Exhibit 10.1(a)
EXECUTION VERSION
AMENDED AND RESTATED MASTER REPURCHASE
AGREEMENT
CREDIT SUISSE, NEW YORK BRANCH, as
administrative agent (“ Administrative Agent
”)
FIELDSTONE INVESTMENT CORPORATION, as seller
(“ Seller ”),
FIELDSTONE MORTGAGE COMPANY, as seller (“
Seller ”) and
THE SEVERAL GROUP AGENTS, CONDUIT BUYERS AND
COMMITTED BUYERS PARTY HERETO FROM TIME TO TIME
Dated November 14, 2006
1
TABLE OF CONTENTS
Page
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3.
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Program;
Initiation of Transactions
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11.
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Program; Costs;
Illegality
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13.
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Representations
and Warranties
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16.
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Remedies Upon
Default
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18.
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Repurchase
Transactions
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20.
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Notices and
Other Communications
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21.
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Entire
Agreement; Severability
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24.
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Binding Effect;
Governing Law; Jurisdiction
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27.
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Disclosure
Relating to Certain Federal Protections
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29.
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Buyers and
Administrative Agent May Act Through Affiliates
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30.
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Indemnification; Obligations
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33.
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Recording of
Communications
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34.
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Actions
Requiring Consent
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35.
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No Proceedings;
Waiver of Setoff
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36.
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Periodic Due
Diligence Review
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38.
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Acknowledgement
Of Anti-Predatory Lending Policies
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39.
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Documents
Mutually Drafted
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40.
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General
Interpretive Principles.
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41.
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The
Administrative Agent; The Group Agents
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44.
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Amendments and
Waivers
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Schedule 1
— Representations and Warranties with Respect to Purchased
Mortgage Loans
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Schedule 2
– Authorized Representatives
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Exhibit A
– Form of Transaction Request
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Exhibit B
– Form of Purchase Confirmation
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Exhibit C
– Form of Mortgage Loan Schedule
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Exhibit D
– Form of Officer’s Compliance Certificate
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Exhibit F
– Form of Opinion of Sellers’ counsel
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Exhibit G
– Underwriting Guidelines
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Exhibit H
– Officer’s Certificate of the Sellers and Corporate
Resolutions of Sellers
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Exhibit I
– Sellers’ Tax Identification Number
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Exhibit J
– Existing Indebtedness
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Exhibit K
— Escrow Instruction Letter
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Exhibit M
– Form of Servicer Notice
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Exhibit O
– Mortgage Loan Reports
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2
PRELIMINARY STATEMENTS
WHEREAS, the parties previously entered into a
master repurchase agreement, dated November 8, 2005 (the
“ Existing Repurchase Agreement ”).
WHEREAS, the parties have requested that the
Existing Repurchase Agreement be amended and restated on the terms
and conditions set forth herein.
Accordingly, the parties hereby agree, in
consideration of the mutual promises and mutual obligations set
forth herein, that the Existing Repurchase Agreement is hereby
amended and restated as set forth herein.
1. Applicability
From
time to time the parties hereto may enter into transactions in
which a Seller agrees to transfer to the Administrative Agent for
the benefit of the Buyers Mortgage Loans (as hereinafter defined)
against the transfer of funds by the Administrative Agent for the
benefit of the Buyers, and the Administrative Agent on behalf of
the Buyers shall be obligated to transfer to such Seller such
Mortgage Loans at a date certain or on demand, against the transfer
of funds by such Seller. This Agreement is a commitment by
Committed Buyers to engage in the Transactions as set forth herein
up to their respective Commitments; provided, that the Committed
Buyers shall have no commitment to enter into any Transaction
requested which would result in the aggregate Purchase Price of
then outstanding Transactions to exceed the Maximum Committed
Purchase Price. No more than one (1) Transaction shall be made
by the Administrative Agent for the benefit of the Buyers on any
Business Day. Each such transaction shall be referred to herein as
a “ Transaction ” and, unless otherwise agreed
in writing, shall be governed by this Agreement, including any
supplemental terms or conditions contained in any annexes
identified herein, as applicable hereunder.
On
the date hereof and subject to the conditions to the initial
Transaction as set forth in Section 10(a), the JPM Buying
Group shall pay to the Credit Suisse Buying Group an amount equal
to $59,883,365.35 and upon receipt by the Credit Suisse Buying
Group of such payment, the JPM Buying Group shall own fifty percent
(50%) of the interests in the outstanding Purchase Price on the
date hereof. Each member of the Credit Suisse Buying Group
represents and warrants that the portion of the Purchase Price
to be sold by it hereunder is owned by it free and clear of
any liens, claims or encumbrances created by it. The
parties acknowledge and agree that this assignment is being made to
effect the allocation of the Purchase Price as of the date hereof
among the Buying Groups on a pro rata basis in accordance with the
Buying Group Limits.
2. Definitions
All
capitalized terms used herein but not defined shall have the
meanings set forth in the Custodial Agreement. Whenever used in
this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
“30/40 Mortgage Loan
” means a Mortgage Loan which
(a) has an original term to maturity of not more than thirty
years from commencement of amortization, with a balloon payment in
year thirty based upon a forty year amortization schedule and
(b) is originated in accordance with the Underwriting
Guidelines.
“ Acceptable SPV ” means a
Person which issues Structured Securities Debt.
“ Acceptable State ” means
any state acceptable pursuant to Sellers’ Underwriting
Guidelines.
“ Accepted Servicing Practices
” means, with respect to any Mortgage Loan, those mortgage
servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in
the jurisdiction where the related Mortgaged Property is
located.
“ Act of Insolvency ” means,
with respect to any Person or its Affiliates, (i) the filing
of a petition, commencing, or authorizing the commencement of any
case or proceeding, or the voluntary joining of any case or
proceeding under any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar law relating to the protection
of creditors, or suffering any such petition or proceeding to be
commenced by another which is consented to, not timely contested or
results in entry of an order for relief; (ii) the seeking of
the appointment of a receiver, trustee, custodian or similar
official for such party or an Affiliate or any substantial part of
the property of either; (iii) the appointment of a receiver,
conservator, or manager for such party or an Affiliate by any
governmental agency or authority having the jurisdiction to do so;
(iv) the making or offering by such party or an Affiliate of a
composition with its creditors or a general assignment for the
benefit of creditors; (v) the admission by such party or an
Affiliate of such party of its inability to pay its debts or
discharge its obligations as they become due or mature; or
(vi) that any governmental authority or agency or any person,
agency or entity acting or purporting to act under governmental
authority shall have taken any action to condemn, seize or
appropriate, or to assume custody or control of, all or any
substantial part of the property of such party or of any of its
Affiliates, or shall have taken any action to displace the
management of such party or of any of its Affiliates or to curtail
its authority in the conduct of the business of such party or of
any of its Affiliates.
“ Administrative Agent ”
means Credit Suisse, New York Branch or any affiliate or successor
thereto.
“ Administrative Fee ” shall
have the meaning set forth in the Pricing Side Letter.
“ Affiliate ” means, with
respect to any Person, any “affiliate” of such Person,
as such term is defined in the Bankruptcy Code.
“ Agency ” means Freddie Mac,
Fannie Mae or GNMA, as applicable.
“ Agency Security ” means a
mortgage-backed security issued by an Agency.
“ Agreement ” means this
Amended and Restated Master Repurchase Agreement, as it may be
amended, supplemented or otherwise modified from time to
time.
“ Appraised Value ” means the
value set forth in an appraisal made in connection with the
origination of the related Mortgage Loan as the value of the
Mortgaged Property.
“ Asset Tape ” means a
remittance report on a monthly basis or requested by Administrative
Agent pursuant to Section 17d hereof containing servicing
information, including, without limitation, those fields reasonably
requested by Administrative Agent from time to time, on a
loan-by-loan basis and in the aggregate, with respect to the
Purchased Mortgage Loans serviced by Sellers or any Servicer for
the month (or any portion thereof) prior to the Reporting
Date.
“ Asset Value ” shall have
the meaning set forth in the Pricing Side Letter.
“ Assignment of Mortgage ”
means an assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Administrative
Agent for the benefit of the Buyers.
“ Available Collections ”
means, on any date of determination, all Collections, together with
any investment income from funds on deposit in the Collection
Account; provided that, Available Collections shall not include any
Collections that have been set aside or removed by the Servicer
solely in payment of the Servicer’s accrued and unpaid
servicing fee.
“ Bailee Letter ” has the
meaning assigned to such term in the Custodial
Agreement.
“ Bankruptcy Code ” means the
United States Bankruptcy Code of 1978, as amended from time to
time.
“ Bid ” has the meaning set
forth in Section 4(c) hereof.
“ BPO ” means an opinion of
the fair market value of a Mortgaged Property given by a licensed
real estate agent or broker which generally includes three
comparable sales and three comparable listings.
“ Business Day ” means any
day other than (a) a Saturday or Sunday; (b) a public or
bank holiday in New York City; and (c) if the applicable
Business Day relates to any computation to be made with respect to
LIBOR, any day on which dealings in dollar deposits are carried on
in the London interbank market.
“ Buydown Amount ” has the
meaning set forth in Section 5(c) hereof.
“ Buyers ” means, at any
time, any of the Conduit Buyers and the Committed
Buyers.
“ Buying Group ” means, at
any time, a group consisting of one or more Conduit Buyers, such
Conduit Buyer’s related Committed Buyers and the applicable
Group Agent.
“ Buying Group Limit ” means,
for any Buying Group at any time, the aggregate amount of the
Commitments of Committed Buyers in such Buying Group at such
time.
“ Capital Lease Obligations ”
means, for any Person, all obligations of such Person to pay rent
or other amounts under a lease of (or other agreement conveying the
right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP.
“ Cash Equivalents ” means
(a) securities with maturities of 90 days or less from
the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof,
(b) certificates of deposit and eurodollar time deposits with
maturities of 90 days or less from the date of acquisition and
overnight bank deposits of the Administrative Agent or of any
commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of the Administrative
Agent or of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more
than seven days with respect to securities issued or fully
guaranteed or insured by the United States Government,
(d) commercial paper of a domestic issuer rated at least A-1
or the equivalent thereof by S&P or P-1 or the equivalent
thereof by Moody’s and in either case maturing within
90 days after the day of acquisition, (e) securities with
maturities of 90 days or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any
foreign government, the securities of which state, commonwealth,
territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or
A by Moody’s, (f) securities with maturities of
90 days or less from the date of acquisition backed by standby
letters of credit issued by the Administrative Agent or any
commercial bank satisfying the requirements of
clause (b) of this definition or (g) shares of money
market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of
this definition.
“ Change in Control ”
means:
(A) any transaction or event as a result of
which (i) any Person or Persons own, beneficially or of
record, at least 15% of the outstanding stock of FIC or
(ii) FIC shall cease to own, directly or indirectly, 100% of
any of its Subsidiaries; or
(B) the sale, transfer, or other
disposition of all or substantially all of a Seller’s assets
(excluding any such action taken in connection with any
securitization transaction in the ordinary course of business)
except the sale, transfer or other disposition of substantially all
of FMC’s assets to FIC.
“ Code ” means the Internal
Revenue Code of 1986, as amended.
“ Collection Account ” means
one or more accounts established by the Servicer for the benefit of
Buyers, into which all collections and proceeds on or in respect of
the Mortgage Loans shall be deposited by Servicer.
“ Collections ” means, with
respect to any Mortgage Loan, all cash collections and other
proceeds of such Mortgage Loan and Repurchase Assets with respect
thereto.
“ Combined Loan to Value Ratio
” or “ CLTV ” means, with respect to any
Second Lien Mortgage Loan, the sum of the original principal
balance of such Mortgage Loan and the outstanding principal balance
of any related first lien as of the date of origination of the
Mortgage Loan, divided by the Appraised Value of the Mortgaged
Property as of the origination date.
“ Commercial Paper ” means
the short-term promissory notes of a Conduit Buyer issued by such
Conduit Buyer in the commercial paper market.
“ Committed Buyer ” means
(a) any Person listed as such on Schedule 3 hereto
and (b) any other Person that becomes a party to this
Agreement as a “ Committed Buyer ”
hereunder.
“ Commitment ” means, at any
time with respect to each Committed Buyer, the amount set forth
opposite such Committed Buyer’s name on Exhibit N
hereto (as such Exhibit N may be amended, supplemented
or otherwise modified and in effect).
“ Conduit Buyer ” means
(a) any Person listed as such on Schedule 3 hereto
and (b) any other Person that becomes a party to this
Agreement as a “ Conduit Buyer ”
hereunder.
“ Consolidated Adjusted Tangible Net
Worth ” means, for the Sellers, the amount that would, in
conformity with GAAP, equal the stockholder’s equity included
on the balance sheet of the Sellers and their Subsidiaries, plus
any preferred stock not already included in the calculation of
stockholder’s equity, plus any Indebtedness of the Sellers
and their Subsidiaries that is fully subordinated to any
obligations arising under this Repurchase Agreement, plus other
comprehensive loss arising from the FASB 133, minus any intangibles
or goodwill (as defined under GAAP), minus any advances between the
Sellers and their Affiliates (other than consolidated subsidiaries
or between FIC and FMC), minus any loans or advances to officers or
directors of the Sellers (as reported under GAAP), minus other
comprehensive income arising from FASB 133; provided, however, that
the non-cash effect (gain or loss) of any mark-to-market
adjustments impacting stockholder’s equity for fluctuation of
the value of financial instruments as mandated under FASB 133 shall
be excluded from the calculation of Consolidated Adjusted Tangible
Net Worth.
“ Credit Grade ” means, with
respect to a Mortgagor, the risk category for such Mortgagor as
determined in accordance with the Underwriting
Guidelines.
“ Credit Suisse Buying Group
” means, at any time, a group consisting of those Persons
listed as such on Schedule 3 hereto and the Credit
Suisse Group Agent.
“ Credit Suisse Group Agent ”
means Credit Suisse, New York Branch or any affiliate or successor
thereto.
“ Custodial Agreement ” means
the amended and restated custodial agreement dated as of the date
hereof, among Sellers, Administrative Agent and Custodian as the
same may be amended from time to time.
“ Custodial Fee ” means the
fee payable by the Sellers to the Custodian pursuant to the
Custodial Agreement.
“ Custodial Mortgage Loan Schedule
” has the meaning assigned to such term in the Custodial
Agreement.
“ Custodian ” means Wells
Fargo Bank, National Association or such other party specified by
Administrative Agent (with the consent of the Group Agents) and
agreed to by Sellers, which approval shall not be unreasonably
withheld.
“ Defaulted Mortgage Loan ”
means a Mortgage Loan (i) as to which any scheduled payment,
or part thereof, remains unpaid for sixty (60) days or more
from the original scheduled due date for such payment; (ii) as
to which an Act of Insolvency has occurred and is continuing with
respect to the Mortgagor thereof; (iii) as to which the
related Mortgagor has failed to pay in full the first scheduled
payment thereunder; (iv) which has been identified by a Seller
or the Servicer as uncollectible; (v) which, consistent with
the Underwriting Guidelines and the Accepted Servicing Practices,
has been or should be written off as uncollectible; or (vi) as
to which the related Mortgagor is otherwise in default thereunder;
provided that any Mortgage Loan as to which any scheduled
payment remains unpaid in full after the scheduled due date
therefor for more than thirty (30) days, but less than sixty
(60) days, shall not constitute a Defaulted Mortgage Loan
unless such Mortgage Loan is otherwise a Defaulted Mortgage Loan
for a reason described in clauses (i)-(v) above.
“ Dollars ” and
“$” means dollars in lawful currency of the
United States of America.
“ Due Date ” means the day of
the month on which the Monthly Payment is due on a Mortgage Loan,
exclusive of any days of grace.
“ Effective Date ” means the
date upon which the conditions precedent set forth in
Section 10 shall have been satisfied.
“ Electronic Tracking Agreement
” means an amended and restated Electronic Tracking Agreement
among Administrative Agent, Sellers, MERS and MERSCORP, Inc., to
the extent applicable as the same may be amended from time to
time.
“ Eligible Mortgage Loan ”
means a Purchased Mortgage Loan which complies with the
representations and warranties set forth on Schedule 1
to this Agreement.
“ Eligible Subservicer ”
means JPMorgan Chase Bank, National Association, or such other
Person as may be approved in writing as a subservicer of Mortgage
Loans by the Administrative Agent (acting at the direction of the
Group Agents).
“ ERISA ” means the Employee
Retirement Income Security Act of 1974, as amended from time to
time.
“ ERISA Affiliate ” means any
corporation or trade or business that is a member of any group of
organizations (i) described in Section 414(b) or (c) of
the Code of which a Seller is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of
ERISA and Section 412(c)(11) of the Code and the lien created
under Section 302(f) of ERISA and Section 412(n) of the Code,
described in Section 414(m) or (o) of the Code of which a
Seller is a member.
“ Escrow Instruction Letter ”
means the Escrow Instruction Letter from Sellers to the Settlement
Agent, in the form of Exhibit K hereto, as the same may
be modified, supplemented and in effect from time to
time.
“ Escrow Payments ” means,
with respect to any Mortgage Loan, the amounts constituting ground
rents, taxes, assessments, water rates, sewer rents, municipal
charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to
be escrowed by the Mortgagor with the mortgagee pursuant to the
Mortgage or any other document.
“ Event of Default ” has the
meaning specified in Section 15 hereof.
“ Existing Indebtedness ” has
the meaning specified in Section 13(a)(24) hereof.
“ Facility Outstanding Principal
” means, at any time, the aggregate outstanding principal
balance of all Mortgage Loans sold to the Administrative Agent for
the benefit of the Buyers by the Sellers.
“ Fannie Mae ” means Fannie
Mae, the government sponsored enterprise formerly known as the
Federal National Mortgage Association.
“ FASB 133 ” means the
Statement of Financial Accounting Standards No. 133, or any
successor statement thereto.
“ FHA ” means the Federal
Housing Administration, an agency within the United States
Department of Housing and Urban Development, or any successor
thereto, and including the Federal Housing Commissioner and the
Secretary of Housing and Urban Development where appropriate under
the FHA Regulations.
“ FIC ” means Fieldstone
Investment Corporation, a Maryland corporation, and its permitted
successors and assigns.
“ FICO ” means Fair Isaac
& Co., or any successor thereto.
“ Fidelity Insurance ” means
insurance coverage with respect to employee errors, omissions,
dishonesty, forgery, theft, disappearance and destruction, robbery
and safe burglary, property (other than money and securities) and
computer fraud in an aggregate amount acceptable to Sellers’
regulators.
“ Fitch ” means Fitch
Ratings, Inc., or any successor thereto.
“ Fixed Rate Mortgage Loan ”
means a Mortgage Loan that bears interest at a single fixed rate
for its entire term.
“ Floating Rate Mortgage Loan
” means a Mortgage Loan that is not a Fixed Rate Mortgage
Loan.
“ FMC ” means Fieldstone
Mortgage Company, a Maryland corporation, or its permitted
successors and assigns.
“ Foreclosed Loan ” means a
Mortgage Loan, the property securing which has been foreclosed upon
by a Seller.
“ Freddie Mac ” means the
Federal Home Loan Mortgage Corporation or any successor
thereto.
“ Full Documentation ” means,
with respect to a Mortgage Loan, that the related Mortgagor has
provided the highest level of information to the applicable Seller
about its assets, liabilities, income, credit history and
employment history, as determined for “full
documentation” in accordance with the Underwriting
Guidelines.
“ GAAP ” means generally
accepted accounting principles in effect from time to time in the
United States of America and applied on a consistent
basis.
“ GNMA ” means the Government
National Mortgage Association and any successor thereto.
“ Government Securities ”
means any security issued or guaranteed as to principal or interest
by the United States, or by a person controlled or supervised by
and acting as an instrumentality of the government of the United
States pursuant to authority granted by the Congress of the United
States; or any certificate of deposit for any of the
foregoing.
“ Governmental Authority ”
means any nation or government, any state or other political
subdivision thereof, or any entity exercising executive,
legislative, judicial, regulatory or administrative functions over
any Seller or Buyer, as applicable.
“ Gross Margin ” means, with
respect to each adjustable rate Mortgage Loan, the fixed percentage
amount set forth in the related Mortgage Note.
“ Group Agent ” means
(a) with respect to the Credit Suisse Buying Group, the Credit
Suisse Group Agent; (b) with respect to the JPM Buying Group,
the JPM Group Agent and (c) any Person that becomes a party to
the Repurchase Agreement as a “ Group Agent ”
hereunder.
“ Guarantee ” means, as to
any Person, any obligation of such Person directly or indirectly
guaranteeing any Indebtedness of any other Person or in any manner
providing for the payment of any Indebtedness of any other Person
or otherwise protecting the holder of such Indebtedness against
loss (whether by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or services, or
to take-or-pay or otherwise); provided that the term “
Guarantee ” shall not include (i) endorsements
for collection or deposit in the ordinary course of business, or
(ii) obligations to make servicing advances for delinquent
taxes and insurance or other obligations in respect of a Mortgaged
Property, to the extent required by Administrative Agent. The
amount of any Guarantee of a Person shall be deemed to be an amount
equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee is made or, if not
stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good
faith. The terms “ Guarantee ” and “
Guaranteed ” used as verbs shall have correlative
meanings.
“ High Cost Mortgage Loan ”
means a Mortgage Loan classified as (a) a “high
cost” loan under the Home Ownership and Equity Protection Act
of 1994 or (b) a “high cost,”
“threshold,” “covered,” or
“predatory” loan under any other applicable state,
federal or local law (or a similarly classified loan using
different terminology under a law, regulation or ordinance imposing
heightened regulatory scrutiny or additional legal liability for
residential mortgage loans having high interest rates, points
and/or fees).
“ Income ” means with respect
to any Purchased Mortgage Loan at any time until repurchased by a
Seller, any principal received thereon or in respect thereof and
all interest, dividends or other distributions thereon.
“ Indebtedness ” means, for
any Person, such Person’s: (a) obligations for borrowed
money; (b) obligations representing the deferred purchase
price of Property other than accounts payable arising in the
ordinary course of such Person’s business on terms customary
in the trade; (c) obligations, whether or not assumed, secured
by Liens or payable out of the proceeds or production from property
now or hereafter owned or acquired by such Person;
(d) obligations that are evidenced by notes, acceptances, or
other instruments; (e) obligations under repurchase
agreements, sale/buy-back agreements or like arrangements;
(f) obligations (contingent or otherwise) of such Person in
respect of letters of credit for the account of such Person; and
(g) Capital Lease Obligations.
“ Index” means, with respect
to any adjustable rate Mortgage Loan, the index identified on the
Mortgage Loan Schedule and set forth in the related Mortgage Note
for the purpose of calculating the applicable Mortgage Interest
Rate.
“ Interest Only Adjustment Date
” means, with respect to each Interest Only Loan, the date,
specified in the related Mortgage Note on which the Monthly Payment
will be adjusted to include principal as well as
interest.
“ Interest Only Loan ” means
a Mortgage Loan which only requires payments of interest for a
period of time specified in the related Mortgage Note.
“ Interest Rate Adjustment Date
” means the date on which an adjustment to the Mortgage
Interest Rate with respect to each Mortgage Loan becomes
effective.
“ Interest Rate Protection
Agreement ” means, with respect to any or all of the
Purchased Mortgage Loans, any short sale of a US Treasury Security,
or futures contract, or mortgage related security, or eurodollar
futures contract, or options related contract, or interest rate
swap, cap or collar agreement, or similar arrangement providing for
protection against fluctuations in interest rates or the exchange
of nominal interest obligations, either generally or under specific
contingencies, entered into by a Seller and an Affiliate of Buyers
or such other party acceptable to Group Agents in their sole
discretion, which agreement is acceptable to Administrative Agent
in its sole discretion.
“ JPM Buying Group ” means,
at any time, a group consisting of those Persons listed as such on
Schedule 3 hereto and the JPM Group Agent.
“ JPM Group Agent ” means
JPMorgan Chase Bank, N.A. or any affiliate or successor
thereto.
“ Jumbo Mortgage Loan ” means
an A quality first lien Mortgage Loan which is not eligible for
sale to an Agency.
“ Law ” means any law
(including common law), constitution, statute, treaty, regulation,
rule, ordinance, order, injunction, writ, decree or award of any
Official Body.
“ LIBOR ” means for each day,
the rate of interest (calculated on a per annum basis) equal to the
overnight British Bankers Association Rate as reported on the
display designated as “BBAM” “Page DG8
4a” on Bloomberg (or such other display as may replace
“BBAM” “Page DG8 4a” on Bloomberg) on
such date of determination, and if such rate shall not be so
quoted, the rate per annum at which Administrative Agent or an
Affiliate is offered Dollar deposits at or about 11:00 a.m., (New
York City time), on such day, by prime banks in the interbank
eurodollar market where the eurodollar and foreign currency
exchange operations in respect of its loans are then being
conducted for delivery on such day for an overnight period, and in
an amount comparable to the amount of the Purchase Price of
Transactions to be outstanding on such day.
“ Lien ” means any mortgage,
lien, pledge, charge, security interest or similar encumbrance;
provided, however, that a Lien shall not include Permitted
Liens.
“ Loan to Value Ratio ” or
“ LTV ” means the ratio of (i)(a) with respect
to any first lien Mortgage Loan, the original outstanding principal
amount of such Mortgage Loan and (b) with respect to any Second
Lien Mortgage Loan, the outstanding principal amount of any related
first lien as of the date of origination of such Mortgage Loan, to
(ii) the lesser of (a) the Appraised Value of the
Mortgaged Property at origination or (b) if the Mortgaged
Property was purchased within 12 months of the origination of
such Mortgage Loan, the purchase price of the Mortgaged
Property.
“ Margin Call ” has the
meaning specified in Section 6(a) hereof.
“ Margin Deadline ” has the
meaning specified in Section 6(b) hereof.
“ Margin Deficit ” has the
meaning specified in Section 6(a) hereof.
“ Market Value ” means, with
respect to any Purchased Mortgage Loan as of any date of
determination, the whole-loan servicing released fair market value
of such Purchased Mortgage Loan on such date as determined by
Administrative Agent (or an Affiliate thereof) in its good faith
discretion.
“ Material Adverse Effect ”
means (a) a material adverse change in, or a material adverse
effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Servicer or the
Sellers, taken as a whole; (b) a material impairment of the
ability of any of the Sellers or the Servicer to perform under any
Program Agreement; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability of any Program
Agreement against Sellers or the Servicer.
“ Maximum Aggregate Purchase Price
” shall have the meaning set forth in the Pricing Side
Letter.
“ Maximum Committed Purchase Price
” means, at any time, the sum of the Commitments of the
Committed Buyers then in effect.
“ Maximum Credit Suisse Group Purchase
Price ” shall have the meaning set forth in the Pricing
Side Letter.
“ Maximum JPM Group Purchase Price
” shall have the meaning set forth in the Pricing Side
Letter.
“ MERS ” means Mortgage
Electronic Registration Systems, Inc., a corporation organized and
existing under the laws of the State of Delaware, or any successor
thereto.
“ MERS System ” means the
system of recording transfers of mortgages electronically
maintained by MERS.
“ Monthly Payment ” means the
scheduled monthly payment of principal and/or interest on a
Mortgage Loan.
“ Moody’s ” means
Moody’s Investors Service, Inc. or any successors
thereto.
“ Mortgage ” means each
mortgage, assignment of rents, security agreement and fixture
filing, or deed of trust, assignment of rents, security agreement
and fixture filing, deed to secure debt, assignment of rents,
security agreement and fixture filing, or similar instrument
creating and evidencing a lien on real property and other property
and rights incidental thereto.
“ Mortgage File ” means, with
respect to a Mortgage Loan, the documents and instruments relating
to such Mortgage Loan and set forth in Exhibit F to the
Custodial Agreement.
“ Mortgage Interest Rate ”
means the rate of interest borne on a Mortgage Loan from time to
time in accordance with the terms of the related Mortgage
Note.
“ Mortgage Interest Rate Cap
” means, with respect to an adjustable rate Mortgage Loan,
the limit on each Mortgage Interest Rate adjustment as set forth in
the related Mortgage Note.
“ Mortgage Loan ” means any
closed-end, fixed or floating-rate, first lien or Second Lien
Mortgage Loan, on a one-to-four-family residential mortgage or home
equity loan evidenced by a promissory note and secured by a
mortgage, which Mortgage Loan has closed and been funded by a
Seller, and which satisfies the requirements set forth in the
Underwriting Guidelines and Section 13(b) hereof; provided ,
however, that, except as expressly approved in writing by
Administrative Agent, Mortgage Loans shall not include any
“high-LTV” loans ( i.e ., a mortgage loan having
a loan-to-value ratio in excess of 100% or in excess of such lower
percentage set forth in the Underwriting Guidelines or with respect
to Second Lien Mortgage Loans, a combined loan-to value ratio, in
excess of the lower of (i) the percentage specified in the
Underwriting Guidelines or (ii) 100%) or any High Cost
Mortgage Loans and; provided, further, that the origination date
with respect to such Mortgage Loan is no earlier than thirty
(30) days prior to the related Purchase Date.
“ Mortgage Loan Documents ”
means the documents in the related Mortgage File to be delivered to
the Custodian.
“ Mortgage Loan Schedule ”
means with respect to any Transaction as of any date, a mortgage
loan schedule in the form of either (a) Exhibit C
attached hereto or (b) a computer tape or other electronic
medium generated by a Seller, and delivered to Administrative Agent
and Custodian, which provides information (including, without
limitation, the information set forth on Exhibit C
attached hereto) relating to the Purchased Mortgage Loans in a
format acceptable to Administrative Agent.
“ Mortgage Loan Schedule and Exception
Report ” has the meaning assigned to such term in the
Custodial Agreement.
“ Mortgage Note ” means the
promissory note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
“ Mortgaged Property ” means
the real property securing repayment of the debt evidenced by a
Mortgage Note.
“ Mortgagor ” means the
obligor or obligors on a Mortgage Note, including any person who
has assumed or guaranteed the obligations of the obligor
thereunder.
“ Multiemployer Plan ” means
a multiemployer plan defined as such in Section 3(37) of ERISA
to which contributions have been or are required to be made by a
Seller or any ERISA Affiliate and that is covered by Title IV of
ERISA.
“ Net Income ” means, for any
period and any Person, the net income of such Person for such
period as determined in accordance with GAAP.
“ Net Worth ” means, with
respect to any Person, an amount equal to, on a consolidated basis,
such Person’s stockholder equity (determined in accordance
with GAAP).
“ 1934 Act ” means the
Securities Exchange Act of 1934, as amended from time to
time.
“ Non-Utilization Fee ” shall
have the meaning set forth in the Pricing Side Letter.
“ Notice Date ” has the
meaning given to it in Section 3(b) hereof.
“ Obligations ” means
(a) all of Sellers’ indebtedness, obligations to pay the
Repurchase Price on the Repurchase Date, the Price Differential on
each Price Differential Payment Date, and other obligations and
liabilities, to Buyers, the Administrative Agent, Group Agents,
their Affiliates or Custodian arising under, or in connection with,
the Program Agreements, whether now existing or hereafter arising;
(b) any and all sums paid by the Buyers or the Administrative
Agent or the Group Agents on behalf of Buyers in order to preserve
any Purchased Mortgage Loan or its interest therein; (c) in
the event of any proceeding for the collection or enforcement of
any of Sellers’ indebtedness, obligations or liabilities
referred to in clause (a), the reasonable expenses of
retaking, holding, collecting, preparing for sale, selling or
otherwise disposing of or realizing on any Purchased Mortgage Loan,
or of any exercise by Administrative Agent, Group Agents or Buyers
of their rights under the Program Agreements, including, without
limitation, attorneys’ fees and disbursements and court
costs; and (d) all of Sellers’ indemnity obligations to
Buyers, the Administrative Agent, Group Agents, Custodian and other
indemnified parties pursuant to the Program Agreements.
“ OFAC ” has the meaning set
forth in Section 13(a)(28) hereof.
“ Official Body ” means any
government or political subdivision or any agency, authority,
bureau, central bank, commission, department or instrumentality of
any such government or political subdivision, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or
domestic.
“ Outstanding Principal Balance
” means, with respect to any Mortgage Loan at any time, the
then outstanding principal amount thereof.
“ PBGC ” means the Pension
Benefit Guaranty Corporation or any entity succeeding to any or all
of its functions under ERISA.
“ Permitted Guarantee Obligations
” means (a) mortgage, repurchase and warehouse
facilities whereby Sellers are jointly and severally liable
thereunder; (b) mortgage repurchase and warehouse facilities
or other ordinary course transactions whereby FIC guarantees the
obligations of any of its Subsidiaries thereunder; and (c) the
obligations of either Seller pursuant to surety bonds required in
connection with state licensing and branch offices.
“ Permitted Liens ” means
(i) liens of current real property taxes and assessments not
yet due and payable, (ii) covenants, conditions and
restrictions, rights of way, easements and other matters of the
public record as of the date of recording being acceptable to
mortgage lending institutions generally and specifically referred
to in the lender’s title insurance policy delivered to the
Seller and which does not adversely affect the Appraised Value of
the Mortgaged Property, (iii) in the case of a Mortgaged
Property that is a condominium or an individual unit in a planned
unit development, liens for common charges permitted by statute,
(iv) other matters to which like properties are commonly
subject, which do not, individually or in the aggregate, materially
interfere with the benefits of the security intended to be provided
by the related Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
“ Person ” means an
individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency
thereof.
“ Plan ” means an employee
benefit or other plan established or maintained by any Seller or
any ERISA Affiliate and covered by Title IV of ERISA, other than a
Multiemployer Plan.
“ Post Default Rate ” shall
have the meaning set forth in the Pricing Side Letter.
“ Price Differential ” means
with respect to any Transaction as of any date of determination, an
amount equal to the product of (A) the Pricing Rate for such
Transaction and (B) the Purchase Price for such Transaction,
calculated daily on the basis of a 360-day year for the actual
number of days during the period commencing on (and including) the
Purchase Date for such Transaction and ending on (but excluding)
the date of determination.
“ Price Differential Payment Date
” means, with respect to a Purchased Mortgage Loan, the 5
th day of the month following the related Purchase Date
and each succeeding 5 th day of the month thereafter;
provided, that, with respect to such Purchased Mortgage Loan, the
final Price Differential Payment Date shall be the related
Repurchase Date; and provided , further , that if any
such day is not a Business Day, the Price Differential Payment Date
shall be the next succeeding Business Day.
“ Pricing Rate ” shall have
the meaning set forth in the Pricing Side Letter.
“ Pricing Side Letter ” means
that certain Pricing Side Letter, dated as of the date hereof,
between the Administrative Agent and the Sellers, as the same may
be amended from time to time.
“ Principal ” has the meaning
given to it in Annex I.
“ Program Agreements ” means,
collectively, the Pricing Side Letter, the Servicing Agreement, if
any, the Servicer Notice, if any, the Custodial Agreement, this
Agreement and the Electronic Tracking Agreement, if entered
into.
“ Prohibited Person ” has the
meaning set forth in Section 13(a)(28) hereof.
“ Property ” means any right
or interest in or to property of any kind whatsoever, whether real,
personal or mixed and whether tangible or intangible.
“ Pro Rata Share ” means at
any time,
(a) for each Committed Buyer, the
Commitment of such Committed Buyer, divided by the Maximum
Committed Purchase Price at such time; and
(b) for Conduit Buyers in any Buying Group,
an amount equal to the aggregate Commitments of each Committed
Buyer in such Conduit Buyers’ Buying Group, divided by
the Maximum Committed Purchase Price at such time.
“ Purchase Confirmation ”
means a confirmation of a Transaction, in the form attached as
Exhibit B hereto.
“ Purchase Date ” means the
date on which Purchased Mortgage Loans are to be transferred by the
applicable Seller to the Administrative Agent for the benefit of
the Buyers.
“ Purchase Price ” means the
price at which each Purchased Mortgage Loan is transferred by the
applicable Seller to the Administrative Agent for the benefit of
the Buyers, which shall equal:
(i) on the Purchase Date, the Asset Value
of the Purchased Mortgage Loan on such date; and
(ii) on any day after the Purchase Date,
except where Administrative Agent and the Sellers agree otherwise,
the amount determined under the immediately preceding clause
(i) decreased by the amount of any cash applied to reduce the
Sellers’ obligations under clause (ii) of
Section 4(b) hereof or under Section 6 hereof.
“ Purchase Price Percentage ”
shall have the meaning set forth in the Pricing Side
Letter.
“ Purchase Price Share ”
means with respect to any Buyer in respect of any Transaction, such
Buyer’s Pro Rata Share of the Purchase Price for such
Transaction.
“ Purchased Mortgage Loans ”
means the collective reference to Mortgage Loans together with the
Repurchase Assets related to such Mortgage Loans transferred by the
applicable Seller to the Administrative Agent for the benefit of
the Buyers in a Transaction hereunder, listed on the related
Mortgage Loan Schedule attached to the related Transaction Request,
which such Mortgage Loans the Custodian has been instructed to hold
pursuant to the Custodial Agreement.
“ Qualified Insurer ” means a
mortgage guaranty insurance company duly authorized and licensed
where required by law to transact mortgage guaranty insurance
business and approved as an insurer by Fannie Mae or Freddie
Mac.
“ Qualified Originator ”
means an originator of Mortgage Loans which is acceptable under the
Underwriting Guidelines.
“ Rating Agency ” means each
of Moody’s, S&P or Fitch or any successor
thereof.
“ Records ” means all
instruments, agreements and other books, records, and reports and
data generated by other media for the storage of information
maintained by Sellers or any other person or entity with respect to
a Purchased Mortgage Loan. Records shall include the Mortgage
Notes, any Mortgages, the Mortgage Files, the credit files related
to the Purchased Mortgage Loan and any other instruments necessary
to document or service a Mortgage Loan.
“ REO Property ” means real
property acquired by a Seller, including a Mortgaged Property
acquired through foreclosure of a Mortgage Loan or by deed in lieu
of such foreclosure.
“ Reporting Date ” means the
5 th day of each month or, if such day is not a Business
Day, the next succeeding Business Day.
“ Repurchase Assets ” has the
meaning assigned hereto in Section 8 hereof.
“ Repurchase Date ” means the
earlier of (i) the Termination Date, (ii) the date set
forth in the applicable Purchase Confirmation or (iii) the
date determined by application of Section 16 hereof; provided
that in no event may the Repurchase Date be later than one year
after the Purchase Date set forth in the applicable Purchase
Confirmation.
“ Repurchase Price ” means
the price at which Purchased Mortgage Loans are to be transferred
from the Administrative Agent for the benefit of the Buyers to
Sellers upon termination of a Transaction, which will be determined
in each case (including Transactions terminable upon demand) as the
sum of the Purchase Price and the accrued but unpaid Price
Differential as of the date of such determination.
“ Request for Certification ”
means a notice sent to the Custodian reflecting the sale of one or
more Purchased Mortgage Loans to the Administrative Agent for the
benefit of the Buyers hereunder.
“ Required Committed Buyers ”
means, at any time, Committed Buyers having Commitments equal to
100% of the Maximum Committed Purchase Price, or, if the
Commitments have been terminated, having equal to 100% of the
Purchase Price outstanding with respect to Transactions
hereunder.
“ Requirement of Law ” means,
with respect to any Person, any law, treaty, rule or regulation or
determination of an arbitrator, a court or other governmental
authority, applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is
subject.
“ Responsible Officer ” means
as to any Person, the chief executive officer or, with respect to
financial matters, the chief financial officer of such Person, or,
with respect to any certificates to be provided to Administrative
Agent hereunder, any of the chief executive officer, the chief
financial officer or the treasurer or such Person.
“ S&P ” means Standard
& Poor’s Ratings Services, or any successor
thereto.
“ SEC ” means the Securities
and Exchange Commission, or any successor thereto.
“ Second Lien Mortgage Loan ”
means a Mortgage Loan secured by a second lien on the related
Mortgaged Property.
“ Seller ” means each of
(i) Fieldstone Investment Corporation, a Maryland corporation,
or its permitted successors and assigns and (ii) Fieldstone
Mortgage Company, a Maryland corporation, or its permitted
successors and assigns.
“ Servicer ” means any
servicer approved by Group Agents in their sole discretion, which
may be a Seller.
“ Servicer Advance ” has the
meaning specified in Section 7(g) hereof.
“ Servicer Notice ” means the
notice acknowledged by the Servicer substantially in the form of
Exhibit M hereto.
“ Servicing Agreement ” means
any servicing agreement entered into among Sellers, Servicer,
and/or Eligible Subservicer as the same may be amended from time to
time.
“ Settlement Agent ” means,
with respect to any Transaction the subject of which is a Wet-Ink
Mortgage Loan, the entity approved by a Group Agent, in its sole
good-faith discretion, which may be a title company, escrow company
or attorney in accordance with local law and practice in the
jurisdiction where the related Wet-Ink Mortgage Loan is being
originated. A Settlement Agent is deemed approved unless such Group
Agent notifies Sellers otherwise at any time electronically or in
writing.
“ SIPA ” means the Securities
Investor Protection Act of 1970, as amended from time to
time.
“ Structured Securities Debt
” means any Indebtedness incurred by an Acceptable SPV,
provided that (i) such Indebtedness is non-recourse to
any shareholder or equity owner of such Acceptable SPV,
(ii) such Indebtedness is publicly issued or privately placed
pursuant to a 144(a) offering and (iii) such Indebtedness is
rated by at least one of the Rating Agencies.
“ Subordinated Debt ” means,
Indebtedness of Sellers which is (i) unsecured, (ii) no
part of the principal of such Indebtedness is required to be paid
(whether by way of mandatory sinking fund, mandatory redemption,
mandatory prepayment or otherwise) prior to the date which is one
year following the Termination Date and (iii) the payment of
the principal of and interest on such Indebtedness and other
obligations of Sellers in respect of such Indebtedness are
subordinated to the prior payment in full of the principal of and
interest (including post-petition obligations) on the Transactions
and all other obligations and liabilities of Sellers to Buyers
hereunder on terms and conditions approved in writing (which may be
by facsimile or electronic mail) by Administrative Agent and all
other terms and conditions of which are satisfactory in form and
substance to Administrative Agent.
“ Subsidiary ” means, with
respect to any Person, any corporation, partnership or other entity
of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or
other entity (irrespective of whether or not at the time securities
or other ownership interests of any other class or classes of such
corporation, partnership or other entity shall have or might have
voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person
or one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries of such Person.
“ Termination Date ” shall
have the meaning set forth in the Pricing Side Letter.
“ Test Period ” means any
calendar quarter.
“ Transaction ” has the
meaning set forth in Section 1 hereof.
“ Transaction Request ” means
a request from a Seller to Administrative Agent, in the form
attached as Exhibit A hereto, to enter into a
Transaction.
“ Trust Receipt and Certification
” means, with respect to any Transaction as of any date, a
receipt and certification in the form attached as an exhibit to the
Custodial Agreement.
“ Underwriting Guidelines ”
means the standards, procedures and guidelines of the Sellers for
underwriting and acquiring Mortgage Loans, which are set forth in
the written policies and procedures of the Sellers, a copy of which
is attached hereto as Exhibit G and such other
guidelines as are identified and approved in writing by
Administrative Agent.
“ Uniform Commercial Code ”
means the Uniform Commercial Code as in effect on the date hereof
in the State of New York or the Uniform Commercial Code as in
effect in the applicable jurisdiction.
“ VA ” means the U.S.
Department of Veterans Affairs, an agency of the United States of
America, or any successor thereto including the Secretary of
Veterans Affairs.
“ Violation Deadline ” has
the meaning assigned thereto in Section 4(c) hereof.
“ Weighted Average CLTV ”
means, at any time with respect to a group of Purchased Mortgage
Loans, the weighted average of all of the CLTVs for such Purchased
Mortgage Loans, weighted on the basis of the current Outstanding
Principal Balance of such Purchased Mortgage Loans.
“ Weighted Average FICO Score
” means, at any time with respect to a group of Purchased
Mortgage Loans, the weighted average of all FICO Scores for such
Purchased Mortgage Loans, weighted on the basis of the current
Outstanding Principal Balance of such Purchased Mortgage
Loans.
“ Weighted Average LTV ”
means, at any time with respect to a group of Purchased Mortgage
Loans, the weighted average of all of the LTVs for such Purchased
Mortgage Loans, weighted on the basis of the current Outstanding
Principal Balance of such Purchased Mortgage Loans.
“ Weighted Average Mortgage Interest
Rate ” means, at any time with respect to a group of
Purchased Mortgage Loans, the weighted average of all Mortgage
interest rates for such Purchased Mortgage Loans, weighted on the
basis of the current Outstanding Principal Balance of such
Purchased Mortgage Loans.
“ Wet-Ink Documents ” means,
with respect to any Wet-Ink Mortgage Loan, the (a) Transaction
Request and (b) the Mortgage Loan Schedule.
“ Wet-Ink Mortgage Loan ”
means a Mortgage Loan which a Seller is selling to the
Administrative Agent for the benefit of the Buyers prior to the
delivery of the related Mortgage File to the Custodian.
3. Program; Initiation of
Transactions
a.
From time to time, Conduit Buyers may in their sole discretion, and
if Conduit Buyers in any Buying Group shall decline to purchase,
the related Committed Buyers shall, direct the related Group Agent,
which shall direct the Administrative Agent to purchase from
Sellers certain Mortgage Loans that have been either originated by
Sellers or purchased by Sellers from other originators, subject to
the terms and conditions hereof. This Agreement is a commitment
by each Committed Buyer to direct their applicable Group Agent to
direct the Administrative Agent to enter into Transactions with the
Sellers for an amount equal to such Committed Buyer’s
Commitment, subject to the terms and conditions hereof. This
Agreement is neither a commitment by Conduit Buyers to direct their
applicable Group Agent to direct the Administrative Agent to enter
into Transactions with the Sellers nor a commitment by any
Committed Buyer to direct their applicable Group Agent to direct
the Administrative Agent to enter into Transactions with the
Sellers for amounts exceeding such Committed Buyer’s
Commitment, but rather sets forth the procedures to be used in
connection with periodic requests for Administrative Agent for the
benefit of Buyers to enter into Transactions with the Sellers. Each
Seller hereby acknowledges that, beyond the Maximum Committed
Purchase Price, Buyers are not under any obligation to direct their
applicable Group Agent to direct the Administrative Agent to agree
to enter into, or to enter into, any Transaction pursuant to this
Agreement. Furthermore, each Committed Buyer’s commitment to
enter into any Transactions shall be several from the obligations
of any other Committed Buyer so that no Committed Buyer shall be
responsible for the failure of any other Committed Buyer to honor
its funding obligations hereunder. All Purchased Mortgage Loans
shall exceed or meet the Underwriting Guidelines, and shall be
serviced by Servicer. The aggregate Purchase Price of Purchased
Mortgage Loans subject to outstanding Transactions shall not exceed
the Maximum Aggregate Purchase Price. Administrative Agent for the
benefit of Buyers shall only be required to enter into Transactions
in which the Purchase Price with respect thereto is at least
$25,000,000.
b.
With respect to each Transaction involving Mortgage Loans which are
not Wet-Ink Mortgage Loans, Sellers shall give Group Agents,
Administrative Agent and Custodian prior notice by no later than
11:00 a.m. (New York City time) at least two (2) Business Days
prior to any proposed Purchase Date (the date on which such notice
is given, the “ Notice Date ”); provided, that
the requested Purchase Price must be an aggregate amount of at
least $25 million. With respect to Wet-Ink Mortgage Loans,
Sellers shall deliver notice of any proposed purchase on or before
12:00 noon (New York City time) on the Purchase Date. On the Notice
Date, Sellers shall (i) request that the Administrative Agent
for the benefit of Buyers enter into a Transaction by furnishing to
Administrative Agent a Transaction Request, (ii) deliver to
Administrative Agent, each Group Agent and Custodian a Mortgage
Loan Schedule and (iii) deliver to Custodian, or the
Administrative Agent, either a Request for Certification and each
Mortgage File or Wet-Ink Documents for each Wet-Ink Mortgage Loan,
as applicable, in accordance with Section 10(b)(3) hereof.
Following receipt of such request, Administrative Agent for the
benefit of Buyers may enter into such requested Transaction or may
notify Sellers of its intention not to enter into such Transaction
in accordance with the conditions precedent set forth in
Section 10 hereof. In the event the Mortgage Loan Schedule
provided by a Seller contains erroneous computer data, is not
formatted properly or the computer fields are otherwise improperly
aligned, Administrative Agent shall provide written or electronic
notice to Sellers describing such error and Sellers shall correct
the computer data, reformat or properly align the computer fields
itself and resubmit the Mortgage Loan Schedule as required herein.
Each Transaction Request shall be irrevocable and binding on the
applicable Seller, and the Sellers shall indemnify the
Administrative Agent, Group Agents and Buyers against any loss or
expense incurred by the Administrative Agent, Group Agents or
Buyers, either directly or indirectly, as a result of any failure
by the applicable Seller to complete such Transaction, including,
without limitation, any actual loss or expense incurred by the
Administrative Agent, Group Agents or the Buyers, either directly
or indirectly, by reason of the liquidation or reemployment of
funds acquired by the Administrative Agent or Group Agents
(including, without limitation, funds obtained by Buyers by issuing
Commercial Paper or promissory notes, obtaining deposits as loans
from third parties and reemployment of funds) for the Buyers to
fund such Transaction. The funding of each Transaction shall be
made ratably among the Buying Groups in accordance with their
Buying Group Limits.
c.
Upon the satisfaction of the applicable conditions precedent set
forth in Section 10 hereof, each Group Agent shall select a Buyer
or Buyers in its Buying Group to fund such Transaction and such
Group Agent, in its sole discretion, may allocate the portion of
the Transaction to be funded by its Buying Group among one or more
Buyers in its Buying Group. All of Sellers’ interest in the
Repurchase Assets shall pass to the Administrative Agent for the
benefit of the Buyers on the Purchase Date, against the transfer of
the Purchase Price to Sellers. The portion of each Transaction
funded by a Conduit Buyer shall be in such Conduit Buyer’s
sole and absolute discretion, and any portion of such Transaction
not funded by the Conduit Buyer of a Buying Group will be funded by
the Committed Buyers of such Buying Group. On each Purchase Date,
the Administrative Agent for the benefit of Buyers shall record on
its books and records each Buying Group’s pro rata share of
the Purchase Price paid to the applicable Seller with respect to
each Transaction, which records shall be conclusive evidence of the
Purchase Price paid to the applicable Seller with respect to such
amounts, absent manifest error. Upon transfer of the Mortgage Loans
to the Administrative Agent for the benefit of Buyers as set forth
in this Section and until termination of any related Transactions
as set forth in Sections 4 or 16 of this Agreement, ownership
of each Mortgage Loan, including each document in the related
Mortgage File and Records, is vested in the Administrative Agent
for the benefit of the Buyers; provided that, prior to the
recordation by the Custodian as provided for in the Custodial
Agreement record title in the name of the applicable Seller to each
Mortgage shall be retained by the Sellers in trust, for the benefit
of the Administrative Agent for the benefit of Buyers, for the sole
purpose of facilitating the servicing and the supervision of the
servicing of the Mortgage Loans.
d.
With respect to each Wet-Ink Mortgage Loan, by no later than 12:00
noon, (New York City time) on the fifth Business Day following the
applicable Purchase Date, Sellers shall cause the related
Settlement Agent to deliver to the Custodian the remaining
documents in the Mortgage File.
e. At
the request of the Sellers made no later than forty-five
(45) days prior to, but no earlier than sixty (60) days
prior to, the Termination Date of this Agreement, each Group Agent
may, on behalf of the Committed Buyers in its Buying Group, in its
sole discretion extend the Termination Date for a period of 364
additional days or such other period to be determined by each Group
Agent in its sole discretion by giving written notice of such
extension to the Sellers. Any failure by a Group Agent to deliver
such notice of extension shall be deemed to be such Group
Agent’s determination not to extend the then current
Termination Date.
f.
Notwithstanding that multiple Buyers are purchasing Purchase Price
Shares of the Transactions entered into under the Repurchase
Agreement, all Transactions shall be deemed a single Transaction
and all of the Repurchase Assets shall be security for all of the
Obligations thereunder.
4. Repurchase
a.
The related Seller shall repurchase the related Purchased Mortgage
Loans from the Administrative Agent on behalf of Buyers on each
related Repurchase Date. Such obligation to repurchase exists
without regard to any prior or intervening liquidation or
foreclosure with respect to any Purchased Mortgage Loan (but
liquidation or foreclosure proceeds received by Administrative
Agent, Group Agents or any Buyer shall be applied to reduce the
Repurchase Price for such Purchased Mortgage Loan on each Price
Differential Payment Date except as otherwise provided herein). The
related Seller is obligated to repurchase and take physical
possession of the Purchased Mortgage Loans from the Administrative
Agent on behalf of Buyers or its designee (including the Custodian)
at such Seller’s expense on the related Repurchase
Date.
b.
Provided that no Event of Default shall have occurred and is
continuing, and each Group Agent has received its Buying
Group’s ratable portion of the related Repurchase Price
(based upon the portion of the Purchase Price funded by such Group
Agent for such Transaction) upon repurchase of the Purchased
Mortgage Loans by the related Seller, Administrative Agent and
Buyers agree to release their ownership interest hereunder in the
Purchased Mortgage Loans (including, the Repurchase Assets related
thereto) at the request of the related Seller. With respect to
payments in full by the related Mortgagor of a Purchased Mortgage
Loan, Sellers agree to (i) provide Administrative Agent and
Group Agents with a copy of a report from the related Servicer
indicating that such Purchased Mortgage Loan has been paid in full,
(ii) remit to each Group Agent, within two Business Days, its
Buying Group’s portion of the Repurchase Price with respect
to such Purchased Mortgage Loans and (iii) provide
Administrative Agent and Group Agents a notice specifying each
Purchased Mortgage Loan that has been prepaid in full.
Administrative Agent and Buyers agree to release their ownership
interest in Purchased Mortgage Loans which have been prepaid in
full after receipt of evidence of compliance with clauses
(i) through (iii) of the immediately preceding
sentence.
5. Price Differential
a. On
each Business Day that a Transaction is outstanding, the Pricing
Rate shall be reset and, unless otherwise agreed, the accrued and
unpaid Price Differential shall be settled in cash on each related
Price Differential Payment Date. Two Business Days prior to the
Price Differential Payment Date, Administrative Agent shall give
Sellers written or electronic notice of the amount of the Price
Differential due to them on such Price Differential Payment Date.
On the Price Differential Payment Date, Sellers shall pay to the
Administrative Agent (for the benefit of the Buyers and Group
Agents) the Price Differential for such Price Differential Payment
Date (along with any other amounts to be paid pursuant to
Section 7 hereof), by wire transfer in immediately available
funds.
b. If
Sellers fail to pay all or part of the Price Differential by
11:00 a.m. (New York City time) on the related Price
Differential Payment Date, with respect to any Purchased Mortgage
Loan, Sellers shall be obligated to pay to the Administrative Agent
for the benefit of the Buyers (in addition to, and together with,
the amount of such Price Differential) interest on the unpaid
Repurchase Price at a rate per annum equal to the Post Default Rate
until the Price Differential is received in full by the
Administrative Agent.
6. Margin Maintenance
a. If
at any time the Asset Value of the Purchased Mortgage Loans subject
to Transactions is less than the then outstanding Purchase Price
for all Transactions (a “ Margin Deficit ”),
then the Administrative Agent may by notice to Sellers require
Sellers to transfer to Administrative Agent cash in an amount equal
to the Margin Deficit (such requirement, a “ Margin
Call ”).
b.
Any notice given before 10:00 a.m. (New York City time) on a
Business Day shall be met, and the related Margin Call satisfied,
no later than 5:00 p.m. (New York City time) on such Business Day;
notice given after 10:00 a.m. (New York City time) on a
Business Day shall be met, and the related Margin Call satisfied,
no later than 5:00 p.m. (New York City time) on the following
Business Day (the foregoing time requirements for satisfaction of a
Margin Call are referred to as the “ Margin Deadlines
”). The failure of Administrative Agent, on any one or more
occasions, to exercise its rights hereunder, shall not change or
alter the terms and conditions to which this Agreement is subject
or limit the right of Administrative Agent to do so at a later
date. Sellers, Administrative Agent and Buyers each agree that a
failure or delay by Administrative Agent to exercise its rights
hereunder shall not limit or waive Administrative Agent’s
rights under this Agreement or otherwise existing by law or in any
way create additional rights for Sellers.
c. In
the event that a Margin Deficit exists with respect to any
Purchased Mortgage Loan, the Administrative Agent may retain any
funds received by it to which the Sellers would otherwise be
entitled hereunder up to an amount not to exceed the Margin Deficit
and upon providing notice to the Sellers, which funds
(i) shall be held by Administrative Agent against the related
Margin Deficit and (ii) may be applied by Administrative Agent
against any Purchased Mortgage Loan for which the related Margin
Deficit remains otherwise unsatisfied. Notwithstanding the
foregoing, the Administrative Agent retains the right, in its sole
discretion, to make a Margin Call in accordance with the provisions
of this Section 6 to the extent that Administrative Agent has
not exercised its rights under this subsection (c). The
Administrative Agent shall exercise its rights under this
Section 6 at the direction of any Buyer.
7. Income Payments
a. If
Income is paid in respect of any Purchased Mortgage Loan during the
term of a Transaction, such Income shall be the property of
Administrative Agent for the benefit of the Buyers. Notwithstanding
the foregoing, and provided no Event of Default has occurred and is
continuing, Administrative Agent agrees that if a third-party
Servicer is in place for any Purchased Mortgage Loans, such
Servicer shall deposit such Income to the Collection Account.
Sellers shall deposit all Income received in its capacity as
Servicer of any Purchased Mortgage Loans or pursuant to the
preceding sentence to the Collection Account in accordance with
Section 12(c) hereof.
b. In
the event that an Event of Default has occurred and is continuing,
notwithstanding any provision set forth herein, Sellers shall remit
to Administrative Agent all Income received with respect to each
Purchased Mortgage Loan on the related Price Differential Payment
Date or on such other date or dates as Administrative Agent
notifies Sellers in writing.
c.
The Servicer shall be permitted, in its reasonable discretion, to
set aside and pay from the Collection Account any accrued and
unpaid servicing fee under any Servicing Agreement due and owing to
it, and such amounts shall not constitute Available Collections.
All moneys held by Servicer in the Collection Account shall, to the
extent available for distribution, be distributed by the Servicer
on each Price Differential Payment Date, in the following order of
priority:
(1) first, to the Servicer, to repay any
outstanding Servicer Advances;
(2) second, on a pro rata basis,
(A) to the Servicer, the servicing fee under any Servicing
Agreement and other reasonable amounts due and owing to the
Servicer (to the extent any portion of the accrued and unpaid
servicing fees have not been previously set aside from Collections
by the Servicer in accordance with the first sentence of this
Section 7(c)) and (ii) to the Custodian, the Custodial
Fee and the reasonable out-of-pocket costs and expenses of the
Custodian not covered by the Custodial Fee;
(3) third, to the Administrative Agent on
behalf of itself and the Buyers (as applicable) in an amount
sufficient to pay (as applicable and in the following order of
priority):
A. the Administrative Fee;
B. to the Group Agents for the benefit of their
respective Buyers, all accrued and unpaid Price Differential due
and owing to the Buyers for the immediately preceding calendar
month (to be distributed pro rata in proportion to each Buying
Group’s portion of the outstanding Purchase
Price);
C. to the Group Agents for the benefit of their
respective Buyers, all accrued and unpaid fees and other costs and
expenses under the Pricing Side Letter (to be distributed pro rata
in proportion to each Buying Group’s portion of such fees,
costs and expenses);
D. to the Group Agents for the benefit of their
respective Buyers, (i) prior to the Termination Date, any amount
selected by the Sellers in their discretion toward a reduction of
the outstanding Purchase Price, or any amount necessary to reduce
the outstanding Purchase Price to cure an Event of Default or to
satisfy the Margin Deficit and (ii) following the Termination
Date, on a pro rata basis, all remaining Available Collections will
be used to reduce the outstanding Purchase Price to zero, in both
cases to be distributed pro rata in proportion to each Buying
Group’s portion of the outstanding Purchase Price;
E. on a pro rata basis, to the Group Agents for
the benefit of their respective Buyers, all costs, expenses and
indemnification payments, if any, due and owing to such Persons
under this Agreement and the other Program Agreements (to be
distributed pro rata in proportion to each Buying Group’s
portion of such fees, costs and expenses); and
(4) fourth, any remaining funds shall be
paid to the Sellers (prior to the Termination Date if, after giving
effect to such payment, no Event of Default shall occur) or to the
Group Agents for the benefit of their respective Buyers and the
Administrative Agent to reduce the outstanding Obligations to zero
(following the Termination Date), to the extent outstanding
Obligations remain due and owing (to be distributed pro rata in
proportion to each Buying Group’s portion of the outstanding
Purchase Price).
d. If
on any Price Differential Payment Date Available Collections are
not sufficient to pay the sum of the amounts described in clauses
(2) through (4) above that are due and payable, the
Servicer may, in its sole discretion and solely to the extent that
the Servicer reasonably expects to be reimbursed in full pursuant
to Section 7(c)(1), advance an amount equal to such amounts
due and payable on such Price Differential Payment Date (each, a
“ Servicer Advance ”).
8. Security Interest
Although the parties intend that all
Transactions hereunder be sales and purchases and not financings,
in the event any such Transactions are deemed to be financings,
each Seller hereby pledges to Administrative Agent for the benefit
of the Buyers as security for the performance by such Seller of its
Obligations and hereby grants, assigns and pledges to
Administrative Agent for the benefit of the Buyers a fully
perfected first priority security interest in the Purchased
Mortgage Loans, the Records, and all related servicing rights, the
Program Agreements (to the extent such Program Agreements and
Sellers’ right thereunder relate to the Purchased Mortgage
Loans), any Property relating to the Purchased Mortgage Loans, all
insurance policies and insurance proceeds relating to any Purchased
Mortgage Loan or the related Mortgaged Property, including, but not
limited to, any payments or proceeds under any related primary
insurance, hazard insurance, Income, the Collection Account,
Interest Rate Protection Agreements, accounts (including any
interest of Sellers in escrow accounts) and any other contract
rights, instruments, accounts, payments, rights to payment
(including payments of interest or finance charges) general
intangibles and other assets relating to the Purchased Mortgage
Loans (including, without limitation, any other accounts) or any
interest in the Purchased Mortgage Loans, and any proceeds
(including the related securitization proceeds) and distributions
with respect to any of the foregoing and any other property,
rights, title or interests as are specified on a Transaction
Request and/or Trust Receipt and Certification, in all instances,
whether now owned or hereafter acquired, now existing or hereafter
created (collectively, the “ Repurchase Assets
”); provided, however, as to any Purchased Mortgage Loan the
security interest shall automatically terminate upon payment in
full to Administrative Agent of the Repurchase Price with respect
thereto. In such event, (i) this Agreement shall constitute
a security agreement, and the Administrative Agent shall have all
of the rights of a secured party under applicable law and
(ii) each of the Sellers and each Buyer represents and
warrants as to itself that each remittance of amounts by a Seller
to such Buyer under this Agreement will have been (x) in
payment of a debt incurred by such Seller in the ordinary course of
business or financial affairs of such Seller and such Buyer and
(y) made in the ordinary course of business or financial
affairs of such Seller and such Buyer. Sellers agree to
execute, deliver and/or file such documents and perform such acts
as may be reasonably necessary to fully perfect Administrative
Agent’s security interest created hereby for the benefit of
the Buyers. Furthermore, the Sellers hereby authorize the
Administrative Agent to file financing statements relating to the
Repurchase Assets, as the Administrative Agent, at its option, may
deem appropriate. The Sellers shall pay the filing costs for any
financing statement or statements prepared pursuant to this
Section.
9. Payment and Transfer
Unless otherwise mutually agreed in writing, all
transfers of funds to be made hereunder shall be made in Dollars,
in immediately available funds, without deduction, set-off or
counterclaim, to the party entitled thereto to the account
specified in Section 42, or such other account as such party
shall specify to the others in writing. Each party acknowledges
that it has no rights of withdrawal from the foregoing account. All
Purchased Mortgage Loans transferred by one party hereto to the
other party shall be in the case of a purchase by the
Administrative Agent for the benefit of the Buyers in suitable form
for transfer or shall be accompanied by duly executed instruments
of transfer or assignment in blank and such other documentation as
Administrative Agent may reasonably request. All Purchased Mortgage
Loans shall be evidenced by a Trust Receipt and Certification. Any
Repurchase Price received by Administrative Agent after 2:00 p.m.
(New York City time) shall be deemed received on the next
succeeding Business Day; provided, that Administrative Agent shall
credit to the Sellers interest, if any, earned on such funds
overnight.
10. Conditions Precedent
a.
Initial Transaction . As conditions precedent to the initial
Transaction, Administrative Agent shall have received on or before
the day of such initial Transaction the following, in form and
substance satisfactory to Administrative Agent and duly executed by
Sellers and each other party thereto:
(1) Program Agreements . The Program
Agreements (including without limitation a Custodial Agreement in a
form acceptable to Administrative Agent) duly executed and
delivered by the parties thereto and being in full force and
effect, free of any modification, breach or waiver.
(2) Security Interest . Evidence that all
other actions necessary or, in the opinion of Administrative Agent,
desirable to perfect and protect Buyers’ interest in the
Purchased Mortgage Loans and other Repurchase Assets have been
taken, including, without limitation, duly authorized and filed
Uniform Commercial Code financing statements on Form
UCC-1.
(3) Organizational Documents . A
certified copy of each Seller’s charter, bylaws and corporate
resolutions approving the Program Agreements and transactions
thereunder (either specifically or by general resolution) and all
documents evidencing other necessary corporate action or
governmental approvals as may be required in connection with the
Program Agreements.
(4) Good Standing Certificate . A
certified copy of a good standing certificate from the jurisdiction
of organization of each Seller, dated as of no earlier than the
date 10 Business Days prior to the Purchase Date with respect to
the initial Transaction hereunder.
(5) Incumbency Certificate . An
incumbency certificate of the corporate secretary of each Seller,
certifying the names, true signatures and titles of the
representatives duly authorized to request transactions hereunder
and to execute the Program Agreements.
(6) Opinion of Counsel . In-house and
outside counsel opinions of each Seller’s counsel, in form
and substance substantially as set forth in Exhibit F
attached hereto.
(7) Underwriting Guidelines . A true and
correct copy of the Underwriting Guidelines certified by an officer
of Sellers.
(8) Fees . Payment of any fees due to
Administrative Agent hereunder.
(9) Insurance . Evidence that Sellers
have added Administrative Agent, for the benefit of the Buyers, as
additional loss payees under the Sellers’ Fidelity
Insurance.
b.
All Transactions . The obligation of the Administrative
Agent and the Group Agents on behalf of the Buyers to enter into
each Transaction pursuant to this Agreement is subject to the
following conditions precedent:
(1) Due Diligence Review . Without
limiting the generality of Section 36 hereof, the respective Group
Agent shall have completed, to its satisfaction, its due diligence
review of the related Mortgage Loans and Sellers and the
Servicer.
(2) Required Documents .
(a) With respect to each Purchased Mortgage
Loan which is not a Wet-Ink Mortgage Loan, the Mortgage File has
been delivered to the Custodian on or prior to 3:00 p.m. (New York
City time) two (2) Business Days prior to the Purchase
Date;
(b) With respect to each Wet-Ink Mortgage
Loan, the Wet-Ink Documents have been delivered to Administrative
Agent or Custodian, as the case may be, by 3:00 p.m. (New York City
time) on the Purchase Date.
(3) Transaction Documents .
Administrative Agent, the respective Group Agent or their designee
shall have received on or before the day of such Transaction
(unless otherwise specified in this Agreement) the following, in
form and substance satisfactory to Administrative Agent and such
Group Agent and (if applicable) duly executed:
(a) A Transaction Request delivered
pursuant to Section 3(c) hereof and a Purchase
Confirmation.
(b) The Request for Certification and the
related Custodial Mortgage Loan Schedule, and the Trust
Receipt.
(c) Such certificates, opinions of counsel
or other documents as Administrative Agent may reasonably
request.
(4) No Event of Default . No Event of
Default shall have occurred and be continuing;
(5) Requirements of Law . Administrative
Agent shall not have determined that the introduction of or a
change in any Requirement of Law or in the interpretation or
administration of any Requirement of Law applicable to Buyers has
made it unlawful, and no Governmental Authority shall have asserted
that it is unlawful, for Buyers to enter into Transactions with a
Pricing Rate based on LIBOR.
(6) Representations and Warranties . Both
immediately prior to the related Transaction and also after giving
effect thereto and to the intended use thereof, the representations
and warranties made by each Seller in each Program Agreement shall
be true, correct and complete on and as of such Purchase Date in
all material respects with the same force and effect as if made on
and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of
such specific date).
(7) Electronic Tracking Agreement . To
the extent Sellers are selling Mortgage Loans which are registered
on the MERS® System, an Electronic Tracking Agreement entered
into, duly executed and delivered by the parties thereto and being
in full force and effect, free of any modification, breach or
waiver.
(8) Material Adverse Effect . No event
has occurred and is continuing that, under the sole discretion of
the Administrative Agent, is reasonably likely to result in a
Material Adverse Effect.
(9) Maximum Aggregate Purchase Price .
After giving effect to the requested Transaction, the aggregate
outstanding Purchase Price for all Purchased Mortgage Loans subject
to then outstanding Transactions under this Agreement shall not
exceed the Maximum Aggregate Purchase Price.
(10) Satisfactory Standards . The credit,
risk management and collection policies of the Sellers are
satisfactory to each Group Agent, and the Sellers have adequate
ability to underwrite Mortgage Loans and to administer the
Underwriting Guidelines and Accepted Servicing
Practices.
11. Program; Costs;
Illegality
a.
Sellers shall reimburse each Group Agent and the Administrative
Agent for any of such Person’s reasonable out-of-pocket
costs, including due diligence review costs and reasonable
attorney’s fees, incurred by such Person in determining the
acceptability to such Person of any Mortgage Loans. Sellers shall
also pay, or reimburse Administrative Agent if Administrative Agent
shall pay, any termination fee, which may be due any servicer.
Sellers shall pay the fees and expenses of each Group Agent’s
and the Administrative Agent’s counsel in connection with the
Program Agreements (without duplication), unless otherwise agreed
to in writing between a Group Agent and the Sellers. Legal fees for
any subsequent amendments to this Agreement or related documents
shall be borne by Sellers. Sellers shall pay ongoing custodial and
bank fees and expenses, and any other ongoing fees and expenses
under any other Program Agreement.
b. If
any Group Agent determines that, due to the introduction of, any
change in, or the compliance by any Buyer or any Conduit
Buyer’s liquidity provider or program support provider with
(i) any eurocurrency reserve requirement or (ii) the
interpretation of any law, regulation or any guideline or request
from any central bank or other Governmental Authority (whether or
not having the force of law), there shall be an increase in the
cost to such Buyer or such Conduit Buyer’s liquidity provider
or program support provider in engaging in the present or any
future Transactions, or providing its commitment to engage in any
future Transaction, then Sellers agree to pay (without duplication)
to Administrative Agent or to such Group Agent, from time to time,
upon demand by such Group Agent (with a copy to Custodian) the
actual cost of additional amounts as specified by such Group Agent
to compensate such Buyer or such Conduit Buyer’s liquidity
provider or program support provider for such increased costs (the
“ Additional Costs ”), provided that
(A) such Group Agent delivers to the Sellers (without a copy
to Administrative Agent) a certificate setting forth in reasonable
detail the amount and basis of determination of such Additional
Costs and such certificate as to any Additional Costs submitted by
such Group Agent to the Sellers shall be conclusive in the absence
of manifest error and (B) notwithstanding anything contained
herein, neither Seller shall be obligated to compensate Buyers or
any Conduit Buyer’s liquidity provider or program support
provider for any Additional Costs that such Buyers or any Conduit
Buyer’s liquidity provider or program support provider become
entitled to claim hereunder for any period prior to the date that
is 120 days prior to a notice of such claim if Buyers, any
Conduit Buyer’s liquidity provider or program support
provider or such Group Agent knew or reasonably would have been
expected to know of the circumstances giving rise to such
Additional Costs and of the fact that such circumstances could be
expected to result in a claim for Additional Costs.
c.
Notwithstanding any other provision herein, if, after the Effective
Date, the adoption of any law or bank regulatory guideline or any
amendment or change in the interpretation of any existing or future
Law or bank regulatory guideline by any Official Body charged with
the administration, interpretation or application thereof, or the
compliance with any directive of any Official Body (in the case of
any bank regulatory guideline, whether or not having the force of
Law), shall make it unlawful for any Buyer or any Conduit
Buyer’s liquidity provider or program support provider to
acquire or maintain or to commit to acquire or maintain a Mortgage
Loan as contemplated by this Agreement, (i) such Buyer or
liquidity provider or program support provider to any Conduit Buyer
shall, within ten (10) days after receiving actual knowledge
thereof, deliver a certificate to the Sellers (with a copy to the
Administrative Agent) setting forth the basis for such illegality,
which certificate shall be conclusive absent manifest error and
(ii) the commitment of such Buyer or such Conduit
Buyer’s liquidity provider or program support provider
hereunder to make a portion of a Mortgage Loan and continue any
portion of a Mortgage Loan as such shall forthwith be suspended,
and such suspension shall remain in effect so long as the
circumstance described above exists.
If circumstances subsequently change so that it
is no longer unlawful for an affected Buyer or any Conduit
Buyer’s liquidity provider or program support provider to
acquire or to maintain a portion of a Mortgage Loan as contemplated
hereunder, such Buyer or such Conduit Buyer’s liquidity
provider or program support provider will, as soon as reasonably
practicable after such Buyer or such Conduit Buyer’s
liquidity provider or program support provider knows of such change
in circumstances, notify the Sellers and the Administrative Agent,
and upon receipt of such notice, the obligations of such Buyer or
such Conduit Buyer’s liquidity provider or program support
provider to acquire or maintain its acquisition of portions of
Mortgage Loans shall be reinstated.
Each Buyer agrees that, upon the occurrence of
any event giving rise to the operation of Section 11(c) with
respect to such Buyer, it will, if requested by the Sellers and to
the extent permitted by law or by the relevant Official Body,
endeavor in good faith to change the office at which it books its
portions of Mortgage Loans hereunder if such change would make it
lawful for such Buyer to continue to acquire or to maintain its
acquisition of portions of Mortgage Loans hereunder; provided,
however, that such change may be made in such manner that such
Buyer, in its sole determination, suffers no unreimbursed cost or
expense or any other disadvantage whatsoever.
d.
With respect to any Transaction, Administrative Agent, for the
benefit of the Buyers, may conclusively rely upon, and shall incur
no liability to Sellers in acting upon, any request or other
communication that Administrative Agent reasonably believes to have
been given or made by a person on the certificate delivered
pursuant to Section 10(a)(5) hereof. In each such case, each
Seller hereby waives the right to dispute Administrative
Agent’s record of the terms of the Purchase Confirmation,
request or other communication.
e.
Notwithstanding the assignment of the Program Agreements with
respect to each Purchased Mortgage Loan to Buyers, each Seller
agrees and covenants with (x) Buyers and Administrative Agent
to enforce diligently Sellers’ rights and remedies set forth
in the Program Agreements and (y) to provide Administrative
Agent with prompt written notice of any Material Adverse Effect or
event which, with the passage of time, is reasonably likely to
become a Material Adverse Effect, by any party to any Program
Agreement and of which any Seller is aware.
f.
Any payments made by Sellers to Group Agents or Administrative
Agent, for the benefit of Buyers, shall be free and clear of, and
without deduction or withholding for, any taxes; provided, however,
that if such payer shall be required by law to deduct or withhold
any taxes from any sums payable to Group Agents or Administrative
Agent, for the benefit of Buyers, then such payer shall
(A) make such deductions or withholdings and pay such amounts
to the relevant authority in accordance with applicable law,
(B) pay to the respective Group Agent or Administrative Agent,
for the benefit of Buyers, the sum that would have been payable had
such deduction or withholding not been made, and (C) at the
time Price Differential is paid, pay to the respective Group Agent
or Administrative Agent, for the benefit of Buyers, all additional
amounts as specified by such Group Agent or Administrative Agent,
as applicable, to preserve the after-tax yield such Buyers would
have received if such tax had not been imposed.
12. Servicing
a.
Sellers, on Buyers’ behalf, shall contract with Servicer to,
or if a Seller is the Servicer, such Seller shall, service the
Mortgage Loans consistent with the degree of skill and care that
such Seller customarily requires with respect to similar Mortgage
Loans owned or managed by it and in accordance with Accepted
Servicing Practices. The Servicer shall (i) comply with all
applicable Federal, State and local laws and regulations,
(ii) maintain all state and federal licenses necessary for it
to perform its servicing responsibilities hereunder and
(iii) not impair the rights of Buyers in any Mortgage Loans or
any payment thereunder. Administrative Agent may terminate the
servicing of any Mortgage Loan with the then-existing servicer in
accordance with Section 12(e) hereof.
b.
Sellers shall cause the Servicer to hold or cause to be held all
escrow funds collected by Servicer with respect to any Purchased
Mortgage Loans in trust accounts and shall apply the same for the
purposes for which such funds were collected.
c.
Sellers shall cause the Servicer to deposit all collections
received by Servicer on the Purchased Mortgage Loans in the
Collection Account in accordance with Section 7(c) no later than
two (2) Business Days following receipt.
d.
Upon Administrative Agent’s request, Sellers shall provide
promptly to Administrative Agent (i) a Servicer Notice
addressed to and agreed to by the Servicer of the related Purchased
Mortgage Loans, advising such Servicer of such matters as
Administrative Agent may reasonably request, including, without
limitation, recognition by the Servicer of Buyers’ interest
in such Purchased Mortgage Loans and the Servicer’s agreement
that upon receipt of notice of an Event of Default from
Administrative Agent, it will follow the instructions of
Administrative Agent with respect to the Purchased Mortgage Loans
and any related Income with respect thereto.
e.
Upon the occurrence of an Event of Default hereunder or a material
default under the Servicing Agreement, Administrative Agent shall
have the right to immediately terminate the Servicer’s right
to service the Purchased Mortgage Loans under the Servicing
Agreement without payment of any penalty or termination fee.
Sellers and the Servicer shall cooperate in transferring the
servicing of the Purchased Mortgage Loans to a successor servicer
appointed by Administrative Agent in its sole
discretion.
f. If
any Seller should discover that, for any reason whatsoever, any
Seller or any entity responsible to Seller for managing or
servicing any such Purchased Mortgage Loan has failed to materially
perform such Seller’s obligations under the Program
Agreements or any of the obligations of such entities with respect
to the Purchased Mortgage Loans, Sellers shall promptly notify
Administrative Agent.
g.
Servicer may not delegate any of its rights, duties or obligations
except to an Eligible Subservicer upon notice to the Administrative
Agent; provided that such delegation shall not relieve
Servicer of its duties and obligations as Servicer hereunder and
under the other Program Agreements or the Servicing
Agreement.
h.
Sellers shall cause the Servicer to distribute moneys held by
Servicer in the Collection Account in the order of priority set
forth in Section 7(c) of this Agreement.
13. Representations and
Warranties
a.
Each Seller represents and warrants to Buyers, Group Agents and
Administrative Agent as of the date hereof and as of each Purchase
Date for any Transaction that:
(1) Seller Existence . Each Seller has
been duly organized and is validly existing as a corporation in
good standing under the laws of the State of Maryland.
(2) Licenses . Each Seller is duly
licensed or is otherwise qualified in each jurisdiction in which it
transacts business for the business which it conducts and is not in
default of any applicable federal, state or local laws, rules and
regulations unless, in either instance, the failure to take such
action is not reasonably likely (either individually or in the
aggregate) to cause a Material Adverse Effect (hereinbefore
defined) and is in material compliance with such state’s
applicable laws, rules and regulations. FMC has the requisite power
and authority and legal right to originate and purchase Mortgage
Loans (as applicable) and to own, sell and grant a lien on all of
its right, title and interest in and to the Mortgage Loans, and to
execute and deliver, engage in the transactions contemplated by,
and perform and observe the terms and conditions of, this
Agreement, each Program Agreement and any Transaction Request or,
if applicable, Purchase Confirmation. FMC is an FHA Approved
Mortgagee and VA Approved Lender. FIC is a qualified REIT as
defined by the Code.
(3) Power . Each Seller has all requisite
corporate or other power, and has all governmental licenses,
authorizations, consents and approvals necessary to own its assets
and carry on its business as now being or as proposed to be
conducted, except where the lack of such licenses, authorizations,
consents and approvals would not be reasonably likely to have a
Material Adverse Effect.
(4) Due Authorization . Each Seller has
all necessary corporate or other power, authority and legal right
to execute, deliver and perform its obligations under each of the
Program Agreements, as applicable. This Agreement, any Transaction
Request, Purchase Confirmation and the Program Agreements have been
(or, in the case of Program Agreements and any Transaction Request,
Purchase Confirmation not yet executed, will be) duly authorized,
executed and delivered by each Seller and Servicer, all requisite
or other corporate action having been taken, and each is valid,
binding and enforceable against each Seller in accordance with its
terms except as such enforcement may be affected by bankruptcy, by
other insolvency laws, or by general principles of
equity.
(5) Financial Statements . FIC has
heretofore furnished to Administrative Agent a copy of (a) its
consolidated and consolidating balance sheet for the fiscal year of
FIC ended December 31, 2005 and the related consolidated
statements of income and retained earnings and of cash flows for
FIC and its consolidated Subsidiaries for such fiscal year, setting
forth in each case in comparative form the figures for the previous
year, with the opinion thereon of a member of AICPA and
(b) its consolidated and consolidating balance sheet for the
fiscal quarters of FIC ended March 31, 2006 and June 30,
2006, and the related consolidated statements of income and
retained earnings and of cash flows for FIC and its consolidated
Subsidiaries for such quarterly fiscal periods, setting forth in
each case in comparative form the figures for the previous year.
All such financial statements are complete and correct and fairly
present, in all material respects, the consolidated financial
condition of FIC and its Subsidiaries and the consolidated results
of their operations as at such dates and for such fiscal periods,
all in accordance with GAAP applied on a consistent basis. Since
December 31, 2005, there has been no material adverse change
in the consolidated business, operations or financial condition of
FIC and its consolidated Subsidiaries taken as a whole from that
set forth in said financial statements nor is any Seller aware of
any state of facts which (without notice or the lapse of time)
would or could result in any such material adverse change. Each
Seller has, on the date of the statements delivered pursuant to
this Section (the “ Statement Date ”) no
knowledge of any liabilities, direct or indirect, fixed or
contingent, matured or unmatured, or liabilities for taxes,
long-term leases or unusual forward or long-term commitments not
disclosed by, or reserved against in, said balance sheet and
related statements, and at the present time there are no material
unrealized or anticipated losses from any loans, advances or other
commitments of such Seller except as heretofore disclosed to
Administrative Agent in writing.
(6) Event of Default . There exists no
Event of Default.
(7) Solvency . Each Seller is solvent and
will not be rendered insolvent by any Transaction and, after giving
effect to such Transaction, will not be left with an unreasonably
small amount of capital with which to engage in its business.
Neither Seller intends to incur, nor does it believe that it has
incurred, debts beyond its ability to pay such debts as they mature
and is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or
similar official in respect of such entity or any of its assets.
Sellers are not transferring any Purchased Mortgage Loans with any
intent to hinder, delay or defraud any of their respective
creditors.
(8) No Conflicts . The execution,
delivery and performance by each Seller and Servicer of this
Agreement, any Transaction Request or Purchase Confirmation
hereunder and the Program Agreements do not conflict with any term
or provision of the certificate of incorporation or by-laws of such
Seller or any law, rule, regulation, order, judgment, writ,
injunction or decree applicable to any Seller of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over any Seller, which conflict would have a Material
Adverse Effect and will not result in any violation of any such
mortgage, instrument, agreement or obligation to which any Seller
is a party.
(9) True and Complete Disclosure . All
information, reports, exhibits, schedules, financial statements or
certificates of any Seller or Servicer or any Affiliate thereof or
any of their officers furnished or to be furnished to
Administrative Agent in connection with the initial or any ongoing
due diligence of any Seller or any Affiliate or officer thereof,
negotiation, preparation, or delivery of t
