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EXHIBIT 10.3
MASTER REPURCHASE AGREEMENT
September 1996 Version
Dated as of October 31, 1997
Between:
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE CAPITAL INC.
and
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT CORPORATION
and
PACIFICAMERICA SECURITIES, INC.
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in
which one party ("Seller") agrees to transfer to the other ("Buyer")
securities or other assets ("Securities") against the transfer of funds
by Buyer, with a simultaneous agreement by Buyer to transfer to Seller
such Securities 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, unless otherwise agreed in writing, shall be
governed by this Agreement, including any supplemental terms or
conditions contained in Annex I hereto and in any other annexes
identified herein or therein as applicable hereunder.
2. DEFINITIONS
(a) "Act of Insolvency", with respect to any party, (i) the
commencement by such party as debtor of any case or proceeding
under any bankruptcy, insolvency, reorganization, liquidation,
moratorium dissolution, delinquency or similar law, or such
party seeking the appointment or election of a receiver,
conservator, trustee, custodian or similar official for such
party or any substantial part of its property, or the
convening of any meeting of creditors for purposes of
commencing any such case or proceeding or seeking such an
appointment or election, (ii) the commencement of any such
case or proceeding against such party, or another seeking such
an appointment or election, or the filing against a party of
an application for a protective decree under the provisions of
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 or election, the issuance of such a protective
decree or the entry of an order having a similar effect, or
(C) is not dismissed within 15 days,
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(iii) the making by such party of a general assignment for the
benefit of creditors, or (iv) the admission in writing by such
party of such party's inability to pay such party's debts as
they become due;
(b) "Additional Purchased Securities", Securities provided by
Seller to Buyer pursuant to Paragraph 4(a) hereof;
(c) "Buyer's Margin Amount", with respect to any Transaction as of
any date, the amount obtained by application of the Buyer's
Margin Percentage to the Repurchase Price for such Transaction
as of such date;
(d) "Buyer's Margin Percentage", with respect to any Transaction
as of any date, a percentage (which may be equal to the
Seller's Margin Percentage) agreed to by Buyer and Seller or,
in the absence of any such agreement, the percentage obtained
by dividing the Market Value of the Purchased Securities on
the Purchase Date by the Purchase Price on the Purchase Date
for such Transaction;
(e) "Confirmation", the meaning specified in Paragraph 3(b)
hereof,
(f) "Income", with respect to any Security at any time, any
principal thereof and all interest, dividends or other
distributions thereon,
(g) "Margin Deficit", the meaning specified in Paragraph 4(a)
hereof,
(h) "Margin Excess", the meaning specified in Paragraph 4(b)
hereof,
(i) "Margin Notice Deadline", the time agreed to by the parties in
the relevant Confirmation, Annex I hereto or otherwise as the
deadline for giving notice requiring same-day satisfaction of
margin maintenance obligations as provided in Paragraph 4
hereof (or, in the absence of any such agreement, the deadline
for such purposes established in accordance with market
practice);
(j) "Market Value", with respect to any Securities as of any date,
the price for such Securities on such date obtained from a
generally recognized source agreed to by the parties or the
most recent closing bid quotation from such a source, plus
accrued Income to the extent not included therein (other than
any Income credited or transferred to, or applied to the
obligations of, Seller pursuant to Paragraph 5 hereof) as of
such date (unless contrary to market practice for such
Securities);
(k) "Price Differential", 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 Purchase Price
for such Transaction on a 360-day-per-year basis for the
actual number of days during the period commencing on (and
including) the Purchase Date for such Transaction and ending
on (but excluding)
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the date of determination (reduced by any amount of such Price
Differential previously paid by Seller to Buyer with respect
to such Transaction);
(l) "Pricing Rate", the per annum percentage rate for
determination of the Price Differential;
(m) "Prime Rate", the prime rate of U.S. commercial banks as
published in The Wall Street journal (or, if more than one
such rate is published, the average of such rates);
(n) "Purchase Date", the date on which Purchased Securities are to
be transferred by Seller to Buyer;
(o) "Purchase Price", (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and
(ii) thereafter, except where Buyer and Seller agree
otherwise, such price increased by the amount of any cash
transferred by Buyer to Seller pursuant to Paragraph 4(b)
hereof and decreased by the amount of any cash transferred by
Seller to Buyer pursuant to Paragraph 4(a) hereof or applied
to reduce Seller's obligations under clause (ii) of Paragraph
5 hereof;
(p) "Purchased Securities", the Securities transferred by Seller
to Buyer in a Transaction hereunder, and any Securities
substituted therefor in accordance with Paragraph 9 hereof.
The term "Purchased Securities" with respect to any
Transaction at any time also shall include Additional
Purchased Securities delivered pursuant to Paragraph 4(a)
hereof and shall exclude Securities returned pursuant to
Paragraph 4(b) hereof,
(q) "Repurchase Date", the date on which Seller is to repurchase
the Purchased Securities from Buyer, including any date
determined by application of the provisions of Paragraph 3(c)
or 11 hereof;
(r) "Repurchase Price", the price at which Purchased Securities
are to be transferred from Buyer to Seller upon termination of
a Transaction which will be determined in each case (including
Transactions terminable upon demand) as the sum of the
Purchase Price and the Price Differential as of the date of
such determination;
(s) "Seller's Margin Amount", with respect to any Transaction as
of any date, the amount obtained by application of the
Seller's Margin Percentage to the Repurchase Price for such
Transaction as of such date;
(t) "Seller's Margin Percentage", with respect to any Transaction
as of any date, a percentage (which may be equal to the
Buyer's Margin Percentage) agreed to by Buyer and Seller or,
in the absence of any such agreement, the percentage
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obtained by dividing the Market Value of the Purchased
Securities on the Purchase Date by the Purchase Price on the
Purchase Date for such Transaction.
3. Initiation; Confirmation; Termination
(a) An agreement to enter into a Transaction may be made orally or
in writing at the initiation of either Buyer or Seller. On the
Purchase Date for the Transaction, the Purchased Securities
shall be transferred to Buyer or its agent against the
transfer of the Purchase Price to an account of Seller.
(b) Upon agreeing to enter into a Transaction hereunder, Buyer or
Seller (or both), as shall be agreed, shall promptly deliver
to the other party a written confirmation of each Transaction
(a "Confirmation"). The Confirmation shall describe the
Purchased Securities (including CUSIP number, if any),
identify Buyer and Seller and set forth (i) the Purchase Date,
(ii) the Purchase Price, (iii) the Repurchase Date, unless the
Transaction is to be terminable on demand, (iv) the Pricing
Rate or Repurchase Price applicable to the Transaction, and
(v) any additional terms or conditions of the Transaction not
inconsistent with this Agreement. The Confirmation, together
with this Agreement, shall constitute conclusive evidence of
the terms agreed between Buyer and Seller with respect to the
Transaction to which the Confirmation relates, unless with
respect to the Confirmation specific objection is made
promptly after receipt thereof. In the event of any conflict
between the terms of such Confirmation and this Agreement,
this Agreement shall prevail.
(c) In the case of Transactions terminable upon demand, such
demand shall be made by Buyer or Seller, no later than such
time as is customary in accordance with market practice, by
telephone or otherwise on or prior to the business day on
which such termination will be effective. On the date
specified in such demand, or on the date fixed for termination
in the case of Transactions having a fixed term, termination
of the Transaction will be effected by transfer to Seller or
its agent of the Purchased Securities 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 Paragraph 5 hereof) against the transfer of the
Repurchase Price to an account of Buyer.
4. MARGIN MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased
Securities subject to all Transactions in which a particular
party hereto is acting as Buyer is less than the aggregate
Buyer's Margin Amount for all such Transactions (a "Margin
Deficit"), then Buyer may by notice to Seller require Seller
in such Transactions, at Seller's option, to transfer to Buyer
cash or additional Securities reasonably acceptable to Buyer
("Additional Purchased Securities"), so that the cash and
aggregate Market Value of the Purchased Securities,
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including any such Additional Purchased Securities, will
thereupon equal or exceed such aggregate Buyer's Margin Amount
(decreased by the amount of any Margin Deficit as of such date
arising from any Transactions in which such Buyer is acting as
Seller).
(b) If at any time the aggregate Market Value of all Purchased
Securities subject to all Transactions in which a particular
party hereto is acting as Seller exceeds the aggregate
Seller's Margin Amount for all such Transactions at such time
(a "Margin Excess"), then Seller may by notice to Buyer
require Buyer in such Transactions, at Buyer's option, to
transfer cash or Purchased Securities to Seller, so that the
aggregate Market Value of the Purchased Securities, after
deduction of any such cash or any Purchased Securities so
transferred, will thereupon not exceed such aggregate Seller's
Margin Amount (increased by the amount of any Margin Excess as
of such date arising from any Transactions in which such
Seller is acting as Buyer).
(c) If any notice is given by Buyer or Seller under subparagraph
(a) or (b) of this Paragraph at or before the Margin Notice
Deadline on any business day, the party receiving such notice
shall transfer cash or Additional Purchased Securities as
provided in such subparagraph no later than the close of
business in the relevant market on such day. If any such
notice is given after the Margin Notice Deadline, the party
receiving such notice shall transfer such cash or Securities
no later than the close of business in the relevant market on
the next business day following such notice.
(d) Any cash transferred pursuant to this Paragraph shall be
attributed to such Transactions as shall be agreed upon by
Buyer and Seller.
(e) Seller and Buyer may agree, with respect to any or all
Transactions hereunder, that the respective rights of Buyer or
Seller (or both) under subparagraphs (a) and (b) of this
Paragraph may be exercised only where a Margin Deficit or a
Margin Excess, as the case may be, exceeds a specified dollar
amount or a specified percentage of the Repurchase Prices for
such Transactions (which amount or percentage shall be agreed
to by Buyer and Seller prior to entering into any such
Transactions).
(f) Seller and Buyer may agree, with respect to any or all
Transactions hereunder, that the respective rights of Buyer
and Seller under subparagraphs (a) and (b) of this Paragraph
to require the elimination of a Margin Deficit or a Margin
Excess, as the case may be, may be exercised whenever such a
Margin Deficit or a Margin Excess exists with respect to any
single Transaction hereunder (calculated without regard to
any other Transaction outstanding under this Agreement).
5. INCOME PAYMENTS
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Seller shall be entitled to receive an amount equal to all Income paid
or distributed on or in respect of the Securities that is not otherwise
received by Seller, to the full extent it would be so entitled if the
Securities had not been sold to Buyer. Buyer shall, as the parties may
agree with respect to any Transaction (or, in the absence of any such
agreement, as Buyer shall reasonably determine in its discretion), on
the date such Income is paid or distributed either (i) transfer to or
credit to the account of Seller such Income with respect to any
Purchased Securities subject to such Transaction or (ii) with respect
to Income paid in cash, apply the Income payment or payments to reduce
the amount, if any, to be transferred to Buyer by Seller upon
termination of such Transaction. Buyer shall not be obligated to take
any action pursuant to the preceding sentence (A) to the extent that
such action would result in the creation of a Margin Deficit, unless
prior thereto or simultaneously therewith Seller transfers to Buyer
cash or Additional Purchased Securities sufficient to eliminate such
Margin Deficit, or (B) if an Event of Default with respect to Seller
has occurred and is then continuing at the time such Income is paid or
distributed.
6. SECURITY INTEREST
Although the parties intend that all Transactions hereunder be sales
and purchases and not loans, in the event any such Transactions are
deemed to be loans, Seller shall be deemed to have pledged to Buyer as
security for the performance by Seller of its obligations under each
such Transaction, and shall be deemed to have granted to Buyer a
security interest in, all of the Purchased Securities with respect to
all Transactions hereunder and all Income thereon and other proceeds
thereof.
7. PAYMENT AND TRANSFER
Unless otherwise mutually agreed, all transfers of funds hereunder
shall be in immediately available funds. All Securities transferred by
one party hereto to the other Party (i) shall be in suitable form for
transfer or shall be accompanied by duly executed instruments of
transfer or assignment in blank and such other documentation as the
party receiving possession may reasonably request, (ii) shall be
transferred on the book-entry system of a Federal Reserve Bank, or
(iii) shall be transferred by any other method mutually acceptable to
Seller and Buyer.
8. SEGREGATION OF PURCHASED SECURITIES
To the extent required by applicable law, all Purchased Securities in
the possession of Seller shall be segregated from other securities in
its possession and shall be identified as subject to this Agreement.
Segregation may be accomplished by appropriate identification on the
books and records of the holder, including a financial or securities
intermediary or a clearing corporation. All of Seller's interest in the
Purchased Securities shall pass to Buyer on the Purchase Date and,
unless otherwise agreed by Buyer and Seller, nothing in this Agreement
shall preclude Buyer from engaging in repurchase transactions with the
Purchased Securities or otherwise selling, transferring,
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pledging or hypothecating the Purchased Securities, but no such
transaction shall relieve Buyer of its obligations to transfer
Purchased Securities to Seller pursuant to Paragraph 3, 4 or 11 hereof,
or of Buyer's obligation to credit or pay Income to, or apply Income to
the obligations of, Seller pursuant to Paragraph 5 hereof.
REQUIRED DISCLOSURE FOR TRANSACTIONS IN WHICH THE SELLER RETAINS
CUSTODY OF THE PURCHASED SECURITIES
Seller is not permitted to substitute other securities for
those subject to this Agreement and therefore must keep
Buyer's securities segregated at all times, unless in this
Agreement Buyer grants Seller the right to substitute other
securities. If Buyer grants the right to substitute, this
means that Buyer's securities will likely be commingled with
Seller's own securities during the trading day. Buyer is
advised that, during any trading day that Buyer's securities
are commingled with Seller's securities, they [will]* [may]**
be subject to liens granted by Seller to [its clearing bank]*
[third parties]** and may be used by Seller for deliveries on
other securities transactions. Whenever the securities are
commingled, Seller's ability to resegregate substitute
securities for Buyer will be subject to Seller's ability to
satisfy [the clearing]* [any]** lien or to obtain substitute
securities.
*Language to be used under 17 C.F.R. Section403.4(e) if Seller is a
government securities broker or dealer other than a financial
institution.
**Language to be used under 17 C.F.R. Section403.5(d) if Seller is a
financial institution.
9. SUBSTITUTION
(a) Seller may, subject to agreement with and acceptance by Buyer,
substitute other Securities for any Purchased Securities. Such
substitution shall be made by transfer to Buyer of such other
Securities and transfer to Seller of such Purchased
Securities. After substitution, the substituted Securities
shall be deemed to be Purchased Securities.
(b) In Transactions in which Seller retains custody of Purchased
Securities, the parties expressly agree that Buyer shall be
deemed, for purposes of subparagraph (a) of this Paragraph, to
have agreed to and accepted in this Agreement substitution by
Seller of other Securities for Purchased Securities; provided,
however, that such other Securities shall have a Market Value
at least equal to the Market Value of the Purchased securities
for which they are substituted.
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10. REPRESENTATIONS
Each of Buyer and Seller represents and warrants to the other flat (i)
it is duly authorized to execute and deliver this Agreement, to enter
into Transactions contemplated hereunder and to perform its obligations
hereunder and has taken all necessary action to authorize such
execution, delivery and performance, (ii) it will engage in such
Transactions as principal (or, if agreed in writing, in the form of an
annex hereto or otherwise, 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 and (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. On the Purchase Date for any Transaction
Buyer and Seller shall each be deemed to repeat all the foregoing
representations made by it.
11. EVENTS OF DEFAULT
In the event that (i) Seller fails to transfer or Buyer fails to
purchase Purchased Securities upon the applicable Purchase Date, (ii)
Seller fails to repurchase or Buyer fails to transfer Purchased
Securities upon the applicable Repurchase Date, (iii) Seller or Buyer
fails to comply with Paragraph 4 hereof, (iv) Buyer fails, after one
business day's notice, to comply with Paragraph 5 hereof, (v) an Act of
Insolvency occurs with respect to Seller or Buyer, (vi) any
representation made by Seller or Buyer shall have been incorrect or
untrue in any material respect when made or repeated or deemed to have
been made or repeated, or (vii) Seller or Buyer shall admit to the
other its inability to, or its intention not to, perform any of its
obligations hereunder (each an "Event of Default"):
(a) The nondefaulting party may, at its option (which option shall
be deemed to have been exercised immediately upon the
occurrence of an Act of Insolvency), declare an Event of
Default to have occurred hereunder and, upon the exercise or
deemed exercise of such option, the Repurchase Date for each
Transaction hereunder shall, if it has not already occurred,
be deemed immediately to occur (except that, in the event that
the Purchase Date for any Transaction has not yet occurred as
of the date of such exercise or deemed exercise, such
Transaction shall be deemed immediately canceled). The
nondefaulting party shall (except upon the occurrence of an
Act of Insolvency) give notice to the defaulting party of the
exercise of such option as promptly as practicable.
(b) In all Transactions in which the defaulting party is acting as
Seller, ff the nondefaulting party exercises or is deemed to
have exercised the option referred to in subparagraph (a) of
this Paragraph, (i) the defaulting party's obligations in
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such Transactions to repurchase all Purchased Securities, at
the Repurchase Price therefor on the Repurchase Date
determined in accordance with subpara graph (a) of this
Paragraph, shall thereupon become immediately due and payable,
(ii) all Income paid after such exercise or deemed exercise
shall be retained by the nondefaulting party and applied to
the aggregate unpaid Repurchase Prices and any other amounts
owing by the defaulting party hem- under, and (iii) the
defaulting party shall immediately deliver to the
nondefaulting party any Purchased Securities subject to such
Transactions then in the defaulting party's possession or
control
(c) In all Transactions in which the defaulting party is acting as
Buyer, upon tender by the nondefaulting party of payment of
the aggregate Repurchase Prices for all such Transactions, all
right, title and interest in and entitlement to all Purchased
Securities subject to such Transactions shall be deemed
transferred to the nondefaulting party, and the defaulting
party shall deliver all such Purchased Securities to the
nortdefaulting party.
(d) If the nondefaulting party exercises or is deemed to have
exercised the option referred to in subparagraph (a) of this
Paragraph, the nondefaulting party, without prior notice to
the defaulting party, may:
(i) as to Transactions in which the defaulting party is
acting as Seller, (A) immediately sell, in a
recognized market (or otherwise in a commercially
reasonable manner) at such price or prices as the
nondefaulting party may reasonably deem satisfactory,
any or all Purchased Securities subject to such
Transactions and apply the proceeds thereof to the
aggregate unpaid Repurchase Prices and any other
amounts owing by the defaulting party hereunder or
(B) in its sole discretion elect, in lieu of selling
all or a portion of such Purchased Securities, to
give the defaulting party credit for such Purchased
Securities in an amount equal to the price therefor
on such date, obtained from a generally recognized
source or the most recent closing bid quotation from
such a source, against the aggregate unpaid
Repurchase Prices and any other amounts owing by the
defaulting party hereunder, and
(ii) as to Transactions in which the defaulting party is
acting as Buyer, (A) immediately purchase, in a
recognized market (or otherwise in a commercially
reasonable manner) at such price or prices as the
nondefaulting party may reasonably deem satisfactory,
securities ("Replacement Securities") of the same
class and amount as any Purchased Securities that are
not delivered by the defaulting party to the
nondefaulting party as required hereunder or (B) in
its sole discretion elect, in lieu of purchasing
Replacement Securities, to be deemed to have
purchased Replacement Securities at the price
therefor on such date,
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obtained from a generally recognized source or the
most recent closing offer quotation from such a
source.
Unless otherwise provided in Annex 1, the parties acknowledge
and agree that (1) the Securities subject to any Transaction
hereunder are instruments traded in a recognized market, (2)
in the absence of a generally recognized source for prices or
bid or offer quotations for any Security, the nondefaulting
party may establish the source therefor in its sole discretion
and (3) all prices, bids and offers shall be determined
together with accrued Income (except to the extent contrary to
market practice with respect to the relevant Securities).
(e) As to Transactions in which the defaulting party is acting as
Buyer, the defaulting party shall be liable to the
nondefaulting party for any excess of -the price paid (or
deemed paid) by the nondefaulting party for Replacement
Securities over the Repurchase Price for the Purchased
Securities replaced thereby and for any amounts payable by the
defaulting party under Paragraph 5 hereof or otherwise
hereunder.
(f) For purposes of this Paragraph 11, the Repurchase Price for
each Transaction hereunder in respect of which the defaulting
party is acting as Buyer shall not increase above the amount
of such Repurchase Price for such Transaction determined as of
the date of the exercise or deemed exercise by the
nondefaulting party of the option referred to in subparagraph
(a) of this Paragraph.
(g) The defaulting party shall be liable to the nondefaulting
party for (i) the amount of all reasonable legal or other
expenses incurred by the nondefaulting party in connection
with or as a result of an Event of Default, (ii) damages in an
amount equal to the cost (including all fees, expenses and
commissions) of entering into replacement transactions and
entering into or tern-terminating hedge transactions in
connection with or as a result of an Event of Default and
(iii) any other loss, damage, cost or expense directly arising
or resulting from the occurrence of an Event of Default in
respect of a Transaction.
(h) To the extent permitted by applicable law, the defaulting
party shall be liable to the nondefaulting party for interest
on any amounts owing by the defaulting party hereunder, from
the date the defaulting party becomes liable for such amounts
hereunder until such amounts are (i) paid in full by the
defaulting party or (ii) satisfied in full by the exercise of
the nondefaulting party's rights hereunder. Interest on any
sum payable by the defaulting party to the nondefaulting party
under this Paragraph 11(h) shall be at a rate equal to the
greater of the Pricing Rate for the relevant Transaction or
the Prime Rate.
(i) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any
other agreement or applicable law.
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12. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in
reliance upon the fact that, 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.
13. NOTICES AND OTHER COMMUNICATIONS
Any and all notices, statements, demands or other communications
hereunder may be given by a party to the other by mail, facsimile-dle,
telegraph, messenger or otherwise to the address specified in Annex H
hereto, or so sent to such party at any other place specified in a
notice of change of address hereafter received by the other. All
notices, demands and requests hereunder may be made crafty, to be
confirmed promptly in writing, or by other communication as specified
in the preceding sentence.
14. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase
transactions. Each provision and agreement herein shall be treated as
separate and independent from any other provision or agreement herein
and shall be enforceable notwithstanding the unenforceability of any
such other provision or agreement.
15. NON-ASSIGNABILITY; TERMINATION
(a) The rights and obligations of the parties under this Agreement
and under any Transaction shall not be assigned by either
party without the prior written consent of the other party,
and any such assignment without the prior written consent of
the other party shall be null and void. Subject to the
foregoing, this Agreement and any Transactions shall be
binding upon and shall inure to the benefit of the parties and
their respective successors and assigns. This Agreement may be
terminated by either party upon giving written notice to the
other, except that this Agreement shall, notwithstanding such
notice, remain applicable to any Transactions then
outstanding.
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(b) Subparagraph (a) of this Paragraph 15 shall not preclude a
party from assigning, charging or otherwise dealing with all
or any part of its interest in any sum payable to ft under
Paragraph 11 hereof.
16. GOVERNING LAW
This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof
17. 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 Paragraph 4(a) or 4(b) hereof will not constitute a waiver
of any right to do so at a later date.
18. 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.
(b) Subject to the last sentence of subparagraph (a) of this
Paragraph, 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 Paragraph,
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.
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19. INTENT
(a) The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11
of the United States Code, as amended (except insofar as the
type of Securities subject to such Transaction or the term of
such Transaction would render such definition inapplicable),
and a 'securities contract' as that term is defined in Section
741 of Title 11 of the United States Code, as amended (except
insofar as the type of assets subject to such Transaction
would render such definition inapplicable).
(b) It is understood that either party's right to liquidate
Securities delivered to it in connection with Transactions
hereunder or to exercise any other remedies pursuant to
Paragraph 11 hereof is a contractual right to liquidate such
Transaction as described in Sections 555 and 559 of Title 11
of the United States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an
"insured depository institution," as such term is defined in
the Federal Deposit Insurance Act, as amended ("FDIA"), then
each Transaction hereunder is a "qualified financial
contract," as that term is defined in FDIA and any rules,
orders or policy statements thereunder (except insofar as the
type of assets subject to such Transaction would render such
definition inapplicable).
(d) It is understood that this Agreement constitutes a "netting
contract" as defined in and subject to Title IV of the Federal
Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") and each payment entitlement and payment obligation
under any Transaction hereunder shall constitute a "covered
contractual payment entitlement" or "covered contractual
payment obligation", respectively, as defined in and subject
to FDICIA (except insofar as one or both of the parties is not
a financial institution as that is defined in FDICIA).
20. 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
14
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.
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE CAPITAL INC. ▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT CORPORATION
By: By:
------------------------------- -------------------------------
Title: Title:
------------------------------- ----------------------------
Date: Date:
------------------------------- -----------------------------
PACIFICAMERICA SECURITIES, INC.
By:
-------------------------------
Title:
-------------------------------
Date:
-------------------------------
15
ANNEX I
(continued)
SUPPLEMENTAL TERMS AND CONDITIONS TO
MASTER REPURCHASE AGREEMENT,
DATED AS OF OCTOBER 31, 1997, AMONG
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE CAPITAL INC.,
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT CORPORATION
AND PACIFICAMERICA SECURITIES, INC.
1. APPLICABILITY. These Supplemental Terms and Conditions (the
"Supplemental Terms") to Master Repurchase Agreement (the
"Master Repurchase Agreement", and collectively with these
Supplemental Terms, the "Agreement") modify the terms and
conditions under which the parties hereto, from time to
time, enter into Transactions. To the extent that these
Supplemental Terms conflict with the terms of the Master
Repurchase Agreement, these Supplemental Terms shall
control.
2. ADDITIONAL DEFINITIONS. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Master Repurchase
Agreement. Capitalized terms used in the Master Repurchase Agreement
whose definitions are modified in these Supplemental Terms shall, for
all purposes of the Agreement, be deemed to have such modified
definitions.
"A Quality Mortgage Loans" shall refer to Mortgage Loans
originated in the manner described for such category in the
Seller's Underwriting Guidelines.
"A- Quality Mortgage Loans" shall refer to Mortgage Loans
originated in the manner described for such category in the
Seller's Underwriting Guidelines.
"Affiliate" means any subsidiary of Seller.
"Assignment" shall have the meaning set forth in Paragraph 3(b)
of the Master Repurchase Agreement.
"B Quality Mortgage Loans" shall refer to Mortgage Loans
originated in the manner described for such category in the
Seller's Underwriting Guidelines.
"Book Net Worth" shall refer to the equity of PAMM determined in
accordance with GAAP less the sum of (i) intercompany
receivables, (ii) loans to officers or employees of Seller, (iii)
deferred charges and (iv)
16
amounts to be withdrawn for payment of taxes due and payable by
the shareholders of PAMM.
"Business Day" shall mean any day excluding Saturday, Sunday and
any day on which banks located in the States of New York or
California are authorized or permitted to close for business. All
references to "business day" in the Master Repurchase Agreement
shall be deemed to be references to Business Day.
"Buyer" shall mean MLCC, in the case of Mortgage Loans secured by
second liens, and MLMCI in all other cases.
"Buyer's Margin Amount" shall have the meaning set forth in the
Master Repurchase Agreement except that the percentage referred
to therein for each Transaction shall be specified in the related
Confirmation/Funding Request.
"C Quality Mortgage Loans" shall refer to Mortgage Loans
originated in the manner described for such category in the
Seller's Underwriting Guidelines.
"C- Quality Mortgage Loans" shall refer to Mortgage Loans
originated in the manner described for such category in the
Seller's Underwriting Guidelines.
"CLTV" shall mean, with respect to each Mortgage Loan that is not
a first lien residential mortgage loan, the combined
loan-to-value ratio calculated as a fraction, expressed as a
percentage, the numerator of which is the original principal
balance of the related Mortgage Loan (together with the related
senior lien mortgage loans) and the denominator of which is
either (i) the lesser of the sales price or the appraised value
of the related mortgaged property if the sale occurred within six
(6) months of the determination date, or (ii) the appraised value
of the related mortgaged property.
"Confirmation/Funding Request" shall have the meaning of
"Confirmation" as set forth in the Master Repurchase Agreement
but shall be substantially in the form attached hereto as Exhibit
A.
"Covenant Compliance Certificate" shall refer to a certificate of
PAMM to the effect that PAMM and Pacific Thrift and Loan Company
are in compliance, as of the date of such certificate, with the
covenants set forth in Paragraphs 15(c)(xi) and (xii),
respectively, of this Annex I.
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17
"Custodian" shall refer to Bankers Trust Company of California,
N.A., or any permitted successor thereto pursuant to the Custody
Agreement.
"Custody Agreement" shall refer to a custody agreement pursuant
to which the Custodian acts as bailee for Buyer.
"D Quality Mortgage Loans" shall refer to Mortgage Loans
originated in the manner described for such category in the
Seller's Underwriting Guidelines.
"FHA" shall mean the Federal Housing Administration of the
Department of Housing and Urban Development.
"FNMA" shall mean the Federal National Mortgage Association.
"GAAP" shall mean generally accepted accounting principles
consistently applied.
"Market Value" shall mean, with respect to any Mortgage Loans as
of any date of determination, the value of such Mortgage Loans on
such date as determined in accordance with Paragraph 12 of these
Supplemental Terms.
"Master Assignment Agreement" means a loan agreement between
Buyer and Seller for the financing of residual interests
resulting from Seller's securitization of Mortgage Loans.
"MLCC" shall refer to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Corporation.
"MLMCI" shall refer to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc.
"Mortgage" shall mean a duly recorded first or second mortgage or
first or second deed of trust on improved residential real
property.
"Mortgage Loan Schedule" shall have the meaning set forth in
Paragraph 3(b) of the Master Repurchase Agreement.
"Mortgage Loans" shall mean those first or second lien
residential mortgage loans secured by real property that Seller
has sold to Buyer hereunder and shall include A Quality Mortgage
Loans, A- Quality Mortgage Loans, B Quality Mortgage Loans, C
Quality Mortgage Loans, C- Quality Mortgage Loans and D Quality
Mortgage Loans.
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"Mortgage Loan Income" shall mean income payable with respect to
a Mortgage Loan including all amounts payable on account of such
Mortgage Loan whether principal, interest, partial prepayments,
prepayments in full, penalties, advance payments or expenses and
whether payable by or from the mortgagor or the servicer for such
Mortgage Loan.
"PAMM" shall refer to PacificAmerica Money Center, Inc.
"Person" means a corporation, association, partnership,
organization, business, trust, individual, a government or
political subdivision thereof, any governmental agency or any
other entity.
"Required Loan Documents" shall refer to the documents required
to be held by the Custodian as bailee under the Custody
Agreement.
"Securities" shall, in addition to the definition set forth in
the Master Repurchase Agreement, refer to Mortgage Loans;
provided, however, that such Mortgage Loans shall not be deemed
to be securities for the purposes of any securities or blue sky
laws; provided further, however, that "Securities" shall also
refer to additional assets as Buyer may determine at its option
and in its sole discretion as evidenced by an amendment to this
Agreement.
"Seller" shall refer to PacificAmerica Securities, INc., a
Delaware corporation.
"Seller's Margin Amount" shall have the meaning set forth in the
Master Repurchase Agreement except that the percentage referred
to therein for each Transaction shall be specified in the related
Confirmation/Funding Request.
"Seller's Underwriting Guidelines" shall refer to the
underwriting guidelines for various categories of Mortgage Loans
in the form most recently approved by Buyer in writing.
"Servicer" shall refer to Seller or such other servicer as Buyer
may approve in its sole discretion as the servicer of a Mortgage
Loan.
"Third Person" shall refer to any Person to whom Buyer transfers
any portion of its interest in the Mortgage Loans.
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19
"Transaction" shall, in addition to the definition set forth in
the Master Repurchase Agreement, refer to substitutions pursuant
to Paragraph 9 of the Master Repurchase Agreement.
"Trust Receipt" shall refer to the Trust Receipt substantially in
the form attached as an exhibit to the Custody Agreement.
3. MODIFICATION OF PARAGRAPH 3(b) OF THE MASTER REPURCHASE AGREEMENT.
Paragraph 3(b) of the Master Repurchase Agreement is amended by adding
the following after the first
sentence of Paragraph 3(b):
In the case of Transactions involving Securities that are
Mortgage Loans, (a) copies of the documents reasonably requested
by Buyer shall have been delivered to Buyer prior to the Purchase
Date for such Mortgage Loans, (b) the Purchased Securities shall
be identified on a detailed listing to be provided by Seller to
Buyer (a "Mortgage Loan Schedule") attached to an Assignment (as
defined below), which Mortgage Loan Schedule shall indicate the
category of Mortgage Loan and such other information as Buyer may
require and (c) the Required Loan Documents shall be delivered to
and/or held by the Custodian pursuant to the terms of the Custody
Agreement, pursuant to which Custody Agreement the Custodian
shall, among other things, issue Trust Receipts in a form
acceptable to Buyer, evidencing Custodian's retention of the
Required Loan Documents as custodian for Buyer.
4. MODIFICATION OF PARAGRAPH 4 OF THE MASTER REPURCHASE AGREEMENT.
(a) Paragraph 4 of the Master Repurchase Agreement is hereby amended
by adding the following sentence at the end of subparagraph (a):
In case of a Margin Deficit with respect to Mortgage
Loans, Seller shall transfer cash or Mortgage Loans to satisfy
its obligations hereunder; provided, however, Seller may transfer
Mortgage Loans only to the extent that they have been reviewed by
the Custodian pursuant to the Custody Agreement and the Custodian
has furnished its Trust Receipt with respect thereto.
(b) Paragraph 4(a) of the Master Repurchase Agreement is hereby
further amended to provide that Seller shall transfer the cash or
Mortgage Loans to Buyer (in the manner contemplated by the
Agreement and the Custody
I-5
20
Agreement) in accordance with Paragraph 24 of these Supplemental
Terms.
5. MODIFICATION OF PARAGRAPH 5 OF THE MASTER REPURCHASE AGREEMENT.
Paragraph 5 of the Master Repurchase Agreement is hereby amended by
adding the following after the last
sentence of such Paragraph:
If an Event of Default shall have occurred and be
continuing, Seller shall collect, or cause to be collected, all
Mortgage Loan Income on behalf of Buyer and, upon request of
Buyer, shall forward such payments to Buyer immediately upon
receipt.
6. MODIFICATION OF PARAGRAPH 7 OF THE MASTER REPURCHASE AGREEMENT.
Paragraph 7 of the Master Repurchase Agreement is hereby amended by
adding the following after the last
sentence of such Paragraph:
Buyer shall disburse funds to an account specified in
writing by Seller. In the case of Mortgage Loans, transfer of
such Mortgage Loans to Buyer shall occur as of the date on which
Buyer receives (i) the Trust Receipt of the Custodian and (ii) a
list identifying the Servicer with respect to each such Mortgage
Loan, if not otherwise set forth in the Trust Receipt.
In the case of Mortgage Loans transferred by Buyer to a
Third Person, Buyer shall send a notice to the Custodian and
transfer of such Mortgage Loans to any Third Person shall occur
when such Third Person receives the acknowledgment of the
Custodian identifying such Mortgage Loans. Any Mortgage Loans
repurchased by Seller pursuant to Paragraph 3(c) or 11(c) of the
Master Repurchase Agreement shall be transferred to Seller or its
agent upon the receipt by the Custodian from Buyer of a notice of
transfer which confirms the release of Buyer's interest in any
such Mortgage Loans.
7. MODIFICATION OF PARAGRAPH 8 OF THE MASTER REPURCHASE AGREEMENT.
Paragraph 8 of the Master Repurchase Agreement is amended by adding the
following at the end of the last
sentence thereof:
In the case of Mortgage Loans, Buyer hereby grants to
Seller the right to perform in Buyer's stead under any
repurchase, reverse repurchase or similar transaction in which
Buyer has sold, loaned or otherwise transferred the Mortgage
Loans in the event that Buyer has defaulted on its obligation to
repurchase or accept redelivery of such Mortgage Loans
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in conformity with the terms of any such transaction and so long
as an Event of Default under the Agreement on the part of Seller
shall not have occurred and be continuing.
8. MODIFICATIONS OF PARAGRAPH 11 OF THE MASTER REPURCHASE AGREEMENT.
Paragraph 11 of the Master Repurchase Agreement is hereby further
amended by adding new subsections (i),
(j), (k) and (l) to such Paragraph:
(i) Any sales of Purchased Securities, pursuant to
Paragraph 11(d)(i) of the Agreement, which are Mortgage Loans may
be effected in public or private sales as Buyer may reasonably
deem appropriate and at such price or prices as Buyer may
reasonably deem satisfactory. In the event Buyer elects in lieu
of so selling such Purchased Securities to give Seller credit for
such Purchased Securities, such credit shall be in an amount
equal to the Market Value thereof as of the date of permitted
acceleration of the non-defaulting party hereunder pursuant to
Paragraph 11(a).
(j) If an Event of Default shall occur and be continuing,
Buyer shall exercise reasonable efforts (the reasonableness of
which shall be determined by Buyer in its discretion in light of
the circumstances) to provide notice to Seller prior to
exercising any remedy in respect of an Event of Default by
Seller, provided, however, that notwithstanding anything in the
Agreement to the contrary, Buyer shall not be required, prior to
exercising any remedy in respect of an Event of Default by
Seller, to give any notice otherwise required hereunder, if Buyer
reasonably believes that (i) the Mortgage Loans then held by
Buyer threaten to decline speedily in value or (ii) any delay
occasioned by the giving of such notice will jeopardize Buyer's
ability to recover, by sale of such Securities or otherwise, all
or part of the then-outstanding amount of the Repurchase Price or
of any other amounts owed to Buyer in connection therewith. If no
prior notice is given, Buyer shall give notice to Seller of the
remedies effected by Buyer promptly thereafter. Buyer may
forthwith apply the cash, if any, then held by it as part of the
Purchased Securities relating to any Transaction to the payment
of the Repurchase Price, and, if there shall be no such cash or
the cash so applied shall not be sufficient to pay in full the
Repurchase Price, may thereafter collect, receive, appropriate,
retain and realize upon the Purchased Securities, or any part
thereof, and may forthwith sell, assign, contract to sell, or
otherwise dispose of and deliver the Purchased Securities, or any
part
I-7
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thereof, in one or more parcels at such public or private sale or
sales, at such place or places, at such price or prices and upon
such other terms and conditions as Buyer may deem best (provided,
however, that Buyer shall act in a commercially reasonable
manner), for cash or on credit or for future delivery without
assumption of any credit risk, with the right of Buyer upon any
such sale or sales to purchase all or any part of the Purchased
Securities so sold. Upon any sale, transfer or other disposition
of the Purchased Securities pursuant hereto Buyer shall have the
right to deliver, assign and transfer to the transferee thereof
the Purchased Securities so sold. Each transferee upon any such
transfer or other disposition shall hold the property thereby
acquired by it absolutely free from any claim or right of any
kind, including any equity or rights of redemption, of Seller,
who hereby specifically waives all rights of redemption, stay or
appraisal which it has or may have under any rule of law or
statute whether now existing or hereafter adopted (in the latter
case, to the extent permitted thereby). Seller agrees that Buyer
need give only such notice of the time and place of any public or
private sale (including any adjourned private sale) or other
intended disposition as may be required by market conditions and
standards of commercial reasonableness and that Buyer need not in
any event give more than five (5) days' notice that such sale or
disposition is to take place. Seller agrees that the notice
provided for in the preceding sentence is reasonable notification
of such matters.
Buyer shall not be obligated to make any sale pursuant to
any such notice. Buyer may, without notice or publication,
adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or
place to which the same may be so adjourned, provided that Buyer
shall act in a commercially reasonable manner. In case of any
sale of all or any part of the Purchased Securities on credit or
for future delivery, the Purchased Securities so sold may be
retained by Buyer until the selling price is paid by the
purchaser thereof, but Buyer shall not incur any liability in
case of the failure of such purchaser to take up and pay for the
Purchased Securities so sold, and, in case of any such failure,
such Purchased Securities may again be sold upon like notice.
Buyer, however, instead of exercising the power of sale herein
conferred upon it, may proceed by a suit or suits at law or in
equity to foreclose the lien and security interest created hereby
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23
and sell the Purchased Securities, or any portion thereof, under
a judgment or decree of a court or courts of competent
jurisdiction.
(k) Buyer shall have no obligation to realize upon any
Purchased Securities, except through proper application of any
distributions with respect to the Purchased Securities made
directly to Buyer or its agent(s). Seller hereby waives the
defense of impairment of the Purchased Securities; provided,
however, that Buyer shall act in a commercially reasonable
manner. Buyer may in its sole discretion elect to realize upon
all or a portion of the Purchased Securities by giving Seller
credit for such Purchased Securities, which credit shall be in an
amount equal to the Market Value thereof as of the date of
permitted acceleration by Buyer hereunder pursuant to Paragraph
11(a).
(l) Any purchases of Replacement Securities, pursuant to
Paragraph 11(d)(ii) of the Agreement, which are Mortgage Loans
shall be of the same or similar type, maturity and amount as the
Purchased Securities that are not delivered by Buyer and may be
effected in purchases in a commercially reasonable manner at such
price or prices as Seller may reasonably deem appropriate. In the
event Seller elects in lieu of so purchasing such Replacement
Securities to be deemed to have purchased Replacement Securities
in a commercially reasonable manner as provided in Paragraph
11(d)(ii), such Replacement Securities shall be deemed to have
been purchased at the Market Value thereof (determined as of the
date of permitted acceleration by Seller hereunder pursuant to
Paragraph 11(a).
9. DISBURSEMENT OF FUNDS. Seller may request that the parties enter into
a transaction hereunder by making a written request under the form of
Confirmation/Funding Request attached hereto as Exhibit A for the
purchase and sale of Mortgage Loans, either by mail or facsimile
transmission, to Buyer. Buyer shall pay the Purchase Price within one
(1) Business Day of receipt of such notice, so long as the terms and
conditions of the Agreement are fully satisfied and no Event of Default
hereunder shall have occurred and be continuing. The amount of any such
Purchase Price of Mortgage Loans shall be in a minimum amount of
$1,000,000.
10. CONFIRMATIONS.
(a) Each Confirmation shall be binding upon Seller and Buyer unless
written notice of objection is given by the objecting party to
the other party within one (1)
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business day after the objecting party's receipt of such
Confirmation.
(b) Notwithstanding Paragraph 3(b) of the Master Repurchase
Agreement, in the event of any conflict between the terms of a
Confirmation and this Agreement, such Confirmation shall prevail.
11. INCOME PAYMENTS. All payments and distributions, whether in cash or in
kind, made on or with respect to the Mortgage Loans shall, unless
otherwise mutually agreed by Buyer and Seller, be paid, delivered or
transferred in the case of Mortgage Loans, so long as an Event of
Default on the part of Seller shall not have occurred and be continuing,
directly to the Servicer from the related mortgagor.
12. MARKET VALUE DETERMINATION. Buyer shall determine the Market Value for
the Purchased Securities in the good faith exercise of its reasonable
business judgment from time to time and at such time as it may elect in
its sole discretion; provided, however, that Buyer shall assign a Market
Value of zero with respect to (i) any Mortgage Loan that is, as of the
valuation date, delinquent for (1) more than sixty (60) days in the case
of Mortgage Loans amounting in aggregate principal amount to 3% of the
aggregate principal amount of Mortgage Loans subject to this Agreement
on the date of determination and (2) more than thirty (30) days in the
case of all other Mortgage Loans, (ii) any ▇▇▇▇- ▇▇▇▇ Loan with respect
to which there is a breach of a rep- resentation, warranty or covenant
made by Seller in this Agreement or the Custody Agreement that
materially adversely affects Buyer's interest in such Mortgage Loan and
which breach has not been cured prior to the date on which Market Value
is being determined and (iii) any Mortgage Loan that was not originated
in conformity with Seller's Underwriting Guidelines. Buyer shall inform
Seller on each valuation date of any Mortgage Loan which has been
assigned a Market Value of zero, and Buyer shall, within one Business
Day of its receiving a written request for release of such Mortgage
Loan, notify the Custodian that Buyer has released its interest in such
Mortgage Loan. Buyer shall provide Seller with communications outlining
Buyer's periodic determination of the Market Value of the Purchased
Securities, which communications shall be provided bi-weekly or with
such lesser frequency as the Market Value is actually determined.
▇-▇▇
▇▇
▇▇. SECURITY INTEREST.
(a) In the event, for any reason, any Transaction is construed by any
court as a secured loan rather than a purchase and sale, the
parties intend that Buyer shall have a perfected first priority
security interest in all of the Purchased Securities.
(b) Seller shall pay all reasonable fees and expenses associated with
perfecting such security interest including, without limitation,
the cost of filing financing statements under the Uniform
Commercial Code, to the extent required by Buyer or its counsel,
and any fees charged by the Custodian.
14. DELIVERY OF ADDITIONAL DOCUMENTS. Seller shall, simultaneously with the
funding of each Transaction, deliver to Buyer through the Custodian a
fully executed Trust Receipt.
15. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Each party represents and warrants, and shall on and as of the
Purchase Date of any Transaction be deemed to represent and
warrant, as follows:
(i) The execution, delivery and performance of the Agreement
and the performance of each Transaction do not and will
not result in or require the creation of any lien,
security interest or other charge or encumbrance (other
than pursuant hereto) upon or with respect to any of its
properties; and
(ii) The Agreement is, and each Transaction when entered into
under the Agreement will be, a legal, valid and binding
obligation of such party enforceable against it in
accordance with the terms of the Agreement, subject to
applicable bankruptcy, insolvency, and similar laws
affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity
(regardless of whether enforcement is sought in a
proceeding in equity or at law).
(b) Seller represents and warrants as of the date of the Agreement
and as of the Purchase Date of each Transaction, as follows:
(i) All information provided by Seller to Buyer or the
Custodian concerning the Mortgage Loans is true and
correct in all material respects;
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(ii) No Mortgage Loan shall have any scheduled payments of
Mortgage Loan Income in default or delinquent by (1)
more than sixty (60) days in the case of Mortgage Loans
amounting in aggregate principal amount to 3% of the
aggregate principal amount of Mortgage Loans subject to
this Agreement on the date of determination and (2)
more than thirty (30) days in the case of all other
Mortgage Loans;
(iii) No Mortgage Loan shall be in foreclosure and no
mortgagor relating to a Mortgage Loan shall be
currently the subject of an Act of Insolvency;
(iv) Seller shall cause each Mortgage Loan to be serviced in
strict conformity with the servicing standards
described in Paragraph 26(b) of these Supplemental
Terms;
(v) Seller, immediately prior to the purchase by Buyer
under the Agreement, is the legal and beneficial owner
of the Mortgage Loans free and clear of any lien,
security interest, option or encumbrance;
(vi) Buyer has a perfected first-priority security interest
in each Mortgage Loan (including all proceeds,
distributions and other amounts realized in respect
thereof) subject to no prior lien, charge, encumbrance
or rights of others, and no further action, other than
the possession by the Custodian of certain documents
relating thereto pursuant to the Custody Agreement,
including any filing or recordation of any document, is
required in order to establish and perfect the liens on
and security interest in the Mortgage Loans in favor of
Buyer against any third party in any jurisdiction;
(vii) No Mortgage Loan was subject to any lien or encumbrance
at the time of the purchase thereof by Buyer under the
Agreement;
(viii) Notwithstanding any other provision of the Agreement,
the maximum number of days, in aggregate that a
Mortgage Loan subject to any Transaction hereunder
shall have been subject to the Agreement or to the
Custody Agreement (except with the consent of Buyer)
shall be (1) one hundred and fifty (150) days with
respect to Mortgage Loans constituting up to 20% (by
Market Value) of the Mortgage Loans subject to this
Agreement and (2) one hundred and twenty (120) days in
all other cases;
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(ix) The aggregate outstanding Repurchase Price for Mortgage
Loans that are not first lien residential mortgage
loans does not exceed an amount equal to 20% of the
aggregate outstanding Repurchase Price for all Mortgage
Loans subject to the Agreement;
(x) The CLTV for each Mortgage Loan is not in excess of (1)
125% with respect to Mortgage Loans constituting up to
10% (by Market Value) of the Mortgage Loans subject to
this Agreement and (2) 90% in all other cases;
(xi) Each Mortgage Loan has been originated in compliance
with the Seller's Underwriting Guidelines and all
applicable laws and no change to such guidelines has
occurred since the date of the last written revision to
such guidelines was furnished to and approved in
writing by Buyer;
(xii) Seller is a wholly-owned subsidiary of PAMM;
(xiii) No Mortgage Loan is secured by mixed-use mortgaged
property utilized for both commercial and residential
purposes;
(xiv) No Mortgage Loan is secured exclusively by mortgaged
property constituting outbuildings; and
(xv) No Mortgage Loan is secured by a mobile home, modular
home or manufactured house that was not originated in
accordance with the origination standards of FNMA or
the FHA.
(c) Seller covenants with Buyer as follows:
(i) Seller shall be at the time it delivers any Mortgage
Loans to the Custodian or Buyer for any Transaction,
and shall continue to be, through the Purchase Date
relating to each such Transaction, the legal and
beneficial owner of such Mortgage Loans free and clear
of any lien, security interest, option or encumbrance
except for the security interest created by the
Agreement;
(ii) All data and other information relating to the Mortgage
Loans provided at any time by or on behalf of Seller to
the Custodian, whether in writing, by electronic
transmission or on computer tape or diskette or
otherwise, will be true and correct;
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(iii) Seller will pay and discharge all taxes, levies, liens
and other charges on its assets and on the Purchased
Securities sold by it to Buyer under the Agreement
which, in each case, in any manner would create any
lien or charge upon such Purchased Securities and which
would materially adversely affect the interests of
Buyer except those that are being contested by Seller
in good faith and with respect to which payment has
been stayed by a court of competent jurisdiction;
(iv) Seller will perform all of its duties and obligations
under the Agreement and the Custody Agreement;
(v) Seller shall promptly notify Buyer of (i) the
acceleration of any debt obligation or the termination
of any credit facility of Seller or PAMM; (ii) the
amount and maturity of any such debt assumed after the
date hereof; (iii) any material adverse developments
with respect to pending or future litigation involving
Seller or PAMM; and (iv) any other developments which
might materially and adversely affect the financial
condition of Seller or PAMM;
(vi) Seller shall promptly notify Buyer if Seller intends to
amend or supplement Seller's Underwriting Guidelines in
any way;
(vii) There shall exist, with respect to each Mortgage Loan,
a policy of title insurance (or title commitment or
title binder to issue same) effective as of the date of
origination of such Mortgage Loan, the original of
which policy of title insurance (or title commitment or
title binder to issue same) shall be delivered to the
Custodian in accordance with the terms of the Agreement
and the Custody Agreement;
(viii) Seller shall remain a wholly-owned subsidiary of PAMM
unless Buyer shall otherwise agree in writing;
(ix) Seller shall cause PAMM to deliver a Covenant
Compliance Certificate to Buyer on the first business
day of each calendar month;
(x) The ratio of PAMM's assets to equity is not greater
than 15 to 1;
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29
(xi) The ratio of Pacific Thrift and Loan Company's assets
to equity is not greater than 15 to 1; and
(xii) Seller shall cause to be furnished directly to Buyer,
promptly after the production thereof, PAMM's Call
Reports and each report from PAMM to any applicable
regulatory authority and any response thereto from such
regulatory authority.
16. EVENTS OF DEFAULT.
(a) The term "Event of Default" shall, in addition to the definition
set forth in the Master Repurchase Agreement, include the
following events:
(i) Any governmental or self-regulatory authority shall
take possession of Seller, or any Affiliate thereof, or
all or substantially all its property or appoint any
such trustee, receiver, conservator or other official,
or such party shall take any action to authorize any of
the actions set forth in this clause (i).
(ii) Buyer or Seller shall have reasonably determined that
the other party is or will be unable to meet its
commitments under this Agreement, shall have notified
such other party of such determination (which notice
shall describe in a reasonable manner the reason for
such determination) and such other party shall not have
responded with appropriate information to the contrary
to the satisfaction of the notifying party within one
(1) Business Day.
(iii) In the judgment of Buyer a material adverse change
shall have occurred in the business, operations,
properties, prospects or financial condition of Seller;
(iv) The Agreement shall for any reason cease to create a
valid, perfected, first priority security interest in
any of the Purchased Securities; provided, however,
that such circumstance shall not constitute an Event of
Default if, after determining the Market Value of the
Mortgage Loans without taking into account the Mortgage
Loans with respect to which such circumstance has
occurred, no other Event of Default shall have occurred
and be continuing;
(v) Seller or PAMM shall be in material default with
respect to any normal and customary covenants
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30
under any material contract or agreement to which
it is a party (which covenants include, but are not
limited to, an Act of Insolvency of Seller or the
failure of Seller to make required payments under such
contract or agreement as they become due) which default
permits acceleration of the obligations of Seller under
such contract or agreement by any other party thereto;
(vi) Seller shall merge or consolidate into any entity
unless the surviving or resulting entity shall be
acceptable to Buyer, in its reasonable discretion, and
such entity expressly assumes by written agreement,
executed and delivered to Buyer in form and substance
satisfactory to Buyer, the performance of all Seller's
duties and obligations hereunder and under the Custody
Agreement;
(vii) Buyer shall request reasonable assurances as to the
financial well-being of Seller and such assurances
shall not have been provided in writing within
twenty-four (24) hours;
(viii) A final judgment by any competent court in the United
States of America for the payment of money in an amount
of at least $100,000 is rendered against the defaulting
party or PAMM (the latter case resulting in the
defaulting party being Seller), and the same remains
undischarged or unpaid for a period of thirty (30) days
during which execution of such judgment is not
effectively stayed;
(ix) Any representation or warranty made by Seller in the
Agreement or the Custody Agreement shall have been
incorrect or untrue when made or repeated or when
deemed to have been made or repeated and such breach is
continuing; provided, however, that with respect to any
representation or warranty made by Seller with respect
to a Mortgage Loan, such circumstance shall not
constitute an Event of Default if after determining the
Market Value of the Mortgage Loans without taking into
account the Mortgage Loan with respect to which such
circumstances have occurred, no other Event of Default
shall have occurred and be continuing;
(x) Seller shall breach any covenant in the Agreement and
such breach is continuing;
(xi) The filing by Seller or an Affiliate of a petition in
bankruptcy, the adjudication of Seller or an
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Affiliate as insolvent or bankrupt, the application by
Seller or an Affiliate for any receiver or trustee for
itself or any substantial part of its property, the
commencement of any proceeding relating to Seller or an
Affiliate under any reorganization, arrangement,
dissolution or liquidation law, or the initiation of
any such proceeding against Seller or an Affiliate if
such party indicates by any act its consent thereto or
if such proceeding is not dismissed or stayed within
fifteen (15) days;
(xii) A firm of independent accountants shall have failed to
issue an opinion or shall have issued an opinion
qualified adversely in any material respect in
connection with the most recent audited financial
statements of PAMM;
(xiii) Seller shall cease to conduct its business or shall
undertake a new line of businesses in substitution for,
or in addition to, its business as it is being
conducted on the date of the Agreement without Buyer's
review and consent, which consent shall not be
unreasonably withheld and which consent shall either be
given by Buyer within five (5) business days of Buyer
receiving a request from Seller or shall be deemed to
have been refused by Buyer;
(xiv) PAMM shall experience losses or changes in its
financial condition (exclusive of amounts withdrawn for
payment of taxes due and payable by the shareholders of
Seller) that cause its Book Net Worth for any two
consecutive calendar quarters to be less than or equal
to 80% of its Book Net Worth as of the commencement of
such period; and
(xv) Seller or any of Seller's Affiliates shall be in
default with respect to any contract or agreement with
Buyer or any of Buyer's Affiliates.
(b) In addition to the other remedies available to Buyer or Seller
upon the occurrence and during the continuance of an Event of
Default by a defaulting party, Buyer shall have the following
additional remedies upon the occurrence and during the
continuance of an Event of Default by Seller:
(i) All rights of Seller to receive payments on the
Mortgage Loans which it would otherwise be authorized
to receive pursuant to Paragraph 5 of
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the Master Repurchase Agreement as modified by
Paragraph 4 of these Supplemental Terms shall cease,
and all rights to such payments shall thereupon become
vested in Buyer, which shall thereupon have the sole
right to receive such payments and apply them to the
amounts owed by Seller pursuant to the Agreement.
(ii) All payments that are received by Seller contrary to
the provisions of the preceding clause (i) shall be
received in trust for the benefit of Buyer, shall be
segregated from other funds of Seller and shall be
promptly paid to Buyer.
(iii) Buyer may unilaterally instruct the Servicer to direct
all payments of Mortgage Loan Income directly to Buyer.
(iv) Buyer may exercise any self-help remedies permitted by
applicable law.
(v) Buyer shall be entitled to the right of set off with
respect to any amounts owed by Buyer or any Affiliate
of Buyer to Seller or any Affiliate of Seller under any
contract, margin account or other arrangement.
(c) Any sale of Purchased Securities under Paragraph 11 of the Master
Repurchase Agreement as modified by these Supplemental Terms
shall be conducted in a commercially reasonable manner.
(d) Expenses incurred in connection with an Event of Default shall
include without limitation those reasonable costs and expenses
incurred by the nondefaulting party as a result of the early
termination of any repurchase agreement or reverse repurchase
agreement entered into by the nondefaulting party in connection
with the Transaction then in default.
17. APPLICATION OF PROCEEDS. The proceeds of any sale or other realization
of all or any part of the Purchased Securities, and any other cash at
the time held by Buyer under the Agreement, shall be applied by Buyer in
the following order of priority:
First, to the payment of all reasonable costs and expenses
of such sale incurred by Buyer and its Affiliates and all
reasonable expenses (including the fees and expenses of counsel),
liabilities and advances
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reasonably made or incurred by Buyer and its affiliates
in connection therewith.
Second, to the payment of the outstanding Repurchase Price
owed by Seller under the Agreement.
Third, to the payment of all other amounts owed by Seller
under the Agreement.
Fourth, to the payment of any other amounts owed by Seller
to Buyer or any Affiliate thereof under any other instrument or
agreement.
Fifth, to the payment to Seller, or to such other person
as a court of competent jurisdiction may direct, of any surplus
then remaining from such proceeds and other cash.
As used in the Agreement, "proceeds" of the Purchased
Securities shall mean cash and other property received or
otherwise realized in respect of the Purchased Securities.
18. FINANCIAL STATEMENTS.
(a) As of the date hereof, Seller shall provide, or cause to be
provided, to Buyer the audited year-end financial statements and
most recent available interim financial statement of PAMM. Seller
shall periodically provide, or cause to be provided to, Buyer,
without any request or other action on the part of Buyer, PAMM's
year-end balance sheet, income statement and cash flow statement,
audited by BDO ▇▇▇▇▇▇▇, LLP or another firm of independent
accountants acceptable to Buyer in its sole discretion, within
ninety (90) days after the end of PAMM's fiscal year, PAMM's
quarterly balance sheet income statement and cash flow statement,
within sixty (60) days after the end of the first three fiscal
Quarters in each of PAMM's fiscal years and PAMM's monthly
balance sheet and income statement within thirty (30) days after
the end of the first two months in each of PAMM's fiscal
quarters.
(b) Seller shall provide, or shall cause to be provided to, Buyer, at
the expense of Seller when requested by Buyer, with all periodic
unaudited balance sheets and income statements of PAMM and Seller
from time to time as soon after the preparation thereof as
practicable.
(c) Each delivery of Purchased Securities by Seller to Buyer
hereunder will constitute a representation by Seller that there
has been no material adverse change
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in Seller's or PAMM's financial condition not disclosed to Buyer
since the date of Seller's and PAMM's most recent unaudited
balance sheet or income statement delivered to Buyer. Seller
shall provide, or shall cause to be provided to, Buyer, from time
to time at Seller's expense, with such information concerning
Seller or PAMM of a financial or operational nature as Buyer may
reasonably request promptly upon receipt of such request.
19. PRICE DIFFERENTIAL; REPURCHASE PRICE.
(a) The Price Differential shall be payable in arrears with respect
to each Transaction, together with the Purchase Price therefor,
on the termination date for the related Transaction or as may be
otherwise mutually agreed upon by the parties and as specified in
the related Confirmation.
(b) All calculations of Price Differential shall be made on the basis
of a 360-day year and the actual number of days elapsed from, and
including, the related Purchase Date to, but excluding, the date
the related Repurchase Price is paid to Buyer.
(c) Payment of the Repurchase Price (including the Price
Differential) shall be made by wire transfer in immediately
available funds or in such other manner as may be mutually agreed
upon by Buyer and Seller in writing. Amounts received by Buyer
after 3:00 p.m., New York City time, on any Business Day shall be
deemed to have been paid by Seller and received by Buyer on the
next succeeding Business Day.
20. MAXIMUM TRANSACTION AMOUNT; TYPES OF MORTGAGE LOANS;
TRANSACTIONS PERMISSIVE.
(a) The aggregate outstanding Repurchase Price for the Purchased
Securities that are Mortgage Loans shall not at any time exceed
$120,000,000.
(b) The aggregate outstanding Repurchase Price for Purchased
Securities that are C Quality Mortgage Loans shall not at any
time exceed 30% of the aggregate outstanding Repurchase Price for
all Purchased Securities under the Agreement.
(c) The aggregate outstanding Repurchase Price for Purchased
Securities that are D Quality Mortgage Loans shall not at any
time exceed 15% of the aggregate outstanding Repurchase Price for
all Purchased Securities under the Agreement.
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(d) The aggregate outstanding Repurchase Price for Purchased
Securities that are C Quality Mortgage Loans and D Quality
Mortgage Loans shall not at any time exceed 45% of the aggregate
outstanding Repurchase Price for all Purchased Securities that
are A Quality Mortgage Loans and B Quality Mortgage Loans.
(e) The aggregate outstanding Repurchase Price for Mortgage Loans
that are not first lien residential mortgage loans shall not
exceed an amount equal to 20% of the aggregate outstanding
Repurchase Price for all Mortgage Loans subject to the Agreement.
(f) Any Mortgage Loan that is rejected for financing hereunder by
Buyer because such Mortgage Loan does not conform to the
requirements for financing set forth herein or any Mortgage Loan
assigned a Market Value of zero may be resubmitted for financing
hereunder but such financing shall be at Buyer's sole discretion,
whether or not any previous deficiency with respect to such
Mortgage Loan shall have been cured.
(g) Any provision hereof to the contrary notwithstanding, Buyer may
enter into Transactions hereunder in its sole individual
discretion but Buyer is not required to enter into any such
Transaction.
21. TERMINATION. Notwithstanding any provisions of Paragraph 15 of the
Master Repurchase Agreement to the contrary, the Agreement and all
Transactions outstanding hereunder shall terminate automatically without
any requirement for notice on the date occurring on the earlier of (i)
three hundred and sixty-four (364) days after the date of the Agreement
and (ii) the written agreement of Seller and Buyer; provided, however,
that notwithstanding the foregoing, the Agreement shall continue in full
force and effect until any outstanding Repurchase Price has been paid in
full. Upon termination of the Agreement and the payment of the
Repurchase Price with respect to all Transactions, Buyer shall release
its lien and security interest under the Agreement and assign, transfer
and deliver, against receipt, any remaining Purchased Securities and
money received in respect thereof to or on the order of Seller. Upon the
request of Seller, Buyer will then execute termination statements and
such other documents as Seller may reasonably request as are necessary
to make clear upon the public record the termination of the lien and
security interests created by the Agreement with respect to the
Purchased Securities.
▇-▇▇
▇▇
▇▇. ADDITIONAL INFORMATION; CONFIDENTIALITY.
(a) At any reasonable time during business hours, Seller shall permit
Buyer, its agents or attorneys, to inspect and copy any and all
documents and data in their possession pertaining to each
Mortgage Loan that is the subject of such Transaction. Such
inspection shall occur upon the request of Buyer at a mutually
agreeable location during regular business hours and on a date
not more than two (2) Business Days after the date of such
request.
(b) Seller agrees to provide Buyer from time to time with such
information concerning Seller or PAMM of a financial or
operational nature as Buyer may reasonably request.
(c) Each of the parties acknowledges that the Agreement and the
Custody Agreement 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) or as may be
necessitated by any filing requirements of the Securities and
Exchange Commission, it shall limit the distribution of such
documents to its officers, employees, attorneys, accountants and
agents as required in order to conduct its business with the
other parties hereto. This subparagraph (c) shall not apply to
information which has entered the public 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.
23. MARGIN MAINTENANCE. Paragraph 4(a) of the Master Repurchase Agreement is
hereby modified to provide that if the notice to be given by Buyer to
Seller under such paragraph is given at or prior to 1:00 p.m. New York
City time on a Business Day, Seller transfer the cash or Additional
Purchased Securities to Buyer (in the manner contemplated by the
Agreement and the Custody Agreement) prior to 1:00 p.m. New York City
time on the following Business Day, and if such notice is given after
1:00 p.m. New York City time, Seller shall transfer the cash or
Additional Purchased Securities (in the manner as aforesaid) prior to
the close of business in New York City on the Business Day following the
date of such notice.
24. OPINIONS OF COUNSEL. Seller shall, on the date of the first Transaction
hereunder and, upon the request of Buyer, on the
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date of any subsequent Transaction, cause to be delivered to Buyer, with
reliance thereon permitted as to any person or entity that purchases the
Mortgage Loans from Buyer in a repurchase transaction, a favorable
opinion of Seller's counsel with respect to the matters set forth in
Exhibit D hereto, in form and substance reasonably acceptable to Buyer.
25. SERVICING ARRANGEMENTS.
(a) The parties hereto agree and acknowledge that, notwithstanding
the purchase and sale of the Mortgage Loans contemplated hereby,
Seller shall continue to service, or cause the Servicer to
service, the Mortgage Loans for the benefit of Buyer and, if
Buyer shall exercise its rights to sell the Mortgage Loans
pursuant to the Agreement, Buyer's assigns; provided, however,
that the obligation to service Mortgage Loans for the benefit of
Buyer as aforesaid shall cease upon the receipt by Buyer of the
related Repurchase Price and all other amounts due to Buyer
hereunder with respect thereto.
(b) Seller shall service and administer, or cause the Servicer to
service and administer, the Mortgage Loans in accordance with
prudent mortgage loan servicing standards and procedures
generally accepted in the mortgage banking industry. Seller shall
at all times maintain, or cause the Servicer to maintain,
accurate and complete records of its servicing of the Mortgage
Loans.
(c) Seller shall cause the Servicer to provide directly to Buyer and
its permitted assigns with monthly reports concerning the
Mortgage Loans with such frequency and containing such
information as is set forth in Exhibit E hereto. In addition,
Seller shall deliver to Buyer on each business day a schedule of
Mortgage Loans reflecting current balances and such other
information as Buyer may reasonably request.
(d) Buyer shall, in connection with the exercise of its rights to
sell the Mortgage Loans pursuant to Paragraph 11(d) of the Master
Repurchase Agreement, have the option to sell the Mortgage Loans
on a servicing released basis without the payment of any
termination fee to Seller or any Servicer.
26. FURTHER ASSURANCES. Seller shall promptly provide such further
assurances or agreements as Buyer may request in order to effect the
purposes of the Agreement.
▇-▇▇
▇▇
▇▇. BUYER AS ATTORNEY-IN-FACT. Upon the occurrence and during the
continuation of an Event of Default, Buyer is hereby appointed the
attorney-in-fact of Seller for the purpose of carrying out the
provisions of the Agreement and taking any action and executing 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. Without limiting the generality of the
foregoing, after an Event of Default has occurred and is continuing,
Buyer shall have the right and power to (i) take any action Buyer deems
prudent to direct the receipt of payments on any Mortgage Loan from the
Servicer thereof to Buyer or its designee, including, without
limitation, the sending of any letter which irrevocably instructs such
Servicer to make all payments directly to Buyer or its designee, and
(ii) receive, endorse and collect all checks made payable to the order
of Seller representing any payment on account of the principal of or
interest on any of the Purchased Securities and to give full discharge
for the same.
28. PERMITTED ASSIGNMENT.
(a) Seller shall not assign to any Person its duties and obligations
under the Agreement or the Custody Agreement or its liabilities
with respect to the Agreement or the Custody Agreement without
the express written consent of Buyer.
(b) Notwithstanding any assignment of rights as contemplated by
Paragraph 29(a) of these Supplemental Terms, Seller shall remain
obligated to Buyer pursuant to the terms of the Agreement as
though no such assignment had occurred.
(c) Buyer's rights and remedies with respect to the Mortgage Loans
and otherwise under the Agreement shall not be affected by any
such assignment.
29. APPOINTMENT OF AGENT. MLCC hereby appoints MLMCI as its agent for
purposes of reviewing and executing Confirmation/Funding Requests,
determining Market Value, exercising any termination option provided for
in Paragraph 17 of these Supplemental Terms, exercising MLCC's rights
under any margin maintenance provision of the Agreement, exercising
MLCC's rights under the default provisions of the Agreement and such
other purposes as MLCC may direct. The appointment of such agent shall
not relieve MLCC of its obligations as Buyer hereunder.
30. CROSS-COLLATERALIZATION; RIGHT OF SET-OFF. MLMCI may, in its sole
discretion upon the occurrence and during the
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continuation of an Event of Default hereunder, proceed against any
assets held by it under the Master Assignment Agreement and shall have a
right of set-off against any amounts owed by MLMCI to Seller under the
Master Assignment Agreement. In addition, the parties agree that MLMCI
may, in its sole discretion upon the occurrence and during the
continuation of an event of default under the Master Assignment
Agreement, proceed against any assets held by it hereunder and shall
have a right of set-off against any amounts owed by MLMCI to Seller
hereunder.
31. EXPENSES. Seller shall pay its own expenses incurred in connection with
the transactions contemplated hereby. In addition, Seller shall pay the
fees and expenses incurred by Buyer in connection with the transactions
contemplated hereby (including without limitation the fees and expenses
of Buyer's counsel, which fees and expenses shall not exceed $50,000
without Seller's prior written consent).
32. COUNTERPARTS. The Agreement may be executed in any number of
counterparts, each of which counterparts shall be deemed to be an
original, and such counterparts shall constitute but one and the same
instrument.
33. BINDING TERMS. All of the covenants, stipulations, promises and
agreements in the Agreement shall bind the successors and assigns of the
parties hereto, whether expressed or not.
34. NOTICES AND OTHER COMMUNICATIONS. Any provision of Paragraph 13 of the
Master Repurchase Agreement to the contrary notwithstanding, any notice
required or permitted by the Agreement shall be in writing (including
telegraphic, facsimile or telex communication) and shall be effective
and deemed delivered only when received by the party to which it is
sent; provided, however, that a facsimile transmission shall be deemed
to be received when transmitted so long as the transmitting machine has
provided an electronic confirmation of such transmission. Any such
notice shall be sent to a party at the address or facsimile transmission
number set forth in Annex II attached hereto.
35. INCORPORATION OF TERMS. The Master Repurchase Agreement as supplemented
hereby shall be read, taken and construed as one and the same
instrument.
36. CONTROLLING AGREEMENT. The Agreement shall supersede all other
agreements between the parties relating to the subject matter hereof.
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EXHIBIT A
CONFIRMATION/FUNDING REQUEST
TO: PacificAmerica Securities, Inc. FROM: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc.
______________________________ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Floor
______________________________ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ________________ Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc. ("Buyer") is pleased to confirm your sale
and our purchase of the Mortgage Loans listed on Attachment I hereto pursuant to
the Master Repurchase Agreement (including the supplemental terms set forth in
Annex I thereto), dated as of October 31, 1997 (the "Master Repurchase
Agreement") among Buyer and Pacific Thrift and Loan under the following terms
and conditions:
ORIG PRIN AMT OF MTG LOANS: _____ _____ _____ _____ _____
REM PRIN AMT OF MTG LOANS: _____ _____ _____ _____ _____
PURCHASE DATE: _____ _____ _____ _____ _____
REPURCHASE DATE: _____ _____ _____ _____ _____
PURCHASE PRICE: _____ _____ _____ _____ _____
PRICING RATE: _____ _____ _____ _____ _____
PRICE DIFFERENTIAL DUE: _____ _____ _____ _____ _____
BUYER'S MARGIN AMOUNT: _____ _____ _____ _____ _____
SELLER'S MARGIN AMOUNT: _____ _____ _____ _____ _____
The Master Repurchase Agreement is incorporated by reference into this
Confirmation/Funding Request and made a part hereof as if it were fully set
forth herein. All capitalized terms used herein but not otherwise defined shall
have the meanings specified in the Master Repurchase Agreement.
PACIFICAMERICA SECURITIES, INC. ▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE CAPITAL INC.
BY: ______________________________ BY: ______________________________
NAME: ____________________________ NAME: ____________________________
TITLE: ___________________________ TITLE: ___________________________
▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇ I
TO EXHIBIT A
CONFIRMATION/FUNDING REQUEST FOR MORTGAGE LOANS
Request No. ___
Date: _________
Product Wire Loan Borrower Loan Purchase Market Takeout Note Commitment Takeout Maturity
Investor Type Date Number Last Amount Price Value Date Rate Number* Price Date
-------- ------- ---- ------ -------- ------ -------- ------ ------- ---- ---------- ------- --------
TOTALS:
PACIFICAMERICA SECURITIES, INC.**
By: ______________________________
Title: ______________________________
Date: ______________________________
Amount to be
funded by Buyer: $____________
* To be provided within 2 Business Days of funding if not currently available.
** PacificAmerica Securities, INc. hereby represents that no warehouse lien or
other lien or encumbrance exists with respect to the above-referenced Mortgage
Loans.
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EXHIBIT D
OPINION OF COUNSEL TO SELLER
1. Seller is a duly organized and validly existing corporation in good
standing under the laws of the State of ________ and has all power and
authority (corporate and other) to enter into and perform its obligations
under the Agreement and the Custody Agreement. Seller is duly qualified to
do business and is in good standing in each jurisdiction in which the
character of the business transacted by it requires such qualification and
in which the failure so to qualify would have a material adverse effect on
the business, properties, prospects, assets or condition (financial or
other) of Seller and its subsidiaries, considered as a whole.
2. The Agreement and the Custody Agreement have each been duly authorized,
executed and delivered by Seller.
3. The consummation of any of the transactions contemplated by the Agreement
and the Custody Agreement will not conflict with, result in a breach of, or
constitute a default under the charter or bylaws of Seller or the terms of
any indenture or other agreement or instrument known to us to which Seller
is party or bound, or any order known to such counsel to be applicable to
Seller or any regulations applicable to Seller, of any state or federal
court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over Seller.
4. Each note relating to a Mortgage Loan will have been endorsed in a manner
which satisfies any requirement of endorsement in order to transfer all
right, title and interest in and to that Mortgage Loan from Seller to
Buyer. Each assignment of Mortgage related to each Mortgage Loan is in
recordable form and is sufficient under applicable law to validly and
effectively transfer all right, title and interest of Seller to Buyer. The
Agreement together with (a) the delivery of such related notes to the
Custodian; (b) the endorsement of such Notes in blank; and (c) the delivery
of the assignments of Mortgages related to the Mortgage Loans to the
Custodian in recordable form assigning such Mortgages in blank, creates a
valid, perfected security interest in such Mortgage Loans in favor of
Custodian for the benefit of Buyer; such security interest will have the
same priority and will be subject to the same security interests and liens
as apply to such Mortgage Loans in the hands of Seller.
5. The Agreement and the Custody Agreement each constitute a valid and legally
binding obligation of Seller enforceable against Seller in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and
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43
other laws of general applicability relating to or affecting creditors'
rights generally and to general equity principles.
6. No consent, approval, authorization or order of any state or federal court
or government agency or body is required to be obtained by Seller for the
consummation of the transactions contemplated by the Agreement or the
Custody Agreement.
7. The consummation of any of the transactions contemplated by the Agreement
and the Custody Agreement will not conflict with, result in a breach of, or
constitute a default under any regulations applicable to Seller, of any
state or federal court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over Seller.
8. [Substantive Consolidation and True Sale]
D-2
44
EXHIBIT E
MONTHLY MORTGAGE LOAN REPORT
[Date of Report]
Mortgage No. of Days
Loan Subject to No. of Days
Number Agreement Delinquent
-------- ------------ -----------
▇-▇
▇▇
▇▇▇▇▇ ▇▇
Names and Addresses for Communications Between Parties
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE CAPITAL INC.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Vice President
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
World Financial Center
▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT CORPORATION c/o
Merrill ▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Vice President
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
World Financial Center
▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
in each case with a copy to
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Director
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
World Financial Center
▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
II-1
46
PACIFICAMERICA SECURITIES, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (818) 992-8999 ext. 260
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (818) 992-8999 ext. 298
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (818) 992-8999 ext. 222
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Jeffer, Mangels, ▇▇▇▇▇▇ & Marmaro LLP
2121 Avenue of the Stars
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
II-2