Exhibit 10.2
Execution Version
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MASTER REPURCHASE AGREEMENT
_____________________________
Dated as of January 31, 2003
_____________________________
by and among
DSHI COMMERCIAL INVESTMENTS, INC.
as Seller,
LNR PROPERTY CORPORATION,
as Guarantor,
and
BANC OF AMERICA MORTGAGE CAPITAL CORPORATION,
as Buyer
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS ............................................................. 1
1.1 Defined Terms ........................................................... 1
1.2 Other Definitional Provisions ........................................... 13
SECTION 2. INITIATION; CONFIRMATION; TERMINATION ................................... 14
2.1 Initiation .............................................................. 14
2.2 Confirmation ............................................................ 14
2.3 Termination ............................................................. 15
2.4 Extension of Termination Date ........................................... 15
SECTION 3. AMOUNTS AND TERMS OF TRANSACTIONS ....................................... 15
3.1 Maximum Purchase Price .................................................. 15
3.2 Minimum Purchase Amount ................................................. 15
3.3 Periodic Payments of Price Differential ................................. 15
SECTION 4. MARGIN MAINTENANCE ...................................................... 16
4.1 Margin Deficit .......................................................... 16
4.2 Transfer of Cash or Additional Purchased Securities ..................... 16
4.3 Attribution of Transferred Cash or Additional Purchased Securities ...... 16
4.4 Right to Margin Maintenance ............................................. 16
SECTION 5. INCOME PAYMENTS ......................................................... 16
SECTION 6. SECURITY INTEREST ....................................................... ▇▇
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▇▇▇▇▇▇▇ ▇. PAYMENT AND TRANSFER ........................................................ 17
SECTION 8. SEGREGATION OF PURCHASED SECURITIES ......................................... 18
8.1 Segregation of Purchased Securities ......................................... 18
8.2 Required Disclosure for Certain Transactions ................................ 18
SECTION 9. SUBSTITUTION ................................................................ 18
SECTION 10. REPRESENTATIONS AND WARRANTIES .............................................. 18
10.1 Representations and Warranties of each Party ................................ 18
10.2 Additional Representations and Warranties of the Repurchase Parties ......... 19
10.3 Financial Condition ......................................................... 24
SECTION 11. CONDITIONS PRECEDENT ........................................................ 25
11.1 Conditions Precedent to Sale of Securities .................................. 25
SECTION 12. AFFIRMATIVE COVENANTS ....................................................... 27
12.1 Financial Statements ........................................................ 27
12.2 Certificates; Other Information ............................................. 28
12.3 Payment of Obligations ...................................................... 29
12.4 Conduct of Business and Maintenance of Existence ............................ 29
12.5 Maintenance of Property; Insurance .......................................... 29
12.6 Inspection of Property; Books and Records; Discussions ...................... 29
12.7 Notices ..................................................................... 30
12.8 ERISA ....................................................................... 31
12.9 Information Relating to Purchased Securities ................................ 31
12.10 Distributions in Respect of Purchased Securities ............................ 31
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12.11 Further Assurances ................................................. 31
12.12 Amendments to Offering Documents ................................... 32
12.13 Security Interest; Concerning Purchased Securities. ................ 32
12.14 Servicing of Commercial Mortgage Loans ............................. 32
12.15 Financial Covenants ................................................ 33
SECTION 13. NEGATIVE COVENANTS ................................................. 33
13.1 Limitation on Indebtedness ......................................... 33
13.2 Limitation on Liens ................................................ 33
13.3 Limitation on Guarantee Obligations ................................ 34
13.4 Limitation on Fundamental Changes .................................. 34
13.5 Limitation on Transactions with Affiliates ......................... 34
13.6 Limitation on Changes in Fiscal Year ............................... 34
13.7 Unrelated Activities ............................................... 34
13.8 Governing Documents ................................................ 35
13.9 Separateness ....................................................... 35
13.10 ERISA .............................................................. 36
SECTION 14. EVENTS OF DEFAULT; REMEDIES ........................................ 36
14.1 Events of Default .................................................. 36
14.2 Remedies ........................................................... 37
SECTION 15. INDEMNIFICATION .................................................... 39
SECTION 16. MISCELLANEOUS ...................................................... 41
16.1 Single Agreement ................................................... 41
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16.2 Notices and Other Communications ............................................. 41
16.3 No Waivers, Etc .............................................................. 41
16.4 Entire Agreement; Severability ............................................... 41
16.5 Assignments and Participations; Hypothecation of Securities; Termination ..... 41
16.6 Governing Law ................................................................ 42
16.7 Submission To Jurisdiction; Waivers .......................................... 42
16.8 WAIVER OF JURY TRIAL ......................................................... 43
16.9 Counterparts ................................................................. 43
16.10 Use of Employee Plan Assets .................................................. 43
16.11 Intent ....................................................................... 43
16.12 Disclosure Relating to Certain Federal Protections ........................... 44
16.13 Confidentiality .............................................................. 44
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SCHEDULES
Schedule 1 CMBS Residual Certificates
Schedule 10.2(l) Locations of Repurchase Parties
Schedule 10.2(s) Subsidiaries
Schedule 10.3(a) Contingent Liabilities
Schedule 13.2 Permitted Indebtedness
Schedule 16.2 Addresses for Notices
EXHIBITS
Exhibit A Form of Guarantee
Exhibit B-1 Form of CMBS Confirmation
Exhibit B-2 Form of B-Note Confirmation
Exhibit C Form of Summary of Purchased Security Key Data
Exhibit D Form of Covenant Compliance Certificate
Exhibit E Form of Servicer Notice and Agreement
Exhibit F Form of Exception Report
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MASTER REPURCHASE AGREEMENT
MASTER REPURCHASE AGREEMENT, dated as of January 31, 2003 (as amended,
supplemented or otherwise modified from time to time, this "Agreement"), by and
among DSHI COMMERCIAL INVESTMENTS, INC., a Delaware corporation (the "Seller"),
LNR PROPERTY CORPORATION, a Delaware corporation (the "Guarantor") and Banc of
America Mortgage Capital Corporation ("BAMCC") (the "Buyer").
RECITALS
Lennar Capital Services, Inc., Delaware Securities Holdings, Inc.,
Bank of America, N.A. and Banc of America Securities LLC are parties to that
certain Fourth Amended and Restated Credit Agreement (the "Fourth Amended and
Restated Agreement"), dated as of November 30, 2001.
Lennar Capital Services, Inc., Delaware Securities Holdings, Inc.
(collectively, the "Existing Sellers") and Banc of America Mortgage Capital
Corporation are parties to that certain Master Repurchase Agreement, dated as of
September 26, 2000 (as amended, supplemented or otherwise modified from time to
time, including by Annex I, the "Existing Repurchase Agreement").
The Fourth Amended and Restated Agreement and the Existing Repurchase
Agreement are being terminated as of the date hereof concurrently with the
execution of this Agreement by the parties hereto. Immediately prior to the
execution of this Agreement, the Purchased Securities (as defined in the
Existing Repurchase Agreement) subject to Transactions pursuant to the Existing
Repurchase Agreement will be repurchased by the Existing Sellers and ownership
of such securities will be transferred to the Seller. On the date hereof, the
Buyer shall purchase such securities pursuant to the terms hereof.
From time to time the Seller and the Buyer may enter into
transactions, subject to the terms and conditions hereof, pursuant to which the
Seller agrees to sell to the Buyer and the Buyer agrees to purchase from the
Seller certain Eligible Securities (defined below) against payment by the Buyer
of a purchase price, with a simultaneous agreement by the Buyer to sell to the
Seller and by the Seller to repurchase from the Buyer such Eligible Securities
at a date certain, as specified in the related Confirmation (defined below),
against payment by the Seller of a repurchase price determined in accordance
herewith.
NOW THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Acceptable Special Servicer": (a) an Affiliate of the Seller,
reasonably acceptable to the Buyer, in the business of servicing distressed
commercial or multifamily mortgage loans, or (b) any other Person acceptable to
the Buyer in its sole discretion.
"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 30 days, (iii) the making by such party of a general
assignment for the benefit of creditors, or (iv) the admission in writing by
such party of such party's inability to pay such party's debts as they become
due.
"Additional Purchased Securities: as defined in Section 4.1.
"Affiliate": any Person which directly or indirectly controls, or is
under common control with, or is controlled by, another Person. As used in this
definition, "control" (including, with its correlative meanings, "controlled by"
and "under common control with") shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise); provided that, in any event, any Person which owns
directly or indirectly 10% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
10% or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to control
such corporation or other Person.
"Agreement": this Master Repurchase Agreement, as amended,
supplemented or otherwise modified from time to time.
"B-Note": any (a) subordinate mortgage note relating to a Commercial
Mortgage Loan, (b) any subordinate participation in such Commercial Mortgage
Loan or (c) any similar interest in such a Commercial Mortgage Loan approved by
the Buyer in its sole discretion to be treated as a "B Note" hereunder.
"Book Value": with respect to any Purchased Security, the purchase
price which the Seller initially paid for such Purchased Security including any
loss/price adjustments less the sum of all principal paydowns and realized
losses relating to such Purchased Security, such value shall be determined by
the Seller and notified to the Buyer, which calculation and calculation
methodology must be acceptable to the Buyer, not less frequently than on a
quarterly basis.
"Breakage Costs": as defined in Section 3.3(b).
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"Business Day": any day other than (i) a Saturday or Sunday or (ii) a
day on which the New York Stock Exchange, the Federal Reserve Bank of New York,
Bank of America, N.A. or banks in the State of Florida are authorized or
obligated by law or executive order to be closed.
"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.
"Buyer's Margin Percentage": with respect to any Transaction as of any
date, the Buyer's Margin Percentage set forth in the table below opposite the
applicable Purchased Security description:
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Purchased Security Buyer's Margin Percentage
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B-Note LTV:
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0% to 75% 133.33%
76% to 80% 153.85%
81% to 85% 181.82%
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CMBS Rating:
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BB or better 133.33%
B through BB- 153.85%
B-/Unrated 181.82%
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"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent equity ownership interests in a Person which is not a
corporation and any and all warrants or options to purchase any of the
foregoing.
"Closing Date": January 31, 2003.
"CMBS": any security which has been issued pursuant to a pooling and
servicing agreement evidencing beneficial interests in one or more pools of
Commercial Mortgage Loans serviced by an Acceptable Special Servicer pursuant to
a Special Servicing Agreement.
"Code": the Internal Revenue Code of 1986 as amended from time to
time, or any replacement or successor statute, and the regulations promulgated
thereunder from time to time.
"Commercial Mortgage Loan": a mortgage loan secured by a Commercial
Property.
"Commercial Property": (i) with respect to CMBS, a parcel of
commercial real property constituting multi-family residential, retail, office
real property, or other type of commercial real property including all
improvements, buildings and fixtures thereon and (ii) with respect to any
B-Note, a parcel of commercial real property constituting multi-family
residential, retail, office real property, or other type of commercial real
property approved by the
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Buyer (specifically excluding, without limitation, commercial real properties
primarily operated as hotels, marinas golf courses or healthcare facilities)
including all improvements, buildings and fixtures thereon.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with a Seller within the meaning of Section 4001
of ERISA.
"Confirmation": as defined in Section 2.2.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
"Control Account": the account set forth on Schedule 2 hereto into
which payments of Income with respect to the Purchased Securities will be
deposited by each Servicer and trustee, as applicable.
"Costs": as defined in Section 15.
"Debt Service Coverage Ratio": for each Commercial Property, as of any
date of determination, for the preceding four (4) calendar quarters ending with
the most recently completed calendar quarter, the ratio, as determined by the
Buyer, of net operating income to (ii) the aggregate amount of scheduled
principal and/or interest payments with respect to each Commercial Mortgage Loan
secured by such Commercial Property which would be due for the same period
assuming the maximum principal amount of each Commercial Mortgage Loan secured
by such Commercial Property is outstanding.
"Default": any of the events specified in Section 14.1, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Eligible Securities": any CMBS, B-Notes and any other security or
asset acceptable to the Buyer in its sole and absolute discretion; provided,
that Eligible Securities shall in no event include:
(a) any CMBS or B-Note that entitles the holder to payments based only
or disproportionately on the interest portion of payments on the underlying
Commercial Mortgage Loans;
(b) any CMBS or B-Note that entitles the holder to payments based only
or disproportionately on the principal portion of payments on the underlying
Commercial Mortgage Loans;
(c) except to the extent listed on Schedule 1, any CMBS that is a
"residual certificate" as defined in Section 860G(a)(2) of the Internal Revenue
Code of 1986, as amended;
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(d) any CMBS or B-Note as to which the Buyer determines in its sole
discretion that the Commercial Mortgage Loans or the Commercial Property, as
applicable, underlying such CMBS or B-Note are not acceptable;
(e) any CMBS or B-Note that is in default after giving effect to
applicable notice, grace and cure periods, if any;
(f) any B-Note with a maturity date more than 5 years after Purchase
Date;
(g) any B-Note that is subject to a fixed rate of interest; and
(h) any B-Note with a Loan-to-Value Ratio in excess of 85%.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or requirements of law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Rate": with respect to each day during any calendar month
a Transaction is outstanding, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) as of the first calendar day of such month,
appearing on Telerate Page 3750 (or any successor page) as the one month London
interbank offered rate for deposits in U.S. Dollars at approximately 11:00 a.m.,
London time, in an amount comparable to the amount of the Transactions to be
outstanding on such day. If for any reason such rate is not available, the term
"Eurodollar Rate" shall mean, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) as of the first calendar day of such month,
appearing on Reuters Screen LIBO Page as the one month London interbank offered
rate for deposits in U.S. Dollars at approximately 11:00 a.m., London time, on
such date in an amount comparable to the amount of the Transactions to be
outstanding on such day; provided, however, if more than one rate is specified
on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.
"Event of Default": as defined in Section 14.1.
"Fee Letter": the Fee Letter, dated January 31, 2003, between the
Buyer and the Seller, as amended, supplemented or otherwise modified from time
to time.
"Fitch": Fitch Investors Service, L.P., or any successor thereto.
"GAAP": generally accepted accounting principles as in effect from
time to time in the United States.
"Governing Documents": as to any Person, the articles or certificate
of incorporation and by-laws or other organizational or governing documents of
such Person.
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"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee": the guarantee made by the Guarantor in favor of the
Buyer, dated as of the date hereof, in the form of Exhibit A attached hereto.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation (determined without duplication) of the guaranteeing person (or
any other Person [including any bank under any letter of credit] if the
guaranteeing person has issued a reimbursement, counter indemnity or similar
obligation in favor of such other Person) guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends or other obligations(the "primary
obligations") of any other third Person (the "primary obligor") in any manner,
whether directly or indirectly, including any obligation of the guaranteeing
person, whether or not contingent, (i) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (iv) otherwise
to assure or hold harmless the owner of any such primary obligation against loss
in respect thereof; provided, however, that the term Guarantee Obligation shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the maximum stated amount of the
primary obligation relating to such Guarantee Obligation (or, if less, the
maximum stated liability set forth in the instrument embodying such Guarantee
Obligation), provided, however, that in the absence of any such stated amount or
stated liability, the amount of such Guarantee Obligation shall be such
guaranteeing person's maximum reasonably anticipated liability in respect
thereof as reasonably determined by the Guarantor in good faith, subject to the
Seller's approval.
"Guarantor": as defined in the introductory paragraph hereof.
"Guarantor Tax Credits" is defined in clause (i) of the definition of
Tax Credits.
"Income": with respect to any Security at any time, any principal
thereof and all interest, dividends or other distributions thereon.
"Indebtedness": of any Person at any date means, without duplication,
(a) all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services (other than
trade liabilities and other accounts payable and accrued expenses incurred in
the ordinary course of business and payable in accordance with customary
practices, which are not 60 days or more past due), to the extent such
obligations constitute indebtedness for the purposes of GAAP, (c) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (d) all obligations of such Person under financing leases
and capital leases, (e) all obligations of such Person in respect of acceptances
issued or created for the account of such Person, (f) all Guarantee
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Obligations of such Person (excluding in any calculation of consolidated
indebtedness of the Guarantor, Guarantee Obligations of the Guarantor in respect
of primary obligations of any Subsidiary), (g) all reimbursement obligations of
such Person for letters of credit and other similar contingent liabilities, (h)
all liabilities secured by any Lien (other than Liens for taxes not yet due and
payable) on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof, (i) any repurchase
obligation or liability of such Person or any of its Subsidiaries with respect
to accounts or notes receivable sold by such Person or any of its Subsidiaries,
(j) Senior Preferred Stock, (k) such Person's pro rata share of recourse debt of
Special Investment Affiliates and any recourse loans where such Person is liable
as a general partner or otherwise, and (l) all obligations to make advances and
contributions to Investment Affiliates.
"Indemnified Party": as defined in Section 15.
"Independent Director": means a natural Person who is not at the time
of initial appointment as Independent Director, and may not have been at any
time during the five years preceding such initial appointment or at any time
while serving as Independent Director, (i) a stockholder (with the exception of
the direct or indirect ownership of a relatively incidental number of shares in
the indirect parent of the Seller by such Independent Director or an Industry
Company providing such Independent Director), director (with the exception of
serving as the Independent Director of the Seller), officer, employee, partner,
member, attorney or counsel of the Seller or any Affiliate; (ii) a creditor,
customer, supplier or other person who derives any of its purchases or revenues
from its activities with the Seller or any Affiliate; (iii) a natual Person
controlling or under common control with any Person that would be excluded from
serving as an Independent Director under (i) or (ii), above; or (iv) a member of
the immediate family of a natural Person excluded from servicing as an
Independent Director under (i) or (ii), above; provided, however, (v) a natural
Person who satisfies the foregoing definition other than under (ii), above,
shall not be disqualified from serving as an Independent Director of the Seller
if such individual is an independent director provided by an Industry Company,
and (vi) a natural Person who otherwise satisfies the foregoing definition
except for being a past, existing or future director of an Affiliate of the
Seller who shall otherwise be employed by an Industry Company that is providing,
has provided or shall provide a director of an Affiliate of the Seller, shall be
permitted to serve as an Independent Director of the Seller for so long as such
individual is an independent director provided by an Industry Company and is not
at the time of initial appointment, or at any time while serving as such
Independent Director, an Independent Director of an Affiliate whose
organizational documents contain restrictions on its activities substantially
similar to those set forth in Section 9 of the Certificate of Incorporation of
the Seller and that holds a direct or indirect equity interest in the Seller.
"Industry Company": a nationally recognized company that provides
professional independent directors and other corporate services in the ordinary
course of its business.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": at any time, a Multiemployer Plan is insolvent within the
meaning of Section 4245 of ERISA.
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"Lien": any mortgage, pledge, hypothecation, deposit arrangement,
preference, priority, security interest, collateral assignment, statutory or
consensual lien, charge, restriction or other encumbrance of any kind (including
any repurchase agreement, any conditional sale or other title retention
agreement or lease in the nature thereof, any filing or agreement to file a
financing statement as debtor under the Uniform Commercial Code on any property
leased to any Person under a lease which is not in the nature of a conditional
sale or title retention agreement, or any subordination agreement in favor of
another Person). For purposes of this Agreement, a Lien on the Capital Stock of
any Person shall be deemed to constitute a Lien on the assets of said Person.
"Loan-to-Value Ratio" or "LTV": for each Commercial Property that
secures a B-Note, the ratio expressed as a percentage, of (i) the aggregate
outstanding principal amounts of each applicable Commercial Mortgage Loan
secured by such Commercial Property (including, without limitation, the
outstanding principal amount of each applicable B-Note) at the time the
loan-to-value ratio is being calculated to (ii) the Market Value of such
Commercial Property at the time the loan-to-value ratio is being calculated.
"Margin Deficit: as defined in Section 4.1
"Market Value": with respect to any Purchased Security as of any time,
the lesser of (i) the most recently determined Book Value for such Purchased
Security and (ii) the price at such time at which such Purchased Security could
readily be sold as determined in good faith by Banc of America Securities LLC in
its sole discretion (or any other party in its sole discretion approved by the
Buyer) and with respect to any B-Note, taking into account, without limitation,
credit quality, delinquency status and aging, in each case, which price may be
determined to be zero, plus accrued Income to the extent not included therein
(other than any Income credited or transferred to, or applied to the obligations
of, the Seller pursuant to Section 5 hereof) as of such date (unless contrary to
market practice for such Security).
"Material Adverse Effect": a material adverse effect on (a) the
property, business, operations or financial condition of the Seller or the
Guarantor, (b) the ability of the Seller to perform its obligations under this
Agreement or the Guarantor to perform its obligations under the Guarantee, (c)
the validity or enforceability of either this Agreement or the Guarantee, (d)
the rights and remedies of the Buyer under this Agreement or the Guarantee, or
(e) the timely payment of the Repurchase Price or any Price Differential or
other amounts payable in connection therewith.
"Maximum Purchase Price": $100,000,000.
"Materials of Environmental Concern": any mold, any petroleum
(including crude oil or any fraction thereof) or petroleum products (including,
without limitation, gasoline) or any hazardous or toxic substances, materials or
wastes, defined as such in or regulated under any Environmental Law, including,
without limitation, asbestos, polychlorinated biphenyls, and urea-formaldehyde
insulation.
"Minimum Purchase Amount": $1,000,000.
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"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc., or any successor thereto.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Non-Bank of America Securities": any B-Note or CMBS issued by a
Person other than Bank of America, N.A. or an Affiliate of Bank of America, N.A.
"Non-Bank of America Sublimit": as defined in Section 3.1.
"Offering Document": the indenture, pooling and servicing agreement or
other document pursuant to which a Purchased Security has been issued.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Person": any legal person, including any individual, corporation,
limited liability company, partnership, joint venture, estate, association,
joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof, or any other entity.
"Plan": at any time, any employee benefit plan which is covered by
ERISA and in respect of which the Seller or a Commonly Controlled Entity is (or,
if such plan were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement": that certain Pledge Agreement, dated as of January
31, 2003, made by Seller for the benefit of Buyer.
"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)
the date of determination (reduced by any amount of such Price Differential
previously paid by Seller to Buyer with respect to such Transaction).
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"Pricing Rate": as of any date, the Pricing Rate set forth in the
table below in the column corresponding to the appropriate Purchased Security
description:
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Purchased Security Pricing Rate
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B-Note LTV: Eurodollar Rate plus:
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0% to 75% 1.50%
76% to 80% 1.70%
81% to 85% 1.90%
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CMBS Rating: Eurodollar Rate plus:
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BB or better 1.50%
B through BB- 1.70%
B-/Unrated 1.90%
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"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).
"Promissory Note": that certain Demand Promissory Note, dated as of
January 30, 2003, made by Guarantor in favor of Seller.
"Purchase Date": the date on which Purchased Securities are to be
transferred by the Seller to the Buyer.
"Purchase Price": (a) on the Purchase Date, the price at which the
Purchased Securities are transferred by the Seller to the Buyer, which price
shall not exceed the product of (x) the Market Value of the Purchased Securities
to be purchased times (y) the Purchase Rate set forth in the table below
opposite the appropriate Purchased Security description:
-------------------------------------------------------------------------
Purchased Security Purchase Rate
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B-Note LTV:
---
0% to 75% 75%
76% to 80% 65%
81% to 85% 55%
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CMBS Rating:
------
BB or better 75%
B through BB- 65%
B-/Unrated 55%
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(b) thereafter, except where the Buyer and the Seller agree otherwise,
such price to be decreased by the amount of any cash transferred by the Seller
to the Buyer pursuant to Section 4 hereof or applied to reduce the Seller's
obligations under clause (ii) of Section 5 hereof.
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"Purchase Rate": for any Purchased Security, the maximum amount,
expressed as a percentage of the Market Value of such Purchased Security,
payable by the Buyer on the Purchase Date as the Purchase Price.
"Purchased Securities": Eligible Securities transferred by the Seller
to the Buyer in a Transaction hereunder, and any Eligible Securities substituted
therefor in accordance with Section 9 hereof. The term "Purchased Securities"
with respect to any Transaction at any time shall also include Additional
Purchased Securities delivered pursuant to Section 4.1 hereof.
"Rating": in respect of any CMBS or B- Note, if applicable, a rating
assigned by S&P, Moody's, Fitch or another nationally recognized rating agency
acceptable to the Buyer. Unless otherwise noted, a rating shall reference the
rating designations used by S&P. Any reference to a rating assigned by any
rating agency other than S&P shall refer to the rating which is the nearest
equivalent to the designation used by S&P.
"Related Document": the Guarantee, each Confirmation, each Offering
Document and any other document executed in connection with this Agreement or
with a Securitization Transaction, or related thereto.
"Repurchase Date": for each Transaction, 5:00 p.m., New York City
time, on the Termination Date, or if such date is not a Business Day, the next
succeeding Business Day, or such earlier date as the related Purchased
Securities may be repurchased pursuant to Section 2.3, Section 4.1 or Section
14.2 of this Agreement.
"Repurchase Parties": the collective reference to the Seller and the
Guarantor.
"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.
"Reorganization": at any time, a Multiemployer Plan is in
reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA or the regulations thereunder, other than those events as to which the
thirty day notice period is waived under subsections .21, .22, .23, .26, .27 or
..28 of PBGC Reg.(S) 4043.
"Requirement of Law": as to any Person, the Governing Documents of
such Person, if applicable, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": as to any Repurchase Party, each of the chief
executive officer and the president, or, with respect to financial matters, the
chief financial officer, chief accounting officer or controller of such entity,
as applicable.
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"Revolving Credit Agreement": the Third Amendment and Restated
Revolving Credit Agreement, dated as of November 27, 2002, among Guarantor, the
Lenders named therein, Bank of America, N.A., as administrative agent, Guaranty
Bank, as syndication agent, and Fleet National Bank and U.S. Bank, National
Association, as co-documentation agents with Bank of America Securities LLC, as
sole lead arranger and sole book manager.
"S&P": Standard & Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇,
Inc., or any successor thereto.
"SEC": the Securities and Exchange Commission.
"Securities": any Eligible Securities or Purchased Securities.
"Securitization Transaction": each of the securitization transactions,
if applicable, pursuant to which a Purchased Security was issued.
"Servicer": as defined in Section 12.14.
"Servicer Notice and Agreement": as defined in Section 12.14.
"Servicing Standard": With respect to any Servicer the servicing and
administration of the Commercial Mortgage Loans or Properties, if applicable,
for which it is responsible (a) in the same manner in which, and with the same
care, skill, prudence and diligence with which, the Servicer, generally services
and administers similar mortgage loans or properties with similar borrowers (i)
for other third-parties, giving due consideration to customary and usual
standards of practice of prudent institutional commercial mortgage lenders
servicing their own loans or properties or (ii) held in its own portfolio,
whichever standard is higher, (b) with a view to the maximization of the
recovery on such Commercial Mortgage Loan or Property on a net present value
basis and the best interests of the certificateholders or, if a B-Note is
involved, with a view towards the maximization of recovery on such pair of
Commercial Mortgage Loans to the certificateholders and the related B-Note
holder (as a collective whole), and (c) without regard to (i) any relationship
that the Servicer or any Affiliate thereof may have with the related mortgagor,
any mortgage loan seller or any other party to the transaction or any of their
Affiliates; (ii) the ownership of any CMBS or B-Note by the Servicer or by any
Affiliate thereof; (iii) the right of the Servicer to receive compensation or
other fees for its services; (iv) the obligations of the Servicer to make
advances; (v) the ownership, servicing or management by the Servicer or any
Affiliate thereof for others of any other mortgage loans or mortgaged property;
(vi) any obligation of the Servicer or any Affiliate of the Servicer to cure a
breach of a representation and warranty with respect to a Commercial Mortgage
Loan; and (vii) any debt the Servicer or any Affiliate of either has extended to
any mortgagor or any Affiliate of such mortgagor.
"Special Servicing Agreement": an agreement pursuant to which an
Acceptable Special Servicer services Commercial Mortgage Loans underlying CMBS
that are in default or have been identified as otherwise requiring special
attention or administration, as amended, supplemented or otherwise modified from
time to time.
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"Subordinated Debt": Indebtedness of the Guarantor and its
Subsidiaries that is contractually subordinated in right of payment and
otherwise to the Indebtedness under this Agreement and the Related Documents,
such subordination to be on terms acceptable to the Buyer.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person, and provided such corporation, partnership or other entity is
consolidated with such Person for financial reporting purposes under GAAP.
"Termination Date": January 31, 2005, as such date may be extended
pursuant to Section 2.4.
"Transaction": a transfer of Eligible Securities, made pursuant to a
Confirmation and in accordance with the terms and conditions of this Agreement,
from the Seller to the Buyer against payment by the Buyer of the Purchase Price,
with a simultaneous agreement by the Buyer and the Seller that such securities
shall be repurchased by the Seller from the Buyer on the Repurchase Date against
payment by the Seller of the Repurchase Price.
"Transaction Period": the period from and including the date hereof
to, but not including, the Termination Date.
"Transferee": as defined in Section 16.5.
"Underwriting Package" : any internal document prepared by the Seller
for its evaluation of a B-Note or Non-Bank of America Security, to include at a
minimum the data required in the relevant Confirmation. In addition, with
respect to any B-Note, the Underwriting package shall include (i) a copy of the
appraisal, (ii) the current rent roll, (iii) a minimum of two years of property
level financial statements to the extent available, (iv) current financial
statement of the obligor on the Commercial Mortgage Loan, (v) the form of
B-Note, (vi) a copy of the intercreditor agreement with the first lienholder or
the participation agreement (as applicable), (vii) any financial analysis, site
inspection, market studies, and any other diligence conducted by the Seller and
(viii) such further documents or information as the Buyer may reasonably
request. With respect to any Non-Bank of America Securities, the Underwriting
Package shall include (i) a summary of the Seller's underwriting for Top 20
assets included in the Securitization Transaction, if applicable (and for
additional assets at Buyer's request) including, without limitation, site
inspections and market studies, (ii) loss projections and the timing thereof for
each asset, (iii) the B-piece bid letter, (iv) a list of loss (price)
adjustments for each individual asset, (v) a summary of special servicing fees,
(vi) representations and warranties for securitization, (vii) Offering Documents
and (viii) such further documents or information as the Buyer may reasonably
request.
1.2 Other Definitional Provisions.
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(a) As used herein, and any certificate or other document made or
delivered pursuant hereto, accounting terms relating to any Repurchase Party not
defined in Section 1.1, and accounting terms partly defined in Section 1.1, to
the extent not defined, shall have the respective meanings given to them under
GAAP.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, schedule and
exhibit references are to this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. INITIATION; CONFIRMATION; TERMINATION
2.1 Initiation. An agreement to enter into a Transaction may be made
during the Transaction Period in writing at the initiation of the Seller. On the
Purchase Date for the Transaction, provided that no Default or Event of Default
has occurred and is then continuing, the Purchased Securities shall be
transferred to the Buyer or its agent against the transfer of the Purchase Price
to an account of the Seller on the books of the Buyer in its offices as set
forth on Schedule 16.2, or by wire transfer of such funds to another account
designated in writing by the Seller.
2.2 Confirmation.
(a) The Seller shall promptly deliver to the Buyer a written
confirmation of each Transaction, substantially in the form of Exhibit B-1 or
Exhibit B-2, as applicable, attached hereto (a "Confirmation"), which
Confirmation must be received by the Buyer prior to 11:00 a.m., New York City
time, three (3) Business Days prior to the requested Purchase Date. The
Confirmation shall specify any additional terms or conditions of the Transaction
not inconsistent with this Agreement. In the event of any conflict between the
terms of such Confirmation and this Agreement, the terms of this Agreement shall
prevail.
(b) In the case of Transactions involving Non-Bank of America
Securities or B-Notes, the Seller shall deliver the Underwriting Package for
each Commercial Mortgage Loan underlying a Purchased Security in such
Transaction to the Buyer not less than 6 Business Days prior to the date of the
requested Purchase Date, and the Buyer shall have approved each such Non-Bank of
America Security or B-Note, as the case may be, in its sole discretion. The
Buyer agrees that it shall notify the Seller of its approval or disapproval of
each proposed Non-Bank of America Security or B-Note within 6 Business Days
after its receipt of the complete Underwriting Package and any supplemental
requests (requested orally or in writing) relating to such proposed Non-Bank of
America Security or B-Note. Unless the Buyer notifies the Seller of its approval
of such proposed Non-Bank of America Security or B-Note within 6 Business Days
after its receipt of the complete Underwriting Package including any
supplemental requests, the Buyer shall be deemed not to have approved such
proposed Non-Bank of America Security or B-Note. For purposes of this Section
2.2(b), any Underwriting Package received by the Buyer after 1:00 p.m., New York
City time, shall be deemed to be received on the following Business Day.
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2.3 Termination. In the case of individual Transactions terminable
upon demand, such demand shall be made by the Buyer or the 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 the Seller or its agent of the
Purchased Securities and any Income in respect thereof received by the Buyer
(and not previously credited or transferred to, or applied to the obligations
of, the Seller pursuant to Section 5 hereof) against the transfer of the
Repurchase Price to an account of the Buyer.
2.4 Extension of Termination Date. The Seller may, by written request
delivered to the Buyer no earlier than the date which is 6 months and one day
after the date hereof, and thereafter no earlier than 6 months and one day after
each date on which the Buyer agrees to extend the Termination Date as provided
herein, but in each case not less than 30 days prior to the then current
Termination Date, request that such Termination Date be extended by 6 months.
Upon receipt of any such request, and provided that no Default or Event of
Default shall have occurred and be continuing, the Buyer may, in its sole and
absolute discretion, agree to so extend the Termination Date; provided, however,
that in no event shall the Termination Date be extended beyond January 31, 2006.
SECTION 3. AMOUNTS AND TERMS OF TRANSACTIONS
3.1 Maximum Purchase Price. (a) The aggregate Purchase Price of all
Transactions outstanding at any time shall not exceed the Maximum Purchase
Price;
(b ) the aggregate Purchase Price of all Transactions involving
Non-Bank of America Securities outstanding at any time shall not exceed 35% of
the Maximum Purchase Price (the "Non-Bank of America Sublimit"); and
(c) the aggregate Purchase Price of all Transactions involving CMBS
with a Rating of "Level III, Bond Class B-/Unrated" outstanding at any time
shall not exceed 25% of the Maximum Purchase Price.
3.2 Minimum Purchase Amount. On the Purchase Date, the aggregate
Purchase Price of the Purchased Securities transferred by the Seller to the
Buyer shall not be less than the Minimum Purchase Amount.
3.3 Periodic Payments of Price Differential.
(a) Notwithstanding anything to the contrary contained in this
Agreement, the Seller shall pay all accrued and unpaid Price Differential
relating to the Transactions on the last day of each calendar month, or if such
last day is not a Business Day, then on the next succeeding Business Day.
(b) If the Seller repurchased Purchased Securities for which the
Pricing Rate is a fixed rate on any day prior to the last day of the 30, 60 or
90 day period for which such rate is fixed or if the Seller repurchases
Purchased Securities on any day which is not a Repurchase
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Date for such Purchased Securities, the Seller shall indemnify the Buyer and
hold the Buyer harmless from any losses, costs and/or expenses which the Buyer
may sustain or incur arising from the reemployment of funds obtained by the
Buyer hereunder or from fees payable to terminate the deposits from which such
funds were obtained ("Breakage Costs"), in each case for the remainder of the
applicable 30, 60 or 90 day period. They Buyer shall deliver to the Seller a
statement setting forth the amount and basis of determination of any Breakage
Costs in such detail as determined in good faith by the Buyer to be adequate, it
being agreed that such statement and the method of its calculation shall be
conclusive and binding upon the Seller absent manifest error. This Section
3.3(b) shall survive termination of this Agreement and repurchase of all
Purchased Securities subject to Transactions hereunder.
SECTION 4. MARGIN MAINTENANCE
4.1 Margin Deficit. 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 the Buyer is less than the aggregate Buyer's Margin Amount
for all such Transactions (a "Margin Deficit"), then the Buyer may by notice to
the Seller require the Seller in such Transactions, at the Seller's option, to
(i) transfer to the Buyer cash or additional Securities reasonably acceptable to
the Buyer ("Additional Purchased Securities"), (ii) repurchase the Purchased
Securities at the Repurchase Price, (iii) make a payment in reduction of the
Repurchase Price or (iv) choose any combination of the foregoing, so that the
cash and aggregate Market Value of the Purchased Securities, 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 the Buyer is acting as the seller).
4.2 Transfer of Cash or Additional Purchased Securities. If any
notice is given by the Buyer pursuant to Section 4.1 on any Business Day, the
Seller shall transfer cash or Additional Purchased Securities as provided in
Section 4.1 no later than 5:00 p.m., New York City time, on the next succeeding
Business Day after such notice is given.
4.3 Attribution of Transferred Cash or Additional Purchased
Securities. Any cash or Additional Purchased Securities transferred pursuant to
this Section 4 shall be attributed to such Transaction as the Buyer shall
determine, in its sole discretion, exercised in good faith.
4.4 Right to Margin Maintenance. Notwithstanding the foregoing, the
Seller and the Buyer hereby agree, with respect to any and all Transactions
hereunder, that the rights of the Buyer under Section 4.1 to require the
elimination of a Margin Deficit may be exercised whenever such a Margin Deficit
exists with respect to any single Transaction hereunder (calculated without
regard to any other Transaction outstanding under this Agreement).
SECTION 5. INCOME PAYMENTS
The 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 the Seller, to the full extent it would be so entitled if the
Securities had not been sold to the Buyer. The Seller hereby agrees to instruct
each applicable trustee and Servicer to transfer all Income with respect to the
Purchased Securities directly to the Buyer for deposit into the Control Account.
Each
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calendar month, upon receipt by the Buyer of the accrued and unpaid Price
Differential pursuant to Section 3.3(a) hereof and provided that no Margin
Deficit, Default or Event of Default has occurred and is continuing, the Buyer
shall transfer all collected and available balances in the Control Account to
the account of the Seller, Account Number 3752033827, Bank of America, N.A.,
Routing Number ▇▇▇▇▇▇▇▇▇ by the end of the Business Day during such calendar
month on which such request is made by notice of such request to the Buyer;
provided such request is received prior to 2:00 p.m., Charlotte, North Carolina
time, on a Business Day, or if such request is received after such time on a
Business Day, not later than 11:00 a.m., Charlotte, North Carolina time, on the
next following Business Day. Following the occurrence and during the
continuation of any Event of Default, all Income in respect of any Purchased
Securities shall be paid to and retained by the Buyer to the extent of and
applied immediately to the payment of the Repurchase Price and no amounts shall
be transferred to the Seller as aforesaid until all amounts owing by the Seller
hereunder have been paid in full or any such Event of Default has been cured or
waived.
SECTION 6. SECURITY INTEREST
The Buyer and the Seller intend that the Transactions hereunder be
sales by the Seller to the Buyer of the Purchased Securities. However, in order
to preserve the Buyer's rights under this Agreement in the event that a court or
other forum recharacterizes the Transactions as loans, the Seller hereby
assigns, pledges and grants a security interest to the Buyer as security for the
performance by the Seller of its obligations under each such Transaction in all
of its right, title and interest in, to and under all of the following property
now owned or at any time hereafter acquired by the Seller or in which the Seller
now has or at any time in the future may acquire any right title or interest:
the Control Account, all monies from time to time on deposit in the Control
Account, all of the Purchased Securities with respect to all Transactions
hereunder, and all Income thereon and other proceeds thereof.
SECTION 7. PAYMENT AND TRANSFER
(a) Unless otherwise mutually agreed, all transfers of funds
hereunder shall be in U.S. Dollars, in immediately available funds, without
deduction, set-off or counterclaim. 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
the Seller and the Buyer.
(b) On or prior to each Purchase Date, the Seller shall have (i) in
the case of any Purchased Security which is certificated, delivered to the Buyer
the certificate or certificates evidencing the Purchased Securities with all
necessary endorsements, bond powers or transfer instruments executed in blank by
the appropriate officers of the Seller, (ii) in the case of any Purchased
Securities which are not certificated, taken all necessary action to reregister
the Purchased Securities into the name of the Buyer with the Depository Trust
Company or other applicable clearance company or (iii) in the case of any
B-Note, delivered to the Buyer the original participation certificate and a copy
of the underlying Commercial Mortgage Loan
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documents, and in the case of either (i), (ii) or (iii) above, the Seller shall
execute and deliver such other documents as may be required to transfer the
Purchased Securities of record pursuant to the related Offering Document and as
the Buyer shall require to accomplish its purchase of the Purchased Securities,
including, without limitation, signature guarantees to the extent required.
SECTION 8. SEGREGATION OF PURCHASED SECURITIES
8.1 Segregation of Purchased Securities. To the extent required by
applicable law, all Purchased Securities in the possession of the 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 the Seller's interest
in the Purchased Securities shall pass to the Buyer on the Purchase Date and,
subject to the conditions set forth in Section 16.5 unless otherwise agreed by
the Buyer and the Seller, nothing in this Agreement shall preclude the Buyer
from engaging in repurchase transactions with the Purchased Securities or
otherwise selling, transferring, pledging or hypothecating the Purchased
Securities, but no such transaction shall relieve the Buyer (or any applicable
Transferee) of its obligations to transfer Purchased Securities to the Seller
pursuant to Sections 3, 4 or 14 hereof, or of the Buyer's (or any applicable
Transferee's) obligation to credit or pay Income to, or apply Income to the
obligations of, the Seller pursuant to Section 5 hereof.
8.2 Required Disclosure for Certain Transactions. The Buyer has
granted the right, pursuant to, among other things, Section 9 hereof, to
substitute other Eligible Securities for those subject to this Agreement, which
means that the Buyer's securities will likely be commingled with the Seller's
own securities during the trading day. The Buyer is advised that, during any
trading day that the Buyer's securities are commingled with the Seller's
securities, they may be subject to liens granted by the Seller to third parties
and may be used by the Seller for deliveries on other securities transactions.
Whenever the securities are commingled, the Seller's ability to resegregate
substitute securities for the Buyer will be subject to the Seller's ability to
satisfy any lien or to obtain substitute securities.
SECTION 9. SUBSTITUTION
The Seller may, subject to agreement with and acceptance by the Buyer,
substitute other Securities for any Purchased Securities. Such substitution
shall be made by transfer to the Buyer of such other Securities and transfer to
the Seller of such Purchased Securities. After substitution, the substituted
Securities shall be deemed to be Purchased Securities.
SECTION 10. REPRESENTATIONS AND WARRANTIES
10.1 Representations and Warranties of each Party. Each of the Buyer
and the Seller represents and warrants to the other that:
(a) 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;
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(b) 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);
(c) 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);
(d) it has obtained all authorizations of any governmental body
required in connection with this Agreement, if any, and the Transactions
hereunder and such authorizations are in full force and effect;
(e) 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;
(f) it is acting for its own account, and it has made its own
independent decisions to enter into each Transaction and as to whether each
Transaction is appropriate or proper for it based upon its own judgment and upon
advice from such advisers as it has deemed necessary. It is not relying on any
communication (written or oral) of the other party as investment adviser or as a
recommendation to enter into any Transaction; it being understood that
information and explanations related to the terms and conditions of any
Transaction shall not be considered investment advice or a recommendation to
enter into such Transaction. No communication (written or oral) received from
the other party shall be deemed to be an assurance or guarantee as to the
expected results of any Transaction;
(g) it is capable of assessing the merits of and understands (on its
own behalf or through independent professional advice), and accepts, the terms,
conditions and risks of each Transaction. It is also capable of assuming, and
assumes, the risks of each Transaction; and
(h) the other party is not acting as a fiduciary for or an adviser to
it in respect of any Transaction.
10.2 Additional Representations and Warranties of the Repurchase
Parties. In addition to the representations and warranties set forth in Section
10.1, each Repurchase Party additionally represents and warrants to the Buyer on
the date hereof and on the date of each transaction that:
(a) Eligible Securities. Each Purchased Security is an Eligible
Security.
(b) Valid Title; No Encumbrances. Upon transfer of such Purchased
Securities to the Buyer, the Buyer shall (i) be the owner, and entitlement
holder with respect thereto, of such Purchased Securities free and clear of all
pledges, Liens, security interests, encumbrances, charges and other adverse
claims, other than any adverse claims or proceedings caused by the actions or
inactions of the Buyer or its Affiliates in connection with the related
Securitization Transaction, and (ii) obtain a valid, perfected first priority
security interest in such Purchased Securities free and clear of all pledges,
Liens, security interests, encumbrances, charges and other adverse claims,
subject only to Liens caused by the actions or inactions of the
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Buyer or its Affiliates in connection with the related Securitization
Transaction in the event that any Transaction is construed as a financing and
not a sale.
(c) Corporate Existence; Compliance with Law. It (i) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) has the corporate power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
(iii) is in compliance in all material respects with all Requirements of Law,
and (iv) is duly qualified as a foreign corporation and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification except to
the extent that the failure to be so qualified and in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(d) Corporate Power; Consent; Enforceable Obligations. (i) It has
the corporate power and authority and the legal right to make, deliver and
perform this Agreement and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement and the transactions
contemplated hereby;
(ii) no consent or authorization of, filing with or other act by or
in respect of any Governmental Authority or any other Person is required in
connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for consents, authorizations and
filings which have been obtained or made, as the case may be, and are in
full force and effect; and
(iii) this Agreement has been duly executed and delivered by each of
the Repurchase Parties and constitutes the legal, valid and binding
obligation of each of the Repurchase Parties, enforceable against the
Repurchase Parties in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law);
(e) No Legal Bar. The execution, delivery and performance by the
Repurchase Parties of this Agreement will not violate any Requirement of Law or
any Contractual Obligation of any Repurchase Party and will not result in, or
require, the creation or imposition of any Lien on any of its or their
properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation (other than the Liens created hereby in favor of the Buyer).
(f) No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the best knowledge of each Repurchase Party, threatened by or against any
Repurchase Party or against any of its properties or revenues (i) with respect
to this Agreement or any of the transactions contemplated hereby, or (ii) which
could reasonably be expected to have a Material Adverse Effect.
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(g) No Default. No Repurchase Party is in default under or with
respect to any Contractual Obligation in any respect which could reasonably be
expected to have a Material Adverse Effect. No Event of Default has occurred and
is continuing.
(h) No Burdensome Restrictions. No Contractual Obligation of any
Repurchase Party and no Requirement of Law applicable to any Repurchase Party
could reasonably be expected to have a Material Adverse Effect.
(i) Taxes. Each Repurchase Party has filed or caused to be filed all
tax returns which are required to be filed and has paid all taxes shown to be
due and payable on said returns or on any assessments made against it or any of
its property and all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority (other than those the amount or
validity of which is currently being contested in good faith by appropriate
proceedings, with respect to which reserves in conformity with GAAP have been
provided on the books of the applicable Repurchase Party, and which, if such
contest were adversely determined, could not reasonably be expected to have a
Material Adverse Effect); and no tax liens have been filed and, to the best
knowledge of each Repurchase Party, no claims are being asserted with respect to
any such taxes, fees or other charges.
(j) Federal Regulations. No part of the proceeds of any Transaction
hereunder will be used for "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect or for any purpose which violates, or which would be
inconsistent with, the provisions of the Regulations of such Board of Governors.
(k) Solvency. Each Repurchase Party is solvent as of the date hereof;
and neither will be rendered insolvent by the transactions contemplated by this
Agreement and the Guarantee, nor be left with an unreasonably small amount of
capital with which to engage in its business; neither Repurchase Party intends
to incur, or believes that it has incurred, debts beyond its ability to pay such
debts as they mature; neither Repurchase Party contemplates the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar official
in respect of any Repurchase Party or any of its assets.
(l) Locations of Repurchase Parties. The principal place of business,
chief executive office and jurisdiction of incorporation of each Repurchase
Party and the location of books and records regarding the Purchased Securities
is set forth in Schedule 10.2(l).
(m) Purchased Securities. (i) There are no outstanding rights,
options, warrants or agreements for the purchase, sale or issuance of the
Purchased Securities created by, through, or as a result of the Seller's actions
or inactions of any Repurchase Party in connection with the related
Securitization Transaction; (ii) there are no agreements on the part of any
Repurchase Party to issue, sell or distribute the Purchased Securities, other
than this Agreement, and (iii) the Seller has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any securities or any
interest therein or to pay any dividend or make any distribution in respect of
the Purchased Securities;
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(n) Investment Company Act; Public Utility Holding Company Act. The
Seller is not or will it become as a result of the transactions contemplated
hereby or by any Securitization Transaction, (i) an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended; or (ii) a "holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
(o) No Change. Since August 31, 2002 there has been no development
or event, nor any prospective development or event, which has had or could
reasonably be expected to have a Material Adverse Effect.
(p) ERISA. (i) None of the Repurchase Parties or any of their
Subsidiaries is an entity deemed to hold "plan assets" within the meaning of
ERISA or any regulations promulgated thereunder of an employee benefit plan (as
defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any
plan within the meaning of Section 4975 of the Code, and (ii) the execution of
this Agreement and the Related Documents and the transactions contemplated
hereby and thereby shall not give rise to any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code.
(q) Insurance. The Seller has, with respect to its properties and
business, insurance meeting the requirements of Section 12.5.
(r) Environmental Matters. Except insofar as there is no reasonable
likelihood of a Material Adverse Effect arising from any combination of facts or
circumstances inconsistent with any of the following:
(i) no properties owned or leased by a Repurchase Party or any of
itsSubsidiaries and, to the knowledge of each of the Repurchase Parties and
each of their Subsidiaries, no properties formerly owned or leased by a
Repurchase Party, its predecessors, or any former subsidiaries or
predecessors thereof (the "Properties"), contain, or have previously
contained, any Materials of Environmental Concern in amounts or
concentrations which constitute or constituted a violation of, or
reasonably could be expected to give rise to liability under, Environmental
Laws;
(ii) each of the Repurchase Parties and their Subsidiaries is in
compliance, and has in the last five years been in compliance, with all
applicable Environmental Laws, and there is no violation of any
Environmental Laws which reasonably could be expected to interfere with the
continued operations of any such Repurchase Party or Subsidiary;
(iii) none of the Repurchase Parties nor any of their Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability under any Environmental Law, nor do any of
the Repurchase Parties or any of their Subsidiaries have knowledge that any
such notice will be received or is being threatened;
(iv) Materials of Environmental Concern have not been (i) transported
or disposed by any of the Repurchase Parties or any of their Subsidiaries
in violation of, or in a manner or to a location which reasonably could be
expected to give rise to liability under, any applicable Environmental Law,
nor (ii) has any of them generated, treated,
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stored or disposed of at, on or under any of the Properties in violation
of, or in a manner that reasonably could be expected to give rise to
liability under, any applicable Environmental Law;
(v) no judicial proceedings or governmental or administrative action
is pending, or, to the knowledge of each of the Repurchase Parties and each
of their Subsidiaries, threatened, under any Environmental Law which any of
the Repurchase Parties or any of their Subsidiaries is or will be named as
a party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements arising out of judicial proceedings or governmental
or administrative actions, outstanding under any Environmental Law to which
any of them is a party; and
(vi) there has been no release or, to the best knowledge of any
Repurchase Party, threat of release of Materials of Environmental Concern
in violation of or in amounts or in a manner that reasonably could be
expected to give rise to liability under any Environmental Law for which
any of the Repurchase Parties or any of their Subsidiaries may become
liable.
(s) Subsidiaries. The Seller is an indirect subsidiary of LNR
Property Corporation and Schedule 10.2(s) sets forth the name of each direct or
indirect Subsidiary of the Seller, its form of organization, its jurisdiction of
organization, the total number of issued and outstanding shares or other
interests of Capital Stock thereof, the classes and number of issued and
outstanding shares or other interests of Capital Stock of each such class, the
name of each holder of Capital Stock thereof and the number of shares or other
interests of such Capital Stock held by each such holder and the percentage of
all outstanding shares or other interests of such class of Capital Stock held by
such holders.
(t) Accuracy and Completeness of Information.
(i) Neither this Agreement nor any financial statements, reports,
certificates or other information furnished by any Repurchase Party or any
of their officers to the Buyer in connection with this Agreement or any
other financing between any Repurchase Party and the Buyer contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading; there is no fact known to the executive officers of any
Repurchase Party which has resulted in, or is likely to result in, a
Material Adverse Effect which has not been set forth in this Agreement or
otherwise disclosed to the Buyer; and
(ii) all projections with respect to the Repurchase Parties furnished
by or on behalf of a Repurchase Party to the Buyer were prepared and
presented in good faith by or on behalf of such Repurchase Party. No fact
is known to a Repurchase Party which materially and adversely affects or in
the future is reasonably likely (so far as such Repurchase Party can
reasonably foresee) to have a Material Adverse Effect which has not been
set forth in the financial statements referred to in Section 10.3 or in
such information, reports, papers and data or otherwise disclosed in
writing to the Buyer prior to the Closing Date.
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(u) Labor Relations. No Repurchase Party is engaged in any unfair
labor practice which could reasonably be expected to have a Material Adverse
Effect. There is (i) no unfair labor practice compliant pending or, to the best
knowledge of each Repurchase Party and each of the Subsidiaries, threatened
against a Repurchase Party before the National Labor Relations Board which could
reasonably be expected to have a Material Adverse Effect and no grievance or
arbitration proceeding arising out of or under a collective bargaining agreement
is so pending or threatened; (ii) no strike, labor dispute, slowdown or stoppage
pending or, to the best knowledge of each Repurchase Party, threatened against a
Repurchase Party; and (iii) no union representation question existing with
respect to the employees of a Repurchase Party and no union organizing
activities are taking place with respect to any thereof.
(v) Separateness. As of the date hereof, the Seller (a) owns no
assets, and does not engage in any business, other than the assets and
transactions specifically contemplated by this Repurchase Agreement; (b) has not
incurred any indebtedness or obligation, secured or unsecured, direct or
indirect, absolute or contingent (including guaranteeing any obligation), other
than pursuant hereto; (c) has not made any loans or advances to any third party
other than loans to Guarantor, and has not acquired obligations or securities of
its Affiliates; (d) has paid its debts and liabilities (including, as
applicable, shared personnel and overhead expenses) only from its own assets;
(e) complies with the provisions of its organizational documents; (f) does all
things necessary to observe organizational formalities and to preserve its
existence, and has not amended, modified or otherwise changed its organizational
documents, or suffered same to be amended, modified or otherwise changed; (g)
maintains all of its books, records, financial statements and bank accounts
separate from those of its Affiliates; (h) is, and at all times holds itself out
to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate), corrects any known misunderstanding regarding its
status as a separate entity, conducts business in its own name, does not
identify itself or any of its Affiliates as a division or part of the other; (i)
maintains adequate capital for the normal obligations reasonably foreseeable in
a business of its size and character and in light of its contemplated business
operations; (j) does not engage in or suffer any change of ownership,
dissolution, winding up, liquidation, consolidation or merger in whole or in
part; (k) does not commingle its funds or other assets with those of any
Affiliate or any other Person; (l) maintains its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or any other person; (m) does not
hold itself out to be responsible for the debts or obligations of any other
Person; (n) has not (i) filed or consented to the filing of any bankruptcy,
insolvency or reorganization case or proceeding with respect to the Seller;
instituted any proceedings under any applicable insolvency law or otherwise
sought any relief under any laws relating to the relief from debts or the
protection of debtors generally with respect to the Seller; (ii) sought or
consented to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian or any similar official for the Seller or a substantial
portion of its properties; or (iii) made any assignment for the benefit of the
Seller's creditors; and (o) has at least one (1) Independent Director.
On the Purchase Date for any Transaction the Buyer and each Repurchase
Party shall each be deemed to repeat all of the foregoing representations made
by it.
10.3 Financial Condition.
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(a) The audited consolidated balance sheet of the Guarantor and its
consolidated Subsidiaries as at the fiscal year end November 30, 2001 and the
related audited consolidated statements of income and retained earnings and of
cash flows for the fiscal year then ended, setting forth in each case in
comparative form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising out of the
scope of the audit, by Deloitte and Touche, LLP, copies of which have heretofore
been furnished to the Buyer are complete and correct and present fairly the
consolidated financial condition of the Guarantor and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended. All such
financial statements, including the related schedules and notes thereto, have
been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as disclosed therein). Except as set forth on Schedule
10.3(a) attached hereto, neither the Guarantor nor any of its consolidated
Subsidiaries had, at the date of the most recent balance sheet referred to
above, any material Guarantee Obligation, contingent liability or liability for
taxes, or any long-term lease or unusual forward or long-term commitment,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction or other financial derivative, which is not reflected in
the foregoing statements or in the notes thereto. During the period from August
31, 2002 to and including the date hereof there has been no sale, transfer or
other disposition by the Guarantor or any of its consolidated Subsidiaries of
any material part of its business or property and no purchase or other
acquisition of any business or property (including any Capital Stock of any
other Person) material in relation to the consolidated financial condition of
the Guarantor and its consolidated Subsidiaries on the date hereof
(b) The operating forecast and cash flow projections of the Seller and
its consolidated Subsidiaries, copies of which have heretofore been furnished to
the Buyer, have been prepared in good faith under the direction of a Responsible
Officer of the Seller, and in accordance with GAAP. The Seller has no reason to
believe that as of the date of delivery thereof such operating forecast and cash
flow projections are materially incorrect or misleading in any material respect,
or omit to state any material fact which would render them misleading in any
material respect.
SECTION 11. CONDITIONS PRECEDENT
11.1 Conditions Precedent to Sale of Securities. The parties hereto
hereby agree that each sale of Securities under this Agreement shall be subject
to the satisfaction, prior to or concurrently with each such sale, the following
conditions precedent:
(a) The Buyer shall have received this Agreement, executed and
delivered by a duly authorized officer of each of the parties hereto;
(b) The Buyer shall have received the Guarantee, executed and
delivered by a duly authorized officer of the Guarantor;
(c) The Buyer shall have received the Pledge Agreement, executed and
delivered by a duly authorized officer of the Seller;
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(d) The Buyer shall have received the Promissory Note, executed and
delivered by a duly authorized officer of the Guarantor;
(e) The Buyer shall have received a Confirmation, substantially in
the form of Exhibit B-1 or Exhibit B-2 attached hereto, with respect to each
Security to be purchased on the related Purchased Date, executed and delivered
by a duly authorized officer of the Seller;
(f) The Buyer shall have received the Special Servicing Agreement(s),
each certified as a true, correct and complete copy of the original together
with a fully executed Servicer Notice and Agreement consenting to termination of
such Servicing Agreement upon the occurrence of an Event of Default;
(g) The Buyer shall have received evidence satisfactory to the Buyer
that the Seller has delivered an irrevocable instruction to each trustee and
Servicer, as applicable, to pay Income with respect to the Purchased Securities
directly to the Control Account, which instruction may not be modified without
the prior consent of the Buyer;
(h) The representations and warranties of the Repurchase Parties in
Section 10 shall be true and correct;
(i) No Event of Default shall have occurred and be continuing;
(j) The Buyer shall have received financing statements of the Seller
(Form UCC-1 or Form UCC-3, as appropriate), naming the Seller, as "debtor," the
Buyer, as "secured party," and describing the Purchased Securities as the
"collateral" to be filed in all jurisdictions designated by the Buyer;
(k) The Buyer shall have satisfactorily completed its due diligence
review of the Securities;
(l) The Buyer shall have received opinions of counsel of the Seller
and the Guarantor (including, without limitation, an opinion with respect to the
perfection of the Buyer's security interest and an opinion that the execution,
delivery and performance by each of the Seller and the Guarantor of this
Agreement and by Guarantor of the Guarantee will not result in a breach or
violation of any term or provision of, or constitute a default under any
material indenture or other agreement or instrument to which it is a party or by
which it is bound), in form and substance satisfactory to the Buyer;
(m) The Buyer shall have received certified copies of the charter and
by-laws (or equivalent documents) of the Seller (which shall be reasonably
acceptable to the Buyer) and of all corporate or other authority for the Seller
with respect to the execution, delivery and performance of this Agreement and
the Related Documents (and the Buyer may conclusively rely on such certificate
until it receives notice in writing from the Seller to the contrary).
(n) The Buyer shall have either (i) received the original certificate
evidencing any Security which is in certificated form, in form and substance
satisfactory to the Buyer or (ii) received confirmation that such Security has
been registered into the name of the Buyer with the Depository Trust Company or
other applicable securities intermediary clearance corporation;
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(o) The Buyer shall have received the fees to be received on the
Closing Date referred to in the Fee Letter;
(p) With respect to any B-Note, the Buyer shall have received the
original participation certificate and a copy of the underlying Commercial
Mortgage Loan documents including, without limitation, a recorded copy of the
mortgage, a copy of the title insurance policy, the original note, if any, and a
copy of the Deed of Trust, if any;
(q) The Buyer shall have received such other and further documents
and legal opinions as the Buyer in its sole discretion shall reasonably require;
and
(r) No event or events shall have been reasonably determined by the
Buyer to have occurred resulting in the absence of a "repo market" for a period
of at least 2 consecutive Business Days respecting loans or mortgage-backed or
asset-backed securities such that the Buyer is unable to finance or fund
purchases under this Agreement through the "repo market" or the Buyer's
customers.
SECTION 12. AFFIRMATIVE COVENANTS
While there is an outstanding Transaction, each of the Repurchase
Parties hereby agrees that it shall:
12.1 Financial Statements. Furnish to the Administrative Agent and
each Buyer:
(a) as soon as available, but in any event (i) within 120 days after
the end of the fiscal year of the Guarantor, a copy of the audited consolidated
balance sheet of the Guarantor and its consolidated Subsidiaries as at the end
of such year and the related audited consolidated statements of income and
retained earnings and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising out of the
scope of the audit, by Deloitte and Touche, LLP or other independent certified
public accountants of nationally recognized standing and (ii) within 120 days
after the end of the fiscal year of the Seller, a copy of the unaudited
consolidated balance sheet of the Seller and its consolidated Subsidiaries as at
the end of such year and the related unaudited consolidated statements of income
and retained earnings and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects;
(b) as soon as available, but in any event not later than 60 days
after the end of each of the first three quarterly periods of each fiscal year
of the Guarantor, (i) the unaudited consolidated balance sheet of each
Repurchase Party and their respective consolidated Subsidiaries as at the end of
such quarter and the related unaudited consolidated statements of income and
retained earnings and (ii) consolidated statements of cash flows of the
Guarantor for such quarter and the portion of the fiscal year through the end of
such quarter, setting forth in each case in comparative form the figures for the
previous year, certified by a Responsible
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Officer of each applicable Repurchase Party as being fairly stated in all
material respects (subject to normal year-end audit adjustments);
(c) with respect to each B-Note, as soon as available, but in any
event not later than 60 days after the end of each fiscal quarter of the Seller,
the operating statement and rent roll for each Commercial Property securing such
B-Note;
(d) with respect to each B-Note, if provided to the Seller by the
obligor under any Commercial Mortgage Loan, as soon as available, but in any
event not later than 30 days after receipt thereof, the annual balance sheet
with respect to such obligor;
(e) with respect to each CMBS or B-Note, as soon as available but in
any event not later than 30 days after receipt thereof, (i) the related monthly
securitization report, if any, and (ii) within 30 days after the end of each
month, a copy of the standard monthly exception report, substantially in the
form of Exhibit F attached hereto, prepared by the Seller in the ordinary course
of its business in respect of the related Commercial Mortgage Loan or Commercial
Property.
(f) all such financial statements shall be complete and correct in all
material respects and shall be prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein and with
prior periods (except as approved by such accountants or officer, as the case
may be, and disclosed therein).
12.2 Certificates; Other Information. Furnish to the Buyer:
(a) concurrently with the delivery of the financial statements
referred to in Sections 12.1(a)(i) above, a certificate of the independent
certified public accountants reporting on such financial statements stating that
in making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 12.1(a) and (b) above and with the delivery of each
Confirmation, a certificate of a Responsible Officer, substantially in the form
of Exhibit D attached hereto (i) stating that, to the best of such Officer's
knowledge, each Repurchase Party during such period has observed or performed
all of its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the Related Documents to be observed, performed
or satisfied by it, and that such Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate and (ii)
showing in detail the calculations supporting such Officer's certification of
each Repurchase Party's compliance with the requirements of Section 13.1 and the
Guarantor's compliance with the requirements of the Guarantee;
(c) as soon as available, but in any event not later than 90 days
after the end of each fiscal year of the Guarantor, a copy of the projections of
the Guarantor of the operating budget and cash flow budget of the Guarantor and
its Subsidiaries for the succeeding fiscal year, such projections to be
accompanied by a certificate of a Responsible Officer certifying that such
projections have been prepared in good faith based upon reasonable assumptions;
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(d) no later than the 15/th/ day of each month, with respect to each
Purchased Security, a Summary of Purchased Security Key Data, substantially in
the form of Exhibit C, properly completed;
(e) promptly upon receipt thereof, copies of all reports submitted to
any Repurchase Party or any Subsidiary by independent certified public
accountants in connection with each annual, interim or special audit of the
books and record of such Repurchase Party or such Subsidiary made by such
accountants, including, without limitation, any management letter commenting on
such Repurchase Party's internal controls submitted by such accountants to
management in connection with their annual audit;
(f) within 15 days after the same are sent, copies of all financial
statements and reports which a Repurchase Party sends to its stockholders, and
within fifteen days after the same are filed, copies of all financial statements
and reports which a Repurchase Party may make to, or file with, the Securities
and Exchange Commission or any successor or analogous Governmental Authority;
(g) no later than 60 days after the end of each fiscal quarter of the
Seller, an updated list of all Subsidiaries of the Seller as of such time;
(h) promptly, such additional financial and other information as the
Buyer may from time to time reasonably request.
12.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
any Repurchase Party or its Subsidiaries, as the case may be.
12.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to Section 13.5; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, be reasonably expected to have a Material Adverse Effect.
12.5 Maintenance of Property; Insurance. Keep all property useful and
necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks as are usually
insured against in the same general area by companies engaged in the same or a
similar business, and furnish to the Buyer, upon written request, full
information as to the insurance carried.
12.6 Inspection of Property; Books and Records; Discussions. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of the Buyer to visit and inspect any of its
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properties and examine and make abstracts from any of its books and records at
any reasonable time one time per calendar year at the expense of the Seller and
the cost thereof to Seller shall not exceed $10,000, and otherwise as often as
may reasonably be desired at the sole expense of the Buyer and to discuss the
business, operations, properties and financial and other condition of any
Repurchase Party and its Subsidiaries with officers and employees of any such
Repurchase Party and its Subsidiaries and with its independent certified public
accountants.
12.7 Notices. Promptly give notice to the Buyer of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Repurchase Party or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time between any
Repurchase Party or any of its Subsidiaries and any Governmental Authority,
which in either case, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Seller or any of its
Subsidiaries (i) in which the amount involved is $500,000 or more and not
covered by insurance or (ii) in which injunctive or similar relief is sought and
where, if adversely determined, such litigation or proceeding could reasonably
be expected to have a Material Adverse Effect;
(d) the following events, as soon as possible and in any event within
30 days after the Seller knows or has reason to know thereof: (i) the occurrence
or expected occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution
of proceedings or the taking of any other action by the PBGC or the Seller or
any Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan;
and
(e) the resignation or termination of any Acceptable Special Servicer
under any Special Servicing Agreement with respect to any Purchased Security;
(f) the conveyance, sale, lease, assignment, transfer or other
disposition (any such transaction, or related series of transactions, a "Sale")
of any property, business or assets ("Property") of the Seller whether now owned
or hereafter acquired, with the exception of any Sale of Property by the Seller
which is not material to the conduct of its business and is effected in the
ordinary course of business;
(g) the establishment of a rating assigned to the long-term unsecured
debt issued by the Guarantor by ▇▇▇▇▇'▇ or S&P (or other rating agency
acceptable to the Buyer), and of any downgrade in such rating once established;
(h) the upgrading, downgrading or elimination by S&P or ▇▇▇▇▇'▇ of
the rating of any Purchased Security;
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(i) any loss or expected loss in respect of any Purchased Security,
or any other event or change in circumstances or expected event or change in
circumstances that could be reasonably be expected to result in a material
decline in value or cash flow of any Purchased Security; and
(j) any event or change in circumstances which could reasonably be
expected to have a Material Adverse Effect;
(k) any amendment, waiver, supplement or other modification to
Article VII of the Revolving Credit Agreement or related definitions; and
(l) any change in the outstanding principal amount of the Promissory
Note.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action the Seller proposes to take with
respect thereto.
12.8 ERISA. The Seller shall, and shall cause each of its
Subsidiaries to, comply in all material respects with all requirements of ERISA
applicable with respect to each Plan.
12.9 Information Relating to Purchased Securities. The Seller shall
promptly deliver or cause to be delivered to the Buyer (i) any report or notice
received by the Seller pursuant to the Offering Documents that are required to
be delivered to the registered holder of the Purchased Securities promptly
following receipt thereof and (ii) any other such document or information
relating to the Purchased Securities as the Buyer may reasonably request in
writing from time to time.
12.10 Distributions in Respect of Purchased Securities. If the Seller
shall receive any rights, whether in addition to, in substitution of, as a
conversion of, or in exchange for any Purchased Securities, or otherwise in
respect thereof, the Seller shall accept the same as the Buyer's agent, hold the
same in trust for the Buyer and deliver the same forthwith to the Buyer in the
exact form received, together with duly executed instruments of transfer or
assignment in blank and such other documentation as the Buyer shall reasonably
request. If any sums of money or property are paid or distributed in respect of
the Purchased Securities and received by the Seller, the Seller shall promptly
pay or deliver such money or property to the Buyer and, until such money or
property is so paid or delivered to the Buyer, hold such money or property in
trust for the Buyer, segregated from other funds of the Seller.
12.11 Further Assurances. At any time and from time to time, upon the
written request of the Buyer, and at the sole expense of the Seller, the Seller
will promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Buyer may reasonably request for
the purposes of obtaining or preserving the full benefits of this Agreement, the
Offering Documents and of the rights and powers therein granted, including,
without limitation, any offering documents, private placement memoranda or
prospectuses relating to the Purchased Securities in order to facilitate the
sale thereof.
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12.12 Amendments to Offering Documents. The Seller shall give the
Buyer notice prior to consenting to, or entering into, any amendments to the
Offering Documents.
12.13 Security Interest; Concerning Purchased Securities.
(a) The Seller shall do all things necessary to preserve the
Purchased Securities so that they remain subject to a first-priority perfected
security interest hereunder in the event any such Transactions are deemed to be
loans, and the Seller shall be deemed to have pledged to the Buyer as security
for the performance by the Seller of its obligations under each such
Transaction, and shall be deemed to have granted to the Buyer a security
interest in, all of the Purchased Securities with respect to all Transactions
hereunder and all Income thereon and other proceeds thereof pursuant to Section
6 hereof.
(b) The Seller will comply with all rules, regulations and other
laws of any Governmental Authority and shall cause the Purchased Securities to
comply with all applicable rules, regulations and other laws. The Seller shall
not allow any default for which the Seller is responsible to occur under any
Commercial Mortgage Loan documents or Offering Documents and the Seller shall
fully perform or cause to be performed when due all of its obligations under any
Commercial Mortgage Loan documents or Offering Documents.
12.14 Servicing of Commercial Mortgage Loans. The Seller shall cause
one or more Acceptable Special Servicers (each, a "Servicer") to service, or
cause to be serviced, all Commercial Mortgage Loans and, as applicable,
Properties underlying the Eligible Securities in accordance with any and all
applicable laws, the terms of this Agreement, the terms of the respective
Commercial Mortgage Loan documents and, to the extent consistent with the
foregoing, in accordance with the Servicing Standard. The Seller shall notify
the Servicer(s) of the Buyer's interest hereunder and the Seller shall notify
the Buyer of the name and address of all Servicers. The Buyer shall have the
right to approve each Servicer and the form and substance of all servicing
agreements or servicing side letter agreements. The Seller shall cause the
Servicer(s) to hold or cause to be held all escrow funds collected with respect
to such Commercial Mortgage Loans in trust accounts and shall apply the same for
the purposes for which such funds were collected. The Seller shall provide to
the Buyer a letter from each Servicer substantially in the form of Exhibit E
hereto (a "Servicer Notice and Agreement") to the effect that upon the
occurrence of an Event of Default, the Lender may terminate any Special
Servicing Agreement and in any event transfer servicing to the Buyer's designee,
at no cost or expense to the Buyer, it being agreed that the Seller will pay any
and all fees required to terminate a Special Servicing Agreement and to
effectuate the transfer of servicing to the designee of the Buyer. Upon the
Buyer's request, the Seller shall provide promptly to the Buyer a letter
addressed to and agreed by each Servicer, in form and substance satisfactory to
the Buyer, advising such Servicer of such matters as the Buyer may reasonably
request. If the Seller should discover that, for any reason, the Seller or any
entity responsible to the Seller by contract for managing or servicing any such
Commercial Mortgage Loan has failed to perform fully Seller's obligations under
this Agreement or the Related Documents or any of the obligations of such
entities with respect to the Commercial Properties, the Commercial Mortgage
Loans or the Securities, the Seller shall promptly notify the Buyer.
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12.15 Guarantor Covenants. The Guarantor shall at all times comply
with the covenants set forth in Sections 7.2 through Section 7.7, Section 9.3,
Section 9.6 and Section 9.8 of the Revolving Credit Agreement, as the same shall
be amended, waived, supplemented or otherwise modified from time to time;
provided, that for purposes of calculating compliance with financial covenants
pursuant to this Agreement, the Buyer shall not give effect to any amendment,
waiver or other modification to Article VII of the Revolving Credit Agreement or
related definitions executed (i) for the purpose or with the effect of avoiding
or waiving a Default or Event of Default (other than with respect to a Default
resulting from changes in legal requirements by any Governmental Authority
and/or to GAAP) or (ii) at any time that the Administrative Agent under the
Revolving Credit Agreement shall be any Person other than Bank of America, N.A.
SECTION 13. NEGATIVE COVENANTS
Each Repurchase Party, as applicable, hereby agrees that, so long as
any of the Commitments remain in effect or any amount is owing to the Buyer
hereunder or under any Related Document, it shall not, and, to the extent
applicable, shall not permit any of its Subsidiaries to, directly or indirectly:
13.1 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness of the Seller, except:
(a) Indebtedness of the Seller under this Agreement;
(b) Indebtedness of the Seller to any Subsidiary and of any Subsidiary
to the Seller or any other Subsidiary;
(c) Indebtedness of the Seller outstanding on the date hereof and
listed on Schedule 13.2;
(d) additional Indebtedness of the Seller not exceeding $3,500,000 in
aggregate principal amount at any one time outstanding.
13.2 Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of the Seller's property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of the Seller or its Subsidiaries, as the
case may be, in conformity with GAAP;
(b) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(c) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount
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and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the Seller or any Subsidiary;
(d) Liens in existence on the date hereof securing Indebtedness
permitted by Section 13.2(c); provided, that no such Lien is spread to cover any
additional property after the date of this Agreement and that the amount of
Indebtedness secured thereby is not increased;
(e) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding (as to the Seller and all of its Subsidiaries)
$3,000,000 in aggregate amount at any time outstanding; and
(f) Liens created pursuant to this Agreement or any Related Document.
13.3 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation of the Seller.
13.4 Limitation on Fundamental Changes. With respect to the Seller,
enter into any merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, assign, transfer or otherwise dispose of, all or substantially all of its
property, business or assets, or make any material change in its present method
of conducting business, except:
(a) any Subsidiary of the Seller may be merged or consolidated with
or into the Seller (provided that the Seller shall be the continuing or
surviving corporation) or with or into any one or more wholly owned Subsidiaries
of the Seller (provided that the wholly owned Subsidiary or Subsidiaries shall
be the continuing or surviving corporation); and
(b) any wholly owned Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Seller or any other wholly owned Subsidiary of the Seller.
13.5 Limitation on Transactions with Affiliates. With respect to the
Seller, enter into any transaction, including, without limitation, any purchase,
sale, lease, loan or exchange of property or the rendering of any service, with
any Affiliate unless such transaction is (a) otherwise permitted under this
Agreement, (b) in the ordinary course of the Seller's or such Subsidiary's
business and (c) upon fair and reasonable terms no less favorable to the Seller
or such Subsidiary, as the case may be, than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate; provided,
however, that loans made to the Guarantor as permitted under this Agreement
shall be deemed to be on commercially reasonable terms to the extent made at a
prevailing rate of interest.
13.6 Limitation on Changes in Fiscal Year. Permit the fiscal year to
end on a day other than November 30.
13.7 Unrelated Activities. With respect to the Seller, engage in any
activity other than activities specifically permitted by this Section 13,
including, but not limited to, investment in real estate related assets, and the
purchasing, financing and holding of commercial mortgage-backed securities and
activities incident thereto.
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13.9 Governing Documents. With respect to the Seller, amend its
certificate of incorporation (except to increase the number of authorized shares
of common stock), partnership agreement or other Governing Documents, without
the prior written consent of the Buyer, which shall not be unreasonably withheld
or delayed.
13.9 Separateness. With respect to the Seller, (a) own no assets, and
will not engage in any business, other than the assets and transactions
specifically contemplated by this Agreement; (b) not incur any indebtedness or
obligation, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation), other than (i) pursuant hereto and
under the agreements and documents evidencing, securing or in any other way
related to the Purchased Securities, (ii) customary representations, warranties,
indemnities and other agreements in connection with the origination,
acquisition, servicing, collection, enforcement, financing, participation,
securitization, sale or other disposition of the Purchased Securities, and (iii)
obligations under zoning and other governmental regulations, rules, prohibitions
and ordinances and proposed restrictions, covenants, conditions, limitations,
easements, rights-of-way and other matters existing of public record or proposed
to be recorded or filed in the future governing or affecting mortgaged real
property or that may otherwise require the consent of or joinder by a mortgagee;
(c) not make any loans or advances to any third party other than loans to the
Guarantor, and shall not acquire obligations or securities of its Affiliates;
(d) pay its debts and liabilities (including, as applicable, shared personnel
and overhead expenses) only from its own assets; (e) comply with the provisions
of its organizational documents; (f) do all things necessary to observe
organizational formalities and to preserve its existence, and will not amend,
modify or otherwise change Sections 3, 7 or 9 of its certificate of
incorporation or any other provision of its organizational documents in a manner
that conflicts with the provisions of said Sections 3, 7 or 9 of its certificate
of incorporation, and shall inform Buyer of any other amendment to its
organizational documents; (g) maintain all of its books, records, financial
statements and bank accounts separate from those of its Affiliates (except that
such financial statements may be consolidated to the extent consolidation is
required under United States generally accepted accounting principles
consistently applied as in effect from time to time or as a matter of law) and
file its own tax returns (except to the extent consolidation is required or
permitted under applicable law); (h) be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate), shall correct any known misunderstanding regarding
its status as a separate entity, shall conduct business in its own name, shall
not identify itself or any of its Affiliates as a division of the other; (i)
maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business
operations; (j) not engage in or suffer any change of ownership, dissolution,
winding up, liquidation, consolidation or merger in whole or in part; (k) not
commingle its funds or other assets with those of any Affiliate or any other
Person; (l) maintain its assets in such a manner that it will not be costly or
difficult to segregate, ascertain or identify its individual assets from those
of any Affiliate or any other Person; (m) not and will not hold itself out to be
responsible for the debts or obligations of any other Person; (n) shall not,
without the vote of its Independent Director, (i) file or consent to the filing
of any bankruptcy, insolvency or reorganization case or proceeding with respect
to the Seller; institute any proceedings under any applicable insolvency law or
otherwise seek any relief under any laws relating to the relief from debts or
the protection of debtors generally with respect to the Seller;(ii) seek or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian or any similar official for the Seller or a substantial
portion of its properties; or (iii)
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make any assignment for the benefit of the Seller's creditors; and (o) shall
have at least one (1) Independent Director.
13.10 ERISA. None of the Repurchase Parties shall become an entity
deemed to hold "plan assets" within the meaning of ERISA or any regulations
promulgated thereunder of an employee benefit plan (as defined in Section 3(3)
of ERISA) which is subject to Title I of ERISA or any plan within the meaning of
Section 4975 of the Code.
SECTION 14. EVENTS OF DEFAULT; REMEDIES
14.1 Events of Default. Each of the following shall constitute an
event of default (an "Event of Default"):
(a) the Seller fails to transfer Purchased Securities upon the
applicable Purchase Date;
(b) the Seller fails to repurchase Purchased Securities upon the
applicable Repurchase Date;
(c) the Seller fails to comply with Section 4 hereof;
(d) an Act of Insolvency occurs with respect to the Seller or the
Guarantor;
(e) any representation made by any Repurchase Party shall have been
incorrect or untrue in any material respect when made or repeated or deemed to
have been made or repeated;
(f) the Seller shall admit to the other its inability to, or its
intention not to, perform any of its obligations hereunder;
(g) to the extent any that any Transaction is deemed a sale and not
a financing, this Agreement shall for any reason not cause, or shall cease to
cause, the Buyer to be the owner free and clear of any pledge, Lien, security
interest, encumbrance, charge or other adverse claim of any of the Purchased
Securities, or in the event that any Transaction is deemed a financing and not a
sale, this Agreement shall for any reason not create, or shall cease to create,
a valid, perfected first priority security interest in favor of the Buyer in any
of the Purchased Securities and cause the Buyer to be the entitlement holder
with respect thereto;
(h) the Seller shall fail to perform or comply with, admit its
inability to perform or state its intention not to perform or comply with its
obligations and covenants under this Agreement or any Related Document;
(i) the Guarantor shall fail to perform or comply with, admit its
inability to perform or state its intention not to perform or comply with its
obligations and covenants under the Guarantee or any Related Document;
(j) the Seller or the Guarantor shall (i) default in any payment of
principal of or interest of any Indebtedness or in the payment of any Guarantee
Obligation, in each case
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involving payment in respect of Indebtedness of the Seller of $3,000,000 or more
("Seller Indebtedness" or "Seller Guarantee Obligation") as applicable, or
Indebtedness of the Guarantor of $5,000,000 or more ("Guarantor Indebtedness" or
"Guarantor Guarantee Obligation"), as applicable, in each case beyond the period
of grace (not to exceed 30 days), if any, provided in the instrument or
agreement under which such Seller Indebtedness or Guarantor Indebtedness or
Seller Guarantee Obligation or Guarantor Guarantee Obligation was created; or
(ii) default in the observance or performance of any other agreement or
condition relating to any such Seller Indebtedness or Guarantor Indebtedness,
beyond the period of grace (not to exceed 30 days), or Seller Guarantee
Obligation or Guarantor Guarantee Obligation beyond the period of grace (not to
exceed 30 days), or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Seller Indebtedness or Guarantor
Indebtedness or beneficiary or beneficiaries of such Seller Guarantee Obligation
or Guarantor Guarantee Obligation (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Seller Indebtedness or Guarantor Indebtedness to become
due prior to its stated maturity or such Seller Guarantee Obligation or
Guarantor Guarantee Obligation to become payable;
(k) the occurrence of any "Event of Default", however defined, under
any Indebtedness, credit agreement or repurchase agreement between the Seller or
the Guarantor, on the one hand, and the Buyer or any of its Affiliates, on the
other hand;
(l) one or more judgments or decrees shall be entered against the
Seller or the Guarantor involving in the aggregate a liability (not paid or
fully covered by insurance) of $[5,000,000] or more and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending appeal
within 60 days from the entry thereof;
(m) (i) the Seller ceases to be an indirect wholly-owned subsidiary
of LNR Property Corporation, or (ii) LNR Property Corporation ceases to be the
holder, directly or indirectly, of all issued and outstanding shares of the
common stock of the Seller; or
(n) any event or circumstance shall occur which has had or could
reasonably be expected to have a Material Adverse Effect.
14.2 Remedies. (a) In making a determination as to whether an Event
of Default has occurred, either party shall be entitled to rely on reports
published or broadcast by media sources believed by either party to be generally
reliable and on information provided to it by any other sources believed by it
to be generally reliable, provided that either party reasonably and in good
faith believes such information to be accurate and has taken such steps as may
be reasonable in the circumstances to attempt to verify such information.
(b) Upon the occurrence of any Event of Default, 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
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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.
(c) In all Transactions in which the defaulting party is acting as
Seller, if the nondefaulting party exercises or is deemed to have exercised the
option referred to in paragraph (b) of this Section 14.2, (i) the defaulting
party's obligations in such Transactions to repurchase all Purchased Securities,
at the Repurchase Price therefor on the Repurchase Date determined in accordance
with paragraph (b) of this Section 14.2, 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 hereunder,
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.
(d) 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 nondefaulting party.
(e) If the nondefaulting party exercises or is deemed to have
exercised the option referred to in paragraph (b) of this Section 14.2, 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,
obtained from a generally recognized source or the most recent closing
offer quotation from such a source.
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In the absence of a generally recognized source for prices or bid or
offer quotations for any Purchased Security, the nondefaulting party may
establish the source therefor in its sole discretion and 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).
(f) For purposes of this Section 14, 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 paragraph (b) of this Section
14.2.
(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
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 Section 14.2(j) shall be at a rate equal to
the greater of the Pricing Rate for the relevant Transaction or the Prime Rate.
(i) In addition to the rights under this Section 14.2, upon an Event
of Default the Buyer shall no longer be obligated to enter into any additional
Transactions pursuant to any outstanding Confirmation and the Buyer shall have
the following additional rights if an Event of Default occurs with respect to
the Seller:
(i) The Buyer and the Seller agree and acknowledge that the
Purchased Securities constitute collateral that may decline rapidly in
value. Accordingly, notwithstanding anything to the contrary in this
Agreement, the Buyer shall not be required to give notice to the Seller or
any other Repurchase Party prior to exercising any remedy in respect of an
Event of Default. If no prior notice is given, the Buyer shall give notice
to the Seller of the remedies effected by the Buyer promptly thereafter.
The Buyer shall act in good faith in exercising its rights pursuant to this
paragraph.
(ii) The Buyer may, in its sole discretion, elect to hold any
Purchased Security for its own account and earn the related interest on the
full face amount thereof.
(j) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other agreement or
applicable law.
SECTION 15. INDEMNIFICATION
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(a) The Seller agrees to hold the Buyer, and its Affiliates and
their officers, directors, employees, agents and advisors (each an "Indemnified
Party") harmless from and indemnify any Indemnified Party against all
liabilities, losses, damages, judgments, costs and expenses of any kind which
may be imposed on, incurred by or asserted against such Indemnified Party
(collectively, the "Costs") relating to or arising out of this Agreement, the
Related Documents (to the extent arising from actions or inactions of the
Seller) or any transaction contemplated hereby or thereby, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the Guarantee or any transaction contemplated hereby or thereby,
that, in each case, results from anything other than any Indemnified Party's
gross negligence or willful misconduct. Without limiting the generality of the
foregoing, the Seller agrees to hold any Indemnified Party harmless from and
indemnify such Indemnified Party against all Costs with respect to all Purchased
Securities relating to or arising out of any violation or alleged violation of,
noncompliance with or liability under any law, rule or regulation (including
without limitation, Environmental Laws) that, in each case, results from
anything other than such Indemnified Party's gross negligence or willful
misconduct. In any suit, proceeding or action brought by an Indemnified Party in
connection with any Purchased Security for any sum owing thereunder, or to
enforce any provisions of any Purchased Security, the Seller will save,
indemnify and hold such Indemnified Party harmless from and against all expense,
loss or damage suffered by reason of any defense, set-off, counterclaim,
recoupment or reduction or liability whatsoever of the account debtor or obligor
thereunder, arising out of a breach by the Seller of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to or in favor of such account debtor or obligor or its successors from
the Seller. The Seller also agree to reimburse an Indemnified Party as and when
billed by such Indemnified Party for all such Indemnified Party's costs and
expenses incurred in connection with the enforcement or the preservation of such
Indemnified Party's rights under this Agreement or any transaction contemplated
hereby or thereby, including without limitation the reasonable fees and
disbursements of its counsel. Notwithstanding anything to the contrary in this
Section 12, the Seller shall not be liable for any Costs relating to the Related
Documents or the transactions contemplated thereby arising from the material
actions or inactions of the Buyer. This indemnity shall continue in full force
and effect regardless of the termination of this Agreement.
(b) The Seller agrees to pay as and when billed by the Buyer all of
the reasonable out-of-pocket costs and expenses incurred by the Buyer in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement, the Guarantee or any
other documents prepared in connection herewith or therewith. The Seller agrees
to pay as and when billed by the Buyer all of the out-of-pocket costs and
expenses incurred in connection with the consummation and administration of the
transactions contemplated hereby and thereby including without limitation (i)
all the reasonable fees, disbursements and expenses of counsel to the Buyer and
(ii) all the due diligence, inspection, testing and review costs and expenses
incurred by the Buyer with respect to the Purchased Securities under this
Agreement (other than in connection with the initial closing of the
Securitization Transaction relating to the Purchased Securities), including, but
not limited to, those costs and expenses incurred by the Buyer and reimbursable
by the Seller pursuant to Section 15(a) of this Agreement.
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SECTION 16. MISCELLANEOUS
16.1 Single Agreement. The Buyer and the 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 the Buyer and the 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.
16.2 Notices and Other Communications. Any and all notices,
statements, demands or other communications hereunder may be given by a party to
the other by mail, facsimile, telegraph, messenger or otherwise to the address
specified in Schedule 16.2, 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 orally, to be confirmed
promptly in writing, or by other communication as specified in the preceding
sentence.
16.3 No Waivers, Etc. No express or implied waiver of any Event of
Default by either party shall constitute a waiver of any other Event of Default
and no exercise of any remedy hereunder by any party shall constitute a waiver
of its right to exercise any other remedy hereunder. No modification or waiver
of any provision of this Agreement and no consent by any party to a departure
herefrom shall be effective unless and until such shall be in writing and duly
executed by both of the parties hereto. Without limitation on any of the
foregoing, the failure to give a notice pursuant to Section 4.1 will not
constitute a waiver of any right to do so at a later date.
16.4 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.
16.5 Assignments and Participations; Hypothecation of Securities;
Termination
(a) The Seller may not assign any of its rights or obligations under
this Agreement without the prior written consent of the Buyer and any attempt by
the Seller to assign any of its rights or obligations under this Agreement
without the prior written consent of the Buyer shall be null and void. The Buyer
may upon notice to the Seller and without consent of the Seller, sell to any
other person participating interests in any Transaction, its interest in the
Purchased Securities, or any other interest of the Buyer under this Agreement
(any such purchasing participant, a "Transferee"); provided, that any transfer
effected pursuant to this
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Section 16.5(a) shall be in respect of Purchased Securities with a minimum
Purchase Price of $5,000,000 (other than in the case of (a) a transfer of all of
the interests then held by the Buyer (or a Transferee) or (b) a transfer to an
Affiliate of the Buyer (or a Transferee)). The Seller agrees to cooperate with
the Buyer in connection with any such assignment, transfer or sale of
participating interest and to enter into such restatements of, and amendments,
supplements and other modifications to, this Agreement in order to give effect
to such assignment, transfer or sale.
(b) The Buyer shall have free and unrestricted use of all Purchased
Securities and nothing in this Agreement shall preclude the Buyer from engaging
in repurchase transactions with the Purchased Securities or otherwise pledging,
transferring, hypothecating, or rehypothecating the Purchased Securities;
provided, however, that the Buyer shall transfer the Purchased Securities to the
Seller on the applicable Repurchase Date free and clear of any pledge, Lien,
security interest, encumbrance, charge or other adverse claim on any of the
Purchased Securities. Nothing contained in this Agreement shall obligate the
Buyer to segregate any Purchased Securities transferred to the Buyer by the
Seller.
(c) 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.
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.
16.6 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
16.7 SUBMISSION TO JURISDICTION; WAIVERS. EACH REPURCHASE PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THE AGREEMENT OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY
THEREOF;
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED
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OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID,
TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF
WHICH THE BUYER SHALL HAVE BEEN NOTIFIED; AND
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO ▇▇▇ IN ANY OTHER JURISDICTION.
16.8 WAIVER OF JURY TRIAL. EACH OF THE REPURCHASE PARTIES AND THE
BUYER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
16.9 Counterparts. The Agreement and all other documents relating
thereto may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of the parties
hereto may execute this Agreement or such other document by signing any such
counterpart.
16.10 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 Section 16.10(a) above, any such
Transaction shall proceed only if Seller furnishes or has furnished to Buyer its
most recent available audited statement of its financial condition and its most
recent subsequent unaudited statement of its financial condition.
(c) By entering into a Transaction pursuant to this Section 16.10,
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.
16.11 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).
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(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 Section 14.2 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 term is defined in
FDICIA).
16.12 Disclosure Relating to Certain Federal Protections. The parties
acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a
broker or dealer registered with the Securities and Exchange Commission ("SEC")
under Section 15 of the Securities Exchange Act of 1934 ("1934 Act"), the
Securities Investor Protection Corporation has taken the position that the
provisions of the Securities Investor Protection Act of 1970 ("SIPA") do not
protect the other party with respect to any Transaction hereunder;
(b) in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer registered with
the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to
the other party with respect to any Transaction hereunder;
(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; and
(d) in the case of Transactions in which one of the parties is an
"insured depository institution" as that term is defined in Section 1813(c)(2)
of Title 12 of the United States Code, as amended, funds held by the financial
institution pursuant to a Transaction hereunder are not a deposit and therefore
are not insured by the Federal Deposit Insurance Corporation, the Savings
Association Insurance Fund or the Bank Insurance Fund, as applicable.
16.13 Confidentiality. Each party hereto agrees to keep confidential
any written information provided to it by or on behalf of any other party hereto
pursuant to or in connection with this Agreement or obtained by the Buyer based
on a review of the books and records of the Repurchase Parties; provided that
nothing herein shall prevent any such party from disclosing
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any such information (i) to any other party to this Agreement, (ii) to any
Transferee or potential Transferee which agrees to comply with the provisions of
this Section 16.13, (iii) to its employees, directors, agents, attorneys,
accountants and other professional advisors, (iv) upon the request or demand of
any examiner or other Governmental Authority, (v) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (vi) which has been publicly disclosed other
than in breach of this Agreement, or (vii) in connection with the exercise of
any remedy hereunder.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
DSHI COMMERCIAL INVESTMENTS, INC.,
as Seller
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
LNR PROPERTY CORPORATION, as
Guarantor
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
BANC OF AMERICA MORTGAGE
CAPITAL CORPORATION, as Buyer
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President