MASTER REPURCHASE AGREEMENT GOVERNING
PURCHASES AND SALES OF MORTGAGE LOANS
Dated as of March 31, 1998
Between
XXXXXX COMMERCIAL PAPER INC.,
as Buyer
and
OCWEN FINANCIAL SERVICES, INC.
as Seller
WHEREAS, Seller and Buyer entered into that certain Master Repurchase
Agreement Governing the Purchases and Sales of Mortgage Loans dated as of
December 15, 1997 (the "December Master Repurchase Agreement") in the Committed
Amount of One hundred million Dollars ($100,000,000), and Seller is utilizing
the December Master Repurchase Agreement in the ordinary course of its business
as an originator of subprime mortgage loans (the "Ordinary Course Mortgage
Loans"); and
WHEREAS, Seller was offered the opportunity to acquire a single pool of
mortgage loans with an aggregate principal balance of $309,723,997 as of
November 1, 1997, and Buyer was willing to enter into this repurchase agreement
to enable Seller to acquire the new loans; and
WHEREAS, Ocwen Financial Corporation acquired certain mortgage loans
(the "Mortgage Loans") from Xxxxxx Capital, a division of Xxxxxx Brothers
Holdings, Inc., as buyer, pursuant to that certain Purchase and Sale Agreement
dated as of December 3, 1997 by and between Cityscape Corp., as seller, and
Xxxxxx Capital, which was assigned to Ocwen Financial Corporation pursuant to
that certain Xxxx of Sale and Assignment dated as of February 27, 1998 by and
between Xxxxxx Capital, as assignor, and Ocwen Financial Corporation, as
assignee (the "Mortgage Loan Purchase and Sale Agreement"); and
WHEREAS, Seller has agreed to buy and Ocwen Financial Corporation has
agreed to sell the Mortgage
Loans to Seller subject to the agreement of Buyer to purchase the Mortgage Loans
from Seller in accordance with this Master Repurchase Agreement Governing
Purchases and Sales of Mortgage Loans (this "Agreement").
1. APPLICABILITY
Commencing on the date hereof and continuing through and including the
Termination Date, Xxxxxx Commercial Paper Inc. ("BUYER") agrees, subject to the
terms and conditions hereof, to enter into a transaction upon the request of
Ocwen Financial Services, Inc. ("SELLER") in which Seller agrees to transfer to
Buyer all those Mortgage Loans acquired by Seller pursuant to and in accordance
with that certain Purchase and Sale Agreement dated as of December 3, 1997 by
and between Cityscape Corp., as seller, and Xxxxxx Capital, a division of Xxxxxx
Brothers Holdings, Inc., as buyer (the "Mortgage Loans") as assigned to Ocwen
Financial Corporation pursuant to that certain Xxxx of Sale and Assignment dated
as of February 27, 1998 by and between Xxxxxx Capital, as assignor, and Ocwen
Financial Corporation, as assignee, as further assigned to Ocwen Financial
Services, Inc., pursuant to that certain Xxxx of Sale and Assignment dated March
31, 1998 (as so assigned, the "Mortgage Loan Purchase and Sale Agreement")
against the transfer of funds by Buyer in a single advance to Seller on the date
hereof (the "TRANSACTION"). The Transaction is entered into with the
understanding that on the Termination Date, or earlier upon the demand of
Seller, the Buyer agrees to transfer such Mortgage Loans to Seller, at a date
certain not later than 30 days after the transfer or on demand, as specified in
the Confirmation, against the transfer of funds by Seller. The Transaction shall
be governed by this Agreement and the related Confirmation, unless otherwise
agreed in writing. The Mortgage Loans are more fully set forth on Annex A to
Exhibit I, attached hereto and made a part hereof.
2. DEFINITIONS
"ACT OF INSOLVENCY" means, with respect to any party and its Affiliates, (i) the
filing of a petition, commencing, or authorizing the commencement 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 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.
2
"ADDITIONAL LOANS" means Mortgage Loans or cash provided by Seller to Buyer or
its designee pursuant to Section 4(a).
"AFFILIATE" means, with respect to any Person, another Person that directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") means possession,
directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise).
"AGENCY" means FNMA, FHLMC or GNMA.
"AGREEMENT" means this Master Repurchase Agreement Governing Purchases and Sales
of Mortgage Loans between Buyer and Seller, as amended from time to time.
"BALLOON MORTGAGE LOAN" means any Mortgage Loan that provided on the date of
origination for scheduled payments by the Mortgagor based upon an amortization
schedule extending beyond its maturity date.
"BUSINESS DAY" means a day other than (i) a Saturday or Sunday, or (ii) a day in
which the New York Stock Exchange is authorized or obligated by law or executive
order to be closed.
"BUYER" has the meaning specified in Section 1.
"COLLATERAL" has the meaning specified in Section 6.
"COLLATERAL AMOUNT" means, with respect to any Transaction, the amount obtained
by application of the applicable Collateral Amount Percentage to the related
Repurchase Price for such Transaction.
"COLLATERAL AMOUNT PERCENTAGE" means the amount set forth in the Confirmation
which, in any event (i) shall not be less than 105.26% with respect to the
Mortgage Loans in determining whether a Market Value Collateral Deficit exists
pursuant to the first sentence of Section 4(a) hereof and (ii) shall not be less
than 105.26% with respect to all Mortgage Loans in determining whether a
Securitization Value Collateral Deficit exists pursuant to the second sentence
of Section 4(a) hereof.
"COLLATERAL DEFICIT" means either a Market Value Collateral Deficit or a
Securitization Value Collateral Deficit.
"COLLATERAL INFORMATION" means the following information with respect to each
Mortgage Loan: (i) Seller's loan number, (ii) the Mortgagor's name, (iii) the
address of the Mortgaged Property, (iv) the current interest rate, (v) the
original balance, (vi) current balance as of the last day of the
3
immediately preceding month, (vii) the paid to date, (viii) the appraisal value
of the Mortgaged Property, (ix) whether interest rate is fixed or adjustable
(and if adjustable, the ARM terms, including the index, spread, adjustment
frequency, next adjustment date, caps and floors), (x) whether the Mortgage Loan
is convertible from ARM to fixed, (xi) the occupancy status of the Mortgaged
Property (including whether owner occupied), (xii) whether the Mortgage Loan is
a Balloon Loan, (xiii) the first payment date, (xiv) the maturity date, (xv) the
principal and interest payment, (xvi) the property type of the Mortgaged
Property, (xvii) the applicable credit grade, (xviii) the note date and (xix)
whether the Mortgage Loan is a Wet Ink Mortgage Loan.
"CONFIRMATION" has the meaning specified in Section 3(a).
"CUSTODIAL AGREEMENT" means that certain custodial agreement, dated as of
February 27, 1998, by and among Buyer, Seller and the Custodian.
"CUSTODIAL DELIVERY" means the form executed by Seller in order to deliver the
Mortgage Loan Schedule and/or the Mortgage File to Buyer or its designee
(including the Custodian) pursuant to Section 7, a form of which is attached
hereto as Exhibit II.
"CUSTODIAN" means the custodian under the Custodial Agreement. The custodian is
First Trust National Association.
"DELINQUENT" means, with respect to any Mortgage Loan, the period of time from
the date on which a Mortgagor fails to pay an obligation under the terms of such
Mortgage Loan (without regard to any applicable grace periods) to the date on
which such payment is made.
"Event of Default" has the meaning specified in Section 13.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"FNMA" means the Federal National Mortgage Association.
"GNMA" means the Government National Mortgage Association.
"HEDGE" means, with respect to any or all of the Purchased Mortgage Loans, any
interest rate swap, cap or collar agreement or similar arrangements providing
for protection against fluctuations in interest rates or the exchange of nominal
interest obligations, either generally or under specific contingencies, entered
into by Seller with Buyer or its Affiliates, and reasonably acceptable to the
Buyer.
"HUD" means the United States Department of Housing and Urban Development.
"INCOME" means, with respect to any Purchased Mortgage Loan at any time, any
principal thereof then payable and all interest, dividends or other
distributions payable thereon less any related servicing fee(s) charged by a
subservicer.
4
"LIBOR" means the London Interbank Offered Rate for one-month United States
dollar deposits as set forth on page 3750 of Telerate as of 11:00 a.m., London
time, on the date of determination.
"LOAN-TO-VALUE RATIO" means with respect to any Mortgage Loan as of any date,
the fraction, expressed as a percentage, the numerator of which is the principal
balance of such Mortgage Loan at the date of determination and the denominator
of which is the value of the related Mortgaged Property as set forth in the
appraisal of such Mortgaged Property obtained in connection with the origination
of such Mortgage Loan. .
"MARKET VALUE" means as of any date with respect to any Mortgage Loan, the price
at which such Mortgage Loan could readily be sold as determined by Buyer in its
sole discretion; provided, however, that Buyer shall not take into account, for
purposes of calculating Market Value, any Mortgage Loans that (i) are more than
59 days Delinquent or (ii) with respect to which there is a breach of a
representation, warranty or covenant made by Seller in this Agreement that
materially adversely affects Buyer's interest in such Mortgage Loan and which
breach has not been cured.
"MARKET VALUE COLLATERAL DEFICIT" has the meaning specified in Section 4(a).
"MORTGAGE" means a mortgage, deed of trust, deed to secure debt or other
instrument, creating a valid and enforceable first lien on or a first priority
ownership interest in an estate in fee simple in real property and the
improvements thereon, securing a mortgage note or similar evidence of
indebtedness.
"MORTGAGE FILE" means the documents specified as the "Mortgage File" in Section
7(d), together with any additional documents and information required to be
delivered to Buyer or its designee (including the Custodian) pursuant to this
Agreement.
"MORTGAGE LOAN" means (i) a non-securitized whole loan, namely a conventional
mortgage loan secured by a first lien on a one to four family residential
property which conform to Seller's underwriting guidelines or (ii) another type
of non-securitized whole loan as may be agreed upon in writing by the parties
hereto from time to time.
"MORTGAGE LOAN SCHEDULE" means a schedule of Mortgage Loans attached to each
Trust Receipt, Confirmation and Custodial Delivery.
"MORTGAGE NOTE" means a note or other evidence of indebtedness of a Mortgagor
secured by a Mortgage.
"MORTGAGED PROPERTY" means the real property securing repayment of the debt
evidenced by a Mortgage Note.
"MORTGAGEE" means the record holder of a Mortgage Note secured by a Mortgage.
5
"MORTGAGOR" means the obligor on a Mortgage Note and the grantor of the related
Mortgage.
"PERIODIC PAYMENT" has the meaning specified in Section 5(b).
"PERSON" means an individual, partnership, corporation, joint stock company,
trust or unincorporated organization or a governmental agency or political
subdivision thereof.
"PRICE DIFFERENTIAL" means, with respect to any Transaction hereunder as of any
date, 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 (reduced by any amount of such Price Differential previously
paid by Seller to Buyer with respect to such Transaction).
"PRICING RATE" means the per annum percentage rate specified in the Confirmation
for determination of the Price Differential which shall not exceed LIBOR plus
the applicable Pricing Spread.
"PRICING SPREAD" means .75% (or 75bp) with respect to the Transactions.
"PRIME RATE" means the rate of interest published by THE WALL STREET JOURNAL,
northeast edition, as the "prime rate".
"PURCHASE AMOUNT" shall mean Two hundred seventy- eight million two hundred
thousand Dollars ($278,200,000.00).
"PURCHASE DATE" means the date on which Purchased Mortgage Loans are transferred
by Seller to Buyer or its designee (including the Custodian) as specified in the
Confirmation.
"PURCHASE PRICE" means on the Purchase Date, the price at which Purchased
Mortgage Loans are transferred by Seller to Buyer or its designee (including the
Custodian), which, subject to compliance with the collateral maintenance
requirements of Section 4, shall equal ninety-five per cent (95%) of the
aggregate outstanding principal amount of the Mortgage Loans on the Purchase
Date; provided, however, that the Purchase Price of any Mortgage Loan shall not
in any event exceed the outstanding principal amount thereof.
"PURCHASED MORTGAGE LOANS" means the Mortgage Loans sold by Seller to Buyer in a
Transaction, any Additional Loans and any Substituted Mortgage Loans.
"REPLACEMENT LOANS" has the meaning specified in Section 14(b)(ii).
"REPURCHASE DATE" means the date on which Seller is to repurchase the Purchased
Mortgage Loans from Buyer, including any date determined by application of the
provisions of Sections 3
6
or 14, as specified in the Confirmation; provided that in no event shall such
date later than the Termination Date.
"REPURCHASE PRICE" means the price at which Purchased Mortgage Loans are to be
transferred from Buyer or its designee (including the Custodian) to Seller upon
termination of a Transaction, which will be determined in each case (including
Transactions terminable upon demand) as the sum of the Purchase Price and the
Price Differential as of the date of such determination decreased by all cash,
Income and Periodic Payments actually received by Buyer pursuant to Sections
4(a), 5(a) and 5(b), respectively.
"SECURITIZATION VALUE" means, as of any date with respect to any Mortgage Loans,
the price at which such Mortgage Loans could be securitized and sold in a
securitization as determined by Buyer in its sole discretion; provided, however,
that Buyer shall not take into account, for purposes of calculating
Securitization Value, any Mortgage Loan (i) which are more than 59 days
Delinquent or (ii) with respect to which there is a breach of a representation,
warranty or covenant made by Seller in this Agreement that materially adversely
affects Buyer's interest in such Mortgage Loan and which breach has not been
cured.
"SECURITIZATION VALUE COLLATERAL DEFICIT" has the meaning specified in Section
4(a).
"SELLER" has the meaning specified in Section 1.
"SERVICING AGREEMENT" has the meaning specified in Section 25.
"SERVICING RECORDS" has the meaning specified in Section 25.
"SUBSTITUTED MORTGAGE LOANS" means any Mortgage Loans substituted for Purchased
Mortgage Loans in accordance with Section 9 hereof.
"TERMINATION DATE" shall mean that date which is the last to occur of (i) the
ninety-first (91st) day following the date upon which the Purchase Amount is
advanced by Buyer to Seller under the terms of this Agreement, or (ii) such
later date as the parties may determine by mutual written agreement .
"TRANSACTION" has the meaning specified in Section 1.
7
"TRUST RECEIPT" means a trust receipt issued by Custodian to Buyer confirming
the Custodian's possession of certain mortgage loan files which are the property
of and held by Custodian for the benefit of the Buyer or the registered holder
of such trust receipt.
3. INITIATION; CONFIRMATION; TERMINATION; MAXIMUM TRANSACTION AMOUNTS
(a) An agreement to enter into the Transaction shall be in writing at the
initiation of either Buyer or Seller. In any event, Buyer shall confirm the
terms of the Transaction by issuing a written confirmation to Seller promptly
after the parties enter into the Transaction in the form of Exhibit I attached
hereto (a "CONFIRMATION"). Such Confirmation shall describe the Purchased
Mortgage Loans, identify Buyer and Seller and set forth (i) the Purchase Date,
(ii) the Purchase Price, (iii) the Repurchase Date, unless the Transaction is to
be terminable on demand, (iv) the Pricing Rate applicable to the Transaction,
(v) the applicable Collateral Amount Percentages and (vi) additional terms or
conditions not inconsistent with this Agreement. After receipt of the
Confirmation, Seller shall, subject to the provisions of subsection (c) below,
sign the Confirmation and promptly return it to Buyer.
(b) Any Confirmation by Buyer shall be deemed to have been received by Seller on
the date actually received by Seller.
(c) The Confirmation, together with this Agreement, shall be conclusive evidence
of the terms of the Transaction covered thereby unless objected to in writing by
Seller no more than two (2) Business Days after the date the Confirmation was
received by Seller or unless a corrected Confirmation is sent by Buyer. An
objection sent by Seller must state specifically that writing which is an
objection, must specify the provision(s) being objected to by Seller, must set
forth such provision(s) in the manner that the Seller believes they should be
stated, and must be received by Buyer no more than two (2) Business Days after
the Confirmation was received by Seller.
(d) In the case of Transactions terminable upon demand, such demand shall be
made by Seller by telephone or otherwise, no later than 1:00 p.m. (New York
Time) on the Business Day prior to the day on which such termination will be
effective.
(e) On the Repurchase Date, termination of the Transaction will be effected by
transfer to Seller or its designee of the Purchased Mortgage Loans (and any
Income in respect thereof received by Buyer not previously credited or
transferred to, or applied to the obligations of, Seller pursuant to Section 5)
against the simultaneous transfer of the Repurchase Price to an account of
Buyer. Seller is obligated to obtain the Mortgage Files from Buyer or its
designee at Seller's expense on the Repurchase Date.
4. COLLATERAL AMOUNT MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased Mortgage Loans
subject to then outstanding Transactions is less than the aggregate Collateral
Amount for all such Transactions (a "MARKET VALUE COLLATERAL DEFICIT"), then
Buyer may by notice to Seller require Seller to transfer to Buyer or its
designee (including the Custodian) Mortgage Loans ("ADDITIONAL LOANS") or cash,
so that the cash and aggregate Market Value of the Purchased Mortgage Loans,
8
including any such Additional Loans, will thereupon equal or exceed the
aggregate Collateral Amount. If at any time the aggregate Securitization Value
of all Mortgage Loans subject to then outstanding Transactions is less than the
aggregate Collateral Amount for all such Transactions (a "SECURITIZATION VALUE
COLLATERAL DEFICIT"), then Buyer may by notice to Seller require Seller to
transfer to Buyer or its designee (including the Custodian) Additional Loans or
cash, so that the cash and aggregate Securitization Value of such Mortgage
Loans, including any such Additional Loans, will thereupon equal or exceed the
aggregate Collateral Amount.
(b) Notice required pursuant to subsection (a) above may be given by any means
of telecopier or telegraphic transmission. A notice for the payment or delivery
in respect of a Collateral Deficit received before 9:00 a.m. on a Business Day,
local time of the party receiving the notice, must be met not later than 5:00
p.m. on the Business Day following the day upon which the notice was given,
local time of the party receiving the notice. Any notice given on a Business Day
after 9:00 a.m., local time of the party receiving the notice, shall be met not
later than 2:00 p.m. (New York time) on the following Business Day. The failure
of Buyer, on any one or more occasions, to exercise its rights under subsection
(a) of this Section shall not change or alter the terms and conditions to which
this Agreement is subject or limit the right of the Buyer to do so at a later
date. Buyer and Seller agree that a failure or delay to exercise its rights
under subsections (a) of this Section shall not limit Buyer's rights under this
Agreement or otherwise existing by law or in any way create additional rights
for Seller.
(c) In the event that Seller fails to comply with the provisions of this Section
4, Buyer shall not enter into any additional Transactions hereunder after the
date of such failure.
5. INCOME PAYMENTS
(a) Where a particular Transaction's term extends over an Income payment
date on the Purchased Mortgage Loans subject to that Transaction such Income
shall be the property of Buyer. Notwithstanding the foregoing, so long as no
Event of Default shall have occurred and be continuing, Seller shall be entitled
to all Income with respect to Purchased Mortgage Loans subject to Transactions.
Upon the occurrence and continuance of an Event of Default, all Income with
respect to Purchased Mortgage Loans subject to Transactions shall be held in a
segregated account established by the Custodian for the benefit of Buyer and
distributed under the Custodial Agreement.
(b) Notwithstanding that Buyer and Seller intend that the Transactions
hereunder be sales to Buyer of the Purchased Mortgage Loans, Seller shall pay by
wire transfer to Buyer the accreted value of the Price Differential (less any
amount of such Price Differential previously paid by Seller to Buyer)(each such
payment, a "PERIODIC PAYMENT") on the first Business Day of each month.
(c) Buyer shall offset against the Repurchase Price of each such
Transaction all Income and Periodic Payments actually received by Buyer pursuant
to Sections 5(a) and (b), respectively.
6. SECURITY INTEREST; ADDITIONAL COLLATERAL
(a) Buyer and the Seller intend that the Transaction hereunder be sales to Buyer
of the Purchased Mortgage Loans and not loans from Buyer to Seller secured by
the Purchased Mortgage Loans. However, in order to preserve Buyer's rights under
this Agreement in the event that a court or other forum recharacterizes the
Transactions hereunder as loans and as security for the
9
performance by Seller of all of Seller's obligations to Buyer under this
Agreement and the December Master Repurchase Agreement and the Transactions
entered into pursuant to this Agreement and the December Master Repurchase
Agreement, Seller grants Buyer a first priority security interest in the
Transactions set forth in the December Master Repurchase Agreement and the
Ordinary Course Mortgage Loans, and the Purchased Mortgage Loans, Servicing
Records, insurance relating to the Ordinary Course Mortgage Loans and the
Purchased Mortgage Loans, Income, any and all Xxxxxx, any and all custodial
accounts and escrow accounts relating to the Purchased Mortgage Loans and the
Ordinary Course Mortgage Loans, and any other contract rights, general
intangibles and other assets relating to the Ordinary Course Mortgage Loans or
the Purchased Mortgage Loans or any interest in the Ordinary Course Mortgage
Loans or the Purchased Mortgage Loans and the servicing of the Ordinary Course
Mortgage Loans and the Purchased Mortgage Loans and any and all replacements,
substitutions, distributions on or proceeds of any and all of the foregoing
(collectively, the "COLLATERAL").
(b) Seller shall pay all fees and expenses associated with perfecting Buyer's
security interest in the Collateral, including, without limitation, the cost of
filing financing statements under the Uniform Commercial Code and recording
assignments of Mortgage, as and when required by Buyer in its sole discretion.
(c) Seller covenants to take such further actions as are necessary in order to
perfect Buyer's first priority security interest in the Xxxxxx.
7. PAYMENT, TRANSFER AND CUSTODY
(a) Unless otherwise mutually agreed in writing, all transfers of funds
hereunder shall be in immediately available funds.
(b) On or before each Purchase Date, Seller shall deliver or cause to be
delivered to Buyer or its designee the Custodial Delivery in the form attached
hereto as Exhibit II.
(c) On the Purchase Date for the Transaction, ownership of the Purchased
Mortgage Loans shall be transferred to the Buyer or its designee (including the
Custodian) against the simultaneous transfer of the Purchase Price to an account
of Seller specified in the Confirmation. Seller, simultaneously with the
delivery to Buyer or its designee (including the Custodian) of the Purchased
Mortgage Loans relating to the Transaction hereby sells, transfers, conveys and
assigns to Buyer or its designee (including the Custodian) without recourse, but
subject to the terms of this Agreement, all the right, title and interest of
Seller in and to the Purchased Mortgage Loans together with all right, title and
interest in and to the proceeds of any related insurance policies.
(d) In connection with the sale, transfer, conveyance and assignment, on or
prior to each Purchase Date with respect to each Mortgage Loan, the Seller shall
deliver or cause to be delivered and released to the Custodian the following
original documents (collectively the "MORTGAGE FILE"), pertaining to each of the
Purchased Mortgage Loans identified in the Custodial Delivery delivered
therewith:
(i) the original Mortgage Note bearing all intervening
endorsements, endorsed "Pay to the order of ________ without recourse,
and without representation or warranty, express or implied" and signed
in the name of the last endorsee (the "LAST ENDORSEE") by an authorized
officer (in the event that the Mortgage Loan was acquired by the Last
Endorsee in a merger, the signature must be in the following form:
"[the Last Endorsee], successor by merger to [name of predecessor]"; in
the event that the Mortgage Loan was
10
acquired or originated while doing business under another name, the
signature must be in the following form: "[the Last Endorsee], formerly
known as [previous name]");
(ii) the original of any guarantee executed in connection with the
Mortgage Note (if any);
(iii) the original Mortgage with evidence of recording thereon or
copies certified by Seller to have been sent for recording;
(iv) the originals of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon or copies
certified by Seller to have been sent for recording;
(v) the original assignment of Mortgage in blank for each Mortgage
Loan, in form and substance acceptable for recording and signed in the
name of the Last Endorsee (in the event that the Mortgage Loan was
acquired by the Last Endorsee in a merger, the signature must be in the
following form: "[the Last Endorsee], successor by merger to [name of
predecessor]"; in the event that the Mortgage Loan was acquired or
originated while doing business under another name, the signature must
be in the following form: "[the Last Endorsee], formerly known as
[previous name]");
(vi) the originals of all intervening assignments of mortgage with
evidence of recording thereon or copies certified by Seller to have
been sent for recording;
(vii) the original policy of title insurance or a true copy thereof
or, if such policy has not yet been delivered by the insurer, the
commitment or binder to issue the same; and
(viii) the original of any security agreement, chattel mortgage or
equivalent document executed in connection with the Mortgage (if any).
(e) Intentionally deleted.
(f) With respect to all of the Mortgage Loans delivered by Seller to Buyer or
its designee (including the Custodian), Seller shall execute an omnibus power of
attorney substantially in the form of Exhibit III attached hereto irrevocably
appointing Buyer its attorney-in-fact with full power to complete and record the
assignment of Mortgage, complete the endorsement of the Mortgage Note and take
such other steps as may be necessary or desirable to enforce Buyer's rights
against such Mortgage Loans, the related Mortgage Files and the Servicing
Records.
(g) Buyer shall deposit the Mortgage Files representing the Purchased Mortgage
Loans, or direct that the Mortgage Files be deposited directly, with the
Custodian. The Mortgage Files shall be maintained in accordance with the
Custodial Agreement.
(h) Any Mortgage Files not delivered to Buyer or its designee (including the
Custodian) are and shall be held in trust by Seller or its designee for the
benefit of Buyer as the owner thereof. Seller or its designee shall maintain a
copy of the Mortgage File and the originals of the Mortgage File not delivered
to Buyer or its designee. The possession of the Mortgage File by Seller or its
designee is at the will of the Buyer for the sole purpose of servicing the
related Purchased Mortgage Loan, and such retention and possession by the Seller
or its designee is in a custodial capacity only. The books and records
(including, without limitation, any computer records or tapes) of Seller or its
designee shall be marked appropriately to reflect clearly the sale of the
related Purchased Mortgage Loan to Buyer. Seller or its designee (including the
11
Custodian) shall release its custody of the Mortgage File only in accordance
with written instructions from Buyer, unless such release is required as
incidental to the servicing of the Purchased Mortgage Loans or is in connection
with a repurchase of any Purchased Mortgage Loan by Seller.
8. REHYPOTHECATION OR PLEDGE OF PURCHASED MORTGAGE LOANS
Title to all Purchased Mortgage Loans shall pass to Buyer and Buyer shall have
free and unrestricted use of all Purchased Mortgage Loans. Nothing in this
Agreement shall preclude Buyer from engaging in repurchase transactions with the
Purchased Mortgage Loans or otherwise pledging, repledging, hypothecating, or
rehypothecating the Purchased Mortgage Loans, but no such transaction shall
relieve Buyer of its obligations to transfer Purchased Mortgage Loans to Seller
pursuant to Section 3 or of any other obligation under this Agreement during a
Transaction. Nothing contained in this Agreement shall obligate Buyer to
segregate any Purchased Mortgage Loans delivered to Buyer by Seller; provided
that Buyer acknowledges that the Custodian is contractually obligated to
segregate the Mortgage Files pursuant to the Custodial Agreement.
9. SUBSTITUTION
(a) Subject to Section 9(b), Seller may, upon one (1) Business Days'
written notice to Buyer, with a copy to Custodian, substitute other Mortgage
Loans for any Purchased Mortgage Loans. Such substitution shall be made by
transfer to Buyer or its designee (including the Custodian) of the Mortgage
Files of such other Mortgage Loans together with a Custodial Delivery and
transfer to Seller or its designee of the Purchased Mortgage Loans requested for
release. After substitution, the substituted Mortgage Loans, shall be deemed to
be Purchased Mortgage Loans subject to the same Transaction as the released
Mortgage Loans.
(b) Notwithstanding anything to the contrary in this Agreement, Seller may
not substitute other Mortgage Loans for any Purchased Mortgage Loans (i) if
after taking into account such substitution, a Collateral Deficit would occur or
(ii) such substitution would cause a breach of any provision of this Agreement.
10. REPRESENTATIONS AND WARRANTIES
(a) Each of Buyer and Seller represents and warrants to the other that (i) it is
duly authorized to execute and deliver this Agreement, to enter into the
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
person signing this Agreement on its behalf is duly authorized to do so on its
behalf; (iv) this Agreement is legal, valid and binding obligation of it,
enforceable against it in accordance with its terms, (v) no approval, consent or
authorization of the Transactions contemplated by this Agreement from any
federal, state, or local regulatory authority having jurisdiction over it is
required or, if required, such approval, consent or authorization has been or
will, prior to the Purchase Date, be obtained; (vi) the execution, delivery, and
performance of this Agreement and the Transactions hereunder will not violate
any law, regulation, order, judgment, decree, ordinance, charter, by-law, or
rule applicable to it or its property or constitute a default (or an event
which, with notice or lapse of time, or both would constitute a default) under
or result in a breach of any agreement or other instrument by which it is bound
or by which any of its assets are affected; (vii) it has received approval and
authorization to enter into this Agreement and each and every Transaction
actually entered into hereunder pursuant to its internal policies and
procedures; and
12
(viii) neither this Agreement nor any Transaction pursuant hereto are entered
into in contemplation of insolvency or with intent to hinder, delay or defraud
any creditor.
(b) Seller represents and warrants to Buyer that as of the
Purchase Date for the purchase of any Purchased Mortgage
Loans by Buyer from Seller and as of the date of this
Agreement and any Transaction hereunder and at all times
while this Agreement and any Transaction hereunder is in
full force and effect:
(i) ORGANIZATION. Seller is duly organized, validly existing
and in good standing under the laws of the State of
Florida and is duly licensed, qualified, and in good
standing in every state where Seller transacts business
and in any state where any Mortgaged Property is located
if the laws of such state require licensing or
qualification in order to conduct business of the type
conducted by Seller therein.
(ii) No Litigation. There is no action, suit, proceeding,
arbitration or investigation pending or threatened against
Seller which, either in any one instance or in the
aggregate, may result in any material adverse change in
the business, operations, financial condition, properties
or assets of Seller, or in any material impairment of the
right or ability of Seller to carry on its business
substantially as now conducted, or in any material
liability on the part of Seller, or which if adversely
determined would affect the validity of this Agreement or
any of the Purchased Mortgage Loans or of any action taken
or to be taken in connection with the obligations of
Seller contemplated herein, or which would be likely to
impair materially the ability of Seller to perform under
the terms of this Agreement;
(iii) No Broker. OTHER THAN Xxxxxx Brothers Holdings, Inc.,
Seller has not dealt with any broker, investment banker,
agent, or other person, except for Buyer, who may be
entitled to any commission or compensation in connection
with the sale of Purchased Mortgage Loans pursuant to this
Agreement;
(iv) Good Title to Collateral. Purchased Mortgage Loans shall
be free and clear of any lien, encumbrance or impediment
to transfer, and Seller has good, valid and marketable
title and the right to sell and transfer such Purchased
Mortgage Loans to Buyer.
(v) Delivery of Mortgage File. With respect to each Purchased
Mortgage Loan which is not a Wet Ink Mortgage Loan, the
Mortgage Note, the Mortgage, the assignment of Mortgage
and any other documents required to be delivered under
this Agreement and the Custodial Agreement for such
Mortgage Loan has been delivered to the Custodian. Seller
or its designee is in possession of a complete, true and
accurate Mortgage File with respect to each Mortgage Loan,
except for such documents the originals of which have been
delivered to the Custodian.
(vi) Selection Process. Intentionally Deleted.
(vii) [Reserved].
13
(viii) No Untrue Statements. To the best of Seller's knowledge,
neither this Agreement nor any written statement made, or
any report or other document issued or delivered or to be
issued or delivered by Seller pursuant to this Agreement
or in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements
contained herein or therein not misleading;
(ix) Origination Practices. Intentionally Deleted.
(x) Performance of Agreement. Seller does not believe, nor
does it have any reason or cause to believe, that it
cannot perform each and every covenant contained in this
Agreement on its part to be performed;
(xi) Seller Not Insolvent. Seller is not, and with the passage
of time does not expect to become, insolvent; and
(xii) No Event of Default. No Event of Default has occurred and
is continuing hereunder.
(c) Seller represents and warrants to the Buyer that each Purchased Mortgage
Loan sold hereunder, as of the related Purchase Date conform to the
representations and warranties set forth in Exhibit V attached hereto. Seller
further represents and warrants to the Buyer that, as of the date of its
delivery, the Collateral Information with respect to each Purchased Mortgage
Loan is complete, true and correct. It is understood and agreed that the
representations and warranties set forth on Exhibit V hereto, if any, shall
survive delivery of the respective Mortgage File to Buyer or its designee
(including the Custodian).
(d) On the Purchase Date for any Transaction, Buyer and Seller shall each be
deemed to have made all the foregoing representations with respect to itself as
of such Purchase Date.
11. NEGATIVE COVENANTS OF THE SELLER
On and as of the date of this Agreement and each Purchase Date and until this
Agreement is no longer in force with respect to any Transaction, Seller
covenants that it will not:
(a) take any action which would directly or indirectly impair or adversely
affect Buyer's title to or the value of the Purchased Mortgage Loans;
(b) pledge, assign, convey, grant, bargain, sell, set over, deliver or otherwise
transfer any interest in the Purchased Mortgage Loans to any person not a party
to this Agreement nor will the Seller create, incur or permit to exist any lien,
encumbrance or security interest in or on the Purchased Mortgage Loans except as
described in Section 6 of this Agreement; or
(c) create, incur or permit to exist any lien, encumbrance or security interest
in or on any of the Collateral without the prior express written consent of
Buyer.
14
12. AFFIRMATIVE COVENANTS OF THE SELLER
For so long as this Agreement is in effect:
(a) Seller covenants that it will promptly notify Buyer of any material adverse
change in its business operations and/or financial condition;
(b) Seller shall provide Buyer with copies of such documentation as Buyer may
reasonably request evidencing the truthfulness of the representations set forth
in Section 10, including but not limited to resolutions evidencing the approval
of this Agreement by Seller's board of directors or loan committee, copies of
the minutes of the meetings of Seller's board of directors or loan committee at
which this Agreement and the Transactions contemplated by this Agreement were
approved;
(c) Seller shall, at Buyer's request, take all action necessary to ensure that
Buyer will have a first priority security interest in the Collateral, including,
among other things, filing such Uniform Commercial Code financing statements as
Buyer may reasonably request;
(d) Seller shall notify Buyer no later than one (1) Business Day after obtaining
actual knowledge thereof, if any event has occurred that constitutes an Event of
Default with respect to Seller or any event that with the giving of notice or
lapse of time, or both, would become an Event of Default with respect to Seller;
(e) Intentionally Deleted.
(f) Seller covenants, upon request of Buyer after the occurrence of a Collateral
Deficit, to enter into hedging transactions with respect to fixed rate Purchased
Mortgage Loans in order to provide adequate protection, in Seller's reasonable
judgment, against interest rate risks;
(g) Seller covenants to provide Buyer on the first Business Day of each month,
either by direct modem electronic transmission or via a computer diskette, the
Collateral Information in computer readable format with respect to all Purchased
Mortgage Loans then subject to Transactions;
(h) Intentionally Deleted.
(i) Seller covenants to provide Buyer with the following financial and reporting
information:
(i) Within 120 days after the last day of its fiscal year, Seller's
audited consolidated statements of income and statements of changes in
cash flow for such year and balance sheets as of the end of such year
in each case presented fairly in accordance with GAAP, and accompanied,
in all cases, by an unqualified report of a nationally recognized
independent certified public accounting firm consented to by Buyer
(which consent shall not be unreasonably withheld);
(ii) Within 90 days after the last day of the first three fiscal
quarters in any fiscal year, Seller's consolidated statements of income
and statements of changes in cash flow for such quarter and balance
sheets as of the end of such quarter presented fairly in accordance
with GAAP; and
15
(iii) Upon request and in any event not more frequently than quarterly,
an officer's certificate from a senior officer of the Seller addressed
to Buyer certifying that, as of such calendar month, (x) Seller is in
compliance with all of the terms, conditions and requirements of this
Agreement, and (y) no Event of Default exists.
13. EVENTS OF DEFAULT
(a) If any of the following events (each an "EVENT OF DEFAULT") occur, Seller
and Buyer shall have the rights set forth in Section 14, as applicable:
(i) Seller or Buyer fails to satisfy or perform either (i) any
payment obligation under this Agreement or (ii) any other
material obligation or covenant under this Agreement
within five (5) Business Days of notice of such breach;
(ii) an Act of Insolvency occurs with respect to Seller or
Buyer;
(iii) any representation made by Seller shall have been
incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated and such
representation is not corrected or cured of its inaccuracy
within five (5) Business Days of notice of such breach;
(iv) Seller or Buyer shall admit its inability to, or its
intention not to, perform any of its obligations
hereunder;
(v) any governmental, regulatory, or self-regulatory
authority, including, but not limited to, the Agencies,
takes any action to remove, limit, restrict, suspend or
terminate the rights, privileges, or operations of the
Seller or any of its Affiliates, including suspension as
an issuer, lender or seller/servicer of mortgage loans,
which suspension has a material adverse effect on the
ordinary business operations of Seller or Seller's
Affiliate, and which continues for more than 24 hours;
(vi) Seller dissolves, merges or consolidates with another
entity (unless (A) it is the surviving party or (B) the
entity into which it mergers has equity and a market value
of at least that of the Seller immediately prior to such
merger and such entity expressly assumes the obligations
of the Seller at the time of such merger), or sells,
transfers, or otherwise disposes of a material portion of
its business or assets without Buyer's prior written
consent;
(vii) Buyer, in its good faith judgment, believes that there has
been a material adverse change in the business,
operations, corporate structure or financial condition of
Seller or that Seller will not meet any of its obligations
under any Transaction pursuant to this Agreement, this
Agreement or any other agreement between the parties, and
two (2) Business Days have elapsed since Buyer has
delivered to Seller written notice to such effect;
(viii) Seller is in default under any indenture or other
agreement with respect to the borrowing of money to which
it is a party, PROVIDED, HOWEVER, such a default shall not
constitute an Event of Default if the exercise of
16
such remedies as are available to Seller's counterparty
with respect to such default would not result in a
material adverse change in the business operations or
financial condition of the Seller;
(ix) A final nonappealable judgment by any competent court in
the United States of America for the payment of money in
an amount of at least $250,000 is rendered against the
Seller, and the same remains undischarged or unpaid for a
period of sixty (60) days during which execution of such
judgment is not effectively stayed;
(x) This Agreement shall for any reason cease to create a
valid, first priority security interest in any of the
Purchased Mortgage Loans purported to be covered hereby;
(xi) A Market Value Collateral Deficit occurs with respect to
Seller or Buyer, as applicable, and is not eliminated
within the time period specified in Section 4(b); or
(xii) An "event of default" has occurred pursuant to a hedging
transaction entered into upon request of Buyer pursuant to
Section 12(h) hereof.
(xiii) An "event of default" shall have occurred and be
continuing under the terms of the December Master
Repurchase Agreement.
14. REMEDIES
(a) If an Event of Default occurs with respect to Seller, the following rights
and remedies are available to Buyer:
(i) At the option of Buyer, exercised by written notice to
Seller (which option shall be deemed to have been
exercised, even if no notice is given, immediately upon
the occurrence of an Act of Insolvency), the Repurchase
Date for each Transaction hereunder shall be deemed
immediately to occur,
(ii) If Buyer exercises or is deemed to have exercised the
option referred to in subsection (a)(i) of this Section,
(A) Seller's obligations hereunder to repurchase all Purchased
Mortgage Loans in such Transactions shall thereupon become
immediately due and payable,
(B) to the extent permitted by applicable law, the Repurchase
Price with respect to each such Transaction shall be increased by
the aggregate amount obtained by daily application of, on a 360 day
per year basis for the actual number of days during the period from
and including the date of the exercise or deemed exercise of such
option to but excluding the date of payment of the Repurchase Price
as so increased, (x) the greater of the Prime Rate or the Pricing
Rate for each such Transaction to (y) the Repurchase Price for such
Transaction as of the Repurchase Date as determined pursuant to
subsection (a)(i) of this Section (decreased as of any day by (I)
any amounts actually in the possession of Buyer pursuant to clause
(C) of this subsection, (II) any proceeds from the sale of Purchased
Mortgage Loans applied to the Repurchase Price pursuant to
17
subsection (a)(xii) of this Section, and (III) any amounts applied
to the Repurchase Price pursuant to subsection (a)(iii) of this
Section), and
(C) all Income actually received by the Buyer or its designee
(including the Custodian) pursuant to Section 5 shall be applied to
the aggregate unpaid Repurchase Price owed by Seller.
(iii) After one Business Day's notice to Seller (which notice
need not be given if an Act of Insolvency shall have
occurred, and which may be the notice given under
subsection (a)(i) of this Section), Buyer may (A)
immediately sell, without notice or demand of any kind, at
a public or private sale and at such price or prices Buyer
may reasonably deem satisfactory any or all Purchased
Mortgage Loans subject to a Transaction hereunder or (B)
in its sole discretion elect, in lieu of selling all or a
portion of such Purchased Mortgage Loans, to give Seller
credit for such Purchased Mortgage Loans in an amount
equal to the Market Value of the Purchased Mortgage Loans
against the aggregate unpaid Repurchase Price and any
other amounts owing by Seller hereunder. The proceeds of
any disposition of Purchased Mortgage Loans shall be
applied first to the costs and expenses incurred by Buyer
in connection with Seller's default; second to the actual
costs of cover and/or related hedging transactions; third
to the Repurchase Price; and fourth to any other
outstanding obligation of Seller to Buyer or its
Affiliates.
(iv) The parties recognize that it may not be possible to
purchase or sell all of the Purchased Mortgage Loans on a
particular Business Day, or in a transaction with the same
purchaser, or in the same manner because the market for
such Purchased Mortgage Loans may not be liquid. In view
of the nature of the Purchased Mortgage Loans, the parties
agree that liquidation of a Transaction or the underlying
Purchased Mortgage Loans does not require a public
purchase or sale and that a good faith private purchase or
sale shall be deemed to have been made in a commercially
reasonable manner. Accordingly, Buyer may elect, in its
sole discretion, the time and manner of liquidating any
Purchased Mortgage Loan and nothing contained herein shall
(A) obligate Buyer to liquidate any Purchased Mortgage
Loan on the occurrence of an Event of Default or to
liquidate all Purchased Mortgage Loans in the same manner
or on the same Business Day or (B) constitute a waiver of
any right or remedy of Buyer. However, in recognition of
the parties' agreement that the Transactions hereunder
have been entered into in consideration of and in reliance
upon the fact that all Transactions hereunder constitute a
single business and contractual relationship and that each
Transaction has been entered into in consideration of the
other Transactions, the parties further agree that Buyer
shall use its best efforts to liquidate all Transactions
hereunder upon the occurrence of an Event of Default as
quickly as is prudently possible in the reasonable
judgment of Buyer.
(v) Buyer shall, without regard to the adequacy of the
security for the Seller's obligations under this
Agreement, be entitled to the appointment of a receiver by
any court having jurisdiction, without notice, to take
possession of and protect, collect, manage, liquidate, and
sell the Collateral or any portion thereof, and collect
the payments due with
18
respect to the Collateral or any portion thereof. Seller
shall pay all costs and expenses incurred by Buyer in
connection with the appointment and activities of such
receiver.
(vi) Seller agrees that Buyer may obtain an injunction or an
order of specific performance to compel Seller to fulfill
its obligations as set forth in Section 25, if Seller
fails or refuses to perform its obligations as set forth
therein.
(vii) Seller shall be liable to Buyer for the amount of all
expenses, reasonably incurred by Buyer in connection with
or as a consequence of an Event of Default, including,
without limitation, reasonable legal fees and expenses and
reasonable costs incurred in connection with hedging or
covering transactions.
(viii) Buyer shall have all the rights and remedies provided
herein, provided by applicable federal, state, foreign,
and local laws (including, without limitation, the rights
and remedies of a secured party under the Uniform
Commercial Code of the State of New York, to the extent
that the Uniform Commercial Code is applicable, and the
right to offset any mutual debt and claim), in equity, and
under any other agreement between Buyer and Seller.
(ix) Buyer may exercise one or more of the remedies available
to Buyer immediately upon the occurrence of an Event of
Default and, except to the extent provided in subsections
(a)(i) and (iii) of this Section, at any time thereafter
without notice to Seller. All rights and remedies arising
under this Agreement as amended from time-to-time
hereunder are cumulative and not exclusive of any other
rights or remedies which Buyer may have.
(x) In addition to its rights hereunder, Buyer shall have the
right to proceed against any assets of Seller which may be
in the possession of Buyer or its designee (including the
Custodian) including the right to liquidate such assets
and to set off the proceeds against monies owed by Seller
to Buyer pursuant to this Agreement. Buyer may set off
cash, the proceeds of the liquidation of the Purchased
Mortgage Loans, any Collateral or its proceeds, and all
other sums or obligations owed by Seller to Buyer against
all of Seller's obligations to Buyer, whether under this
Agreement, under a Transaction, or under any other
agreement between the parties, or otherwise, whether or
not such obligations are then due, without prejudice to
Buyer's right to recover any deficiency. Any cash,
proceeds, or property in excess of any amounts due, or
which Buyer reasonably believes may become due, to it from
Seller shall be returned to Seller after satisfaction of
all obligations of Seller to Buyer.
(xi) Buyer may enforce its rights and remedies hereunder
without prior judicial process or hearing, and Seller
hereby expressly waives any defenses Seller might
otherwise have to require Buyer to enforce its rights by
judicial process. Seller also waives any defense Seller
might otherwise have arising from the use of nonjudicial
process, enforcement and sale of all or any portion of the
Collateral, or from any other election
19
of remedies. Seller recognizes that nonjudicial remedies
are consistent with the usages of the trade, are
responsive to commercial necessity and are the result of a
bargain at arm's length.
(xii) Buyer and Seller hereby agree that sales of the Purchased
Mortgage Loans shall be deemed to include and permit the
sales of Purchased Mortgaged Loans pursuant to a
securities offering.
(xiii) Notwithstanding the foregoing remedies, if the Event of
Default (other than an Event of Default under Section
13(a)(xi)) arises from a breach of any representation or
warranty set forth in Sections 10(b)(iii), (v) or (ix) or
in Exhibit V attached hereto with respect to a Purchased
Mortgage Loan, then Seller may elect, subject to Buyer's
written consent (which consent shall not be unreasonably
withheld or delayed), to cure such default by repurchasing
such Mortgage Loan or substituting for such Mortgage Loan
within two (2) Business Days of such Event of Default,
PROVIDED, HOWEVER, that Seller shall not have the right to
make the foregoing election if such breach causes a
default with respect to Mortgage Loans that in the
aggregate represent ten percent (10%) or more of the
aggregate Purchase Price of all Purchased Mortgage Loans
subject to then outstanding Transactions. The repurchase
price for any such repurchase shall be the outstanding
Repurchase Price of such Mortgage Loan, as the case may
be. Any such substitution shall be performed in accordance
with Section 9 of this Agreement.
(b) If an Event of Default occurs with respect to Buyer, the following rights
and remedies are available to Seller:
(i) Upon tender by Seller of payment of the aggregate
Repurchase Price for all such Transactions, Buyer's right,
title and interest in all Purchased Mortgage Loans subject
to such Transactions shall be deemed transferred to
Seller, and Buyer shall deliver or cause to be transferred
all such Purchased Mortgage Loans to Seller or its
designee at Buyer's expense.
(ii) If Seller exercises the option referred to in subsection
(b)(i) of this Section and Buyer fails to deliver or cause
to be delivered the Purchased Mortgage Loans to Seller or
its designee, after one Business Day's notice to Buyer,
Seller may (A) purchase Mortgage Loans ("REPLACEMENT
LOANS") that are as similar as is reasonably practicable
in characteristics, outstanding principal amounts (as a
pool) and interest rate to any Purchased Mortgage Loans
that are not delivered by Buyer to Seller or its designee
as required hereunder or (B) in its sole discretion elect,
in lieu of purchasing Replacement Loans, to be deemed to
have purchased Replacement Loans at a price therefor on
such date, equal to the Market Value of the Purchased
Mortgage Loans.
(iii) Buyer shall be liable to the Seller, and Buyer shall pay
to the Seller on demand, (A) with respect to Purchased
Mortgage Loans (other than Additional Loans), for any
excess of the price paid (or deemed paid) by Seller for
Replacement Loans therefor over the Repurchase Price for
such Purchased Mortgage Loans and (B) with respect to
Additional Loans, for the price paid (or deemed paid) by
Seller for the Replacement
20
Loans therefor. In addition, Buyer shall be liable to
Seller for interest on such remaining liability with
respect to each such purchase (or deemed purchase) of
Replacement Loans calculated on a 360-day year basis for
the actual number of days during the period from and
including the date of such purchase (or deemed purchase)
until paid in full by Buyer. Such interest shall be at the
greater of the Pricing Rate or the Prime Rate.
(iv) Buyer shall be liable to Seller for the amount of all
expenses reasonably incurred by Seller in connection with
or as a consequence of an Event of Default, including,
without limitation, reasonable legal expenses and
reasonable expenses incurred in connection with covering
existing hedging transactions with respect to the
Purchased Mortgage Loans.
(v) Seller shall have all the rights and remedies provided
herein, provided by applicable federal, state, foreign,
and local laws, in equity, and under any other agreement
between Buyer and Seller, including, without limitation,
the right to offset any debt or claim.
(vi) Seller may exercise one or more of the remedies available
to Seller immediately upon the occurrence of an Event of
Default and at any time thereafter without notice to
Buyer. All rights and remedies arising under this
Agreement as amended from time-to-time hereunder are
cumulative and not exclusive of any other rights or
remedies which Seller may have.
15. ADDITIONAL CONDITION
Seller shall, on the date of the initial Transaction hereunder and, upon the
request of Buyer, on the date of any subsequent Transaction, cause to be
delivered to Buyer, with reliance thereon permitted as to any Person that
purchases the Purchased Mortgage Loan from Buyer in a repurchase transaction, a
favorable opinion or opinions of counsel with respect to the matters set forth
in Exhibit IV attached hereto.
16. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact
that, the Transaction hereunder constitute a single business and contractual
relationship. Accordingly, each of Buyer and Seller agrees (i) to perform all of
its obligations in respect of each Transaction hereunder, and that a default in
the performance of any such obligations shall constitute a default by it in
respect of all Transactions hereunder, (ii) that each of them shall be entitled
to set off claims and apply property held by them in respect of any Transaction
against obligations owing to them in respect of any other Transactions hereunder
and (iii) that payments, deliveries, and other transfers made by either of them
in respect of any Transaction shall be deemed to have been made in consideration
of payments, deliveries, and other transfers in respect of any other
Transactions hereunder, and the obligations to make any such payments,
deliveries, and other transfers may be applied against each other and netted;
provided, however, that the parties hereto acknowledge and agree that each
Purchased Mortgage Loan is identified and unique and nothing in this Agreement
should limit or reduce Buyer's obligation to deliver the Purchased Mortgage
Loans to Seller as and when provided herein.
21
17. NOTICES AND OTHER COMMUNICATIONS
Unless another address is specified in writing by the respective party to whom
any written notice or other communication is to be given hereunder, all such
notices or communications shall in in writing or confirmed in writing and
delivered at the respective addresses set forth in the Confirmation.
18. ENTIRE AGREEMENT; SEVERABILITY
This Agreement together with the applicable Confirmation constitutes the entire
understanding between Buyer and Seller with respect to the subject matter it
covers and shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions involving
Purchased Mortgage Loans. By acceptance of this Agreement, Buyer and Seller
acknowledge that they have not made, and are not relying upon, any statements,
representations, promises or undertakings not contained in this Agreement. 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.
19. ASSIGNABILITY
The rights and obligations of the parties under this Agreement and under any
Transactions shall not be assigned by Seller without the prior written consent
of Buyer. This Agreement and the Transaction shall be binding upon and shall
inure to the benefit of the parties and their respective successors and assigns.
Nothing in this Agreement express or implied, shall give to any person, other
than the parties to this Agreement and their successors hereunder, any benefit
or any legal or equitable right, power, remedy or claim under this Agreement.
20. TERMINABILITY
This Agreement shall terminate upon the written notice from either party to the
other party to such effect, except that this Agreement shall, notwithstanding
the above clause, remain applicable to the Transaction through and including the
Termination Date. Notwithstanding any such termination or the occurrence of an
Event of Default, all of the representations and warranties hereunder (including
those made in Exhibit V) shall continue and survive.
21. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF.
22. CONSENT TO JURISDICTION
The parties irrevocably agree to submit to the personal jurisdiction of the
United States District Court for the Southern District of New York, the parties
irrevocably waiving any objection thereto. If, for any reason, federal
jurisdiction is not available, and only if federal jurisdiction is not
available, the parties irrevocably agree to submit to the personal jurisdiction
of the Supreme Court of the State of New York, the parties irrevocably waiving
any objection thereto.
22
23. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any
other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto. Any such waiver or modification shall be effective only in the
specific instance and for the specific purpose for which it was given.
24. INTENT
The parties understand and intend that this Agreement and each Transaction
hereunder constitute a "repurchase agreement" and a "securities contract" as
those terms are defined under the relevant provisions of Title 11 of the United
States Code, as amended.
25. SERVICING
(a) Notwithstanding the purchase and sale of the Purchased Mortgage Loans
hereby, Seller shall continue to service the Purchased Mortgage Loans for the
benefit of Buyer and, if Buyer shall exercise its rights to pledge or
hypothecate the Purchased Mortgage Loan prior to the related Repurchase Date
pursuant to Section 8, Buyer's assigns; provided, however, that the obligations
of Seller to service the Purchased Mortgage Loans shall cease, at Seller's
option, upon the payment by Seller to Buyer of the Repurchase Price therefor.
Seller shall service the Purchased Mortgage Loans in accordance with the
servicing standards maintained by other prudent mortgage lenders with respect to
mortgage loans similar to the Purchased Mortgage Loans.
(b) Seller agrees that Buyer is the owner of all servicing records, including
but not limited to any and all servicing agreements, files, documents, records,
data bases, computer tapes, copies of computer tapes, proof of insurance
coverage, insurance policies, appraisals, other closing documentation, payment
history records, and any other records relating to or evidencing the servicing
of Purchased Mortgage Loans (the "SERVICING RECORDS") so long as the Purchased
Mortgage loans are subject to this Agreement. Seller grants Buyer a security
interest in all servicing fees and rights relating to the Purchased Mortgage
Loans and all Servicing Records to secure the obligation of the Seller or its
designee to service in conformity with this Section and any other obligation of
Seller to Buyer. Seller covenants to safeguard such Servicing Records and to
deliver them promptly to Buyer or its designee (including the Custodian) at
Buyer's request.
23
(c) Upon the occurrence and continuance of an Event of Default, Buyer may, in
its sole discretion, (i) sell its right to the Purchased Mortgage Loans on a
servicing released basis or (ii) terminate the Seller as servicer of the
Purchased Mortgage Loans with or without cause, in each case without payment of
any termination fee.
(d) Seller shall not employ sub-servicers to service the Purchased Mortgage
Loans without the prior written approval of Buyer, which approval shall not be
unreasonably withheld.
(e) Seller shall cause any sub-servicers engaged by Seller to execute a letter
agreement with Buyer acknowledging Buyer's security interest and agreeing that,
upon notice from Buyer (or the Custodian on its behalf) that an Event of Default
has occurred and in continuing hereunder, it shall deposit all Income with
respect to the Purchased Mortgage Loans in the account specified in the third
sentence of Section 5(a).
26. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
The parties acknowledge that they have been advised that in the case of
Transactions in which one of the parties is an "insured depository institution"
as that term is defined in Section 1831(a) of Title 12 of the United States
Code, as amended, funds held by the financial institution pursuant to a
Transaction hereunder are not a deposit and therefore are not insured by the
Federal Deposit Insurance Corporation, the Savings Association Insurance Fund or
the Bank Insurance Fund, as applicable.
27. NETTING
If Buyer and Seller are "financial institutions" as now or hereinafter defined
in Section 4402 of Title 12 of the United States Code ("SECTION 4402") and any
rules or regulations promulgated thereunder:
(a) All amounts to be paid or advanced by one party to or on behalf of the other
under this Agreement or any Transaction hereunder shall be deemed to be "payment
obligations" and all amounts to be received by or on behalf of one party from
the other under this Agreement or any Transaction hereunder shall be deemed to
be "payment entitlements" within the meaning of Section 4402, and this Agreement
shall be deemed to be a "netting contract" as defined in Section 4402.
(b) The payment obligations and the payment entitlements of the parties hereto
pursuant to this Agreement and any Transaction hereunder shall be netted as
follows. In the event that either party (the "DEFAULTING PARTY") shall fail to
honor any payment obligation under this Agreement or any Transaction hereunder,
the other party (the "NONDEFAULTING PARTY") shall be entitled to reduce the
amount of any payment to be made by the Nondefaulting Party to the Defaulting
Party by the amount of the payment obligation that the Defaulting Party failed
to honor.
28. MISCELLANEOUS
(a) Time is of the essence under this agreement and all Transactions and all
references to a time shall mean New York time in effect on the date of the
action unless otherwise expressly stated in this Agreement.
(b) Buyer shall be authorized to accept orders and take any other action
affecting any accounts of the Seller in response to instructions given in
writing or orally by telephone or otherwise by any person with apparent
authority to act on behalf of the Seller, and the Seller shall indemnify
24
Buyer, defend, and hold Buyer harmless from and against any and all liabilities,
losses, damages, costs, and expenses of any nature arising out of or in
connection with any action taken by Buyer in response to such instructions
received or reasonably believed to have been received from the Seller.
(c) If there is any conflict between the terms of this Agreement or any
Transaction entered into hereunder and the Custodial Agreement, this Agreement
shall prevail.
(d) If there is any conflict between the terms of a Confirmation or a corrected
Confirmation issued by the Buyer and this Agreement, the Confirmation shall
prevail.
(e) This Agreement may be executed in counterparts, each of which so executed
shall be deemed to be an original, but all of such counterparts shall together
constitute but one and the same instrument.
(f) Intentionally Deleted.
(g) The headings in this Agreement are for convenience of reference only and
shall not affect the interpretation or construction of this Agreement
25
IN WITNESS WHEREOF, the parties have entered into this Master Agreement
Governing Purchases and Sales of Mortgage Loans as of the date set forth above.
Seller:
OCWEN FINANCIAL SERVICES, INC.
a Florida corporation
By: (Seal)
---------------------------
Title:
------------------------
Date:
-------------------------
26
IN WITNESS WHEREOF, the parties have entered into this Master Agreement
Governing Purchases and Sales of Mortgage Loans as of the date set forth above.
XXXXXX COMMERCIAL PAPER, INC.
as Buyer
By: (Seal)
---------------------------
Title:
------------------------
Date:
-------------------------
27
The following exhibits have been deleted herefrom, but are available to the
Commission upon request.
EXHIBIT I Confirmation
EXHIBIT II Form of Custodial Delivery
EXHIBIT III Form of Power of Attorney
EXHIBIT IV Opinion of Counsel to Seller
EXHIBIT V Representations and Warranties
Regarding Mortgage Loan
EXHIBIT VI Seller's Underwriting Guidelines
28
