EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
by and among
AH MORTGAGE ACQUISITION CO., INC.,
AMERICAN HOME MORTGAGE INVESTMENT CORP.,
AMERICAN HOME MORTGAGE CORP.
and
AMERICAN HOME MORTGAGE SERVICING INC.
dated as of
September 25, 2007
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TABLE OF CONTENTS
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Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
1
Section 1.1
Definitions...............................................................1
Section 1.2
Interpretation...........................................................16
ARTICLE II
PURCHASE AND SALE OF ASSETS
17
Section 2.1
Purchase and Sale of
Assets..............................................17
Section 2.2
Excluded
Assets..........................................................18
Section 2.3
Post-Final Closing Date Asset
Deliveries.................................20
Section 2.4
Non-Assignment of
Assets.................................................20
Section 2.5
Assumption of Certain
Liabilities........................................21
Section 2.6
Retained
Liabilities.....................................................21
Section 2.7
Initial Closing; Final
Closing...........................................21
Section 2.8
Ancillary
Agreements.....................................................22
Section 2.9
Deliveries by
Purchaser..................................................22
Section 2.10 Deliveries
by
Sellers....................................................23
Section 2.11 "As Is
Where Is"
Transaction.............................................24
ARTICLE III
TRANSFERRED EMPLOYEES
24
Section 3.1
Transferred
Employees....................................................24
Section 3.2
Employee Benefit
Plans...................................................25
Section 3.3
COBRA....................................................................25
Section 3.4
WARN.....................................................................25
Section 3.5
Cooperation..............................................................25
Section 3.6 No
Third Party
Rights....................................................25
ARTICLE IV
PURCHASE PRICE; ADJUSTMENT; ALLOCATION
25
Section 4.1
Purchase
Price...........................................................25
Section 4.2
Allocation of the Purchase
Price.........................................27
Section 4.3
Deposit..................................................................28
Section 4.4
Dispute
Escrow...........................................................28
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
29
Section 5.1
Authorization; Validity of Agreement; Seller
Action......................29
Section 5.2
Organization and Good
Standing...........................................30
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TABLE OF CONTENTS
(continued)
Page
Section 5.3
Governmental Consents and Approvals; No
Violations.......................30
Section 5.4
Noncontravention.........................................................31
Section 5.5
Title to Assets and Properties;
Liens....................................31
Section 5.6
Mortgage Servicing Portfolio; Servicing Agreements; Assumed
Contracts; Mortgage
Loans................................................31
Section 5.7
Compliance with
Laws.....................................................33
Section 5.8
Litigation;
Proceedings..................................................33
Section 5.9
Sufficiency of
Assets....................................................33
Section 5.10 Financial
Statements.....................................................34
Section 5.11
Seller/Servicer
Status...................................................34
Section 5.12 MERS
Membership..........................................................34
Section 5.13 Status of
Mortgage
Loans.................................................35
Section 5.14
Brokers..................................................................35
ARTICLE VI
COVENANTS
35
Section 6.1
Interim Operations of
Sellers............................................35
Section 6.2
Operations Following the Initial
Closing.................................37
Section 6.3
Access; Books and
Records................................................40
Section 6.4
Cooperation; Efforts and Actions to Cause
Closings.......................41
Section 6.5
Confidentiality..........................................................42
Section 6.6
Subsequent
Actions.......................................................43
Section 6.7
Post-Final Closing Amounts Received and
Paid.............................43
Section 6.8
Notices of Certain
Events................................................43
Section 6.9
Interim Financial
Information............................................44
Section 6.10 Procedures
for Transfer of
Servicing.....................................44
Section 6.11 Bankruptcy
Actions.......................................................46
Section 6.12
Maintenance of
Insurance.................................................47
Section 6.13
Laws.....................................................................47
Section 6.14 Financing
Assistance and Protection of Purchased
Assets..................47
Section 6.15 Excluded
Contracts.......................................................49
Section 6.16 Assumption
of Certain Assumed
Contracts..................................49
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TABLE OF CONTENTS
(continued)
Page
Section 6.17 Provisions
Regarding
Advances............................................49
Section 6.18
FNMA.....................................................................50
Section 6.19 Option to
Purchase Excluded
Assets.......................................51
Section 6.20
Compensation
Plan........................................................51
Section 6.21 Approved
FNMA
Servicer...................................................51
ARTICLE VII
BANKRUPTCY COURT MATTERS
52
Section 7.1
Competing
Transaction....................................................52
Section 7.2
Break-Up
Fee.............................................................52
Section 7.3
Bankruptcy Court
Filings.................................................52
ARTICLE VIII CONDITIONS
53
Section 8.1
Conditions to Obligations of Purchaser and Sellers On or Prior
to
the Initial Closing
Date.................................................53
Section 8.2
Conditions to Obligations of Sellers On or Prior to the Initial
Closing
Date.............................................................53
Section 8.3
Conditions to Obligations of Purchaser On or Prior to the
Initial
Closing
Date.............................................................54
Section 8.4
Condition to Obligations of Purchaser On or Prior to the Final
Closing
Date.............................................................55
ARTICLE IX
TERMINATION
56
Section 9.1
Termination..............................................................56
Section 9.2
Procedure and Effect of
Termination......................................57
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF PURCHASER
58
Section 10.1 Legal
Power; Organization; Qualification of
Purchaser....................58
Section 10.2 Binding
Agreement........................................................58
Section 10.3 No
Conflict or
Default...................................................58
Section 10.4
Funding..................................................................59
Section 10.5
Brokers..................................................................59
Section 10.6
Independent
Investigation................................................59
ARTICLE XI
MISCELLANEOUS
59
Section 11.1
No
Survival of Representations and
Warranties............................59
Section 11.2 Transfer
Taxes...........................................................59
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TABLE OF
CONTENTS
(continued)
Page
Section 11.3 Fees and
Expenses; Allowed Administrative
Expenses.......................60
Section 11.4 Amendment;
Waiver........................................................60
Section 11.5
Publicity................................................................60
Section 11.6
Notices..................................................................61
Section 11.7
Counterparts.............................................................62
Section 11.8 Entire
Agreement; No Third Party
Beneficiaries...........................62
Section 11.9
Severability.............................................................63
Section 11.10 Governing
Law............................................................63
Section 11.11 Venue and
Retention of
Jurisdiction......................................63
Section 11.12 No Punitive
Damages......................................................64
Section 11.13
Assignment...............................................................64
Section 11.14 Fulfillment of
Obligations...............................................64
Section 11.15 Specific
Performance.....................................................64
Section 11.16 Waiver of Bulk
Transfer Laws.............................................64
Section 11.17 Personal
Liability.......................................................64
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement dated as of September 25, 2007, is
entered
into by and among AH Mortgage Acquisition Co., Inc. ("Purchaser"),
a Delaware
corporation, American Home Mortgage Investment Corp., a Maryland
corporation, as
a debtor and debtor-in-possession ("Parent"), American Home
Mortgage Corp., a
New York corporation, as a debtor and debtor-in-possession, and
American Home
Mortgage Servicing Inc., a Maryland corporation, as a debtor
and
debtor-in-possession (the "Company" and together with American Home
Mortgage
Corp. and Parent, the "Sellers").
WHEREAS, Sellers own and/or are engaged in the Business (as
hereinafter
defined).
WHEREAS, on August 6, 2007 (the "Petition Date"), the Filing
Subsidiaries (as hereinafter defined) filed voluntary petitions
("Petitions")
for relief (the "Bankruptcy Cases") under Chapter 11 of Title 11,
U.S.C. ss.ss.
101, et seq., as amended (the "Bankruptcy Code"), in the United
States
Bankruptcy Court for the District of Delaware (together with any
court having
proper jurisdiction with respect to the Bankruptcy Cases, the
"Bankruptcy
Court").
WHEREAS, upon the terms and subject to the conditions set forth in
this
Agreement, and as authorized under Sections 105, 363 and 365 of the
Bankruptcy
Code, Sellers wish to sell to Purchaser, and Purchaser wishes to
purchase from
Sellers, all of the Purchased Assets (as hereinafter defined), and
Purchaser is
willing to assume all of the Assumed Liabilities (as hereinafter
defined).
WHEREAS, Sellers, as debtors and debtors-in-possession, have
continued
in the possession of their respective assets and in the management
of the
Business pursuant to Sections 1107 and 1108 of the Bankruptcy
Code.
NOW, THEREFORE, in consideration of the foregoing and the
mutual
representations, warranties, covenants and agreements set forth
herein, and for
other good and valuable consideration, the receipt and sufficiency
of which are
hereby acknowledged, the parties hereto, intending to be legally
bound hereby,
agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. As used in this Agreement, in addition to
the
terms defined elsewhere herein, the following terms have the
meanings set forth
below when used herein with initial capital letters:
"Administrative Agent" means Bank of America, N.A. in its capacity
as
the administrative agent under the Existing BOA Bank Facility.
"Administrative Agent Cash Proceeds" has the meaning set forth
in
Section 2.2(a).
"Advances" means (i) with respect to each Servicing Agreement,
including
any Disputed Servicing Agreement, the aggregate outstanding amount
that as of
any date of determination has
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been advanced directly by Sellers from their own funds or funds
borrowed by
Sellers from a third party (but not with funds borrowed from any
custodial or
other accounts under such Servicing Agreement) in connection with
servicing
Mortgage Loans in accordance with the terms of such Servicing
Agreement,
including with respect to principal, interest, Taxes, insurance
premiums and
other advances made pursuant to the applicable Servicing Agreement;
and (ii)
with respect to the Servicing Rights Held for Sale and the Mortgage
Loans set
forth on Schedule 6.10(f), the aggregate outstanding amount that as
of any date
of determination has been advanced directly by Sellers from their
own funds or
funds borrowed by Sellers from a third party (but not with funds
borrowed from
any custodial or other accounts maintained in connection with
performing the
Servicing Rights Held for Sale or servicing the Mortgage Loans set
forth on
Schedule 6.10(f)) in connection with the Company's performing the
Servicing
Rights Held for Sale or servicing of the Mortgage Loans set forth
on Schedule
6.10(f), including with respect to principal, interest, Taxes,
insurance
premiums and other advances.
"Advances Amount" means, as of the close of business on the
Business Day
immediately prior to the Initial Closing Date (the "Advances
Amount
Determination Time"), the amount of outstanding Advances which have
been paid
out by Sellers and not yet collected from third parties.
"Advances Amount Determination Time" has the meaning set forth in
the
definition of Advances Amount.
"Affiliate" means a Person that directly, or indirectly through one
or
more intermediaries, controls, is controlled by or is under common
control with
the Person specified. For purposes of this definition, the term
"control" of a
Person means the possession, direct or indirect, of the power to
(i) vote 50% or
more of the voting securities of such Person or (ii) direct or
cause the
direction of the management and policies of such Person, whether by
contract or
otherwise, and the terms and phrases "controlling," "controlled by"
and "under
common control with" have correlative meanings.
"Agreement" or "this Agreement" means this Asset Purchase
Agreement,
together with the schedules and exhibits hereto.
"Allocation Schedule" has the meaning specified in Section 4.2
hereof.
"Ancillary Agreements" has the meaning specified in Section 2.8
hereof.
"Ancillary Income" means any and all income, revenue, fees,
expenses,
charges or other moneys that Sellers are entitled to receive,
collect or retain
as servicer, subservicer or master servicer pursuant to the
Servicing Agreements
(other than Servicing Fees).
"Applicable Requirements" means, with respect to each Seller,
all
applicable requirements of Law, including those relating to
servicing, insuring
or filing of claims in connection with Mortgage Loans, and all
contractual
obligations of Sellers.
"Arbitrating Accountants" has the meaning specified in Section
4.1(c)
hereof.
"Assigned Leases" means those Leases used in the operation of
the
Business listed on Schedule 1.1(b).
"Assignment and Assumption Agreement" means the assignment and
assumption agreement to be executed by Sellers in favor of
Purchaser in respect
of the Assumed Contracts and Assumed Liabilities, in form and
substance
reasonably satisfactory to Sellers and Purchaser.
"Assignment and Assumption of Lease Agreements" means the
assignment and
assumption of lease agreements to be executed by Sellers in favor
of Purchaser
in respect of the Real Property Leases, in form and substance
reasonably
satisfactory to Sellers and Purchaser.
"Assumed Contracts" has the meaning set forth in Section
2.1(b).
"Assumed Liabilities" means the (i) obligations of Sellers as
servicer,
subservicer or master servicer arising under any Servicing
Agreement (other than
Disputed Servicing Agreements unless specifically assumed by
Purchaser
hereunder) including, specifically, the obligation to advance
delinquent
scheduled principal and interest payments under any Servicing
Agreements to the
extent such advance could not be borrowed from any custodial or
other accounts
under such Servicing Agreement, after assignment thereof to
Purchaser at the
Final Closing, (ii) obligations of Sellers under any Assigned Lease
or Assumed
Contract (other than Servicing Agreements) after the assignment
thereof to
Purchaser at the Final Closing, (iii) all Losses incurred by
Sellers or their
Affiliates in the operation of the Business pursuant to Sections
6.1 and 6.2 or
otherwise arising as a result of, or in connection with, the
continued ownership
by Sellers of the Purchased Assets and operation of the Business
after the
Initial Closing Date, including, without limitation, any Claims and
Liabilities
of the Company arising with respect to Business Employees whose
employment is
terminated after the Initial Closing under WARN, COBRA or any other
similar Law,
and (iv) the Liabilities of Sellers set forth on Schedule 1.1(c);
provided,
however, with respect to clause (iii) no such Liability shall
constitute an
Assumed Liability to the extent it relates to any period, or act or
omission
occurring, prior to the Initial Closing (e.g., severance or
retention accrued
prior to the Initial Closing but not payable until after the
Initial Closing).
"Assumed Pre-Petition Contracts" has the meaning specified in
Section
6.11(c) hereof.
"Assumed Rights and Claims" has the meaning specified in Section
2.1(j)
hereof.
"Auction" has the meaning specified in the Revised Sale
Procedures
Order.
"Auction Date" has the meaning specified in the Revised Sale
Procedures
Order.
"Bankruptcy Cases" has the meaning specified in the Recitals.
"Bankruptcy Code" has the meaning specified in the Recitals.
"Bankruptcy Court" has the meaning specified in the Recitals.
"Bankruptcy Exceptions" means any limitations, omissions or
failures of
performance arising due to the fact that the Sellers are operating
as debtors in
possession under the
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Bankruptcy Code, including but not limited to, (i) Sellers'
inability to
maintain the services of their officers or other employees or the
fact that a
substantial number of Sellers' employees have left their positions
and continue
to leave their positions, (ii) Sellers' inability to maintain the
continued
operation of any operating function at a standard consistent with
past practice,
(iii) vendors and counterparties of Sellers failing to continue to
perform their
obligations to Sellers, and (iv) ongoing litigation with respect to
the Business
and the Purchased Assets.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy
Procedure.
"Bills of Sale" means the bills of sale to be executed by Sellers
in
favor of Purchaser in respect of the Purchased Assets, in form and
substance
reasonably satisfactory to Sellers and Purchaser.
"Books and Records" means all books, ledgers, files, reports,
plans,
records, manuals and other materials (in any form or medium)
Related to the
Business or directly relating to the Purchased Assets, and the
Assumed
Liabilities.
"Break-Up Fee" has the meaning specified in Section 7.2 hereof.
"Budget" means a budget prepared in substantially the same manner
and
using substantially the same assumptions utilized in the
preparation of the
budget annexed to the Cash Collateral Order (except to include
Professional Fees
as such term is defined in the Sale Approval Order), which budget
shall cover
the period following the Initial Closing Date and give effect to a
10% variance
(other than with respect to cash payments to the lenders provided
therein, if
any); provided that Sellers and Purchaser shall in good faith
attempt to agree
to a revised budget for the period following the Initial Closing
Date through
the Final Closing Date and, in the event of such agreement, such
revised budget
shall be deemed the "Budget" hereunder.
"Business" means the business (whether existing now or existing at
or
before the Initial Closing) of providing servicing for Mortgage
Loans, including
pursuant to the Servicing Agreements.
"Business Day" means a day other than Saturday, Sunday or any day
on
which the Federal Reserve Bank of New York is closed.
"Business Employee" means each employee of Sellers whose sole
responsibility is to provide services Related to the Business and
each other
employee of Sellers having significant responsibility Related to
the Business
listed on the Business Employee List and any other such employee
hired after the
date hereof not in violation of any provision hereof.
"Business Employee List" has the meaning specified in Section
3.1
hereof.
"Business Interim Financial Statements" has the meaning specified
in
Section 5.10 hereof.
"Cash Collateral Order" means the Final Order (i) Authorizing
Debtors'
Use of Cash Collateral and (ii) Granting Replacement Liens and
Adequate
Protection to Certain Pre-Petition
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Secured Creditors, dated September 4, 2007, entered by the
Bankruptcy Court in
the Bankruptcy Cases.
"Cash Deposit" has the meaning specified in Section 4.3 hereof.
"Charter Documents" means, with respect to any Person, the
certificate
or articles of incorporation and by-laws, the certificate of
limited
partnership, the limited partnership agreement, the partnership
agreement or the
limited liability company operating agreement and certificate of
formation or
articles of organization or such other organizational documents of
such Person.
"Claims" means any right to payment, whether or not such right
is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured,
unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, known
or unknown; or any right to an equitable remedy, including for
breach of
performance if such breach gives rise to a right of payment,
whether or not such
right to an equitable remedy is reduced to judgment, fixed,
contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
"COBRA" means the U.S. Consolidated Omnibus Budget Reconciliation
Act of
1985, as amended, or any similar State or Local Law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means Bank of America, N.A. in its capacity as
the
collateral agent under the Existing BOA Bank Facility.
"Company" has the meaning set forth in the preamble.
"Competing Transaction" has the meaning specified in Section 7.1
hereof.
"Computer Equipment" means all equipment and devices (including
data
processing hardware and related telecommunications equipment,
media, and tools)
Related to the Business, including Sellers' rights under all
related warranties,
including all items listed in Schedule 1.1(g).
"Confidential Information" has the meaning specified in Section
6.5(b)
hereof.
"Confidentiality Agreement" has the meaning specified in Section
9.2
hereof.
"Consent" means any consent, approval, license, waiver or
authorization.
"Contracts" means all agreements, contracts, leases and
subleases,
purchase orders, arrangements, commitments and licenses.
"Copyrights" has the meaning set forth in the definition of
"Intellectual Property."
"Cure Amount" means collectively the Initial Cure Amount, the
Interim
Cure Amount and Purchaser's Cure Amount.
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"Cure Escrow Agreement" means an escrow agreement by and among
Purchaser, Sellers and an escrow agent reasonably agreeable to each
of Purchaser
and Sellers to be entered into at the Initial Closing, in
substantially the form
set forth in Exhibit A hereto.
"Defaulted Mortgage Loan" means a Mortgage Loan that is 60 days or
more
delinquent in accordance with the OTS method of calculating
delinquencies.
"Deposit Escrow Agent" means a bank or other financial
institution
selected by Purchaser and reasonably acceptable to the Company.
"Deposit Escrow Agreement" means a deposit escrow agreement by and
among
Purchaser, Sellers and the Deposit Escrow Agent, as escrow agent,
in
substantially the form set forth in Exhibit B hereto.
"DIP Financing Agreement" means the Debtor-In-Possession Loan
and
Security Agreement, dated August 6, 2007, among Parent, as debtor
and
debtor-in-possession, certain Affiliates, as debtors and
debtors-in-possession,
the lenders party thereto and WLR, as Administrative Agent, as such
may be
amended from time to time.
"Disclosure Schedules" means the disclosure schedules delivered
by
Sellers to Purchaser in connection with this Agreement.
"Dispute Amount" has the meaning set forth in Section 4.4.
"Dispute Escrow Agent" means the escrow agent party to the
Dispute
Escrow Agreement.
"Dispute Escrow Agreement" means an escrow agreement by and
among
Purchaser, Sellers and an escrow agent reasonably agreeable to each
of Purchaser
and Sellers to be entered into at the Initial Closing, in
substantially the form
set forth in Exhibit C hereto.
"Disputed Servicing Agreement" means a Servicing Agreement
described in
and set forth on Schedule 1.1(k) .
"Enforceability Exceptions" has the meaning specified in Section
5.1
hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended.
"ERISA Affiliate" means any trade or business, whether or not
incorporated, (i) under common control within the meaning of
Section 4001(b)(1)
of ERISA with any Seller or (ii) which together with any Seller
would be deemed
a "single employer" within the meaning of Section 414 of the
Code.
"Exchange Act" means the U.S. Securities Exchange Act of 1934,
as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning specified in Section 2.2
hereof.
"Excluded Contracts" has the meaning specified in Section 6.15
hereof.
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"Existing
BOA Bank Facility" means the Second Amended and Restated
Credit Agreement, dated August 10, 2006, among Sellers, certain of
their
Affiliates, Bank of America, N.A., as administrative agent, and
certain other
parties, as amended.
"Expense Reimbursement" means a reimbursement to Purchaser not to
exceed
$2.0 million of Purchaser's actual reasonable documented
out-of-pocket expenses
incurred in connection with the transactions contemplated by this
Agreement,
including professional fees.
"Fannie Mae Stipulation Order" means that certain Order
Granting
Debtors' Motion Pursuant to Section 105(A) of the Bankruptcy Code
and Bankruptcy
Rule 9019 for an Order Approving and Authorizing Compromise and
Settlement
Agreement with Fannie Mae granted by the Bankruptcy Court on
September 4, 2007,
as amended or supplemented.
"Filing Subsidiaries" means Parent and the Company and the
Affiliates of
the Company set forth on Schedule 1.1(f).
"Final Closing" has the meaning specified in Section 2.7
hereof.
"Final Closing Date" has the meaning specified in Section 2.7
hereof.
"Final Order" means an order or judgment: (i) as to which the time
to
appeal, petition for certiorari or move for review or rehearing has
expired and
as to which no appeal, petition for certiorari or other proceeding
for review or
rehearing has been filed or sought or (ii) if an appeal, writ of
certiorari,
reargument or rehearing has been filed or sought, the order or
judgment has been
affirmed by the highest court to which such order or judgment was
appealed or
certiorari has been denied, or reargument or rehearing shall have
been denied or
resulted in no modification of such order or judgment, and the time
to take any
further appeal or to seek certiorari or further reargument or
rehearing has
expired; provided, that the theoretical possibility that a motion
under Rule 59
or Rule 60 of the Federal Rules of Civil Procedure, or any
analogous rule under
the Bankruptcy Rules, may be filed with respect to such order or
judgment shall
not prevent such order or judgment from being considered a Final
Order.
"Financing" has the meaning specified in Section 6.14.
"Fixtures and Equipment" means all furniture, fixtures,
furnishings,
vehicles, equipment, leasehold improvements, Computer Equipment,
tools and other
tangible personal property Related to the Business, wherever
located, including
any of the foregoing purchased subject to any conditional sales or
title
retention agreement in favor of any other Person.
"FNMA" means the Federal National Mortgage Association and any
successor
agency.
"FNMA Servicing Rights" has the meaning specified in Section
6.18
hereof.
"GAAP" means United States generally accepted accounting
principles,
applied on a consistent basis.
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"Government Entity" means any foreign, federal, state or local
court,
administrative body or other governmental or quasi-governmental
entity with
competent jurisdiction, or any agency, instrumentality or authority
thereof,
including the FNMA and the Federal Trade Commission.
"Government Requirements" has the meaning specified in Section
5.3
hereof.
"Governmental Authorizations" means all licenses, permits,
certificates
and other authorizations and approvals Related to the Business or
relating to
the Purchased Assets, the Assumed Liabilities or the Assumed
Contracts and
issued by or obtained from a Government Entity.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvement Act of
1976,
as amended.
"Independent Accounting Firm" has the meaning specified in Section
4.2
hereof.
"Initial Closing" has the meaning specified in Section 2.7
hereof.
"Initial Closing Date" means the date upon which the Initial
Closing
occurs.
"Initial Closing Date Mortgage Loan Schedule" has the meaning
specified
in Section 5.6(a) hereof.
"Initial Closing Date Report" has the meaning specified in
Section
4.1(b) hereof.
"Initial Closing Servicing Balance" means an amount equal to the
unpaid
principal balance of the Mortgage Loans under the Servicing
Agreements as of the
close of business on the day prior to the Initial Closing Date,
after
application of all payments received on or prior to such date.
"Initial Cure Amount" means the maximum amount payable or that may
be
payable by Sellers in order to cure all defaults on Assumed
Contracts as of the
date the Sale Approval Order is entered by the Bankruptcy Court and
effectuate
the assumption by Sellers of an Assumed Contract and the assignment
to Purchaser
(or Purchaser's designee) pursuant to Section 365 of the Bankruptcy
Code (a) as
provided in the Sale Approval Order or other Order of the
Bankruptcy Court,
entered at or prior to the Sale Hearing or (b) pursuant to a
written agreement
among the parties to the Assumed Contract (subject, in the case of
Sellers, to
the prior written consent of the Administrative Agent and prior
consultation
with the official committee of unsecured creditors appointed in the
Bankruptcy
Cases) and Purchaser (or such designee) that is in effect prior to
the date on
which the Sale Approval Order is entered by the Bankruptcy
Court.
"Intellectual Property" means (i) trademarks, service marks,
brand
names, certification marks, collective marks, d/b/a's, domain
names, logos,
symbols, trade dress, assumed names, fictitious names, trade names
and other
indicia of origin, together with the goodwill associated with any
of the
foregoing, all applications and registrations for the foregoing,
including all
renewals of same (collectively, "Trademarks"); (ii) inventions and
discoveries,
whether patentable or not, and all patents, registrations,
invention disclosures
and applications therefor, including divisions, continuations,
continuations-in-part and renewal applications, and including
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renewals, extensions and reissues (collectively, "Patents"); (iii)
trade
secrets, confidential information and know-how, including
processes, schematics,
business methods, formulae, drawings, prototypes, models, designs,
customer
lists and supplier lists (collectively, "Trade Secrets"); (iv)
published and
unpublished works of authorship, whether copyrightable or not
(including
databases and other compilations of information), including mask
rights,
copyrights therein and thereto, registrations and applications
therefor, and all
renewals, extensions, restorations and reversions thereof
(collectively,
"Copyrights"); and (v) any other intellectual property or
proprietary rights.
"Interim Cure Amount" means the maximum amount, other than the
Initial
Cure Amount, payable or that may be payable by Sellers in order to
cure all
defaults on Assumed Contracts as of the Initial Closing Date and
effectuate the
assumption by Sellers of an Assumed Contract and the assignment to
Purchaser (or
Purchaser's designee) pursuant to Section 365 of the Bankruptcy
Code.
"IRS" means the Internal Revenue Service.
"IT Assets" means Technical Documentation, Software Contracts
and
Computer Equipment, in each case Related to the Business.
"Knowledge of Sellers" concerning a particular subject, area or
aspect
of the Business or the affairs of Seller, means the actual (and not
constructive
or imputed) knowledge of any individual listed on Schedule 1.1(a)
after making a
reasonable inquiry as to the accuracy of the representation and
warranty in
question.
"Law" means any law, statute, ordinance, rule, regulation, code,
Order,
judgment, writ, injunction or decree enacted, issued, promulgated,
enforced, or
entered by a Government Entity.
"Lease" means each lease or other Contract pursuant to which a
Seller
leases any Real Property or personal property, either as lessor or
lessee, and
all ancillary documents relating thereto.
"Leased Real Property" means all Real Property, including
leasehold
improvements, that are the subject of the Assigned Leases, as set
forth on
Schedule 1.1(d).
"Liabilities" means any and all claims, debts, liabilities,
commitments
and obligations of any kind, whether fixed, contingent or absolute,
matured or
unmatured, liquidated or unliquidated, accrued or not accrued,
asserted or not
asserted, known or unknown, determined, determinable or otherwise,
whenever or
however arising (including whether arising out of any contract or
tort based on
negligence or strict liability) and whether or not the same would
be required by
GAAP to be reflected in financial statements or disclosed in the
notes thereto,
including all costs and expenses relating thereto.
"Lien" means, as applied to any Person, any lien, charge, claim,
pledge,
conditional sale agreement or other title retention agreement,
lease, mortgage,
deed of trust, right of first refusal, security interest, option,
proxy, voting
trust or agreement, transfer restriction or other encumbrance
(including the
filing of, or agreement to give, any financing statement under the
Uniform
Commercial Code of any jurisdiction).
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<PAGE>
"Loss" or "Losses" means any and all losses, Liabilities, costs,
claims,
damages, penalties and expenses (including reasonable attorneys'
fees and
expenses and costs of investigation, enforcement and
litigation).
"Material Adverse Effect" means any result, occurrence, change,
effect,
event or circumstance, that, individually or in the aggregate, has
had or would
reasonably be expected to have, a material adverse effect or change
in the
Purchased Assets, the Assumed Liabilities, the Assumed Contracts
and the
Business taken as a whole or the ability of Sellers to perform
their obligations
under this Agreement, except for any result, occurrence, change,
effect, event,
or circumstance relating to (i) the economy or the financial
markets in general,
except to the extent specifically related to or disproportionately
impacting
Sellers, the Purchased Assets, the Assumed Liabilities, the Assumed
Contracts or
the Business, (ii) the industry in which the Business operates in
general and
not specifically relating to the Business, except to the extent
disproportionately impacting Sellers, the Purchased Assets, the
Assumed
Liabilities, the Assumed Contracts or the Business, (iii) the
announcement of
this Agreement or the transaction contemplated hereby or the
identity of
Purchaser, (iv) changes in applicable Laws after the date hereof,
(v) the fact
that Sellers will be operating as debtors-in-possession under the
Bankruptcy
Code, (vi) changes in GAAP or regulatory accounting principles
after the date
hereof, or (vii) changes in the value of the Mortgage Loans or the
Servicing
Rights.
"Mortgage Loan Documents" means, for each Mortgage Loan, all
documents
pertaining to such Mortgage Loan, including the Mortgage Note, the
mortgage or
deed of trust and all assignments of the mortgage or deed of trust,
all
endorsements and allonges to the Mortgage Note, the title insurance
policy with
all endorsements thereto, any security agreement and financing
statements, any
account agreements, and any assignments, assumptions,
modifications,
continuations or amendments to any of the foregoing.
"Mortgage Loan Schedule" has the meaning specified in Section
5.6(a)
hereof.
"Mortgage Loans" means any residential mortgage loan or other
extension
of credit secured by a Lien on real property of a borrower.
"Mortgage Note" means, with respect to a Mortgage Loan, a
promissory
note or notes, or other evidence of indebtedness, with respect to
such Mortgage
Loan secured by a mortgage or mortgages, together with any
assignment,
reinstatement, extension, endorsement or modification thereof.
"Mortgaged Property" means a fee simple property (or such other
estate
in real property as is commonly accepted as collateral for Mortgage
Loans that
are subject to secondary mortgage sales or securitizations) that
secures a
Mortgage Note and that is subject to a mortgage.
"Necessary Consent" has the meaning specified in Section 2.4
hereof.
"Net Proceeds" has the meaning specified in Section 4.1(a)
hereof.
"New Financing Liens" means Liens on the Purchased Assets in
respect of
the Financing.
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"Non-Governmental Authorizations" means all licenses, permits,
certificates and other authorizations and approvals other than
Governmental
Authorizations that are (i) held by Sellers or any of their
Affiliates and (ii)
Related to the Business.
"Order" means, with respect to any Person, any award, decision,
injunction, judgment, stipulation, order, ruling, subpoena, writ,
decree,
consent decree or verdict entered, issued, made or rendered by any
Government
Entity affecting such Person or any of its properties or
assets.
"Ordinary Course of Business" means (i) with respect to the period
prior
to the Initial Closing Date, the ordinary course of business of the
Business,
consistent with the customs and practices of Sellers and their
Affiliates from
and after the Petition Date and (ii) with respect to the period
following the
Initial Closing Date, the ordinary course of business of the
Business,
consistent with the customs and practices of Sellers and their
Affiliates from
and after the Petition Date and consistent with the Budget.
"Parent" has the meaning specified in the preamble.
"Permits" has the meaning set forth in Section 5.7 hereof.
"Permitted Lien" means (i) Liens arising under the terms of an
Assumed
Contract and (ii) Liens arising on the Purchased Assets after the
Initial
Closing Date that are not the result of a breach by any Seller of
this
Agreement.
"Person" means a natural person, partnership, corporation,
limited
liability company, business trust, joint stock company, trust,
unincorporated
association, joint venture, Government Entity or other entity or
organization.
"Petitions" has the meaning specified in the Recitals.
"Petition Date" has the meaning specified in the Recitals.
"Plan" means each "employee benefit plan" as defined in Section
3(3) of
ERISA, each deferred compensation and each bonus, retention,
salary
continuation, incentive compensation, stock purchase, stock option,
restricted
stock, phantom stock and other equity compensation plan, program,
agreement or
arrangement; each severance or termination pay, medical,
surgical,
hospitalization, life insurance and other "welfare" plan, fund or
program
(within the meaning of Section 3(1) of ERISA); each profit-sharing,
stock bonus
or other "pension" plan, fund or program (within the meaning of
Section 3(2) of
ERISA); each employment, consulting, retention, change in control,
termination
or severance agreement; and each other employee benefit plan, fund,
program,
agreement or arrangement, in each case, that is sponsored,
maintained or
contributed to or required to be contributed to by Sellers or by
any ERISA
Affiliate, or to which Sellers or an ERISA Affiliate is party,
whether written
or oral, qualified or non-qualified, funded or unfunded, foreign or
domestic,
currently effective or terminated for the benefit of any present or
former
director, employee, consultant, or independent contractors of
Sellers or any
ERISA Affiliate, or with respect to which Sellers or any ERISA
Affiliate has any
Liability, and all insurance policies, fiduciary liability
policies, benefit
administration contracts, actuarial contracts, trusts, escrow,
surety bonds,
letter of credit and other contracts primarily relating (but solely
to the
extent relating) to any of the foregoing.
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<PAGE>
"Privileged Documents" has the meaning specified in Section 2.3
hereof.
"Proximate Cause Party" has the meaning specified in Section
9.1(b)(i)
hereof.
"Purchaser's Cure
Amount" means the amount, other than the Initial Cure
Amount and the Interim Cure Amount, payable in order to cure all
defaults on
Assumed Contracts and effectuate the assumption by Sellers of an
Assumed
Contract and the assignment to Purchaser (or Purchaser's designee)
pursuant to
Section 365 of the Bankruptcy Code (a) as provided in an Order of
the Bankruptcy
Court, or (b) pursuant to a written agreement among the parties to
the Assumed
Contract and Purchaser (or such designee) entered into after the
Initial Closing
Date.
"Purchase Price" has the meaning specified in Section 4.1(a)
hereof.
"Purchased Assets" has the meaning specified in Section 2.1
hereof.
"Purchaser" has the meaning specified in the preamble.
"Purchaser Subservicing Agreement" means a servicing agreement to
be
executed on behalf of each of Sellers and Purchaser, in form and
substance
reasonably satisfactory to Sellers and Purchaser, under which
Purchaser will,
after the Final Closing, serve as a subservicer for certain
Mortgage Loans and
with respect to any Disputed Servicing Agreements that, upon the
Final Closing,
are treated as Excluded Assets in accordance with Section 4.4.
"Real Property" means all real property that is leased, licensed
to,
used, occupied or owned by Sellers Related to the Business or that
is reflected
as an asset of the Company on the Balance Sheet and used in
connection with the
Business.
"Real Property Leases" means the leases pursuant to which a
Seller
occupies the Leased Real Property, including the leases described
in Schedule
1.1(b).
"Reconciliation Calculation" has the meaning set forth in Section
6.2.
"Reconciliation Payment" has the meaning set forth in Section
6.2.
"Reconciliation Payment Report" has the meaning set forth in
Section
6.2.
"Reconciliation Period" has the meaning set forth in Section
6.2.
"Reconciliation Report" has the meaning set forth in Section
6.2.
"Related to the Business" means primarily used or held primarily
for use
in connection with the Business as conducted by Sellers and their
Affiliates.
"REO Property" means a Mortgaged Property acquired by a Seller
through
foreclosure, acceptance of a deed in lieu of foreclosure or
otherwise in
connection with the default or imminent default of a Mortgage
Loan.
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<PAGE>
"Representatives" means, with respect to any Person, the
directors,
officers, employees, accountants, agents, counsel, insurance
brokers, insurance
companies, lenders and other financing sources and other
representatives of such
Person.
"Requested Party" has the meaning specified in Section 6.3(b)
hereof.
"Requesting Party" has the meaning specified in Section 6.3(b)
hereof.
"Retained Liabilities" means any and all Claims and Liabilities of
any
kind or nature whatsoever of a Seller or any of its Affiliates or
affecting any
of the Purchased Assets (other than the Assumed Liabilities),
including any
Claims and Liabilities (i) arising from any early payment default
claims with
respect to any Mortgage Loans, loan repurchase obligations or
premium recapture
obligations or from any deficiency with respect to any existing
loan facilities
of Sellers or relating to obligations as an originator, (ii) except
as otherwise
provided in Section 3.2, relating to any and all Plans, (iii)
relating to any
Disputed Servicing Contract, unless specifically assumed by
Purchaser hereunder,
(iv) relating to any action, event, circumstance or condition
occurring or
existing on or prior to the Initial Closing Date, including (a)
arising, with
respect to employees whose employment is terminated at or before
the Initial
Closing, under WARN, COBRA or any other similar Law, (b) for any
employee
severance relating to the employment or termination of employment
by Sellers of
any employees of Sellers prior to the Initial Closing and (c)
resulting from any
and all lawsuits or governmental examinations, audits or
investigations
commenced and claims made or pertaining to the period prior to the
Initial
Closing Date, (v) for the Initial Cure Amount and the Interim Cure
Amount or
(vi) that are Liabilities of Sellers under this Agreement.
"Revised Sale Procedures" means the Revised Sale Procedures
substantially in the form set forth in Exhibit D.
"Revised Sale Procedures Order" means an Order of the Bankruptcy
Court,
substantially in the form set forth in Exhibit D that, among other
things,
approves the Revised Sale Procedures, designates Purchaser as a
"stalking horse
bidder," and authorizes Sellers to pay the Break-Up Fee and
Expense
Reimbursement in accordance with this Agreement and the Revised
Sale Procedures.
"Sale Approval Order" means a Final Order or Final Orders of
the
Bankruptcy Court issued pursuant to Sections 105, 363, 364 and 365
of the
Bankruptcy Code, in substantially the form set forth in Exhibit E
hereto, that
among other things, (i) authorizes and approves (a) the sale,
transfer and
assignment of the Purchased Assets and the Assumed Liabilities to
Purchaser in
accordance with the terms and conditions of this Agreement, free
and clear of
all Liens (other than Permitted Liens), "claims" (as such term is
defined in the
Bankruptcy Code) and interests, (b) the assumption and assignment
of the Assumed
Contracts and Assumed Liabilities in connection therewith and as a
part thereof
and (c) approves the granting of liens and administrative
superpriority claims
contemplated by Section 6.14; (ii) finds that Purchaser has acted
in "good
faith" within the meaning of Section 363(m) of the Bankruptcy Code;
(iii) finds
that this Agreement was negotiated, proposed and entered into by
the parties
without collusion, in good faith and from arm's length bargaining
positions;
(iv) states the Bankruptcy Court shall retain jurisdiction to
resolve any
controversy or claim arising out of or relating to this
Agreement,
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<PAGE>
or any breach hereof as provided in Section 11.11 hereof; (v)
orders that this
Agreement and the transactions contemplated hereby may be
specifically enforced
against and binding upon, and not subject to rejection or avoidance
by, Sellers
or any chapter 7 or chapter 11 trustee of Sellers; and (vi)
provides that such
Sale Approval Order may only be modified upon notice and pursuant
to a further
Order of the Bankruptcy Court, provided that if such modification
is adverse to
Purchaser, such modification shall be subject to the approval of
Purchaser, in
its sole discretion.
"Sale Hearing" has the meaning specified in the Revised Sale
Procedures
Order.
"Sale Motion" means the motion filed by Parent with the Bankruptcy
Court
for the approval of the Revised Sale Procedures Order and the Sale
Approval
Order, in form and substance reasonably satisfactory to
Purchaser.
"Sellers" has the meaning specified in the preamble.
"Servicing Agreements" means the servicing agreements, pooling
and
servicing agreements, subservicing agreements, master servicing
agreements,
interim servicing agreements and related agreements Related to the
Business
which are contained in the agreements identified on Schedule
1.1(j), other than
(i) any such agreements for the FNMA Servicing Rights if the FNMA
Servicing
Rights, pursuant to Section 6.18, are to be Excluded Assets and
(ii) any such
agreements for the Servicing Rights Held for Sale.
"Servicing Fees" means the sum of (i) the servicing fees (excluding
any
Ancillary Income) paid to a Seller as set forth in a Servicing
Agreement and
(ii) any Ancillary Income.
"Servicing File" means, for each Mortgage Loan, copies of the
Mortgage
Loan Documents and all other documents, files and other items
related thereto
required to be maintained by the servicer pursuant to the
applicable Servicing
Agreement, and, if not specifically set forth in the applicable
Servicing
Agreement, pursuant to the applicable servicing standard.
"Servicing Rights" means all right, title and interest of Sellers
in and
to: (i) the right to service the Mortgage Loans under the Servicing
Agreements,
including the right to receive the Servicing Fees and Ancillary
Income; (ii) the
related master servicing and/or servicing obligations as specified
in each
Servicing Agreement, including the obligations to administer and
collect the
payments of or relating to the Mortgage Loans, and to remit all
amounts and
provide information reporting to others in accordance with the
Servicing
Agreements; (iii) the right of ownership, possession, control or
use of any and
all Servicing Files and Mortgage Loan Documents pertaining to the
servicing of
the Mortgage Loans as provided in the Servicing Agreements; (iv)
the rights with
respect to, and obligations to make, any advances required pursuant
to any
Servicing Agreement, including obligations to reimburse funds
borrowed from any
custodial or other accounts under a Servicing Agreement; (v) the
"clean-up call"
right, if any, to purchase the related Mortgage Loans upon the
aggregate
principal balance thereof being reduced below a specified amount to
the extent
provided for in the Servicing Agreement; and (vi) all other rights,
powers and
privileges of Sellers as the master servicer, servicer or
subservicer under the
Servicing Agreements as expressly set forth therein or as deemed at
Law;
provided, that all indemnification rights and obligations of
Sellers with
respect to acts occurring
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<PAGE>
prior to the Initial Closing Date shall not be transferred to
Purchaser (other
than the Purchased Assets and Assumed Liabilities).
"Servicing Rights Held for Sale" has the meaning specified in
Section
6.1(a) hereof.
"Software Contracts" means all Contracts, agreements, licenses,
and
other commitments and arrangements with any Person respecting the
ownership,
license, acquisition, design, development, distribution, marketing,
development,
use, outsourcing or maintenance of computer program code, related
technical or
user documentation, and databases, in each case Related to the
Business, other
than such of the foregoing as are identified in the Excluded
Assets, including
the items set forth on Schedule 1.1(h) as (i) licenses from third
parties
(development and/or marketing); (ii) licenses from third parties
(internal use
only); (iii) development contracts, work-for-hire agreements,
information
technology outsourcing agreements, and consulting and employment
agreements;
(iv) licenses and sublicenses to others; and (v) maintenance,
support, or
enhancement agreements.
"Subsidiary" means, with respect to any Person, any corporation or
other
organization, whether incorporated or unincorporated, of which (i)
at least a
majority of the securities or other interests having by their terms
ordinary
voting power to elect a majority of the board of directors or
others performing
similar functions with respect to such corporation or other
organization is
directly or indirectly owned or controlled by such Person and/or by
any one or
more of its Subsidiaries, or (ii) such Person or any other
Subsidiary of such
Person is a general partner.
"Tax" or "Taxes" means all taxes, charges, fees, duties,
levies,
penalties or other assessments imposed by any federal, state, local
or foreign
governmental authority, including income, gross receipts, excise,
property,
sales, gain, use, ad valorem, inventory, license, custom duty,
unemployment,
capital stock, transfer, franchise, payroll, withholding, social
security,
minimum estimated, profit, gift, severance, value added,
disability, premium,
recapture, credit, occupation, service, leasing, employment, stamp
and other
taxes, any amounts attributable thereto or attributable to any
failure to comply
with any requirement regarding Tax Returns and any successor,
transferee or
secondary Liability in respect of taxes, including, in each case,
any interest,
penalty, fines or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund,
estimate or information return or statement relating to Taxes,
including any
such document prepared on a consolidated, combined or unitary basis
and also
including any schedule or attachment thereto, and including any
amendment
thereof.
"Technical Documentation" means all technical and descriptive
materials
relating to the acquisition, design, development, use, or
maintenance of
computer code, program documentation, Computer Equipment and
materials Related
to the Business.
"Termination Date" has the meaning specified in Section 9.1
hereof.
"Trade Secrets" has the meaning specified in the "Intellectual
Property"
definition.
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"Trademark Assignments" means the trademark assignments to be
executed
by Sellers in favor of Purchaser in respect of the Trademarks in a
form suitable
for recording in the U.S. trademark office, in form and substance
reasonably
satisfactory to Sellers and Purchaser.
"Trademarks" has the meaning specified in the "Intellectual
Property"
definition.
"Transfer Taxes" means any federal, state, county, local, foreign
and
other sales, use, transfer, conveyance, documentary transfer,
recording or other
similar Tax, fee or charge imposed upon the sale, transfer or
assignment of
property or any interest therein or the recording thereof, and any
penalty,
addition to Tax or interest with respect thereto.
"Transferred Employee" has the meaning specified in Section
3.1(b)
hereof.
"Transferred Intellectual Property" means all the Intellectual
Property
Related to the Business owned by, or licensed to, Sellers or their
Affiliates,
including all invoices, shipping documents, purchase orders and
other preprinted
business forms that have any Trademark thereon, used in connection
with the
Business, including those set forth on Schedule 1.1(i).
"Transition Services Agreement" means the transition services
agreement
to be entered into by and between Purchaser, Parent and the Company
as set forth
in Exhibit F.
"VA" means the Department of Veteran Affairs and any successor
thereto.
"WARN" means the U.S. Worker Adjustment and Retraining Notification
Act
of 1988, as amended or any similar state or local (including, for
the avoidance
of doubt, the California Worker Adjustment and Retraining
Notification Act, as
amended).
"WLR" means WLR Recovery Fund III, L.P.
Section 1.2 Interpretation. When a reference is made in this
Agreement to a section or article, such reference shall be to a
section or
article of this Agreement unless otherwise clearly indicated to the
contrary.
(a) Whenever the words "include" "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the
words "without
limitation."
(b) The words "hereof," "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to
refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and
article, section, paragraph, exhibit and schedule references are to
the
articles, sections, paragraphs, exhibits and schedules of this
Agreement unless
otherwise specified.
(c) The meaning assigned to each term defined herein shall be
equally applicable to both the singular and the plural forms of
such term. Where
a word or phrase is defined herein, each of its other grammatical
forms shall
have a corresponding meaning.
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<PAGE>
(d) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and
permitted
assigns.
(e) A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or
reenactment
thereof, any legislative provision substituted therefor and all
regulations and
statutory instruments issued thereunder or pursuant thereto.
(f) When calculating the period of time before which, within
which or following which any act is to be done or step taken
pursuant to this
Agreement, the date that is the reference date in calculating such
period shall
be excluded. If the last day of such period is a non-Business Day,
the period in
question shall end on the next succeeding Business Day.
(g) Any reference in this Agreement to $ shall mean U.S.
dollars.
(h) The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and, in the event an
ambiguity or
question of intent or interpretation arises, this Agreement shall
be construed
as jointly drafted by the parties hereto and no presumption or
burden of proof
shall arise favoring or disfavoring any party by virtue of the
authorship of any
provision of this Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.1 Purchase and Sale of Assets. On the terms and
subject
to the conditions set forth herein, on the Final Closing Date,
Sellers shall
sell, convey, transfer, assign and deliver to Purchaser (or to one
or more
designees of Purchaser), and Purchaser shall purchase (or cause
such designee or
designees to purchase) from Sellers, free and clear of all Claims
and Liens,
other than Permitted Liens and New Financing Liens, all of the
right, title and
interest of all Sellers and their Affiliates as of the Final
Closing Date in and
to all assets and properties Related to the Business, whether
tangible or
intangible, real, personal or mixed (collectively, the "Purchased
Assets") and
including:
(a) all of Sellers' Servicing Rights and rights to receive
Servicing Fees;
(b) subject to Section 6.15, all rights and benefits under (i)
Contracts set forth in Schedule 2.1(b)(i), (ii) Real Property
Leases, (iii)
Software Contracts, (iv) the Assigned Leases, (v) Servicing
Agreements (subject
to Section 4.4), and (vi) Contracts Related to the Business entered
into or made
by any Seller in the Ordinary Course of Business after the date
hereof, before
the Final Closing Date and in accordance with the covenants herein;
provided,
that except as set forth in Schedule 2.1(b)(ii), in the case of any
such
Contract referred to in this clause (b), Sellers shall have
furnished Purchaser
a true, correct and complete copy of such Contract (collectively,
the "Assumed
Contracts");
(c) all Transferred Intellectual Property;
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<PAGE>
(d)
all Books and Records that are not Excluded Assets;
(e) all Fixtures and Equipment;
(f) all IT Assets;
(g) the Leased Real Property, including all easements and other
rights and interests appurtenant thereto;
(h) subject to Section 6.17, the right to be reimbursed for
Advances;
(i) all credits, prepaid expenses, deferred charges, security
deposits, prepaid items and duties to the extent primarily related
to a
Servicing Agreement, an Assumed Liability, an Assumed Contract or a
Purchased
Asset;
(j) all causes of action, lawsuits, judgments, claims, refunds,
choses in action, rights of recovery, rights of set-off, rights of
recoupment,
demands and any other rights or Claims of any nature available to
or being
pursued by Sellers or any of their Affiliates (A) to the extent
related to the
Purchased Assets within subsections (a) through (i) and (k) through
(n) of this
Section 2.1 and arising or accruing from and after the Initial
Closing or (B)
except as set forth in Section 2.2(c)(ii), to the extent related to
the Assumed
Liabilities or Assumed Contracts, whether arising by way of
counterclaim or
otherwise ("Assumed Rights and Claims");
(k) to the extent transferable, all guaranties, warranties,
indemnities and similar rights in favor of Sellers or any of their
Affiliates to
the extent related to any Servicing Agreement, any Purchased Asset
within
subsections (a) through (j) and (l) through (n) of this Section 2.1
or any
Assumed Liability or Assumed Contract;
(l) to the extent transferable, all Permits held by Sellers
necessary for the operation or ownership of the Business or any of
the Purchased
Assets within subsections (a) through (k) of this Section 2.1 and
Governmental
Authorizations, and all Non-Governmental Authorizations, including
those listed
on Schedule 2.1(l);
(m) to the extent transferable, (i) all rights under insurance
policies and insurance proceeds directly relating to Mortgage Loans
serviced
pursuant to any Servicing Agreements (other than Disputed Servicing
Agreements
unless specifically assumed by Purchaser hereunder), and (ii)
subject to Section
2.2(a), all bank accounts (other than bank accounts maintained by
the Collateral
Agent and the Administrative Agent), other accounts, safe deposit
boxes, lock
boxes and safes Related to the Business, including accounts
associated with the
Liabilities set forth on Schedule 1.1(c) and all cash and cash
equivalents held
in or required to be held in such accounts; and
(n) all goodwill and other intangible assets associated with
the
Business, (including the rights in and to the name "American Home
Mortgage
Servicing" and similar names thereto and the goodwill associated
with the
Transferred Intellectual Property and all properties, rights and
assets acquired
by Sellers in connection with the operation of the Business between
the Initial
Closing and the Final Closing).
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Section 2.2 Excluded Assets. Notwithstanding anything herein to
the contrary, Sellers shall retain all of their existing right,
title and
interest in and to any and all assets that are not Purchased
Assets, and there
shall be excluded from the sale, conveyance, assignment or transfer
to Purchaser
or any designee of the Purchaser hereunder, and the Purchased
Assets shall not
include, the following assets whether tangible or intangible, real,
personal or
mixed (collectively, the "Excluded Assets"):
(a) all cash and cash equivalents (including all cash and cash
equivalents on deposit in bank accounts maintained by the
Collateral Agent and
Administrative Agent and cash that was received by the Sellers on
or prior to
the Initial Closing Date that is or was required to be deposited
into accounts
maintained by the Collateral Agent and the Administrative Agent
pursuant to the
Cash Collateral Order (the "Administrative Agent Cash Proceeds"),
but excluding
(i) cash flows under any Servicing Agreements or any net cash flow
generated by
operation of the Business on or after the Initial Closing Date,
(ii) any
collections of Advances included in the Advances Amount after the
Advances
Amount Determination Time (which, notwithstanding any provision
hereof, will
constitute Purchased Assets) and (iii) accounts associated with the
Liabilities
set forth on Schedule 1.1(c) and all cash and cash equivalents held
in or
required to be held in such accounts;
(b) all Tax Returns of Sellers or any of their Affiliates and
all
Books and Records (including working papers) related thereto,
(other than any
such Tax documents primarily related to the Purchased Assets,
Assumed
Liabilities or Assumed Contracts), and any Books and Records which
Seller is
required by Law to retain, provided that Seller shall, upon the
request of
Purchaser, provide Purchaser with copies of such Books and Records
which Sellers
are required by Law to retain;
(c) all (i) causes of action, lawsuits, judgments, claims,
refunds, rights of recovery, rights of set-off, rights of
recoupment, demands
and any other rights or Claims of any nature other than the Assumed
Rights and
Claims and (ii) any and all defenses and counterclaims relating
acts or
omissions under the Assumed Contracts that occurred prior to the
Initial
Closing;
(d) all rights or Liabilities in connection with and assets of
the Plans;
(e) any rights, demands, claims, actions and causes of action
constituting avoidance actions of Sellers' estate under Chapter 5
of the
Bankruptcy Code, and any other applicable provisions of the
Bankruptcy Code,
including any and all proceeds of the foregoing;
(f) all of Sellers' rights, demands, Claims and causes of
action
arising with respect to the assertion or defense of claims against
the Filing
Subsidiaries under Section 502 and 503 of the Bankruptcy Code and
Rule 3007
thereunder;
(g) any of the rights of Sellers under this Agreement (or any
agreements between either Seller, on the one hand, and Purchaser or
any of its
Affiliates, on the other hand, entered into on or after the date of
this
Agreement);
(h) other than those described in Section 2.1(m), all insurance
proceeds that Sellers or any of their Affiliates have a right to
receive as of
the Initial Closing or that relate to
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events, circumstances or occurrences prior to the Initial Closing
(which for the
avoidance of doubt shall include the proceeds of Parent's directors
and officers
insurance policy);
(i) other than those described in Section 2.1(m), all insurance
policies;
(j) Tax refunds;
(k) the Purchase Price;
(l) all Privileged Documents;
(m) the Real Property located in Melville, New York, that is
the
headquarters facility for Parent;
(n) the assets listed on Schedule 2.2(n);
(o) any Excluded Contracts;
(p) any Disputed Servicing Agreements designated as Excluded
Assets pursuant to Section 4.4 and any Servicing Rights Held for
Sale; and
(q) all rights, claims and causes of action relating to any
Excluded Asset within subsections (a) through (p) of this Section
2.2 or any
Retained Liability.
Section 2.3 Post-Final Closing Date Asset Deliveries. If any
Seller, in its reasonable discretion, determines after the Final
Closing Date
that books, records or other materials constituting Purchased
Assets are still
in the possession of such Seller or any of its Affiliates, such
Seller shall, or
shall cause such Affiliates to, promptly deliver them to the
Purchaser. If any
Seller or Purchaser, in its reasonable discretion, determines after
the Final
Closing Date that books, records or other materials constituting
Excluded Assets
were delivered to Purchaser, Purchaser shall promptly return them
to the
applicable Seller. In furtherance and not in limitation of the
foregoing (and
notwithstanding any provision in this Agreement to the contrary),
each of
Sellers and Purchaser acknowledges and agrees that it is neither
Sellers' nor
Purchaser's intention to sell, assign or transfer possession of any
documents or
communications of Sellers that are subject to Sellers'
attorney-client privilege
and/or the work-product immunity doctrine (except to the extent
such documents
or communications are related to Purchaser's continued conduct of
the Business)
(the "Privileged Documents"). In the event it is discovered that
any such
Privileged Documents have been inadvertently or unintentionally
turned over to
Purchaser, Purchaser agrees, upon Sellers' request, to promptly
turn over to
Sellers or destroy such Privileged Documents, in each case at
Sellers' sole cost
and expense; provided, that (a) Purchaser shall in no way be
obligated or
responsible for reviewing, identifying or making a determination
that any
documents or communications in its possession are Privileged
Documents and (b)
Purchaser shall not be obligated to take any actions under this
Section 2.3 that
may subject it to any liability or otherwise be in violation with
any applicable
Law.
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Section 2.4 Non-Assignment of Assets. Notwithstanding any other
provision of this Agreement to the contrary, this Agreement shall
not constitute
an agreement to assign or transfer and shall not effect the
assignment or
transfer of any Purchased Asset if an attempted assignment thereof,
without the
approval, authorization or consent of, or granting or issuance of
any license or
permit by, any third party thereto (each such action, a "Necessary
Consent"),
would constitute a breach thereof or in any way adversely affect
the rights of
Purchaser thereunder unless the Bankruptcy Court has entered a
Final Order
(which may include the Sale Approval Order) whose effectiveness has
not been
stayed providing that such Necessary Consent is not required. If
the Bankruptcy
Court has not entered such an Order, Sellers and Purchaser will use
their
commercially reasonable efforts to obtain the Necessary Consents
with respect to
any such Purchased Asset or any claim or right or any benefit
arising thereunder
for the assignment thereof to Purchaser as Purchaser may reasonably
request. If
such Necessary Consent is not obtained, or if an attempted
assignment thereof
would be ineffective or would adversely affect the rights of any
Seller
thereunder so that Purchaser would not in fact receive all such
rights, such
Seller and Purchaser will cooperate in a mutually agreeable
arrangement under
which Purchaser would obtain the benefits and assume the
obligations thereunder
in accordance with this Agreement, including, to the extent that
such an
arrangement would be permitted by Law and the related Contract,
subcontracting,
sub-licensing, or sub-leasing to Purchaser, or under which such
Seller would
enforce for the benefit of Purchaser, with Purchaser assuming such
Seller's
obligations, any and all rights of such Seller against a third
party thereto.
Section 2.5 Assumption of Certain Liabilities. On the terms and
subject to the conditions set forth herein and as additional
consideration for
the Purchased Assets, at the Final Closing, Purchaser shall assume
and discharge
or perform when due in accordance with their respective terms and
subject to the
respective conditions thereof, the Assumed Liabilities. Other than
the Assumed
Liabilities, Purchaser shall not assume any Liability of any nature
or kind
whatsoever of Sellers.
Section 2.6 Retained Liabilities. Sellers shall retain and be
liable and responsible for all Retained Liabilities.
Section 2.7 Initial Closing; Final Closing.
(a) Subject to the terms and conditions of this Agreement, the
initial closing (the "Initial Closing") of the transactions
contemplated hereby
shall take place at such location as the parties hereto shall
mutually agree on
the second Business Day following the date on which the conditions
set forth in
Sections 8.1 through 8.3 (other than those conditions that by their
nature can
be satisfied only at the Initial Closing but subject to the
fulfillment or
waiver of those conditions) have been satisfied or waived or at
such other time
and place as the parties hereto may mutually agree. Purchaser's
obligation to
close on the second Business Day following the date on which the
conditions set
forth in Sections 8.1 through 8.3 have been satisfied (other than
those
conditions that by their nature can be satisfied only at the
Initial Closing but
subject to the fulfillment or waiver of those conditions) shall not
be subject
to the cure period set forth in Section 9.1(d)(ii). At the Initial
Closing,
Purchaser shall deliver the Purchase Price in accordance
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with Section 4.1. In consideration of payment of such Purchase
Price on the
Initial Closing Date, from the Initial Closing Date until the Final
Closing
Date, Sellers shall operate the Business in the Ordinary Course of
Business,
subject to the Bankruptcy Exceptions, for the economic benefit of
Purchaser.
Sellers shall operate the Business in accordance with Sections 6.1
and 6.2 and
shall not take any actions inconsistent with such sections without
the prior
written consent of Purchaser. For the avoidance of doubt, the
Purchase Price
shall be determined based on the Initial Closing Servicing Balance
and the
Advances Amount as finally determined from the Initial Closing Date
Report and
no adjustment shall be made to the Purchase Price in respect of
changes to
servicing balances or advances amounts during the period from the
Initial
Closing Date through the Final Closing Date. On the Initial Closing
Date, the
appropriate parties shall take all actions required under Sections
2.9(a) and
2.10(a) and all other actions not previously taken but required to
be taken
hereunder at or prior to the Initial Closing Date.
(b) Subject to the terms and conditions of this Agreement, the
final closing (the "Final Closing") and the transfer of title to
the Purchased
Assets, Assumed Liabilities and Assumed Contracts contemplated
hereby shall take
place at such location as the parties hereto shall mutually agree
on the
Business Day following the date on which the condition set forth in
Section
8.4(a) has been satisfied or waived or at such other time and place
as the
parties hereto may mutually agree (such date, the "Final Closing
Date"). On the
Final Closing Date, the appropriate parties shall take all actions
required
under Sections 2.8, 2.9(b) and 2.10(b) and all other actions not
previously
taken but required to be taken hereunder at or prior to the Final
Closing Date.
In the event that the condition set forth in Section 8.4(a) has not
been
satisfied or waived prior to September 30, 2008, Sellers shall
either (i) effect
the transfer of title to the Purchased Assets, Assumed Liabilities
and Assumed
Contracts to Purchaser on such date or (ii) at the direction and
expense of
Purchaser, within 60 days after September 30, 2008, sell, transfer
and assign,
subject to any required Bankruptcy Court approval, for such
purchase price as
Purchaser shall have negotiated, the Purchased Assets, Assumed
Liabilities and
Assumed Contracts to any third party or third parties designated by
Purchaser on
or before September 30, 2008, and deliver to Purchaser all proceeds
of such
sale, net of an amount equal to the value of any Assumed
Liabilities not so
transferred and any Losses that represent the incremental costs
incurred by
Sellers in connection with such sale that would not have otherwise
been incurred
with respect to a transfer to Purchaser.
(c) Notwithstanding any other provision of this Agreement,
Purchaser does not have the right to direct the management or
policies of
Sellers. The right to direct the management and policies of Sellers
is solely
the responsibility of the respective executive officers and
directors of each
Seller.
Section 2.8 Ancillary Agreements. On the Final Closing Date,
Sellers shall duly execute and deliver to Purchaser, and Purchaser
shall duly
execute and deliver to Sellers, each of the following agreements to
which they
are to be a party (the "Ancillary Agreements"):
(a) Trademark Assignments;
(b) the Transition Services Agreement;
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Y
(c) the Bills of Sale;
(d) the Assignment and Assumption Agreement;
(e) the Assignment and Assumption of Lease Agreements;
(f) the Purchaser Subservicing Agreement; and
(g) all instruments or documents necessary to change the names
of
the individuals who have access to or are authorized to make
withdrawals from or
dispositions of all bank accounts, other accounts, safe deposit
boxes, lock
boxes and safes Related to the Business or related to the Purchased
Assets, all
keys and combinations to all safe deposit boxes, lock boxes and
safes Related to
the Business and all keys related to the Purchased Assets.
Section 2.9 Deliveries by Purchaser.
(a) At the Initial Closing, Purchaser shall deliver to Sellers
the following:
(i) the Purchase Price in accordance with Section 4.1;
(ii) the duly executed Dispute Escrow Agreement and Cure
Escrow Agreement; and
(iii) the certificate to be delivered pursuant to Section
8.2(c).
(b) On the Final Closing Date (and any earlier date after the
Initial Closing Date on which Purchaser desires to have a Purchased
Asset
conveyed pursuant to this Agreement), Purchaser shall deliver to
Sellers the
following:
(i) such instruments of assumption and other instruments
or documents, in form and substance reasonably acceptable to
Sellers, as
may be necessary to effect Purchaser's assumption of the
Assumed
Liabilities and the effective assignment of any Assumed
Contracts,
Assigned Leases or
other Purchased Assets; and
(ii) such other customary instruments of transfer,
assumptions, filings or documents, in form and substance
reasonably
satisfactory to Sellers, as may be required to give effect to
this
Agreement or any Ancillary Agreement.
Section 2.10
Deliveries by Sellers.
(a) At the Initial Closing, Sellers shall deliver, or cause to
be
delivered, to Purchaser the following:
(i)
certified copies of (A) the Revised Sale Procedures
Order and the Sale Approval Order, neither of which shall have
been
modified or amended in any manner adverse to Purchaser that has not
been
agreed to in writing by Purchaser and shall have become a Final
Order
and not be subject to any stay of effectiveness, and (B) all
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other Orders of the Bankruptcy Court pertaining to the
transactions
contemplated by this Agreement and the Ancillary Agreements;
(ii) the duly executed Dispute Escrow Agreement;
(iii) the duly executed Cure Escrow Agreement;
(iv) the certificates to be delivered pursuant to Section
8.3(c);
(v) affidavits executed by each Seller that such Seller is
not a foreign person within the meaning of Section 1445(f)(3) of
the
Code;
(vi) a receipt acknowledging payment of the Purchase Price
payable in accordance with Section 4.1.
(b) On the Final Closing Date (and any earlier date after the
Initial Closing Date on which Purchaser desires to have a Purchased
Asset
conveyed pursuant to this Agreement), Sellers shall deliver, or
cause to be
delivered, to Purchaser the following:
(i) a master copy of each software program Related to the
Business, which is a Purchased Asset (in both object code, and to
the
extent available, source code form);
(ii) such instruments of assumption and other instruments
or documents, in form and substance reasonably acceptable to
Purchaser,
as may be necessary to effect Sellers' assignment of any
Assumed
Contracts, Assigned Leases or other Purchased Assets to Purchaser
or its
designee; and
(iii) such other customary instruments of transfer,
assumptions, filings or documents, in form and substance
reasonably
satisfactory to Purchaser, as may be required to give effect to
this
Agreement or any Ancillary Agreement.
Section 2.11 "As Is Where Is" Transaction. Purchaser hereby
acknowledges and agrees that, notwithstanding anything to the
contrary contained
herein, except as expressly set forth in this Agreement, Sellers
make no
representations or warranties whatsoever, express or implied, with
respect to
any matter relating to the Purchased Assets. Without in any way
limiting the
foregoing, Sellers hereby disclaim any warranty (express or
implied) of
merchantability or fitness for any particular purpose as to any
portion of the
Purchased Assets. Purchaser further acknowledges that Purchaser has
conducted an
independent inspection and investigation of the physical condition
of all
portions of the Purchased Assets and all such other matters
relating to or
affecting the Purchased Assets as Purchaser deemed necessary or
appropriate and
that in proceeding with its acquisition of the Purchased Assets,
Purchaser is
doing so based solely upon such independent inspections and
investigations.
Accordingly, except as expressly set forth in the Agreement,
Purchaser will
accept the Purchased Assets on the Final Closing Date "AS IS" and
"WHERE IS".
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E
ARTICLE III
TRANSFERRED EMPLOYEES
Section 3.1 Transferred Employees. With respect to each
Business
Employee, Sellers have previously provided to Purchaser lists (the
"Business
Employee List"), setting forth, to the extent such information is
permitted to
be disclosed under applicable Law: (i) each such person's title or
job/position;
(ii) each such person's job designation (i.e., salaried or hourly);
(iii) each
such person's location of employment; (iv) each such person's
employment status
(i.e., actively employed or not actively at work (due to, e.g.,
illness,
short-term disability, sick leave, authorized leave or absence,
etc.)); (v) each
such person's annual base rate of compensation and target bonus
amount for the
current fiscal year to which he or she is entitled and any such
bonus amount
which he or she has received prior to the date hereof; and (vi) if
applicable,
any material, individual specific provisions relating to such
person's
employment (e.g., golden parachute, etc.).
(a) Not later than 10 days prior to the Final Closing Date,
Sellers will provide Purchaser with an updated Business Employee
List.
(b) Prior to the Final Closing Date, and effective as of the
Final Closing Date, Purchaser shall offer employment to
substantially all
Business Employees identified on the Business Employee List (as
updated in
accordance with clause (a) of this Section 3.1). Each such offer of
employment
shall comply with the requirements of this Section 3.1. The new
employment of
each Business Employee who accepts Purchaser's offer of employment
shall
commence with effect from the later of the Final Closing Date or
the date of
acceptance. Each Business Employee who accepts Purchaser's offer of
employment
and who becomes an employee of Purchaser as of the Final Closing
Date shall be a
"Transferred Employee."
(c) Purchaser's offer of employment will be at a level of
compensation and benefits that, in the aggregate, Purchaser
determines in good
faith is reasonably comparable to the compensation and benefits of
such Person
immediately prior to the Petition Date, without giving effect to
any key
employee retention plan and any compensation or bonus plan,
agreement or
arrangement designed to retain employees during the pendency of the
Bankruptcy
Cases. Purchaser shall give service credit for pre-Final Closing
Date service
with Sellers for purposes of the eligibility and vesting (but not
benefit
accrual) provisions of the plans and programs in which such
employees
participate, and give appropriate credit for unused vacation time
and co-pays
and deductibles under welfare benefit plans.
Section 3.2 Employee Benefit Plans. Sellers represent and
warrant
to Purchaser that Schedule 3.2 sets forth a true, complete and
correct list of
each Plan that covers any Business Employee and Sellers have made
available to
Purchaser true, complete and correct copies of each such Plan.
Purchaser and its
Affiliates shall not assume any Plans or any Liabilities under or
with respect
to the Plans (except, in Purchaser's sole discretion, as to any
permitted
"rollover" accepted by the applicable plan of Purchaser or one of
its Affiliates
that is elected by a Transferred Employee under a Plan intended to
be qualified
under Section 401(a) of the Code). Effective as of the Final
Closing Date,
Sellers shall cause each Business Employee to
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<PAGE>
be 100% fully vested in his benefits under each of the Plans
intended to be
qualified under Section 401(a) of the Code that provides for
vesting.
Section 3.3 COBRA. Sellers shall retain all obligations
relating
to compliance with the continuation health care coverage
requirements of COBRA
under the Plans with respect to all current and former Business
Employees (and
their dependents) for qualifying events occurring on or prior to
the Initial
Closing Date. Subject to the other limitations of this Agreement,
this Section
3.3 shall not, however, limit the ability of the Sellers to amend
or terminate
any Plan at any time.
Section 3.4 WARN. Sellers agree to provide any required notice
under and to otherwise retain all Liabilities relating to WARN, or
any similar
Laws, with respect to any event on or prior to the Initial Closing
Date
affecting Business Employees.
Section 3.5 Cooperation. Sellers and Purchasers shall provide
each other with such records and information as may be reasonably
necessary,
appropriate and permitted under applicable Law to carry out their
obligations
under this Article III.
Section 3.6 No Third Party Rights. No provision of this
Agreement
confers rights or remedies upon any Person, including any Business
Employee or
any Transferred Employee, other than the parties hereto.
ARTICLE IV
PURCHASE PRICE; ADJUSTMENT; ALLOCATION
Section 4.1 Purchase Price. (a) The aggregate consideration for
the Purchased Assets (as adjusted pursuant to this Article IV, the
"Purchase
Price") shall, subject to the terms and conditions of this Article
IV, equal the
sum of (A) $6.0 million, (B) an amount equal to the "Initial
Closing Servicing
Balance Price" determined as set forth on Schedule 4.1(a) and (C)
an amount
equal to 92% of the Advances Amount. The Purchase Price to be paid
at the
Initial Closing shall be based on the Initial Closing Servicing
Balance and the
Advances Amount as determined from the Initial Closing Date Report.
At the
Initial Closing, Purchaser shall pay the Purchase Price as follows
(and in the
following order of priority) (i) an amount equal to the Dispute
Amount to the
Dispute Escrow Agent, (ii) an amount equal to the necessary direct
costs of the
Sellers incurred in connection with this Agreement which are
reasonably
acceptable to the Administrative Agent (it being agreed that the
fees, costs,
and expenses of Kroll Zolfo Cooper are not to be deducted and that
such amount
shall be reduced by any amounts that are disputed by the
Administrative Agent in
accordance with the Cash Collateral Order) as directed by Sellers,
(iii) an
aggregate amount equal to the Initial Cure Amount for each Assumed
Contract, in
cash by wire transfer of immediately available funds to be held
pursuant to the
Cure Escrow Agreement and (iv) the remaining Purchase Price (less
any amounts
delivered on behalf of Sellers in accordance with Section 4.3(a))
shall be paid
by wire transfer of immediately available funds to an account or
accounts
designated by the Administrative Agent (pursuant to the Sale
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<PAGE>
Approval Order) in writing to the Purchaser, not less than two
Business Days
prior to the Initial Closing, on behalf of Sellers, to the
Administrative Agent
in accordance with the Cash Collateral Order (the amounts payable
under clause
(iv) hereinafter referred to as "Net Proceeds").
(b) Sellers shall prepare the calculation, as of the close of
business on the day preceding the Initial Closing Date (the
"Initial Closing
Date Report"), of (i) the outstanding stated principal balance of
all Mortgage
Loans under the Servicing Agreements in the Initial Closing Date
Mortgage Loan
Schedule (which shall include a subtotal of the outstanding
principal balance of
all Mortgage Loans under Disputed Servicing Agreements) and (ii)
the Advances
Amount. Sellers shall provide Purchaser with the Initial Closing
Date Report not
later than the Initial Closing. Within the 30-day period following
the date of
the Initial Closing Date, Purchaser shall have the right to dispute
the amounts
set forth in the Initial Closing Date Report as the Initial Closing
Servicing
Balance (and the subtotal of the outstanding principal balance of
all Mortgage
Loans under the Disputed Servicing Agreements) and the Advances
Amounts and
Sellers shall have the right to correct any manifest errors with
respect to the
amounts set forth in the Initial Closing Date Report as the Initial
Closing
Servicing Balance and the Advances Amount; provided, however, that
Purchaser
shall have 30 days after the correction of any manifest error by
Sellers to
dispute any such correction. If Purchaser does not dispute the
Initial Closing
Date Report within such 30-day period after delivery of the Initial
Closing Date
Report or, if applicable the 30-day period after Sellers'
correction of any
manifest error in the Initial Closing Date Report, such items shall
be deemed
final by Sellers and Purchaser, and the Purchase Price calculated
pursuant to
Section 4.1(a) and the Dispute Amount calculated pursuant to
Section 4.4 shall
be deemed final.
(c) If Purchaser disputes the Initial Closing Date Report (or
any
item included therein) as set forth in Section 4.1(b) above, such
dispute shall
be resolved in the following manner: (i) Purchaser shall notify
Sellers of such
dispute within 30 days after Purchaser's receipt of the Initial
Closing Date
Report, or, if applicable, within 30 days after Sellers' correction
of any
manifest error in the Initial Closing Date Report, which notice
shall specify in
reasonable detail the nature of the dispute; (ii) during the 15-day
period
following Sellers' receipt of such notice, Sellers and Purchaser
shall use their
commercially reasonable efforts to resolve such dispute in good
faith; and (iii)
if at the end of such 15-day period Sellers and Purchaser shall
have failed to
resolve such dispute in writing, Sellers and Purchaser shall submit
the item(s)
in dispute as promptly as practicable to a national accounting or
consulting
firm (the "Arbitrating Accountants") with experience in the
mortgage loan
servicing business and that is independent of Sellers and Purchaser
and their
respective Affiliates, to be selected by mutual agreement between
Sellers and
Purchaser. The Arbitrating Accountants shall act as an arbitrator
and shall
resolve the dispute as promptly as practicable after such di
