insolvency Event" shall mean, for any Person:
(a) that such Person or any Affiliate shall discontinue or abandon operation
of its business; or
(b) that such Person or any Affiliate shall fail generally to, or admit in
writing its inability to, pay its debts as they become due; or
(c) a proceeding shall have been instituted in a court having jurisdiction
seeking a decree or order for relief in respect of such Person or its
Affiliate in an involuntary case under any applicable bankruptcy,
insolvency, liquidation, reorganization or other similar law now or
hereafter in effect, or for the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator, conservator or other similar
official of such Person or its Affiliate, or for any substantial part of
its property, or for the winding-up or liquidation of its affairs; or
(d) the commencement by such Person or its Affiliate of a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or such Person's or its Affiliate's consent to the
entry of an order for relief in an involuntary case under any such Law, or
consent to the appointment of or taking possession by a receiver,
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liquidator, assignee, trustee, custodian, sequestrator, conservator or
other similar official of such Person, or for any substantial part of its
property, or any general assignment for the benefit of creditors; or
(e) that such Person or its Affiliate shall become insolvent; or
(f) if such Person or its Affiliate is a corporation, such Person or its
Affiliate, or any of their respective Subsidiaries, shall take any
corporate action in furtherance of, or the action of which would result in
any of the actions set forth in the preceding clause (a), (b), (c), (d) or
(e).
"Late Payment Fee" shall have the meaning set forth in Section 5(b)
hereof.
"LIBOR Rate" shall mean, with respect to each day a Transaction is
outstanding, the rate per annum equal to the rate appearing at page 5 of the
Telerate Screen as one-month LIBOR on such date (and if such date is not a
Business Day, the LIBOR Rate in effect on the Business Day immediately preceding
such date), and if such rate shall not be so quoted, the rate per annum at which
Buyer or its Affiliate is offered dollar deposits at or about 10:00 a.m., New
York City time, on such date, by prime banks in the interbank eurodollar market
where the eurodollar and foreign currency exchange operations in respect of its
Transactions are then being conducted for delivery on such day for a period of
one month and in an amount comparable to the amount of the Transactions
outstanding on such day.
"Lien" shall mean any lien, claim, charge, restriction, pledge, security
interest, mortgage, deed of trust or other encumbrance.
"LTV" shall mean with respect to any Mortgage Loan, the ratio of the
original outstanding principal amount of the Mortgage Loan to the lesser of (a)
the Appraised Value of the Mortgaged Property at origination or (b) if the
Mortgaged Property was purchased within 12 months of the origination of the
Mortgage Loan, the purchase price of the Mortgaged Property.
"Margin Call" shall have the meaning specified in Section 4.
"Margin Deficit" shall have the meaning specified in Section 4.
"Market Value" shall mean, as of any date with respect to any Purchased
Mortgage Loan, the price at which such Mortgage Loan could readily be sold as
determined by Buyer in its sole discretion.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
Property, business, operations, financial condition or prospects of any Seller,
Guarantor or any of their respective Affiliates, (b) the ability of any Seller,
Guarantor or any of their respective Affiliates to perform their respective
obligations under any of the Facility Documents to which it is a party, (c) the
validity or enforceability of any of the Facility Documents, (d) the rights and
remedies of Buyer or its Affiliates under any of the Facility Documents, (e) the
timely payment of any amounts payable under the Facility Documents, or (f) the
Asset Value of the Purchased Mortgage Loans, taken as a whole.
"Maximum Purchase Price" shall mean Seven Hundred Fifty Million Dollars
($750,000,000).
"MERS" shall mean Mortgage Electronic Registration Systems, Inc., a
Delaware corporation, or any successor thereto.
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"MERS System" shall mean the system of recording transfers of mortgages
electronically maintained by MERS.
"Monthly Payment" shall mean the scheduled monthly payment of principal
and interest on a Mortgage Loan.
"Moody's" shall mean Moody's Investor's Service, Inc. or any successors
thereto.
"Mortgage" shall mean each mortgage, assignment of rents, security
agreement and fixture filing, or deed of trust, assignment of rents, security
agreement and fixture filing, deed to secure debt, assignment of rents, security
agreement and fixture filing, or similar instrument creating and evidencing a
first or second lien on real property and other property and rights incidental
thereto.
"Mortgage File" shall have the meaning specified in the Custodial
Agreement.
"Mortgage Interest Rate" shall mean the rate of interest borne on a
Mortgage Loan from time to time in accordance with the terms of the related
Mortgage Note.
"Mortgage Loan" shall mean any loan evidenced by a Mortgage Note and
secured by a Mortgage encumbering Mortgaged Property consisting of a one-to-four
family residence.
"Mortgage Loan Schedule" shall mean with respect to any Transaction as of
any date, a mortgage loan schedule in the form of a computer tape or other
electronic medium generated by Sellers and delivered to Buyer and Custodian,
which provides information (including, without limitation, the information set
forth on Exhibit C attached hereto) relating to the Purchased Mortgage Loans in
a format acceptable to Buyer.
"Mortgage Loan Schedule and Exception Report" shall have the meaning set
forth in the Custodial Agreement.
"Mortgage Note" shall mean the promissory note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage.
"Mortgaged Property" shall mean the real property securing repayment of
the debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor or obligors on a Mortgage Note,
including any Person who has assumed or guaranteed the obligations of the
obligor thereunder.
"Multiemployer Plan" shall mean, with respect to any Person, a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA which is or was
at any time during the current year or the immediately preceding five years
contributed to (or required to be contributed to) by such Person or any ERISA
Affiliate thereof on behalf of its employees and which is covered by Title IV of
ERISA.
"Non-Excluded Taxes" shall have the meaning set forth in Section 7(a)
hereof.
"Non-Exempt Buyer" shall have the meaning set forth in Section 7(e)
hereof.
"Nondefaulting Party" shall have the meaning set forth in Section 29
hereof.
"Obligations" shall mean (a) any amounts due and payable by any Seller to
Buyer in connection with any Transaction hereunder, together with interest
thereon (including interest which would be payable
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as post-petition interest in connection with any bankruptcy or similar
proceeding) and all other amounts, fees or expenses which are payable hereunder
or under any of the Facility Documents and (b) all other obligations or amounts
due and payable by any Seller to Buyer or an Affiliate of Buyer under any other
contract or agreement.
"OFAC" shall have the meaning set forth in Section 11(y) hereof.
"Other Taxes" shall have the meaning set forth in Section 7(b) hereof.
"Payment Date" shall mean the last day of each month, or if such date is
not a Business Day, the Business Day immediately preceding the last day of the
month.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Periodic Advance Repurchase Payment" shall have the meaning specified in
Section 5(a).
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean, with respect to a Seller, any employee benefit or
similar plan that is or was at any time during the current year or immediately
preceding five years established, maintained or contributed to by such Seller or
any ERISA Affiliate thereof and that is covered by Title IV of ERISA, other than
a Multiemployer Plan.
"PMI Policy" shall mean a policy of primary mortgage guaranty insurance
issued by a Qualified Insurer, as required by this Agreement with respect to
certain Mortgage Loans.
"Post-Default Rate" shall mean a rate equal to the sum of (a) the Pricing
Rate plus (b) two percent (2.00%).
"Price Differential" shall mean, with respect to any Transaction hereunder
as of any date, 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 Post-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
during the period commencing on (and including) the Purchase Date for such
Transaction and ending on (but excluding) the Repurchase Date .
"Pricing Rate" shall mean a rate per annum equal to the sum of (a) the
LIBOR Rate plus (b) the Pricing Spread.
"Pricing Spread" shall mean fifty basis points (0.50%).
"Prohibited Person" shall have the meaning set forth in Section 11(y)
hereof.
"Property" shall mean any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Purchase Date" shall mean the date on which Purchased Mortgage Loans are
transferred by Seller to Buyer or its designee.
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"Purchase Price" shall mean, (a) on the Purchase Date, the price at which
each Purchased Mortgage Loan is transferred by Sellers to Buyer which shall
equal the lesser of (i) the Purchase Price Percentage multiplied by the Market
Value of such Mortgage Loan on the Purchase Date and (ii) the outstanding
principal balance of the Mortgage Loan and (b) thereafter, except where Buyer
and Sellers agree otherwise, such Purchase Price determined in accordance with
(a) above, decreased by the amount of any cash, Income and Periodic Advance
Repurchase Payments (in each case, other than Price Differential) actually
received by Buyer on account of such Purchased Mortgage Loan pursuant to
Sections 5 or applied to reduce Sellers' obligations under Section 4(b) hereof.
"Purchase Price Percentage" shall mean ninety-eight percent (98.0%).
"Purchased Mortgage Loans" shall mean the Mortgage Loans sold by Sellers
to Buyer in a Transaction, and any Additional Purchased Mortgage Loans as
evidenced by a Mortgage Loan Schedule and Exception Report delivered by Sellers
to Buyer and/or a Trust Receipt.
"Qualified Insurer" shall mean a mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and acceptable under the Underwriting Guidelines.
"Rating Agency" shall mean any of S&P, Moody's or Fitch.
"Records" shall mean all instruments, agreements and other books, records,
and reports and data generated by other media for the storage of information
maintained by Sellers or any other person or entity with respect to a Purchased
Mortgage Loan. Records shall include the Mortgage Notes, any Mortgages, the
Mortgage Files, the credit files related to the Purchased Mortgage Loan and any
other instruments necessary to document or service a Mortgage Loan.
"Register" shall have the meaning set forth in Section 19 hereof.
"Regulations T, U and X" shall mean Regulations T, U and X of the Board of
Governors of the Federal Reserve System (or any successor), as the same may be
modified and supplemented and in effect from time to time.
"REO Property" shall mean a Mortgaged Property acquired through
foreclosure or by deed in lieu of foreclosure.
"Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .21, .22, .24, .26, .27 or .28 of PBGC Reg.
ss. 4043.
"Repurchase Assets" shall have the meaning provided in Section 8 hereof.
"Repurchase Date" shall mean the date on which Sellers are to repurchase
the Purchased Mortgage Loans subject to a Transaction from Buyer as specified in
the related Transaction Request, or if not so specified, on a date requested
pursuant to Section 3(d) or on the Termination Date, including any date
determined by application of the provisions of Sections 3 or 14.
"Repurchase Price" shall mean the price at which Purchased Mortgage Loans
are to be transferred from Buyer or its designee to Sellers upon termination of
a Transaction, which will be determined in each case (including Transactions
terminable upon demand) as the sum of the Purchase Price and the Price
Differential as of the date of such determination.
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"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule, regulation, procedure 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.
"S&P" shall mean Standard & Poor's Ratings Services, or any successor
thereto.
"SEC" shall have the meaning set forth in Section 32 hereof.
"Second Lien Mortgage Loan" shall mean a Mortgage Loan secured by a second
lien on the related Mortgaged Property.
"Section 4402" shall have the meaning set forth in Section 29 hereof.
"Section 7 Certificate" shall have the meaning set forth in Section 7(e)
hereof.
"Seller" or "Sellers" shall have the meaning provided in the heading
hereof.
"Servicer" shall mean American Home Mortgage Servicing, Inc., a Maryland
corporation.
"Servicer Notice" shall have the meaning set forth in Section 16 hereof.
"Single-Employer Plan" shall mean a single-employer plan as defined in
Section 4001(a)(15) of ERISA which is subject to the provisions of Title IV of
ERISA.
"SIPA" shall have the meaning set forth in Section 32 hereof.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
"Tangible Net Worth" shall mean, for any Person as of a particular date,
(a) all amounts which would be included under capital on a balance sheet of such
Person at such date, determined in accordance with GAAP, less (b) (i) amounts
owing to such Person from its Affiliates, or from officers, employees,
shareholders or other Persons similarly affiliated with such Person, (ii)
intangible assets and (iii) deferred tax charge.
"Taxes" shall have the meaning set forth in Section 7(a) hereof.
"Termination Date" shall mean the date which is 45 days from the date
hereof which shall be October 15, 2005.
"Transaction" shall have the meaning specified in Section 1.
"Transaction Request" shall mean a request from Sellers to Buyer to enter
into a Transaction.
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"Trust Receipt" shall have the meaning set forth in the Custodial
Agreement.
"Underwriting Guidelines" shall mean the underwriting guidelines of
Sellers, attached hereto as Exhibit D.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect from time to time in the State of New York; provided that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or non
perfection of the security interest in any Repurchase Assets or the
continuation, renewal or enforcement thereof is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York, "Uniform
Commercial Code" shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non perfection.
Section 3. Initiation; Termination
(a) Conditions Precedent to Initial Transaction. Buyer's agreement to
enter into the initial Transaction hereunder is subject to the satisfaction,
immediately prior to or concurrently with the making of such Transaction, of the
condition precedent that Buyer shall have received from Sellers any fees and
expenses payable hereunder, and all of the following documents, each of which
shall be satisfactory to Buyer and its counsel in form and substance:
(i) The following Facility Documents delivered to Buyer:
(A) Repurchase Agreement. This Agreement, duly executed by the
parties thereto;
(B) Guaranty Agreement. The Guaranty Agreement, duly executed
by the parties thereto;
(C) Custodial Agreement. The Custodial Agreement, duly
executed by the parties thereto; and
(D) Electronic Tracking Agreement. The Electronic Tracking
Agreement entered into, duly executed and delivered by the parties
thereto.
(ii) Opinions of Counsel. An opinion or opinions of outside counsel
to Sellers (or, in Buyer's sole discretion, in-house counsel to Sellers),
substantially in the form of Exhibit A.
(iii) Organizational Documents. A certificate of corporate existence
of each Seller and Guarantor delivered to Buyer prior to the Effective Date (or
if unavailable, as soon as available thereafter) and certified copies of the
charter and by-laws (or equivalent documents) of each Seller and Guarantor and
of all corporate or other authority for each Seller and Guarantor with respect
to the execution, delivery and performance of the Facility Documents and each
other document to be delivered by Sellers or Guarantor from time to time in
connection herewith.
(iv) Security Interest. Evidence that all other actions necessary
or, in the opinion of Buyer, desirable to perfect and protect Buyer's interest
in the Purchased Mortgage Loans and other Repurchase Assets have been taken,
including, without limitation, UCC searches and duly authorized and filed
Uniform Commercial Code financing statements on Form UCC-1.
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(v) Underwriting Guidelines. A true and correct copy of the
Underwriting Guidelines certified by an officer of each Seller.
(vi) Other Documents. Such other documents as Buyer may reasonably
request, in form and substance reasonably acceptable to Buyer.
(b) Conditions Precedent to all Transactions. Upon satisfaction of the
conditions set forth in this Section 3(b), Buyer shall enter into a Transaction
with Sellers. Buyer's obligation to enter into each Transaction (including the
initial Transaction) is subject to the satisfaction of the following further
conditions precedent, both immediately prior to entering into such Transaction
and also after giving effect thereto to the intended use thereof:
(i) Due Diligence Review. Without limiting the generality of Section
17 hereof, Buyer shall have completed, to its satisfaction, its due diligence
review of the related Mortgage Loans and Seller and Guarantor.
(ii) No Default. No Default shall have occurred and be continuing
under the Facility Documents.
(iii) Representations and Warranties. Both immediately prior to the
Transaction and also after giving effect thereto and to the intended use
thereof, the representations and warranties made by Sellers in Section 11
hereof, shall be true, correct and complete on and as of such Purchase Date in
all material respects with the same force and effect as if made on and as of
such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).
(iv) Maximum Purchase Price. After giving effect to the requested
Transaction, the aggregate outstanding Purchase Price for all Purchased Mortgage
Loans subject to then outstanding Transactions under this Agreement shall not
exceed the Maximum Purchase Price.
(v) No Margin Deficit. After giving effect to the requested
Transaction, the Asset Value of all Purchased Mortgage Loans exceeds the
aggregate Purchase Price for such Transactions.
(vi) Transaction Request. On or prior to 10:00 a.m. (New York Time)
one (1) day prior to the applicable Purchase Date, Sellers shall have delivered
to Buyer (a) a Transaction Request, and (b) a Mortgage Loan Schedule.
(vii) Delivery of Mortgage File. Sellers shall have delivered to
Custodian the Mortgage File with respect to each Purchased Mortgage Loan and
Custodian shall have issued a Trust Receipt with respect to each such Purchased
Mortgage Loan to Buyer.
(viii) Servicer Notice. A fully executed Servicer Notice.
(ix) Fees and Expenses. Sellers shall have paid to Buyer all
reasonable fees and expenses of counsel to Buyer as contemplated by Section
15(b) which amounts, at Buyer's option, may be withheld from the proceeds
remitted by Buyer to the Sellers pursuant to any Transaction hereunder.
(x) No Material Adverse Change. None of the following shall have
occurred and/or be continuing:
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(A) an event or events shall have occurred in the good faith
determination of Buyer resulting in the effective absence of a "repo
market" or comparable "lending market" for financing debt obligations
secured by securities or an event or events shall have occurred resulting
in Buyer not being able to finance Purchased Mortgage Loans through the
"repo market" or "lending market" with traditional counterparties at rates
which would have been reasonable prior to the occurrence of such event or
events; or
(B) an event or events shall have occurred resulting in the
effective absence of a "securities market" for securities backed by
mortgage loans or an event or events shall have occurred resulting in
Buyer not being able to sell securities backed by mortgage loans at prices
which would have been reasonable prior to such event or events; or
(C) there shall have occurred a material adverse change in the
financial condition of Buyer which affects (or can reasonably be expected
to affect) materially and adversely the ability of Buyer to fund its
obligations under this Agreement;
(D) On or after the Effective Date, there shall have occurred
(i) a material change in financial markets, an outbreak or escalation of
hostilities or a material change in national or international political,
financial or economic conditions; (ii) a general suspension of trading on
major stock exchanges or suspension of trading in Guarantor's stock; or
(iii) a disruption in or moratorium on commercial banking activities or
securities settlement services.
Each Transaction Request delivered by Sellers shall constitute a
certification by Sellers that all the conditions set forth in this Section 3(b)
(other than clause (x) hereof) have been satisfied (both as of the date of such
notice or request and as of Purchase Date).
(c) Initiation.
(i) Sellers shall deliver a Transaction Request to Buyer on or prior
to the date and time set forth in Section 3(b)(vi) prior to entering into any
Transaction, substantially in the form attached as Exhibit B hereto. The
Transaction Request shall specify any additional terms or conditions of the
Transaction agreed to by Sellers and Buyer and not inconsistent with this
Agreement. Each Transaction Request, together with this Agreement, shall
constitute conclusive evidence of the terms agreed between Buyer and Sellers
with respect to the Transaction to which the Transaction Request relates, and
Buyer's disbursement and any Seller's acceptance of the related proceeds shall
constitute Buyer's and Sellers' agreement to the terms of such Transaction
Request. It is the intention of the parties that each Transaction Request shall
not be separate from this Agreement but shall be made a part of this Agreement.
In the event that any terms or conditions of any Transaction Request are
inconsistent, or in direct conflict, with this Agreement, the terms of this
Agreement shall prevail; provided that the Transaction Request and this
Agreement shall be construed to be cumulative to the extent possible. Such
Transaction Request shall include a Mortgage Loan Schedule with respect to the
Mortgage Loans to be sold in such requested Transaction.
(ii) The Repurchase Date for each Transaction shall not be later
than the Termination Date.
(iii) Subject to the terms and conditions of this Agreement, during
such period Sellers may sell to Buyer, repurchase from Buyer and resell to Buyer
Eligible Mortgage Loans hereunder.
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(iv) No later than the date and time set forth in Section 3(b)(vi),
the Sellers shall deliver to Custodian the Mortgage Loan File pertaining to each
Eligible Mortgage Loan to be purchased by Buyer.
(v) Subject to the provisions of this Section 3, the Purchase Price
will then be made available to Sellers by Buyer transferring, via wire transfer,
in the aggregate amount of such Purchase Price in funds immediately available.
(d) Repurchase
(i) Sellers may repurchase Purchased Mortgage Loans without penalty
or premium on any date. The Repurchase Price payable for the repurchase of any
such Purchased Mortgage Loan shall be reduced as provided in Section 5(d). If
Sellers intend to make such a repurchase, Sellers shall give one (1) Business
Day's prior written notice thereof to Buyer, designating the Purchased Mortgage
Loans to be repurchased. If such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, and, on receipt,
such amount shall be applied to the Repurchase Price for the designated
Purchased Mortgage Loans.
(ii) On the Repurchase Date, termination of the Transaction will be
effected by reassignment to Sellers or their designee of the Purchased Mortgage
Loans (and any Income in respect thereof received by Buyer not previously
credited or transferred to, or applied to the Obligations of Sellers pursuant to
Section 5) against the simultaneous transfer of the Repurchase Price to an
account of Buyer. Such obligation to repurchase exists without regard to any
prior or intervening liquidation or foreclosure with respect to any Purchased
Mortgage Loan (but liquidation or foreclosure proceeds received by Buyer shall
be applied to reduce the Repurchase Price for such Purchased Mortgage Loan on
each Payment Date except as otherwise provided herein). Sellers are obligated to
obtain the Mortgage Files from Custodian or Buyer or its designee at Sellers'
expense on the Repurchase Date.
Section 4. Margin Amount Maintenance
(a) Buyer shall determine the Asset Value of the Purchased Mortgage Loans
at such intervals as determined by Buyer in its sole discretion.
(b) If at any time the aggregate Asset Value of all related Purchased
Mortgage Loans subject to all Transactions is less than the aggregate Purchase
Price for all such Transactions (a "Margin Deficit"), then Buyer may by notice
to Sellers (as such notice is more particularly set forth below, a "Margin
Call"), require Sellers to transfer to Buyer or its designee cash or Eligible
Mortgage Loans approved by Buyer in its sole discretion ("Additional Purchased
Mortgage Loans") so that the aggregate Asset Value of the Purchased Mortgage
Loans, including any such cash or Additional Purchased Mortgage Loans, will
thereupon equal or exceed the aggregate Purchase Price for all Transactions. In
the event Buyer delivers a Margin Call to Sellers on any Business Day, Sellers
shall be required to transfer cash or Additional Purchased Mortgage Loans no
later than 5 p.m. (New York City time) on the subsequent Business Day.
(c) Buyer's election, in its sole and absolute discretion, not to make a
Margin Call at any time there is a Margin Deficit shall not in any way limit or
impair its right to make a Margin Call at any time a Margin Deficit exists.
(d) Any cash transferred to Buyer pursuant to Section 4(b) above shall be
credited against the Repurchase Price of the related Transactions.
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Section 5. Periodic Advance Repurchase Payments; Late Payment Fee; Income
(a) Notwithstanding that Buyer and Sellers intend that the Transactions
hereunder be sales to Buyer of the Purchased Mortgage Loans for all purposes
except accounting and tax purposes, Sellers shall pay to Buyer the accreted
value of the Price Differential (less any amount of such Price Differential
previously paid by Sellers to Buyer) plus the amount of any unpaid Margin
Deficit (each such payment, a "Periodic Advance Repurchase Payment") on each
Payment Date. Notwithstanding the preceding sentence, if Sellers fail to make
all or part of the Periodic Advance Repurchase Payment by 3:00 p.m. (New York
time) on any Payment Date, the Pricing Rate shall be equal to the Post-Default
Rate until the Periodic Advance Repurchase Payment is received in full by Buyer.
(b) If Sellers shall fail to pay in full any accrued Periodic Advance
Repurchase Payment, Repurchase Price or any other amount due and payable to
Buyer under the Facility Documents (whether on the Repurchase Date, Termination
Date, by acceleration or otherwise), a late fee (the "Late Payment Fee") shall
accrue on such amount at a rate equal to the Post-Default Rate for the period
from and including the due date thereof to but excluding the date the same is
paid in full. Late Payment Fees payable hereunder shall accrue daily and shall
be payable upon such accrual.
(c) For so long as no Event of Default has occurred, (i) Buyer hereby
grants Sellers a license to directly receive all Income paid or distributed on
or in respect of the Repurchase Assets; (ii) all Income constituting principal
or unscheduled prepayments in respect of a Repurchase Asset that is received by
Buyer, shall be retained by Buyer and shall be applied by Buyer to reduce the
Repurchase Price of such Transaction Asset; and (iii) all other Income received
by Buyer shall be remitted to Sellers.
(d) The license granted under Section 5(c) above shall automatically
terminate upon the occurrence of an Event of Default without further act or
instrument. Any and all Income in respect of Transaction Assets received by any
Seller following the termination of such license (which shall automatically
occur following the occurrence of an Event of Default) shall be paid by Sellers
to Buyer and shall be applied by Buyer to reduce the amounts that comprise the
Obligations in any manner that it shall elect. Until so paid by Sellers to
Buyer, all Income received by Sellers shall be held by Sellers in trust for
Buyer, segregated from other funds of Sellers, and shall forthwith upon receipt
by Sellers be turned over to Buyer in the exact form received by Sellers (duly
endorsed by Sellers to Buyer, if required).
(e) Buyer shall offset against the Repurchase Price of each such
Transaction all Income and Periodic Advance Repurchase Payments actually
received by Buyer, excluding any Late Payment Fees.
Section 6. Requirements of Law
(a) If any Requirement of Law (other than with respect to any amendment
made to Buyer's certificate of incorporation and by laws or other organizational
or governing documents) or any change in the interpretation or application
thereof or compliance by Buyer with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority
made subsequent to the date hereof:
(i) shall subject Buyer to any Tax or increased Tax of any kind
whatsoever with respect to this Agreement or any Transaction or change the basis
of taxation of payments to Buyer in respect thereof;
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, deposits
or other liabilities in or for the account of,
16
advances, or other extensions of credit by, or any other acquisition of funds
by, any office of Buyer which is not otherwise included in the determination of
the LIBOR Rate hereunder;
(iii) shall impose on Buyer any other condition;
and the result of any of the foregoing is to increase the cost to Buyer, by an
amount which Buyer deems to be material, of entering, continuing or maintaining
any Transaction or to reduce any amount due or owing hereunder in respect
thereof, then, in any such case, upon Sellers' receipt from Buyer of a
certificate that sets forth in reasonable detail the good faith calculation of
the additional amount or amounts as will compensate Buyer for such increased
cost or reduced amount receivable and basis therefor (an "Increased Cost
Certificate"), Sellers shall (i) promptly to pay Buyer such additional amount or
amounts as set forth in the Increased Cost Certificate; or (ii) pay to Buyer the
Repurchase Price applicable to all of the Transactions identified in the
Increased Cost Certificate (which may include all of the Transactions) within
two (2) Business Days after its receipt of the Increased Cost Certificate.
(b) If Buyer shall have determined that the adoption of or any change in
any Requirement of Law (other than with respect to any amendment made to Buyer's
certificate of incorporation and by laws or other organizational or governing
documents) regarding capital adequacy or in the interpretation or application
thereof or compliance by Buyer or any corporation controlling Buyer with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any Governmental Authority made subsequent to the date hereof shall
have the effect of reducing the rate of return on Buyer's or such corporation's
capital as a consequence of its obligations hereunder to a level below that
which Buyer or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration Buyer's or such corporation's
policies with respect to capital adequacy) by an amount deemed by Buyer to be
material, then from time to time, upon Sellers' receipt of an Increased Cost
Certificate, Sellers shall (i) promptly pay to Buyer such additional amount or
amounts as set forth in the Increased Cost Certificate; or (ii) pay to Buyer the
Repurchase Price applicable to all of the Transactions identified in the
Increased Cost Certificate (which may include all of the Transactions) within
two (2) Business Days after its receipt of the Increased Cost Certificate.
(c) If Buyer becomes entitled to claim any additional amounts pursuant to
this Section, it shall promptly notify Sellers of the event by reason of which
it has become so entitled. An Increased Cost Certificate as to any additional
amounts payable pursuant to this Section submitted by Buyer to Sellers shall be
conclusive in the absence of manifest error.
Section 7. Taxes
(a) Any and all payments by Sellers under or in respect of this Agreement
or any other Facility Documents to which Sellers are a party shall be made free
and clear of, and without deduction or withholding for or on account of, any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities (including penalties, interest and additions
to tax) with respect thereto, whether now or hereafter imposed, levied,
collected, withheld or assessed by any taxation authority or other Governmental
Authority (collectively, "Taxes"), unless required by law. If any Seller shall
be required under any applicable Requirement of Law to deduct or withhold any
Taxes from or in respect of any sum payable under or in respect of this
Agreement or any of the other Facility Documents to Buyer, (i) Sellers shall
make all such deductions and withholdings in respect of Taxes, (ii) Sellers
shall pay the full amount deducted or withheld in respect of Taxes to the
relevant taxation authority or other Governmental Authority in accordance with
any applicable Requirement of Law, and (iii) the sum payable by Sellers shall be
increased as may be necessary so that after Sellers have made all required
deductions and withholdings (including deductions and withholdings applicable to
additional amounts payable under this Section 7) Buyer receives an amount equal
to the sum it would have received had no
17
such deductions or withholdings been made in respect of Non-Excluded Taxes. For
purposes of this Agreement the term "Non-Excluded Taxes" are Taxes other than,
in the case of Buyer, Taxes that are imposed on its overall net income (and
franchise taxes imposed in lieu thereof) by the jurisdiction under the laws of
which Buyer is organized or of its applicable lending office, or any political
subdivision thereof, unless such Taxes are imposed as a result of Buyer having
executed, delivered or performed its obligations or received payments under, or
enforced, this Agreement or any of the other Facility Documents (in which case
such Taxes will be treated as Non-Excluded Taxes).
(b) In addition, Sellers hereby agree to pay any present or future stamp,
recording, documentary, excise, property or value-added taxes, or similar taxes,
charges or levies that arise from any payment made under or in respect of this
Agreement or any other Facility Document or from the execution, delivery or
registration of, any performance under, or otherwise with respect to, this
Agreement or any other Facility Document (collectively, "Other Taxes").
(c) Sellers hereby agree to indemnify Buyer for, and to hold it harmless
against, the full amount of Non-Excluded Taxes and Other Taxes, and the full
amount of Taxes of any kind imposed by any jurisdiction on amounts payable under
this Section 7 imposed on or paid by such Buyer and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto. The indemnity by Sellers provided for in this Section 7(c)
shall apply and be made whether or not the Non-Excluded Taxes or Other Taxes for
which indemnification hereunder is sought have been correctly or legally
asserted. Amounts payable by Sellers under the indemnity set forth in this
Section 7(c) shall be paid within ten (10) days from the date on which Buyer
makes written demand therefor.
(d) Within thirty (30) days after the date of any payment of Taxes,
Sellers (or any Person making such payment on behalf of Sellers) shall furnish
to Buyer for its own account a certified copy of the original official receipt
evidencing payment thereof. For purposes of subsection (e) of this Section 7,
the terms "United States" and "United States person" shall have the meanings
specified in Section 7701 of the Internal Revenue Code.
(e) Buyer (including for avoidance of doubt any assignee, successor or
participant) that either (i) is not incorporated under the laws of the United
States, any State thereof, or the District of Columbia or (ii) whose name does
not include "Incorporated," "Inc.," "Corporation," "Corp.," "P.C.," "insurance
company," or "assurance company" (a "Non-Exempt Buyer") shall deliver or cause
to be delivered to Sellers the following properly completed and duly executed
documents:
(i) in the case of a Non-Exempt Buyer that is not a United States
person, a complete and executed (x) U.S. Internal Revenue Form W-8BEN with Part
II completed in which Buyer claims the benefits of a tax treaty with the United
States providing for a zero or reduced rate of withholding (or any successor
forms thereto), including all appropriate attachments or (y) a U.S. Internal
Revenue Service Form W-8ECI (or any successor forms thereto); or
(ii) in the case of an individual, (x) a complete and executed U.S.
Internal Revenue Service Form W-8BEN (or any successor forms thereto) and a
certificate substantially in the form of Exhibit F (a "Section 7 Certificate")
or (y) a complete and executed U.S. Internal Revenue Service Form W-9 (or any
successor forms thereto); or
(iii) in the case of a Non-Exempt Buyer that is organized under the
laws of the United States, any State thereof, or the District of Columbia, a
complete and executed U.S. Internal Revenue Service Form W-9 (or any successor
forms thereto), including all appropriate attachments; or
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(iv) in the case of a Non-Exempt Buyer that (x) is not organized
under the laws of the United States, any State thereof, or the District of
Columbia and (y) is treated as a corporation for U.S. federal income tax
purposes, a complete and executed U.S. Internal Revenue Service Form W-8BEN
claiming a zero rate of withholding (or any successor forms thereto) and a
Section 7 Certificate; or
(v) in the case of a Non-Exempt Buyer that (A) is treated as a
partnership or other non-corporate entity, and (B) is not organized under the
laws of the United States, any State thereof, or the District of Columbia,
(x)(i) a complete and executed U.S. Internal Revenue Service Form W-8IMY (or any
successor forms thereto) (including all required documents and attachments) and
(ii) a Section 7 Certificate, and (y) without duplication, with respect to each
of its beneficial owners and the beneficial owners of such beneficial owners
looking through chains of owners to individuals or entities that are treated as
corporations for U.S. federal income tax purposes (all such owners, "beneficial
owners"), the documents that would be required by clause (i), (ii), (iii), (iv),
(vi), (vii) and/or this clause (v) with respect to each such beneficial owner if
such beneficial owner were Buyer, provided, however, that no such documents will
be required with respect to a beneficial owner to the extent the actual Buyer is
determined to be in compliance with the requirements for certification on behalf
of its beneficial owner as may be provided in applicable U.S. Treasury
regulations, or the requirements of this clause (v) are otherwise determined to
be unnecessary, all such determinations under this clause (v) to be made in the
sole discretion of Sellers, provided, however, that Buyer shall be provided an
opportunity to establish such compliance as reasonable; or
(vi) in the case of a Non-Exempt Buyer that is disregarded for U.S.
federal income tax purposes, the document that would be required by clause (i),
(ii), (iii), (iv), (v), (vii) and/or this clause (vi) of this Section 7(e) with
respect to its beneficial owner if such beneficial owner were Buyer; or
(vii) in the case of a Non-Exempt Buyer that (A) is not a United
States person and (B) is acting in the capacity as an "intermediary" (as defined
in U.S. Treasury Regulations), (x)(i) a U.S. Internal Revenue Service Form
W-8IMY (or any successor form thereto) (including all required documents and
attachments) and (ii) a Section 7 Certificate, and (y) if the intermediary is a
"non-qualified intermediary" (as defined in U.S. Treasury Regulations), from
each person upon whose behalf the "non-qualified intermediary" is acting the
documents that would be required by clause (i), (ii), (iii), (iv), (v), (vi),
and/or this clause (vii) with respect to each such person if each such person
were Buyer.
If the forms referred to above in this Section 7(e) that are provided by Buyer
at the time Buyer first becomes a party to this Agreement or, with respect to a
grant of a participation, the effective date thereof, indicate a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be treated as Taxes other than "Non-Excluded Taxes" ("Excluded Taxes") and
shall not qualify as Non-Excluded Taxes unless and until Buyer provides the
appropriate form certifying that a lesser rate applies, whereupon withholding
tax at such lesser rate shall be considered Excluded Taxes solely for the
periods governed by such form. If, however, on the date a Person becomes an
assignee, successor or participant to this Agreement, Buyer transferor was
entitled to indemnification or additional amounts under this Section 7, then
Buyer assignee, successor or participant shall be entitled to indemnification or
additional amounts to the extent (and only to the extent), that Buyer transferor
was entitled to such indemnification or additional amounts for Non-Excluded
Taxes, and Buyer assignee, successor or participant shall be entitled to
additional indemnification or additional amounts for any other or additional
Non-Excluded Taxes.
(f) For any period with respect to which Buyer has failed to provide
Sellers with the appropriate form, certificate or other document described in
subsection (e) of this Section 7 (other than (i) if such failure is due to a
change in any applicable Requirement of Law, or in the interpretation or
application thereof, occurring after the date on which a form, certificate or
other document originally was
19
required to be provided, (ii) if such form, certificate or other document
otherwise is not required under subsection (e) of this Section 7, or (iii) if it
is legally inadvisable or otherwise commercially disadvantageous for Buyer to
deliver such form, certificate or other document), Buyer shall not be entitled
to indemnification or additional amounts under subsection (a) or (c) of this
Section 7 with respect to Non-Excluded Taxes imposed by the United States by
reason of such failure; provided, however, that should Buyer become subject to
Non-Excluded Taxes because of its failure to deliver a form, certificate or
other document required hereunder, Sellers shall take such steps as Buyer shall
reasonably request, to assist Buyer in recovering such Non-Excluded Taxes.
(g) Without prejudice to the survival of any other agreement of Sellers
hereunder, the agreements and obligations of Sellers contained in this Section 7
shall survive the termination of this Agreement. Nothing contained in this
Section 7 shall require Buyer to make available any of its tax returns or any
other information that it deems to be confidential or proprietary.
Section 8. Security Interest; Buyer's Appointment as Attorney-In-Fact
(a) Security Interest. Although the parties intend that all Transactions
hereunder be sales and purchases (other than for accounting and tax purposes)
and not loans, in the event any such Transactions are deemed to be loans,
Sellers hereby pledge to Buyer as security for the performance by Sellers of the
Obligations and hereby grants, assigns and pledges to Buyer a fully perfected
first priority security interest in the Purchased Mortgage Loans, the Records,
and all servicing rights related to the Purchased Mortgage Loans, the Facility
Documents (to the extent such Facility Documents and Sellers' right thereunder
relate to the Purchased Mortgage Loans), any Property relating to any Purchased
Mortgage Loan or the related Mortgaged Property, all insurance policies and
insurance proceeds relating to any Purchased Mortgage Loan or the related
Mortgaged Property, including but not limited to any payments or proceeds under
any related primary insurance or hazard insurance, any Income relating to any
Purchased Mortgage Loan and any contract rights, accounts (including any
interest of Sellers in escrow accounts) and any other payments, rights to
payment (including payments of interest or finance charges) and general
intangibles to the extent that the foregoing relates to any Purchased Mortgage
Loan and any other assets relating to the Purchased Mortgage Loans (including,
without limitation, any other accounts) or any interest in the Purchased
Mortgage Loans, all collateral under any other secured debt facility (including,
without limitation, any facility documented as a repurchase agreement or similar
purchase and sale agreement) between any Seller and/or its Affiliates on the one
hand and Buyer and/or its Affiliates on the other, and any proceeds (including
the related securitization proceeds) and distributions and any other property,
rights, title or interests as are specified on a Trust Receipt and Mortgage Loan
Schedule and Exception Report with respect to any of the foregoing, in all
instances, whether now owned or hereafter acquired, now existing or hereafter
created (collectively, the "Repurchase Assets"). Sellers hereby authorize Buyer
to file such financing statement or statements relating to the Repurchase Assets
as Buyer, at its option, may deem appropriate. Sellers shall pay the filing
costs for any financing statement or statements prepared pursuant to this
Section 8.
(b) Buyer's Appointment as Attorney in Fact. Sellers hereby irrevocably
constitute and appoint 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 Sellers and in the name of Sellers
or in its own name, from time to time in Buyer's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be reasonably
necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, Sellers hereby give Buyer the
power and right, on behalf of Sellers, without assent by, but with notice to,
Sellers, if an Event of Default shall have occurred and be continuing, to do the
following:
20
(i) in the name of Sellers, 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 Repurchase Assets and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by
Buyer for the purpose of collecting any and all such moneys due with respect to
any other Repurchase Assets whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Repurchase Assets;
(iii) (A) to direct any party liable for any payment under any
Repurchase Assets to make payment of any and all moneys due or to become due
thereunder directly to Buyer or as Buyer shall direct; (B) to ask or demand for,
collect, receive payment of and 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 Repurchase Assets; (C) to sign and endorse any invoices, assignments,
verifications, notices and other documents in connection with any Repurchase
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 Repurchase
Assets or any proceeds thereof and to enforce any other right in respect of any
Repurchase Assets; (E) to defend any suit, action or proceeding brought against
Sellers with respect to any Repurchase Assets; (F) to settle, compromise or
adjust any suit, action or proceeding described in clause (E) above and, in
connection therewith, to give such discharges or releases as Buyer may deem
appropriate; and (G) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any Repurchase Assets as fully and
completely as though Buyer were the absolute owner thereof for all purposes, and
to do, at Buyer's option and Sellers' expense, at any time, and from time to
time, all acts and things which Buyer deems necessary to protect, preserve or
realize upon the Repurchase Assets and Buyer's Liens thereon and to effect the
intent of this Agreement, all as fully and effectively as Sellers might do.
Sellers hereby ratify 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.
Sellers also authorize Buyer, if an Event of Default shall have occurred,
from time to time, to execute, in connection with any sale provided for in
Section 14 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Repurchase Assets.
The powers conferred on Buyer hereunder are solely to protect Buyer's
interests in the Repurchase Assets and shall not impose any duty upon it to
exercise any such powers. Buyer shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and neither it nor
any of its officers, directors, employees or agents shall be responsible to
Sellers for any act or failure to act hereunder, except for its or their own
gross negligence or willful misconduct.
Section 9. Payment, Transfer and Custody
(a) Unless otherwise mutually agreed in writing, all transfers of funds to
be made by Sellers hereunder shall be made in Dollars, in immediately available
funds, without deduction, set off or counterclaim, to Buyer at the following
account maintained by Buyer: Account No. 40711421, for the account of Goldman
Sachs Mortgage Company; Reference: American Home Mortgage Warehouse, Citibank,
N.A., ABA No. 02100089, not later than 3:00 p.m. New York City time, on the date
on which such payment shall become due (and each such payment made after such
time shall be deemed to have been made on the next succeeding Business Day).
Sellers acknowledge that they have no rights of withdrawal from the foregoing
account.
21
(b) On the Purchase Date for each Transaction, ownership of the Purchased
Mortgage Loans shall be transferred to Buyer or its designee against the
simultaneous transfer of the Purchase Price to the following account of Sellers
(or as otherwise directed by Sellers): Account No. [_________________], for the
account of [_________________] [BANK], ABA No. [_________________], Attn:
[_________________]. With respect to the Purchased Mortgage Loans being sold by
any Seller on a Purchase Date, Sellers hereby sell, transfer, convey and assign
to Buyer or its designee without recourse, but subject to the terms of this
Agreement, all their respective right, title and interest in and to the
Purchased Mortgage Loans together with all right, title and interest in and to
the proceeds of any related Repurchase Assets.
(c) In connection with such sale, transfer, conveyance and assignment, on
or prior to each Purchase Date, Sellers shall deliver or cause to be delivered
and released to Custodian the Mortgage File for the related Purchased Mortgage
Loans.
Section 10. Intentionally Omitted
Section 11. Representations
Sellers represent and warrant to Buyer that as any Purchase Date and as of
the date of this Agreement and at all times while the Facility Documents and any
Transaction hereunder is in full force and effect:
(a) Acting as Principal. Sellers will engage in such Transactions as
principal (or, if agreed in writing in advance of any Transaction by the other
party hereto, as agent for a disclosed principal).
(b) No Broker. Sellers have 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 Mortgage Loans pursuant
to this Agreement.
(c) Financial Statements. Guarantor has furnished to Buyer a copy of
Guarantor's (a) consolidated balance sheet and the consolidated balance sheets
of its consolidated Subsidiaries for the fiscal year ended December 31, 2004 and
the related consolidated statements of income and retained earnings and of cash
flows for Guarantor and its consolidated Subsidiaries for such fiscal year,
setting forth in each case in comparative form the figures for the previous
year, with the opinion thereon of Deloitte & Touche LLP and (b) consolidated
balance sheet and the consolidated balance sheets of its consolidated
Subsidiaries for the quarterly fiscal period(s) of Guarantor ended March 31,
2005 and June 30, 2005 and the related consolidated statements of income and
retained earnings and of cash flows of Guarantor and its consolidated
Subsidiaries for such quarterly fiscal period(s), setting forth in each case in
comparative form the figures for the previous year. All such financial
statements are complete and correct and fairly present, in all material
respects, the consolidated financial condition of Guarantor and its Subsidiaries
and the consolidated results of their operations as at such dates and for such
fiscal periods, all in accordance with GAAP applied on a consistent basis. Since
June 30, 2005, there has been no material adverse change in the consolidated
business, operations or financial condition of Guarantor and its consolidated
Subsidiaries taken as a whole from that set forth in said financial statements
nor is Guarantor or Sellers aware of any state of facts which (without notice or
the lapse of time) would or could result in any such material adverse change or
could have a Material Adverse Effect and that Guarantor does not have, any
liabilities, direct or indirect, fixed or contingent, matured or unmatured,
known or unknown, or liabilities for taxes, long-term leases or unusual forward
or long-term commitments not disclosed by, or reserved against in, said balance
sheet and related statements, and at the present time there are no material
unrealized or anticipated losses from any loans, advances or other commitments
of Guarantor except as heretofore disclosed to Buyer in writing.
22
(d) Organization, Etc. AHMA is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland. AHMC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York. Each Seller (a) has all requisite corporate or other
power, and has all governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
Material Adverse Effect; (b) is qualified to do business and is in good standing
in all other jurisdictions in which the nature of the business conducted by it
makes such qualification necessary, except where failure so to qualify would not
be reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect; and (c) has full power and authority to execute,
deliver and perform its obligations under the Facility Documents.
(e) Authorization, Compliance, Etc. The execution and delivery of, and the
performance by each Seller of its obligations under, the Facility Documents to
which it is a party (a) are within such Seller's powers, (b) have been duly
authorized by all requisite action, (c) do not violate any provision of
applicable law, rule or regulation, or any order, writ, injunction or decree of
any court or other Governmental Authority, or its organizational documents, (d)
do not violate any indenture, agreement, document or instrument to which such
Seller or any of its Subsidiaries is a party, or by which any of them or any of
their Properties, any of the Repurchase Assets is bound or to which any of them
is subject and (e) are not in conflict with, do not result in a breach of, or
constitute (with due notice or lapse of time or both) a default under, or except
as may be provided by any Facility Document, result in the creation or
imposition of any Lien upon any of the Property of such Seller or any of its
Subsidiaries pursuant to, any such indenture, agreement, document or instrument.
No Seller is required to obtain any consent, approval or authorization from, or
to file any declaration or statement with, any Governmental Authority in
connection with or as a condition to the consummation of the Transactions
contemplated herein and the execution, delivery or performance of the Facility
Documents to which it is a party.
(f) Litigation. There are no actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are pending or
threatened) or other legal or arbitrable proceedings affecting any Seller,
Guarantor or any of their respective Subsidiaries or affecting any of the
Repurchase Assets or any of the other Properties of Guarantor before any
Governmental Authority which (i) questions or challenges the validity or
enforceability of the Facility Documents or any action to be taken in connection
with the transactions contemplated hereby, (ii) makes a claim or claims in an
aggregate amount greater than $5,000,000, (iii) individually or in the
aggregate, if adversely determined, would have a Material Adverse Effect, or
(iv) requires filing with the SEC in accordance with its regulations.
(g) Purchased Mortgage Loans.
(i) Sellers have not assigned, pledged, or otherwise conveyed or
encumbered any Purchased Mortgage Loan to any other Person, and immediately
prior to the sale of any Mortgage Loan to Buyer, the applicable Seller was the
sole owner of such Mortgage Loan and had good and marketable title thereto, free
and clear of all Liens, in each case except for Liens to be released
simultaneously with the sale to Buyer hereunder.
(ii) The provisions of this Agreement are effective to either
constitute a sale of Repurchase Assets to Buyer or to create in favor of Buyer a
valid security interest in all right, title and interest of Sellers in, to and
under the Repurchase Assets.
(h) Chief Executive Office/Jurisdiction of Organization. On the Effective
Date, Sellers' chief executive offices are, and have been, located at 538
Broadhollow Road, Melville, New York 11747.
23
AHMA's jurisdiction of organization is Maryland and AHMC's jurisdiction of
organization is New York.
(i) Location of Books and Records. The location where each Seller keeps
its books and records, including all computer tapes and records related to the
Repurchase Assets is its chief executive office.
(j) Enforceability. This Agreement and all of the other Facility Documents
executed and delivered by Guarantor and Sellers in connection herewith are
legal, valid and binding obligations of Sellers and Guarantor and are
enforceable against Sellers and Guarantor in accordance with their terms except
as such enforceability may be limited by (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors rights generally and (ii) general principles of equity.
(k) Ability to Perform. No Seller believes, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained in
the Facility Documents to which it is a party on its part to be performed
(l) No Default. No Default has occurred and is continuing.
(m) Underwriting Guidelines. The Underwriting Guidelines are the true and
correct underwriting guidelines of Sellers.
(n) Adverse Selection. No Seller has selected the Purchased Mortgage Loans
in a manner so as to adversely affect Buyer's interests.
(o) Tangible Net Worth. Guarantor's Tangible Net Worth is greater than Six
Hundred Eighty-Five Million Dollars ($685,000,000).
(p) Accurate and Complete Disclosure. The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of any
Seller and Guarantor to Buyer in connection with the negotiation, preparation or
delivery of this Agreement and the other Facility Documents or included herein
or therein or delivered pursuant hereto or thereto, when taken as a whole, do
not contain any untrue statement of material fact or omit to state any material
fact necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by or on behalf of any Seller or
Guarantor to Buyer in connection with this Agreement and the other Facility
Documents and the transactions contemplated hereby and thereby including without
limitation, the information set forth in the related Mortgage Loan Schedule,
will be true, complete and accurate in every material respect, or (in the case
of projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to Sellers, after due
inquiry, that could reasonably be expected to have a Material Adverse Effect
that has not been disclosed herein, in the other Facility Documents or in a
report, financial statement, exhibit, schedule, disclosure letter or other
writing furnished to Buyer for use in connection with the transactions
contemplated hereby or thereby.
(q) Margin Regulations. The use of all funds acquired by Sellers under
this Agreement will not conflict with or contravene any of Regulations T, U or
X.
(r) Investment Company. None of Sellers, Guarantor nor any of their
respective Subsidiaries is an "investment company" or a company "controlled" by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
24
(s) Solvency. As of the date hereof and immediately after giving effect to
each Transaction, the fair value of the assets of each Seller and Guarantor is
greater than the fair value of the liabilities (including, without limitation,
contingent liabilities if and to the extent required to be recorded as a
liability on the financial statements of any Seller or Guarantor in accordance
with GAAP) of such Person and each Seller and Guarantor are solvent and, after
giving effect to the transactions contemplated by this Agreement and the other
Facility Documents, will not be rendered insolvent or left with an unreasonably
small amount of capital with which to conduct its business and perform its
obligations. No Seller or Guarantor intends to incur, nor does it believe that
it has incurred, debts beyond its ability to pay such debts as they mature. No
Seller or Guarantor is contemplating the commencement of an insolvency,
bankruptcy, liquidation, or consolidation proceeding or the appointment of a
receiver, liquidator, conservator, trustee, or similar official in respect of
itself or any of its property.
(t) ERISA.
(i) No liability under Sections 4062, 4063, 4064 or 4069 of ERISA
has been or is expected by to be incurred by any Seller or Guarantor or any of
their respective ERISA Affiliates with respect to any Plan which is a
Single-Employer Plan in an amount that could reasonably be expected to have a
Material Adverse Effect.
(ii) No Plan which is a Single-Employer Plan had an accumulated
funding deficiency, whether or not waived, as of the last day of the most recent
fiscal year of such Plan ended prior to the date hereof. No Seller or Guarantor
nor any of their respective ERISA Affiliates is (A) required to give security to
any Plan which is a Single-Employer Plan pursuant to Section 401(a)(29) of the
Code or Section 307 of ERISA, or (B) subject to a Lien in favor of such a Plan
under Section 412(n) of the Code or Section 302(f) of ERISA.
(iii) Each Plan of Sellers, Guarantor, their respective Subsidiaries
and ERISA Affiliates is in compliance with the applicable provisions of ERISA
and the Code, except where the failure to comply would not result in any
Material Adverse Effect.
(iv) No Seller or Guarantor nor any of their respective Subsidiaries
has incurred a tax liability under Chapter 43 of the Code or a penalty under
Section 502 of ERISA which has not been paid in full, except where the
incurrence of such tax or penalty would not result in a Material Adverse Effect.
(v) No Seller or Guarantor nor any of their respective Subsidiaries
nor any of their respective ERISA Affiliates has incurred or reasonably expects
to incur any withdrawal liability under Section 4201 of ERISA as a result of a
complete or partial withdrawal from a Multiemployer Plan in an amount that could
reasonably be expected to have a Material Adverse Effect.
(u) Taxes. Sellers and Guarantor and their respective Subsidiaries have
timely filed all tax returns that are required to be filed by them and have
timely paid all Taxes due, except for any such Taxes as are being appropriately
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves have been provided. There are no Liens for
Taxes, except for statutory liens for Taxes not yet due and payable.
(v) No Reliance. Each Seller has made its own independent decisions to
enter into the Facility Documents and each Transaction and as to whether such
Transaction is appropriate and proper for it based upon its own judgment and
upon advice from such advisors (including without limitation, legal counsel and
accountants) as it has deemed necessary. No Seller is relying upon any advice
from Buyer as to any aspect of the Transactions, including without limitation,
the legal, accounting or tax treatment of such Transactions.
25
(w) Plan Assets. No Seller or Guarantor is an employee benefit plan as
defined in Section 3 of Title I of ERISA, or a plan described in Section
4975(e)(1) of the Code, and the Purchased Mortgage Loans are not "plan assets"
within the meaning of 29 CFR ss.2510.3-101.
(x) No Prohibited Persons. No Seller or Guarantor nor any of their
respective Affiliates, officers, directors, partners or members, is a Person (or
to Sellers' or Guarantor's knowledge, owned or controlled by a Person): (i) that
is listed in the Annex to, or is otherwise subject to the provisions of
Executive Order 13224 issued on September 24, 2001 ("EO13224"); (ii) whose name
appears on the United States Treasury Department's Office of Foreign Assets
Control ("OFAC") most current list of "Specifically Designated National and
Blocked Persons" (which list may be published from time to time in various
mediums including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or
supports "terrorism", as that term is defined in EO13224; or (iv) who is
otherwise affiliated with any Person listed above (any and all Persons described
in clauses (i) through (iv) above are herein referred to as a "Prohibited
Person").
Section 12. Covenants
On and as of the date of this Agreement and each Purchase Date and at all
times until this Agreement is no longer in force, Sellers covenant as follows:
(a) Preservation of Existence; Compliance with Law. Each Seller and
Guarantor shall:
(i) Preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises necessary for the operation
of its business;
(ii) Comply with the requirements of all applicable laws, rules,
regulations and orders, whether now in effect or hereafter enacted or
promulgated by any applicable Governmental Authority (including, without
limitation, all environmental laws);
(iii) Maintain all licenses, permits or other approvals necessary
for such Person to conduct its business and to perform its obligations under the
Facility Documents, and shall conduct its business strictly in accordance with
applicable law;
(iv) Keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied; and
(v) Permit representatives of Buyer, upon reasonable notice (unless
an Event of Default shall have occurred and is continuing, in which case, no
prior notice shall be required), during normal business hours, to examine, copy
and make extracts from its books and records, to inspect any of its Properties,
and to discuss its business and affairs with its officers, all to the extent
reasonably requested by Buyer.
(b) Taxes. Each Seller and Guarantor shall timely file all tax returns
that are required to be filed by it and shall timely pay all Taxes due, except
for any such Taxes as are being appropriately contested in good faith by
appropriate proceedings diligently conducted with respect to which adequate
reserves have been provided.
(c) Notice of Proceedings or Adverse Change. Sellers shall give notice to
Buyer immediately after any knowledge of:
(i) the occurrence of any Default;
26
(ii) any (a) default or event of default under any Indebtedness of
any Seller or Guarantor that is greater than $5,000,000 individually or in the
aggregate or (b) litigation, investigation, regulatory action or proceeding that
is pending or threatened by or against any Seller or Guarantor in any federal or
state court or before any Governmental Authority which, if not cured or if
adversely determined, would reasonably be expected to have a Material Adverse
Effect or constitute a Default, and (c) any Material Adverse Effect with respect
to any Seller or Guarantor;
(iii) any litigation or proceeding that is pending or threatened
against (a) Sellers in which the amount involved exceeds $5,000,000 and is not
covered by insurance, in which injunctive or similar relief is sought, or which,
would reasonably be expected to have a Material Adverse Effect and (b) any
litigation or proceeding that is pending or threatened in connection with any of
the Repurchase Assets, which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect;
(iv) and, as soon as reasonably possible, notice of any of the
following events:
(A) a change in the insurance coverage of Sellers or
Guarantor, with a copy of evidence of same attached;
(B) any material change in accounting policies or financial
reporting practices of Sellers or Guarantor;
(C) promptly upon receipt of notice or knowledge of any Lien
or security interest (other than security interests created hereby or
under any other Facility Document) on, or claim asserted against, any of
the Repurchase Assets; and
(D) any other event, circumstance or condition that has
resulted, or has a possibility of resulting, in a Material Adverse Effect.
(d) Financial Reporting. Sellers and Guarantor shall maintain a system of
accounting established and administered in accordance with GAAP, and furnish to
Buyer promptly, from time to time, such other information regarding the business
affairs, operations and financial condition of Sellers and Guarantor as Buyer
may reasonably request.
(e) Visitation and Inspection Rights. Each Seller permit Buyer to inspect,
and take all other reasonable actions permitted under Section 17 hereof.
(f) Reimbursement of Expenses. Each Seller shall promptly reimburse Buyer
for all expenses as the same are incurred by Buyer as required by Section 15(b)
hereof.
(g) Further Assurances. Sellers shall execute and deliver to Buyer all
further documents, financing statements, agreements and instruments, and take
all further action that may be required under applicable law, or that Buyer may
reasonably request, in order to effectuate the transactions contemplated by this
Agreement and the Facility Documents or, without limiting any of the foregoing,
to grant, preserve, protect and perfect the validity and first-priority of the
security interests created or intended to be created hereby. Sellers shall do
all things necessary to preserve the Repurchase Assets so that they remain
subject to a first priority perfected security interest hereunder. Without
limiting the foregoing, Sellers and Guarantor will comply with all rules,
regulations, and other laws of any Governmental Authority and cause the
Repurchase Assets to comply with all applicable rules, regulations and other
laws. Sellers shall fully perform or cause to be performed when due all of its
obligations under any Repurchase Assets or the Facility Documents.
27
(h) True and Correct Information. All information, reports, exhibits,
schedules, financial statements or certificates of each Seller, Guarantor or any
of their respective Affiliates or any of their officers furnished to Buyer
hereunder and during Buyer's diligence of Sellers and/or Guarantor are and will
be true and complete and do not omit to disclose any material facts necessary to
make the statements therein or therein, in light of the circumstances in which
they are made, not misleading. All required financial statements, information
and reports delivered by Sellers and/or Guarantor to Buyer pursuant to the
Facility Documents shall be prepared in accordance with GAAP, or in the case of
SEC filings, the appropriate SEC accounting requirements.
(i) ERISA Events.
(i) Promptly upon becoming aware of the occurrence of any Event of
ERISA Termination which together with all other Events of ERISA Termination
occurring within the prior 12 months involve a payment of money by or a
potential aggregate liability of Sellers or Guarantor or any of their respective
ERISA Affiliates or any combination of such Persons in excess of $1,000,000,
Sellers shall give Buyer a written notice specifying the nature thereof, what
action Sellers or Guarantor or any of their respective ERISA Affiliates has
taken and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto.
(ii) Promptly upon receipt thereof, Sellers shall furnish to Buyer
copies of (i) all notices received by Sellers or Guarantor or any of their
respective ERISA Affiliates of the PBGC's intent to terminate any Plan or to
have a trustee appointed to administer any Plan; (ii) all notices received by
Sellers or Guarantor or any of their respective ERISA Affiliates from the
sponsor of a Multiemployer Plan pursuant to Section 4202 of ERISA involving
withdrawal liability in excess of $1,000,000; and (iii) all funding waiver
requests filed by any Seller or Guarantor or any of their respective ERISA
Affiliates with the Internal Revenue Service with respect to any Plan, the
accrued benefits of which exceed the present value of the plan assets as of the
date the waiver request is filed, and all communications received by any Seller
or Guarantor any their respective ERISA Affiliates from the Internal Revenue
Service with respect to any such funding waiver request.
(j) No Adverse Selection. Sellers shall not select Eligible Mortgage Loans
to be sold to Buyer as Purchased Mortgage Loans using any type of adverse
selection or other selection criteria which would adversely affect Buyer.
(k) Servicer Approval. Sellers shall not cause the Mortgage Loans to be
serviced by any servicer other than a servicer expressly approved in writing by
Buyer, which approval shall be deemed granted by Buyer with respect to Servicer
with the execution of this Agreement.
(l) Books and Records. Sellers shall, to the extent practicable, maintain
and implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing the Repurchase Assets in
the event of the destruction of the originals thereof), and keep and maintain or
obtain, as and when required, all documents, books, records and other
information reasonably necessary or advisable for the collection of all
Repurchase Assets.
(m) Illegal Activities. No Seller or Guarantor shall engage in any conduct
or activity that could subject its assets to forfeiture or seizure.
(n) Material Change in Business. No Seller or Guarantor shall make any
material change in the nature of its business as carried on at the date hereof.
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(o) Disposition of Assets; Liens. No Seller shall create, incur, assume or
suffer to exist any Lien of any nature whatsoever on any of the Repurchase
Assets, whether real, personal or mixed, now or hereafter owned, other than the
Liens created in connection with the transactions contemplated by this
Agreement; nor shall Sellers cause any of the Purchased Mortgage Loans to be
sold, pledged, assigned or transferred.
(p) Transactions with Affiliates. No Seller shall enter into any
transaction, including, without limitation, the purchase, sale, lease or
exchange of property or assets or the rendering or accepting of any service with
any Affiliate, unless such transaction is (a) not otherwise prohibited in this
Agreement, (b) in the ordinary course of such Seller's business and (c) upon
fair and reasonable terms no less favorable to such Seller, as the case may be,
than it would obtain in a comparable arm's length transaction with a Person
which is not an Affiliate.
(q) ERISA Matters.
(i) No Seller shall permit any event or condition which is described
in the definition of "Event of ERISA Termination" to occur or exist with respect
to any Plan or Multiemployer Plan if such event or condition, together with all
other events or conditions described in the definition of Event of ERISA
Termination occurring within the prior 12 months, involves the payment of money
by or an incurrence of liability of Sellers or any ERISA Affiliate thereof, or
any combination of such entities in an amount in excess of $1,000,000.
(ii) No Seller shall be an employee benefit plan as defined in
Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the
Code and Sellers shall not use "plan assets" within the meaning of 29 CFR
ss.2510.3-101 to engage in this Agreement or the Transactions hereunder.
(r) Consolidations, Mergers and Sales of Assets. No Seller shall (i)
consolidate or merge with or into any other Person or (ii) sell, lease or
otherwise transfer all or substantially all of its assets to any other Person;
provided that a Seller may merge or consolidate with another Person if such
Seller is the corporation surviving such merger.
(s) Guarantees. No Seller shall create, incur, assume or suffer to exist
any Guarantees, except to the extent reflected in such Seller's financial
statements or notes thereto.
(t) Servicing Tape. Sellers shall each provide (or cause Servicer to
provide) to Buyer on the fifth Business Day of each month a computer readable
file containing servicing information, including without limitation, a Mortgage
Loan Schedule, details of Income, remittance monies, collection performance,
delinquencies, expected dispositions and sales, and such other fields specified
by Buyer from time to time, on a Repurchase Asset by Repurchase Asset basis and
in the aggregate, with respect to the Repurchase Assets serviced hereunder by
Servicer.
(u) Underwriting Guidelines No Seller shall amend or otherwise modify the
Underwriting Guidelines in any material respect without the prior written
consent of Buyer, not to be unreasonably withheld. Without limiting the
foregoing, in the event that Seller makes any amendment or modification to the
Underwriting Guidelines, such Seller shall promptly deliver to Buyer a complete
copy of the amended or modified Underwriting Guidelines.
Section 13. Events of Default
If any of the following events (each an "Event of Default") occur, Sellers
and Buyer shall have the rights set forth in Section 14, as applicable:
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(a) Payment Default. Sellers shall default in (i) the payment of any
Periodic Advance Payment, Repurchase Price or Price Differential with respect to
any Transaction when due (whether at stated maturity, upon acceleration or at
mandatory or optional prepayment); or (ii) the payment of any other Obligations,
when the same shall become due and payable, whether at the due date thereof, or
by acceleration or otherwise; or
(b) Representation and Warranty Breach. Any representation, warranty or
certification made or deemed made herein or in any other Facility Document by
Sellers or Guarantor or any certificate furnished to Buyer pursuant to the
provisions hereof or thereof or any information with respect to the Mortgage
Loans furnished in writing by on behalf of Sellers shall prove to have been
untrue or misleading in any material respect as of the time made or furnished
(other than the representations and warranties set forth in Schedule 1, which
shall be considered solely for the purpose of determining the Market Value of
the Purchased Mortgage Loans; unless (i) Sellers shall have made any such
representations and warranties with actual knowledge that they were materially
false or misleading at the time made; or (ii) any such representations and
warranties have been determined in good faith by Buyer in its sole discretion to
be materially false or misleading on a regular basis); or
(c) Immediate Covenant Default. The failure of any Seller to perform,
comply with or observe any term, covenant or agreement applicable to Sellers
contained in any of Sections 12(a), (j), (l), (p) (q) or (r); or
(d) Additional Covenant Defaults. Any Seller shall fail to observe or
perform any other covenant or agreement contained in this Agreement (and not
identified in clause (c) of Section 13.01) or any other Facility Document, and
if such default shall be capable of being remedied, and such failure to observe
or perform shall continue unremedied for a period of three (3) Business Days; or
(e) Judgments. A judgment or judgments for the payment of money in excess
of $5,000,000 in the aggregate shall be rendered against any Seller or Guarantor
or any of their respective Affiliates by one or more courts, administrative
tribunals or other bodies having jurisdiction and the same shall not be
satisfied, discharged (or provision shall not be made for such discharge) or
bonded, or a stay of execution thereof shall not be procured, within 30 days
from the date of entry thereof, and such Person(s) shall not, within said period
of 30 days, or such longer period during which execution of the same shall have
been stayed or bonded, appeal therefrom and cause the execution thereof to be
stayed during such appeal; or
(f) Cross-Default.
(i) Any Seller, Guarantor or any of their respective Affiliates
shall be in default under any Indebtedness or any other contract to which it is
a party, which default involves Indebtedness or an obligation in excess of
$5,000,000; or
(ii) Any Seller, Guarantor or any of their respective Affiliates
shall be in default under any GS Indebtedness or other agreement with Buyer
and/or its Affiliates, which default involves GS Indebtedness or an obligation
in excess of $250,000; or
(g) Insolvency Event. An Insolvency Event shall have occurred with respect
to any Seller or Guarantor; or
(h) Enforceability. For any reason, any Facility Document at any time
shall not be in full force and effect in all material respects or shall not be
enforceable in all material respects in accordance with its respective terms, or
any Lien granted pursuant thereto shall fail to be perfected and of first
priority, or any Person (other than Buyer) shall contest the validity,
enforceability, perfection or priority
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of any Lien granted pursuant thereto, or any party thereto (other than Buyer)
shall seek to disaffirm, terminate, limit or reduce its obligations hereunder;
or
(i) Liens. Any Seller shall grant, or suffer to exist, any Lien on any
Repurchase Asset (except any Lien in favor of Buyer); or at least one of the
following fails to be true (A) the Repurchase Assets shall not have been sold to
Buyer, or (B) the Liens contemplated hereby shall cease or fail to be first
priority perfected Liens on any Repurchase Assets in favor of Buyer or shall be
Liens in favor of any Person other than Buyer; or
(j) Material Adverse Change. Any material adverse change in the Property,
business, prospects, financial condition or operations of Guarantor, any Seller
or any of their respective Affiliates shall occur, in each case as determined by
Buyer in its sole good faith discretion, or any other condition shall exist
which, in Buyer's sole good faith discretion, constitutes a material impairment
of such Person's ability to perform its obligations under this Agreement or any
other Facility Document; or
(k) ERISA. (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of any Seller, Guarantor or any
of their respective ERISA Affiliates, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of Buyer, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (iv) any Plan shall terminate for
purposes of Title IV of ERISA, (v) any Seller, Guarantor or any of their
respective ERISA Affiliates shall, or in the reasonable opinion of Buyer be
likely to, incur any liability in connection with a withdrawal from, or the
insolvency or reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all other
such events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
(l) Change of Control. A Change of Control of any Seller shall have
occurred.
Section 14. Remedies
(a) If an Event of Default occurs, the following rights and remedies are
available to Buyer; provided, that an Event of Default shall be deemed to be
continuing unless expressly waived by Buyer in writing.
(i) At the option of Buyer, exercised by prior written notice to
Sellers (which option shall be deemed to have been exercised, even if no notice
is given, immediately upon the occurrence of an Insolvency Event of any Seller),
the Repurchase Date for each Transaction hereunder, if it has not already
occurred, shall be deemed immediately to occur. Buyer shall (except upon the
occurrence of an Insolvency Event of any Seller) give prior written notice to
such Seller of the exercise of such option as promptly as practicable.
(ii) If Buyer exercises or is deemed to have exercised the option
referred to in subsection (a)(i) of this Section,
(A) Sellers' obligations in such Transactions to repurchase
all Purchased Mortgage Loans, at the Repurchase Price therefor on the
Repurchase Date determined in accordance with subsection (a)(i) of this
Section, (1) shall thereupon become immediately due
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and payable and (2) all Income received by Buyer after such exercise or
deemed exercise shall be retained by Buyer and applied to reduce the
amounts that comprise the Obligations in any manner that it shall elect;
and
(B) to the extent permitted by applicable law, the Repurchase
Price with respect to each such Transaction shall be increased by the
aggregate amount obtained by daily application of, on a 360 day per year
basis for the actual number of days during the period from and including
the date of the exercise or deemed exercise of such option to but
excluding the date of payment of the Repurchase Price as so increased, (x)
the Post-Default Rate in effect following an Event of Default to (y) the
Repurchase Price for such Transaction as of the Repurchase Date as
determined pursuant to subsection (a)(i) of this Section (decreased as of
any day by (i) any amounts actually in the possession of Buyer pursuant to
clause (C) of this subsection, and (ii) any proceeds from the sale of
Purchased Mortgage Loans applied to the Repurchase Price pursuant to
subsection (a)(iv) of this Section.
(iii) Upon the occurrence of an Events of Default, Buyer shall have
the right to obtain physical possession of all files of Sellers relating to the
Purchased Mortgage Loans and the Repurchase Assets and all documents relating to
the Purchased Mortgage Loans which are then or may thereafter come in to the
possession of Sellers or any third party acting for such Seller (including,
without limitation, Servicer) and Sellers shall deliver to Buyer such
assignments as Buyer shall request. Buyer shall be entitled to specific
performance of all agreements of Sellers contained in the Facility Documents.
(iv) At any time on the Business Day following notice to Sellers
(which notice may be the notice given under subsection (a)(i) of this Section),
in the event Sellers have not repurchased all Purchased Mortgage Loans, Buyer
may (A) immediately sell, without demand or further notice of any kind, at a
public or private sale and at such price or prices as Buyer may deem
satisfactory any or all Purchased Mortgage Loans and the Repurchase Assets
subject to a such Transactions hereunder and apply the proceeds thereof to the
Obligations in any manner that it shall elect or (B) in its sole discretion
elect, in lieu of selling all or a portion of such Purchased Mortgage Loans, to
give Sellers credit for such Purchased Mortgage Loans and the Repurchase Assets
in an amount equal to the Market Value of the Purchased Mortgage Loans against
the Obligations in any manner that it shall elect. The proceeds of any
disposition of Purchased Mortgage Loans and the Repurchase Assets shall be
applied as determined by Buyer in its sole discretion.
(v) Sellers shall be liable to Buyer for (i) the amount of all
reasonable legal or other expenses (including, without limitation, all costs and
expenses of Buyer in connection with the enforcement of this Agreement or any
other agreement evidencing a Transaction, whether in action, suit or litigation
or bankruptcy, insolvency or other similar proceeding affecting creditors'
rights generally, further including, without limitation, the reasonable fees and
expenses of counsel (including the costs of internal counsel of Buyer) incurred
in connection with or as a result of an Event of Default, (ii) damages in an
amount equal to the cost (including all fees, expenses and commissions) of
entering into replacement transactions and entering into or terminating hedge
transactions in connection with or as a result of an Event of Default, and (iii)
any other loss, damage, cost or expense directly arising or resulting from the
occurrence of an Event of Default in respect of a Transaction.
(vi) Buyer shall have, in addition to its rights hereunder, any
rights otherwise available to it under any other agreement or applicable law.
(b) Buyer may exercise one or more of the remedies available hereunder
immediately upon the occurrence of an Event of Default and at any time
thereafter without notice to Sellers. All rights and
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remedies arising under this Agreement are cumulative and not exclusive of any
other rights or remedies which Buyer may have.
(c) Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Sellers hereby expressly waives any defenses
Sellers might otherwise have to require Buyer to enforce its rights by judicial
process. Sellers also waive any defense (other than a defense of payment or
performance) Sellers might otherwise have arising from the use of nonjudicial
process, enforcement and sale of all or any portion of the Repurchase Assets, or
from any other election of remedies. Sellers recognize that nonjudicial remedies
are consistent with the usages of the trade, are responsive to commercial
necessity and are the result of a bargain at arm's length.
(d) To the extent permitted by applicable law, Sellers shall be liable to
Buyer for interest on any amounts owing by such Seller hereunder, from the date
Sellers becomes liable for such amounts hereunder until such amounts are (i)
paid in full by Sellers or (ii) satisfied in full by the exercise of Buyer's
rights hereunder. Interest on any sum payable by the Sellers to Buyer under this
paragraph 14(d) shall be at a rate equal to the Post-Default Rate.
Section 15. Indemnification and Expenses; Recourse
(a) Sellers agrees to hold Buyer, and its Affiliates and their respective
direct and indirect partners, shareholders, members, officers, directors,
employees, agents and advisors (each an "Indemnified Party") harmless from and
indemnify any Indemnified Party against all liabilities, losses, damages,
judgments, costs and expenses of any kind which may be imposed on, incurred by
or asserted against such Indemnified Party (collectively, "Costs"), relating to
or arising out of this Agreement, any other Facility Document or any transaction
contemplated hereby or thereby, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, any other
Facility Document or any transaction contemplated hereby or thereby, that, in
each case, results from anything other than the Indemnified Party's gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, Sellers agree to hold any Indemnified Party harmless from and
indemnify such Indemnified Party against all Costs with respect to all Mortgage
Loans relating to or arising out of any taxes incurred or assessed in connection
with the ownership of the Mortgage Loans, that, in each case, results from
anything other than the Indemnified Party's gross negligence or willful
misconduct. In any suit, proceeding or action brought by an Indemnified Party in
connection with any Mortgage Loan for any sum owing thereunder, or to enforce
any provisions of any Mortgage Loan, Sellers will save, indemnify and hold such
Indemnified Party harmless from and against all expense, loss or damage suffered
by reason of any defense, set off, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor thereunder, arising out of
a breach by any Seller of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
account debtor or obligor or its successors from any Seller. Sellers also agree
to reimburse an Indemnified Party as and when billed by such Indemnified Party
for all the Indemnified Party's costs and expenses incurred in connection with
the enforcement or the preservation of Buyer's rights under this Agreement, any
other Facility Document or any transaction contemplated hereby or thereby,
including without limitation the reasonable fees and disbursements of its
outside counsel.
(b) Sellers agree to pay as and when billed by Buyer all present and
future reasonable out-of-pocket costs and expenses incurred by Buyer in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement, any other Facility
Document. Sellers agrees to pay as and when billed by Buyer all of the
reasonable out-of-pocket costs and expenses incurred in connection with the
consummation and administration of the transactions contemplated hereby and
thereby including without limitation filing fees and all the reasonable fees,
disbursements and expenses of outside counsel to Buyer which amount may, at
Buyer's option, be
33
deducted from the Purchase Price paid for the first Transaction hereunder.
Subject to the limitations set forth in Section 17 hereof, Sellers agree to pay
Buyer all the reasonable out of pocket due diligence, inspection, testing and
review costs and expenses incurred by Buyer with respect to Mortgage Loans
submitted by Sellers for purchase under this Agreement, including, but not
limited to, those out of pocket costs and expenses incurred by Buyer pursuant to
Sections 15(b) and 17 hereof.
(c) Sellers hereby acknowledge that the Obligations are recourse
obligations of Sellers.
Section 16. Servicing
(a) Sellers, on Buyer's behalf, shall contract with Servicer to service
the Purchased Mortgage Loans consistent with the degree of skill and care that
Sellers customarily require with respect to Mortgage Loans owned or managed by
it and in accordance with Accepted Servicing Practices. Servicer shall (i)
comply with all applicable Requirements of Law, (ii) maintain all state and
federal licenses necessary for it to perform its servicing responsibilities
hereunder and (iii) not impair the rights of Buyer in any Mortgage Loans or any
payment thereunder. Buyer may terminate the servicing of any Mortgage Loan with
the then existing servicer in accordance with Section 16(d) hereof.
(b) Each Seller shall cause Servicer to hold or cause to be held all
escrow funds collected by Sellers with respect to any Purchased Mortgage Loans
in trust accounts and shall apply the same for the purposes for which such funds
were collected.
(c) Sellers shall provide a Servicer Notice to the Servicer substantially
in the form of Exhibit E hereto (a "Servicer Notice") and shall cause Servicer
to acknowledge and agree to the same. Any successor or assignee of a Servicer
shall be approved in writing by Buyer and shall acknowledge and agree to a
Servicer Notice prior to such successor's assumption of servicing obligations
with respect to the Repurchase Assets.
(d) Upon the occurrence of a Event of Default, Buyer shall have the right
to immediately terminate Servicer's right to service the Purchased Mortgage
Loans without payment of any penalty or termination fee. Sellers shall cooperate
in transferring the servicing of the Purchased Mortgage Loans to a successor
servicer appointed by Buyer in its sole discretion.
(e) If Sellers should discover that, for any reason whatsoever, any Person
responsible to Sellers by contract for managing or servicing any such Purchased
Mortgage Loan has failed to perform fully such Seller's obligations under the
Facility Documents or any of the obligations of such entities with respect to
the Purchased Mortgage Loans, such Seller shall promptly notify Buyer.
(f) Sellers shall cause the Servicer to permit Buyer from time to time to
inspect Servicer's servicing facilities, as the case may be, for the purpose of
satisfying Buyer that Servicer has the ability to service the Purchased Mortgage
Loans as provided in this Agreement.
(g) After the Purchase Date with respect to a Transaction and until the
Repurchase Date applicable thereto, Sellers shall have no right to modify or
alter the terms of such Purchased Mortgage Loan and Sellers will have no
obligation or right to repossess such Transaction Asset or substitute another
Transaction Asset, except as provided in the Custodial Agreement.
Section 17. Due Diligence
(a) Sellers acknowledge that Buyer has the right to perform continuing due
diligence reviews with respect to the Mortgage Loans, Sellers and Guarantor, for
purposes of verifying compliance with the
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representations, warranties and specifications made hereunder, or otherwise, and
Sellers agree that upon reasonable prior notice to Sellers unless an Event of
Default shall have occurred, in which case no notice is required, Buyer or its
authorized representatives will be permitted during normal business hours to
examine, inspect, and make copies and extracts of, the Mortgage Files and any
and all documents, records, agreements, instruments or information relating to
such Mortgage Loans in the possession or under the control of Servicer, Sellers
and/or Custodian. Sellers also shall make available to Buyer a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Mortgage Files and the Mortgage Loans. Without limiting the
generality of the foregoing, each Seller acknowledges that Buyer may purchase
Mortgage Loans from Sellers based solely upon the information provided by
Sellers to Buyer in the Mortgage Loan Schedule and the representations,
warranties and covenants contained herein, and that Buyer, at its option, has
the right at any time to conduct a partial or complete due diligence review on
some or all of the Mortgage Loans purchased in a Transaction, including, without
limitation, ordering broker's price opinions, new credit reports and new
appraisals on the related Mortgaged Properties and otherwise re-generating the
information used to originate such Mortgage Loan. Buyer may underwrite such
Mortgage Loans itself or engage a mutually agreed upon third party underwriter
to perform such underwriting. Each Seller agrees to cooperate with Buyer and any
third party underwriter in connection with such underwriting, including, but not
limited to, providing Buyer and any third party underwriter with access to any
and all documents, records, agreements, instruments or information relating to
such Mortgage Loans in the possession, or under the control, of Sellers. Each
Seller further agrees that Sellers shall pay all reasonable out-of-pocket costs
and expenses incurred by Buyer in connection with Buyer's activities pursuant to
this Section 17 ("Due Diligence Costs").
Section 18. Assignability
(a) The rights and obligations of the parties under this Agreement and
under any Transaction shall not be assigned by any Seller without the prior
written consent of Buyer. Subject to the foregoing, this Agreement and any
Transactions shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. Nothing in this Agreement express
or implied, shall give to any Person, other than the parties to this Agreement
and their successors hereunder, any benefit of any legal or equitable right,
power, remedy or claim under this Agreement. Subject to the following sentence,
Buyer may from time to time assign all or a portion of its rights and
obligations under this Agreement and the Facility Documents pursuant to an
executed assignment and acceptance by Buyer and assignee ("Assignment and
Acceptance"), specifying the percentage or portion of such rights and
obligations assigned. Notwithstanding the preceding sentence, if such assignment
is to a Person that is not an Affiliate of Buyer and no Default shall have
occurred and be continuing, any such assignment shall be subject to the prior
written consent of Sellers, which consent shall not be unreasonably withheld,
delayed or conditioned. Upon such assignment, (a) such assignee shall be a party
hereto and to each Facility 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 it be released from
its obligations hereunder and under the Facility Documents. Unless otherwise
stated in the Assignment and Acceptance, each Seller shall continue to take
directions solely from Buyer unless otherwise notified by Buyer in writing.
Buyer may distribute to any prospective assignee any document or other
information delivered to Buyer by Sellers.
(b) Buyer may sell participations to one or more Persons in or to all or a
portion of its rights and obligations under this Agreement; provided, however,
that (i) Buyer's obligations under this Agreement shall remain unchanged, (ii)
Buyer shall remain solely responsible to the other parties hereto for the
performance of such obligations; and (iii) each Seller shall continue to deal
solely and directly
35
with Buyer in connection with Buyer's rights and obligations under this
Agreement and the other Facility Documents except as provided in Section 7.
(c) Buyer may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 18, disclose to
the assignee or participant or proposed assignee or participant, as the case may
be, any information relating to Sellers, Guarantor or any of their respective
Subsidiaries or to any aspect of the Transactions that has been furnished to
Buyer by or on behalf of Sellers or any of their respective Subsidiaries;
provided that such assignee or participant agrees in writing to hold such
information subject to the confidentiality provisions of this Agreement.
(d) In the event Buyer assigns all or a portion of its rights and
obligations under this Agreement, the parties hereto agree to negotiate in good
faith an amendment to this Agreement to add agency provisions similar to those
included in repurchase agreements for similar syndicated repurchase facilities.
Section 19. Transfer and Maintenance of Register
(a) Subject to acceptance and recording thereof pursuant to paragraph (b)
of this Section 19, from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of Buyer under this Agreement. Any assignment or
transfer by Buyer of rights or obligations under this Agreement that does not
comply with this Section 19 shall be treated for purposes of this Agreement as a
sale by such Buyer of a participation in such rights and obligations in
accordance with Section 19(b) hereof.
(b) Each Seller shall maintain a register (the "Register") on which it
will record Buyer's rights hereunder, and each Assignment and Acceptance and
participation. The Register shall include the names and addresses of Buyer
(including all assignees, successors and participants) and the percentage or
portion of such rights and obligations assigned. Failure to make any such
recordation, or any error in such recordation shall not affect Sellers'
obligations in respect of such rights. If Buyer sells a participation in its
rights hereunder, it shall provide Sellers, or maintain as agent of such Seller,
the information described in this paragraph and permit such Seller to review
such information as reasonably needed for such Seller to comply with its
obligations under this Agreement or under any applicable Requirement of Law.
Section 20. Hypothecation or Pledge of Purchased Mortgage Loans
Title to all Purchased Mortgage Loans and Repurchase Assets shall pass to
Buyer and Buyer shall have free and unrestricted use of all Purchased Mortgage
Loans. Nothing in this Agreement shall preclude Buyer from engaging in
repurchase transactions with the Purchased Mortgage Loans or otherwise pledging,
repledging, transferring, hypothecating, or rehypothecating the Purchased
Mortgage Loans. Nothing contained in this Agreement shall obligate Buyer to
segregate any Purchased Mortgage Loans delivered to Buyer by a Seller.
Section 21. Tax Treatment
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 Sellers that is secured by the Purchased
Mortgage Loans and that the Purchased Mortgage Loans are owned by Sellers in the
absence of a Default by Sellers. All parties to this Agreement agree to such
treatment and agree to take no action inconsistent with this treatment, unless
required by law.
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Section 22. Set-Off
In addition to any rights and remedies of Buyer hereunder and by law,
Buyer shall have the right, without prior notice to Sellers, any such notice
being expressly waived by each Seller to the extent permitted by applicable law,
upon any amount becoming due and payable by Sellers hereunder (whether at the
stated maturity, by acceleration or otherwise) to set-off and appropriate and
apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by Buyer and/or any of its Affiliate to or for the credit or the account
of Sellers, Guarantor or any of their respective Affiliates. Buyer agrees
promptly to notify Sellers 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.
Section 23. Terminability
Sellers acknowledge that:
(a) each representation and warranty made or deemed to be made by entering
into a Transaction, herein or pursuant hereto shall survive the making of such
representation and warranty, notwithstanding the payment of the Repurchase Price
with respect thereto or the termination of any of the Facility Documents;
(b) Buyer shall not be deemed to have waived any Default that may arise
because any representation or warranty shall have proved to be false or
misleading, notwithstanding that Buyer may have had notice or knowledge or
reason to believe that such representation or warranty was false or misleading
at the time the Transaction was made; and
(c) the covenants contained in this Agreement, including without
limitation, the obligations of each Seller under Section 15 hereof, shall
survive the termination of this Agreement.
Section 24. Notices and Other Communications
Except as otherwise expressly permitted by this Agreement, all notices,
requests and other communications provided for herein (including without
limitation any modifications of, or waivers, requests or consents under, this
Agreement) shall be given or made in writing (including without limitation by
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof or thereof); or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party. Except as otherwise provided in this
Agreement and except for notices given under Section 3 (which shall be effective
only on receipt), all such communications shall be deemed to have been duly
given when transmitted by telecopy or personally delivered or, in the case of a
notice sent by mail or courier, upon receipt or refusal, in each case given or
addressed as aforesaid.
Section 25. Entire Agreement; Severability; Single Agreement
This Agreement, together with the Facility Documents, constitute the
entire understanding between Buyer and Sellers with respect to the subject
matter they cover and shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase transactions
involving Purchased Mortgage Loans. By acceptance of this Agreement, Buyer and
each Seller acknowledge that they have not made, and are not relying upon, any
statements, representations, promises or undertakings not contained in this
Agreement. Each provision and agreement herein shall be treated as
37
separate and independent from any other provision or agreement herein and shall
be enforceable notwithstanding the unenforceability of any such other provision
or agreement.
Buyer and each Seller acknowledges that, and have entered hereinto and
will enter into each Transaction hereunder in consideration of and in reliance
upon the fact that, all Transactions hereunder constitute a single business and
contractual relationship and that each has been entered into in consideration of
the other Transactions. Accordingly, each of Buyer and each Seller 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, (ii) that each of them
shall be entitled to set off claims and apply property held by them in respect
of any Transaction against obligations owing to them in respect of any other
Transaction hereunder; (iii) that payments, deliveries, and other transfers made
by either of them in respect of any Transaction shall be deemed to have been
made in consideration of payments, deliveries, and other transfers in respect of
any other Transactions hereunder, and the obligations to make any such payments,
deliveries, and other transfers may be applied against each other and netted and
(iv) to promptly provide notice to the other after any such set off or
application.
Section 26. Governing Law
THIS REPURCHASE AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF.
Section 27. Submission to Jurisdiction; Waivers
BUYER AND EACH SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS REPURCHASE AGREEMENT AND THE OTHER FACILITY
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH
THE BUYER SHALL HAVE BEEN NOTIFIED; AND
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO SUE IN ANY OTHER JURISDICTION.
38
(v) THE BUYER AND EACH SELLER HEREBY IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS REPURCHASE AGREEMENT,
ANY OTHER FACILITY DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 28. No Waivers, Etc.
No failure on the part of Buyer to exercise and no delay in exercising,
and no course of dealing with respect to, any right, power or privilege under
any Facility Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any Facility Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
Section 29. Netting
If Buyer and Sellers are "financial institutions" as now or hereinafter
defined in Section 4402 of Title 12 of the United States Code ("Section 4402")
and any rules or regulations promulgated thereunder,
(a) All amounts to be paid or advanced by one party to or on behalf of the
other under this Agreement or any Transaction hereunder shall be deemed to be
"payment obligations" and all amounts to be received by or on behalf of one
party from the other under this Agreement or any Transaction hereunder shall be
deemed to be "payment entitlements" within the meaning of Section 4402, and this
Agreement shall be deemed to be a "netting contract" as defined in Section 4402.
(b) The payment obligations and the payment entitlements of the parties
hereto pursuant to this Agreement and any Transaction hereunder shall be netted
as follows. In the event that either party (the "Defaulting Party") shall fail
to honor any payment obligation under this Agreement or any Transaction
hereunder, the other party (the "Nondefaulting Party") shall be entitled to
reduce the amount of any payment to be made by the Nondefaulting Party to the
Defaulting Party by the amount of the payment obligation that the Defaulting
Party failed to honor.
Section 30. Confidentiality
Buyer and each Seller hereby acknowledge and agree that all information
provided by one party to any other regarding the terms set forth in any of the
Facility Documents or the Transactions contemplated thereby (the "Confidential
Terms") shall be kept confidential and shall not be divulged to any party
without the prior written consent of such other party except to the extent that
(i) it is necessary to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies or regulatory bodies or in order to
comply with any applicable federal or state laws, (ii) any of the Confidential
Terms are in the public domain other than due to a breach of this covenant, or
(iii) in the event of an Event of Default Buyer determines such information to
be necessary or desirable to disclose in connection with the marketing and sales
of the Purchased Mortgage Loans or otherwise to enforce or exercise Buyer's
rights hereunder. Notwithstanding the foregoing or anything to the contrary
contained herein or in any other Facility Document, the parties hereto may
disclose to any and all Persons, without limitation of any kind, the federal,
state and local tax treatment of the Transactions, any fact relevant to
understanding the federal, state and local tax treatment of the Transactions,
and all materials of any kind (including opinions or other tax analyses)
relating to such federal, state and local tax treatment and that may be relevant
to understanding such tax treatment; provided that Sellers may not disclose the
name of or identifying information with respect to Buyer or any pricing terms
(including, without limitation, the
39
Pricing Rate, Purchase Price Percentage and Purchase Price) or other nonpublic
business or financial information that is unrelated to the federal, state and
local tax treatment of the Transactions and is not relevant to understanding the
federal, state and local tax treatment of the Transactions, without the prior
written consent of Buyer. The provisions set forth in this Section 30 shall
survive the termination of this Agreement.
Section 31. Intent
(a) The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of the United
States Code, as amended (except insofar as the type of Mortgage Loans subject to
such Transaction or the term of such Transaction would render such definition
inapplicable), and a "securities contract" as that term is defined in Section
741 of Title 11 of the United States Code, as amended (except insofar as the
type of assets subject to such Transaction would render such definition
inapplicable).
(b) It is understood that either party's right to liquidate Mortgage Loans
delivered to it in connection with Transactions hereunder or to exercise any
other remedies pursuant to Section 14 hereof is a contractual right to liquidate
such Transaction as described in Sections 555 and 559 of Title 11 of the United
States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an
"insured depository institution," as such term is defined in the Federal Deposit
Insurance Act, as amended ("FDIA"), then each Transaction hereunder is a
"qualified financial contract," as that term is defined in FDIA and any rules,
orders or policy statements thereunder (except insofar as the type of assets
subject to such Transaction would render such definition inapplicable).
(d) It is understood that this Agreement constitutes a "netting contract"
as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment entitlement and
payment obligation under any Transaction hereunder shall constitute a "covered
contractual payment entitlement" or "covered contractual payment obligation",
respectively, as defined in and subject to FDICIA (except insofar as one or both
of the parties is not a "financial institution" as that term is defined in
FDICIA).
(e) This Agreement is intended to be a "repurchase agreement" and a
"securities contract," within the meaning of Section 555 and Section 559 under
the Bankruptcy Code.
Section 32. Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a broker or
dealer registered with the Securities and Exchange Commission ("SEC") under
Section 15 of the Securities Exchange Act of 1934 ("1934 Act"), the Securities
Investor Protection Corporation has taken the position that the provisions of
the Securities Investor Protection Act of 1970 ("SIPA") do not protect the other
party with respect to any Transaction hereunder;
(b) in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer registered with
the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to
the other party with respect to any Transaction hereunder; and
40
(c) in the case of Transactions in which one of the parties is a financial
institution, funds held by the financial institution pursuant to a Transaction
hereunder are not a deposit and therefore are not insured by the Federal Deposit
Insurance Corporation or the National Credit Union Share Insurance Fund, as
applicable.
Section 33. Intentionally Omitted
Section 34. Acknowledgement of Anti-Predatory Lending Policies
Sellers acknowledge that they have been informed that Buyer has in place
internal policies and procedures that expressly prohibit its purchase of any
High Cost Mortgage Loan.
Section 35. Miscellaneous
(a) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
(b) Captions. The captions and headings appearing herein are for included
solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
(c) Acknowledgment. Each Seller hereby acknowledges that:
(i) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Facility Documents;
(ii) Buyer has no fiduciary relationship to either Seller; and
(iii) no joint venture exists between Buyer and either Seller.
(d) Documents Mutually Drafted. Each Seller and Buyer agree that this
Agreement each other Facility Document prepared in connection with the
Transactions set forth herein have been mutually drafted and negotiated by each
party, and consequently such documents shall not be construed against either
party as the drafter thereof.
Section 36. Joint and Several Liability.
Each Seller hereby acknowledges and agrees that such Seller shall be
jointly and severally liable to Buyer for all representations, warranties,
covenants, obligations and indemnities of Sellers hereunder.
Section 37. General Interpretive Principles
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
41
(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) a reference to a Subsection without further reference to a Section is
a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular provision;
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration; and
(g) all times specified herein or in any other Facility Document (unless
expressly specified otherwise) are local times in New York, New York unless
otherwise stated.
[THIS SPACE INTENTIONALLY LEFT BLANK]
42
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
set forth above.
SELLERS:
AMERICAN HOME MORTGAGE ACCEPTANCE, INC., Address for Notices to Sellers:
a Maryland corporation
American Home Mortgage
Acceptance, Inc.
American Home Mortgage Corp.
By: /s/ Stephen A. Hozie 538 Broadhollow Road
--------------------- Melville, New York 11747
Name: Stephen A. Hozie Attention: Alan B. Horn
Title: Executive Vice President and Chief Telecopier No.: 800-209-7276
Financial Officer Telephone No.: 516-396-7703
AMERICAN HOME MORTGAGE CORP.,
a New York corporation
By: /s/ Stephen A. Hozie
---------------------
Name: Stephen A. Hozie
Title: Executive Vice President and Chief
Financial Officer
Acknowledged and Agreed:
GUARANTOR:
AMERICAN HOME MORTGAGE INVESTMENT CORP.,
a Maryland corporation
By: /s/ Stephen A. Hozie
----------------------
Name: Stephen A. Hozie
Title: Executive Vice President and Chief
Financial Officer
BUYER: Address for Notices to Buyer:
GOLDMAN SACHS MORTGAGE COMPANY, Goldman Sachs Mortgage Company
a New York limited partnership 85 Broad Street
New York, New York 10004
By: Goldman Sachs Real Estate Funding Corp., Attention: Anthony Preisano
a New York corporation, as general Telecopier No.: 212-428-9097
partner Telephone No.: 212-855-0393
By: /s/ Howard Altarescu
---------------------
Name: Howard Altarescu With a copy to:
Title: Authorized Signatory
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019
Attention: Frederick B. Utley,
III, Esq.
Telecopier No.: 212-878-8375
Telephone No.: 212-878-8356
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
Each Seller represents and warrants to Buyer, with respect to each
Mortgage Loan, that as of the Purchase Date for the purchase of any Purchased
Mortgage Loans by Buyer from Sellers and as of the date of this Agreement and
any Transaction hereunder and at all times while the Facility Documents and any
Transaction hereunder is in full force and effect. For purposes of this Schedule
1 and the representations and warranties set forth herein, a breach of a
representation or warranty shall be deemed to have been cured with respect to a
Mortgage Loan if and when Sellers has taken or caused to be taken action such
that the event, circumstance or condition that gave rise to such breach no
longer adversely affects such Mortgage Loan. With respect to those
representations and warranties which are made to the best of each Seller's
knowledge, if it is discovered by such Seller or Buyer that the substance of
such representation and warranty is inaccurate, notwithstanding such Seller's
lack of knowledge with respect to the substance of such representation and
warranty, such inaccuracy shall be deemed a breach of the applicable
representation and warranty.
(a) Mortgage Loans as Described. The information set forth in the Mortgage
Loan Schedule is complete, true and correct;
(b) Payments Current. No payment required under the Mortgage Loan is 30
days or more delinquent nor has any payment under the Mortgage Loan been 30 days
or more delinquent at any time since the origination of the Mortgage Loan;
(c) No Outstanding Charges. There are no defaults in complying with the
terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. No
Seller has advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or indirectly,
for the payment of any amount required under the Mortgage Loan, except for
interest accruing from the date of the Mortgage Note or date of disbursement of
the Mortgage Loan proceeds, whichever is earlier, to the day which precedes by
one month the Due Date of the first installment of principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and Mortgage
have not been impaired, waived, altered or modified in any respect, from the
date of origination except by a written instrument which has been recorded, if
necessary to protect the interests of Buyer, and which has been delivered to
Custodian or to such other Person as Buyer shall designate in writing, and the
terms of which are reflected in the Mortgage Loan Schedule. The substance of any
such waiver, alteration or modification has been approved by the issuer of any
related PMI Policy and the title insurer, if any, to the extent required by the
policy, and its terms are reflected on the Mortgage Loan Schedule, if
applicable. No Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement, approved by the issuer of any related
PMI Policy and the issuer of the title insurer, to the extent required by the
policy, and which assumption agreement is part of the Mortgage Loan File
delivered to Custodian or to such other Person as Buyer shall designate in
writing and the terms of which are reflected in the Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either
Exh. H-1
the Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject
to any right of rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto, and no Mortgagor
was a debtor in any state or federal bankruptcy or insolvency proceeding at, or
subsequent to, the time the Mortgage Loan was originated;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all buildings
or other improvements upon the Mortgaged Property are insured by a generally
acceptable insurer against loss by fire, hazards of extended coverage and such
other hazards as are provided for in the Fannie Mae Guides or by Freddie Mac. If
required by the National Flood Insurance Act of 1968, as amended, each Mortgage
Loan is covered by a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration as in effect which
policy conforms to Fannie Mae and Freddie Mac. All individual insurance policies
contain a standard mortgagee clause naming the applicable Seller and its
successors and assigns as mortgagee, and all premiums thereon have been paid and
such policies may not be reduced, terminated or cancelled without 30 days' prior
written notice to the mortgagee. The Mortgage obligates the Mortgagor thereunder
to maintain the hazard insurance policy at the Mortgagor's cost and expense, and
on the Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at such Mortgagor's cost and expense, and to
seek reimbursement therefor from the Mortgagor. Where required by state law or
regulation, the Mortgagor has been given an opportunity to choose the carrier of
the required hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering a condominium, or any hazard
insurance policy covering the common facilities of a planned unit development.
The hazard insurance policy is the valid and binding obligation of the insurer,
is in full force and effect, and will be in full force and effect and inure to
the benefit of Buyer upon the consummation of the transactions contemplated by
this Agreement. No Seller has engaged in, and has no knowledge of the
Mortgagor's or any servicer's having engaged in, any act or omission which would
impair the coverage of any such policy, the benefits of the endorsement provided
for herein, or the validity and binding effect of such policy, including,
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other person or entity, and no such unlawful
items have been received, retained or realized by any Seller;
(g) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity and disclosure laws or unfair and deceptive practices
laws applicable to the Mortgage Loan have been complied with, the consummation
of the transactions contemplated hereby will not involve the violation of any
such laws or regulations, and Sellers shall maintain in its possession,
available for Buyer's inspection, and shall deliver to Buyer upon demand,
evidence of compliance with all such requirements;
(h) 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 relevant Seller has not waived
the performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has
Seller waived any default resulting from any action or inaction by the
Mortgagor;
(i) Location and Type of Mortgaged Property. The Mortgaged Property is a
fee simple property located in the state identified in the Mortgage Loan
Schedule except that with respect to real property located in jurisdictions in
which the use of leasehold estates for residential properties is a
widely-accepted practice, the Mortgaged Property may be a leasehold estate and
consists of a single
Exh. H-2
parcel of real property with a detached single family residence erected thereon,
or a two- to four-family dwelling, or an individual residential condominium unit
in a low-rise condominium project, or an individual unit in a planned unit
development and that no residence or dwelling is (i) a mobile home or (ii) a
manufactured 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 Fannie Mae Selling Guide and shall conform with the
Underwriting Guidelines. The Mortgage Property is not raw land;
(j) Valid First and Second Lien. Each Mortgage is a valid and subsisting
first lien, with respect to First Lien Mortgage Loans, or second lien, with
respect to Second Lien Mortgage Loans, of record on a single parcel of real
estate constituting the Mortgaged Property, including all buildings and
improvements 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, subject in all cases to the exceptions to title set forth in the title
insurance policy with respect to the related Mortgage Loan, which exceptions are
generally acceptable to prudent mortgage lending companies, and such other
exceptions to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the benefits
of the security intended to be provided by such Mortgage. In no event shall any
Mortgage Loan be in a lien position more junior than a second lien. The lien of
the Mortgage is subject only to:
(i) the lien of current real property taxes and assessments not yet
due and payable;
(ii) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of recording
acceptable to prudent mortgage lending institutions generally and specifically
referred to in the lender's title insurance policy delivered to the originator
of the Mortgage Loan and (a) specifically referred to or otherwise considered in
the appraisal made for the originator of the Mortgage Loan or (b) which do not
adversely affect the Appraised Value of the Mortgaged Property set forth in such
appraisal;
(iii) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security intended to
be provided by the Mortgage or the use, enjoyment, value or marketability of the
related Mortgaged Property; and
(iv) with respect to Second Lien Mortgage Loans, the lien of the
first mortgage on the Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting, enforceable and perfected (A) first lien and first priority security
interest with respect to each First Lien Mortgage Loan, or (B) second lien and
second priority security interest with respect to each Second Lien Mortgage
Loan, in either case, on the property described therein and Sellers have full
right to sell and assign the same to Buyer. The Mortgaged Property was not, as
of the date of origination of the Mortgage Loan, subject to a mortgage, deed of
trust, deed to secure debt or other security instrument creating a lien
subordinate to the lien of the Mortgage;
(k) Validity of Mortgage Documents. The Mortgage Note and the Mortgage and
any other agreement executed and delivered by a Mortgagor in connection with a
Mortgage Loan are genuine, and each is the legal, valid and binding obligation
of the maker thereof enforceable in accordance with its terms. All parties to
the Mortgage Note, the Mortgage and any other such related agreement had legal
capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage
Note, the Mortgage and any such agreement, and the Mortgage Note, the Mortgage
and any other such related agreement have been duly and properly executed by
other such related parties. The documents, instruments and
Exh.H-3
agreements submitted for loan underwriting were not falsified and contain no
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the information and statements therein
not misleading. No fraud, error, omission, misrepresentation, negligence or
similar occurrence with respect to a Mortgage Loan has taken place on the part
of any Person, including without limitation, the Mortgagor, any appraiser, any
builder or developer, or any other party involved in the origination or
servicing of the Mortgage Loan. The relevant Seller has reviewed all of the
documents constituting the Servicing File and has made such inquiries as it
deems necessary to make and confirm the accuracy of the representations set
forth herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed and
the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder, and any and all requirements as to
completion of any on-site or off-site improvement and as to disbursements of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. The relevant Seller is the sole owner of record and holder
of the Mortgage Loan and the indebtedness evidenced by each Mortgage Note and
upon the sale of the Mortgage Loans to Buyer, such Seller will retain the
Mortgage Files or any part thereof with respect thereto not delivered to
Custodian, Buyer or Buyer's designee, in trust only for the purpose of servicing
and supervising the servicing of each Mortgage Loan. The Mortgage Loan is not
assigned or pledged, and Sellers have good, indefeasible and marketable title
thereto, and has full right to transfer and sell the Mortgage Loan to Buyer free
and clear of any encumbrance, equity, participation interest, lien, pledge,
charge, claim or security interest, and has full right and authority subject to
no interest or participation of, or agreement with, any other party, to sell and
assign each Mortgage Loan pursuant to this Agreement and following the sale of
each Mortgage Loan, Buyer will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. The relevant Seller intends to relinquish all rights to
possess, control and monitor the Mortgage Loan;
(n) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i) organized
under the laws of such state, or (ii) qualified to do business in such state, or
(iii) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (3) not doing business in such
state;
(o) CLTV, LTV, PMI Policy. No Mortgage Loan that is a Second Lien Mortgage
Loan has a CLTV in excess of 100%. No Mortgage Loan has an LTV greater than
100%. The LTV of the Mortgage Loan either is not more than 80% or the excess
over 75% of the Appraised Value is and will be insured as to payment defaults by
a PMI Policy until the LTV of such Mortgage Loan is reduced to 80%. 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. No
action, inaction, or event has occurred and no state of facts exists that has,
or will result in the exclusion from, denial of, or defense to coverage. Any
Mortgage 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. The Mortgage Interest Rate for the Mortgage Loan as set forth on the
Mortgage Loan Schedule is net of any such insurance premium;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA lender's
title insurance policy, or with respect to any Mortgage Loan for which the
related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or other generally acceptable form of policy or insurance
acceptable to Fannie Mae or Freddie Mac and each such title insurance policy is
issued by a
Exh. H-4
title insurer acceptable to Fannie Mae or Freddie Mac and qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring
the applicable Seller, its successors and assigns, as to the first priority lien
(with respect to First Lien Mortgage Loans) or second priority lien (with
respect to Second Lien Mortgage Loans) of the Mortgage in the original principal
amount of the Mortgage Loan, subject only to the exceptions contained in clauses
(1), (2), (3) and (4) of paragraph (j) of this Schedule 1, and in the case of
Adjustable Rate Mortgage Loans, against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of the Mortgage
providing for adjustment to the Mortgage Interest Rate and Monthly Payment.
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 relevant Seller, its successor and assigns,
are the sole insureds of such lender's title insurance policy, and such lender's
title insurance policy is valid and remains 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 of the related Mortgage, including any Seller, has
done, by act or omission, anything which would impair the coverage of such
lender's title insurance policy, including without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind has
been or will be received, retained or realized by any attorney, firm or other
person or entity, and no such unlawful items have been received, retained or
realized by any Seller;
(q) No Defaults. Other than payments due but not yet 30 days or more
delinquent, there is no default, breach, violation or event which would permit
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event which
would permit acceleration, and Sellers nor any of their respective Affiliates
nor any of their respective predecessors, have waived any default, breach,
violation or event which would permit acceleration. With respect to each Second
Lien Mortgage Loan, (i) the prior mortgage is in full force and effect, (ii)
there is no default, breach, violation or event of acceleration existing under
such prior mortgage or the related mortgage note, (iii) no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration
thereunder, and either (A) the prior mortgage contains a provision which allows
or (B) applicable law requires, the mortgagee under the Second Lien Mortgage
Loan to receive notice of, and affords such mortgagee an opportunity to cure any
default by payment in full or otherwise under the prior mortgage;
(r) 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 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;
(s) Location of Improvements; No Encroachments. All improvements which
were considered in determining the Appraised Value of the Mortgaged Property lay
wholly within the boundaries and building restriction lines of the Mortgaged
Property, and no improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by a
mortgagee approved by the Secretary of Housing and Urban Development pursuant to
Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union,
Exh. H-5
insurance company or other similar institution which is supervised and examined
by a federal or state authority. The documents, instruments and agreements
submitted for loan underwriting were not falsified and contain no untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the information and statements therein not
misleading. No Mortgage Loan contains terms or provisions which would result in
negative amortization. Principal payments on the Mortgage Loan commenced no more
than sixty days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate as well as the Lifetime Rate Cap and the Periodic Cap
are as set forth on the Mortgage Loan Schedule. The Mortgage Note is payable in
equal monthly installments of principal and interest, which installments of
interest, with respect to Adjustable Rate Mortgage Loans, are subject to change
due to the adjustments to the Mortgage Interest Rate on each Interest Rate
Adjustment Date, with interest calculated and payable in arrears, sufficient to
amortize the Mortgage Loan fully by the stated maturity date, over an original
term of not more than thirty years from commencement of amortization. Unless
otherwise specified, the Mortgage Loan is payable on the first day of each
month. There are no Convertible Mortgage Loans which contain a provision
allowing the Mortgagor to convert the Mortgage Note from an adjustable interest
rate Mortgage Note to a fixed interest rate Mortgage Note;
(u) Customary Provisions. The Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the benefits of
the security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by judicial
foreclosure. Upon default by a Mortgagor on a Mortgage Loan and foreclosure on,
or trustee's sale of, the Mortgaged Property pursuant to the proper procedures,
the holder of the Mortgage Loan will be able to deliver good and merchantable
title to the Mortgaged Property. There is no homestead or other exemption
available to a Mortgagor which would interfere with the right to sell the
Mortgaged Property at a trustee's sale or the right to foreclose the Mortgage,
subject to applicable federal and state laws and judicial precedent with respect
to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The Mortgage Loan
was underwritten in accordance with the Underwriting Guidelines (a copy of which
is attached hereto as Exhibit D) The Mortgage Note and Mortgage are on forms
acceptable to Freddie Mac or Fannie Mae and Sellers have not made any
representations to a Mortgagor that are inconsistent with the mortgage
instruments used;
(w) Occupancy of the Mortgaged Property. The Mortgaged Property is
lawfully occupied under applicable law. All inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities;
(x) No Additional Collateral. The Mortgage Note is not and has not been
secured by any collateral except the lien of the corresponding Mortgage and the
security interest of any applicable security agreement or chattel mortgage
referred to in clause (j) above;
(y) 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 Buyer to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) (aa) Delivery of Mortgage Documents. The Mortgage Note, the Mortgage,
the Assignment of Mortgage and any other documents required to be delivered
under the Custodial
Exh. H-6
Agreement for each Mortgage Loan have been delivered to Custodian. The relevant
Seller is in possession of a complete, true and accurate Mortgage File in
compliance with Exhibit A hereto, except for such documents the originals of
which have been delivered to Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged Property is
a condominium unit or a planned unit development (other than a de minimis
planned unit development) such condominium or planned unit development project
is (i) acceptable to Fannie Mae or Freddie Mac or (ii) located in a condominium
or planned unit development project which has received project approval from
Fannie Mae or Freddie Mac. The representations and warranties required by Fannie
Mae with respect to such condominium or planned unit development have been
satisfied and remain true and correct;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage with respect
to each Mortgage Loan is in recordable form and is acceptable for recording
under the laws of the jurisdiction in which the Mortgaged Property is located.
The transfer, assignment and conveyance of the Mortgage Notes and the Mortgages
by each Seller are not subject to the bulk transfer, bulk sale or similar
statutory provisions in effect in any applicable jurisdiction (including,
without limitation, Article 6 of the Uniform Commercial Code);
(dd) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, the
Mortgage contains an enforceable provision for the acceleration of the payment
of the unpaid principal balance of the Mortgage Loan in the event that the
Mortgaged Property is sold or transferred without the prior written consent of
the mortgagee thereunder, and to the best of each Seller's knowledge, such
provision is enforceable;
(ee) Assumability. With respect to each Adjustable Rate Mortgage Loan, the
Mortgage Loan Documents provide that after the related first Interest Rate
Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(ff) No Buydown Provisions; No Graduated Payments or Contingent Interests.
The Mortgage Loan does not contain provisions pursuant to which Monthly Payments
are paid or partially paid with funds deposited in any separate account
established by Sellers, the Mortgagor, or anyone on behalf of the Mortgagor, or
paid by any source other than the Mortgagor nor does it contain any other
similar provisions which may constitute a "buydown" provision. The Mortgage Loan
is not a graduated payment mortgage loan and the Mortgage Loan does not have a
shared appreciation or other contingent interest feature;
(gg) Consolidation of Future Advances. Any future advances made to the
Mortgagor prior to the Purchase Date have been consolidated with the outstanding
principal amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The lien
of the Mortgage securing the consolidated principal amount is expressly insured
as having first or second, as applicable, 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 Fannie Mae and Freddie Mac.
The consolidated principal amount does not exceed the original principal amount
of the Mortgage Loan;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings. There is
no proceeding pending or threatened for the total or partial condemnation of the
Mortgaged Property. The Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty so as
to affect adversely the value of the Mortgaged Property as security for the
Exh. H-7
Mortgage Loan or the use for which the premises were intended and each Mortgaged
Property is in good repair;
(ii) Collection Practices; Escrow Deposits; Interest Rate Adjustments. The
origination, servicing and collection practices used by each Seller with respect
to the Mortgage Loan have been in all respects in compliance with Accepted
Servicing Practices, applicable laws and regulations, and have been in all
respects legal and proper and prudent in the mortgage origination and servicing
business. With respect to escrow deposits and Escrow Payments, all such payments
are in the possession of, or under the control of, Sellers and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been collected in
full compliance with state and federal law and the provisions of the related
Mortgage Note and Mortgage. An escrow of funds is not prohibited by applicable
law and has been established in an amount sufficient to pay for every item that
remains unpaid and has been assessed but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due Sellers have been
capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest Rate
adjustments have been made in strict compliance with state and federal law and
the terms of the related Mortgage and Mortgage Note on the related Interest Rate
Adjustment Date. If, pursuant to the terms of the Mortgage Note, another index
was selected for determining the Mortgage Interest Rate, the same index was used
with respect to each Mortgage Note which required a new index to be selected,
and such selection did not conflict with the terms of the related Mortgage Note.
The relevant Seller executed and delivered any and all notices required under
applicable law and the terms of the related Mortgage Note and Mortgage regarding
the Mortgage Interest Rate and the Monthly Payment adjustments. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited;
(jj) Intentionally Omitted;
(kk) No Violation of Environmental Laws. 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 the Mortgaged Property in which
compliance with any environmental law, rule or regulation is an issue; there is
no violation of any environmental law, rule or regulation with respect to the
Mortgage Property; and nothing further remains to be done to satisfy in full all
requirements of each such law, rule or regulation constituting a prerequisite to
use and enjoyment of said property;
(ll) Servicemembers Civil Relief Act of 2003. The Mortgagor has not
notified Sellers, and such Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Servicemembers Civil Relief Act of 2003;
(mm) Appraisal. The Mortgage File contains an appraisal of the related
Mortgaged Property signed prior to the approval of the Mortgage Loan application
by a qualified appraiser, duly appointed by Sellers, who had no interest, direct
or indirect in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or disapproval
of the Mortgage Loan, and the appraisal and appraiser both satisfy the
requirements of Fannie Mae or Freddie Mac and Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated;
(nn) Disclosure Materials. The Mortgagor has executed a statement to the
effect that the Mortgagor has received all disclosure materials required by, and
Sellers have complied with, all applicable law with respect to the making of the
Mortgage Loans. Sellers shall maintain such statement in the Mortgage File;
Exh. H-8
(oo) Construction or Rehabilitation of Mortgaged Property. No Mortgage
Loan was made in connection with the construction or rehabilitation of a
Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property;
(pp) Value of Mortgaged Property. No Seller has knowledge of any
circumstances existing that could reasonably be expected to adversely affect the
value or the marketability of any Mortgaged Property or Mortgage Loan or to
cause the Mortgage Loans to prepay during any period materially faster or slower
than similar mortgage loans held by Sellers generally secured by properties in
the same geographic area as the related Mortgaged Property;
(qq) No Defense to Insurance Coverage. No Seller has caused or will cause
to be performed any and all acts required to preserve the rights and remedies of
Buyer in any insurance policies applicable to the Mortgage Loans including,
without limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of coinsured, joint loss payee
and mortgagee rights in favor of Buyer. No action has been taken or failed to be
taken, no event has occurred and no state of facts exists or has existed on or
prior to the Purchase Date (whether or not known to any Seller on or prior to
such date) which has resulted or will result in an exclusion from, denial of, or
defense to coverage under any applicable, special hazard insurance policy, PMI
Policy or bankruptcy bond (including, without limitation, any exclusions,
denials or defenses which would limit or reduce the availability of the timely
payment of the full amount of the loss otherwise due thereunder to the insured)
whether arising out of actions, representations, errors, omissions, negligence,
or fraud of Sellers, the related Mortgagor or any party involved in the
application for such coverage, including the appraisal, plans and specifications
and other exhibits or documents submitted therewith to the insurer under such
insurance policy, or for any other reason under such coverage, but not including
the failure of such insurer to pay by reason of such insurer's breach of such
insurance policy or such insurer's financial inability to pay;
(rr) Escrow Analysis. With respect to each Mortgage, Sellers have within
the last twelve months (unless such Mortgage was originated within such twelve
month period) analyzed the required Escrow Payments for each Mortgage and
adjusted the amount of such payments so that, assuming all required payments are
timely made, any deficiency will be eliminated on or before the first
anniversary of such analysis, or any overage will be refunded to the Mortgagor,
in accordance with RESPA and any other applicable law;
(ss) Prior Servicing. Each Mortgage Loan has been serviced in all material
respects in strict compliance with Accepted Servicing Practices;
(tt) Credit Information. As to each consumer report (as defined in the
Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by Sellers to Buyer, that such Seller has full right and authority and
is not precluded by law or contract from furnishing such information to Buyer
and Buyer is not precluded from furnishing the same to any subsequent or
prospective purchaser of such Mortgage. The relevant Seller shall hold Buyer
harmless from any and all damages, losses, costs and expenses (including
attorney's fees) arising from disclosure of credit information in connection
with Buyer's secondary marketing operations and the purchase and sale of
mortgages or Servicing Rights thereto;
(uu) Leaseholds. If the Mortgage Loan is secured by a long-term
residential lease, (1) the lessor under the lease holds a fee simple interest in
the land; (2) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the assignment of the lease without the lessor's consent and
the acquisition by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure or provide the holder of the
Mortgage with substantially similar protections; (3) the terms of such lease do
not (a) allow the termination thereof upon the lessee's default without the
holder of the
Exh. H-9
Mortgage being entitled to receive written notice of, and opportunity to cure,
such default, (b) allow the termination of the lease in the event of damage or
destruction as long as the Mortgage is in existence, (c) prohibit the holder of
the Mortgage from being insured (or receiving proceeds of insurance) under the
hazard insurance policy or policies relating to the Mortgaged Property or (d)
permit any increase in rent other than pre-established increases set forth in
the lease; (4) the original term of such lease is not less than 15 years; (5)
the term of such lease does not terminate earlier than five years after the
maturity date of the Mortgage Note; and (6) the Mortgaged Property is located in
a jurisdiction in which the use of leasehold estates in transferring ownership
in residential properties is a widely accepted practice;
(vv) Prepayment Penalty. Each Mortgage Loan is subject to a Prepayment
Penalty as provided in the related Mortgage Note unless otherwise as set forth
on the Mortgage Loan Schedule hereof, and no Mortgage Loan has a Prepayment
Penalty period in excess of five years;
(ww) Predatory Lending Regulations; High Cost Loans; No Inclusion of
Insurance. No Mortgage Loan (i) is subject to Section 226.32 of Regulation Z or
any similar state law (relating to high interest rate credit/lending
transactions), (ii) includes any single premium credit life or accident and
health insurance or disability insurance or (iii) is a High Cost Mortgage Loan;
(xx) Georgia Fair Lending Act. No Mortgage Loan that was originated on or
after October 1, 2002 and before March 7, 2003 which is secured by property
located in the State of Georgia. There is no Mortgage Loan that was originated
on or after March 7, 2003 that is a "high cost home loan" as defined under the
Georgia Fair Lending Act;
(yy) Single-premium Credit Life Insurance Policy. In connection with the
origination of any Mortgage Loan, no proceeds from any Mortgage Loan were used
to finance a single-premium credit life insurance policy;
(zz) Tax Service Contract; Flood Certification Contract. Each Mortgage
Loan is covered by a paid in full, life of loan, tax service contract and a paid
in full, life of loan, flood certification contract and each of these contracts
is assignable to Buyer;
(aaa) Qualified Mortgage. The Mortgage Loan is a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code;
(bbb) Regarding the Mortgagor. The Mortgagor is one or more natural
persons;
(ccc) Origination. No predatory or deceptive lending practices, including,
without limitation, the extension of credit without regard to the ability of the
Mortgagor to repay and the extension of credit which has no apparent benefit to
the Mortgagor, were employed in the origination of the Mortgage Loan;
(ddd) Recordation. Each original Mortgage was recorded and, except for
those Mortgage Loans subject to the MERS identification system, all subsequent
assignments of the original Mortgage (other than the assignment to Buyer) have
been recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of Sellers, or is in
the process of being recorded; and
(eee) Compliance with Anti-Money Laundering Laws. Each 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"); each 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 Mortgage
Loan for purposes of the
Exh. H-10
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.
Exh. H-11