EXHIBIT 10.1
EXECUTION COPY
MASTER REPURCHASE AGREEMENT
DATED AS OF FEBRUARY 12, 2003
Among:
BEAR ▇▇▇▇▇▇▇ COMMERCIAL MORTGAGE, INC.,
BEAR, ▇▇▇▇▇▇▇ FUNDING, INC.
and
DSHI ▇▇▇▇▇, INC.
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in which Seller
agrees to transfer to Buyer Eligible Loans against the transfer of funds by
Buyer, with a simultaneous agreement by Buyer to transfer to Seller such
Eligible Loans at a date certain or on demand, against the transfer of funds by
Seller. Each such transaction shall be referred to herein as a "Transaction" and
shall be governed by this Agreement, as the same shall be amended from time to
time.
2. DEFINITIONS
"1934 Act" shall have the meaning specified in Section 29(a) of
this Agreement.
"Accelerated Repurchase Date" shall have the meaning set forth
in Section 15 of this Agreement.
"Act of Insolvency" shall mean with respect to either Buyer or
Seller, (i) the commencement by such party as debtor of any case or
proceeding under any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar law, or such party seeking the
appointment of a receiver, trustee, custodian or similar official for
such party or any substantial part of its property, or (ii) the
commencement of any such case or proceeding against such party, or
another seeking such an appointment, or the filing against a party of an
application for a protective decree under the provisions of the
Securities Investor Protection Act of 1970, which (A) is consented to or
not timely contested by such party, (B) results in the entry of an order
for relief, such an appointment, the issuance of such a protective
decree or the entry of an order having a similar effect, or (C) is not
dismissed within 15 days, (iii) the making by a party of a general
assignment for the benefit of creditors, or (iv) the admission in
writing by a party of such party's inability to pay such party's debts
as they become due.
"Additional Assets" shall have the meaning set forth in Section
4(a) of this Agreement.
"Affiliate" shall mean, when used with respect to any specified
Person, any other Person directly or indirectly controlling, controlled
by, or under common control with, such Person. Control shall mean the
possession, direct or indirect, 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 and
"controlling" and "controlled" shall have meanings correlative thereto.
"Agreement" shall mean this Master Repurchase Agreement dated as
of February 12, 2003, by and between Buyer and Seller.
"Asset Information" shall mean, with respect to each Purchased
Loan, the information set forth in Exhibit VII attached hereto.
"Assignment of Mortgage" shall mean, with respect to any
Mortgage, an assignment of the mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of
the jurisdiction wherein the related property is located to reflect the
assignment and pledge of the Mortgage.
"B Notes" shall mean subordinate interests in Whole Loans.
"BSCMI" shall mean Bear ▇▇▇▇▇▇▇ Commercial Mortgage, Inc., or
any successor.
"BSFI" shall mean Bear, ▇▇▇▇▇▇▇ Funding, Inc., or any successor.
"Business Day" shall mean a day other than (i) a Saturday or
Sunday, or (ii) a day in which the New York Stock Exchange or banks in
the State of New York or Florida are authorized or obligated by law or
executive order to be closed.
"Buyer" shall mean BSCMI, in the case of Eligible Loans
originated by BSCMI or an Affiliate of BSCMI, and BSFI, in the case of
all other Eligible Loans, if any.
"Buyer's Margin Ratio" shall mean with respect to any
Transaction as of any date, a percentage agreed to by Buyer and Seller
or, in the absence of any such agreement, the percentage obtained by
dividing the Purchase Price of the Purchased Loans on the Purchase Date
by the Market Value on such Purchase Date for such Transaction.
"Change of Control" shall mean Seller ceases to be an indirect
wholly-owned subsidiary of the Parent Company.
"Collateral" shall have the meaning set forth in Section 6 of
this Agreement.
"Collection Account" shall mean a segregated interest bearing
demand deposit account established and maintained at the Depository, in
the name of and in trust for the benefit of Buyer pursuant to the terms
of the Depository Agreement.
"Collection Period" shall mean with respect to the Remittance
Date in any month, the period beginning on but excluding the Cut-off
Date in the month preceding the month
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in which such Remittance Date occurs and continuing to and including the
Cut-off Date immediately preceding such Remittance Date.
"Confirmation" shall have the meaning specified in Section 3(b)
of this Agreement.
"Custodial Agreement" shall mean the Custodial Agreement, dated
as of February 12, 2003, by and among the Custodian, Seller and Buyer,
as amended, modified and in effect from time to time.
"Custodial Delivery" shall mean the form executed by Seller in
order to deliver the Purchased Loan Schedule and the Purchased Loan File
to Buyer or its designee (including the Custodian) pursuant to Section
7, a form of which is attached hereto as Exhibit IV.
"Custodian" shall mean Wachovia Bank, National Association, or
any successor Custodian appointed by Buyer with the prior written
consent of Seller (which consent shall not be unreasonably withheld or
delayed).
"Cut-off Date" shall mean the second Business Day preceding each
Remittance Date.
"Default" shall mean any event which, with the giving of notice,
the passage of time, or both, would constitute an Event of Default.
"Depository" shall mean Wachovia Bank, National Association, or
any successor Depository appointed by Buyer.
"Depository Agreement" shall mean the Demand Deposit Account
Agreement dated February 12, 2003 among the Depository, Buyer and Seller
and their respective successors and assigns.
"Diligence Materials" shall mean the Preliminary Due Diligence
Package together with the Supplemental Due Diligence List.
"Draft Appraisal" shall mean a short form appraisal, "letter
opinion of value," or any other form of draft appraisal acceptable to
Buyer.
"Early Repurchase Date" shall have the meaning specified in
Section 3(e) of this Agreement.
"Eligible Loans" shall mean any of the following types of loans,
which loans do not provide for restrictions on transfer to or from Buyer
and otherwise were originated by Buyer or an Affiliate of Buyer and are
acceptable to Buyer in the exercise of its commercially reasonable
business judgment, are secured directly or indirectly by a property that
is a multifamily, retail, office, warehouse, industrial, or hospitality
property (or any other property type acceptable to Buyer), which
property is located in the United States of America, its territories or
possessions, meet all of the other requirements of this
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Master Repurchase Agreement, and which would not, if the same became
Purchased Loans, cause the aggregate Purchase Price of all Eligible
Loans to exceed the Maximum Aggregate Purchase Price:
(i) Whole Loans that are performing (i.e., current
and not in default (monetary or non-monetary) commercial
mortgage loans secured by first liens on multifamily and
commercial real property with respect to which the ratio of loan
to value as determined by Buyer, in the exercise of its
commercially reasonable judgment, for the real property securing
directly such loan (including for purposes of this calculation,
such loan and any loan junior to or pari passu with such loan
and secured, directly or indirectly, by the related property)
does not exceed the percentage stated in the Confirmation;
(ii) B Notes that are performing (i.e., current or
not in default (monetary and non-monetary) commercial mortgage
loans secured by first liens on multifamily and commercial real
property with respect to which the ratio of loan to value as
determined by Buyer, in the exercise of its commercially
reasonable judgment, for the real property securing directly
such loan (including for purposes of this calculation, such loan
and any loan senior to or pari passu with such loan and secured,
directly or indirectly, by the related property) does not exceed
the percentage stated in the Confirmation;
(iii) Mezzanine Loans that are performing (i.e.,
current and not in default (monetary or non-monetary) with
respect to which the ratio of total loan to value as determined
by Buyer, in the exercise of its commercially reasonable
judgment, for the real property securing indirectly such loan
(including for purposes of this calculation, such loan and any
loan senior to or pari passu with such loan and secured,
directly or indirectly, by the related property) does not exceed
the percentage stated in the Confirmation; and
(iv) any other Whole Loan, B Note or Mezzanine Loan
which does not conform to the criteria set forth in clauses
(i)-(iii) above and Buyer elects in its sole discretion to
purchase, in which case the criteria for the ratio of total loan
to value and the underwritten debt service coverage ratio, and
any modifications to the Maximum Aggregate Purchase Price with
respect to such loan, shall be set forth in the related
Confirmation for the Transaction under which such loan or
interest is purchased by Buyer.
An Eligible Loan concurrently or prior to becoming a Purchased
Loan must have the related loan document files segregated and held by an
independent third party custodian. Non-performing loans, loans secured
by undeveloped land or coop shares and construction loans are not
eligible for inclusion as Eligible Loans.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
thereunder. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement and, as of
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the relevant date, any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any corporation or trade or business
that is a member of any group of organizations (i) described in Section
414(b) or (c) of the Code of which Seller is a member and (ii) solely
for purposes of potential liability under Section 302(c)(l1) of ERISA
and Section 412(c)(ll) of the Code and the lien created under Section
302(f) of ERISA and Section 412(n) of the Code, described in Section
414(m) or (o) of the Code of which Seller is a member.
"Event of Default" shall have the meaning set forth in Section
14 of this Agreement.
"Exit Fee" shall have the meaning specified in Section 3(e) of
this Agreement.
"Filings" shall have the meaning specified in Section 6 of this
Agreement.
"GAAP" shall mean United States generally accepted accounting
principles consistently applied as in effect from time to time.
"Governmental Authority" shall mean any national or federal
government, any state, regional, local or other political subdivision
thereof with jurisdiction and any Person with jurisdiction exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government.
"Hedging Transactions" shall mean, with respect to any or all of
the Purchased Loans, any short sale of U.S. Treasury Securities or
mortgage-related securities, futures contract (including Eurodollar
futures) or options contract or 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 as counterparties or one or
more other counterparties acceptable to Buyer.
"Income" shall mean, with respect to any Eligible Loan at any
time, any principal thereof and all interest, dividends or other
distributions thereon or proceeds thereof.
"Indemnified Amounts" and "Indemnified Parties" shall have the
meaning specified in Section 20 of this Agreement.
"Independent Director" means an independent director reasonably
satisfactory to Buyer who shall not have been at the time of such
individual's initial appointment as Independent Director, and may not
have been at any time during the five years preceding such initial
appointment or at any time while serving as Independent Director, (i) a
stockholder, officer, director (with the exception of serving as the
Independent Director of Seller), partner, employee, member, attorney or
counsel of Seller or any Affiliate, (ii) a creditor, customer, supplier
or other person who derives any of its purchases or revenues from its
activities with, Seller or any of its Affiliates, (iii) a Person
controlling or under common control with any Person that would be
excluded from serving as an Independent
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Director under (i) or (ii) above, or (iv) a member of the immediate
family of an individual excluded from servicing as an Independent
Director under (i), (ii) or (iii), above; provided, however, (v) an
individual who satisfies the foregoing definition other than under (i),
(ii) and (iii) above, shall not be disqualified from serving as an
Independent Director of Seller if such individual is an independent
director provided by an Industry Company, and (vi) an individual who
otherwise satisfies the foregoing definition except for being a past,
existing or future director of an Affiliate of Seller, or who shall
otherwise be employed by an Industry Company that is providing, has
provided or shall provide a director of an Affiliate of Seller, shall be
qualified to serve as an Independent Director of Seller for so long as
such individual is an independent director provided by an Industry
Company and is not at the time of initial appointment, or at any time
while serving as such Independent Director, an Independent Director of
an Affiliate whose organizational documents contain restrictions on its
activities substantially similar to those set forth in the Certificate
of Incorporation of Seller that holds a direct or indirect equity
interest in Seller.
"Industry Company" shall mean a nationally recognized company
that provides professional independent directors and other corporate
services in the ordinary course of its business.
"Intercreditor Agreement" shall mean the agreement between
Seller and the holder of the senior co-lender interest (such as a "B"
noteholder's interest in an "A/B" loan structure) in a commercial
mortgage loan secured by a first lien on multifamily and/or commercial
real property.
"LIBOR" shall mean the rate per annum (rounded upwards, if
necessary, to the next 1/100th of 1%) calculated on each Pricing Rate
Determination Date for the next Pricing Rate Period as equal to the rate
for U.S. dollar deposits for a one month period which appears on
Telerate Page 3750 as of 11:00 am, London time, on such Pricing Rate
Determination Date; provided, however, that if such rate does not appear
on Telerate Page ▇▇▇▇, "▇▇▇▇▇" determined on each Pricing Rate
Determination Date for the next Pricing Rate Period shall mean a rate
per annum equal to the rate at which U.S. dollar deposits are offered in
immediately available funds in the London Interbank Market to the London
office of National Westminster Bank, Plc (or its successors) by leading
banks in the Eurodollar market at 11:00 a.m., London time, on the
Pricing Rate Determination Date. "Telerate Page 3750" means the display
designated as "Page 3750" on the Associated Press-Dow ▇▇▇▇▇ Telerate
Service (or such other page as may replace Page 3750 on the Associated
Press-Dow ▇▇▇▇▇ Telerate Service or such other service as may be
nominated by the British Bankers' Association as the information vendor
for the purpose of displaying British Banker's Association interest
settlement rates for U.S. Dollar deposits). LIBOR determined on the
basis of the rate displayed on Telerate Page 3750 in accordance with the
provisions hereof shall be subject to corrections, if any, made in such
rate and displayed by the Associated Press-Dow ▇▇▇▇▇ Telerate Service
within one (1) hour of the time when such rate is first displayed by
such Service.
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"LIBOR Transaction" shall mean, with respect to any Pricing Rate
Period, any Transaction with respect to which the Pricing Rate for such
Pricing Rate Period is determined with reference to LIBOR.
"Margin Call" shall have the meaning set forth in Section 4(a)
of this Agreement.
"Margin Deficit" shall have the meaning set forth in Section
4(a) of this Agreement.
"Market Value" shall mean, with respect to any Purchased Loans,
as of any relevant date, the market value for such Purchased Loans on
such date, as determined by Buyer in the exercise of its commercially
reasonable judgment and may be determined on each Business Day during
the term of this Agreement, or less frequently from time to time if
Buyer elects in its sole discretion. Any provision hereof to the
contrary notwithstanding, a Market Value of zero shall be assigned to
(i) any Purchased Loan that has been delinquent for at least sixty (60)
days, (ii) any Purchased Loan with respect to which there is a breach of
a representation or warranty made by Seller in this Agreement or the
Custodial Agreement that materially adversely affects Buyer's interests
hereunder, (iii) any documents evidencing any Purchased Loan released by
the Custodian for more than 10 Business Days, or (iv) any Purchased Loan
that has become a specially serviced loan as defined in the applicable
servicing agreement.
"Maximum Aggregate Purchase Price" shall mean $75,000,000 at any
one time.
"Mezzanine Loan" shall mean a loan secured by pledges of the
entire equity ownership interests in entities that own directly or
indirectly multifamily and commercial properties.
"Mezzanine Note" shall mean a note or other evidence of
Mezzanine Loan indebtedness.
"Moody's" shall mean ▇▇▇▇▇'▇ Investor Service, Inc.
"Mortgage" shall mean a mortgage, deed of trust, deed to secure
debt or other instrument, creating a valid and enforceable first
priority 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 Note" shall mean a note or other evidence of
indebtedness of a Mortgagor secured by a Mortgage.
"Mortgaged Property" shall mean the real property securing
repayment of the debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a Mortgage Note and the
grantor of the related Mortgage.
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"Multiemployer Plan" shall mean a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been, or were
required to have been, made by Seller or any ERISA Affiliate and which
is covered by Title IV of ERISA.
"New Asset" shall mean an Eligible Loan that Seller proposes to
be included as an Eligible Loan.
"Original Purchase Date" shall mean the date a Purchased Loan
was purchased by Seller or its Affiliates from Buyer or its Affiliates.
"Parent Company" shall mean Delaware Securities Holdings, Inc.
"Person" shall mean an individual, corporation, limited
liability company, business trust, partnership, joint tenant or
tenant-in-common, trust, unincorporated organization, or other entity,
or a federal, state or local government or any agency or political
subdivision thereof.
"Plan" shall mean an employee benefit or other plan established
or maintained by Seller or any ERISA Affiliate during the five year
period ended prior to the date of this Agreement or to which Seller or
any ERISA Affiliate makes, is obligated to make or has, within the five
year period ended prior to the date of this Agreement, been required to
make contributions and that is covered by Title IV of ERISA or Section
302 of ERISA or Section 412 of the Code, other than a Multiemployer
Plan.
"Preliminary Due Diligence Package" shall mean with respect to
any New Asset, a summary memorandum outlining the proposed transaction,
including potential transaction benefits and all material underwriting
risks, all Underwriting Issues and all other characteristics of the
proposed transaction that a reasonable buyer would consider material,
together with due diligence information relating to the New Asset to be
provided by Seller to Buyer pursuant to this Agreement, including, but
not limited to:
With respect to each Eligible Loan:
(i) the Asset Information;
(ii) description of the mortgaged property;
(iii) description of the borrower and sponsor, including
experience with other projects (real estate owned) and
net worth and liquidity statements;
(iv) description of the ownership structure of the borrower
and the sponsor (including, without limitation,
independent director(s)/member(s);
(v) term sheet outlining the transaction generally,
including description of existing or proposed senior
debt;
(vi) debt service coverage and loan to value ratios;
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(vii) whether the Mortgagor is an Affiliate of Seller;
(viii) any exceptions to the representations and warranties set
forth in Exhibit VI to this Agreement;
(ix) asset summary books which include, to the extent
provided to Seller, the following:
(A) loan detail and asset description, including
market information on competing properties,
terrorism and other insurance coverage;
(B) map, photo;
(C) current rent roll;
(D) historical, current and pro forma cash flow and
operating information;
(E) appraisal, environmental, engineering summary;
(F) information relating to valuation, security or
underwriting issues, special or unique loan
features and structural issues;
(x) loan data disk;
(xi) materials furnished to the Rating Agencies in connection
with the issuance of the Eligible Loans, to the extent
provided to Seller;
(xii) remittance report for most recent period in Seller's
possession;
(xiii) quarterly remittance reports in Seller's possession;
(xiv) accounting reports delivered with respect to the
Eligible Loan in Seller's possession;
(xv) legal opinions delivered with respect to the Eligible
Loan in Seller's possession; and
(xvi) closing binder in respect of the underlying Purchased
Loan.
"Price Differential" shall mean, with respect to any Transaction
as of any date, the aggregate amount obtained by daily application of
the Pricing Rate for such Transaction to the Repurchase 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).
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"Pricing Rate" shall mean, for any Pricing Rate Period with
respect to any Transaction, an annual rate as agreed to between Buyer
and Seller or as otherwise set forth on the applicable Confirmation;
"Pricing Rate Determination Date" shall mean (a) in the case of
the first Pricing Rate Period with respect to any Transaction, the
second (2nd) Business Day preceding the Purchase Date and (b) with
respect to any subsequent Pricing Rate Period, the second (2nd) Business
Day preceding the first day of the Pricing Rate Period.
"Pricing Rate Period" shall mean, (a) in the case of the first
Pricing Rate Period with respect to any Transaction, the period
commencing on and including the Purchase Date for such Transaction and
ending on and including the following Remittance Date, and (b) in the
case of any subsequent Pricing Rate Period, the period commencing on the
calendar day following each Remittance Date and ending on and including
the following Remittance Date; provided, however, that in no event shall
any Pricing Rate Period end subsequent to the Repurchase Date.
"Principal Payment" shall mean, with respect to any Purchased
Loans, any payment or prepayment of principal or any proceeds of
redemption received by the Depository in respect thereof.
"Purchase Agreement" shall mean the agreement pursuant to which
Seller acquired the Purchased Loan.
"Purchase Date" shall mean the date on which Eligible Loans are
to become Purchased Loans.
"Purchase Fee" shall have the meaning specified in Section 3(f)
of this Agreement.
"Purchase Price" shall mean, with respect to any Purchased
Loans, the price at which such Purchased Loans are sold by Seller to
Buyer on the applicable Purchase Date.
"Purchased Loan File" shall mean the documents specified as the
"Purchased Loan File" in Section 7(b), together with any additional
documents and information required to be delivered to Buyer or its
designee (including the Custodian) pursuant to this Agreement.
"Purchased Loan Documents" shall mean, with respect to a
Purchased Loan, the documents comprising the Purchased Loan File for
such Purchased Loan.
"Purchased Loans" shall mean (i) with respect to any
Transaction, the Eligible Loans sold by Seller to Buyer in such
Transaction until such Eligible Loans are repurchased pursuant to this
Agreement and (ii) with respect to the Transactions in general, all
Eligible Loans sold by Seller to Buyer and any Additional Assets
delivered by Seller to Buyer pursuant to Section 4(a) of this Agreement
until such Eligible Loans are repurchased pursuant to this Agreement.
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"Purchased Loan Schedule" shall mean a schedule of Purchased
Loans attached to each Trust Receipt and Custodial Delivery containing
information substantially similar to the Asset Information.
"Rating Agencies" shall mean Moody's and Standard & Poor's.
"REIT" shall have the meaning specified in Section 11(h) of this
Agreement.
"Remittance Date" shall mean the [ ( )] calendar day of each
month, or the next succeeding Business Day, if such calendar day shall
not be a Business Day.
"Repurchase Date" shall mean the date on which Seller is to
repurchase the Purchased Loans from Buyer, which shall be the date
specified in the related Confirmation or determined by the application
of the provisions hereof.
"Repurchase Price" shall mean, with respect to any Purchased
Loans as of any date, the price at which such Purchased Loans are to be
transferred from Buyer to Seller upon termination of the related
Transaction; such price will be determined in each case as the sum of
the Purchase Price of such Purchased Loans and the Price Differential
with respect to such Purchased Loans as of the date of such
determination, minus all Income and cash actually received by Buyer in
respect of such Transaction pursuant to Sections 4(a), 5(b), 5(c), 5(d)
and 5(e) of this Agreement.
"Requirement of Law" shall mean any law, treaty, rule,
regulation, code, directive, policy, order or requirement or
determination of an arbitrator or a court or other governmental
authority whether now or hereafter enacted or in effect.
"Reset Date" shall mean, with respect to any Pricing Rate
Period, the second Business Day preceding the first day of such Pricing
Rate Period with respect to any Transaction.
"SEC" shall have the meaning specified in Section 29(a) of this
Agreement.
"Seller" shall mean DSHI ▇▇▇▇▇, INC., a Delaware corporation.
"Servicing Agreements" shall have the meaning specified in
Section 22(b) of this Agreement.
"Servicing Records" shall have the meaning specified in Section
22(b) of this Agreement.
"SIPA" shall have the meaning specified in Section 29(a) of this
Agreement.
"Special-Purpose Entity" shall mean a Person, other than an
individual, which is formed or organized solely for the purpose of
holding, directly and subject to this Agreement, the Purchased Loans,
does not engage in any business unrelated to the Purchased Loans and the
financing thereof, does not have any assets other than the Purchased
Loans and the financing thereof, or any indebtedness other than as
permitted
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by this Agreement, has its own separate books and records and its own
accounts, in each case which are separate and apart from the books and
records and accounts of any other Person, holds itself out as being a
Person, separate and apart from any other Person and provides in its
formation and organizational documents for the inclusion of at least one
Independent Director on terms and conditions approved by Buyer. If the
foregoing entity is a limited partnership or limited liability company,
(i) its partnership agreement or limited liability company agreement (as
applicable) shall provide that the partnership or limited liability
company shall dissolve upon the withdrawal or dissolution of the last
remaining general partner or managing member, but the partnership or
limited liability company will not be dissolved if the remaining
partners or members, within ninety (90) days, by majority vote elect to
continue the partnership or limited liability company and appoint a new
general partner or new managing member, and (ii) the partnership
agreement or limited liability company agreement (as applicable) must
provide that the dissolution and winding up or bankruptcy or insolvency
filing of such partnership or limited liability company shall require
the unanimous consent of all partners or members (including the
affirmative vote of the Independent Directors).
"Standard & Poor's" shall mean Standard & Poor's Ratings
Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Supplemental Due Diligence List" shall mean, with respect to
any New Assets, information or deliveries concerning the New Assets that
Buyer shall reasonably request in addition to the Preliminary Due
Diligence Package.
"Survey" shall mean a certified ALTA/ACSM (or applicable state
standards for the state in which the Eligible Loans are located) survey
of a Mortgaged Property prepared by a registered independent surveyor
and in form and content satisfactory to Buyer and the company issuing
the Title Policy for such Mortgaged Property.
"Title Policy" shall mean an American Land Title Association (or
an equivalent form thereof as adopted in the applicable jurisdiction)
lender's title insurance policy.
"Transaction Conditions Precedent" shall have the meaning
specified in Section 3(b) of this Agreement.
"Transaction Documents" shall mean, collectively, this
Agreement, the Custodial Agreement and all Confirmations executed
pursuant to this Agreement in connection with specific Transactions.
"Trust Receipt" shall mean a trust receipt issued by Custodian
to Buyer confirming the Custodian's possession of certain Purchased Loan
Files which are the property of and held by Custodian for the benefit of
Buyer (or any other holder of such trust receipt).
"UCC" shall have the meaning specified in Section 6 of this
Agreement.
"Underwriting Issues" shall mean, with respect to any New Assets
as to which Seller intends to request a Transaction, all material
information that has come to Seller's
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attention that, based on the making of reasonable inquiries and the
exercise of reasonable care and diligence under the circumstances, would
be considered a materially "negative" factor (either separately or in
the aggregate with other information), or a material defect in loan
documentation or closing deliveries (such as any absence of any material
Purchased Loan Document(s)), to a reasonable institutional mortgage
Buyer in determining whether to originate or acquire the New Assets in
question.
"Whole Loan" shall mean a commercial mortgage loan or note
secured by a first lien on multifamily or commercial real property.
3. INITIATION; CONFIRMATION; TERMINATION; FEES
(a) On or after the Initial Purchase Date and prior to the
Repurchase Date and subject to the terms and conditions set forth in this
Agreement (including, without limitation, the "Transaction Conditions Precedent"
specified in Section 3(b) of this Agreement), an agreement to enter into a
Transaction shall be made in writing at the initiation of Seller as provided
below; provided, however, that the aggregate Repurchase Price (excluding the
Price Differential with respect to the Purchased Loans as of the date of
determination) for all Transactions shall not exceed the Maximum Aggregate
Purchase Price. Seller shall give Buyer written notice of each proposed
Transaction and Buyer shall inform Seller of its determination with respect to
any assets proposed to be sold to Buyer by Seller solely in accordance with
Exhibit VIII attached hereto. Buyer shall have the right to review all Eligible
Loans proposed to be sold to Buyer in any Transaction and to conduct its own due
diligence investigation of such Eligible Loans as Buyer determines. Upon receipt
of all Diligence Materials and other reasonably required documentation, Buyer
shall complete its due diligence review and financial modeling with respect to
the assets proposed to be sold to Buyer by Seller. Buyer shall be entitled to
make a determination, in the exercise of its sole discretion, that it shall not
purchase any or all of the assets proposed to be sold to Buyer by Seller and
Buyer's failure to make such a determination shall constitute a refusal to
purchase the Eligible Loan(s). On the Purchase Date for the Transaction which
shall be not less than three (3) Business Days following the approval of an
Eligible Loan by Buyer in accordance with Exhibit VIII hereto, the Purchased
Loans shall be transferred to Buyer or its agent against the transfer of the
Purchase Price in immediately available funds to an account designated by
Seller. To the extent Buyer enters into a Transaction with Seller with respect
to a Purchased Loan which is an Eligible Loan of the type described in clause
(iv) of the definition thereof (i.e., such Eligible Loan does not satisfy the
characteristics described in clauses (i)-(iii) of the definition thereof), then
such loan shall be deemed to be an Eligible Loan for all purposes of this
Agreement.
(b) Upon agreeing to enter into a Transaction hereunder, provided
each of the Transaction Conditions Precedent (as hereinafter defined) shall have
been satisfied (or waived by Buyer), Buyer shall promptly deliver to Seller a
written confirmation substantially in the form of Exhibit I attached hereto of
each Transaction (a "Confirmation"). In the absence of execution and delivery by
Buyer of a Confirmation for a proposed Transaction, Buyer shall under no
circumstance be deemed to have agreed to enter into such Transaction. Such
Confirmation shall describe the Purchased Loan(s) which shall be the subject of
the proposed Transaction, shall identify Buyer and Seller, and shall set forth
(i) the Purchase Date, (ii) the Purchase Price for such Purchased Loan(s), (iii)
the Repurchase Date, (iv) the Pricing Rate applicable to the
13
Transaction and (v) any additional terms or conditions not inconsistent with
this Agreement. With respect to any Transaction, the Pricing Rate shall be
determined initially on the Pricing Rate Determination Date applicable to the
first Pricing Rate Period for such Transaction, and shall be reset on each Reset
Date for the next succeeding Pricing Rate Period for such Transaction. Buyer or
its agent shall determine in accordance with the terms of this Agreement the
Pricing Rate on each Pricing Rate Determination Date for the related Pricing
Rate Period and notify Seller of such rate for such period on the Reset Date.
For purposes of this Section 3(b), the "Transaction Conditions Precedent" shall
be deemed to have been satisfied with respect to any proposed Transaction if:
(1) no Default or Event of Default under this Agreement
shall have occurred and be continuing as of the Purchase Date for such
proposed Transaction;
(2) the representations and warranties made by Seller in any
of the Transaction Documents shall be true and correct in all material
respects as of the Purchase Date for such Transaction;
(3) Buyer shall have received the Diligence Materials and
completed to Buyer's satisfaction its due diligence review and financial
modeling with respect to the assets proposed to be sold to Buyer by
Seller;
(4) Buyer or the Custodian on behalf of Buyer shall have
received the applicable Transaction Documents and other documents and
opinions specified in Section 7 of this Agreement. The Custodian shall
have delivered a Trust Receipt satisfactory to Buyer no later than 4:00
p.m. on the Purchase Date;
(5) Buyer shall have determined, in accordance with the
applicable provisions of Section 3(a) of this Agreement, that the assets
proposed to be sold to Buyer by Seller in such Transaction are Eligible
Loans;
(6) none of the following shall have occurred and/or be
continuing:
(i) an event or events shall have occurred resulting
in the effective absence of a "repo market" or comparable
"lending market" for financing mortgage securities or mortgage
loans or an event or events shall have occurred resulting in
Buyer not being able to finance any Transactions through the
"repo market" or "lending market" with traditional
counterparties at rates which would have been reasonable prior
to the occurrence of such event or events; or
(ii) an event or events shall have occurred resulting
in the effective absence of a "securities market" for securities
backed by mortgage loans or an event or events shall have
occurred resulting in Buyer not being able to sell securities
backed by mortgage loans at prices which would have been
reasonable prior to such event or events; or
(iii) there shall have occurred a material adverse
change in the "repo market" or comparable "lending market" or in
the financial condition of Buyer
14
which effects (or can reasonably be expected to effect)
materially and adversely the ability of Buyer to fund its
obligations under this Agreement;
(7) the purchase by Buyer from Seller of the Purchased Loans
shall be completed prior to the Repurchase Date and the aggregate of the
Purchase Prices for all Transaction shall not exceed the Maximum
Aggregate Purchase Price; and
(8) With respect to the initial Transaction and as otherwise
required by Buyer in connection with any subsequent Transaction, Seller
shall have delivered to Buyer a due authorization, execution and
enforceability opinion of Seller's counsel, in such form reasonably
acceptable to Buyer, including an opinion that Buyer has a perfected
security interest in such collateral as is subject to such Transaction,
prior to any other claim or interest, subject to reasonable and
customary exceptions, qualifications and assumptions.
Notwithstanding anything to the contrary contained in this Agreement, in no
event shall any Transaction hereunder be consummated until such time as Buyer
has received all of the following, each in form and substance reasonably
satisfactory to Buyer: (i) the fully executed Custodial Agreement and related
Trust Receipt; (ii) a Depository Agreement with respect to the Collection
Account executed by the Depository; (iii) such legal opinions as Buyer may
reasonably require; and (iv) Seller's organizational documents to the extent not
delivered as of the date hereof.
(c) Each Confirmation, together with this Agreement, shall be
conclusive evidence of the terms of the Transaction(s) covered thereby unless
objected to in writing by Seller no more than two (2) Business Days after the
date such Confirmation is received by Seller. An objection sent by Seller with
respect to any Confirmation must state specifically that the writing is an
objection, must specify the provision(s) of such Confirmation being objected to
by Seller, must set forth such provision(s) in the manner that Seller believes
such provisions should be stated, and must be received by Buyer no more than two
(2) Business Days after such Confirmation is received by Seller. Seller shall
execute a written acceptance accepting each Confirmation not objected to by
Seller within the aforementioned two (2) Business Day period and prior to the
Purchase Date.
(d) Each Transaction entered into between Buyer and Seller shall
remain outstanding from the initial Purchase Date until February 12, 2006.
(e) Seller shall be entitled to terminate a Transaction and
repurchase any or all of the Purchased Loans from Buyer on three (3) Business
Days' notice on any Business Day prior to the Repurchase Date (an "Early
Repurchase Date").
If Seller terminates any Transaction pursuant to the preceding
sentence, then Seller shall pay to Buyer a termination fee (the "Exit Fee") on
the Early Repurchase Date. The Exit Fee shall be calculated as the sum of (a)
the product of (i) the Repurchase Price multiplied by (ii) 0.25% (25 basis
points) plus (b) any costs, losses, damages or fees incurred in connection with
any hedge or financing entered into or unwound by Buyer as a result of such
termination. Additionally:
15
(i) No Exit Fee will be payable for the early repurchase of
Purchased Loans resulting from (a) the sale of the underlying assets to Buyer,
or any of its Affiliates, (b) the sale of the underlying assets to Buyer, or any
of its Affiliates under a master repurchase agreement, or (c) the sale of the
underlying assets to a securitization vehicle for which Buyer, or any of its
Affiliates are acting in a lead manager role.
(ii) For the period from the Purchase Date through thirty
(30) months following the Purchase Date, should Purchased Loans amortize or pay
down, including prepayments in whole or in part, no Exit Fee will be payable in
connection with such pay-downs.
(iii) No Exit Fee will be payable in the event of any Margin
Call given by Buyer under Section 4(a) of this Agreement.
(iv) All other transactions which result in the reduction of
the Repurchase Price, or any other sales of Purchased Loans prior to the
Repurchase Date will be subject to payment of the Exit Fee.
Such notice shall set forth the Early Repurchase Date and shall identify with
particularity the Purchased Loans to be repurchased on such Early Repurchase
Date.
On the Repurchase Date or any Early Repurchase Date, termination
of the Transactions will be effected by transfer by Buyer to Seller or its agent
of the Purchased Loan(s) and any Income in respect thereof received by Buyer
(and not previously credited or transferred to, or applied to the obligations
of, Seller pursuant to Section 5 of this Agreement) against the simultaneous
transfer in immediately available funds of the Repurchase Price to an account
designated by Buyer. The transfer (and/or release of security interest) on the
Repurchase Date and/or Early Repurchase Date by Buyer to Seller of the Purchased
Loans shall be free and clear of all liens, encumbrances, security interests and
claims created by Buyer in and to the interest of Buyer or its Affiliates. Buyer
agrees upon receipt of the Repurchase Price to execute and deliver to Seller
from time to time upon Seller's request, all reassignments and other
documentation deemed reasonably appropriate by Seller to give effect to the
foregoing transfers (and/or release of security interest) of Purchased Loans
including, without limitation Form UCC-3 Termination Statements.
(f) In connection with each Transaction, Seller shall pay Buyer an
upfront amount on the Purchase Date equal to the product of (i) the Purchase
Price and (ii) the following amount: (A) if the Repurchase Date is more than six
months from the Purchase Date but on or prior to the date that is one year from
the Purchase date, 0.125%, (B) if the Repurchase Date is more than one year from
the Purchase Date but on or prior to the date that is two years from the
Purchase date, 0.25%, if the Repurchase Date is more than two years from the
Purchase Date but on or prior to the date that is three years from the Purchase
date, 0.375% (the "Purchase Fee").
(g) Upon demand by Buyer, Seller shall indemnify Buyer and hold
Buyer harmless from any net loss or expense (not to include any lost profit or
opportunity) (including, without limitation, reasonable attorneys' fees and
disbursements) which Buyer may sustain or incur as a consequence of (i) default
by Seller in terminating any Transaction after Seller has given a notice in
accordance with Section 3(e) of a termination of a Transaction, (ii) any payment
of the
16
Repurchase Price on any day other than a Remittance Date (including, without
limitation, any such loss or expense arising from the reemployment of funds
obtained by Buyer to maintain Transactions hereunder or from fees payable to
terminate the transactions from which such funds were obtained) or (iii) default
by Seller in selling Eligible Loans after Seller has notified Buyer of a
proposed Transaction and Buyer has agreed to purchase such Eligible Loans in
accordance with the provisions of this Agreement. A certificate as to such
costs, losses, damages and expenses, setting forth the calculations therefor
shall be submitted promptly by Buyer to Seller and shall be conclusive and
binding on Seller in the absence of manifest error.
(h) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof by any Governmental Authority or
compliance by Buyer with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority having
jurisdiction over Buyer made subsequent to the date hereof:
(i) shall subject Buyer to any tax of any kind
whatsoever with respect to the Transaction Documents, any
Purchased Loans or any Transaction, or change the basis of
taxation of payments to Buyer in respect thereof (except for
changes in the rate of tax on Buyer's overall net income);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for
the account of, advances, loans or other extensions of credit
by, or any other acquisition of funds by, any office of Buyer
which is not otherwise included in the determination of the
LIBOR hereunder; or
(iii) shall impose on Buyer any other condition;
and the result of any of the foregoing is to increase the cost to Buyer, by an
amount which Buyer deems to be material, of entering into, continuing or
maintaining Transactions or to reduce any amount receivable under the
Transaction Documents in respect thereof; then, in any such case, Seller shall
promptly pay Buyer, upon its demand, any additional amounts necessary to
compensate Buyer for such increased cost or reduced amount receivable. If Buyer
becomes entitled to claim any additional amounts pursuant to this Section 3(h),
it shall promptly notify Seller of the event by reason of which it has become so
entitled. A certificate as to the calculation of any additional amounts payable
pursuant to this subsection shall be submitted by Buyer to Seller and shall be
conclusive and binding upon Seller in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the repurchase by
Seller of any or all of the Purchased Loans.
(i) If Buyer shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by Buyer or any corporation
controlling Buyer with any request or directive regarding capital adequacy
(whether or not having the force of law) from any Governmental Authority made
subsequent to the date hereof does or shall have the effect of reducing the rate
of return on Buyer's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which Buyer or such corporation
could have achieved but for such adoption,
17
change or compliance (taking into consideration Buyer's or such corporation's
policies with respect to capital adequacy) by an amount deemed by Buyer to be
material, then from time to time, after submission by Buyer to Seller of a
written request therefor, Seller shall pay to Buyer such additional amount or
amounts as will compensate Buyer for such reduction. A certificate as to the
calculation of any additional amounts payable pursuant to this subsection shall
be submitted by Buyer to Seller and shall be conclusive and binding upon Seller
in the absence of manifest error. This covenant shall survive the termination of
this Agreement and the repurchase by Seller of any or all of the Purchased
Loans.
(i) Any provision hereof to the contrary notwithstanding,
Transactions entered into hereunder shall be at the sole discretion of Buyer.
Buyer is not required to enter into any Transaction and Buyer may, in its sole
discretion, reject for inclusion in any Transaction any Eligible Loans offered
for sale hereunder by Seller.
4. MARGIN MAINTENANCE
(a) If at any time the product of the aggregate Market Value of all
the Purchased Loans and the Buyer's Margin Ratio shall be less than the
aggregate outstanding Repurchase Price for such Purchased Loans (a "Margin
Deficit"), then Buyer may by notice to Seller (a "Margin Call") require Seller
within one (1) Business Day to transfer to Buyer (i) cash or (ii) additional
assets acceptable to Buyer in its sole and absolute discretion (such cash or
additional assets paid by Seller to Buyer are herein referred to as "Additional
Assets"), so that the sum of (a) cash plus (b) the product of (i) the aggregate
Market Value of the Purchased Loans and such Additional Assets (other than cash)
and (ii) the Buyer's Margin Ratio shall at least equal the aggregate outstanding
Repurchase Price. Seller's failure to cure any Margin Deficit as required by the
preceding sentence prior to expiration of the one (1) Business Day shall
constitute an Event of Default under the Transaction Documents and shall entitle
Buyer to exercise its remedies under Section 15 of this Agreement (including,
without limitation, the liquidation remedy provided for in Section 15(iv) of
this Agreement).
(b) If any Margin Call is given by Buyer under Section 4(a) of this
Agreement, Seller shall transfer Additional Assets as provided in Section 4(a)
by no later than one (1) Business Day after the giving of such notice. Notice
required pursuant to Section 4(a) of this Agreement may be given by any means,
including by telephone, telecopier or telegraphic transmission. The failure of
Buyer on any one or more occasions, to exercise its rights under Section 4(a) of
this Agreement shall not constitute a waiver of such default or change or alter
the terms and conditions to which this Agreement is subject or limit the right
of Buyer or Seller to do so at a later date. Buyer and Seller agree that any
failure or delay by Buyer to exercise its rights under Section 4(a) of this
Agreement shall not limit such party's rights under this Agreement or otherwise
existing by law or in any way create additional rights for such party.
(c) Any cash transferred to Buyer pursuant to Section 4(a) of this
Agreement shall be held by Buyer as though it were Additional Assets and, unless
Buyer shall otherwise consent, any such cash shall not reduce the Repurchase
Price.
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5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS
(a) The Collection Account shall be established at the Depository
concurrently with the execution and delivery of this Agreement by Seller and
Buyer. Buyer shall have sole dominion and control over the Collection Account.
All Income in respect of the Purchased Loans, as well as any payments in respect
of associated Hedging Transactions, shall be deposited directly into the
Collection Account by the related servicer and shall be remitted by the
Depository in accordance with the Depository Agreement and the applicable
provisions of Sections 5(b), 5(c), 5(d), 5(e), 5(f) and 15 of this Agreement.
Buyer and Seller shall direct the servicer in writing to remit all payments to
Depository until such time as Buyer directs the servicer otherwise.
(b) So long as no Event of Default shall have occurred and be
continuing, and no Margin Deficit exists with respect to the Purchased Loans,
all Income received by the Depository in respect of the Purchased Loans and the
associated Hedging Transactions during each Collection Period shall be applied
by the Depository on the related Remittance Date as follows:
(i) first, to remit to Buyer an amount equal to the
Price Differential which has accrued and is outstanding as of
such Remittance Date;
(ii) second, to remit to Buyer an amount equal to any
premium or accrued interest included in the Purchase Price for
the Purchased Loans;
(iii) third, with respect to each Purchased Loan, to
remit to Buyer an amount equal to the product of the Buyer's
Margin Ratio in respect of such Purchased Loan and the remaining
Income in respect of such Purchased Loan; and
(iv) fourth, to remit to Seller the remainder, if
any.
(c) If a Margin Deficit exists with respect to the Purchased Loans,
then until Seller cures such Margin Deficit and so long as no Event of Default
shall have occurred and be continuing, all Income received by the Depository in
respect of the Purchased Loans and the associated Hedging Transactions shall be
applied by the Depository on the Business Day next following the Business Day on
which such funds are deposited in the Collection Account as follows:
(i) first, to remit to Buyer an amount equal to the
Price Differential which has accrued and is outstanding in
respect of all of the Purchased Loans as of such Business Day;
(ii) second, to transfer cash to Buyer, so that the
cash plus the product of the aggregate Market Value of the
Purchased Loans (including any Additional Assets) and the
Buyer's Margin Ratio will at least equal the aggregate
outstanding Repurchase Price;
(iii) third, with respect to each Purchased Loan, to
remit to Buyer an amount equal to the product of the Buyer's
Margin Ratio in respect of such
19
Purchased Loan and the remaining Income in respect of such
Purchased Loan; and
(iii) fourth, to remit to Seller the remainder, if
any.
(d) If an Event of Default shall have occurred and be continuing,
all Income (including all Principal Payments) received by the Depository in
respect of the Purchased Loans and the associated Hedging Transactions shall be
applied by the Depository on the Business Day next following the Business Day on
which such funds are deposited in the Collection Account as follows:
(i) first, to remit to Buyer an amount equal to the
Price Differential which has accrued and is outstanding in
respect of all of the Purchased Loans as of such Business Day;
(ii) second, to make a payment to Buyer on account of
the Repurchase Price of the Purchased Loans until the Repurchase
Price for all of the Purchased Loans has been reduced to zero;
and
(iii) third, to remit to Buyer an amount equal to any
costs or expenses due and owing by Seller as of such Business
Day; and
(iv) fourth, to remit to Seller the remainder,
subject to (f) below.
(e) Any provisions contained herein notwithstanding, any principal
prepayments received by the Depository in respect of the Purchased Loans shall
be remitted to Buyer and held by Buyer as though such principal prepayments were
Additional Assets. Unless Buyer shall otherwise consent, any such principal
prepayments shall not be used to reduce the Repurchase Price until the next
succeeding Reset Date, when such prepayment shall be applied to reduce the
Repurchase Price.
(f) Buyer is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply (i) any and all
amounts held by Buyer and (ii) the outstanding amount permitted under Section
13(s) of this Agreement from time to time due to Seller from an Affiliate,
against any or all of the obligations of Seller now or hereafter existing under
this Agreement irrespective of whether or not Buyer shall have made any demand
under this Agreement (and without prior notice to Seller) and although such
obligations may be unmatured, whereupon such obligations owing by Buyer to
Seller shall, to the extent (and only to the extent) of such set off actually
made by Buyer, be discharged. The rights of Buyer under this Section are in
addition to other rights and remedies (including other rights of setoff) which
Buyer may have.
6. SECURITY INTEREST
Buyer and Seller intend that all Transactions hereunder be sales to
Buyer of the Purchased Loans and not loans from Buyer to Seller secured by the
Purchased Loans. However, in the event any such Transaction is deemed to be a
loan, Seller hereby pledges all of its right, title, and interest in, to and
under and grants a first priority lien on, and security interest in, all of
20
the following property, whether now owned or hereafter acquired, now existing or
hereafter created and wherever located (collectively, the "Collateral") to Buyer
to secure the payment and performance of all amounts or obligations owing to
Buyer pursuant to this Agreement and the related documents described herein:
(a) the Purchased Loans, Servicing Agreements, Servicing Records,
insurance relating to the Purchased Loans, and all "deposit
accounts" (as defined in the UCC, including, without limitation,
collection and escrow accounts) relating to the Purchased Loans;
(b) the Collection Account and all monies from time to time on
deposit in the Collection Account;
(c) all "general intangibles" (including "payment intangibles"),
"accounts," "chattel paper," "documents" and "instruments" as
defined in the UCC relating to or constituting any and all of
the foregoing;
(d) all "supporting obligations" and "letter of credit rights" as
defined in the UCC relating to or constituting any and all of
the foregoing; and
(e) all replacements, substitutions or distributions on or proceeds,
payments, Income and profits of, tort claims, insurance claims
and other rights to payments, and records (but excluding any
financial models or other proprietary information) and files
relating to any and all of any of the foregoing.
Buyer's security interest in the Collateral shall terminate only upon
termination of Seller's obligations under this Agreement and the documents
delivered in connection herewith and therewith. For purposes of the grant of the
security interest pursuant to this Section 6 of this Agreement, this Agreement
shall be deemed to constitute a security agreement under the Uniform Commercial
Code as in effect in any applicable jurisdiction (the "UCC"). Buyer shall have
all of the rights and may exercise all of the remedies of a secured creditor
under the UCC and the other laws of any applicable jurisdiction, including the
State of New York. In furtherance of the foregoing, (a) Seller, at its sole cost
and expense, shall cause to be filed in such locations as may be necessary to
perfect and maintain perfection and priority of the security interest granted
hereby, UCC-1 financing statements and continuation statements (collectively,
the "Filings"), and shall forward copies of such Filings to Buyer upon
completion thereof, and (b) Seller shall from time to time take such further
actions as may be reasonably requested by Buyer to maintain and continue the
perfection and priority of the security interest granted hereby (including
marking its records and files to evidence the interests granted to Buyer
hereunder).
7. PAYMENT, TRANSFER AND CUSTODY
(a) On the Purchase Date for each Transaction, ownership of the
Purchased Loans shall be transferred to Buyer or its designee (including the
Custodian) against the simultaneous transfer of the Purchase Price in
immediately available funds to an account of Seller specified in the
Confirmation relating to such Transaction. Buyer shall have the right to request
Seller to provide an officer's certificate of Seller with respect to any copy of
a document required to be delivered certifying that such represents a true and
correct copy of the original.
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(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 IV. In connection with each sale, transfer,
conveyance and assignment of a Purchased Loan, on or prior to each Purchase Date
with respect to such Purchased Loan, Seller shall deliver or cause to be
delivered and released to the Custodian the following original documents
(collectively, the "Purchased Loan File"), pertaining to each of the Purchased
Loans identified in the Custodial Delivery delivered therewith:
With respect to each Purchased Loan which is a Whole Loan or with
respect to a B Note a certified copy of the documents in (ii) through and
including (xxiii) below to the extent available to Seller:
(i) The original Mortgage Note bearing all
intervening endorsements, endorsed "Pay to the order of ______
without recourse" and signed in the name of the last endorsee
(the "Last Endorsee") by an authorized Person (in the event that
the Purchased Loan was acquired by the Last Endorsee in a
merger, the signature must be in the following form: "[Last
Endorsee], successor by merger to [name of predecessor]"; in the
event that the Purchased Loan was acquired or originated by the
Last Endorsee while doing business under another name, the
signature must be in the following form: "[Last Endorsee],
formerly known as [previous name]") or a lost note affidavit in
substantially the form of Exhibit F to the Custodial Agreement,
with a copy of the applicable Mortgage Note attached thereto.
(ii) A copy of any guarantee executed in connection
with the Mortgage Note (if any) thereof together with an
officer's certificate of Seller certifying that such represents
a true and correct copy of the original.
(iii) A copy of the Mortgage with evidence of
recording thereon, or a copy thereof together with an officer's
certificate of Seller certifying that such represents a true and
correct copy of the original and that such original has been
submitted for recordation in the appropriate governmental
recording office of the jurisdiction where the Mortgaged
Property is located.
(iv) Copies of all assumption, modification,
consolidation or extension agreements with evidence of recording
thereon, or copies thereof together with an officer's
certificate of Seller certifying that such represent true and
correct copies of the originals and that such originals have
each been submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the
Mortgaged Property is located.
(v) The original Assignment of Mortgage to Buyer or
its designee, or in blank, as Buyer requires, for each Purchased
Loan secured by a Mortgage, in form and substance acceptable for
recording and signed in the name of the Last Endorsee (in the
event that such Purchased Loan was acquired by the Last Endorsee
in a merger, the signature must be in the following form: "[Last
Endorsee], successor by merger to [name of predecessor]"; in the
event that such Purchased Loan was acquired or originated while
doing business under another
22
name, the signature must be in the following form: "[Last
Endorsee], formerly known as [previous name]").
(vi) Copies of all intervening assignments of
mortgage with evidence of recording thereon, or copies thereof
together with an officer's certificate of Seller certifying that
such represent true and correct copies of the originals and that
such originals have each been submitted for recordation in the
appropriate governmental recording office of the jurisdiction
where the Mortgaged Property is located.
(vii) Copies of any attorney's opinion of title and
abstract of title or the original mortgagee title insurance
policy, or if the original mortgagee title insurance policy has
not been issued, the irrevocable marked commitment to issue the
same together with an officer's certificate of Seller certifying
that such represent true and correct copies of the originals.
(viii) A copy of any security agreement, chattel
mortgage or equivalent document executed in connection with the
Purchased Loan.
(ix) A copy of any assignment of leases and rents, if
any, with evidence of recording thereon, or a copy thereof
together with an officer's certificate of Seller, certifying
that such copy represents a true and correct copy of the
original that has been submitted for recordation in the
appropriate governmental recording office of the jurisdiction
where the Mortgaged Property is located.
(x) Copies of all intervening assignments of
assignment of leases and rents, if any, or copies thereof, with
evidence of recording thereon.
(xi) A copy of the UCC-1 financing statements created
on and after the Original Purchase Date, certified as true and
correct by Seller, and all necessary UCC-3 continuation
statements created on and after the Original Purchase Date with
evidence of filing thereon or copies thereof certified by Seller
to have been sent for filing, and UCC-3 assignments from Seller
to Buyer or its designee, which UCC-3 assignments shall be in
form and substance acceptable for filing.
(xii) A copy of any environmental indemnity agreement
(if any).
(xiii) A copy of any omnibus assignment in blank (if
any).
(xiv) A copy of the disbursement letter from the
Mortgagor to the original mortgagee (if any).
(xv) A copy of the Mortgagor's certificate or title
affidavit (if any).
(xvi) A Survey (if any) as accepted by the title
company for issuance of the Title Policy and a copy of the Title
Policy.
(xvii) A copy of the Mortgagor's opinion of counsel (if
any).
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(xviii) A copy of any assignment of permits, contracts
and agreements (if any).
(xix) A copy of any assignment of any interest rate
cap agreement or other interest rate protection agreement
entered into by the Mortgagor or its affiliates, with the
counterparty's written consent to such assignment and agreement
not to amend or modify the underlying cap or other interest rate
protection agreement and to make all payments thereunder to
Buyer as assignee.
(xx) A copy of the fully executed Intercreditor
Agreement.
(xxi) A copy of any estoppel letter from the
Mortgagor.
(xxii) A copy of any executed servicing agreement.
(xxiii) A copy of the Purchase Agreement.
(xxiv) A copy of any loan agreement.
With respect to each Purchased Loan which is a Mezzanine Loan:
(i) The original Mezzanine Note signed in connection
with the Purchased Loan bearing all intervening endorsements,
endorsed "Pay to the order of _______ without recourse" and
signed in the name of the Last Endorsee by an authorized Person
(in the event that the Mezzanine Note was acquired by the Last
Endorsee in a merger, the signature must be in the following
form: "[Last Endorsee], successor by merger to [name of
predecessor]"; in the event that the Purchased Loan was acquired
or originated by the Last Endorsee while doing business under
another name, the signature must be in the following form:
"[Last Endorsee], formerly known as [previous name]") or a lost
note affiliate in substantially the form of Exhibit F to the
Custodial Agreement, with a copy of the applicable Mortgage Note
attached thereto.
(ii) The original of the loan agreement and the
guarantee, if any, executed in connection with the Purchased
Loan.
(iii) The original intercreditor or loan coordination
agreement, if any, executed in connection with the Purchased
Loan.
(iv) The original security agreement executed in
connection with the Purchased Loan.
(v) Copies of all documents relating to the
formation and organization of the borrower of such Purchased
Loan, together with all consents and resolutions delivered in
connection with such borrower's obtaining the Purchased Loan.
(vi) All other documents and instruments evidencing,
guaranteeing, insuring or otherwise constituting or modifying or
otherwise affecting such
24
Purchased Loan, or otherwise executed or delivered in connection
with, or otherwise relating to, such Purchased Loan, including
all documents establishing or implementing any lockbox pursuant
to which Seller is entitled to receive any payments from cash
flow of the underlying real property.
(vii) The assignment of Purchased Loan sufficient to
transfer to Buyer all of Seller's rights, title and interest in
and to the Purchased Loan.
(viii) A copy of the borrower's opinion of counsel (if
any).
(ix) A copy of the UCC-1 financing statements created
on and after the Original Purchase Date, certified as true and
correct by Seller, and all necessary UCC-3 continuation
statements with evidence of filing thereon or copies thereof
certified by Seller to have been sent for filing, and UCC-3
assignments from Seller to Buyer or its designee, which UCC-3
assignments shall be in form and substance acceptable for
filing.
(x) The pledge agreement and original certificates
representing the pledged equity interests (if any).
(xi) Stock powers relating to each pledged equity
interest, executed in blank, if an original stock certificate is
provided.
(xii) Assignment of any management agreements,
agreements among equity interest holders or other material
contracts.
(xiii) If no original stock certificate is provided,
evidence satisfactory to Buyer that the pledged ownership
interests have been transferred to, or otherwise made subject to
a first priority security interest in favor of, Seller.
(xiv) Copies of all loan documents and related closing
documents pertaining to the closing of the senior indebtedness
incurred or owed by the owner of the real property with respect
to which the borrower of the Mezzanine Loan has pledged its
ownership interests, whether directly or indirectly through
intermediate entities, including without limitation the
organizational documents of such owner.
(xv) An assignment of any interest rate cap agreement
or other interest rate protection agreement entered into by the
borrower under the Purchased Loan or its affiliates with respect
to the Purchased Loan, with the counterparty's written consent
to such assignment and agreement not to amend or modify the
underlying cap or other interest rate protection agreement and
to make all payments thereunder to Buyer as assignee.
(xvi) the original servicing agreement, if any,
executed in connection with the Purchased Loan.
(xvii) A copy of the Purchase Agreement.
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(xviii) A copy of the borrower's fee title insurance
policy in respect of the mezzanine loan and a certified copy of
the related Survey.
With respect to each Purchased Loan which is of the type described in
clause (iv) of the definition of Eligible Loan, any of the documentation
referred to above in this Section 7(b) of this Agreement which is reasonably
determined by Buyer to be necessary to effectuate the sale, transfer, conveyance
and assignment of such Purchased Loan.
In addition, with respect to each Purchased Loan, Seller shall deliver
an instruction letter from Seller to either the Mortgagor or the borrower under
such Purchased Loan or the servicer with respect to such Purchased Loan,
instructing the Mortgagor, the borrower or the servicer, as applicable, to remit
all sums required to be remitted to the holder of such Purchased Loan under the
loan documents to the Depository for deposit in the Collection Account or as
otherwise directed in a written notice signed by Seller and Buyer, if Buyer so
requires.
From time to time, Seller shall forward to the Custodian any original
documents or additional documents it may obtain evidencing any assumption,
modification, consolidation or extension of a Purchased Loan approved in
accordance with the terms of this Agreement, and upon receipt of any such other
documents, the Custodian shall hold such other documents as Buyer shall request
from time to time. With respect to any documents which have been delivered or
are being delivered to recording offices for recording and have not been
returned to Seller in time to permit their delivery hereunder at the time
required, in lieu of delivering such original documents, Seller shall deliver to
Buyer a true copy thereof with an officer's certificate certifying that such
copy is a true, correct and complete copy of the original, which has been
transmitted for recordation. Seller shall deliver such original documents to the
Custodian promptly when they are received. With respect to all of the Purchased
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 V attached hereto irrevocably appointing Buyer its attorney-in-fact with
full power to (i) complete and record the Assignment of Mortgage, (ii) complete
the endorsement of the Mortgage Note or Mezzanine Note and (iii) take such other
steps as may be necessary or desirable to enforce Buyer's rights against such
Purchased Loans and the related Purchased Loan Files and the Servicing Records.
Buyer shall deposit the Purchased Loan Files representing the Purchased Loans,
or direct that the Purchased Loan Files be deposited directly, with the
Custodian. The Purchased Loan Files shall be maintained in accordance with the
Custodial Agreement. Any Purchased Loan 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 Purchased Loan File and the originals of
the Purchased Loan File not delivered to Buyer or its designee. The possession
of the Purchased Loan File by Seller or its designee is at the will of Buyer for
the sole purpose of servicing the related Purchased Loan, and such retention and
possession by 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 Loan to Buyer. Seller or its designee (including the
Custodian) shall release its custody of the Purchased Loan File only in
accordance with written instructions from Buyer, unless such release is required
as incidental to the servicing of the Purchased Loans or is in connection with a
repurchase of any Purchased Loan by Seller.
26
(c) Unless an Event of Default shall have occurred and be
continuing, except as otherwise provided in Section 12(e) of this Agreement,
Buyer shall exercise all voting and corporate rights with respect to the
Purchased Loans in accordance with Seller's written instructions; provided,
however, that Buyer shall not be required to follow Seller's instructions
concerning any vote or corporate right if doing so would, in Buyer's good faith
business judgment, impair the Purchased Loans or be inconsistent with or result
in any violation of any provision of the Transaction Documents. Upon the
occurrence and during the continuation of an Event of Default, Buyer shall be
entitled to exercise all voting and corporate rights with respect to the
Purchased Loans without regard to Seller's instructions (including, but not
limited to, if an Act of Insolvency shall occur with respect to Seller, to the
extent Seller controls or is entitled to control selection of the special
servicer, Buyer may transfer such special servicing to an entity satisfactory to
Buyer).
(d) In the event that any portion of the Purchased Loans consists of
or is secured by a letter of credit, Seller shall promptly, and in any event
within two (2) Business Days after becoming a beneficiary thereunder, notify
Buyer thereof and enter into a tri-party agreement with Buyer and the issuer
and/or confirming bank with respect to the "letter-of-credit rights" (within the
meaning of the UCC) assigning such letter-of-credit rights to Buyer and
directing all payments thereunder to the Collection Account, all in form and
substance satisfactory to Buyer. In the event that any portion of the Purchased
Loans consists of "electronic chattel paper" (within the meaning of the UCC) or
"transferable records" (within the meaning of the Uniform Electronic
Transactions Act and the Electronic Signatures in Global and National Commerce
Act), Seller shall take all steps necessary to grant Buyer control thereof.
8. SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED LOANS
(a) Title to all Purchased Loans shall pass to Buyer in accordance
with this Agreement on the applicable Purchase Date, and Buyer shall have free
and unrestricted use of all Purchased Loans. Nothing in this Agreement, the
Intercreditor Agreement, or any other Transaction Document shall preclude Buyer
from engaging in repurchase or financing transactions with the Purchased Loans
or otherwise selling, transferring, pledging, repledging, hypothecating, or
rehypothecating the Purchased Loans, but no such transaction shall relieve Buyer
of its obligations to transfer the Purchased Loans to Seller pursuant to
Sections 3 or 11 of this Agreement or of Buyer's obligation to credit or pay
Income to, or apply Income to the obligations of, Seller pursuant to Section 5
hereof of this Agreement.
(b) Nothing contained in this Agreement or any other Transaction
Document shall obligate Buyer to segregate any Purchased Loans delivered to
Buyer by Seller. Notwithstanding anything to the contrary in this Agreement or
any other Transaction Document, no Purchased Loan shall remain in the custody of
Seller or an Affiliate of Seller.
9. SUBSTITUTION; SEGREGATION OF DOCUMENTS RELATING TO ELIGIBLE LOANS
(a) Substitution of Eligible Loans is subject to satisfaction of the
conditions to the acquisition of the related Purchased Loan and payment of the
Exit Fee in respect of the Purchased Loan for which substitution is being made.
27
(b) All documents relating to Purchased Loans in the possession of
Seller shall be segregated from other documents and securities in its possession
and shall be identified as being subject to this Agreement. Ownership of all
Purchased Loans shall pass to Buyer and nothing in this Agreement shall preclude
Buyer from engaging in repurchase or financing transactions with the Purchased
Loans or otherwise pledging or hypothecating the Purchased Loans, but no such
transaction shall relieve Buyer of its obligations to resell and transfer
Purchased Loans to Seller pursuant to the terms of this Agreement.
10. REPRESENTATIONS
(a) Buyer and Seller each represents and warrants, and shall on and
as of the Purchase Date of any Transaction be deemed to represent and warrant,
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
(or, if agreed in writing in advance of any Transaction by the
other party hereto, as agent for a disclosed principal);
(iii) the person signing this Agreement on its behalf
is duly authorized to do so on its behalf (or on behalf of any
such disclosed principal);
(iv) it has obtained all authorizations of any
governmental body required in connection with this Agreement and
the Transactions hereunder and such authorizations are in full
force and effect;
(v) the execution, delivery and performance of this
Agreement and the Transactions hereunder will not violate any
law, ordinance, charter, by-law or rule applicable to it or any
agreement by which it is bound or by which any of its assets are
affected; and
(vi) the person signing this Agreement on its behalf is
duly authorized to do so on its behalf (or on behalf of any
disclosed principal).
(b) Seller represents and warrants to Buyer that as of the Purchase
Date for the purchase of any Purchased Loans by Buyer from Seller and as of the
date of this Agreement and at all times while this Agreement and any Transaction
thereunder is in full force and effect:
(i) Organization. Seller is a Special-Purpose
Entity, duly organized, validly existing and in good standing
under the laws and regulations of the state of Seller's
organization and is duly licensed, qualified, and in good
standing in every state where such licensing or qualification is
necessary for the transaction of Seller's business. Seller has
the power to own and hold the assets it purports to own and
hold, and to carry on its business as now being conducted and
proposed
28
to be conducted, and has the power to execute, deliver, and
perform its obligations under this Agreement and the other
Transaction Documents.
(ii) Due Execution; Enforceability. The Transaction
Documents have been duly executed and delivered by Seller, for
good and valuable consideration. The Transaction Documents
constitute the legal, valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective
terms subject to bankruptcy, insolvency, and other limitations
on creditors' rights generally and to equitable principles.
(iii) Non-Contravention. Neither the execution and
delivery of the Transaction Documents, nor consummation by
Seller of the transactions contemplated by the Transaction
Documents (or any of them), nor compliance by Seller with the
terms, conditions and provisions of the Transaction Documents
(or any of them) will conflict with or result in a breach of any
of the terms, conditions or provisions of (i) the formation,
organizational or other governing documents of Seller, (ii) any
material contractual obligation to which Seller is now a party
or the rights under which have been assigned to Seller or the
obligations under which have been assumed by Seller or to which
the assets of Seller are subject or constitute a default
thereunder, or result thereunder in the creation or imposition
of any lien upon any of the assets of Seller, other than
pursuant to the Transaction Documents, (iii) any material
judgment or order, writ, injunction, decree or demand of any
court applicable to Seller, or (iv) any applicable Requirement
of Law. Seller has all necessary licenses, permits and other
consents from Governmental Authorities necessary to acquire, own
and sell the Purchased Loans and for the performance of its
obligations under the Transaction Documents.
(iv) Litigation: Requirements of Law. There is no
action, suit, proceeding, investigation, or arbitration pending
or, to the best knowledge of Seller, threatened against Seller
or any of their respective assets, nor is there any action,
suit, proceeding, investigation, or arbitration pending or
threatened against Seller which may result in any material
adverse change in the business, operations, financial condition,
properties, or assets of Seller, or which may have an adverse
effect on the validity of the Transaction Documents or the
Purchased Loans or any action taken or to be taken in connection
with the obligations of Seller under any of the Transaction
Documents. Seller is in compliance in all material respects with
all Requirements of Law. Seller is not in default in any
material respect with respect to any judgment, order, writ,
injunction, decree, rule or regulation of any arbitrator or
Governmental Authority.
(v) Good Title to Purchased Loans. Immediately prior
to the purchase of any Purchased Loans by Buyer from Seller,
such Purchased Loans are free and clear of any lien, encumbrance
or impediment to transfer (including any "adverse claim" as
defined in Section 8-102(a)(l) of the UCC), and Seller is the
record and beneficial owner of and has good and marketable title
to and the right to sell and transfer such Purchased Loans to
Buyer and, upon transfer of such Purchased Loans to Buyer, Buyer
shall be the owner of such Purchased Loans free of any
29
adverse claim created by Seller or its Affiliates. In the event
the related Transaction is recharacterized as a secured
financing of the Purchased Loans, the provisions of this
Agreement are effective to create in favor of Buyer a valid
security interest in all rights, title and interest of Seller
in, to and under the Purchased Loans and Buyer shall have a
valid, perfected first priority security interest in the
Purchased Loans.
(vi) No Default. No Default or Event of Default
exists under or with respect to the Transaction Documents.
(vii) Representations and Warranties Regarding
Purchased Loans; Delivery of Purchased Loan File. Seller
represents and warrants to Buyer that each Purchased Loan sold
hereunder and each pool of Purchased Loans sold in a Transaction
hereunder, as of each Purchase Date for a Transaction conform to
the applicable representations and warranties set forth in
Exhibit VI attached hereto, except as disclosed to Buyer in
writing prior to the related Purchase Date for the Transaction
in which such Purchased Loan is purchased by Buyer. It is
understood and agreed that the representations and warranties
set forth in Exhibit VI hereto, if any, shall survive delivery
of the respective Purchased Loan File to Buyer or its designee
(including the Custodian). With respect to each Purchased Loan,
the Mortgage Note or Mezzanine Note, the Mortgage (if any), the
Assignment of Mortgage (if any) and any other documents required
to be delivered under this Agreement and the Custodial Agreement
for such Purchased Loan have been delivered to Buyer or the
Custodian on its behalf. Seller or its designee is in possession
of a complete, true and accurate Purchased Loan File with
respect to each Purchased Loan, except for such documents the
originals of which have been delivered to the Custodian.
(viii) Adequate Capitalization: No Fraudulent Transfer.
Seller has, as of such Purchase Date, adequate capital for the
normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business
operations. Seller is generally able to pay, and as of the date
hereof is paying, its debts as they come due. Seller has not
become, or is presently, financially insolvent nor will Seller
be made insolvent by virtue of Seller's execution of or
performance under any of the Transaction Documents within the
meaning of the bankruptcy laws or the insolvency laws of any
jurisdiction. Seller has not entered into any Transaction
Document or any Transaction pursuant thereto in contemplation of
insolvency or with intent to hinder, delay or defraud any
creditor.
(ix) Consents. No consent, approval or other action
of, or filing by Seller with, any Governmental Authority or any
other Person is required to authorize, or is otherwise required
in connection with, the execution, delivery and performance of
any of the Transaction Documents (other than consents, approvals
and filings that have been obtained or made, as applicable).
30
(x) Ownership. Seller does not have any
stockholders, partner, members or other holders of ownership
interests other than as set forth on Exhibit XI attached hereto
is a true, complete and correct ownership chart for Seller.
(xi) Organizational Documents. Seller has delivered
to Buyer certified copies of its formation, organizational and
other governing documents, together with all amendments thereto.
(xii) No Encumbrances. There are (i) no outstanding
rights, options, warrants or agreements on the part of Seller
for a purchase, sale or issuance, in connection with the
Purchased Loans, and (ii) no agreements on the part of Seller to
issue, sell or distribute the Purchased Loans.
(xiii) Federal Regulations. Seller is not (A) an
"investment company," or a company "controlled by an investment
company," within the meaning of the Investment Company Act of
1940, as amended, or (B) a "holding company," or a "subsidiary
company of a holding company," or an "affiliate" of either a
"holding company" or a "subsidiary company of a holding
company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
(xiv) Taxes. Seller has filed or caused to be filed
all tax returns which to the knowledge of Seller would be
delinquent if they had not been filed on or before the date
hereof and has paid all taxes shown to be due and payable on or
before the date hereof on such returns or on any assessments
made against it or any of its property and all other taxes, fees
or other charges imposed on it and any of its assets by any
Governmental Authority; no tax liens have been filed against any
of Seller's assets and, to Seller's knowledge, no claims are
being asserted with respect to any such taxes, fees or other
charges.
(xv) ERISA. Seller does not have any Plans or any
ERISA Affiliates and makes no contributions to any Plans or any
Multiemployer Plans.
(xvi) Judgments/Bankruptcy. Except as disclosed in
writing to Buyer, there are no judgments in an amount in excess
of $250,000 against Seller unsatisfied of record or docketed in
any court located in the United States of America and no Act of
Insolvency has ever occurred with respect to Seller.
(xvii) Full and Accurate Disclosure. No information
contained in the Transaction Documents, or any written statement
furnished by or on behalf of Seller pursuant to the terms of the
Transaction Documents, 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
in light of the circumstances under which they were made.
(xviii) Financial Information. All financial data
concerning Seller and the Purchased Loans that has been
delivered by or on behalf of Seller to Buyer is true, complete
and correct in all material respects and has been prepared in
accordance with GAAP. Since the delivery of such data, except as
otherwise disclosed in
31
writing to Buyer, there has been no change in the financial
position of Seller or the Purchased Loans, or in the results of
operations of Seller, which change is reasonably likely to have
in a material adverse effect on Seller.
(xix) Place of Incorporation. Seller's place of
incorporation is the State of Delaware. The location where
Seller keeps its books and records, including all computer tapes
and records relating to the Eligible Loans, is the address set
forth in Section 16 of this Agreement.
(c) On the Purchase Date for any Transaction, Seller shall be deemed
to have made all of the representations set forth in Section 10(b) of this
Agreement as of such Purchase Date.
11. NEGATIVE COVENANTS OF SELLER
On and as of the date hereof and each Purchase Date and until this
Agreement is no longer in force with respect to any Transaction, Seller shall
not without the prior written consent of Buyer:
(a) take any action which would directly or indirectly impair or
adversely affect Buyer's title to or security interest in the Purchased Loans;
(b) transfer, assign, convey, grant, bargain, sell, set over,
deliver or otherwise dispose of, or pledge or hypothecate, directly or
indirectly, any interest in the Purchased Loans (or any of them) to any Person
other than Buyer, or engage in repurchase transactions or similar transactions
with respect to the Purchased Loans (or any of them) with any Person other than
Buyer;
(c) create, incur or permit to exist any lien, encumbrance or
security interest in or on the Purchased Loans, except as described in Section 6
of this Agreement;
(d) create, incur or permit to exist any lien, encumbrance or
security interest in or on any of the other Purchased Loans subject to the
security interest granted by Seller pursuant to Section 6 of this Agreement;
(e) modify or terminate any of the organizational documents of
Seller;
(f) allow any Change of Control;
(g) None of the Purchase Price for any Purchased Loan will be used
either directly or indirectly to acquire any security, as that term is defined
in Regulation T of the Regulations of the Board of Governors of the Federal
Reserve System, and Seller has not taken any action that might cause any
Transaction to violate any regulation of the Federal Reserve Board;
(h) after the occurrence and during the continuation of any Default
or Event of Default, make any distribution, payment on account of, or set apart
assets for any equity or ownership interest of Seller, or for a sinking or other
analogous fund for the purchase, redemption, defeasance, retirement or other
acquisition of any equity or ownership interest of Seller, whether now or
hereafter outstanding, or make any other distribution in respect to any
32
equity or ownership interest of Seller, either directly or indirectly, whether
in cash or property or in obligations of Seller; provided, that the foregoing
shall not restrict Seller from making distributions, from assets other than the
Purchased Loans, required to maintain Seller's status under the Code as a real
estate investment trust ("REIT") within the meaning of Section 856 through 860
of the Code, in the event Seller then qualifies as a REIT under the Code; or
(i) with respect to Purchased Loans, file a financing statement, or
an amendment or termination statement with respect to a financing statement,
except as approved by Buyer in each instance.
12. AFFIRMATIVE COVENANTS OF SELLER
(a) Seller shall promptly notify Buyer of any material adverse
change in its business operations and/or financial condition; provided, however,
that nothing in this Section 12 shall relieve Seller of its obligations under
this Agreement.
(b) Seller shall provide Buyer with copies of such documents as
Buyer may request evidencing the truthfulness of the representations set forth
in Section 10 of this Agreement.
(c) Seller (1) shall defend the right, title and interest of Buyer
in and to the Purchased Loans against, and take such other action as is
necessary to remove, the liens, security interests, claims and demands of all
Persons (other than security interests by or through Buyer) and (2) shall, at
Buyer's request, take all action reasonably necessary to ensure that Buyer will
have a first priority security interest in the Purchased Loans subject to any of
the Transactions in the event such Transactions are recharacterized as secured
financings.
(d) Seller shall notify Buyer and the Depository of the occurrence
of any Default or Event of Default with respect to Seller as soon as possible
but in no event later than one (1) Business Day after obtaining actual knowledge
of such event.
(e) To the extent that Seller is empowered to do so Seller shall
cause the special servicer rating of the special servicer with respect to all
mortgage loans underlying Purchased Loans to be no lower than "above average" by
Standard & Poor's.
(f) Seller shall promptly (and in any event not later than two (2)
Business Days following receipt) deliver to Buyer any other information with
respect to the Purchased Loans as may be reasonably requested by Buyer from time
to time.
(g) Seller will permit Buyer or its designated representative to
inspect Seller's records with respect to the Purchased Loans and the conduct and
operation of its business related thereto upon reasonable prior written notice
from Buyer or its designated representative, at such reasonable times and with
reasonable frequency, and to make copies of extracts of any and all thereof,
subject to the terms of any confidentiality agreement between Buyer and Seller.
(h) If Seller shall at any time become entitled to receive or shall
receive any rights, whether in addition to, in substitution of, as a conversion
of, or in exchange for the Purchased Loans, or otherwise in respect thereof,
Seller shall accept the same as Buyer's agent, hold the same in trust for Buyer
and deliver the same forthwith to Buyer in the exact form received, duly
33
endorsed by Seller to Buyer, if required, together with an undated bond power
covering such certificate duly executed in blank to be held by Buyer hereunder
as additional collateral security for the Transactions. If any sums of money or
property so paid or distributed in respect of the Purchased Loans shall be
received by Seller, to the extent otherwise required under this Agreement,
Seller shall, until such money or property is paid or delivered to Buyer, hold
such money or property in trust for Buyer, segregated from other funds of
Seller, as additional collateral security for the Transactions.
(i) At any time from time to time upon request of Buyer, at the sole
expense of Seller, Seller will promptly and duly execute and deliver such
further instruments and documents and take such further actions as Buyer may
reasonably request for the purposes of obtaining or preserving the full benefits
of this Agreement including the first priority security interest granted
hereunder and of the rights and powers herein granted (including, among other
things, filing such Uniform Commercial Code financing statements as Buyer may
reasonably request). If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory note, other
instrument, negotiable document, certificated security or chattel paper, such
note, instrument, document, security or chattel paper shall be immediately
delivered to Buyer, duly endorsed in a manner satisfactory to Buyer, to be held
as Collateral pursuant to this Agreement. Seller hereby irrevocably authorizes
Buyer at any time and from time to time to file in any filing office in any
jurisdiction any initial financing statements and amendments thereto that (1)
indicate the Collateral (i) as all of the Purchased Loans, regardless of whether
any particular asset comprised in the Collateral falls within the scope of
Article 9 of the UCC or such jurisdiction, or (ii) as being of an equal or
lesser scope or with greater detail, and (2) contain any other information
required by part 5 of Article 9 of the UCC for the sufficiency or filing office
acceptance of any financing statement or amendment, including (i) whether Seller
is an organization, the type of organization and any organization identification
number issued to Seller, and (ii) in the case of a financing statement filed as
a fixture filing or indicating Collateral as as-extracted collateral or timber
to be cut, a sufficient description of real property to which the Collateral
relates. Seller agrees to furnish any such information to Buyer promptly upon
request. Seller also ratifies its authorization for Buyer to have filed in any
jurisdiction any initial financing statements or amendments thereto if filed
prior to the date hereof.
(j) Seller shall provide Buyer with the following financial and
reporting information:
(i) As soon as available and in any event not later
than three (3) Business Days after the Parent Company files its
quarterly report on Form 10-Q with the SEC, a copy of the Parent
Company's unaudited consolidated statements of income and
statements of changes in cash flow for such quarter and balance
sheets as of the end of such quarter (which statements and
balance sheets shall separately break out the statements of
income and changes in cash flow and balance sheets of Seller),
in each case presented fairly in accordance with GAAP and
certified as being true and correct by an officer's certificate;
(ii) As soon as available and in any event not later
than three (3) Business Days after the Parent Company files its
annual report on Form 10-K with the SEC, a copy of the Parent
Company's audited consolidated statements of income and
statements of changes in cash flow for such year and balance
sheets
34
as of the end of such year (which statements and balance sheets
shall separately break out the statements of income and changes
in cash flow and balance sheets of Seller), 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;
(iii) As soon as available and in any event not later
than three (3) Business Days of the date the Parent Company
files its quarterly report on Form 10-Q with the SEC, an
officer's certificate from 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;
(iv) within 15 days after the last day of each
calendar month in any fiscal year, any and all property level
financial information with respect to the Purchased Loans that
is in the possession of Seller or an Affiliate, or such other
information as may be mutually determined and agreed upon in
writing by both Buyer and Seller, including, without limitation,
rent rolls and income statements; and
(v) (A) Within 15 days after each month end, a
monthly reporting package containing all information set forth
on Exhibit III attached hereto, and (B) within five (5) Business
Days of Seller's receipt, a copy of all financial and other
reporting information from time to time furnished to Seller by
the Mortgagors and/or other obligors pursuant to the applicable
Mortgage or other documents evidencing a Purchased Loan, or
furnished to Seller by a party to an Intercreditor Agreement.
(k) Seller shall at all times comply in all material respects with
all laws, ordinances, rules and regulations of any federal, state, municipal or
other public authority having jurisdiction over Seller or any of its assets and
Seller shall do or cause to be done all things reasonably necessary to preserve
and maintain in full force and effect its legal existence, and all licenses
material to its business.
(l) Seller shall at all times keep proper books of records and
accounts in which full, true and correct entries shall be made of its
transactions in accordance with GAAP and set aside on its books from its
earnings for each fiscal year all such proper reserves in accordance with GAAP.
(m) Seller shall observe, perform and satisfy all the terms,
provisions, covenants and conditions required to be observed, performed or
satisfied by it, and shall pay when due all costs, fees and expenses required to
be paid by it, under the Transaction Documents. Seller shall pay and discharge
all taxes, levies, liens and other charges on its assets and on the Purchased
Loans that, in each case, in any manner would create any lien or charge upon the
Purchased Loans, except for any such taxes as are being appropriately contested
in good faith by appropriate proceedings diligently conducted and with respect
to which adequate reserves have been provided in accordance with GAAP.
35
(n) Seller shall advise Buyer in writing of any change of its place
of incorporation and of any change in Seller's name or the places where the
books and records pertaining to the Purchased Loans are held not less than
fifteen (15) Business Days prior to taking any such action.
(o) Seller will maintain records with respect to the Purchased Loans
and the conduct and operation of its business with no less a degree of prudence
than if the Purchased Loans were held by Seller for its own account and will
furnish Buyer, upon request by Buyer or its designated representative, with
information reasonably obtainable by Seller with respect to the Purchased Loans
and the conduct and operation of its business.
(p) Seller shall notify Buyer in writing on the fifth (5th) Business
Day of each month of any intercompany transfers that occurred in the prior month
that resulted in the creation of, or an increase or decrease in the amount of,
the obligations of any Affiliate to Seller.
(q) Seller shall provide Buyer with access to operating statements,
the occupancy status and other property level information, with respect to the
Mortgaged Properties, plus any such additional reports as Buyer may reasonably
request.
(r) Seller hereby covenants and agrees that all interest and
original issue discount received or accrued with respect to the Purchased Loans
shall be treated as portfolio interest within the meaning of Sections 871(h) and
881(c) of the Internal Revenue Code, as amended, and no amount will be required
to be deducted from any remittance on the Purchased Loans on account of
withholding tax or otherwise.
13. SPECIAL PURPOSE ENTITY
Seller hereby represents and warrants to Buyer, and covenants with
Buyer, that as of the date hereof and so long as any of the Transaction
Documents shall remain in effect:
(a) It is and intends to remain solvent and it has paid and will pay
its debts and liabilities (including employment and overhead expenses), if any,
from its own assets as the same shall become due.
(b) It has complied and will comply with the provisions of its
formation, organizational and other governing documents as such documents may be
amended from time to time.
(c) It has done or caused to be done and will do all things
necessary to observe corporate formalities and to preserve its existence.
(d) It has maintained and will maintain all of its books, records,
financial statements and bank accounts separate from those of its Affiliates,
its shareholders and any other Person (except to the extent consolidation is
required under United States generally accepted accounting principles
consistently applied as in effect from time to time or as a matter of law) and
file its own tax returns (except to the extent consolidation is required or
permitted under applicable law).
36
(e) It has been, is and will be, and at all times will hold itself
out to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate), shall correct any known misunderstanding regarding
its status as a separate entity, shall conduct business in its own name and
shall not hold itself out or its Affiliates as a division or part of the other.
(f) It has not owned and will not own any property or any other
assets other than the Purchased Loans, loans made to its shareholder as
permitted under the terms of this Agreement, cash and its interest under any
associated Hedging Transactions, the Transaction Documents and any and all
agreements and documents in any way relating to the Purchased Loans and any such
loan made to its shareholder.
(g) It has not engaged and will not engage in any business other
than the acquisition, ownership, financing and disposition of Purchased Loans in
accordance with the applicable provisions of the Transaction Documents.
(h) It has not entered into, and will not enter into, any contract
or agreement with any of its Affiliates, except upon terms and conditions that
are intrinsically fair and substantially similar to those that would be
available on an arm's-length basis with Persons other than such Affiliate;
provided, however, that any loan made to its shareholder as permitted under and
in accordance with the terms of this Agreement shall be deemed to be made upon
terms and conditions that are intrinsically fair and similar to those that would
be available on a arm's-length basis.
(i) It has not incurred and will not incur any indebtedness or
obligation, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation), other than (A) obligations under the
Transaction Documents, (B) obligations under the agreements and documents
evidencing, securing or in any other way relating to the Purchased Loans, (C)
customary representations, warranties, indemnities and other agreements in
connection with the origination, acquisition, servicing, collection,
enforcement, financing, participation, securitization, sale or other disposition
of the Purchased Loans, (D) obligations under zoning and other governmental
regulations, rules, prohibitions and ordinances and proposed restrictions,
covenants, conditions, limitations, easements, rights-of-way and other matters
existing of public record or proposed to be recorded or filed in the future
governing or affecting mortgaged real property or that may otherwise require the
consent of or joinder by a mortgagee, and (E) unsecured trade payables, in an
aggregate amount not to exceed $100,000 at any one time outstanding, incurred in
the ordinary course of originating, acquiring, owning, servicing, collecting,
enforcing, selling, securitizing, financing and disposing of Purchased Loans;
provided, however, that any such trade payables incurred by Seller shall be paid
within 90 days of the date incurred.
(j) It has not made and will not make any loans or advances to any
other Person other than as described in this Section 13, other than Eligible
Loans which are part of the Purchased Loans, and shall not acquire obligations
or securities of any Affiliate or any other Person (other than Eligible Loans
which are part of the Purchased Loans).
(k) It will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations.
37
(l) It shall not, and shall not permit the Parent Company to, seek
its dissolution, liquidation or winding up, in whole or in part, or consent to
any Change of Control, or consolidate or merge with any other Person.
(m) It will not commingle its funds and other assets with those of
any of its Affiliates or any other Person.
(n) It has maintained and will maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any of its Affiliates or any other Person.
(o) It has not held and will not hold itself out to be responsible
for the debts or obligations of any other Person.
(p) It has not amended the provisions of its formation,
organizational and other governing documents, and shall inform Buyer of any
other amendment to such documents or its by laws.
(q) It shall, within 10 days of the filing of its formation,
organizational and other governing documents, elect, and thereafter maintain, an
Independent Director as a member of its board of directors.
(r) Except with the authorization and direction of its Independent
Director, it shall not take, and shall not consent to its shareholder taking any
of the following actions: (i) dissolve or liquidate, in whole or in part; (ii)
consolidate or merge with or into any other Person; or convey or transfer all or
substantially all of its properties and assets to any Person; or (iii) institute
any proceeding to be adjudicated as bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against it, or file a
petition or answer or consent seeking reorganization or relief under the federal
Bankruptcy Code or consent to the filing of any such petition or to the
appointment of a receiver, rehabilitator, conservator, liquidator, assignee,
trustee or sequestrator (or other similar official) of the Seller or its
shareholder or of any substantial part of its property, or ordering the winding
up or liquidation of its affairs, or make an assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as they
become due, or take any action in furtherance of any of the foregoing.
(s) It has not and will not enter into any transaction with an
Affiliate not in the ordinary course of the Seller's business; provided,
however, that any unsecured loan made by the Seller to the Parent Company shall
be deemed to be in the ordinary course of the Seller's business so long as such
loan is not in excess of the aggregate of any Income in respect of the Purchased
Loans which has been distributed to Seller pursuant to Section 5 herein. Any
such loans shall be subordinated to any obligations of Seller to Buyer.
In the event that a loan is made by Seller to the Parent Company, such
loan shall be immediately payable in full if either of the following events
shall occur:
(i) an Event of Default under this Agreement; or
38
(ii) a downgrade of the credit rating of the
long-term debt obligations or short-term debt obligations of LNR
Property Corporation.
Seller agrees to give Buyer prompt notice of any downgrade of the credit
rating of the long-term debt obligations or short-term debt obligations of LNR
Property Corporation.
(t) Not consent to the withdrawal of its shareholder as its sole
equity owner.
(u) It has and shall have no liabilities, contingent or otherwise,
other than those normal and incidental to the acquisition, origination,
ownership, management, servicing, administration, collection, enforcement,
financing, securitization, sale and disposition of the Purchased Loans.
(v) It has conducted and shall conduct its business consistent with
the requirements of being a Special-Purpose Entity.
(w) It shall not maintain any employees.
(x) Upon request by Buyer, it shall promptly amend its formation,
organizational and other governing documents to reflect the provisions of this
Section 13.
14. EVENTS OF DEFAULT; EVENT OF TERMINATION
(a) Each of the following shall constitute an "Event of Default"
under this Agreement:
(i) either (A) the Transaction Documents shall for
any reason not cause, or shall cease to cause, Buyer to be the
owner free of any adverse claim of any of the Purchased Loans,
or (B) if a Transaction is recharacterized as a secured
financing, the Transaction Documents with respect to any
Transaction shall for any reason cease to create a valid first
priority security interest in favor of Buyer in any of the
Purchased Loans;
(ii) in the event that Buyer or any of its Affiliates
is a party to any Hedging Transaction and a default or breach
occurs thereunder on the part of Seller or any of its Affiliates
which results in the early termination of such Hedging
Transaction or otherwise is not cured within the cure period for
such default or breach provided under the terms and conditions
of such Hedging Transaction;
(iii) failure of Buyer to receive no later than one
(1) Business Day following any Remittance Date the accreted
value of the Price Differential (less any amount of such Price
Differential previously paid by Seller to Buyer) (including,
without limitation, in the event the Income paid or distributed
on or in respect of the Purchased Loans is insufficient to make
such payment and Seller does not make such payment or cause such
payment to be made);
39
(iv) failure of Buyer to receive the Repurchase Price
for any Purchased Loans on the date the same is due under this
Agreement (whether on the Repurchase Date, Early Repurchase Date
or otherwise as provided herein);
(v) failure of Seller to make any other payment
(i.e., a payment of a type not specified in any other clause of
this Section 14) owing to Buyer which has become due, whether by
acceleration or otherwise under the terms of this Agreement
which failure is not remedied within the applicable period in
the case of a failure pursuant to Section 4 or three Business
Days in the case of any other such failure;
(vi) any governmental, regulatory, or self-regulatory
authority shall have taken any action to remove, limit,
restrict, suspend or terminate the rights, privileges, or
operations of Seller, which suspension has a material adverse
effect on the financial condition or business operations of
Seller, taken as a whole;
(vii) Buyer shall have determined, in the exercise of
its good faith business judgment, (A) that there has been a
material adverse change in the business, operations, corporate
structure or financial condition, creditworthiness or prospects,
taken as a whole, of Seller; (B) that Seller will not meet or
has breached any of its obligations under any Transaction
pursuant to any of the Transaction Documents; or (C) that a
material adverse change in the financial or legal condition of
Seller may occur due to the pendency or threatened pendency of a
material legal action against Seller;
(viii) a Change of Control or an Act of Insolvency
shall have occurred with respect to Seller;
(ix) any representation made by Seller hereunder
shall have been incorrect or untrue in any material respect when
made or repeated or deemed to have been made or repeated;
(x) a final judgment by any competent court in the
United States of America for the payment of money in an amount
greater than $250,000 shall have been rendered against Seller,
and remained undischarged or unpaid for a period of thirty (30)
days, during which period execution of such judgment is not
effectively stayed;
(xi) if Seller or Buyer shall breach or fail to
perform any of the terms, covenants, obligations or conditions
of this Agreement, other than as specifically otherwise referred
to in this definition of "Event of Default", and such breach or
failure to perform is not remedied within five (5) Business
Days;
(xii) Seller shall have defaulted or failed to perform
under any other note, indenture, loan agreement, guaranty, swap
agreement or any other contract, agreement or transaction to
which it is a party, which default (A) involves the failure to
pay a matured obligation in excess of $250,000, or (B) permits
the acceleration of the maturity of obligations by any other
party to or beneficiary of
40
such note, indenture, loan agreement, guaranty, swap agreement
or other contract agreement or transaction, or Seller shall
breach any covenant or condition, shall fail to perform, admits
its inability to perform or state its intention not to perform
its obligations under any Transaction or in respect of any
repurchase agreement, reverse repurchase agreement, securities
contract or derivative transaction with any party.
Notwithstanding anything to the contrary herein, for purposes of this Section
14(a), an Event of Default with respect to one Buyer shall not be an Event of
Default with respect to the other Buyer.
(b) At the option of Buyer, exercised by written notice to Seller,
in the event that the senior debt obligations or short-term debt obligations of
The Bear ▇▇▇▇▇▇▇ Companies Inc. shall be rated below the four highest generic
grades (without regard to any pluses or minuses reflecting gradations within
such generic grades) by any nationally recognized statistical rating
organization, Seller shall pay to Buyer the then outstanding Repurchase Price in
twelve (12) monthly installments, which shall be as equal in amount as possible.
In the event that there are less than twelve (12) months outstanding with
respect to a Transaction, Seller shall pay to Buyer 1/12 of the remaining
outstanding Repurchase Price on a monthly basis, with the entire balance paid
back to Buyer within twelve (12) months. In the event that Buyer delivers such
notice to Seller, Buyer shall not be required to enter into any Transactions
under this Agreement.
15. REMEDIES
If an Event of Default shall occur and be continuing with respect to
Seller, the following rights and remedies shall be 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, if it has not already
occurred, be deemed immediately to occur (the date on which such
option is exercised or deemed to have been exercised being
referred to hereinafter as the "Accelerated Repurchase Date").
(ii) If Buyer exercises or is deemed to have
exercised the option referred to in Section 15(i) of this
Agreement:
(A) Seller's obligations hereunder to
repurchase all Purchased Loans shall
become immediately due and payable on
and as of the Accelerated Repurchase
Date;
(B) to the extent permitted by applicable
law, the Repurchase Price with respect
to each Transaction (determined as of
the Accelerated Repurchase Date) shall
be the Price Differential prior to the
date of Seller's default plus - basis
points; and
41
(C) the Custodian shall, upon the request of
Buyer, deliver to Buyer all instruments,
certificates and other documents than
held by the Custodian relating to the
Purchased Loans.
(iii) Upon the occurrence of an Event of Default with
respect to Seller, Buyer may (A) immediately sell, at a public
or private sale at such price or prices as Buyer may deem
satisfactory any or all of the Purchased Loans or (B) in its
sole discretion elect, in lieu of selling all or a portion of
such Purchased Loans, to give Seller credit for such Purchased
Loans in an amount equal to the Market Value of such Purchased
Loans against the aggregate unpaid Repurchase Price for such
Purchased Loans and any other amounts owing by Seller under the
Transaction Documents. The proceeds of any disposition of
Purchased Loans effected pursuant to this Section 15(iii) shall
be applied, (w) first, to the costs and expenses incurred by
Buyer in connection with Seller's default; (x) second, to
consequential damages, including, but not limited to, costs of
cover and/or Hedging Transactions, if any; (y) third, to the
Repurchase Price; and (z) 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 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 Loans may not be liquid. In view of the nature of the
Purchased Loans, the parties agree that liquidation of a
Transaction or the Purchased 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 Loans, and
nothing contained herein shall (A) obligate Buyer to liquidate
any Purchased Loans on the occurrence and during the continuance
of an Event of Default or to liquidate all of the Purchased
Loans in the same manner or on the same Business Day or (B)
constitute a waiver of any right or remedy of Buyer.
(v) Seller shall be liable to Buyer for (A) the
amount of all expenses, including reasonable legal fees and
expenses, actually incurred by Buyer in connection with or as a
consequence of an Event of Default with respect to Seller, (B)
consequential damages, including, without limitation, all costs
incurred in connection with covering transactions or Hedging
Transactions, and (C) any other loss, damage, cost or expense
directly arising or resulting from the occurrence of an Event of
Default with respect to Seller.
(vi) Buyer shall have, in addition to its rights and
remedies under the Transaction Documents, all of the rights and
remedies provided by applicable federal, state, foreign, and
local laws (including, without limitation, if the Transactions
are recharacterized as secured financings, the rights and
remedies of a secured party under the UCC, to the extent that
the UCC is applicable, and the right to offset any mutual debt
and claim), in equity, and under any other agreement between
Buyer and Seller. Without limiting the generality of the
42
foregoing, Buyer shall be entitled to set off the proceeds of
the liquidation of the Purchased Loans against all of Seller's
or Seller's Affiliates obligations to Buyer, whether or not such
obligations are then due, without prejudice to Buyer's right to
recover any deficiency.
(vii) Buyer may exercise any or all of the remedies
available to Buyer immediately upon the occurrence of an Event
of Default and at any time during the continuance thereof. All
rights and remedies arising under the Transaction Documents, as
amended from time to time, are cumulative and not exclusive of
any other rights or remedies which Buyer may have.
(viii) 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, disposition of any
or all of the Purchased Loans, or from any other election 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.
(ix) To the extent that applicable law imposes duties
on Buyer to exercise remedies in a commercially reasonable
manner, Seller acknowledges and agrees that it is not
commercially unreasonable for Buyer (i) to fail to incur
expenses reasonably deemed significant by Buyer to prepare the
Purchased Loans for disposition or otherwise to complete raw
material or work in process into finished goods or other
finished products for disposition, (ii) to fail to obtain third
party consents for access to Purchased Loans to be disposed of,
or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or
disposition of the Purchased Loans to be collected or disposed
of, (iii) to fail to exercise collection remedies against
Persons obligated on the Purchased Loans or to remove liens on
or any adverse claims against the Purchased Loans, (iv) to
exercise collection remedies against Persons obligated on the
Purchased Loans directly or through the use of collection
agencies and other collection specialists, (v) to advertise
dispositions of the Purchased Loans through publications or
media of general circulation, whether or not the Purchased Loans
are of a specialized nature, (vi) to contact other Persons,
whether or not in the same business as Seller, for expressions
of interest in acquiring all or any portion of such Purchased
Loans, (vii) to hire one or more professional auctioneers to
assist in the disposition of the Purchased Loans, whether or not
the Purchased Loans are of a specialized nature, (viii) to
dispose of the Purchased Loans by utilizing internet sites that
provide for the auction of assets of the types included in the
Purchased Loans or that have the reasonable capacity of doing
so, or that match buyers and sellers of assets, (ix) to dispose
of assets in wholesale rather than retail markets, (x) to
disclaim disposition warranties, such as title, possession or
quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure Buyer against risks of loss, collection
or disposition of the Purchased Loans or to provide to Buyer a
guaranteed return from the collection or
43
disposition of the Purchased Loans, or (xii) to the extent
deemed appropriate by Buyer, to obtain the services of other
brokers, investment bankers, consultants and other professionals
to assist Buyer in the collection or disposition of any of the
Purchased Loans. Seller acknowledges that the purpose of this
Section 15(ix) is to provide non-exhaustive indications of what
actions or omissions by Buyer would not be commercially
unreasonable in Buyer's exercise of remedies against the
Purchased Loans and that other actions or omissions by Buyer
shall not be deemed commercially unreasonable solely on account
of not being indicated in this Section 15(ix). Without
limitation upon the foregoing, nothing contained in this Section
15(ix) shall be construed to grant any rights to Seller or to
impose any duties on Buyer that would not have been granted or
imposed by this Agreement or by applicable law in the absence of
this Section 15(ix).
(x) Buyer shall not be required to make any demand
upon, or pursue or exhaust any of its rights or remedies
against, Seller, any other obligor, guarantor, pledgor or any
other Person with respect to the payment of the obligations of
Seller hereunder or to pursue or exhaust any of its rights or
remedies with respect to any Purchased Loans therefor or any
direct or indirect guarantee thereof. Buyer shall not be
required to marshal the Purchased Loans or any guarantee of the
obligations of Seller hereunder or to resort to the Purchased
Loans or any such guarantee in any particular order, and all of
its rights hereunder or under any other document or instrument
executed in connection herewith shall be cumulative. To the
extent it may lawfully do so, Seller absolutely and irrevocably
waives and relinquishes the benefit and advantage of, and
covenants not to assert against Buyer, any valuation, stay,
appraisement, extension, redemption or similar laws and any and
all rights or defenses it may have as a surety now or hereafter
existing which, but for this provision, might be applicable to
the sale of any Purchased Loans made under the judgment, order
or decree of any court, or privately under the power of sale
conferred by this Agreement, or otherwise.
(xi) Seller hereby appoints Buyer as attorney-in-fact
of Seller for the purpose, after the occurrence and during the
continuance of an Event of Default, of carrying out the
provisions of this Agreement and taking any action and executing
or endorsing any instruments that Buyer may deem necessary or
advisable to accomplish the purposes hereof, which appointment
as attorney-in-fact is irrevocable and coupled with an interest
so long as any Transaction remains outstanding.
16. NOTICES AND OTHER COMMUNICATIONS
All notices, consents, approvals and requests required or permitted
hereunder shall be given in writing and shall be effective for all purposes if
hand delivered or sent by (a) hand delivery, with proof of attempted delivery,
(b) certified or registered United States mail, postage prepaid, (c) expedited
prepaid delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, or (d) by telecopier (with answerback
acknowledged) provided that such telecopied notice must also be delivered by one
of the means set forth in (a),
44
(b) or (c) above, to the address specified below or at such other address and
person as shall be designated from time to time by any party hereto, as the case
may be, in a written notice to the other parties hereto in the manner provided
for in this Section:
if to Buyer: Bear ▇▇▇▇▇▇▇ Commercial Mortgage, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Bear, ▇▇▇▇▇▇▇ Funding, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Seller: DSHI ▇▇▇▇▇, INC.
c/o LNR Property Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bilzin ▇▇▇▇▇▇▇ ▇▇▇▇▇ Price & ▇▇▇▇▇▇▇ LLP
2500 First Union Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
A notice shall be deemed to have been given: (a) in the case of hand
delivery, at the time of delivery, (b) in the case of registered or certified
mail, when delivered or the first attempted
45
delivery on a Business Day, (c) in the case of expedited prepaid delivery upon
the first attempted delivery on a Business Day, or (d) in the case of
telecopier, upon receipt of answerback confirmation, provided that such
telecopied notice was also delivered as required in this Section. A party
receiving a notice which does not comply with the technical requirements for
notice under this Section may elect to waive any deficiencies and treat the
notice as having been properly given.
17. NON-ASSIGNABILITY
(a) The rights and obligations of the parties under the Transaction
Documents and under any Transaction shall not be assigned by either party
without the prior written consent of the other party; provided, however, that
Buyer may assign its rights and obligations under the Transaction Documents
and/or under any Transaction, without the prior written consent of Seller.
(b) Buyer shall be entitled to issue one or more participation
interests with respect to any or all of the Transactions.
(c) Subject to the foregoing, the Transaction Documents and any
Transactions shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. Nothing in the Transaction
Documents, express or implied, shall give to any Person, other than the parties
to the Transaction Documents and their respective successors, any benefit or any
legal or equitable right, power, remedy or claim under the Transaction
Documents.
18. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
(a) This Agreement shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles thereof.
(b) Each party irrevocably and unconditionally (i) submits to the
non-exclusive jurisdiction of any United States Federal or New York State court
sitting in Manhattan, and any appellate court from any such court, solely for
the purpose of any suit, action or proceeding brought to enforce its obligations
under this Agreement or relating in any way to this Agreement or any Transaction
under this Agreement and (ii) waives, to the fullest extent it may effectively
do so, any defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on account of its
place of residence or domicile.
(c) Each party hereby irrevocably waives, to the fullest extent they
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding and irrevocably consent to the service of any
summons and complaint and any other process by the mailing of copies of such
process to them at their respective address specified herein. Each party hereby
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Section 18 shall affect the
right of Buyer to serve legal process in any other manner permitted by law or
affect the right of Buyer to bring any action or proceeding against Seller or
its property in the courts of other jurisdictions.
46
(d) EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR
DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.
19. NO RELIANCE
Each of Buyer and Seller hereby acknowledges, represents and warrants to
the other that, in connection with the negotiation of, the entering into, and
the performance under, the Transaction Documents and each Transaction
thereunder:
(a) It is not relying (for purposes of making any investment
decision or otherwise) upon any advice, counsel or representations (whether
written or oral) of the other party to the Transaction Documents, other than the
representations expressly set forth in the Transaction Documents.
(b) It has consulted with its own legal, regulatory, tax, business,
investment, financial and accounting advisors to the extent that it has deemed
necessary, and it has made its own investment, hedging and trading decisions
(including decisions regarding the suitability of any Transaction) based upon
its own judgment and upon any advice from such advisors as it has deemed
necessary and not upon any view expressed by the other party.
(c) It is a sophisticated and informed Person that has a full
understanding of all the terms, conditions and risks (economic and otherwise) of
the Transaction Documents and each Transaction thereunder and is capable of
assuming and willing to assume (financially and otherwise) those risks;
(d) It is entering into the Transaction Documents and each
Transaction thereunder for the purposes of managing its borrowings or
investments or hedging its underlying assets or liabilities and not for purposes
of speculation;
(e) It is not acting as a fiduciary or financial, investment or
commodity trading advisor for the other party and has not given the other party
(directly or indirectly through any other Person) any assurance, guaranty or
representation whatsoever as to the merits (either legal, regulatory, tax,
business, investment, financial, accounting or otherwise) of the Transaction
Documents or any Transaction thereunder.
20. INDEMNITY
Seller hereby agrees to indemnify Buyer, Buyer's designee and each of
its officers, directors, employees and agents ("Indemnified Parties") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, taxes (including stamp, excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Purchased Loans or in connection with any of the transactions contemplated by
this Agreement and the documents delivered in connection herewith, other than
income taxes of Buyer), fees, costs, expenses (including reasonable attorneys'
fees and disbursements) or disbursements (all of the foregoing, collectively
"Indemnified Amounts") which may at any time (including, without
47
limitation, such time as this Agreement shall no longer be in effect and the
Transactions shall have been repaid in full) be imposed on or asserted against
any Indemnified Party in any way whatsoever arising out of or in connection
with, or relating to, this Agreement or any Transactions thereunder or any
action taken or omitted to be taken by any Indemnified Party under or in
connection with any of the foregoing; provided that Seller shall not be liable
for Indemnified Amounts resulting from the gross negligence or willful
misconduct of any Indemnified Party or with respect to any Purchased Loan, for
or in connection with any matters arising from events which occurred prior to
the Original Purchase Date thereof. Without limiting the generality of the
foregoing, Seller agrees to hold Buyer harmless from and indemnify Buyer against
all Indemnified Amounts with respect to all Purchased Loans relating to or
arising out of any violation or alleged violation of any environmental law, rule
or regulation or any consumer credit laws, including without limitation ERISA,
the Truth in Lending Act and/or the Real Estate Settlement Procedures Act, that,
in each case, results after the Original Purchase Date from anything other than
Buyer's gross negligence or willful misconduct. In any suit, proceeding or
action brought by Buyer in connection with any Purchased Loan for any sum owing
thereunder, or to enforce any provisions of any Purchased Loan, Seller will
save, indemnify and hold Buyer harmless from and against all expense (including,
without limitation, reasonable attorneys' fees and expenses), loss or damage
suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by Seller of any obligation thereunder or arising out of
any other agreement, indebtedness or liability at any time after the Original
Purchase Date owing to or in favor of such account debtor or obligor or its
successors from Seller. Seller also agrees to reimburse Buyer as and when billed
by Buyer for all Buyer's costs and expenses incurred in connection with Buyer's
due diligence reviews with respect to the Purchased Loans (including, without
limitation, those incurred pursuant to Section 21) and the enforcement or the
preservation of Buyer's rights under this Agreement or any Transaction
contemplated hereby, including without limitation the reasonable fees and
disbursements of its counsel. Seller hereby acknowledges that, the obligation of
Seller hereunder is a recourse obligation of Seller.
21. DUE DILIGENCE
Seller acknowledges that Buyer has the right to perform continuing due
diligence reviews with respect to the Purchased Loans, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or otherwise, and Seller agrees that upon reasonable prior notice to
Seller, Buyer or its authorized representatives will be permitted during normal
business hours to examine, inspect, and make copies and extracts of, the
Purchased Loan Files, Servicing Records and any and all documents, records,
agreements, instruments or information relating to such Purchased Loans in the
possession or under the control of Seller, any other servicer or subservicer
and/or the Custodian. Seller also shall make available to Buyer a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Purchased Loan Files and the Purchased Loans. Without limiting
the generality of the foregoing, Seller acknowledges that Buyer may enter into
Transactions with Seller based solely upon the information provided by Seller to
Buyer and the representations, warranties and covenants contained herein, and
that Buyer, at its option, has the right at any time to conduct a partial or
complete due diligence review on some or all of the Purchased Loans. Buyer may
underwrite such Purchased Loans itself or engage a third party
48
underwriter to perform such underwriting. Seller agrees to reasonably cooperate
with Buyer and any third party underwriter in connection with such underwriting,
including, but not limited to, providing Buyer and any third party underwriter
with access to any and all documents, records, agreements, instruments or
information relating to such Purchased Loans in the possession, or under the
control, of Seller. Seller further agrees that Seller shall reimburse Buyer for
any and all out-of-pocket costs and expenses reasonably incurred by Buyer in
connection with Buyer's activities pursuant to this Section 21, including,
without limitation, reasonable attorneys' fees and expenses.
22. SERVICING
(a) Notwithstanding the purchase and sale of the Purchased Loans
hereby, Seller shall continue to cause the Purchased Loans to be serviced for
the benefit of Buyer and, if Buyer shall exercise its rights to pledge or
hypothecate the Purchased Loans prior to the Repurchase Date pursuant to Section
8, Buyer's assigns.
(b) Seller agrees that Buyer is the owner of all servicing records,
including but not limited to any and all servicing agreements (the "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 Loans (the "Servicing
Records") so long as the Purchased Loans are subject to this Agreement. Seller
grants Buyer a security interest in all servicing fees and rights of Seller
relating to the Purchased Loans and all Servicing Records to secure the
obligation of 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.
(c) Upon the occurrence and continuance of an Event of Default,
Buyer may, in its sole discretion, (i) sell its right to the Purchased Loans on
a servicing released basis or (ii) terminate Seller or any sub-servicer of the
Purchased 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
Loans without the prior written approval of Buyer. If the Purchased Loans are
serviced by a sub-servicer, Seller shall irrevocably assign all rights, title
and interest in the Servicing Agreements in the Purchased Loans to Buyer.
(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 it shall deposit all Income with respect to the Purchased
Loans in the Collection Account.
(f) To the extent permitted under the servicing agreement the
payment of servicing fees shall be subordinate to payment of amounts outstanding
under any Transaction and this Agreement.
(g) The servicer shall service and administer the Purchased Loans in
accordance with prudent commercial mortgage loan servicing standards and
procedures generally accepted in the commercial mortgage industry. Seller
acknowledges that Seller and any operating advisor or
49
special servicer designated by Seller shall be subject to the terms of any
applicable intercreditor agreements, loan coordination agreements, pooling and
servicing agreements or any similar agreements governing the rights of, and
limitations on, senior and subordinated lenders. Seller shall use its reasonable
best efforts to provide Buyer with notice of any modification agreement
(including modifications to the servicing standards and procedures)
simultaneously with entering into any agreement modifying the terms of a
Purchased Loan or the related servicing agreement; provided that Seller shall
provide Buyer with notice of such modification agreement no later than five (5)
Business Days after such modification agreement becomes effective. In the event
that (i) any such modification agreement is executed and is not satisfactory to
Buyer or (ii) Seller fails to give notice of such modification agreement to
Buyer, Buyer shall be entitled (with notice to Seller) to terminate the
Transaction affected by such Transaction under this Agreement and the Repurchase
Date shall be deemed to immediately occur for such Transactions; provided that
the related modification shall be material.
23. WIRE INSTRUCTIONS
(a) Any amounts to be transferred by Buyer to Seller hereunder shall
be sent by wire transfer in immediately available funds to the account of Seller
at:
Bank: Bank of America, National Association
Acct. No.: 1235913467
ABA #: ▇▇▇▇▇▇▇▇▇
(b) Any amounts to be transferred by Seller to Buyer hereunder shall
be sent by wire transfer in immediately available funds to the account of Buyer
at:
Bank: BankOne National Association/Bear ▇▇▇▇▇▇▇
ABA No.: 071 000 013
Acct. No.: 580-1230
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
(c) Amounts other than the Purchase Price for a Mortgage Loan
received after 3:00 p.m., New York City time, on any Business Day shall be
deemed to have been paid and received on the next succeeding Business Day.
24. CONFIDENTIALITY
Each of the parties acknowledges that this Agreement, the Custodial
Agreement and the terms of each Transaction are confidential in nature and each
such party agrees that, unless otherwise directed by a court or regulatory
entity of competent jurisdiction or as may be required by federal or state law
(which determination as to federal or state law shall be based upon written
advice of counsel), it shall limit the distribution of such documents and the
disclosure of such information to its officers, employees, attorneys,
accountants and agents as required in order to conduct its business with the
other parties hereto. Notwithstanding the foregoing, Buyer shall be permitted to
provide a copy of this Agreement and the Custodial Agreement, and shall be
permitted to describe the terms of each Transaction, in connection with the
re-hypothecation of the Eligible Loans. This Section shall not apply to
information which has entered the public
50
domain through means other than a breach of the foregoing covenant by the party
seeking to distribute such documents or which the other party has given written
permission to disclose.
Seller hereby acknowledges and agrees that any and all information
concerning Seller (the "Information") that is furnished by Seller to Buyer and
any of its affiliates may be used and relied upon by any other of Buyer's
Affiliates without any liability to Seller to the extent such information is
obtained by Buyer or an Affiliate from another of its Affiliates without any
liability to Seller, provided, however, that no Information will be used by a
Buyer or an Affiliate in violation of federal or state securities laws.
Seller further acknowledges and agrees that any confidentiality
agreement that may now or hereafter exist between Seller and Buyer or an
Affiliate shall not preclude the disclosure of any Information between or among
Buyer and any of its Affiliates.
25. SINGLE TRANSACTION
Buyer and Seller acknowledge that, and have entered hereunto and will
enter into each Transaction hereunder in consideration of and in reliance upon
the fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of 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.
26. 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. Without limitation on any of the foregoing, the failure to give
a notice pursuant to Section 4(a) hereof will not constitute a waiver of any
right to do so at a later date.
27. USE OF EMPLOYEE PLAN ASSETS
(a) If assets of an employee benefit plan subject to any provision
of the Employee Retirement Income Security Act of 1974 ("ERISA") are intended to
be used by either party hereto (the "Plan Party") in a Transaction, the Plan
Party shall so notify the other party prior to the Transaction. The Plan Party
shall represent in writing to the other party that the Transaction does not
constitute a prohibited transaction under ERISA or is otherwise exempt
therefrom, and the other party may proceed in reliance thereon but shall not be
required so to proceed.
51
(b) Subject to the last sentence of subsection (a) of this Section,
any such Transaction shall proceed only if Seller furnishes or has furnished to
Buyer its most recent available audited statement of its financial condition and
its most recent subsequent unaudited statement of its financial condition.
(c) By entering into a Transaction pursuant to this Section, Seller
shall be deemed (i) to represent to Buyer that since the date of Seller's latest
such financial statements, there has been no material adverse change in Seller's
financial condition which Seller has not disclosed to Buyer, and (ii) to agree
to provide Buyer with future audited and unaudited statements of its financial
condition as they are issued, so long as it is a Seller in any outstanding
Transaction involving a Plan Party.
28. MISCELLANEOUS
(a) Time is of the essence under the Transaction Documents and all
Transactions thereunder and all references to a time shall mean New York time in
effect on the date of the action unless otherwise expressly stated in the
Transaction Documents.
(b) All rights, remedies and powers of Buyer hereunder and in
connection herewith are irrevocable and cumulative, and not alternative or
exclusive, and shall be in addition to all other rights, remedies and powers of
Buyer whether under law, equity or agreement. In addition to the rights and
remedies granted to it in this Agreement, Buyer shall have all rights and
remedies of a secured party under the Uniform Commercial Code.
(c) The Transaction Documents 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
(d) The headings in the Transaction Documents are for convenience of
reference only and shall not affect the interpretation or construction of the
Transaction Documents.
(e) Without limiting the rights and remedies of Buyer under the
Transaction Documents, Seller shall pay Buyer's reasonable out-of-pocket costs
and expenses, including reasonable fees and expenses of accountants, attorneys
and advisors, incurred in connection with the preparation, negotiation,
execution and consummation of, and any amendment, supplement or modification to,
the Transaction Documents and the Transactions thereunder. Seller agrees to pay
Buyer on demand all costs and expenses (including reasonable expenses for legal
services of every kind) of any subsequent enforcement of any of the provisions
hereof, or of the performance by Buyer of any obligations of Seller in respect
of the Purchased Loans, or any actual or attempted sale, or any exchange,
enforcement, collection; compromise or settlement in respect of any of the
Eligible Loans and for the custody, care or preservation of the Eligible Loans
(including insurance costs) and defending or asserting rights and claims of
Buyer in respect thereof, by litigation or otherwise. In addition, Seller agrees
to pay Buyer on demand all reasonable costs and expenses (including reasonable
expenses for legal services) incurred in connection with the maintenance of the
Collection Account and registering the Eligible Loans in the name of Buyer or
its nominee. All such expenses shall be recourse obligations of Seller to Buyer
under this Agreement.
52
(f) Each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or be invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
(g) The parties acknowledge and agree that although they intend to
treat each Transaction as a sale of the Purchased Loans, in the event that such
sale shall be recharacterized as a secured financing, this Agreement shall also
serve as a security agreement with respect to Buyer's rights in the Collateral.
In order to secure and to provide for the prompt and unconditional repayment of
the Repurchase Price and the performance of its obligations under this
Agreement, Seller hereby pledges to Buyer and hereby grants to Buyer a first
priority security interest in all of its rights in the Purchased Loans. Buyer
may without Seller's execution, consent or approval, and Seller hereby covenants
that it shall at Buyer's request duly execute any Form UCC-1 financing
statements as may be required by Buyer in order to perfect its security interest
created hereby in such rights and obligations granted above, it being agreed
that Seller shall pay any and all fees required to file such financing
statements.
(h) This Agreement contains a final and complete integration of all
prior expressions by the parties with respect to the subject matter hereof and
thereof and shall constitute the entire agreement among the parties with respect
to such subject matter, superseding all prior oral or written understandings.
(i) The parties understand that this Agreement is a legally binding
agreement that may affect such party's rights. Each party represents to the
other that it has received legal advice from counsel of its choice regarding the
meaning and legal significance of this Agreement and that it is satisfied with
its legal counsel and the advice received from it.
(j) Should any provision of this Agreement require judicial
interpretation, it is agreed that a court interpreting or construing the same
shall not apply a presumption that the terms hereof shall be more strictly
construed against any Person by reason of the rule of construction that a
document is to be construed more strictly against the Person who itself or
through its agent prepared the same, it being agreed that all parties have
participated in the preparation of this Agreement.
(k) The parties recognize that each Transaction is a "securities
contract" as that term is defined in Section 741 of Title 11 of the United
States Code, as amended.
(l) Any notice, acknowledgment, statement or certificate (including,
without limitation, any Confirmation) given by Buyer to any Seller shall be
effective as, and shall be deemed to be, a notice, acknowledgment, statement or
certificate given to each and every Seller. Buyer may, without necessity of any
inquiry, rely solely upon any notice, acknowledgment, statement or certificate
of any of (1) any Seller or (2) any authorized representative of Seller set
forth on Exhibit II or otherwise designated by any Seller from time to time, as
constituting the joint and several statement and certificate of each and every
Seller fully authorized by each and every Seller. Any disbursements of funds to
Seller provided for in Section 5 of this Agreement
53
or otherwise in this Agreement or the Transaction Documents shall be deemed
properly made to Seller if disbursed to any Seller or its designee.
(m) In all instances, in the event BSCMI and BSFI agree, in their
sole discretion, to enter into Transactions under this Agreement, BSCMI's and
BSFI's obligations under such Transactions shall be several and not joint and
shall be limited, in each case, to the respective Purchased Loans purchased by
each of BSCMI and BSFI in connection with such Transactions.
29. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a
broker or dealer registered with the Securities and Exchange Commission ("SEC")
under Section 15 of the Securities Exchange Act of 1934 ("1934 Act"), the
Securities Investor Protection Corporation has taken the position that the
provisions of the Securities Investor Protection Act of 1970 ("SIPA") do not
protect the other party with respect to any Transaction hereunder;
(b) in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer registered with
the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to
the other party with respect to any Transaction hereunder; and
(c) in the case of Transactions in which one of the parties is a
financial institution, funds held by the financial institution pursuant to a
Transaction hereunder are not a deposit and therefore are not insured by the
Federal Deposit Insurance Corporation or the National Credit Union Share
Insurance Fund, as applicable.
54
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
12th day of February 2003.
BUYER:
BEAR ▇▇▇▇▇▇▇ COMMERCIAL MORTGAGE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------------
Title: Managing Director
BEAR, ▇▇▇▇▇▇▇ FUNDING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------------
Title: Managing Director
SELLER:
DSHI ▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Title: Vice President