EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
by and among
AH MORTGAGE ACQUISITION CO., INC.,
AMERICAN HOME MORTGAGE INVESTMENT CORP.,
AMERICAN HOME MORTGAGE CORP.
and
AMERICAN HOME MORTGAGE SERVICING INC.
dated as of
September 25, 2007
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION 1
Section 1.1 Definitions...............................................................1
Section 1.2 Interpretation...........................................................16
ARTICLE II PURCHASE AND SALE OF ASSETS 17
Section 2.1 Purchase and Sale of Assets..............................................17
Section 2.2 Excluded Assets..........................................................18
Section 2.3 Post-Final Closing Date Asset Deliveries.................................20
Section 2.4 Non-Assignment of Assets.................................................20
Section 2.5 Assumption of Certain Liabilities........................................21
Section 2.6 Retained Liabilities.....................................................21
Section 2.7 Initial Closing; Final Closing...........................................21
Section 2.8 Ancillary Agreements.....................................................22
Section 2.9 Deliveries by Purchaser..................................................22
Section 2.10 Deliveries by Sellers....................................................23
Section 2.11 "As Is Where Is" Transaction.............................................24
ARTICLE III TRANSFERRED EMPLOYEES 24
Section 3.1 Transferred Employees....................................................24
Section 3.2 Employee Benefit Plans...................................................25
Section 3.3 COBRA....................................................................25
Section 3.4 WARN.....................................................................25
Section 3.5 Cooperation..............................................................25
Section 3.6 No Third Party Rights....................................................25
ARTICLE IV PURCHASE PRICE; ADJUSTMENT; ALLOCATION 25
Section 4.1 Purchase Price...........................................................25
Section 4.2 Allocation of the Purchase Price.........................................27
Section 4.3 Deposit..................................................................28
Section 4.4 Dispute Escrow...........................................................28
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SELLERS 29
Section 5.1 Authorization; Validity of Agreement; Seller Action......................29
Section 5.2 Organization and Good Standing...........................................30
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Section 5.3 Governmental Consents and Approvals; No Violations.......................30
Section 5.4 Noncontravention.........................................................31
Section 5.5 Title to Assets and Properties; Liens....................................31
Section 5.6 Mortgage Servicing Portfolio; Servicing Agreements; Assumed
Contracts; Mortgage Loans................................................31
Section 5.7 Compliance with Laws.....................................................33
Section 5.8 Litigation; Proceedings..................................................33
Section 5.9 Sufficiency of Assets....................................................33
Section 5.10 Financial Statements.....................................................34
Section 5.11 Seller/Servicer Status...................................................34
Section 5.12 MERS Membership..........................................................34
Section 5.13 Status of Mortgage Loans.................................................35
Section 5.14 Brokers..................................................................35
ARTICLE VI COVENANTS 35
Section 6.1 Interim Operations of Sellers............................................35
Section 6.2 Operations Following the Initial Closing.................................37
Section 6.3 Access; Books and Records................................................40
Section 6.4 Cooperation; Efforts and Actions to Cause Closings.......................41
Section 6.5 Confidentiality..........................................................42
Section 6.6 Subsequent Actions.......................................................43
Section 6.7 Post-Final Closing Amounts Received and Paid.............................43
Section 6.8 Notices of Certain Events................................................43
Section 6.9 Interim Financial Information............................................44
Section 6.10 Procedures for Transfer of Servicing.....................................44
Section 6.11 Bankruptcy Actions.......................................................46
Section 6.12 Maintenance of Insurance.................................................47
Section 6.13 Laws.....................................................................47
Section 6.14 Financing Assistance and Protection of Purchased Assets..................47
Section 6.15 Excluded Contracts.......................................................49
Section 6.16 Assumption of Certain Assumed Contracts..................................49
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TABLE OF CONTENTS
(continued)
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Section 6.17 Provisions Regarding Advances............................................49
Section 6.18 FNMA.....................................................................50
Section 6.19 Option to Purchase Excluded Assets.......................................51
Section 6.20 Compensation Plan........................................................51
Section 6.21 Approved FNMA Servicer...................................................51
ARTICLE VII BANKRUPTCY COURT MATTERS 52
Section 7.1 Competing Transaction....................................................52
Section 7.2 Break-Up Fee.............................................................52
Section 7.3 Bankruptcy Court Filings.................................................52
ARTICLE VIII CONDITIONS 53
Section 8.1 Conditions to Obligations of Purchaser and Sellers On or Prior to
the Initial Closing Date.................................................53
Section 8.2 Conditions to Obligations of Sellers On or Prior to the Initial
Closing Date.............................................................53
Section 8.3 Conditions to Obligations of Purchaser On or Prior to the Initial
Closing Date.............................................................54
Section 8.4 Condition to Obligations of Purchaser On or Prior to the Final
Closing Date.............................................................55
ARTICLE IX TERMINATION 56
Section 9.1 Termination..............................................................56
Section 9.2 Procedure and Effect of Termination......................................57
ARTICLE X REPRESENTATIONS AND WARRANTIES OF PURCHASER 58
Section 10.1 Legal Power; Organization; Qualification of Purchaser....................58
Section 10.2 Binding Agreement........................................................58
Section 10.3 No Conflict or Default...................................................58
Section 10.4 Funding..................................................................59
Section 10.5 Brokers..................................................................59
Section 10.6 Independent Investigation................................................59
ARTICLE XI MISCELLANEOUS 59
Section 11.1 No Survival of Representations and Warranties............................59
Section 11.2 Transfer Taxes...........................................................59
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(continued)
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Section 11.3 Fees and Expenses; Allowed Administrative Expenses.......................60
Section 11.4 Amendment; Waiver........................................................60
Section 11.5 Publicity................................................................60
Section 11.6 Notices..................................................................61
Section 11.7 Counterparts.............................................................62
Section 11.8 Entire Agreement; No Third Party Beneficiaries...........................62
Section 11.9 Severability.............................................................63
Section 11.10 Governing Law............................................................63
Section 11.11 Venue and Retention of Jurisdiction......................................63
Section 11.12 No Punitive Damages......................................................64
Section 11.13 Assignment...............................................................64
Section 11.14 Fulfillment of Obligations...............................................64
Section 11.15 Specific Performance.....................................................64
Section 11.16 Waiver of Bulk Transfer Laws.............................................64
Section 11.17 Personal Liability.......................................................64
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement dated as of September 25, 2007, is entered
into by and among AH Mortgage Acquisition Co., Inc. ("Purchaser"), a Delaware
corporation, American Home Mortgage Investment Corp., a Maryland corporation, as
a debtor and debtor-in-possession ("Parent"), American Home Mortgage Corp., a
New York corporation, as a debtor and debtor-in-possession, and American Home
Mortgage Servicing Inc., a Maryland corporation, as a debtor and
debtor-in-possession (the "Company" and together with American Home Mortgage
Corp. and Parent, the "Sellers").
WHEREAS, Sellers own and/or are engaged in the Business (as hereinafter
defined).
WHEREAS, on August 6, 2007 (the "Petition Date"), the Filing
Subsidiaries (as hereinafter defined) filed voluntary petitions ("Petitions")
for relief (the "Bankruptcy Cases") under Chapter 11 of Title 11, U.S.C. ss.ss.
101, et seq., as amended (the "Bankruptcy Code"), in the United States
Bankruptcy Court for the District of Delaware (together with any court having
proper jurisdiction with respect to the Bankruptcy Cases, the "Bankruptcy
Court").
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, and as authorized under Sections 105, 363 and 365 of the Bankruptcy
Code, Sellers wish to sell to Purchaser, and Purchaser wishes to purchase from
Sellers, all of the Purchased Assets (as hereinafter defined), and Purchaser is
willing to assume all of the Assumed Liabilities (as hereinafter defined).
WHEREAS, Sellers, as debtors and debtors-in-possession, have continued
in the possession of their respective assets and in the management of the
Business pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. As used in this Agreement, in addition to the
terms defined elsewhere herein, the following terms have the meanings set forth
below when used herein with initial capital letters:
"Administrative Agent" means Bank of America, N.A. in its capacity as
the administrative agent under the Existing BOA Bank Facility.
"Administrative Agent Cash Proceeds" has the meaning set forth in
Section 2.2(a).
"Advances" means (i) with respect to each Servicing Agreement, including
any Disputed Servicing Agreement, the aggregate outstanding amount that as of
any date of determination has
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been advanced directly by Sellers from their own funds or funds borrowed by
Sellers from a third party (but not with funds borrowed from any custodial or
other accounts under such Servicing Agreement) in connection with servicing
Mortgage Loans in accordance with the terms of such Servicing Agreement,
including with respect to principal, interest, Taxes, insurance premiums and
other advances made pursuant to the applicable Servicing Agreement; and (ii)
with respect to the Servicing Rights Held for Sale and the Mortgage Loans set
forth on Schedule 6.10(f), the aggregate outstanding amount that as of any date
of determination has been advanced directly by Sellers from their own funds or
funds borrowed by Sellers from a third party (but not with funds borrowed from
any custodial or other accounts maintained in connection with performing the
Servicing Rights Held for Sale or servicing the Mortgage Loans set forth on
Schedule 6.10(f)) in connection with the Company's performing the Servicing
Rights Held for Sale or servicing of the Mortgage Loans set forth on Schedule
6.10(f), including with respect to principal, interest, Taxes, insurance
premiums and other advances.
"Advances Amount" means, as of the close of business on the Business Day
immediately prior to the Initial Closing Date (the "Advances Amount
Determination Time"), the amount of outstanding Advances which have been paid
out by Sellers and not yet collected from third parties.
"Advances Amount Determination Time" has the meaning set forth in the
definition of Advances Amount.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by or is under common control with
the Person specified. For purposes of this definition, the term "control" of a
Person means the possession, direct or indirect, of the power to (i) vote 50% or
more of the voting securities of such Person or (ii) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise, and the terms and phrases "controlling," "controlled by" and "under
common control with" have correlative meanings.
"Agreement" or "this Agreement" means this Asset Purchase Agreement,
together with the schedules and exhibits hereto.
"Allocation Schedule" has the meaning specified in Section 4.2 hereof.
"Ancillary Agreements" has the meaning specified in Section 2.8 hereof.
"Ancillary Income" means any and all income, revenue, fees, expenses,
charges or other moneys that Sellers are entitled to receive, collect or retain
as servicer, subservicer or master servicer pursuant to the Servicing Agreements
(other than Servicing Fees).
"Applicable Requirements" means, with respect to each Seller, all
applicable requirements of Law, including those relating to servicing, insuring
or filing of claims in connection with Mortgage Loans, and all contractual
obligations of Sellers.
"Arbitrating Accountants" has the meaning specified in Section 4.1(c)
hereof.
"Assigned Leases" means those Leases used in the operation of the
Business listed on Schedule 1.1(b).
"Assignment and Assumption Agreement" means the assignment and
assumption agreement to be executed by Sellers in favor of Purchaser in respect
of the Assumed Contracts and Assumed Liabilities, in form and substance
reasonably satisfactory to Sellers and Purchaser.
"Assignment and Assumption of Lease Agreements" means the assignment and
assumption of lease agreements to be executed by Sellers in favor of Purchaser
in respect of the Real Property Leases, in form and substance reasonably
satisfactory to Sellers and Purchaser.
"Assumed Contracts" has the meaning set forth in Section 2.1(b).
"Assumed Liabilities" means the (i) obligations of Sellers as servicer,
subservicer or master servicer arising under any Servicing Agreement (other than
Disputed Servicing Agreements unless specifically assumed by Purchaser
hereunder) including, specifically, the obligation to advance delinquent
scheduled principal and interest payments under any Servicing Agreements to the
extent such advance could not be borrowed from any custodial or other accounts
under such Servicing Agreement, after assignment thereof to Purchaser at the
Final Closing, (ii) obligations of Sellers under any Assigned Lease or Assumed
Contract (other than Servicing Agreements) after the assignment thereof to
Purchaser at the Final Closing, (iii) all Losses incurred by Sellers or their
Affiliates in the operation of the Business pursuant to Sections 6.1 and 6.2 or
otherwise arising as a result of, or in connection with, the continued ownership
by Sellers of the Purchased Assets and operation of the Business after the
Initial Closing Date, including, without limitation, any Claims and Liabilities
of the Company arising with respect to Business Employees whose employment is
terminated after the Initial Closing under WARN, COBRA or any other similar Law,
and (iv) the Liabilities of Sellers set forth on Schedule 1.1(c); provided,
however, with respect to clause (iii) no such Liability shall constitute an
Assumed Liability to the extent it relates to any period, or act or omission
occurring, prior to the Initial Closing (e.g., severance or retention accrued
prior to the Initial Closing but not payable until after the Initial Closing).
"Assumed Pre-Petition Contracts" has the meaning specified in Section
6.11(c) hereof.
"Assumed Rights and Claims" has the meaning specified in Section 2.1(j)
hereof.
"Auction" has the meaning specified in the Revised Sale Procedures
Order.
"Auction Date" has the meaning specified in the Revised Sale Procedures
Order.
"Bankruptcy Cases" has the meaning specified in the Recitals.
"Bankruptcy Code" has the meaning specified in the Recitals.
"Bankruptcy Court" has the meaning specified in the Recitals.
"Bankruptcy Exceptions" means any limitations, omissions or failures of
performance arising due to the fact that the Sellers are operating as debtors in
possession under the
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Bankruptcy Code, including but not limited to, (i) Sellers' inability to
maintain the services of their officers or other employees or the fact that a
substantial number of Sellers' employees have left their positions and continue
to leave their positions, (ii) Sellers' inability to maintain the continued
operation of any operating function at a standard consistent with past practice,
(iii) vendors and counterparties of Sellers failing to continue to perform their
obligations to Sellers, and (iv) ongoing litigation with respect to the Business
and the Purchased Assets.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure.
"Bills of Sale" means the bills of sale to be executed by Sellers in
favor of Purchaser in respect of the Purchased Assets, in form and substance
reasonably satisfactory to Sellers and Purchaser.
"Books and Records" means all books, ledgers, files, reports, plans,
records, manuals and other materials (in any form or medium) Related to the
Business or directly relating to the Purchased Assets, and the Assumed
Liabilities.
"Break-Up Fee" has the meaning specified in Section 7.2 hereof.
"Budget" means a budget prepared in substantially the same manner and
using substantially the same assumptions utilized in the preparation of the
budget annexed to the Cash Collateral Order (except to include Professional Fees
as such term is defined in the Sale Approval Order), which budget shall cover
the period following the Initial Closing Date and give effect to a 10% variance
(other than with respect to cash payments to the lenders provided therein, if
any); provided that Sellers and Purchaser shall in good faith attempt to agree
to a revised budget for the period following the Initial Closing Date through
the Final Closing Date and, in the event of such agreement, such revised budget
shall be deemed the "Budget" hereunder.
"Business" means the business (whether existing now or existing at or
before the Initial Closing) of providing servicing for Mortgage Loans, including
pursuant to the Servicing Agreements.
"Business Day" means a day other than Saturday, Sunday or any day on
which the Federal Reserve Bank of New York is closed.
"Business Employee" means each employee of Sellers whose sole
responsibility is to provide services Related to the Business and each other
employee of Sellers having significant responsibility Related to the Business
listed on the Business Employee List and any other such employee hired after the
date hereof not in violation of any provision hereof.
"Business Employee List" has the meaning specified in Section 3.1
hereof.
"Business Interim Financial Statements" has the meaning specified in
Section 5.10 hereof.
"Cash Collateral Order" means the Final Order (i) Authorizing Debtors'
Use of Cash Collateral and (ii) Granting Replacement Liens and Adequate
Protection to Certain Pre-Petition
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Secured Creditors, dated September 4, 2007, entered by the Bankruptcy Court in
the Bankruptcy Cases.
"Cash Deposit" has the meaning specified in Section 4.3 hereof.
"Charter Documents" means, with respect to any Person, the certificate
or articles of incorporation and by-laws, the certificate of limited
partnership, the limited partnership agreement, the partnership agreement or the
limited liability company operating agreement and certificate of formation or
articles of organization or such other organizational documents of such Person.
"Claims" means any right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured, known
or unknown; or any right to an equitable remedy, including for breach of
performance if such breach gives rise to a right of payment, whether or not such
right to an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
"COBRA" means the U.S. Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, or any similar State or Local Law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means Bank of America, N.A. in its capacity as the
collateral agent under the Existing BOA Bank Facility.
"Company" has the meaning set forth in the preamble.
"Competing Transaction" has the meaning specified in Section 7.1 hereof.
"Computer Equipment" means all equipment and devices (including data
processing hardware and related telecommunications equipment, media, and tools)
Related to the Business, including Sellers' rights under all related warranties,
including all items listed in Schedule 1.1(g).
"Confidential Information" has the meaning specified in Section 6.5(b)
hereof.
"Confidentiality Agreement" has the meaning specified in Section 9.2
hereof.
"Consent" means any consent, approval, license, waiver or authorization.
"Contracts" means all agreements, contracts, leases and subleases,
purchase orders, arrangements, commitments and licenses.
"Copyrights" has the meaning set forth in the definition of
"Intellectual Property."
"Cure Amount" means collectively the Initial Cure Amount, the Interim
Cure Amount and Purchaser's Cure Amount.
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"Cure Escrow Agreement" means an escrow agreement by and among
Purchaser, Sellers and an escrow agent reasonably agreeable to each of Purchaser
and Sellers to be entered into at the Initial Closing, in substantially the form
set forth in Exhibit A hereto.
"Defaulted Mortgage Loan" means a Mortgage Loan that is 60 days or more
delinquent in accordance with the OTS method of calculating delinquencies.
"Deposit Escrow Agent" means a bank or other financial institution
selected by Purchaser and reasonably acceptable to the Company.
"Deposit Escrow Agreement" means a deposit escrow agreement by and among
Purchaser, Sellers and the Deposit Escrow Agent, as escrow agent, in
substantially the form set forth in Exhibit B hereto.
"DIP Financing Agreement" means the Debtor-In-Possession Loan and
Security Agreement, dated August 6, 2007, among Parent, as debtor and
debtor-in-possession, certain Affiliates, as debtors and debtors-in-possession,
the lenders party thereto and WLR, as Administrative Agent, as such may be
amended from time to time.
"Disclosure Schedules" means the disclosure schedules delivered by
Sellers to Purchaser in connection with this Agreement.
"Dispute Amount" has the meaning set forth in Section 4.4.
"Dispute Escrow Agent" means the escrow agent party to the Dispute
Escrow Agreement.
"Dispute Escrow Agreement" means an escrow agreement by and among
Purchaser, Sellers and an escrow agent reasonably agreeable to each of Purchaser
and Sellers to be entered into at the Initial Closing, in substantially the form
set forth in Exhibit C hereto.
"Disputed Servicing Agreement" means a Servicing Agreement described in
and set forth on Schedule 1.1(k) .
"Enforceability Exceptions" has the meaning specified in Section 5.1
hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any trade or business, whether or not
incorporated, (i) under common control within the meaning of Section 4001(b)(1)
of ERISA with any Seller or (ii) which together with any Seller would be deemed
a "single employer" within the meaning of Section 414 of the Code.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning specified in Section 2.2 hereof.
"Excluded Contracts" has the meaning specified in Section 6.15 hereof.
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"Existing BOA Bank Facility" means the Second Amended and Restated
Credit Agreement, dated August 10, 2006, among Sellers, certain of their
Affiliates, Bank of America, N.A., as administrative agent, and certain other
parties, as amended.
"Expense Reimbursement" means a reimbursement to Purchaser not to exceed
$2.0 million of Purchaser's actual reasonable documented out-of-pocket expenses
incurred in connection with the transactions contemplated by this Agreement,
including professional fees.
"Fannie Mae Stipulation Order" means that certain Order Granting
Debtors' Motion Pursuant to Section 105(A) of the Bankruptcy Code and Bankruptcy
Rule 9019 for an Order Approving and Authorizing Compromise and Settlement
Agreement with Fannie Mae granted by the Bankruptcy Court on September 4, 2007,
as amended or supplemented.
"Filing Subsidiaries" means Parent and the Company and the Affiliates of
the Company set forth on Schedule 1.1(f).
"Final Closing" has the meaning specified in Section 2.7 hereof.
"Final Closing Date" has the meaning specified in Section 2.7 hereof.
"Final Order" means an order or judgment: (i) as to which the time to
appeal, petition for certiorari or move for review or rehearing has expired and
as to which no appeal, petition for certiorari or other proceeding for review or
rehearing has been filed or sought or (ii) if an appeal, writ of certiorari,
reargument or rehearing has been filed or sought, the order or judgment has been
affirmed by the highest court to which such order or judgment was appealed or
certiorari has been denied, or reargument or rehearing shall have been denied or
resulted in no modification of such order or judgment, and the time to take any
further appeal or to seek certiorari or further reargument or rehearing has
expired; provided, that the theoretical possibility that a motion under Rule 59
or Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under
the Bankruptcy Rules, may be filed with respect to such order or judgment shall
not prevent such order or judgment from being considered a Final Order.
"Financing" has the meaning specified in Section 6.14.
"Fixtures and Equipment" means all furniture, fixtures, furnishings,
vehicles, equipment, leasehold improvements, Computer Equipment, tools and other
tangible personal property Related to the Business, wherever located, including
any of the foregoing purchased subject to any conditional sales or title
retention agreement in favor of any other Person.
"FNMA" means the Federal National Mortgage Association and any successor
agency.
"FNMA Servicing Rights" has the meaning specified in Section 6.18
hereof.
"GAAP" means United States generally accepted accounting principles,
applied on a consistent basis.
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"Government Entity" means any foreign, federal, state or local court,
administrative body or other governmental or quasi-governmental entity with
competent jurisdiction, or any agency, instrumentality or authority thereof,
including the FNMA and the Federal Trade Commission.
"Government Requirements" has the meaning specified in Section 5.3
hereof.
"Governmental Authorizations" means all licenses, permits, certificates
and other authorizations and approvals Related to the Business or relating to
the Purchased Assets, the Assumed Liabilities or the Assumed Contracts and
issued by or obtained from a Government Entity.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvement Act of 1976,
as amended.
"Independent Accounting Firm" has the meaning specified in Section 4.2
hereof.
"Initial Closing" has the meaning specified in Section 2.7 hereof.
"Initial Closing Date" means the date upon which the Initial Closing
occurs.
"Initial Closing Date Mortgage Loan Schedule" has the meaning specified
in Section 5.6(a) hereof.
"Initial Closing Date Report" has the meaning specified in Section
4.1(b) hereof.
"Initial Closing Servicing Balance" means an amount equal to the unpaid
principal balance of the Mortgage Loans under the Servicing Agreements as of the
close of business on the day prior to the Initial Closing Date, after
application of all payments received on or prior to such date.
"Initial Cure Amount" means the maximum amount payable or that may be
payable by Sellers in order to cure all defaults on Assumed Contracts as of the
date the Sale Approval Order is entered by the Bankruptcy Court and effectuate
the assumption by Sellers of an Assumed Contract and the assignment to Purchaser
(or Purchaser's designee) pursuant to Section 365 of the Bankruptcy Code (a) as
provided in the Sale Approval Order or other Order of the Bankruptcy Court,
entered at or prior to the Sale Hearing or (b) pursuant to a written agreement
among the parties to the Assumed Contract (subject, in the case of Sellers, to
the prior written consent of the Administrative Agent and prior consultation
with the official committee of unsecured creditors appointed in the Bankruptcy
Cases) and Purchaser (or such designee) that is in effect prior to the date on
which the Sale Approval Order is entered by the Bankruptcy Court.
"Intellectual Property" means (i) trademarks, service marks, brand
names, certification marks, collective marks, d/b/a's, domain names, logos,
symbols, trade dress, assumed names, fictitious names, trade names and other
indicia of origin, together with the goodwill associated with any of the
foregoing, all applications and registrations for the foregoing, including all
renewals of same (collectively, "Trademarks"); (ii) inventions and discoveries,
whether patentable or not, and all patents, registrations, invention disclosures
and applications therefor, including divisions, continuations,
continuations-in-part and renewal applications, and including
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renewals, extensions and reissues (collectively, "Patents"); (iii) trade
secrets, confidential information and know-how, including processes, schematics,
business methods, formulae, drawings, prototypes, models, designs, customer
lists and supplier lists (collectively, "Trade Secrets"); (iv) published and
unpublished works of authorship, whether copyrightable or not (including
databases and other compilations of information), including mask rights,
copyrights therein and thereto, registrations and applications therefor, and all
renewals, extensions, restorations and reversions thereof (collectively,
"Copyrights"); and (v) any other intellectual property or proprietary rights.
"Interim Cure Amount" means the maximum amount, other than the Initial
Cure Amount, payable or that may be payable by Sellers in order to cure all
defaults on Assumed Contracts as of the Initial Closing Date and effectuate the
assumption by Sellers of an Assumed Contract and the assignment to Purchaser (or
Purchaser's designee) pursuant to Section 365 of the Bankruptcy Code.
"IRS" means the Internal Revenue Service.
"IT Assets" means Technical Documentation, Software Contracts and
Computer Equipment, in each case Related to the Business.
"Knowledge of Sellers" concerning a particular subject, area or aspect
of the Business or the affairs of Seller, means the actual (and not constructive
or imputed) knowledge of any individual listed on Schedule 1.1(a) after making a
reasonable inquiry as to the accuracy of the representation and warranty in
question.
"Law" means any law, statute, ordinance, rule, regulation, code, Order,
judgment, writ, injunction or decree enacted, issued, promulgated, enforced, or
entered by a Government Entity.
"Lease" means each lease or other Contract pursuant to which a Seller
leases any Real Property or personal property, either as lessor or lessee, and
all ancillary documents relating thereto.
"Leased Real Property" means all Real Property, including leasehold
improvements, that are the subject of the Assigned Leases, as set forth on
Schedule 1.1(d).
"Liabilities" means any and all claims, debts, liabilities, commitments
and obligations of any kind, whether fixed, contingent or absolute, matured or
unmatured, liquidated or unliquidated, accrued or not accrued, asserted or not
asserted, known or unknown, determined, determinable or otherwise, whenever or
however arising (including whether arising out of any contract or tort based on
negligence or strict liability) and whether or not the same would be required by
GAAP to be reflected in financial statements or disclosed in the notes thereto,
including all costs and expenses relating thereto.
"Lien" means, as applied to any Person, any lien, charge, claim, pledge,
conditional sale agreement or other title retention agreement, lease, mortgage,
deed of trust, right of first refusal, security interest, option, proxy, voting
trust or agreement, transfer restriction or other encumbrance (including the
filing of, or agreement to give, any financing statement under the Uniform
Commercial Code of any jurisdiction).
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"Loss" or "Losses" means any and all losses, Liabilities, costs, claims,
damages, penalties and expenses (including reasonable attorneys' fees and
expenses and costs of investigation, enforcement and litigation).
"Material Adverse Effect" means any result, occurrence, change, effect,
event or circumstance, that, individually or in the aggregate, has had or would
reasonably be expected to have, a material adverse effect or change in the
Purchased Assets, the Assumed Liabilities, the Assumed Contracts and the
Business taken as a whole or the ability of Sellers to perform their obligations
under this Agreement, except for any result, occurrence, change, effect, event,
or circumstance relating to (i) the economy or the financial markets in general,
except to the extent specifically related to or disproportionately impacting
Sellers, the Purchased Assets, the Assumed Liabilities, the Assumed Contracts or
the Business, (ii) the industry in which the Business operates in general and
not specifically relating to the Business, except to the extent
disproportionately impacting Sellers, the Purchased Assets, the Assumed
Liabilities, the Assumed Contracts or the Business, (iii) the announcement of
this Agreement or the transaction contemplated hereby or the identity of
Purchaser, (iv) changes in applicable Laws after the date hereof, (v) the fact
that Sellers will be operating as debtors-in-possession under the Bankruptcy
Code, (vi) changes in GAAP or regulatory accounting principles after the date
hereof, or (vii) changes in the value of the Mortgage Loans or the Servicing
Rights.
"Mortgage Loan Documents" means, for each Mortgage Loan, all documents
pertaining to such Mortgage Loan, including the Mortgage Note, the mortgage or
deed of trust and all assignments of the mortgage or deed of trust, all
endorsements and allonges to the Mortgage Note, the title insurance policy with
all endorsements thereto, any security agreement and financing statements, any
account agreements, and any assignments, assumptions, modifications,
continuations or amendments to any of the foregoing.
"Mortgage Loan Schedule" has the meaning specified in Section 5.6(a)
hereof.
"Mortgage Loans" means any residential mortgage loan or other extension
of credit secured by a Lien on real property of a borrower.
"Mortgage Note" means, with respect to a Mortgage Loan, a promissory
note or notes, or other evidence of indebtedness, with respect to such Mortgage
Loan secured by a mortgage or mortgages, together with any assignment,
reinstatement, extension, endorsement or modification thereof.
"Mortgaged Property" means a fee simple property (or such other estate
in real property as is commonly accepted as collateral for Mortgage Loans that
are subject to secondary mortgage sales or securitizations) that secures a
Mortgage Note and that is subject to a mortgage.
"Necessary Consent" has the meaning specified in Section 2.4 hereof.
"Net Proceeds" has the meaning specified in Section 4.1(a) hereof.
"New Financing Liens" means Liens on the Purchased Assets in respect of
the Financing.
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"Non-Governmental Authorizations" means all licenses, permits,
certificates and other authorizations and approvals other than Governmental
Authorizations that are (i) held by Sellers or any of their Affiliates and (ii)
Related to the Business.
"Order" means, with respect to any Person, any award, decision,
injunction, judgment, stipulation, order, ruling, subpoena, writ, decree,
consent decree or verdict entered, issued, made or rendered by any Government
Entity affecting such Person or any of its properties or assets.
"Ordinary Course of Business" means (i) with respect to the period prior
to the Initial Closing Date, the ordinary course of business of the Business,
consistent with the customs and practices of Sellers and their Affiliates from
and after the Petition Date and (ii) with respect to the period following the
Initial Closing Date, the ordinary course of business of the Business,
consistent with the customs and practices of Sellers and their Affiliates from
and after the Petition Date and consistent with the Budget.
"Parent" has the meaning specified in the preamble.
"Permits" has the meaning set forth in Section 5.7 hereof.
"Permitted Lien" means (i) Liens arising under the terms of an Assumed
Contract and (ii) Liens arising on the Purchased Assets after the Initial
Closing Date that are not the result of a breach by any Seller of this
Agreement.
"Person" means a natural person, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Government Entity or other entity or organization.
"Petitions" has the meaning specified in the Recitals.
"Petition Date" has the meaning specified in the Recitals.
"Plan" means each "employee benefit plan" as defined in Section 3(3) of
ERISA, each deferred compensation and each bonus, retention, salary
continuation, incentive compensation, stock purchase, stock option, restricted
stock, phantom stock and other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance and other "welfare" plan, fund or program
(within the meaning of Section 3(1) of ERISA); each profit-sharing, stock bonus
or other "pension" plan, fund or program (within the meaning of Section 3(2) of
ERISA); each employment, consulting, retention, change in control, termination
or severance agreement; and each other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to by Sellers or by any ERISA
Affiliate, or to which Sellers or an ERISA Affiliate is party, whether written
or oral, qualified or non-qualified, funded or unfunded, foreign or domestic,
currently effective or terminated for the benefit of any present or former
director, employee, consultant, or independent contractors of Sellers or any
ERISA Affiliate, or with respect to which Sellers or any ERISA Affiliate has any
Liability, and all insurance policies, fiduciary liability policies, benefit
administration contracts, actuarial contracts, trusts, escrow, surety bonds,
letter of credit and other contracts primarily relating (but solely to the
extent relating) to any of the foregoing.
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"Privileged Documents" has the meaning specified in Section 2.3 hereof.
"Proximate Cause Party" has the meaning specified in Section 9.1(b)(i)
hereof.
"Purchaser's Cure Amount" means the amount, other than the Initial Cure
Amount and the Interim Cure Amount, payable in order to cure all defaults on
Assumed Contracts and effectuate the assumption by Sellers of an Assumed
Contract and the assignment to Purchaser (or Purchaser's designee) pursuant to
Section 365 of the Bankruptcy Code (a) as provided in an Order of the Bankruptcy
Court, or (b) pursuant to a written agreement among the parties to the Assumed
Contract and Purchaser (or such designee) entered into after the Initial Closing
Date.
"Purchase Price" has the meaning specified in Section 4.1(a) hereof.
"Purchased Assets" has the meaning specified in Section 2.1 hereof.
"Purchaser" has the meaning specified in the preamble.
"Purchaser Subservicing Agreement" means a servicing agreement to be
executed on behalf of each of Sellers and Purchaser, in form and substance
reasonably satisfactory to Sellers and Purchaser, under which Purchaser will,
after the Final Closing, serve as a subservicer for certain Mortgage Loans and
with respect to any Disputed Servicing Agreements that, upon the Final Closing,
are treated as Excluded Assets in accordance with Section 4.4.
"Real Property" means all real property that is leased, licensed to,
used, occupied or owned by Sellers Related to the Business or that is reflected
as an asset of the Company on the Balance Sheet and used in connection with the
Business.
"Real Property Leases" means the leases pursuant to which a Seller
occupies the Leased Real Property, including the leases described in Schedule
1.1(b).
"Reconciliation Calculation" has the meaning set forth in Section 6.2.
"Reconciliation Payment" has the meaning set forth in Section 6.2.
"Reconciliation Payment Report" has the meaning set forth in Section
6.2.
"Reconciliation Period" has the meaning set forth in Section 6.2.
"Reconciliation Report" has the meaning set forth in Section 6.2.
"Related to the Business" means primarily used or held primarily for use
in connection with the Business as conducted by Sellers and their Affiliates.
"REO Property" means a Mortgaged Property acquired by a Seller through
foreclosure, acceptance of a deed in lieu of foreclosure or otherwise in
connection with the default or imminent default of a Mortgage Loan.
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"Representatives" means, with respect to any Person, the directors,
officers, employees, accountants, agents, counsel, insurance brokers, insurance
companies, lenders and other financing sources and other representatives of such
Person.
"Requested Party" has the meaning specified in Section 6.3(b) hereof.
"Requesting Party" has the meaning specified in Section 6.3(b) hereof.
"Retained Liabilities" means any and all Claims and Liabilities of any
kind or nature whatsoever of a Seller or any of its Affiliates or affecting any
of the Purchased Assets (other than the Assumed Liabilities), including any
Claims and Liabilities (i) arising from any early payment default claims with
respect to any Mortgage Loans, loan repurchase obligations or premium recapture
obligations or from any deficiency with respect to any existing loan facilities
of Sellers or relating to obligations as an originator, (ii) except as otherwise
provided in Section 3.2, relating to any and all Plans, (iii) relating to any
Disputed Servicing Contract, unless specifically assumed by Purchaser hereunder,
(iv) relating to any action, event, circumstance or condition occurring or
existing on or prior to the Initial Closing Date, including (a) arising, with
respect to employees whose employment is terminated at or before the Initial
Closing, under WARN, COBRA or any other similar Law, (b) for any employee
severance relating to the employment or termination of employment by Sellers of
any employees of Sellers prior to the Initial Closing and (c) resulting from any
and all lawsuits or governmental examinations, audits or investigations
commenced and claims made or pertaining to the period prior to the Initial
Closing Date, (v) for the Initial Cure Amount and the Interim Cure Amount or
(vi) that are Liabilities of Sellers under this Agreement.
"Revised Sale Procedures" means the Revised Sale Procedures
substantially in the form set forth in Exhibit D.
"Revised Sale Procedures Order" means an Order of the Bankruptcy Court,
substantially in the form set forth in Exhibit D that, among other things,
approves the Revised Sale Procedures, designates Purchaser as a "stalking horse
bidder," and authorizes Sellers to pay the Break-Up Fee and Expense
Reimbursement in accordance with this Agreement and the Revised Sale Procedures.
"Sale Approval Order" means a Final Order or Final Orders of the
Bankruptcy Court issued pursuant to Sections 105, 363, 364 and 365 of the
Bankruptcy Code, in substantially the form set forth in Exhibit E hereto, that
among other things, (i) authorizes and approves (a) the sale, transfer and
assignment of the Purchased Assets and the Assumed Liabilities to Purchaser in
accordance with the terms and conditions of this Agreement, free and clear of
all Liens (other than Permitted Liens), "claims" (as such term is defined in the
Bankruptcy Code) and interests, (b) the assumption and assignment of the Assumed
Contracts and Assumed Liabilities in connection therewith and as a part thereof
and (c) approves the granting of liens and administrative superpriority claims
contemplated by Section 6.14; (ii) finds that Purchaser has acted in "good
faith" within the meaning of Section 363(m) of the Bankruptcy Code; (iii) finds
that this Agreement was negotiated, proposed and entered into by the parties
without collusion, in good faith and from arm's length bargaining positions;
(iv) states the Bankruptcy Court shall retain jurisdiction to resolve any
controversy or claim arising out of or relating to this Agreement,
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or any breach hereof as provided in Section 11.11 hereof; (v) orders that this
Agreement and the transactions contemplated hereby may be specifically enforced
against and binding upon, and not subject to rejection or avoidance by, Sellers
or any chapter 7 or chapter 11 trustee of Sellers; and (vi) provides that such
Sale Approval Order may only be modified upon notice and pursuant to a further
Order of the Bankruptcy Court, provided that if such modification is adverse to
Purchaser, such modification shall be subject to the approval of Purchaser, in
its sole discretion.
"Sale Hearing" has the meaning specified in the Revised Sale Procedures
Order.
"Sale Motion" means the motion filed by Parent with the Bankruptcy Court
for the approval of the Revised Sale Procedures Order and the Sale Approval
Order, in form and substance reasonably satisfactory to Purchaser.
"Sellers" has the meaning specified in the preamble.
"Servicing Agreements" means the servicing agreements, pooling and
servicing agreements, subservicing agreements, master servicing agreements,
interim servicing agreements and related agreements Related to the Business
which are contained in the agreements identified on Schedule 1.1(j), other than
(i) any such agreements for the FNMA Servicing Rights if the FNMA Servicing
Rights, pursuant to Section 6.18, are to be Excluded Assets and (ii) any such
agreements for the Servicing Rights Held for Sale.
"Servicing Fees" means the sum of (i) the servicing fees (excluding any
Ancillary Income) paid to a Seller as set forth in a Servicing Agreement and
(ii) any Ancillary Income.
"Servicing File" means, for each Mortgage Loan, copies of the Mortgage
Loan Documents and all other documents, files and other items related thereto
required to be maintained by the servicer pursuant to the applicable Servicing
Agreement, and, if not specifically set forth in the applicable Servicing
Agreement, pursuant to the applicable servicing standard.
"Servicing Rights" means all right, title and interest of Sellers in and
to: (i) the right to service the Mortgage Loans under the Servicing Agreements,
including the right to receive the Servicing Fees and Ancillary Income; (ii) the
related master servicing and/or servicing obligations as specified in each
Servicing Agreement, including the obligations to administer and collect the
payments of or relating to the Mortgage Loans, and to remit all amounts and
provide information reporting to others in accordance with the Servicing
Agreements; (iii) the right of ownership, possession, control or use of any and
all Servicing Files and Mortgage Loan Documents pertaining to the servicing of
the Mortgage Loans as provided in the Servicing Agreements; (iv) the rights with
respect to, and obligations to make, any advances required pursuant to any
Servicing Agreement, including obligations to reimburse funds borrowed from any
custodial or other accounts under a Servicing Agreement; (v) the "clean-up call"
right, if any, to purchase the related Mortgage Loans upon the aggregate
principal balance thereof being reduced below a specified amount to the extent
provided for in the Servicing Agreement; and (vi) all other rights, powers and
privileges of Sellers as the master servicer, servicer or subservicer under the
Servicing Agreements as expressly set forth therein or as deemed at Law;
provided, that all indemnification rights and obligations of Sellers with
respect to acts occurring
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prior to the Initial Closing Date shall not be transferred to Purchaser (other
than the Purchased Assets and Assumed Liabilities).
"Servicing Rights Held for Sale" has the meaning specified in Section
6.1(a) hereof.
"Software Contracts" means all Contracts, agreements, licenses, and
other commitments and arrangements with any Person respecting the ownership,
license, acquisition, design, development, distribution, marketing, development,
use, outsourcing or maintenance of computer program code, related technical or
user documentation, and databases, in each case Related to the Business, other
than such of the foregoing as are identified in the Excluded Assets, including
the items set forth on Schedule 1.1(h) as (i) licenses from third parties
(development and/or marketing); (ii) licenses from third parties (internal use
only); (iii) development contracts, work-for-hire agreements, information
technology outsourcing agreements, and consulting and employment agreements;
(iv) licenses and sublicenses to others; and (v) maintenance, support, or
enhancement agreements.
"Subsidiary" means, with respect to any Person, any corporation or other
organization, whether incorporated or unincorporated, of which (i) at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person and/or by any one or
more of its Subsidiaries, or (ii) such Person or any other Subsidiary of such
Person is a general partner.
"Tax" or "Taxes" means all taxes, charges, fees, duties, levies,
penalties or other assessments imposed by any federal, state, local or foreign
governmental authority, including income, gross receipts, excise, property,
sales, gain, use, ad valorem, inventory, license, custom duty, unemployment,
capital stock, transfer, franchise, payroll, withholding, social security,
minimum estimated, profit, gift, severance, value added, disability, premium,
recapture, credit, occupation, service, leasing, employment, stamp and other
taxes, any amounts attributable thereto or attributable to any failure to comply
with any requirement regarding Tax Returns and any successor, transferee or
secondary Liability in respect of taxes, including, in each case, any interest,
penalty, fines or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
estimate or information return or statement relating to Taxes, including any
such document prepared on a consolidated, combined or unitary basis and also
including any schedule or attachment thereto, and including any amendment
thereof.
"Technical Documentation" means all technical and descriptive materials
relating to the acquisition, design, development, use, or maintenance of
computer code, program documentation, Computer Equipment and materials Related
to the Business.
"Termination Date" has the meaning specified in Section 9.1 hereof.
"Trade Secrets" has the meaning specified in the "Intellectual Property"
definition.
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"Trademark Assignments" means the trademark assignments to be executed
by Sellers in favor of Purchaser in respect of the Trademarks in a form suitable
for recording in the U.S. trademark office, in form and substance reasonably
satisfactory to Sellers and Purchaser.
"Trademarks" has the meaning specified in the "Intellectual Property"
definition.
"Transfer Taxes" means any federal, state, county, local, foreign and
other sales, use, transfer, conveyance, documentary transfer, recording or other
similar Tax, fee or charge imposed upon the sale, transfer or assignment of
property or any interest therein or the recording thereof, and any penalty,
addition to Tax or interest with respect thereto.
"Transferred Employee" has the meaning specified in Section 3.1(b)
hereof.
"Transferred Intellectual Property" means all the Intellectual Property
Related to the Business owned by, or licensed to, Sellers or their Affiliates,
including all invoices, shipping documents, purchase orders and other preprinted
business forms that have any Trademark thereon, used in connection with the
Business, including those set forth on Schedule 1.1(i).
"Transition Services Agreement" means the transition services agreement
to be entered into by and between Purchaser, Parent and the Company as set forth
in Exhibit F.
"VA" means the Department of Veteran Affairs and any successor thereto.
"WARN" means the U.S. Worker Adjustment and Retraining Notification Act
of 1988, as amended or any similar state or local (including, for the avoidance
of doubt, the California Worker Adjustment and Retraining Notification Act, as
amended).
"WLR" means WLR Recovery Fund III, L.P.
Section 1.2 Interpretation. When a reference is made in this
Agreement to a section or article, such reference shall be to a section or
article of this Agreement unless otherwise clearly indicated to the contrary.
(a) Whenever the words "include" "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation."
(b) The words "hereof," "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified.
(c) The meaning assigned to each term defined herein shall be
equally applicable to both the singular and the plural forms of such term. Where
a word or phrase is defined herein, each of its other grammatical forms shall
have a corresponding meaning.
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(d) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(e) A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or reenactment
thereof, any legislative provision substituted therefor and all regulations and
statutory instruments issued thereunder or pursuant thereto.
(f) When calculating the period of time before which, within
which or following which any act is to be done or step taken pursuant to this
Agreement, the date that is the reference date in calculating such period shall
be excluded. If the last day of such period is a non-Business Day, the period in
question shall end on the next succeeding Business Day.
(g) Any reference in this Agreement to $ shall mean U.S. dollars.
(h) The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and, in the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as jointly drafted by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provision of this Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.1 Purchase and Sale of Assets. On the terms and subject
to the conditions set forth herein, on the Final Closing Date, Sellers shall
sell, convey, transfer, assign and deliver to Purchaser (or to one or more
designees of Purchaser), and Purchaser shall purchase (or cause such designee or
designees to purchase) from Sellers, free and clear of all Claims and Liens,
other than Permitted Liens and New Financing Liens, all of the right, title and
interest of all Sellers and their Affiliates as of the Final Closing Date in and
to all assets and properties Related to the Business, whether tangible or
intangible, real, personal or mixed (collectively, the "Purchased Assets") and
including:
(a) all of Sellers' Servicing Rights and rights to receive
Servicing Fees;
(b) subject to Section 6.15, all rights and benefits under (i)
Contracts set forth in Schedule 2.1(b)(i), (ii) Real Property Leases, (iii)
Software Contracts, (iv) the Assigned Leases, (v) Servicing Agreements (subject
to Section 4.4), and (vi) Contracts Related to the Business entered into or made
by any Seller in the Ordinary Course of Business after the date hereof, before
the Final Closing Date and in accordance with the covenants herein; provided,
that except as set forth in Schedule 2.1(b)(ii), in the case of any such
Contract referred to in this clause (b), Sellers shall have furnished Purchaser
a true, correct and complete copy of such Contract (collectively, the "Assumed
Contracts");
(c) all Transferred Intellectual Property;
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(d) all Books and Records that are not Excluded Assets;
(e) all Fixtures and Equipment;
(f) all IT Assets;
(g) the Leased Real Property, including all easements and other
rights and interests appurtenant thereto;
(h) subject to Section 6.17, the right to be reimbursed for
Advances;
(i) all credits, prepaid expenses, deferred charges, security
deposits, prepaid items and duties to the extent primarily related to a
Servicing Agreement, an Assumed Liability, an Assumed Contract or a Purchased
Asset;
(j) all causes of action, lawsuits, judgments, claims, refunds,
choses in action, rights of recovery, rights of set-off, rights of recoupment,
demands and any other rights or Claims of any nature available to or being
pursued by Sellers or any of their Affiliates (A) to the extent related to the
Purchased Assets within subsections (a) through (i) and (k) through (n) of this
Section 2.1 and arising or accruing from and after the Initial Closing or (B)
except as set forth in Section 2.2(c)(ii), to the extent related to the Assumed
Liabilities or Assumed Contracts, whether arising by way of counterclaim or
otherwise ("Assumed Rights and Claims");
(k) to the extent transferable, all guaranties, warranties,
indemnities and similar rights in favor of Sellers or any of their Affiliates to
the extent related to any Servicing Agreement, any Purchased Asset within
subsections (a) through (j) and (l) through (n) of this Section 2.1 or any
Assumed Liability or Assumed Contract;
(l) to the extent transferable, all Permits held by Sellers
necessary for the operation or ownership of the Business or any of the Purchased
Assets within subsections (a) through (k) of this Section 2.1 and Governmental
Authorizations, and all Non-Governmental Authorizations, including those listed
on Schedule 2.1(l);
(m) to the extent transferable, (i) all rights under insurance
policies and insurance proceeds directly relating to Mortgage Loans serviced
pursuant to any Servicing Agreements (other than Disputed Servicing Agreements
unless specifically assumed by Purchaser hereunder), and (ii) subject to Section
2.2(a), all bank accounts (other than bank accounts maintained by the Collateral
Agent and the Administrative Agent), other accounts, safe deposit boxes, lock
boxes and safes Related to the Business, including accounts associated with the
Liabilities set forth on Schedule 1.1(c) and all cash and cash equivalents held
in or required to be held in such accounts; and
(n) all goodwill and other intangible assets associated with the
Business, (including the rights in and to the name "American Home Mortgage
Servicing" and similar names thereto and the goodwill associated with the
Transferred Intellectual Property and all properties, rights and assets acquired
by Sellers in connection with the operation of the Business between the Initial
Closing and the Final Closing).
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Section 2.2 Excluded Assets. Notwithstanding anything herein to
the contrary, Sellers shall retain all of their existing right, title and
interest in and to any and all assets that are not Purchased Assets, and there
shall be excluded from the sale, conveyance, assignment or transfer to Purchaser
or any designee of the Purchaser hereunder, and the Purchased Assets shall not
include, the following assets whether tangible or intangible, real, personal or
mixed (collectively, the "Excluded Assets"):
(a) all cash and cash equivalents (including all cash and cash
equivalents on deposit in bank accounts maintained by the Collateral Agent and
Administrative Agent and cash that was received by the Sellers on or prior to
the Initial Closing Date that is or was required to be deposited into accounts
maintained by the Collateral Agent and the Administrative Agent pursuant to the
Cash Collateral Order (the "Administrative Agent Cash Proceeds"), but excluding
(i) cash flows under any Servicing Agreements or any net cash flow generated by
operation of the Business on or after the Initial Closing Date, (ii) any
collections of Advances included in the Advances Amount after the Advances
Amount Determination Time (which, notwithstanding any provision hereof, will
constitute Purchased Assets) and (iii) accounts associated with the Liabilities
set forth on Schedule 1.1(c) and all cash and cash equivalents held in or
required to be held in such accounts;
(b) all Tax Returns of Sellers or any of their Affiliates and all
Books and Records (including working papers) related thereto, (other than any
such Tax documents primarily related to the Purchased Assets, Assumed
Liabilities or Assumed Contracts), and any Books and Records which Seller is
required by Law to retain, provided that Seller shall, upon the request of
Purchaser, provide Purchaser with copies of such Books and Records which Sellers
are required by Law to retain;
(c) all (i) causes of action, lawsuits, judgments, claims,
refunds, rights of recovery, rights of set-off, rights of recoupment, demands
and any other rights or Claims of any nature other than the Assumed Rights and
Claims and (ii) any and all defenses and counterclaims relating acts or
omissions under the Assumed Contracts that occurred prior to the Initial
Closing;
(d) all rights or Liabilities in connection with and assets of
the Plans;
(e) any rights, demands, claims, actions and causes of action
constituting avoidance actions of Sellers' estate under Chapter 5 of the
Bankruptcy Code, and any other applicable provisions of the Bankruptcy Code,
including any and all proceeds of the foregoing;
(f) all of Sellers' rights, demands, Claims and causes of action
arising with respect to the assertion or defense of claims against the Filing
Subsidiaries under Section 502 and 503 of the Bankruptcy Code and Rule 3007
thereunder;
(g) any of the rights of Sellers under this Agreement (or any
agreements between either Seller, on the one hand, and Purchaser or any of its
Affiliates, on the other hand, entered into on or after the date of this
Agreement);
(h) other than those described in Section 2.1(m), all insurance
proceeds that Sellers or any of their Affiliates have a right to receive as of
the Initial Closing or that relate to
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events, circumstances or occurrences prior to the Initial Closing (which for the
avoidance of doubt shall include the proceeds of Parent's directors and officers
insurance policy);
(i) other than those described in Section 2.1(m), all insurance
policies;
(j) Tax refunds;
(k) the Purchase Price;
(l) all Privileged Documents;
(m) the Real Property located in Melville, New York, that is the
headquarters facility for Parent;
(n) the assets listed on Schedule 2.2(n);
(o) any Excluded Contracts;
(p) any Disputed Servicing Agreements designated as Excluded
Assets pursuant to Section 4.4 and any Servicing Rights Held for Sale; and
(q) all rights, claims and causes of action relating to any
Excluded Asset within subsections (a) through (p) of this Section 2.2 or any
Retained Liability.
Section 2.3 Post-Final Closing Date Asset Deliveries. If any
Seller, in its reasonable discretion, determines after the Final Closing Date
that books, records or other materials constituting Purchased Assets are still
in the possession of such Seller or any of its Affiliates, such Seller shall, or
shall cause such Affiliates to, promptly deliver them to the Purchaser. If any
Seller or Purchaser, in its reasonable discretion, determines after the Final
Closing Date that books, records or other materials constituting Excluded Assets
were delivered to Purchaser, Purchaser shall promptly return them to the
applicable Seller. In furtherance and not in limitation of the foregoing (and
notwithstanding any provision in this Agreement to the contrary), each of
Sellers and Purchaser acknowledges and agrees that it is neither Sellers' nor
Purchaser's intention to sell, assign or transfer possession of any documents or
communications of Sellers that are subject to Sellers' attorney-client privilege
and/or the work-product immunity doctrine (except to the extent such documents
or communications are related to Purchaser's continued conduct of the Business)
(the "Privileged Documents"). In the event it is discovered that any such
Privileged Documents have been inadvertently or unintentionally turned over to
Purchaser, Purchaser agrees, upon Sellers' request, to promptly turn over to
Sellers or destroy such Privileged Documents, in each case at Sellers' sole cost
and expense; provided, that (a) Purchaser shall in no way be obligated or
responsible for reviewing, identifying or making a determination that any
documents or communications in its possession are Privileged Documents and (b)
Purchaser shall not be obligated to take any actions under this Section 2.3 that
may subject it to any liability or otherwise be in violation with any applicable
Law.
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Section 2.4 Non-Assignment of Assets. Notwithstanding any other
provision of this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign or transfer and shall not effect the assignment or
transfer of any Purchased Asset if an attempted assignment thereof, without the
approval, authorization or consent of, or granting or issuance of any license or
permit by, any third party thereto (each such action, a "Necessary Consent"),
would constitute a breach thereof or in any way adversely affect the rights of
Purchaser thereunder unless the Bankruptcy Court has entered a Final Order
(which may include the Sale Approval Order) whose effectiveness has not been
stayed providing that such Necessary Consent is not required. If the Bankruptcy
Court has not entered such an Order, Sellers and Purchaser will use their
commercially reasonable efforts to obtain the Necessary Consents with respect to
any such Purchased Asset or any claim or right or any benefit arising thereunder
for the assignment thereof to Purchaser as Purchaser may reasonably request. If
such Necessary Consent is not obtained, or if an attempted assignment thereof
would be ineffective or would adversely affect the rights of any Seller
thereunder so that Purchaser would not in fact receive all such rights, such
Seller and Purchaser will cooperate in a mutually agreeable arrangement under
which Purchaser would obtain the benefits and assume the obligations thereunder
in accordance with this Agreement, including, to the extent that such an
arrangement would be permitted by Law and the related Contract, subcontracting,
sub-licensing, or sub-leasing to Purchaser, or under which such Seller would
enforce for the benefit of Purchaser, with Purchaser assuming such Seller's
obligations, any and all rights of such Seller against a third party thereto.
Section 2.5 Assumption of Certain Liabilities. On the terms and
subject to the conditions set forth herein and as additional consideration for
the Purchased Assets, at the Final Closing, Purchaser shall assume and discharge
or perform when due in accordance with their respective terms and subject to the
respective conditions thereof, the Assumed Liabilities. Other than the Assumed
Liabilities, Purchaser shall not assume any Liability of any nature or kind
whatsoever of Sellers.
Section 2.6 Retained Liabilities. Sellers shall retain and be
liable and responsible for all Retained Liabilities.
Section 2.7 Initial Closing; Final Closing.
(a) Subject to the terms and conditions of this Agreement, the
initial closing (the "Initial Closing") of the transactions contemplated hereby
shall take place at such location as the parties hereto shall mutually agree on
the second Business Day following the date on which the conditions set forth in
Sections 8.1 through 8.3 (other than those conditions that by their nature can
be satisfied only at the Initial Closing but subject to the fulfillment or
waiver of those conditions) have been satisfied or waived or at such other time
and place as the parties hereto may mutually agree. Purchaser's obligation to
close on the second Business Day following the date on which the conditions set
forth in Sections 8.1 through 8.3 have been satisfied (other than those
conditions that by their nature can be satisfied only at the Initial Closing but
subject to the fulfillment or waiver of those conditions) shall not be subject
to the cure period set forth in Section 9.1(d)(ii). At the Initial Closing,
Purchaser shall deliver the Purchase Price in accordance
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with Section 4.1. In consideration of payment of such Purchase Price on the
Initial Closing Date, from the Initial Closing Date until the Final Closing
Date, Sellers shall operate the Business in the Ordinary Course of Business,
subject to the Bankruptcy Exceptions, for the economic benefit of Purchaser.
Sellers shall operate the Business in accordance with Sections 6.1 and 6.2 and
shall not take any actions inconsistent with such sections without the prior
written consent of Purchaser. For the avoidance of doubt, the Purchase Price
shall be determined based on the Initial Closing Servicing Balance and the
Advances Amount as finally determined from the Initial Closing Date Report and
no adjustment shall be made to the Purchase Price in respect of changes to
servicing balances or advances amounts during the period from the Initial
Closing Date through the Final Closing Date. On the Initial Closing Date, the
appropriate parties shall take all actions required under Sections 2.9(a) and
2.10(a) and all other actions not previously taken but required to be taken
hereunder at or prior to the Initial Closing Date.
(b) Subject to the terms and conditions of this Agreement, the
final closing (the "Final Closing") and the transfer of title to the Purchased
Assets, Assumed Liabilities and Assumed Contracts contemplated hereby shall take
place at such location as the parties hereto shall mutually agree on the
Business Day following the date on which the condition set forth in Section
8.4(a) has been satisfied or waived or at such other time and place as the
parties hereto may mutually agree (such date, the "Final Closing Date"). On the
Final Closing Date, the appropriate parties shall take all actions required
under Sections 2.8, 2.9(b) and 2.10(b) and all other actions not previously
taken but required to be taken hereunder at or prior to the Final Closing Date.
In the event that the condition set forth in Section 8.4(a) has not been
satisfied or waived prior to September 30, 2008, Sellers shall either (i) effect
the transfer of title to the Purchased Assets, Assumed Liabilities and Assumed
Contracts to Purchaser on such date or (ii) at the direction and expense of
Purchaser, within 60 days after September 30, 2008, sell, transfer and assign,
subject to any required Bankruptcy Court approval, for such purchase price as
Purchaser shall have negotiated, the Purchased Assets, Assumed Liabilities and
Assumed Contracts to any third party or third parties designated by Purchaser on
or before September 30, 2008, and deliver to Purchaser all proceeds of such
sale, net of an amount equal to the value of any Assumed Liabilities not so
transferred and any Losses that represent the incremental costs incurred by
Sellers in connection with such sale that would not have otherwise been incurred
with respect to a transfer to Purchaser.
(c) Notwithstanding any other provision of this Agreement,
Purchaser does not have the right to direct the management or policies of
Sellers. The right to direct the management and policies of Sellers is solely
the responsibility of the respective executive officers and directors of each
Seller.
Section 2.8 Ancillary Agreements. On the Final Closing Date,
Sellers shall duly execute and deliver to Purchaser, and Purchaser shall duly
execute and deliver to Sellers, each of the following agreements to which they
are to be a party (the "Ancillary Agreements"):
(a) Trademark Assignments;
(b) the Transition Services Agreement;
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Y
(c) the Bills of Sale;
(d) the Assignment and Assumption Agreement;
(e) the Assignment and Assumption of Lease Agreements;
(f) the Purchaser Subservicing Agreement; and
(g) all instruments or documents necessary to change the names of
the individuals who have access to or are authorized to make withdrawals from or
dispositions of all bank accounts, other accounts, safe deposit boxes, lock
boxes and safes Related to the Business or related to the Purchased Assets, all
keys and combinations to all safe deposit boxes, lock boxes and safes Related to
the Business and all keys related to the Purchased Assets.
Section 2.9 Deliveries by Purchaser.
(a) At the Initial Closing, Purchaser shall deliver to Sellers
the following:
(i) the Purchase Price in accordance with Section 4.1;
(ii) the duly executed Dispute Escrow Agreement and Cure
Escrow Agreement; and
(iii) the certificate to be delivered pursuant to Section
8.2(c).
(b) On the Final Closing Date (and any earlier date after the
Initial Closing Date on which Purchaser desires to have a Purchased Asset
conveyed pursuant to this Agreement), Purchaser shall deliver to Sellers the
following:
(i) such instruments of assumption and other instruments
or documents, in form and substance reasonably acceptable to Sellers, as
may be necessary to effect Purchaser's assumption of the Assumed
Liabilities and the effective assignment of any Assumed Contracts,
Assigned Leases or other Purchased Assets; and
(ii) such other customary instruments of transfer,
assumptions, filings or documents, in form and substance reasonably
satisfactory to Sellers, as may be required to give effect to this
Agreement or any Ancillary Agreement.
Section 2.10 Deliveries by Sellers.
(a) At the Initial Closing, Sellers shall deliver, or cause to be
delivered, to Purchaser the following:
(i) certified copies of (A) the Revised Sale Procedures
Order and the Sale Approval Order, neither of which shall have been
modified or amended in any manner adverse to Purchaser that has not been
agreed to in writing by Purchaser and shall have become a Final Order
and not be subject to any stay of effectiveness, and (B) all
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other Orders of the Bankruptcy Court pertaining to the transactions
contemplated by this Agreement and the Ancillary Agreements;
(ii) the duly executed Dispute Escrow Agreement;
(iii) the duly executed Cure Escrow Agreement;
(iv) the certificates to be delivered pursuant to Section
8.3(c);
(v) affidavits executed by each Seller that such Seller is
not a foreign person within the meaning of Section 1445(f)(3) of the
Code;
(vi) a receipt acknowledging payment of the Purchase Price
payable in accordance with Section 4.1.
(b) On the Final Closing Date (and any earlier date after the
Initial Closing Date on which Purchaser desires to have a Purchased Asset
conveyed pursuant to this Agreement), Sellers shall deliver, or cause to be
delivered, to Purchaser the following:
(i) a master copy of each software program Related to the
Business, which is a Purchased Asset (in both object code, and to the
extent available, source code form);
(ii) such instruments of assumption and other instruments
or documents, in form and substance reasonably acceptable to Purchaser,
as may be necessary to effect Sellers' assignment of any Assumed
Contracts, Assigned Leases or other Purchased Assets to Purchaser or its
designee; and
(iii) such other customary instruments of transfer,
assumptions, filings or documents, in form and substance reasonably
satisfactory to Purchaser, as may be required to give effect to this
Agreement or any Ancillary Agreement.
Section 2.11 "As Is Where Is" Transaction. Purchaser hereby
acknowledges and agrees that, notwithstanding anything to the contrary contained
herein, except as expressly set forth in this Agreement, Sellers make no
representations or warranties whatsoever, express or implied, with respect to
any matter relating to the Purchased Assets. Without in any way limiting the
foregoing, Sellers hereby disclaim any warranty (express or implied) of
merchantability or fitness for any particular purpose as to any portion of the
Purchased Assets. Purchaser further acknowledges that Purchaser has conducted an
independent inspection and investigation of the physical condition of all
portions of the Purchased Assets and all such other matters relating to or
affecting the Purchased Assets as Purchaser deemed necessary or appropriate and
that in proceeding with its acquisition of the Purchased Assets, Purchaser is
doing so based solely upon such independent inspections and investigations.
Accordingly, except as expressly set forth in the Agreement, Purchaser will
accept the Purchased Assets on the Final Closing Date "AS IS" and "WHERE IS".
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E
ARTICLE III
TRANSFERRED EMPLOYEES
Section 3.1 Transferred Employees. With respect to each Business
Employee, Sellers have previously provided to Purchaser lists (the "Business
Employee List"), setting forth, to the extent such information is permitted to
be disclosed under applicable Law: (i) each such person's title or job/position;
(ii) each such person's job designation (i.e., salaried or hourly); (iii) each
such person's location of employment; (iv) each such person's employment status
(i.e., actively employed or not actively at work (due to, e.g., illness,
short-term disability, sick leave, authorized leave or absence, etc.)); (v) each
such person's annual base rate of compensation and target bonus amount for the
current fiscal year to which he or she is entitled and any such bonus amount
which he or she has received prior to the date hereof; and (vi) if applicable,
any material, individual specific provisions relating to such person's
employment (e.g., golden parachute, etc.).
(a) Not later than 10 days prior to the Final Closing Date,
Sellers will provide Purchaser with an updated Business Employee List.
(b) Prior to the Final Closing Date, and effective as of the
Final Closing Date, Purchaser shall offer employment to substantially all
Business Employees identified on the Business Employee List (as updated in
accordance with clause (a) of this Section 3.1). Each such offer of employment
shall comply with the requirements of this Section 3.1. The new employment of
each Business Employee who accepts Purchaser's offer of employment shall
commence with effect from the later of the Final Closing Date or the date of
acceptance. Each Business Employee who accepts Purchaser's offer of employment
and who becomes an employee of Purchaser as of the Final Closing Date shall be a
"Transferred Employee."
(c) Purchaser's offer of employment will be at a level of
compensation and benefits that, in the aggregate, Purchaser determines in good
faith is reasonably comparable to the compensation and benefits of such Person
immediately prior to the Petition Date, without giving effect to any key
employee retention plan and any compensation or bonus plan, agreement or
arrangement designed to retain employees during the pendency of the Bankruptcy
Cases. Purchaser shall give service credit for pre-Final Closing Date service
with Sellers for purposes of the eligibility and vesting (but not benefit
accrual) provisions of the plans and programs in which such employees
participate, and give appropriate credit for unused vacation time and co-pays
and deductibles under welfare benefit plans.
Section 3.2 Employee Benefit Plans. Sellers represent and warrant
to Purchaser that Schedule 3.2 sets forth a true, complete and correct list of
each Plan that covers any Business Employee and Sellers have made available to
Purchaser true, complete and correct copies of each such Plan. Purchaser and its
Affiliates shall not assume any Plans or any Liabilities under or with respect
to the Plans (except, in Purchaser's sole discretion, as to any permitted
"rollover" accepted by the applicable plan of Purchaser or one of its Affiliates
that is elected by a Transferred Employee under a Plan intended to be qualified
under Section 401(a) of the Code). Effective as of the Final Closing Date,
Sellers shall cause each Business Employee to
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be 100% fully vested in his benefits under each of the Plans intended to be
qualified under Section 401(a) of the Code that provides for vesting.
Section 3.3 COBRA. Sellers shall retain all obligations relating
to compliance with the continuation health care coverage requirements of COBRA
under the Plans with respect to all current and former Business Employees (and
their dependents) for qualifying events occurring on or prior to the Initial
Closing Date. Subject to the other limitations of this Agreement, this Section
3.3 shall not, however, limit the ability of the Sellers to amend or terminate
any Plan at any time.
Section 3.4 WARN. Sellers agree to provide any required notice
under and to otherwise retain all Liabilities relating to WARN, or any similar
Laws, with respect to any event on or prior to the Initial Closing Date
affecting Business Employees.
Section 3.5 Cooperation. Sellers and Purchasers shall provide
each other with such records and information as may be reasonably necessary,
appropriate and permitted under applicable Law to carry out their obligations
under this Article III.
Section 3.6 No Third Party Rights. No provision of this Agreement
confers rights or remedies upon any Person, including any Business Employee or
any Transferred Employee, other than the parties hereto.
ARTICLE IV
PURCHASE PRICE; ADJUSTMENT; ALLOCATION
Section 4.1 Purchase Price. (a) The aggregate consideration for
the Purchased Assets (as adjusted pursuant to this Article IV, the "Purchase
Price") shall, subject to the terms and conditions of this Article IV, equal the
sum of (A) $6.0 million, (B) an amount equal to the "Initial Closing Servicing
Balance Price" determined as set forth on Schedule 4.1(a) and (C) an amount
equal to 92% of the Advances Amount. The Purchase Price to be paid at the
Initial Closing shall be based on the Initial Closing Servicing Balance and the
Advances Amount as determined from the Initial Closing Date Report. At the
Initial Closing, Purchaser shall pay the Purchase Price as follows (and in the
following order of priority) (i) an amount equal to the Dispute Amount to the
Dispute Escrow Agent, (ii) an amount equal to the necessary direct costs of the
Sellers incurred in connection with this Agreement which are reasonably
acceptable to the Administrative Agent (it being agreed that the fees, costs,
and expenses of Kroll Zolfo Cooper are not to be deducted and that such amount
shall be reduced by any amounts that are disputed by the Administrative Agent in
accordance with the Cash Collateral Order) as directed by Sellers, (iii) an
aggregate amount equal to the Initial Cure Amount for each Assumed Contract, in
cash by wire transfer of immediately available funds to be held pursuant to the
Cure Escrow Agreement and (iv) the remaining Purchase Price (less any amounts
delivered on behalf of Sellers in accordance with Section 4.3(a)) shall be paid
by wire transfer of immediately available funds to an account or accounts
designated by the Administrative Agent (pursuant to the Sale
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Approval Order) in writing to the Purchaser, not less than two Business Days
prior to the Initial Closing, on behalf of Sellers, to the Administrative Agent
in accordance with the Cash Collateral Order (the amounts payable under clause
(iv) hereinafter referred to as "Net Proceeds").
(b) Sellers shall prepare the calculation, as of the close of
business on the day preceding the Initial Closing Date (the "Initial Closing
Date Report"), of (i) the outstanding stated principal balance of all Mortgage
Loans under the Servicing Agreements in the Initial Closing Date Mortgage Loan
Schedule (which shall include a subtotal of the outstanding principal balance of
all Mortgage Loans under Disputed Servicing Agreements) and (ii) the Advances
Amount. Sellers shall provide Purchaser with the Initial Closing Date Report not
later than the Initial Closing. Within the 30-day period following the date of
the Initial Closing Date, Purchaser shall have the right to dispute the amounts
set forth in the Initial Closing Date Report as the Initial Closing Servicing
Balance (and the subtotal of the outstanding principal balance of all Mortgage
Loans under the Disputed Servicing Agreements) and the Advances Amounts and
Sellers shall have the right to correct any manifest errors with respect to the
amounts set forth in the Initial Closing Date Report as the Initial Closing
Servicing Balance and the Advances Amount; provided, however, that Purchaser
shall have 30 days after the correction of any manifest error by Sellers to
dispute any such correction. If Purchaser does not dispute the Initial Closing
Date Report within such 30-day period after delivery of the Initial Closing Date
Report or, if applicable the 30-day period after Sellers' correction of any
manifest error in the Initial Closing Date Report, such items shall be deemed
final by Sellers and Purchaser, and the Purchase Price calculated pursuant to
Section 4.1(a) and the Dispute Amount calculated pursuant to Section 4.4 shall
be deemed final.
(c) If Purchaser disputes the Initial Closing Date Report (or any
item included therein) as set forth in Section 4.1(b) above, such dispute shall
be resolved in the following manner: (i) Purchaser shall notify Sellers of such
dispute within 30 days after Purchaser's receipt of the Initial Closing Date
Report, or, if applicable, within 30 days after Sellers' correction of any
manifest error in the Initial Closing Date Report, which notice shall specify in
reasonable detail the nature of the dispute; (ii) during the 15-day period
following Sellers' receipt of such notice, Sellers and Purchaser shall use their
commercially reasonable efforts to resolve such dispute in good faith; and (iii)
if at the end of such 15-day period Sellers and Purchaser shall have failed to
resolve such dispute in writing, Sellers and Purchaser shall submit the item(s)
in dispute as promptly as practicable to a national accounting or consulting
firm (the "Arbitrating Accountants") with experience in the mortgage loan
servicing business and that is independent of Sellers and Purchaser and their
respective Affiliates, to be selected by mutual agreement between Sellers and
Purchaser. The Arbitrating Accountants shall act as an arbitrator and shall
resolve the dispute as promptly as practicable after such dispute is referred to
it. Each of the parties hereto shall bear all costs and expenses incurred by it
in connection with such arbitration, except that the cost of the Arbitrating
Accountants hereunder shall be borne equally by Sellers and Purchaser. This
provision for arbitration shall be specifically enforceable by the parties
hereto. The decision of the Arbitrating Accountants in accordance with the
provisions hereof shall be final and binding (absent manifest error), and there
shall be no right of appeal therefrom. Upon the resolution of the disputes, the
Purchase Price (and the Dispute Amount, if applicable) shall be recalculated
based on the final Initial Closing Date Report as determined in accordance with
this Section 4.1(c), and Purchaser shall pay by wire transfer of immediately
available funds to an account or accounts designated by Sellers, on behalf of
Sellers, to the Administrative Agent
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any portion of the Purchase Price not already paid pursuant to Section 4.1(a)
(other than any portion relating to the Disputed Servicing Agreements which
shall be delivered to the Dispute Escrow Agent to be included in the Dispute
Amount) or Sellers shall pay by wire transfer of immediately available funds to
an account or accounts designated by Purchaser to Purchaser any overpayment of
Purchase Price previously paid by Purchaser (other than any portion relating to
the Disputed Servicing Agreements which shall be paid to Purchaser by the
Dispute Escrow Agent from the Dispute Amount and Purchaser and Sellers shall
jointly instruct the Dispute Escrow Agent to deliver such amount (together with
any interest and earnings allocable thereto) to Purchaser), as the case may be.
Sellers shall keep the Administrative Agent and the official unsecured creditors
committee in the Bankruptcy Cases reasonably informed of activities arising
under this Section 4.1(c) and shall provide the Administrative Agent with copies
of all correspondence and schedules delivered by the parties under this Section
4.1. To the extent that any matter becomes the subject of an arbitration
proceeding, Sellers shall provide the Administrative Agent with reasonable prior
written notice of any written submissions and to the extent there are scheduled
any formal or informal proceedings associated with such arbitration, the
Administrative Agent shall be entitled to send one or more parties to such
proceedings, solely to monitor the same. Sellers shall obtain the Administrative
Agent's prior written approval to settle or agree to return any overpayment
amount or to agree to compromise any disputed overpayment amount.
Section 4.2 Allocation of the Purchase Price. (a) The Purchase
Price and the value of any Assumed Liabilities shall be allocated among the
Business, the Purchased Assets and the agreements provided herein for transfer
of the Business to Purchaser in a manner consistent with an allocation schedule
(the "Allocation Schedule"), which Allocation Schedule shall be mutually agreed
upon by Purchaser and Sellers prior to the Initial Closing Date to the extent
reasonably possible, in compliance with Section 1060 of the Code and the
regulations promulgated thereunder. If the Allocation Schedule is not mutually
agreed upon within such period, the parties shall submit such dispute to a
nationally recognized independent accounting firm mutually chosen by the parties
(the "Independent Accounting Firm") for a decision that shall be rendered in a
timely manner in order to permit the timely filing of all applicable forms with
the IRS and other Tax authorities. The Independent Accounting Firm's review
shall be final and binding on all parties. The fees and expenses of the
Independent Accounting Firm shall be borne 50% by Sellers, on the one hand, and
50% by Purchaser, on the other hand.
(b) Each of Sellers and Purchaser shall (i) timely file any forms
(including IRS Form 8594) and Tax Returns required to be filed in connection
with the Allocation Schedule, (ii) be bound by such allocation for purposes of
determining Taxes, (iii) prepare and file, and cause its Affiliates to prepare
and file, its Tax Returns on a basis consistent with such allocation and (iv)
take no position, and cause its Affiliates to take no position, inconsistent
with such allocation on any applicable Tax Return. Each of Purchaser, on the one
hand, and Sellers, on the other hand, will provide the other with copies of IRS
Form 8594 and any required exhibits thereto, consistent with the allocation
determined pursuant to this Section 4.2 upon request. In the event that the
allocation set forth on the Allocation Schedule is disputed by any taxing
authority, the party receiving notice of such dispute shall promptly notify the
other party hereto concerning the existence of, material developments regarding,
and resolution of such dispute.
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Section 4.3 Deposit. Upon execution of this Agreement, Purchaser
will execute and deliver to Sellers and the Deposit Escrow Agent the Deposit
Escrow Agreement and, upon execution and delivery thereof by each of the other
parties thereto, Purchaser will simultaneously deliver to the Deposit Escrow
Agent, pursuant to the terms of the Deposit Escrow Agreement, $15,000,000 in
immediately available funds (the "Cash Deposit"). Any Cash Deposit shall be held
by the Deposit Escrow Agent in an interest bearing account reasonably acceptable
to Purchaser and Sellers. The Cash Deposit shall be held by the Deposit Escrow
Agent to serve as an earnest money deposit under this Agreement to be released
as follows:
(a) Effect of Closing. If the Initial Closing shall occur,
Sellers and Purchaser shall jointly instruct the Deposit Escrow Agent to, on the
Initial Closing Date, deliver the Cash Deposit, together with all accrued
investment income thereon, by wire transfer of immediately available funds, on
behalf of Sellers, to the Administrative Agent (and such amounts shall be
applied toward the payment of the Purchase Price) in accordance with the terms
of the Deposit Escrow Agreement.
(b) Effect of Termination. If this Agreement is validly
terminated prior to the Initial Closing Date, the Deposit Escrow Agent shall
deliver the Cash Deposit in accordance with the terms of the Deposit Escrow
Agreement. If pursuant to this Agreement and the Deposit Escrow Agreement the
Cash Deposit is delivered to, or becomes deliverable to, anyone other than
Purchaser the Cash Deposit will constitute liquidated damages and shall be
delivered to an account or accounts designated by the Administrative Agent
(pursuant to the Sale Approval Order) on behalf of Sellers. Because it would be
impractical and extremely difficult ,to determine the extent of any damages that
might result from a breach of, or default under, this Agreement by Purchaser
prior to the Initial Closing Date, it is understood and agreed that such
liquidated damages represent Purchaser's and Sellers' reasonable estimate of
actual damages, such liquidated damages do not constitute a penalty and the Cash
Deposit will constitute Sellers' sole and exclusive remedy for any breach of, or
default under, this Agreement by Purchaser prior to the Initial Closing Date.
Section 4.4 Dispute Escrow. At the Initial Closing, Purchaser
shall deliver to the Dispute Escrow Agent, to be held pursuant to the Dispute
Escrow Agreement, an amount equal to 0.92% of the unpaid principal balance (as
set forth in the Initial Closing Date Report) of the Mortgage Loans under the
Disputed Servicing Agreements (such amount, as adjusted pursuant to Section
4.1(c), the "Dispute Amount") in immediately available funds. With respect to
each Disputed Servicing Agreement, Sellers shall use their commercially
reasonable efforts to negotiate a settlement or have issued as soon as possible
a Final Order determining whether such Disputed Servicing Agreement was
terminated at or prior to the Petition Date, provided, that Sellers may, in
their reasonable discretion, determine that Sellers will not seek to negotiate a
settlement or have issued a Final Order with respect to any one or more Disputed
Servicing Agreements, and provided further that without the prior written
consent of Purchaser Sellers shall not agree to a settlement which adversely
affects Purchaser's rights and benefits under such Disputed Servicing Agreement
if it otherwise were to become a Purchased Asset. To the extent requested by
Sellers, Purchaser shall use its commercially reasonable efforts to assist in
such negotiations with respect to Disputed Servicing Agreements. For each
Disputed Servicing Agreement for which a settlement is negotiated or a Final
Order is issued determining that such
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Disputed Servicing Agreement was not terminated at or prior to the Petition
Date, Sellers and Purchaser shall instruct the Dispute Escrow Agent to deliver
the portion of the Dispute Amount (together with any interest and earnings
allocable thereto) related to such Servicing Agreement to the Administrative
Agent on behalf of Sellers and such Servicing Agreement shall be a Purchased
Asset. For each Disputed Servicing Agreement for which a Final Order is issued
determining that such Disputed Servicing Agreement was terminated at or prior to
the Petition Date, or with respect to which Sellers reasonably determine that
neither a negotiated settlement nor a Final Order will be sought, Sellers and
Purchaser shall instruct the Dispute Escrow Agent to deliver the portion of the
Dispute Amount (together with any interest and earnings allocable thereto)
related to such Servicing Agreement to Purchaser and such Servicing Agreement
shall be an Excluded Asset. In the event any Disputed Servicing Agreement has
not become an Excluded Asset pursuant to the foregoing sentence by the later of
(i) Final Closing and (ii) September 30, 2008, Purchaser may elect to (a) treat
such Servicing Agreement as an Excluded Asset and Sellers and Purchaser shall
instruct the Dispute Escrow Agent to deliver any portion of the Dispute Amount
(together with any interest and earnings allocable thereto) related to such
Servicing Agreement to Purchaser or (b) treat such Servicing Agreement as a
Purchased Asset and Sellers and Purchaser shall instruct the Dispute Escrow
Agent to deliver any portion of the Dispute Amount (together with any interest
and earnings allocable thereto) related to such Servicing Agreement to an
account or accounts designated by the Administrative Agent (pursuant to the Sale
Approval Order) on behalf of Sellers.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as set forth in the Disclosure Schedules, Sellers jointly and
severally represent and warrant to Purchaser that the statements contained in
this Article V are true and correct as of the date of this Agreement (or, if
made as of a specified date, as of such date), and shall be true and correct as
of the Initial Closing Date as though made on the Initial Closing Date.
Section 5.1 Authorization; Validity of Agreement; Seller Action.
Each Seller has the corporate power and authority (a) to execute and deliver
this Agreement and each Ancillary Agreement to which such Seller is or will be a
party, (b) to perform its obligations hereunder and thereunder (subject to entry
and effectiveness of the Revised Sale Procedures Order), and (c) to consummate
the transactions contemplated hereby and thereby (subject to entry and
effectiveness of the Sale Approval Order). The execution, delivery and
performance of this Agreement by each Seller and of each Ancillary Agreement by
each Seller that is or will be a party thereto, and the consummation by each
Seller of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate action on the part of each Seller and no
other corporate actions or proceedings on the part of such Seller are necessary
to authorize this Agreement, any Ancillary Agreement or any of the transactions
contemplated hereby and thereby. This Agreement has been duly and validly
executed and delivered by or on behalf of each Seller and (assuming this
Agreement constitutes a valid and binding obligation of Purchaser) constitutes
the legal, valid and binding obligation of each Seller, enforceable against such
Seller in accordance with its terms, except (i) as enforceability may be limited
by applicable bankruptcy, reorganization, insolvency, moratorium and other Laws
affecting the enforcement of
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creditors' rights generally from time to time in effect and by general equitable
principles relating to enforceability (the "Enforceability Exceptions"), (ii)
that enforceability of the provisions hereof requiring consummation of the
transactions contemplated hereby is subject to entry and effectiveness of the
Sale Approval Order or any other action by the Bankruptcy Court and (iii) that
enforceability of all other provisions hereof is subject to entry and approval
of the Revised Sale Procedures Order or any other action by the Bankruptcy
Court. Subject to entry and effectiveness of the Sale Approval Order, when
required by this Agreement to be delivered to Purchaser each Ancillary Agreement
will be duly and validly executed and delivered by each Seller that will be a
party thereto, and upon such execution and delivery (assuming such Ancillary
Agreement constitutes a valid and binding obligation of each other party
thereto) will constitute the legal, valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its respective terms, subject
to the Enforceability Exceptions.
Section 5.2 Organization and Good Standing. Except as a result of
the commencement of the Bankruptcy Cases, each Seller (i) is a legal entity duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and (ii) has all requisite corporate power and,
subject to any required Bankruptcy Court approval, authority to carry on the
Business as presently conducted, except as would not reasonably be expected to
have a Material Adverse Effect. Except as a result of the commencement of the
Bankruptcy Cases, each Seller is qualified to do business and is in good
standing in all jurisdictions where it owns or leases real property in
connection with the operation of the Business or otherwise conducts the
Business, except where the failure to so qualify or to so be in good standing
has not had and would not reasonably be expected to have a Material Adverse
Effect.
Section 5.3 Governmental Consents and Approvals; No Violations.
Subject to the entry and effectiveness of the Sale Approval Order and the
satisfaction of the conditions set forth therein, no Consent of, or declaration,
filing or registration with, any Government Entity is required to be obtained or
made, as applicable, by either Seller in connection with the execution, delivery
and performance of this Agreement or any Ancillary Agreement (the "Governmental
Requirements"), or the consummation of the transactions contemplated by this
Agreement or by any Ancillary Agreement, except for: (a) the filing of a
notification and report form under the HSR Act and the expiration or earlier
termination of the applicable waiting period thereunder and (b) Consents,
declarations, filings and registrations of Government Entities, the failure to
have which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
Section 5.4 Noncontravention. The execution, delivery and
performance by the Sellers of this Agreement and the Ancillary Agreement to
which they are or will be a party do not, and the consummation of the
transactions contemplated herein and therein will not, (a) violate, conflict
with, or result in any breach of any of the terms, conditions or provisions of
the Sellers' Charter Documents, (b) except as set forth on Schedule 5.4(b),
assuming the entry and effectiveness of the Sale Approval Order, and further
assuming for purposes of this representation that Section 2.4 were not a part of
this Agreement, require a Consent or violate or
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result in any violation or breach of, or constitute a default (with or without
due notice or lapse of time or both) under, or give rise to any right of
termination, cancellation or acceleration under, or a material loss of any
benefits under, any of the terms, conditions or provisions of any Assumed
Contract, (c) except as set forth on Schedule 5.4(c), violate any Law applicable
to the Sellers or by which any portion of the Purchased Assets is bound or
subject or (d) assuming the entry and effectiveness of the Sale Approval Order,
result in the creation or imposition of any Lien, other than Permitted Liens and
New Financing Liens, upon the Purchased Assets, except in the case of
subsections (b) and (c) above, as has not had and would not reasonably be
expected to have a Material Adverse Effect.
Section 5.5 Title to Assets and Properties; Liens. Subject to
entry and effectiveness of the Sale Approval Order, at the Final Closing,
Sellers shall transfer to Purchaser (or one or more designees of Purchaser)
good, valid, legal and marketable title to, or a valid lease or license interest
in, all of the Purchased Assets, free and clear of all Liens and Claims, other
than Permitted Liens and New Financing Liens.
Section 5.6 Mortgage Servicing Portfolio; Servicing Agreements;
Assumed Contracts; Mortgage Loans.
(a) Mortgage Servicing Portfolio. Sellers have delivered to
Purchaser in a spreadsheet attached as Schedule 5.6(a) a correct and complete
schedule dated as of September 17, 2007 that provides information with respect
to the Mortgage Loans serviced pursuant to the Servicing Agreements (the
"Mortgage Loan Schedule," which term includes, except where the context requires
otherwise, a correct and complete updated schedule (the "Initial Closing Date
Mortgage Loan Schedule") to be prepared as of the close of business on the day
preceding the Initial Closing Date and delivered on the Initial Closing Date).
(b) Assumed Contracts. Except as set forth on Schedule 5.6(b)(i),
the Servicing Agreements set forth all of the material provisions with respect
to fees and other income and set forth in all material respects all of the other
terms and conditions of Sellers' rights and obligations relating to the
servicing of the Mortgage Loans, and there are no other agreements, written or
oral, that modify or affect the Servicing Agreements or the Servicing Fees and
the Servicing Rights thereunder. The Company and American Home Mortgage Corp.,
as applicable, own the entire right, title and interest in and to the Servicing
Rights and the right to service the Mortgage Loans underlying the Servicing
Agreements free and clear of all Liens and Claims subject to the entry and
effectiveness of the Sale Approval Order, except for the rights of subservicers
and other Liens and Claims disclosed on Schedule 5.6(b)(ii). Except as set forth
on Schedule 5.6(b)(iii): (i) the transfer, assignment and delivery of the
Servicing Rights in accordance with the terms and conditions of this Agreement
shall, upon execution and delivery of the applicable Assignment and Assumption
Agreements by the parties thereto, grant to Purchaser all of Sellers' Servicing
Rights; (ii) each Assumed Contract is in full force and effect, is the valid,
binding and enforceable agreement of Sellers and, to the Knowledge of Sellers,
each other party thereto, except for the Enforceability Exceptions, and, upon
the assignment of each such Assumed Contract to Purchaser in accordance with
this Agreement, will be enforceable by Purchaser, except for the Enforceability
Exceptions; (iii) none of the other parties to any of the
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Assumed Contracts has provided written notice to any of Sellers that such party
will be terminating, modifying or amending any of the Assumed Contracts (or
otherwise seeking to terminate, modify or amend, or reduce Seller's benefits
under any Assumed Contracts, including the Servicing Rights under any of the
Servicing Agreements); (iv) no written claim has been made against a Seller for
indemnification pursuant to any Assumed Contract; (v) to the Knowledge of the
Sellers, no other party thereto is or, with the lapse of time or giving of
notice or both, would be, in violation or default of an Assumed Contract; (vi)
Schedule 5.6(b)(iv) hereto sets forth each Assumed Contract; (vii) except as set
forth on Schedule 5.6(b)(iii), the Assumed Contracts constitute all of the
material contracts existing or utilized in connection with the Business; and
(viii) other than engagement of the Company, Sellers have not engaged any
subservicers, to perform any of the Servicing Rights; except in each of clauses
(i) through (viii) as would not reasonably be expected to have a Material
Adverse Effect.
(c) Compliance with Applicable Servicing Agreements and Law.
Except as set forth on Schedule 5.6(c), from and after the time a Mortgage Loan
became subject to the applicable Servicing Agreements, the servicing of the
Mortgage Loans has been performed by the applicable Seller in compliance, in all
material respects, with all provisions of the related Mortgage Loan Documents,
the applicable Servicing Agreements and Law.
(d) Advances. Except as set forth on Schedule 5.6(d)(i), (i) all
Advances described in clause (i) of the definition of Advances made by Sellers
prior to and through and including the date set forth on Schedule 5.6(d)(ii) and
the Initial Closing Date have been made in compliance in all material respects
with the terms of the applicable Servicing Agreement; (ii) the amount of each
Advance described in clause (i) of the definition of Advances (shown both gross
and net, where applicable, of any unscheduled principal and interest payments),
in each case in accordance with the applicable Servicing Agreement, is set forth
on Schedule 5.6(d)(ii) (which shall be updated as of the Initial Closing Date)
as of the date set forth on such schedule and the Initial Closing Date; (iii)
all Advances described in clause (i) of the definition of Advances are valid and
subsisting amounts owing to Sellers, payable at the times and in accordance with
the provisions of the applicable Servicing Agreement, free and clear of all
Liens, subject to the entry and effectiveness of the Sale Approval Order, (other
than Liens arising under any servicing advance facility which shall be satisfied
as of the Initial Closing), Claims, defenses, and rights of set-off (other than
defenses and rights of set-off of any borrower under any Mortgage Loan which
such defenses and rights of set-off are, to the Knowledge of Sellers, not
material in the aggregate); and (iv) all of the Advances described in clause (i)
of the definition of Advances included in the Purchased Assets relate to
Mortgage Loans that are being serviced by Sellers pursuant to a Servicing
Agreement. Except as set forth on Schedule 5.6(d)(iii), (i) all Advances
described in clause (ii) of the definition of Advances made by Sellers prior to
and through and including the date set forth on Schedule 5.6(d)(iv) and the
Initial Closing Date have been made in compliance in all material respects with
the terms of the applicable Mortgage Loan Documents and, to the extent
applicable, the agreements governing the rights that have become the Servicing
Rights Held for Sale; (ii) the amount of each Advance described in clause (ii)
of the definition of Advances (shown both gross and net, where applicable, of
any unscheduled principal and interest payments), in each case in accordance
with the applicable Mortgage Loan Document and, to the extent applicable, the
agreements that govern the rights that have become the Servicing Rights Held for
Sale, is set forth on Schedule 5.6(d)(iv) (which shall be updated as of the
Initial Closing Date) as of the date set forth on such schedule and the Initial
Closing Date;
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(iii) all Advances described in clause (ii) of the definition of Advances are
valid and subsisting amounts owing to Sellers, payable at the times and in
accordance with the provisions of the applicable Mortgage Loan Document and, to
the extent applicable, the agreements governing the rights that have become the
Servicing Rights Held for Sale, free and clear of all Liens, subject to the
entry and effectiveness of the Sale Approval Order, (other than Liens arising
under any servicing advance facility which shall be satisfied as of the Initial
Closing), Claims, defenses, and rights of set-off (other than defenses and
rights of set-off of any borrower under any Mortgage Loan which such defenses
and rights of set-off are, to the Knowledge of Sellers, not material in the
aggregate); and (iv) all of the Advances described in clause (ii) of the
definition of Advances included in the Purchased Assets relate to Mortgage Loans
set forth on Schedule 6.10(f) or, to the extent applicable, the Servicing Rights
Held for Sale.
Section 5.7 Compliance with Laws. Except as set forth on Schedule
5.7(a), each Seller (i) is in compliance with and is operating the Business, and
each of the Purchased Assets and Assumed Contracts is, in compliance with all
Applicable Requirements in all material respects and (ii) holds all material
permits, concessions, grants, licenses, easements, variances, exemptions,
consents, orders, franchises, authorizations and approvals of all Governmental
Entities necessary for the lawful conduct of the Business (the "Permits").
Except as set forth in Schedule 5.7(b), the Permits are valid and in full force
and effect. Except as set forth in Schedule 5.7(c), no Seller has received any
written notice or other written communication from any Governmental Entity or
other Person (i) asserting any violation of, or failure to comply with, any
requirement of any Permit or (ii) notifying a Seller or any of its Subsidiaries
of the non-renewal, revocation or withdrawal of any Permit. Each Seller is in
material compliance with the terms of the Permits.
Section 5.8 Litigation; Proceedings. Except as set forth on
Schedule 5.8, there is no material claim, action, suit, proceeding, complaint,
charge, hearing, grievance or arbitration pending or, to the Knowledge of the
Sellers, threatened against or Related to the Business, or related to the
Purchased Assets, the Assumed Liabilities or the Assumed Contracts, whether at
law or in equity, whether civil or criminal in nature or by or before any
arbitrator or Governmental Entity, nor are there any investigations relating to
the Business, or related to the Purchased Assets, the Assumed Liabilities or the
Assumed Contracts, pending or, to the Knowledge of the Sellers, threatened by or
before any arbitrator or any Governmental Entity. None of the Purchased Assets
is subject to any judgment, injunction, order, consent or decree of any
Governmental Entity or any settlement agreement with any Person.
Section 5.9 Sufficiency of Assets. Except as set forth on
Schedule 5.9, the Purchased Assets constitute substantially all of the assets
reasonably necessary for the operation of the Business as conducted by Sellers
as of the date hereof and substantially all of the assets that are used by
Sellers to operate the Business in the manner presently conducted.
Section 5.10 Financial Statements.
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(a) Attached to Schedule 5.10(a) is certain unaudited financial
summary information of the Business as of July 31, 2007 and for the seven month
period then ended (the "Business Interim Financial Statements"). The Business
Interim Financial Statements were prepared by Sellers from the books and records
of Sellers and do not include all of the information and footnotes required by
GAAP. Historically, neither the Company nor Sellers have maintained separate
financial statements for the Business on the basis presented in Schedule 5.10(a)
or on any other comparable basis. In addition, the historical consolidated
financial statements of Parent are currently being reviewed by the Securities
and Exchange Commission. The operating results for the seven month period ended
July 31, 2007 are not necessarily indicative of the results that may be expected
for a full twelve month period and further, may not be representative of the
Business as an independent, stand-alone entity as more fully described in
Schedule 5.10(a). The Business Interim Financial Statements are presented on an
accrual basis, except that Servicing Fees and ancillary fees are recognized when
received. The Business Interim Financial Statements were not audited or reviewed
by an independent accountant.
(b) Attached to Schedule 5.10(b) is certain unaudited financial
summary information of the Business as of July 31, 2007 and for the seven month
period then ended recast to more closely reflect the operations of the Business
on a stand-alone basis (the "Recast Business Interim Financial Statements"). The
Recast Business Interim Financial Statements were prepared by Sellers from the
Business Interim Financial Statements, and as more thoroughly described in
Schedule 5.10(b), include the use of certain assumptions and estimates. Sellers
prepared the Recast Business Interim Financial Statements in good faith as a
reasonable pro forma estimate of the assets and liabilities, results of
operations and cash flows of the Business as of July 31, 2007 and for the seven
month period then ended.
(c) The parties hereto recognize and acknowledge that the Recast
Business Interim Financial Statements were prepared in connection with
negotiating the sale of the Business, and, accordingly required the development
and application of the assumptions and estimates described in Schedule 5.10(b).
Section 5.11 Seller/Servicer Status. The Company is a FNMA
approved servicer of Mortgage Loans, eligible to service FNMA Mortgage Loans.
Except as set forth on Schedule 5.11, the Company is licensed, approved or
exempt from licensure and/or approval as a servicer under state mortgage
regulatory agencies in each state where the failure to be so licensed, approved
or exempt could materially and adversely affect Servicing Rights in respect of
Servicing Agreements.
Section 5.12 MERS Membership. American Home Mortgage Holdings,
Inc. is a MERS Member, and the Company and American Home Mortgage Corp. in their
capacity as affiliates of American Home Mortgage Holdings, Inc. are each
authorized users of the MERS System pursuant to American Home Mortgage Holding,
Inc.'s membership and, except as set forth on Schedule 5.12, American Home
Mortgage Holdings, Inc. is in compliance with all terms and conditions of its
membership in MERS.
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Section 5.13 Status of Mortgage Loans. As of September 17, 2007,
the aggregate amount of Defaulted Mortgage Loans serviced pursuant to the
Servicing Agreements is not more than 4.8% of the aggregate outstanding
principal balance of all Mortgage Loans that are being serviced pursuant to the
Servicing Agreements.
Section 5.14 Brokers. Other than Milestone Advisors, LLC and
Phoenix Capital Inc. whose fee shall be paid by Sellers, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of Sellers.
ARTICLE VI
COVENANTS
Section 6.1 Interim Operations of Sellers. Sellers covenant and
agree that, after the date hereof and through the Final Closing Date, with
respect to the Purchased Assets, the Assumed Contracts and the Business, except
as expressly provided in this Agreement or as may be agreed in writing by
Purchaser:
(a) the Business shall be conducted in the Ordinary Course of
Business, subject to the Bankruptcy Exceptions, and Sellers shall use
commercially reasonable efforts, to preserve the business organization of the
Business intact, keep available the services of the current officers and
employees of the Business and maintain the existing relations with customers,
suppliers, creditors, business partners and others having business dealings with
the Business; provided that prior to the Initial Closing Date, Sellers may
deliver a written notice to Purchaser describing which servicing rights (but not
the related Advances to the extent they have not been sold prior to the Initial
Closing) set forth on Schedule 6.1(a) Sellers intend to sell to third parties,
which servicing rights may not relate to mortgage loans having unpaid principal
balances exceeding $10 billion in the aggregate (the servicing rights described
in such notice (but not the related Advances to the extent they have not been
sold prior to the Initial Closing) being referred to in this Agreement as the
"Servicing Rights Held for Sale");
(b) Sellers and their Affiliates shall not assign, modify, amend
or terminate any of the Assumed Contracts, except (1) in the Ordinary Course of
Business, (2) as necessary to assume and assign the Assumed Contracts pursuant
to Section 365 of the Bankruptcy Code to Purchaser or any designee of Purchaser
and with the written consent of Purchaser or such designee, (3) as set forth on
Schedule 6.1(b), or (4) for the Servicing Rights Held for Sale;
(c) Sellers and their Affiliates shall not terminate or permit to
lapse any Permits or other Government Authorizations that are necessary for the
operation of the Business and the termination or lapse of which would cause a
Material Adverse Effect, except when such termination or lapse results from any
Order or other proceeding instituted by any Government Entity and such
termination or lapse has been duly contested by Seller with commercially
reasonable efforts;
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(d) Sellers and their Affiliates shall not (1) permit any Liens
or Claims to arise with respect to the Purchased Assets other than in the
Ordinary Course of Business; or (2) purchase, transfer, sell or dispose of any
assets of the Business other than in the Ordinary Course of Business or dispose
of or permit to lapse any rights to any material Intellectual Property other
than in the Ordinary Course of Business; provided that prior to the Initial
Closing Date, Sellers may sell, or enter into agreements to sell, the Servicing
Rights Held for Sale;
(e) Sellers and their Affiliates shall not make any change to
increase the rate of base compensation or bonus opportunity of any Business
Employee other than as set forth on Schedule 6.1(e) or as is reasonably
acceptable to Purchaser; provided, however, that, subject to any required
Bankruptcy Court Approval, Sellers shall, after the Initial Closing, modify or
replace any employee retention plan or similar plan applicable to any Business
Employee employed in Texas as is requested by Purchaser;
(f) Sellers and their Affiliates shall not waive or release any
material right that constitutes a Purchased Asset;
(g) Sellers and their Affiliates shall not (1) enter into any
material settlement or release with respect to any legal proceeding relating to
or affecting the Purchased Assets, the Assumed Liabilities, the Assumed
Contracts or the Business, other than in the Ordinary Course of Business, as
required by Law, or with respect to Disputed Servicing Agreements (provided that
Sellers or their Affiliates shall not, without Purchaser's written consent,
enter into any settlement or release with respect to any Disputed Servicing
Agreement that adversely affects Purchaser, it being understood that any
settlement or release which results in the return to the Purchaser of the
Purchase Price, or relieves Purchaser of the obligation to pay the Purchase
Price, allocable to such Disputed Servicing Agreement will not be deemed to
adversely affect Purchaser) or (2) pay any amount, perform any obligation or
agree to pay any amount or perform any obligation, in settlement or compromise
of any suits or claims of Liability Related to the Business, in each case in
excess of $100,000; provided that Sellers shall be permitted to enter into
settlement agreements prior to the Initial Closing Date in connection with (A)
the transfer of Servicing Rights Held for Sale, (B) with the written consent of
Purchaser (which shall not be unreasonably withheld or delayed), the Disputed
Servicing Agreements and (C) any Liabilities that are not Assumed Liabilities
provided that Purchaser will not have any Loss with respect thereto;
(h) Other than as provided in Section 4.4, Sellers and their
Affiliates shall not (1) breach, reject or terminate any Assumed Contract or
seek Bankruptcy Court approval to do so or (2) fail to use commercially
reasonable efforts to oppose any action by a third party to terminate (including
any action by a third party to obtain Bankruptcy Court approval to terminate)
any Assumed Contract; provided that, prior to the Initial Closing Date, Sellers
may (A) with the consent of Purchaser (which shall not be unreasonably withheld
or delayed), reject any Assumed Contract (other than Servicing Agreements) that
is not material to the Business or readily replaceable at substantially the same
cost and without disruption to the operation of the Business and (B) with the
written consent of Purchaser (which shall not be unreasonably withheld or
delayed), terminate and reject a Disputed Servicing Contract;
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(i) With respect to any Purchased Asset, Sellers and their
Affiliates shall not: (1) agree to allow any form of relief from the automatic
stay in the Bankruptcy Cases; (2) fail to use commercially reasonable efforts to
oppose any action by a third party to obtain relief from the automatic stay in
the Bankruptcy Cases; (3) agree to a rejection of any Assumed Contract except as
provided in Section 6.1(h)(A) or (B); or (4) fail to use commercially reasonable
efforts to oppose any action by a Person (other than Purchaser) seeking to have
an Assumed Contract rejected, except as provided in provisos (A) and (B) in
Section 6.1(h);
(j) Except as required by Law or the Bankruptcy Court, Sellers
and their Affiliates shall not take, or agree to or commit to take, any action
that would or is reasonably likely to result in any of the conditions to the
Initial Closing set forth in Article VIII not being satisfied, or would make any
representation or warranty of Sellers contained herein inaccurate in any
material respect at, or as of any time prior to, the Initial Closing Date or
that would materially impair the ability of Sellers or Purchaser to consummate
the Initial Closing in accordance with the terms hereof or materially delay such
consummation;
(k) Sellers shall conduct the Business (1) in accordance with Law
except where the failure to do so will not result in a Material Adverse Effect
or where the failure to do so results from any Order or other proceeding
instituted by any Government Entity that has been duly contested by Sellers with
commercially reasonable efforts and (2) in accordance with the other Applicable
Requirements in the Ordinary Course of Business and subject to the Bankruptcy
Exceptions and except when any failure to conduct the Business in accordance
with the Applicable Requirements results from any Order or other proceeding
instituted by any Government Entity that has been duly contested by Sellers with
commercially reasonable efforts; and
(l) No Seller nor any of Sellers' Affiliates shall enter into any
agreement, Contract, contract commitment or arrangement to do any of the
foregoing, or authorize, recommend, propose or announce an intention to do, any
of the foregoing.
Section 6.2 Operations Following the Initial Closing.
(a) From the Initial Closing to the Final Closing, Sellers shall
operate the Business and manage the Purchased Assets, Assumed Liabilities and
Assumed Contracts in the Ordinary Course of Business, subject to the Bankruptcy
Exceptions and consistent with Section 6.1 (provided that, with respect to
Sections 6.1(a), (c), (d)(1), (d)(2) (but solely with respect to the lapse of
rights to material Intellectual Property referred to therein), (f), (h)(1) (but
solely with respect to the breach of an Assumed Contract referred to therein),
(k), and (l) (but solely to the extent (l) relates to any of the matters
referred to in the foregoing listed subsections of Section 6.1) Sellers shall
have liability for a breach thereof only through bad faith, willful misconduct
or gross negligence); provided that Purchaser, at Purchaser's cost and expense
shall provide, or arrange for, as part of the Financing, such liquidity and
working capital as may be necessary to enable Sellers to operate the Business
from the Initial Closing to the Final Closing. Notwithstanding any provision of
this Section 6.2, other than with respect to Retained Liabilities, Sellers shall
have no obligation to fund any Liabilities of the Business following the Initial
Closing other than from proceeds of the Financing and revenues generated by the
Business after
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the Initial Closing. Subject to Section 2.7(c), Sellers shall regularly consult
with Purchaser with respect to such operations and to prepare the Business to be
transitioned to Purchaser at the Final Closing as a stand alone business.
Notwithstanding the foregoing, Purchaser shall not have the right to direct the
management or policies of Sellers.
(b) From the Initial Closing until the Final Closing, all profits
and Losses of the Business shall be solely for the account of Purchaser, and
Purchaser shall be solely responsible for all Losses, costs and expenses of the
Business during such period and shall bear all Liabilities of the Business and
all Losses incurred by Sellers or their Affiliates in the operation of the
Business or otherwise arising as a result of, or in connection with, the
continued ownership by Sellers of the Purchased Assets and the operation of the
Business after the Initial Closing; provided that Sellers acknowledge and agree
that such Liabilities and Losses shall not include any Liabilities or Losses
incurred by Sellers in connection with the resolution or attempted resolution of
Claims with respect to the Disputed Servicing Agreements, including any and all
costs of adjudicating same to a Final Order or negotiating a settlement thereof,
which Liabilities and Losses shall be borne by Sellers. Following the Initial
Closing, Sellers and Purchaser shall, for each three month period following the
Initial Closing through the Final Closing and for any shorter period between the
last full three month period and the Final Closing (each such period a
"Reconciliation Period"), reconcile the net cash flow of the Business as
contemplated by Exhibit G (each a "Reconciliation Calculation"). Following the
Final Closing and the determination of the final Reconciliation Report for the
last Reconciliation Period pursuant to Section 6.2(d) or 6.2(e), Sellers or
Purchaser, as the case may be, shall make a reconciliation payment to the other
with respect to the net sources and uses of cash for the period from the Initial
Closing through the Final Closing (the "Reconciliation Payment") based on the
final Reconciliation Reports as determined pursuant to Section 6.2(d) or 6.2(e)
for each Reconciliation Period as may be necessary to ensure each party is
placed in the same economic position as if the Purchased Assets, Assumed
Liabilities and Assumed Contracts had been transferred to the Purchaser on the
Initial Closing Date and that Sellers have not benefited from any profits nor
suffered any Losses in connection with the operation of the Business during the
period from the Initial Closing through the Final Closing. Any Reconciliation
Payment payable by Sellers to Purchaser shall be payable exclusively out of cash
held by the Company at the time the Reconciliation Payment is required to be
paid and only from cash arising out of the operation of the Business after the
Initial Closing and through the Final Closing. Notwithstanding anything to the
contrary herein, the parties acknowledge that Sellers shall be operating as
debtors in possession under the Bankruptcy Code.
(c) With respect to Sellers' operation of the Business from the
Initial Closing to the Final Closing, Sellers shall indemnify Purchaser for any
Losses to the extent arising out of (i) Sellers' bad faith, willful misconduct
or gross negligence in its operation of the Business or (ii) a breach of this
Agreement (other than Sections 6.1(a), (c), (d)(1), (d)(2) (but solely with
respect to the lapse of rights to material Intellectual Property referred to
therein), (f), (h)(1) (but solely with respect to the breach of an Assumed
Contract referred to therein), (k), and (l) (but solely to the extent (l)
relates to any of the matters referred to in the foregoing listed subsections of
Section 6.1), with respect to which Sellers shall have liability for a breach
thereof only through willful misconduct, bad faith or gross negligence).
Following the Final Closing, Purchaser shall indemnify Sellers and their
Affiliates for any Losses arising out of operation of the Business or otherwise
arising as a result of, or in connection with, the continued ownership
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by
Sellers of the Purchased Assets and operation of the Business after the Initial
Closing through the Final Closing, except for any Losses arising out of (i)
Sellers' or their Affiliates' bad faith, willful misconduct or gross negligence,
or (ii) a breach of this Agreement (other than Sections 6.1(a), (c), (d)(1),
(d)(2) (but solely with respect to the lapse of rights to material Intellectual
Property referred to therein), (f), (h)(1) (but solely with respect to the
breach of an Assumed Contract referred to therein), (k), and (l) (but solely to
the extent (l) relates to any of the matters referred to in the foregoing listed
subsections of Section 6.1) with respect to which Sellers shall have liability
for a breach thereof only through bad faith, willful misconduct or gross
negligence). Notwithstanding anything to the contrary herein, the parties hereby
agree that "gross negligence" shall not include, and Sellers shall not be
liable, for any Losses arising due to the Bankruptcy Exceptions. In addition,
Purchaser shall be obligated to pay the Purchaser's Cure Amount.
(d) Sellers shall prepare each Reconciliation Calculation for
each Reconciliation Period in accordance with Exhibit G (a "Reconciliation
Report"). Sellers shall provide Purchaser with each Reconciliation Report as
promptly as possible after the applicable Reconciliation Period but not later
than 30 days thereafter. Within the 30 day period following receipt of each
Reconciliation Report, Purchaser shall have the right to dispute the amounts set
forth therein, as set forth in Section 6.2(e). If Purchaser does not dispute the
Reconciliation Report within such 30 day period, such report shall be deemed
final by Sellers and Purchaser, and Purchaser shall be barred from disputing the
portion of the Reconciliation Payment Report corresponding to such
Reconciliation Report. Sellers shall prepare the calculation of the
Reconciliation Payment which shall be a summation on the final Reconciliation
Reports for each Reconciliation Period (the "Reconciliation Payment Report").
Sellers shall provide Purchaser with the Reconciliation Payment Report within
five days of the final determination of the Reconciliation Report for the last
Reconciliation Period. Within the 5 day period following receipt of the
Reconciliation Payment Report, Purchaser shall have the right to dispute the
Reconciliation Payment solely in the event that the Reconciliation Payment
Report differs from the sum of the final Reconciliation Reports. If Purchaser
does not dispute the Reconciliation Payment Report within such 5 day period,
such report shall be deemed final by Sellers and Purchaser, and, Sellers or
Purchaser, as the case may be, shall immediately thereafter deliver the
Reconciliation Payment.
(e) If Purchaser disputes any Reconciliation Report or the
Reconciliation Payment Report (or any item included therein) as set forth in
Section 6.2(d) above, such dispute shall be resolved in the following manner:
(i) Purchaser shall notify Sellers of such dispute within 30 days after
Purchaser's receipt of the applicable report, which notice shall specify in
reasonable detail the nature of the dispute; (ii) during the 15-day period
following Sellers' receipt of such notice, Sellers and Purchaser shall use their
commercially reasonable efforts to resolve such dispute in good faith; and (iii)
if at the end of such 15-day period Sellers and Purchaser shall have failed to
resolve such dispute in writing, Sellers and Purchaser shall submit the item(s)
in dispute as promptly as practicable to Arbitrating Accountants with experience
in the mortgage loan servicing business and that are independent of Sellers and
Purchaser and their respective Affiliates to be selected by mutual agreement
between Sellers and Purchaser. The Arbitrating Accountants shall act as an
arbitrator and shall resolve the dispute as promptly as practicable after such
dispute is referred to it. Each of the parties hereto shall bear all costs and
expenses incurred by it in connection with such arbitration, except that the
cost of the Arbitrating
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Accountants hereunder shall be borne equally by Sellers and Purchaser. This
provision for arbitration shall be specifically enforceable by the parties
hereto. The decision of the Arbitrating Accountants in accordance with the
provisions hereof shall be final and binding (absent manifest error), and there
shall be no right of appeal therefrom. Upon the resolution of the disputes (A)
with respect to any Reconciliation Report, the Reconciliation Report determined
in accordance with this Section 6.2(e) will be the final Reconciliation Report
for such Reconciliation Period and (B) with respect to the Reconciliation
Payment Report, the Reconciliation Payment shall be recalculated based on the
final Reconciliation Payment Report as determined in accordance with this
Section 6.2(e), and Sellers or Purchaser, as the case may be, shall immediately
thereafter deliver the Reconciliation Payment.
(f) From the Initial Closing Date through the Final Closing Date,
Sellers shall service the (i) Mortgage Loans serviced under the Disputed
Servicing Agreements, (ii) Mortgage Loans serviced by the Servicing Rights Held
for Sale and (iii) Mortgage Loans set forth on Schedule 6.10(f). In
consideration of such servicing (A) Sellers shall remit to the Business (or the
Business may retain, as the case may be) an amount equal to all Servicing Fees
payable to the servicing agent for servicing the Mortgage Loans described in
subclauses (i) through (iii) hereof at the time of the receipt thereof, (B)
Sellers shall remit to the Business, on a monthly basis, for servicing the
Mortgage Loans described in subclause (ii) and (iii) hereof (I) $15 per month
per Mortgage Loan serviced during the two month period following the Initial
Closing Date, $20 per month per Mortgage Loan serviced during the two month
period following such period and $25 per Mortgage Loan serviced after the four
month period following the Initial Closing Date minus (II) the monthly Servicing
Fees collected by the Business with respect to servicing such Mortgage Loan and
(C) Sellers shall remit to the Business, on a monthly basis, $25 for each
Mortgage Loan described in subclauses (ii) and (iii) that is "deboarded."
(g) Upon (i) a sale by Sellers of the Mortgage Loans described on
Schedule 6.10(f) or the servicing rights with respect thereto or (ii) a sale by
Sellers of the Servicing Rights Held for Sale, Sellers shall undertake a review
of the number of Business Employees reasonably necessary to continue to service
the Servicing Agreements as compared to the number of Business Employees which
were servicing all such servicing rights immediately prior to such sale or
termination. In the event that in Sellers' reasonable business judgment (taking
into account, without limitation, the need for Business Employees to service
future servicing rights which may be acquired by the Business, and the need for
additional Business Employees to service Defaulted Mortgage Loans), such sale or
termination directly results in there being excess Business Employees, Sellers
shall terminate such Business Employees and shall be liable for and bear any
Liabilities incurred by the Business as a result of such terminations (and such
Liabilities shall not be borne by Purchaser or the Business).
Section 6.3 Access; Books and Records. (a) Between the date of
this Agreement and the Final Closing Date, Sellers shall, at Purchaser's
expense, (i) afford Purchaser and its authorized Representatives access to all
books and records, offices and other facilities Related to the Business, as well
as management and other employees Related to the Business, of Sellers, (ii)
permit Purchaser to make inspections and to make copies of such books and
records Related to the Business as it may require and (iii) furnish Purchaser
with such financial and operating data Related to the Business and other
information which is Related to the Business as
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Purchaser may from time to time request; provided, however, that prior to the
Initial Closing, such access (y) shall be reasonable and (z) shall not
unreasonably disrupt the business of Sellers. For an abundance of clarity, under
no circumstances shall this right to access be construed as a "diligence out" or
termination right of Purchaser.
(b) Purchaser and Sellers shall preserve for a period of six
years after the Final Closing Date (or such longer period as may be required by
any Government Entity or ongoing claim) all books and records Related to the
Business prior to the Final Closing Date. After the Final Closing Date, where
there is a legitimate purpose, the party hereto that has received a request for
access (the "Requested Party") shall provide the party hereto requesting access
(the "Requesting Party") with access, upon prior reasonable written request
specifying the need therefor, during regular business hours, to the books of
account and records of the Requested Party, but, in each case, only to the
extent relating to the conduct of the Business prior to the Final Closing Date,
and the Requesting Party and its Representatives shall have the right to make
copies of such books and records; provided, however, that the foregoing right of
access shall not be exercisable in such a manner as to interfere unreasonably
with the normal operations and business of the Requested Party; and provided,
further, that such information shall be held by the Requesting Party in
confidence to the extent required by, and in accordance with, the
Confidentiality Agreement. Such records may nevertheless be destroyed by either
party if such party sends to the other party written notice of its intent to
destroy records, specifying with particularity the contents of the records to be
destroyed. Such records may then be destroyed after the 30th day after such
notice is given unless the party receiving the notice objects to the
destruction, in which case the party that provided the notice shall deliver, at
the objecting party's expense, such records to the objecting party.
(c) At Sellers' request following the Final Closing Date,
Purchaser shall provide Sellers with reasonable access to the Transferred
Employees and shall cooperate with Purchaser for the purpose of assisting
Sellers with the winding down of Parent and the Filing Subsidiaries in
conjunction with the Bankruptcy Cases and the provision of any information
required for the purpose of filing Tax returns; provided, that such access shall
not unreasonably disrupt the business of Purchaser.
Section 6.4 Cooperation; Efforts and Actions to Cause Closings.
(a) Following the date hereof and through the Final Closing Date, upon the terms
and subject to the conditions of this Agreement, Purchaser and Sellers shall
cooperate in good faith and use their respective commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done and
cooperate with each other in order to do, all things necessary, proper or
advisable (subject to any applicable Laws) to satisfy the conditions to each of
the Initial Closing Date and the Final Closing Date, as applicable, set forth in
Article VIII and to consummate the transactions contemplated hereby as promptly
as practicable, including the preparation and filing of all forms, registrations
and notices required to be filed to consummate the transactions contemplated
hereby and the taking of such actions as are necessary to obtain all requisite
Consents, orders, Permits, qualifications or exemption from consents by any
third party or Government Entity, including the Revised Sale Procedures Order
and the Sale Approval Order. Sellers and Purchaser shall each file their
Notification and Report Form under the HSR Act
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within 10 Business Days after the entry of the Sale Approval Order. The filing
fee with respect thereto shall be borne one-half by Purchaser and one-half by
Sellers.
(b) Following the date hereof and through the Final Closing Date,
each party shall promptly consult with the other parties hereto with respect to,
provide any necessary information with respect to, and provide the other parties
(or their respective counsel) with copies of, all filings made by such party
with any Government Entity or any other information supplied by such party to a
Government Entity in connection with this Agreement and the transactions
contemplated hereby. Each party hereto shall promptly provide the other parties
with copies of any communication (including any written objection, litigation or
administrative proceeding that challenges the transactions contemplated hereby
or the entry of the Revised Sale Procedures Order or the Sale Approval Order)
received by such party from any Government Entity or any other Person regarding
the transactions contemplated hereby. If any party hereto or Affiliate thereof
receives a request for additional information or documentary material from any
such Government Entity with respect to the transactions contemplated hereby,
then such party shall endeavor in good faith to make, or cause to be made, as
soon as reasonably practicable and after consultation with the other parties, an
appropriate response in compliance with such request. To the extent that
transfers, amendments or modifications of Permits are required as a result of
the execution of this Agreement or consummation of the transactions contemplated
hereby, Sellers shall use their commercially reasonable efforts to effect such
transfers, amendments or modifications.
(c) To the extent not otherwise provided in the Sale Approval
Order, Sellers shall use their commercially reasonable efforts to obtain, prior
to the Initial Closing, all requisite approvals, including the Consent to the
transactions contemplated hereby of each other party to each Contract (other
than a Servicing Agreement) to which it is a party or to which the Purchased
Assets or Assumed Liabilities are subject with a Seller or any Affiliate of a
Seller (including under any Software Contract or Contract relating to the
Transferred Intellectual Property and the IT Assets), if required by the terms
of such Contract.
Section 6.5 Confidentiality. (a) After the Initial Closing, the
Sellers will, and cause their respective Affiliates and Representatives to, hold
in confidence and not use in any manner detrimental to the Business all
Confidential Information concerning the Business, the Purchased Assets, the
Assumed Liabilities or the Assumed Contracts, except to the extent that such
information can be shown to have been (i) in the public domain prior to the
Initial Closing or (ii) in the public domain at or after the Initial Closing
through no fault of the Sellers or any of their Affiliates or any of their
respective Representatives. If, after the Initial Closing, Sellers or any of
their Affiliates or any of their respective Representatives are legally required
to disclose any Confidential Information, Sellers shall to the extent permitted
by Law (A) promptly notify Purchaser to permit Purchaser, at its expense, to
seek a protective order or take other appropriate action and (B) cooperate as
reasonably requested by Purchaser in Purchaser's efforts to obtain a protective
order or other reasonable assurance that confidential treatment will be accorded
such Confidential Information, but only at Purchaser's sole cost and expense.
If, after the Initial Closing and in the absence of a protective order, Sellers
or any of their Affiliates or any of their respective Representatives are
compelled as a matter of Law to disclose any such Confidential Information to a
third party, such Person may disclose to the third party compelling disclosure
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only the part of such Confidential Information as is required by Law to be
disclosed; provided, however, that to the extent permitted by Law, prior to any
such disclosure, such Person consults in good faith with Purchaser and its legal
counsel as to such disclosure and the nature and wording of such disclosure.
(b) For purposes of Section 6.5(a), "Confidential Information"
shall mean any confidential information concerning the Business, the Purchased
Assets, the Assumed Liabilities or the Assumed Contracts, including, without
limitation, methods of operation, products, prices, fees, costs, markets or
other specialized information or proprietary matters.
Section 6.6 Subsequent Actions. Subject to the Bankruptcy
Exceptions, each of the parties shall use reasonable efforts to take, or cause
to be taken, all appropriate action to do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the transactions contemplated by this Agreement as promptly
as practicable and to cause to be satisfied the conditions in Article VIII. If
at any time before or after the Final Closing Date, Purchaser shall consider or
be advised that any deeds, bills of sale, instruments of conveyance,
assignments, assurances or any other actions or things are necessary or
desirable (i) to vest, perfect or confirm ownership (of record or otherwise) in
Purchaser (or, subject to Bankruptcy Court approval, its designee), its right,
title or interest in, to or under any or all of the Purchased Assets or Assumed
Contracts, (ii) to vest, perfect or confirm ownership (of record or otherwise)
in a Seller, any of its rights, properties or assets or (iii) otherwise to carry
out this Agreement, Sellers shall execute and deliver all deeds, bills of sale,
instruments of conveyance, powers of attorney, assignments and assurances and
take and do all such other actions and things as may be reasonably requested by
Purchaser (or, subject to Bankruptcy Court approval, its designee) in order to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in Purchaser or Sellers, in each case at
Purchaser's cost and expense. In furtherance of the foregoing, Purchaser shall
use commercially reasonable efforts to satisfy the condition set forth in
Section 8.4(a) as soon as reasonably practical after the Initial Closing.
Section 6.7 Post-Final Closing Amounts Received and Paid. All
amounts that are received by a Seller or any of its Affiliates in respect of any
of the Purchased Assets with respect to a period following the Final Closing
shall be received by such Person as agent, in trust for and on behalf of
Purchaser, and following the Final Closing, Sellers shall, on a monthly basis,
pay, or cause to be paid, by wire transfer of immediately available funds to
Purchaser all such amounts received by or paid to any such Seller or any of
their respective Affiliates, and shall provide Purchaser with information as to
the nature and source of all such payments, including any invoice related
thereto. All amounts that are received by Purchaser or any of its Affiliates
following the Final Closing in respect of any Excluded Assets with respect to a
period prior to the Final Closing shall be received by such Person as agent, in
trust for and on behalf of Sellers, and Purchaser shall, on a monthly basis, pay
or cause to be paid all such amounts over to Sellers by wire transfer of
immediately available funds and shall provide Seller with information as to the
nature and source of all such payments, including any invoice relating thereto.
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Section 6.8 Notices of Certain Events. From the date hereof until
the Initial Closing Date,
(a) Sellers shall promptly notify Purchaser of:
(i) any written notice or other written communication from
any Person (including any notices or communications filed with the
Bankruptcy Court other than notices or other written communications
which provide for a copy to be provided to Purchaser) alleging that the
consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement, or objecting to the
consummation of any of the transactions contemplated by this Agreement;
(ii) any written notice or other written communication
from any Government Entity in connection with the transactions
contemplated by this Agreement; and
(iii) any change or fact with respect to any of Sellers'
representations, warranties or obligations hereunder of which it is
aware that, with notice or lapse of time or both, will or is reasonably
likely to result in a material breach by Sellers of this Agreement or
otherwise result in any of the conditions set forth in Article VIII
becoming incapable of being satisfied.
(b) Purchaser shall promptly notify Sellers of:
(i) any written notice or other written communication from
any Person (other than notices or other written communications directed
to Sellers or to the Bankruptcy Court, with a copy provided to
Purchaser) alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by this
Agreement, or objecting to the consummation of any of the transactions
contemplated by this Agreement;
(ii) any written notice or other written communication
from any Government Entity (other than notices or other written
communications directed to Sellers or to the Bankruptcy Court, with a
copy provided to Purchaser) in connection with the transactions
contemplated by this Agreement; and
(iii) any change or fact with respect to any of
Purchaser's representations, warranties or obligations hereunder of
which it is aware that, with notice or lapse of time or both, will or is
reasonably likely to result in a material breach by Purchaser of this
Agreement or otherwise result in any of the conditions set forth in
Article VIII becoming incapable of being satisfied.
No disclosure by any party hereto pursuant to this Section 6.8
shall be deemed to amend or supplement the Disclosure Schedule with respect
thereto or prevent or cure any misrepresentation or breach of warranty for
purposes of this Agreement.
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Section 6.9 Interim Financial Information. From the date of this
Agreement until the Final Closing Date, Sellers will deliver to Purchaser such
financial and operating information Related to the Business as is provided (and
when provided) to the board of directors or the operating or financial
management of Sellers in the Ordinary Course of Business.
Section 6.10 Procedures for Transfer of Servicing.
(a) Transfer. Without limiting any other provision of this
Agreement, on the Final Closing Date, Sellers shall, in accordance with
Purchaser's reasonable instructions, take all steps, and execute and deliver all
such agreements, letters or other documents, as are reasonably requested by
Purchaser to effect the transfer of the Servicing Agreements (and the related
Purchased Assets) from Sellers to Purchaser or Purchaser's designee such that,
after the Final Closing Date, Purchaser or its designee has all of the Servicing
Rights, the Servicing Files and any and all assets and rights necessary to
perform its obligations under such Servicing Agreements.
(b) Name Changes. As soon as practicable after the Final Closing
Date, each of Sellers and Purchaser agree to take all such actions as are
required, in accordance with the Purchaser's reasonable instructions, to change
the named party to Purchaser or its designee on documents related to the
Servicing Agreements that are currently in the name of Sellers, in their
capacity as Servicer, including on all financing statements and insurance
policies.
(c) Invoices and Collections. All invoices (including legal, tax
and insurance invoices) and collections pertaining to the servicing of the
Mortgage Loans after the Initial Closing Date that Sellers receive after the
Final Closing Date shall be promptly forwarded by Sellers to Purchaser by
reputable overnight courier for a period of not less than 90 days after the
Final Closing Date and thereafter by regular mail within a reasonable time after
receipt for a period of not less than 180 days. Purchaser agrees to pay each
such invoice promptly upon the receipt of such invoice from Sellers together
with an officer's certificate from Sellers stating that Seller has received no
benefit under such invoice and that such invoices should be paid by Purchaser
and constitute expenses of the applicable trust pursuant to the applicable
Servicing Agreements.
(d) Existing Litigation and Indemnities. As promptly as possible
after the date hereof (and in any event prior to the Initial Closing), Sellers
and Purchaser shall agree upon mechanics and procedures to identify and schedule
all litigation (other than litigation against Sellers) presently being handled
by Sellers as servicer under the Servicing Agreements and, if applicable,
transfer to Purchaser or its designee responsibility from and after the Final
Closing Date for such litigation.
(e) Compliance Costs; Reporting Obligations. Sellers shall be
responsible for all costs of compliance related to the operation of the Business
and the Purchased Assets prior to the Initial Closing Date. After the Initial
Closing Date, Sellers shall be responsible for completing any requested
compliance and/or servicer certificate related to the operation of the Business
and the Purchased Assets prior to the Initial Closing Date, including but not
limited to pursuant to Regulation AB under the Exchange Act and Form 1098 tax
reporting. If requested
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by Sellers, Purchaser shall be of reasonable assistance to Sellers in connection
with the foregoing so long as (i) Sellers pay to Purchaser a mutually agreeable
nominal fee in connection with such assistance and (ii) Sellers provide to
Purchaser all information needed by Purchaser in connection with such
assistance. Nothing in this Section 6.10(e) affects Sellers' obligations under
the Applicable Requirements in connection with the operation of the Business, or
affects in any manner Section 2.7(c).
(f) Subservicing of AHM Loans. Following the Final Closing Date,
pursuant to the terms of the Purchaser Subservicing Agreement, Purchaser or its
designee shall serve as subservicer for (i) Mortgage Loans serviced under the
Disputed Servicing Agreements that are treated as Excluded Assets and, prior to
the sale to a third party, the Servicing Rights Held for Sale and (ii) Mortgage
Loans set forth on Schedule 6.10(f). In consideration of such subservicing (A)
Purchaser or its designee shall retain all Servicing Fees payable to the
servicing agent for servicing the Mortgage Loans described in subclauses (i) and
(ii) hereof, (B) Sellers shall pay to Purchaser or its designee, on a monthly
basis, as invoiced by Purchaser or its designee, for servicing the Mortgage
Loans described in subclause (ii) hereof (I) $15 per month per Mortgage Loan
serviced during the two month period following the Initial Closing Date, $20 per
month per Mortgage Loan serviced during the two month period following such
period and $25 per Mortgage Loan serviced after the four month period following
the Initial Closing Date minus (II) the monthly Servicing Fees collected by the
Business with respect to servicing such Mortgage Loan and (C) Sellers shall pay
to Purchaser or its designee, as invoiced by Purchaser or its designee, $25 for
each Mortgage Loan described in subclause (ii) hereof that is "deboarded".
(g) Transition Services. Following the Final Closing, Sellers,
other than the Company, shall provide, or cause to be provided, to the Business
certain services that are currently provided to the Business by Sellers and
certain Affiliates of Sellers, all as more fully set forth in the Transition
Services Agreement to be entered into by the Sellers and the Purchaser as of the
Final Closing Date.
Section 6.11 Bankruptcy Actions. (a) Sellers hereby agree that
they shall, and Sellers shall cause all of their Affiliates to, comply with all
of the obligations of Sellers under (i) the Revised Sale Procedures Order (after
entry of such Order by the Bankruptcy Court) and (ii) the Sale Approval Order
(after the entry of such Order by the Bankruptcy Court).
(b) Sellers shall use reasonable efforts to comply (or obtain an
order from the Bankruptcy Court waiving compliance) with all requirements under
the Bankruptcy Code and Bankruptcy Rules in connection with obtaining approval
of the transactions contemplated by this Agreement, including serving on all
required Persons in the Bankruptcy Cases (including (i) all Persons who are
known to possess or assert a Lien against or interest in any of the Purchased
Assets, (ii) the IRS, (iii) all applicable state attorneys general, local realty
enforcement agencies and local Government Entities, (iv) all applicable state
and local Government Entities with taxing authority and (v) all other Persons
required by any order of the Bankruptcy Court notice of the Sale Motion, the
Sale Hearing, the Revised Sale Procedures Order, the Sale Approval Order, and
all objection deadlines in accordance with all applicable Bankruptcy Rules, the
Revised Sale Procedures Order, and any applicable local rules of the Bankruptcy
Court.
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(c) As provided in the Revised Sale Procedures Order, Sellers
shall move to assume and assign to Purchaser (or Purchaser's designee or
designees) the Assumed Contracts that are executory contracts capable of being
assumed pursuant to Section 365 of the Bankruptcy Code (collectively, the
"Assumed Pre-Petition Contracts") and shall provide notice thereof in accordance
with all applicable Bankruptcy Rules, the Revised Sale Procedures Order, and any
applicable local rules of the Bankruptcy Court. Sellers shall pay Cure Amounts
in the time and manner specified by the Sale Approval Order; provided that
Purchaser shall pay any Cure Amounts relating to a default on Assumed Contracts
occurring after the Initial Closing which default is not the result of Sellers'
breach of this Agreement.
Section 6.12 Maintenance of Insurance. From the date of this
Agreement until the Final Closing Date, Parent shall, in connection with the
Business, cause the Company to (a) continue to carry Sellers' existing insurance
through the Final Closing Date, and (b) shall use reasonable efforts to not
allow any breach, default, termination or cancellation of such insurance
policies or agreements to occur or exist.
Section 6.13 Laws. From the date of this Agreement until the
Initial Closing Date, Sellers shall promptly notify Purchaser concerning the
existence of any new Law of which Sellers become aware, which restricts,
prevents, prohibits, makes illegal or enjoins the operation of the Business, the
Purchased Assets, the Assumed Liabilities, the Assumed Contracts or the
transactions contemplated hereby.
Section 6.14 Financing Assistance and Protection of Purchased
Assets. (a) In connection with Purchaser obtaining financing for the operation
of the Business for the period from the Initial Closing through the Final
Closing and refinancing funds paid by Purchaser in cash necessary to consummate
the transactions contemplated by this Agreement (the "Financing"), Sellers
shall, and shall cause their respective officers, employees, and advisors to,
provide to Purchaser all reasonable cooperation, on a timely basis, reasonably
requested by Purchaser that is reasonably necessary or customary including: (i)
causing senior management and other appropriate employees of the Business upon
reasonable advance notice by Purchaser and on a reasonable number of occasions,
to be available for meetings, including management and other presentations,
rating agency presentations, participation in due diligence sessions, to review
and comment on disclosure documents and to assist with the preparation of
business projections and similar materials in connection with any such
financing; (ii) subject to the Bankruptcy Exceptions, taking all actions
reasonably necessary to permit prospective financing providers involved in the
Financing to evaluate the Business's assets and operations; (iii) subject to the
Bankruptcy Exceptions, providing reasonable assistance in the timely preparation
of offering memoranda, prospectuses, rating agency, lender and investor
presentations, syndication or information memoranda, marketing materials and
other similar documents, if applicable, including but not limited to causing
management and other personnel to participate in related drafting sessions; (iv)
timely furnishing such financial and other information regarding the Business as
shall exist or, subject to the Bankruptcy Exceptions, become available as may be
reasonably requested by Purchaser; (v) after the Initial Closing through the
Final Closing, executing and delivering any loan agreement, indenture, pledge
and security documents, other
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definitive financing documents, or other certificates or documents as may be
reasonably requested by Purchaser and otherwise facilitating, after the Initial
Closing, the pledging of, and granting, recording and perfection of first
priority security interests in the Purchased Assets and cash and cash
equivalents and other proceeds received in connection with the Business and the
Purchased Assets after the Initial Closing (in favor of Purchaser or the
applicable lenders under the Financing), which assistance may include, but shall
not be limited to, becoming directly liable for any loans or other indebtedness
relating to the Financing (so long as recourse therefore is limited to the
Purchased Assets and cash and cash equivalents and other proceeds received in
connection with the Business and the Purchased Assets during the period after
the Initial Closing); (vi) promptly filing with the Bankruptcy Court and using
commercially reasonable efforts to seek the approval of any motion that may be
necessary or appropriate in connection with any of the foregoing as reasonably
requested by Purchaser. The foregoing notwithstanding, neither Sellers nor any
other person shall be required to take any action with respect to the foregoing
to the extent that the approval of the Bankruptcy Court is required for such
action and such approval has not yet been obtained, provided that such action
shall be required to be taken promptly upon obtaining such approval. Purchaser
shall indemnify Sellers from and against any and all Losses incurred by them
relating to their provision of cooperation pursuant to this Section 6.14(a)
other than Losses arising from Sellers' bad faith, willful misconduct or gross
negligence.
(b) To secure Sellers' obligations under this Agreement, Sellers
grant to Purchaser, as of the Initial Closing, a first priority (subject only to
any Permitted Liens and Liens securing the Financing) lien on and security
interest in all of the Purchased Assets and Sellers' cash and cash equivalents
and other proceeds received in connection with the Business and the Purchased
Assets after the Initial Closing (which lien and security interest may be
assigned to any lender of the Purchaser), provided any such liens and security
interest granted to Purchaser shall not extend to any Administrative Agent Cash
Proceeds. Sellers shall execute and deliver any pledge and security documents or
other certificates or documents as may be reasonably requested by Purchaser to
facilitate the pledging of, and granting, recording and perfection of such lien
and security interest and shall promptly file with the Bankruptcy Court and
using commercially reasonable efforts to seek the approval of any motion that
may be necessary or appropriate in connection with any of the foregoing as
reasonably requested by Purchaser, including seeking approval from the
Bankruptcy Court pursuant to Section 364 of the Bankruptcy Code for such liens
and security interest.
(c) If Sellers, in connection with the operation of the Business
after the Initial Closing, enter into any servicing agreements with respect to
Mortgage Loans, then Sellers shall include in such servicing agreements such
provisions as Purchaser may reasonably request to facilitate (i) lenders to make
or continue their loans or (ii) the Financing. Such provisions may include
provisions authorizing the servicer to finance, pledge and/or assign any or all
of its right, title and interest in, to and under the servicing agreement to one
or more lenders selected by the servicer, providing for the lenders to designate
successor servicers, and providing for remedies for, and waivers of, defaults
under the servicing agreement. Without limiting any other rights or remedies of
Sellers, to the extent Sellers suffer any Losses with respect to any such new
servicing agreements the economic consequences of which are not fully borne by
Purchaser through the Reconciliation Payment or otherwise, Sellers may set off
the amount of such Losses against any moneys owed by Sellers to Purchaser under
this Agreement or against the Purchased Assets.
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(d) Sellers will deposit all cash and cash equivalents received
in connection with the Business and the Purchased Assets during the period from
the Initial Closing until the later of the Final Closing and payment of the
Reconciliation Payment in cash accounts that are separate from any other
accounts maintained or used by Sellers or any of their Affiliates. The cash in
such accounts will be used only for the operation of the Business in the
Ordinary Course or as required by the agreements for the Financing. Such
accounts shall be subject to such control agreements and rights for the benefit
of the lenders for the Financing as are required by such lenders and such other
control agreements as, to the extent permitted by law, are requested by
Purchaser. If Sellers are required to pay a Reconciliation Payment, Sellers
shall use the moneys in such accounts for such purpose. Sellers shall not
deposit or commingle any other amounts with such separate accounts and Sellers
shall provide a statement of all transactions relating to such accounts upon
request of Purchaser.
Section 6.15 Excluded Contracts. From time to time prior to the
Final Closing Date, Purchaser may designate to Sellers any Assumed Contract
(other than (x) prior to the Initial Closing, any Servicing Agreement and (y)
any Disputed Servicing Agreement while it is a Disputed Servicing Agreement)
that Purchaser wants to exclude from the Assumed Contracts (the "Excluded
Contracts") and, if the Initial Closing occurs, upon such designation the
Purchased Assets, Assumed Liabilities and Assumed Contracts shall exclude any
Excluded Contracts and the Liabilities associated therewith. For the avoidance
of doubt, the designation of any Assumed Contract as an Excluded Contract shall
not result in a reduction of the Purchase Price.
Section 6.16 Assumption of Certain Assumed Contracts. If, prior
to the Final Closing, but after the Initial Closing has occurred, Sellers are by
Section 365(d)(4) of the Bankruptcy Code required to either assume a lease of
nonresidential real property (within the meaning of Section 365 of the
Bankruptcy Code) by a certain deadline or it will be deemed rejected, Sellers
shall undertake commercially reasonable efforts to obtain an extension of such
deadline, and if they are unable to obtain such extension, shall assume such
lease if so directed by Purchaser in writing. If Sellers later reject such
lease, Purchaser shall indemnify Sellers for an amount equal to (x) any
administrative expense priority claim under Section 503 of the Bankruptcy Code
that arises from such rejection for the period of two years following the
earlier of (A) the rejection date and (B) fifteen business days following the
date that Purchaser notifies Sellers of its request to treat such lease as a
rejected contract, minus (y) the product of (1) the amount of such lessor's
unsecured claim that would have been allowed if such lease been rejected as of
the Initial Closing Date multiplied by (2) a reasonable estimate of the recovery
percentage on account of general unsecured claims (after giving effect to the
indemnification payment pursuant to this Section 6.16) in the applicable
Bankruptcy Case.
Section 6.17 Provisions Regarding Advances.
(a) Sellers shall use their commercially reasonable efforts to
sell, within 180 days after the Initial Closing Date, (i) the Mortgage Loans
described on Schedule 6.10(f) or the servicing rights with respect thereto and
(ii) the Servicing Rights Held for Sale. Simultaneous
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with and as a condition to each such sale, Sellers shall pay or cause Purchaser
to be paid, for any outstanding Advances relating to such Mortgage Loans or
relating to the Mortgage Loans serviced under the servicing rights being sold,
an amount equal to the amount of such Advances. On the six-month anniversary of
the Initial Closing Date, Sellers shall purchase from Purchaser or the Business,
as the case may be, any outstanding Advances held by Purchaser or the Business
relating to such Mortgage Loans or relating to the Mortgage Loans serviced under
the Servicing Rights Held for Sale for a price equal to the amount of such
Advances. To the extent required for Sellers to have the funds to pay such
price, Sellers will borrow the moneys therefor by making a draw under the DIP
Financing Agreement. From and after the date of such purchase, such Advances
shall be Excluded Assets and the price so paid shall be Purchased Assets.
(b) Any Advances required to be made after the Initial Closing
with respect to (i) the Mortgage Loans described on Schedule 6.10(f), (ii) the
Servicing Rights Held for Sale or (iii) any Disputed Servicing Agreement during
such time as it remains a Disputed Servicing Agreement, shall be made by Sellers
with funds borrowed by Sellers under the DIP Financing Agreement or otherwise,
and such Advances shall be Excluded Assets. Purchaser shall not have any
obligation to make any such Advances, but it shall have the right to do so if
they are not made by Sellers in which case such Advances will be Purchased
Assets. Purchaser and Sellers hereby agree that the amount of any Advances
required to be made under this Section 6.17 by Sellers out of their own funds or
by making a draw on the DIP Financing Agreement, shall be delivered to Sellers
(with respect to periods prior to the Final Closing Date), or to Purchaser (with
respect to periods following the Final Closing Date) and upon receipt of such
funds, Sellers or Purchaser shall administer the application of such Advances in
the same manner in which it administers all Advances which are Purchased Assets.
(c) After the Initial Closing, within five Business Days after
any Disputed Servicing Agreement ceases to be a Disputed Servicing Agreement
under circumstances in which it has not become an Excluded Asset, Purchaser will
pay Sellers, for any outstanding Advances made by Sellers after the Initial
Closing, an amount equal to the amount of such Advances and such Advance shall
be Purchased Assets; provided, however, that Purchaser will deliver such payment
to the lender under the DIP Financing Agreement to repay any obligations of
Sellers outstanding under the DIP Financing Agreement that were incurred to fund
Advances under this Section 6.17 (or, to the extent there are no such
obligations, shall deliver such payment to Sellers). At such time as any
Disputed Servicing Agreement becomes an Excluded Asset, Sellers shall purchase
from Purchaser or the Business, as the case may be, any outstanding Advances
held by Purchaser or the Business relating to such Disputed Servicing Agreement
for a price equal to the amount of such Advances. To the extent required for
Sellers to have the funds to pay such price, Sellers will borrow the moneys
therefor by making a draw under the DIP Financing Agreement. From and after the
date of such purchase, such Advances shall be Excluded Assets and the price so
paid shall be Purchased Assets.
(d) Any collections by Sellers or Purchaser with respect to
Advances relating to a Mortgage Loan shall, for any outstanding Advances made
before the Initial Closing with respect to such Mortgage Loan and any
outstanding Advances made at or after the Initial Closing with respect to such
Mortgage Loan, be applied first to the earliest funded outstanding Advance
relating to such Mortgage Loan.
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(e) Purchaser and Sellers shall, and Purchaser shall cause its
Affiliates to, use their respective commercially reasonable efforts to cause the
DIP Financing Agreement and the Order approving the DIP Financing Agreement to
be amended prior to the Initial Closing to permit Sellers to borrow under the
DIP Financing Agreement amounts that may be necessary to fund any Advances in
accordance with this Section 6.17.
Section 6.18 FNMA. Prior to the later of October 17, 2007 and the
date that is two weeks prior to the date set forth in the Fannie Mae Stipulation
Order, as such date may be extended, by which the "Closing" (as defined in the
Fannie Mae Stipulation Order) must occur, and in no event later than the Initial
Closing Date, Purchaser shall notify Sellers of Purchaser's determination of
whether to include any of Sellers' Servicing Rights and Servicing Agreements
with FNMA and related Advances (the "FNMA Servicing Rights") as Purchased
Assets. The Sellers agree to take commercially reasonable efforts to reasonably
extend the date set forth in the Fannie Mae Stipulation Order by which the
"Closing" (as defined in the Fannie Mae Stipulation Order) must occur. If
Purchaser notifies Sellers that the FNMA Servicing Rights will be included as
Purchased Assets, then the FNMA Servicing Rights will be Purchased Assets and
the Initial Closing Servicing Balance shall include the unpaid principal balance
of the Mortgage Loans being serviced pursuant to the FNMA Servicing Rights and
the Advances Amount shall include the Advances related thereto. Otherwise, the
FNMA Servicing Rights will be Excluded Assets. Notwithstanding the foregoing, if
Purchaser has timely notified Sellers that the FNMA Servicing Rights are to be
Purchased Assets and the FNMA Servicing Rights cannot be included as Servicing
Agreements other than as a result of Sellers' breach of the FNMA Servicing
Rights after the date of this Agreement or Sellers' failure to pay any Initial
Cure Amount or any Interim Cure Amount with respect to the FNMA Servicing
Rights, then the unpaid principal balance of the Mortgage Loans being serviced
pursuant to the FNMA Servicing Rights shall be included in the Initial Closing
Servicing Balance and the Advances Amount shall include the Advances related
thereto notwithstanding that the FNMA Servicing Rights cannot be included as
Servicing Agreements and such rights are not being transferred to Purchaser. In
such event Sellers will use commercially reasonable efforts to sell the FNMA
Servicing Rights on commercially reasonable terms. If Sellers are able to so
sell the FNMA Servicing Rights, then the amount of the Purchase Price payable by
the Purchaser with respect to the FNMA Servicing Rights shall be reduced by an
amount (which amount shall not exceed the portion of the Purchase Price payable
with respect to the FNMA Servicing Rights) equal to the net proceeds of such
sale, after payment of all expenses incurred by Sellers in connection with such
sale (or, if such Purchase Price already has been paid, such amount shall be
refunded to Purchaser).
Section 6.19 Option to Purchase Excluded Assets. In the event
that at the Final Closing or at the end of the term of the Transition Services
Agreement the Excluded Assets designated with an asterisk on Schedule 2.2(n) are
no longer required for use by Sellers in any capacity (including under the
Transition Services Agreement) and are no longer needed for the administration
of Sellers' estate, Purchaser shall have the option to purchase such assets, or
any of them, upon payment of their net book value; provided that Purchaser shall
pay any change of control, breakage fees or similar fees in respect of such
purchase.
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Section 6.20 Compensation Plan. Prior to the Initial Closing,
Purchaser shall use its commercially reasonable efforts to prepare and deliver
to Sellers a replacement compensation plan for any Business Employees employed
in Texas and Sellers shall use their commercially reasonable efforts to seek an
Order of the Bankruptcy Court approving such compensation plan. If, despite the
commercially reasonable efforts of Purchaser and Sellers prior to the Initial
Closing, a replacement compensation plan for Business Employees employed in
Texas is not approved by an Order of the Bankruptcy Court prior to the Initial
Closing, Purchaser shall be responsible for any amounts accruing after the
Initial Closing with respect to Business Employees employed in Texas under the
"Non-Insider Employee Retention Plan" described on Schedule 3.2 from the Initial
Closing until the effective date of a replacement compensation plan for Business
Employees employed in Texas.
Section 6.21 Approved FNMA Servicer. From the date of this
Agreement until the earlier of the Final Closing and the termination of this
Agreement, (i) Sellers will use their best efforts to remain an approved FNMA
servicer (as contemplated by the Fannie Mae Stipulation Order) and (ii)
Purchaser shall use its best efforts to become an approved FNMA servicer.
Purchaser and Sellers shall each reasonably cooperate with each other in their
respective efforts to comply with the foregoing covenants.
ARTICLE VII
BANKRUPTCY COURT MATTERS
Section 7.1 Competing Transaction. This Agreement is subject to
approval by the Bankruptcy Court and the consideration by Sellers' creditor
constituencies and the Bankruptcy Court of higher or better competing bids.
Purchaser acknowledges that following the date hereof until (but not beyond) the
Auction Date, Sellers and their respective Representatives and Affiliates may,
with respect to any transaction (or series of transactions) involving the direct
or indirect sale, transfer or other disposition of a material portion of the
Purchased Assets to a purchaser or purchasers other than Purchaser or effecting
any other transaction (including a plan of reorganization or liquidation) the
consummation of which would be substantially inconsistent with the transactions
herein contemplated (a "Competing Transaction"): (a) continue to initiate
contact with, or solicit or encourage submission of any inquiries, proposals or
offers by, any Person (other than Purchaser and its Affiliates, agents and
representatives), (b) respond to any inquiries or offers to purchase all or any
part of the Purchased Assets and (c) perform any and all other acts related
thereto contemplated by the Revised Sale Procedures Order, including supplying
information relating to the Business and the assets of Sellers to prospective
purchasers that satisfy the conditions therefor specified in the Revised Sale
Procedures Order. Notwithstanding the foregoing, in no event may Sellers or
their respective Affiliates initiate contact with, or solicit or encourage
submission of any inquiries, proposals or offers by, any Person (other than
Purchaser and its Affiliates, agents and representative) with respect to a
Competing Transaction or accept an offer or proposal from any Person (other than
Purchaser and its Affiliates, agents and representative) with respect to a
Competing Transaction (i) other than pursuant to and in compliance with the
terms and conditions of the Revised Sale Procedures Order or (ii) after the
Auction.
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Section 7.2 Break-Up Fee. In the event that this Agreement is
terminated pursuant to Section 9.1(e), Sellers shall pay to Purchaser a cash
amount equal to $5,000,000 (the "Break-Up Fee"), and the Expense Reimbursement
in cash. The Expense Reimbursement will be due and payable on the Business Day
immediately following such termination. The Break-Up Fee will be due and payable
upon the earlier of the closing of, and termination of the agreement providing
for, a Competing Transaction; provided, however, that the Break-Up Fee shall
only be due and payable upon the termination of an agreement providing for a
Competing Transaction if Sellers are entitled to retain a deposit made in
connection with the Competing Transaction. Notwithstanding anything to the
contrary contained in this Agreement, (1) upon payment of the Break-Up Fee and
the Expense Reimbursement in accordance herewith, Sellers and their respective
Representatives and Affiliates shall be fully released and discharged from any
Liability under or resulting from this Agreement and, neither Purchaser nor any
other Person shall have any other remedy or cause of action under or relating to
this Agreement, including for reimbursement of expenses and (2) Sellers'
obligations hereunder shall be joint and several. Notwithstanding this Section
7.2, if Purchaser is the Next Highest Bidder (as such term is defined in the
Revised Sale Procedures) and Purchaser closes under this Agreement as a result
of a failure to close under a Competing Transaction, then Sellers shall have no
obligation to pay, and Purchaser shall not be entitled to receive, the Expense
Reimbursement or Break-Up Fee.
Section 7.3 Bankruptcy Court Filings. As promptly as practicable
following the execution of this Agreement, Sellers shall file with the
Bankruptcy Court the Sale Motion, and, subject to Section 7.1, Sellers shall
thereafter pursue diligently the entry of the Revised Sale Procedures Order and
the Sale Approval Order. Purchaser agrees that it will promptly take such
actions as are reasonably requested by Sellers to assist in obtaining entry of
the Revised Sale Procedures Order and the Sale Approval Order and all parties
hereto shall use their respective reasonable best efforts to obtain a finding of
adequate assurance of future performance by Purchaser or its designee or
designees under the Assumed Pre-Petition Contracts, and demonstrating that each
of Purchaser and such designees is a "good faith" purchaser under Section 363(m)
of the Bankruptcy Code, including furnishing affidavits or other documents or
information for filing with the Bankruptcy Court. In the event the entry of the
Revised Sale Procedures Order or the Sale Approval Order shall be appealed,
Sellers and Purchaser shall use their respective reasonable efforts to defend
such appeal.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Obligations of Purchaser and Sellers On
or Prior to the Initial Closing Date. The respective obligations of each party
to consummate the transactions contemplated by this Agreement on the Initial
Closing Date shall be subject to the satisfaction, or waiver by Purchaser and
Sellers, on or prior to the Initial Closing Date of the following conditions
precedent:
(a) Revised Sale Procedures Order. The Revised Sale Procedures
Order (A) shall have been entered by the Bankruptcy Court and not be subject to
any stay of
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effectiveness, (B) shall not have been modified or amended in any manner adverse
to Purchaser unless agreed to in writing by Purchaser in its sole discretion,
and (C) shall have become a Final Order.
(b) Sale Approval Order. The Sale Approval Order (A) shall have
been entered by the Bankruptcy Court and not be subject to any stay of
effectiveness, (B) shall not have been modified or amended in any manner adverse
to Purchaser unless agreed to in writing by Purchaser in its sole discretion,
and (C) shall have become a Final Order.
(c) No Law, Judgments, Etc. No Government Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law which is in effect and which restricts, prevents, prohibits, makes illegal
or enjoins the consummation of the transactions contemplated by this Agreement.
(d) Hart-Scott-Rodino; Competition Approvals. The applicable
waiting period under the HSR Act shall have expired or been earlier terminated
without action by the Department of Justice or the Federal Trade Commission to
prevent consummation of the transactions contemplated by this Agreement.
Section 8.2 Conditions to Obligations of Sellers On or Prior to
the Initial Closing Date. The obligations of Sellers to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
or waiver by Sellers, on or prior to the Initial Closing Date of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties made herein by Purchaser shall be true and correct on the date of
this Agreement (without regard to any materiality or Material Adverse Effect
qualifier contained therein and after giving effect to any cure of such breach
of representation or warranty prior to the Initial Closing Date) and shall be
true and correct on the Initial Closing Date as though made on the Initial
Closing Date, except to the extent such representations and warranties speak as
of a specified earlier date (in which case such representations and warranties
shall be true and correct as of such specified earlier date), and except to the
extent that any such failure of representations or warranties to be true and
correct, individually or in the aggregate, has not had or would not reasonably
be expected to have a Material Adverse Effect.
(b) Covenants. Each of the covenants and agreements of Purchaser
to be performed on or prior to the Initial Closing Date shall have been duly
performed in all material respects.
(c) Certificate. Sellers shall have received a certificate,
signed by a duly authorized officer of Purchaser and dated the Initial Closing
Date, to the effect that the conditions set forth in Sections 8.2(a) and 8.2(b)
have been satisfied.
(d) Deliveries. Purchaser shall have delivered, or caused to be
delivered, to Sellers all of the items set forth in Section 2.9.
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(e) Minimum Proceeds. The Net Proceeds payable to the
Administrative Agent on the Initial Closing Date pursuant to Section 4.1(a)(iv)
shall not be less than an amount equal to the "Minimum Net Proceeds" determined
as set forth on Schedule 8.2(e).
Section 8.3 Conditions to Obligations of Purchaser On or Prior to
the Initial Closing Date. The obligations of Purchaser to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
or waiver by Purchaser, on or prior to the Initial Closing Date of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties made herein by Seller shall be true and correct on the date of this
Agreement (without regard to any materiality or Material Adverse Effect
qualifier contained therein and after giving effect to any cure of such breach
of representation or warranty prior to the Initial Closing Date) and shall be
true and correct on the Initial Closing Date as though made on the Initial
Closing Date, except to the extent such representations and warranties speak as
of a specified earlier date (in which case such representations and warranties
shall be true and correct as of such specified earlier date), and except to the
extent that any such failure of representations or warranties to be true and
correct, individually or in the aggregate, has not had or would not reasonably
be expected to have a Material Adverse Effect.
(b) Covenants. Each of the covenants and agreements of Sellers to
be performed on or prior to the Initial Closing Date shall have been duly
performed in all material respects.
(c) Certificate. Purchaser shall have received certificates,
signed by duly authorized officers of Sellers and dated the Initial Closing Date
to the effect that the conditions set forth in Sections 8.3(a) and 8.3(b) have
been satisfied.
(d) Sale Approval Order. With respect to obligations and benefits
that can be realized prior to the Initial Closing Date, Sellers shall have
complied, in all material respects, with all of their obligations under, and
Purchaser shall have received the benefits of, the Sale Approval Order.
(e) Deliveries. Sellers shall have delivered, or caused to be
delivered, to Purchaser all of the items set forth in Section 2.10(a).
(f) No Material Adverse Effect. From the date of this Agreement
through the Initial Closing Date there shall not have occurred any action,
failure to act, event or circumstance that has had, or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(g) Consents. All Consents set forth on Schedule 8.3(g) hereto
shall have been duly obtained, made or given, shall be in form and substance
reasonably satisfactory to Purchaser, shall not be subject to the satisfaction
of any condition that has not been satisfied or waived and shall be in full
force and effect.
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(h) Status of Mortgage Loans. As of the Initial Closing Date, the
aggregate amount of Defaulted Mortgage Loans serviced pursuant to the Servicing
Agreements shall not constitute more than 8% of the aggregate outstanding
principal balance of all Mortgage Loans which are being serviced pursuant to the
Servicing Agreements and a duly authorized officer of Parent shall have
delivered a certificate as of the Initial Closing Date certifying as to such
fact.
(i) Minimum Servicing Agreement Balance. The Initial Closing Date
Mortgage Loan Schedule shall include Mortgage Loans serviced pursuant to the
Servicing Agreements (which are not Disputed Servicing Agreement) with an unpaid
principal balance of not less than $38 billion.
Section 8.4 Condition to Obligations of Purchaser On or Prior to
the Final Closing Date. The obligations of Purchaser to effectuate the Final
Closing shall be subject to the satisfaction or waiver by Purchaser, at or prior
to the Final Closing Date of the following condition:
(a) Governmental Consents. Purchaser shall have obtained all
licenses, permits, certificates, regulatory approvals, concessions, grants,
franchises, and other authorizations required by any Government Entity to permit
the transfer of the Business to Purchaser as contemplated by this Agreement and
as may be necessary or appropriate for the operation by the Business in the
Ordinary Course of Business.
ARTICLE IX
TERMINATION
Section 9.1 Termination. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may be terminated and the
transactions contemplated hereby abandoned at any time on or prior to the
Initial Closing Date:
(a) by the mutual written consent of Sellers and Purchaser;
(b) by either Sellers or Purchaser, upon written notice to the
other:
(i) if the closing condition set forth in Section 8.1(b)
or Section 8.1(d) shall not have been satisfied on or before December
31, 2007 (unless such deadline is extended with the written consent of
Purchaser) and if all other conditions to the respective obligations of
the parties with respect to the Initial Closing that are capable of
being fulfilled by such date shall have been so fulfilled or waived;
provided, however, that the party proposing to terminate (and its
Affiliates) shall not have breached in any material respect any of their
respective representations, warranties, covenants or agreements
contained in this Agreement in any manner that shall have proximately
contributed to such failure (such breaching party, a "Proximate Cause
Party");
(ii) if the Initial Closing Date shall not have occurred
on or before December 31, 2007 (unless such deadline is extended with
the consent of Purchaser) (the
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"Termination Date"); provided, however, that the party proposing to
terminate or any of its Affiliates is not a Proximate Cause Party; or
(iii) if a Government Entity shall have issued a Final
Order or taken any other action permanently restricting, preventing,
prohibiting, making illegal or enjoining the transactions contemplated
by this Agreement, unless such Final Order or action was issued or taken
at the request or with the support of the party seeking to terminate
this Agreement (or any of its Affiliates); it being agreed that the
parties hereto shall promptly appeal any such adverse order or other
determination that is not non-appealable (and pursue such appeal with
reasonable diligence); or
(c) by Purchaser, upon written notice to Sellers:
(i) if any condition to the obligations of Purchaser set
forth in Sections 8.1 and 8.3 shall have become incapable of fulfillment
other than as a result of a breach by Purchaser of any covenant or
agreement contained in this Agreement, and such condition is not waived
by Purchaser;
(ii) if there shall be a breach by Sellers of any
representation or warranty, or any covenant or agreement contained in
this Agreement which would result in a failure of a condition set forth
in Sections 8.1 or 8.3 and which breach has not been cured by the
earlier of (i) 20 Business Days after the giving of written notice by
Purchaser to Sellers of such breach and (ii) the Termination Date; or
(iii) if the Revised Sale Procedures Order has not been
entered at least two days prior to any bid deadline set by Sellers with
respect to the sale of the Business but in any event no later than
October 15, 2007, or if the Revised Sale Procedures Order, once entered,
is changed in a manner that is adverse to Purchaser without the consent
of Purchaser in its sole discretion; or
(iv) if the Sale Approval Order has not been entered and
become a Final Order without stay of its effectiveness by November 15,
2007, or if the Sale Approval Order, once entered, is changed in a
manner that is adverse to Purchaser without the consent of Purchaser in
its sole discretion.
(d) by Sellers, upon written notice to Purchaser:
(i) if any condition to the obligations of Sellers set
forth in Sections 8.1 and 8.2 shall have become incapable of fulfillment
other than as a result of a breach by Sellers of any covenant or
agreement contained in this Agreement, and such condition is not waived
by Sellers;
(ii) if there shall be a breach in any material respect by
Purchaser of any representation or warranty, or any covenant or
agreement contained in this Agreement which would result in a failure of
a condition set forth in Sections 8.1 or 8.2 and which breach, except as
provided in Section 2.7(a), has not been cured by the earlier of (i) 20
Business Days after the giving of written notice by Sellers to Purchaser
of such breach and (ii) the Termination Date;
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(e) automatically if the Bankruptcy Court shall enter an Order
approving a Competing Transaction, subject to Purchaser's right to payment of
the Break-Up Fee and Expense Reimbursement in accordance with the provision of
Section 7.2; provided, however, that if the Auction is held pursuant to the
Revised Sale Procedures, and Purchaser is designated as the Next Highest Bidder
(as such term is defined in the Revised Sale Procedures), then this Agreement
shall not terminate pursuant to this subsection (e) until the earlier of (i) the
closing on the bid initially selected as the "Successful Bid" at the Auction (as
such term is defined in the Revised Sale Procedures); and (ii) December 31,
2007. While Purchaser remains the Next Highest Bidder (as such term is defined
in the Revised Sale Procedures), the obligations of Purchaser and Sellers
described in Sections 6.4, 6.6, 6.10(d), 6.11(b) and (c) and 6.17(e) shall be
held in abeyance until the purchase agreement with the bidder or purchase
agreements with the bidders, as the case may be, who made the "Successful Bid"
at the Auction (as such term is defined in the Revised Sale Procedures) are
terminated.
Section 9.2 Procedure and Effect of Termination. If this
Agreement is terminated in accordance with Section 9.1, this Agreement shall
become void and of no further force and effect (subject to the provisions of
this Article IX) and the transactions contemplated by this Agreement shall be
abandoned, without further action by any party, and no party shall have any
Liability or further obligation to any other party resulting from such
termination (a) except for the provisions of: (i) that certain Confidentiality
Agreement, dated July 31, 2007, between Parent and WL Ross & Co., LLC (the
"Confidentiality Agreement"); (ii) Article IX (Termination); and (iii) Sections
4.3 (Deposit), 7.2 (Break-Up Fee), 9.2 (Procedure and Effect of Termination),
11.3 (Fees and Expenses; Allowed Administrative Expenses), 11.4 (Amendment;
Waiver), 11.5 (Publicity), 11.6 (Notices), 11.8 (Entire Agreement; No Third
Party Beneficiaries), 11.10 (Governing Law), 11.11 (Venue and Retention of
Jurisdiction), 11.12 (No Punitive Damages), 11.13 (Assignment) and 11.17
(Personal Liability), all of which shall remain in full force and effect; and
(b) except that no such termination shall relieve any party from any Liability
(other than for punitive or exemplary damages) which such party may have to
another party for Losses arising out of any breach of this Agreement by such
party which occurs upon or prior to the termination of this Agreement. If this
Agreement is terminated in accordance with Section 9.1, Sellers shall, unless
the termination shall be pursuant to Section 9.1(d)(ii), pay Purchaser the
Expense Reimbursement.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers that all of the statements
contained in this Article X, are true and correct as of the date of this
Agreement (or, if made as of a specified date, as of such date) and will be true
and correct as of the Initial Closing Date as though made on the Initial Closing
Date.
Section 10.1 Legal Power; Organization; Qualification of
Purchaser. Purchaser has been duly incorporated, and is validly existing and in
good standing under the Laws of its jurisdiction of incorporation, has all
requisite power and authority to execute and deliver this
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Agreement and the Ancillary Agreements and to consummate the transactions
contemplated hereby, and has taken all necessary corporate or other action to
authorize the execution, delivery and performance of this Agreement.
Section 10.2 Binding Agreement. This Agreement has been duly
executed and delivered by Purchaser and, assuming due and valid authorization,
execution and delivery by Sellers, this Agreement constitutes a legal, valid and
binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms, except as limited by the Enforceability Exceptions. When
required by this Agreement to be delivered to Sellers, each Ancillary Agreement
will be duly and validly executed and delivered by Purchaser, and upon such
execution and delivery (assuming such Ancillary Agreement constitutes a valid
and binding obligation of each other party thereto) will constitute the legal,
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its respective terms, except as limited by the Enforceability
Exceptions.
Section 10.3 No Conflict or Default. Neither the execution and
delivery of this Agreement nor the consummation by Purchaser of the transactions
contemplated hereby will result in a violation of, or a default under, or
conflict with, or require any consent, approval or notice under, any material
contract, trust, commitment, agreement, obligation, understanding, arrangement
or restriction of any kind to which Purchaser is a party or by which Purchaser
is bound or to which any properties or assets owned by Purchaser are subject.
Consummation by Purchaser of the transactions contemplated hereby will not
violate, or require any consent, approval or notice under, any provision of any
material judgment, order, decree, statute, Law, rule or regulation applicable to
such Purchaser other than those set forth on Schedule 10.3.
Section 10.4 Funding. The Purchaser has provided Sellers with a
copy of its equity financing commitment. Purchaser acknowledges that its
obligations under this Agreement are not subject to it securing any debt
financing or debt financing commitment with respect to the transactions
contemplated by this Agreement.
Section 10.5 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of Purchaser.
Section 10.6 Independent Investigation. In making the decision to
enter into this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby, Purchaser has conducted its own
independent investigation, review and analysis of the Purchased Assets, Assumed
Liabilities, and Business, which investigation, review and analysis was done by
Purchaser, its Affiliates and its Representatives. Purchaser acknowledges that
it and its Representatives have been provided adequate access to the personnel,
properties, premises and records of the Business for such purpose. In entering
into this Agreement and the Ancillary Agreements, Purchaser acknowledges that
Purchaser, its Affiliates and its Representatives have relied solely upon the
aforementioned investigation,
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review and analysis and not on any factual representations or opinions of
Sellers, their Affiliates or their Representatives (except the specific
representations and warranties of Seller set forth in this Agreement. Purchaser
hereby acknowledges and agrees that (a) other than the representations and
warranties made in this Agreement, none of Sellers, their Affiliates or their
Representatives makes or has made any representation or warranty, express or
implied, at law or in equity, with respect to the Purchased Assets, Assumed
Liabilities or the Business, including as to (i) merchantability or fitness for
any particular use or purpose, (ii) the performance of the Purchased Assets and
the Business after the Initial Closing or (iii) the probable success or
profitability of the Purchased Assets or the Business, and (b) none of Sellers,
their Affiliates or their Representatives will have or be subject to any
Liability or indemnification obligation to Purchaser or to any other Person
resulting from the distribution to Purchaser, its Affiliates or its
Representatives of, or Purchaser's use of, any information relating to the
Purchased Assets, Assumed Liabilities or the Business and any information,
documents or material made available to Purchaser, whether orally or in writing,
in management presentations, responses to questions submitted on behalf of
Purchaser or in any other form in expectation of the transactions contemplated
hereby.
ARTICLE XI
MISCELLANEOUS
Section 11.1 No Survival of Representations and Warranties. The
parties hereto agree that the representations and warranties contained in this
Agreement and in any certificate delivered pursuant hereto by any Person shall
not survive the Initial Closing Date hereunder and none of the parties shall
have any Liability to each other after the Initial Closing Date for any breach
thereof. The parties hereto agree that the covenants contained in this Agreement
to be performed at or after the Initial Closing Date shall survive the Initial
Closing Date hereunder.
Section 11.2 Transfer Taxes. All Transfer Taxes attributable to
the transfer of the Purchased Assets and any Transfer Taxes required to effect
any recording or filing with respect thereto shall be borne one-half by
Purchaser and one-half by Sellers. Sellers and Purchaser shall cooperate to
timely prepare, and Purchaser shall file or cause to be filed any returns or
other filings relating to such Transfer Taxes (unless Sellers are required by
applicable Law to file the return), including any claim for exemption or
exclusion from the application or imposition of any Transfer Taxes.
Section 11.3 Fees and Expenses; Allowed Administrative Expenses.
(a) Except as otherwise provided in this Agreement, all costs and expenses
incurred in connection with this Agreement and the consummation of the
Transaction shall be paid by the party incurring such expenses.
(b) The Break-Up Fee, Expense Reimbursement and any
Reconciliation Payment payable to Purchaser shall constitute allowed
superpriority administrative expense claims against the Sellers with priority
over all administrative expense claims and unsecured claims against the Sellers,
including any adequate protection-related claims and any
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administrative expenses of the kinds specified in or ordered pursuant to
Sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 546(c), 726,
and 1114 of the Bankruptcy Code, to the extent permitted by Law, subject only to
any superpriority claims arising under the DIP Financing Agreement and the
Bankruptcy Court Order approving such Agreement.
(c) Any claims arising from breaches by any Sellers of their
obligations pursuant to the terms of this Agreement shall constitute allowed
administrative expense claims against the Sellers under Sections 503(b)(1) and
507(a)(1), as applicable, of the Bankruptcy Code.
Section 11.4 Amendment; Waiver. This Agreement may be amended,
modified and supplemented only by a written instrument signed by all of the
parties hereto expressly stating that such instrument is intended to amend,
modify or supplement this Agreement. No action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other or
subsequent breach. No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Law. Sellers shall not agree to amend, modify or supplement
this Agreement or any Ancillary Agreement, or waive any provision of this
Agreement or any Ancillary Agreement (including but not limited to Section
8.2(e) hereof) without the prior written consent of the Administrative Agent and
without prior consultation with the official committee of unsecured creditors
appointed in the Bankruptcy Cases.
Section 11.5 Publicity. The initial press release with respect to
the execution of this Agreement shall be a joint press release reasonably
acceptable to Purchaser and Sellers. Thereafter, until the Final Closing Date,
or the date the transactions contemplated hereby are terminated or abandoned
pursuant to Article IX, Parent and Purchaser will consult with each other in
good faith prior to issuing or causing (directly or through another Person) the
publication of any press release or other similar public statement with respect
to this Agreement or the transactions contemplated hereby.
Section 11.6 Notices. All notices and other communications
hereunder shall be in writing and shall be delivered personally by hand, by
facsimile (which is confirmed) or sent by an overnight courier service to the
parties at the following addresses (or at such other address for a party as
shall be specified by such party by like notice):
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if to Purchaser, to:
AH Mortgage Acquisition Co., Inc.
c/o WL Ross & Co. LLC
1166 Avenue of the Americas, 27th Floor
New York, New York 10036
Facsimile: (212) 317-4891
Attention: Mr. Wilbur L. Ross, Chairman
with copies to (which copies shall not constitute notice):
Jones Day
222 East 41st Street
New York, New York 10017
Facsimile: (212) 755-7306
Attention: Robert A. Profusek, Esq.
if to Sellers, to:
c/o American Home Mortgage Investment Corp.
538 Broadhollow Road
Melville, New York 11747
Facsimile: (516) 949-3929
Attention: Mr. Steven Cooper
with copies to (which copies shall not constitute notice):
Kroll Zolfo Cooper
101 Eisenhower Parkway
Roseland, New Jersey 07068
Facsimile: (973) 618-9430
Attention: Elizabeth S. Kardos, Esq.
And
Young Conaway Stargatt & Taylor, LLP
The Brandywine Building
1000 West Street, 17th Floor
Wilmington, Delaware 19801
Facsimile: (302) 571-1253
Attention: James L. Patton, Jr., Esq.
And
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Banc of America
Strategic Solutions, Inc.
901 Main Street, 66th Floor
Dallas, TX 75202
Facsimile: (214) 290-9475
Attention: Jay T. Wampler
And
Kaye Scholer LLP
425 Park Avenue
New York, New York 10022
Facsimile: (212) 836-6545
Attention: Mark Liscio, Esq.
And
Hahn & Hessen LLP
488 Madison Avenue
New York, New York 10022
Facsimile: (212) 478-7400
Attention: Mark S. Indelicato, Esq.
All notices given pursuant to this Section 11.6 shall be deemed
to have been given (i) if delivered personally on the date of delivery or on the
date delivery was refused by the addressee, (ii) if delivered by facsimile, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 11.6 and an appropriate answerback is received, or (iii) if delivered by
overnight courier, on the date of delivery as established by the return receipt
or courier service confirmation (or the date on which the courier service
confirms that acceptance of delivery was refused by the addressee).
Section 11.7 Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties. Copies of
executed counterparts transmitted by telecopy or other electronic transmission
service shall be considered original executed counterparts, provided receipt of
such counterparts is confirmed.
Section 11.8 Entire Agreement; No Third Party Beneficiaries. This
Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and thereof, except for the Confidentiality
Agreement, which shall remain in full force and effect until the Initial Closing
Date, and (b) is not intended to confer any rights or remedies upon any Person
other than the parties hereto and thereto, including without limitation any
Business Employee or Transferred Employee.
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Section 11.9 Severability. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 11.10 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH (A) THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO RULES GOVERNING THE CONFLICT OF LAWS AND, (B) TO THE
EXTENT APPLICABLE, THE BANKRUPTCY CODE.
Section 11.11 Venue and Retention of Jurisdiction. (a) Without
limiting any party's right to appeal any order of the Bankruptcy Court, (i) the
Bankruptcy Court shall retain exclusive jurisdiction to enforce the terms of
this Agreement and to decide any claims or disputes which may arise or result
from, or be connected with, this Agreement, any breach or default hereunder, or
the transactions contemplated hereby, and (ii) any and all proceedings related
to the foregoing shall be filed and maintained only in the Bankruptcy Court, and
the parties hereby consent to and submit to the jurisdiction and venue of the
Bankruptcy Court and shall receive notices at such locations as indicated in
Section 11.6 hereof; provided, however, that if the Bankruptcy Cases of the
Sellers have closed, the parties agree to unconditionally and irrevocably submit
to the exclusive jurisdiction of the United States District Court for the
Southern District of New York sitting in New York County or the Commercial
Division, Civil Branch of the Supreme Court of the State of New York sitting in
New York County and any appellate court from any thereof, for the resolution of
any such claim or dispute. The parties hereby irrevocably waive, to the fullest
extent permitted by applicable Law, any objection which they may now or
hereafter have to the laying of venue of any such dispute brought in such court
or any defense of inconvenient forum for the maintenance of such dispute. Each
of the parties hereto agrees that a judgment in any such dispute may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by law.
(b) Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any suit, action or proceeding by
delivery of a copy thereof in accordance with the provisions of Section 11.6.
Section 11.12 No Punitive Damages. In no event will any party to
this Agreement be liable to any other party for any punitive or exemplary
damages or any claim of diminution in value of the Business.
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Section 11.13 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of Law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Notwithstanding
anything to the contrary in this Agreement, Purchaser may assign or pledge its
rights hereunder to secure financing for the transactions contemplated hereby.
Section 11.14 Fulfillment of Obligations. Any obligation of any
party to any other party under this Agreement, which obligation is performed,
satisfied or fulfilled completely by an Affiliate of such party, shall be deemed
to have been performed, satisfied or fulfilled by such party.
Section 11.15 Specific Performance. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that Purchaser and Sellers shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement, this
being in addition to any other remedy to which they are entitled at Law or in
equity. Nothing herein will affect the terms and conditions of Purchaser's
equity commitment.
Section 11.16 Waiver of Bulk Transfer Laws. Unless Purchaser
requests otherwise, Sellers and Purchaser agree to waive compliance with (a)
Article 6 of the Uniform Commercial Code as adopted in each of the jurisdictions
in which any of the Purchased Assets are located to the extent that such Article
is applicable to the transactions contemplated hereby and (b) any other so
called "bulk sales" laws; provided that if Purchaser requests otherwise,
Sellers' compliance with such request shall be at the sole expense of Purchaser.
Section 11.17 Personal Liability. This Agreement shall not create
or be deemed to create or permit any personal Liability or obligation on the
part of any officer, director, employee, Representative or investor (including
WLR) of any party hereto.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, Purchaser and Sellers have executed this Agreement
or caused this Agreement to be executed by their respective officers thereunto
duly authorized as of the date first written above.
AH MORTGAGE ACQUISITION CO., INC.
By: /s/ David Storper
----------------------------------------------
Name: David Storper
Title: Vice President and Secretary
AMERICAN HOME MORTGAGE
INVESTMENT CORP.,
as Seller and Debtor and Debtor-in-Possession
By: /s/ Michael Strauss
----------------------------------------------
Name: Michael Strauss
Title: Chief Executive Officer
AMERICAN HOME MORTGAGE CORP,
as Seller and Debtor and Debtor-in-Possession
By: /s/ Michael Strauss
----------------------------------------------
Name: Michael Strauss
Title: Chief Executive Officer
AMERICAN HOME MORTGAGE SERVICING, INC.,
as Seller and Debtor and Debtor-in-Possession
By: /s/ Michael Strauss
----------------------------------------------
Name: Michael Strauss
Title: Chief Executive Officer