Exhibit 10.1
EXECUTION VERSION
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MASTER REPURCHASE AGREEMENT
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as buyer ("Buyer",
which term shall include any "Principal"
as defined and provided for in Annex I) or as agent pursuant hereto
("Agent"), and
CHIMERA INVESTMENT CORPORATION, as seller ("Seller")
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Dated January 18, 2008
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TABLE OF CONTENTS
Page
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1. Applicability..........................................................1
2. Definitions............................................................1
3. Program; Initiation of Transactions...................................18
4. Repurchase............................................................20
5. Price Differential....................................................21
6. Margin Maintenance....................................................21
7. Income Payments.......................................................22
8. Security Interest.....................................................23
9. Payment and Transfer..................................................23
10. Conditions Precedent..................................................24
11. Program; Costs........................................................26
12. Servicing.............................................................27
13. Representations and Warranties........................................28
14. Covenants.............................................................33
15. Events of Default.....................................................39
16. Remedies Upon Default.................................................41
17. Reports...............................................................44
18. Repurchase Transactions...............................................47
19. Single Agreement......................................................47
20. Notices and Other Communications......................................47
21. Entire Agreement; Severability........................................48
22. Non assignability.....................................................49
23. Set-off...............................................................49
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24. Binding Effect; Governing Law; Jurisdiction...........................49
25. No Waivers, Etc.......................................................50
26. Intent................................................................50
27. Disclosure Relating to Certain Federal Protections....................51
28. Power of Attorney.....................................................51
29. Buyer May Act Through Affiliates......................................52
30. Indemnification; Obligations..........................................52
31. Counterparts..........................................................53
32. Confidentiality.......................................................53
33. Recording of Communications...........................................54
34. Periodic Due Diligence Review.........................................54
35. Authorizations........................................................55
36. Acknowledgement Of Anti-Predatory Lending Policies....................55
37. Documents Mutually Drafted............................................55
38. General Interpretive Principles.......................................55
SCHEDULES
Schedule 1 - Representations and Warranties with Respect to Purchased
Mortgage Loans
Schedule 2 - Authorized Representatives
Schedule 3A - Approved Servicers for Servicing Released Loans
Schedule 3B - Approved Servicer for Servicing Retained Loans
ANNEXES
Annex I - Buyer Acting as Agent
EXHIBITS
Exhibit A - Form of Transaction Request
Exhibit B - Form of Purchase Confirmation
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Exhibit C - Form of Mortgage Loan Schedule
Exhibit D - Form of Officer's Compliance Certificate
Exhibit E - Form of Power of Attorney
Exhibit F - Form of Opinion of Seller's and counsel
Exhibit G - Reserved
Exhibit H - Officer's Certificate of the Seller and Corporate Resolutions of
Seller
Exhibit I - Seller's Tax Identification Number
Exhibit J - Existing Indebtedness
Exhibit K - Reserved
Exhibit L - Reserved
Exhibit M - Form of Servicer Notice
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1. Applicability
From time to time the parties hereto may enter into transactions in
which Seller agrees to transfer to Buyer Mortgage Loans (as hereinafter defined)
against the transfer of funds by Buyer, with a simultaneous agreement by Buyer
to transfer to Seller such Mortgage Loans at a date certain or on demand,
against the transfer of funds by Seller. This Agreement is a commitment by Buyer
to engage in the Transactions as set forth herein up to the Maximum Committed
Purchase Price; provided, that the Buyer shall have no commitment to enter into
any Transaction requested which would result in the aggregate Purchase Price of
then outstanding Transactions to exceed the Maximum Committed Purchase Price.
Each such transaction shall be referred to herein as a "Transaction" and, unless
otherwise agreed in writing, shall be governed by this Agreement, including any
supplemental terms or conditions contained in any annexes identified herein, as
applicable hereunder.
2. Definitions
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"30/40 Mortgage Loan" means a Mortgage Loan which has an original
term to maturity of not more than thirty years from commencement of
amortization, with a balloon payment in year thirty based upon a forty year
amortization schedule.
"Acceptable State" means any state acceptable pursuant to the
originator's Acquisition Guidelines.
"Accepted Servicing Practices" means, with respect to any Mortgage
Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage Loan
in the jurisdiction where the related Mortgaged Property is located.
"Acquisition Guidelines" means, with respect to a Mortgage Loan, the
originator's residential mortgage loan underwriting guidelines (unless such
originator has been disapproved by Buyer), as the case may be, in effect at the
time the Mortgage Loan was originated.
"Act of Insolvency" means, with respect to any Person or its
Affiliates, (i) the filing of a petition, commencing, or authorizing the
commencement of any case or proceeding, or the voluntary joining of any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar law relating to the protection of creditors, or suffering
any such petition or proceeding to be commenced by another which is consented
to, not timely contested or results in entry of an order for relief; (ii) the
seeking of the appointment of a receiver, trustee, custodian or similar official
for such party or an Affiliate or any substantial part of the property of
either; (iii) the appointment of a receiver, conservator, or manager for such
party or an Affiliate by any governmental agency or authority having the
jurisdiction to do so; (iv) the making or offering by such party or an Affiliate
of a composition with its creditors or a general assignment for the benefit of
creditors; (v) the admission by such party or an Affiliate of such party of its
inability to pay its debts or discharge its obligations as they become due or
mature; or (vi) that any governmental authority or agency or any person, agency
or entity acting or purporting to act under governmental authority shall have
taken any action to condemn, seize or appropriate, or to assume custody or
control of, all or any substantial part of the property of such party or of any
of its Affiliates, or shall have taken any action to displace the management of
such party or of any of its Affiliates or to curtail its authority in the
conduct of the business of such party or of any of its Affiliates.
"Additional Purchased Mortgage Loans" has the meaning assigned
thereto in Section 6(a) hereof.
"Adjusted Tangible Net Worth" means, for any Person, Net Worth of
such Person plus Subordinated Debt, minus all intangible assets, including
capitalized servicing rights, goodwill, patents, tradenames, trademarks,
copyrights, franchises, any organizational expenses, deferred expenses, prepaid
expenses, prepaid assets, receivables from shareholders, Affiliates or
employees, and any other asset as shown as an intangible asset on the balance
sheet of such Person on a consolidated basis as determined at a particular date
in accordance with GAAP.
"Affiliate" means, with respect to any Person, any "affiliate" of
such Person, as such term is defined in the Bankruptcy Code. Notwithstanding
anything to the contrary contained herein, the term "Affiliate" with respect to
Seller shall not include (i) Annaly Capital Management, Inc. or Fixed Income
Discount Advisory Company ("FIDAC") or any fund managed or advised by FIDAC or
any of their respective Affiliates, other than Seller or (ii) any special
purpose entity as a depositor in securitizations or any securitization trust.
"Agency" means Freddie Mac, Fannie Mae or GNMA, as applicable.
"Agency Security" means a mortgage-backed security issued by an
Agency.
"Agent" means Credit Suisse First Boston Mortgage Capital LLC or any
affiliate or successor thereto.
"Agreement" means this Master Repurchase Agreement, as it may be
amended, supplemented or otherwise modified from time to time.
"Alt-A Mortgage Loan" means a Mortgage Loan that satisfies the
guidelines for such loans set forth in the related Acquisition Guidelines, or as
otherwise determined by Buyer in its sole discretion.
"Appraised Value" means the value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.
"Asset Tape" means a remittance report on a monthly basis or
requested by Buyer pursuant to Section 17d hereof containing servicing
information, including, without limitation, those fields reasonably requested by
Buyer from time to time, on a loan-by-loan basis and in the aggregate, with
respect to the Purchased Mortgage Loans serviced by Seller or any Servicer for
the month (or any portion thereof) prior to the Reporting Date.
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"Assignment of Mortgage" means an assignment of the Mortgage, notice
of transfer or equivalent instrument in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect the sale of the Mortgage to Buyer.
"Bailee Letter" has the meaning assigned to such term in the
Custodial Agreement.
"Bank" means Wells Fargo Bank, N.A.
"Bankruptcy Code" means the United States Bankruptcy Code of 1978,
as amended from time to time.
"Bid" has the meaning set forth in Section 4(c) hereof.
"Bid Fee" has the meaning set forth in Section 4(c) hereof.
"BPO" means an opinion of the fair market value of a Mortgaged
Property given by a licensed real estate agent or broker which generally
includes three comparable sales and three comparable listings.
"Business Day" means any day other than (A) a Saturday or Sunday and
(B) a public or bank holiday in New York City.
"Buydown Amount" has the meaning set forth in Section 5(c) hereof.
"Buyer" means Credit Suisse First Boston Mortgage Capital LLC, and
any successor or assign hereunder.
"Buyer's Margin Amount" means with respect to any Transaction as of
any date of determination, an amount equal to the product of (A) Buyer's Margin
Percentage and (B) the Purchase Price for such Transaction.
"Buyer's Margin Percentage" means, with respect to any Transaction
as of any date, a percentage equal to the percentage obtained by dividing the
(A) Market Value of the Purchased Mortgage Loans on the Purchase Date for such
Transaction by (B) the Purchase Price on the Purchase Date for such Transaction;
provided, that, with respect to any Mortgage Loan which was not an Exception
Mortgage Loan on the related Purchase Date and which, as of the date of
determination, is an Exception Mortgage Loan, Buyer's Margin Percentage as of
such date of determination shall be equal to the percentage obtained by dividing
(A) the Market Value of such Mortgage Loan on the related Purchase Date by (B)
the amount the Purchase Price would have been on the Purchase Date if such
Mortgage Loan had been categorized as the type of Mortgage Loan (e.g., Exception
Mortgage Loan, etc.) that it is categorized on the date of determination.
"Capital Lease Obligations" means, for any Person, all obligations
of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
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"Cash Equivalents" means (a) securities with maturities of 90 days
or less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of deposit
and eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of Buyer or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of Buyer or of any commercial bank satisfying the requirements of clause (b) of
this definition, having a term of not more than seven days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-1 or the
equivalent thereof by S&P or P-1 or the equivalent thereof by Moody's and in
either case maturing within 90 days after the day of acquisition, (e) securities
with maturities of 90 days or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's, (f)
securities with maturities of 90 days or less from the date of acquisition
backed by standby letters of credit issued by Buyer or any commercial bank
satisfying the requirements of clause (b) of this definition or (g) shares of
money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
"Change in Control" means:
(A) the sale, transfer, or other disposition of all or substantially
all of Seller's assets (excluding any such action taken in
connection with (1) any securitization transaction; or (2) in
connection with an asset based financing or other secondary market
transaction related to mortgage loans and in the ordinary course of
the Seller's business); or
(B) any transaction or event as a result of which a "person" or
"group" (within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
shall become, or obtain rights (whether by means of warrants,
options or otherwise) to become, the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a percentage of the total voting power of all classes
of capital stock of the Seller entitled to vote generally in the
election of directors of 30% or more.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Account" means the account established by the Collection
Account Control Agreement, into which all collections and proceeds on or in
respect of the Mortgage Loans shall be deposited by Master Servicer upon an
Event of Default.
"Collection Account Control Agreement" means that certain collection
account control agreement, dated as of the date hereof, among Buyer, Master
Servicer, Seller and Bank.
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"Committed Mortgage Loan" means a Mortgage Loan which is the subject
of a Take-out Commitment with a Take-out Investor.
"Conforming Mortgage Loan" means a first lien Mortgage Loan
originated in accordance with the criteria of an Agency for purchase of Mortgage
Loans, including, without limitation, conventional Mortgage Loans, as determined
by Buyer in its sole discretion.
"Custodial Agreement" means the custodial agreement dated as of the
date hereof, among Seller, Buyer and Custodian as the same may be amended from
time to time.
"Custodial Mortgage Loan Schedule" has the meaning assigned to such
term in the Custodial Agreement.
"Custodian" means Wells Fargo Bank, N.A. or such other party
specified by Buyer and agreed to by Seller, which approval shall not be
unreasonably withheld.
"Default" means an Event of Default or an event that with notice or
lapse of time or both would become an Event of Default.
"Dollars" and "$" means dollars in lawful currency of the United
States of America.
"Due Date" means the day of the month on which the Monthly Payment
is due on a Mortgage Loan, exclusive of any days of grace.
" Due Diligence Cap" means $40,000.
"Effective Date" means the date upon which the conditions precedent
set forth in Section 10 shall have been satisfied.
"Electronic Tracking Agreement" means an Electronic Tracking
Agreement among Buyer, Seller, MERS and MERSCORP, Inc., to the extent applicable
as the same may be amended from time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means any corporation or trade or business that is
a member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which Seller is a member and (ii) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or (o) of the Code of which Seller is a
member.
"Escrow Payments" means, with respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
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"Event of Default" has the meaning specified in Section 15 hereof.
"Event of Termination" means with respect to Seller (i) with respect
to any Plan, a reportable event, as defined in Section 4043 of ERISA, as to
which the PBGC has not by regulation waived the requirement of Section 4043(a)
of ERISA that it be notified with 30 days of the occurrence of such event, or
(ii) the withdrawal of Seller, or any ERISA Affiliate thereof from a Plan during
a plan year in which it is a substantial employer, as defined in Section
4001(a)(2) of ERISA, or (iii) the failure by Seller or any ERISA Affiliate
thereof to meet the minimum funding standard of Section 412 of the Code or
Section 302 of ERISA with respect to any Plan, including, without limitation,
the failure to make on or before its due date a required installment under
Section 412(m) of the Code or Section 302(e) of ERISA, or (iv) the distribution
under Section 4041 of ERISA of a notice of intent to terminate any Plan or any
action taken by Seller or any ERISA Affiliate thereof to terminate any plan, or
(v) the adoption of an amendment to any Plan that, pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of
tax-exempt status of the trust of which such Plan is a part if Seller or any
ERISA Affiliate thereof fails to timely provide security to the Plan in
accordance with the provisions of said sections, or (vi) the institution by the
PBGC of proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or (vii) the receipt by Seller
or any ERISA Affiliate thereof of a notice from a Multiemployer Plan that action
of the type described in the previous clause (vi) has been taken by the PBGC
with respect to such Multiemployer Plan, or (viii) any event or circumstance
exists which may reasonably be expected to constitute grounds for Seller or any
ERISA Affiliate thereof to incur liability under Title IV of ERISA or under
Sections 412(c)(11) or 412(n) of the Code with respect to any Plan.
"Exception Mortgage Loan" means any Mortgage Loan which is otherwise
ineligible for purchase hereunder, or which otherwise becomes ineligible for
purchase hereunder and which is approved by Buyer in its sole discretion;
provided, however, that Seller shall pay to Buyer a fee of $25 with respect to
any such approval of an Exception Mortgage Loan; and provided, that upon 30
days' notice to the Seller, Buyer may change such Exception Mortgage Loan
approval fee. Buyer's approval of a Mortgage Loan as an Exception Mortgage Loan
shall expire on the earlier of (a) the date set forth by the Buyer in the
written notice that such Mortgage Loan is approved as an Exception Mortgage Loan
(an "Exception Notice") or (b) the occurrence of any additional event, other
than that set forth in the Exception Notice, which would cause the Mortgage Loan
to become ineligible for purchase hereunder. The Pricing Rate, Market Value,
Purchase Price and Buyer's Margin Percentage with respect to Exception Mortgage
Loans shall be set in the sole discretion of Buyer. Buyer may at any time, and
in its sole discretion, no longer consider a Mortgage Loan an Exception Mortgage
Loan, in which case such Mortgage Loan shall have a Market Value of zero.
"Existing Indebtedness" has the meaning specified in Section
13(a)(23) hereof.
"Fannie Mae" means Fannie Mae, the government sponsored enterprise
formerly known as the Federal National Mortgage Association.
"FICO" means Fair Isaac & Co., or any successor thereto.
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"Fidelity Insurance" shall mean insurance coverage with respect to
omissions, dishonesty, forgery, theft, disappearance and destruction, robbery
and safe burglary, property (other than money and securities) and computer fraud
in an aggregate amount acceptable to Seller's regulators.
"Freddie Mac" means the Federal Home Loan Mortgage Corporation or
any successor thereto.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States of America and applied on a consistent basis.
"GNMA" means the Government National Mortgage Association and any
successor thereto.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, or any entity exercising executive,
legislative, judicial, regulatory or administrative functions over Seller or
Buyer, as applicable.
"Gross Margin" means, with respect to each adjustable rate Mortgage
Loan, the fixed percentage amount set forth in the related Mortgage Note.
"High Cost Mortgage Loan" means a Mortgage Loan classified as (a) a
"high cost" loan under the Home Ownership and Equity Protection Act of 1994 or
(b) a "high cost," "threshold," "covered," or "predatory" loan under any other
applicable state, federal or local law (or a similarly classified loan using
different terminology under a law, regulation or ordinance imposing heightened
regulatory scrutiny or additional legal liability for residential mortgage loans
having high interest rates, points and/or fees).
"Income" means with respect to any Purchased Mortgage Loan at any
time until repurchased by the Seller, any principal received thereon or in
respect thereof and all interest, dividends or other distributions thereon.
"Indebtedness" means, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business, so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for the account of such Person; (e) Capital Lease Obligations of such Person;
(f) obligations of such Person under repurchase agreements, sale/buy-back
agreements or like arrangements; (g) Indebtedness of others Guaranteed by such
Person; (h) all obligations of such Person incurred in connection with the
acquisition or carrying of fixed assets by such Person; and (i) Indebtedness of
general partnerships of which such Person is a general partner.
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"Index" means, with respect to any adjustable rate Mortgage Loan,
the index identified on the Mortgage Loan Schedule and set forth in the related
Mortgage Note for the purpose of calculating the applicable Mortgage Interest
Rate.
"Interest Only Adjustment Date" means, with respect to each Interest
Only Loan, the date, specified in the related Mortgage Note on which the Monthly
Payment will be adjusted to include principal as well as interest.
"Interest Only Loan" means a Mortgage Loan which only requires
payments of interest for a period of time specified in the related Mortgage
Note.
"Interest Rate Adjustment Date" means the date on which an
adjustment to the Mortgage Interest Rate with respect to each Mortgage Loan
becomes effective.
"Interest Rate Protection Agreement" means, with respect to any or
all of the Purchased Mortgage Loans, any short sale of a US Treasury Security,
or futures contract, or mortgage related security, or Eurodollar futures
contract, or options related contract, or interest rate swap, cap or collar
agreement or Take-out Commitment, or similar arrangement providing for
protection against fluctuations in interest rates or the exchange of nominal
interest obligations, either generally or under specific contingencies, entered
into by Seller and an Affiliate of Buyer or such other party acceptable to Buyer
in its sole discretion, which agreement is acceptable to Buyer in its sole
discretion.
"Jumbo Mortgage Loan" means a first lien Mortgage Loan which would
satisfy the requirement for a Conforming Mortgage Loan except for an unpaid
principal balance greater than the maximum balance permitted by the Agencies but
less than $2,000,000.
"LIBOR" means, in the Buyer's sole discretion which may be confirmed
by fifteen (15) days notice to the Seller (which may be electronic), for each
day, (a) the rate of interest (calculated on a per annum basis) equal to the
overnight British Bankers Association Rate as reported on the display designated
as "BBAM" "Page DG8 4a" on Bloomberg (or such other display as may replace
"BBAM" "Page DG8 4a" on Bloomberg) on such date of determination, and if such
rate shall not be so quoted, the rate per annum at which Buyer or an Affiliate
is offered Dollar deposits at or about 11:00 a.m., (New York City time), on such
day, by prime banks in the interbank eurodollar market where the eurodollar and
foreign currency exchange operations in respect of its loans are then being
conducted for delivery on such day for an overnight period, and in an amount
comparable to the amount of the Purchase Price of Transactions to be outstanding
on such day or (b) the rate of interest (calculated on a per annum basis) equal
to the one month British Bankers Association Rate as reported on the display
designated as "BBAM" "Page DG8 4a" on Bloomberg (or such other display as may
replace "BBAM" "Page DG8 4a" on Bloomberg) on such date of determination, and if
such rate shall not be so quoted, the rate per annum at which Buyer is offered
Dollar deposits at or about 11:00 a.m., (New York City time), on such day, by
prime banks in the interbank eurodollar market where the eurodollar and foreign
currency exchange operations in respect of its loans are then being conducted
for delivery on such day for a period of one month, and in an amount comparable
to the amount of the Purchase Price of Transactions to be outstanding on such
day.
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"Lien" means any mortgage, lien, pledge, charge, security interest
or similar encumbrance.
"Loan to Value Ratio" or "LTV" means with respect to any Mortgage
Loan, the ratio of the original outstanding principal amount of such Mortgage
Loan to the lesser of (a) the Appraised Value of the Mortgaged Property at
origination or (b) if the Mortgaged Property was purchased within 12 months of
the origination of such Mortgage Loan, the purchase price of the Mortgaged
Property.
"Margin Call" has the meaning specified in Section 6(a) hereof.
"Margin Deadline" has the meaning specified in Section 6(b) hereof.
"Margin Deficit" has the meaning specified in Section 6(a) hereof.
"Market Value" means, with respect to any Purchased Mortgage Loan as
of any date of determination, the whole-loan servicing released fair market
value of such Purchased Mortgage Loan on such date as determined by Buyer (or an
Affiliate thereof) in its sole discretion. Without limiting the generality of
the foregoing, Seller acknowledges that (a) in the event that a Purchased
Mortgage Loan is not subject to a Take-out Commitment, Buyer may deem the Market
Value for such Mortgage Loan to be no greater than par and (b) the Market Value
of a Purchased Mortgage Loan may be reduced to zero by Buyer if:
(i) a breach of a representation, warranty or covenant
made by Seller in this Agreement with respect to such Purchased
Mortgage Loan has occurred and is continuing;
(ii) such Purchased Mortgage Loan is a Non-Performing
Mortgage Loan;
(iii) such Purchased Mortgage Loan has been released
from the possession of the Custodian under the Custodial Agreement
(other than to a Take-out Investor pursuant to a Bailee Letter) for
a period in excess of ten (10) calendar days;
(iv) such Purchased Mortgage Loan has been released from
the possession of the Custodian under the Custodial Agreement to a
Take-out Investor pursuant to a Bailee Letter for a period in excess
of 45 calendar days;
(v) such Purchased Mortgage Loan has been subject to a
Transaction hereunder for a period of greater than 364 days;
(vi) such Purchased Mortgage Loan is no longer
acceptable for purchase by Buyer (or an Affiliate thereof) under any
of the flow purchase or conduit programs for which Seller then has
been approved due to a Requirement of Law relating to consumer
credit laws or otherwise;
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(vii) when the Purchase Price for such Purchased
Mortgage Loan is added to other Purchased Mortgage Loans, the
aggregate Purchase Price of all Super Jumbo Mortgage Loans that are
Purchased Mortgage Loans exceeds 25% of the Maximum Aggregate
Purchase Price;
(viii) when the Purchase Price for such Purchased
Mortgage Loan is added to other Purchased Mortgage Loans, the
aggregate Purchase Price of all Alt-A Mortgage Loans that are
Purchased Mortgage Loans exceeds 10% of the Maximum Aggregate
Purchase Price.
"Master Servicer" means Wells Fargo Bank, N.A.
"Material Adverse Effect" means (a) a material adverse change in, or
a material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of Seller or any Affiliate that is a party
to any Program Agreement taken as a whole; (b) a material impairment of the
ability of Seller or any Affiliate that is a party to any Program Agreement to
perform under any Program Agreement and to avoid any Event of Default; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability of any Program Agreement against Seller or any Affiliate that is
a party to any Program Agreement.
"Maximum Aggregate Purchase Price" means FIVE HUNDRED MILLION
DOLLARS ($500,000,000).
"Maximum Committed Purchase Price" means THREE HUNDRED MILLION
DOLLARS ($300,000,000). All funds made available by Buyer to the Seller under
this Agreement will first be attributed to the Maximum Committed Purchase Price.
For purposes of this Agreement, Mortgage Loans will be allocated first to the
Maximum Committed Purchase Price based on the date on which such Mortgage Loan
becomes subject to this Agreement, commencing from the earliest date to the most
recent date. To the extent that there is availability under the Maximum
Aggregate Purchase Price, but any Mortgage Loans proposed by the Sellers for
purchase by Buyer would otherwise exceed the Maximum Committed Purchase Price,
then to the extent that such Maximum Committed Purchase Price would be exceeded,
such Mortgage Loans may be purchased by the Buyer on an uncommitted basis, in
Buyer's sole discretion.
"MERS" means Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or
any successor thereto.
"MERS System" means the system of recording transfers of mortgages
electronically maintained by MERS.
"Monthly Payment" means the scheduled monthly payment of principal
and/or interest on a Mortgage Loan.
"Moody's" means Moody's Investors Service, Inc. or any successors
thereto.
-10-
"Mortgage" means each mortgage, assignment of rents, security
agreement and fixture filing, or deed of trust, assignment of rents, security
agreement and fixture filing, deed to secure debt, assignment of rents, security
agreement and fixture filing, or similar instrument creating and evidencing a
lien on real property and other property and rights incidental thereto.
"Mortgage File" means, with respect to a Mortgage Loan, the
documents and instruments relating to such Mortgage Loan and set forth in
Exhibit F to the Custodial Agreement.
"Mortgage Interest Rate" means the rate of interest borne on a
Mortgage Loan from time to time in accordance with the terms of the related
Mortgage Note.
"Mortgage Interest Rate Cap" means, with respect to an adjustable
rate Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set
forth in the related Mortgage Note.
"Mortgage Loan" means any Conforming Mortgage Loan, Jumbo Mortgage
Loan, Super Jumbo Mortgage Loan, Alt-A Mortgage Loan, or Exception Mortgage Loan
which is a fixed or floating-rate, one-to-four-family residential mortgage or
home equity loan evidenced by a promissory note and secured by a mortgage, which
satisfies the requirements set forth in Section 13(b) hereof and is either a
Servicing Retained Mortgage Loan or a Servicing Released Mortgage Loan;
provided, however, that, except as expressly approved in writing by Buyer,
Mortgage Loans shall not include any "high-LTV" loans (i.e., a mortgage loan
having a loan-to-value ratio in excess of 100% or any High Cost Mortgage Loans.
"Mortgage Loan Documents" means the documents in the related
Mortgage File to be delivered to the Custodian.
"Mortgage Loan Schedule" means with respect to any Transaction as of
any date, a mortgage loan schedule in the form of either (a) Exhibit C attached
hereto or (b) a computer tape or other electronic medium generated by Seller,
and delivered to Buyer and Custodian, which provides information (including,
without limitation, the information set forth on Exhibit C attached hereto)
relating to the Purchased Mortgage Loans in a format acceptable to Buyer.
"Mortgage Note" means the promissory note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage.
"Mortgaged Property" means the real property securing repayment of
the debt evidenced by a Mortgage Note.
"Mortgagor" means the obligor or obligors on a Mortgage Note,
including any person who has assumed or guaranteed the obligations of the
obligor thereunder.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been or are required to be
made by Seller or any ERISA Affiliate and that is covered by Title IV of ERISA.
-11-
"Net Income" means, for any period and any Person, the net income of
such Person for such period as determined in accordance with GAAP excluding
unrealized gains and losses.
"Net Worth" means, with respect to any Person, an amount equal to,
on a consolidated basis, such Person's stockholder equity (determined in
accordance with GAAP).
"1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Non-Performing Mortgage Loan" means (i) any Mortgage Loan for which
any payment of principal or interest is more than twenty nine (29) days past
due, (ii) any Mortgage Loan with respect to which the related mortgagor is in
bankruptcy or (iii) any Mortgage Loan with respect to which the related
mortgaged property is in foreclosure.
"Notice Date" has the meaning given to it in Section 3(b) hereof.
"Obligations" means (a) all of Seller's indebtedness, obligations to
pay the Repurchase Price on the Repurchase Date, the Price Differential on each
Price Differential Payment Date, and other obligations and liabilities, to
Buyer, its Affiliates or Custodian arising under, or in connection with, the
Program Agreements, whether now existing or hereafter arising; (b) any and all
sums paid by Buyer or on behalf of Buyer in order to preserve any Purchased
Mortgage Loan or its interest therein; (c) in the event of any proceeding for
the collection or enforcement of any of Seller's indebtedness, obligations or
liabilities referred to in clause (a), the reasonable expenses of retaking,
holding, collecting, preparing for sale, selling or otherwise disposing of or
realizing on any Purchased Mortgage Loan, or of any exercise by Buyer of its
rights under the Program Agreements, including, without limitation, attorneys'
fees and disbursements and court costs; and (d) all of Seller's indemnity
obligations to Buyer or Custodian or both pursuant to the Program Agreements.
"OFAC" has the meaning set forth in Section 13(a)(27) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Plan" means an employee benefit or other plan established or
maintained by any Seller or any ERISA Affiliate and covered by Title IV of
ERISA, other than a Multiemployer Plan.
"Post Default Rate" means an annual rate of interest equal to the
greater of (a) the Pricing Rate plus 3% or (b) the Mortgage Interest Rate.
"Price Differential" means with respect to any Transaction as of any
date of determination, an amount equal to the product of (A) the Pricing Rate
for such Transaction and (B) the Purchase Price for such Transaction, calculated
daily on the basis of a 360-day year for the actual number of days during the
period commencing on (and including) the Purchase Date for such Transaction and
ending on (but excluding) the Repurchase Date.
"Price Differential Payment Date" means, with respect to a Purchased
Mortgage Loan, the 5th day of the month following the related Purchase Date and
each succeeding 5th day of the month thereafter; provided, that, with respect to
such Purchased Mortgage Loan, the final Price Differential Payment Date shall be
the related Repurchase Date; and provided, further, that if any such day is not
a Business Day, the Price Differential Payment Date shall be the next succeeding
Business Day.
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"Pricing Rate" means LIBOR plus:
(a) 0.75% with respect to Transactions the subject of
which are Conforming Mortgage Loans;
(b) 0.75% with respect to Transactions the subject of
which are Jumbo Mortgage Loans;
(c) 0.75% with respect to Transactions the subject of
which are Super Jumbo Mortgage Loans;
(d) 1.25% with respect to Transactions the subject of
which are Alt-A Mortgage Loans; and
(e) the rate determined in the sole discretion of Buyer
with respect to Transactions the subject of which are Exception
Mortgage Loans and any other Transactions so identified by the Buyer
in agreeing to enter into a Transaction with respect to such
Exception Mortgage Loan
The Pricing Rate shall change in accordance with LIBOR, as provided
in Section 5(a).
Where a Purchased Mortgage Loan may qualify for two or more Pricing
Rates hereunder, unless otherwise expressly agreed to by the Buyer in writing,
such Purchased Mortgage Loan shall be assigned the higher Pricing Rate, as
applicable.
"Principal" has the meaning given to it in Annex I.
"Program Agreements" means, collectively, the Servicing Agreement,
if any, the Servicer Notice, if any, the Custodial Agreement, this Agreement,
the Electronic Tracking Agreement, if entered into, the Collection Account
Control Agreement, the Power of Attorney and, with respect to each Exception
Mortgage Loan, a Purchase Confirmation.
"Prohibited Person" has the meaning set forth in Section 13(a)(27)
hereof.
"Property" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
-13-
"Purchase Confirmation" means a confirmation of a Transaction, in
the form attached as Exhibit B hereto.
"Purchase Date" means the date on which Purchased Mortgage Loans are
to be transferred by Seller to Buyer.
"Purchase Price" means the price at which each Purchased Mortgage
Loan is transferred by Seller to Buyer, which shall equal:
(i) on the Purchase Date, in the case of all Purchased Mortgage
Loans the amount equal to the applicable Purchase Price Percentage multiplied by
the lesser of either: (x) the Market Value of such Purchased Mortgage Loan or
(y) the outstanding principal amount thereof as set forth on the related
Mortgage Loan Schedule;
(ii) on any day after the Purchase Date, except where Buyer and the
Seller agree otherwise, the amount determined under the immediately preceding
clause (i) decreased by the amount of any cash transferred by the Seller to
Buyer pursuant to Section 4(c) hereof or applied to reduce the Seller's
obligations under clause (ii) of Section 4(b) hereof or under Section 6 hereof.
"Purchase Price Percentage" means, with respect to each Mortgage
Loan, the following percentage, as applicable:
(a) 97% with respect to Purchased Mortgage Loans that are Conforming
Mortgage Loans;
(b) 94% with respect to Purchased Mortgage Loans that are Jumbo
Mortgage Loans;
(c) 90% with respect to Purchased Mortgage Loans that are Super
Jumbo Mortgage Loans;
(d) 90% with respect to Purchased Mortgage Loans that are Alt-A
Mortgage Loans; and
(e) with respect to Transactions the subject of which are Exception
Mortgage Loans, a percentage to be determined by Buyer in its sole
discretion, provided that in the absence of an Exception Notice, the
applicable Purchase Price Percentage for such Purchased Mortgage
Loan shall be reduced by 10% every ten (10) Business Day period,
such reduction to occur at the outset of each such ten (10) Business
Day period, commencing on the date that such Mortgage Loan becomes
an Exception Mortgage Loan.
Where a Purchased Mortgage Loan may qualify for two or more Purchase
Price Percentages hereunder, unless otherwise expressly agreed to by the Buyer
in writing, such Purchased Mortgage Loan shall be assigned the lower Purchase
Price Percentage, as applicable.
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"Purchased Mortgage Loans" means the collective reference to
Mortgage Loans together with the Repurchase Assets related to such Mortgage
Loans transferred by Seller to Buyer in a Transaction hereunder, listed on the
related Mortgage Loan Schedule attached to the related Transaction Request,
which such Mortgage Loans the Custodian has been instructed to hold pursuant to
the Custodial Agreement. For the avoidance of doubt, with respect to any
Servicing Retained Loan, the term "Purchased Mortgage Loan" shall not include
the related Servicing Rights.
"Qualified Insurer" means a mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by Fannie Mae or Freddie Mac.
"Qualified Originator" means an originator of Mortgage Loans duly
licensed and validly authorized under applicable law to originate mortgage loans
in the related jurisdiction and not disapproved by Buyer.
"Records" means all instruments, agreements and other books,
records, and reports and data generated by other media for the storage of
information maintained by Seller or any other person or entity with respect to a
Purchased Mortgage Loan. Records shall include the Mortgage Notes, any
Mortgages, the Mortgage Files, the credit files related to the Purchased
Mortgage Loan and any other instruments necessary to document or service a
Mortgage Loan.
"Recourse Indebtedness" means, for any date of determination, for
any Person the aggregate of Indebtedness of such Person on a consolidated basis
during such period maintained in accordance with GAAP; provided, however, that
for any period, the aggregate Indebtedness of such Person during such period
maintained in accordance with GAAP shall be calculated less the aggregate amount
of any such Indebtedness that is reflected on the balance sheet of such Person
in respect of obligations incurred pursuant to a securitization transaction or
other secondary market transaction, solely to the extent such obligations are
secured by the assets subject to such transaction and are non recourse to such
Person. In the event that any Indebtedness would be excluded from the
calculation of Indebtedness but for the existence of recourse, such Person shall
be entitled nonetheless to exclude the amount of such Indebtedness that is not
subject to recourse.
"REO Property" means real property acquired by Seller, including a
Mortgaged Property acquired through foreclosure of a Mortgage Loan or by deed in
lieu of such foreclosure.
"Reporting Date" means the 5th day of each month or, if such day is
not a Business Day, the next succeeding Business Day.
-15-
"Repurchase Assets" has the meaning assigned thereto in Section 8
hereof.
"Repurchase Date" means the earlier of (i) the Termination Date,
(ii) the date set forth in the applicable Purchase Confirmation, (iii) the date
determined by application of Section 16 hereof or (iv) the date identified to
Buyer by Seller as the date that the related Mortgage Loan is to be sold
pursuant to a Take-out Commitment.
"Repurchase Price" means the price at which Purchased Mortgage Loans
are to be transferred from Buyer to Seller upon termination of a Transaction,
which will be determined in each case (including Transactions terminable upon
demand) as the sum of the Purchase Price and the accrued but unpaid Price
Differential as of the date of such determination.
"Request for Certification" means a notice sent to the Custodian
reflecting the sale of one or more Purchased Mortgage Loans to Buyer hereunder.
"Requirement of Law" means, with respect to any Person, any law,
treaty, rule or regulation or determination of an arbitrator, a court or other
governmental authority, applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Responsible Officer" means as to any Person, the chief executive
officer or, with respect to financial matters, the chief financial officer of
such Person.
"S&P" means Standard & Poor's Ratings Services, or any successor
thereto.
"SEC" means the Securities and Exchange Commission, or any successor
thereto.
"Security Agreement" means, with respect to any Mortgage Loan, any
contract, instrument or other document related to security for repayment thereof
(other than the related Mortgage and Mortgage Note), executed by the Mortgagor
and/or others in connection with such Mortgage Loan, including without
limitation, any security agreement, guaranty, title insurance policy, hazard
insurance policy, chattel mortgage, letter of credit or certificate of deposit
or other pledged accounts, and any other documents and records relating to any
of the foregoing.
"Seller" means Chimera Investment Corporation or its permitted
successors and assigns.
"Servicer" means, with respect to Servicing Released Loans, the
servicers listed on Schedule 3A attached hereto, and with respect to the
Servicing Retained Loans, the servicers listed on Schedule 3B attached hereto,
and any successor thereto, or any other servicer mutually acceptable to Buyers
and Seller.
"Servicer Notice" means a notice acknowledged by the Master Servicer
substantially in the form of Exhibit M hereto.
"Servicing Agreement" means any servicing agreement entered into
among Seller and a Servicer or the Master Servicer as the same may be amended
from time to time.
"Servicing Released Loan" means a Purchased Mortgage Loan with
respect to which the related Servicing Rights were sold to Seller and
subsequently purchased by Buyers on the related Purchase Date.
"Servicing Retained Loan" means Purchased Mortgage Loan with respect
to which the related Servicing Rights were retained by a third party Servicer
upon the sale of such Loan to Seller and subsequent sale to Buyers on the
related Purchase Date.
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"Servicing Rights" means contractual, possessory or other rights of
Seller or any other Person, whether arising under a Servicing Agreement or
otherwise, to administer or service a Purchased Mortgage Loan.
"SIPA" means the Securities Investor Protection Act of 1970, as
amended from time to time.
"Subordinated Debt" means, Indebtedness of Seller which is (i)
unsecured, (ii) no part of the principal of such Indebtedness is required to be
paid (whether by way of mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) prior to the date which is one year following the
Termination Date and (iii) the payment of the principal of and interest on such
Indebtedness and other obligations of Seller in respect of such Indebtedness are
subordinated to the prior payment in full of the principal of and interest
(including post-petition obligations) on the Transactions and all other
obligations and liabilities of Seller to Buyer hereunder on terms and conditions
approved in writing by Buyer and all other terms and conditions of which are
satisfactory in form and substance to Buyer.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
"Super Jumbo Mortgage Loan" means a Mortgage Loan that otherwise
satisfies the definition of Jumbo Mortgage Loan, but has an unpaid principal
balance of at least $2,000,000 but not greater than $5,000,000.
"Take-out Commitment" means a commitment of Seller to either (a)
sell one or more identified Mortgage Loans to a Take-out Investor or (b) (i)
swap one or more identified Mortgage Loans with a Take-out Investor that is an
Agency for an Agency Security, and (ii) sell the related Agency Security to a
Take-out Investor, and in each case, the corresponding Take-out Investor's
commitment back to Seller to effectuate any of the foregoing, as applicable.
With respect to any Take-out Commitment with an Agency, the applicable agency
documents list Buyer as sole subscriber.
"Take-out Investor" means (i) an Agency or (ii) other institution
which has made a Take-out Commitment and has been approved by Buyer.
"Termination Date" means the earlier of (a) January 16, 2009, and
(b) the date of the occurrence of an Event of Default.
"Test Period" means any calendar quarter.
"Transaction" has the meaning set forth in Section 1 hereof.
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"Transaction Request" means a request from Seller to Buyer, in the
form attached as Exhibit A hereto, to enter into a Transaction.
"Trust Receipt and Certification" means, with respect to any
Transaction as of any date, a receipt and certification in the form attached as
an exhibit to the Custodial Agreement.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect on the date hereof in the State of New York or the Uniform Commercial
Code as in effect in the applicable jurisdiction.
"Violation Deadline" has the meaning assigned thereto in Section
4(c) hereof.
3. Program; Initiation of Transactions
a. From time to time, Buyer will purchase from Seller certain
Mortgage Loans that have been purchased by Seller from other
originators. This Agreement is a commitment by Buyer to enter into
Transactions with the Seller for an amount equal to the Maximum
Committed Purchase Price. This Agreement is not a commitment by
Buyer to enter into Transactions with the Seller for amounts
exceeding the Maximum Committed Purchase Price but rather sets forth
the procedures to be used in connection with periodic requests for
Buyer to enter into Transactions with the Seller. The Seller hereby
acknowledges that, beyond the Maximum Committed Purchase Price,
Buyer is under no obligation to agree to enter into, or to enter
into, any Transaction pursuant to this Agreement. All Purchased
Mortgage Loans shall exceed or meet the Acquisition Guidelines, and
shall be serviced by Servicer. The aggregate Purchase Price of
Purchased Mortgage Loans subject to outstanding Transactions shall
not exceed the Maximum Aggregate Purchase Price.
b. With respect to each Transaction, Seller shall give Buyer and
Custodian at least 1 Business Day's prior notice of any proposed
Purchase Date (the date on which such notice is given, the "Notice
Date"); provided, that if Seller is delivering 25 or fewer Mortgage
Loans on a Purchase Date, the notice shall be delivered on or before
10:30 a.m. (New York City time) on the Purchase Date. On the Notice
Date, Seller shall (i) request that Buyer enter into a Transaction
by furnishing to Buyer a Transaction Request, (ii) deliver to Buyer
and Custodian a Mortgage Loan Schedule and (iii) deliver to
Custodian either a Request for Certification and each Mortgage File
in accordance with Section 10(b)(3) hereof. With respect to
requested Transactions which would cause the aggregate outstanding
Purchase Price for all outstanding Transactions to exceed the
Maximum Committed Purchase Price, Buyer may enter into such
requested Transaction or may notify Seller of its intention not to
enter into such Transaction. In the event the Mortgage Loan Schedule
provided by Seller contains erroneous computer data, is not
formatted properly or the computer fields are otherwise improperly
aligned, Buyer shall provide written or electronic notice to Seller
describing such error and Seller may either (a) give Buyer written
or electronic authority to correct the computer data, reformat the
Mortgage Loans or properly align the computer fields or (b) correct
the computer data, reformat or properly align the computer fields
itself and resubmit the Mortgage Loan Schedule as required herein.
In the event that the Seller gives Buyer authority to correct the
computer data, reformat the Mortgage Loan Schedule or properly align
the computer fields, the Seller shall pay $10 per change and any
other direct expenses incurred by Buyer; provided, that upon 30
days' notice to the Sellers, Buyer may change such computer
correction fee. The Seller shall hold Buyer harmless for such
correction, reformatting or realigning, as applicable, except as
otherwise expressly provided herein.
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c. With respect to each Exception Mortgage Loan, upon receipt of the
Transaction Request, Buyer shall, consistent with this Agreement,
specify the terms for such proposed Transaction, including the
Purchase Price, the Pricing Rate, the Market Value and the
Repurchase Date in respect of such Transaction. The terms thereof
shall be set forth in the Purchase Confirmation to be delivered to
Seller on or prior to the Purchase Date.
d. With respect to each Exception Mortgage Loan, the Purchase
Confirmation, together with this Agreement, shall constitute
conclusive evidence of the terms agreed between Buyer and Seller
with respect to the Transaction to which the Purchase Confirmation
relates, and Seller's acceptance of the related proceeds shall
constitute Seller's agreement to the terms of such Purchase
Confirmation. It is the intention of the parties that, with respect
to each Exception Mortgage Loan, each Purchase Confirmation shall
not be separate from this Agreement but shall be made a part of this
Agreement. In the event of any conflict between this Agreement and,
with respect to each Exception Mortgage Loan, a Purchase
Confirmation, the terms of the Purchase Confirmation shall control
with respect to the related Transaction.
e. Upon the satisfaction of the applicable conditions precedent set
forth in Section 10 hereof, all of Seller's interest in the
Repurchase Assets shall pass to Buyer on the Purchase Date, against
the transfer of the Purchase Price to Seller. Upon transfer of the
Mortgage Loans to Buyer as set forth in this Section and until
termination of any related Transactions as set forth in Sections 4
or 16 of this Agreement, ownership of each Mortgage Loan, including
each document in the related Mortgage File and Records, is vested in
Buyer; provided that, prior to the recordation by the Custodian as
provided for in the Custodial Agreement record title in the name of
Seller to each Mortgage shall be retained by Seller in trust, for
the benefit of Buyer, for the sole purpose of facilitating the
servicing and the supervision of the servicing of the Mortgage
Loans.
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4. Repurchase
a. Seller shall repurchase the related Purchased Mortgage Loans from
Buyer on each related Repurchase Date. Such obligation to repurchase
exists without regard to any prior or intervening liquidation or
foreclosure with respect to any Purchased Mortgage Loan (but
liquidation or foreclosure proceeds received by Buyer shall be
applied to reduce the Repurchase Price for such Purchased Mortgage
Loan on each Price Differential Payment Date except as otherwise
provided herein). Seller is obligated to repurchase and take
physical possession of the Purchased Mortgage Loans from Buyer or
its designee (including the Custodian) at Seller's expense on the
related Repurchase Date.
b. Provided that no Default shall have occurred and is continuing,
and Buyer has received the related Repurchase Price upon repurchase
of the Purchased Mortgage Loans, Buyer agrees to release its
ownership interest hereunder in the Purchased Mortgage Loans
(including, the Repurchase Assets related thereto) at the request of
Seller. With respect to payments in full by the related Mortgagor of
a Purchased Mortgage Loan, Seller agrees to (i) provide Buyer with a
copy of a report from the related Servicer or Master Servicer
indicating that such Purchased Mortgage Loan has been paid in full,
(ii) remit to Buyer, within two Business Days, the Repurchase Price
with respect to such Purchased Mortgage Loans and (iii) provide
Buyer a notice specifying each Purchased Mortgage Loan that has been
prepaid in full. Buyer agrees to release its ownership interest in
Purchased Mortgage Loans which have been prepaid in full after
receipt of evidence of compliance with clauses (i) through (iii) of
the immediately preceding sentence.
c. In the event that at any time any Purchased Mortgage Loan
violates the applicable sublimit set forth in the definition of
Market Value, Buyer may, in its sole discretion, redesignate such
Mortgage Loan as an Exception Mortgage Loan. If Buyer does not
redesignate such Mortgage Loan as an Exception Mortgage Loan, and if
Seller fails to notify Buyer within five (5) Business Days following
notice or knowledge of such violation that Seller does not want to
receive a bid for such Mortgage Loan as described below, Buyer or an
Affiliate of Buyer may offer to terminate Seller's right and
obligation to repurchase such Mortgage Loan by paying Seller a price
to be set by Buyer in its sole discretion (a "Bid"). Seller, within
five (5) Business Days of receipt of Buyer's bid (the "Violation
Deadline") may, in its sole discretion, either (i) accept Buyer's
bid, terminating Seller's right to repurchase such Mortgage Loan
under this Agreement or (ii) immediately repurchase the Mortgage
Loan at the Repurchase Price in accordance with this Section 4.
Seller shall pay Buyer a bid fee equal to $250 (the "Bid Fee") with
respect to each Mortgage Loan on which Buyer or its Affiliate makes
a Bid, regardless of whether the Bid is accepted and such Bid Fee
shall be due and payable to Buyer on or before the Violation
Deadline. Any amount paid by Buyer or its Affiliate to terminate
Seller's right to repurchase a Purchased Mortgage Loan if a Bid is
accepted pursuant to this Section shall be applied by Buyer toward
the outstanding Repurchase Price for the applicable Transaction.
-20-
5. Price Differential.
a. On each Business Day that a Transaction is outstanding, the
Pricing Rate shall be reset and, unless otherwise agreed, the
accrued and unpaid Price Differential shall be settled in cash on
each related Price Differential Payment Date. Two Business Days
prior to the Price Differential Payment Date, Buyer shall give
Seller written or electronic notice of the amount of the Price
Differential due on such Price Differential Payment Date. On the
Price Differential Payment Date, Seller shall pay to Buyer the Price
Differential for such Price Differential Payment Date (along with
any other amounts to be paid pursuant to Section 7 hereof), by wire
transfer in immediately available funds.
b. If Seller fails to pay all or part of the Price Differential by
3:00 p.m. (New York City time) on the related Price Differential
Payment Date, with respect to any Purchased Mortgage Loan, Seller
shall be obligated to pay to Buyer (in addition to, and together
with, the amount of such Price Differential) interest on the unpaid
Repurchase Price at a rate per annum equal to the Post Default Rate
until the Price Differential is received in full by Buyer.
c. Seller may remit to Buyer funds up to the outstanding Purchase
Price, to be held as unsegregated cash margin and collateral for all
Obligations under the Repurchase Agreement (such amount, to the
extent not applied to Obligations under the Repurchase Agreement,
the "Buydown Amount"). The Buydown Amount shall be used by Buyer in
order to calculate the Price Differential, which will accrue on the
Purchase Price then outstanding minus the Buydown Amount, applied to
Transactions involving the lowest Pricing Rate. The Seller shall be
entitled to request a drawdown of the Buydown Amount or remit
additional funds to be added to the Buydown Amount no more than one
time per week. Without limiting the generality of the foregoing, in
the event that a Margin Call or other Default exists, the Buyer
shall be entitled to use any or all of the Buydown Amount to cure
such circumstance or otherwise exercise remedies available to the
Buyer without prior notice to, or consent from, the Seller. Provided
no Margin Call or other Default exists, Buyer shall remit any
portion of such Buydown Amount back to Seller within one (1)
Business Day of written request thereof; provided that such written
request is received by the Buyer prior to 3:00 pm (New York City
time).
6. Margin Maintenance
a. If at any time the Market Value of any Purchased Mortgage Loan
subject to a Transaction is less than Buyer's Margin Amount for such
Transaction (a "Margin Deficit"), then Buyer may by notice to any
Seller require Seller to transfer to Buyer cash or Eligible Mortgage
Loans satisfactory to Buyer in its sole discretion ("Additional
Purchased Mortgage Loans") in an amount at least equal to the Margin
Deficit (such requirement, a "Margin Call") .
-21-
b. Notice delivered pursuant to Section 6(a) may be given by any
written or electronic means. Any notice given before 10:00 a.m. (New
York City time) on a Business Day shall be met, and the related
Margin Call satisfied, no later than 5:00 p.m. (New York City time)
on such Business Day; notice given after 10:00 a.m. (New York City
time) on a Business Day shall be met, and the related Margin Call
satisfied, no later than 5:00 p.m. (New York City time) on the
following Business Day (the foregoing time requirements for
satisfaction of a Margin Call are referred to as the "Margin
Deadlines"). The failure of Buyer, on any one or more occasions, to
exercise its rights hereunder, shall not change or alter the terms
and conditions to which this Agreement is subject or limit the right
of Buyer to do so at a later date. Seller and Buyer each agree that
a failure or delay by Buyer to exercise its rights hereunder shall
not limit or waive Buyer's rights under this Agreement or otherwise
existing by law or in any way create additional rights for Seller.
c. In the event that a Margin Deficit exists with respect to any
Purchased Mortgage Loan, Buyer may retain any funds received by it
to which the Seller would otherwise be entitled hereunder, which
funds (i) shall be held by Buyer against the related Margin Deficit
and (ii) may be applied by Buyer against any Purchased Mortgage Loan
for which the related Margin Deficit remains otherwise unsatisfied.
Notwithstanding the foregoing, the Buyer retains the right, in its
sole discretion, to make a Margin Call in accordance with the
provisions of this Section 6.
7. Income Payments
a. If Income is paid in respect of any Purchased Mortgage Loan
during the term of a Transaction, such Income shall be the property
of Buyer.
b. Provided no Event of Default has occurred and is continuing, on
each Price Differential Payment Date, Seller shall remit to Buyer an
amount equal to the Price Differential out of the interest portion
of the Income paid in respect to the Purchased Mortgage Loans for
the preceding month in accordance with Section 5 of this Agreement.
Upon termination of any Transaction, to the extent that there is any
excess Income after repayment of all amounts to be transferred to
Buyer by Seller, Buyer, in its sole option, may apply the excess
income to reduce the Repurchase Price due upon termination of any
other outstanding Transactions.
c. Upon the occurrence and continuance of an Event of Default, the
Seller shall and shall cause the Master Servicer to deposit such
Income to the Collection Account. All such Income shall be held in
trust for Buyer, shall constitute the property of Buyer and shall
not be commingled with other property of the Seller, Master Servicer
or any Affiliate of the Seller or Master Servicer except as
expressly permitted above. Funds deposited in the Collection Account
during any month shall be held therein, in trust for the Buyer,
until the next Price Differential Payment Date. If an Event of
Default has occurred, all funds in the Collection Account shall be
withdrawn and applied as determined by the Buyer.
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d. Notwithstanding any provision to the contrary in this Section 7,
within two (2) Business Days of receipt by Seller or Master Servicer
of any prepayment of principal in full, with respect to a Purchased
Mortgage Loan, Seller or Master Servicer shall remit such amount to
Buyer and Buyer shall immediately apply any such amount received by
Buyer to reduce the amount of the Repurchase Price due upon
termination of the related Transaction.
e. Notwithstanding anything to the contrary set forth herein, upon
notice by Buyer to Seller, Seller shall remit to Buyer all
collections received by Servicer or Seller on the Purchased Mortgage
Loans in accordance with Buyer's directions no later than the day on
which aggregate collections of principal and interest (excluding
principal prepayments) on the Purchased Mortgaged Loans reaches an
amount to be indicated by Buyer in its sole discretion. 8. Security
Interest
Although the parties intend that all Transactions hereunder be sales
and purchases and not loans, in the event any such Transactions are deemed to be
loans, and in any event, Seller hereby pledges to Buyer as security for the
performance by Seller of its Obligations and hereby grants, assigns and pledges
to Buyer a fully perfected first priority security interest in the Purchased
Mortgage Loans, the Records, and all related servicing rights, the Program
Agreements (to the extent such Program Agreements and Seller's right thereunder
relate to the Purchased Mortgage Loans), any related Take-out Commitments, any
Property relating to the Purchased Mortgage Loans, all insurance policies and
insurance proceeds relating to any Purchased Mortgage Loan or the related
Mortgaged Property, including, but not limited to, any payments or proceeds
under any related primary insurance and hazard insurance, Income, the Collection
Account, the Buydown Amount and any account to which such amount is deposited,
Interest Rate Protection Agreements relating solely to any Purchased Mortgage
Loan, accounts (including any interest of Seller in escrow accounts) and any
other contract rights, instruments, accounts, payments, rights to payment
(including payments of interest or finance charges) general intangibles and
other assets relating to the Purchased Mortgage Loans (including, without
limitation, any other accounts) or any interest in the Purchased Mortgage Loans,
and any proceeds (including the related securitization proceeds) and
distributions with respect to any of the foregoing and any other property,
rights, title or interests as are specified on a Transaction Request and/or
Trust Receipt and Certification, in all instances, whether now owned or
hereafter acquired, now existing or hereafter created (collectively, the
"Repurchase Assets").
Seller agrees to execute, deliver and/or file such documents and
perform such acts as may be reasonably necessary to fully perfect Buyer's
security interest created hereby. Furthermore, the Seller hereby authorizes the
Buyer to file financing statements relating to the Repurchase Assets, as the
Buyer, at its option, may deem appropriate. The Seller shall pay the filing
costs for any financing statement or statements prepared pursuant to this
Section 8.
9. Payment and Transfer
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Unless otherwise mutually agreed in writing, all transfers of funds
to be made by Seller hereunder shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to Buyer at the
following account maintained by Buyer: Account No. 3074 3796, for the account of
CSFB Buyer/Chimera Investment Corporation Seller-Inbound Account, Citibank, ABA
No. 021 000 089 or such other account as Buyer shall specify to Seller in
writing. Seller acknowledges that it has no rights of withdrawal from the
foregoing account. All Purchased Mortgage Loans transferred by one party hereto
to the other party shall be in the case of a purchase by Buyer in suitable form
for transfer or shall be accompanied by duly executed instruments of transfer or
assignment in blank and such other documentation as Buyer may reasonably
request. All Purchased Mortgage Loans shall be evidenced by a Trust Receipt and
Certification. Any Repurchase Price received by Buyer after 2:00 p.m. (New York
City time) shall be deemed received on the next succeeding Business Day.
10. Conditions Precedent
a. Initial Transaction. As conditions precedent to the initial
Transaction, Buyer shall have received on or before the day of such
initial Transaction the following, in form and substance
satisfactory to Buyer and duly executed by Seller and each other
party thereto:
(1) Program Agreements. The Program Agreements
(including without limitation a Custodial Agreement in a form
acceptable to Buyer) duly executed and delivered by the parties
thereto and being in full force and effect, free of any
modification, breach or waiver.
(2) Security Interest. Evidence that all other actions
necessary or, in the opinion of Buyer, desirable to perfect and
protect Buyer's interest in the Purchased Mortgage Loans and other
Repurchase Assets have been taken, including, without limitation,
duly authorized and filed Uniform Commercial Code financing
statements on Form UCC-1.
(3) Organizational Documents. A certificate of the
corporate secretary of Seller substantially in the form of Exhibit H
hereto, attaching certified copies of Seller's charter, bylaws and
corporate resolutions approving the Program Agreements and
transactions thereunder (either specifically or by general
resolution) and all documents evidencing other necessary corporate
action or governmental approvals as may be required in connection
with the Program Agreements.
(4) Good Standing Certificate. A certified copy of a
good standing certificate from the jurisdiction of organization of
Seller, dated as of no earlier than the date 10 Business Days prior
to the Purchase Date with respect to the initial Transaction
hereunder.
(5) Incumbency Certificate. An incumbency certificate of
the corporate secretary of Seller, certifying the names, true
signatures and titles of the representatives duly authorized to
request transactions hereunder and to execute the Program
Agreements.
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(6) Opinion of Counsel. An opinion of Seller's counsel,
in form and substance substantially as set forth in Exhibit F
attached hereto.
(7) Fees. Payment of any fees due to Buyer hereunder.
(8) Insurance. Evidence that Seller has added Buyer as
an additional loss payee under the Seller's Fidelity Insurance.
b. All Transactions. The obligation of Buyer to enter into each
Transaction pursuant to this Agreement is subject to the following
conditions precedent:
(1) Due Diligence Review. Without limiting the
generality of Section 34 hereof, Buyer shall have completed, to its
satisfaction, its due diligence review of the related Mortgage Loans
and Seller and each Servicer.
(2) Required Documents. The Seller shall have delivered
the Mortgage File to the Custodian in accordance with the terms of
the Custodial Agreement.
(3) Transaction Documents. Buyer or its designee shall
have received on or before the day of such Transaction (unless
otherwise specified in this Agreement) the following, in form and
substance satisfactory to Buyer and (if applicable) duly executed:
(a) A Transaction Request delivered pursuant to Section 3(c) hereof
and a Purchase Confirmation, if applicable.
(b) The Request for Certification and the related Custodial Mortgage
Loan Schedule, and the Trust Receipt.
(c) Such certificates, opinions of counsel or other documents as
Buyer may reasonably request.
(4) No Default. No Default or Event of Default shall
have occurred and be continuing;
(5) Acquisition Guidelines. A true and correct copy of
the relevant Acquisition Guidelines certified by an officer of the
Seller, which have been approved by Buyer.
(6) Requirements of Law. Buyer shall not have determined
that the introduction of or a change in any Requirement of Law or in
the interpretation or administration of any Requirement of Law
applicable to Buyer has made it unlawful, and no Governmental
Authority shall have asserted that it is unlawful, for Buyer to
enter into Transactions with a Pricing Rate based on LIBOR.
(7) Representations and Warranties. Both immediately
prior to the related Transaction and also after giving effect
thereto and to the intended use thereof, the representations and
warranties made by Seller in each Program Agreement shall be true,
correct and complete on and as of such Purchase Date in all material
respects with the same force and effect as if made on and as of such
date (or, if any such representation or warranty is expressly stated
to have been made as of a specific date, as of such specific date).
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(8) Electronic Tracking Agreement. To the extent Seller
is selling Mortgage Loans which are registered on the MERS(R)
System, an Electronic Tracking Agreement entered into, duly executed
and delivered by the parties thereto and being in full force and
effect, free of any modification, breach or waiver.
(9) Material Adverse Change. None of the following shall
have occurred and/or be continuing:
(a) Credit Suisse First Boston, New York Branch's corporate bond
rating as calculated by S&P or Moody's has been lowered or
downgraded to a rating below investment grade by S&P or Moody's;
(b) an event or events shall have occurred in the good faith
determination of Buyer resulting in the effective absence of a "repo
market" or comparable "lending market" for financing debt
obligations secured by mortgage loans or securities or an event or
events shall have occurred resulting in Buyer not being able to
finance Purchased Mortgage Loans through the "repo market" or
"lending market" with traditional counterparties at rates which
would have been reasonable prior to the occurrence of such event or
events; or
(c) an event or events shall have occurred resulting in the
effective absence of a "securities market" for securities backed by
mortgage loans or an event or events shall have occurred resulting
in Buyer not being able to sell securities backed by mortgage loans
at prices which would have been reasonable prior to such event or
events; or
(d) there shall have occurred a material adverse change in the
financial condition of Buyer which affects (or can reasonably be
expected to affect) materially and adversely the ability of Buyer to
fund its obligations under this Agreement.
11. Program; Costs
a. Seller shall reimburse Buyer for any of Buyer's reasonable
out-of-pocket costs, including due diligence review costs and
reasonable attorney's fees, incurred by Buyer in determining the
acceptability to Buyer of any Mortgage Loans. Seller shall also pay,
or reimburse Buyer if Buyer shall pay, any termination fee, which
may be due any servicer. Seller shall pay the fees and expenses of
Buyer's counsel in connection with the Program Agreements; provided
that the Seller shall not be responsible for legal fees in excess of
$60,000 in connection with the initial preparation and negotiations
of the Program Agreements or due diligence cost in excess of the Due
Diligence Cap in accordance with Section 34 hereof. Legal fees for
any subsequent amendments to this Agreement or related documents
shall be borne by Seller. Seller shall pay ongoing custodial and
bank fees and expenses, and any other ongoing fees and expenses
under any other Program Agreement.
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b. If Buyer determines that, due to the introduction of, any change
in, or the compliance by Buyer with (i) any eurocurrency reserve
requirement or (ii) the interpretation of any law, regulation or any
guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be
an increase in the cost to Buyer in engaging in the present or any
future Transactions, then Seller agrees to pay to Buyer, from time
to time, upon demand by Buyer (with a copy to Custodian) the actual
cost of additional amounts as specified by Buyer to compensate Buyer
for such increased costs.
c. With respect to any Transaction, Buyer may conclusively rely
upon, and shall incur no liability to Seller in acting upon, any
request or other communication that Buyer reasonably believes to
have been given or made by a person authorized to enter into a
Transaction on Seller's behalf, whether or not such person is listed
on the certificate delivered pursuant to Section 10(a)(5) hereof. In
each such case, Seller hereby waives the right to dispute Buyer's
record of the terms of the Purchase Confirmation, request or other
communication.
d. Notwithstanding the assignment of the Program Agreements with
respect to each Purchased Mortgage Loan to Buyer, Seller agrees and
covenants with Buyer to enforce diligently Seller's rights and
remedies set forth in the Program Agreements.
e. Any payments made by Seller to the Buyer shall be free and clear
of, and without deduction or withholding for, any taxes; provided,
however, that if such payer shall be required by law to deduct or
withhold any taxes from any sums payable to Buyer, then such payer
shall (A) make such deductions or withholdings and pay such amounts
to the relevant authority in accordance with applicable law, (B) pay
to Buyer the sum that would have been payable had such deduction or
withholding not been made, and (C) at the time Price Differential is
paid, pay to Buyer all additional amounts as specified by Buyer to
preserve the after-tax yield Buyer would have received if such tax
had not been imposed, and otherwise indemnify Buyer for any such
taxes imposed.
12. Servicing
a. Seller, on Buyer's behalf, shall contract with each Servicer and
the Master Servicer to, or if Seller is the Servicer, Seller shall,
service the Mortgage Loans consistent with the degree of skill and
care that Seller customarily requires with respect to similar
Mortgage Loans owned or managed by it and in accordance with
Accepted Servicing Practices. The Seller shall cause each Servicer
and the Master Servicer to (i) comply with all applicable Federal,
State and local laws and regulations, (ii) maintain all state and
federal licenses necessary for it to perform its servicing
responsibilities hereunder and (iii) not impair the rights of Buyer
in any Mortgage Loans or any payment thereunder. Buyer may terminate
the servicing of any Servicing Released Mortgage Loan with the
then-existing servicer in accordance with Section 12(e) hereof.
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b. Seller shall cause each Servicer and the Master Servicer to hold
or cause to be held all escrow funds collected by such Servicer or
the Master Servicer with respect to any Purchased Mortgage Loans in
trust accounts and shall apply the same for the purposes for which
such funds were collected.
c. Upon the occurrence and continuance of an Event of Default, the
Seller shall and shall cause the Master Servicer to deposit all
collections received by Master Servicer on the Purchased Mortgage
Loans in the Collection Account
d. On the date hereof, Seller shall provide promptly to Buyer (i) a
Servicer Notice addressed to and agreed to by the Master Servicer of
the related Purchased Mortgage Loans, advising such Servicer of such
matters as Buyer may reasonably request, including, without
limitation, recognition by the Master Servicer of Buyer's interest
in such Purchased Mortgage Loans and the Master Servicer's agreement
that upon receipt of notice of an Event of Default from Buyer, it
will follow the instructions of Buyer with respect to the Purchased
Mortgage Loans and any related Income with respect thereto.
e. Upon the occurrence of an Event of Default hereunder or a
material default under the Servicing Agreement, Buyer shall have the
right to immediately terminate the Servicer's right to service the
Servicing Released Purchased Mortgage Loans under the Servicing
Agreement without payment of any penalty or termination fee. Seller
and the related Servicer shall cooperate in transferring the
servicing of the Servicing Released Purchased Mortgage Loans to a
successor servicer appointed by Buyer in its sole discretion.
f. If Seller should discover that, for any reason whatsoever, Seller
or any entity responsible to Seller for managing or servicing any
such Purchased Mortgage Loan has failed to perform fully Seller's
obligations under the Program Agreements or any of the obligations
of such entities with respect to the Purchased Mortgage Loans,
Seller shall promptly notify Buyer.
13. Representations and Warranties
a. Seller represents and warrants to Buyer as of the date hereof and
as of each Purchase Date for any Transaction that:
(1) Seller Existence. Seller has been duly organized and
is validly existing as a corporation in good standing under the laws
of the State of Maryland.
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(2) Licenses. Seller is duly licensed or is otherwise
qualified in each jurisdiction in which it transacts business for
the business which it conducts and is not in default of any
applicable federal, state or local laws, rules and regulations
unless, in either instance, the failure to take such action is not
reasonably likely (either individually or in the aggregate) to cause
a Material Adverse Effect and is not in default of such state's
applicable laws, rules and regulations. Seller has the requisite
power and authority and legal right to originate and purchase
Mortgage Loans (as applicable) and to own, sell and grant a lien on
all of its right, title and interest in and to the Mortgage Loans,
and to execute and deliver, engage in the transactions contemplated
by, and perform and observe the terms and conditions of, this
Agreement, each Program Agreement and any Transaction Request or, if
applicable, Purchase Confirmation.
(3) Power. Seller has all requisite corporate or other
power, and has all governmental licenses, authorizations, consents
and approvals necessary to own its assets and carry on its business
as now being or as proposed to be conducted, except where the lack
of such licenses, authorizations, consents and approvals would not
be reasonably likely to have a Material Adverse Effect.
(4) Due Authorization. Seller has all necessary
corporate or other power, authority and legal right to execute,
deliver and perform its obligations under each of the Program
Agreements, as applicable. This Agreement, any Transaction Request,
Purchase Confirmation and the Program Agreements have been (or, in
the case of Program Agreements and any Transaction Request, Purchase
Confirmation not yet executed, will be) duly authorized, executed
and delivered by Seller, all requisite or other corporate action
having been taken, and each is valid, binding and enforceable
against Seller in accordance with its terms except as such
enforcement may be affected by bankruptcy, by other insolvency laws,
or by general principles of equity.
(5) Financial Statements. The financial statements of
Seller, copies of which have been furnished to Buyer, (i) are, as of
the dates and for the periods referred to therein, complete and
correct in all material respects, (ii) present fairly the financial
condition and results of operations of Seller as of the dates and
for the periods indicated and (iii) have been prepared in accordance
with GAAP consistently applied (subject as to interim statements to
normal year end adjustments). Since the date of the most recent
financial statements, there has been no Material Adverse Change with
respect to Seller. The Seller has, on the date of the statements
delivered pursuant to this Section (the "Statement Date") no
liabilities, direct or indirect, fixed or contingent, matured or
unmatured, known or unknown, or liabilities for taxes, long-term
leases or unusual forward or long-term commitments not disclosed by,
or reserved against in, said balance sheet and related statements,
and at the present time there are no material unrealized or
anticipated losses from any loans, advances or other commitments of
Seller except as heretofore disclosed to Buyer in writing.
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(6) Event of Default. There exists no Event of Default
under Section 15(b) hereof, which default gives rise to a right to
accelerate indebtedness as referenced in Section 15(b) hereof, under
any mortgage, borrowing agreement or other instrument or agreement
pertaining to indebtedness for borrowed money or to the repurchase
of mortgage loans or securities.
(7) Solvency. Seller is solvent and will not be rendered
insolvent by any Transaction and, after giving effect to such
Transaction, will not be left with an unreasonably small amount of
capital with which to engage in its business. Seller does not intend
to incur, nor does it believe that it has incurred, debts beyond its
ability to pay such debts as they mature and is not contemplating
the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of
such entity or any of its assets. The amount of consideration being
received by Seller upon the sale of the Purchased Mortgage Loans to
Buyer constitutes reasonably equivalent value and fair consideration
for such Purchased Mortgage Loans. Seller is not transferring any
Purchased Mortgage Loans with any intent to hinder, delay or defraud
any of its creditors.
(8) No Conflicts. The execution, delivery and
performance by Seller of this Agreement, any Transaction Request or
Purchase Confirmation hereunder and the Program Agreements do not
conflict with any term or provision of the certificate of
incorporation or by-laws of Seller or any law, rule, regulation,
order, judgment, writ, injunction or decree applicable to Seller of
any court, regulatory body, administrative agency or governmental
body having jurisdiction over Seller, which conflict would have a
Material Adverse Effect and will not result in any violation of any
such mortgage, instrument, agreement or obligation to which Seller
is a party.
(9) True and Complete Disclosure. All information,
reports, exhibits, schedules, financial statements or certificates
of Seller or any Affiliate thereof or any of their officers
furnished or to be furnished to Buyer in connection with the initial
or any ongoing due diligence of Seller, or any Affiliate or officer
thereof, negotiation, preparation, or delivery of the Program
Agreements are true and complete and do not omit to disclose any
material facts necessary to make the statements herein or therein,
in light of the circumstances in which they are made, not
misleading. All financial statements have been prepared in
accordance with GAAP.
(10) Approvals. No consent, approval, authorization or
order of, registration or filing with, or notice to any governmental
authority or court is required under applicable law in connection
with the execution, delivery and performance by Seller of this
Agreement, any Transaction Request, Purchase Confirmation and the
Program Agreements.
(11) Litigation. There is no action, proceeding or
investigation pending with respect to which the Seller has received
service of process or, to the best of Seller's knowledge threatened
against it before any court, administrative agency or other tribunal
(A) asserting the invalidity of this Agreement, any Transaction,
Transaction Request, Purchase Confirmation or any Program Agreement,
(B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, any Transaction Request, Purchase
Confirmation or any Program Agreement, (C) makes a claim
individually in an amount greater than $2,000,000 or in an aggregate
amount greater than $5,000,000, (D) which requires filing with the
Securities and Exchange Commission in accordance with the 1934 Act
or any rules thereunder or (E) which might materially and adversely
affect the validity of the Mortgage Loans or the performance by it
of its obligations under, or the validity or enforceability of, this
Agreement, any Transaction Request, Purchase Confirmation or any
Program Agreement.
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(12) Material Adverse Change. There has been no material
adverse change in the business, operations, financial condition,
properties or prospects of Seller Affiliates since the date set
forth in the most recent financial statements supplied to Buyer.
(13) Ownership. Upon payment of the Purchase Price and
the filing of the financing statement and delivery of the Mortgage
Files to the Custodian and the Custodian's receipt of the related
Request for Certification, Buyer shall become the sole owner of the
Purchased Mortgage Loans and related Repurchase Assets, free and
clear of all liens and encumbrances.
(14) Acquisition Guidelines. The Acquisition Guidelines
provided to Buyer are the true and correct Acquisition Guidelines of
the related originator.
(15) Taxes. Seller has timely filed all tax returns that
are required to be filed by it and has paid all taxes, except for
any such taxes as are being appropriately contested in good faith by
appropriate proceedings diligently conducted and with respect to
which adequate reserves have been provided. The charges, accruals
and reserves on the books of Seller in respect of taxes and other
governmental charges are, in the opinion of Seller, adequate.
(16) Investment Company. Neither Seller nor any of its
Subsidiaries is required to be registered as an "investment
company", or a company "controlled" by an entity required to be
registered as an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(17) Chief Executive Office; Jurisdiction of
Organization. On the Effective Date, Seller's chief executive
office, is, and has been, located at 1211 Avenue of the Americas,
Suite 2902, NY, NY 10036. On the Effective Date, Seller's
jurisdiction of organization is the State of Maryland. Seller shall
provide Buyer with thirty days advance notice of any change in
Seller's principal office or place of business or jurisdiction.
Seller has no trade name. During the preceding five years, Seller
has not been known by or done business under any other name,
corporate or fictitious, and has not filed or had filed against it
any bankruptcy receivership or similar petitions nor has it made any
assignments for the benefit of creditors.
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(18) Location of Books and Records. The location where
Seller keeps its books and records, including all computer tapes and
records relating to the Purchased Mortgage Loans and the related
Repurchase Assets is its chief executive office.
(19) Adjusted Tangible Net Worth. On the Effective Date,
Seller's Adjusted Tangible Net Worth is not less than $200,000,000.
(20) ERISA. Each Plan to which Seller or its
Subsidiaries make direct contributions, and, to the knowledge of
Seller, each other Plan and each Multiemployer Plan, is in
compliance in all material respects with, and has been administered
in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law.
(21) Adverse Selection. Seller has not selected the
Purchased Mortgage Loans in a manner so as to adversely affect
Buyer's interests.
(22) Agreements. Neither Seller nor any Subsidiary of
Seller is a party to any agreement, instrument, or indenture or
subject to any restriction materially and adversely affecting its
business, operations, assets or financial condition, except as
disclosed in the financial statements described in Section 13(a)(5)
hereof. Neither Seller nor any Subsidiary of Seller is in default in
the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement,
instrument, or indenture which default could have a material adverse
effect on the business, operations, properties, or financial
condition of Seller as a whole. No holder of any indebtedness of
Seller or of any of its Subsidiaries has given notice of any
asserted default thereunder.
(23) Other Indebtedness. All Indebtedness (other than
Indebtedness evidenced by this Agreement) of Seller existing on the
date hereof is listed on Exhibit J hereto (the "Existing
Indebtedness").
(24) Servicing. Seller has ensured that the applicable
Servicer and Master Servicer has adequate financial standing,
servicing facilities, procedures and experienced personnel necessary
for the sound servicing of mortgage loans of the same types as may
from time to time constitute Mortgage Loans and in accordance with
Accepted Servicing Practices.
(25) No Reliance. Seller has made its own independent
decisions to enter into the Program Agreements and each Transaction
and as to whether such Transaction is appropriate and proper for it
based upon its own judgment and upon advice from such advisors
(including without limitation, legal counsel and accountants) as it
has deemed necessary. Seller is not relying upon any advice from
Buyer as to any aspect of the Transactions, including without
limitation, the legal, accounting or tax treatment of such
Transactions.
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(26) Plan Assets. Seller is not an employee benefit plan
as defined in Section 3 of Title I of ERISA, or a plan described in
Section 4975(e)(1) of the Code, and the Purchased Mortgage Loans are
not "plan assets" within the meaning of 29 CFR ss.2510.3-101 in the
Seller's hands.
(27) No Prohibited Persons. Neither the Seller nor any
of its Affiliates, officers, directors, partners or members, is an
entity or person (or to the Seller's knowledge, owned or controlled
by an entity or person): (i) that is listed in the Annex to, or is
otherwise subject to the provisions of Executive Order 13224 issued
on September 24, 2001 ("EO13224"); (ii) whose name appears on the
United States Treasury Department's Office of Foreign Assets Control
("OFAC") most current list of "Specifically Designated National and
Blocked Persons" (which list may be published from time to time in
various mediums including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to
commit or supports "terrorism", as that term is defined in EO13224;
or (iv) who is otherwise affiliated with any entity or person listed
above (any and all parties or persons described in clauses (i)
through (iv) above are herein referred to as a "Prohibited Person").
b. With respect to every Purchased Mortgage Loan, Seller represents
and warrants to Buyer as of the applicable Purchase Date for any
Transaction and each date thereafter that each representation and
warranty set forth on Schedule 1 is true and correct.
c. The representations and warranties set forth in this Agreement
shall survive transfer of the Purchased Mortgage Loans to Buyer and
shall continue for so long as the Purchased Mortgage Loans are
subject to this Agreement. Upon discovery by Seller or Buyer of any
breach of any of the representations or warranties set forth in this
Agreement, the party discovering such breach shall promptly give
notice of such discovery to the others. Buyer has the right to
require, in its unreviewable discretion, Seller to repurchase within
1 Business Day after receipt of notice from Buyer any Purchased
Mortgage Loan (i) for which a breach of one or more of the
representations and warranties referenced in Section 13(b) exists
and which breach has a material adverse effect on the value of such
Mortgage Loan or the interests of Buyer or (ii) which is determined
by Buyer, in its good faith discretion, to be unacceptable for
inclusion in a securitization.
14. Covenants
Seller covenants with Buyer that, during the term of this facility:
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a. Adjusted Tangible Net Worth. Seller shall maintain an Adjusted
Tangible
Net Worth of at least $200,000,000. b. Indebtedness to Adjusted
Tangible Net Worth Ratio. Seller's ratio of Recourse Indebtedness to
Adjusted Tangible Net Worth shall not exceed 12:1.
c. Litigation. Seller will promptly, and in any event within ten
(10) days after service of process on any of the following, give to
Buyer notice of all litigation, actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing
which are threatened or pending) or other legal or arbitrable
proceedings affecting Seller or any of their Subsidiaries or
affecting any of the Property of any of them before any Governmental
Authority that (i) questions or challenges the validity or
enforceability of any of the Program Agreements or any action to be
taken in connection with the transactions contemplated hereby, (ii)
makes a claim individually in an amount greater than $2,000,000 or
in an aggregate amount greater than $5,000,000, or (iii) which,
individually or in the aggregate, if adversely determined, could be
reasonably likely to have a Material Adverse Effect.
d. Prohibition of Fundamental Changes. Seller shall not enter into
any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation,
winding up or dissolution) or sell all or substantially all of its
assets, excluding any such action taken in connection with (1) any
securitization transaction or (2) in connection with an asset based
financing or other secondary market transaction related to mortgage
loans and the ordinary course of the Seller's business; and
provided, that Seller may merge or consolidate with (a) any wholly
owned subsidiary of Seller, or (b) any other Person if Seller is the
surviving corporation; and provided further, that if after giving
effect thereto, no Default would exist hereunder.
e. Maintenance of Profitability. Seller shall not permit, for any
Test Period, Net Income for such Test Period, before income taxes
for such Test Period and distributions made during such Test Period,
to be less than $1.00.
f. Servicer; Asset Tape. Upon the occurrence of any of the following
(a) the occurrence and continuation of an Event of Default, (b) upon
any Purchased Mortgage Loan becoming an Aged Loan, (c) the fifth
Business Day of each month, or (d) upon the request of Buyer, Seller
shall cause the applicable Servicer or Master Servicer to provide to
Buyer, electronically, in a format mutually acceptable to Buyer and
Seller, an Asset Tape by no later than the Reporting Date. Seller
shall not cause the Mortgage Loans to be serviced by any servicer
other than a servicer expressly approved in writing by Buyer, which
approval shall be deemed granted by Buyer with respect to Seller
with the execution of this Agreement.
g. Insurance. The Seller shall continue to maintain, for Seller and
its Subsidiaries, Fidelity Insurance in an aggregate amount at least
equal to $1,000,000. The Seller shall maintain, for Seller and its
Subsidiaries, Fidelity Insurance in respect of its officers,
employees and agents, with respect to any claims made in connection
with all or any portion of the Repurchase Assets. The Seller shall
notify the Buyer of any material change in the terms of any such
Fidelity Insurance.
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h. No Adverse Claims. Seller warrants and will defend, and shall
cause any Servicer or Master Servicer to defend, the right, title
and interest of Buyer in and to all Purchased Mortgage Loans and the
related Repurchase Assets against all adverse claims and demands.
i. Assignment. Except as permitted herein, neither Seller nor any
Servicer shall sell, assign, transfer or otherwise dispose of, or
grant any option with respect to, or pledge, hypothecate or grant a
security interest in or lien on or otherwise encumber (except
pursuant to the Program Agreements), any of the Purchased Mortgage
Loans or any interest therein, provided that this Section shall not
prevent any transfer of Purchased Mortgage Loans in accordance with
the Program Agreements.
j. Security Interest. Seller shall do all things necessary to
preserve the Purchased Mortgage Loans and the related Repurchase
Assets so that they remain subject to a first priority perfected
security interest hereunder. Without limiting the foregoing, Seller
will comply with all rules, regulations and other laws of any
Governmental Authority and cause the Purchased Mortgage Loans or the
related Repurchase Assets to comply with all applicable rules,
regulations and other laws. Seller will not allow any default for
which Seller is responsible to occur under any Purchased Mortgage
Loans or the related Repurchase Assets or any Program Agreement and
Seller shall fully perform or cause to be performed when due all of
its obligations under any Purchased Mortgage Loans or the related
Repurchase Assets and any Program Agreement.
k. Records.
(1) Seller shall collect and maintain or cause to be
collected and maintained all Records relating to the Purchased
Mortgage Loans in accordance with industry custom and practice for
assets similar to the Purchased Mortgage Loans, including those
maintained pursuant to the preceding subparagraph, and all such
Records shall be in Custodian's possession unless Buyer otherwise
approves. Seller will not allow any such papers, records or files
that are an original or an only copy to leave Custodian's
possession, except for individual items removed in connection with
servicing a specific Mortgage Loan, in which event Seller will
obtain or cause to be obtained a receipt from a financially
responsible person for any such paper, record or file. Seller or the
Servicer of the Purchased Mortgage Loans will maintain all such
Records not in the possession of Custodian in good and complete
condition in accordance with industry practices for assets similar
to the Purchased Mortgage Loans and preserve them against loss.
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(2) For so long as Buyer has an interest in or lien on
any Purchased Mortgage Loan, Seller will hold or cause to be held
all related Records in trust for Buyer. Seller shall notify, or
cause to be notified, every other party holding any such Records of
the interests and liens in favor of Buyer granted hereby.
(3) Upon reasonable advance notice from Custodian or
Buyer, Seller shall (x) make any and all such Records available to
Custodian or Buyer to examine any such Records, either by its own
officers or employees, or by agents or contractors, or both, and
make copies of all or any portion thereof, and (y) permit Buyer or
its authorized agents to discuss the affairs, finances and accounts
of Seller with its chief operating officer and chief financial
officer and to discuss the affairs, finances and accounts of Seller
with its independent certified public accountants.
l. Books. Seller shall keep or cause to be kept in reasonable detail
books and records of account of its assets and business and shall
clearly reflect therein the transfer of Purchased Mortgage Loans to
Buyer.
m. Approvals. Seller shall maintain all licenses, permits or other
approvals necessary for Seller to conduct its business and to
perform its obligations under the Program Agreements, and Seller
shall conduct its business strictly in accordance with applicable
law.
n. Material Change in Business. Seller shall not make any material
change in the nature of its business as carried on at the date
hereof.
o. Reserved.
p. Distributions. Seller shall not pay any dividends greater than
Net Income in any given calendar year. If an Event of Default has
occurred and is continuing, Seller shall not pay any dividends with
respect to any capital stock or other equity interests in such
entity, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Seller.
q. Applicable Law. Seller shall comply with the requirements of all
applicable laws, rules, regulations and orders of any Governmental
Authority.
r. Existence. Seller shall preserve and maintain its legal existence
and all of its material rights, privileges, licenses and franchises.
s. Chief Executive Office; Jurisdiction of Organization. Seller
shall not move its chief executive office from the address referred
to in Section 13(a)(17) or change its jurisdiction of organization
from the jurisdiction referred to in Section 13(a)(17) unless it
shall have provided Buyer 30 days' prior written notice of such
change.
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t. Taxes. Seller shall timely file all tax returns that are required
to be filed by it and shall timely pay and discharge all taxes,
assessments and governmental charges or levies imposed on it or on
its income or profits or on any of its property prior to the date on
which penalties attach thereto, except for any such tax, assessment,
charge or levy the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are
being maintained.
u. Transactions with Affiliates. Seller will not enter into any
transaction, including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service, with
any Affiliate unless such transaction is (a) otherwise permitted
under the Program Agreements, (b) in the ordinary course of Seller's
business and (c) upon fair and reasonable terms no less favorable to
Seller than it would obtain in a comparable arm's length transaction
with a Person which is not an Affiliate, or make a payment that is
not otherwise permitted by this Section to any Affiliate.
v. Guarantees. Seller shall not create, incur, assume or suffer to
exist any Guarantees, except (i) to the extent reflected in Seller's
financial statements or notes thereto and (ii) to the extent the
aggregate Guarantees of Seller do not exceed $5,000,000.
w. Indebtedness. Seller shall not incur any additional material
Indebtedness that has not been approved by Buyer, other than:
(1) Indebtedness to the Buyer under this Agreement;
(2) Obligations to pay taxes;
(3) Liabilities for accounts payable, non capitalized
equipment or operating leases and similar liabilities incurred in
the ordinary course of business;
(4) Accrued expenses, deferred credits and loss
contingencies that are properly classified as liabilities under
GAAP;
(5) Indebtedness incurred in the ordinary course of
business to hedge the risk of interest rate fluctuations or any of
the Seller's portfolios or pipelines of Mortgage Loans under this
Repurchase Agreement or in respect of other Indebtedness permitted
hereunder;
(6) Liabilities for capital leases and similar
liabilities incurred in the ordinary course of business, up to an
aggregate maximum amount of $5,000,000;
(7) Indebtedness under other committed mortgage
warehouse lines of credit (including committed mortgage loan
repurchase agreements) now or hereafter existing, the papers
evidencing, securing, governing or otherwise related to which
Indebtedness impose covenants and conditions on the Seller that are
no more restrictive or onerous than the covenants and conditions
imposed on the Seller by this Agreement and notice of which has been
delivered to the Buyer;
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(8) The specific Indebtedness described on Exhibit J;
(9) Other Indebtedness of the Seller approved in writing
by the Buyer (provided that Buyer shall have no obligations to
approve any such Indebtedness, and may approve or disapprove it in
the Buyer's sole and absolute discretion).
x. Hedging. Seller has entered into Interest Rate Protection
Agreements with respect to the Alt-A Mortgage Loans, Jumbo Mortgage
Loans and Conforming Mortgage Loans, having terms with respect to
protection against fluctuations in interest rates acceptable to
Buyer in its sole discretion.
y. True and Correct Information. All information, reports, exhibits,
schedules, financial statements or certificates of Seller, any
Affiliate thereof or any of their officers furnished to Buyer
hereunder and during Buyer's diligence of Seller are and will be
true and complete and do not omit to disclose any material facts
necessary to make the statements herein or therein, in light of the
circumstances in which they are made, not misleading. All required
financial statements, information and reports delivered by Seller to
Buyer pursuant to this Agreement shall be prepared in accordance
with U.S. GAAP, or, if applicable, to SEC filings, the appropriate
SEC accounting regulations.
z. Servicing. Seller has ensured that the applicable Servicer and
Master Servicer has adequate financial standing, servicing
facilities, procedures and experienced personnel necessary for the
sound servicing of mortgage loans of the same types as may from time
to time constitute Mortgage Loans and in accordance with Accepted
Servicing Practices.
aa. Take-out Payments. With respect to each Committed Mortgage Loan,
Seller shall arrange that all payments under the related Take-out
Commitment shall be paid directly to Buyer at the account set forth
in Section 9 hereof, or to an account approved by Buyer in writing
prior to such payment. With respect to any Agency Take-out
Commitment, if applicable, (1) with respect to the wire transfer
instructions as set forth in Freddie Mac Form 987 (Wire Transfer
Authorization for a Cash Warehouse Delivery) such wire transfer
instructions are identical to Buyer's wire instructions or Buyer has
approved such wire transfer instructions in writing in its sole
discretion, or (2) the Payee Number set forth on Fannie Mae Form
1068 (Fixed-Rate, Graduated-Payment, or Growing-Equity Mortgage Loan
Schedule) or Fannie Mae Form 1069 (Adjustable-Rate Mortgage Loan
Schedule), as applicable, is identical to the Payee Number that has
been identified by Buyer in writing as Buyer's Payee Number or Buyer
has previously approved the related Payee Number in writing in its
sole discretion; with respect to any Take-out Commitment with an
Agency, the applicable agency documents list Buyer as sole
subscriber, unless otherwise agreed to in writing by Buyer, in
Buyer's sole discretion.
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bb. No Pledge. Seller shall not pledge, transfer or convey any
security interest in the Collection Account to any Person without
the express written consent of Buyer.
cc. Plan Assets. Seller shall not be an employee benefit plan as
defined in Section 3 of Title I of ERISA, or a plan described in
Section 4975(e)(1) of the Code and the Seller shall not use "plan
assets" within the meaning of 29 CFR ss.2510.3-101 to engage in this
Repurchase Agreement or any Transaction hereunder.
dd. Maintenance of Liquidity. The Seller shall maintain, as of the
end of each calendar month, unrestricted cash and Cash Equivalents
in an amount at least equal to the greater of (i) $25,000,000 or
(ii) 3% of all mortgage loans not sold or securitized and held by
the Seller for sale in accordance with GAAP.
ee. Additional Warehouse Lines. The Seller shall maintain at least
one additional warehouse, repurchase or similar facility in an
amount at least equal to the Maximum Aggregate Purchase Price.
ff. Sharing of Information. The Seller shall allow the Buyer to
exchange information related to the Seller and the Transaction
hereunder with third party lenders and the Seller shall permit each
third party lender to share such information with the Buyer.
15. Events of Default
Each of the following shall constitute an "Event of Default"
hereunder:
a. Payment Failure. Failure of Seller to (i) make any payment of
Price Differential or Repurchase Price or any other sum which has
become due, on a Price Differential Payment Date or a Repurchase
Date or otherwise, whether by acceleration or otherwise, under the
terms of this Agreement, any other warehouse and security agreement
or any other document evidencing or securing Indebtedness of Seller
to Buyer or to any Affiliate of Buyer, or (ii) cure any Margin
Deficit when due pursuant to Section 6 hereof.
b. Cross Default. (i) Seller or any of Seller's Affiliates shall be
in default after the application of any applicable grace periods
under (i) any Indebtedness, in the aggregate, in excess of
$5,000,000 of Seller or of such Affiliate which default (1) involves
the failure to pay a matured obligation, or (2) permits the
acceleration of the maturity of obligations by any other party to or
beneficiary with respect to such Indebtedness, or (ii) any other
contract or contracts, in the aggregate in excess of $5,000,000 to
which Seller or such Affiliate is a party which default (1) involves
the failure to pay a matured obligation, or (2) permits the
acceleration of the maturity of obligations by any other party to or
beneficiary of such contract.
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c. Assignment. Assignment or attempted assignment by Seller of this
Agreement or any rights hereunder without first obtaining the
specific written consent of Buyer, or the granting by Seller of any
security interest, lien or other encumbrances on any Purchased
Mortgage Loans to any person other than Buyer.
d. Insolvency. An Act of Insolvency shall have occurred with respect
to Seller, or any Affiliate.
e. Material Adverse Change. Any material adverse change in the
Property, business, financial condition or operations of Seller or
any of its Affiliates shall occur, in each case as determined by
Buyer in its sole good faith discretion, or any other condition
shall exist which, in Buyer's sole good faith discretion,
constitutes a material impairment of Seller's ability to perform its
obligations under this Agreement or any other Program Agreement.
f. Breach of Financial Representation or Covenant or Obligation. A
breach by Seller of any of the representations, warranties or
covenants or obligations set forth in Sections 13(a)(1), 13(a)(7),
13(a)(12), 13(a)(19), 13(a)(23), 14a, 14b, 14d, 14e, 14r, 14v, 14w,
14aa, 14bb, 14dd or 14ee of this Agreement.
g. Breach of Non-Financial Representation or Covenant. A breach by
Seller of any other material representation, warranty or covenant
set forth in this Agreement (and not otherwise specified in Section
15(f) above), if such breach is not cured within five (5) Business
Days (other than the representations and warranties set forth in
Schedule 1, which shall be considered solely for the purpose of
determining the Market Value, the existence of a Margin Deficit and
the obligation to repurchase such Mortgage Loan) unless (i) such
party shall have made any such representations and warranties with
knowledge that they were materially false or misleading at the time
made, (ii) any such representations and warranties have been
determined by Buyer in its sole discretion to be materially false or
misleading on a regular basis, or (iii) Buyer, in its sole
discretion, determines that such breach of a material
representation, warranty or covenant materially and adversely
affects (A) the condition (financial or otherwise) of such party,
its Subsidiaries or Affiliates; or (B) Buyer's determination to
enter into this Agreement or Transactions with such party, then such
breach shall constitute an immediate Event of Default and Seller
shall have no cure right hereunder).
h. Change of Control. The occurrence of a Change in Control. i.
Failure to Transfer. Seller fails to transfer the Purchased Mortgage
Loans to Buyer on the applicable Purchase Date (provided Buyer has
tendered the related Purchase Price).
j. Judgment. A final judgment or judgments for the payment of money
in excess of $5,000,000 in the aggregate shall be rendered against
the Seller or any of its Affiliates by one or more courts,
administrative tribunals or other bodies having jurisdiction and the
same shall not be satisfied, discharged (or provision shall not be
made for such discharge) or bonded, or a stay of execution thereof
shall not be procured, within 30 days from the date of entry
thereof.
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k. Government Action. Any Governmental Authority or any person,
agency or entity acting or purporting to act under governmental
authority shall have taken any action to condemn, seize or
appropriate, or to assume custody or control of, all or any
substantial part of the Property of Seller or any Affiliate thereof,
or shall have taken any action to displace the management of Seller
or any Affiliate thereof or to curtail its authority in the conduct
of the business of Seller or any Affiliate thereof, or takes any
action in the nature of enforcement to remove, limit or restrict the
approval of Seller or Affiliate as an issuer, buyer or a
seller/servicer of Mortgage Loans or securities backed thereby, and
such action provided for in this subparagraph k shall not have been
discontinued or stayed within 30 days.
l. Inability to Perform. An officer of Seller shall admit its
inability to, or its intention not to, perform any of Seller's
Obligations.
m. Security Interest. This Agreement shall for any reason cease to
create a valid, first priority security interest in any material
portion of the Purchased Mortgage Loans or other Repurchase Assets
purported to be covered hereby.
n. Financial Statements. Seller's audited annual financial
statements or the notes thereto or other opinions or conclusions
stated therein shall be qualified or limited by reference to the
status of Seller as a "going concern" or a reference of similar
import.
An Event of Default shall be deemed to be continuing unless
expressly waived by Buyer in writing. 16. Remedies Upon Default
In the event that an Event of Default shall have occurred:
a. Buyer may, at its option (which option shall be deemed to have
been exercised immediately upon the occurrence of an Act of
Insolvency of Seller or any Affiliate), declare an Event of Default
to have occurred hereunder and, upon the exercise or deemed exercise
of such option, the Repurchase Date for each Transaction hereunder
shall, if it has not already occurred, be deemed immediately to
occur (except that, in the event that the Purchase Date for any
Transaction has not yet occurred as of the date of such exercise or
deemed exercise, such Transaction shall be deemed immediately
canceled). Buyer shall (except upon the occurrence of an Act of
Insolvency) give notice to Seller of the exercise of such option as
promptly as practicable.
b. If Buyer exercises or is deemed to have exercised the option
referred to in subparagraph (a) of this Section, (i) Seller's
obligations in such Transactions to repurchase all Purchased
Mortgage Loans, at the Repurchase Price therefor on the Repurchase
Date determined in accordance with subparagraph (a) of this Section,
shall thereupon become immediately due and payable, (ii) all Income
paid after such exercise or deemed exercise shall be retained by
Buyer and applied, in Buyer's sole discretion, to the aggregate
unpaid Repurchase Prices for all outstanding Transactions and any
other amounts owing by Seller hereunder, and (iii) Seller shall
immediately deliver to Buyer the Mortgage Files relating to any
Purchased Mortgage Loans subject to such Transactions then in
Seller's possession or control.
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c. Buyer also shall have the right to obtain physical possession,
and to commence an action to obtain physical possession, of all
Records and files of Seller relating to the Purchased Mortgage Loans
and all documents relating to the Purchased Mortgage Loans
(including, without limitation, any legal, credit or servicing files
with respect to the Purchased Mortgage Loans) which are then or may
thereafter come in to the possession of Seller or any third party
acting for Seller. To obtain physical possession of any Purchased
Mortgage Loans held by Custodian, Buyer shall present to Custodian a
Trust Receipt and Certification. Buyer shall be entitled to specific
performance of all agreements of Seller contained in this Agreement.
d. Buyer shall have the right to direct all servicers then servicing
any Purchased Mortgage Loans to remit all collections thereon to
Buyer, and if any such payments are received by Seller, Seller shall
not commingle the amounts received with other funds of Seller and
shall promptly pay them over to Buyer. Buyer shall also have the
right to terminate any one or all of the servicers then servicing
any Purchased Mortgage Loans with or without cause. In addition,
Buyer shall have the right to immediately sell the Purchased
Mortgage Loans and liquidate all Repurchase Assets. Such disposition
of Purchased Mortgage Loans may be, at Buyer's option, on either a
servicing-released or a servicing-retained basis. Buyer shall not be
required to give any warranties as to the Purchased Mortgage Loans
with respect to any such disposition thereof. Buyer may specifically
disclaim or modify any warranties of title or the like relating to
the Purchased Mortgage Loans. The foregoing procedure for
disposition of the Purchased Mortgage Loans and liquidation of the
Repurchase Assets shall not be considered to adversely affect the
commercial reasonableness of any sale thereof. Seller agrees that it
would not be commercially unreasonable for Buyer to dispose of the
Purchased Mortgage Loans or the Repurchase Assets or any portion
thereof by using Internet sites that provide for the auction of
assets similar to the Purchased Mortgage Loans or the Repurchase
Assets, or that have the reasonable capability of doing so, or that
match buyers and sellers of assets. Buyer shall be entitled to place
the Purchased Mortgage Loans in a pool for issuance of
mortgage-backed securities at the then-prevailing price for such
securities and to sell such securities for such prevailing price in
the open market. Buyer shall also be entitled to sell any or all of
such Mortgage Loans individually for the prevailing price. Buyer
shall also be entitled, in its sole discretion to elect, in lieu of
selling all or a portion of such Purchased Mortgage Loans, to give
the Seller credit for such Purchased Mortgage Loans and the
Repurchase Assets in an amount equal to the Market Value of the
Purchased Mortgage Loans against the aggregate unpaid Repurchase
Price and any other amounts owing by the Seller hereunder.
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e. Upon the happening of one or more Events of Default, Buyer may
apply any proceeds from the liquidation of the Purchased Mortgage
Loans and Repurchase Assets to the Repurchase Prices hereunder and
all other Obligations in the manner Buyer deems appropriate in its
sole discretion.
f. Seller shall be liable to Buyer for (i) the amount of all
reasonable legal or other expenses (including, without limitation,
all costs and expenses of Buyer in connection with the enforcement
of this Agreement or any other agreement evidencing a Transaction,
whether in action, suit or litigation or bankruptcy, insolvency or
other similar proceeding affecting creditors' rights generally,
further including, without limitation, the reasonable fees and
expenses of counsel (including the costs of internal counsel of
Buyer) incurred in connection with or as a result of an Event of
Default, (ii) damages in an amount equal to the cost (including all
fees, expenses and commissions) of entering into replacement
transactions and entering into or terminating hedge transactions in
connection with or as a result of an Event of Default, and (iii) any
other loss, damage, cost or expense directly arising or resulting
from the occurrence of an Event of Default in respect of a
Transaction.
g. To the extent permitted by applicable law, Seller shall be liable
to Buyer for interest on any amounts owing by Seller hereunder, from
the date Seller becomes liable for such amounts hereunder until such
amounts are (i) paid in full by Seller or (ii) satisfied in full by
the exercise of Buyer's rights hereunder. Interest on any sum
payable by Seller under this Section 16(g) shall be at a rate equal
to the Post-Default Rate.
h. Buyer shall have, in addition to its rights hereunder, any rights
otherwise available to it under any other agreement or applicable
law.
i. Buyer may exercise one or more of the remedies available to Buyer
immediately upon the occurrence of an Event of Default and, except
to the extent provided in subsections (a) and (d) of this Section,
at any time thereafter without notice to Seller. All rights and
remedies arising under this Agreement as amended from time to time
hereunder are cumulative and not exclusive of any other rights or
remedies which Buyer may have.
j. Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Seller hereby expressly waives any
defenses Seller might otherwise have to require Buyer to enforce its
rights by judicial process. To the extent permitted by law, Seller
also waives any defense (other than a defense of payment or
performance) Seller might otherwise have arising from the use of
nonjudicial process, enforcement and sale of all or any portion of
the Repurchase Assets, or from any other election of remedies.
Seller recognizes that nonjudicial remedies are consistent with the
usages of the trade, are responsive to commercial necessity and are
the result of a bargain at arm's length.
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k. Buyer shall have the right to perform reasonable due diligence
with respect to Seller and the Mortgage Loans, which review shall be
at the expense of Seller.
17. Reports
a. Notices. Seller shall furnish to Buyer (x) promptly, copies of
any material and adverse notices (including, without limitation,
notices of defaults, breaches, potential defaults or potential
breaches) and any material financial information that is not
otherwise required to be provided by Seller hereunder which is given
to Seller's lenders, (y) immediately, notice of the occurrence of
any Event of Default hereunder or default or breach by Seller, a
Servicer or Master Servicer of any obligation under any Program
Agreement or any material contract or agreement of Seller. a
Servicer or Master Servicer or the occurrence of any event or
circumstance that such party reasonably expects has resulted in, or
will, with the passage of time, result in, a Material Adverse Effect
or an Event of Default or such a default or breach by such party and
(z) the following:
(1) as soon as available and in any event within
forty-five (45) calendar days after the end of each calendar month,
the unaudited consolidated balance sheets of Seller as at the end of
such period and the related unaudited consolidated statements of
income and retained earnings and of cash flows for the Seller and
its consolidated Subsidiaries for such period and the portion of the
fiscal year through the end of such period, accompanied by a
certificate of a Responsible Officer of Seller, which certificate
shall state that said consolidated financial statements fairly
present in all material respects the consolidated financial
condition and results of operations of Seller in accordance with
GAAP, consistently applied, as at the end of, and for, such period
(subject to normal year-end adjustments);
(2) as soon as available and in any event within ninety
(90) days after the end of each fiscal year of Seller, the
consolidated balance sheets of Seller as at the end of such fiscal
year and the related consolidated statements of income and retained
earnings and of cash flows for the Seller for such year, setting
forth in each case in comparative form the figures for the previous
year, accompanied by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion
and the scope of audit shall be acceptable to Buyer in its sole
discretion, shall have no "going concern" qualification and shall
state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of Seller
as at the end of, and for, such fiscal year in accordance with GAAP;
(3) such other prepared statements that Buyer may
reasonably request;
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(4) if applicable, copies of any 10-Ks, 10-Qs,
registration statements and other "corporate finance" SEC filings
(other than 8-Ks) by Seller, within 5 Business Days of their filing
with the SEC; provided, that, Seller or any Affiliate will provide
Buyer and Credit Suisse First Boston Corporation with a copy of the
annual 10-K filed with the SEC by Seller or its Affiliates, no later
than 90 days after the end of the year;
(5) as soon as available, and in any event within thirty
(30) days of receipt, copies of relevant portions of all final
written Agency, Governmental Authority and investor audits,
examinations, evaluations, monitoring reviews and reports of its
operations (including those prepared on a contract basis) which
provide for or relate to (i) material corrective action required,
(ii) material sanctions proposed, imposed or required, including
without limitation notices of defaults, notices of termination of
approved status, notices of imposition of supervisory agreements or
interim servicing agreements, and notices of probation, suspension,
or non-renewal, or (iii) "report cards," "grades" or other
classifications of the quality of Seller's operations;
(6) from time to time such other information regarding
the financial condition, operations, or business of the Seller as
Buyer may reasonably request;
(7) as soon as reasonably possible, and in any event
within thirty (30) days after a Responsible Officer of the Seller
has knowledge of the occurrence of any Event of Termination, stating
the particulars of such Event of Termination in reasonable detail;
(8) As soon as reasonably possible, notice of any of the
following events: (a) change in the insurance coverage required of
Seller, Master Servicer or any other Person pursuant to any Program
Agreement, with a copy of evidence of same attached;
(b) any material dispute, litigation, investigation, proceeding or
suspension between Seller, Master Servicer or a Servicer, on the one hand, and
any Governmental Authority or any Person;
(c) any material change in accounting policies or financial
reporting practices of Seller, a Servicer or Master Servicer;
(d) with respect to any Purchased Mortgage Loan, immediately upon
receipt of notice or knowledge thereof, that the underlying Mortgaged Property
has been damaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty, or otherwise damaged so as to affect adversely the
value of such Mortgaged Loan;
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(e) any material issues raised upon examination of Seller or
Seller's facilities by any Governmental Authority;
(f) any material change in the Indebtedness of the Seller,
including, without limitation, any default, renewal, non-renewal, termination,
increase in available amount or decrease in available amount related thereto;
(g) promptly upon receipt of notice or knowledge of (i) any default
related to any Repurchase Asset, (ii) any lien or security interest (other than
security interests created hereby or by the other Program Agreements) on, or
claim asserted against, any of the Purchased Mortgage Loans;
(h) a summary of the portfolio performance on a rolling quarterly
period, commencing on the calendar quarter following the date hereof, stratified
by percentage repurchase demands for: representation breaches, missing document
breaches, repurchases due to fraud, early payment default requests, summarized
on the basis of (a) pending repurchase demands (including weighted average
duration of outstanding request), (b) satisfied repurchase demands, (c) total
repurchase demands;
(i) any other event, circumstance or condition that has resulted, or
has a possibility of resulting, in a Material Adverse Effect with respect to
Seller, a Servicer or Master Servicer; and
(j) the occurrence of any material employment dispute and a
description of the strategy for resolving it that has the possibility of
resulting in a Material Adverse Effect.
b. Officer's Certificates. Seller will furnish to Buyer, at the time
the Seller furnishes each set of financial statements pursuant to
Section 17(a)(1) or (2) above, a certificate of a Responsible
Officer of Seller in the form of Exhibit D hereto.
c. Mortgage Loan Reports. Seller will furnish to Buyer monthly
electronic Mortgage Loan performance data, including, without
limitation, delinquency reports and volume information, broken down
by product (i.e., delinquency, foreclosure and net charge-off
reports).
d. Asset Tape. Seller shall provide to Buyer, electronically, in a
format mutually acceptable to Buyer and Seller, an Asset Tape by no
later than the Reporting Date.
e. Other. Seller shall deliver to Buyer any other reports or
information reasonably requested by Buyer or as otherwise required
pursuant to this Agreement.
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18. Repurchase Transactions
Buyer may, in its sole election, engage in repurchase transactions
with the Purchased Mortgage Loans or otherwise pledge, hypothecate, assign,
transfer or otherwise convey the Purchased Mortgage Loans with a counterparty of
Buyer's choice all at no cost to the Seller. Unless an Event of Default shall
have occurred, no such transaction shall relieve Buyer of its obligations to
transfer and not substitute therefor Purchased Mortgage Loans to Seller pursuant
to Section 4 hereof, or of Buyer's obligation to credit or pay Income to, or
apply Income to the obligations of, Seller pursuant to Section 7 hereof. In the
event Buyer engages in a repurchase transaction with any of the Purchased
Mortgage Loans or otherwise pledges or hypothecates any of the Purchased
Mortgage Loans, Buyer shall have the right to assign to Buyer's counterparty any
of the applicable representations or warranties herein and the remedies for
breach thereof, as they relate to the Purchased Mortgage Loans that are subject
to such repurchase transaction.
19. Single Agreement
Buyer and Seller acknowledge that, and have entered hereunto, and
will enter into each Transaction hereunder, in consideration of and in reliance
upon the fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to
set-off claims and apply property held by them in respect of any Transaction
against obligations owing to them in respect of any other Transactions hereunder
and (iii) that payments, deliveries and other transfers made by either of them
in respect of any Transaction shall be deemed to have been made in consideration
of payments, deliveries and other transfers in respect of any other Transactions
hereunder, and the obligations to make any such payments, deliveries and other
transfers may be applied against each other and netted.
20. Notices and Other Communications
Any and all notices (with the exception of Transaction Requests or
Purchase Confirmations, which shall be delivered via facsimile only),
statements, demands or other communications hereunder may be given by a party to
the other by mail, email, facsimile, messenger or otherwise to the address
specified below, or so sent to such party at any other place specified in a
notice of change of address hereafter received by the other. All notices,
demands and requests hereunder may be made orally, to be confirmed promptly in
writing, or by other communication as specified in the preceding sentence.
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If to Seller:
Chimera Investment Corporation
1211 Avenue of the Americas Suite 2902
New York, NY 10036
Attention: Chief Financial Officer
Phone Number: 212.696.0100
Fax Number: 212.696.9809
If to Buyer:
For Transaction Requests and Purchase Confirmations:
---------------------------------------------------
Credit Suisse First Boston Mortgage Capital LLC
302 Carnegie Center, 2nd Floor
Princeton, NJ 08540
Attention: Warehouse Lending
Phone Number: (609) 627-5004
For all other Notices:
----------------------
Credit Suisse First Boston Mortgage Capital LLC
302 Carnegie Center, 2nd Floor
Princeton, NJ 08540
Attention: Gary Timmerman
Phone Number: 609-627-5026
Fax Number: 609-627-5080
with a copy to:
Credit Suisse First Boston Mortgage Capital LLC
c/o Credit Suisse Securities (USA) LLC
One Madison Avenue, 9th Floor
New York, NY 10010
Attention: Legal Department--RMBS Warehouse Lending
21. Entire Agreement; Severability
This Agreement shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase transactions.
Each provision and agreement herein shall be treated as separate and independent
from any other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or agreement.
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22. Non assignability
The Program Agreements are not assignable by Seller. Buyer may from time to time
assign all or a portion of its rights and obligations under this Agreement and
the Program Agreements with the consent of the Seller which consent shall not be
unreasonably withheld provided that such consent shall not be required in the
event (i) the assignee is an Affiliate of the Buyer or (ii) an Event of Default
has occurred and is continuing; provided, however that Buyer shall maintain as
agent of Seller, for review by Seller upon written request, a register of
assignees and a copy of an executed assignment and acceptance by Buyer and
assignee ("Assignment and Acceptance"), specifying the percentage or portion of
such rights and obligations assigned. Upon such assignment, (a) such assignee
shall be a party hereto and to each Program Agreement to the extent of the
percentage or portion set forth in the Assignment and Acceptance, and shall
succeed to the applicable rights and obligations of Buyer hereunder, and (b)
Buyer shall, to the extent that such rights and obligations have been so
assigned by it to either (i) an Affiliate of Buyer which assumes the obligations
of Buyer or (ii) to another Person approved by Seller (such approval not to be
unreasonably withheld) which assumes the obligations of Buyer, be released from
its obligations hereunder and under the Program Agreements. Unless otherwise
stated in the Assignment and Acceptance, Seller shall continue to take
directions solely from Buyer unless otherwise notified by Buyer in writing.
Buyer may distribute to any prospective assignee any document or other
information delivered to Buyer by Seller.
23. Set-off
In addition to any rights and remedies of the Buyer hereunder and by
law, the Buyer shall have the right, without prior notice to the Seller, any
such notice being expressly waived by the Seller to the extent permitted by
applicable law to set-off and appropriate and apply against any Obligation from
Seller or any Affiliate thereof to Buyer or any of its Affiliates any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other obligation (including to return excess margin), credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by or due from the Buyer or any Affiliate thereof to or for the credit or
the account of the Seller or any Affiliate thereof. The Buyer agrees promptly to
notify the Seller after any such set off and application made by the Buyer;
provided that the failure to give such notice shall not affect the validity of
such set off and application.
24. Binding Effect; Governing Law; Jurisdiction
a. This Agreement shall be binding and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns. Seller acknowledges that the obligations of Buyer hereunder
or otherwise are not the subject of any guaranty by, or recourse to,
any direct or indirect parent or other Affiliate of Buyer. THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTION 5-1401 AND
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
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b. SELLER HEREBY WAIVES TRIAL BY JURY. SELLER HEREBY IRREVOCABLY
CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF
NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING TO THE PROGRAM
AGREEMENTS IN ANY ACTION OR PROCEEDING. SELLER HEREBY SUBMITS TO,
AND WAIVES ANY OBJECTION IT MAY HAVE TO, EXCLUSIVE PERSONAL
JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK, WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE
PROGRAM AGREEMENTS.
25. No Waivers, Etc.
No express or implied waiver of any Event of Default by either party
shall constitute a waiver of any other Event of Default and no exercise of any
remedy hereunder by any party shall constitute a waiver of its right to exercise
any other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto. Without limitation on any of the foregoing, the failure to give
a notice pursuant to Section 6(a), 16(a) or otherwise, will not constitute a
waiver of any right to do so at a later date.
26. Intent
a. The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of the
United States Code, as amended and a "securities contract" as that
term is defined in Section 741 of Title 11 of the United States
Code, as amended and that all payments hereunder are deemed "margin
payments" or "settlement payments" as defined in Title 11 of the
United States Code.
b. It is understood that either party's right to liquidate Purchased
Mortgage Loans delivered to it in connection with Transactions
hereunder or to exercise any other remedies pursuant to Section 16
hereof is a contractual right to liquidate such Transaction as
described in Sections 555 and 559 of Title 11 of the United States
Code, as amended.
c. The parties agree and acknowledge that if a party hereto is an
"insured depository institution," as such term is defined in the
Federal Deposit Insurance Act, as amended ("FDIA"), then each
Transaction hereunder is a "qualified financial contract," as that
term is defined in FDIA and any rules, orders or policy statements
thereunder (except insofar as the type of assets subject to such
Transaction would render such definition inapplicable).
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d. It is understood that this Agreement constitutes a "netting
contract" as defined in and subject to Title IV of the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") and
each payment entitlement and payment obligation under any
Transaction hereunder shall constitute a "covered contractual
payment entitlement" or "covered contractual payment obligation",
respectively, as defined in and subject to FDICIA (except insofar as
one or both of the parties is not a "financial institution" as that
term is defined in FDICIA).
e. This Agreement is intended to be a "repurchase agreement" and a
"securities contract," within the meaning of Section 555 and Section
559 under the Bankruptcy Code.
27. Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
a. in the case of Transactions in which one of the parties is a
broker or dealer registered with the SEC under Section 15 of the
1934 Act, the Securities Investor Protection Corporation has taken
the position that the provisions of the SIPA do not protect the
other party with respect to any Transaction hereunder;
b. in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer
registered with the SEC under Section 15C of the 1934 Act, SIPA will
not provide protection to the other party with respect to any
Transaction hereunder; and
c. in the case of Transactions in which one of the parties is a
financial institution, funds held by the financial institution
pursuant to a Transaction hereunder are not a deposit and therefore
are not insured by the Federal Deposit Insurance Corporation or the
National Credit Union Share Insurance Fund, as applicable.
28.Power of Attorney
Seller hereby authorizes Buyer to file such financing statement or
statements relating to the Repurchase Assets without Seller's signature thereon
as Buyer, at its option, may deem appropriate. Seller hereby appoints Buyer as
Seller's agent and attorney-in-fact to execute any such financing statement or
statements in Seller's name and to perform all other acts which Buyer deems
appropriate to perfect and continue its ownership interest in and/or the
security interest granted hereby, if applicable, and to protect, preserve and
realize upon the Repurchase Assets, including, but not limited to, the right to
endorse notes, complete blanks in documents, transfer servicing, and sign
assignments on behalf of Seller as its agent and attorney-in-fact. This agency
and power of attorney is coupled with an interest and is irrevocable without
Buyer's consent. Notwithstanding the foregoing, the power of attorney hereby
granted may be exercised only during the occurrence and continuance of any
Default hereunder. Seller shall pay the filing costs for any financing statement
or statements prepared pursuant to this Section 28. In addition the foregoing,
the Seller agrees to execute a Power of Attorney, the form of Exhibit E hereto,
to be delivered on the date hereof.
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29. Buyer May Act Through Affiliates
Buyer may, from time to time, designate one or more affiliates for
the purpose of performing any action hereunder.
30. Indemnification; Obligations
a. Seller agrees to hold Buyer and each of its respective Affiliates
and their officers, directors, employees, agents and advisors (each,
an "Indemnified Party") harmless from and indemnify each Indemnified
Party (and will reimburse each Indemnified Party as the same is
incurred) against all liabilities, losses, damages, judgments, costs
and expenses (including, without limitation, reasonable fees and
expenses of counsel) of any kind which may be imposed on, incurred
by, or asserted against any Indemnified Party relating to or arising
out of this Agreement, any Transaction Request, Purchase
Confirmation, any Program Agreement or any transaction contemplated
hereby or thereby resulting from anything other than the Indemnified
Party's gross negligence or willful misconduct. Seller also agrees
to reimburse each Indemnified Party for all reasonable expenses in
connection with the enforcement of this Agreement and the exercise
of any right or remedy provided for herein, any Transaction Request,
Purchase Confirmation and any Program Agreement, including, without
limitation, the reasonable fees and disbursements of counsel.
Seller's agreements in this Section 30 shall survive the payment in
full of the Repurchase Price and the expiration or termination of
this Agreement. Seller hereby acknowledges that its obligations
hereunder are recourse obligations of Seller and are not limited to
recoveries each Indemnified Party may have with respect to the
Purchased Mortgage Loans. Seller also agrees not to assert any claim
against Buyer or any of its Affiliates, or any of their respective
officers, directors, employees, attorneys and agents, on any theory
of liability, for special, indirect, consequential or punitive
damages arising out of or otherwise relating to the facility
established hereunder, the actual or proposed use of the proceeds of
the Transactions, this Agreement or any of the transactions
contemplated thereby. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO
ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE
NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE
INDEMNIFIED PARTIES.
b. Without limitation to the provisions of Section 4, if any payment
of the Repurchase Price of any Transaction is made by Seller other
than on the then scheduled Repurchase Date thereto as a result of an
acceleration of the Repurchase Date pursuant to Section 16 or for
any other reason, Seller shall, upon demand by Buyer, pay to Buyer
an amount sufficient to compensate Buyer for any losses, costs or
expenses that it may reasonably incur as of a result of such
payment.
c. Without limiting the provisions of Section 30(a) hereof, if
Seller fails to pay when due any costs, expenses or other amounts
payable by it under this Agreement, including, without limitation,
fees and expenses of counsel and indemnities, such amount may be
paid on behalf of Seller by Buyer, in its sole discretion.
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31. Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, and all such counterparts shall
together constitute one and the same instrument.
32. Confidentiality
This Agreement and its terms, provisions, supplements and
amendments, and notices hereunder, are proprietary to Buyer and Agent and shall
be held by Seller in strict confidence and shall not be disclosed to any third
party without the written consent of Buyer except for (i) disclosure to Seller's
direct and indirect Affiliates and Subsidiaries, attorneys or accountants, but
only to the extent such disclosure is necessary and such parties agree to hold
all information in strict confidence, or (ii) disclosure required by law, rule,
regulation or order of a court or other regulatory body. Notwithstanding the
foregoing or anything to the contrary contained herein or in any other Program
Agreement, the parties hereto may disclose to any and all Persons, without
limitation of any kind, the federal, state and local tax treatment of the
Transactions, any fact relevant to understanding the federal, state and local
tax treatment of the Transactions, and all materials of any kind (including
opinions or other tax analyses) relating to such federal, state and local tax
treatment and that may be relevant to understanding such tax treatment; provided
that Seller may not disclose the name of or identifying information with respect
to Buyer or Agent or any pricing terms (including, without limitation, the
Pricing Rate, Purchase Price Percentage and Purchase Price) or other nonpublic
business or financial information (including any sublimits and financial
covenants) that is unrelated to the federal, state and local tax treatment of
the Transactions and is not relevant to understanding the federal, state and
local tax treatment of the Transactions, without the prior written consent of
the Buyer.
Notwithstanding anything in this Agreement to the contrary, the
Seller shall comply with all applicable local, state and federal laws,
including, without limitation, all privacy and data protection law, rules and
regulations that are applicable to the Purchased Assets and/or any applicable
terms of this Agreement (the "Confidential Information"). The Seller understands
that the Confidential Information may contain "nonpublic personal information",
as that term is defined in Section 509(4) of the Gramm-Leach-Bliley Act (the
"Act"), and the Seller agrees to maintain such nonpublic personal information
that it receives hereunder in accordance with the Act and other applicable
federal and state privacy laws. The Seller shall implement such physical and
other security measures as shall be necessary to (a) ensure the security and
confidentiality of the "nonpublic personal information" of the "customers" and
"consumers" (as those terms are defined in the Act) of Buyer or any Affiliate of
Buyer which the Seller holds, (b) protect against any threats or hazards to the
security and integrity of such nonpublic personal information, and (c) protect
against any unauthorized access to or use of such nonpublic personal
information. The Seller represents and warrants that it has implemented
appropriate measures to meet the objectives of Section 501(b) of the Act and of
the applicable standards adopted pursuant thereto, as now or hereafter in
effect. Upon request, the Seller will provide evidence reasonably satisfactory
to allow Buyer to confirm that the providing party has satisfied its obligations
as required under this Section. Without limitation, this may include Buyer's
review of audits, summaries of test results, and other equivalent evaluations of
the Seller. The Seller shall notify Buyer immediately following discovery of any
breach or compromise of the security, confidentiality, or integrity of nonpublic
personal information of the customers and consumers of Buyer or any Affiliate of
Buyer provided directly to the Seller by Buyer or such Affiliate. The Seller
shall provide such notice to Buyer by personal delivery, by facsimile with
confirmation of receipt, or by overnight courier with confirmation of receipt to
the applicable requesting individual.
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33. Recording of Communications
Buyer and Seller shall have the right (but not the obligation) from
time to time to make or cause to be made tape recordings of communications
between its employees and those of the other party with respect to Transactions.
Buyer and Seller consent to the admissibility of such tape recordings in any
court, arbitration, or other proceedings. The parties agree that a duly
authenticated transcript of such a tape recording shall be deemed to be a
writing conclusively evidencing the parties' agreement.
34. Periodic Due Diligence Review
Seller acknowledges that Buyer has the right to perform continuing
due diligence reviews with respect to the Seller and the Mortgage Loans, for
purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, and Seller agrees that upon
reasonable (but no less than one (1) Business Day's) prior notice unless an
Event of Default shall have occurred, in which case no notice is required, to
Seller, Buyer or its authorized representatives will be permitted during normal
business hours to examine, inspect, and make copies and extracts of, the
Mortgage Files and any and all documents, records, agreements, instruments or
information relating to such Mortgage Loans in the possession or under the
control of Seller and/or the Custodian. Seller also shall make available to
Buyer a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Mortgage Files and the Mortgage Loans.
Without limiting the generality of the foregoing, Seller acknowledges that Buyer
may purchase Mortgage Loans from Seller based solely upon the information
provided by Seller to Buyer in the Mortgage Loan Schedule and the
representations, warranties and covenants contained herein, and that Buyer, at
its option, has the right at any time to conduct a partial or complete due
diligence review on some or all of the Mortgage Loans purchased in a
Transaction, including, without limitation, ordering Broker's price opinions,
new credit reports and new appraisals on the related Mortgaged Properties and
otherwise re-generating the information used to originate such Mortgage Loan.
Buyer may underwrite such Mortgage Loans itself or engage a mutually agreed upon
third party underwriter to perform such underwriting. Seller agrees to cooperate
with Buyer and any third party underwriter in connection with such underwriting,
including, but not limited to, providing Buyer and any third party underwriter
with access to any and all documents, records, agreements, instruments or
information relating to such Mortgage Loans in the possession, or under the
control, of Seller. Seller further agrees that Seller shall pay all
out-of-pocket costs and expenses incurred by Buyer in connection with Buyer's
activities pursuant to this Section 34 ("Due Diligence Costs"); provided, that
such Due Diligence Costs shall not exceed the Due Diligence Cap per calendar
year unless a Default or Event of Default shall have occurred, in which event
Buyer shall have the right to perform due diligence, at the sole expense of
Seller without regard to the dollar limitation set forth herein..
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35. Authorizations
Any of the persons whose signatures and titles appear on Schedule 2
are authorized, acting singly, to act for Seller or Buyer, as the case may be,
under this Agreement.
36. Acknowledgement Of Anti-Predatory Lending Policies
Buyer has in place internal policies and procedures that expressly
prohibit its purchase of any High Cost Mortgage Loan.
37. Documents Mutually Drafted
The Seller and the Buyer agree that this Agreement and each other
Program Agreement prepared in connection with the Transactions set forth herein
have been mutually drafted and negotiated by each party, and consequently such
documents shall not be construed against either party as the drafter thereof.
38. General Interpretive Principles
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
a. the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to
include the other gender;
b. accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
c. references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document
are to designated Articles, Sections, Subsections, Paragraphs and
other subdivisions of this Agreement;
d. a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same
Section
in which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions;
e. the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular provision;
f. the term "include" or "including" shall mean without limitation
by reason of enumeration;
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g. all times specified herein or in any other Program Agreement
(unless expressly specified otherwise) are local times in New York,
New York unless otherwise stated; and
h. all references herein or in any Program Agreement to "good faith"
means good faith as defined in Section 1-201(19) of the UCC as in
effect in the State of New York.
[Signature Page Follows]
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IN WITNESS WHEREOF, Seller and the Buyer have caused their names to be signed
hereto by their respective officers thereunto duly authorized as of the date
first above written.
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as Buyer
By: /s/ A. Adam Loskove
Title: Vice President
Date:__________________________________
CHIMERA INVESTMENT CORPORATION, as Seller
By: /s/ A. Alexandra Denahan
Title: Chief Financial Officer
Date:__________________________________
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO PURCHASED MORTGAGE LOANS
(a) Payments Current. All payments required to be made up to the
Purchase Date for the Mortgage Loan under the terms of the Mortgage Note have
been made and credited. No payment required under the Mortgage Loan is
delinquent nor has any payment under the Mortgage Loan been delinquent at any
time since the origination of the Mortgage Loan. The first Monthly Payment shall
be made, or shall have been made, with respect to the Mortgage Loan on its Due
Date or within the grace period, all in accordance with the terms of the related
Mortgage Note.
(b) No Outstanding Charges. All taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments or
ground rents which previously became due and owing have been paid, or an escrow
of funds has been established in an amount sufficient to pay for every such item
which remains unpaid and which has been assessed but is not yet due and payable.
Neither Seller nor the Qualified Originator from which Seller acquired the
Mortgage Loan has advanced funds, or induced, solicited or knowingly received
any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required under the Mortgage Loan,
except for interest accruing from the date of the Mortgage Note or date of
disbursement of the proceeds of the Mortgage Loan, whichever is earlier, to the
day which precedes by one month the Due Date of the first installment of
principal and/or interest thereunder.
(c) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination; except by a written instrument which has been
recorded, if necessary to protect the interests of Buyer, and which has been
delivered to the Custodian and the terms of which are reflected in the Custodial
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required, and
its terms are reflected on the Custodial Mortgage Loan Schedule. No Mortgagor in
respect of the Mortgage Loan has been released, in whole or in part, except in
connection with an assumption agreement approved by the title insurer, to the
extent required by such policy, and which assumption agreement is part of the
Mortgage File delivered to the Custodian and the terms of which are reflected in
the Custodial Mortgage Loan Schedule.
(d) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including, without limitation, the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor in respect of the Mortgage Loan was a debtor
in any state or Federal bankruptcy or insolvency proceeding at the time the
Mortgage Loan was originated. Seller has no knowledge nor has it received any
notice that any Mortgagor in respect of the Mortgage Loan is a debtor in any
state or federal bankruptcy or insolvency proceeding.
Schedule 1-1
(e) Hazard Insurance. The Mortgaged Property is insured by a fire
and extended perils insurance policy, issued by a Qualified Insurer, and such
other hazards as are customary in the area where the Mortgaged Property is
located, and to the extent required by Seller as of the date of origination
consistent with the Acquisition Guidelines, against earthquake and other risks
insured against by Persons operating like properties in the locality of the
Mortgaged Property, in an amount not less than the greatest of (i) 100% of the
replacement cost of all improvements to the Mortgaged Property, (ii) the
outstanding principal balance of the Mortgage Loan, or (iii) the amount
necessary to avoid the operation of any co-insurance provisions with respect to
the Mortgaged Property, and consistent with the amount that would have been
required as of the date of origination in accordance with the Acquisition
Guidelines. If any portion of the Mortgaged Property is in an area identified by
any federal Governmental Authority as having special flood hazards, and flood
insurance is available, a flood insurance policy meeting the current guidelines
of the Federal Emergency Management Agency is in effect with a generally
acceptable insurance carrier, in an amount representing coverage not less than
the least of (1) the outstanding principal balance of the Mortgage Loan (2) the
full insurable value of the Mortgaged Property, and (3) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended
by the Flood Disaster Protection Act of 1974. All such insurance policies
(collectively, the "hazard insurance policy") contain a standard mortgagee
clause naming Seller, its successors and assigns (including, without limitation,
subsequent owners of the Mortgage Loan), as mortgagee, and may not be reduced,
terminated or canceled without 30 days' prior written notice to the mortgagee.
No such notice has been received by Seller. All premiums on such insurance
policy have been paid. The related Mortgage obligates the Mortgagor to maintain
all such insurance and, at such Mortgagor's failure to do so, authorizes the
mortgagee to maintain such insurance at the Mortgagor's cost and expense and to
seek reimbursement therefor from such Mortgagor. Where required by state law or
regulation, the Mortgagor has been given an opportunity to choose the carrier of
the required hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering a condominium, or any hazard
insurance policy covering the common facilities of a planned unit development.
The hazard insurance policy is the valid and binding obligation of the insurer
and is in full force and effect. Seller has not engaged in, and has no knowledge
of the Mortgagor's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, or the validity and binding effect of either including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by Seller.
(f) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, the consummation of the transactions contemplated hereby
will not involve the violation of any such laws or regulations, and Seller shall
maintain or shall cause its agent to maintain in its possession, available for
the inspection of Buyer, and shall deliver to Buyer, upon demand, evidence of
compliance with all such requirements.
(g) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any such
release, cancellation, subordination or rescission. Seller has not waived the
performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has
Seller waived any default resulting from any action or inaction by the
Mortgagor.
Schedule 1-2
(h) Type of Mortgaged Property. The Mortgaged Property consists of a
single parcel of real property with a detached single family residence erected
thereon, or a two- to four-family dwelling, or an individual condominium unit in
a low-rise condominium project, or an individual unit in a planned unit
development or a de minimis planned unit development; provided, however, that
any condominium unit or planned unit development shall conform with the
applicable Fannie Mae and Freddie Mac requirements regarding such dwellings or
shall conform to underwriting guidelines acceptable to Buyer in its sole
discretion and that no residence or dwelling is a mobile home. No portion of the
Mortgaged Property is used for commercial purposes; provided, that, the
Mortgaged Property may be a mixed use property if such Mortgaged Property
conforms to underwriting guidelines acceptable to Buyer in its sole discretion.
(i) Valid First Lien. The Mortgage is a valid, subsisting, enforceable and
perfected first priority lien and first priority security interest, on the real
property included in the Mortgaged Property, including all buildings on the
Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to:
a. the lien of current real property taxes and assessments not yet
due and payable;
b. covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording
acceptable to prudent mortgage lending institutions generally and
specifically referred to in Buyer's title insurance policy delivered
to the originator of the Mortgage Loan and (a) referred to or
otherwise considered in the appraisal made for the originator of the
Mortgage Loan or (b) which do not adversely affect the Appraised
Value of the Mortgaged Property set forth in such appraisal;
c. other matters to which like properties are commonly subject which
do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value
or marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates with
respect to each first lien mortgage loan, a valid, subsisting and enforceable
first lien and first priority security interest on the property described
therein and Seller has full right to pledge and assign the same to Buyer. The
Mortgaged Property was not, as of the date of origination of the Mortgage Loan,
subject to a mortgage, deed of trust, deed to secure debt or other security
instrument creating a lien subordinate to the lien of the Mortgage.
Schedule 1-3
(j) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor if
applicable, in connection with a Mortgage Loan are genuine, and each is the
legal, valid and binding obligation of the maker thereof enforceable in
accordance with its terms. All parties to the Mortgage Note, the Mortgage and
any other such related agreement had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and any other such related
agreement have been duly and properly executed by such related parties. No
fraud, error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken place on the part of any Person, including,
without limitation, the Mortgagor, any appraiser, any builder or developer, or
any other party involved in the origination of the Mortgage Loan. Seller has
reviewed all of the documents constituting the Mortgage File and has made such
inquiries as it deems necessary to make and confirm the accuracy of the
representations set forth herein. To the best of Seller's knowledge, except as
disclosed to Buyer in writing, all tax identifications and property descriptions
are legally sufficient; and tax segregation, where required, has been completed.
(k) Full Disbursement of Proceeds. There is no further requirement
for future advances under the Mortgage Loan, and any and all requirements as to
completion of any on-site or off-site improvement and as to disbursements of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage.
(l) Ownership. Seller has full right to sell the Mortgage Loan to
Buyer free and clear of any encumbrance, equity, participation interest, lien,
pledge, charge, claim or security interest, and has full right and authority
subject to no interest or participation of, or agreement with, any other party,
to sell each Mortgage Loan pursuant to this Agreement and following the sale of
each Mortgage Loan, Buyer will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest except any such security interest created pursuant to the
terms of this Agreement.
(m) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (i) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (ii) either (A) organized
under the laws of such state, (B) qualified to do business in such state, (C) a
federal savings and loan association, a savings bank or a national bank having a
principal office in such state, or (D) not doing business in such state.
(n) Title Insurance. The Mortgage Loan is covered by either (i) an
attorney's opinion of title and abstract of title, the form and substance of
which is acceptable to prudent mortgage lending institutions making mortgage
loans in the area wherein the Mortgaged Property is located or (ii) an ALTA
lender's title insurance policy or other generally acceptable form of policy or
insurance acceptable to Fannie Mae or Freddie Mac and each such title insurance
policy is issued by a title insurer acceptable to Fannie Mae or Freddie Mac and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring Seller, its successors and assigns, as to the first priority
lien of the Mortgage, as applicable, in the original principal amount of the
Mortgage Loan, with respect to a Mortgage Loan (or to the extent a Mortgage Note
provides for negative amortization, the maximum amount of negative amortization
in accordance with the Mortgage), subject only to the exceptions contained in
clauses (1), (2) and (3), and in the case of adjustable rate Mortgage Loans,
against any loss by reason of the invalidity or unenforceability of the lien
resulting from the provisions of the Mortgage providing for adjustment to the
Mortgage Interest Rate and Monthly Payment. Where required by state law or
regulation, the Mortgagor has been given the opportunity to choose the carrier
of the required mortgage title insurance. Additionally, such lender's title
insurance policy affirmatively insures ingress and egress and against
encroachments by or upon the Mortgaged Property or any interest therein. The
title policy does not contain any special exceptions (other than the standard
exclusions) for zoning and uses and has been marked to delete the standard
survey exception or to replace the standard survey exception with a specific
survey reading. Seller, its successors and assigns, are the sole insureds of
such lender's title insurance policy, and such lender's title insurance policy
is valid and remains in full force and effect and will be in force and effect
upon the consummation of the transactions contemplated by this Agreement. No
claims have been made under such lender's title insurance policy, and no prior
holder or servicer of the related Mortgage, including Seller, has done, by act
or omission, anything which would impair the coverage of such lender's title
insurance policy, including without limitation, no unlawful fee, commission,
kickback or other unlawful compensation or value of any kind has been or will be
received, retained or realized by any attorney, firm or other Person, and no
such unlawful items have been received, retained or realized by Seller.
Schedule 1-4
(o) No Defaults. There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event has
occurred which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a default, breach, violation or event
of acceleration, and neither Seller nor its predecessors have waived any
default, breach, violation or event of acceleration.
(p) No Mechanics' Liens. There are no mechanics' or similar liens or
claims which have been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens) affecting the
Mortgaged Property which are or may be liens prior to, or equal or coordinate
with, the lien of the Mortgage.
(q) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lie wholly within the boundaries and building restriction lines of the
Mortgaged Property, and no improvements on adjoining properties encroach upon
the Mortgaged Property. No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning and building law, ordinance or
regulation.
(r) Origination; Payment Terms. The Mortgage Loan was originated by
or in conjunction with a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to Sections 203 and 211 of the National Housing Act,
a savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or similar banking institution which is supervised and
examined by a federal or state authority. Principal and/or interest payments on
the Mortgage Loan commenced no more than 60 days after funds were disbursed in
connection with the Mortgage Loan. With respect to adjustable rate Mortgage
Loans, the Mortgage Interest Rate is adjusted on each Interest Rate Adjustment
Date to equal the Index plus the Gross Margin (rounded up or down to the nearest
..125%), subject to the Mortgage Interest Rate Cap. The Mortgage Note is payable
on the first day of each month in equal monthly installments of principal and/or
interest (subject to a balloon payment in the case of a 30/40 Mortgage Loan and
subject to an "interest only" period in the case of Interest Only Loans), which
installments of interest (a) with respect to adjustable rate Mortgage Loans are
subject to change on the Interest Rate Adjustment Date due to adjustments to the
Mortgage Interest Rate on each Interest Rate Adjustment Date and (b) with
respect to Interest Only Loans are subject to change on the Interest Only
Adjustment Date due to adjustments to the Mortgage Interest Rate on each
Interest Only Adjustment Date, in both cases with interest calculated and
payable in arrears, sufficient to amortize the Mortgage Loan fully by the stated
maturity date, over an original term of not more than 30 years from commencement
of amortization (except with respect to any 30/40 Mortgage Loans). No 30/40
Mortgage Loan has a balloon payment due prior to the date which is 15 years
following the origination date. The Due Date of the first payment under the
Mortgage Note is no more than 60 days from the date of the Mortgage Note.
Schedule 1-5
(s) Customary Provisions. The Mortgage Note has a stated maturity.
The Mortgage contains customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the realization against
the Mortgaged Property of the benefits of the security provided thereby,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. Upon default by a
Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale of, the
Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage
Loan will be able to deliver good and merchantable title to the Mortgaged
Property. There is no homestead or other exemption or other right available to
the Mortgagor or any other person, or restriction on the Seller or any other
person, including without limitation, any federal, state or local, law,
ordinance, decree, regulation, guidance, attorney general action, or other
pronouncement, whether temporary or permanent in nature, that would interfere
with, restrict or delay, either (y) the ability of the Seller, Buyer or any
servicer or any successor servicer to sell the related Mortgaged Property at a
trustee's sale or otherwise, or (z) the ability of the Seller, Buyer or any
servicer or any successor servicer to foreclose on the related Mortgage. The
Mortgage Note and Mortgage are on forms acceptable to Freddie Mac or Fannie Mae.
(t) Occupancy of the Mortgaged Property. As of the Purchase Date the
Mortgaged Property is lawfully occupied under applicable law. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities. Seller has not received notification from any
Governmental Authority that the Mortgaged Property is in material non-compliance
with such laws or regulations, is being used, operated or occupied unlawfully or
has failed to have or obtain such inspection, licenses or certificates, as the
case may be. Seller has not received notice of any violation or failure to
conform with any such law, ordinance, regulation, standard, license or
certificate. With respect to any Mortgage Loan originated with an
"owner-occupied" Mortgaged Property, the Mortgagor represented at the time of
origination of the Mortgage Loan that the Mortgagor would occupy the Mortgaged
Property as the Mortgagor's primary residence.
Schedule 1-6
(u) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral, pledge account or other security except the lien
of the corresponding Mortgage and the security interest of any applicable
Security Agreement.
(v) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Custodian or
Buyer to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor.
(w) Transfer of Mortgage Loans. Except with respect to Mortgage
Loans registered with MERS, the Assignment of Mortgage is in recordable form and
is acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located.
(x) Due-On-Sale. The Mortgage contains an enforceable provision for
the acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder.
(y) No Buydown Provisions; No Graduated Payments or Contingent
Interests. Except with respect to Agency Mortgage Loans, the Mortgage Loan does
not contain provisions pursuant to which Monthly Payments are paid or partially
paid with funds deposited in any separate account established by Seller, the
Mortgagor, or anyone on behalf of the Mortgagor, or paid by any source other
than the Mortgagor nor does it contain any other similar provisions which may
constitute a "buydown" provision. The Mortgage Loan is not a graduated payment
mortgage loan (except with respect to 30/40 Mortgage Loans) and the Mortgage
Loan does not have a shared appreciation or other contingent interest feature.
(z) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the Purchase Date have been consolidated with the
outstanding principal amount secured by the Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term.
The lien of the Mortgage securing the consolidated principal amount is expressly
insured as having first lien priority by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated interest or by
other title evidence acceptable to Fannie Mae and Freddie Mac. The consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan.
(aa) No Condemnation Proceeding. There have not been any
condemnation proceedings with respect to the Mortgaged Property and Seller has
no knowledge of any such proceedings.
(bb) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination and collection practices used by the originator,
each servicer of the Mortgage Loan and Seller with respect to the Mortgage Loan
have been in all respects in compliance with Accepted Servicing Practices,
applicable laws and regulations, and have been in all respects legal and proper.
With respect to escrow deposits and Escrow Payments, all such payments are in
the possession of, or under the control of, Seller and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been collected in
full compliance with state and federal law. An escrow of funds is not prohibited
by applicable law and has been established in an amount sufficient to pay for
every item that remains unpaid and has been assessed but is not yet due and
payable. No escrow deposits or Escrow Payments or other charges or payments due
Seller have been capitalized under the Mortgage or the Mortgage Note. All
Mortgage Interest Rate adjustments have been made in strict compliance with
state and federal law and the terms of the related Mortgage Note. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited.
Schedule 1-7
(cc) Conversion to Fixed Interest Rate. Except as allowed by Fannie
Mae or Freddie Mac or otherwise as expressly approved in writing by Buyer, with
respect to adjustable rate Mortgage Loans, the Mortgage Loan is not convertible
to a fixed interest rate Mortgage Loan.
(dd) Other Insurance Policies. No action, inaction or event has
occurred and no state of facts exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage under any
applicable special hazard insurance policy, PMI Policy or bankruptcy bond,
irrespective of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other compensation has
been or will be received by Seller or by any officer, director, or employee of
Seller or any designee of Seller or any corporation in which Seller or any
officer, director, or employee had a financial interest at the time of placement
of such insurance.
(ee) Servicemembers Civil Relief Act. The Mortgagor has not notified Seller, and
Seller has no knowledge, of any relief requested or allowed to the Mortgagor
under the Servicemembers Civil Relief Act of 2003. (ff) Appraisal. The Mortgage
File contains an appraisal of the related Mortgaged Property signed prior to the
funding of the Mortgage Loan by a qualified appraiser, duly appointed by Seller,
who had no interest, direct or indirect in the Mortgaged Property or in any loan
made on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and the appraisal and appraiser
both satisfy the requirements of Fannie Mae or Freddie Mac and Title XI of the
Federal Institutions Reform, Recovery, and Enforcement Act of 1989 as amended
and the regulations promulgated thereunder, all as in effect on the date the
Mortgage Loan was originated.
(gg) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by
applicable law with respect to the making of adjustable rate mortgage loans, and
Seller maintains such statement in the Mortgage File.
(hh) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction or rehabilitation of
a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property.
Schedule 1-8
(ii) No Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the Purchase Date (whether or not known to Seller on or
prior to such date) which has resulted or will result in an exclusion from,
denial of, or defense to coverage under any private mortgage insurance
(including, without limitation, any exclusions, denials or defenses which would
limit or reduce the availability of the timely payment of the full amount of the
loss otherwise due thereunder to the insured) whether arising out of actions,
representations, errors, omissions, negligence, or fraud of Seller, the related
Mortgagor or any party involved in the application for such coverage, including
the appraisal, plans and specifications and other exhibits or documents
submitted therewith to the insurer under such insurance policy, or for any other
reason under such coverage, but not including the failure of such insurer to pay
by reason of such insurer's breach of such insurance policy or such insurer's
financial inability to pay.
(jj) Capitalization of Interest. The Mortgage Note does not by its
terms provide for the capitalization or forbearance of interest.
(kk) No Equity Participation. No document relating to the Mortgage
Loan provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a sharing in the
appreciation of the value of the Mortgaged Property. The indebtedness evidenced
by the Mortgage Note is not convertible to an ownership interest in the
Mortgaged Property or the Mortgagor and Seller has not financed nor does it own
directly or indirectly, any equity of any form in the Mortgaged Property or the
Mortgagor.
(ll) Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan
have not been and shall not be used to satisfy, in whole or in part, any debt
owed or owing by the Mortgagor to Seller or any Affiliate or correspondent of
Seller, except in connection with a refinanced Mortgage Loan.
(mm) Origination Date. The Purchase Date is no more than ninety (90)
days following the origination date.
(nn) No Exception. The Custodian has not noted any material
exceptions on a Custodial Mortgage Loan Schedule with respect to the Mortgage
Loan which would materially adversely affect the Mortgage Loan or Buyer's
interest in the Mortgage Loan.
(oo) Mortgage Submitted for Recordation. The Mortgage either has
been or will promptly be submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Mortgaged Property
is located.
(pp) Documents Genuine. Such Purchased Mortgage Loan and all
accompanying collateral documents are complete and authentic and all signatures
thereon are genuine. Such Purchased Mortgage Loan is a "closed" loan fully
funded by Seller and held in Seller's name.
(qq) Bona Fide Loan. Such Purchased Mortgage Loan arose from a bona
fide loan, complying with all applicable State and Federal laws and regulations,
to persons having legal capacity to contract and is not subject to any defense,
set-off or counterclaim.
Schedule 1-9
(rr) Other Encumbrances. To the best of Seller's knowledge, any
property subject to any security interest given in connection with such
Purchased Mortgage Loan is not subject to any other encumbrances other than a
stated first mortgage, if applicable, and encumbrances which may be allowed
under the Acquisition Guidelines.
(ss) Description. Each Purchased Mortgage Loan conforms to the
description thereof as set forth on the related Custodial Mortgage Loan Schedule
delivered to the Custodian and Buyer.
(tt) Located in U.S. No collateral (including, without limitation,
the related real property and the dwellings thereon and otherwise) relating to a
Purchased Mortgage Loan is located in any jurisdiction other than in one of the
fifty (50) states of the United States of America or the District of Columbia.
(uu) Acquisition Guidelines. Each Purchased Mortgage Loan has been
originated in accordance with the Acquisition Guidelines (including all
supplements or amendments thereto) previously provided to Buyer.
(vv) Aging. Such Purchased Mortgage Loan has not been subject to a
Transaction hereunder for more than 364 days.
(ww) Committed Mortgage Loans. Each Committed Mortgage Loan is
covered by a Take-out Commitment, does not exceed the availability under such
Take-out Commitment (taking into consideration mortgage loans which have been
purchased by the respective Take-out Investor under the Take-out Commitment and
mortgage loan which Seller has identified to Buyer as covered by such Take-out
Commitment) and conforms to the requirements and the specifications set forth in
such Take-out Commitment and the related regulations, rules, requirements and/or
handbooks of the applicable Take-out Investor and is eligible for sale to and
insurance or guaranty by, respectively the applicable Take-out Investor and
applicable insurer. Each Take-out Commitment is a legal, valid and binding
obligation of Seller enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(xx) Primary Mortgage Guaranty Insurance. Each Mortgage Loan is
insured as to payment defaults by a policy of primary mortgage guaranty
insurance in the amount required where applicable, and by an insurer approved,
by the applicable Take-out Investor, if applicable, and all provisions of such
primary mortgage guaranty insurance have been and are being complied with, such
policy is in full force and effect, and all premiums due thereunder have been
paid.
(yy) Predatory Lending Regulations; High Cost Loans. None of the
Mortgage Loans are classified as High Cost Mortgage Loans.
Schedule 1-10
M-1