1
EXHIBIT 10.21
[EXECUTION COPY]
MASTER REPURCHASE AGREEMENT
Dated as of August 19, 1998
Between:
AAMES CAPITAL CORPORATION,
as Seller
and
FIRST UNION NATIONAL BANK,
as Buyer
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in which the
Seller agrees to transfer to the Buyer mortgage loans or other assets (the
"Collateral") against the transfer of funds by the Buyer, with a simultaneous
agreement by the Buyer to transfer to the Seller such Collateral at a date
certain, against the transfer of funds by the Seller. Each such transaction
shall be referred to herein as a "Transaction" and, unless otherwise agreed in
writing, shall be governed by this Agreement.
2. DEFINITIONS
As used in this Agreement, and unless the context requires a different meaning,
the following terms shall have the meanings assigned to them below:
(a) "1934 Act" shall mean the Securities Exchange Act of 1934.
(b) "Act of Insolvency" shall mean, with respect to any party, (i)
the commencement by such party as debtor of any case or
proceeding under any bankruptcy, insolvency, reorganization,
liquidation, moratorium, dissolution, delinquency or similar
law, or such party seeking the appointment or election of a
receiver, conservator, trustee, custodian or similar official
for such party or any substantial part of its property, or the
convening of any meeting of creditors for purposes of commencing
any such case or proceeding or seeking such an appointment or
election, (ii) the commencement of any such case or proceeding
against such party, or another seeking such an appointment or
election, or the filing against a party of an application for a
protective decree under the provisions of SIPA, which (A) is
consented to or not timely contested by such party, (B) results
in the entry of an order for relief, such an appointment or
election, the issuance of such a protective decree or the entry
of an order having a similar effect, or (C) is not dismissed
within 15 days, (iii) the making by such party of a general
assignment for the benefit of creditors, or (iv) the admission
in writing by such party of such party's inability to pay such
party's debts as they become due.
(c) "Additional Collateral" shall mean Mortgage Loans and/or cash
provided by the Seller to the Buyer pursuant to Paragraph 5(b)
hereof.
(d) "Additional Required Documents" shall mean the following
documents with respect to any Mortgage Loan:
(i) original disclosure statements complying with Regulation Z
("Truth in Lending") of the Board of Governors of the
Federal Reserve System and all agreements relating
thereto, if applicable;
(ii) original Equal Credit Opportunity Act notice and
additional disclosure statements or agreements relating
thereto, if applicable;
2
(iii) a certification as to whether or not the property securing
the Mortgage Loan falls into a flood zone as identified by
a HUD identified flood map and, if applicable, a survey of
such property;
(iv) an attorney's opinion of title and abstract of title or an
original or certified copy of a mortgagee's title
insurance policy insuring the lien of the Mortgage Loan
against the applicable property
(v) a property and casualty insurance policy on the property
securing the Mortgage Loan covering fire, hazard and
extended coverage, and if applicable, flood insurance,
all in amounts not less than the principal amount of the
promissory note relating to the Mortgage Loan (or the
maximum amount issuable for flood insurance) which
insurance has been endorsed to provide for payment
thereof to the Seller, as mortgagee, together with
written notice to the mortgagor of the fact, if true,
that mortgagor's property lies within a flood zone;
(vi) original or copy of executed application by the obligor on
such Mortgage Loan for such Mortgage Loan;
(vii) original or copy of credit bureau report on the obligor on
such Mortgage Loan;
(viii) original HUD-1 settlement statement duly executed by the
obligor on such Mortgage Loan;
(ix) original complete appraisal obtained with respect to the
applicable property obtained in connection with the
Mortgage Loan; and
(x) such other documents as the Buyer may reasonably request
from time to time including but not limited to
verification of employment of the obligor on such Mortgage
Loan (to the extent required by the Underwriting
Standards), verification of deposit by such obligor (if
applicable), and any inspection reports performed with
respect to such obligor or the property covered by such
Mortgage Loan.
(e) "Agreement" shall mean this Master Repurchase Agreement, together
with all exhibits, schedules or amendments hereto and all
Confirmations hereunder.
(f) "Aggregate Commitment" shall have the meaning assigned to such
term in Paragraph 6.
(g) "Bankruptcy Code" shall mean Title 11 of the United States Code,
as amended.
(h) "Business Day" shall mean any day excluding Saturday, Sunday and
any day on which banks located in the States of New York, North
Carolina or California are authorized or permitted to close for
business.
(i) "Buyer" shall mean First Union National Bank, a national banking
association having its principal place of business in Charlotte,
North Carolina.
(j) "Collateral" shall have the meaning assigned to such term in
Paragraph 1.
(k) "Confirmation" shall mean a confirmation for a Transaction as
required by Paragraph 4(a) hereof, substantially in the form of
Exhibit A hereto.
(l) "Current Margin" shall mean, with respect to any date, the
difference between (i) the aggregate Market Value of all
Purchased Loans held by the Buyer on such date and (ii) the
aggregate Purchase Price paid by the Buyer for all Purchased
Loans held by the Buyer on such date.
(m) "Custodial Agreement" shall mean the Repurchase Facility
Custodial Agreement, dated as of August 19, 1998, among the
Buyer, the Seller and the Custodian.
(n) "Custodian" shall mean Bankers Trust Company of California, N.A.,
a national banking association.
(o) "Default Rate" shall mean, for any day, the Pricing Rate for such
day plus 4.00%.
2
3
(p) "Eligible Mortgage Loan" shall mean a Mortgage Loan with respect
to which each of the representations and warranties set out in
Exhibit B hereto is accurate and complete as of the date of the
related Confirmation (and the Seller by including any such
Mortgage Loan in any Transaction shall be deemed to so represent
and warrant to the Buyer at and as of the date of such
Transaction).
(q) "ERISA" shall mean the Employee Retirement Income Security Act of
1974.
(r) "Event of Default" shall have the meaning assigned to such term
in Paragraph 12.
(s) "FDIA" shall mean the Federal Deposit Insurance Act, as amended.
(t) "FDICIA" shall mean the Federal Deposit Insurance Corporation
Improvement Act of 1991.
(u) "GAAP" shall mean generally accepted accounting principles.
(v) "Guaranty" shall mean the guaranty agreement, dated as of August
19, 1998, executed by the Guarantor in favor of the Buyer.
(w) "Guarantor" shall mean Aames Financial Corporation, a Delaware
corporation.
(x) "Income" shall mean, with respect to any Mortgage Loan at any
time, any payments of principal thereof and all payments of
interest and dividends or other distributions thereon.
(y) "Indemnified Parties" shall have the meaning assigned to such
term in Paragraph 15.
(z) "LIBOR" shall mean the London Interbank Offered Rate obtained on
page 3750 of Telerate (or as otherwise obtained in a manner
reasonably selected by the Buyer) as being the rate at which
deposits in immediately available U.S. dollars having a maturity
of one month are offered to or by reference banks in the London
interbank market, as determined by the Buyer at the time of each
Transaction.
(aa) "Margin" shall mean, with respect to any Mortgage Loan or pool of
Mortgage Loans, the difference between the Market Value of such
loan or loans and the Purchase Price for such loan or loans.
(bb) "Margin Call" shall have the meaning assigned to such term in
Paragraph 5(b).
(cc) "Margin Deficit" shall have the meaning assigned to such term in
Paragraph 5(b).
(dd) "Market Value" shall mean, with respect to each Purchased Loan,
the market value of such Purchased Loan as determined by the
Buyer in its sole discretion.
(ee) "Mortgage Loan" shall mean a residential real estate secured
loan, including, without limitation: (i) a promissory note, any
reformation thereof and related deed of trust (or mortgage) and
security agreement; (ii) all guaranties and insurance policies,
including, without limitation, all mortgage and title insurance
policies and all fire and extended coverage insurance policies
and rights of the Seller to return premiums or payments with
respect thereto; and (iii) all right, title and interest of the
Seller in the property covered by such deed of trust (or
mortgage).
(ff) "Original Margin" shall mean, with respect to any date, the
difference between (i) the aggregate Market Value of all
Purchased Loans held by the Buyer on such date, determined as of
the most recent Purchase Date for each such Purchased Loan, and
(ii) the Purchase Price paid by the Buyer for all such Purchased
Loans on such Purchase Date(s).
(gg) "Person" shall mean a corporation, an association, a partnership,
an organization, a limited liability company, a business, a
trust, an individual, a government or political subdivision
thereof, any governmental agency or any other entity.
(hh) "Plan Party" shall have the meaning assigned to such term in
Paragraph 29(a).
(ii) "Price Differential" shall mean, with respect to any Transaction
as of any date, the difference between the Repurchase Price to
be paid by the Seller and the Purchase Price paid by the Buyer.
3
4
The Price Differential will equal the aggregate amount obtained
by daily application of the Pricing Rate for such Transaction to
the Purchase Price for such Transaction on a 360-day-per-year
basis for the actual number of days during the period commencing
on (and including) the Purchase Date for such Transaction and
ending on (but excluding) the Repurchase Date.
(jj) "Pricing Rate" shall mean the per annum rate for determination of
the Price Differential, which rate shall be LIBOR plus 25 basis
points. This Pricing Rate shall be reviewed and mutually agreed
upon at the end of each calendar quarter.
(kk) "Purchase Date" shall mean the date on which Purchased Loans are
to be transferred by the Seller to the Buyer.
(ll) "Purchased Loans" shall mean the Mortgage Loans transferred by
the Seller to the Buyer in a Transaction hereunder. The term
"Purchased Loans" with respect to any Transaction at any time
also shall include Additional Collateral delivered pursuant to
Paragraph 5(b) hereof.
(mm) "Purchase Price" shall mean the price at which Purchased Loans
are transferred by the Seller to the Buyer.
(nn) "Replacement Mortgage Loans" shall have the meaning assigned to
such term in Paragraph 13(c).
(oo) "Repurchase Date" shall mean the date on which the Seller is
required to repurchase the Purchased Loans from the Buyer, which
shall be (i) the 15th day of the calendar month in which the
Purchase Date occurs or, if such Purchase Date falls on or after
the 15th day of such month, the 15th day of the following
calendar month (or, in each case, if such day is not a Business
Day, the next Business Day), (ii) such earlier date as may be
set forth in a Confirmation or (iii) such earlier date as may be
determined by application of the provisions of Paragraph 13
hereof.
(pp) "Repurchase Price" shall mean the price at which Purchased Loans
are to be transferred from the Buyer to the Seller upon
termination of a Transaction, which will be determined in each
case as the sum of the Purchase Price and the Price Differential
as of the date of such determination.
(qq) "Repurchase Term" shall mean, with respect to any Transaction,
the period beginning on the Purchase Date and continuing through
the Repurchase Date.
(rr) "Required Documents" shall mean the following documents with
respect to any Mortgage Loan:
(i) the original executed and fully completed promissory note
relating to the Mortgage Loan (properly endorsed to the
Seller if purchased by the Seller from another
originator), which promissory note shall be duly endorsed
in blank without recourse by an authorized officer of the
Seller;
(ii) the original executed and fully completed mortgage or
deed of trust relating to the Mortgage Loan in proper
form for recordation in the appropriate jurisdiction and
duly recorded in the appropriate jurisdiction; provided,
however, that a certified copy of the executed mortgage or
deed of trust relating to the Mortgage Loan may be
delivered to the Buyer in lieu of the original recorded
deed of trust or mortgage until such time as the original
recorded mortgage or deed of trust is received from the
recording jurisdiction and submitted to the Buyer; and
(iii) an original executed, fully completed and recordable but
unrecorded assignment of the mortgage or deed of trust
relating to the Mortgage Loan in proper form for
recordation in the appropriate jurisdiction (unless the
Buyer determines that under applicable state law the
assignment should be recorded in order to adequately
protect its interest, in which case the assignment shall
be recorded by the Seller and a certified true copy
thereof shall be provided to the Buyer), together with
the original or a duly certified copy of the fully
completed and proper assignment or assignments of the
mortgage or deed of trust from the original holder
through any subsequent transferees to the Seller in
proper form for recordation in the appropriate
jurisdiction, duly recorded if local requirements in the
jurisdiction in which the property is located required
the recordation of such assignment or assignments.
4
5
(ss) "SEC" shall mean the Securities and Exchange Commission.
(tt) "Seller" shall mean Aames Capital Corporation, a California
corporation having its principal place of business in Los
Angeles, California.
(uu) "Subservicer" shall mean an independent third party subservicer
named by the Seller and reasonably acceptable to the Buyer.
(vv) "Subservicing Agreement" shall mean the subservicing agreement
between the Seller and the Subservicer.
(ww) "SIPA" shall mean the Securities Investor Protection Act of 1970.
(xx) "Transaction" shall mean each transaction between the Seller and
the Buyer that is undertaken pursuant to a Confirmation.
(yy) "Underwriting Standards" shall mean the underwriting policies of
the Seller set forth in Exhibit C hereto, as amended pursuant to
paragraph 11(l).
3. INITIATION AND TERMINATION OF TRANSACTIONS
(a) An agreement to enter into a Transaction may be made in writing
at the initiation of either the Buyer or the Seller and shall be
evidenced by a Confirmation delivered pursuant to Paragraph 4(a).
On the Purchase Date for the Transaction, the Purchased Loans
shall be transferred to the Buyer or its agent against the
transfer of the Purchase Price to an account of the Seller.
(b) The Buyer's obligation to purchase any Mortgage Loan shall be
subject to the following:
(i) The Buyer (or the Custodian, if so directed by the Buyer)
shall have possession of the Required Documents for each
Mortgage Loan to be purchased; provided that such
possession may have been released to a prospective
purchaser of a Mortgage Loan (or a custodian acting on its
behalf) if the Buyer or the Custodian, as applicable, has
received a bailment letter for the related Required
Documents.
(ii) The Buyer shall have determined that the Mortgage Loans to
be purchased in the requested Transaction satisfy the
requirements of this Agreement.
(iii) The Seller's representations and warranties contained in
this Agreement and reaffirmed in the Confirmation shall be
true and correct.
(iv) The Purchase Price for such Transaction shall be at least
$5,000,000.
(v) No Event of Default shall have occurred under this
Agreement.
(vi) The Buyer shall not be obligated to purchase Mortgage
Loans more often than once per calendar week.
(vii) The Guaranty shall be in full force and effect.
(c) On the Repurchase Date for each Transaction, termination of the
Transaction will be effected by transfer to the Seller or its
agent of the Purchased Loans and any Income in respect thereof
received by the Buyer (and not previously credited or transferred
to, or applied to the obligations of the Seller hereunder)
against the transfer of the Repurchase Price to an account of the
Buyer.
4. TRANSACTION CONFIRMATION
(a) Upon the parties' agreement to enter into a Transaction
hereunder, the Buyer shall prepare and deliver to the Seller, at
least one Business Day prior to the Purchase Date for the
Transaction, a Confirmation for such Transaction.
5
6
(b) The Confirmation shall list the Purchased Loans and set forth (i)
the Purchase Date, (ii) the Purchase Price, (iii) the anticipated
Repurchase Date, (iv) the Pricing Rate or Repurchase Price
applicable to the Transaction, and (v) any additional terms or
conditions of the Transaction.
(c) The Confirmation, together with this Agreement, shall constitute
conclusive evidence of the terms agreed between the Buyer and the
Seller, and shall be binding upon the parties unless written
notice of objection is given by the objecting party prior to the
closing of the Transaction.
(d) In the event of any conflict between the terms of a Confirmation
and this Agreement, the Confirmation shall prevail.
5. MARGIN MAINTENANCE
(a) On Monday of each week during the Repurchase Term (or more often,
if the Buyer in its sole discretion so decides), the Buyer will
determine (i) the aggregate Market Value of all Purchased Loans
and other Collateral held by the Buyer and (ii) the Current
Margin for such date.
(b) If on any date during the term of this Agreement the Current
Margin for such date is less than the Original Margin for such
date (such shortfall, a "Margin Deficit"), the Buyer may by
notice to the Seller (such notice, a "Margin Call") require that
the Seller, at the Buyer's option, transfer to the Buyer cash or
additional Mortgage Loans reasonably acceptable to the Buyer
(collectively, "Additional Collateral"), so that the Current
Margin for such date will then equal or exceed the Original
Margin for such date; provided, however, that the Buyer may not
make a Margin Call unless (i) the Margin Deficit exceeds $100,000
and (ii) the Current Margin is less than five percent.
(c) If any notice is given under subparagraph (b) of this Paragraph
5 on any Business Day, then the Seller shall transfer cash or
Mortgage Loans as provided in such subparagraph no later than
the close of business on the second Business Day following the
date on which such notice is given. Any cash transferred to the
Buyer pursuant to this subparagraph (c) shall be held by the
Buyer for so long as any Transaction remains in effect and shall
be applied against the Repurchase Price for any terminated
Transaction on the applicable Repurchase Date.
6. AGGREGATE COMMITMENT AND TERM
(a) The aggregate Purchase Price for all Purchased Loans owned by the
Buyer on any date shall at no time exceed $300,000,000 (the
"Aggregate Commitment").
(b) This Agreement shall continue in effect for a period of 180 days
from the date of its execution by both parties.
7. PAYMENTS ON MORTGAGE LOANS; SERVICING
The Seller shall act as servicer for all Mortgage Loans, will service all
Mortgage Loans in accordance with industry standards for loans held by third
parties and shall not sell or transfer its rights to service such loans without
the Buyer's consent; provided that the Seller may engage a Subservicer to
service all Purchased Loans for the benefit of the Buyer and the Seller, as
their interests may appear, pursuant to a Subservicing Agreement. All funds
received by the Seller, in its capacity as servicer with respect to Mortgage
Loans that are Purchased Loans, shall be held by the Seller in trust for the
Buyer until such Mortgage Loans have been repurchased by the Seller.
8. REPURCHASE PRIOR TO REPURCHASE DATE
Notwithstanding any provision hereof to the contrary, the Buyer may require the
Seller to repurchase any of the Purchased Loans subject to a Transaction as to
which a breach of any representation contained in Exhibit B hereto has occurred
upon two Business Days' prior notice.
9. DELIVERY OF MORTGAGE LOANS
All of the Required Documents for Mortgage Loans that are to be Purchased Loans
for a Transaction shall be delivered to the Buyer (or the Custodian, if so
directed by the Buyer) at least two Business Days prior to the Purchase Date for
such Transaction.
6
7
10. REPRESENTATIONS AND WARRANTIES
(a) Each of the Buyer and the Seller represents and warrants to the
other that (i) it is duly authorized to execute and deliver this
Agreement, to enter into Transactions contemplated hereunder and
to perform its obligations hereunder and has taken all necessary
action to authorize such execution, delivery and performance,
(ii) it will engage in such Transactions as principal, (iii) the
individual signing this Agreement on its behalf is duly
authorized to do so on its behalf, (iv) it has obtained all
authorizations of any governmental body required in connection
with this Agreement and the Transactions hereunder and such
authorizations are in full force and effect and (v) the
execution, delivery and performance of this Agreement and the
Transactions hereunder will not violate any law, ordinance,
charter, bylaw or rule applicable to it or any agreement by
which it is bound or by which any of its assets are affected. On
the Purchase Date for any Transaction the Buyer and the Seller
shall each be deemed to repeat all the foregoing representations
made by it.
(b) In addition to the foregoing, the Seller hereby represents and
warrants that, as of the date of this Agreement and as of the
Purchase Date for each Transaction:
(i) If the Seller is servicing any of the Purchased Loans, the
Seller is servicing such Purchased Loans in accordance
with industry standards for similar loans owned by third
parties.
(ii) No Event of Default has occurred or is continuing under
this Agreement.
(iii) Since the date of the most recent balance sheet or
financial statement delivered by the Seller to the Buyer
pursuant to the Agreement, there has been no material
adverse change in its financial condition or results of
operations.
(c) The Seller hereby represents and warrants to the Buyer that, as
to each Mortgage Loan, as of the applicable Purchase Date or
such other date specified herein:
(i) The information set forth in the schedule of Mortgage
Loans attached to each Confirmation is true and correct in
all material respects.
(ii) Such Mortgage Loan is an Eligible Mortgage Loan.
11. COVENANTS
The Seller hereby covenants and agrees with the Buyer that, as long as the Buyer
has any obligation to enter into Transactions under the Agreement:
(a) The Seller (or the Subservicer, at the option of the Seller)
shall hold all Additional Required Documents for the Mortgage
Loans that are Purchased Loans in trust for the benefit of the
Buyer.
(b) The Seller shall furnish or cause to be furnished to the Buyer:
(i) Within 90 days after the last day of each fiscal year of
the Seller and the Guarantor, consolidated statements of
income (and, in the case of the consolidated statement
of the Guarantor, cash flows) for the Seller and the
Guarantor for such year and consolidated balance sheets
for the Seller and the Guarantor as of the end of such
year presented fairly in all material respects in
accordance with GAAP and accompanied by an unqualified
report of a firm of independent certified public
accountants of nationally recognized standing and
including therewith a copy of any management letter from
such certified public accountants; and
(ii) Within 45 days after the last day of each fiscal
quarter, (A) unaudited consolidated statements of income
(and, in the case of the consolidated statement of the
Guarantor, cash flows) for the Seller and the Guarantor
for such quarter, and unaudited consolidated balance
sheets for the Seller and the Guarantor as of the end of
such quarter and (B) a certificate of an officer of the
Seller, whose position is vice president or higher,
stating that such financial statements are presented
fairly in all material respects and in accordance with
GAAP, subject to year-end audit adjustments, and further
certifying that neither the
7
8
Seller nor any affiliate thereof is in default under the
terms and conditions of any agreement evidencing or
securing any indebtedness of such entity.
(c) The Seller shall promptly furnish such additional financial and
other information, including, without limitation, financial
statements of the Seller, and information regarding the
Purchased Loans, as the Buyer may from time to time reasonably
request.
(d) The Seller shall pay or otherwise satisfy at or before maturity
or before it becomes delinquent or accelerated, as the case may
be, all its indebtedness (including taxes), except indebtedness
being contested in good faith by appropriate proceedings and for
which provision is made to the satisfaction of the Buyer for the
payment thereof in the event the Seller is found to be obligated
to pay such indebtedness and which indebtedness is thereupon
promptly paid by the Seller.
(e) The Seller shall maintain its corporate existence and obtain and
maintain all rights, privileges, licenses, approvals,
franchises, properties and assets necessary or desirable in the
normal conduct of its business, including but not limited to any
required approvals with respect to the SEC or the Securities
Commission of the State of California and comply with all
contractual obligations and requirements of law (including,
without limitation, any requirements of law under or in
connection with ERISA, the federal Consumer Credit Protection
Act, the federal Real Estate Settlement Procedures Act, the
federal Equal Credit Opportunity Act, the federal
Truth-in-Lending Act, and any regulations promulgated
thereunder), except where the failure to so comply is not likely
to have a material adverse effect on the business, operations,
assets or financial or other condition of the Seller or on the
Purchased Loans.
(f) The Seller shall keep proper books of record and account in
which full, true and correct entries in conformity with GAAP and
all requirements of law shall be made of all dealings and
transactions in relation to its business and activities.
(g) The Seller shall permit representatives of the Buyer to (A)
visit and inspect any of its properties and examine and make
abstracts from any of its books and records (including without
limitation books and records relating to the Purchased Loans) at
any reasonable time and as often as may reasonably be desired by
the Buyer (but, prior to the occurrence of an Event of Default,
only upon not less than two Business Days' prior notice), and
(B) discuss the business, operations, properties and financial
and other condition of the Seller with officers and employees of
the Seller, and with its independent certified public
accountants; provided, however, that the results of any such
visit, inspection, examination, discussion or audit, to the
extent such results are proprietary and non-public, shall be
maintained by the Buyer in confidentiality except as required by
law or regulation or by any governmental agency or regulatory
body having authority over the Buyer, or to the extent such
information may be communicated to the legal counsel or auditors
of the Buyer.
(h) The Seller shall promptly give written notice to the Buyer of:
(i) the occurrence of any potential default or Event of
Default known to responsible management personnel of the
Seller and the proposed method of cure thereof;
(ii) any litigation or proceeding affecting the Seller or the
Purchased Loans which could have a material adverse effect
on the Purchased Loans, or the business, operations,
property, or financial or other condition of the Seller;
(iii) a material adverse change known to responsible management
personnel of the Seller in the business, operations,
property or financial or other condition of the Seller;
(iv) any changes in the following senior management positions
of the Seller: President, Chief Executive Officer, Chief
Operating Officer or Chief Financial Officer;
(v) any breach of a representation or warranty set out in
Exhibit B hereto; and
(vi) any default or event of default by the Seller or any of
the Seller's affiliates under the terms and conditions of
any agreement evidencing or securing any indebtedness of
such entity.
(i) The Seller shall pay all reasonable out-of-pocket costs and
expenses (including fees and disbursements of legal counsel up
to a maximum of $10,000) of the Buyer incident to the
8
9
preparation and negotiation of this Agreement and all related
documents, and incident to the enforcement of the Seller's
obligations hereunder or under any Confirmation, whether by
judicial proceedings or otherwise, including, without
limitation, in connection with bankruptcy, insolvency,
liquidations, reorganization, moratorium or other similar
proceedings involving the Seller. The obligations of the Seller
under this Paragraph 11(i) shall be effective and enforceable
whether or not any Transaction is outstanding hereunder and
shall survive the termination of this Agreement.
(j) The Seller shall originate and acquire Mortgage Loans only in
accordance with the Seller's current Underwriting Standards.
(k) The Seller shall not, directly or indirectly, create, incur,
assume or suffer to exist, any lien or other encumbrance upon the
Collateral.
(l) The Seller shall not alter its current Underwriting Standards in
any material manner from those disclosed to the Buyer and
attached to the Agreement as Exhibit C unless it has given 10
Business Days' written notice of the proposed alteration to the
Buyer, and the Buyer has failed to object to the proposed
alteration within such 10 Business Day period.
(m) The Seller shall comply fully with the terms of the Custodial
Agreement.
12. EVENTS OF DEFAULT
The following shall constitute Events of Default hereunder (each, an "Event of
Default"):
(a) the Seller's failure to transfer or the Buyer's failure to
purchase Purchased Loans upon the applicable Purchase Date;
(b) the Seller's failure to repurchase or the Buyer's failure to
transfer Purchased Loans upon the applicable Repurchase Date;
(c) the Seller's or the Buyer's failure to comply with Paragraph 5
hereof;
(d) an Act of Insolvency occurs with respect to the Seller or the
Buyer;
(e) any representation or warranty made by the Seller (other than the
representations and warranties of the Seller set out in Paragraph
10(c)) or the Buyer in this Agreement shall have been incorrect
or untrue in any material respect when made or repeated or deemed
to have been made or repeated;
(f) the Seller or the Buyer shall admit to the other its inability
to, or its intention not to, perform any of its obligations
hereunder;
(g) the Seller shall breach any covenant, requirement or obligation
contained in this Agreement;
(h) a default or event of default shall occur under any credit
agreement or other material agreement having a face amount of
$5,000,000 or greater for which the Seller is the primary
obligor;
(i) the Seller shall fail to repurchase any Purchased Loans at the
Repurchase Price when required by Paragraph 8 of this Agreement;
(j) in the reasonable judgment of the Buyer a material adverse change
shall have occurred in the business, operations, properties,
prospects or financial condition of the Seller, or
(k) Seller dissolves, merges or consolidates with another entity
(unless it is the surviving party), is acquired by any Person
(unless such Person is reasonably acceptable to the Buyer), or
sells, transfers, or otherwise disposes of a material portion of
its business or assets, except for the sale or transfer of
Mortgage Loans in the ordinary course of business.
13. REMEDIES UPON EVENT OF DEFAULT
Upon the occurrence of any Event of Default and, with respect to any Event of
Default resulting from the breach of the Seller's covenants set forth in
Paragraph 11(b), if such Event of Default has not been cured within three
Business Days:
9
10
(a) The nondefaulting party may, at its option (which option shall
be deemed to have been exercised immediately upon the occurrence
of an Act of Insolvency), declare an Event of Default to have
occurred hereunder and, upon the exercise or deemed exercise of
such option, the Repurchase Date for each Transaction hereunder,
shall, if it has not already occurred, be deemed immediately to
occur (except that, in the event that the Purchase Date for any
Transaction has not yet occurred as of the date of such exercise
or deemed exercise, such Transaction shall be deemed immediately
canceled). The nondefaulting party shall (except upon the
occurrence of an Act of Insolvency) give notice to the
defaulting party of the exercise of such option as promptly as
practicable.
(b) Upon the occurrence of an Event of Default by the Seller, if the
Buyer exercises or is deemed to have exercised the option
referred to in subparagraph (a) of this Paragraph, (i) the
Seller's obligation to repurchase all Purchased Loans at the
Repurchase Price therefor on the Repurchase Date determined in
accordance with subparagraph (a) of this Paragraph, shall
thereupon become immediately due and payable; (ii) all Income
paid after such exercise or deemed exercise shall be retained by
the Buyer and applied to the aggregate unpaid Repurchase Price
and any other amounts owing by the Seller hereunder; (iii) the
Seller shall immediately deliver to the Buyer any Purchased
Loans that are subject to a Transaction which are then in the
Seller's possession or control; (iv) the Buyer may, without
notice to the Seller, (A) immediately sell, in a recognized
market (or otherwise in a commercially reasonable manner) at
such price or prices as the Buyer may reasonably deem
satisfactory, any or all Purchased Loans subject to such
Transactions and apply the proceeds thereof to the aggregate
unpaid Repurchase Prices and any other amounts owing by the
Seller hereunder or (B) in its sole discretion elect, in lieu of
selling all or a portion of such Purchased Loans, to give the
Seller credit for such Purchased Loans in an amount equal to the
price therefor on such date, obtained from a generally
recognized source, against the aggregate unpaid Repurchase
Prices and any other amounts owing by the Seller hereunder; and
(v) the Buyer may refuse to enter into any further Transactions
with the Seller under this Agreement and may determine that the
Agreement is terminated.
(c) Upon the occurrence of an Event of Default by the Buyer and
tender by the Seller of payment of the aggregate Repurchase
Price for any Transaction, (i) all right, title and interest in
and entitlement to all Purchased Loans subject to such
Transaction shall be deemed transferred to the Seller; (ii) the
Buyer shall deliver all such Purchased Loans to the Seller;
(iii) the Seller may, without notice to the Buyer, (A)
immediately purchase, in a commercially reasonable manner, at
such price or prices as the Seller may reasonably deem
satisfactory, Mortgage Loans ("Replacement Mortgage Loans") of
the same class and amount as any Purchased Loans that are not
delivered by the Buyer to the Seller as required hereunder or
(B) in its sole discretion elect, in lieu of purchasing
Replacement Mortgage Loans, to be deemed to have purchased
Replacement Mortgage Loans at the price therefor on such date,
obtained from a generally recognized source; and (iv) the Buyer
shall be liable to the Seller for any excess of the price paid
(or deemed paid) by the Seller for Replacement Mortgage Loans
over the Repurchase Price for the Purchased Loans replaced
thereby.
(d) The parties acknowledge and agree that (i) in the absence of a
generally recognized source for prices or bid or offer
quotations for any Mortgage Loan, the nondefaulting party may
establish the source therefor in its sole discretion; and (ii)
all prices, bids and offers shall be determined together with
accrued Income (except to the extent contrary to market practice
with respect to the relevant Mortgage Loans).
(e) For purposes of this Paragraph 13, the Repurchase Price for each
Transaction hereunder with respect to which the Buyer is in
default shall not increase above the amount of such Repurchase
Price for such Transaction determined as of the date of the
exercise or deemed exercise by the nondefaulting party of the
option referred to in subparagraph (a) of this Paragraph.
(f) The defaulting party shall be liable to the nondefaulting party
for (i) the amount of all reasonable legal or other expenses
incurred by the nondefaulting party in connection with or as a
result of an Event of Default, (ii) damages in an amount equal
to the cost (including all fees, expenses and commissions) of
entering into replacement transactions and entering into or
terminating hedge transactions in connection with or as a result
of an Event of Default, and (iii) any other loss, damage, cost
or expense directly arising or resulting from the occurrence of
an Event of Default in respect of a Transaction.
10
11
(g) To the extent permitted by applicable law, the defaulting party
shall be liable to the nondefaulting party for interest at the
Default Rate on any amounts owing by the defaulting party
hereunder from the date the defaulting party becomes liable for
such amounts hereunder until such amounts are (i) paid in full
by the defaulting party or (ii) satisfied in full by the
exercise of the nondefaulting party's rights hereunder.
(h) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other
agreement or applicable law.
(i) Upon default by the Seller, all rights of the Seller to receive
payments on the Mortgage Loans which it would otherwise be
authorized to receive hereunder shall cease, and all rights to
such payments shall become vested in the Buyer, which shall have
the sole right to receive such payments and apply them to the
amounts owed by the Seller pursuant to the Agreement. All
payments that are received by the Seller contrary to the
provisions of this clause (i) shall be received in trust for the
benefit of the Buyer, shall be segregated from other funds of
the Seller and shall be promptly paid to the Buyer.
(j) In addition to the other remedies available to the Buyer upon
the occurrence and during the continuance of an Event of Default
by the Seller, the Buyer shall be entitled to the right of
set-off with respect to any amounts owed by the Seller to the
Buyer under any contract, margin account or other arrangement.
The Seller hereby waives any right it may have to require that
any deposits held by the Buyer for the Seller be set off by the
Buyer against the Seller's obligations under the Agreement.
14. APPLICATION OF PROCEEDS
The proceeds of any sale of or other realization on any or all of the Collateral
at the time held by the Buyer under the Agreement, shall be applied by the Buyer
in the following order of priority:
(a) First, to the payment of all reasonable costs and expenses of
such sale incurred by the Buyer and its affiliates and all
reasonable expenses (including the fees and expenses of
counsel), liabilities and advances reasonably made or incurred
by the Buyer and its affiliates in connection therewith.
(b) Second, to the payment of the outstanding Repurchase Price owed
by the Seller under the Agreement.
(c) Third, to the payment of all other amounts owed by the Seller
under the Agreement.
(d) Fourth, to the payment of any other amounts owed by the Seller
to the Buyer or any affiliate thereof under any other instrument
or agreement.
(e) Fifth, to the payment to the Seller, or to such other Person as
court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds and other cash.
As used in the Agreement, "proceeds" of the Collateral shall mean cash and other
property received or otherwise realized in respect of the Purchased Loans.
15. INDEMNIFICATION
If the Buyer becomes involved in any capacity in any action, proceeding or
investigation in connection with any matter contemplated by this Agreement, the
primary focus of which action, proceeding or investigation concerns the Seller,
the Seller will reimburse the Buyer for its legal and other expenses (including
the cost of any investigation and preparation) as they are incurred by the
Buyer. The Seller also agrees to indemnify and hold harmless the Buyer and its
affiliates and their respective directors, officers, employees and agents
(collectively, the "Indemnified Parties"), from and against any and all losses,
claims, damages and liabilities, joint or several, related to or arising out of
any matters contemplated by this Agreement, unless (and this clause shall apply
only to the extent that) such losses, claims, damages or liabilities resulted
primarily from the gross negligence or willful misconduct of the Buyer.
If the foregoing indemnification is for any reason unavailable to any of the
Indemnified Parties, then the Seller shall contribute to the amount paid or
payable by the Indemnified Parties as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative benefits
received by the Seller, on the one hand, and such Indemnified Parties, on the
other, arising out of the matters contemplated by this Agreement.
11
12
The reimbursement, indemnity and contribution provided for herein shall be in
addition to any other liability that the Seller may otherwise have under this
Agreement, at law or in equity, and shall survive the termination or expiration
of this Agreement.
16. PAYMENT AND TRANSFER
Unless otherwise mutually agreed, all transfers of funds hereunder shall be in
immediately available funds. All Mortgage Loans transferred by one party hereto
to the other party (a) shall be in suitable form for transfer or shall be
accompanied by duly executed instruments of transfer or assignment in blank and
such other documentation as the party receiving possession may reasonably
request, (b) shall be transferred on the book-entry system of a Federal Reserve
Bank, or (c) shall be transferred by any other method mutually acceptable to the
Seller and the Buyer.
17. LIMITED POWER OF ATTORNEY
The Seller hereby appoints the Buyer to act (after the occurrence and during the
continuation of an Event of Default) as the attorney-in-fact of the Seller for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instruments that the Buyer shall deem necessary or
advisable to accomplish the purposes hereof. This appointment as
attorney-in-fact is irrevocable and is coupled with an interest. Without
limiting the generality of the foregoing, the Buyer and its assigns shall have
the right and power to sell Purchased Loans and to receive, endorse and collect
all checks made payable to the order of the Seller on account of the principal
or interest on any of the Purchased Loans and to give full discharge of the
same.
18. EFFECT OF TERMINATION
The termination of this Agreement by either party shall not eliminate any
liability for losses incurred by either party during the duration of this
Agreement. To the extent that this Agreement is terminated, the terms of this
Agreement shall continue to apply to any Transactions outstanding after the
termination of this Agreement. The provisions of Paragraph 15 relating to
Indemnification shall survive the termination of this Agreement.
19. TIME
All references to time contained in the Agreement shall be deemed to be local
time in Charlotte, North Carolina on the applicable day.
20. FEES AND EXPENSES
Nothing in this Agreement shall act as a bar to the collection of any fees or
expenses of the Buyer that the Seller may agree to pay in any separate agreement
relating to any or all of the Transactions.
21. PAYMENT OF SECURED CREDITORS
The Seller may direct the Buyer to pay all or any portion of the Purchase Price
for a Transaction to one or more creditors of the Seller, or any of its
affiliates, if such payment is necessary to release a lien on the Mortgage Loans
that are to be purchased in such Transaction. Such payment and release of an
existing lien may occur simultaneously with the purchase of Mortgage Loans under
this Agreement.
22. OPINIONS OF COUNSEL
The Seller shall, on the date hereof and, upon the request of the Buyer, on the
date of any subsequent Transaction, cause to be delivered to the Buyer, with
reliance thereon permitted as to any Person or entity that purchases the
Purchased Loans from the Buyer, a favorable opinion of the Seller's counsel with
respect to the matters set forth in Exhibit D hereto, in form and substance
reasonably acceptable to the Buyer.
23. SINGLE AGREEMENT
The Buyer and the Seller acknowledge that, and have entered into this Master
Repurchase Agreement and will enter into each Transaction hereunder in
consideration of and in reliance upon the fact that, all Transactions hereunder
constitute a single business and contractual relationship and have been made in
consideration of each other. Accordingly, each of the Buyer and the Seller
agrees (a) to perform all of its obligations in respect of each
12
13
Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all Transactions
hereunder, (b) that each of them shall be entitled to set off claims and apply
property held by them in respect of any Transaction against obligations owing to
them in respect of any other Transactions hereunder and (c) that payments,
deliveries and other transfers made by either of them in respect of any
Transaction shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of any other Transactions hereunder,
and the obligations to make any such payments, deliveries and other transfers
may be applied against each other and netted.
24. NOTICES AND OTHER COMMUNICATIONS
Any and all notices, statements, demands or other communications hereunder may
be given by a party to the other by mail, facsimile, telegraph, messenger or
otherwise to the address listed below, or such other address as may be specified
in a notice of change of address hereafter received by the other:
SELLER: Aames Capital Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Treasure
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BUYER: First Union National Bank
000 Xxxxx Xxxxxxx Xxxxxx, XX-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All notices, demands and requests hereunder may be made orally, to be confirmed
promptly in writing, or by other communication as specified in the preceding
sentence. Any such notice, demand or request shall be deemed to have been
received on the date delivered to the premises of the addressee (as evidenced,
in the case of registered or certified mail, by the date noted on the return
receipt, or in the case of facsimile or other telecommunication device, the date
noted on the confirmation of such transmission).
25. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent from
any other provision or agreement herein and shall be enforceable notwithstanding
the unenforceability of any such other provision or agreement.
26. NON-ASSIGNABILITY; TERMINATION
(a) The rights and obligations of the parties under this Agreement
and under any Transaction shall not be assigned by either party
without the prior written consent of the other party, and any
such assignment without the prior written consent of the other
party shall be null and void. Subject to the foregoing, this
Agreement and any Transactions shall be binding upon and shall
inure to the benefit of the parties and their respective
successors and assigns. This Agreement may be terminated by
either party upon giving written notice to the other, except
that this Agreement shall, notwithstanding such notice, remain
applicable to any Transactions then outstanding.
(b) Subparagraph (a) of this Paragraph 26 shall not preclude a party
from assigning, charging or otherwise dealing with all or any
part of its interest in any sum payable to it under Paragraph 13
hereof.
(c) This Agreement may be terminated by the Buyer if, for any
reason, any Transaction is not deemed to be a purchase and sale,
and the Agreement shall for any reason cease to create a valid,
first priority security interest in any of the Purchased Loans
purported to be covered thereby.
13
14
27. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NORTH CAROLINA
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
28. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any
other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless in writing and duly executed by both of the parties hereto. Without
limitation on any of the foregoing, the failure to give a notice pursuant to
Paragraph 5(b) hereof will not constitute a waiver of any right to do so at a
later date.
29. USE OF EMPLOYEE PLAN ASSETS
(a) If assets of an employee benefit plan subject to any provision of
ERISA are intended to be used by either party hereto (the "Plan
Party") in a Transaction, the Plan Party shall so notify the
other party prior to the Transaction. The Plan Party shall
represent in writing to the other party that the Transaction does
not constitute a prohibited transaction under ERISA or is
otherwise exempt therefrom, and the other party may proceed in
reliance thereon but shall not be required so to proceed.
(b) Subject to the last sentence of subparagraph (a) of this
Paragraph, any such Transaction shall proceed only if the Seller
furnishes or has furnished to the Buyer its most recent available
audited statement of its financial condition and its most recent
subsequent unaudited statement of its financial condition.
(c) By entering into a Transaction pursuant to this Paragraph, the
Seller shall be deemed to (i) represent to the Buyer that since
the date of the Seller's latest such financial statements, there
has been no material adverse change in the Seller's financial
condition which the Seller has not disclosed to the Buyer, and
(ii) agree to provide the Buyer with future audited and unaudited
statements of its financial condition as they are issued, so long
as it is a Seller in any outstanding Transaction involving a Plan
Party.
30. INTENT
(a) The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of
the Bankruptcy Code, and a "securities contract" as that term is
defined in Section 741 of the Bankruptcy Code. The parties
further intend and recognize that the Mortgage Loans constitute
"securities" as such term is defined in Section 101(49) of the
Bankruptcy Code.
(b) It is understood that either party's right to liquidate Mortgage
Loans delivered to it in connection with Transactions hereunder
or to exercise any other remedies pursuant to Paragraph 13 hereof
is a contractual right to liquidate such Transaction as described
in Sections 555 and 559 of the Bankruptcy Code.
(c) Although the parties intend that all Transactions hereunder be
sales and purchases and not loans, in the event any such
Transactions are deemed to be loans, the Seller shall be deemed
to have pledged to the Buyer as security for the performance by
the Seller of its obligations under each such Transaction, and
shall be deemed to have granted to the Buyer a security interest
in, all of the Purchased Loans with respect to all Transactions
hereunder and all Income thereon and other proceeds thereof.
(d) The parties agree and acknowledge that if a party hereto is an
"insured depository institution," as such term is defined in
FDIA, then each Transaction hereunder is a "qualified financial
contract," as that term is defined in FDIA and any rules, orders
or policy statements thereunder (except insofar as the type of
assets subject to such Transaction would render such definition
inapplicable).
(e) It is understood that this Agreement constitutes a "netting
contract" as defined in and subject to Title IV of FDICIA and
each payment entitlement and payment obligation under any
Transaction
14
15
hereunder shall constitute a "covered contractual payment
entitlement" or "covered contractual payment obligation",
respectively, as defined in and subject to FDICIA (except
insofar as one or both of the parties is not a "financial
institution" as that term is defined in FDICIA).
31. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a
broker or dealer registered with the SEC under Section 15 of the
1934 Act, the Securities Investor Protection Corporation has
taken the position that the provisions of SIPA do not protect the
other party with respect to any Transaction hereunder;
(b) in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer
registered with the SEC under Section 15C of the 1934 Act, SIPA
will not provide protection to the other party with respect to
any Transaction hereunder; and
(c) in the case of Transactions in which one of the parties is a
financial institution, funds held by the financial institution
pursuant to a Transaction hereunder are not on deposit and
therefore are not insured by the Federal Deposit Insurance
Corporation or the National Credit Union Share Insurance Fund, as
applicable.
32. MULTIPLE COUNTERPARTS
For the purpose of facilitating the execution of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute and be one and the same
instrument.
15
16
IN WITNESS WHEREOF, the Seller and the Buyer have caused this Master
Repurchase Agreement to be executed by their authorized representatives as of
this 19 day of August, 1998.
AAMES CAPITAL CORPORATION,
as Seller
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President-Finance
FIRST UNION NATIONAL BANK,
as Buyer
By: /s/ X.X. Xxxxx
--------------------------------------
Name: X.X. Xxxxx
Title VP
16
17
EXHIBIT A
FORM OF CONFIRMATION
[Date]
[Seller]
[____________________________]
[____________________________]
[____________________________]
Attention: [_________________]
Ladies and Gentlemen:
Pursuant to the master repurchase agreement (the "Master Repurchase
Agreement"), dated as of [___________ __, ____], between the undersigned (the
"Buyer") and you (the "Seller"), the Buyer hereby agrees to purchase the
Mortgage Loans identified on Schedule I attached hereto, subject to the terms
set forth below:
Purchase Date: ________________
Repurchase Date: ________________
Purchase Price: ________________
Pricing Rate: ________________
Margin: [___]%
Original Margin: [___]%
All of the representations and warranties made in the Master Repurchase
Agreement must be true and correct as of the Purchase Date and no Event of
Default shall have occurred. Capitalized terms not defined herein shall have the
meanings assigned to them in the Master Repurchase Agreement.
If you are in agreement with these terms, please execute the
acknowledgement and acceptance set forth below and return one copy of this
Confirmation to the Buyer.
Very truly yours,
FIRST UNION NATIONAL BANK,
as Buyer
By:_____________________________________
Name:___________________________________
Title:__________________________________
Accepted and Agreed as of this ____ day of __________, ____.
AAMES CAPITAL CORPORATION,
as Seller
By:________________________
Name:______________________
Title:_____________________
18
SCHEDULE I TO CONFIRMATION
MORTGAGE LOAN SCHEDULE
19
EXHIBIT B
REPRESENTATIONS AND WARRANTIES
RELATING TO ELIGIBLE MORTGAGE LOANS
(a) The Mortgage Loan is a binding and valid obligation of the obligor
thereon, in full force and effect and enforceable in accordance with its terms.
(b) The Mortgage Loan is genuine in all respects as appearing on its
face and as represented in the books and records of the Seller and all
information set forth therein is true and correct.
(c) The Mortgage Loan is free of any default of any party thereto
(including the Seller), other than as expressly permitted pursuant to
subparagraph (d) below, counterclaims, offsets and defenses and from any
rescission, cancellation or avoidance, whether by operation of law or otherwise.
(d) No payment under the Mortgage Loan is more than 59 days past due the
payment due date set forth in the underlying promissory note and deed of trust
(or mortgage); provided that in no event shall Purchased Loans having any
payment which is more than 30 days past due the payment date set forth in the
underlying promissory note and deed of trust (or mortgage) constitute more than
the lesser of (i) five percent (by Market Value) of the Aggregate Commitment or
(ii) ten percent (by Market Value) of all Purchased Loans then owned by the
Buyer pursuant to the terms of this Agreement.
(e) The Mortgage Loan contains the entire agreement of the parties
thereto with respect to the subject matter thereof, has not been modified or
amended in any respect and is free of concessions or understandings with the
obligor thereon of any kind not expressed in writing therein.
(f) The Mortgage Loan complies in all respects and was originated in
accordance with all applicable laws and regulations governing the same,
including, without limitation, the federal Consumer Credit Protection Act, the
federal Real Estate Settlement Procedures Act, the federal Equal Credit
Opportunity Act, the federal Truth-in-Lending Act, and the regulations
promulgated thereunder and all applicable usury laws and restrictions, and all
notices, disclosures and other statements or information required by law or
regulation to be given, and any other act required by law or regulation to be
performed, in connection with the Mortgage Loan have been given and performed as
required.
(g) The proceeds of each Mortgage Loan have been fully disbursed, and
there is no obligation on the part of the mortgagee to make future advances
thereunder. Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor either have
been complied with or are not yet required to be complied with but will be
complied with as and when required. All costs, fees and expenses incurred in
making or closing or recording such Mortgage Loans were paid.
(h) At all times the Mortgage Loan will be free and clear of all liens.
(i) The property covered by the Mortgage Loan is insured against loss or
damage by fire and all other hazards normally included within standard extended
coverage in accordance with the provisions of the Mortgage Loan with the Seller
named as a loss payee thereon.
(j) The property covered by the Mortgage Loan is free and clear of all
liens except:
(i) the lien in favor of the Seller;
(ii) the lien of current real property taxes and assessments not
yet due and payable;
(iii) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record, as of the date of
recording, as are acceptable to mortgage lending institutions generally
and specifically referred to in a lender's title insurance policy
delivered to the originator of the Mortgage Loan and which (A) are
referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan or (B) do not materially adversely
affect the appraised value of the property as set forth in such
appraisal;
(iv) other matters to which like properties are commonly subject
and which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage Loan or the use, enjoyment,
value or marketability of the related property;
(v) liens subordinate in priority to the lien in favor of the
Seller; and
20
(vi) in the case of second priority Mortgage Loans, one lien
superior in priority to the lien in favor of the Seller.
(k) The property shall be improved, and such improvements shall consist
of a completed one- to four-unit single family residence, including, but not
limited to, a condominium, planned unit development or townhouse, but excluding
in any event a co-op or mobile home.
(l) The Mortgage Loan is not subject to any servicing arrangement with
any Person other than the Seller or the Subservicer nor are any servicing rights
relating to the Mortgage Loan subject to any lien, claim, interest or negative
pledge in favor of any Person other than as permitted hereunder.
(m) The Additional Required Documents for each Mortgage Loan include an
appraisal of the related property signed prior to the approval of the Mortgage
Loan application by a qualified appraiser, duly appointed by the originator of
the Mortgage Loan, who has no interest, direct or indirect, in the mortgaged
property or in any loan made on the security thereof, other than as an employee
of the lender, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of Title XI of the Federal Institutions Reform, Recovery, and
Enforcement Act of 1989 and the regulations promulgated thereunder, all as in
effect on the date the Mortgage Loan was originated.
(n) The Mortgage Loan is secured by a first or second priority mortgage
or deed of trust on the property covered thereby.
(o) The Mortgage Loan is not a revolving credit facility.
(p) No real property taxes or insurance payments due and payable with
respect to the property (or escrow installments therefor) covered by the
Mortgage Loan are past due the payment due date thereof.
(q) No more than 180 days have elapsed since the Mortgage Loan was first
purchased by the Buyer pursuant to this Agreement; provided that no more than 30
percent of all Purchased Loans owned by the Buyer pursuant to this Agreement at
any time shall have been first purchased by the Buyer pursuant to this Agreement
more than 120 days prior to the date on which eligibility hereunder is
determined.
(r) The Mortgage Loan has a loan-to-value ratio of not more than 95%,
based on the value assigned to the property securing the Mortgage Loan in the
appraisal referred to in (m) above.
(s) The Mortgage Loan complies with the Underwriting Standards.
21
EXHIBIT C
SELLER'S UNDERWRITING STANDARDS
22
EXHIBIT D
FORM OF OPINION OF COUNSEL
