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EXHIBIT 10.34
EXECUTION COPY
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DELINQUENCY ADVANCE PURCHASE AGREEMENT
BETWEEN
AAMES CAPITAL CORPORATION
AS SELLER,
AND
FAIRBANKS CAPITAL CORP.
AS BUYER
DATED AS OF MAY 13, 1999
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS................................................................................................1
SECTION 1.1 Certain Defined Terms. ..............................................................1
SECTION 1.2 Interpretation and Construction......................................................7
ARTICLE II
SALES AND TRANSFERS; SETTLEMENTS...........................................................................7
SECTION 2.1 General Terms. .....................................................................7
SECTION 2.2 Purchase and Sale. .................................................................8
SECTION 2.3 Intended as Sale.....................................................................8
SECTION 2.4 Protection of Ownership of the Buyer.................................................9
SECTION 2.5 Mandatory Repurchase Under Certain Circumstances....................................10
SECTION 2.6 Transfers by Buyer..................................................................11
ARTICLE III
REPRESENTATIONS AND WARRANTIES............................................................................11
SECTION 3.1 Representations and Warranties of Seller............................................11
(a) Organization and Qualification......................................................11
(b) Authority...........................................................................12
(c) Execution and Binding Effect. ......................................................12
(d) Authorizations and Filings..........................................................12
(e) Absence of Conflicts................................................................12
(f) Location of Chief Executive Office, etc.............................................12
(g) Accurate and Complete Disclosure....................................................13
(h) No Proceedings......................................................................13
(i) Litigation..........................................................................13
(j) Margin Regulations..................................................................13
(k) Taxes...............................................................................13
(l) Books and Records...................................................................13
(m) Creditor Approval...................................................................14
(n) Investment Company..................................................................14
(o) No Fraudulent Conveyance............................................................14
(p) Solvency............................................................................14
SECTION 3.2 Representations and Warranties of the Seller With Respect to the Sale of
the Receivables..................................................................................14
(a) Servicing Contracts. ..............................................................14
(b) Assignment..........................................................................14
(c) No Liens............................................................................14
(d) Filings.............................................................................15
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(e) Collection Policy...................................................................15
(f) Bona Fide Receivables...............................................................15
(g) Accuracy of Schedule................................................................15
(h) Servicer Advances Reimbursable......................................................15
(i) Year 2000...........................................................................15
ARTICLE IV
CONDITIONS PRECEDENT......................................................................................15
SECTION 4.1 Conditions to Closing...............................................................16
ARTICLE V
COVENANTS.................................................................................................17
SECTION 5.1 Covenants of the Seller.............................................................17
(a) Notice of Material Adverse Change...................................................17
(b) Preservation of Corporate Existence.................................................17
(c) Compliance with Laws................................................................18
(d) Enforceability of Obligations; Reimbursements.......................................18
(e) Books and Records...................................................................18
(f) Fulfillment of Obligations..........................................................18
(g) Notice of Relocation................................................................18
(h) Further Information.................................................................18
(i) Treatment of Purchase...............................................................18
(j) Fees, Taxes and Expenses............................................................19
(k) Compliance with Collection Policy...................................................19
(l) Litigation..........................................................................19
(m) Notification........................................................................19
SECTION 5.2 Negative Covenants of the Seller....................................................19
(a) No Rescissions or Modifications.....................................................19
(b) No Liens............................................................................19
(c) No Changes..........................................................................19
(d) Modification, Termination or Resignation Under Servicing Contracts..................20
(e) Consolidations Mergers and Sales of Assets..........................................20
(f) Collection Policy...................................................................20
ARTICLE VI
TERMINATION...............................................................................................20
SECTION 6.1 Term................................................................................20
ARTICLE VII
INDEMNIFICATION...........................................................................................20
SECTION 7.1 Indemnity...........................................................................20
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ARTICLE VIII
MISCELLANEOUS.............................................................................................21
SECTION 8.1 Survival............................................................................21
SECTION 8.2 Amendments..........................................................................22
SECTION 8.3 Notices.............................................................................22
SECTION 8.4 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial;
Process Agent.......................................................................23
SECTION 8.5 Records.............................................................................24
SECTION 8.6 No Implied Waiver; Cumulative Remedies. ............................................24
SECTION 8.7 No Discharge........................................................................24
SECTION 8.8 Prior Understandings................................................................24
SECTION 8.9 Successors and Assigns..............................................................24
SECTION 8.10 No Petition.........................................................................25
SECTION 8.11 Severability; Counterparts..........................................................25
SECTION 8.12 Expenses............................................................................25
EXHIBIT A................................................................................................A-1
EXHIBIT B................................................................................................B-1
EXHIBIT C................................................................................................C-1
EXHIBIT D................................................................................................D-1
EXHIBIT E................................................................................................E-1
Schedule 1...............................................................................................1-1
Schedule 2...............................................................................................2-1
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DELINQUENCY ADVANCE PURCHASE AGREEMENT
This DELINQUENCY ADVANCE PURCHASE AGREEMENT, dated as of May 13,
1999 (as amended, supplemented or otherwise modified and in effect from time to
time, this "AGREEMENT"), made by and between FAIRBANKS CAPITAL CORP., a Utah
corporation, as buyer (the "BUYER"), and AAMES CAPITAL CORPORATION, a California
corporation, as seller (the "SELLER").
R E C I T A L S:
WHEREAS, in the ordinary course of the Seller's business, the
Seller enters into servicing agreements, which include the Servicing Contracts
(as defined below), pursuant to which the Seller acts as servicer of portfolios
of mortgage loans;
WHEREAS, pursuant to the Servicing Contracts, the Seller has
made Delinquency Advances (as defined below) that have given rise to the
Receivables (as defined below) which, subject to the terms and conditions of
this Agreement, the Seller now wishes to sell to the Buyer, and the Buyer wishes
to purchase from the Seller, on the Closing Date;
WHEREAS, Buyer intends to sell the Receivables to its
subsidiary, Fairbanks Funding Corp, a Delaware Corporation ("Fairbanks
Funding"); and
WHEREAS, Nomura Asset Capital Corporation, a Delaware
corporation, (together with its successors and assigns, "Lender") will finance
Fairbanks Funding's purchase of the Receivables and obtain a security interest
in the Receivables to secure that financing;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, and for good and sufficient consideration, the
parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used in this Agreement,
the following capitalized terms shall have the following meanings:
"AFFILIATE" shall mean, with respect to a Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with, such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
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"BUSINESS DAY" shall mean any day other than (i) a Saturday or
Sunday or (ii) any other day on which banking institutions are authorized or
required by law, executive order or governmental decree to be closed in the
States of Delaware, New York, Utah or California.
"BUYER" shall have the meaning set forth in the recitals hereto.
"CHIEF EXECUTIVE OFFICE" shall mean, with respect to the Seller
or the Buyer, the place where the Seller or the Buyer, as the case may be, is
located, within the meaning of Section 9-103(3)(d), or any analogous provision,
of the UCC, in effect in the jurisdiction whose Law governs the perfection of
the Buyer's ownership of any of the Purchased Assets.
"CLOSING DATE" shall mean May 13, 1999.
"COLLECTION POLICY" shall mean the Seller's policies regarding
the collection and remittance of the Receivables as promptly as is reasonably
practical and in accordance with the provisions of the Servicing Contracts.
"COLLECTIONS" shall mean: (a) with respect to any Receivable as
of any date, (i) the sum of all amounts, whether in the form of wire transfer,
cash, checks, drafts, or other instruments, received by the Seller in payment
of, or applied to, any amount owed with respect to a Receivable on or before
such date, including, without limitation, all amounts received on account of
such Receivable, and (ii) cash Proceeds of a Related Security with respect to
such Receivable; and (b) at any time during the term of this Agreement, all
Termination Amounts paid to the Seller in an amount up to, but not exceeding,
the aggregate Outstanding Balance of the Receivables at such time.
"CUT-OFF DATE" shall mean April 30, 1999.
"DELINQUENCY ADVANCES" shall mean, with respect to the Servicing
Contracts, all Monthly Advances (as defined in Servicing Contracts) made by the
Seller or a predecessor servicer, as the servicer or the subservicer under the
Servicing Contracts.
"DOLLAR" and "$" shall mean the lawful currency of the United
States of America.
"ELIGIBLE RECEIVABLE" shall mean, at the time, any Receivable:
(a) which complies in all material respects with all
applicable Laws and other legal requirements, whether federal, state or local;
(b) which constitutes an "account" or a "general intangible"
as defined in the UCC as in effect in the State of New York and in the
jurisdiction whose Law governs the sale and the perfection of the Buyer's
ownership interests therein, and is not evidenced by an "instrument," as defined
in the UCC as so in effect;
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(c) which was originated in connection with making of a
Delinquency Advance by the Seller pursuant to a Servicing Contract that, on the
Closing Date, is in full force and effect;
(d) which, at the time of the Purchase, is genuine and
constitutes a legal, valid, binding and irrevocable payment obligation under the
Servicing Contract under which it has arisen, enforceable in accordance with the
terms of such Servicing Contract, subject to no offsets, counterclaims or
defenses;
(e) which provides for payment in Dollars;
(f) which was not originated in or subject to the Laws of a
jurisdiction whose Laws would make such Receivable, the related Servicing
Contract or the sale of the Purchased Assets relating thereto to the Buyer
hereunder unlawful, invalid or unenforceable and is not subject to any legal
limitation on transfer;
(g) which, immediately prior to the Purchase, was owned
solely by the Seller free and clear of all Liens;
(h) for which, at the time of the Purchase, there exists no
dispute regarding the transaction that gave rise to such Receivable that results
in making the Receivable invalid or otherwise not recoverable; and
(i) which is not an obligation of the United States of
America, any State, or any agency or instrumentality or political subdivision
thereof.
"EVENT OF BANKRUPTCY" shall mean for any Person:
(a) that such Person shall fail generally to, or admit in
writing its inability to, pay its debts as they become due; or
(b) a proceeding shall have been instituted in a court
having jurisdiction in the premises seeking a decree or order for relief in
respect of such Person in an involuntary case under any applicable bankruptcy,
insolvency, liquidation, reorganization or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator, conservator or other similar official of such Person or
for any substantial part of its property, or for the winding-up or liquidation
of its affairs; or
(c) the commencement by such Person of a voluntary case
under any applicable bankruptcy, insolvency or other similar Law now or
hereafter in effect, or such Person's consent to the entry of an order for
relief in an involuntary case under any such Law, or consent to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator, conservator or other similar official of such Person or for any
substantial part of its property, or any general assignment for the benefit of
creditors; or
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(d) if such Person is a corporation, such Person, or any
subsidiary of such Person, shall take any corporate action in furtherance of, or
the actions of which would result in any of the actions set forth in the
preceding clause (a), (b) or (c).
"FAIRBANKS FUNDING" shall have the meaning set forth in the
recitals hereto.
"FISCAL YEAR" shall mean each year which is the fiscal year of
the Seller for accounting purposes.
"GAAP" shall mean generally accepted accounting principles in
the United States of America, applied on a consistent basis and applied to both
classification of items and amounts, and shall include, without limitation, the
official interpretations thereof by the Financial Accounting Standards Board,
its predecessors and successors.
"INDEMNIFIED PARTIES" shall have the meaning specified in
Section 7.1 hereof.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of
1986, as amended from time to time, and any successor thereto, and the
regulations promulgated and rulings issued thereunder.
"LAW" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body.
"LIEN", in respect of the property of any Person, shall mean any
ownership interest of any other Person, any mortgage, deed of trust,
hypothecation, pledge, lien, security interest, financing statement, or charge
or other encumbrance or security arrangement of any nature whatsoever,
including, without limitation, any conditional sale or title retention
arrangement, and any assignment, deposit arrangement, consignment or lease
intended as, or having the effect of, security.
"LENDER" shall have the meaning set forth in the recitals
hereto.
"LENDER LOAN AGREEMENT" shall mean the Loan Agreement dated as
of the date hereof between Lender and Fairbanks Funding pursuant to which Lender
has agreed to lend to Fairbanks Funding, pursuant to a revolving credit
facility, a maximum principal amount of $20,000,000 as the same may be amended,
supplemented, or otherwise modified from time to time.
"LENDER LOAN AND SECURITY DOCUMENTS" shall mean, collectively,
the Lender Loan Agreement, the "Note" and the "Security Agreement" (as such
terms are defined in the Lender Loan Agreement) together with any and all other
documents or agreements delivered by Buyer, Seller and Fairbanks Funding in
connection with the transactions contemplated by this Agreement and the Lender
Loan Agreement.
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"OFFICIAL BODY" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"OUTSTANDING BALANCE" of any Receivable shall mean, at any time,
the then outstanding amount thereof.
"PERSON" shall mean an individual, corporation, limited
liability company, partnership (general or limited), trust, business trust,
unincorporated association, joint venture, joint-stock company, Official Body or
any other entity of whatever nature.
"PROCEEDS" shall mean "proceeds" as defined in Section 9-306(l)
of the UCC as in effect in the State of New York and the jurisdiction whose Law
governs the perfection of the Buyer's interests therein.
"PURCHASE" shall mean the purchase by the Buyer from the Seller
of an undivided ownership interest in the Purchased Assets pursuant to Sections
2.1 and 2.2 hereof.
"PURCHASE AND CONTRIBUTION AGREEMENT" shall mean the Purchase
and Contribution Agreement dated as of the date hereof between the Buyer and
Fairbanks Funding.
"PURCHASE PRICE" shall have the meaning specified in Section
2.2(c) hereof.
"PURCHASED ASSETS" shall mean, at any time, an undivided
ownership interest in (i) all of the Receivables outstanding on the Cut-off
Date, (ii) all Collections, (iii) all Related Security with respect to each such
Receivable, and (iv) all cash and non-cash Proceeds of the foregoing.
"RECEIVABLES" shall mean, collectively, each and every right of
the Seller to be reimbursed for the Delinquency Advances (without giving effect
to the Purchase hereunder) under a Servicing Contract as of the Cut-off Date,
whether or not constituting an "account" or a "general intangible" under the UCC
but not evidenced by "chattel paper" or an "instrument," as defined in the UCC.
Each such right with respect to a single Mortgage Loan shall be treated as a
single Receivable for purposes of this Agreement.
"RECEIVABLES REIMBURSEMENT ACCOUNT" shall mean the demand
deposit account identified on Exhibit D, which account has been established in
the name of, and under the exclusive control and dominion of, the Lender or its
designee and is maintained at Bankers Trust Company for the purpose of
depositing all Collections made with respect to the Receivables pursuant to
Section 2.7 of the Purchase and Contribution Agreement.
"RECEIVABLES SCHEDULE" shall mean the list of Receivables
described in Section 4.1(k), which identifies each Receivable by the related
Servicing Contract account number, account name, and Outstanding Balance.
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"RECORDS" shall mean correspondence, memoranda, computer
programs, tapes, discs, papers, books or other documents or transcribed
information of any type whether expressed in ordinary or machine readable
language.
"RELATED Security" shall mean with respect to any Receivable,
(a) all security interests or Liens and property subject thereto from time to
time, if any, purporting to secure payment of such Receivable, whether pursuant
to the Servicing Contract related to such Receivable or otherwise, together with
all financing statements covering any collateral securing such Receivable; (b)
all guarantees, indemnities, letters of credit, insurance or other agreements or
arrangements of any kind from time to time supporting or securing payment of
such Receivable whether pursuant to the Servicing Contract related to such
Receivable or otherwise; and (c) any and all Proceeds of the foregoing.
"RELEVANT UCC" shall mean the UCC as in effect in the State of
New York and in the jurisdiction whose Law governs the perfection of the Buyer's
ownership interests in the Purchased Assets.
"REPURCHASE EVENT" shall mean, with respect to any Receivable
sold by the Seller to the Buyer pursuant to this Agreement, any one of the
following events or circumstances:
(i) the failure of such Receivable, at the time of the
Purchase, to be an Eligible Receivable;
(ii) any representation or warranty made by the Seller in
Section 3.2 of this Agreement with respect to such
Receivable proves to have been false or misleading; or
(iii) the failure of the Buyer or Fairbanks Funding to have a
perfected ownership interest in such Receivable, free
and clear of any Lien imposed by or in respect of
Seller.
"RESPONSIBLE OFFICER" shall mean, with respect to the Seller or
the Buyer, the chief executive officer, chief financial officer, or treasurer of
such Person and any other Person designated as a Responsible Officer by any such
officers, identified on the List of Responsible Officers attached as Exhibit E
hereto (as such list may be amended or supplemented from time to time) and
agreed to by the Seller and Buyer.
"SELLER" shall have the meaning set forth in the recitals
hereto.
"SERVICING CONTRACTS" shall mean, collectively, those servicing
agreements described on Schedule 2 attached hereto to which the Seller is a
party, pursuant to which the Seller acts as the servicer of portfolios of
mortgage loans, or by which Seller's servicing obligations are governed. For all
purposes of this Agreement, the term "Servicing Contracts" shall include any and
all
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instruments, agreements, invoices or other writings, which gives rise to or
otherwise evidence any of the Receivables.
"SUBSERVICING CONTRACTS" shall mean, collectively, each of the
Sub-Servicing Agreements between the Seller and the Buyer with respect to each
of the Servicing Contracts.
"TERMINATION AMOUNTS" shall mean, with respect to any Servicing
Contract, any termination fee or similar payment that is paid to the Seller, and
any other amount that is paid or reimbursed to the Seller, in connection with
the termination of the Seller's obligations as servicer or subservicer under
such Servicing Contract.
"UCC" shall mean, with respect to any jurisdiction, the Uniform
Commercial Code, or any successor statute, or any comparable law, as the same
may from time to time be amended, supplemented or otherwise modified and in
effect in such jurisdiction.
"WEEKLY REPORT DATE" shall mean each Monday; provided that, if a
Monday is not a Business Day, the Weekly Report Date shall be the next
succeeding Business Day.
SECTION 1.2 Interpretation and Construction. Unless the context
of this Agreement otherwise clearly requires, references to the plural include
the singular, the singular the plural and the part the whole. References in this
Agreement to "determination", "determine" and "determined" by the Buyer shall be
conclusive absent manifest error and include good faith estimates by the Buyer
(in the case of quantitative determinations), and the good faith belief of the
Buyer (in the case of qualitative determinations). The words "hereof", "herein",
"hereunder" and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section and other headings contained in this Agreement are for reference
purposes only and shall not control or affect the construction of this Agreement
or the interpretation hereof in any respect. Section, subsection and exhibit
references are to this Agreement unless otherwise specified. As used in this
Agreement, the masculine, feminine or neuter gender shall each be deemed to
include the others whenever the context so indicates. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. Terms
not otherwise defined herein which are defined in the UCC as in effect in the
State of New York on the date hereof shall have the respective meanings ascribed
to such terms therein unless the context otherwise clearly requires.
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ARTICLE II
SALES AND TRANSFERS; SETTLEMENTS
SECTION 2.1 General Terms. On the terms and conditions
hereinafter set forth, on the Closing Date, the Seller shall sell to the Buyer,
and the Buyer shall purchase from the Seller, without recourse, except as
specifically set forth herein, all right, title and interest of the Seller in,
to and under the Receivables, along with Related Security with respect to such
Receivables and Collections with respect thereto, and the Buyer shall buy from
the Seller such Receivables, Related Security and Collections.
SECTION 2.2 Purchase and Sale. (a) The Seller hereby irrevocably
sells, sets over, assigns, transfers and conveys to the Buyer and its successors
and assigns, without recourse, except as specifically set forth herein, and the
Buyer hereby accepts, purchases and receives from the Seller, all of the
Seller's right, title, and interest in and to the Receivables, together with all
monies due or to become due in respect thereof, including the Related Security,
all Collections with respect to the Receivables, and all other Purchased Assets.
(b) The Purchase shall be made on the Closing Date; provided
that all conditions precedent to the Purchase specified in Section 4.1 shall
have been satisfied.
(c) The purchase price (the "PURCHASE PRICE") for the
Receivables (together with the related Purchased Assets) payable on the Closing
Date shall be $15,272,685.65. The Buyer shall pay to the Seller on the Closing
Date the Purchase Price less the amount of $2,000,000 (the "ESCROW AMOUNT"),
which Escrow Amount shall be deposited in a bank account (the "Escrow Account")
established for the benefit of Buyer in the name of, and under the exclusive
control and dominion of Lender. Prior to or on September 13, 1999, Buyer or its
assignee of the Receivables shall conduct a due diligence review of the
Receivables to determine whether such Receivables were, as of the Closing Date,
fully recoverable. Buyer shall cause to be withdrawn from the Escrow Account an
amount equal to the amount of Receivables which Buyer has determined in its
reasonable discretion did not as of the Closing Date represent an amount fully
recoverable in a liquidation of the related Mortgage Loan. Buyer shall cause
such amount to be applied as a prepayment of principal pursuant to the Lender
Loan Agreement, and shall remit the remaining balance, if any, of the Escrow
Account to Seller, less any amount due Buyer under this Agreement. Any amount
withdrawn from the Escrow Account because Buyer has determined that all or a
portion of a Receivable is not recoverable and applied as a prepayment of
principal pursuant to the Lender Loan Agreement shall be deemed a repurchase of
such Receivable pursuant to Section 2.5(b) hereof and shall reduce the
Outstanding Balance of such Receivable by the amount so withdrawn and applied
and Buyer shall reconvey such Receivable pursuant to Section 2.5(d).
SECTION 2.3 Intended as Sale. (a) It is the intention of the
parties hereto that the Purchase shall constitute a sale and assignment, which
sale and assignment shall be absolute, irrevocable and without recourse except
as specifically provided herein and shall provide the Buyer
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with the full benefits of ownership of the Receivables and the other related
Purchased Assets. In the event that the Purchase is deemed by a court contrary
to the express intent of the parties to constitute a pledge rather than a sale
and assignment of the Purchased Assets, the Seller does hereby grant to the
Buyer a first-priority, perfected security interest in and to, and lien on, the
Receivables and the other related Purchased Assets, together with all monies
from time to time on deposit in the Receivables Reimbursement Account relating
to the Purchased Assets. The possession by the Buyer or its transferee or agent
of notes and such other goods, money, documents, chattel paper or certificated
securities related thereto shall be deemed to be "possession by the secured
party" for purposes of perfecting such security interest pursuant to the
Relevant UCC (including, without limitation, Section 9-305 thereof).
Notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property, shall be deemed to be
notifications to, or acknowledgments, receipts or confirmations from, bailees or
agents (as applicable) of, the Buyer or its transferee for the purpose of
perfecting such security interest under the Relevant UCC and other applicable
Laws. The sale and conveyance hereunder of the Purchased Assets does not
constitute an assumption by the Buyer or its successors and assigns of any
obligations of the Seller to any Person in connection with Receivables or under
any Servicing Contract or any other agreement or instrument relating to the
Receivables.
(b) In connection with the Purchase, the Seller agrees to
record and file on or prior to the Closing Date, at its own expense, financing
statements with respect to the Purchased Assets, suitable to reflect the
transfer of accounts and general intangibles (each as defined in Article 9 of
the Relevant UCC) and meeting the requirements of applicable state Law in such
manner and in such jurisdictions as are necessary to perfect the sale, transfer
and assignment of the Purchased Assets from the Seller to the Buyer, and to
deliver file-stamped copies of such financing statements or other evidence of
such filing satisfactory to the Buyer on the Closing Date or the day thereafter.
In addition to, and without limiting the foregoing, the Seller shall, upon the
request of the Buyer, in order to accurately reflect this transaction, execute
and file such financing or continuation statements or amendments thereto or
assignments thereof (as permitted pursuant to Section 8.9 hereof) as may be
reasonably requested by the Buyer.
(c) The Seller shall maintain its books and records,
including but not limited to any computer files and master data processing
records, so that such records that refer to Receivables sold hereunder shall
indicate clearly that the Seller's right, title and interest in such Receivables
has been sold to the Buyer and that a security interest in such Receivables has
been granted by Fairbanks Funding to the Lender. Indication of the Buyer's
interest in Receivables shall be deleted from or modified on the Seller's
records when, and only when, the Receivables shall have been paid in full or the
Buyer's interest in such Receivables shall have been repurchased or repaid by
the Seller hereunder.
SECTION 2.4 Protection of Ownership of the Buyer.
(a) The Seller agrees that from time to time, at its
expense, it shall promptly execute and deliver all additional instruments and
documents and take all additional action that the Buyer
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may reasonably request in order to perfect the interests of the Buyer in, to and
under, or to protect, the Purchased Assets or to enable the Buyer to exercise or
enforce any of its rights or remedies hereunder. To the fullest extent permitted
by applicable Law, the Buyer and its successor and assigns shall be permitted to
sign and file continuation statements and amendments thereto and assignments
thereof without the Seller's signature in such cases where the Seller is
obligated hereunder or under the Relevant UCC to sign such statements,
amendments or assignments if, after written notice to the Seller, the Seller
shall have failed to sign such continuation statements, amendments or
assignments within five (5) Business Days after receipt of such notice from the
Buyer. The Seller hereby irrevocably constitutes and appoints the Buyer and any
officer, agent, successor or assignee thereof, with full power of substitution,
as its true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of the Seller and in the name of the Seller or
in its own name, from time to time in the Buyer's discretion to sign such
continuation statements, amendments or assignments. Carbon, photographic or
other reproduction of this Agreement or any financing statement shall be
sufficient as a financing statement.
(b) At any reasonable time and from time to time at the
Buyer's reasonable request and upon seven days' prior notice to the Seller, the
Seller shall permit such Person as the Buyer may designate, which for so long as
any amounts may be owing by Fairbanks Funding to Lender under the Lender Loan
and Security Documents and shall include, without limitation, Lender or persons
designated by Lender, at such Person's expense and together with the Buyer, to
conduct audits or visit and inspect the principal place of business of the
Seller to examine the Records, internal controls and procedures maintained by
the Seller with respect to the Receivables and take copies and extracts
therefrom, and to discuss the Seller's affairs with its officers, employees and,
upon notice to the Seller, independent accountants. The Seller hereby authorizes
such officers, employees and independent accountants to discuss with the Buyer
or its designee the affairs of the Seller. Any audit provided for herein shall
be conducted in accordance with Seller's rules respecting safety and security on
its premises and without materially disrupting operations.
(c) If the Seller shall receive any Collections with respect
to Receivables which have been sold to the Buyer pursuant to this Agreement, the
Seller shall hold such Collections in trust for the Buyer and shall pay such
amounts to the Buyer as soon as practicable, but in no event more than two (2)
Business Days after receipt thereof.
(d) The Buyer shall have the right to do all such acts and
things as it may deem reasonably necessary to protect its interests hereunder,
including, without limitation, confirmation and verification of the existence,
amount and status of the Receivables.
SECTION 2.5 Mandatory Repurchase Under Certain Circumstances.
(a) The Seller shall promptly repurchase from the Buyer all of the Receivables
for a repurchase price equal to the aggregate Outstanding Balance of all of the
Receivables, if, at any time, the Buyer or Fairbanks Funding shall cease to have
a perfected ownership interest in all of the Receivables purchased hereunder,
free and clear of any Lien imposed by or in respect of Seller, or if any of the
representations or warranties made by the Seller in this Agreement (other than
the representations
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and warranties set forth in Section 3.2 of this Agreement, the breach of which
shall constitute a Repurchase Event) prove to have been false or misleading in
any material respect as of the date on which they were made.
(b) If a Repurchase Event occurs with respect to any
Receivable, the Seller shall promptly repurchase such Receivable from the Buyer
for a purchase price equal to the then Outstanding Balance of such Receivable.
(c) Each of the Seller and the Buyer shall promptly notify
the other if it becomes aware of or receives notice of any fact or circumstance
that could or would cause the Seller to be obligated to repurchase any
Receivable pursuant to this Section 2.5 or any Receivable is not otherwise
recoverable. The repurchase price of any Receivables purchased hereunder shall
be deposited by Seller into an account designated by Buyer within two (2)
Business Days of Buyer notifying Seller that a Repurchase Event has occurred, or
of Seller becoming aware that such Repurchase Event has occurred.
(d) Upon receipt by the Buyer of the Outstanding Balance of
any Receivable required to be repurchased by the Seller pursuant to this Section
2.5 or withdrawal from the Escrow Account pursuant to Section 2.2(c) hereof, the
Buyer shall automatically and without further action provided that Buyer is
required to repurchase such Receivables from Fairbanks Funding pursuant to the
Purchase and Contribution Agreement, be deemed to sell, transfer, assign,
set-over and otherwise convey to the Seller, without recourse, representation or
warranty, all the right, title and interest of the Buyer in and to such
Receivable, all monies due or to become due with respect thereto, including the
Related Security and all Collections related to such Receivable, and all
proceeds thereof; and such repurchased Receivable shall be treated by the Buyer
as collected in full as of the date on which it was transferred. The Buyer shall
execute such documents and instruments of transfer or assignment and take such
other actions as shall reasonably be requested by the Seller to effect the
conveyance of such Receivable, all monies due or to become due with respect
thereto, including the Related Security and all Collections related to such
Receivable, pursuant to this Section 2.5. Promptly following any such
repurchase, the Seller shall update the Receivables Schedule to remove therefrom
such repurchased Receivable, and deliver the same to the Buyer as so updated.
SECTION 2.6 Transfers by Buyer. The Seller acknowledges and
agrees that the Buyer will, pursuant to the Lender Loan and Security Documents
and the Purchase and Contribution Agreement (copies of which have been reviewed
by the Seller), sell to Fairbanks Funding the Receivables and the other related
Purchased Assets, and the Seller hereby acknowledges and consents to such sale
and the transactions contemplated by such agreement and documents.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of Seller. The Seller
hereby represents and warrants to the Buyer on and as of the Closing Date that:
(a) Organization and Qualification. The Seller is a
corporation duly organized, validly existing and in good standing under the Laws
of its jurisdiction of incorporation. The Seller is duly qualified to do
business as a foreign corporation in good standing in each jurisdiction in which
the ownership of its properties or the nature of its activities (including
transactions giving rise to Receivables), or both, requires it to be so
qualified or, if not so qualified, the failure to so qualify would not have a
material adverse effect on its financial condition or results of operations.
(b) Authority. The Seller has the corporate power and
authority to execute and deliver this Agreement, to make the sales provided for
herein and to perform its obligations under this Agreement.
(c) Execution and Binding Effect. This Agreement has been
duly executed and delivered by the Seller and, assuming the due and valid
execution and delivery hereof by the Buyer, constitutes the legal, valid and
binding obligation of the Seller, enforceable against the Seller in accordance
with its terms, except as the enforceability hereof may be limited by
bankruptcy, insolvency, reorganization or other similar Laws of general
application relating to or affecting the enforcement of creditors' rights
generally or by general principles of equity and will vest absolutely and
unconditionally in the Buyer a valid undivided ownership interest in the
Purchased Assets purported to be assigned hereby, subject to no Liens
whatsoever. Upon the filing of the necessary financing statements under the UCC
or under applicable Law as in effect in the jurisdiction whose Law governs the
perfection of the Buyer's ownership interests in the Purchased Assets, the
Buyer's ownership interests in the Purchased Assets will be perfected under
Article Nine of such UCC or under applicable Law, prior to and enforceable
against all creditors of and purchasers from the Seller and all other Persons
whatsoever (other than the Buyer and its successors and assigns).
(d) Authorizations and Filings. No authorization, consent,
approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any Official Body is or
will be necessary or, in the opinion of the Seller, advisable in connection with
the execution and delivery by the Seller of this Agreement, the consummation by
the Seller of the transactions herein contemplated or the performance by the
Seller of or the compliance by the Seller with the terms and conditions hereof,
to ensure the legality, validity or enforceability hereof, or to ensure that the
Buyer will have a valid undivided ownership interest in and to the Receivables
and the other related Purchased Assets which is perfected and prior to all other
Liens (including competing ownership interests), other than the filing of
financing statements under the UCC in the jurisdiction of the Seller's Chief
Executive Office.
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(e) Absence of Conflicts. Neither the execution and delivery
by the Seller of this Agreement, nor the consummation by the Seller of the
transactions herein contemplated, nor the performance by the Seller of or the
compliance by the Seller with the terms and conditions hereof, will (i) violate
any Law or (ii) conflict with or result in a breach of or a (with due notice or
lapse of time or both) default under (A) the Certificate of Incorporation or
By-laws of the Seller or (B) any agreement or instrument, including, without
limitation, any and all indentures, debentures, loans, credit agreements or
other agreements to which the Seller is a party or by which it or any of its
properties (now owned or hereafter acquired) may be subject or bound (including,
without limitation, the Servicing Contracts). The Seller has not entered into
any agreement with any Person prohibiting, restricting or conditioning the
assignment of any portion of the Receivables.
(f) Location of Chief Executive Office, etc. As of the date
hereof: (i) the Seller's Chief Executive Office is located at 000 Xxxxx Xxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, 00000, (ii) the Seller has only the
Subsidiaries and divisions listed on Exhibit C hereto; (iii) the offices where
the Seller keeps all of its material Records are listed on Exhibit B hereto; and
(iv) the Seller has, within the last 5 years, operated only under the trade
names identified in Exhibit C hereto, and, within the last 5 years, has not
changed its name, merged or consolidated with any other corporation with assets
over $1,000,000 or been the subject of any proceeding under Xxxxx 00, Xxxxxx
Xxxxxx Code (Bankruptcy), except as disclosed in Exhibit C hereto.
(g) Accurate and Complete Disclosure. No information
furnished in writing by the Seller to the Buyer pursuant to or in connection
with this Agreement or any transaction contemplated hereby is false or
misleading in any material respect as of the date of which such information was
furnished (including by omission of material information necessary to make such
information not misleading).
(h) No Proceedings. There are no proceedings or
investigations pending, or to the knowledge of the Seller threatened, before any
Official Body (A) asserting the invalidity of this Agreement, (B) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement, or (C) seeking any determination or ruling that might materially and
adversely affect (i) the performance by the Seller of its obligations under this
Agreement or (ii) the validity or enforceability of this Agreement, the
Servicing Contracts, or any of the Receivables.
(i) Litigation. No injunction, decree or other decision has
been issued or made by any Official Body that prevents, and to the knowledge of
the Seller, no threat by any Person has been made to attempt to obtain any such
decision that would have a material adverse impact on, the conduct by the Seller
of a significant portion of the Seller's business operations or any portion of
its business operations affecting the Receivables (including the performance of
its obligations and the exercise of its rights under the Servicing Contracts),
and no litigation, investigation or proceeding pending or threatened against the
Seller which could have a material adverse effect on the financial condition or
results of operations of the Seller, impair the ability of the Seller to perform
its obligations under this Agreement, or materially adversely affect the
collectibility of the Receivables as a whole exists, except as set forth on
Exhibit A hereto.
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(j) Margin Regulations. The use of all funds acquired by the
Seller under this Agreement will not conflict with or contravene any of
Regulations T, U or X promulgated by the Board of Governors of the Federal
Reserve System as the same may from time to time be amended, supplemented or
otherwise modified.
(k) Taxes. The Seller has timely filed all United States
federal income tax returns and all other material tax returns or extensions
which are required to be filed by it and has paid all taxes due pursuant to such
returns and paid or contested any assessment received by the Seller related to
such returns. No Lien has been filed against the Seller on all or any material
portion of its property or assets in respect of any unpaid federal, state or
local taxes.
(l) Books and Records. The Seller has indicated on its books
and records (including any computer files) that the Receivables and the other
related Purchased Assets are the property of the Buyer. The Seller maintains at
one or more of the offices listed on Exhibit B hereto the complete records for
the Receivables and the other related Purchased Assets.
(m) Creditor Approval. The Seller has obtained from its
creditors and all other Persons that may have an interest in the Receivables (i)
all approvals that are necessary to sell and assign the Receivables in the
manner contemplated by this Agreement and (ii) releases of any security
interests in the Receivables.
(n) Investment Company. The Seller is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(o) No Fraudulent Conveyance. The transactions contemplated
by this Agreement are being consummated by the Seller in furtherance of the
Seller's ordinary business, with no contemplation of insolvency and with no
intent to hinder, delay or defraud any of its present or future creditors. By
its receipt of the Purchase Price hereunder, the Seller shall have received
reasonably equivalent value for the Purchased Assets sold or otherwise conveyed
to the Buyer under this Agreement.
(p) Solvency. The Seller is solvent and will not be rendered
insolvent by the transactions contemplated herein.
SECTION 3.2 Representations and Warranties of the Seller With
Respect to the Sale of the Receivables. By selling Receivables to the Buyer on
the Closing Date, the Seller represents and warrants to the Buyer as of the
Closing Date (in addition to its other representations and warranties contained
herein or made pursuant hereto) that:
(a) Servicing Contracts. All of the Servicing Contracts are
in full force and effect and the Seller has not been terminated. Other than
Certificate Insurer's right to terminate the Servicing Contracts based on
Seller's failure to achieve certain delinquency targets, no event has
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occurred that would give any party to any Servicing Contract the right
(including with notice or lapse of time or both) to terminate the Seller for
cause as the servicer or subservicer under any Servicing Contract, and the
Seller does not have actual knowledge of any pending or threatened action to
terminate the Seller as servicer or subservicer under any of the Servicing
Contracts.
(b) Assignment. This Agreement vests in the Buyer all the
right, title and interest of the Seller in and to the Receivables and the other
related Purchased Assets, and constitutes a valid sale of the Receivables and
the other related Purchased Assets, enforceable against, and creating an
interest prior in right to, all creditors of and purchasers from the Seller.
(c) No Liens. Each Receivable is owned by the Seller free
and clear of any Lien (except any Lien of the Trust under the relevant Servicing
Agreement), except as provided herein, and is not subject to any dispute or
other adverse claim, except as provided herein. When the Buyer purchases the
Receivables, it shall acquire an ownership interest in the Receivables, the
Related Security, and the Collections with respect thereto, free and clear of
any Lien, except as provided herein. The Seller has not and will not prior to
the time of the sale of any such interest to the Seller have sold, pledged,
assigned, transferred or subjected and will not thereafter sell, pledge, assign,
transfer or subject, to a Lien any of the Receivables, the Related Security or
the Collections other than in accordance with the terms of this Agreement.
(d) Filings. On or prior to the Closing Date, all financing
statements and other documents required to be recorded or filed in order to
perfect and protect the Receivables and the other related Purchased Assets
against all creditors of, and purchasers from, the Seller and all other Persons
whatsoever have been duly filed in each filing office necessary for such purpose
and all filing fees and taxes, if any, payable in connection with such filings
have been paid in full.
(e) Collection Policy. The Seller has complied in all
material respects with the Collection Policy in regard to each Receivable and
related Servicing Contract. The Seller has not extended or modified the terms of
any Receivable or the related Servicing Contract except in accordance with the
Collection Policy.
(f) Bona Fide Receivables. Each Receivable is an obligation
arising out of the making of a Delinquency Advance by the Seller or a
predecessor servicer, in its capacity as a servicer of a portfolio of mortgage
loans, pursuant to a Servicing Contract. Each Receivable relates to a
Delinquency Advance that has been made in accordance with the terms of the
related Servicing Contract. The Seller has no knowledge of any fact that has led
it to expect that such Receivable will not be fully recoverable when the related
Mortgage Loan is brought current or is liquidated. As of the Cut-off Date, the
Seller has not received any Collections or other payments in respect of the
Receivables which have not been applied to the Receivables, and each Receivable
is an Eligible Receivable.
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(g) Accuracy of Schedule. The information set forth in
Schedules 1 and 2 hereto with respect to the Receivables and the Servicing
Contracts is true and correct in all material respects as of the date hereof.
(h) Servicer Advances Reimbursable. The terms of the
Servicing Contracts provide that each Delinquency Advance is reimbursable to the
Seller from collections on the related mortgage loan, collections on other
mortgage loans serviced or subserviced by the Seller pursuant to the related
Servicing Contract, or from the owner of the related mortgage loan.
(i) Year 2000. The Seller has reviewed the areas within its
business and operations which could be adversely affected by, and has developed
or is developing a program to address on a timely basis, the risk that certain
computer applications used by the Seller may be unable to recognize and perform
properly date-sensitive functions involving dates prior to and after December
31, 1999 (the "Year 2000 Problem"). The Year 2000 Problem will not have a
material adverse effect on the Seller's ability to comply with its Collection
Policy at any time during the term of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1 Conditions to Closing. On the Closing Date, as a
condition precedent to the Buyer's obligations hereunder, all of the
representations and warranties of the Seller made herein shall be true and
correct, the Seller shall not be in breach of any of the agreements made herein,
and the Seller shall deliver to the Buyer the following documents and
instruments, all of which shall be in form and substance acceptable to the
Buyer:
(a) A copy of the resolutions of the Board of Directors of
the Seller, certified as of the date hereof by its secretary authorizing the
execution, delivery and performance of this Agreement by the Seller and
approving the transactions contemplated hereby;
(b) The Certificate of Incorporation of the Seller,
certified as of a date reasonably near the Closing Date by the Secretary of
State or other similar official of the Seller's jurisdiction of incorporation;
(c) A good standing certificate for the Seller issued by the
Secretary of State or other similar official of the Seller's jurisdiction of
incorporation, certificates of qualification as a foreign corporation issued by
the Secretaries of State or other similar officials of each jurisdiction where
such qualification is material to the transactions contemplated by this
Agreement and certificates of the appropriate state official in each
jurisdiction specified by the Buyer as to the absence of any tax Liens against
the Seller under the Laws of such jurisdiction, each such certificate to be
dated a date reasonably near the Closing Date;
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(d) A certificate of the secretary or an assistant secretary
of the Seller dated as of the Closing Date, certifying (i) the names and
signatures of the officers authorized on the Seller's behalf to execute, and the
officers and other employees authorized to perform, this Agreement by the Seller
and (ii) a copy of the Seller's By-laws;
(e) Executed copies of proper financing statements (Form
UCC-l) naming the Seller as seller/debtor in respect of the Receivables, the
Related Security and Collections and the Buyer, as the purchaser/secured party,
together with evidence of filing thereof in the appropriate jurisdictions; or
other similar instruments or documents as may be necessary or, in the opinion of
the Buyer, desirable under the UCC of all appropriate jurisdictions to evidence
or perfect the Buyer's ownership interests in all of the Receivables, the
Related Security and Collections;
(f) Executed copies of proper financing statements (Form
UCC-3), if any, necessary under the Laws of all appropriate jurisdictions to
release all security interests and other Liens or rights of any person in
Receivables and the other related Purchased Assets previously granted by the
Seller;
(g) Certified copies of requests for information or copies
(Form UCC-11) (or a similar search report certified by parties acceptable to the
Buyer) dated a date reasonably near the Closing Date listing all effective
financing statements that name the Seller (under its present name and any
previous name or any trade names or "d.b.a." name) as debtor and which are filed
in jurisdictions in which the filings were made pursuant to paragraph (e) above,
together with copies of such financing statements (none of which shall cover any
of the Receivables, the Servicing Contracts or any related rights);
(h) A favorable opinion or opinions of the Seller, dated the
date hereof and addressed to the Buyer, and the Lender, relating to corporate
matters, legality, validity and enforceability of this Agreement, and a
favorable opinion or opinions of Xxxxxxx and Xxxxx, counsel to the Seller, dated
the date hereof and addressed to Buyer relating to the characterization of the
transfer of the Receivables in a bankruptcy case as an absolute transfer, and
relating to the perfection of the Buyer's ownership interests in the Receivables
and the other related Purchased Assets and such other matters as the Buyer may
reasonably request;
(i) An officer's certificate dated the date hereof in a form
reasonably acceptable to the Buyer executed by a Responsible Officer of the
Seller to the effect that (i) all representations and warranties are true and
correct as of the Closing Date and (ii) all terms, covenants agreements and
conditions required to be complied with or performed on or prior to the Closing
Date have been complied with or performed on or prior to the Closing Date;
(j) Executed copies of all of the Servicing Contracts,
certified as true, complete and correct by an incumbent officer of the Seller,
except as noted in a certificate of such officer;
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(k) A true, complete, and correct list (which shall be in
paper form and may also be in the form of a computer file or tape) of the
Receivables, each of which shall be identified by the related Servicing
Contract, account number, account name, and Outstanding Balance. Such list shall
be marked as the "Receivables Schedule" and shall constitute Schedule 1 to this
Agreement.
ARTICLE V
COVENANTS
SECTION 5.1 Covenants of the Seller. At all times during the
term of this Agreement, unless the Buyer shall otherwise consent in writing:
(a) Notice of Material Adverse Change. Promptly upon
becoming aware thereof, the Seller shall give the Buyer notice of any material
adverse change in the business, operations, or financial condition of the Seller
which reasonably could affect adversely the collectibility of any of the
Receivables or the Seller's ability to perform its obligations under the
Servicing Contracts, including, without limitation, any defaults by the Seller
under any material agreements to which the Seller is a party and any defaults by
the Seller that would permit the acceleration of any indebtedness of the Seller.
(b) Preservation of Corporate Existence. The Seller shall
preserve and maintain its corporate existence, rights, franchises and privileges
in the jurisdiction of its incorporation, and qualify and remain qualified in
good standing as a foreign corporation in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification would materially adversely affect (i) the interests of the Buyer
hereunder or (ii) the ability of the Seller to perform its obligations under
this Agreement and the Servicing Contracts.
(c) Compliance with Laws. The Seller shall comply in all
material respects with all Laws applicable to the Seller, its business and
properties, the Servicing Contracts, the Receivables, and the other Purchased
Assets.
(d) Enforceability of Obligations; Reimbursements. The
Seller shall take such actions as are reasonable and within its power to ensure
that, with respect to each Receivable, that Buyer will receive reimbursements
with respect to each Delinquency Advance as promptly as practicable. The Seller
shall enforce its right to receive reimbursement for each Delinquency Advance
against any and all parties to a Servicing Contract, if its usual and customary
procedures do not result in such reimbursement.
(e) Books and Records. The Seller shall, to the extent
practicable, maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing
Receivables in the event of the destruction of the originals thereof), and keep
and maintain or obtain, as and when required, all documents, books, records and
other
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information reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to permit the daily
identification of all Collections).
(f) Fulfillment of Obligations. The Seller shall duly
observe and perform, or cause to be observed or performed, all material
obligations and undertakings on its part to be observed and performed under or
in connection with this Agreement and the Servicing Contracts; shall do nothing
to impair the rights, title and interest of the Buyer in and to the Purchased
Assets or the right or ability of the Seller or the Buyer to realize on the
Purchased Assets; and shall pay when due any taxes applicable to Seller and
payable in connection with the Receivables and their creation and satisfaction
or shall properly contest the payment of any such taxes in good faith and before
a court or administrative body of appropriate jurisdiction.
(g) Notice of Relocation. The Seller shall give the Buyer
thirty (30) days' prior written notice of any relocation of its Chief Executive
Office if, as a result of such relocation, the applicable provisions of the UCC
of any applicable jurisdiction or other applicable Laws would require the filing
of any amendment of any previously filed financing statement or continuation
statement or of any new financing statement. The Seller will at all times
maintain its Chief Executive Office within a jurisdiction in the United States
in which Article Nine of the UCC (1972 or later revision) is in effect as of the
date hereof or the date of any such relocation.
(h) Further Information. The Seller shall furnish or cause
to be furnished to the Buyer such other information as promptly as practicable,
and in such form and detail, as the Buyer may reasonably request.
(i) Treatment of Purchase. For accounting and tax purposes,
the Seller shall treat the sale of the Receivables hereunder as a sale of
Receivables. The Seller shall also maintain its records and books of account in
a manner which clearly reflects such sale of the Receivables to the Buyer.
(j) Fees, Taxes and Expenses. The Seller shall pay all
filing fees, stamp taxes, other taxes and expenses that are incurred or assessed
on account of or arise out of this Agreement and the documents and transactions
entered into pursuant to this Agreement.
(k) Compliance with Collection Policy. The Seller shall
comply in all material respects with the Collection Policy with respect to each
Receivable and the related Servicing Contract.
(l) Litigation. As soon as possible, and in any event within
ten Business Days of Seller's knowledge thereof, the Seller shall give the Buyer
notice of (i) any litigation, investigation or proceeding against the Seller
that may exist at any time that in Seller's reasonable judgement could have a
material adverse effect on the financial condition or results of operations of
the Seller, impair the ability of the Seller to perform its obligations under
this Agreement, or materially
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adversely affect the collectibility of all or any portion of the Receivables,
and (ii) any material adverse development in any such previously disclosed
litigation.
(m) Notification. Seller has advised the parties to the
Servicing Contracts that the Receivables are being sold. All necessary consents
required under the Servicing Contracts for the sale of the Receivables have been
obtained. As soon as practible after the Closing Date, Seller shall notify the
parties to the Servicing Contracts in writing that the Receivables have been
sold.
SECTION 5.2 Negative Covenants of the Seller. At all times
during the term of this Agreement, unless the Buyer shall otherwise consent in
writing:
(a) No Rescissions or Modifications. For as long as any
Receivable shall remain uncollected or not otherwise paid to the Buyer or
repurchased by the Seller pursuant to Section 2.5, the Seller shall not take any
action that would rescind or cancel all or any portion of such Receivable, or
amend, modify, consent to the modification of or waive any terms or provisions
thereof or of the related Servicing Contract or the Collection Policy except in
accordance with the terms thereof, without the prior written consent of the
Buyer.
(b) No Liens. The Seller shall not cause any of the
Receivables or related Servicing Contracts to be sold, pledged, assigned, or
transferred or to be subject to a Lien, other than the sale and assignment of
the Purchased Assets to the Buyer, the Liens created in connection with the
transactions contemplated by this Agreement, and the Subservicing Contracts.
(c) No Changes. The Seller shall not change its name,
identity or corporate structure in any manner which would make any financing
statement or continuation statement filed in connection with this Agreement or
the transactions contemplated hereby misleading within the meaning of Section
9-402(7) of the UCC of any applicable jurisdiction or other applicable Laws
unless it shall have given the Buyer at least thirty (30) days' prior written
notice thereof and unless prior thereto it shall have caused such financing
statement or continuation statement to be amended or a new financing statement
to be filed such that such financing statement or continuation statement would
not be misleading.
(d) Modification, Termination or Resignation Under Servicing
Contracts. Without the prior written consent of the Buyer, for as long as any
Receivables arising under any Servicing Contract shall not have been paid in
full, the Seller shall not (i) modify or terminate, or otherwise permit the
modification or the termination of, such Servicing Contract or (ii) resign from,
or assign, transfer, or otherwise delegate, any of its rights or obligations, as
the servicer or subservicer under such Servicing Contract, unless the Seller is
prohibited by law from continuing thereunder, as evidenced by an opinion of
counsel in form and substance satisfactory to the Buyer or is removed by the
Certificate Insurer or Trustee.
(e) Consolidations Mergers and Sales of Assets. The Seller
shall not (i) consolidate or merge with or into any other Person, or (ii) sell,
lease or otherwise transfer all or substantially all
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of its assets to any other Person; provided that the Seller may merge or
consolidate with another Person if the Seller is the corporation surviving such
merger, or is if the survivor assumes the obligations of Seller and has net
worth at least as high as Sellers.
(f) Collection Policy. The Seller shall not make, allow or
consent to any material change in its Collection Policy, or in its current
payment terms with respect to Receivables, without prior written notification to
and consent of the Buyer.
ARTICLE VI
TERMINATION
SECTION 6.1 Term. This Agreement shall commence as of the date
of execution and delivery hereof and shall continue in full force and effect
until the payment in full of all of the Receivables purchased hereunder;
provided, however, that the indemnification and payment provisions set forth in
Article VII hereof and the provisions and agreement set forth in Section 8.10
hereof shall be continuing and shall survive termination of this Agreement.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Indemnity.
(a) The Seller agrees to indemnify, defend and save harmless
the Buyer and any of its successors or permitted assignees (each, an
"INDEMNIFIED PARTY" and collectively, the "INDEMNIFIED PARTIES"), other than for
the Indemnified Party's own gross negligence or willful misconduct, forthwith on
demand, from and against any and all losses, claims, damages, liabilities, costs
and expenses (including, without limitation, all reasonable attorneys' fees and
expenses, expenses incurred by an Indemnified Party (or any successors thereto)
and expenses of settlement, litigation or preparation therefor) which any
Indemnified Party may incur or which may be asserted against any Indemnified
Party by any Person (whether on its own behalf or derivatively on behalf of the
Seller) arising from or incurred in connection with (i) any breach of a
representation, warranty or covenant by the Seller made or deemed made hereunder
or in connection herewith or the transactions contemplated hereby or any
statements made by any Responsible Officer of the Seller in connection herewith
or the transactions contemplated hereby which shall have been incorrect in any
material respect when made, (ii) any action taken or, if the Seller is otherwise
obligated to take action, failed to be taken, by the Seller with respect to the
Purchased Assets or any of its obligations hereunder including, without
limitation, the Seller's failure to comply with an applicable Law or regulation,
(iii) any failure to vest and maintain vested in the Buyer the ownership of the
Purchased Assets, free and clear of any Lien or other adverse claim, (iv) any
failure to pay when due any taxes, including without limitation any sales tax,
excise tax or other similar tax or charge payable in connection with the
Receivables and their creation or satisfaction, or (v) any dispute, suit,
action,
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claim, proceeding or governmental investigation, pending or threatened, whether
based on statute, regulation or order, on tort, on contract or otherwise, before
any Official Body (an "Action") which arises out of or relates to this
Agreement, the Purchased Assets or the Receivables or the related Servicing
Contracts, or the use of the proceeds of the sale of the Purchased Assets or the
Receivables pursuant hereto other than any such Action arising from Buyer's
servicing of the Receivables pursuant to the Sub-Servicing Contracts.
(b) Promptly upon receipt by any Indemnified Party under
this Section 7.1 of notice of the commencement of any suit, action, claim,
proceeding or governmental investigation against such Indemnified Party, such
Indemnified Party shall, if a claim in respect thereof is to be made against the
Seller hereunder, notify the Seller in writing of the commencement thereof. The
Seller may participate in and assume the defense and settlement of any such
suit, action, claim, proceeding or investigation at its expense, and no
settlement thereof shall be made without the approval of the Seller and the
Indemnified Party. The approval of either party will not be unreasonably
withheld or delayed. After notice from the Seller to the indemnified party of
its intention to assume the defense thereof with counsel reasonably satisfactory
to the Buyer and so long as the Seller so assumes the defense thereof in a
manner reasonably satisfactory to the Buyer, the Seller shall not be liable for
any legal expenses of counsel unless there shall be a conflict between the
interests of the Seller and the Indemnified Party.
(c) Each Indemnified Party shall use its good faith efforts
to mitigate, reduce or eliminate any losses, expenses or claims for
indemnification.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Survival. The indemnification and payment provisions
of Article VII shall be continuing and shall survive any termination of this
Agreement, subject to applicable statutes of limitation; provided, however, that
any such indemnification or payment claim must be presented to the Seller within
thirty (30) Business Days after the Person making such claim receives notice or
otherwise becomes aware of such claim, provided, further, however, that any
failure to give such notice shall not prejudice the rights of any Indemnified
Party except to the extent Seller is actually prejudiced by such failure to give
notice.
SECTION 8.2 Amendments. Any provision of this Agreement may be
waived or amended in writing by the parties hereto.
SECTION 8.3 Notices. Except as provided below, all
communications and notices provided for hereunder shall be in writing (including
bank wire, telecopy or electronic facsimile transmission or similar writing) and
shall be given to the other party at its address or telecopy number set forth
hereunder or at such other address or telecopy number as such party may
hereafter specify for the purposes of notice to such party. Each such notice or
other communication shall be
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effective if given by facsimile, when such facsimile is transmitted to the
facsimile number specified in this Section 8.3 and the appropriate written
confirmation is received or, if given by any other means, when received at the
address specified in this Section 8.3. Each party further agrees to deliver
promptly to the other party a written confirmation of each telephonic notice
signed by an authorized officer of the Seller. However, the absence of such
confirmation shall not affect the validity of such notice.
If to the Buyer:
Fairbanks Capital Corp.
0000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx, General Counsel
Telecopier: (000) 000-0000; and
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopier: (000) 000-0000
If to the Seller:
Aames Capital Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, CFO
Telecopier: (000)-000-0000
with a copy to:
Xxxxxxx X. Xxxxxx, General Counsel
Telecopier: (000)-000-0000
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SECTION 8.4 Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial; Process Agent. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The Seller and the Buyer
hereby submit to the nonexclusive jurisdiction of courts of the State of New
York located in the Borough of Manhattan and the United States District Court
for the Southern District of New York for purposes of adjudicating any claim or
controversy arising in connection with this Agreement or any of the transactions
contemplated hereby. The Seller and the Buyer hereby irrevocably waive, to the
fullest extent they may lawfully do so, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. Nothing in this Section 8.4 shall affect the
right of any Person to bring any action or proceeding against the Seller or the
Buyer or their respective properties in the courts of other jurisdictions. EACH
PARTY HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO ANY RELATIONSHIP ESTABLISHED IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(b) THE SELLER HEREBY IRREVOCABLY DESIGNATES CT CORPORATION
AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, FOR AND ON BEHALF OF IT,
SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT. THE SELLER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO CT
CORPORATION, 0000 XXXXXXXX, XXX XXXX, XXX XXXX, XX TO ITS ADDRESS FOR NOTICES IN
SECTION 8.3, WHICH SERVICE SHALL BECOME EFFECTIVE THREE (3) BUSINESS DAYS AFTER
DEPOSIT IN THE MAIL AND SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE BUYER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE SELLER IN ANY OTHER JURISDICTION.
SECTION 8.5 Records. All amounts calculated or due hereunder
shall be determined from the records of the Buyer, which determinations shall be
prima facie conclusive.
SECTION 8.6 No Implied Waiver; Cumulative Remedies. No course of
dealing and no delay or failure of the Buyer in exercising any right, power or
privilege under this Agreement shall affect any other or future exercise thereof
or the exercise of any other right, power or privilege; nor shall any single or
partial exercise of any such right, power or privilege or any abandonment or
discontinuance of steps to enforce such a right, power or privilege preclude any
further exercise thereof or of any other right, power or privilege. The rights
and remedies of the Buyer under this Agreement are cumulative and not exclusive
of any rights or remedies which the Buyer would otherwise have.
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SECTION 8.7 No Discharge. The obligations of the Seller under
this Agreement shall be absolute and unconditional and shall remain in full
force and effect without regard to, and shall not be released, discharged or in
any way affected by (a) any exercise or nonexercise of any right, remedy, power
or privilege under or in respect of this Agreement or applicable Law, including,
without limitation, any failure to set-off or release in whole or in part by the
Buyer of any balance of any deposit account or credit on its books in favor of
the Buyer or any waiver, consent, extension, indulgence or other action or
inaction in respect of any thereof, or (b) any other act or thing or omission or
delay to do any other act or thing which would operate as a discharge of the
Buyer as a matter of law.
SECTION 8.8 Prior Understandings. This Agreement and the
Sub-servicing Contracts set forth the entire understanding of the parties
relating to the subject matter hereof and thereof, and supersede all prior
understandings and agreements, whether written or oral with respect to the
subject matter hereof and thereof.
SECTION 8.9 Successors and Assigns. (a) This Agreement shall be
binding on the parties hereto and their respective successors and assigns;
provided, however, that the Seller may not assign any of its rights or delegate
any of its duties hereunder without the prior written consent of the Buyer. No
provision of this Agreement shall in any manner restrict the ability of the
Buyer to assign, participate, grant security interests in, or otherwise transfer
any portion of the Purchased Assets owned by the Buyer. The Seller hereby agrees
and consents to the sale by the Buyer of all the Receivables and the other
related Purchased Assets to Fairbanks Funding pursuant to the Purchase and
Contribution Agreement and the transactions contemplated by the Lender Loan and
Security Documents. The Seller further agrees that notwithstanding any claim,
counterclaim, right of setoff or defense which it may have against the Buyer due
to a breach by the Buyer of this Agreement or for any other reason, and
notwithstanding the bankruptcy of the Buyer or any other event whatsoever, the
Seller's sole remedy shall be a claim against the Buyer for money damages and
the Escrow Account, and in no event shall the Seller assert any claim on or any
interest in the Receivables or any proceeds thereof or take any action which
would reduce or delay receipt by Fairbanks Funding of collections with respect
to the Receivables. Additionally, the Buyer directs and the Seller agrees for
the benefit of Fairbanks Funding that any amounts payable by the Seller to the
Buyer hereunder or otherwise in connection herewith which are to be paid by the
Buyer to Fairbanks Funding shall be paid by the Seller, on behalf of the Buyer,
directly to Fairbanks Funding, and, in connection with the foregoing, the Seller
agrees (i) that all of the Seller's rights and remedies under this Agreement,
and in and to the Purchased Assets, are hereby expressly made subject and
subordinate in all respects to the rights of Fairbanks Funding under the
Purchase and Contribution Agreement and (ii) for at least ninety (90) days after
all of the obligations owing by the Buyer to Fairbanks Funding under the
Purchase and Contribution Agreement have been paid in full, the Seller will not
take any action to assert any claim against the Buyer.
(b) The Seller agrees that the Buyer may at any time assign
all of its assets to a newly-formed, special-purpose limited liability company
into which the Buyer shall merge, and which limited liability company shall,
inter alia, be assigned all of the Buyer's rights and shall
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assume all of the Buyer's obligations hereunder and under the Purchase and
Contribution Agreement.
SECTION 8.10 No Petition. The Seller agrees that, prior to the
date which is one year and one day after the date upon which the last Receivable
purchased hereunder has been paid in full, it will not institute against, or
join any other Person in instituting against, the Buyer any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
similar proceeding under the Laws of the United States or any state of the
United States.
SECTION 8.11 Severability; Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable any other provision in
such jurisdiction or such provision in any other jurisdiction.
SECTION 8.12 Expenses
Seller shall pay Buyer's costs and expenses reasonably incurred
in connection with Buyer's due diligence for this Agreement, including the fees
and out-of-pocket expenses of Buyer's attorneys up to $200,000.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above set forth.
AAMES CAPITAL CORPORATION,
as Seller
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name:
Title:
FAIRBANKS CAPITAL CORP.
as Buyer
By: /s/ Xxx X. Xxxxxxxxx
-------------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Executive Vice President
[Delinquency Advance Purchase Agreement]
32
EXHIBIT A
SCHEDULE OF LITIGATION
None
A-1
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EXHIBIT B
SCHEDULE OF LOCATION OF RECORDS
Seller: 000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Buyer: 0000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
B-1
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EXHIBIT C
SCHEDULE OF CORPORATE NAMES,
TRADE NAMES OR ASSUMED NAMES AND SUBSIDIARIES
Corporate Name: Aames Capital Corp.
Trade Names: Aames Home Loan
Assumed Names: None
Subsidiaries: None
C-1
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EXHIBIT D
THE RECEIVABLES REIMBURSEMENT ACCOUNT
Bankers Trust Company, NY
ABA number 000-000-000
Account number 00000000
Account name: Nomura Asset Capital Corporation #27531
Attn: Xxxxx Xxxxxxxxxx
D-1
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EXHIBIT E
LIST OF RESPONSIBLE OFFICERS
Responsible Officers of Seller: Xxxx X. Xxxxxxxx
Xxxxx X. Xxxxx
Xxx X. Van Deuren
Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxxx
Xxxxxxx Xxxxxx
Responsible Officers of Buyer: Xxxxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxx
Xxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxx
Xxx Xxxxx
Xxxxxx xx Xxxx
Xxxxx X. Xxxxx
E-1
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Schedule 1
SCHEDULE OF RECEIVABLES
(As of the Cut-off Date)
[To come]
1-1
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Schedule 2
SCHEDULE OF SERVICING CONTRACTS
1. Pooling and Servicing Agreement between Aames Capital Corporation and
Bankers Trust Company of California, N.A dated as of December 1, 1996
with respect to Aames Mortgage Trust 1996-D.
2. Servicing Agreement between Aames Capital Corporation and Bankers Trust
Company of California, N.A dated as of March 1, 1997 with respect to
Aames Capital Owner Trust 1997-1.
2-1
