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EXHIBIT 10.1
SECOND AMENDED AND
RESTATED
ASSET PURCHASE
AGREEMENT
by and among
CARRINGTON CAPITAL
MANAGEMENT, LLC ,
CARRINGTON MORTGAGE
SERVICES, LLC ,
NEW CENTURY FINANCIAL
CORPORATION
and
NEW CENTURY MORTGAGE
CORPORATION
dated as of
May 21,
2007
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ARTICLE I DEFINITIONS AND
INTERPRETATION 2
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Section 1.1
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Definitions
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2 |
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Section 1.2
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Interpretation
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20 |
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ARTICLE II
PURCHASE AND SALE OF ASSETS
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Section 2.1
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Purchase and Sale of Assets
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Section 2.2
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Excluded Assets
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Section 2.3
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Post-Closing Asset Deliveries
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23 |
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Section 2.4
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Conveyance of Assets by Affiliates of
Sellers
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23 |
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Section 2.5
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Non-Assignable Permits and Contracts;
Servicing Licenses
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Section 2.6
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Shared Contracts
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Section 2.7
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Assumption of Certain
Liabilities
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26 |
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Section 2.8
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Retained Liabilities
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29 |
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Section 2.9
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Closing
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Section 2.10
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Ancillary Agreements
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Section 2.11
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Deliveries by Purchaser
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Section 2.12
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Deliveries by Sellers
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Section 2.13
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Limited Representations
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30 |
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ARTICLE III
TRANSFERRED EMPLOYEES
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Section 3.1
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Transferred Employees
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Section 3.2
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Employee Benefit Plans
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Section 3.3
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COBRA
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31 |
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Section 3.4
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WARN
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32 |
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Section 3.5
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Cooperation
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32 |
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Section 3.6
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No Third Party Rights
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32 |
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ARTICLE IV PURCHASE PRICE; ADJUSTMENT;
ALLOCATION
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32 |
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Section 4.1
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Purchase Price
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32 |
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Section 4.2
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Purchase Price Adjustments
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32 |
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Section 4.3
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Post-Closing Adjustments
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Section 4.4
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Deposit Amount
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Section 4.5
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Allocation of the Purchase
Price
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ARTICLE V REPRESENTATIONS AND
WARRANTIES OF THE SELLER
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Section 5.1
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Authorization; Validity of Agreement;
Seller Action
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Section 5.2
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Capitalization
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Section 5.3
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Organization and Good
Standing
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Section 5.4
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Consents and Approvals; No
Violations
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Section 5.5
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[Reserved.] |
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Section 5.6
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Absence of Certain Changes
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Section 5.7
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Confidentiality
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Section 5.8
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Title to Assets and Properties;
Liens
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38 |
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Section 5.9
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Sufficiency of Purchased
Assets
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Section 5.10
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Real Property
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Section 5.11
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Leases
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Section 5.12
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Environmental Matters
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Section 5.13 Description of Mortgage Servicing Portfolio;
Servicing Agreements; Mortgage Loans 39 |
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Section 5.14
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Contracts and Commitments
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Section 5.15
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Litigation and Claim
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Section 5.16
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Compliance with Laws; Regulatory
Approvals
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Section 5.17
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Permits
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Section 5.18
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Employee Benefit Plans
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Section 5.19
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Tax Matters
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Section 5.20
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Intellectual Property
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Section 5.21
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Brokers or Finders
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Section 5.22
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Affiliate Transactions
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Section 5.23
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Operation of the Business
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Section 5.24
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PTO Liability
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ARTICLE VI
COVENANTS
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Section 6.1
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Interim Operations of Seller
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Section 6.2
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Access
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Section 6.3
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Cooperation; Efforts and Actions to
Cause Closing
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Section 6.4
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Confidentiality
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Section 6.5
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Subsequent Actions
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Section 6.6
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Procedures for Transfer of
Servicing
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Section 6.7
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Bankruptcy Actions
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Section 6.8
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Maintenance of Insurance
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Section 6.9
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Schedules and Exhibits
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Section 6.10
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Orders
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Section 6.11
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Servicing
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ARTICLE VII TAX
MATTERS
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Section 7.1
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Transfer Taxes
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Section 7.2
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Liability for Taxes and Related
Matters
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Section 7.3
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Cooperation
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Section 7.4
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Tax Benefits
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ARTICLE VIII
CONDITIONS
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Section 8.1
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Conditions to Obligations of Purchaser
and Sellers
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Section 8.2
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Conditions to Obligations of
Sellers
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Section 8.3
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Conditions to Obligations of
Purchaser
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ARTICLE IX
TERMINATION
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Section 9.1
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Termination
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Section 9.2
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Break-Up Fee; Expense
Reimbursement
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Section 9.3
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Procedure and Effect of
Termination
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ARTICLE X BIDDING PROCEDURES
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Section 10.1
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Bidding Procedures
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60 |
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ARTICLE XI
INDEMNIFICATION
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Section 11.1
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Survival
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60 |
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Section 11.2
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Sellers’ Agreement to
Indemnify
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Section 11.3
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Limitations on Sellers’
Agreements to Indemnify
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Section 11.4
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Purchaser’s Agreement to
Indemnify
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Section 11.5
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Limitations on Purchaser’s
Agreement to Indemnify
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Section 11.6 Other Limitations on and Treatment of Certain
Claims for Indemnification 63 |
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Section 11.7
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Claims
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Section 11.8
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Third Party Indemnification
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Section 11.9
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Set Off Against Indemnification
Holdback Amount
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Section 11.10
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Release of Indemnification Holdback
Amount
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Section 11.11
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Purchase Price Adjustments
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ARTICLE XII REPRESENTATIONS AND
WARRANTIES OF PURCHASER
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Section 12.1
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Legal Power; Organization;
Qualification of Purchaser
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Section 12.2
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Binding Agreement
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Section 12.3
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No Conflict or Default
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Section 12.4
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Brokers
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ARTICLE XIII
MISCELLANEOUS
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67 |
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Section 13.1
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Fees and Expenses
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67 |
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Section 13.2
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Amendment; Waiver
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Section 13.3
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Publicity
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67 |
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Section 13.4
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Notices
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67 |
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Section 13.5
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Counterparts
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69 |
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Section 13.6
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Entire Agreement; No Third Party
Beneficiaries
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Section 13.7
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Severability
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69 |
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Section 13.8
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Governing Law
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69 |
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Section 13.9
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Venue and Retention of
Jurisdiction
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Section 13.10
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Time of Essence
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70 |
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Section 13.11
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No Consequential Damages
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Section 13.12
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Assignment
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70 |
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Section 13.13
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Fulfillment of Obligations
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70 |
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Section 13.14
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Specific Performance
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70 |
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Section 13.15
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Waiver of Bulk Transfer Laws
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70 |
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Section 13.16
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Personal Liability
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70 |
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Section 13.17
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No Right of Setoff
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70 |
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1
SCHEDULES *
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Schedule 1.1(a)
Schedule 1.1(b)
Schedule 1.1(c)
Schedule 1.1(d)
Schedule 1.1(e)
Schedule 1.1(f)
Schedule 1.1(g)
Schedule 1.1(h)
Schedule 1.1(i)
Schedule 2.1(c)
Schedule 2.1(m)
Schedule 2.6(a)
Schedule 2.6(b)
Schedule 2.7(e)
Schedule 2.7(g)
Schedule 3.1
Schedule 3.2
Schedule 4.5(a)
Schedule 5.6
Schedule 5.8
Schedule 5.9
Schedule 5.11
Schedule 5.13(a)
Schedule 5.13(b)
Schedule 5.13(d)
Schedule 5.14
Schedule 5.14(e)
Schedule 5.15
Schedule 5.16
Schedule 5.17
Schedule 5.20(a)
Schedule 5.20(b)
Schedule 5.22
Schedule 5.23
Schedule 6.1(e)(i)
Schedule 6.1(e)(ii)
Schedule 6.7(d)
Schedule 8.3(i)
Schedule 8.3(l)
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Knowledge of Sellers
Assigned Leases
Assumed Liabilities
Leased Real Property
Servicing Licenses
Filing Subsidiaries
Computer Equipment
Software Contracts
Servicing Agreements
Assumed Contracts
Permits
Separation Shared Contracts
Transferred Shared Contracts
Ancillary Servicing-Related Agreements
Servicing Agreement Indemnification Sections
Business Employees
Plans
Allocation Schedule
Absence of Certain Changes
Title to Assets and Properties; Liens
Sufficiency of Purchased Assets
Leases
Mortgage Loan Schedule
Servicing Agreements Exceptions
Advances
Contracts
Contracts Related to the Business
Litigation
Compliance with Laws; Regulatory Approvals
Permits
IT Assets
Transferred Intellectual Property
Affiliate Transactions
Operation of the Business
Employment Matters
Conduct of Business
[Reserved.]
Other Consents
Amounts Owing Under Service Advance Facility |
* The exhibits and schedules to this Second
Amended and Restated Asset Purchase Agreement have been omitted
from this filing pursuant to Item 601(b)(2) of
Regulation S-K. The Registrant will furnish copies of any of
the exhibits and schedules to the Securities and Exchange
Commission upon request.
2
EXHIBITS *
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Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Exhibit H
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Bidding Procedures Order
Form of Assignment and Assumption Agreement
Form of Assignment and Assumption of Lease Agreements
Form of Escrow Agreement
Form of Sale Approval Order
Form of Copyright Assignment
Form of Bill of Sale
Deposit Escrow Agreement |
* The exhibits and schedules to this Second
Amended and Restated Asset Purchase Agreement have been omitted
from this filing pursuant to Item 601(b)(2) of
Regulation S-K. The Registrant will furnish copies of any of
the exhibits and schedules to the Securities and Exchange
Commission upon request.
3
SECOND AMENDED AND RESTATED ASSET PURCHASE
AGREEMENT
This
Second Amended and Restated Asset Purchase Agreement (this “
Agreement ”), dated as of May 21, 2007, is
entered into by and among CARRINGTON CAPITAL MANAGEMENT, LLC, a
Delaware limited liability company (“ Carrington
”), CARRINGTON MORTGAGE SERVICES, LLC, a Delaware limited
liability company (“ Purchaser ”), NEW CENTURY
FINANCIAL CORPORATION, a Maryland corporation, as a debtor and
debtor-in-possession (“ Parent ”), and NEW
CENTURY MORTGAGE CORPORATION, a California corporation, as a debtor
and debtor-in-possession (the “ Company ” and
together with Parent, the “ Sellers ”).
WHEREAS , Sellers are engaged in the Business (as
hereinafter defined).
WHEREAS , Sellers are also engaged in the business of
originating Mortgage Loans (as hereinafter defined) and other
businesses and, together with certain of its Affiliates, the
business of reselling Mortgage Loans (the “ Origination
Business ”).
WHEREAS , on April 2, 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. §§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 under the
Bankruptcy Code, 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), relating to or used in connection with the Business (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.
WHEREAS , on April 2, 2007, Carrington, Purchaser,
Parent and the Company entered into that certain Asset Purchase
Agreement (the “ Original Agreement ”) and on
April 19, 2007, Carrington, Purchaser, Parent and the Company
agreed to amend and restate the Original Agreement and,
accordingly, entered into that certain Amended and Restated Asset
Purchase Agreement dated as of April 19, 2007 (the “
First Amended and Restated Agreement ”).
WHEREAS , Section 13.2 of the First Amended and
Restated Agreement provides that the First Amended and Restated
Agreement may be amended, modified and supplemented, but only by a
written instrument signed by all of the parties thereto.
WHEREAS , Carrington, Purchaser, Parent and the Company have
agreed to amend and restate the First Amended and Restated
Agreement as set forth in this Agreement.
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,
the following terms have the meanings set forth below:
“
Accepted Contract ” has the meaning specified in
Section 2.7(b) hereof.
“
Accepted Contracts ” has the meaning specified in
Section 2.7(b) hereof.
“
Additional Contract ” has the meaning specified in
Section 2.7(d) hereof.
“
Additional Contracts ” has the meaning specified in
Section 2.7(d) hereof.
“
Advances ” means, with respect to each Servicing
Agreement, 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 or its Affiliates from a third
party (but not with funds borrowed from any custodial or other
accounts under a Servicing Agreement) in connection with servicing
the 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.
“
Advances Amount ” means the First Lien Advances Amount
and the Second Lien Advances Amount.
“
Advances Amount Difference ” has the meaning specified
in Section 4.3(a) hereof.
“
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. For purposes of this Agreement, neither
Carrington nor Purchaser shall be considered an Affiliate of either
Seller.
“
Affiliate Purchased Assets ” has the meaning specified
in Section 2.4 hereof.
“
Affiliate Seller ” has the meaning specified in
Section 2.4 hereof.
“
Agreement ” or “ this Agreement ”
means this Asset Purchase Agreement, together with the schedules
and exhibits hereto.
“
Allocation Schedule ” has the meaning specified in
Section 4.5(a) hereof.
“
Alternative Bidder ” has the meaning specified in the
Bidding Procedures Order.
“
Alternative Transaction ” has the meaning specified in
Section 9.2(a) hereof.
“
Ancillary Agreements ” has the meaning specified in
Section 2.10 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 pursuant to the Servicing
Agreements (other than servicing fees).
“
Ancillary Servicing-Related Agreements ” means the
ancillary Contracts designated by Purchaser, in its sole
discretion, as set forth on Schedule 2.7(e) that are
related to, and were entered into by Sellers and various non-debtor
counterparties in connection with, the Servicing Agreements.
“
Applicable Requirements ” means, with respect to each
Seller all applicable requirements of Law 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 4.2(d) hereof.
“
Assigned Contracts ” means the Assumed Contracts
(other than the Servicing Agreements).
“
Assigned Leases ” means those Leases used or leased by
the Business owned by Persons (other than Sellers or any of their
Affiliates) engaged primarily in the Business and 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 Liabilities, in
substantially the form set forth in Exhibit B
hereto.
“
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 substantially the form set forth in
Exhibit C hereto.
“
Assumed Contracts ” has the meaning set forth in
Section 2.1(c) hereof.
“
Assumed Liabilities ” means the obligations arising
under (i) any Servicing Agreement, Assigned Lease or Assumed
Contract after the assignment to Purchaser of the Liabilities of
Sellers set forth on Schedule 1.1(c) and (ii)
Section 3.1(d) with respect to the PTO for the
Transferred Employees.
“
Assumed Rights and Claims ” has the meaning specified
in Section 2.1(k) hereof.
“
Auction ” has the meaning specified in the Bidding
Procedures Order.
“
Audit Reports ” has the meaning specified in
Section 4.2(c) hereof.
“
Balance Sheet ” means the consolidated balance sheet
of the Parent dated as of December 31, 2005 and included in
the Financial Statements.
“
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.
“
Basket Amount ” has the meaning specified in
Section 11.6 hereof.
“
Bidding Procedures ” has the meaning specified in the
Bidding Procedures Order.
“
Bidding Procedures Order ” means the Order of the
Bankruptcy Court (including all schedules thereto) entered by the
Bankruptcy Court on April 20, 2007, a copy of which is
attached as Exhibit A .
“
Bills of Sale ” means the bills of sale to be executed
by Sellers in favor of Purchaser in respect of the Purchased
Assets, substantially in the form set forth in Exhibit G
.
“
Books and Records ” means all books, ledgers, files,
reports, plans, records, manuals and other materials (in any form
or medium) Related to the Business.
“
Break-Up Fee ” has the meaning specified in
Section 9.2(a) hereof.
“
Business ” means the business (whether existing now or
existing at or before the Closing, direct or indirect) of providing
servicing (including master servicing, subservicing, special
servicing and property management servicing) for residential real
estate Mortgage Loans underlying the RMBS Transactions, and shall
not include the Excluded Businesses.
“
Business Day ” means a day other than Saturday, Sunday
or any day on which banks located in the State of California,
Delaware or Connecticut are authorized or obligated to close.
“
Business Employee ” means each employee of Sellers
whose sole responsibility is to provide services Related to the
Business and each other employee of Sellers identified by Sellers
as having significant responsibility Related to the Business,
including as set forth on Schedule 3.1 .
“
Business Portion ” has the meaning specified in
Section 2.6(a) hereof.
“
Carrington ” has the meaning specified in the
preamble.
“
Carrington-Related Assets ” means the RMBS
Transactions numbered 1 through 12 in the definition thereof.
“
Carrying Costs ” has the meaning specified in
Section 2.7(b) hereof.
“
Cash Purchase Price ” means an amount equal to
(i) the Purchase Price, as adjusted, minus (ii)
$32,300,000.
“
Claims ” means, with respect to the period prior to
the Closing Date, any right to payment from Sellers, 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 for breach of performance if such breach gives
rise to a right of payment from Seller, whether or not such right
to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
“
Closing ” has the meaning specified in
Section 2.9 hereof.
“
Closing Adjustment Difference ” has the meaning
specified in Section 4.3(a) hereof.
“
Closing Carrington-Related Assets Amount ” means an
amount equal to the product of (i) the scheduled principal balance
of the Mortgage Loans under the applicable Servicing Agreements for
the Carrington-Related Assets as of the close of business on the
Closing Date, after application of all scheduled payments due on
such date, whether or not received, multiplied by
(ii) 0.69%.
“
Closing Date ” means the date upon which the Closing
occurs.
“
Closing Date Audit Report ” has the meaning specified
in Section 4.2(c) hereof.
“
Closing Date Mortgage Loan Schedule ” has the meaning
specified in Section 5.13(a) hereof.
“
Closing Date Purchase Price ” has the meaning
specified in Section 4.1(a) hereof.
“
Closing First Lien Advances Amount ” means, as of the
Closing Date with respect to the Servicing Agreements, an amount
equal to 95% of the aggregate amount of Advances relating to
Mortgage Loans under the Servicing Agreements secured by first
liens on the Mortgaged Property, which amount shall be determined
pursuant to the audit described in Section 4.2(c) .
“
Closing New Century Portfolio-Related Assets Amount ”
means an amount equal to the product of (i) the scheduled
principal balance of the Mortgage Loans under the applicable
Servicing Agreements for the New Century Portfolio-Related Assets
as of the close of business on the Closing Date, after application
of all scheduled payments due on such date, whether or not
received, multiplied by (ii) 0.69%.
“
Closing Servicing Agreement Amount ” means the Closing
Carrington-Related Assets Amount and the Closing New Century
Portfolio-Related Assets Amount.
“
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.
“
Computer Equipment ” means all equipment and devices
(including data processing hardware and related telecommunications
equipment, media, and tools) used by Sellers in the conduct of the
Business, including Sellers’ rights under all related
warranties. As of the date hereof, the Computer Equipment consists
of all items listed in Schedule 1.1(g) .
“
Confidentiality Agreement ” has the meaning specified
in Section 9.3 hereof.
“
Consent ” means any consent, approval, license, waiver
or authorization.
“
Contract Determination Date ” means: (i) for each
Assigned Contract that is designated by Purchaser as an Accepted
Contract pursuant to Section 2.7 , the date upon which
such Contract is assigned to Purchaser, provided that the Cure
Amounts for such contract shall have been paid and performed when
due; and (ii) for each Assigned Contract that is an Excluded
Contract pursuant to Section 2.7 , the earlier of
(A) the date that Sellers’ rejection of such Contract is
effective as set forth in an Order of the Bankruptcy Court; or
(B) 15 Business Days after the earlier of (x) the date on
which Purchaser shall have delivered notice to Sellers of its
determination that such Contract shall be an Excluded Contract
pursuant to Section 2.7 or (y) the Contract
Notification Deadline for such Contract; provided , that
Purchaser shall no longer be in possession of the premises or
property subject to a lease or otherwise accepting the performance
of the non-debtor party to the Contract after such date; and
provided , further , that Purchaser shall be entitled
to (and/or Sellers shall, at Purchaser’s cost and direction)
seek entry of an Order of the type described in clause (A)
rejecting any Excluded Contract effective retroactively to the
Petition Date or such later date as Purchaser may deem
appropriate.
“
Contract Notification Deadline ” has the meaning
specified in Section 2.7(b) hereof.
“
Contracts ” means all agreements, contracts, leases
and subleases, purchase orders, arrangements, commitments and
licenses (other than this Agreement and the Ancillary Agreements)
that are Related to the Business as of the Closing, or to which any
of the Purchased Assets are subject, whether written or oral,
including the Software Contracts, except to the extent included in
Excluded Assets.
“
Copyright Assignments ” means the copyright
assignments to be executed by Sellers in favor of Purchaser in
respect of the Copyrights, in substantially the form set forth in
Exhibit F hereto.
“
Copyrights ” has the meaning specified in the
“Intellectual Property” definition.
“
Cure Amount ” has the meaning specified in
Section 2.7(f) hereof.
“
Cure Finding ” has the meaning specified in
Section 2.7(f) hereof.
“
Cut-Off Carrington-Related Assets Amount ” means an
amount equal to the product of (i) the scheduled principal balance
of the Mortgage Loans under the applicable Servicing Agreements for
the Carrington-Related Assets as of the Cut-Off Date, after
application of all scheduled payments due on the Cut-Off Date,
whether or not received, multiplied by (ii) 0.69%.
“
Cut-Off Date ” means the first day of the calendar
month in which the Closing occurs, or such other date as shall be
agreed by Sellers and Purchaser.
“
Cut-Off Date Audit Report ” has the meaning specified
in Section 4.2(c) hereof.
“
Cut-Off Date Mortgage Loan Schedule ” has the meaning
specified in Section 5.13(a) hereof.
“
Cut-Off First Lien Advances Amount ” means, as of the
Cut-Off Date with respect to the Servicing Agreements, an amount
equal to 95% of the aggregate amount of Advances relating to
Mortgage Loans under the Servicing Agreements secured by first
liens on the Mortgaged Property, which amount shall be determined
pursuant to the audit described in Section 4.2(c) .
“
Cut-Off New Century Portfolio-Related Assets Amount ”
means an amount equal to the product of (i) the scheduled
principal balance of the Mortgage Loans under the applicable
Servicing Agreements for the New Century Portfolio-Related Assets
as of the Cut-Off Date, after application of all scheduled payments
due on the Cut-Off Date, whether or not received, multiplied
by (ii) 0.69%.
“
Cut-Off Servicing Agreement Amount ” means the Cut-Off
Carrington-Related Assets Amount and the Cut-Off New Century
Portfolio-Related Assets Amount.
“
Deposit Amount ” has the meaning specified in
Section 4.4 hereof.
“
Deposit Escrow Agreement ” means that certain Deposit
Escrow Agreement dated as of May 10, 2007, by and among Purchaser,
Parent, the Company and JPMorgan Chase Bank, N.A., as escrow agent,
a copy of which is attached as Exhibit H .
“
Deposit Escrow Agent ” means JPMorgan Chase Bank,
N.A.
“
DIP Financing Agreement ” means the
Debtor-in-Possession Loan and Security Agreement, dated as of
April 13, 2007, by and among New Century Financial
Corporation, certain of its Affiliates, Greenwich Capital Financial
Products, Inc., The CIT Group/Business Credit, Inc. and the lenders
party thereto, as amended.
“
Enforceability Exceptions ” has the meaning specified
in Section 5.1 hereof.
“
Environmental Claim ” means any claim, action, cause
of action, investigation or notice (written or oral) by any Person
alleging actual or potential Liability for investigatory, cleanup
or governmental response costs, or natural resources or property
damages, or personal injuries, attorney’s fees or penalties
relating to (i) the presence, or release into the environment,
of any Materials of Environmental Concern, now or in the past, or
(ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
“
Environmental Law ” means each federal, state, local
and foreign Law and regulation relating to pollution, protection or
preservation of human health or the environment, including ambient
air, surface water, ground water, land surface or subsurface
strata, and natural resources, and including each Law and
regulation relating to emissions, discharges, releases or
threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacturing, processing, distribution,
use, treatment, generation, storage, containment (whether above
ground or underground), disposal, transport or handling of
Materials of Environmental Concern, or the preservation of the
environment or mitigation of adverse effects thereon and each Law
and regulation with regard to record keeping, notification,
disclosure and reporting requirements respecting Materials of
Environmental Concern.
“
Equal Credit Opportunity Act ” means the Equal
Opportunity Act promulgated under Chapter 41 of Title 15,
U.S.C. Subchapter IV.
“
ERISA ” means the Employee Retirement Income Security
Act of 1974, as amended.
“
ERISA Affiliate ” means any trade or business, whether
or not incorporated, that together with Seller would be deemed a
“single employer” within the meaning of Section 4001(b)
of ERISA or Section 414 of the Code.
“
Escrow Agent ” means the escrow agent under the Escrow
Agreement, as mutually agreed by Sellers and Purchaser.
“
Escrow Agreement ” means the escrow agreement to be
entered into by and between Purchaser, Parent, the Company and an
escrow agent, substantially in the form set forth in
Exhibit D .
“
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 Businesses ” means the businesses (whether
existing now or existing at or before the Closing, direct or
indirect) of providing servicing for residential real estate
mortgage loans, other than in connection with or relating to the
RMBS Transactions, and any other businesses of Sellers other than
the Business. Excluded Businesses shall include any Origination
Business or forced placed business or title insurance business.
“
Excluded Contract ” has the meaning specified in
Section 2.7(b) hereof; provided , that no
Servicing Agreement shall be an Excluded Contract.
“
Excluded Contracts ” has the meaning specified in
Section 2.7(b) hereof; provided , that none of
the Servicing Agreements shall be Excluded Contracts.
“
Expense Reimbursement ” has the meaning specified in
Section 9.2(b) hereof.
“
Fair Housing Act ” means the Fair Housing Act
promulgated under Title VIII of the Civil Rights Act of 1968.
“
Filing Subsidiaries ” means Parent and the Company and
the Affiliates of the Company set forth on
Schedule 1.1(f) .
“
Final Determination ” means (i) with respect to
federal income Taxes, a “determination” as defined in
Section 1313(a) of the Code or execution of an Internal Revenue
Service Form 870AD, and (ii) with respect to other Taxes,
any final determination of liability in respect of a Tax that,
under applicable Law, is not subject to further appeal, review or
modification through proceedings or otherwise (including the
expiration of a statute of limitations or a period for the tiling
of claims for refunds, amended returns or appeals from adverse
determinations).
“
Final Determination Date ” means the date upon which
(i) the parties mutually agree upon the Audit Reports prepared
pursuant to Section 4.2(c) or (ii) the Arbitrating
Accountants enter into their final and binding decision regarding
the audit report pursuant to Section 4.2(d) .
“
Final Disclosure Schedules ” means the disclosure
schedules as provided in this Agreement and required to be
delivered by Sellers to Purchaser as set forth in
Section 6.9 .
“
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 is
pending 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.
“
Financial Statements ” means the audited consolidated
balance sheets of the Parent as of December 31, 2005, together
with the consolidated statements of income, shareholders’
equity and cash flow for the year then ended.
“
First Amended and Restated Agreement ” has the meaning
set forth in the Recitals.
“
First Lien Advances Amount ” means, as of any date
with respect to the Servicing Agreements, an amount equal to 95% of
the aggregate amount of Advances relating to Mortgage Loans under
the Servicing Agreements secured by first liens on the Mortgaged
Property, which amount shall be determined pursuant to the audit
described in Section 4.2(c) .
“
Fixtures and Equipment ” means all furniture,
furnishings, vehicles, equipment, 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.
“
GAAP ” means United States generally accepted
accounting principles, applied on a consistent basis.
“
Governmental Authorizations ” means all licenses,
permits, certificates and other authorizations and approvals
related to the Business and issued by or obtained from a Government
Entity.
“
Government Entity ” means any federal, state or local
court, administrative body or other governmental or
quasi-governmental entity with competent jurisdiction, including
the Department of Housing and Urban Development, the Federal
National Mortgage Association, the Government National Mortgage
Association, the Federal Home Loan Mortgage Corporation and the
Federal Trade Commission.
“
Government Requirements ” has the meaning specified in
Section 5.4 hereof.
“
Holdback Release Amount ” has the meaning specified in
Section 11.10(a) hereof.
“
Holdback Release Date ” has the meaning specified in
Section 11.10(a) hereof.
“
HSR Act ” means the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended.
“
Indebtedness ” means (i) all indebtedness for
borrowed money or for the deferred purchase price of property or
services (other than current trade Liabilities incurred in the
Ordinary Course of Business and payable in accordance with
customary practices), (ii) any other indebtedness that is
evidenced by a note, bond, debenture or similar instrument,
(iii) all obligations under financing leases, (iv) all
obligations in respect of acceptances issued or created,
(v) all Liabilities secured by any lien on any property and
(vi) all guarantee obligations.
“
Indemnification Holdback Amount ” means an amount
initially equal to $5,000,000.
“
Indemnitee ” means the Person or Persons entitled to,
or claiming a right to, indemnification under
Article XI hereof.
“
Indemnitor ” means the Person or Persons claimed by
the Indemnitee to be obligated to provide indemnification.
“
Independent Accounting Firm ” has the meaning
specified in Section 4.5(a) hereof.
“
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,
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
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 without
limitation databases and other compilations of information),
including mask rights and IT Inventories, 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.
“
Intellectual Property License ” means a license or
other right to use any Intellectual Property set forth on
Schedule 5.20(a)(v) .
“
IRS ” means the Internal Revenue Service.
“
IT Assets ” means IT Inventories, Technical
Documentation, Software Contracts and Computer Equipment, in each
case Related to the Business.
“
IT Inventories ” means (i) computer software code
(in all media) and materials, including all software programs;
(ii) computer software documentation, including user
materials; and (iii) all other unused or reusable materials,
stores, and supplies related to computer software, in each case to
the extent used in, relating to, or arising out of the Business, as
set forth on Schedule 5.20(a) .
“
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) .
“
Law ” means any Law, statute, ordinance, rule,
regulation, code, order, judgment, writ, injunction, decree,
enacted, issued, promulgated, enforced, or entered by a Government
Entity.
“
Lease ” means each lease or other Contract pursuant to
which Seller leases any Real Property or personal property, either
as lessor or lessee.
“
Lease and Subservicing Agreement ” means a Lease and
Subservicing Agreement, to be dated as of the Closing Date, between
Purchaser and the Company, in form and substance acceptable to
Sellers and Purchaser.
“
Leased Real Property ” means all real property,
including leasehold improvements, that is the subject of the
Assigned Leases, as set forth on Schedule 1.1(d) .
“
Liabilities ” means any and all 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.
“
Lien ” means any lien, charge, claim, pledge, security
interest, conditional sale agreement or other title retention
agreement, lease, mortgage, security interest, option or other
encumbrance (including the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code of any
jurisdiction).
“
Loss ” or “ Losses ” means any and
all losses, liabilities, costs, claims, damages, penalties and
expenses (including all reasonable attorneys’ fees and
expenses and costs of investigation, enforcement and
litigation).
“
Material Adverse Effect ” means any change, effect,
event or circumstance, that, individually or in the aggregate, is
materially adverse to the Purchased Assets, the Business or the
ability of Sellers to perform their obligations under this
Agreement, except for any change, effect, event, or circumstance
relating to (i) the economy or the financial markets in
general, (ii) the industry in which the Business operate in
general and not specifically relating to 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 a 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 securities issued in the RMBS
Transactions.
“
Materials of Environmental Concern ” means chemicals,
pollutants, contaminants, wastes, toxic or hazardous substances,
materials and wastes, petroleum and petroleum products, asbestos
and asbestos-containing materials, polychlorinated hiphenyls, lead
and lead-based paints and materials, and radon.
“
Mortgage Loans ” means any residential mortgage loan
or other extension of credit secured by a Lien on real property of
a borrower originated or purchased by Sellers or any of their
Affiliates or purchased by Sellers or their Affiliates and included
in or relating to the RMBS Transactions, including the related REO
Properties.
“
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 5.13(a) hereof.
“
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.
“
Multiemployer Plan ” means any plan that is a
“multiemployer plan,” as defined in Section 3(37)
or Section 4001(a)(3) of ERISA, which is maintained or
contributed to for employees of Seller or any ERISA Affiliate or
with respect to which Sellers or any ERISA Affiliate has any
Liability or reasonable expectation of Liability.
“
New Century Portfolio-Related Assets ” means the RMBS
Transactions numbered 13 through 28 in the definition thereof.
“
New Century Portfolio-Related Assets Deduction ” has
the meaning specified in Section 4.2 hereof.
“
Non-Business Portion ” has the meaning specified in
Section 2.6(a) hereof.
“
Non-Competition Covenants ” has the meaning specified
in Section 6.9(c) hereof.
“
Non-Governmental Authorizations ” means all licenses,
permits, certificates and other authorizations and approvals other
than Governmental Authorizations that are (i) held by Seller
or any of their Affiliates and (ii) related to the
Business.
“
Non-Transferred Asset ” has the meaning specified in
Section 2.5(a) hereof.
“
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.
“
Ordinary Course of Business ” means the ordinary
course of business of the Business, consistent with past custom and
practice of the Business.
“
Organizational Documents ” means, with respect to a
limited partnership, the certificate of limited partnership,
limited partnership agreement and subscription agreements with such
partnership’s partners then in effect; with respect to a
limited liability company, the certificate of formation, limited
liability company agreement and subscription agreements with such
company’s members then in effect; with respect to a
corporation, the articles or certificate of incorporation and
by-laws of such corporation then in effect; and, with respect to
any other entity, comparable organizational documents of such
entity, in each case, as then in effect.
“
Original Agreement ” has the meaning specified in the
Recitals.
“
Origination Business ” has the meaning specified in
the Recitals.
“
Parent ” has the meaning specified in the
preamble.
“
Patents ” has the meaning specified in the
“Intellectual Property” definition.
“
Pending Claims ” has the meaning specified in the
Escrow Agreement.
“
Permits ” means permits, concessions, grants,
franchises, licenses and other authorizations and approvals
required or issued by any Government Entity and primarily used or
held for use in connection with the Business.
“
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.
“
Petition ” has the meaning specified in the
Recitals.
“
Petition Date ” has the meaning specified in the
Recitals.
“
Plan ” means each deferred compensation and each
bonus, retention, 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 Seller or by any ERISA Affiliate, or to which
Seller or an ERISA Affiliate is party, whether written or oral, for
the benefit of any director, employee or former employee of Seller
or any Seller Subsidiary, or with respect to which Sellers or any
ERISA Affiliate otherwise has Liability or reasonable expectation
of Liability.
“
Post-Closing Purchase Price Adjustment ” has the
meaning specified in Section 4.3(b) hereof.
“
Post-Petition Contracts ” means the Contracts of the
Filing Subsidiaries entered into by the Filing Subsidiaries, other
than in the Ordinary Course of Business or approved by the
Bankruptcy Court, in either case after April 2, 2007 and prior
to or on the date of the delivery of the Final Disclosure
Schedules.
“
Pre-Closing Audit Report ” has the meaning specified
in Section 4.2(c) .
“
Pre-Closing Period ” means any taxable period (or
portion thereof) ending on or before the close of business on the
Closing Date.
“
Proximate Cause Party ” has the meaning specified in
Section 9.1(b) hereof.
“
PTO ” has the meaning specified in
Section 3.1(d) hereof.
“
PTO Policy ” has the meaning specified in
Section 3.1(d) hereof.
“
Purchased Asset ” has the meaning specified in
Section 2.1 hereof.
“
Purchase Price ” has the meaning specified in
Section 4.1(b) hereof.
“
Purchase Price Adjustment Statement ” has the meaning
specified in Section 4.3(a) hereof.
“
Purchaser ” has the meaning specified in the
preamble.
“
Purchaser Damages ” has the meaning specified in
Section 11.2 hereof.
“
Purchaser Indemnified Parties ” means Purchaser and
each of its Affiliates.
“
Qualified Topping Bid ” has the meaning specified in
the Bidding Procedures Order.
“
Real Property ” means all real property that is leased
or owned by Sellers or that is reflected as an asset of the Company
(or the Parent, as the case may be) on the Balance Sheet and used
primarily in connection with the Business.
“
Real Property Leases ” means the leases described in
Schedule 1.1(b) pursuant to which a Seller occupies the
Leased Real Property.
“
Regulatory Approvals ” means any and all certificates,
permits, licenses, franchises, concessions, grants, consents,
approvals, orders, registrations, authorizations, waivers,
variances or clearances from, or filings or registrations with, a
Government Entity.
“
Related to the Business ” means required for, or
primarily used in connection with, the Business as conducted by
Sellers prior to the Closing.
“
REO Property ” means a Mortgaged Property acquired
under a Servicing Agreement through foreclosure, acceptance of a
deed in lieu of foreclosure or otherwise in connection with the
default or imminent default of a Mortgage Loan.
“
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.
“
Retained Liabilities ” means any and all Claims and
Liabilities of any kind or nature whatsoever of a Seller or any of
its Affiliates other than the Assumed Liabilities, including, any
Claims and Liabilities (i) arising from any early payment
default claims with respect to any Mortgage Loans or from any
deficiency with respect to any existing loan facilities of Sellers,
(ii) any Claims or Liabilities relating to any and all Plans,
Multiemployer Plans or Title IV Plans (except as set forth in
Section 3.1(d) with respect to certain PTO of
Transferred Employees), or (iii) relating to any action,
event, circumstance or condition occurring or existing on or prior
to the Closing Date, including (a) any Claims and Liabilities
arising under WARN, COBRA or any other Law pertaining to current
and former employees (or their beneficiaries) generally, (b) any
employee severance Claims or Liabilities relating to the employment
or termination of employment by Sellers of any employees of
Sellers, (c) any Claims and Liabilities relating to any Liens
on the Purchased Assets, (d) any Liabilities and obligations
arising under Contracts between Sellers, on the one hand, and any
of their Affiliates, on the other hand, (e) any and all Claims
and Liabilities for or resulting from any and all lawsuits or
governmental examinations, audits or investigations pertaining to
the period prior to the Closing Date, (f) any and all Claims
and Liabilities for or resulting from Taxes attributable to the
Purchased Assets for any Pre-Closing Period or the income or
operations of the Business for any Pre-Closing Period, (g) any
and all Transfer Taxes in connection with the Closing of the
transactions contemplated hereby, (h) any and all Liabilities
for or resulting from Environmental Claims or under any
Environmental Laws, and (i) any and all Liabilities for or
resulting from any action, suit, proceeding or investigation
brought against a Seller or any of its Affiliates by any Government
Entity based upon a Seller’s or any of its Affiliate’s
conduct of the Business prior to the Closing Date or a
Seller’s or any of its Affiliate’s failure, or alleged
failure, to comply with all applicable Laws prior to the Closing
Date.
“
RMBS Transactions ” mean the following residential
mortgage-backed securities transactions:
| |
1. |
|
Carrington Mortgage Loan Trust, Series 2004-NC1 |
| |
2. |
|
Carrington Mortgage Loan Trust, Series 2004-NC2 |
| |
3. |
|
Carrington Mortgage Loan Trust, Series 2005-NC1 |
| |
4. |
|
Carrington Mortgage Loan Trust, Series 2005-NC2 |
| |
5. |
|
Carrington Mortgage Loan Trust, Series 2005-NC3 |
| |
6. |
|
Carrington Home Equity Loan Trust, Series 2005-NC4 |
| |
7. |
|
Carrington Mortgage Loan Trust, Series 2005-NC5 |
| |
8. |
|
Carrington Mortgage Loan Trust, Series 2006-NC1 |
| |
9. |
|
Carrington Mortgage Loan Trust, Series 2006-NC2 |
| |
10. |
|
Carrington Mortgage Loan Trust, Series 2006-NC3 |
| |
11. |
|
Carrington Mortgage Loan Trust, Series 2006-NC4 |
| |
12. |
|
Carrington Mortgage Loan Trust, Series 2006-NC5 |
| |
13. |
|
New Century Home Equity Loan Trust, Series 2003-2 |
| |
14. |
|
New Century Home Equity Loan Trust, Series 2003-3 |
| |
15. |
|
New Century Home Equity Loan Trust, Series 2003-4 |
| |
16. |
|
New Century Home Equity Loan Trust, Series 2003-5 |
| |
17. |
|
New Century Home Equity Loan Trust, Series 2003-6 |
| |
18. |
|
New Century Home Equity Loan Trust, Series 2004-1 |
| |
19. |
|
New Century Home Equity Loan Trust, Series 2004-2 |
| |
20. |
|
New Century Home Equity Loan Trust, Series 2004-3 |
| |
21. |
|
New Century Home Equity Loan Trust, Series 2004-4 |
| |
22. |
|
New Century Home Equity Loan Trust, Series 2005-1 |
| |
23. |
|
New Century Home Equity Loan Trust, Series 2005-2 |
| |
24. |
|
New Century Home Equity Loan Trust, Series 2005-3 |
| |
25. |
|
New Century Home Equity Loan Trust, Series 2005-4 |
| |
26. |
|
New Century Home Equity Loan Trust, Series 2006-1 |
| |
27. |
|
New Century Home Equity Loan Trust, Series 2006-2 |
| |
28. |
|
New Century Home Equity Loan Trust, Series 2006-S1 |
“
Sale ” means the sale of the Purchased Assets in
accordance with the Bidding Procedures Order.
“
Sale Approval Order ” means an Order or Orders of the
Bankruptcy Court issued pursuant to Sections 363 and 365 of
the Bankruptcy Code, substantially in the form set forth in
Exhibit E .
“
Sale Hearing ” has the meaning specified in the
Bidding Procedures Order.
“
Sale Motion ” means the motion filed by Parent with
the Bankruptcy Court for the approval of the Sale Approval Order in
the form of a Final Order.
“
SEC ” means the U.S. Securities and Exchange
Commission.
“
Second Lien Advances Amount ” means, as of any date,
an amount equal to (i) 95% of the aggregate amount of Advances
relating to Mortgage Loans under the Servicing Agreements secured
by second liens on the Mortgaged Property, which amount shall be
determined pursuant to the audit described in
Section 4.2(c) , minus (ii) any amounts
previously collected and paid pursuant to
Section 4.1(b) to Sellers in a previous collection
period under the Servicing Agreements after the Closing Date.
“
Second Lien Advances Purchase Price ” has the meaning
specified in Section 4.1(b) hereof.
“
Securities Act ” means the Securities Act of 1933, as
amended.
“
Seller Damages ” has the meaning specified in
Section 11.4 hereof.
“
Seller Indemnified Parties ” means Sellers and each of
their Affiliates.
“
Sellers ” has the meaning specified in the
preamble.
“
Separation Shared Contracts ” means those Shared
Contracts set forth on Schedule 2.6(a) .
“
Servicer ” means the “Servicer” or
“Master Servicer” as defined in any Servicing
Agreement.
“
Servicer Advance Facility ” means the Servicer Advance
Financing Facility Agreement, dated as of August 28, 2003, by
and between Citigroup Global Markets Realty Corp., a New York
corporation, and the Company.
“
Servicer Advance Facility Amount ” means all
Obligations (as defined in the Servicer Advance Facility) due and
owing under the Servicer Advance Facility as of the Closing Date,
as determined and agreed to by Citigroup Global Markets Realty
Corp. or by the Bankruptcy Court and set forth on the Servicer
Advance Facility Schedule or all Obligations (as such term is
defined in the DIP Financing Agreement) that are due and owing
under Tranche B of the DIP Financing Agreement on the Closing Date,
as applicable.
“
Servicer Advance Facility Schedule ” means the
schedule setting forth the Servicer Advance Facility Amount and
delivered by Sellers pursuant to Section 8.3(d) .
“
Servicer Indemnity ” means the Servicer’s
express indemnity obligations under the sections of the Servicing
Agreements set forth on Schedule 2.7(g) .
“
Servicing Agreements ” means the servicing agreements,
pooling and servicing agreements, subservicing agreements, master
servicing agreements, interim servicing agreements and related
agreements which are identified on Schedule 1.1(i) ,
including all documents attached as an exhibit or schedule to or
incorporated by reference into any Servicing Agreement.
“
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 Licenses ” means the licenses required by
Law or a Government Entity in order to engage in the Business,
including the licenses listed on Schedule 1.1(e) .
“
Servicing Litigation ” has the meaning specified in
Section 6.6(d) hereof.
“
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 and 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,
servicers or subservicer under the Servicing Agreements as
expressly set forth therein; provided , that all
indemnification rights and obligations of Sellers under the
Servicing Agreements arising prior to the Closing Date and relating
to the operation of the Business prior to the Closing Date, shall
not be transferred to Purchaser.
“
Shared Contract ” means any Contract or arrangement
(i) that is set forth on Schedule 2.6(a) and
2.6(b) and (ii) under which (A) the Business and
(B) at least one other business unit of Sellers or their
Affiliates purchase or sell goods or services or otherwise have
rights or obligations.
“
Software Contracts ” means all Contracts, agreements,
licenses, and other commitments and arrangements, with the
exception of generally available or off-the-shelf shrink wrap
licenses acquired for under $5,000, with any person or entity
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 relating to or arising
out of the Business, other than such of the foregoing as are
identified in the Excluded Assets. As of the date hereof, the
Software Contracts consist of 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) distributorships, dealerships, franchises, and
manufacturer’s representative contracts; (v) licenses
and sublicenses to others; and (vi) maintenance, support, or
enhancement agreements.
“
Straddle Period ” has the meaning specified in
Section 7.2(b) hereof.
“
Straddle Period Taxes ” has the meaning specified in
Section 7.2(b) hereof.
“
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 (excluding any such partnership where such Person
or any Subsidiary of such Person does not have a majority of the
voting interest in such partnership).
“
Supplemental Motion ” has the meaning specified in
Section 2.7(d) hereof.
“
Supplemental Order ” has the meaning specified in
Section 2.7(d) hereof.
“
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, 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 transferee or
secondary Liability in respect of taxes, including, in each case,
any interest, penalty, or addition thereto, whether disputed or
not.
“
Tax Return ” means any return, declaration, report,
claim for refund, 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 (other than Inventory) relating to the
acquisition, design, development, use, or maintenance of computer
code, program documentation, Computer Equipment and materials in
Sellers’ Business.
“
Third Party Claim ” has the meaning specified in
Section 11.8(a) hereof.
“
Title IV Plan ” means a plan that is subject to
Section 302 or Title IV of ERISA or Section 412 of the
Code.
“
Trademarks ” has the meaning specified in the
“Intellectual Property” definition.
“
Trade Secrets ” has the meaning specified in the
“Intellectual Property” definition.
“
Transfer Instructions ” means the transfer
instructions agreed by Sellers and Purchaser pursuant to
Section 6.6(a) .
“
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, and as set forth on
Schedule 5.20(b) .
“
Transferred Shared Contract ” means those Shared
Contracts that are set forth on Schedule 2.6(b) .
“
Transition Services Agreement ” means a transition
services agreement to be dated as of the Closing Date, between
Purchaser and the Company, in form and substance acceptable to
Sellers and Purchaser.
“
TRS ” has the meaning specified in
Section 5.2 hereof.
“
Unresolved Portion ” has the meaning specified in
Section 11.10(a) hereof.
“
WARN ” means the U.S. Worker Adjustment and Retraining
Notification Act of 1988, as amended or any similar state or local
Law (including, for the avoidance of doubt, the California Worker
Adjustment and Retraining Notification Act, as amended).
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 arc 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.
(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.
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 and except as
provided in Section 2.7 , at the Closing, Sellers shall
sell, convey, transfer, assign and deliver to Purchaser, and
Purchaser shall purchase from Sellers, free and clear of all
“claims” (as defined in the Bankruptcy Code) and Liens,
all of the right, title and interest of all Sellers in and to the
following assets, whether tangible or intangible, real, personal or
mixed, except for the Excluded Assets (collectively, the “
Purchased Assets ”):
(a) all of
Sellers’ Servicing Rights and rights to receive Servicing
Fees with respect to the Carrington-Related Assets on and after the
Closing Date;
(b) all of
Sellers’ Servicing Rights and rights to receive Servicing
Fees with respect to the New Century Portfolio-Related Assets on
and after the Closing Date;
(c) except
for Contracts included in the Excluded Assets, all
(i) Contracts set forth in Schedule 2.1(c) ,
(ii) Real Property Leases, (iii) Intellectual Property
Licenses, (iv) subject to Section 2.6 , rights under
Separation Shared Contracts that relate primarily to the conduct of
the Business, (v) Transferred Shared Contracts, (vi) the
Assigned Leases and (vii) Contracts entered into or made by any
Seller Related to the Business after April 2, 2007 and before
the Closing; provided that, in the case of any such Contract
referred to in this clause (vii) , Sellers shall have
furnished Purchaser a true, correct and complete copy of such
Contract and, after a reasonable opportunity to review such
Contract, Purchaser shall have consented in writing to assume such
Contract (all contracts described in clauses (i) through
(vii) of this Section 2.1(c), collectively, the “
Assumed Contracts ”), which Consent shall not be
unreasonably withheld or delayed;
(d) all
Transferred Intellectual Property;
(e) all
Books and Records Related to the Business that are not Excluded
Assets;
(f) all
Fixtures and Equipment Related to the Business;
(g) all IT
Assets Related to the Business;
(h) the
Leased Real Property, including all easements and other rights and
interests appurtenant thereto;
(i) all
Advances;
(j) all
credits, prepaid expenses, deferred charges, security deposits,
prepaid items and duties to the extent primarily related to a
Servicing Agreement or a Purchased Asset;
(k) 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
to the extent primarily related to the Purchased Assets and arising
or accruing from and after the Closing or to the extent primarily
related to the Assumed Liabilities, whether arising by way of
counterclaim or otherwise (“ Assumed Rights and Claims
”);
(l) all
guaranties, warranties, indemnities and similar rights in favor of
Sellers or any of their Affiliates to the extent related to any
Servicing Agreement or Purchased Asset, other than any guaranties,
warranties, indemnities and similar rights in favor of Sellers or
any of their Affiliates arising prior to the Closing Date; and
(m) to the
extent permitted by Law, all Permits held by Sellers Related to the
Business or any of the Purchased Assets, including those listed on
Schedule 2.1(m) .
Section 2.2 Excluded Assets . Notwithstanding anything
herein to the contrary, from and after the Closing, 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 hereunder, and the Purchased Assets shall not include,
the following (collectively, the “ Excluded Assets
”):
(a) any
asset or class of assets excluded from the defined terms set forth
in Sections 2.l(a) through (m) by virtue of the
limitations expressed or implied therein;
(b) all
cash and cash equivalents, including Sellers’ bank accounts,
but excluding cash flows under, and any accounts created pursuant
to, any Servicing Agreements or any net profits generated by
operation of the Business on or after the Closing Date;
(c) 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 related to the Purchased Assets, and any Books
and Records which Sellers are required by Law to retain;
(d) 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
other than the Assumed Rights and Claims, including to any claims
of any nature relating to early payment default claimants;
(e) the
Plans and all rights or Liabilities in connection with and assets
of the Plans;
(f) any
rights, demands, claims, actions and causes of action constituting
avoidance actions of Sellers’ estate under Chapter 5 of
the Bankruptcy Code, including any and all proceeds of the
foregoing;
(g) all of
Sellers’ rights and causes of action arising under
Section 502 and 503 of the Bankruptcy Code and Rule 3007
thereunder;
(h) all of
the rights and claims of the Filing Subsidiaries available to
Filing Subsidiaries under the Bankruptcy Code, of whatever kind or
nature, as set forth in Sections 544 through 551, inclusive,
and any other applicable provisions of the Bankruptcy Code, and any
related claims and actions arising under such sections by operation
of Law or otherwise, including any and all proceeds of the
foregoing;
(i) 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);
(j) all
insurance policies and insurance proceeds that Sellers or any of
their Affiliates have a right to receive as of the Closing and that
relate to events, circumstances or occurrences prior to the Closing
(it being understood that none of Sellers or their Affiliates have
a right to receive insurance proceeds belonging to the trusts
related to the RMBS Transactions);
(k) Tax
refunds (i) Related to the Business to the extent related to
any taxable period (or portion thereof) ending on or prior to the
Closing Date and (ii) not Related to the Business related to
any taxable period (or portion thereof);
(l) the
Purchase Price and any rights Sellers may have to the
Indemnification Holdback Amount pursuant to this Agreement and the
Escrow Agreement;
(m) all
rights, claims and causes of action relating to any Excluded Asset
or any Retained Liability; and
(n) all
Excluded Contracts.
Section 2.3 Post-Closing Asset Deliveries . If either
Seller, in its reasonable discretion, determines after the Closing
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 Purchaser at no cost or expense to
Purchaser (other than Consents pursuant to
Section 2.5(a) which shall be at the cost and expense
of Purchaser). If any Seller or Purchaser, in its reasonable
discretion, determines after the Closing that books, records or
other materials constituting Excluded Assets were delivered to
Purchaser, Purchaser shall promptly return them to the applicable
Seller at Sellers’ sole cost and expense.
Section 2.4 Conveyance of Assets by Affiliates of
Sellers . Notwithstanding anything to the contrary contained in
this Agreement, if it is determined before, at or after the Closing
that any Affiliate of any Seller (an “ Affiliate
Seller ”) owns or possesses any Purchased Assets Related
to the Business if such Affiliate Seller were deemed to be a Seller
under this Agreement (such assets and properties, the “
Affiliate Purchased Assets ”), then Sellers shall,
upon Purchaser’s request, promptly cause such Affiliate
Seller to transfer, assign, convey and deliver to Purchaser such
Affiliate Purchased Assets in accordance with the terms and
conditions of this Agreement; provided , that Purchaser
shall not be obligated to pay any amounts to Sellers in
consideration for the transfer of such Affiliate Purchased Assets
to Purchaser other than those amounts that Purchaser is obligated
to pay to Sellers pursuant to Section 4.1 .
Section 2.5 Non-Assignable Permits and Contracts; Servicing
Licenses .
(a)
Non-Assignability . Notwithstanding anything to the contrary
contained in this Agreement or in any Ancillary Agreement, to the
extent that any Contract included in the Purchased Assets is not
capable of being assigned to Purchaser as contemplated by this
Agreement without the Consent of the other party or parties thereto
or the issuer thereof or any other third party (including a
Government Entity), or if such assignment or attempted assignment
without such Consent would constitute a breach thereof or a
violation of any Law, this Agreement shall not constitute an
assignment or transfer of any claim, right, benefit or obligation
thereunder, or any such attempted assignment, unless any such
Consent is obtained at or prior to the date of such attempted
assignment (any such Contract that is not capable of being assigned
to Purchaser at the Closing as contemplated by this
Section 2.5(a) , a “ Non-Transferred Asset
”).
(b) Efforts
to Obtain Consents and Waivers . At Purchaser’s request,
and at Purchaser’s cost and expense, each Seller shall use
commercially reasonable efforts, and Purchaser shall provide
reasonable cooperation to each Seller, to obtain the Consents
referred to in Section 2.5(a) with respect to any
Non-Transferred Asset after the Closing.
(c) If
Waivers or Consents Cannot be Obtained . Except with respect to
the Servicing Licenses, which are covered under
Section 2.5(e) , until the Consents referred to in
Section 2.5(a) with respect to any Non-Transferred
Assets are obtained, Sellers’ sole responsibility with
respect to such Non-Transferred Assets, notwithstanding
Section 2.1 , shall be to use all commercially
reasonable efforts, at the cost and expense of Purchaser, for the
period ending on the earlier of the one-year anniversary of the
Closing Date or the effective date of any plan of reorganization of
Sellers confirmed in the Bankruptcy Cases, to: (i) provide to
Purchaser the benefits of such Non-Transferred Asset;
(ii) cooperate in any reasonable and lawful arrangement
designed to provide such benefits to Purchaser; and
(iii) enforce for the account of Purchaser any rights of
Sellers arising from such Non-Transferred Asset against the other
party or parties thereto or the issuer thereof. Purchaser shall
indemnify and hold harmless Sellers against and from any Loss
incurred by Sellers arising from or related to any and all actions
taken by either Seller pursuant to this Section 2.5(c)
at the direction of Purchaser.
(d)
Obligation of Purchaser to Perform . Other than with respect
to Servicing Licenses, to the extent that Purchaser is provided the
benefits pursuant to Section 2.5(c) of any Non-Transferred
Asset, Purchaser shall perform, on behalf of Sellers, for the
benefit of Sellers and the other party or parties thereto or the
issuer thereof the obligations of Sellers thereunder or in
connection therewith and if Purchaser shall fail to perform to the
extent required herein, Sellers, without waiving any rights or
remedies that they may have under this Agreement or applicable
Laws, may suspend their performance under
Section 2.5(c) in respect of the instrument that is the
subject of such failure to perform unless and until such situation
is remedied, at either Sellers’ option, or Sellers may
perform at Purchaser’s sole cost and expense such
obligations, in which case Purchaser shall reimburse Sellers’
reasonable costs and expenses of such performance as promptly as
practicable following receipt of an invoice therefor. Purchaser
shall indemnify and hold harmless Sellers against and from any Loss
incurred by Sellers arising from or related to any and all actions
taken by either Seller pursuant to this Section 2.5(d)
at the direction of Purchaser.
(e) Servicing
Licenses . Purchaser shall use all commercially reasonable
efforts to obtain all Servicing Licenses required in connection
with the Business as promptly as possible, and Sellers shall
cooperate with, and provide assistance to, Purchaser in all such
efforts. If and to the extent Purchaser shall not have obtained all
such Servicing Licenses prior to the Closing, (i) the Company
shall perform such activities under the Servicing Agreements as are
required from time to time to be performed by a Person with such
Servicing Licenses in compliance with Law, in each case for a
servicing fee to be mutually agreed by Purchaser and the Company
(which fee shall not be less than the Company’s actual costs
incurred in performing such activities), (ii) Purchaser and
the Company shall enter into the Lease and Subservicing Agreement,
which may include a lease back to the Company of any Purchased
Assets and Assumed Liabilities, including any employees, Servicing
Rights, IT Assets or Permits required in order to conduct the
Business in compliance with Law or (iii) Purchaser and the
Company shall enter into another arrangement mutually satisfactory
to Purchaser and Sellers. The Lease and Subservicing Agreement or
other arrangement shall terminate on the six-month anniversary of
the Closing Date, unless earlier terminated by mutual agreement of
the parties thereto. As of the date hereof, Purchaser has contacted
and shall continue to contact the state regulators in all states
where Servicing Licenses are required in order to ascertain if any
state regulator will object to such arrangements, and shall use all
commercially reasonable efforts to inform and consult with all such
state regulators as to such arrangements contemplated in this
Section 2.5(e) and to avoid any objection thereto.
Section 2.6 Shared Contracts .
(a)
Separation of Certain Shared Contracts for Benefit of
Purchaser . Prior to the Closing, Sellers and Purchaser shall
use commercially reasonable efforts to work together (and, if
necessary and desirable, to work with the third parties to the
Separation Shared Contracts) in an effort to (i) divide,
modify and/or replicate (in whole or in part) the respective rights
and obligations under and in respect of the Separation Shared
Contracts and (ii) if reasonably feasible, novate the
respective rights and obligations under and in respect of the
Separation Shared Contracts, such that, effective as of the
Closing, (A) Purchaser is the beneficiary of the rights and is
responsible for the obligations related to that portion of the
Separation Shared Contract Related to the Business and included in
the Purchased Assets (the “ Business Portion ”)
so that, subsequent to the Closing, Sellers shall have no rights or
obligations with respect to the Business Portion of the Separation
Shared Contract, and (B) the applicable Seller is the
beneficiary of the rights and is responsible for the obligations
related to that portion of the Separation Shared Contract other
than the Business Portion (the “ Non-Business Portion
”) so that, subsequent to the Closing, Purchaser shall have
no rights or obligations with respect to the Non-Business Portion
of the Separation Shared Contract. If the applicable parties are
not able to enter into an arrangement to formally divide, modify
and/or replicate one or more Separation Shared Contracts prior to
the Closing as contemplated by the previous sentence, then
(i) Purchaser shall be entitled to the benefits of the
Business Portion of any such Separation Shared Contract accruing on
or after the Closing Date to the extent (and only to the extent)
that Sellers may provide such benefits (A) without violating
the terms of such Separation Shared Contract and (B) without
incurring any material expense (and any such expense shall be
reimbursed by Purchaser) and (ii) to the extent Purchaser
receives such benefits, Purchaser shall perform at its sole cost
and expense the obligations of the applicable Seller to be
performed after the Closing under the Business Portion of such
Separation Shared Contract as in effect on the Closing Date until
the earliest of (i) such time as separate Contracts for such
goods or services have been agreed between such Seller and the
other party to such Contracts, (ii) the election by Seller to
terminate such arrangement, (iii) the termination of such
Separation Shared Contract and (iv) the date which is
12 months after the Closing Date.
(b) Other
Shared Contracts . With respect to any Transferred Shared
Contract that is, at Sellers’ sole option, transferred to
Purchaser at the Closing, Purchaser shall provide the applicable
Seller with the benefits of such Transferred Shared Contract in
substantially the manner described in Section 2.6(a)
above (subject to the limitations set forth therein), and such
Seller shall reimburse Purchaser for such benefits in substantially
the manner described in Section 2.6(a) above (subject
to the limitations set forth therein), until the earliest of
(i) such time as separate Contracts for such goods or services
have been agreed between such Seller and the other party to such
Contracts, (ii) the election by Seller to terminate such
arrangement, (iii) the termination of such Transferred Shared
Contract and (iv) the date which is 12 months after the
Closing Date.
Section 2.7 Assumption of Certain Liabilities .
(a) On the
terms of and subject to the conditions set forth herein, Purchaser
shall (i) assume at the Closing and discharge or perform when
due the Assumed Liabilities on and after the Closing Date and
(ii) assume all obligations for and pay and discharge when due
the Cure Amounts relating to each Assigned Contract at the
respective Contract Determination Date for such Assigned Contract;
provided , that, except as set forth in
Section 2.7(b) , in no event shall Purchaser assume and
discharge when due the Cure Amounts relating to the Excluded
Contracts. Except as set forth in this Section 2.7 ,
Purchaser shall not assume or have any Liability or responsibility
with respect to any Liability of any nature or kind whatsoever
relating to the Business or the Purchased Assets that exists, or
arises out of the operation or ownership of the Purchased Assets or
the Business, prior to, at or after, the Closing and that is not an
Assumed Liability. Except as set forth in this
Section 2.7 , other than the Assumed Liabilities,
Purchaser shall not assume any Liability of any nature or kind
whatsoever of Sellers.
(b) From
time to time after the date hereof, but in no event later than
60 days following the Closing Date or, if such date does not
fall on a Business Day, the next succeeding Business Day (the
“ Contract Notification Deadline ”), Purchaser
shall, in its sole discretion, notify Sellers of (i) each
Assigned Contract that Purchaser has agreed to assume (each, an
“ Accepted Contract ” and, collectively, the
“ Accepted Contracts ”) and (ii) each
Assigned Contract that Purchaser does not desire to assume (each,
an “ Excluded Contract ” and, collectively, the
“ Excluded Contracts ”); provided , that
any Assigned Contract that has not been designated by Purchaser as
either an Accepted Contract or an Excluded Contract by the Contract
Notification Deadline shall be deemed to be an Excluded Contract;
and provided , further , that Sellers shall not be
deemed in breach under this Agreement (whether as a result of an
inaccuracy in a representation or warranty or breach of a covenant)
or otherwise if Sellers shall reject an Excluded Contract.
Purchaser shall be responsible for and shall pay to each applicable
Person that is a party to an Accepted Contract the respective Cure
Amount for such Accepted Contract on the Contract Determination
Date for such Accepted Contract. In furtherance of the foregoing,
the Sale Approval Order shall provide that the assignment and
assumption to Purchaser of the Assigned Contracts is approved,
subject only to (A) payment by Purchaser of the Cure Amounts
for each Assigned Contract, (B) resolution of any assumption
objection under Section 365(c)(1) or (c)(2) of the Bankruptcy
Code and (C) Purchaser’s right to designate any Assigned
Contract an Excluded Contract in accordance with the terms of this
Section 2.7(b) . From the date hereof until the
Contract Notification Deadline, Sellers shall not reject any
Assigned Contract unless such contract has been designated an
Excluded Contract by Purchaser; provided , that Sellers
shall not be deemed in breach under this Agreement (whether as a
result of an inaccuracy in a representation or warranty or breach
of a covenant) or otherwise if Sellers shall reject an Excluded
Contract. Purchaser shall be responsible for, and shall pay in
accordance with Section 2.7(c) , all costs incurred by
Sellers with respect to, and all amounts due by or on behalf of
Sellers under, each Assigned Contract, together with all of
Sellers’ reasonable, necessary, ordinary course, post-Closing
obligations that are specifically attributable to each such
Assigned Contract (the “ Carrying Costs ”)
during the period from the Closing Date through the Contract
Determination Date for each such Assigned Contract. Except as set
forth in this Section 2.7 , Purchaser’s Carrying
Costs shall not include any attorneys’ or financial advisory
fees arising from and directly related to the Bankruptcy Cases or
Sellers and their Affiliates status as debtors-in-possession under
Chapter 11 of the Bankruptcy Code. With respect to each
Assigned Contract, between the Closing Date and such Assigned
Contract’s respective Contract Determination Date, Sellers
shall provide, to the extent reasonably necessary for Purchaser to
operate the Business after the Closing Date and at
Purchaser’s sole cost and expense, a subcontract, sublease or
sublicense, as may be applicable, to Sellers’ rights Related
to the Business pursuant to such Assigned Contract.
(c) With
respect to each Assigned Contract, Sellers shall, within
60 days after the later of (i) the Contract Determination
Date for such Assigned Contract or (ii) the Contract
Notification Deadline, advise Purchaser in writing of the amount of
the Carrying Costs with respect to such Assigned Contract in
sufficiently reasonable detail; provided , that, without
limiting the foregoing, Sellers, in their sole discretion, may
advise Purchaser in writing of the amount of Carrying Costs at any
time with respect to any Assigned Contract the Carrying Costs of
which are equal to or greater than $100,000. Purchaser shall pay
the Carrying Costs as so indicated within 10 Business Days after
such notification; provided , that Purchaser may object to
the Carrying Costs within such 10 Business Day period. If Purchaser
makes such an objection, Sellers and Purchaser shall first use good
faith efforts to resolve such objection and, absent resolution
within 10 Business Days of Purchaser’s objection, the matter
shall be submitted to the Bankruptcy Court, whose determination
shall be final and binding upon the parties.
(d) Sellers
shall file a motion (the “ Supplemental Motion
”) with the Bankruptcy Court for entry of an Order of the
Bankruptcy Court (the “ Supplemental Order ”) to
assume and assign to Purchaser any additional Contracts or any
Separation Shared Contracts, in each case that have not been
previously rejected by Sellers, as identified by Purchaser and
approved by Sellers in their sole discretion (each, an “
Additional Contract ” and, collectively, the “
Additional Contracts ”) that, for any reason, are not
assumed and assigned to Purchaser pursuant to the Sale Approval
Order, with the same effect as if such Contracts had been Assigned
Contracts (i) under the Sale Approval Order, including setting
a proposed cure amount and seeking a Cure Finding therefor, and
(ii) under this Section 2.7 , including with
respect to the obligation to pay the Cure Amount and Carrying Costs
with respect to each such Additional Contract; provided ,
that Purchaser’s obligation to pay the Carrying Costs for any
Additional Contract shall commence upon the date that Sellers
approve Purchaser’s request to treat such contract as an
Additional Contract hereunder. The Sale Approval Order shall
provide that a motion to assume and assign an Additional Contract
shall be on notice only to Purchaser and to the non-debtor party or
parties to such Contract. If the non-debtor party to any such
Additional Contract objects to the assumption and assignment of
such Contract or to Sellers’ proposed cure amount, then
Sellers shall either settle, at Purchaser’s cost, the
objection of such party (subject to approval of Purchaser) or shall
litigate, at Purchaser’s cost, such objection under such
procedures as the Bankruptcy Court shall approve and proscribe. The
Contract Notification Deadline for any Additional Contract shall be
deemed to be, and shall be extended until, the later of
(x) the date that is 45 days after the date that such
Additional Contract is identified by Purchaser to Sellers, subject
to the approval of Sellers in their sole discretion; and
(y) the date that is three Business Days after the date that
the Bankruptcy Court makes a Cure Finding for such Contract (in
each case if such date would be after the date that would otherwise
be the Contract Notification Deadline). The Sale Approval Order
shall provide that with respect to any action required or permitted
to be taken by Sellers pursuant to this Section&nbs
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